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Directors Report of Electrotherm (India) Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 28th Annual Report on the business and operations of your Company and Audited Financial Statements for the year ended on 31st March, 2014.

Financial Results

The Financial year 2013-2014 was consisting of 6 (Six) months for the year ended on 31st March, 2014 and as such all references to financial year 2013-2014 in this Directors'' Report and Annual Report is to be read as year of 6 (six) months starting from 1st October, 2013 and ending on 31st March, 2014. Hence figures of the financial year 2013-2014 are not comparable with figures of previous financial year 2012-2013.

(Rs. In Crore)

Particulars 2013-2014 2012-2013 (Six Months) (Twelve Months)

Total Revenue 662.20 1,060.42

Loss before Depreciation, Finance Costs & Tax (364.91) (494.23)

Less : Depreciation 69.39 138.83

Finance Costs 1.89 101.55

Loss before exceptional and extra ordinary items and tax (A-B) (293.63) (253.85)

Exceptional items & Extraordinary Items (27.54) 0.00

Loss before Tax (321.17) (253.85)

Less : Wealth Tax 0.02 0.03

Loss after Tax / Deferred Tax (321.19) (253.88)

Add / (Less) : Prior period adjustment 0.03 (0.01)

Loss for the period / year (321.16) (253.89)

Surplus brought forward (824.92) (571.03)

Balance (1146.08) (824.92)

Less : Transfer to General Reserve - -

Balance carried to Balance Sheet (1146.08) (824.92)

Dividend

In view of losses incurred by the Company during the year, the Board of Directors of the Company do not recommend any Dividend on Equity Shares and on Preference Shares for the year ended on 31st March, 2014.

Operations

During the period of 6 months for the year ended on 31st March, 2014, the total revenue of the Company is Rs. 662.20 Crores. The Loss for the period of 6 months for the year ended on 31st March, 2014 is Rs. 321.16 Crores.

Directors

Pursuant to the provisions of the Companies Act, 2013 and Articles of Association of the Company Mr. Avinash Bhandari, Joint Managing Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

Mr. Nilesh Desai has resigned from directorship on 16th May, 2014. The Board places on record its appreciation for the services rendered by them during their tenure as members of the Board of Directors of the Company.

The Term of Mr. Mukesh Bhandari - Managing Director designated as Chairman, Mr. Shailesh Bhandari , Managing Director and Mr. Avinash Bhandari - Joint Managing Director has expired on 31st January, 2014. They being eligible have offered themselves for re-appointment and the resolution has been placed for approval of Member.

Mr. Ram Singh and Mr. Pradeep Krishna Prasad, Independent Directors, whose period of office was liable to determination by retirement of Directors by rotation under the erstwhile applicable provision of the Companies Act, 1956 are being appointed as Independent Director for a term of five consecutive years. Notice under section 160 of the Companies, Act, 2013 have been received from Members signifying their intention to propose their candidature as directors of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

As required under Clause 49 of the Listing Agreement with stock exchanges, the details of Directors seeking appointment/re-appointment at the ensuing Annual General Meeting has been provided in the Notice of the Annual General Meeting.

Corporate Social Responsibility (CSR)

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. Mr. Shailesh Bhandari is the Chairman and Mr. Avinash Bhandari and Mr. Pradeep Krishna Prasad are the Members of the Committee. The said committee has been entrusted with the responsibility of formulating and recommending to the Board a Corporate Social Responsibility Policy indicating the activities to be undertaken by the Company.

Subsidiary Companies

As on 31st March, 2014, the Company has 8 (Eight) subsidiary company in India and outside India. Pursuant to the General Circular issued by the Ministry of Corporate Affairs, Government of India copies of Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and the Report of the Auditors of subsidiary companies have not been attached with the annual accounts of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular.

The annual accounts of the subsidiary companies and the related information are available for inspection by any shareholder at the registered office of the Company during business hours and make them available upon the request by any shareholder of the Company.

Consolidated Financial Statements

Pursuant to clause 32 and 41 of the Listing Agreement and Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Board of Directors have pleasure in attaching the Audited Consolidated financial statements including the financial statements of subsidiary companies.

Fixed Deposit

The Company has neither accepted nor invited any deposit from public, within the meaning of section 58 and 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 2014, as amended, during the year under review.

Directors'' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:

1. In the preparation of the annual accounts for the year ended on 31st March, 2014, the applicable accounting standards have been followed by the company along with proper explanation relating to material departures, if any from the same;

2. Appropriate accounting policies have been selected and applied consistently and have 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 financial year and of the loss of the company for that period;

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

4. The Annual Accounts for the financial year ended on 31st March, 2014 have been prepared on a going concern basis.

Cost Auditor

The Board of Directors of your Company have on the recommendation of the Audit Committee appointed M/s. V. H. Savaliya & Associates, Cost Accountants, Ahmedabad, as Cost Auditors, to conduct the cost audit of your Company for the financial year ending 31st March, 2015, at a remuneration as mentioned in the Notice convening the AGM, subject to ratification of the remuneration by the Members of your Company.

