Corporate Information

Chairman Directors P. K. Khaitan B. Khaitan Naresh Chandra Jamshed J. Irani M. B. N. Rao S. Y. Rajagopalan Umang Kejriwal Mayank Kejriwal Uddhav Kejriwal V. M. Ralli M. K. Jalan R. S. Singh K. Ramanathan Jyoti Jain Lodha & Co. Chartered Accountants Khaitan & Co. Bank of Baroda Bank of India CITI Bank N.A. HSBC Limited HDFC Bank Limited ICICI Bank Ltd. IDBI Bank Ltd. Punjab National Bank Standard Chartered Bank State Bank of India Khardah, West Bengal Haldia, West Bengal Elavur, Tamil Nadu Parbatpur, Jharkhand G. K. Tower 19, Camac Street, Kolkata 700 017 Rathod Colony, P.O. Rajgangpur - 770 017 Dist. Sundargarh, Orissa

Managing Director Joint Managing Director Wholetime Directors

Chief Financial Officer Company Secretary Auditors Solicitors Bankers

Works

Corporate Office Registered Office

Contents
Notice 2 Directors Report 10 Annexure : A to the Directors Report 16 Management Discussion and Analysis 19 Risk Management 29 Corporate Governance 31 Auditors Certificate on Corporate Governance 41 Ten-Year Financial Summary 42 Auditors Report 43 Balance Sheet 48 Profit & Loss Account 49 Cash Flow Statement 50 Schedules 51 Auditors Report on Consolidated Accounts 83 Consolidated Accounts 84 Consolidated Cash Flow 86 Consolidated Schedules 87

Notice
Notice is hereby given that the Fifty Sixth Annual General Meeting of the Company will be held at the Registered Office of the Company at Rathod Colony, Rajgangpur, Dist. Sundergarh, Orissa on Monday, the July 11, 2011 at 11.30 A.M. to transact the following business: 1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2011 and the Profit and Loss Account for the year ended on that date together with the Report of the Board of Directors and the Auditors thereon. To consider declaration of dividend by the Company, as recommended by the Board of Directors for the year ended March 31, 2011. To appoint a Director in place of Mr. Pradip Kumar Khaitan, who retires by rotation and is eligible for re-appointment. To appoint a Director in place of Mr. Binod Khaitan, who retires by rotation and is eligible for re-appointment. To appoint a Director in place of Mr. Uddhav Kejriwal, who retires by rotation and is eligible for re-appointment. To appoint a Director in place of Mr. Vyas Mitre Ralli, who retires by rotation and is eligible for re-appointment. To appoint Statutory Auditors and to fix their remuneration. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT pursuant to Sections 269, 309, 311 and other applicable provisions, if any, of the Companies Act, 1956 approval is hereby accorded to the re-appointment of Mr. Umang Kejriwal, Managing Director for a further period of 5 years effective from April 01, 2012 on the remuneration namely, Rs.5,00,000/- per month in addition to the commission and perquisites as set out in the explanatory statement annexed to this notice." 9. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT pursuant to Sections 269, 309, 311 and other applicable provisions, if any, of the Companies Act, 1956 approval is hereby accorded to the re-appointment of Mr. Mayank Kejriwal, Joint Managing Director for a further period of 5 years effective from April 01, 2012 on the remuneration namely, Rs. 5,00,000/- per month in addition to the commission and perquisites as set out in the explanatory statement annexed to this notice." 10. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution:

2. 3. 4. 5. 6. 7. 8.

Special Business:

"RESOLVED THAT in partial modification of the earlier Resolution passed by the Members of the Company in the Annual General Meeting held on August 01, 2008, the consent of the Company be and is hereby accorded, in terms of Section 293(1)(d) and other applicable provisions, if any, of the Companies Act, 1956, to the Board of Directors of the Company and/or a duly authorized Committee of the Board for the time being exercising the powers conferred by the Board of Directors ("the Board") for borrowing, from time to time, any sum or sums of moneys on such terms and conditions and with or without security, as the Board may think fit which, together with the moneys already borrowed by the Company (apart from the temporary loans obtained or to be obtained from the Company's bankers in the ordinary course of business) may exceed the aggregate for the time being of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose, provided that the total amount of money/moneys so borrowed by the Board shall not at any time exceed the limit of Rs. 2,500 Crores (Rupees Two Thousand Five Hundred Crores Only). "RESOLVED FURTHER THAT the Board be and is hereby authorized to do and perform all such acts, deeds, matters and things as may be necessary, desirable or expedient for the purpose of giving effect to this Resolution." 11. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT in terms of sections 255 and 256 of the Companies Act, 1956 and other applicable provisions of any laws, Mr. Umang Kejriwal, who is presently a director and is also Managing Director of the Company, shall, unless resolved otherwise, be a director, who will not be liable to retire by rotation, for life." 12. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT in terms of sections 255 and 256 of the Companies Act, 1956 and other applicable provisions of any laws, Mr. Mayank Kejriwal, who is presently a director and is also Joint Managing Director of the Company, shall, unless resolved otherwise, be a director, who will not be liable to retire by rotation, for life."

13. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT in terms of sections 255 and 256 of the Companies Act, 1956 and other applicable provisions of any laws, Mr. Uddhav Kejriwal, who is presently Wholetime Director of the Company, on being appointed as a Director at the meeting, he shall, unless resolved otherwise, be a director, who will not be liable to retire by rotation, for life." 14. To consider and if thought fit, to pass with or without modifications, the following Resolution as Special Resolution: "RESOLVED THAT in terms of sections 269, 309, 311 and other applicable provisions, if any, of the Companies Act, 1956 approval is hereby accorded to amend the present terms of appointment of Mr. Uddhav Kejriwal, Wholetime Director, relating to Basic Salary, Special Allowance and encashment of leave, as set out in the explanatory statement annexed to this notice." By Order of the Board of Directors For Electrosteel Castings Limited Jyoti Jain Company Secretary May 12, 2011 Kolkata NOTES : (a) The relevant details in respect of item Nos. 3 to 6, 8 and 9 above pursuant to Clause 49 of the Listing Agreement are annexed hereto. Every shareholder entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him/her and such proxy need not be a shareholder. The Proxy forms should, however, be deposited at the Registered Office of the Company not later than 48 hours before commencement of the meeting. Corporate Members intending to send their authorised representatives to attend the meeting are requested to send a certified copy of the Board Resolution authorizing their representative to attend and vote on their behalf at the Meeting. The Register of Share Transfer of the Company
2 3

(b)

(c)

(d)

will remain closed for accepting Share Transfer applications from July 05, 2011 to July 11, 2011 (both days inclusive). (e) The dividend on equity shares, if declared, shall be paid to those members whose names appear in the Register of Members of the Company as on July 11, 2011. With respect to shares held in electronic form the dividend will be payable to the beneficial owners of the shares as on the closing hours of business on July 04, 2011 as per details furnished by the Depositories for this purpose. The Unclaimed dividend for the financial year 2002-2003 has been transferred by the Company to the Investor Education & Protection Fund constituted by the Central Government under Section 205A & 205C of the Companies Act, 1956. Members who have not received their dividend paid by the Company in respect of earlier years are requested to check with the Company's Registered Office at Rathod Colony, Rajgangpur-770017 (Orissa). Members are requested to note that in terms of Section 205C of the Companies Act, 1956 any dividend unpaid / unclaimed for a period of 7 years from the date when it first became due for payment is required to be transferred to the Central Government to the credit of the Investor Education & Protection Fund. Thereafter, no claim shall be entertained in respect of the dividend transferred to the Fund. Members desirous of getting any information in respect of the Accounts of the Company are requested to send their queries in writing to the Company at the Registered Office so as to reach at least 7 days before the date of the meeting so that the required information can be made available at the meeting. Members / Proxies attending the meeting are requested to bring their copy of the Annual Report for reference at the meeting as also the Attendance Slip duly filled in for attending the meeting. Shareholders are requested to provide particulars of their bank account details for availing 'Electronic Clearing Service' (ECS) facility. Further, ECS facility is also available to the beneficial owners of shares in demat form. Those desirous of availing the facility may provide their mandate for physical holding to the Company and for demat holding to their DP in writing. Equity Shares of the Company fall under the category of compulsory demat trading by all investors. Considering the advantages of scripless trading, shareholders are requested to consider dematerialisation of their shareholding so as to avoid inconvenience. Shareholders are requested to give us their valuable suggestions for improvement of our investor services.

(f)

(g)

(h)

(i)

(j)

(k)

(As required by Section 173 of the Companies Act, 1956) Item No. 8 & 9 - Reappointment of Mr. Umang Kejriwal & Mr. Mayank Kejriwal as Managing Director and Joint Managing Director respectively. Mr. Umang Kejriwal and Mr. Mayank Kejriwal were re-appointed as Managing Director and Jt. Managing Director respectively for a period of 5 years from April 01, 2007. The Board at its Meeting held on May 12, 2011 re-appointed Mr. Umang Kejriwal and Mr. Mayank Kejriwal for a further period of 5 years with effect from April 01, 2012 on the remuneration of Rs.5,00,000/- per month for each of them in addition to the commission and perquisites as per the terms as mentioned herein subject to the approval of the Shareholders at the Annual General Meeting of the Company. Remuneration: (I) (II) Salary: Rs. 5,00,000 per month. Commission: Commission on net profits as may be decided by the Board of Directors for each financial year based on the net profits of that year and taking into account all other factors. a) Medical Benefits: Reimbursement of actual expenses incurred for self and family. b) Leave: As per applicable Staff Rules of the Company. c) Accommodation: Furnished Residential accommodation including gas, electricity and water. d) Club Fees: Fees of a maximum of two clubs excluding admission & life membership fees. e) Car and Telephone: Provision of a car for use on Company's business and telephone at residence. These will not be considered as perquisites. However, personal long distance calls on telephone and use of car for private purpose shall be billed by the Company. j) f) The Personal Accident & Term Insurance: Premium not to exceed Rs. 15,000/- per annum. g) Encashment of Leave: In accordance with the Company's Rules & Regulations. h) Contribution to Retiral Benefit Funds: i. ii. Company's contribution to Provident Fund as applicable to other employees. Gratuity in accordance with the Gratuity Fund Rules not exceeding half a month's salary for each completed year of service.

