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Directors Report of Monnet Ispat & Energy Ltd.

Mar 31, 2015

The Directors are pleased to present the Twenty-Fifth Annual Report on the business and operations of the Company together with the audited accounts for the financial year ended 31st March, 2015.

1. FINANCIAL SUMMARY

Financial Summary and performance Highlights of your Company, for the financial year ended March 31, 2015 are as follows:

(Rs. in crores)

Particulars Stand Alone Consolidated

31.03.15 31.03.14 31.03.15 31.03.14

Gross Sales & Other Income 3,258.41 2,360.83 3,306.82 2,378.20

Profit Before Interest Depreciation & Tax 198.52 475.24 148.60 463.02

Depreciation & Amortisation 281.44 138.73 288.41 143.77

Interest 652.87 239.38 670.46 249.48

Profit/Loss From Operations (735.80) 97.13 (810.27) 69.78

Exceptional Items 252.91 - 252.92 -

Share Of Profit Transferred To Minority - - 12.38 (0.28)

Provision for Taxation (192.83) 30.49 (193.88) 32.46

Profit/Loss After Tax (795.87) 66.63 (856.93) 37.04

Balance of P & L Account B/F 1,450.97 1,412.00 1,373.69 1,339.09

Amount Available For Appropriation - - - -

Balance of P & L Account C /F to Next 655.10 1,450.97 516.76 1,373.69 Year

Reserve & Surplus 1,776.85 2,598.80 1,825.70 2,710.88

Previous year's figures have been regrouped/ rearranged wherever considered necessary.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review your Company's gross turnover and net turnover was Rs.3435.45 Crores and Rs.3185.62 Crores respectively. The operating EBITDA was Rs.198.52 Crores. The Company had incurred a loss of Rs. 795.87 Crores after considering exceptional items of Rs. 252.91Crores as compared to profit of Rs. 66.63 Crores during the previous year.

Further, there has been no change in the nature of business during the period under review.

2. DIVIDEND

In view of the losses incurred by the company, Board has not recommended any Dividend for the Financial Year 2014-15.

3. MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments have taken place between the end of financial year of the Company to which balance sheet relates and date of report, which affects the financial position of the Company.

4. SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

Your Company has sixteen subsidiary companies including subsidiaries of subsidiaries, three joint ventures and one associate company. The consolidated financial statements presented by the Company include financial information of its subsidiaries, Joint Ventures and associate companies and prepared in compliance with applicable Accounting Standards. For further details of these subsidiaries, please refer Note 1 [I] of Consolidated Financial Statements. The Annual Accounts of the subsidiary Companies are open for inspection by any Shareholder at the Company's Registered Office at Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh-492101 and the Company will make available these documents and the related detailed information upon request by any Shareholder of the Company or any Shareholder of its subsidiaries, Joint ventures and associate Companies who may be interested in obtaining the same.

A separate statement in form AOC-1, containing the salient features of the financial statement of its subsidiaries, Joint Ventures and associate companies is attached as

Annexure – 1.

Further, Black Sea Natural Resources, Abkhazia and Black Sea Natural Resources, Moscow became subsidiaries of the company the during the year under review and Company wound-up its subsidiary Monnet Global Mali S.A. during the year.

The Company had entered into separate JV agreements for the development of Coal Block. While the coal blocks were under development, the Hon'ble Supreme Court of India cancelled the allocation of coal blocks by the Government of India to state and private sectors. Consequently, the allocation of coal blocks alloted to the company and of these three JVs stood cancelled.

5. DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, your directors hereby state and confirm that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. They 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 and of the profit and loss of the Company for that period;

c. They 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;

d. They have prepared the annual accounts on a going concern basis;

e. They have laid down internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively; and

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

6. COMMENTS BY THE BOARD ON AUDIT QUALIFICATION

There are no qualifications, reservations or adverse remarks or disclaimers made by Statutory Auditors, in their report. However, the Secretarial Audit Report for the Financial year ended March 31, 2015 contains certain reservation and remarks which are given along with the management reply for the same:

- Due to losses incurred by the Company, remuneration paid to its managing director was in excess of the limit prescribed under Schedule V to the Company and the Company is in process of fling application before the Central Government for seeking waiver of excess remuneration paid during the financial year 2014-15:

In this regard, the Company wishes to inform that Company is in the process of flling of application before the Central Government for seeking waiver of excess remuneration paid to managing director during the financial year 2014-15

- Few e-form(s) were fled with the Registrar of Companies, Chhattisgarh beyond their due dates:

In this regard, the Company wishes to inform that delay in fling of some forms was mainly due to ambiguity and uncertainty in the provisions of the Companies Act, 2013.

- Annual return on foreign liabilities and assets has not been fled by the Company.:

In this regard, the Company wishes to inform that Company is in the process of filling of Annual return on foreign liabilities and assets with Reserve Bank of India.

7. RISK MANAGEMENT

Your Company's Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The risk policy defines the risk management handling system vis-à-vis role of various entities. The profiling, a continuously ongoing and evolving process, is done for each risk. The process involves prioritizing, modeling and assigning mitigation process to each type of risk model. The management periodically issues the policies to its divisions. These divisions modify these to make it suitable. A corporate level independently constituted team and a sound internal audit system is in place. The internal audit team periodically visits the divisions and carries out audit. The findings are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

8. ORDERS PASSED BY THE REGULATORS OR COURTS, IF ANY

Except the cancellation of operational coal mine by Hon'ble Supreme Court at Raigarh which has impacted the operation of the company, their is no significant and material orders were passed by the Regulators, Courts or Tribunals impacting the going concern status and Company's operations in future.

9. INTERNAL CONTROLS & INTERNAL FINANCIAL CONTROLS

Internal Control systems are an integral part of company's corporate governance. Your Company has effective internal control environment. Control systems have documented policies, checks and balances, guidelines and procedures that are supplemented by robust internal audit processes and monitored continuously by periodical reviews by management which provides reasonable assurance that all assets are safeguarded; transactions are authorized, recorded and reported properly. Your Company has an independent MIS and Audit Department to oversee the day-to-day functioning of the Company. The Company has proper budgeting system and the actual performance is continuously evaluated and the corrective measures are taken from time to time. The internal control system is designed to ensure that all financial and other records are reliable for preparing financial statements, other data and for maintaining accountability of assets.

10. SHARE CAPITAL

There was no change in the Company's share capital during the year under review.

The Company's paid up share capital is Rs. 2,40,84,29,224/- comprising of 6,58,25,681 equity shares of Rs. 10 each and 1,75,00,000 6.5% Cumulative Non Convertible redeemable preference shares of Rs. 100 each and shares foresighted amount of Rs. 172,414/-.

