Directors Report of Mideast Integrated Steels Ltd.

Mar 31, 2024

The Directors are pleased to present 31^stAnnual Report and the Statements of Accounts for the financial year
ended on March 31, 2024.

1. FINANCIAL SUMMARY AND HIGHLIGHTS

The Company’s financial performance for the year ended March 31, 2024 along with previous year’s figures is
given hereunder:

(Rs. In Mn)

	Standalone		Consolidated
Particulars	2023-24	2022-23	2023-24	2022-23
Gross Sales	600.71	201.03	7931.18	9443.47
Other Income	1213.02	112.88	1226.85	305.99
Profit/(Loss) Before Finance Cost &Depreciation	998.27	(1437.52)	1354.25	(548.81)
Interest/ Finance Cost	42.24	29.95	385.30	502.12
Depreciation	358.98	361.41	653.56	660.75
Profit/(Loss) before Tax	589.39	(1441.20)	266.69	(1937.98)
Tax Expense	10.76	0	(70.65)	16.05
Profit/(Loss) After Tax	600.15	(1441.20)	196.04	(1954.03)
Appropriations / Adjustments	8.10	3.68	48.70	226.31
Balance of profit / (loss) brought forward	1168.59	2609.79	(720.78)	1231.19
Profit for the year	600.15	(1441.20)	195.45	(1951.98)
Re-measurement gains/(losses) on defined benefit plans	-	-		-
Proposed Final dividend		-		-
Profit carried to the Balance sheet	1768.73	1168.59	(525.34)	(720.78)

2. FINANCIAL PERFORMANCEHIGHLIGHTS

Standalone Operations:

During the year under review, the Company’s net revenue from operations was Rs. 510.30million as against Rs.
170.02million in the previous financial year. The Company’s Profit/(Loss) before Depreciation Interest and Tax
(“PBDIT”) is Rs. 998.27million in the financial year ended 31st March, 2024 as opposed to PBDIT of Rs
(1437.94)Million in the immediate previous financial year.

Taking into account depreciation and interest cost, profit/ (Loss) before tax (PBT) stood at Rs. 589.39million as
against Rs.(1441.20)Million in the previous financial year and total comprehensive income for the year was Rs.
600.15million as against Rs. (1441.20)Million in the previous financial year.

Consolidated Operations:

During the year under review, the Company’s net revenue from operations was Rs. 7840.78million as against Rs.
8027.75million in the previous financial year. Further, in the financial year ended 31st March, 2024, profit before

tax (PBT) was Rs. 315.39million as against Rs. (1711.67) Million in the previous financial year and profit after
tax (PAT) was Rs. 196.04million against Rs.(1954.03) Million in the previous financial year.

The performance and financial position of the subsidiary company is included in the consolidated financial
statements of the Company.

3. COMPANY’S WORKING DURING THE YEAR/ STATE OF COMPANY’S AFFAIRS

In financial year 2023-2024, the Sales increased by around 300% to Rs. 510.30million from Rs. 170.02million
in the previous financial year ended 2023. The plant of the company got shut down in December 2019 and thus
there were no manufacturing activities. The Company only got order from Supreme Court to sell the lying
stocks only. Company has earned a profitof Rs. 589.39million as compared to lossesof Rs. 1441.20million in
the previous financial year 2023.

4. SUBSIDIARY COMPANY

The Company has one wholly owned subsidiary namely Maithan Ispat Limited. A statement containing the
salient features of the financial statements of the subsidiary in the Form AOC-1 is attached with the financial
statements of the Company as per the requirement of Section 129(3) of the Companies Act, 2013.

Maithan Ispat Limited (MIL), the subsidiary company having billet and sponge iron plant was under shut down
since February 2019 as the Consortium of Banks had taken over possession of Company’s plant under
SARFAESI Act and no major business activities were there.

Maithan Ispat Limited entered into a One Time Settlement amounting to Rs. 175.00 crores with the Consortium
Banks and made payment of same and resumed its operations from January 2022.

During the year under review, the Companyearned revenue of Rs. 733.04 crores during the financial year ended
2023-24 as compared to revenue of Rs. 785.77 crores in the previous financial year. But due to various factors
there were operational losses of Rs. 28.16 crores during the year as compared tooperational losses amounting to
Rs. 27.41 crores during the previous financial year. The Company is hopeful to perform better in future.

5. CHANGE IN NATURE OF BUSINESS

During the year under review, there was no change in the nature of the business of the Company.

6. TRANSFER TO RESERVES

The Company has not transferred any amount to General Reserves during the Year.

7. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to regulations 34 of the Listing Regulations, Management’s Discussion and Analysis Report for the
year is presented in a separate section forming part of the Annual Report.

8. SHARE CAPITAL

During the year under review, there was no change in the Authorized Capital of the Company. On March 31,
2024, the Authorized Share Capital stood at Rs. 1800.00 million. There was no change in the Company’s issued,
subscribed and paid-up equity share capital during the year. On March 31, 2024, it stood at Rs. 1378.75 million
divided into 13,78,75,000 equity shares of Rs. 10/- each. The Company has neither issued shares with differential

rights as to dividend, voting or otherwise nor issued shares (including sweat equity shares) to the employees or
Directors of the Company, under any Scheme. No disclosure is required under Section 67(3)(c) of Companies
Act, 2013 in respect of voting rights not exercised directly by the employees of the Company as the provisions of
the said Section are not applicable.

9. DIVIDEND

The Company has not recommended any dividend for the financial year ended March 31, 2024.

10. ANNUAL RETURN

As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return
for Financial Year ended 2024 is in the prescribed Form No. MGT-9. The same is available on company website
www.mescosteel.com.

11. PUBLIC DEPOSIT

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

12. NUMBER OF MEETINGS OF THE BOARD

During the financial year 2023-24, the Board of Directors of the Company met 2 times i.e., on December 07,
2023 and March 30, 2024. Further, a separate Meeting of the Independent Directors of the Company was also
held on March 30, 2024.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134, sub-section 3(c) and sub-section 5 of the Companies Act, 2013,
the Board of Directors, to the best of their knowledge and ability, state and confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed with
no material departures;

ii. we 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 as on 31.03.2024and of the loss of the Company for the same
period;

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

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

v. we have laid down internal financial controls in the Company that are adequate and are operating
effectively; and

vi. we have devised proper systems to ensure compliance with the provisions of all applicable laws and
that these are adequate and are operating effectively.

14. DECLARATION OF INDEPENDENCE

The Company has received the necessary declaration from each Independent Director who is part of Board
confirming that;

i. They meet the criteria of Independence as laid out in Section 149(6) of the Companies Act, 2013 read
with the Schedules, rules made there under and Regulation 25 of SEBI Listing Regulations, 2015.

Independent Directors have also confirmed that they are not aware of any circumstances or situations,
which exist or may be reasonably anticipated, that could impair or impact their ability to discharge his
duties with an objective independent judgment and without any external influence and that they are
independent of the Management.

ii. Further, Independent Directors have complied with the Code for Independent Directors prescribed in
schedule IV of the Companies Act, 2013 (‘ACT’). Directors and senior management personnel have
complied with the code of conduct laid down by Board for all members of board of directors and
senior management of the listed entity. and

iii. Registered themselves with the Independent Directors’ Databank as per the Companies (Appointment
and Qualification of Directors) Fifth Amendment Rules, 2019.

15. NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of 3 Independent Directors as Members. One
meetingwas held during the financial year under review on March 30, 2024. More details on the committee are
given in the Corporate Governance Report.

16. NOMINATION AND REMUNERATION POLICY

Company’s Policy on Director’s Appointment and Remuneration including criteria for determining qualification,
positive attributes, independence of directors and other matters provided under section 178(3) of the Companies
Act, 2013, there has been no change in the Policy since the previous financial year. Given below is the link on
the website of company where in complete policy is placed
https://www.mescosteel.com/pdf/investor_misl/Policies/Nomination_Remuneration_Policy.pdf.

17. AUDITORS

a. StatutoryAuditors

At the 29th Annual General Meeting, the Members approved appointment of M/s Ashok Shyam & Associates,
Chartered Accountants (Firm registration No. 011223N) as Statutory Auditors of the Company to hold office for
a period of five years from the conclusion of that AGM till the conclusion of the thirty forth AGM to be held on
2027.

The Statutory Auditors have confirmed that they are not disqualified from continuing as the auditors of the
Company.

