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Directors Report of Splendid Metal Products Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Twenty Fifth Annual Report of your Company together with the Audited Financial Statements of Accounts for the Financial Year ended 31st March, 2015.

Company 's Performance

Your Directors hereby report that the Company has achieved a turnover of Rs. 345159.78 lakhs upto 31.03.2015 as against the turnover of Rs. 284441.87 lakhs during the previous financial year ended 31.03.2014.

The highlights of the Financial Results are as follows :

(Rs. In Lakhs)

Particulars 2014-2015 2013-2014

Profit Before Depreciation & Interest 26052.58 17952.84

Financial Costs 21589.50 17255.64

Depreciation 3896.73 3828.66

Profit Before Tax 566.35 (3131.46)

Provision for Tax

* Current Tax 199.67 2.23

* Deferred Tax 244.46 681.88

Profit After Tax 9376 (3815.56)

Balance of profit brought forward from 11040.67 14873.62

earlier years

Add: Excess Provision for IT written off -

Profit available for appropriation 11134.41 11058.06

Appropriations:

Proposed Dividend:

* Equity - -

* Preference 14.93 14.93

- Dividend Tax 2.64 2.54

Balance of Profit 11116.84 11040.59

Operations & Overall Performance:

During the year under review, your Company reported total income of Rs.346189.69 Lakhs as against Rs.286561.90 lakhs of previous year. Your company posted profit before tax of Rs.566.35 lakhs as against loss of Rs.3131.46 lakhs in the previous year. After making a provision of Rs.21589.50 Lakhs towards interest and Rs.3896.73 Lakhs towards depreciation, the current financial year closed with a net profit of Rs.93.76 Lakhs as against net loss of Rs.3815.56 Lakhs last year.

The net worth of the Company as on 31st March, 2015 is Rs 69691.17 lakhs against Rs.69360.00 lakhs in 2013-14. Net worth is increased by Rs. 331.17 lakhs.

Consolidated turnover of Rs.394248.21 lakhs as against Rs.337328.53 lakhs in the previous year and Consolidated Profit before Tax of Rs.1473.98 lakhs as against loss of Rs.2057.74 lakhs in the previous year.

Despite adverse Global as well as Indian economy, your Company performed moderately and Sujana Metal looks ahead to a hopeful further systematic robustness in the business and operation. Your Directors continue to identify opportunities to leverage and introduce technology to improve our performance, be it in operations, people management, and knowledge management and to strengthen proactive stakeholder relations.

Dividend:

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No:2592/SASF/CBO and 5938/SASF/CBO dated 28.06.2005 and 29.10.2005 respectively, your Company is required to pay the dividend of Rs. 14.93 Lakhs (Previous year Rs.14.93 Lakhs) which represents 1% on 14,93,365 Cumulative Redeemable Preference Shares(CRPS) of Rs.100/-each to the holders of Cumulative Redeemable Preference Shares for the year under review, Further your Company also provided a provision of dividend tax to the extent of Rs. 2.64 Lakhs (Previous year Rs.2.53 Lakhs)

In view of the current steel scenario, the Board of Directors are of the opinion that Cash flow should be conserved and hence decided to plough back the entire profit earned by the Company and have not recommended any dividend.

Your Company has always emphasized on achieving operational excellence and continues to focus on customer satisfaction and delight. Backed by strong fundamentals and robust plans your Company is fully prepared to face current challenges and benefit from expected medium and long term growth in Indian economy.

Prospects:

The Government is undertaking proactive policy initiatives for Infrastructure development and Industrial growth, which will accelerate steel demand in line with economic growth. However, concerns like poor availability of iron ore and inconsistent quality as well as high import dependency of coking coal need to be addressed.

Material Changes and Commitments:

There is no material change and commitment has occurred, affecting the financial position of the Company, between the end of the financial year of the Company i.e. 31st March, 2015 and the date of this report.

Details of significant and material Orders passed by the regulators or courts or tribunals impacting the going concern status of the Company and the Company 's operations in future:

Company petition (C.P.175/2013) filed by Standard Bank (Mauritius) Limited (SBML) against the Company u/s 433 of the Companies Act, 1956, in connection with the corporate guarantee furnished by the Company on behalf of its step down subsidiary Optimix Enterprises Limited, Mauritius was admitted by the Hon 'ble High Court of Judicature at Hyderabad for the State of Telangana and The State of Andhra Pradesh. However, the Company has filed appeals before the appropriate judicial authority and also exploring the process of settlement with Standard Bank (Mauritius) Limited. Except the above, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company and the Company 's operations in future.

Deposits

Your Company has not accepted Deposits from Public or Members under Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 for the year under review.

Related Party Transactions

The Board of Directors, on recommendation of the Audit Committee framed a policy for Related Party Transaction which includes matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report. The Policy is also posted in the Investors section of the Company 's website.

All Related Party Transactions that were entered into during the financial year were on an arm 's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The requisite details of the related party transactions entered into during the financial year are provided in Annexure-I included in this report.

Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, where ever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis.

None of the Directors, other than to the extent of their shareholding, receipt of remuneration / commission, has any pecuniary relationships or transactions vis-a-vis the Company.

Corporate Social Responsibility:

The Board of Directors, on recommendation of the Corporate Social Responsibility Committee framed a Corporate Social Responsibility Policy in consonance with Section 135 of the Companies Act, 2013 read with the rules framed there under duly indicating the activities to be undertaken by the Company as specified in the Schedule VII of the Companies Act, 2013. The Corporate Social Responsibility Policy is posted in the Investors section of the Company 's website.

The Annual Report on CSR activities is annexed herewith as Annexure- II and forms part of this report.

Directors ' Responsibility Statement:

Directors' Responsibility Statement as required under the provisions of Section 134(3)(c) of the Companies Act, 2013, is given in the Annexure -III attached hereto and forms part of this Report.

Auditors:

(a) Statutory Auditors:

The term of office of the Company's existing Statutory Auditors M/s. CRK & Associates, Chartered Accountants, Hyderabad, will come to an end at the conclusion of the ensuing Annual General Meeting of the Company. It is proposed to appoint M/s T. Raghavendra & Associates, Chartered Accountant (Registration No. 003329S ), Hyderabad, as Statutory Auditors of the Company for the financial year 2015-16 at such remuneration as may be fixed by the Board of Directors. Your Board of Directors recommended the appointment of M/s T. Raghavendra & Associates, Chartered Accountants (Registration No.003329S), Hyderabad, as Statutory Auditors of your Company. Your approval for such appointment is solicited. M/s T. Raghavendra & Associates, has furnished written consent and a certificate of their eligibility obtained as required under second proviso of Section 139(1) of the Companies Act, 2013 read with the rules made thereunder. In terms of the Listing Agreement, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI.

Notes to the accounts as referred in the Auditor's Report are self-explanatory and does not contain any qualification and therefore, do not call for any further comments or explanations.

(b) Cost Auditors:

The Board of your Company has reappointed M/s. Nageswara Rao& Co, Cost Accountants [Firm No.000332] as the Cost Auditor of the Company for financial year 2015-16 pursuant to provisions of Section 148 and other applicable provisions of the Companies Act 2013. The said Auditors have confirmed that their appointment, if made, shall be within the limits as prescribed under Section 141(3) of the Companies Act, 2013. The Cost Audit Report shall be submitted along with full information and explanation on every reservation or qualification contained therein, if any, and Annexure to the Central Government within stipulated time period.

As required by Section 148 of the Companies Act,2013, necessary resolution has been included in the notice convening the Annual General Meeting seeking ratification by the members to the remuneration proposed to be paid to the cost auditors for the financial year ending 31st March,2016.

The Cost Audit Reports the financial year ended March 31, 2014 were filed within the prescribed period.

(c) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules framed there under, the Board of Directors, on recommendation of the Audit Committee, appointed Shri Y Ravi Prasada Reddy, Practicing Company Secretary to undertake the secretarial audit of the Company. The secretarial audit report issued by Shri Y Ravi Prasada Reddy Practicing Company Secretary for the financial year ending 31st March, 2015 is given in the Annexure - IV attached hereto and forms part of this Report. There are no qualifications, reservations or adverse remarks made by the secretarial auditor and the observation made is self explanatory and requires no further explanation from the Board.

Share Capital:

The paid up equity share capital as on 31st March, 2015 was Rs.10072.54 Lakhs.

In pursuance of Special Resolution passed by the shareholders of the company through postal ballot on 10th October 2014, to issue 10,46,60,000 equity shares of Rs.5/- each at par [as the price calculated in accordance with the Regulations for Preferential Issue under SEBI (ICDR) Regulations is less than the face value] to the promoters/promoters' group against the Promoters' contribution brought in the form of unsecured loans of Rs.52.33 Crores (Rupees Fifty Two Crores and Thirty Three Lakhs only) as per the CDR package, by way of preferential allotment, the Company allotted 51,00,000 equity shares of Rs.5/- each to the promoters on 14.02.2015.

The Company has not issued any share with differential voting rights nor has granted any stock options or sweat equity as on 31st March, 2015. None of the Directors of the Company hold instruments convertible into equity shares of the Company.

Extract of Annual Return:

Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed there under, the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure - V and forms part of this Report.

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are given in the Annexure -VI attached hereto and forms part of this Report.

Meetings:

During the year under review 5 (Five) board meetings were held on May 30th, 2014, August 12th, 2014, August 28th, 2014, November 13th, 2014 and February 14th, 2015. The maximum time gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013.

Directors:

During the year under review, the members of the Company at the AGM held on September 30th, 2014 appointed Shri Dr V Malakonda Reddy, Shri J. Ramakrishnan and Dr K. Srinivasa Rao as Independent Directors under Section 149 of the Act and Clause 49 (revised) of the Listing Agreement to hold office for 5 (five) consecutive years.

The Board has appointed Smt Sandhyasri, as Additional Director (Independent Director) w.e.f March 30th, 2015 and now it is recommended her appointment to be regularized and be appointed for a period of 5 (Five) years i.e from March 30th , 2015 to March 29th, 2020. Her appointment on the Board shall also fulfill the requirement of a Woman Director on the Board of the Company as required under the Companies Act, 2013 and clause 49 of the Listing Agreement.

The Board of Directors of the Company, on the recommendation of the Nomination and Remuneration Committee, re-appointed Shri S.Hanumantha Rao as a Director-Finance of the Company with effect from May 27th, 2015, subject to the approval of the members, at the forthcoming Annual General Meeting.

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Shri. R.K.Birla, Managing Director of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

The Resolutions proposing their reappointment/ appointments as Directors will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they continue to meet with the criteria of independence as prescribed under subsection (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Shri Y.S.Chowdary, a Chairman and Promoter-Non Executive Director of the Company resigned from the Board of Directors with effect from October 15th, 2014. The Board placed on record its appreciation for the outstanding contributions made by Shri Y.S.Chowdary during his tenure.

None of the Directors of your Company is disqualified under Section 162 (2) of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors ' Report.

The following persons are Key Managerial Personnel of the Company:

Shri R.K.Birla : Managing Director

Shri Ch.Narayana Rao: Chief Financial Officer

Shri Shaik Ibraheem : Company Secretary

During the year there is no change in the role of the aforesaid KMP.

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of this report.

Board Evaluation :

The Board of Directors evaluated the annual performance of the Board as a whole, its committee's and the directors individually in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement in the following manner:

* Structured evaluation forms, after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance, for evaluation of the performance of the Board, its Committee's and each director were circulated to all the members of the Board along with the Agenda Papers.

* The members of the Board were requested to evaluate by filling the evaluation forms and the duly filled in evaluation forms were required to be sent to the Company Secretary in a sealed envelope or personally submitted to the Chairman at the concerned meeting.

* The Board also provided an individual feedback to the concerned director on areas of improvement, if any.

A separate meeting of Independent Directors was held on 30th March, 2015 to evaluate the performance evaluation of the Chairman, the Non Independent Directors, the Board and flow of information from management.

Particulars of Employees:

The information required pursuant to the provision of Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, are set out in Annexure-VII of this Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis, forming part of this report as required under Clause 49 (VIII)(D) of the Listing Agreement with the Stock Exchanges is attached hereto as Annexure- VIII and forms part of this Report.