11. DECLARATION BY INDEPENDENT DIRECTORS

The company has received the necessary declaration from each director in accordance with Section 149(6) of the Companies Act, 2013 that he/she meets the criteria of Independence as laid out in Section 149(6) of the Companies Act, 2013 and clause 49 of the listing agreement.

12. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and clause 49 of the listing agreement, the Board evaluated the effectiveness of its functioning and that of Committees, Key Managerial Personnel & individual Directors by seeking their inputs on various aspects of Board/ Committee Governance. Further, the Independent Directors at their meeting reviewed the performance of Board, Chairman of the Board and Non- executive Directors.

13. PARTICULARS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) APPOINTED OR RESIGNED DURING THE FINANCIAL YEAR ENDED MARCH 31, 2015.

In accordance with the provisions of Section 149(2) of the Companies Act,2013 your company is required to appoint one women Director. Accordingly Ms. Bhavna Thakur was appointed as Independent women Director of the Company on 31.03.2015 and Mr. Suman Jyoti Khetan was appointed as an independent director on 14.8.2015. They will hold the Office till the next AGM. Further, Mr. Suresh Kishin Chand Khatanhar was appointed nominee director of IDBI Bank on 29.05.2015.

During the period beginning from the date of last Directors report Mr. Vikram Deswal and Mr. Amulya Charan, Directors ceased to be Directors of the company.

In accordance with the provisions of section 152 of the companies Act, 2013 and In terms of Articles of Association of the company, Mr.C.P. Baid, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re- appointment.

During the period under review the following KMP changes took place- Mr. Raj Kumar Ralhan was appointed as Chief Financial Officer on 14.11.2014 and Mr. Hardeep Singh, was appointed as company secretary on 31.03.2015. Mr. M.P. Kharbanda, Company Secretary resigned from the post of Company Secretary on 22.01.2015.

As per clause 49 IV(G) of the Listing Agreement, the required details of the Directors appointed/ Reappointed during the year is given in "Annexure-2"

14. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. Further, there have been no materially significant related party transactions between the Company and the Directors, the management, the subsidiaries or the relatives except for those disclosed in the financial statements. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report.

15. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with Section 135 of the Companies Act, 2013 read with the Rules made thereunder, the Company has formed Corporate Social Responsibility (CSR) Committee. The policy on Corporate Social Responsibility as approved by the Board of Directors is uploaded on the website of the Company i.e. www. monnetgroup.com.

The composition of the Corporate Social Responsibility Committee is as under:

Name of DIN Composition of the

Members CSR Committee

Mr. Sandeep 00082869 Chairman Jajodia

Mr. Amulya 00007370 Member Charan *

Mr. J.P. Lath 00380076 Member

Mr. Suman 00023370 Member Jyoti Khaitan **

* Resigned during the period.

** Appointed on 14.08.2015.

The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Report as Annexure "3".

16. AUDITORS

STATUTORY AUDITOR

M/s. O.P. Bagla & Co., Chartered Accountants (Firm Registration No. 000018N) have been appointed as the Statutory Auditors of the Company in the 24th Annual General Meeting of the Company held on Sept 27, 2014, to hold the Office till the conclusion of 27th Annual General Meeting of the Company, subject to the ratification of shareholders at every Annual General Meeting.

Further, the ratification in respect with the appointment of M/s. O.P. Bagla & Co. Chartered Accountants as the Statutory Auditors of the Company is proposed in the Notice of 25th Annual General Meeting of the Company.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditor to conduct the Secretarial Audit of the Company for FY 2014-2015. The Report of Secretarial Auditor (Form MR-3) for the FY 2014-2015 is annexed to the report as Annexure – 4.

COST AUDITOR

On the recommendation of Audit Committee, the Board of Directors in its meeting held on May 29, 2015 has appointed M/s. N. K. Jain & Associates, Cost Accountants as the Cost Auditor of the Company for the financial year 2015-16 on the aggregate remuneration of Rs. 3,00,000/- (Rupees Three Lakhs only) plus taxes, as applicable and out of pocket expenses, in accordance with the provisions under Section 148 of the Companies Act, 2013 read with rules made there under.

The remuneration payable to the Cost Auditor of the Company has been proposed for the ratification by the members of the Company and form part of the notice of 25th Annual General Meeting.

17. PUBLIC DEPOSITS

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.

18. DISCLOSURES

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year, six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

EXTRACT OF ANNUAL RETURN

In accordance with the provisions of Section 134(3) (a) of the Companies Act, 2013, the extract of the annual return in Form No. MGT – 9 is annexed as Annexure – 5 hereto and forms a part of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of Investments, Loans and Guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no 12 and 13 and 30 to the Financial Statements.

STATUTORY DISCLOSURES

i) A declaration signed by Chairman & Managing Director as required under Clause 49 (I) (D) of the Listing Agreement is enclosed in the Annual Report.

ii) The Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2015

NOMINATION AND REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial personnel and their remuneration as well as policy on other employees remuneration. The Brief terms of policy is stated in the Corporate Governance Report.

AUDIT COMMITTEE

The Company complies with the provisions related to Audit Committee, as provided under Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013. The composition of the Audit Committee is as under:

Name of DIN Composition

Members of the Audit

Committee

Mr. Amulya Charan* 00007370 Chairman,

Mr. Amit Dixit 01798942 Member

Mr. J.P. Lath 00380076 Member

Mr. Suman Jyoti Khai- 00023370 Member tan **

* Resigned during the period.

** Appointed on 14.08.2015.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Vigil Mechanism Cum Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. Details of the same are given in the Corporate Governance Report. The same has also been displayed on the website of the Company and the link for the same is http://www.monnetgroup.com

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place a policy on Gender Equality, Gender Protection, Prevention of Sexual Harrasment and Redressal System in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

No complaints pertaining to sexual harassment were received during FY 2014-15.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as Annexure 6.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of the Report .However, having regard to the provisions of the frst proviso of Section 136(1) of the Companies Act 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at Registered Office of the Company during working hours, any member interested in obtaining said such information may write to the Company Secretary, at the registered Office and the same will be furnished on request.

