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Directors Report of ISMT Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Annual Report and Audited Accounts of the Company for the year ended March 31,2015.

FINANCIAL HIGHLIGHTS Rs. in Crore

Particulars Financial Year

2014-15 2013-14

Gross Sales 2320.15 2563.10

Profit/(Loss) before Finance 46.17 102.91 Charges, Depreciation,

Amortization & Tax (EBIDTA)

Cash Profit/ (Loss) (250.70) (102.56)

Gross Profit/ (Loss) (180.17) (80.62)

Profit/ (Loss) Before Tax (220.99) (204.65)

Taxation 0.00 (34.36)

Net Profit/ (Loss) (220.99) (170.29)

Add: Balance brought forward from (245.27) (74.98)

Previous Year

Balance available for Appropriation (472.19) (245.27)

Appropriations / Transfer to Reserves NIL NIL

Balance carried to Balance Sheet (472.19) (245.27)

DIVIDEND

Your Directors are unable to recommend a dividend for the year ended on March 31, 2015, in view of the loss.

OPERATIONS

This has been one of the most difficult years with all the three plants viz. Baramati, Jejuri and Ahmednagar recording lowest production and sales in last 10 years. The continuing imports resulted in tube segment operating at 25% capacity.

MARKET

Both domestic and export markets continued to be extremely challenging - on account of large volume of imports at low prices and sharp drop in oil prices in the international market.

FINANCE

The Joint Lenders’ Forum (JLF) of the Company bankers had mandated SBI Capital Markets Limited to make a financial plan and had also commissioned Techno Economic Viability Study by Dun and Bradstreet Information Services India Pvt. Ltd. The JLF then approved a Corrective Action Plan for fresh Corporate Term Loans of Rs. 450 Crore by way of rectification.

Term Loans of Rs. 405 Crore were accordingly disbursed during the year. Due to increased borrowings and higher interest rates, the finance cost shot up by more than 23%.

The Corrective Action Plan (CAP), however, failed to achieve the desired result primarily due to aggressive Chinese imports in the absence of a deterrent Import Duty. The Company is now discussing with Bankers the various options including Restructuring.

CAPTIVE POWER PLANT

Captive Power Plant (CPP) had envisaged that the Coal Linkage will be available and the Banking of Power will be allowed, both of which are still not in place resulting in large losses. The Company has now appealed to APTEL against the MERC order denying Banking to the Company.

The Company has yet to receive an amount of Rs. 40.83 Crore from MSEDCL towards excess energy charges paid on account of non availability of Banking facility.

IMPORT DUTY

The Safeguard Duty of 20% was finally imposed after about two years in August, 2014 which will soon come down to 10% in August 2015. The domestic industry has since filed an application for levy of Anti Dumping Duty against imports from China.

It is critical for survival of the industry that steep and long term Anti Dumping Duty is imposed at the earliest and that the Provisional Duty is urgently levied immediately after initiation of Anti Dumping Proceedings.

SALE OF NON CORE ASSETS

Reduction of debt through sale of non core assets is one of the highest priority of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013 (‘Act’) and the Articles of Association of the Company, Mr. O. P. Kakkar retires by rotation and being eligible, offers himself, for re-appointment.

IDBI Bank Limited had appointed Mr. Ajit Ingle as its Nominee Director in place of Mr. Suresh Khatanhar on the Board of the Company w.e.f September 6, 2014. The Board placed on record its sincere appreciation and gratitude for his guidance and contribution to the Company.

Mr. Salil Taneja whose term as Whole-time Director was upto November 30, 2014 has resigned as Director of the Company w.e.f. December 1, 2014. The Board placed on record its appreciation and gratitude for his guidance and contribution to the Company.

Mr. B. R. Taneja was appointed as the Managing Director of the Company w.e.f. December 1, 2014 for a period of 2 (two) years with approval of the Members of the Company by way of Postal Ballot.

Mr. Rajiv Goel has been re-appointed as a Whole-time Director of the Company w.e.f. December 1, 2014 for a period of 1 (one) year subject to approval of the Members of the Company at its ensuing Annual General Meeting (AGM).

The Independent Directors ofthe Company had given a declaration pursuant to Section 149 (7) of the Act.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors like : Knowledge and Skills, Familiarity with the Company and its business, Monitoring Company’s Corporate Governance Practices, Development of strategies and risk management, Participation and attendance in meetings, Professional conduct and Sharing of information etc.

