BOARD’S REPORT

DEAR MEMBERS,

The Directors take pleasure in presenting the Thirty Ninth Annual Report together with the Audited Financial Statements of your Company for the financial year ended 31^st March, 2018.

FINANCIAL HIGHLIGHTS:

The summarized financial performance of your Company for the financial year ended 31^st March, 2018 is as under:

(Rs, in Lakhs)

(Note: The Company had prepared its financial statements in accordance with Indian Accounting Standards (‘Ind AS') as prescribed under Section 133 of Companies Act, 2013 read with relevant rules thereunder and other accounting principles generally accepted in India. Thus, figures of previous FY 2016-17 are adjusted accordingly.)

OPERATIONS:

Iron & Steel is indispensable for nation building and has a direct linkage with nation’s health and growth. FY 2017-18 continued to be a very challenging year for global economy and in particular for iron and steel industry in India. In spite of challenges, the Company is able to achieve the desired results. The key highlights of Company’s performance during the year under review are:

- With the improvement in production as well as prices of finished goods as compared to last year, revenue from operations increased by 19.59% to Rs, 48,715.94 Lakhs only.

- With the improvement in margins as compared to last year, EBIDTA increased by 14.36% to Rs, 2,581.44 Lakhs only.

- Profit before Tax significantly increased by 101.41% to Rs, 697.69 Lakhs of current year as compared to Rs, 346.40 Lakhs of last year.

- Profit after Tax significantly increased by 111.93% to Rs, 486.09 Lakhs of Current year as compared to Rs, 229.36 Lakhs of last year. STATE OF THE COMPANY’S AFFAIRS:

The FY 2017-18 has been overall a successful year for the Company. The Company had faced many challenges in its operating sector mainly on account of average demand of finished products due to overall improvement in production and significant imports from countries like China, Korea etc.. In spite of that, your Company is able to manage the situation at its end and achieve the desired result by taking appropriate decision by the management of the Company keeping in mind the prevailing market trends. The overall state of affairs of the Company keeping in mind the present market scenario is satisfactory.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION:

There is no such material change and commitment affecting the financial position of your Company which have occurred between the end of the financial year of your company to which the financial statements relate and the date of the report.

CHANGE(S) IN THE NATURE OF BUSINESS, IF ANY:

There has been no change in the nature of business implemented by the Company during the Financial Year 2017-18.

INDUSTRY SCENARIO AND OUTLOOK:

The Government of India is aiming to scale up steel production in the country to 300 million tonnes (MT) by 2030. India produced 9.07 million tonnes (Mt) of crude steel and bags second position in crude steel production, output up by 3.6% from March, 2017. The world’s total crude steel production in March stood at 148.3 million tonnes (Mt), up 4.0 percent from corresponding period last year as India grabbed the second position pushing Japan a notch lower.

(Source: World steel Association).

India is expected to become the world’s largest producer of crude steel in the next 10 years, moving up from the second position. The sector has benefited from the hike in prices and production, especially since the beginning of the millennium. It is general assumption that the year 2018 would give more benefits to the steel industry in terms of demand, costs of production, market realization and exports than what was experienced in the previous year.

Your company is one of the major key players among the various players in the rolling mill industry in the Durgapur region of West Bengal. It operates with a vision to become industry leader in zone which inspires its stakeholders and a well-defined business plan with planned strategy give hope to achieve its vision.

DIVIDEND AND RESERVES:

In view of meeting capital requirements of the Company through ploughing back of profit in the business, the Directors of your Company are intend to retain the surplus profits in the business itself. Therefore, no dividend is being recommended.

During the period under review, no amount was transferred to General Reserve.

SHARE CAPITAL:

During the financial year under review, there is no change in the capital structure of the Company and accordingly the issued, subscribed and paid up share capital of your Company stood at ' 46,76,37,500/- (Rupees Forty Six Crores Seventy Six Lakhs Thirty Seven Thousand Five Hundred Only) comprising of ' 4,67,63,750 (Four Crores Sixty Seven Lakhs Sixty Three Thousand and Seven Hundred and Fifty) number of Equity shares of '10/- each fully paid up as on 31^st March, 2018.The Company had not issued any equity shares with differential rights as to dividend, voting or otherwise.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES INDUSTRIAL RELATIONS:

During the financial year under review, industrial relations remained cordial. Employees’ competencies and skills were enhanced by exposing them to several internal and external training programmes. Various measures were taken to improve motivation level of employees. Additional efforts are continued to be implemented with a view to obtain commitment and loyalty towards the organization.

