Dear Shareholders,
 
 The transformation of any steel company into a
 resource-cum-utilities-cum alloy steel organisation is painstaking. At
 Adhunik, the transformation will be completed quicker than usual and be
 fully operational by 2012- 13. Once commissioned, the business model
 will generate sizeable unencumbered cash, which will help rightsize the
 balance sheet and enhance significant value in a sustainable way.
 
 A number of people still make the mistake of dismissing Adhunik as a
 steel company when we are clearly a resource-cum-utilities
 cum-special-steel organisation. This complement not only makes us
 unique from a mid-sized organisational perspective in India, but a
 number of initiatives undertaken over the years helped us emerge as a
 ''different'' company.
 
 This ''difference'' was partly reflected in our financials of 2010-11. We
 reported a sizeable EBIDTA of Rs.587.86 cr even as some of our
 facilities were yet to be commissioned, and the full import of our
 investments will only reflect this year and more visibly from 2012-13.
 
 The difference
 
 We are a different kind of company in the Indian power, metals and
 minerals sector for the following reasons:
 
 - We represent a combination of the robust growth emerging out of three
 sectors in India - power, mining and special steel. There are a number
 of Indian companies with an integration across two of these businesses.
 There is perhaps none with as strong an exposure across all three
 sectors, and definitely none in the country''s mid-cap space. These
 business complements are not mere add-ons; if spun off into separate
 companies, each can potentially hold its own in terms of scale and
 related economies
 
 - We possess a core process competence in our business space that
 translates into high operational efficiency. For instance, yields in
 our steel melting shop and rolling mill are attractively high with a
 declining proportion of rework
 
 - We demonstrated a high proportion of by-product utilisation with the
 objective of reducing conversion costs.  We utilised our blast furnace
 and coke oven gases as fuel in our heating furnace; the gasification of
 coal helped us reduce oil and diesel consumption
 
 - We made a better utilisation of waste through the sale of fly ash to
 cement makers, the pioneering beneficiation of char for onward use in
 our rotary kiln and boilers
 
 - We rapidly transformed the major part (two-thirds) of our end product
 mix towards alloy steel
 
 - We pioneered the technology of recovery of sub grade manganese ore
 through a jigging plant
 
 The result is that we are low cost at one end and high value-added at
 the other, combining two diverse competencies into our organisational
 culture, now increasingly marked by prudent delegation, responsible
 experimentation and precise enumeration.
 
 Reviewing 2010-11
 
 During 2010-11, we reported a 24.8% increase in consolidated revenue,
 37.6% increase in consolidated EBIDTA, 346 basis point increase in
 consolidated EBIDTA margin and 34.2 % increase in consolidated net
 income. We are convinced that this performance represents the start of
 a J curve for the following reasons:
 
 Alloy steel business: The Company is present in the niche alloy steel
 segment, catering to the growing needs of downstream sectors like
 automobile, power, engineering and oil and gas.  The Company has one of
 the largest single location alloy steel manufacturing units with 50% of
 the product portfolio comprising value- added products. Our products
 were approved by all major automobile OEMs (tier I and II) within just
 five years. This strengthened our average realisations for rolled steel
 production from Rs. 39,419 per tonne in 2009-10 to Rs.46,905 per tonne
 in 2010-11
 
 Mining business: Our mining business (merchant mining through Orissa
 Manganese and Minerals Limited) grew 73% in 2010-11 over 2009-10.
 During the year under review, realisations for iron ore and manganese
 ore increased 70.2% and 83.9% respectively. This resulted in an
 increase in the share of revenue from mining increasing to 23% of
 consolidated revenues in 2010-11 against 16% in 2009-10. We expect to
 commence our Suleipat mine (50:50 JV) by the second half of FY 2011-12.
 The iron ore beneficiation plant commenced operations in March 2011
 (benefits to accrue in 2011-12) and we plan to commence our pellet
 plant from the second half of 2011-12. The beneficiation and
 pelletisation plants will help us transform low-grade materials and
 fines into pellets. Our captive iron ore mine will be operational by
 the second half of 2011- 12 and we plan to commission captive coal
 mining by end 2013.
 
 Power: We enhanced our resource base through investments in captive and
 merchant power generation. Our captive power plant of 34 MW is running
 to full capacity. Besides, the construction of the first two phases of
 our merchant power plant in Jharkhand (through APNRL) is proceeding as
 per schedule. We were allocated a captive coal mine (reserve of 69 MMT)
 with Tata Steel for our merchant power plant and expect to commence
 mining from 2013.
 
 Growing competencies
 
 At Adhunik, we expect to drive our profitability for the following
 reasons:
 
 One, we invested significantly in ERP to integrate our entire
 manufacturing process - from the weigh bridge to production planning to
 debtors management. We introduced shared services through a centralised
 department to monitor the entire group activity rather than the same
 department being replicated across our businesses. This helped
 streamline our processes, enhance manpower management and increase
 process efficiency. We partnered with leading global IT giants like
 SAP, Microsoft, GE and Accenture in different areas to automate our
 business process.
 
 Two, our power investment is expected to drive consolidated revenues
 from 2012-13 onwards as Phase I & Phase II will have been entirely
 commissioned by then. We intend to expand the Jharkhand project by
 another 540 MW at the same location. We also signed MoUs with the
 Chhattisgarh, Bihar and Orissa governments to commission 1,000 MW power
 plants in each state, which will expand our merchant power portfolio.
 
 Three, our subsidiary which owns merchant mines is growing at more than
 50% annually. Besides, the flexibility of using these resources helps
 us control costs and ensure raw material availability.
 
 Four, we expect to swap high-cost loans with low-cost alternatives and
 repay debt through accruals.
 
 Five, we plan to encash a part of the value of our mining assets when
 fully commissioned.
 
 Spreading smiles
 
 Adhunik is a responsible corporate citizen. The Company adopted six
 villages near Rourkela through timely investments in village
 infrastructure, healthcare, education, infrastructure, women
 empowerment and economic development (through Nav Nirman Sanstha).
 
 Overview
 
 The transformation of any steel company into a resource-cum-utilities-
 cum-alloy steel organisation is painstaking. At Adhunik, the
 transformation is being completed quicker and should be fully
 operational in 2012-13.
 
 Once commissioned, our business model will generate a fair amount of
 unencumbered cash that will rightsize the balance sheet and enhance
 significant value in a sustainable way.
 
 Regards,
 
 Mr. Manoj Agarwal
 
 Managing Director