The details of familiarisation programme of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at www.ismt.com

AUDITORS

Pursuant to Section 139 of the Companies Act, 2013 and the Rules framed thereunder, the members of the Company at the 16th AGM held on September 26, 2014, approved the appointment of M/s. P G. Bhagwat and J. K. Shah & Co., as Joint Statutory Auditors of the Company to hold office for a period of 3 (three) consecutive years till the conclusion of 19th AGM, subject to ratification of their appointment at every AGM.

In respect of the Qualified Opinion and Emphasis of Matter by the Auditors on the Standalone and Consolidated Financial Statement, it has been explained in the Notes forming part of said Financial Statements which are self-explanatory and do not call for further comments.

COST AUDITORS

Pursuant to Section 148 of Companies Act, 2013 read with The Companies (Audit and Auditors) Rules, 2014, your Directors had, on recommendation of the Audit Committee, approved the appointment and remuneration of following Cost Auditors for Financial Year 2014-15:

(i) M/s. Dhananjay V. Joshi & Associates and

(ii) M/s Parkhi Limaye & Co.

The payment of remuneration for FY 2014-15 to aforesaid Cost Auditors is subject to ratification by the Members at the ensuing Annual General Meeting.

The Cost Audit Report for the financial year 2013-14 was due on September 30, 2014 and was filed with the Ministry of Corporate Affairs on September 26, 2014.

SUBSIDIARIES

As on date of this report, the Company continued to have eleven direct and indirect subsidiary companies. A report in Form AOC-1 on the performance and financial position of each of the subsidiary companies as per the Companies Act, 2013 included in the consolidated financial statement is provided in the Financial Statements forming part of this Annual Report.

The Company has framed a Policy for determining Material Subsidiaries which is available on its website at www.ismt.com

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Management Discussion Analysis and Corporate Governance Report together with a Certificate from the Company’s Auditors on compliance, is forming part of this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, your Directors make the following statement:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31,2015 and of the Loss of the Company for that period;

iii) 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, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) That the Directors have prepared the annual accounts on a going concern basis;

v) That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

vi) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT-9 is forming part of this Report as Annexure A.

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

The particulars as required under Section 134(3)(m) of the Companies Act, 2013 is forming part of this report as Annexure B.

NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration Policy of the Company on director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters is available on the website of the Company at www.ismt.com.

The criteria for performance evaluation as laid down by Nomination and Remuneration Committee has been defined in the Nomination and Remuneration Policy.

Detail pertaining to remuneration of Directors and employees required under Section 197(12) of the Companies Act, 2013 read with Rules framed thereunder are forming part of this Report as Annexure C.

SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Act, the Board has appointed M/s. MRM Associates, Company Secretaries in Practice as Secretarial Auditors to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2015. The Report of the Secretarial Auditors is forming part of this Report as Annexure D. The Company is in the process of appointing an Independent Woman Director to address both the observations of the Secretarial Audit Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of Loans, Guarantees and Investments covered under Section 186 of the Act forming part of the Notes to the Financial Statements is forming part of this Report.

RISK MANAGEMENT

The Management of the Company has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company’s risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, liquidity, security, property, IT, regulatory and other risks have been identified and assessed and there is an adequate risk management policy in place capable of addressing those risks.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to Section 135 of the Companies Act, 2013 a CSR Committee constituted by the Board of Directors consists of three directors including one independent director.

AUDIT COMMITTEE AND VIGIL MECHANISM

Pursuant to Section 177 of the Companies Act, 2013 an Audit Committee constituted by the Board of Directors consists of three directors with independent director forming a majority.

The Whistle Blower Policy/ Vigil Mechanism of the Company was established by the Board of Directors and is available on the website of the Company at www.ismt.com.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which were either not at an arm’s length or not in the ordinary course of business and further could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Hence, there is no information to be provided in Form AOC-2 while the particulars of all Related Party Transactions in terms of AS-18 are forming part of the financial statements.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company’s website at www.ismt.com.

GENERAL

1. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

2. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for the continued support and co-operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders.The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and teamwork.