CREDIT RATING:

The Company’s credit rating ascribed by rating agency is given below:

(Note: The Credit rating for Long Term Loans was withdrawn as the same was fully repaid to Term lenders as per repayment schedule, for Fund Based Limits upgraded to IND B-/stable and for Non Fund Based Limits upgraded to IND A4 by M/s. India Ratings and Research Pvt. Ltd. on April 2, 2018.)

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

Information as required under the provisions of sub-section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure-A, which is annexed hereto and forms part of Board’s Report.

DETAILS OF BOARD MEETINGS:

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. However, in case of a special and urgent business need, the Board’s approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.

During the year, four Board meetings were held, details of which are given below. The maximum time gap between any two consecutive meetings did not exceed 120 days.

COMMITTEES OF BOARD:

There are currently five Committees of the Board as per Companies Act, 2013 and the same are as follows:

-/ Audit Committee

-/ Nomination and Remuneration Committee -/ Corporate Social Responsibility Committee -/ Stakeholders Relationship Committee -/ Management and Finance Committee

The details of composition of the Committees of Board of Directors are as under:-

a. Audit Committee

During the year under review, the Board of Director of your Company re-constituted the Audit Committee in accordance with the provisions of Section 177 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Audit Committee had met four times i.e. on 22^nd May, 2017, 11^th August, 2017, 28^th November, 2017and 12^th February, 2018.

The details of composition of the Audit Committee are as under:-

*Appointed w.e.f 12.02.2018

**Resigned w.e.f. 19.12.2017

All the recommendations made by the Committee are duly accepted and approved by the Board of Directors.

Vigil Mechanism / Whistle Blower Policy

In compliance with provisions of Section 177(9) and (10) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Vigil Mechanism / Whistle Blower Policy to deal with unethical behavior, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy, if any. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co-employees and the Company. During the year under review, no personnel has been denied access to the Audit Committee. Further, the Vigil Mechanism/ Whistle Blower Policy have been uploaded on the website of the Company at www.adhunikindustries.com and may be accessed at the following web-link: http://www.adhunikindustries.com/download/21526556637.pdf

b. Nomination & Remuneration Committee

During the year under review, the Board of Director of your Company re-constituted the Nomination and Remuneration Committee in accordance with the provision of Section 178 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Committee had met three times i.e. on 11^th August, 2017, 12^th February, 2018 and 23^rd March, 2018. The details of composition of the Nomination & Remuneration Committee are as under:-

* Appointed w.e.f. 12.02.2018 ** Resigned w.e.f 19.12.2017

c. Corporate Social Responsibility Committee

The CSR philosophy of your Company is embedded in its commitment to all stakeholders, consumers, employees, environment and society while your Company’s approach extends both to External community as well as to your Company’s large and diverse internal employee base & their families. The Committee had approved the CSR policy and the Budget. The CSR policy is uploaded on Company’s website. Further, the Report on CSR Activities/ Initiatives is enclosed as Annexure - B.

During the financial year 2017-18, the Committee had met once i.e. on 22^nd May, 2017.The composition of the CSR Committee formed in accordance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is as under:

d. Stakeholders Relationship Committee:

During the year under review, the Board of Directors of your Company had re-constituted the Stakeholders Relationship Committee in compliance with the provisions of Section 178 of the Companies Act, 2013 read with the Rules issued thereunder and Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Committee met once during the financial year 2017-18 on 23^rd March, 2018. The details of composition of the Stakeholders Relationship Committee are as under:-

*Appointed w.e.f. 12.02.2018 ** Resigned w.e.f. 19.12.2017

e. Management and Finance Committee:

The Management and Finance Committee had met three times during the year on 5^th April, 2017, 18^th July, 2017 and October 24, 2017. The details of composition of the Management and Finance Committee are as under:-

