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Directors Report of Kalyani Steels Ltd.

Mar 31, 2014

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

1. Financial Highlights : (Rs. in Million)

2013-14 2012-13

Sales, Gross : 13,959.037 10,114.257

Excise Duty : 2,825.172 2,108.450

Sales, Net : 11,133.865 8,005.807

Other Operating Revenue : 8.016 66.874

Sale of Services : 18.000 18.000

Revenue from Operations (Net) : 11,159.881 8,090.681

Other Income : 117.922 71.545

Total Revenue : 11,277.803 8,162.226

Total Expenditure : 9,873.626 7,324.433

Finance Cost : 170.023 224.844

Depreciation & amortisation expenses : 339.563 235.628

Profit before Tax : 894.591 377.321 Tax Expenses :

- Current Tax : 256.000 77.500

- Deferred Tax : 53.401 61.226

- Add / (Less): Excess provision for Taxation in earlier years : (0.678) (0.083) Profit after Tax : 585.868 238.678 Dividend on Equity Share Capital : 130.959 65.480

2. Dividend :

The Directors are pleased to recommend a dividend of Rs. 3/- per Equity Share of Rs. 5/- each (i.e. 60%) for the financial year ended 31st March, 2014.

3. The Year in Retrospect :

During the year under consideration, the Company was able to increase the operational levels and achieved gross sales of Rs. 13,959 Million against Rs. 10,114 Million in the previous year, representing growth of 38%. The Profits before Tax increased to Rs. 895 Million, against Rs. 377 Million in the previous year, representing growth of 137%. This was possible due to improvement in operational efficiencies and benefits derived from cost reduction initiatives undertaken by the Company.

4. Management Discussion and Analysis Report

Management Discussion and Analysis Report (MD&A) for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of this Annual Report.

5. Corporate Governance Report

Corporate Governance Report as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of this Annual Report.

A certificate from Statutory Auditors of the Company, M/s P.G. Bhagwat, Chartered Accountants, confirming compliance with conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to Corporate Governance Report.

6. Fixed Deposits :

During the year 2013-14, the Company transferred, five deposits aggregating to Rs. 88,000/- to Investor Education and Protection Fund (IEPF) as per requirement of law. As a result, as on 31st March, 2014, no deposits were outstanding with the Company. Presently, the Company does not accept / renew the deposits.

7. Directors :

Mr.B.N. Kalyani and Mr.C.G. Patankar Directors of the Company are retiring by rotation at the ensuing Annual General Meeting and being eligible, they offer themselves for re-appointment.

In view of Section 149 and other applicable provisions of the Companies Act, 2013, it is proposed to appoint Mr.Arun Pawar, Mr.B.B. Hattarki, Mr.M.U. Takale, Mr.S.M. Kheny and Mr.S.S. Vaidya, as an Independent Directors of the Company for the period of five years with effect from 5th September, 2014 to 4th September, 2019. All the Directors being eligible, offered themselves for appointment. In the opinion of the Board, all the Directors fulfill the conditions specified in the Companies Act, 2013 and rules made there under, for their appointment as an Independent Director of the Company.

These appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, as required by the Corporate Governance Code (Clause 49 of the Listing Agreement), are given in the report on Corporate Governance.

8. Directors'' Responsibility Statement :

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that :

i) in the preparation of the financial statements for the year ended 31st March, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year under review;

iii) the Directors had 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; and

iv) the Directors had prepared the financial statements for the year ended 31st March, 2014, on a ''going concern'' basis.

9. Auditors and Auditors'' Report :

M/s P.G. Bhagwat, Chartered Accountants, Pune, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received letter from M/s P.G. Bhagwat, Chartered Accountants, to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

The observations and comments given by the Auditors in their Report read together with notes to accounts are self-explanatory and hence do not call for any further comments.

10. Cost Auditors :

M/s S.R. Bhargave & Co., Cost Accountants, Pune, Cost Auditors of the Company have been re-appointed as the Company''s Cost Auditors for the Financial Year 2014-15.

11. Particulars of Employees :

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all Shareholders of the Company excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of said Annexure may write to the Company Secretary at the Registered Office of the Company.

12. Conservation of energy, technology absorption and foreign exchange earnings & outgo :

The 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 the Board of Directors) Rules, 1988 and forming part of the Report is annexed hereto.

