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Directors Report of Vesuvius India Ltd.

Dec 31, 2015

The Directors have pleasure in submitting their Annual Report together with the Audited Financial Statements for the year ended on December 31, 2015.

The Year in Retrospect

(Rs Lakhs)

Year ended Year ended Financial Results: 31.12.2015 31.12.2014

Sale of Goods (excluding Excise Duty) 67,117 62,167

Sale of Services 2,729 3,000

Other Income 126 56

Total Revenue from operations 69,972 65,223

Other Income 1,021 910 Total Revenue 70,993 66,133

Profit before Depreciation, Interest & Tax (PBDIT) 13,559 10,905

Depreciation & Amortization 2,322 1,912

Interest - -

Profit before Tax 11, 237 8, 993 Provision for Income Tax 3,878 3,076

Profit for the year after Tax 7,359 5,917

Proposed Dividend and Taxes:

Proposed Dividend @Rs 6.25 per Equity share 1,268 1,218

Dividend Tax on Dividend 258 243

Interim Dividend - 203

Dividend Tax on Interim Dividend - 34

Total Dividend and Taxes 1,526 1,698

Transfer to General Reserves: 736 592 Basic & Diluted Earnings Per Share: Rs 36.26 Rs 29.15

Financial Year of the Company

The Financial Year of the Company continues to remain the twelve months period from 1st January to 31st December of each year. The Company Law Board by an Order dated January 7, 2016 permitted the Company to have the Financial Year to end on 31st December of each year.

Operating & Financial Performance, Internal Control

India's steel production grew by a meagre 2.6% from 87.3 million tons in 2014 to 89.6 million tons during 2015 compared to the 6.5% - 7% growth forecast by the World Bank as well as the World Steel Association. After an initial growth, production slumped during the year. Domestic steelmakers suffered immensely as steel market prices dropped close to or below their cost of production due to many factors including the sharp increase in low-priced imports from China. The market weakness affected our customers who are desperate to cut their costs. Major steel producers have either dropped their outputs significantly and are producing inconsistently or have shelved their growth plans.

In this scenario, our strategies to re-jig market portfolio, exit low margin business, focused reduction in operational costs, enlarge addressable markets through increased penetration of existing and new value creating solutions and reinforcing our technology and innovation leadership positions, have given positive results.We were able to defend our market share at the cost of profitability at some of our major customers. Competition activities have increased as they hold on to their market share with aggressive pricing.

We have always thrived on differentiated offerings in terms of value-added products and services to our customers. This is always a high stake battle and our sword and our shield on this battleground has always been Quality. The Turbo-Q programmed was launched during the year to sharpen our instincts and hone our skills in delivering Quality to our customers. The essence of this programmed was to drive home this all-important message that:

- Customer Loyalty drives business retention & profits

- Customer Loyalty is driven by

=¦ Consistent quality of products and services

=¦ The supplier's ability to resolve problems with speed and to provide high quality solutions that prevents repeats.

This year the Company's total revenue crossed Rs 700 crores. Total revenue from operations increased by over 7% over the previous year driven entirely by domestic growth. Net sales increased by about 8% and both PBT and PAT increased by about 25% over the previous year. Reduction in raw material and energy costs and focused attention in reducing operations cost contributed to significant savings.

There is no change in the nature of the business of the Company. The Company has no subsidiaries or associated companies therefore disclosures in this regard are not provided in this Report. There were no significant and material orders passed by regulators or courts or tribunals impacting the going concern status and Company's operations in future.

All four factories had been working efficiently during the year. Safety measures and processes have been installed and improved upon at all plants and work sites.

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Code on Internal Control which require that the Directors review the effectiveness of internal controls and compliance controls, financial and operational risks, risk assessment and management systems and related party transactions, have been complied with. Self certification exercises are also conducted by which senior management certify effectiveness of the internal control system, their adherence to Code of Conduct and Company's policies for which they are responsible, financial or commercial transactions, if any, where they have personal interest or potential conflict of interest. Internal Audit has been conducted on a pan India basis.

Company's Policies on Health & Safety, Quality, Corporate Social Responsibility, Remuneration, Employee Concern (Whistle Blowing), Related Party Transactions, Insider trading, Risk Management and also the Code of Conduct applicable to Directors and Employees of the Company have been complied with. These Policies and the Code of Conduct are available on the Company's website www.vesuviusindia.com

Dividend

The Board of Directors are pleased to recommend a dividend of Rs 6.25 per Equity Share of nominal value of Rs 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs 1,526 lakhs (previous year Rs 1,461 lakhs). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within May 9, 2016 and dividend will be paid within May 15, 2016.

Group Activities

Vesuvius pic, the ultimate holding company, is listed on the London Stock Exchange and is a global leader in metal flow engineering, principally serving steel and foundry industries. Vesuvius develops innovative and customized solutions to be used in extremely demanding industrial environments, which enable customers to improve their manufacturing processes, enhance product quality and reduce energy consumption. Vesuvius has a worldwide presence and serves customers through a network of low-cost manufacturing plants located close to their own facilities and embed the Vesuvius industry experts with their operations, who are supported by Vesuvius global technology centers. Vesuvius' core competitive strengths are market and technology leadership, strong customer relationships, well established presence in developing markets and global reach.

During the year Vesuvius pic. completed the acquisition of the SIDERMES group of companies, an Italian manufacturer of ceramic probes for the measure of temperature and dissolved gases in the steel and foundry industries. This acquisition is an additional step in the implementation strategy to grow in the provision of technical services to our customers.

Vesuvius Group Limited, U.K., the immediate holding company, holds about 56% of the share capital of the Company. Mr Francois Wanecq, the Chief Executive of Vesuvius pic, the ultimate holding company, is a Director of our Company. Mr Tanmay Ganguly, President -Advanced Refractory and Mr Christopher Abbott, President-Flow Control of the Vesuvius Group worldwide are also Directors of the Company. The Vesuvius Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

100 years of VESUVIUS - In the year 1916 Vesuvius was born in Pittsburg, Pennsylvania, USA.when the World War I was in its third year and American steel industry had unprecedented boom conditions. Three young men startled the world in 1916 by producing the best crucibles ever made. VESUVIUS completes 100 years in this year 2016. Since 1916 Vesuvius had expanded its operations to Europe with its first European facility in Newmilns, Scotland. Vesuvius' development and invention of flow control product called "stopper rod", is statically pressed alumina graphite products etc. made continuous casting technology viable and replaced the conventional ingot casting process. Vesuvius now operates in over 30 countries with over 69 manufacturing establishments, 6 Research & Development Centres and 8 Development Laboratories.

25years of VESUVIUS INDIA - In year 1991 Vesuvius incorporated their first Indian operations in Kolkata. VESUVIUS INDIA completes 25 years in this year 2016. In these 25 years, our Company now operates in four factories, exports to over 15 countries, has reached a total revenue earning of Rs 700 crores with about direct 435 employees over 1500 contractual employees, has consistently paid dividend to the Shareholders since 1998 and still remains debt free.

ISO Certification

The Company's factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Segment wise performance

The Company is primarily a manufacturer and trader of refractory and is managed organizationally as a single unit. Accordingly, the Company is a single business segment company. Geographical (secondary) segment has been identified as domestic sales and exports. Details of segment reporting are available in the Annual Accounts.

Industry Structure & Developments, Opportunities & Threats, Outlook, Risks & Concerns It was a weak market for the Indian steel industry as domestic steelmakers suffered immensely due to lower market prices and many factors including the sharp increase in low-priced imports from China. Steel companies had reduced production, shelved their expansion plans and were desperate to reduce their operational costs. The economy has not yet delivered its promises in terms of serious demand from infrastructural growth.

Steel and foundry industry comprises the biggest group of our customers. Hence anything that affects the steel and foundry industry will have its one off effect on our business.

There is a continuous process for identifying, evaluating and managing significant risks faced through a risk management process designed to identify the key risks facing each business. The role of insurance and other measures used in managing risks is also reviewed. Risks would include significant weakening in demand from core-end markets, end market cyclically, adverse foreign exchange fluctuations, inflation uncertainties, energy costs and shortage of raw materials, maintenance and protection of leading technologies and adverse regulatory developments. During the year a risk analysis and assessment was conducted and no major risks were noticed.

Board of Directors

Mr Subrata Roy was appointed Managing Director of the Company for a term of five years effective from January 1, 2015 and his appointment was made by the Board of Directors at their meeting held on December 26, 2014 and thereafter was approved by the Shareholders at the Extra-Ordinary General Meeting held on March 27, 2015. Mr Roy is due to retire by rotation at the ensuing Annual General Meeting. Mr Roy has confirmed and declared that he is qualified to act as a Director of the Company and being eligible has offered himself for reappointment as a Director of the Company. The Board of Directors are also of the opinion that Mr Roy fulfils all the conditions specified in the Companies Act, 2013 making him eligible to be appointed as Director. Upon his reappointment as Director, he will continue as Managing Director of the Company for the remaining period of his term. His reappointment will be subject to retirement by rotation. Details about Mr Subrata Roy is mentioned in the Notice convening the Annual General Meeting.

Miss Nayantara Palchoudhuri was appointed an Independent Director at the Extra-Ordinary General Meeting held on March 27, 2015 for a term of five years commencing from March 27, 2015 and will not be liable to retire by rotation during her term of five years.

Mr Biswadip Gupta was appointed as an Independent Director at the Annual General Meeting held on May 7, 2015 pursuant to the provisions of section 149 of the Companies Act, 2013 for a period of five years from May 7, 2015 and will not be liable to retire by rotation during his term of five years.

Mr Yves M.C.M.G Nokerman, who was a nominee of the holding company, had resigned from the Vesuvius Group's employment and so had resigned as a Director of the Company and his resignation was accepted effective from May 7, 2015. The Board of Directors record their appreciation of the services rendered by Mr Nokerman during his term as a Director of the Company since August 2008.

Mr Tanmay Kumar Ganguly, President-Advanced Refractories of the Vesuvius Group.who was the Managing Director of the Company upto December 31, 2014, has been appointed effective from May 7, 2015, as a Director in the casual vacancy caused by the resignation of Mr Nokerman. It is proposed to appoint Mr Ganguly as a Director of the Company and a suitable resolution has been included in the Notice convening the Annual General Meeting for approval of the Members. Mr Ganguly will be liable to retire by rotation. Details about Mr Ganguly is mentioned in the Notice convening the Annual General Meeting.

Mr Christopher David Abbott, President-Flow Control of the Vesuvius Group, has been appointed as an Additional Director of the Company effective from August 3, 2015. It is proposed to appoint Mr Abbott as a Director of the Company and a suitable resolution has been included in the Notice convening the Annual General Meeting for approval of the Members. Mr Abbott will be liable to retire by rotation. Details about Mr Abbott is mentioned in the Notice convening the Annual General Meeting.

The Board of Directors are of the opinion that the presence of both Mr Ganguly and Mr Abbott, being two most senior personnel in the Vesuvius Group, would bring great value and provide immense support to the Board of Directors and to the Company. Their involvement in the Company reinforces the importance the Vesuvius Group gives to their Indian operations. The Board is therefore recommending the appointment of both Mr Ganguly and Mr Abbott as Directors of the Company.

Mr Biswadip Gupta, Mr Sudipto Sarkar and Miss Nayantara Palchoudhuri, Independent Directors of the Company, have had a separate meeting on November 7, 2015 to review the performance of Independent Directors and Board as a whole and assess the quality, quantity and timeliness of flow of information from the Company management to the Directors. Mr Sudipto Sarkar and Miss Nayantara Palchoudhuri met separately to review the performance of the Chairman. The overall outcome was that the Board and its individual Directors are performing effectively and that the Board is well supported and diversified and presents an open forum for debate and discussion and that the strategies approved by the Board have produced results even during these weak business environment.

The Independent Directors have confirmed and declared that they are not disqualified to act as an independent director in compliance with the provisions of section 149 of the Companies Act, 2013 and the Board is also of the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Directors.

All Directors, Key Managerial Personnel and senior management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by the Managing Director is attached as Annexure VIM which forms a part of this Report of the Directors. The Code of Conduct is available on the Company's website www.vesuviusindia.com. All Directors have confirmed compliance with provisions of section 164 of the Companies Act, 2013.

The details of number and dates of meetings held by the Board and its Committees, attendance of Directors and remuneration paid to them is given separately in the attached Corporate Governance Report.

Directors' Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013, Clause 49(lll)(D)(4)(a) of the listing agreement with Stock Exchanges (applicable up to November 30, 2015) and provisions of SEBI-LODR and in the preparation of the annual accounts for the year ended on December 31, 2015 and state that :

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

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

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) there is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Key Managerial Personnel

The following three persons have been appointed as Key Managerial Personnel of the Company in compliance with the provisions of section 203 of the Companies Act, 2013:

a) Mr Subrata Roy, Managing Director

b) MrTaposh Roy, Company Secretary

c) Mr Sanjoy Dutta, Chief Financial Officer

Remuneration and other details of the Key Managerial Personnel for the year ended December 31, 2015 are mentioned in the Extract to the Annual Return in Form MGT-9 which is attached as Annexure IV and forms a part of this Report of the Directors.

Corporate Governance

The Company has in place the SEBI regulations pertaining to Corporate Governance. During the year under consideration the Company had a seven member Board of Directors consisting of three non- executive independent directors, three non-executive non-resident directors representing the holding company and the Managing Director.

The non-executive non-resident Directors have waived their commission on profits for the year and have not received any sitting fees for attending the meetings of the Directors. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 2013 and Rules thereon.

The Corporate Governance Report for the year ended on December 31, 2015, giving the details as required under Regulation 34(3) read with Clause C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI- LODR") is given separately as Annexure I and forms part of this Report of the Directors. The Corporate Governance Certificate for the year ended on December 31, 2015 issued by Mr Anjan Kumar Roy of M/s Anjan Kumar Roy & Co, Practicing Company Secretaries, Secretarial Auditor of the Company, is also attached as Annexure II and forms a part of this Report of the Directors.

The Company has in place an Insider Trading Code for compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. Mr Taposh Roy, Company Secretary, is the Compliance Officer responsible for compliance with the Insider Trading procedures. Details of securities transaction by insiders are placed before the Board of Directors of the Company and also notified to the Stock Exchanges.

