Dear Shareholders,
 
 The fiscal year 2010–11 was a journey of recovery from the global
 meltdown, consolidation and development of path breaking new products.
 The global economic climate posed several challenges, but we made the
 best use of our resources and abilities to grow. Our world class
 manufacturing & project implementation standards helped our clients
 build their own enterprises of tomorrow.
 
 The global steel giants from across the world have shown interest in
 the Indian steel industry in the recent past. Both China and India''s
 domestic steel demand not only survived the economic slowdown, but
 actually grew at a remarkable rate. China accounted for 45% of steel
 production in 2010 and India was recently confirmed as the world''s
 fourth largest steel producer. The crude steel production in India
 registered a year-on-year growth of 6.4% in 2010 and reached 66.8
 Million Metric Tons.
 
 In India, the secondary producers of steel are currently playing an
 important role in production and growth of steel industry. In the
 annual report for FY 2010-11, the Indian Ministry of Steel recognized
 the contribution of several relatively smaller and medium scale units
 such as Sponge Iron Plants, Mini Blast Furnace units, Electric Arc
 Furnaces, Induction Furnaces, which not only play an important role in
 production of secondary steel, but also contribute substantial value
 addition in terms of quality, innovation and cost effectiveness.
 
 Perhaps the greatest challenge facing the steel producers is a sharp
 increase in the cost of iron ore, coal and oil that have not yet been
 matched by price increases for customers. These have created pressures
 on the viability of the steel industry and consequently the
 competitiveness of the user industries.
 
 Inspite of an extremely volatile raw material market, cost escalations
 and non-availability of key raw materials, the company has achieved a
 15% growth in sales to clock a turnover of Rs. 2311 Crores.
 
 Engineering & Projects Division
 
 With the introduction of larger capacity Induction Melting Furnaces
 (IMF), the total installed capacity for Steel production through
 induction route has steadily increased in India over the years. World''s
 largest 40 ton IMF for billet making introduced sometime back is
 gaining popularity with the mini steel plants in India and is helping
 customers produce steel at lower cost. This is also helping them build
 plants of capacity of 0.3 – 0.6 MTPA through the induction route.
 
 The price realisations of products like Billets and TMT bars in export
 markets that we service (Turkey, Middle East, Iran, Africa, Pakistan
 and Bangladesh) have gone up considerably in comparison to the
 financial year 2008–09, making the billet production through Induction
 Furnace route viable again. We are seeing an increased number of
 enquiries for setting up turnkey steel projects over the last 6 months
 from such markets. Therefore, we expect our export sales to go up
 significantly in the year 2011–12 as against 2009-10 and 2010-11
 helping us to not only increase our sales for the E & P division but
 also improve our realisations/ margins.
 
 The company has spent substantial amount of resources in design and
 development of Continuous Casting Machine (CCM) for billets suitable
 for small induction based steel plants. This, we believe, will be a
 highly successful product because the small steel manufacturers using
 induction route want to migrate from ingot making to billet making. We
 have a large captive base of existing customers who can use this
 product. Over the next 5 years, we expect to sell large numbers of CCMs
 and help our customers improve their productivity, yield and price
 realisations.
 
 Along with the growth of the auto industry in India, the foundry sector
 is also booming. Over the next 5 years as India aims to gain a dominant
 position in the auto ancillary market, we see a large market for our
 foundry furnaces.
 
 Induction heating and hardening is another area which is growing along
 with the auto sector. The forging industries are also switching from
 conventional fuel fired furnace to induction heating furnace due to
 increasing cost of oil, pollution related issues and low productivity.
 We are therefore, seeing a good growth in the sales of our Induction
 heating & hardening equipment.
 
 We have been working on a new steel making technology along with a
 scientist Mr. Louis J. Fourie from South Africa for the past 10 years.
 This technology has the potential to dramatically reduce the cost of
 steel production through the use of inferior grade raw materials. The
 Ministry of Steel and the Department of Science & Technology have
 recognized our continuous efforts to bring this concept to a pilot
 stage and have sanctioned & released amount of Rs. 6.55 crores from
 their Steel Development Fund (SDF). We appreciate the contribution from
 Ministry of Steel and the Department of Science & Technology which will
 help us to take this concept to the next stage of development.
 
