AFFLUENCE

DIRECTORS' REPORT

To

The Members,

Your Directors are pleased to present the twelfth Annual Report of your Company along with the Audited Annual Accounts for the financial year ended 31st March, 2014.

FINANCIAL RESULTS

The summarized financial results as compared to previous year are furnished below:

OPERATIONAL REVIEW

The Company is engaged in the business of manufacturing value added products including Ferro Chrome, Ferro Manganese, Silico Manganese, Pig Iron, Angel, Channel, Beam, TMT Rods, H.T. Billet, Special Steel Billet, M.S.Billets, Sponge Iron and Iron Pellet.In addition company generates power mainly for captive use but it also export surplus power to GRIDCO. During the year under review the company has achieved a revenue growth of 25% from Rs.74,894.26 Lacs during the FY'2012-13 to Rs.10,0081.54 Lacs in the FY'2013-14 due to better product mix . The operating margins reduced to 18% at Rs.18,012.44 Lacs in the FY'2013-14 versus 19% at Rs.14,346.01 Lacs in the previous year. The PBT increased to Rs.4,575.12 Lacs for the FY'2013-14 from Rs.3,736.87 Lacs in the previous year.PAT increased from Rs.2,654.95 Lacs during the previous financial year to Rs.4,308.81 Lacs during the FY'2013-14.The Net Worth of company improved substantially from 48,526.26 Lacs as on 31st March, 2013 to 65,479.99 Lacs as on 31st March, 2014 and this helped in generation of internal resources for funding expansion plans of Company.

The production of Iron Pellet was 492,928 MT. compared to 22,641 MT. in the previous year. The production of Sponge Iron was 145,861 MT. compared to 133,891 MT. in the previous year. The production of Billet was 98,910.77 MT. compared to 109,206 MT. in the previous year. The production of TMT Bars was 38,496 MT. compared to 40,942 MT. in the previous year.The production of Pipe was 3,406 MT. compared to 896 MT. in the previous year.The production of Angle was Nil compared to 2,723 MT in the previous year.The production of Beam was Nil compared to 1,185 MT in the previous year.The production of Channel was Nil compared to 2,624 MT in the previous year. The production of Pig Iron was Nil compared to 5,519MT in the previous year.The production of Ferro Manganese was 12,526 MT. compared to 17,517 MT in the previous year. The production of Silico Manganese was 16,252 MT. compared to 16,225 MT in the previous year. The production of Ferro Chrome was 21,996 MT. compared to 13,390 MT. in the previous year.

The captive power generated during the year was 423.75 million units as against 390.67 million units in the previous year.

The Company has 6 wind power plants in Maharashtra and during the year 6.98 million units were generated against 4.86 million units during the previous year.

CREDIT RATING

The company has been awarded the financial credit rating of A-/Negative for long term banking facilities and A2+ for short term banking facilities by CRISIL. The rating underscores the financial strength of the company in terms of the highest safety with regard to timely fulfillment of its financial obligations.

The above rating continues to draw strength from promoter's experience, operational efficiency by virtue of having an integrated plant, production of value added products fetching higher margins, increasing profit levels and moderate its financial position.

EXPANSION PROJECTS

The company is implementing Phase III B expansion plan at its Sambhalpur plant with an overall planned investment of around Rs.296.50 Crores out of which Rs.157.38 Crores have already been invested till Mar'14 and has planned its scheduled completion by Oct'2014. The company is adequately utilizing the financial assistance received from various banks and financial institutions for the Phase III B. Below mentioned projects are to be completed by Oct'2014 except Railway Siding, which is a part of Phase III A.

We are very close to the completion of the above project. Apart from the above projects, we have also started new projects being financed out of internal accruals of the company. These projects are DRI Plant of 350 TPD X 2 and SMS Plant of 8 Ton x 4.  

