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Directors Report of Graphite India Ltd.

Mar 31, 2023

The Directors have pleasure in presenting their Forty Eighth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2023.

Financial Results

Rs. in Crores

2022-23

2021-22

2022-23

2021-22

Particulars

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

2913

2799

3181

3026

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Exceptional Items, Tax and other Comprehensive Income

531

803

445

769

Finance Costs 9

4

13

5

Profit before Depreciation, Exceptional Items and Tax

^.522

799

432

764

Depreciation and Amortisation Expense

46

46

57

55

Profit before Share of Profit/(Loss) of Associate, Exceptional Items and Tax

476

753

375

709

Share of (Loss) of Associate

-

-

-

(16)

Profit before Exceptional Items and Tax

476

753

375

693

Exceptional Items

-

-

53

-

Profit before Tax

476

753

322

693

Tax Expense for the Current Year

Current Tax

1

158

\129

160

Deferred Tax

(4)

21

(6)

28

Profit for the Year

350

574

199

505

Other Comprehensive Income (net of tax)

*

3

1 14

(2)

Total Comprehensive Income for the year

350

577

213

503

Statement of Retained Earnings

Retained Earnings at the beginning of the year

2904

P 2425

3309

2906

Add Profit lor the year

350

574

199

505

Add Comprehensive Income/(Loss)

*

3

1

3

Less Final Dividend on Equity Shares

195

98

195

98

Less Transfer to Reserve Fund

-

-

-

7

Less Dividend Accrued - Non-Controlling Interest and Changes in Equity

-

-

*

-

Retained Earnings at the end of the year

3059

2904

3314

3309

REVIEW OF THE ECONOMY

The global economy experienced a widespread slowdown in 2022 due to geopolitical turmoil, sharp decline in China''s manufacturing activity and periodic recurrence of pandemic. Supply chain disruptions and poor demand in developed countries further weakened global trade, disrupting exports from emerging markets and developing economies. As a result of supply chain constraints and an increase in commodity prices, many economies suffered high levels of inflation. In response, central banks implemented policy correction measures to mitigate and contain inflationary pressures. The consequent rise in interest rates and the slowdown in economic activity have caused bank specific risks and

financial destabilisation concerns. In April 2023, International Monetary Fund (IMF) reported that the global output growth rate for 2022 was 3.4%. However, this low growth rate is expected to further decline to 2.8% in 2023 followed by a small rise to 3% in 2024. Growth in advanced economies are projected to decline steeply from 2.7% in 2022 to 1.3% in 2023, with a slight small increase to 1.4% in 2024. Average growth in emerging markets and developing economies are projected to decline from 4% in 2022 to 3.9% in 2023 and is forecasted to rise to 4.2% in 2024. Given the huge risks in the economic, financial, geopolitical and environmental domains, the cumulative near-term economic outlook continues to be depressive and volatile.

The US, European Union, and other developed economies have undergone a weak growth, which has adversely impacted the global economy. The USA’ GDP growth is projected to decline to 1.6% in 2023 due to higher interest rates, lower incomes, and reduced consumer spending. Similarly, the European Union''s growth is expected to be 1% and 1.9% in 2023 and 2024, respectively. This is because COVID-19 restrictions were being eased and the boost from pent-up demand that drove economic activity in the previous year is expected to diminish. Chinese economy had a less than anticipated performance in 2022 due to the pandemic related lockdowns and decline in the real estate market. However, the Chinese government has implemented several monetary and fiscal policies, and removed the zero-COVID-19 policy, leading to an expectation of a moderate improvement in 2023 with a projected expansion to 5.2%. However, the growth is unlikely to reach pre-pandemic level in the foreseeable future.

On the sectoral front, the global steel industry saw a decline in demand in 2022 due to monetary tightening and high energy costs. The World Steel Association (WSA) forecasts a 2.3% increase in demand for the steel industry in 2023, resulting in a total demand of 1,822.3 million metric tones (MMT). Additionally, WSA projects a 1.7% growth in steel demand in 2024, reaching a total of 1,854 MMT. The recovery is expected to be driven by the manufacturing industry, although the high interest rates may still have a dampening effect on overall steel demand.

In 2022, the Indian economy experienced a robust recovery driven by private consumption and government spending, resulting in a GDP growth of 6.8%, despite few signals of moderation and grey zones. The capital goods sector is expected to benefit from the growth momentum in infrastructure and investments made towards renewable energy. The Indian economy is predicted to maintain its strong growth trajectory in FY 2023, fueled by consistent government spending on infrastructure and affordable housing projects further augmenting private investment. The country’s impressive performance in the global steel industry is expected to continue due to the anticipated growth in the residential sector, supported by affordable housing projects and urban demand, thereby maintaining the good demand for steel products, especially through the "Electric Arc Furnace” route (environmental concerns) and correspondingly the demand for graphite electrodes.

As per IMF growth projections, the Indian economy is expected to maintain its robust growth following an impressive growth rate of 6.8% in 2022, with a GDP growth rate of 5.9% in 2023 and 6.3% in 2024. Despite global uncertainty and challenges, the Indian economy is expected to remain a top performer and continue to be one of the world’s fastest-growing countries.

GRAPHITE INDIA

The Company’s performance for FY 2022-23 was subdued compared to FY 2021-22. While revenue from operations increased by 4% to Rs. 2,913 crore for FY 2022-23 as against

Rs. 2,799 crore in the previous year, PBT decreased to Rs. 476 crore as against Rs. 753 crore of previous year. This includes investment income of Rs. 97 crore as against Rs. 241 crore in the last year. The performance of the Company was adversely impacted mainly due to lower volume and higher costs despite higher realisations as compared to last year. The global demand for graphite electrodes had majorly declined during the financial year owing to - (1) Slowdown in steel industry due to high energy cost in Europe and other regions, post Russia’s invasion of Ukraine; (2) Continual lockdown in China after re-emergence of COVID; and (3) High inflation and increase in interest rates in all major economies. This combined with the effect of stock adjustments led to worse ''than expected contraction in steel demand and as a corollary the demand for electrodes was also negatively impacted.

The Company’s Graphite and Carbon Segment continues to be the primary source of revenue and profit, accounting for about 92% of the total revenue.

OVERSEAS SUBSIDIARIES

Weak European economy fueled by the Russia Ukraine conflict has led to an unprecedented increase in energy and gas costs rendering German electrode operations unviable. The Group decided to shut down its German graphite electrode production, while restructuring speciality and coating operations as they are not so energy intensive and initiated closure of operations of one step down subsidiary the Bavaria Electrodes GmbH - in liquidation w.e.f. 1st October, 2022.

DIVIDEND

Dividend @ Rs. 8.50 per share on 19,53,75,594 equity shares of Rs. 2/- each for the financial year ended 31st March 2023 has been recommended by the Board of Directors.

MANAGEMENT DISCUSSION AND ANALYSIS (i) Industry''s structure and developments

A. Graphite and Carbon Segment

Graphite Electrodes

Graphite Electrode is used in electric arc furnace (EAF) based steel mills for conducting current to melt scrap iron and steel and is a consumable for the steel industry. The principal manufacturers are based in USA, Europe, Middle East, India, China, South East Asia and Japan.

Graphite Electrode demand is primarily linked to the global production of steel in electric arc furnaces which is one of the three basic methods for steel production i.e. - [1] Bessimer Oxygen Furnace (BOF); [2] Electric Arc Furnace (EAF); and [3] Induction Steel Furnaces (ISF). According to the World Steel Association ("WSA”), global (excluding China) EAF steel production grew at a 4% compounded annual growth rate from 2015 to 2021, the most recent year for which WSA has published such figures. This compares to a 2% compounded annual growth rate for overall global (excluding China) steel production during this same period. As a result, the EAF method of steelmaking accounted for 49% of the global

(excluding China) steel production in 2021, compared to 44% in 2015, with increasing share of growth in nearly every region.

EAF steelmaking is more energy efficient and is beneficial in terms of its low carbon footprint, compared to steel produced through the blast oxygen furnace (“BOF’) steelmaking model. According to the Steel Manufacturers Association (“SMA”), EAF steelmaking produces 75% fewer carbon dioxide emissions compared to BOF steelmaking. Further, SMA notes that the EAF process is a sustainable model for recycling scrap-based raw materials into new steel, which is 100% (and infinitely) recyclable at the end of its useful life. In addition to these advantages, EAF steel producers benefit from their flexibility in sourcing iron units, being able to make steel from either scrap or alternative sources of iron, such as Direct Reduced Iron (DRI) and Hot Briquetted Iron (HBI), both made directly from iron ore. China’s share in EAF production, which was only 6% of global steel making till 2014 through EAF, had increased to 10% up to 2021 and is estimated to become higher going forward as per S&P Platts report.

Reflecting on these positives and other strategic advantages, the EAF based steel production is expected to grow at a faster rate than BOF steel production. Based on industry announcements on proposed additional EAF steel capacities, this could result in global (excluding China) EAF production capacity increasing at approximately 3% compounded annual growth rate from 2022 to 2030. This should translate into similar increase in demand for UHP graphite electrodes over this same period to support EAF capacity expansion, besides further potential graphite electrode demand from production increases at existing EAF steel plants to support overall expected growth in steel demand.

Calcined Petroleum Coke and Paste

Graphite India’s Coke plant in Barauni, Bihar, is engaged in the manufacturing of Calcined Petroleum Coke (CPC), Carbon Paste and Electrically Calcined Anthracite Paste and is one of the several backward integration initiatives of the Company. Two grades of CPC - aluminium and graphite - are produced. CPC is primarily used in the manufacture of anodes for use in aluminium smelters, manufacture of graphite electrodes and also used as carburiser in steel. The division also manufactures four grades of Paste, i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) and Tamping Paste based on either CPC or ECAC. Electrode Paste is used in Ferro Alloy Smelters and Tamping Paste is used as a lining material in submerged arc furnaces.

This division’s performance has been satisfactory this year which can be attributed to improved market conditions for the product from its user industries namely steel, aluminium and graphite electrodes.

Impervious Graphite Equipment (IGE)

IGE Division is in the business of design, manufacture and supply of Impervious Graphite Heat and Mass Transfer Equipment and Turnkey systems. It has an integrated facility

for process/product design, manufacturing, inspection and providing supervision during erection and commissioning activities.

Impregnated graphite is an ideal material of construction for corrosive applications in sectors like Chloro-Alkali, Crop protection agrochemicals, Chlorinated Organic, speciality & fine Chemicals, Phosphoric Acid, Fertilizers, Rayon, Steel Pickling, Metal Processing, Polymers, Drug Intermediates, Batteries & Gelatine etc.

The Company has built the product line into a reliable brand with a reputation for prompt service, good quality and consistent performance by investing in strengthening its core competencies. This division is capable of meeting any country specific design and has obtained many certifications relevant to the product profile. Order booking both in domestic and export market has been good. Both order booking and sales in FY 2022-23 have been all time high.

B. Other Segments

Glass Reinforced Plastic Pipes (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes suitable for municipal application, seawater, effluent, irrigation, penstock as well as Pipe-liners for rehabilitation of old pipes/ducts by trenchless technology in metro cites. Product is manufactured by the Continuously Advancing Mandrel Filament Winding Process with computerized advanced technology comparable to other plants worldwide. The plant operations are dependent upon tenders floated by government / semi-government authorities which have been virtually absent during the year.

Steel

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs and broaches. HSS cutting tools are essentially used in - (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterized by a single good quality manufacturer of HSS i.e. PSD which faces competition from small domestic producers and cheap imports from overseas manufacturers.

The performance of the division has been quite satisfactory during FY 2022-23 with increased level of sales and productivity. The division has been able to restart export of HSS during this year.

18 MW Hydel Power

The Company has an installed capacity of 18 MW of power generation through Hydel route. The renewal of Wheeling & Banking agreement which was pending with Government authorities has now been cleared by Karnataka Electricity Regulatory Commission, permitting third party sale of

unutilized banked energy. This has enabled the division to sell higher units during the current financial year.

Capex on Hybrid Renewable Power Plant

Work on proposed 35 MW Hybrid (Wind and Solar) renewable power plant is on. Required land has been acquired for Phase-I (wind power) of the project. Major orders for equipment and services has been placed. Foundation work is under progress and is satisfactory. Almost all major approvals have been obtained. The Company is hopeful that Phase-I of the project can commence operations during 2023-24 which is expected to result in significant savings in power cost to the Company, apart from achieving carbon emission reduction with clean energy.

(ii) Opportunities and threats

Opportunities in the near term include: (a) domestic steel demand is expected to remain robust despite challenging macro environment, largely driven by government’s focused initiatives on infrastructure development; (b) under the Government''s National Steel Policy 2017, per capita steel consumption is expected to increase to 160 kg by 2030-31;

(c) Indian government has withdrawn the duty on import of scrap, which will benefit EAF steel manufacturers; (d) China’s curb on steel production to maintain the output at levels of 2021 and further abolishing the rebate of 13% VAT on certain steel exports to reduce steel production and exports. The lower exports from China may lead to higher steel production in the other EAF steel producing nations; and (e) Countries around the world are moving towards their carbon neutrality goals and therefore corporates are becoming environment conscious and adopting environment friendly manufacturing processes. With this backdrop, steel manufacturers are steadily moving towards EAF process which is expected to create sustainable demand for graphite electrode in the medium to long term.

The steel industry in India contributes approximately 2% to the country''s GDP, positioning the country as the second largest producer of steel in the world. During FY 2022-23, India’s crude steel production increased to 124.45 MMT from 117.6 MMT in 2021-22. During the year, the domestic steel industry registered a growth of 6% despite decline by 4.2% in global steel production. Moreover, the domestic production growth has surpassed the growth levels achieved not only during the last two years but also during pre-COVID years. The steel demand and consumption were primarily propelled by the government’s push for economic growth, driven by infrastructure development. According to the Ministry of Steel, during FY 2022-23, India''s steel exports slumped to a five-year low of 6.7 MMT, a year-on-year decline of 50.2% due to slowing global demand and imposition of export duty on steel. Whereas the import of finished steel during the same period stood at 6.02 MMT marking a notable surge of 29% over FY 2021-22.

The Indian steel industry is supported by its strong manufacturing capabilities, robust domestic consumption by steel-consuming sectors and strong global demand for its steel

products. Government’s push for infrastructure development through the Gati-Shakti Master Plan, the Make-in-India initiative for the manufacturing sector, the Dedicated Freight Corridor and railway expansion plans would provide impetus for increased steel demand.

China, the largest steel producer in the world has projected a growth target of around 5% for 2023. China''s crude steel output in 2022 fell by 2.1%, or 21.73 MMT, from 2021 to 1.013 billion MT, marking a second-successive annual decline. However, it is expected that its real estate industry will improve with the support of related policies leading to a narrowing decline in steel demand, backed by a stabilized property market and the rebound of other steel-consuming industries. China''s steel industry will remain optimistic, driven by pent-up demand after the China’s downgraded epidemic response and efforts to stabilize supplies and curb prices. The WSA has predicted that China alone will consume about half of the global steel production of 2023 of 1.814 billion tonnes.

The near-term opportunities includes: (a) the domestic steel industry is better placed than that of other countries and should witness strengthening of fundamentals, driven by better domestic demand and government’s greater push on infrastructure development; (b) the budget for FY 2023-24 has given the much-needed impetus to the infrastructure, housing, and construction sector, backed by policy-level support from the government; (c) the launch of the National Infrastructure Pipeline (NIP) with a progressive outlook and projected infrastructure investment to the tune of Rs. 111 lakhs crores during FY 2020-25 is the key indicator of the push towards infrastructure projects across the country; (d) rebuilding of infrastructure in Turkey post earthquake and post Russia-Ukraine war.

The threats in the near term include: (a) slowdown in global economic activities, coupled with high inflation and the energy crisis; (b) fluctuations in raw material prices having a significant impact on the cost of production, margins, and profitability; (c) supply-chain disruptions affecting the availability and cost of raw materials; and (d) lower steel consumption due to stagnant demand in China resulting in higher exports of steel from China, which may impact steel production and prices in other steel producing nations.

Graphite India is one of the leading producers of graphite electrodes globally by capacity. The company has over 60 years of proven technical expertise in the industry and manufactures full range of graphite electrodes, with focus on the large-diameter, ultra-high power (UHP) electrodes preferred by the large steel manufacturers. It is therefore well positioned to meet the growing demand for electrodes from both domestic and international Electric Arc Furnace steel manufacturers.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 2913 crore as against Rs. 2,799 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 867 crore as against Rs. 1,034 crore in the previous year.

Graphite and Carbon Segment

The performance of the segment was sub-optimal in FY 2022-23 as compared to FY 2021-22 with subdued demand conditions in the global and domestic market.

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 63,709 MT as against 91,214 MT in the previous year.

Production of Calcined Petroleum Coke during the year was 46,870 MT as against 32,184 MT in the previous year.

Production of Carbon Paste during the year was 3,571 MT against 4,358 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares during the year was 2,100 MT as against 1,802 MT in the previous year.

The segment revenue increased to Rs. 2,679 crore from Rs. 2,619 crore in the previous year with decrease in domestic and export sales both on volume and value terms. Segment recorded profit of Rs. 392 crore in FY 2022-23 compared to Rs. 526 crore in FY 2021-22.

Other Segments

GRP division produced 626 MT pipes as against 649 MT in the previous year.

Production of HSS and Alloy Steels was 2,701 MT during the year as against 2,712 MT in the previous year.

Power generated from Hydel Power Plant of 18 MW capacity amounted to 56.59 million units during the year as against 63.16 million units in the previous year. 105.68 million unit was sold during the year as against 65.54 million unit in

2021-22.

(iv) Outlook

The uptick in steel demand observed in 2021 was reversed amidst the challenges such as the pandemic shock, high inflation, increasing interest rates, the Russia-Ukraine conflict and lockdowns in China. As a result, steel using sectors’ activity went down in the last quarter of 2022. This, combined with the effect of stock adjustments, led to worse than expected contraction in steel demand. According to the WSA, global crude steel production decreased by 4.2% to 1,878.5 MMT in 2022 compared to 1,960.4 MMT in 2021. The demand is projected to rebound 2.3% to reach 1,822.3 MMT and is forecast to grow by 1.7% in 2024 to reach 1,854 MMT. The manufacturing sector is expected to lead the recovery, although high interest rates may continue to impact steel demand as growth is expected to accelerate in most regions except China, where it is likely decelerate due to reduction in consumption owing to decline in its population. Investments in decarbonization in dynamic emerging economies will increasingly drive positive momentum for global steel demand, though China’s contribution to global growth is likely to

diminish.

Persistent inflation and high-interest rates in most economies will limit the recovery of steel demand in 2023, despite positive factors like China’s reopening, Europe’s resilience in the face of the energy crisis, and the easing of supply chain bottlenecks. In 2024, demand growth is likely to be driven by regions outside China but facing global deceleration due to China''s anticipated 0% growth, overshadowing the improved environment. Sustained inflation remains a downside risk, potentially keeping interest rates high.

Chinese steel demand contracted in both 2021 and 2022 as its economy decelerated sharply due to unexpected lockdowns that extended across the country. The negative momentum in the construction sector seen in 2021 intensified further in 2022 and investment in real estate declined by 10%, the first year-on-year decline in 25 years. In 2023, the infrastructure sector may continue to benefit from the projects initiated at the end of 2022, although growth may weaken in 2024 if no large-scale projects begin in 2023. China’s manufacturing sector performance in 2022 was weak, although exports performed relatively well. The manufacturing sector is expected to show only a moderate recovery in 2023-24, with slowing exports.

Steel demand in the developed economies suffered a sizable contraction in 2022 because of monetary tightening and high energy costs. After falling by 6.2% in 2022, it is expected to increase by 1.3% in 2023 and by 3.2% in 2024.

The EU economy turned out to be more resilient to the energy crisis caused by the Ukraine war than initially thought. While the EU economy grew by 3.5% in 2022, avoiding recession, industrial activities suffered significantly from high energy costs that led to a sizable contraction in steel demand in 2022. In 2023, the EU steel industry will continue to feel the impact of war, other supply chain-related issues, and continued monetary tightening. In 2024, demand is expected to see a visible rebound as the impact of the Ukraine war and supply chain disruptions are expected to dissipate. However, the outlook is subject to persisting uncertainty.

The strong post-pandemic rebound of the US economy has run its course with the Fed’s steep interest rate hikes to tackle inflation. Growth in 2023-2024 is expected to be subdued by recessionary pressure. Furthermore, the spin off effect from the recent SVB bankruptcy needs to be watched.

Steel demand in Japan contracted in 2022 due to weak manufacturing and destocking. The weak global economic environment is expected to weigh on steel demand in 2023, but as Japan is a supply-constrained economy, the impact is not expected to be significant.

Meanwhile, the Indian economy has shown a strong and sustained economic expansion in 2022, with real GDP growth for FY 2022-23 estimated at 7% as per the Economic Survey 2022-23 despite the shocks of COVID-19 and the Russia-Ukraine conflict. Many reports worldwide continue to report India as the fastest-growing major economy at 6.5-7% in FY 2023. The uptick in private consumption, infrastructure

development, the bid for developing more affordable housing and the Indian Railways capex are all demand drivers and have given a boost to production activity, resulting in increased capacity utilization across sectors, making India a leading global force in steel production and the second largest crude steel producer in the world. India''s finished steel production has increased by over 6% to 124.45 MMT as compared to 118 MMT in 2021. According to ICRA’s latest research note on the steel sector, domestic steel demand is expected to clock double-digit growth of around 11.3% in FY 2023, following the 11.5% hike recorded in FY 2022, supported by the government’s push for infrastructure-led economic expansion. India is expected to remain a bright star in the global steel industry; its expected growth at 7.3% in 2023 and 6.2% in 2024 are backed by affordable housing projects and urban demand.

Investments in decarbonization and dynamic emerging economies will increasingly drive positive momentum for global steel demand, even as China’s contribution to global growth diminishes. The steel industry is transitioning towards EAF manufacturing. This shift, driven by its lower carbon footprint compared to traditional blast furnace steelmaking, is expected to drive long-term demand growth for graphite electrodes.

(v) Risks and Concerns

Exports to specific regions may be severely impacted by protective trade barriers in the form of crippling import duties, anti-dumping duties, countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such restrictive impositions. The ongoing crisis between Russia and Ukraine and other regional geo-political conflicts may also have crippling effect.

COVID-19 dealt the biggest blow to the Global Freight trade, which was almost flat for the last 10 years. A demand supply imbalance, shortage of containers and vessel schedules, congestion in major hubs / trading ports, has led to delay in transit times of inbound and outbound freight and pushed up ocean freight to an all-time high. The current geo-political tension caused by the Russia-Ukraine crisis has further aggravated the situation. Going forward, international trade may remain largely regional in a bid to contain freight costs. No miraculous recovery in freight cost is expected in 2023, at least in the first half of the FY 2023-24. Easing of the demand-supply gap by introduction of new containers, new vessels with higher TEU (Twenty feet Equivalent Units) handling capacity, diverting traffic to mid-size ports in the vicinity of the major (already congested) ports are expected to happen in the latter half of the year.

While the outbreak of COVID-19 is beginning to subside in most parts of the world, the infection intensity in some areas have shown resurgence. As a result, we are unable to predict the resultant impact of the present COVID-19 pandemic. The pandemic has adversely affected, and may further adversely affect, business, results of operations, financial position and

cash flows. Such effects may be material and the potential impacts may include, but not limited to: 1) adverse impacts on countries of customers, and resultant impacts on demand for our products; 2) disruptions at production facilities, including reduction in operating hours, labour shortages and changes in operating procedures, including additional cleaning and disinfecting procedures; 3) disruptions in supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities; and 4) reductions in operating effectiveness due to workforce disruptions from COVID-19 restrictions and social distancing resulting from, among other things, the unavailability of key personnel necessary to conduct business activities. The situation continues to change rapidly and additional unforeseen challenges may arise that cannot be realistically predicted.

The repercussions of reduced investment and bankruptcies may run more extensively through the economies. Depending on the duration, global business confidence could be severely affected, leading to weaker investment and growth than projected in the baseline. Related to the uncertainty around COVID-19, an extended risk-off episode in financial markets and tightening of financial conditions could cause deeper and longer-lasting downturns in a number of countries.

The Graphite business is majorly dependent on the global EAF steel industry, which is cyclical and is affected significantly by global economic conditions. The EAF steel industry majorly depends on demand from automotive, construction, machinery, equipment and transportation industries which can be significantly affected by macroeconomic reversals. Any instability or downturn in these industries could potentially impact the demand for graphite electrodes. Historically, the pricing of graphite electrode has been cyclical in nature, reflecting the demand trends of the global EAF steel making industry and the supply of graphite electrodes. The graphite electrode industry has experienced negative impacts on pricing due to overcapacity in the past. An increase in global graphite electrode production capacity that outpaces an increase in demand for graphite electrodes could adversely affect the price of graphite electrodes. Excess production capacity may lead manufacturers to produce and export electrodes at prices that _are lower than prevailing domestic prices and at or below their cost of production. This could result in downward pressure on graphite electrode prices, negatively affecting sales, margins and profitability.

Petroleum needle coke is a key raw material used in the production of graphite electrodes. Therefore, the performance of the company is heavily dependent on the price and timely availability of superior grade petroleum needle coke. Any disruption in the supply could have a material adverse effect on the business. In addition, as petroleum needle coke reflects a significant percentage of the raw material cost of graphite electrodes, graphite electrodes have historically been priced at a spread / linked to the cost of petroleum needle coke,

which in the past has increased in tight demand markets. Major steel producers, have in the past experienced and may again experience downturns or financial distress that could adversely impact our ability to collect our accounts receivable on a timely basis or at all.

The Company has optimum exposure to exports and imports. Volatility in foreign currency markets may directly impact the Company’s prospects. Inherent natural hedge of various balancing exposures may mitigate the risk to an extent.

Competition in the graphite industry is based primarily on price, product differentiation by performance/quality, delivery reliability and customer service. Graphite electrodes, in particular, are subject to cut throat price competition.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are enabled. IT Security Policy is in place to ensure that the risks associated with non-compliance of information gathering, processing, security (against cyber crimes) and preservation are assessed and adequately and ably managed. The purpose and objective of the policy is to address the risks by defining, developing and implementing adequate controls through proper categorization. An internal committee reviews the adherence and suggests if any changes are required. Independent systems audit is performed by TUV Nord, India. Third party product inspections are performed by agencies like SGS, BV India.

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 2,913 crore as against Rs. 2,799 crore in the previous year.

Profit after tax was Rs. 350 crore as against Rs. 574 crore in the previous year. Profit before tax was lower at Rs. 476 crore as compared to Rs. 753 crore in the previous year.

Borrowing at Rs. 335 crore was lower than Rs. 344 crore as compared to previous year and the Finance Cost increased to Rs. 9 crore from Rs. 4 crore in the previous year.

Capital expenditure during the year amounted to Rs. 156 crore as against Rs. 78 crore in the previous year.

ICRA has reaffirmed the long term rating at [ICRA] ‘AA ’ (pronounced ICRA double A plus) with negative outlook. The short-term debt programme rating has been reaffirmed at [ICRA] ''A1 '' (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility emanating from large liquid investment portfolio.

Details of contingent liabilities are given in Note 34 to the Financial Statements.

(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed

The Company’s HR policies and practices continue to focus on contemporary as well as pragmatic people centric initiatives.

While designing these policies, special attention is given to Company’s vision as well as changing needs. Optimal utilisation of people and periodic review of the organogram is addressed continuously. The HR function has actively participated in formulation of ESG policy of the Company.

Training and development programs are specifically targeted to address Company’s progressive needs with focus on —behavioral aspects of training. Formulation of unit-wise training calendar, identifying training needs by in-house resources and imparting training on all functional aspects across the Company.

Safety plays a major role for the success of an organization and the Company recognizes the same. Hence, emphasis has been given for adopting and maintaining best safety practices across the units along with regular periodic audit of the same.

Multiskilling and multitasking of employees is achieved through suitably designed training modules as well as rotation through different job profiles. This ensures a laudable mix of learning, innovation and excellence leading to continual employee skills and enhancement of growth and progress of the employees.

Company values its employees as an intelligent and responsible resource for effectively and optimally managing other material resources like money, machines and materials. Hence, productive and effective engagement of all resources at various levels is critical to achieve Company’s objectives of cost optimisation, profitability as well as business growth. This is critical in ensuring the interests of all stakeholders.

Specific initiatives are being taken to develop successors to key/critical roles. Emphasis is given to improve the foundational understanding of the fundamentals of leadership competencies of Team Building, Lateral Thinking, Influencing Outcomes and Problem Solving.

The total number of permanent employees in the Company is 1,695 as on 31st March, 2023.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

(ix) Occupational Health and Safety

Internal Safety Audits are conducted at regular intervals at plants. Audit observations relating to unsafe acts, practices, conditions are discussed in "Corrective and Preventive Action” meetings. Protection and safety of our personnel and assets are our top priority. We believe in in-depth investigation of unfortunate accidents, if any, so that root causes are identified and corrective and preventive measures are undertaken. Consultation and participation of workers and statutory bodies are encouraged.

Sl.

No.

Particulars

2022-23

2021-2

2

Improvement / (deterioration)

1

Interest Coverage Ratio -(PBIDT / Finance cost)%

46.47

183.

90

(75%)

2

Operating Profit Margin - (PBDIT / Total Revenue)%

17.41

26.

11

(33%)

3

Net Profit Margin - (PAT / Total Revenue)%

12.01

20.

52

(41%)

4

Return on Net worth -(PAT / Net worth)%

7.54

12.

86

(41%)

Health, Safety, Environment and Quality policies are in place and are audited by external agencies. Safety Audit once in two years, as specified, is carried out by External Safety Auditors. Every year health check-up of all employees is being carried out by competent medical professionals.

Health, Safety, Environment and Quality policies are in place and are audited by external agencies. Safety Audit once in two years, as specified, is carried out by External Safety Auditors. Every year health check-up of all employees is being carried out by competent medical professionals.

Environmental, Social and Governance (ESG)

ESG performance of a business is its corner stone in creating long term value. It can represent risks and opportunities that will impact Company’s ability to create value. This includes environmental issues like climate change and scarcity of natural resources. It covers social issues like human capital practices, diversity, health and safety, community relationship and value chain engagement. It involves governance matters that includes performance of the board, ethical practices, disclosures and transparency.

While the Company has been informally practicing the principles of ESG since several years, it has now embarked on a structured journey of ESG to emerge as a company that is committed to growth through ESG.

The Company has carried out an assessment to find out current maturity level on the ESG aspects and identified some material aspects to be addressed on priority. ESG report for the year 2021-22 has been disclosed on Company’s website (https: / / graphiteindia. com / investors / documents/63b4ff705aaeaESG%20Report%20FY%202021-22%20Final.pdf). The year 2021-22 has been considered as a base year in this journey of ESG and significant progress has been made in working on some of the select priority aspects during the year 2022-23. Major focus areas during the year are:

(a) Greenhouse Gas (GHG) emission (scope 1 and 2) accounting and developing a low carbon pathway. Company has planned a 12% reduction in GHG intensity of main product, Graphite Electrodes in two years with respect to base year 2021-22;

(b) Water accounting and developing a water security plan;

(c) Waste accounting and developing initiatives to reduce wastage;

(d) CDP had sought response from the Company on the impact of its business on climate change and have responded to CDP during July, 2022. This is an annual disclosure and we plan to continue to respond to CDP every year going forward.

