Directors Report of Bhuwalka Steel Industries Ltd.

Mar 31, 2015

Dear Members,

Your Directors have pleasure in presenting before you the 33rd Annual Report of the Company together with Audited Statement of Accounts for the Twelve Months Period ended 31st March, 2015.

1. FINANCIAL RESULTS:

(Rs. in Lakhs)

Particulars 2014 - 15 2013 - 14 (12 months) (6 months)

Total Income 39285.29 16838.80

Profit/(Loss) before Interest, (1383.07) (1069.70) Depreciation and Taxation

Less: - Interest 5.61 1151.56

Less:- Depreciation/Amortization 522.05 304.09

Profit/(Loss) Before Tax before (1910.73) (2525.36) Extraordinary item

Add:- Profit from Extraordinary item 1311.98 -

Profit/(Loss) Before Tax After (598.74) (2525.36) Extraordinary item

Less:- Income Tax for the year 931.73 596.05 (including FBT and Deferred taxation)

Less:- Income tax for earlier years - -

Profit After Tax 332.98 (1929.30)

Add: Balance of profit brought (1337.27) 592.03 forward From last year

Appropriations:

Proposed Dividend with Dividend - - taxon Equity shares

Balance of Profit carried forward (1004.30) (1337.27)

2. OPERATIONS REVIEW:

The current year operational figures are for 12 months period from 01.04.2014 to 31.03.2015 as against previous year figures which are for 6 months period. Total income from operations during the period of twelve months under review was Rs. 39285.29 lakhs as compared to Rs. 16838.80 lakhs in the previous year (6 months). The company has made a profit of Rs.332.98 lakhs as compared to previous year the Company has suffered a loss after tax of Rs. 19,29.30 lakhs (after extra ordinary items). Main reason for losses was Lower capacity utilization of production capacities due to inadequate working capital during most of the period of reported fY.

Company is endeavoring hard to overcome the issues of poor demand in Infra and Real Estate by innovative marketing strategies and also focusing in optimizing its capacity utilization. However short of working capital is impacting the efforts negatively.

Company is taking Suitable measures to resolve the banking issue, which will provide flexibility to infuse fresh funds and sell noncore assets to improve liquidity for working capital and consequently increase capacity utilization. The management is hopeful that these measures will enable to increase the volumes and also the profitability and liquidity of the company.

3. DIVIDEND

Your Directors express their inability to recommend any dividend in view of huge losses incurred by the Company.

4. DISCLOSURES OF AMOUNTS, IF ANY, TRANSFER TO ANY RESERVES.

It is not proposed to carry any amount to any reserves from the profits of the Company. Hence, disclosure under Section 134 (3) (j) of the companies act, 2013 is not required.

5. SUBSIDIARY COMPANY

Company currently has only one wholly owned Subsidiary, M/s. Benaka Sponge Iron Private Limited. Subsidiary Company is into manufacturing of sponge Iron products from iron ore and pallets. While preparing consolidated financials of the company, Financials of M/s Benaka Sponge Iron Private Limited has been consolidated as per Accounting Standard- 21 of ICAI.

During the- financial year 2014-15 the company has disinvested its total investments in joint venture company Bhuwalka Steel Industries FZC, UAE.

6. Deposit

The Company has not accepted any deposit during the year.

7. CONSERVATION OF ENERGY:

Total energy consumption and energy consumed per unit of production as per Form 'A' is annexed - forming part of this Report.

8. TECHNOLOGY ABSORPTION:

The Company is keeping abreast of the latest developments in product technology, manufacturing process and methods and using indigenous technology.

9. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

Foreign Exchange Earnings and Expenditure are given under Point 8 (E) and 8 (F) of Note '23' forming part of the Accounts for the Period ended 31st March, 2015.

10. PERSONNEL:

Industrial Relations remained cordial through out the year.

There are no employees of the categories specified under Section 134 of the Companies Act, 2013 read with Companies (Particulars of Employees) Rules, 1975 as amended. Hence, this information is not given.

11. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

Due to non servicing of the debt post re-structuring the company Account has been classified as NPA by the bankers. The company however is taking suitable measure to resolve the same.

