KIOCL Limited — AGM Information 2023

Sep 22, 2023

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No. S/BC/1 (18-5)/2023/291 September 22, 2023

National Stock Exchange of India Limited Scrip Code: KIOCL Through: NEAPS BSE Limited Scrip Code: 540680, Scrip Name: KIOCL Through: BSE Listing Centre Metropolitan Stock Exchange of India Limited Scrip Code: KIOCL Through: mylisting

Dear Sir/Madam,

Sub: Chairman’s Message to Shareholders given at the 47[th] Annual General Meeting

We enclose herewith a copy of Chairman’s Message given to Shareholders at the 47[th] Annual General Meeting of the Company held today i.e., on 22[nd] September 2023 at 12:00 Noon.

This is for information and record please.

Thanking You,

Yours faithfully, For KIOCL Limited,

Digitally signed by Pushpkant Mishra Pushpkant Mishra Date: 2023.09.22 16:41:16 +05'30' (P.K. Mishra) Company Secretary & Compliance Officer

Encl: As Above

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CHAIRMAN'S AGM SPEECH

Poised for Growth; Paving Our Way Forward

At the 47�� Annual General Meeting Held on Friday, September 22ⁿ�, 2023

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steel prices had headed south

Market Scenario

India, continued to be the world's second largest producer of crude steel with the production of about 124.7 million tons crude steel in 2022, while �inished steel production stood at 117.80 million tons. In Calendar year 2023, crude steel production is expected to touch nearly 134 million tons and �inished production to reach around 127-128 million tons. World's crude steel production decreased by about 4.20% to 1,878.5 million tons in 2022 from 1960.4 million tons in 2021. As per World Steel Association report, in 2023, steel demand will see a marginal growth to reach about 1, 881.4 million tons.

Esteemed Shareholders, my colleagues on the Board, distinguished ladies and gentlemen,

Seaborne Iron ore prices were highly volatile during 2023 and ended the year at their lowest in last 3 or 4 years. COVID-19 & property sector slowdown continued to weigh down steel demand in China. Prices in the western countries remained subdued because of weak demand, high in�lation, and fear of recession. The fallout from Ukraine con�lict has impacted the markets, by drying up ore supplies and growing energy crunch hampering Europe's steel output.

It is a privilege to speak to you and present the Annual Report for Financial Year 2022-23.

Let me begin by addressing the operating environment during the year gone by. Nonetheless, it was a challenging year for the steel industry. Globally, the industry made swift progress on the back of strong post-Covid recovery and growing infrastructure investments around the world.

However, the con�lict in Ukraine aggravated existing in�lationary pressures. Gas and coal prices surged, leading to a sharp increase in steel prices.

Levy of export duty on Export of pellets was a major dampener for standalone export-oriented pellet producer like KIOCL. The steep hike in export duty coupled with high cost of production have rendered KIOCL pellet exports unviable. Because of higher production cost, even iron ore pellets were not viable in domestic market. However, KIOCL started focusing on selling iron ore pellets in domestic market both through road and sea mode of dispatches for maximizing sales during the �inancial year 2022-23.

The economic crisis induced by the war resulted in lower demand for steel and it redirected trade �lows. Moreover, during the �iscal, customs duty of 45% was levied on the export of Iron Ore Pellets.

Despite these challenges, our production during the year touched 1.51 Million Tonnes (Mt) and we dispatched 1.46 Million Tonnes of iron ore pellets, in comparison to production and dispatch of 2.03 Mt and 2.07 Mt respectively in FY2022. Besides, we recorded capacity utilisation of 43% during the �iscal year.

Pellet Exports from India stood at about 6.26 million tons during 2022-23 as against 11.14 million tons in the previous year, down by about 43.77 % on Year – on -Year. Pellet Exports from KIOCL stood at about 1.273 million tons during 2022-23 as against 2.032 million tons in the previous year, down by about 37.36 % on Year – on -Year. However, KIOCL's market share in export of pellets from India has increased from 18.20% in FY 2021-22 to 20.30% in FY: 2022-23.

