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Directors Report of Southern Ispat & Energy Ltd.

Mar 31, 2014

Dear Members,

The Directors take immense pleasure in presenting this 19th Annual Report together with the Consolidated Audited Accounts of the Company for the Financial Year 2013-14 for the period ended on 31st March 2014.

Financial Results (Rs. Million).

Particulars 2013-14 2012-13

Sales & Other Income 5062.40 9299.63

Material Consumed 4714.25 8777.28

Changes in Inventory 0.09 4.95

Employee Benefits 4.66 7.21

Finance Cost 6.65 8.44

Depreciation 9.84 16.54

Other Expenses 46.68 60.07

Profit before Taxes 282.83 425.16

Taxes-Current Tax 0.04 0.73 - Deferred Tax (1.18) (2.40)

Profit After Taxes 283.98 426.82

Earnings per Share (Basic & Dilutive) 2.15 3.23

REVIEW OF OPERATIONS

During the year under review, the Company''s financial performance has been adversely affected due to the non-availability of raw material, increasing raw material costs and volatile foreign exchange. The company took various initiatives to improve its profitability by diversification which helped the Company to post a reasonable performance for the year.

DIVIDEND

In order to augment resources for the expansion plans, your Directors do not recommend distributing any dividend for the year ended 31st March 2014.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the Audited Consolidated Financial Statements are provided in the Annual Report.

SUBSIDIARY

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company, However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the Subsidiary Company will also be kept open for inspection at the Registered Office of the Company and that of the respective Subsidiary Company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary Company. Details of subsidiary of the Company are covered in Management''s Discussion and Analysis Report forming part of the Annual Report.

EXPANSION PLANS

* Exploring Mining Opportunities & Securing Raw materials and integrating backwards into mining of Iron Ore and Chrome Ore.

* Setting up a Beneficiated & Pelletizing plant with an installed capacity of 12,00,000 TP A in Madhya Pradesh, India for exploiting the mining operations & maximizing profits.

INTERNAL CONTROL SYSTEM

The Company has in place an adequate and appropriate system of internal control, commensurate with its size and nature of business to ensure efficacy of operations and compliance with applicable legislations. The Company has comprehensive budgetary control system. The management regularly reviews actual performance.

SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

Corporate Social Responsibility occupies a central position in Companies activities and is an ongoing daily affair. Our Company''s plant at Kottayi, Palakkad is a leading industrial unit in the region and therefore the local community look towards the Company for social support. Company continues to provide necessary support to economically backward people of the adjoining villages through various community development, education and healthcare programmes.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company all the time strives towards the development of its employees, to upgrade their skills and to boost the motivation levels of its human resource through various mechanisms. For enhancing the team spirit of the employees departmental quality circles and other awareness programmes being organized from time to time. We were successful in maintaining a healthy working environment and cordial industrial relations throughout the year. The efforts put in by the employees at all levels are highly commendable and have contributed immensely to the excellent performance of the company. Your Company HR team has been continuously striving for establishing a better and congenial relationship with Workmen, Unions and all external agencies resulting in achieving zero man days'' loss due to industrial unrest.

BOARD OF DIRECTORS

To appoint Directors in place of Mr. Vinod Bajoria (DIN: 02661406) and Mr. Manish Kumar Mishra (DIN: 05173129) who retire by rotation at the Annual General Meeting and being eligible have offered themselves for re-appointment.

Mr. Madhav Rao, Mr. Dinesh Kesri & Mr. T.N. Sivakumar Independent Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

The proposals regarding the appointment/reappointment of the aforesaid Director are placed for your approval.

PARTICULARS UNDER SEC 217

None of the employees of the Company was in receipt of remuneration above Rs. 2,00,000/- per month or Rs. 24,00,000/- per annum during the year under review and as such there is no need to give a declaration u/s 217 (2A) of the Companies Act, 1956.

CORPORATE GOVERNANCE

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

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

DEPOSITS

The Company has not accepted any fixed deposits during the period under review.

