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Directors Report of Uttam Value Steels Ltd.

Mar 31, 2015

Dear Members,

The Directors present the Forty Fifth Annual Report on the operations of your Company along with Audited Financials Statement of Accounts for the year ended 31 st March, 2015.

FINANCIAL HIGHLIGHTS

(Rs. Crores)

particulars 2014-15 2013-14

Sales (Gross) 5405.65 7062.02

Other Income 59.66 51.28

Total Income 5465.31 7113.30

Profit/(Loss) before Interest, 348.00 309.05 Depreciation, Exceptional Items & Tax

Less : Finance Charges 270.31 254.37

Depreciation 109.02 153.41

Profit/(Loss) before tax (31.33) (98.73)

Portion of current year Profit/(Loss) - - on Investment in Associate

Net Profit/(Loss) after Tax (31.33) (98.73)

PERFORMANCE

The Company achieved a Gross Turnover of Rs.5405.65 Crores in 2014-15 as against Rs.7062.02 Crores in the previous year, showing a declined by 23.45 % over previous year. The operating EBIDTA for the year was Rs.348.00 Crores as against Rs.309.05 Crores in the previous year showing an increase by 12.60 %. The Company posted a loss of Rs.31.33 Crores during the year as against a loss of Rs.98.73 Crores in the previous year after providing depreciation of Rs.109.02 Crores (Previous year Rs.153.41 Crores).

DIVIDEND

In view of the accumulated losses, the Board of Directors do not recommend any Dividend on the Equity shares.

Industry Structure and Development

The Engineering Division of the company has been approved for its engineering skills/works/services by various premier consulting companies and Inspection Agencies, such as Engineers India Ltd, MECON, LRIS, BVIS, amongst various other agencies. The Engineering segment is highly competitive in view of tough competition from foreign companies/ agencies and giant public/private sector undertakings.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors confirm that:

i) in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures.

ii) appropriate Accounting Policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2015 and of the Profit and Loss Account for the Financial Year 2014-2015.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

v) had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively : and

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

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement the Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report.

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

Information in accordance with Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexed and forms integral part of this Report.

Wardha and Murbad works of the Steel & Engineering Division respectively adopts a cautious approach in power and fuel consumption by optimizing the operation of shifts and by following strict fuel consumption measures.

DIRECTORS AND KEY MANGERIAL PERSONNEL

During the year under review the Company has appointed following persons as Key Managerial Personnel as per the requirement of section 197 of Companies Act, 2013 Read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Sr. No. Name of the Person Designation

1 Shri Rajiv Munjal Whole Time Director

2 Shri Ashok Tandon Whole Time Director

3 Shri Rajendra Sharda* Chief Financial Officer

4 Shri Ram Gaud Sr. G.M. and Company Secretary

* Since resigned.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the listing Agreement, a structured questionnaire was prepared after taking into consideration the various aspects of the Board functioning, composition of the Board and its committees, culture, execution and performance of specific duties, obligation and governance.

The performance evaluation of the Independent Directors was completed. The performance evaluation of Chairman and Non-Independent Directors was carried out by the Independent Directors. The Board of the Directors expressed their satisfaction over the evaluation process.

NUMBER OF MEETINGS OF THE BOARD

During the financial year 2014-15, five Boards Meetings were held, for details please refer to Corporate Governance on page no. 29.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT BY THE COMPANY

The Details of Loans Guarantees and Investment covered under the provision of the Section 186 of the Companies Act, 2013 are given in the notes of Financial Statements.

REMUNERATION AND NOMINATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation to the Directors, Key Managerial Personnel and Senior Management of the Company. The Policy also lays down the criteria for selection and appointment of Board Members. The details of the policy are explained in the Corporate Governance Report for which please refer to page no. 30

AUDIT COMMITTEE

The audit Committee comprises Independent Directors namely Shri B.L. Khanna, Shri U.N Challu, Shri B.L Khurana (appointed w.e.f. 29th May, 2015). All the recommendations made by the Audit Committee were accepted by the Board.

STAKEHOLDER RELATIONSHIP COMMITTEE

The Stakeholder Relationship Committee comprises of three Senior Directors namely Shri Rajinder Miglani, Shri Rajiv Munjal, Shri Ashok Tandon

RELATED PARTY TRANSACTION

All the Transactions entered with Related Parties for the year under review are strictly done on arm's length basis and in the ordinary course of business. The Company presents full details of transactions of all related party before the Audit Committee, specifying the nature, value and terms & conditions of the transactions. Transactions with related parities are conducted in a transparent manner with the interest of the Company and Stakeholders as utmost priority. The Company has one material transaction during the year with Related Party, the details of the same is given in Form AOC-2 which is attached herewith as Annexure E.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have Subsidiary or Joint Venture Company, The Company has Indrajit Power Pvt Ltd. as the Associate Company, however in the light of the amendment made in rule 6 of the Companies (Account) Rule, 2014 vide the official Gazette published on 14th October, 2014, the Company does not requires to consolidated the Annual Account of Associate Company with the Annual Account of the Company The report on the performance of the Associate Company with the Annual Account of the Company. The report on the performance of the Associate Company may be accessed on the Company Website at www.uttamvalue.com

STATUTORY AUDITOR AND THEIR REPORT:

M/s. Todarwal and Todarwal (Firm Registration No. 111009W), Statutory Auditors of the Company, will hold office till the conclusion of ensuing Annual General Meeting and eligible for re-appointment as per the Section 139 of the Companies Act, 2013.

M/s. Todarwal and Todarwal expressed their willingness to get re-appointed as the Statutory Auditors of the Company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013 read with the rules made thereunder. In terms of the Listing Agreement, the Auditor's have confirmed vide their letter dated 28th May, 2015 that they hold a valid certificate issued by the Peer Review Board of the ICAI. Accordingly, the Board based on the recommendation of the Audit Committee, recommends the appointment of M/s. Todarwal and Todarwal, Chartered Accountants as Statutory Auditor of the Company for the term of one year for the approval of shareholders.

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

COST AUDITORS AND COST AUDIT REPORT:

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Steel and Engineering Division every year.

The Board of Directors, on the recommendation of Audit Committee, has appointed M/s. Manisha & Associates, Cost Accountants as Cost Auditor to audit the cost accounts of the Company for the financial year 2015-16 at a remuneration of Rs.60,000/- per annum and reimbursement of out of pocket expenses if any. As required under the Companies Act, 2013 a resolution seeking members approval for the remuneration payable to the Cost Auditors forms part of the Notice convening the Annual General Meeting.

The cost audit report for the financial year 2013-14 was filed with the Ministry of Corporate Affairs.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of the Section 204 of the Companies, Act, 2013 read with the rules made there under, the Company has appointed M/s. JNG & Co.,a firm of Practicing Company Secretaries (CP No. 8108), to undertake the Secretarial Audit of the Company. The Secretarial Audit Report, is annexed herewith and forms an integral part of this report.

There is no secretarial audit qualification for the year under review.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with rules 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this reports. In terms of section 136 of the Companies Act, 2013, the same is opened for the inspection at the registered offices of your Company. Copies of this statement may be obtained by the member by writing to the Company Secretary of your Company.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS.

The Company's human resource policies and strategies seek to ensure a high level of motivation among employees so that they play a significant role in achieving the company's goal.

The Company has initiated various in-house training programs for skill advancement. The Company accords highest priority to ensure safety and protection of health of its employees which are essential to, and form an integral part of, every HR development endeavor.

