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Directors Report of Sandur Manganese & Iron Ores Ltd.

Mar 31, 2023

The Board of Directors are pleased to present the report of the business and operations of the Company along with audited financial statements for the financial year ended 31 March 2023 (year under review/ FY 2022-23).

Financial Results

The summary of the standalone and consolidated financial results is as follows:

Rs. in Lakh

Particulars

Standalone

Consolidated1

1

FY 2022-23

FY 2021-22

FY 2022-23

FY 2021-22

Net Sales/Income

2,12,580.76

2,24,874.15

2,12,580.76

-

Other Income

5,883.75

3,522.58

5,919.74

-

Total

2,18,464.51

2,28,396.73

2,18,500.50

-

Expenditure

(i) Variable

1,51,967.62

1,07,877.49

1,51,967.62

-

(ii) Fixed

21,350.94

19,583.58

21,371.61

-

(iii) Depreciation/Amortization

6,425.50

5,560.08

6,425.50

-

(iv) Finance costs

2,784.76

3,843.33

2,784.76

-

Total

1,82,528.82

1,36,864.48

1,82,549.49

-

Profit Before Taxes

35,935.69

91,532.25

35,951.01

-

Less:

(i) Current Tax

9,156.98

22,453.00

9,156.98

-

(ii) Deferred Tax

(312.07)

1,567.67

(312.07)

-

Net Profit

27,090.78

67,511.58

27,106.10

-

Share in Profit/(Loss) of associate

-

-

(27.26)

Net profit after taxes and share of loss of associate

27,090.78

67,511.58

27,078.84

Add: Balance brought forward from the previous year

1,65,021.86

98,410.68

1,65,021.86

-

Profit before appropriation

1,92,112.64

1,65,922.26

1,92,100.70

-

Less: Appropriations

(i) Dividend on Equity Shares

1,350.29

900.19

1,350.29

-

(ii) Other comprehensive loss/(income)

80.92

0.21

80.92

-

Total

1,431.21

900.40

1,431.21

-

Profit carried to Balance Sheet

1,90,681.43

1,65,021.86

1,90,669.49

-

Performance Review and State of the Company’s Affairs

During the year under review, the Company has a turnover amounting to '' 2,12,581 lakh and EBITDA of '' 45,146 lakh. Decrease in turnover compared to previous financial year was majorly due to lower realisation in mining and ferroalloys segments coupled with high volatility in coke segment. The segment wise revenue growth/(decline) against previous year for mining, ferroalloys and coke & energy segments were (18)%, (10)% and 14% respectively.

The Company recorded profit before tax of '' 35,936 lakh after charging '' 6,426 lakh towards depreciation/amortization on fixed assets and '' 2,785 lakh towards finance costs. The profit before tax has decreased by 61% over the previous year mainly

due to decrease in realisation per tonne from external sales of Manganese Ore, decrease in realisation of Iron Ore due to drop in the market price and decrease in average selling price per MT of Ferroalloys. Further, there has been an increase in cost of production of ferroalloys and coke due to increase price of their respective raw materials. The segment wise result decline against previous year for mining, ferroalloys and coke & energy segments were 41%, 70% and 89% respectively.

After charging current income tax of '' 9,157 lakh, deferred tax of '' (312) lakh, the profit after tax (PAT) for the current year has been '' 27,091 lakh. There has been a reduction in the PAT as compared to previous financial year.

Subsidiary and Associate companies incorporated during the year under review are yet to start their operations. Hence, performance of these companies is insignificant to the overall performance of the Company.

ProjectsExisting Projects

Downhill Conveyor System

The Company''s proposal for setting up a 300 tonnes per hour Downhill Conveyor System (DCS) from the Company''s Kammaturu Iron Ore Mine to PMBR railway siding is under progress. At the head end and the tail end of the DCS, 100% of electrical work, 85% of fabrication work and 64% of the civil works have been completed. With current status, the DCS project is envisaged to be commissioned three months after Stage 2 approval of Forest Clearance is granted by the Government of India, which is under process. Successful implementation of this project will lead to seamless movement of product, lower transportation cost and higher realizations as product will be delivered directly at railway sliding.

Power Purchase

The Company had entered into a Share Subscription and Shareholders'' Agreement (SSSHA) with Renew Green Energy Solutions Private Limited (RGESPL) and Renew Sandur Green Energy Private Limited (RSGEPL) and Power Purchase Agreement with RSGEPL for the purpose of captive consumption of renewable power at the Company''s Metal & Ferroalloys Plant. Pursuant to the SSSHA, the Company invested an amount of '' 3,86,43,000/- towards subscription of 35,13,000 equity shares of '' 10 each at a premium of '' 1 each on 6 January 2023 and '' 27,05,01,000 towards subscription of 2,45,91,000 equity shares of '' 10 each at a premium of '' 1 each on 30 March 2023. Accordingly, as on 31 March 2023, the Company subscribed to 49% equity stake of RSGEPL.

As on the date of this Report, 33 MW Solar Power Plant and 9.9 MW Wind Turbine Generators with associated electrical equipment''s interconnecting the power with Karnataka Power Transmission Corporation Limited (KPTCL) grid has been successfully commissioned at Kudligi Taluk, Vijayanagara District, Karnataka State. With successful commissioning and injection of above power to the grid, the objective of Rights Issue as mentioned in the Letter of Offer dated 21 July 2022 i.e., the procurement of power at cheaper cost to operate all the three existing furnaces of ferroalloy plant and other expansion activities at Vyasankere, Hosapete Taluk, Vijayanagara District, Karnataka State has been achieved.

Future Projects

The Company is exploring different strategic possibilities and evaluating the opportunities from different parameters in order to sustain growth, achieve substantial market share and meet its future needs. Future market for the envisaged products, availability of infrastructure facilities and utilities are some of the critical aspects that the Company is considering as part of next phase of expansion into beneficiation of ores, manufacturing of pellets and setting up an integrated steel manufacturing facilities. Appropriate decisions in this regard will be taken by the Company based on the expert opinion, analysis and evaluation.

The following events occurred till the date of this Report:

Approval for enhancement in Maximum Permissible Annual Production (MPAP) of Manganese Ore

On 22 February 2023, the Central Empowered Committee (CEC) constituted by the Hon''ble Supreme Court of India, has granted approval to the Company, for enhancing the Company''s Manganese Ore production from 2.86 lakh tonnes to 5.82 lakh tonnes (5.50 lakh tonnes in Mining Lease No. 2678 and 0.32 lakh tonnes in Mining Lease No. 2679). The CEC has granted approval after examining in detail the recommendations of the Technical Committee of the Government of Karnataka and the report of the Indian Council of Forestry Research & Education, Ministry of Environment, Forest & Climate Change (MoEFCC) and keeping in view the Hon''ble Supreme Court''s order dated

13 April 2012 and the Judgements dated 18 April 2013 and

14 December 2017.

Grant of Environmental Clearance (EC) for increase in Iron Ore production from 1.60 Million Tonnes Per Annum (MTPA) to 4.50 MTPA along with proposed 7.0 MTPA Beneficiation Plant and a Downhill Conveyor System

MoEFCC, Government of India, examined the Company''s application under EIA Notification 2006 and its further amendments thereto, and after accepting the recommendations of Expert Appraisal Committee (EAC) during 9th EAC (NonCoal Mining) meeting held during January 17-18, 2023 and 12th EAC meeting held on March 21-22, 2023, has accorded Environmental Clearance on 25 April 2023 for enhancing Iron Ore production from 1.60 MTPA to 4.50 MTPA, retaining the Manganese Ore production at 0.582 MTPA. MoEFCC has also granted approval for the proposed 7.0 MTPA Ore Beneficiation Plant, 1.2 km Down Hill Conveyor System and 0.15 MTPA Crushing & Screening Plant of Iron Ore and Manganese Ore in the Company''s Mining lease area of 1860.10 ha (ML No: 2678).

Approvals

Subsequent to obtaining EC from MoEFCC for enhancement in production, the Company has applied for combined Consent For Establishment (CFE) to Karnataka State Pollution Control Board (KSPCB) seeking enhancement in Iron Ore production from 1.6 MTPA to 4.5 MTPA, Manganese Ore production from

0.286 MTPA to 0.582 MTPA, setting up a Beneficiation Plant of 7.0 MTPA and 1.2 km Downhill Conveyor from Kammathuru Iron Ore mine to PMBR railway siding. On receipt of approval for Consent for Establishment from KSPCB, the Consent For Operations (CFO) will be obtained in phased manner for enhancing the Manganese Ore production from current 0.286 MTPA to 0.582 MTPA followed by Consent for Operations for enhancement in Iron Ore production from 1.60 to 4.50 MTPA, Beneficiation Plant and Downhill Conveyor Project.

The Company had represented to CEC on 26 April 2023 seeking enhancement of MPAP of Iron Ore in Mining Lease No. 2678. The CEC after examining the proposal, advised Federation of Indian Mineral Industries (FIMI) on 2 June 2023 for compilation of the requisite information to enable Indian Council of Forestry Research & Education, Dehradun to prepare Reclamation & Rehabilitation Plans at the enhanced level of operations.

Awards and Recognitions Five Star Rating Award

The Ministry of Mines, Government of India and Indian Bureau of Mines have introduced the Sustainable Development Framework and have undertaken a system of rating mining leases.

At the 75th Anniversary of Indian Bureau of Mines held on 1 March 2023 in Nagpur, the Ministry of Mines, Government of India has awarded 5 Star Rating to both the Mining Leases of the Company, for the year 2021-22. The Company has been receiving Five Star Rating Awards from inception of this award by Ministry of Mines, Government of India in the year 2014 -15 and thereafter for all years. Consecutively, this is the 8th year that the Company has received 5 star rating.

Other Awards

At the 21st MEMC Week organised by the Mines Environment & Mineral Conservation Association of Karnataka under the aegis of Indian Bureau of Mines, the Company has bagged a total of 17 prizes, including the overall first prize for both the mines.

As a part of the 52nd National Safety Day programme, the Company''s plant in Vyasanakere has been awarded “Best Safety Performance Industry” on BKRISE regional level competition by the Department of Factories and Boilers, Government of Karnataka.

Change in the Capital Structure

As on 31 March 2023, the authorised share capital of the Company was '' 11,500 lakh comprising of 11,40,00,000 Equity Shares of '' 10 each and 1,00,000 Preference Shares of '' 100 each. The paid-up share capital of the Company was '' 2,700.58 lakh comprising of 2,70,05,823 Equity Shares of '' 10 each.

During the year under review, the Board of Directors of the Company in its meeting held on 10 April 2022, approved issue of up to 1,80,03,882 equity shares of face value of '' 10 (Rights Equity Shares) each at a price of '' 10 per equity share (Issue Price) for an amount not exceeding '' 18,00,38,820 on a Rights Basis to the eligible equity shareholders of the Company in the ratio of 2 Rights Equity Shares for every 1 fully paid-up equity share held by the eligible equity shareholders as on the Record Date, that is on Wednesday, 27 July 2022 which got allotted on 9 September 2022. Accordingly, the issued, subscribed and fully paid-up share capital of the Company has increased from '' 9,00,19,410 divided into 90,01,941 equity shares of '' 10 each to '' 27,00,58,230 divided into 2,70,05,823 equity shares of '' 10 each.

The Company has neither issued equity shares with differential rights as to dividend, voting or otherwise nor shares (including sweat equity shares) to employees of the Company under any scheme. Further, the Company has not issued debentures, bonds, convertible or non-convertible securities or warrants and has not held any shares in trust for the benefit of employees where the voting rights are not exercised directly by the employees. The Company has not bought back any of its securities during the year.

Change in the Nature of the Business

During the year under review, there was no change in nature of business.

Dividend Distribution Policy

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), top 1000 listed companies based on market capitalization are required to formulate a dividend distribution policy. Accordingly, the Company has adopted the Dividend Distribution Policy which sets out the parameters and circumstances which are to be considered by the Board in determining the distribution of dividend to its Members and/or retaining profits earned by the Company. The Company''s Dividend Distribution Policy is available on the Company''s website at https://www. sandurgroup.com/policies and annexed to this Report as ‘Annexure A’.

Dividend

The Directors have recommended a dividend of '' 5 per equity share of '' 10 each (50%) For the year ended 31 March 2023. The said dividend is subject to the approval of Members at the ensuing Annual General Meeting of the Company. According to the Finance Act, 2020, dividend income will be taxable in the hands of the Members w.e.f., 1 April 2020, and the Company is required to deduct tax at source from the dividend payable to the Members at prescribed rates as per the Income Tax Act, 1961.

Transfer to Reserves

As permitted under the Companies Act, 2013 (the Act), the Board does not propose to transfer any amount to general reserve and has decided to retain the entire amount of profit for the financial year 2022-23 in the statement of profit and loss.

Transfer of Amount to Investor Education and Protection Fund

As per Section 124(5) of the Act read with rules made thereunder, dividends remaining unpaid/unclaimed for a period of seven years from the date of transfer to the unpaid dividend account is required to be transferred to Investor Education and Protection Fund (IEPF). Further, the shares in respect of which dividend has not been paid or claimed for seven consecutive years shall be transferred by the Company in the name of IEPF.

In pursuance of the above, the dividend remaining unclaimed or unpaid in respect of dividends declared for financial year 2014-15 amounting to '' 1,40,670 have been transferred to the IEPF during the financial year 2022-23. Consequently, 504 shares belonging to 8 Members in respect of which dividends remained unpaid/unclaimed for seven consecutive years were also transferred to IEPF.

In the interest of the Members, the Company sends periodical reminders to the Members to claim their dividends to avoid the transfer of dividends or shares to the IEPF Authority. Notices in this regard are also published in the newspapers and the details of unpaid/unclaimed dividends and Members whose

shares are liable to be transferred to the IEPF Authority, are uploaded on the Company''s website at https://www.sandurgroup. com/shares-transferred-to-iepf.

It may be noted that as per the above-mentioned provisions of the Act, the unpaid/unclaimed dividend pertaining to the financial year 2015-16 and unpaid/unclaimed first interim dividend pertaining to the financial year 2016-17, along with the underlying shares are due to be transferred to IEPF by 21 October 2023 and 19 December 2023 respectively. Members who have not encashed the dividend warrant(s) from financial year 2015-16 onwards, may forward their claims to the Company/Registrar and Transfer Agents before 7 October 2023, to avoid any transfer of dividend or shares to the IEPF Authority.

The information in respect of unpaid/unclaimed dividend and shares thereto along with due date for transfer to IEPF are given below:

Financial Year

Date of declaration

Due date for transfer to IEPF

Unclaimed dividend As on 31 March 2023

Unclaimed shares As on 31 March 2023

2015-16 (Final dividend)

14 September 2016

21 October 2023

1,45,458.00

48,486

2016-17

(Interim dividend-I)

12 November 2016

19 December 2023

1,43,844.00

71,922

2016-17

(Interim dividend-II)

31 March 2017

7 May 2024

55,732.00

55,732

2016-17

(Final Dividend)

26 September 2017

2 November 2024

96,764.00

48,382

2017-18

(Interim Dividend)

27 December 2017

2 February 2025

2,52,430.00

50,486

2017-18

(Final Dividend)

1 September 2018

7 October 2025

1,06,798.00

53,654

2018-19

(Interim Dividend)

14 November 2018

21 December 2025

1,78,111.50

50,989

2018-19

(Final Dividend)

21 September 2019

28 October 2026

1,10,792.50

31,655

2019-20

(Interim Dividend I)

11 November 2019

18 December 2026

71,950.00

35,975

2019-2020 (Interim Dividend II)

5 March 2020

11 April 2027

1,99,810.00

39,962

2020-21 (Final Dividend)

22 September 2021

29 October 2028

2,38,216.00

26,157

2021-22 (Final Dividend)

28 September 2022

3 November 2029

1,19,210.00

24,743

The voting rights on the shares lying with IEPF shall remain frozen till the rightful owner claims the shares. The benefits arising out of the shares transferred to IEPF is credited to IEPF Authorities. The Members can claim the same from the IEPF Authorities.

The Members whose unpaid/unclaimed dividends or shares are transferred to the IEPF can request the Company/Registrar and Transfer Agent as per the applicable provisions in the prescribed e-form IEPF-5 for claiming the unpaid/unclaimed dividend or shares out of the IEPF. The process for claiming the unpaid/unclaimed dividend or shares out of the IEPF is also available on the Company''s website at https://www. sandurgroup.com/others.

Bijan Kumar Dash, Company Secretary and Chief Compliance Officer is the Nodal Officer under the provisions of IEPF.

Subsidiary Company, Associate Company and Joint Ventures

During the year under review, the Company had incorporated a Wholly Owned Subsidiary (WOS) company with the name “Sandur Pellets Private Limited” on 7 May 2022 by subscribing to 100% of its share capital. There has been no change in the nature of business of the WOS. The Company does not have any material subsidiary as per Regulation 16(1)(c) of Listing Regulations. The Policy on Determining Material Subsidiary is uploaded on the Company''s website at https://www. sandurgroup.com/policies.

On 5 May 2023, the State Level Environment Impact Assessment Authority, Karnataka, constituted by Ministry of Environment and Forest, Government of India approved the transfer of Environmental Clearance (Order No. SEIAA 46 IND 2020) dated 11 February 2022 for establishment of Iron Ore and Manganese Ore Beneficiation plant at Sy No. 89(Part),

97/3, 98 & 99, Jaisinghpur (Venkatagiri) village, Sandur Taluk, Ballari District, Karnataka which was earlier granted to M/s. Excel Mining and Infra Services in favour of Sandur Pellets Private Limited, WOS of the Company. Accordingly, the WOS is in the process of initiating its business operations in the year 2023-24.

Pursuant to the Share Subscription and Shareholders'' Agreement entered with Renew Green Energy Solutions Private Limited and Renew Sandur Green Energy Private Limited (RSGEPL), the Company has subscribed to 49% of the paid-up equity share capital in RSGEPL, thereby making it an associate company.

The Company does not have any joint ventures.

The disclosure pursuant to first proviso to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014 is annexed with this Report as ‘Annexure B’. Further, as per the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company along with relevant documents and separate audited financial statement in respect of Company''s subsidiary, are available on the Company''s website at https://www.sandurgroup.com/ subsidiaries.

Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company

There are no significant and material orders passed by the Regulators/Courts/Tribunals that would impact the going concern status of the Company and its future operations.

Material changes and commitment, if any, affecting the financial position of the Company which occurred between the end of the financial year to which these financial statement relate and the date of the report

No material changes and commitment affecting the financial position of the Company occurred between the end of the financial year to which financial statement relate and the date of this Report.

Particulars of contracts or arrangements made with related parties

In terms of clause (h) of Section 134(3) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of the contracts or arrangements entered into by the Company with its related parties as referred to in Section 188(1) of the Act in Form No. AOC-2 is annexed with this Report as ‘Annexure C’.

During the year under review, all related party transactions entered into by the Company were on an arm''s length basis and in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee of the Company and placed before Board for information/approval, as and when required. With a view to ensure continuity of day-to-day operations, an omnibus approval is obtained for related party transactions which are of repetitive nature, entered in the ordinary course of business and at arm''s length basis.

A statement giving details of all related party transactions entered pursuant to the omnibus approval so granted, is placed before the Audit Committee on a quarterly basis for its review.

Further, the Company has not entered into any contract/ arrangement/transaction with related parties which are considered to be material as per Regulation 23 of the Listing Regulations and the Company''s Policy on Related Party Transactions. In terms of Regulation 23(9) of the Listing Regulations, the Company submits the details of related party transactions as per the specified format to the stock exchange on a half yearly basis.

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed on the Company''s website at https://www.sandurgroup.com/policies.

Particulars of Loans, Guarantees or Investments

The particulars of investments made under Section 186 of the Act have been disclosed in the financial statement. The Company has not granted any loans or provided guarantees under Section 186 of the Act.

Deposits

The Company does not have any deposits at the beginning of the financial year and has neither accepted nor renewed any deposits during the year under review. Thus, provisions of Section 73 of the Act are not applicable to the Company.

Directors and Key Managerial Personnel

As on the date of this Report, the Board consists of seven members - one Managing Director, one Whole Time Director, four Independent Directors (including one Woman Director) and one Non-Executive Non-Independent Director. The Chairman of the Board is a Non-Executive Director.

Induction

During the year, the Company has not appointed any Director or Key Managerial Personnel.

Re-appointments

During the year, the following re-appointments were made by the Company:

• Jagadish Rao Kote (DIN: 00521065) was re-appointed as an Independent Director by the Members of the Company through Postal Ballot on 17 July 2022, for a second term of five consecutive years with effect from

27 May 2022 to 26 May 2027. The Board opined that he is a person of integrity and possess relevant expertise and experience (including proficiency) and he satisfies the independence criteria as laid down under the Act and the Listing Regulations.