 CHANGES IN SHARE CAPITALDuring the year under review, the Company has allotted 32,98,400 Equity Shares of Rs. 10/- each on preferential basis at a premium of Rs. 115/- each to the entities belonging to promoter group and strategic investors belonging to non promoters group and the Company has cancelled 39,19,000 Equity Shares in view of Amalgamation, which were held by the Amalgamating Companies and the relevant compliances were complied with.Consequent to the said allotment, the Paid-up Share Capital of the Company stood to Rs. 37,84,62,170/-as on 31/03/2014. The entire proceeds received from the allotment have been utilized towards the object of the issue.  DEMATERIALISATION OF SHARESAs on the reporting date, 37,730,217 equity shares, representing about 95.98% of the total paid-up capital of the Company, have been dematerialized through the depository- National Securities Depository Limited (NSDL). 

DIVIDEND

Considering the capital intensive nature of the industry and in view of the future funds requirements for the in-hand projects, your Directors do not recommend any dividend for the financial year 2013-14.     

SUBSIDIARY COMPANIES

As on 31st March 2014, your Company has 3 subsidiaries, namely Shyam Minimet Africa (P) Ltd, Damodar Aluminium Pvt. Ltd. and Singhbhum Steel and Power Ltd. There are no 2nd layer subsidiaries.

Damodar Aluminium Pvt. Ltd. and Singhbhum Steel and Power Ltd. have become the subsidiaries of the company in view of Amalgamation.

JOINT VENTURE COMPANIES

MJSJ Coal Limited: Your Company has entered into a joint venture with the Government of India together with Jindal Stainless Limited, Jindal Steel and Power Limited and Jindal Energy Limited under a PPP model. A captive coal block has been allotted to the said Company in Talcher Colliery belt. At present, acquisition of land is going on for effective implementation of the coal mine.

PUBLIC DEPOSIT

Your Company has not accepted any deposit during the year under review within the meaning of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules 1975.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013, and the Company's Articles of Association, Sri Sanjay Kumar Agarwal and Sri Dev Kumar Tiwari, Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The details of the Directors seeking re-appointment together with the nature of expertise in the specific functional area is provided in the Director's profile forming part of this Annual Report. Members are requested to consider their reappointment as a Director, liable to retire by rotation. 

Sri Deepak Kumar Agarwal has been appointed as an Additional Director on the Board with effect from 14th July, 2014. He shall hold office upto the date of ensuing Annual General Meeting. The Company has received a notice under Section 160 of the Companies Act, 2013 proposing the candidature of Sri Deepak Kumar Agarwal as Director of the Company. In view of his vide experience and qualifications, your Directors recommend his appointment. If appointed, he will continue to act as the Whole Time Director of the Company.

Pursuant to the provisions of Section 149 of the Act, the Company has received a notice in writing under Section 160(1) of the Act from one member proposing the candidature of Smt. Kiran Vimal Agarwal for the office of the Women Director along-with the security deposit as envisaged under the Act. The matter regarding appointment of Smt. Kiran Vimal Agarwal was placed before the Nomination and Remuneration Committee and the Board, which recommended her appointment as such.

RISK MANAGEMENT

At the heart of the risk management policy of the Company, there is a comprehensive and integrated risk management framework comprising of prudential norms, structured reporting and control.

CORPORATE SOCIAL RESPONSIBILTY

Your Company recognises that its business activities have direct and indirect impact on the society. The Company strives to integrate its business values and operations in an ethical and transparent manner to demonstrate its commitment to sustainable development and to meet the interests of its stakeholders. The Company is committed to continuously improving its social responsibilities, environment and economic practices to make positive impact on the society.

Create a positive footprint within the society to make a meaningful difference in the lives  

   of people by continually aligning its initiatives to the goals for sustainable development.

Maintain commitment to quality, health and safety in every respect of the business and

   people.

Undertake ethical business practices across the supply chain.

Make positive impact on the environment and promote good environmental practices.

Promote equality of opportunity and diversity of workforce throughout its business

   operations.

