Directors Report of AML Steel Ltd.

Mar 31, 2014

The Members,

The Directors have pleasure in presenting the 21st Annual Report of the Company together with the Audited accounts for the year ended 31st March 2014.

FINANCIAL REVIEW: (Rupees in Lacs) Particulars 2013-14 2012-13

Total Turnover (Net) 12648.3 11244.87

Profit Before Depreciation, Interest and Tax 668.17 753.65

Depreciation 125.58 122.93

Interest 535.49 622.12

Profit Before Current Tax 7.09 8.6

Profit after Current Tax 4.9 5.94

Balance Profit B/f from earlier year 2689.13 2743.19

Appropriation 2694.03 2749.13

Transfer to General Reserve 60 60

Proposed Dividend (including Dividend Tax) , 0 0

Profit C/f to Balance Sheet 2634.03 2689.13

RESERVES:

Your Board has approved the transfer of Rs. 60.00 Lakhs to the General Reserves.

DIVIDEND :

The Board of Directors of the Company has not recommended any Dividend during the Year.

MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL PERFORMANCE

AML Steel Limited (AML''s) Net Turnover for the financial year ended March 31, 2014 increased to Rs. 126.48 crores from Rs. 112.45 crores in the previous year. The operating profit (PBDIT) of the Company has decreased to Rs. 6.68 crore from Rs. 7.54 crores in the previous year. Net Profit before tax has however has decreased to Rs. 7.09 lakhs from Rs. 8.601akhs in the previous year. The Profit of your Company for the Year 2013 -14 was affected adversely mainly due to the impact of input prices and higher overheads.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The demand for steel in India is expected to rise 7 per cent in next financial year beginning April 1 as compared to sluggish projected growth of 5.5 per cent in 2013-14. The overall outlook for the steel sector is positive and the demand was likely to pick up in next financial year on the back of revival in the economic growth and the government''s measures to ease infrastructure Investment Rules.

OPPORTUNITIES

The global steel industry has witnessed reasonable demand growth and steel manufacturing gradually shifted to emerging market such as China and India. By utilizing the optimum resources along with the liberalized Foreign Direct Investment policies can further help to grow the Steel Industries in India.

CHALLENGES

The adverse cost fluctuations in input raw material and its availability & costs, high interest, taxes, duties, inadequacy of funds to the expansion or modification of project Low labour productivity, fluctuations in environment, technology up gradation etc impede the development of Steel Industries in General. One of the major specific threats includes building the capability of the existing work force to meet the higher level of skill requirements, to develop the infrastructure.

OUTLOOK

During the year Our Country improved its position to 04th in the said sector. Your Company always intends to actively pursue these growth opportunities in the fast growing Iron and Steel manufacturing sector in the country. It will focus on the optimum utilization of available resources by creating a balance economy, maximum returns to the members, reaching a good impact on public by adhering to high ethics and standards.

COMPANY''S PRODUCTION MILD STEEL INGOTS & TMT BARS:

During the year under consideration your company achieved a turnover of Rs. 126.48 Crores. Your Company is presently using its furnace to convert Scrap into M.S Ingots for its captive manufacturing thus reducing cost of production. Demand for TMT Bar is expected to rise as a result of various initiatives taken by government of India to boost infrastructural Industry.

RISKS AND CONCERNS

Risk and concerns given by the management are not in detail but only highlighting some of salient among them. It includes fluctuation in input prices, nonavailability of adequate financing, Frequent changes in technology, price volatility, Climate Changes, Strict regulatory frame works etc. Managing Director, Directors, Business, Plant heads and executives in charge manage risk on a daily basis through cross functional involvement and intense communication across business.

ADEQUACY OF INTERNAL CONTROL

The company has an internal audit system for assessing suitability of the internal controls, adherences to policies, procedures and taking corrective action to address any gaps. It facilitates proper recommendation for improving the business systems. These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, monitoring operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability with financial reporting. The company has continued with its efforts to align processes and controls with best global practices in these areas as well.

The Audit Committee of the board actively reviews the adequacy and effectiveness of internal control systems and suggests improvements to strengthen the same.

