Directors Report of Orissa Sponge Iron & Steel Ltd.

Mar 31, 2014

Dear Members,

The Directors submit the following report on Financial Results for the year ended 31 st March, 201 4:

Financial Results: For the year For the year 31st March, 31st March, 2014 2013 (Rs in lacs) (Rs in lacs)

Turnover 83.76 3,808.73

Profit / (Loss) before depreciation (6,685.52) (5,266.36)

Depreciation (net of revaluation adjustment) 228.92 1,478.20

Profit / (Loss) before tax (6,914.44) (6,744.56)

Provision for Deferred Tax - Assets 2,785.19 1,747.51

Profit / (Loss) after tax (4,129.25) (4,997.05)

Surplus /(Deficit) brought forward from previous year (23,757.45) (18,760.40)

Surplus /(Deficit) carried forward to Statement of Profit & Loss (27,886.70) (23,757.45)

Performance

The plant was shut down for the whole year. Consequently during the year sponge iron production was Nil as compared to 12430 MT in the previous year. Billet production was Nil for both years. Power Generation during the year was Nil as compared to 11,950,647 KWH in the previous year. The Company generated total revenue of ? 84 lacs compared to ? 3,809 lacs in the previous year. The Company suffered loss for this year also amounting to ? 4,129 las as compared to ? 4,997 lacs in the previous year. Future Outlook

Your Directors are pleased to report that after obtaining Forest Clearance for operating the Iron Ore Mines allotted to the Company from the Ministry of Environment and Forest (MOEF), your Company has taken steps for compliance of all conditions and requirements for commencement of mining operation at the earliest. Grama Sabha Meeting, which is requirement under the Forest Rights Act, 2006 was held on 20th July, 2014. Compliance of other conditions of Stage I Clearance is being attended on top priority. Availability of iron Ore from own mines will vastly improve production and profitability. Your Directors express their sincere gratitude to all concerned for bearing with the Company during the difficult time.

Meanwhile your Company is trying to finalise conversion agreement with other steel producers for conversion of Iron Ore/Pellets into sponge iron at our plant which will help the Company to restart the plant operations. The recent measures taken by the concerned authorities to facilitate iron ore supply and restoration of coal linkage will improve the cost economics for plant operations.

Subsidiary Company

Bamra Iron & Steel Company (India) Ltd. is a wholly owned subsidiary of the Company. Since the said Company has not started its operations, consolidated financial statement has not been prepared.

Dividend

Your Directors regret their inability to recommend any dividend for the year in view of losses. Preference Shares

Inter Corporate Loan received by the Company amounting to ? 20 crores was converted into "Advance received for issue of Preference Shares" as on 31.03.2014. Subsequently 10% Cumulative Non Convertible Preference Shares of ? 10 each at par amounting to? 20 crores has been issued and allotted on private placement by adjusting the said Advance at the Board Meeting held on 14.08.2014.

Project & Engineering Division

The Project and Engineering (P&E) division is continuing its work of supplying process know-how and basic engineering to several existing sponge iron units as well as new units who call for such services. It has widened its network to include consultancy and supervisory services for renovation, up- gradation and re-commissioning of the mini steel plants with Sponge Iron, Power, Steel Melting Shop and Rolling Mills. It also takes up assignment for carrying out technical audit of Company''s plant health, process health, quality, safety, energy efficiency and environment protection on a regular basis and recommeding corrective measures. During the year under review, this division has taken up an assignment from a Russian Company for conversion of their Refractory Kiln to DRI Kiln. The contract, which also provides for process guarantee for DRI production is presently under implementation.

Community Development

In line with your Company''s philosophy, your Company continues to pursue a comprehensive programme of Community Development covering education, immunization, agricultural & horticultural extension, mother & child care etc. directly and also through OSIL TRFI Community Services Trust. However due to financial losses suffered by the Company not much support could be extended for such activities during the year.

Quality

Your Company continues to follow the Quality Management System for production and supply of Sponge Iron and Steel Billets and possesses Certificate of Registration of ISO 9001:2008 from British Certification Inc. Your Company is proud of maintaining the clean environment in the vicinity of the Plant and your Company''s Environmental Management System applicable to production and supply of Sponge Iron and Steel Billets has been certified under ISO 14001:2004 by British Certification Inc. The Occupational Health and Safety Management System of your Company has also been certified by the same Agency and your Company complies with the requirements of OHSAS 18001:2007.

