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Directors Report of Electrosteel Castings Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the Sixtieth Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March 2015.

FINANCIAL RESULTS (Rs. in Crores)

Particulars Standalone

FY 2014-15 FY 2013-14

Revenue from Operations 2153.78 2186.88

Other Income 30.81 19.70

Total Revenue 2184.59 2206.58

Profit before Tax (PBT) 96.34 135.97

Less : Tax including Deferred Tax 23.67 35.41

Profit after Tax (PAT) 72.67 100.56

Add : Share of Profit/(Loss) in Associates - -

Add/(Less) : Share of Unrealised Profit - -

Net Profit/(Loss) before Minority Interest 72.67 100.56

Minority Interest - -

Net Profit/(Loss) for the year 72.67 100.56

Add:Profit brought forward from previous year 182.10 186.69

Less : Earlier year adjustment - -

Amount available for appropriation 254.77 287.25

Appropriations :

Less : Transfer to Debenture Redemption Reserve 3.50 54.00

Less : Transfer to General Reserve 25.00 25.00

Less : Proposed Dividend including tax thereon 27.92 26.15

Less : Amount Transferred to Legal Reserve - -

Total 56.42 105.15

Surplus carried to Balance Sheet 198.35 182.10

FINANCIAL RESULTS (Rs. in Crores)

Pirticulars Consolidated

FY 2014-15 FY 2013-14

Revenue from Operations 2401.83 2459.16

Other Income 62.18 28.16

Total Revenue 2464.01 2487.82

Profit before Tax (PBT) 143.51 119.57

Less: Tax including Deferred Tax 27.23 38.07

Profit after Tax (PAT) 116.28 81.50

Add: Share of Profit/(Loss)in Associates (232.06) (96.61)

Add/(Less): Share of Unerealised Profit (0.18) (0.05)

Net Profit/(Loss) before Minority Interest(115.96) (15.16)

Minority Interest (0.13) (0.77)

Net Profit/(Loss) for the year (116.09) (15.93)

Add: Profit brought forward from Previous year (59.91) 61.26

Less: Earlier year adjustment 0.68 - Amount available for appropriation (176.68) 45.33

Appropriations:

Less: Transfer to Debenture Redemption Reserve 3.50 54.00

Less: Transfer toGeneral Reserve 25.00 25.00

Less: Proposed Dividend including tax thereon 27.92 26.15

Less: Amount Transferred to Legal Reserve 0.08 0.09

Total 56.50 105.24

Surplus carried to Balance Sheet (233.18) (59.91)

DIVIDEND

The Directors are pleased to recommend a dividend of Re.0.65 per Equity Share of face value of Re.1 each, i.e. 65%, for the Financial Year ended 31 March 2015. This dividend is subject to the approval of the Members at the ensuing Annual General Meeting (AGM). If approved, the total outlay on account of dividend for the Financial Year 2014-15 would amount to Rs.27.92 Crores (including Rs.4.72 Crores towards Dividend Distribution Tax) as compared to Rs.26.15 Crores (including Rs.3.80 Crores towards Dividend Distribution Tax) paid for the Financial Year 2013-14.

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs.3.50 Crores to Debenture Redemption Reserve Account and an amount of Rs.25.00 Crores to the General Reserve. An amount of Rs.198.35 Crores is proposed to be retained in the Statement of Profit and Loss.

OPERATIONS

The Company's Revenue from Operations on standalone basis decreased marginally by around 1.51% from Rs.2,186.88 Crores in 2013-14 to Rs.2,153.78 Crores in 2014-15. Export Sales decreased by around 23.83% from Rs.989.21 Crores in 2013-14 to Rs.753.46 Crores in 2014-15, due to stiff competition faced by the products of the Company in the overseas markets. The Company's profit (PAT) for the Financial Year was Rs.72.67 Crores as against Rs.100.56 Crores for the previous Financial Year due to additional Coal levy of Rs.13 Crores being charged to the Profit and higher depreciation of Rs.16 Crores due to change in rates under Schedule II of the Companies Act, 2013. An additional levy at the rate of Rs.295 per ton of Coal extracted has been paid as per the terms of the Ordinance promulgated by Government of India, Ministry of Law & Justice dated 21 October 2014 in pursuance of the Order dated 24 September 2014 issued by Hon'ble Supreme Court of India cancelling the allocation of Parbatpur Coal Block to the Company with effect from 31 March 2015.

The Revenue from Operations on consolidated basis, for the year ended 31 March 2015 was marginally down by 2.33% from Rs.2,459.16 Crores in 2013-14 to Rs.2,401.83 Crores in 2014-15. The consolidated loss after tax increased to Rs.116.09 Crores for the Financial Year as against Rs.15.93 Crores in the previous year mainly on account of losses of associates.

During the year under review, the production of Ductile Iron (DI) Pipes was 2,77,317 MT as against 2,81,239 MT in the previous year. Production of DI Fittings during the year was 6,027 MT as compared to 5,992 MT in the previous year. The production of Cast Iron (CI) Pipes at Elavur was 32,041 MT as against 25,848 MT in the previous year.

During the last quarter of the financial year 2014-15, the Company partly commissioned its new DI Fittings Plant at Haldia. The operations are expected to stabilise during the current financial year.

The Company continues to provide special attention towards improvement in production and productivity with higher energy efficiency. Further, to delight both International and Indian customers, the Company has added a number of product variants to its existing product base during the year 2014-15.

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report and there has been no change in the nature of business.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the overall industry structure, developments, performance and state of affairs of the Company's business, international operations, internal controls and their adequacy, risk management systems including a section on 'Risk Management' and other material developments during the financial year 2014-15 is annexed marked as Annexure 1 forming part of this Report.

FUTURE PROSPECTS

Demand for Ductile Iron Pipes and Fittings in the domestic market continues to be bullish. The Company continues to maintain its dominant position in the market against competitors. The Company, after entrenching itself in the prestigious Western European markets, is looking to expand in Eastern Europe. The European Commission has started Anti-Dumping and Anti Subsidy investigation on import of Ductile Iron Pipes manufactured in India, which the Company is stoutly defending. New markets are being opened up in South America and Africa. The Company will continue to maintain its emphasis on the Gulf markets where it has a historically strong presence.

SHARE CAPITAL

In order to meet the working capital requirements of the Company and for general corporate use for the Company's growth, the Company had issued and allotted 1,31,38,000 Equity Shares of face value of Re.1/- each at a premium of Rs.18.03 per Equity Shares on preferential basis to the Promoter Companies during the year under review. These Equity Shares rank pari passu in all respect with the existing Equity Shares of the Company.

The Issued, Subscribed and Paid up Share Capital of the Company consequently, stood at Rs.35,69,55,322/-, comprising of 35,69,55,322 Equity shares of Re.1/- each as on 31 March 2015.

FINANCE

Global Depository Receipts

Global Depository Receipts (GDRs) of the Company were delisted from London Stock Exchange on 26 February 2015, as the trading volume of GDRs was minimal. A total of 21,05,000 GDRs are outstanding as on 31 March 2015.

Debentures

As on 31 March 2015, the Company has the following Secured Redeemable Non-Convertible Debentures (NCDs) listed on the National Stock Exchange of India Limited:

Series of Debentures Amount (Rs. in Crore)

10.75% 120

11.00% 50

12.50% 100

Total 270

The Debenture Trustee for each of the aforesaid Series of Debentures is as follows:

M/s. Axis Trustee Services Limited,

2nd Floor, Axis House, Bombay Dyeing Mills Compound,

Pandurang Budhkar Marg, Worli, Mumbai 400 025

Contact Person : Chief Operating Officer

Phone : (022) 2425 5202

Fax : (022) 2425 4200

Email Id: debenturetrustee@axistrustee.com

The Company has paid interest on the aforesaid debentures on time and nothing is payable as on date. There was a partial redemption of 10.75% Series of NCD's amounting to Rs.39.60 Crores after the close of the financial year ended 31 March 2015 as per the terms of issue of these NCDs.

Warrants

The Company had issued 3,35,68,312 Warrants in the year 2010 entitling the holders to convert into one Equity Share of Re.1/- each at an exercise price of Rs.59.58 per share till 7 February 2015. However, all these outstanding warrants expired on 7 February 2015 due to non-exercise of options by the warrant holders within the tenure of the warrants.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

The Company was allotted Parbatpur Coal Block on 7 July 2005 by the Ministry of Coal.

The Company was also allotted North Dhadhu Coal Block on 13 January 2006 by the Ministry of Coal and according to the terms of allocation, the Company entered into a joint venture agreement with Adhunik Alloys & Power Limited, Jharkhand Ispat Pvt. Limited and Pawanjay Steel & Power Limited for mining of coal.

During the year under review, in pursuance of the Order dated 24 September 2014 issued by Hon'ble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated 21 October 2014 (the Ordinance) for implementing the Supreme Court Order, allotment of Parbatpur Coal Block (coal block/mines) to the Company which was under advanced stage of implementation, has been cancelled with effect from 1 April 2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said Block till 31 March 2015. Accordingly, the coal block/mine was handed over to Bharat Coking Coal Ltd as per the directions from Coal India Ltd with effect from 1 April 2015.