The Audit Committee has received a Certificate from the Cost Auditors certifying their Independence and arm''s length relationship with your Company. The Cost Audit Report for the financial year 2012-13 was filed with Central Government.

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

The additional information required under the provisions of section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure - "A" which forms part of this Annual Report.

Particulars of Employees

There are no employees within the purview of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended. Hence, no information is required to be appended to this Report in this regard.

Corporate Debt Restructuring ("CDR") & BIFR Application

The CDR Cell has approved CDR Package of the Company on CDR EG Meeting dated November 14, 2013 and issued letter conveying approval on February 03, 2014. As Per CDR Directives as described in Letter of Approval under the head of "Critical conditions" the company has filed reference to BIFR on February 28, 2014. Since net worth of the Company is fully eroded, it was obligatory at the company''s end to file reference to BIFR. The Monitoring Institution i.e. Bank of India has informed the Company vide their letter dated 24th April, 2014 that they have decided the withdrawal of the case under CDR mechanism.

Corporate Governance

Your Company has complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. Pursuant to Clause 49 of the Listing Agreement, a Corporate Governance Report along with a Certificate from the Auditors confirming the compliance is annexed and forms a part of this report.

Management Discussion and Analysis Report

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report is annexed after the Directors'' Report and form a part of this report.

Auditors

M/s. Mehta Lodha & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, retires at the forthcoming Annual General Meeting and the Company has received a certificate pursuant to Section 141(3)(g) of the Companies Act, 2013 from them to effect that their re-appointment, if made, will be in accordance with the limit as specified in the said section and that they are not disqualified for re-appointment.

Auditors Report

There are certain reservations, qualifications or adverse remarks in the Auditors'' Report for the period ended on 31st March, 2014. The Board of Directors of the Company would like to clarify/explain the same as under:

1. The winding up petitions and recovery cases against the company have been contested by the Company before the statutory authorities including Courts/Tribunals and hence in our opinion the said legal cases would not affect the going concern concept of accounting to the Company.

2. The CDR Cell has approved CDR Package of the Company on CDR EG Meeting dated November 14, 2013 and issued letter conveying approval on February 03, 2014. As Per CDR Directives as described in Letter of Approval under the head of "Critical conditions" the company has filed reference to BIFR on February 28, 2014. Since net worth of the Company is fully eroded, it was obligatory at the company''s end to file reference to BIFR. The Monitoring Institution i.e. Bank of India has informed the Company vide their letter dated 24th April, 2014 that they have decided the withdrawal of the case under CDR mechanism.

3. A special Civil Application in the nature of PIL was filed in the year 2010 against the company before Hon''ble Gujarat High Court challenging the Environment Clearance for expansion of steel plant and No objection Certificate (NOC) & consolidation consent and authorization. Gujarat High Court on May 11, 2012 set aside the environment clearance with liberty to Company to apply once again and to stop the operation of the steel Plant. The Company has filed a Special Leave Petition (SLP) in the Hon''ble Supreme Court, Challenging the High Court order. After hearing, the Hon''ble Supreme Court of India on May 18, 2012 stayed the order passed by the Hon''ble Gujarat High Court. All the parties to the petition have filed their reply before the Hon''ble Supreme Court of India and now hon''ble Supreme Court of India directed the Central pollution Control Board of India and Gujarat Pollution Control Board to make joint inspection & submit the report. They have submitted the report to Hon''ble Supreme Court. The Next date for listing is 16.09.2014.

4. The Company has contested with the Excise Department and is hopeful of recovering the terminal excise duty of Rs.1.58 crore and shall also be able to recover the advance of Rs.12.23 crore on resolution of the dispute. In case of VAT liability with Maharashtra Sales Tax Department the company has contested the liability and is hopeful of recovering the advance payment of Rs.40.00 Million from Maharashtra Sale Tax Department in due course. The old Vat Input Credit Receivable is hopeful of its reliasation. Regarding VAT Assessment order 2009-2010 for Tax liability of Rs.5.94 crores. The Company has filed an appeal and hopeful to recover from the statutory authority.

5. With regard to additional disclosures in relation to financial statements, management thins it is sufficient to disclose the same in note no.2.31 of notes to accounts.