Listing Fees

The annual listing fees have been paid to the Stock Exchanges where the Company''s shares are listed. Your Company''s application to National Stock Exchange (NSE) for listing and Calcutta Stock Exchange for de-listing is pending before the respective Exchanges.

Reconciliation of Share Capital

In compliance of the directions of Securities and Exchange Board of India (SEBI), reconciliation of share capital is being carried out quarterly by a Practising Company Secretary. The findings of the reconciliation of share capital were satisfactory.

Directors

Pursuant to Section 149,152 and other applicable provisions of the Companies Act, 2013 and Rules made there under, your Directors are seeking appointment of Mr. A. K. Mukherjee, Mr. S. K. Khetan and Mr. B. K. Sarkar, as independent Directors for period of 5 years from the date of the ensuing Annual General Meeting. The above Directors meet the criteria for indepndence as provided in Section 149(6) of the Companies Act, 2013. Details of the proposal for appointment of the above Independent Directors are mentioned in the Notice of the 34th Annual General Meeting and the Explanatory Statement under Section 102 of the Companies Act, 2013.

Mr. P. C. Mohanty retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re appointment.

Your Directors recommend the appointments/reappointment as mentioned above for approval of the Shareholders.

Conservation of energy, technology absorption, foreign exchange earning and outgo

The information required under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 as amended are set out in Annexure, which forms part of this Report.

Particulars of Employees

There were no employees drawing the requisite remuneration whose names are required to be disclosed as required under sub-section 2A of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time.

Industrial Relations

Lock out declared at the plant on 14.10.2012 was lifted on 30.12.2013 following amicable settlement with the Workers'' union on 27.12.2013.

Directors'' Responsibility Statement

In accordance with the provisions of sub-section 2AA of Section 217 of the Companies Act, 1956, your Directors state that:

(a) In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) Accounting policies selected are applied consistently. Judgments and estimates that are reasonable and prudent are made, so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2014 and of the loss of the Company for the year ended on that date.

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

(d) The Accounts for the financial year ended 31st March, 2014 have been prepared on a ''going concern'' basis. Auditors

The Statutory Auditors, M/s L. N. More & Co., Chartered Accountants, Cuttack, will retire at the conclusion of the ensuing Annual General Meeting

and being eligible offer themselves for re-appointment.

The Audit Committee and the Board has recommended their re-appointment. The necessary Resolution is being placed before the shareholders for

approval. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224 (1B) of the Companies

Act, 1956.

Auditors'' Report

Reference to Annexure to the Audit Report vide Para 9 (a), your Directors submit that due to shut down of plant operations for the last two years and

the absence of regular flow of funds, fund situation has become critical. Consequently the undisputed liability on account of Central Sales Tax, Orissa

Sales Tax and Entry Tax could not be paid due to fund constraints.

There are no other qualifications or adverse remarks in the Auditor''s Report which require any clarification/explanation. The Notes on Accounts forming

part of the financial statements are self-explanatory and needs no further explanation.

Cost Auditors

Pursuant to the provision of Section 233B of the Companies Act, 1956 and The Companies (Cost Accounting Records) Rules, 2011, M/s. B. Ray &

Associates, Cost Accountants, Kolkata has been re-appointed as Cost Auditor of the Company for the year 2014-15 to conduct audit of cost records maintained by the Company.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the following documents form part of the Annual Report:

(a) Management Discussion and Analysis

(b) Report on Corporate Governance along with Certificate for compliance of conditions of Corporate Governance

(c) Managing Director''s declaration regarding compliance of code of conduct by Board Members and senior management personnel. Acknowledgement and Appreciation

The Directors acknowledge with gratitude the co-operation extended by Indian Renewable Energy Development Agency Ltd. (IREDA), Banks, State Government, Suppliers, Customers and Shareholders and solicit their continued support. The Directors also wish to place on record their sincere appreciation of the dedicated services put in by the Company''s workers, staff and executives under difficult conditions.