SUBSIDIARIES:

A brief description of AML Steel Subsidiaries is as follows:

Name Products Location

Ankit Ispat Private Limited MSI (Mild Steel Ingot) Kariakal

Ashok Steel Industries MSI (Mild Steel Ingot) & Sri Lanka Private ltd TMT Bars

AML Steel & Power Limited Sponge Iron, Power Plant Jharkhand for captive consumption & Steel Melting Shop for manufacturing of Billets

As required under Section 217 of the Companies Act, 1956, the Audited Statement of accounts along with the report of the Board of Directors and Auditors'' Report of your Companies, subsidiaries, namely, AML Steel & Power Limited, Ankit Ispat Private Limited and Ashok Steel Industries (P) Limited, Srilanka, are annexed to this report.

PUBIC DEPOSITS:

The Company has not accepted or not renewed any Public Deposits, as defined under section 58A of the companies Act,1956 during the year under review.

HUMAN RESOURCES:

The Industrial Relation with the employees of the Company continues to be cordial. Your Company takes all the necessary steps to facilitate a friendly atmosphere with in the organization by way of hiring, developing and retaining the best personnel.

DIRECTORS:

Shri Ankit Agarwal and Shri Vinay Kishore Kasat, Directors of the Company are due for retirement by rotation at this annual General Meeting who are eligible for re - appointment. Brief particulars of these Directors are given below:

i) Ankit Agarwal- is a Promoter cum Non-Executive Director of the Company. He is an engineering graduate from Anna University, Chennai. And He is a member of the management team responsible for the company''s day to day operations and long term.

ii) Vinay Kishore Kasat - is a Non-Executive Independent Director of the Company. He is a graduate in commerce and having an experience in different industries. He is practicing as an industrial consultant from the year 1998. He is also involved in the social activities.

DIRECTORS'' RESPONSIBILITY STATEMENT:

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

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended March 31 , 2014 and the profit of the company for that year;

(iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, if any;

(iv) The accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS:

In terms of listing agreement with the Stock Exchanges, the duly audited consolidated financial statements are placed as Annexure. These statements have been prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective Boards.

PARTICULARS OF EMPLOYEES:

There were no employees of the company who were in the receipt of the remuneration as per the limits prescribed by Section 217(2A) of the Companies Act, 1956 and the rules framed there under.

DISCLOSURE OF PARTICULARS:

The information required under Section 217(l)Ie) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as annexure forming part of this Report.

LISTING:

Your Company''s shares have been listed at Madras Stock Exchange Limited, Delhi Stock Exchange Association Limited and Ahmedabad Stock Exchange Limited. It is confirmed that the Annual Listing fees upto the period from

01.04.2014 to 31.03.2015 has been paid to the aforesaid exchanges.

AUDITORS:

M/s. K.P. Jain & Co., Chartered Accountants, Chennai, the Auditors'' of the Company retire at the conclusion of the Annual General Meeting and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

In terms of listing agreement with the Stock Exchanges, a compliance report on Corporate Governance is given as Annexure. A certificate from Auditors of the company regarding compliance of conditions of Corporate Governance is placed as Annexure. The Board has laid down a Code of Conduct for all Board Members and Senior Management of the company.

VIGIL MECHANISM:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a vigil mechanism for directors and employees to report genuine concerns has been established.

CAUTIONERY STATEMENT

The statement in this management Discussion and analysis report describing the company''s projections, estimates, expectations or predictions may be ''forward-looking statement'' within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied.

APPRECIATION:

Your Directors would like to place on record our sincere appreciation and thank the entire team of AML Steel limited for their support inspite of challenging business environment. We take this opportunity to express our sincere thanks to all stake holders for their confidence and faith and to all Government, Regulatory Authorities and Banks for their valuable support.

For and on behalf of the Board

Place : Chennai Ankit Agarwal Ajay Agarwal Date : 04.09.2014 Director Director (DIN: 00065020) (DIN: 00064366)

---

Mar 31, 2010

The Directors have pleasure in presenting the Seventeenth Annual Report together with the Audited statements of accounts of your company for the year ended 31st March 2010.