Plan for the year 2023-24 includes the following, among others:

(a) Development of report based on recommendations of TCFD (Task Force for Climate Related Financial Disclosure). This will entail identification of climate change related risks and opportunities for our business,

developing metrices and targets to manage the risks and exploit opportunities, developing a strategy around this and setting up a governance structure;

(b) Greenhouse Gas (GHG) emission (scope 3) accounting for our main product, Graphite Electrodes. This will help us influence and reduce the GHG emissions of our supply chain;

(c) Conducting energy audit through globally recognised agencies to identify energy cost reduction as well as GHG emission reduction opportunities;

(d) Continue with low carbon pathway;

(e) Continue water conservation initiatives;

(f) Continue waste management initiatives;

(g) Getting health and safety management certificate ISO 45001 for all of our factories;

(h) Improve our policies, procedures and processes around human capital;

(i) Initiate development of sustainable supply chain.

(x) COVID-19 : Measures Undertaken

In view of the current improved situation, most of the protocols

relating to COVID-19 have been withdrawn/reduced.

(xi) Significant changes (i. e. change of 25 % or more as compared to the immediate ly previous financial year) in key financial ratios, along with explanations are as under:

Explanations :-

The Company’s performance deteriorated during FY 2022-23 principally due to lower volume owing to subdued demand for Graphite Electrodes and increased cost. This has led to fall in margin and return indicators, as above. Increased working capital requirements have also led to a higher debts resulting in higher interest costs.

Transaction of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity is given below :-

Emerald Company Private Limited (ECPL) (An entity of the promoter Group holding 61.33% of the share capital).

2022-23

2021-22

(Rs. Cr.)

(Rs. Cr.)

Dividend Paid

119.82

59.91

Research and Development

The Company’s R&D efforts are primarily focussed towards developing import substitutes for Aeronautical, Aerospace, Railway and other industrial applications.

Continual process development activities are ongoing for producing superior version of carbon brake pads for aircrafts and helicopters.

Space application components processed at state-of-art facilities were successfully tested by Space Research agencies.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. (GIBV) in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four step down subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH-in-liquidation, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH and the General Graphene Corporation, USA, is an American subsidiary of GIBV, Netherlands.

Due to weak European economy fueled by the Russia Ukraine conflict has led to an unprecedented increase in energy and gas costs rendering German electrode operations unviable. The Group has decided to shut down its German graphite electrode production as of now while restructuring speciality and coating operations as they are not so energy intensive and initiated liquidation of one step down subsidiary, Bavaria Electrodes GmbH- in liquidation, with effect from 1st October,

The overseas subsidiaries recorded a turnover of Euro 37.95 million (Mn) as compared to Euro 43.28 Mn in the previous year. The subsidiaries have continued their dismal performance. However, during the current year, loss of Euro 18.11 Mn was higher against loss of Euro 10.08 Mn in the previous year.

The Company, by way of Royalty, earned Rs. 3.21 crore during the year, as against Rs. 4.01 crore in the previous year, from overseas subsidiary.

GIBV has made further investment of USD 2.5 Mn in General Graphene Corporation (GGC) and total investments stood at USD 18.60 Mn as on 31.03.2023 which constitute 55.315% of capital. The investments in GGC is accounted for using the equity method as per IndAS 28 till 31st January, 2022 and as a subsidiary as per IndAS 110 for the remaining two months, for FY 2021-22 and for FY 2022-23.

No Company has ceased to be a subsidiary of the Company during the year.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per IndAS 110 forms a part of this Annual Report.


Information pursuant to Section 134 of the Companies Act, 2013

a. Pursuant to Section 92(3) read with Section 134(3)

(a) of the Act, the Annual Return as on 31st March 2023 is available on the Company’s website on http:// ir.graphiteindia.com/

b. Four meetings of the Board of Directors of the Company were held during the year on 23rd May 2022, 5th August 2022, 11th November 2022, 8th February 2023.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 2

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required. No fraud has been reported by Statutory Auditors.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -Annexure 3

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 4

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 5

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated several projects aimed at promoting education, employment enhancing vocational/employability skills, livelihood enhancement projects, healthcare initiatives, rural development projects etc. as detailed in the CSR annual report for the year ended 31st March, 2023 which forms part of this report - Annexure 6. The CSR policy has been displayed on Company website www. graphiteindia.com and can be viewed under the head CSR.

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees

and individual directors on the basis of a set of criterias framed and approved by the Nomination and Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website www. graphiteindia. com and can be viewed under the head Corporate Governance.

m. The Company does not accept deposits from public.

n. There were no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 7 and 8.

o. Dividend Distribution Policy has been posted on the Company’s website www.graphiteindia.com and can be viewed under the head Corporate Governance.

DIRECTORS

Mr. Sridhar Srinivasan was appointed as an additional Director by the Board of Directors of the Company at its meeting held on 30th May 2023. He holds office up to the date of the ensuing AGM. The Board also appointed him as an Independent Director of the Company for a period of five years from 30th May 2023, subject to approval of the members of the Company. Members approval is being sought in the forthcoming AGM.

Mr. A. V. Lodha retires by rotation in this AGM and being eligible offers himself for re-appointment.

No director is related inter-se to any other director of the Company.

Recognition/Award and Certificates

The Company continues to enjoy the status of a Four Star Export House. This year the Company has received the following awards from EEPC for export performance:

- Special trophy for Excellence in Exports of High Technology Products for 2017-18;

- Top Exporter-Gold-Large Enterprise for 2018-19.

The Company has also received award from Syama Prasad Mookerjee Port, Kolkata, for being the 2nd highest performing Container Importer of the year through Kolkata Dock System.

The Company has acquired certification with the standards ISO 9001:14001. TUV Nord has recently completed ISO 9001:2015 audit and renewed certificate is expected in next couple of months.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that -

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) The directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 9

Business Responsibility and Sustainability Report (BRSR) forms part of our Annual Report. Annexure 10Auditors

S. R. Batliboi & Co. LLP, Chartered Accountants, was reappointed as Auditors of the Company for a second term of five (5) years at the 47 th AGM held on 5 th August, 2022. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2022-23 who will conduct cost audit in respect of accounts and records made and maintained by the Company as required u/s 148(1) of Companies Act, 2013 as detailed below -

Shome & Banerjee

Electrode plant at Durgapur and Power generation facilities at Chunchanakatte.

Deodhar-Joshi & Associates

Electrode, IGE and GRP plants at Nashik

B G Chowdhury & Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels Titilagarh

division

at

Consolidated Cost Audit Report for FY 2021-22 was filed with the Ministry of Corporate Affairs, Government of India, on 26th August, 2022.

The above Cost Auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 202324.

Secretarial Audit/Compliance Report

Secretarial Audit Report and Secretarial Compliance Report for FY 2022-23 received from M/s. Bajaj Todi & Associates, Practicing Company Secretaries are annexed herewith -Annexure 11 and 12

Secretarial Standards

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Prevention of Sexual Harassment of Women at Workplace

The Company has complied with the provisions relating to

the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board

K. K. Bangur Chairman

May 30, 2023 DIN : 00029427


Mar 31, 2022

The Directors have pleasure in presenting their Forty Seventh Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2022.

Financial Results Rs. in Crores

Particulars

2021-22

2020-21

2021-22

2020-21

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

2799

1839

3026

1958

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Tax and other Comprehensive Income

803

322

769

111

Finance Costs

4

5

1 6

Profit before Depreciation and Tax

—.799

316

764

105

Depreciation and Amortisation Expense

46

45

55

52

Profit before Share of Profit/(Loss) of Associate and Tax

753

271

709

53

Share of (Loss) of Associate

-

-

(16)

(10)

Profit before Tax

753

271

693

43

Tax Expense for the Current Year

Current Tax

/\ 158

64

>160

62

Deferred Tax

21

1 ^|8

28

13

Profit for the Year

574

199

505

(32)

Other Comprehensive Income (net of tax)

3

(2)

(2)

19

Total Comprehensive Income for the year

577

197

503

13

Statement of Retained Earnings

Retained Earnings at the beginning of the year

| 2425

| 2228

2906

2945

Add Profit for the year

574

| 199

505

(32)

Add Comprehensive Income/(Loss)

1 ^|3

(2)

J3

(2)

Less Final Dividend on Equity Shares

98

-

98

-

Less transfer to Reserve Fund

-

-

7

5

Retained Earnings at the end of the year

2904

2425

3309

2906

REVIEW OF THE ECONOMY

As the world enters the third year of the Covid-19 pandemic crisis, economic developments have been both encouraging and disconcerting, clouded by several risks and considerable uncertainties with regard to new variants of Covid-19 and the Russia-Ukraine crisis. The GDP output in many countries rebounded in 2021 after a sharp decline in 2020. International trade has picked up, however, high commodity prices, rising interest rates continue to put pressure on the growth outlook. Spending in developing countries surged to support economic activity during the crisis, but many countries are now facing record levels of external and domestic debt. Adding to these debt-related risks is the likelihood of higher interest rates. It is difficult to predict how rapidly interest rates will rise as advanced economies have slowed down their expansion in monetary policies. Amidst these evolving economic conditions, global economy registered a strong recovery of 6.1% in 2021 compared to 3.1% de-growth in 2020. Similarly, emerging and

developing economies registered a growth of 6.8% in 2021 compared to de-growth of 2.0% in 2020. Overall, the growth during the year turned out to be stronger than expected primarily driven by the pent-up demand and fiscal and monetary support extended by governments across the world —to overcome the Covid-19 crisis.

In the United States, the economy exited 2021 in overdrive, but the growth restricted by global supply chain constraints has pushed inflation higher than expected. Interest rate hikes are predicted to cool the economy. The US GDP registered a growth of 5.7% in 2021 compared to de-growth of 3.4% in 2020. Similarly, the European economy GDP bounced back to 5.3% in 2021 after registering a major decline of 6.4% in 2020, reflecting a recovery in domestic demand. Despite the strong rebound, the economy continues to face added pressure due to rising fuel prices and higher inflation. In Asia, China registered a robust GDP growth of 8% in 2021. Growth in China is expected to moderate to 5.1% in 2022, amid the

lingering effects of the pandemic, environmental concerns and tighter regulations on certain sectors of the economy, however export market registered a strong growth.

In 2021, the steel demand turned out to be stronger than expected in many regions, especially in the EU and the US, despite the rise of subsequent waves of Covid-19 and supply chain constraints. However, the outlook for 2022 has weakened due to inflationary pressure, which is further subdued by the consequences of the Ukraine crisis. The impact of this conflict on the global economies will depend on their trade and financial exposure to Russia and Ukraine. The European region will be majorly impacted due to their close proximity and higher dependence on Russian energy. Various nations have put in strict sanctions on Russia which in turn has led to trade barriers, increase in commodity and fuel prices leading to higher inflation. The ongoing crisis is expected to have a cascading effect thereby deteriorating the global economic outlook. The International Monetary Fund (IMF) has reduced the expected World GDP growth to 3.6% for 2022 and 2023 as compared to earlier projected growth of 4.4% for 2022 and 3.8% for 2023.

Indian economy registered a strong growth of 8.9% in 2021 and real GDP surpassed the pre-pandemic level of 2020 by 1.8% The recovery was broad-based as all constituents of demand, including private consumption, have recuperated and surpassed their respective p re-pandemic levels. The economic impact of the "second wave” in Q1 FY 2021-22 was lower due to mini lockdown restrictions imposed by the states, however, its impact on the human lives was much more severe. The country’s index of industrial production (IIP) grew by 13.7% in FY 2021-22 as compared to de-growth of 12% in FY 2020-21. Government’s greater push on infrastructure, incentives to facilitate industrial production and ‘Make in India’ initiative has supported accelerated growth during the year. In addition, the strong rebound was backed by phased unlocking of the economy, favorable fiscal policy measures and robust consumer demand.

India is the second-largest producer of crude steel after China and also the second largest consumer of steel. The crude steel production is estimated to have increased by 18% to reach 120 million tonnes (MT) in FY 2021-22, and the robust production is driven by strong demand from steel consuming sectors. Overall, the demand for steel globally during the year was driven by pick-up in economic activity across nations and lower export from China.

The growth in the Indian steel sector is further driven by government’s increased focus on Aatmanirbar Bharat and the government announced guidelines for the approved speciality steel production-linked incentive (PLI) scheme. The scheme is expected to attract investment worth Rs. 400 billion (US$ 5.37 billion) and expand speciality steel capacity by 25 MT to 42 MT in FY 2026-27, from 18 MT in FY 2020-21. The Indian steel industry is modern with state-of-the-art steel mills and the corporates continue to upgrade them to higher energy efficiency levels and are well positioned to meet the growing

demand.

As per IMF, the Indian economy is expected to register a strong GDP growth of 8.2% in 2022. The economic activity is expected to remain robust, however, the macroeconomic deterents such as higher inflation, commodity price volatility and supply chain disruption arising from Russia-Ukraine conflict may put pressure on the outlook.

GRAPHITE INDIA

The Company’s performance for FY 2021-22 was impressive compared to FY 2020-21. Revenue from operations increased by 52% to Rs. 2,799 crore for FY 2021-22 as against Rs. 1,839 crore in the previous year and PBT increased to Rs. 753 crore as against Rs. 271 crore of previous year which also includes investment income of Rs. 241 crore as against Rs. 158 crore in the last year. The performance of the Company was comparatively better due to higher volume and higher realization as compared to last year. The global demand for graphite electrodes had improved during the financial year owing to - (1) waning impact of Covid-19 and resultant pick up in the industrial activities; (2) revival of demand with recovery in the steel industry and increased capacity utilization; and (3) strong recovery in the major consuming industries such as construction, automobile and the focussed thrust of all steel consuming nations on infrastructure - augured well for the electrode industry. However, the continued increase in cost of key inputs such as calcined petroleum coke, pitch etc has kept the operating margins under pressure.

The Company’s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 94% of the total revenue.

OVERSEAS SUBSIDIARIES

The performance of the German subsidiaries continued to be worrisome during the year although losses were lower as compared to last financial year. Continued increase in cost of electricity and gas in Germany, pre and post Russia-Ukraine war has adversely impacted the operations despite recovery in demand and improvement in realisations.

DIVIDEND

Dividend @ Rs. 10/- per share on 19,53,75,594 equity shares of Rs. 2/- each for the financial year ended 31st March 2022 has been recommended by the Board of Directors.

MANAGEMENT DISCUSSION AND ANALYSIS (i) Industry''s structure and developments

A. Graphite and Carbon Segment

Graphite Electrodes

Graphite Electrode is used in electric arc furnace based steel mills for conducting current to melt scrap iron and steel and is a consumable for the steel industry. The principal manufacturers are based in USA, Europe, Middle East, India, China, South East Asia and Japan.

Graphite Electrode demand is primarily linked with the global

production of steel in electric arc furnaces which is one of the two basic methods for steel production i.e. - [1] Bessimer Oxygen Furnace (BOF); and [2] Electric Arc Furnace (EAF). According to World Steel Association (WSA), the EAF steel industry has grown at 4.5% compound annual rate since 2015. The fundamental reason behind this recovery has been China beginning to restructure its steel industry, encouraging consolidation and shutting down archaic BOF capacities. China has also begun to comply with environmental regulations to improve air quality impacted by CO2 emissions associated with the burning of coal in BOF steelmaking. In addition, trade restrictions in developed economies such as North America and Western Europe for protecting their domestic steel industries against imports from BOF steel producing countries, which have resulted in a significant decrease in Chinese steel exports. According to China’s Customs and Baiinfo, Chinese steel exports declined from 112 million MT in 2015 to 67 million MT in 2021. This resulted in increased steel production outside of China, benefiting EAF steel production. China’s share in EAF production, which was only 6% of global steel making till 2014 through EAF, had increased to 10% upto 2021 and is estimated to become higher going forward as per S&P Platts report.

According to the WSA, since 2000, EAF steelmaking grew at an annual pace of approximately 3%, compared with 1% for steelmaking overall, excluding China. As a result of the increasing global availability of steel scrap and the more resilient, high-variable cost and environmental friendly EAF model, EAF steel producers are expected to continue to grow at a faster rate than BOF producers globally. Additionally, EAF steel producers are able to use increasingly higher quality of steel scrap and sponge iron, their two primary raw materials, to produce larger volumes.

Calcined Petroleum Coke and Paste

Graphite India’s Coke plant in Barauni, Bihar, is engaged in the manufacturing of Calcined Petroleum Coke (CPC), Carbon Paste and Electrically Calcined Anthracite Paste and is one of the several backward integration initiatives of the Company. Two grades of CPC - aluminium and graphite - are produced. CPC is primarily used in the manufacture of anodes for use in aluminium smelters, manufacture of graphite electrodes and also used as carburiser in steel. The division also manufactures four grades of Paste, i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) and Tamping Paste based on either CPC or ECAC. Electrode Paste is used in Ferro Alloy Smelters and Tamping Paste is used as a lining material in submerged arc furnaces.

This division’s performance has been quite robust this year because of improved market condition in its user industries namely steel, aluminium and graphite electrodes.

Impervious Graphite Equipment (IGE)

IGE Division is in the business of design, manufacture and supply of Impervious Graphite Heat and Mass Transfer Equipment and Turnkey systems. It has an integrated facility

for process/product design, manufacturing, inspection and providing supervision during erection and commissioning activities.

Impregnated graphite is an ideal material of construction for corrosive applications in sectors like Chloro-Alkali, Crop protection agrochemicals, Chlorinated Organic, speciality & fine Chemicals, Phosphoric Acid, Fertilizers, Rayon, Steel Pickling, Metal Processing, Polymers, Drug Intermediates, Batteries & Gelatine etc.

Over the years, the Company has built the product line into a reliable brand with a reputation for prompt service, good quality and consistent performance by investing in strengthening its core competencies. Division has the capability to meet any country specific design and has obtained many certifications relevant to the product profile. Domestic chemical, specialty chemical, drugs and pharma industries have picked up. Order booking both in domestic and export market has been good. Further expansions are planned to meet increasing market demands.

B. Other SegmentsGlass Reinforced Plastic Pipes (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes suitable for municipal application, seawater, effluent, irrigation, penstock as well as Pipe-liners for rehabilitation of old pipes/ducts by trenchless technology in metro cites. Product is manufactured by the Continuously Advancing Mandrel Filament Winding Process with computerized advanced technology comparable to other plants worldwide. The plant operations are dependent upon tenders floated by government / semi-government authorities which have been virtually absent during the year.

Steel

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs and broaches. HSS cutting tools are essentially used in - (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterized by a single good quality manufacturer of HSS i.e. PSD which faces competition from small domestic producers and cheap imports from overseas manufacturers.

In the Central budget for the year 2022-23, the Government has withdrawn the order for imposition of Anti-dumping Duty on imports of HSS products from certain countries who were indulging in unfair competition by dumping these products into India. The Company has represented to the Government for re-imposition of this duty, as HSS is not required for infrastructure projects. This division has seen buoyancy in the plant capacity utilisation due to improved demand conditions.

18 MW Hydel Power

The Company has an installed capacity of 18 MW of power generation through Hydel route. The renewal of Wheeling & Banking agreement which was pending with Government authorities has now been cleared by Karnataka Electricity Regulatory Commission, permitting third party sale of unutilized banked energy.

Capex on Hybrid Renewable Power Plant

A 35 MW Hybrid (Wind and Solar) renewable power plant to supply captive power to the electrode plant in Satpur, Nashik, has been undertaken during the year 2021-22 and is under implementation.

(ii) Opportunities and threats

During FY 2021-22, India crude steel production stood at 120 MT, registering a robust growth of 18% year-on-year (y-o-y) and India continues to remain second largest steel producer in the world. Domestic crude steel capacity expanded by 8% to 154 million tonnes per annum (MTPA) in 2021 from 143 MPTA in 2020. Finished steel production was at 112 MT, a growth of 21.3% y-o-y and total steel consumption was 106 MT, a growth of 18.8% y-o-y. The steel demand and consumption was driven by the strong demand from the construction and infrastructure sectors which started picking up especially after lifting of Covid-19 restrictions. Over the last four years, India''s annual import of steel has steadily declined, while its export has increased, making India a net exporter both in 2020 and 2021. India was the net exporter of finished steel in 2021 with a net trade surplus of 7.80 MT, a significant increase of 37% y-o-y.

The Indian steel industry is supported by its strong manufacturing capabilities and robust in-house consumption by steel consuming sectors coupled with strong demand for Indian steel products from rest of the world. The third wave of Covid-19 in early 2022 was short-lived and did not have a major impact on the economic activity. However, the concerns arising from geopolitical tensions between Russia and Ukraine, higher energy cost and commodity prices, as well as the low growth in China, all these factors have together dampened the steel demand outlook. Despite these uncertainties, the demand for Indian steel products is expected to remain strong driven by higher consumption from the key steel consuming sectors. Furthermore, the government’s increased budget allocations for infrastructure development is expected to create a demand across multiple categories of products, including steel. The Gati Shakti Master Plan focuses on building infrastructure over the next five years at an investment of Rs. 100 lakh crore. Since construction and infrastructure sectors are major consumers of steel, the demand is expected to remain strong and it will drive the steel production and in turn the demand for graphite electrodes.

China is the largest steel producer in the world, in 2021, China''s steel demand recovered in the first half of the year, however, it slowed down considerably in the second half with the government capping to maintain the output levels of 2020.

This was primarily due to country’s aim to reduce its carbon emission in line with its goal to achieve carbon neutrality by 2060. As a result, China’s steel production declined by 3.0% in 2021 for the first time in six years, despite a strong growth of 12% in the first part of the year. The China government has further extended the capping for 2022, to maintain the output levels of 2021. In addition, China is moving towards adopting more efficient Electric Arc Furnace (EAF) process to reduce its carbon emission and 43 new EAF’s with a total crude steel capacity of 29 million MT/year are expected to be set up between 2022 to 2025. The new EAF capacities are expected to drive the demand of graphite electrode in the country and may result in lower export of electrode to other countries.

Opportunities in the near term include: (a) domestic steel demand is expected to remain robust despite challenging macro environment, largely driven by government’s greater push on infrastructural development; (b) in October 2021, the government announced guidelines for the approved specialty steel production-linked incentive (PLI) scheme which will enhance steel production capacity domestically and at the same time increase domestic demand and usage of steel which in turn will drive demand for graphite electrode; (c) under the Government''s National Steel Policy 2017, per capita steel consumption is expected to increase to 160 kg by 2030-31; (d) Indian government has withdrawn duty on scrap imports, which will benefit EAF steel manufacturers; (e) China’s curb on steel output to maintain the levels of 2021 and further abolishment of rebate of 13% VAT on certain steel exports to reduce steel production and exports. The lower exports from China may lead to higher steel production in the EAF steel producing nations; g) Countries around the world are moving towards their carbon neutrality goals and therefore corporates are becoming environment conscious and adopting environment friendly manufacturing processes. With this backdrop, steel manufacturers are gradually moving towards EAF process which is expected to create sustainable demand for graphite electrode in the longer term.

The threats in the near terms include: (a) slowdown in global economic activities due to ongoing Russia-Ukraine crisis and subsequent waves of Covid-19 pandemic; (b) the continuous rise in global energy and commodity prices and continued supply chain disruptions may impact the growth momentum; (c) higher than expected inflation due to increasing fuel and food prices; (d) Central banks rising interest rates to curb the inflation may impact the steel industry expansion plans; (e) Lower steel consumption in China due to tough real estate market and uncertainties surrounding Covid-19. This may result in higher export of steel from China which may impact steel production in other steel producing nations.

Graphite India is one of the largest producers of graphite electrodes globally, by capacity. The company has three plants - Durgapur and Nashik in India, and Nurnberg in Germany, with a combined production capacity of 98,000 tonnes per year. It manufactures the full range of graphite electrodes, but its focus is on large diameter, ultra-high power (UHP) electrodes preferred by the large steel manufacturers

and is therefore well positioned to meet the growing demand for electrodes from both domestic industry and EAF steel producing nations with improving operational efficiencies and delivering profitable growth despite rising cost pressure.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 2,799 crore as against Rs. 1,839 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 1,034 crore as against Rs. 733 crore in the previous year.

Graphite and Carbon Segment

The performance of the segment was impressive in FY 2021-22 as compared to FY 2020-21 with declining impact of Covid-19 and recovery in economic conditions globally.

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 91,214 MT as against 66,871 MT in the previous year.

Production of Calcined Petroleum Coke during the year was 32,184 MT as against 32,679 MT in the previous year.

Production of Carbon Paste during the year was 4,358 MT against 3,210 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares during the year was 1,802 MT as against 1,776 MT in the previous year.

The segment revenue increased to Rs. 2,619 crore from Rs. 1,719 crore in the previous year with increase in domestic and export sales both on volume and value terms. Segment recorded profit of Rs. 526 crore in FY 2021-22 compared to Rs. 176 crore in FY 2020-21.

Other Segments

GRP division produced 649 MT pipes as against 1,623 MT in the previous year.

Production of HSS and Alloy Steels was 2,712 MT during the year as against 1,829 MT in the previous year.

Power generated from Hydel Power Plant of 18 MW capacity amounted to 63.16 million units during the year as against 54.28 million units in the previous year. 65.54 million unit was sold during the year as against 39.97 million unit in 2020-21.

(iv) Outlook

Global steel production was severely impacted by the Covid-19 pandemic in the spring of 2020 and has been gradually recovering since then. As per World Steel Association (WSA), global crude steel production increased by 3.6% to 1,911.9 MT in 2021 compared to 1,844.9 in 2020. Furthermore, the global crude steel production excluding China registered a robust increase of 12.7% on y-o-y. From the start of 2022, there is a heightened global uncertainty due to Russia-Ukraine crisis and further evolution of Covid-19 variants continues to pose substantial risks to the outlook. The WSA has forecasted steel

demand to grow nominally by 0.4% in 2022 to reach 1,840.2 MT after increasing by 2.7% in 2021. In 2023 steel demand will see further growth of 2.2% to reach 1,881.4 MT. The subdued growth in 2022, is primarily due to higher fuel prices, peak inflation levels in key economies and supply chain disruptions due to the ongoing Russia and Ukraine crisis.

The global graphite electrodes market had seen a significant upward trend in 2021. Market growth is driven by the pent-up demand for graphite electrodes from the key steel consuming sectors such as construction, automotive, infrastructure, and aerospace and defense. The global steel production in the countries excluding China went up 12.7% thereby driving the demand of graphite electrodes. Globally, the increased focus on curbing environment pollution and moving towards carbon neutrality has given a greater push to steel manufacturer to shift from blast furnace to electric arc furnace (EAF) which is more energy efficient. The shift has been gradual but expected to drive demand for graphite electrode in the longer run. Additionally, the increasing requirement for Ultra-High Power (UHP) graphite electrodes is another market trend that is projected to drive the market. UHP has a higher thermal and electrical conductivity and can swiftly melt scrap to manufacture steel. The steel industry therefore prefers higher thermal and electrical conductor to quickly melt scrap for manufacturing steel and therefore its demand is expected to grow in the coming years.

In 2021, China’s crude steel production was 1,033 MT, representing a decline of 3.0% y-o-y. This was in line with their policy to maintain the output levels of 2020 and now the government has further extended the capping for 2022, to maintain the output levels of 2021. This is a conscious step towards reducing carbon emission as the country plans to achieve carbon neutrality by 2060. In addition, the domestic steel demand in China has been on a downward trend with slowdown in infrastructural development and urbanization nearing completion. Furthermore, the government has encouraged steelmakers to replace obsolete and small steel plants with newer or more efficient facilities and the focus is on increasing EAF steel production to more than 15% of China’s total crude steel output by 2025 compared to 10% in 2021. As per S&P Platts, in 2021, China has approved the construction of 43 new EAFs with a total crude steel capacity of 29 million MT/year through capacity swaps, while in 2020, only about 10 million MT/year of new EAFs got construction approvals. The new EAF capacities are expected to drive the demand of graphite electrode in the country and may result in lower export of electrode to other countries.

In 2021, India''s economy rebounded by 8.2% y-o-y after experiencing a severe contraction of 7% in 2020. The confidence of consumers and businesses is on the rise along with improved demand conditions. The construction and infrastructure activity continued to remain robust, with indicators of cement production and steel consumption showing consistent growth. The availability of raw material and labor cost-effectiveness has fueled the growth in the Indian

steel sector. Consequently, the steel industry contributes significantly to India''s manufacturing output. India’s crude steel production in FY 2021-22 was 120 MT, registering a strong increase of 18% y-o-y and remaining second largest steel producer in the world. As per latest estimate of Moody’s, India’s domestic demand for steel is expected to grow at 10% through 2022 riding on the government’s investment focus on construction of roads, ports, airports and railways.

The global steel production and demand momentum at the start of 2022 was impacted due to geopolitical tension arising between Russia-Ukraine and subsequent waves of Covid-19. The high inflationary pressure amidst the rising global energy and commodity price environment continues to add more uncertainty on the outlook. The impact of Russia-Ukraine crisis is expected to be more on the European region due to their proximity and increasing sanctions on Russia may create some demand and supply imbalance. As per WSA, the global, steel demand is expected to be slower in 2022 to just 0.4% from 2.7% recorded last year. The steel demand in the developed world is forecast to increase by 1.1% and 2.4% in 2022 and 2023 respectively, after recovering by 16.5% in 2021. India’s steel demand growth is expected to be the highest in 2022 at 7.5% among top consuming nations, including China and the US, driven by increased demand for Indian steel products from the other parts of the world amidst the ongoing geopolitical tension.

Overall, the steel production in India is expected to remain strong. Furthermore, the lower steel production in China will continue to drive higher steel production in other countries. With a steady shift towards EAF steel production around the world, the demand for graphite electrode is expected to remain strong in the near term. The ongoing challenges such as Ukraine crisis, high inflation, anticipated central bank policies to hike interest rate in order to curb inflation are some factors which continue to put pressure on the economic

(v) Risks and Concerns

The cyclical nature of steel demand, production through the EAF route and volatility in the cost of input materials has always been key risk and concern for the Company.

Graphite India sells its products to the steel manufacturers using the EAF route. The steel industry historically has been highly cyclical and is affected significantly by macroeconomic conditions. Major customers for the steel industry include companies in the automotive, construction, appliance, machinery, equipment and transportation industries. In the recent past, these industries were negatively impacted by the general economic downturn and the deterioration in the financial markets, including restricted liquidity and credit availability. Customers, including major steel producers, have in the past experienced and may experience slowdown or financial distress that could adversely impact the Company.

Pricing for graphite electrodes has always reflected the demand trends of the global EAF steelmaking industry and

the supply of graphite electrodes. Global graphite electrode excess capacity had adversely impacted graphite electrode prices in the past. The pricing had started going down steeply after a sharp upswing seen in 2017, 2018 and partly in 2019, thus, adversely impacting sales, margins and profitability till later part of 2020 but had somewhat improved due to increase in the demand for electrodes with increase in capacity utilisation of steel industry. Therefore, the performance of the Company is sensitive to economic conditions and a downturn in economic conditions may adversely affect business.

Petroleum needle coke is the primary raw material used in the production of graphite electrodes. Supply of petroleum ^needle coke had been limited since the second half of 2017 as the demand had outpaced supply. This was also partly due to the increasing demand of needle coke in the production of lithium-ion batteries used in electric vehicles. The price of needle coke had softened to some extent due to general slowdown in demand from the end user industries. But price and availability had again tightened with increase in demand by electrode industry and the lithium ion battery industry. Therefore, the performance of the Company is heavily dependent on the price and timely availability of petroleum needle coke. Similarly, the availability and price of other materials and energy cost may impact the operations and margins of the Company.

