Directors Report of SAL Steel Ltd.

Mar 31, 2018

Dear Members,

The Directors pleased to present the 15th Annual Report of your company on the operations and performance along with the Audited Financial Statements for the year ended on 31st March 2018.

FINANCIAL HIGHLIGHTS

Rs. In Lacs

Particulars	March 31, 2018	March 31, 2017
Total Revenues	51136.81	39939.90
Total Expenditure	51119.05	39582.61
Profit before interest depreciation, extraordinary item and tax	792.75	1121.51
Depreciation and Interest	775.00	764.23
Profit / (Loss) before exceptional, extraordinary item and tax	17.75	357.28
Exceptional & Extraordinary item	6378.26	Nil
Profit / (Loss) before tax	6396.02	357.29
Tax Expense / Deferred tax	2156.95	269.60
Net Profit / (Loss) for the year	4239.07	87.68
Total Comprehensive income	15.96	4.91
Profit / (Loss) Brought forward from last year	-16060.74	-16148.43
Balance Carried forward	-11821.68	-16060.74

STATE OF COMPANY’S AFFAIRS / PERFORMANCE OVERVIEW

During the year under review Total Revenue from operation has been increased from Rs. 39,939.90 lacs to Rs. 51,136.81 lacs as compared to previous year’s turnover. Company has registered a net profit of Rs. 4,239.07 lacs in comparison of profit of Rs. 87.69 lacs during previous year.

During the year under review, one of the Operational Creditor of the Company had filed an application under Section 9 of Insolvency and Bankruptcy Code, 2016 against the Company before Hon’ble National Company Law Tribunal, Ahmedabad Bench for initiation of the Corporate Insolvency Resolution Process. Hon’ble NCLT Ahmedabad vide order dated 06.09.2017 admitted the application and appointed Insolvency Professional. Further on account of settlement with the creditors, company approached the Hon’ble Supreme Court of India for withdrawal of matter before Hon’ble NCLT pursuant of powers of the Court under Articles 142 of the Constitution. Hon’ble Supreme Court vide its order dated 10.01.2018 had allowed the petition and set aside the order dated 06.09.2017passed by Hon’ble NCLT, Ahmedabad.

DIVIDEND

Due to high accumulated loss, your Directors have not recommended dividend for the financial year 2017-18.

BUSINESS ACTIVITY

The company is engaged in manufacture of sponge iron, ferro alloys and power. Company is generating power on account of waste heat recovery system resulting economic price. Company is having its power plant of 40 MW. Power generated is used for captive consumption. There has been no change in the nature of business of the Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have holding or subsidiary companies during the year and no other company has become holding / subsidiary/ joint venture / associate. The Company is an Associate Company of M/s Shah Alloys Limited as it is holding more than 20% of the Equity Share Capital in the Company as a Promoter Company.

DEPOSIT

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

DETAILS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013

During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company.

REGULATORY STATEMENT

In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR), Regulations 2015, the Cash Flow Statement for the year ended 31.03.2018 is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).

The Company has paid listing fees for the year 2018-19 to above stock exchanges.

DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION

During the year under review there is no change in the Composition of the Board or KMPs.

MEETINGS OF THE BOARD

During the year under review, total five meetings were held. Due to initiation of Corporate Insolvency Resolution Process (CIRP) against the Company, meeting held on 09.09.2017 & 11.12.2017 were chaired by Insolvency Professionals wherein no Directors where present due to ceased of power of Board of directors pursuant to section 17 of Insolvency & Bankruptcy Code 2015. While Board members met three times for meetings held on 27.05.2017, 05.08.2017 & 10.02.2018 during the financial year. Details of meetings are given in the Corporate Governance Report annexed herewith and forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each Independent Director of the Company confirming that he/she met with the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical background. The Company follows diverse Board structure.

BOARD EVALUATION

As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Board’s own performance, its committee & Individual directors. The manner and detail in which evaluation was carried out is stated in the Corporate Governance Report which is annexed and forms a part of this report.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.

CORPORATE GOVERNANCE REPORT

The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2018, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite Certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of Corporate Governance is annexed to this Report.

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

As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report as Annexure - 1.

RISK MANAGEMENT POLICY

The Company had put in place an enterprise wide risk management framework. This holistic approach provides the assurance that, to the best of its capabilities, the Company identifies, assesses and mitigates risks that could materially impact its performance in achieving the stated objectives. The Audit committee ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities. The Committee reviews strategic decisions of the Company and on regular basis, reviews the Company’s portfolio of risks and considers it against the Company’s Risk Appetite. The Committee also recommends changes to the Risk Management Technique and / or associated frameworks, processes and practices of the Company.

VIGIL MECHANISM POLICY

The Company had implemented a vigil mechanism, whereby employees, directors and other stakeholders can report matters such as generic grievances, corruption, misconduct, fraud, misappropriation of assets and non-compliance of code of conduct to the Company. The policy safeguards the whistle blowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY

Company has earned a profit in the year under review. However, the average net profits of the Company during immediately three preceding financial years is negative, provisions related to expenditure of atleast two percent of the average net profits in CSR activities is presently not applicable to the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:

a) In the preparation of the annual accounts for the financial year ended 31st March 2018, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on a going concern basis; and

e) The directors in the case of a listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The policy of the Company on Director’s appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 is available on the Company’s website at www.salsteel.co.in

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year. PARTICULARS OF THE EMPLOYEES

Information pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure- 2. Further, particulars of employees remuneration, as prescribed under section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not attached with this report since there was no employee who was in receipt of excess remuneration as prescribed.

DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIES ACT, 2013

During the financial year, all transactions entered into with the Related Parties as defined under Companies Act, 2013, were in the ordinary course of business and on an arm’s length basis and as such did not attract provisions of Section 188 (1) of Companies Act, 2013. The Company has formulated policy on related party transactions. Particular of related party transactions in prescribed Form AOC-2 is attached at Annexure-3. Approvals from the Audit Committee are obtained even for transactions which are in ordinary course of business and repetitive in nature. Further, on quarterly basis, disclosures are made to the Audit Committee and to the Board. Details of related party transactions are given in the notes to financial statements.

IND AS

Your company has adopted IND AS w.e.f. 1st April 2017 pursuant to Notification of the Ministry of Corporate Affairs dated 16th February 2015 in place of Accounting Standards.

AUDITORS AND AUDIT REPORTS

a. Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under M/ s. Ashish Bhavsar & Associates, Cost Accountants were appointed for auditing cost accounting records of the Company for the year ending 31st March, 2018. Board has further appointed M/s. Ashish Bhavsar & Associates, Cost Accountants as Cost Auditors for the year ending 31st March 2019 subject to approval of remuneration in the forthcoming Annual General Meeting.

b. Internal Auditor

The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the Audit Committee in order to strengthen the internal control system for the Company.

c. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder, the Board of Directors has appointed M/s Kamlesh Shah & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2018-19. The report submitted by the Secretarial Auditor in Form MR-3 for the financial year ended as on 31st March, 2018 is attached to this report as Annexure - 4. Remarks of secretarial auditor are self-explanatory.

d. Statutory Auditors

Directors submit their explanations for the Qualifications, reservations or adverse remarks contain in the Auditor’s Report for the year under review. Para nos. of Auditors’ Report and reply are us under:

Basis for Qualified Opinion - Para 1

Company has paid the capital advances in earlier years for total amounting Rs. 9,12,32,064/-which are currently shown under long term loans and advances to the suppliers for the supply of customized equipments. The machines are manufactured and ready for dispatch but lenders had stopped funding and Company does not have enough accruals to lift the machines.

Annexure A to the Independent Auditors’ Report - Para vii a

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same has been paid.

MATERIAL CHANGES / INFORMATION:

1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company.

2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of the Companies Act 2013 read with applicable rules made thereunder is annexed to this report at Annexure - 5.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions, Banks and ARCs during the year. Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. Directors would also like to acknowledge continued patronage extended by Company’s shareholders in its entire endeavor.

For and on behalf of the Board

Date:30^thMay 2018 Rajendra V. Shah

Place: Santej Chairman

(DIN: 00020904)

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Mar 31, 2016

Dear Members,

The Directors pleased to present the 13^th Annual Report of your company on the operations and performance along with the Audited Financial Statements for the year ended on 31^st March 2016.

FINANCIAL HIGHLIGHTS

Rs. In Lacs

Particulars	March 31, 2016	March 31, 2015
Total Revenues	33819.36	36604.09
Total Expenditure	31439.10	33929.35
Profit before interest depreciation, extraordinary item and tax	2380.26	2674.74
Depreciation and Interest	2086.86	3865.76
Profit / (Loss) before extraordinary item and tax	293.40	(1191.02)
Extraordinary item	3170.24	4748.72
Profit / (Loss) before tax	(2876.84)	(5939.74)
Tax Expense / Deferred tax	Nil	1644.16
Net Profit / (Loss) for the year	(2876.84)	(7583.90)
Profit / (Loss) Brought forward from last year	(12812.85)*	(5175.09)
Balance Carried forward	(15689.69)	(12812.85)*

* includes Rs. 54.13 lacs of transitional adjustment on depreciation.

STATE OF COMPANY''S AFFAIRS / PERFORMANCE OVERVIEW

During the year under review Net Turnover of the Company has been decreased from Rs. 36604.09 lacs to Rs. 33819.36 lacs as compared to previous year''s turnover. Company has registered a net loss of Rs. 2876.84 lacs in comparison to the loss of Rs. 7583.90 lacs during previous year. Company had approached Hon''ble BIFR for declaring it sick undertaking pursuant to provisions of Section 3 (1) (o) of SICA. Application of the company has been registered in August 2015. Matter is pending before Hon''ble Bench of BIFR. All banks have transferred their debts to ARCs and Company is in the process of settling debts with ARCs.

DIVIDEND

Due to high accumulated loss, your Directors have not recommended dividend for the financial year 2015-16.

BUSINESS ACTIVITY

The company is engaged in manufacture of sponge iron, Ferro alloys, MS & SS Angle and power. Company is generating power on account of waste heat recovery system resulting economic price. Company is having its power plant of 40 MW. Power generated is used for captive consumption and surplus power is sold resulting profit. There has been no change in the nature of business of the Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have holding or subsidiary companies during the year and no other company has become holding / subsidiary/ joint venture / associate. The Company is an Associate Company of M/s Shah Alloys Limited as it is holding more than 20% of the Equity Share Capital in the Company as a Promoter Company.

DEPOSIT

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

DETAILS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013

During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company.

REGULATORY STATEMENT

In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR), Regulations 2015, the Cash Flow Statement for the year ended 31.03.2016 is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).