13. Quality and Safety :

Your Company accords high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard.

14. Transfer of amounts to Investor Education and Protection Fund :

Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, the dividend which remained unclaimed for a period of seven years has been transferred to the Investor Education and Protection Fund.

15. Acknowledgement :

The Directors would like to express their sincere appreciation of the co-operation received from the Central Government, Government of Maharashtra, Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers. The Directors also wish to place on record its appreciation for the commitment displayed by all employees at all levels, resulting in the successful performance of the Company during the year.

The Directors also take this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company.

for and on behalf of the Board of Directors

Place:Pune B.N. Kalyani

Date:29th May, 2014 Chairman


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting the Fortieth Annual Report on the business and operations of the Company and the Audited Financial Statements for the year ended 31st March, 2013.

1. Financial Highlights :

(Rs. in Million) 2012-13 2011-12

Sales, Gross : 10,114.257 11,588.942

Excise Duty : 2,108.450 2,013.128

Sales, Net : 8,005.807 9,575.814

Other Operating Revenue : 66.874 192.651

Sale of Services : 18.000

Revenue from Operations (Net) : 8,090.681 9,768.465

Other Income : 71.545 218.030

Total Revenue : 8,162.226 9,986.495

Total Expenditure : 7,324.433 9,342.612

Finance Cost : 224.844 213.672

Depreciation & amortisation expenses : 235.628 260.568

Profit before exceptional items and tax : 377.321 169.643

Exceptional Item - Profit on Sale of Investment : 54.800

Profit before Tax : 377.321 224.443

Tax Expenses :

- Current Tax : 77.500 47.000

- Deferred Tax : 61.226 (42.742)

- Add / (Less) : Excess provision for Taxation in earlier years : (0.083) (0.179)

Profit after Tax : 238.678 220.364

Dividend on Equity Share Capital : 65.480 43.653



2. Dividend :

The Directors recommend a dividend of Rs. 1.50/- per Equity Share of Rs. 5/- each (i.e. 30%) for the year ended 31st March, 2013.

3. The Year in Retrospect :

On the backdrop of Iron Ore mining ban in the State of Karnataka, Odisha and Goa, adversely affecting the supply as well as cost of iron ore, the Company performed reasonably well during the year 2012-13. The Company achieved Profit before Tax of Rs. 377.321 Million during 2012-13, as compared to Rs. 224.443 Million in the previous year, representing a growth of 68%. This was possible due to improvement in operational efficiencies and cost reduction initiatives undertaken by the Company.

The members are aware of the Iron Ore mining ban imposed by the Hon''ble Supreme Court vide its Order dated 29th July, 2011 and 5th August, 2011, in the State of Karnataka. As a result of the mining ban, the iron ore production declined drastically in the State of Karnataka and the Company was required to operate at a lower capacity.

The Hon''ble Supreme Court later allowed NMDC Limited (NMDC) to mine 1 Million Tons of Iron Ore per month and sell it to steel plants through e-Auction. The Hon''ble Supreme Court also allowed selling 1.5 Million Tons of Iron Ore per month through e-Auction from the then existing stocks of 25 Million Tons in the State of Karnataka. However, subsequently a cap of 30 Million Tons per annum was put on the total production of Iron Ore from the State of Karnataka. The decision of selling Iron Ore through e-Auction and limiting the mining quantity in the State of Karnataka led to speculative prices, which in turn led to closure or lower capacity utilisation of steel plants in the State of Karnataka.

After closure of mines, the leases for Iron Ore mining had been categorised by the Hon''ble Supreme Court appointed Central Empowered Committee (CEC) as ''A'', ''B'' and C, based on the level of illegalities.

Category A Mines - It comprises of (a) working leases where there is no illegality / marginal illegality have been found and (b) non-working leases wherein no / marginal irregularities have been found. The number of such leases comes to 21 & 24 respectively.

Category B Mines - It comprises of (a) mining leases where illegal mining by the way of (i) mining pits outside the sanctioned lease areas have been found to be upto 10% of the lease areas and / or (ii) overburden / waste dumps outside the sanctioned lease areas have been found to be upto 15% of the lease areas and (b) leases falling on interstate boundary between Karnataka and Andhra Pradesh and for which survey sketches have not been finalised. The number of such leases in Category B comes to 72.