It is evident that there is a paradigm shift in the thought process on social responsibility. Today is the time when organizations have realised that social commitment is very much part of their business. Martin Luther King's words resonate powerfully when he made this earnest call for social justice: human progress is neither automatic nor inevitable. We

are faced now with the fact that tomorrow is today. Your company aims:

At establishing and maintaining a dynamic organizational structure suited to meet

   present and future Company needs;

Attracting competent personnel with growth potential and developing their maximum

  capabilities in a working environment through the provision of opportunities for

  advancement and other incentives;

Developing and sustaining a favourable employee attitude and obtaining maximum

   contribution from employees through stable employment, adequate salaries

   commensurate with the Company's capacity to pay and maintaining

   good and safe working conditions and job satisfaction;

Establishing a system for redressal of employees' grievances in the shortest possible  

   time;

Providing training facilities, internal and external, and other opportunities for self- 

   development in their current joband for advancement;

The steel making process is a highly resource and energy intensive process.

All steel plants have upgraded their production processes with clean technologies so as to minimise the impact on the environment. The various factories and undertakings of the organisation comply with the rules and regulations laid down by the various regulatory bodies including carrying out of various checks and inspections from time to time. Your Company is committed to protection of the environment and the promotion of responsible corporate policies that conserve and optimally utilise resources and at the same time, sustain the economic environment for growth.

QUALITY MANAGEMENT

The Company practices stringent statistical process control to enhance product quality in line with demanding customer need. The Company continues to maintain the ISO- 9001-2008 Quality Management System.

CORPORATE GOVERNANCE

Your Company is committed in maintaining the highest standards of Corporate Governance and firmly believes in attaining maximum level of transparency, integrity and accountability in all facets of its operation and in all its interactions with its stakeholders. Your Company adheres to the highest ethical standards and thrives to be a responsible corporate citizen. The Management Team and all other employees of the Company maintain a high level of ethical values for achieving business success.

AUDITORS

Your Company's Statutory Auditors, M/s S. K. Patodi and Co., Chartered Accountants, Kolkata will retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from them to the effect that their appointment, if made, will be well within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not  disqualified for re-appointment within the meaning of Section 226 of the said Act.      

The observations made in the Auditors' Report read with Notes to Accounts are self-explanatory and therefore, do not call for any further elucidation.

COST AUDITORS

Pursuant to the Companies (Cost Accounting Record) Rules, 2011 and circular dated 11th April, 2011 issued by the MCA, Cost Audit Branch, your Board has re-appointed M/s D. Radhakrishnan and Co., Cost Accountants, Kolkata to conduct the Cost Audit of its' Steel Division for the financial period 2013-14. The same has subsequently been approved by the Central Government. The Cost Audit Report for the year ended 31 March 2013 has already been submitted before the Board and was an unqualified one. The XBRL filing of the same shall be duly completed within the due time period. 

PARTICULARS OF EMPLOYEES

None of the employees are drawing remuneration exceeding 5 Lacs per month or Rs. 60 Lacs per year. Therefore details required to be furnished in accordance with Sub Section (2A) of Section 217 of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are not applicable.

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

Information 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 are set out as annexure attached hereto and forming part of this report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies Act, 1956 (as amended), the Directors confirm that

 In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed with the proper explanation to material departure wherever applicable.

 They have followed 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 on 31st March 2013, and of the profit of the Company for that period.

 They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

 The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their sincere gratitude to its customers, dealers, suppliers, investors, members, financial institutions/banks, Central Government, State Government, all regulatory and government authorities and all other business associates for their continued support and cooperation extended by them to the Company.

Your Directors express deep appreciation for the continued efforts and commitment displayed by all the executives, officers and staffs during the year.

Date:  2nd July, 2013

Place: Kolkata         

                                                                                    For and on behalf of the Board

                                                            Brij Bhushan Agarwal          Sanjay Agarwal

                                                Managing Director               Director

ANNEXURE A TO THE REPORT OF DIRECTORS'

STATEMENT PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES ( DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.

I. CONSERVATION OF ENERGY:

a) Efforts made for conservation of energy :

During the year, the Company continued its thrust towards compliances of environmental regulation and energy conservation to improve upon its past performance. Your Company continues to accord priority on the energy conservation schemes to conserve natural resources on an on-going basis including regular review of energy generation and consumption and effective control on utilisation of energy. The following energy conservation measures were taken by the Company during the financial year :

1. Generation of electrical energy by recovering waste energy through installation and    

    commissioning of Two Waste Heat Recovery Boiler having capacity of 9.5 TPH each.