Mr Subrata Roy, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer, have given their certificate under Regulation 17(8) read with Part B of Schedule II of SEBI-LODR regarding the annual financial statements for the year ended on December 31, 2015 to the Board of Directors. The Managing Director has given his certificate under Regulation 34(3) read with Part D of Schedule V of SEBI-LODR regarding compliance with the Code of Conduct of the Company for the year ended on December 31, 2015, which is attached as Annexure VIM and forms a part of this Report of the Directors.

In compliance with SEBI-LODR, new Listing Agreements as per revised format with BSE Limited and National Stock Exchange of India Limited were executed on December 3, 2015.

Audit Committee

The Audit Committee was constituted on October 24, 2000. The Committee as on December 31, 2015 comprises Mr Biswadip Gupta as Chairman and Mr Christopher Abbott, Mr Tanmay Ganguly Miss Nayantara Palchoudhuri and Mr Sudipto Sarkar as Members. The Company Secretary is the Secretary of the Committee. The Managing Director and Chief Financial Officer are permanent invitees to the meeting. The details of all related party transactions are placed periodically before the Audit Committee. During the year there were no instances where the Board had not accepted the recommendations of the Audit Committee. The Company has in place a vigil mechanism details of which are available on the Company's website www.vesuviusindia.com. All persons have been given direct access to the Chairman of the Audit Committee to lodge their grievances. No personnel has been denied access to the Audit Committee to lodge their grievances.

The Audit Committee has also been delegated the responsibility for monitoring and reviewing risk management assessment and minimization procedures, implementing and monitoring the risk management plan and identifying, reviewing and mitigating all elements of risks which the Company may be exposed to.

The details of terms of reference of the Audit Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them during the year ended on December 31, 2015 are given separately in the attached Corporate Governance Report.

Corporate Social Responsibility Committee

A Corporate Social Responsibility Committee was constituted on April 29, 2014. The Committee as on December 31, 2015 comprises Mr Biswadip Gupta as Chairman and Mr Tanmay Ganguly, Miss Nayantara Palchoudhuri, Mr Subrata Roy and Mr Sudipto Sarkar. Mr Arunava Maitra, Chief HR Officer, is the Secretary of the Committee.

The Corporate Social Responsibility Policy, which was approved by the Board on November 10, 2014, is available on the Company's website www.vesuviusindia.com The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them during the year ended on December 31, 2015 are given separately in the attached Corporate Governance Report.

The Annual Report on Corporate Social Responsibility is attached as Annexure VII. The Company believes that CSR projects should be sustainable and with the long term purpose of improving the quality of living for the less privileged and for increasing social assets. The funds should be carefully spent on CSR so that they result in the ultimate objectives meted out in the Company's CSR Policy. Meetings have been held with agencies having all India presence to provide CSR support jointly with the employees of the Company to CSR projects not only where the Company's factories are based but also around steel plants and other locations where the Company operates. These meetings have remained inconclusive as good quality CSR activities as per the Company's CSR Policy having a strong bearing on the society's needs were not immediately available. As a result the Company could only spend about Rs 10 lakhs during the year and expects that in the next year more CSR activities will be approved and undertaken.

Nomination and Remuneration Committee

A Nomination and Remuneration Committee was constituted on April 29, 2014 and the members as on December 31, 2015 are Mr Sudipto Sarkar as Chairman and Mr Biswadip Gupta, Mr Christopher Abbott, Mr Tanmay Ganguly and Miss Nayantara Palchoudhuri as Members. The Company Secretary is the Secretary of this Committee. The Company's Remuneration Policy prepared in accordance with section 178 of the Companies Act, 2013 is available on the Company's website www.vesuviusindia.com. The details of terms of reference of the Nomination and Remuneration Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them during the year ended on December 31, 2015 are given separately in the attached Corporate Governance Report.

Share Transfer and Stakeholders Grievance & Relationship Committee

The Share Transfer Committee was constituted on January 1,1993 and was renamed The Share Transfer and Investor Grievance Committee on February 12, 2001. To comply with the requirements of the Companies Act, 2013 and the listing agreements with Stock Exchanges, the name of the Committee was changed to Share Transfer and Stakeholders Grievance & Relationship Committee effective from April 29, 2014. The Members of the Committee as on December 31, 2015 are Mr Biswadip Gupta as Chairman, Mr Christopher Abbott, Mr Tanmay Ganguly, Miss Nayantara Palchoudhuri, Mr Subrata Roy and Mr Sudipto Sarkar as Members. The Committee has delegated the responsibility for share transfers and other routine share maintenance work to the Company Secretary and to M/s C B Management Services (P) Ltd, the Registrars and Share Transfer Agents of the Company. All requests for dematerialization and dematerializations of shares, transfer or transmission of shares and other share maintenance matters are completed within 15 days of receipt of valid and complete documents. Minutes of the Committee meetings are circulated to all Directors and discussed at the Board meetings. The Committee also reports to the Board on matters relating to the shareholding pattern, shareholding of major shareholders, insider trading compliances, movement of share prices, redressal of complaints, reports on SCORES of SEBI and all compliances under the Companies Act, 2013, the listing agreement with Stock Exchanges and SEBI-LODR. Details of the number and dates of meetings of this Committee which were held during the year ended on December 31, 2015, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report.

The shares of the Company are listed on the Bombay and National Stock Exchange. The Company's shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the attached Corporate Governance Report. Only 2.13 % of share capital are held in physical mode by 3040 Shareholders as on December 31,2015.

Investor Education and Protection Fund

In compliance with the provisions of section 205Aof the Companies Act, 1956, a sum of Rs 381,694/- being the dividend lying unclaimed out of the eleventh deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Loans, guarantees and investments

It is the Company's policy not to give loans, directly or indirectly, to any person (other than to employees under contractual obligations) or to other body corporate or give any guarantee or provide any security in connection with a loan to any other body corporate or person. The Company also does not make any investment in securities of any other body corporate.

Provisions of section 186 of the Companies Act, 2013 are not applicable to loans to employees.

Information pursuant to section 134(3) of the Companies Act, 2013

Vesuvius pic is the ultimate holding company of the Company and therefore all subsidiaries of Vesuvius pic are treated as related parties of the Company. Transactions have been held during the year with some of the related parties, details of which are mentioned in the Annual Report in accordance with the Accounting Standards 18 on Related Party Disclosures notified by the Companies (Accounting Standards) Rules, 2006. All these transactions are in the ordinary course of business and are at arm's length and hence the restrictive provisions of section 188(1) are not attracted to these transactions. In compliance with the provisions of Regulation 34(3) read with Schedule V of SEBI-LODR read with section 134(3)(h) it is confirmed that no loans or advances in the nature of loans have been received or paid to the holding company or any associate company or any Director or to any firms or companies in which a director is interested and no investments have been made in the shares of the parent/ holding companies or any of its subsidiaries. The prescribed Form AOC- 2 is therefore not applicable to the Company.

There were no material changes and commitments affecting the financial position of the Company occurring between December 31, 2015 and the date of this Report of the Directors.

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure V and forms a part of this Report of the Directors.

The prescribed particulars of Employees required under section 134(3)(q) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure VI and forms a part of this Report of the Directors.

Prevention of Sexual Harassment

In compliance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 the Company had constituted a Prevention of Sexual Harassment Committee with three employees and a reputed NGO representative and requested Miss Nayantara Palchoudhuri, Director, to be an Adviser to the Committee. The Prevention of Sexual Harassment Policy was also approved by the Board and all employees, specially women employees, were made aware of the Policy and the manner in which complaints could be lodged. The Committee submitted their first Annual Report which has been received and approved by the Board.

The following is reported pursuant to section 22 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,2013 :

a. Number of complaints of sexual harassment received in the year: Nil

b. Number of complaints disposed off during the year: Nil

c. Number of cases pending for more than ninety days: Nil

d. Number of workshops or awareness programme against sexual harassment carried out: Two

e. Nature of action taken by the employer or District Officer: Not Applicable

Policies Approved by the Board

During the year the following policies were approved by the Board and copies of these policies are attached as per Annexure referred to below:

policy Date of thwe Board Whwther Annexure meeting upload on number wher approved companys website

Risk Management Policy May 7,2015 YES IX

Insider Trading Code May 7,2015 YES X

Insider Trading Fair Disclosure Code May 7,2015 YES XI

Prevention of Sexual Harassment Policy August 3,2015 NO XII

Materiality and Dealing withRelated Party Transactions November 7,2015 YES XIII

Annexures forming a part of this Report of the Directors

The Annexures referred to in this Report and other information which are required to be disclosed are annexed herewith and form a part of this Report of the Directors :

Annexure particles

I Corporate Governance Report

II Certificate from Practicing Company Secretary on Corporate Governance Report

III Secretarial Audit Report

IV Extract of the Annual Return in Form MGT-9

V Prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

VI Particulars of Employees

VII Annual Report on Corporate Social Responsibility

VIII Managing Director's Certificate under regulation 34(3) read with Part D of Schedule V of SEBI-LODR on compliance of Code of Conduct

IX Risk Management Policy

X Insider Trading Code

XI Insider Trading Fair Disclosure Code

XII Prevention of Sexual Harassment Policy

XIII Materiality and Dealing with Related Party Transactions

Human Resources Management & Health, Safety and Environment

People are considered to be one of most valuable resources and the Company recognizes that working environment motivate employees to be productive and innovative. The continuous leadership and technical training courses give employees the opportunity to improve their skills, maximize personal potential and develop careers within the Company and the Group while adhering to Vesuvius values.

Employees were encouraged to participate in sports activities. A cricket competition had been organized during the year which the employees gleefully participated. Other tournaments like table tennis and badminton were also organised. The Company had 435 employees as on December 31, 2015.

Our intense focus on Health & Safety as a primary and mainstream responsibility for all our employees is out of our care and concern for our people, our customers and our business associates. The Turbo- S programme was launched to align our operations with these fundamentals to focus on enhancing personnel safety. Much work has gone into making operations safer by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipment, regular safety audits etc.

Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into.

All management staff of the Company have undergone training on Anti-Bribery and Anti-Corruption Policy of the Company.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the

Board of Directors

BiswadipGupta

Kolkata CHAIRMAN

February 26, 2016


Dec 31, 2014

Dear Members,

FOR THE YEAR ENDED ON DECEMBER 31, 2014

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2014.

The Year in Retrospect Rs Lakhs Year ended Year ended Financial Results: 31.12.2014 31.12.2013

Sale of Goods (excluding Excise Duty) 62,167 57,492

Sale of Services 3,000 2,627

Other Income 966 628

Total Revenue 66,133 60,747

Profit before Depreciation, Interest & Tax (PBDIT) 10,905 11,657

Depreciation & Amortisation 1,912 1,756

Interest - 7

Profit before Tax 8,993 9,894

Provision for Income Tax 3,076 3,377

Profit for the year after Tax 5,917 6,517

Proposed Dividend and Taxes:

Proposed Final Dividend @Rs 6/-per share i.e. 60% 1,218 964

Dividend Tax on Final Dividend 243 164

Interim Dividend @ Re 1/-per share i.e. 10% 203 -

Dividend Tax on Interim Dividend 34 -

Total Dividend and Taxes 1,698 1,128

Transfer to General Reserves: 592 652

Basic & Diluted

Earnings Per Share: Rs 29.15 Rs 32.10



Dividend

On the occasion of the 20th Anniversary of commencement of commercial production from the Company''s first plant at Kolkata, an interim dividend being the 20th Anniversary Special Dividend of Re. 1/- per share (i.e. 10%) had been declared by the Board of Directors on February 25, 2014 and paid to all Members on March 12, 2014.

The Board of Directors are pleased to recommend a final dividend of Rs 6/- per share i.e. 60% on Equity Shares of Rs 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs 1,461 lakhs (previous year Rs 1,128 lakhs). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within May 12, 2015 and dividend will be paid on or after May 15, 2015 to those who are Members of the Company as on May 7, 2015, the Book Closure period being April 29, 2015 to May 7,2015. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

The interim dividend together with the proposed final dividend results in a total dividend payout of Rs 71- per share (i.e. 70% ) for the current year ending December 31, 2014.

Group Activities

Vesuvius pic, the ultimate holding company, is listed on the London Stock Exchange and is a global leader in metal flow engineering, principally serving steel and foundry industries with customized products, services and technologies that make demanding applications possible. Vesuvius has a presence across the world at all major customer facilities employing over 12,000 employees spread over 30 countries with 69 manufacturing establishments, 6 Research & Development Centres and 8 Development Laboratories and employs more than 100 PhDs. The Vesuvius Research Centers in USA and France are fully equipped laboratory and product testing complexes.

Vesuvius Group Limited, U.K., the immediate holding company, holds about 56% of the share capital of the Company. Mr Francois Wanecq the Chief Executive of Vesuvius pic, the ultimate holding company, is a Director of our Company. Vesuvius continues to focus on safety, technology, investing new capacities in emerging markets including in India. Vesuvius is actively pursuing the implementation of its strategy towards Technical Services and for this purpose has acquired two companies involved in high technology data capture serving principally the steel industry - ECIL Mec Tec in Brazil and Process Metrix in California. The Vesuvius Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

ISO Certification

The Company''s factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Segmentwise performance

The Company is primarily a manufacturer and trader of refractory and is managed organizationally as a single unit. Accordingly, the Company is a single business segment company. Geographical (secondary) segment has been identified as domestic sales and exports.

Board of Directors

Dr Claude Dumazeau, who was a nominee of the holding company, had retired from the Vesuvius Group''s employment and so had resigned as a Director of the Company and his resignation was accepted effective from February 25, 2014. The Board of Directors record their appreciation of the services rendered by Dr Dumazeau during his term as a Director of the Company since December, 1994.

Mr Sudipto Sarkar was appointed as an Independent Director at the Annual General Meeting held on April 29, 2014 pursuant to the provisions of section 149 of the Companies Act, 2013 for a period of five years from April 29, 2014 and will not be liable to retire by rotation during his term of five years.