Category C Mines - It comprises of leases wherein (a) the illegal mining by way of (i) mining pits outside the sanctioned lease area have been found to be more than 10% of the lease area and / or (ii) overburden / waste dumps outside the sanctioned lease areas have been found to be more than 15% of the lease areas and / or (b) the leases found to be involved in flagrant violation of the Forest Conservation Act and / or found to be involved in illegal mining in other lease areas. The number of such leases comes to 49.

On 3rd September 2012, the Hon''ble Supreme Court allowed mining in 18 Category A'' mines and on 18th April, 2013, permitted reopening of remaining Category A'' mines (27 in number) and Category ''B'' mines (63 in number). Thus, 108 out of the 166 mines in Karnataka are allowed to resume operations after compliance of stringent conditions laid down by the Hon''ble Supreme Court, subject to cap of 30 Million Tons per annum, on the total production of Iron Ore in the State of Karnataka. The decision regarding remaining mines in Category ''B'' is pending and will be taken in due course by the Hon''ble Supreme Court. However, the Hon''ble Supreme Court cancelled 49 leases of Category C mines.

Although the Hon''ble Supreme Court took commendable steps in its decisions for clampdown on the illegal mining, Category A'' and ''B'' mines may take even two years of time for implementing all the ''Reclamation and Rehabilitation (R & R)'' Plans and opening of all the Category A'' and ''B'' mines.

In the given situation, the Company has no other option than to procure iron ore by participating in e-Auction conducted by Monitoring Committee. Due to short supply of iron ore, the prices of iron ore have become speculative and almost doubled, putting pressure on the operating margins of the Company.

4. Rolling Mill :

The Rolling Mill started its commercial production with effect from 28th March, 2013. The mill has capacity to roll 100,000 MTs of steel per annum. This will reduce reliance on outside rolling as well as achieve reduction in the rolling cost, inventory and the Company will be able to cater the customer needs faster.

5. Cost Reduction Initiatives :

- 33m2 Circular Sinter Plant commissioned on 4th March, 2013. This will enhance flexibility to use cheaper raw materials like iron ore fines instead of lumpy ore.

- Completed installation of Stoves on MBF - I.

- Completed installation of Coal Injection System.

The Company expects to achieve substantial cost savings, by taking these initiatives, thus improving margins.

6. Coke Oven along with DRI Plant :

Metallurgical Coke is one of the basic inputs of steel making process. At present Coke is purchased from domestic and international markets however, inconsistent quality and high prices continuously affect the Steel Industry. To reduce the cost and improve quality of Coke, the Company intends to set up Coke Oven along with DRI plant based on Coke Oven gas and a Pellet Plant. Details of the Project are being worked out.

7. Fixed Deposits :

As on 31st March, 2013, five Depositors having deposits aggregating to Rs. 88,000/- did not collect the amounts due. However, as of 24th May 2013, three deposits aggregating to Rs. 65,000/- were transferred to Investor Education and Protection Fund (IEPF) as per requirements of law. Presently, the Company does not accept / renew the deposits.

8. Directors :

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.B.B. Hattarki, Mr.S.S. Vaidya and Mr.M.U. Takale Directors of the Company are retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

These appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, as required by the Corporate Governance Code (Clause 49 of the Listing Agreement), are given in the report on Corporate Governance.

9. Directors'''''' Responsibility Statement :

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed that :

i) in the preparation of the financial statements for the year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year under review;

iii) the Directors had 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; and

iv) the Directors had prepared the financial statements for the year ended 31st March, 2013, on a ''going concern'' basis.

10. Auditors and Auditors'' Report :

M/s. P. G. Bhagwat, Chartered Accountants, Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received letter from M/s. P. G. Bhagwat, Chartered Accountants, to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956 and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies Act, 1956.

The observations and comments given by the Auditors in their Report read together with notes to accounts are self-explanatory and hence do not call for any further comments under Section 217 of the Companies Act, 1956.

11. Particulars of Employees :

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all Shareholders of the Company excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of said Annexure may write to the Company Secretary at the Registered Office of the Company.

12. Conservation of energy, technology absorption and foreign exchange earnings & outgo :

The 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 the Board of Directors) Rules, 1988 and forming part of the Report is annexed hereto.

13. Quality and Safety :

The Company accords high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard.