• At the 68th Annual General Meeting (AGM) held on

28 September 2022:

a. In terms of the provisions of Section 152(6) of the Act,

Mohammed Abdul Saleem (DIN: 00061497), Director of the Company, liable to retire by rotation and who

being eligible, offered himself for reappointment, was re-appointed by the Members.

b. Hemendra Laxmidas Shah (DIN: 00996888) who was on the Board as Non-Executive Director was appointed as an Independent Director, for a term of five consecutive years with effect from 1 October 2022 to 30 September 2027. The Board opined that he is a person of integrity and possess relevant expertise and experience (including proficiency) and he satisfies the independence criteria as laid down under the Act and the Listing Regulations.

c. Mohammed Abdul Saleem (DIN: 00061497) was reappointed as Whole Time Director designated as Director (Mines) for a further term of three years with effect from 1 October 2022 to 30 September 2025.

d. Bahirji Ajai Ghorpade (DIN: 08452844) was reappointed as Managing Director for a further term of three years with effect from 1 October 2022 to 30 September 2025.

During the period from 1 April 2023 till the date of this Report, subject to the approval of the members, the following reappointments are proposed to be made:

• In terms of the provisions of Section 152(6) of the Act, T. R. Raghunandan (DIN: 03637265), the Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offered himself for reappointment.

• The Board at its meeting held on 3 August 2023, accorded its approval for appointment of Latha Pillai (DIN: 08378473), as an Independent Director of the Company for a second term with effect from 8 March 2024 to 7 March 2029 (both days inclusive), subject to Members'' approval at the ensuing Annual General Meeting. The Nomination and Remuneration Committee (NRC) at its meeting held on 17 May 2023, had reviewed domain skills, professional experience and industry exposure of Latha Pillai, Independent Director and noted that she fulfils the skills/expertise/competencies required in context of the Company''s business. Thereafter, the NRC considering the excellent rating assigned to Latha Pillai during performance evaluation for the year 2022-23, recommended her appointment for a further period of five consecutive years to the Board as it will be advantageous and beneficial for the Company. Further, the Company has received a notice in writing from a Member proposing her candidature for the office of Director pursuant to Section 160 of the Act. The Board opined that she is a person of integrity and possess relevant expertise and experience (including proficiency) and she satisfies the independence criteria as laid down under the Act and the Listing Regulations.

Cessation

During the year, S. S. Rao (DIN: 00150816) ceased to be the Independent Director of the Company from closure of business hours on 10 November 2022, upon completion of his second term. The Board of Directors and the Management of the Company placed on record their profound appreciation for

the contributions made by S. S. Rao during his association with the Company over the years.

As on 31 March 2023, the following were the Key Managerial Personnel of the Company as per Section 2(51) and 203 of the Act:

• Bahirji Ajai Ghorpade, Managing Director;

• Mohammed Abdul Saleem, Whole Time Director designated as Director (Mines);

• Uttam Kumar Bhageria, Chief Financial Officer & Chief Risk Officer;

• Bijan Kumar Dash, Company Secretary & Chief Compliance Officer.

Board Meetings

The Board meets at regular intervals to discuss and decide on Company''s business policies and strategies apart from other regular and important business items. However, in case a special and urgent business requires approval of the Board, such approval is taken by passing resolution through circulation, as permitted by law, which is taken on record in the subsequent Board meeting.

During the financial year 2022-23, the Board met eight times

i.e., 10 April 2022, 18 May 2022, 6 July 2022, 21 July 2022, 11 August 2022, 10 November 2022, 9 February 2023 and 24 March 2023. The details and particulars of Board meetings are given in the Corporate Governance Report forming part of this Report.

Policy on Directors’ Appointment and Remuneration

The Company has adopted Policy on Nomination and Remuneration of Directors, Key Managerial Personnel (KMPs) and other employees which inter-alia includes criteria for determining qualification, positive attributes, independence of a director and other matters provided under sub-Section (3) of Section 178 of the Act and relevant provisions of Listing Regulations. The Members may refer Corporate Governance Report for details regarding this policy. The policy is also available on the Company''s website at https://www. sandurgroup.com/policies. During the year under review, the Policy was reviewed and amended by the Nomination and Remuneration Committee and the Board at its meeting held on 11 August 2022.

Declaration by Independent Directors

All the Independent Directors of the Company meet the criteria of independence as provided under Section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations. Declarations to this effect have been received from them as prescribed under Section 149(7) of the Act. Further, in terms of Regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstance or situation which exists or may reasonably be anticipated that could impair or impact their ability to discharge their duties. During the financial year 2022-23, there has been no change in the circumstances affecting their status as Independent Directors of the Company.

The Independent Directors have also complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Code of Conduct for Directors and Senior Management formulated by the Company under Regulation 17(5) of Listing Regulations.

Board Evaluation

The Nomination and Remuneration Committee and the Board have laid down the manner in which formal evaluation of the performance of the Board, committees, individual Directors and the Chairman has to be made annually.

During the evaluation process, it was ensured that all the provisions relating to Board evaluation of the Act and Listing Regulations, are followed. The criteria for evaluation were based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India (SEBI) and the guidelines issued by Institute of Company Secretaries of India (ICSI). The Board evaluation was done internally. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, individual Directors and the Chairman. The questionnaire for evaluation of Board was based on several parameters like structure of the Board, meetings of the Board, functions of the Board, relationship and communication between Board and management and professional development of Directors. Similarly, the evaluation criteria for Committee, individual Directors, and the Chairman were set on different parameters.

At the Board meeting that followed the meeting of the Independent Directors on 9 February 2023, the outcome of evaluation was discussed. The feedback received on the performance evaluation of individual Directors was intimated separately to each Director by the Chairman of the Board by mail. Similarly, outcome of evaluation of Chairman of Board was intimated to him by the elected Chairman of the separate meeting of Independent Directors.

Meeting of Independent Directors

A separate meeting of Independent Directors for the financial year 2022-23 as per Clause VII (1) of Schedule IV under Section 149(8) of the Act and Regulation 25(3) of the Listing Regulations was held on 9 February 2023, wherein the Independent Directors reviewed the performance of NonIndependent Directors, Chairman of the Board and the Board as a whole.

Training and Familiarisation Programme for Independent Directors

Details of training and familiarization programme are provided in the Corporate Governance Report forming part of this Report.

Board Committees

The Board has constituted six Committees to assist the Board in effectively discharging its functions and responsibilities. These committees support Board''s work in line with the applicable provisions of the Act and Listing Regulations, namely:

1. Audit Committee;

2. Nomination and Remuneration Committee;

3. Stakeholders Relationship Committee;

4. Corporate Social Responsibility Committee;

5. Risk Management Committee;

6. Corporate Sustainability Committee.

In addition to the above, the Board at its meeting held on 10 April 2022 constituted a “Right Issue Committee” of the Board to decide detailed terms and conditions of the Company''s Right Issue and matters connected or incidental thereto. The Board at its meeting held on 10 November 2022 taken note of the dissolution of the Right Issue Committee after completion of Rights Issue formalities in all aspects.

The details of the Committees including composition, terms of reference, meeting details etc., are provided in the Corporate Governance Report forming part of this Report.

The recommendations, if any, of these Committees are submitted to the Board for approval. During the year under review, the Board had accepted the recommendations of the Committees.

Vigil Mechanism

The Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethics. The Company has established a vigil mechanism towards this approach. In accordance with Section 177(9) of the Act read with Rule 7(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the Company''s Audit Committee oversees the vigil mechanism which has been established to address genuine concerns about unethical behaviour, actual or suspected fraud, leak of Unpublished Price Sensitive Information or violation of the Company''s Code of Conduct and Ethics Policy, if any, expressed by the Director(s) or employees or any other person.

The Company has adopted a Whistle Blower Policy which provides for adequate safeguards against victimisation of Director(s) or employee(s) or any other person who avail such mechanism. The Company has also provided direct access to the Chairman of the Audit Committee in matters concerning financial, accounting and concerns relating to officers belonging to above Senior General Manager level.

The Whistle Blower Policy is available on the Company''s website at https://www.sandurgroup.com/policies. During the year under review, the Policy was reviewed and amended by the Audit Committee and the Board at its meeting held on 18 May 2022.

Directors’ Responsibility Statement

In accordance with the provisions of Section 134(3)(c) of the Act, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have 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

as at 31 March 2023 and of the profit and loss of the Company For the year ended 31 March 2023;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts for the financial year ended 31 March 2023 on a ‘going concern'' basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Details in respect of frauds reported by Auditors under sub-Section (12) of Section 143 of the act other than those which are reportable to the Central Government

The Auditors have not reported any frauds during the year under review.

Adequacy of Internal Financial Controls

The Company has established a robust framework for internal financial controls. The Company has in place adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. The Company has a well-defined delegation of power with well-defined authority and responsibility matrix defining the financial limits for approving revenue as well as capital expenditure. Segregation of duties has been well defined to remove the concentration of power within few officials. The Company uses a state-of-the-art Enterprise Resource Programming (ERP) system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

M/s. P. Chandrasekar LLP, Chartered Accountants, have been appointed to oversee and carry out internal audit of Company''s activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the Statutory Auditors and approved by the Audit Committee. In line with international practice, the internal audit plan aims at review of internal controls and risk in operations. The Audit Committee reviews audit reports submitted by the internal auditor. Suggestions for improvement are considered and the Audit Committee follows up on them. During the year, such controls were assessed and no reportable material weaknesses in the design or operation were observed. Accordingly, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2022-23.

The Statutory Auditors in their report has stated that the Company has, in all material respects, an adequate internal financial controls system with reference to standalone and consolidated financial statements and such internal financial controls with reference to standalone and consolidated financial statements were operating effectively as at 31 March 2023, based on the criteria for internal financial control with reference to standalone and consolidated financial statements established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Annual Return

A copy of Annual Return, in Form MGT-7, pursuant to the provisions of Section 92(3) of the Act read with relevant Rules of the Companies (Management and Administration) Rules, 2014 as amended from time to time is available on the website of the Company at https://www.sandurgroup.com/agm-postal-ballots.

Auditors Statutory Auditor

M/s. R. Subramanian and Company LLP, Chartered Accountants, Chennai (Firm Registration No. 004137S/ S200041), were appointed as Statutory Auditors of the Company at the 63rd AGM held on 26 September 2017 in terms of the provisions of Section 139 of the Act, to hold office until the conclusion of 68th AGM.

As the term of five years of the M/s. R. Subramanian and Company LLP came to an end at the conclusion of 68th AGM, based on the recommendation of the Audit Committee and the Board, the Members of the Company at the 68th AGM held on 28 September 2022 appointed M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No.008072S) as the Statutory Auditors of the Company for a term of five consecutive years i.e., from the conclusion of 68th AGM till the conclusion of 73rd AGM of the Company, at such remuneration as may be mutually agreed between the Board of Directors and the Auditors. In terms of Companies (Amendment) Act, 2017, effective from 7 May 2018, the requirement of seeking ratification of auditors'' appointment at every Annual General Meeting has been dispensed with.

The Auditors Report on the financial statement of the Company For the year ended 31 March 2023, is forming part of this Report.

Secretarial Auditor

Pursuant to the provisions of Section 204(1) of the Act and Regulation 24A of the Listing Regulations, the Company is required to annex with its Board''s Report a secretarial audit report, given by a Company Secretary in Practice. N. D. Satish, Practicing Company Secretary (having ICSI Membership No. F10003 and Certificate of Practice No. 12400) has been appointed as Secretarial Auditor of the Company for the financial year 2022-23. The Secretarial Audit Report is forming part of this Annual Report as ‘Annexure D’.

In accordance with Regulation 24A of Listing Regulations read with SEBI Circular No. CIR/CFD/CMD1/27/2019 dated

8 February 2019, the Company has obtained Secretarial Compliance Report for the financial year ended 31 March 2023 from the Secretarial Auditor of the Company and the same has been submitted to the stock exchange (BSE) on 29 May 2023.

Cost Auditor and Cost Records

In terms of Section 148(2) of the Act read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014, the Company is required to get its cost accounting records audited by a cost auditor. The Board had, at its 359th meeting held on 11 August 2022, appointed M/s. K. S. Kamalakara & Co. as Cost Auditors for the financial year 2022-23 and the same was ratified by the Members at the 68th Annual General Meeting of the Company.

The Board after considering the recommendations of the Audit Committee, reappointed M/s. K. S. Kamalakara & Co. as Cost Auditors for the financial year 2023-24. A resolution seeking approval of the Members for ratifying the remuneration payable to the Cost Auditors for financial year 2023-24 is provided in the Notice of the ensuing Annual General Meeting.

In accordance with Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014, the Cost Auditor is required to submit his report within 180 days from the date of closure of financial year and the Company is required to file the same with the Ministry of Corporate Affairs (MCA) within 30 days from the date of receipt of the cost audit report. The Cost Audit Report for the financial year 2021-22 was filed with the MCA on 26 August 2022.

The Cost accounts and records as required to be maintained under Section 148(1) of the Act are duly made and maintained by the Company.

Internal Auditor

The Company has appointed M/s. P. Chandrasekar LLP, Chartered Accountants as Internal Auditor of the Company as mandated under provisions of Section 138 of the Act to evaluate the internal controls and financial reporting.

Auditors Observation

There are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditor, Secretarial Auditor, Internal Auditor and Cost Auditor in their respective reports.

Secretarial Standards

Pursuant to the provisions of Section 118 of the Act, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and notified by Ministry of Corporate Affairs (MCA) except delay in circulation of agenda papers and draft minutes of Board/Committee meetings to Board of Directors or Committee members in few instances. However, all the members of the Board/Committees approved minutes of the meetings and the same were taken note of in the subsequent meeting.

Corporate Governance

Corporate Governance Report forms part of this Report. A Certificate on Corporate Governance Report as required under

Regulation 34(3) read with Schedule V of Listing Regulations, issued by M/s. Deloitte Haskins & Sells, Chartered Accountants, is annexed to this Report as ‘Annexure E’.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report as required under clause (e) of Regulation 34(2) read with Schedule V of the Listing Regulations, forms part of this Report.

Business Responsibility & Sustainability Report

Business Responsibility & Sustainability Report as required under clause (f) of Regulation 34(2) of the Listing Regulations depicting initiatives taken by the Company from an environmental, social and governance aspect forms part of this Report.

Statement concerning Development and Implementation of Risk Management Policy of the Company

The Board has constituted Risk Management Committee to proactively identify, assess and mitigate risks in order to protect its business, improve Corporate Governance and enhance stakeholders'' value. The Risk Management Committee lay down procedures for risk assessment and minimization. It shall serve as the ‘eyes and ears'' for the Company which would ensure that the Company is insulated from risks both at the macro and micro level. The Risk Management Committee periodically reviews the various risks associated with the Company''s business, industry, operation and recommends steps to be taken to control, monitor and mitigate the risk.

The Company has in place a Risk Management Policy to identify and evaluate various business risks and opportunities. The Risk Management Policy is available on website of the Company at https://www.sandurgroup.com/policies.

In terms of Regulation 21 of the Listing Regulations, Uttam Kumar Bhageria is the Chief Risk Officer of the Company.

The Company believes that periodic review of various risks which has a bearing on the business and operations of the Company is vital to proactively manage uncertainty and changes in the internal and external environment so that it can limit the adverse impact and capitalize on opportunities.

The Company''s risk management is embedded in the business processes as a part of review of business and operations. The Board with the support of the management periodically assess various risks associated with the business and operations of the Company and considers appropriate risk mitigation processes. However, there are certain risks which cannot be avoided but the impact can only be minimized.

The Management Discussion and Analysis Report forming part of this Report also contains information on risk and concerns relating to industry. The Company has well defined roles and responsibilities of Board of Directors, Audit Committee, Risk Management Committee, Chief Risk Officer to have a seamless process in place regarding risk identification, assessment, mitigation and monitoring.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Act read with rules made thereunder, the Corporate Social Responsibility Committee has been constituted by the Board for the purposes of recommending and monitoring the CSR initiatives of the Company. The details such as composition, terms of reference, meetings held etc., are mentioned in the Corporate Governance Report forming part of this Report.

Details of Policy Developed and Implemented by the Company on its Corporate Social Responsibility (CSR) Initiatives

The Company as a responsible corporate citizen has been, for close to seven decades, consciously contributing towards betterment of the local area and living standards of its people, and also protection and improvement of the environment. In accordance with Section 135 of the Act, the Company has undertaken CSR activities, projects and programs, excluding activities undertaken in pursuance of its normal course of business.

Reaching out to under privileged communities is a part of the Company''s philosophy and culture. The Company shall continue to be mindful of its social and moral responsibilities towards consumers, employees, members, and the local community. The Company works primarily through Karnataka Seva Sangha (Implementing Agency) towards supporting projects in the areas of education, healthcare and sanitation, community development including protection of national heritage, restoration of historical sites, and promotion of art and culture, enhancing vocational skills; promoting healthcare including preventive healthcare, and rural development, environmental sustainability and ecological balance, promotion of traditional arts and handicrafts.

As against the approved budget of CSR contribution of '' 889.42 lakh for financial year 2022-23, '' 680.40 lakh was spent, and '' 209.02 lakh was transferred to unspent CSR account as per provision of Section 135 (6). '' 209.02 lakh will be spent during financial year 2023-24 for the Ongoing Project of construction of three Schools of Sandur Education Society. The Annual Report on Company''s CSR activities of the

Company undertaken during the year 2022-23 is furnished in ‘Annexure F’.

The Company''s Corporate Social Responsibility Policy can be accessed on Company''s website at https://www.sandurgroup. com/policies. The Members may refer to the Annual Report on CSR for details regarding the policy. During the year under review, the Policy was reviewed and amended by the Corporate Social Responsibility Committee and the Board at its meeting held on 10 November 2022.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as prescribed in Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are set out in ‘Annexure G’ to this Report.

Particulars of Employees

In terms of the first proviso to Section 136 of the Act, the Reports and Accounts are being sent to the Members excluding the information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. Any Member interested in obtaining the same may write to the Company Secretary of the Company.

The statement containing information as required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in ‘Annexure H’ and forms part of this Report.

Remuneration received by Managing Director/ Whole Time Director from Holding Company or Subsidiary Company

During the year under review, the Managing Director/Whole Time Director has not received any remuneration from holding company or subsidiary company.

Credit Rating

During the year under review, there has been no change in the credit ratings of the Company. As on 31 March 2023, the Company had the following credit ratings:

Instrument Details

Amount (in '' lakh)

Rating upgraded

Name of credit rating agency

Long term rating

A (Stable)

ICRA

Short term rating

89,600

A1

Long term rating

A (Stable)

CRISIL

Short term rating

89,600

A1

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

In compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Company has constituted an Internal Complaints Committee (ICC) for the prevention and redressal of complaints related to sexual harassment at workplace. During the year under review, no complaints were received relating to sexual harassment.

Disclosure of Transactions of the Company with any person or entity belonging to the Promoter/ Promoter Group which holds 10% or more shareholding in the Company

The transactions with the person or entity belonging to the promoter/promoter group which hold (s) 10% or more shareholding in the Company have been disclosed in the accompanying financial statements.

General Disclosures

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

b) the details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

Acknowledgement

The Directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The Directors also extend their gratitude to the Union and the State Governments for their support as well as confidence and recognitions bestowed on the Company.

The Directors wish to place on record their appreciation of all its employees for their commendable teamwork, professionalism and dedication. And ultimately, the Directors wish to thank all the government agencies, promoters, business associates, banks and investors for their continued support and trust.

1

Sandur Pellets Private Limited, a wholly owned subsidiary, was incorporated on 7 May 2022 and the Company started presenting its consolidated financial statements from the current year. Accordingly, the comparatives of the previous year are not applicable.


Mar 31, 2018

Dear Shareholders,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2018:

FINANCIAL RESULTS

Rs. lakh

Sl.

Particulars

Current Year

Previous Year

No.

2017-18

2016-17

a)

Net Sales / Income

61,239.95

43,371.05

b)

Other Income

1,109.53

856.21

Total

62,349.48

44,227.26

c)

Expenditure

(i) Variable

30,047.12

22,104.67

(ii) Fixed

14,612.65

12,171.33

(iii) Depreciation / Amortization

742.63

704.87

(iv) Interest

494.90

724.92

Total

45,897.30

35,705.79

d)

Profit Before Taxes

16,452.18

8,521.47

e)

Less:

(i) Current Tax

5,420.00

3,220.00

(ii) Deferred Tax

380.00

(270.00)

f)

Net Profit/(Loss)

10,652.18

5,571.47

g)

Add: Balance brought forward from the previous year

42,304.91

37,066.87

h)

Profit before appropriation

52,957.09

42,638.34

i)

Less: Appropriations

(i) Dividend on Equity Shares

612.50

262.50

(ii) Tax on Dividend

124.69

54.93

(iii) Other comprehensive income/(loss)

124.00

16.00

Total

861.19

333.43

j)

Profit carried to Balance Sheet

52,095.89

42,304.91

The Company earned profit before tax of Rs.16,452.18 lakh after charging Rs.742.63 lakh towards depreciation on fixed assets and Rs.494.90 lakh towards interest. After charging income tax of Rs.5,420.00 lakh and deferred tax of Rs.380.00 lakh, the profit for the current year is Rs.10,652.18 lakh.