As far as our �inancial performance is concerned, our Revenue from Operations stood at ₹1,543.42 crores. Our income from Sale of Services (O&M Operations and Mineral Exploration Services) during the year was ₹ 20.47 crores, against ₹ 24.91 crores in the previous year. However, revenue from export declined by 46% to ₹ 1,361.43 crores in comparison to ₹ 2,928.97 crores in the previous �inancial year.

Dividend

The Board of Directors had not recommended payment of dividend for the year 2022-23 due to absence of distributable pro�its. The Board has not recommended dividend based on the parameters laid down in the Dividend Distribution Policy.

Mainly due to imposition of duty @ 45% on export of Iron Ore Pellets vide Customs Noti�ication dated 21-05-2022, w.e.f. 22-05-2022, your Company was not in a position to export Iron Ore Pellets post duty imposition regime and coupled with high produce prices for domestic market, your Company incurred a Loss Before Tax of ₹ 122.76 crores against a Pro�it Before Tax of ₹ 411.03 crores in the previous year. However, the Government of India �inally removed the export duty on November 19, 2022, but by then global

CAPEX

Your Company had Incurred a CAPEX of ₹ 422.83 crores, highest post closure of captive mine during the Financial Year 2022-23, which was 110% of the Budget Estimate (BE) of ₹ 384.63 crores and against

previous years CAPEX of ₹ 290.45 crores. 95 % of CAPEX expenditure was met through internal resources of the Company and balance was met from term loan.

Way forward - Creating KIOCL of tomorrow

For a sustainable future, your Company is continuously working on various long term / short term expansion / diversi�ications projects, which are at different stages of implementations / approvals from different regulatory authorities at the level of State Government and Central Government.

Development of Devdari Iron Ore Mine, Sandur Taluk, Ballari Dist., Karnataka

Ministry of Environment, Forest and Climate Chage, Govt of India vide letter dated December 16, 2022 accorded Final Stage II Forest Clearance for diversion of 388 ha for mining and 13.5761 ha for ancillary activities for Devadari Iron Ore Mine. Govt. of Karnataka executed the Mining Lease deed on January 2, 2023 with KIOCL Ltd. for grant of a mining lease for Iron Ore and Manganese Ore, over an extent of 388 ha

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for a period of 50 years in Devadari Range, Sandur Taluk, Ballari District, Karnataka State. The Mining Lease deed was registered at the Of�ice of SubRegistrar, Sandur taluk on 18-01-2023 and your Company incurred Rs. 329.17 Crores towards Stamp Duty & other charges for registering the ML deed.

Government of Karnataka issued Govt order for �inal diversion of Forest land 401.57610 ha on 11-04-2023. On handing over of forest land by DCF Ballary to KIOCL, Company will start the activities for commencement & development work at Devadari Iron Ore Mine to produce iron ore.

At KIOCL, we leverage over decades of experience to strengthen our foothold in the industry. With our strategic location in Karnataka, we seek to expand our operations by developing and commencing mining operation at the Devadari Iron Ore Mine.

Our efforts in this direction have been successful as the Government of Karnataka executed the Mining Lease deed on January 2, 2023, granting us the mining lease for Devadari Iron Ore Mine. This development allows us to re-enter into mining operations and optimise production capacity at our Pellet Plant.

KIOCL Limited CIN No: L13100KA1976GOI002974

We believe, as a result of this, we are well-positioned to Along with a focus on business growth, we continue to take advantage of growing global demand for iron ore. ful�il our obligation towards people and communities. Installation of Vertical Pressure Filters It encourages us to undertake CSR projects in Pellet Plant Unit encompassing the domain of healthcare and nutrition. We also directed efforts to promote education, provide Four (04) vertical Pressure �ilters have been installed access to clean drinking water, ensure environmental at Pellet Plant to have �lexibility to utilize the ore sustainability and promote skill development received from any part of the country. Auxiliary programmes for the marginalised sections of society. equipments are also being supplied by various During the �iscal, we have spent ₹ 589.96 lakh towards vendors. Vertical Pressure Filter installation would our CSR activities. This includes funding for ongoing improve the capacity utilization with �lexibility in projects and set-off availed during the year.

