Directors Report of Shree Ganesh Forgings Ltd.

Mar 31, 2014

Dear Members,

The Directors present herewith the 41st Annual Report and the Audited Statement of Accounts of the company for period from 1st April, 2013 to 31st March, 2014.

Financial Highlights

PARTICULARS FOR THE (IN LACS) PERIOD ENDED 2012-2013 2013-2014

Operational Income 3.26 214.56

Other Income 361.92 23.33

Total Expenditure 521.51 2357.15 (excluding interest)

Interest - 9.99 Loss before Tax (127.02) (2119.26)

Deferred Tax 77.81 79.25

Loss after tax (49.21) (2040.01)

Dividend

The Board does not recommend any dividend for the period under review.

Operations

During the period under review, the turnover of the Company was Rs. 3.26 Lac in comparison to Rs. 214.56 Lac of previous year mainly on account of partial closure of the production facilities due to lack of availability of working capital funds and persistent labour problems. The company has been mainly servicing customers whose requirements matched the company''s stock of semi- finished and finished goods entirely or partially. In several cases, semi-finished and finished goods have been re-worked to meet the current customers'' requirements.

Members are aware that the company had filed a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 due to erosion of its net worth. As of 31st March, 2014, the net worth remains negative in view of the accumulated loss .

Meanwhile, our accounts with the banks were designated as Non- Performing Asset (NPA) by the bankers and in May, 2011 the bankers initiated recovery action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Company is taking all requisite measures to ensure that the outstanding dues to the bankers is settled and has already given its proposal for one-time settlement with the bankers. State Bank of India, which became our lead bank after the merger of State Bank of Indore with it in August 2010, also sent us a possession notice in October, 2011 against which the company has already filed an application with the Debt Recovery Tribunal. The management is making constant endeavors to move on with discussions with the bankers so as to arrive at a mutually acceptable proposal.

The management is also evaluating various options with respect to raising the funds required for settling the banks'' dues, including selling or leasing the land on which the factory is situated and shifting the operations to an alternate site. As of date, the management is seriously considering a couple of proposals, although a structured outcome is yet to emerge.

Directors

In accordance with the provisions of the Articles of Association of the Company, Mrs. Anita Sekhri, retires by rotation at the forthcoming Annual General Meeting and being eligible, offer herself for reappointment. The Board recommends her re-appointment.

Statutory Auditors

The Auditor M/s. Batliboi & Purohit, Chartered Accountants (Firm Registration No. 101048W), who are the statutory auditors of the Company, hold office till the conclusion of the forthcoming AGM and are eligible for re-appointment. Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. Batliboi & Purohit, Chartered Accountants (Firm Registration No. 101048W) as statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the Forty Third AGM to be held in the year 2016, subject to ratification of their appointment at every AGM. The Board of Directors has recommended their re-appointment as auditors.

The written consent from the Auditor has been received along with a certificate that their appointment if made, shall be in accordance with the prescribed conditions and the said auditors satisfy the criteria provided in Section 141 of the Act.

Public Deposits

The Company has not invited and/ or accepted any deposits within the meaning of Section 58 A of the Companies Act, 1956, read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder.

Directors'' Responsibility Statement

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

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 accounting policies have been selected and applied consistently and all judgments and estimates made are reasonable and prudent, so as to give a fair view of the state of affairs of the Company as at 31st March, 2014 and of the loss for that period ;

c) proper and sufficient care has been taken 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 fraud and other irregularities ;

d) the annual accounts have been prepared on a going -concern basis.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information required in terms 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 is given as Annexure A to this Report.

Subsidiary Company

The statement pursuant to Section 212 of the Companies Act, 1956 in respect of the Company''s subsidiary viz. SGFL International BV is attached as Annexure B to this Report. The subsidiary was constrained to sell off its investments in view of the fall in global demand and due to serious operational problems. The consolidated financial statements of the Company and its subsidiary forms part of the Annual Report.