Corporate Governance:

Your Company is committed to principles of good Corporate Governance. The Board of Directors ensures that your Company is in compliance with all the applicable provisions of the Clause 49 (as amended) of the Listing Agreement pertaining to Corporate Governance. A detailed report on Corporate Governance is attached as Annexure-IX and forms part of this report. Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

Subsidiaries of the Company:

Details of the subsidiaries are given below:

S. Name of the No. Company Status Nature of Business

1 Glade Steel Subsidiary It is engaged in the business Private Limited of manufacturing, distributing, supplying, selling and other wise dispose of Rounds, Flats, Squares, Angles, Channels, Girders and Allied Products with installed capacity of 75,000 MT/per annum of re-rolling and 50,000 MT/per annum of MS ingots

2 Asian Tide Wholly Owned It was incorporated in Hong Enterprises Subsidiary Kong for carrying on the Limited (WOS) business of trading of goods and services with accent on procuring raw materials (in bulk) for manufacturing activities of the Company (melting scarp for its rolling division) and sale surplus in the market.

3 Alpha Ventures Wholly Owned Alpha Ventures Limited has been Limited Subsidiary promoted to carry out any object (WOS) Islands not prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands. As per the law prevailing in Cayman Islands

4 Optimix Stepdown It was incorporated in Mauritius Enterprises Subsidiary for carrying on the business Limited (WOS of or businesses which are not Asian Tide prohibited under the laws for Enterprises the time being in force in the Limited) Republic of Mauritius. This includes (inter alia) to engage in the business of all forms of investments including but not limited to venture capital and private equity investments whether directly, indirectly through any special purpose vehicles or otherwise.

S. Name of the Country of Percentage of No. Company Incorporation ownership interest

1 Glade Steel India 51.15% Private Limited

2 Asian Tide Hong Kong 100% Enterprises Limited

3 Alpha Ventures Cayman 100% Limited

4 Optimix Mauritius 100% Enterprises Limited

A separate statement containing the salient features of the Financial Statement for the financial year ended 31st March, 2015 of the aforesaid Subsidiary Companies are included in the Annual Report as Form AOC-1 as an 'Annexure -X '. The Financial statements of the said Subsidiary Companies are available for inspection by the Shareholders at the Registered office of your Company. Your Company undertakes that the Financial statements of the Subsidiaries Companies shall be made available to the Shareholders of the Company on demand.

Consolidated Financial Statements:

The consolidated financial statements of your Company for the financial year 2014-15, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI).

The consolidated financial statements have been prepared on the basis of audited financial statements of the Company and its subsidiaries.

Audit Committee:

Your Company has constituted an Audit Committee as per the requirements of Section 177 of the Companies Act, 2013. The details of the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act, 2013, is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Audit Committee.

Internal Control Systems and their adequacy:

Your Company has an effective Internal Control System to prevent fraud and misuse of Company 's resources and protect shareholders ' interest. Your Company has an independent Internal Audit Department to monitor and review and focus on the compliances of various business processes. The internal audit report alongwith audit findings and tracking of process improvements & compliances is presented for review to the Audit Committee of Board of Directors.

Vigil Mechanism:

The Board of Directors, on recommendation of the Audit Committee, established a vigil mechanism by framing a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Vigil Mechanism framework ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination shall be meted out to any person for a genuinely raised concern. The designated officer/ Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud/ misconduct.

Remuneration Policy:

The Board of Directors, on recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy for selection, appointment and remuneration of Directors, KMP and Senior Management and matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report.

The Policy is also posted in the Investors section of the Company 's website www.sujana.com.

Particulars of Loans, Guarantees or Investments:

Particulars of Loans, Guarantees and Investments as required under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the Financial Statements.

Risk Management :

The Risk Management programme at SMPL is focused on ensuring that risks are known and addressed. The Board of Directors, on recommendation of the Audit Committee, established a robust Risk Management framework by framing a Risk Management Policy to deal with all risks including possible instances of fraud and mismanagement, if any. The Risk Management Policy details the Company 's objectives and principles of Risk Management along with an overview of the Risk Management process, procedures and related roles and responsibilities.

The Board is of the opinion that there are no elements of risks that may threaten the existence of the Company. The board periodically tracks the progress of implementation of the Risk Management policy.

Industrial Relations:

Your directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

Sexual Harassment Policy:

The Company as required under the provisions of "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013 " has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto.

In the year under review, the Company has not received any complaint under the said Policy.

Environment and Social Obligation:

The Company 's plants comply with all norms set up for clean and better environment by the competent authorities. The Company undertakes regular checks / inspections including certification for the maintenance of the environment. The Company values environmental protection and safety as the major considerations in its functioning. The Company has adequate effluent Treatment Plants to prevent pollution. The Company is continuously endeavoring to improve the health and quality of life in the communities surrounding its industrial complexes.

Human Resource Management:

The Company believes that Human Resource is its most valuable resource, which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains. Your Directors would like to place on record their deep appreciation of all employees for rendering quality services and to every constituent of the Company be its customers, shareholders, regulatory agencies or creditors. Industrial relations have remained harmonious throughout the year.

Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately the covered.

Quality:

Your Company accorded high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard.

Appreciations:

The Board of Directors take this opportunity to express their deep sense of gratitude to the Central, State Government and Local Authorities, Financial Institutions, Banks, Customers, Dealers, Vendors and all the stakeholders for their continued cooperation and support to your Company.

The Board of Directors wishes to express its appreciation to all the employees of the Company for their outstanding contribution to the successful operations of the Company.

The Board specially thank to the shareholders for their continued confidence and faith in the Company.

BY ORDER OF THE BOARD

R.K.BIRLA S.HANUMANTHA RAO Place: Hyderabad Managing Director Director-Finance Date: August 28th 2015 DIN:00118776 DIN:00118801




Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Twenty Fourth Annual Report of your Company together with the Audited Statement of Financial Accounts for the Financial Year ended 31st March, 2014 comprising of 12 months from 01.04.2013 to 31.03.2014.

1. Company''s Financial Results:

The highlights of the financial results are as follows:

(Rs. In Lakhs) 2013-2014 2012-2013 Particulars (12 Months) (12 Months)

Net sales/Income from Operation 284441.87 364985.48

Other Income 2116.89 1541.59

Total Income 286558.76 366527.07

Operating Profit before 17952.84 20176.62

Depreciation & Interest

Interest 17255.64 18099.73

Depreciation 3828.66 4123.01

Profit /loss before tax (3131.46) (2046.12)

Provision for tax 684.10 (20.01)

Profit/loss before extra-ordinary (3815.56) (2026.11)

items

Extra-ordinary items 0.00 0.00

Profit/loss after extra-ordinary (3815.56) (2026.11)

items

2. Operations & Overall Performance:

During the year under review, your Company reported total income of Rs.286558.78 Lakhs as against Rs.366527.07 lakhs of previous year. The operating EBIDTA for the year was Rs.17952.84 lakhs as against Rs.20176.62 lakhs in the previous year. After making a provision of Rs.17255.64 Lakhs towards interest and Rs.3828.66 Lakhs towards depreciation, the current financial year closed with a net loss of Rs.3815.56 Lakhs as against net loss of Rs.2026.11 Lakhs last year.

The net worth of the Company as on 31st March, 2014(consisting of 12 months) is Rs 69360.00 lakhs against Rs. 73192.96 lakhs in 2012-13 (consisting of 12 months). Net worth is decreased by Rs. 3832.96 lakhs due to losses.

Despite adverse Global as well as Indian economy, your Company performed moderately and Sujana Metal looks ahead to a hopeful further systematic robustness in the business and operation. Your Directors continue to identify opportunities to leverage and introduce technology to improve our performance, be it in operations, people management, and knowledge management and to strengthen proactive stakeholder relations.

3. Industrial Relations:

Your directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

4. Prospects:

With the restructuring of its debt and implementation of the CDR package as approved by the CDR Cell, your Company believes that it will gradually be able to progress in its operations towards profitability. Your Company has been extremely fortunate to have full support of its employees during this period and all efforts are being made to garner support from the customers of the Company.

The Government is undertaking proactive policy initiatives for Infrastructure development and Industrial growth, which will accelerate steel demand in line with economic growth. However, concerns like poor availability of iron ore and inconsistent quality as well as high import dependency of coking coal need to be addressed.

5. Withdrawal of Scheme of Amalgamation:

Scheme of Amalgamation between (1) M/s Lakshmi Gayatri Industries Private Limited, (2) M/s Glade Steel Private Limited, (3) M/s Sri Ganga Steel Enterprises Private Limited and (4) M/s Topaz Steel India Limited with M/s. Sujana Metal Products Limited was withdrawn by the Company and the order on withdrawal of the Company''s petition was issued by the Hon''ble High Court, AP on 17.12.2013.

6. Subsidiaries of the Company:

Details of the subsidiaries are given below: S. Name of the No Company Status Nate of Business

1 Glade Steel Subsidiary It is engaged in the business of Private manufacturing, distributing, Limited supplying, selling and other wise dispose of Rounds,Flats, Squares, Angles, Channels, Girders and Allied Products with installed capacity of 75,000 MT/per annum of re-rolling and 50,000 MT/per annum of MSingots

2 Asian Tide Wholly It was incorporated in Hong Kong for Enterprises Owned carrying on the Limited Subsidiary business of trading of goods and services with accent on procuring raw materials (in bulk) for manufacturing activities of the Company (melting scarp for its rolling division) and sale surplus in the market.



3 Alpha Wholly Alpha Ventures Limited has been Ventures Owned promoted to carry out Limited Subsidiary any object not (WOS) prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands. As per the law prevailing in Cayman Islands

4 Optimix Stepdown It was incorporated in Mauritius for Enterprises Subsidiary carrying on the business or businesses Limited (WOS of which are not prohibited under the Asian Tide laws for the time being in force inthe Enterprises Republic of Mauritius. This includes Limited) (inter alia) to engage in the business of all forms of investments including but not limited to venture capital and private equity investments whether directly, indirectly through any special purpose vehicles or otherwise.

S. Name of the Country of percentage No Company Incorporation of ownership Intrest

1 Glade Steel India 51.15% Private Limited

2 Asian Tide Hong Kong 100% Enterprises Limited 3 Alpha Cayman 100% Ventures Islands Limited 4 Optimix Mauritius 100% Enterprises Limited

Your Company has availed the general exemption from attaching a copy of the Balance Sheet, Profit and Loss Account, Directors'' Report and Auditors'' Report of the subsidiary Companies and other documents required to be attached under Section 212(1) of the Companies Act, 1956, to the Balance Sheet of your Company. The said exemption is granted vide Circular No. 5/12/2007-Cl-III issued by Ministry of Corporate Affairs dated 08.02.2011.

Accordingly, the said documents of subsidiary Companies are not being attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiary Companies is contained in the report. The annual accounts of the subsidiary Companies are open for inspection by any member/ investor at the Company''s Registered office and the Company will make available these documents and the related detailed information upon request by any investor of the Company or any investor of its subsidiary Companies who may be interested in obtaining the same. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2014 is annexed to this Report.

In terms of Clause 32 of the Listing Agreement with the Stock Exchanges and as prescribed by Accounting Standard 21 notified by the Government of India under Section 211(3C) of the Companies Act, 1956, the Audited Consolidated Financial Statements are annexed.

7. Corporate Governance:

Your Company is committed to principles of good Corporate Governance. The Board of Directors ensures that your Company is in compliance with all the applicable provisions of the Clause 49 (as amended) of the Listing Agreement pertaining to Corporate Governance. A detailed report on Corporate Governance is attached and forms part of this report. Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

8. Management Discussion and Analysis Report:

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

9. Directors:

In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Shri Y.S. Chowdary and Shri G. Srinivasa Raju, Directors retire by rotation at the forthcoming Annual General Meeting and being eligible, offers themselves for re- appointment.

ln terms of the Companies Act, 2013 (''Act'') Independent Directors are required to be excluded while computing the number of directors to retire by rotation. Accordingly, it is proposed to change the terms of office of Shri S. Hanumantha Rao and Shri R.K. Birla from non-retiring to retiring by rotation.

As of the date of this Report, Shri J. Ramakrishnan, Dr. K. Srinivasa Rao and Dr. V. Malakonda Reddy are Independent Directors as per Clause 49 of the Listing Agreement and were appointed under the Companies Act 1956 as Directors liable to retire by rotation. In order to give effect to the applicable provisions of sections 149 and 152 of the Act, it is proposed that these Directors be appointed as Independent Directors, to hold office for five consecutive years, for a term up to September 29, 2019.

Further Shri. Chintapalli Srinivasu was appointed as IDBl Nominee Director of the Company in place of Shri. Ashok Kumar De, w.e.f. 30.05.2014 and Shri Vimlesh Kumar was appointed as PNB Nominee Director of the Company w.e.f. 28.08.2014.

The Board places on record its appreciation for the valuable services rendered by Shri Ashok Kumar De during association as a Nominee Director of the Company.

