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Directors Report of Lloyds Metals & Energy Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the Thirty Eighth Annual Report and the Company's audited financial statement for the financial year ended 31st March, 2015.

FINANCIAL HIGHLIGHTS (Rs in Lacs Current Year Previous Year 2014-15 2013-14

Sales ( Net ) 63,891.58 56,774.61

Other Income 2,242.46 1,667.66

Total Income 66,134.04 58,442.27

Profit before Interest, (395.02) (855.96)

Depreciation & Tax

Less : Finance Cost 619.63 715.86

Depreciation 1,067.19 2,672.75

Profit/(Loss) before tax (2,081.84) (4,244.57)

Less : Tax Provision - -

Net Profit/ (Loss) after Tax (2,081.84) (4,244.57)

DIVIDEND

In view of the losses incurred by the Company, your Directors have not recommended any dividend for the year ended 31st March, 2015.

OPERATIONS AND OVERALL PERFORMANCE

Global steel demand grows slower than the global GDP, as a result of the weakness in the emerging world. Global Steel demand grew at a moderate pace of 2% in spite of subdued economy worldwide on the back of improvement of output in the European market, United States and Japan which has partly set off the downturn in China, a world's largest steel maker, which moved from an investment to service-driven economy.

Steel imports by India surged by a whopping 71% to touch a record high of 9.31 million tonne in 2014-15, putting pressure on the already squeezed margins of domestic firms. Steelmakers in India, which remained a net importer of steel for the year, have been on the wrong foot for quite some time now, mainly due to dearer raw materials while their counterparts in China, Japan and Russia took advantage of lower iron ore prices and in some cases, sops offered by the Government. India had imported 7.38 MT of steel in 2009-10, 6.66 MT in 2010-11, 6.86 MT in 2011-12, 7.93 MT in 2012-13 and 5.45 MT in 2013-14.

Exports, however, have been at slower pace than imports, especially in more recent years. Shipments of steel stood at 3.25 MT in 2009-10 and 5.98 MT in 2013-14, only to plunge 8% to 5.5 MT last fiscal. Due to rising imports from countries like China, Japan and Russia, domestic steel industry is struggling to retain margins. Cost structure in these countries has significantly come down because of fall in the prices of iron ore and depreciation of their currencies against dollar. So in dollar terms, their cost of production has come down.

The problem of the domestic steel industry got compounded with the subdued demand. Though the last fiscal was better compared to the previous one, it still remains below potential. Real consumption of the alloy grew by 3.1% to stand at 76.35 MT in the last fiscal compared to 59.34 MT in 2009- 10, 66.42 MT in 2010-11, 71.02 MT in 2011-12, 73.48 MT in 2012-13, 74.09 MT in 2013-14.

However, pinning hopes of a better demand days ahead, they continue to raise their output. Production for sale saw a steady rise to 88.12 MT in 2014-15 from 60.62 MT in 2009-10, 68.62 MT in 2010-11, 75.69 MT in 2011-12, 81.68 MT in 2012-13 and 87.67 MT in 2013-14.

India remained to be the world's largest producer of Direct Reduced Iron (DRI) or sponge iron with a host of coal based units, located in the mineral - rich states of the country.

Steel Prices, Globally and Domestically witnessed a sustained downside mainly due to overcapacity, cheaper imports, economic conditions and shift towards other substitutes which significantly impacted the steel prices. Steel makers margins have consistently contracted since FY'11 due to overcapacity and demand-supply gap. Margins of steel producers would continue to be under pressure, given the high cost of production on the back of higher input costs and their limited ability to pass on hikes in costs. The credit profile of steel makers to remain weak next fiscal due to their large debt for working capital and capex coupled with modest EBITDA (earnings before interest, taxes, depreciation, and amortization) margins. Global steel prices will continue to trend downward which will inturn, exert tremendous pressure on global contract prices of raw materials such as iron ore and coal. The recovery in the world steel pricing momentum would be driven by a reviving economy, stabilization in the Euro-zone and a rebound in the construction industry in developed countries.

A robust and thriving Power sector is central to India's sustained economic growth. India's power sector has evolved substantially over the last few decades and is now witnessing unprecedented interest and investments across the value chain. With the global economic growth and industrialization, power consumption is escalating rapidly, creating demand for more power and compelling industry players to manage their power portfolio efficiently. In 2014-15 as a whole, total power generation in India grew by 8.5% and it is expected to grow by 8.4% in 2015-16. The power transmission sector in India has not been able to keep pace with the rising power demand and generation capacity in the country. The Indian Power Sector faced a challenging year under review as it juggled with increasing power demand, the poor paying capability of power distribution Companies, inadequate domestic coal/gas availability, an inefficient power tariff mechanism and rising financing costs.