EXPLANATORY STATEMENT

i)

Leave Travel Concession: Return passage for Mr. Umang Kejriwal and Mr. Mayank Kejriwal and their family in accordance with the Rules specified by the Company. For the purpose of calculation of such monetary value, the perquisites shall be valued as per Income Tax Rules, wherever applicable and in the absence thereof, at cost. Explanation: For the purpose of eligibility of perquisites "family" means the spouse, the dependant children and dependant parents of the Whole time Director. Minimum Remuneration: In the event of absence or inadequacy of profits of the Company in any financial year, Mr. Umang Kejriwal and Mr. Mayank Kejriwal will be entitled to receive such minimum remuneration as is permissible under Section II of Part II of Schedule XIII to the Act.

(III) Perquisites and Amenities:

As per the provisions of Sections 198, 269 and 309 read with Schedule XIII to the Companies Act, 1956, the appointment of and remuneration to Wholetime Director requires the approval of the shareholders in General Meeting by way of a Special Resolution.
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The Board of Directors recommends the resolutions for your approval as set out under item no. 8 & 9. Mr. Umang Kejriwal, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal may be considered as interested in the above appointments. None of the Directors is concerned or interested in the above appointment. The Explanatory Statement together with the accompanying notice may also be regarded as an abstract of the terms of re-appointment of Mr. Umang Kejriwal and Mr. Mayank Kejriwal and Memorandum of interest of Directors u/s. 302 of the Companies Act, 1956. Item No.10 - Limit under Section 293(1)(d) As per the provisions of Section 293(1)(d) of the Companies Act, 1956, the Board of Directors of the Company cannot, except with the permission of the Members in General Meeting, borrow moneys in excess of the aggregate of the paid-up capital of the Company and its free reserves. The shareholders of the Company, vide Resolutions passed at the Annual General Meeting held on August 01, 2008 approved the borrowing limits of Rs.1,500 Crores in terms of Section 293(1)(d) of the Companies Act, 1956. The increasing business operations and future growth plans of the Company would necessitate restructuring of the borrowing limits by authorizing the Board of Directors to borrow moneys which may exceed at any time the aggregate of the paid-up capital of the Company and its free reserves, but not exceeding Rs.2,500 Crores (in place of the existing limit of Rs.1,500 Crores). These upward revisions in the borrowing limits would require your approval under the provisions of Sections 293(1)(d) of the Companies Act, 1956. The Board of Directors recommends the resolution for your approval. None of the Directors is either interested or concerned (save and except to the extent of their shareholding in the Company, if any) in these resolutions. Item No.11 to 13 - Directors not liable to Retirement by Rotation At present there are Twelve Directors on the Board. As per the provisions of Section 255 of the Companies Act, 1956 atleast two-third of the total Directors shall be the Directors whose period of office is liable to determination by retirement by rotation. To comply with these provisions, since two-third of total number of Directors comes to eight who are required to retire by rotation, so long as the total number of director of the company is twelve, the company could have four directors who will not be required to retire by rotation. In view of this, it is now proposed that unless resolved otherwise, Mr. Umang Kejriwal, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal may be the Directors who will not be liable to retire by rotation, till their life. The Board of Directors recommends the resolutions for your approval. None of the Directors expect Mr. Umang Kejriwal, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal is interested or concerned in these resolutions. Item No. 14 Amendment of terms of appointment of Mr. Uddhav Kejriwal The Board at its meeting held on May 7, 2007 re-appointed Mr. Uddhav

Kejriwal for a further period of 5 years with effect from June 16, 2008. Further, w.e.f. June 16, 2011, the Board at its meeting held on May 12, 2011 approved revision of exisitng terms of Salary from Rs. 1,50,000 per month in the grade of 1,50,000-25,000-2,50,000 to Rs. 2,50,000 per month in the grade of 2,50,000-50,000-3,00,000. The Board w.e.f. June 16, 2011 also revised existing Special Allowance of Rs. 44,500 per month in grade of 44,500-3250-57,500 to Special Allowance of Rs. 75,000 per month in grade of 75,000-25,000-1,00,000. Further, w.e.f. June 16, 2011, the Board revised the existing terms of Encashment of leave from At the end of tenure of office in accordance with the Companys Rules to In accordance with the Companys Rules & Regulations. The Board of Directors recommends the resolutions for your approval. None of the Directors except Mr. Umang Kejriwal, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal is interested or concerned in these resolutions.