Pursuant to the General Circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs , the Board has given consent for not attaching the Balance Sheet, the Profit and Loss Account and other documents as set out in section 212 (1) of the Companies Act, 1956, in respect of the subsidiary. However, these documents are available for inspection by any member at the Registered Office of the Company, during working hours upto the date of the Annual General Meeting. Copies of these documents shall also be made available to any member of the company upon request.

Particulars of Employees

There are no employees drawing remuneration in excess of the limits specified in section 217(2A) of the Companies Act, 1956.

Industrial Relations

The company was constrained to lay off few employees in view of partial closure of operations consequent to which they had moved the Industrial Court, Thane for payment of closure compensation.

The company has been taking efforts to ensure peaceful severance of service and amicable settlement of the dues of the employees concerned. In reciprocation, some of the employees have accepted the company''s proposal and their dues have been settled. However ,the Industrial Court, Thane ,has restrained the company from shifting, selling, parting with or creating third party interest in respect of its plant, machinery , land, building or any immovable property.

Management Discussion & Analysis Report and Report on Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion & Analysis Report, the Report on Corporate Governance and the certificate in respect of compliance of requirements of Corporate Governance are annexed to this Report and form part of this Annual Report.

Acknowledgement

Your Directors express their grateful appreciation to the company''s valued customers, suppliers, investors and bankers for their continued support, assistance, co-operation and guidance. Your directors also thank all the employees and executives for their contribution and look forward to their continued support in the future too.

Date: 25.11.2014 By order of the Board Place: Mumbai For Shree Ganesh Forgings Limited

Registered Office: Sd/- 412, Emca House, Deepak B. Sekhri S.B.S. Road, Fort, Chairman & Managing Director Mumbai-400 001 DIN : 00054671

---

Mar 31, 2013

The Directors present herewith the 40th Annual Report and the Audited Statement of Accounts of the company for period from 1st April, 2012 to 31st March, 2013.

Financial Highlights

For the period ended (in lacs) 2012-13 2011-12

Operational Income 214.56 236.32

Other Income 2.33 5.98

Total Expenditure 2357.15 1332.27

(excluding interest)

Interest 9.99 1.32

Loss before Tax (2119.26) (1089.97)

Tax 79.25 21.10

Loss after tax ( 2040.01) (999.94)

Dividend

The Board does not recommend any dividend for the period under review.

Operations

During the period under review, the turnover of the Company was Rs. 214.56 Lac in comparison to Rs. 236.32 Lac of previous year mainly on account of partial closure of the production facilities due to lack of availability of working capital funds and persistent labour problems. The company has been mainly servicing customers whose requirements matched the company''s stock of semi- fnished and fnished goods entirely or partially. In several cases, semi-fnished and fnished goods have been re-worked to meet the current customers'' requirements.

The reworked Corporate Debt Restructuring (CDR) package although sanctioned by the CDR Cell in March 2010 and sanctioned individually by all the lender bankers was not implemented at all though it was expected to be implemented by July 2010. Further, the banks unilaterally decided to exit from the CDR scheme. We have also fled an appeal with the CDR Core Group as per their extant rules in this regard.

Members are aware that the company had fled a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 due to erosion of its net worth. As of 31st March, 2013, the net worth remains negative in view of the accumulated loss .

Meanwhile, our account with the banks were designated as Non- Performing Asset (NPA) by the bankers and in May, 2011 the bankers initiated recovery action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Company is taking all requisite measures to ensure that the outstanding dues to the bankers is settled and has already given its proposal for one-time settlement with the bankers. State Bank of India, which became our lead bank after the merger of State Bank of Indore with it in August 2010, also sent us a possession notice in October, 2011 against which the company has already fled an application with the Debt Recovery Tribunal. The management is making constant endeavors to move on with discussions with the bankers so as to arrive at a mutually acceptable proposal.

The management is also evaluating various options with respect to raising the funds required for settling the banks'' dues, including selling or leasing the land on which the factory is situated and shifting the operations to an alternate site. As of date, the management is seriously considering a couple of proposals, although a structured outcome is yet to emerge.