For and on behalf of the Board of Directors Pune S C Gupta May 30, 2015 Chairman






Mar 31, 2014

Dear members,

The Directors have pleasure in presenting the Annual Report and Audited Accounts of the Company for the year ended March 31, 2014.

FINANCIAL HIGHLIGHTS Rs. in Crore

Particulars Financial Year 2013-14 2012-13

Gross Sales 2563.10 2513.02

Profit / (Loss) before Finance Charges, Depreciation, Amortization & Tax (EBIDTA) 102.91 179.36

Cash Profit / (Loss) (102.56) (45.00)

Gross Profit / (Loss) (80.62) 26.69

Profit / (Loss) Before Tax (204.65) (140.63)

Taxation (34.36) (40.92)

Net Profit / (Loss) (170.29) (99.71)

Add: Balance brought forward

from Previous Year (74.98) 24.73

Balance available for Appropriation (245.27) (74.98)

Appropriations NIL NIL

Balance carried to Balance Sheet (245.27) (74.98)

DIVIDEND

Your Directors are unable to recommend a dividend for the year ended on March 31, 2014, in absence of adequate profits.

OPERATIONS

All the Plants viz., the two Tube Plants at Ahmednagar and Baramati, the Steel Plant at Jejuri and the Captive Power Plant at Chandrapur operated at poor utilization levels leading to higher production cost. However, the focus on internal cost cutting, both fixed and variable and minimizing working capital could partially mitigate the same.

MARKET

The recessionary international environment, a weak domestic market and large imports put tremendous pressure on domestic market. Exports were also drastically affected as a result of slump in US Sales.

FINANCE

While the Company raised long term loans of Rs. 235 Crore during the year, it did not result in the desired improvement given the continuing losses arising from the external factors as above. These losses have led to further erosion in net working capital and the Company is evaluating various options for meeting its requirements.

Due to increased borrowings and higher interest rates, the finance cost shot up by more than 20%.

CAPTIVE POWER

The operation of Captive Power Plant was adversely affected on account of lower production in Tube and Steel Plants. The Company''s persistent efforts in obtaining the coal linkage to improve the viability are continuing and its petition with MERC to get the Banking Agreement is still awaiting decision.

SAFEGUARD DUTY

There has been considerable delay in implementation of Safeguard Duty despite the initiation of Safeguard investigation in April 2013. The Safeguards authority has now recommended Safeguard Duty of 25% subject to the approval of the Safeguards Board. In the absence of this protection, the domestic industry continued to suffer from increasing imports in a declining market.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. J.P. Sureka retires by rotation and being eligible, offers himself, for re-appointment.

Mr. Vinod Sethi, Independent Director resigned from the Board on February 11, 2014. The Board placed on record its sincere appreciation and gratitude for his guidance and contribution to the Company.

In compliance with the provisions of Section 149 read with Schedule IV of the Companies Act, 2013, the appointment of Mr. S. C. Gupta and Mr. K.K. Rai as Independent Director(s) is being placed before the Members in the forthcoming Annual General Meeting for their approval.

AUDITORS

M/s. P. G. Bhagwat and J. K. Shah & Co., Joint Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting (AGM) and being eligible have offered themselves for re-appointment.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. P. G. Bhagwat and J. K. Shah & Co., as Joint Statutory Auditors of the Company from the conclusion of the forthcoming AGM for a period of three years until the conclusion of the AGM for the year ending March 31, 2017 subject to ratification of their appointment at every Annual General Meeting.

In respect of the Qualified Opinion and Emphasis of Matter by the Auditors on the Standalone and Consolidated Financial Statement, it has been explained in the Notes forming part of said Financial Statements which are self-explanatory and therefore do not call for any further comments.

COST AUDITORS

The Central Government had approved appointment of the following Cost Auditors for Financial Year 2013-14:

(i) M/s. Dhananjay V. Joshi & Associates and

(ii) M/s Parkhi Limaye & Co.

The Cost Audit Report for the year 2012-13 was due on September 30, 2013 and was filed with the Ministry of Corporate Affairs on September 27, 2013.

SUBSIDIARIES

As on date of this report, the Company has eleven direct and indirect subsidiary companies. The Central Government has granted general exemption to the holding Companies from attaching the Annual Accounts of their subsidiary companies. The Annual Accounts of these subsidiary companies and other relevant information shall be made available for inspection at the Company''s Registered Office.