Exports to specific regions may be severely impacted by trade barriers in the form of crippling import duties, anti-dumping duties, countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist / restrictive impositions. The ongoing crisis between Russia and Ukraine and other regional geo-political tensions may also have crippling effect.

Covid-19 has dealt the biggest blow to the Global Freight trade, which was almost flat for the last 10 years. A demand supply imbalance, shortage of containers and vessel schedules, congestion in major hub ports, has led to delay in transit times of inbound and outbound freight and pushed up ocean freight to an all-time high. The current geo-political tension caused by the Russia-Ukraine crisis has further aggravated the situation. Going forward, international trade may remain largely regional in a bid to contain freight costs. No miraculous recovery in freight cost is expected in 2022, at least in the first half of the FY 2022-23. Easing of the demand-supply gap by introduction of new containers, new vessels with higher TEU (Twenty feet Equivalent Units) handling capacity, diverting traffic to mid-size ports in the vicinity of the major (already congested) ports are expected to happen in the latter half of the year.

The Company has an optimum exposure to exports, imports and is a net foreign exchange earner. Volatility in foreign currency market directly impacts the Company’s prospects. Inherent natural hedge of various balancing exposures may mitigate the risk to an extent.

While the outbreak of Covid-19 has begun to subside in most parts of the world, the infection rates in some areas have experienced resurgence. As a result, we are unable to predict the resultant impact of the Covid-19 pandemic. The pandemic has adversely affected, and may further adversely affect, business, results of operations, financial position and cash flows. Such effects may be material and the potential impacts include, but are not limited to: 1) adverse impacts on countries of customers, and resultant impacts on demand for our products; 2) disruptions at production facilities, including reduction in operating hours, labour shortages and changes in operating procedures, including additional cleaning and disinfecting procedures; 3) disruptions in supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities; and 4) reductions in operating effectiveness due to workforce disruptions from Covid-19 restrictions and social distancing resulting from, among other things, the unavailability of key personnel necessary to conduct business activities. The situation continues to change rapidly and additional impact may arise that cannot be realistically predicted.

The repercussions of reduced investment and bankruptcies may run more extensively through the economies. Depending on the duration, global business confidence could be severely affected, leading to weaker investment and growth than projected in the baseline. Related to the uncertainty around Covid-19, an extended risk-off episode in financial markets and tightening of financial conditions could cause deeper and longer-lasting downturns in a number of countries.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured. IT Security Policy is in place to ensure that the risks associated with information gathering, processing and preservation are assessed and adequately managed. The purpose and objective of the policy is to address the risks by defining, developing and implementing adequate controls through proper categorization. An internal committee reviews the adherence and suggests if any changes are required. Independent systems audit is performed by TUV Nord, India. Third party product inspections are performed by agencies like SGS.

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 2,799 crore as against Rs. 1,839 crore in the previous year.

Profit after tax was Rs. 574 crore as against Rs. 199 crore in the previous year. Profit before tax was higher at Rs. 753 crore as compared to Rs. 271 crore in the previous year.

Borrowing at Rs. 344 crore was higher than Rs. 223 crore as

compared to previous year and the Finance Cost decreased to Rs. 4 crore from Rs. 6 crore in the previous year.

Capital expenditure during the year amounted to Rs. 78 crore as against Rs. 80 crore in the previous year.

The Company is a net foreign exchange earner.

ICRA has reaffirmed the long term rating at [ICRA] ‘AA ’ (pronounced ICRA double A plus) with negative outlook. The short-term debt programme rating has been reaffirmed at [ICRA] ''A1 '' (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility —''emanating from large liquid investment portfolio.

Details of contingent liabilities are given in Note 34 to the Financial Statements.

(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed

The HRD policies and practices continue to focus on contemporary as well as pragmatic people centric initiatives.

While designing these policies, special attention is given to Company’s vision as well as changing needs. Optimal utilisation of people and periodic review of the organogram is addressed continuously.

Training and development programs are specifically targeted to address Company’s changing needs especially in view of the volatile and uncertain external environment as well as evolving complex business dynamics.

Multiskilling and multitasking of employees is achieved through suitably designed training modules as well as rotation through different job roles. This ensures a mix of learning, innovation and excellence leading to continual improvements.

Company considers its employees as an intelligent and responsible resource for effectively and optimally managing other resources like money, machines and materials. Hence productive and effective engagement of all at various levels is critical to achieve Company’s objectives of cost optimisation, profitability as well as business growth. This is critical to ensure interests of all stake holders.

Specific initiatives are being taken to develop successors to key roles. Emphasis is given to improve the foundational understanding of leadership competencies of Team Building, lateral thinking, Influencing Outcomes and Problem Solving. In order to achieve this, targeted leadership and behavioural ‘Coaching’ for identified employees is undertaken. This will ensure seamless succession.

The total number of permanent employees in the Company is 1,719 as on 31st March, 2022.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

(ix) Occupational Health and Safety

Internal Safety Audits are conducted at regular intervals at plants. Audit observations relating to unsafe acts, practices, conditions are discussed in "Corrective and Preventive Action” meetings. Protection and safety of our personnel and assets are our top priority. We believe in in-depth investigation of unfortunate accidents, if any, so that root causes are identified and corrective and preventive measures are undertaken. Consultation and participation of workers and statutory bodies are encouraged.

Health, Safety, Environment and Quality policies are in place and are audited by external agencies. Safety Audit once in two years, as specified, is carried out by External Safety Auditors. Every year health check-up of all employees is being carried out by competent medical professionals.

(x) COVID-19 : Measures Undertaken

After the pandemic struck and lockdown was imposed towards end March 2020, the company started implementing changes to protect its employees though appropriate health and safety protocols, which included canceling travel and eliminating in-person meetings, working from home wherever possible and establishing safety protocols at its sites. These measures have subsequently been eased out with decline in severity of pandemic, however, the safety procedures like temperature measurements, personal protective equipment, use of masks/ gloves, social distancing, frequent cleaning and disinfecting and implementation of daily check sheets to ensure team members are highly focused on the new procedures are still in place.

Further the company also contributed Rs. 5 crore to West Bengal State Disaster Management Authority towards Covid-19 relief. The Company also spent Rs. 32.50 lakhs approx. towards free Covid vaccination through an implementing agency.

(xi) Significant changes (i. e. change of 25% or more as compared to the immediate ly previous financial year) in key financial ratios, along with explanations are as under:

Sl.

No.

Particulars

2021-22

2020-21

Improvement / (deterioration)

1

Interest Coverage Ratio -(Finance cost / PBIDT)%

183.90

54.57

237%

2

Debt Equity Ratio -

0.07

0.05

33%

-Times

3

Operating Profit Margin - (PBDIT / Total Revenue)%

26.11

15.01

74%

4

Net Profit Margin - (PAT / Total Revenue)%

20.52

10.84

89.24%

5

Return on Net worth -(PAT / Net worth)%

12.86

4.97

159%

Explanations :-

The Company had recorded better performance during FY 2021-22 in terms of turnover and profitability. The performance has led to improvement in all profitability linked

ratios. Debt equity ratio has slightly increased due to higher year end borrowings.

Transaction of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity is given below :-

Emerald Company Private Limited (ECPL) (An entity of the promoter Group holding 61.33% of the share capital).

2021-22

2020-21

(Rs. Cr.)

(Rs. Cr.)

Dividend Paid

59.91

-

—Research and Development

The Company’s R&D efforts are primarily focussed towards developing import substitutes for Aeronautical, Aerospace, Railway and other industrial applications.

Continual process development activities are ongoing for producing superior version of carbon brake pads for aircrafts and helicopters.

Space application components processed at state-of-art facilities were successfully tested by Space Research agencies.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. (GIBV) in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH. General Graphene Corporation, USA, has become subsidiary of GIBV from 1st February, 2022.

The overseas subsidiaries recorded a turnover of Euro 43.28 million (Mn) as compared to Euro 29.85 Mn in the previous year. The subsidiaries have continued their dismal performance. However, during the current year, loss of Euro 10.08 Mn was lower against loss of Euro 29.71 Mn in the previous year.

The Company, by way of Royalty, earned Rs. 4.01 crore during the year, as against Rs. 2.68 crore in the previous year, from overseas subsidiary.

^General Graphene Corporation (GGC)

General Graphene Corporation, USA, which was an associate company of GIBV, has become a subsidiary of GIBV (a 100% subsidiary of the Company) w.e.f. 1st February 2022. GIBV has made further investment of USD 2.5 Mn and total investments stood at USD 16.10 Mn as on 31.03.2022 which constitute 51.81% of capital. The investments in General Graphene is accounted for using the equity method as per IndAS 28 till 31st January, 2022 and as a subsidiary as per IndAS 110 for the remaining two months.

No Company has ceased to be a subsidiary of the Company during the year.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per IndAS 110 forms a part of this Annual Report.

Information pursuant to Section 134 of the Companies Act, 2013

a. Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March 2022 is available on the Company’s website on http:// ir.graphiteindia.com/

b. Four meetings of the Board of Directors of the Company were held during the year on 28th June 2021, 6th August 2021, 1st November 2021 and 14th February 2022.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 2

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -Annexure 3

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 4

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 5

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated several projects aimed at promoting education, employment enhancing vocational/employability skills, livelihood enhancement projects, healthcare initiatives, rural development projects etc. as detailed in the CSR annual report for the year ended 31st March, 2022

which forms part of this report - Annexure 6. The CSR policy has been displayed on Company website www.graphiteindia.com and can be viewed on http:// ir.graphiteindia.com/

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination and Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website and can be viewed on http://ir.graphiteindia.com/

—m. The Company does not accept deposits from public.

n. There were no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 7 and 8.

o. Dividend Distribution Policy can be viewed on http:// ir.graphiteindia.com/

DIRECTORS

Mr. K. K. Bangur retires by rotation in this AGM and being eligible offers himself for re-appointment.

Recognition/Award and Certificates

The Company continues to enjoy the status of a Four Star Export House. This year the Company has received Star Performer Award for 2018-19 for export performance from EEPC.

The Company has acquired certification with the standards ISO:9001 & 14001.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) The directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 9

Business Responsibility Report (BRR) forms part of our Annual Report. Annexure 10Auditors

The first term of five consecutive years of appointment of S. R. Batliboi & Co. LLP, Chartered Accountants, as the statutory auditors of the Company ends on the date of the ensuing AGM. They can be re-appointed for another five year term. They have conveyed their eligibility and willingness to be reappointed.

The Board of Directors on the recommendation of the Audit Committee have also recommended to the members of the Company, appointment of S. R. Batliboi & Co. LLP, to audit financial accounts from FY 2022-23 onwards for a second term of five consecutive years.

Cost Auditors

The Company had appointed following Cost Auditors who conducted cost audit in respect of accounts and records made and maintained by the Company for FY 2021-22 as required u/s 148(1) of Companies Act, 2013 as detailed below-

Shome & Banerjee

Electrode plant at Durgapur and Power generation facilities at Chunchanakatte and Mandya.

Deodhar-Joshi & Associates

6

Electrode, IGE and GRP plants at Nashik

B G Chowdhury

& Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2020-21 was filed with the Ministry of Corporate Affairs, Government of India, on 7th September 2021.

Cost auditors have been appointed to conduct cost audit in respect of accounts and records made and maintained by the Company for FY 2022-23 as under -

Shome & Banerjee

Electrode plant at Durgapur and Power generation facility at Chunchanakatte

Deodhar-Joshi & Associates

Electrode, IGE and GRP plants at Nashik

B G Chowdhmy & Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels Titilagarh

division at

Secretarial Audit/Compliance Report

Secretarial Audit Report and Secretarial Compliance Report for FY 2021-22 received from M/s. Bajaj Todi & Associates, Practicing Company Secretaries are annexed herewith -Annexure 11 and 12

Secretarial Standards

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Prevention of Sexual Harassment of Women at Workplace

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

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board K. K. Bangur

June 14, 2022 Chairman


Mar 31, 2021

The Directors have pleasure in presenting their Forty Sixth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2021.

Financial Results Rs. in Crore

Particulars

2020-21

2019-20

2020-21

2019-20

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

1839

2875

1958

3094

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Tax and other Comprehensive Income

322

61

111

95

Finance Costs

6

17

6

1.

Profit before Depreciation and Tax

316

45

105

77

Depreciation and

Amortisation Expense

45

^ 1 1

52

51

Profit before Share of Profit/(Loss) of Associate and Tax

271

1

53

26

Share of Profit/(Loss) of Associate

-

-

(10)

(7)

Profit before Ta

Tax Expense for Current Tax

271

1

43

19

he Current Year

/\ 64

62

6

Deferred Tax

8

(32)

13

(32)

Profit for the Year

199

31

(32)

45

Other Comprehensive Income (net of tax)

(2)

(3)

19

30

Total Comprehensive Income for the year

197

28

13

75

Statement of Retained Earnings

Retained Earnings at the beginning of the year

| 2228

3071

2945

3776

Add Profit for the

year

199

3 1

(32)

45

Add Comprehensive Income

(2)

(3)

(2)

(3)

Less Final Dividend on Equity Shares

-

684

684

Less Dividend Distribution Tax on above

-

140

14!

Less Interim Dividend on Equity Shares

-

39

.^^1-

3''

Less Dividend Distribution Tax on above

-

8

v

8

Less transfer to Reserve Fund

-

y/-

5

1

Retained Earnings at the end of the year

2425

2228

2906

2945

REVIEW OF THE ECONOMY

FY 2021 was an unprecedented year with outbreak of the Covid-19 pandemic around the world and had brought economies across the globe to a complete standstill for most part of the year 2020. In almost all the countries, manufacturing and other business activities were halted especially during first half of the year due to various lockdown measures implemented in part or full. Worldwide governments’ immediate focus was to ensure the well-being of the people and to invest in medical infrastructure. In addition, various central banks and governments together ensured sufficient liquidity in the system to manage the crisis. The US Federal Reserve eased the monetary policy and maintained an accommodative stance by lowering interest rates to 0.25% from 1.25% at the

beginning of March, 2020, which has been effectively zero since then, to allow businesses to stay afloat. The central governments too provided economic relief packages to support households, employers, financial markets and state and local governments. During the year, the health crisis quickly morphed into an economic crisis and added further stress to the already weak global demand and trading activities and as a result global economic growth declined substantially for the third consecutive year by (3.3)%.

In the United States, economy contracted by (3.5)% from 2.3% in 2019 due to the outbreak and impact of covid which added pressure to already simmering US-China trade war, slowing investment and exports. The U.S. was one of the worst hit countries in terms of number of covid cases and mortality. The

European economy too contracted by (6.6)% due to impact of covid halting of business activities and falling demand from Asia. The much-awaited Brexit happened in December, 2020 and as a result of which imports and exports for both UK and Europe fell by at least 30%. It is likely to continue for most of 2021 as both economies recover from pandemic related shocks and uncertainties in trade and tariff rules. In Asia, all the key economies registered a decline in its GDP growth except China which registered an increase of 2.3%. China was successful in implementing strict containment measures at the start of the year and its central bank provided liquidity to ensure quicker recovery. Rest of the Asian countries continues to face the pandemic challenges and recovery of the economic activity varies depending upon the severity of the impact of the pandemic in the different countries.

During the third quarter of the year, as the covid related lockdowns started to ease in many countries, the economic activity started to pick-up and recovery in demand was swift due to excess liquidity in the market and higher government spending. The auto and steel sectors saw a pick-up in demand in the third and fourth quarter.

The start of 2021 witnessed a sharp recovery in demand and industrial output due to the widespread optimism surrounding the development of vaccines to curb the rate of infection. Base metal prices were up by 30% between August, 2020 and February, 2021 and steel prices also started to rise in key regions such as China, US and Europe. However, the positive momentum at the start of 2021 was again impacted as economies started to face second and third wave of the pandemic majorly in the Asian countries. Countries around the world are taking all necessary measures to contain the pandemic such as focusing on revamping the healthcare services, implementing micro-lockdowns, organizing mass vaccination drives to slow down the impact of the virus.

India’s GDP growth also contracted to (8.0)% in 2020 from 4.2% in 2019 as the country went into strict nationwide lockdown in the second quarter of the year due to the rising number of Covid-19 cases. The economic activity remained subdued due to complete halt in manufacturing activities, fall in consumer demand, plunging auto sales, and halt in construction and real estate sectors. According to the data released by the Ministry of Statistics & Programme Implementation (MOSPI), the Index of Industrial Production, the IIP index declined to (8.6)% compared to (0.8)% in 201920 The subdued economic performance resulted in higher unutilized production capacity, lower corporate profits and rising unemployment.

In response to the decelerating economic growth, RBI had taken swift action by providing liquidity in the market in excess of Rs 3.7 lakh crore, providing loan moratorium, and lowering interest rates to help businesses tackle the impact of the pandemic and maintaining an accommodative stance. The government also announced an economic relief package of Rs 1.7 lakh crore for food and direct cash transfers and has also made relaxation in filing of ITR and GST returns. These

measures along with lowering of corporate tax announced in 2019, supported the economy and businesses during much of 2020 despite the challenging macro-economic indicators.

The Indian economy started showing signs of steady recovery from October, 2020 as lockdown began easing in several states and economic activities started to pick-up. This resulted in rebound of economic activities due to pent-up demand, excess liquidity and increase in consumer spending. The manufacturing sector witnessed a sequential spike in demand with revival of demand in auto, steel and construction sectors.

The Indian steel industry, which is the second largest steel manufacturer in the world, also witnessed an increase ^^in demand due to increased construction activities and infrastructure spending initiatives undertaken by the government. This pandemic had impacted all industries and sectors, disrupting demand and supply balance, however, as the lockdowns eased, the consumer spending increased due to renewed confidence and optimism on the back of declining covid cases and availability of vaccines. Currently, India is battling the second wave of corona virus which has turned out to be more severe, virulent and has caught the administration off guard. But despite that the businesses and consumers seemed to have well prepared to handle the situation on the economic front. Several states have imposed micro-lockdowns, but the key manufacturing industries continue to remain operational and push economic activity.

GRAPHITE INDIA

The Company’s performance for FY 2020-21 was positive compared to FY 2019-20. Although, revenue from operations decreased by 36% to Rs. 1,839 crore for FY 2020-21 as against Rs. 2,875 crore in the previous year, however, PBT increased to Rs. 271 crore as against Rs. 1 crore of previous year which also includes investment income of Rs. 107 crore as against Rs. 45 crore in the last year. The performance of the Company was comparatively better due to higher volume despite continuing trend of lower realizations and lower impact of high cost inventory as compared to last year. The global demand for graphite electrodes continued to be weak till second / third quarter of financial year owing to - (1) continued adverse impact of Covid-19; (2) consumption of electrode inventory built-up by the steel industry during FY 2018-19 when electrode was in short supply; and (3) reemergence of supply from China due to incremental electrode capacity coming much ahead of expected increase in steel production through EAF route. However, since then demand for Graphite electrodes has revived due to overall recovery of the steel industry. Strong recovery in the major consuming industries such as construction and automobile and recent thrust of all steel consuming nations on infrastructure are expected to augur well for the electrode industry. However, resurgence of Covid-19 variant is quite virulent and is a major concern of all.

The Company’s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 93% of the total revenue.

OVERSEAS SUBSIDIARIES

The performance of the German subsidiaries continued to be dismal during the year due to economic slowdown in the region, lower steel production and consumption of carry forward electrode inventory that was built-up during FY

2018-19 which clearly impacted the demand and prices of electrodes.

DIVIDEND

Dividend @ Rs. 5/- per share on 19,53,75,594 equity shares of Rs. 2/- each for the financial year ended 31st March 2021 has been recommended by the Board of Directors. .

MANAGEMENT DISCUSSION AND ANALYSIS

(i) Industry''s structure and developments

A. Graphite and Carbon Segment

Graphite Electrodes

Graphite Electrode is used in electric arc furnace based steel mills for conducting current to melt scrap iron and steel and is a consumable for the steel industry. The principal manufacturers are based in USA, Europe, Middle East, India, China, South East Asia and Japan.

Graphite Electrode demand is primarily linked with the global production of steel in electric arc furnaces which is one of the two basic methods for steel production i.e. - [1] Bessimer Oxygen Furnace (BOF); and [2] Electric Arc Furnace (EAF). According to World Steel Association (WSA), the EAF steel industry has grown at 6.4% compound annual rate since 2015. The fundamental reason behind this recovery has been China beginning to restructure its steel industry, encouraging consolidation and shutting down archaic capacities. China has also begun to comply with environmental regulations to improve air quality impacted by CO2 emissions associated with the burning of coal in BOF steelmaking. In addition, trade restrictions in developed economies such as North America and Western Europe for protecting their domestic steel industries against imports from BOF steel producing countries, which have resulted in a significant decrease in Chinese steel exports. According to China, Customs and Baiinfo, Chinese steel exports declined from 112 million MT in 2015 to 54 million MT in 2020. This resulted in increased steel production outside of China, benefiting EAF steel production. China’s share in EAF production which was only 6% of global steel making till 2014 through EAF had increased to 10.4% upto 2019 and is estimated to be higher going forward.

According to the WSA, since 2000, EAF steelmaking grew at an annual pace of approximately 3%, compared with 1% for steelmaking overall, excluding China. As a result of the increasing global availability of steel scrap and the more resilient, high-variable cost and environmentally friendly EAF model, EAF steel producers are expected to continue to grow at a faster rate than BOF producers globally. Additionally, EAF steel producers are able to use increasingly higher quality of steel scrap and sponge iron, their two primary raw materials, to produce larger volumes.

Calcined Petroleum Coke and Paste

Graphite India’s Coke plant in Barauni, Bihar, is engaged in the manufacturing of Calcined Petroleum Coke (CPC), Carbon Paste and Electrically Calcined Anthracite Paste and is one of the several backward integration initiatives of the Company. Two grades of CPC - aluminium and graphite - are produced. CPC is primarily used in the manufacture of anodes for use in aluminium smelters, manufacture of graphite electrodes and also used as carburiser in steel. The division also manufactures four grades of Paste, i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) and Tamping Paste based on either CPC or ECAC. Electrode Paste is used in Ferro Alloy Smelters and Tamping Paste is used as a lining material in submerged arc furnaces.

This division’s performance has been satisfactory this year because of improved market condition in its user industries namely steel, aluminium and graphite electrodes.

Impervious Graphite Equipment

IGE Division is in the business of design, manufacture and supply of Impervious Graphite Heat and Mass Transfer Equipment and Turnkey systems. It has an integrated facility under one roof for process/product design, manufacturing, inspection and for providing supervision during erection and commissioning activities.

Impregnated graphite is an ideal material of construction for corrosive applications in sectors like Chloro-Alkali, Crop protection agrochemicals, Chlorinated Organic, speciality & fine Chemicals, Phosphoric Acid, Fertilizers, Rayon, Steel Pickling, Metal Processing, Polymers, Drug Intermediates, Batteries & Gelatine etc.

Over the years, the Company has built the product line into a reliable brand with a reputation for prompt service, good quality and consistent performance by investing in strengthening its core competencies. Division has the capability to meet any country specific design and has obtained many certifications relevant to the product profile. Domestic chemical, specialty chemical, drugs and pharma industries have picked up. Order booking both in domestic and export market has been good.

B. Other Segments

Glass Reinforced Plastic Pipes (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes suitable for municipal application, seawater, effluent, irrigation, penstock as well as Pipe-liners for rehabilitation of old pipes/ducts by trenchless technology in metro cites. Product is manufactured by the Continuously Advancing Mandrel Filament Winding Process with computerized advanced technology comparable to other plants worldwide. The plant operations are dependent upon tenders floated by government / semi-government authorities which have been absent during the year

Steel Segment

Powmex Steels Division (PSD) is engaged in the business of

manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs and broaches. HSS cutting tools are essentially used in - (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterized by a single good quality manufacturer of HSS i.e. PSD which faces competition from small domestic producers and cheap imports from overseas manufacturers.

In the budget for the year 2021-22, the Government of India issued a notification, temporarily suspending Anti-dumping Duty till September, 2021 on imports of HSS products from certain countries who were indulging in unfair competition by dumping these products into India. The Company has represented to the Government for re-imposition of this duty, as HSS is not required for infrastructure projects. The Company is hopeful that this notification would soon be repealed and the buoyancy experienced in plant capacity utilisation in the last few months will get revived.

18 MW Hydel Power Facility

The Company has an installed capacity of 18 MW of power generation through Hydel route. Renewal of Wheeling & Banking Agreement to be effective from August 2020 is pending with Government authorities.

(ii) Opportunities and threats

During fiscal year 2020-21, India continued to maintain its position as the second largest steel producer in the world with crude steel production of 102.5 million tonnes (MT), but registering a decline of 6.1% over 2019-20 mainly attributable to lower demand and closure of factories during the first half of 2020 due to the covid pandemic related production curbs. The production of finished steel also declined by 7.8% to 94.66 MT. India contributes 6% of total world crude steel production. The country exported 10.79 MT of finished steel, up by 29.1% and imported 4.75 MT, down by 29.1% and became net exporter for the fiscal year 2020-21. Per capita finished steel consumption in India was 74.7 Kg for 2019-20 as compared to 75.7 Kg in 2018-19.

The onset of pandemic in early 2020, saw the global steel industry coming to a grinding halt. Infrastructure, real estate and automobile, the biggest consumer of steel had cut their demand as manufacturing was stopped due to lockdown measures put in place to contain the spread of virus. Indian steel industry too was impacted by the pandemic related business disruptions. The steel industry was already under pressure due to cheaper imports from China and weak demand due to slowdown in key sectors. The steel demand was on a declining trend for most part of 2020, however, it gradually started picking up in October with the easing of lockdowns and manufacturing sector started to pick up pace. The auto industry in India saw a sharp rebound in sales from October with onset of festive season in India and pent-up demand which augured well for both auto and steel industry.

The real estate and infrastructure industry too contributed to a sharp rise in demand for the steel partly due to government initiatives towards infrastructure spending as well as excess liquidity driven by lower interest rates. The rising demand lead to investments in the domestic market from SAIL, TATA Steel and other major players. Furthermore, the government of India introduced new vehicle scrapping policy which is expected to significantly reduce its import dependency on China to bridge the gap between demand and supply and in turn will help the domestic steel market.

The key steel consuming sectors such as auto, capital goods, infrastructure which contributes 10%, 11% and 9% of the domestic steel demand, is expected to grow significantly in the range of 11%-15% in the next 5 years. The government of India is also aiming to increase the per capita consumption of steel to 160 Kg by 2030 from existing 75 Kg which is likely to keep the demand steady. The immediate challenge for the industry comes from the ongoing raging second wave and expected third wave in 2021 which can contribute to demand pressure and increase in inventory, steel prices, rising input cost which can hurt margins and a slowdown in implementation of various policies of the government.

China crude steel production increased by 5.2% to 1,053 MT and its share of global crude steel production increased to 56.5% in 2020 as compared to 53.3% in 2019. China was amongst the very few countries in the world to have registered growth in steel output as it was able to contain the spread of covid and restart the economic activities earlier than other countries. As a result, the infrastructure spending increased in the country aided by various stimulus packages by the government of China which increased the demand of steel. China’s auto sector, the largest in the world, saw a decline of 2% in sales for the year, however, with sales picking up from December 2020, the demand has been steady which has contributed to the demand for steel.

EAF steelmaking which uses graphite electrodes as an essential consumable is expected to grow significantly in coming years due to recent policy changes in China to move towards EAF steel production from the existing BOF technology to curb emissions. BOF steel production still contributes majorly to the China’s steel production capacity, however, as per the latest five-year plan of the Chinese government, policy changes have been introduced to focus on reducing emissions. This has led to introduction of new technologies in existing plants and shift towards EAF from BOF. Between 2015 and 2020, China closed about 200 million tonnes of capacity and upgraded 600 million tonnes of capacity to control emissions. As a result, the demand for graphite electrodes is increasing on an annual basis.

The Company is closely monitoring the recent developments and the impact of second wave of the Coronavirus on the industry and business. Opportunities in the near term include - (a) the pick-up in sales in auto industry, the sustainability of which needs to be watched closely post second wave; (b) introduction of new vehicle scrappage policy by the Indian

government to offset the demand from China; (c) The recent government initiatives towards infrastructure spending, 100% FDI in steel industry and existing National Steel Policy, which aspires to achieve 300MT of domestic capacity by 2030 is expected to increase investments and production to sustain the demand and supply of steel; and (d) lower exports from China to the world, especially to the regions such as Europe and North America which has higher EAF capacities, due to restrictive trade policies, will lead to an increased demand in the domestic steel industries and subsequently leading to a higher demand for graphite electrodes.

The threats in the near terms include - (a) fall in demand due to ongoing second wave which has been more severe as compared to the situation in 2020 and expected third wave in future; (b) underutilization of capacity due to volatility in domestic labour markets in terms of availability of manpower and increasing input cost; (c) implication of price fluctuations as steel supply increases from China which is cheaper compared to other global steel manufacturers; and (d) sustainability and pace of recovery of economic activities and economies around the world.

Graphite India is well positioned with its strong balance sheet and longstanding customer relationship. The Company remains fully confident of not only navigating successfully through these unprecedented times but also emerging stronger.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 1,839 crore as against Rs. 2,875 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 733 crore as against Rs. 1,345 crore in the previous year.

Graphite and Carbon Segment

The performance of the segment was satisfactory in FY 202021 as compared to FY 2019-20 considering impact of Covid-19 on global recovery and weak economic conditions during major part of the year.

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 66,871 Mt against 63,088 Mt in the previous year.

Production of Calcined Petroleum Coke during the year was 32,679 MT as against 27,315 MT in the previous year.

Production of Carbon Paste during the year was 3,210 MT against 4,453 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares during the year was 1,776 MT as against 1,749 MT in the previous year.

The segment revenue decreased to Rs. 1,719 crore from Rs. 2,780 crore in the previous year with decline in domestic and export sales on value terms. Segment recorded profit of Rs. 176 crore in FY 2020-21 from loss of Rs. 77 crore in FY

2019-20.

Other Segments

GRP division produced 1,623 MT pipes as against 1,513 MT in the previous year.

Production of HSS and Alloy Steels was 1,829 MT during the year as against 1,327 MT in the previous year.

Power generated from captive Hydel Power Plant of 18 MW capacity amounted to 54.28 million units during the year as against 49.69 million units in the previous year. Unit sold 39.97 million unit during the year as against 25.20 million unit in 2019-20.

(iv) Outlook

—Crude steel production across the globe started to decline at the start of 2020 due to the Covid-19 induced lockdowns resulting in closure of manufacturing facilities. The steel production remained impacted during the first half of the year and started gradual increase in production from May, 2020 onwards with the opening up of the economies. As per WSA, global crude steel production reached 1,864 MT for the CY 2020, marginally down by 0.9% compared to CY 2019. However, global crude steel production excluding China declined significantly by 8.2% in CY 2020.

In China, the government is focusing on reducing carbon emissions in the next 5 years and hence the share of EAF mills is likely to increase. The steel industry is also expected to witness an increase in mergers and acquisitions of state owned mills as well as introduction of new scrappage policies which is likely to increase EAF steel capacity. As a result of these factors, it is expected that total UHP graphite electrode demand in China will continue to increase going forward.