For and on behalf of the Board Munir Mohanty, Director Dr. P. K. Mohanty, Vice Chairman & Managing Director

Place: Kolkata Dated: 14th August, 2014

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Mar 31, 2013

The Directors are pleased to report that after nearly 10 years of sustained effort, Forest Clearance for operating the Iron Ore Mines alloted to the Company has been granted on 3rd June, 2013 by the Ministry of Environment and Forest (MOEF). The Company will do its utmost to expedite compliance of all conditions and requirements leading to commencing mining operation as early as possible. Availability of Iron Ore from own mines will vastly improve production and profitability. Your Directors express their sincere gratitude to all concerned for bearing with the company during the difficult times.

Your Directors submit the following report on Financial Results for the year ended 31 st March, 2013:

Financial Results:

For the year ended For the year ended 31st March, 2013 31st March, 2012 (Rs. in lacs) (Rs. in lacs)

Turnover 3,808.73 10,055.62

Profit / (Loss) before depreciation (5,266.36) (6,433.95)

Depreciation (net of revaluation adjustment) 1,478.20 1,218.07

Exceptional Items 530.91 Profit / (Loss) before tax (6,744.56) (8,182.93)

Tax for earlier years 190.79

Provision for Deferred Tax - Assets 1,747.51 1,846.98

Profit / (Loss) after tax (4,997.05) (6,526.74)

Surplus/(Deficit) brought forward from previous year (18,760.40) (12,233.66)

Surplus /(Deficit) carried forward to Statement of Profit & Loss (23,757.45) (18,760.40)

Performance

The Company could operate the plant for only four months during the year. Nonavailability of iron ore of required quality and quantity at affordable prices and the continuing losses left the Company with no alternative but to shut down plant operations from 17th July, 2012 to reduce rapid erosion of net worth.

Production of sponge iron for the year was 12,430 MT as compared to 42,872 MT recorded last year. Revenue from sponge sales and power sales dropped to Rs. 3,897 lacs and Rs. 165 lacs respectively. Billet Plant was not operated during the year. The Company suffered losses for this year also.

Subsidiary Company

Bamra Iron & Steel Company (India) Ltd. is a wholly owned subsidiary of the Company. Since the said Company has not started its operations as the project is under implementation, consolidated financial statement has not been prepared.

Dividend

Your Directors regret their inability to recommend any dividend for the year in view of losses.

Project & Engineering Division

The Project and Engineering (P&E) division is continuing its work of supplying process know-how and basic engineering to several existing sponge iron units as well as new units who call for such services. It has widened its network to include consultancy and supervisory services for renovation, up- gradation and re-commissioning of the mini steel plants with Sponge Iron, Power, Steel Mill Shop and Rolling Mills. It also takes up assignment for carrying out technical audit of Company''s plant health, process health, quality, safety, energy efficiency and environment protection on a regular basis and recommeding corrective measures.

Community Development

In line with your Company''s philosophy, your Company continues to pursue a comprehensive programme of Community Development covering education, immunization, agricultural & horticultural extension, mother & child care etc. directly and also through OSIL TRFI Community Services Trust.

Quality

Your Company continues to follow the Quality Management System for production and supply of Sponge Iron and Steel Billets and possesses Certificate of Registration of ISO 9001:2008 from British Certification Inc. Your Company is proud of maintaining the clean environment in the vicinity of the Plant and your Company''s Environmental Management System applicable to production and supply of Sponge Iron and Steel Billets has been certified under ISO 14001:2004 by British Certification Inc. The Occupational Health and Safety Management System of your Company has also been certified by the same Agency and your Company complies with the requirements of OHSAS 18001:2007. Listing Fees

The annual listing fees have been paid to the Stock Exchanges where the Company''s shares are listed. Your Company''s application to National Stock

Exchange (NSE) for listing and Calcutta Stock Exchanges for de-listing is pending before the respective Exchanges.

Reconciliation of Share Capital

In compliance of the directions of Securities and Exchange Board of India (SEBI), Reconciliation of Share Capital is being carried out quarterly by a

Practising Company Secretary. The findings of the Reconciliation of Share Capital were satisfactory.

Directors

Mr. G. Mathi Vathanan, IAS was nominated by Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) in place of Mr. C. ].

Venugopal, IAS as Director cum Chairman. Accordingly he was appointed by the Board as Additional Director to hold the position of Director and

Chairman on the Board with effect from 03.10.2012. Mr. S. H. Gupta was nominated by Torsteel Research Foundation in India (TRFI) on the Board.

