Directors Report of Facor Steels Ltd.

Mar 31, 2015

Dear Members,

Your Directors submit the TWELFTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2015.

FINANCIAL RESULTS (' in lacs)

Particulars For the For the

year ended year ended 31.03.2015 31.03.2014

Gross Profit/(Loss) (2623.80) (2267.52)

Depreciation / Amortization 469.38 537.29

Profit /(Loss) before

exceptional items & Tax (3093.18) (2804.81)

Exceptional items 1842.11 0.00

Profit/(Loss) before tax

for the year (1251.07) (2804.81)

Provision/(Credit) for

MAT/DEF. TAX /WT 0.00 0.00

Profit/(Loss) after tax for the year (1251.07) (2804.81)

OVERALL PERFORMANCE

Your Company's performance during the financial year 2014- 15 was badly affected due to the closure of the plant operations with effect from 30/05/2014 due to consensus lockout declared as per agreement reached with the workforce. This closure was necessitated due to adverse market conditions with subdued demand for Alloy and Stainless Steel resulting in lower utilization of capacity. The lay off is still continuing due to no change in the situation.

During the year under review, your Company reported total income of ' 3043.78 Lacs as against ' 6636.74 Lacs of previous year. After making a provision of ' 781.29 Lacs towards interest and ' 469.38 Lacs towards depreciation, the loss for the current financial year amounts to ' 1251.07 Lacs as against net loss of ' 2804.81 Lacs reported in the previous year. The net loss of ' 1251.07 Lacs of the current year has been arrived after considering exceptional items of ' 1842.11 Lacs, details of which has been given in Note 32 of on Financial Statement.

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations. A detailed Management Discussion and Analysis Report forms part of this report is annexed as Annexure -1.

OUTLOOK FOR 2015-16

The lay off at Company's plant is continuing and it is unviable to operate the plant under present business conditions. In our effort to revive operations, the Company and its Promoters have been engaged in scouting for tie-ups with Potential Investors/ Strategic Partners who can introduce newer value added product portfolios in the market and infuse capital in the Company.

DIVIDEND

In the absence of profit, your directors are unable to declare any dividend for the year 2014-15.

BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

As the accumulated losses of the Company at the Financial year ended 31st March, 2014 exceeded its net worth, the Company has made reference to the Board for Industrial and Financial Reconstruction (BIFR) under section 15 of the Sick Industrial Companies (Special) Provisions Act, 1985. The reference has been registered vide Case No. 74/2014 by BIFR and proceedings have started.

PARTICULAR OF LOANS, GUARANTEES OR INVESTMENT

There are no loans, Guarantees and Investments made under the provisions of Section 186 of the Companies Act, 2013 during the year under review. Details of Loans, Guarantees and Investments as at the year end are given in the notes to the Financial Statements.

RELATED PARTY TRANSACTION

There are no contracts or arrangement with related parties referred to in Section 188 (1) by the Companies Act, 2013. The details of other transactions entered into with the related parties are given in Note 43 to the Financial Statement.

The Policy on Related Party Transactions approved by Board is uploaded on the Company's Website.

DEPOSITS

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

CAPITAL STRUCTURE

Authorised Capital of the Company is ' 60,00,00,000/- and there was no change in the authorised capital of the company during the year under review.

Paid up capital of the company is ' 53,43,23,679/- comprising of 20,65,23,679 equity shares of ' 1/- each and 32,78,000 5% Redeemable Cumulative Preference Shares of ' 100/- each. During the year under review there was no change in the paid up capital of the company

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

In view of the continuing losses, the company is not in a position to make any expenditure under Corporate Social Responsibility as per the Provisions of Companies Act, 2013.

INDUSTRIAL RELATIONS

The Company has declared Consensus lock out as per the agreement reached with its work force effective from 30th May, 2014. Since then Company has separated 50 officers of the Company Further 282 staff and workers have been separated through Voluntary Separation Scheme. The general industrial relation situation is cordial.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure- 2

NUMBER OF BOARD MEETINGS HELD

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year Seven Board Meetings, Five Audit Committee Meetings, One Stakeholders Relationship Committee Meeting & Three Nomination and Remuneration Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

CORPORATE GOVERNANCE

The report on corporate governance as per the requirement of the listing agreement with stock exchange forms part of this report is annexed as Annexure-3. The Company has complied with all the requirements of corporate governance. The certificate from the Auditors of the Company confirming compliance to the conditions of the corporate governance requirements is also annexed.

DIRECTOR RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred in Section 134(5) of Companies Act, 2013, it is hereby stated.

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

(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 loss 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; and

(e) the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable Laws and that such system were adequate and operating effectively.

INFORMATION ON REMUNERATION

Information as per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules , 2014 are annexed as Annexure-4 and Annexure-5 to this report.

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

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed as Annexure-6 and Form A which forms part of this Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

FINANCE

Company's banks accounts have been classified as NPA by all banks during the year under review due to non payment of interest and the considerable reduction in the drawing power due to suspension of production activities. Company has also received notices from certain banks under Section 13(2) of SARFAESI Act. The company has replied to the said notices. Company has received a letter from Central Bank of India on 12/06/2015 informing the bank has assigned all the rights, title and interest in financial assistance granted to the company in favour of Invent Assets Securitisation & Reconstruction Private Limited (INVENT) vide assignment agreement dated 01/06/2015. Hence INVENT has become the secured lender and all the rights, title and interest of Central Bank of India has been vested with INVENT in respect of the above financial assistance.

