To the Members,
 
 The Directors take pleasure in presenting the Twelfth Annual Report of
 the Company together with the Audited Statements of Accounts for the
 year ended March 31, 2011.
 
 FINANCIAL RESULTS:
 
 The performance of the Company during 2010-2011 is summarised below:
 
                                                     (Rs. in Lakhs)
 
 PARTICULARS                              2010-2011        2009-2010
 
 Total Income                             115609.10         69697.92
 
 Total Expenditure (excluding 
 Depreciation and Interest)               106922.88         65042.03
 
 Profit before Interest & Depreciation      8686.22          4655.89
 
 Less: Interest and other financial 
 charges                                    4792.16          3159.40
 
 Depreciation                               1114.09           318.11
 
 Profit before Prior period items           2779.97          1178.38
 
 Less/(Add): Expenditure pertaining to 
 previous year                                44.83             1.26
 
 Profit before Tax                          2735.14          1177.12
 
 Less: Provision for Tax
 
 - Current Tax and Earlier Year Taxes        897.38           176.57
 
 - Deferred Tax                              616.71           504.51
 
 - MAT Credit Entitlement                   (478.61)               -
 
 Profit after Tax                           1699.66           496.04
 
 Profit brought forward from previous year  2876.00          2410.60
 
 Profit available for Appropriation         4575.66          2906.64
 
 Appropriations:
 
 Proposed Dividend on Preference Shares        5.64             5.64
 
 Tax on Dividend as above                      0.85                -
 
 Transfer to General Reserve                 100.00            25.00
 
 Balance carried forward                    4469.17          2876.00
 
 Review of Operations:
 
 The Company achieved a turnover of Rs. 1156.09 crores for the year
 ended 31 st March, 2011 as against Rs. 696.98 crores in the previous
 year. The Company earned a Gross Profit of Rs. 86.86 crores before
 interest and depreciation as against Rs. 46.56 crores in the previous
 year. After deducting interest of Rs. 47.92 crores, providing a sum of
 Rs. 11.14 crores towards depreciation, tax provision of Rs. 8.97 crores
 and after adjusting deferred tax and MAT Credit, the operations
 resulted in a Net Profit of Rs. 16.99 crores as against Rs. 4.96 crores
 for the previous year.
 
 The company''s manufacturing activity was higher during the year under
 review and coupled with the increase in prices of steel products
 resulted in higher turnover and higher net profit when compared to
 previous year.
 
 During the year under review, the company continued with low level of
 operations at the Steel Melting Division at Kothapeta unit as the input
 costs continued to be high throughout the year. The Company sold the
 unutilised power produced from the Captive Power Plant.
 
 The setting up of the 2,40,000 SMS plant in the premises of GASL
 (India) Limited was completed during the year under review and the
 commercial production commenced in August'' 2010.
 
 As informed in the last Annual report, the Company has promoted
 Simhadri Power Limited (SPL) as a Special Purpose Vehicle (SPV) which
 will set up the 60 MW waste heat recovery based power generation unit
 in which the Company shall hold not less than 26% equity in SPL and 51%
 of the power generated will be captively consumed by the units of the
 Company. The proposed power plant is being set up at Malliveedu, L.Kota
 Mandal, Vizianagaram District, Andhra Pradesh and the setting up of the
 Power plant is in progress as per the schedule and the commercial
 production is expected as per schedule in October 2012. During the year
 under review, the Company has invested Rs. 16.69 crores in M/s.
 Simhadri Power Limited by subscribing to 1,66,87,066 Equity shares of
 Rs. 10/- each fully paid.
 
 The acquisition of GSAL (India) Limited is in progress with the DRS
 being filed with the Hon''ble BIFR for its consideration.  Subject to
 the approval of the Hon''ble BIFR, the proposal inter-alia is for merger
 with the Company in line with the revised Scheme of Amalgamation
 already approved by the members through Postal Ballot held on 23rd
 March 2011.
 
 DIVIDEND:
 
 The Board has, subject to the approval of the Members at the ensuing
 Annual General Meeting, recommended a dividend at the stipulated rate
 of 10.25 % on 5,50,400 Preference Shares of Rs. 10/- each of the
 Company for the year ended 31st March, 2011.
 