DIRECTORS’ RESPONSIBILITY STATEMENT:

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, and based on the information provided by the Management, the Board of Directors report that:

(i) In the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent except as otherwise stated in the Notes to Financial Statements so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date;

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

(iv) The Directors have prepared the annual accounts for the financial year ended March 31,2018 on a ‘going concern’ basis;

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

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

BOARD INDEPENDENCE:

Our definition of ‘Independence’ of Directors is derived from Regulation 16(1 )(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms above said provisions :-

a) Shri Asit Baran Dasgupta (DIN: 02476594)

b) Shri Chandra Shekhar Jalan (DIN: 01023586)

c) Smt. Sonam Agarwal* (DIN: 08054202)

d) Smt. Archana Gupta Sha** (DIN: 07089290)

*Appointed w.e.f. 12.02.2018 ** Resigned w.e.f. 19.12.2017

DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(7) of the Companies Act, 2013 as well as Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

DIRECTORS:

Shri Asit Baran Dasgupta (DIN: 02476594), Shri Chandra Shekhar Jalan (DIN: 01023586) and Smt. Archana Gupta Sha* (DIN: 07089290) has furnished their individual declaration on 1st April, 2017 and Smt. Sonam Agarwal (DIN: 08054202) who was appointed as an Non-Executive additional Independent Woman Director on 12^th February, 2018 has furnished her declaration on 12^th February, 2018 pursuant to Section 149(7) of the Companies Act, 2013 confirming their status as an Independent Director pursuant to provisions of Section 149(6) of the Companies Act, 2013.

The other Board of Directors of your company comprises of Shri Mohan Lal Agarwal (DIN: 01047906), Director (Non-Executive), Shri Mahesh Kumar Agarwal (DIN: 00507690), Director & Chairman (Non- Executive) and Shri Jugal Kishore Agarwal (DIN: 00227460) Managing Director (Executive).

As per provisions of Section 152 of the Companies Act, 2013, Mr. Jugal Kishore Agarwal has been re-appointed for a further period of 3 years commencing from 30^th November, 2017 to 29^th November, 2020 based on the recommendation of Nomination and Remuneration Committee and approval of shareholders sought in the 38^thAnnual General Meeting held on 21^st September, 2017.

Further, in accordance with the provisions of Section 152 of the Act, the Rules prescribed thereunder and your Company’s Articles of Association, Shri Mahesh Kumar Agarwal (DIN: 00507690) retires by rotation at the ensuing Annual General Meeting being eligible, offers himself for re-appointment. The Board of Directors recommends the re-appointment of Shri Mahesh Kumar Agarwal (DIN: 00507690) at the ensuing Thirty Ninth Annual General Meeting.

Again, consent of the shareholders has been sought in the ensuing Annual General Meeting for continuation of holding office by Shri Asit Baran Dasgupta as Non-Executive Independent Director after attaining the age of seventy five years.

(*Smt. Archana Gupta Sha, Independent Director, resigned from the Board of Directors of the Company w.e.f 19^thDecember, 2017 due to her some other business engagements.)

KEY MANAGERIAL PERSONNEL(KMPs):

During the year under review, no changes occurred in the position of Whole-time Key Managerial Personnel (KMPs) of the Company. Shri Jugal Kishore Agarwal, (DIN: 00227460) Managing Director, Shri Bikash Roy Chowdhury, Chief Financial Officer and Shri Bharat Agarwal, Company Secretary are the Whole-time Key Managerial Personnel (KMPs) of the Company.

(Note: Shri. Jugal Kishore Agarwal has been re-appointed as the Managing Director of the Company for a period of three years i.e. from 30^th November, 2017 to 29^th November, 2020.)

COMPANY’S POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION:

Pursuant to provisions of Section 178(3) of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company based on the recommendation of the Nomination and Remuneration Committee, has formulated a Remuneration Policy. The Company’s Remuneration Policy is available on the web link http://www.adhunikindustries.com/download/21526556394.pdf

The Remuneration Policy of the Company, inter alia, includes the aims and objectives, principles of remuneration, guidelines for remuneration to Executive Directors and Non-Executive Directors, fixed and variable components in the remuneration package, criteria for identification of the Board Members and appointment of senior management.