10. Directors'' Responsibility Statement:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating management, confirm that-

a. 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. that 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 loss of the Company for that year;

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 preventing and detecting fraud and other irregularities;

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

11. Disclosures under Section 217(1)(d) of the Companies Act, 1956:

Material changes and commitments which can affect the financial position of the Company occurred between the end of the financial year of the Company and date of this report:

S.No Particulars (Yes/No)

(a) The purchase, sale or destruction of a plant or the destruction of inventories. No

(b) A material decline in the market value of inventories or investments No

(c) The expiration of a patent which had given the No Company a virtual monopoly in the sale of its principal products.

(d) The settlement of tax liabilities of prior period No and the settlement of any legal or other proceedings either favourably or adversely, if they were pending at the

balance-sheet date

(e) The institution of importance proceedings against No the Company.

(f) Material change in the capital structure in the No resulting from the issuance, retirement or conversion of share capital or stock .

(g) The disposal of a substantial part of the No undertaking or the profits or loss whether of a capital or revenue nature.

(h) Alteration in the wage structure arising out of No Union Negotiations.

(i) Incurring or any reduction of long-term indebtedness. No

(j) Entering into or cancellation of contracts. No

(k) Refund of taxes or completion of assessments No

12. Statutory Auditors:

The Company''s Statutory Auditors, M/s CRK & Associates, Chartered Accountants [Registration No.010004S], Hyderabad will retire at the ensuing Annual General Meeting of the Company and being eligible offers themselves for re-appointment.

The Company has received necessary certificates from the Auditor pursuant to Section 139 and 141 of the Companies Act, 1956, regarding their eligibility for re-appointment. Accordingly, the approval of the Shareholders for the re-appointment of M/s. CRK & Associates, Chartered Accountants as Auditors of the Company is being sought at the ensuing Annual General Meeting.

Your Board recommends the appointment of M/s. CRK & Associates, Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company.

13. Cash Flow Analysis:

In conformity with the provisions of Clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31st March, 2014 is included in the annual accounts.

14. Personnel:

The relations with employees continued to be cordial throughout the year. The Board appreciates the willful co-operation and team spirit in the Management Cadre and other employees of the Company.

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is annexed to this report.

15. Human Resource Management:

The Company believes that Human Resource is its most valuable resource, which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains. Your Directors would like to place on record their deep appreciation of all employees for rendering quality services and to every constituent of the Company be its customers, shareholders, regulatory agencies or creditors. Industrial relations have remained harmonious throughout the year.

16. Dividend:

In the absence of profit, your directors are unable to declare any dividend for the year 2013-2014.

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No:2592/SASF/CBO and 5938/SASF/ CBO dated 28.06.2005 and 29.10.2005 respectively, your Company is required to pay the dividend of Rs. 14.93 Lakhs (Previous year Rs.14.93 Lakhs) which represents 1% on 14,93,365 Cumulative Redeemable Preference Shares(CRPS) of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the year under review, Further your Company also provided a provision of dividend tax to the extent of Rs. 2.43 Lakhs (Previous year Rs.2.42 Lakhs).

17. Quality:

Your Company accorded high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard.

18. Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately the covered.

19. Listing of Company''s Securities:

Your Company''s shares are currently listed on Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Madras Stock Exchange Limited.

20. Dematerialization of Shares:

Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL).

21. Fixed Deposits:

Your Company has not accepted any fixed deposits from the public and is therefore, not required to furnish information in respect of outstanding deposits under Non-banking, Non-financial Companies (Reserve Bank) Directions, 1966 and Companies (Acceptance of Deposits) Rules, 1975 and the provisions of the Companies Act,2013 are not applicable.

22. Cost Auditors:

M/s. Nageswara Rao & Co, Cost Accountants [Firm No.000332], Hyderabad, have been duly appointed as Cost Auditors for conducting audit of Cost Accounting Records in respect of steel products manufactured by the Company for the year 2014-15. They were also the cost auditors for the previous year 2013-14. As required by Section 148 of the Companies Act, 2013, necessary resolution has been included in the notice convening the Annual General Meeting seeking ratification by the members to the remuneration proposed to be paid to the cost auditors for the financial year ending 31st March, 2015.

The Cost Audit Reports are required to filed within 180 days from the end of the financial year. The Cost Audit Reports the financial year ended March 31, 2013 were filed within the prescribed period. The Cost Audit Reports for the financial year ended March 31st, 2014 will be filed within the prescribed time period.

23. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required by Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of the particulars in the report of the Board of Directors) Rules, 1988 are given in the Annexure 1 and forms part of this report.

24. Corporate Social Responsibility:

Pursuant to the provisions of Section 135 the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has constituted the Corporate Social Responsibility Committee to monitor the Corporate Social Responsibility Policy of the Company from time to time and to recommend the amount of expenditure to be incurred on the activities related to CSR.

Your Company is committed socially not only to compliances of all the statutory laws and regulations but also actively participates in the improvement of quality of life of society at large. Your Company has a strong sense of community responsibility. Your Company follows the policy which is more and more beneficial to the society at large by promoting and encouraging economic, social and educational development and also giving active support to local initiatives around its area of operation thereby promoting upliftment of people in varied arenas of life.

Your Company has retained collective focus

on the various areas of corporate sustainability that impact people, environment and the society at large. Founded on the philosophy that society is not just another stakeholder in its business, but the prime purpose of it, your Company, across its various operations is committed to making a positive contribution.

25. Code of conduct for Independent Directors:

As the New Companies Act, 2013 has been made effective from 01st April, 2014 which replaces the erstwhile Companies Act, 1956 (to the extent of notified sections) and the provision of Section 149(8) requires that the company and independent directors shall abide by the provisions specified in Schedule IV (i.e Code of Conduct for Independent Directors).

Your Company has adopted the Code of Conduct for Independent Directors vide resolution passed by the Board of Directors under Section 149(8) of the Companies Act, 2013 at their meeting held on 30.05.2014.

26. Whistle Blower Policy and Vigil Mechanism:

Your Company recognizes the value of transparency and accountability in its administrative and management practices. The Company promotes the ethical behavior in all its business activities. The Company has adopted the Whistle blower Policy and Vigil Mechanism in view to provide a mechanism for the directors and employees of the Company to approach Audit Committee of the Company to report existing/probable violations of laws, rules, regulations or unethical conduct.

27. Reconstitution of various committees of Board of Directors:

Board of Directors of the Company, in accordance with Section 177 and 178 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 and amended Clause 49 of the Listing Agreement, has reconstituted and widened the various Committees of the Board.

Accordingly, the Company has renamed its existing Remuneration Committee as Nomination and Remuneration Committee and have delegated to it powers as required under section 178 of the Act. Pursuant to Clause 49 (VI) of the listing agreement , your Company has constituted Risk Management Committee for framing, implementing and monitoring the risk management plan for the Company.

The scope of Audit Committee has been widened so as to bring it in accordance with the requirement of the Section 177 of the Companies Act, 2013. The Company has also constituted a Corporate Social Responsibility Committee as required under Section 135 of the Companies Act, 2013.

28. Explanations to qualifications in Auditors'' Report:

There are no qualifications in the Auditors'' Report dated 30th May, 2014. Your Board of Directors wish to state that the relevant notes forming part of the Company''s Accounts are self-explanatory and hence do not require any further explanation from the Board.

29. Appreciations:

The Board of Directors of the Company extends their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thanks the Employees for their valuable efforts and the shareholders for their undaunted faith in the Company.

BY ORDER OF THE BOARD R.K.BIRLA S.HANUMANTHA RAO MANAGING DIRECTOR PLACE: Hyderabad DIRECTOR (FINANCE) DATE: 28.08.2014


Mar 31, 2013

To The Members of Sujana Metal Products Limited,

The Directors have pleasure in presenting the Twenty Third Annual Report of your Company together with the Audited Statement of Financial Accounts for the Year ended 31st March, 2013.

1. Company''s Performance:

Your Directors hereby report that the Company has achieved a turnover of Rs. 364,985.48 lakhs upto 31.03.2013 consisting of Twelve (12) months, as against the turnover of Rs. 353,836.35 lakhs during the previous financial year ended 31.03.2012 consisting of Twelve (12) months.

The highlights of the financial results are as follows: (Rs. In Lakhs)

2012-2013 2011-12 Particulars (12 Months) (12 Months)

Operating Profit 18635.03 22122.24 before Depreciation & Interest

Interest 18099.73 17228.30

Depreciation 4123.01 4694.62

Operating Profit after (3587.71) 199.32 depreciation and Interest

Other Income 1541.59 2332.66

Profit before tax (204 6.12) 2531.98

Provision for tax (20.01) 448.98

Profit before extra- (2026.11) 2083.00 ordinary items

Extra-ordinary items 0.00 0.00

Profit after extra- (2026.11) 2083.00 ordinary items

2. Review of Operations:

During the financial year 2012-13, your Company has incurred a net loss of Rs.2026.11 lakhs. The Management on its part filed an application with CDR Cell, Mumbai for restructuring of its debts under Corporate Debt Restructuring (CDR) Scheme so that it can help the Company to improve its financial position so as to imrpove the service to the lenders in future and also modernize, expand and diversify in order to come out of problem.

The Company is pleased to inform that CDR package has been approved by the CDR Empowered Group, Mumbai vide its letter dated: 28.03.2013 and various requirements are being complied with respect to the said corporate debt restructuring.

3. Industrial Relations:

Your directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

4. Prospects:

Your Company had made a reference to the Corporate Debt Restructuring (CDR) cell constituted by Reserve Bank of India for restructuring of its financial debt. The CDR Cell positively considered the request of the Company and has approved the debt restructuring proposal given by the Company. For the purpose of implementation of the approved package as also to comply with the post-implementation requirements, Punjab National Bank the lead consortium bank of the Company has been appointed as Monitoring Institution (MI) by the CDR Cell. To facilitate the process of monitoring of progress of sanction and implementation of the approved package by respective lenders and to revive the performance of the Company/ restructuring package on a continuous basis, a Monitoring Committee (MC), comprising of representatives of Punjab National Bank, State Bank of Patiala, Bank of Baroda and Bank of India has also been constituted.

With the restructuring of its debts and implementation of the CDR package as approved by the CDR Cell, your Company believes that it will gradually be able to progress in its operations towards profitability. Your company has been extremely fortunate to have full support of its employees during this period and all efforts are being made to garner support from the customers of the Company.

5. Scheme of Amalgamation:

Board of Directors of the Company at their meeting held on 12th November, 2010 approved the Scheme of amalgamation between (1) M/s Lakshmi Gayatri Industries Private Limited, (2) M/s Glade Steel Private Limited, (3) M/s Sri Ganga Steel Enterprises Private Limited and (4) M/s Topaz Steel India Limited with M/s. Sujana Metal Products Limited w.e.f: 01.10.2009. The Amalgamation would result in synergy of operations and also reduce the overhead and administrative costs substantially, by combining these units it will meet the competition in the domestic and international market and also helps to meet the international standards and it will also reduce the inventory levels which will result in significant savings in procurement of inventory and carrying costs of the inventory.

Necessary approvals from the Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE) and Madras Stock Exchange Limited (MSE) have been obtained vide their Letter Nos DCS/ AMAL/NTP/24(f)/983/2010-11 dated:24th December, 2010,NSE/LIST/153641-Z dated : 14thDecember, 2010 and MSE/LD/ PSK/738/593/10 dated:16th December, 2010 respectively.

The Company Law Board, Southern Region Bench, Chennai has approved the shifting of registered office of M/s Sriganga Steel Enterprises Private Limited(Third Transferor Company) from the state of Tamilnadu to Andhra Pradesh on 17th February, 2011 .

By an order dated: 28.03.2011, the Hon''ble High Court of Andhra Pradesh , Hyderabad has directed that meetings of the Shareholders and Secured Creditors of the Company be held at Anjuman Hall, Hotel Taj Banjara, Road No.1, Banjara Hills, Hyderabad-500034 on Thursday the 28th day of April, 2011 at 2.30 P.M. and 3.30 P.M respectively for the purpose of considering and approving the proposed scheme of amalgamation.

On 28.04.2011, Shareholders and Secured creditors of the Company passed the resolution for approving the Scheme of Amalgamation with requisite majority. The petition under Section 394 read with Section 391(2) of the Companies Act, 1956 for sanction of Scheme of amalgamation was filed with the Hon''ble High Court of Judicature at Andhra Pradesh on 15.06.2011 and admitted on 15.07.2011. As on the date of this report, the Company has not yet received the order from Hon''ble High Court of Judicature at Andhra Pradesh.

6. Subsidiaries of the Company:

Details of the subsidiaries are given below:

Indian Subsidiaries:

(a) Glade Steel Private Limited

M/s Glade Steel Private Limited, Hyderabad, is a subsidiary of the Company. It is engaged in the business of manufacturing, distributing, supplying, selling and other wise dispose of Rounds, Flats, Squares, Angles, Channels, Girders and Allied Products with installed capacity of 75,000 MT/per annum of re-rolling and 50,000 MT/per annum of MS ingots.