OPERATIONS AT A GLANCE:

MINING:

In Tonnes

Opening stock

Production

Internal Consumption

Sales

Closing stock

Manganese Ore

1,46,532

2,59,669

41,968

2,23,832

1,40,401

(1,26,907)

(2,22,271)

(25,172)

(1,77,373)

(1,46,532)

Iron Ore

1,70,254

15,80,021

-

13,32,386

4,17,597

(2,13,970)

(11,49,899)

(-)

(11,93,615)

(1,70,254)

NOTE: Previous year figures are in brackets.

The Company’s production of manganese ore increased by 16.83% and iron ore increased by 37.41% during the financial year 2017-18. The Company witnessed an increase in sales of manganese ore by 27.23% and iron ore by 11.63% during the financial year 2017-18.

The Company has been able to step up its iron ore production in 4th Quarter following Central Empowered Committee (CEC) permitting restoration of iron ore production limit to 1.60 Million Tonnes Per Annum (MTPA) in December 2017.

FERROALLOYS

In Tonnes

Opening stock

Production

Sales

Closing stock

Silico-Manganese

2,663

29,317

30,987

993

(163)

(24,862)

(22,362)

(2,663)

NOTE: Previous year figures are in brackets.

The Company’s production of Silico Manganese increased by 17.92% and sales increased by 38.57% as compared to previous year. Increase in production and sales of Silico Manganese was largely driven by improvement in price realization for the product.

ENERGY

Energy generation at the Power Plant increased by 4.22% compared to previous year and captive consumption at Ferroalloy Plant also increased by 19.90% as compared to previous year.

COKE OVEN PROJECT

The Company has embarked upon implementation of the Stage I of the Iron & Steel (I&S) Project (0.4 MTPA Coke Oven Plant (COP), 30 MW Waste Heat Recovery Boiler (WHRB) and Repair and Refurbishment of Ferroalloy Plant) aimed at ensuring long term sustainability of its ferroalloy business, together with ensuring sustained usage of its own manganese ore for producing value added ferroalloys. The Company is targeting to complete the Stage I by October 2019.

Bhoomi Puja and Foundation Stone laying Ceremony for Phase 1 of 1 MTPA Steel Plant was held on 19 March 2018. Shri R. V. Deshpande, Minister for Large & Medium Industries & Infrastructure Development, Government of Karnataka and Shri Sajjan Jindal, Chairman, JSW Group were Chief Guests for the occasion.

‘five STAR’ RATING

The Ministry of Mines and Indian Bureau of Mines have introduced the ‘Sustainable Development Framework’ (SDF) and have undertaken a system of rating mining leases. As part of this initiative, both the mining leases (Nos. 2678 and 2679) of the Company have been awarded ‘Five Star’ rating for 2016-17 at the 3rd National Conclave on Mines and Minerals held at New Delhi on 20 March 2018.

The evaluation system for star rating (1-5) under SDF programme commenced in 2014-15 and the Company has successively received ‘Five Star’ rating for all the last three years, and is the only Mining Company in Karnataka to have done so.

ISO CERTIFICATION

It is a pleasure to report that the Indian Register Quality Systems (IRQS) has carried out due diligence and found that the Company’s:

(a) Quality Management Systems are in conformity with the ISO 9001:2015 Standards;

(b) Environment Management Systems are in conformity with the ISO 14001:2015 Standards; and

(c) Occupational Health & Safety Management Systems are in conformity with the OHSAS 18001:2007 Standards;

and have issued the above three Certificates of Approval.

In addition to recognition that it’s procedures are of International Standards, this will also enable the Company to get higher score in the Sustainable Development Framework (SDF) of Indian Bureau of Mines (IBM) which entitles Star Rating of mines by the Ministry of Mines, Government of India. Presently, the Company is achieving a score of 92-93% for both the Mining Leases and with this ISO Certifications, the Company should be able to score up to 98% in SDF.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

No significant and material orders were passed by any Regulator(s) or Court(s) or Tribunal(s) which would impact the going concern status of the Company.

MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitment affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of this report.

DIVIDEND AND TRANSFER TO RESERVES

The Board of Directors at its meeting held on 27 December 2017 declared interim dividend of Rs.5/- per share.

In addition to the above, the Board of Directors is pleased to recommend a final dividend of Rs.2/- per share, out of the profits of the Company for the financial year ended 31 March 2018.

Accordingly, approval of the shareholders is being sought at the ensuing Annual General Meeting for dividend of Rs.7/- per share (including Rs.5/- paid as interim dividend) for the financial year 2017-18.

The Company does not propose to transfer any amounts to the reserves.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

In terms of clause (h) of sub-section (3) of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the Company is required to furnish particulars of the contract entered into by the Company with its related parties in the Board’s Report.

All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. During the year, the Company has not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Since all the related party transactions were in ordinary course of business and at arm’s length, hence, no disclosure in Form AOC-2 has been made.

The policy on Related Party Transactions can be accessed on the Company’s website at http://sandurgroup.com/Policies.html.

SUBSIDIARY

The Company has a Subsidiary Company - Star Metallics and Power Private Limited (SMPPL) in which it holds a stake of 80.58% (as at 31 March 2018).

As mentioned earlier, the Company, in order to ensure long term viability of its business has commenced work on Stage I of Phase 1 of the I&S Project. In furtherance of this objective, it is proposed that the Company and SMPPL amalgamate. Accordingly, the Board of Directors at its meeting held on 14 February 2018 has approved the Draft Scheme of Amalgamation of SMPPL with the Company.

An application, in pursuance of Regulation 37 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI(LODR), Regulations, 2015] has been submitted to BSE Limited seeking its Noobjection to the Draft Scheme before approaching the National Company Law Tribunal (NCLT) for the same. The application is under process.

A statement containing the salient features of the financial statement of SMPPL in the prescribed format is appended as Annexure- ‘A’ to this Report.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY

SMPPL has a ferroalloy plant and a 32 MW thermal power plant which is used as a captive unit for its ferroalloy operations. The entire fixed assets of SMPPL have been leased to the Company from 1 February 2016 on a short-term basis. As a result, SMPPL did not have any manufacturing operations during the period under review, and the main source of revenue was only lease rental from the Company.

A brief extract of SMPPL’s financial performance is given below:

Rs. lakh

Particulars

Current Year

Previous Year

2017-18

2016-17

Income

Revenue from Operations

1,020.00

1,020.00

Other Income

160.30

185.29

TOTAL

1,180.30

1,205.29

Expenditure

Operating and Other Expenses

232.70

231.20

Finance Cost

0.03

0.00

Depreciation

506.61

507.36

TOTAL

739.34

738.56

Profit/(Loss) before Tax

440.96

466.73

Profit/(Loss) after Tax

440.96

466.73

Paid-up equity shares (Rs.10/- per equity share)

9,337.97

9,337.97

Weighted average number of equity shares outstanding

9,33,79,705

9,33,79,705

Earnings Per Share

- Basic & Diluted

0.47

0.50

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

The details of the loans and guarantees given and investments made by the Company find mention in Note Nos.5, 6 and 27(b) of the audited financial statements. There are no changes in these figures from the date of audited financials to the date of this report.

DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year under review. The Company did not have any deposits at the beginning of the financial year. Thus, provisions of Section 73 of the Companies Act 2013 are not applicable to the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Indian Accounting Standard (Ind AS) 110 on Consolidated Financial Statements and in terms of provisions of Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and its subsidiary are forming part of the Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements along with the Auditors Report and Directors’ Report thereon are available on the Company’s website, www. sandurgroup.com. Further, separate audited accounts in respect of the subsidiary are also posted on the website.

These documents will also be available for inspection during business hours at the registered office of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on date of this Report, the Board is constituted of one Managing Director, one Whole-Time Director, four Non-Executive Directors (including the Chairman, a Woman Director and the newly inducted non-executive director; appointed on 30 May 2018), and five Independent Directors. The Company is in the process of appointing an Independent Director. The Managing Director, Whole Time Director, Chief Financial Officer and the Company Secretary constitute the Key Managerial Personnel of the Company.

Inductions

The Board appointed Rajnish Kumar Singh as an Additional Director with effect from 1 January 2018. Subject to ratification of the shareholders, the Board has also appointed him as a whole-time director designated as Director (Corporate) for a period of 3 years with effect from 1 January 2018. Resolution seeking shareholders’ approval for his appointment is being sought by way of postal ballot.

Sachin D. Sanu and Divya Ajith were appointed as Chief Financial Officer and Company Secretary of the Company, respectively, with effect from 1 April 2018.

P. Anur Reddy, Principal Chief Conservator of Forests -Wildlife (Retired), has been appointed as an additional director on 30 May 2018. Subject to ratification of the shareholders, the Board has also appointed him as a Non-Executive Director. Resolution seeking shareholders’ approval for his appointment is being sought by way of postal ballot.

Retirement/Cessation

U. R. Acharya, Director (Commercial) and K. Raman, Chief Financial Officer retired with effect from closing hours of 31 March 2018.

With a view to enable Md Abdul Saleem to pay significant attention and be continuously available for supervising mining operations in his capacity as Vice President (Mines), he was allowed to step down from the post of Company Secretary with the closure of business hours on 31 March 2018

Re-appointment

T. R. Raghunandan, is liable to retire by rotation at the ensuing 64th AGM and being eligible, has offered himself for reappointment. He is not disqualified from being appointed as a director as specified under Section 164 of the Companies Act, 2013. The Board recommends his re-appointment.

NUMBER OF MEETINGS OF THE BOARD

The Board met 8 (Eight) times during the financial year, the details of which are given in the Corporate Governance Report forming part of this Report.

The intervening gap between any two consecutive meetings of the Board did not exceed one hundred and twenty days as prescribed under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION

The policy of the Company on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, can be accessed on the Company’s website at http://sandurgroup.com/Policies.html.

The Company’s Policy in this regard has been formulated with a view to:

(a) Devise a transparent system of determining appropriate level of remuneration throughout all levels of directors, KMPs, core management team and the senior management personnel in the Company;

(b) Encourage personnel to perform to their highest level;

(c) Provide consistency in remuneration throughout the Company; and

(d) aligning the performance of the business with the performance of key personnel and teams within the Company.

There has been no change in the Policy during the year under review.

DECLARATION BY INDEPENDENT DIRECTORS

All five independent directors of the Company meet the criteria of independence as provided under sub-section (6) of Section 149 of the Companies Act, 2013. Declarations to this effect have also been received from them.

BOARD EVALUATION

As mandated by the statutory provisions of the Companies Act, 2013 and SEBI(LODR) Regulations, 2015, the Nomination and Remuneration Committee has devised a mechanism for carrying out formal annual evaluation of the Board, its Committees and individual directors.

Evaluation of the Board, its Committees and individual directors for the year 2017-18 has been carried out based on this mechanism by the Board.

TRAINING OF INDEPENDENT DIRECTORS

On induction, the independent directors on Board are familiarized with the nature of Industry and the Company’s business operations. They are updated on a frequent basis with regard to operations of the Company. Any material development is intimated promptly. The Management encourages active participation by the independent directors’ in management of the Company and accordingly, any advice or suggestion provided by any of the Independent Directors is taken seriously and diligently implemented, and any clarification sought by the Independent Directors with regard to the Company’s operations is duly addressed.

Learning for Independent Directors and Company’s learning from them is a pervasive ongoing phenomenon via participation.

Further, at the time of appointment of a director, the Company issues a formal letter of appointment entailing his/her role, function, duties and responsibilities as a director. The terms and conditions of appointment of independent director are available on the Company’s website.

Details of training and familiarization programme are provided in the Report on Corporate Governance.

COMMITTEES OF THE BOARD

Currently, the Board has seven committees - namely Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Environment Committee, Corporate Social Responsibility Committee, Risk Management Committee and Project Committee.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

The Audit Committee comprises four Independent Directors, namely, B. Ananda Kumar as its Chairman, V. Balasubramanian, S. S. Rao, G. P. Kundargi and a Non-Executive Director, Vatsala Watsa, as its members.

The Company believes in conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethics. The Company has established a vigil mechanism towards this end.

In accordance with sub-section (9) of Section 177 read with Rule 7(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the Company’s Audit Committee is required to oversee the vigil mechanism.

The Committee oversees the vigil mechanism which has been established to address genuine concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct and Ethics if expressed by any of the employees and other Directors.

The Company has also provided adequate safeguards against victimization of employees and Directors, in the event of any such concern. The Company has also provided direct access to the Chairman of the Audit Committee in matters concerning financial/ accounting and concerns relating to personnel belonging to levels above Senior General Manager.

The Whistleblower Policy along with other Policies of the Company is available on the Company’s website at http://sandurgroup.com/ Policies.html.

DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3)(c) of the Companies Act, 2013, the Directors of the Board state that:

(a) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have 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 as at 31 March 2018 and of the profit and loss of the Company for the year ended 31 March 2018;

(c) the Directors have taken proper and sufficient care 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) the Directors have prepared the annual accounts for the financial year ended 31 March 2018 on a ‘going concern’ basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

Auditors have not reported any frauds during the year under review.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Board of Directors has laid down internal financial controls to be followed by the Company and report that such internal financial controls are adequate and operating effectively. Your Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. The Company uses a state-of-the-art Enterprise Resource Programming (ERP) system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

M/s. P. Chandrasekar LLP, Chartered Accountants, have been appointed to oversee and carry out internal audit of Company’s activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and the audit committee. In line with international practice, the internal audit plan aims at review of internal controls and risks in operations. The audit committee reviews audit reports submitted by the internal auditors. Suggestions for improvement are considered and the audit committee follows up on them.

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92(3) read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished as Annexure - ‘B’ attached to this Report.

STATUTORY AUDITORS

M/s. R. Subramanian and Company LLP, Chartered Accountants, Chennai (Firm Registration No. FRN004137S), were appointed as Statutory Auditors of the Company at the 63rd Annual General Meeting held on 26 September 2017 in terms of the provisions of Section 139 of Companies Act, 2013, to hold office until the conclusion of 68th Annual General Meeting, subject to ratification at each Annual General Meeting.

In terms of Companies (Amendment) Act, 2017, effective from 7 May 2018, the requirement of seeking ratification of auditors’ appointment at every annual general meeting has been dispensed with.

In view of the above, the Board will not be placing any resolution seeking shareholders’ ratification of appointment of M/s. R. Subramanian and Company LLP, Chartered Accountants, Chennai as Statutory Auditors of the Company at annual general meetings during the course of its remaining tenure.

STATUTORY AUDITORS’ REPORT

Auditors’ Report on the financial statements of the Company is forming part of this Annual Report. No qualifications, reservations or adverse remarks have been made by the Statutory Auditors in the said Report.

SECRETARIAL AUDIT

Pursuant to provisions of sub-section (1) of Section 204 of the Companies Act, 2013, the Company is required to annex with its Board’s Report a secretarial audit report, given by a company secretary in practice.

N. D. Satish, Practicing Company Secretary (ICSI Membership No.33507 and Certificate of Practice No.12400) has been appointed as Secretarial Auditor of the Company for the financial year 2017-18. The Secretarial Audit Report is forming part of this Annual Report as Annexure- ‘C’.

The Secretarial Auditor has stated in his Report that there have been delays in filing of returns/e-forms with the Registrar of Companies in few instances. In this regard, the Board hereby states that the said delays were inadvertent and unintentional and the Company is striving to ensure timely filing of forms.

It is observed in the Secretarial Audit Report that the Board composition is not in compliance with provisions of Regulation 17 of the SEBI (LODR) Regulations, 2015 during the period 1 January 2018 to 31 March 2018.

In this connection, the Board states that the composition of Board digressed for a brief period of 3 months when an executive director was appointed with effect from 1 January 2018. However, the composition was corrected upon retirement of another executive director with effect from closure of working hours on 31 March 2018.

There is no further qualification or adverse remarks in the Report which require reply from the Board of Directors.

COST AUDITORS

In terms of Section 148(2) of the Companies Act, 2013 read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs (MCA), the Company is required to get its cost accounting records audited by a cost auditor.

The Board has, at its 317th Meeting held on 30 May 2017, appointed M/s. K. S. Kamalakara & Co. as Cost Auditors for the Financial Year 2017-18.

In accordance with Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014, the cost auditor is required to submit his report within 180 days from the date of closure of the financial year and within thirty days from the date of receipt of the cost audit report and the Company is required to file a copy of the same with the Ministry of Corporate Affairs (MCA). The Cost Audit Report for the Financial Year 2016-17 was filed with the MCA on 12 October 2017.

CORPORATE GOVERNANCE

The Directors’ Report on Corporate Governance is annexed to this report. The certificate of the Auditors, M/s R. Subramanian and Company LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Clause E of Schedule V of SEBI (LODR) Regulations, 2015 is also annexed.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The Management Discussion and Analysis Report forms part of the Annual Report in Compliance with Clause (e) of Sub-regulation (2) of Regulation 34 read with Schedule V of SEBI (LODR) Regulations, 2015.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Board constituted the Risk Management Committee on 28 May 2014. Though statutorily, only top 100 listed companies (based on the market capitalization) are required to have a Risk Management Committee, the Board has decided for continuation of the Risk Management Committee, so that the Company would align with practices followed by top 100 listed companies in the country.

The Board at its 256th meeting held on 28 October 2005 had prescribed the Risk Management and Minimisation procedures. These procedures are reviewed on a regular basis by the Board. Risk management includes identifying types of risks and its assessment, risk handling, monitoring and reporting.

Company has also constituted Coordination Committee to monitor various departments and sections of the Company and specified operational responsibilities. The Risk Management Committee focuses on macro level and external risks, and the Coordination Committee consisting of Executive level of the Board i.e., the Whole-time directors, in association with Senior Management Personnel, take steps for identification, assessment, mitigation and monitoring of internal and operational risks.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has been, for close to six decades, consciously contributing towards betterment of the local area and living standards of its people, and also protection and improvement of the Environment.

Being socially, environmentally and ethically responsible and also to add value to the operations while contributing towards the long-term sustainability of business, the Board of Directors has further strengthened its resolve to do more for the development of the area and improvement of living conditions of the surrounding rural population.

The Annual Report on Company’s CSR activities of the Company undertaken during the year under review are furnished in Annexure- ‘D’.

The Company’s Corporate Social Responsibility Policy can be accessed on Company’s website at http://sandurgroup.com/doc/ CSR/CSRPolicy.pdf. There has been no change in the Policy during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as prescribed in Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are set out in Annexure- ‘E’ to this Report.

TRANSFER OF UNPAID AND UNCLAIMED DIVIDENDS TO INVESTOR EDUCATION AND PROTECTION FUND

Dividends remaining unpaid and unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be transferred to the Investor Education and Protection Fund (IEPF).

The Company transferred the following amounts to the IEPF during the year:

Particulars of Dividend

Amount (in Rs.)

Date of Transfer

2009-10 (Final dividend)

1,40,430.00

20 November 2017

EMPLOYEES

Pursuant to the provisions of sub-section (12) of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars are set out in Annexure - ‘F’.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREvENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In compliance with the Sexual Harassment ofWomen at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Company has constituted an Internal Complaints Committee (ICC) for the prevention and redressal of complaints related to sexual harassment at workplace.

No complaints pertaining to sexual harassment were received during the year ended 31 March 2018.

ACKNOWLEDGEMENTS

The directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The directors also extend their gratitude to the Central and State Governments for their support as well as confidence and recognitions bestowed on the Company.

The directors wish to place on record their appreciation of all its employees for their commendable team work, professionalism and dedication. And ultimately, the Board of Directors wish to thank all the government agencies, the promoters, business associates, banks and investors for their continued support and trust.

for and on behalf of the Board of Directors

S. Y. GHORPADE

Chairman

(DIN: 00080477)

Place: Bengaluru

Date : 30 May 2018


Mar 31, 2017

Dear Shareholders,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2017:

FINANCIAL RESULTS

(Amount in Rs. lakh)

Sl. No.