AUDITORS AND AUDITORS REPORT

M/s. Sunil Johri & Associates, Chartered Accountants Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from M/S. Sunil Johri & Associates, Chartered Accountants, to the effect that their appointment, if would be within the prescribed limits under Section I41(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

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

COST AUDITORS

M/s Arindam & Associates, Cost & Management Accountants, Raipur, Cost Auditors of the Company have been appointed as the Company''s Cost Auditors for the Financial Year 2014-15.

DIRECTOR''S RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956 the Directors state that:-

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

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

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act. 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

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

The particulars as required to be disclosed pursuant to Section 217 (1) (e) of the Companies Act,1956 read with Companies (Disclosures of Particulars in the Report of Board of Directors) Rules 1988 are given in Annexure : A forming part of this report.

ACKNOWLEDGEMENTS

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

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

The Directors express their special thanks to Mr. Vivek Agrawal, Chairman & Managing Director of the Company, for his untiring efforts for the progress of the Company.

For and on behalf of the Director

Dated : 31-05-2014 Place : Palakkad Sd/- Vivek Agrawal Chairman & Managing Director


Jun 30, 2013

Dear Shareholders,

The Directors take immense pleasure in presenting this 18th Annual Report together with the Consolidated Audited Accounts of the Company for the Financial Year 2012-13 for the period ended on 30th June 2013.

Financial Results (Rs. Million).

Particulars 12-13 11-12

Sales & Other 9299.63 10191.36

Income

Material Consumed 8777.28 9577.75

Changes in Inventory 4.95 (4.87)

Employee Benefits 7.21 5.19

Finance Cost 8.44 4.02

Depreciation 16.51 19.27

Other Expenses 60.07 179.10

Profit before Taxes 425.16 410.89

Taxes-Current Tax 0.73 0.66

-Deferred (2.40) (2.28)

Tax

Profit After Taxes 426.82 412.52

Earnings per Share 3.23 3.12

(Basic & Dilutive)

REVIEW OF OPERATIONS

During the year under review, the Company''s financial performance has been adversely affected due to the non-availability of raw material, increasing raw material costs, high bank interest rates and volatile foreign exchange. The company took various initiatives to improve its profitability by diversification which helped the Company to post a reasonable performance for the year.

DIVIDEND

In order to augment resources for the expansion plans, your Directors do not recommend distributing any dividend for the year ended 30th June 2013.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements, the Audited Consolidated Financial Statements are provided in the Annual Report.

SUBSIDIARY

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the Subsidiary Company will also be kept open for inspection at the Registered Office of the Company and that of the respective Subsidiary Company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary Company. Details of subsidiary of the Company are covered in Management''s Discussion and Analysis Report forming part of the Annual Report.

EXPANSION PLANS

- Exploring Mining Opportunities & Securing Raw materials and integrating backwards into mining of Iron Ore and Chrome Ore.

- Setting up a Beneficiated & Pelletizing plant with an installed capacity of 12, 00,000 TPA in Madhya Pradesh, India for exploiting the mining operations & maximizing profits.

INTERNAL CONTROL SYSTEM

The Company has in place an adequate and appropriate system of internal control, commensurate with its size and nature of business to ensure efficacy of operations and compliance with applicable legislations. The Company has comprehensive budgetary control system. The management regularly reviews actual performance.

SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

Corporate Social Responsibility occupies a central position in Companies activities and is an ongoing daily affair. Our Company''s plant at Kottayi, Palakkad is a leading industrial unit in the region and therefore the local community look towards the Company for social support. Company continues to provide necessary support to economically backward people of the adjoining villages through various community development, education and healthcare programmes.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company all the time strives towards the

development of its employees, to upgrade their skills and to boost the motivation levels of its human resource through various mechanisms. For enhancing the team spirit of the employees departmental quality circles and other awareness programmes being organized from time to time. We were successful in maintaining a healthy working environment and cordial industrial relations throughout the year. The efforts put in by the employees at all levels are highly commendable and have contributed immensely to the excellent performance of the company. Your Company HR team has been continuously striving for establishing a better and congenial relationship with Workmen, Unions and all external agencies resulting in achieving zero man days'' loss due to industrial unrest.

