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Monnet Ispat & Energy Limited

Corporate Office: MONNET HOUSE, 11, Masjid Moth, Greater Kailash Part-II, New Delhi-110048E-mail: [email protected] Website: www.monnetgroup.com

10 14Energizing our

Progression with Power Generation

Conquering Frontiers through

our Mining Business

Going Deeper with Mineral Beneficiation.

Reaching Higher.

Scaling New Heights by Offering

Coal Consulting

27

83

37Report of the

Directors

Consolidated Financial

Management Discussion and

Analysis

Report on Corporate Governance

17 20Integrated Strength

of Ferro-AlloysProviding a Rock Solid Foundation

through Our Products

CSR towards Inclusive Growth

Financial Highlights

Standalone Financial

02Chairman’s

CommuniquéCorporate Overview

06Sponge Iron Unit

– The First Stride in our Odyssey

Extending Value Through Steel –Making Facilities

BOARD OF DIRECTORSChairman & Managing Director

Sandeep Jajodia

Executive Directors

Dy. Managing Director

C.P. Baid

Non Executive Independent

Directors

G.C. Mrig

Amit Dixit

Ajay Relan

Vikram Deswal

Other Non Executive Directors

J.P. Lath

BOARD COMMITTEESAudit Committee

G.C. Mrig - Chairman

Ajay Relan - Member

J.P. Lath - Member

M.P. Kharbanda - Secretary

Shareholders’/ Investors’

J.P. Lath

C.P. Baid

Remuneration Committee

G.C. Mrig

Vikram Deswal

J.P. Lath

Finance Committee

Sandeep Jajodia

C.P. Baid

J.P. Lath

Executive Committee

Sandeep Jajodia

C.P. Baid

J.P. Lath

Share Transfer Committee

J.P. Lath

C.P. Baid

M.P. Kharbanda

BANKERSPunjab National Bank

State Bank of Bikaner & Jaipur

State Bank of India

State Bank of Patiala

IDBI Bank Limited

COMPANY SECRETARYM.P. Kharbanda

AUDITORSO.P. Bagla & Company

Chartered Accountants, New Delhi

REGISTERED OFFICE & RAIPUR WORKSMonnet Marg, Mandir Hasaud,

Raipur - 492101

RAIGARH WORKSVillage Naharpali, Tehsil Kharsia,

Distt. Raigarh, Chhattisgarh

COALMINEVillage Milupara, Block-Tamnar,

Distt. Raigarh, Chhattisgarh

INVESTOR SERVICES CENTREMonnet House, 11, Masjid Moth,

Greater Kailash Part-II,

New Delhi - 110048.

Ph. : 011-29218542-46,

Fax : 011-29218541

e-mail : [email protected]

CORPORATE OFFICEMonnet House, 11, Masjid Moth,

Greater Kailash Part-II,

New Delhi - 110048

MIEL Corporate Website

www.monnetgroup.com

CORPORATEINFORMATION

Annual Report 2012-13 | 01

Dear Shareholders,

It is indeed a pleasure to reconnect with you at the end

of another fi nancial year wherein your Company, through

its mantra of “looking beyond challenges”, is trying to

navigate through the slow economic environment. With our

1.5 MTPA integrated steel manufacturing facility at Raigarh,

Chhattisgarh and upcoming pit head thermal power plant

of 1050 MW (2 units of 525 MW each) in Angul, Odisha,

we are looking at a new phase of growth for the Company.

The economic growth during the year, ended at an

extremely disappointing level of 5%. The expected growth

and investment in infrastructure such as roads, highways,

airports, ports and manufacturing facilities was slow thereby

resulting in considerable low demand for steel.

Having said that, your Company demonstrated strong

nimbleness and resilience to face challenges head-on,

as evident from our satisfactory levels of profi tability

under tough prevailing circumstances. We embarked on

proactively realigning our business to adjust to current

market conditions, enabling us to maintain revenue from

operations to `1979.62 Crores in FY 13, up from `1897.38

Crores in the previous fi scal. However, profi t decreased

from the earlier level of `288.86 Crores to `250.32 Crores

in the year under review due to pressures on margins in the

industry.

Progressing into the next fi scal, we are extremely optimistic

about enhancing our profi tability. Our 1.5 MTPA integrated

steel plant at Raigarh will produce structural steel, longs

(TMT Bars) and fl ats (Plate Mill Plates – PMPs) to cater to

the rapidly growing infrastructure & construction industry.

The integrated facility would reduce cost and would help in

optimizing operations very competitively. We would also be

for the fi rst time entering the consumer markets and would

be introducing our rebar under “Monnet Steel TMT” brand.

The branded steel is expected to improve margins further.

Additionally, in line with our business strategy to diversify

business operations and strengthen position, the Company

through its subsidiary Monnet Power Company Limited

(MPCL) is building its power generation capabilities as an

Independent Power Producer. The expansion of the 1050 MW

power project at Angul, Odisha is well on track. This power

project, envisaged as amongst the lowest cost generating

units in India, makes us optimistic about generating robust

profi tability from our power operations.

BUSINESS STRATEGY

By systematically approaching the value proposition in every

aspect of what we do, we at Monnet leverage our competitive

advantages and maximize our value to all our stakeholders.

CHAIRMAN’S COMMUNIQUÉ


CONCLUSION

Monnet is ideally positioned to respond to the challenges

and capitalize on the opportunities that lie ahead. We

appreciate the efforts of our employees and their on-going

commitment to meet the challenges that are inherent in

our highly competitive business. On behalf of the Board,

I would also like to take this opportunity to express my

gratitude to our investors, bankers and stakeholders for

the trust they have shown in our capabilities. Monnet is

confi dent of scaling greater heights in the years ahead and

we look forward to your support in this journey.

Sandeep Jajodia

Chairman & Managing Director

A key element of our business strategy is to operate as a low

cost producer in a highly competitive business environment.

At our plants and sites we employ the latest equipment

and technology and advanced manufacturing facilities to

achieve effi cient production rates and conversion costs. We

remain sharply focussed on driving shareholder value by

concentrating on sound operational performance, strategic

growth initiatives and balanced capital allocation. We also

continue to be disciplined in pursuing additional acquisition

opportunities that are highly synergistic and meet our return

on capital requirements while maintaining a stable fi nancial

position.

OUTLOOK

As we look forward, we remain encouraged by the

long-term macroeconomic fundamentals supporting our

businesses. We expect the economy to return on the path to

recovery thereby pushing investments in the infrastructure

and construction sector and generating increased demand

for steel. Through further investments in technology to

improve effi ciencies and through acquisitions to expand our

footprint, we are optimistic about enhancing our profi tability

and maximizing returns to our stakeholders.

CSR

Being a part of the community is prime to our business

at Monnet. Through Monnet Foundation, we continued

investing funds for local community initiatives and social

infrastructure in and around areas of our operation. Our

solidarity to the game of boxing remains unchanged and

by providing impetus to the game and the players both at

grassroot and higher levels, we aspire to create many more

sporting icons who will defi nitely bring glory to the nation.

Earlier in the year, Monnet felicitated Olympic Bronze

medallist MC Mary Kom and the entire boxing contingent

for having put up one of India’s best performance ever in

boxing at the Olympics. Under the aegis of our commitment

of infrastructure development, we have taken up the

assignment of beautifi cation and landscaping of airports in

Bhubaneswar, Kolkata and Raipur.

WITH 1.5 MTPA INTEGRATED STEEL MANUFACTURING FACILITY AT RAIGARH, CHHATTISGARH AND UPCOMING PIT HEAD THERMAL POWER PLANT OF 1050 MW (2 UNITS OF 525 MW EACH) IN ANGUL, ODISHA, WE ARE LOOKING AT A NEW PHASE OF GROWTH FOR THE COMPANY


We are the nation’s second largest coal-based sponge iron

producer and we are the only private company to operate

the single largest underground coal mine in India.

Established in 1994, Monnet was incorporated to

manufacture and market sponge iron. The goal thereafter

was to develop an integrated model by diversifying into

other allied sectors that will render strength and value to

the Company’s operations. Over the years, Monnet has

built a diversifi ed de-risked business portfolio encompassing

integrated manufacturing facilities of Sponge Iron, Pig Iron,

Steel and Ferro Alloys. The Company is also engaged in

power generation for both captive use and as an

Independent Power Producer (IPP).

Adding impetus to this is our low-cost structure,

logistics infrastructure, skilled workforce and

sophisticated information systems which enable us

deliver superior performance metrics consistently.

Leveraging the competitive advantages of

forward and backward integration enabling

cost leadership, the goal is now to tap new

opportunities and expand business horizons.

CORPORATEOVERVIEW

Yes, we do shape and meet the critical demands of our industry. However, at Monnet, enterprise is not

limited to business profi tability.

Our community development work through the Monnet Foundation has impacted innumerable lives with

a promise to make their tomorrow better than their today. Proud sponsor to the Indian Boxing Team,

we are also committed to nurturing sporting talent through Monnet Sports Foundation to attain the

pinnacles of international glory.


VISION

• To be an industry leader

• To be an employer of choice

• To set benchmarks in international excellence

Trust based on Accountability, Tenacity for Results

We are deeply aware of the trust reposed in us by our

stakeholders. Success to us means consistently delivering on

that trust and being accountable to each of our stakeholders.

We will go the extra mile to deliver on our promises. Our

persistent endeavour would be to exceed stakeholders’

expectations and achieve targets ahead of deadline.

Respect for People and Resources

Moving ahead with utmost respect for the people connected

directly or indirectly to us and for the resources is a prima

facie requisite of all our operations. We are committed to the

policy of creating a net positive impact on the environment

of where we operate.

Unity in Diversity

At Monnet, we are proud of our culturally diverse workforce,

adding a new dimension to our talented workforce.

Uniqueness is respected and celebrated, and pulled

together for creating laudable success stories at work.

Sense of Achievement, Self Confidence

We lay special emphasis of developing and nurturing

leadership talent within the organization by

instilling a can-do attitude. Accomplishing

business growth by recognizing high

performance is a key component

of our employee development

strategy.

Team Work; Talent Retention

Excellence at business is achieved by hiring, developing and

retaining the best talent. Developing camaraderie among

the workforce, bringing in operational discipline and

enhancing problem solving skills improves the team effort

in realizing organizational goals.

Business Verticals

Sponge Iron

Steel Manufacturing

Power Generation

Mining

Mineral Benefi ciation

Coal Consulting

Ferro Alloys

Technology Partners

Nuova Carpentaria Odolese, Italy

Hallteck Equipment, UK

Tickers

NSE Ticker: MONNETISPA

BSE Ticker: Monnet Ispat Limited: 513446

Certifi cations

Quality Protocol: ISO 9001:2008

Monnet Ispat & Energy Limited, Raigarh, is accredited with

ISO 9001:2008 & ISO 14001:2004

MIEL is registered with UNFCCC for certifi ed emission

reductions (CER).

MISSION

• To be an excellent corporate citizen

• Human resource excellence

• Customer delight and beyond

VALUES

‘Trust’ is the core value.

T - Trust Based on Accountability; Tenacity for Results

R - Respect for People and Resources

U - Unity in Diversity

S - Sense of Achievement, Self-Confi dence

T - Team Work; Talent Retention


Key Strengths

Captive availability of coal, iron ore and power. This gives a head start in maintaining a low cost

base and ensuring competitive advantage through business cycles.

• Use of most advanced technology in the manufacturing process

• The sponge iron exhibits superior quality characteristics

» excellent metallic content

» impeccable consistency in chemical and physical characteristics

» Sulphur and phosphorus which can reduce the strength of steel are maintained at much lower levels than specifi ed

» Better production process ensures sponge is free from dust caused during material handling

Key Statistics• Second largest coal based sponge iron producer in the country

Also referred as direct reduced iron, metallized iron or hot briquetted iron, sponge iron is

the core material used in the iron and steel industry for the production of steel. Recognizing

the vital need for steel for a nation eager to reach high levels of industrialization, Monnet

ventured into this segment in the early nineties. Under the fl agship company Monnet

Ispat & Energy Limited (MIEL), the fi rst sponge iron unit with a capacity of 1 lac Tonnes Per

Annum (TPA) was set up at Raipur, Chhattisgarh.

SPONGE IRON UNIT –THE FIRST STRIDE IN OUR ODYSSEY


WE ARE THE SECOND LARGEST COAL BASED SPONGE IRON PRODUCER IN THE COUNTRY.


EXTENDING VALUE THROUGH STEEL –MAKING FACILITIESWith a vision to transit the Company from a sponge iron manufacturing facility to a value

added steel company, Monnet established the integrated 1.5 MTPA steel making facility

at Raigarh. Using productively the upstream competencies, this integrated steel making

facility to produce structural steel, longs (TMT Bars) and fl ats (Plate Mill Plates –PMPs) will

establish Monnet as a dominant player in the steel industry.


Key Strengths• Use of raw materials – coal, iron ore, ferro alloys and power from captive and domestic

resources reduces company’s dependency on imports of raw materials

• Modern technology adopted for the integrated steel plant

» Reduces dependence on raw materials like coking coal and iron ore lumps

» Utilizes all waste heat and gases generated in the process

» New technology enables production of high value steel through electric arc furnace

• Setting up of iron ore palletization plant along with the sinter plant enables gainful

use of cheap iron ore fi nes available abundantly


ENERGIZING OUR PROGRESSION WITH POWER GENERATIONMonnet’s power generating facilities at Raipur and Raigarh was set up as a backward integration

initiative for the Company’s sponge iron manufacturing facility. The Group presently has a

combined captive power generation capacity of 230 MW. Further, the establishment of the pit

head thermal power plant of 1050 MW (2 units of 525 MW each) at Angul, Odisha through its

subsidiary Monnet Power Company Limited, will steer Monnet from being a captive producer

to an Independent Power Producer.


Key Strengths• Blackstone Group holds 12.5% stake in Monnet Power Company Limited

• Availability of captive coal mines enhances operational effi ciencies of the project

• Availability of pit head coal mine ensures logistic effi ciency for transporting coal

via conveyer belts

• Project envisaged as amongst the lowest cost generation units in India

PROJECT ENVISAGED AS AMONGST THE LOWEST COST GENERATION UNITS IN INDIA


CONQUERING FRONTIERS THROUGH OUR MINING BUSINESSBesides owning and operating the single largest underground coal mine in India, Monnet has

sizeable presence in mineral assets to emerge as a highly backward integrated player thereby

controlling costs at every stage. Monnet also acquired Indonesian Coal Company - PT Sarwa

Sembada Karya Bumi, in the Jambi province of Sumatra, Indonesia through its 100% subsidiary

Monnet Global Limited (MGL). MIEL is also amongst the consortium of four state-owned Indian

companies to have been shortlisted to invest in new gold and copper deposits in the Hajigak region

of Afghanistan.

Key Strengths• Only private company to operate the single largest underground coal mine in the

country

• Selected to work as Mine Developer and Operator (MDO) partner for the Morga

III coal block, Monnet has also been awarded the Guma Pusari and Gaitra

Limestone blocks

• Mineral resource acquisition both in India and abroad has helped Monnet to scale

up its mining operations thereby ensuring regular supply of coal and reduction of

costs

• The global acquisition gives MGL access to good grade coal with a coal to OB ratio

of 1:3.5, having a very low sulphur content of mere 0.14%

Key StatisticsMilupara coal project is the fi rst single largest underground coal mine in India with a

private company to have production of 1 MTPA.



Under operation • 4.2 MTPA plant at Khalari (Ranchi) in N.K. Coalfi elds in collaboration with M/s Daniels of USA

Washeries for Public Sector Undertakings• MIEL in collaboration with CLI USA/EMA Lysright Australia has been awarded contract for design

& setting up of Washeries and running their operations for the following washery projects:

» a) Patherdih Washery – 5 MTPA (coking coal)

» b) Ashok Washery – 10 MTPA (non-coking coal)

HUGE BUSINESS OPPORTUNITY IN INDIA, AS THE COUNTRY IS CURRENTLY BENEFICIATING ONLY 15% OF ITS RAW COAL PRODUCTION AGAINST 90-95% ACHIEVED BY USA AND 50% BY CHINA

GOING DEEPER WITH MINERAL BENEFICIATION. REACHING HIGHER.MIEL has been working to become one-stop solution to provide benefi ciation solutions from concept to commission followed

by operation and maintenance of the washeries both in coking and non-coking sectors. Monnet carries out extensive coal

washing and benefi ciation for its internal consumption as well as for other users, both in the public and private sectors.

Monnet’s mineral benefi ciation plants in the pipeline include:

• 5 MTPA washery at Angul, in Talcher Coal Fields, Odisha in collaboration with J-coal of Japan

• 2.5 MTPA non coking coal washery at Raigarh in Chhattisgarh, with indigenous technology to be expanded to 5 MTPA

• 3 MTPA non-coking coal washery at Bachra in N.K. Coalfi elds, Jharkhand with indigenous technology


Key Strengths• Extensive knowledge and expertise of the mining sector giving it a signifi cant edge in the business

• Technological prowess for planning, designing, establishing, operating and maintaining coal washing

plants

» State-of-the-art technology laboratory at its Khalari (Ranchi) washery in NK Coalfi elds

» Research and Development laboratory with most sophisticated equipment for testing coal at

Raigarh (Chhattisgarh)

» Acquired know-how and technical expertise from various leading companies of the world, including

EMA-Lysright Pty, Australia; Daniel Corporation, USA; J-Coal, Japan; and CLI Corporation, USA

• Huge business opportunity in India, as the country is currently benefi ciating only 15% of its raw coal

production against 90-95% achieved by USA and 50% by China


SCALING NEW HEIGHTS BY OFFERING COAL CONSULTINGLeveraging the experience gathered in course of design, construction and operation of the highest coal

producing underground coal mine in the country and various other projects, Monnet has diversifi ed into

the fi eld of coal consulting. The Company provides innovative, practical and cost effective consultancy

services in the fi elds of exploration, exploitation and benefi ciation of coal and other minerals.

Key Strengths• Experience and expertise across a wide spectrum of services - resource assessment, mine planning,

engineering, coal handling, coal washing, energy audit and safety management etc.

• Monitoring by experienced professionals enabling projects to be completed within time and budget


Ferro-alloys are alloys of iron with elements such as chromium, manganese, silicon, tungsten,

molybdenum or vanadium. The Monnet portfolio of ferro-alloys includes vital alloys such as

Ferro Manganese (Fe-Mn) and Silico-Manganese (Si-Mn). The production of Ferro Alloys is

used for both captive purposes in production of value added steel as well as for merchant sale.

Being a highly power intensive operation, Monnet has an advantage of integrated operations

for supplying low cost power from its captive power plant to the ferro alloy operations.

INTEGRATED STRENGTH OF FERRO-ALLOYS


MONNET STEEL TMT BarsThe TMT BAR mill having H-V confi guration under technical know-how from

NCO Italy, will produce Fe-500/ Fe-500D grades of reinforcement steel,

sizes ranging from 8mm to 40mm and will have variants of High Corrosion

Resistant (HCR) / Earthquake Resistant (EQR) quality. Implementation of the

QUENCHING & TEMPERING enables the production of TMT Bars of higher

UTS with guaranteed UTS/YS ratio and higher elongation to ensure excellent

earthquake resistance property.

KEY ATTRIBUTES

SUPERIOR BOND STRENGTH

The critically designed and unique rib pattern of Monnet TMT bars makes them

ideal for superior bonding with concrete. Precise rolling, computer controlled

quenching & self-tempering process by NCO Italy & guide equipment by

Hallteck, UK ensures uniformity in the lug pattern and physical properties

across the length of the TMT bars.

EARTHQUAKE RESISTANT – HIGHER FLEXIBILITY WITH HIGH STRENGTH

At Monnet Steel, a superior and controlled steel making practice reduces the

level of impurities present in the fi nished product. In fact, in Monnet TMT

bars, the level of impurities (sulphur and phosphorous) are much below the

standard specifi cations as per IS 1786:2008. This guarantees that Monnet

TMT bars provide good fl exibility combined with high strength, resilience

and toughness - a characteristic essential for safety of construction against

earthquakes.

MIEL, Raigarh is accredited with ISO 9001:2008 and ISO 14001:2004

certifi cation for manufacturing of consistently good quality steel products

and maintaining strict quality norms in the entire manufacturing process. The

products are manufactured using world-class technology and exhibit superior

features thus providing a rock solid foundation in their respective fi eld of use.

PROVIDING A ROCK SOLID FOUNDATION THROUGH OUR PRODUCTS

MONNET STEEL TMT BARS PROVIDE GOOD FLEXIBILITY COMBINED WITH HIGH STRENGTH, RESILIENCE AND TOUGHNESS - A CHARACTERISTIC ESSENTIAL FOR SAFETY OF CONSTRUCTION AGAINST EARTHQUAKES


SUPERIOR BENDABILITY, LONGEVITY & DUCTILITY

Critical control over levels of impurities coupled with

computer controlled online heat treatment ensures that

Monnet TMT bars have bendability, longevity & ductility far

exceeding the IS 1786:2008 prescribed minimum norms.

CORROSION RESISTANCE*

For Higher Corrosion Resistance (HCR) requirements in case

of marine & coastal applications, if stipulated by customers,

the chemical composition is modifi ed by adding appropriate

alloying elements for enhancing corrosion resistance.

*supplied against specific customer requirements

Structural SteelMIEL has set up a Structural Steel Rolling Mill of 3 Lac TPA

capacity, on better technological platform, for manufacturing

various sizes of structural sections ranging from Beam

Section 125mm to 500mm, Channel Section 125mm to

400mm and Angle Section 75x75mm to 200x200mm, to

cater to the needs of the construction sector.

Monnet’s Medium and Heavy class Structural Sections

are suitable for all kind of conceivable Steel Structural

Construction of conventional and innovative type at any

geographical location.

Monnet Steel PlatesThe plate mill is single stand 4Hi reversible with AGC,

Primary & Secondary de-scaler. Product range would be:

Width: upto 2500 mm width; Thickness: from 8mm to

110mm: length as per order; in structural and boiler grades.