Particulars

Current Year 2016-17

Previous Year 2015-16

a)

Net Sales / Income

42,223.65

22,241.22

b)

Other Income

508.30

488.17

Total

42,731.95

22,729.39

c)

Expenditure

(i) Variable

22,284.68

14,130.37

(ii) Fixed

11,050.09

8,075.73

(iii) Depreciation / Amortization

704.87

437.55

(iv) Interest

724.92

1.24

Total

34,764.56

22,644.89

d)

Profit before taxes

7,967.39

84.50

e)

Exceptional Items (Net)

-

577.00

f)

Less:

(i) Current Tax

3,210.00

390.00

(ii) Deferred Tax

(270.00)

540.43

g)

Net Profit/(Loss)

5,027.39

(1,422.93)

h)

Add: Balance brought forward from the previous year

31,313.68

33,046.82

i)

Profit before appropriation

36,341.07

31,623.89

j)

Less: Appropriations

(i) Dividend on Equity Shares

262.50

262.50

(ii) Tax on Dividend

54.93

47.71

Total

317.43

310.21

k)

Profit carried to Balance Sheet

36,023.64

31,313.68

The Company earned profit before tax of Rs.7,967.39 lakh after charging Rs.704.87 lakh towards depreciation on fixed assets and Rs.724.92 lakh towards interest. After charging of income tax of Rs.3,210 lakh and deferred tax of Rs.(270) lakh, the profit for the current year is Rs.5,027.39 lakh.

OPERATIONS AT A GLANCE:

MINING OPERATIONS

In Tonnes

Manganese Ore:

Iron Ore:

Current Year 2016-17

Previous Year 2015-16

Current Year 2016-17

Previous Year 2015-16

Production

2,22,271

1,51,289

11,49,899

7,39,744

Internal Consumption

25,172

13,000

-

-

Sales

1,77,373

1,12,277

11,93,615

8,84,292

The Company produced 2,22,271 tonnes of manganese ore and 11,49,899 tonnes of iron ore during the financial year 2016-17 as against 1,51,289 tonnes of manganese ore and 7,39,744 tonnes of iron ore produced during the previous year. The Company sold 1,77,373 tonnes of manganese ore and 11,93,615 tonnes of iron ore during the year under review as against 1,12,277 tonnes of manganese ore and 8,84,292 tonnes of iron ore sold during the previous year.

The Company has been able to step up its manganese ore and iron ore production in light of Central Empowered Committee (CEC), constituted by the Hon’ble Supreme Court, permitting restoration of iron ore production limit to 1.60 Million Tonnes Per Annum (MTPA) and for enhancement of Manganese ore production to 0.254 MTPA, for which requisite statutory approvals from various authorities could be obtained during the second half of the year. The production of manganese and iron ores was earlier restricted at 0.1874 and 0.74 MTPA respectively.

FERROALLOYS

Opening stock

Production

Internal Consumption

Sales

Closing stock

[Excess] / Shortage

Silico-Manganese

(Tonnes)

163

(3,311)

24,862

(6,757)

-

(-)

22,362

(9,905)

2,663

(163)

-

(-)

NOTE:

a) Previous year figures are in brackets.

This was the first full year of operation of the two ferroalloy furnaces by the Company after taking the ferroalloy and the power plant on lease from its subsidiary pursuant to lease agreement dated 1 February 2016.

The Company produced 24,862 tonnes of Silico Manganese and sold 22,362 tonnes during the year.

POWER

Generation

Captive Consumption

Sales

[Excess] / Shortage

Power (Mega watt)

1,57,578

(40,277)

1,03,449

(4,479)

33,354

(35,418)

20,775

(380)

NOTE:

a) Previous year figures are in brackets.

During the year, the Company generated 157.58 mu of power including 20.00 mu towards auxiliary consumption. Further, the company’s captive consumption at its ferroalloy plant stood at 103.45 mu. The Company also sold 0.33 mu of power during the year.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

No significant and material orders were passed by any Regulator(s) or Court(s) or Tribunal(s) which would impact the going concern status of the Company.

MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitment affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

DIVIDEND

The Board of Directors at its meeting held on 12 November 2016 and 31 March 2017 had declared interim dividend of Rs.2 and Rs.1 respectively.

Accordingly, approval of the shareholders is being sought at the ensuing Annual General Meeting for dividend of Rs.5 per share (including Rs.3 paid as interim dividend) for the financial year 2016-17.

SUBSIDIARY

The Company has a Subsidiary Company - Star Metallics and Power Private Limited (SMPPL) in which it holds a stake of 80.58% (as at 31 March 2017). A statement containing the salient features of the financial statement of SMPPL in the prescribed format is appended as Annexure- ‘A’ to this Report.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY

SMPPL has a ferroalloy plant with two furnaces, and a 32 MW thermal power plant which is used as a captive unit for its ferroalloy operations. In pursuance of lease agreement executed on 1 February 2016, the Company has taken both the ferroalloy plant and the power plant of the subsidiary company on lease.

A brief extract of its financial performance is given below:

(Rs. lakh)

Particulars

Current Year 2016-17

Previous Year 2015-16

Income

Revenue from Operations

1020.00

8138.16

Other Income

185.29

86.52

TOTAL

1205.29

8224.68

Expenditure

Cost of material consumed

-

6017.63

(Increase) / Decrease in finished goods

-

-

Operating and Other Expenses

230.29

1889.96

Finance Cost

0.00

28.82

Depreciation

507.36

508.05

TOTAL

737.65

8444.46

Profit/(Loss) before Tax

467.64

(219.78)

Tax expenses - Current Tax of Previous Year

29.38

-

LESS : MAT Credit of Previous Year

(29.38)

-

Profit/(Loss) after Tax

467.64

(219.78)

Loss brought forward from previous year

(3092.87)

(2873.09)

Loss carried to Balance Sheet

(2625.23)

(3092.87)

Paid-up equity shares C10 per equity share)

9337.97

9261.50

Weighted average number of equity shares outstanding

9,33,79,705

9,26,15,000

Earnings Per Share

- Basic & Diluted

0.50

(0.24)

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

The details of the loans and guarantees given and investments made by the Company are in Note Nos. 9, 10 and 25 of the audited financial statements. There are no changes in these figures from the date of audited financials to the date of this report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

In terms of clause (h) of sub-section (3) of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the Company is required to furnish particulars of the contract entered into by the Company with its related parties in the Board’s Report.

All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. The policy on Related Party Transactions can be accessed on the Company’s website at www.sandurgroup.com.

Details of the contracts or arrangements made with related parties are given in the prescribed format as Annexure - ‘B’.

DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year under review. The Company did not have any deposits at the beginning of the financial year. Thus, provisions of Section 73 of the Companies Act 2013 are not applicable to the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements and in terms of provisions of Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and its subsidiary are forming part of the Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements along with the Auditors Report and Directors’ Report thereon are available on the Company’s website, www.sandurgroup.com. Further, separate audited accounts in respect of the subsidiary are also placed on the website.

These documents will also be available for inspection during business hours at the registered office of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on date of this report, the Board is constituted of one Managing Director, one Whole-Time Director, three Non-Executive Directors (including the Chairman and a Woman Director) and five Independent Directors.

The Key Managerial Personnel of the Company constitute one Managing Director, one Whole Time Director, Company Secretary and a Chief Financial Officer.

During the year under review, P. Vishwanatha Shetty and R. Subramanian, Independent Directors on the Board, have resigned from their office with effect from 27 January 2017 and 31 March 2017 respectively.

S. Y Ghorpade was holding the position of Chairman & Managing Director till 31 March 2017. Upon completion of his tenure as Chairman & Managing Director, the Chairman did not opt for re-appointment, but chose to continue as a Non-Executive Chairman of the Company. The Board accorded its approval for his continuance as Non-Executive Chairman of the Company with effect from 1 April 2017.

Consequent to appointment of another Non-Executive Director, Vatsala Watsa did not meet one of the criteria provided under Section 149(6) of the Companies Act, 2013 for continuing to be an Independent Director of the Company, accordingly, the Board has accorded its approval on 12 November 2016 for her continuance as a Non-Executive Director, liable to retire by rotation.

The Board has, in its 317th meeting held on 30 May 2017, re-designated K. V. Ramarathnam, as an Independent Director of the Company.

APPOINTMENT/RE-APPOINTMENTS

G. P. Kundargi has been co-opted on 12 November 2016 as an Additional Director on the Board. He holds office of an Independent Director.

The Board has, at its 316th meeting held on 31 March 2017, re-appointed, Nazim Sheikh as Managing Director for a period of three years with effect from 1 April 2017 and U. R. Acharya as Director (Commercial) for a period Vatsala Watsa, is liable to retire by rotation at the ensuing 63rd AGM and being eligible has offered herself for re-appointment. She is not disqualified from being appointed as a director as specified under Section 164 of the Companies Act, 2013. The Board recommends her re-appointment.

The Board also recommends, K. V. Ramarathnam’s change in status from a Non-Executive Director to an Independent Director of the Company, w. e. f., 30 May 2017, to hold office as such for a period of 5 consecutive years, for shareholders’ approval at the ensuing 63rd AGM.

NUMBER OF MEETINGS OF THE BOARD

The Board met 7 (seven) times during the financial year, the details of which are given in the Corporate Governance Report forming part of this report.

The intervening gap between any two consecutive meetings of the Board did not exceed one hundred and twenty days as prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION

The policy of the Company on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is appended as Annexure- ‘C’to the Report.

DECLARATION BY INDEPENDENT DIRECTORS

All five independent directors of the Company meet the criteria of independence as provided under sub-section (6) of Section 149 of the Companies Act, 2013. Declarations to this effect have also been received from them.

BOARD EVALUATION

As mandated by the statutory provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a mechanism for formal annual evaluation has been devised by the Company. Evaluation of the Board, it’s Committees and the directors for the year 2016-17 has been done based on this mechanism. The mechanism provides for annual evaluation at the end of each year on the basis of feedback received by each director. The performance of individual directors was evaluated by the Nomination and Remuneration Committee (NRC). NRC’s report on performance evaluation of individual directors was taken on record by the Board. The performance of the Board and its Committees was evaluated by the Board.

TRAINING OF INDEPENDENT DIRECTORS

On induction, the new independent directors on Board are familiarized with the nature of Industry and the Company’s business operations. They are updated on a frequent basis with regard to operations of the Company. Any material development is intimated promptly. The Management encourages participation by the independent directors and accordingly, any clarification sought by the independent directors with regard to the Company’s operations is duly addressed.

Presently, no formal training programme exists. Until now, learning for the independent directors has been a pervasive ongoing phenomenon via participation.

Further, at the time of appointment of a director, the company issues a formal letter of appointment entailing his/her role, function, duties and responsibilities as a director. The terms and conditions of appointment of independent director are available on the Company’s website.

COMMITTEES OF THE BOARD

Currently, the Board has seven committees - namely Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Environment Committee, Corporate Social Responsibility Committee, Risk Management Committee and Project Committee.

The Audit Committee comprises four Independent Directors and a Non-Executive Director namely, B. Ananda Kumar as its Chairman, V. Balasubramanian, S. S. Rao, Vatsala Watsa and G. P. Kundargi as its members.

The Company believes in conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. The Company has established a vigil mechanism towards this end.

In accordance with sub-section (9) of Section 177 read with Rule 7(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the Company’s Audit Committee is required to oversee the vigil mechanism.

The Committee oversees the vigil mechanism which has been established to address genuine concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct and Ethics expressed by the employees and other Directors.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee in matters concerning financial/accounting and concerns relating to personnel belonging to levels above Senior General Manager.

The Whistleblower Policy along with other Policies of the Company is available on the Company’s website.

DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3)(c) of the Companies Act, 2013, your directors state that:

(a) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have 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 as at 31 March 2017 and of the profit and loss of the Company for the year ended 31 March 2017;

(c) the Directors have taken proper and sufficient care 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) the Directors have prepared the annual accounts for the financial year ended 31 March 2017 on a ‘going concern’ basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

Auditors have not reported any frauds during the year under review.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Board of Directors has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. Your Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The Company has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. The Company uses a state-of-the-art Enterprise Resource Programming (ERP) system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

M/s. P. Chandrasekar, Chartered Accountants, have been appointed to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and the audit committee. In line with international practice, the internal audit plan aims at reviewing internal controls and risks in operations. The audit committee reviews audit reports submitted by the internal auditors. Suggestions for improvement are considered and the audit committee follows up on them.

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92(3) read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished as Annexure - ‘D’ attached to this Report.

AUDITORS

Pursuant to the provisions of Section 139(2) of the Companies Act, 2013, no listed company or a company belonging to such class or classes as may be prescribed shall appoint or re-appoint an Individual as an Auditor for more than one term of 5 consecutive years or an Audit Firm for more than two terms of 5 consecutive years. M/s Deloitte Haskins & Sells, the statutory auditors of the Company had already completed the maximum tenure of two terms of five consecutive years as stipulated in Section 139(2) of the Companies Act, 2013. However, in terms of proviso to sub-section (2) of Section 139 of the Companies Act, 2013, three years time was granted from the commencement of the Companies Act, 2013, i.e. 1 April 2014, for complying with the aforesaid requirement.

Accordingly, M/s. Deloitte Haskins & Sells were appointed as statutory auditors at the 60th Annual General Meeting (AGM) held on 27 September 2014 to hold office until the conclusion of 63rd AGM.

In light of the aforesaid, the Board is considering to recommend another Firm of Chartered Accountants to be appointed as Statutory Auditors of the Company to hold office for a term of five years from conclusion of 63rd AGM until conclusion of 68th AGM.

AUDITORS’ REPORT

Auditors’ Report on the financial statements of the Company is forming part of this Annual Report. No qualifications, reservations or adverse remarks have been made by the Statutory Auditors in the said Report.

SECRETARIAL AUDIT

Pursuant to provisions of sub-section (1) of Section 204 of the Companies Act, 2013, the Company is required to annex with its Board’s Report a secretarial audit report, given by a company secretary in practice.

N. D. Satish, Practicing Company Secretary (ICSI Membership No.33507 and Certificate of Practice No.12400) has been appointed as Secretarial Auditor of the Company for the financial year 2016-17. The Secretarial Audit Report is forming part of this Annual Report as Annexure- ‘E’.

The Secretarial Auditor has stated in his Report that there have been delays in filing of returns/e-forms with the Registrar of Companies in few circumstances. In this regard, the Board hereby states that the said delays were inadvertent and unintentional and the Company is striving to ensure timely filing of forms.

The Secretarial Auditor has further observed that the Company has issued duplicate share certificates by virtue of delegation of specific authority given by Board of Directors to its Directors and Company Secretary and whereas, in terms of Rule 6(2)(a) of Companies (Share Capital and Debenture) Rules, 2014 of the Companies Act, 2013, duplicate share certificate is required to be issued with the prior approval of the Board or Committee of Directors. On this, the Board states that the duplicate share certificates were issued by the Directors and the Company Secretary under the specific authority granted by the Board in order to comply with provisions of Regulation 39 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 requiring a listed entity to issue duplicate share certificates within thirty days of lodgment.

It is observed in the Secretarial Audit Report that during the period under review, there has been a delay in filling up of vacancy of the Independent Director pursuant to the provisions of Regulation 25 of the SEBI (LODR) Regulations, 2015. In this connection, the Board states that the Board was unable to fill the intermittent vacancy of independent director within the stipulated time despite its concerted effort to locate a suitable candidate but has complied with the requirement of filling the vacancy by appointing an independent director at the earliest possible time.

The Secretarial Auditor has observed that the Company has not filed a copy of the audit report along with its financial statements for the year ended 31 March, 2016 and also a statement on unmodified opinion as per the provisions of Regulation 33 (3) (d) of LODR within the timeframe. The Board states in this regard, the said lapse has inadvertently occurred on account of amendment in the provisions of Regulation 33 notified on 27 May 2016; a day before the meeting of the Board of Directors on 28 May 2016.

The Secretarial Auditor has further reported delay in intimations of loss of share certificate and issue of duplicate share certificates to the stock exchange as required under the provisions of Regulation 39 of SEBI (LODR) Regulations, 2015. In this regard, the Board hereby states that the said delays were inadvertent and unintentional and the Company is striving to ensure timely compliance.

There is no further qualification or adverse remarks in the Report which require reply from the Board of Directors.

COST AUDITORS

In terms of Section 148(2) of the Companies Act, 2013 read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs (MCA), the Company is required to gets its cost accounting records audited by a cost auditor.

The Board has, at its 310th Meeting held on 28 May 2016, appointed M/s. K. S. Kamalakara & Co. as Cost Auditors for the Financial Year 2016-17.

In accordance with Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014, the cost auditor is required to submit his report within 180 days from the date of closure of the financial year and within thirty days from the date of receipt of the cost audit report, the Company shall file a copy of the same with the Ministry of Corporate Affairs (MCA). The Cost Audit Report for the Financial Year 2015-16 was filed with the MCA on 29 September 2016.

CORPORATE GOVERNANCE

The Directors’ Report on Corporate Governance is annexed to this report. The certificate of the Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Clause E of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also being annexed.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The Management Discussion and Analysis Report forms part of the Annual Report in Compliance with Clause (e) of Sub-regulation (2) of Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Board constituted the Risk Management Committee on 28 May 2014. Though Statutorily, only top 100 listed companies ((based on the market capitalization) are required to have a Risk Management Committee, the Board has decided for continuation of the Risk Management Committee, so that the Company would align with practices followed by top 100 listed companies in the country.

The Board at its 256th meeting held on 28 October 2005 had prescribed the Risk Management and Minimisation procedures. These procedures are reviewed on a regular basis by the Board. Risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting.

Company has also constituted Coordination Committee to monitor various departments and sections of the Company and specified operational responsibilities. The Risk Management Committee focuses on macro level and external risks, and the Coordination Committee consisting of Executive level of the Board i.e., the Wholetime directors, in association with Senior Management Personnel, take steps for identification, assessment, mitigation and monitoring of internal and operational risks.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has been, for close to six decades, consciously contributing towards Corporate, Social and Environmental improvement.

Being socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long-term sustainability of business, the Board of Directors has further strengthened its resolve to do more for the development of the area improvement of living conditions of the surrounding rural population.

The Annual Report on Company’s CSR activities of the Company undertaken during the year under review are furnished in Annexure-‘F’ attached to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as prescribed in Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are set out in Annexure- ‘G’to this report.

TRANSFER OF UNPAID AND UNCLAIMED DIVIDENDS TO INVESTOR EDUCATION AND PROTECTION FUND

Dividends remaining unpaid and unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be transferred to the Investor Education and Protection Fund (IEPF). The Company transferred the following amounts to the IEPF during the year:

Particulars of Dividend

Financial year

Amount (in Rs.)

Date of Transfer

Final dividend

2008-09

1,41,956.00

22 November 2016

EMPLOYEES

Pursuant to the provisions of sub-section (12) of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars are set out in Annexure - ‘H’ to the Directors’ Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Company has constituted an Internal Complaints Committee (ICC) for the prevention and redressal of complaints related to sexual harassment at workplace.

No complaints pertaining to sexual harassment were received during the year ended 31 March 2017.

ACKNOWLEDGEMENTS

The directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The directors also extend its gratitude to the Central and State Governments for the confidence bestowed on the Company.

The directors wish to place on record their appreciation for all its employees for their commendable team work and professionalism. And ultimately, we wish to thank all the government agencies, the promoters, business associates, banks and investors and look forward to their continued support and contribution.

for and on behalf of the Board of Directors

Place : Bengaluru S. Y. GHORPADE

Date : 30 May 2017 Chairman

DIN: 00080477


Mar 31, 2015

Dear Memers,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2015:

FINANCIAL RESULTS Current Previous Year Year sl. Particulars Rs. lakh Rs. lakh

a) Net Sales / Income 29,469.93 29,970.89

b) Other Income 402.37 1,582.45

Total 29,872.30 31,553.34

c) Expenditure

(i) Variable 18,200.27 17,904.55

(ii) Fixed 8,830.27 6,929.39

(iii) Depreciation / Amortization 489.41 920.58

(iv) Interest 235.24 1.57

Total 27,755.19 25,756.09

d) Profit before taxes 2,117.11 5,797.25

e) Less:

(i) Current Tax 1,000.00 1,590.00

(ii) Deferred Tax (318.52) 370.00

f) Net Profit 1,435.63 3,837.25

g) Add: Balance brought forward from the previous year 31,927.13* 28,803.84

h) Profit before appropriation 33,362.76 32,614.09

i) Less: Appropriations

(i) Proposed dividend on Equity Shares 262.50 262.50

(ii) Tax on Dividend 53.44 44.61

(iii) Transfer to General Reserve - 383.73

Total 315.94 690.84

j) Profit carried to Balance Sheet 33,046.82 31,950.25

*After adjusting depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed asset with NIL remaining useful life (net of deferred tax)

The Company earned profit before tax of Rs.2,117.11 lakh after charging Rs.489.41 lakh towards depreciation on fixed assets and Rs.235.24 lakh towards interest.

After taking into account charging off income tax of Rs.1,000 lakh for current year and deferred tax credit of Rs.318.52 lakh, the profit for the current year of Rs.1,435.63 lakh along with brought forward profits of Rs.31,927.13 lakh aggregating to Rs.33,362.76 lakh is carried to the Balance Sheet.

