ISMT

Last year has been a challenging one for ISMT.  On the one hand we have
 been faced with relentlessly increasing input costs while on the other
 we have been grappling with a largely OEM customer base where prices
 tend to be sticky and where price increases come through only with a
 time lag. In this situation, I believe ISMT has done well to strike a
 balance between the need to maintain and build customer relationships
 and the need to continue to meet financial benchmarks.
 
 Much more importantly, throughout this challenging period the Company
 has been able to keep sight of and pursue its long term objectives. Our
 Vision, as I have reiterated a number of times, is to establish
 ourselves as the most sought after, efficient, profitable and respected
 producer globally of precision seamless tubes and alloy steels.
 
 I am happy to report that in this year, consistent with our Vision, we
 have made significant progress towards becoming an application
 orientated company. Through a process of re- organization, realignment
 and a renewed focus on training, technology development, and quality
 improvements ISMT has been able to make notable breakthroughs in a
 number of key industry sectors. As a result of these efforts, during
 this year, we have not only strengthened relationships with our
 existing customers but also developed a number of new ones. While many
 of these initiatives will take time to translate fully into financial
 results, we believe that they will clearly lead the Company towards its
 eventual goal.
 
 On another very important front, we are now close to commissioning the
 expansion of our tube making capacity at Baramati - trials are already
 underway. As I have shared with you earlier, our total tube making
 capacity is increasing from 155,000 MT/annum to 475,000 MT/annum. This
 increase in scale is a vital part of our strategy to realize our
 corporate vision.  In the last two years we have already been operating
 at full capacity. In order to project our capabilities and our
 leadership position globally it is imperative that we increase this
 capacity.  With the PQF in operation we will meet this objective fully.
 
 A few weeks ago we inaugurated the ISMT Centre of Excellence (ICE), a
 full scale, in- house, residential training center located on a 20 acre
 independent campus that will cater to the training needs of the entire
 company. Once again, we believe that this training institute will be
 central to the success of our growth plans.
 
 The sectors that we are focused on and which will drive the companys
 growth are Energy, Construction, Oil & Natural Gas, Bearings, General
 Engineering and Mining. Fortunately all of these sectors are doing well
 and will, likely, continue to do so in spite of the general industrial
 slow down.
 
 While on this positive note, I would like to take the opportunity to
 express my gratitude to our Customers, Banks, Financial Institutions,
 Business Associates, and Shareholders for their continued support.
 
                                                      Thank you
 
                                                   B. R. Taneja