Overseas Subsidiaries

(a) Alpha Ventures Limited

Alpha Ventures Limited is a Wholly Owned Subsidiary Company incorporated on 6 March 2007 in Cayman Islands. Alpha Ventures Limited has been promoted to carry out any object not prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands. As per the law prevailing in Cayman Islands, Financial Statements of M/s Alpha Venture Limited are not required to be audited.

(b) Asian Tide Enterprises Limited

Asian Tide Enterprises Limited, is a Wholly Owned Subsidiary Company. It was incorporated on 3 July 2007 in Hong Kong for carrying on the business of trading of goods and services with accent on procuring raw materials (in bulk) for manufacturing activities of the Company (melting scarp for its rolling division) and sale surplus in the market.

(c) Optimix Enterprises Ltd

Optimix Enterprises Ltd, is a Wholly Owned Subsidiary of Asian Tide Enterprises Limited,Hong Kong and step down subsidiary of your Company. It was incorporated on 22nd August, 2011 in Mauritus for carrying on the business or businesses which are not prohibited under the laws for the time being in force in the Republic of Mauritius. This includes (inter alia) to engage in the business of all forms of investments including but not limited to venture capital and private equity investments whether directly, indirectly through any special purpose vehicles or otherwise.

Statement pursuant to Section 212(1)(e) of the Companies Act,1956 relating to Subsidiary Companies, as at 31st March,2013, is also annexed to this report.

7. Consolidated Financial Statements:

Your Company has availed the general exemption from attaching a copy of the Balance Sheet, Profit and Loss Account, Directors'' Report and Auditor''s Report of the subsidiary Companies and other documents required to be attached under Section 212(1) of the Companies Act, 1956, to the Balance Sheet of your Company. The said exemption is granted vide Circular No. 5/12/2007-CL-III issued by Ministry of Corporate Affairs dated 08.02.2011.

Accordingly, the said documents of subsidiary Companies are not being attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiary Companies is contained in the report. The annual accounts of the subsidiary Companies are open for inspection by any member/investor at the Company''s Registered office and the Company will make available these documents and the related detailed information upon request by any investor of the Company or any investor of its subsidiary Companies who may be interested in obtaining the same. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2013 is annexed to this Report.

In terms of Clause 32 of the Listing Agreement with the Stock Exchanges and as prescribed by Accounting Standard 21 notified by the Government of India under Section 211(3C) of the Companies Act, 1956, the Audited Consolidated Financial Statements are annexed.

8. Corporate Governance:

Your Company has complied with the requirements of Clause 49 of the listing agreement regarding Corporate Governance. A detailed repor t on Corporate Governance is attached and forms part of this report. A Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

9. Management Discussion and Analysis Report:

A separate Management Discussion and Analysis Report is also attached and forms part of this report.

10. Directors:

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Shri Y.S. Chowdary and Dr. K. Srinivasa Rao, Directors retire by rotation at the forthcoming Annual General Meeting and being eligible, offers themselves for re-appointment.

11. Directors'' Responsibility Statement:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating management, confirm that-

a. 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. that 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 loss of the Company for that year;

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 preventing and detecting fraud and other irregularities;

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

12. Disclosures under Section 217(1)(d) of the Companies Act, 1956:

Material changes and commitments which can affect the financial position of the Company occurred between the end of the financial year of the Company and date of this report:

Change S.No Particulars (Yes/No)

(a) The purchase, sale or destruction of a plant or the destruction of inventories. No

(b) A material decline in the market value of inventories or investments No

(c) The expiration of a patent which had given the No Company a virtual monopoly in the sale of its principal products.

(d) The settlement of tax liabilities of prior period No and the settlement of any legal or other proceedings either favourably or adversely, if they were pending at the balance-sheet date.

(e) The institution of importance proceedings against the Company. No

(f) Material change in the capital structure in the No resulting from the issuance, retirement or conversion of share capital or stock .

(g) The disposal of a substantial part of the undertaking No or the profits or loss whether of a capital or revenue nature.

(h) Alteration in the wage structure arising out of Union Negotiations. No

(i) Incurring or any reduction of long-term indebtedness. No

(j) Entering into or cancellation of contracts. No

(k) Refund of taxes or completion of assessments No

13. Code of conduct

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on the Company''s website. Board Members and Senior Management personnel have affirmed compliance with the Code for the financial year 2012- 13. A separate declaration to this effect is made out in the Corporate Governance Report.

14. Statutory Auditors:

The Company''s Statutory Auditors, M/s CRK & Associates, Chartered Accountants, Hyderabad (Regn. No. 010004S) will retire at the ensuing Annual General Meeting of the Company and being eligible offers themselves for re-appointment.

The Company has received necessary certificates from the Auditor pursuant to Section 224(1B) of the Companies Act, 1956, regarding their eligibility for re-appointment. Accordingly, the approval of the Shareholders for the re-appointment of M/s. CRK & Associates, Chartered Accountants as Auditors of the Company is being sought at the ensuing Annual General Meeting.

Your Board recommends the appointment of M/s. CRK & Associates, Chartered Accountants as Auditors of the Company.

15. Cash Flow Analysis:

In conformity with the provisions of Clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31st March 2013 is included in the annual accounts.

16. Personnel:

The relations with employees continued to be cordial throughout the year. The Board appreciates the willful co-operation and team spirit in the Management Cadre and other employees of the Company.

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is annexed to this report.

17. Human Resource Management:

With the size of expansion going in the Company, human resources assume greater importance and have a significant place in the Organizational Structure. Your Company has been able to create a favorable work environment that encourages innovation and meritocracy. Your Company has put in place a scalable recruitment and human resource management. The efforts of your Company in the area of employee management and HR practices have been proved effective in Human Resource Management. Emphasis is given to the overall development of the personality of individual employee. Welfare schemes for employees and their families are run in the factories.

18. Dividend:

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No:2592/ SASF/CBO and 5938/SASF/CBO dated 28.06.2005 and 29.10.2005 respectively, your Company is required to pay the dividend of Rs. 14.93 Lakhs (Previous year Rs.14.93 Lakhs) which represents 1% on 14,93,365 Cumulative Redeemable Preference Shares(CRPS) of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the year under review, Further your Company also provided a provision of dividend tax to the extent of Rs. 2.42 Lakhs (Previous year Rs.2.48 Lakhs)

19. Quality:

Your Company accorded high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard.

20. Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately covered.

21. Listing of Company''s Securities:

Your Company''s shares are currently listed on Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Madras Stock Exchange Limited and The Global Depository Receipts are currently listed at the Luxembourg Stock Exchange.

22. Dematerialization of Shares:

Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL).

23. Fixed Deposits:

The Company has not accepted any fixed deposits and the provisions of Section 58A of the Companies Act, 1956 are not applicable.

24. Cost Auditors:

In pursuance of Section 233B of the Companies Act, 1956 read with circular no. 52/26/CAB – 2010 the Company has appointed M/s Nageswara Rao & Co, Cost Accountants, Secunderabad (Firm No. 332) as the Cost Auditors for conducting audit of Cost Accounting Records in respect of steel products manufactured by the Company for the year 2012-13. The approval of the Central Government for the appointment has been received. The Company has reappointed them as Cost Auditors for the financial year 2013- 2014.

Cost accounting records for the year ended 31st March, 2013 were maintained as per the Companies (Cost Audit Report) Rules, 2011. The Cost Auditor shall submit the report along with their observations and suggestions, and Annexure to the Central Government within stipulated time period.

25. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required by Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of the particulars in the report of the Board of Directors) Rules, 1988 are given in the Annexure 1 and forms part of this report.

26. Explanations to any qualifications in Auditors'' Report:

There are no qualifications in the Auditors'' Report dated 28th May, 2013. Your Board of Directors wish to state that the relevant notes forming part of the Company''s Accounts are self-explanatory and hence do not require any further explanation from the Board.

However, the management views on some of the comments to annexure to the Auditor''s report are as follows:

1. Paragraph (vii) (a) in annexure to the Audit Report, according to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues except Income Tax as on 31st of March, 2013 for a period of more than six months from the date they became payable.

Management View:

The Company is in the process of amalgamation of the companies i.e. M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited with Sujana Metal Products Limited w.e.f.1.10.2009. The Scheme under the consideration of the Honorable High Court of Andhra Pradesh, upon the scheme of amalgamation which is becoming effective, no liability is arises.

2. Paragraph (vii) (b) in annexure to the Audit Report, according to the information and explanations given to us, there are amounts payable in respect of income tax, sales tax, customs duty and excise duty which have not been deposited on account of disputes. They are detailed as follows.

F.Y to which Amount in Name of the Statute matters pertain Rs. (Lakhs)

Income Tax Act,1961 2005-06 1517.25 2009-10

Central Excise 1995-2010 1771.26 Act,1944 2012-13 246.46

Customs Act,1962 1998-99 308.28 2008-09 215.08 2012-13 15.27

Foreign Exchange 1995-1996 630 Regulation Act,1973

APGST Act,1957 2002-03 438.18 2003-04 768.88

Central Sales Tax Act, 2005-08 51.91 1956 2006-07 241.34

Tamilnadu Value 2006-07 194.92 Added Tax Act,2006 2012-13 200.00





Name of the Statute Forum where matter is pending

Income Tax Act,1961 Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeal)

Central Excise Act,1944 Central Excise &Service Tax Appellate Tribunal, Commissioner of Central Excise

Customs Act,1962 Commissioner (Customs), Sea Port, Chennai, CESTAT Bangalore

Foreign Exchange Hon''ble High Court of Delhi Regulation Act,1973

APGSt Act,1957 Sales Tax Appellate Tribunal, Commercial Tax Officer

Central Sales Tax Appellate Deputy Commissioner, Hon''ble High Court of Andhra Pradesh

Tamilnadu Value Hon''ble High Court of Tamilnadu Added Tax Act, 2006

Management View:

As the liabilities are disputed and the matters are pending with the respective statutory authorities, the Company has not remitted the same. The Company has taken an opinion from leading tax practitioners'' who are in respective fields and opined that the Company has a good chance of getting favorable verdict in all these cases. However, the same were disclosed as contingent liabilities in the notes on accounts of financial statements.

3. Paragraph (ix) in annexure to the Audit Report, Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, there have been delays in repayment of dues to financial institutions.

Maximum Amount Maximum Remarks Banks Default (Rs. in Period of lakhs) Default

SASF Chennai (IDBI)

Principal 736.00 304 CDR scheme not Interest 352.08 335 approved by SASF

SASF Vizag (IDBI)

Principal 515.25 212 CDR scheme not approved by SASF. Interest 325.24 335

Due to CDR approval, Repayment schedule is postponed .So the Company does not fall under default in repayment for the banks namely IOB,BOI, ANDHRA BANK & PNB (LONG TERM) as per CDR in this current period of 2012-2013.

Management View:

Your Company had received approved letter from SASF dated 18th July, 2013 stating that they are participating CDR scheme along with other Banks.

27. Appreciations:

The Board of Directors of the Company extends their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thanks the Employees for their valuable efforts and the shareholders for their undaunted faith in the Company.

BY ORDER OF THE BOARD

PLACE: Hyderabad R.K.BIRLA S.HANUMANTHA RAO

DATE : 13.08.2013 MANAGING DIRECTOR DIRECTOR (FINANCE)


Mar 31, 2012

To The Members of Sujana Metal Products Limited,

The Directors have pleasure in presenting the Twenty Second Annual Report of your Company together with the Audited Statement of Financial Accounts for the Financial Year ended 31st March, 2012 comprising of 12 months from 01.04.2011 to 31.03.2012.

1. Company's Performance:

Your Directors hereby report that the Company has achieved a turnover of Rs. 353836.35 lakhs upto 31.03.2012 consisting of Twelve (12) months, as against the turnover of Rs. 425400.18 lakhs during the previous financial year ended 31.03.2011 consisting of Eighteen (18) months.

The highlights of the financial results are as follows:

(Rs. In Lakhs)

2011-12 2009-2011

Particulars (12 Months) (18 Months) Operating 22122.24 32139.98

Profit before Depreciation &

Interest

Interest 17228.30 19430.77

Depreciation 4694.62 7069.95

Operating Profit 199.32 5639.26 after depreciation and Interest

Other Income 2332.66 898.65

Profit before tax 2531.98 6537.91 Provision for tax 448.98 2669.22

Profit before extra- 2083.00 3868.69 ordinary items

Extra-ordinary -- --

items

Profit after extra- 2083.00 3868.69 ordinary items



2. Review of Operations:

Growth in Revenue and Profit During the period under review, your Company recorded a total income of Rs.356169.01 lakhs, compared to Rs. 426298.83 lakhs (annualized total income Rs.284199.22) in the previous financial period, which represents a 25.32 % annualized growth. The net profit for the year stands at Rs. 2083.00 lakhs as compared to the net profit of Rs. 3868.69 lakhs (annualized net profit Rs.2579.13) in the previous period, which represents a 19.24 % annualized decrease over the previous period.