Mr Tanmay Kumar Ganguly, Managing Director of the Company, has been appointed President- Advanced Refractories of the Vesuvius Group with effect from January 1, 2015 and is now responsible for the worldwide Advanced Refractory business of the Vesuvius Group from his new location in the United Kingdom. Mr Ganguly had resigned from the Company effective from close of office hours on December 31, 2014 to take up his new assignment within the Vesuvius Group and his resignation was accepted by the Board at their meeting held on December 26, 2014. The Board of Directors record their appreciation of the good work done by Mr Tanmay Ganguly and acknowledge his contribution to the growth and prosperity of the Company during his tenure as Managing Director.

At the Board meeting held on December 26, 2014, Mr Subrata Roy was appointed Managing Director of the Company for a period of five years with effect from January 1, 2015, subject to the approval of the Members of the Company which has been sought through electronic voting for which a Notice has been issued on January 28, 2015. Mr Subrata Roy, aged 49 years, is a Mechanical Engineer from Jadavpur University, Kolkata, and worked with Bharat Heavy Electricals Ltd. for five years prior to joining Vesuvius India in September, 1993. Over the last two decades Mr Roy held numerous roles within the Company. He assumed the responsibilities of Engineering Manager of the Kolkata Plant, Slidegates Product Line Manager for Asia Pacific, Business Manager-Slide Gates & Purge Plugs, General Manager-Flow Control Sales, and had gradually moved to his new responsibility as Chief Executive-Operations around two and half years ago, immediately before his appointment as Managing Director. He was an integral part of the team which set up the Company''s first factory at Kolkata and he had also supervised the construction of the Company''s second factory at Visakhapatnam. He is not a Director of any other company and does not hold any shares of the Company and is not related to any Director or Key Managerial Personnel of the Company.

The Companies Act, 2013 requires that a Woman Director should be a member of the Board of Directors. Miss Nayantara Palchoudhuri has been recommended both by the Nomination and Remuneration Committee and by the Board of Directors to be the Woman Independent Director of the Company. Approval to her appointment has been sought from the Members of the Company through electronic voting for which a Notice has been issued on January 28, 2015. If approved, Miss Nayantara Palchoudhuri will join the Board of Directors as a Woman Independent Director for a term of five years effective from March 27, 2015 and during this term she will not be liable to retire by rotation.

Miss Nayantara Palchoudhuri, aged 52 years, is a fourth generation Tea Planter with more than 20 years experience in the successful operations and management of the tea estates in North Bengal. She is a B.A. (Hons) in Political Science from University of Jadavpur with a First Class First and was awarded the University Gold Medal and the National Scholarship; an M.A in Development Studies from the School of Oriental and African Studies -SOAS- (University of London) and M.Phil (Research Degree) from the London School of Economics & Political Science where she was awarded the Metcalfe Scholarship.

She is presently serving as the Honorary Consul for Norway in the Eastern Region looking after their trade development and consular matters. She was recently awarded the Banga Samman Award and the Nari Samman Award and The FLO- 2008 Woman Achiever Award and was the only delegate from India to the International Visitors Leadership Programme to USA on an invitation from the US Government in 2007.

She is presently the Chairperson of the North Bengal Branch and Council Member of the Tea Research Association, Member of the National Committee for Tea and the Indian Tea Association. She is a Wholetime Director of Washabarie Tea Co Pvt Ltd and also a Director of West Bengal Tea Development Corporation Ltd, Rossell India Limited and Ludlow Jute & Specialities Limited and a Partner of Mohurgong &Gulma Tea Estates.

She is a Member of the Executive Committee of Indian Chamber of Commerce and of the National Executive Committee of the Federation of Indian Chambers of Commerce and Industry (FICCI). She is the Founder Member of the Entrepreneurship Development Institute (EDI) set up in association with the Government of West Bengal and the Bengal National Chamber of Commerce and Industry for skill and enterprise development.

She is currently the President of the Indo British Scholars Association.

She was the First Lady President of the 120 year old Bengal National Chamber of Commerce and Industry and was a Member of the Senate of Calcutta University and an Executive Council Member of the Netaji Subhas Open University.

She is associated with several social Associations and has held several responsibilities including as Past District Governor of Rotary International District 3291, Member of the Advisory Committee of the Indian Council for Cultural Relations, Kolkata, International Vice-Chair of the London School of Economics Alumni Association, Executive Committee of the Ladies Study Group and State Co-Convenor of Indian National Trust for Art and Cultural Heritage (INTACH) - the leading heritage conservation organisation in the country.

Miss Palchoudhuri does not hold any shares in the Company, nor is she related to any Director or Key Managerial Personnel of the Company. She has given a declaration that she fulfils and complies with all the conditions specified in the Companies Act, 2013 making her eligible to be appointed as an Independent Director. The Board of Directors are also of the opinion that Miss Palchoudhuri fulfils all the conditions specified in the Companies Act, 2013 making her eligible to be appointed as an Independent Director.

Mr Biswadip Gupta, Chairman of the Company, will retire by rotation at the next Annual General Meeting and being eligible has offered himself for reappointment as a Director of the Company. Being eligible, he is proposed to be re-appointed as an Independent Director of the Company in compliance with the provisions of section 149 of the Companies Act, 2013 for a term of five years effective from May 7, 2015. He will not be liable to retire by rotation during his term of five years.

Mr Biswadip Gupta, aged about 64 years, is a BE(Metallurgy) and MBA and has about 42 years experience in the steel and refractory industry. He has received extensive training worldwide in the refractory making industry during his 20 years association with the Vesuvius Group, UK before being associated with Vesuvius India. Since 1979 he was the Consultant Director, Indian Operations of Vesuvius Corporation SA, Switzerland. Mr Gupta had joined the Company as a Director in 1991 and was the Managing Director from 1992 upto April 17, 2007 and thereafter continued as a non-executive Director. He had been instrumental in setting up of the Indian operations. Mr Gupta was the recipient of the Chief Executive''s Award for outstanding performance in 1993 and again in 2003 from the Vesuvius Group during his tenure as Managing Director of the Company.

Mr Gupta was formerly President of Bengal Club Limited and President of Bengal Chamber of Commerce and Industry. He was Deputy Chairman of the Indian Refractory Makers Association and Chairman of CM (Eastern Region). He is presently a Director of Barbil Beneficiation Company Ltd, DESCON Ltd, Dishergarh Infrastructure Development Pvt Ltd, Gourangdih Coal Limited, JSW Bengal Steel Ltd, JSW Energy (Bengal) Ltd, JSW Natural Resources Bengal Limited, JSW Natural Resources India Limited, NICCO Engineering Services Ltd, NICCO Ventures Limited and President, Corporate Affairs of JSW Steel Limited. He is a member of the following Committees:

Name of Company Name of Committee Nature of Membership

JSW Benqal Steel Ltd Audit Committee Member

Nicco Engineering ServicesLtd Audit Committee Member

Vesuvius India Ltd 1. Audit Committee Chairman

2. Share Transfer & Sakeholders Chairman Grievance& Relationship Committee

3. Corporate Social Responsibility Committee Chairman

4. Nomination & Remuneration Committee Member

Mr Gupta''s nature of experience is in Steel and Refractory business, Corporate Affairs and Finance. He holds 38,749 shares of the Company. He is not related to any Director or Key Managerial Personnel of the Company. He has given a declaration that he fulfils and complies with all the conditions specified in the Companies Act, 2013 making him eligible to be appointed as an Independent Director. The Board of Directors are also of the opinion that Mr Gupta fulfils all the conditions specified in the Companies Act, 2013 making him eligible to be appointed as an Independent Director.

Mr Yves M.C.M.G Nokerman retires by rotation at the Annual General Meeting of the Company and, being eligible, has offered himself for reappointment.

He is proposed to be re-appointed a Director and will be liable to retire by rotation.

Mr Yves M.C.M.G. Nokerman is the Vice President Global Shared Services of Vesuvius Group and is based in Ghlin, Belgium. He joined the Board of Directors on July 29, 2008 as a nominee of the holding company. He is not a director of any other company in India, but is a director of 27 companies abroad belonging to the Vesuvius Group. He is well conversant with the refractory industry having over 29 years of experience and his nature of experience is in Finance, Taxation, Information Technology and Corporate Affairs. He does not hold any shares in the Company. He is not related to any other Director or Key Managerial Personnel of the Company. Mr Nokerman is a member of the Audit Committee, Corporate Social Responsibility Committee, Nomination and Remuneration Committee and also the Share Transfer and Stakeholders Grievance & Relationship Committee.

Mr Biswadip Gupta and Mr Sudipto Sarkar, Independent Directors of the Company, have had a separate meeting on November 10, 2014 to review the performance and evaluation of Independent Directors and Board as a whole and assess the quality, quantity and timeliness of flow of information from the Company management to the Directors. The overall outcome from the evaluation was that the Board and its individual Directors are performing effectively and that the Board is well supported and presents an open forum for debate and that future focus should be on strategy, governance and compliances.

The Independent Directors have confirmed and declared that they are not disqualified to act as an independent director in compliance with the provisions of section 149 of the Companies Act, 2013 and the Board is also of the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Directors.

All Directors, Key Managerial Personnel and senior management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by the Managing Director is attached as Annexure IX which forms a part of this Report of the Directors. The Code of Conduct is available on the Company''s website www.vesuviusindia.com.AII Directors have confirmed compliance with provisions of section 164 of the Companies Act, 2013.

The details of number and dates of meetings held by the Board and its Committees, attendance of Directors and remuneration paid to them is given separately in the attached Corporate Governance Report.

Directors'' Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013 and Clause 49(lll)(D)(4)(a) of the listing agreement with Stock Exchanges in the preparation of the annual accounts for the year ended on December 31, 2014 and state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis;

v. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

vi. there is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Key Managerial Personnel

The following three persons were formally appointed as Key Managerial Personnel of the Company effective from April 1, 2014 in compliance with the provisions of section 203 of the Companies Act, 2013:

a) Mr Tanmay Kumar Ganguly, Managing Director

b) Mr Taposh Roy, Company Secretary

c) Mr Sanjoy Dutta, Chief Financial Officer

Mr Tanmay Ganguly having resigned effective from December 31, 2014, Mr Subrata Roy was appointed as the Managing Director and Key Managerial Personnel effective from January 1, 2015. Remuneration and other details of the Key Managerial Personnel for the year ended December 31, 2014 are mentioned in the Extract of the Annual Return which is attached as Annexure IV and forms a part of this Report of the Directors.

Corporate Governance

The Company has in place the SEBI guidelines pertaining to Corporate Governance. During the year under consideration the Company had a five member Board of Directors consisting of two non-executive independent directors, two non-executive non-resident directors representing the holding company and the Managing Director.

The non-executive non-resident Directors have waived their commission on profits for the year and have not received any sitting fees for attending the meetings of the Directors. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 2013 and Rules thereon.

The Corporate Governance Report giving the details as required under Clause 49 of the listing agreement with the Stock Exchanges is given separately as Annexure I and forms part of this Report of the Directors. The Corporate Governance Certificate for the year ended on December 31, 2014 issued by MrAnjan Kumar Roy of M/sAnjan Kumar Roy & Co, Practicing Company Secretaries, Secretarial Auditor of the Company, is also attached as Annexure II and forms a part of this Report of the Directors.

The Company has in place an Insider Trading Code for compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992. Mr Taposh Roy, Company Secretary, is the Compliance Officer responsible for compliance with the Insider Trading procedures. Details of securities transaction by insiders are placed before the Board of Directors of the Company and also notified to the Stock Exchanges.

Mr Subrata Roy, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer have given their certificate under Clause 49(IX) of the listing agreement with Stock Exchanges regarding the annual financial statements for the year ended on December 31, 2014 to the Board of Directors. The Managing Director has given his certificate under Clause 49(II)(E) of the listing agreement with Stock Exchanges regarding compliance with the Code of Conduct of the Company for the year ended December 31, 2014, which is attached as Annexure IX and forms a part of this Report of the Directors.

Audit Committee

The Audit Committee was constituted on October 24, 2000. The Committee now comprises Mr Biswadip Gupta as Chairman and Mr Yves M.C.M.G Nokerman and Mr Sudipto Sarkar as Members. The Company Secretary is the Secretary of the Committee. The Managing Director and Chief Financial Officer are permanent invitees to the meeting. The details of all related party transactions are placed periodically before the Audit Committee. During the year there were no instances where the Board had not accepted the recommendations of the Audit Committee. The Company has in place a vigil mechanism details of which are available on the Company''s website www.vesuviusindia.com

The Audit Committee has also been delegated the responsibility for monitoring and reviewing risk management assessment and minimization procedures, implementing and monitoring the risk management plan and identifying, reviewing and mitigating all elements of risks which the Company may be exposed to.

The details of terms of reference of the Audit Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report.

Corporate Social Responsibility Committee

A Corporate Social Responsibility Committee was constituted on April 29, 2014 with Mr Biswadip Gupta as Chairman and Mr Tanmay Ganguly and Mr Yves Nokerman as Members. Mr Tanmay Ganguly has resigned effective from December 31, 2014 and in his place Mr Subrata Roy, Managing Director, has been inducted into the Committee as a Member effective from January 1,2015.

The Committee met only once during the year on November 10, 2014 to finalise the Corporate Social Responsibility Policy. The Policy was approved by the Board on November 10, 2014, is available on the Company''s website www.vesuviusindia.com and is attached as Annexure VII and forms a part of this Report of the Directors.

The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report.

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies. Social, environment and ethical matters are reviewed by the Board including the impact such matters may have on the Company''s management of risk.

The Company continues its spend to support local initiatives to improve infrastructure as well as support in other corporate social responsibility initiatives. The Company has not yet finalized the manner of implementation of the CSR Policy, for which it is in dialogue with various agencies to evaluate available options. The disclosure requirements relating to the amounts spent on Corporate Social Responsibility activities of the Company is due for the first time for the financial year ending on December 31, 2015 and hence is not disclosed this year.

Nomination and Remuneration Committee

A Nomination and Remuneration Committee was

constituted on April 29, 2014 with Mr Sudipto Sarkar as Chairman and Mr Biswadip Gupta, Mr Yves Nokerman and Mr Francois Wanecq as Members. The Company Secretary is the Secretary of this Committee.