The criteria for identification of the Board Members including that for determining qualification, positive attributes, independence etc. are summarily given hereunder:

- The Board member shall possess appropriate skills, qualification, characteristics and experience. The objective is to have a Board with diverse background and experience in business, government, academics, technology, human resources, social responsibilities, finance, law etc. and in such other areas as may be considered relevant or desirable to conduct the Company’s business in appropriate manner.

- Independent Director shall be person of integrity and expertise and experience and/or someone who the Committee/Board believes could contribute to the growth/philosophy/strategy of the Company.

- In evaluating the suitability of individual Board Members, the Committee takes into account many factors, including general understanding of the Company’s business dynamics, global business, social perspective, educational and professional background and personal achievement.

- Director should possess high level of personal and professional ethics, integrity and values. He / She should be able to balance the legitimate interest and concern of all the Company’s stakeholder in arriving at decisions, rather than advancing the interest of a particular constituency.

- Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities effectively. He must have the aptitude to critically evaluate management’s working as a part of a team in an environment of collegiality and trust.

- The Committee evaluates each individual with the objective of having a group that best enables the success of the Company’s business and achieves its objectives.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS:

During the year, your company has duly complied with the provision of section 186 of the Companies Act, 2013. The particulars of loans given, investments made, guarantees given under the provisions of Section 186 read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 are provided in the notes to the Financial Statements.

DETAILS RELATING TO MATERIAL VARIATIONS:

Disclosures regarding material variations as specified in Regulation 32(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not required to be furnished as no such event took place during the year.

RISK MANAGEMENT:

Risk management is the process of identification, assessment and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate/control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. The Company has a well-defined process to ensure risks are identified and steps to treat them are put in place at the right level in the management.

In terms of the requirement of the Companies Act, 2013 and Regulation 17(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Company has developed and implemented the Risk Management Policy. The Company has taken adequate measures to mitigate various risk encountered. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis Report which forms a part of this report.

HUMAN RESOURCE:

Company’s industrial relations continued to be harmonious during the period under review. The human resource philosophy and strategy of your Company have been designed to attract and retain the best talent, creating a workplace environment that keeps employees engaged, motivated and encourages innovation. Your Company has qualified and talented human resources at all levels of operation. It has put concerted efforts for continuous learning and training to ensure that strong and credible leadership is developed.

SAFETY, HEATH AND ENVIRONMENT:

The manufacture of steel involves steps that are potentially hazardous if not executed with due care. The Company maintains the highest safety standards within its operating units and is an ISO certified (ISO 9001:2008, 14001:2004 & 18001:2007) organization. Further, there is a team of professionals who conducts regular training programs to implement the concept of maintain safe operations among the employees and to educate the team on safety norms and procedures to be followed in an unfortunate situation. Our mission is to protect and enhance the well-being of our employees, visitors and partners. Safe working is non-negotiable.

CORPORATE SOCIAL RESPONSIBILITY:

In lines with the provisions of Section 135 of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) Policy for the development and benefit of the weaker section of the society and the same is approved by the CSR Committee and the Board of Directors of the Company. The CSR Policy of the Company provides a road map for its CSR activities. The purpose of CSR Policy is to devise an appropriate strategy and focus on its CSR initiatives and lay down the broad principles on the basis of which the Company will fulfill its CSR objectives. As per the said policy, the Company follows the strategy of discharging its CSR responsibilities related to social service through various trusts/societies in addition to its own initiatives and donations made to other non-government organizations.

The CSR Policy has been uploaded on the Company’s website at www.adhunikindustries.com and may be accessed at the link http:// www.adhunikindustries.com/download/21530079539.pdf. Pursuant to the requirements under Section 135 of the Companies Act, 2013 and Rules made thereunder, a report on CSR activities and initiatives taken during the year in the prescribed format is given in Annexure-B, which is annexed hereto and forms part of the Board’s Report.