The Company has paid listing fees for the year 2016-17 to above stock exchanges.

DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION

During the year under review there is no change in the Composition of the Board or KMPs.

MEETINGS OF THE BOARD

The Board met five times during the financial year. Details of meetings are given in the Corporate Governance Report annexed herewith and forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each Independent Director of the Company confirming that he/she met with the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical background. The Company follows diverse Board structure.

BOARD EVALUATION

As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Board''s own performance, its committee & Individual directors. The manner and detail in which evaluation was carried out is stated in the Corporate Governance Report which is annexed and forms a part of this report.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.

CORPORATE GOVERNANCE REPORT

The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2016, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite Certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of Corporate Governance is annexed to this Report.

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

As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report as Annexure - 1.

RISK MANAGEMENT POLICY

The Company had put in place an enterprise wide risk management framework. This holistic approach provides the assurance that, to the best of its capabilities, the Company identifies, assesses and mitigates risks that could materially impact its performance in achieving the stated objectives. The Audit committee ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities. The Committee reviews strategic decisions of the Company and on regular basis, reviews the Company''s portfolio of risks and considers it against the Company''s Risk Appetite. The Committee also recommends changes to the Risk Management Technique and / or associated frameworks, processes and practices of the Company.

VIGIL MECHANISM POLICY

The Company had implemented a vigil mechanism, whereby employees, directors and other stakeholders can report matters such as generic grievances, corruption, misconduct, fraud, misappropriation of assets and non-compliance of code of conduct to the Company. The policy safeguards the whistle blowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY

Company is loss making unit and hence provisions related to CSR is presently not applicable.

DIRECTORS'' RESPONSIBILITY STATEMENT

In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:

a) In the preparation of the annual accounts for the financial year ended 31^st March 2016, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on a going concern basis; and

e) The directors in the case of a listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

The policy of the Company on Director''s appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 is available on the Company''s website at www.salsteel.co.in

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year. PARTICULARS OF THE EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act,2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure- 2. Particulars of employees remuneration, as required under section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not attached with this report since there was no employee who was in receipt of remuneration in excess of aggregate of Rs. 60,00,000 during the year if employed throughout the financial year or Rs. 5 lacs per month in the aggregate if employed for part of the year.

DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIES ACT, 2013

During the financial year, all transactions entered into with the Related Parties as defined under Companies Act, 2013, were in the ordinary course of business and on an arm''s length basis and as such did not attract provisions of Section 188 (1) of Companies Act, 2013. The Company has formulated policy on related party transactions. Particular of related party transactions in prescribed Form AOC-2 is attached at Annexure - 3. Approvals from the Audit Committee are obtained even for transactions which are in ordinary course of business and repetitive in nature. Further, on quarterly basis, disclosures are made to the Audit Committee and to the Board. Details of related party transactions are given in the notes to financial statements.

STATUTORY AUDITORS

Members at its 12^th Annual General Meeting held on September 24, 2015 approved the appointment of M/s. Talati & Talati, Chartered Accountants, as statutory auditors for the period as per provisions of the Act, subject to ratification in every Annual General Meeting. Company has received letter of consent and confirmation under section 141(1) the Companies Act 2013 for their appointment hence, the Board has now proposed to ratify the appointment of Statutory Auditors from conclusion of 13^th Annual General Meeting to next Annual General Meeting to be held in 2017. Necessary Resolution for their appointment as the Statutory Auditors and fixing their remuneration is proposed to be passed at the Annual General Meeting.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under M/s. Ashish Bhavsar & Associates, Cost Accountants were appointed for auditing cost accounting records of the Company for the year ending 31^st March, 2016.

Internal Auditor

The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the Audit Committee in order to strengthen the internal control system for the Company.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with rules made there under, the Board of Directors has appointed M/s Kamlesh Shah & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2015-16. The report submitted by the Secretarial Auditor in Form MR-3 is attached to this report as Annexure - 4. The remark of secretarial auditor is self explanatory in nature.

BOARD''S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS

The Directors submit their explanations to then various observations made by the Auditors in their report for the year 2015-16. Para nos. of Auditors'' Report and reply are as under:

Basis for Qualified Opinion - Para 1

Company has paid the capital advances in earlier years for total amounting Rs. 9,41,22,080 which are currently shown under long term loans and advances to the suppliers for the supply of customized equipments based on our specific design and requirements. The machines are manufactured and ready for dispatch but Company does not have further funds to pay balance amount to lift the machines. However, the Management is trying to recover such advances from the suppliers fully subject to provisions made in the books of accounts of Rs. 1,69,32,523. At present amount of loss is not quantifiable.

Annexure A to the Independent Auditors'' Report - Para vii a

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same has been paid.

Annexure A to the Independent Auditors'' Report - Para viii

In view of the market conditions of steel sector at the relevant time, Company approached to the Consortium of the Banks for restructuring of the debts through CDR mechanism. The lenders appointed SBI Capital Market Limited to prepare a financial package and GITCO to carry out the Techno Economic Viability (TEV) Report. Based on the viability of the plant certified by SBI Caps and GITCO, SBI approached to the CDR (EG) and the case was admitted by the CDR and directed the lenders to submit the final report within 90 days for the sanction of the package. In between, SBI withdrew the support from the CDR by submitting letter of withdrawal without assigning any reason. As a result Company suffered badly and later not able to make the payments as per the terms of sanction. As a result financial health of the Company got further deteriorated and net worth became negative. Thus, Company approached to Hon''ble BIFR for declaring company as sick undertaking pursuant to the provisions of Section 3 (1) (o) of the SICA. The application of the Company has been registered vide letter dated 24.08.2015.