The Total Income of the Company was Rs661.34 Crores during the year as against Rs.584.42 Crores in the previous year, showed increase of 13.16%. The Company has reported Net Loss of Rs.20.82 Crores during the year under review as against loss of Rs.42.45 Crores in the previous year.

The production of Sponge Iron Division during the year under review was 143384 MT against 165631 MT in the previous year showing decrease of 13.43%. The total income of the division was Rs.599.58 Crores (including trading) as against Rs.528.87 Crores during the previous year, showing increase of 13.37% as a result of increase in trading of Steel and realization of higher price of sponge iron.

POWER DIVISION

During the financial year 2010-11, in order to utilize the waste heat and convert into productive energy, the Company has commissioned it's 30 MW co-generation Waste Heat Recovery Based (WHRB) Power Plant, at Ghugus, Maharashtra. The production of the division was 17.10 MWH during the year under review as compared to 17.05 MWH for the previous year. The total income of the division was Rs.39.34 Crores during the year under review as against Rs.38.88 Crores during the previous year showing an increase of 1.17%.

By virtue of issuance of Commercial Circular No. 154 & 156 dated 23rd January, 2012 by Maharashtra State Electricity Distribution Company Limited and other laws and circulars of authority, the scope of distribution/supply/utilization of electricity through Open Access has been expanded. Due to this, the prospectus of the industry is expected to improve in the nearest future. The Company is exploring all the possibilities, strictly adhering to and complying with the parameters and conditions laid down in the said circulars & other laws to utilize the power generated by its power generation unit.

In respect of Iron ore mining activities, the Company has received all statutory permissions and necessary sanctions from the concerned authorities to commence mining operations. However, due to insurrection by Naxals near Surjagarh Iron Ore Mine in which one of the official of the Company was killed, the Mining Operations of the Company at Surjagarh Iron Ore Mine at Surjagarh Village, Gadchiroli District, Maharashtra has been temporarily discontinued w.e.f. July, 2013 and the same facts has been informed to the concerned Govt. Authority. The Company is taking adequate steps to commence mining operations.

ENVIRONMENT & SOCIAL OBLIGATION

The Company maintains the pollution free environment in and around its plants. The Company's' plants comply with all norms set up for clean & better environment by Competent Authorities.

UNFCCC REGISTRATION

The Waste Heat based power plant of the Company has been accorded final registration with UNFCCC as a 'Clean Development Mechanism' (CDM) project activity. The waste heat based power plant generates power using waste heat from flue gases coming out of 4 numbers 100 TPD and 1 number 500 TPD Sponge Iron Kilns. The project involves 5 numbers waste heat recovery boilers.

The reduction in CO2 emission from project facility arises from the displacement of an equivalent amount of electricity to the extent of electricity generated from project activity which would have been otherwise generated and supplied by grid.

The project shall be eligible for 109660 Carbon Emission Reductions (CER) Certificates every year for 10 years duration from 2013-2023.

As per the records of UNFCCC, this is the first large scale project from Sponge Iron industry to be accorded the registration by UNFCCC as per the new methodology ACM 0012 introduced by UNFCCC.

SUBSIDIARY & CONSOLIDATED FINANCIAL STATEMENTS

The Company is not required to consolidate it's Financial Statements for the year ended 31st March, 2015 as Company do not have any subsidiary.

The Company and its Registrar M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence in terms of SEBI direction, for having a common Registrar and Share Transfer Agent, endeavored their best to service the Investors satisfactorily.

RESERVES

The Company did not propose to transfer any amount to any reserves.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there are no changes in the nature of the business of the Company.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

1. in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed and there are no material departures from the same;

2. the Directors have selected such accounting policies and applied them consistently and made judgements 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, 2015 and of the profit of the Company for the year ended on that date;

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

4. the Directors have prepared the annual accounts on a 'going concern' basis;

5. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

6. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

BOARD MEETINGS

The Board of Directors duly met 4 (four) times respectively on 26th May, 2014, 8th August, 2014, 27th October, 2014 and 21st January, 2015 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose. No circular resolutions were passed by the Company during the financial year under review.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Mukesh R. Gupta (DIN 00028347)

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr. Mukesh R. Gupta (DIN 00028347), Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Mr. Babulal Agarwal (DIN 00029389)

Mr. Babulal Agarwal (DIN 00029389) was reappointed as a Managing Director for a period of three years with effect from 1st January, 2015.