14. Employees :

The Board of Directors wishes to place on record its appreciation for the exemplary dedication and contribution of the employees at all levels, to ensure that the Company continues to grow and excel.

Your Directors would like to place on record their appreciation of the co-operation received from the Central Government, Government of Maharashtra, Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers.

The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company.

for and on behalf of the Board of Directors Place:Pune B.N. Kalyani

Date:24th May, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Thirty-Ninth Annual Report on the business and operations of the Company and the Audited Financial Statements for the year ended 31st March, 2012.

1 Financial Highlights : (Rs in Million)

2011-12 2010-11

Sales, Gross : 11,715.871 14,187.255

Excise Duty : 2,013.128 2,076.978

Sales, Net : 9,702.743 12,110.277

Other Operating Revenue : 192.651 257.940

Revenue from Operations (Net) : 9,895.394 12,368.217

Other Income : 224.199 166.908

Total Revenue : 10,119.593 12,535.125

Total Expenditure : 9,387.332 11,351.332

Finance Cost : 302.050 203.306

Depreciation & amortization expenses : 260.568 294.762

Profit before exceptional items and tax : 169.643 685.725

Exceptional Item - Profit on Sale of Investment : 54.800 -

Profit before Tax : 224.443 685.725

Provision for Taxation : 4.079 138.687

Profit after Tax : 220.364 547.038

Dividend on Equity Share Capital : 43.653 87.306

2. Dividend :

The Directors recommend a dividend of Rs 1/- per Equity Share of Rs 5/- each (i.e. 20%) for the year ended 31st March, 2012.

3. The Year in Retrospect :

The year 2011-12 was a very challenging year for the Company. In the steel industry, cost is the main driver for competitiveness and the majority of the cost of production is contributed by raw materials, mainly iron ore and metallurgical coke. In order to ensure continuous and assured supply of iron ore, the Company had entered into long-term agreement with Mysore Minerals Limited (MML) for purchase of calibrated iron ore. By virtue of this Agreement, the iron ore extracted from Subbarayanhalli Iron Ore Mine (SIOM) of MML, was exclusively sold to the Company, catering the requirements of iron ore of the Company.

During the month of July, 2011, due to illegal mining and increasing environmental degradation in the State of Karnataka, the Hon'ble Supreme Court of India, vide its order dated 29th July, 2011, suspended the mining operations and transportation of iron ore in the Bellary District, in an area ad-measuring approximately 10,868 hectares of land, which accounts for 80% of Karnataka's iron ore production. Accordingly, the operations and transportation of iron ore from SIOM and other mines in the Bellary District was totally suspended.

As a result of mining ban, the iron ore production declined drastically in the Karnataka State and the Company was required to operate at very lower capacity. The Company along with other steel plants in the State of Karnataka, made lot of representations to the Hon'ble Supreme Court of India and related departments of Central and State Governments, for providing relief against ban and to restore iron ore availability as earlier.

Based on representations made, on 5 th August, 2011, the Hon'ble Supreme Court allowed NMDC Limited (NMDC) to operate its two mines to the extent of providing 1 (One) Million Tonne of iron ore per month and auctioning of stocks of iron ore of 25 (Twenty Five) Million Tonne, which were lying in the various mines and stockyards.

Since, NMDC was allowed to operate its two mines, the Company made reasonable efforts to get allocation of iron ore from NMDC. However, considering the long-term supply agreements of NMDC with its customers and limited production of iron ore, the Company got allocation on adhoc basis from NMDC.

Based on the suggestion of the Central Empowered Committee (CEC), the Hon'ble Supreme Court of India vide its order dated 26th August, 2011 extended the operation of order dated 29th July, 2011 to the leases in District Chitradurga and Tumkur, thereby consequently banning mining in District Chitradurga and Tumkur also, which accounts for balance 20% of Karnataka's iron ore production.

Thereafter the Hon'ble Supreme Court directed that the sale of iron ore should continue only through e-auction under the supervision of the Monitoring Committee set up by the Hon'ble Supreme Court. In the given situation, the Company had no other option than to procure iron ore by participating in e-auction conducted by Monitoring Committee. Due to short supply of iron ore, the prices of iron ore became speculative and almost doubled, putting pressure on the operating margins. Uncommon increase in prices of the iron ore, has adversely impacted the volumes and the margins of the Company.