The Company''s Remuneration Policy is available on the Company''s website www.vesuviusindia.com and is attached as Annexure VIM and forms a part of this Report of the Directors. The details of terms of reference of the Nomination and Remuneration Committee, number and dates of meetings held, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report.

Share Transfer and Stakeholders Grievance & Relationship Committee

The Share Transfer Committee was constituted on January 1,1993 and was renamed The Share Transfer and Investor Grievance Committee on February 12, 2001. To comply with the requirements of the Companies Act, 2013 and the listing agreements with Stock Exchanges, the name of the Committee was changed to Share Transfer and Stakeholders Grievance & Relationship Committee effective from April 29, 2014. The Members of the Committee are Mr Biswadip Gupta as Chairman, Mr Tanmay Ganguly, Mr Yves Nokerman and Mr Sudipto Sarkar as Members. Mr Tanmay Ganguly having resigned effective from December 31, 2014, Mr Subrata Roy has been inducted into the Committee as a Member effective from January 1, 2015. There were two meetings during the year on April 29, 2014 and December 31, 2014. The Committee has delegated the responsibility for share transfers and other routine share maintenance work to the Company Secretary and to M/s C B Management Services (P) Ltd, the Registrars and Share Transfer Agents of the Company. All requests for dematerialisation and rematerialisation of shares, transfer or transmission of shares and other share maintenance matters are completed within 15 days of receipt of valid and complete documents. Minutes of the Committee meetings are circulated to all Directors and discussed at the Board meetings. The Committee also reports to the Board on matters relating to the shareholding pattern, shareholding of major shareholders, insider trading compliances, movement of share prices, redressal of complaints, Reports on SCORES of SEBI and all compliances under the Companies Act, 2013 and the listing agreement with Stock Exchanges. The details of the number and dates of meetings of this Committee which were held during the year ended December

31, 2014, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report.

The shares of the Company are listed on the Bombay and National Stock Exchange. The Company''s shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the attached Corporate Governance Report. Only 2.23 % of share capital are held in physical mode by 3174 Shareholders.

Investor Education and Protection Fund

In compliance with the provisions of section 205Aof the Companies Act, 1956, a sum of Rs 339,552/- being the dividend lying unclaimed out of the tenth dividend declared by the Company for the year ended December 31, 2006 at the Annual General Meeting held on April 17, 2007 was transferred to the Investor Education and Protection Fund of the Central Government in May, 2014, after giving several notices and reminders to the concerned shareholders.

Dividend which remains unclaimed out of the eleventh dividend declared by the Company for the year ended on December 31, 2007 at the Annual General Meeting held on April 29, 2008 will be transferred to the Investor Education and Protection Fund of the Central Government in June, 2015 pursuant to the provisions of section 205A of the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 12,2015.

Notices pursuant to Rule 4Aof the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 30, 2015 reminding them to encash their unclaimed dividend.

Auditors

M/s B S R & Co. LLP, Chartered Accountants, hold office as Auditors of the Company till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. Pursuant to the provisions of section 139 of the Companies Act, 2013, the Auditors are proposed to be reappointed for a term of two years, subject to ratification by the Members at every Annual General Meeting. There are no qualifications or observations or remarks made by the Auditors in their Report.

Secretarial Audit

A Secretarial Audit was conducted during the year by the Secretarial Auditor, Mr Anjan Kumar Roy of M/s Anjan Kumar Roy & Co. Practicing Company Secretaries, in accordance with the provisions of section 204 of the Companies Act, 2013. The Secretarial Auditor''s Report is attached as Annexure III and forms a part of this Report of the Directors. There are no qualifications or observations or remarks made by the Secretarial Auditor in his Report.

Cost Audit

In compliance with the provisions of Section 233B and Section 224(IB) and other applicable provisions of the Companies Act, 1956 and the Order No F.NO.52/26/CAB-2010 dated November 6, 2012 issued by the Ministry of Corporate Affairs, Government of India, Messrs N. K. Ghosh & Associates, Cost Accountants, of Flat no 4B, 10/1 Chakraberia Road (South), Kolkata 700 025 (Firm''s Registration no 102058) had been appointed Cost Auditors of the Company for the first time for conducting Cost Audit of the Company''s cost records for the year ended December 31, 2013. The Cost Audit for the year ended December 31, 2013 had been completed and the report has been filed with the Ministry of Corporate Affairs.

The Board at their meeting held on February 25, 2014 re-appointed the Cost Auditors for the year ended December 31, 2014 at a remuneration of Rs 150,000 plus service tax and out of pocket expenses. Pursuant to the provisions of section 148 of the Companies Act, 2013 which has replaced section 233B of the Companies Act, 1956, the remuneration of the Cost Auditor should be determined by the Members of the Company. A Notice dated January 28, 2015 had been issued to the Members

of the Company seeking their approval, through electronic voting, to the remuneration payable to the Cost Auditors.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Loans, guarantees and investments

It is the Company''s policy not to give loans, directly or indirectly, to any person (other than to employees under contractual obligations) or to other body corporates or give any guarantee or provide any security in connection with a loan to any other body corporate or person. The Company also does not make any investment in securities of any other body corporate.

In compliance with section 186 of the Companies Act, 2013, loans to employees bear interest at applicable rates.

Information pursuant to section 134(3) of the Companies Act, 2013

The prescribed particulars of Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo required under section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure V and forms a part of this Report of the Directors.

The prescribed particulars of Employees required under section 134(3)(q) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure VI and forms a part of this Report of the Directors.

Report of The Directors^;

Annexures forming a part of this Report of the Directors

The Annexures referred to in this Report and other information which are required to be disclosed are annexed herewith and form a part of this Report of the Directors :

Annexure

Particulars

Corporate Governance Report

I, Certificate from Practicing Company Secretary on Corporate

Governance Report

III Secretarial Audit Report

IV Extract of the Annual Return in Form MGT-9

Prescribed particulars of Conservation of Energy, Technology

Absorption and Foreign Exchange Earnings and Outgo

VI Particulars of Employees

VII Corporate Social Responsibility Policy of the Company

VIII Remuneration Policy of the Company

IX Managing Director''s Certificate under Clause 49(II)(E) of Listing

Agreement on compliance of Code of Conduct

Human Resources Management & Health, Safety and Environment

A fundamental concept embodied in the Company''s Code of Conduct is that the Company''s goals can only be met through the efforts of its employees. Vesuvius recognises that job satisfaction requires working environments that motivate employees to be productive and innovative and provide opportunities for employee training and development to maximise personal potential and develop careers within the Group. The Company values the involvement of its employees and keeps them informed on matters affecting them as employees and factors relevant to the Company''s performance. Decisions on recruitment, career development, training, promotion and other employment related issues are made solely on the grounds of individual ability, achievement, expertise and conduct and these principles are operated on a non-discriminatory basis. Training courses give employees the opportunity to improve their skills, maximize personal potential and develop careers within the Company and the Group while adhering to Vesuvius values.

We have made further progress on Health and Safety both in terms of safe working practices and the reporting performance by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into.

All senior officials of the Company have undergone training on Anti Bribery and Anti Corruption Policy of the Company.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the Board of Directors

Kolkata Biswadip Gupla February 24, 2015 CHAIRMAN


Dec 31, 2013

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2013.

The Year in Retrospect Financial Results

(Rs. Lakhs)

Year ended Year ended 31.12.2013 31.12.2012

Sale of Goods (excluding Excise Duty) 57,492 53,553

Sale of Services 2,627 2,681

Other Income 628 352

Total Revenue 60,747 56,586

Profit before Depreciation, Interest & Tax (PBDIT) 11,657 9,904

Depreciation & Amortisation 1,756 1,635

Interest 7 6

Profit before Tax 9,894 8,263

Provision for Income Tax 3,377 2,687

Profit after Tax 6,517 5,576

Balance as per last Balance Sheet brought forward 26,604 22,647

Available for appropriation 33,121 28,223

Appropriations made :

Proposed Dividend @ Rs 4.75 per share i.e. 47.50 % 964 913

Dividend Tax 164 148

Transfer to General Reserves 652 558

1,780 1,619

Balance in Statement of Profit & Loss 31,341 26,604

33,121 28,223

Basic & Diluted Earnings Per Share Rs 32.10 Rs 27.48

Operating & Financial Performance, Internal Control

It continued to be a difficult period for the Indian economy reflected by lower GDP growth, inflationary trends and lower industrial production. Private consumption, an important demand-side driver of growth which amounts for about three-fourths of GDP, plummeted in line with other economic indicators after being impacted by high retail inflation and interest rates. This scenario continues to prevail with impact on the economy in general and domestic steel industry in particular causing the steel industry to suffer from lower volumes, margins and delay in new projects.

This year total revenue increased by over Rs 4,161 lakhs driven by domestic growth despite slowdown in domestic steel production. Net sales increased by 7% but PBT and PAT increased by 20% and 17% respectively over the previous year. Energy and transportation costs increased sharply but significant savings were made through energy usage optimization programs. Focused attention is made on cost and internal efficiencies to retain profitability.

All four factories had been working efficiently during the year. New Taphole Clay facility at Visakhapatnam successfully produced planned materials for field trials. Safety measures and processes have been installed and improved upon at all plants and work sites.

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Internal Audit has been conducted on a pan India basis.

The Company has adopted the revised policies on Health & Safety, Quality, Code of Conduct applicable to Directors and Employees of the Company and also the Whistle Blowing Policy. Code on Internal Control which require that the Directors review the effectiveness of internal controls and compliance controls, financial and operational risks, risk assessment and management systems and related party transactions, have been complied with. Self certification exercises are also conducted by which senior management certify effectiveness of the internal control system and adherence to Code of Conduct and Company''s policies for which they are responsible.

Dividend

The Board of Directors are pleased to recommend dividend of Rs 4.75 per share i.e. 47.50% on Equity Shares of Rs 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs 1,128 lakhs (previous year Rs 1,061 lakhs). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within May 5, 2014 and dividend warrants will be dispatched on or after May 8, 2014 to those who are members of the Company as on April 29, 2014. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

Special Dividend

The Company this year is celebrating its 20th Anniversary of commencement of commercial production from its first plant at Kolkata. On this occasion, and for the purpose of rewarding the Shareholders for their continuous support to the Company, the Board of Directors have declared at their Board meeting held on February 25, 2014 a 20th Anniversary Special Dividend of Re. 1/- per share (i.e. 10%). The Record Date for determining the persons eligible for this Special Dividend is March 8, 2014. Dividend warrants will be dispatched on or after March 12, 2014. This 20th Anniversary Special Dividend is an interim dividend for the year ended December 31, 2014 and is given in addition to the dividend of Rs4.75 per share (i.e. 47.50%) that has been recommended for the year ended on December 31, 2013 which will be declared at the ensuing Annual General Meeting.

ISO Certification

The Company''s factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Segment wise performance

The Company is primarily a manufacturer and trader of refractory and is managed organizationally as a single unit. Accordingly, the Company is a single business segment company. Geographical (secondary) segment has been identified as domestic sales and exports.

Industry Structure & Developments, Opportunities & Threats, Outlook, Risks & Concerns

The steel industry, which is the major customer of the Company, has been suffering from the present economic slowdown with lower volumes and poor margins caused by non-availability of raw materials like iron ore and coal, inflationary costs, higher interest rates compounded with unfavorable foreign exchange. Major customers have either put off or delayed their expansion projects. Competition activities have increased as they try to hold on to their market share even at lower prices causing pressure on margins. International competitors have entered Indian markets with new acquisitions with aggressive pricing strategies.

Vesuvius is a global leader in metal casting engineering providing technical services principally to the steel and foundry industries and has established with the customers over the years a relationship of trust and partnership based on the true value we create in our customer''s processes with our unique technological product and service offering. biggest group of our customers. Hence anything that affects the steel and foundry industry will have its one off effect on our business.

There is a continuous process for identifying, evaluating and managing significant risks faced through a risk management process designed to identify the key risks facing each business. The role of insurance and other measures used in managing risks is also reviewed. Risks would include significant weakening in demand from core-end markets, adverse foreign exchange fluctuations, inflation, energy costs and shortage of raw materials and adverse regulatory developments. During the year a risk analysis and assessment was conducted in line with the Group requirements and no major risks were noticed.

Directors

Dr S K Gupta, who was the non-executive independent Chairman of the Company, had resigned effective from May 8, 2013 and Mr Shekhar Datta, a non-executive independent Director of the Company had resigned on April 25, 2013. Dr Claude Dumazeau retired from the Vesuvius Group''s employment and his resignation as a Director of the Company was accepted effective from February 25, 2014. The Board of Directors records its appreciation of the services rendered by Dr S K Gupta, Mr Shekhar Datta and Dr Claude Dumazeau.

Mr Biswadip Gupta was unanimously appointed Chairman of the Board of Directors at the Board meeting held on July 27, 2013. He is also the Chairman of the Audit Committee effective from July 27, 2013.

Mr Sudipto Sarkar retires by rotation in accordance with the Articles of Association of the Company at the forthcoming Annual General Meeting, and being eligible, offered himself for reappointment.

Mr Sudipto Sarkar, a renowned Barrister and aged about 67 years, is a Director of the Company since July 26, 2005. He holds B.Sc. (Maths-Hons) from Presidency College, Kolkata; BA (Law Tripos) from Jesus College, Cambridge, UK; LL.M, (International Law) from Jesus College, Cambridge, UK; M.A. (Law) from Jesus College, Cambridge, UK. He is also Barrister, Gray''s Inn, London. He is presently practicing as a Senior Advocate. He also has several publications to his credit on Evidence, Law of Civil Procedures and Specific Relief Act. He is the collaborating editor of Ramaiya''s Guide to the Companies Act and contributor to several volumes of International Law Reports (Cambridge).