Mr. Jagannath Dange (DIN 01569430)

Mr. Jagannath Dange (DIN 01569430) was appointed as Additional Non Executive Independent Director of the Company w.e.f. 26th May, 2014, subsequently the approval of the shareholders was sought at the Annual General Meeting held on 30th July, 2014.

Dr. B.R. Singh (DIN 02843001) and Mrs. Bhagyam Ramani (DIN 00107097)

Dr. B.R. Singh (DIN 02843001) and Mrs. Bhagyam Ramani (DIN 00107097) were appointed as Additional Non Executive Independent Directors of the Company w.e.f. 27th October, 2014 subsequently approval of the shareholders was accorded through postal ballot, result of which was announced on 29th December, 2014.

Mr. Sonam Bodh (DIN 06731687)

Mr. Sonam Bodh (DIN 06731687), IDBI Nominee Director was withdrawn as Nominee with effect from 25th November, 2014. The board hereby places on record its sincere appreciation for the valuable guidance and meaningful contribution made by Mr. Sonam Bodh as member of the Board/Committees during the period of his association with the Company.

Mr. Nitesh Tanwar

Mr. Nitesh Tanwar was appointed Company Secretary and Compliance Officer of the Company with effect from 21 st January, 2015 in place of Mr. Shyamal Padhiar who resigned with effect from 25th December, 2014.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013 and revised clause 49 of the listing agreement, stating that they meet the criteria of independence as provided in section 149(6) of Companies Act, 2013.

PERFORMANCE EVALUATION OF THE DIRECTORS

The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of the individual Directors and the Board.

The framework of performance evaluation of the Independent Directors captures the following points:

A. Key attributes of the Independent Directors that justify his/ her extension/continuation on the Board of the Company;

B. Participation of the Directors in the Board proceedings and his/ her effectiveness;

The evaluation was carried out by means of the replies given/ observations made by all the Directors on the set of questions developed by them which brought out the key attributes of the Directors, quality of interactions among them and its effectiveness.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The Company does not have any employee, whose particulars are required to be given pursuant to the provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed hereto marked as Annexure "D" and forms part of this report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEE GIVEN AND SECURITIES PROVIDED

Particulars of Investments made pursuant to Section 186 of the Companies Act, 2013 are provided in Note 10 to the Financial Statements. The Company has not given any loan or guarantee or provided any security during the year under review.

The Company, by passing a Special Resolution through Postal Ballot on 29th December, 2014, has taken a limit of Rs. 2000 Crores for making investments, giving loans to any person or other body corporate, giving any guarantee or providing any security in connection with any loan to any person or other body corporate and acquiring by way of subscription, purchase or otherwise the securities of any other body corporate.

PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY

Pursuant to Section 188 of the Companies Act, 2013, the Company did not enter into any contracts, transactions or arrangement with any of the related party during the financial year ended 31st March, 2015.

COMMITTEES AND POLICIES

Audit Committee

The Audit Committee was reconstituted as per the requirement of the Companies Act, 2013 and revised clause 49 of the listing agreement. The Committee comprises of Mr. Shantanu Mohapatra as the Chairman and Mr. Mukesh R. Gupta, Mr. B.B. Chadha, Dr. B.R. Singh and Mr. Devidas Kambale as the Members.

All the recommendations made by the Audit Committee are accepted and implemented by the Board of Directors. More details on the committee are given in the Corporate Governance Report.

Nomination and Remuneration Committee

The Company has a Remuneration Committee which is renamed as Nomination and Remuneration Committee as per revised Clause 49 of the Listing Agreement. The Committee comprises of 1 non-executive promoter and 3 Non-executive Directors namely Mr. Mukesh R. Gupta, Mr. B.B. Chadha, Mr. Devidas Kambale and Dr. B.R. Singh. During the financial year 2014-2015, two meetings of Nomination and Remuneration Committee were held i.e. on 26th May, 2014 and 21st January, 2015.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee (formerly known as Stakeholders' / Investors' Grievance Committee) is reconstituted on 27th October, 2014 in terms of revised clause 49 of Listing Agreement and is entrusted with the responsibility of redressing the shareholders'/ investors' complaints with respect to transfer of shares, non-receipt of Annual Report, non-receipt of dividend etc. The Committee comprises of Mr. Mukesh R. Gupta as the Chairman and Mr. Devidas Kambale and Dr. B.R. Singh as the Members.

Risk Management Committee

The Risk Management Committee of the Company is constituted on 27th October, 2014 in terms of revised clause 49 of the listing agreement. The Committee comprises of Mr. Mukesh R. Gupta as the Chairman and Mr. Babulal Agarwal, Mr. Rajesh R. Gupta and Mr. Jagannath Dange as the Members.