12. DETAILS OF DIRECTORS AND KMP:

Sri Suresh Kumar Bhuwalka retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

During the year Mr. Munish Mohan, Nominee Director appointed in the place of Smt. Visalakshi Vasanthan who retired with effect from 08/05/2014 and Mr. Munish Mohan retired with effect from 14/02/2015 due to withdrawal of Nomination by the appointing Authority i.e., IDBI Bank Ltd. and Mr. K C Kondaiah retired with effect from 08/05/2014.

Mr. Ajay Kumar Bhuwalka appointed as Managing Director of the Company in the Board Meeting held on 13.11.2014 and the same is being considered in the ensuing Annual General Meeting being held on 9/11/2015.

13. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS PURSUANT TO RULE 8 (5) (viii) OF COMPANIES (ACCOUNTS) RULES, 2014:

The Company has an adequate Internal financial control system, commensurate with the size of its business operations.

14. SECRETARIAL AUDIT REPORT:

Mr. Manoj Rajan, Practicing Company Secretary Membership No. ACS 19865 was appointed to conduct the Secretarial Audit of the Company for the Financial Year 2014-15, as required under section 204 of Act and Rules made their under. The Secretarial Audit Report, in the prescribed Form MR-3 is annexed to this report.

15. BOARD MEETING:

During the financial year 2014-15, the Board met 6 times on the following dates 08.05.2014, 30.05.2014, 14.08.2014, 13.11.2014, 14.02.2015 and 20.03.2015.

16. DECLARATION OF INDEPENDENT DIRECTORS

Presently there are no Independent Directors on Board. However, steps are being taken for the appointment of Independent Directors.

17. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

As per provisions of Section 178(1) constitution of Nomination and Remuneration Committee is being constituted.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES MADE PURSUANT TO SECTION 188 OF THE COMPANIES ACT, 2013.

Details of each of the related party transaction entered into by the Company during the Year together with justification are annexed herewith in Form AOC-2 as "Annexure B".

19. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM The Audit Committee consists of the following members;

a) Mr. K C Kondaiah, Independent Director - Upto 30.5.2014

b) Mr. Ajay Kumar Bhuwalka

c) Suresh Kumar Bhuwalka - Upto 30.5.2014

d) Mr. Ankit Bhuwalka

During the financial year 2014-15, the Committee met 5 times on the following dates 08.05.2014, 30.05.2014, 13.08.2014, 13.11.2014, 14.02.2015.

The Company has established a vigil mechanism and oversees through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company.

20. INFORMATION PURSUANT TO RULE 5 (2) OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The Company has not appointed any employee(s) in receipt of remuneration exceeding the limits specified under Rule 5 (2) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

21. AUDITORS:

The Auditors, M/s. ASR Associates, Chartered Accountants, Bellary, retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There was no loan given or guarantee given or investment made or security provided pursuant to Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.

23. DETAILS OF SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

There are no significant material orders passed by the Regulators / Courts / Tribunal which would impact the going concern status of the Company and its future operations. Hence, disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules, 2014 is not required.

24. Risk Management Policy:

The Company has developed & implemented Risk Management Policy. However, Company has not come across any element of risk which may threaten the existence of the Company.

25. AUDITORS' REPORT:

a) As reported by Statutory Auditor's in their Audit, there have been delays in servicing undisputed statutory liabilities during 2014-15 on time. Further certain payments have been delayed beyond 180 days. Amount of these delays have been detailed in point no. (vii) (a) and (b) of annexure of Paragraph 1 (CARO) of the Auditor's Report.

Management's Reply:- Company has been going through tough financial condition during FY 14-15 due to operational and cash losses. This situation occurred due to lower production level and bad demand scenario of Company's product during such period. Owing to cash losses and liquidity constraints, company could not mobilize funds for statutory dues and hence same were delayed unintentionally. Company has already taken measure to improve its position by utilization of current assets and these dues will be paid on highest priority.

b) In Reply of Point no. (viii) of the annexure of Paragraph 1 (CARO) of the Auditor's Report i.e. "The Company's accumulated losses at the end of the Financial Year were more than 50% of the net worth. The company has incurred cash losses in the current Financial Year. The Company has to comply with provisions of The Sick Industrial Companies Act, 1985 (SICA ACT) as applicable to the Company post this event."