CSRTOWARDS INCLUSIVE GROWTH

At Monnet, our CSR activities are a refl ection of our desire for

holistic and responsible growth as well as of our pioneering spirit

and leadership. Improving the lives of the societies in which

we operate through integration of economic prosperity, social

development and environmental protection is vital to our overall

success. The Monnet Foundation, the philanthropic arm of Monnet

Group, is continually engaged in taking forward the Group’s CSR

initiatives. Another area which has captured the interest of the

Group is the development of sports, especially boxing in the

country. It is through our consistent CSR efforts that we have been

able to bring about a transformation in the lives of people living

in an around our facilities in Odisha and Chhattisgarh and fortify

Monnet into a robust, resilient and sustainable company.

Our CSR initiatives are marked by unrelenting commitment

to several projects identifi ed under the focus areas of

Women Empowerment, Education, Healthcare, Infrastructure

Development and Sports Development.

THE MONNET FOUNDATION, THE PHILANTHROPIC ARM OF MONNET GROUP, IS CONTINUALLY ENGAGED IN TAKING FORWARD THE GROUP’S CSR INITIATIVES


Empowering CommunitiesMonnet strongly believes in supporting the communities

around its operations, building positive local relations

and assisting the development of the micro-economic

environment within the communities. With this line of

thought, the Group has fully adopted 9 villages viz.

Naharpali, Singhanpur, Bilaspur, Bhupdevpur, Pilaipali,

Lodhajhar, Rakshapali, Shalihabhatha, Kurrubhatha in

Raigarh, Chhattisgarh and endeavours to add more to this

number. Regular training courses are conducted in diverse

spheres of craft and skills to enable youth and women

empowerment. Women are provided with sewing machines

in order to enable them to earn their livelihood. Also,

the Foundation, under the affi liation of AISECT - IGNOU

Computer centre, conducts computer classes to enable

gainful employment for the youth.

EducationChildren are our future and investing in their education

is the best way for empowering our community and our

nation. Guided by this strong belief, Monnet Foundation

generously supports the cause of education. Monnet DAV

Public Schools at Raipur and Raigarh replete with modern

facilities have been established for the welfare of the

children of MIEL’s employees and of workers and children in

the surrounding areas.

Sincere efforts of teachers and sheer hard work of students of

the Monnet DAV Public schools have started reaping results.

The students of the Monnet DAV Public School, Raipur have

brought laurels for the school and state by performing

exceptionally well at National Level examinations.


Achievements – Monnet DAV Public School, RaipurIn the recently conducted All India Level National Science Talent Search Examination 2013,

the most prominent and prestigious examination in India organized by UNIFIED Council

Hyderabad (An ISO-9001-2008 Certifi ed organization in Testing and Assessment), 388500

students of 4000 schools from all over India including 84 students from the Monnet DAV

Public School appeared for the examination. Among them, following fi ve students of Monnet

DAV Public School Raipur, came out with fl ying colours:

K. SAI KUMAR FROM CLASS V,

1st IN CHHATTISGARH STATE AND 4th RANK ALL OVER INDIA

NEHA VERMA FROM CLASS VII,

4th RANK IN THE STATE AND A RANKING OF 91 IN ALL OVER INDIA

AASTHA SAHU FROM CLASS II,

1st IN THE STATE AND 27th POSITION IN ALL OVER INDIA

PAYAL NAND FROM CLASS IX,

5th POSITION IN THE STATE AND A RANKING OF 241 IN ALL OVER INDIA

PARVATI KARKEY FROM CLASS X,

2nd RANK IN THE STATE AND A RANKING OF 269 IN ALL OVER INDIA5

3


Concerned about the low enrolment, especially in rural India, the

Foundation has also initiated efforts to encourage children to enrol

at least in primary education. The Foundation conducts various

literacy campaigns in the villages of Angul with the mission to

obtain 100% literacy.

Further, the Foundation also supports the non-formal education

to children through ‘anganwadis’ under the pioneering Integrated

Child Development Services (ICDS) Scheme of the Government of

India. Literacy campaigns are regularly organized to increase the

GER in the rural villages near the Company’s operational areas. To

encourage students to pursue higher academics, the Foundation

rewards meritorious students with scholarships. Financial assistance

is also given to children from the under-privileged families. A

special foundation called ‘Sahan’ has been set up by the Group to

look after the needs of the differently abled children.

HealthcareMonnet embraces a commitment to support and give generously

in the communities where it conducts business for the promotion

of improved healthcare facilities. Under the aegis of the Monnet

Foundation, Maina Devi Health Centres have been set up to look

after the healthcare facilities of the workers and employees, their

families, and the community at large. Showing sensitivity to the

healthcare needs of the local community, round the clock free

ambulance services for meeting basic health care needs as well as

for emergency facilities, regular free medical camps and fi nancial

support for surgical treatments at hospitals in Raipur and Raigarh

have been launched by Monnet. To spread awareness about

healthcare, the Foundation also organizes events in partnership

with leading health organizations such as Department of Health,

ICDS and UNICEF. Villagers are counselled on the need for proper

nutrition for children and the importance of maintaining proper

hygiene.

Always very cautious about the hazards the environment may

possess, Monnet Foundation took up the initiative of replacing

the traditional chulhas that emit excessive smoke with “Smokeless

Chulhas”. The stoves are distributed free of cost at all Anganwadi

Centres where the mid-day meals of children are cooked in Angul,

Odisha.

A SPECIAL FOUNDATION CALLED ‘SAHAN’ HAS BEEN SET UP BY THE GROUP TO LOOK AFTER THE NEEDS OF THE DIFFERENTLY ABLED CHILDREN.


Infrastructure Development As a responsible corporate entity, Monnet consistently strives towards meeting the expectations of the

society by supporting initiatives for improving infrastructure relevant for the development of the society

while maintaining the ecological balance on a sustainable basis. The Foundation undertakes electrifi cation

projects in villages, building of schools and recreational facilities, construction of roads, development of

proper sanitation facilities etc., in line with its efforts to work towards building an effective and effi cient

infrastructure system in the cities and rural areas of the Group’s presence. The foundation has also taken

up initiative of maintaining Chhattisgarh Haat and Anupam Garden in Raipur through the program “Our

Dream, A Green City”. Monnet Group has also been taking up the development of Odisha, Kolkata and

Raipur airports and is actively involved in the beautifi cation and landscaping of these areas.

Swami Vivekanand Airport, Raipur, Chhattisgarh



Sports DevelopmentTo facilitate India’s emergence as a sporting nation, Monnet

decided to promote sports wherein the country has talent

but the sportsmen are unable to achieve their full potential

due to lack of funds and infrastructure. This need to promote

sports ignited a spark to set up a sports foundation i.e.

“Monnet Sports Foundation”(MSF), which will work towards

strengthening the focus on sports (other than cricket) in the

country. As the fi rst step, MSF was inspired to adopt Boxing

Sport which has the potential to earn laurels for the nation

and represents power, strength, agility and endurance that

syncs perfectly well with the Group’s business operations

i.e. Steel, Power and Mining. Monnet Group associated

with the Indian Boxing Federation (IBF) by being the offi cial

sponsors of the Indian Boxing team.

ConclusionAt Monnet, Corporate Social Responsibility is a value that

runs deep in pursuit of a vision to become an organization

working towards a better tomorrow. We remain focused

on continuing improvements in all aspects of CSR and

contributing to the society in a constructive manner.

PROVIDING HOLISTIC SUPPORT FROM GRASS ROOT LEVEL TO BEING SPONSORS OF THE INDIAN BOXING TEAM


(` in Crores)

FINANCIAL YEAR 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Equity Capital 47.96 54.48 64.36 64.36 64.36

Preference Capital 0 0 0 0 175.00

Sales 1548.73 1480.70 1573.05 1897.38 1,957.43

EBITDA (Profi t Before Dep., Int. & Tax) 406.63 477.33 466.39 537.85 546.51

EBITDA Margin (%) 26.26 32.24 29.65 28.35 27.92

Net Profi t After Tax 216.00 269.10 281.16 288.86 250.32

Cash Profi t 304.41 346.40 364.33 372.23 354.84

Dividend Per Share (`) 5.00 5.00 5.00 2.50 1.50

Earnings Per Share (`) 44.22 53.64 48.61 44.90 39.07

Book Value Per Share (`) 268.20 307.20 324.78 366.77 428.06

Shareholders' Funds 1286.26 1673.05 2090.14 2360.35 2,754.76

FINANCIALHIGHLIGHTS


Your Directors submit their report for the financial year ended 31st March, 2013.

Sales, Profits, Dividends & Retention[` in Crores]

2013 2012Sales (Net of Excise) & Other Income 2028.27 1960.54Profit before Depreciation 427.31 451.13Depreciation and amortization expenses 88.90 74.11Profit before taxes 338.41 377.02Tax Expense 88.09 88.18Profit after Tax 250.32 288.86Cash Profit 354.84 372.23Profit brought forward from previous year 1,198.04 988.32Profit available for appropriation 1,448.36 1,277.18Dividend: 15% (2011-12 : 25%) 9.56 16.04Dividend on Preference Shares 0.06 0.00Tax on Dividend 1.64 2.60Dividend paid (including taxes thereon) 11.26 18.65Transfer to General Reserve 25.10 28.90Transfer to Debenture Redemption Reserve 0.00 31.59Surplus carried to Balance Sheet 1412.00 1198.04

Report of the Directors for the financial year ended 31st March, 2013

Status of ExpansionsSteelThe company has implemented the integrated steel project at Raigarh. As the project has multiple models leading to the production of both Long and Flat products, stabilizing the various processes might require fixing or addressing technical problems. Moreover, the Company plans to steadily introduce the new products in the market to ensure the positive response in view of the pressure on the demand in the industry. It is, however, hopeful that the above does not pose any serious issues.

Power (Monnet Power Company Limited) – Technical UpdateThe boiler drum lifting for both, Unit 1 & Unit 2, were completed in the year 2012. Boiler hydro-test for Unit 1 has been completed in April, 2013. The foundation works for ESP has been completed and structural work is at advanced stage of completion. The ESP control room panel erection works is under progress. Turbine erection for Unit 1 is in progress and generator stator erection has already been completed. Condenser erection for Unit 1 has been completed and hydro-test is in progress and Condenser erection for Unit 2 is in progress. The shell casting for chimney upto 275 meters has already been achieved, flue cane fabrication has been completed and flue cane erection upto 255 meters has already been achieved. The civil works for cooling tower and mechanical erection is in progress. The tower erection

for switchyard has been completed and stringing works, equipment erection and panel erection is in progress. The raw water reservoir compartment #2 has already been completed and civil works is in progress for raw water reservoir compartment #1. For water intake system intake water pump house raft has been completed and pipe laying activity for water intake system is in progress.

Risk ManagementYour Company’s Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The Company also has a sound internal audit system in place. The audit consists of an independently constituted team in the Company and outside auditors appointed for the purpose. The risk policy and internal Audit Reports are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.

Note on SubsidiariesYour Company has seventeen subsidiary companies including subsidiaries of subsidiaries. The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. For further details of these subsidiaries, please refer


Note 1 [ I ] of Consolidated Financial Statements on page 86. The Ministry of Corporate Affairs, Government of India vide its Circular No. 5/12/2007-CL-III dated 08-02-2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. The information in accordance with para (iv) of the circular dated 08-02-2011 is appended at the beginning of Consolidated Financial Statements on page 81 and 82. Further, annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies’ investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor at Company’s Corporate Office in Delhi and at the Registered Offices of subsidiary companies concerned.

BuybackThe buyback scheme of Company’s own equity shares launched pursuant to Section 77A of the Companies Act, 1956 and the SEBI (Buyback of Securities) Regulations, 1998 has been successfully completed and closed on 21st December, 2012. The Company has bought back a total of 606126 equity shares at an average price of ̀ 323.28 per share and a total consideration of `19.65 Crores was paid. All the securities bought back have been extinguished, the requisite reporting to the Registrar of Companies and to the SEBI has been done as prescribed under the Companies Act and Securities Laws and regulations.

DividendThe Board of Directors recommends a dividend of `1.50/- per share on 63731681 equity shares of `10/- each for the financial year ended 31st March, 2013 subject to approval of the shareholders in the ensuing Annual General Meeting. The total outgo on account of dividend including corporate dividend tax works out to `11.26 Crore as against `18.65 Crore in the previous year.

Necessary information with respect to entitlement is being given in detail in the Notice calling Annual General Meeting.

Depository SystemAs on 31st March, 2013, about 99.29% of the shares of your Company are held in dematerialized form. The percentage wise decline in dematerialized shares is due to ongoing buyback scheme in which only dematerialized shares have been bought back so far.

The shares of the Company are available for trading in the dematerialized form under both the Depository Systems in India – NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Company’s shares

under the Depository System is INE743C01013. The annual custody fee for the financial year 2013-14 has been paid to NSDL and CDSL, the Depositories.

During the year, 14808 shares of the Company, covered in 105 requests, were dematerialized. Out of 63731681 equity shares being the paid-up capital of the Company as on 31st March, 2013, a total of 63282367 shares constituting 99.29% of the paid-up share Capital stand dematerialized.

DirectorsDuring the period beginning after the date of last Directors’ Report, Shri Gopal Tiwari, Director and Shri N.C. Jha, Whole-time Director have resigned from the Board w.e.f. 10th June, 2013 and 1st August, 2013 respectively. The Board places on record its appreciation of valuable guidance rendered by them during their tenure.

Pursuant to Section 255 of the Companies Act, 1956, Shri J.P. Lath, Director, retires by rotation on the day of ensuing Annual General Meeting of the Company and, being eligible, offers himself for re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the detail of above director is given in Annexure-V.

Responsibility StatementIn terms of Section 217 (2AA), your directors confirm having: -

(i) followed in the preparation of Annual Accounts, the applicable accounting standards, with proper explanation relating to material departures, if any;

(ii) selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review;

(iii) 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) prepared the accounts on a going concern basis.

Management Discussion & AnalysisPursuant to clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled “Management Discussion & Analysis” has been included in this annual report and is given in Annexure-II and forms an integral part of this report.

Corporate Governance ReportPursuant to clause 49 of the Listing Agreement with stock exchanges, a separate section titled “Compliance Report on


Corporate Governance” has been included in this annual report and is given in Annexure-III along with a certificate of compliance from the Auditors and forms an integral part of this report.

Statutory Disclosuresi) A declaration signed by Chairman & Managing Director

as required under Clause 49 (I) (D) of the Listing Agreement is enclosed as Annexure-IV.

ii) The Chairman & Managing Director and Chief Financial Officer have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2013.

Consolidated Financial StatementsIn accordance with Accounting Standard 21 - Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary companies as approved by their respective boards form part of this Report & Accounts.

Audit CommitteeThe Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956 consists of Shri G.C. Mrig as its Chairman and Shri Ajay Relan and Shri J.P. Lath as its members.

AuditorsThe Auditors’ Report and Notes to the Accounts as referred in the Auditors’ Report are self-explanatory and therefore, do not call for any further comments or explanation.

M/s. O.P. Bagla & Co., Chartered Accountants, New Delhi, Auditors of the Company, hold the office till the conclusion of 22nd Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956.

Fixed DepositsThe Company has not invited or accepted any deposits during the year from the Public under Section 58A of the Companies Act, 1956.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & OutgoAs required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data is enclosed as Annexure-I forming part of this report.

PersonnelInformation as per Section 217(2A) of the Act, read with

the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to all the members excluding the statement containing the particulars of employees to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary at the Corporate Office of the Company for a copy.

AcknowledgmentsYour Directors take this opportunity to offer their sincere thanks to the various Departments of the Central and State Government, Financial Institutions, Bankers to the Company, all Customers, Suppliers and contractors for their continued valued assistance and support. Your Directors also wish to place on record their appreciation for dedicated services rendered by all officers, staff and workers of the Company at all levels.

For and on behalf of Board of Directors

Place: New Delhi (Sandeep Jajodia)Date: 14th August, 2013 Chairman & Managing Director


Information as per 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 and forming part of the Director’s Report for the year ended 31st March, 2013.

A. CONSERVATION OF ENERGY : The Company has taken a number of steps to improve the conservation of energy by increasing the efficiency of raw

material inputs in power generation and by reducing/eliminating consumption wastages. Conservation of energy and improving the efficiency of existing resources are continuing processes and form an integral part of responsibilities of departmental heads. Various steps taken in this direction are as follows: -

a] Energy conservation measures taken :

— De-staging of one No. Boiler Feed Pump of TG-2 resulting into energy conservation of 20 KWH per hour at Raipur Plant. Similar work is in progress at Raigarh plant.

— Reduction in consumption of coal by use of Dolo Char in AFBC Boiler. During the year 2011-12, Dolo Char consumption was 24524 MT against which, the consumption during FY 2012-13 is 96365 MT

— Arresting steam leak.

— Maintain Steam Trap to save steam.

— Arresting compressed air leak.

— Insulation work for reduced radiation loss.

— Cooling Tower has been reconditioned to increase cooling efficiency leading to energy conservation.

— Adopting cheap energy for production work in Kiln 1 & 2 (DRI)

— Optimization of Steam Generation & Condensate Recovery System.

— Optimization of Heat Recovery from flue gases.

— Optimization in capacity utilization, thus reducing specific consumption of energy.

— Optimization of pump & motor operations through application of VFD in WHRB -1 and VFD in I.D. Fan of WHRB-III.

— Optimization of Elimination of one I.D. Fan, P.A., F.D. and CEP in WHRB, AFBC & TG.

— Strict control of quality inputs, resulting in less slag generation, thus saving electricity consumption

— Utilization of Ignite Oil in place of LDO in SID.

— Utilization of all size fraction of coal.

— Minimization of handling losses.

— Implementation of online oversize Coal recirculating system in DRI to reduce HSD consumption and ground wash.

— Automation of RMHS Circuit by operating through PLC.

— Reduction of power consumption of Kilns by installing V.V.V.F. Drive for LOB compressors and CB fans of kilns, shutting of one compressor, stopping one side screen filter pump and by installation of VFD in two CW Pumps.

— Energy gain by increasing feed water temperature in De-aerator by 5 degree centigrade.

— Reduction in consumption of Furnace Oil from 2746.795 KL during 2011-12 to 1329.88 KL in 2012-13 due to direct rolling of Billet for Structurals.

Annexure - I

Annexure to the Directors’ Report


b] Additional Investments and proposals, if any, being implemented for reduction of consumption of energy at Raigarh Plant :

1. Cooling Tower make up from clarifloculator Tank to cooling tower basin through Natural flow and stop Two 55 kw motor .

2. VFDs Installation in PA fans and ACW pumps in 90 MW Plant.

3. Lighting power saving by voltage reduction.

4. To use cheap FO fuel for AFBC Boilers light up instead of HSD.

5. New insulation work in power plant and DRI.

6. RCC work in Power plant CHP Area.

c] Impact of measures of [a] and [b] above for reduction of energy consumption and consequent impact on the cost of production of goods.

— The per ton power consumption has been under control.

d] Total energy consumption and energy consumption per unit of production is as per Form A annexed.

B. TECHNOLOGY ABSORPTION e] Efforts made in technology absorption are as per Form B annexed.

C. FOREIGN EXCHANGE EARNINGS AND OUTGOf] Activities relating to exports

initiatives taken to increase exportsdevelopment of new export markets forproducts and services and export plans.

The efforts are being made.

g] Total Foreign Exchange used and earned

- Used 254.86 Crores

- Earned 44.87 Crores


Current Year(2012-2013)

Previous Year(2011-2012)

A. POWER AND FUEL CONSUMPTION :1. ELECTRICITY a] Purchased - Units 39772092 44514295 - Total Amount (` in Lakhs) 2181 2172 - Rate/Unit (`) 5.48 4.88 b] Own Generation (i) Through Diesel Generator - Units (in KWH) 14095001 12862336 - Unit per ltr. of Diesel Oil 3.40 3.01 - Cost/Unit [`] 15.62 15.26 (ii) Through Steam Turbine - Units (in KWH) 921630999 913551499 - Unit per MT of Gas 241 242

- Cost/Unit 2.68 2.222. COAL Quantity (in Mts.) Sponge Iron Kiln 943655 1008950 Power Plant Boiler 385800 597236 Ferro Alloys furnace 3437 3655 Total Cost (` in Lakhs) 31934 38009 Average rate (` per ton) 2395.81 2361.07

3. FURNACE OIL/LDO

Quantity (K. Ltrs.) 1501326 7580204 Total Cost (` in Lakhs) 633.17 3148 Average rate (` per Ltrs.) 42.17 41.53

4. OTHERS/INTERNAL GENERATION NIL NIL

B. CONSUMPTION PER MT OF SPONGE IRON Electricity (in KWH) 78 79 Furnace Oil (in K. Ltrs) NIL NIL Coal (in Mts.) 1.25 1.44

Others NIL NIL

C. CONSUMPTION PER MT OF MILD STEEL INGOTS

1. Electricity (KWH) 0 0

D. CONSUMPTION PER MT OF MILD STEEL BILLET


E. CONSUMPTION PER MT OF FERRO ALLOYS


F. CONSUMPTION PER MT OF STRUCTURAL STEEL


FORM - A

DISCLOSURE OF PARTICULARS WITH RESPECT OF CONSERVATION OF ENERGY


A. RESEARCH AND DEVELOPMENTS : NIL NIL

B. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION :

1) Efforts, in brief, made towards : technology absorption adaptation and innovation

The Raigarh Plant is using 85% efficient TPH CFBC Boiler Technology in place of conventional 80% efficient AFBC Boiler Technology

The Raigarh Plant is using 85% efficient TPH CFBC Boiler Technology in place of conventional 80% efficient AFBC Boiler Technology

2) Benefits derived as a result of :the above efforts e.g. productimprovement, cost reduction,product development, importsubstitution etc.