The Company has a medical Centre at its Wardha complex providing round the clock medical assistance to its employees. Health checkup is also carried out periodically, for all employees. Total employees as on 31st March, 2015 were 1394.

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.

The Whistle Blower Policy has been posted on the website of the Company (www.uttamvalue.com)

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

In order to attain the corporate objectives, strict internal controls systems are required to be implemented across the organization. The same is ensured by the senior management through a mix of periodic reviews, implementation of Standard Operating Procedures, defining Delegation of powers and constant up-gradation of IT systems.The efficacy of internal control systems is ensured as a combined result of the following activities:

* Operational performance is reviewed each month by an executive committee comprising members of Senior Management.

* Performance of each function is closely monitored by the Senior Management through various Weekly / Monthly review meetings. Reviews of all independent functions are regularly undertaken. Simultaneously, cross functional activities are also subject to periodic review.

* Various policies are introduced from time to time, to ensure effective functioning of various independent departments, such as, Marketing, Finance, HR, etc.

* Delegation of power is regularly reviewed and revised, based on feedback received from Directors and process owners. The documents clearly specify the authorities of various divisional / functional heads etc. Hence, the financial and non-financial authorities stand clearly defined. Reports of Internal audit and management response thereto are subject to regular review by Audit Committee. Adequacy of internal audit is also reviewed by the Audit Committee.

SHARE CAPITAL

The paid up equity share capital as on 31st March, 2015 was Rs. 1322.94Crores. During the year under review the Company has issued and allotted 12,70,96,774 of Equity Shares constituting Rs. 197 Crores as per preferential allotment u/s 81 (1A) of the Companies Act, 1956. 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:

The details forming part of the extract of the Annual return in form MGT-9 as required u/s. 92 of the Companies Act, 2013 is included in the Report as Annexure - C and forms an integral part of this report

RISK MANAGEMENT

As required by Clause 49 of the Listing Agreement, the Company has framed the Risk Management Policy. The Risk Management Policy defines the Risk Management Approach of the Company which includes periodic review of such risks and also documentation, mitigating controls and reports mechanism of such risks.

The Main objective of this policy is to ensure sustainable business growth with stability and to promote proactive approach and reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy established a structure and disciplined approach to risk management in order to guide decision on risk related issues.

Under the current challenging and competitive environment the strategy for mitigating inherent risk in accomplishing the growth plan of the Company are imperative. The Common risk interalia are regulatory risk, competition, financial risk, technology obsolescence, human resources risk, political risks, investments, retention of talents, expansion of facilities and product price risk.

CORPORATE SOCIAL RESPONSIBILITY:

Though the provisions of Section 135 of Companies Act, 2013 and Rules made there under regarding Corporate Social Responsibility are not attracted to the Company yet the Company has framed the Corporate Social Responsibility (CSR) Committee as per the requirement of Companies Act, 2013, the Company believes that Corporate Social Responsibility (CSR) is 'the continuing commitment for improving the quality of life of the society at large.' The company strives to contribute to the environment to its fullest to avoid irreversible changes in the ecosystem. We contribute to this global effort with activities such as planting of tree saplings and promoting environmental protection awareness amongst our employees. Company controls the pollutions by recycling and reusing the scrap, with safety, health and environment protection high on its corporate agenda

The Company has been, over the years, pursuing part of the corporate philosophy, and unwritten CSR Policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the Community with those of Company itself in an environment of partnership for inclusive development, the Company is committed for conducting business with a strong environment conscience, so as to ensure sustainable development, safe work places and enrichment of the quality of life.

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 complex.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURT

There are no significant and material orders passed by the Regulators or the Courts which would impact the going concern status of the Company and its future operations. The Stock Exchanges (BSE and NSE) have conveyed their 'No-Objection' approval for the draft Scheme of Demerger between Uttam Value Steels Limited ( "UVSL' or "Demerged Company"); and Lloyds Steel Industries Limited ("LSIL' or "Resulting Company") vide their letter dated 14th October, 2014 and 20th October, 2014 respectively. Thereafter Hon'ble High Court, Judicature at Bombay has directed vide their order dated 12th December, 2014, that the meeting of the Equity Shareholders be convened and accordingly on 22nd January, 2015, the Equity Shareholders approved the said Scheme of Demerger. Further, as per the direction of Hon'ble High Court, the meeting of Secured Creditors was held on 20th May, 2015 and the said scheme was approved accordingly.

STATUTORY COMPLIANCE:

The Company has complied with the various provisions of the Companies Act, 2013, the SEBI regulations and provisions of the Listing Agreements. Compliance certificates are obtained from various units of the Company and the Board is informed of the same at every Board meeting.

CAUTIONARY STATEMENT:

The Management Discussions and Analysis describe Company's projections, expectations or predictions and are forward looking statements' within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.

INVESTOR SERVICES

The Company and its Registrars and Share Transfer Agent, namely M/s. Bigshare Services Private Limited, who is looking after the physical as well as Demat work and also shareholders correspondence, endeavored their best to service the Investors satisfactorily. Your company has constituted a committee comprising of 3 senior Directors of the Company to redress the Investor grievances.

DIRECTORS

In term of the Articles of Association of the Company, Shri Rajinder Miglani (DIN 00286788) retires by rotation being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

Shri Ankit Miglani (DIN 00444956) - Director of the Company has conveyed his desire to devote most of his time and efforts to develop International Operations of the Company. Since he will be required to travel extensively out of India, he has requested the Company to relieve him from the responsibility of Directorship of the Company effective from 1st April, 2015.

During the year under review Shri Manash Chakraborty's Nomination has been withdrawn by Asset Reconstruction Company (India) Limited (ARCIL) w.e.f 10th February, 2015 in lieu of the payment of the entire dues of ARCIL made by the Company and accordingly Shri Manash Chakraborty has vacated the office of Nominee Director Shri S K Sachdev has been appointed as a Nominee Director of IDBI Bank w.e.f. 7th November, 2014 in place of Shri R K Bansal in terms of letter dated 26th August, 2014 received from IDBI.

The Board wishes to place on record the gratitude and sincere appreciation to Shri Ankit Miglani, Shri Manash Chakraborty and Shri R K Bansal for their immense and invaluable contribution made to the Company during their tenure as a Director

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the articles of Association of the Company, Shri B.L.Khurana, was appointed as an Additional Directors designated as an Independent Director w.e.f. 29th May, 2015 and shall hold the office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Shri B L Khurana for the appointment as an Independent Director.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet with criteria of Independence as prescribed under sub-section (6) of section 149 of the Companies Act, 2013 and under clause 49 of the Listing Agreements with the Stock Exchanges.

None of the Directors of your Company is disqualified under Section 164 (2) of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors' Report.

GENERAL DISCLOSURES

i) The information required under section 197 (12) of the Companies Act. 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of Directors Report for the year ending 31st March, 2015 is given in a separate Annexure to this Report.

Having regard to the provisions of the first proviso to section 136 (1) of the Act and as provided the Annual Report excluding the aforesaid Annexure is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of the Company before 21 days of the ensuing Annual General Meeting during the business hours on working days.