The graphite electrode industry has historically followed the growth of the EAF steel industry and, to a lesser extent, the steel industry as a whole, which has been highly cyclical and affected significantly by general economic conditions. Historically, EAF steel production has grown faster than the overall steel output due to its greater resilience, overall variable cost structure, lower capital intensity and more environmentally friendly nature. The Company remains confident in the long-term growth propensity of EAF steel production. Global warming and other environmental concerns are critical issues facing the society and companies globally, and the EAF steelmakers are among the largest recycling industry in the world. EAF steel making produces 75% less carbon emissions than traditional BOF steel making.

The recovery of economic activity around the globe from the pandemic slowly started picking up in October, 2020 and has seen a sharp rebound in demand and supply since then. World crude steel production was 486.9 MT between January-March 2021, up by 10% compared to the same period in 2020. Crude steel production increased in all the regions collectively except North America. Asia and Oceania produced 356.9 MT of crude steel and showed double digit growth of 13.2% year on year for the first three months of 2021. The European Union too witnessed a growth of 3.1% in crude steel production to 37.8 MT. China produced 271 MT of crude steel in first quarter of

2021, a sharp increase of 15.6% compared to same period in 2020. India is estimated to have produced 29.6 MT of crude steel in first quarter of 2021, an increase of 10.4% compared to same period in 2020.

The second wave of the virus since the start of March and April 2021 has slowed the demand due to implementation of micro-lockdowns in various regions, however, the recovery in manufacturing sector is expected to be robust compared to other sectors in 2021 as supply chain activities continue to function inspite of the pandemic protocols.

Despite the near-term challenges, the Indian economy is expected to remain resilient, and growth is expected to be in line with global expectations. India is also expected to gain significant market share in exports of manufactured goods due to US-China trade concerns. This will provide a significant boost to the manufacturing sector in terms of production and investments. As such, India has already witnessed a slew of investments by major steel players to ramp up steel production since the start of 2021. With recovery in key sectors such as infrastructure, construction, automobile and mining, the demand for steel in India is expected to grow by 19.8% in 2021. The Indian government’s recent vehicle scrappage policies and doubling of ship breaking capacity combined with global price increase of steel is expected to reduce imports. Furthermore, it is expected that EAF production of steel will rise in India, where the consumption of graphite electrodes will also rise which in turn would increase demand for graphite electrodes.

(v) Risks and Concerns

The cyclical nature of steel demand, production through the EAF route and volatility in the cost of input materials has always been key risk and concern for the Company.

Graphite India sells its products to the steel manufacturers using the EAF route. The steel industry historically has been highly cyclical and is affected significantly by macroeconomic conditions. Major customers for the steel industry include companies in the automotive, construction, appliance, machinery, equipment and transportation industries. In the recent past, these industries were negatively impacted by the general economic downturn and the deterioration in the financial markets, including restricted liquidity and credit availability. Customers, including major steel producers, have in the past experienced and may again experience downturns or financial distress that could adversely impact the Company.

Global graphite electrode excess capacity has adversely impacted graphite electrode prices in the past. The pricing had started going down steeply after a sharp upswing seen in 2017, 2018 and partly in 2019, thus, adversely impacting sales, margins and profitability till later part of 2020 but the outlook for 2021 has somewhat improved due to increase in the demand for electrodes with increase in capacity utilisation of steel industry. Therefore the performance of the Company is sensitive to economic conditions and a downturn in economic conditions may adversely affect business.

Petroleum needle coke is the primary raw material used in the production of graphite electrodes. Supply of petroleum needle coke had been limited since the second half of 2017 as the demand had outpaced supply. This was also partly due to the increasing demand of needle coke in the production of lithium-ion batteries used in electric vehicles. The price of needle coke had softened to some extent due to general slowdown in demand from the end user industries. But price and availability may again tighten with increase in demand by electrode industry and the lithium ion battery industry. Therefore the performance of the Company is also dependent on the price and timely availability of petroleum needle coke. Similarly the availability and price of other materials and energy cost may impact the operations and margins of the Company.

Exports to specific regions may be severely impacted by trade barriers in the form of crippling import duties, anti-dumping duties, countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist / restrictive impositions.

The Company has an optimum exposure to exports, imports and is a net foreign exchange earner. Volatility in foreign currency market directly impacts the Company’s prospects. Inherent natural hedge of various balancing exposures may mitigate the risk to an extent.

The evolution of the COVID-19 pandemic remains uncertain. The recovery of the global economy could be weaker than expected after the spread of the virus slows down for a number of other reasons. These include lingering uncertainty about contagion, loss of business and consumer confidence, establishment closures and structural shifts in corporate and household behavior, resulting in supply chain disruptions and weakness in aggregate demand.

While the outbreak of Covid-19 had begun to subside in certain areas of the world, the infection rates in some areas have experienced resurgence in the spread of Covid-19 including India and the infection rates in other areas continue to escalate. As a result, we are unable to predict the ultimate impact of the Covid-19 pandemic at this time. The pandemic has adversely affected, and may further adversely affect, business, results of operations, financial position and cash flows. Such effects may be material and the potential impacts include, but are not limited to - 1) adverse impacts on countries of customers, and resultant impacts on demand for our products; 2) disruptions at production facilities, including reductions in operating hours, labour shortages and changes in operating procedures, including additional cleaning and disinfecting procedures; 3) disruptions in supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities; and 4) reductions in operating effectiveness due to workforce disruptions from Covid-19 restrictions and social distancing resulting from, among other things,

the unavailability of key personnel necessary to conduct business activities. This situation continues to change rapidly and additional impacts may arise that cannot be currently predicted.

The repercussions of reduced investment and bankruptcies may run more extensively through the economies. Depending on the duration, global business confidence could be severely affected, leading to weaker investment and growth than projected in the baseline. Related to the uncertainty around Covid-19, an extended risk-off episode in financial markets and tightening of financial conditions could cause deeper and longer-lasting downturns in a number of countries.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured. IT Security Policy is in place to ensure that the risks associated with information gathering, processing and preservation are assessed and adequately managed. The purpose and objective of the policy is to address the risks by defining, developing and implementing adequate controls through proper categorization. An internal committee reviews the adherence and suggests if any changes are required. Independent systems audit is performed by TUV Nord, India. Third party product inspections are performed b

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 1,839 crore as against Rs. 2,875 crore in the previous year.

Profit after tax was Rs. 199 crore as against Rs. 31 crore in the previous year. Profit before tax was higher at Rs. 271 crore as compared to Rs. 1 crore in the previous year.

Borrowing at Rs. 223 crore was lower than Rs. 416 crore in the previous year and the Finance Cost decreased to Rs. 6 crore from Rs. 17 crore in the previous year.

Capital expenditure during the year amounted to Rs. 80 crore as against Rs. 32 crore in the previous year.

The Company is a net foreign exchange earner.

ICRA has reaffirmed the long term rating at [ICRA] ‘AA ’ (pronounced ICRA double A plus) with negative outlook. The short-term debt programme rating has been reaffirmed at [ICRA] ''A1 '' (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility emanating from large liquid investment portfolio.

Details of contingent liabilities are given in Note 34 to the Financial Statements.

(viii) Material developments in Human Resources /

Industrial Relations front, including number of people employed

The HRD policies and practices focus on contemporary and pragmatic people centric initiatives, aligning those with business vision and objectives, which primarily help in creating robust organisational structure and aims at optimum utilisation of human resources.

The Company continually imparts training across all levels as per annual training calendar and also imparts specialized training, wherever necessary, for upgrading the skill of the concerned employees. The Company also deputes employees to attend various programs/industrial exhibitions on the subject matter relevant to their work areas. It also ensures that workmen are multi-skilled in the different areas of operations through a system of job rotation.

The Company considers that improving employee engagement, which is not an isolated HR process, significantly improves the company’s performance across a number of key areas, such as profitability, productivity, business growth, customer satisfaction, innovation, health and safety, sickness and absence, employee turnover and wellbeing. Towards this end, organization’s engagement efforts have been aligned with overall business strategy. Important issues relating to the plant and actions required to address the same are regularly discussed. The Company involves its teams at various locations in planning ahead, assessing opportunities and discussing ideas for business improvement. Leadership development at middle and senior level is being ensured to prepare future leaders in the organization and ensures smooth and seamless succession.

The Company undertook various workshops in the areas of physical fitness, mental health and well-being of its employees including awareness programs on Covid-19.

The total number of permanent employees in the Company is 1,748 as on 31st March, 2021.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

(ix) Occupational Health and Safety

Internal Safety Audits are conducted at regular frequency in the plants. Audit observations relating to unsafe acts,

•—practices, conditions are discussed in "Corrective and Preventive Action” meetings. Protection and safety of our personnel and assets are our top priority. We believe in indepth investigation of unfortunate accidents, if any, so that root causes are identified and corrective and preventive measures are undertaken. Consultation and participation of workers and statutory bodies are encouraged.

Health, Safety, Environment & Quality policies are in place and are audited by external agencies. Safety Audit once in two years, as specified, is carried out by External Safety Auditors. Every year health check-up of all employees is being carried out by competent medical professionals.

(x) COVID-19: Measures Undertaken

After the pandemic struck and lockdown was imposed towards end March 2020, the company started implementing changes to protect its employees though appropriate health and safety protocols, which included canceling travel and eliminating in-person meetings, working from home wherever possible and establishing safety protocols at its sites. The safety procedures included temperature measurements, personal protective equipment, mandatory use of masks/ gloves, social distancing, frequent cleaning and disinfecting and implementation of daily check sheets to ensure team members are highly focused on the new procedures. The above measures still continues to be implemented.

Further the company also contributed in aggregate Rs. 3.20 crore to PM CARES Fund and CM Relief Funds of West Bengal, Maharashtra, Odisha and Bihar towards Covid-19 relief. The Company through an implementing agency engaged in grocery / safety-kit distribution (value Rs. 19.98 lakh) and conducted COVID awareness programs (value Rs. 2.68 lakh) to help the poor and needy.

(xi) Significant changes (i. e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with explanations are as under:

Sl.

No.

Particulars

2020-21

2019-20

Improvement / (deterioration)

1

Debtors Turnover - (Debtors / Revenue from Operations) - (Days)

72

51

(41)%

2

Interest Coverage Ratio - (Finance cost / PBIDT)%

54.43

3.65

1387%

3

Debt Equity Ratio -Equity) -Times

(Debts/Total

0.06

0.11

45%

4

Operating Profit Margin - (PBDIT / Total Revenue)%

15.05

2.06

629%

5

Net Profit Margin -Revenue)%

(PAT / Total

9.33

1.03

802%

6

Return on Net worth worth)%

i - (PAT Net

4.99

0.82

506%

Explanations :-

The Company had recorded better performance during FY

2020-21 in terms of profitability despite lower turnover. The major reasons are higher volume and lower impact of high cost inventory as compared to last year. The performance has led to improvement in all profitability linked ratios.

Transa.ction of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity is given below :-

Emerald Company Private Limited (ECPL) (An entity of the promoter Group holding 61.33% of the share capital).

2020-21

2019-20

(Rs. Cr.)

(Rs. Cr.)

Dividend Paid

-

442.44

Research and Development

The Company’s R&D efforts are primarily focussed towards

developing import substitutes for Aeronautical, Aerospace, Railway and other industrial applications.

Continual process development activities are ongoing for producing superior version of carbon brake pads for aircrafts and helicopters.

Space application components processed at state-of-art facilities were successfully tested by Space Research agencies.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding ¦¦company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.

The overseas subsidiaries recorded a turnover of Euro 29.85 Mn as compared to Euro 51.06 Mn in the previous year. The subsidiaries have not performed well due to adverse demand conditions and consequent decrease in prices resulting in loss of Euro 29.71 Mn as against profit of Euro 0.50 Mn in the previous year.

The Company, by way of Royalty, earned Rs. 2.68 crore during the year, as against Rs. 4.66 crore in the previous year, from overseas subsidiary.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per IndAS 110 forms a part of this Annual Report.

Associate Company

General Graphene Corporation, USA is an associate company. As on 31st March 2021, investment of USD 13.98 million (39.43% of capital) has been made in the company. The investments in General Graphene is accounted for using the equity method as per IndAS 28.

No Company has ceased to be a subsidiary of the Company during the year.

Information pursuant to Section 134 of the Companies Act, 2013

a. Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March 2021 is available on the Company’s website on http:// ir.graphiteindia.com/

b. Four meetings of the Board of Directors of the Company were held during the year on 9th June 2020, 12th August 2020, 13th November 2020 and 11th February 2021.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors

appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 2.

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -Annexure 3.

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 4.

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 5.

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated projects aimed at promoting education, employment enhancing vocational skills, livelihood enhancement projects, healthcare initiatives, rural development projects etc. as detailed in the CSR annual report for the year ended 31st March, 2021 which forms part of this report - Annexure 6. The CSR policy has been displayed on Company website www.graphiteindia.com and can be viewed on http://ir.graphiteindia.com/

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination and Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website and can be viewed on http://ir.graphiteindia.com/

m. The Company does not accept deposits from public.

n. There were no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial

Personnel) Rules 2014 are contained in Annexures 7 and 8.

o. Dividend Distribution Policy is enclosed - Annexure 9. The same can also be viewed on http://ir.graphiteindia. com/

DIRECTORS

Mr. J. D. Curravala, who retires by rotation in this Annual General Meeting (AGM) is not available for re-appointment. The vacancy so caused is not proposed to be filled up.

Mr. A. V. Lodha retires by rotation in this AGM and being eligible offers himself for re-appointment.

Recognition/Award and Certificates

The Company has received several awards over the years from CAPEXIL and EEPC for export performance. Presently it has acquired certification with the standards ISO:9001 & 14001.

The Company continues to enjoy the status of a Four Star Export House.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) The directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 10

Business Responsibility Report (BRR) forms part of our Annual Report. Annexure 11

Shome & Banerjee

Electrode plant at Durgapur and Power generation facilities at Chunchanakatte & Mandya.

Deodhar-Joshi & Associates

*

Electrode, IGE and GRP plants at Nashik

B G Chowdhury

& Co.

Coke division at Barauni

N Radhakrishnan& Co.

Powmex Steels division at Titilagarh

Auditors

S. R. Batliboi & Co. LLP, Chartered Accountants, was S. R. Batliboi & Co. LLP, Chartered Accountants, was appointed as Auditors of the Company, for a period of five (5) years at the 42nd AGM held on 4th August, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2020-21 who will conduct cost audit in respect of accounts and records made and maintained by the Company as required u/s 148(1) of Companies Act, 2013 as detailed below -

Consolidated Cost Audit Report for FY 2019-20 was filed with the Ministry of Corporate Affairs, Government of India, on 9 th September 2020. The above Cost auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 2021-22.

Secretarial Audit/Compliance Report

Secretarial Audit Report and Secretarial Compliance Report for FY 2020-21 received from M/s. Baja Todi & Associates, Practicing Company Secretaries are annexed herewith -Annexure 12 and 13.

Secretarial Standards

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Prevention of Sexual Harassment of Women at Workplace

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

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board K. K. Bangur

June 28, 2021 Chairman

Graphite India Limited

Annexure 2

NOMINATION AND REMUNERATION POLICY The objectives of this Policy include the following:

• to lay down criteria for identifying persons who are qualified to become Directors;

• to formulate criteria for determining qualification, positive attributes and independence of a Director;

• to determine the composition and level of remuneration, including reward linked with the performance, which is reasonable and sufficient to attract, retain and motivate Directors and KMP, to work towards the long term growth and success of the Company

• to frame guidelines on the diversity of the Board;

DEFINITIONS

Unless the context requires otherwise, the following terms shall have the following meanings: "Director” means a Director of the Company.

"Key Managerial Personnel” or “KMP” means -

(i) the Chief Executive Officer or the Managing Director or the Manager;

(ii) the Whole-time Director;

(iii) the Chief Financial Officer;

(iv) the Company Secretary; and

(v) such other officer as may be prescribed under the applicable law.

Criteria for identifying persons who are qualified to be appointed as a Director of the Company :

Section 164 of the Companies Act, 2013 (“Act’) provides for the disqualifications for appointment of any person to become Director of any company. Any person who in the opinion of the Board of Directors (“Board”) is not disqualified to become a Director, and in the opinion of the Board, possesses the ability, integrity and relevant expertise and experience, can be appointed as Director of the Company.

Independent Directors :

For appointing any person as an Independent Director he/she should possess qualifications as mentioned in (A) the Act and the Rules made there under (including but not limited to Section 149 of the Act and Rule 5 of The Companies (Appointment and qualification of Directors) Rules, 2014); and (B) LODR.

Appointment criteria and qualifications :

The Nomination & Remuneration Committee (Committee) shall identify and as certain the integrity, qualification, expertise and experience of the person for appointment as Director (including Independent Directors),or KMP and recommend to the Board his / her appointment.

Such person should possess adequate qualification, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position.

Evaluation of Directors :

In terms of Section 149 of the Act read with Schedule IV of the said Act the Independent Directors shall at its separate meeting review the performance of non- independent Directors based on the parameters that are considered relevant by the Independent Directors.

The Board as a whole shall evaluate the performance of Independent Directors. During such evaluation the Director being evaluated shall be excluded from the meeting.

Evaluation of SMP and KMP

Criteria for evaluating performance of SMP and KMP (other than Directors) shall be as per the internal guidelines of the Company on performance management and development.

Criteria for evaluating performance of Other Employees

The human resources department of the Company shall evaluate the performance of Other Employees. In this regard, the human resources department shall decide upon the criteria for evaluating performance of Other Employees.

20


Mar 31, 2019

The Directors have pleasure in presenting their Forty Fourth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2019.

Financial Results Rs. in Crore

2018-19

2017-18

2018-19

2017-18

Particulars

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

6737

2983

7858

3291

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Exceptional Item, Tax and other Comprehensive Income

4403

1441

5233

1533

Finance Costs

11

6

12

8

Profit before Depreciation, Exceptional Item and Tax

4392

1435

5221

1525

Depreciation and Amortisation Expense

56

46

62

52

Profit before Share of profit/(loss) of Associate and Tax

4336

1389

5159

1473

Share of profit/(Loss) of Associate

-

-

(3)

-

Profit before Exceptional Items and Tax

4336

1389

5156

1473

Exceptional Items

55

55

-

Profit before Tax

4281

1389

5101

1473

Tax Expense for the Current Year

Current Tax

1469

465

1654

475

Deferred Tax

6

10

5 1

(34)

Profit for the Year

2806

914

3396

1032

Other Comprehensive Income (net of tax)

(1)

1

(23)

7

Total Comprehensive Income

2805

915

3373

1039

Statement of Retained Earnings

Retained Earnings at the beginning of the year

1019

269

1135

267

Add Profit for the year

2806

914

3396

1032

Add Comprehensive Income

(1)

1

*

1

Less Final Dividend on Equity Shares

2!4

234

39

Less Dividend Distribution Tax on above

48

8

48

8

Less Interim Dividend on Equity Shares

!9 1

98

S9 1

98

Less Dividend Distribution Tax on above

80

20

80

20

Less Transfer to Reserve Fund

-

-

1

* _

Retained Earnings at the end of the year

3071

1019

3775

1135

* Amount is below the rounding-off norm adopted by the Company.

REVIEW OF THE ECONOMY

Global growth rates, peaked to 4% in 2017, softened to 3.6% in 2018, and projected to decline to 3.3% in 2019 and rebound to 3.6% in 2020. Even a 3.3% global growth is still appreciable, compared to the outlook for many countries with considerable challenges in the short term, especially the advanced economies whose growth rates are projected to constrict towards their modest long-term potential.

While 2019 has started on a weak signal, some pickup is expected during the second half of the year. This pickup is also subject to significant policy enablers by the major economies, enhanced further by the absence of inflationary pressures and no output shortfalls. The US Federal Reserve, reckoning the rising global risks, skipped interest rate increases and signaled flat rates for the rest of the year. The European Central Bank, the Bank of Japan, and the Bank of England have all shifted to a more supportive stance. China has triggered strong fiscal and monetary stimuli to counter the dampening effect of trade tariffs, which is highly dependent on the outcome of ongoing U.S - China trade negotiations.

These policy facilitators have helped in reversing the tightening financial bottlenecks to varying degrees across countries. Emerging markets have experienced resumption of portfolio inflows, a decline in sovereign borrowing costs, and a strengthening of their currencies in relation to the US dollar. While the improvements in financial markets have been noteworthy, those in the real economy are yet to register. Indices of industrial production and investment levels remain subdued for most advanced and emerging economies. Global trade is yet to recover. With improvements expected in the second half of 2019, global economic growth in 2020 is projected to return to 3.6%.

While the overall outlook remains positive, there are several downside risks. There is an uneasy and fragile truce on trade policy. Any disruption could flare up again in other related areas (like the auto industry) with large dislocations in global supply chains. A rebounding growth in China may intensify shock waves in global trade in the core sector, and the risks surrounding Brexit remain heightened. In the face of such significant financial uncertainties several large private and public sector industries run the risk of debt driven chapter 11 closure in several countries.

As per the first advanced estimates of CSO (Central Statistics Office), Ministry of Statistics and program implementation, India’s GDP would grow at 7.2% in 2018-19, showing improvement from 6.7% growth in 2017-18 mainly because of push from agriculture and the manufacturing sectors. Real GVA (Gross Value Added) is anticipated to grow at 7% in the current fiscal as against 6.5% in 2017-18. The growth rate in Per Capita Income is estimated at 6.1% during 2018-19, as against 5.4% in the previous year.

The sectors which registered growth rate of over 7% are electricity, gas, water supply and other utility services, construction, manufacturing, public administration, defence and other services. The expansion in activities in ‘agriculture, forestry and fishing’ is likely to increase to 3.8% in the current fiscal from 3.4% in the preceding year. The growth of the manufacturing sector is expected to accelerate to 8.3% this fiscal, up from 5.7% in 2017-18.

The Wholesale Price Index (WPI), in respect of the groups -Food Articles, Manufactured Products, Electricity and all Commodities, has risen by (-)0.9%, 4.1%, 6.8% and 4.9%, respectively during April’18-November’18. The Consumer Price Index (CPI) has shown a rise of 3.9% during the same period.

The reform measures undertaken in 2017-18 continued to strengthen and accelerate the growth momentum. The prospect for the Indian economy for the year 2019-20 should be seen in the light of emerging global and domestic developments. Indicators signal that global economic growth is expected to pick up during the second half of 2019. This is expected to provide further boost to India’s exports. In contrast, the increasing global prices of oil and other key commodities may increase the value of imports. There are signs of revival of investment activity in the economy and the recent pick up in the growth of fixed investment is expected to maintain momentum in the coming year.

Various economic reforms were undertaken in the last two years which include: implementation of the Goods and Service Tax (GST), announcement of bank recapitalization, push to infrastructure development by giving infrastructure status to affordable housing, higher allocation of funds for highway construction and greater focus on coastal connectivity. Medium-term macro outlook remains bright against the background of implementation of GST, green shoots in the global economy, relatively stable prices and improvement in indicators in the global economy. According to IMF World Economic Outlook Update April 2019, Indian economy is expected to grow at 7.3% during 2019 and further accelerate to 7.5% during 2020.

GRAPHITE INDIA

The Company recorded a sterling and highest ever performance during the year. Revenue from operations increased by 126% to Rs. 6,737 crore for FY 2018-19 as against Rs. 2,983 crore in the previous year. PBT increased by 208% to Rs. 4,281 crore as against Rs. 1,389 crore of previous year which also includes investment income of Rs. 102 crore as against Rs. 52 crore in the last year. This performance is attributable mainly to the realization of full potential of positive price movements, witnessed during last year inspite of softening of demand-supply imbalance during latter part of the year. The global demand for graphite electrodes was strong owing to - (1) demand revival in some of the steel producing nations with higher EAF capacities; and (2) structural shift due to closure of significant steel capacities in highly polluting blast/ induction furnaces in China which are now being replaced by environment friendly electric arc furnaces. China has also closed down some of its archaic electrode manufacturing capacities.

The Company’s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 98% of the total revenue.

OVERSEAS SUBSIDIARIES

The performance of the German subsidiaries which turned around last year has shown sharp improvement during the current year with recovery in electrode demand as well as prices.

DIVIDEND

The Directors are pleased to recommend declaration of final dividend @ Rs. 35 per equity share on 19,53,75,594 equity shares of Rs. 2/each for the financial year ended 31st March 2019 in addition to the Interim dividend @ Rs. 20 per equity share, already paid.

Explanations

The Company has recorded the best ever performance during FY 2018-19, principally due to positive price movements in the electrode market witnessed during the year. The performance has led to better credit terms with customers, improved liquidity ratios, impressive margins and return indicators, as above. Increased working capital requirements has led to a higher debt equity ratio.

Transaction of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity is given below :-

Emerald Company Private Limited (ECPL) (An entity of the promoter Group holding 61.20% of the share capital).

2018-19

2017-18

(Rs. Cr.)

(Rs. Cr.)

Dividend Paid

382.65

83.71

Pollution Matter - Bangalore

The Company in October 2018, decided to stop operations in the Bengaluru plant by halting the furnaces in a sequential manner and accelerate the work of revamping of roof sheets in compliance with some observations of Karnataka State Pollution Control Board (KSPCB). Pursuant to the inspection by KSPCB officials KSPCB, on 15th December, 2018 renewed the “Consent to Operate” for a period up to 30 th June, 2020 with condition to shift the unit from the existing location. On 28th January, 2019, Principal Bench - National Green Tribunal, Delhi (NGT) restored the KSPCB direction dated 30 th June, 2012, and closure order dated 2nd July, 2012. Further, NGT directed constitution of a joint committee comprising representatives of CPCB, KSPCB and NEERI, to carry out within two months stack monitoring of the industry, ambient air monitoring of the industrial unit and surrounding areas and study on source apportionment of pollution sources. Pursuant thereto, KSPCB withdrew consent for operations and issued closure order dated 14th February, 2019.

On 2nd April, 2019, the Board of Directors of the Company decided to permanently close operations in the Bengaluru Plant in Whitefield within such time as is required by the Company to obtain appropriate consents, approvals, authorizations and no objections. Closure application has been filed with Government of Karnataka and Company has also stopped the production activities at the plant. KSPCB on 8th April, 2019 sought five months time from NGT, to submit project report. KSPCB also informed NGT of the Company’s decision to close down the Bengaluru plant permanently. NGT took note of the above and felt that there was no necessity for calling for any further report in this regard and disposed off all the appeals filed before it.

As Company has been debottlenecking its capacity in Durgapur and Nashik factory, closure of Bengaluru plant will not affect its overall capacity.

Research and Development

The Company’s commitment towards R & D, its continual improvement, development of technology and import substitution of materials is in line with the Government of India’s ‘Make in India’ policy and has consistently supported the Company in becoming one of the “best in quality and low in cost” producers of graphite electrode and carbon material.

R&D initiatives are in the area of new product development, raw materials, productivity, process development, reduction in carbon emission etc.

Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Continual process development activities are towards producing superior version of carbon brake pads for aircrafts and helicopters.

These R&D efforts were continuous and by bench marking the operational efficiencies of manufacturing facilities at different locations, steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards/norms.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.

The overseas subsidiaries recorded a turnover of Euro 161.28 Mn as compared to Euro 51.88 Mn in the previous year. The subsidiaries have performed well during the year with favourable demand conditions and consequent increase in prices and have turned around to a profit of Euro 73.63 mn as against Euro 14.86 mn in the previous year (including Graphite International B.V.).

The Company earned by way of Royalty Rs. 17.86 crore during the year, as against Rs. 4.60 crore in the previous year, from overseas subsidiary.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per Ind AS 110 forms a part of this Annual Report.

Associate Company

Graphite India Limited, through its wholly owned subsidiary, Graphite International B.V. has signed an agreement for investment of up to USD 18.59 million in General Graphene Corporation, USA to acquire approximately 46% stake in it. Till 31st March 2019, investment of USD 7.59 million has been made in the above company which constitute 26.68% stake.

General Graphene Corporation is involved in development of Graphene sheets for commercial applications. The investment will be made in multiple tranches based on achievement of agreed milestones in the process of development and establishing manufacturing capabilities for the commercial production of Graphene sheets. Graphene is a two dimensional sheet of pure carbon structure in a single layer of carbon atoms and though it is chemically identical to both graphite and diamond, it is remarkably different. It is a very versatile material with its key properties being the strongest, thinnest and lightest material known. It is also more conductive, both thermally and electrically, than any other material and known to be corrosion resistant and Impermeable.

Some of the potential applications of this material include Electronics like touch screens; Medicine and bio electric sensory devices; Filtration e.g. Low cost desalination; Composite materials; Energy storage and Aerospace.

The investment in General Graphene Corporation is being done with the objective of entering a high technology business with excellent prospects, subject to successful commercial development. The investment does not fall within related party transaction and none of Graphite''s promoter / promoter group / group companies have interest in General Graphene Corporation. No regulatory approvals are required.

The investments in General Graphene Corporation is accounted for using the equity method as per Ind AS 28.

No Company has ceased to be a subsidiary of the Company during the year.

Audit Committee

The Audit Committee was reconstituted on 30th March 2019 with Mr. N. Venkataramani as its Chairman, Mr. Gaurav Swarup and Mr. A. V. Lodha as its members. Prior to the said date the Committee comprised Mr. A. V. Lodha as its Chairman, Dr. R. Srinivasan, Mr. N. Venkataramani and Mr. J. D. Curravala as its members. The reconstitution became necessary due to change in status of Mr. A. V. Lodha as non-independent Director and cessation of term of Dr. R. Srinivasan who desired not to be re-appointed at the end of the five year term on 31st March 2019.

Information pursuant to Section 134 of the Companies Act, 2013

a. Extract of the annual return as provided under Section 92 (3) of Companies Act, 2013 is enclosed - Annexure 2

b. Four meetings of the Board of Directors of the Company were held during the year on 11th May 2018, 6th August 2018, 6th September 2018 and 6th February 2019.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 3

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed - Annexure 4

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 5

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 6

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated projects aimed at promoting education, employment enhancing vocational skills and livelihood enhancement projects and healthcare initiatives through B D Bangur Endowment and autism related projects through Amrit Somani Memorial Trust. The CSR policy has been displayed on company website www.graphiteindia.com and can be viewed on http://www.graphiteindia.com/ View/ investor_relation.aspx

The CSR annual report for the year ended 31st March, 2019 is attached separately and forms part of this report - Annexure 7

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination and Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website and can be viewed on http://www.graphiteindia.com/View/ investor_relation.aspx

m. The Company does not accept deposits from public.

n. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 8 and 9.

o. Dividend Distribution Policy is enclosed - Annexure

10. The same can also be viewed on http://www. graphiteindia.com/View/investor_relation.aspx

DIRECTORS

The five year term of office of Mr. P. K. Khaitan, Mr. N. S. Damani, Mr. A. V. Lodha and Mr. N. Venkataramani as Independent Directors of the Company expired on 31st March, 2019. The Board of Directors (Board) in the meeting held on 6th February 2019, on the recommendation of the Nomination and Remuneration Committee (NRC) re-appointed them as Independent Directors for a second consecutive term of five years from 1st April 2019 up to 31st March, 2024 (subject to approval of the members of the Company). Since Mr. P. K. Khaitan was over seventy five years, the Company prior to 31st March, 2019, through a postal ballot obtained members approval for his re-appointment. Approval from the members for re-appointment of Mr. N. S. Damani and Mr. N. Venkataramani is being obtained in the ensuing annual general meeting (AGM).

Mr. J. D. Curravala is a non executive non Independent Director of the Company. Since he was also over 75 years, the Company prior to 31st March, 2019, through a postal ballot obtained members approval for his continuance as a Director from 1st April, 2019 till the date he retires by rotation at the ensuing AGM. Being eligible, he offers himself for re appointment in the ensuing AGM.