The efficient Boiler Technology has resulted in saving of coal which is a scarce mineral

The efficient Boiler Technology has resulted in saving of coal which is a scarce mineral

3) Information relating to imported :Technology

A Slag Recycling Plant is being set up by Korean Technology to further extract Iron from the Slag and also Manufacture PS Balls that has varied uses in developed countries.

A Slag Recycling Plant is being set up by Korean Technology to further extract from the slag and also Manufacture PS Balls that has varied uses in developed countries.

FORM - B

DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION


Industry Structure & DevelopmentsThe steel industry globally has been passing through challenging times for almost two years on account of economic slowdown, falling investment rate and overall pressure on the commodities. Indian Steel Industry has become completely integrated with the global industry and the outlook of the industry is not only influenced by the global factors but strongly correlates and tracks the global developments in the industry and economy.

The potential for the Indian Steel industry to grow is enormous on account of huge bankable reserves of coal and iron-ore and the potential investment demand from the development of the Infrastructure and allied industries. The plan layout for the industry set by the Government was targeted to achieve a capacity of 95 million tonnes by April-December, 2012-13. However, global slowdown and the domestic deceleration in economic activity in last few years have witnessed a sharp decline in the investment demand and capital formation and as such growth in the Industry also slowed down considerably. Issues such as long and tedious form of land acquisition and host of regulatory approvals at the Central and State level Governments consuming inordinate delay is impacting the growth of steel industry in the Country. Coupled with that, the Indian mining sector has also been plagued by regulatory hurdles and a unclear policy framework.

Notwithstanding above, Indian policy makers would be forced to seriously pursue the objective of streamlining the road map of easy approval system and to secure the development of core sector in India. India’s GDP growth is hugely dependent on the manufacturing activity which in turn will be led only by growth of the core sector in the country. Therefore, the outlook for the steel industry as a whole remains buoyant in the medium term and inspiring to plan for fresh investments to the existing steel capacity in the Country.

India also ranked 4th largest producer of crude steel in the world and it continues to retain the position of largest producer of DRI (sponge iron) in the world mainly on account of domestic availability of thermal coal and iron ore, the key resources for sponge iron. India’s capacity of crude steel production has expanded from 51.17 MT in 2005-06 to 91.66 MT in April-December, 2012-13. During the same period, the production of crude steel grew from 46.46 MT to 73.79 MT at an annual growth of 8%. Per capita consumption of steel has registered an annual growth of 7.6% and has increased to 59 kgs in 2011-12 from 38 kgs during 2005-06.

The production of finished steel grew to 73.42 MT during 2011-12 as against 46.57 MT in 2005-06 with an annual

growth of 7.9% and the consumption of finished steel grew by 9.4% during these six years. During April-December 2012-13, export of finished steel stood at 3.78 million tonnes, thus registering a growth of 24% compared to last year while 5.79 million tonnes of steel was imported during the same period, thus registering a growth of 16.2% compared to last year, registering a jump of about 1 million ton during FY 2012-13. Concessional duties being extended by India under FTAs to countries like South Korea and Japan are the primary reason behind jump in imports. On the other hand, India continues to be net exporter of pig iron for which main contribution is made by private sector.

Risks & ConcernsThe biggest risk to the Indian industry could be a dismal development in the mining sector. Mineral resources such as coal, iron-ore etc. provide the back-bone to the Indian industry and could position India as one of the strongest players in the steel industry on the Global map. But the controversy in the past allocation of coal blocks and clamp down by some of the State Governments on iron-ore mines and intervention of Courts on the subjects of illegal mining have adversely impacted the development of mining sector. The continuity of uncertainty in the mining sector could be the biggest threat for development of the steel industry.

The other major risk for the industry is the slowing economic growth, non-clarity of policies, lack of reforms and inadequate availability of capital. The development in the industry is dependent on adequate resource allocation both physical and financial which are not flowing to the industry.

Competitiveness in the domestic industry is critical to raw material integration and India is best positioned to make this industry one of the most competitive in the world. Non-competitiveness in the industry can lead to higher imports from China and other CIS countries, which can threaten and can be destabilizing for the growth of domestic industry.

The figures of production, Import and Export of Total Finished Steel (alloy + non alloy), Capacity, production and capacity utilization of Crude Steel and production through coal based and gas based route of Sponge Iron during the last two years are given below:

Unit : million tonnes

Total Finished Steel (alloy + non-alloy)

Year Production for sale

Import Export Real Consumption

2011-12* 73.42 6.83 4.04 70.92

Apr-Dec. 2012-13*

56.72 5.79 3.78 53.53

Annexure - II

Management Discussion And Analysis


Crude Steel

Year Capacity Production Capacity Utilization

2011-12* 89.29 73.79 83

Apr-Dec. 2012-13* 91.66 58.33 85**

Sponge Iron

Year Coal Based Gas Based Total

2011-12* 15.20 5.17 20.37

Apr-Dec. 2012-13* 11.66 3.23 14.89

Source: JPC; *= prov; **= based on annualized production

Opportunities & ThreatsIndia’s GDP growth is likely to move higher in the coming years due to compulsive focus by Policy Makers for development of Infrastructures & other Sectors to provide jobs / employment to millions of qualified youth coming out of colleges and institutions in India.

Capacity expansions are expected to continue for meeting the anticipated demand that is likely to come from various sectors, mainly rural sector which has not yet got the requisite exposure to multi-faceted use of steel. India has enormous scope and untapped potential to increase steel consumption in almost all sectors, especially in automobiles, engineering industries, irrigation and water supply. India has rich mineral resources and has fourth largest iron ore reserves. Besides, India has third largest pool of technical manpower after United States and the erstwhile USSR. Expected increase in the investments in infrastructure projects and expected growth in housing sector, urbanization of rural India strengthen the industry prospects.

The Government has earmarked USD 1 trillion for investment in infrastructure and construction during 12th Five Year Plan. This will boost the steel demand by approximately 40 million tonnes. As per World Steel Association estimates, 5.9% growth is projected in the Indian Steel Industry during FY 2013-14. The Planning Commission has approved a total outlay of `90974.64 Crores of Internal and Extra Budgetary Resources for Central Sector Schemes and `200 Crores for Centrally Sponsored Scheme for 12th Five Year Plan (2012-17). Indian Government has recently taken several reformist measures such as containment of fuel subsidy, FDI in retail etc. Besides, India has so far experienced good monsoon that will boost rural income. These factors are expected to help push India’s GDP growth at the rate of 6.4 per cent.

OutlookThe revival in the economy of US in the last twelve months where the GDP growth has accelerated to 2.5% and is further expected to grow to 3.5% will provide a big impetus to the world growth. Besides, China, the other major economy, is re-

energizing its efforts to lift the growth in the country to generate jobs and employment for its ever increasing work force in the country. Similarly, Japan, of late, has also liberalized the financial markets to provide enough liquidity to boost the growth in the country. The uncertainty in the Europe is also settling down and the European Union is collectively trying to push the growth in the region.

Back home, the economic activity in the country is expected to accelerate post the General Elections at the Centre and in the States. The GDP growth is likely to inch higher as a consequence of various initiatives taken by the Government.

Currently, the Focus of the Government and Central Bank in India is for monetary and fiscal consolidation likely to attract FDI and foreign capital which is desperately required for pushing the growth in the country.

The aggregation of the above factors at the global and local levels provide a very optimistic projection of the industry’s future.

Segment wise or Product wise PerformanceProduction Unit 2013 2012 Increase /

(Decrease)Sponge Iron MT 761142 742194 2.55M.S./S.S. Products

MT 100015 89061 12.30

Structural Steel

MT 76387 81204 -5.93

Ferro Alloys MT 10864 8993 20.81Coal MT 794723 850505 -6.56Power Units in

‘000743069 858238 -13.42

Internal Control Systems and their AdequacyInternal Control systems are an integral part of company’s corporate governance. Your Company has effective internal control environment. Control systems have documented policies, checks and balances, guidelines and procedures that are supplemented by robust internal audit processes and monitored continuously by periodical reviews by management which provides reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly. Your Company has an independent MIS and Audit Department to oversee the day-to-day functioning of the Company. The Company has proper budgeting system and the actual performance is continuously evaluated and the corrective measures are taken from time to time.


Material Developments in Human Resources/Industrial Relations frontYour Company believes that the drive for progress is integral to growth objective that can be achieved only by having innovative talent. To achieve this objective, your Company invites best technical talent from premier technology and management institutes throughout India who have to appear in the entrance examination that are conducted across major cities in India. Selected candidates have to further complete successfully extensive on job training before final induction in appropriate divisions. Your company also conducts comprehensive development programs. Equal emphasis is laid on the development of workforce. Company contributes its profits in Monnet Foundation through which, the Company continually strives to improve the living conditions, providing better sanitation and medical facilities. Further, a blend of programmes and initiatives are devised from time to time and followed extensively with an objective to reach out to the people living in and around company’s plant areas as also to the immediate family members of Company’s workforce to provide education opportunities to talented children, providing skill learning opportunities to womenfolk who can work from home and help boost family’s earning capacities.

Industrial relations in the Company are satisfactory and cordial across all the plants and divisions. The operations of the plant are under the charge of independent Chief Executive Officers, who have rich experience and qualifications in the field. Your Company assiduously keeps on devising and improvising its HR policies towards never ending pursuit of value creation.

Forward Looking StatementsThe “Management Discussion and Analysis” section contains forward-looking statements and are stated as required by applicable securities laws and regulations. Unforeseen factors such as change in policies, tax laws and other statutes may affect the results and actual outcome may differ materially from those expressed or implied herein and thus, involve risk and uncertainties. Use of certain words such as expects, estimates, believes, will and other similar words identify such forward looking statements. The Company does not undertake obligation to publicly update or revise any such forward looking statements. Therefore, precaution should be taken to read these statements with caution and by not placing undue reliance. Further, this report should be read in conjunction with the financial statements and notes thereto contained herein.


Your Directors present the Company’s Report on Corporate Governance for the financial year ended on 31st March, 2013.

Company’s Philosophy on Code of GovernanceMonnet is committed to ethical corporate citizenship by following systemic process of healthy governance practices and discharging societal responsibilities towards capital providers, business associates, stakeholders and employees in conducting its affairs in a fair and professional manner and in maintaining the high standards. The Company has also taken a series of other measures such as having professional Directors on the Board who have achieved prominence in their professional career, adopting pragmatic policies and effective systems and procedures, sharing of information with shareholders on a regular basis, through newspapers, audits and checks.

The policies and actions of the Company, while being in full compliance of applicable laws and regulations, are dictated by the underlying objective of maximizing shareholder value on a long-term basis.

Board of DirectorsYour Company has strong and balanced Board of Directors. The Board is fully empowered to discharge the responsibility of strategic supervision of your Company. As on date, more than half of the strength of the Board comprises of Independent and Non-executive Directors. The Board consists of seven directors, i.e. a Chairman & Managing Director, a Dy. Managing Director, and five Non-executive Directors. Four of these five Directors are Non-executive Independent Directors.

The Board of Directors meets at least once in a quarter to review the Company’s performance and financial results and more often, if considered necessary, to transact any other business. The intervening period between two Board Meetings was well within the maximum gap of four months as prescribed under Clause 49 of the Listing Agreement.

Meetings & AgendaThe agenda is accompanied by Notes giving comprehensive background that enables the Board to take informed decisions. Generally, agenda papers are circulated seven days prior to the board meeting.

Present structure of the Board of Directors is as following

Name Category No. of Board

Meetings attended during

2012-13

Whether attended AGM held on 29th

September, 2012

No. of Directorships in other public

companies 1, 2

No. of Committee Memberships in other

Companies 1, 3

Chairman Member Chairman MemberShri Sandeep Jajodia(Chairman & Managing Director)

Not IndependentExecutive

6 NP 0 5 0 1

Shri C.P. Baid(Dy. Managing Director)

Not IndependentExecutive

6 P 0 5 0 0

Shri N.C. Jha* Whole-time Director 3 NP 0 4 0 0Shri G.C. Mrig Independent

Non Executive6 NP 0 1 1 1

Shri Amit Dixit IndependentNon Executive

3 NP 0 6 0 4

Shri Vikram Deswal IndependentNon Executive

2 NP 0 0 0 0

Shri Ajay Relan IndependentNon Executive

4 NP 0 6 2 2

Shri J. P. Lath Not IndependentNon Executive

6 P 0 4 0 3

Shri Gopal Tiwari ** Not IndependentNon Executive

6 NP 0 1 0 1

Annexure - III



Notes:1. Other Directorships and Committee Memberships of Directors are as on 31st March, 2013.2. Directorships in other Companies exclude Private Limited Companies, Foreign Companies, Membership of Associations etc./Professional

Bodies and Alternate Directorship.3. Committee Membership is in respect of Audit Committee and Investors Grievance Committee of Indian Public Limited Companies.* Resigned w.e.f. 01-08-2013.** Resigned w.e.f. 10-06-2013.

Details of Board Meetings during Financial YearDuring the financial year ended 31st March, 2013, six meetings of the Board were held as follows:—

Sl. No. Date Board Strength No. of Directors Present1 14th May, 2012 9 72 4th August, 2012 9 63 14th August, 2012 9 84 5th September, 2012 9 65 14th November, 2012 9 86 14th February, 2013 9 9

Information in cases of appointment or re-appointment of Directors as required under Listing Agreement is given as underRequisite details in respect of Shri J.P. Lath are given in Annexure-V.

Committees of the BoardCurrently, there are seven Committees of the Board, i.e. Executive Committee, Finance Committee, Audit Committee, Remuneration Committee, Investors’/Shareholders’ Grievance Committee, Special Allotment Committee and Share Transfer Committee. These Committees have defined terms of reference. However, occasionally, the Board assigns certain matters. The Board also forms Committee for a specific purpose after which these Committees cease to exist.

Audit CommitteeYour Company has in place a qualified and independent Audit Committee as prescribed in Clause 49 (II) (A) and has been delegated powers specified in sub-clause (C) and performs role as defined in sub-clause (D). It also reviews the information as per sub-clause (E) and meets at least four times in a year and not more than four months elapse between two meetings as prescribed in sub-clause (B) of the aforesaid Clause 49 (II). The Audit Committee also meets the requirements contained in Section 292A of the Companies Act, 1956.

CompositionThe Audit Committee comprises of three Independent Non Executive Directors and a Secretary in compliance of Clause 49 II (A) (i) of the Listing Agreement. Shri G.C. Mrig is the Chairman of Audit Committee. Shri Ajay Relan and Shri J.P. Lath are the other Members of the Committee.

AttendanceBesides members of the Committee, the Managing Director, Dy. Managing Director, Executive Director and Chief Financial Officer along with the Statutory Auditors are invitees to the meetings.

The details of attendance in the Audit Committee Meetings held during the year is given below: —

Name No. of Audit Committee Meetings held during the tenure of the Members

No. of Audit Committee Meetings Attended

G.C. Mrig 5 5Ajay Relan 5 4J.P. Lath 5 5


During the year 5 Audit Committee Meetings were held. The detail of these Meetings and attendance thereat is given below: —

Sl. No. Date Committee Strength No. of Members Present1 14th May, 2012 3 32 4th August, 2012 3 23 14th August, 2012 3 35 14th November, 2012 3 36 14th February, 2013 3 3

Remuneration CommitteeThe Remuneration Committee comprises of Shri G.C. Mrig (Chairman) Shri Vikram Deswal and Shri J. P. Lath. Shri Vikram Deswal has been inducted w.e.f. 14-8-2013 consequent to resignation of Shri Gopal Tiwari. The terms of reference of this Committee cover the matters specified for Remuneration Committees under clause 49 of the Listing Agreement. During the year one Remuneration Committee Meeting was held on 14-08-2012.

Shareholders/Investors Grievance CommitteeThe Shareholders/Investors Grievance Committee oversees the redressal of Shareholders and Investor Grievances. Apart from this, the Committee also oversees the compliance with Listing Agreement and various statutes, Rules, Regulations pertaining to securities market, dissemination of quarterly information to Stock Exchanges, furnishing of various certificates from practicing Company Secretary such as Capital Reconciliation Audit, Clause 47 certification, NSDL & CDSL matters such as carrying out Corporate Action etc.

On day to day basis, the Investor grievances are handled by Company’s Registrars and Share Transfer Agents MCS Ltd., New Delhi. The Secretarial Department of the Company monitors complaints and other activities and also helps in resolving grievances wherever needed. A firm of Practicing Company Secretaries conducts the audit on quarterly basis and submits Capital Reconciliation Audit Report. It also conducts half yearly due diligence exercise in compliance of Clause 47 of the Listing Agreement and submits its certificate.

CompositionThe Shareholders/Investors Grievance Committee is headed by Non-executive Chairman in compliance of Clause 49 IV (G) (iii) of the Listing Agreement. Shri J.P Lath is the Chairman of the Committee. Shri Vikram Deswal and Shri C.P. Baid are the other Members of the Committee. Shri Vikram Deswal has been inducted w.e.f. 14-8-2013 consequent to resignation of Shri Gopal Tiwari. Shri M.P. Kharbanda, Company Secretary is the Compliance Officer.

AttendanceThe dates of meetings and details of attendance at Shareholders/Investors Grievance Committee Meetings held during the year is given below: —

Sl. No. Date Committee Strength No. of Members Present1 14th May, 2012 3 32 14th August, 2012 3 33 14th November, 2012 3 34 14th February, 2013 3 3

Share Transfer CommitteeThe Share Transfer work is handled by the Registrars who along with Share Transfer Committee handle the transfers/transmission of shares, issue of duplicate share certificates etc. The Composition and attendance of the members during the financial year ending 31st March, 2013 is as follows: —

Name Category Number of Meetings held during the tenure of the

Members

Number of Meetings attended during

the yearShri J. P. Lath Director 22 22Shri C.P. Baid Dy. Managing Director 22 22Shri M.P. Kharbanda Company Secretary 22 22


Whereas requests for share transfer, transmission, split/consolidation and duplicate share certificate are first processed by Company’s Registrar & Transfer Agents, MCS Ltd. and only valid requests are forwarded to Share Transfer Committee for its approval, requests for dematerialization/rematerialization are handled directly and independently by MCS Ltd. in line with the Depository Guidelines for their speedy disposal. The Share Transfer Committee meets regularly.

Details of Remuneration to Managing DirectorThe break-up of remuneration paid to the Managing Director, Dy. Managing Director and Executive Director are as follow: —

(` in Lakhs)Name Shri Sandeep

JajodiaShri C.P. Baid Shri N.C. Jha Shri K.K.

KhannaShri Gopal

TiwariPosition Chairman &

Managing Director

Dy. Managing Director

Whole-time Director

Executive Director

Consultant

Salary (`) 360.00 169.50 71.17 15.28 6.60Commission/Allowance (`) NIL NIL NIL NIL NILPerquisites (`) 44.15 6.55 1.54 0.14 NILTotal (`) 404.15 176.05 72.71 15.42 NILStock Option Granted (Nos.) NIL NIL NIL NIL NILService Contract 5 years

from 1-4-2010 to 31-3-2015

5 yearsfrom 8-11-2010 to 07-11-2015

3 years from 14-08-2012 to 13-08-2015

3 years from 31-10-2009 to30-10-2012

N.A.

Sitting Fee paid to Non-Executive Directors is as given belowName of the Director Sitting Fees (`) ESOP granted

(No. of Shares)Shri G.C. Mrig 130,000 NILShri Ajay Relan NIL NILShri Gopal Tiwari 1,26,000 NILShri J. P. Lath 1,24,000 NILShri Amit Dixit 60,000 NILShri Vikram Deswal 40,000 NIL

Compliance OfficerShri M.P. Kharbanda, Company SecretaryMonnet House, 11 Masjid Moth,Greater Kailash-II, New Delhi – 110 048

Status of Complaints For The Period 1st April, 2012 to 31st March, 2013Particulars No. of

ComplaintsNumber of complaints received from the investors (including the opening Balance as on 01.04.2012) comprising of Non-receipt of Dividend Warrants where reconciliation is completed after end of the quarter, securities sent for transfer and transmission annual report & complaints received from Regulatory/Statutory Bodies.

196

Number of complaints resolved 162Complaints Pending as at 31st March, 2013 34Number of shares pending for transfer as at 31st March, 2013. 0

General Body Meetingsa)

Details of Last 3 Annual General MeetingsFinancial Year Place of Meeting Date and Time

2011-12 Monnet Ispat & Energy Ltd. 29th September, 2012 at 2.30 p.m.2010-11 Monnet Marg, Mandir Hasaud, 30th September, 2011at 11.30 a.m.2009-10 Raipur-492101, Chhattisgarh 30th December 2010 at 3.00 p.m.


b) An Extra-Ordinary General Meeting of the shareholders was held on 16th March, 2013 in which two resolutions have been passed unanimously as under:

i. Reclassification of Authorized Capital of `132 Crores comprising of 13.20 Crores equity shares of `10/- each. Reclassified capital now consists of 8.20 Crores equity shares of `10/- each aggregating to `82.00 Crores and balance 0.50 Crores Preference Shares of `100/- each aggregating to `52.00 Crores; and

ii. Increase of Authorized Capital by addition of 1.25 Crores Preference Shares of `100/- each aggregating to `125 Crores, thereby increasing the Authorized Capital to `257 Crores.

c) Special Resolutions passed in previous three Annual General Meetings :

1. At the last Annual General Meeting held on 29th September, 2012, two Special Resolutions were passed (a) for addition of an object in the Main Object Clause of Memorandum of Association of the Company and (b) for various changes in the Articles of Association of the Company and were passed unanimously.

2. At the Annual General Meeting held on 30th September, 2011, a Special Resolution was passed for holding office of profit by a director.

3. At the Annual General Meeting held on 30th December, 2010, two Ordinary Resolutions under Section 293 (1) (a) and 293 (1) (d) were passed unanimously through postal ballot.

d) Postal Ballot: In the 22nd Annual General Meeting held on 29th September 2012, the Company had obtained the approval of its Members under Section 192A of the Companies Act, 1956, pertaining to:

Resolution No. (1): Ordinary Resolution under Section 293(1)(a) of the Companies Act, 1956 for creation of charges on the movable and immovable properties of the Company, both present and future, in respect of borrowings.