All the banks assigned debts to Assets Reconstruction Company (ARC). Company has made proposal for settlement with ARC. Company is actively negotiating with them for settlement of debts and expecting a settlement. Since matter is pending before Hon''ble BIFR and settlement proposals are under considerations.

MATERIAL CHANGES / INFORMATION:

1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company.

2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of the Companies Act 2013 read with applicable rules made there under is annexed to this report at Annexure - 5.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions, Banks and ARCs during the year. Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. Directors would also like to acknowledge continued patronage extended by Company''s shareholders in its entire endeavor.

For and on behalf of the Board Rajendra V. Shah

Date : 30^th May 2016 Chairman

Place : Santej (DIN: 00020904)

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Mar 31, 2014

Dear Members,

The Directors present 11th Annual Report on the operations and performance together with the Audited Financial Statements for the year ended on 31st March 2014.

FINANCIAL HIGHLIGHTS Rs. In Lacs

Total Turnover and other Receipts 32941.81 38067.18

Gross Profit/Loss(Before deducting any of the following) 272.57 847.03

A. Interest and Financial charges 3162.11 3184.62

B. Depreciation, Amortisation and Impairment 1748.42 1929.51

C. Tax Liability

I. Current Tax 0.00 0.00

II. Deferred Tax (1131.20) (1435.02)

III. Prior year Tax adjustment 5.74 0.40

Prior period adjustment 29.17 26.76

Net Profit available for appropriation (3542.67) (2859.24)

Provision for Investment Allowance Reserve Nil Nil

Net Profit.

A. Add: Brought forward from last year''s balance (1632.44) 1226.80

B. Less: Transferred to: General Reserve Nil Nil Transfer to Debenture Redemption Reserve Nil Nil

Dividend: Dividend has not been recommended by the Board N.A N.A

Balance Carried forward (5175.09) (1632.44)

OPERATIONAL OVERVIEW

During the year under review Net Turnover of the Company has been decreased from Rs. 38,067.18 Lacs to Rs. 32,941.81 Lacs as compared to previous year''s turnover. Due to decline in net profit margin is mainly attributed to factors like higher basic raw materials prices like Coal and Iron ore, inflationary conditions, cost burdens, shortage of working capital and lower margin etc.

DIVIDEND

Due to loss, your Directors have not recommended dividend for the financial year 2013-14.

CORPORATE GOVERNANCE

The Board of Directors supports to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance.

DIRECTORS

Shri Anil Kumar Pandya, will be the Director retiring by rotation and being eligible offer himself for re-appointment at the ensuing Annual General Meeting. Shri Piyush Chandarana has tendered resignation from the position of Director-Commercial w.e.f. 13th May, 2014.

Shri Bhaskar Ghosh, Director of the Company vacated office of director under Section 283 of Companies Act, 1956 and subject to the provision of Article 129 of Articles of Association of the Company. Board took note of vacation of office of Director in the Board meeting held on 14.11.2013. As per the provisions of Section 149 of the Act, which has come into force with effect from 1st April, 2014, an Independent Director shall hold office for a term up to five consecutive years on the Board of a company and is not liable to retire by rotation. In compliance with the provisions of Section 149 read with Schedule IV of the Act, the appointment of Shri Ambalal C. Patel, Shri Harshad Shah, Shri Jethalal M. Shah, Shri Tejpal Shah and Shri Shrikant Jhaveri as Independent Directors is being placed before the Members in General Meeting for their approval. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. Members are requested to refer to the Notice of the Annual General Meeting and the Explanatory Statement for details of the qualifications and experience of the Directors and the period of their appointment. The Board recommends the passing of the Resolutions at Item Nos. 5 to 9 of the Annual General Meeting Notice.

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

As required under section 2l7(l)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report.

PARTICULARS OF THE EMPLOYEES

Particulars of the employees as required under provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees), Rules 1975.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to requirements under Section 217 (2AA) ofthe Companies Act, 1956, with respect Directors'' Responsibility Statement, itis hereby confirmed:

a) In the preparation of the annual accounts for the financial year ended 31st March 2014, the applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

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

d) The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s. Talati & Talati, Chartered Accountants, Statutory Auditors of the Company, retires at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Your Directors recommend their re-appointment.

M/s. Ashish Bhavsar & Associates, Cost Accountants have been appointed for auditing cost accounting records of the Company for the year ending 3lst March, 2015. Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under, Members are requested to consider the ratification of the remuneration payable to M/s. Ashish Bhavsar & Associates, Cost Accountants.

The due date for filing of the Cost Audit and Compliance Reports for the financial year 2012-13 was 30th September, 2013. The Company has filed the Reports and Compliance reports with the Ministry of Corporate Affairs on 10th September, 2013.

The Company has received letters from Statutory Auditor and Cost Auditor to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

EXPLANATION TO THE AUDITORS'' REMARKS:

The Directors submit their explanations to the qualifications made by the Auditors in their report for the year 2013-14. The para nos. of Auditor Report and reply as under:

Under the headirvg of "Emphasis of Matter"

Note No. 28 to the notes on accounts is self explanatory and give suitable explanation to the qualification.