Management's Reply: - Management has taken Appropriate steps to resolve all financial issues effecting the company and taking measure to safeguard the company's interest from further erosion in its networth. As the Net worth of the company has eroded more than 50% we have applied for registration with The Sick Industrial Companies Act, 1985 (SICA ACT).

c) As reported in point no. 11 of the annexure of Paragraph 1 (CARO) of the Auditor's Report i.e. "Based on our Audit procedures and as per the information and explanations given by the management, the company has defaulted in repayment of loans and interest to Banks and Financial Institutions. Consequently the banks have served notice U/S 13 of the SARFESI Act.

Management's Reply: - As mentioned above to the reply of a) Company could not arrange funds for timely banking repayments due to cash losses and liquidity constraints and hence banking repayments were delayed unintentionally. Company has already taken measure to improve this issue and has approached the bankers for a solution in this matter. The matter is under consideration by the bankers. The company has also approached DRT in response to the SARFESI notice issued by the bankers.

For further clarification on Auditor's observation, The Notes on accounts referred to in the Auditors' Report are self explanatory and therefore do not call for any additional comments under section 217(3) of the Companies Act, 1956.

26. DIRECTORS' RESPONSIBILITY STATEMENT AS PER SECTION 217 (2AA):

Your Directors hereby confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a 'going concern' basis.

e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

27. REPORT ON CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, the following form part of this Annual Report:

a) Management Discussion and Analysis;

b) Report on Corporate Governance;

c) Auditors' Certificate regarding compliance of conditions of Corporate Governance

28. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation for the continued support, encouragement and co- operation extended by all the stakeholders namely; Financial Institutions, Bankers, shareholders, customers and suppliers.

Your Directors also place on record their appreciation for the contributions made by the employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD (AJAY KUMAR BHUWALKA) MANAGING DIRECTOR Place : Bangalore (ANKIT BHUWALKA) Date : 29th September , 2015 DIRECTOR

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Mar 31, 2014

TO THE MEMBERS OF

BHUWALKA STEEL INDUSTRIES LIMITED:

The Directors have pleasure in presenting before you the 32nd Annual Report of the Company together with Audited Statement of Accounts for the Six Months Period ended 31st March, 2014.

1. FINANCIAL RESULTS: (Rs. in Lakhs) Particulars 2013 - 14 2012 - 13 (6 months) (18 months)

Total Income 16,838.80 85,405.18

Profit/(Loss) before Interest, Depreciation and Taxation (10,69.70) 3809.25

Less: Interest 11,51.56 3,369.46

Less: Depreciation/Amortization 304.09 817.42

Profit/(Loss) Before Tax before Extraordinary item (25,25.36) (377.63)

Add: Profit from Extraordinary item - 501.03

Profit/(Loss) Before Tax After Extraordinary item (25,25.36) 123.40

Less: Income Tax for the year (including FBT and Deferred taxation) 596.05 (73.60)

Less: Income tax for earlier years - -

Profit After Tax (19,29.31) 49.80

Add: Balance of profit brought forward From last year 592.03 542.23

Appropriations:

Proposed Dividend with Dividend tax on Equity shares - -

Balance of Profit carried forward (13,37.27) 592.03



2. OPERATIONS REVIEW:

The Company has adopted 6 Months Financial Period from 1st October 2013 to 31st March, 2014 as compared to previous financial year of 18 months i.e. 1st April 2012 to 30th September 2013. Total income from operations during the period of six months under review was Rs. 16,838.80 lakhs as compared to Rs. 85,405.18 lakhs in the previous year (18 months). During the period under review, the Company has suffered a loss after tax of Rs. 19,29.31 lakhs (after extra ordinary items) as against profit after tax of Rs. 49.80 lakhs in the previous accounting year. Main reason for losses were Lower capacity utilization of production capacities due to inadequate working capital during most of the period of reported FY, steep rise in interest costs and high depreciation cost.

Company is endeavoring hard to overcome the issues of poor demand in Infra and Real Estate by innovative marketing strategies and also focusing in optimizing its capacity utilization. However shortage of working capital is impacting the efforts negatively.

In order to improve financial performance and profitability, Company is endeavoring to raise long term funding resources through equity, concentrating in improving productivity, efforts for optimum capacity utilization of the Wada plant and an overall cost reduction exercise. Further company is trying to dispose of its surplus Investments and Surplus properties in Fy 2014-15 in order to fund the gap of working capital requirements of the company.