The Notes on financial statements referred to in the Auditor’s Report are self-explanatory and do not call for any
further comments. The Statutory Auditors have not reported any instance of fraud committed in the Company by
its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of
which needs to be mentioned in this Report.

Auditor Report was qualified for the Financial Year 2023-24. The replies to same were also given at given Point
No. 21. The statement on impact of audit qualifications for the financial year ended March 31, 2024 along with
Management''s replies thereon has been filed with BSE too.

b. Cost Auditor

Pursuant to section 148 read with Rule 3 & 4 of The Companies (Audit and Auditors) Rules, 2014, if a company
doesn’t have a turnover of Rs. 100 crores in the last preceding financial year then the cost audit is not

applicable.It is hereby informed that our turnover for the preceding financial year is less than Rs. 100 crores thus
cost audit is not applicable on us and we are not appointing cost auditor for FY 2024-25.

c. Secretarial Auditor

M/s Tripti Shakya & Company was appointed as Secretarial Auditor for the year 2023-24. M/s Tripti Shakya &
Company has issued the audit report in respect of the secretarial audit of the Company for the previous financial
year ended March 31, 2024. The Secretarial Audit Report is annexed as Annexure-A to this Report. Given
Below is the management’s reply on the observations made by the Secretarial Auditor in their Report.

Further for the financial year 2024-25, M/s Tripti Shakya & Company is appointed as Secretarial Auditor.

Observation No. 1:

In terms of Securities and Exchange Board of India Circular No. Cir/ISD/3/2011, the 100 percent Promoter’s
holding is to be in dematerialized form. Promoter holding is not in 100% Demat form.

Management’s Reply:

Company isinreceipt ofdeclaration from promoters that theshares which arenotindematform areeither pending
adjudication ofdisputebeforejudicial/quasi-judicial authorities or has been lost andsamewouldbedematted
oncethedisputeis resolved/settled”

Observation No. 2

The Company has made SEBI (Listing Obligations and Disclosure) Regulation 2015, as amended from time to
time but there has been delay in some compliances.

Management’s Reply:

The Company has made compliances with SEBI (Listing Obligations and Disclosure) Regulations 2015 but due
to unavoidable circumstances there was non-compliance with fewRegulations. Company is trying not to default
for same in future. Further there has been delay in filing of few compliances due to late receipt ofreports which
was filed later on with some delay and complied.

d. Internal Auditors

Pursuant to the provisions of Section 138 of theCompanies Act, 2013read withRule 13 of The Companies
(Accounts) Rules 2014 and based on the Audit Committee recommendations, the Board of Directors of the
Company has appointed Mr. Ranjit Kumar Barik, as the Internal Auditor of the Company for the financial year
2024-25.

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

19. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES & CONSOLIDATED
FINANCIAL STATEMENTS

During the year under review, the Company has only 1 (one) material unlisted subsidiary i.e., MaithanIspat
Limited. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard issued by the Institute
of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the
Financial Statements of its Subsidiary. Consolidated Financial Statements form part of this Annual Report.

Statement containing the salient features of the financial statement of the Company’s subsidiary in Form AOC-1
is enclosed as Annexure-B.

In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited
accounts of the Subsidiary Company on its website at www.mescosteel.com.

20. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, the Company entered into contracts or arrangements with related parties which
were in the ordinary course of business and on arm’s length basis. All related party transactions were placed
before the Audit Committee for review on quarterly basis. The details of the related party transactions as required
under Accounting Standard are set out in Notes to the standalone financial statements forming part of this
Annual Report.

There are no material transactions with the related parties except transactions which were approved by
Shareholders at 30th Annual General Meeting held on December 30, 2023, in accordance with Company’s
Related Party Transaction Policy and Regulation 23 of LODR Regulations. As required under Regulation 46 (2)
(g) of LODR, the Related Party Transaction Policy and Company’s Material Subsidiary Policy is disclosed in the
Company’s website i.e., www.mescosteel.com

The details of the related party transactions as required under Section 134(3)(h) r/w Rule 8 (2) of the Companies
(Accounts) Rules, 2014 and under Regulation 34(3), Para A of Schedule V of SEBI(LODR) Regulations, 2015 is
as per Form AOC 2 and is enclosed as Annexure - C.

21. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL
POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company between the
end ofthe financial year of the Company to which the financial statements relate and the date of the report except
to the extent disclosed below:

Point wise Replies to Auditor’s Qualifications

1. The Company has got physical verification done of the Property, Plant and Equipment (PPE) by a third
party in the state of Odisha, and this Property, Plant and Equipment (PPE) in the state of Odisha
comprises of approximately 98.90% of the Property, Plant and Equipment (PPE) of the Company and
have submitted the report of the third party to the statutory auditor. The Company is making efforts to
complete the physical verification of the remaining physical assets, being approximately about 1% of
the Property, Plant and Equipment (PPE) of the Company in the next financial year.

2. The physical verification report from third party has been provided to the auditors and the valuation has
done at cost price or net realizable value whichever is lower. The value of inventory been taken at cost
price since it is less than the net realizable value, since as on date the market price of the inventory
items has gone up during last 4 years.

3. The major amounts of receivables are from Maithan Ispat Limited, subsidiary of the Company, and
Maithan has been making repayment since it restarted operations in January 2022. Maithan in the last 2
years have generated positive cash flows and the repayment will be done by Maithan to the Company in
a systematic and organized manner without affecting Maithan’s operation. There has been movement in
the receivables since last two years, Maithan has started making payment and Maithan’s net-worth is
positive, hence impairment testing is not required.

4. The original copies of the deposits are with the government authorities or with courts wherever the
requirement of submitting the original deposits was. But, the list of deposits and confirmation of the
deposits from the various banks has been submitted and provided.

5. The Company has been verbally informed by ICICI bank that they have received a notice from GST
department and have thus made the entry of debiting the Company’s account as per the notice of the
GST department for the amounts recoverable from the Company.

6. The Company is getting reconciliation done for the amount from banks and same will be transferred
soon.

7. The creditors and debtors are more than 4 years old as the operations have been shut down since
December 2019. Further the company is also settling their amounts. Since these amounts are quite old it
is not feasible to get confirmation from them. Further, the management is of the view that the
confirmation/reconciliation of the balances will not be any material impact on the state of affairs of the
Company.

8. Due to non-operation of the Plant, the Directors of the Company have infused their own funds into
Company as and when there is an urgent requirement of funds. These loans given by the Directors to
the Company are interest free and the company can return as and when the company is able to repay the
loan.

9. The management has informed that major amount of these advances are sub judice in Hon’ble High
Court and it has been advised not to make any change in the accounts in this matter.

10. The disputed amounts are with various authorities for various year and at different levels including
appellate. Some of these disputes are old.

11. The company has taken legal opinion on the treatment of Compensation as well interest on same from
an independent advocate. Accordingly, details relating to the same are mentioned Note No. 29 notes to
accounts of the Financial Statement. Further the Company is making payment of compensation under
protest by selling of stocks lying with the Company after getting necessary permission and order from
Hon’ble Supreme Court. Furthermore, there is a stock of approximate 1.1 million tonne on the ground
which is being sold under the Hon’ble Supreme court order dated 06.04.2023. This will further reduce
this amount. The Company has already deposited with Government an amount of Rs. 415.79 (including
GST) till July 2023 under protest.

12. The amounts are old and have been written back and written off to appropriately reflect the state of
affairs of the Company. Further, the list of the parties of whom the amounts were written back and
written off has been provided.

13. This is a continuous supply and that the invoicing will be done as per the arrangement/ understanding
and the applicable provisions.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo
stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies
(Accounts)Rules, 2014, is annexed herewith as Annexure-D.

23. RISK MANAGEMENT POLICY

As per the provisions of Companies Act, 2013 and SEBI LODR 2015, the risk management is not applicable on
the Company.

24. CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of Section 135 of the Act, the Company has to contribute to CSR activities if it has a) Net
worth of more than Rs. 500 crores b) Turnover of more than Rs. 1000 crores c) Net profit of more than Rs. 5
crores in the preceding year.

Since the Company does not meet any criteria and thus these provisions are not applicable so they were not
required to make any contribution towards CSR activities. A report on same is annexed as Annexure-E

25. PERFORMANCE EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, board committees and
individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. The performance of the
Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the
board composition and structure, effectiveness of board processes, information and functioning, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors and performance of
the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the
Company, taking into account the views of the Executive Directors and Non-executive Directors.

26. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review,

• Mrs. Rita Singh, Mrs. Natasha Sinhaand Mr. Vishwambhar Nath Tiwari resigned from directorship on
23.05.2024.

• Mrs. Shipra Singh Rana and Mr. Dushyant Kumar Singh were appointed as Additional Executive
Directors of the Company on 27.02.2024.

• Mr. Hawa Singh Chahar, Independent Non-executive director retired on 21.06.2024.

• Mrs. Shipra Singh Rana resigned on 25.07.2024.

• Mrs. Shipra Singh Rana was appointed as Additional Non-Executive Director on 26.07.2024.

• Mr. Dushyant Kumar Singh resigned on 29.07.2024.

• Mr. Dushyant Kumar Singh was appointed as Additional Executive Director and Mr. Amarendra Khatua
was appointed as Independent Non-executive Director of the Company on 30.07.2024.

• Mr. Prasant Kumar Misra was re-appointed as Independent Non-executive Director of the Company from
23.11.2024 to 22.11.2029 for a term of five years.

• Mrs. Shipra Singh Rana was appointed as Whole time Director by the Board of Directors on 30.07.2024
for a term of five years.

All the above appointments are subject to approval of shareholders in Annual General Meeting.

27. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S
OPERATIONS IN FUTURE.

There are no significant and material orders passed by the regulators or courts or tribunals which impact the
going concern status and Company’s operations in future except to the extent disclosed at point No. 21 of the
Director’s Report.

It is hereby informed that a Forensic Audit and an investigation were being conducted by SEBI through its CFID
Department.SEBI through its order dated 21^st February, 2024 has ordered various directions. The Company has
filed an appeal in the Tribunal against the order of SEBI.The matter is sub-judice.

The Company had taken External Commercial Borrowing (ECB) from Banyan Tree Bank Ltd., Mauritius,
and there were disputes regarding the repayment of the balance amount of the ECB loans to Banyan Tree
Bank Ltd. Banyan Tree Bank Ltd., was acquired / taken over by theBank. Silver Bank (formerly known as
Banyan Tree Bank Ltd.) filed a case in the court. The debt of Silver Bank has been paid through assignment
of Debt. Silver Bank filed an affidavit with NCLAT that no dues are receivable from the Company so the
matter has been disposed off.

28. INTERNAL FINANCIAL CONTROLS

Details of internal financial control and its adequacy in compliance with the provisions of Rule 8 (5)(viii) of
Companies (Accounts) Rules, 2014 are included in the Management Discussion and Analysis Report, which
forms part of this Report.

29. DISCLOSURE AS PER THE SEXUAL HARRASMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in
line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the Rules thereunder. During the financial year ended March 31, 2024, no complaint
pertaining to sexual harassment was received by the Company. Further company confirms that the company has
complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

30. AUDIT COMMITTEE

The details pertaining to the composition of the audit committee are included in the Corporate Governance
Report, which is part of this report.

31. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
provided as Annexure F to this report.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and
other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms
part of this Annual Report and is attached as Annexure-G.

32. STAKEHOLDERS RELATIONSHIP COMMITTEE

The details pertaining to the composition of the Stakeholder Relationship committee are included in the
Corporate Governance Report, which is a part of this report.

33. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

Your Company recognizes the value of transparency and accountability in its administrative and management
practices. The Company promotes the ethical behavior in all its business activities. The Company has adopted
the Whistle blower Policy and Vigil Mechanism in view to provide a mechanism for the directors andemployees
of the Company to approach Audit Committee of the Company to report existing/ probable violations of laws,
rules, regulations or unethical conduct.The Whistle Blower Policy has been posted on the website of the
Company (www.mescosteel.com)

34. CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate of Practicing Company Secretary regarding compliance of the
conditions of Corporate Governance as stipulated in Part C of Schedule V of the SEBI (LODR) Regulations,
2015 are enclosed as part of this report.

35. COMPLIANCES WITH SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of
India.

36. FRAUD REPORTING

There have been no frauds reported by the Auditors of the Company to the Audit Committee or the Board of
Directors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year.

37. ACKNOWLEDGEMENTS

The Board expresses its sincere gratitude to the shareholders, bankers/lenders, Investors, vendors, State and
Central Government authorities and the valued customers for their continued support. The Board also
wholeheartedly acknowledges and appreciates the dedicated efforts and commitment of all employees of the
Company.

By order of the Board
For and on behalf of
Mideast Integrated Steels Limited

Shipra Singh Rana
Director
DIN: 00137209

Place: New Delhi
Date: 30/07/2024

---

Mar 31, 2018

To

The Members

Mideast Integrated Steels Limited

The Directors are pleased to present 25^th Annual Report and the Statements of Accounts for the financial year ended on March 31, 2018.

1. FINANCIAL RESULTS

The Company’s financial performance for the year ended March 31, 2018 along with previous year’s figures is given hereunder:

(Rs. in Mn)

	Standalone		Consolidated
Particulars	2017-18	2016-17	2017-18	2016-17
Gross Sales & Other Income	6,443.09	3,030.20	10,800.11	7326.54
Profit/(Loss) Before Finance Cost & Depreciation	1,688.90	1,039.68	1985.70	1,302.52
Interest/ Finance Cost	823.43	402.69	1,732.06	1,009.57
Depreciation	565.35	546.58	828.69	836.31
Profit/(Loss) before Tax	300.12	90.41	(575.07)	(543.36)
Tax Expense	67.20	(49.93)	66.47	(138.36)
Profit/(Loss) After Tax	232.92	140.34	(641.54)	(405.00)
Appropriations / Adjustments
Balance of profit / (loss) brought forward	2,703.97	2,563.23	1113.74	1689.03
Profit for the Year	232.92	140.34	(641.54)	(405.00)
Re-measurement gains/ (losses) on defined benefit plans	0.60	0.40	(3.26)	(172.79)
Proposed Final Dividend	-	-	-	-
Profit carried to Balance Sheet	2,937.49	2,703.97	471.52	1113.74

2. FINANCIAL PERFORMANCE HIGHLIGHTS

Standalone Operations:

- Revenue from operations for the year increased by 122% to Rs. 6302.31 Million from Rs. 2835.44 achieved during previous financial year.

- EBITDA for the year increased by 83.23% to Rs. 1688.90 Million as compared to EBITDA of Rs. 1039.68 Million achieved in previous financial year.

- Profit after tax increased to Rs. 232.92 Million as compared Rs. 140.34 Million in previous financial year.

Consolidated Operations:

- Revenue from operations for the year increased by 47.41% to Rs. 0080.11 Million from Rs. 7326.54 during the previous financial year;

- EBITDA for the year increased by 52.45% to Rs. 1985.70 Million as compared to EBITDA of Rs. 1302.52 Million achieved during previous financial year.

- Due to increase in finance cost Loss after tax increased by 11.60% to Rs. (644.80) Million as compared to Loss of Rs. (577.79) Million achieved during previous financial year.

3. COMPANY’S WORKING DURING THE YEAR/ STATE OF COMPANY’S AFFAIRS

In financial year 2018, Gross Sales increased by 122% to Rs. 6302.31 Million from Rs. 2835.44 in financial year 2017. Company’s continuous focus on improving operational efficiencies helped in maintaining EBIDTA level. Growth in sales is mainly driven by restart of production and sale of pig iron. Company’s Profit after Tax increased to Rs. 232.92 Million during the period under review as compared to Rs. 140.34 Million during previous year.

4. CHANGE IN NATURE OF BUSINESS

During the year under review, there were no change in the nature of the business of the Company.

5. TRANSFER TO RESERVES

The Company has not transferred any amount to General Reserves during the Year.

6. DIVIDEND

Due to inadequate profit during the financial year ended March 31, 2018, your Directors have not recommended any dividend for the financial year ended March 31, 2018.

7. PUBLIC DEPOSITS

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

8. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to regulations 34 of the Listing Regulations, Management’s Discussion and Analysis Report for the year is presented in a separate section forming part of the Annual Report.