ANNEXURE AS REFERRED TO IN THE NOTES ON NOTICE

Information pursuant to Clause 49 of the Listing Agreement regarding appointment of new Director or reappointment of a Director. Mr. Pradip Kumar Khaitan Mr. Pradip Kumar Khaitan is Chairman of the Company and has been a director of the Company since 1972. He is a B.Com, LL.B and Attorney-at-Law (Gold Medalist) and has experience in the fields of commercial and corporate law, tax law, arbitration, foreign collaborations, mergers & acquisitions, restructuring and de-mergers. He is a member of the Bar Council of India, the Bar Council of West Bengal and the Indian Council of Arbitration. He is a senior most partner of Khaitan & Co., Advocates & Solicitors firm. Mr. Khaitan is also Director of several limited companies as per details given below:
Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Name of the Company CESC Ltd. Dalmia Bharat Enterprises Ltd. Dhunseri Petrochem & Tea Ltd. Emaar MGF Land Ltd. Gillanders Arbuthnot & Co. Ltd. Graphite India Ltd. Hindustan Motors Ltd. India Glycols Ltd. OCL India Ltd. Pilani Investment & Industries Corporation Ltd. Suzlon Energy Ltd. TCPL Packaging Ltd. VISA Steel Ltd. Woodlands Multispeciality Hospital Ltd. Nature of Interest Director Director Director Director Director Director Director Director Director Director Director Director Director Director Chairmanship / Membership of Committee NIL NIL NIL Member-Shareholders and Investors Grievance Committee Member-Shareholders and Investors Grievance Committee NIL Member-Investors Grievance Committee NIL NIL Member- Audit Committee Member- Audit Committee Member- Investor Relations Committee NIL NIL NIL 6 7

Mr. Pradip Kumar Khaitan holds 1,000 equity shares in the Company as Joint holder. The Board of Directors commends the reappointment. Mr. Binod Khaitan Mr. Binod Khaitan is a qualified B.Com., M.B.A. (Geneva), a retired businessman with wide experience in industries such as plywood, tea, jute, tyre, tube etc. Presently he is associated with various charitable and social organisations like Rotary Club, Vivekanand Kendra etc. He has been on the Board of the Company as a non-executive director since 1975 and currently holds directorship of the following limited Company as per detail given below:
Sl. No. 1. 2. Name of the Company The Phosphate Co. Ltd Electrosteel Steels Ltd. Nature of Interest Director Director Chairmanship / Membership of Committee NIL NIL

Mr. Binod Khaitan holds 2,000 equity shares in the Company. The Board of Directors commends the reappointment. Mr. Uddhav Kejriwal Mr. Uddhav Kejriwal is Wholetime Director of the Company. After joining in 2003, he has made a major contribution for the creation of the Haldia facility having 2.95 Lakhs TPA coke making capacity, 60,000 MT sponge Iron capacity and 12 MW Power Plant. He oversees all financial affairs and commercial issues pertaining to the business of the Company. Mr. Kejriwal is also Director of several limited Companies as per details given below:
Sl. No. 1. 2. 3. 4. Name of the Company Malay Commercial Enterprises Ltd. Murari Investments & Trading Company Ltd. Sri Gopal Investments Ventures Ltd. Badrinath Industries Ltd Nature of Interest Director Director Director Director Chairmanship / Membership of Committee NIL NIL NIL NIL

The Board of Directors commends the reappointment. Mr. Vyas Mitre Ralli Mr. Vyas Mitre Ralli is Wholetime Director of the Company. He is a qualified B.Tech (Hons.) in Metallurgical Engineering from Indian Institute of Technology, Kharagpur. He joined the Company in April 1972 and currently is in-charge of Plants at Khardah and Haldia. He also oversees all the production and development at LIL. He has been appointed as a Wholetime Director on December 21, 2009. He does not hold directorship of any other Company. The Board of Directors commends the reappointment.

Mr. Umang Kejriwal Mr. Umang Kejriwal is Managing Director of the Company and has 35 years' experience in the Pipe manufacturing industry. From 1972 to 1975 he was actively engaged in the sale of the Company's products through his role as an Executive Director of the Company's then sole selling agents, Electrocast Sales India Ltd. He was appointed an Executive Director of the Company in 1975 and was subsequently promoted to Deputy Managing Director in 1979. In 1981, he was appointed as Managing Director of the Company. He is visionary and contributed to the growth of the Company. Mr. Kejriwal is also Director of several limited Companies as per details given below:
Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. Name of the Company Electrosteel Thermal Power Ltd. Electrosteel Thermal Coal Ltd. Electrosteel Steels Ltd. Uttam Commercial Co. Ltd. G.K. Investments Ltd. Electrocast Sales India Ltd. Escal Finance Services Ltd. Utkal Investments Ltd. Nature of Interest Director Director Director Director Director Director Director Director Chairmanship / Membership of Committee NIL NIL NIL NIL NIL NIL NIL NIL

The Board of Directors commends the reappointment. Mr. Mayank Kejriwal Mr. Mayank Kejriwal is Joint Managing Director of the Company. He was appointed as an Executive Director of the Company in 1977. In 1981, he was appointed as Joint Managing Director of the Company. Mr. Kejriwal has 35 years' experience in the Pipe manufacturing industry. Mr. Kejriwal is also Director of several limited Companies as per details given below:
Sl. No. 1. 2. 3. 4. 5. 6. 7. Name of the Company Lanco Industries Ltd. Electrosteel Thermal Power Ltd. Escal Finance Services Ltd. Electrosteel Thermal Coal Ltd. Murari Investment & Trading Co.Ltd. Electrocast Sales India Ltd. Malay Commercial Enterprises Ltd. Nature of Interest Managing Director Director Director Director Director Director Director Chairmanship / Membership of Committee NIL NIL NIL NIL NIL NIL NIL