In accordance with the Accounting Standard (AS 21), the audited consolidated financial statement of the Company forming part of this report is attached hereto.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance and Management Discussion & Analysis together with a Certificate from the Company''s Auditors on compliance, forming part of this Report is attached hereto.

RESEARCH & DEVELOPMENT

As part of the Company''s overall strategy, throughout the year the Company remained focused on developing value added products for all its market segments including Energy, OCTG, Bearing, Auto and Mining Sectors. R & D activities also focused on process cost reductions. Details of the R & D activities undertaken are enumerated in Annexure I to this Report.

PARTICULARS OF DISCLOSURE

The particulars in respect of energy conservation, technology absorption and foreign exchange earnings & outgo etc. as required under Section 217(1)(e) of the Companies Act, 1956 are given in Annexure I to this report. The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 forming part of this Report are given in Annexure II to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors make the following statement:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2014 and of the Loss of the Company for that period;

iii) 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;

iv) that the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for the continued support and co-operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders. The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and team work.

For and on behalf of the Board of Directors

Pune S C Gupta May 28, 2014 Chairman


Mar 31, 2013

To the Members of ISMT Limited

The Directors have pleasure in presenting the Annual Report and Audited Accounts of the Company for the year ended March 31, 2013

FINANCIAL HIGHLIGHTS

Rs. in Crore

Particulars Financial Year 2012-13 2011-12

Gross Sales 2513.02 2980.60

Profit / (Loss) before Finance Charges, Depreciation, Amortization &Tax(EBIDTA) 171.51 265.47

Cash Profit (45.00) 107.08

Gross Profit 18.85 144.68

Profit / (Loss) Before Tax (140.63) 28.66

Taxation (40.92) 0.07

Net Profit / (Loss) (99.71) 28.59

Add : Balance brought forward from Previous Year 24.73 58.91

Balance available for Appropriation (74.98) 87.50

Appropriations

Dividend 10.99

Tax on Dividend 1.78

General Reserve 50.00

Balance carried to Balance Sheet (74.98) 24.73

DIVIDEND

Your Directors are unable to recommend a dividend for the year ended on March 31, 2013, in absence of adequate profits.

OPERATIONS

As a result of adverse market conditions, particularly on the domestic front, volumes dropped significantly both in Tube as well as Steel. In turn, lower volumes led to higher fixed costs per ton, resulting in a further erosion of margin.

During the year the Company''s focus was on containing its losses by initiating a number of cost reduction measures at its plants with a special emphasis on improving yields, reducing input costs, and reducing the PQF mill process cost.

MARKET

Faced with an uncertain economic situation, both domestically as well as internationally, a volatile domestic currency, and steep inflation, 2012-13 was a very difficult year for the Company. The recessionary international environment, a slow domestic market, coupled with large imports from China put tremendous downward pressure on margins as well as volumes. As a result, domestic Steel & Tube sales fell by 24% and exports fell by 22%.

FINANCE

The Company continues to closely monitor its forex exposure despite which the extreme volatility resulted in a loss of Rs. 63.85 Crore. This is largely offset by savings on interest cost on total forex borrowings of Rs. 1121 Crore.

Due to increased borrowings and higher interest rates the finance costs went up steeply.

CAPTIVE POWER

The Captive Power Plant commissioned during the year is operating satisfactorily. However, the expected reduction in power cost has not been fully realised because of -

(a) non availability of coal linkage.

(b) the denial of banking facilities by MSEDCL, despite valid agreement for Banking with MSEDCL.

SAFEGUARD DUTY

As repeatedly pointed out in the Chairman''s communication to the shareholders, the Company has undergone immense suffering because of the cheap & unabated imports from China and other countries. Imports have increased dramatically during last three years resulting in serious injury to me domestic Seamless Tube Industry in the form of declining profitability, increase in idle capacity, drop in domestic market share, and an increase in inventory levels.

Recognising the serious injury to the domestic industry the Director General of Safeguards has already proceeded with Safeguard investigation.

DIRECTORS

Mr. A. K. Jain, Director of the Company, expired on April 12, 2013. The Board of Directors express grief on his sad demise.