The claim for compensation amounting to Rs.1,220.71 Crores till 31 March 2014 and Rs.68.13 Crores during the year under review till the handing over the mines is yet to be received by the Company. The Company, pending acceptance and recovery of the claim, has filed a petition before the Hon'ble High Court at Delhi, hearing whereof has concluded and judgement is awaited.

Further in terms of the aforesaid Hon'ble Supreme Court Order, North Dhadhu Coal Block allotted in joint venture with other companies, has also been cancelled w.e.f. 24 September 2014. The Company barring initial contribution of Rs.8.23 Crores has not made any further investments in the said joint venture company. In view of the management, the compensation to be received in terms of the Ordinance is expected to cover the cost incurred by the joint venture companies.

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and complexity of the operations of the Company. All operations are executed through Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a preapproved Delegation of Authority (DOA) Schedule which is in-built into the SAP system. DOA is reviewed periodically by the management and compliance of DOA is regularly checked and monitored by the Auditors. The Company's books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/ effectiveness of all transactions, integrity and reliability of reporting.

The Internal Auditors of the Company, M/s. Chaturvedi & Company, an independent firm of Chartered Accountants, monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. Based on the Internal Audit Reports, process owner takes corrective actions in their respective areas and thereby strengthens the controls. The Report is presented before the Audit Committee for review at regular intervals.

DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company had the following Subsidiaries, Associate Companies and Joint Ventures as on 31 March 2015:

Sl. No. Name of the Company Status

1. Electrosteel Algerie SPA Subsidiary

2. Electrosteel Castings (UK) Limited Subsidiary

3. Electrosteel Castings Gulf FZE Subsidiary

4. Electrosteel Doha for Trading LLC Subsidiary

5. Electrosteel Europe S.A. Subsidiary

6. Electrosteel Trading S.A, Spain Subsidiary

7. Electrosteel USA, LLC Subsidiary

8. Electrosteel Brasil Ltda. Tubos e Conexoes Duteis Subsidiary

9. Mahadev Vyapaar Pvt Ltd Subsidiary

10. Electrosteel Bahrain Holding S.PC. Company Subsidiary

11. WaterFab LLC (subsidiary of Electrosteel USA, LLC) Subsidiary

S. No. Name of the Company Status

12. Electrosteel Steels Limited Associate Company 13. Electrosteel Thermal Power Limited Associate Company

14. Srikalahasthi Pipes Limited Associate Company (Formerly, Lanco Industries Limited)

15. Domco Private Limited Joint Venture

16. North Dhadhu Mining Company Private Limited Joint Venture

M/s. Electrosteel Bahrain Holding S.P.C. Company, Bahrain was incorporated as a subsidiary of the Company and M/s. Singardo International Pte Ltd., Singapore ceased to be the subsidiary during the year under review. The Company has formulated a policy on determining material subsidiaries of the Company, which has been uploaded on the Company's website at the web link: http://www.electrosteelcastings.com/ investors/pdf/policy-on-material-subsidiary.pdf.

A Report on performance and financial position of each of the Company's subsidiaries, associate companies and joint ventures for the financial year ended 31 March 2015 pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act) read with Rule 8 of Companies (Accounts) Rules, 2014 is given in Annexure - 2. The statement containing salient features of financial statement of subsidiaries, associate companies and joint ventures for the financial year ended 31 March 2015 pursuant to the said Section read with Rule 5 of the said Rules are given in the financial statements.

STATUS OF MERGER OF MAHADEV VYAPAAR PVT LTD

The Board of Directors of the Company on 11 August 2014 approved the Scheme of Amalgamation ("the Scheme") between the Company and M/s. Mahadev Vyapaar Pvt Ltd., a wholly owned subsidiary of the Company with effect from 1 April 2014 ("Appointed Date") to obtain operational synergies and also to pool resources of both the companies for growth and development of business. The Company has received Observation letters from both BSE Limited and the National Stock Exchange of India Limited dated 26 February 2015. Separate applications made in this regard by the Company and the subsidiary are pending before Hon'ble High Court of Orissa, Cuttack and Hon'ble Calcutta High Court, respectively.

REPORT ON CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated in Clause 49 of the Listing Agreement. A Report on Corporate Governance & Shareholder Information for the year under review together with the Auditors' Certificate thereon is annexed as Annexure 3 forming part of this Report.

The Company had also adopted a "Code of Conduct", as required under Clause 49 of the Listing Agreement and all Directors and Senior Management have affirmed compliance with the Code for 2014-15. A certificate, signed by the Managing Director, affirming compliance of Directors & Senior Management, forms part of the Report on Corporate Governance.

MEETINGS OF THE BOARD

The details of Board Meetings held during the financial year 2014-15 have been furnished in the Corporate Governance Report forming part of this Report and annexed at Annexure 3.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Mr. Naresh Chandra, Dr. Jamshed Jiji Irani and Mr. Bhaskara Nageswararao Mandavilli were appointed as Independent Directors of the Company for tenure of five years with effect from 28 August 2014. The status of Mr. Naresh Chandra had changed from an Independent Director to a Non Executive and Non Independent Director with effect from 10 September 2014. Mr. Bhaskara Nageswararao Mandavilli, an Independent Director resigned from the Board with effect from 27 March 2015. The Board places on record its sincere appreciation for the valuable contributions made by Mr. Bhaskara Nageswararao Mandavilli during the tenure of his office as a Director of the Company.

Mr. Vyas Mitre Ralli and Mr. Mahendra Kumar Jalan were appointed as Whole-time Directors of the Company for a period of 5 years with effect from 21 December 2014 and 22 January 2015, respectively and they are liable to retire by rotation as per the provisions of Section 152 of the Act.

Mr. Mahendra Kumar Jalan, retires by rotation at the forthcoming Annual General Meeting (AGM) and being eligible, offer himself for re-appointment.

Mr. Rama Shankar Singh, Director of the Company resigned from the close of business hours on 31 March 2015 and Ms. Nityangi Kejriwal was appointed as a Director from the close of business hours on 31 March 2015 to fill the casual vacancy caused by the resignation of Mr. Singh. The Board places on record its sincere appreciation for the contributions made by Mr. Rama Shankar Singh during the tenure of his office as a Director of the Company.

Ms. Kejriwal holds office only upto this AGM pursuant to the provisions of Section 161(4) of the Act since Mr. Singh would have retired by rotation at this AGM if he had not resigned from his office. The Company has received a notice under Section 160 of the Act from a Member proposing her appointment as a Director of the Company and the same has been included as an item in the notice of AGM for consideration of the Members.

The Board had appointed Mr. Jinendra Kumar Jain as Additional Director (Independent) with effect from 18 June 2015. However, Mr. Jain resigned from his office with effect from 30 July 2015. The Board appointed Mr. Ram Krishna Agarwal, as an Additional Director (Independent) with effect from 30 July 2015 for a term of 5 years, subject to the approval of Members. A declaration has been received from Mr. Agarwal that he satisfies the criteria of independence as per Section 149(6) of the Act. The Company has also received a notice from a Member proposing his appointment as an Independent Director of the Company and the same has been included in the notice of ensuing AGM.

Brief resume of the Directors who are subject to appointment/re-appointment at the ensuing AGM, nature of their expertise in their specific functional areas, details of directorships in other companies and the membership of Committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the Notice for the forthcoming AGM.

The Board, at its meeting held on 12 May 2015, had appointed Mr. Gautam Jhunjhunwala as the Chief Financial Officer of the Company under the provisions of Section 2(51) and 203 of the Act read with Rules made thereunder.

Mr. Prem Kumar Bafana has been appointed as Company Secretary of the Company with effect from 15 December 2014. Ms. Kavita Bhaysar has resigned from the post of Company Secretary with effect from 6 December 2014. The Board also places on record its appreciation for the contributions made by Ms. Kavita Bhaysar during the tenure of her office as the Company Secretary of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act, the Directors state that :

a) in the preparation of annual accounts for the Financial Year ended 31 March 2015, the applicable accounting standards had been followed and there were no material departures requiring any explanation;

b) they had 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 of the Company for that period;

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

d) they had prepared annual accounts on a 'going concern' basis;

e) they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and

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

INDEPENDENT DIRECTORS

Declaration by Independent Directors

Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Dr. Jamshed Jiji Irani and Mr. Ram Krishna Agarwal, Independent Directors have given declarations that they fulfil the criteria of independence as laid down in Section 149(6) of the Act and the Rules made thereunder and Clause 49 of the Listing Agreement.

Familiarisation Programme for the Independent Directors

The Company, on 9 February 2015 had conducted a Familiarisation Programme for the Independent Directors of the Company in order to familiarise them with their toles, rights, responsibilities in the Company. The Familiarisation Program is hosted on the website of the Company and the web link for the same is http://www.electrosteelcastings.com/ investors/pdf/familiarisation¬independent.pdf.

DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES

There are 5 Board Committees as on 31 March 2015 viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Banking and Authorisation Committee.

The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee and Stakeholders' Relationship Committee are provided in the Corporate Governance Report annexed as Annexure 3.

The Banking and Authorisation Committee comprises of Mr. Binod Khaitan as the Chairman, Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal as members as on 31 March 2015. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank accounts of the Company, changing the signatories of the Bank Accounts, subscribing/purchasing/selling/dealing in shares and securities and availing broking services, making loans from time to time to subsidiary companies/Joint Ventures/Associates for its working capital requirement and any other work related to day-to-day operations of the Company.