He is presently a Director of JSW Steel Ltd, Eveready Industries Ltd, EIH Associated Hotels Ltd and Mcnally Bharat Engineering Company Ltd. He is on the panel of experts of the Indian Institute of Corporate Affairs constituted by the Ministry of Corporate Affairs, New Delhi. He is a member of the following Committees :

Name of Name of Nature of Company Committee Membership

EIH Associated Hotels Ltd 1. Audit Committee Member

2. Investors Grievances Member Committee

Eveready Industries Ltd Audit Committee Member

Name of Name of Nature of Company Committee Membership

JSW Steel Ltd Audit Committee Member

McNally Bharat Engineering Shareholders & Investors Member Company Ltd Grievances Committee

Vesuvius India Ltd 1. Audit Committee Member

2. Share Transfer & Investor Member Grievance Committee

Mr Sarkar''s nature of experience is in Law and Corporate Affairs. He does not hold any shares in the Company and is not related to any other Director of the Company.

All Directors and senior management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by the Managing Director is annexed to this Report. All Directors have confirmed compliance with provisions of section 274(1 )(g) of the Companies Act, 1956.

Listing and ISIN Number

The shares of the Company are listed on the Bombay and National Stock Exchange. The Company''s shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the Corporate Governance Report. Only 2.30 % of share capital are held in physical mode by 3311 Shareholders.

Group Activities

Vesuvius pic, the ultimate holding company since December 19, 2012, is listed on the London Stock Exchange and is a global leader in metal flow engineering, principally serving steel and foundry industries with customized products, services and technologies that make demanding applications possible. The Vesuvius Group has a presence across the world at all major customer facilities employing over 11,000 employees spread over 30 countries with 72 manufacturing establishments and has 6 Research & Development Centers, 8 Development Laboratories and employs more than 100 PhDs. The Vesuvius Research Centers in USA and France are fully equipped laboratory and product testing complexes.

Vesuvius Group holds about 56% of the share capital of the Company. Mr Francois Wanecq the Chief Executive of Vesuvius pic is a Director of our Company. The Vesuvius Group continues to focus on safety, technology, investing into growing markets including in India. The Vesuvius Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

Corporate Governance

The Company has in place the SEBI guidelines pertaining to Corporate Governance. During the year under consideration the Company had a eight member Board of Directors consisting of four non-executive independent directors, three non-executive non-resident directors representing the holding company and the Managing Director. Two non-executive independent Directors viz. Dr S K Gupta and Mr Shekhar Datta have resigned during the year. Dr Claude Dumazeau, a non-executive non-resident Director''s resignation was accepted by the Board at their meeting held on February 25, 2014. The Board of Directors now consists of five Directors with Mr Biswadip Gupta as Chairman.

The non-resident Directors have waived their commission on profits for the year and have not received any sitting fees for attending the meetings of the Directors. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 1956.

The Audit Committee was constituted on October 24, 2000 and the Share Transfer and Investor Grievance Committee on February 12, 2001. The details of the composition and attendance of the Board and Committees thereof and remuneration paid to the Directors as well as the shares held by the Directors have been given separately in the Corporate Governance Report.

The Corporate Governance Report giving the details as required under clause 49 of the listing agreement with the stock exchanges is given separately and forms part of the Directors Report to Shareholders. The Corporate Governance Certificate for the year ended on December 31, 2013 issued by the Statutory Auditors is also attached.

The Company has in place an Insider Trading Code for compliance with the Securities and Exchange

Board of India (Prohibition of Insider Trading) Regulations, 1992. MrTaposh Roy, Company Secretary, is the Compliance Officer responsible for compliance with the Insider Trading procedures. Details of securities transaction by insiders are placed before the Board of Directors of the Company.

MrTanmay Ganguly, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer have given their certificate under clause 49(V) of the listing agreement with stock exchanges regarding the annual financial statements for the year ended on December 31, 2013 to the Board of Directors. The Managing Director has given his certificate under clause 49(I)(D) of the listing agreement with stock exchanges, which is attached and forms a part of our Report.

Secretarial audit for reconciliation of Capital

The Securities and Exchange Board of India has directed vide circular no. D&CC/FITTC/CIR-16/2002 dated December 31, 2002 that all issuer companies shall submit a certificate of capital integrity, reconciling the total shares held in both the depositories viz NSDL and CDSL and in physical form with the total shares issued /paid up capital. In compliance with this requirement, the Company has submitted

I within due dates the certificates, duly certified by a Practicing Company Secretary, to the stock exchanges where the securities of the Company are listed. Investor Education and Protection Fund In compliance with the provisions of section 205A of the Companies Act, 1956, a sum of Rs 322,302/- being the dividend lying unclaimed out of the ninth dividend declared by the Company for the year ended December 31, 2005 at the Annual General Meeting held on April 20, 2006 was transferred to the Investor Education and Protection Fund of the Central Government in May, 2013, after giving several notices and reminders to the concerned shareholders. Dividend which remains unclaimed out of the tenth dividend declared by the Company for the year ended on December 31, 2006 at the Annual General Meeting held on April 17, 2007 will be transferred to the Investor Education and Protection Fund of the Central Government in May, 2014 pursuant to the provisions of section 205Aof the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 12, 2014. Notices pursuant to Rule 4A of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 31, 2014 reminding them to encash their unclaimed dividend. Auditors M/s B S R & Co., Chartered Accountants, who were appointed Auditors of the Company at the Annual General Meeting held on April 25, 2013, have changed their name to M/s B S R & Co. LLP upon conversion of their partnership firm to a Limited Liability Partnership. They hold office till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment.

Cost Auditors

In compliance with the provisions of Section 233B and Section 224(IB) and other applicable provisions of the Companies Act, 1956 and the Order No F.No.52/26/CAB-2010 dated November 6, 2012 issued by the Ministry of Corporate Affairs, Government of India, Messrs N. K. Ghosh & Associates, Cost Accountants, of Flat no 4B, 10/1 Chakraberia Road (South), Kolkata 700 025 (Firm''s Registration no 102058) had been appointed Cost Auditors of the Company for the financial year ended on December 31, 2013 after obtaining Central Government''s approval. They have been re-appointed cost Auditors for the year ended December 31, 2014, subject to the approval of the Central Government.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

Information pursuant to section 217 of the Companies Act, 1956

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217(1)(e) and Particulars of Employees required under section 217(2A) of the Companies Act, 1956 read with the Rules made there under are given in the Annexure to this Report and form a part of the Directors Report.

Directors'' Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 217(2AA) of the Companies Act, 1956 in the preparation of the annual accounts for the year ended on December 31, 2013 and state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

Social, environment and ethical matters are reviewed by the Board including the impact such matters may have on the Company''s management of risk.

Particular emphasis is focused on the following areas :

- Code of Conduct: requiring all employees to comply with the highest standards of legal and ethical behavior.

- Health, Safety and Environment: protecting the health and safety of our employees, contractors, customers and the general public and reducing energy consumption and waste in our operations.

- Products and services : developing innovative products and services which promote sustainability in our customers'' production processes and products.

The Company continues to support local initiatives to improve infrastructure and increase business opportunities as well as support in other corporate social responsibility initiatives.

Human Resources Management & Health, Safety and Environment

The Company''s long-term success is dependent upon the diversity, dedication and commitment of all our people who share a common set of values. Vesuvius looks at diversity in its broadest sense, recognizing the importance of getting the right balance of independence, skills, knowledge and experience across the business.

Training courses give employees the opportunity to improve their skills, maximize personal potential and develop careers within the Company and the Group while adhering to Vesuvius values. The Columbus program where promising young graduates from emerging countries are trained to take on international careers was offered to fresh Indian graduates. Similarly, the graduate exchange program where three graduates from India and Brazil exchanged places during the year for international training and skill development with cross-cultural experience. Employees were encouraged to participate in sports activities and so this year a Vesuvius Premier League was conducted where employees participated in football matches. Cricket, badminton and caroms tournaments were also held.

Our Code of Conduct expresses our intense concern for Health and Safety in saying that "we will protect the health and safety of our employees, customers, suppliers, contractors, visitors, the general public and others affected by our operations". We have made further good progress on Health and Safety both in terms of safe working practices and the reporting performance by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the

Board of Directors

Kolkata Biswadip Gupta

February 25, 2014 CHAIRMAN


Dec 31, 2012

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2012.

The Year in Retrospect

Financial Results (Rs Lakhs)

Year ended Year ended 31.12.2012 31.12.2011

Sale of Goods (exduding Excise Duty) 53,553 51,236

Sale of Services 2,681 2,790

Other Income 352 465

Total Revenue 56,586 54,491

Profit before Depreciation, Interest & Tax (PBDIT) 9,904 9,796

Depreciation & Amortisation 1,635 1,467

Interest 6 61

Profit before Tax 8,263 8,268

Provision for Income Tax 2,687 2,746

Profit after Tax 5,576 5,522

Balance as per last

Balance Sheet brought forward 22,647 18,677

Available for appropriation 28,223 24,199

Appropriations made:

Proposed Dividend @ Rs 4.50 per share i.e. 45 % 913 863

Dividend Tax 148 137

Transfer to General Reserves 558 552

1,619 1,552

Balance in Statement of Profit & Loss 26,604 22,647

28,223 24,199

Basic & Diluted Earnings Per Share Rs 27.48 Rs 27.21

Operating & Financial Performance, Internal Control

It continued to be a difficult period for the Indian economy reflected by lower GDP, inflationary trends and lower industrial production. The steel industry, which comprises the biggest group of the Company''s customers, alsofaced a similar difficult period. Poor availability of iron ore and other raw materials resulted in reduced production and major expansion projects have been delayed. These have had a negative impact on our business.

This year total revenue increased by over Rs 2,058 lakhs driven by domestic growth in spite of the slowdown in domestic steel production while exports had marginally reduced.

Increase in raw material prices, energy & transportation and adverse foreign exchange fluctuation have placed a burden on the margins for the year. Margin decline was most severe at the beginning of the year. Focussed action on cost, internal efficiencies and price optimisation helped restore profitability by year end.

The Kolkata plant expansion was completed in April 2012 and the plant is ready to cater to the proposed increased demand of customers. Freehold land at Visakhapatnam has been purchased and possession obtained for setting up the fifth plant of the Company. An international standard Research & Development Centre is also proposed at this location.

The Company always engages with customers to enable them to be aware of the systems and processes internally followed by the Company. In one such interaction, Mr AP Choudhry, Chairman and Managing DirectorofRashtriya Ispat Nigam Limited visited their Blast Furnace -III at Visakhapatnam and interacted with the Vesuvius team working at that site. He was delighted with the processes being followed and appreciated that all team members strictly adhered to the Health and Safety norms.

The LD3 CSP caster-1 at Tata Steel was commissioned successfully in February 2012. Vesuvius provided the entire tundish refractory and application for this caster. The entire refractory job for the new 1.2 million tons per annum pellet ("MTPA") plant of BMM Ispat which was commissioned during the year was provided by the Company. Similar turnkey refractory supply and installation was done at Essar Steel''s 6 MTPA iron ore pelletisation furnace in Paradip. The largest boiler gunning repair work was done for JSW Energy at Barmer during the year.

All four factories had been working at near full efficiency during the year. In-plant rejection for all manufactured items have been further reduced due to improved processes. Safety measures and processes have been installed at all plants and work sites.

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Internal Audit has been conducted on a pan India basis.

The Company has complied with the provision of the Code on Internal Control which require that the Directors review the effectiveness of internal controls including financial, operational and compliance control and risk management systems. Self certification exercises are also conducted by which senior management certify effectiveness of the internal control system for which they are responsible together with the Company''s policies.

Dividend

The Board of Directors are pleased to recommend dividend of Rs 4.50 per share i.e. 45% on Equity Shares of Rs 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs 1,061 lakhs (previous year Rs 1,000 lakhs). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within April 30, 2013 and dividend warrants will be despatched on or after May 3, 2013 to those who are members of the Company as on April 25, 2013. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

ISO Certification

The Company''s factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Segmentwise performance

The Company is primarily a manufacturer and trader of refractory and is managed organizationally as a single unit. Accordingly, the Company is a single business segment company. Geographical (secondary) segment has been identified as domestic sales and exports.

Industry Structure & Developments, Opportunities & Threats, Outlook, Risks & Concerns

It continues to be a difficult period for the Indian economy. GDP has become lower at around 5% while inflation remains high. Foreign exchange fluctuation have also added to the concerns and estimates had to be revised. The steel industry, which is the major customer of the Company, which have been impacted with shortage of iron ore and other raw material have reduced volumes and have delayed their expansion plans.

Competition activities have increased causing pressure on margins. International refractory companies are now strategically entering Indian and South Asian markets.

Other industries like Aluminium, Cement, Poweretc where the Company also operates, have also been facing similar slow down due to reduced demand.

Your Company trades in refractory based solutions and steel industry comprises the biggest group of its customers. Hence anything that affects the steel industry will have its one off effect on our business. India is set to emerge as the second largest producer and consumer of steel in the next few years and refractory being an essential requirement in steel industry will see increased demand. The Kolkata plant expansion was completed in April 2012 and is ready to meet any increased demands ofthe customer.

All business operations have risks and threats attached to them most of which may be outside the control of the Company. Apart from the concerns over raw material prices and availability, fluctuations in exchange rates, inflationary pressures, adverse political or regulatory developments, aggressive competition and chances of a reduction in customer output leading to lower demands are some perceived threats.

During the year a risk analysis and assessment was conducted in line with the Group requirements and no major risks were noticed.

Directors

Dr S K Gupta and Mr Yves M.C.M.G. Nokerman retire by rotation in accordance with the Articles of Association of the Company at the forthcoming Annual General Meeting, and being eligible, offer themselves for reappointment.

Dr S K Gupta, Chairman of the Company, is a metallurgical engineer with Ph.D. and D.Sc. in ferrous process metallurgy and has about 53 years experience. He has been Professor of IIT Bombay, Founder Director of SAIL''s R&D Centre, Chief Executive of MECON and SAIL''s Rourkela Steel Plant and the Executive Vice Chairman of Jindal Vijayanagar Steel Ltd (now known as JSW Steel Ltd). He is presently Chairman of BMM Ispat Ltd and a Director ofJSW Steel Ltd, Jindal Saw Ltd, Jindal South West Holdings Limited, Sobha Developers Ltd. and Surana Industries Ltd. For his outstanding contributions to metallurgical enterprises in general and steel fraternity in particular, Government of India had conferred upon him the title "National Metallurgist". He is a Director of the Company since October 1999. Dr Gupta is well conversant with the iron and steel industry. He does not hold any shares in the Company. He is not related to any other Director of the Company.