"Para - iii - (g)" of Annexure to Independent. Auditors'' Report

Company was incorporated as backward integration project for Shah Alloys Limited (SAL). The finished product of our company becomes Raw material for SAL. However, due to financial crisis, SAL is not functioning on its optimum capacity and as such, company is not getting sufficient orders to optimize its production capacity. This has adversely affected production of the Company. Thus accruals are not enough to pay back the amount to SAL after making payment of interest and installments to its lenders. Due to low realization and low market demand, Company was struggling with matching cash flow. Since Company is not able to make payment of interest and installments to bankers, company approached to CDR cell for restructuring of debts. Side by side, Company is planning to develop market for its products in nearby areas.

"Para - ix - (a)" of Annexure to Independent Auditors'' Report

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same have been paid.

"Para - xi" of Annexure to Independent Auditors'' Report

On account of underutilization of capacities, the cash flow was mismatch resulting delay in payment of interest. In the CDR EG meeting flash report as submitted by the Company has been accepted and it is expected that once CDR proposal is accepted, Company shall come out from financial crises resulting optimum capacity utilization.

FIXED DEPOST

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

REGULATORY STATEMENT

In conformity with provision of Clause 32 in the Listing Agreement(s) the Cash Flow Statement for the year ended 31.03.2014 is annexed hereto. The equity shares of your company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).

The Company has paid the listing fees for the year 2014-15 to above stock exchanges.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Company''s shareholders in its entire endeavour.



For and on behalf of the Board Date: 28th May 2014 Rajendra V. Shah Place: Santej (DIN: 00020904) Chairman

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Mar 31, 2013

Dear Members,

The Directors present 10th Annual Report on the operations and performance together with the Audited Financial Statements for the year ended on 31st March 2013.

FINANCIAL HIGHLIGHTS

Rs.In Lacs

PARTICULARS Current Year Previous Year 31.03.13 31.03.12

Total Turnover and other Receipts 38067.18 33393.71

Gross Profit/Loss(Before deducting any of the following) 847.03 4253.37

A. Interest and Financial charges 3184.62 2311.69

B. Depreciation, Amortisation and Impairment 1929.51 1805.93

C. Tax Liability

I. Current Tax 0.00 16.00

II. Deferred Tax (1435.02) 48.70

III. Prior year Tax adjustment 0.40 (26.74)

Prior period adjustment 26.76 55.89

Net Profit available for appropriation (2859.24) 41.90

Provision for Investment Allowance Reserve Nil Nil

Net Profit/Loss

A. Add : Brought forward from last year''s balance 1226.80 1184.90

B. Less : Transferred to: General Reserve Nil Nil

Transfer to Debenture Redemption Reserve Nil Nil

Balance Carried forward (1632.44) 1226.80

OPERATIONAL OVERVIEW

During the year under review Net Turnover of the Company has been increased to Rs. 38,067.18 Lacs as compared to previous year''s turnover which was Rs. 33,393.71 Lacs. There is decline in profit, mainly attributed to factors like higher basic raw materials prices like Coal and Iron ore, inflationary conditions, cost burdens, shortage of working capital and lower margin, increased interest burden etc.

DIVIDEND

Due to loss, your Directors have not recommended dividend for the financial year 2012-13.

DIRECTORS

Shri Sujal Shah, Shri Harshad Shah and Shri Tejpal Shah will be Directors retiring by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

Your Directors recommend above re-appointments and request members to consider the same as stated in Notice of the Annual General Meeting.

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

As required under section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report.

PARTICULARS OF THE EMPLOYEES

Particulars of the employees as required under provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees), Rules 1975.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed that:

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

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

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

d) The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s. Talati & Talati, Chartered Accountants, Statutory Auditors of the Company, retires at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Your Directors recommend their re-appointment.

Your directors had appointed M/s. Ashish S. Bhavsar & Co. as Cost Auditor, for auditing cost accounting records of the Company for financial year 2012-13. The Report of 2011-12 has been submitted to the Central Government within stipulated time and report of 2012-13 will be submitted to the Central Government on or before the due date.

Board in its meeting held on 28th May, 2013 have decided to appoint M/s. Ashish Bhavsar & Associates, Cost Accountants for auditing cost accounting records of the Company for the financial year 2013-14 and an application for seeking said appointment will be made to the Central Government by the Company. The Company has received a letter to the effect that their appointment would be within the prescribed limits under Section 224(1-B) of the Companies Act, 1956.

EXPLANATION TO THE AUDITORS'' REMARKS

The Directors submit their explanations to the qualifications made by the Auditors in their report for the year 2012-13. The para nos. of Auditors Report and reply are as under:

Under the heading ''Opinion''

Company was incorporated as backward integration project for Shah Alloys Limited (SAL). The finished product of our company becomes Raw material for SAL. However, due to financial crisis, SAL is not functioning on its optimum capacity and as such, company is not getting sufficient orders to optimize its production capacity. This has adversely affected production of the Company. Thus accruals are not enough to pay back the amount to SAL after making payment of interest and instalments to its lenders. Due to low realization and low market demand, Company was struggling with matching cash flow. Since Company is not able to make payment of interest and instalments to bankers, company approached to CDR cell for restructuring of debts. Flash report has already been admitted by CDR cell and company has to submit final report. Company is expecting that restructuring will be approved by CDR cell shortly and company will be able to improve production capacity and pay off the dues on the appointed dates as per scheme that may be approved by CDR cell. At the same time, Company would be developing market for its products in nearby areas.