Vigil Mechanism

The Company has established a Vigil Mechanism and adopted Whistle Blower Policy in compliance with provisions of Section 177(9) of the Act and Clause 49 of the Listing Agreement for the Directors and employees to report genuine concerns and grievances. This mechanism provides adequate safeguards against victimisation of employees and directors and also provide for direct access to the Chairperson of the Audit Committee. The said Policy is available at the Company's website and can be accessed through a web link i.e. http://www.electrosteelcastings.com/investors/pdf/vigil.pdf.

Nomination and Remuneration Policy

The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act and Clause 49 of the Listing Agreement. The Nomination and Remuneration Policy has been annexed to this Report as Annexure 4.

Corporate Social Responsibility Policy

The Board has constituted a Corporate Social Responsibility (CSR) Committee on 10 May 2014 as per the provisions of Section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014. The Board has adopted a Corporate Social Responsibility Policy (CSR Policy) formulated by the CSR Committee in accordance with the provisions of the Act. A Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars specified in Annual Report on CSR as per Section 135 of the Act read with Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 are disclosed as Annexure 5 to this Report.

Policy on Board Diversity and Succession Plan

In compliance with the provisions of Clause 49 of the Listing Agreement, a Policy on Board Diversity and Succession Plan was devised by the Nomination and Remuneration Committee to ensure adequate diversity in the Board of Directors of the Company.

FORMAL ANNUAL EVALUATION AND ITS CRITERIA

The Nomination and Remuneration Committee of the Board has formulated certain criteria for annual evaluation of Directors pursuant to Clause 49 of the Listing Agreement and as per requirements of Section 134 of the Act are disclosed below -

A. The Board shall evaluate the roles, functions, duties of the Independent Directors (IDs) of the Company. Each ID shall be evaluated by all other Directors but not by the Director being evaluated. The Board shall also review the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence of Section 149 and aforesaid Schedule IV by the IDs shall also be reviewed by the Board.

B. Performance review of all the Non Independent Directors of the Company on the basis of the activities undertaken by them, expectations of Board and level of participation.

C. Performance review of Chairman of the Company in terms of the level of competence of Chairman in steering the Company.

D. The review and assessment of the flow of information by the Company to the Board and the manner in which deliberations take place, the manner of placing Agenda and contents therein.

E. The review of the performance of Directors individually, its own performance as well as evaluation of working of its Committees shall be carried out by the Board.

F. On the basis of performance evaluation, it shall be determined by the Nomination & Remuneration Committee & Board whether to extend or continue the term of appointment of ID subject to all other applicable compliances.

Meeting of Independent Directors : The Independent Directors of the Company held a separate meeting on 9 February 2015 without the attendance of Non Independent Directors and members of management for evaluation of the performance of Non Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act and Clause 49 of the Listing Agreement.

Further, pursuant to the provisions of Section 134(3)(p) of the Act, the Board had carried out an annual evaluation of its own performance, the performance of Directors individually as well as evaluation of the performance and working of its Committees at its meeting.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES

The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the Rules) are provided in Annexure 6A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2014-15 are being sent to the Members and other entitled thereto, excluding this statement. This statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

The disclosures pertaining to the remuneration of Directors, KMP and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 6B to this Report.

PREVENTION OF INSIDER TRADING & CODE OF CONDUCT FOR FAIR DISCLOSURE

The Company has adopted a Code of Conduct for Regulating, Monitoring and Reporting Trading by Insiders in securities of the Company. The Code requires pre-clearance for dealing in the Company's securities and prohibits the purchase or sale of securities of the Company by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

The Company has also adopted a Code of Practices and Procedures for Fair Disclosure and Conduct of Unpublished Price Sensitive Information to formulate a stated framework and policy for prompt and fair disclosure of events and occurrences that could impact price discovery in the market for securities of the Company.

AUDITORS AND AUDITORS' REPORT

M/s. Lodha & Co., Chartered Accountants, (Firm Registration No.301051E) were appointed as Auditors of the Company for a tenure of three years i.e. from the conclusion of the 59th Annual General Meeting (AGM) till the conclusion of the 62nd AGM of the Company. This appointment is subject to ratification by the Members at every AGM held after appointment during their tenure of office.

As required under Section 139 of the Act, the Company has received a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable. The necessary resolution is being placed for Members ratification at the ensuing AGM.

The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditors' Report are given below :

1. As regards the Qualified Opinion expressed by the Auditors in their Report and its consequential references made in para nos. (d), (e), (g) and (h)(i) of their Report, attention is drawn to Note nos. 2.33a and 2.33b of the Standalone Financial Statement, which are self-explanatory;

2. On the Auditors' observation made in para (i)(a) of the Annexure to the Auditors' Report, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures;

3. On the Auditors' observation made in para (xi) of Annexure to the Auditors' Report, your Directors have to clarify that External Commercial Borrowings (ECB) funds are being used as per the progress of the respective project(s) for which these amounts were borrowed and pending the completion of the project(s), the balance amounts could only be parked in fixed deposits as per the terms of ECB.

COST AUDITORS

The Companies (Cost Records and Audit) Amendment Rules, 2014 as published in Official Gazette on 31 December 2014 pursuant to sub-sections (1) and (2) of Section 469 and Section 148 of the Act, requires audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Sponge Iron & Power Generating units for every Financial Year.

The Cost Audit Report and a Compliance Report for the Financial Year 2013-14 were filed on 8 September 2014 which was within stipulated due date.

M/s. S. G. & Associates (FRN 000138), Cost Accountants, Kolkata, has been re-appointed as Cost Auditors for Financial Year 2015-16 for all the applicable units and products of the Company with an intimation to the Ministry of Corporate Affairs. The remuneration proposed to be paid to them for the Financial Year 2015-16 requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing AGM.

SECRETARIAL AUDITORS

In terms of Section 204 of the Act and Rules framed thereunder, M/s. S. M. Gupta & Co., Practicing Company Secretaries were appointed Secretarial Auditors of the Company for the financial year 2014-15. The report of the Secretarial Auditors is enclosed as Annexure 7 to this Report. An observation made by the Secretarial Auditors that the Company is yet to appoint Chief Financial Officer, to which the Directors wish to inform that Mr. Gautam Jhunjhunwala has been appointed as the Chief Financial Officer with effect from 12 May 2015.

INTERNAL AUDITORS

In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi & Company, an independent firm of Chartered Accountants were appointed as Internal Auditors for the financial year 2014-15. The Audit Committee in consultation with the Internal Auditors formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee inter-alia reviews Internal Audit Reports.

The Board has re-appointed M/s. Chaturvedi & Company as Internal Auditors for the financial year 2015-16 under the provisions of Section 138 of the Act.

PUBLIC DEPOSITS

During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014.

LOANS, INVESTMENTS, GUARANTEES & SECURITIES

The particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is/was proposed to be utilised by the recipient as per the provisions of Section 186(4) of the Act are given in Note nos. 2.38.1 to the Standalone Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return as on the Financial Year ended 31 March 2015 in Form MGT 9 as prescribed under the said Rules is annexed as Annexure 8 to this Report.

AWARDS AND ACCOLADES

EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" to Electrosteel Castings Limited for star performers as large enterprise in the product group of "Sanitary and Industrial Castings" for its outstanding contribution to engineering exports during the year 2012¬13.

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

The Company has in place a Policy in line with requirements, inter-alia, of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the financial year 2014-15.

RELATED PARTY TRANSACTIONS

The Company has entered into contracts/arrangements with the related parties during the Financial Year 2014-15 which were in the ordinary course of business and on arm's length basis. Thus provisions of Section 188(1) of the Act are not applicable and the disclosure under AOC 2 is not required. However, your attention is drawn to the Related Party disclosure in Note no 2.38 of the Standalone Financial Statements.

The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is http://www.electrosteelcastings.com/investors/pdf/ related-party-transaction-policy.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.

There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review.

RISK MANAGEMENT POLICY

The Company has a well-established Risk Management Policy to identify and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Company's competitive advantage. The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk etc. and it has proper mitigation process for the same. The Audit Committee reviews this policy periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report.

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

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 the Act, read with Rule 8 of Companies (Accounts) Rules, 2014 is annexed as Annexure 9 and forms a part of this Report.

ACKNOWLEDGEMENT

Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on behalf of the Board of Directors

Pradip Kumar Khaitan

Chairman

DIN : 00004821 Place : Kolkata

Date : 30 July 2015


Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting their Fifty Ninth Annual Report and Audited Annual Accounts of the Company for the Financial Year ended March 31, 2014.

Financial Results

The Company''s financial performance, for the Financial Year ended March 31, 2014 is summarized as below :

(Rs. in Crores)

Sl Particulars FY2013-14 FY2012-13

i. Revenue from operations 2186.88 1934.55

ii. Other Income 19.70 95.05

iii. Total Revenue 2206.58 2029.60

iv. Profit before Taxation (PBT) 135.96 120.98

v. Less:TaxincludingDeferredTax 35.41 23.75

vi. Profit after Taxation (PAT) 100.55 97.23

vii. Add : Profit brought forward frompreviousyear 186.70 113.58

viii. Add : Transfer from Debenture Redemption - 50.00 Reserve

ix. Amount available for appropriation 287.25 260.81

Appropriation

Add : Transfer to Debenture Redemption Reserve 54.00 10.00

Less : TransfertoGeneralReserve 25.00 45.00

Less : Proposed Dividend including tax thereon 26.15 19.11

Total 105.15 74.11

x. SurpluscarriedtoBalanceSheet 182.10 186.70

Dividend

Your Directors recommend a dividend of Re.