Resolution No. (2): Special Resolution under Section17 and 18 of the Companies Act, 1956 for addition of one object under the Main Objects Clause of Memorandum of Association of the Company.

Resolution No. (3): Special Resolution under Section31of the Companies Act, 1956 for various alterations in the Articles of Association of the Company.

Voting Pattern and Procedure for Postal Ballot:

1. The Board of Directors of the Company had, at its meeting held on 14th August, 2012, appointed Mr. Sanjay Grover, Practicing Company Secretary, as the Scrutinizer for conducting the postal ballot voting process.

2. The Postal Ballot process was carried out in a fair and transparent manner. The postal ballot forms had been kept under his safe custody before commencing the scrutiny of such postal ballot forms.

3. All postal ballot forms received up to the close of working hours on 27th September, 2012 the last date and time fixed by the Company for receipt of the forms, had been considered.

4. The results of the Postal Ballot were announced in the 22nd Annual General Meeting held on 29th September, 2012 at the Registered Office of the Company as per the Scrutinizer’s Report as under :

Ordinary Resolution No. 1 (Item No 9 of Notice)Promoter/Public

No. of Shares

held

No. of Votes Polled

% of Votes Polled on

outstanding Shares

No. of Votes-In

Favour

No. of Votes Against

% of Votes in Favour on Votes

Polled

% of Votes Against on

Votes Polled

(1) (2) (3)=[(2) (1)]*100

(4) (5) (6)=[(4)/ (2)]*100

(7)=[(5)/(2)]*100

Promoter & promoter Group

31810341 31805341 99.98% 31805341 0 100% 0%

Public-Institutional Holders

25199308 3163495 12.55% 1636050 1527445 51.72% 48.28%

Public-Others 7109305 86940 1.22% 80307 0 92.37% 0%Total 64118954 35055776 54.67% 33521698 1527445 95.62% 4.36%


Special Resolution No. 2 (Item No 10 of Notice)Promoter/Public No. of

Shares held

No. of Votes

Polled

% of Votes Polled on outstanding

Shares

No. of Votes-In

Favour


% of Votes in Favour on Votes Polled


Votes Polled(1) (2) (3)=[(2)/

(1)]*100(4) (5) (6)=[(4)/

(2)]*100(7)=[(5)/(2)]*100


31810341 31805341 99.98% 31805341 0 100% 0%


25199308 3163495 12.55% 1670292 1493203 52.80% 47.20%


Special Resolution No. 3 (Item No 11 of Notice)Promoter/Public No. of

Shares held

No. of Votes

Polled

% of Votes Polled on outstanding

Shares

No. of Votes-In

Favour


% of Votes in Favour on Votes Polled


Votes Polled(1) (2) (3)=[(2)/

(1)]*100(4) (5) (6)=[(4)/

(2)]*100(7)=[(5)/(2)]*100


31810341 31805341 99.98% 31805341 0 100% 0%


25199308 3163495 12.55% 1670292 1493203 52.80% 47.20%


e) None of the items to be transacted at the ensuing 23rd Annual General Meeting is required to be passed by postal ballot.

Disclosures(A) Disclosure by key managerial personnel about related party transactions

The appropriate policies and guidelines are in place to enable the key managerial personnel to give the disclosures relating to financial and commercial transactions where they and/or their relatives have personal interest. There are no materially significant related party transactions, which have potential conflict with the interest of the Company at large. The related party transactions have been disclosed in Note No. 48 of Other Notes on Accounts on Balance Sheet and Profit and Loss Account for the year ended 31st March, 2013.

(B) Matters related to capital market No non-compliance related penalties or strictures have been imposed on the Company by Stock Exchanges or SEBI or

any statutory authority, on any matter related to capital markets, during the last three years.

(C) Access to Audit Committee No personnel has been denied access to the Audit Committee.

(D) Management Discussion and Analysis The Management Discussion and Analysis is a part of the annual report.

(E) Compliance with mandatory requirements and adoption of Non-mandatory requirements Besides mandatory requirements of Clause 49 of Listing Agreement, endeavor is being made to comply with non-mandatory

requirements such as special resolution for alteration of Articles of Association, though not mandatory, is being conducted though postal ballot and formation of Remuneration Committee. For details, refer to the section of this report dealing with Committees of the Board.

Means of CommunicationMonnet regularly interacts with the shareholders and pursues the policy of timely disclosure of information. The Company publishes quarterly results on an all India basis in major newspapers.

Quarterly Results Normally published in The Economic Times (All Editions), The Times of India, Navbharat Times, Business Standard, Hindu Business Line, Mint and Financial Times.

Whether it also displays official news releases and Presentations made to institutional investors or to analysts

N.A.

Whether M D & A is a part of annual report or not Yes


General Shareholder Information1. Annual General Meeting

Date 30th September, 2013Venue Monnet Ispat & Energy Limited

Monnet Marg, Mandir Hasaud,Raipur-492101, Chhattisgarh

Time 2.30 p.m.Book Closure Date Monday, 23rd September., 2013 to Monday 30th September, 2013 (both days

inclusive)Dividend Payment Date Within 30 days from the date of approval by shareholders in AGM. Dividend shall

be payable to those members whose name appears in the Register of Members as on 23rd September, 2013 after giving effect to all the transfers received on or prior to 23rd September, 2013.

2. Financial Calendar for : 2013-14 (Tentative)

Financial Year 2013-14Financial year ending 31st MarchFirst Quarter Results On 14th August, 2013Half Yearly Results On or before14th November, 2013Third Quarter Results On or before 14th February, 2014.Fourth Quarter Audited Results On or before 30th May, 2014

3. Regd. Office & Works : Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh- 492101

4. Listing of shares on stock exchanges The equity shares of the Company are listed on National Stock Exchange of India Ltd, Bombay Stock Exchange Ltd. &

Madhya Pradesh Stock Exchange. Delisting from Calcutta Stock Exchange Assn. Ltd. is pending.

Stock Exchange Stock CodeNational Stock Exchange of India Ltd. MONNETISPA‘Exchange Plaza’, Bandra Kurla Complex,Bandra (E), Mumbai- 400051.e-mail : [email protected] ; website : www.nseindia.comBombay Stock Exchange Ltd. 513446Phiroze Jeejeebhoy Towers,Dalal Street, Fort, Mumbai – 400 001e-mail : [email protected] ; website : www.bseindia.comM.P. Stock Exchange“Palika Plaza”, Phase II, 201, 2nd Floor,MTH Compound, Indore – 452 001 (M.P)

5. Shares held in Dematerialized and Physical form as on 31st March, 2013

1.40 0.71

97.90

Share Held in NSDL Share Held in CDSL Share Held in Physical Form


6. Shareholding pattern as on 31st March, 2013:

Category No. of Shares held % of ShareholdingPromoters / Persons Acting in Concert 31810341 49.91Banks, Financial Institutions and Insurance Companies 744202 1.17Mutual Funds & UTI 10807 0.02Foreign Institutional Investors 24673984 38.72NRI/OCBs 90490 0.14Private Corporate Bodies 4395835 6.90Resident Individuals, H.U.F., Directors & their Relatives 2004022 3.14Others (Foreign Banks, Trusts & Foundations) 2000 0.00Total 63731681 100.00

0

10

20

30

40

50

60

Promoters/Persons

Acting in Concert

Banks, Financial

Institutions and

Insurance

Mutual Funds& UTI

Foreign Institutional

Investors

NRI/OCBs Private Corporates

Bodies

ResidentIndividuals,

HUF, Directors

& Relatives

Others (ForeignBanks, Trust &

Foundations

% a

ge

Shareholding Pattern

7. Distribution of Shareholding as on 31st March, 2013:

Range of Holding of Shares

No. of Shareholders No. of SharesPhysical Demat Total % Physical Demat Total %

1 - 500 3553 8870 12423 95.20 396050 784540 1180590 1.85 501 - 1000 22 254 276 2.12 16872 198709 215581 0.34 1001 - 2000 7 129 136 1.04 11300 201375 212675 0.33 2001 - 3000 1 32 33 0.25 2100 84101 86201 0.14 3001 - 4000 0 22 22 0.17 0 78009 78009 0.12 4001 - 5000 0 25 25 0.19 0 118132 118132 0.19 5001 - 10000 1 33 34 0.26 6992 240452 247444 0.39 Above 10000 1 99 100 0.77 16000 61577049 61593049 96.64TOTAL 3585 9464 13049 100.00 449314 63282367 63731681 100.00

8. Stock Price Data (for the period April, 2012 to March, 2013)

Year Month BSE High (`) BSE Low (`) NSE High (`) NSE Low (`)2012 April 560.55 450.00 490.00 461.002012 May 536.10 390.25 486.45 395.002012 June 400.00 320.00 399.90 321.002012 July 395.00 300.00 404.20 300.002012 August 321.50 280.30 321.85 250.252012 September 317.25 265.10 309.85 273.102012 October 324.00 285.65 324.00 290.002012 November 305.90 256.00 299.00 248.952012 December 308.95 260.00 308.40 260.102013 January 285.00 251.00 285.25 249.452013 February 263.30 230.05 263.70 225.002013 March 247.80 176.00 250.00 175.05


9. Dividend History:

Type Financial Year

Date of Declaration

Dividend%

Dividend(` Per share*)

Status of Transfer of Unpaid Dividendto the Central Government after 7 years

Final Dividend** 2012-13 28-09-2013 15 1.50Final Dividend 2011-12 29-09-2012 25 2.50Final Dividend 2010-11 30-09-2011 50 5.00Final Dividend 2009-10 30-12-2010 50 5.00Final Dividend 2008-09 30-09-2009 50 5.00Final Dividend 2007-08 30-09-2008 25 2.50Interim Dividend 2007-08 28-04-2008 25 2.502nd Interim Dividend

2006-07 15-03-2007 25 2.50

1st Interim Dividend 2006-07 30-10-2006 20 2.002nd Interim Dividend

2005-06 30-06-2006 15 1.50 Unpaid Dividend transferred to the Central Government

1st Interim Dividend 2005-06 27-10-2005 30 3.00 Unpaid Dividend transferred to the Central Government

2nd Interim Dividend



2nd Interim Dividend



Final/Annual Dividend


* on the face value of `10/- per share fully paid-up ** Dividend recommended by the Board is subject to the approval of the shareholders in 23rd Annual General Meeting.

10. Stock Performance:

The performance of the Company’s share relative to the BSE Sensitive Index and S&P CNX Nifty (on closing rates at the end of each month in respective stock exchange) considering 100 as the base is given in the Chart below:

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Relative Performance of NSE

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Relative Performance of BSE


11. Registrar & Share Transfer Agents:

MCS Ltd. F-65, Okhla Industrial Area, Phase-I, New Delhi – 110020 Tel. : 011- 41406149 Fax : 011- 41709881

12. Share Transfer System: Share Transfer Committee is normally held every 15 days and approves the physical transfers received periodically. The

Company is fine tuning its procedures to ensure transfer of Physical Shares within the prescribed period of 15 days of receipt of documents, if found in order or to be returned within 15 days. Share Transfer Agents have been authorized to sign the share certificates on behalf of the Company for expeditious disposal of transfer requests.

13. Dematerialization of Shares & Liquidity: As at 31st March 2013, 99.29% of equity capital was held in Electronic form with National Securities Depository Ltd.

(NSDL) and Central Depository Services Ltd. (CDSL). Normally, requests for dematerialization of shares are processed and confirmed within 15 days of receipt to NSDL and CDSL.

For guidance on depository services, shareholders may write to the Company.

14. Nomination Facility: Shareholders holding shares in physical form and desirous of making a nomination in respect of their holding in the

Company, as permitted under section 109A of the Companies Act, 1956 are requested to submit to the Company the prescribed Form 2B for this purpose.

15. BANK DETAILS/ECS MANDATE: Shareholders holding shares in physical form are requested to notify/send the following to the Company to facilitate better

services.

(i) any change in their address/bank details, and;

(ii) Particulars of their bank account, in case the same have not been sent earlier.

Payment of dividend through ECS minimizes the risk of loss/late delivery of dividend warrant. Therefore, it is in your interest to provide ECS mandate to the Company. Those holding Shares in physical form can also avail this facility. The ECS Mandate Form can be downloaded from Company’s Website.

Interested shareholders may send the filled-in ECS Mandate Form being sent with the Annual Report. Ensure to enclose a cancelled blank cheque of your bank account. Please check before hand that the concerned branch of your bank provides the ECS facility.

16. Address for Communication: Monnet House, 11, Masjid Moth, Greater Kailash-II, New Delhi – 110 048 Phone : +91 11 29218542 – 46 Fax : +91 11 29218541 e-mail : [email protected]

Disclaimer :The information furnished above is certified by Monnet Ispat & Energy Limited to be true, fair and accurate (except in respect of errors in or omissions from documents filed electronically that result solely from electronic transmission errors beyond our control and in respect of which we take corrective action as soon as it is reasonably practicable after becoming aware of the error or the omission). SEBI, the Stock Exchanges or the NIC do not take any responsibility for the accuracy, validity, consistency and integrity of the data entered and updated by it.

M.P. KharbandaCompany SecretaryMonnet Ispat & Energy Limited


To The Members of

MONNET ISPAT & ENERGY LIMITED,

We have examined the compliance of conditions of Corporate Governance procedures by MONNET ISPAT & ENERGY LIMITED, for the year ended on 31st March, 2013, with the relevant records and documents maintained by the Company, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For O.P. BAGLA & CO.,Chartered Accountants

Sd/-(Atul Bagla)PartnerM. No. 91885Firm Regd. No. 000018N

Place: New DelhiDate : 14th August, 2013

Annexure - IV

Declaration By Chairman & Managing Director

It is hereby declared that all Board Members and senior management personnel have affirmed compliance with the Code of Conduct within 30 days for and from the beginning of current financial year.

Sd/-(Sandeep Jajodia)

Chairman & Managing DirectorPlace: New DelhiDate:14th August, 2013

Certificate


Name of Director Shri J.P. Lath

Brief Resume Aged about 72 years, Mr Lath is a graduate and is working in the capacity of whole-time director in a group Company.

Expertise in specific functional area Having over 37 years of experience in making statutory compliances of large manufacturing unit, making liaison with various Central/State Government Departments for obtaining licenses, permissions, NoC etc.

List of Other Companies in which Directorship held (excluding foreign Companies, Private Limited Companies & Section 25 Companies)

1. Monnet Project Developers Ltd.2. Monnet Industries Ltd.3. Monnet Mining Company Ltd.

Chairman/Member of the Committees of the Board of Directors of other Companies in which he is a Director (excluding foreign Companies, Private Limited Companies & Section 25 Companies)

- Member of Audit Committee of Monnet Project Developers Ltd.- Member of Grievance Committee of Monnet Industries Ltd.

Details of shareholding (both own or held by/for other persons on a beneficial basis), if any, in the Company

Holding 1696 equity shares by himself and relatives holding 600 equity shares.

Annexure - V

Details of Directors seeking appointment / reappointment in 21st Annual General Meeting(Pursuant to Clause 49 of the Listing Agreement)


Independent Auditor’s ReportTo the Members ofMONNET ISPAT & ENERGY LIMITEDNew Delhi

Report on the Financial StatementsWe have audited the accompanying financial statements of MONNET ISPAT & ENERGY LIMITED (‘the Company’), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion and to the best of our information and

according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2013;

(ii) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report) Order,

2003 as amended by the Companies (Auditor’s Report) order 2004 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

iv) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; and

v) on the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For O. P. BAGLA & CO.Chartered Accountants

Firm Regn No. 000018N

Place : New Delhi (ATUL BAGLA)Dated : May 29, 2013 Partner M No. 91885


ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS’ REPORT ON ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2013

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of fixed assets.

b) As explained to us, major fixed assets have been physically verified by the management during the year. We have been informed that the discrepancies noticed on such verification as compared to book record were not material and have been properly dealt with in the books of account. In our opinion the frequency of verification is reasonable.

c) The Company has disposed off an insignificant part of fixed assets during the year, hence paragraph 4 (i) (c) of the said order is not applicable.

2. a) Physical verification has been conducted by the management at reasonable intervals in respect of finished goods, stores, spare parts and raw materials except ores & coal. We were informed that physical verification of the same was difficult due to its volume and loose nature.

b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of these stocks followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion the Company is maintaining proper records of inventories. The discrepancies noticed on such verification between the physical stocks and book records were not significant and the same have been properly dealt with in the books of account.

3. The Company has given loan to a Company covered in the registers maintained under section 301 of the Companies Act, 1956. The balance amount outstanding at the year end was `12413 lacs. The terms and conditions of the loan are not prima facie prejudicial to the interest of the Company. There are no overdue amounts outstanding at the year end regarding this loan.

4. According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from Companies, Firms or other Parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4 (iii) (e) to (g) of the order are not applicable.

5. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and with regard to the sale of goods. During the course of audit, no major weakness has been noticed in the underlying internal control system.

6. a) In our opinion and according to information and explanations given to us, the transactions that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered in the register.

b) In our opinion, the transactions made in pursuance of contracts/ arrangements entered in the register maintained under Section 301 of the Companies Act,1956 and exceeding the value of `500,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.

7. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

8. In our opinion and according to the information and explanations given to us, the Company has an adequate internal audit system commensurate with its size and nature of its business.

9. The Central Government has prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed such records and are of the opinion that prescribed accounts and records have been made and maintained.

10. a) As per information and explanations given to us, the Company has been regular in depositing the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess, Octroi, Entry Tax and other statutory dues with the appropriate authorities. There are no undisputed statutory dues at the year end outstanding for a period of more than six months from the date they become payable.

b) We have been informed that following disputed demands in respect of Income Tax, Excise Duty,


Sales Tax and Entry Tax have not been deposited on account of pending appeals.

S. No.

Nature of Demand

Unpaid Amount(` in Lac)

Forum where appeal is pending

1. Sales Tax 562.61 Deputy Commissioner of Sales Tax (Appeals)

2. Entry Tax 233.59 Deputy Commissioner of Sales Tax (Appeals)

3. Central Excise

338.39 Commissioner Appeals (Central Excise)

4. Central Excise

1375.63 CESTAT

5. Income Tax

16869.56 Commissioner Income Tax (Appeals)

* Basic amount, excluding interest, if any.

11. The Company does not have any accumulated losses at the end of the financial year. Further, there are no cash losses during the financial year under audit and in the immediately preceding financial year.

12. Based on our audit procedures and on the basis of information and explanations given to us by the management, we are of the opinion that there is no default in repayment of dues to the Financial Institution, Banks or Debenture holders as at the year end.

13. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Paragraph 4 (xii) of the order is not applicable.

14. According to information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks / Financial Institutions, terms and conditions whereof are prejudicial to the interest of the Company.

15. According to the information and explanations given to us, the term loans taken by the Company have been applied for the purposes for which the loans were obtained.

16. According to the information and explanations given to us, the funds raised on short term basis have not been utilized for long term investments.

17. In our opinion, and according to information and explanations given to us, proper records have been maintained of the transactions and contracts relating to investments in shares and other securities and debentures. These investments have been held by the company, in its own name, except certain investments made under portfolio management schemes.

18. During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The Company has created security / charge in respect of debentures issued.

20. Since the Company has not raised money by way of Public Issue during the year, paragraph 4 (xx) of the order is not applicable.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that, no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended 31st March, 2013.

22. Other clauses of the order are not applicable to the Company for the year under report.


Firm Regn No. 000018N



Balance Sheet As at 31st March, 2013

(`)

Particulars Note As at31-03-2013

As at31-03-2012

EQUITY AND LIABILITIESShareholders' Funds Share Capital 2 2,387,489,224 643,550,484 Reserves and Surplus 3 25,160,118,809 22,959,944,450

27,547,608,033 23,603,494,934Non-Current Liabilities Long-Term Borrowings 4 40,324,248,796 28,511,948,539 Deferred Tax Liabilities (Net) 5 1,661,220,870 1,504,990,403 Long-Term Provisions 6 60,085,882 62,378,973

42,045,555,548 30,079,317,915Current liabilities Short-Term Borrowings 7 13,991,782,042 9,831,952,926 Trade Payables 8 1,244,162,457 611,826,835 Other Current Liabilities 9 8,774,205,818 4,776,578,632 Short-Term Provisions 10 112,573,536 186,466,429

24,122,723,853 15,406,824,822TOTAL 93,715,887,434 69,089,637,671ASSETSNon-Current Assets Fixed Assets Tangible Assets 11 13,875,021,388 13,786,959,020 Intangible Assets 12 0 538,467

Capital Work-in-Progress 36,825,918,051 20,219,299,785Non-Current Investments 13 9,314,971,446 5,902,801,577Long-Term Loans and Advances 14 8,096,082,352 4,433,585,666Other Non-Current Assets 15 836,178,327 797,352,993

68,948,171,564 45,140,537,508Current assets Current Investments 16 994,550 10,259,283 Inventories 17 7,790,413,195 5,623,675,062 Trade Receivables 18 2,458,498,083 1,788,204,769 Cash and Bank Balances 19 7,191,707,486 8,733,295,229 Short-Term Loans and Advances 20 7,218,930,944 7,724,404,104 Other Current Assets 21 107,171,611 69,261,716

24,767,715,870 23,949,100,163TOTAL 93,715,887,434 69,089,637,671Significant Accounting Policies 1

The accompanying notes form an integral part of these financial statements.In terms of our report of even date annexed

For O.P. BAGLA & CO.Chartered Accountants Sandeep Jajodia C.P. Baid J.P. LathAtul Bagla Chairman & Managing Director Dy. Mg. Director Director Partner

Place : New Delhi M.P. KharbandaDated : May 29, 2013 Company Secretary


Statement of Profit and Loss For the year ending 31st March, 2013

(`)

Particulars Note Year ended 31-03-2013

Year ended 31-03-2012

Revenue:

Revenue from Operations 22 21,721,136,831 20,600,641,206

Less:Excise Duty 2,146,801,578 1,626,794,978

19,574,335,253 18,973,846,228

Other Income 23 708,345,784 631,536,037

Total Revenue 20,282,681,037 19,605,382,265

Expenses:

Cost of Materials Consumed 24 11,736,905,446 12,079,516,032

Changes in Inventories 25 7,695,363 (661,228,566)

Employee Benefits Expense 26 1,084,730,831 945,379,802

Finance Costs 27 1,192,091,885 867,022,483

Depreciation and Amortization Expense 11 & 12 888,979,802 741,067,850

Other Expenses 28 1,988,229,109 1,863,253,981

Total Expenses 16,898,632,435 15,835,011,582

Profit before Exceptional and Extraordinary Items & Tax 3,384,048,601 3,770,370,683

Exceptional / Extraordinary Items 0 0

Profit before Tax 3,384,048,601 3,770,370,683

Tax expense:

Current Tax

Current Year 683,900,000 755,100,000

Earlier Years 373,960 (6,798,501)

Deferred Tax

Current Year 156,230,467 92,608,308

Add : MAT Credit Entitlement Utilised 40,351,099 40,855,526

Profit for the year 2,503,193,075 2,888,605,350

Earnings per equity share (Par value of `10/- each)

Basic 39.07 44.90

Diluted 37.83 43.48

Significant Accounting Policies 1





Notes on Accounts1. Significant Accounting Policies

I. Basis of AccountingThe Company has prepared its financial statements in accordance with generally accepted accounting principles and also in accordance with the requirements of the Companies Act, 1956.