6. SHARE CAPITAL

During the year under review, there was no change in the Company’s issued, subscribed and paid-up equity share capital. On March 31, 2018, it stood at Rs. 1378.75 Million divided into 13,78,75,000 equity shares of Rs. 10/- each. The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme. No disclosure is required under Section 67(3)(c) of Companies Act, 2013 in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said Section are not applicable

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts)Rules, 2014, is annexed herewith as Annexure-A

8. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES & CONSOLIDATED FINANCIAL STATEMENTS

During the year under review, the Company has only 1 subsidiary i.e. Maithan Ispat Limited material unlisted subsidiary. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiary. Consolidated Financial Statements form part of this Annual Report. Statement containing the salient feature of the financial statement of the Company’s subsidiaries in Form AOC-1 is enclosed as Annexure-B.

In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the Subsidiary Companies on its website at www.mescosteel.com.

9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, the Company entered into contracts or arrangements with related parties which were in the ordinary course of business and on arm’s length basis. All related party transactions are placed before the Audit Committee for review on a quarterly basis. The details of the related party transactions as required under Accounting Standard are set out in Notes to the standalone financial statements forming part of this Annual Report.

No transaction with the related party is material in nature except transaction which was approved by Shareholders at 24th Annual General Meeting held on September 27, 2017, in accordance with Company’s Related Party Transaction Policy and Regulation 23 of LODR Regulations.

As required under Regulation 46 (2) (g) of LODR, the Related Party Transaction Policy and Company’s Material Subsidiary Policy is disclosed in the Company’s website i.e. www.mescosteel.com

The details of the related party transactions as required under Section 134(3)(h) r/w Rule 8 (2) of the Companies (Accounts) Rules, 2014 and under Regulation 34(3),Para A of Schedule V of SEBI(LODR) Regulations, 2015 is as per Form AOC 2 is enclosed as Annexure - C.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

11. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure D to this report.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits setout in the said rules forms part of this Annual Report and is attached as Annexure-D.

12. DIRECTORS OR KEY MANAGERIAL PERSONNEL

During the year under review, the shareholder of the Company in their AGM held on September 27, 2017 has reappointed Smt. Rita Singh as Chairperson and Managing Director of the Company for a period of 5 years with effect from August 1, 2017, Mrs. Natasha Sinha has been reappointed as Whole-time Director for a period of 5 years with effect from April 1, 2017, Mr. Priyabrata Patnaik has been appointed as whole time director with effect from August 1, 2017 for a period of 5 years and Mr. Hanumantha Rao Ravipati has been re-appointed as Whole Time Director for a period of 3 years with effect from September 30, 2017.

During the year under review Mr. Priyabrata Patnaik (DIN:01709955) resigned as whole time director of the Company with effect from afternoon of February 28, 2018 and Mr. Hanumantha Rao Ravipati (DIN:00044028), Whole Time Director resigned with effect from the close of business hours of March 31, 2018. The Board of Directors records their appreciation for the services rendered by both Mr. Priyabrata Patnaik and Mr. Hanumantha Rao Ravipati.

In accordance with the provisions of the Companies Act,2013 and Articles of Association of the Company, Mrs. Natasha Sinha, Whole time director retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.

Pursuant to Rule 8 (5) (iii) of Companies (Accounts) Rules, 2014 it is reported that, there have been no changes in the Directors or Key Managerial Personnel during the year. However Mr. Sharanappa Neelappa Kambalii has been appointed as Chief Executive Officer of the Company with effect from June 9, 2018

Further the Board of Directors vide circulation appointed Mr. Sharanappa Neelappa Kambalii as Non-Executive Additional Director with effect from July19, 2018. He being eligible offers herself for reappointment at the ensuing Annual General Meeting.

13. DECLARATION OF INDEPENDENCE

The Company has received necessary declaration from each Independent Director under section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

14. PERFORMANCE EVALUATION

During the year, the evaluation of the annual performance of individual directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act and relevant Rules and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations, 2015 and the circular issued by SEBI with respect to Guidance Note on Board Evaluation from time to time.

In a separate meeting of Independent Directors,performance of Non Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company,taking into account the views of the Executive Directors and Non-executive Directors.

15. NUMBER OF MEETINGS OF THE BOARD

During the financial year 2017-18, the Board of Directors of the Company, met 4 times i.e. on May 27, 2017, August 8, 2017, November 14, 2017 and February 14, 2018. The gap between two consecutive meetings did not exceed one hundred twenty days. Further, a separate Meeting of the Independent Directors of the Company was also held on February 14, 2018.

16. AUDIT COMMITTEE

The Audit Committee Comprises of Five Independent Directors and a Whole Time Director as Members. 4 (Four) meetings were held during the financial year under review. All the recommendations made by the Audit Committee have been accepted and implemented by the Board of Directors. More details on the committee are given in the Corporate Governance Report.

17. STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee Comprises of 2 Independent Directors and a Whole Time Director as Members. 4 (Four) meetings were held during the financial year under review. More details on the committee are given in the Corporate Governance Report.

18. NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee Comprises of 3 Independent Directors as Members. Nomeeting were held during the financial year under review. More details on the committee are given in the Corporate Governance Report.

19. NOMINATION AND REMUNERATION POLICY

Company’s Policy on Directors Appointment and Remuneration including criteria for determining qualification, positive attributes, independence of directors and other matters provided under section 178(3) of the Companies Act, 2013 there has been no change in the Policy since the last Financial Year. Given below is the link on the website of company where in complete policy is placed http://www.mescosteel.com/admin/investor/Nomination%20 and%20 Remuneration%20 Policy.pdf

20. RISK MANAGEMENT POLICY

The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various strategic, operational and financial risks that the Organisation faces, along with the adequacy of mitigation plans to address such risks. There is an overarching Risk Management Policy in place that was reviewed and approved by the Board.

21. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

Your Company recognizes the value of transparency and accountability in its administrative and management practices. The Company promotes the ethical behavior in all its business activities. The Company has adopted the Whistle blower Policy and Vigil Mechanism in view to provide a mechanism for the directors and employees of the Company to approach Audit Committee of the Company to report existing/ probable violations of laws, rules, regulations or unethical conduct.The Whistle Blower Policy has been posted on the website of the Company (www.mescosteel.com)

22. DISCLOSURE AS PER THE SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has adopted a policy on prevention,prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the financial year ended March 31, 2018 no complaint pertaining to sexual harassment was received by the Company. Further company confirms that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

22. AUDITORS

a. Statutory Auditors

M/s. Todarwal & Todarwal LLP has tendered their resignation to discontinue as the Statutory Auditor of the Company for the further remaining terms of their period i.e. from April 1, 2018 tills March 31, 2022 due to change in constitution of their firm.

Hence, in order to fill up the casual vacancy the Company has appointed M/s. Arun Todarwal & Associates LLP in the Board Meeting held on August 13, 2018. The office of /s. Arun Todarwal & Associates., Chartered Accountants, are to be confirmed by the members in the ensuing Annual General Meeting, Further, their appointment shall be for the remaining period tenure of 4 (Four) years, subject to the approval of members in the ensuing Annual General Meeting. There are no qualifications or reservation made by the Auditors in their Report. The observations of Statutory Auditors in their reports on standalone and consolidated financials are self-explanatory and therefore do not call for any further comments.

b. Cost Auditor

The Board of Directors on the recommendation of the Audit Committee has appointed M/s. S.S. Sonthalia & Company (Firm Regn. No. 00167), Cost Accountants for auditing the cost records of the Company for the Financial Year 2018-19.

In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules 2014,appropriate resolution seeking your ratification of the remuneration of M/s M/s. Sonthalia & Company, (Firm Regn. No. 00167), Cost Accountants, as Cost Auditors, is included in the Notice convening the 37th AGM of the Company.

c. Secretarial Auditor

During the year under review, Mr. Robinderpal Singh Batth, Practicing Company Secretary (Certificate of Practice No.3836), who was appointed as the Secretarial Auditor of the Company has issued the audit report in respect of the secretarial audit of the Company for the financial year ended March 31, 2018. The Secretarial Audit Report is annexed as Annexure-E to this Report. Given Below is the management reply on the observations made by the Secretarial Auditor in their Report.

Observation:

In terms of Securities and Exchange Board of India Circular No. Cir/ISD/3/2011, the 100% Promoter’s holding is to be in dematerialized form. Promoter holding is not in 100% Demat form.

Management’s Reply:

Company is in receipt of declaration from promoters that the shares which are not in demat form are pending adjudication of dispute before judicial/ quasi-judicial authorities and same would be dematted once the dispute is resolved/settled”

d. Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Rule 13 of The Companies (Accounts) Rules 2014 and based on the Audit Committee recommendations, the Board of Directors of the Company have appointed of M/s. SRB & Co., Chartered Accountants, as the Internal Auditor of the Company for the financial year 2017-18.