The company is in receipt of winding up petition filed by some of the unsecured creditors from the Nagpur Bench of the Hon'ble High Court of Mumbai. The company is in the process of responding to the same.

AUDITORS

STATUTORY AUDITOR

M/s Salve & Company, Chartered Accountants hold office upto the conclusion of the ensuing 12th Annual General Meeting. Based on the recommendation of the Audit Committee, the Board of Directors of the Company have proposed the appointment of M/s Salve & Co., Chartered Accountants, as the Auditors of the Company from the conclusion of the forthcoming 12th Annual General Meeting till the conclusion of the 14th Annual General Meeting (subject to ratification by shareholders at every Annual General Meeting). M/s Salve & Co., have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 141 of the Companies Act, 2013.

Your Directors request you to ratify the appointment of M/s Salve & Company, Chartered Accountants (Registration No.109003W) as Statutory Auditors of the Company at the ensuing 12th Annual General Meeting and to fix their remuneration.

COST AUDITOR

Pursuant to Section 141 & 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s S. K. Phatak & Co. to audit the cost accounts of the Company for the financial year 2014- 15. The members have given the approval for the appointment of M/s S.K. Phatak as cost auditors for the financial year 2014- 15 in the Elevanth AGM held on 11th September, 2014.

Your Directors had, in accordance with the General Circular from the Ministry of Corporate Affairs appointed M/s S. K. Phatak & Co., Cost Accountants, as Cost Auditors for Financial Year ended 31st March, 2015, for which Central Government approval had been received by the Company. The report on Cost audit for Financial Year ended 31st March, 2015 would be filed with Central Government before 30th September, 2015.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s P. S. Channe & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for financial Year 2014-15. M/s P S. Channe & Co., have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 141 of the Companies Act, 2013. The Report of the Secretarial Audit Report is annexed herewith as Annexure-7. There are no qualifications or observations or remarks made by Secretarial Auditor in his report.

DECLARATION BY INDEPENDENT DIRECTORS:

Shri A. S. Kapre, Shri M. B. Thaker, Shri Mohan S. Adige, Shri K. A. Pardhi and Mrs. Champaka Rangachari are Independent Directors on the Board of your Company. In the Opinion of the Board and as confirmed by the these Directors, they fulfill the conditions specified in Section 149 of the Companies Act, 2013 and the rules made thereunder about their status as Independent Directors of the Company

DIRECTORS:

Mr. N. D. Saraf and Mr. Anurag Saraf shall retire by rotation at the ensuing 12th Annual General Meeting and, being eligible, offer themselves for re-appointment in accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company

The Company has formulated a code of conduct for all members of the Board and Senior Management Personnel. All concerned members/executives have affirmed compliance with the said code.

The Board of Directors had appointed Mrs. Champaka Rangachari as Additional Directors of the Company in the category of Independent Directors with effect from March 30, 2015 The above mentioned appointment is regularized in this Annual General Meeting of the Company. Information about the Directors proposed to be appointed / reappointed as stipulated under Clause 49 of the listing agreement with the Stock Exchange in India are provided in the report on Corporate Governance forming part of this report.

Shri M. D. Saraf resigned as Managing Director of the Company with effect from the close of business hours on 25th May, 2015 and continues to be the Vice Chairman and Director of the Company

The Board has placed on record its appreciation for the outstanding contributions made by Mr. Rajkamal Rao and Mr. Arye Berest during their tenure.

KEY MANAGERIAL PERSONAL:

Shri C. V Raghavan, the Chief Finance Officer and Shri Amit G. Pandey, the General Manager(Legal) and Company Secretary have resigned from the service of the Company with effect from the close of business hours on 1st June, 2015.

NOMINATION AND REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

AUDIT COMMITTEE

Audit Committee of the Company comprises of Mr. A. S. Kapre, Mr. M. B. Thaker, Mr. M. S. Adige and Mr. Anurag Saraf, Except Mr. Anurag Saraf, who is a Promoter Director of the Company, rest all members of the Audit Committee are Independent Directors. The committee has been constituted in strict compliance with the provisions of Clause 49 of the Listing agreement and assumes all responsibilities provided therein, discharging their duties diligently with transparency and accountability as their sole motivation.

You are requested to appoint Auditors for the current year and to fix their remuneration.

AUDITOR'S REPORT

The report by Auditors if self explanatory. Further, in view of consensus lockout at plant and preparation of Accounts on going concern basis, the Auditors have made some observations under "Emphasis of matter appearing in the Auditors Report which management has responded in Note (b) and 28 to the Audited Financial Statements for the year ended 31st March, 2015

PARTICULARS OF EMPLOYEES

In terms of the provisions of section 197(12) of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. Having regard to the provisions of section 136 of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company

DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATION COMMITTEE:

The Company has constitute a Nomination & Remuneration Committee under Clause 49 of the Listing Agreement & Company has Nomination & Remuneration Policy for appointment and remuneration of Directors Under Section 178 of the Companies Act, 2013 an Clause 49 of the Listing Agreement. All the appointments of Directors is as per the Nomination & Remuneration Policy of the Company, which were also approved by the Committee.

DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT:

The Company have adopted the Vigil Mechanism Policy for the Company in its duly held Board Meeting on 14th February, 2015 and the same is available on the website of the Company.

DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE

Company has not issued any share under ESOP or Sweat Equity Shares during the year.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORK PLACE (PREVENTION , PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy for Prevention of Sexual harassment in accordance with the requirements of the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013. All employees (Permanent, Contractual, temporary, trainees) are covered under this policy. The Company did not receive any complaint during the year 2014-15.

