TO THE MEMBERS
 
 The Directors submit the EIGHTH ANNUAL REPORT on the business and
 operations of the Company and the Audited Statements of Accounts for
 the year ended 31st March, 2011.
 
 FINANCIAL RESULTS:
 
                                               For the       For the
                                            year ended    year ended
                                             31.3.2011     31.3.2010
                                          (Rs in lacs)  (Rs in lacs)
 
 Gross Profit /(Loss)                          335.16       (192.85)
 
 Depreciation /Amortization                    547.80         397.11
 
 Adjustments relating to earlier 
 years                                        
                                             (130.87)         (3.22)
 
                                              (81.77)       (586.74)
 
 Provision/(Credit) for                        272.23          72.73
 MAT/FBT/DEF. TAX/ WT 
 
 Profit/(Loss) after tax                     (354.00)       (659.47)
 for the year 
 
 
 OVERALL PERFORMANCE:
 
 The year 2010-11 saw increase in domestic demand as compared to 2009-10
 and there were increased orders from Automobile and Non automobile
 sectors. The competition grew with more Steel Plants coming up
 especially with backward integration route with Blast Furnaces, Sponge
 Iron and Captive Power, with lower rates which has affected our
 qualities and also net realization. There was an increase in raw
 material prices by almost 30% over the previous year which resulted in
 further increase in our working capital requirement to meet the
 targeted production. The production level in Steel Melting Shop
 remained almost the same i.e. 38585 MT as compared to 38715 MT of
 2009-10. The Rolling Mill production was slightly higher at 36657 MT
 excluding conversion as compared to 33795 MT in 2009-10.  However,
 there was reduction in the conversion tonnage which was at 17052 MT as
 compared to previous year’s 22251 MT. The most encouraging feature was
 increase in production of Forged Round Bars which almost doubled as
 compared to previous year as the stabilization period of Forging Plant
 was almost complete. In the Domestic Sales front the tonnage was lower
 due to steep competition from new Steel producers with backward
 integration. On the Export front the tonnage increased by almost 40% as
 European and U.S. markets opened up after a deep recession in 2008-09
 and part of 2010.
 
 The Working capital gap created by losses in the first half coupled
 with increase in working capital demand due to rising Raw Material
 prices created further problems in achieving targets, resulting in a
 net loss of Rs. 361 lacs in a Sales Turnover of Rs. 26814.06 lacs
 during the financial year 2010-11 as compared to net loss of 659.47
 lacs in a Sales Turnover of Rs. 21954.58 lacs during the year 2009-10.
 Your company in order to tide over this situation has decided to focus
 over niche products by higher capacity utilization of Forging Plant.
 Looking into the market size and demand, your company in the financial
 year 2011-12 expects to achieve consistent production of 500 MT per
 month for the first six months and thereafter increase it production to
 750 MT per month for the remaining part of the financial year. This is
 expected to give the required boost to the overall profitability level
 of the company.  
 
 DIVIDEND:
 
 In the absence of profit, your directors are unable to declare any
 dividend for the year 2010-2011.
 
 PROSPECTS:
 
 Your company has entered into the Forged product material in a big way
 after receiving approval from following customers in 2009-10.
 
 -M/s. Elecon Engineers, Gujarat
 -SIEMENS, Kharagpur
 -BHEL, Tirchy
 -Nuclear Power Corporation Limited
 -ThyssenKrup Industries, Pune
 -Sugar Industries
 -Defence Sector
 
 Apart from normal shafts the company has entered into step shafts,
 Eccentric shafts, special shafts and dies.
 
 -Your company has bagged order of approx., 12 crores from Ordnance
 Factory Ambajhari, Nagpur in Feb, 2011 which will be executed during
 the period April to September, 2011.
 
 -Development of new products continues to remain a major thrust of
 your company for critical end applications and import substitution.
 
 -Number of special grades were developed during the year both for
 Domestic and Export market.
 
 With the Indian economy maintaining its growth momentum by posting 8.6%
 growth for the year under review and the auto industry in good shape
 the outlook for Special and Alloy Steel industry is expected to be good
 ahead.
 
 FINANCE:
 
 The Company has not accepted any fixed deposit from the public during
 the year under review. During the year the promoters of the company
 were allotted 15,00,000 5% Redeemable Cumulative Preference Shares of
 Rs. 100/- each by converting their interest bearing ICD of equivalent
 amount. This has not only reduced the debt and interest burden of the
 company but has also improved the net worth of the company, which got
 significantly eroded due to continued losses posted by the company
 during the last three years. In order to enable the company to convert
 the ICD into Preference shares the Authorised Share Capital of the
 Company has also been increased from Rs. 30 crores to Rs. 40 crores.
 The Authorised Share Capital of the Company now constitutes of Equity
 shares of Rs. 25 crores of Re. 1/- each and 5% Redeemable Cumulative
 Preference Shares of Rs.15 crores having a face value of Rs. 100/-
 each.
 