II. Income and ExpenditureAccounting of Income & Expenditure is done on accrual basis except interest on late payment received from debtors which is accounted for on receipt basis.

III. Salesa) Sales are shown inclusive of excise duty and

net of sales tax, rebates and discounts etc.

b) Interdivision sales are reduced from gross turnover as required by AS-9 of ICAI.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customer’s account as evidenced by the receipt of confirmation of execution of delivery instructions.

IV. ClaimsRevenue in respect of claims is recognised only when the same is reasonably ascertained.

V. Fixed Assets & Depreciationa) Fixed assets are stated at their original cost of

acquisition inclusive of inward freight, duties and expenditure incurred in the acquisition, construction and installation.

b) Cenvat credit availed on capital equipments is accounted for by credit to respective fixed assets.

c) Incidental expenditure on Modifications, Expansions/New Projects (including interest and commitment charges on loans obtained for acquisition of capital assets) has been allocated to assets on pro-rata basis on completion of the Project.

d) Depreciation on fixed assets is provided on Straight Line Method (SLM) on pro-rata basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except on some Plant & Machinery of Sponge

Iron Division, Unit-I, on which depreciation is being provided since commissioning of the unit on Written Down Value (WDV) method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on improvement to leasehold premises is provided based on tenure of lease.

VI. InventoriesInventories are valued on the following basis:

a) Finished Goods - at lower of cost or estimated realizable value.

b) Semi Finished Goods - at lower of cost or estimated realizable value.

c) Work-in-Process - at lower of cost or estimated realizable value

d) Raw Materials - at cost. However, in cases where the realizable value of the finished product falls below cost, materials are written down to net realizable value.

e) Stores and Spares - at cost

f) Finished Goods At Depot – at lower of cost or estimated realizable value (including excise duty & freight)

VII. Excise Duty Cenvat credit, to the extent availed, is adjusted towards cost of materials.

VIII. Retirement BenefitsGratuity is accounted for on the basis of actuarial valuation as on the closing date.

IX. Contingent LiabilitiesContingent Liabilities are determined on the basis of available information and are disclosed by way of notes to the accounts.

X. Sundry DebtorsSundry Debtors are shown net of bills discounted. Interest on overdue bills is accounted for on receipt basis.

XI. InvestmentsLong Term Investments are stated at cost. Provision


for diminution is made only if such a decline is other than temporary. Short term investments are carried at lower of cost or quoted / fair value.

XII. Foreign Currency Transactionsa) Monetary Assets and liabilities in foreign

currency are revalued at the year end exchange rates. Exchange differences arising on such revaluation are recognized in Statement of Profit & Loss.

b) In case of forward exchange contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

c) Exchange differences arising on reporting of long term foreign currency monetary items, in so far as they relate to acquisition of a depreciable capital asset are adjusted in the cost of the asset as per Companies (Accounting standards) (second amendment) Rules, 2011 for additions after 01-04-2011.

XIII. Dividend is accounted for as per the date of declaration.

XIV. Unless specifically stated to be otherwise, these policies are consistently followed.


(`)

Particulars As at 31-03-2013

As at31-03-2012

Note No. 2 : Share CapitalAUTHORISED Equity Shares8,20,00,000 Shares of par value of `10/- each (Previous year 13,20,00,000 shares of par value of `10/- each)

820,000,000 1,320,000,000 Preference Shares1,75,00,000 Shares of par value of `100/- each (Previous year NIL) 1,750,000,000 0

2,570,000,000 1,320,000,000 ISSUED, SUBSCRIBED AND FULLY PAID-UPEquity Shares6,37,31,681 shares of par value of `10/- each (Previous year 6,43,37,807 shares of par value of `10/- each) 637,316,810 643,378,070 Add : Shares Forfeited (Amount Originally Paid up) 172,414 172,414 Preference Shares1,75,00,000 6.5% Cumulative Non Convertible Redeemable Preference Shares of par value of `100/- each

1,750,000,000 0

Total 2,387,489,224 643,550,484

a) Reconciliation of shares outstanding at the beginning and at the end of the reporting period is given below:


As at31-03-2012

Equity SharesNumber of shares outstanding as at the beginning of the year 64,337,807 64,337,807 Shares issued during the year 0 0 Shares bought back during the year 606,126 0 Number of shares outstanding as at the closing of the year 63,731,681 64,337,807Preference SharesNumber of shares outstanding as at the beginning of the year 0 0 Shares issued during the year 17,500,000 0 Number of shares outstanding as at the closing of the year 17,500,000 0

b) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

The holders of preference shares are entitled to preferential dividends from the date of allotment. Such shares shall rank for capital and dividend and for repayment of capital in a winding up, in priority to the ordinary shares of the Company. The holders of such shares shall have the right to receive notice of general meetings of the Company but shall not confer on the holders thereof, the right to vote at any meetings of the Company, save to the extent and in the manner provided in the Companies Act, 1956.

Notes


c) Following Shareholders hold equity shares more than 5% of the total equity shares of the company at the end of the period :-

Name of Shareholder % of Shareholding 31-03-2013

% of Shareholding 31-3-2012

Equity SharesPavitra Commercials Ltd. 0.00 6.35 Cecil Webber Engineering Ltd 0.71 6.57 Kamdhenu Enterprises Ltd 0.00 10.50 Udhyam Merchandise Pvt Ltd 38.69 15.47 Vistabrook Limited 5.95 4.65 Blackstone GPV Capital Partners Mauritius 7.17 7.10 Deutsche Securities Mauritius Ltd (FII Custodian) 7.87 8.23 Preference SharesMonnet Industries Ltd 100.00 0.00

d) The company has issued the following shares for a consideration other than cash or bonus shares during the immediately preceding 5 years:

47,22,539 equity shares of `10 each were allotted as fully paid up for consideration other than cash pursuant to scheme of amalgamation of M/s.Mounteverest Trading & Investment Limited with the Company as per order dated 19.11.2010 passed by Honourable High Court of Chattisgarh.

e) The Company has bought back 18,94,385 equity shares during the last five years.

f) Preference shares were issued on 30th March, 2013 for the period of 9 years with periodical put and call options.


(`)


As at31-03-20112

Note No. 3 : Reserves and SurplusCapital ReserveAs per last Balance Sheet 777,655,899 777,655,899 Securities Premium AccountAs per last Balance Sheet 7,508,927,344 7,508,927,344 Less : Utilized for Buy Back of Equity Shares (190,445,180) 0 Debenture Redemption ReserveAs per last Balance Sheet 860,164,156 544,275,014 Add : Transfer from Surplus 0 315,889,142 Capital Redemption Reserve As per last Balance Sheet 12,862,590 12,862,590 Transferred from General Reserve 6,061,260 0 Capital Reconstruction ReserveAs per last Balance Sheet 196,801,760 196,801,760 Amalgamation ReserveAs per last Balance Sheet 33,050,090 33,050,090 General Reserve As per last Balance Sheet 1,590,073,546 1,301,073,546 Add : Transfer from Surplus 251,000,000 289,000,000 Less : Transfer to Capital Redemption Reserve on Buy Back of Equity Shares (6,061,260) 0 SurplusAs per last Balance Sheet 11,980,409,065 9,883,159,286 Add: Profit for the year from Statement of Profit & Loss 2,503,193,075 2,888,605,350 Less: Transfer to Debenture Redemption Reserve 0 (315,889,142)Transfer to General Reserve (251,000,000) (289,000,000)Proposed Dividend on Equity Shares (95,597,522) 0 Proposed Dividend on Preference Shares (623,288) (160,439,183)Tax on Proposed Dividend (16,352,727) (26,027,246)

14,120,028,604 11,980,409,065 Total 25,160,118,809 22,959,944,450

The Company has proposed final dividend for the year 2012-13 @ `1.50 per equity share par value of `10/- each (previous year `2.50 per equity share)


(`)


As at31-03-2012

Note No. 4 : Long-Term BorrowingsBonds/DebenturesSecuredNon-Convertible Redeemable Debentures Redeemable at Par. 6,050,005,067 3,000,003,962 (For Coupon rate and Terms of Redemption / Conversion, refer Note 52)Term LoansFrom BanksSecuredForeign Currency Loans 12,074,424,599 12,124,090,500 Rupee Loans 20,936,519,129 11,887,854,077 UnsecuredRupee Loans 1,263,300,000 1,500,000,000 TOTAL 40,324,248,796 28,511,948,539

1 Term Loans, External Commercial Borrowings (ECB) and Non Convertible Debentures (NCD) from Financial Institutions / Banks, are secured by first charge on all immovable and movable assets (present & future) of the company (subject to prior charges on movables in favour of working capital banks) ranking pari - passu with the charges created in favour of participating financial institutions. Some of the loans / facilities are further guaranteed by the Managing Director of the company.

2 The repayment terms and rate of interest of term loans are as under:

a) Rupee Term Loan for Steel Project :- The Company has an outstanding balance of `2,155.61 Crores of Rupee term loan with interest band of 1.50% to 2.50% plus base rate. These loans are repayable in quarterly installments commencing from FY 2013-14.

b) Rupee Term Loan for Power Project :- The Company has an outstanding balance of `96.93 Crores of Rupee term loan with interest band of 11.75% to 12.95% repayable by FY 2015-16.

c) Other Term Loan of `150 Crores is repayable from Sept 2013 to March 2018 with interest band of 2.50% plus base rate.

d) Foreign Currency Term Loan $ 212 Million: the loan is repayable in installments from FY 2014-15 to FY 2019-20 and carries interest rate of libor plus 4.25 to 4.6%.

e) USD 45 Million repayble in FY 2013-14 with interest rate Libor +1.90%

(`)


As at31-03-2012

Note No. 5 : Deferred Tax Liabilities (Net) Deferred Tax LiabilitiesDifference of Book Depreciation and Tax Depreciation 1,662,579,374 1,511,252,280 Less: Deferred Tax AssetsDisallowances u/s 43B of the Income Tax Act, 1961 1,358,504 6,261,877 Total 1,661,220,870 1,504,990,403

The net increase during the year in the Deferred Tax Liability has been debited to the Statement of Profit & Loss.


(`)


As at31-03-2012

Note No. 6 : Long-term ProvisionsProvision for Employee BenefitsProvision for Gratuity (Note No. 46) 10,866,113 17,346,303Provision for Leave Benefits (Note No. 46) 49,219,769 45,032,670Total 60,085,882 62,378,973

(`)


As at31-03-2012

Note No. 7 : Short-term Borrowings Working Capital Facilities- From BanksSecured 6,059,667,243 1,892,165,733Commercial Paper (Unsecured)From Banks 500,000,000 1,500,000,000From Institutions & Others 0 1,000,000,000Bonds/DebenturesUnsecured0 % Fully Convertible Debenture of `1,000/- each. (For Coupon rate and Terms of Redemption / Conversion, refer Note No. 52)

392,625,000 392,625,000

Short Term Loans (Unsecured)Foreign Currency Loans 2,925,382,713 536,683,624Rupee Loans 4,114,107,086 4,510,478,569Total 13,991,782,042 9,831,952,926

1 Working Capital Facilities from banks are secured by first charge on movable current assets and second charge on all immovable assets of the company. These working capital loans are further guaranteed by Managing Director of the company.

(`)


As at31-03-2012

Note No. 8 : Trade PayablesTrade Payables - Micro, Small & Medium Enterprises 13,797,345 1,272,316 - Others 1,230,365,113 610,554,519 Total 1,244,162,457 611,826,835

Disclosure w.r.t. Micro and Small Enterprises as required by MSMED Act is made in Note No. 42.


(`)


As at31-03-2012

Note No. 9 : Other Current Liabilities Current Maturities of Long Term Debts 4,273,122,500 2,621,041,339Payable for Capital Expenditure 3,210,618,609 958,267,045Interest Accrued but not due 195,867,285 135,718,643Unpaid Dividends 7,297,078 10,556,381Advances from Customers and others 126,227,511 85,670,269Provision for Expenses 437,125,831 498,511,215Statutory Dues 225,783,566 230,925,902Security Deduction & Deposits 298,163,438 235,887,838Total 8,774,205,818 4,776,578,631

(`)


As at31-03-2012

Note No. 10 : Short-term Provisions Provision for Proposed Dividend 96,220,809 160,439,183Provision for Tax on Dividend 16,352,727 26,027,246Total 112,573,536 186,466,429


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(`)


As at31-03-2012

Note No. 14 : Long-term Loans and Advances (Unsecured Considered good, unless otherwise stated) Capital Advances 7,846,325,256 4,183,671,470 Security Deposits 249,757,096 249,914,196 Total 8,096,082,352 4,433,585,666

(`)


As at31-03-2012

Note No. 15 : Other Non-current Assets (Unsecured Considered good, unless otherwise stated)Non-Current Bank Deposits 836,178,327 797,352,993 Total 836,178,327 797,352,993 Non-Current Bank Balances include:Deposits Provided as collateral against Credit Facilities 653,737,318 74,710,600

(`)

Name of Scrip 31-03-2013 31-03-2012 No. of

Share/Units Face Value Per Share/

Unit

Amount No. of Share/Units

Face Value Per Share/

Unit

Amount

Note No. 16 : Current InvestmentsEquity Shares Through Portfolio 994,550 10,259,283 Management SchemesTotal 994,550 10,259,283 Quoted InvestmentsBook Value 994,550 10,259,283 Market Value 994,550 11,335,579

(`)


As at31-03-2012

Note No. 17 : Inventories Raw Materials 5,551,703,434 3,383,542,008 Work-in-Process 31,154,701 35,274,926 Finished Goods 1,650,220,105 1,653,795,243 Stores and Spares 557,334,955 551,062,885 Total 7,790,413,195 5,623,675,062

a) Inventories include material in transitb) Inventory items have been valued considering the Significant Accounting Policy No. VI disclosed in Note No. 1 to these

Financial Statements.


(`)


As at31-03-2012

Note No. 18 : Trade Receivables Debts outstanding for a period exceeding six months Unsecured, Considered Good 381,426,330 373,131,160 Unsecured, Considered Doubtful 19,621,111 20,537,361 Less: Provision for Bad & Doubtful Debts* 19,621,110 20,537,361

381,426,331 373,131,161 Other Debts-Considered Good 2,077,071,752 1,415,073,608 Total 2,458,498,083 1,788,204,769 a) Trade receivables include amount due from Private Companies in which

Directors of the Company are Directors26,811,886 26,311,886

(`)


As at31-03-2012

Note No. 19 : Cash and Bank Balances Cash & Cash EquivalentsBalances with Banks- in Current Accounts 3,046,693,671 3,058,555,335 Cheques & Drafts on Hand 29,426,369 101,065,782 Cash on Hand 7,090,728 8,060,869 Others (stamps in hand) 5,705,800 5,705,800 Bank Deposits with less than three months maturity 3,872,107,370 4,888,493,670

6,961,023,937 8,061,881,456 Other Bank BalancesBank Deposits with more than three months maturity 223,386,471 660,857,393 Balance in Unpaid Dividend Accounts 7,297,078 10,556,381 Total 7,191,707,486 8,733,295,229 Deposits with banks include the following:Deposits provided as Collateral against Credit Facilities 1,230,704,294 227,449,469


(`)


As at31-03-2012

Note No. 20 : Short Term Loans and Advances (Unsecured Considered good, unless otherwise stated) LOANS

To Subsidiaries 3,704,340,415 2,539,500,078 To others 401,275,285 371,458,053

ADVANCES RECOVERABLE IN CASH OR KINDFrom Subsidiaries 100,525,711 488,105 From Others 2,093,988,103 3,769,156,222

ADVANCESTo Employees 47,510,346 40,999,660 Prepaid Expenses 48,873,387 151,162,163 Balances with Excise Authorities 530,188,610 555,401,154 Advance Income Tax (Net of provision for tax) 230,766,831 194,425,313 MAT Credit Entitlement 61,462,257 101,813,356

Total 7,218,930,944 7,724,404,104 a) Due from Directors and Officers of the Company: - Directors 0 788,665 b) Advance recoverable from others include Joint venture Companies

9,003,393 28,067,869

(`)


As at31-03-2012

Note No. 21 : Other Current Assets Interest Accrued on:Investments 258,041 258,041 Term deposits 106,913,570 69,003,675 Total 107,171,611 69,261,716


(`)

Particulars Year Ended 31-03-2013

Year Ended 31-03-2012

Note No. 22 : Revenue from Operations Sale of ProductsFinished Goods 27,451,567,182 26,462,750,642 Sale of Services- Job Work Income 73,254,600 15,075,000 Other operating IncomeScrap Sales 37,975,046 31,180,883

27,562,796,829 26,509,006,525 Less : Inter Division Transfers 5,841,659,998 5,908,365,319 Total 21,721,136,831 20,600,641,206 Detail of Sale of Finished GoodsSponge Iron 17,197,517,471 16,650,137,193 M.S/S.S Products 2,813,152,518 2,478,667,557 Structure 2,914,046,385 2,822,103,979 Ferro Alloys 646,540,688 503,551,478 Coal 1,140,444,159 1,101,560,332 Power 2,621,409,057 2,841,883,751 Others 118,456,904 64,846,352

27,451,567,182 26,462,750,642

(`)



Note No. 23 : Other Income Interest IncomeFrom Bank Deposits 221,872,352 240,601,446 From Long Term Investments 517,500 18,055,696 Others 339,187,342 271,730,219 Dividend Current Investments 6,000 5,204,734 Non Current Investments 2,827,836 21,944,877 Net Gain on sale of Investments 6,455,876 0 Rent Received 0 10,787,392 Insurance Claim Received 7,285,252 4,891,998 Exchange Fluctuation 87,357,722 10,687,578 Profit on Disposal of Fixed Assets 88,417 17,217,746 Other Miscellaneous Income 42,747,488 30,414,351 Total 708,345,784 631,536,035


(`)



Note No. 24 : Cost of Materials Consumed Inventories at the Beginning of the Year 3,383,542,008 2,081,649,018Add: Purchases (Net) 18,939,704,251 18,747,301,863Less : Inventory at the end of Year 5,551,703,434 3,383,542,008

16,771,542,824 17,445,408,873Less : Inter Division Transfers 5,034,637,379 5,365,892,841Total 11,736,905,446 12,079,516,032Detail of Materials ConsumedIron Ore 8,341,408,568 8,016,970,998Coke & Coal 3,352,646,787 3,169,284,038Magnese Ore & Hi Mn Slag 240,010,273 148,985,384Billets 2,029,156,333 2,284,611,368Pig Iron 445,673,180 0M.S. Scrap 75,060,050 0Ferro Alloys 105,911,827 100,523,500Sponge Iron 1,574,546,125 1,932,998,147Others 607,129,680 1,792,035,439

16,771,542,824 17,445,408,873

(`)



Note No. 25 : Changes in Inventories Opening Stock as on 01-04-2012Work-in-Process 35,274,926 27,049,894 Stock in Trade 0 3,405,336 Finished Goods 1,653,795,243 997,386,373 (A) 1,689,070,169 1,027,841,603 Closing Stock as on 31-03-2013Work-in-Process 31,154,701 35,274,926 Finished Goods 1,650,220,105 1,653,795,243 (B) 1,681,374,806 1,689,070,169

7,695,363 (661,228,566)Detail of Finished Goods InventorySponge Iron 1,058,242,256 1,103,362,397 M.S./S.S. Products 119,217,139 135,554,529 Structure 168,095,724 216,503,790 Si Manganese 22,034,634 23,045,677 Coal 51,850,512 100,388,109 OtherChar 227,919,189 73,035,532 End Cutting/Miss Rolls 1,858,712 1,905,209 Bricks 1,001,940 0 GRAND TOTAL (A + B) 1,650,220,105 1,653,795,243


(`)



Note No. 26 : Employee Benefits Expenses Salaries and Wages 978,016,390 857,477,078Contribution to Provident and other Funds 69,433,681 55,795,811Staff Welfare Expenses 37,280,760 32,106,913Total 1,084,730,831 945,379,802

(`)



Note No. 27 : Finance Costs Interest 1,179,885,661 859,915,129 Other Service Charges 12,206,224 7,107,354 Total 1,192,091,885 867,022,483


(`)



Note No. 28 : Other Expenses MATERIAL, MANUFACTURING AND OTHERSStores and Spares Consumed 299,706,875 297,861,107 Power and Fuel Outside 476,164,842 672,303,582 Captive Power and Fuel Consumed 807,022,619 433,613,955 Power and Fuel 1,283,187,461 1,105,917,538 Excise Duty on Stocks (13,983,306) 83,473,357 Less : Inter Division Transfers (807,022,619) (542,472,474)