The Board of Directors commends the reappointment. By Order of the Board of Directors For Electrosteel Castings Limited Jyoti Jain Company Secretary May 12, 2011 Kolkata
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Directors Report
To, The Members

To The Shareholders

Your Directors take pleasure in presenting their Fifty Sixth Annual Report and Audited Accounts of the Company for the year ended March 31, 2011.
Financial Results Sl.no. Particulars i. ii. iii. iv. v. Gross Turnover Net Turnover Other Income Total Revenue Earning Before Interest, Depreciation, Taxation and Amortisation (EBITDA) Interest (Net) Depreciation Profit before Taxation (PBT) Tax including Deferred Tax Profit after Taxation (PAT) Profit brought forward from previous year Amount available for appropriation Appropriation Transfer to Debenture Redemption Reserve Transfer to General Reserve Proposed Dividend including tax thereon Total xiii. Surplus carried to Balance Sheet Rs. in Crores FY 2010-11 FY 2009-10 1749.67 1711.43 70.33 1781.76 1466.64 1428.77 125.42 1554.19

316.98 47.68 54.41 214.89 60.25 154.64 101.02 255.66

404.29 44.07 52.30 307.92 101.63 206.29 87.60 293.89

vi. vii. viii. ix. x. xi. xii.

22.00 100.00 47.47 169.47 86.19

27.00 118.24 47.63 192.87 101.02

The Company's turnover has increased from Rs. 1466.64 crores in 2009-10 to Rs. 1749.67 crores in 2010-11 representing an increase of 19.30 %.

Dividend Your Directors recommend a dividend @ Rs.1.25 per share i.e.125% for the year ended March 31, 2011.The dividend, on approval by members, will absorb Rs. 47.47 crores, inclusive of tax of Rs. 6.62 crores on distribution of dividend. Operations The Company's turnover has increased from Rs. 1466.64 crores in 2009-10 to Rs. 1749.67 crores in 2010-11 representing an increase of 19.30 %. Export sales showed an increase from Rs. 507.15 crores to Rs. 623.06 crores, an increase of 22.86% owing to higher proportion of sales in the export market. The increase in turnover is mainly due to increase in sales quantity of DI Pipes by 13.46%. Successful commissioning of Blast Furnace has contributed to increase in availability of liquid metal by 15.78%. The Company's profit (PBT) for the year was Rs. 214.89 crores as against Rs. 307.92 crores. The decline was due to steep rise in raw materials prices mainly of iron ore & coal. During the year D.I. Pipes production was 2,70,327 MT as against 2,35,463 MT in the previous year, showing an increase of 14.81%. This is highest ever exceeding the earlier best by about 7%. Production of D.I. fittings was higher by 7.58% over the previous year (from 4,683 MT to 5,038 MT). The production of CI Pipes at Elavur was 30,199 MT as against 40,651 MT in the previous year due to the customer's preference for DI Pipes over CI Pipes. Cost reduction and backward integration Blast Furnace - Productivity of Blast Furnace has been improved after relining. Usage of Sintered product has been increased successfully

to reduce the dependency on Lump Ore. Coal injection system in the Blast Furnace has been improved to reduce Coke rate. Coke oven plant -Production improved to meet the Blast Furnace requirement. Your Company is now self sufficient. Import of Coke is not required. Pipe & Fittings - Apart from increase in Production and Productivity, special attention has been given to increase Energy efficiency. Further Product variety has been added to meet newer requirements from International and enlightened Indian customers. Credit Rating Your Company continues to enjoy the rating for long-term/medium term debt and various Bank facilities as "CARE AA "(Double A ) including the Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 300 crores as at 31.03.2011). "CARE AA" rating indicates high safety for timely servicing of debt obligations and very low credit risk. The rating for the short-term debt/facilities sanctioned and/or availed by the Company has been assigned as "PR1 +" which is the highest rating in the category and indicates a strong capacity for timely payment of short-term debt obligations and lowest credit risk. Future Prospects Government's thrust on the infrastructure facilities is already showing continuous increasing demand for D. I. Pipes in the domestic market. However, additional capacity installed by new entrants and peer group companies may intensify the competition in the domestic market. There is constant endeavor by your Company for increasing the share in existing foreign markets and enter new countries.
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Directors Report (Contd.)

Corporate Governance Your Company has fully complied with the requirements of Clause 49 of the Listing Agreement regarding Corporate Governance. A report on Corporate Governance Practices, the Auditors' Certificate on compliance of mandatory requirements thereof and Management Discussion and Analysis are given as annexure to this report. Directors' responsibility statement Your Directors hereby confirm : a) that in the preparation of annual accounts, containing financial statements for the year ended March 31, 2011 the applicable accounting standards have been followed. that the stated accounting policies have been consistently followed to give a true and fair view of the state of affairs of the Company and the profit for that period. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. the annual accounts have been prepared on a going concern basis.

b)

c)

d)

Energy, Technology and Foreign Exchange Statement containing necessary information as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto as annexure 'A'. Employees The Board of Directors expresses its appreciation for the cordial relations and outstanding contribution made by the employees of the Company.