Four (04) vertical Pressure �ilters have been installed access to clean drinking water, ensure environmental at Pellet Plant to have �lexibility to utilize the ore sustainability and promote skill development received from any part of the country. Auxiliary programmes for the marginalised sections of society. equipments are also being supplied by various During the �iscal, we have spent ₹ 589.96 lakh towards vendors. Vertical Pressure Filter installation would our CSR activities. This includes funding for ongoing improve the capacity utilization with �lexibility in projects and set-off availed during the year. using iron ores of different types. The commissioning Future Outlook of Vertical Pressure �ilters is expected to be completed by Dec, 2023 As we move forward, we are strategically rede�ining our approach to uncover new opportunities. We are Installation of dual burner system continuously expanding and diversifying our Your Board in its 277th Meeting held on 04-02-2022 as operations. Along with foraying into mining a part of green initiative, has taken up the project of operations, we are establishing a DISP Plant with a installing dual burner system in the indurating capacity of 2.0 LTPA, and a Coke Oven Plant with a machine of Pellet Plant to utilise Natural Gas as an capacity of 1.80 LTPA as backward integration alternative to the Furnace Oil being used currently. projects. Additionally, we plan to make necessary The project cost is ₹ 36.80 Crores. modi�ications to the Blast Furnace Unit to improve its economic viability. We remain determined to explore Setting up of Coke oven plant and DISP Plant with Modernization of BFU new markets and segments to retain our competitive edge and reduce costs through process optimisation. Captive coke oven and PCI System will reduce the Alongside, our continuous investment in people input raw material cost of Blast furnace operation. empower us with the expertise required to sustain Construction of Non-Recovery Coke Oven Plant of growth and ef�iciency across our operations.

Setting up of Coke oven plant and DISP Plant with Modernization of BFU

Captive coke oven and PCI System will reduce the Alongside, our continuous investment in people input raw material cost of Blast furnace operation. empower us with the expertise required to sustain Construction of Non-Recovery Coke Oven Plant of growth and ef�iciency across our operations. capacity 1.8 lakh ton per annum at Mangalore is under Corporate Governance progress. The technology of Coke Oven Plant is provided by M/s Central Institute of Mining & Fuel The philosophy of your Company in relation to Research, under Atmanirbhar Bharath Initiative. Total corporate governance is to ensure transparency, cost of project is Rs. 185 Crores excluding GST. Civil disclosures and reporting that con�irms fully with the works for Battery- 1 and Battery-2 are completed and laws and regulations of the country in order to structural erection work is under progress. promote ethical conduct & practices throughout the organisation for enhancing stakeholders' value. Your Implementation of ERP Company is committed to complying with the SAP S/4 Hana ERP on cloud platform has gone live on provisions of SEBI (Listing Obligations and Disclosure April 1, 2023 with core modules. The project is named Requirements) Regulations, 2015 relating to as “Ashwa Megha”. The ERP implementation is a major Corporate Governance and the guidelines on milestone towards digital transformation of the Corporate Governance for CPSE issued by Department Company. of Public Enterprises, GoI from time to time.

Acknowledgement

Mineral Exploration Works

KIOCL is also engaged in mineral exploration and are As I conclude, I would like to express my sincere involved in the exploration of minerals such as iron, thanks to our dedicated team who helped us navigate a manganese, limestone, nickel, chromium, copper, gold, tough year. I am also grateful to our shareholders for lead, zinc, kyanite & phosphorite. During the year a their continued support. Finally, I would like to thank total of nineteen (19) number of Mineral Exploration the Ministry of Steel, Central and State Governments, Projects for NMET, Govt. of Karnataka and others with Regulatory authorities, our customers and all other cumulative approved project value of ₹ 134.95 crores stakeholders for being partners in our journey. (including GST) were handled. Additionally, Mineral Thank You, Exploration works of Devadari Iron Ore Block (captive mine block) with approved project value of ₹ 24.86 Crores (including GST) was also carried out. Sd/-

Sd/T. Saminathan

Corporate Social Responsibility - Growth with Goodness

Date:22.09.2023 Chairman-cum-Managing Director Place: Bangalore

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