Your Director's are presenting the Thirteenth Annual Report of your
 Company together with the Audited Statement of Accounts for the year
 ended 30th June, 2001.
 
 1. FINANCIALS
 
 THE FINANCIAL RESULTS
 
                                                     Rupees in Thousands
 -----------------------------------------------------------------------
                                                  2000-2001    1999-2000
 -----------------------------------------------------------------------
 Financial Results for the year ended 
 30th June, 2001
 
 Total Income                                       1782064      7911312
 
 Gross Profit/(Loss)                                (15019)        89300
 
 Less : Interest                                          -            -
 
 Depreciation                                          2772         2941
 
 Profit/ (Loss) before tax                          (17791)        86359
 
 Less : Provision for taxation                            -            -
 
 Profit / (Loss) after taxation                     (17791)        86359
 
 Prior Period Adjustments                                 -            -
 
 Add : Profit for the earlier years                  138486       138486
 
 Profit / (Loss) available for appropriation         120695       224845
 
 Debenture Redemption Reserve                             -        86359
 
 Balance carried to Balance Sheet                    120695       138486
 -----------------------------------------------------------------------
 
 Since your company has not made any profits during the year under
 review, your Directors have not recommended any dividend.
 
 2. INDUSTRIAL PERFORMANCE
 
 The domestic and global steel industry is in an un-prevented sate of
 recession for the longest period over. Correspindgly trading operations
 has also be marginal.
 
 3. PROJECT IMPLEMENTATION
 
 Both the Blast Furances were operative till 1997-98 and had to be shut
 down for want of funds coupled with depressed market conditions and
 correspondingly low sales realisation and the adverse impact of
 anti-dumping duty on coke. With support of the Financial Institutions,
 the company is taking steps to re-start both the Blast Furances in
 phased manner and it is expected that the commissioning of the first
 Blast Furnace shall taken place by May, 2002 and the second Blast
 Furance by Sept. 2002.
 
 The anti-dumping duty for coke has since been withdrawn. The prevailing
 and potential price of foundry pig iron in Northern India in particular
 provides opportunity for generation of gross margin. This can be
 achieve with highest level of productivity and specific consumption with
 corresponding low cost of production.
 
 Presently the participating Financial Institutions have reviewed the
 status along with Lender's Engineers and Auditors and have given the
 clearance for completion of the steel project, which includes the 2 LD
 Convertors, Lime Calcining Plant, Oxygen Plant, Ladle Furance and
 Continuous Casting Plant. On the basis of the review, appraisal,
 sanction and disbursement of the funds, the steel project is now
 expected to be completed by March, 2003.
 
 4. FUTURE OUTLOOK 
 
 Though industry has not been able to quantity the exact quantum of
 growth in the steel sector, a recent report put out by consultancy
 major mokinsey and Company, has pointed out that the domestic steel
 sector overall would soon see a 8 to 10% surge in demand mainly on the
 back of a good performance by the housing, construction and retail
 sectors. This view is reinforced by the 15% growth posted by the Cement
 Sector. The price of long product has also increased lately by around
 7%. Scrap prices are also on the increase and Electric Arc/Induction
 Furance user would be more inclined to buy Pig Iron.
 
 We are also exploring the market for both Billet and Bars. Our
 strategic advantage of having the plant in Northern India helps us to
 economically self our products in Punjab, U.P. Haryana and Rajasthan
 markets and generate contributions and help in generation of cash of
 sustaining the business.
 
 The Director's wish to point out that barring unforeseen circumstances,
 the anticipated turnaround and the proposed project implementation plan
 depend substantially upon the availability of finance and the related
 disbursements becoming available in accordance with the time schedule
 presently adopted.
 
 5. RESTRUCTURING OF MANAGEMENT AND CAPITAL
 
 The members may be aware that the integrated Steel Project of the
 company at Jagdishpur has undergone time and cost overruns. The
 Promoters could not bring in further funds for the Project and the
 Financial Institutions were requested again for additional financial
 assistance for competition of the Project. The Financial Institutions
 as a condition for further financial assistance to the Company for
 completion of its integrated Steel Project situated at Jagdishpur,
 U.P., amongst other things, asked the Company for both Management and
 Capital restructuring. Accordingly the Board of Directors of the
 Company was re-structured and Dr. S. K. Gupta, a renowned figure in
 steel industry, was appointed as non-executive Chairman of the Company.
 Besides Dr. Bhaskar Dutta, holding a doctorate in Metallurgy from U.K.
 and having three decades of experience in the Steel Industry in India
 and abroad has been appointed as Managing Director. Mr. Anil Rai,
 Co-chairman, Mr. S.K. Mittal Managing Director and other Directors
 mentioned elsewhere in the report resigned from the Board.
 