Para ix (a)

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same have been paid.

Para xi

On account of underutilization of capacities, the cash flow was mismatch resulting delay in payment of interest. In the CDR EG meeting flash report as submitted by the Company has been accepted and it is expected that once CDR proposal is accepted, Company shall come out from financial crises resulting optimum capacity utilization.

FIXED DEPOST

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

REGULATORY STATEMENT

In conformity with provision of Clause 32 in the Listing Agreement(s) the Cash Flow Statement for the year ended 31.03.2013 is annexed hereto.

The equity shares of your company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE)

The Company has paid the listing fees for the year 2013-14 to above stock exchanges.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Company''s shareholders in its entire endeavour.

For and on behalf of the Board

Sd/-

Date: 28th May 2013 Rajendra V Shah

Place: Santej CHAIRMAN

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Mar 31, 2012

Dear Members,

The Directors present 9th Annual Report on the operations and performance together with the Audited Financial Statements for the year ended on 31st March 2012.

FINANCIAL HIGHLIGHTS: (Rs. in Lakhs)

Particulars 2011-12 2010-11

Net Turnover 32757.58 32009.10

Other Income 636.13 237.79

Gross Revenue 33393.71 32246.89

Less: Cost of Sales 29140.34 27893.60

Profit before depreciation, Interest & Tax (PBDIT) / Operating Profits 4253.37 4353.29

Less: Depreciation & Amortisation 1805.93 1944.05

Less: Interest and Financial Expenses 2311.69 2213.81

Profit before Taxes 135.75 195.43

Less: Provision for Taxes 37.96 146.58

Net Profit after Tax but before Extraordinary Items 97.79 48.85

Less: Prior-Period Adjustments 55.89 21.59

Net Profit after Tax 41.90 27.26

Add: Balance brought forward from previous year 1184.90 1157.64

Total Profits available for Appropriations 1226.80 1184.90

Less; Appropriations:

General Reserve Nil Nil

Balance to be carried forward 1226.80 1184.90

OPERATIONAL OVERVIEW

During the year under review Net Turnover of the Company has been increased to Rs. 327.58 Crores as compared to previous year's turnover which was Rs. 320.09 Crores. Company's profit after tax (PAT) has also increased marginally. However, decline in net profit margin is mainly attributed to factors like higher basic raw materials prices like Coal and Iron ore, inflationary conditions, cost burdens, shortage of working capital and lower margin etc..

DIVIDEND

Due to inadequacy of profits, your Directors have not recommended dividend for the financial year 2011-12

DIRECTORS:

Shri Shri Babulal M. Singhal, Shri Piyush R Chandarana and Shri Ambalal C Patel will be the Directors retiring by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

Your Directors recommend above re-appointments and request members to consider the same as stated in Notice of the Annual General Meeting.

WHOLE-TIME DIRECTORS

Your Directors propose re-appointment of Executive Director Shri Anilkumar S Pandya, Director - Commercial, whose tenure expires on 24th October 2012, for a further term of 2 years. The material terms & conditions of his reappointment have been provided in explanatory statement attached to the Notice of the meeting. Members are requested to consider his reappointment at the ensuing Annual General Meeting.

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

As required under section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report.

PARTICULARS OF THE EMPLOYEES:

Particulars of the employees as required under provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees), Rules 1975.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed that:

a) In the preparation of the annual accounts for the financial year ended 31st March 2012, the applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

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

d) The Directors have prepared the annual accounts on a going concern basis.

AUDITORS:

M/s Talati & Talati, Statutory Auditors of the Company hold office until the conclusion of the ensuing Ninth Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Your Directors recommends their re-appointment.

Pursuant to Central Government's Order dated 3rd May 2011 Ref No. 52/26/CAB-2010, mandating appointment of Cost Auditor, your directors have re-appointed M/s Ashish S. Bhavsar & Co. as Cost Auditor, for auditing cost accounting records of the Company for financial year 2012-13.

EXPLANATION TO THE AUDITORS' REMARKS:

The Directors submit their explanations to the qualifications made by the Auditors in their report for the year 2011-12. The Para nos. of Auditors' Report and reply are as under:

Para iii (g)

Company was incorporated as backward integration project for Shah Alloys Limited (SAL). The finished product of our company becomes Raw material for SAL. However, due to financial crisis, SAL is not functioning on its optimum capacity and as such, company is not getting sufficient orders to optimize its production capacity. This has adversely affected production of the Company. Thus accruals are not enough to pay back the amount to SAL after making payment of interest and instalments to its lenders. However, company is in the process of developing the market and selling the same in the nearby areas.

It is learnt that SAL has carried out TEV study based on which DRS shall be submitted by Operating Agency to Hon'ble BIFR. It is expected that once the Rehabilitation scheme is approved, Company will be able to increase its turnover on account of increase availability of sufficient orders and shall consider repayment of the dues to SAL.

Para ix (a)

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same have been paid.

Para xi

On account of underutilization of capacities, the cash flow was mismatch resulting delay in payment of interest. Company has made proposal to its bankers for working capital requirements. Once the working capital is sanctioned and disbursed, Company will be regular in payment of dues to its bankers.