Dr Gupta is a member of the following Committees :

(1) JSW Steel Ltd.

(a) As Chairman - Remuneration Committee, Risk Management Committee and Business Responsibility Committee and

(b) As Member - Audit Committee, Investor Grievances Committee, Share Allotment Committee and Project Review Committee;

(2) Jindal South West Holdings Ltd - As Member- Audit Committee, Investor Grievances Committee and Remuneration Committee;

(3) Sobha Developers Ltd - As Member - Audit Committee and Investor Grievance Committee;

(4) Surana Industries Ltd - (a) As Chairman - Remuneration Committee and (b) As Member - Share Transfer & Investor Grievance and

(5) Vesuvius India Ltd - (a) As Chairman -Audit Committee and (b) As Member- Share Transfer & Investor Grievance Committee

Mr Yves M.C.M.G. Nokerman is the Vice President Finance & IT of Vesuvius Group and is based in Brussels, Belgium. Hejoined the Board ofDirectors on July 29, 2008. He is not a director of any other company in India but is a director on 32 companies abroad belonging to the Group. He is well conversant with the refractory industry having over 27 years of experience. He does not hold any shares in the Company. He is not related to any other Director of the Company. Mr Nokerman is a member of the Audit Committee only.

All Directors and senior management ofthe Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by the Managing Director is annexed to this Report. All Directors have confirmed compliance with provisions ofsection 274(1)(g) ofthe Companies Act, 1956.

Listing and ISIN Number

The shares ofthe Company are listed on the Bombay and National Stock Exchange.

The Company''s shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the Corporate Governance Report.

Group Activities

The Cookson Group plc of United Kingdom, carried out a Scheme of Arrangement, approved by the High Court of Justice of England and Wales, in several steps in December 2012 as a result of which Vesuvius plc has replaced Cookson Group plc as the ultimate holding company for Vesuvius India Limited effective from December 19, 2012. The name of Cookson Group plc has been changed to Cookson Group Limited consequent upon its delisting from the London Stock Exchange. Vesuvius plc has been listed on the London Stock Exchange on December 19, 2012.

Under the Scheme of Arrangement Cookson group''s electronic business division was demerged and transferred to Alent plc, a newly incorporated entity set up for the purposes of the Demerger.

Vesuvius Group holds about 56% ofthe share capital of the Company and is a world leader in the design, engineering, manufacture and delivery of refractory products, systems and services for high-technology industrial applications. The Group continues to focus on safety, technology, investing into growing markets including in India. With the Group''s support the Kolkata Plant expansion was completed in April 2012 and freehold land for a new plant at Visakhapatnam has been acquired. The Vesuvius Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

Corporate Governance

The Company has already put in place the SEBI guidelines pertaining to Corporate Governance. The eight member Board of Directors consist of four non-executive independent directors, three non-executive non-resident directors representing the parent company and the Managing Director. The non-resident Directors have waived their commission on profits for the year and have not received any sitting fees for attending the meetings of the Directors. The Managing Director does not receive sitting fees for attending the meetings ofthe Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 1956. The Audit Committee was constituted on October 24, 2000 and the Investor Grievance Committee on February 12, 2001. The details ofthe composition and attendance ofthe Board and Committees thereof and remuneration paid to the Directors as well as the shares held by the Directors have been given separately in the Corporate Governance Report.

The Corporate Governance Report giving the details as required under clause 49 ofthe listing agreement with the stock exchanges is given separately and forms part of the Directors Report to Shareholders. The Corporate Governance Certificate for the year ended on December 31, 2012 issued by the Statutory Auditors is also attached.

Mr Tanmay Ganguly, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer have given their certificate under clause 49(V) of the listing agreement with stock exchanges regarding the annual accounts for the year ended on December 31, 2012 to the Board of Directors. The Managing Director has given his certificate under clause 49 (I) (D) of the listing agreement with stock exchanges which is attached and forms a part ofour Report.

Investor Education and Protection Fund

In compliance with the provisions of section 205Aof the Companies Act, 1956, a sum of Rs 295,869/- being the dividend lying unclaimed outofthe eighth dividend declared by the Company for the year ended December 31, 2004 at the Annual General Meeting held on April 12, 2005 was transferred to the Investor Education and Protection Fund of the Central Government in April, 2012, after giving several notices and reminders to the concerned shareholders.

The dividend which remains unclaimed out of the ninth dividend declared by the Company for the year ended on December 31, 2005 at the Annual General Meeting held on April 20, 2006 will be transferred to the Investor Education and Protection Fund of the Central Government in May, 2013 pursuant to the provisions of section 205A of the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 14, 2013.

Notices pursuant to Rule 4Aof the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 31, 2013 reminding them to encash their unclaimed dividend.

Annual Audited Accounts

The annual financial statements are prepared in the form as prescribed in Schedule VI to the Companies Act, 1956. By Notification no S.O.447(E) dated February 28, 2011 issued by the Ministry of Corporate Affairs, Government of India, Schedule VI has been revised and this revision becomes applicable to the Company for the first time in preparation of the annual financial statements for the financial year ended December 31, 2012. The revised Schedule VI introduces some significant conceptual changes as well as new disclosures. These include classification of all assets and liabilities into current and non-current. The previous years figures have also undergone a major reclassification to comply with the new requirements of the revised Schedule VI. In preparation of these financial statements, disclosures, which are not applicable for both the current year and the previous year, have not been separately mentioned in these financial statements.

Auditors

M/s BSR& Co., Chartered Accountants, who were appointed Auditors of the Company at the Annual General Meeting held on April 26, 2012, hold office till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment.

Cost Auditors

In compliance with the provisions of Section 233B and Section 224(IB) and other applicable provisions of the Companies Act, 1956 and the Order No F.No.52/26/CAB-2010 dated November 6,2012 issued by the Ministry of Corporate Affairs, Government of India, Messrs N. K. Ghosh & Associates, Cost Accountants, of Flat no 4B, 10/1 Chakraberia Road (South), Kolkata 700 025 (Firm''s Registration no 102058) have been appointed Cost Auditors ofthe Company, subject to the approval of the Central Government, for the financial year ended December 31, 2013 and subsequent financial years.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

Information pursuant to section 217 of the Companies Act, 1956

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217(1)(e) and Particulars of Employees required under section 217(2A) of the Companies Act, 1956 read with the Rules made thereunder are given in the Annexure to this Report and form a part ofthe Directors Report.

Directors'' Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 217(2AA) of the Companies Act, 1956 in the preparation of the annual accounts for the year ended on December 31, 2012 and state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

Social, environment and ethical matters are reviewed by the Board including the impact such matters may have on the Company''s management of risk.

Particular emphasis is focused on the following areas :

- Code of Conduct : requiring all employees to comply with the highest standards of legal and ethical behaviour.

- Health, Safety and Environment: protecting the health and safety of our employees, contractors, customers and the general public and reducing energy consumption and waste in our operations.

- Products and services : developing innovative products and services which promote sustainability in our customers'' production processes and products.

Scholarship Award scheme for meritorious children of employees and contractual staff benefited about 52 children. Children were also encouraged to express their artistic skills by participating in a Sit and Draw contest. Children of schools near our Kolkata and Visakhapatnam plants received prizes for participation in school sports and were overjoyed when drawing books and colour pencils were distributed among them on occasion of Independence Day.

The Company continues to support local initiatives to improve infrastructure and increase business opportunities as well as support in other corporate social responsibility initiatives.

Human Resources Management & Health, Safety and Environment

People are considered to be one of most valuable resources and the Company recognizes that working environment motivate employees to be productive and innovative. The continuous leadership and technical training courses give employees the opportunity to improve their skills, maximize personal potential and develop careers within the Company and the Group while adhering to Vesuvius values. Employees were encouraged to participate in sports activities. A cricket match had been organized with a major customer. Employees gleefully participated in other tournaments like table tennis and volleyball.

Health and safety of all employees and associates the Company works with remains of paramount importance. Much work has gone into making operations safer by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the

Board of Directors

Kolkata Dr Saibal Kanti Gupta

February 26, 2013 CHAIRMAN


Dec 31, 2011

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2011.

The Year in Retrospect

Financial Results (Rs. '000)

Year ended Year ended 31.12.2011 31.12.2010

Sale of Goods (excluding Excise Duty) 5,123,542 4,203,211

Sale of Services 279,025 197,947

Other Income 46,538 53,255

Total Income 5,449,105 4,454,413

Profit before Depreciation, Interest & Tax (PBDIT) & Exceptional Item 979,569 866,414

Exceptional Item-income - 10,917

Depreciation 146,656 129,113

Interest 6,080 204

Profit before Tax 826,833 748,014

Provision for Income Tax 74,579 259,510

Profit after Tax 552,254 488,504

Balance as per last Balance Sheet brought forward 1,867,582 1,522,596

Available for appropriation 2,419,836 2,011,100

Appropriations made:

Proposed Dividend @Rs4.25per sharei.e.42.50% 86,258 81,184

Dividend Tax 13,680 13,484

Transfer to General Reserves 55,225 48,850

155,163 143,518

Profit & Loss Account Balance 2,264,673 1,867,582

2,419,836 2,011,100

Basic & Diluted Earnings Per Share Rs 27.21 Rs 24.07

Operating & Financial Performance,

Internal Control

Your Company has had another very steady performance in 2011 generating enough cash to pay for the increased activities and substantial expenditure on capacity expansion. "Debt Free" status has been maintained with enough cash balance to support further spending on new assets to sustain growth in coming years.

This year gross sales and services increased by over Rs 1 billion. Annual results show a revenue growth of around 23% driven by strong domestic growth at around 22% and export growth at over 30% over last year, in spite of the slowdown in domestic steel production. The strong growth in domestic revenue was achieved due to improvement in market share and penetration into new product and market segments.

The operating profit (PBDIT) at Rs 979 million for the year is higher by 13% over last year and profit after tax (PAT) at Rs 552 million is also higher by over 13%.

Increase in raw material prices and other input costs like energy, the sudden devaluation of Rupee vis-a- vis major currencies like USD,GBP and Euro during later part of the year and withdrawal of DEPB export benefits have placed a burden on the margins for the year.

The Company continued to invest in technological developments and capacity expansion.

The Computational Fluid Dynamics (CFD) Laboratory was set up in May 2011 and consequently a new Water Modelling unit will also be commissioned at the Kolkata plant by March 2012. Water modelling is mainly aimed at simulating flow conditions to that of liquid steel in actual continuous casting environment. Design of the shapes of our products specially sub- entry nozzles for Thin Slab Casters are critical in determining productivity and operational efficiency. The primary shape is determined using water modeling and CFD techniques since most of the operational factors are greatly influenced by flow patterns.

The Company always engages with customers to develop for them improved processes at lower costs. In one such endeavour, the Company designed, manufactured and installed reinforced precast dampers for a customer's non-recovery type coke ovens keeping in mind the service conditions of thermal shock resistance, no cracks and longer service life. The life of the new installed dampers have increased from 6 months to over 12 months, installation charges were much lower, this resulted in import substitution and also better process performance which resulted in huge savings for the customer.

In a similar way, new generation GTC2085 tundish slidegate system with integrated tube changer facility was introduced during commissioning of the caster of a customer. The new system has witnessed significant growth in tundish sequence lengths.

Customer has benefited not only from maximum sequence length but also from operational efficiencies like reduced alumina build up and oxidation of refractory, replacing nozzles without interrupting the casting process etc.

The new pressing complex at the Kolkata plant had been commissioned in July 2011 and installation of the kilns have been completed in January 2012 and are stabilizing to the desired levels. The other equipments will be installed and commissioned by March 2012 and we expect Kolkata plant expansion to be completed by April 2012.

At Visakhapatnam, near our existing factories, full payment for acquiring 15 acres of land on freehold basis from Andhra Pradesh Industrial Infrastructure Corporation Ltd has been made for setting up the fifth plant of the Company.

All four factories had been working at near full capacity during the year. In-plant rejection for all manufactured items have reduced due to improved processes. The new process to deal with customer complaints on products and services has been successful and has lead to speed and quality of problem resolution.

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Internal Audit on pan India basis was conducted by M/s Deloitte Haskins & Sells, Chartered Accountants. In addition Cookson Group internal audit function carried out several audits during the year.

The Company has complied with the provision of the Code on Internal Control which require that the Directors review the effectiveness of internal controls including financial, operational and compliance control and risk management systems. Self certification exercises are also conducted by which senior management certify effectiveness of the internal control system for which they are responsible together with the Company's policies.

Dividend

The Board of Directors are pleased to recommend dividend of Rs 4.25 per share i.e. 42.50 % on Equity Shares of Rs 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs 100 million (previous year Rs 95 million). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within April 30, 2012 and dividend warrants will be despatched on or after May 7, 2012 to those who are members of the Company as on April 26, 2012. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

ISO Certification

The Company's factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Segment wise performance

The Company is primarily a manufacturer and trader of refractory and is managed organizationally as a single unit. Accordingly, the Company is a single business segment company. Geographical (secondary) segment has been identified as domestic sales and exports.

Industry Structure & Developments, Opportunities & Threats, Outlook, Risks & Concerns

The year 2011 was a relatively difficult year for the Indian economy. GDP growth came down to below 7% level, inflation continued to remain high and bank interest rates were increased. These led to domestic steel industry suffering lower volumes, reduced margins and many of their new projects were either put off or delayed. Steel production in India has marginally increased over the previous year and steel prices have been under pressure. Most domestic steel makers were under margin pressure due to rise in input cost, availability and prices of raw materials, foreign exchange fluctuation and inflationary pressures.

Your Company trades in refractory based solutions and steel industry comprises the biggest group of its customers. Hence anything that affects the steel industry will have its one off effect on our business. India is set to emerge as the second largest producer and consumer of steel in the next few years and refractory being an essential requirement in steel industry will see increased demand. With this in mind, your Company is completing the expansion of its Kolkata plant to double its capacity to meet the increased demand of the steel industry and is also planning another plant at Visakhapatnam.