Your Directors states that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review :

a) Details relating to deposits covered under Chapter V of the Act.

b) Issue of equity shares with differential rights as to dividend, voting or otherwise.

c) Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

d) Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

e) The Company has not offered any Shares During the Financial year under Employee Stock Option/ Purchase Scheme.

f) Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT:

Your Directors wish to express their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members and Stakeholders during the year under review. Your Directors also wish to express their immense appreciation for the devotion, commitment and contribution made by the employees of the Company while discharging their duties.

For and on behalf of the Board

Rajinder Miglani Chairman

Dated: 29th May, 2015 Place: Mumbai


Mar 31, 2013

The Directors present the 43rd Annual Report on the operations of your Company along with Audited Statement of Accounts for the year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS

(Rs. in Lacs)

2012-13 2011-12 (12 Months) (9 months)

Sales : 668556.72 405303.18

Other Income 6203.28 4346.93

Total Income : 674760.00 409650.11

Profit/(Loss) before Interest, 31178.32 15476.72 Depreciation, Exceptional Items & Tax

Less : Finance Charges 16575.50 10849.94

Depreciation 14501.05 10649.84

Profit / (Loss) before exceptional 101.77 (6023.06) items & taxes

Less : Exceptional items (Net) - 1322.40

Profit/(Loss) before tax 101.77 (7345.46)

Tax Provision - -

Profit/(Loss) after Tax 101.77 (7345.46)

Net Profit/ (Loss) 101.77 (7345.46)

FINANCIAL YEAR

The current year is of twelve months. Financial accounts for the previous period was prepared for nine months i.e. from 1st July, 2011 to 31st March, 2012 hence they are not comparable.

DIVIDEND

In view of the accumulated losses, the Board of Directors do not recommend any dividend on the Equity shares.

STEEL INDUSTRY SCENARIO

2012 -13 was a challenging year for the steel industry with apparent steel use increasing at the slowest rate since 2009 when global demand declined by 6.5%. This was mainly due to the Eurozone crisis which persisted throughout 2012 and whose impact was felt further. On top of this, corrective macroeconomic measures in major emerging economies also contributed to a concerted slowdown globally. However, in the early part of 2013, the key risks to the global economy - the Eurozone crisis, a hard landing for the Chinese economy, and the US fiscal cliff issue - have all stabilized considerably and we now expect a recovery in global steel demand to kick in by the second half, led by the emerging economies. Yet, the situation on the financial markets remains fragile and the Eurozone crisis is far from being solved as the recent events in Cyprus have again shown.

Apparent steel use in China is expected to grow by 3.5% in 2013 to 668.8 Mt following a 1.9% increase in 2012. In 2014, steel demand is expected to grow by 2.5% as the Chinese government''s measures to control investment in an effort to rebalance the economy will remain in place.

In India, steel demand is also expected to pick up and will grow by 5.9% to 75.8 Mt in 2013 following 2.5 % growth in 2012 as monetary easing is expected to support investment activities. In 2014, growth in steel demand is expected to further accelerate to 7% thanks to the reform measures aimed at narrowing the fiscal deficit, coupled with measures to improve the foreign direct investment climate.

OPERATIONS & OVERALL PERFORMANCE

The Company achieved a Gross Turnover of Rs. 6685.56 crores in 2012-13 as against Rs. 4053.03 crores in the previous period (9 months), showing a growth of 23 % over previous year.The operating EBIDTA for the year was Rs. 311.78 crores as against Rs. 154.77 crores in the previous period (9 months). The Company posted a profit ofRs. 1.01 crores during the year as against a loss of Rs. 73.45 crores in the previous period (9 months) after providing depreciation of Rs. 145.01 crores (Previous period Rs. 106.50 crores).

STEEL PRODUCTS

Sale of steel products during the year 2012-13 was Rs. 3033.31 crores as against the previous period (9 months) of Rs. 2239.69 crores. Export sales achieved during the year Rs. 23.07 crores as against Rs. 10.77 crores recorded during the previous period of 9 months.

ENGINEERING PRODUCTS

Engineering Division achieved sales of Rs. 470.07 crores during 2012 -13 as compared to sales of Rs. 286.24 crores for 9 months in the previous period. During the year the division has executed various orders / jobs by supplying critical equipment and items including various types of Tanks and Vessels, Water Cooled Equipment to SMS India Ltd, Instrument Air Drier Unit to bOc India Ltd for MRPL PP Project , Pressure Vessels to Technimon SpA for OPAL Butene Project , Pressure Vessels - Passivation Drum & Pump out Drum and Hexane Dryer Package to Technip France for OPAL Butene Project, Marine Unloading Arms to HPCL, Supply of Cooling Bed-Fixed Structure to Danieli India Ltd, Buffer Vessels to SAIL, Pressure Vessels to HPCL, equipment for WHR Boiler to Petron Engineering Construction Ltd for IOCL, Paradip and Equipment to Uttam Galva Metallics Ltd, Uttam Galva Steels Ltd, Gopani Iron & Power Ltd. and Tapadia Polysters Pvt. Ltd. and supply of critical Spares and Services to all the major public and private Oil and Gas sector, Port Trust and various Government bodies.

PREFERENTIAL ISSUE OF EQUITY SHARES

In terms of the special resolution passed at the Extraordinary General Meeting of the members of the Company held on 14th July 2012, the Company was authorized to issue 7,00,00,000 Equity Shares to Metallurgical Engineering and Equipments Limited and 31.00.00.000 Equity Shares to Ultimate Logistics Solutions Private Limited on preferential basis, at a price of Rs. 10 per equity share, higher than the price calculated in accordance with Preferential Issue Guidelines contained in SEBI (ICDR) Regulations, 2009. Accordingly, the Committee of Board of Directors at its meeting held on 6th Dec, 2012 has issued 38,00,00,000 equity shares at a price of Rs. 10 each.

In terms of Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, Ultimate logistics Solutions Private Limited and Metallurgical Engineering Equipments Limited had made an open offer to the equity shareholders of the Company which opened on October 23, 2012 and closed on November 7, 2012.

UTILIZATION OF PROCEEDS FROM PREFERENTIAL ISSUE

Proceeds from Preferential issue of equity shares of Rs. 38,000 lacs have been utilised to fund the working capital needs and for general corporate purposes of the company.

CONVERSION OF PREFERENCE SHARES OF IDBI BANK LIMITED

In terms of the special resolution passed at the Extra-ordinary General Meeting of the members of the Company held on 4th March, 2013 the Company was authorized to convert 22,69,50,000 Redeemable Preference Shares of Rs. 10 each into 15,00,00,000 Equity shares of Rs. 10 each fully paid up by way of preferential Issue at a price of Rs. 15.13 per equity share.

Accordingly Committee of Directors of the Company at its meeting held on 19th March, 2013 has allotted 15.00.00.000 equity shares to IDBI Bank Limited.

DEBT RESTRUCTURING

All the debts of the Company are crystalized and settled. Over the years, the Company has paid a large amount towards past debt liabilities and remaining debts are being paid in accordance with the restructured terms. The Company has paid off Rs. 134.12 crores during the period under review towards past Debt liabilities.

CHANGE OF NAME OF THE COMPANY

Pursuant to the consent received from the shareholders of the Company in the Extraordinary General Meeting held on 4th March, 2013 and Fresh Certificate of Incorporation received from Registrar of Companies, Maharashtra, Mumbai, the name of the Company has been changed from LLOYDS STEEL INDUSTRIES LIMITED to UTTAM VALUE STEELS LIMITED with effect from 18th March, 2013.