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

Information under Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014 is given below:

A. Conservation of Energy

The Company has taken a number of steps to improve the conservation of energy by increasing the efficiency of raw material inputs in power generation and by reducing/eliminating consumption wastages. Conservation of energy and improving the efficiency of existing resources are continuing processes and form an integral part of responsibilities of departmental heads. Various steps taken in this direction are as follows:-

1. SMS- Charge mix change Hot metal: DRI from 55:45 to 80:20. Energy saving 330 kwh/mt.

2. Sinter plant- Using claimed lime reduced coke consumption from 110 kg.mt to 85 kg/mt.

3. Blast furnace- by using single blower in spite of two blower, steam consumption reduced by 65 mt/hr to 45 mt/hr.

4. Bar mill- By using gas fired furnace ( earlier Furnace oil based) , furnace oil consumption in bar mill stopped

B. TECHNOLOGY ABSORPTION

i. Efforts are being made in technology absorption: the Raigarh plant is using 85 % efficient TPH CFBC Boiler Technology in place of conventional 80 % efficient AFBC Boiler Technology.

ii. Benefits derived as a result of the above efforts: the efficient Bioler Technology has resulted in saving of coal which is a scarce mineral.

iii. Details of technology imported during last five years: NA

iv. Expenditure incurred on Research and Development.: NA

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earned in terms of actual inflows and the Foreign Exchange outgo in terms of actual outflows, during financial year 2014-15 are as follow :-

1. Activities relating to exports The efforts initiatives taken to increase amraede. being exports development of new export markets for products and services and export plans.

2. Total Foreign Exchange used and earned

(In Crores) 2014-15 2013-14

- Used 173.24 273.34

- Earned 217.13 185.36

20. MANAGEMENT DISCUSSION & ANALYSIS REPORT - Pursuant to clause 49 of the Listing Agreement the Management Discussion and Analysis Report is enclosed in this Directors Report in Annexure-7

21. CORPORATE GOVERNANCE

The Company has complied with requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. A report on the Corporate Governance practices, the Auditors' Certificate on compliance of mandatory requirements thereof are form part of this report.

22. LISTING OF SHARES

Presently the Equity Shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The Listing Fees for the financial year 2015-16 has been paid.

CAUTIONARY NOTE

Certain statements in the 'Management Discussion and Analysis' section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook. Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Company's growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Company's financial statements and notes on accounts.

ACKNOWLEDGEMENT

Your Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all Officers, staff and workers of the Company at all levels.

By Order of the Board For Monnet Ispat & Energy Limited

Place: New Delhi Date : 14.08.2015

Sd/-

Sandeep Jajodia

Chairman & Managing Director DIN: 00082869


Mar 31, 2014

Dear Members,

For the financial year ended 31st March, 2014

The Directors submit their report for the financial year ended 31st March, 2014.

Sales, Profits, Dividends & Retention

[Rs. in Crores]

2014 2013

Sales (Net of Excise) & Other Income 2,360.83 2,028.27

Profit before Depreciation 235.86 427.31

Depreciation and amortization expenses 138.73 88.90

Profit before taxes 97.13 338.41

Tax Expense 30.49 88.09

Profit after Tax 66.63 250.32

Cash Profit 232.13 354.84

Profit brought forward from previous year 1,412.00 1,198.04

Profit available for appropriation 1,478.63 1,448.36

Dividend: 10% (2012-13 : 15%) 6.58 9.56

Dividend on Preference Shares 11.38 0.06

Tax on Dividend 3.05 1.64

Dividend paid (including taxes thereon) 21.01 11.26

Transfer to General Reserve 6.66 25.10

Surplus carried to Balance Sheet 1,450.96 1,412.00

Status of Expansions

Steel

Post Commercial Operation of steel facility, stabilization of various modules was a challenge which has successfully been met and the company is now steadily ramping-up the capacity utilization. Operating cash flows of the Company are showing a definitive ascending trend from month to month. The Company is penetrating new markets and developing a customer base for its value added products successfully. The efforts of the Company are supplemented by the revival of overall steel markets.

The Company''s production strategy is primarily driven by the marketing strategy which involves the opportunities of encashing product mixes with higher profitability and relative ease of salability. We have been fairly successful in our approach and are now gradually pushing our main products in the market. Based on the response, we are not facing major challenge and concerns to create a market base for our products. The company is hopeful of making the current year a much better performing year both in terms of top line and bottom line.

Power (Monnet Power Company Limited)

Monnet Power Company Limited (MPCL) is a subsidiary of MIEL and is at an advanced stage of implementation of the 1050 MW pit-head coal based Thermal Power Project at Angul, Odisha. The Project was started in the right earnest in June 2009 with the award of the BTG package to BHEL. However, the pace of project implementation got affected due to delays in receipt of various Government approvals and disbursement of loan from the banks. The Environmental Clearance, which is the important approval from the Project perspective, was received in June 2010 instead of June 2009 due to Angul being included as High Pollution Area.

The Company obtained all the requisite Loan sanctions by January 2010 but the lenders started their disbursement in December 2010 only. The Company faced the impact of high cost of debt from the first disbursement itself due to the change in the interest rate regime in the country. The rate of interest which was envisaged as 11.50% p.a. in the loan documents shot up considerably and have hovered around 14% p.a. ever since.

The Power Sector has been facing multiple challenges over the past few years which generally has resulted in time and cost over-runs in most of the projects. MPCL too has faced similar challenges of delayed disbursals, late approvals and the issue of land acquisition in the beginning resulting in time & cost over-run of the project. The revised Cost of Project is pegget at Rs. 7117 crores instead of Rs. 5092 crores earlier. Similarly, the COD of the Project has been revised to September 2015 instead of December 2012 earlier, with unit-I expected to be commissioned by March 2015 and unit-II by September 2015.

Despite the multiple hurdles being faced by corporates in this sector MPCL has managed to freeze its Revised Cost of Project and has also arranged the required funding for the cost overrun so as to complete the project within the revised time lines.

The project implementation is at a very advance stage with 65% of the overall project having been completed. Individually, Unit-I is progressing faster and much ahead in terms of completion which as per the latest external monitoring report is around 75% complete. As against this, Unit-II as per the same report is 60% completed. In terms of completion Unit-I is expected to be completed within 8 months and Unit-II is expected to be completed within 13 months from the date the funds, both equity and debt, are made available to the Project.

Risk Management

Your Company''s Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The risk policy defines the risk management handling system vis-à-vis role of various entities. The profiling, a continuously ongoing and evolving process, is done for each risk. The process involves prioritizing, modeling and assigning mitigation process to each type of risk model. The management periodically issues the policies to its divisions. These divisions modify these to make it suitable. A corporate level independently constituted team and a sound internal audit system is in place. The internal audit team periodically visits the divisions and carries out audit. The findings are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

Note on Subsidiaries

Your Company has sixteen subsidiary companies including subsidiaries of subsidiaries. The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. For further details of these subsidiaries, please refer Note 1 [I] of Consolidated Financial Statements on page 83. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-III dated 08-02-2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies required to be attached under Section 212 (1) of the Companies Act, 1956 to the Balance Sheet of the Company. Accordingly, the said documents are not being attached with the Balance Sheet of the Company. A gist of financial performance of subsidiary companies is contained in the Report as Annexure VI. The Annual Accounts of the subsidiary Companies are open for inspection by any Shareholder at the Company''s Registered Office at Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh-492101 and the Company will make available these documents and the related detailed information upon request by any Shareholder of the

Company or any Shareholder of its subsidiary Companies who may be interested in obtaining the same.