 COST AUDITOR:
 
 The Directors have appointed Mr. Shridhar K. Phatak, a practicing Cost
 Accountant, as Cost Auditor for the financial year 2011-12 for the
 Company’s Mini Steel Plant at Nagpur for which Central Government’s
 approval has also been obtained.
 
 INDUSTRIAL RELATIONS:
 
 The overall industrial relations in the Company were cordial during the
 year.
 
 DIRECTORS:
 
 Mr. Anurag Saraf, Mr. M. B. Thaker and Mr. Arye Berest, Directors of
 the Company, retire by rotation and, being eligible offer themselves
 for re-election. Mr. G.L.N. Sastry ceased to be Nominee Director for
 Bank of India in the Board of the Company w. e. f. 30th June, 2011
 consequent to his retirement from the Bank upon attending
 superannuation. Subject to approval of the shareholders in the General
 Meeting, the Board of Directors has re-appointed Mr. N. D. Saraf and
 Mr. Anurag Saraf as Whole-time Director and Joint Managing Director of
 the company, respectively, for a further period of 5 years. Necessary
 resolution in respect of their re-appointment has been commended for
 approval of the Shareholders in the Notice of the ensuing Annual
 General Meeting of the Company.
 
 The Company has formulated a Code of Conduct for all members of the
 Board and Senior Management Personnel. All concerned Board members /
 executives have affirmed compliance with the said Code.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT:
 
 Pursuant to the provisions of Section 217 (2AA) of Companies Act, 1956,
 your Directors confirm that:
 
 i)in the preparation of the annual accounts, the applicable accounting
 standards have been followed and there are no material departures.
 
 ii)they 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 of the profit of the
 Company for that period;
 
 iii) proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Act for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 iv) annual accounts have been prepared on a going concern basis.
 
 AUDIT COMMITTEE:
 
 The Audit Committee formed by the Board of Directors of the Company
 consists of Mr. A.S. Kapre, Mr. M. B. Thaker, who are Non-Executive
 Independent Directors of the Company, and Mr. Vinod Saraf who is
 Managing Director. Mr. A.S. Kapre is its Chairman. The
 committee''s role, terms of reference and the authority and powers are
 in conformity with the requirements of the Companies Act 1956 and
 the Listing Agreement.
 
 AUDITORS:
 
 You are requested to appoint Auditors for the current year and to fix
 their remuneration. M/s Salve & Company, Chartered Accountants
 hold office upto the conclusion of the ensuing Annual General Meeting.
 The Company has received the requisite Certificate pursuant to
 Section 224 (1B) of the Companies Act 1956 regarding their eligibility
 for reappointment as Auditors of the Company.
 
 
 AUDITOR''S REPORT:
 
 With reference to the comments made by the Auditor in his Report,
 the Directors wish to state that the relevant notes forming part of the
 Company''s Accounts are self-explanatory and hence do not require
 any further explanation from the Board.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO: 
 
 The statement giving details of conservation of
 energy, technology absorption, foreign exchange earnings and outgo, in
 accordance with the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988 is annexed and marked Annexure `A''
 which forms part of this Report.  
 
 PARTICULARS OF EMPLOYEES:
 
 During the year under review there were no employees receiving remu-
 neration of or in excess of Rs.60,00,000/- per annum or Rs.5,00,000/-
 per month requiring disclosure as per the provisions of Section 217(2A)
 read with the Companies (Particulars of Employees) Rules, 1975.
 
 CORPORATE GOVERNANCE:
 
 Pursuant to Clause 49 of the Listing agreement with the Stock Exchange,
 a Management Discussion and Analysis Report, Corporate Governance
 Report and Auditor’s Certificate regarding compliance of conditions of
 Corporate Governance are made a part of the Annual Report.
 
 ACKNOWLEDGEMENT AND APPRECIATION: 
 
 Your Directors acknowledge the
 support and co-operation received from Central and State Government,
 financial Institutions, Banks, Customers, Suppliers and the
 Shareholders of the Company and expresses its sincere gratitude to them
 for their valuable support. The Directors also appreciate the value and
 contributions made by every employee of the company in the operations
 of the company.
 
                                  On behalf of Board of Directors,
 
                                                      M. D. SARAF
                               Vice- Chairman & Managing Director
 
                                                      VINOD SARAF
 
                                                Managing Director
 
 Place : Nagpur 
 Dated : 29th July, 2011