Mr. Nirmal Chandra, Whole-Time Director designated as President (Project & Product Development) ceased to be Director of the Company w.e.f. November 30, 2012 on completion of his term of office.

IDBI Bank Limited has withdrawn the nomination of Mr. V. Gourishankar from the Board and instead appointed Mr. Suresh Khatanhar as its Nominee Director, w. e. f June 6, 2012.

The Board places on record its sincere appreciation of the services rendered by Mr. A. K. Jain, Mr. Nirmal Chandra and Mr. V. Gourishankar during their respective association with the Company.

Mr. O. P. Kakkar was appointed as an Additional Director of the Company on November 8, 2012. He holds office up to the date of the ensuing Annual General Meeting (AGM) of the

Company and is eligible for appointment. Members'' approval has been sought in the Notice convening AGM for his appointment as a Director of the Company liable to retire by rotation.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. S. C. Gupta and Mr. Rajiv Goel retire by rotation and being eligible, offers themselves, for re-appointment.

AUDITORS

M/s. P. G. Bhagwat and J. K. Shah & Co., Joint Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

In respect of the Emphasis of Matter by the Auditors on the Standalone and Consolidated Financial Statement, it has been explained in the Notes forming part of said Financial Statements which are self-explanatory and therefore do not call for any further comments.

COST AUDITORS

The Central Government had approved appointment of the following Cost Auditors for Financial Year 2012-13 :

(i) M/s. Dhananjay V. Joshi & Associates and

(ii) M/s Parkhi Limaye & Co.

The Cost Audit Report for the year 2011-12 was due on January 31, 2013 and was filed with the Ministry of Corporate Affairs on December 31, 2012.

SUBSIDIARIES

As on date of this report, the Company has eight direct and indirect subsidiary companies. The Central Government has granted general exemption to the holding Companies from attaching the Annual Accounts of their subsidiary companies. The Annual Accounts of these subsidiary companies and other relevant information shall be made available for inspection at the Company''s Registered Office.

In accordance with the Accounting Standard (AS 21), the audited consolidated financial statement of the Company forming part of this report is attached hereto.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance and Management Discussion & Analysis together with a Certificate from the Company''s Auditors on compliance, forming part of this Report is attached hereto.

RESEARCH & DEVELOPMENT

As part of the Company''s overall strategy, throughout the year the Company remained focused on developing value added products for all its market segments including Energy, OCTG, Bearing, Auto and Mining Sectors. R & D activities also focused on process cost reductions. Details of the R & D activities undertaken are enumerated in Annexure I to this Report.

PARTICULARS OF DISCLOSURE

The particulars in respect of energy conservation, technology absorption and foreign exchange earnings & outgo, etc. as required under Section 217(l)(e) of the Companies Act, 1956 are given in Annexure I to this report. The particulars of employees as required under Section 217 (2 A) of the Companies Act, 1956 forming part of this Report are given in Annexure II - to this Report.

DIRECTORS'' RESPONSD3ILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors make the following statement:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2013 and of the Loss of the Company for that period;

iii) 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;

iv) that the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for the continued support and co-operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders. The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and team work.

For and on behalf of the Board of Directors

Pune S C Gupta

May 28, 2013 Chairman


Mar 31, 2012

To the Members of ISMT LIMITED

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

FINANCIAL HIGHLIGHTS (Rs.in Crore)

Financial Year Particulars 2011-12 2010-11

Gross Sales 2980.60 2552.79

Profit before Finance Charges, Depreciation, Amortization & Tax (EBIDTA) 265.47 274.64

Cash Profit 107.08 162.98

Gross Profit 144.68 184.08

Profit Before Tax 28.66 95.96

Taxation 0.07 20.60

Net Profit 28.59 75.36

Add: Balance brought forward from previous year 58.91 54.83

Balance available for Appropriation 87.50 130.19

Appropriations

Dividend 10.99 18.31

Tax on Dividend 1.78 2.97

General Reserve 50.00 50.00

Balance carried to Balance Sheet 24.73 58.91

DIVIDEND

Despite drop in profit and taking long term view, the Board has recommended a dividend of Rs. 0.75 per Equity Share of face value of Rs. 5/- each (15 % of face value) for the financial year ended March 31,2012 and is subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company.