ACKNOWLEDGEMENTS

Directors of the Company wish to thank the Central and State Governments for their continued support and co-operation extended towards the business as well as the company’s social functions. The Management also thanks the shareholders, Business Associates, Financial Institutions & Banks, Customers and Suppliers for the faith reposed in the Company. The Board expresses its sincere appreciation to the dedicated and committed team of employees and workmen of your Company.

Customers and Suppliers for the faith reposed in the Company. The Board expresses its sincere appreciation to the dedicated and committed team of employees and workmen of your Company.

On behalf of Board of Directors,

Vinod Saraf Anurag Saraf Managing Director Director

Nagpur Dated : 5th August, 2015

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Mar 31, 2013

TO THE MEMBERS

The Directors submit the TENTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS:

For the year For the Previous ended year ended 31.3.2013 31.3.2012 (Rs in lacs) (Rs in lacs)

Gross Profit / (Loss) (2395.74) (348.16)

Depreciation / Amortization 548.56 543.42

Adjustments relating to earlier years 22.16 (25.26)

(2966.46) (866.32)

Provision /(Credit) for MAT/FBT/DEF.TAX / WT (465.60) 0.18

Profit/(Loss) after tax for the year (2500.86) (866.50)

OVERALL PERFORMANCE:

The year 2012-2013 did not see any substantial increase in demand of special alloy steel and remained absolutely flat as compared to 2011 - 12 but at the same time, there was decreasing trend in the production levels as compared to 2011-12. This was mainly due to availability of steel at cheaper prices as a result of cut throat competition from Blast Furnace route producers and also others with backward integration facilities like sponge iron and captive power units. The automobile industry continues to reel under low demand due to higher interest cost and increase in fuel prices. The relief automobile industry expected from Government of India also did not materialize and as such there was very subdued demand for all type of vehicles during the year 2012-13 resulting in lower demand.

On the production level, the production of Steel Melting Shop decreased by around 7000 MT as compared to 2011-12 and Rolling Mill Shop production was almost down by 14000 MT during the current financial year compared to the previous year. The conversion of outside parties also dropped drastically since competitors'' steel plants were lying idle and they did not have semi-finished products for doing conversion at our end. Further since Capital equipment industry was also affected badly, there was a considerable drop in production of Forge Shop by about 1500 MT in 2012-13 compared to 2011-12. The already deteriorating situation became more precarious in the 3rd quarter of 2012-13 paving way for mounting losses and Company was forced to look at continuation of operations.

On the sales front, there was a decrease of 18% in sales turnover on indigenous sales compared to previous year and decrease of 60% in forged product sales. Inspite of domestic sales downward trend, the company could maintain the export turnover similar to that of previous year, thereby minimizing the losses to certain extent.

Your company witnessed rare occasion in its lifetime when all the workers and staff of the company gave their full support to the management to declare lockout for closing down the production activities in the absence of adequate productions orders with a noble intent to save the losses that the company would suffer by keeping its operations continued. The Company declared consented lock out with Workers Union beginning from 7th January, 2013 in a phased manner to curtail future losses. Due to Depressed market conditions coupled with lower production levels, the company has posted a loss of Rs.25.01 Crores during the year 2012-13.

The Management on its part filed an application with CDR Cell, Mumbai for Corporate Debt Restructuring after preparing a road map where it is envisaged that company shall now concentrate on forged products in Oil & Gas, Nuclear Power equipments and Power sector in addition to increasing the export performance from present level of 400 MT per month to 1400 MT per month during the next two years. The Company is pleased to inform that CDR package has been approved by the Consortium Bankers and various requirements are being complied with to restart the Plant at the earliest.

DIVIDEND:

In the absence of profit, your directors are unable to declare any dividend for the year 2012-2013.

CORPORATE DEBT RESTRUCTURING:

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

FUTURE PROSPECTS:

With the restructuring of its debt and implementation of the revival package approved by the CDR Cell your company believes that it will gradually be able to revive its operations towards profitability. Your company has been extremely fortunate to have full support of its employees during the lock-out period and all efforts are being made to garner support from the customers of the company as well when the operations of the company are revived. Although, huge efforts would be required towards regaining the confidence of the customers once the operations are restarted, your company is hopeful and confident that the same would be done over a period of time based on continued and sustained quality supply of material coupled with prompt and efficient customer service.

Looking into stiff competition from the blast furnace manufacturers and overall slowdown in the automobile sector, production of general grades of alloy steel, which was done earlier, has become unviable for the company and as a result your company has decided to give major thrust towards export of niche products and manufacture of specialty steel which is currently being imported in the country. More focus will also be given towards products which can give faster realization in terms of money and reduced the inventory carrying cost. Further, the company also plans to stage wise increase the production of its forged round bars and diversify into special shapes and sizes of forged products as per the requirement of the customers. With the combined strategy of increasing exports, catering to domestic market in niche segment to substitute imports and increasing sales of forged products in the open die segment, your company hopes to achieve better results in future.

REPORTING TO BOARD OF INDUSTRIAL AND FINANCIAL RESTRUCTURING (BIFR):

As per the Audited Accounts of the Company for the year ended 31st March, 2013, the accumulated losses of the Company as at the end of the said period amounting to Rs.4747.81 lacs have resulted in erosion of more than 50% of its peak net worth of Rs.5343.24 lacs during the present year as well as immediate preceding four financial years.