Corporate Social Responsibility Committee

Pursuant to Section 135(2) read with Schedule VII of the Companies Act, 2013, the Board of your Company has constituted a CSR Committee. The Committee comprises of Mr. Mukesh R. Gupta as the Chairman and Dr. B.R. Singh and Mr. Rajesh R. Gupta as the members. Your Company has developed a CSR Policy. The CSR Policy has been uploaded on the Company's website at the web link: http://www.llovds. in/policies.html.

Risk Management Policy

The Risk Management policy is formulated and implemented by the Company in compliance with the provisions of the new Companies Act, 2013 and revised listing agreement. The policy helps to identify the various elements of risks faced by the Company, which in the opinion of the Board threatens the existence of the Company. The Risk Management Policy as approved by the Board is uploaded on the Company's website at the web link: http://www.lloyds.in/policies.html.

Remuneration Policy

The Nomination and Remuneration Committee has formulated and implemented "Remuneration policy" in compliance with section 178 of the Companies Act, 2013 read with applicable rules thereto and revised clause 49 of the listing agreement. The policy provides guidelines to the Nomination & Remuneration Committee relating to the Appointment, Removal & Remuneration of Directors and KMP. It also provides criteria for determining qualifications, positive attributes and independence of a director.

The Nomination and Remuneration policy as approved by the Board is uploaded on the Company's website at the web link: http://www.lloyds.in/policies.html.

Whistle Blower Policy & Vigil Mechanism

Pursuant to Section 177(9) of the Companies Act, 2013 and revised clause 49 of the Listing Agreement, the Company has formulated Whistle Blower Policy & established Vigil Mechanism for the directors and employees of the Company to report, serious and genuine unethical behaviour, actual or suspected fraud and violation of the Company's code of conduct or ethics policy. It also provides adequate safeguards against victimization of persons, who use such mechanism and makes provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. None of the employees of the Company has been denied access to the Audit Committee.

Mr. Nitesh Tanwar, Company Secretary and Compliance officer of the Company, has been designated as Vigilance and Ethics Officer for various matters related to Vigil Mechanism.

The Policy on Vigil Mechanism and Whistle Blower Policy as approved by the Board is uploaded on the Company's website at the web link: http://www.lloyds.in/policies.html.

CORPORATE GOVERNANCE

Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchange with which the Company is listed are complied with. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

AUDITORS AND AUDITORS' REPORT

Statutory Auditor

Pursuant to Section 139 of the Companies Act, 2013, rules made thereunder and subject to approval of the members of the Company at the Annual General Meeting, the Board of directors on the recommendation of the Audit Committee appointed M/s Todarwal & Todarwal, Chartered Accountants (Firm Registration No.111009W), as the Statutory Auditors of the Company for the period of three financial years commencing from 1st April, 2014 to 31st March, 2017.

The Board based on the recommendation of the Audit Committee, recommends the ratification of the appointment of M/s Todarwal & Todarwal, Chartered Accountants (Firm Registration No.111009W) as the Statutory Auditors. The members are thus requested to ratify the appointment of aforesaid Statutory Auditors for the next financial year 2015- 2016 at the ensuing Annual General Meeting.

As regards Auditors' observation in Point No. 10 of annexure to the Auditors' Report in respect of cash losses and accumulated losses, it is factually correct that the Company has incurred cash losses and the accumulated losses are more than fifty percent during the year due to adverse market conditions.

Cost Auditor

In terms of provisions of Section 148 of the Companies Act, 2013 and in accordance with notification issued by the Ministry of Corporate Affairs, F.No.52 /26/ CAB - 2010 dated 2nd May, 2011, M/s Manisha & Associates, Nagpur, Cost Accountants were appointed as Cost Auditor of the Company for the financial year 2014-15 and they have offered themselves for re-appointment for the financial year 2015-16. The Company has filed Cost Audit Report for the financial year ended 31 st March, 2014 with the Central Government within the time limit prescribed under the Companies Act, 2013.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K. C Nevatia of K. C Nevatia & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended March, 2015. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed hereto marked as Annexure 'B' and forms part of this Report.

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

The Information on conservation of energy, technology absorption, foreign exchange earnings and out go, which is required to be given pursuant to the provisions of section 134(3)(m)of the Companies Act, 2013, read with Rule 8(3) of Companies (Account) Rules, 2014 is annexed hereto marked as Annexure 'A' and forms part of this report.