Mr. A. V. Lodha who was an Independent Director, informed vide letter dated 22nd March, 2019 of his non fulfillment of requirements prescribed under Companies Act, 2013 for being classified as an Independent Director. The Board took note that he ceased to be an Independent Director and his designation stood changed as non Executive non Independent Director from 22nd March, 2019 up to 31st March, 2019. The Board on 30th March, 2019 rescinded its decision to re-appoint Mr. A. V. Lodha as Independent Director for a period of 5 years from 01st April, 2019 and appointed Mr. A. V. Lodha as an Additional Director (non executive non independent) from 1st April, 2019 to hold office till the date of the ensuing AGM. Notice has been received from a member proposing name of Mr. A. V. Lodha for the office of director of the Company. The NRC and Board have recommended the said proposal for approval of the members of the Company in the ensuing AGM.

Dr. R. Srinivasan, whose term as an Independent Director of the company ended on 31st March, 2019 informed the Company that in view of his advancing age, he wished to retire as an Independent Director of the Company at the end of the said term. The Board accepted his request and placed on record their sincere appreciation of the services rendered by Dr. Srinivasan during his long tenure as a director of the Company.

The term of office of Mr. M. B. Gadgi! as ‘Whole time Director’ designated as Executive Director expires on 30th June 2019. The Board, on the recommendation of the NRC have, subject to approval of members of the company re-appointed him for a further period of 1 year from 1st July 2019. Members’ approval is being sought in the ensuing AGM.

No director is related inter-se to any other director of the Company.

Recognition/Award

The Company has received Asia’s ‘Best Under a Billion 2018’ award from Forbes Asia.

The Company continues to enjoy the status of a Star Trading House.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) The directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 11

Business Responsibility Report (BRR)

The Listing Regulations mandate the inclusion of the BRR as part of Annual Report for top 500 listed entities based on market capitalisation. In compliance with the Listing Regulations, we have incorporated BRR into our Annual Report. Annexure 12

Auditors

S. R. Batliboi & Co. LLP, Chartered Accountants, were appointed as Auditors of the Company, for a period of five (5) years at the 42nd AGM held on 4th August, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2018-19 who conducted cost audit in respect of accounts and records made and maintained by the Company as required u/s 148(1) of Companies Act, 2013 as detailed below -

Shome & Banerjee

Electrode plants at Durgapur, Bangalore including captive power generation facilities and 1.5 MW Link Canal Power plant at Mandya.

Deodhar-Joshi & Associates

Electrode, IGE and GRP plants at Nashik including captive power generation facility.

B G Chowdhury & Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2017-18 was filed with the Ministry of Corporate Affairs, Government of India, on 17th

August, 2018. The said Cost auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 2019-20.

Secretarial Audit/Compliance Report

Secretarial Audit Report and Secretarial Compliance Report for FY 2018-19 received from M/s. P. S. & Associates, Practicing Company Secretaries are annexed herewith - Annexure 13 and 14

Secretarial Standards

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Prevention of Sexual Harassment of Women at Workplace

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

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board

Kolkata K. K. Bangur

May 18, 2019 Chairman


Mar 31, 2018

The Directors have pleasure in presenting their Forty Third Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2018.

Financial Results Rs. in Crore

2017-18

2016-17

2017-18

2016-17

Particulars

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

2983

1392

3291

1554

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Tax and other Comprehensive Income

144

159

1533

126

Finance Costs

6

8

8

Profit before Depreciation, Exceptional Item and Tax

1435

153

1525

118

Depreciation and Amortisation Expense

46

42

52

46

Profit before Tax

1389

111

1473

72

Tax Expense for the Current Year

Current Tax

465

3

475

6

Deferred Tax

10

(4)

(34)

(4)

Profit for the Year

914

112

1032

70

Other Comprehensive Income (net of tax)

1

(2)

7

(1)

Total Comprehensive Income

915

110

1039

69

REVIEW OF THE ECONOMY

Global growth strengthened in 2017 to 3.8 percent, with a notable rebound in global trade, driven by an investment recovery in advanced economies, continued strong growth in emerging Asia, upswing in emerging Europe and signs of recovery in several commodity exporting countries. Resurgent investment spending in advanced economies and an end to the investment decline in some commodity-exporting markets and developing economies were important drivers of the uptick in global GDP growth and manufacturing activity.

Global growth is expected to touch 3.9 percent this year and the next, supported by strong momentum, favorable market sentiment, positive financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States. The partial recovery in commodity prices should allow conditions in commodity exports to gradually improve.

On the upside, the cyclical rebound could prove stronger in the near term as the pickup in activity and easier financial conditions reinforce each other. On the downside, rich asset valuations could dampen growth and confidence. A possible trigger could be a faster-than-expected increase in advanced economy core inflation and interest rates as demand accelerates.

As per Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the Indian GDP has grown at 7.2% in Q3 2017-18 backed by 6.5% in Q2 2017-18 and 5.7% in Q1 2017-18. In the second advanced estimates, released in February 2018 by CSO, the Indian economy is expected to grow by 6.6% in the full year 2017-18.

The reform measures undertaken in 2017-18 are expected to strengthen and reinforce growth momentum. The prospect for Indian economy for the year 2018-19 needs to be assessed in the light of emerging global and domestic developments. Indicators show that global economic growth is expected to pick up. This is expected to provide further boost to India’s exports, which has already shown strong growth in the current financial year. On the other hand, the increasing global prices of oil and other key commodities may exert an upward pressure on the value of imports. There are signs of revival of investment activity in the economy and the recent pick up in the growth of fixed investment is expected to maintain momentum in the coming year.

Various economic reforms were undertaken in the year which includes: implementation of the Goods and Service Tax (GST), announcement of bank recapitalization, push to infrastructure development by giving infrastructure status to affordable housing, higher allocation of funds for highway construction and greater focus on coastal connectivity. Medium-term macro outlook remains bright against the background of implementation of GST, green shoots in the global economy, relatively stable prices and improvement in indicators of external sector. According to IMF World Economic Outlook Update April 2018, Indian economy is expected to grow at 7.4% during 2018 and further accelerate to 7.8% during 2019.

GRAPHITE INDIA

The Company recorded an impressive performance during the year. Revenue from operations increased by 114% to Rs. 2,983 crore for FY 2017-18 as against Rs. 1,392 crore in the previous year. The increase was primarily driven by higher sales price realization and sale volume. The continued consistent slide in the selling prices witnessed during last few years reversed midway during the current year with better balancing of demand-supply imbalance. The global demand for graphite electrodes was strong owing to - (1) demand revival in some of the steel producing nations with higher EAF capacities; (2) consolidation in electrode industry which saw approximately 2,00,000 tons of capacity being shut down and (3) closure of significant steel capacities in highly polluting induction furnaces and blast furnaces in China which are gradually being replaced by environment friendly electric arc furnaces. China also closed down some of its electrode manufacturing capacities.

The PBT of Rs. 1,389 crore for current year was higher in comparison to Rs. 111 crore of previous year which also includes investment income of Rs. 52 crore as against Rs. 47 crore in the last year.

The Company’s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 95% of the total revenue.

OVERSEAS SUBSIDIARIES

The performance of the German subsidiaries has turned around and shown sharp improvement during the year with recovery in electrode demand as well as prices during the year.

DIVIDEND

The Directors are pleased to recommend declaration of final dividend @ Rs. 12 per equity share on 19,53,75,594 equity shares for the financial year ended 31st March 2018 in addition to the Interim dividend @ Rs. 5 per equity share, already paid.

Pollution Matter - Bangalore

Appeal filed by complainants before the Hon’ble National Green Tribunal South Zone at Chennai against the majority order dated 22.06.2013 passed in favour of the Company by the Hon’ble Karnataka State Appellate Authority at Bangalore is pending.

Research & Development

The Company’s R&D is committed towards continual improvement, development of technology and development of import substitute materials.

R&D initiatives are in the area of new product development, raw materials, productivity, process development, reduction in carbon emission etc.

Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Continual process development activities are towards producing superior version of carbon brake pads for aircrafts and helicopters.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding Company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.

The overseas subsidiaries recorded a turnover of Euro 51.88 Mn as compared to Euro 32.51 Mn in the previous year. The subsidiaries have performed well during the year with favourable demand conditions and consequent increase in prices and have turned around to a profit of Euro 14.86 mn as against loss of Euro 5.18 mn in the previous year (including Graphite International B.V.).

The Company earned by way of Royalty Rs. 4.60 crore during the year, as against Rs. 2.32 crore in the previous year, from overseas subsidiary.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1

No Company has ceased to be a subsidiary of the Company during the year. The Company does not have any joint venture or associate companies.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per Ind AS 110 forms a part of this Annual Report.

Audit Committee

The Audit Committee comprises Mr. A. V. Lodha as its Chairman with Dr. R Srinivasan, Mr. N. Venkataramani and Mr. J. D. Curravala as its members.

All recommendations of the Audit Committee were accepted by the Board.

Information pursuant to Section 134 of the Companies Act, 2013

a. Extract of the annual return as provided under Section 92 (3) of Companies Act, 2013 is enclosed - Annexure 2

b. Four meetings of the Board of Directors of the Company were held during the year on 18th May 2017, 4th August 2017, 23rd October 2017 and 30th January 2018.

c. All the Independent Directors of the Company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 3

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -Annexure 4

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 5

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 6

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated projects aimed at promoting education, employment enhancing vocational skills and livelihood enhancement projects and healthcare initiatives through B D Bangur Endowment. The CSR policy has been displayed on company website www.graphiteindia.com and can be viewed on http://www.graphiteindia.com/View/ investor_relation.aspx

The CSR annual report for the year ended 31st March, 2018 is attached separately and forms part of this report - Annexure 7

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination & Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website and can be viewed on http://www.graphiteindia.com/View/ investor_relation.aspx

m. The Company does not accept deposits from public.

n. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 8 and 9.

o. Dividend Distribution Policy is enclosed - Annexure

10. The same can a lso be v iewed on http://www. graphiteindia.com/View/investor_relation.aspx

DIRECTORS

Mr. K. K. Bangur retires by rotation at the ensuing AGM and being eligible offers himself for re-appointment.

No director is related inter-se to any other director of the Company.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) The directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 11

Business Responsibility Report (BRR)

The Listing Regulations mandate the inclusion of the BRR as part of Annual Report for top 500 listed entities based on market capitalisation. In compliance with the Listing Regulations, we have incorporated BRR into our Annual Report.

Auditors

S. R. Batliboi & Co. LLP, Chartered Accountants, were appointed as Auditors of the Company, for a period of five (5) years at the 42nd AGM held on 4th August, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2017-18 who conducted cost audit as detailed below :

Shome & Banerjee

Electrode plants at Durgapur, Bangalore including captive power generation facilities and 1.5 MW Link Canal Power plant at Mandya.

DBK & Associates

Electrode, IGE and GRP plants at Nashik including captive power generation facility.

B G Chowdhury & Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2016-17 was filed with the Ministry of Corporate Affairs, Government of India, on 29th August, 2017.

The said Cost Auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 2018-19. The firm “DBK & Associates” name has now been changed to “Deodhar-Joshi & Associates”.

Secretarial Audit Report

The Board appointed M/s. P. S. & Associates, Practicing Company Secretaries, to conduct Secretarial Audit for FY 2017-18. The Secretarial Audit Report is annexed herewith - Annexure 12

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board

Kolkata K. K. Bangur

May 11, 2018 Chairman


Mar 31, 2017

The Directors have pleasure in presenting their Forty Second Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2017.

Financial Results

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The financial statements for the Financial Year ended 31st March, 2017 are the Company’s first Ind AS compliant annual financial statements with comparative figures for the year ended 31st March, 2016 also under Ind AS. The date of transition is 1st April, 2015. The disclosure and effects of first time adoption of Ind AS are detailed in Note 47 of the standalone financial statements and Note 47 of the consolidated financial statements.

The standalone and consolidated financial highlights of your Company for the Financial Year ended 31st March, 2017 are summarized as follows:

Rs in Crore

Particulars

2016-17 2015-16

2016-17 2015-16

Graphite India Limited

Graphite India Limited Consolidated

Revenue from Operations (Gross)

1391.75

1424.64

1640.22

1659.67

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Tax and other Comprehensive Income

159.49

196.76

126.03

184.03

Finance Costs

6.50

7.84

7.89

9.46

Profit before Depreciation, Exceptional Item and Tax

152.99

188.92

118.14

174.57

Depreciation and Amortization Expense

41.56

44.42

46.39

49.20

Profit before Tax

111.43

144.50

71.75

125.37

Tax Expense for the Current Year

Current Tax

3.28

49.79

5.58

51.89

Deferred Tax

(4.13)

(9.93)

(4.29)

(9.34)

Profit for the Year

112.28

104.64

70.46

82.82

Other Comprehensive Income (net of tax)

1.75

0.54

0.88

(1.71)

Total Comprehensive Income

110.53

104.10

69.58

84.53

REVIEW OF THE ECONOMY

As per the latest estimates of International Monetary Fund (IMF) issued in August 2016, global economic growth remained moderate in 2016 at 3.1%, which is less than the earlier estimate of 3.4%. There was high degree of uncertainty as a result of political changes which depressed the global economy. The primary factors that shape the global outlook - both in the short and the long term - point to a subdued growth for 2017 and a gradual recovery thereafter but also with downside risks. These forces include major departures such as Brexit; ongoing realignments in China of commodity exporters; continuing slow-growth trends in some of the western economies along with poor productivity growth, as well as geo-political uncertainties and protectionist regulatory measures inhibiting free trade opportunities between the developed and the developing economies.

After a lackluster turn out in 2016, economic growth is projected to pick up momentum in 2017 and 2018, especially in the emerging markets and the developing economies. However, there is a wide disparity in the projections of possible outcomes, given the uncertainty surrounding the global economy.

With these strictures, the aggregate growth projections for 2017-18 remain unchanged as compared with the October 2016 IMF World Economic Outlook. The outlook for advanced economies has improved for 2017-18, reflecting a spurt in the activity in the second half of 2016, as also triggered by the fiscal and administrative stimulus given in the United States. As a corollary, the growth prospects have marginally diminished for emerging / developing economies, where financial conditions have correspondingly tightened. Nearterm growth prospects were revised upwards for China, due to expected policy stimulus, but were revised downwards for a number of other large economies - notably India, Brazil, and Mexico.

The Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation, Government of India, has estimated that Indian economy is likely to grow at 7.1% in 2016-17, compared to the growth of 7.6% achieved in 2015-16. The growth in agriculture, industry and services is estimated at 4.1%, 5.2% and 8.8% respectively in 2016-17 as compared to 1.2%, 7.4% and 8.9% respectively in 2015-16. Growth rate of industry sector declined in 2016-17 mainly on account of contraction in mining & quarrying and moderation of growth in manufacturing sector. The improvement in India’s economic fundamentals accelerated in the year 2015 with the combined impact of strong government reforms, Reserve Bank of India’s (RBI) inflation focus supported by benign global commodity prices. Moody’s has affirmed the Government of India’s Baa3 rating with a positive outlook stating that the reforms by the government will enable the country to perform better compared to its peers over the medium term. According to IMF World Economic Outlook Update (January 2017), Indian economy is expected to grow at 7.2% during FY 2016-17 and further accelerate to 7.7% during FY 2017-18. Demonetisation is expected to have a positive impact on the Indian economy, which will help foster a clean and digitized economy in the long run. India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern.

GRAPHITE INDIA

The Company recorded a subdued performance during the year. Revenue from Operations decreased by 2% to Rs. 1,391.75 crore for FY 2016-17 as against Rs. 1,424.64 crore in the previous year. The decline was primarily driven by lower sales price realization while the sale volume increased. The slide in the prices witnessed during last year continued unabated during the current year with surplus capacity and fierce competition. The global demand for graphite electrodes had remained subdued owing to marginal incremental demand for steel. Furthermore, falling iron ore prices have made the Electric Arc Furnace route less economical as compared to the Blast Furnace route. Reduction in input costs has compensated to some extent the fall in electrode prices. However, the reduction was not sufficient to compensate for the falling price of finished electrodes which resulted in falling margins. The PBT of Rs. 111.43 crore for current year was lower in comparison to Rs. 144.50 crore of previous year which also includes investment income of Rs. 47.05 crore as against Rs. 28.52 crore in the last year. However, this trend seems to have reversed somewhat in the recent months with some visible recovery in the steel industry which has led to a recovery in electrode demand too.

The Company’s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 90% of the total revenue.

The business environment in all segments has become intensely competitive. In order to sustain and survive through this difficult phase, the Company has taken extraordinary measures in ensuring efficient management of all its resources, innovative and creative approach towards cost reduction and high level of operating efficiencies.

OVERSEAS SUBSIDIARIES

The performance of the German subsidiaries continues to suffer due to unremunerative selling prices and weak demand scenario in Europe. However, the industry is hopeful of a recovery considering the recent growth in electrode demand across several geographies.

DIVIDEND

The Directors recommend dividend @ Rs. 2/- per equity share on 19,53,75,594 equity shares for the financial year ended 31st March 2017.

MANAGEMENT DISCUSSION AND ANALYSIS

(i) Industry’s structure and developments

A. Graphite and Carbon Segment

Graphite Electrodes

Graphite Electrode is used in electric arc furnace based steel mills for conducting current that melts scrap iron and steel and is a consumable item for the steel industry. The principal manufacturers are based in USA, Europe, India, China, Malaysia and Japan.

Graphite Electrode demand is primarily linked with the global production of steel in electric arc furnaces. Between the two basic methods for steel production - (1) Blast Furnace (BF); and (2) Electric Arc Furnace (EAF) - the share of EAF route to steel production is estimated at about 26% at the global level. This is expected to grow further in years to come due to its inherent favourable characteristics of (a) an environment friendly and less polluting production process; (b) low capital cost; and (c) faster project (commissioning) time. Fresh investments in EAF steel mills are characterized by large furnace capacities requiring large diameter UHP Electrodes. It is expected that the demand for UHP Electrodes too will grow synchronously. These typical industry features coupled with an increasing proportion of EAF steel share in total crude steel production in future should hopefully augment the demand for Graphite Electrodes in the long term.

Stagnant demand, intense competition and sliding sales price continued to pose challenges since last 3-4 years. But a turnaround is possible with the recovery in steel demand coupled with consolidation / restructuring in the electrode industry.

Calcined Petroleum Coke and Paste

The Coke Division in Barauni, Bihar, is engaged in the manufacturing of Calcined Petroleum Coke, Carbon Paste and Electrically Calcined Anthracite Paste and is one of the several backward integration initiatives of the Company. In Calcined Petroleum Coke (CPC), two grades - aluminium and graphite - are produced. It is primarily used for manufacture of anodes for use in aluminium smelters, manufacture of graphite electrodes and also used as carburiser in steel. The division also manufactures four grades of Paste i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) & Tamping Paste based on either CPC or ECAC. Electrode Paste is used in Ferro Alloy Smelters and Tamping Paste is used as a lining material in submerged arc furnaces.

This division could not perform to expectations because of low realization, competition and constraint in getting its basic raw material i.e. Green / Raw Petroleum Coke.

Impervious Graphite Equipment

The Impervious Graphite Equipment (IGE) Division is engaged in design, manufacture and supply of Impervious Graphite Heat and Mass transfer equipment and Turnkey systems. The product range includes Graphite Heat Exchangers in Shell & tube type and Polyblock type construction, Turnkey systems like HCl Synthesis units and Dry Gas generation units, Absorbers and Absorption systems, Graphite Columns, H2SO4 Dilution and Cooling units, Vacuum Ejector systems, Graphite Bursting Discs and accessories.

Impervious graphite is an ideal material of construction for corrosive process fluids and finds wide application in industries like Chloro Alkali, Chlorinated Organic Chemicals, Phosphoric Acid, Fertilizers, Steel Pickling, Metal Processing, Polymers like VCM, Polycarbonate and Capro lactam, Drug Intermediates, etc.

Over the years the Company has built this product line into a reliable brand with a reputation for prompt service, good quality and consistent performance by investing in strengthening the core competencies. Division’s total sale was higher by about 35% in this financial year. Domestic business is consistently doing good as there are expansions in chloro-alkali, drugs / pharma, agrochemicals and fine chemicals sectors. Domestic order booking in this year increased by about 40% compared to last year. In export market, there are no major expansions & many projects are getting deferred. Competitors have also dropped their prices substantially & most companies prefer to buy locally. However, we continue to be strong in phosphoric acid business. In this year, Company manufactured the biggest phosphoric acid evaporators so far used for this application for an overseas customer.

Captive Power

Power constitutes one of the major costs of Electrode Production. For captive consumption, the Company has an installed capacity of 31.5 MW of power generation through Hydel route (18 MW) and through multi-fuel route (13.5 MW). Power generation through Hydel Power Plant was 33.75 million units as against 41.00 million units in the previous year. The multi fuel power generating sets remained as a stand-by facility as adequate power was available from the Grid and 6 MW DG set was disposed off during the year.

B. Glass Reinforced Plastic Pipes and Tanks (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes and Pipe liners for rehabilitation of old pipes. Product is manufactured by continuous filament winding process with computerized, advanced technology comparable to other plants worldwide. These pipes find application in diverse fields such as bulk water supply projects, power plants, sewerage disposal schemes, industrial effluent disposal etc. For sea water it is the most suitable recommended alternative.

The Company has a good track record of supplying large diameter pipes and their successful commissioning. Its pipes are in use for many years in several infrastructure projects in private as well as in public sector. Some of the competitors have either shut shop or are in difficult financial position due to unsustainable business strategy adopted by them. This will give an edge to the units which are focused on good quality GRP pipe production. However project cost overruns, delay in completion of projects, disputes on contractual defaults and non-receipt of receivables have still remained as inherent risks in the business. The Company’s policy of picking up orders selectively has paid off and the unit has performed better than previous year on these parameters. Further rationalization and consolidation in the industry is expected.

C. Other Segments Steel Segment

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches and special form tools. HSS cutting tools are essentially utilised in - (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterized by one good quality manufacturer of HSS viz. PSD and several other small manufacturers who cater to the low end of the quality spectrum in the retail segment. On the demand side, the industry is broadly divided into large and small cutting tool manufacturers who use both domestic and imported HSS. PSD faces competition from small domestic producers and imports from large overseas manufacturers. Demand for HSS products in PSD’s range remained subdued during the year under review. The division is facing increasing competition from cheaper Chinese imports.

Development of new grades of HSS has been successfully undertaken which is likely to benefit the division in the medium term.

1.5 MW Hydel Power Facility

Power generated from this facility is sold to Karnataka Power Grid under a Power Purchase Agreement. Generation of power is entirely dependent on monsoon.

(ii) Opportunities and threats

India was the third largest steel producer in 2016. India’s crude steel production grew by 7.4% year-on-year to 95.6 million tons in 2016. India’s steel exports grew 150% year-on-year to 0.75 million tons in February 2017, while steel imports declined 46% year-on-year to 0.49 million tons. Total consumption of finished steel grew by 3.4% year-on-year to 76.22 million tons during April 2016 - February 2017. India is expected to become the world’s second largest producer of crude steel in the next 10 years, moving up from the third position, as its capacity is projected to increase to about 300 million tons by 2025. Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.

The World Steel Association expects the demand for steel to grow by 0.4% YoY in 2017. Steel demand in China is expected to fall by 3% in 2017, which translates into a decline of almost 19 million tons. But, overall steel demand will get a boost from higher demand in USA, India, Middle East and Africa. We believe that the increased demand from these countries will lead to higher steel production through EAF route, as production through the EAF method is higher in these countries compared to the blast furnace route. Overall steel production through EAF route is expected to reach 435 million tons in 2017 as compared to 410 million tons in 2016.

The Company is currently witnessing the resultant positive impact of the ongoing consolidation in the Graphite Electrode sector coupled with increase in demand as well as realization.

Volumes and business prospects, in general, would be impacted by factors like: (a) sustainability of the global economic recovery in 2017-18; (b) pace of recovery in the euro zone and China; (c) rising cost of key inputs; (d) highly deteriorated financial health of steel industry; (e) sustainability of recent surge of commodity and oil prices; and (f) pace of hike in interest rates in the United States.

While the Company is equipped and geared to face these business challenges, it is hopeful of realizing its business goals, with the positive revival of the business environment.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 1,391.75 crore as against Rs. 1,424.64 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 527.31 crore as against Rs. 643.46 crore in the previous year.

Graphite and Carbon Segment

The performance of the segment was sub-optimal in the F.Y.2016-17 but can be termed as satisfactory considering overall challenging environment.

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 73,756 Mt against 62,022 Mt in the previous year.

Production of Calcined Petroleum Coke during the year was 24,007 Mt as against 20,162 Mt in the previous year.

Production of Carbon Paste during the year was 3,886 Mt against 5,405 Mt in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares at 1,505 Mt was higher as compared to that of 1,070 Mt in the previous year.

Power generated from captive Hydel Power Plant of 18 MW capacity amounted to 33.75 million units during the year as against 41.00 million units in the previous year. Multifuel generating facilities remained as stand-by and were not operated due to adequate availability from the grid.

The Segment Revenue declined to Rs. 1257.40 crore from Rs. 1,290.75 crore in the previous year. Domestic and Export sales in terms of volume and realization were impacted adversely due to severe competition during the year. The profitability of the segment decreased from Rs. 139.67 crore in FY 2015-16 to Rs. 53.28 crore in FY 2016-17.

GRP Segment

The GRP Division produced 6,760 Mt pipes as against 6,132 Mt in the previous year.

Other Segments

Production of HSS and Alloy Steels was 1,374 Mt during the year as against 1,275 Mt in the previous year.

Sale of power from 1.5 MW Link Canal facility was 0.88 million units as against 3.39 million units in the previous year.

(iv) Outlook

World crude steel production reached 1,628.50 million tons for the year 2016, up by 0.8% compared to 2015. Annual production in Asia during 2016 was 1,125.10 million tons of crude steel, an increase of 1.6% compared to 2015. India’s crude steel production for 2016 was 95.6 million tons, up by 7.4% compared to 2015.

The year 2017 and 2018 is expected to see a cyclical upturn in steel demand with a continuing recovery in the developed economies and an accelerating growth momentum in the emerging and developing economies. We expect that Russia and Brazil will finally come out of their recessions. However, China, which accounts for 45% of global steel demand, is expected to return to a more subdued growth rate after its recent short uplift. For this reason, overall growth momentum will remain modest.

With the “risk of global recession” receding and economic performance improving across most regions, a number of geopolitical changes still create some concern. US policy uncertainties, Brexit, the rising populist wave in current European elections and the potential retreat from globalization and free trade under the pressure of rising nationalism / protectionism add a new dimension of uncertainty in investment environment. However, risks from ongoing conflicts in the Middle East and in Eastern Ukraine appear to be reducing.

The pickup in oil prices in 2016 helped stabilize the fiscal position of oil producing countries. In 2017-18 oil prices are expected to show a moderate gain but any spike in oil prices to the levels seen in 2010-12 seems unlikely despite the recent OPEC agreement on oil production cuts. Other commodity prices also rebounded due to stronger activities in China, but no further hikes are envisaged. The mildly rising oil prices may boost the investment in several economies worldwide.

Benefitting from strong fundamentals, newly announced measures related to fiscal stimuli and rising infrastructure spending, the United States is expected to continue to lead the growth in the developed world in 2017-18. The EU recovery is strengthening with many positive developments. Eurozone monetary policy is expected to remain on its current path, at least in 2017, while fiscal tightening is not expected to strengthen further and risk of deflation has significantly receeded.

The Government initiatives for infrastructure development, including railway projects, implementation of smart city project and ‘Make in India’ initiatives should boost demand for steel in India. This will also increase graphite electrode demand in the domestic market.

The imposition of Safeguard Duty and MIP on various grades of steel should augur well for the domestic steel industry and should provide a boost for higher level of capacity utilization.

With better economics of EAF steel as compared to BF route, coupled with its inherent advantages like low capital requirement and low emission levels, it is expected that EAF steel production will steadily grow. This has to some extent resulted in higher electrode demand during the later part of Q4/16-17. It is expected that this will sustain and grow.

With its competitive cost structure and a well diversified customer base, the Company is well geared to enhance its presence in the global Graphite Electrode market and benefit from the upturn in the industry.

(v) Risks and Concerns

The Company is exposed to the threat of the cyclical nature of the steel demand as also to the risks arising from the volatility in the cost of input materials. Over the last few years steel industry across the globe was undergoing tremendous stress due to reduced steel demand, increasing export of steel from China and slowing down of development in the Middle East due to lower crude oil prices. In addition, due to reduced price level of iron ore and coking coal, the BF route for producing steel had become more economical and hence was being preferred by steel producers. Combined result of these developments had reduced capacity utilization of EAF steel industry for the last 3-4 years. This had resulted in surplus supply in the market leading to reduction in electrode price level. Although some improvement is evident in the recent past with the rebounding of demand for steel, but the economic slowdown and/or cyclical recession in certain major steel consuming industries may adversely impact the demand-supply dynamics as also the profitability and your Company too is vulnerable to these changes.

Disproportionate increase in taxes and other levies imposed periodically by the Central and State Governments, especially on essential inputs, may increase the cost of manufacture and reduce the profit margins. However likely implementation of Goods & Service Tax (GST) is expected to bring in stability in this area.

Exports to specific regions may get severely affected by trade barriers in the form of crippling import duties or anti dumping duties or countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist/ restrictive impositions. Devaluation or appreciation of currency may impact business prospects.

The main raw materials are either petroleum based or coal based. Increase or decrease in oil and commodity price will directly impact cost of product and margins. Further increase in price of crude and coal and its direct impact on its derivative materials like Needle Coke, Pitch, Furnace Oil, Met Coke etc. will all tend to inflate the input cost in a major way.

The Company has a mixed exposure of exports and imports and is a net foreign exchange earner. So, volatility in foreign currency market directly impacts the company’s prospects. Inherent natural hedge of various balancing exposures may mitigate the risk up to an extent.

Due to rapid urbanization close to the industrial zones, the Pollution Control Authorities are imposing strict conditions resulting in additional capital expenditure.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured.

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 1,391.75 crore as against Rs. 1,424.64 crore in the previous year.

Profit after tax was Rs. 112.28 crore as against Rs. 104.64 crore in the previous year. Profit before tax was lower at Rs. 111.43 crore as compared to Rs. 144.50 crore in the previous year. The benefit of lower input costs has been negated by lower realization but higher investment income.

Borrowing at Rs. 126.82 crore was lower than Rs. 179.92 crore in the previous year and as a result the Finance Cost decreased to Rs. 6.50 crore from Rs. 7.84 crore in previous year.

Capital expenditure during the year amounted to Rs. 80.44 crore as against Rs. 51.69 crore in the previous year. The Company is a net foreign exchange earner.

ICRA has reaffirmed the long term rating at [ICRA] ‘AA ’ (pronounced ICRA double A plus) which indicates that the outlook on the long term rating is stable. The shortterm debt programme rating has been reaffirmed at [ICRA] ‘A1 ’ (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility emanating from large liquid investment portfolio.

Details of contingent liabilities are given in Note 37 to the Financial Statements.

(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed

The HRD policies and practices focus on contemporary and pragmatic people centric initiatives, aligning it with business vision and objectives, which primarily help in creating robust organizational structure and aims at optimum utilization of resources.