The Company has been playing a pro-active role in the socio economic growth and has contributed to all spheres ranging from health, education, hygiene and empowerment of women, environment conservation etc. The Company becomes the part of some of the social programs in India, touching the lives of hundreds of people positively by supporting such programs. As a part of its CSR programs, the Company had organized various programs for distribution of food, clothes and basic necessity items to the weaker section of the society as well as to provide them basic education and work based training for generation of livelihood on regular basis for the weaker section of society. Company CSR activities are mainly deployed through a NGO M/s. Nav Nirman Sanstha. Company has also given donations to M/s. Friends of Tribal Society, M/s. Purvanchal Kalyan Ashram to promote education among children belonging to weaker section of the society and also to M/s. Shri Hanuman Parishad for eradication of hunger in rural and backward areas.

PARTICULARS OF EMPLOYEES:

Disclosure pertaining to remuneration and other details as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the prescribed particulars of remuneration of employees pursuant to Section 134(3)(q) and Section 197(12) read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given in Annexure - C to the Board’s Report and forms part of this report.

RISK AND CONCERN:

Risk management is the continuing process to identify, analysis, evaluate and treat loss exposures to monitor risk control and financial resources to mitigate the adverse effects of loss. In today’s complex business environment, effective risk management is critical to success of any business. The Company has a risk management team, which periodically evaluating the risks associated with the business and taking necessary initiatives to minimize its impact. This also helps the Company in taking business decisions with balanced risks and rewards comparison. The risk management framework ensures compliance with the requirements of relevant Regulations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

FAMILIARIZATIONS PROGRAMME FOR IDs’:

In terms of Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has in place a system of conducting the Familiarization Programme for Independent Director to familiarize them with their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc., through various initiatives. The said policy is uploaded on the Company’s website at www.adhunikindustries.comand may be accessed at the link http://www. adhunikindustries.com/download/21526556087.pdf

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code prohibits the purchase or sale of Company’s shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company during the period, the Trading Window is closed. The Board is responsible for implementation of the Code.

All Board of Directors and the designated employees have confirmed compliance with the Code.

The policy on the Code of Conduct is uploaded on the Company’s website at www.adhunikindustries.com and may be accessed at the link http://adhunikindustries.com/download/21526302496.pdf

BOARD EVALUATION:

The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to sub-section 3(p) of Section 134 of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (“SEBI”) under Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings etc. The criteria for evaluation of Directors inter alia includes factors such as engagement, strategic planning and vision, team spirit and consensus building, effective leadership, domain knowledge, management qualities, team work abilities, achievements, understanding and awareness, integrity, ethics, value and openness.

The Board and the Nomination and Remuneration Committee (“NRC”) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors held on 12^th February, 2018, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and nonexecutive directors. The same was also discussed in the board meeting at which the performance of the Board, its committees and individual directors was discussed. The performance of Independent Directors has been evaluated based on the guidelines as provided under Schedule IV of the Companies Act, 2013. The evaluation of the Independent Directors was carried out by the entire Board except by the Director being evaluated. The directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.

SUBSIDIARY, JOINT VENTURES AND ASSOCIATES COMPANIES:

The Company does not have any subsidiaries, joint ventures and associate companies. So, the required disclosure is not applicable to the Company.

DEPOSITS:

During the year under review, the Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNALS:

SEBI vide its letter bearing no. SEBI/HO/ISD/OW/P/2017/18183 dated August 7, 2017 duly addressed to the three Stock Exchanges has forwarded a list of 331 suspected shell companies as identified by Ministry of Corporate Affairs and has directed the Stock Exchanges to identify the companies listed on their trading platform and place trading in all such listed securities in Stage VI of the Graded Surveillance Measure (GSM) with immediate effect. Your Company was also aggrieved by the communication of Securities and Exchange Board of India (SEBI) addressed to the three stock exchanges on August 7, 2017 and the consequential order passed by National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on August 7, 2017 itself by placing securities of the Company in GSM Stage VI with effect from August 8, 2017. The Company had made a representation to SEBI on August 9, 2017 against the impugned communication of SEBI dated August 7, 2017 and also provided the required information asked by National Stock Exchange of India Limited (NSE) vide its communication dated August 9, 2017 and BSE Limited (BSE) vide its communication dated August 10, 2017, vide its communication dated August 14, 2017. Since no action was taken on the said representation dated August 9, 2017 and after providing the required information to NSE and BSE, our Company had filed an appeal to Securities Appellate Tribunal (SAT).