BOARD OF DIRECTORS

Mr. V Manikandan, Independent Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

Mr Manish Kumar Mishra Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

The proposals regarding the appointment/re- appointment of the aforesaid Director are placed for your approval.

PARTICULARS UNDER SEC 217

None of the employees of the Company was in receipt of remuneration above Rs. 2,00,000/= per month or Rs. 24,00,000/= per annum during the year under review and as such there is no need to give a declaration u/s 217 (2A) of the Companies Act, 1956

CORPORATE GOVERNANCE

The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Annual Report contains a separate Section for the same.

As required under the said provisions, the Company has obtained the Certificate from the Auditors of the Company which is annexed to forms part of the Annual Report.

The Management Discussion and Analysis Report forms part of the Annual Report.

DEPOSITS

The Company has not accepted any fixed deposits during the period under review.

AUDITORS AND AUDITORS REPORT

M/s. Sunil Johri & Associates, Chartered Accountants Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from M/S. Sunil Johri & Associates, Chartered Accountants, to the effect that their appointment, if made would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies act,1956.

The observation and comments given by auditors in this report read together with notes to Accounts are self explanatory and hence do not call for any further comments under Section 217 of the Companies Act,1956.

DIRECTOR''S RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956 the Directors state that:- i. In the preparation of the Annual Accounts, all applicable Accounting Standards have been followed and proper explanations relating to material departures, if any have been furnished.

ii. Accounting policies as listed in notes to the financial statements have been made so as to give a true and fair view of the state of affairs of the Company for the Financial Year 2012-13 for the period ended on 30th June,2013 and of the Profit of the Company for the Accounting Year ended on that day

iii. Proper and sufficient care for the maintenance of adequate accounting records has been taken in accordance with the provisions of this Act so as to safeguard the assets of the Company and to prevent and detect fraud and other irregularities and

iv. The Annual Accounts have been prepared on a going concern basis.

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

The particulars as required to be disclosed pursuant to Section 217 (1) (e) of the Companies Act,1956 read with Companies (Disclosures of Particulars in the Report of Board of Directors) Rules 1988 are given in Annexure: A forming part of this report.

ACKNOWLEDGEMENTS

Your directors acknowledge the assistance and goodwill received from the concerned departments of the State and Central Governments, Financial Institutions, Banks, Customers, Selling Agents, Dealers, Distributors, employees at all levels and the Shareholders.

For, Southern Ispat & Energy Limited

Sd/- Sd/-

Date: 17/10/2013 Vivek Agarwal Vinod Bajoria

Place: Palakkad Chairman & Managing Director Director


Jun 30, 2011

Dear Shareholders,

The Directors take immense pleasure in presenting this 16th Annual Report together with the consolidated audited accounts of the Company for the financial year 2010-11 for the period ended on 30th June 2011.

Financial Results (Rs. Million).

Particulars 10-11 09-10

Sales & Other Income 8058.48 3288.72

Direct Expenditure 7593.34 3141.68

Administrative & Financial Expenditure 52.64 18.03

Depreciation 24.05 11.92

Profit before Taxes 388.45 117.09

Taxes-Current Tax 29.69 19.99

-Deferred Tax (6.60) 14.80

Profit After Taxes 365.36 82.30

Transfer to 46.10 10.63 General Reserves

Balance Carried to Balance sheet 414.91 95.66

Earnings per Share (Basic & Dilutive) 8.15 7.46

REVIEW OF OPERATIONS

The fiscal year that has just ended has been positive and encouraging for your company and clear that we are on the right and intended path. The domestic market was showing good support to the product irrespective of the substantial reduction in the export to the advanced countries. The company took various initiatives to improve its profitability by diversification which helped the company to post an impressive performance for the year.

EXPANSION PLANS

- Expanding existing facilities such that to raise the total Steel production of the Company to 0.13 million TPA over the next few years and provide the foundation to maintain high quality growth and enhance value creation for its shareholders.

- As a part of its forward integration strategy, company is poised to seize the opportunities in the Iron & Steel Industry (both for steel & intermediary saleable products) through its Acquisition of Integrated Steel Plant.

- Exploring mining opportunities & securing raw materials and integrating backwards into mining of Iron Ore and Chrome Ore.