In terms of Section 23 of the Sick Industrial Companies (Special Provision) Act, 1985, the Company falls under the category of potentially sick industrial company and therefore the fact is required to be reported to Board of industrial and Financial Restructuring (BIFR) within 60 days from the date of finalization of the audited accounts. A report on causes of erosion of net worth and steps taken by the Company is forming part of the notice of AGM.

FINANCE:

The Company'' s financial requirements have been significantly restructured under the CDR package. The letter of credit (LC) devolved by the company have been converted into term loans repayable in yearly installments over period of 8 years and fresh term loans have been granted by the banks towards capital investment for procurement of balancing equipments and pollution control equipments required to be installed in its mini steel plant. Further, to accelerate revival of the operations of the company, lenders/ bankers have agreed under the CDR mechanism to grant working capital limits to the company at reduced interest rates then the prevailing bank rates. The promoters of the Company, to avoid complete erosion of net worth, granted their consent for conversion of Inter Corporate Deposit (ICD) worth Rs.7.78 crores into 5% Redeemable Cumulative Preference Shares, as a result of which the total paid up shares capital of the Company got increased from Rs.45.65 crores to Rs.53.43 crores during the last quarter of the financial year 2012-2013.

COST AUDITOR:

The Board of Directors on recommendation of the Audit Committee has appointed Mr. Shridhar K. Phatak, a Practicing Cost Accountant, as Cost Auditor of the company for the financial year 2013-14 to carry out cost audit of the company'' s Mini Steel Plant situated at Nagpur. Necessary approval of the Central Government in respect of appointment of Mr. Shridhar K. Phatak as Cost Auditor of the Company has been received by the Company. As required under the provisions of Section 224(1B) read with Section 233 (B)(2) of the Companies Act, 1956, the Company has obtained written confirmation from Mr. Shridhar K. Phatak to the effect that he is eligible for appointment as Cost Auditor under Section 233B of the Companies Act,1956. The Audit Committee has also received a certificate from the Cost Auditor certifying his independence and arm'' s length relationship with the Company. The report on Cost Audit for Financial Year ended 31st March, 2012 was filed on 24th January, 2013 and in respect of Financial Year ended 31st March, 2013 would be filed with Central Government before 30th September, 2013. Further, your Directors have appointed M/s S.K. Phatak & Co., Cost Accountants as Cost Auditors of the Company for Financial Year ended 31st March, 2014 as well subject to the approval of the Central Government.

INDUSTRIAL RELATIONS:

The Overall Industrial Relations in the Company during the entire financial year remained cordial. The company with the support of all its employees including workers and staff members was able to declare consensus lock-out w.e.f 7th January, 2013 in its mini steel plant for closing down the production activities of the company in phased manner due to absence of adequate productions orders and to avoid further losses. Support given by all employees for reducing the losses of the company, by keeping the plant closed, in the larger interest of the company shows the maturity and sense of ownership and affection each employee carries for the company and the Directors deeply acknowledges and appreciates the same.

DIRECTORS:

Mr. Anurag Saraf, Mr. M. B. Thaker and Mr. A. S. Kapre, Directors of the Company, retire by rotation at the ensuing Annual General Meeting, and being eligible offer themselves for re-appointment.

Mr. Anurag Saraf tendered his resignation from the Executive post of Joint Managing Director and his resignation was duly approved by the Board of Directors in their meeting held on 14th March, 2013. However, he continues to remain a Director on the Board of the Company. Mr. Vibhu Bakhru resigned from Directorship of the Company w.e.f. 9th April, 2013 consequent to he being appointed Hon'' ble Judge of the Delhi High Court. The Board has placed on record its sincere appreciation of the services rendered by Mr. Vibhu Bakhru and Mr. Anurag Saraf during their tenure as Director and Joint Managing Director of the Company respectively.

The Company has formulated a Code of Conduct for all members of the Board and Senior Management Personnel. All concerned Board members / executives have affirmed compliance with the said Code.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217 (2AA) of Companies Act, 1956, your Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

ii) They have, in selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonably and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31s March, 2013 and of the loss of the Company for the year ended on that date;

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

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

AUDITORS:

M/s Salve & Company, Chartered Accountants retire as Statutory Auditors of the Company at the ensuing Annual General Meeting and have given their consent for re-appointment as the Statutory Auditors of the Company for the year 2013-14. Pursuant to the provision of Section 224(1B) of the Companies Act, 1956, the Company has obtained written consent from the above auditors that their re- appointment if made, would be in conformity with the limits specified in the said section.

AUDITOR''S REPORT:

With reference to the comments made by the Auditor in his Report, the Directors wish to state that the relevant notes forming part of the Company''s Accounts are self-explanatory and hence do not require any further explanation from the Board.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure `A'' which forms part of this Report. PARTICULARS OF EMPLOYEES:

During the year under review there were no employees receiving remu- neration of or in excess of Rs.60,00,000/- per annum or Rs.5,00,000/- per month requiring disclosure as per the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975. CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing agreement with the Stock Exchange, a Management Discussion and Analysis Report, Corporate Governance Report and Auditor'' s Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. ACKNOWLEDGEMENT AND APPRECIATION: Your Directors wish to express their appreciation for the continued support and co-operation received from Central and State Government, Financial Institutions, Banks, Customers, Suppliers and the Shareholders of the Company. The Directors also appreciate the value and contributions made by every employee of the company in the operations of the company and deeply acknowledge the support and sacrifices made by the employees of the company during the lock-out period.