0.65 per Equity share of face value of Re. 1 each, i.e. 65% for the Financial Year ended March 31, 2014.

The Dividend, subject to approval of Members at the Annual General Meeting on 28th August, 2014, will be paid to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from Friday, 22nd August, 2014 to Thursday, 28th August, 2014 (inclusive of both dates).The dividend, on approval by members, will absorb Rs. 26.15 crore (approx.), inclusive of tax of Rs. 3.80 crore (approx.) on distribution of dividend.

Fixed Deposits

The Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

Operations

The Company''s Revenue from operations has increased from Rs. 1,934.55 crores in 2012-13 to Rs. 2,186.88 crores in 2013-14. Export sales showed an increase from Rs. 936.68 crores to Rs.989.21 crores, an increase of 5.60% due to higher realisation in the export market. The Company''s profit (PAT) for the financial year was Rs.100.55 crores as against Rs. 97.23 crores of previous financial year which is a nominal increase of 3.42% since last financial year.

During the year production of Ductile Iron (DI) pipes was 2,81,239 MT as against 2,84,849 MT in the previous year. Production of DI Fittings during the year was 5,992 MT as compared to

6,063 MT in previous year. The production of Cast Iron (CI) pipes at Elavur was 25,848 MT as against 24,451 MT in the previous year.

Special attention has been given not only to increase energy efficiency but also for improvement in production and productivity. Further, product variety has been added to meet newer requirements from international and enlightened Indian customers.

Future Prospects

Demand for Ductile Iron Pipes and Fittings in the domestic market is bullish. Your Company continues to maintain its dominant position in the market against competitors. In the Export market, market shares have increased in the European markets even with the crisis in Europe. Your Company, after entrenching itself in the prestigious West European markets, is looking to expand in Eastern Europe. New markets are being opened up in South America and Africa. We will maintain our emphasis in the Gulf markets where we have a historically strong presence.

Directors

Mr. Rama Shankar Singh, a Director of the Company had tendered his resignation from the post of Wholetime Director with effect from 5th February, 2014. However, Mr. Singh continues to be a Non-Executive Director of the Company.

Upon the Companies Act, 2013, coming into effect from 1st April, 2014, Mr. Pradip Kumar Khaitan became an Independent Director and Mr. Shermadevi Yegnaswami Rajagopalan ceased to be an independent Director of the

Company. However, Mr. Rajagopalan continues to be a Non-Executive Director of the Company.

Mr. Rajagopalan and Mr. Vyas Mitre Ralli, Directors, retire by rotation at the ensuing Annual General Meeting (AGM) and are eligible for re-appointment at the ensuing AGM.

Further, the period of directorship of Mr. Ralli and Mr. Mahendra Kumar Jalan Wholetime Directors of the Company would expire on 20th December, 2014 and 21st January, 2015 respectively. They have given their consent for re- appointment.

As per Section 149 of the Companies Act, 2013, an Independent Director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company.

In line of the above mentioned provision, all the Independent Directors of the Company needs to be re-appointed for a term of five years. Hence approval of the members is sought for the appointment of all the Independent Directors for a term of 5 years with effect from 28th August, 2014 to 27th August, 2019 at the ensuing AGM.

A brief resume of the Directors being appointed and reappointed at the ensuing AGM, their nature of expertise in specific functional areas and names of the companies in which they hold directorships and/or memberships/ chairmanships of Committees of the respective Boards, shareholding and relationship between directors inter se as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is given in the Notice convening AGM.

Directors'' Responsibility Statement

Your Directors hereby confirm :

a) that in the preparation of annual accounts, containing financial statements for the Financial Year ended March 31, 2014 the applicable accounting standards have been followed and there were no material departures there from requiring any explanation;

b) that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company and the profit for that period;

c) that the Directors 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;

d) that the annual accounts have been prepared on a ''going concern'' basis.

Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges, the Board of Directors take pleasure in attaching the Consolidated Financial Statements prepared in accordance with the Accounting Standard

(AS)-21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures as prescribed by the Institute of Chartered Accountants of India.

Auditors and Auditors'' Report Statutory Auditors

M/s. Lodha and Co., Chartered Accountants, Statutory Auditors of the Company, retire at the conclusion of the 59th Annual General Meeting of the Company. They have offered themselves for re-appointment as Statutory Auditors for next term of three consecutive years and confirmed that their reappointment, if made, will be within the prescribed limits under section 141(3) of the Companies Act, 2013.

There are no qualifications or adverse remarks in the Auditors'' Report which require any clarification/explanation. The Notes on Financial Statements are self explanatory and need no further explanation.

Cost Auditors

The Central Government''s directions vide their Order dated 6th November, 2012 and pursuant to Section 148B of the Companies Act, 2013, requires audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Paint, Sponge Iron & Power Generating units for every financial year. Activities related to mines will come under purview of this audit on & from the date when commercial production will start.

The Cost Audit Report and a Compliance Report for the financial year 2012-13 were filed on 19th September, 2013.

M/s. S. G. & Associates, partnership firm of Cost Accountants in Kolkata, has been re-appointed as Cost Auditors for Financial Year 2014-15 for all the applicable units and products of the Company subject to the approval of Central Government, if any required.

Cost Audit Report for the financial year 2013-14 will be filed within the due date.

Subsidiary, Associate Companies and Joint Ventures

As on March 31 2014, your Company has the following Subsidiaries, Associate Companies and Joint Ventures.

Sl Name of the Company Status

1. Electrosteel Algerie SPA Subsidiary

2. Electrosteel Castings (UK) Limited Subsidiary

3. Electrosteel Castings Gulf FZE Subsidiary

4. Electrosteel Doha for Trading LLC Subsidiary

5. Electrosteel Europe S.A. Subsidiary

6. Electrosteel Trading S.A, Spain Subsidiary

7. Electrosteel USA, LLC Subsidiary

8. Singardo International Pte Limited Subsidiary

9. Electrosteel Brasil Ltda. Subsidiary Tubos e Conexoes Duteis

10. Mahadev Vyapaar Private Limited Subsidiary

11. WaterFabLLC Stepdown subsidiary (subsidiary of Electrosteel USA, LLC)

12. Electrosteel Steels Limited Associate Company

13. Electrosteel Thermal Power Ltd. Associate Company

14. Lanco Industries Limited Associate Company

15. Domco Private Limited Joint Venture

16. North Dhadhu Mining Joint Venture Company Private Limited

The statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached to and forms part of this Annual Report.

In terms of the general exemption granted by Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated February 8, 2011, the Board of Directors of your Company at its meeting held on 10th May, 2014 has given its consent for not attaching the Balance Sheet, Statement of Profit and Loss, and Reports of the Board of Directors and the Auditors'' thereon of these subsidiary/step down subsidiary companies for the Financial Year ended March 31, 2014. However, a statement containing brief financial details of the Company''s subsidiaries for the Financial Year ended March 31, 2014is included in the Annual Report, as to comply with the terms of the general exemption. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary

companies seeking such information at any point of time. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Company''s Head Office and at the Head Office of the subsidiary company concerned.

Credit Rating

Your Company has been rated as "CARE AA- (Double A minus)" for long-term/medium term debt and various Bank facilities, including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 270 Crores as at March 31,2014). "CARE AA-(Double A minus)" rating indicates high degree of safety regarding timely servicing of financial obligation and lower credit risk.

The rating for the short-term debt/facilities sanctioned and/or availed by the Company has been assigned as "CARE A1 (A One Plus)" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk.

Your Company has also been rated "BWR AA (Double A)" by Brickwork Rating for Non- Convertible Debentures (NCDs) (Outstanding Rs. 150 crore out of Rs. 270 Crore as on 31.03.2014). "BWR AA (Double A)" signifies that the NCDs have high degree of safety regarding timely servicing of financial obligations and carries very low credit risk.

Awards

EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" to Electrosteel Castings Limited for star performers as large enterprise in the product group of sanitary and Industrial Castings for its outstanding contribution to engineering exports during the year 2011- 12.

Disposal of complaint under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" ("The Act")

In compliance with the Act, the Company has constituted the "Internal Complaints Committee" and also framed the redressal policy in case of sexual harassment at workplace. During the year, the Company has not received any complaint with respect to sexual harassment at work place.

Increase in Paid-up Equity Share Capital

During the year ended March 31, 2014, the Company has allotted 1,70,64,617 Equity Shares of Re. 1/- (Rupee one) each at an issue price of Rs 13.85 per Equity share on November 27, 2013 to the Promoters on preferential basis and accordingly the paid-up Equity share capital stands increased to Rs. 34,38,17,322 divided into 34,38,17,322 Equity shares of Re. 1/- (Rupee one) each.