 The transformer manufacturing started in the year 2009 – 10 has shown
 good progress. The company increased its market share in the furnace
 transformer sector and clocked sales of more than Rs. 20 crores. In the
 coming years, the company plans to widen its focus to cater to
 non-furnace segments and grow this business multifold.
 
 Steel Division
 
 The biggest challenge the company faced during the last financial year
 was the non-availability of iron ore from the Hospet/ Bellary area
 forcing the company to source this critical raw material either from
 east or through imports thereby increasing the cost substantially. The
 problem still continues and will continue to effect the operations till
 the Karnataka Government and the Central Government together resolve
 this serious issue facing the steel industry.
 
 Domestic DI pipe demand grew steadily at the rate of 12% over the last
 five years and the total manufacturing capacity in India stood at about
 1.2 MMT by the end of the year 2010-11. The Company has retained its
 position as the third largest manufacturer of DI Pipe (by actual
 production), and is augmenting its capacity further. The company has
 commissioned its 128 m³ Blast Furnace and new facility for DI Pipe
 production of higher diameter up to 1200 mm. The Company also got BIS
 approval for higher sizes of DI Pipes up to 1200 mm. The marketing and
 distribution network for DI pipes has been expanded by opening offices
 across 14 states in the country and experienced people have been
 leading the marketing function across the network.
 
 With the approval from Power Grid Corporation, the company has
 established credibility in the market and is poised to increase the
 production of angles for Transmission Line Tower (TLT) applications.
 The Company has also received BIS approval for its MS Billets which has
 improved its realization in the Gujarat market.
 
 Electro TMT Plus bars have emerged as the premium brand in rebar
 segment in Gujarat. With the kicking in of full Hans Ispat capacity,
 Electro TMT Plus bars has become the largest selling TMT brand in
 Gujarat. With a strong brand image, the price realizations are steadily
 improving and the product has been approved for supply to various large
 Government and private projects. The new variants of TMT introduced by
 the company like CRS (Corrosion Resistant Steel) and EQR (Earth Quake
 Resistant) are gaining acceptability in the market and the volumes are
 slowly increasing resulting into higher realisations per ton.
 
 With the commissioning of ladle refining furnace and induction refining
 furnace, the company will focus more on production of value added
 products like stainless steel and forging grade low alloy steel.
 
 The Company renewed the appointment of ECS (Eicher Consultancy
 Services, subsidiary of Price Waterhouse Coopers) to help it with
 productivity and EBITDA improvements through FY 2010-11. Several
 process improvements have been made in SMS, TMT Mill and Structural
 Mill to improve the productivity and optimize cost.
 
 Electric Vehicle Division
 
 Electric 2 wheeler market has seen an upward trend in India in the
 recent past on account of subsidy from the Central Government, petrol
 price hike and improved performance of our products due to various R &
 D efforts.
 
 We hope to take the maximum advantage of the above situations because
 of being the longest standing brand in the market, our reputation of
 being the EV technology leader and a vast dealer network across India.
 We expect more than 50% growth in our revenues in the coming financial
 year and an exponential growth from there on.
 
 We are improving our key internal operations to ensure a consistent and
 positive experience for our customers, partners, suppliers and
 employees.
 
 As a Group we remain committed to corporate and social responsibility.
 In all of our actions we strive to ensure that all economic,
 environmental and social aspects are considered. We believe that this
 approach, driven by our principles of respect, trust and integrity,
 makes us more responsible and informed as a company.
 
 I wish to record my appreciation to all for their contribution towards
 the growth of the company and look forward to take on new challenges
 and scale new heights of achievement in future.
 
 Mukesh Bhandari
 
 Chairman & Chief Technology Officer