3. DIVIDEND:

Your Directors express their inability to recommend any dividend in view of huge losses incurred by the Company.

4. SUBSIDIARY COMPANY:

As required under section 212 of the Companies Act. 1956, the audited statements of accounts along with the report of the Board of Directors of M/s Benaka Sponge Iron Private Limited together with the Auditor''s report as at 31st March 2014, are appended. While preparing consolidated financials of the company, Financials of M/ s Benaka Sponge Iron Private Limited has been consolidated as per Accounting Standard- 21 of ICAI. As Company has already taken up steps to sell its Investment in shares in Overseas Joint Venture at Bhuwalka Steel Industries, UAE (FZC), the same is shown under Investments and Consolidation of the same is not done while preparing Consolidated Financial Statements.

5. CONSERVATION OF ENERGY:

Total energy consumption and energy consumed per unit of production as per Form ''A'' is annexed - forming part of this Report.

6. TECHNOLOGY ABSORPTION:

The Company is keeping abreast of the latest developments in product technology, manufacturing process and methods and using indigenous technology.

7. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

Foreign Exchange Earnings and Expenditure are given under Point 8 (F) and 8 (G) of Note ''23'' forming part of the Accounts for the Period ended 31st March, 2014.

8. PERSONNEL:

Industrial Relations remained cordial through out the year.

There are no employees of the categories specified under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended. Hence, this information is not given.

9. DIRECTORS:

Sri Ajay Kumar Bhuwalka retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

10. AUDITORS:

The Auditors, M/s. ASR Associates, Chartered Accountants, Bellary, retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

11. AUDITORS'' REPORT:

a) As reported by Statutory Auditor''s in their Audit, there have been delays in servicing undisputed statutory liabilities during 2013-14 on time. Further certain payments have been delayed beyond 180 days. Amount of these delays have been detailed in point no. 8 and 9 of annexure of Paragraph 1 (CARO) of the Auditor''s Report.

Management''s Reply:- Company has been going through tough financial condition during FY 13-14 due to operational and cash losses. These situation occurred due to lower production level and bad demand scenario of Company''s product during such period. Owning to cash losses and liquidity constraints, company could not mobilize funds for statutory dues and hence same were delayed unintentionally. Company has already taken measure to improve its position by utilization of current assets and these dues will be paid on highest priority.

b) In Reply of Point no.10 of the annexure of Paragraph 1 (CARO) of the Auditor''s Report i.e. "The Company''s accumulated losses at the end of the Financial Year were more than 50% of the net worth. The company has not incurred any cash losses in the immediately preceding Financial Year. The Company has incurred cash losses of Rs.2221 lacs in the current Financial Year. The Company has to comply with provisions of The Sick Industrial Companies Act, 1985 (SICA ACT) as applicable to the Company post this event."

Management''s Reply: - Company has suffered losses due to low operational capacity utilization and shortage of working capital in the Company. Management has already taken initiatives to safeguard the company from further erosion of the net worth. Company is in process of getting additional working capital margin from sale of surplus assets of the company. These sales will get materialized in FY 14-15 which will augment additional working capital for the company. With this, company will be able to improve its production capacity utilization and also to check on losses.

The Company will comply with provisions of The Sick Industrial Companies Act, 1985 as far as it is applicable to the company.

c) As reported in point no. 11 of the annexure of Paragraph 1 (CARO) of the Auditor''s Report i.e. "Based on our Audit procedures and as per the information and explanations given by the management, the company has defaulted in repayment of loans and interest to Banks and Financial Institutions. Unpaid overdues interest and installments to banks and institutions as at 31.03.2014 aggregates to Rs.1,172.13 lacs including devolved L.C. unfunded at that date".

Management''s Reply: - As mentioned above to the reply of a) Company could not arrange funds for timely banking repayments due to cash losses and liquidity constraints and hence banking repayments were delayed unintentionally. Company has already taken measure to improve its position by utilization of current assets and sale of surplus assets. As a result of the same, these dues will be paid as earlier as possible. For further clarification on Auditor''s observation, The Notes on accounts referred to in the Auditors'' Report are self explanatory and therefore do not call for any additional comments under section 217(3) of the Companies Act, 1956.

12. DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 217 (2AA):

Your Directors hereby confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a ''going concern'' basis.

13. REPORT ON CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, the following form part of this Annual Report:

a) Management Discussion and Analysis;

b) Report on Corporate Governance;

c) Auditors'' Certificate regarding compliance of conditions of Corporate Governance

14. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation for the continued support, encouragement and co- operation extended by all the stakeholders namely; Financial Institutions, Bankers, shareholders, customers and suppliers.

Your Directors also place on record their appreciation for the contributions made by the employees of the Company at all levels.

By Order of the Board (AJAY KUMAR BHUWALKA) Director

Place : Bangalore (ANKIT BHUWALKA) Date : 14th August,2014 Director

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Mar 31, 2012

TO THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED:

The Directors have pleasure in presenting before you the 30th Annual Report of the Company together with Audited Statement of Accounts for the year ended 31 st March 2012.

1. FINANCIAL RESULTS:

(Rs.in Lakhs)

2011 - 12 2010 - 11

Total Income 63,996.75 52,870.81

Profit before Interest,

Depreciation and Taxation 2,654.73 2,697.80

Less: - Interest 2,403.42 1,872.52

Less:- Depreciation/Amortization 597.68 306.70

Profit Before Tax (346.37) 518.57

Less:- Income Tax for the year(including

FBT and Deferred taxation) 125.66 187.37 Less:- Income tax for

earlier years - 2.54

Profit After Tax (220.73) 328.65

Add: Balance of profit brought forward

From last year 762.96 434.31

Appropriations:

Proposed Dividend with

Dividend taxon Equity shares - -

Transfer- Capital

Redemption Reserve - -

Transfer to General Reserve - -

Balance of Profit carried forward 542.23 762.96



2. OPERATIONS REVIEW:

Total income from operations during the year under review was Rs. 63,996.75 lakhs as compared to Rs. 52,870.81 lakhs in the previous year signifying a rise by 21% in top line. During the year under review, the Company has incurred losses after tax of 2.20 Crores as against a profit after tax of Rs.3.28 Crores in the previous accounting year. Main reason for losses are poor capacity utilization of production capacities due to inadequate working capital, steep rise in interest costs and high depreciation cost.

Company has implemented expansion plan at its unit at Wada which is yet to be operative in full capacity due to inadequate working capital. Company has applied for restructuring of its bank borrowings under CDR which is under progress with CDR cell and bank lenders viz. Canara Bank and IDBI Bank for their approval.

In order to improve financial performance and profitability, Company is endeavoring to raise long term funding resources through equity, concentrating in improving productivity, efforts for optimum capacity utilization of the Wada plant and an overall cost reduction exercise. Further company is also planning to sale its surplus assets at Hoskote, Kanchipuram and Bangalore in order to improve long term fund positions of the company. Post sale of these assets, company's main operations will be concentrated only at its WADA facilities at Maharasthra.

Company's products are continued to be well accepted by the market. Company has been regularly participating in tenders floated by govt, undertakings and has begged good orders as well during last quarter of FY 2011-12. Further there is good local demand of products in Maharasthra as well as Karnataka. Company is expecting to turnaround based on pending approval of required additional working capital under CDR and long terms funds from sale of its surplus assets.

3. DIVIDEND

In view of loss, no dividend has been recommended by the directors

4. SUBSIDIARY COMPANY

Company currently has only one wholly owned Subsidiary, M/s Benaka Sponge Iron Private Limited. Subsidiary Company is into manufacturing of Sponge Iron products from Iron ore and pallets. Due to ban of iron ore mining in Bellary, raw material availability became difficult to sponge iron units in Bellary. Owing to this fact, M/s Benaka Sponge Iron Private Limited has incurred losses during FY 2011-12 due to poor capacity utilization of the facility.

As required under section 212 of the Companies Act. 1956, the audited statements of accounts along with the report of the Board of Directors of M/s Benaka Sponge Iron Private Limited together with the Auditor's report as at and for the year 31st March 2012, are appended. While preparing consolidated financials of the company, Financials of M/s Benaka Sponge Iron Private Limited has been consolidated as per Accounting Standard- 21 of ICAI.

5. CONSERVATION OF ENERGY:

Total energy consumption and energy consumed per unit of production as per Form 'A' is annexed - forming part of this Report.