Preferential Issue :

The Company had sought approval of shareholders by way of evoting vide notice dated 11th April, 2014, the results of which will be declared on 12th May, 2014 for issue of 1,31,38,000 Equity shares of Re.1 each on Preferential basis to G. K. & Sons Private Limited and Electrocast Sales India Limited, two Promoter Companies of the Company at a price of Rs.19.03 per Equity Share.

Debentures :

As on March 31, 2014, the Company has the following Non-Convertible Debentures (NCD) listed on National Stock Exchange of India Limited :

Type of Debentures Amount (Rs. in Crore)

10.75% 120

11.00% 50

12.50% 100

The Debenture Trustee for the aforesaid Debentures is as follows :

Axis Trustee Services Limited

2nd Floor, Axis House, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg Worli, Mumbai - 400 025 Contact Person : Chief Operating Officer Phone : (022) 2425 5202, Fax : (022) 2425 4200 Email Id : debenturetrustee@axistrustee.com

Energy, Technology and Foreign Exchange Earnings and Outgo

Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure ''A'' and forms part of this Report.

Reports on Corporate Governance and Management Discussion and Analysis Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. Report on Corporate Governance Practices, the Auditors'' Certificate on compliance of mandatory

requirements thereof and Report on Management Discussion and Analysis are given as annexure and form part of this report.

Particulars of Employees

Having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the information pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and the Companies (Particulars of Employees) Amendment Rules, 2011, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the Financial institutions, Banks, Government authorities, Customers, Vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s executives, staff and workers.

On behalf of the Board of Directors

May 10, 2014 P. K. Khaitan Kolkata Chairman


Mar 31, 2013

To, The Members

The Directors take pleasure in presenting their Fifty Eighth Annual Report and Audited Annual Accounts of the Company for the financial year ended March 31, 2013.

Financial Results Rs. in Crores

Sl.no. Particulars FY2012-13 FY2011-12

i. Revenue from operations 1934.55 1916.66

ii. Other Income 95.05 70.77

iii. Total Revenue 2029.60 1987.43

iv. Profit before Taxation (PBT) 120.98 22.58

v. Less:Tax including Deferred Tax 23.75 (19.80)

vi. Profit after Taxation (PAT) 97.23 42.38

vii. Add : Profit brought forward from previous year 113.58 86.19

viii. Add : Transfer from Debenture Redemption Reserve 50.00 25.00

ix. Amount available for appropriation 260.81 153.57

Appropriation

Less : Transfer to Debenture Redemption Reserve 10.00 16.00

Less : Transfer to General Reserve 45.00 5.00

Less : Proposed Dividend including tax thereon 19.11 18.99

Total 74.11 39.99

x. Surplus carried to Balance Sheet 186.70 113.58

Dividend

Your Directors recommend a dividend of Rs.0.50 per equity share i.e. 50% for the financial year ended March 31, 2013.The dividend, on approval by members, will absorb Rs.19.11 crores, inclusive of tax of Rs.2.78 crores on distribution of dividend.

Operations

The Company''s Revenue from operations has increased from Rs.1916.66 crores in 2011-12 to Rs.1934.55 crores in 2012-13. Export sales showed an increase from Rs.822.69 crores to Rs.936.68 crores, an increase of 14% due to higher proportion of sales in the export market. The Company''s profit (PAT) for the financial year was Rs.97.23 crores as against Rs.42.38 crores of previous financial year which is an increase of 129.42% since last financial year.

During the year Ductile Iron (DI) pipes production was 2,84,849 MT as against 2,70,168 MT in the previous year, showing a marginal increase in production. Production of DI Fittings during the year was 6,214 MT as compared to 6,063 MT in previous year. The production of Cast Iron (CI) pipes at Elavur was 24,451 MT as against 19,177 MT in the previous year.

Apart from improvement in Production and Productivity, special attention has been given to increase Energy efficiency. Further, Product variety has been added to meet newer requirements from International and enlightened Indian customers.

Future Prospects

Demand for Ductile Iron Pipes and Fittings in the domestic market remains stable. Your Company continues to maintain its dominant position in the market against competitors. In the Export market, market shares have increased in the European markets even after the crisis in Europe. A new office and stockyard has been set up in Germany and it should start initial business in the current fiscal. Initial business has also started with government orders in Brazil and other South American markets. We will maintain our emphasis in the Gulf markets where we have opened subsidiaries in Qatar and UAE.

Directors

Mr. M. B. N. Rao, Mr. Naresh Chandra and Dr. Jamshed Jiji Irani, Directors, retire by rotation at the ensuing Annual General Meeting (AGM) and are eligible for re-appointment at the ensuing AGM.

A brief resume of the Directors retiring by rotation at the ensuing AGM, nature of expertise in specific functional areas and names of the companies in which they hold directorships and/or memberships/ chairmanships of Committees of the respective Boards, share- holding and relationship between directors inter se as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is given in the Notice convening AGM.

Directors'' Responsibility Statement

Your Directors hereby confirm :

a) that in the preparation of annual accounts, containing financial statements for the financial year ended March 31, 2013 the applicable accounting standards have been followed and there were no material departures therefrom requiring any explanation;

b) that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company and the profit for that period;

c) that the Directors 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;

d) that the annual accounts have been prepared on a ''going concern'' basis.

Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges, the Board of Directors has pleasure in attaching the Consolidated Financial Statements prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

Auditors and Auditors'' Report

Statutory Auditors

M/s. Lodha and Co., Chartered Accountants, Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting of the Company. They have offered themselves for reappointment as Statutory Auditors and confirmed that their reappointment, if made, will be within the prescribed limits under section 224(1B) ofthe Companies Act, 1956.

There are no qualifications or adverse remarks in the Auditors'' Report which require any clarification/explanation. The Notes on Financial Statements are self explanatory and need no further explanation.

Cost Auditors

The Central Government''s directions vide their Order dated 2nd May, 2011 & 30th June, 2011 pursuant to Section 233B of the Companies Act, 1956, requires audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Sponge Iron & Power Generating units for every financial year on & from 2011-12. The mines related activities will come under purview of this audit on & from the date when commercial production will start. Subject to the approval of Central Goverment. M/s. S. G. & Associates, partnership firm of Cost Accountants in Kolkata, has been reappointed as Cost Auditors for Financial Year 2013-14 for all the applicable units and products of the Company.

Cost Audit Report for the financial year 2012- 13 will be filed within due date.

The Cost Audit Report for the financial year 2011-12 was filed on 24th December, 2012 within the due date of 28th February, 2013.

Besides the audit, the Company has to submit a ''Compliance Report'' for the cost accounting records of the Company as a whole including all its activities duly certified by a Cost Accountant. For this purpose, the Company has appointed a qualified Cost Accountant for the financial year 2013-14. The Compliance Certificate for Financial Year 2011-12 was filed by the Company on 25th December, 2012, due date for the same being 28th February, 2013.

Subsidiary, Associate Companies and Joint Ventures

As on March 31, 2013, your Company has the following Subsidiaries, Associate Companies and Joint Ventures :-

S. No. Name of the Company Status

1. Electrosteel Algerie SPA Subsidiary

2. Electrosteel Castings (UK) Limited Subsidiary

3. Electrosteel Castings Gulf FZE Subsidiary

4. Electrosteel Dohafor Trading LLC Subsidiary

5. Electrosteel Europe S.A. Subsidiary

6. Electrosteel Trading S.A, Spain Subsidiary

7. Electrosteel USA, LLC Subsidiary

8. Singardo International Pte Limited Subsidiary

9. Electrosteel Brasil Ltda. Subsidiary Tubose Conexoes Duteis

10. Mahadev Vyapaar Private Limited Subsidiary

11. WaterFab LLC Step down subsi diary (subsidiary of Electrosteel USA, LLC)

12. Electrosteel Steels Limited Associate Company

13. Electrosteel Thermal Power Ltd. Associate Company

14. Lanco Industries Limited Associate Company

15. Domco Private Limited Joint Venture

16. North Dhadhu Mining Company Joint Venture Private Limited

As required, the statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached to and forms part of this Annual Report.

In terms of the general exemption granted by Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated 8th February, 2011, the Board of Directors of your Company at its meeting held on 10th May, 2013 has given its consent for not attaching the Balance Sheet, Statement of Profit and Loss, and Reports of the Board of Directors and the Auditors'' thereon of these subsidiary/ step down subsidiary companies for the financial year ended 31st March, 2013. However, a statement containing brief financial details of the Company''s subsidiaries for the financial year ended 31st March, 2013 is included in the Annual Report, as to comply with the terms of the general exemption. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Company''s Head Office and at the Head Office of the subsidiary company concerned.

Credit Rating

Your Company has been rated as "CARE AA- (Double A minus)" for long-term/medium term debt and various Bank facilities as including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 120 Crores as at 31st March, 2013). "CARE AA- (Double A minus)" rating indicates high degree of safety regarding timely servicing of financial obligation and lower credit risk.

The rating for the short-term debt/facilities sanctioned and/or availed by the Company has been assigned as "CARE A1 (A One Plus)" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk.

Awards

EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for star performers as large enterprise in the product group of sanitary and Industrial Castings for our outstanding contribution to engineering exports during the year 2010-11.

Energy, Technology and Foreign Exchange Earnings and Outgo

Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure ''A'' and forms part of this Report.

Reports on Corporate Governance and Management and Discussion Analysis

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance.