6. With regard to the third party Balance Confirmation and its classification and other issue affecting the financial statements, to the extent stated therein, the management is taking all necessary steps, so that the confirmation of the third parties are obtained and establish proper mechanism to reconcile inter departmental transactions.

With regards to slow moving inventories, the company has valued on estimate net realizable value.

With regards to capital work in progress, the said may required further investment to bring them into commercial use and therefore these are not treated as impaired assets.

7. With regards to fixed assets of other Plants are required to be physically verified and to be reconciled with the records, the management is of the view that the Company has appointed RSM Astute Consulting (Guj.) Pvt. Limited as a Internal Auditor and they make physical verification of other plant and make audit of the same.

8. With regards to defaulted in repayment of dues (including interest) to financial institution and banks, the same is mentioned in point no. 2 of the above.

Appreciation

Your Directors wish to place on record their appreciation for the valuable co-operation and support received from the Customers and Suppliers, various Financial Institutions, Banks, Government Authorities, Auditors and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the devoted services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board

Place : Ahmedabad Mukesh Bhandari Date : 13th August, 2014 Chairman


Sep 30, 2013

To, The Members

The Directors have pleasure in presenting the 27th Annual Report on the business and operations of your Company and Audited Financial Statements for the year ended on 30th September, 2013.

Financial Results

The Financial year 2012 2013 was consisting of 12 (twelve) months year ended on 30th September, 2013 and as such all references to financial year 2012 2013 in this Directors'' Report and Annual Report is to be read as year of 12 (twelve) months starting from 1st October, 2012 and ending on 30th September, 2013. Hence figures of the financial year 2012 2013 are not comparable with figures of previous financial year 2011 2012.

(Rs.In Million)

Particulars 2012-2013 2011-2012 (Twelve Months) (Eighteen Months)

Total Revenue 10616.38 22718.60

Loss before Depreciation, Finance Costs & Tax (134.76) (1418.44)

Less :Depreciation 1388.30 1991.82

Finance Costs 1015.46 4740.34

Loss before Tax (2538.52) (8150.60)

Less :Current Tax & Wealth Tax 0.25 0.23

Deferred Tax 0 (865.12)

Loss after Tax / Deferred Tax (2538.77) (7285.71)

Add / (Less) : Prior period adjustment (0.12) (6.82)

Loss for the period / year (2538.89) (7292.53)

Surplus brought forward (5710.25) 1582.28

Balance (8249.14) (5710.25)

Less :Transfer to General Reserve

Balance carried to Balance Sheet (8249.14) (5710.25)

Dividend

In view of losses incurred by the Company during the year, the Board of Directors of the Company does not recommend any Dividend on Equity Shares and on Preference Shares for the year ended on 30th September, 2013.

Operations

During the year ended on 30th September, 2013, the total revenue of the Company is Rs. 10616.38 Million compared to revenue of Rs. 22718.60 Million of previous financial year. The Loss for the year is Rs. 2538.89 Million against the Loss of Rs. 7292.53 Million of the previous financial year.

Directors

In accordance with the provisions of section 256(1) of the Companies Act, 1956 and the Article 153 of the Articles of Association of the Company, Mr. Shailesh Bhandari, Managing Director, Mr. Nilesh Desai, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re appointment.

Mr. Narendra Dalal has resigned from directorship on 31st December, 2012. The Board places on record its appreciation for the services rendered by them during their tenure as members of the Board of Directors of the Company.

Subsidiary Company

As on 30th September, 2013, the Company has 8 (Eight) subsidiary company in India and outside India. Pursuant to the general exemption granted by the Ministry of Corporate Affairs, Government of India vide General Circular No. 2/2011 dated 8th February, 2011, copies of Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and the Report of the Auditors of subsidiary companies have not been attached with the annual accounts of the Company under section 212 of the Companies Act, 1956. As required under the above said circular, a statement containing the information of subsidiaries is attached and forms part of this Annual Report.

The annual accounts of the subsidiary companies and the related information are available for inspection by any shareholder at the registered office of the Company during business hours and make them available upon the request by any shareholder of the Company.

Consolidated Financial Statements

Pursuant to clause 32 and 41 of the Listing Agreement and Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Board of Directors has pleasure in attaching the Audited Consolidated financial statements including the financial statements of subsidiary companies.

Fixed Deposit

The Company has neither accepted nor invited any deposit from public, within the meaning of section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

Directors'' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:

1. In the preparation of the annual accounts for the year ended on 30th September, 2013, the applicable accounting standards have been followed by the company along with proper explanation relating to material departures, if any;

2. Appropriate accounting policies have been selected and applied consistently and have 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 financial year and of the loss of the company for that period;

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

4. The Annual Accounts for the financial year ended on 30th September, 2013 have been prepared on a going concern basis.

Cost Auditor

Pursuant to section 233B of the Companies Act, 1956, the Board of Directors at its meeting held on 27th November, 2012 based on the audit Committee recommendations, appointed M/s. V. H. Savaliya & Associates, Cost Accountants, Ahmedabad as a cost auditor to conduct cost audit of "Steel Plant", "Tractors & other Motor Vehicles" (including automotive components)" and "Engineering Machinery (including electrical & electronic product)" for the financial year 2012 13. The said appointment has been approved by the Central Government.