6. TECHNOLOGY ABSORPTION:

The Company is keeping abreast of the latest developments in product technology, manufacturing process and methods and using indigenous technology.

7. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

Foreign Exchange Earnings and Expenditure are given under Point 8 (F) and 8 (G) of Note '23' forming part of the Accounts for the year ended 31st March 2012.

8. PERSONNEL:

Industrial Relations remained cordial through out the year.

There are no employees of the categories specified under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended. Hence, this information is not given.

9. DIRECTORS:

Sri Ankit Bhuwalka and Sri. Roop Sing Chawhan retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re- appointment.

10. AUDITORS:

The Auditors, M/s. ASR Associates, Chartered Accountants, Bellary, retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

11. AUDITORS' REPORT:

The Notes on accounts referred to in the Auditors' Report are self explanatory and therefore do not call for any further comments under section 217(3) of the Companies Act, 1956.

12. DIRECTORS' RESPONSIBILITY STATEMENT AS PER SECTION 217 (2AA):

Your Directors hereby confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a 'going concern' basis.

13. REPORT ON CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, the following form part of this Annual Report;

a) Management Discussion and Analysis;

b) Report on Corporate Governance;

c) Auditors' Certificate regarding compliance of conditions of Corporate Governance

14. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation for the continued support, encouragement and co-operation extended by all the stakeholders namely; Financial Institutions, Bankers, shareholders, customers and suppliers. Your Directors also place on record their appreciation for the contributions made by the employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD

(SURESH KUMAR BHUWALKA)

Chairman and Managing Director

(AJAY KUMAR BHUWALKA)

Director

Place: Bangalore

Date : 1st August, 2012

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Mar 31, 2011

TO THE MEMBERS OF

BHUWALKA STEEL INDUSTRIES LIMITED:

The Directors have pleasure in presenting before you the 29th Annual Report of the Company together with Audited Statement of Accounts for the year ended 31st March, 2011.

1. FINANCIAL RESULTS:

(Rs.in lakhs) 2010-11 2009-10

Total Income 52870.81 45951.86

Profit before Interest,

Depreciation and Taxation 2697.80 1935.23

Less: Interest 1872.52 1319.35

Less: Depreciation/ Amortization 306.70 306.50

Profit Before Tax 518.57 309.38

Less: Income Tax for the year(including FBT and Deferred taxation) 187.37 100.74

Less :Income tax for earlier years 2.54 -

Profit After Tax 328.65 208.64

Add : Balance of profit brought forward from last year 434.31 225.67

Appropriations:

Proposed Dividend with Dividend tax on Equity shares - -

Transfer - Capital Redemption Reserve - -

Transfer to General Reserve - -

Balance of Profit carried forward 762.96 434.31

2. OPERATIONS REVIEW:

Total income from operations during the year under review was Rs.52870.81 lakhs as compared to Rs. 45951.86 lakhs in the previous year signifying a rise by 15.06% in top line. During the year under review, the Company's profit after tax surged to Rs.328.65 lakhs against Rs. 208.64 lakhs in the previous accounting year.

Company has completed its expansion project of Unit 4 at Wada and commercial production after trial run in the last quarter 2010- 2011. To achive optimal production capacity, Company is planning to raise long term funding and exploring options for the same.This will support the Company to produce to its maximum capacities and improve its profitibality.

Company has renewed its Joint Developement agreement with Soul Space Realty Limited (a B.L. Kashyap Group Company) to speedly take up real estate development at its unit at Hoskote. Necessary approvals and sancations are awaited to launch the project as soon as possible.

It will unlock real estate value for the Company and will support its long term funding needs.

3. DIVIDEND:

The Management has decided to retain the profits for the year ended 31st March, 2011 for meeting Company's future expansion projects.

4. ISSUE OF BONUS SHARES:

The company completed allotment of Bonus Shares to equity shareholders in the ratio of 1:1 on 23-07-2011 pursuant to shareholders' approval obtained through postal ballot on 12-07-2011.