3. Industrial Relations:

Your directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

4. Prospects:

Indian GDP is estimated at 7.6% in F.Y.2012- 13 as per Prime Minister's Economic Advisory Council (PMEAC). Indian steel demand is also expected to track GDP growth supported by easing interest rate cycle and resultant revival in infrastructure, construction, industrial and manufacturing sectors. Prediction of good monsoon in the current year, declining commodity prices globally, lower interest rates are positive to spur economic activity in the country. Notwithstanding, fragile recovery in US, sovereign debt crisis in Europe and slow down in china, domestic demand/ consumption is one of the primary drivers of Indian Economy, to be optimistic to show a GDP growth of above 7%. While continuing its growth thrust on secondary steel segment, your Company is actively contemplating forward as well as backward integration in the steel sector, all along the value chain from mining of ore to manufacture of steels and also actively exploring overseas expansion in steel.

5. Scheme of Amalgamation:

Board of Directors of the Company at their meeting held on 12th November, 2010 approved the Scheme of amalgamation between (1) M/s Lakshmi Gayatri Industries Private Limited, (2) M/s Glade Steel Private Limited, (3) M/s Sri Ganga Steel Enterprises Private Limited and (4) M/s Topaz Steel India Limited with M/s. Sujana Metal Products Limited w.e.f: 01.10.2009. The Amalgamation Would result in synergy of operations and also reduce the overhead and administrative costs substantially, by combining these units it will meet the competition in the domestic and international market and also helps to meet the international standards and it will also reduce the inventory levels which will result in significant savings in procurement of inventory and carrying costs of the inventory.

Necessary approvals from the Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE) and Madras Stock Exchange Limited (MSE) have been obtained vide their Letter Nos DCS/AMAL/NTP/24(f)/983/2010-11 dated : 24th December, 2010, NSE/LIST/153641-Z dated : 14thDecember, 2010 and MSE/LD/ PSK/738/593/10 dated : 16th December, 2010 respectively.

The Company Law Board, Southern Region Bench, Chennai has approved the shifting of registered office of M/s Sriganga Steel Enterprises Private Limited(Third Transferor Company) from the state of Tamilnadu to Andhra Pradesh on 17th February, 2011.

By an order dated : 28.03.2011, the Hon'ble High Court of Andhra Pradesh , Hyderabad has directed that meetings of the Shareholders and Secured Creditors of the Company be held at Anjuman Hall, Hotel Taj Banjara, Road No.1, Banjara Hills, Hyderabad-500034 on Thursday the 28th day of April, 2011 at 2.30 P.M. and 3.30 P.M respectively for the purpose of considering and approving the proposed scheme of amalgamation.

On 28.04.2011, Shareholders and Secured creditors of the Company passed the resolution for approving the Scheme of Amalgamation with requisite majority. The petition under Section 394 read with Section 391(2) of the Companies Act, 1956 for sanction of Scheme of amalgamation was filed with the Hon'ble High Court of Judicature at Andhra Pradesh on 15.06.2011 and admitted on 15.07.2011. As on the date of this report, the Company has not yet received the order from Hon'ble High Court of Judicature at Andhra Pradesh.

6. Subsidiaries of the company:

Details of the subsidiaries are given below:

Indian Subsidiaries: (a). Glade Steel Private Limited

M/s Glade Steel Private Limited, Hyderabad, is a subsidiary of the Company. It is engaged in the business of manufacturing, distributing, supplying, selling and other wise dispose of Rounds, Flats, Squares, Angles, Channels, Girders and Allied Products with installed capacity of 60,000 MT/per annum of re-rolling and 50,000MT/per annum of MS ingots.

Overseas Subsidiaries;

(a). Alpha Ventures Limited

Alpha Ventures Limited is a Wholly Owned Subsidiary Company incorporated on 6th March 2007 in Cayman Islands. Alpha Ventures Limited has been promoted to carry out any object not prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands. As per the law prevailing in Cayman Islands, Financial Statements of M/s Alpha Venture Limited are not required to be audited.

(b). Asian Tide Enterprises Limited

Asian Tide Enterprises Limited, is a Wholly Owned Subsidiary Company. It was incorporated on 3rd July 2007 in Hong Kong for carrying on the business of trading of goods and services with accent on procuring raw materials (in bulk) for manufacturing activities of the Company (melting scarp for its rolling division) and sale surplus in the market.

(c) Optimix Enterprises Ltd

Optimix Enterprises Ltd, is a Wholly Owned Subsidiary of Asian Tide Enterprises Limited, Hong Kong and step down subsidiary of your Company. It was incorporated on 22nd August, 2011 in Mauritus for carrying on the business or businesses which are not prohibited under the laws for the time being in force in the Republic of Mauritius. This includes (inter alia) to engage in the business of all forms of investments including but not limited to venture capital and private equity investments whether directly, indirectly through any special purpose vehicles or otherwise. Statement pursuant to Section 212(1)(e) of the Companies Act,1956 relating to Subsidiary Companies, as at 31st March, 2012, is also annexed to this report.

7. Consolidated Financial Statements:

Your Company has availed the general exemption from attaching a copy of the Balance Sheet, Profit and Loss Account, Director's Report and Auditor's Report of the subsidiary Companies and other documents required to be attached under Section 212(1) of the Companies Act, 1956, to the Balance Sheet of your Company. The said exemption is granted vide Circular No. 5/12/2007-CL-III issued by Ministry of Corporate Affairs dated 08.02.2011.

Accordingly, the said documents of subsidiary Companies are not being attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiary Companies is contained in the report. The annual accounts of the subsidiary Companies are open for inspection by any member/ investor at the Company's Registered office and the Company will make available these documents and the related detailed information upon request by any investor of the Company or any investor of its subsidiary Companies who may be interested in obtaining the same. A statement containing brief financial details of the Company's subsidiaries for the financial year ended March 31, 2012 is annexed to this Report.

In terms of Clause 32 of the Listing Agreement with the Stock Exchanges and as prescribed by Accounting Standard 21 notified by the Government of India under Section 211(3C) of the Companies Act, 1956, the Audited Consolidated Financial Statements are annexed.

8. Corporate Governance:

Your Company has complied with the requirements of Clause 49 of the listing agreement regarding Corporate Governance. A detailed report on Corporate Governance is attached and forms part of this report. Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

9. Management Discussion and Analysis Report:

A separate Management Discussion and Analysis Report is also attached and forms part of this report.

10. Directors:

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Shri G.Srinivasa Raju and Shri J.Ramakrishnan, Directors retire by rotation at the forthcoming Annual General Meeting and being eligible, offers themselves for re-appointment.

11. Directors' Responsibility Statement:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating management, confirm that-

a. 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. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss 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 preventing and detecting fraud and other irregularities;

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

12. Disclosures under Section 217(1)(d) of the Companies Act, 1956:

Material changes and commitments which can affect the financial position of the Company occurred between the end of the financial year of the Company and date of this report:

S. Change Particulars No (Yes/No)

(a) The purchase, sale or destruction of a plant or the destruction of inventories. No

(b) A material decline in the market value of inventories or investments No

(c) the expiration of a patent which had given the Company a virtual monopoly No in the sale of its principal products.

(d) The settlement of tax liabilities of prior period and the settlement of any No legal or other proceedings either favourably or adversely, if they were pending at the balance-sheet date.

(e) The institution of importance proceedings against the company. No

(f) Material change in the capital structure in the resulting from the issuance, No retirement or conversion of share capital or stock .

(g) the disposal of a substantial part of the undertaking or the profits or loss No whether of a capital or revenue nature.

(h) Alteration in the wage structure arising out of Union Negotiations. No

(i) Incurring or any reduction of long-term indebtedness. No

(j) Entering into or cancellation of contracts. No

(k) Refund of taxes or completion of assessments No



13. Code of conduct:

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on the Company's website. Board Members and Senior Management personnel have affirmed compliance with the Code for the financial year 2011-12. A separate declaration to this effect is made out in the Corporate Governance Report.

14. Statutory Auditors:

The term of office of the Company's existing Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, will come to an end at the conclusion of the ensuing Annual General Meeting of the Company. It is proposed to appoint M/s CRK & Associates, Chartered Accountants, Hyderabad as Statutory Auditors of the Company for the financial year 2012-13 at such remuneration as may be fixed by the Board of Directors.

Your Board of Directors recommended the appointment of M/s CRK & Associates, Chartered Accountants, Hyderabad, as Statutory Auditors of your Company. Your approval for such appointment is solicited.

Your Company has received a letter from M/s CRK & Associates, Chartered Accountants, Hyderabad, to the effect that their appointment as Statutory Auditors, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and they are not disqualified for such appointment.

15. Cash Flow Analysis:

In conformity with the provisions of Clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31st March 2012 is included in the annual accounts.

16. Personnel:

The relations with employees continued to be cordial throughout the year. The Board appreciates the willful co-operation and team spirit in the Management Cadre and other employees of the Company.

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is annexed to this report.

17. Human Resource Management:

With the size of expansion going in the Company, human resources assume greater importance and have a significant place in the Organizational Structure. Your Company has been able to create a favorable work environment that encourages innovation and meritocracy. Your Company has put in place a scalable recruitment and human resource management. The efforts of your Company in the area of employee management and HR practices have been proved effective in Human Resource Management. Emphasis is given to the overall development of the personality of individual employee. Welfare schemes for employees and their families are run in the factories.

18. Dividend:

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No:2592/ SASF/CBO and 5938/SASF/CBO dated 28.06.2005 and 29.10.2005 respectively, your Company is required to pay the dividend of Rs. 14.93 Lakhs (Previous period Rs.25.08 Lakhs) which represents 1% on 14,93,365 Cumulative Redeemable Preference Shares(CRPS) of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the year under review, Further your Company also provided a provision of dividend tax to the extent of Rs. 2.48 Lakhs (Previous period Rs. 4.16 Lakhs).

19. Quality:

Your Company accord to high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard.

20. Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately covered.

21. Listing of Company's Securities:

Your Company's shares are currently listed on Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Madras Stock Exchange Limited and The Global Depository Receipts are currently listed at the Luxembourg Stock Exchange.

22. Dematerialization of Shares:

Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL).

23. Fixed Deposits:

The Company has not accepted any fixed deposits and the provisions of Section 58A of the Companies Act, 1956 are not applicable.

24. Cost Auditors:

In pursuance of Section 233B of the Companies Act, 1956 read with circular no. 52/26/CAB - 2010 the Company has appointed M/s. Nageswara Rao & Co., Cost Accountants, Secunderabad as the Cost Auditors for conducting audit of Cost Accounting Records in respect of steel products manufactured by the Company for the year 2011-12. The approval of the Central Government for the appointment has been received. The Company has reappointed them as Cost Auditors for the financial year 2012-13.

Cost accounting records for the year ended 31st March, 2012 were maintained as per the Companies (Cost Audit Report) Rules, 2011. The Cost Auditor shall submit the report along with their observations and suggestions, and Annexure to the Central Government within stipulated time period.

25. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required by Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of the particulars in the report of the Board of Directors) Rules, 1988 are given in the Annexure 1 and forms part of this report.

26. Explanations to qualifications in Auditors' Report:

The Statutory Auditors of the Company M/s Deloitte Haskins & Sells have made the following comments in their report for the year 2011-12.

Auditors Comments:

1. Paragraph (viii) (b) in Annexure to the Audit Report, details of undisputed amounts payable in respect of Income Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and Other material statutory dues which were in arrears as at March 31, 2012 for a period of more than six months from the date they became payable are given below:

Year to Nature of Nature of Amount which the Date of (Rupees in Due date Statute Dues amount Payment relates

Income Tax Income Tax 192.87 2011-2012 June 15, 2011 and Not paid Act, 1961 September 15, 2011

Company Explanation:

The Company is in the process of amalgamation of the companies i.e. M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited with Sujana Metal Products Limited w.e.f 1.10.2009.The Scheme under the consideration of the Honorable High Court of Andhra Pradesh, upon the scheme of amalgamation which is becoming effective, no liability is arises.

