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AML Steel Ltd.

BSE: 530464 Sector: Metals & Mining
NSE: AMLSTEEL ISIN Code: INE577F01018
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AML Steel Ltd. (AMLSTEEL) - Director Report

Company director report

DIRECTORS

To

The Members

Your Directors have pleasure in presenting the 21st Annual Report of theCompany together with the Audited accounts for the year ended 31st March 2014.

FINANCIAL REVIEW: (Rupees in Lacs)

Particulars 2013 -14 2012 -13
Total Turnover (Net) 12648.3 11244.87
Profit Before Depreciation Interest and Tax 668.17 753.65
Depreciation 125.58 122.93
Interest 535.49 622.12
Profit Before Current Tax 7.09 8.6
Profit after Current Tax 4.9 5.94
Balance Profit B/f from earlier year 2689.13 2743.19
Appropriation 2694.03 2749.13
Transfer to General Reserve 60 60
Proposed Dividend (including Dividend Tax) 0 0
Profit C/f to Balance Sheet 2634.03 2689.13

RESERVES:

Your Board has approved the transfer of Rs. 60.00 Lakhs to the General Reserves.

DIVIDEND:

The Board of Directors of the Company has not recommended any Dividend during the Year.

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL PERFORMANCE

AML Steel Limited (AML's) Net Turnover for the financial year ended March 31 2014increased to Rs. 126.48 crores from Rs. 112.45 crores in the previous year. The operatingprofit (PBDIT) of the Company has decreased to Rs. 6.68 crore from Rs. 7.54 crores in theprevious year. Net Profit before tax has however has decreased to Rs. 7.09 lakhs from Rs.8.601akhs in the previous year. The Profit of your Company for the Year 2013 -14 wasaffected adversely mainly due to the impact of input prices and higher overheads.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The demand for steel in India is expected to rise 7 per cent in next financial yearbeginning April 1 as compared to sluggish projected growth of 5.5 per cent in 2013-14. Theoverall outlook for the steel sector is positive and the demand was likely to pick up innext financial year on the back of revival in the economic growth and the government'smeasures to ease infrastructure Investment Rules.

OPPORTUNITIES

The global steel industry has witnessed reasonable demand growth and steelmanufacturing gradually shifted to emerging market such as China and India. By utilizingthe optimum resources along with the liberalized Foreign Direct Investment policies canfurther help to grow the Steel Industries in India.

CHALLENGES

The adverse cost fluctuations in input raw material and its availability & costshigh interest taxes duties inadequacy of funds to the expansion or modification ofproject Low labour productivity fluctuations in environment technology up gradation etcimpede the development of Steel Industries in General. One of the major specific threatsincludes building the capability of the existing work force to meet the higher level ofskill requirements to develop the infrastructure.

OUTLOOK

During the year Our Country improved its position to 04th in the said sector. YourCompany always intends to actively pursue these growth opportunities in the fast growingIron and Steel manufacturing sector in the country. It will focus on the optimumutilization of available resources by creating a balance economy maximum returns to themembers reaching a good impact on public by adhering to high ethics and standards.

COMPANY'S PRODUCTION MILD STEEL INGOTS & TMT BARS:

During the year under consideration your company achieved a turnover of Rs. 126.48Crores. Your Company is presently using its furnace to convert Scrap into M.S Ingots forits captive manufacturing thus reducing cost of production. Demand for TMT Bar is expectedto rise as a result of various initiatives taken by government of India to boostinfrastructural Industry.

RISKS AND CONCERNS

Risk and concerns given by the management are not in detail but only highlighting someof salient among them. It includes fluctuation in input prices nonavailability ofadequate financing Frequent changes in technology price volatility Climate ChangesStrict regulatory frame works etc. Managing Director Directors Business Plant heads andexecutives in charge manage risk on a daily basis through cross functional involvement andintense communication across business.

ADEQUACY OF INTERNAL CONTROL

The company has an internal audit system for assessing suitability of the internalcontrols adherences to policies procedures and taking corrective action to address anygaps. It facilitates proper recommendation for improving the business systems. Thesecontrols have been designed to provide a reasonable assurance with regard to maintainingproper accounting controls monitoring operations protecting assets from unauthorized useor losses compliances with regulations and for ensuring reliability with financialreporting. The company has continued with its efforts to align processes and controls withbest global practices in these areas as well.

