Dear Members,

Your Directors present 12th Annual Report on the operations and performance together with the Audited Financial Statements for the year ended on 31st March 2015.

Particulars Current Year 31.03.15 Previous Year 31.03.14
Total Turnover and other Receipts 36604.09 32941.81
Gross Profit/Loss(Before deducting any of the following) 2674.74 272.57
A. Interest and Financial charges 2991.73 3162.11
B. Depreciation, Amortisation and Impairment 874.02 1748.42
C. Tax Liability
I. Current Tax 0.00 0.00
II. Deferred Tax 1644.16 (1131.20)
III. Prior year Tax adjustment (0.28) 5.74
Prior period adjustment 35.55 29.17
Net Profit available for appropriation (7583.62) (3542.67)
Provision for Investment Allowance Reserve Nil Nil
Net Profit.
A. Add: Brought forward from last years balance (5175.09) (1632.44)
B. Less: Transferred to: General Reserve Nil Nil
Transfer to Debenture Redemption Reserve Nil Nil
Dividend: Dividend has not been recommended by the Board N.A N.A
Balance Carried forward (12812.85) (5175.09)


During the year under review Net Turnover of the Company has been increased from Rs. 32941.81 Lacs to Rs. 36604.09 Lacs as compared to previous years turnover. However, due to increase in the operational expenditure, the Company has incurred a net loss after tax of Rs. 7583.62 lacs as compared to 3542.67 lacs in the corresponding year.


Due to loss, your Directors have not recommended dividend for the financial year 2014-15.


The Company is engaged in the business of manufacture sponge iron, ferro alloys, MS & SS Angle and power and the same are sold in the domestic market. Because of the captive power generation, company has advantage of low power cost per unit of manufacturing. Company is having its power plant of 40 MW. Company is also generating power on account of waste heat recovery system resulting economic price. Power generated is used for captive consumption and surplus power is sold resulting profit. There was no change in the nature of any of the business activity during the year.


The company does not have holding or subsidiary companies during the year and no other company has become holding / subsidiary/ joint venture / associate.

The Company is an Associate Company of M/s Shah Alloys Limited as it is holding more than 20% of the Equity Share Capital in the Company as a Promoter Company.


The Company has total accumulated losses of Rs. 1281284834 at the close of the financial year. Since Companys 100% net worth is eroded, the Board of Directors have passed necessary resolution to make a reference to Board for Industrial And Financial Reconstruction (BIFR) under the provisions of The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).


The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.


In conformity with provision of Clause 32 in the Listing Agreement (s), the Cash Flow Statement for the year ended 31.03.2015 is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).

The Company has paid listing fees for the year 2015-16 to above stock exchanges.


As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report


The Company is not entering into related parties transactions for sale/purchase of goods or services at preferential prices. However, all the transactions in the nature of sales/purchase of goods or services are made on arms length basis. The same were reported to the Board at every meeting and Board took a note of the same and approved. Other details for inter corporate financial transactions or remuneration and other benefits paid to directors, their relatives, key managerial personnel etc. are given in the notes to the accounts vide note no. 31 as per requirements of AS 18.

The Company has formulated various other policies like Risk Management Policy, Evaluation of Board Performance Policy, CSR Policy etc. etc. All such policies were documented and adopted by the Board in its meeting held on 14.2.2015.

Full details of Risk Management Policy are given in the Corporate Governance Report under the head Whistle Blower Policy.

As the Company is loss making one, the provisions related to CSR is presently not applicable to the Company.

Regarding Performance Review of each of the member of the Board and also the performance of the various Committees and the Board, the Company has adopted the Model Code of Conduct for Independent Directors, Key Managerial Personnel as prescribed in Schedule IV to the Companies Act, 2013 and also as prescribed in the SEBI (Insider Trading) Regulations. The Company strictly follows the procedure to obtain necessary timely declarations from each of the directors and key managerial personnel from time to time.


During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company. However, the Company had in earlier years provided bank guarantee on behalf of Shah Alloys Ltd. and the outstanding liability as on 31.3.2015 is Rs. 603.78 lacs and same is shown as contingent liability.


The Board of Directors supports to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on corporate governance.


Details about the Board of Directors Meetings are attached to the Report on Corporate Governance. Further, Shri Rajendra V Shah, will be the Director retiring by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. Shri Piyush Chandarana has tendered resignation from the position of Director - Commercial w.e.f. 13th May, 2014.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.


(Pursuant to Provisions of section 149(6) OF the Companies Act 2013)

All the Independent Directors of the Company do hereby declare that:

(1) All the Independent Directors of the Company are neither Managing Director, nor a Whole Time Director nor a Manager or a Nominee Director.

(2) All the Independent Directors in the opinion of the Board are persons of integrity and possesses relevant expertise and experience.

(3) Who are or were not a Promoter of the Company or its Holding or subsidiary or associate company.

(4) Who are or were not related to promoters or directors in the company, its holding, subsidiary or associate company.

(5) Who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company or their promoters or directors, during the two immediately preceding financial years or during the current financial year.