The Training & Development Programmes encompassing the competency building initiatives amongst employees continues to be an ongoing process. Besides, the leadership building at senior and middle management level, and the succession planning for critical positions continue to be a focus area.

The involvement of employees in the operational initiatives at the manufacturing plants of the Company continues to be high.

The total number of permanent employees in the Company is 2026 as on 31st March, 2017.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

Pollution Matter - Bangalore

Appeal filed by complainants before the Hon’ble National Green Tribunal South Zone at Chennai against the majority order dated 22.06.2013 passed in favour of the Company by the Hon’ble Karnataka State Appellate Authority at Bangalore is pending.

Research & Development

The Company’s R&D is committed towards continual improvement, development of technology and development of import substitute material.

R&D initiatives are in the area of new product development, raw materials, productivity, process development, reduction in carbon emission etc.

Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Continual process development activities are towards producing superior version of carbon brake pads for aircrafts and helicopters.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.

The overseas subsidiaries recorded a turnover of Euro 32.51 Mn as compared to Euro 35.17 Mn in the previous year.

On the backdrop of prolonged economic slowdown, German subsidiaries did not do well due to low demand in Europe, high production costs and reduction in prices by competitors to capture volumes in the dwindling market. Due to these unfavourable factors the loss for the year was higher at € 5.18 Mn as against € 4.77 Mn in the previous year.

The Company earned by way of Royalty Rs. 2.32 crore during the year, as against Rs. 2.81 crore in the previous year, from overseas subsidiary.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1

No Company has ceased to be a subsidiary of the Company during the year. The Company does not have any joint venture or associate companies.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per Ind AS 110 forms a part of this Annual Report.

Audit Committee

The Audit Committee comprises Mr. A. V. Lodha as its Chairman with Dr. R Srinivasan, Mr. N. Venkataramani and Mr. J. D. Curravala as its members.

All recommendations of the Audit Committee were accepted by the Board.

Information pursuant to Section 134 of the Companies Act, 2013

a. Extract of the annual return as provided under Section 92 (3) of Companies Act, 2013 is enclosed - Annexure 2

b. Four meetings of the Board of Directors of the Company were held during the year on 12th May 2016, 10th August 2016, 01st December 2016 and 14th February 2017.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company’s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -Annexure 3

e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -Annexure 4

g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 5

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 6

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company has initiated projects aimed at promoting education and employment enhancing vocational skills and livelihood enhancement projects, and healthcare initiatives through B D Bangur Endowment. The CSR policy has been displayed on company website www.graphiteindia.com and can be viewed on http://www.graphiteindia.com/View/ investor_relation.aspx

The CSR annual report for the year ended 31st March, 2017 is attached separately and forms part of this report

- Annexure 7

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination & Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company’s website and can be viewed on http://www.graphiteindia.com/View/ investor_relation.aspx

m. The Company does not accept deposits from public.

n. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 8 and 9.

o. Dividend Distribution Policy is enclosed - Annexure

10. The same can also be viewed on http://www. graphiteindia.com/View/investor_relation.aspx.

DIRECTORS

Mr. J. D. Curravalla retires by rotation at the ensuing AGM and being eligible offers himself for re-appointment.

No director is related inter-se to any other director of the Company.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House. This year too, the Company received the following awards for export performance -

- from CAPEXIL : Top Export Award for 2014-15

Top Export Award for 2013-14.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed;

(b) the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) the directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report -Annexure 11

Business Responsibility Report (BRR)

The Listing Regulations mandate the inclusion of the BRR as part of Annual Report for top 500 listed entities based on market capitalization. In compliance with the Listing Regulations, we have incorporated BRR into our Annual Report.

Auditors

The Board of Directors recommend the appointment of M/s S. R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005) as the next Statutory Auditors of the Company for a five year term beginning from the conclusion of the 42nd AGM till the conclusion of the 47th AGM of the Company, in place of Price Waterhouse, Chartered Accountants, pursuant to the provision of the Section 139(2) of the Companies Act 2013.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2016-17 who conducted cost audit as detailed below-

Shome & Banerjee

Electrode plants at Durgapur, Bangalore including captive power generation facilities and 1.5 MW Link Canal Power plant at Mandya.

DBK & Associates

Electrode, IGE and GRP plants at Nashik including captive power generation facility.

B G Chowdhury & Co.

Coke division at Barauni

N Radhakrishnan & Co.

Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2015-16 was filed with the Ministry of Corporate Affairs, Government of India, on 7th September, 2016.

The said Cost auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 201718:

Secretarial Audit Report

The Board appointed M/s. P. S. & Associates, Practicing Company Secretaries, to conduct Secretarial Audit for FY 2016-17. The Secretarial Audit Report is annexed herewith -Annexure 12

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board

Kolkata K. K. Bangur

May 18, 2017 Chairman


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Fortieth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2015.

Financial Results Rs. in Crore

Particulars 2014-15 2013-14 Graphite India Limited

Revenue from Operations (Gross) Profit 1571.36 1844.89 for the year after charging all Expenses but before providing Finance Costs, Depreciation,

Exceptional Item and Tax 186.02 324.48

Finance Costs 12.23 16.96

Profit before Depreciation, Exceptional 173.79 307.52 Item and Tax

Depreciation and Amortisation Expense 38.75 53.60

Profit before Tax and Exceptional Item 135.04 253.92

Exceptional Item 5.60 —

Profit before Tax 129.44 253.92

Tax Expense for the Current Year

Current Tax 47.12 88.37

Deferred Tax 0.13 (5.37)

Tax Expense - Write Back relating to

Earlier Years (Net) — —

Profit for the Year 82.19 170.92

Balance as at the beginning of the Year 198.89 207.97

Amount available for appropriation 281.08 378.89

Appropriations :

Transfer to General Reserve — 100.00

Transfer to Reserve Fund — —

Proposed Dividend on Equity Shares 39.08 68.38

Dividend Tax 7.95 11.62

Balance as at the close of the Year 234.05 198.89

281.08 378.89

Particulars 2014-15 2013-14 Graphite India Limited Consolidated

Revenue from Operations (Gross) 1784.80 2086.09 Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation,

Exceptional Item and Tax 171.85 294.77

Finance Costs 15.83 23.89

Profit before Depreciation, Exceptional 156.02 270.88 Item and Tax

Depreciation and Amortisation Expense 43.54 58.10

Profit before Tax and Exceptional Item 112.48 212.78

Exceptional Item 5.60 —

Profit before Tax 106.88 212.78

Tax Expense for the Current Year :

Current Tax 50.57 90.59

Deferred Tax 0.13 (5.37)

Tax Expense - Write Back relating to :

Earlier Years (Net) (1.41) (2.32)

Profit for the Year 57.59 129.88

Balance as at the beginning of the Year 219.71 270.19

Amount available for appropriation 277.30 400.07

Appropriations :

Transfer to General Reserve — 100.00

Transfer to Reserve Fund 0.87 0.36

Proposed Dividend on Equity Shares 39.08 68.38

Dividend Tax 7.95 11.62

Balance as at the close of the Year 229.40 219.71

277.30 400.07

REVIEW OF THE ECONOMY

The Central Statistics Office (CSO) has estimated that Indian economy is likely to register growth of 7.4 per cent in 2014-15, as compared to a growth of 5.1 per cent and 6.9 per cent in 2012-13 and 2013-14 respectively. Industrial and services sectors registered significant growth but growth in agricultural sector affected adversely due to sub-optimal monsoon in 2014-15. The year 2014-15 has witnessed key policy reforms aimed at promoting growth and eliminating structural constraints in the economy. The Government's initiative of 'Make in India' aided further by liberalization in foreign direct investment, low oil price, easier credit conditions, etc.

Should give greater impetus to the economy.

While the Indian economy seems to be getting back on track, global economy is still struggling to gain momentum as many developed economies continue to grapple with the still lingering legacies of the global financial crisis and the emerging economies are performing below their potential. Global growth in 2014 was a modest 3.4 per cent indicating a sluggish pickup in the advanced economies in relation to previous year and a slowdown in emerging markets and developing economies, as per the World Economic Outlook (WEO) update released by the International Monetary Fund (IMF). Activity levels in United States and United Kingdom have gathered momentum due to well thought out monetary and labour market policies. The recovery has been miniscule in Eurozone and Japan. China is undergoing a carefully managed slowdown. Overall global growth is projected to reach 3.5 per cent and 3.8 per cent in 2015 and 2016.

GRAPHITE INDIA

The Company recorded a subdued performance during the year. Revenue from Operations decreased by 14.8 per cent to Rs. 1,571.36 crore for FY 2014-15 as against Rs. 1,844.89 crore in the previous year. The decline was primarily driven by lower sales volume and lower price realization. One of the major reasons for low demand of Graphite Electrodes was Chinese over production of steel through the Blast Furnace method leading to higher export of steel from China at low price which ultimately impacted global steel production through Electric Arc Furnace route. The rapid slide in price of Graphite Electrodes continued unabated due to excess capacity and fierce competition. The year witnessed steep fall in pricing of Graphite Electrodes further aggravated by weak Euro. Commodity and oil prices dropped resulting in reduction in input cost. However, the reduction was not sufficient to compensate for the falling price of finished goods which resulted in lower margins. The PAT of Rs. 82.19 crore for current year was lower by around 52% in comparison to Rs. 170.92 crore of previous year.

The Company's Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 89% of the total revenue.

Glass Reinforced Plastic Pipes and Steel divisions have performed better during the year in comparison to previous year.

The business environment in all segments has become intensely competitive. In order to sustain and survive through this difficult phase, the Company has taken extraordinary measures in ensuring efficient management of all resources, innovative approach to cost reduction and high level of operating efficiencies.

The performance of the German subsidiaries continues to suffer due to unremunerative selling prices and weak demand scenario in Europe. However the industry projections are indicating a recovery in the medium term.

DIVIDEND

The Directors have recommended payment of Dividend @ Rs. 2/- per equity share on equity shares of Rs. 2/- each.

MANAGEMENT DISCUSSION AND ANALYSIS

(i) Industry's structure and developments

A. Graphite and Carbon Segment Graphite Electrodes

Graphite Electrode is used in electric arc furnace (EAF) based steel mills for conducting current that melts scrap iron and steel and is a consumable item for the steel industry. An increasing proportion of global steel is made using electric arc furnaces, and the electric arc furnace itself is getting more efficient, making more steel per tonne of electrode. The principal manufacturers are based in USA, South America, Europe, India, China, Malaysia and Japan.

Graphite Electrode demand is primarily linked with the global production of steel in electric arc furnaces. Between the two basic methods for steel production - (1) Blast Furnace (BF); and (2) Electric Arc Furnace (EAF) - the EAF route to steel production has increased over the last two decades to about 30% at the global level. The share of EAF is expected to grow further in years to come due to its inherent favourable characteristics of

(a) an environment friendly and less polluting production process; (b) low capital cost; and (c) faster project (commissioning) time. Fresh investments in EAF steel mills are characterised by large furnace capacities requiring large diameter UHP Electrodes. It is expected that the demand for UHP Electrodes too will grow synchronously. These industry features coupled with an increasing proportion of EAF steel share in total crude steel production in future should proportionately augment the demand for Graphite Electrodes.

Stagnant demand, intense competition and sliding sales price continued to push challenges during the year. This is compounded by liberalisation of import tariff for these items by the Government in new FTA regime. Unabated imports of Graphite Electrodes from China, Malaysia and Japan caused severe setback to the industry. However, the Government has finally clamped Anti Dumping Duty on imports from China with effect from 13th February, 2015.

The duty drawback on export of Graphite Electrodes has been further reduced from 3 per cent to 2.4 per cent with effect from 22nd November, 2014. However, the value cap was increased from 3200/MT to 8000/MT. The interest subvention available for export finance till 31st March, 2014 was not extended during the year resulting in high cost of funds. Recently announced Foreign Trade Policy provides for incentive on export to notified markets to offset infrastructural inefficiencies and associated costs under Merchandise Exports from India Scheme (MEIS) which should augur well for exporters.

Calcined Petroleum Coke and Paste

The Coke Division in Barauni, engaged in the manufacture of Calcined Petroleum Coke (CPC), which is used as a raw material for certain grades of electrodes, is one of the several backward integration initiatives of the Company. The Division also makes Carbon Electrode Paste and Carbon Tamping Paste. Two grades of CPC - aluminium and graphite - are produced here. CPC is a raw material used in the manufacture of regular and high power grade Graphite Electrodes. This is also a critical raw material for fine grained high density graphite used in speciality graphite products and impervious graphite equipment. Carbon Electrode Paste is used in ferro alloy smelters and Carbon Tamping Paste is used as a lining material in submerged arc furnaces.

This division could not perform to expectations because of poor demand, low realisation and constraint in supply of basic raw material i.e. raw petroleum coke.

Impervious Graphite Equipment

The Impervious Graphite Equipment (IGE) Division is engaged in manufacturing and marketing of heat exchangers, ejectors, pumps and turnkey plants. These have a wide range of applications in corrosive chemicals industries such as pharmaceutical, agro-chemical, chloro alkali and fertilizer industries.

Over the years the Company has built this product line into a reliable brand with a reputation for prompt service, good quality and consistent performance through investing in strengthening the core competencies.

The division did not perform up to expectation due to weak export demand. Export realization also suffered due to weak Euro.

Captive Power

Power constitutes one of the major costs of Electrode Production. For captive consumption, the Company has an installed capacity of 31.5 MW of power generation through Hydel (18 MW) route and 13.5 MW through multi-fuel route. Power generation through Hydel Power Plant was 48.48 million units as against 52.54 million units in the previous year. The multi fuel power generating sets remained as a stand-by facility as adequate power was available from the Grid.

B. Steel Segment

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches and special form tools. HSS cutting tools are essentially utilised in - (a) automotive; (b) machine tools;

(c) aviation; and (d) DIY market. The industry is characterised by one good quality manufacturer of HSS viz. PSD and several other small manufacturers who cater to the low end of the quality spectrum in the retail segment. On the demand side, the industry is broadly divided into large and small cutting tool manufacturers who use both domestic and imported HSS. PSD faces competition from small domestic producers and imports from large overseas manufacturers.

During the year under review, there was a marginal improvement in the domestic market for the Division's HSS products. The Division has identified a few potential customers in the domestic market who as part of their indigenization programme approached the Division for their HSS requirements, with more stringent specifications. The Division is able to meet those specifications and hence the customers have decided to buy their bulk requirements from PSD. Newer grades and sizes are also being developed for the domestic market to widen the product range. Exports remained subdued due to slowdown in the European economies.

C. Other Segments

Glass Reinforced Plastic Pipes and Tanks (GRP) GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes and Pipeline liners, by continuous filament process with computerized, advanced technology. These pipes have diverse applications such as water supply projects, power plants, sewerage disposal schemes, industrial effluent disposal, etc.

The Company has a good track record of supplying large diameter pipes in major infrastructure projects. Units which were under-cutting the prices to an unsustainable level are shutting down their operations due to various reasons. This will give edge to the units which are in quality production. However project cost overruns, delay in completion of projects, disputes on contractual defaults and non-receipt of receivables remain inherent risks in the business. The Company's policy of picking up orders selectively has paid off and the unit has performed better than previous year. Further consolidation in the industry is expected.

1.5 MW Hydel Power Facility

Power generated from this facility is sold to Karnataka Power Grid under a Power Purchase Agreement. Generation of power is entirely dependent on monsoon.

(ii) Opportunities and threats

India is the fourth largest producer of steel in the world.

India's crude steel accounts for production of 83.2 MT of steel in 2014. China remained world's largest steel producer followed by Japan and USA. Global crude steel production reached 1,662 MT in 2014, showing a growth of 1.2% over 2013. Indian steel industry entered into a new development stage from 2007-08 riding high on resurgent economy and rising demand for steel. India holds third position in consumption of steel. High infrastructure investment, growth in manufacturing and housing sector, emergence of rural markets and various other initiatives taken by the Government will give further boost to the steel demand. In the medium to long term, this augurs well for the domestic Graphite Electrode industry. But the short-term challenges such as: (a) less than projected GDP growth leading to softening of demand for steel, (b) disruption in supply of primary inputs to the EAF steel mills like consistent and adequate supply of quality power at affordable tariff, and soaring prices of scrap may perhaps restrict the production of steel through the EAF route. It may also put on hold some of the investment / expansion plans.

The Company is exposed to the threat of the cyclical nature of the steel demand as also to the risks arising from the volatility in the cost of input materials. Chinese import of steel at low price is also impacting steel production in India and other countries resulting in lower demand of Graphite Electrodes.

The Company also faces the challenge in domestic market, due to large scale import of graphite electrodes. Liquidity is a big issue for domestic steel industry which may result in increase in bad debts. Falling oil prices may impact development plan in Middle East which may result in lower steel demand, resulting into lower electrode demand.

There is a gap between demand and supply of Graphite Electrodes. Surplus supply has resulted in price pressure on Graphite Electrodes. Closure of unprofitable electrode manufacturing facilities will give relief.

Volumes and business prospects, in general, would be impacted by factors like: (a) Uncertainty about the economic recovery in 2015-16; (b) doubts about the early resolution of the crisis in the euro area; (c) doubts about the pace of withdrawal of the fiscal support in the United States.

While the Company is equipped and geared to face these business challenges, it is hopeful of realising its business goals, subject to a positive revival of the business environment.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 1571.36 crore as against Rs. 1,844.89 crore in the previous year. Aggregate Export Revenue of all divisions together was Rs. 761.01 crore as against Rs. 1,083.04 crore in the previous year.

Graphite and Carbon Segment

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 66,525 MT against 68,094 MT in the previous year.

Production of Calcined Petroleum Coke during the year was 21,668 MT as against 20,709 MT in the previous year.

Production of Carbon Paste during the year was 8,408 MT against 7,875 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares at 1,114 MT was lower as compared to that of 1,121 MT in the previous year.

Power generated from captive Hydel Power Plant of 18 MW capacity amounted to 48.48 million units during the year as against 52.54 million units in the previous year. Multi-fuel generating facilities remained as stand- by and were not operated due to adequate availability from the grid.

The Segment Revenue declined to Rs. 1,393.73 crore from Rs. 1,704.77 crore in the previous year. Domestic and Export sales in terms of volume and realization impacted adversely due to severe competition during the year. The profitability of the segment decreased from Rs. 294.02 crore to Rs. 142.46 crore due to steep reduction in price of Graphite Electrodes coupled with decrease in volume inspite of various cost saving initiatives taken by the Company. Weak Euro also impacted realization.

Steel Segment

Production of HSS and Alloy Steels was 1,554 MT during the year as against 1,454 MT in the previous year.

Other Segments

The GRP Division produced 10,350 MT as against 9,630 MT in the previous year.

Sale of power from 1.5 MW Link Canal facility was 3.90 million units as against 3.14 million units in the previous year.

(iv) Outlook

The IMF in their April, 2015 report estimated global growth at 3.5 per cent in 2015 and 3.8 per cent in 2016 with widely varying prospects across the major countries and regions. Growth in emerging market economies has been projected to be weaker due to lower commodity and oil price while growth prospects for advance economies is improving owing to the rise in the disposable income from lower oil prices, continuous support from facilitative monetary policy stands and more moderate fiscal adjustments. The decline in oil prices could boost activity to more than expected levels.

Indian economy will outgrow China and its BRICS peers with a GDP growth of 7.5 per cent as per the IMF report. The oil price fall will benefit Indian economy. The Government initiatives for infrastructure development should give boost to the demand including steel demand. With the implementation of smart city project, demand of steel is likely to grow further.

Though steel sector is going through a recessionary phase due to lower demand and higher imports, the steel demand is expected to grow in future.

World crude steel production reached 1,662 MT for the year 2014, up by 1.2% compared to 2013. Annual production for Asia was 1,132.3 MT of crude steel in 2014, an increase of 1.4% compared to 2013. India's crude steel production in 2014 is 83.2 MT as against 81.3 MT in 2013, an increase of 2.3% on 2013.

The production through EAF route should go up in view of its various advantages, primarily from the point of view of low emission of carbon dioxide. This development augurs well for the growth of Graphite Electrode demand in future years, inspite of reducing specific consumption of electrodes per tonne of steel produced, as a result of improvement in manufacturing technology of steel as well as electrodes.

With its competitive cost structure, strong technical product features and a well diversified customer base, the Company has established its presence in the global Graphite Electrode industry as a potential global player and this has significantly enabled the Company to penetrate aggressively, the growing market for large diameter UHP Graphite Electrodes.

It is expected that the domestic demand for steel and as a corollary for Graphite Electrodes may increase marginally. Faced with unfavourable business conditions, the global players have turned to the Asian markets and are following an aggressive pricing policy to capture volumes. This is likely to affect the Company's domestic volumes as also the profit margins.

(v) Risks and Concerns

It is undeniable that business projections have an inherent element of uncertainty of unknown elements like sudden reversal of positive trends leading to economic slowdown resulting in possible negative growth for steel, automotive and infrastructure industries slowing down which in turn may adversely impact the prospects for our industry.

Graphite Electrode demand solely depends on EAF steel production. Any shift towards BF steel production will impact demand of Graphite Electrodes. Disproportionate increase in taxes and other levies imposed periodically by the Central and State Governments, especially on essential inputs, may increase the cost of manufacture and reduce the profit margins. Economic slowdown and/or cyclical recession in certain major steel consuming industries may adversely impact the demand-supply dynamics as also the profitability and your Company too is vulnerable to these changes. Exports to specific regions may get severely affected by trade barriers in the form of crippling import duties or anti dumping duties or countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist/ restrictive impositions. Devaluation or appreciation of currency may impact business prospects. Low crude oil priced may lead to reduced developmental activities in Middle East region resulting into weaker demand for steel & electrodes. Recent devaluation of Japanese Yen and Euro made imports in India attractive in comparison to domestic products.

There are serious concerns caused by the Eurozone crisis at the centre stage, compounded further by the political turmoil seen in many countries particularly in the Middle East and other recent setbacks to the global economic growth.

The main raw materials are either petroleum based or coal based. Increase or decrease in oil and commodity price will directly impact cost of product and margins. The increasing price of crude and coal and its direct impact on its derivative materials like Needle Coke, Pitch, Furnace Oil, Met Coke, etc. will all tend to inflate the input cost in a major way.

The Company has a mixed exposure of exports, imports and foreign currency debt portfolio. So, volatility in foreign currency market directly impacts the company's prospects. Inherent natural hedge of various balancing exposures may mitigate the risk up to an extent. It is perhaps difficult to recall a more challenging environment than of surviving the volatility in the present foreign currency market.

Due to rapid urbanization close to the industrial zones, the Pollution Control Authorities are imposing strict conditions resulting in additional capital expenditure.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured.

(vii) Discussion on financial performance with respect to operational performance Revenue from Operations recorded Rs. 1,571.36 crore as against Rs. 1,844.89 crore in the previous year.

The year was less volatile as compared to last year from the financial management perspective with somewhat ease in liquidity, lower inflation and lower volatility in exchange rates vis-a-vis USD. However, it continued to be characterized by uneven global recovery uncertainty in the economic environment, lower capacity utilizations, political and economic turmoil seen in many countries and cross currency headwinds. In the face of growing export-import exposure, financial challenges like currency rate fluctuations, country risk and commodity price risks required focused attention and effective management of potential risks.

RBI had reduced repo rate twice by 0.25 per cent each in January, 2015 and March, 2015 and is presently at 7.50 per cent. Softening of inflation rate, improvement in current account deficit and growing growth concerns have been the prime factors for reversal of RBI's stance. However, the benefit has not trickled down to the borrowers. The year also witnessed considerable appreciation of rupee against non USD currencies whereby making export and domestic markets highly competitive for the Company.

Profit after tax was Rs. 82.19 crore as against Rs. 170.92 crore in the previous year. Profit before tax was lower at Rs. 129.44 crore as compared to Rs. 253.92 crore in the previous year mainly on following counts - (a) reduction in sales volume in the export market. (b) Lower realization in both domestic and export market (c) lower investment income; However the Company continued to reap operational benefits with higher production from cost effective new facilities.

Borrowing at Rs. 248 crore was lower than Rs. 341 crore of the previous year as a result the Finance Cost decreased to Rs. 12.23 crore from Rs. 16.96 crore in previous year.

Capital expenditure during the year amounted to Rs. 31.66 crore as against Rs. 33.01 crore in the previous year. The Company is a net foreign exchange earner.

The Company had maintained a proper mix of foreign currency and rupee borrowings, keeping in view the overall forex exposure with an objective to optimize cost. ICRA has reaffirmed the long term rating at [ICRA] 'AA ' (pronounced ICRA double A plus) which indicates that the outlook on the long term rating is stable. The short- term debt programme rating has been reaffirmed at [ICRA] 'A1 ' (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects the continuance of significant improvement in the Company's financial risk profile.

Details of contingent liabilities are given in Note 36 to the Financial Statements.

(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed-

The HRD policies and practices focus on contemporary and pragmatic people centric initiatives, aligning it with business vision and objectives, which primarily help in creating robust organisational structure and aims at optimum utilisation of resources. In order to meet these objectives, the Company has revisited its HR processes, including the Performance Management System (PMS) with the progression in Key Performance Areas (KPAs). The Training & Development Programmes encompassing the competency building initiatives amongst employees continues to be an ongoing process. Besides, the leadership building at senior and middle management level, and the succession planning for critical positions continue to be a focus area. The involvement of employees in the operational initiatives at the manufacturing plants of the Company continues to be high. Besides, Company has engaged services of a competent consultancy organisation for the purpose of resource optimisation & restructuring. The SAP HR payroll module and other Information Technology developments, provide the data analysis, and business opportunities based on the real time sharing of information and integration of systems, leading to efficient decision making process and impacting the internal communication positively in our growing enterprise.

The total number of permanent employees in the Company is 2083 as on 31st March, 2015.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

Pollution Matter - Bangalore

Appeal filed by complainants before the Hon'ble National Green Tribunal South Zone at Chennai against the majority order dated 22.06.2013 passed in favour of the Company by the Hon'ble Karnataka State Appellate Authority at Bangalore, is pending.

Research & Development

The R&D commitment towards continuous improvement and development of technology has consistently supported the company in becoming one of the low cost producers in the Graphite Electrode and carbon material producing industry.

R&D initiatives are in the area of raw materials, productivity, process development, reduction in carbon emission, etc.

Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Superior version of carbon brake pads for aircrafts is being developed.

State of art furnace was designed, fabricated, installed and successfully used to process carbon-carbon composite materials.

Many of the cost savings achieved were significant and in compliance with the "pollution control and clean environment norms". These R&D efforts were continuous and by bench marking, the operational efficiencies of manufacturing facilities at different locations were compared and steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards/norms.

Holding Company

Pursuant to the amalgamation of promoter group investment companies with Emerald Company Ltd. (ECL) (also a promoter group Company), the equity shareholding of ECL in the Company exceeded 50% during the year. As such, the Company has become a subsidiary of ECL.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH.

The overseas subsidiaries recorded a turnover of € 38.74 mn as compared to € 36.62 mn in the previous year.

On the backdrop of prolonged economic slowdown, German subsidiaries did not do well due to low demand in Europe, increase in production costs and reduction in prices by competitors to capture volumes in the dwindling market. Despite these unfavourable factors the loss for the year was reduced to € 2.26 mn as against € 9.45 mn in the previous year.

The Company earned by way of Royalty Rs. 2.98 crore during the year, as against Rs. 2.95 crore in the previous year, from overseas subsidiary.

Statement containing salient features of the financial statements of subsidiaries is enclosed as Annexure A to the Consolidated Financial Statement and have not been repeated here for the sake of brevity.

No Company has ceased to be a subsidiary of the Company during the year. The Company does not have any joint venture or associate companies.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per AS- 21 forms a part of this Annual Report.

Audit Committee

The Audit Committee comprises Mr. A. V. Lodha as its Chairman with Dr. R Srinivasan, Mr. N. Venkataramani and Mr. J. D. Curravala as its members.

All recommendations of the Audit Committee were accepted by the Board.

Information pursuant to Section 134 of the Companies Act, 2013

a. Extract of the annual return as provided under Section 92(3) of Companies Act, 2013 is enclosed - Annexure 1

b. Four meetings of the Board of Directors of the Company were held during the year on 9th May, 2014, 12th August, 2014, 10th November, 2014 and 13th February, 2015.

c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013.

d. Relevant extracts of the Company's policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed - Annexure 2

e. There is no qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required.

f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed - Annexure 3

g. Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of Companies Act, 2013 is enclosed - Annexure 4

h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed - Annexure 5

i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Operations Report. There are no current risks which threaten the existence of the Company.

j. Corporate Social Responsibility (CSR)

As part of its CSR activities, the Company intends to initiate projects aimed at promoting education including special education and employment enhancing vocational skills and livelihood enhancement projects, either directly or through B D Bangur Endowment. The CSR policy has been displayed on company website www.graphiteindia.com and can be viewed on http://www.graphiteindia.com/View/investor_re lation.aspx

The Board on the CSR Committee's recommendation and looking into the practical aspects of not being able to spend big money in a particular time frame, had in November, 2014 allocated an initial amount Rs. 50 lakhs towards the aforesaid activities. However, due to very limited period thereafter, no expenditure was incurred. It is intended to carry forward the unspent amount of Rs. 5.11 crore approx. to be spent during the financial year 2015-16.

The CSR annual report is attached separately and forms part of this report - Annexure 6

k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias framed and approved by the Nomination & Remuneration Committee / Board.

l. The Company has adopted a Vigil Mechanism which has been posted on the Company's website and can be viewed on http://www.graphiteindia.com/ View/investor_relation.aspx

m. The Company does not accept deposits from public.

n. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 7 and 8.

DIRECTORS

Mr. P. K. Khaitan, Mr. S. Goenka, Dr. R. Srinivasan, Mr. N. S. Damani, Mr. A. V. Lodha, Mr. N. Venkataramani, all existing directors of the Company were appointed as Independent Directors for a period of five years from 1st April, 2014 by the members of the Company in the 39th Annual General Meeting (AGM) held on 12.08.2014, pursuant to the provisions of Section 149 & 152 of Companies Act 2013.

Mr. Balaji Rao and Mr. S. Goenka had resigned as directors of the Company on 12.08.2014 and 18.08.2014 respectively. The Board has placed on record its sincere appreciation of the valuable services rendered by Mr. Balaji Rao and Mr. S. Goenka during their long tenure as directors of the Company.

Mr. Gaurav Swarup and Mrs. Renu Challu who were appointed as additional directors on 25th August, 2014 by the Board of Directors of the Company, hold office up to the date of the ensuing AGM. Proposals for both of them being appointed as Independent Directors for a period of five years from the date of ensuing AGM are included in the notice covering the 40th AGM for approval of the members of the Company.

Mr. J. D. Curravala retires by rotation at the ensuing AGM and being eligible offers himself for re-appointment. No director is related inter-se to any other director of the Company.

Key Managerial Personnel

The Board in the meeting held on 9th May 2014 noted that the following Officials of the company (viz) Mr. M.

B. Gadgil - Executive Director, Mr. K. C. Parakh - CFO and Mr. B. Shiva - Company Secretary would function as Key Managerial Personnel.

Familiarisation Programme for Independent Directors

Details of the familiarization programme for Independent Directors have been posted on the Company's website and can be viewed on http: //www.graphiteindia.com/ View/investor_relation.aspx Recognition/Award

The Company continues to enjoy the status of a Star Trading House. This year too, the Company received the following awards for export performance -

- from EEPC : Top Exporter Award for 2012-13 Silver Trophy from Eastern Region.