Consolidated Financial Statements

The audited Standalone and Consolidated Financial Statements of your Company, which form part of the Annual Report, have been prepared pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges, in accordance with the provisions of the Companies Act, 1956, the Accounting Standard (AS-21) on Consolidated Financial Statements, the Accounting Standard (AS-23) on Accounting for Investments in Associates and Accounting Standard (AS-27) on Financial Reporting of Interests in Joint Ventures, prescribed by the Companies (Accounting Standards) Rules, 2006.

Dividend

The Board of Directors recommends a dividend of Rs. 1.00/- per share (10%) on 65825681 equity shares of face value of Rs. 10/- each for FY 2013-14 (Rs. 1.50 per share (15%) in the previous year) subject to approval of the shareholders in the ensuing Annual General Meeting. The total outgo on account of dividend including Dividend Distribution Tax works out to Rs. 11.26 Crore as against Rs. 18.65 Crore in the previous year.

Necessary information with respect to entitlement is being given in detail in the Notice calling Annual General Meeting.

Depository System

As on 31st March, 2014, about 99.33% of the shares of your Company are held in dematerialized form.

The shares of the Company are available for trading in the dematerialized form under both the Depository Systems in India – NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Company''s shares under the Depository System is INE743C01013. The annual custody fee for the financial year 2014-15 has been paid to NSDL and CDSL, the Depositories.

During the year, 10408 shares of the Company, covered in 68 requests, were dematerialized. Out of 65825681 equity shares being the paid-up capital of the Company as on 31st March, 2014, a total of 65386775 shares constituting 99.33% of the paid-up share Capital stand dematerialized.

Directors

During the period beginning after the date of last Directors'' Report, Shri Ajay Relan, and Shri G.C. Mrig, Directors ceased to be directors from the Board of w.e.f. 3rd December, 2013 and 24th January, 2014 respectively. Shri Ajay Relan had to resign from the Board owing to mandate of the Funds he was advising not to stay on the Boards of the Listed Companies. Shri G.C. Mrig has crossed the age of 75 years and opted to step down on health grounds. The Board places on record its appreciation of valuable guidance rendered by them during their tenure.

Pursuant to sub-section (4) of Section 161 of the Companies Act, 2013, the Board has filled the casual vacancy resulted from the resignation of Shri Ajay Relan by appointing Shri Amulya Charan in his place w.e.f. 11th June, 2014. Shri Amulya Charan shall hold the office of director only up to the date up to which Shri Ajay Relan would have held the office of director in case he would not have resigned.

The nature of composition of the Board member is being recast to make it compliant with the provisions of the Companies Act, 2013 with respect to appointment of independent directors for a fixed term during which period, they shall neither retire by rotation nor shall be counted in the Total strength of the Board. However, two-third of these Total strength of the Board shall comprise of the directors who shall be liable to retire by rotation. For this purpose, requisite resolutions have been incorporated in the Notice of the 24th Annual General Meeting and the Explanatory Statement contains the detailed reasons therefor. Consequently, Shri J.P. Lath being the only director liable to retire by rotation, shall retire at the ensuing Annual General Meeting. He has conveyed his willingness to be re-appointed as a director liable to retire by rotation.

As per Clause 49 (IV) (G) of the Listing Agreement, the required detail of directors appointed/reappointed during the year is given in Annexure-V.

Independent Directors

Pursuant to Section 149 of the Companies Act, 2013 (new Act) read with the Rules made thereunder, the Independent Directors can hold office for a period of up to 5 consecutive years and shall not be liable to retire by rotation. They may be appointed for a maximum of two consecutive terms of up to 5 years each. In terms of revised clause 49 of the listing agreement which will be applicable from 1st October, 2014, in case the Independent Director has already served for 5 or more years, he can be appointed for only one term of 5 years. However, under the new Act and Clause 49 of listing agreement, they may be appointed afresh with a fixed period of up to 5 years. As per sub-section (5) of said Section 149, the compliance is to be made within one year from the date of commencement of the new Act.

Presently, Shri Amulya Charan, Shri Amit Dixit and Shri Vikram Deswal are the Independent Directors of the Company in terms of Section 149. As per their existing terms of appointment, all of them are liable to retire by rotation. The Board considered the appointment of the above mentioned Directors in terms of Section 149 and Schedule IV to the Companies Act, 2013 and Clause 49 of the listing agreement and was of the view that these independent directors fulfill the conditions specified in the Act and the rules made thereunder and that the proposed directors are independent of the management and can be appointed for a term of three years during which period, they shall not be liable to retire by rotation. These directors possess requisite qualifications, appropriate skills, experience and knowledge in one or more fields of finance, law management, marketing, administration, technical operations and other disciplines related to Company''s business, the educational / professional qualifications, working experience, expertise in line with Company''s business, positive attributes.

Responsibility Statement

In terms of Section 217 (2AA) of the Companies Act, 1956, your directors confirm having:

(i) followed in the preparation of Annual Accounts, the applicable accounting standards, with proper explanation relating to material departures, if any;

(ii) selected such accounting policies and applied them 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 or loss of the Company for the year under review ;

(iii) 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) prepared the accounts on a going concern basis.

Management Discussion & Analysis

Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled "Management Discussion & Analysis" has been included in this annual report and is given in Annexure-II and forms an integral part of this report.

Corporate Governance Report

Pursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled "Compliance Report on Corporate Governance" has been included in this annual report and is given in Annexure-III along with a certificate of compliance from the Auditors and forms an integral part of this report.

Statutory Disclosures

i) A declaration signed by Chairman & Managing Director as required under Clause 49 (I) (D) of the Listing Agreement is enclosed as Annexure-IV.

ii) The Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2014.

Consolidated Financial Statements

In accordance with Accounting Standard 21 - Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective boards form part of this Report & Accounts.

Audit Committee

The Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013 consists of Shri Amulya Charan as its Chairman and Shri Amit Dixit and Shri J.P. Lath as its members.

Auditors

The Auditors'' Report and Notes to the Accounts as referred in the Auditors'' Report are self-explanatory and therefore, do not call for any further comments or explanation.

M/s. O.P. Bagla & Co., Chartered Accountants, New Delhi, Auditors of the Company, hold the office till the conclusion of 24th Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 139 (1) of the Companies Act, 2013.

Fixed Deposits

The Company has not invited or accepted any deposits during the year from the Public under Section 73 of the Companies Act, 2013.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

As required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data is enclosed as Annexure-I forming part of this report.