OPERATIONS

During the year the Company registered incremental tube sales of 17,532 MT and incremental steel sales of 10,950 MT. After streamlining the new PQF capacity with the existing processes last year, this year the efforts were to increase the lot size so as to minimize downtime on account of size changes and further on Production Planning to optimize on available resources.

MARKET

Exports growth of over 52% has been quite encouraging given the fact that the key world economies are passing through uncertain times. On the domestic front, while inflation and higher interest rates have adversely impacted some of the industries, construction equipment segment witnessed good growth.

FINANCE

During the year the company redeemed entire outstanding Foreign Currency Convertible Bonds ('FCCB') amounting to USD 20 Million along with redemption premium. Increase in overall interest rates and adverse foreign exchange rates along with provisioning for FCCB redemption premium led to the increase in finance cost during year. Unprecedented forex volatility during the financial year resulted in forex loss of Rs. 31.52 Crore. To address the risks associated with foreign currency transactions, company has put in place forex risk management policy.

POWER PROJECT

The 40 MW Captive power plant of the company has commenced commercial production from May 28, 2012. The Power generated is wheeled using the state electricity grid to all three manufacturing plants located at Ahmednagar, Baramati & Jejuri. The surplus power generation resulting from the current Banking Regulations, on account of varying load consumption pattern at the manufacturing plants, is proposed for sale to MSEDCL. The Company has applied for domestic coal linkage, which is still awaited.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. A.K. Jain and Mr. Vinod Sethi retire by rotation and being eligible offer themselves for re-appointment.

AUDITORS

M/s P. G. Bhagwat and J. K. Shah & Co., Joint Statutory Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

COST AUDITORS

The Central Government had approved appointment of the following Cost Auditors for FY 2011-12:

(i) M/s Dhananjay V. Joshi & Associates and

(ii) M/s Parkhi Limaye & Co.

The Cost Audit Report for the year 2010-11 was due on September 27, 2011 and was filed with the Ministry of Corporate Affairs on September 27,2011.

SUBSIDIARIES

As on date of this report, the Company has eight direct and indirect subsidiary companies. The Central Government has granted general exemption to the holding Companies from attaching the Annual Accounts of their subsidiary companies. The Annual Accounts of these subsidiary companies and other relevant information shall be made available for inspection at the Company's Registered Office.

Continuing with the strategy to shift employee intensive activity from Structo to India, while retaining technology intensive front end activities in Sweden, the second cold draw bench was shifted during the year to the Company's Baramati plant and is now fully operational.

In accordance with the Accounting Standard (AS 21), the audited consolidated financial statement of the Company forming part of this report is attached hereto.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance and Management Discussion & Analysis together with a Certificate from the Company's Auditors on compliance, forming part of this Report is attached hereto.

RESEARCH & DEVELOPMENT

Your Company is actively pursuing R&D activities focussed on developing new Steel grades and tubes to match customer requirements. In addition, the Company also encourages in house development of tooling and indigenisation of imported machinery. The Company remained focused on developing value added products for all its market segments including the Energy, OCTG, Bearing, Auto and Mining Sectors. R&D activities also focused on process cost reductions through an increase in yields.

Details of the R&D activities undertaken are enumerated in Annexure I to this report

PARTICULARS OF DISCLOSURE

The particulars in respect of energy conservation, technology absorption and foreign exchange earnings and outgo etc. as required under Section 217(l)(e) of the Companies Act, 1956 are given in Annexure I to this report.

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 are given in Annexure II to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 217(2AA) of the Companies Act, 1956, your Directors make the following statement:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31,2012 and of the Profit of the Company for that period;

iii) 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;

iv) that the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for the continued support and co-operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders. The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and teamwork.

For and on behalf of the Board of Directors

Pune S C Gupta

May 28, 2012 Chairman


Mar 31, 2011

To the Members of ISMT LIMITED

The Directors have pleasure in presenting their Annual Report and Audited Accounts for the year ended March 31, 2011

FINANCIAL HIGHLIGHTS (Rs. in Crore)

Financial Year

Particulars

2010-11 2009-10

Gross Sales 2601.92 1914.19

Profit before Finance Charges, Depreciation, Amortization & Tax (EBIDTA) 277.84 217.81

Cash Profit 162.99 132.91

Gross Profit 101.74 82.71

Profit Before Tax 96.02 91.23

Taxation 20.66 16.62

Net Profit 75.36 74.61

Add : Balance brought

forward from previous year 54.83 47.30

Balance available for

Appropriation 130.19 121.91

Appropriations

Dividend 18.31 14.65

Tax on Dividend 2.97 2.43

General Reserve 50.00 50.00

Balance carried to Balance Sheet 58.91 54.83



Despite a 28% improvement in EBIDTA, the net profit was impacted by higher interest and depreciation of the expansion project.