On behalf of Board of Directors,

M.D.Saraf Vinod Saraf

Vice-Chairman & Managing Director Managing Director Nagpur

Dated: 29th May, 2013

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Mar 31, 2012

The Directors submit the NINTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS:

For the For the Previous year ended year ended 31.3.2012 31.3.2011 (Rs. in lacs) (Rs in lacs)

Gross Profit / (Loss) (348.16) 334.27

Depreciation / Amortization 543.42 547.80

Adjustments relating to earlier years (25.26) (130.87)

(86632) (82.66)

Provision /(Credit) for MAT/FBT/DEF.TAX/WT 0.18 271.34

Profit/(Loss) after tax for the year (866.50) (354.00)

OVERALL PERFORMANCE:

The year 2011-12 did not see much increase in domestic demand of special alloy steels as compared to 2010-11 However, there was an increase in export demand by almost 18% in 2011-12 as compared to 2010-11. The competition continued to grow with most of the Steel Plants coming up with Blast Furnaces, Sponge Iron and Captive Power units thereby affecting the demand supply situation and the net realization to the company. The increased interest rate affected the sales of Auto industries that started looking at various sops and incentives from the Govt. to keep the momentum of production and sales.

On the production level in 2011-12 the production of Steel Melting Shop (SMS) was lower by almost 4000 Tons and that of Rolling Mill was lower by 2000 MT as compared to 2010-11, however, in Forge production there was an increase by almost 200 MT as compared to 2010-11. The most encouraging feature in Forged segment was that sales increased by almost 18% and Exports also increased by 15%. The Working capital requirement increased with increase in input cost whereas there was no equivalent increase in Steel prices. The development of new products continues to remain a major thrust for the company for critical end applications and import substitution which gave higher realization.

The stiff competition coupled with sluggish economic conditions has had adverse impact on the working of the company, which has resulted in company posting a net loss of Rs. 866.50 lacs for the year 2011-12.

DIVIDEND:

In the absence of profit, your directors are unable to declare any dividend for the year 2011-2012.

PROSPECTS:

The Indian economy is facing a very challenging environment and the GDP growth rate is constantly on decline which is not a good sign for domestic market, further the value of Indian Rupee has also declined in the currency market which has made imports dearer and export attractive. In order to ensure better returns your company now

is focusing more on exports of its products and also tapping domestic market for substituting imports of niche products, where margins are expected to be higher with less competition from domestic steel plants. In order to achieve desired results your company has entered into an agreement for long term co-operation with M/s INTECO Special Melting Technologies GMbh, (INTECO) a company based in Austria, Europe, which specializes in transfer of technology for alloyed and special steel, including special melting technology, Secondary Metallurgy, forging, Heat Treatment and supply of relevant equipments relating to steel making.

You company has also entered into the open die forged products material in a big way thereby increasing the customer's base and product range in 2011-12. In the year under review several new products that meet the requirement of high end Automobile applications, energy and oil and gas sector have been added. The company is constantly exploring business opportunity in these markets and is being recognized as a reputed manufacturer.

The company also diversified into special shapes and sizes of forged products as per the requirement of customers.

With the combined strategy of increasing export, catering to domestic market in niche segment to substitute imports and increasing sales of forged products in the open die segment, your company hopes to achieve better results in future.

FINANCE:

The Company has not accepted any fixed deposit from the public during the year under review. However, continued losses posted by the company for the consecutive third year has considerably affected the fund flow of the company. In order to improve the net worth of the company Inter-corporate Deposit (ICD) worth Rs.10 Crores belonging to Promoter Group entities was converted into 5% Redeemable Cumulative Preference Shares during the year under review. Further, steps are being taken by the Company to effectively manage the finances and it is expected that with the improvement in the production level the finance position of the company will also stabilize.

COST AUDITOR:

The Board of Directors on recommendation of the Audit Committee has appointed Mr. Shridhar K. Phatak, a Practicing Cost Accountant, as Cost Auditor of the company for the financial year 2012-13 to carry out cost audit of the company's Mini Steel Plant situated at Nagpur. Necessary approval of the Central Government in respect of appointment of Mr. Shridhar K. Pathak as Cost Auditor of the Company has been received by the Company. As required under the provisions of Section 224(1B) read with Section 233 (B)(2) of the Companies Act, 1956, the Company has obtained written confirmation from Mr. Shridhar K. Phatak to the effect that he is eligible for appointment as Cost Auditor under Section 233B of the Companies Act,1956. The Audit Committee has also received a certificate from the Cost Auditor certifying his independence and arm's length relationship with the Company.

INDUSTRIAL RELATIONS:

The overall industrial relations in the Company were cordial during the year.

DIRECTORS:

Mr. N. D. Saraf and Mr. Vibhu Bakhru, Directors of the Company, retire by rotation at the ensuing Annual General Meeting, and being eligible offer themselves for re-appointment.

Mr. G.L.N. Sastry, Nominee Director, Bank of India, ceased to be director on board of the company w.e.f. 30th June, 2011 consequent to his retirement from service of the bank of India on achieving superannuation. Mr. P. K. Kukde resigned from Directorship of the Company w.e.f. 7th November,2011. The Board has placed on record its sincere appreciation of the services rendered by Mr. G. L. N. Sastry and Mr. P. K. Kukde during their tenure as Directors of the Company.