2. Paragraph (viii) (c) in Annexure to the Audit Report , details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2012 on account of disputes are given below:

Financial Year Amount Name of the Statute to which matter (Rupees in Forum where matter is pending pertains Lakhs)

Income Tax Act, 1961 2008-2009 837.08 Asst. commissioner of Income Tax Central Excise Act, 1995-2009 1209.90 Custom Excise & Service Tax

1944 1995-1997 1 00 Appellate Tribunal

Commissioner of Customs (Appeals)

Customs Act, 1962 1998-1999 306.28 Commissioner of Customs (Sea

2008-2009 214.90 Port)

Custom Excise & Service Tax Appellate Tribunal

Foreign Exchange 1995-1996 530.00 Hon'ble High Court of Delhi Regulation Act, 1973

APGST Act, 1957 2002-2003 438.13 Sales Tax Appellate Tribunal

2003-2004 786.88 Commercial Tax Officer

Central Sales Tax Act, 2005-2008 51.91 Appellate Deputy Commissioner 1956 2006-2007 241.34 Hon'ble High Court of Andhra Pradesh and Appellate Deputy Commissioner

Tamilnadu Value Added 2006-2007 194.92 Hon'ble High Court of Tamilnadu Tax Act, 2006



Company Explanation:

As the liabilities are disputed and the matters are pending with the respective statutory authorities, the Company has not remitted the same. The Company has taken an opinion from leading tax practitioners' who are in respective fields and opined that the Company has a good chance of getting favorable verdict in all these cases. However, the same were disclosed as contingent liabilities in the notes on accounts of financial statements.

27. Appreciations:

The Board of Directors of the Company extends their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thanks the Employees for their valuable efforts and the shareholders for their undaunted faith in the Company.

BY ORDER OF THE BOARD

PLACE: Hyderabad R.K.BIRLA S.HANUMANTHA RAO

DATE: 16.07.2012 MANAGING DIRECTOR DIRECTOR (FINANCE)


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting you the Twenty First Annual Report of your Company together with the Audited Accounts for the financial period ended 31st March, 2011 comprising 18 months from 01.10.2009 to 31.03.2011.

1. Company's Performance:

Your Directors hereby report that the Company has achieved a turnover of Rs. 425400.18 lakhs upto 31.03.2011 consisting of Eighteen (18) Months, as against the turnover of Rs. 192985.70 lakhs during the previous financial year ended 30.09.2009 consisting of Twelve (12) months.

The highlights of the financial results are as follows:

(Rs. In Lakhs)

2009-2011 2008-2009

(18 (12

Months) Months)

Operating 32,139.98 14,580.70 Profit before Depreciation & Interest

Interest 19,430.77 8,882.42

Depreciation 7,069.95 2,766.19

Operating Profit 5,639.26 2,932.09 after depreciation and Interest

Other Income 898.65 820.13

Profit before tax 6,537.91 3,752.22

Provision for tax 2,669.22 1,235.40

Profit before extra- 3,868.69 2,516.82 ordinary items

Extra - ordinary 0.00 0.00

items

Profit after extra- 3,868.69 2,516.82 ordinary items

Add:Profit brought 11,497.99 9,526.17 forward

Profit available for 15,366.68 12,042.99 appropriation

2. Review of Operations:

Growth in Revenue and Profit during the period under review. Your Company recorded a total income of Rs. 426298.83 lakhs (annualised total income Rs. 284199.22), compared to Rs. 193805.83 lakhs in the previous financial year, which represents a 119.96% growth (annualised growth 46.64%). The net profit for the period stands at Rs. 3868.69 lakhs (annualised net profit Rs. 2579.13) as compared to the net profit of Rs. 2516.82 lakhs in the previous year, which represents a 53.70% (annualised 2.48%) increase over the previous year

3. Extension of Financial Year of the Company:

The Financial year of your Company extended upto 31.03.2011 consisting of 18 months from 01.10.2009 to 31.03.2011 vide approval of the Registrar of Companies, Hyderabad dated: 04.10.2010.

The Company has received the approval for extension of time for the purpose of holding Annual General Meeting on or before 26.09.2011 vide approval of the Registrar of Companies, Hyderabad dated: 02.05.2011.

4. Change of Registered office of the Company :

During the financial period 2009-11 the Registered office of the Company has been shifted from Survey No. 296/7/9, IDA, Bollaram, Jinnaram Mandal, Medak Dist. to Plot No. 18, Nararjuna Hills, Panjagutta, Hyderabad - 500 082 vide resolution passed by the members of the Company through Postal Ballot on 24th December, 2010.

5. Industrial Relations:

Your Directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

6. Further Issue of Securities of the Company:

(a) Allotment of 2,44,62,857 equity shares of Rs. 5/- each of the Company on preferential basis to Promoters and Non-promoters:

In pursuance of special resolution passed by the members of the Company at their Extraordinary General Meeting held on 24th October, 2009, to issue 2,44,62,857 Equity shares of Rs.5/- each at a price determined as per the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, of Rs.17.50/- per share to the Promoters or Promoter Group members and/or non-promoters for meeting the capital expenditure in respect of expansion programme, general corporate expenditure and also to part finance the working capital requirements. The Company allotted 2,44,62,857 equity shares of Rs.5/- each to the promoters& Non-promoters on 19.11.2009 the proceeds of the issue have been utilized for the purpose for which they have been raised.

(b). Allotment of 5,26,31,500 equity shares of Rs. 5/- each at a premium of Rs. 21.676 per share underlying 52,63,150 Global Depository Receipts (GDRs) :

Pursuant to the special resolution passed by the members of the Company at the Extraordinary General Meeting held on 24th October, 2009, your Company had successfully completed the issue and allotment of 5,26,31,500 equity shares of Rs. 5/- each at a premium of Rs. 21.676 per share underlying 52,63,150 Global Depository Receipts (GDRs) representing 10 equity shares per GDR, aggregating US$ 30.00 Millions. Your Company invested the funds raised through GDRs, in it's Wholly Owned Subsidiaries. The Global Depository Receipts have been listed on the Luxembourg Stock Exchange.

(c). Allotment of 5,00,00,000 convertible warrants of Rs. 5/- each at a price of Rs. 21/- per warrant on preferential basis to the Promoters and Promoters Group:

In pursuance of special resolution passed by the members of the Company through Postal Ballot on 24.12.2009, to issue 5,00,00,000 convertible warrants of Rs.5/- each at a price determined as per the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, of Rs.21/- per share to the Promoters and Promoter Group for meeting the capital expenditure in respect of expansion programme, general corporate expenditure, to part finance the working capital requirements and also to part finance acquisition of steel units. The Company allotted 5,00,00,000 Convertible Warrants to the promoters & promoters group on 04.01.2010. These warrants are compulsorily convertible into equity shares within a period of eighteen months from the date of allotment i.e., 04.01.2010. As on the date of this report, there are no outstanding warrants for conversion. The proceeds of the issue have been utilized for the purpose for which they have been raised.

7. Scheme of Amalgamation

Board of Directors of the Company at their meeting held on 12th November, 2010 approved the Scheme of amalgamation between (1) M/s Lakshmi Gayatri Industries Private Limited, (2) M/s Glade Steel Private Limited, (3) M/s Sri Ganga Steel Enterprises Private Limited and (4) M/s Topaz Steel India Limited with M/s Sujana Metal Products Limited w.e.f: 01.10.2009. The Amalgamation would result in synergy of operations and also reduce the overhead and administrative costs substantially, by combining these units it will meet the competition in the domestic and international market and also helps to meet the international standards and it will also reduce the inventory levels which will result in significant savings in procurement of inventory and carrying costs of the inventory.

Necessary approvals from the Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE) and Madras Stock Exchange Limited (MSE) have been obtained vide their letter nos.

DCS/AMAL/NTP24(f)/983/2010-11 dated : 24th December, 2011, NSE/LIST/153641-Z dated : 14th December, 2010 and MSE/LD/ PSK/738/593/10 dated : 16th December, 2010 respectievely.

The Company Law Board Southern Region Bench, Chennai has approved the shifting of Registered office of M/s. Sri Ganga Steel Enterprises Private Limited (Third transferor Company) from the state of Tamilnadu to Andhra Pradesh on 17th February 2011.

By an order dated: 28.03.2011, the Hon'ble High Court of Andhra Pradesh Hyderabad directed that meetings of the Shareholders and Secured Creditors of the Company be held at Anjuman Hall, Hotel Taj Banjara, Road No.1, Banjara Hills, Hyderabad-500034. on Thursday the 28th day of April, 2011 at 2.30 P.M. and 3.30 P.M respectively for the purpose of considering and approving the proposed scheme of amalgamation.

On 28.04.2011, Shareholders and Secured creditors of the Company passed a resolution for approving the Scheme of Amalgamation with requisite majority. The petition under Section 394 read with Section 391(2) of the Companies Act, 1956 for sanction of Scheme of amalgamation was filed with the Hon'ble High Court of Judicature at Andhra Pradesh on 15.06.2011 and admitted on 15.07.2011. As on the date of this report, the Company has not yet received the order from Hon'ble High Court of Judicature at Andhra Pradesh.

8. Subsidiaries of The Company

As on 31.03.2011, the Company had the following Subsidiaries:

(a) Glade Steel Private Limited

During the Financial year 2007-08, your Company has acquired 100% share holding of M/s. Glade Steel Private Limited by making investment of Rs. 6,74,514.00 as on the date of this report your Company holding 51.15% share holding in M/s. Glade Steel Private Limited. M/s. Glade Steel Private Limited, incorporated on 12th May 2005 for carrying on the business of manufacture, distribute, supply, sell and other wise dispose of Rounds, Flats, Squares, Angles, Channels,Grinders and Allied Products with installed capacity of 60,000 MT/per annum of re- rolling and 50,000MT/per annum of MS ingots.

(b) Alpha Ventures Limited

Alpha Ventures Limited, is a wholly owned subsidiary company incorporated on 6 March 2007 in Cayman Islands. Alpha Ventures Limited has been promoted to carry out any object not prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands. As per the law prevailing in Cayman Islands, Financial Statements of M/s Alpha Venture Limited are not required to be audited.

(c ) Asian Tide Enterprises Limted

Asian Tide Enterprises Limted, is a wholly owned subsidiary company incorporated on 3rd July 2007 in Hong Kong for carrying on the business trading of goods and services with accent on procuring raw materials (in bulk) for manufacturing activities of the Company (melting scrap for its rolling division) and sale surplus in the market.

The aforesaid subsidiary incorporated a wholly owned subsidiary Company named M/s Optimix Enterprises Ltd. at Mauritius on 22.08.2011 which will be the stepdown subsidiary for Sujana Metal Products Ltd.

Statement pursuant to Section 212(1)(e) of the Companies Act,1956 relating to Subsidiary Companies, As at 31st March,2011, is also annexed to this report.

9. Consolidated Financial Statements:

Your Company has availed the general exemption from attaching a copy of the Balance Sheet, Profit and Loss Account, Directors' Report and Auditor's Report of the subsidiary Companies and other documents required to be attached under Section 212(1) of the Companies Act, 1956, to the Balance Sheet of your Company. The said exemption is granted vide Circular No. 5/12/2007-CL-III issued by Ministry of Corporate Affairs dated 08.02.2011.

Accordingly, the said documents of subsidiary Companies are not being attached with the Balance sheet of the Company. A gist of the financial performance of the subsidiary Companies is contained in the report. The annual accounts of the subsidiary Companies are open for inspection by any member/ investor at the Company's Registered office and the Company will make available these documents and the related detailed information upon request by any investor of the Company or any investor of its subsidiary Companies who may be interested in obtaining the same. A statement containing brief financial details of the Company's subsidiaries for the financial year ended March 31, 2011 is annexed to this Report.

In terms of Clause 32 of the Listing Agreement with the Stock Exchanges and as prescribed by Accounting Standard 21 notified by the Government of India under Section 211(3C) of the Companies Act, 1956, the Audited Consolidated Financial Statements are annexed.

10. Postal Ballot:

During the period 2009-11, the Company conducted two postal ballot exercises to obtain members approval for, inter alia:

- Issue of convertible warrants on preferential basis to promoters and promoter group.

- Increasing the borrowing powers of the Company.

- To increase the limit of making loan, investment, security, guarantee under Section 372A of the Companies Act, 1956.

- Shifting the registered office of the Company from Survey No:296/7/9, IDA Bollaram, Jinnaram Mandal, Medak District to Plot No:18, Nagarjuna Hills, Panjagutta, Hyderabad-500082.

- Issue of equity shares and/or any securities linked to, convertible into or exchangeable for equity shares including without limitations through Global Depository Receipts (GDR)/ Foreign Currency Convertible

Bonds (FCCBs)/ Foreign Currency Exchangeable Bonds(FCEB)/American Depository Receipts (ADR), Qualified Institutional Placements (QIP)

The complete details of postal ballot exercises are provided in the Corporate Governance Report attached and forming part of this report.