RESEARCH AND DEVELOPMENT

The Company undertakes on a continuous basis, various activities such as the development of new products and processes, cost reduction, improvement in quality and productivity and import substitution.

INVESTOR SERVICES

The Company and its Registrars M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence, endeavored their best to service the investors satisfactorily. Your Company has constituted a committee comprising of 3 Senior Directors of the Company to redress the Investor grievances.

DIRECTORS

In accordance with the provisions of Companies Act, 1956 and as per the provisions of the Articles of Association of the Company, Shri B. L. Khanna & Shri U. N. Challu, retire by rotation and being eligible, offer themselves for re-appointment to the Board.

Shri Rajinder Miglani, was appointed as a Additional Director and Chairman of the Company Shri Ankit

Miglani and Shri Rajiv Munjal were appointed as Additional Directors by the Board of Directors of the Company at its meeting held on 28th December, 2012. Further, Shri S. K. Soni was also appointed as an Additional Director w.e.f. 25th May, 2013 respectively. As Additional Directors, they hold office upto the date of the ensuing Annual General Meeting of the Company at which they are being proposed for regularization.

During the year Shri Ashok Tandon , Director of the Company was re-designated as Whole time Director w.e.f. 20th June, 2012 and the shareholders of the Company have confirmed his appointment as Whole time Director vide Special Resolution passed at the Extra Ordinary General Meeting of the Company held on 04th March, 2013.

Further, the Board of Directors appointed Shri Rajiv Munjal as Whole time Director, designated as Director - (Commercial) and of the Company which needs to be approved by the Shareholders at the ensuing Annual General Meeting of the Company.

The above appointments / re-appointments forms part of the Notice of the 43rd Annual General Meeting and the relevant Resolutions are recommended for your approval.

Profiles of these Directors, as required by the Listing Agreement provisions, are given in the Corporate Governance Report which forms part of this Annual Report / Notice.

During the year, Shri Mukesh Gupta resigned as Chairman and Director, Shri Rajesh Gupta resigned as a Managing Director & Director, Shri B. L. Agarwal resigned as a Director w.e.f 28th December, 2012 & Shri K. A. Krishna Rao resigned as Director of the Company w.e.f 25th May, 2013. The Board wishes to place on record their gratitude and sincere appreciation for their immense and invaluble contributions made to the Company during their tenure as Directors since inception of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

1. In the preparation of annual accounts for the financial year 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review.

3. The Directors 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;

4. Final accounts have been prepared on going concern basis.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor''s Certificate on its compliance are annexed hereto and forms part of this Annual Report.

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 complex.

PUBLIC DEPOSITS

The Company has not accepted any deposit from the public and hence has not contravened provisions of the Section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, I975 and the Reserve Bank of India, if any.

AUDITORS & AUDITORS'' REPORT

The Auditors of the Company, M/s Todarwal & Todarwal (Regn. No. I I I009W) shall hold the office upto the conclusion of the ensuing Annual General Meeting of the Company and being eligible offers themselves for re-appointment. Pursuant to the provisions of Section 224( IB) of the Companies Act, 1956, the Auditors have furnished certificate of their eligibility for the re- appointment. The members are requested to appoint Auditors for the next financial year and to authorize the Board to fix their remuneration.

As regards Auditors'' observations in Clause No. 9 (b), I0 & II in the Annexure Audit Report (CARO Report), they are self-explanatory and do not require further explanation.

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

Information in accordance with Section 2I7(I) (e) of the Companies Act, I956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, I988 are set out in Annexure ''A'' forming part of this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 2I 7(2A) of the Companies Act, I 956 and the Companies (Particulars of Employees) Rules, I975, names and other particulars of the employees are required to be set out in the annexure to this report. However, as per the provisions of Section 2I9(I)(b)(iv) of the Companies Act, I956, the report and Annual Accounts of the Company sent to the shareholders do not contain the said annexure. Any shareholders desirous of obtaining the annexure may write to the Company Secretary at the registered office of the Company.

INSURANCE

The Company has taken adequate insurance cover for all its assets.

COST AUDITOR

In pursuance of Section 233B of the Companies Act, I956 read with circular no. 52/26/CAB - 20I0 the Company has appointed Manisha & Associates, Nagpur as the Cost Auditors to conduct the Cost Audit for the financial year 2013-2014. The approval of the central government for the appointment has been received.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the period under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the Company while discharging their duties.

For and on behalf of the Board

Dated: 25th May, 2013 RAJINDER MIGLANI

Place : Mumbai CHAIRMAN


Mar 31, 2012

The Directors present their 42nd Annual Report on the business and operations of your Company and Audited Statement of Accounts for the period ended 31st March, 2012.

FINANCIAL HIGHLIGHTS (Rs in Lacs) Current Period Previous Period 2011-2012 2010-2011 (9 months) (15 months)

Sales : 405303.18 436536.29

Other Income 4346.93 4636.61

Total Income : 409650.11 441172.90

Profit / (Loss) before Interest.

Depreciation, Exceptional Item & Tax 15476.72 11045.83

Less : Finance Charges 10849.94 9756.79

Depreciation 10649.84 15493.07 Profit / (Loss) before

exceptional items & taxes (6023.06) (14204.03)

Less :Exceptional items (Net) 1322.40 (236.89)

Profit/(Loss) before tax (7345.46) (13967 13)

Tax Provision - -

Profit/(Loss) after Tax (7345.46) (13967.13)

Net Profit/(Loss) (7345.46) (13967.13)

'Previous period figures have been regrouped as per Revised Schedule VI of the Companies Act, 1956 introduced by Ministry of Corporate Affairs vide notification dated February 28, 2011

FINANCIAL YEAR

Owing to extension of last Financial Year (2010-2011) by three months and consequently the previous financial year containing 15 months, which ended on 30th June, 2011. In order to realign financial year ending in March 2012, your company is closing the current financial year of 9 months and therefore financial accounts are prepared for a period of 9 months i.e. from 1st July, 2011 to 31st March, 2012.

DIVIDEND

The Directors have not recommended any Dividend for the period ended 31st March, 2012.

STEEL INDUSTRY SCENARIO

The Indian Steel Industry has entered into a new development stage riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 4th largest producer of crude steel and the largest producer of sponge iron or DRI in the world. India's real consumption of steel recorded a growth of 4.4% during April-December 2011 over same period of last year. However, despite some positive influence, overall steel consumption growth in the country was subdued because of steep decline in growth in end use sectors and slow growth in EDP. Sourcing of Raw material has turned into a major bottleneck for Steed Industry apart from rising input costs with sustained rise in inflation, and consequent high interest cost With Government passing the land acquisition bill and mining bill, the country's steel industry is likely to regain stability.

OPERATIONS & OVERALL PERFORMANCE

The Company achieved a Turnover of Rs 4053.03 crores in 9 months period as against Rs 4365.36 crores in the previous financial year (15 months). The Company achieved an operating Profit (PBDIT) of Rs 154.77 crores in the current period as against Rs 110.46 crores in the previous period. The Company incurred a loss of Rs 73.45 crores during the period (9 months) as against a loss of Rs 139.67 crores in the previous financial year (15 months) after providing depreciation of Rs 106.50 crores (Previous period Rs 154.93 crores).

DEBT RESTRUCTURING

All the debts of the Company are crystallized and settled. Over the years, the company has paid a large amount towards past debt liabilities and remaining Debts are being paid in accordance with the restructured terms. The Company has paid off Rs 94.72 crores during the period under review towards past Debt liabilities.