- from Export-Import Forum : Top Global Electrode Producers in the World.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that-

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed;

(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 at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) the directors have prepared the annual accounts 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 were 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.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms a pari of this Report - Annexure 9

Auditors

Price Waterhouse, Chartered Accountants, existing Auditors of the Company were appointed for a period of three years by the members of the Company in the 39th AGM held on 12th August, 2014. Their appointment for the second year to audit the accounts for the financial year beginning on 1st April, 2015 to 31st March, 2016 requires ratification by the members. They are eligible and available for re-appointment.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2014-15 who conducted cost audit as detailed below:

Shome & Banerjee :Electrode plants at Durgapur and Bangalore including captive power generation facilities

DBK & Associates : Electrode, IGE and GRP plants at Nashik including captive power generation facility

B G Chowdhury & Co. : Coke division at Barauni

N Radhakrishnan & Co. : 1.5 MW Link Canal Power plant at Mandya

Mani & Co. : Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2013-14 was filed with the Ministry of Corporate Affairs, Government of India on 19.09.2014. The due date for filing the reports was 27.09.2014.

The Company has appointed following Cost Auditors for FY 2015-16 -

Shome & Banerjee : Electrode plants at Durgapur, Bangalore including captive power generation facilities and 1.5 MW Link Canal Power plant at Mandya.

DBK & Associates : Electrode, IGE and GRP plants at Nashik including captive power generation facility.

B G Chowdhury & Co. : Coke division at Barauni

N Radhakrishnan & Co. : Powmex Steels division at Titilagarh

Secretarial Audit Report

The Board appointed M/s. P S & Associates, Practicing Company Secretaries, to conduct Secretarial Audit for FY 2014-15. The Secretarial Audit Report is annexed herewith - Annexure 10

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board Kolkata K. K. Bangur May 14, 2015 Chairman


Mar 31, 2014

The Directors have pleasure in presenting their Thirty Ninth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2014.

Financial Results

Rs. in Crore

2013-14 2012-13 2013-14 2012-13

Particulars Graphite India Limited Graphite India Limited

Consolidated

Revenue from Operations (Gross) 1844.89 1836.18 2086.09 2020.14

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation and Tax 324.48 305.26 294.77 309.86

Finance Costs 16.96 22.14 23.89 30.69

Profit before Depreciation and Tax 307.52 283.12 270.88 279.17

Depreciation and Amortisation Expense 53.60 50.04 58.10 62.01

Profit before Tax 253.92 233.08 212.78 217.16

Tax Expense for the Current Year Current Tax 88.37 55.79 90.59 57.97

MAT Credit — — — (0.35)

Deferred Tax (5.37) 24.21 (5.37) 25.47

Tax Expense - Write Back relating toEarlier Years (Net) — (10.00) (2.32) (0.34)

Profit for the Year 170.92 163.08 129.88 134.41

Balance as at the beginning of the Year 207.97 224.89 270.19 316.56

Amount available for appropriation 378.89 387.97 400.07 450.97

Appropriations : Transfer to General Reserve 100.00 100.00 100.00 100.00

Transfer to Reserve Fund — — 0.36 0.78

Proposed Dividend on Equity Shares 68.38 68.38 68.38 68.38

Dividend Tax 11.62 11.62 11.62 11.62

Balance as at the close of the Year 198.89 207.97 219.71 270.19

378.89 387.97 400.07 450.97

BUSINESS REVIEW

The Central Statistics Office (CSO) has estimated that the Indian economy is likely to register a growth rate of 4.9 per cent in 2013-14. This growth is significantly lower in comparison to the average of 7.6 per cent during 2004-05 to 2013-14. It is further stated that the sub-5 per cent growth of the economy in 2013-14 is primarily the result of the continued slowdown in the industrial sector that is estimated to grow at 0.7 per cent in 2013-14 and lower growth in the ''trade, hotels, transport and communications'' segment of the service sector. On the brighter side, agriculture, electricity, gas and water supply, financial, insurance, real estate & business services and community as well as social & personal services sector are projected to have grown at faster

rates in 2013-14 vis-à-vis 2012-13. The World Economic Outlook (WEO) update released by the International Monetary Fund in January 2014 has revised the growth projection for the world economy slightly upwards to 3.0 per cent and 3.7 per cent for 2013 and 2014 respectively. From 2014 onwards, global growth prospects are projected to improve over the medium term at a gradual pace. In India, several reform measures have been undertaken including clearance of several large projects by the Cabinet Committee on Investment. These steps could help in revival of investment and growth in the economy. In addition, resurgence of exports, prospects of revival in the global economy and moderation in inflation observed recently, point to a better outlook for the Indian economy in 2014-15 vis-à-vis 2013-14.

GRAPHITE INDIA

The Company posted a flat revenue during the year amidst continuing weak economic conditions, inflationary trends, contraction in manufacturing output and resulting sluggish demand faced by the user industries throughout the year, both globally and domestically. Revenue from Operations was Rs. 1,844.89 crore for FY 2013-14 as against Rs. 1,836.18 crore in the previous year. Production of steel through EAF route remained at the same level resulting in no growth in demand of Graphite Electrodes. The slide in price of Graphite Electrodes, which started in last year due to fierce competition, was steeper during the year. The year also witnessed reduction in major input costs. Reduction in input costs together with cost reduction initiatives and better inventory management could result in improved performance of the Company. The PAT of Rs. 170.92 crore for the current year was higher by 5% in comparison to Rs. 163.08 crore of previous year.

The Company''s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 92% of the total revenue.

Exports suffered set back during the year due to weak performance by the Company''s subsidiary in Germany.

Glass Reinforced Plastic Pipes and Steel segment did not perform to expectation due to weak demand and unsustainable prices.

The business environment in all segments has become intensely competitive. In order to sustain and survive through this difficult phase, the Company has taken extraordinary measures in ensuring efficient management of all resources, innovative approach to cost reduction and high level of operating efficiencies.

The performance of the German subsidiaries suffered due to steep fall in selling prices and weak demand scenario in Europe.

DIVIDEND

The Directors are pleased to recommend the payment of Dividend @ Rs. 3.50 per equity share on equity shares of Rs. 2/- each.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(i) Industry''s structure and developments A. Graphite and Carbon Segment

Graphite Electrodes

Graphite Electrode is used in electric arc furnace (EAF) based steel mills for conducting current that melts scrap iron and steel and is a consumable item for the steel industry. An increasing proportion of global steel is made using electric arc furnaces, and the electric arc furnace itself is getting more efficient, making more steel per

tonne of electrode. The principal manufacturers are based in USA, South America, Europe, India, China, Malaysia and Japan.

Graphite Electrode demand is primarily linked with the global production of steel in electric arc furnaces. Between the two basic routes for steel production - (1) Blast Furnace (BF); and (2) Electric Arc Furnace (EAF) - the EAF route to steel production has increased over the last two decades to about 30% at the global level. The share of EAF is expected to grow further in years to come due to its inherent favourable characteristics of (a) an environment friendly and less polluting production process; (b) low capital cost; and (c) faster project (commissioning) time. Fresh investments in EAF steel mills are characterised by large furnace capacities requiring large diameter UHP Electrodes. It is expected that the demand for UHP Electrodes too will grow synchronously. These industry features coupled with an increasing proportion of EAF steel share in total crude steel production in future should proportionately augment the demand for Graphite Electrodes.

Stagnant demand, intense competition and sliding sales price continued to push challenges during the year. This is compounded by liberalisation of import tariff for these items by the Government in new FTA regime. On the other hand, Graphite Electrodes from India are subject to levies in some countries making imports dearer for overseas consumers.

The Government of India has also reduced rate of duty drawback on Graphite Electrodes from 4% to 3% with a cap of Rs. 3,200 / MT with effect from 22nd September, 2013. This has impaired competitiveness of Indian electrode industry.

The new facility for production of 20,000 MT of Graphite Electrodes at Durgapur has fully stabilised. Upgraded technology deployed in this facility has resulted in improved quality and efficient cost of production.

Calcined Petroleum Coke and Paste

The Coke Division in Barauni, engaged in the manufacture of Calcined Petroleum Coke (CPC), which is used as a raw material for certain grades of electrodes, is one of the several backward integration initiatives of the Company. The Division also makes Carbon Electrode Paste and Carbon Tamping Paste. Two grades of CPC - aluminium and graphite - are produced here. CPC is a raw material used in the manufacture of regular and high power grade Graphite Electrodes. This is also a critical raw material for fine grained high density graphite used in speciality graphite products and impervious graphite equipment. Carbon Electrode Paste is used in ferro alloy smelters and Carbon Tamping Paste is used as a lining material in submerged arc furnaces.

This division could not perform to expectations because of poor demand, low realisation and constraint in supply of basic raw material i.e. raw petroleum coke.

Impervious Graphite Equipment

The Impervious Graphite Equipment (IGE) Division is engaged in manufacturing and marketing of heat exchangers, ejectors, pumps and turnkey plants. These have a wide range of applications in corrosive chemicals industries such as pharmaceutical, agro-chemical, chloro alkali and fertilizer industries.

Over the years the Company has built this product line into a reliable brand with a reputation for prompt service, good quality and consistent performance through investing in strengthening the core competencies.

This division has maintained its performance inspite of difficult economic environment.

DGFT has amended export licensing requirement for SCOMET items which would help in speedy execution of export orders.

Captive Power

Power constitutes one of the major costs of Electrode Production. For captive consumption, the Company has an installed capacity of 31.5 MW of power generation through Hydel (18 MW) route and 13.5 MW through multi-fuel route. Power generation through Hydel Power Plant was higher to 52.54 million units as against 29.48 million units in the previous year due to very good monsoon. The multi fuel power generating sets remained as stand-by owing to adequate availability of power from the grid.

The Company terminated the Power Delivery Agreement (PDA) and Shares Subscription Agreement (SSA) with Wardha Power Co. Ltd. (WPCL) and invoked the arbitration clause last year. Arbitration proceedings are underway.

B. Steel Segment

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches and special form tools. HSS cutting tools are essentially utilised in - (a) automotive; (b) machine tools; (c) aviation; and (d) DIY market. The industry is characterised by one good quality manufacturer of HSS viz. PSD and several other small manufacturers who cater to the low end of the quality spectrum in the retail segment. On the demand side, the industry is broadly divided into large and small cutting tool manufacturers who use both domestic and imported HSS. PSD faces competition from small domestic producers and imports from large overseas manufacturers.

During the year under review, domestic market for HSS

products continued to be subdued. However, the division was able to increase exports, and proposes to concentrate on this market for achieving higher volumes and better value addition in the coming year. With pickup in economic activity, it is expected that domestic sales of HSS products will improve progressively.

C. Other Segments

Glass Reinforced Plastic Pipes and Tanks (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes and Pipeline liners, by continuous filament process with computerized, advanced technology. These pipes have diverse applications such as water supply projects, power plants, sewerage disposal schemes, industrial effluent disposal, etc.

The Company has a good track record of supplying large diameter pipes in major infrastructure projects. During the year, the performance of the Division has remained below par due to severe under cutting of prices by competitors. Further, the Division had to face cost pressures on account of rising input prices and general inflationary economy. The market is increasingly getting flooded with small competitors owing to low technological requirement and low investment involved, resulting in unhealthy competition. Project cost over-runs, delay in completion of projects, disputes on contractual defaults and non-receipt of receivables are the several inherent risks in this business. Thus, it has become difficult to operate in this unpredictable business environment and the Company has become selective in picking its orders. This industry is expected to consolidate in the near future with closure of operations by one big manufacturer and likely closure of some other weak manufacturers.

The performance of the division was not satisfactory during the period under review due to severe competition. A big order has been received during the year from NTPC which will be executed in next year.

1.5 MW Hydel Power Facility

Power generated from this facility is sold to Karnataka Power Grid under a Power Purchase Agreement. Generation of power is entirely dependent on monsoon.

(ii) Opportunities and threats

India has acquired a strategic position on the global steel map, from the growing demand from infrastructure, real estate and automobile sector. India was ranked as the world''s fourth largest crude steel capacity in 2011-12 and is expected to become the second largest producer of crude steel in the world by 2015-16. India is also one of the world''s largest producers of sponge iron. The World Steel Association forecasts that global apparent steel use will increase by 3.1% to 1,527 Mt in 2014 following growth of 3.6% in 2013. In 2015, it is forecast that world steel demand will grow further by 3.3% and will reach 1,576 Mt. In 2013 world steel demand grew higher due to a stronger than expected performance in the developed world in the second half of the year. Domestic steel industry is strengthening production capacity in view of rising demand from infrastructure, automobile, construction, railway sector, etc. The demand landscapes for steel is expected to change in the medium to long term as the new Government is expected to increase spend on the infrastructure sector.

In the medium to long term, this augurs well for the domestic Graphite Electrode industry. But the short-term challenges such as: (a) less than projected GDP growth leading to softening of demand for steel, (b) disruption in supply of primary inputs to the EAF steel mills like consistent and adequate supply of quality power at affordable tariff, and soaring prices of scrap may perhaps restrict the production of steel through the EAF route. It may also put on hold some of the investment / expansion plans.

The Company is exposed to the threat of the cyclical nature of the steel demand as also to the risks arising from the volatility in the cost of input materials. The Company also faces the challenge in its domestic market, due to large scale import of graphite electrodes. Liquidity is a big issue for domestic steel industry which may result in increase in bad debts.

Volumes and business prospects, in general, would be impacted by factors like: (a) Uncertainty about the economic recovery in 2013-14; (b) doubts about the early resolution of the crisis in the euro area; (c) doubts about the pace of withdrawal of the fiscal support in the US.

While the Company is equipped and geared to face these business challenges, it is hopeful of realising its business goals, subject to a positive revival of the business environment.

(iii) Segment-wise Performance

Revenue of the Company

The revenue from operations amounted to Rs. 1,844.89 crore as against Rs. 1,836.18 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 1,083.04 crore as against Rs. 1,163.62 crore in the previous year.

Graphite and Carbon Segment

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 68,094 MT against 67,583 MT in the previous year.

Production of Calcined Petroleum Coke during the year was 20,709 MT as against 24,183 MT in the previous year.

Production of Carbon Paste during the year was 7,905 MT against 6,303 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares at 1,121 MT was higher as compared to that of

1.013 MT in the previous year.

Power generated from captive Hydel Power Plant of 18 MW capacity amounted to 52.54 million units during the year as against 29.48 million units in the previous year. Multi-fuel generating facilities remained as stand-by and were not operated due to adequate availability from the grid.

The Segment Revenue remained flat at Rs. 1,704.77 crore in comparison to Rs. 1,700.83 crore in the previous year. Domestic and Export sales in terms of volume increased during the year but realization impacted adversely due to severe competition. Profitability of the segment increased from Rs. 278.66 crore to Rs. 294.02 crore due to increase in volume, various cost initiatives taken by the Company, depreciation of rupee, etc.

Steel Segment

Production of HSS and Alloy Steels was 1,454 MT during the year as against 1,620 MT in the previous year.

Other Segments

The GRP Division produced 9,630 MT as against 4,298 MT in the previous year.

Sale of power from 1.5 MW Link Canal facility was 3.14 million units as against 2.05 million units in the previous year.

(iv) Outlook

As per the April-2014 update of the IMF World Economic Outlook (WEO), Global activity has broadly strengthened and is expected to improve further in 2014-15, with much of the impetus for growth coming from advanced economies. Although downside risks have diminished overall, lower-than-expected inflation poses risks for advanced economies. There is increased financial volatility in emerging market economies, and increases in the cost of capital will likely dampen investment and weigh on growth. Advanced economy policymakers need to avoid a premature withdrawal of monetary support. Emerging market economy policymakers must adopt measures to suit the changing fundamentals, facilitate external adjustment, further monetary policy tightening, and carry out structural reforms.

According to indications and forecasts, the International Monetary Fund (IMF) sees economic recovery on the back of global cues. The IMF has projected India''s economy to grow by 5.4% in 2014-15 and 6.4% in 2015- 16 on the back of strengthening global growth, improving export competitiveness and implementation of recently approved investment projects. In its latest World Economic

Outlook (WEO), the IMF said overall growth is expected to firm up on policies supporting investment and a confidence boost from recent policy actions, but will remain below trend. IMF said the global recovery is becoming broader, but the changing external environment poses new challenges to emerging markets and developing economies. The multilateral agency forecasts global growth to average 3.6% in 2014 - up from 3% in 2013 - and to rise to 3.9% in 2015.

Annual production for Asia was 1,080.9 Mt of crude steel in 2013, an increase of 6.0% compared to 2012. The region''s share of world steel production increased slightly from 65.7% in 2012 to 67.3% in 2013. India''s crude steel production in 2013 is estimated at 81.2 Mt as against 77.3 Mt in 2012, an increase of 5.1% on 2012.

The Indian steel sector has grown substantially during the last decade, registering a strong demand push in the last five years. The steel demand in India is expected to grow by 3.3% to 76.2 Mt in 2014, following 1.8% growth in 2013, due to an improved outlook for the construction and manufacturing sectors, even though this will be constrained by high inflation and structural problems. Steel demand is projected to grow by 4.5% in 2015 supported by the expectation that structural reforms will be implemented.

The production through EAF route should go up in view of its various advantages, primarily from the point of view of low emission of carbon dioxide. This development augurs well for the growth of Graphite Electrode demand in future years, inspite of reducing specific consumption of electrodes per tonne of steel produced, as a result of improvement in manufacturing technology of steel as well as electrodes.

With its competitive cost structure, strong technical product features and a well diversified customer base, the Company has established its presence in the global Graphite Electrode industry as a potential global player and this has significantly enabled the Company to penetrate aggressively, the growing market for large diameter UHP Graphite Electrodes.

It is expected that the domestic demand for steel and as a corollary for Graphite Electrodes may increase marginally. Faced with unfavourable business conditions, the global players have turned to the Asian markets and are following an aggressive pricing policy to capture volumes. This is likely to affect the Company''s domestic volumes as also the profit margins.

(v) Risks and Concerns

The worldwide economic trend has a significant influence on results of operations, financial position and net assets. It is undeniable that business projections have an inherent element of uncertainty of unknown elements like sudden reversal of positive trends leading to economic slowdown resulting in possible negative growth for steel, automotive

and infrastructure industries slowing down which in turn may adversely impact the prospects for our industry. The Graphite Electrode industry is not sensitive to steel prices but is impacted by the volume of steel production. Recently there has been a significant decline in the steel price as a result of the massive expansion of blast furnace capacities, particularly in China, for primary steel production.

Disproportionate increase in taxes and other levies imposed periodically by the Central and State Governments, especially on essential inputs, may increase the cost of manufacture and reduce the profit margins.

The macroeconomic environment is characterized by a high level of uncertainty with regard to the fragile economic recovery as well as the risk of yet another crisis in the financial market crisis and the resultant global economic downturn. Economic slowdown and/or cyclical recession in certain major steel consuming industries may adversely impact the demand-supply dynamics as also the profitability and your Company too is vulnerable to these changes.

Implementation of new or more stringent import and export restrictions, tightening of price controls, exchange restrictions, customs regulations and protectionist trade restrictions are the major factors of Regulatory Risks. Exports to specific regions may get severely affected by trade barriers in the form of crippling import duties or anti dumping duties or countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such protectionist/ restrictive impositions.

There are serious concerns caused by the Euro zone crisis at the centre stage, compounded further by the political turmoil seen in many countries particularly in the Middle East and other recent setbacks to the global economic growth. Furthermore, the looming economic downturn in some emerging markets due to currency devaluation against the U.S. dollar presents a risk to future business development.

The main raw materials are either petroleum based or coal based. The increasing price of crude and coal and its direct impact on its derivative materials like Needle Coke, Pitch, Furnace Oil, Met Coke, etc. will all tend to inflate the input cost in a major way.

The Company has a mixed exposure of exports, imports and foreign currency debt portfolio. So, volatility in foreign currency market directly impacts the company''s prospects. Inherent natural hedge of various balancing exposures may mitigate the risk up to an extent. It is perhaps difficult to recall a more challenging environment than of surviving the volatility in the present foreign currency market.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms, except in the case of PSD where internal audit is done in-house. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are ensured.

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 1,844.89 crore as against Rs. 1,836.18 crore in the previous year.

The year continued to be a challenging one from the financial management perspective, conditioned by fragile global recovery, uncertainty in the economic environment, tight liquidity, continuing volatility in currency exchange rates and persistent high inflation, combined with the political turmoil seen in many countries. In the face of growing export-import exposure, financial challenges like currency rate fluctuations, rising interest rates and commodity price risks required focused attention and effective management of potential risks.

RBI had reduced repo rate by 0.25% during May, 2013 but had to revert back to its hawkish stance and had hiked rate thrice by 0.25% each time in Sep''13, Oct''13 and Jan''14 respectively. It had also taken some extraordinary steps in July''13 to curb exchange volatility by increasing Marginal Standing Facility (MSF) rates by 2% to 10.25%. The year also witnessed huge volatility in the foreign currency markets with huge devaluation of rupee. Though Current Account Deficit (CAD) has been contained to an extent, inflation still remains a concern for the apex bank.

Profit after tax was Rs. 170.92 crore as against Rs. 163.08 crore in the previous year.

Profit before tax was higher at Rs. 253.92 crore as compared to Rs. 233.08 crore in the previous year mainly on following counts - (a) reduction in finance cost due to better working capital management; (b) higher investment income; (c) lower cost of production in the new facilities; which were partially offset by increase in the input costs, lower price realization, etc.

Borrowing at Rs. 341 crore was lower than Rs. 604 crore of the previous year, as a result the Finance Cost decreased to Rs. 16.96 crore from Rs. 22.14 crore in previous year.

Capital expenditure during the year amounted to Rs. 33.01 crore as against Rs. 40.95 crore in the previous year.

The Company had maintained a proper mix of foreign currency and rupee borrowings, keeping in view the overall forex exposure with an objective to optimize cost.

ICRA has reaffirmed the long term rating at [ICRA] ''AA '' (pronounced ICRA double A plus) which indicates that the outlook on the long term rating is stable. The short-

term debt programme rating has been reaffirmed at [ICRA] ''A1 '' (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects the continuance of significant improvement in the Company''s financial risk profile.

Details of contingent liabilities are given in Note 37 to the Financial Statements.

The Company is a net foreign exchange earner.

(viii) Material developments in human resources / industrial relations front, including number of people employed-

The HRD policies and practices focus on contemporary and pragmatic people centric initiatives, aligning it with business vision and objectives, which primarily help in creating robust organizational structure and aims at optimum utilization of resources. In order to meet these objectives, the company has revisited its HR processes, including the Performance Management System (PMS) with the progression in Key Performance Areas (KPAs). The Training and Development programmes encompassing the competency building initiatives amongst employees continues to be an ongoing process. Besides, the leadership building at senior and middle management level, and the succession planning for critical positions continue to be a focus area. The involvement of employees in the operational initiatives at the manufacturing plants of the Company continues to be high. The SAP HR payroll module and other Information Technology developments, provide the data analysis, and business opportunities based on the real time sharing of information and integration of systems, leading to efficient decision making process and impacting the internal communication positively in our growing enterprise.

The total number of people employed in the company is 2299 as on 31st March, 2014.

The employee relations continue to be cordial and harmonious at all the locations of the Company.

Pollution Matter - Bangalore

The Company had filed three appeals before the Hon''ble Karnataka State Appellate Authority (AA) at Bangalore against the order passed by the Karnataka Pollution Control Board (KPCB) refusing consent under the Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974 and also directing closure of factory at Bangalore. In response to the said appeal, an interim order was passed on 25.7.2012 by AA staying the orders passed by KPCB. The AA finally, vide majority order dated 22.6.2013 set aside the impugned order of KPCB and the appeals were accordingly allowed. The complainants have filed appeal against the aforesaid order of AA before the Hon''ble National Green Tribunal, South Zone at Chennai which is presently being heard.

Research & Development

The R&D commitment towards continuous improvement and development of technology has consistently supported the company in becoming one of the low cost producers in the Graphite Electrode and carbon material producing industry.

R&D initiatives are in the area of raw materials, productivity, process development, reduction in carbon emission, etc.

Continuous efforts are being put to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Superior version of carbon brake pads for aircrafts is being developed.

State of art furnace was designed, fabricated, installed and successfully being used to process carbon-carbon composite materials.

Many of the cost savings achieved were significant and in compliance with the "pollution control and clean environment norms". These R&D efforts were continuous and by bench marking, the operational efficiencies of manufacturing facilities at different locations were compared and steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards/norms.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary and Graphite International B.V. in The Netherlands is wholly owned overseas subsidiary of the Company which is the holding company of four subsidiaries in Germany.

The overseas subsidiaries recorded a turnover of Euro 36.62 mn as compared to Euro 49.71 mn in the previous year.

On the backdrop of prolonged economic slowdown, German subsidiaries did not do well due to low demand in Europe, increase in production costs and reduction in prices by competitors to capture volumes in the dwindling market. Hence, lower turnover coupled with high input cost have resulted in a loss of Euro 9.45 mn during the year, as against loss of Euro 3.62 mn in the previous year.

The Company earned by way of Royalty Rs. 2.95 crore during the year, as against Rs. 3.92 crore in the previous year, from overseas subsidiaries.

The Ministry of Corporate Affairs by a Circular dated 08- February-2011 has granted exemption from the provisions of Section 212 of the Companies Act, 1956 with regard to the attachment of the accounts, reports, statement in terms of section 212(1)(e), etc. of its subsidiaries as part of its Accounts. The Board of Directors of the Company has by a resolution given consent for not attaching the aforesaid documents of its subsidiaries. The Annual Accounts of subsidiary companies and the related detailed information will be made available to the holding and

subsidiary company investors who seek such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any shareholder in the Registered Office of the Company and that of the subsidiaries. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per AS-21 forms a part of the Annual Report.

Information pursuant to Section 217 of the Companies Act, 1956

Information in accordance with clause (e) of sub-section (1) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March, 2014 is given in Annexure ''1''.

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors'' Report for the year ended 31st March, 2014 are given in Annexure ''2''.

DIRECTORS

Mr. K K Bangur, Chairman, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

The Board of Directors ("Board") in their meeting held on 9th May, 2014 appointed Mr. P K Khaitan, Mr. Sanjiv Goenka, Dr. R Srinivasan, Mr. N S Damani, Mr. A V Lodha and Mr. N Venkataramani who were independent directors of the Company on the date of commencement of Companies Act, 2013 ("Act") as independent directors of the Company for a period of five years from 1st April, 2014. All of them meet the criteria prescribed in Section 149 (6) of the Act to qualify to be independent directors. In the opinion of the Board, each one of them is a person of integrity and possesses relevant expertise and experience. The Board has also opined that all of them fulfil the conditions specified in the Act and rules made there-under and that they are all independent of management. Approval of the members of the Company is sought for their appointment in the ensuing AGM.

Mr. Balaji Rao, vide his letter dated 9th May, 2014, informed that consequent upon the requirements of revised Clause 49 of Listing Agreement which limits an individual''s directorships in listed companies to seven, he had decided to resign as a director of the Company with effect from the conclusion of the next Annual General Meeting. Accordingly, he does not seek appointment from the members at the ensuing AGM.

The term of office of Mr. M B Gadgil as ''Whole-time Director'' designated as the Executive Director expires on 30th June, 2014. The Board in its meeting held on 9th May, 2014 on the recommendation of the ''Remuneration Committee'', have subject to approval of members of the Company re-appointed him for a further period of five years from 1st July, 2014. The matter is being placed before the members in the ensuing AGM for their approval.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House. This year too, the Company received the following awards for export performance –

- from Hon. Prime Minister, Govt. of India - DRDO Technology Absorption Award by R&D, Bangalore.

- from ECGC - DNB : Dun & Bradstreet Corporate Awards 2012.

- from EEPC, India, Mumbai : 45th National Award for Export Excellence for 2012-13.

- from CAPEXIL: Special Export Award / Certificate of Merit 2011-12.

- from Greentech Foundation, New Delhi: 12th Annual Greentech Safety Awards 2013 in the Gold Category by Engineering Sector in Satpur plant.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state-

1. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. that they 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 31st March, 2014 and of the profit of the Company for the year ended 31st March, 2014.

3. that they have taken proper and sufficient care 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 fraud and other irregularities; and

4. that they have prepared the annual accounts on a going concern basis.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms a part of this Report.

Auditors

Price Waterhouse, Chartered Accountants, Auditors of the Company retire and are eligible for re-appointment.

Cost Auditors The Company had appointed following Cost Auditors for FY 2013-14 who conducted cost audit as detailed below- Shome & Banerjee Electrode plants at Durgapur and Bangalore including captive power generation facilities

DBK & Associates Electrode, IGE and GRP plants at Nashik including captive power generation facility

B G Chowdhury & Co. Coke division at Barauni N Radhakrishnan & Co. 1.5 MW Link Canal Power plant at Mandya Mani & Co. Powmex Steels division at Titilagarh

Consolidated Cost Audit Report and Compliance Report were filed with the Ministry of Corporate Affairs, Government of India on 18.09.2013. The due date for filing the reports was 27.09.2013.

The Company has appointed following Cost Auditors for FY 2014-15 - Shome & Banerjee Electrode plants at Durgapur and Bangalore including captive power generation facilities DBK & Associates Electrode, IGE and GRP plants at Nashik including captive power generation facility B G Chowdhury & Co. Coke division at Barauni N Radhakrishnan & Co. 1.5 MW Link Canal Power plant at Mandya Mani & Co. Powmex Steels division at Titilagarh

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company.

On behalf of the Board Kolkata K. K. Bangur

May 9, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting their Thirty Eighth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2013.

Financial Results Rs. in Crore

2012-13 2011-12 2012-13 2011-12

Particulars Graphite India Limited Graphite India Limited Consolidated

Revenue from Operations (Gross) 1836.18 1742.03 2020.14 1983.63

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Exceptional Item and Tax 305.26 345.87 309.86 361.14

Finance Costs 22.14 14.39 30.69 18.63

Profit before Depreciation, Exceptional Item and Tax 283.12 331.48 279.17 342.51

Depreciation and Amortisation Expense 50.04 40.44 62.01 48.74

Profit before Exceptional Item and Tax 233.08 291.04 217.16 293.77

Exceptional Item - (29.62) - (3.41)

Profit before Tax 233.08 320.66 217.16 297.18

Tax Expense for the Current Year

Current Tax 55.79 82.20 57.97 83.77

MAT Credit - - (0.35) -

Deferred Tax 24.21 7.80 25.47 8.14

Tax Expense - Write Back relating to Earlier Years (Net) (10.00) (7.23) (0.34) (7.21)

Profit for the Year 163.08 237.89 134.41 212.48

Balance as at the beginning of the Year 224.89 166.47 316.56 283.67

Amount available for appropriation 387.97 404.36 450.97 496.15

Appropriations :

Transfer to General Reserve 100.00 100.00 100.00 100.00

Transfer to Reserve Fund - - 0.78 0.12

Proposed Dividend on Equity Shares 68.38 68.38 68.38 68.38

Dividend Tax 11.62 11.09 11.62 11.09

Balance as at the close of the Year 207.97 224.89 270.19 316.56

387.97 404.36 450.97 496.15

BUSINESS REVIEW

The CSO (Central Statistical Organisation), has estimated that the Indian Economy is likely to register a lower growth of 5% in FY 2012-13 as compared with the modest growth of 6.2% registered in 2011-12 and much stronger growth in 2009-10 and 2010-11. It is further stated that the sharp decline in growth is mainly due to external causes, while domestic causes also contributed. The growth rate declined on account of the reduction in investment rate and lower growth of exports vis-a-vis that of imports. Growth in net exports has been negative due to the weakening of global demand. The net exports growth has been low because of global weakness. The World Economic Outlook (WEO) Update released by the IMF in January 2013 put the rate of growth of world output at 3.9% in 2011 and 3.2% in 2012, down from 5.1% in 2010. For the advanced economies, the growth rate was much lower at 3%, 1.6%, and 1.3% for 2010, 2011 and 2012 respectively. The growth rate in the relatively faster growing emerging economies also fell over this period. As a result of weak growth in (trading) partner countries, Indian exports also declined. With the global economy likely to recover in 2013 further aided by several decontrol measures announced by the Government in recent months, the Indian economy''s outlook for 2013-14 can be viewed as "cautiously optimistic".