Besides, other qualification, the notes to the Accounts are self explanatory and give suitable explanation to the qualifications in the Auditors' Report.

FIXED DEPOST

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

FURTHER ISSUE OF SECURITIES VIA PREFERENTIAL ALLOTMENT

For the purpose of augmenting working capital resources of the Company, Board in its meeting held on 6th December 2011, decided to raise funds for the Company through preferential allotment of convertible warrants to Strategic Investors and Promoter's Group entities. Accordingly, pursuant to the provisions of section 81(1A) of the Companies Act, 1956, shareholders of the Company in their meeting held on 5th January 2012 passed special resolution authorising Board to issue and allot convertible warrants upto Rs. 32 Crores to the parties as mentioned in the notice of general meeting. Accordingly, Board in its meeting held on 03.02.2012 allotted convertible warrants to the investors on the terms and conditions as are mentioned in the notice convening general meeting. An amount equal to minimum subscription has been received from the warrant holders against aforesaid allotment. Each warrant is convertible into equity share of Rs. 10/- at the time of exercise of option by the warrant holder within 18 months from the date of the issue of such warrants.

REGULATORY STATEMENT

In conformity with provision of Clause 32 in the Listing Agreement(s) the Cash Flow Statement for the year ended 31.03.2012 is annexed hereto.

The equity shares of your company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE)

The Company has paid the listing fees for the year 2012-13 to above stock exchanges.

APPRECIATION:

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Company's shareholders in its entire endeavor.

For and on behalf of the Board

Date : 30th June 2012 Rajendra V. Shah

Place : Santej CHAIRMAN

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Mar 31, 2011

Dear Members,

The Directors present 8th Annual Report on the operations and performance together with the Audited Financial Statements for the year ended on 31st March 2011.

FINANCIAL HIGHLIGHTS

(Amount in Rs. Lacs)

Particulars 2010-11 2009-10

Net Turnover 32009.10 29848.24

Other Income 237.79 574.13

Gross Revenue 32246.89 30422.37

Less: Cost of Sales 27946.19 25557.81

Profit before depreciation, Interest & Tax (PBDIT) / Operating Profits 4300.70 4864.56

Less: Depreciation & Amortisation 1890.72 1960.26

Less: Interest and Financial Expenses 2213.81 2687.72

Profit before Taxes 196.17 216.58

Less: Provision for Taxes 147.32 89.14

Net Profit after Tax but before Extra -ordinary Items 48.85 127.44

Less: Prior-Period Adjustments 21.59 44.63

Net Profit after Tax 27.26 82.81

Add: Balance brought forward from previous year 1157.64 1074.83

Total Profits available for Appropriations 1184.90 1157.64

Less: Appropriations

General Reserve Nil Nil

Balance to be carried forward 1184.90 1157.64

OPERATIONAL OVERVIEW

During the year under review Net Turnover of the Company has been increased to Rs. 320.09 Crores as compared to previous year's turnover which was Rs. 298.48 Crores, an increase of around 7.24%. However, Company's profits after tax has declined a bit mainly due to the factors like lower prevailing selling price of sponge Iron, increase in price of basic raw materials like Coal and Iron ore, inflationary conditions, cost burdens and shortage of working capital etc.

DIVIDEND

Due to inadequacy of profits, your Directors have not recommended dividend for the financial year 2010-11.

DIRECTORS

Shri Shri Jethabhai M. Shah, K.C Thatoi and Shri Anilkumar Pandya will be the Directors retiring by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting. Shri Shrikant N. Jhaveri has been appointed as Additional Director by the Board on 11th May 2011 and he will cease to hold office at the ensuing Annual General Meeting. Shri Jhaveri has consented to act as Director, if reappointed. Your Directors recommend his appointment and request members to con- sider the resolution for his reappointment as stated in Notice of the Annual General Meeting.

Shri Bhaskar Ghosh has been appointed as Additional Director by the Board on 4th July 2011 and he will cease to hold office at the ensuing Annual General Meeting. Shri Ghosh has consented to act as Director, if reappointed. Your Directors recommends his appointment and request members to consider the resolution for his reappointment as stated in Notice of the Annual General Meeting.

WHOLE-TIME DIRECTORS

Your Directors propose re-appointment of Whole Time Directors viz. Shri Sujal A Shah, Director – Purchase and Shri Babulal M Singhal, Director-Commercial, whose tenure have expired on 25th April 2011 and 15th May 2011 respectively, for a further term of 5 years. The material terms & conditions of their reappointment have been provided in explanatory statement attached to the Notice of the meeting. Members are requested to consider their reappointment at the ensuing Annual General Meeting.

MOU SIGNED WITH GOVT OF GUJARAT

Your Directors are pleased to inform that in the 5th Global Investors Summit of biennially held renowned event "Vibrant Gujarat 2011", organised by Government of Gujarat, your Company has evinced its interest in economic development of Country and has entered into a "Memorandum of Understanding (MOU)" with Government of Gujarat for proposed investment of Rs. 1000 crores in the Cement Business in Dist. Kutch, Gujarat.

The activities relating to "Cement" business is covered under "Other Objects" of Memorandum of Association (MOA) of the Company. Pursuant to the requirement of section 149 (2A) of Companies Act, 1956 approval of members is sought to pass special resolution as mentioned in "Item No. 10" in Notice of Meeting.

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

As required under section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report.