All business operations have risks and threats attached to them most of which may be outside the control of the Company. Apart from the concerns over raw material prices and availability, fluctuations in exchange rates, inflationary pressures, adverse political or regulatory developments, aggressive competition and chances of a reduction in customer output leading to lower demands are some perceived threats.

During the year a risk analysis and assessment was conducted in line with the Group requirements and no major risks were noticed.

Directors

Mr Sudipto Sarkar and Mr Biswadip Gupta retire by rotation in accordance with the Articles of Association of the Company at the forthcoming Annual General Meeting, and being eligible, offer themselves for reappointment.

Mr Sudipto Sarkar, a renowned Barrister, aged about 63 years, is a Director of the Company since July 26, 2005. He holds B.Sc. (Maths-Hons) from Presidency College, Kolkata; BA (Law Tripos) from Jesus College, Cambridge, UK; LL.M, (International Law) from Jesus College, Cambridge, UK; M.A. (Law) from Jesus College, Cambridge, UK. He is also Barrister, Gray's Inn, London. He is presently practising as a Senior Advocate. He also has several publications to his credit on Evidence, Law of Civil Procedures and Specific Relief Act. He is the collaborating editor of Ramaiya's Guide to the Companies Act and contributor to several volumes of International Law Reports (Cambridge). He has also instituted the Sarkar Law lectures in Kolkata, where senior English Judges such as Lord Slynn of Hadley, Lord Nicholls of Birkenhead and Lord Justice Robin Auld have lectured.

He was formerly Chairman of the Board of Directors of Clarion Advertising Services Ltd, now known as Bates India Ltd and President of The Bengal Club, Calcutta 1998-99 and Director of Bombay Stock Exchange Limited. He is presently a Director of JSW Steels Ltd, Eveready Industries Ltd, EIH Associated Hotels Ltd, B & A Limited, B & A Packaging India Ltd, DESCON Limited, Island Hotel Maharaj Ltd and Mcnally Bharat Engineering Co Ltd. Mr Sarkar's nature of experience is in Law and Corporate Affairs. He does not hold any shares in the Company.

Mr Biswadip Gupta, aged about 61 years, is a BE(Metallurgy) and MBA and has about 39 years experience in the steel and refractory industry. He has received extensive training worldwide in the refractory making industry during his 20 years association with the Vesuvius Group, UK before being associated with Vesuvius India. Since 1979 he was the Consultant Director, Indian Operations of Vesuvius Corporation SA, Switzerland. Mr Gupta had joined the Company as a Director in 1991 and was the Managing Director from 1992 upto April 17, 2007 and thereafter continued as a non-executive Director. He had been instrumental in setting up of the Indian operations. Mr Gupta was the recipient of the Chief Executive's Award for outstanding performance in 1993 and again in 2003 from the Vesuvius Group during his tenure as Managing Director of the Company.

Mr Gupta was formerly President, Bengal Chamber of Commerce and Industry, Deputy Chairman of the Indian Refractory Makers Association and Chairman of CII (Eastern Region). He is presently Jt. Managing Director & CEO of JSW Bengal Steel Ltd and Director of Barbil Beneficiation Company Ltd, DESCON Ltd, Dishergarh Infrastructure Development Pvt Ltd, Gourangdih Coal Limited, JSW Energy (Bengal) Ltd, NICCO Engineering Services Ltd, Nicco Ventures Limited and Member Managing Committee of Bengal Club Ltd. Mr Gupta's nature of experience is in Steel and Refractory business, Corporate Affairs and Finance. He holds 78,749 shares of the Company.

At the Annual General Meeting held on April 17, 2007 Mr Tanmay Kumar Ganguly was appointed Managing Director of the Company for a period of five years commencing from April 18, 2007. His term ends on April 17, 2012. The Board of Directors at their meeting held on February 29, 2012 decided to reappoint

Mr Ganguly as a Managing Director of the Company for a further period of five years effective from April 18, 2012 to April 17, 2017, subject to the approval of the Members at the ensuing Annual General Meeting, on terms of appointment and remuneration as set out in a draft Agreement to be executed between the Company and Mr Ganguly. Mr Ganguly is 48 years of age, a Bachelor of Commerce graduate and a Chartered Accountant and has about 24 years experience in chemicals, refractory and FMCG industry. He started his career with Union Carbide India Ltd and has worked in ICI (India) Ltd, Hindustan Lever Limited, Pillsbury India as Chief Financial Officer, as Finance Director-Asia Pacific Region of General Mills (Pillsbury) then returned to India as President and CEO of General Mills India and immediately before joining our Company was working in Radhakrishna Foodland Pvt Ltd as Chief Operating Officer. He had previously worked in the Company as Controller. He is not a Director of any other company in India. He holds 67,471 shares of the Company.

The Group's Code of Conduct applicable to the Directors and employees of the Company has been adopted by the Board and all Directors and senior management of the Company have confirmed compliance with the Code of Conduct and the declaration in this regard made by the Managing Director is annexed to this Report. All Directors have confirmed compliance with provisions of section 274(1)(g) of the Companies Act, 1956.

Listing and ISIN No

The shares of the Company are listed on the Bombay and National Stock Exchange.

The Company's shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the Corporate Governance Report.

Group Activities

The Vesuvius Group, which holds about 56 % of the share capital of the Company, is a world leader in the design, engineering, manufacture and delivery of refractory products, systems and services for high- technology industrial applications. The Group continues to focus on safety, technology, investing into growing markets including in India. With the Group's support the Kolkata Plant expansion was undertaken and a new plant at Visakhapatnam has been envisaged. The Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

Corporate Governance

The Company has already put in place the SEBI guidelines pertaining to Corporate Governance. The eight member Board of Directors consist of four non- executive independent directors, three non-executive non-resident directors representing the parent company and the Managing Director. The non-resident Directors have waived their commission on profits for the year and have not received any sitting fees for attending the meetings of the Directors. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 1956.

The Audit Committee was constituted on October 24, 2000 and the Investor Grievance Committee on February 12, 2001. The details of the composition and attendance of the Board and Committees thereof and remuneration paid to the Directors as well as the shares held by the Directors have been given separately in the Corporate Governance Report.

The Corporate Governance Report giving the details as required under clause 49 of the listing agreement with the stock exchanges is given separately and forms part of the Directors Report to Shareholders. The Corporate Governance Certificate for the year ended on December 31,2011 issued by the Statutory Auditors is also attached.

Mr Tanmay Ganguly, Managing Director and Mr Sanioy Dutta, Chief Financial Officer have given their certificate under clause 49(V) of the listing agreement with stock exchanges for compliance with the Code of Conduct of the Company regarding the annual accounts for the year ended on December 31, 2011 which is attached and forms a part of our Report to Shareholders.

Investor Education and Protection Fund

In compliance with the provisions of section 205Aof the Companies Act, 1956, a sum of Rs. 135,066/- being the dividend lying unclaimed out of the 10th Anniversary Special Dividend declared by the Board of Directors on February 17, 2004 and a sum of Rs 351,303/- being the dividend lying unclaimed out of the seventh dividend declared by the Company for the year ended on December 31, 2003 at the Annual General Meeting held on April 20, 2004 was transferred to the Investor Education and Protection Fund of the Central Government in March, 2011 and May, 2011 respectively, after giving several notices and reminders to the concerned shareholders.

The dividend which remains unclaimed out of the eighth dividend declared by the Company for the year ended on December 31, 2004 at the Annual General Meeting held on April 12, 2005 will be transferred to the Investor Education and Protection Fund of the Central Government in May, 2012 pursuant to the provisions of section 205A of the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 12, 2012.

Notices pursuant to Rule 4Aof the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 30, 2012 reminding them to encash their unclaimed dividend.

Auditors

M/s BSR& Co., Chartered Accountants, who were appointed Auditors of the Company at the Annual General Meeting held on April 19, 2011, hold office till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

Information pursuant to section 217 of the Companies Act, 1956

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217(1)(e) and Particulars of Employees required under section 217(2A) of the Companies Act, 1956 read with the Rules made there under are given in the Annexure to this Report and form a part of the Directors Report.

Directors' Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 217(2AA) of the Companies Act, 1956 in the preparation of the annual accounts for the year ended on December 31, 2011 and state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

Social, environment and ethical matters are reviewed by the Board including the impact such matters may have on the Company's management of risk.

Particular emphasis is focused on the following areas:

- Code of Conduct : requiring all employees to comply with the highest standards of legal and ethical behaviour.

- Health, Safety & Environment: protecting the health and safety of our employees, contractors, customers and the general public and reducing energy consumption and waste in our operations.

- Products and services: developing innovative products and services which promote sustainability in our customers' production processes and products.

The Company continues to support local initiatives to improve infrastructure and increase business opportunities as well as support in other corporate social responsibility initiatives.

Human Resources Management & Health, Safety and Environment

people are considered to be one of most valuable resources by the Company and recognizes that working environment motivate employees to be productive and innovative. The continuous leadership and technical training courses give employees the opportunity to improve their skills, maximize personal potential and develop careers within the Company and the Group while adhering to Vesuvius values.

Health and safety of all employees and associates the Company works with remains of paramount importance. Much work has gone into making operations safer by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the

Board of Directors

Kolkata Dr Saibal Kanti Gupta

February 29, 2012 CHAIRMAN


Dec 31, 2010

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2010.

The Year in Retrospect

Financial Results (Rs. 000)

Year ended Year ended

31.12.2010 31.12.2009

Sale of Goods (excluding Excise Duty) 4,203,211 3,422,796

Sale of Services 197,947 192,146

Other Income 53,255 28,042

Total Income 4,454,413 3,642,984

Profit before Depreciation, Interest & Tax (PBDIT) & Exceptional Item 866,414 686,470

Exceptional Item-income 10,917 -

Depreciation 129,113 126,697

Interest 204 226

Profit before Tax 748,014 559,547

Provision for Income Tax 259,510 185,765

Profit after Tax 488,504 373,782

Balance as per last Balance Sheet brought forward 1,522,596 1,275,237

Available for appropriation 2,011,100 1,649,019

Appropriations made:

Proposed Dividend @ Rs 41- per share i.e 40% 81,184 76,110

Dividend Tax 13,484 12,935

Transfer to General Reserves 48,850 37,378

143,518 126,423

Profit & Loss Account Balance 1,867,582 1,522,596

2,011,100 1,649,019

Basic & Diluted Earnings Per Share Rs. 24.07 Rs. 18.42

Operating & Financial Performance, Internal Control

Your Company has had another very steady performance in 2010 generating enough cash to pay for the increased activities and capacity expansion. While the "Debt Free" status has been maintained, our cash balance has improved to Rs 561 million by the end of the year.

This years annual results has shown a revenue growth of over 22% driven by a strong domestic growth at around 18% and export growth at over 54% over last year, compared to the modest growth of about 8% in domestic steel output. The strong growth in domestic revenue was achieved due to improvement in market share and penetration into new product and market segments.

" Our new strategy for growth gives our Group a clear perspective for its future. It is based on organic growth, depending on our own abilities to deliver and we have many great projects ahead. Mid size acquisitions can also be considered where attractive targets are offered for sale. We will need to deploy all our efforts to achieve this plan but I am confident we can succeed provided we maintain our successful business model and act in accordance with our shared values."

Francois Wanecq

President & CEO, Vesuvius Group

The operating profit (PBDIT) at Rs. 866 million for the year is higher by 26% over last year and profit after tax (PAT) at Rs. 488 million is higher by over 30%.

With the withdrawal of the post-retirement medical benefit scheme for employees under directions of IRDA, the provision created earlier in compliance with Accounting Standard 15 was written back and has been treated as an Exceptional Item income.

The Company has received grants totaling Rs. 1.8 million from the Andhra Pradesh Government for setting up of the Companys second plant at Visakhapatnam. This grant has been treated as Capital Reserve.

All four factories had been working at near full capacity during the year. In-plant rejection for all manufactured items have reduced due to improved processes. The Company has also instituted a new process to deal with customer complaints on products and services. The emphasis is on speed and quality of problem resolution while making sure that the learnings from such incidents are incorporated in the process improvement immediately. The Kolkata plant expansion for doubling capacity is expected to be completed by May, 2011.

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Internal Audit on pan India basis was conducted by M/s Deloitte Haskins & Sells, Chartered Accountants. In addition Cookson Group internal audit function carried out several audits during the year.

The Company has complied with the provision of the Code on Internal Control which require that the Directors review the effectiveness of internal controls including financial, operational and compliance control and risk management systems. Self certification exercises are also conducted by which senior management certify effectiveness of the internal control system for which they are responsible together with the Companys policies.

Dividend

The Board of Directors are pleased to recommend dividend of Rs. 41- per share i.e. 40 % on Equity Shares of Rs. 10/- each. The dividend together with dividend tax will entail a cash outflow of Rs. 95 million (previous year Rs. 89 million). If this is approved at the forthcoming Annual General Meeting, dividend will be deposited with the bank within April 23, 2011 and dividend warrants will be despatched on or after April 28, 2011 to those who are members of the Company as on April 19, 2011. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

ISO Certification

The Companys factories at Kolkata, Mehsana and Visakhapatnam and two of its sites at Surat in Gujarat and Dolvi in Maharashtra have been certified ISO 9001:2008 for Quality Management Systems Standards.

Directors

Mr Shekhar Datta and Dr Claude Dumazeau retire by rotation in accordance with the Articles of Association of the Company at the forthcoming Annual General Meeting, and being eligible, offer themselves for reappointment.

Mr Shekhar Datta is a Mechanical Engineer (London) and Fellow of All India Management Association. He is presently a Director of Triveni Engineering & Industries Ltd and Wockhardt Ltd. He was the Chairman of Bombay Stock Exchange Ltd., and the past President of Confederation of Indian Industry (CM), Bombay Chamber of Commerce & Industry and Indo-ltalian Chamber of

Commerce & Industry. He was the Managing Director & President of Greaves Limited (formerly, Greaves Cotton & Co. Limited) and was Chairman of Morganite Crucibles Ltd. (formerly, Greaves Morganite Crucibles Ltd.), Mumbai. Mr Datta is well conversant with the engineering industry as well as the refractory and crucibles industry. He is a Director of the Company since January 31, 2003. He does not hold any shares in the Company. He is a member of the the Audit Committee and member of the Share Transfer and Investor Grievance Committee.