(6) None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary, or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakhs rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year,

(7) Who neither himself, nor any of his relatives,

(a) Holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of three financial years immediately preceding the financial year in which I\he is proposed to be appointed.

(b) Is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial years in which he is proposed to be appointed of

(i) A firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; OR

(ii) Any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent, or more of the gross turnover of such firm;

(iii) Holds together with his relatives two per cent, or more of the total voting power of the company; OR

(iv) Is a Chief Executive or director, by whatever name called, or any non-profit organization that receives twenty five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; OR

(v) Who possesses such other qualifications as may be prescribed.


In terms of section 134 Clause (C) of Sub-Section (3) of the Companies Act, 2013, in relation to financial statements for the year 201415, the Board of Directors state:

a) In the preparation of the annual accounts for the financial year ended 31st March 2015, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;

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

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concern basis; and

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

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


In compliance with Section 178 (1) as also in compliance with Clause 49 of the Listing Agreement, the Board of Directors do hereby declare that:

a. The Company has proper constitution of the Board of Directors including independent directors in proportion as per requirement of clause 49 of the Listing Agreement. However, the Company is still in process for appointing a suitable person as woman director as required under Section 149 of the Companies Act, 2013.

b. The Company has constituted Nomination and Remuneration Committee, Stakeholders Relationship Committee, Audit Committee as per requirements of the Clause 49 of the Listing Agreement and provisions of the Companies Act 2013.

c. The Company has the policy for selection and appointment of independent directors who are persons of reputation in the society, have adequate educational qualification, sufficient business experience and have integrity & loyalty towards their duties.

d. The Company pays managerial remuneration to its Managing/Whole Time Directors based upon their qualification, experience and past remuneration received by them from their previous employers and companys financial position.

e. The Independent Directors are paid sitting fee for attending Board and other committee meetings as decided by the Board from time to time. This sitting fee is decided considering the financial position of the company.

f. The Company is not paying any commission on net profits to any directors.

g. During the year the Board has met 4 times during the year. The details of presence of every director at each meeting of the Board including the meetings of the Committees, if any, are given in the reports of the Corporate Governance.


The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.


1. The Board makes evaluation of the effectiveness and efficiency of every individual directors, committee of directors, independent directors and board as a whole.

2. For these purpose the Board makes evaluation twice in a year on a half yearly basis.

3. The performance of individual directors are evaluated by the entire Board, excluding the Director being evaluated on the basis of presence of every directors at a meeting, effective participation in discussion of each of the business of agenda for the meetings, feedback receives from every directors on draft of the minutes and follow up for action taken reports from first line management.

4. Effectiveness and performance of various committees are evaluated on the basis of the scope of work assign to each of the committees the action taken by the committees are reviews and evaluated on the basis of minutes and agenda papers for each of the committee meetings.

5. The performance of independent directors are evaluated on the basis of their participation at the meetings and post meeting follow up and communication from each of such independent directors.


Company has appointed three whole time directors namely: Shri Sujal Shah, Shri B.M. Singhal and Shri Anil Pandya. Total managerial remuneration paid to each of them during the current year and previous year are as under:

I. The Percentage of the remuneration of each director to the median remuneration of the employees of the company for the financial year:

Sr. No. Name of director Designation Remuneration paid in current year Remuneration paid in previous year Total cost of remuneration of the employees Percentage remuneration of director to total cost of remuneration
1 Shri Sujal Shah Whole Time Director 4,32,000 4,32,000 10,10,93,239 0.42%
2 Shri B.M Singhal Whole Time Director and CFO 4,92,000 4,92,000 10,10,93,239 0.48%
3 Shri Anil Pandya Whole Time Director 4,80,000 4,72,200 10,10,93,239 0.47%
4 Shri Hardik Modi Company Secretary 1,92,500 (upto 7.10.2014) 3,02,500 10,10,93,239 0.19%

II. The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any in the financial year:

There was no increase in remuneration. However, in case of Shri Anil Pandya, there was increase in benefits in Feb. 2014 and hence there is marginal increase seen during the year under review.

III. The percentage increase in the median remuneration of employees in the financial year:

During the year the total remuneration of employees was Rs. 10,10,93,239 as against Rs. 9,45,43,964 in the previous year constituting a net increase of Rs. 65,49,275 constituting 6.48%. This increase in remuneration of employees was due to increase in overall inflation index.

IV. The number of permanent employees on the rolls of company:

There were 383 permanent employees on the rolls of company.

V. The explanation on the relationship between average increase in remuneration and company performance;

NOT APPLICABLE as there was no substantial increase in remuneration of any employee during the year. The increase was only due to increase in inflation index.

VI. Comparison of the remuneration of the Key managerial personnel against the performance of the company :

The KMP i.e. whole time Directors, Company Secretary, CFO are being paid total Remuneration of 15.965 Lacs per annum.

VII. Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year;

Closing Market Price of shares of Company as on 31/03/2014 : Rs. 1.53 /-

Closing Market Price of shares of Company as on 31/03/2015 : Rs. 1.75/-

Earning Per share for the financial year ended on 31/03/2014 : Rs. (4.17)/-

Earning per share for the financial year ended on 31/03/2015 : Rs. (3.34)/-

Regarding other information like Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies is not given herewith since Company had made IPO more than 5 Years before and there was no substantial variation in the market price of shares of the company. Companys EPS is negative and hence PE Ratio is not given.