Current Year Previous Year (Tonnes) (Tonnes)

Manganese Ore:

Production 1,60,909 1,02,372

Internal Consumption 30,344 30,292

Sales 99,113 62,029

Iron Ore:

Production* 5,16,285 7,12,362

Sales* 5,62,186 5,04,100

*Excludes 87,990 (Previous year 4,05,856) tonnes salvaged from dumps and sold

The production of manganese ore and iron ore during the financial year 2014-15 was 1,60,909 and 5,16,285 tonnes respectively as against 1,02,372 and 7,12,362 tonnes produced during the previous year. Excluding the ores salvaged from dumps, the Company sold 99,113 tonnes of manganese ore and 5,62,186 tonnes of iron ore during the year under review.

MINING OPERATIONS

The Government of Karnataka has vide notifications No.CI 214 MMM 2014 and No.CI 213 MMM 2014 both dated 23 September 2014 accorded sanction for third renewal of Company's Mining Leases No.2580 and 2581 for extraction of manganese and iron ores over an extent of 2,837 ha and 378 ha in Swamimalai and Ramanamalai Blocks, Sandur Taluk, Bellary district for a further period of 20 years effective from 1 January 2014 and valid till 31 December 2033 under the provisions of Section 8 of the Mines & Minerals (Development & Regulation) Act, 1957.

In furtherance of the same, keeping about 1,210 hectares for future use by the Company after obtaining Forest Clearance under Section 2 of the Forest (Conservation) Act, 1980, Mining Lease Deeds No.2678 and No.2679 for 1,860.10 hectares and 139.20 hectares respectively, were executed on 20 March 2015 by the Director, Department of Mines & Geology, Government of Karnataka in favour of the Company and the same have been duly registered on 25 March 2015 with the jurisdictional Sub-Registrar at Sandur as Documents No.2787 and No.2788.

In the meanwhile, the Government of India promulgated the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015 on 12 January 2015 under Article 123(1) of the Constitution amending certain provisions of the MMDR Act, 1957. The Ordinance seeks to bring in transparency and weed out discretion and accordingly, the grant of mineral concessions under the Ordinance shall only be through auctions. Unlike in the 1957 Act, henceforth, no renewal of any mining concessions shall be granted. Further, the tenure of the mineral concessions has been extended from the existing 30 years to 50 years; thereafter, the Mining Lease would be put up for auction (and not for renewal as in the earlier system).

The Government has provided for transition period in sub-section 5 and 6 of Section 8A of the Ordinance in accordance with which Mining Leases would be deemed to be extended from the date of their last renewal to 31 March 2030 (for the captive miners) and till 31 March 2020 (for the merchant miners) or till the completion of the renewal already granted, if any, whichever is later.

Accordingly, the Company's Mining Leases No.2678 and 2679 having been renewed with effect from 1 January 2014 are valid upto 31 December 2033.

The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued a Circular dated 1 April 2015 amending Para 4.16 of the Guideines issued by it under the Forest (Conservation) Act, 1980 and extended the already granted Forest Clearance for a period co-terminus with the period of Mining Leases in accordance with the provisions of Section 8A(1) of the Mines & Minerals (Development & Regulation) Amendment Act, 2015.

Further, by another Circular dated 1 May 2015 the MoEFCC clarified that no further renewals or approvals would be required if Forest Clearance under Section 2 of the Forest (Conservation) Act, 1980 has been granted by MoEFCC either during the original lease period or previous renewal(s) of the mining lease.

Forest Clearance which was granted to the Company's Mining Leases No.2678 (Old No.2580) and No.2679 (Old No.2581) for a period of 20 years expiring in December 2026 stands extended to 31 December 2033 in light of the above circulars dated 1 April 2015 and 1 May 2015. However, the question of validity of this Forest Clearance is pending before the Hon'ble Supreme Court for confirmation.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

No significant and material orders were passed by any Regulator(s) or Court(s) or Tribunal(s) which would impact the going concern status of the Company.

MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitment affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

DIVIDEND

Directors are pleased to recommend a dividend of Rs.3 per share for the current financial year. The dividend if approved and declared in the forthcoming Annual General meeting would result in a cash outflow of Rs. 315.94 lakh (including tax).

SUBSIDIARY

Star Metallics and Power Private Limited (SMPPL), a subsidiary of the Company commenced its commercial operations on 9 January 2011. It has two ferroalloy furnaces and also a 32 MW thermal power plant which is used as a captive unit for its ferroalloy operations.

Further, a statement containing the salient features of the financial statement of SMPPL in the prescribed format is appended as Annexure- 'A' to this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

The details of the loans and guarantees given and investments made by the Company are in Note Nos.9 and 25 of the audited financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

In terms of clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the Company is required to furnish particulars of the contract entered into by the Company with its related parties in the Report of the Board.

The Company has entered into a Conversion Contract with its subsidiary, SMPPL for conversion of the Company's manganese ore ('Mn ore') into Silicomanganese ('SiMn') / ferro manganese at SMPPL's ferroalloys plant. In terms of the Contract, requisite quantity and quality of Mn ores, reductants and electrode paste, are made available to SMPPL without any cost, for conversion of the same into SiMn (or any other ferro alloy). The balance materials and consumables are procured by SMPPL, the cost of which is included in the conversion cost. The entire SiMn (or any other ferro alloys) so produced by SMPPL is supplied to SMIORE. Silicomanganese is being sold to SMPPL to enable it to export the same to fulfill the export obligation commitment, as per the requirements of Export Promotion Capital Goods (EPCG) Scheme. SMPPL, being a subsidiary company, is a related party in accordance with the provisions of Section 2(76)(viii)(A) of the Companies Act, 2013.

During the year under review, the Company purchased 2.2 acres of land at Sandur, from Skand Private Limited. The Company proposes to construct quarters, to accommodate its senior executives, on the said land. Skand Private Limited, is a related party of the Company by virtue of Section (76)(iv) of the Companies Act 2013, since the Boards of both the Companies have three common directors.

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. The policy on Related Party Transactions can be accessed on the Company's website at www.sandurgroup.com.

Details of the contracts or arrangements made with related parties are given in the prescribed format as Annexure - 'B'.

DEPOSITS

The Company has not accepted fixed deposits from the public during the financial year under review. The Company did not have any deposits at the beginning of the financial year. Thus, provisions of Section 73 of the Companies Act 2013 are not applicable to the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements and in terms of provisions of Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and its subsidiary are forming part of the Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements along with the Auditors Report and Directors' Report thereon are available on the Company's website, www.sandurgroup.com. Further, separate audited accounts in respect of the subsidiary are also placed on the website.

These documents will also be available for inspection during business hours at the registered office of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board is constituted of two managing directors, four whole-time directors and six independent directors including a woman director. Chairman of the Board is an executive director. There has been no change in the composition of the Board in the year 2014-15.

The Company has a Company Secretary and a Chief Financial Officer who along with the managing directors and whole time directors constitute the Key Managerial Personnel.

APPOINTMENT/RE-APPOINTMENTS

The Listing Agreement with Bombay Stock Exchange Limited was amended on 17 April 2014, fixing a maximum tenure for independent directors for the first time. Clause 49(M)(B)(3)(a) allowed an independent director to hold office for a term up to five consecutive years on the Board of a company and provided for reappointment for another term of up to five consecutive years on passing of a special resolution by the company. Further, an independent director who had already served for more than five years in a company as on October 1,2014, on completion of his present term, could be appointed for one more term of up to five years only.

Accordingly, shareholders approval was sought at the 60th Annual General Meeting held on 27 September 2014 for re-appointment of R. Subramanian (who was appointed on 28 May 2009 and completing more than five years as on 1 October 2014) for a term of four consecutive years expiring at the Annual General Meeting for the financial year 2017-18 i.e., before the end of September 2018.

Subsequently, the aforesaid Clause was amended on 15 September 2014 to bring it in line with the Companies Act, 2013. In terms of amended Clause 49 and Section 149(10) of the Companies Act, 2013 an independent director can hold office for a term up to five consecutive years on the Board of a company and be eligible for reappointment for another term of up to five consecutive years on passing of a special resolution by the Company. Further, no independent director shall be eligible to hold office for more than two consecutive terms. Further, in accordance with explanation to Section 149(11) of the said Act, tenure of an independent director on the date of commencement of the Act shall not be counted as a term.

In view of the aforementioned provisions, other five Independent Directors - V. Balasubramaian, P. Vishwanatha Shetty, B. Ananda Kumar, S. S. Rao and Vatsala Watsa have been appointed for a term of four consecutive years expiring on 31 March 2019, by the shareholders vide resolution dated 31 March 2015 passed by postal ballot.

It may be noted that in accordance with the provisions of sub-section (13) of Section 149 of the Companies Act, 2013, none of the Independent Directors shall be liable to determination to retirement by rotation henceforth.

K. Raman- Director (Finance) & Chief Financial Officer is liable to retire by rotation at the ensuing meeting and being eligible is offering himself for re-appointment. He is not disqualified from being appointed as a director as specified under Section 164 of the Companies Act, 2013.

NUMBER OF MEETINGS OF THE BOARD

The Board met five times during the financial year, the details of which are given in the Corporate Governance Report forming part of this report.

The intervening gap between any two consecutive meetings of the Board did not exceed one hundred and twenty days as prescribed under the Companies Act, 2013 and the Listing Agreement.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Board is committed to maintain its independence and accordingly, half of the Board is constituted by Independent Directors; thereby, ensuring separation of governance and management.

The policy of the Company on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 of the Companies Act, 2013, adopted by the Board is appended as Annexure- 'C'to the Report.

DECLARATION BY INDEPENDENT DIRECTORS

All six independent directors of the Company meet the criteria of independence as provided under sub-section (6) of Section 149 of the Companies Act, 2013. Declarations to this effect have also been received from them.

BOARD EVALUATION

The Companies Act, 2013 vide Section 134(3)(p) read with Rule 8 of Companies (Accounts) Rules 2014, requires the Board to carry out formal annual evaluation of its own performance, of Committees and of individual directors.

Further, all the listed companies and public companies with paid-up share capital of Rs.25 crore or more are required to indicate the manner & criteria of formal Board evaluation in Board's Report.

Also, Schedule IV of the Companies Act, 2013 read with clause 49(II)(B)(5) of the Listing Agreement requires performance evaluation of independent directors to be done by the entire Board of Directors, excluding the director being evaluated (based on the criteria laid down by the Nomination and Remuneration Committee). On the basis of the report of performance evaluation, it is required to be determined whether to extend or continue the term of appointment of the independent director.

As mandated by the aforementioned provisions, a mechanism for formal annual evaluation has been devised by the Company. Evaluation of the Board, its Committees and the directors for the year 2014-15 has been done based on this mechanism. The mechanism provides for annual evaluation at the end of each year. The performance of the Board, Committees and individual directors are evaluated based on reviews/ feedback of the directors themselves. The feedback forms have been prepared based on the broad parameters as set out in the 'Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and other employees'. A Report, prepared based on completed feedback form, is then placed before the Board for its review.

TRAINING OF INDEPENDENT DIRECTORS

On induction, the new independent directors on Board are familiarized with the nature of Industry and the Company's business operations. They are updated on a frequent basis with regard to operations of the Company. Any material development is intimated promptly. The Management encourages participation by the independent directors and accordingly, any clarification sought by the independent directors with regard to the Company's operations is duly addressed.

Presently, no formal training programme exists. Until now, learning for the independent directors has been a pervasive ongoing phenomenon via participation.

Further, at the time of appointment of a director, the company issues a formal letter of appointment entailing his/her role, function, duties and responsibilities as a director. The terms and conditions of appointment of independent directors is available on the Company's website .

COMMITTEES OF THE BOARD

Currently, the Board has six committees - namely, Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Environment Committee, Corporate Social Responsibility Committee and Risk Management Committee.

DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

The Audit Committee is constituted of five Independent Directors namely, R. Subramanian as its Chairman and V. Balasubramanian, B. Ananda Kumar, S. S. Rao and Vatsala Watsa as its members.

The Company believes in conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. The Company has established a vigil mechanism towards this end.

In accordance with sub-section (9) of Section 177 read with Section Rule 7(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the Company's Audit Committee is required to oversee the vigil mechanism.

The Committee oversees the vigil mechanism which has been established to address genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct and Ethics expressed by the employees and other Directors.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee in matters concerning financial/accounting and concerns relating to personnel belonging to levels above Senior General Manager.

The Whistleblower Policy along with other Policies of the Company is available on the Company's website.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, your directors state that:

(a) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have 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 as at 31 March 2015 and of the profit and loss of the Company for the year ended 31 March 2015;

(c) the Directors have taken proper and sufficient care 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) the Directors have prepared the annual accounts for the financial year ended 31 March 2015 on a 'going concern' basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

Auditors have not reported any frauds during the year under review.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Company's internal financial controls are deployed through an internally evolved framework that address material risks in the Company's operations and financial reporting objectives, through a combination of entity level controls (including Enterprise Risk Management, Legal Compliance Framework and Anti-fraud Mechanism such as Ethics Framework, Code of Conduct, Whistle Blower Policy, etc.), process controls (both manual and automated), information technology based controls, period end financial reporting and closing controls and through internal audit.

It is an irrebuttable presumption that internal financial controls, no matter how well conceived and operated, cannot provide absolute assurance of achieving financial, operational and compliance reporting objectives because of its inherent limitations. Also, projections of any evaluation of the internal financial controls to future periods are subject to the risk that the internal financial control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Further, the Company has appointed a practicing chartered accountancy firm M/s. P. Chandrashekar as internal auditors to look into various process in areas pertaining to purchases, sales, creditors, receivables, contracts, sub-contracts, inventory, cash management, payroll, labour contracts, expenses, Reclamation & Rehabilitation (R&R), core drilling and taxation.

The Company is also undertaking the implementation of a structured framework on Internal Controls to further strengthen the internal control environment in the Company. This will provide a benchmark approach for evaluating the adequacy of controls and monitoring the operating effectiveness of those controls on an ongoing basis. During the implementation of the structured framework on internal controls, there is a possibility of identifying weaknesses or improvements in the design and / or operation of the existing controls and the underlying processes. Those will be dealt with as they are identified.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92(3) read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished as Annexure - 'D' attached to this Report.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore (ICAI Registration No.008072S) are the Statutory Auditors of the Company.

M/s. Deloitte Haskins & Sells have already completed the maximum tenure of two terms of five consecutive years as stipulated in Section 139 of the Companies Act, 2013. However, in terms of proviso to sub-section (2) of Section 139 of the Companies Act, 2013, three years time has been granted from the commencement of the Act i.e. 1 April 2014, for complying with the aforesaid requirement.

Accordingly, M/s. Deloitte Haskins & Sells were appointed as statutory auditors at the 60th Annual General Meeting held on 27 September 2014 in terms of the said proviso, to hold office until the conclusion of 63rd Annual General Meeting, subject to ratification at each Annual General Meeting. As per provisions of Section 139(1) of the Act, their appointment as Statutory Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of next Annual General Meeting is subject to ratification by Members.

AUDITORS' REPORT

Auditors' Report on the financial statements of the Company is forming part of this Annual Report and there are no qualifications in the said report. No qualifications, reservations or adverse remarks have been made by the Satutory Auditors in the said Report.

SECRETARIAL AUDIT

Pursuant to provisions of sub-section (1) of Section 204 of the Companies Act 2013, the Company is required to annex with its Board's Report a secretarial audit report, given by a company secretary in practice.

Sathya Prasad Yadav, Practicing Company Secretary (ICSI Membership No.18755 and Certificate of Practice No.6775) has been appointed as Secretarial Auditor of the Company for the financial year 2014-15. The Secretarial Audit Report is forming part of this Annual Report as Annexure- 'E'.

The Secretarial Auditor has in his Report observed that there has been a delay in filing of returns with the Registrar of Companies on a few occasions. In this regard, the Board hereby states that the said delays were inadvertent due to the circumstances prevailing during the period. There are no further qualifications or adverse remarks in the Report which require reply from the Board of Directors.

COST AUDITORS

In terms of Section 148(2) of the Companies Act, 2013 read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs (MCA), the Company is required to gets its cost accounting records audited by a cost auditor.

M/s. K. S. Kamalakara & Co. was appointed as Cost Auditors for the Financial Year 2014-15 by the Board at its meeting held on 9 August 2014.

In accordance with Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014, the cost auditor is required to submit his report within 180 days from the date of closure of the financial year. Further, the due date for filing the Cost Audit Report for the FY 2014-15 is thirty days from the date of receipt of a copy of the cost audit report. Accordingly, the same shall be filed with the Ministry of Corporate Affairs (MCA) on or before 30 October 2015. The Cost Audit Report for the FY 2013-14 was filed with the MCA on 28 October 2014.

CORPORATE GOVERNANCE

The Directors' Report on Corporate Governance is annexed to this Report. The certificate of the Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The management discussion and analysis report forms part of the Annual Report in Compliance with Clause 49 of the Listing Agreement.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

Company has adopted a risk management framework to ensure early identification and management of various critical risks, which accrue to its business model and the risk management framework adopted by the Company ensures continuous focus on identifying, assessment & evaluation, and adequate mitigation of various risks affecting the Company.

The Audit committee reviews the Company's critical risks, overall risk exposure and timely changes to overall exposure, and status of various risk mitigation plans on a periodic basis.

The Board at its 256th meeting held on 28 October 2005 prescribed the Risk Management and Minimisation procedures. The same is reviewed on a regular basis by the Board. Risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has been, for close to six decades, consciously contributing towards Corporate, Social and Environmental improvement.

Being socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long term sustainability of business, the Board of Directors has further strengthened its resolve to do more for the development of the area improvement of living conditions of the surrounding rural population.

The Annual Report on Company's CSR activities of the Company undertaken during the year under review are furnished in Annexure-'F' attached to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not applicable since the Company does not have any manufacturing activities.

No foreign exchange was earned during the year and particulars of the foreign exchange outgo during the year in terms of actual outflows appear as Note No.31 in the Notes forming part of Financial Statements.

EMPLOYEES

Pursuant to the provisions of sub-section (12) of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars are set out in Annexure - 'G' to the Directors' Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Government of India has enacted the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for prevention of sexual harassment of women at workplace and also for providing a redressal mechanism. In furtherance of the same, the Government has also notified the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013. The Act and the Rules came into force from 9 December 2013.

The Company has constituted an Internal Complaints Committee (ICC) for the prevention and redressal of complaints related to sexual harassment at workplace.

No complaints pertaining to sexual harassment were received during the year ended 31 March 2015.

ACKNOWLEDGEMENTS

The directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The directors also extend its gratitude to the Central and State Governments for the confidence bestowed on the Company.

The directors wish to place on record their appreciation for all its employees for their commendable team work and professionalism. And ultimately, we wish to thank all the Government agencies, the promoters, business associates, banks and investors and look forward to their continued support and contribution.

for and on behalf of the Board

Place : Bangalore S. Y. Ghorpade Date : 27 May 2015 Chairman & Managing Director


Mar 31, 2014

Dear Shareholders,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2014:

Financial results (in lakh) Sl Particulars Current Previous Year Year

a) Net Sales / Income 29970.92 16,118.92

b) Other Income 1582.44 2,263.92

Total 31553.36 18,382.84

c) Expenditure

(i) Variable 17904.56 8,365.04

(ii) Fixed 6861.85 5,022.69

(iii) Depreciation/ Amortisation 920.59 1,125.69

(iv) Interest 1.57 235.97

Total 25688.57 14,749.38

d) Profit before taxes 5864.79 3,633.46

e) Less: 25688.57 14,749.38 (i) Current Tax 1610.00 730.00 (ii) MAT Credit - (60.00) (iii) Deferred Tax 370.00 (288.00) (iv) Earlier years f) Net Profit 3884.79 3,251.46

g) Add: Balance brought forward from the previous year 28803.84 25,552.38 h) Profit carried to Balance Sheet 32688.63 28,803.84

The Company earned profit before tax of H5,864.79 lakh after charging H920.59 lakh towards depreciation on fixed assets and amortisation of mining lease rights and H1.57 lakh towards interest.

After taking into account charging off income tax of H1,610.00 lakh for current year and deferred tax credit of H370.00 lakh, the profit for the current year of H3,884.79 lakh along with brought forward profits of H28,803.84 lakh aggregating to H32,688.63 lakh is carried to the Balance Sheet.

Financial results Current Previous Previous Year Year (Tonnes) (Tonnes) Manganese Ore:

Production 1,02,372 25,534

Salvaged from dumps

Internal Consumption 30,292 16,032

Sales 62,029 69,919

Iron Ore:

Production 7,12,362 1,58,467

Salvaged for dumps 4,05,856 -

Sales 9,09,956 2,33,813

With the resumption of mining operations from 25 January 2013, the Company has been able to produce both iron ore and manganese ore up to the limits prescribed by the Central Empowered Committee (CEC) constituted by the Hon''ble Supreme Court and the production of iron ore and manganese ore during the financial year 2013-14 was 7,12,362 and 1,02,372 tonnes respectively as against 1,58,467 and 25,534 tonnes produced during the previous year. Taking into account the ores salvaged from the dumps, the Company sold 9,09,956 tonnes of iron ore and 62,029 tonnes of manganese ore during the year under review.