 As regards capital restructuring as advised by the Financial
 Institutions, steps are already underway for approval by you and the
 concerned authorities of a scheme for restructuring of Financial
 liabilities by : -
 
 1. Converting 40% of the existing equity share capital into 0.0001%
 Cumulative Redeemable Preference Shares (CRPS) to be redeemed in 5
 equal annual installments commencing in the year 2016.
 
 2. Conversion of Institutional loans to the extent of Rs. 2,800 million
 into equity shares of Rs. 10 each.
 
 6. DIRECTORS
 
 Dr. S. K. Gupta, whose nomination has been withdrawn by IFCI Ltd., has
 been appointed as additional director (independent) and non-executive
 Chairman of the Company.
 
 Dr. Bhaskar Dutta and Mr. Rajeshwar Singh and Dr. Ramesh C. Vaish
 were appointed by the Board as Additional Directors of the Company. Dr.
 Bhaskar Dutta and Mr. Rajeshwar Singh have also been appointed as
 Managing Director and Whole time Director respectively of the Company.
 
 Mr. Anil Rai, Mr. Vijay Bhushan, Mr. Y.P. Sharma, Mr. J.R. Gupta, Mr.
 S.K. Mittal, Mr. M.F. Mehta and Mr. K. C. Gupta resigned from the
 directorship of the Company. The Board places on record its
 appreciation for the services rendered by them during their tenure as
 Directors of the Company.
 
 Nomination of Mr. Mr. S. G. Gulati, nominated by IDBI and Mr. P.K.
 Sengupta nominated by IFCI Ltd on the Board of the company, were
 subsequently withdrawn by IDBI and IFCI Ltd respectively. The IDBI has
 nominated Mr. K. Raghavan and IFCI Ltd has nominated Mr. D. U. Rao as
 Directors on the Board of the Company.
 
 7. AUDIT COMMITTEE
 
 The Board has in pursuance of Section 292A of the Companies Act, 1956,
 constituted an Audit Committee consisting of Mr. M. Sankaranaryanan
 (UTI Nominee), M. D.U. Rao (IFCI Nominee) and Dr. R. C Vaish, Director
 of the Company.
 
 8. CORPORATE GOVERNANCE
 
 The Stock Exchange have introduced clause 49 on corporate Governance in
 the Listing Agreement. As per this clause the Corporate Governance has
 to be implemented by the Company during the financial year 2001-2002.
 Your Company has already initiated steps to put in place system of
 Corporate governance in right earnest.
 
 9. STOCK OPTIONS TO THE EMPLOYEES OF THE COMPANY.
 
 An Employee Stock option Scheme (ESOS) for the employees of the
 company, prepared in accordance with the SEBI (Employee Stock option
 Scheme and Employee Stock purchase Scheme) Guidelines, 1999 notified by
 the SEBI, and approved by the members of the company, was introduced
 during the last year.
 
 In accordance with the scheme, a total of 18,84,680 stock options have
 been granted to the eligible employees and directors of the Company on
 14.04.200 and each option is convertible into one equity share .25% of
 the options granted shall vest after one year, another 25% of the grant
 after two years and balance 50% of the grant after three years from the
 date of grant mentioned above. The exercise price is at pa i.e. Rs. 10/-
 per share with a power to the Board to decide the premium, if any, in
 subsequent grants.
 
 It may be informed here that the company has not received application
 from any option holder so far for excecise of the option of converting
 the options into shares of the company.
 
 10. HUMAN RESOURCES
 
 In our previous report we had mentioned about the formation of cross
 functional core teams to enable your company to utilize the Human
 Resource potential. With the fund flow for the project coming to a
 hall, these core teams of Jagdishpur were utilized for various
 construction and lubrication work which should have otherwise been
 contracted to outside agencies. Activities elated to maintenance of
 equipment and machinery were also carried out by these core teams.
 