The Audit Committee of the board actively reviews the adequacy and effectiveness ofinternal control systems and suggests improvements to strengthen the same.

SUBSIDIARIES:

A brief description of AML Steel Subsidiaries is as follows:_

Name Products Location
Ankit Ispat Private Limited MSI (Mild Steel Ingot) Kariakal
Ashok Steel Industries Private Limited MSI (Mild Steel Ingot) & TMT Bars Sri Lanka
AML Steel & Power Limited Sponge Iron Power Plant for captive consumption & Steel Melting Shop for manufacturing of Billets Jharkhand

As required under Section 217 of the Companies Act 1956 the Audited Statement ofaccounts along with the report of the Board of Directors and Auditors' Report of yourCompanies subsidiaries namely AML Steel & Power Limited Ankit Ispat PrivateLimited and Ashok Steel Industries (P) Limited Srilanka are annexed to this report.

PUBIC DEPOSITS:

The Company has not accepted or not renewed any Public Deposits as defined undersection 58A of the companies Act1956 during the year under review.

HUMAN RESOURCES:

The Industrial Relation with the employees of the Company continues to be cordial. YourCompany takes all the necessary steps to facilitate a friendly atmosphere with in theorganization by way of hiring developing and retaining the best personnel.

DIRECTORS:

Shri Ankit Agarwal and Shri Vinay Kishore Kasat Directors of the Company are due forretirement by rotation at this annual General Meeting who are eligible for re -appointment. Brief particulars of these Directors are given below:

i) Ankit Agarwal- is a Promoter cum Non-Executive Director of the Company. He isan engineering graduate from Anna University Chennai. And He is a member of themanagement team responsible for the company's day to day operations and long term.

ii) Vinay Kishore Kasat - is a Non-Executive Independent Director of the Company.He is a graduate in commerce and having an experience in different industries. He ispracticing as an industrial consultant from the year 1998. He is also involved in thesocial activities.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act 1956 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

(i) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(ii) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year endedMarch 31 2014 and the profit of the company for that year;

(iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities if any;

(iv) The accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS:

In terms of listing agreement with the Stock Exchanges the duly audited consolidatedfinancial statements are placed as Annexure. These statements have been prepared on thebasis of audited financial statements received from subsidiary companies as approved bytheir respective Boards.

PARTICULARS OF EMPLOYEES:

There were no employees of the company who were in the receipt of the remuneration asper the limits prescribed by Section 217(2A) of the Companies Act 1956 and the rulesframed there under.

DISCLOSURE OF PARTICULARS:

The information required under Section 217(l)Ie) of the Companies Act 1956 read withthe Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988is given as annexure forming part of this Report.

LISTING:

Your Company's shares have been listed at Madras Stock Exchange Limited Delhi StockExchange Association Limited and Ahmedabad Stock Exchange Limited. It is confirmed thatthe Annual Listing fees upto the period from 01.04.2014 to 31.03.2015 has been paid to theaforesaid exchanges.

AUDITORS:

M/s. K.P. Jain & Co. Chartered Accountants Chennai the Auditors' of the Companyretire at the conclusion of the Annual General Meeting and being eligible offerthemselves for re-appointment.

CORPORATE GOVERNANCE

In terms of listing agreement with the Stock Exchanges a compliance report onCorporate Governance is given as Annexure. A certificate from Auditors of the companyregarding compliance of conditions of Corporate Governance is placed as Annexure. TheBoard has laid down a Code of Conduct for all Board Members and Senior Management of thecompany.

VIGIL MECHANISM:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a vigil mechanism for directors and employees to report genuine concerns has beenestablished.

CAUTIONERY STATEMENT

The statement in this management Discussion and analysis report describing thecompany's projections estimates expectations or predictions may be 'forward-lookingstatement' within the meaning of applicable securities laws and regulations. Thesestatements being based on certain assumptions and expectations of future events actualresults could differ materially from those expressed or implied.

APPRECIATION:

Your Directors would like to place on record our sincere appreciation and thank theentire team of AML Steel limited for their support inspite of challenging businessenvironment. We take this opportunity to express our sincere thanks to all stake holdersfor their confidence and faith and to all Government Regulatory Authorities and Banks fortheir valuable support.