Financial Results: (Rupees in Lakhs)

Particulars 2009-10 2008-09

Total Turnover 10,813.96 9,658.76

Profit Before Depreciation, Interest and Tax 440.60 380.45

Depreciation 124.92 100.07

Interest 275.45 253.96

Profit Before Current Tax 40.23 26.41

Profit after Current Tax 24.01 29.25

Balance Profit B/f from earlier year 2,883.89 2,914.64

Appropriation

Transfer to General Reserve 60.00 60.00

Proposed Dividend (including Dividend Tax) 0.00 0.00

Profit C/f to Balance Sheet 2,847.90 2,883.89



Reserves :

Your Board has approved the transfer of Rs. 60.00 Lakhs to the General Reserves.

Dividend :

Your company is passing through a period of transition and consolidation. As such your directors propose not to recommend any dividend for the year under review.

Management discussion and analysis

FINANCIAL PERFORMANCE

AML Steel Limited (AMLs) Turnover for the financial year ended March 31, 2010 increased to Rs.108.13 crores from Rs. 96.58 crores in the previous year. The operating profit (PBDIT) of the Company has increased to Rs. 4.40 crores from Rs. 3.80 crores in the previous year. Net Profit however has decreased to Rs. 0.24 crores from Rs. 0.29 crores in the previous year. AML Steel consolidated turnover for the year ended March 31, 2010 was 313.02 crores.

Industry structure and developments

Financial year 2009-2010 was one of the important years for the domestic steel industry. The Indian economy invalidating the theory of coupling started showing signs of growth amidst the global slowdown that was still prevailing world over. With governments focus on development of infrastructure, steel demand in India has rose by more than 8% in 2009. With strong growth predictions in auto and housing sectors, steel demand is set to grow in double digits.

Opportunities

India has immense scope for increasing consumption of steel. Current per capita consumption is around 40 kg compared with 100 kg in Brazil, 250 kg in China and a global average of 198 kg. Steel demand is expected to raise 5-6 percent annually until 2019-2020.

Challenges

There have been almost revolutionary changes in the global steel scene with fierce competitive pressures on performance, productivity, price reduction and customer satisfaction. National boundaries have melted to encompass an ever increasing world market. Trade in steel products has been on die upswing with the production facilities of both the developed and the developing countries complementing each other in the making of steel of different grades and specialty for the world market. Technological innovations have provided the competitive edge to the technologically strong companies.

Smooth and quick transfer of technology has, however, meant an increasingly competitive pressure on the companies to be ahead of the others in the race for technological superiority to maintain and, if possible, to strengthen the bottom lines. Sagging prices in the backdrop of economic slowdown have spelt turmoil in the industry the world over.

Outlook

The steel industry in India has been moving from strength to strength and according to the Annual Report by the Ministry of Steel, India has emerged as the 5th largest producer of steel in the world and is likely to become the second largest producer of crude steel by 2015 — 2016. Recendy, Steel Minister Mr. Virbhadra Singh said that India will become worlds second largest steel producer by 2012, more than doubling its capacity to 124 million tones as part of the push being given to assist overall infrastructure development.

AML intends to actively pursue these growth opportunities in the fast growing Iron and Steel manufacturing sector in the country. Companys production Mild steel ingots & tmt bars:

During the year under consideration your company achieved a turnover of Rs.10,813.967 Lakhs. Your Company is presently using its furnace to convert Scrap into M.S Ingots for its captive manufacturing thus reducing cost of production. Demand for TMT Bar is expected to rise as a result of various initiatives taken by government of India to boost infrastructural Industry.

Risks and concerns

Risks management is a structured and disciplined approach to manage enterprise risk. Some of the risk include a general down turn in market demand conditions, policies and pricing adopted by China, the largest producer of Steel, global demand of Steel, escalation in price of raw material etc.

The company recognizes Risk management as an integrated, forward looking and process oriented approach for managing all key business risks and opportunities. Managing Director, Directors, Plant heads and executives in charge manage risk on a daily basis through cross functional involvement and intense communication across business.

Adequacy of internal control

The company has an internal audit system for assessing suitability of the internal controls, adherences to policies, procedures and taking corrective action to address any gaps.

These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, monitoring operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability with financial reporting. The company has continued with its efforts to align processes and controls with best global practices in these areas as well.