Your Company continues to enjoy the rating for longterm/medium term debt and various Bank facilities as "CARE AA "(Double A ) including the Non-Convertible Debentures (NCDs) of the Company.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, as amended, form part of this report. However, pursuant to Section 219(1)(b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all the shareholders of the Company, excluding the aforesaid information. Those members desirous to obtain such particulars may write to the Company Secretary at the Registered Office of the Company. Subsidiary, Joint Venture and Associate Companies As on March 31, 2011, your Company has the following Subsidiaries, Joint Ventures and Associate Companies.
S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Name of the Company Electrosteel Castings (UK ) Limited Electrosteel Europe S.A. Electrosteel Algerie SPA Singardo International Pte Limited Electrosteel USA, LLC WaterFab LLC North Dhadhu Mining Company Pvt Ltd Domco Pvt Limited Lanco Industries Limited Electrosteel Steels Limited (Formerly Electrosteel Integrated Ltd.) Electrosteel Thermal Power Limited STATUS Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture Joint Venture Associate Associate Associate

The statement pursuant to Section 212 of the Companies Act 1956, in respect of the above mentioned subsidiaries are attached in the Annual Report. In terms of the general exemption granted by Government of India, Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated February 08, 2011, the Board of Directors of your Company in its meeting held on May 12, 2011 given consent for not attaching the copies of the balance sheet, profit and loss account, reports of the Board of Directors and the Auditors' Reports of the subsidiary companies for the year ended March 31, 2011. However, a statement containing brief financial details of the Company's subsidiaries for the year ended March 31, 2011 is included in the Annual Report, as to comply with the terms of the exemption letter. The Company undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to members of the Company and subsidiary companies seeking such information at any point of time. Moreover, the annual accounts of the subsidiary companies will also be kept for inspection for members at the Company's Corporate Office and at the Corporate Office of the subsidiary companies concerned.

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Directors Report (Contd.)

Greenfield Project by an Associate Company M/s Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited) (ESL) ESL is setting up a 2.2 MTPA Integrated Steel & D I Pipe project at Siyaljuri in Bokaro District in the State of Jharkhand. The project envisages production of 1.20 MTPA long steel products viz. bar & rods, 0.33 MTPA of D I pipes and balance 0.677 MTPA of other steel products. The project is appraised by the State Bank of India as the lead bank. The ESL plant will be based on Blast Furnace Route and would have various technological facilities including of Sinter Plant, Coke Oven Plant, Pellet Plant, Blast Furnace, Basic Oxygen Furnace, Billet Casters, Rebar & Wire Rod Mill. Implementation of the project is progressing satisfactorily and ESL has acquired the required land, received all statutory clearances, and placed almost all the orders for supply of plant & machinery. One of the Blast Furnaces of the Company was commissioned in September, 2010, which was temporarily shut down for the purpose of synchronization with other units and has since restarted in March, 2011. The construction work of the other facilities at site is in full swing. Awards JIPM-Japan has given 'AWARD FOR EXCELLENCE IN CONSISTENT TPM COMMITMENT' for the year 2010 in recognition of your Company's outstanding achievement. EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for star performers as large enterprise in the product group of sanitary and Industrial Castings for our outstanding contribution to engineering exports during the year 2008-09.

JIPM-Japan has given 'AWARD FOR EXCELLENCE IN CONSISTENT TPM COMMITMENT' for the year 2010 in recognition of your Company's outstanding achievement.

Consolidated Financial Statements Pursuant to Clause 41 of the Listing Agreement entered into with the stock exchanges, the Board of Directors has pleasure in attaching the Consolidated Financial Statement prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India. Auditors and Auditor's Report M/s. Lodha and Company, Char tered Accountants, statutory auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting of the Company. They have offered themselves for reappointment as statutory auditors and confirmed that their appointment, if made, will be within the prescribed limits under section 224(1B) of the Companies Act, 1956. There are no qualifications or adverse remarks in the Auditors' Report which require any clarification/explanation. The Notes to Accounts forming part of the financial statements are self explanatory and needs no further explanation. Directors Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Mr. Uddhav Kejriwal and Mr. Vyas Mitre Ralli, Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

Acknowledgement Your Directors take this opportunity to thank the Financial Institutions, Banks, Government Authorities, Customers, Shareholders, Investors, employees and other stakeholders for their continued trust and support to the Company.

On behalf of the Board UMANG KEJRIWAL Managing Director UDDHAV KEJRIWAL Wholetime Director

Kolkata May 12, 2011

14

15

Annexure A

To Directors Report

CONSERVATION OF ENERGY a) Energy conservation taken : n In the major shut down, all in-effective transparent sheets were replaced and better quality sheets were placed in an effective way to get the advantage of full day light. This resulted in an energy saving benefit as now no overhead lamps are kept on during day time. n Light sensors have been fitted to automatically switch off street lights in one section of the factory at the sense of day break or switches on just before night fall. After seeing the success of the same most of the plant will be covered. n Upgradation of pulverized coal injection system has resulted in reducing the consumption of the coke. n With continual focus in improving the energy utilization, work practice changes with some modifications in the Induction furnaces has resulted in substantial reduction in power consumption per metric ton of liquid metal processing. b) Additional investment and proposals, if any, being implemented for reduction of consumption of energy. n Capacitors are being installed in phases to improve the overall power factor of the plant which will lead to less power consumption. In beginning of the financial year the power factor was about 0.92 and after installation of few capacitors it is currently now 0.938. Projected that end of this financial year we will reach 0.95 n Online Maximum demand display system is being installed to monitor and control the same to achieve lower energy cost.