4. Rolling Mill :

The Company's initiatives to increase rolling capacity by 100,000 MTs of steel per annum, at Hospet, by setting up of an additional Rolling Mill are in progress. The Company has incurred capex of Rs 481 Million till year end and the mill would be operational by September, 2012. This would facilitate reduction in cost, inventory and will cater to customer needs faster.

5. Cost Reduction Initiatives :

The initiatives taken by the Company towards cost reduction by installation of sinter plant, coal injection system and stoves on blast furnaces, are underway as scheduled. These installations are expected to be on stream by March, 2013, resulting in substantial cost savings, thus improving margins.

6. Fixed Deposits :

As on 31st March, 2012, deposits aggregating Rs 448,000/- ( 45 depositors) remained unclaimed. Out of these deposits, one deposit amounting to Rs 10,000/- was claimed and then repaid by the Company during the month of April, 2012. Presently, the Company does not accept / renew the deposits.

7. Directors :

Mr.Arun P. Pawar, who was appointed as an Additional Director on the Board, with effect from 25th October, 2011, holds office till the ensuing Annual General Meeting. Notice proposing appointment of Mr.Arun P. Pawar as Director having been received, the matter is included in the Notice for the ensuing Annual General Meeting.

Mr.C.G. Patankar, Executive Director completed his term on 31st March, 2012. He continues on the Board as Non-Executive Director.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.Amit B. Kalyani, Mr.S.M. Kheny and Mr.C.G. Patankar Directors of the Company are retiring by rotation at the ensuing Annual General Meeting and being eligible, they offer themselves for re-appointment.

These appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, as required by the Corporate Governance Code (Clause 49 of the Listing Agreement), are given in the report on Corporate Governance.

8. Directors' Responsibility Statement :

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that :

i) in the preparation of the financial statements for the year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year under review;

iii) the Directors had 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; and

iv) the Directors had prepared the financial statements for the year ended 31st March, 2012, on a 'going concern' basis.

9. Auditors :

M/s Dalal and Shah, Chartered Accountants, Mumbai (Firm Registration No.102021W) are the present Statutory Auditors of the Company.

The Company has received a Special Notice from a member of the Company signifying his intention to propose the name of M/s P.G. Bhagwat, Chartered Accountants, Pune (Firm Registration No.101118W), as Statutory Auditors of the Company.

M/s P.G. Bhagwat, Chartered Accountants, Pune, have expressed their willingness to act as a Statutory Auditors of the Company.

You are requested to appoint of M/s P.G. Bhagwat, Chartered Accountants, Pune, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting.

10. Particulars of Employees :

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors' Report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all Shareholders of the Company excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of said Annexure may write to the Company Secretary at the Registered Office of the Company.

11. Conservation of energy, technology absorption and foreign currency exchange earnings & outgo :

The 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 the Board of Directors) Rules, 1988 and forming part of the Report is annexed hereto.

12. Quality and Safety :

Your Company accords high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard.

13. Employees :

The Board of Directors wishes to place on record its appreciation for the exemplary dedication and contribution of the employees at all levels, to ensure that the Company continues to grow and excel.

Your Directors would like to place on record their appreciation of the co-operation received from the Central Government, Government of Maharashtra, Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers.

The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company.

for and on behalf of the Board of Directors

Place : Pune B.N. Kalyani

Date : 26th May, 2012 Chairman


Mar 31, 2011

Dear Shareholders,

The Directors have pleasure in presenting their Thirty-Eighth Annual Report on the business and operations of the Company and the Audited Accounts for the year ended 31st March, 2011.

1. Financial Highlights :

(Rs in Million)

2010-11 2009-10

Sales and Income from Operations : 14,192.528 11,677.765

Excise Duty : 2,076.978 1,321.235

Net Sales and Income from Operations : 12,115.550 10,356.530

Power generated, captively consumed : 252.667 218.940

Other Income : 157.597 88.733

Total Income : 12,525.814 10,664.203

Total Expenditure : 11,364.280 9,587.983

Interest : 180.902 263.798

Depreciation & Write offs : 294.762 311.386

Profit for the year : 685.870 501.036

Provision for Taxation : 162.896 68.278

Net Profit / (Loss) : 522.974 432.758

Dividend on Equity Share Capital : 87.306 54.566

2. Dividend :

Your Directors recommend a dividend of Rs 2/- per Equity Share of Rs 5/- each (40%) for the year ended 31st March, 2011.