- Setting up a Beneficiated & Palletizing plant with an installed capacity of 12, 00,000 TPA in Madhya Pradesh, India for exploiting the mining operations & maximizing profits.

- Entering into Solar cells/ solar power plant equipments which aim to manufacture " electricity from Sun & Sand".

- Company has opened three branches across the country to curb the Indian steel demand.

- Your Company has also floated a 100% foreign subsidiary by name of "SIEL FZE" in UAE to exploit the Global opportunities which in turns boost the operations and maximize the wealth of shareholders.

INTERNAL CONTROL SYSTEM

The company has in place an adequate and appropriate system of internal control, commensurate with its size and nature of business to ensure efficacy of operations and compliance with applicable legislations. The company has comprehensive budgetary control system. The management regularly reviews actual performance.

SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

Corporate Social Responsibility occupies a central position in Companies activities and is an ongoing daily affair. Our Company's plant at Kottayi, Palakkad is a leading industrial unit in the region and therefore the local community look towards the Company for social support. Company continues to provide necessary support to economically backward people of the adjoining villages through various community development, education and healthcare programmes.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company all the time strives towards the development of its employees, to upgrade their skills and to boost the motivation levels of its human resource through various mechanisms. For enhancing the team spirit of the employees departmental quality circles and other awareness programmes being organized from time to time. We were successful in maintaining a healthy working environment and cordial industrial relations throughout the year. The efforts put in by the employees at all levels are highly commendable and have contributed immensely to the excellent performance of the company. Your Company HR team has been continuously striving for establishing a better and congenial relationship with Workmen, Unions and all external agencies resulting in achieving zero man days loss due to industrial unrest.

DIVIDEND

In order to augment resources for the expansion plans, your Directors, do not recommend distributing any dividend for the year ended 30 June 2011.

BOARD OF DIRECTORS

Appointment/Retirement in Board

¦k Mr. K K Agarwalla has given his unwillingness to continue on the board w e f the date of ensuing Annual General Meeting. The Directors included the resolution in the notice of Annual General Meeting indicating the intention of the above director not to be re- appointed. Your directors place on record their deep appreciation of the valuable services rendered by Mr K K Agarwalla during his directorship.

* Mr. Umesh Kumar Sahu aged about 40 years is a graduate in Commerce with vast experience in Steel Industry. He is specialised in erection, installation and functioning of steel industries and have an enviable record in this field. In addition to his general corporate experience, his vast and rich experience, consistent with Production strategy will provide operational excellence to the Company and a capability to drive innovation. He has extensive advisory experience on issue of strategy, driving performance improvement, change management, organisation building and human capital development your company decides to include the proposal for the appointment of Mr. Umesh Kumr Sahu as Director of the company.

* Mr. T N Sivakumar is a B.E. Electrical & Electronics Engg. M.Sc Engineering., in Applied Electronics & Servo Mechanism. He is having 34 years of vital industrial Experience. He is also a member of Member of Institution of Engineers India, Member of Institution of Engineering Technology London, Coimbatore productivity council, Coimbatore Dist. Small Scale Industries Association, Engineering Export promotion Council & Coimbatore Management Association. He has also worked for one year as senior research fellow in the Council of Scientific and industrial Research govt., of India. Your company decides to include the proposal for the appointment of Mr. T N Sivakumar as Independent Director of the company.

* Mr. Thiagaraja Iyer Venkatramani, Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

The proposals regarding the appointment/re- appointment of the aforesaid Director are placed for your approval.

PARTICULARS UNDER SEC 217

None of the employees of the Company was in receipt of remuneration above Rs. 2,00,000/= per month or Rs. 24,00,000/= per annum during the year under review and as such there is no need to give a declaration u/s 217 (2A) of the Companies Act, 1956

CORPORATE GOVERNANCE

The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Annual Report contains a separate Section for the same.

As required under the said provisions, the Company has obtained the Certificate from the Auditors of the Company which is annexed to forms part of the Annual Report.

The Management Discussion and Analysis Report forms part of the Annual Report.

DEPOSITS

The Company has not accepted any fixed deposits during the period under review.