Personnel

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 the Report and Accounts are being sent to all the members and other entitled thereto excluding the statement containing the particulars of employees to be provided under Section 217(2A) of the Companies Act, 1956. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary at the Corporate Office of the Company for a copy.

Corporate Social Responsibility

Monnet is already sharing a percentage of its profits for discharging its societal responsibility. During the year under report, the Company has contributed 6.04% of its profits (previous year 7.28% to Monnet Foundation. Monnet Foundation was formed in the year 2007 by the Company and is governed by the Board of Trustees drawn from the senior management of the Group. During the seven years period, Monnet Foundation has done a lot of developmental and social work for the populace living around its Units / Operations in Raipur, Raigarh etc. Monnet Foundation is predominantly engaged in woman empowerment, education, vocational training, health, sanitation and hygiene, road development, creating facilities for availability of hygienic and potable drinking water besides financial help to the needy or deserving. Monnet Foundation also conducts awareness campaigns. The Company has formed CSR Committee and has appointed E&Y as consultants for the purpose of formulation of CSR Policy and other matters related thereto. Presently, the Committee has Shri Amulya Charan as its Chairman and Shri J.P. Lath and Shri Sandeep Jajodia as its members. Your company is already committed to spend a minimum of 2% of its average net profits of preceding three financial years.

Acknowledgments

Your Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all officers, staff and workers of the Company at all levels.

For and on behalf of Board of Directors

Place: New Delhi (Sandeep Jajodia)

Date: 11th August, 2014 Chairman & Managing Director


Mar 31, 2012

The Directors submit their report for the financial year ended 31st March, 2012.

Sales, Profits, Dividends & Retention

[Rs. in Crore]

2012 2011

Sales (Net of Excise) & Other Income 1897.38 1,573.05

Profit before Depreciation 451.13 435.40

Depreciation and amortization expenses 74.11 73.86

Profit before taxes 377.02 361.54

Current Tax 78.90 71.08

Deferred Tax 9.26 9.30

Profit after Tax 288.86 281.16

Cash Profit 372.23 364.32

Profit brought forward from previous year 988.32 806.75

Profit available for appropriation 1,277.18 1,087.91

Dividend: 25% (2010-11 : 50%) 16.04 32.17

Tax on Dividend 2.60 5.22

Dividend paid (including taxes thereon) 0.00 2.50

Transfer to General Reserve 28.90 28.20

Transfer to Debenture Redemption Reserve 31.59 31.50

Surplus carried to Balance Sheet 1198.04 988.32

Company Performance

During the year under report, various divisions reported the production as below:

[Rs. in Crore]

Production Unit 2012 2011 Increase/ (Decrease)

Sponge Iron MT 742194 692096 7.24

M.S./S.S. Products MT 89061 41956 112.27

Structural Steel MT 81204 39289 106.68

Ferro Alloys MT 8993 8606 4.50

Coal MT 850505 951930 (10.65)

Power Units in '000 858238 969075 (11.44)

Status of Expansions

Steel

The steel expansion at Raigarh is progressing as per schedule. 80 MW Power Plant is completed and commenced. Facilities like Blast Furnace, Sinter Plant, Rebar Mill etc. are getting commenced during the year and Pellet Plant and Coke Oven Plant will get completed in the 1st half of next financial year.

Power (Monnet Power Company Limited)

The Power Project of 1050 MW being set up in MPCL a subsidiary Company at Angul is also progressing with major milestones like boiler drum lifting and TG deck casting having been completed for both unit 1 and unit 2. TG Building structure is in progress. The Company is well placed with work order on other modules like power evacuation system, cooling tower, intake water system besides two-third of chimney height having been erected. Boiler light-up is proposed in July 2013 with synchronization proposed in Sep-Oct 2013 for Unit 1 and December 2013 for Unit 2.

Risk Management

Your Company's Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The Company also has a sound internal audit system in place. The audit consists of an independently constituted team in the Company and outside auditors appointed for the purpose. The risk policy and Internal Audit Reports are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

Note on Subsidiaries

Your Company has fifteen subsidiary companies including subsidiaries of subsidiaries. The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. For further details of these subsidiaries, please refer Note 1 [ I ] [a] of Consolidated Financial Statements on page [82]. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-III dated 08-02-2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. The information in accordance with para (iv) of the circular dated 08-02-2011 is appended at the beginning of Consolidated Financial Statements on pages [77] and [78]. Further, annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies' investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at Company's Corporate Office in Delhi and at the Registered Offices of subsidiary companies concerned.

Buyback

During the year under review, your Company had launched buyback scheme of its own equity shares pursuant to Section 77A of the Companies Act, 1956 and the SEBI (Buyback of Securities) Regulations, 1998. The buyback scheme was opened on 21-03-2012 and is continuing. However, the actual buyback commenced from 21-05-2012 and so far, the Company has bought back a total of 231483 equity shares till the date of signing of Board's Report. The maximum offer size of the buyback is Rs.100 Crore and the maximum offer price is Rs.500/- per share. The total amount of buyback is Rs.79.95 Crore. All the equity shares bought back are being extinguished periodically as prescribed under the said regulations.

Dividend

The Board of Directors recommends a dividend of Rs.2.5/- per share on 64175673 equity shares of Rs.10/- each for the financial year ended 31-03-2012 subject to approval of the shareholders in the ensuing Annual General Meeting. The total outgo on account of dividend including corporate dividend tax works out to Rs.18.65 Crore as against Rs.39.89 Crore in the previous year. However, in view of continuing buy back scheme, the actual payout shall differ and shall be based on actual share capital as on the date of book closure of the Company on 22nd September and approval by the shareholders.

Necessary information with respect to entitlement is being given in detail in the Notice calling Annual General Meeting.

Depository System

As on 31-03-2012, about 99.28% of the shares of your Company are held in dematerialized form. The percentage wise decline in dematerialized shares is due to ongoing buyback scheme in which only dematerialized shares have been bought back so far.

The shares of the Company are available for trading in the dematerialized form under both the Depository Systems in India - NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Company's shares under the Depository System is INE743C01013. The annual custody fee for the financial year 2012-13 has been paid to NSDL and CDSL, the Depositories.

During the year, 42739 shares of the Company, covered in 174 requests and constituting 0.07% of the paid-up Share Capital of the Company, were dematerialized and 1 shares of the Company, covered in 1 requests and constituting 0.00% of the paid-up Share Capital of the Company, were rematerialized. As on 31-03-2012, 63873685 shares of the Company constituting 99.28% of the issued and subscribed share Capital stand dematerialized. The Company's market capitalization stood at Rs.3010 Crore on 31-03-2012.