STEEL PRODUCTS

Sale of steel products during the period under review (9 months) has been Rs 2239.69 crores as against the previous period (15 months) figure of Rs 2841.96 Crores. Export during the period of 9 months is Rs 10.77 crores as against Rs 13.32 Crores recorded during the previous period of 15 months.

ENGINEERING PRODUCTS

The Division during the period under review achieved sales of Rs 286.24 crores for the 9 months period as compared to the previous year sales of Rs 400.77 crores for 15 months. The Company during the year has supplied critical items and items including tanks and furnace to SMS India Ltd., and other equipments for many clients. The Division continues to support in supply of Spares and Services to all the major Oil, Gas, Port Trust and various Government bodies. The Company has been successful in obtaining further orders from reputed companies for their projects.

PREFERENTIAL ISSUE

During the period under review, in terms of restructuring of the debts with financial institution, the company has allotted Rs 2,89,18,450 Equity shares of Rs 10/- each to ARCIL and Rs 4,92,61,802 Equity shares of X 10/- each to SBI on preferential basis against part conversion of their existing loan after obtaining approval of the members. The Company has also allotted Rs 19,50,00,000 Equity shares of Rs 10/- each or preferential basis to Promoters and investors after obtaining approval of the members.

The Company has received listing approval from one of the stock exchange in respect of the aforesaid shares. However, listing approval from the other stock exchange is pending at the end of the year.

The proceeds from the issue is fully utilized to wards restructuring of debts and the working capital as per stated object in the resolution approving the said issue.

RESEARCH AND DEVELOPMENT

The Company undertakes on a continuous basis, various activities such as the development of new products and processes, cost reduction, improvement in quality and productivity and import substitution.

REFERENCE TO BIFR AND DEREGISTRATION

The Company filed a reference before the Hon'ble BIFR on 29th June 2001. The reference came to be registered as Case Number 278/2001 as per their communication No. 3 (L-7) BC/2001 dated 11th July 2001.

The Hon'ble BIFR vide its order dated 1st March, 2006, after hearing the matter has declared the Company as a sick industrial company in terms of section 3 (1) (o) of SICA and appointed ICICI Bank Ltd. as the Operating Agency to prepare a Draft Rehabilitation Scheme (DRS).

The Company submitted a revised Draft Rehabilitation Scheme (DRS) on January 9, 2012 to the ICIC Bank Ltd., OA and the copy of the same was forwarded to the BIFR.

At the lenders meeting held on 17th February, 2012, the company informed the OA and others about the recent developments in the Company and also the factual position of the financials such as infusion of equity fund etc. In view of that it was directed to submit the DRS after including the audited financials of FY 2011-12 and to submit the audited financials latest by May 31, 2012.

Consequent upon improvement in overall operating performance on back of improving prices and demand in the products of the company, restructuring of the debts and infusion of funds by promoters and investors to the extent of Rs 227 crores , the Net Worth of the company has turned positive during the period ended 31st March, 2012 as under :

Particulars (Rs In Crores). As on As on

31.03.2012 30.06.2011

Share Capital 902.12 628.94

Reserves and Surplus (820.32) (928.02)

Net Worth 81.80 (299.09)

Looking at the above improvement, it is pertinent to say that the company is moving steadily towards reviving and has become self- sufficient enough to sustain / survive on it's own in the long run.

Consequent upon restructuring of it's debts during the last year and Net Worth turning positive during the period under review, the company would be approaching Hon 'bled BIFR for de-registration of the company from purview of the Section 3(1) (o) of Sick Industrial Companies ( Special Provisions ) Act. 1985.

INVESTOR SERVICES

The Company and its Registrars M/s. Big share Services Private Limited who is looking after the physical as well as Demit work and also shareholders correspondence, endeavored their best to service the Investors satisfactorily. Your Company has constituted a committee comprising of 3 Senior directors of the Company to redress the Investor Grievances.

DIRECTORS

During the year. Shri B L Agawam, Director of your Company, retire by rotation and being eligible, offer himself for reappointment.

IDBI has appointed Mr. R K Banal as its Nominee Director on the Board of the Company with effect from 28th February, 2012 in place of Mr. B Ravindranath. The Board record its sincere appreciation for the valuable guidance and meaningful contribution made by Mr. B Ravindranath as member of the Board, Audit and Remuneration Committee during the period of his association with the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed that:

1. In the preparation of annual accounts for the period ended 31st ' March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

3. The directors 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;

4. Final accounts have been prepared on going concern basis. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report.

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 complex.

PUBLIC DEPOSITS

The company has not accepted any deposit from the public and hence has not contravened provisions of the Section 58A of the companies Act. 1956 and the companies (Acceptance of Deposits) Rules, 1975 and the Reserve Bank of India, if any.

AUDITORS & AUDITORS' REPORT

The Auditors' of the company, M/s Todarwal & Todarwal, shall hold the office upto the conclusion of the ensuing Annual General Meeting of the company and being eligible offers themselves for re- appointment. Pursuant to the provisions of Section 224(1 B) of the companies Act, 1956, the auditors have furnished certificate of their eligibility for the re-appointment. The members are requested to appoint Auditors for the next financial year and fix their remuneration.

As regards Auditors' observations in Clause No. 9 (b), 10 & 11 in the Annexure Audit Report (CARO Report), they are self explanatory and do not require further explanation.

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

Information in accordance with Section 217(1) (e) of the Companies Act. 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure 'A' forming part of this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, names and other particulars of the employees are required to be set out in the annexure to this report. However, as per the provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the report and Annual Accounts of the Company sent to the shareholders do not contain the said annexure. Any shareholders desirous of obtaining the annexure may write to the company secretary at the registered office of the company.

INSURANCE

The Company has taken adequate insurance cover for all its assets.

COST AUDITOR

In pursuance of Section 233B of the Companies Act, 1956 read with circular no. 52/26/CAB - 2010 the company has appointed Manish & Associates, Nagpur as the Cost Auditors to conduct the Cost Audit for the financial year 2011-2012. 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- 2013.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the period under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the company while discharging their duties.

For and on behalf of the Board

Dated : 21st April, 2012 Mukesh R Gupta

Place: Mumbai Chairman


Jun 30, 2011

Dear Members,

The Directors present their 41st Annual Report on the business and operations of your Company and Audited Statement of Accounts for the period ended 30th June, 2011.

FINANCIAL HIGHLIGHTS (Rs in Lacs)

Current Period Previous Year 2010-2011 2009-2010 (15 Months) (12 Months)

Sales : 436536.29 305278.06

Other Income 3408.90 447.09

Total Income: 439945.19 305726.15

Profit / (Loss) before Interest, Depreciation, Exceptional Item & Tax 9806.62 10621.41

Less: Finance Charges 8529.16 4897.03

Depreciation 15493.07 11668.20

Profit / (Loss) before exceptional items & taxes (14215.61) (5943.82)

Add: Exceptional items (Net) 236.89 (1807.86)

Profit/(Loss) before tax (13978.72) (7751.68)

Tax Provision - -

Profit/(Loss) after Tax (13978.72) (7751.68)

Add: Prior Period Income/Expenses 11.59 (56.41)

Net Profit/(Loss) (13967.13) (7808.09)

Profit / (Loss) b/f from previous year (150603.66) (142795.57)

Transferred from Debenture 1902.00 -

Redemption Reserve

Balance Carried Forward (162668.79) (150603.66)

EXTENSION OF FINANCIAL YEAR

The Company has extended its current Financial Year (2010- 2011) by a period of three months i.e. upto 30th June, 2011 through resolution passed by circulation on 30th March, 2011. Accordingly the financial accounts are prepared for a period of 15 months i.e. from 1st April, 2010 to 30th June, 2011.