DIVIDEND

The Board has recommended a higher Dividend of Rs 1.25 per Equity Share of Rs. 5/- each (25 % of face value) for the financial year ended March 31, 2011 and is subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company.

OPERATIONS

While incremental capacity became available during the year leading to higher production at Baramati plant, the volumes at Ahmednagar plant were flat. Expansion of both, the size range and the product mix was targeted and achieved during the year.

MARKET

Consistent marketing efforts by your Company during last few years towards developing new customers especially in Export market has helped the Company to achieve strong Export led growth. Export during the year were higher by about 87%, while Domestic Tubes & Steel Sales increased by 24% & 31% respectively riding on strong growth in Auto, Bearing and Power Sector.

FINANCE

There were frequent increases in the bank rates on account of higher inflation. However by optimizing the foreign currency borrowings, where the libor rates continued to be low, the Company could limit the adverse impact and finance cost which came down from 6.6% to 5.6% of the sales. With over 30% of Export Sales in Euro denomination, the Company has started borrowing in Euro to create a natural hedge.

POWER PROJECT

The Company's 40 MW Captive Power Project at Chandrapur District is now close to commissioning. But for the frequent interruptions and impediments both internal and external, the project should have already been on stream. The Company has applied for domestic coal linkage.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr J P Sureka and Mr Salil Taneja retire by rotation and being eligible offer themselves for re-appointment.

AUDITORS

J K Shah & Co and M/s P G Bhagwat, Joint Statutory Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

COST AUDITORS

The Central Government had directed an audit of the Cost Accounts maintained by the Company in respect of Steel and Tube businesses for the financial year commencing from 2010 -11. In terms of the said direction the Company has appointed M/s. D. V. Joshi & Associates and M/s. Parkhi Limaye & Co., Cost Accountants as Cost Auditors for conducting the cost audit for Tube & Steel divisions respectively. The Central Government has approved appointment of the said Cost Auditors.

SUBSIDIARIES

While the operations of Structo attained break even during the year, in order to reduce cost and to attain long term viability & growth, it was decided to re-locate some of the upstream facilities to India. One of the Draw Benches has already been shifted to Ahmednagar Plant and the Second Draw Bench is planned for shifting during the current year to Baramati Plant.

As on date of this report, the Company has eight direct & indirect subsidiary companies. The Central Government has granted general exemption to all Companies from attaching the Annual Accounts of the subsidiary companies. The Annual Accounts of these subsidiary companies and other relevant information shall be made available for inspection at the Company's Registered Office.

In accordance with the Accounting Standard (AS 21), the audited consolidated financial statement of the Company forming part of this report is attached hereto.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance and Management Discussion and Analysis together with a Certificate from the Company's Auditors on compliance, forming part of the Directors' Report is attached hereto.

RESEARCH & DEVELOPMENT

Your Company continued its efforts towards Research & Development activities during the year in key areas of Product, Process and inhouse tooling development.

Details of the R&D activities undertaken are enumeated in Annexure I to this report.

DISCLOSURE PARTICULARS

The Particulars in respect of energy conservation, technology absorption and foreign exchange earnings outgo, etc as required under Section 217(1) (e) of the Companies Act, 1956 are given in Annexure - I to this report. The Company has also initiated number of Energy reduction initiatives anticipating UNFCCC benefits under Green House Gas Commission reduction programme The particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forming part of this Report are given in Annexure -II to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by Section 217 (2AA) of the Companies Act, 1956 the Directors' Responsibility Statement is given hereunder:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures ;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2011 and of the Profit of the Company for that period.

iii) 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;

iv) that the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for the continued support and co-operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders. The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and team work.

For and on behalf of the Board of Directors

Pune S C Gupta

June 29, 2011 Chairman













 
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