Report on Corporate Governance Practices, the Auditors'' Certificate on compliance of mandatory requirements thereof and Report on Management Discussion and Analysis are given as annexure and form part of this report.

Particulars of Employees

Having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the information pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and the Companies (Particulars of Employees) Amendment Rules, 2011, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Acknowledgement

Your Directors take this opportunity to thank the Financial Institutions, Banks, Government Authorities, Customers, Shareholders, Investors and other stakeholders for their continued trust and support to the Company.

On behalf of the Board of Directors

May 10, 2013 P. K. Khaitan

Kolkata Chairman


Mar 31, 2012

The Directors take pleasure in presenting their Fifty Seventh Annual Report and Audited Accounts of the Company for the year ended March 31, 2012.

Financial Results Rs. in Crores

Sl.no. Particulars FY2011-12 FY2010-11

i. Revenue from operation 1916.66 1709.53

ii. Other Income 70.77 101.75

iii. Total Revenue 1987.43 1811.28

iv. Profit before Taxation (PBT) 22.58 214.89

v. Tax including Deferred Tax (19.80) 60.25

vi. Profit after Taxation (PAT) 42.38 154.64 vii. Profit brought forward from previous year 86.19 101.02

viii. Transfer from Debenture Redemption Reserve 25.00 -

ix. Amount available for appropriation 153.57 255.66

Appropriation

Transfer to Debenture Redemption Reserve 16.00 22.00

Transfer to General Reserve 5.00 100.00

Proposed Dividend including tax thereon 18.99 47.47

Total 39.99 169.47

x. Surplus carried to Balance Sheet 113.58 86.19

Dividend

Your Directors recommend a dividend @ Rs 0.50 per share i.e.50% for the year ended March 31, 2012.The dividend, on approval by members, will absorb Rs. 18.99 crores, inclusive of tax of Rs 2.65 crores on distribution of dividend.

Operations

F.Y. 2011-12 was a challenging year with a moderate growth of business due to turbulent economic environment. There was a slowdown in global economy activities across major part of the world and India was also affected to a larger extent coupled with domestic factors such as inflation, decelerating growth and widening current account deficit. Despite these constraints and the challenging environment, the Company performed reasonably well and sustained its production and sales in quantitative terms. The Company's Revenue from operation has increased from Rs. 1709.53 crores in 2010-11 to Rs. 1916.66 crores in 2011-12 representing an increase of 12.12 %. Export sales showed an increase from Rs. 566.33 crores to Rs. 822.69 crores, an increase of 45.27 % due to higher proportion of sales in the export market. The Company's profit (PAT) for the year was Rs. 42.38 crores as against Rs. 154.64 crores. The decline was due to steep rise in raw materials prices mainly of iron ore & coal and sharp depreciation of INR against dollar.

During the year D.I.pipes production was 2,70,168 MT as against 2,70,327 MT in the previous year, showing marginally decreases. This year more product varieties have been added in the said production to satisfy our customers. Production of D.I.fittings was higher by 23.34% over the previous year (from 5,038 MT to 6,214 MT).

The production of C.I. pipes at Elavur was 19,177 MT as against 30,199 MT in the previous year due to the customer's preference for DI Pipes over CI Pipes.

Credit Rating

Your Company continues to enjoy the rating for long-term/medium term debt and various Bank facilities as "CARE AA "(Double A ) including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 200 crores as at 31.03.2012). "CARE AA" rating indicates high safety for timely servicing of debt obligations and very low credit risk.

The rating for the short-term debt/facilities sanctioned and/or availed by the Company has been assigned as "CARE A1 ( A One Plus)" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk.

Future Prospects

Government's thrust on the infrastructure facilities is already showing continuous increasing demand for D. I. pipes in the domestic market. However, additional capacity installed by new entrants and peer group companies may intensify the competition in the domestic market. There is constant endeavor by your Company for increasing the share in existing foreign markets and enter new countries. Your Company has opened a new office in Italy with two stockyards. There are plans to set up an office and stockyard in Germany this fiscal. A branch office is also being opened shortly in Morocco to service the West African market where we have already started getting projects. Approvals have been obtained in Brazil and other South American markets and initial businesses obtained. In short, we see an exciting year ahead.

Corporate Governance

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance.

A report on Corporate Governance Practices, the Auditors' Certificate on compliance of mandatory requirements thereof and Management Discussion and Analysis are given as annexure to this report.

Directors' responsibility statement

Your Directors hereby confirm :

a) that in the preparation of annual accounts, containing financial statements for the year ended March 31, 2012 the applicable accounting standards have been followed.

b) that the stated accounting policies have been consistently followed to give a true and fair view of the state of affairs of the Company and the profit for that period.

c) that the Directors 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.

d) that the annual accounts have been prepared on a 'going concern' basis.

Cost Audit

The Central Government's directions vide their Order dated 2nd May,2011 & 30th June,2011 pursuant to Section 233B of the Companies Act, 1956, requires audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Sponge Iron & Power Generating units for every financial year on & from 2011-12. The mines related activities will come under purview of this audit on & from when commercial production will start. Besides the audit, ECL has to submit a 'Compliance Report' for the Company as a whole including all its activities duly certified by a Cost Accountant. M/s. S. G. & Associates, a partnership firm of Cost Accountants in Kolkata, has been appointed as Statutory Cost Auditor for FY 2011-12. The Cost Audit report (by Cost Auditor) and Compliance Report (by the Company) shall be submitted within 180 days from the close of Company's financial year.

Energy, Technology and Foreign Exchange

Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure 'A'.

Employees

The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, pursuant to Section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all the shareholders of the Company, excluding the aforesaid information. Those members desirous to obtain such particulars may write to the Company Secretary at the registered office of the Company.

Subsidiary, Joint Venture and Associate Companies

As on March 31 2012, your Company has the following Subsidiaries, Joint Ventures and Associate Companies.

S. No. Name of the Company STATUS

1. Electrosteel Castings (UK) Limited Subsidiary

2. Electrosteel Europe S.A. Subsidiary

3. Electrosteel Algerie SPA Subsidiary

4. Singardo International Pte Limited Subsidiary

5. Electrosteel USA, LLC Subsidiary

6. Mahadev Vyapaar Private Limited Subsidiary

7. Electrosteel Trading S.A, Spain Subsidiary

8. WaterFab LLC Subsidiary

9. North Dhadhu Mining Company Pvt Ltd Joint Venture

10. Domco Private Limited Joint Venture

11. Lanco Industries Limited Associate

12. Electrosteel Steels Limited Associate

13. Electrosteel Thermal Power Limited Associate

The statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached in the Annual Report.

In terms of the general exemption granted by Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated February 08, 2011, the Board of Directors of your Company in its meeting held on May 28, 2012 has given consent for not attaching the copies of the balance sheet, profit and loss account, reports of the Board of Directors and the Auditors' Reports of the subsidiary companies for the year ended March 31, 2012. However, a statement containing brief financial details of the Company's subsidiaries for the year ended March 31, 2012 is included in the Annual Report, as to comply with the terms of the exemption letter. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to members of the Company and subsidiary companies seeking such information at any point of time. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Company's Corporate office and at the corporate office of the subsidiary companies concerned.

Greenfield Project by an Associate Company, M/s Electrosteel Steels Limited (ESL)

As you are aware, ESL is setting up a 2.2 MTPA integrated steel & Ductile Iron (DI) Pipe project, at Siyaljori village, in Bokaro District, in the state of Jharkhand, which is about 22 kms from Bokaro city, a well developed industrial town of Jharkhand.

During the project implementation process, some modifications were suggested by the technical experts to meet the technical superiority and efficiency improvement of the plant. Hence, for better balancing of the product with optimized product mix and better value addition, ESL is contemplating to enhance the plant capacity from 2.2 MTPA to 2.51 MTPA.

The ESL plant is at its advance stage of completion and its operations are currently in a nascent stage. Due to a variety of technical reasons, the plant has undergone improvements and changes, which will in turn benefit the operations in the long run.

Awards

EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for star performers as large enterprise in the product group of sanitary and Industrial Castings for our outstanding contribution to engineering exports during the year 2009-10.

Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges the Board of Directors has pleasure in attaching the Consolidated Financial Statement prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

Auditors and Auditor's Report

M/s. Lodha and Company, Chartered Accountants, statutory auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting of the Company. They have offered themselves for reappointment as statutory auditors and confirmed that their appointment, if made, will be within the prescribed limits under section 224(1B) of the Companies Act, 1956.

There are no qualifications or adverse remarks in the Auditors' Report which require any clarification/explanation. The Notes to Accounts forming part of the financial statements are self explanatory and needs no further explanation. The Schedule VI of the Companies Act, 1956 has been revised by the Ministry of Corporate Affairs vide its notification dated February 28, 2011. The notification is in force and is applicable for all Balance Sheets and Statement of Profit and Loss to be prepared for the financial year commencing on or after April 1, 2011. Therefore, the previous period figures have been regrouped/ re-cast wherever necessary.

Directors

Mr. M.K.Jalan, Mr.R.S.Singh and Mr. S. Y. Rajagopalan, Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Acknowledgement

Your Directors take this opportunity to thank the Financial Institutions, Banks, Government Authorities, Customers, Shareholders, Investors, employees and other stakeholders for their continued trust and support to the Company.