 To conserve the resources for funding the expansion plans, the Board
 has deemed it prudent not to recommend any dividend on the Equity
 Shares of the Company for the year ended 31 st March, 2011.
 
 TRANSFERTO RESERVES:
 
 The Company transferred Rs. 100 Lakhs to the General Reserve out of the
 amount available for appropriation and Rs. 44.69 crores is retained in
 the Profit and Loss Account.
 
 ISSUE OF SHARES AND SHARE WARRANTS:
 
 During the year under review, the Company, on 23rd July, 2010 has
 allotted 35,50,000 equity shares of Rs. 10/- each at a price of Rs.
 37/- (Rupees Thirty Seven) per share and also 40,00,000 share warrants
 at a price of Rs. 38/- (Rupees Thirty Eight) per warrant on
 preferential basis to M/s Umashiv Garments Private Limited belonging to
 Promoter Group pursuant to the members'' approval obtained in the
 Extraordinary General Meeting held on 9th July, 2010. Each of these
 warrants is convertible into 1 (one) Equity Share of par value of Rs.
 10/- each at the option of the Warrant holder within 18 months from the
 date of their allotment.
 
 During the current year 2011 -12, the Company, on 8th April, 2011 has
 allotted 40,00,000 equity shares of the Company at a price of Rs. 28/-
 (Rupees Twenty Nine) per share consequent upon conversion of share
 warrants which were allotted on 23rd July 2010 on preferential basis to
 M/s Umashiv Garments Private Limited (Promoter Group Company).
 
 During the current year 2011-12, the Company, on 8th April, 2011 has
 allotted 51,00,000 share warrants of the Company at a price of Rs. 45/-
 (Rupees Forty Five) per share warrant on preferential basis to M/s
 Umashiv Garments Private Limited (Promoter Group Company) pursuant to
 the members'' approval obtained through Postal Ballot. Each of these
 warrants is convertible into 1 (one) Equity Share of par value of Rs.
 10/- each at the option of the Warrant holder within a period of 18
 months from the date of allotment (i.e latest by 7th October, 2012).
 
 The amount raised through the issue was fully utilised for the proposed
 expansion plans of the Company.
 
 CAPITAL STRUCTURE:
 
 During the year under review, the paid up equity share capital of the
 Company was increased from Rs. 393,000,000 to Rs. 428,500,000
 comprising of 42,850,000 Equity Shares of Rs. 10/- each with the issue
 and allotment of 3,550,000 (Thirty five lakh fifty thousands) Equity
 Shares of Rs. 10/- each of the Company on 23rd July, 2010.
 
 During the Current year 2011-12, the paid up equity share capital of
 the Company has increased from Rs. 428,500,000 to Rs. 468,500,000
 comprising of 46,850,000 Equity Shares of Rs. 10/- each with the
 allotment of 4,000,000 (Forty Lakhs) Equity Shares of Rs. 10/- each of
 the Company consequent upon conversion of the share warrants on 8th
 April, 2011,
 
 DIRECTORS:
 
 In accordance with the provisions of Companies Act, 1956 and the
 Articles of Association of the Company, Mr. C. Siva Prasad and Mr. K.
 Krishna Rao retire by rotation and being eligible, offer themselves for
 re-appointment.
 
 During the year under review, M/s Andhra Pradesh Development
 Corporation (APIDC) has nominated Mr. V. Nagf Reddy, IAS as its nominee
 in the place of Mr. Vinod Kumar Agrawal, IAS with effect from 20th
 August, 2010. The Board placed on record its appreciation for the
 services rendered by Mr. Vinod Kumar Agrawal.
 
 During the current year 2011-12, M/s Andhra Pradesh Development
 Corporation (APIDC) has nominated Mrs. Nilam Sawhney, IAS as its
 nominee in the place of Mr. V. Nagi Reddy, IAS with effect from 7th
 July, 2011.
 
 FUTURE OUTLOOK:
 
 The long term outlook of the Steel Industry continues to be promising
 and challenging. With increased manufacturing base, your Company
 expects to better the revenues with improved margins.
 