SHARE CAPITAL AND LISTING OF SHARES

During the year under review, your company issued 32,723,400 & 88,399,980'fully paid up under lying Equity shares of Rs.10 Each through 1,090,780 &2,946,666 Global Depository Receipts on 4th August 2010 & 9th June 2011 respectively. These GDR's are listed in Luxembourg Stock Exchange. The securities of the company are listed and traded in compulsory dematerialized form on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.

SHARE WARRANTS

During the Year, Company has forfeited the share warrant money received against Fifty Lacs Shares of Rs.10 each with a Premium of Rs.5 due to the non receipt of remaining amount. The amount forfeited has been transferred Capital Reserves.

AMALGAMATION

Your Directors decided in the interest of the company not to pursue further for the proposed Amalgamation of Kerala Sponge Iron Limited with your Company due to continuing delay in complying with technical issues.

SUBSIDIARY

The Company also initiated the plans of controlling the business from large spectrum by setting up a business office in Sharjah Airport International Free Zone (SAIF ZONE) in Dubai, UAE through 100% wholly owned subsidiary company in the name of SIEL FZE on 25th August 2010 for general trading activities of the Company.

In view of the general exemption granted by the Ministry of Corporate Affairs from applicability of the provisions of Section 212 of the Companies Act, 1956 (Act), the stand alone audited financial statements of the subsidiary company is not attached to this report. As per the general exemption, a statement containing brief financial details of the company's subsidiary for the vear ended 31st March, 2011 is included in the Annual Report. Copies of Annual Report of the subsidiary companies and related information, will be made available free of cost to the shareholders, on request. Annual Accounts of the subsidiary company are available for inspection at registered office of the company.

Audited Consolidated Financial Statements prepared in accordance with prescribed accounting standards, form part of this Annual Report.

AUDITORS & AUDITORS REPORT

M/s. Sunil Johri & Associates, Chartered Accountants and M/s Mahadevan & Sivarajan, Chartered Accountants Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from M/S. Sunil Johri & Associates, Chartered Accountants and M/S. Mahadevan & Sivarajan.. Chartered Accountants, to the effect that their appointment, if made would be within the prescribed limits under 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies Act,1956.

The observation and comments given by auditors in this report read together with notes to Accounts are self explanatory and hence do not call for anv further comments under Section 217 of the Companies Act,1956.

DIRECTOR'S RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956 the Directors state that:-

In the preparation of the Annual Accounts, all applicable Accounting Standards have been followed and proper explanations relating to material departures, if any have been furnished.

Accounting policies as listed in Schedule M & M-l to the financial statements have been made so as to give a true and fair view of the state of affairs of the Company for the financial year 2010-11 for the period ended on 30th June,2011 and of the Profit of the Company for the Accounting Year ended on that day.

Proper and sufficient care for the maintenance of adequate accounting records has been taken in accordance with the provisions of this Act so as to safeguard the assets of the Company and to prevent and detect fraud and other irregularities and The Annual Accounts have been prepared on a going concern basis.

The following accounting standards were not applicable to the company during the year under review due to non-occurrence of events and transactions covered under the scope of these accounting standards: -

AS- 7 Accounting for construction

AS -13 Accounting for amalgamation

AS - 23 Accounting for investments in associates in consolidated financial statements

AS - 24 Discontinuing operation

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

The particulars as required to be disclosed pursuant to Section 217 (1) (e) of the Companies Act,1956 read with Companies ( Disclosures of Particulars in the Report of Board of Directors) Rules 1988 are given in Annexure to Directors report.

ACKNOWLEDGEMENTS

Your directors acknowledge the assistance and goodwill received from the concerned departments of the State and Central Governments, Financial Institutions, Banks, Customers, Selling Agents, Dealers, Distributors, employees at all levels and the Shareholders.

For Southern Ispat & Energy Limited

Sd/- Sd/-

Vivek Agarwal E Sankaranarayana,

Chairman & Director

Managing Director

Date: 21/11/2011

Place: Palakkad.


Jun 30, 2010

The Directors take immense pleasure in presenting this 15th Annual Report together with the audited accounts of the Company for the financial year 2009-10 for the period of 15th Months ended 30,h June 2010.