DIVIDEND

In view of the losses, the Directors have not recommended any Dividend for the period ended 30th June, 2011.

STEEL INDUSTRY SCENARIO

The Indian Steel Industry, after passing through a phase of economic slowdown in 2009 has shown a steady growth in 2010. The consumption of steel in the country has shown an increase of around 10.3 per cent during April 2010 to January 2011 as compared to the same period of previous year, indicating strengthening of demand. During the last few years, the demand growth has been more than supply growth. The lag in supply growth was mainly due to delays in statutory clearances, land acquisition issues, lack of new raw material linkages, etc. However the Indian economy is facing the risk of very high inflationary conditions leading the Government to tighten monetary policies which may in turn affect growth significantly. The high raw material cost coupled with increasing operational cost has put pressure on operating margins of the Steel Companies in the later half and trend is expected to continue during the current year as well.

OPERATIONS & OVERALL PERFORMANCE

The Company achieved a Turnover of Rs 4365.36 crores in 15 months period as against Rs 3052.78 crores in the previous year (12 months). The Company incurred a Loss of Rs 139.79 crores during the period (15 months) as against previous year (12 months) loss of Rs 77.52 crores after providing depreciation of Rs 154.93 crores (Previous year Rs 116.68 crores).

The company during the period has completed modernization and modification of its steel plant at Wardha and installed some new equipment/s, modified existing equipments and up-graded other auxiliary facilities to increase the existing capacity of the plant. The company has now started receiving regular Hot Metal supplies and accordingly has changed its charge mix by replacing scrap by Hot Metal thereby reducing the production time and saving a considerable amount on power consumed. The company has made necessary changes in its plant to synchronise with production cycle of Hot metal. The above changes alongwith removal of certain bottlenecks has now increased its production capacity to 1 million tonnes of HR per annum. This will help to improve the viability of its operations in the long run.

Debt Restructuring

The Company has completed restructuring of debt with majority of its lenders. Restructuring proposals of debts with some Financial Institutions and Banks are under various stages of discussion. In spite of Company facing a very difficult situation, the Company has paid off Rs 57.76 crores during the period towards past Debt liabilities in accordance with the restructuring terms.

Steel Products

Sale of steel products during the period under review (15 months) has been Rs 2841.96 crores as against the previous year (12 months) figure of Rs 1793.21 crores. Export during the period of 15 months has increased to Rs 13.32 crores as against Rs 2.13 Crores recorded during the previous year of 12 months.

Engineering Products

During the period under review the sales of engineering products were Rs 400.77 crores for the 15 months period as compared to the previous year (12 months) of Rs 438.26 crores. The Company during the year has supplied critical items to G.R.S.E., DPRO and other equipments for many clients. The division has completed its project of supply and commissioning of Marine Loading Arms to Essar Construction Ltd.. The Division continues to support in supply of Spares and Services to all the major Oil, Gas, Port Trust and various Government Bodies. The Company has been successful in obtaining further orders from reputed companies for their projects.

PREFERENTIAL ISSUE

During the period under review, the Company has converted 16,85,00,000 Warrants of Rs 10/- each issued on preferential basis to promoters into Equity Shares of Rs 10/- each upon exercise of conversion option by them. The Warrants were convertible at the option of the holder at any time within a period of 18 months from the date of allotment. The Company has received listing approval from both BSE and NSE in respect of the aforesaid shares.

MANAGEMENT DISCUSSION AND ANALYSIS

The core business of the Company is manufacturing and marketing Iron and Steel products and manufacturing capital equipments and turnkey projects. The Management discussions and analysis is given hereunder:-

a) Industry structure and development : India's domestic steel demand remained robust with apparent demand last year, led by good demand for autos and engineering services. The Indian Steel Industry is expected to do well on the back of increase in demand and capacity addition by domestic steel companies. The engineering industry in India manufactures a wide range of products, with heavy engineering goods accounting for bulk of the production. The development of Engineering Industry depends upon the development of core sectors and the infrastructure sector. The Engineering Industry demands high level of investment.

b) Opportunities and threats: The Indian steel industry has a very good growth potential, with future demand boosting India's per capita consumption of steel to higher levels. The Indian steel markets are emerging high due to robust demand for construction and civil engineering, automotive and mechanical engineering. This growth however will be more dependent on supply-side response, innovative product offerings and substitutions, massive increase in oil prices etc.

c) Segment-wise performance: The Company is mainly in the business of manufacturing Steel and Capital Equipments and Turnkey Projects. The Company has no activity outside India except export of steel products manufactured in India. Segment wise performance is given at Note No. 23 of Schedule P i.e. Notes on Accounts.

d) Outlook: The outlook for the domestic steel industry looks positive. The country has acquired a central position on the global steel map with its giant steel mills, acquisition of global scale capacities by players, continuous modernization & up gradation of old plants, improving energy efficiency, and backward integration into global raw material sources. Steel consumption in India is expected to grow significantly in coming years as per capita finished steel consumption is far less than its regional counterparts. However inflation can affect the higher growth rate of the economy. Government measures like fiscal policies to control inflation will affect access to credit and could slow down investment as well as demand. The Company continues to compete and participate in the tenders of various Public and Private Sector giants and is hopeful of bagging fresh orders for engineering products. The Engineering products of the company has been approved for its engineering skills/works/services by various premier consulting companies such as MECON, LRIS and also approved by Industrial Boiler Regulatory Authority (IBR).

e) Risk and concerns: The domestic steel industry always runs on risk of normal industry cycle. Your Company is exposed to the normal Industry Risk Factors and manages these risks by following prudent business and risk management practices. The company has been taking continuous modernization programmes to maintain efficient operation of its Steel and Engineering activities.

f) Internal control system: The Company maintains periodical internal checks and conduct adequate internal audit, which provide safeguards and proper monitoring and vetting of transactions. ISO- 9001:2008 certification has been obtained for execution of works at Murbad. Necessary quality control systems and procedures have been established. Periodical internal checks and audits are conducted by the Management and Internal Auditors. Upgradation wherever necessary are carried out at frequent intervals.

g) Discussion on financial performance with respect to operating performance: The operating performance of the Company has been discussed in Directors Report under the head 'Financial Highlights' & 'Operations and Overall Performance' in the current period.

h) Human resources and industrial relations: During the period under review the Employee/Industrial relations at all units and job sites remained cordial Training programmes are conducted internally for staff and workmen. Training is imparted for updating of manufacturing techniques/processes. Personnel are sponsored for external programmes on need based. Number of employees as on 30th June, 2011 was 1350.

i) Cautionary Statement: The Management Discussions and Analysis describe Company's projections, expectations or predictions and are forward looking statements' within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.

RESEARCH AND DEVELOPMENT

The Company undertakes on a continuous basis, various activities such as the development of new products and processes, cost reduction, improvement in quality and productivity and import substitution.