22. CORPORATE SOCIAL RESPONSIBILITY

The CSR Committee consists of three directors including two Independent Director. The CSR Committee has formulated a CSR policy of the Company for undertaking the activities as specified in Schedule VII of the Companies Act, 2013. The Said policy has been approved and adopted by the Board of directors of the Company, the contents of which have been displayed on the Company’s website. (Weblink: www.mescosteel.com).The Annual Report on CSR activities initiated and undertaken by the Company during the year under review is annexed herewith as an Annexure-F

23. ANNUAL RETURN

Given is the weblink www.mescosteel.com/admin/investor/2017-18.pdf where annual return referred to in sub-section (3) of section 92 has been placed.

24. CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate of Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated in Part Cof Schedule V of the SEBI (LODR) Regulations, 2015 are enclosed as part of this report.

25. INTERNAL FINANCIAL CONTROLS

Details of internal financial control and its adequacy in compliance with the provisions of Rule 8 (5)(viii) of Companies (Accounts) Rules, 2014 are included in the Management Discussion and Analysis Report, which forms part of this Report.

26. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company between the end ofthe financial year of the Company to which the financial statements relate and the date of the report and the date of this Report except to the extent disclosed below.

- During the year under review the Hon’ble Supreme Court vide judgment dated August 2, 2017 in Common Cause vs Union of India & Ors., Writ Petition No. 114 of 2014 upheld the calculation made by Central Empowered Committee (“CEC”) and had directed all the mine lease holders to pay the entire amount by December 31, 2017, failing which the mining operations of the mine lease holders will be closed by the State of Odisha. As per this judgment our Company had come under the violation of production in excess of environmental clearances and as per the CEC calculations had to pay approximately Rs. 925 Crores.

- Our Company’s equity shares got listed with Bombay Stock Exchange Limited (BSE) vide BSE trading approval dated October 16, 2017 and trading on shares started with effect from October 18, 2017.

- Mining operations of Mideast Integrated Steels Limited (herein after referred to “MISL”) mines situated at Roida-I has been closed from December 31, 2017 till the time company makes the payment of the compensation as passed in the order dated August 2, 2017 passed by the Hon’ble Supreme Court in Common Cause Vs Union of India & Ors., Writ Petition No. 114 of 2014 due to non payment of aforesaid compensation amount.

- During the year under review, company has infused Rs. 225.00 Million by acquiring 2,25,00,000 equity shares having face value of Rs. 10 each.

26. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Company’s operations in future except to the extent disclosed regarding Supreme Court judgment dated August 2, 2017 in Common Cause vs Union of India & Ors., Writ Petition No. 114 of 2014 as detailed above

27. GENERAL DISCLOSURE

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

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

b) Issue of shares (including sweat equity shares) to employees of the Company under any Scheme or ESOS.

c) We further confirm that maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained.

28. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(3)(c) and 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, your Directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed with no material departures;

b. 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/loss of the Company for the same period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls in the Company that are adequate and are operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that these are adequate and are operating effectively.

29. COMPLIANCES WITH SECRETARIAL STANDARDS

During the year, the Company is in compliance of both erstwhile and revised Secretarial Standard -1(Meetings of the Board of Directors), Secretarial Standard-2 (General Meetings) effective from 1st October, 2017.

28. ACKNOWLEDGEMENTS

The Board expresses its sincere gratitude to the shareholders, bankers/lenders, Investors, vendors, State and Central Government authorities and the valued customers for their continued support. The Board also wholeheartedly acknowledges and appreciates the dedicated efforts and commitment of all employees of the Company.

By order of the Board

For and on behalf of Mideast Integrated Steels Limited

Rita Singh

New Delhi Chairperson Cum Managing Director

August 13, 2018 DIN: 00082263

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Mar 31, 2012

TO THE MEMBERS

The Directors have pleasure to present their 19th annual report of the Company for the year ended 31st March 2012.

Financial Results

Year 2011-12 Year 2010-11 PARTICULARS Rs. in Mn Rs. in Mn

Sales / Income 5467.55 3791.25

Total expenditure 4037.21 772.21

Operating profit 1430.34 1019.04

Add: Other Income 38.31 25.18

Profit Before Interest, Forex Fluctuation, Depreciation,

Prior period items and Taxes 1468.65 1044.22

Less: Interest 61.59 283.81

Profit before Depreciation, prior Period items and Taxes 1407.06 760.91

Less: Depreciation 351.97 353.10

Profit Before Tax 1055.0 407.31

Less: Provision for Current Taxes 143.94 11.66

Add: MAT Credit 143.94 11.66

Less: Provision for Deferred Tax 151.46 (17.25)

Less: Provision for Earlier Years Taxes 0.95

Profit after Taxes 902.68 424.56

Add: Balance brought forward from the previous year (679.54) (1104.09)

Balance 223.14 (679.54)

Which the Directors have apportioned as under to:

(i) Proposed Dividend 68.94

(ii) Tax on Dividends 11.18

Total 80.12

Balance carried to Balance Sheet 143.02 (679.54)

Dividend

Your Board have great pleasure to recommend a Maiden Dividend of 5% of the face value of each share, amounting to Rs. 68.94 Mn on the paid up capital of the company of Rs. 1378.75 Mn as on 31.03.2012.

The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting.

New Projects - Value Addition

Installation of a slag processing unit of 0.5 million tonnes capacity, has been started at Jajpur steel plant. This would lead to significant value addition to the slag generated in the process of steel making.

The company will also take up coal block development project and projects for commissioning a coal washery and a thermal power station from the middling of coal washery in Chhindwara district of Madhya Pradesh.

Necessary statutory approvals for dolomite and limestone mine at Katni are being obtained, and it is hoped that commercial production will start by the end of the coming financial year. Your company is investing in Mesco Magic Cement Ltd for setting up a 2.0 million tonnes cement plant at Rewa in Madhya Pradesh.

Expansion

Your company is upgrading the steel plant into a fully integrated steel plant of 1.2 million tonnes per annum capacity. With an investment of Rs. 10 billion, a steel melt shop with a rolling mill for rebar and wire rod will be commissioned. It would have all the supporting plants to make it a state-of-the art integrated steel plant. A high level team has successfully concluded its trip to China for finalizing technical and financial details for the first phase of the expansion of the steel plant. In the second phase, the total capacity of the steel plant will be raised to 3.5 million tonnes per annum.

The company has commissioned one line of the Sinter Plant and two lines of Railway Sidings during F.Y 2011-12. In the next phase of expansion it is working on the plan to put up a steel making facilities, oxygen plant, Pulverized Coal dust injection unit, coke oven battery, Lime Plant, Rolling Mill and re-heating furnace with a forward integration to manufacture 1.2 mtpa of long products like Bars, Rebars, Rods and billets.

The company has already taken up steps for taking approvals / clearances to double the capacity of Iron ore mining Output with the regulators.

The Global Economy

The world economic outlook continues to be under stress, International Monetary Fund has predicted a growth of 3.5% in 2012 as against 3.9% in 2011. The projection for 2013 is slightly better at 3.9%. The advanced economies would continue to be sluggish in 2012 posting growth rate of 1.4%, which is lower than the 1.6% in 2011. Emerging and developing countries are also slowing down and are expected to grow by 5.6% in 2012 as against 6.2% growth in 2011. Weaknesses in financial markets and sovereign debt problems besetting the Euro Zone countries are likely to make only a marginal impact on global economy in general and emerging economies in particular. However capital volatility and declining exports will be seen in the remaining part of the year. Downside risks to this weaker global outlook continue to loom large. The most immediate risk is insufficient policy action that will further escalate the euro area crisis.

The US: The US is expected to achieve a growth rate of 2% in 2012, up from 1.7% in 2011. There are signs that the US economy is on a steady recovery path to post better numbers in 2013. Dealing with fiscal cliff via a medium term fiscal plan is critical for the US to consolidate the gains it has made since 2008. IMF estimates that the negative spillovers from the euro area, limited so far, have been partially offset by falling long-term yields due to safe haven flows. In the assessment of IMF, excessive fiscal tightening in the United States, given recent political gridlock may lead to lowering of growth. If policy makers fail to reach consensus on extending some temporary tax cuts and reversing deep automatic spending cuts, the U.S. structural fiscal deficit could decline by 4 percentage points of GDP in 2013. U.S. growth would then stall next year, with significant spillovers to the rest of the world. Moreover, delays in raising the federal debt ceiling could increase risks of financial market disruptions and a loss in consumer and business confidence.