761,888,410 944,779,527 ADMINISTRATION & OTHER EXPENSESPrinting and Stationery 6,077,092 4,920,026 Rent 2,102,973 2,869,111 Rates & Taxes 3,724,202 1,375,272 Vehicle Expenses 46,698,628 46,597,904 Communication Expenses 8,992,659 9,297,987 Travelling & Conveyance 41,568,536 25,762,965 Insurance Charges 47,466,635 40,642,934 Legal & Professional Charges 65,579,717 53,111,189 Directors Sitting Fees 480,000 530,000 Auditors' Remuneration- As Audit Fees 3,000,000 2,500,000 - For Quarterly Review 400,000 400,000 - For Tax Matters 1,810,000 1,021,000 - For Certification & Other Matters 1,826,500 1,415,000 - Reimbursement of Expenses 259,668 482,776 Miscellaneous Expenses 126,528,441 114,295,475 Lease Rent & Hire Charges 8,215,956 9,478,730 Share Transfer Expenses 261,667 191,581 Internal Audit Fees & Expenses 4,340,860 3,543,777 Loss from Partnership Firm 324,623 355,395 Bank Charges 30,888,488 19,164,789 Provision For Doubtful Debts (716,194) (2,494,674)Loss on Sale of Fixed Assets 1,022,871 0 Distribution & Marketing Expenses 688,663,451 440,945,917 Loss on Sale of Investment 0 24,721,329

1,089,516,773 801,128,483 REPAIR & MAINTENANCEMachinery 102,243,262 91,418,366 Building 22,017,509 15,165,459 Others 12,563,154 10,762,146

136,823,925 117,345,971TOTAL 1,988,229,109 1,863,253,981


(` in Lac)As at

31-03-2013As at

31-03-201229. Contingent Liabilities(Excluding Matters Separately Dealt with in other notes):Claims against the Company not Acknowledged as Debt- In respect of Disputed Excise Demands 1,714.02 1,616.97- In respect of Disputed Sales Tax Demands 579.40 714.60- In respect of Disputed Entry Tax Demands 259.51 1,016.89- In respect of Disputed Income Tax Demands 16,869.56 2,908.60- In respect of Disputed Demands for water charges by

Water Resources Division1,238.09 1,075.44

- In respect of Electricity Duty on Generation of Power 4,407.56 3,525.09- Other claims against the Company not acknowledged as Debt 5,111.07 1,076.70(The above are basic amounts excluding interest, if any)

(` in Lac)As at

31-03-2013As at

31-03-201230. Commitmentsa. Estimated amount of contracts remaining to be executed on Capital Account

and not provided for (Net of advances)36,576.16 53,940.32

b. Letters of Credit opened in favour of Inland/Overseas Suppliers (Net) 9,545.71 7,785.18

(`)As at

31-03-2013As at

31-03-201231. Salary includes following Remuneration paid to DirectorsMr. Sandeep Jajodia (Chariman & Managing Director)- Salary 36,000,000 30,000,000- Perquisites 4,414,792 3,684,685Mr. K.K. Khanna (Executive Director)- Salary 1,527,734 3,437,400- Perquisites 14,400 39,000Mr. C.P. Baid (Dy. Managing Director)- Salary 16,950,196 11,450,196- Perquisites 6,54,600 661,200Mr. Gopal Tiwari (Director)- Consultancy 660,000 660,000Mr. Nirmal Chand Jha (Whole-time Director)- Salary 7,116,829 NIL- Perquisites 153,945 NIL

Other Notes on Accounts


(` in Lac)As at

31-03-2013As at

31-03-201232. Guaranteesa. Counter Guarantees issued in respect of guarantees issued by Company’s

Bankers2,892.68 1,101.72

b. Guarantees issued on behalf of limited companies* 42,597.67 22,855.60

* Includes `18,448.95 lacs of guarantee issued to Mez lenders of subsidiary Company, Monnet Power Company Limited (MPCL) as interim security till the creation of 2nd charge on the assets of MPCL as per terms of sanction.

33. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

34.(` in Lac)

Particulars % 2012-2013 % 2011-2012Value of Imported & Indigenous Raw Material Consumed and the percentage of each to total consumption :-- Imported 0 0.00 0 0.00- Indigenous 100 117,369.05 100 120,795.16

35. To comply with the guidance note on “Accounting Treatment of Excise Duty” issued by The Institute of Chartered Accountants of India, excise duty amounting to `1,452 Lacs (Previous Year `1,592 lacs) has been included in the value of inventories as on 31st March, 2013 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

36. Value of Imports on CIF basis(` in Lac)

Current Year Previous Year- Capital Goods including Spares etc. 18,746.71 14,568.98- Raw Material etc. 0.00 0.00

37. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

38. Pre-operative Expenses capitalized as Capital Work in Progress during the year are as under:-(` in Lac)

Amount brought forward 68,965.60Incurred During the YearAdministrative, Financial & Other Expenses 44,168.78Trial Run Expenses 251.19Allocated to Fixed Assets during the year 0.00Amount carried over 113,385.57


(` in Lac)Current Year Previous Year

39. Expenditure in Foreign Currency- Traveling /Others 13.26 199.47- Financial Charges 6725.97 5082.08

(` in Lac)Current Year Previous Year

40. Earning in Foreign CurrencyFOB Value of Exports (` in Lac) 4486.82 9879.99

41. Balance confirmations have not been received from number of parties showing debit/credit balances.

(` in Lac)2012-13 2011-12

42. Dues to Small & Micro Enterprises #:1. Principal amount outstanding 137.97 12.722. Interest due on (1) above and the Unpaid Interest 0.00 0.003. Interest paid on all Delayed Payments under MSMED Act 0.00 0.004. Payment made beyond the Appointed date during the year 0.00 0.005. Interest due and payable for the period of delay other than (3) above 0.00 0.006. Interest accrued and remaining unpaid 0.00 0.007. Amount of further interest remaining due and payable in succeeding

years0.00 0.00

# The details of amounts outstanding to Micro & Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

43. Rupee equivalent of export obligation to be completed by 20th March, 2021 under EPCG Scheme as on 31st March, 2013 is `73,861.10 Lacs (Previous year `20,293.89 lacs).

44. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to `2,962.00 lacs upto 31st March, 2013 (`2,732.93 lacs upto 31st March, 2012). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ‘unconstitutional’. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

45. As reported in earlier years, the Company had received risk purchase claims aggregating to `3,505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred for arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.


46. Retirement Benefits : Gratuity & Leave EncashmentThe following table summarises the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the Balance Sheet for Gratuity & Leave Encashment:

(` in Lac)Reconciliation of opening and closing Balances of the Present value of the Defined Benefit Obligation:

Gratuity For Year Ended Leave Encashment For Year Ended

31-03-2013 31-03-2012 31-03-2013 31-03-2012Obligations at Period Beginning 949 607 450 257Service Cost 143 136 105 173Interest on Defined Benefit Obligation 81 49 39 21Benefits Settled -41 -38 -130 -152Curtailment Cost/(Credit) 0 0 0 -85Actuarial (Gain)/Loss 134 195 28 236Obligations at Period end 1267 949 492 450Change in Plan AssetsPlans Assets at period beginning, at fair value 776 528 0 0Expected return on Plan Assets 66 42 0 0Actuarial Gain/(Loss) -5 14 0 0Assets Distributed on Settlements 0 0 0 0Contributions 362 230 130 237Benefits Settled -41 -38 -130 -237Plans Assets at period end, at fair value 1158 776 0 0Closing PBO 1267 949 492 450Closing fair value of Plan Assets -1158 -776 0 0Closing Funded Status -109 -173 -492 -450Unrecognised Actuarial (Gain)/Loss 0 0 0 0Unfunded Net Asset/(Liability) Recognized in the Balance Sheet

-109 -173 -492 -450

Expenses Recognized Service cost 143 136 105 173Interest cost 81 49 39 21Expected return on Plan Assets -66 -42 0 0Curtailment cost / (Credit) 0 0 0 -85Actuarial (Gain)/Loss 139 181 28 236Net cost 297 324 172 345AssumptionsInterest rate 8.50% 8.50% 8.00% 8.70%Discount factor 8.50% 8.50% 8.00% 8.70%Estimated rate of return on Plan Assets 8.5% 8.5% N.A. N.A.Salary increase 5% 5% 8% 8%Attrition rate 2% 2% 4% 4%Retirement age 65 65 65 65

47. Tax Expense is the aggregate of current year Income Tax, Fringe Benefit Tax and Deferred Tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:Income Tax provision of `6,839 lacs has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of `403.51 lacs has been utilised.

b) Deferred Tax :The Company estimates the Deferred Tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.


(` in Lac)

Particulars Opening balance as at 01-04-2012

Charge/ credit during the year

Closing as at 31-03-2013

Depreciation 15,112.52 1,513.27 16,625.79Adjustments u/s 43B -62.62 49.03 -13.59Net 15,049.90 1,562.3 16,612.2

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

48. Related Party DisclosuresIn accordance with the Accounting Standard (AS-18) on Related Party Disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. RelationshipsKey Managerial Personnel : Shri Sandeep Jajodia (Chairman & Managing Director) Shri C.P. Baid (Dy. Managing Director) Shri K.K. Khanna (till 13.08.2012) (Executive Director) Shri Nirmal Chand Jha (Whole-time Director)Enterprise where KMP has significant influence : A.P. Coal Washeries Pvt Ltd.Subsidiaries : Monnet Global Ltd. Monnet Overseas Ltd. Monnet Daniel Coal Washeries Ltd. Monnet Power Company Ltd. Monnet Cement Ltd. Monnet Enterprises PTE Ltd. Rameshwaram Steel & Power Pvt. Ltd. Chattel Constructions Private Limited Chomal Exports Private Limited Monnet Sports FoundationSubsidiary of Subsidiaries : Pt Monnet Global Monnet Enterprises DMCC Pt. Sarwa Sembada Karya Bumi Monnet Global Liberia Ltd. Monnet Global Guinea S.A. Monnet Global Mali S.A. Monnet Global Colombia S.A.S.Joint Ventures : MP Monnet Mining Company Ltd. Mandakini Coal Company Ltd. Urtan North Mining Company Ltd. Monnet Ecomaister Enviro Pvt Ltd.Associates : Orissa Sponge Iron & Steel Ltd.


B. The following transactions were carried out with related parties in the ordinary course of business :-(` in Lac)

Key Managerial

Personnel

Subsidiaries Joint Ventures Enterprises where

KMP hold significant

influence31-03-2013 31-03-2012 31-03-2013 31-03-2012 31-03-2013 31-03-2012 31-03-2013 31-03-2012

Reimbursement of Expenses

- - 2.54 0.32 - - - -

Sale of goods / services / inputs

- - 4,448.50 2,845.99 - - - -

Sale of assets - - - 21.55 - - - -

Rent received - - - - 16.92 - - -

Loan given - - 7,393.48 9,756.56 866.00 - 5.00 275.00

Loan repaid - - 4,115.36 23,257.45 516.63 - - 90.00

Interest received - - 3,011.94 2,341.61 24.00 - - -

Remuneration paid 668.32 492.72 - - - - - -

Subscription to shares - - 16,296.39 6,080.82 19173.19 695.70 - -

Share Application Money pending allotment

- - - - 73.98 264.05 - -

Purchase of Raw Material / Finished goods

- - 849.41 1,221.00 - - - -

C. Outstanding Balance :-(` in Lac)

Description

Outstanding BalancesDebit

31-03-2013Debit

31-03-2012Subsidiaries 38,048.66 25399.88Key Management Personnel (0.17) 7.89Joint Ventures 90.03 280.68Associates 357.54 0.00Enterprises where KMP hold significant influence 268.12 263.12

49. Segment Reporting As per Accounting Standards (AS) 17 on “Segment Reporting”, segment information has been provided in the Notes to Consolidated Financial Statements.

50. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

51. Interest in Joint VentureThe Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of Monnet Ecomaister Enviro Private Limited. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for Monnet Ecomaister Enviro Private Limited which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.


The Company’s share of the assets, liabilities, income and expenses of the jointly controlled entities as at 31st March, 2013 is as follows:

(` in Lac)

Particulars

MP Monnet Mining Co. Limited

Mandakini Coal Co. Limited

Urtan North Mining Co. Limited

Monnet Ecomaister Enviro Private Limited

31-03-2013 31-03-2012 31-03-2013 31-03-2012 31-03-2013 31-03-2012 31-03-2013 31-03-2012I Assets

Fixed Assets/ Capital work in Progress

87.03 85.70 1008.73 630.20 310.04 286.15 1613.58 5.29

Non-Current Investments

0.00 0.00 71.67 0.00 0.00 0.00 0.00 0.00

Inventories 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Sundry Debtors 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Cash and Bank Balances

1.92 4.05 261.32 182.24 60.29 4.41 248.25 215.50

Loans and Advances 0.00 0.00 4846.86 2883.98 2.64 0.50 119.93 375.65

II Liabilities

Secured Loans 0.00 0.00 0.00 0.00 0.00 0.00 543.89 0.00

Long Term Provisions 0.00 0.00 1537.41 1.33 0.00 0.00 0.00 0.00

Unsecured Loans 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Current Liabilities and Provisions

8.19 8.39 794.81 15.86 4.71 1.93 133.31 3.38

III Income

Operating Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other Income 0.00 0.00 18.51 4.04 0.00 0.00 20.09 9.89

IV Expenses

Expenses 0.61 16.63 45.18 18.65 0.02 0.00 8.42 13.03

52. Terms and conditions of issue and redemption of Debentures are as under:No of Debenture

Rate Amount(` in Lac)

Date of Commencement of Redemption

Non Convertible Debentures1200 12.50% 12000.00 Issued on 4th November, 2008. Redeemable at par in the ratio of 35:35:30

at the end of 8th, 9th and 10th Year. 800 10.50% 8000.00 Issued on 30th January, 2010. Redeemable at par on 30th January 2020.1000 10.50% 10000.00 Issued on 24th December, 2009. Redeemable at par on 24th December,

2019.1000 11.00% 10000.00 Issued on 18th January, 2013. Redeemable at par at the end of 7th, 8th,

9th and 10th Year.1500 11.25% 15000.00 Issued on 20th February, 2013. Redeemable at par on 20th February, 2018.300 11.25% 3000.00 Issued on 28th March, 2013. Redeemable at par on 28th March, 2018.250 11.50% 2500.00 Issued on 28th March, 2013. Redeemable at par on 28th March, 2020.Convertible Debentures1308750 0% 3926.25 Issued on 21st November, 2009 Compulsorily convertible into 1.6 equity

shares against each debenture within a period of 18 months. Formalities are underway for conversion.

53. Aggregate Capital Expenditure as on 31st March, 2013 for projects under construction to be capitalized to Fixed Assets is `4469.65 Crores and includes Capital Work in Progress `3,685.02 Crores under the head Non-Current Assets and the Capital Advances `784.63 Crores under the head Long-term Loans & Advances.


54. Earning Per Share (EPS)–The numerators and denominators used to calculate Basic and Diluted Earning per share:Basic Earning Per Share

Year Ended on 31-03-2013


Profit attributable to the Equity Shareholders – (` in Lacs) (A) 25,031.93 28,886.05Basic weighed average number of Equity Shares outstanding during the year (B)

64,068,659 64,337,807

Nominal value of Equity Shares (`) 10.00 10.00Basic earning per share (`)- (A)/(B) 39.07 44.90

Diluted Earning Per Share



Profit attributable to the Equity Shareholders – as above (` in Lacs) 25,031.93 28,886.05Interest paid on Potential Equity Shares net of tax impact (` In Lacs) 0 0Profit considered for diluted E.P.S. (C) 25,031.93 28,886.05Basic weighed average number of Equity Shares outstanding during the year as above

64,068,659 64,337,807

Weighted average potential Equity Shares for the year 2,094,000 2,094,000Total weighted average Shares considered for Diluted E.P.S. (D) 66,162,659 66,431,807Nominal value of Equity Shares (`) 10.00 10.00Diluted Earning Per Share (`)- (C)/(D) 37.83 43.48

55. Previous year figures have been regrouped or recasted wherever necessary. For And on Behalf of the Board




Cash Flow Statement For the year ending 31st March, 2013

(`) Particulars Year ended

31-03-2013 Year ended

31-03-2012A. Cash Flow from Operating Activities

Net Profit before tax and Extra-ordinary items 3,384,048,601 3,770,370,683 Adjustment for :Depreciation 891,938,816 741,067,850 Profit/Loss on Sale of Fixed Assets 1,022,871 (17,217,746)Interest Received (561,577,194) (530,387,361)Interest Paid 1,179,885,661 859,915,129 Dividend Received (2,833,836) (27,149,611)

1,508,436,318 1,026,228,261 Operating Profit before Working Capital Facilities 4,892,484,919 4,796,598,944 Adjustment for :Trade & Other Receivable (3,467,331,427) (1,074,446,374)Inventories (2,166,738,133) (2,019,422,370)Trade Payable 4,627,669,718 2,423,479,771

(1,006,399,842) (670,388,972)Cash generated from Operations 3,886,085,078 4,126,209,972 Tax Paid (720,615,480) (745,464,199)Dividend Paid (186,466,429) (373,875,039)

(907,081,909) (1,119,339,238)Net Cash Flow from operating activities 2,979,003,169 3,006,870,734

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (982,409,135) (3,610,319,680)Sale of Fixed Assets 1,923,548 34,817,861 CWIP (16,606,618,266) (9,564,718,984)Purchase of Investments (Net) (3,402,905,136) (412,969,732)Buyback of Shares (196,506,440) 0 Interest Received 561,577,194 530,387,361 Dividend Received 2,833,836 27,149,611

(20,622,104,400) (12,995,653,563)Net Cash used in Investing Activities (20,622,104,400) (12,995,653,563)

C. Cash Flow from Financing ActivitiesProceed from Preference Share Issue 1,750,000,000 0 Interest Paid (1,179,885,661) (859,915,129)Proceed from Share Premium / Other Reserves 0 0 Proceeds from Borrowings 15,972,129,373 12,280,328,988

16,542,243,712 11,420,413,859 Net Cash used in Financing Activities (1,100,857,519) 1,431,631,030 Cash & Cash Equivalent Opening 8,061,881,456 6,630,250,426 Cash & Cash Equivalent Closing 6,961,023,937 8,061,881,456

NOTES:-1 The above Cash Flow statement has been prepared pursuant to clause No 32 of the listing Agreement with Stock

Exchanges and under the indirect method set out in AS-3 issued by the Institute of Chartered Accountants of India.2 Figures in brackets indicate cash outflow. 3 Significant Accounting Policies and Notes on Accounts form an integral part of Cash Flow Statement.4 Previous year figures have been regrouped/reclassified to confirm to current year’s classification.

In terms of our report of even date annexed




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Independent Auditor’s Report On Consolidated Financial Statements of Monnet Ispat & Energy Limited

To The Members ofMONNET ISPAT & ENERGY LIMITED

We have audited the accompanying consolidated financial statements of MONNET ISPAT & ENERGY LIMITED (‘the Company’), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

1. We did not audit the financial statements of three subsidiaries and one joint venture company, whose

financial statements reflect total assets of `4014.70 lacs as at 31st March,2013, total revenue of `614.91 lacs and cash flows amounting to `19.07 lacs for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors.

2. We have relied on the unaudited financial statements of certain subsidiaries and joint ventures whose financial statements reflect total assets of `1627.98 lacs as at 31st March,2013, total revenue of `1327.39 lacs and cash flows amounting to `57.82 lacs. These unaudited financial statements, as approved by the respective Board of Directors of these companies, have been furnished to us by the management and our report, in so far as it relates to the amounts included in respect these subsidiaries and joint ventures is based solely on such approved unaudited financial statements.

3. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements and AS 27, Financial Reporting of Interests in Joint Ventures, as notified by the Companies (Accounting Standard) Rules, 2006.

4. Pursuant to transfer of shares on 30th March,2013, M/s. Orissa Sponge Iron and Steel Ltd became associate of the Company. As per provisions of AS 23, Accounting for Investments in Associates in Consolidated Financial Statements, the Company is required to account for the investment in associates using equity method. However, due to non availability of financial statements of the associate company, the investment has been accounted for at cost.

5. Subject to note number 4 above, we report that we are of the opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India :-

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2013;

(ii) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.