REFERENCE TO BIFR

The Company has filed a reference before the Hon'ble BIFR on 29th June 2001. The reference came to be registered as Case Number 278/2001 as per their communication No. 3(L- 7) BC/2001 dated 11th July 2001. The Hon'ble BIFR vide its order dated 1st March, 2006, after hearing the matter has declared the Company as a sick industrial company in terms of section 3 (1) (o) of SICA and appointed ICICI Bank Ltd. as the Operating Agency. The Company submitted a revised Draft Rehabilitation Scheme (DRS) to the ICICI Bank Ltd., OA and the copy of the same was forwarded to the BIFR .

The BIFR in its hearing held on 23.09.2010 directed ICICI Bank Ltd, OA to examine the DRS and convene a joint meeting of all concerned and to submit its report on DRS. As per the direction of Hon'ble BIFR, ICICI Bank Ltd, OA convened a joint meeting on 21st October, 2010 where at except SBI other creditors agreed to the DRS submitted. It was also decided that the lenders should provide their comments to OA on future course of action.

BIFR vide its letter dated 04.02.2011 has appointed Shri B. L. Khanna as a Special Director on the Board of the Company under section 16 (4) of the Sick Industrial Companies (Special Provisions) Act, 1985.

INVESTOR SERVICES

The Company and its Registrars M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence, endeavored their best to service the Investors satisfactorily. Your company has constituted a committee comprising of 3 Senior directors of the Company to redress the Investor grievances.

DIRECTORS

During the year, Shri Mukesh R Gupta, Director of your Company, retire by rotation and being eligible, offer himself for reappointment.

Mr. B L Khanna was appointed as Special Director by BIFR with effect from 4th February, 2011. The Company welcomes Mr. Khanna on the Board. He is a Chartered Accountant by profession and is in practice for more than 40 years. His presence on the board will be immensely beneficial for the Company.

IFCI has withdrawn its nominee Director Mr. R Parthasarthy from the Board of the Company with effect from 4th March, 2011. The Board record its sincere appreciation for the valuable guidance and meaningful contribution made by Mr. R Parthasarthy as member of the Board, Audit and Remuneration Committee during the period of his association with the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed that:

1. In the preparation of annual accounts for the period ended 30th June 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

3. The directors 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;

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report.

ENVIRONMENT & 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, health and safety. 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 quality of life in the communities surrounding its industrial complex.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the period.

AUDITORS & AUDITORS' REPORT

The members are requested to appoint Auditors for the next financial year and fix their remuneration. As regards qualification at Sr.No.4 (f) in the Auditors' Report, Directors wish to state that in view of the ongoing discussion for restructuring of the debt and interest liability, the Company has not provided for interest on some loans. Auditors' observations in Clause No. 9 (b) , 10 & 11 in the Annexure Audit Report (CARO Report) are self explanatory and do not require further explanation.

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

Information in accordance with Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure 'A' forming part of this report.

PARTICULARS OF EMPLOYEES

The Company does not have any employee, whose particulars are required to be given pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended by MCA vide i'ts Circular No. 23/2011 dated 03.05.2011.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the period under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution their duties.

For and on behalf of the Board

Dated : 29th August, 2011 Mukesh R Gupta

Place : Mumbai Chairman


Mar 31, 2010

The Directors present their 40* Annual Report on the business and operations of your Company and Audited Statement of Accounts for the year ended 31st March, 2010.

FINANCIAL HIGHLIGHTS (Rs.in Lacs) Current Year Previous Year 2009-2010 2008-09 Sales : 305278.06 284156.44 Other Income 447.09 642.25 Total Income: 305725.15 284798.69 Profit / (Loss) before Interest, Depreciation, Exceptional Item & Tax 10621.41 (8757.26) Less: Finance Charges 4897.03 5099.65 Depreciation 11668.20 11579.27 Profit / (Loss) before exceptional items & taxes (5943.82) (25436.18) Add: Exceptional items (Net) (1807.86) 8966.14 Profit/(Loss) before tax (7751.68) (16470.04) Tax Provision - 42.09 Profit/(Loss) after Tax (7751.68) (16512.13) Add: Prior Period Income / (Expenses) (56.41) 26.68 Net Prof it/(Loss) (7808.09) (16485.45) Profit / (Loss) b/f from previous year (142795.57) (126310.12) Balance Carried Forward (150603.66) (142795.57)

DIVIDEND

In view of the accumulated losses, the Directors have not recommended any Dividend for the year ended 31s March, 2010.

OPERATIONS & OVERALL PERFORMANCE

The domestic steel industry has registered a consumption growth of about 8% during the year 2009-10 with consumption figures reaching to 56.3 million tones from 52.3 million tonnes in the previous year. This was partly due to various measures initiated by the government. With production of about 60 million tonnes of crude steel during the year 2009-2010, India emerged as the third largest steel producer in the world. The Industry is expected to achieve a substantial increase in crude steel production capacity by the year 2012. The steel prices started to show an increase from the second quarter of the year as the major steel companies raised their prices on back of steep rise in input costs. The increase in demand and increasing steel prices backed by robust demand from automobile and infrastructure sector helped the steel industry to record a good growth. The global steel industry is expected to recover in 2010 on the back of government stimulation packages, the continued stabilisation of financial systems and a return of consumer confidence.

The Company achieved a Turnover of Rs. 3052.78 crores as against Rs. 2841.56 crores in the previous year, showing an increase of 7.4%. The Company incurred a Loss, before exceptional items, of 59.43 crores during the year as compared with previous year loss of Rs. 254.36 crores after providing depreciation of 116.68 crores (Previous year Rs. 115.79 crores).

The company is in the process of modernising and modifying its steel plant at Wardha by installing some new equipment/s, modification of existing equipments and up-gradation of utility system and other auxiliary facilities. The above modernization and debottlenecking would enable the plant to make optimum use of its capacities at various stages of production.

Debt Restructuring

Restructuring proposals of debts with the Financial Institutions and Banks are under various stages of discussion with the lenders. In spite of Company facing a very difficult situation, the Company has paid off 100.23 crores during the year towards past Debt liabilities in accordance with the restructuring terms.

Steel Products

Sale of steel products during the year under review has been 1825.36 crores as against the previous year figure of Rs. 2009.20 crores. Owing to poor demand from global customers the exports has almost dried up during the year at 2.13 Crores as against Rs.158.93 Crores recorded during the previous year.

Engineering Products

During the year under review the sales of engineering products were 379.14 crores as compared to the previous year of Rs. 271.51 crores showing an increase of Rs. 107.63 crores. The Company during the year has supplied critical items for projects G.R.S.E. and equipments for Uttam Galva Steels Ltd., Uttam Galva Metallics Ltd. and Balkrishna Industries Ltd. The division has completed its project of supply and commissioning of Marine Loading Arms to Essar Construction Ltd.. The Division continues to support in supply of Spares and Services to all the major Oil, Gas, Port Trust and various Government bodies. The Company has been successful in obtaining further orders from Indian Oil Corporation Ltd, Brahmaputra Cracker & Polymer Ltd., National Aluminium Co. Ltd., Mangalore Chemicals & Fertilizers Ltd., & Indian Oil Corporation Ltd., Welspun Maxsteel Ltd. & Uttam Galva Metallics amongst others for their Projects.

PREFERENTIAL ISSUE

During the year under review, in terms of restructuring of the debts with a financial institution, the company has allotted 1,30,00,000 Equity shares of Rs.10/- each at par on preferential basis to a financial institution against part conversion of its existing loan after obtaining approval of the members in the Extra Ordinary General Meeting held on 25th January, 2010. The Company has received listing approval from both BSE and NSE in respect of the aforesaid shares.