Europe: Euro Zone is likely end the year 2012 with -0.3 % growth, which should improve to 0.7% in the year 2013. Even Germany will slow down to 1.0% in 2012 from 3.1% in 2011. According to IMF, the euro area periphery has been at the epicenter of a further escalation in financial market stress, triggered by increased political and financial uncertainty in Greece, banking sector problems in Spain, and doubts about governments'' ability to deliver on fiscal adjustment and reform as well as about the extent of partner countries'' willingness to help.

India: GDP at factor cost grew by 6.5% in 2011 -12 in India as against 8.4% in 2010-11. Agriculture and allied sectors grew by 2.8%, while the industry was up by 3.4%, and services grew by 8.9%. The growth of industry was 7.2% in 2010-11, pointing to slowdown in industrial activity. Within Industry, mining and quarrying turned negative during 2011-12 and was at -0.9% while in the 2010-11 this sector was up by 5%.

According to Aug 2012 Review of Economy by Reserve Bank of India, the economy''s performance in 2011-12 was marked by slowing growth, high inflation and widening fiscal and current account gaps. The economy grew at its slowest pace in nine years with mining, manufacturing and construction dragging the growth down. In spite of slowing growth, inflation stayed high for larger part of the year. Recession in the euro area and general uncertainty regarding the global economic climate chipped the external demand as well. Domestic policy uncertainties, governance and corruption issues amidst lack of political consensus on reforms led to a sharp deterioration in investment climate. The need is to tackle twin deficits - current account deficit which is at 4.4% of GDP and fiscal deficit at 5.1% of GDP which is likely to go beyond the already high limit that was budgeted.

The Global Iron & Steel Market:

Global steel demand is a function of global economic growth. In developing countries steel consumption is higher compared with developed countries. Emerging economies particularly China, Indonesia, Brazil and India would continue to be the main markets where growth in steel demand will be seen. According to World Steel Association, the demand for steel is expected to reach 1422 million tonnes in 2012 and would grow by 4.5% the next year touching 1486 million tonnes. Despite economic slowdown in the developed world, demand for steel will continue to be in the positive. IMF data suggests that in 2012, prices of commodities other than fuel have declined by 12% and in 2013 it is expected to see a further dip of 4%. In.such a scenario, the prices of steel and iron ore may not go up in the immediate future. Already iron ore prices are down by 30% from their high in the beginning of 2012.

World Steel Association estimates that China''s apparent steel use in 2012 is expected to increase by 4.0% to 649 million tonnes following 6.2% growth in 2011. In 2013, steel demand will again grow by 4.0% and reach 675 million tonnes. The decline in steel demand is on account of government''s efforts to rebalance the economy and contain the real estate bubble. Despite falling prices, China continues to produce steel, as a result a forced destocking cannot be ruled out. Due to the difficulties being faced by the steel industry in China, it is expected that coking coal prices may come down during the year.

Management is of the view that China has already reached its saturation and it will be difficult for China to sustain the current levels.

India''s steel use is forecast to grow by 6.9% to reach 72.5 million tonnes in 2012. In 2013, the growth rate in steel use is expected to accelerate to 9.4% on the back of urbanization and surging infrastructure investment. Therefore demand for steel will remain robust in the country.

Apparent steel use in the US is forecast to grow by a healthy 5.7% in 2012. In 2013, the steel use in the US is expected to grow by 5.6% to 99.5 million tonnes bringing it to 92% of the 2007 level.

Finance

Your Directors are glad to state that the Hon''ble High Court of Delhi has approved our proposal under section 391 to 394 of the Companies Act, 1956. Accordingly, your company has settled the payment with all major secured creditors like IDBI, IFCI, LIC, IIBI, SBI etc. amounting to Rs. 345.82 crores. except few unsecured creditors. The Payment of principal amount of around Rs. 17 crores was already made to IPICOL and matter relating to payment of interest is under settlement.

Deposits

The Company has not accepted fixed deposits during the financial year under review.

Auditors

M/s Sangram Paul & Co. Chartered Accountants, Statutory Auditors of the Company, retires at the conclusion of the ensuing Annual General Meeting and being eligible offers themselves for reappointment. A certificate under section 224(1 -B) of the Companies Act, 1956 has been obtained from them. Further management has proposed to appoint M/s Todarwal & Todarwal Chartered Accountants as Joint Auditors of the company, subject to approval of shareholders, till the conclusion of the next Annual General Meeting of the company.

Directors

Mr. Debiprasad Bagchi, Mr. Sanjiv Batra, Mr. Nandanandan Mishra were appointed as Additional Director from 27th March, 2012. Mr. Madhukar who was appointed as Additional Director from 13th April, 2012. Also Mr. Puran Chandra Sahu who was appointed as Additional Director from 1st June, 2012

Mr. Debi Prasad Bagchi, Mr. Sanjiv Batra, Mr. Nandanandan Mishra, Mr. Madhukar and Mr. Puran Chandra Sahu will hold office till the date of the forthcoming Annual General Meeting and notices have been received from a Member proposing the candidatures of Mr. Debi Prasad Bagchi, Mr. Sanjiv Batra, Mr. Nandanandan Mishra, Mr. Madhukar and Mr. Puran Chandra Sahu for being appointed as Directors of the Company.

Shifting of Registered Office

Subject to the approval of the shareholders, Board has proposed to shift its registered office from H-1, Zamrudpur, Community Centre, Kailash Colony, New Delhi -110 048 to Mesco Towers, 3915, Lewis Road, Kedar Gauri Square Bhubaneswar - 751 002, Odisha.

Energy Conservation, Technology Absorption & Foreign Exchange Earnings & Outgo

The Particulars required in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure ''A.

Particulars of Employees

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules there under, in respect of the employees of the Company, is provided in the Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Members, excluding the aforesaid Annexure. The Annexure is available for inspection by Members at the Registered Office of the Company during business hours on working days up to the date of the ensuing AGM, and if any Member is interested in obtaining a copy thereof such Member may write to the Company Secretary.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement executed with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report, Managing Director''s and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A Business Responsibility Report on the Company''s corporate sustainability initiatives is also included.

Directors'' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures from the same;

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

3. The directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The directors have prepared the annual accounts of the Company on a ''going concern'' basis.

Acknowledgement

Your directors wish to express their appreciation for the co-operation and support extended by various government and regulatory authorities, bankers, shareholders, all business associates and stakeholders of the company. The Directors also extend their appreciation to the executors of the staff and workers of the company.

Place: New Delhi By order of the Board

Date: 31.08.2012 Company Secretary

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Oct 31, 1997

We have pleasure in presenting the Fifth Annual Report of the Company together with the Audited Balance Sheet and the Statement of pre-operative Expenses as on 31st October, 1997.

PROJECT IMPLEMENTATION

The Company has scheduled the implementation plan of the project so as to ensure that commercial production commences from June, 1998. The installed capacity has been increased, thanks to bigger size blast furnace, state-of-the-art equipments for raw material handling equipments, Blast Furnace with latest technology, mechanical and electrical repair shops, instrumentation and automation including recently signed MOU with Rautaruuki of Finland for enhancing the productivity to 2.6 t/cum with enhance a level of automation and reducing cost of production by substituting waste oil from refinery to the extent of 50 kilos/t by replacing coke to the extent. The capacity has been increased from 5,92,000 tons per annum to 7,00,000 tons per annum. As a result of these upgraded technical features, your foreign collaborators China iron & Steel Industry & Trade Group Corporation (CSGC) (formerly China Metallurgical Import & Export Corporation.) has given a higher performance guarantee. In addition to that, M/s Rautaruuki, Finland has confirmed this as stated above.

The Industrial Development Bank of India (IDBI), the lead financial institution, has reappraised the project and had estimated an additional project cost of Rs. 150.00 crores (revised project cost of Rs. 457.00 crores) with excellent techno-economic parameters i.e. IRR 22.10%, Break even 54%, Cash Break Even at 43% and DSCR at 1.85. The company has been receiving continued valuable support from the financial institutions and has already received a disbursement of around Rs. 76.35 crores (against Rs. 100.00 crores to be funded by the institutions towards additional project cost). The incidence of interest is the major factor in further over run created by non-disbursement by some Financial Institutions. Owing to this non-disbursement of money by some of the financial institutions, the project got delayed further resulting higher incidence for interest burden. However, with the increased techno-economic parameters i.e. IRR 19.40%, Break Even 54.75%, Cash Break Even at 38.13% and DSCR at 1.55, we see no problem for IDBI in giving further support. The capital expenditure incurred on the project as on Balance Sheet date is Rs. 450.71 crores (net of Liabilities) including interest upto October, 1997 against appraised Rs. 457.00 crores.