5. SUBSIDIARY COMPANY:

The Company's wholly owned Subsidiary, M/s. Bhuwalka Steel Industries (UAE) FZE, Sharjah became a Joint Venture Company in January,2011 consequent to its entering into a Joint Venture Agreement with Mr. Hassan Ibrahim Lootah of M/s. Lootha Group of Companies, Dubai. The Joint Venture Company's name has been since changed to M/s. Lootah Bhuwalka Steel Industries FZC. The Company now holds 49% of the equity capital of the Joint Venture Company.

As required under Section 212 of the Companies Act, 1956, the Audited Statement of Accounts along with the report of the Board of Directors of Benaka Sponge Iron Pvt Ltd. together with the Auditors' Report as at and for the year ended 31st March 2011, are appended.

6. CONSERVATION OF ENERGY:

Total energy consumption and energy consumed per unit of production as per Form ‘A' is annexed - forming part of this Report.

7. TECHNOLOGY ABSORPTION:

The Company is keeping abreast of the latest developments in product technology, manufacturing process and methods and using indigenous technology

8. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

Foreign Exchange Earnings and Expenditure are given under Note 8 (F) and 8 (G) of Schedule ‘18' forming part of the Accounts for the year ended 31st March 2011.

9. PERSONNEL:

Industrial Relations remained cordial throughout the year.

There are no employees of the categories specified under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended. Hence, this information is not given.

10. DIRECTORS:

Sri Suresh Kumar Bhuwalka and Sri Ajay Kumar Bhuwalka retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Shri. N.Srinivasan resigned on 27.09.2010 as Director on the Board of the Company.

Smt. Visalakshi Vasanthan has been appointed on 28.09.2010 as Nominee Director of IDBI Bank.

11. AUDITORS:

The current Auditors, M/s. M.S.Dahiya & Co., Chartered Accountants, have not offered themselves for re-appointment as Auditors of the Company for the year 2011-12. M/s.ASR Associates, Chartered Accountants, (in respect of whom notice in writing from a member of the Company signifying his intention to appoint them as Auditors of the Company has been received pursuant to Section 225(1) of the Companies Act, 1956) are proposed to be appointed as the Auditors of the Company to hold the office from the conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting of the Company.

12. AUDITORS' REPORT:

The Notes on accounts referred to in the Auditors' Report are self explanatory and therefore do not call for any further comments under section 217(3) of the Companies Act, 1956.

13. DIRECTORS' RESPONSIBILITY STATEMENT AS PER SECTION 217 (2AA) :

Your Directors hereby confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a ‘going concern' basis

14. REPORT ON CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, the following form part of this Annual Report:

a) Management Discussion and Analysis;

b) Report on Corporate Governance;

c) Auditors' Certificate regarding compliance of conditions of Corporate Governance

15. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation for the continued support, encouragement and co-operation extended by all the stakeholders namely; Financial Institutions, Bankers, shareholders, customers and suppliers.

Your Directors also place on record their appreciation for the contributions made by the employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD

(SURESH KUMAR BHUWALKA) Chairman and Managing Director

Place : Bangalore Date : 30th May 2011 (AJAY KUMAR BHUWALKA)

Director

---

Mar 31, 2010

The Directors have pleasure in presenting before you the 28th Annual Report of the Company together with Audited Statement of Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS:

(Rs.in lakhs) 2009-10 2008-09

Total Income 449,28.75 494,49.56

Profit before Interest,

Depreciation and Taxation 19,35.23 8,22.49

Less: Interest 13,19.35 15,69.37

Less: Depreciation/

Amortization 3,06.50 4,45.86

Profit Before Tax 3,09.38 (11,92.72)

Less: Income Tax for the year(including FBT and Deferred taxation) 1,00.74 (3,82.78)

Less: Income tax for

earlier years - 10.92

Less: Excess Prov. of

Gratuity & Leave Withdrawn - 15.25

Profit After Tax 2,08.64 (8,05.61)

Add: Balance of profit

brought forward

From last year 2,25.67 10,31.29

Balance of Profit carried

forward 4,34.31 2,25.67



2. OPERATIONS REVIEW:

Total income from operations during the year under review was Rs. 449.28 crores as compared to Rs. 494.49 crores in the previous year signifying a fall , by 10.06% in top line. During the year under review, the Company has recovered from the effect of global recession and has made profit after tax of Rs.2.08 Crores as against a loss of Rs. 8.06 Crores in the previous accounting year.