Accordingly he was appointed as Additional Director with effect from 10.01.2013. Having been appointed as Additional Directors, they vacate office conclusion of the ensuing Annual General Meeting. Notices under Section 257 of the Companies Act, 1956 have been received from some members for appointing them as Directors at the ensuing Annual General Meeting.

Mr. C. J. Venugopal, IAS was withdrawn from the Board as Director and Chairman by IPICOL with effect from 03.10.2012. Mr. M. A. Khan was withdrawn from the Board as Director byTRFI with effect from 10.01.2013. Mr. S. N. Nayak resigned as Director from the Board having been withdrawn as Director on the Board by IPICOL vide letter dated 10.05.2013.

Your Directors place on record its deep appreciation of the valuable guidance and services of Mr. C. ]. Venugopal, IAS as Director cum Chairman,

Mr. M. A. Khan and Mr. S. N. Nayak as Directors during their tenure of office.

Mr. S. K. Khetan and Mr. B. K. Sarkar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re appointment.

Dr. P. K. Mohanty was re appointed as Vice Chairman and Managing Director by the Board for a period of three years with effect from 23.06.2013 subject to all necessary approvals.

Mr. Munir Mohanty was re appointed as Whole-time Director by the Board for a period of five years with effect from 31.05.2013 subject to all necessary approvals.

Proposal for re appointment of Dr. P. K. Mohanty as Vice Chairman and Managing Director and Mr. Munir Mohanty as Whole-time Director are included in the Notice of the ensuing Annual General Meeting for the approval of Shareholders. Your Directors recommend all the appointments and re appointments as mentioned above for approval of the Shareholders.

Conservation of energy, technology absorption, foreign exchange earning and outgo

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 as amended are set out in Annexure, which forms part of this Report.

Particulars of Employees

There were no employees drawing the requisite remuneration whose names are required to be disclosed as required under sub-section 2A of Section

217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended from time to time.

Industrial Relations

The Company was constrained to declare lockout of its plant with effect from 1410.2012 following illegal strike by the Workers Union with effect from 12.10.2012, which is still continuing. Deliberations and negotiations are going on with the Union for arriving at an amicable settlement soon.

Directors'' Responsibility Statement

In accordance with the provisions of sub-section 2AA of Section 217 of the Companies Act, 1956, your Directors state that:

(a) In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) Accounting policies selected are applied consistently. Judgments and estimates that are reasonable and prudent are made, so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2013 and of the Profit/ Loss of the Company for the year ended on that date.

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

(d) The Accounts for the financial year ended 31st March, 2013 have been prepared on a ''going concern'' basis. Auditors

The Statutory Auditors, M/s L. N. More & Co., Chartered Accountants, Cuttack, will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Audit Committee and the Board has recommended their re-appointment. The necessary resolution is being placed before the shareholders for approval. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956.

Auditors'' Report

There are no qualifications or adverse remarks in the Auditors'' Report which require any clarification/explanation. The Notes on Accounts forming part of the financial statements are self-explanatory and needs no further explanation. Cost Auditors

Pursuant to the provision of Section 233B of the Companies Act, 1956 and The Companies (Cost Accounting Records) Rules, 2011, M/s. B. Ray &

Associates, Cost Accountants, Kolkata has been re-appointed as Cost Auditor of the Company for the year 2013-1 k to conduct audit of cost records maintained by the Company.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the following documents form part of the Annual Report:

(i) Management Discussion and Analysis

(ii) Report on Corporate Governance along with Certificate for compliance of conditions of Corporate Governance

(iii) Vice-Chairman & Managing Director''s declaration regarding compliance of code of conduct by board members and senior management personnel. Acknowledgement and Appreciation

The Directors acknowledge with gratitude the co-operation extended by Indian Renewable Energy Development Agency Ltd. (IREDA), Banks, State Government, Suppliers, Customers and Shareholders and solicit their continued support. The Directors also wish to place on record their sincere appreciation of the dedicated services put in by the Company''s workers, staff and executives under difficult conditions.