Directors

Mr Deepak B Sekhri and Mrs. Anita D Sekhri are proposed for the reappointed by the Board as Managing Director and Whole time Director respectively, subject to confrmation of the shareholders at the general meeting. The approval of the members for their appointment as Managing Director and Whole Time Director respectively is being sought at the ensuing Annual General Meeting.

In accordance with the provisions of the Articles of Association of the Company, Mr. Deepak Sekhri, retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment. The Board recommends his re- appointment.

Statutory Auditors

The Auditors M/s Batliboi & Purohit, Chartered Accountants, Mumbai, hold offce until the conclusion of the ensuing Annual General Meeting. The Board recommends their reappointment. The Company has received a certifcate to the effect that their appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Remarks of Auditors

The point mentioned in Auditors Report as the Basis of Qualifed Report that Accumulated losses is more than 50% of its Net worth is because the Company has been facing lot of operational problems in recent past due to shortage of staff, senior fnance head and there is no production and sales in the Company. Also due to shortage of funds, the Company has become a sick unit. Therefore, Company has applied in the B.I.F.R / A.A.I.F.R for its restructuring.

Point no.iii of Annexure to Auditors Report regarding Loan granted to related parties.

As the Company is a sick company it was unable to comply with provisions of section 295 and obtain approval from Central Government. It is in the process of Complying with the various provisions of the Acts.

Point no. ix of Annexure to Auditors report in respect of Statutory Dues

It has been observed that there have been few delays in payment of Statutory Dues. As the Company is a sick company and have accumulated losses it was unable to pay its Statutory dues. The company is in the process of settling all its Statutory dues.

Others remarks of the Auditors are self-explanatory in nature read with respective notes to accounts and need no further clarifcations.

Public Deposits

The Company has not invited and/ or accepted any deposits within the meaning of Section 58 A of the Companies Act, 1956, read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder.

Directors'' Responsibility Statement

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

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 accounting policies have been selected and applied consistently and all judgments and estimates made are reasonable and prudent , so as to give a fair view of the state of affairs of the Company as at 31st March, 2013 and of the loss for that period ;

c) proper and suffcient care has been taken 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 fraud and other irregularities ;

d) the annual accounts have been prepared on a going -concern basis.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information required in terms 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 is given as Annexure A to this Report.

Subsidiary Company

The statement pursuant to Section 212 of the Companies Act, 1956 in respect of the Company''s subsidiary viz. SGFL International BV is attached as Annexure B to this Report. The subsidiary was constrained to sell off its investments in view of the fall in global demand and due to serious operational problems. The consolidated fnancial statements of the Company and its subsidiary forms part of the Annual Report.

Pursuant to the General Circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs , the Board has

given consent for not attaching the Balance Sheet, the Proft and Loss Account and other documents as set out in section 212 (1) of the Companies Act,1956, in respect of the subsidiary. However, these documents are available for inspection by any member at the Registered Offce of the Company, during working hours upto the date of the Annual General Meeting. Copies of these documents shall also be made available to any member of the company upon request.

Particulars of Employees

There are no employees drawing remuneration in excess of the limits specifed in section 217(2A) of the Companies Act, 1956.

Industrial Relations

The company was constrained to lay off few employees in view of partial closure of operations consequent to which they had moved the Industrial Court, Thane for payment of closure compensation.

The company has been taking efforts to ensure peaceful severance of service and amicable settlement of the dues of the employees concerned. In reciprocation, some of the employees have accepted the company''s proposal and their dues have been settled. However ,the Industrial Court, Thane ,has restrained the company from shifting, selling, parting with or creating third party interest in respect of its plant, machinery , land, building or any immovable property .

Management Discussion & Analysis Report and Report on Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion & Analysis Report, the Report on Corporate Governance and the certifcate in respect of compliance of requirements of Corporate Governance are annexed to this Report and form part of this Annual Report.