11. Corporate Governance:

Your Company's Report on Corporate Governance is attached and forms part of this report. Certificate from the Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is attached to this report.

12. Management Discussion and Analysis Report:

A separate Management Discussion and Analysis Report is also attached and forms part of this report.

13. Directors:

In accordance with the provisions of the Companies Act, 1956 and the Company's Artciles of Association, Shri Y.S. Chowdary and Dr.V.Malakonda Reddy, Directors retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Further, Shri S.Hanumantha Rao, whose term as Executive Director expires on 30.09.2010, was re-appointed as Director (Finance) of the Company with effect from 13th August, 2010 for a period of 5 years at the Board Meeting held on 13th August, 2010 subject to the approval of the members. Separate resolution has been put up for consideration by the members.

14. Directors' Responsibility Statement:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating management, confirm that- a. 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. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss 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 preventing and detecting fraud and other irregularities;

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

15. Disclosures under Section 217(1)(d) of the Companies Act, 1956:

Material changes and commitments which can affect the financial position of the Company occurred between the end of the financial year of the Company and date of this report :

Change S. No. Particulars (Yes/No)

(a) The purchase, sale or destruction of a plant or the destruction of No inventories.

(b) A material decline in the market value of inventories or investments No

(c) the expiration of a patent which had given the Company a virtual monopoly No in the sale of its principal products.

(d) The settlement of tax liabilities of prior period and the settlement of any No legal or other proceedings either favourably or adversely, if they were pending at the balance-sheet date.

(e) The institution of importance proceedings against the Company. No

(f) Material change in the capital structure in the resulting from the issuance, No retirement or conversion of share capital or stock .

(g) the disposal of a substantial part of the undertaking or the profits or loss No whether of a capital or revenue nature.

(h) Alteration in the wage structure arising out of Union Negotiations. No

(i) Incurring or any reduction of long-term indebtedness. No

(j) Entering into or cancellation of contracts and. No

(k) Refund of taxes or completion of assessments Yes

16. Code of conduct

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on the Company's website. Board Members and Senior Management personnel have affirmed compliance with the Code for the financial period 2009-11. A separate declaration to this effect is made out in the Corporate Governance Report.

17. Promoter Group Companies:

Pursuant to intimation from promoters, names of Promoters and Companies comprising the "Group" as defined in the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969, have been disclosed on page No. 37 in the Annual Report of the Company.

18. Statutory Auditors:

Your Company's Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, who retire at the ensuing Annual General Meeting of your Company, being eligible, offer themselves for reappointment.

Your Board of Directors recommended the appointment of M/s. Deloitte Haskins & Sell, Chartered Accountants, Hyderabad, as Statutory Auditors of your Company. Your approval for such appointment is solicited.

Your Company has received a letter from M/s. Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, to the effect that their appointment as Statutory Auditors, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and they are not disqualified for such appointment.

19. Cash Flow Analysis

In conformity with the provisions of clause 32 of the listing agreement, the cash flow statement for the period ended 31st March, 2011 is included in the annual account.

20. Personnel

The relations with employees continued to be cordial throughout the year. The Board appreciates the willing co-operation and team spirit displayed by the Management Cadre and other employees of the Company.

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is annexed to this report.

21. Human Resource Management:

With the size of expansion going in the Company, human resources assume greater importance and have a significant place in the Organizational Structure. Your Company has been able to create a favorable work environment that encourages innovation and merit. Your Company has put in place a scalable recruitment and human resource management. The efforts of your Company in the area of employee management and HR practices have proved effective in Human Resource Management. Emphasis is given to the overall development of the personality of individual employee. Welfare schemes are run in the factories. for employees and their families.

22. Dividend:

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No:2592/SASF/CBO and 5938/SASF/ CBO dated 28.06.2005 and 29.10.2005 respectively, your Company is required to pay the dividend of Rs. 25.08 Lakhs (Previous year Rs.35.32 Lakhs) which represents 1% on 3531625 (on 19.11.2009, 20,38,260 CRPS which was issued in the name of Stressed Assets Stabilization Fund(SASF), Mumbai redeemed as the terms and conditions as mentioned in the letters No: SASF/ Sujana Metal/No:706 dated:25.06.2008 and SASF/SMPL(Sujana)/ No.2(2008-09) dated:06.12.2008 issued by Stressed Assets Stabilisation Fund have been fulfilled with the issue and allotment of 1,27,48,571 equity shares of Rs.5/- each to SASF) Cumulative Redeemable Preference Shares(CRPS) of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the period under review, Further your Company also provided a provision of dividend tax to the extent of Rs.4.16 Lakhs (Previous year Rs.6.00 Lakhs)

23. Quality and Safety:

Your Company accords high priority to quality, safety, training, development, health and environment. The Company endeavours to ensure continuous compliance and improvements in this regard.

24. Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately the covered.

25. Listing of Company's Securities:

Your Company's shares are currently listed on Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Madras Stock Exchange Limited and The Global Depository Receipts are currently listed at the Luxembourg Stock Exchange.

26. Dematerialization of Shares:

Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL).

27. Fixed Deposits:

Your Company has not accepted any fixed deposits and the provisions of Section 58A of the Companies Act, 1956 are not applicable.

28. Cost Auditors:

In terms of the directives of Ministry of Corporate Affairs under Section 233B of the Companies Act, 1956 vide its General Circular No:15/2011 and circular F.No:52/26/CAB-2010 on 11.04.2011 and 03.05.2011 respectively, the Company has appointed the qualified Cost Accountant for conducting audit of Cost Accounting Records in respect of steel products manufactured by the Company for the year 2011-12.

29. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required by Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of the particulars in the report of the Board of Directors) Rules, 1988 are given in the Annexure 1 and forms part of this report.

30. Explanations for the qualifications in Auditors' Report:

The Statutory Auditors of the Company M/s Deloitte Haskins & Sells have made the following comments in their report for the period 2009-11.

Auditor's Comments:

1. Paragraph (viii) (b) in Annexure to the Audit Report, details of undisputed amounts payable in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and Other material statutory dues which were in arrears as at March 31, 2011 for a period of more than six months from the date they became payable are given below:

Amount Year to which Nature of Nature of Date of (Rupees in the amount Due date Statute Dues Payment Lakhs) relates

Income Tax Income Tax 462.32 2010-2011 June 15, 2010 and Not paid Act, 1961 2.74 2001-2002 September 15, 2010 4.20 2002-2003 June, September, December and March of each year / period

Income Tax Fringe 7.56 2006-2007 January 23,2010 Not Paid

Act, 1961 Benefit Tax 8.51 2007-2008 February 24,2010

Wealth Tax Wealth Tax 0.88 2008-2009 September 30, 2009 Not paid Act,1957 1.08 2009-2010 September 30, 2010

Company Explanation:

The Company is in the process of amalgamation of the companies i.e. M/s Lakshmi Gayatri Industries Private Limited, M/s Glade Steel Private Limited, M/s Sri Ganga Steel Enterprises Private Limited and M/s Topaz Steel India Limited with Sujana Metal Products Limited w.e.f 1.10.2009.The Scheme under the consideration of the Honorable High Court of Andhra Pradesh, upon the scheme of amalgamation which is becoming effective, no liability is arises.

2. Paragraph (viii) (c) in Annexure to the Audit Report , details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2011 on account of disputes are given below:

Financial Year Amount Name of the Statute to which matter (Rupees in Forum where matter is pending pertains Lakhs)

Central Excise Act, 1944 1995-2009 1,384.30 Custom Excise & Service Tax 1995-1997 1.00 Appellate Tribunal Commissioner of Customs (Appeals)

Customs Act, 1962 1998-1999 302.69 Commissioner of Customs (Sea 2008-2009 214.90 Port) Custom Excise & Service Tax Appellate Tribunal

Foreign Exchange Regulation 1995-1996 530.00 Hon'ble High Court of Delhi Act, 1973

APGST Act, 1957 2002-2003 488.13 Sales Tax Appellate Tribunal

2003-2004 786.88 Appellate Deputy Commissioner

Central Sales Tax Act, 1956 2002-2003 2,213.11 Commercial Tax Officer

2004-2005 13.38 Sales Tax Appellate Tribunal

2005-2008 58.58 Appellate Deputy Commissioner

2006-2007 241.34 Hon'ble High Court of Andhra Pradesh and Appellate Deputy Commissioner

Tamilnadu Value Added Tax 2006-2007 194.92 Hon'ble High Court of Tamilnadu Act, 2006

Company Explanation:

As the liabilities are disputed and the matters are pending with the respective statutory bodies, the Company has not remitted the same. The Company has taken opinion from leading tax practitioners' in respective fields, who opined that the Company has a good chance of getting verdict its favour in all these cases. However, the same were disclosed as contingent liabilities in the notes on accounts.

31. Appreciations:

The Board of Directors of the Company extend their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thank the Employees for their valuable efforts and the shareholders for their valued trust in the Company.

By order of the Board

R.K. Birla S. Hanumantha Rao

Managing Director Director (Finance)

Place: Hyderabad

Date: 29.08.2011














Sep 30, 2009

The Directors have pleasure in presenting you the Twentieth Annual Report of your Company together with the Audited Accounts for the Financial Year ended 30th September, 2009 comprising of 12 months from 01.10.2008 to 30.09.2009.

Companys Performance:

Your Directors hereby report that the Company has achieved a turnover of Rs. 192985.69 lakhs upto 30.09.2009 consisting of twelve (12) months, as against the turnover of Rs.189214.80 lakhs during the previous financial year ended 30.09.2008 consisting of fifteen (15) months.

The highlights of the financial results are as follows:

(Rupees in Lakhs)

2008-2009 2007-2008 (12 Months) (15 Months)

Operating Profit before 14580.67 11896.95

Depreciation & Interest

Interest 8882.41 4561.54

Depreciation 2766.19 2202.82

Operating Profit after depreciation and Interest 2932.07 5132.59

Other Income 820.13 348.44

Profit before tax 3752.20 5481.03

Provision for tax 1235.40 2399.22

Profit before extra-ordinary 2516.80 3081.81 items

Extra-ordinary items -- 740.71

Profit after extra-ordinary 2516.80 3822.52 items

Add: Profit brought forward 9526.17 6259.85

Profit available for 12042.97 10082.37 appropriation

Review of Operations:

Growth in Revenue and Profit During the year under review, your Company recorded a total income of Rs. 193805.82 lakhs, compared to Rs. 189563.24 lakhs in the previous financial year, which represents a 2.24% growth. The net profit for the year stands at Rs. 2516.80 lakhs as compared to the net profit of Rs. 3822.52 lakhs (annualized Rs. 3058.02 lakhs) in the previous year, which represents a 21.50% decrease (annualized) over the previous year, due to 100% depreciation provided on moulds.

Industrial Relations:

Your directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year.

Allotment of 6,05,00,000 convertible warrants of Rs. 5/- each at a price of Rs. 36/- per warrant to the promoters and promoters group:

In pursuance of special resolution passed by the members of the Company at their 18th Annual General Meeting held on 31.12.2007, to issue 6,05,00,000 convertible warrants of Rs. 5/- each at a price determined as per the provisions of SEBI (Disclosure and Investor Protection) Guidelines 2000, of Rs.36/- per share to the Promoters and Promoter Group, the Company allotted 6,05,00,000 Convertible Warrants to the promoters & promoters group on 28.01.2008. These warrants are compulsorily convertible into equity shares within a period of eighteen months from the date of allotment i.e., 28.01.2008.

During the previous year 32,00,000 warrants out of 6,05,00,000 warrants had been converted into 32,00,000 equity shares of Rs. SI- each of the Company and subsequently listed in BSE.

During the year under review 60,00,000 warrants out of 6,05,00,000 warrants had been converted into 60,00,000 equity shares of Rs. 5/- each of the Company and subsequently listed in BSE.

5,13,00,000 convertible warrants out of 6,05,00,000 convertible warrants issued to the Promoter Group on 28.01.2008 through preferential allotment at a price of Rs.36/- per warrant including a premium of Rs.31/- per warrant have lapsed since the respective allottees had informed the Company that they would not be exercise the option of converting the outstanding warrants into equity shares.

The proceeds of the issue have been utilized for the purpose for which they have been raised.

Subsidiaries of the Company

Your Company formed the following Wholly Owned Subsidiaries:

(a) Glade Steel Private Limited

Glade Steel Private Limited, incorporated on 12th May 2005, is having its registered office at 18, Nagarjuna Hills, Punjagutta, Hyderabad. Glade has been promoted with an object to purchase or other wise acquire,manufacture, distribute, supply, sell and other wise dispose of Rounds, Flats, Squares, Angles, Channels,Grinders and Allied Products with installed capacity of 60,000 MT/per annum of re-rolling and 50,000MT/per annum of MS ingots.