Firm Regn. No. 000018N



Balance Sheet As at 31st March, 2013 (Consolidated)

(`) Particulars Note As at

31-03-2013 As at

31-03-2012 EQUITY AND LIABILITIESShareholders' fundsShare Capital 2 2,487,489,224 693,550,484 Reserves and Surplus 3 25,707,293,596 23,584,300,714

28,194,782,820 24,277,851,198 Share Application Money Pending Allotment 84,949,364 50,401,130 Minority Interest 1,306,712,352 1,070,094,564 Non-current liabilitiesLong-term Borrowings 4 64,440,422,312 40,981,501,086 Deferred Tax Liabilities (Net) 5 1,649,642,468 1,498,816,824 Long-term Provisions 6 81,286,786 79,516,109

66,171,351,566 42,559,834,019 Current liabilitiesShort-term Borrowings 7 16,134,207,171 11,886,972,156 Trade Payables 8 1,323,310,893 903,772,865 Other Current Liabilities 9 14,399,325,916 7,752,600,566 Short-term Provisions 10 112,575,279 186,467,010

31,969,419,258 20,729,812,597 TOTAL 127,727,215,360 88,687,993,507 ASSETSNon-current assetsFixed AssetsTangible Assets 11 15,754,246,705 15,704,870,097 Intangible Assets 12 1,287,961,915 1,288,684,359 Capital work-in-progress 71,892,775,043 36,479,308,319 Non-current Investments 13 2,714,819,225 1,078,770,967 Long-term loans and Advances 14 9,533,391,225 7,029,723,406 Other Non-current Assets 15 1,111,717,174 907,844,648

102,294,911,287 62,489,201,795 Current assets Current Investments 16 994,550 10,259,283 Inventories 17 8,210,567,644 5,914,639,021 Trade Receivables 18 4,110,029,787 2,989,555,329 Cash and Bank Balances 19 7,871,604,089 9,598,778,551 Short-term Loans and Advances 20 5,118,229,395 7,613,481,187 Other Current Assets 21 120,878,608 72,078,341

25,432,304,073 26,198,791,712 TOTAL 127,727,215,360 88,687,993,507Significant Accounting Policies 1


For O.P. BAGLA & CO.Chartered Accountants Sandeep Jajodia C.P. Baid J.P. Lath(Atul Bagla) Chairman & Managing Director Dy. Mg. Director Director Partner



Statement of Profit and Loss For the year ending 31st March, 2013 (Consolidated)

(`) Particulars Note Year ended


31-03-2012 Revenue:

Revenue from operations 22 22,852,185,451 21,535,114,508

Less: Excise Duty 2,193,074,656 1,647,837,272

20,659,110,795 19,887,277,236

Other Income 23 612,436,932 466,574,717

Total Revenue 21,271,547,726 20,353,851,953

Expenses:

Cost of Materials Consumed 24 12,105,661,210 12,136,443,540

Changes in Inventories 25 (144,657,297) (704,496,370)

Employee Benefits Expense 26 1,245,650,167 1,084,942,846

Finance Costs 27 1,318,465,664 1,004,277,462

Depreciation and Amortization Expense 11 & 12 1,001,986,966 814,703,741

Other Expenses 28 2,590,193,262 2,447,887,148

Total Expenses 18,117,299,972 16,783,758,368

Profit before Exceptional and Extraordinary Items & Tax 3,154,247,754 3,570,093,585

Exceptional / Extraordinary Items 0 0

Profit Before Tax 3,154,247,754 3,570,093,585

Tax expense:

Current Tax

Current year 726,437,018 781,842,050

Earlier years 2,005,548 (6,576,535)

Deferred Tax

Current year 150,825,644 120,530,464

Add : MAT Credit Entitlement Utilised 40,351,099 40,855,526

Profit for the Year 2,234,628,445 2,633,442,079

Less : Share Of Profit Transferred To Minority (13,172,909) (21,135,283)

Profit after Tax (after adjustment for Minority Interest) 2,221,455,536 2,612,306,797

Earnings per equity share (Par value of `10/- each)

Basic 34.67 40.60

Diluted 33.58 39.32

Significant Accounting Policies 1


For O.P. BAGLA & CO.Chartered Accountants Sandeep Jajodia C.P. Baid J.P. Lath(Atul Bagla) Chairman & Managing Director Dy. Mg. Director Director Partner



Notes on Accounts1. SIGNIFICANT ACCOUNTING POLICIES

I. Principles of ConsolidationThe consolidated financial results of Monnet Ispat & Energy Ltd (“the Company”) and its subsidiaries have been prepared on the following basis:-

a) The financial statements of the Company and its subsidiary companies have been consolidated on a line-by-line basis by adding together with the book value of like items of assets, liabilities and after eliminating the inter subsidiary balances in accordance with Accounting Standard (AS) 21-“ Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

b) Interest in Joint Ventures have been accounted by using the proportionate consolidation method as per Accounting Standard (AS) – 27 – “Financial Reporting of Interest in Joint Ventures” issued by Companies (Accounting Standard) Rules, 2006.

c) As far as possible the consolidated financial statement have been prepared using uniform accounting policies for like transactions and in similar circumstances and are presented to

the extent possible in the same manner as the company’s separate financial statements.

d) In respect of foreign subsidiaries, being non- integral foreign operations, revenue items are consolidated at the average rate prevailing during the year. All assets and liabilities are converted at rates prevailing at the year end. Any exchange difference arising on consolidation is recognized in the Exchange Fluctuation Reserve.

e) The difference between the cost of investment in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognized in the financial statements as Goodwill or Capital Reserve as the case may be.

f) Minority Interest’s share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders of the company.

g) Minority Interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated balance sheet separate from liabilities and the equity of the Company’s shareholders.


h) Particulars of subsidiaries and step subsidiaries considered in the consolidated financial statements are :

Name of the Subsidiary Main Activities Country of Incorporation

Proportion of ownership interest

SubsidiariesMonnet Overseas Ltd Investments U.A.E. 100%Monnet Global Ltd Investments U.A.E. 100%Monnet Enterprises Pte. Ltd. All kinds of business

activitiesSINGAPORE 100%

Monnet Power Company Ltd Power Generation INDIA 85.32%Monnet Daniel Coal Washeries Ltd.

Coal Washery INDIA 51.65%

Monnet Cement Ltd. Cement INDIA 99.97%Rameshwaram Steel & Power Private Limited

Manufacturing of Sponge Iron

INDIA 97%

Chomal Exports Pvt Ltd Mining INDIA 51%Monnet Sports Foundation Promotion of sports INDIA 100%Step SubsidiariesPT Monnet Global Imports/Exports and

MiningINDONESIA 99%

PT Sarwa Sembada Karya Bumi Mining INDONESIA 95%Monnet Global (Liberia) Ltd Mining / Exploration LIBERIA 100%Monnet Global Guinea – SAU Mining / Exploration Republic of Guinea 100%Monnet Global Mali - SA Mining / Exploration Mali 100%Monnet Enterprises DMCC Trading, Investments U.A.E. 100%Monnet Global Colombia S.A.S Mining / Exploration Columbia 100%

Apart from the above, the Company also holds 9999 equity shares of M/s. Chattel Constructions Pvt Ltd, which corresponds to 99.99% holding. However, the accounts of the subsidiary have not been consolidated as the control is intended to be temporary and the subsidiary is held exclusively with a view to subsequent disposal.

i) Interest in joint venturesThe Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister Enviro Pvt Ltd. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet Ecomaister Enviro Pvt Ltd which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

II. The goodwill recorded in these Consolidated Financial Statements has not been amortized,

but instead evaluated for impairment. The group evaluates the carrying amounts of its goodwill whenever events or changes in circumstances indicate that its carrying amount may be impaired, for diminution other than temporary.

III. Investment other than in subsidiaries, joint ventures and associates have been accounted as per Accounting Standard (AS) 13 on “Accounting for Investments”.

IV. Other Significant Accounting PoliciesThese are set out under “Significant Accounting Policies” as given in the Standalone Financial Statements of Monnet Ispat & Energy Limited.


(`)


As at31-03-2012

Note No. 2 : Share CapitalAUTHORISED Equity Share Capital8,20,00,000 shares of par value of `10/- each (Previous year 13,20,00,000 shares of par value of `10/- each)

820,000,000 1,320,000,000

Preference Share Capital1,85,00,000 shares of par value of `100/- each (Previous year 500000 shares of `100/- each)

1,850,000,000 50,000,000

ISSUED, SUBSCRIBED AND FULLY PAID-UPEquity Share Capital6,37,31,681 shares of par value of `10/- each (Previous year 6,43,37,807 shares of par value of `10/- each)

637,316,810 643,378,070

Add : Shares Forfeited (Amount Originally Paid up) 172,414 172,414 Total 637,489,224 643,550,484 Preference Share Capital1,75,00,000 6.5% Cumulative Non Convertible Redeemable Preference Shares of par value of `100/- each

1,750,000,000 0

10,00,000 (Previous Year 5,00,000) 0.001% Compulsorily Convertible Preference Shares (CCPS) of par value of `100/- each

100,000,000 50,000,000

Total 2,487,489,224 693,550,484

a) Reconciliation of shares outstanding at the beginning and at the end of the reporting period is given below:


As at31-03-2012

Number of shares outstanding as at the beginning of the year 64,337,807 64,337,807 Shares issued during the year 0 0 Shares bought back during the year 606,126 0 Number of shares outstanding as at the closing of the year 63,731,681 64,337,807

Reconciliation of preference shares outstanding at the beginning and at the end of the reporting period is given below:


As at31-03-2012

Number of shares outstanding as at the beginning of the year 0 0 Shares allotted during the year 18,000,000 500,000 Number of shares outstanding as at the closing of the year 18,000,000 500,000

b) (i) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

(ii) Convertible Preference shares- Terms and conditions of issue: The CCPS are carrying dividend @ 0.001%. Each holder of CCPS is entitled to vote in meetings of the company only on resolutions which directly affect the rights attached to CCPS. Each CCPS can be converted in to fully paid up equity shares of the company after 15 years of date of issue subject to maximum tenure of 20 years from the date of issue. Alternatively CCPS can be converted in the events of (i) Occurrence of IPO of the company (ii) exit of investor from the company. Each CCPS is convertible into 3.37 equity shares of the company.


(iii) Non Convertible Preference Shares : ‘The holders of preference shares are entitled to preferential dividends from the date of allotment.Such shares shall rank for capital and dividend and for repayment of capital in a winding up, in priority to the ordinary shares of the Company. The holders of such shares shall have the right to receive notice of general meetings of the Company but shall not confer on the holders thereof, the right to vote at any meetings of the Company, save to the extent and in the manner provided in the Companies Act, 1956.

c) Following share holders held more than 5% shares in the company as at the end of the year:

Name of Shareholder % of Shareholding 31-03-2013

% of Shareholding 31-3-2012

EQUITYPavitra Commercials Ltd. 0.00 6.35 Cecil Webber Engineering Ltd Below 5% 6.57 Kamdhenu Enterprises Ltd 0.00 10.50 Udhyam Merchandise Pvt Ltd 38.69 15.47 Vistabrook Limited 5.95 Below 5%Blackstone GPV Capital Partners Mauritius 7.17 7.10 Deutsche Securities Mauritius Ltd. 7.87 8.23 CONVERTIBLE PREFERENCE SHARESBlackstone FP Capital Partners (MAURITIUS) V Ltd 100.00 100.00 NON CONVERTIBLE PREFERENCE SHARESMonnet Industries Ltd 100.00 0.00

d) The company has issued the following shares for a consideration other than cash or bonus shares during the immediately preceding 5 years:

47,22,539 equity shares of `10 each were allotted as fully paid up for consideration other than cash pursuant to scheme of amalgamation of M/s.Mounteverest Trading & Investment Limited with the Company as per order dated 19.11.2010 passed by Honourable High Court of Chattisgarh.

e) The Company has bought back 1,894,385 equity shares during the last five years.

f) Non Convertible Preference shares were issued on 30th March, 2013 for the period of 9 years with periodical put and call options.


(`)


As at31-03-20112

Note No. 3 : Reserves and SurplusCapital ReserveAs per last Balance Sheet 777,655,899 777,655,899 Securities Premium AccountAs per last Balance Sheet 8,703,048,399 8,125,461,178 Add: Transferred During The Year 309,879,755 577,587,221 Less : Utilized for buy back of equity shares (190,445,180) 0 Debenture Redemption ReserveAs per last Balance Sheet 860,164,156 544,275,014 Add : Transfer from Surplus 0 315,889,142 Capital Redemption Reserve As per last Balance Sheet 12,862,590 12,862,590 Capital Reconstruction ReserveAs per last Balance Sheet 196,801,760 196,801,760 Exchange Fluctuation ReserveAs per last Balance Sheet (122,371,774) 59,581,744 Add : For the year (105,322,531) (181,953,518)Amalgamation ReserveAs per last Balance Sheet 33,050,090 33,050,090 General Reserve As per last Balance Sheet 1,590,073,546 1,301,073,546 Add : Transfer from Surplus 251,000,000 289,000,000 SurplusAs per last balance sheet 11,533,016,048 9,712,065,403 Add: Profit for the year from Statement of Profit & Loss 2,221,455,536 2,612,306,797 Less: Transfer to Debenture Redemption Reserve 0 (315,889,142) Transfer to general reserve (251,000,000) (289,000,000) Proposed dividend on equity shares (95,597,522) 0 Proposed dividend on preference shares (624,288) (160,439,683) Tax on proposed dividend (16,352,889) (26,027,327)

13,390,896,886 11,533,016,048 Total 25,707,293,596 23,584,300,714

The Company has proposed final dividend for the year 2012-13 @ `1.50 per equity share par value of `10/- each (previous year `2.50 per equity share)


(`)


As at31-03-2012

Note No. 4 : Long-Term BorrowingsBonds/DebenturesSecuredNon-Convertible Redeemable Debentures redeemable at par. 6,050,005,067 3,000,003,962 (For Coupon rate, Terms of Redemption / Conversion, refer Note 47)Term LoansFrom Banks, NBFCs and FIsSecuredForeign Currency Loans 15,762,346,809 15,039,881,000 Rupee Loans 41,364,770,435 20,456,156,929 UnsecuredRupee Loans 1,263,300,000 2,485,459,195 Total 64,440,422,312 40,981,501,086

1 Term Loans, External Commercial Borrowings (ECB) and Non Convertible Debentures (NCD) from Financial Institutions / Banks, are secured by first charge on all immovable and movable assets (present & future) of the company (subject to prior charges on movables in favour of working capital banks) ranking pari - passu with the charges created in favour of participating financial institutions. Some of the loans / facilities are further guaranteed by the Managing Director of the company.

2 The repayment terms and rate of interest of term loans are as under:

a) Rupee Term Loan for Steel Project :- The Company has an outstanding balance of `2155.61 Crores of Rupee term loan with interest band of 1.50% to 2.50% plus base rate. These loans are repayable in quarterly installments commencing from FY 2013-14.

b) Rupee Term Loan for Power Project :- The Company has an outstanding balance of `96.93 Crores of Rupee term loan with interest band of 11.75% to 12.95% repayable by FY 2015-16.

c) Other Term Loan of `150 Crores is repayable from Sept., 2013 to March, 2018 with interest band of 2.50% plus Base rate.

d) Rupee Terms loans from Banks and Financial Institutions in MPCL (`1,513 Crores) are secured in favour of Security Trustee IDFC Ltd on behalf of all the lenders. The loans are secured with the English Mortgage & assignment of Project Rights and also secured inter-alia on first charge basis by mortgage of deposit of original title deed of land of the company.’The term loans are further secured by pledge of shares of the company held by the holding company.’The term loans are repayable in equal quarterly installments as per the terms of the respective agreements over a period of 10 years after a moratorium period of one year from the scheduled commencement of project. The rate of interest of all the consortium bankers are linked to their respective base rates and are aligned to 11.50% at the time of signing of CLRA. Thereafter the rate of interest for all participating lenders has changed according to the change in base rate of respective lender.

e) Foreign Currency Term Loan $ 212 Million : the loan is repayable in installments from FY 2014-15 to FY 2019-20 and carries interest rate of libor plus 4.25 to 4.6%.

f) USD 45 Million is repayble in FY 2013-14 with interest rate Libor +1.90%

g) Foreign Currency Term Loan - Monnet Power Co. Ltd ($ 47 million) : secured by hypothecation of whole of the company’s movable properties (present & future) including all movables, plant & machinery and all other equipments whether installed or not at project site of the company.The external commercial borrowing carried rate of interest of 6 month LIBOR plus 425 bsp on 360 days basis. The loan is repayable in 10 semi annual unequal installments after a moratorium period of three years from the scheduled COD.


h) Foreign Currency Term Loan $ 40 Million - Monnet Global : the loan is repayable in FY 2012-13 and FY 2013-14 and carries interest rate of libor plus 3.5%

i) Foreign Currency Term Loan $ 2 Million - Monnet Ecomaister : a) Term Loan is secured by Guarantee of Shareholders. b) The Loan is at rate of interest of 6 month LIBOR plus 2.62% on 360 days basis. The loan is repayable in five half yearly equal installments after a moratorium period of 36 months from the first disbursement. First instalment is due in December 2015.

j) Unsecured Term Loan of `150 Crores is repayable in monthly installments from FY 2013-14 to FY 2017-18.

(`)


As at31-03-2012

Note No. 5 : Deferred Tax Liabilities (Net) Deferred Tax LiabilitiesDifference of Book Depreciation and Tax Depreciation 1,693,337,033 1,616,429,700 Less: Deferred Tax AssetsDisallowances u/s 43B of the Income Tax Act, 1961 1,358,504 6,261,877 Brought Forward Losses 42,336,060 111,350,999 Total 1,649,642,468 1,498,816,824

The net increase during the year in the Deferred Tax liability has been debited to Statement of Profit & Loss

(`)


As at31-03-2012

Note No. 6 : Long-term ProvisionsProvision for employee benefitsProvision for Gratuity 21,463,202 25,733,503 Provision for Leave Benefits 59,823,584 53,782,606 Total 81,286,786 79,516,109

(`)


As at31-03-2012

Note No. 7 : Short-term Borrowings Working Capital Facilities- From BanksSecured 6,115,706,074 1,952,207,394 Commercial Paper (Unsecured)From Banks 500,000,000 1,500,000,000 From Institutions & Others 0 1,000,000,000 Bonds/DebenturesUnsecured0 % Fully Convertible Debenture of `1,000/- each. 392,625,000 392,625,000 (For Coupon rate and Terms of Redemption / Conversion, refer Note 47)Short Term LoansUnsecuredForeign Currency Loans 2,925,382,713 536,683,624 Rupee Loans 5,104,554,620 5,410,005,480 Loans from other Bodies CorporateUnsecured 1,095,938,764 1,095,450,658 Total 16,134,207,171 11,886,972,156


a) Working Capital Facilities from banks are secured by first charge on movable current assets and second charge on all immovable assets of the company. These working capital loans are further guaranteed by Managing Director of the company.

b) Loan from non banking finance company in MPCL ̀ 100 Crores is secured by subservient charge on current and movable fixed assets of the company. The loan is at interest rate of 13.60%.

(`)


As at31-03-2012

Note No. 8 : Trade PayablesTrade Payables - Micro, Small & Medium Enterprises 13,797,345 1,272,316 - Others 1,309,513,548 902,500,550 Total 1,323,310,893 903,772,865

Disclosure w.r.t. Micro and Small Enterprises as required by MSMED Act is made in Note No.38.

(`)


As at31-03-2012

Note No. 9 : Other Current Liabilities Current maturities of long term debts 5,490,019,010 4,673,696,722 Payable for Capital Expenditure 6,571,571,458 972,142,173 Interest accrued but not due on borrowings 232,002,888 167,162,189 Interest accrued and due on borrowings 53,738,495 142,626,619 Unpaid Dividends 7,297,078 10,556,381 Advances from customers and others 172,669,147 90,620,185 Provision for Expenses 936,714,490 1,039,377,315 Statutory dues 384,211,960 372,869,919 Security Deduction & Deposits 551,101,391 283,549,063 Total 14,399,325,916 7,752,600,566

(`)


As at31-03-2012

Note No. 10 : Short-term Provisions Provision for proposed dividend 96,222,552 160,439,764 Provision for Tax on dividend 16,352,727 26,027,246 Total 112,575,279 186,467,010


Note

No.

11 :

Tan

gib

le F

ixed

Ass

ets

(`)

Part

icu

lars

Gro

ss B

lock

Dep

reci

atio

nN

et B

lock

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at

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4-2

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diti

on

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stm

ents

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at

31-0

3-2

013

Up

to

31-0

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For

the

year

31-0

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Ad

just

men

tsU

p t

o

31-0

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013

As

at

31-0

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As

at

31-0

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Land

& S

ite

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elop

men

t22

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3,93

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1,84

6,84

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6,44

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383,

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428,

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316,

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15

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Prev

ious

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15,6

29,9

30,1

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Note

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12 :

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tan

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le A

sset

s (

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Note

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13 :

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(`)


As at31-03-2012

Note No. 14 : Long-term Loans and Advances (Unsecured Considered good, unless otherwise stated)Capital Advances- Secured 797,066,711 2,055,916,979 - Unsecured 8,356,193,864 4,595,227,847 Security Deposits 380,130,650 378,578,580 Total 9,533,391,225 7,029,723,406

(`)


As at31-03-2012

Note No. 15 : Other Non-current Assets (Unsecured Considered good, unless otherwise stated)Non-Current bank deposits 1,111,717,174 907,844,648 Total 1,111,717,174 907,844,648 Non-Current bank balances include:Deposits provided as collateral against credit facilities 791,866,331 185,202,255

(`)

Name of Scrip 31-03-2013 31-03-2012 No. of

Share/Units Face Value Per Share/

Unit

Amount No. of Share/Units

Face Value Per Share/

Unit

Amount

Note No. 16 : Current InvestmentsEquity Shares Through Portfolio 994,550 10,259,283 Management SchemesTOTAL 994,550 10,259,283 Quoted InvestmentsBook Value 994,550 10,259,283 Market Value 994,550 11,335,579

(`)


As at31-03-2012

Note No. 17 : Inventories Raw Materials 5,682,023,094 3,543,143,306 Work-in-Process 32,131,088 36,388,466 Finished Goods 1,879,459,919 1,730,545,243 Stores and Spares 616,953,543 604,562,005 Total 8,210,567,644 5,914,639,021

a) Inventories include material in transit.b) Inventory items have been valued considering the Significant Accounting Policy No. VI disclosed in Note No. 1 to the

Standalone Financial Statements.