Dr Claude Dumazeau who holds a Ph.D. in Material Science from France, is the Vice President-Research & Development of the parent company with over 30 years experience in Vesuvius Group in areas of marketing, sourcing, patents and Research & Development. He is presently the head of Research & Development for Vesuvius Group worldwide and is based at Brussels, Belgium. He is also a Director of Vesuvius Group SA, Vesuvius France SA, Vesuvius Belgium N.V, Cookson France and Side Dams S.p.A. He is a Director of the Company since December 8, 1994. He does not hold any shares in the Company. He is not a Director of any other company in India nor is a member of any Committee in India.

The Groups Code of Conduct applicable to the Directors and employees of the Company has been adopted by the Board and all Directors and senior management of the Company have confirmed compliance with the Code of Conduct and the declaration in this regard made by the Managing Director is annexed to this Report. All Directors have confirmed compliance with provisions of section 274(1)(g) of the Companies Act, 1956.

Listing and ISIN No

The shares of the Company are listed on the Bombay and National Stock Exchange.

The Companys shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the Corporate Governance Report.

Group Activities

The Vesuvius Group, which holds about 56 % of the share capital of the Company, is a world leader in

the design, engineering, manufacture and delivery of refractory products, systems and services for high- technology industrial applications. The Group has recently completed the process of defining its Group Strategy which is also being implemented in India. The business model is to create value for customers by improving their performance in safety, quality, productivity and the environment. The Group continues to focus on safety, technology, investing into growing markets, substantially reducing customers C02 emissions and people development through knowledge transmission. The Group has a sincere commitment to and has been extremely supportive of their Indian operations and continues to provide constant support in terms of technology, systems, manufacturing etc.

Corporate Governance

The Company has already put in place the SEBI guidelines pertaining to Corporate Governance. The Board of Directors consist of 3 non-executive independent directors, 1 non-executive "not- independent" director, 3 non-executive non-resident directors representing the parent company and the Managing Director. Since Mr Biswadip Gupta was an executive of the Company in the immediately preceding three financial years, i.e. he was Managing Director upto April 17, 2007, he is treated as a "not independent" director. The non-resident Directors have waived their commission on profits for the year and have agreed not to receive sitting fees for attending the Board meetings from June, 2010. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 1956. The Audit Committee was constituted on October 24, 2000 and the Investor Grievance Committee on February 12, 2001. The details of the composition and attendance of the Board and Committees thereof and remuneration paid to the Directors have been given separately in the Corporate Governance Report.

The Corporate Governance Certificate for the year ended December 31, 2010 issued by the Statutory Auditors and the Corporate Governance Report giving the details as required under clause 49 of the listing agreement with the stock exchanges is given separately and forms part of our Report to Shareholders.

Mr Tanmay Ganguly, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer have given their certificate under clause 49(V) of the listing agreement with stock exchanges for compliance with the Code of Conduct of the Company regarding the annual accounts for the year ended on December 31,2010.

Investor Education and Protection Fund

In compliance with the provisions of section 205Aof the Companies Act, 1956, a sum of Rs. 152,886/- being the dividend lying unclaimed out of the sixth dividend declared by the Company for the year ended on December 31, 2002 at the Annual General Meeting held on April 3, 2003 was transferred to the Investor Education and Protection Fund of the Central Government in May, 2010 after giving several notices and reminders to the concerned shareholders.

The dividend which remains unclaimed out of the 10th Anniversary Special Dividend declared by the Board of Directors on February 17, 2004 and the

seventh dividend declared by the Company for the year ended December 31, 2003 at the Annual General Meeting held on April 20, 2004 will be transferred to the Investor Education and Protection Fund of the Central Government in March, 2011 and May, 2011 respectively pursuant to the provisions of section 205A of the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 12, 2011.

Notices pursuant to Rule 4A of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 28, 2011 reminding them to encash their unclaimed dividend.

Auditors

M/s B S R & Co., Chartered Accountants, who were appointed Auditors of the Company at the Annual General Meeting held on June 3, 2010, hold office till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

Information pursuant to section 217 of the Companies Act, 1956

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217(1)(e) and Particulars of Employees required under section 217(2A) of the Companies Act, 1956 read with the Rules made thereunder are given in the Annexure to this Report.

Directors Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 217(2AA) of the Companies Act, 1956 in the preparation of the annual accounts

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

The Company continues to support local initiatives to improve infrastructure and increase business opportunities as well as support in other corporate social responsibility initiatives.

Human Resources Management & Health, Safety and Environment

People are considered to be one of the most valuable resources by the Company. Expanding in technology, investing in capacity and developing presence at project sites will require people who will have to be trained in the specific expertise that makes Vesuvius different. The continuous leadership and technical training courses give employees the opportunity to improve their skills leading to consistent improvements in systems and practices while adhering to Vesuvius values.

Health and safety of all employees and our associates we work with remains our paramount importance. Much work has gone into making our operations

safer by implementation of standards for vehicle and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore we continuously care for the environment, responsibly dispose wastes and continue development of local co- operatives.

Risk assessment at all our manufacturing facilities, major steel customer sites and linings project sites continue to receive special focus.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the

Board of Directors

Dr Saibal Kanti Gupta

CHAIRMAN

Kolkata

February 25, 2011


Dec 31, 2009

The Directors have pleasure in submitting their Annual Report together with the Audited Statements of Account for the year ended on December 31, 2009.

The Year in Retrospect

Financial Results (Rs. 000)

Year ended Year ended 31.12.2009 31.12.2008

Sale of Goods (excluding Excise Duty) 3,422,796 3,369,032

Sale of Services 192,146 156,476

Other Income 28,042 32,588

Total Income 3,642,984 3,558,096

Profit before Depreciation, Interest & Tax (PBDIT) 686,470 585,264

Depreciation 126,697 86,643

Interest 226 15,750

Profit before Tax 559,547 482,871

Exceptional Item - 5,901

Provision for Income Tax 185,765 170,546

Profit after Tax 373,782 306,424

Balance as per last Balance Sheet brought forward 1,275,237 1,046,946

Available for appropriation 1,649,019 1,353,370

Appropriations made:

Proposed Dividend @ Rs 3.75 per share i.e 37.50% 76,110 40,592

Dividend Tax 12,935 6,899

Transfer to General Reserves 37,378 30,642

126,423 78,133

Profit & Loss Account Balance 1,522,596 1,275,237

1,649,019 1,353,370

Dividend

The Company has regained its strength despite the impediments caused by the adverse economic environment at the beginning of the year and appreciates the support given during these times by the shareholders and other stakeholders. The Board of Directors are therefore pleased to recommend dividend of Rs. 3.75/- per share i.e. 37.50 %. If this is approved at the forthcoming Annual General Meeting, the dividend will be deposited with the bank within May 3, 2010 and dividend warrants will be despatched on or after May 7, 2010 to those who are members of the Company as on April 27, 2010. In respect of shares held electronically, dividend will be paid on the basis of beneficial ownership as per details furnished by the depositories.

Directors

Dr S K Gupta and Mr Yves M.C.M.G. Nokerman retire by rotation in accordance with the Articles of Association of the Company at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment.

Dr S K Gupta, Chairman of the Company, is a metallurgical engineer with Ph.D. and D.Sc. in ferrous process metallurgy and has about 50 years experience. He has been Professor of IIT Bombay, Founder Director of SAILs R&D Centre, Chief Executive of MECON and SAILs Rourkela Steel Plant and the Executive Vice Chairman of Jindal Vijayanagar Steel Ltd (now known as JSW Steel Ltd). He is presently Chairman of Bhuwalka Steel Industries Ltd and BMM Ispat Ltd and a Director of JSW Steel Ltd, Jindal Saw Ltd, Jindal South West Holdings Limited, IVRCL Infrastructures & Projects Ltd, Sobha Developers Ltd. and Surana Industries Ltd. For his outstanding contributions to metallurgical enterprises in general and steel fraternity in particular, Government of India has conferred upon him the title "National Metallurgist". He is a Director of the Company since October 1999. Dr Gupta is well conversant with the iron and steel industry. He does not hold any shares in the Company. Dr Gupta is also the Chairman of the Audit Committee and member of the Share Transfer and Investor Grievance Committee.

Mr Yves M.C.M.G. Nokerman is the Vice President Finance & IT i.e. Chief Financial Officer (CFO) of Vesuvius Group and is based in Brussels, Belgium. He joined the Board of Directors on July 29, 2008 in the casual vacancy caused by the resignation of Dr Luigi Gramizzi. He is a Director on 32 companies abroad belonging to the Group. He is well conversant with the refractory industry having over 25 years of experience. He does not hold any shares in the Company. Mr Nokerman is a member of the Audit Committee.

The Groups Code of Conduct applicable to the Directors and employees of the Company has been adopted by the Board and all Directors and senior management of the Company have confirmed compliance with the Code of Conduct and the declaration in this regard made by the Managing Director is annexed to this Report. All Directors have confirmed compliance with provisions of section 274(1 )(g) of the Companies Act, 1956.

Listing and (SIN No.

The Calcutta Stock Exchange Ltd has vide their letter no CSE/LD/580/2009 dated December 7, 2009 confirmed that the voluntary delisting of the shares of the Company has been granted by the Committee of the Exchange at their meeting held on November 14, 2009 and hence the Company is now delisted from the official list of the Calcutta Stock Exchange. However, considering the interest of the general investor, the equity shares of the Company will be traded under the "permitted Category" of the Calcutta Stock Exchange.

The shares of the Company remain listed on the Bombay and National Stock Exchange.

The Companys shares are compulsorily traded in the dematerialized form. The ISIN number allotted is INE 386A01015. The details of shareholding pattern, distribution of shareholding and share prices are mentioned separately in the Corporate Governance Report.

Group Activities

The Vesuvius Group, which holds about 56 % of the share capital of the Company, is a world leader in the design, engineering, manufacture and delivery of refractory products, systems and services for high-technology industrial applications. The Group continues to provide constant support in terms of technology, systems, management support, manufacturing and other areas of operations. The Group has a sincere commitment to their Indian operations and to its future growth strategies and has been extremely supportive of their Indian operations as they view future quantum business growth from India.

Corporate Governance

The Company has already put in place the SEBI guidelines pertaining to Corporate Governance. The Board of Directors consist of 3 non-executive independent directors, 1 non-executive "not- independent" director, 3 non-executive non-resident directors representing the parent company and the Managing Director. Since Mr Biswadip Gupta was an executive of the Company during the immediately preceding three financial years, i.e. he was Managing Director upto April 17, 2007, he is treated as a "not independent" director. The non-resident Directors have waived their commission on profits for the year. The Managing Director does not receive sitting fees for attending the meetings of the Board or any Committee thereof. The sitting fees paid to the directors are within the limits prescribed under the Companies Act, 1956. The Audit Committee was constituted on October 24, 2000 and the Investor Grievance Committee on February 12, 2001. The details of the composition and attendance of the Board and Committees thereof and remuneration paid to the Directors have been given separately in the Corporate Governance Report.

The Corporate Governance Certificate for the year ended December 31, 2009 issued by the Statutory Auditors and the Corporate Governance Report giving the details as required under clause 49 of the listing agreement with the stock exchanges is given separately and forms part of our Report to Shareholders.

Mr Tanmay Ganguly, Managing Director and Mr Sanjoy Dutta, Chief Financial Officer have given their certificate under clause 49(V) of the listing agreement with stock exchanges for compliance with the Code of Conduct of the Company regarding the annual accounts for the year ended December 31, 2009.

Investor Education and Protection Fund

In compliance with the provisions of section 205A of the Companies Act, 1956, a sum of Rs 169,296/- being the dividend lying unclaimed out of the fifth dividend declared by the Company for the year ended December 31, 2001 was transferred to the Investor Education and Protection Fund of the Central Government in April 2009 after giving several notices and reminders to the concerned shareholders.

The dividend which remains unclaimed out of the sixth dividend declared by the Company for the year ended December 31, 2002 at the Annual General Meeting held on April 3, 2003 will be transferred to the Investor Education and Protection Fund of the Central Government in May 2010 pursuant to the provisions of section 205A of the Companies Act, 1956. Thereafter no claim shall lie on these dividend from the shareholders. Individual notices have already been sent to the shareholders concerned on February 12,2010.

Notices pursuant to Rule 4Aof the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978 have been sent to all members concerned on January 29, 2010 reminding them to encash their unclaimed dividend.

Auditors

M/s BSR & Associates, Chartered Accountants, hold office till the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment.

Fixed Deposits

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 1975.

Information pursuant to section 217 of the Companies Act, 1956

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217(1 )(e) and Particulars of Employees required under section 217(2A) of the Companies Act, 1956 read with the Rules made thereunder are given in the Annexure to this Report.

Directors Responsibility Statement

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 217(2AA) of the Companies Act, 1956 in the preparation of the annual accounts for the year ended December 31, 2009 and state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

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

iv. the Directors have prepared the annual accounts on a going concern basis.

Corporate Social Responsibility

The Company recognizes that its operations impact a wide community of stakeholders, including investors, employees, customers, business associates and local communities and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of Corporate Social Responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

The Company continues to support local initiatives to improve infrastructure and increase business opportunities as well as support in other corporate social responsibility initiatives.

Human Resources Management & Health, Safety and Environment

Health and safety of all employees and our associates we work with remains of paramount importance. Cookson Group HS&E targets have been laid down which require huge reduction in recordable injuries and illnesses and reduction in normalised energy use. Over the past few years much work has gone into making our operations safer and managing our environment impacts. These are matters of priority and therefore caring for the environment, responsible disposal of wastes and development of local co-operatives are some of the ongoing initiatives.

Significant actions during the year include risk assessment at all manufacturing facilities, major steel customer sites and all linings project sites. Special focus has been on implementation of Vesuvius worldwide standards of Lock-Tag-Try (LTT) safe maintenance procedures, upgradation of the permit- to-work system, forklift safety and safety pathways at all plants and application sites.

Appreciation

Your Directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your Directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continuous support to the Company.

For and on behalf of the Board of Directors

Dr. Saibal Kanti Gupta

CHAIRMAN

Kolkata

February 23, 2010



 
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