 REPORT ON SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:
 
 The Company has no subsidiaries for the year under review and hence the
 report on subsidiaries and consolidated financial statements and the
 statement pursuant to Section 212 of the Companies Act, 1956 are not
 applicable to the Company.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT:
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, the Directors hereby confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any;
 
 (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) they have 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 for
 preventing and detecting fraud and other irregularities;
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 REPORT ONTHE CORPORATE GOVERNANCE:
 
 Your Company continues to follow the principles of good Corporate
 Governance. In pursuance of Clause 49 of the Listing Agreement entered
 into with the Stock Exchanges, a separate report on Corporate
 Governance along with a certificate from the Auditors of the Company
 regarding its compliance is annexed herewith and forms part of this
 Report.
 
 MANAGEMENT DISCUSSION AND ANALYSIS:
 
 The Management Discussion and Analysis report as required under the
 Listing agreement entered into with the Stock Exchanges is annexed
 herewith and forms part of this Report.
 
 AUDITORS and AUDITORS'' REPORT:
 
 M/s Pavuluri& Co, Chartered Accountants, the Company''s Auditors will
 retire at the conclusion of the ensuing Annual General Meeting and are
 eligible for re-appointment and have expressed their willingness to act
 as Auditors of the Company, if appointed, and have further confirmed
 that the said appointment would be in conformity with the provisions of
 Section 224 (1B) of the Companies Act, 1956.
 
 The Notes to Accounts forming part of the financial statements are
 self-explanatory and need no further explanation. There are no
 qualifications or adverse remarks in the auditors'' report which require
 any clarification or explanation.
 
 COST AUDITORS:
 
 During the Current year 2011-12, in terms of Section 233B of the
 Companies Act, 1956 and as per the directives of the Central Government
 vide circular F. NO. 52/26/CAB-2010; dated the 3rd May, 2011, M/s DZR &
 Co., Cost and Management Accountants, Hyderabad are appointed as the
 Cost Auditors of the Company to conduct cost audit for the financial
 year 2011 -12 subject to the approval of Central Government.
 
 FIXED DEPOSITS:
 
 The Company has not accepted any Fixed Deposits from the Public within
 the meaning of Section 58-A, of the Companies Act, 1956 and the rules
 made there under during the financial year under review and, as such,
 no amount on account of principal or interest on Fixed Deposits was
 outstanding as on 31st March, 2011.
 
 PARTICULARS OF EMPLOYEES:
 
 None of the employees of the Company is in receipt of remuneration for
 whole/ part of the year exceeding the limits as prescribed under
 Section 217(2A) of the Companies Act, 1956 read with Companies
 (Particulars of Employees) Rules, 1975.
 
 CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
 
 Information required under Section 217 (1) (e) of the Companies Act,
 1956 read with the Companies (Disclosure of Particulars in the report
 of Board of Directors) Rules, 1988, as amended from time to time, forms
 part of this report. However, as per the provisions of Section 219 (1)
 (b) (iv), the report and the accounts are being sent to all members of
 the Company excluding the information relating to conservation of
 energy, technology absorption and foreign exchange earnings and outgo.
 Any member interested in obtaining such particulars may inspect the
 same in the Registered Office of the Company or write to the Company
 Secretary for a copy.
 
 INDUSTRIAL RELATIONS:
 
 The Industrial relations have been cordial through out the year under
 review and your Directors wish to place on record their sincere
 appreciation for the dedication, commitment and teamwork of employees
 at all levels, who have been instrumental in enabling your Company to
 achieve higher growth levels during the year.
 
 ACKNOWLEDGEMENTS:
 
 Your Directors take this opportunity to express their appreciation for
 the continued support and assistance received from the Company''s
 Bankers. The Directors also thank the Business Associates, Financial
 Institutions and various Central and State Government Departments and
 Government Authorities for their continued co-operation and support.
 
 The Directors also wish to place on record their gratitude for the
 continued support and cooperation received from the valued Customers,
 Vendors, Members, and Investors of the Company and look forward to the
 same in greater measure in the coming years.
 
                            For and on behalf of the Board of Directors
 
 Place: Malliveedu, LKota (Mandal)          B. SATISH KUMAR
 
 Date:August 27, 2011                 Chairman & Managing Director