GRAPHITE INDIA

In the face of this situation, the year has been quite challenging for the Company due to slow global recovery and consequent weak market conditions. Revenue from Operations at Rs.1836.18 crore was marginally higher by 5.4% for FY 2012-13 as against Rs.1742.03 crore in the previous year. While there was a steady increase in the price of major inputs, raw materials and all round increase in production overheads, selling expenses and finance cost, unfortunately, there was no commensurate increase in selling price. The major players in their aggressive drive to pick up volumes, continued to drop the selling price throughout the year. Japanese producers also reduced prices riding on the back of a weak Yen. This situation lead to lower PAT of Rs.163.08 crore for the current year as against Rs. 237.89 crore in the previous year. Charge on account of depreciation was also higher on completion of Durgapur plant expansion.

The Company''s Graphite and Carbon Segment continues to be the main source of revenue and profit for the Company, accounting for about 93% of the total revenue. This segment registered a growth of around 11% YoY.

The Company''s total export sales increased by 22% but domestic sales declined due to unabated imports in spite of increase in demand.

Glass Reinforced Plastic Pipes and Steel segment did not perform to expectation due to weak demand and unsustainable prices.

The business environment in all segments has become intensely competitive. In order to sustain and survive through this difficult phase, the Company has taken extraordinary measures in ensuring efficient management of all resources, innovative approach to cost reduction and high level of operating efficiencies.

The performance of the Company''s German subsidiaries suffered due to poor demand, increase in input costs and steep fall in selling prices.

DIVIDEND

The Directors are pleased to recommend the payment of Dividend @ Rs.3.50 per equity share on equity shares of Rs. 2/- each.

Additional Disclosures

In line with the requirements of the Listing Agreements and the Accounting Standards of the Institute of Chartered Accountants of India, the Company has made certain additional disclosures in respect of consolidated financial statements, related party transactions and segmental reporting.

Pollution Matter - Bangalore

The Company had filed appeal before the Environment Appellate Authority (EAA) at Bangalore against the order passed by the Karnataka Pollution Control Board (KPCB) refusing consent under the Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974 and also directing closure of factory at Bangalore. In response to the said appeal, an interim order was passed by EAA staying the orders passed by KPCB and which continues to be in force. The appeal was heard and the case has been reserved for final orders.

Research & Development

The R&D''s commitment towards continuous improvement and development of technology has consistently supported the Company in becoming one of the low cost producers, in the electrode industry.

R&D initiatives are in areas of raw materials, productivity, process development, reduction in carbon emission, etc. Many of the cost savings achieved were significant and in compliance with the "pollution control and clean environment norms". These R&D efforts are continual and by benchmarking, the operational efficiencies of manufacturing facilities at different locations were compared and steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards / norms.

Subsidiary Companies

Carbon Finance Limited is wholly owned Indian subsidiary and Graphite International B.V. in The Netherlands is wholly owned overseas subsidiary of the Company which is the holding company of four subsidiaries in Germany.

The overseas subsidiaries recorded a turnover of Euro 49.71 mn as compared to Euro 61.19 mn in the previous year.

On the backdrop of prolonged economic slowdown, German subsidiaries did not do well due to low demand in Europe, increase in production costs and reduction in prices by competitors to capture volumes in the dwindling market. Hence, lower turnover coupled with high input cost have resulted in loss of Euro 3.62 mn during the year, as against profit of Euro 1.02 mn in the previous year. Following tax audit carried out for the periods 2004- 2008, subsidiaries had to make provision for tax including interest thereon amounting to Euro 1.85 mn. Discussion is on to bring it down.

The Company earned by way of Royalty Rs. 3.92 crore during the year, as against Rs. 4.82 crore in the previous year, from overseas subsidiaries.

The Ministry of Corporate Affairs by a Circular dated 08- February-2011 has granted exemption from the provisions of Section 212 of the Companies Act, 1956 with regard to the attachment of the accounts, reports, statement in terms of section 212(1)(e), etc. of its subsidiaries as part of its Accounts. The Board of Directors of the Company has by a resolution given consent for not attaching the aforesaid documents of its subsidiaries. The Annual Accounts of subsidiary companies and the related detailed information will be made available to the holding and subsidiary company investors who seek such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any shareholder in the Registered Office of the Company and that of the subsidiaries. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per AS-21 forms a part of the Annual Report.

Information pursuant to Section 217 of the Companies Act, 1956

Information in accordance with clause (e) of sub-section (1) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March, 2013 is given in Annexure ''1''.

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors'' Report for the year ended 31st March, 2013 are given in Annexure ''2''.

DIRECTORS

Mr J D Curravala, Mr D J Balaji Rao and Mr P K Khaitan, Directors of the Company, retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House for a period of five years effective 1st April, 2009 till 31st March, 2014. This year too, the Company received the following awards for export performance - - from ECGC - DNB -

Indian Exporters'' Excellence Award 2012;

Best manufacturer - Export (Large); - from EEPC, India, Mumbai : 44th National Award for

Export Excellence for 2011-12.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state -

1. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. that they 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 31st March, 2013 and of the profit of the Company for the year ended 31st March, 2013.

3. that they have taken proper and sufficient care 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 fraud and other irregularities; and

4. that they have prepared the annual accounts on a going concern basis.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms a part of this Report.

Auditors

Price Waterhouse, Chartered Accountants, Auditors of the Company retire and are eligible for re-appointment.

Cost Auditors

Mani & Co. and N Radhakrishnan & Co., Cost Accountants, conducted audit of the Cost Accounts for FY 2011-12 of the Powmex Steels division and Power division respectively. Consolidated Cost Audit Report and Compliance Report were filed with the Ministry of Corporate Affairs, Government of India on 08.01.2013. The due date for filing reports was 28.02.2013.

The Company has appointed following Cost Auditors for FY 2012-13 -

Shome & Banerjee Electrode plants at Durgapur and Bangalore including captive power generation facilities

DBK & Associates Electrode, IGE and GRP plants at Nashik including captive power generation facility

B G Chowdhury & Co. Coke division at Barauni N Radhakrishnan & Co. 1.5 MW Link Canal Power plant at Mandya

Mani & Co. Powmex Steels division at Titilagarh

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company.

On behalf of the Board

Kolkata K. K. Bangur

May 10, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their Thirty Seventh Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2012.

FINANCIAL RESULTS

Rs in Crore

2011-12 2010-11

Particulars Graphite India Limited

Revenue from Operations (Gross) 1742.03 1283.38

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation,

Exceptional Item and Tax 345.87 313.43

Finance Costs 14.39 5.55

Profit before Depreciation, Exceptional Item and Tax 331.48 307.88

Depreciation and Amortisation Expense 40.44 39.33

Profit before Exceptional Item and Tax 291.04 268.55

Exceptional Item (29.62) 12.73

Profit before Tax 320.66 255.82

Tax Expense for the Current Year

Current Tax 82.20 94.24

Deferred Tax - Charge/(Credit) 7.80 (10.74)

Tax Expense - Write Back relating to Earlier Years (Net) (7.23) -

Profit for the Year 237.89 172.32

Balance as at the beginning of the Year 166.47 110.46

Transferred from Debenture Redemption Reserve - 68.04

Amount available for appropriation 404.36 350.82

Appropriations :

Transfer to General Reserve 100.00 100.00

Reserve Fund - -

Dividend Paid on Equity Shares - 4.18

Proposed Dividend on Equity Shares 68.38 68.38

Dividend Tax 11.09 11.79

Balance as at the close of the Year 224.89 166.47

40436 350.82



2011-12 2010-11

Graphite India Limited Consolidated

Revenue from Operations (Gross) 1983.63 1501.33

Profit for the year after charging all Expenses but before providing Finance Costs, Depreciation, Exceptional Item and Tax 361.14 343.67

Exceptional Item and Tax 18.63 8.64

Finance Costs 342.51 335.03

Profit before Depreciation, Exceptional Item and Tax 48.74 48.62

Depreciation and Amortisation Expense 293.77 286.41

Profit before Exceptional Item and Tax (3.41) 12.73

Exceptional Item 297.18 273.68

Profit before Tax 83.77 96.29

Tax Expense for the Current Year Current Tax 8.14 (11.87)

Deferred Tax - Charge/(Credit) (7.21) 0.15

Tax Expense - Write Back relating to Earlier Years (Net) 212.48 189.11

Profit for the Year 283.67 211.13

Balance as at the beginning of the Year — 68.04

Transferred from Debenture Redemption Reserve 496.15 468.28

Amount available for appropriation 100.00 100.00

Appropriations :

Transfer to General Reserve 0.12 0.26

Reserve Fund — 4.18

Dividend Paid on Equity Shares 68.38 68.38

Proposed Dividend on Equity Shares 11.09 11.79

Dividend Tax 316.56 283.67

Balance as at the close of the Year 496.15 468.28

BUSINESS REVIEW

The CSO (Central Statistical Organisation), has estimated that the Indian Economy is likely to register a modest growth of 6.9% in FY 2011-12 as compared with the robust growth of 8.4% registered in the two preceding years. It is further stated that the sharp decline in growth in the manufacturing industry has led to the significant slowdown in the National GDP growth rate. The economic / financial crisis in the Eurozone, the minimal growth in the other industrialised nations and the slow pace of recovery of the domestic sector, are all collectively responsible for the overall depressed performance of the Indian economy. It is however heartening to note that despite the challenging conditions faced by the global economy, Indian exports have continued to be steady in the current year and has registered a growth of 14.3% in real terms over and above 22.7% growth achieved in FY 2010-11 (as per advance estimates). The outlook for the global economy is neutral to cautiously positive, subject to a major upswing in the economic prospects of Europe and other large trading blocks.

GRAPHITE INDIA

The Company has repeated an impressive performance. Revenue from Operations for FY 2011-12 was Rs 1742 crore as against Rs 1283 crore in The previous year and PAT was Rs 238 crore for the current year as Against Rs 172 crore in the previous year.

The Company's Graphite and Carbon Segment (Graphite Electrodes) continues to be the main source of income and profit for the Company, accounting for about 84% of the total revenues.

Higher levels of capacity utilisation backed by a strong volume growth, tighter cost control, along with a weaker rupee geared the Company to register a notable performance for the year, in spite of a miniscule price increase. The major players in their aggressive drive to pick up volumes, kept the pressure on selling prices through the year.

The performance of the subsidiary companies too improved during the year aided wholly by growth in volumes.

DIVIDEND

The Directors are pleased to recommend the payment of Dividend @ 3.50 per equity share on equity shares of 2 each.

Additional Disclosures

In line with the requirements of the Listing Agreements and the Accounting Standards of the Institute of Chartered Accountants of India, the Company has made certain additional disclosures in respect of consolidated financial statements, related party transactions and segmental reporting.

Research & Development

The R&D's commitment towards continuous improvement and development of technology has consistently supported the Company in becoming one of the low cost producers, in the electrode industry.

R&D initiatives are in areas of raw materials, productivity, process development, reduction in carbon emission, etc. Many of the cost savings achieved were significant and in compliance with the "pollution control and clean

environment norms". These R&D efforts are continual and by benchmarking, the operational efficiencies of manufacturing facilities at different locations were compared and steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards / norms.

Besides, the R&D initiatives in the areas of (a) new product development, (b) speciality products and (c) Carbon-Carbon Composite Brake Discs for defence applications, continue.

Subsidiary Companies

In March 2012, the Company sold shares it held in Carbon International Holdings NV, Curacao. Presently, Carbon Finance Limited is wholly owned Indian subsidiary and Graphite International B.V. in The Netherlands is wholly owned overseas subsidiary of the Company which is the holding company of four subsidiaries in Germany.

The Company made an investment of Euro 4.5 mn in the share capital of its overseas subsidiary, Graphite International B.V. and converted loan of Euro 1.3 mn into equity to strengthen the capital base of the Company during the year.

The overseas subsidiaries recorded a turnover of Euro 61.19 mn as compared to Euro 48.51 mn in the previous year. The profit before tax of these overseas subsidiaries was Euro 1.02 mn and profit after tax was Euro 0.78 mn (as against Euro 0.16 mn and 0.13 mn).

The Company earned by way of Royalty 4.82 crore during the year, as against 3.35 crore in the previous year, from overseas subsidiaries.

The Ministry of Corporate Affairs by a Circular dated 08 February, 2011 has granted exemption from the provisions of Section 212 of the Companies Act, 1956 with regard to the attachment of the accounts, reports, statement in terms of section 212(1)(e), etc. of its subsidiaries as part of its Accounts. The Board of Directors of the Company has by a resolution given consent for not attaching the aforesaid documents of its subsidiaries. The Annual Accounts of subsidiary companies and the related detailed information will be made available to the holding and subsidiary company investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any shareholder in the Registered Office of the Company and that of the subsidiaries. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per AS-21 forms a part of the Annual Report.

Information pursuant to Section 217 of the Companies Act, 1956

Information in accordance with clause (e) of sub-section (1) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' Report for the year ended 31 March, 2012 is given in Annexure '1'.

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors' Report for the year ended 31 March, 2012 are given in Annexure '2'.

DIRECTORS

Mr. Bhaskar Mitter, Director, who retires by rotation at the ensuing AGM does not seek re-appointment in view of his advanced age. Mr Mitter had joined the erstwhile Graphite Board in April 1967 and continued to serve as a director after its amalgamation with the Company. The Board has placed on record its sincere appreciation of the valuable services rendered by him during his long and distinguished association with the Company.

Dr. R Srinivasan, Mr. N Venkataramani and Mr. M B Gadgil, Directors of the Company, retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House for a period of five years effective 01 April, 2009 till 31 March, 2014. This year too, the Company received the following awards for export performance -

- from CAPEXIL: Special Export Award for 2010-11;

- from EEPC, India, Eastern Region, Kolkata : Top Exporter Award for 2009-10 from Eastern Region- (Silver Trophy) Large Enterprise;

- from EEPC, India, New Delhi : National Award for Export Excellence for 2009-10;

- from EEPC, India, Mumbai : 43rd National Award for Export Excellence for 2010-11

- from Dun & Bradstreet - Rolta Corporate Award, 2011.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state -

1. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed

along with proper explanation relating to material departures.

2. that they 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, 2012 and of the profit of the Company for the year ended 31 March, 2012.

3. that they have taken proper and sufficient care 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 fraud and other irregularities; and

4. that they have prepared the annual accounts on a going concern basis.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms a part of this Report.

Auditors

Price Waterhouse, Chartered Accountants, Auditors of the Company retire and are eligible for re-appointment.

Cost Auditors

Mani & Co., Cost Auditors, who conducted audit of the cost accounts relating to Powmex Steels Division of the Company for the FY 2010-11 filed the Cost Audit Report with the Ministry of Corporate Affairs, Government of India on 18 August, 2011. The due date for filing the said Report was 27 September, 2011. They are appointed to conduct the audit for FY 2011-12.

The Company had appointed N.Radhakrishnan & Co, Cost Auditors, to conduct the audit of the cost accounts relating to 1.5 MW Link Canal Mini Hydel Plant at Mandya, Mysore, of the Company for FY 2011-12.

The due date for filing the Cost Audit Reports for the financial year ended 31 March, 2012 is 27 September, 2012.

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company.



On behalf of the Board

K. K. Bangur

Chairman

Kolkata

Date : May 11, 2012


Mar 31, 2011

The Directors have pleasure in presenting their Thirty Sixth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2011.

FINANCIAL RESULTS

Rs. in Crore

2010-11 2009-10 2010-11 2009-10 Particulars Graphite India Limited Graphite India Limited Consolidated

Sales / Income from Operations – (Gross) 1280.04 1178.22 1501.33 1394.06

Profit for the year after charging all expenses but before providing interest, depreciation, exceptional item and tax 312.92 409.28 342.78 428.27

Interest 5.04 10.49 7.75 14.47

Profit before depreciation, exceptional item and tax 307.88 398.79 335.03 413.80

Depreciation 39.33 39.54 48.62 49.94

Profit before taxation and exceptional item 268.55 359.25 286.41 363.86

Payment under Voluntary Retirement Scheme 12.73 — 12.73 —

Profit before Taxation 255.82 359.25 273.68 363.86

Provision for taxation - Current Tax 94.24 116.00 96.29 117.69

MAT Credit — — — (0.07)

Earlier years — 0.08 0.15 0.11

Deferred (10.74) 11.00 (11.87) 11.28

Profit for the year 172.32 232.17 189.11 234.85

Balance brought forward from the earlier year 110.46 44.39 211.13 142.97

Transfer from Debenture Redemption Reserve 68.04 3.90 68.04 3.90

350.82 280.46 468.28 381.72

Which has been appropriated as under :

Dividend paid on Equity Shares 4.18 — 4.18 —

Proposed Dividend on Equity Shares 68.38 60.03 68.38 60.03

Dividend Tax 11.79 9.97 11.79 9.97

Transfer to General Reserve 100.00 100.00 100.00 100.00

Reserve Fund — — 0.26 0.59

Balance carried forward 166.47 110.46 283.67 211.13

350.82 280.46 468.28 381.72

BUSINESS REVIEW

As per Central Statistical Organisation, the Indian Economy - led by a resurgence in agriculture, services and manufacturing sectors - is estimated to grow by a robust 8.6% in FY 2010- 11. In 2009-10, the Indian Economy grew by 8%. The farm sector which grew by a meagre 0.4 % in 2009-10 is estimated to turnaround with an impressive 5.4% growth in 2010-11, while manufacturing and services sectors are expected to post consistent growth levels of 8% and 9.6% respectively.

The GDP forecast for 2011-12 is set at 9%, subject to certain assumptions.

The United Nations Industrial Development Organisation, in one of its publications, has commended India for its strong economic growth and has ranked India as one of the top 10 manufacturers of the world for the year 2010.

The world economy too registered a rapid recovery - led by Asia in the front, hopefully leaving the worst economic recession behind us. Despite the myriad challenges faced by

the global economy, the forecast for world GDP for 2011 has been upgraded, thus signalling slow but steady revival.

GRAPHITE INDIA

Gross sales for 2010-11 were Rs. 1280 crore as against Rs. 1178 crore in the previous year and PAT was Rs. 172 crore for the current year as against Rs. 232 crore in the previous year.

The Companys Graphite and Carbon Segment (Graphite Electrodes) continues to be the main source of income and profit for the Company, accounting for about 81% of the total revenues.

With improved market demand for electrodes, capacity utilisation registered a steady rise every quarter and the growth in sales was driven entirely by volume growth. While volumes increased, electrode prices declined virtually throughout the year and are reflected in the declining PAT.

Capacity utilization of the German Operations improved as compared to previous year. However due to softening of prices, results continue to be depressed.

DIVIDEND

The Directors are pleased to recommend the payment of Dividend @ Rs. 3.50 per equity share on equity shares of Rs. 2 each.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB)

Out of the FCCB amounting to USD 40 mn raised in 2005 with maturity date in October-2010:

35,925 Bonds were converted into 285,91,033 equity shares;

3,875 Bonds were bought back; and

200 Bonds were redeemed.

Additional Disclosures

In line with the requirements of the Listing Agreements and the Accounting Standards of the Institute of Chartered Accountants of India, your Company has made additional disclosures in respect of consolidated financial statements, related party transactions and segmental reporting.

Research & Development

The R&D Centre was established in 1976 and since its inception, it has played a pivotal role in the development of

new products and process routes that have given the Company a competitive advantage in local and global markets.

Research & Development initiatives were carried out in the areas of raw materials, productivity, process development, process improvement, reduction in carbon emission, etc. Many of the cost savings achieved were significant and in compliance with the “pollution control and clean environment norms”. These R&D efforts are continual and by benchmarking, the operational efficiencies of manufacturing facilities at different locations were compared and steps were taken for process improvement and achieving operational synergies. The focus is on further development and improvement of standards.

Besides, the R&D initiatives in the areas of new product development, speciality products and Carbon-Carbon Composite Brake Discs for defence applications, continue.

PUBLIC DEPOSITS

The Company is not accepting public deposits. There is no unclaimed deposit during the year.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian Subsidiary; Graphite International BV in The Netherlands and Carbon International Holdings NV in Curacao (previously Netherlands Antilles) are the wholly owned overseas subsidiaries of the Company.

The overseas subsidiaries recorded a turnover of Euro 47.72 mn as compared to Euro 39.73 mn in the previous period. The profit before tax of these overseas subsidiaries was Euro 0.16 mn and profit after tax was Euro 0.13 mn (as against Euro 1.07 mn and 0.86 mn).

The Company earned by way of Royalty Rs. 3.35 crore during the year, as against Rs. 3.13 crore in the previous year, from overseas subsidiaries.

The Ministry of Corporate Affairs by a Circular dated 8 February, 2011 has granted exemption from the provisions of Section 212 of the Companies Act, 1956 with regard to the attachment of the accounts, reports, statement in terms of Section 212(1)(e), etc. of its subsidiaries as part of its Accounts. The Board of Directors of the Company has by a resolution given consent for not attaching the balance sheet of its subsidiaries. The Annual Accounts of subsidiary companies and the related detailed information will be made available to the holding and subsidiary company investors seeking such information at any point of time. The annual

accounts of the subsidiary companies will also be kept for inspection by any shareholder in the Registered Office of the Company and that of the subsidiaries. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The Consolidated financial statement of the Company along with those of its subsidiaries prepared as per AS-21 forms part of the Annual Report.

Information pursuant to Section 217 of the Companies Act, 1956

Information in accordance with clause (e) of sub-section (1) of Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31 March, 2011 is given in Annexure 1.

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors Report for the year ended 31 March, 2011 are given in Annexure 2.

DIRECTORS

Mr. A. V. Lodha, Mr. N. S. Damani and Mr. K. K. Bangur, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Recognition/Award

The Company continues to enjoy the status of a Star Trading House for a period of five years effective 1 April, 2009 till 31 March, 2014. This year too, the Company received the following awards for export performance –

- from EEPC, Eastern Region, Award for Export Excellence for export performance during the year 2008-09; and

- from CAPEXIL - Special Export Award for 2009-10.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state –

1. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. that they 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, 2011 and of the profit of the Company for the year ended 31 March, 2011.

3. that they have taken proper and sufficient care 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 fraud and other irregularities; and

4. that they have prepared the annual accounts on a going concern basis.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report.

Auditors

Price Waterhouse, Chartered Accountants, Auditors of the Company retire and are eligible for re-appointment.

Cost Auditor

Mani & Co., Cost Auditors, who conducted audit of the cost accounts relating to Mini Steel Plant of Powmex Steels Division of the Company for the Financial Year 2009-2010 filed the Cost Audit Report with the Ministry of Corporate Affairs, Government of India on 6 September, 2010. The due date for filing the said Report was 30 September, 2010.

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.



On behalf of the Board

K. K. Bangur Chairman

Kolkata Date : May 9, 2011


Mar 31, 2010

The Directors have pleasure in presenting their Thirty Fifth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2010.

FINANCIAL RESULTS

Rs. in Crore 2009-10 2008-09 2009-10 2008-09 Particulars Graphite India Graphite India Limited Limited Consolidated Sales / Income from Operations - (Gross) 1178.22 1182.73 1394.06 1557.86 Profit for the year after charging all expenses but before providing interest, depreciation and tax 409.28 261.04 428.27 332.91 Less: Interest 10.49 25.94 14.47 35.10 Profit before depreciation and tax 398.79 235.10 413.80 297.81 Less: Depreciation 39.54 34.35 49.94 44.04 Profit before taxation 359.25 200.75 363.86 253.77 Less : Provision for taxation - Current Tax 116.00 23.50 117.69 34.87 MAT Credit - (23.50) (0.07) (23.50) Earlier years 0.08 13.78 0.11 13.79 Deferred 11.00 (7.25) 11.28 (7.56) Fringe Benefit - 0.65 - 0.65 Profit for the year 232.17 193.57 234.85 235.52 Add: Balance brought forward from the previous year 44.39 10.83 142.97 67.67 Transfer from Debenture Redemption Reserve3.90 - 3.90 - 280.46 204.40 381.72 303.19 Which has been appropriated as under :

Proposed Dividend on Equity Shares 60.03 51.29 60.03 51.29 Dividend Tax 9.97 8.72 9.97 8.72 Transfer to General Reserve 100.00 100.00 100.00 100.00 Reserve Fund - - 0.59 0.21 Balance carried forward 110.46 44.39 211.13 142.97 280.46 204.40 381.72 303.19

BUSINESS REVIEW

The Indian economy as a whole has shown remarkable resilience in containing the ill-effects of the continuing global economic crisis. While there was a significant decline in the economic activity across the globe, in the year gone by, the major relief however is that the worst of the economic slowdown apparently seems to be behind us. Demand in the domestic economy has witnessed positive growth since the Q2 of current fiscal and is likely to gain further momentum-going forward. The Global recovery too is more pronounced than earlier expectations, bolstered by the emerging and developing economies- espedally China, Russia and Brazil — driven mainly by their buoyant internal demand. IMF has projected the US economy to grow by 3% and world economic growth to be around 4% for the year 2010. This augurs well for the year ahead and corporates which had put their plans of capacity expansion "on hold" are once again looking at expansions with renewed hope and vigour.

The Indian GDP Growth rate which had gone down from 9% in 2007-08 to 6.7% in 2008-09 has risen to 7.2% in 2009-10. The real turnaround came in the second quarter of 2009-10, when the economy grew by 7.9 per cent. The industrial and service sectors grew by 8.2 and 8.7 percent respectively, while growth in the manufacturing sector more than doubled from 3.2 per cent in 2008-09 to 8.9 per cent in 2009-10. Riding on the strong industrial growth, Indias GDP is expected to grow at 8.5% for the year 2010-2011 and 9% for the year 2011-2012.

GRAPHITE INDIA

In spite of this challenging business scenario, the Company has been able to post a satisfactory performance, primarily as a result of the cost optimization efforts carried out across all product divisions and functions. Despite lower sales volumes, the higher sales realization, lower input costs and reduction in operational costs helped in improving the operating margins of the Company during the year.

Gross sales for 2009-10 were Rs. 1178 crore as against Rs. 1183 crore in the previous year and PAT was Rs. 232 crore for the current year as against Rs.194 crore in the previous year.

The Companys Graphite and Carbon Segment (Graphite Electrodes) continue to be the main source of income and profit for the Company, accounting for about 82% of the total revenues. Though domestic demand recovered from Q2 of the current fiscal, overseas demand continued to be depressed. While sales by volume was lower, both domestic and export price realization were higher, which led to higher profitability.

The Company had raised USD 40 Million by way of Foreign Currency Convertible Bonds in October 2005, of which USD 30.2 Million is outstanding and if not converted will be redeemed in October-2010. FCCB of USD 0.675 mn were converted into 536,973 equity shares at a premium of Rs.53.31 per share, of the Company during the year. Out of FCCB funds, Rs. 13.38 crore was utilized to fund various capital expenditure requirements out of proceeds of Bondsduring the year.

The German operations have been affected severely by the subdued demand in EU during the year.

DIVIDEND

The Directors are pleased to recommend the payment of Dividend @ Rs. 3.50 per equity share on equity shares of Rs. 2/- each.

Additional Disclosures

In line with the requirements of the Listing Agreements and die Accounting Standards of die Institute of Chartered Accountants of India, your Company has made additional disclosures in respect of consolidated financial statements, related party transactions and segmental reporting.

Research & Development

Research & Development initiatives were carried out in the areas of raw materials, productivity, process development, process improvement, reduction in carbon emission, etc. Many of the cost savings achieved were significant and in compliance with the "pollution control and clean environment norms". These R&D efforts are continual and by bench marking, the operational efficiencies of manufacturing facilities at different locations were compared and refining steps were taken for process improvement and achieving operational synergies. The focus is on further development and improvement of standards.

Besides, the R&D initiatives in the areas of new product development, speciality products and Carbon-Carbon Composite Brake Discs for defence applications, continue.

Public Deposits

The Company is not accepting public deposits. There is no unclaimed deposit during die year.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian Subsidiary; Graphite International BV in The Netherlands and Carbon International Holdings NV in Netherlands Antilles are the wholly owned overseas subsidiaries of the Company.

The overseas subsidiaries recorded a turnover of Euro 39.73 mn as compared to Euro 72.82 mn in the previous period. The profit before tax of these overseas subsidiaries was Euro 1.07 mn and profit after tax was Euro 0.86 mn.

The Company earned by way of Royalty Rs. 3.13 crore during the year, as against Rs. 5.70 crore in the previous year, from overseas subsidiaries.

The Company has obtained exemption from the provisions of Section 212(1) of the Companies Act, 1956 with regard to the attachment of the accounts, reports, statement in terms of Section 212(l)(e) etc. of its subsidiaries as part of its Accounts. All these subsidiaries are 100% wholly owned by the Company. The Annual Accounts of subsidiary companies and the related detailed information will be made available to the holding and subsidiary company investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor in the Registered Office of the Company and that of the subsidiaries. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The Consolidated financial statement of the Company along with those of its subsidiaries prepared as per AS-21 forms part of the Annual Report.

Information pursuant to Section 217 of the Companies Act, 1956

The prescribed Form A relating to conservation of energy in the Companys Powmex Steels Division at Titilagarh in Orissa is annexed.

Information in accordance with clause (e) of sub-section (1) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31 March, 2010 is given in Annexure A.

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors

Report for the year ended 31 March, 2010 are given in Annexure B.

DIRECTORS

Life Insurance Corporation of India vide letter dated 30- October-2009 withdrew its nominee Mr. B B Das from the Board of Directors of the Company with immediate effect. The Directors placed on record their sincere appreciation for the valuable services rendered by Mr Das during his tenure as Director of the Company.

Mr. D. J. Balaji Rao, Mr. P. K. Khaitan and Mr. S. Goenka, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Recognition/Award

This year too, the Company received Top Exporter awards: (1) from EEPC for export performance from Eastern Region during 2007-08 and (2) from CAPEXIL for its export performance during 2008-09. The Company also received Dun & Bradstreet Rolta Corporate Award — 2009 for Top Indian Company under Graphite Electrodes segment. The Company continues to enjoy the status of a Star Trading House for a period of five years effective 1 April, 2009 till 31 March, 2014.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state —

1. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. that they have selected such accounting policies and applied them consistendy 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-2010 and of the profit of the Company for the year ended 31-March-2010.

3. that they have taken proper and sufficient care 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 fraud and other irregularities; and

4. that they have prepared the annual accounts on a going concern basis.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report.

Auditors

Price Waterhouse, Chartered Accountants, Auditors of the Company retire and are eligible for re-appointment.

Acknowledgement

Your directors place on record their appreciation of the

assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

On behalf of the Board Kolkata K. K. Bangur Date : 13 May, 2010 Chairman

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