Acknowledgement

Your Directors express their grateful appreciation to the company''s valued customers, suppliers, investors and bankers for their continued support, assistance, co-operation and guidance. Your directors also thank all the employees and executives for their contribution and look forward to their continued support in the future too.

Date: 06.01.2014

Place: Mumbai For and on behalf of the Board of Directors

Sd/-

Deepak B. Sekhri

Chairman & Managing Director

---

Mar 31, 2010

The Directors have pleasure in presenting the Annual Report and the Audited Statement of Accounts for the Financial Year ended 31st March ,2010.

Financial Highlights

(Rs. in lacs)

2009-2010 2008-09

Operational Income 2958.85 4180.84

Other Income 348.56 233.00

Total Expenditure 5801.26 4787.44

(excluding interest)

Interest 1327.44 1409.62

Profi t/ (Loss) before Tax (3840.18) (1783.22)

Tax Expense (91794) (1186.85)

Profi t/ (Loss ) after tax (2922.24) (596.37)

Dividend



In view of the loss incurred , the Board regrets their inability to recommend dividend for this year.

Operations

During the year under review, the turnover of the Company reduced considerably to Rs. 2958.85 lacs against the previous years Rs. 4180.84 lacs.This is attributable to the failure of the Corporate Debt Restructuring (CDR) package on the one hand and the global meltdown on the other, besides the recurrent labour problems faced by the company.

The CDR package which saw the company take a few positive steps in late 2008 and early 2009 failed to meet the Companys requirements and expectations since all the facilities werent released in time to gear the company towards fulfi lling its business obligations. The company was therefore constrained to apply again to the CDR Cell for reworking of the package during the last quarter of 2009 . Due to unfavourable circumstances and lack of consensus amongst the bankers consortium, the approval to this CDR proposal took longer than expected. Pending approval of the reworked package, the bankers had not released the working capital limits essential to the survival of any medium -sized unit given the melt-down in the global scenario. While the Company had been able to secure orders from some of its age-old European customers despite the economic downturn , many of these orders could not be executed by the company due to lack of working capital .

The global meltdown ofcourse left its scars on the export turnover which has always been the mainstay of the Companys business . This in turn resulted in the company not being able to meet its projected turnover under the CDR package, which led to an unprecedented tightening of working capital limits . In short the entire operations was into a vicious circle , and needless to say that our capacity

utilization was well below average industry standards.

Unfortunately, all these factors resulted in mounting losses for the Company so much so that the Companys net worth which stands at Rs.2800.48 lacs as on 31.03.2010 has been completely wiped out by the accumulated losses of Rs. 3576.39 lacs.

Under the advice of the Companys auditors , the Board shall be referring the Company to the Board of Industrial and Financial Reconstruction under the proviso to section 15(1) of the Sick Industrial Companies ( Special Provisions ) Act, 1985 .

Presently, the domestic market is showing signs of recovery and the Company has already started reviving its presence in the domestic sector. The export market is also slowly beginning to thaw and with the co-operation of the bankers in implementing the reworked CDR package without delay , the Company should be able to arrive at a more sustainable position.

The operations of the Companys step-down subsidiaries, Hertecant NV in Belgium, ELFE in France and Hertecant ME in Dubai also took a beating during the year with all of them having reported loss for the fi nancial year ended 31.03.2010.

Corporate Debt Restructuring

As stated earlier, the CDR package sanctioned for the Company in September, 2008 was not very successful in bringing about the fi nancial roundabout that was expected of it.

In view of this situation, during the year under review, the company approached the CDR Cell once again with a request to rework the CDR package and give us the required breather so that the company is able to meet its commitments to its clients and vendors. While the CDR Cell gave its approval to the reworked package at its meeting held on 15th March, 2010, the sanction of the consortium bankers have just been received and the implementation of the reworked package is expected to commence by July, 2010. The reworked CDR package , inter alia, envisages the following :

a) Issue of Optionally Convertible Cumulative Redeemable Preference Shares(OCCRPS) to the extent of Rs. 15.65 crores to the lender- bankers viz. State Bank of Patiala, State Bank of Hyderabad, State Bank of Indore and Bank of Maharashtra on conversion of the Funded Interest Term Loans as on 01.04.2009 and the interest accrued on it thereafter.