EXTRACT OF THE ANNUAL RETURN

The Extract of the Annual Return pursuant to section 92(3) of the Companies Act, 2013 for the financial year 2014-15 is annexed hereto marked as 'Annexure C' and forms part of this report.

PAYMENT OF ANNUAL LISTING FEES

Shares of the Company are presently listed at BSE Limited, P.J.Towers, Dalal Street, Mumbai and the Company has paid listing fee upto 31st March, 2016 in respect of above stock exchange.

GENERAL DISCLOSURE

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save or ESOS.

4. 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.

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.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers and Vendors during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the Company while discharging their duties.

For and on behalf of the Board

Date : 10th April, 2015 Mukesh R. Gupta Place : Mumbai Chairman




Mar 31, 2013

The Directors present their 36th Annual Report on the business and operations of your Company and Audited Statement of Accounts for the year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS

(Rs. in Lacs) Current Year Previous Year 2012-13 2011-12

Sales ( Net ) 75,920.22 100,680.39

Other Income 1,626.29 1,718.94

Total Income : 77,546.51 102,399.33

Profit before Interest, 3,693.33 4,468.97

Depreciation & Tax

Less : Finance Cost 849.93 1,494.59

Depreciation 2,651.85 2,601.15

Profit/(Loss) before tax 191.55 373.23

Less : Tax Provision - -

Net Profit/ (Loss) after Tax 191.55 373.23

DIVIDEND

With a view to conserve the resources in long run, your Directors have not recommended any Dividend for the year ended 31st March, 2013.

OPERATIONS & OVERALL PERFORMANCE

Global apparent Steel consumption increased 1.7 % in 2012, down sharply from 7.4 % growth in 2011. The growth in the Indian Steel Industry remained muted during the year under review. The total Indian finished Steel consumption registered a marginal growth of 3.7 % compared to last year mainly due to lower demand from steel using industries like automobiles, infrastructures, construction, regulatory hurdles, delays in project execution and weak sentiment through the steel industry globally and in the domestic market. India remained to be the world''s largest producer of Direct Reduced Iron (DRI) or sponge iron with a host of coal based units, located in the mineral - rich states of the country.

Globally, Steel prices improved in the first half of 2012, but declined in the back half due to a glut in imports, oversupply in the market, weak demand and tempering growth in Asia. A sustained downside in steel prices has materially and adversely affected margins of the Steel Companies. High input costs coupled with lower operating margins and high capital charges dented the net margins of the Steel Producers and trend is expected to continue during the current year as well. With the general expectation of modest growth globally and sustained raw material prices, the steel prices would firm up and remain stable in the year ahead.

The Indian Power sector has achieved a lot over the last decade in the areas of policy reforms, private sector participation in generation and transmission, new manufacturing technology and capabilities, but there is still much to achieve and a number of challenges to overcome before the opportunities can be leveraged. The last decade has seen a sea change in India''s Electricity sector, from being 10th largest in the world to 5th largest now..The Power Sector is high on India''s priority as it''s offers tremendous potential for investing companies based on the sheer size of the market and the returns available on investment capital. The challenges in the domestic power sector continued during the year under review. India is facing a Power deficit of around 9 % and this is likely to continue over the next few years. India faced massive power black- outs during the first half of the year due to overdrawing and grid indiscipline. The High fuel prices and low merchant realization has put pressure on operating margins of the power companies, however, the trend is expected to change in the coming years backed by production of renewable energy, revision in tariff structure, coal linkages and reforms announced by the Government to revive power sector.

The Total Income of the Company was Rs. 775.46 crores during the year as against Rs. 1,024.00 crores in the previous year, showed decrease of 32 %. The Company has reported Net profit of Rs. 1.91 crores during the year under review as against Rs. 3.73 crores in the previous year.

SPONGE IRON DIVISION

The production of Sponge Iron Division during the year under review was 151066 MT against 156698 MT in the previous year showing decrease of 4 %. The total income of the division was Rs. 686.63 Crores as against Rs. 934.15 Crores during the previous year, showing decrease of 36 %.

POWER DIVISION

During the financial year 2010-11, in order to utilize the waste heat and convert into productive energy, the Company has commissioned it''s 30 MW co-generation Waste Heat Recovery Based (WHRB) Power Plant, at Ghugus, Maharashtra. The production of the division was 23.96 MWH during the year under review as compared to 24.54 MWH for the previous year. The total income of the division was Rs. 72.57 Crores during the year under review as against Rs. 72.65 Crores during the previous year.