Directors

During the period beginning after the date of last Directors' Report, Shri M.S. Gujral, Chairman of the Board left for heavenly abode on 04-05-2012. Shri M.S. Gujral had remained the Chairman of Indian Railway Board from 17-11-1980 to 6th February, 1983 and of Coal India Limited from 1983 to 1985 apart from holding senior bureaucratic positions in various capacities with Government of India. Shri Gujral made immense contribution as a member of the Board on operations and strategic matters from time to time. His stature and reputation elevated the profile of the Board. He was a member of the Board from the inception of the Company and was elevated as a Chairman of the Board from 29-11-2002. Shri Gujral, though having left for heavenly abode, shall continue to remain a guiding light and the source of inspiration.

Shri Amit Dixit and Shri Vikram Deswal were inducted as additional directors on the Board of the Company w.e.f. 14-05-2012 and hold office upto the date of ensuing Annual General Meeting. The Company has received notices u/s 257 of the Companies Act, 1956 proposing their names for the directorship along with a fee of Rs.500/- each.

Shri K.K. Khanna, Executive Director resigned from the Board of Directors w.e.f. 13-08-2012 due to his personal commitments. The Board places on record its appreciation of the valuable guidance rendered by him during his tenure as Executive Director. Further, Shri N.C. Jha, who is Ex-Chairman of Coal India Limited, had joined the Company as Chief Executive Officer (Mining Business) on 10-05-2012 and has been elevated as Whole-time Director of the Company w.e.f. 14-08-2012 for a period of three years.

Pursuant to Section 255 of the Companies Act, 1956, Shri Ajay Relan, Director, retires by rotation on the day of ensuing Annual General Meeting of the Company and, being eligible, offers himself for re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the details of above directors are given in Annexure-V.

Responsibility Statement

In terms of Section 217 (2AA), your directors confirm having: -

(i) followed in the preparation of Annual Accounts, the applicable accounting standards, with proper explanation relating to material departures, if any;

(ii) selected such accounting policies and applied them 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 or loss of the Company for the year under review;

(iii) 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) prepared the accounts on a going concern basis.

Management Discussion & Analysis

Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled "Management Discussion & Analysis" has been included in this annual report and is given in Annexure-II and forms an integral part of this report.

Corporate Governance Report

Pursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled "Compliance Report on Corporate Governance" has been included in this annual report and is given in Annexure-III along with a certificate of compliance from the Auditors and forms an integral part of this report.

Statutory Disclosures

i) A declaration signed by Chairman & Managing Director as required under Clause 49 (I) (D) of the Listing Agreement is enclosed as Annexure-IV.

ii) The Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31-03-2012.

Consolidated Financial Statements

In accordance with Accounting Standard 21 - Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective boards form part of this Report & Accounts.

Audit Committee

The Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956 consists of Shri G.C. Mrig as its Chairman and Shri Ajay Relan and Shri J.P Lath as its members.

Auditors

The Auditors' Report and Notes to the Accounts as referred in the Auditors' Report are self-explanatory and therefore, do not call for any further comments or explanation.

M/s. O.P Bagla & Co., Chartered Accountants, New Delhi, Auditors of the Company, hold the office till the conclusion of 22nd Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956.

Fixed Deposits

The Company has not invited or accepted any deposits during the year from the Public under Section 58A of the Companies Act, 1956.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

As required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data is enclosed as Annexure-I forming part of this report.

Personnel

Information as per Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to all the members excluding the statement containing the particulars of employees to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary at the Corporate Office of the Company for a copy.

Acknowledgments

Your Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all officers, staff and workers of the Company at all levels.

For and on behalf of Board of Directors

New Delhi (Sandeep Jajodia)

Date : 14-08-2012 Chairman & Managing Director


Mar 31, 2011

Directors' Report for the Year Ended 31st March, 2011

The Directors submit their report for the financial year ended 31st March, 2011.

Sales, Profits, Dividends & Retention

[Rs. in Crores]

2011 2010

Sales (Net of Excise) & Other Income 1602.37 1512.45

Profit before Depreciation 435.39 402.97

Depreciation 73.86 71.67

Profit for the year 361.53 331.30

Mat Credit Entitlement (1.91) (12.35)

Provision for taxation 72.28 54.74

Provision for deferred taxation 9.30 17.98

Provision for FBT 0.00 0.00

Income Tax Adjustment 0.70 1.83

Profit after taxation 281.16 269.10

Cash Profit 364.32 358.75

Profit brought forward from previous year 806.75 603.66

Balance B/F on Amalgamation 0.00 11.64

Profit available for appropriation 1087.91 884.40

Dividend: 50% (2009-10 : 50%) 32.17 28.59

Differential Dividend on Equity Shares 2.50 0.00

Tax on Dividend 5.22 4.86

Transfer to General Reserve 28.20 27.00

Transfer to Debenture Redemption Reserve 31.50 17.20

Surplus carried to Balance Sheet 988.32 806.75

Company Performance

During the year under report, various divisions reported the production as below:

Production Unit 2011 2010 Increase/ (Decrease)

Sponge Iron MT 692096 710044 -2.53

M.S./S.S. Products MT 41956 115325 -63.62

Structural Steel MT 39289 90714 -56.69

Ferro Alloys MT 8606 0 NA

Coal MT 951930 1000119 -4.82

Power Units in'000 969075 1020661 -5.05

During the year, there have been no capacity additions at the plant. The production in all segments of the business were more or less in line with the previous year except steel where the Company chose to sell power rather than making steel. The power sales generated better profitability therefore, the lower production of steel does not manifest a decline in the performance of the Company.

Status of Expansions

Steel

The Steel expansion at Raigarh gearing to make a total capacity of 1.50 million tons is progressing in all the modules viz. additional power capacity of 80 MW, Blast Furnace, Sinter Plant, Rebar Mill, Steel Melting Shop and Plate Mill. The project is as per the schedule and is likely to be commissioned as per the dates published by the Company on its website.

Power (MPCL)

The work on power plant of 1050 MW being set up in MPCL is also progressing after initial delay owing to delayed receipt of environmental clearance and sorting out of problems in some parcels of the land procurement. The site is mobilized both by BHEL and Indure, the two EPC contractors of the project. The project has also tied up the sale and evacuation of the power. The progress on the mines which will supply the coal to the power plant is satisfactory and the mines are expected to be ready well before the commercial operation of the power project.

New Joint Venture

Your Company has formed a Joint Venture Company namely Monnet Ecomaister Enviro Private Limited with Ecomaister Co., Ltd. of Korea having 50:50 partnership. A Slag Handling Plant is being setup within Company's Plant. This facility will be environmentally protective and commercially profitable. Using molten slag which is otherwise a waste by-product, the technology will first recover metal content from the slag and the remainder will be converted into a valuable industrial product that finds variety of uses in Korea and European Countries.