For and on behalf of the Board
Place: Chennai Ankit Agarwal Ajay Agarwal
Date: 04.09.2014 Director Director
(DIN: 00065020) (DIN: 00064366)

ANNEXUREI TO THE DIRECTORS' REPORT

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICUALRS IN THE REPORT OF THE BOARDOF DIRECTORS) RULES 1988 AND FORMING PART OF THE DIRECTORS'S REPORT FOR THE YEAR ENDING31ST MARCH 2014:

A. CONSERVATION OF ENERGY:

a) Energy Conversation measures taken:

Periodicals maintenance and check up of plant and plant and machinery and other motordriven equipment to keep them operational at optimum level.

b) Additional Investments and Proposals if any being implemented for reduction ofconsumption of energy.

The management of the company is continuously reviewing areas wherever further energyreduction and savings can be achieved.

c) Impact of measures at (a) and (b) for reduction of energy consumption and consequentImpact on the cost of production of goods.

The measures taken above reduce the cost of replacement.

d) Total energy consumption and energy consumption per unit of production are furnishedin the prescribed TForm A' enclosed.

B. Technology Absorption Efforts made in Research & Development and Technology arefurnished in the prescribe ?Form B' enclosed.

C. Foreign Exchange Earnings and Outgo:

1. Activities relating to exports: Initiatives taken to increase exports developmentsof new export markets for products and services and export plants: NIL

2. Total Foreign Exchange used and earned

i. On Account of Travel: NIL
ii On Account of Raw Materials: NIL
iii Total Foreign Exchange Earned: NIL

FORMA

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. Power and Fuel Consumption 2013-14 2012-13
1. Electricity
(a) Purchased:
Units (KWH) in Lakhs 307.56 276.23
Total amount (Rs. In Lakhs) 1211.78 1056.20
Rate/Unit (Rs.) 3.94 3.82
(b) Own generation Nil Nil
2. Coal Nil Nil
3. Furnace Oil Nil Nil
4 Others/Internal Generation Nil Nil
B. Consumption per unit of production:
Electricity (KWH) - Per MT of M.S.Ingots 947.45 945.23
Electricity (KWH) - Per MT of T.M.T Saria 947.45 945.23

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

Research and development:
1. The specific areas in which Research and development is carried out by the company. NIL
2. Benefits derived as a result of the above Research and Development. NIL
3. Future plan of Action NIL
Possibilities are explored to involve in Research and Development
4. Expenditure on Research and Development
A. Capital Expenditure: NIL
B. Recurring Expenditure: NIL
C. Total: NIL
D. Total R&D Expenditure as a percentage of total turnover: NIL

Technology Absorption Adaptation and Innovation.

1. Efforts in brief made towards Technology Absorption Adoption and innovation

The Company has procured the machinery manufactured by well established Manufacturers.Therefore the company does not require and has not made any arrangement for import oftechnical Know-how

2. Benefits derived as a result of the above efforts. Product Improvement and Productdevelopment.

3. Information relating to the technology imported during the last 5 years: NIL
For and on behalf of the Board
Place: Chennai Ankit Agarwal Ajay Agarwal
Date: 04.09.2014 Director Director
(DIN: 00065020) (DIN: 00064366)

ANNEXURE II TO THE DIRECTORS REPORT

REPORT ON CORPORATE GOVERNANCE

(As required by Clause 49 of the listing agreement of the Stock Exchanges)

Company's Philosophy on Code of Corporate Governance:

The Board of Directors of the Company has taken all the norms of Corporate Governanceat AML Steel Limited in its real spirit considering and enhancing shareholders value andmanagement accountability.

The Board of Directors of the Company fully understands the rights of the shareholdersto have information on the performance of the company and considers itself as a trustee ofits shareholders.

Board of Directors:

The Board consists of 6 directors with optimum combination of executive andnon-executive directors. Except Managing Director all other directors are non-executivedirectors including 3 independent directors. The Composition attendance at the Boardmeetings and last annual general meeting outside directorship committee memberships& chairmanship are given below:

Name & Designation Category

Attendance

Number of other Directorships

Board Meetings Last AGM Public Companies Committee Membership Committee Chairmanship
Mr. Ashok Agarwal Promoter Executive 11 Yes 2 - -
Mr. Ajay Agarwal Promoter Non-executive 11 Yes 1 2 2
Mr. Ankit Agarwal Promoter Non-executive 11 Yes - 1 -
Mr. S.Kolandai Raj Independent Non-executive 5 No - 1 -
Mr. Vinay Kishore Kasat Independent Non-executive 6 No 1 2 1
Mr. Inderjeet Kaushal Independent Non-executive 5 No - - -

• Directorship in Foreign Companies Private Limited Companies and Companiescovered under section 25 of the Companies Act 1956 have not been considered.