During the year, In order to raise resources for modernization/ debottlenecking and working capital requirements the Company has also allotted 16,85,00,000 Warrants of Rs. 10/- each convertible into Equity Shares of Rs. 10/- each on preferential basis to the promoters. The Warrants are convertible at the option of the holder at any time within a period of 18 months from the date of allotment

MANAGEMENT DISCUSSION AND ANALYSIS

The core business of the Company is manufacturing and marketing Iron and Steel products and manufacturing capital equipments and turnkey projects. The Management discussions and analysis is given hereunder:-

a) Industry structure and development : The steel Industry in India has successfully come out of the adverse effects of the global economic slowdown and registered a positive growth during the previous year. The National Steel Policy has fixed a target of taking steel production up to 110 MT by 2019-20. Nonetheless, with the current rate of ongoing green-field and brown-field projects, the Ministry of Steel has projected Indias steel capacity to touch 124.06 MT by 2011-12. The Engineering Products of the Company has been approved for its engineering skills/works/services by various premier consulting companies and Inspection Agencies such as Engineers India Ltd, MECON, LRIS, BVIS, amongst various other agencies. The Division has further been approved by Industrial Boiler Regulatory Authority (IBR). The Engineering segment is highly competitive in view of tough competition from foreign companies / agencies and giant public / private sector undertakings. The development of engineering industry depends on the development of core sectors and the infrastructure sector.

b) Opportunities and threats: The Indian steel Industry witnessed an upward trend during the previous year. It has huge scopes in the future with massive scale of infrastructural development happening all across the country. This upward trend is expected to be continued on account of favourable conditions like competitive prices, increase in consumption of steel owing to upcoming infrastructure and Greenfield projects, highly skilled and low cost workforce etc. The major threats for the industry is higher cost of inputs and lower realizations which may put pressure on the profitability and operating margins of the international as well as domestic steel companies. In addition to this, major obstacles are current economic turmoil, technological change, inadequate availability of suitable quality of raw material, increasing prices of raw materials, high cost of energy / capital etc.

c) Segment-wise performance: The Company is mainly in the business of manufacturing Steel and Capital Equipments and Turnkey Projects. The Company has no activity outside India except export of steel products manufactured in India. Segment wise performance is given at Note No. 25 of Schedule P i.e. Notes on Accounts.

d) Outlook: The outlook for the industry looks reasonable, since India has good iron ore deposits, skilled manpower and growing demand for steel. The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth. The government is backing the industry through favorable industrial reforms, while the private sector is supporting it with investments worth billions of Rupees. Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors With an impressive track record, the country has become a reputed name in the world steel industry. Global steel giants from all over the world have shown interest in the industry because of its phenomenal performance. The Company continues to compete and participate in the tenders of various Public and Private Sector giants and is hopeful of bagging considerable fresh orders for engineering products.

e) Risk and concerns: The domestic steel industry carrying inherent risk in respect of imbalance in supply / demand apart from price sensitivity and demand volatility. Slowdown in implementation of the Greenfield Steel projects by major steel producers due to non-availability of sufficient iron ore, coal and land, may increase the prevailing supply demand gap in coming years. Besides the above, the global market turmoil, which dented the growth curve of user industry, may affect the progress of the steel industry. The company has been taking continuous modernization programme to maintain efficient operation of its Steel and Engineering activities.

f) Internal control system: The Company maintains periodical internal checks and conduct adequate internal audit, which provide safeguards and proper monitoring and vetting of transactions. ISO-9001:2000 certification has been obtained for execution of works at Murbad. Necessary quality control systems and procedures have been established. Periodical internal checks and audits are conducted by the Management and Internal Auditors. Upgradation wherever necessary are carried out at frequent intervals.

g) Discussion on financial performance with respect to operating performance: The operating performance of the Company has been discussed in Directors Report under the head Financial Highlights & Operations and Overall Performance in the current year.

h) Human resources and industrial relations: During the year under review the Employee/Industrial relations at all units and job sites remained cordial Training programmes are conducted internally for staff and workmen. Training is imparted for updating of manufacturing techniques/processes. Personnel are sponsored for external programmes on need based.. Number of employees as on 31" March, 2010 was 1438.

i) Cautionary Statement: The Management Discussions and Analysis describe Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.

RESEARCH AND DEVELOPMENT

The Company undertakes on a continuous basis, various activities such as the development of new products and processes, cost reduction, improvement in quality and productivity and import substitution.

REFERENCE TO BIFR

The Company has filed a reference before the Honble BIFR on 29lh June 2001. The reference came to be registered as Case Number 278/2001 as per their communication No. 3(L-7) BC/2001 dated 11,n July 2001. The Honble BIFR vide its order dated 1s" March, 2006, after hearing the matter has declared the Company as a sick industrial company in terms of section 3 (1) (o) of SICA and appointed ICICI Bank Ltd. as the Operating Agency to prepare a Draft Rehabilitation

Scheme (DRS). The Company has submitted a Draft Rehabilitation Scheme (DRS) to the iCICI Bank Ltd., OA with a copy of the same to the BIFR.

As per the direction of Honble BIFR, OA convened a joint meeting of three Secured Creditors, not supporting CDR, on 1" August, 2008. In accordance with the decision taken thereat, the company has approached the three secured creditors and was successful in approving the OTS with two of the creditors and in discussion for revision/ reschedulement with remaining one creditor. The developments in this regard are being informed to Operating Agency.

INVESTOR SERVICES

The Company and its Registrars M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence, endeavored their best to service the Investors satisfactorily. Your company has constituted a committee comprising of 3 Senior directors of the Company to redress the Investor grievances.

DIRECTORS

During the year, Shri K.A.Krishnarao, Director of your Company, retire by rotation and being eligible, offer himself for reappointment.

Mr. Satish Kumar Gupta was appointed as Nominee Director of ARCIL with effect from 24,h May, 2010.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed that:

1. In the preparation of annual accounts for the financial year ended 31" March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures.

2. The directors have selected such accounting policies and applied them consistently and made Judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

3. . The directors 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;

4. Final accounts have been prepared on going concern basis.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditors Certificate on its compliance are annexed hereto and forms part of this Annual Report.

ENVIRONMENT & SOCIAL OBLIGATION

The Companys 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, health and safety. 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 quality of life in the communities surrounding its industrial complex.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year.

AUDITORS & AUDITORS REPORT

The members are requested to appoint Auditors and fix their remuneration.

As regards qualification at Sr.No.4 (e) in the Auditors Report, Directors wish to state that in view of the ongoing discussion for restructuring of the debt and interest liability, the Company has not provided for interest on some loans. Auditors observations in Clause No. 9 (b), 10 & 11 in the Annexure Audit Report (CARO Report) are self explanatory and do not require further explanation.

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

Information in accordance with Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure A forming part of this report.

PARTICULARS OF EMPLOYEES

A statement pursuant to the provisions of Section 217 (2A) of he Companies Act, 1956, read with Companies (Particulars of Employers) Rules, 1975, as amended, the names and other particulars of tie employees are set out in the Annexure B to the Directors Report.

ACKNOWLEDGEMENT:

Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers, Vendors and Members during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the company while discharging their duties.

For and on behalf of the Board Dated : 24th May, 2010 Mukesh R Gupta Place : Mumbai Chairman

 
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