For and on behalf of the Board

Munir Mohanty, Director

Place: Bhubaneswar Dr. P. K. Mohanty,

Vice Chairman

Dated: 13th August, 2013 & Managing Director

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Mar 31, 2012

The Directors submit the following report on Financial Results for the year ended 31 st March, 2012:

Financial Results: For the year ended For the year ended 31st March 2012 31st March 2011 (Rs. in lacs) (Rs.in lacs)

Turnover 10,055.62 15,214.41

Profit / (Loss) before depreciation (6,433.95) (6,866.96)

Depreciation (net of revaluation adjustment) 1,218.07 1,436.63

Exceptional Items 530.91 -

Profit / (Loss) before tax (8,182.93) (8,303.59)

Tax for earlier years 190.79 -

Provision for Deferred Tax - Assets 1,846.98 3,017.23

Profit / (Loss) after tax (6,526.74) (5,286.36)

Surplus /(Deficit) brought forward from previous year (12,233.66) (6,947.30)

Surplus /(Deficit) carried forward to Statement of Profit & Loss (18,760.40) (12,233.66)

Performance

Your Company incurred heavy losses in this year too due to un-remunerative selling price of finished products and high cost of iron ore and coal prevailing throughout the year leading to a situation where higher production meant higher loss. As a result, production was at the lowest in the history of the Company and was limited to 42,872 MT in the sponge iron unit (17.15 % capacity utilization) and was 6,778 MT in the billet unit (6.78 % capacity utilization). Revenue from power sales dropped substantially from Rs. 1,259.54 lacs in 2010-11 to Rs. 365.49 lacs in 2011-12 due to lower capacity utilization in the sponge iron unit. Production will not be remunerative until the cost of iron ore and coal reduce and selling price of finished product improves.

Your Company had approached its lenders for a corporate debt restructuring to address the irregularity in the borrowings in view of difficult market situations which is under consideration.

Your Company is confident to receive forest clearance and permission to mine from the iron ore mines allotted to the Company shortly. Availability of iron ore from captive mines will vastly improve both production and profitability. Availability of coal from captive mine will still take a few years and will result in even higher profitability.

Open offer formalities are over, which will help consolidate Company's planning and operations.

Subsidiary Company

Bamra Iron & Steel Company (India) Ltd. is a wholly owned subsidiary of the Company. As the Company has not started operations and project is under implementation, consolidated financial statement has not been prepared.

Dividend

Your Directors regret their inability to recommend any dividend for the year in view of losses.

Project & Engineering Division

Project and Engineering (P & E) Division has supplied process know-how and basic engineering to M/s. Super Smelters Limited, Durgapur for 350 TPD DRI Plant which has been commissioned in August, 2011 and running successfully. The second unit of the said Company is also being built under OSIL Technology. 100,000 TPA Sponge Iron Plant, 16 MW Power Plant and 100,000 TPA Steel Billet Plant of M/s. Crackers India (Alloys) Limited, Barbil, Keonjhar is being built under overall consultancy services of this Division. Consultancy and supervisory services for renovation, up-gradation and re- commissioning of the mini steel plant with Sponge Iron, Power and Steel Mill Shop and Rolling Mill of Dinabandu Steel & Power Ltd., Kalinganagar, Odisha, have been completed during the year.

The P & E Division supplied process know-how, basic and detailed engineering, erection and commissioning, supervision as well as operational training for three units of 350 TPD plant to M/s. Usha Martin Ltd., which was funded by the World Bank (IFC) and German Development Bank (DEG) after worldwide technology selection. The third kiln recently completed 600 days of continuous operation.

The P & E Division is also carrying out technical audit of Company's plant health, process health, quality, safety, energy efficiency, and environment protection, on a regular basis and recommending corrective measures.

Community Development

In line with your Company's philosophy, your Company continues to pursue a comprehensive program of Community Development covering education, immunization, agricultural & horticultural extension, mother & child care etc. directly and also through OSIL TRFI Community Services Trust. Quality Your Company continues to follow the Quality Management System for production and supply of Sponge Iron and Steel Billets and possesses Certificate of Registration of ISO 9001:2008 from British Certification Inc. Your Company is proud of maintaining the clean environment in the vicinity of the Plant and your Company's Environmental Management System applicable to production and supply of Sponge Iron and Steel Billets has been certified under ISO 14001:2004 by British Certification Inc. The Occupational Health and Safety Management System of your Company has also been certified by the same Agency and your Company complies with the requirements of OHSAS 18001:2007.