Mining operations

In the face of allegations of rampant illegal mining in the state, which brought the industry under the scanner, the mining industry finds itself faced with a host of challenges and pressures. Against the background of urgent need to re-visit and re-draw sustainable mining plan for the state as a whole, the Company finds itself at cross roads of change.

With the acceptance of the recommendation of the Central Empowered Committee, the Hon''ble Supreme Court by order dated 3 September, 2012 allowed the Company to resume mining in both its leases, ML Nos. 2580 and 2581 over an area of 1863.02 hectares and 142.58 hectares respectively, from 24 January 2013.

The Hon''ble Supreme Court passed its final order in this matter on 18 April 2013. In accordance with the order, iron ore and manganese ore produced on resumption of mining operations is sold through e-auction by the Monitoring Committee for domestic consumption only. However, the iron ore rejected by the domestic industries has been permitted to be exported at a price not lower than the average price realised by the Monitoring Committee for corresponding grades of fines/lumps of the existing stock of iron ore.

Iron ore and manganese ore produced by the Company, required for either captive consumption or its subsidiaries has been exempted from e-auction.

Pursuant to the aforesaid order, 90% of the sale consideration is directly received from the buyer and the balance 10% along with requisite levies is deposited by the buyer with the Monitoring Committee. Further, the Company is ensuring total and strict implementation of the Supplementary Environment Management Plan (SEMP) prescribed for Category ''A'' mining leases.

The Government of Karnataka through a Special Purpose Vehicle (SPV) Company is required to implement a Comprehensive Environment Plan for Mining Impact Zone (CEPMIZ). The plan entails socio-economic development of the area / local population, infrastructure development, conservation and protection of forest, developing common facilities for transportation of iron ore such as maintenance and widening of existing road, construction of alternate road, conveyor belt, railway siding and improving communication system, etc. The Company being a Category ''A'' mining leaseholder was required to provide an undertaking to comply with any liabilities, financial or otherwise, that may arise under the CEPMIZ.

Further, the Hon''ble Supreme Court, to safeguard environment from further degradation, directed the Government of Karnataka to scale down the iron ore production from 82.97 Million Tonnes Per Annum (MTPA) to 25 Million Tonnes (MT) of iron ore from all the mining leases in Bellary District and 5 MT of iron ore from all the mining leases in Chitradurga and Tumkur districts, till the Reclamation & Rehabilitation (R&R) Plans and the proposed CEPMIZ are implemented. Consequently, the Company was directed to restrict the production of iron ore at 0.74 MTPA and manganese ore at 0.1874 MTPA as against the statutory clearances for production of 1.6 MTPA and 0.6 MTPA respectively.

During the year, the Company faced minor setback when it had to suspend its operations briefly on two occasions. The Company''s Mining Leases No. 2580 and 2581, duly renewed (second time) for a period of 20 years effective from 1 January 1994, were due to expire on 31 December 2013. In compliance with the relevant rules, the Company had applied for its renewal on 10 December 2012, more than 12 months prior to its expiry. In pursuance of the rules, the period of Mining Leases stood automatically extended and the Company was entitled to continue its mining operations in the said Mining Leases.

However, without taking cognisance of the aforesaid statutory provisions and ignoring the fact that the Forest Clearance granted in March 2007 for a period of 20 years was valid till December 2026, the mining operations of the Company were suspended by the forest department with effect from 1 January 2014. Following the representation made by the Company, the Company was allowed to resume its operations from 20 January 2014. However, in view of a different interpretation of legal provisions by the Ministry of Environment & Forests (MoEF), Government of India, the Company had to once again suspend its mining operations on 29 January 2014. Thereafter, the Company filed an Interlocutory Application before the Hon''ble Supreme Court on 3 February 2014 for resolving the issue pertaining to interpretation of the relevant provisions. Considering the Company''s plea, the Hon''ble Supreme Court was pleased to stay the directions of MoEF resulting in permitting the Company to continue its mining operations.

Dividend

The Company, in the recent past has witnessed a lot of instability in its mining operations. In the crusade against illegal mining, the Hon''ble Supreme Court vide its order dated 29 July 2011 imposed a general ban on mining in the State of Karnataka. The Company though was not involved in any illegalities/ irregularities, faced collateral damage and was forced to suspend its operations for over 18 months. The Company was allowed to resume its operations in both the mining leases, when the Hon''ble Supreme Court, vide order dated 3 September 2012, permitted resumption of operations in 18 Category ''A'' Mining leases subject to compliance with certain conditions.

Delays in statutory clearances and tardy approvals caused another 5-6 months delay, before the Company could actually resume its operations from 25 January 2013. As reported earlier, drastic reduction in the permissible production limits poses yet another challenge.

Though the Company was confident of sustaining its profits; as a matter of abundant caution, to meet the exigencies in future, if any, the Board in their financial prudence had decided to conserve the resources and did not recommend any dividend for the financial years ended 31 March 2012 and 31 March 2013. But considering the performance during the financial year ended 31 March 2014, the Board is pleased to recommend a dividend of H3/- per share

Investments

No investments were made during the financial year under review.

Subsidiary

SMPPL''s 32 MW captive thermal power plant situated at Vyasanakere, Near Hospet in Bellary District, which commenced its commercial operations on 9 January 2011 is generating power which is being captively used for its ferroalloy operations and the surplus power is being sold in the market.

Consolidated financial statements

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements are provided in the Annual Report.

Directors

The Company witnessed a change in the composition of its Board of Directors. During the year, N. Viswanathan resigned from the directorship on Board with effect from 1 July 2013. The Board appointed B. Ananda Kumar, a non-executive and independent director on 15 July 2013, which was approved by the shareholders at the 59th Annual General Meeting, held on 31 August 2013.

Subsequently, Syed Abdul Aleem and M. S. Rama Rao having attained the retirement age of 75 years (fixed by the Board for the non-executive directors), who were also liable to voluntarily retire by rotation at the 59th Annual General Meeting, did not offer themselves for re-appointment. Accordingly, both of them ceased to be directors on the Board of the Company with effect from 31 August 2013. The Company inducted two other non-executive and independent directors namely, S. Seshagiri Rao and Vatsala Watsa with effect from 1 September 2013.

U. R. Acharya is liable to retire by rotation and being eligible offers himself for re-election. He is not disqualified from being appointed as director as specified under Section 164 of the Companies Act, 2013.

Further, pursuant to the provisions of Section 149 of the Companies Act, 2013, your directors seek the re-appointment of R. Subramanian as an independent director for a term of four consecutive years up to September 2018.

Directors'' responsibility statement

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your directors state that:

In the preparation of accounts, the applicable accounting standards have been followed.

Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March 2014 and of the profit for the year ended on that date.

Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

The annual accounts of the Company have been prepared on a going concern basis.

Auditors

M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment. The Statutory Auditors have already completed the maximum tenure of two terms of five consecutive years for being eligible for re-appointment. However, in terms of proviso to sub-section (2) of Section 139 of the Companies Act, 2013, the Company has three years time for complying with the aforesaid requirement. Accordingly, the re-appointment, if made, would be in compliance with the provisions of Section 139 of the Companies Act, 2013

Corporate governance

The Directors'' Report on Corporate Governance is annexed to this report. The certificate of the Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed.

Further, Ministry of Corporate Affairs has introduced Corporate Governance Voluntary Guidelines, 2009 for voluntary adoption by the corporate sector. It was observed by the Board that various practices of the Company are similar to the procedures / provisions prescribed in the said Guidelines.

Auditors'' report

Auditors'' Report on the financial statements of the Company is forming part of this Annual Report and there are no qualifications in the said report.

Cost auditors

In terms of Companies (Cost Accounting Records) Rules, 2011 and Cost Audit Order dated 6 November 2012 issued in supercession of the earlier orders dated 3 May 2011, 30 June 2011 and 24 January 2012, the Company is required to gets its cost accounting records audited by a cost auditor.

M/s. K. S. Kamalakara & Co. were appointed as Cost Auditors for the Financial Year 2013-14 by the Board at its meeting held on 30 May 2013, which has been approved by the Central Government.

The due date for filing the Cost Audit Reports for the FY 2013-14 is 30 September 2014.

The Cost Audit Report for the FY 2012-13 was filed with the Ministry of Corporate Affairs on 8 November 2013.

Corporate social responsibility

The Company has been, for close to six decades, consciously contributing towards Social and Environmental improvement.

In view of the Voluntary Guidelines on Corporate Social Responsibility issued by the Ministry of Corporate Affairs in December 2009 for voluntary adoption by the corporate sector to be socially, environmentally and ethically responsible in governance of operations, and also to add value to the operations while contributing towards the long term sustainability of business, the Board of Directors has further strengthened its resolve to do more for the development of the area and improvement of living conditions of the surrounding rural population. The Company has prepared plans to contribute generally in construction of roads, adopt the Sandur Town and improve internal roads, drains and public toilets (with water) facilities.

As part of its Corporate Social Responsibility (CSR) and as prescribed in the SEMP, the Company plans to contribute towards developmental activities in the "buffer zone" around its mines, which comprises of 22 villages, and also the town of Sandur. An extensive social survey has been done in these villages around the Mines where such projects are likely to improve the quality of life of its inhabitants. It is proposed to utilise the facilities of Sandur Laminates Limited (SLL) and Sandur Micro Circuits Limited (SMCL), to provide Street Lighting, Home lighting, Community Centre Lighting, Students Hostel Lighting and Solar Power Pump Sets.

These, ''Green Energy Projects'' are expected to benefit the inhabitants of the village by way of free and uninterrupted power supply to remote villages; much needed street lighting; power during day time to pump drinking and irrigation water and also, reduce the load on the public utility system and State Electricity Boards.

Various initiatives taken by the Company towards CSR are enumerated below:

The Company directly and indirectly supports three schools at the mines, four schools at Vyasankere (where it proposes to set up the new projects) and six schools and colleges in and around Sandur. The institutions have been catering to the educational needs of employees'' children as well as the children of Sandur and surrounding villages.

Under Akshaya Patra programme, Company provides free mid-day meals to children studying in some of the aforesaid schools and two government schools at Sandur.

The Company''s Community Health Centre namely "Arogya" at Sandur, meets the medical requirements of employees free of cost and at very affordable and actual cost to the general public of Sandur and other adjacent villages. In association with Vittala of Bangalore, Arogya provides specialised eye care facility. Further, in association with Bhagwan Mahaveer Jain Hospital, camps were organised for cancer detection, diabetes, orthopedic and women & child care.

The Company''s welfare organisation called Sandur Kushala Kala Kendra was established for nurturing and development of traditional handicrafts, upliftment and gainful employment of rural artisans.

The Company continues to provide every month a package of essential food grains, to suffice needs of a family of about five, at 1972 prices, to all its employees and workmen.

The Company has constructed 762 houses at a total cost of H12.53 crore for the victims in flood affected regions of the State. Further, the Company has undertaken construction / development of roads in Sandur region.

The Company has already planted millions of trees and continues to do so.

Secretarial audit

The Company has not undergone secretarial audit per se but while obtaining certification from a Practicing Company Secretary for filing Annual Return with the Ministry of Corporate Affairs in compliance with the provisions of Section 159 of the Companies Act, 1956, Parameswar G. Hegde has undertaken a review of all the requisite secretarial compliances. Further, in accordance with Regulation 55A of SEBI (Depositories and Participants) Regulations, 1996 and Securities and Exchange Board of India (SEBI) Circular No. D&CC/FITTC/CIR-16/2002, SEBI/MRD/Policy/Cir-13/2004 and CIR/MRD/DP/30/2010 dated 31 December 2002, 3 March 2004 and 6 September 2010 respectively, the Company has subjected itself to Reconciliation of Share Capital Audit for all the quarters during the financial year under review and certificates issued by a Company Secretary in practice in this regard were submitted to Stock Exchanges in compliance with the requirements of the said circulars and copies placed before the Board of Directors at the subsequent meetings.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is not applicable since the Company does not have any manufacturing activities. However the particulars relating to conservation of energy and technology absorption at the Metal and Ferroalloy plant which forms part of the subsidiary''s Directors'' Report have been included in the Annual Report.

The particulars regarding expenditure and earnings in foreign exchange appear as items No. 29 and 31 respectively in the Notes forming part of Financial Statements.

Employees

Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended vide Notification No. GSR 289(E) dated 31 March 2011, the names and other particulars are set out in the Annexure to the Directors'' Report.

Acknowledgements

The directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The directors also extend its gratitude to the Central and State Governments for the confidence bestowed on the Company.

The directors wish to place on record their appreciation for all its employees for their commendable team work and professionalism. And ultimately, we wish to thank all the Government agencies, the promoters, business associates, banks and investors and look forward to their continued support and contribution.

for and on behalf of the Board

Place : Bangalore S. Y. Ghorpade Date : 28 May 2014 Chairman & Managing Director


Mar 31, 2013

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2013:

FINANCIAL RESULTS

Current Year Previous Year SI. Particulars Rs. lakh Rs. lakh

a) Net Sales / Income 16,118.92 18,064.37

b) Other Income 2,263.92 1,278.25

Total 18,382.84 19,342.62

c) Expenditure

(i) Variable 8,365.04 9,247.79

(ii) Fixed 5,022.69 6,327.36

(iii) Depreciation / Amortization 1,125.69 1,105.01

(iv) Interest 235.97 0.53

Total 14,749.38 16,680.69

d) Profit before taxes 3,633.46 2,661.93

e) Less :

(i) Current Tax 730.00 1,400.00

(ii) MAT Credit (60.00)

(iii) Deferred Tax (288.00) (572.00)

(iv) Earlier years 985.00

Net Profit 3,251.46 848.93

g) Add: Balance brought forward from the previous year 25,552.38 24,703.45

h) Profit carried to Balance Sheet 28,803.84 25,552.38

The Company earned profit before tax of Rs.3,633.46 lakh after charging ^1,125.69 lakh towards depreciation on fixed assets and amortization of mining lease rights and Rs.235.97 lakh towards interest.

After taking into account charging off income tax of Rs.730.00 lakh for current year, MAT credit of Rs.(60.00) lakh, deferred tax credit of Rs.(288.00) lakh, the profit for the current year of Rs.3,251.46 lakh along with brought forward profits of Rs.25,552.38 lakh aggregating to Rs.28,803.84 lakh is carried to the Balance Sheet.

OPERATIONS

Current Year Previous Year (Tonnes) (Tonnes)

Manganese Ore:

Production 25,534 81,594

Salvaged from dumps 6,920

Sales 69,919 65,320

Iron Ore:

Production 1,58,467 2,99,203

Sales 2,33,813 5,14,791

Subsequent to the Hon''ble Supreme Court''s (SC) order dated 3 September 2012, lifting its earlier ban imposed on mining operations of all the mining leases in the districts of Bellary, Tumkur and Chitradurga, in respect of the 18 ''Category-A'' mines, the Company resumed its operations with effect from 25 January 2013 only after having complied with all the conditions as laid down by the Hon''ble SC in its orders dated 20 April 2012 and 3 September 2012.

Thus, production of both iron ore and manganese ore was restricted to 1,58,467 and 25,534 tonnes respectively as against the 2,99,203 and 81,594 tonnes produced during the previous year. During the year under review, 2,33,813 tonnes of iron ore and 69,919 tonnes of manganese ore was sold.

RESUMPTION OF MINING OPERATIONS

As reported in the last Annual Report, the Hon''ble Supreme Court of India had, while dealing with the Public Interest Litigation filed by Samaj Parivartana Samudaya in the form of a Writ Petition (WP) Civil (C) No.562/2009 with regard to alleged rampant illegal mining being carried in the States of Andhra Pradesh and Kamataka, invoked the provisions of Article 21 of the Constitution of India and vide its order dated 29 July 2011 suspended all mining operations in the Bellary district of Karnataka State, including the operations of the Company. This order of the Hon''ble Supreme Court was later extended to the districts of Chitradurga and Tumkur on 26 August 2011.

The Joint Team constituted by the Hon''ble Supreme Court conducted survey of all the mining leases in the districts of Bellary, Tumkur and Chitradurga of Karnataka State. The Joint Team had reported that the Company was not involved into any illegalities and accordingly, the Central Empowered Committee (CEC), constituted by the Hon''ble Supreme Court, classified both the mining leases of the Company under Category ''A. The Hon''ble Supreme Court, vide order dated 3 September 2012, permitted resumption of 18 Category ''A'' Mining leases, which included both the mining leases of the Company, subject to compliance with certain conditions.

The Company, having complied with the conditions stipulated by the Hon''ble Supreme Court, could resume its operations with effect from 25 January 2013.

In the interest of protection of environment and intergenerational equity, the Hon''ble Supreme Court has prescribed implementation of Supplementary Environment Management Plan (SEMP) which is estimated by the Company to cost about Rs.76 crore.

Further, to safeguard the environment from further degradation and in the interest of intergenerational equity, the Hon''ble Supreme Court has directed the Government of Karnataka to scale down the iron ore production from the present 82.97 Million Tonnes Per Annum (MTPA) to 30 MTPA in the aforesaid three districts of Karnataka. Accordingly, the Company''s Annual Permissible Production limits have been prescribed at 0.74 MTPA of iron ore and 0.1874 MTPA of manganese ore as against the statutory clearances for production of 1.6 MTPA and 0.6 MTPA respectively.

DIVIDEND

In accordance with the policy to pay sustainable dividend linked with long term performance, the Company had paid dividend for three continuous financial years 2008-09, 2009-10 and 2010-11. However, owing to suspension of mining operations of the Company as per the general order passed by the Hon''ble Supreme Court suspending all mining operations and transportation in the Bellary District of Karnataka, the Company could not declare any dividend for the financial year 2011-12.

Having been permitted to resume its operations from 24 January 2013, the Company has operated for mere 2 months in the financial year 2012-13. Considering the circumstances and in light of the financials, the Board is unable to recommend any dividend for the financial year ended 31 March 2013.

INVESTMENTS

No investments were made during the financial year under review.

SUBSIDIARY

SMPPL''s 32 MW captive thermal power plant situated at Vyasanakere, near Hospet in Bellary District, which commenced its commercial operations on 9 January 2011 is producing power which is being captively used for its ferroalloy operations and the surplus power is being sold in the market.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements are provided in the Annual Report.

DIRECTORS

Syed Abdul Aleem, M. S. Rama Rao and S. R. Sridhar are liable to retire by rotation.

In keeping up with good corporate governance practices, the Board has fixed the retirement age at 70 years for executive directors (other than promoter directors) and 75 years for non-executive directors. Syed Abdul Aleem and M. S. Rama Rao, having completed 76 years and 79 years of age respectively, have crossed the stipulated age of retirement for the non-executive directors and accordingly have not offered for their re-appointment.

S. R. Sridhar being eligible, offers himself for re-election. He is not disqualified from being appointed as director as specified under Section 274 of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your directors state that:

- In the preparation of accounts, the applicable accounting standards have been followed.

- Accounting policies selected were applied consistently.

- Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March 2013 and of the profit for the year ended on that date.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

- The annual accounts of the Company have been prepared on a going concern basis.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Directors'' Report on Corporate Governance is annexed to this report. The certificate of the Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed.

Further, Ministry of Corporate Affairs has introduced Corporate Governance Voluntary Guidelines, 2009 for voluntary adoption by the corporate sector. It has been observed by the Board that various practices of the Company are similar to the procedures / provisions prescribed in the said Guidelines.

AUDITORS'' REPORT

Auditors'' Report on the financial statements of the Company is forming part of this Annual Report and there are no qualifications in the said report.

CORPORATE SOCIAL RESPONSIBILITY

The Company has been, for close to six decades, consciously contributing towards Corporate, Social and Environmental improvement. In the past five years (2006-07 to 2010-11) the Company had spent about Rs.38.67 crore in the form of contributions to community health centres, tree plantation, compensation to farmers, de-silting of tanks, construction of houses for flood affected victims, construction of roads, construction of community centres, temples, masjids and churches, mid-day meal schemes for school children, contributions to Government of Karnataka''s ''Bellary Agenda Task Force'' for development of roads in Bellary district, etc.

In view of the Voluntary Guidelines on Corporate Social Responsibility issued by the Ministry of Corporate Affairs in December 2009 for voluntary adoption by the corporate sector to be socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long term sustainability of business, the Board of Directors has further strengthened its resolve be socially responsible in the years to come and apart from proposing to contribute about T37.50 crore for construction of 17 roads, has committed to adopt the Sandur Town and take up all internal roads, drains and public toilets (with water) facilities, and complete the same over the next three years.