(`)


As at31-03-2012

Note No. 18 : Trade Receivables Debts outstanding for a period exceeding six months Unsecured, considered Good 1,670,578,952 1,165,467,826 Unsecured, considered Doubtful 19,621,111 20,537,361 Less: Provision for Bad & Doubtful Debts 19,621,110 20,537,361

1,670,578,953 1,165,467,826 Other Debts-Considered Good 2,439,450,834 1,824,087,503 Total 4,110,029,787 2,989,555,329 a) Trade receivables include amount due from Private Companies in which

Directors of the Company are Directors26,811,886 26,311,886

(`)


As at31-03-2012

Note No. 19 : Cash and Bank Balances Cash & Cash EquivalentsBalances with banks- in current accounts 3,361,294,893 3,735,475,720 Cheques & drafts on hand 29,956,601 105,274,219 Cash on hand 12,049,451 12,687,652 Others (stamps in hand) 5,705,800 5,705,800 Bank deposits with less than three months maturity 4,149,869,874 4,909,976,893 Total 7,558,876,619 8,769,120,285 Other Bank BalancesBank deposits with more than three months maturity* 305,430,392 819,101,886 Balance in unpaid dividend accounts 7,297,078 10,556,381 Total 7,871,604,089 9,598,778,551 Deposits with banks include the following:Deposits provided as collateral against credit facilities 1,542,393,973 5,498,283,951


(`)


As at31-03-2012

Note No. 20 : Short Term Loans and Advances (Unsecured Considered good, unless otherwise stated)Loans

To others 401,275,285 371,458,053 Advances Recoverable In Cash or Kind

From Others 3,705,503,975 6,083,412,504 Advances

To Employees 57,259,421 61,751,586 Prepaid Expenses 112,442,368 220,088,984 Balances with Excise Authorities 579,210,597 585,143,721 Advance Income Tax (Net of provision for tax) 201,075,493 189,812,983 MAT Credit Entitlement 61,462,257 101,813,356

Total 5,118,229,395 7,613,481,187a) Due from Directors and Officers of the Company - Directors 0 788,665

(`)


As at31-03-2012

Note No. 21 : Other Current Assets Interest Accrued :Investments 258,041 258,041 Term Deposits 120,078,905 71,820,300 Others 541,662 0 Total 120,878,608 72,078,341


(`)



Note No. 22 : Revenue from Operations Sale of ProductsFinished Goods 28,160,147,727 26,910,681,733 Sale of Services- Job Work Income 73,254,600 81,982,300 Other operating incomeCoal Beneficiation Charges 436,105,045 423,948,284 Scrap Sales 37,975,046 31,180,883

28,707,482,419 27,447,793,200 Less : Inter Division Transfers 5,855,296,968 5,912,678,692 Total 22,852,185,451 21,535,114,508 Detail of Sales of Finished GoodsSponge Iron 17,690,696,531 16,863,349,808 M.S/S.S Products 2,813,152,518 2,478,667,557 Structure 2,908,694,410 2,822,103,979 Ferro Alloys 646,540,688 503,551,478 Coal 1,361,197,619 1,302,358,240 Power 2,621,409,057 2,875,804,319 Others 118,456,904 64,846,352

28,160,147,727 26,910,681,733

(`)



Note No. 23 : Other Income Interest IncomeFrom Bank Deposits 282,049,599 267,295,297 From Long Term Investments 517,500 18,055,696 Others 38,164,560 38,196,358 Dividend Current Investments 5,210,367 34,733,919 Non Current Investments 2,827,836 21,944,877 Net gain on sale of Investments 6,455,876 0 Rent Received 7,036,369 17,261,412 Insurance Claim Received 7,285,252 4,891,998 Exchange Fluctuation 219,220,892 10,667,939 Profit on Disposal of Fixed Assets 88,417 20,325,977 Other Miscellaneous Income 43,580,264 33,201,244 Total 612,436,932 466,574,717


(`)



Note No. 24 : Cost of Materials Consumed Inventories At Beginning The Year 3,543,143,306 2,157,589,192 Add: Purchases (Net) 19,282,516,035 18,887,890,495 Less : Inventory At the end of Year 5,682,023,094 3,543,143,306

17,143,636,247 17,502,336,381 Less : Inter Division Transfers 5,037,975,037 5,365,892,841 Total 12,105,661,210 12,136,443,540 Detail of Materials ConsumedIron Ore 8,614,099,728 8,098,727,877 Coke & Coal 3,452,049,050 3,137,061,434 Magnese Ore & Hi Mn Slag 240,010,273 148,985,384 Billets 2,029,156,333 2,284,611,368 Pig Iron 445,673,180 0 M.S. Scrap 75,060,050 0 Ferro Alloys 105,911,827 100,523,500 Sponge Iron 1,574,546,125 1,932,998,147 Others 607,129,680 1,799,428,672

17,143,636,247 17,502,336,381

(`)



Note No. 25 : Changes in Inventories Opening Stock as on 01-04-2012Work-in-Process 36,388,466 27,049,894 Stock in Trade 0 3,405,336 Finished Goods 1,730,545,244 1,031,982,110 ( A ) 1,766,933,710 1,062,437,340 Closing Stock as on 31-03-2013Work-in-Process 32,131,088 36,388,466 Stock in Trade 0 0 Finished Goods 1,879,459,919 1,730,545,244 ( B ) 1,911,591,007 1,766,933,710 Total (144,657,297) (704,496,370)Detail of Finished Goods InventorySponge Iron 1,238,341,956 1,166,199,765 M.S/S.S Products 119,217,139 135,554,529 Structure 168,095,724 216,503,790 Si Manganese 22,034,634 23,045,677 Coal 100,990,626 114,300,741 OtherChar 227,919,189 73,035,532 End Cutting/Miss Rolls 1,858,712 1,905,209 Bricks 1,001,940 0

1,879,459,919 1,730,545,243


(`)



Note No. 26 : Employee Benefits Expenses Salaries and Wages 1,130,318,123 990,682,150 Contribution to Provident and other Funds 75,200,884 60,091,217 Staff Welfare Expenses 40,131,159 34,169,480 Total 1,245,650,167 1,084,942,846

(`)



Note No. 27 : Finance Costs Interest 1,306,222,270 891,722,910 Other Service Charges 12,243,394 112,554,552 Total 1,318,465,664 1,004,277,462


(`)



Note No. 28 : Other Expenses MATERIAL, MANUFACTURING AND OTHERSStores and Spares Consumed 354,166,521 360,185,530 Power and Fuel 1,324,040,940 1,141,742,791 Coal Handling & Washing Charges 437,964,668 404,598,957 Excise Duty on Stocks (13,983,306) 88,694,321 Less : Inter Division Transfers (817,321,931) (546,785,847)

1,284,866,892 1,448,435,752 ADMINISTRATION & OTHER EXPENSESPrinting and Stationery 6,946,405 5,821,332 Rent 7,172,689 9,095,382 Rates & Taxes 5,445,278 5,710,214 Vehicle Expenses 57,260,151 55,632,001 Communication Expenses 10,482,780 12,137,007 Travelling & Conveyance 47,988,871 38,182,727 Insurance Charges 49,781,783 42,792,255 Legal & Professional Charges 85,722,229 73,507,632 Directors Sitting Fees 727,716 811,452 Auditors' Remuneration- As Audit Fees 3,574,907 3,028,627 - For Quarterly Review 400,000 400,000 - For Tax Matters 1,972,500 1,051,000 - For Certification & Other Matters 1,847,540 1,477,608 - Reimbursement of Expenses 284,460 485,769 Miscellaneous Expenses 145,530,047 123,449,697 Lease Rent & Hire Charges 8,215,956 9,478,730 Share Transfer Expenses 261,667 191,581 Internal Audit Fees & Expenses 4,580,860 3,783,777 Loss from Partnership Firm 324,623 355,395 Bank Charges 33,635,332 20,991,356 Provision For Doubtful Debts (716,194) (2,494,674)Loss on Sale of Fixed Assets 1,040,786 0 Distribution & Marketing Expenses 691,917,250 444,142,958 Loss on Sale of Investment 0 24,721,329 Amount transferred from Preoperative Expenses 321,844 0 Miscellaneous Expenditure W.off 37,709 2,703,683

1,164,757,188 877,456,837 REPAIR & MAINTENANCEMachinery 103,530,951 93,739,740 Building 22,869,496 16,334,401 Others 14,168,735 11,920,418

140,569,182 121,994,559 Total 2,590,193,262 2,447,887,148


(` in Lac)As at

31-03-2013As at

31-03-201229. Contingent Liabilities(Excluding Matters Separately Dealt with in Other Notes):Claims against the Company not Acknowledged as Debt- In respect of Disputed Excise Demands 2,598.60 1,899.97- in respect of Disputed Sales Tax Demands 579.40 714.60- in respect of Disputed Entry Tax Demands 3,138.69 2,531.66- in respect of Disputed Income Tax Demands 18,380.18 2,908.60- in respect of Disputed Demands for Water Charges by Water Resources

Division1,430.17 1,075.44

- In respect of Electricity Duty on Generation of Power 4,407.56 3,525.09- Other claims against the Company not Acknowledged as debt 5,188.97 1,144.13- Royalty on soil Excavated 200.01 0.00(The above are basic amounts excluding interest, if any)

(` in Lac)As at

31-03-2013As at

31-03-201230. Commitmentsa. Estimated amount of Contracts remaining to be executed on Capital Account

and not provided for (Net of advances)179,637.26 338,137.13

b. Letters of Credit opened in favour of Inland/Overseas Suppliers (Net) 11,490.01 8,321.78

(`)As at

31-03-2013As at

31-03-201231. Salary includes following Remuneration paid to DirectorsMr. Sandeep Jajodia (Chariman & Managing Director)- Salary 36,000,000 30,000,000- Perquisites 4,414,792 3,684,685Mr. K.K. Khanna (Executive Director)- Salary 1,527,734 3,437,400- Perquisites 14,400 39,000Mr. C.P. Baid (Dy. Managing Director)- Salary 16,950,196 11,450,196- Perquisites 6,54,600 661,200Mr. Gopal Tiwari (Director)- Consultancy 660,000 660,000Mr. Nirmal Chand Jha (Whole-time Director)- Salary 7,116,829 NIL- Perquisites 153,945 NIL


(` in Lac)As at

31-03-2013As at

31-03-201232. Guaranteesa. Counter Guarantees issued in respect of guarantees issued by Company’s

Bankers10,916.30 8,466.87

b. Guarantees issued on behalf of limited companies 1,595.41 2,393.00

33. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

34. To comply with the guidance note on “Accounting Treatment of Excise Duty” issued by The Institute of Chartered Accountants of India, excise duty amounting to `1,615.36 Lacs (Previous Year `1,661.12 lacs) has been included in the value of inventories as on 31-03-2013 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

35. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

36. Pre-operative Expenses capitalized as Capital Work in Progress during the year are as under:-(` in Lac)

Amount brought forward 95,860.17Incurred During the YearAdministrative & Other Expenses 76,868.99Trial Run Expenses 251.19Total 172,980.18Allocated to Fixed Assets 0.00Amount c/o 172,980.18

37. Balance confirmations have not been received from number of parties showing debit/credit balances.

(` in Lac)2012-13 2011-12

38. Dues to Small & Micro Enterprises #:1. Principal amount outstanding 137.97 12.722. Interest due on (1) above and the unpaid interest 0.00 0.003. Interest paid on all delayed payments under MSMED Act 0.00 0.004. Payment made beyond the appointed date during the year 0.00 0.005. Interest due and payable for the period of delay other than (3) above 0.00 0.006. Interest accrued and remaining unpaid 0.00 0.007. Amount of further interest remaining due and payable in

succeeding years0.00 0.00

39. Rupee equivalent of export obligation to be completed by 20th March, 2021 under EPCG Scheme as on 31st March, 2013 is `77,110.60 Lacs (Previous year `20,293.89 lacs).

40. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to `2,962.00 lacs upto 31st March, 2013 (`2,732.93 lacs upto 31st March, 2012). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ‘unconstitutional’. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.


41. As reported in earlier years, the Company had received risk purchase claims aggregating to `3505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred to arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

42. Income of beneficiation charges receivable from Punjab State Power Corporation Ltd. (Formerly Punjab State Electricity Board) pursuant to the agreement dated 14th August 2002 has been provided in accordance with the agreement and provisional bills have been accordingly raised along with service tax thereon. Such provisional bills are raised at rates inclusive of the company’s entitlement of certain escalations in the base rate as referred in the aforesaid agreement. Further reimbursement of transportation charges has been accounted for on the basis on which the same are actually realized. Also PSPCL has raised debit notes towards commitment charges, shortages & Penalty. The company has not accepted the debit notes and is contesting the demands. Necessary adjustment towards difference in beneficiation charges/reimbursement of expenses and debit notes raised by PSPCL shall be recognized on final settlement with the party and/or actual realization thereof.

43. Tax Expense is the aggregate of current year Income Tax and Deferred Tax Charged to the Profit and Loss Account for the year.

a) Current Year Charge: Income Tax provision of `7,264 lacs has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of `403.51 lacs has been utilised.

b) Deferred Tax :The Company estimates the Deferred Tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

(` in Lac)

Particulars Opening balance as at 01-04-2012

Charge/ credit during the year

Closing as at 31-03-2013

Deprecation 16,164.29 769.07 16,933.36Adjustments u/s 43B (62.62) 49.03 (13.59)Brought Forward Losses (1,113.51) 690.15 (423.36)Net 14,988.16 1508.25 16,496.41

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

44. Related Party DisclosuresIn accordance with the Accounting Standard (AS-18) on Related Party Disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-


A. Relationships Key Managerial Personnel : Shri Sandeep Jajodia (Chairman & Managing Director) Shri C.P. Baid (Dy. Managing Director) Shri K.K. Khanna (Executive Director) Mr. Nirmal Chand Jha (Whole-time Director)Enterprise where KMP has significant influence : A.P. Coal Washeries Pvt LtdJoint Ventures : MP Monnet Mining Company Ltd Mandakini Coal Company Ltd Monnet Ecomaister Enviro Pvt Ltd Urtan North Mining Company LtdAssociates : Orissa Sponge Iron & Steel Ltd

B. The following transactions were carried out with related parties in the ordinary course of business :-(` in Lac)

Key Managerial Personnel

Joint Ventures / Associates

Enterprises where KMP hold significant influence

31-03-2013 31-03-2012 31-03-2013 31-03-2012 31-03-2013 31-03-2012Rent received - - 8.46 - - -Loan given - - 524.49 - 5.00 275.00Loan repaid - - 174.80 - - 90.00Interest received - - 13.58 - - -Remuneration paid 668.32 492.72 - - - -Subscription to shares - - 19173.19 695.70 - -Share Application Money Pending Allotment

- - 73.98 264.05 - -

C. Outstanding balance :-(` in Lac)

Description

Outstanding BalancesDebit

31-03-2013Debit

31-03-2012Key Management Personnel (0.17) 7.89Joint Ventures 32.52 96.16Associates 357.54 0.00Enterprises where KMP hold significant influence 268.12 263.12


45. Segmental Reporting : Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company.

As part of Secondary reporting, the company has no geographical segment by location.

Information about Business Segment - Primary (` in Lac)

REPORTABLE SEGMENTS Iron & Steel Power Others TOTAL Revenue Sales And Other Income 1,80,081 19,092 7,418 2,06,591Inter-Segment Sales 966 7,934 - Total Revenue 1,81,048 27,026 7,418 2,06,591Segment Result/Operating Profit 35,918 1,856 829 38,603Financial Charges 13,185Other Income 6,124Profit Before Tax 31,542Less : Provision For Tax & Deferred Tax

9,196

Profit After Tax 22,346

(` in Lac)REPORTABLE SEGMENTS Iron & Steel Power Others TOTAL Other Information Segment Assets 7,20,468 4,60,201 62,807 12,43,476Unallocated Assets 33,796Total Assets 12,77,272Segment Liabilities 95,271 42,936 20,957 1,59,165Unallocated Liabilities 8,36,159Total Liabilities 9,95,324Capital Expenditure 4,27,815 4,39,456 22,079 8,89,350Depreciation 4,377 5,063 580 10,020Amortization of Misc. Expenditure 0Non-Cash Expenditure Other Than Depreciation & Amortization

0 0 0 0

Notes :a. Unallocated Assets include investments, Interest Bearing Loans and Deposits, Income Tax Advances and Miscellaneous

expenditure.b. Unallocated Liabilities include interest bearing liabilities, dividend and Income tax provisions.

46. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.


47. Terms and conditions of Issue and Redemption of Non convertible Debentures are as under:

No of Debenture

Rate Amount(` in Lac)

Date of Commencement of Redemption

Non Convertible Debentures1200 12.50% 12,000.00 Issued on 4th November, 2008. Redeemable at par in the ratio of

35:35:30 at the end of 8th, 9th and 10th Year.800 10.50% 8,000.00 Issued on 30th January,2010. Redeemable at par on

30th January 2020.1000 10.50% 10,000.00 Issued on 24th December,2009. Redeemable at par on

24th December,2019.1000 11.00% 10,000.00 Issued on 18th January,2013. Redeemable at par at the end of

7th, 8th, 9th and 10th Year.1500 11.25% 15,000.00 Issued on 20th February,2013. Redeemable at par on

20th February,2018.300 11.25% 3,000.00 Issued on 28th March,2013. Redeemable at par on

28th March,2018.250 11.50% 2,500.00 Issued on 28th March,2013. Redeemable at par on

28th March,2020.Convertible Debentures1,308,750 0% 3,926.25 Issued on 21.11.2009 Compulsorily convertible into 1.6 equity

shares against each debenture within a period of 18 months. Formalities are underway for conversion.

48. Aggregate capital expenditure as on 31-3-2013 for projects under construction to be capitalized to fixed assets is `8,104.60 Crores and includes capital work in progress `7,189.27 Crores under the head non-current assets and the capital advances `915.33 Crores under the head long term loans advances.


49. Earning Per Share (EPS)–The numerators and denominators used to calculate Basic and Diluted Earning per share :

Basic Earning Per Share



Profit attributable to the Equity Shareholders –(A) (` in Lacs) 22,214.55 26,123.07Basic Weighed average number of Equity Shares outstanding during the year (B)

64,068,659 64,337,807

Nominal value of Equity Shares (`) 10.00 10.00Basic Earning per share (`)-(A)/(B) 34.67 40.60

Diluted Earning Per Share



Profit attributable to the Equity Shareholders as above (` in Lacs) 22,214.55 26,126.07Interest Paid on Potential Equity Shares net of tax impact (` In Lacs) 0.00 0.00Profit considered for Diluted E.P.S. (C) 22,214.55 26,123.07Basic Weighed average number of Equity Shares outstanding during the year as above

64,068,659 64,337,807

Weighted Average Potential Equity Shares for the Year 2,094,000 2,094,000Total weighted average shares considered for Diluted E.P.S. (D) 66,162,659 66,431,807Nominal value of Equity Shares (`) 10.00 10.00Diluted Earning per share (`)-(C)/(D) 33.58 39.32

50. Previous year figures have been regrouped or recasted wherever necessary.




Cash Flow Statement For the year ending 31st March, 2013

(`) Particulars Year ended


31-03-2012A. Cash Flow from Operating Activities

Net Profit before tax and Extra-ordinary items 3,154,247,754 3,570,093,585 Adjustment for :Depreciation 1,001,986,966 814,703,741 Miscellaneous Expenditure W/off 0 2,703,683 (Profit)/ Loss on Sale of Fixed Assets 952,369 (20,325,977)Exchange Fluctuation Reserve (105,322,531) (181,953,518)Interest Received (320,731,659) (323,547,351)Interest Paid 1,306,222,270 891,722,910 Dividend Received (8,038,203) (56,678,796)

1,875,069,213 1,126,624,692 Operating Profit before Working Capital Facilities 5,029,316,967 4,696,718,278 Adjustment for :Trade & Other Receivable (893,720,489) (1,861,513,480)Inventories (2,295,928,623) (2,161,302,966)Miscellaneous Expenditure Incurred During the Year 0 0 Trade Payable 7,068,034,054 5,041,618,284

3,878,384,943 1,018,801,838 Cash generated from operations 8,907,701,909 5,715,520,116 Tax Paid (739,705,076) (752,473,470)Dividend Paid (186,467,010) (373,875,039)

(926,172,086) (1,126,348,509)Net Cash Flow from operating activities 7,981,529,824 4,589,171,607

B. Cash Flow from Investing activitiesPurchase of fixed assets (1,072,519,768) (4,476,816,471)Sale of Fixed Assets 4,599,579 39,635,570 CWIP (35,397,140,033) (21,656,675,401)Purchase of Investments (Net) (1,626,783,526) 264,642,057 Buyback of Shares (196,506,440) 0 Interest Received 320,731,659 323,547,351 Dividend Received 8,038,203 56,678,796

(37,959,580,327) (25,448,988,097)Net Cash used in investing activities (37,959,580,327) (25,448,988,097)

C. Cash Flow from Financing ActivitiesProceed from Preference Share Capital 1,800,000,000 50,000,000 Proceed from Share Warrants / Application Money (Net) 34,548,234 25,095,277 Interest Paid (1,306,222,270) (891,722,910)Proceed from Share Premium / Other Reserves 309,879,755 577,587,221 Proceeds from Minority Interest 223,444,879 539,101,551 Proceeds from borrowings 27,706,156,241 21,867,271,840 Net Cash used in financing activities 28,767,806,839 22,167,332,978 Net Increase/ (Decrease) in Cash and Cash Equivalents (1,210,243,664) 1,307,516,488 Cash & Cash equivalent Opening 8,769,120,284 7,461,603,797 Cash & Cash equivalent Closing 7,558,876,620 8,769,120,284

NOTES:-1 The above Cash Flow statement has been prepared pursuant to clause No 32 of the listing Agreement with Stock

Exchanges and under the indirect method set out in AS-3 issued by the Institute of Chartered Accountants of India.2 Figures in brackets indicate cash outflow. 3 Significant Accounting Policies and Notes on Accounts (Schedule 22) form an integral part of Cash Flow Statement.4 Previous year figures have been regrouped/reclassified to confirm to current year’s classification.

In terms of our report of even date annexed




Notes

10 14Energizing our

Progression with Power Generation

Conquering Frontiers through

our Mining Business

Going Deeper with Mineral Beneficiation.

Reaching Higher.

Scaling New Heights by Offering

Coal Consulting

27

83

37Report of the

Directors

Consolidated Financial

Management Discussion and

Analysis


17 20Integrated Strength

of Ferro-AlloysProviding a Rock Solid Foundation

through Our Products

CSR towards Inclusive Growth

Financial Highlights

Standalone Financial

02Chairman’s

CommuniquéCorporate Overview

06Sponge Iron Unit

– The First Stride in our Odyssey

Extending Value Through Steel –Making Facilities

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Corporate Office: MONNET HOUSE, 11, Masjid Moth, Greater Kailash Part-II, New Delhi-110048E-mail: [email protected] Website: www.monnetgroup.com

Monnet Ispat 2013

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