Orissa Sponge Iron & Steel Limited

Listing Fees

The annual listing fees have been paid to the Stock Exchanges where the Company's shares are listed. Your Company's application to National Stock Exchange (NSE) for listing and Calcutta Stock Exchange for de-listing is pending before the respective Exchanges.

Reconciliation of Share Capital

As directed by Securities and Exchange Board of India (SEBI), Reconciliation of Share Capital is being carried out quarterly by a Practising Company Secretary. The findings of the Reconciliation of Share Capital were satisfactory.

Directors

Mr. P. C. Mohanty was nominated by Industrial Promotion & Investment Corporation of Orissa Ltd (IPICOL) as Additional Director with effect from 23.11.2011. Mr. A. K. Mukherjee was appointed as Additional Director with effect from 04.08.2012. Having been appointed as Additional Directors. Mr. P. C. Mohanty and Mr. A. K. Mukherjee shall be vacating their office at the ensuing Annual General Meeting. Notices under Section 257 of the Companies Act, 1956 have been received from some members proposing the candidature of Mr. P. C. Mohanty and Mr. A. K. Mukherjee as Directors in the ensuing Annual General Meeting.

Mr. S. N. Nayak and Mr. M. A. Khan shall retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Conservation of energy, technology absorption, foreign exchange earning and outgo

The information required under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 as amended are set out in Annexure, which forms part of this Report.

Particulars of Employees

There were no employees drawing the requisite remuneration whose names are required to be disclosed as required under sub-section 2A of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended from time to time.

Directors' Responsibility Statement

In accordance with the provisions of sub-section 2AA of Section 217 of the Companies Act, 1956, your Directors state 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) Accounting policies selected are applied consistently. Judgments and estimates that are reasonable and prudent are made, so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2012 and of the Profit/ Loss of the Company for the year ended on that date.

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

(d) The Accounts for the financial year ended 31st March 2012 have been prepared on a 'going concern' basis.

Auditors

The Statutory Auditors, M/s L. N. More & Co., Chartered Accountants, Cuttack, will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Audit Committee and the Board has recommended their re-appointment. The necessary resolution is being placed before the shareholders for approval. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

Auditors' Report

There are no qualifications or adverse remarks in the Auditor's Report which require any clarification/explanation. The Notes on Financial Statements are self explanatory and needs no further explanation.

Cost Auditors

Pursuant to the provision of Section 233B of the Companies Act,1956 and The Companies (Cost Accounting Records) Rules, 2011, M/s. B. Ray & Associates, Cost Accountants, Kolkata was reappointed as Cost Auditor of the Company for the year 2012-13 to conduct audit of cost records maintained by the Company.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the following form part of the Annual Report:

(i) Management Discussion and Analysis

(ii) Report on Corporate Governance along with Certificate for compliance of conditions of Corporate Governance.

(iii) Managing Director's declaration regarding compliance of Code of Conduct by Board Members and Senior Management personnel. Acknowledgement and Appreciation

The Directors acknowledge with gratitude the co-operation extended by Indian Renewable Energy Development Agency Ltd. (IREDA), Banks, State Government, Suppliers, Customers and Shareholders and solicit their continued support. The Directors also wish to place on record their sincere appreciation of the dedicated services put in by the Company's workers, staff and executives under difficult conditions.

For and on behalf of the Board Munir Mohanty, Director

Place: Kolkata Dr. P. K. Mohanty, Vice Chairman

Dated: 4th August, 2012 & Managing Director

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Mar 31, 2010

A. Conservation of energy

(a) Energy conservation measures taken:

Power is generated by utilizing the off-gas of the Sponge Iron Plants.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

There are plans to improve the utilization of waste coal fines and coal char in the Boilers, to generate steam and thereafter electric power.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: (i) The Company is not purchasing any power from the Grid, for normal operations.

(ii) Improved utilization of waste heat and waste coal fines and coal char for power generation will improve the total power availability for production as well as generate surplus for sale. (iii) Reduction in cost of production of Sponge Iron & Billet. (iv) Increase generation of waste gas based power will increase carbon credit generation.

(d) Total energy consumption and energy consumption per unit of production as per Form A of the Annexure in respect of industries specified in the Schedule thereto.