During the year Mr. Mohandas S. Adige & Mr. Rajkamal Rao were appointed Additional Directors by the Board of Directors of the Company under Article 107 of the Articles of Association of the Company w.e.f 07.11.2011 & 06.02.2012 respectively. The Additional Directors hold office under the said Article and Section 260 of the Companies Act, 1956 up to the date of ensuing Annual General Meeting. The Company has received notices from members under section 257(1) of the Companies Act, 1956, signifying their intention to propose candidature of Mr. Mohandas S. Adige & Mr. Rajkamal Rao, for the office of Directors of the Company at the forthcoming Annual General Meeting. The Company has formulated a Code of Conduct for all members of the Board and Senior Management Personnel. All concerned Board members / executives have affirmed compliance with the said Code.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217 (2AA) of Companies Act, 1956, your Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

ii) They have, in selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonably and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on that date;

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

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

PRESENTATION OF FINANCIAL RESULTS:

Pursuant to Notification dated 28th February, 2011 issued by the Ministry of Corporate Affairs, the format for disclosure of financial statement prescribed under Schedule VI to the Companies Act, 1956 has been substantially revised. The financial results of the Company for the year ended 31st March, 2012 have, therefore, been disclosed as per the revised Schedule VI. Previous year's figures have also been restated to confirm with the current year's presentation.

AUDITORS:

M/s Salve & Company, Chartered Accountants retire as Statutory Auditors of the Company at the ensuing Annual General Meeting and have given their consent for re-appointment as the Statutory Auditors of the Company for the year 2012-13. Pursuant to the provision of Section 224(1 B) of the Companies Act, 1956, the Company has obtained written consent from the above auditors that their re- appointment if made, would be in conformity with the limits specified in the said section.

AUDITOR'S REPORT:

With reference to the comments made by the Auditor in his Report, the Directors wish to state that the relevant notes forming part of the Company's Accounts are self-explanatory and hence do not require any further explanation from the Board.

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

The statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure 'A' which forms part of this Report.

PARTICULARS OF EMPLOYEES:

During the year under review there were no employees receiving remuneration of or in excess of Rs. 60,00,000/- per annum or Rs.5,00,000/- per month requiring disclosure as per the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975.

CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing agreement with the Stock Exchange, a Management Discussion and Analysis Report, Corporate Governance Report and Auditor's Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report.

ACKNOWLEDGEMENT AND APPRECIATION:

Your Directors wish to express their appreciation for the continued support and co-operation received from Central and State Government, Financial Institutions, Banks, Customers, Suppliers and the Shareholders of the Company. The Directors also appreciate the value and contributions made by every employee of the company in the operations of the company.

On behalf of Board of Directors,

Vinod Saraf Anurag Saraf

Nagpur Managing Director Jt. Managing Director

Dated : 14th August, 2012

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Mar 31, 2011

TO THE MEMBERS

The Directors submit the EIGHTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2011.

FINANCIAL RESULTS:

For the For the year ended year ended 31.3.2011 31.3.2010 (Rs in lacs) (Rs in lacs)

Gross Profit /(Loss) 335.16 (192.85)

Depreciation /Amortization 547.80 397.11

Adjustments relating to earlier years (130.87) (3.22)

(81.77) (586.74)

Provision/(Credit) for 272.23 72.73 MAT/FBT/DEF. TAX/ WT

Profit/(Loss) after tax (354.00) (659.47) for the year

OVERALL PERFORMANCE:

The year 2010-11 saw increase in domestic demand as compared to 2009-10 and there were increased orders from Automobile and Non automobile sectors. The competition grew with more Steel Plants coming up especially with backward integration route with Blast Furnaces, Sponge Iron and Captive Power, with lower rates which has affected our qualities and also net realization. There was an increase in raw material prices by almost 30% over the previous year which resulted in further increase in our working capital requirement to meet the targeted production. The production level in Steel Melting Shop remained almost the same i.e. 38585 MT as compared to 38715 MT of 2009-10. The Rolling Mill production was slightly higher at 36657 MT excluding conversion as compared to 33795 MT in 2009-10. However, there was reduction in the conversion tonnage which was at 17052 MT as compared to previous year’s 22251 MT. The most encouraging feature was increase in production of Forged Round Bars which almost doubled as compared to previous year as the stabilization period of Forging Plant was almost complete. In the Domestic Sales front the tonnage was lower due to steep competition from new Steel producers with backward integration. On the Export front the tonnage increased by almost 40% as European and U.S. markets opened up after a deep recession in 2008-09 and part of 2010.

The Working capital gap created by losses in the first half coupled with increase in working capital demand due to rising Raw Material prices created further problems in achieving targets, resulting in a net loss of Rs. 361 lacs in a Sales Turnover of Rs. 26814.06 lacs during the financial year 2010-11 as compared to net loss of 659.47 lacs in a Sales Turnover of Rs. 21954.58 lacs during the year 2009-10. Your company in order to tide over this situation has decided to focus over niche products by higher capacity utilization of Forging Plant. Looking into the market size and demand, your company in the financial year 2011-12 expects to achieve consistent production of 500 MT per month for the first six months and thereafter increase it production to 750 MT per month for the remaining part of the financial year. This is expected to give the required boost to the overall profitability level of the company.

DIVIDEND:

In the absence of profit, your directors are unable to declare any dividend for the year 2010-2011.

PROSPECTS:

Your company has entered into the Forged product material in a big way after receiving approval from following customers in 2009-10.

-M/s. Elecon Engineers, Gujarat -SIEMENS, Kharagpur -BHEL, Tirchy -Nuclear Power Corporation Limited -ThyssenKrup Industries, Pune -Sugar Industries -Defence Sector

Apart from normal shafts the company has entered into step shafts, Eccentric shafts, special shafts and dies.