 With the induction of new management an exercise is being carried out to
 bring the manpower requirement to such levels that the productivity are
 at par with the international norms. This would involve re-building the
 management structure where responsibilities are well defined and
 hierarchy barriers are reduced. Parallely positional manning is to be
 replaced by the concept of total work load.
 
 11. DEPOSITORY
 
 The Company's shares are also now admitted to the Central Depository
 Services (India) Ltd., (CDSL) for dematerlisation. As you are aware the
 company has already joined the National Securities Depository Limited
 (NSDL). This enables your to hold your shares in dematerialsed form.
 The holding of shares in demat form facilitates quicker transfers and
 prevents forery. Accordingly the shareholders who have not opted yet
 for this facility are advised to dematerialise their shares in their
 own interest.
 
 Alankit Assignments Limited, New Delhi are the R & T agents for the
 purpose of dematerilisation of shares of the company.
 
 12. LISTING
 
 The Company's Shares are listed at the Uttar Pradesh, Mumbai and Delhi
 Stock Exchanges. The Company has paid listing fee to these Stock
 Exchanges upto the year 1997-98. The Mumbai Stock Exchange has
 suspended the trading in securities of the Company for non-payment of
 annual listing fee. Application for delisting has been made in January,
 1997 to the Stock Exchanges at Ahmedabad, Madras, Calcutta and Jaipur
 for reasons of infrequent and low volumes of trading in the Company's
 shares at these Stock Exchanges.
 
 13. DEPOSITS
 
 The Company has not accepted any Public Deposits during the year. There
 are no outstanding public deposits.
 
 14. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXCHANGE EARNINGS AND OUTGO.
 
 Information pursuant to Section 217(1)(e) of the Companies Act, 1956
 read with Rule 2 of the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 is annexed and forms part of
 this report.
 
 15. AUDIT REPORT
 
 The Auditors comments regarding note no. 6 & 14 state the factual
 position and the relevant notes are self explanatory. Due to closure of
 trading activities at the Ghaziabad branch, the relevant books of
 accounts and records could not be available and the relevant accounts
 were compiled on the basis of data available in computerized system.
 
 No provision is made for claim for rent and charges for equipment lying
 in the bonded warehouse at this stage since the necessary adjustments
 are proposed to be made when the matter is finalized and the equipment
 is cleared.
 
 16. AUDITORS
 
 M/s Bansal & Co., Chartered Accountants, the retiring auditors of the
 Company have expressed their unwillingness for re-appointment. The
 board of Directors of the Company have in their meeting held on 5th
 November, 2001 considered the appointment of M/s Ray & Ray, chartered
 accountants, as statutory auditors of the company and recommend the
 same for your approval. The Company has relieved certificate from the
 from viz. M/s Ray & Ray to the effect that their appointment, if made,
 will be within the permissible limits specified under Section 224(1B)
 of the Companies Act, 1956.
 
 17. PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A) OF THE COMPANIES
 ACT, 1956.
 
 The relevant particulars pursuant to Section 217(2A) of the Companies
 Act, 1956 and forming part of the Director's Report for the year ended
 30.06.2001 are given hereunder:
 
 ------------------------------------------------------------------
 Sr.  Name                    Designation                     Gross
 No.                                             Remuneration (Rs.)
 ------------------------------------------------------------------
 1.   Mr. M.F. Mehta(*)       Managing Director              680814
 
 2.   Mr. Rajeshwar Singh(*)  Director (P&O)                 925703
 
 3.   Mr. K.C. Gupta(*)       Wholetime Director             882507
 ------------------------------------------------------------------
 
 --------------------------------------------------------------------
 Sr.  Name                    Qualification /                 Date of
 No.                          Experience                      Joining
 --------------------------------------------------------------------
 1.   Mr. M.F. Mehta(*)       B.E. Metallurgy - 45 Years   01.05.1993
 
 2.   Mr. Rajeshwar Singh(*)  B.Tech - 38 Years            01.12.2000
 
 3.   Mr. K.C. Gupta(*)       B.Com. - Diploma in Casting  10.03.2000
 --------------------------------------------------------------------
 
 ------------------------------------------------------------------
 Sr.  Name                       Age  Last
 No.                         (Years)  Employment
 ------------------------------------------------------------------
 1.   Mr. M.F. Mehta(*)           69  Indian Iron & Steel Co. Ltd.
 