Various initiatives taken by the Company towards CSR are enumerated below:

- The Company directly and indirectly supports three schools at the mines, four schools at Vyasankere (where it proposes to set up the new projects) and six schools and colleges in and around Sandur. These institutions have been catering to the educational needs of employees'' children as well as the children of Sandur and surrounding villages.

- Under Akshaya Patra programme, the Company provides free mid-day meals to children studying in some of the aforesaid schools and two government schools at Sandur.

- The Company''s Community Health Centre namely "Arogya" at Sandur, meets the medical requirements of employees free of cost and at very affordable and actual cost to the general public of Sandur and other adjacent villages. In association with Vittala of Bangalore, Arogya provides specialized eye care facility. Further, in association with Bhagwan Mahaveer Jain Hospital, camps were organized for cancer detection, diabetes, orthopedic and women & child care.

- The Company''s welfare organisation called Sandur Kushala Kala Kendra was established for nurturing and development of traditional handicrafts, upliftment and gainful employment of rural artisans.

- The Company continues to provide a package of essential food grains, to suffice needs of a family of about five per month, at 1972 prices, to all its employees and workmen, including temporary workmen.

- The company has constructed 762 houses at a total cost of Rs.12.53 crore for the victims in flood affected regions of the State. Further, the Company has undertaken construction / development of roads in Sandur region by spending about Rs.20 crore.

- The Company has already planted millions of trees and continues to do so.

SECRETARIAL AUDIT

The Company has not undergone secretarial audit per se but while obtaining certification from a Practicing Company Secretary for filing Annual Return with the Ministry of Corporate Affairs in compliance with the provisions of Section 159 of the Companies Act, 1956, Parameswar G. Hegde has undertaken a review of all the requisite secretarial compliances. Further, in accordance with Regulation 55A of SEBI (Depositories and Participants) Regulations, 1996 and Securities and Exchange Board of India (SEBI) Circular No. D&CC/FITTC/ CIR-16/2002, SEBI/MRD/Policy/Cir-13/2004 and CIR/ MRD/ DP/ 30/ 2010 dated 31 December 2002, 3 March 2004 and 6 September 2010 respectively, the Company has subjected itself to Reconciliation of Share Capital Audit for all the quarters during the financial year under review and certificates issued by a Company Secretary in practice in this regard were submitted to Stock Exchanges in compliance with the requirements of the said circulars and copies placed before the Board of Directors at the subsequent meetings.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is not applicable since the Company does not have any manufacturing activities. However the particulars relating to conservation of energy and technology absorption at the Metal and Ferroalloys plant which forms part of the subsidiary''s Directors'' Report have been included in the Annual Report.

The particulars regarding expenditure and earnings in foreign exchange appear as items No.29 and 31 respectively in the Notes forming part of the Financial Statements.

EMPLOYEES

Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended vide Notification No.GSR 289(E) dated 31 March 2011, the names and other particulars are set out in the Annexure to the Directors'' Report.

ACKNOWLEDGEMENTS

The directors wish to thank members of judiciary, its associates and legal fraternity for their strong commitment to justice, fairness and equity. The directors also extend its gratitude to the Central and State Governments for the confidence bestowed on the Company.

The directors wish to place on record their appreciation for untiring efforts put in by its employees in seeing that the Company resumed its operations at the earliest. And ultimately, we wish to thank the promoters, business associates, banks and investors and look forward to their continued support and contribution.

for and on behalf of the Board

Place : Bangalore S. Y. Ghorpade

Date : 30 May 2013 Chairman & Managing Director


Mar 31, 2012

Dear Members,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2012:

FINANCIAL RESULTS

Current Year Previous Year SI. Particulars Rs. lakh Rs. lakh

a) Net Sales / Income 18,064.37 34,859.54

b) Other Income 1,278.25 973.43

Total 19,342.62 35,832.97

c) Expenditure

(i) Variable 9,247.79 14,009.98

(ii) Fixed 6,327.36 6,922.90

(iii) Depreciation/Amortization 1,105.01 1,066.28

(iv) Interest 0.53 202.97

Total 16,680.69 22,202.13

d) Profit before taxes 2,661.93 13,630.84

Less: i) Current Tax 1,400.00 5,800.00

ii) Deferred Tax (572.00) (1,393.00)

iii) Earlier years 985.00 55.00

f) Net Profit 848.93 9,168.84

g) Add: Balance brought forward from the previous year 24,703.45 16,960.08

h) Profit before appropriation 25,552.38 26,128.92

Less: Appropriations:

(i) Dividend on equity shares - 437.50

(ii) Tax on dividend - 70.97

(iii) Transfer to General Reserve - 917.00

Total - 1,425.47

j) Profit carried to Balance Sheet 25,552.38 24,703.45

The Company earned profit before tax of Rs.2,661.93 lakh after charging Rs.1,105.01 lakh towards depreciation on fixed assets and amortization of mining lease rights and Rs.0.53 lakh towards interest.

After taking into account charging off income tax of Rs.1,400.00 lakh for current year and Rs.985.00 lakh for earlier years, deferred tax credit of (Rs.572.00 lakh), the profit for the current year of Rs.848.93 lakh along with brought forward profits of Rs.24,703.45 lakh aggregating to Rs.25,552.38 lakh is carried to the Balance Sheet.

OPERATIONS

Current Year Previous Year (Tonnes) (Tonnes)

Manganese Ore:

Production 81,594 2,60,779

Salvaged from dumps 6,920 40,498

Sales 65,320 2,40,675

Iron Ore:

Production 2,99,203 15,78,230

Sales 5,14,791 11,07,680

Operations of the Company were restricted to just about four months during the year under consideration due to suspension of mining operations and transportation in the district of Bellary by the Hon'ble Supreme Court vide its order dated 29 July 2011. Thus, production of both iron ore and manganese ore was restricted to 2,99,203 and 81,594 tonnes respectively as against the 15,78,230 and 2,60,779 tonnes produced during the previous year. 6,920 tonnes of manganese ore was salvaged from old waste dumps. 5,14,791 tonnes of manganese ore and 2,40,675 tonnes of iron ore were sold and export constituted about 2.46% of revenue and sales volume.

SUSPENSION OF MINING OPERATIONS DUE TO GENERAL ORDERS PASSED BY THE HON'BLE SUPREME COURT OF INDIA

The Hon'ble Supreme Court of India has, while dealing with the Public Interest Litigation filed by Samaj Parivartana Samudaya in the form of a Writ Petition (WP) Civil (C) No.562/2009 with regard to rampant illegal mining being carried in the States of Andhra Pradesh and Karnataka expressed its concern towards the degradation of environment due to excessive mining. Invoking the provisions of Article 21 of the Constitution of India the Hon'ble Supreme Court, vide its order dated 29 July 2011, suspended all mining operations in the Bellary district of Karnataka State, including the operations of the Company. This order of the Hon'ble Supreme Court was later extended to the districts of Chitradurga and Tumkur on 26 August 2011.

The Company, in order to protect its interests, impleaded itself by filing Interlocutory Application (I.A. No.7) in WP (C) No.562 of 2009 before the Hon'ble Supreme Court and represented the matter. The Joint Team, constituted by the Hon'ble Supreme Court to verify the illegalities in conduct of mining operations in the districts of Bellary, Chitradurga and Tumkur, has conducted survey of all the mining leases including the Company's mining leases and made the following observations, pertaining to the Company, in its Record of Proceedings dated 10 November 2011:

(a) The Joint Team has not found any illegality vis-a-vis the sanctioned lease boundaries;

(b) The owners of the lessee company have voluntarily handed over more than 2,000 hectares of forest land owned by them to the State Government and which has no parallel in the State;

(c) The lessee company has an excellent track record of undertaking mining operations in accordance with the law.

With completion of survey of all mining leases in the districts of Bellary, Tumkur and Chitradurga by the Joint Team, the CEC filed its Report (Final) dated 3 February 2012 to the Hon'ble Supreme Court wherein it has classified all the mining leases in three categories i.e., Category A', 'B' and 'C. Mining Leases with either no illegality or marginal illegality i.e., encroachment by way of pits up to 5% of the sanctioned mining lease area or encroachment by way of dumps up to 10% have been classified in Category A'. Mining Leases having encroachment by way of pits up to 10% or encroachment by way of dumps up to 15% have been classified in Category 'B' and the Mining Leases having encroachment by way of pits exceeding 10% or encroachment by way of dumps exceeding 15% have been classified in Category 'C. Comapny's both the mining leases are in Category 'A.

Considering the recommendations of the CEC, the Hon'ble Supreme Court has vide its order dated 20 April 2012 permitted mining leases under Category 'A' to resume their operations subject to (a) Approval of Rehabilitation & Reclamation (R&R) Plan by CEC (b) Mining Lessee providing an undertaking to implement the R&R Plan (c) Demarcation of boundaries as per the findings of the Joint Team and as modified by CEC, if any; and (d) Mining Lessee having all approvals like Environmental Clearance (EC), Forest Clearance (FC), Approved Mining Plan and Consent to Operate.

Since Company's mining leases are in Category 'A', in compliance with the directions of the Hon'ble Supreme Court, the Company has submitted the requisite inputs to Federation of Indian Mineral Industries (FIMI) for preparation of R&R Plan and submission to Indian Council for Forestry Research & Education (ICFRE) who have been entrusted with the responsibility of preparing the R&R Plans in accordance with the guidelines prescribed by CEC, which have been approved by the Hon'ble Supreme Court vide its order dated 13 April 2012. FIMI is expected to submit the R&R Plan to ICFRE shortly. The order for resumption of operations has come as a big relief to the Company since it has been maintaining its large workforce by paying full salary without lay-off or retrenchment of any of its employees.

In the meanwhile the Hon'ble Supreme Court vide its order dated 2 September 2011 constituted a Monitoring Committee and directed for sale of existing stock of iron ore through e-auction. Thereafter considering the Affidavit filed by the Company in its Interlocutory Application (IA) No.7 in Writ Petition (WP) Civil (C) No.562/2009, the Hon'ble Supreme Court has vide its order dated 4 May 2012 permitted the manganese ore mined by the Company in its both the mining leases to be sold through e-auction but supply of manganese ore for captive consumption and to the subsidiary companies has been exempted from e-auction.

FUTURE PROSPECTS

In the 57th Annual Report for the year 2010-11, the Company informed its shareholders' about the in-principle approvals accorded by the Government of Karnataka (GoK) for the Company to set up an iron ore beneficiation plant at Vyasankere at a cost of about Rs.165 crore, a Rs.2.5 lakh TPA mini integrated special alloy steel plant at Vyasankere with an investment of about Rs.500 crore, and 4.2km long ropeway costing about Rs.30 crore.

In addition to the above proposals, the Company proposed to set up a plant to manufacture 1.1 lakh TPA steel powder at Vysankere at an estimated project cost of about Rs.200 crore which can provide employment to about 50 persons. This project is proposed to be implemented in association with a foreign technological partner who is expected to contribute 70% of the cost and the balance is proposed to be contributed by the Company.

Further, the Company has obtained approval of the GoK for increasing the capacity of the proposed integrated special alloy steel plant from Rs.2.5 lakh TPA to Rs.3.5 lakh TPA. The project is now estimated to cost about Rs.731 crore and will generate employment opportunities for 678 persons.

DIVIDEND

The Board has not recommended any dividend for the financial year ended 31 March 2012 in view of the suspension of mining operations with effect from 29 July 2011 as per the general order of the Hon'ble Supreme Court and Company's need for capital investments in the proposed projects which the Company intends to finance through internal accruals to the maximum extent possible.

INVESTMENTS

During the financial year under review, Star Metallics and Power Private Limited (SMPPL) allotted Rs.427.40 lakh fully paid up equity shares of Rs.10/- each at a premium of Rs.10/- per share. With this allotment the Company holds 7.524 crore equity shares constituting 81.24% of SMPPL's paid up equity share capital.

SUBSIDIARY

SMPPL's 32 MW captive thermal power plant situated at Vyasanakere, Near Hospet in Bellary District, which commenced its commercial generation on 9 January 2011, has achieved stabilisation in its power plant operations. Apart from captively using the power for its ferroalloy operations, the surplus power is being sold in the market. A statement pursuant to Section 212(1 )(e) of the Companies Act, 1956 has been annexed and is forming part of this report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements are provided in the Annual Report.

CHAIRMAN EMERITUS

M. Y. Ghorpade, Chairman Emeritus of the Company breathed his last on 29 October 2011. He was closely associated with the Company ever since its establishment in 1954 and has made significant contributions in nurturing and developing it into one of the finest professionally managed mining and metallurgical company of India. He used to freely mix and mingle with the labour and took pains in understanding their work conditions and their requirements, resulting in the Company developing and implementing well designed welfare measures for employees, especially the almost interest free housing loan, subsidized ration supply which resulted in 100% food security and free cloth supply, which have been highly appreciated and also resulted in a very low attrition in employment; and it is a matter of pride that the present work force of the Company includes some second and third generation of the first employees.

M. Y Ghorpade stood by his ideals and principles, whether it be as a Minister of the Karnataka State or the Managing Director of SMIORE. Under his stewardship, his nobility, concern for the employees, high standard of ethics in business, and adherence and compliance of rules and law, have earned SMIORE a much deserved reputation of being a business house of high ethical standards and; the Joint Team appointed by the Hon'ble Supreme Court and the Central Empowered Committee (CEC) constituted by the Hon'ble Supreme Court which were entrusted with the responsibility of investigating illegalities in mining, state in their Record of Proceedings dated 10 November 2011 that:

(a) The Joint Team has not found any illegality vis-a-vis the sanctioned lease boundaries;

(b) The owners of the lessee company have voluntarily handed over more than 2,000 hectares of forest land owned by them to the State Government and which has no parallel in the State;

(c) The lessee company has an excellent track record of undertaking mining operations in accordance with the law.

M. Y Ghorpade and SMIORE have been synonymous and earned great amount of goodwill due to the steadfastly implemented philosophy of emphasis on welfare of its employees, development of the local area and its people and special concern for health and education. M. Y Ghorpade's message to the Company before he breathed his last was 'what is earned from the soil of Sandur in one form or the other should be primarily used to benefit Sandur'.

The Company could sail through the very difficult times for almost ten years from 1996-97 till 2006-07 and honorably survive only because of its impeccable track record of honesty, ethical business practices, M. Y Ghorpade's value system, his stature as a principled and honest man and the goodwill he and SMIORE earned in every quarter, be it the banks, institutions, government offices or general public. SMIORE was eventually discharged from BIFR in January 2007; all its liabilities cleared and is now a debt free Company.

The Board of Directors has pledged that the Company will abide by the noble values of M. Y Ghorpade and uphold them even at any distressful time of the Company in future and will strive hard to keep up the legacy it has inherited from the Patron. They have expressed that they are well determined to adhere to the values and principles of M. Y. Ghorpade and strive to achieve the goals set by him, as detailed in his address to the Board in the form of an informal 'WILL' which he had read out and declared to the Board at its 282nd meeting held on 9 April 2011.

DIRECTORS

S. H. Mohan, N. Viswanathan and R. Subramanian are liable to retire by rotation and, being eligible, offer themselves for re-election.

None of the directors of the Company are disqualified from being appointed as directors as specified under Section 274 of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your directors state that:

- In the preparation of accounts, the applicable accounting standards have been followed.

- Accounting policies selected were applied consistently.

- Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March 2012 and of the profit for the year ended on that date.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

- The annual accounts of the Company have been prepared on a going concern basis.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Directors' Report on Corporate Governance is annexed to this report. The certificate of the Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed.

Further, Ministry of Corporate Affairs has introduced Corporate Governance Voluntary Guidelines, 2009 for voluntary adoption by the corporate sector. It has been observed by the Board that various practices of the Company are similar to the procedures / provisions prescribed in the said Guidelines.

AUDITORS' REPORT

Auditors' Report on the financial statements of the Company is forming part of this Annual Report and there are no qualifications in the said report.

CORPORATE SOCIAL RESPONSIBILITY

The Company has been, for close to six decades, consciously contributing towards Corporate, Social and Environmental improvement.

In the past five years (2006-07 to 2010-11) alone, the Company had spent about Rs.38.67 crore in the form of contributions to community health centres, tree plantation, compensation to farmers, de-silting of tanks, construction of houses for flood affected victims, construction of roads, construction of community centres, temples, masjids and churches, mid-day meal schemes for school children, contributions to Government of Karnataka's 'Bellary Agenda Task Force' for development of roads in Bellary district, etc.

In view of the Voluntary Guidelines on Corporate Social Responsibility issued by the Ministry of Corporate Affairs in December 2009 for voluntary adoption by the corporate sector to be socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long term sustainability of business, the Board of Directors has further strengthened its resolve to be socially responsible in the years to come and apart from proposing to contribute about Rs.37.50 crore for construction of 17 roads, has committed to adopt the Sandur Town and take up all internal roads, drains and public toilets (with water) facilities, and complete the same over the next three years.

Various initiatives taken by the company towards CSR are enumerated below:

- The Company directly and indirectly supports three schools at the mines, four schools at Vyasankere (where it proposes to set up the new projects) and six schools and colleges in and around Sandur. The institutions have been catering to the educational needs of employees' children as well as the children of Sandur and surrounding villages.

- Under Akshaya Patra programme, Company provides free mid-day meals to children studying in some of the aforesaid schools and two government schools at Sandur.

- The Company's Community Health Centre namely "Arogya" at Sandur, meets the medical requirements of employees free of cost and at very affordable and actual cost to the general public of Sandur and other adjacent villages. In association with Vittala of Bangalore, Arogya provides specialized eye care facility. Further, in association with Bhagwan Mahaveer Jain Hospital, camps were organized for cancer detection, diabetes, orthopedic and women & child care.

- The Company's welfare organisation called Sandur Kushala Kala Kendra was established for nurturing and development of traditional handicrafts, upliftment and gainful employment of rural artisans.

- The Company continues to provide a package of essential food grains, to suffice needs of a family of about five persons per month at 1972 prices, to all its employees and workmen, including temporary workmen.

- The company has constructed 762 houses at a total cost of Rs.12.53 crore for the victims in flood affected regions of the State. Further, the Company has undertaken construction / development of roads in Sandur region by spending about Rs.6.35 crore and would be required to additionally contribute about Rs.11.23 crore.

- The Company has already planted millions of trees and continues to do so. SECRETARIAL AUDIT

The Company has not undergone secretarial audit per se but while obtaining certification for filing Annual Return with the Ministry of Corporate Affairs in compliance with the provisions of Section 154 of the Companies Act, 1956, a practicing company secretary has undertaken a review of all the requisite secretarial compliances. Further, in accordance with Regulation 55A of SEBI (Depositories and Participants) Regulations, 1996 and Securities and Exchange Board of India (SEBI) Circular No. D&CC/FITTC/CIR-16/2002 and SEBI/MRD/Policy/ Cir-13/2004 and CIR/NRD/DP/30/2010 dated 31 December 2002, 3 March 2004 and dated 6 September 2010 respectively, the Company has subjected itself to Reconciliation of Share Capital Audit for all the quarters during the financial year under review and certificates issued by a Company Secretary in Practice in this regard were submitted to Stock Exchanges in compliance with the requirements of the said circulars and copies placed before the Board of Directors at the subsequent meetings.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE, EARNINGS AND OUTGO

Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is not applicable since the Company does not have any manufacturing activities. However the particulars relating to conservation of energy and technology absorption at the Metal and Ferroalloys plant which forms part of the subsidiary's Directors' Report, have been included in the Annual Report.

The particulars regarding expenditure and earnings in foreign exchange appear as items No.29 and 31 respectively in the Notes.

EMPLOYEES

Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended vide Notification No.GSR 289(E) dated 31 March 2011, the names and other particulars are set out in the Annexure to the Directors' Report.

ACKNOWLEDGEMENTS

The directors wish to thank the Central and State Governments for the support extended during the financial year to the Company.

