Dear Shareholders,
 
 The global economic crisis and the slowdown in the Indian economy in
 the year 2011-12 have poised great challenges and difficult times for
 the company. Diverse businesses, economic factors and unavailability of
 raw material has made the year gone by the most tempestuous year for
 the company.  The global economy is still recovering from the slowdown
 in the economies of the developed countries particularly European Union
 and UK.
 
 The financial position of the company for the year 2011-12 was
 affected, mainly due to non-availability of the key raw material - iron
 ore, higher inputs and interest costs.
 
 The uncertainty of the European debt crisis and international foreign
 markets that lead to the depressed global economic scenario also had
 its toll on the Indian economy as a result of which India''s Gross
 Domestic Product (GDP) for FY2012 had the lowest growth in last three
 years, at 6.5 % against 8.4 % in
 
 FY 2011. Besides, GDP for Q4 of FY2012 had a mere growth of 5.3%,
 drastically below the consensus estimate of 6.1%, which is calculated
 to be the slowest since March 2003.This has been mainly on account of
 slowdown in the industrial sector due to cumulative effect of the
 unavailability of raw material, slow demand and monetary constraints.
 No change in the growth rate is expected in the coming fiscal, with RBI
 projecting a growth of 6.5% for 2012-13.
 
 The Union Budget has announced a number of measures to boost the
 investment climate, with special focus on infrastructure and
 manufacturing sectors. For the Steel Industry, the key measures are in
 the form of increasing custom duty on flat carbon steel products from
 the level of 5% to 7.5%. This along with measures to bring back
 industrial growth should allow for accommodation of additional supply
 on capacities likely to be commissioned in 2012-13.
 
 The Global Steel Industry is going through a rough phase with demand
 declining and the major steel economies like USA and Europe running
 into oversupply. The World crude steel production in 2011 stood at 1518
 million tonnes, growing at 6.2% over 2010, with China contributing as
 high as 52% to the incremental production. The growth rate however, was
 considerably lower as compared to 16% in 2010. The WSA has projected
 that global apparent steel consumption will increase by 3.6% to 1422 Mt
 in 2012, following growth of 5.6% in 2011. In 2013, it is forecasted
 that world steel demand will grow further by 4.5% to around 1486 Mt.
 China''s apparent steel consumption in 2012 and 2013 is expected to
 increase by 4% in both the years. India is expected to resume its high
 growth trend after a sluggish performance in 2011. In 2012, India''s
 steel consumption is forecast to grow by 6.9% to reach 72.5 MT and is
 projected to grow further by 9.4% in 2013, driven by increased
 infrastructure investment and higher pace of urbanisation.
 
 India maintained its ranking as the 4th largest steel producer in the
 World with a production of 71.3 million tonnes in 2011, registering a
 growth rate of 4.4% over 2010, as per WSA. According to JPC estimates,
 domestic finished steel consumption posted a growth of 6.8% during
 2011-12 to 70.92 Million Tonnes. A growth rate of 8-9% in the next few
 years is expected to be sustained mainly by factors such as the 1
 trillion USD investment envisaged for the infrastructure sector in the
 12th Five Year Plan, greater emphasis on increasing growth rate of the
 manufacturing sector, higher rates of urbanization, rising middle class
 population and tapping the potential of the rural market. Also, in
 terms of per capita consumption of finished steel, India at 57 kg lags
 behind the world average of 214.7 kg, indicating a huge potential for
 growth.
 
 The company recorded sales turnover of Rs. 2270.54 crs in FY 2011-12 (for
 18 months) against Rs. 2313.28 crs in FY 2010-11 (for 12 months).
 
 With steel production picking up in African countries, Iran, Middle
 East, Saudi Arabia, Bangladesh and a few other developing economies,
 the engineering business of the company supplying steel making, casting
 and refining equipment is expected to further improve in the coming
 years. The demand from the auto industry is driving the demand for
 melting furnaces for foundry applications and heating and hardening
 equipment.
 
 With company having been able to arrange iron ore from sources outside
 India, the steel and pipe business of the company is expected to show a
 turn around.
 
 With various initiatives being proposed by the Government of India for
 promoting environment friendly electric vehicles, the electric vehicle
 business of the company is also expected to grow substantially from
 here over the next 5 years. Profitability however is expected to remain
 under pressure on account of supply chain constraints in the near term.
 
 The company is working on initiatives for restructuring of its debt
 with its lenders and improving the capacity utilization of steel and
 pipe plant which has fallen substantially during this year. I am sure
 the results of these initiatives will be seen shortly and the company
 will be on revival path soon.
 
 I would like to thank and appreciate all my colleagues and the
 shareholders for their dedication and commitment towards the company
 during these testing times.
 
 Mukesh Bhandari
 
 Chairman & Chief Technology Officer