By virtue of issuance of Commercial Circular No. 154 & 156 dated 23.01.2012 by Maharashtra State Electricity Distribution Company Limited and other laws and circulars of authority, the scope of distribution/supply/utilization of electricity through Open Access has been expanded. The company is exploring all the possibilities, strictly adhering to and complying with the parameters and conditions laid down in the said circulars & other laws to utilize the power generated by its power generation unit.

In respect of Iron ore mining activities, the company has received all statutory permissions and necessary sanctions from the concerned authorities to commence mining operations and the mining operations have commenced on trial basis.

ENVIRONMENT & SOCIAL OBLIGATION

The Company maintains the pollution free environment in and around its plants. The Company''s'' plants comply with all norms set up for clean & better environment by Competent Authorities.

MANAGEMENT DISCUSSION AND ANALYSIS

The core business of the Company is manufacturing / marketing of Iron and Steel and generation / distribution of Power. The Management discussions and analysis is given hereunder :-

a) Industry structure and development: The growth of the Domestic Steel Industry remained subdued on account of slow down in demand from the key consuming sectors and limited iron ore availability. The demand for the steel in domestic industry is expected to remain modest. Global steel demand is also expected to improve gradually as compared to previous year levels. Being one of the fastest growing economics and the second largest populated country, India represents an attractive destination for the Power industry. The working age population is increasing at a rapid pace, thereby creating a strong demand for electricity. India will continue to need large new investments in electricity to meet demands of a fast developing economy, and a population that is growing in size, income and expectations.

b) Opportunities and threats: The growth potential in the Indian Steel industry is optimistic in years to come riding on factors such as High Growth of Economy, availability of Iron Ore and Coal, availability of technical expertise at a cheaper cost, availability of metallurgical knowledge and untapped potential in the rural markets. The main challenges to the industry are Land Acquisition issues, Mineral Security, Environmental Issues and Technological challenges.

Reforms such as the Electricity Act and National Electricity Policy will provide the necessary impetus to the Indian Power Sector. The new tariff norms for power utilities announced by the Central Electricity Regulatory Commission ( CERC) for the period FY 2009-14 will have an overall positive impact on the profitability of the power sector.The key problems hindering the growth of the power sector are lack of land availability, Coal shortages, fuel availability, environment, forest clearances.

c) Segment-wise performance: The Company is operating two segments, Iron and Steel and Power Generation. Segment Wise results are given at Note No. 15 under ''Notes to the Accounts'' forming part of balance sheet. The Company has no activity outside India.

d) Outlook: With a series of mega projects, either being implemented or at the proposal stage and domestic economy carrying forward the reform process further, the future of the Indian Steel industry looks optimistic.

There is strong growth opportunity in power generation led by exponential growth in economy, increasing prosperity for electricity consumption and urbanisation.

e) Risk and concerns: Steel Industry always runs risk of Industry cycle. The Company is continuously monitoring the supply management practices, Technological obsolescence, input prices, price sensitivity and demand volatility are an inherent business risks. The Company undertakes continuous development, training and modernization programme to keep its business efficient. The risks faced by the Power sector are irregular tariff structures, fuel availability, project execution, land acquisition, financial assistance and environment clearance etc. The Company is taking proper actions against the possible industry risks which may affect the business activities of the Company.

f) Mitigation of Risks: The Company in order to mitigate the risks, threats and concerns, is taking necessary short term and long term steps like exploring Open Access Market for sale of power, expanding customer base, forward integration and energy management etc. The Company has already taken effective steps for raw material security in the long term.

g) Internal control system: The Company maintains adequate internal control systems, which provide adequate safeguards and proper monitoring of the transactions. The Company has appointed an Internal Auditor who reports to the Managing Director and Audit Committee of the Board. The Internal Auditor conducts quarterly audits to ensure that the Company''s control systems are adequately followed and all statutory requirements are complied with.

h) Discussion on financial performance with respect to operating performance : The operating performance of the Company has been discussed in Directors Report under the head ''Financial Highlights'' & ''Operations and Overall Performance'' in the current year.

i) Human resources and industrial relations : During the year under review the Employee/ Industrial relations remained harmonious. Steps were taken continuously by the Company for training its employees in various disciplines. Number of employees as on 31st March, 2013 was 444.

j) Cautionary Statement : The Management Discussions and Analysis describe Company''s projections, expectations or predictions and are forward looking statements'' within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company''s operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.

SUBSIDIARY & CONSOLIDATED FINANCIAL STATEMENTS

The Statement required Under Section 212 of the Companies Act, 1956, including the Financial Information relating to subsidiary Company M/s. Gadchiroli Metals and Minerals Limited, wholly owned subsidiary is attached herewith. In accordance with the Accounting Standard AS -21, the Consolidated Financial Statements are attached herewith which forms part of the Annual Report and Accounts.

