AML Steel Ltd Management Discussions

FINANCIAL PERFORMANCE

AML Steel Limited (AMLs) Net Turnover for the financial year ended March 31, 2014 increased to Rs. 126.48 crores from Rs. 112.45 crores in the previous year. The operating profit (PBDIT) of the Company has decreased to Rs. 6.68 crore from Rs. 7.54 crores in the previous year. Net Profit before tax has however has decreased to Rs. 7.09 lakhs from Rs. 8.601akhs in the previous year. The Profit of your Company for the Year 2013 -14 was affected adversely mainly due to the impact of input prices and higher overheads.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The demand for steel in India is expected to rise 7 per cent in next financial year beginning April 1 as compared to sluggish projected growth of 5.5 per cent in 2013-14. The overall outlook for the steel sector is positive and the demand was likely to pick up in next financial year on the back of revival in the economic growth and the governments measures to ease infrastructure Investment Rules.

OPPORTUNITIES

The global steel industry has witnessed reasonable demand growth and steel manufacturing gradually shifted to emerging market such as China and India. By utilizing the optimum resources along with the liberalized Foreign Direct Investment policies can further help to grow the Steel Industries in India.

CHALLENGES

The adverse cost fluctuations in input raw material and its availability & costs, high interest, taxes, duties, inadequacy of funds to the expansion or modification of project Low labour productivity, fluctuations in environment, technology up gradation etc impede the development of Steel Industries in General. One of the major specific threats includes building the capability of the existing work force to meet the higher level of skill requirements, to develop the infrastructure.

OUTLOOK

During the year Our Country improved its position to 04th in the said sector. Your Company always intends to actively pursue these growth opportunities in the fast growing Iron and Steel manufacturing sector in the country. It will focus on the optimum utilization of available resources by creating a balance economy, maximum returns to the members, reaching a good impact on public by adhering to high ethics and standards.

COMPANYS PRODUCTION MILD STEEL INGOTS & TMT BARS:

During the year under consideration your company achieved a turnover of Rs. 126.48 Crores. Your Company is presently using its furnace to convert Scrap into M.S Ingots for its captive manufacturing thus reducing cost of production. Demand for TMT Bar is expected to rise as a result of various initiatives taken by government of India to boost infrastructural Industry.

RISKS AND CONCERNS

Risk and concerns given by the management are not in detail but only highlighting some of salient among them. It includes fluctuation in input prices, nonavailability of adequate financing, Frequent changes in technology, price volatility, Climate Changes, Strict regulatory frame works etc. Managing Director, Directors, Business, Plant heads and executives in charge manage risk on a daily basis through cross functional involvement and intense communication across business.

ADEQUACY OF INTERNAL CONTROL

The company has an internal audit system for assessing suitability of the internal controls, adherences to policies, procedures and taking corrective action to address any gaps. It facilitates proper recommendation for improving the business systems. These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, monitoring operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability with financial reporting. The company has continued with its efforts to align processes and controls with best global practices in these areas as well.

The Audit Committee of the board actively reviews the adequacy and effectiveness of internal control systems and suggests improvements to strengthen the same.

SUBSIDIARIES:

A brief description of AML Steel Subsidiaries is as follows:_

Name	Products	Location
Ankit Ispat Private Limited	MSI (Mild Steel Ingot)	Kariakal
Ashok Steel Industries Private Limited	MSI (Mild Steel Ingot) & TMT Bars	Sri Lanka
AML Steel & Power Limited	Sponge Iron, Power Plant for captive consumption & Steel Melting Shop for manufacturing of Billets	Jharkhand

As required under Section 217 of the Companies Act, 1956, the Audited Statement of accounts along with the report of the Board of Directors and Auditors Report of your Companies, subsidiaries, namely, AML Steel & Power Limited, Ankit Ispat Private Limited and Ashok Steel Industries (P) Limited, Srilanka, are annexed to this report.

PUBIC DEPOSITS:

The Company has not accepted or not renewed any Public Deposits, as defined under section 58A of the companies Act,1956 during the year under review.

HUMAN RESOURCES:

The Industrial Relation with the employees of the Company continues to be cordial. Your Company takes all the necessary steps to facilitate a friendly atmosphere with in the organization by way of hiring, developing and retaining the best personnel.

DIRECTORS:

Shri Ankit Agarwal and Shri Vinay Kishore Kasat, Directors of the Company are due for retirement by rotation at this annual General Meeting who are eligible for re - appointment. Brief particulars of these Directors are given below:

i) Ankit Agarwal- is a Promoter cum Non-Executive Director of the Company. He is an engineering graduate from Anna University, Chennai. And He is a member of the management team responsible for the companys day to day operations and long term.

ii) Vinay Kishore Kasat - is a Non-Executive Independent Director of the Company. He is a graduate in commerce and having an experience in different industries. He is practicing as an industrial consultant from the year 1998. He is also involved in the social activities.