Financial Results (Rs Million).

Particulars 09-10 08-09

Sales & Other Income 3288.71 392.61

Direct Expenditure 3141.68 368.06

Administrative & Financial Expenditure 18.03 11.59

Depreciation 11.91 2.58

Profit before Taxes 117.09 10.37

Taxes - Current Tax 19.99 0.77

- Deferred Tax 14.80 2.23

- Fringe Benefit Tax NIL 0.02

Profit After Taxes 82.30 7.35

Transfer to General Reserves 10.62 NIL

Balance Carried to Balance sheet 71.67 7.35

Earnings per Share (Basic) 7.46 1.03

Earnings per Share (Dilutive) 6.60 1.03

REVIEW OF OPERATIONS

The fiscal year under review was an important year for the domestic industry. The year started with signs showing the growth, amidst the global slowdown that was still prevailing. The domestic market was showing good support to the product irrespective of the substantial reduction in the export to the advanced countries. The company took various initiatives to improve its profitability by diversification which helped the company to post an impressive performance for the year.

EXPANSION PLANS

The proposal to takeover M/s. Kerala Sponge Iron Limited is on the verge of completion and is expected to materialise during the next financial year. Further expansion by doubling its production capacity and installation of Power Plant in the new unit are to be completed within a few months, which will enhance the profitability of your Company and your Company will become an Integrated Steel Plant.

For securing raw material supplies, your company is examining proposals for acquisition of equity stakes in Iron Ore mines in Chattarpur district of Madhya Pradesh.

The companys proposed plan of acquiring of New-Tech Forge and Foundry Ltd an Integrated Steel Plant with an Annual Capacity of 1,20,000 MT in Gujarat is going according to its plan. This will enable the company to have a fully owned subsidiary which is capable of producing all ranges of product IB steel sector. This will enable the company to have a fully owned subsidiary which is capable of producing all ranges of product IB steel sector. It manufactures Sponge Iron, Billets, Round Steel, Machine Flanges, Bearings, Gears, Crankshaft, connecting Rod, Camshaft etc. It is the only integrated forging & foundry plant which manufacturing Sponge Iron to alloy steel products. This will steer the company towards meeting its strategic objectives of achieving profitability through growth and customer satisfaction. The acquisition will result in capacity expansion for SIEL of steel will go to 3 lakhs tonne per annum. SIEL will expand its reach to Geographical area of Gujarat with plant facility in Kutch and towards international market as New- Tech Forge and Foundry Ltd already have presence in sale and distribution level in international market.

The Company also initiated the plans of controlling the business from large spectrum setup an wholly owned subsidiary company in Sharjah Airport International Free Zone ( SAIF ZONE) in Dubai, UAE in the name of Southern Ispat and Energy Ltd (FZE) on 25th August 2010.

Precisely the expansion plan is making the company to integrate its operations & maximizes the profit and thus earning per Share (EPS).

INTERNAL CONTROL SYSTEM

The Company has adequate internal control systems which are evaluated periodically by the Audit Committee and the systems are adequate commensurating with the operations of the Companies.

SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

Corporate Social Responsibility occupies a central position in SIELs activities and is an ongoing daily affair. Our Companys plant at Kottayi, Palakkad is a leading industrial unit in the region and therefore the local community look towards the Company for social support.

SIEL continues to provide necessary support to economically backward people of the adjoining villages through various community development, education and healthcare programmes.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company all the time strives towards the development of its employees, to upgrade their skills and to boost the motivation levels of its human resource through various mechanisms. For enhancing the team spirit of the employees departmental quality circles and other awareness programmes being organized from time to time. We were successful in maintaining a healthy working environment and cordial industrial relations throughout the year. The efforts put in by the employees at all levels are highly commendable and have contributed immensely to the excellent performance of the company.

SIEL HR team has been continuously striving for establishing a better and congenial relationship with Workmen, Unions and all external agencies resulting in achieving zero man days loss due to industrial unrest.

DIVIDEND

In order to augment resources for the expansion plans, your Directors, do not recommend distributing any dividend for the year ended 3oth June 2010.