Audited financial statements, Directors Report and Auditors Report of M/s Glade Steel Private Limited for the financial year ended 31.3.2009 pursuant to Section 212(1) are given from Page No. 63 to 77 and forming part of this report.

(b) Alpha Ventures Limited

Alpha Ventures Limited, incorporated on 6th March 2007, is having its registered office at PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The Company has been promoted to carry out any object not prohibited by the Companies Law (2004) Revision, or as the same may be revised from time to time, or any other law of the Cayman Islands.

As per the law prevailing in Cayman Islands, Financial Statements of M/s Alpha Venture Limited are not required to be audited.

However, the Audit of the financials is conducted by M/s. T. Raghavendra & Associates, Chartered Accountants, Hyderabad, for the purpose of consolidation and the Audited accounts, Directors report, Auditors report and other related information of M/s Alpha Venture Limited for the financial year ended: 30.09.2009 pursuant to Section 212(1) are given from Page No. 78 to 88 and forming part of this report.

(c ) Asian Tide Enterprises Limted

Asian Tide Enterprises Limted, incorporated on 3rd July 2007, is having its registered office at Suite 1402,1 Duddell Street, Central, Hong Kong. Asian has been promoted with an object to trade goods.

Your Companys Financial year is not coinciding with the Financial Year of M/s. Asian Tide Enterprises Limited.

Audited financial statements, Directors Report and Auditors Report of M/s. Asian Tide Enterprises Limited for the financial year ended 31.03.2009 pursuant to Section 212(1) are not provided here since the Company has not carried on any business during the year.

Statement pursuant to Section 212(1)(e) of the Companies Act, 1956 relating to Subsidiary Companies, As at 30th September, 2009, is given as Annexure -1 on Page No. 12.

Consolidated Financial Statements:

The Consolidated financial statements of the Company and its subsidiaries, prepared and presented in accordance with Accounting Standard (AS-21) and pursuant to Clause 32 of the Listing agreement, consisting of the annual audited accounts of your Company for the year ended 30th September 2009 and audited/un- audited financial statements of the respective subsidiary companies as mentioned above have been annexed to the Annual Report.

Corporate Governance:

A report on Corporate Governance along with Practicing Company Secretary certificate on compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement, is provided separately in the Annual Report and forming part of this Annual Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report is provided separately in the Annual Report and forming part of this Annual Report.

Directors:

Shri G. Srinivasa Raju and Dr.K.Srinivasa Rao, Directors of the Company, are liable to retire by rotation in the forthcoming Annual General Meeting of the Members of the Company and being eligible offers themselves for reappointment.

Shri K. Kameswara Rao, Director of the Company had resigned from the Board of Directors of the Company w.e.f. 01.09.2009.

Directors Responsibility Statement:

Pursuant to Section 217{2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating management, confirm that-

a. 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. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss 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 preventing and detecting fraud and other irregularities;

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

Code of conduct

The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been posted on the Companys website. Board Members and Senior Management personnel have affirmed compliance with the Code for the financial year 2008-09. A separate declaration to this effect is made out in the Corporate Governance Report.

Promoter Group Companies:

Pursuant to intimation from promoters, names of Promoters and Companies comprising the "Group" as defined in the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969, have been disclosed on Page No. 20 in the Annual Report of the Company.

Statutory Auditors:

The Companys Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, who retire at the ensuing Annual General Meeting of your Company, being eligible offers themselves for reappointment.

Your Board of Directors recommended the re- appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, as Statutory Auditors of your Company. Your approval for such appointment is solicited.

The Company has received a letter from M/s. Deloitte Haskins & Sells, Chartered Acountants, Hyderabad, to the effect that their appointment as Statutory Auditors, if made, would be within the prescribed limits under Section 224(1 B) of the Companies Act, 1956 and they are not disqualified for such appointment.

Personnel

The relations with employees continued to be cordial through out the year. The Board appreciates the willful co-operation and team spirit in the Management Cadre and other employees of the Company.

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 given as Annexure - 2 to this report.

Human Resource Management:

With the size of expansion going in the Company, human resources assume greater importance and have a significant place in the Organizational Structure. Your Company has been able to create a favorable work environment that encourages innovation and meritocracy. Your Company has put in place a scalable recruitment and human resource management. The efforts of your Company in the area of employee management and HR practices have been proved effective in Human Resource Management. Emphasis is given to the overall development of the personality of individual employee. Welfare schemes for employees and their families are run in the factories.

Dividend:

As per the terms of issue of Cumulative Redeemable Preference Shares (CRPS) vide letter No. 2592/SASF/CBO and 5938/SASF/ CBO dated 28.06.2005 and 29.10.2005 respectievely, your Company is required to pay the dividend of Rs. 35,31,625 (Previous year Rs.44,14,531 consists of 15 months period) which represents 1 % on 35,31,625 Cumulative Redeemable Preference Shares of Rs.100/- each to the holders of Cumulative Redeemable Preference Shares for the year under review. Further your Company also provided a provision of dividend tax to the extent of Rs.6,00,200 (Previous year Rs. 8,38,192 consists of 15 months period)

Quality:

High quality standards are maintained in all areas and review of the same is also made constantly in view of the rapid changes that are taking place in the global markets

Insurance:

All the properties and insurable assets of the Company, including Building, Plant and Machinery, stocks etc., wherever necessary and to the extent required, have been adequately the covered.

Listing of Companys Securities:

Your Companys shares are currently listed on Bombay and Madras Stock Exchanges and The

Global Depository Receipts are currently listed at the Luxumberg Stock Exchange.

The Company also made an application with National Stock Exchange of India Limited (NSE) Mumbai for listing of its equity shares and the same is under consideration of NSE.

Dematerialization of Shares:

Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL).

Fixed Deposits:

The Company has not accepted any fixed deposits and the provisions of Section 58A of the Companies Act, 1956 are not applicable.

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and Outgo:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required by Section 217(1 )(e) of the Companies Act, 1956 read with the Companies (Disclosure of the particulars in the report of the Board of Directors) Rules, 1988 are given in the Annexure 3 and forming part of this report.

Explanations to the qualifications in Auditors Report:

The Statutory Auditors of the Company M/s Deloitte Haskins & Sells have made the following comments in their report for the year 2008-09.

1. Auditors Comments:

Paragraph (iv) in Annexure to the Audit Report, "there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services except that such systems need to be strengthened in respect of certain locations of the company in order to make it commensurate with the size and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal controls systems".

Company Explanation:

The Company is in regular touch with the Statutory Auditors and the Internal Auditors to improve Internal Control Systems, and procedures commensurate with the increased level of operations. The Company has identified bench mark procedures and systems in the industry and the same are being implemented in all the locations of the Company in order to strengthen the systems and procedures. The Company has identified a proven system of Fixed Assets software which is expected to be implemented in due course. The Company is also in the process of implementation of an ERP system in all units, with Chennai unit as pilot plant which will be carried to other units once it stabilizes in the first location. The Company has also initiated many steps to strengthen the internal controls in the areas of inventory and fixed assets.

2. Auditors Comments:

Paragraph (ix) (a) in Annexure to the Audit Report, "Except for delays in deposit of provident fund dues, employee state insurance dues, taxes deducted at source, advance payment of income taxes and wealth tax, the Company has been regular in depositing undisputed statutory dues including investor education and protection fund, custom duty, excise duty, cess, sales tax, service tax and any other material statutory dues applicable to it with the appropriate authorities during the year".

Company Explanation:

The delay in payment of statutory dues are limited to one location and the delay is due to non remittance on due dates on some occasions. However, the Company has cleared all the statutory dues in time with necessary late payment fees and the company has taken appropriate steps to avoid delay in future.

3. Auditors Comments:

Paragraph (ix) (b) in Annexure to the Audit Report "details of undisputed amounts payable in respect of provident fund, investor education and protection fund, income tax, sales tax, wealth tax, service tax, custom duty, excise duty and any other material statutory dues which were in arrears as at September 30, 2009 for a year of more than six months from the date they became payable are given below".

Nature Nature of Amount Year to Due Date of of Dues (Rupees) which the date Payment Statute amount relates

Income Income 112,502,016 1999-2009 July, Not Tax Act, Tax and September, Paid 1961 Fringe December Benefit Tax and March of each year/period.

Company Explanation:

The Company is in the process of reconciling the differences in the amounts payable to the Income Tax Department in the previous years. In the process of reconciliation the company has claimed an amount Rs. 42,685,445 as refund relating to earlier Assessment years and has requested the IT dept. to adjust the same towards various demands from the Income Tax Department for the Assessment years 1999- 00 to 2008-09. The Department adjusted an amount of Rs. 33,007,404. Further the company has made payment of Rs. 43,405,064 subsequent to the Balance sheet date. Hence as on date the existing liability is amounting to Rs. 36,089,548. The company will be remitting the amount to the IT dept. once the final reconciliation with them is completed..

4. Auditors Comments:

Paragraph (ix) (c) in Annexure to the Audit Report "details of dues of sales tax, income tax, custom duty, wealth tax, service tax, excise duty and cess which have not been deposited as on September 30, 2009 on account of any dispute are given below"

Name of Financial Amount Forum where the Statute Year to (Rupees) matter is which matter pending pertains

Central 1995-2009 37,045,115 Custom Excise & Excise Act, Service Tax 1944 Appellate Tribunal

1993-2009 23,889,623 Commissioner of Customs and Central Excise

Customs 1998-1999 28,928,336 Commissioner of Act, 1962 Customs (Sea Port)

Foreign 1995-1996 37,500,000 Honble High Exchange Court of Delhi Regulation Act, 1973

APGST 2002-2005 164,087,562 Honble High Court Act, 1957 of Andhra Pradesh

2003-2004 78,688,077 Appellate Oeputy Commissioner

AP Value 2005-2008 686,274,557 Honble High Court Added of Andhra Pradesh Tax Act, 2005

Central 2002-2003 221,311,181 Commercial Tax Sales Tax Officer Act, 1956

2002-2006 1,337,612 Appellate Deputy Commissioner

Tamilnadu 2006-2007 19,491,531 Honble High Value Court of Tamilnadu Added Tax Act, 2006 Income 1996-1998 26,701,045 Commissioner of Tax Act, Income Tax 1961 (Appeals)

Company Explanation:

As the liabilities are disputed and the matters are pending with the respective statutory bodies, the company has not remitted the same. The company has taken opinion from leading tax practitioners in respective fields, who opined that the Company has a good chance of getting verdict its favour in all these cases. In respect of disputes under APGST Act and AP Value Added Tax Act, the Honorable High Court of AP has since (subsequent to the balance sheet date) set aside all these demands. The company has obtained legal opinion on the orders of Honorable Court who stated conclusively that no liability exists under these demands as on date. However, the same were disclosed as contingent liabilities in the notes on accounts, as the judgments were delivered after the balance sheet date..

5. Auditors Comments:

Paragraph (xi) in Annexure to the Audit Report "there have been delays in repayment of dues

to a bank and financial institution. Such delays have been summarized below indicating the maximum amount of delay and the maximum period, with the year end corresponding amount reflected against each".

Lender Maximum Maximum Remarks amount of period of Default Default (Rs.) (Days)

IDBI Bank Ltd.

Principal 13,532,074 86 --

Interest 14,584,532 32

Stressed Assets As per agreement, Stabilization 16,62,857 Equity Fund(SASF) Shares of Rs.5 at Principal 17,719,750 121 Premium of Rs.12.50 were allotted to SASF

Interest 14,331,095 456 on November 19,2009

Company Explanation:

The Company is regular in payment of interest and installments except in a few occasions. The delay is ranging from 32 days to maximum of 86 days and subsequently the company has paid all dues as on balance sheet date. In case of liability to SASF, SASF had approved discharge of the interest liability by issuance of equity, which was delayed due to delay in receiving the regulatory approvals like approval by the General Body and in principle listing approval of BSE. The company has, subsequent to the balance sheet date, entered into an agreement with SASF for settling the entire loan amount partly in cash and balance by issuing equity. As this proposal was under the consideration of SASF, the amounts as per earlier repayment schedule was not paid.

Appreciations:

The Board of Directors of the Company extends their sincere appreciation to the Government, Bankers, Financial Institutions and others for their kind support. On behalf of the Company, the Board of Directors thanks the Employees for their valuable efforts and the shareholders for their undaunted faith in the Company.

BY ORDER OF THE BOARD

PLACE: Chennai Y.S.CHOWDARY

DATE: 03.03.2010 CHAIRMAN

 
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