On behalf of the Board

May 28, 2012 P. K. Khaitan

Kolkata Chairman


Mar 31, 2011

The Directors take pleasure in presenting their Fifty Sixth Annual Report and Audited Accounts of the Company for the year ended March 31, 2011.

Financial Results Rs. in Crores

Sl. no. Particulars FY 2010-11 FY 2009-10

i. Gross Turnover 1749.67 1466.64

ii. Net Turnover 1711.43 1428.77

iii.Other Income 70.33 125.42

iv. Total Revenue 1781.76 1554.19 v. Earning Before Interest, Depreciation, Taxation and Amortisation (EBITDA) 316.98 404.29

vi Interest (Net) 47.68 44.07

vii Depreciation 54.41 52.30

viii.Profit before Taxation (PBT) 214.89 307.92

ix. Tax including Deferred Tax 60.25 101.63

x. Profit after Taxation (PAT) 154.64 206.29

xi. Profit brought forward from previous year 101.02 87.60

xii.Amount available for appropriation 255.66 293.89

Appropriation

Transfer to Debenture Redemption Reserve 22.00 27.00 Transfer to General Reserve 100.00 118.24

Proposed Dividend including tax thereon 47.47 47.63

Total 169.47 192.87

xiii. Surplus carried to Balance Sheet 86.19 101.02

Dividend

Your Directors recommend a dividend @ Rs.1.25 per share i.e.125% for the year ended March 31,2011.The dividend, on approval by members, will absorb Rs. 47.47 crores, inclusive of tax of Rs. 6.62 crores on distribution of dividend.

Operations

The Companys turnover has increased from Rs. 1466.64 crores in 2009-10 to Rs. 1749.67 crores in 2010-11 representing an increase of 19.30 %. Export sales showed an increase from Rs. 507.15 crores to Rs. 623.06 crores, an increase of 22.86% owing to higher proportion of sales in the export market. The increase in turnover is mainly due to increase in sales quantity of DI Pipes by 13.46%. Successful commissioning of Blast Furnace has contributed to increase in availability of liquid metal by 15.78%. The Companys profit (PBT) for the year was Rs. 214.89 crores as against Rs. 307.92 crores. The decline was due to steep rise in raw materials prices mainly of iron ore & coal.

During the year D.I. Pipes production was 2,70,327 MT as against 2,35,463 MT in the previous year, showing an increase of 14.81%. This is highest ever exceeding the earlier best by about 7%. Production of D.I. fittings was higher by 7.58% over the previous year (from 4,683 MT to 5,038 MT).

The production of CI Pipes at Elavur was 30,199 MT as against 40,651 MT in the previous year due to the customers preference for DI Pipes over CI Pipes.

Cost reduction and backward integration

Blast Furnace - Productivity of Blast Furnace has been improved after relining. Usage of Sintered product has been increased successfully

to reduce the dependency on Lump Ore. Coal injection system in the Blast Furnace has been improved to reduce Coke rate.

Coke oven plant -Production improved to meet the Blast Furnace requirement. Your Company is now self sufficient. Import of Coke is not required.

Pipe & Fittings - Apart from increase in Production and Productivity, special attention has been given to increase Energy efficiency. Further Product variety has been added to meet newer requirements from International and enlightened Indian customers.

Credit Rating

Your Company continues to enjoy the rating for long-term/medium term debt and various Bank facilities as "CARE AA "(Double A ) including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 300 crores as at 31.03.2011). "CARE AA" rating indicates high safety for timely servicing of debt obligations and very low credit risk.

The rating for the short-term debt/facilities sanctioned and/or availed by the Company has been assigned as "PR1 +" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk.

Future Prospects

Governments thrust on the infrastructure facilities is already showing continuous increasing demand for D. I. Pipes in the domestic market. However, additional capacity installed by new entrants and peer group companies may intensify the competition in the domestic market. There is constant endeavor by your Company for increasing the share in existing foreign markets and enter new countries.

Corporate Governance

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance.

A report on Corporate Governance Practices, the Auditors Certificate on compliance of mandatory requirements thereof and Management Discussion and Analysis are given as annexure to this report.

Directors responsibility statement

Your Directors hereby confirm:

a) that in the preparation of annual accounts, containing financial statements for the year ended March 31, 2011 the applicable accounting standards have been followed.

b) that the stated accounting policies have been consistently followed to give a true and fair view of the state of affairs of the Company and the profit for that period.

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

d) the annual accounts have been prepared on a going concern basis.

Energy, Technology and Foreign Exchange

Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure A.

Employees

The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, pursuant to Section 219(l)(b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all the shareholders of the Company, excluding the aforesaid information. Those members desirous to obtain such particulars may write to the Company Secretary at the Registered Office of the Company.

Subsidiary, Joint Venture and Associate Companies

As on March 31, 2011, your Company has the following Subsidiaries, Joint Ventures and Associate Companies.

S. No. Name of the Company STATUS

1. Electrosteel Castings (UK) Limited Subsidiary

2. Electrosteel Europe S.A. Subsidiary

3. Electrosteel Algerie SPA Subsidiary

4. Singardo International Pte Limited Subsidiary

5. Electrosteel USA,LLC Subsidiary

6. WaterFab LLC Subsidiary

7. North Dhadhu Mining Company Pvt Ltd Joint Venture

8. Domco Pvt Limited Joint Venture

9. Lanco Industries Limited Associate

10. Electrosteel Steels Limited (Formerly Electrosteel Integrated Ltd.) Associate

11. Electrosteel Thermal Power Limited Associate

The statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached in the Annual Report.

In terms of the general exemption granted by Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated February 08, 2011, the Board of Directors of your Company in its meeting held on May 12, 2011 given consent for not attaching the copies of the balance sheet, profit and loss account, reports of the Board of Directors and the Auditors Reports of the subsidiary companies for the year ended March 31, 2011. However, a statement containing brief financial details of the Companys subsidiaries for the year ended March 31, 2011 is included in the Annual Report, as to comply with the terms of the exemption letter. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to members of the Company and subsidiary companies seeking such information at any point of time. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Companys Corporate Office and at the Corporate Office of the subsidiary companies concerned.

Greenfield Project by an Associate Company Ms Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited) (ESL)

ESL is setting up a 2.2 MTPA Integrated Steel & D I Pipe project at Siyaljuri in Bokaro District in the State of Jharkhand. The project envisages production of 1.20 MTPA long steel products viz. bar & rods, 0.33 MTPA of D I pipes and balance 0.677 MTPA of other steel products. The project is appraised by the State Bank of India as the lead bank. The ESL plant will be based on Blast Furnace Route and would have various technological facilities including of Sinter Plant, Coke Oven Plant, Pellet Plant, Blast Furnace, Basic Oxygen Furnace, Billet Casters, Rebar & Wire Rod Mill.

Implementation of the project is progressing satisfactorily and ESL has acquired the required land, received all statutory clearances, and placed almost all the orders for supply of plant & machinery. One of the Blast Furnaces of the Company was commissioned in September, 2010, which was temporarily shut down for the purpose of synchronization with other units and has since restarted in March, 2011. The construction work of the other facilities at site is in full swing.

Awards

JIPM-Japan has given AWARD FOR EXCELLENCE IN CONSISTENT TPM COMMITMENT for the year 2010 in recognition of your Companys outstanding achievement.

EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for star performers as large enterprise in the product group of sanitary and Industrial Castings for our outstanding contribution to engineering exports during the year 2008-09.

Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges, the Board of Directors has pleasure in attaching the Consolidated Financial Statement prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

Auditors and Auditors Report

M/s. Lodha and Company, Chartered Accountants, statutory auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting of the Company. They have offered themselves for reappointment as statutory auditors and confirmed that their appointment, if made, will be within the prescribed limits under section 224(1B) of the Companies Act, 1956.

There are no qualifications or adverse remarks in the Auditors Report which require any clarification/explanation. The Notes to Accounts forming part of the financial statements are self explanatory and needs no further explanation.

Directors

Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan. Mr. Uddhav Kejriwal and Mr. Vyas Mitre RalL Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for re- appointment.

Acknowledgement

Your Directors take this opportunity to thank the Financial Institutions, Banks, Government Authorities, Customers, Shareholders, Investors, employees and other stakeholders for their continued trust and support to the Company.

On behalf of the Board

UMANG KEJRIWAL Managing Director

UDDHAV KEJRIWAL Wholetime Director

Kolkata May 12, 2011


Mar 31, 2010

The Directors take pleasure in presenting their Fifty Fifth Annual Report and Audited Accounts of the Company for the year ended March 31, 2010.

Financial Results Rs. in Cores

Sl.no. Particulars FY 2009-10 FY 2008-09

i. Gross Turnover 1466.64 1895.58

ii. Net Turnover 1428.77 1838.04

iii. Other Income 127.75 89.92

iv. Total Revenue 1556.52 1927.96

v. Earning Before Interest, Depreciation, Taxation and Amortisation(EBITDA) 406.62 358.43

vi. Interest 46.40 97.26

vii. Depreciation 52.30 52.12

viii. Profit before Taxation (PBT) 307.92 209.05

ix. Tax including Deferred Tax & Fringe 101.63 68.65 Benefit tax

x. Profit after Taxation (PAT) 206.29 140.40

xi. Profit brought forward from previous year* 87.60 59.99

xii. Transfer from Debenture Redemption Reserve -- 45.00

xiii. Amount available for appropriation 293.89 245.39

Appropriation

Transfer to debenture redemption reserve 27.00 10.00

Transfer to general reserve 118.24 100.00

Proposed Dividend including tax thereon 47.63 45.74

Total 192.87 155.74

xiv. Surplus carried to balance sheet 101.02 89.65

* Net of Rs. 2.05 crores (previous year Rs 0.02 crores) relating to payment of dividend on the shares allotted after the balance sheet date.