New approvals from East European countries like Czechoslovakia, Croatia and Middle East country Kuwait are helping the Company entering new marketing areas.

n Though we have already achieved substantial reduction in the LDO/fossil fuel usage, further improvement has been planned for more effective usage of Blast Furnace gas further reducing dependency on LDO/fossil fuel. c) Impact of measures of (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. Above have already resulted in improvement of energy consumption as is evident from the reflection thereof in Form A d) Total energy consumption & energy consumption per unit of production. As per FORM - A attached TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT (R & D) To continue as the market leader, the Company is increasing its focus to innovate new ideas in product, process and environment improvement. Some of the R&D initiatives taken by the Company during the year to improve performance of the product and to increase the market share are given below. n The Company has developed new linings of DI Pipes for US market for sewerage conveyance certified by the US applicator. n Your Company is partnering with the Industrial Institute Partner Cell of Jadavpur University, to evaluate the performance of special coatings under high corrosive environment by simulating the condition in the laboratory. n The Company has also developed it's own Corrosion Resistance Testing Laboratory to

evaluate the performance of the Coatings and Linings. n New tests are being added at in house laboratory as well as at Jadavpur University. n Development of different Restrained Pipe Joints for difficult laying conditions. n Company has already developed Pipes and Fittings as per AWWA specification for USA market and presently expanding the size range. n The different certification from the world premier certifying agencies like NSF, UL (Underwriter Laboratory), FM (Factory Mutual) continuously assures the customers about the world class quality of the Company's products. n New approvals from East European countries like Czechoslovakia, Croatia and Middle East country Kuwait are helping the Company entering new marketing areas. FOREIGN EXCHANGE EARNINGS & OUTGO a) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products & services and export plans : Continuing efforts are made to increase the exports by exploring, creating and developing new markets, setting up Subsidiaries, Joint Ventures and Branches in foreign countries. b) Total foreign exchange used and earned: Foreign exchange used - Rs. 541.68 crores Foreign exchange earned - Rs. 583.78 crores
16 17

Form - A Form for disclosure of particulars with respect to conservation of energy : 2010-2011 (a) Power & Fuel
Current Year ended 31.03.11 1. Electricity (a) Purchased Units Total Amount Rate/Unit (b) Own Generation i) Though diesel Generator Units Unit/lire of Diesel Oil Cost/Unit variable ii) Though Steam Turbine Generator* Units Unit/lire of Diesel Oil Cost/Unit Variable 2. Furnace Oil incl. Diesel Quantity Total Amount Average Rate 3. Coke & Coal Quantity Total Amount Average Rate 4. Coal Gas Quantity Total Amount Average Rate Kwh 000 140915.80 Rs. Lakhs 7169.69 Rs. 5.09 Kwh 000 Kwh Rs. Kwh 000 Kwh Rs. K.L. Rs. Lakhs Rs./KL M.T. Rs. Lakhs Rs./MT NM3 000 Rs. Lakhs Rs./NM3 2235.78 3.32 11.65 95061.31 157.27 0.29 9774.33 3642.76 37268.70 294482.00 29321.91 9957.12 9072.02 833.11 9.18 Previous Year ended 31.03.10 129379.66 5787.30 4.47 1835.74 3.32 10.12 59265.61 227.24 0.14 9883.43 3029.09 30648.14 284123.42 27327.58 9618.21 8501.86 639.78 7.53

*Includes 60532.00 (previous year 33139.60) kwh surplus power exported to Grid.

(b) Consumption per Unit of Production (MT)

Pipes and Allied Products Electricity (KWH) Furnace Oil (Ltr.) Coke & Coal (Kg.) Coal Gas ( NM3 ) 561 (535) 31 (34) 930 (966) 29 (29)

Management
OVERVIEW Your Company is engaged in the business of manufacturing Ductile Iron Pipes, Fittings and Cast Iron Pipes. Additionally, your Company also undertakes turnkey solutions for water transportation and sewerage management, which includes manufacturing DI Pipes, supplying and laying various types of pipes, operating the system and transferring to the owners. INDUSTRY OUTLOOK To transport sufficient quantities of water from different sources to treatment plants with minimal loss and then transport it to the end users, a strong reliable transport medium is required. Earlier, the only major means available for the use in water transportation application (supply and sanitation) were the CI Pipes. The DI Pipes were first introduced in 1955, which has since been recognized as the industry standard for modern water and wastewater systems. DI Pipes are preferred over CI Pipes on account of being lighter, stronger, more durable and cost efficient these being corrosion resistant, ductile, etc. The DI Pipes also have higher water carrying capacity. The DI Pipes can also be laid out much faster and are virtually maintenance free. In addition, DI Pipes require less support and provide greater flow area as compared to pipes made from other materials. Ductile Iron pipes have a current demand of 800,000 tonnes p.a. in India out of which only 500,000 tonnes p.a. is produced locally. Most of the pipes are consumed primarily by State and the Central government projects for distributing drinking water.