-Your company has bagged order of approx., 12 crores from Ordnance Factory Ambajhari, Nagpur in Feb, 2011 which will be executed during the period April to September, 2011.

-Development of new products continues to remain a major thrust of your company for critical end applications and import substitution.

-Number of special grades were developed during the year both for Domestic and Export market.

With the Indian economy maintaining its growth momentum by posting 8.6% growth for the year under review and the auto industry in good shape the outlook for Special and Alloy Steel industry is expected to be good ahead.

FINANCE:

The Company has not accepted any fixed deposit from the public during the year under review. During the year the promoters of the company were allotted 15,00,000 5% Redeemable Cumulative Preference Shares of Rs. 100/- each by converting their interest bearing ICD of equivalent amount. This has not only reduced the debt and interest burden of the company but has also improved the net worth of the company, which got significantly eroded due to continued losses posted by the company during the last three years. In order to enable the company to convert the ICD into Preference shares the Authorised Share Capital of the Company has also been increased from Rs. 30 crores to Rs. 40 crores. The Authorised Share Capital of the Company now constitutes of Equity shares of Rs. 25 crores of Re. 1/- each and 5% Redeemable Cumulative Preference Shares of Rs.15 crores having a face value of Rs. 100/- each.

COST AUDITOR:

The Directors have appointed Mr. Shridhar K. Phatak, a practicing Cost Accountant, as Cost Auditor for the financial year 2011-12 for the Company’s Mini Steel Plant at Nagpur for which Central Government’s approval has also been obtained.

INDUSTRIAL RELATIONS:

The overall industrial relations in the Company were cordial during the year.

DIRECTORS:

Mr. Anurag Saraf, Mr. M. B. Thaker and Mr. Arye Berest, Directors of the Company, retire by rotation and, being eligible offer themselves for re-election. Mr. G.L.N. Sastry ceased to be Nominee Director for Bank of India in the Board of the Company w. e. f. 30th June, 2011 consequent to his retirement from the Bank upon attending superannuation. Subject to approval of the shareholders in the General Meeting, the Board of Directors has re-appointed Mr. N. D. Saraf and Mr. Anurag Saraf as Whole-time Director and Joint Managing Director of the company, respectively, for a further period of 5 years. Necessary resolution in respect of their re-appointment has been commended for approval of the Shareholders in the Notice of the ensuing Annual General Meeting of the Company.

The Company has formulated a Code of Conduct for all members of the Board and Senior Management Personnel. All concerned Board members / executives have affirmed compliance with the said Code.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217 (2AA) of Companies Act, 1956, your Directors confirm that:

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

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

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

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

AUDIT COMMITTEE:

The Audit Committee formed by the Board of Directors of the Company consists of Mr. A.S. Kapre, Mr. M. B. Thaker, who are Non-Executive Independent Directors of the Company, and Mr. Vinod Saraf who is Managing Director. Mr. A.S. Kapre is its Chairman. The committee's role, terms of reference and the authority and powers are in conformity with the requirements of the Companies Act 1956 and the Listing Agreement.

AUDITORS:

You are requested to appoint Auditors for the current year and to fix their remuneration. M/s Salve & Company, Chartered Accountants hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received the requisite Certificate pursuant to Section 224 (1B) of the Companies Act 1956 regarding their eligibility for reappointment as Auditors of the Company.

AUDITOR'S REPORT:

With reference to the comments made by the Auditor in his Report, the Directors wish to state that the relevant notes forming part of the Company's Accounts are self-explanatory and hence do not require any further explanation from the Board.

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

The statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure `A' which forms part of this Report.

PARTICULARS OF EMPLOYEES:

During the year under review there were no employees receiving remu- neration of or in excess of Rs.60,00,000/- per annum or Rs.5,00,000/- per month requiring disclosure as per the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975.

CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing agreement with the Stock Exchange, a Management Discussion and Analysis Report, Corporate Governance Report and Auditor’s Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report.

ACKNOWLEDGEMENT AND APPRECIATION:

Your Directors acknowledge the support and co-operation received from Central and State Government, financial Institutions, Banks, Customers, Suppliers and the Shareholders of the Company and expresses its sincere gratitude to them for their valuable support. The Directors also appreciate the value and contributions made by every employee of the company in the operations of the company.

On behalf of Board of Directors,

M. D. SARAF Vice- Chairman & Managing Director

VINOD SARAF

Managing Director

Place : Nagpur Dated : 29th July, 2011

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Mar 31, 2010

The Directors submit the SEVENTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS:

For the For the

year ended year ended

31.3.2010 31.3.2009

(Rs in lacs) (Rs in lacs)

Gross Profit / (Loss) (192.85) (42.85)

Depreciation / Amortization 397.11 371.08

Adjustments relating to earlier years (3.22) 6.93

(586.74) (420.86)

Provision/(Credit) for MAT/FBT/DEF. TAX/ WT 72.73 106.52

Profit/(Loss) after tax for the year (659.47) (527.38)



OVERALL PERFORMANCE:

The global recession which started from October 2008 onwards continued in the first two Quarters of financial year 2009-10. The Domestic demand improved towards the middle of the year with the automobile sector cautiously increasing orders on steel producers, however, not letting the inventories at their end increase like in Pre- Oct 2008 period. At the same time many new steel plants started producing with facilities like Blast Furnaces and Coke Ovens. The companies which did not have their rolling facilities commissioned, did so towards the middle of the year. This resulted in the market being far more competitive than the previous year. Your company therefore could not avail full benefits of the improved automobile market. On the export front, improvement was even slower with USA showing some signs of improvement toward the end of the year and Europe showing none. Exports therefore were below expectations. Raw material prices increased twice in the year, first during the Oct-Dec 2009 period and thereafter towards the end of the financial year. Your company had to face adverse situation on both occasions as the price increases obtained from the automobile sector were not immediate whereas the Raw Material prices had to be conceded as per market forces.