The Cost Audit Report for the financial year 2011 12 was filed with Central Government.

Based on the Audit Committee recommendations, Board of Directors has re appointed M/s. V. H. Savaliya & Associates, Cost Accountants, Ahmedabad as cost auditor to conducting the cost audit of "Steel Plant", "Tractors & other Motor Vehicles" (including automotive components)" and "Engineering Machinery (including electrical & electronic product)" for the financial year 2013 14.

Particulars of Employees

There are no employees within the purview of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended. Hence, no information is required to be appended to this Report in this regard.

Corporate Debt Restructuring ("CDR")

The Company has approached the lenders to restructure the entire debt of the company. In accordance to the guideline for corporate Debt restructuring (CDR) Issued by Reserve Bank of India, the flash report of the company was discussed at CDR Empowered Group(EG) meeting and the reference for restructuring of the debt of the company was admitted with CDR Cell on August 23/24, 2012 with cut off date as January 1, 2012. But the scheme was not be finalized due to unavoidable circumstance. Bank of India the referring institution submitted a Memorandum dated July 20, 2013 for re entry of the company in CDR, the flash cum final report of the company with revised cutoff date (i.e. March 31, 2013) was submitted to CDR Cell in accordance with the guidelines for Corporate Debt Restructuring issued by the Reserve Bank of India. The final scheme had been discussed at the CDR EG Meeting and the reference to restructuring of the debt of the Company was readmitted on August 23, 2013. The final CDR package will be approved by CDR EG soon.

Corporate Governance

Your Company has complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. Pursuant to Clause 49 of the Listing Agreement, a Corporate Governance Report along with a Certificate from the Auditors confirming the compliance is annexed and forms a part of this report.

Management Discussion and Analysis Report

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report is annexed after the Directors'' Report and form a part of this report.

Auditors

M/s. Mehta Lodha & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, retires at the forthcoming Annual General Meeting and the Company has received a certificate pursuant to Section 224(1B) of the Companies Act, 1956 from them to effect that their re appointment, if made, will be in accordance with the limit as specified in the said section and that they are not disqualified for re appointment within the meaning of Section 226 of the said Act.

Auditors Report

There are certain reservations, qualifications or adverse remarks in the Auditors'' Report for the period ended on 30th September, 2013. The Board of Directors of the Company would like to clarify / explain the same as under:

1. The winding up petitions and recovery cases against the company have been contested by the Company before the statutory authorities including Courts/Tribunals and hence in our opinion the said legal cases would not affect the going concern concept of accounting to the Company.

2. The Company has approached the lenders to restructure the entire debt of the Company. In accordance to the guidelines for Corporate Debt Restructuring (CDR) issued by Reserve Bank of India, the flash report of the Company was discussed at CDR Empowered Group (EG) meeting and the reference for restructuring of the debt of the Company was admitted with CDR Cell on August 23/24, 2012 with cutoff date as January 1, 2012. Bank of India the referring Institution submitted a Memorandum dated July 20, 2013 for re entry of the Company in CDR, the flash cum final report of the Company with revised cutoff date (i.e. March 31, 2013) was submitted to CDR Cell in accordance with the guidelines for Corporate Debt Restructuring issued by the Reserve Bank of India. The final scheme had been discussed at the CDR EG Meeting and the reference to restructuring of the debt of the Company was re admitted on August 23, 2013.

3. The Company has contested with the Excise Department and is hopeful of recovering the terminal excise duty of Rs.15.79 million and shall also be able to recover the advance of Rs.122.28 million on resolution of the dispute. In case of VAT liability with Maharashtra Sales Tax Department the company has contested the liability and is hopeful of recovering the advance payment of Rs.40.00 Million from Maharashtra Sale Tax Department in due course. The Input Credit Receivable shall be adjusted on completion of the Project. The Company has incurred heavy losses hence not written off Preliminary expenses of Rs. 0.04 Million and Advertisement expenses of Rs.6.52 Million.

With regard to the third party Balance Confirmation and its classification and other issue affecting the financial statements to the extent stated therein, the management is taking all necessary steps so that the confirmation of the third parties are obtained and establish proper mechanism to reconcile inter departmental transactions. With regards to capital work in progress, the company shall be able to complete all pending projects in current year, hence shall not required provision for impairment of assets. With regard to slow moving inventories The Company has valued it on estimate net realizable value.

