MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(For the Financial Year ended 31st March, 2015)

(a) Industry Structure and Developments :

The principal product of the Company is Sponge Iron which is manufactured at its Plants located at Jamshedpur and at District Nalgonda, Telengana. Sponge Iron is used alongwith steel scraps by secondary steel producers for making steel billets/ingots which in turn are used by the re-rollers for making long products used in the house building and in the infra-structure development. Increased and unaffordable cost of raw materials, overheads, manufacturing expenses and virtually no capacity utilization due to poor or non-availability of coal and iron ore, the basic raw materials and debrssed market conditions have adversely affected the company's performance during the year under review. The selling prices of Sponge Iron are market driven and the Company has no control over it. The principal components of cost of Sponge Iron are coal, iron ore and freight and the Company has virtually no control on their availability and cost.

(b) Opportunities and Threats :

i. Opportunities :

The consumption of Sponge Iron is directly linked with the consumption of long steel products namely, TMT Bars, Angles, Channels and Beams. Slow-down of house-building sector and lower spending by the Government on the infra-structure; has resulted in lower demand for the above products. The brsent trend may change in the future as there is hope that the new Central Government of the country will take appropriate and effective steps for the revival and survival of Sponge Iron and secondary steel sector. The Closed Iron Ore Mines in the State of Odisha & Karnataka are also expected to re-open in the near future which will augur well for the Sponge Iron Industry in India.

ii. Threats :

The availability of iron ore and coal in adequate quantity and at affordable prices are the major threats to the Sponge Iron Industry. The availability of Iron ore in the last few years has been severely affected due to closure of iron ore mines in Odisha and Karnataka under the direction of Hon'ble Subrme Court of India and various other Government Agencies and Departments. This status of iron ore is continuing and it is extremely scarce and its prices are ruling extremely high and most unaffordable. The Coal India Ltd. had w.e.f. 1.3.2011 most unjustifiedly and arbitrarily increased the prices of 'B' Grade coal by almost 130% making the operations of the Company's Jamshedpur Sponge Iron Plant unviable. The Company had requested Central Coalfields Ltd./Coal India Ltd. and Ministry of Coal to lower the grade of coal from B/C grade to D/E/F grade. Upon not getting the requisite consent from them, the Company had moved to the Hon'ble High Court at Ranchi, for redressal and to get justice and relief and the entire matter is subjudiced. Under the current circumstances, those Sponge Iron Plants in the country which do not have their own captive iron ore and coal mines are unable to operate profitably unless the prices of these inputs go down sharply from their current highly elevated levels or unless there is a suitable increase in the market prices of Sponge Iron or the Government takes action to provide these vital inputs to the Industry at affordable rates and in sufficient quantity through a suitable mechanism or agency.

(c) Segment-wise Product-wise performance :

Your Company has only two segments namely Sponge Iron and gas taking into account the nature of the product, uses and production system. However, your Company mainly operates under the "Iron & Steel" Segment and hence segment-wise results have not been given.

(d) Outlook :

In view of what has been stated in foregoing paragraphs; your Management perceives that the outlook of the Sponge Iron Industry in the current financial year may improve subject to the Central Government taking effective and positive steps by providing inputs at affordable rates, increase planned expenditure on house building and infrastructures to boost the demand for TMT bars which in turn can make the Sponge Iron selling prices remunerative.

(e) Risks & Concerns :

Risk is inherent in every business activity and Sponge Iron Industry is no exception. The Steel Industry displays strong commodity characteristics and is subject to cyclical price movements in business cycles. The Company is exposed to risks from overall market fluctuations, changes in government policy, laws of the land, taxation, man-made disaster, political risks and increase in cost of inputs like Iron ore, coal, power, diesel, freight, etc. which affect the financial performance of the Company.

(f) Internal Control System and its Adequacy :

The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly and applicable statutes are duly complied with. The Company has constituted an Audit Committee to monitor the adequacy and efficacy of internal control systems.

The adequacy of these compliances and their effectiveness is subject to statutory audit and the same has been adequately reported by the Auditors in their Report as required under the relevant provisions of the Companies Act, 2013. The Company also has an Internal Audit System.

(g) Discussions on financial performance with reference to operational Performance:

During the year; the Company's income from operations/turnover stood at Rs. 8.24 crores as compared to Rs. 17.91 crores in the brvious year. The operating profit before interest, debrciation and taxation stands at Rs. 79.58 lacs compared to Rs176.82 lacs in the brvious year. The Company has incurred a post-tax net loss of Rs. 12.94 lacs as compared to a net profit of Rs. 37.22 lacs in the brvious year. Your Directors are, however, continuing their efforts for improving performance of your Company.

(h) Material Developments in HRD and industrial Relations Front :

Your Directors recognize the value of employees as valuable assets. Developing, motivating, rewarding and retaining talented employees at all levels is a priority and a key responsibility of your Company's management. It is this policy of ours that had in the past enabled us to retain talented employees and maintain harmonious relations with them.

However, due to prolonged closure of Company's Sponge Iron Plants at Jamshedpur and at District: Nalgonda (Telengana); most of it's employees have resigned and left the service. The Company will try to recall the most fittest and experienced of them once the said plants reopen/resume manufacturing operations.

(I) Cautionary Statements :

Statements in this management discussion and analysis report describing the Company's objectives, projections, estimates and expectations may be termed as forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those either exbrssed or implied. The readers of this report are, therefore, advised to read the same with this caution.

For and on behalf of the Board

Dalbir Chhibbar  

Managing Director

Puranmal Agrawal  

Chairman

Dated :29th May, 2015

 Place : Kolkata