Non executive director's compensation and disclosures

No fees / compensation is being paid to non executive directors of the company.

Number of Board Meetings held and dates on which held

During the Year the Board of Directors of the Company met Eleven Times on 02.04.201329.05.2013 01.07.201317.07.201314.08.201301.10.201313.11.201317.12.201302.01.201413.02.2014 and12.03.2014 The maximum time gap between any two consecutive meetings did not exceed fourmonths.

Code of Conduct

The Code of Conduct of the Company as adopted by the Board is applicable to alldirectors and senior management personnel of the company. The Directors and seniorManagement of the company have made requisite annual affirmation of the compliance withthe respective Code. A declaration to this effect duly signed by Managing Director ofCompany is annexed and forms a part of this Report.

Declaration as required under Clause 49 of the listing agreement is appended to thisreport.

Audit Committee

Composition name of members and Chairman.

The Audit Committee consists of three non-executive Directors out of which 2 areindependent Directors. During theyear the committee met four times dated23.05.201310.08.2013 08.11.2013 and 11.02.2014 and the attendance of members at themeeting was as follows:

Name of Members Category Designation No. of meetings attended
Vinay Kishore Kasat Independent Non Executive Chairman 5
S. Kolandai Raj Independent Non Executive Member 5
Ankit Agarwal Non Executive Member 5

Terms of Reference.

The board has defined the scope of Audit committee to cover all areas provided forunder section 292A of the Companies Act 1946 and clause 49 of the Listing Agreement ofthe stock Exchanges.

Remuneration Committee

No remuneration / compensation are paid to any of the directors and as such therequirement of the remuneration committee is not applicable.

Shareholders / Investor's Grievance Committee

The Shareholders / Investor's Grievance Committee consists of two non-executivedirectors. The responsibility of the Shareholders / Investor's Grievance Committee is tosupervise the mechanism of investor grievance rederessal and to ensure cordial investorsrelation. The composition name of members and chairman are as follows:

Name of Members Category Designation
Aj ay Agarwal Promoter Non-executive Chairman
Vinay Kishore Kasat Independent Non-executive Member

No. of Shareholders complaints received during the year ended 31st March 2014 is NIL.No. of complaints not solved to the satisfaction of the shareholders is NIL.

No. of pending complaints for the year ended 31st March 2014 is NIL. General BodyMeetings

a. The details of the last three Annual General Meetings of the Company is given below:

Year Location Date Time
2012-2013 Regd. Office 30/09/13 11.30 A.M
2011-2012 Regd. Office 29/09/12 11.30 A.M
2010-2011 Regd. Office 30/09/11 11.30 A.M

b. Special resolutions passed at last three Annual General Meetings:

No special resolutions were passed at the last three Annual General Meeting. There wereno resolutions requiring approval through Postal Ballot.

Disclosures

• Disclosures on materially significant related party transactions i.e.transactions of the company of material nature with its Promoters Directors theManagement their subsidiaries or relatives that may have potential conflict with theinterest of the company at large - NIL

• Details of non - compliance by the company penalties / strictures imposed onthe company by the Stock Exchanges or SEBI or any Statutory Authority on any mattersrelated to Capital Market during the last three years: NIL

• Whistle Blower Policy: The Company encourages an open door policy whereemployees have access to head of Business / Functions. We affirm that no personnel havebeen denied access to audit committee.

• We confirm that Company had complied with all the mandatory requirement ofClause 49 of the listing Agreement.

• No remuneration / compensation is being paid to any director.

• Annual Report has a detailed section on Management Discussion and AnalysisReport.

• The Company has not raised any money during the year through public issuesright issues or preferential issues.