The Company is under process of restructuring its debt with banks and financial institution under CDR mechanism and the restructuring package envisages reduction in interest rates with cut off date of March 31, 2013 and further envisages funding of interest for prior period overdue interest, hence the defaulted amount shall be crystallized once the scheme is finalized and shall be converted into fresh loan. Hence in opinion of the management of the company, the matter shall be resolved on receipt of the Letter of Approval (LOA) from CDR EG.

4. The company has initiated the process of updating the records of fixed assets afresh and the Management is of the opinion that it shall be able to comply with the requirement in due course of financial year.

5. The Company has been incurring cash losses since June, 2011 and considering the liquidity crunch at times there have been certain delays in fulfilling statutory payments. The management of the company shall try to pay future statutory dues within statutory time lines.

6. With regard to strengthen the Internal Audit System; the management is of the opinion that RSM astute is the Internal Auditor of the Company. Further concurrent auditors namely M/s. A. L. Chechani & Company and M/s. Mandovara Shah and Associates have been appointed as a joint concurrent auditors as per the advice by the bankers of the Company. The Board of directors is of the view that the appointment of concurrent auditor and internal auditor has strengthened the internal control system substantially which is commensurate with size and nature of business of the Company.

Appreciation

Your Directors wish to place on record their appreciation for the valuable co operation and support received from the Customers and Suppliers, various Financial Institutions, Banks, Government Authorities, Auditors and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the devoted services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board

Place: Ahmedabad Mukesh Bhandari

Date:22nd November, 2013 Chairman


Mar 31, 2011

The Members

The Directors have pleasure in presenting the 25th Annual Report on the business and operations of your Company and Audited Financial Statements for the financial year ended on 31st March, 2011.

FINANCIAL RESULTS:

(Rs. In Millions)

Particulars 2010-2011 2009-2010

Sales and other Income 23114.23 20168.35

Profit before Interest, Depreciation & Tax 3412.19 2859.15

Interest & Financial Charges 1924.82 1332.52

Depreciation 1077.76 723.76

Profit before Tax 409.61 802.87

Provision for Tax 76.14 136.45

Profit after Tax (Before Deferred Tax) 333.47 666.42

Provision for Deferred Tax 50.63 120.39

Profit after Deferred Tax 282.84 546.03

Prior period adjustment 5.41 (8.06)

Profit after prior period adjustment 288.25 537.97

Surplus brought forward 1494.03 1198.05

Balance 1782.28 1736.02

(a) Proposed Dividend on Equity Shares 0.00 28.69

(b) Proposed Dividend on Preference Shares 0.00 7.20

(c) Tax on Dividend 0.00 6.10

(d) Transfer to General Reserves 200.00 200.00

Balance Carried forward 1582.28 1494.03

DIVIDEND

In Order to conserve the financial resources, the Board of Directors of the Company do not recommended any Dividend on Equity Share and on Preference Share for the financial year 2010-11.

OPERATIONS

During the year, your Company has achieved a turnover of Rs. 22968.93 Millions representing an increase of 14.69% over the previous year turnover of Rs. 20027.53 Millions. The Net Profit for the year is Rs. 288.25 Millions as against Rs. 537.97 Millions of the previous year.

EXPORTS

During the year, the Company has achieved Export Turnover of Rs. 611.48 Millions as against Rs. 534.53 Millions. Our Exports are mainly from Engineering & Projects Division. It was marginally increase compared to previous year.

DIRECTORS

In accordance with the provisions of section 256(1) of the Companies Act, 1956 and the Article 153 of the Articles of Association of the Company, Mr. Shailesh Bhandari, Managing Director and Mr. Avinash Bhandari, Joint Managing Director, Dr. Sudhir Kapur, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

During the year, Mr. Ashok Kumar Lahiri was appointed as a Director on 26.10.2010 and resigned on 04.02.2011. ICICI Venture Funds Management Company Limited on July 06 2011 has withdrawn the nomination of Mr. Parth Gandhi as a Nominee Director and Mr. Parth Gandhi has also given his resignation letter on July 06, 2011. The same was received by the Company on July 28, 2011 and the Board of Directors has approved the same on Board meeting held on August 12, 2011. The Board places on record its appreciation for the services rendered by him during his tenure as Member of the Board.