The company therefore seeks your approval to the increase in the Authorised Share Capital in order to accommodate the issue of the aforesaid Preference Shares as detailed in the notice convening the Annual General Meeting and for the issue of OCCRPS to the aforesaid lenders under section 81(1A) of the Companies Act,1956.

b) Issue of Equity shares to the promoters in lieu of

their Contribution of Rs. 6 crores, which has already been brought in. Although the members approval for the issue and allotment of shares on a preferential basis was taken at the last Annual General Meeting, no shares were allotted owing to the failure of the CDR package and the applications made to the Bombay and National Stock Exchanges for in- principle listing of the proposed allotment was also withdrawn .

Your approval is sought once again under section 81(1A) of the Companies Act, 1956 for issue of shares to the promoters on preferential basis under the conditions of the reworked CDR package dated 15.03.2010.

Directors

Mr Deepak B Sekhri and Mrs. Anita D Sekhri were reappointed by the Board as Managing Director and Executive Director respectively, subject to confi rmation of the shareholders at the general meeting ,with effect from 01.04.2010 as their previous appointment was valid until 31.03.2010 . The approval of the members for their appointment as Managing Director and Executive Director respectively is being sought at the ensuing Annual General Meeting .

In accordance with the provisions of the Articles of Association of the Company, Mr. Pal Uppal, independent director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re- appointment.

Statutory Auditors

M/s R. K. Chaudhary & Associates, Mumbai, auditors of the Company , hold offi ce until the conclusion of the ensuing Annual General Meeting. The Board recommends their reappointment. The company has received a certifi cate to the effect that their appointment, if made , will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. They have been subject to a ‘peer review by the ICAI.

Public Deposits

During the year under review, the Company has not invited and/ or accepted any deposits, within the meaning of Section 58 A of the Companies Act,1956, read with the Companies (Acceptance of Deposits) Rules, 1975 made thereunder.

Directors Responsibility Statement

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

a) in the preparation of the annual accounts for the year ended 31st March, 2010, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) the accounting policies have been selected and applied consistently and all judgments and estimates made are reasonable and prudent , so as to give a fair view of the state of affairs of the Company as at 31st March, 2010 and of the loss for that period ;

c) proper and suffi cient care has been taken 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 fraud and other irregularities ;

d) the annual accounts have been prepared on a going -concern basis.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Out go The information required in terms 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 is given as Annexure A to this Report.

Subsidiary Company

The statement pursuant to Section 212 of the Companies Act, 1956 in respect of the Companys subsidiary is attached as Annexure B to this Report. As required under the listing agreement, the consolidated fi nancial statements of the Company and its subsidiary are presented as part of this report .The standalone fi nancial statements of the subsidiary together with the Management Report thereon also form part of this Annual Report.

Particulars of Employees

Information as per section 217 (2A) of the Companies Act, 1956 is attached as Annexure C to this report.

Industrial Relations

Industrial relations remained cordial during the year under review.

Management Discussion & Analysis Report and Report on Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, the Management Discussion & Analysis Report , the Report on Corporate Governance and the Certifi cate in respect of compliance of requirements of Corporate Governance are annexed to this Report and form part of this Annual Report .

Acknowledgement

Your Directors express their grateful appreciation to the companys valued customers, suppliers, investors and bankers for their continued support, assistance, co- operation and guidance. Your directors also thank all the employees and executives for their contribution and look forward to their continued support in the future too.



For and on behalf of the Board of Directors

Sd/- Place: Mumbai DEEPAK B. SEKHRI Dated: June 18,2010 Chairman & Managing Director