The Audit Committee of the board actively reviews the adequacy and effectiveness of internal control systems and suggests improvements to strengthen the same.

SUBSIDIARIES:

A brief description of AML Steel Subsidiaries is as follows:

Name Products Location

Ankit Ispat Private Limited MSI (Mild Steel Ingot) Kariakal

Ashok Steel Industries Private Limited MSI (Mild Steel Ingot) & Tor Bars Sri Lanka

AML Steel & Power Limited Sponge Iron, Power Plant for captive Jharkhand consumption & Steel Melting Shop for manufacturing of Billets

As required under Section 217 of the Companies Act, 1956, the Audited Statement of accounts along with the report of the Board of Directors and Auditors Report of your Companies, subsidiaries, namely, AML Steel & Power Limited, Ankit Ispat Private Limited and Ashok Steel Industries (P) Limited, Srilanka, are annexed to this report.

Pubic deposits :

The Company has not accepted nor renewed any Public Deposits, as defined under section 58A of the companies Act, 1956 during the year under review.

Human resources :

Industrial Relations at all the levels remained cordial throughout the year. Your Company has created a friendly atmosphere that helps retaining talented professionals and nurturing their career growth along with the growth of the Organization. Your Company is confident of reaping the best from its human assets in the years to come.

Directors :

Mr. Ashok Agarwal, Managing Director of the Company and Mr. S. Kolandai Raj are due for retirement by rotation at this Annual General Meeting who are eligible for re — appointment. Brief particulars of these Directors are given below: i) Ashok Agarwal —He is Mechanical Engineer from REC, Kurukshethra with about 25 years of experience in setting plants, commissioning it and successfully turning around sick units. ii) S. Kolandai Raj - He is an engineering graduate from Madras University with over 40 years of experience in steel

Industry. He has undergone training in management as well as production technology from reputed institutes in

India as well as overseas. Appropriate resolution for the reappointment of the aforesaid director are being moved at the ensuing Annual General Meeting which the Board re-commends for your approval

Directors responsibility statement:

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

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year ended March 31, 2010 and the profit of the company for that year;

(iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, if any;

(iv) The accounts have been prepared on a going concern basis.

Consolidated financial statements:

In accordance with Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors provide the audited Consolidated Financial Statements in the Annual Report. These statements have been prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective Boards.

Particulars of employees:

There were no employees of the company who were in the receipt of the remuneration as per the limits prescribed by Section 217(2A) of the Companies Act, 1956 and the rules framed there under.

Disclosure of particulars:

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as annexure forming part of this Report.

Listing:

Your Companys shares have been listed at Madras Stock Exchange Limited, Delhi Stock Exchange Association Limited and Ahmedabad Stock Exchange Limited. It is confirmed that the Annual Listing fees for the period from 01.04.2010 to 31.03.2011 has been paid to the aforesaid exchanges.

Auditors:

M/s. K.P. Jain & Co., Chartered Accountants, Chennai, the Auditors of the Company retire at the conclusion of the Annual General Meeting and being eligible, offer themselves for re-appointment.

Corporate governance

The Company has already initiated steps to meet the norms of Corporate Governance, various committees of the Directors have been formed to take care of the matters under Corporate Governance and to provide assistance to efficient conduct of the business and in meeting all its obligations to its shareholder. The detail report on Corporate Governance with a certificate of the Auditors of the Company towards compliance is enclosed as Annexure to this report. Cautionery statement

The statement in this Management Discussion and Analysis report describing the companys objectives, projections, estimates, expectations or predictions may be forward-looking statement within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied.

Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, and economic developments within India and the countries with which the company conducts business and other incidental factors.

Acknowledgement:

Your Directors would like to express their sincere appreciation of the cooperation and assistance received from Companys Bankers. The Directors also thank the business Associates, Financial Institutions and various Central and State Government Departments and Government Authorities for their continued co-operation and support. The Directors also wish to place on record their gratitude for the continued support and co-operation received from the valued Customers, vendors, members and Investors of the Company and look forward to the same in the greater measure in the coming years.