INVESTOR SERVICES

The Company and its Registrars M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence in terms of SEBI direction, for having a common Registrar and Share Transfer Agent, endeavored their best to service the Investors satisfactorily.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Shri Shantanu Mohaoatra and Shri Mukesh Gupta, Directors of your Company, retires by rotation and being eligible, offers themselves for reappointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

1. In the preparation of annual accounts for the financial year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The directors have selected such accounting policies and applied them consistently and made judgements 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 or loss of the Company for the year under review.

3. 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;

4. Final accounts have been prepared on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the revised Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchange with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor''s Certificate on its compliance are annexed hereto and forms part of this Annual Report.

STATUTORY AUDITORS & AUDITORS'' REPORT

The members are requested to appoint Auditors for the next financial year 2013-2014.

COST AUDITORS

In terms of provisions of Section 233B(2) of the Companies Act,1956 and in accordance with notification issued by the Ministry Of Corporate Affairs, F.No.52 /26 / CAB - 2010 dated 02.05.2011, M/s Manisha & Associates, Nagpur, Cost Accountants was appointed as Cost Auditor of the Company for the financial year 2012-13 and offered themselves for re- appointment for the financial year 2013-14 subject to approval of the Central Government. The Company has filed Cost Audit Report for the financial year ended 31.03.2012 with the Central Government within the time limit prescribed under the Companies Act,1956.

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

Information in accordance with Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure ''A'' forming part of this report.

PARTICULARS OF EMPLOYEES

The Company does not have any employees, whose particulars are required to be given pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended by MCA vide i''ts Circular No. 23/2011 dated 03.05.2011.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the company while discharging their duties.

For and on behalf of the Board

Dated : 21.05.2013 Mukesh R Gupta

Place : Mumbai Chairman


Mar 31, 2010

The Directors present their 33rd Annual Report on the business and operations of your Company and Audited Statement of Accounts for the year ended 31s! March, 2010.

FINANCIAL HIGHLIGHTS (Rs. in Lacs)

Current Year Previous Year 2009-10 2008-2009 Sales (Net) 56789.42 52347.23 Other Income 917.89 429.00 Total Income: 57707.31 52776.23 Profit before Interest, Depreciation, 4351.97 5338.00 Exceptional Items & Tax Less: Finance Charges 883.05 560.80 Depreciation 1680.05 1920.96 Profit / (Loss) before exceptional 1788.87 2856.24 items & taxes Profit/(Loss) before tax 1788.87 2856.24 Less . Tax Provision - 17.61 Profit/(Loss) after Tax 1788.87 2838.63 Add/(Less): Prior Period Income / (2.10) 5.45 (Expenses) Net Profit/(Loss) 1786.77 2844.08 Profit / (Loss) b/f from previous year (1726.39) (17742.32) Add : Balance Transferred from 60.38 (14898.24) Capital Reserve - 1247.04 Share Premium Account - 11909.81 Debenture Redemption Reserve - 15.00 Balance Carried Forward 60.38 (1726.39)

DIVIDEND

With a view to conserve the resources in long run, your Directors have not recommended any Dividend for the year ended 31s' March, 2010.

OPERATIONS & OVERALL PERFORMANCE

After being hit back by the economic slow down during the previous year, steel companies had recovered well registering remarkable growth during the year under review. The increase in the demand was mainly caused on the back of growth of various sectors such as automobile, construction, infrastructure and consumer durables. The domestic production of finished steel reported increase of about 4 % during the last year. The steel prices depressed during the first half of the year under review and picked up during the last quarter. Increase in demand and better price realizations had a good impact on the operating margins and profitability of the steel companies in the later half and trend is expected to continue during the current year as well.

During the year under review, the production of Sponge Iron was 168144 MT against 173000 MT in the previous year. The Total Income of the Company was Rs. 577.07 crores during the year as against Rs.527.76 crores in the previous year, showed an increase of 9 %. The Company has reported Net profit of Rs.17.87 crores during the year under review as against Rs. 28.44 crores in the previous year.With this, brought forward losses of Rs. 17.26 Crores has been wiped out. The figures of Total Income and Net Profit for the year under review are not comparable as previous year's figures includes 7 months operations of Steel Pipe & Tube Unit - since demerged.The reduction in the Net Profit is also attributed to increase in cost of raw materials, plant shut down during some part of the year. In order to utilize and harness the

Waste gases generated while producing Sponge Iron, the Company is setting up a 30 MW co-generation power plant at its Sponge Iron plant site which is under commissioning stage.