SUBSIDIARIES

As on March 31st, 2011, the Company has the following Subsidiaries namely:

1. ET Elec-Trans Limited

2. Bhaskarpara Coal Company Limited

3. Jinhua Indus Enterprises Limited

4. Jinhua Jahari Enterprises Limited

5. Shree Ram Electrocast Private Limited

6. Hans Ispat Limited

7. Shree Hans Papers Limited

8. Electrotherm Mali SRL

As per Section 212 of the Companies Act, 1956, we are required to attach Directors' report, Auditors' Report, Balance Sheet and Profit and Loss account of our subsidiaries. The Ministry of Corporate Affairs, Government of India vide its Circular No.2/2011 dated 08.02.2011 has provided an exemption to Companies from complying with section 212, provided such Companies publish the Audited Consolidated financial statements in the Annual Report. Accordingly the Annual Report 2010-11, does not contain the financial statements of our subsidiaries. The audited annual accounts and related information of our subsidiaries, where applicable, will be made available upon request. These documents will also be available for inspection during business hours at our registered office. The same will also given on our website : www.electrotherm.com

CONSOLIDATED FINANCIAL STATEMENTS

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

FIXED DEPOSIT

The Company has neither accepted nor invited any deposit from public, within the meaning of section 58A and 58AA of the Companies Act, 1956 and the Rules made there under.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:

1. In the preparation of the annual accounts for the year ended on 31st March, 2011, the applicable accounting standards have been followed by the company along with proper explanation relating to material departures, if any;

2. Appropriate accounting policies have been selected and applied consistently and have 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 financial year and of the profit of the company for that period;

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

4. The Annual Accounts have been prepared on a going concern basis.

RESEARCH & DEVELOPMENT

R & D is the back bone of the company and could progress due to focus on new product - process development in line with emerging technology and customer demand. Development activity is primarily addressing energy efficiency, safety apart from user friendliness. R & D manpower is continuously exposed to learn new technology and encouraged to take challenge being demanded by the industry.

The development activity is addressing changing requirement and features in the existing product manufactured and sold by the company. It also addresses the raising needs of the existing customers by way of new equipment or process.

HUMAN CAPITAL DEVELOPMENT AND INTEGRATION WITH BUSINESS PROCESSES IN THE COMPANY

The Company on its journey to build Organizational Capability has taken following initiatives to cope up with change in business environment during the year;

- Communication of Vision, Mission and Values across the Organization.

- Engaged Customer Lab for Strategy Development through implementation of Strategy Map and Balanced Scorecard. Linked Performance Management System to Balanced Scorecard. Linked Variable Pay to performance. Launched Recognition Program to create conducive environment by developing healthy result oriented work culture and promoting collaborative teams.

- Conducted "Organization Pulse Survey" across the organization through KPMG to know the pulse of the organization.

- Rolled out HR Policies to strengthen the HR systems & processes and retain the right talent.

- EBIDTA improvement and operational excellence initiatives taken in Steel Division including development of Maintenance Systems in DIP Division. Strengthen Project Management Capability and launched Total Quality Management Initiatives in E&P Division in partnership with Price Waterhouse Coopers.

- Investment in Training and Development of People for capability building. Launched Induction Training Program.

- Launched Mass-scale Innovation Workshop, an organization wide intervention to convert Vision into Reality.

- Institutionalized Corporate Communication Function to strengthen employee engagement. Launched "Jyoti - People First Bulletin" to bring visibility of various happenings in the company and connect the people.

- Strengthened Enterprise Resource Management capability through implementation of SAP software across the organization.

- Launched Knowledge Management Portal to enhance the organization's performance through the improvement and sharing of organizational knowledge.

- Initiatives to transform Recruitment to Talent Management.

- Designed Organization Structure for all the levels and developed Role Profiles for the various positions.

Industrial Relations were cordial at all locations. In a challenging environment and business conditions, the support from the workforce was positive throughout.

The Company had 02 employees who were in receipt of remuneration of not less than Rs. 60.00 Lacs during the year or Rs. 5.00 Lacs per month during any part of the said year. The information required under section 217(2A) of the Companies Act, 1956 and the Rules made there under is not provided in the Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary of the Company.

COST AUDITOR

Pursuant to Section 233-B of the Companies Act, 1956 and Circular No. F No. 52/26/cab-2010 dated 02.05.11 and Circular No. F. No.52/ 26/cab-2010 dated 03.05.11 issued by the Ministry of Corporate affairs, Cost Audit Branch ordering the Cost Audit of the Listed Companies for its "Steel Plant" and "Electricity Industry" every year. Hence to comply the said order, the Company has appointed M/s. V.H. Savaliya & Associates, Ahmedabad as a Cost Accountant for the year 2011-12. The Cost Audit Report for the year 2011-12 will be submitted to the Central Government on or before the due date.

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

The additional information required under the provisions of section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure - "A" which forms part of this Annual Report.