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:

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

(ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 ended March 31 , 2014 and the profit of the company for that year;

(iii) The directors 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, if any;

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

CONSOLIDATED FINANCIAL STATEMENTS:

In terms of listing agreement with the Stock Exchanges, the duly audited consolidated financial statements are placed as Annexure. These statements have been prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective Boards.

PARTICULARS OF EMPLOYEES:

There were no employees of the company who were in the receipt of the remuneration as per the limits prescribed by Section 217(2A) of the Companies Act, 1956 and the rules framed there under.

DISCLOSURE OF PARTICULARS:

The information required under Section 217(l)Ie) 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 forming part of this Report.

LISTING:

Your Companys shares have been listed at Madras Stock Exchange Limited, Delhi Stock Exchange Association Limited and Ahmedabad Stock Exchange Limited. It is confirmed that the Annual Listing fees upto the period from 01.04.2014 to 31.03.2015 has been paid to the aforesaid exchanges.

AUDITORS:

M/s. K.P. Jain & Co., Chartered Accountants, Chennai, the Auditors of the Company retire at the conclusion of the Annual General Meeting and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

In terms of listing agreement with the Stock Exchanges, a compliance report on Corporate Governance is given as Annexure. A certificate from Auditors of the company regarding compliance of conditions of Corporate Governance is placed as Annexure. The Board has laid down a Code of Conduct for all Board Members and Senior Management of the company.

VIGIL MECHANISM:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a vigil mechanism for directors and employees to report genuine concerns has been established.

CAUTIONERY STATEMENT

The statement in this management Discussion and analysis report describing the companys projections, estimates, expectations or predictions may be forward-looking statement within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied.

APPRECIATION:

Your Directors would like to place on record our sincere appreciation and thank the entire team of AML Steel limited for their support inspite of challenging business environment. We take this opportunity to express our sincere thanks to all stake holders for their confidence and faith and to all Government, Regulatory Authorities and Banks for their valuable support.

	For and on behalf of the Board
Place: Chennai	Ankit Agarwal	Ajay Agarwal
Date: 04.09.2014	Director	Director
	(DIN: 00065020)	(DIN: 00064366)

ANNEXUREI TO THE DIRECTORS REPORT

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICUALRS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORSS REPORT FOR THE YEAR ENDING 31ST MARCH 2014:

A. CONSERVATION OF ENERGY:

a) Energy Conversation measures taken:

Periodicals maintenance and check up of plant and plant and machinery and other motor driven equipment to keep them operational at optimum level.

b) Additional Investments and Proposals, if any, being implemented for reduction of consumption of energy.

The management of the company is continuously reviewing areas wherever further energy reduction and savings can be achieved.

c) Impact of measures at (a) and (b) for reduction of energy consumption and consequent Impact on the cost of production of goods.

The measures taken above reduce the cost of replacement.

d) Total energy consumption and energy consumption per unit of production are furnished in the prescribed TForm A enclosed.

B. Technology Absorption Efforts made in Research & Development and Technology are furnished in the prescribe ?Form B enclosed.

C. Foreign Exchange Earnings and Outgo:

1. Activities relating to exports: Initiatives taken to increase exports, developments of new export markets for products and services and export plants: NIL

2. Total Foreign Exchange used and earned

i. On Account of Travel:	NIL
ii On Account of Raw Materials:	NIL
iii Total Foreign Exchange Earned:	NIL

FORMA

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. Power and Fuel Consumption	2013-14	2012-13
1. Electricity
(a) Purchased:
Units (KWH) in Lakhs	307.56	276.23
Total amount (Rs. In Lakhs)	1211.78	1056.20
Rate/Unit (Rs.)	3.94	3.82
(b) Own generation	Nil	Nil
2. Coal	Nil	Nil
3. Furnace Oil	Nil	Nil
4, Others/Internal Generation	Nil	Nil
B. Consumption per unit of production:
Electricity (KWH) - Per MT of M.S.Ingots	947.45	945.23
Electricity (KWH) - Per MT of T.M.T Saria	947.45	945.23

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

Research and development:
1. The specific areas in which Research and development is carried out by the company.	NIL
2. Benefits derived as a result of the above Research and Development.	NIL
3. Future plan of Action	NIL
Possibilities are explored to involve in Research and Development
4. Expenditure on Research and Development
A. Capital Expenditure:	NIL
B. Recurring Expenditure:	NIL
C. Total:	NIL
D. Total R&D Expenditure as a percentage of total turnover:	NIL

Technology Absorption, Adaptation and Innovation.

1. Efforts in brief made towards Technology Absorption, Adoption and innovation

The Company has procured the machinery manufactured by well established Manufacturers. Therefore, the company does not require and has not made any arrangement for import of technical Know-how

2. Benefits derived as a result of the above efforts. Product Improvement and Product development.

3. Information relating to the technology imported during the last 5 years:			NIL
	For and on behalf of the Board
Place: Chennai	Ankit Agarwal	Ajay Agarwal
Date: 04.09.2014	Director	Director
	(DIN: 00065020)	(DIN: 00064366)