Risk Management

Your Company's Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The Company also has a sound internal audit system in place. The audit consists of an independently constituted team in the company and outside auditors appointed for the purpose. The risk policy and internal Audit Reports are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

Note on Subsidiaries

Your company has twelve subsidiary companies including subsidiaries of subsidiaries. The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. For further details of these subsidiaries, please refer Note 22 (A) (1) (i) of Consolidated Financial Statements on page 79. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/1 2/2007-CL-lll dated 8th February, 201 1 has granted general exemption under Section 212(8) of the Companies Act, 1 956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. The information in accordance with para (iv) of the circular dated 8th February, 201 1

is appended at the beginning of Consolidated Financial Statements on pages 67 and 68. Further, annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies' investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at Company's Head Office in Delhi and at the head offices of subsidiary companies concerned.

Allotments and Conversions

During the year under review, the Company has allotted 2657255 equity shares upon conversion of FCCBs. The second tranche of warrants were converted and 4700000 equity shares were allotted to the holders thereof. During the year, the merger of Mounteverest Trading & Investment Limited was completed and 4722539 equity shares were allotted to the shareholders thereof in terms of Scheme of Amalgamation.

Dividend

The Board of Directors recommends a dividend of Rs.5/- per share on 64337807 equity shares of Rs.10/- each for the financial year ended 31st March, 2011 subject to approval of the shareholders in the ensuing Annual General Meeting. The total outgo on account of dividend including corporate dividend tax and differential dividend works out to Rs.39.89 crores as against Rs.33.45 crores in the previous year.

Necessary information with respect to entitlement is being given in detail in the Notice calling Annual General Meeting.

Awards

Star Brands (India), a research oriented summation across industries from Indian consumers to select strongest brands on each industry, has reckoned your company among top 200 companies that have created huge brand recall amongst the business consumers.

Depository System

As on 31st March, 201 1, about 99.31% of the shares of your Company are held in dematerialized form.

The shares of the Company are available for trading in the dematerialised form under both the Depository Systems in India - NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Company's shares under the Depository System is INE743C0101 3. The annual custody fee for the financial year 201 1 -1 2 has been paid to NSDL and CDSL, the Depositories.

During the year, 1 86390 shares of the Company, covered in 1 161 requests and constituting 0.29% of the paid-up Share Capital of the Company, were dematerialised. As on 31st March, 201 1, 63830947 shares of the Company constituting 99.21% of the issued and subscribed share Capital stand dematerialised. The Company's market capitalisation stood at 3287 crores on 31st March, 2011.

Directors

During the period beginning after the date of last Directors' Report, Shri V.N. Kedia and Shri RL Nene resigned from the Board w.e.f. 18-1-2011 and 24-3-2011 respectively. The Board places on record its appreciation of valuable guidance rendered by Shri VN. Kedia and Shri RL. Nene during their tenure of appointment. Further, Shri Gopal Tiwari was inducted as additional director on the Board of the Company w.e.f 29- 3-201 1 through a resolution passed by circulation and holds office upto the date of ensuing Annual General Meeting. The company has received a notice u/s 257 of the Companies Act, 1 956 proposing his name for the directorship along with a fee of Rs. 500/-. The Company is in the process of making further appointments in the Board.

Pursuant to Section 255 of the Companies Act, 1956, Shri G.C. Mrig, Director, retires by rotation on the day of ensuing Annual General Meeting of the Company and, being eligible, offers himself for re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the details of above directors are given in Annexure-V.

Responsibility Statement

In terms of Section 217 (2AA), your directors confirm having:

(i) followed in the preparation of Annual Accounts, the applicable accounting standards , with proper explanation relating to material departures, if any;

(ii) selected such accounting policies and applied them 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 or loss of the Company for the year under review ;

(iii) 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) prepared the accounts on a going concern basis.

Management Discussion & Analysis

Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled "Management Discussion & Analysis" has been included in this annual report and is given in Annexure-ll and forms an integral part of this report.

Corporate Governance Report

Pursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled "Compliance Report on Corporate Governance" has been included in this annual report and is given in Annexure-lll along with a certificate of compliance from the Auditors and forms an integral part of this report.

Statutory Disclosures

i) A declaration signed by Executive Vice Chairman & Managing Director as required under Clause 49 (I) (D) of the Listing Agreement is enclosed as Annexure-IV.

ii) The Executive Vice Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2011.

Consolidated Financial Statements

In accordance with Accounting Standard 21 - Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective boards form part of this Report & Accounts.

Audit Committee

The Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956 consists of Shri M.S. Gujral as Chairman, Shri G.C. Mrig and Shri Gopal Tiwari as its members.

Auditors

The Auditors' Report and Notes to the Accounts as referred in the Auditors' Report are self explanatory and therefore, do not call for any further comments or explanation.

M/s. O.R Bagla & Co., Chartered Accountants, New Delhi, Auditors of the Company, hold the office till the conclusion of 21st Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1 B) of the Companies Act, 1956.

Fixed Deposits

The Company has not invited or accepted any deposits during the year from the Public under Section 58A of the Companies Act, 1956.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo.

As required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1 988 the relevant data is enclosed as Annexure-I forming part of this report.

Personnel

Information as per Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to all the members excluding the statement containing the particulars of employees to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary at the Corporate Office of the Company for a copy.

Acknowledgments

Your Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all officers, staff and workers of the Company at all levels.

For and on behalf of Board of Directors

Place: New Delhi (M.S. Gujral)

Date : 20th August, 2011 Chairman










Mar 31, 2010

The Directors submit their report for the financial year ended 31st March, 2010.

Sales, Profits, Dividends & Retention

[Rs. in Crores

2010 2009

Sales (Net of Excise) & Other Income 1512.81 1596.39

Profit before depreciation 402.97 336.02

Depreciation 71.67 65.30

Profit for the year 331.30 270.72

Provision for taxation 54.74 30.61

Provision for deferred taxation 5.63 23.10

Provision for FBT 0.00 1.27

Income Tax Adjustment (1.83) 0.26

Profit after taxation 269.10 216.00

Cash Profit 346.40 304.40

Profit brought forward from previous year 603.65 443.43

Balance B/F on Amalgamation 11.64 0.00

Profit available for appropriation 884.39 659.43

Dividend: 50% (2008-09 : 50%) 28.58 23.98

Tax on Dividend 4.86 4.08

Transfer to General Reserve 27.00 22.00

Transfer to Debenture Redemption Reserve 17.20 5.72

Surplus carried to Balance Sheet 806.75 603.65

Company Performance

During the year under report, various divisions reported the production as below:

Production Unit 2010 2009 %age Increase/(Decrease)

Sponge Iron MT 710044 600431 18.26

M.S./S.S. Products MT 115325 136495 (15.51)

Structural Steel MT 90714 80584 12.57

Ferro Alloys MT 0 15911 NA

Coal MT 1000119 989111 1.11

Power Units in 000 1020661 689533 48.02

During the year under review, the profit after tax rose to 269.10 crores (previous year Rs. 216.00 crores) registering a growth of 24.58% in-spite of decline in sales by 4.39% to 1480.70 crores as a result of Companys continuing efforts to reduce its cost of production. However, your Company had to discontinue the operations of its Ferro Alloys Division since the cost of production has gone higher than the market price. Ferro Alloys production is highly power intensive and consequently, your company was able to sell the surplus power in the open market yielding high returns.