Company has implemented expansion plan at its unit at Wada which is yet to be operative in full capacity due to inadequate working capital. However the same has been considered by working capital bankers and operations will be in full swing in FY 2010-11.

In order to improve financial performance and profitability, Company has taken up various action plan in current year which include raising long term funding resources through equity, concentrating in improving productivity, efforts for optimum capacity utilization of the Wada and Hoskote plants and an overall cost reduction exercise. As a long term strategic plan, management is exploring amalgamation of other group companies, integration of operations and captive power plant.

Companys products continue to be well accepted by the market. Company has participated in tenders floated by govt, undertakings and is poised to receive large orders to be executed during next 2- 3 quarters. Due to renewed thrust on Infrastructure sector by the existing government at the centre, it is expected that the demand for steel may pick up in coming quarters.

3. DIVIDEND

The Management has decided to retain the profits for the current year for future plans.

4. SUBSIDIARY COMPANY

As required under section 212 of the Companies Act, 1956, the Audited Statement of Accounts along with the report of the Board of Directors of Bhuwalka Steel Industries (UAE) FZE and Benaka Sponge Iron Pvt Ltd. together with the Auditors Report as at and for the year ended 31s March 2010, are appended.

Company is in to discussion with various investors to seek additional investment for meeting capex and working capital requirement at Bhuwalka Steel Industries (UAE) FZE.

5. CONSERVATION OF ENERGY:

Total energy consumption and energy consumed per unit of production as per Form A is annexed - forming part of this Report.

6. TECHNOLOGY ABSORPTION:

The Company is keeping abreast of the latest developments in product technology, manufacturing process and methods and using indigenous technology.

7. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS:

Foreign Exchange Earnings and Expenditure are given under Note 8 (F) and 8 (G) of Schedule 18 forming part of the Accounts for the year ended 31st March 2010.

8. PERSONNEL:

Industrial Relations remained cordial through out the year.

There are no employees of the categories specified under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended. Hence, this information is not given.

9. DIRECTORS :

Shri. N.Srivasan and Shri K.C Kondaiah retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Dr. S.K Gupta resigned on 14.04.2010 and Shri S.S Naganand resigned on 31.05.2010 as Directors on the Board of the Company.

Shri. Roop Sing Chawhan was appointed as an Additional Director w.e.f. 1st June, 2010 and holds office only up to the conclusion of ensuing Annual General Meeting. A Notice under Section 257 of the Companies Act, 1956 has been received from a member proposing his candidature for the office of Director.

10. AUDITORS:

During the year under review M/s. P.K. Rungta & Co., had expressed their inability to conduct the Statutory Audit of your company for the year 2009-10 due to illness of their Proprietor Mr. P.K. Rungta. The resulting Casual Vacancy caused was filled by the Board by appointing M/s. Avinash Bhandari, Chartered Accountants, Bangalore as the Statutory Auditors to hold office until the ensuing Annual General Meeting.

However Mr. Avinash Bhandari has expressed his inability to conduct the Statutory Audit of your company for the year 2010-2011 in view of the peer review certificate requirement for statutory audits as per recent amendment in Clause 41 of the Listing Agreement with Stock Exchanges. The resulting Casual Vacancy caused was filled by the Board by appointing at its meeting held on 7th August .2010 M/s. Dahiya & Co., Chartered Accountants as its auditors, to hold office upto the conclusion of ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

11. AUDITORS REPORT:

The Notes on accounts referred to in the Auditors Report are self explanatory and therefore do not call for any further comments under section 217(3) of the Companies Act, 1956.

12. DIRECTORS RESPONSIBILITY STATEMENT AS PER SECTION 217 (2AA):

Your Directors hereby confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a going concern basis.

13. REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, the following form part of this Annual Report:

a) Management Discussion and Analysis;

b) Report on Corporate Governance;

c) Auditors Certificate regarding compliance of conditions of Corporate Governance

14. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation for the continued support, encouragement and co-operation extended by all the stakeholders namely; Financial Institutions, Bankers, shareholders, customers and suppliers.

Your Directors also place on record their appreciation for the contributions made by the employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD

(SURESH KUMAR BHUWALKA)

Chairman and Managing Director

Place : Bangalore (AJAY KUMAR BHUWALKA)

Date : 11.08.2010 Director