Dividend

Your Directors recommend a dividend @ Rs.1.25 per share i.e. 125% for the year ended March 31,2010.The dividend, on approval by members, will absorb Rs.47.63 crores, inclusive of tax of Rs 6.78 crores on distribution of dividend.

Operations

The Companys turnover has decreased from Rs. 1895.58 crores in 2008-09 to Rs. 1466.64 crores in 2009-10 representing a decrease of 22.63 %. Export sales showed a marginal increase from Rs. 479.20 crores to Rs. 507.15 crores, an increase of 5.83 % owing to higher proportion of sales in the export market. The decrease in turnover is mainly due to lower turnover from trading activities and lower projects executed on turnkey basis. Further, the planned shut down of Blast Furnace for its relining and repairing in the last quarter of 2009-10 also contributed in lower sales of D.I.pipes by approximately 7.00%. However, inspite of above. your Company has achieved highest ever Profit Before Tax(PBT) of Rs. 307.92 crores during the year, representing an increase of 47.30% as compared to Rs. 209.05 in the previous year. The increase in profit is mainly on account of decrease in raw material prices, lower interest cost and better foreign exchange management.

During the year D.I.pipes production was 2,35,463 MT as against 2,51,823 MT in the previous year, showing decrease of 6.5%. The decrease in production was mainly due to planned shut-down of Blast Furnace for its relining and repairing in the last quarter of 2009-10.

Production of D.I.fittings was higher by 10.71% over the previous year (from 4,230 MT to 4,683 MT).

The production of C.I. pipes at Elavur was 40,651 MT as against 39,831 MT in the previous year.

Cost reduction and backward integration

Sinter plant- Working of Sinter plant has been further improved by improving capability of using different raw materials.

Coke oven plant - With the commissioning of 2nd additional battery in September 09, Company is now fully self sufficient and not dependent on imported Coke.

Railway siding - Your Company is constructing railway sidings at Haldia and Barajamda to create facility for smooth movement of materials from the forthcoming coal mine at Parbatpur. Jharkhand and iron ore mine at Kodolibad. Jharkhand. The projects are in advance stage of completion.

Finance

During the year, your Company raised Rs.210.07 crores by issue of 2,000 numbers of Secured Non Convertible Debentures along with 3,35,68,312 numbers of warrants through Qualified Institutions Placement basis for augmenting its long term resources and general corporate purposes.

Further to augment the long term resources required for expansion and other business purposes, your Company raised Rs. 28.98 crores being 90% of the total amount due against conversion of 1,40,00,000 warrants (issued in previous years to Promoters/ Promoter Group Companies) into 140 lakhs equity shares of Re. 1 each at a price of Rs. 23.00 per share.

In addition to above, your Company has availed the balance disbursement of Rs 100 crores of Rupee Term Loan from EXIM Bank and USD 57.50 million from lenders towards ECB.

Credit Rating

The rating for long-term/medium term debt and various Bank facilities sanctioned and/or availed by your Company has been upgraded by Credit Analysis & Research Ltd. (CARE) as from "CARE AA -"(Double A Minus) to "CARE AA" (Double A) including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 300 crores as at 31.03.2010). "CARE AA" rating indicates high safety for timely servicing of debt obligations and very low credit risk.

The rating for the short-term debtffacilities sanctioned and/or availed by the Company has been assigned as "PR1 +" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk.

Future Prospects

Governments thrust on the infrastructure facilities is already showing continuous increasing demand for D. I. pipes in the domestic market. However, additional capacity installed by new entrants and peer group companies may intensify the competition in the domestic market. There is constant endeavor by your Company for increasing the share in existing foreign markets and enter new countries. It has been noticed recently that the price of basic inputs are going up.

Corporate Governance

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance.

A report on Corporate Governance Practices. the Auditors Certificate on compliance of mandatory requirements thereof and Management Discussion and Analysis are given as annexure to this report.

Directors responsibility statement

Your Directors hereby confirm:

a) that in the preparation of annual accounts. containing financial statements for the year ended March 31, 2010 the applicable accounting standards have been followed.

b) that the stated accounting policies have been consistently followed to give a true and fair view of the state of affairs of the Company and the profit for that period.

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

d) the annual accounts have been prepared on a going concern basis.

Energy, Technology and Foreign Exchange

Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure A.

Employees

The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, pursuant to Section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all the shareholders of the Company, excluding the aforesaid information. Those members desirous to obtain such particulars may write to the Company Secretary at the registered office of the Company

Subsidiary, Joint Venture and Associate Companies

As on March 31, 2010, your Company has the following Subsidiaries, Joint Ventures and Associate Companies.

S.No. Name of the Company STATUS

1 Electrostal Castings (UK) Limited Subsidiary

2 Electrostal Europe S.A. Subsidiary

3 ElectrosteelAlgerieSPA Subsidiary

4 Singardo International Pte Limited Subsidiary

5 ElectrosteelUSA,LLC Subsidiary

6 WaterFabLLC Subsidiary

7 North Dhadhu Mining Company Pvt Ltd Joint Venture

8 Domco Pvt Limited Joint Venture

9 Lanco Industries Limited Associate

10 Electrosteel Steels Limited Associate (Formerly Electrosteel Integrated Limited)

11 Electrosteel Thermal Power Limited Associate

The statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached in the annual report.

In terms of the approval granted by the Central Government under Section 212 (8) of the Companies Act, 1956, vide its letter number 47/85/2010-CL-III dated March 22, 2010, the copies of the balance sheet, profit and loss account, reports of the Board of Directors and the Auditors Reports of the subsidiary companies for the year ended March 31, 2010 are not attached to the Balance Sheet of the Company. However, a statement containing brief financial details of the Companys subsidiaries for the year ended March 31, 2010 is included in the Annual Report, as to comply with the terms of the exemption letter. The Company will furnish the annual accounts and other related detailed information of the subsidiaries upon request by any member of the Company. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Companys Registered Office.

Greenfield Project by an Associate Company Ms Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited) (ESL)

ESL is setting up a 2.2 MTPA integrated steel project at a capital outlay of Rs. 7,262 crores at Siyaljuri in Bokaro District in the industrially backward state of Jharkhand. The project cost would be financed in the debt equity ratio of 3:1. The project envisages production of 1.20 MTPA long steel products viz. bar & rods, 0.33 MTPA of D I pipes and balance 0.677 MTPA of other steel products. The project is appraised by the State Bank of India as the lead bank. The ESL plant will be based on Blast Furnace Route and would have various technological facilities including of Sinter Plant, Coke Oven Plant, Pellet Plant, Blast Furnace, Basic Oxygen Furnace, Billet Casters, Rebar & Wire Rod Mill.

Implementation of the project is progressing satisfactorily and ESL has acquired the required land, received all statutory clearances and placed almost all the orders for supply of plant & machinery. The construction work at site is in full swing.

Awards

In May 2009, your Company was awarded by EEPC-ER (Engineering Export Promotion Council, Eastern Region) for Star Performance as Large Enterprise in the Product Group of Sanitary & Industrial Castings for its outstanding contribution to Engineering exports during the year 2006-07.

Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges the Board of Directors has pleasure in attaching the Consolidated Financial Statement prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India.

Auditors and Auditors Report

M/s. Lodha and Company, Chartered Accountants, statutory auditors of the company, retire at the conclusion of the ensuing Annual General Meeting of the Company. They have offered themselves for reappointment as statutory auditors and confirmed that their appointment. if made, will be within the prescribed limits under section 224(1B) of the Companies Act, 1956.

There are no qualifications or adverse remarks in the Auditors Report which require any

clarification/ explanation. The Notes to Accounts forming part of the financial statements are self explanatory and needs no further explanation.

Directors

Mr. N.C.Bahl, Wholetime Director resigned with effect from 23.10.2009. The Board placed on record its appreciation of the valuable contribution made to the Company by Mr. N.C.Bahl.

Mr. V.M. Ralli was appointed as Wholetime Director on 21.12.2009. Mr. M.K. Jalan and Mr. R.S.Singh were appointed as Wholetime Directors on 22.01.2010. Mr. S.Y. Rajagopalan and Mr. M.B.N. Rao were appointed as Additional Directors on 22.01.2010. Your approval for their appointment as Directors has been sought in the Notice convening the Annual General Meeting of the Company.

Mr. Naresh Chandra and Dr. J.J.Irani, Directors. retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Acknowledgement

Your Directors take this opportunity to thank the Financial Institutions, Banks, Government Authorities, Customers, Shareholders, Investors, employees and other stakeholdersfor their continued trust and support to the Company.

On behalf of the Board

Kolkata R K. KHAITAN

May 14, 2010 Chairman

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