"GROUP" FOR INTER-SE TRANSFER OF SHARES

As required under Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, person constituting "Group" (within the meaning defined in the Monopolies and Restrictive Trade Practice Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are given in Annexure –"B" which forms part of this Annual Report

CORPORATE GOVERNANCE

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. Pursuant to Clause 49 of the Listing Agreement, a Corporate Governance Report along with a Certificate from the Auditors confirming the compliance is annexed and forms a part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report are annexed after the Director's Report and forms a part of this report.

AUDITORS & AUDITORS' REPORT

M/s. Mehta Lodha & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, retires at the forthcoming Annual General Meeting and the Company has received a certificate pursuant to Section 224(1B) of the Companies Act, 1956 from them to the effect that their re-appointment, if made, will be in accordance with the limits as specified in the said section.

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.

APPRECIATION

Your Directors wish to place on record their appreciation for the valuable co-operation and support received from the Customers and Suppliers, various Financial Institutions, Banks, Government Authorities, Auditors and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the devoted services of the Executives, Staff and Workers of the Company for its success.

For and on behalf of the Board

Place : Ahmedabad Mukesh Bhandari

Date : 12th August, 2011 Chairman & Chief Technology Officer


Mar 31, 2010

The Directors have pleasure in presenting the 24th Annual Report on the business and operations of your Company and Audited Financial Statements for the Financial Year ended on 31st March, 2010.

FINANCIAL RESULTS

(Rs. In Millions)

Particulars 2009-2010 2008-2009

Sales and other Income 20168.35 16897.12

Profit Before Interest, Depreciation & Tax 2859.15 2441.14

Interest & Financial Charges 1332.52 1150.47

Depreciation 723.76 517.91

Profit Before Tax 802.87 772.76

Provision for Tax 136.45 93.05

Profit After Tax (Before Deferred Tax) 666.42 679.71

Provision for Deferred Tax 120.39 172.55

Profit After Deferred Tax 546.03 507.15

Prior period adjustment (8.06) 15.31

Profit after prior period adjustment 537.97 522.46

Surplus brought forward 1198.05 917.58

Balance 1736.02 1440.04

(a) Proposed Dividend on Equity Shares 28.69 28.69

(b) Proposed Dividend on Preference Shares 7.20 7.20

(c) Tax on Dividend 6.10 6.10

(d) Transfer to General Reserves 200.00 200.00

Balance Carried forward 1494.03 1198.05

DIVIDEND

In view of the Companys profitable performance, the Director are pleased to recommend dividend of Rs. 2.50 (25%) per equity share of Rs. 10/- each and Rs. 0.60 (6%) per preference share of Rs. 10/- each, subject to approval of shareholders at the 24th Annual General Meeting. The dividend will be paid on 1,14,76,374 Equity Shares at Rs. 2.50 per share aggregating to Rs. 28.69 Millions and on 1,20,00,000 Non-Cumulative Redeemable Preference Shares at Rs. 0.60 per share aggregating to Rs. 7.20 Millions besides applicable Dividend Distribution Tax.

OPERATIONS

During the year, your Company has achieved a turnover of Rs. 20,027 Millions representing an increase of 19.01% over the previous year turnover of Rs. 16,827 Millions. The Net Profit for the year is Rs. 538 Millions as against Rs. 522 Millions of the previous year, showing marginal increase of 2.97%.

CAPITAL PROJECTS

During the year, the Company has successfully commissioned the production of Blast Furnace - II and Ductile Iron Pipe. Alloy Steel Plant is under construction.

EXPORTS

During the year, the Company has achieved export turnover of Rs. 535 Millions as against Rs. 2337 Millions. Our Export is mainly from Engineering & Projects Division, which was affected by global turmoil. Many Companies globally have deferred their capital expenditure resulting in lower order book position. Your Directors expect recovery in the coming year and foresee a good growth in export of its products.

DIRECTORS

In accordance with the provisions of section 256(1) of the Companies Act, 1956 and the Article 153 of the Articles of Association of the Company, Mr. Narendra Dalal, Whole-Time Director, Mr. Ravikumar Trehan and Mr. Nilesh Desai, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

Pursuant to Article 231 of the Articles of Association of the Company and pursuant to the Shareholders Agreement executed with ICICI Venture Funds Management Company Limited on 10th March, 2007, the Investor shall have a right to nominate one Director on the Board. The Investor has nominated Mr. Parth Gandhi in place of Mr. Sunay Mathure with effect from 30th May, 2010. The Shareholders are required to kindly confirm his appointment. The Board places on record its appreciation for the services rendered by Mr. Sunay Mathure during his tenure as Member of the Board.

For perusal of the shareholders, a brief resume of each of the directors being appointed or re-appointed are given and forms part of the Notice. Your Directors recommend their re-appointment.