2. Use of Fly Ash, a waste generated from Power Plant, in Brick production.

3. Use of unburn fuel of DRI for generation of power by mixing into coal in boilers.

4. Installation of ABC fans at DRI plant to produce additional heat for utilization in the

    waste heat boiler.

5. Replacement of inefficient motors with energy efficient motors.

6. Installation of on-line temperature controller with sensor on cooling tower.

7. Replaced conventional cooling tower fan blade with high efficiency blade to reduce

   power consumption.

8. Flash steam recovery system to reduce steam loss.

9. Efficient use of by-product gases for Power Generation.

10. Optimized the compressed air pressure setting.

11. Internal energy audit including load balancing study was carried out to understand the

     power losses.

12. Introduced computer aided load monitoring, load shedding system to optimize the

     operation.

b) Additional investment and proposal being implemented for reduction of   

     energy consumption :

1. New DG sets had replaced with old DG Sets  to reduce the power and fuel cost.

2. Efforts are on to reduce auxiliary power consumption in captive power plant by

    replacing conventional system with energy efficient equipments.

3. Investing in alternative or non-thermal based power generation technology.

4. Timely compliance with safety and emission regulation.

5. Building capability for dynamic simulation of power plants.

c) Impact of above measures on consumption of energy :

1. Lower plant specific energy consumption.

2. Improved system cost solutions for our customers and end users.

3. Resulted in improvement of power factor and consequential tariff benefit.

4. Reduced water consumption.

d) Total energy consumption and energy consumption per unit of production

      As per Form A' given hereafter

FORM A

Power and Fuel Consumption

B. CONSUMPTION OF ELECTRICITY PER UNIT OF PRODUCTION

II. TECHNOLOGY ABSORPTION:

FORM B

Disclosure of particulars with respect to technology absorption and research and development

A)   RESEARCH and DEVELOPMENT (R and D)

Specific areas in which the Company carried out RandD :

          1. Better control in process for improving quality of the output.

2. Development of new product and new method of analysis.

3. Re-cycling of water and research on utilization of waste.

4. Improving New Product Development (NPD) lead time.

5. Testing and adaptation of new materials.

6. Product engineering for enhanced product quality and reliability.

7. Production of angel, channel, beams at lower cost.

Benefits derived as a result of above RandD :

 Better control on inputs and thereby improving the quality of the output to match with international specifications.

2. Optimization of resource usage and refinement of process technology.

3. Optimum utilization of waste for generation of power.

4. Reduced fresh water consumption.

5. Safer operations and improved competitiveness.

Future Plan of Action :

1. To reduce the auxiliary consumption of Power.

 Additional investment in manpower, latest instrumentation on to upgrade and

strengthen RandD facilities.

     3. To make capacity addition in power plant.

     4. To improve the quality of Structured rolling mill products to increase the market   

         Share.

Expenses on RandD :

All research and development activities being a part of operation cum projects and the expenditure are of continuous in nature, there is no separate cell for RandD activities and expenses and cost associated with such activities are grouped under the respective heads as per pre established accounting policies.

1. Efforts made towards technology absorption, adaption and innovation :

To increase the consumption of Dolachar for generation of Power.

2. Benefits derived as a result of above efforts :

This will result in reduction in overall cost of coal consumption.

3. Future plan of action

Improving the in-house RandD facilities and workforce to develop and grab the new technologies which have been used for backward and forward integration.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

I.            Activities relating to exports, initiative to increase exports, developments of new export markets for products and services and export plan.

The Company is making continuous efforts to increase its exports by exploring and developing new markets for its product. This effort shows up in the year under review. Increase in export sale marked an increase of 31% as compared to previous year. 

II.          Total Foreign Exchange Earning and Outgo

                      R                In Crores

Date:  14th August, 2014

Place: Kolkata                                                        For and on behalf of the Board

                                                            Brij Bhushan Agarwal          Sanjay Agarwal

                                                Managing Director              Director

NO QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS MADE BY AUDITORS