The brief status of the project is as follows :

(Rs. in Crores) As appraised As per projected by IDBI Balance Sheet (30.06.98) (June 1996) (31.10.97)

COST OF PROJECT 457.00 450.63 610.00

I. FINANCED BY

- EQUITY - EXISTING 67.77 117.77 117.77 - PROPOSED 50.22 0.00 30.00 - SHARE PREMIUM 67.76 67.76 67.76 - IPICOL (CONVERTIBLE) 0.00 20.00 20.00

II. TERM LOAN

- FROM INSTITUTIONS 271.25 245.10 286.00 - INTEREST DEFERERMENT 0.00 0.00 88.00

457.00 450.63 610.00

The Company proposes for DEFERERMENT of liabilities of interest payable to Financial Institutions and an additional loan of Rs. 14 crores to complete the implementation and commissioning of the project.

CIVIL WORKS

100% of the civil works for the Blast furnace & auxiliary units and 90% for the Sinter Plant has been completed. All civil fronts are now available for the erection of equipment and hence will not be a limitation in timely completion of the project.

PLANT AND MACHINERY

The equipments have been sourced from internationally reputed suppliers and who-is-who in the Metallurgical Industry. Over 100% of the equipment for Blast furnace and 80% for Sinter Plant has been received and the balance is expected to be completed by April, 1998 for the first Blast Furnace by May, 1998 for the second Blast Furnace.

PHYSICAL PROGRESS OF THE PROJECT

The project is in the last phase of implementation and having regard to the current progress of the project it can be confidently confirmed that Blast Furnaces will be commerce production by June, 1998. The following is the brief details of the progress of the project.

LAND AND SITE DEVELOPMENT

Entire land measuring 580 acres required for the project has been acquired long ago.

Site development has been also completed in the initial stages of the project.

Boundary wall running 8.5 Kms and circumscribing the land has also been fully constructed.

Major internal roads have been completely laid and the railway track in the plant of 11.5 Kms (Required for movement of finished products and raw materials) is under progress and will be completed by March, 1998.

BUILDING

There are number of Building structure involving tremendous civil works (88,000 cubic meter earth work) and 20,000 tonnes of steel structure fabricated and erected at site by reputed contractors.

The entire work (100%) are complete and the Major building like for Blast Furnaces, Power Plant, Raw Material Handing Equipment, Power Distribution Network and for other auxiliary facilities are in its place. These buildings are fully available for erecting the plant and machinery.

INFRASTRUCTURE FACILITIES

The company has already organised infrastructure facilities like for water, electricity, required for the project.

18 Kms pipe from the River Brahmani to the plant already fully laid up. At river Brahmani, pumps of adequate strengths has been laid down. In the plant also storage tank has been constructed and the same can hold water for meeting 8 days requirement.

Electricity lines from Duburi Sub-station have also been drawn and electricity can be obtained whenever required by us.

IDBI, disbursed Rs. 6.27 crores during November-December, 1997 and promoters contribution of Rs. 14.00 crores which came in the month of December, 1997 helped the progress to great extent. Balance money required for commissioning will be available by March, 1998 and the plant will be expected to go into commercial production by June, 1998.

OTHER ARRANGEMENTS

The Clearance Certificates from the State and Central Pollution Control Boards had been obtained. The pipe lines for water supply from the river Brahmani, which is 15 Kms away from our project have been completely laid down, totalling to 18.0 Kms. The necessary lines for power supply from Duburi sub-station of the GRIDCO (formerly Orissa State Electricity Board) has also been installed. Fifty one thousand tonnes of imported coke has been obtained to take care of around 2 months consumption, as the captive mines for meeting iron ore consumption have also been procured.

The Company has already recruited techinical man power. Over 100 engineers have been given on line training at Steel Authority of India Limited (SAIL), Bhilai Plant as Phase I of the project is racing towards completion.

PROFITABILITY PROSPECTS

The Directors wish to inform you that the Company is having a bright future for the following reasons :

i. As against most of the Indian Iron & Steel companies, who are dependant on domestic market which is very selective in the market, the Company is 100% Export Oriented Iron & Steel Plant which is India's largest EOU in Steel and world's lowest cost producer of Iron. Thereby, having no problem to market. In fact we have already signed agreement with major Japanese Trading Houses at a very lucrative prices.

ii. The Company being an Export Oriented Unit, stands to gain from the appreciation of the US Dollar.

iii. The acquisition of mines in Orissa and the collaboration agreement with the Orissa Mining Corporation to develop more mines for the Company's captive in close proximity is only going to benefit the Company. This element has not been taken into consideration while appraising the project.

FUTURE PLANS

Upon successfully stabilising the Pig Iron Project (Phase- I) the Company proposes to Integrate to produce 1.2 million tonnes long steel products, viz. rods, bars, light steel structural, ball bearing steel, spring steel, wire reds etc. These value added steel products will give a fillip to the profitability base of the company.

Further more being a EOU plant we have no market problems and Indian Rupee weakness against Dollar further strengthens the bottom line.

The Directors are glad to inform you that several internationally reputed suppliers to steel industry have shown keen interest to take part in the project, some of them have even agreed, in principle, to participate in equity and also to provide easy supplier's credit.

ACCOUNTS

As the Company had no manufacturing, trading or service activities during the accounting period ended on 31st October, 1997 no Profit and Loss Account has been prepared for the said period. The expenses incurred during the period have to be capitalised appropriately at a later date.

DEPOSITS

The Company has not invited/accepted/renewed any fixed deposits from Public pursuant to the provisions of Section 58A of the Companies Act, 1956 during the year.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, the information required in respect of Conservation of Energy is not provided herewith since the project is the sample mentation stage and no manufacturing activities have commenced till date.

The Company has been adopting State-of-the art technology, while selecting the equipment. Conservation of energy has been given the highest priority and is one of the prime criteria. The Technology Agreements include provisions for training of manpower, both in India and abroad.

FOREIGN EXCHANGE EARNING AND OUTGO

Upto 31st October, 1997 total foreign exchange outgo is equivalent to Rs. 1087.82 Lacs.

PARTICULARS REGARDING EMPLOYEES

Particulars of Employee(s) in terms of Section 217(2A) of the Companies Act, 1995 are set out in the Annexure I and forms part of this report.

DIRECTORS

Mr. F M Patnaik retires by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offered himself for reappointment.

Mr. Dong Zhixiong retires by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offered himself for re-appointment.

INDUSTRIAL RELATIONS

The relations with the employees during the year continued to be cordial. The cooperation and strength received from the substantially helped in the process of Project implementation.

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Aug 31, 1996

We have pleasure in presenting the Fourth Annual Report of your Company together with the Audited Balance Sheet and the Statement of pre-operative Expenses as on 31st August, 1996.

PROJECT IMPLEMENTATION

The Company has scheduled the implementation plan of the project so as to ensure that commercial production commences from April, 1997. The installed capacity has been increased, thanks to the bigger size blast furnace, state-of-the-art equipments for instrumentation and automation, raw material handling equipments, blast furnace with latest technology, mechanical and electrical repair shops, from 4,64,000 tons per annum to 5,92,000 tons per annum. As a result of these upgraded technical features, your foreign collaborator China Metallurgical Import & Export Corporation (CMIEC) has given a higher performance guarantee.

The Industrial Development Bank of India (IDBI), the lead financial institution, has re-appraised the project and has estimated an additional project cost of Rs. 150 Crores (revised project cost Rs.457 Crores) with excellent techno-economic parameters i.e. IRR 22.10%, Break Even 54%, Cash Break Even at 43% and DSCR at 1.85. Your Company has been receiving continued valuable support from the financial institutions and has already received a disbursement of around Rs.47 Crores (against Rs.100 Crores to be funded by the institutions towards additional project cost). The capital expenditure incurred on the project as on Balance Sheet date is Rs.356 Crores (net of Liabilities) against appraised Rs.457 Crores.