The SAT after hearing both the parties directed SEBI and also the Stock Exchanges vide its order dated September 21, 2017 to reverse their decisions dated August 7, 2017 which were all passed without hearing the appellant.

INTERNAL CONTROL AND AUDIT:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director.

The CEO and CFO certification provided in the Annual Report discusses the adequacy of the Company’s Internal Control System and Audit.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

INTERNAL FINANCIAL CONTROL SYSTEM:

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

AUDITORS AND AUDITOR’S REPORT:

STATUTORY AUDITORS

At the 37th Annual General Meeting (AGM) of the Company held on the 14th day of September, 2016, M/s Sudhir Kumar Jain & Associates, Chartered Accountants, having (Registration No. 318016E) allotted by The Institute of Chartered Accountants of India (ICAI), were appointed as Statutory Auditors of the Company to hold office for a term of 5 (five) years from the conclusion of 37^th AGM till the conclusion of the 42^nd AGM of the Company subject to ratification of such appointment by the Members at every AGM .

The Company has received a letter from the Statutory Auditors pursuant to the provisions of Section 139 of the Companies Act, 2013 confirming that their appointment on such ratification will be within the prescribed limits under the Companies Act, 2013 and that they are not disqualified for the said appointment.

The Companies Amendment Act, 2017 has omitted the requirement of ratification of the appointment of statutory auditors at every Annual General Meeting with effect from May 7, 2018. Hence the ratification of appointment of Statutory Auditors at the ensuing 39^th Annual General Meeting is not required.

The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation or adverse remark. Further, the Statutory Auditors have not reported any incident of fraud during the year under review.

COST AUDITORS

In terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, your Company has appointed M/s. Dipak Lal & Associates, Cost Accountants (a Cost Audit Firm), as Cost Auditor of the Company w.e.f. 1^st April, 2018 to 31^st March, 2019 to carry out audit of cost records of the Company, who was also the Cost Auditor for the Financial year 2017-18. The remuneration proposed to be paid to them in Financial Year 2018-19 requires ratification by the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting. The report issued by the cost auditor for the Financial Year 2017-18 is self-explanatory and do not call for any further comments.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, the Board has appointed M/s. M R & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure- D to this Report.

Board’s comment on Secretarial Audit Report’s Observations:

(i) SEBI vide its letter bearing no. SEBI/HO/ISD/OW/P/2017/18183 dated August 7, 2017 duly addressed to the three Stock Exchanges has forwarded a list of 331 suspected shell companies as identified by Ministry of Corporate Affairs and has directed the Stock Exchanges to identify the companies listed on their trading platform and place trading in all such listed securities in Stage VI of the Graded Surveillance Measure (GSM) with immediate effect. Your Company was also aggrieved by the communication of Securities and Exchange Board of India (SEBI) addressed to the three stock exchanges on August 7, 2017 and the consequential order passed by National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on August 7, 2017 itself by placing securities of the Company in GSM Stage VI with effect from August 8, 2017. The Company had made a representation to SEBI on August 9, 2017 against the impugned communication of SEBI dated August 7, 2017 and also provided the required information asked by National Stock Exchange of India Limited (NSE) vide its communication dated August 9, 2017 and BSE Limited (BSE) vide its communication dated August 10, 2017, vide its communication dated August 14, 2017. Since no action was taken on the said representation dated August 9, 2017 and after providing the required information to NSE and BSE, our Company had filed an appeal to Securities Appellate Tribunal (SAT).

The SAT after hearing both the parties directed SEBI and also the Stock Exchanges vide its order dated September 21, 2017 to reverse their decisions dated August 7, 2017 which were all passed without hearing the appellant.