 2.   Mr. Rajeshwar Singh(*)      62  Usha Ispat Ltd.
 
 3.   Mr. K.C. Gupta(*)           65  Usha (India) Ltd.
 ------------------------------------------------------------------
 Notes
 
 1. Gross remuneration includes salary, allowances, value of free
 accommodation, medical expenses, provident fund, leave travel
 assistance, house rent allowance etc.
 
 2. The nature of employment and other terms and conditions of service
 are regular and governed by rules and regulations of the Company as
 applicable from time to time.
 
 3. None of the employee is a relative of any Director of the Company.
 
 4. Asterisk against a name indicates that the employee was in service
 only for a part of the year.
 
 18. DIRECTORS' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under sub section 2AA of Section 217 of the
 Companies Act, 1956 with respect to the Directors Responsibility
 Statement, it is hereby confirmed:
 
 i) That in preparation of the annual accounts for the financial year
 ended 30.06.2001, the applicable accounting standards had been followed
 along with proper explanations relating to material departures.
 
 ii) That the Directors had 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 financial year and of the
 profit of the Company for the year under report.
 
 iii) That the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and by preventing and detecting fraud and other
 irregularities. 
 
 iv) That the Directors had prepared the accounts for the financial year
 ended 30.06.2001 on a 'going concern basis'.
 
 19. APPRECIATION
 
 Your Directors wish to acknowledge and thank the Central & State
 Government for their support and guidance.
 
 Your Directors wish to place on record their deep appreciation of the
 continue support of shareholders, debenture holders and the devoted
 services rendered by the executives, staff and workers of the Company
 at all levels.
 
 Your Directors also acknowledge with gratitude the co-operation and
 assistance given by the Financial Institutions, Mutual Funds, Banks and
 Business Constituents.
 
 ANNEXURE TO DIRECTORS' REPORT
 
 (IN COMPLIANCE TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
 
 A. CONSERVATION OF ENERGY
 
 (a) Energy Conservation Measures taken: Nil
 
 (b) Additional investment and proposals, if any being implemented for
 reduction of consumption of energy: Proposal is to install a Turbo
 Generator of 3.5 MW capacity utilizing excess BF gas to generate
 Electrical Power to reduce the consumption of purchased electrical
 energy. The investment is to the tune of Rs. 3.5 crores.
 
 (c) Impact of the measures at (a) and (b) above for reduction of energy
 consumption and consequent impact on the cost of production of goods:
 The bought out electrical energy shall be reduced to the extent of 3MW
 for 2 Blast Furances operation saving about Rs. 300/- per ton of hot
 metal. 
 
 (d) Total energy consumption and energy consumption per unit: As per
 Form A.
 
 B. TECHNOLOGY ABSORPTION:
 
 (e) Efforts made in technology absorption: As per Form B.
 
 C. FOREIGN EXCHANGE EARNING AND OUTGO
 
 (f) Activities relating to exports; initiatives taken to increase
 exports; development of new export markets for products and services
 and export plans; NIL
 
 (g) Total foreign exchange earned and used:
 
 Earned : NIL
 
 Used   : NIL
 
 FORM B
 
 (See rule 2)
 
 Form for disclosure of particulars with respect to Absorption, Research
 and Development (R&D)
 
 1. Specific areas in which R&D Carried out by the Company: None
 
 2. Benefits derived as a result of the above efforts: Not Applicable
 
 3. Future plan of action : To optimize the operation of Blast Furnance
 Computer Simulation Model from Rautaruukki shall be implemented.
 
 4. Expenditure on (R&D)
 
 (a) Capital
 
 (b) Recurring
 
 (c) Total 
 
 (d) Total R&D expenditure as a percentage of turnover Technology
 absorption, adaptation and innovation: NIL
 
 Technology, absorption, adaptation and innovation:
 
 (i) Efforts, in brief, made towards technology absorption, adaptation
 and innovation: None
 
 (ii) Benefits derived as a result of the above efforts: None
 
 (iii) In case of imported technology (imported during the last 5 years
 reckoned from the beginning of the financial year) following
 information may be furnished.
 
 (a) Technology Imported : Mini Blast Furance Data Logging System of
 Level II Automation from Rautaruukki Engineering Oy, Finland.
 
 (b) Year of import : 1997
 
 (c) Has technology been fully absorbed ? : No
 
 (d) If no fully absorbed, areas where this has not taken place, reasons
 there for and future plans to action: Shall be implemented when BF
 operation resumes.