During the year 2004-05, the company floated a wholly owned subsidiary for the purpose of Iron ore mining activities. As per the order of Mines Tribunal, the revised letter issued by Government of Maharashtra (GoM) in favour of subsidiary has been set aside. Subsequently the original status has been restored by GoM and a lease has been granted in favour of the company. A case filed by a competitor before Delhi High Court in this matter has been dismissed. In the meanwhile, the company has received all statutory permissions and necessary sanctions from the concerned authorities to commence mining operations and the mining operations are expected to commence in due course.

ENVIRONMENT & SOCIAL OBLIGATION

The Company maintains the pollution free environment in and around its plant. The Companys' plant comply with all norms set up for clean & better environment by Competent Authorities.

MANAGEMENT DISCUSSION AND ANALYSIS

The core business of the Company is manufacturing and marketing Iron and Steel. The Management discussions and analysis is given hereunder :-

a) Industry structure and development: After facing severe beating in terms of price and demand of steel during the previous year, the steel industry has shown good signs of recovery during the current year led by increase in demand and capacity addition by domestic steel companies.

b) Opportunities and threats: The Steel industry has a very good growth potential in years to come with rising domestic as well as global consumption on back of growing demand by sectors like automotive, infrastructure and consumer durable sectors. The constant increase in prices on the back of hike in raw material cost may affect the steel industry.

c) Segment-wise performance: The Company is operating on only one broad segment, Iron and Steel and hence separate segmental reporting is not applicable. The Company has no activity outside India.

d) Outlook: The Steel Industry outlook in immediate future looks reasonably well due to stability in the domestic as well as global steel industry.

e) Risk and concerns: Steel Industry always runs risk of Industry cycle. The Company is continuously monitoring the supply management practices, Technological obsolescence, input prices, price sensitivity and demand volatility are an inherent business risks. The Company undertakes continuous development, training and modernization programme to keep its business efficient.

f) Internal control system: The Company maintains adequate internal control systems, which provide adequate safeguards and proper monitoring of the transactions. The Company has appointed an Internal Auditor who reports to the Managing Director and Audit Committee of the Board. The Internal Auditor conducts quarterly audits to ensure that the Company's control systems are adequately followed and all statutory requirements are complied with.

g) Discussion on financial performance with respect to operating performance : The operating performance of the Company has

been discussed in Directors Report under the head 'Financial Highlights' & 'Operations and Overall Performance' in the current year.

h) Human resources and industrial relations : During the year under review the Employee/ Industrial relations remained harmonious. Steps were taken continuously by the Company for training its employees in various disciplines. Number of employees as on 31st March, 2010 was 302.

i) Cautionary Statement : The Management Discussions and Analysis describe Company's projections, expectations or predictions and are forward looking statements' within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.

SUBSIDIARIES & CONSOLIDATED FINANCIAL STATEMENTS

The Statement required Under Section 212 of the Companies Act, 1956, the Audited Accounts and the Reports of the Directors and Auditors of M/s. Gadchiroli Metals and Minerals Limited, wholly owned subsidiary is attached herewith. In accordance with the Accounting Standard AS -21, the Consolidated Financial Statements are attached herewith which forms part of the Annual Report and Accounts. During the year under review, M/s Lloyds Line Pipes Ltd ceased to be a Wholly owned Subsidiary of the company.

INVESTOR SERVICES

The Company and its Registrars M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence in terms of SEBI direction, for having a common Registrar and Share Transfer Agent, endeavored their best to service the Investors satisfactorily.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Shri Rajesh Gupta and Shri Shantanu Mohapatra, Directors of your Company, retires by rotation and being eligible, offers themselves for reappointment.

DIRECTORS' RESPONSIBILITY STATEMENT

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

1. In the preparation of annual accounts for the financial year ended 31" March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The directors have selected such accounting policies and applied them consistently and made judgements 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 or loss of the Company for the year under review.

3. The directors Jiave 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;

4. Final accounts have been prepared on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the revised Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report.

AUDITORS & AUDITORS' REPORT

The members are requested to appoint Auditors for the next financial year 2010-2011.

Auditors' observations in Clause Np. 9 (b) in the Annexure to Audit Report (CARO Report) are self explanatory and do not require further explanation.

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

Information in accordance with Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure 'A' forming part of this report.

PARTICULARS OF EMPLOYEES

A statement pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure B to the Directors Report.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the company while discharging their duties.

For and on behalf of the Board Dated : 24th May, 2010 Mukesh R Gupta Place : Mumbai Chairman

 
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