BOARD OF DIRECTORS

Mrs. Anusuya Devi Agarwal and Mrs. Richa Agarwal were given their unwillingness to continue on the board w e f the date of ensuing Annual General Meeting. The Directors included the resolution in the notice of Annual General Meeting indicating the above directors not to be re-appointed. Your directors place on record their deep appreciation of the valuable services rendered by Mrs. Anusuya Devi Agarwal and Mrs Richa Agarwal during their tenure as directors.

Mr. M Eswaran, an Independent Director whose sudden and untimely death on 11th December 2009 has created a casual vacancy in the Board of Directors. He has made invaluable contribution towards the progress of the company. The Board held an un official meeting on 12.12.2010 to condole the untimely death of Mr. M Eswaran and conveyed heart-felt condolences to bereaved family. The casual vacancy created was filled in the next Board Meeting held on 24th December 2009 by appointing Mr. Thiagaraja Iyer Venkatramani.

Mr. Vivek Agarwal was appointed as Managing Director of the Company for a period of 05 Years w e f 25-09-2006.

His tenure is going to be expiring on 24-09-2011.The Board after considering his invaluable contribution towards growth of the company has decided to review the terms and condition of appointment approved in the Annual General Meeting held on 20-07-2007. Hence his term of engagement as Managing Director is extended for another 05 Years w e f 27-12-2010 on a remuneration of Rs.50000/- per month Consolidated. Your Company decided to include the proposal of extension of terms and conditions of Mr. Vivek Agarwal, Managing Director in the notice of AGM for your approval

Mr. Thiagara Iyer Venkatramani who was appointed by the Board of Directors of your company in its meeting held on 24th December 2009 as an Additional Director w.e.f 24th December 2010 in terms of the Articles of Association of the Company, holds office upto the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 257 of the Companies Act, 1956 from a shareholder of your company, signifying his intention to propose the name of Mr. Thiagaraja Iyer Venkatramani for appointment as Independent Director of your company liable to retire by rotation.

Mr. R Sivaramakrishnan who was appointed by the Board of Directors of your company in its meeting held on 22nd March 2010 as an Additional Director w.e.f 22nd March 2010 in terms of the Articles of Association of the Company, holds office upto the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 257 of the Companies Act, 1956 from a shareholder of your company, signifying his intention to propose the name of Mr. R Sivaramakrishnan for appointment as Independent Director of your company liable to retire by rotation.

Mr. V Manikandan , Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

Other appointment/Change in Board

K K Agarwalla: Your Company also received notice under Section 257 of the Companies Act from a shareholder of the company to appoint Mr. K K Agarwalla the Executive Officer of the Company since 01st January 1999 as Whole time Director. Mr. K. K. Agarwalla, aged about 63 years, is one of the founder promoter-Directors of the Company. Presently he is the Executive Officer of the Company. He is well experienced in various fields of steel industry.

Mr. Agarwalla was associated with Mr. Vivek Agarwal in setting up SIL, which was then the first steel industry in Kerala to be listed with the Stock Exchanges. Mr. Agarwalla has been assisting in day to day operations of the Company to the CMD.. His experience and expertise are being fully utilised for development of the Company.

Your company decides to include the proposal for the appointment of K K Agarwalla as Whole Time Director under designation Executive Director for a period of 05 years.

E Sankaranarayana : Your Company also received notice under Section 257 of the Companies Act, 1956 from a shareholder of the company to appoint Mr. E Shankaranarayana as Director liable to retire by rotation. Mr. E. Sankaranarayana is an energetic and experienced business stalwart aged about 64 Years, who is a Science Graduate with Technical interest, having experience of 40 years in steel industry. He is specialised in erection, installation and functioning of steel industries and have an enviable record in this field. He is inducted into the Board in view of his track record to utilise his experience and capacities.The Board decided to pay him Rs. 25000.00 per month Consolidated during the tenure subject to approval of members by Special Resolution in the ensuing Annual General Meeting

The proposals regarding the appointment/re-appointment of the aforesaid Directors are placed for your approval.