The directors wish to place on record their appreciation for the confidence reposed on the Company, by its promoters, business associates, employees and investors, despite the blanket ban on mining industry. This confidence has served as a repertoire of strength and has come a long way in helping the Company sail through the tough time.

for and on behalf of the Board

Place : Bangalore S. Y. Ghorpade

Date : 26 May 2012 Chairman & Managing Director


Mar 31, 2011

Dear Members,

The Directors are pleased to present their Report and Audited Statement of Accounts for the year ended 31 March 2011:

FINANCIAL RESULTS

Current Year Previous Year Sl. Particulars lakh lakh

a) Net Sales / Income 34,835.78 28,747.07

b) Other Income 997.19 1,542.82

Total 35,832.97 30,289.89

c) Expenditure

(i) Variable 14,009.98 19,673.66

(ii) Fixed 6,922.90 5,119.55

(iii) Depreciation/Amortization 1,066.28 1,042.12

(iv) Interest 202.97 153.53

Total 22,202.13 25,988.86

d) Profit before taxes 13,630.84 4,301.03

e) Less: i) Current Tax 5,800.00 1,900.00

ii) Deferred Tax (1,393.00) (516.00)

iii) Earlier years 55.00 -

f) Net Profit 9,168.84 2,917.03

g) Add: Balance brought forward from the previous year 16,960.08 14,641.15

h) Profit before appropriation 26,128.92 17,558.18

(i) Less: Appropriations:

(ii) Dividend on equity shares 437.50 262.50

(iii) Tax on dividend 70.97 43.60

(iii) Transfer to General Reserve 917.00 292.00

Total 1,425.47 598.10

j) Profit carried to Balance Sheet 24,703.45 16,960.08

The Company earned profit before tax of 13,630.84 lakh after charging 1,066.28 lakh towards depreciation on fixed assets and amortization of mining lease rights and 202.97 lakh towards interest.

After taking into account charging off income tax of 5,800.00 lakh for current year and 55.00 lakh for earlier years, deferred tax credit of ( 1,393.00 lakh), dividend on shares of 437.50 lakh, tax on dividend of 70.97 lakh and transfer to general reserve of 917.00 lakh, the profit for the current year of 7,743.37 lakh along with brought forward profits of 16,960.08 lakh aggregating to 24,703.45 lakh is carried to the Balance Sheet.

OPERATIONS Current Year Previous Year (Tonnes) (Tonnes)

Manganese Ore: Production 2,60,779 1,97,078

Salvaged from dumps 40,498 28,678

Sales 2,40,675 2,83,445

Iron Ore: Production 15,78,230 14,46,954

Salvaged from dumps - 36,234

Sales 11,07,680 15,35,929

Compared with the previous year, manganese ore production during the financial year 2010-11 increased by 32% from 1,97,078 tonnes to 2,60,779 tonnes. 40,498 tonnes were salvaged from old waste dumps. Sale was 2,40,675 tonnes, including drawal from stock, which is 15% less than the previous year. Export constituted about 6% of revenue though about 9% of sales volume.

Production of Iron Ore increased by 95,042 tonnes compared to that of the previous year.

FUTURE PROSPECTS

As stated in the previous Annual Report, the Company proposes to set up an iron ore beneficiation plant at Vyasankere at a cost of about 165 crore, a 2.5 lakh tonnes per year mini integrated special alloy steel plant at Vyasankere with an investment of about 500 crore, 4.2 km long ropeway costing about 30 crore. In-principle approvals from the Government of Karnataka (GoK) have also been obtained. The Company is in the process of seeking further approvals in this regard and also proposes to seek from the GoK revision of in-principle approval for the steel plant with 3.5 lakh tonnes capacity instead of existing approval for 2.5 lakh tonnes capacity.

DIVIDEND

Board of Directors recommend a dividend of 5/- per equity share of 10/- each for the financial year ended 31 March 2011, aggregating to 437.50 lakh. Subject to the approval of the shareholders at the Annual General Meeting, the dividend will be paid to members whose names appear in the Register of Members as on 10 September 2011 and in respect of shares held in dematerialized form, it will be paid to members whose names are furnished as beneficial owners, by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), as on that date.

The dividend pay out for the year under review has been formulated in accordance with the Company's policy to pay sustainable dividend linked to long term performance. The amount of dividend has also been considered keeping in view the Company's need for capital investments in the proposed projects which the Company intends to finance through internal accruals to the maximum extent possible.

INVESTMENTS

During the financial year under review, Star Metallics and Power Private Limited (SMPPL) allotted 75 lakh equity shares of 10/- each at a premium of 10/- per share against part of the amounts due from them to the Company towards one 20MVA furnace sold by the Company. With this allotment the Company holds 3.25 crore equity shares constituting 74.29% of SMPPL's paid up equity share capital.

Further, in accordance with the approvals accorded under Section 372A of the Companies Act, 1956, the Company has extended long term secured loan of 82.98 crore to SMPPL for the purpose of operating ferroalloys plant and setting up 32 MW coal based power plant.

SUBSIDIARY

SMPPL's 32 MW captive thermal power plant situated at Vyasanakere, Near Hospet, Bellary District, was formally inaugurated by M. Y. Ghorpade, Chairman Emeritus of the Company on Thursday, 9 December 2010.

The operations of the plant have been stabilized. Apart from using the generated power for its ferroalloy operations, the surplus power is being sold in the market.

Considering the equity contribution and the financial assistance extended to SMPPL, Board of Directors of both the companies have accorded their in-principle approval for exploring the possibilities of merging SMPPL with the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements are provided in the Annual Report.

DIRECTORS

S. R. Sridhar and M. S. Rama Rao are liable to retire by rotation and, being eligible, offer themselves for re-election.

E. B. Desai, director of the Company expired on 24 December 2010. Board placed on record its appreciation for the valuable contribution made by E. B. Desai.

V. Balasubramanian, P. Vishwanatha Shetty, U. R. Acharya and K. Raman were co-opted as Additional Directors. U. R. Acharya and K. Raman are proposed to be appointed as Director (Commercial) and Director (Finance) respectively with effect from 9 April 2011. Notices under Section 257 of the Companies Act, 1956 have been received from members signifying their intention to propose the names of aforesaid Directors and resolutions for their election have been included in the notice convening the Annual General Meeting.

S. Y. Ghorpade, Nazim Sheikh, S. H. Mohan and S. R. Sridhar, being whole-time directors of the Company, are proposed to be re-appointed at the proposed remuneration with effect from 1 April 2011. Nazim Sheikh is being proposed to be re-designated as Joint Managing Director.

Board has commended payment of certain percentage of profits as commission to all the directors.

None of the directors of the Company are disqualified from being appointed as directors as specified under Section 274 of the Companies Act, 1956.

Board commends for passing of the respective resolutions proposed in the Notice of the Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your directors state that:

- In the preparation of accounts, the applicable accounting standards have been followed.

- Accounting policies selected were applied consistently.

- Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March 2011 and of the profit for the year ended on that date.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

- The annual accounts of the Company have been prepared on a going concern basis.

AUDITORS

Messrs Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Directors' Report on Corporate Governance is annexed to this report. The certificate of the Auditors, Messrs

Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed.

Further, Ministry of Corporate Affairs has introduced Corporate Governance Voluntary Guidelines, 2009 for voluntary adoption by the corporate sector. It has been observed by the Board that various practices of the Company are similar to the procedures / provisions prescribed in the said Guidelines.

AUDITOR'S REMARKS ON CORPORATE GOVERNANCE

Pursuant to the provisions of clause 49(11)(A)(iv) of the Listing Agreements, the Chairman of the Audit Committee was required to be present at the Annual General Meeting to answer the queries of the shareholders. However, as stated in the Corporate Governance Report, for the reasons beyond his control, R. Subramanian was not present at the Annual General Meeting but Syed Abdul Aleem another member of the Audit Committee was present at the Annual General Meeting to answer the queries of the shareholders.

CORPORATE SOCIAL RESPONSIBILITY

The Ministry of Corporate Affairs (MCA) has issued Voluntary Guidelines on Corporate Social Responsibility in December 2009 for voluntary adoption by the corporate sector to be socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long term sustainability of business. The Company has always been socially responsible as enumerated below. The Board of Directors has resolved to continue to be socially responsible in the years to come.

- The Company directly and indirectly supports three schools at the mines, four schools at Vyasankere (where it proposes to set up the new projects) and six schools and colleges in and around Sandur. The institutions have been catering to the educational needs of employees' children as well as the children of Sandur and surrounding villages. During the financial year under review the Company has donated 90 lakh, in addition to 100 lakh donated during the previous financial year, to Shivapur Shikshana Samithi, Sandur which runs many educational institutions including Sandur Residential School (SRS), which has developed into a premier institution of the region and a member of the prestigious Indian Public Schools' Conference (IPSC) which comprises of about 75% schools in the Country.

- Under Akshaya Patra programme, Company provides free mid-day meals to children studying in some of the aforesaid schools and two government schools at Sandur.

- The Company's Community Health Centre namely "Arogya" at Sandur meets the medical requirements of employees free of cost and at very affordable and actual cost to the general public of Sandur and other adjacent villages. In association with Vittala of Bangalore, Arogya provides specialized eye care facility. Further, in association with Bhagwan Mahaveer Jain Hospital, camps were organized for cancer detection, diabetes, orthopedic and women & child care.

- The Company's welfare organisation called Sandur Kushala Kala Kendra was established for nurturing and development of traditional handicrafts, upliftment and gainful employment of rural artisans.

- The Company continues to provide a package of essential food grains, to suffice needs of a family of about five per month, at 1972 prices, to all its employees and workmen, including temporary workmen.

- The construction of 900 houses undertaken by the Company costing about 10 crore for the victims in flood affected regions of the State is nearing completion. Further, the Company has undertaken construction / development of roads in Sandur region by spending about 6.5 crore.

- The Company has already planted millions of trees and continues to do so.

SECRETARIAL AUDIT

The Company has not undergone secretarial audit per se but while obtaining certification from a practicing company secretary for filing Annual Return with the Ministry of Corporate Affairs in compliance with the provisions of Section 154 of the Companies Act, 1956, Parameswar G. Hegde has undertaken a review of all the requisite secretarial compliances. Further, in accordance with Regulation 55A of SEBI (Depositories and Participants)

Regulations, 1996 and Securities and Exchange Board of India (SEBI) Circular No. D&CC/FITTC/CIR-16/2002 and SEBI/MRD/Policy/Cir-13/2004 dated 31 December 2002 and 3 March 2004 respectively, the Company has subjected itself to Reconciliation of Share Capital Audit for all the quarters during the financial year under review and certificates issued by a Company Secretary in Practice in this regard were submitted to Stock Exchanges in compliance with the requirements of the said circulars and copies placed before the Board of Directors at the subsequent meetings.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE, EARNINGS AND OUTGO

Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 are not applicable as the Metal & Ferroalloys Plant was not operated by the Company. The particulars regarding expenditure and earnings in foreign exchange appear as items No.7 and 8 respectively in the Notes to the Accounts.

EMPLOYEES

During the year there were no employees whose particulars are required to be disclosed under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide Notification No.GSR 289(E) dated 31 March 2011.

ACKNOWLEDGEMENTS

The directors wish to thank the government and the banks for the support extended during the financial year to the Company.

The directors also wish to place on record their appreciation of the cordial labour-management relations and the good work put in by all employees of the Company.

for and on behalf of the Board

S. Y. Ghorpade Chairman & Managing Director

Place : Bangalore Date : 28 May 2011


Mar 31, 2010

The Directors are pleased to present their report and Audited Statement of Accounts for the year ended 31 March 2010:

FINANCIAL RESULTS Current Year Previous Year Rs.lakh Rs. lakh

a) Net Sales/Income 28,747.07 42,781.78

b) Other Income - 1,542.82 286.90

Total 30,289.89 43,068.68

c) Expenditure

(i) Variable 19,673.66 15,096.34

(ii) Fixed 5,119.55 4,478.01

(iii) Depreciation/Amortization 1,042.12 988.51

(iv) Interest 153.53 1.97

Total 25,988.86 20,564.83

d) Profit before taxes 4,301.03 22,503.85

e) Less: i) Current Tax 1,900.00 8,825.00

ii) Deferred Tax (516.00) (1,090.00)

iii) Fringe Benefit Tax - 21.80

f) Net Profit 2,917.03 14,747.05

g) Add: Balance brought forward from the previous year 14,641.15 1,743.66

h) Profit before appropriation 17,558.18 16,490.71

i) Less: Appropriations:

i) Dividend on preference shares - 13.72 ii) Dividend on equity shares 262.50 262.50

iii) Tax on Dividends 43.60 46.94

iv) Transfer to Capital Redempt ion Reserve - 51.40

v) Transfer to general reserve 292.00 1,475.00

Total 598.10 1,849.56

j) Profit carried to Balance Sheet 16,960.08 14,641.15

The Company earned profit before tax of Rs.4,301.03 lakh after charging Rs. 1,042.12 lakh towards depreciation on fixed assets and amortization of mining lease rights and Rs. 153.53 lakh towards interest.

After taking into account charging off income tax of Rs.1,900 lakh, deferred tax of (^516 lakh), dividend on shares of Rs 262.50 lakh, tax on dividends of Rs. 43.60 lakh and transfer to general reserve of Rs.292.00 lakh, the profit carried to the Balance Sheet is Rs.16,960.08 lakh.

OPERATIONS Current Year Previous Year (Tonnes) (Tonnes)

Manganese Ore: Production 1,97,078 2,36,614 Salvaged from dumps 28,678 4,212 Sales 2,83,445 2,95,434

Iron Ore : Production 14,46,954 11,72,845

Salvaged from dumps 36,234 3,32,829

Sales 15,35,929 14,48,817

Compared with the previous year, manganese ore production during the financial year 2009-10 decreased by 17% from 2,36,614 tonnes to 1,97,078 tonnes. 28,678 tonnes were salvaged from old waste dumps. Sale was 2,83,445 tonnes, including drawal from stock, which is 4% less than the previous year. Export constituted about 35% of revenue though about 38% of sales volume.

Production of iron ore increased by 2,74,109 tonnes compared to that of the previous year. Demand for low grade ores enabled usage of 36,234 tonnes of iron ore salvaged from old dumps, which had hitherto been lying unsold for a long period.

FUTURE PROSPECTS

The Company possesses iron ore reserves with varying percentages of Fe. Keeping in mind the fact that the low grade ore may not always find a market, the Board of Directors has approved setting up an iron ore beneficiation plant at Vyasankere at a cost of about Rs.165 crore, to result in value addition of about Rs. 50/55 crore per year. The beneficiation plant would be capable of upgrading 55/56 grade iron ore to about 62/63 grade concentrate for production of sinter or pellets or even sold as it is to others who possess sintering or peptization facilities. Such diversification would result in value addition to its iron ore reserves and also extend the life of the mines.

Further, in order to ensure captive use and value addition to iron ore reserves the Board of Directors has approved setting up a 2.5 lakh tonnes per year medium sized special alloy steel plant at Vyasankere with a total investment of about Rs. 500 crore.

In addition to the above, the Board of Directors has also approved the setting up 4 km ropeway costing Rs.30 crore which will facilitate transporting iron ore from mines to the railway siding.

The Company has sufficient land and water allotment at Vyasankere, about 30 km from the mines, situated on the NH-13 which is also in the close proximity to Hospet-Gunda railway line. Accordingly this would be an ideal location for setting up the said projects.

Further, Government of Karnataka was also pleased to grant its in-principle approval for the said projects.

DIVIDEND

Board of Directors recommend a dividend of Rs.3.00 per equity share of Rs.10/- each for the financial year ended 31 March 2010, aggregating to Rs.262.50 lakh. Subject to the approval of the shareholders at the Annual General Meeting, the dividend will be paid to members whose names appear in the Register of Members as on 29th September 2010 and in respect of shares held in dematerialized form, it will be paid to members whose names are furnished as beneficial owners, by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), as on that date.

The dividend pay out for the year under review has been formulated in accordance with the Companys policy to pay sustainable dividend linked to long term performance. The amount of dividend has also been considered keeping in view the Companys need for capital investments in the proposed projects which the Company intends to finance through internal accruals to the maximum extent possible.

INVESTMENTS

In accordance with the agreement executed with Star Metallics and Power Private Limited (SMPPL), subsidiary of the Company for extending long term secured loan of ^60.00 crore for the purpose of operating ferroalloys plant and setting up 32 MW coal based power plant, the Company invested Rs.59.98 crore.

During the financial year under review, SMPPL allotted 55 lakh equity shares of Rs.10/- each at a premium of Rs.10/- per share against Rs.11.00 crore share application money which was pending for allotment. Subsequent to the end of financial year, SMPPL has allotted 75 lakh equity shares of Rs.10/- each at a premium of Rs.10/- per share against part of the amounts due from them to the Company towards one 20MVA furnace sold by the Company. With this allotment the Company holds 3.25 crore equity shares constituting 74.29% of SMPPLs paid up equity share capital.

SUBSIDIARY

SMPPL is expected to commission its 32 MW coal based thermal power plant at Vyasankere, near Hospet, during September 2010. Further, Government of Karnataka has accorded its in-principle approval for SMPPL to set up another 32MW thermal power plant at a cost of about Rs.130 crore at the same location.

CONSOLIDATED FINANCIAL.STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements are provided in the Annual Report.

DIRECTORS

Sushiladevi Ghorpade has ceased to be a director with effect from 29 June 2010.

Nazim Sheikh, Syed Abdul Aleem and E. B. Desai are liable to retire by rotation and, being eligible, offer themselves for re-election.

S. Y. Ghorpade is attaining the age of 70 years on 13 September 2010 and pursuant to the provisions of clause (c) of Part I of Schedule XIII to the Companies Act, 1956, consent of the Company by special resolution is sought for his continuing as Managing Director till the expiry of his current tenure on 30 June 2011 and for such future terms of office as may be decided by the Board and the Shareholders.

None of the directors of the Company are disqualified from being appointed as directors as specified under Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

Board commends for passing of the respective resolutions proposed in the Notice of the Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors state that:

- In the preparation of accounts, the applicable accounting standards have been followed.

- Accounting policies selected were applied consistently.

- Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March 2010 and of the profit for the year ended on that date.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities.

- The annua! accounts of the Company have been prepared on a going concern basis.

AUDITORS

Messrs Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of this Annual General Meeting and. being eligibie, offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Directors Report on Corporate Governance is annexed to this report. The certificate of the Auditors, Messrs Deloitte Haskins & Sells, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is being annexed.

Further, Ministry of Corporate Affairs has introduced Corporate Governance Voluntary Guidelines, 2009 for voluntary adoption by the corporate sector. It has been observed by the Board that various practices of the Company are similar to the procedures / provisions prescribed in the said Guidelines. The Company will be reviewing its policies and practices in the context of other parameters / recommendations prescribed in the said Guidelines for appropriate adoption.

CORPORATE SOCIAL RESPONSIBILITY

The Ministry of Corporate Affairs (MCA) has issued Voluntary Guidelines on Corporate Social Responsibility in December 2009 for voluntary adoption by the Corporate Sector to be socially, environmentally and ethically responsible in governance of operations and also to add value to the operations while contributing towards the long term sustainability of business. The Company has always been socially responsible as enumerated below. The Board of Directors has resolved to continue to be socially responsible in the years to come.

- The Company directly and indirectly supports three schools at the mines, four schools at Vyasankere (where it proposes to set up the new projects) and nearly six schools and colleges in and around Sandur. The institutions have been catering to the educational needs of employees children as well as the children of Sandur and surrounding villages. During the financial year under review the Company has donated
- Under Akshaya Patra programme, Company provides free mid-day meals to children studying in some of the aforesaid schools and two Government schools at Sandur.

- The Companys Community Health Centre namely "Arogya" at Sandur meets the medical requirements of employees free of cost and also the general public of Sandur and other adjacent villages. In association with Vittala of Bangalore. Arogya provides specialized eye care facility.

- The Companys welfare organisation called Sandur Kushala Kala Kendra was established for nurturing and development of traditional handicrafts, upliftment and gainful employment of rural artisans.

- The Company continues to provide a package of essential food grains, to suffice needs of a family of about five per month, at 1972 prices, to all its employees and workmen, including temporary workmen.

- The Company has undertaken to construct around 900 houses costing about Rs.10-12 crore for the victims in flood affected regions of the State.

- The Company has contributed about Rs.15 crore to Bellary Area Task Force (BATF) for the development of Bellary District in general and Sandur in particular.

SECRETARIALAUDIT

In accordance with Regulation 55A of SEBi (Depositories and Participants) Regulations, 1996 and Securities and Exchange Board of India (SEBI) Circular No. D&CC/FITTC/CIR-16/2002 and SEBI/MRD/Policy/Cir-13/2004 dated 31 December 2002 and 3 March 2004 respectively, the Company has obtained Secretarial Audit reports for all the quarters during the financial year under review from Ms. P. Renuka, Company Secretary in Practice. The same have been submitted to the stock exchanges and copies placed before the Board of Directors at the subsequent meetings.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE, EARNINGS AND OUTGO

Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 are not applicable as the Metal & Ferroalloys Plant was not operated by the Company. The particulars regarding expenditure and earnings in foreign exchange appear as items No.7 and 8 respectively in the Notes to the Accounts.

EMPLOYEES

Information as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in the Annexure forming part of this report.

ACKNOWLEDGEMENTS

The directors wish to thank the government and the banks for the support extended during the financial year to the Company.

The directors also wish to place on record their appreciation of the cordial labour-management relations and the good work put in by all employees of the Company. for and on beha,f of the Board

Place: Bangalore S. Y. GHORPADE Date : 29 July 2010 Chairman & Managing Director

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