As per the Company's estimate, however, the Project cost will be around Rs.488 Crores, as IDBI has disallowed a sum of Rs.31 Crores in the Project cost, as appraised by them, under various heads of expenditure Accordingly, the Promoters are no only required to bring in Rs.50 Crores as required by the Financial Institutions but also have to arrange for another Rs.31 Crores (including private placement with existing shareholders towards the expenditure not considered by the IDBI. It may be noted that the Promoters will bring-in their contribution in the form of equity at a price of Rs.10 per share, though as per the SEBI Guidelines they are entitled to these shares at a much lower price. Due to depressed market conditions and the Project being in implementation stage, the present market price per share is around Rs.5.50, which is bound to appreciate once the production commences, as the Project has bright profitability prospects.

The brief status of implementation of Phase I of the project is as follows:

Civil Works

Over 90% of the civil works for the Blast Furnace and the auxilary unit has been completed. All civil fronts are now available for the erection of equipment and hence will not be a limitation in timely completion of the project.

Plant and Machinery

The equipments have been sourced from internationally reputed supplier and who-is-who in the Metallurgic Industry. Over 75% of the equipment has been received and the balance is expected to be received by January 1997. The erection of equipment is under progress and is expected to be completed by February, 1997 for the first Blast Furnace and by March, 1997 for the second Blast Furnace.

Other Arrangements

The Clearance Certificates from the State and Central Pollution Control Boards had been obtained. The pipe lines for water supply from the river Brahamini, which is 15 Kms away from our project have been completely laid down. The necessary lines for power supply from Dubri sub-station of the Orissa State Electricity Board (OSEB) have already been drawn-up and the power distribution system in the project has also been installed. Fifty one thousand tonnes of imported Coke has been obtained to take care of around 1.5 months' consumption, as the captive mines for meeting iron ore consumption have also been procured.

Your Company has already recruited technical man power. Over 100 engineers have been given on-line training at Steel Authority of India Limited's (SAIL), Bhilai Plant, as the Phase I of the project is racing towards completion.

Profitability Prospects

Your Directors wish to inform you that your Company is having a bright future for the following reasons:

i) As expected, the gap between the demand and supply of iron and steel products, both in the domestic and international markets, has been widening.

ii) The Company's entire production is booked for the international market on a long term basis and it has been receiving a number of enquiries from various domestic and International buyers at good prices.

iii) The Company, being an Export Oriented Unit, stands to gain from the appreciation of the US Dollar.

iv) The acquisition of mines in Orissa and the domestic collaboration agreement with the Orissa Mining Corporation to develop more mines for the Company's captive use is only going to benefit your Company.

v) Your Promoter company's bulk cargo vessels, which are under construction, will be used for the import of coke and the export of the finished product. This strategic alliance will aid the operations of the Company as it will not depend on the seasonal vageries of the shipping industry.

Future Plans

Upon successfully stabilising the Pig Iron Project (Phase I), your Company proposes to integrate to produce 1.2 million tonnes long steel products, viz., rods, bars, light steel structures, ball bearing steel, spring steel, wire rods etc. These value added steel products will give a fillip to the profitability base of your Company.

Your Directors are glad to inform you that several internationally reputed suppliers to steel industry have shown keen interest to take part in the project. Some of them have even agreed, in-principle, to participate in equity and also to provide easy supplier's credit.

Accounts

As the Company had no manufacturing, trading or service activities during the accounting period ended on 31st August, 1996, no Profit and Loss Account has been prepared for the said period. The expenses incurred during the period have to be capitalised appropriately at a later date.

Deposits

The Company has not invited/accepted/renewed any fixed deposits from Public pursuant to the provisions of Section 58A of the Companies Act, 1956 during the year.

Conservation of Energy and Technology Absorption

Pursuant to Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information required in respect of Conservation of Energy and Technology Absorption is not provided herewith since the Project is in the implementation stage and no manufacturing activities have been commenced till the date of the Report.

Your Company has been adopting state-of-the-art technology, while selecting the equipment. Conservation of energy has been given the highest priority and is one of the prime criteria. The Technology Agreements include provisions for training of manpower, both in India and abroad.

Foreign Exchange Earnings and Outgo

Upto 31st August, 1996, total foreign exchange outgo is equivalent to Rs.1063.86 Lacs.

Particulars regarding Employees Particulars of Employee(s) in terms of Section 217 (2A) of the Companies Act, 1956 are set out in the Annexure I and forms part of this report.

Directors

Ms. Natasha Singh and Mr. Liu Guangyu retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offered themselves for re-appointment.

Mr. Moosa Raza, who was appointed as Additional Director in the Board Meeting held on 9th April, 1996, retires at this General Meeting.

Industrial Relations

The relations with the employees during the year continued to be cordial. The co-operation and strength received from them substantially helped in the process of Project implementation.

Auditors

M/s A.R. & Associates, Chartered Accountants and M/s S. Kaira & Associates, Chartered Accountants, the Auditors of the Company retire at the ensuing Annual General Meeting and being eligible, offered themselves for re-appointment.

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Aug 31, 1995

To the Members,

We have pleasure in presenting the Third Annual Report of your Company together with Audited Balance Sheet and Statement of Pre-operative Expenses of the Company as on 31st August, 1995. We heartly welcome the new members who have joined the MESCO family in response to the maiden public issue.

PROJECT IMPLEMENTATION

As you are well aware the Company is implementing a globally competitive Pig Iron Plant, in Phase I, with the capacity of 0.5 million tonnes per annum. The project is expected to be commissioned by December, 1995, without any budget over-run, subject to unforeseen circumstances. The Company has already incurred direct capital expenditure of Rs. 255 crores against the commitment of Rs. 286 crores. The project finances are totally tied-up and we foresee no difficulty in commissioning the project.

The Company plans to transform its Pig Iron Plant into an Integrated Steel Plant in Phase II, to produce steel products such as Steel Rods & Bars and Light Steel Structurals, with the capacity of 1.20 million tonnes per annum, at an additional estimated cost of Rs. 1300 crores.

The Company has already committed certain expenditure, for Phase II in sophisticated Raw Material Handling System, higher power generation, water and in certain other infrastructure facilities, while implementing Phase I of the Project.

The status of the implementation of Phase I of the Project is as follows:

CIVIL WORKS

Due to unprecedented rains in Orissa during August and September, 1994 and prolonged heavy monsoons in the current year. our civil construction work has been severely affected. However, the civil work will be completed, thanks to the intensified efforts of our contractors and engineers, within the stipulated time as the major structures have already been fabricated and are being erected.

PLANT AND MACHINERY

Your Directors are glad to inform you that erection of major plant and machinery is fast progressing. The trial-run test will be performed under the supervision of Chinese Engineers. The major plant and machinery have been supplied by internationally reputed manufacturers and the best name in the industry. Further more, our foreign collaborator China Metallurgical Imports and Exports Corporation (CMIEC) has given performance guarantees as the equipment has been selected under their supervision.

OTHER ARRANGEMENTS

The Company has also made necessary arrangements to ensure successful commissioning of the Plant. The working capital arrangement has already been tied-up. Our engineers are being given on-line training at the Steel Authority of India Limited's (SAIL) Plant pursuant to an agreement entered into with them. Your Company has already imported around 30000 tonnes of coke and other major raw materials. The various Government clearances, including Pollution Control clearance from State as well as the Central Government have already been obtained.

PROFITABILITY PROSPECTS

Your Directors wish to highlight that your Company is having excellent prospects for the following reasons:

(i) As envisaged by us, there is a substantial gap between demand and supply of iron and steel products in the international and domestic market as well.

(ii) The Company's entire production is booked for the international market on long term basis.

(iii) The Company, being Export Oriented Unit, stands to gain from the appreciation of US Dollar.

(iv) The Plant will operate at a higher capacity from its very first year of operations than the capacity appraised by financial institutions.

(v) The Company will also gain, as it has acquired mines in Orissa and has entered into an agreement with Orissa Mining Corporation to develop more mines for its captive use.

(vi) The Company's operations will be further supported and strengthened as it will be using cargo vessels, owned by Group Company for the export of finished products and import of coke.

Hence, in brief, your Company is in a definite win-win scenario.

ACCOUNTS

As the Company had no manufacturing, trading or service activities during the accounting period ended on 31st August, 1995, no Profit and Loss Account has been prepared for the said period. The expenses incurred during this period have to be capitalised appropriately at a later date.