3. The Year in Retrospect :

During the year under consideration, the Company was able to increase the operational levels and achieved gross sales of Rs14,187 Million against Rs11,535 Million in the previous year, representing growth of 23%. This was achieved by selling more of value added products as compared to previous year.

The Company was able to add new grades of steel into its product profile, to growing passenger car segment. Company has successfully developed free cutting steels (Leaded variants) for Export markets.

The change in the product mix and better realisation were primary drivers of the 37% increase in PBT.

4. Rolling Mill :

In order to reduce reliance on outside rolling as well as to achieve cost reduction, the Company has taken initiatives to increase rolling capacity at Hospet by setting up of an additional Rolling Mill. The estimated capex for the same is Rs 456 Million and the mill would roll additional 100,000 MTs of steel per annum. The mill is expected to be operational by year end. This would help in reducing the cost, inventory and will cater to customer needs faster.

5. Cost Reduction Initiatives :

To reduce manufacturing cost and enhance flexibility to use alternate raw materials like iron ore fines instead of lumpy ore, the Company has decided to undertake installation of sinter plant, coal injection system and stoves on blast furnaces. The total cost for these installations is estimated at approx. Rs 3,400 Million, out of which the Company's share will be Rs 1,418 Million. These installations are expected to be on stream in next two years. These would enable the Company to get substantial cost savings, thus improving margins.

6. Coke Oven Batteries Project and Power Plant :

Metallurgical Coke is one of the basic inputs of steel making process. At present Coke is required to be imported from various countries. To reduce the cost and uncertainty with regard to procurement of Coke, the Company intends to set up Coke Oven Batteries Project having a capacity to produce 240,000 MTs of Coke per annum.

The Company also intends to set up 12MW Power Plant by using flue gases generated by Coke Oven Batteries. The power generated will be captively used / exported to the grid.

The total cost for setting up Coke Oven Batteries Project and Power Plant is estimated at approx. Rs 2,000 Million.

7. Fixed Deposits :

As on 31st March, 2011, deposits aggregating Rs101,000/- ( 10 depositors) remained unclaimed. Out of these deposits, one deposit amounting to Rs 15,000/- was transferred to Investor Education and Protection Fund during the month of April, 2011. Presently, the Company does not accept / renew the deposits.

8. Directors :

The Board of Directors at its meeting held on 17th January, 2011, had co-opted Mr.R.K. Goyal, on the Board of the Company as an Additional Director and in the same meeting itself Mr.R.K. Goyal was appointed as a Managing Director of the Company for the period of five years from 17th January, 2011 to 16th January, 2016.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.B.N. Kalyani and Mr.M.U. Takale, Directors of the Company are retiring by rotation at the ensuing Annual General Meeting and being eligible, they offer themselves for re-appointment.

These appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, as required by the Corporate Governance Code (Clause 49 of the Listing Agreement), are given in the report on Corporate Governance.

9. Directors' Responsibility Statement :

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, your Directors confirm that :

i) in the preparation of the accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) accounting policies selected had been applied consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review;

iii) proper and sufficient care had 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 fraud and other irregularities and;

iv) the annual accounts had been prepared, on a going concern basis.

10. Auditors :

You are requested to re-appoint the Auditors of the Company for the Current Year to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting.

11. Particulars of Employees :

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors' Report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all Shareholders of the Company excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of said Annexure may write to the Company Secretary at the Registered Office of the Company.

12. Conservation of energy, technology absorption and foreign currency exchange earnings & outgo :

The 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 the Board of Directors) Rules, 1988 and forming part of the Report is annexed hereto.

13. Quality and Safety :

Your Company accords high priority to quality, safety, training, development, health and environment. The Company endeavors to ensure continuous compliance and improvements in this regard.

14. Employees :

The Board of Directors wishes to place on record its appreciation for the exemplary dedication and contribution of the employees at all levels, to ensure that the Company continues to grow and excel.

Your Directors would like to place on record their appreciation of the co-operation received from the Central Government, Government of Maharashtra, Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers.

The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company.

for and on behalf of the Board of Directors

B.N. Kalyani Chairman

Place : Pune Date : 25th May, 2011



 
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