For and on behalf of the Board

Place : Chennai Ashok Agarwal Ajay Agarwal

Date : 25.06.2010 Managing Director Director

---

Mar 31, 2009

The Directors have pleasure in presenting the Sixteenth Annual Report together with the Audited statements of accounts of your company for the year ended 31" March 2009.

(Rs. in Lakhs)

Particulars 2008-09 2007-08

Sales 9658.76 7145.47

PBDLT 380.45 785.26

Depreciation 100.07 70.64

Interest 253.96 318.39

Profit Before Tax 26.41 396.23

Profit After Tax 29.25 252.36

Balance Profit B/f from earlier year 2914.64 2792.48 Appropriation

Transfer tp General Reserve 60.00 60.00

Proposed Dividend (including Dividend Tax) 0.00 70.19

Profit C/f to Balance Sheet 2883.89 2914.64

RESERVES:

The Board approved the transfer of Rs, 60,00 Lakhs to the General Reserves.

DIVIDEND :

In view of overall recession affecting the Indian Economy too, financial performance of the Company for the year has been badly affected and there was a drop of 88.40% in the PAT as compared to previous year. To face this situation, directors have decided to conserve the financial resources of the company arid regret their inability to recommend any dividend on equity shares for the year 2008-09.





DIRECTOR:

During the year Shri Inderjeet Kaushal was appointed as an Additional Director of the Company on 2nd March 2009 as per the provision of Section 260 of the Companies Act, 1956 & his term of office is upto the date of ensuing Annual General Meeting of the Company. The Company has received a written notice along with the required amount as per the provision of Section 257 of the Companies Act, 1956 proposing his appointment as Director of the Company.

Shri. Ajay Agarwal & Shri. Ankit Agarwal, Directors,, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Appropriate resolutions for appointment/reappointment of the aforesaid Directors are being moved at ensuing Annual General Meeting which the Board comments for vour approval.

DIRECTORS RESPONSIBILITY STATEMENT:

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

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended March 31s1, 2009 and the profit of the company for that year;

(iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, if any;

(iv) The accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors provide the audited Consolidated Financial Statements in the Annual Report. These statements have been prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective Boards.

PARTICULARS OF EMPLOYEES:

There were no employees of the company who were in the receipt of the remuneration as per the limits prescribed by Section 217(2A) of the Companies Act, 1956 and the rules framed there under.

DISCLOSURE OF PARTICULARS:

The information required under Section 217(i)(e) of the Companies Act, 1956 read with the Companies (Disclosure of

Particulars in the Report of Board of Directors) Rules, 1988 is given as annexure forming part of this Report.

LISTING:

: Your Companys shares have been listed at Madras Stock Exchange Limited, Delhi Stock Exchange Limited and Ahmedabad Stock Exchange Limited it is confirmed that the Annual Listing fees upto the period from 01.04.2009 to 31.03,2010 has been paid to the aforesaid exchanges.

AUDITORS:

M/S. K ,P. Jain & Co., Chartered Accountants, Chennai, the Auditors of the Company retire at the conclusion of the Annual General Meeting and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

The Company has already initiated steps to meet the norms of corporate governance, various committees of the Directors have been formed to take care of the matters under Corporate Governance such as Audit, Finance, Shareholders matter etc., and to provide assistance to efficient conduct of the business and in meeting all its obligations of all its shareholder. The details report on Corporate Governance with a certificate of the Auditors of the Company towards compliance is enclosed as Annexure to this report.

CAUTIONARY STATEMENT

The statement in this Management Discussion and Analysis Report describing the Companys objectives, projecti6hs estimates, expectations or predictions may be forward-looking statement within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied.

Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other incidental factors.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to express their appreciation for the continued support and assistance received from the Companys Bankers. The Directors also thank the Business Associates, Financial Institutions and various Central and State Government Departments and Government Authorities for their continued co-operation and support. The Directors also wish to place on record their gratitude for the continued support and cooperation received from the valued Customers, Vendors, Members, and Investors of the Company and look forward to the same in greater measure in the coming years.

For and on behalf of the Board

Place : Chennai ASHOK AGARWAL AJAY AGRAWAL

Date : 21.07.2009 Chairman & Managing Director Director