SUBSIDIARIES

As on 31st March 2010, the Company has following Subsidiaries namely :

1. ET Elec-Trans Limited

2. Bhaskarpara Coal Company Limited

3. Jinhua Indus Enterprises Limited (China)

4. Jinhua Jahari Enterprises Limited (China)

As required under section 212 of the Companies Act, 1956, the financial statements of subsidiaries of the Company are attached herewith and forms part of this Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

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

ACQUISITIONS

After the successful implementation of the organic growth strategy, your Company has now aggressively earmarked an inorganic growth strategy.

During the year, the Company has acquired plant near Baroda for the Transmission Line Tower during March, 2010. This will help forward integration and entry into value added products made out of MS Angles produced by the Company at its plant at Kutch.

After the closure of Financial Year 2009-2010, in May, 2010, the Company has acquired 100% shareholding of Shree Ram Electrocast Private Limited, a Company having its Registered Office at Kolkata and manufacturing complex at Siruguppa, Bellary, Karnataka, for Pig Iron with installed capacity of 1,20,000 MT per annum and Power Generation Plant of 2.5 MW.

In June, 2010, the Company has acquired 100% shareholding of Hans Ispat Limited, a Kutch – Gujarat based Company having manufacturing facilities for Billet of 84000 TPA, TMT Rolling Mill of 1,20,000 TPA and SS Rolling Mill of 72000 TPA per annum. The Company has also acquired the shareholding in Shree Hans Papers Limited, a subsidiary of Hans Ispat Limited which does not have any operations, except owing land.

As a result, all the three Companies mentioned above have become subsidiaries of the Company during the Financial Year 2010-2011.

FIXED DEPOSIT

The Company has neither accepted nor invited any deposit from public, within the meaning of section 58A and 58AA of the Companies Act, 1956 and the Rules made there under.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:

1. In the preparation of the annual accounts for the year ended on 31st March, 2010, the applicable accounting standards have been followed by the Company along with proper explanation relating to material departures, if any;

2. Appropriate accounting policies have been selected and applied consistently and have 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 Financial Year and of the profit of the Company for that period;

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

4. The Annual Accounts have been prepared on a going concern basis.

RESEARCH & DEVELOPMENT

Your Company, being primarily an engineering Company, is continuously making efforts to explore, learn and absorb emerging technologies. The Company continuously makes investment in tools and equipment to facilitate research. It is also providing training to its employees to facilitate development of new products appropriate for the business of the Company. Energy conservation, safety, user friendliness are some of the key focus area while upgrading or developing new products.

Continuous research and development is going on to enhance the functions of various products manufactured and sold by the Company. The development and up gradation of equipment is carried out with a view to meet the raising needs of the existing customers. Proactive research is also being carried out to impart new features to the various products keeping the future needs of the customers in mind.

HUMAN RESOURCES

Industrial Relations were cordial at all locations. In a challenging environment and business conditions, the support from the workforce was positive throughout.

The Company had 8 employees who were in receipt of remuneration of not less than Rs. 24 lacs during the year or Rs. 2 lacs per month during any part of the said year. The information required under section 217(2A) of the Companies Act, 1956 and the Rules made thereunder is provided in the Annexure forming part of the Report. In terms of section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary.

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

Additional information required under the provisions of section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure – A which forms part of this Annual Report.

"GROUP" FOR INTER-SE TRANSFER OF SHARES

As required under Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, person constituting “Group” (within the meaning defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are given in Annexure – B which forms part of this Annual Report.

CORPORATE GOVERNANCE

Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. Pursuant to clause 49 of the Listing Agreement, a Corporate Governance Report alongwith a Certificate from the Auditors confirming the compliance is annexed and forms a part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report is annexed to the Directors Report and forms a part of this Report.

AUDITORS & AUDITORS REPORT

M/s. Mehta Lodha & Co., Chartered Accountants, Ahmedabad, Statutory Auditors of the Company, retires at the forthcoming Annual General Meeting and the Company has received a certificate pursuant to section 224(1B) of the Companies Act, 1956 from them to the effect that their re-appointment, if made, will be in accordance with the limits as specified in the said section.

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 need no further explanation.

APPRECIATION

Your Directors wish to place on record their appreciation for the valuable co-operation and support received from the Customers and Suppliers, various Financial Institutions, Banks, Government Authorities, Auditors and Shareholders during the Year under review. Your Directors also wish to place on record their deep sense of appreciation for the devoted services of the Executives, Staff and Workers of the Company for its success.

For and on behalf of the Board

Place : Palodia Mukesh Bhandari

Date : 13th August, 2010 Chairman & Chief Technology Officer