Share holding of Non Executive Director:

Details of Shareholding of non executive directors in the Company as on 31st March2014:

Name of the Director No of shares held (face value of Rs 10/- each)
Mr. Ajay Agarwal 9000
Mr. Ankit Agarwal 190000
Mr. Vinay Kishore Kasat NIL
Mr. S.Kolandai Rai NIL
Mr. Inderjeet Koushal NIL

Means of Communication

The quarterly / half-yearly results are generally published by the company in

(i) News Today (English)

(ii) Maalai Sudar (Tamil)

Any website where displayed - No

Whether it is also published in official newspapers - No

Presentations made to institutional investors or to analysts - No

Whether management discussion & analysis form part of the Annual Report - Yes

General Shareholder information:

General Shareholder information:

Annual General Meeting : Twenty First
Day : Tuesday 30.09.2014
Time : 11.00 A.M.
Venue : Registered Office
B-73 SIPCOT Industrial Complex
Gummidipoondi - 601201.

Financial Calendar

The financial year cover the period from 1st April to 31st March. Financial Reportingfor 2013 - 14.

Quarter Period Particulars of Results
First April - June 14th August 2013
Second July - September 13th November 2013
Third October - December 13th February 2014
Fourth January - March 29th May 2014

Date of Book Closure:

The Books Closure is fixed between the 26.09.2014 to 30.09.2014 (both days inclusive).

Dividend payment date:

The Board of Directors of the Company has not recommended dividend for the financialyear 2013 - 14.

Listing on Stock Exchanges:

The Company's shares are listed at Madras Stock Exchange Limited Delhi Stock ExchangeLimited and Ahmedabad Stock Exchange Limited. Listing fees for the year 2013-14 has beenpaid.

Stock Code: ISIN Number for NSDL & CDSL is INE577F01018

Registrar and Share Transfer Agents:

The registrar and share transfer agents of the company is M/ s. Cameo CorporateServices Limited Subramanian Building No.l Club House Road Chennai - 600002. (PhoneNo.044-28460390 Fax: 28460129).

Share Transfer System:

All transfers received are processed and approved by the Share Transfer Committee whichnormally meets once a month or more depending on the volume of transfers.

Distribution of Shareholdings:

The Distribution of Shareholdings as on 31st March 2014.

Shareholdings of nominal value No. of Shareholders % to Total Share Amount % to Total
Upto Rs.5000 1034 63.47 2789230 3.72
5001-10000 340 20.87 2792730 3.72
10001-20000 118 7.24 1726750 2.3
20001-30000 45 2.76 1157240 1.54
30001-40000 17 1.04 611580 0.82
40001-50000 15 0.92 686420 0.92
50001-100000 24 1.47 1699230 2.26
100001- and above 36 2.21 63536820 84.72
Total 1629 100 75000000 100
Physical Mode 493 30.26 466050 6.21
Electronic Mode 1136 69.73 7033950 93.78

Shareholding Pattern as on 31st March 2014

Category No. of Shareholders No. of Shares % of Holding
Promoters 9 2233450 29.78
NRI 3 1600 0.02
Resident 1573 1814009 24.19
Corporate Bodies 44 3450941 46
Clearing Members 0 0 0
Total 1629 7500000 100

Outstanding GDR/ADR/Warrants or Convertible Instruments Conversion date and likeimpact on equity:

The company has not issued any ADR /GDR.

Plant Location:

Steel Plant: Eripakkam Village Netapakkam Commune Pondicherry - 605106. PVC Plant:B-73 SIPCOT Industrial Complex Gummudipoondi - 601201.

Sponge Iron Plant: Vill.-Masleva P.O.- Kolabira Dist- Saraikela Kharsawan Jharkhand- 833220 Address for correspondence:

Shareholders correspondence should be addressed to: The Company Secretary

AML STEEL LIMITED

AML TOWERS 9 Gopalapuram 6th Street Chennai - 600 086 Phone: 044 - 39710000 Fax:044-39710012

Shareholders holding shares in Electronic Mode should address all their correspondencesto their respective Depository Participants.

Green Initiative

Your Company welcomes and supports the green initiative taken by Ministry of CorporateAffairs. The Company provides the facility to all of its shareholders the right to receivethe Annual Return by their email id. Previously registered with the Company or ShareTransfer Agents. Shareholders those who have not registered the same are requested toregister their email address.

Declaration

As provided under clause 49 of the listing Agreement with stock exchanges this is toconfirm that all members of the Board and Senior Management have affirmed complianceaffirmation with code of conduct in respect of Financial Year 2013 -14.

For and on behalf of the Board
Place: Chennai Ajay Agarwal
Dated: 04.09.2014 Director
(DIN: 00064366)

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