Expansion Plans

The Company is implementing a steel project to produce 1.5 MTPA of Flat and Long products in equal proportions. Besides, additional capacity of power is also being implemented to fully support the power requirement of expanded capacity. The steel expansion has been designed to be fully integrated to raw materials like coal & iron ore. Raw material risk arrangement in terms of pricing volatility is mitigated through captive availability from Mines and Backward integration facilities. Steel production would be

A highly value added & improve the operating margins.

Merger of Mounteverest Trading & Investment Ltd. into the Company

It was proposed to merge Mounteverest Trading & Investment Limited (MTIL), a Group Company, into Monnet Ispat & Energy Limited. The reasons for the merger are that MTIL A

has made investment in a Company which has similar line of activity as of MIEL Therefore, it was thought prudent from the point of view of the interest of various^ stakeholders and in compliance with the best practices of Corporate A Governance to bring the investment under the Balance Sheet of Monnet | Ispat & Energy Ltd.

The Honble High Court of Chhattisgarh has approved the merger on 9th November, 2010 and making the merger effective from 01.04.2009. Accordingly, the Company is presenting the merged Annual Accounts for the year ended on 31st March, 2010. Other post merger formalities have commenced.

Risk Management

Your Companys Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The Company also has a sound internal audit system in place. The audit consists of an independently constituted team in the company and outside auditors appointed for the purpose. The risk policy and internal Audit Reports are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

Note on Subsidiaries

Your company is having two wholly owned subsidiaries incorporated in Jabel Ali Free Trade Zone Dubai, in UAE , one wholly owned subsidiary of Monnet Global Limited incorporated in Indonesia and one wholly owned subsidiary of Monnet Overseas Limited incorporated in Dubai and four subsidiaries in India two of which are wholly owned. The following may be read in conjunction with the Consolidated Financial Statements enclosed with the Accounts, prepared in accordance with Accounting Standard 21.

Your company has obtained the exemption from Central Government under section 212(8) of the Companies Act, 1956, for attaching a copy of the balance sheet, Profit & Loss Accounts, Directors Report and Auditors Report of the subsidiary companies and other documents required to be attached under section 212(1) of the Act to the Balance sheet of the Company. Accordingly, the said documents are not being attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiaries is contained in the report. The Annual Accounts of the subsidiary Companies are open for inspection by any member/investor and the Company will make available these documents/details upon request by any Member of the Company or its subsidiaries interested in obtaining the same.

Allotments

During the year under review, your company had allotted 9000000 warrants to promoters on preferential basis. The Company has allotted 4300000 equity shares pursuant to exercise of option by the warrant holders to convert equal number of warrants.

Dividend

The Board of Directors recommends a dividend of Rs. 5/- per share on 52452785 equity shares of Rs. 10/- each for the financial year ended 31st March, 2010 subject to approval of the shareholders in the ensuing Annual General Meeting. The total outgo on account of dividend including dividend tax works out to Rs. 28.59 crores as against Rs. 23.98 crores in the previous year.

Necessary information with respect to entitlement is being given in detail in the Notice calling Annual General Meeting.

Depository System

As on 31st March, 2010, about 99.09% of the shares (including 4300000 shares allotted on 31-3-2010 and pending for corporate action) of your Company are held in dematerialized form.

Directors

During the period beginning after the date of last Directors Report, Shri Ajay Relan has been appointed as additional director on the Board of Directors of the Company w.e.f. 9th August, 2010 and holds office upto the date of ensuing Annual General Meeting. The company has received a notice u/s 257 of the Companies Act, 1956 proposing his name for the directorship along with a fee of Rs. 500/-.

The Board of Directors, subject to approval of the shareholders in the ensuing Annual General Meeting, has re-appointed Shri Sandeep Jajodia as Executive Vice Chairman & Managing Director for a period of five years commencing 1st April, 2010. The Board has also appointed Shri K.K. Khanna as Executive Director w.e.f. 31st October, 2009 and Shri C.P. Baid as Dy. Managing Director w.e.f. 8th November, 2010.

Pursuant to Section 255 of the Companies Act, 1956, Shri V.N. Kedia and Shri J.P. Lath, Directors, retire by rotation on the day of ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the details of above directors are given in Annexure-V

Management Discussion & Analysis

Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled "Management Discussion & Analysis" has been included in this annual report and is given in Annexure-II and forms an integral part of this report.

Corporate Governance Report

Pursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled "Compliance Report on Corporate Governance" has been included in this annual report and is given in Annexure-III along with a certificate of compliance from the Auditors and forms an integral part of this report.

Statutory Disclosures

i) A declaration signed by Executive Vice Chairman & Managing Director as required under Clause 49 (I) (D) of the Listing Agreement is enclosed as Annexure-IV.

ii) The Executive Vice Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2010.

Consolidated Financial Statements

In accordance with Accounting Standard 21 - Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective boards form part of this Report & Accounts.

Audit Committee

The Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956 consists of Shri M.S. Gujral as Chairman, Shri P.L. Nene, Shri G.C. Mrig and Shri V.N. Kedia, as its members.

Auditors

The Auditors Report and Notes to the Accounts as referred in the Auditors Report are self explanatory and therefore, do not call for any further comments or explanation.

M/s. O.P. Bagla & Co., Chartered Accountants, New Delhi, Auditors of the Company, hold the office till the conclusion of 20th Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956.

Fixed Deposits

The Company has not invited or accepted any deposits during the year from the Public under Section 58A of the Companies Act, 1956.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

As required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data is enclosed as Annexure-I forming part of this report.

Personnel

Information as per Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to all the members excluding the statement containing the particulars of employees to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary at the Corporate Office of the Company for a copy.

Acknowledgments

Your Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all officers, staff and workers of the Company at all levels.

For and on behalf of Board of Directors

Place : New Delhi (M.S. Gujral)

Date : 25th November, 2010 Chairman

 
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