VIII. Comparison of the remuneration of each key managerial personnel against the performance of the company;

As the company is paying minimum managerial remuneration to its managerial personnel and the Company is the loss making one the comparison of remuneration of each of the KMP with performance of the company is not comparable.

Since WTDs are being paid minimum remuneration and other KMPs are getting remuneration as per prevailing industry norms, it is not possible to compare remuneration with the performance of the company.

IX. The key parameters for any variable component of remuneration availed by the directors: NOT APPLICABLE.

X. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year;

There were 38 employees who are receiving remuneration in excess or higher than the remuneration of Director or Key Managerial Personnel.

XI. Affirmation that the remuneration is as per the remuneration policy of the Company.

All remuneration of the Employees and directors are paid as per remuneration policy of the Company.


Particulars of the employees as required under provisions of Section 197 (12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are not attached with this report since there was no employee who was in receipt of remuneration in excess of 5,00,000 per month during the year or Rs. 60 Lacs per annum in the aggregate if employed part of the year.


Statutory Auditors

M/s. Talati & Talati, Chartered Accountants, an Auditors firm are statutory auditors of the company since 2008-09. As per Rule 6(3) of the Companies (Audit and Auditors) Rules 2014, they are eligible to continue as the statutory auditors of the company for financial years 2015-16, 2016-17, and 2017-18. Accordingly Statutory Auditors of the company have given their letter of consent and confirmation under section 141(1) the Companies Act 2013 for their appointment as Statutory Auditors of the Company up to the financial year 201718 hence, the Board has now proposed to appoint the Statutory Auditors for a period of up to 2017-18. Necessary Resolution for their appointment as the Statutory Auditors and fixing their remuneration is proposed to be passed at the Annual General Meeting.

COST Auditors

M/s. Ashish Bhavsar & Associates, Cost Accountants have been appointed for auditing cost accounting records of the Company for the year ending 31st March, 2015. Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under.


The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the audit Committee in order to strengthen the internal control system for the Company.


The Company has appointed M/s. KAMLESH SHAH & SHAH CO. as the secretarial auditor for the financial year 2014-15. They have given their report in the prescribed form MR-3 which is annexed to this report as an ANNEXURE.


The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non- Executives Directors and Independent Directors except the woman director. CS has resigned w.e.f 8.10.2014 and Company has already issued an appointment letter to new CS who is expected to join in the month of June 2015. The Company is in process of appointing of suitable woman director.


The Directors submit their explanations to the various observations made by the Statutory Auditors in the report are as under for the year 2014-15.

Para for Basis for Qualified Opinion

Since last many years lenders keep on ensuring the sanction and disbursement of the term loan for our ongoing projects and every year revised projections were submitted. The bankers even after the sanction of the term loan have not disbursed fully and hence funds of Rs. 103,89,20,943/- is blocked in the such ongoing projects. Since there is no active development in the ongoing project due to non sanction of funds by lenders as well as no accrual from the operations, as of now the Company does not anticipate execution of such ongoing capital projects and hence have charged back expense of pre-operative expense, trial run expense and borrowing cost element of Rs. 47,48,71,471/ - to the statement of profit and loss during the current year which was earlier capitalized and carried in Capital work In Progress of our ongoing projects. For the remaining balance carried as Capital work In Progress, the company has not carried out any Techno-economic assessment during the year ended 31st March 2015 for the valuations of its ongoing Capital Projects and hence identification of impairment loss and provision thereof, if any, has not been made. Considering the emphasis of the matter, company agreed to appoint an approved valuer to access the impairment of the assets. Company is expecting a report from the valuer and decision will be taken with regard to impairment, if any, on such assets. Apart from this, the Company has paid the capital advances for the amount of 25,26,09,551/- which are currently shown under Long term loans and advances to the suppliers for the supply of customized equipments based of our specific design and requirements.

Annexure to Independent Auditors Report - Para vii (a)

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same have been paid. Annexure to Independent Auditors Report - Para ix

On account of under utilization of capacities, the cash flow was mismatch resulting delay in payment of interest. In the CDR EG meeting flash report as submitted by the Company has been accepted but later lenders have withdrawn from the CDR and not submitted the full scheme to the CDR EG. This has further worsen the cash flow of the Company and now Company is actively negotiating with the lenders for one time settlement (OTS).

In addition to the above clarifications, the notes to the Accounts are self explanatory and give suitable explanation to qualifications in the Auditors Report.


1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company. However, net worth of the company has been completely eroded and Board has decided to approach BIFR under SICA for declaring company as sick unit.

2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future.


Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions and Banks during the year. The Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. The Directors would also like to acknowledge continued patronage extended by Companys shareholders in its entire endeavor.

For and on behalf of the Board
Rajendra V. Shah
Date : 5th May 2015 (DIN: 00020904)
Place : Santej Chairman