The working capital gap created by losses in the first half coupled with increase in working capital demand due to rising Raw Material prices created further problems in achieving targets, resulting in a net loss of Rs. 659 lacs in a Sales Turnover of Rs 21954.58 lacs during the financial year 2009-10 as compared to a net loss of Rs 527 lacs in a Sales Turnover of Rs. 36510.70 lacs during the 2008-2009.

Your company in order to tide over this situation has decided to give more focus on development and utilization of capacity of forged products. The companys forging plant has started commercial production and approvals from most of its customers were also secured through trials. Your company is hopeful that this will bring stability in the operations of the company and reduce dependency of the company in the automobile sector.

DIVIDEND:

In the absence of profit, your directors are unable to declare any dividend for the year 2009-2010.

PROSPECTS:

In order to face a situation with stiff competition in automobile market and lack of backward integration facilities your company is taking the following steps:

- Your company will enter Forged Product market catering to Engineering, Energy, Nuclear, Railways, Defense, Cement and sugar Industry sectors. Forgings will be supplied to these sectors in as forged; heat treated and proof machined conditions. All efforts are being put to diversify from the common straight shaft market to stepped shafts, eccentric shafts, dies and special shapes. At the same time, stress is being put to be in specialised grades like stainless and tool steels rather than Carbon and low alloy steels. Initial modest level of production of 250 MT/month will be ramped to 1000 MT/month in about 2 years.

- A tie up with equity participation in Wardha Power Company Ltd., a company in the field of captive Power manufacturing will enable your company to procure cheaper electricity under open access policy of Maharashtra Electricity Regulatory Commission from October 2010 onwards. This will reduce energy cost and overall cost of production.

- Product development shall remain a major thrust of your company looking for niche products and import substitutions. Special grade development continues to be a major requirement of most export markets despite recession and the same shall be tapped to improve margins.

The above steps will be coupled with cost reduction and product mix optimisation in order to give your company competitiveness within the constraints of working capital and high cost of borrowing. The export market is expected to pick up this year after the exceptionally long recession period and this will enable your company to improve profitability. The forging products will add to the long products to improve export tonnage. Your company expects that the above steps would bring your company back in track and 2010-2011 would be a turnaround year for the company.

FINANCE:

The Company has not accepted any fixed deposit from the public during the year under review. However, continued losses posted by the company for the consecutive second year has considerably affected the fund flow of the company. Various steps are being taken by the Company to effectively manage the finances and it is expected that with the improvement in the production level the finance position of the company will also stabilize.

COST AUDITOR:

The Directors have appointed Mr. Shridhar K. Phatak, a practicing Cost Accountant, as Cost Auditor for the financial year 2010-11 for the Companys Mini Steel Plant at Nagpur for which Central Governments approval has also been obtained.

INDUSTRIAL RELATIONS:

The overall industrial relations in the Company were cordial during the year.

DIRECTORS:

Mr. A. S. Kapre, Mr. P. K. Kukde and Mr. Vibhu Bakhru, Directors of the Company, retire by rotation and, being eligible offer themselves for re-election. The Company has formulated a Code of Conduct for all members of the Board and Senior Management Personnel. All concerned Board members / executives have affirmed compliance with the said Code.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217 (2AA) of Companies Act, 1956, your Directors confirm that:

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

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

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

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

AUDIT COMMITTEE:

The Audit Committee formed by the Board of Directors of the Company consists of Mr. A.S. Kapre, Mr. M. B. Thaker, who are Non-Executive Independent Directors of the Company, and Mr. Vinod Saraf who is Managing Director. Mr. A.S. Kapre is its Chairman. The committees role, terms of reference and the authority and powers are in conformity with the requirements of the Companies Act 1956 and the Listing Agreement.

AUDITORS:

You are requested to appoint Auditors for the current year and to fix their remuneration. M/s Salve & Company, Chartered Accountants hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received the requisite Certificate pursuant to Section 224 (1B) of the Companies Act 1956 regarding their eligibility for reappointment as Auditors of the Company.

AUDITORS REPORT:

With reference to the comments made by the Auditor in his Report, the Directors wish to state that the relevant notes forming part of the Companys Accounts are self-explanatory and hence do not require any further explanation from the Board.

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

The statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure `A which forms part of this Report.

PARTICULARS OF EMPLOYEES:

During the year under review there were no employees receiving remu- neration of or in excess of Rs.24,00,000/- per annum or Rs.2,00,000/- per month requiring disclosure as per the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975.

CORPORATE GOVERNANCE:

Pursuant to Clause 49 of the Listing agreement with the Stock Exchange, a Management Discussion and Analysis Report, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report.

ACKNOWLEDGEMENT AND APPRECIATION:

Your Directors place on record their gratitude for the support and cooperation received from Central and State Governments, Financial Institutions & Banks, Customers, Suppliers and Shareholders for their continued support. The Board also expresses its sincere and special appreciation to the dedicated and committed team of employees and workmen of the company who have wholeheartedly supported the management of the company.

On behalf of Board of Directors,

Place : Nagpur N.D.SARAF

Dated : 26th July, 2010 CHAIRMAN & WHOLETIME DIRECTOR