PARTICULARS OF THE EMPLOYEES

Particulars of the employees as required under provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of limits prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees), Rules 1975.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed that:

a) In the preparation of the annual accounts for the financial year ended 31st March 2011, the applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

c) The Directors have taken proper and sufficient care for the maintenance of adequate account- ing records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s Talati & Talati, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Your Directors recommends their re-appointment.

Pursuant to Central Government's Order dated 3rd May 2011 Ref No. 52/26/CAB-2010, mandating appointment of Cost Auditor, your directors have appointed M/s Ashish S. Bhavsar & Co. as Cost Auditor, for auditing cost accounting records of the Company for financial year 2011-12.

EXPLANATION TO THE AUDITOR'S REMARKS

The Directors submit their explanation to the qualifications made by the Auditors in their report for the year 2010-11. The Para nos. of Auditors' Report and reply are as under:

Para ix (a)

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. How- ever, the same have been paid.

Para xi

On account of financial problem, company defaulted in payment of interest. Company has made proposal to its bankers for working capital requirements. Once the working capital is sanctioned and disbursed, Company will be regular in payment of dues to its bankers.

Besides, other qualification, the notes to the Accounts are self explanatory and give suitable explana- tion to qualifications in Auditors' report.

FIXED DEPOST

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

FURTHER ISSUE OF SHARES BY PREFERENTIAL ALLOTMENT

Members in its adjourned meeting held on 25th April 2011 approved preferential allotment of equity shares and convertible warrants to strategic investors and authorized the Board in this regard. How- ever, the same was abandoned by the Board in its meeting held on 4th July 2011.

REGULATORY STATEMENT

In conformity with provision of Clause 32 in the Listing Agreement(s) the Cash Flow Statement for the year ended 31.03.2011 is annexed hereto.

The equity shares of your company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE)

The Company has paid the listing fees for the year 2011-12 to above stock exchanges.

APPRECIATION

Your Directors place on record their sincere appreciation yet again for the valuable support and co- operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Company's shareholders in its entire endeavor.

For and on behalf of the Board

Sd/- Rajendra V. Shah Date: 23rd July 2011 CHAIRMAN Place: Santej

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Mar 31, 2010

The Directors take pleasure in presenting the 7th Annual Report together with the Audited statement of Accounts for the year ended on 31st March 2010.

FINANCIAL RESULTS

Particulars: (Rs. In lacs) 31.03.2010 31.03.2009

1. Turnover 31535.54 42759.71

2. Other Income 574.13 253.03

3. Profit before Dep. Int. & Taxes 4864.56 5333.31

4. Profit before Tax 216.58 113.51

5. Net profit after Tax 82.81 216.34

OPERATIONAL OVERVIEW

Company has performed relatively low in the year 2009-10 mainly on account of low price realization owing to slack market conditions. Companys basic requirement of manganese ore is fully dependent from other States where the prices are very high and also volatile. Further to this cost of transporta- tion is also very high. This has affected the working of the company and on account of this capacity utilization is comparative lower. However, with the proposed joint venture with GMDC for mining of manganese ore would definitely help in availability of raw material as per requirement and at competi- tive rates. This will give boost to the working of the company in near future.

CORPORATE GOVERNANCE

The Board of Directors supports the broad principles of corporate governance. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity.

Your company has been practicing the principles of good corporate governance over the years.

DIRECTORS

Shri Suresh D Shah ceased to be Director due to his resignation from the Board of the Company w.e.f 31.10.2009. The Board places on record its appreciation for the services rendered by him as Director during their association with the Company. Shri Piyush Chandarana was appointed as Director - Commercial w.e.f. 31.10.2009 for a period of 5 years subject to approval of shareholders.

Shri Ambalal C Patel, Shri Tejpal S Shah and Shri Harshad M Shah retire by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

PARTICULARS OF THE EMPLOYEES

Particulars of the employees as required under the provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended are not attached with this report since there was no employee who was in receipt of remuneration in excess of limits, prescribed under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particular of Employees), Rules 1975.

CONSERVATION OF ENERGY, R & D TECHNOLOGY ETC.

As required under section 217(l)(e) of the Companies Act, 1956 read with Rule 2 of the Gompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 the particulars relating to conservation of Energy, R&D, Technology absorption and foreign Exchange earnings / outgo are annexed as a part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) tha*t 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 profits of the company for that period;

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for prevailing the detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.

AUDITORS

Statutory Auditors of the Company retires at the conclusion of the ensuring Annual General meeting and being eligible, offer themselves for reappointment. Your Directors recommend their re-appoint- ment.

EXPLANATION PURSUANT TO SECTION 217(3) OF THE COMPANIES ACT, 1956

Explanation to the qualification/remarks of the Auditors in its report has been dealt in on notes on accounts wherever required.

FIXED DEPOST

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

REGULATORY STATEMENT

In conformity with provision of Clause 32 in the Listing Agreement(s) the Cash Flow Statement for the year ended 31.03.2010 is annexed hereto.

The equity shares of your company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE)

The Company has paid the listing fees for the year 2010-11 to above stock exchanges.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation received from various government authorities, Stock Exchanges, Financial Institutions and Banks during the year. They also gratefully acknowledge the support extended by the Customers, Suppliers, Shareholders and contribution made by the employees at all level.

For and on behalf of the Board

Date: 22nd July 2010 RAJENDRA V.SHAH

Place: Ahmedabad Chairman