(ii) The Company had sought approval of shareholders by way of postal ballot on January 12, 2018 for enhancement of limit of Related Party Transactions. However, due to frequent market fluctuations and volatility in the iron and steel market, the Company need to procure larger quantity of raw materials than the expected quantity from the Related Party M/s. Adhunik Alloys & Power Limited in order to keep the purchase of raw materials of the Company cost effective. Thus, the company exceeded the earlier limit approved of ' 40,00,00,000/- (Rupees Forty Crores only). Further, pursuant to Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements)2015, the Company is seeking approval of shareholders for ratification of the same by way of postal ballot. The notice of postal ballot is approved by the Board of Directors in its meeting held on 16^th May 2018.

The Board has also appointed M/s. M R & Associates, as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2018-19.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

According to the provisions of Section 188 read with Section 2(76) of the Companies Act, 2013, all transactions entered with Related Parties during the financial year 2017-18 were on arm’s length basis and were in the ordinary course of business.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to omnibus approval so granted along with a statement giving details of all related party transactions is placed before the Audit Committee.

The Policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website www.adhunikindustries.com and may be accessed at the link http://www.adhunikindustries.com/download/21530079703.pdf

Your Directors draw attention of the members to Note 33 to the financial statement which sets out related party disclosures.

Moreover during the year under review the Company has entered into materially significant related party transactions and the relevant disclosure of information pursuant to Section 134(3) (h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 has been shown in AOC-2, annexed herewith marked as Annexure- E to this report.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred a sum of ' 68,000-/ (Rupees Sixty Eight Thousand only) to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Act, being the dividend amount which was due & payable and remained unclaimed and unpaid for a period of 7 (seven) years, as provided in Section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

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

Your Company has always believed in providing a safe and harassment free workplace for every individual working in the Company. Your Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

In accordance with “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013” and in order

to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work places, your Company has constituted an Internal Complaint Committee and adopted a policy on Prevention of Sexual Harassment at Workplace. The policy aims to provide the effective enforcement of basic human right of gender equality and guarantee against sexual harassment and abuse.

During the year, there was no complaint lodged with the Internal Complaint Committee, formed under “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return for the financial year ended on March 31, 2018 in Form MGT-9 as required under Section 92(3) of the Companies Act, 2013, is marked as Annexure - F which is annexed hereto and forms part of the Board’s Report.

MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT:

Management’s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE:

Your Directors are pleased to report that your Company strives to ensure that best corporate governance practices are identified, adopted and consistently followed. Your Company believes that good governance is the basis for sustainable growth of the business and for enhancement of stakeholder’s value.

Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section titled Report on Corporate Governance has been included in this Annual Report along with the certificate obtained from M/s. MR & Associates, Practicing Company Secretaries Firm certifying compliance with the conditions of corporate governance as stipulated under relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and annexed with the report on Corporate Governance.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company complies with all applicable secretarial standards as issued and notified by Institute of Company Secretaries of India.

FORWARD LOOKING AND CAUTIONARY STATEMENTS:

Certain statement in this Report concerning to our growth prospects, particularly those which relate to Management Discussion & Analysis Report, describing the Company’s objectives, projections, estimates, expectations or predictions may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results could however differ materially from those expressed or implied. The risk and uncertainties relating to these statements include, but are not limited to, important factors that could make a difference to the Company’s operations such as global and domestic demand-supply conditions, finished goods prices, raw materials and fuels cost and availability, transportation costs, changes in Government regulations and tax structure, economic developments within India and other factors such as litigation and industrial relations. The Company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the Company.

APPRECIATION:

Your Directors place on record their sincere appreciation for significant contribution made by employees of the Company at each level, through their dedication, hard work and commitment. The Board places on record its appreciation for the continued co-operation and support extended to the Company by various Banks, Financial Institutions, Stock Exchanges, NSDL and CDSL, Vendors, Customers Consultants, Central and State Government bodies, Dealers, and other Business Associates. The Board deeply acknowledges the trust and confidence placed by the consumers of the Company and, above all, the shareholders.

For and on behalf of the Board

Sd/- Sd/-

Registered office Mahesh Kumar Agarwal Jugal Kishore Agarwal

14 Netaji Subhas Road Chairman Managing Director

Kolkata – 700001 (DIN:00507690) (DIN:00227460)

Date:28.05.2018