PARTICULARS UNDER SEC 217

None of the employees of the Company was in receipt of remuneration above Rs. 2,00,000/= per month or Rs. 24,00,000/= per annum during the year under review and as such there is no need to give a declaration u/s 217 (2A) of the Companies Act, 1956

CORPORATE GOVERNANCE

The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the corporate governance. The Annual Report contains a separate Section for the same.

As required under the said provisions, the Company has obtained the Certificate from the Auditors of the Company which is annexed to forms part of the Annual Report.

The Management Discussion and Analysis Report forms part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA)of the Companies Act, 1956 the Directors state that:-

In the preparation of the Annual Accounts, all applicable Accounting Standards have been followed and proper explanations relating to material departures, if any have been furnished.

Accounting policies as listed in Schedule L to the financial statements have been made so as to give a true and fair view of the state of affairs of the Company for the financial year 2009-10 for the period of 15 months ended as on 30th June,2010 and of the Profit of the Company for the Accounting Year ended on that day

Proper and sufficient care for the maintenance of adequate accounting records has been taken in accordance with the provisions of this Act so as to safeguard the assets of the Company and to prevent and detect fraud and other irregularities and

The Annual Accounts have been prepared on a going concern basis.

The following accounting standards were not applicable to the company during the year under review due to non-occurrence of events and transactions covered under the scope of these accounting standards: -

AS - 14 Accounting for amalgamation

AS - 21 Consolidated financial statements

AS - 23 Accounting for investments in associates in consolidated financial statements

AS - 24 Discontinuing operation

AS - 7 Accounting for construction

AS - 11 Accounting for the effects of changes in Foreign Exchange rates

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

The particulars as required to be disclosed pursuant to Section 217 (1) (e) of the Companies Act,1956 read with Companies ( Disclosures of Particulars in the Report of Board of Directors) Rules 1988 are given in Annexure: A forming part of this report.

AUDITORS AND AUDITORS OBSERVATION

M/S. Sunil Johri & Associates, Chartered Accountants and M/S. Mahadevan & Sivarajan, Chartered Accountants Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received letters from M/S. Sunil Johri & Associates, Chartered Accountants and M/S. Mahadevan & Sivarjan , Chartered Accountants, to the effect that their appointment, if made would be within the prescribed limits under 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies act,1956.

Reply to Auditors observation is given as addendum to the report as required under Section 217 (3) of the Companies Act, 1956.

DEPOSITS

The Company has not accepted any fixed deposits during the period under review.

SHARE WARRANTS

The Company during the Financial year 2009-2010 ended on 30th June 2010 issued 50 Lakhs Share Warrants of Rs.10 each at a premium of Rs.5 each to 04 Allottees of Promotor Group on 22nd July 2009 and 01 Crore Share warrants of Rs.10 each with a Premium of Rs.22 each to 15 Allottees of Non Promoters both with an option to convert into one Equity Share of Rs.10 each through preferential allotment as per SEBI Guidelines.

ISSUE OF GDR

Your company issued 32,723,400 fully paid up under lying Equity shares of Rs.10 Each with an offer price of Rs.14.10 through 1,090,780 Global Depository Receipts on 10th August 2010. These GDR are listed in Luxembourg Stock Exchange .

TRADING PERMISSION IN NATIONAL STOCK EXCHANGE

Your Company got the trading permission to deal the existing paid up capital in National Stock Exchange, Mumbai under the Symbol " SOUISPAT" w e f 01-10- 2010 .

SIEL (FZE)

The Company also initiated the plans of controlling the business from large spectrum setup a wholly owned subsidiary of Southern Ispat and Energy Limited in Sharjah

Airport International Free Zone ( SAIF ZONE) in Dubai, UAE in the name of Southern Ispat and Energy Ltd (FZE) on 25th August 2010 for general trading activities of the company.

ACKNOWLEDGE MENTS

Your directors acknowledge the assistance and goodwill received from the concerned departments of the State and Central Governments, Financial Institutions, Banks, Customers, Selling Agents, Dealers, Distributors, employees at all levels and the Shareholders.

For, Southern Ispat & Energy Limited

Vivek Agarwal Richa Agarwal

Chairman & Managing Director Director

Date: 27/11/2010 Place: Palakkad.

 
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