The over reliance on ground water for rural water supply has resulted in twin problem of sustainability and water quality and suggested a shift to surface water source for tackling this issue. This will result in substantial increase in requirement of pipes.

Discussion and Analysis

India, with approximately 16% of the world's population, is estimated to have access to only 4% of the world's water resources. Government of India has in recent years taken the drinking water supply as one of the main thrust area. The involvement of international and multilateral development finance institutions in funding and developing a comprehensive water transportation infrastructure in India, together with the successful implementation of water storage and distribution projects has resulted in the development of a comprehensive water resources management policy and the implementation of other related projects. 9 Demand drivers for DI Pipes The following factors would drive the demand for DI Pipes : 1. Thrust of the government to provide drinking water and sanitation to 100% of the population and make funds available to achieve it. 2. The need to conserve water and reduce leakage. The need to focus on life cycle cost rather than initial cost and to consider inconvenience to public in replacement of pipes. 3. The over reliance on ground water for rural water supply has resulted in twin problem of sustainability and water quality and suggested a shift to surface water source for tackling this issue. This will result in substantial increase in requirement of pipes. 4. Expectations and assertions from people all over for a strong water supply and good drainage system.
18 19

9 2010-11 vs. 2009-10 The Company's turnover has increased from Rs. 1466.64 crores in 2009-10 to Rs. 1749.67 crores in 2010-11 representing an increase of 19.30 %. Export sales showed an increase from Rs. 507.15 crores to Rs. 623.06 crores, an increase of 22.86% owing to higher proportion of sales in the export market. The increase in turnover is mainly due to increase in sales quantity of DI Pipes by 13.46%. Successful commissioning of Blast Furnace has contributed to increase in availability of liquid metal by 15.78%. The Company's profit (PBT) for the year was Rs. 214.89 crores as against Rs. 307.92 crores. The decline was due to steep rise in raw materials prices mainly of iron ore & coal. 9 Ductile Iron Pipes The production of DI pipes increased during the year from 2,35,463 MT last year to 2,70,327 MT i.e. by 14.81%. Year 2008-09 2009-10 2010-11 DI Pipe production 2,51,823 MT 2,35,463 MT 2,70,327 MT

The increase in production was mainly due to improved productivity and debottlenecking in the manufacturing facilities. 9 Cast Iron Pipes Production was lower at 30,199 MT against 40,651 MT in the previous year. This is due to reduction in demand as an effect of preference of DI Pipes over Cast Iron Pipes. 9 DI Fittings & Accessories Production of DI Fittings increased during the year from 4,683 MT last year to 5,038 MT. Company improved the

The focus on exports is clearly established by receiving once again the Engineering Export Promotion Council, Eastern Region's Export Excellency Award for 2008-09, for the 7th year running.

performance of the division by targeting more value added products and higher exports to niche markets. 9 Raw Materials Management Your Company's manufacturing facilities are spread across four locations in India. Presently, the business model consists of fully integrated production facilities which include Coal Mines, Sinter Plant, Coke Oven Plant, Blast Furnace, Pig Iron Plant, Sponge Iron Plant and Captive Power Plant. The integrated manufacturing facility model helps your Company to minimize the production cost as your Company strongly believes that cost competitiveness is the key component of the success. Your Company continuously endeavors to improve the cost competitiveness by adopting various innovative, cost saving measures in the operations. Over the years, your Company has realized that to remain cost competitive, the Company must have control over its basic raw material cost and accordingly your Company initiated the process to get Coal & Iron Ore Mine allocation. In 2005, your Company has been allocated coking coal mine facilities in the State of Jharkhand and is in process of developing it, thus enabling the Company to source prime coking coal from this mine. As the Indian coal has a higher percentage of ash, your Company has also set up a Washery of 2 million TPA to reduce the ash from coking coal which will soon start yielding benefits to your Company. Your Company has also been allocated an Iron Ore Mine at Kodolibad in the State of Jharkhand. The Company expects to receive the consent

from MOEF and on receipt of this consent the mining lease would be signed and mine would be developed. Once this mine is developed, it would help your Company in reducing the production cost further. Your Company is also developing the Dolomite mine at Chandrapura, which will supply low silica high grade Dolomite for its operation. To facilitate the raw-material movement, private railway sidings of your Company are in the final stage of commissioning and are likely to be operational soon. 9 Power Plant 12 MW Power Plant at Haldia has contributed 60.53 million units to SEB grid in place of 33.14 million units last year. Generation was higher due to improved operation of Coke Oven Battery nos. 1 and 2 after completion of their capital repair, leading to improved temperature of the waste gases going into the boilers. Power plant is an ongoing CDM project registered with UNFCCC. 9 Captive Coke Oven Plant During the year, the Coke Oven Plant at Haldia produced 1,64,428 MT of Metallurgical Coke against 1,40,922 MT last year for captive consumption in Blast Furnace at Khardah Works. 9 Export This year again your Company maintained it's thrust in exports by entering new markets like South America as well as consolidated its dominant position in the existing markets. The Company is strengthening its position in export
20

21

Management Discussion (Contd.)

market inspite of strong competition from new players and the ongoing crisis in the European markets, which resulted in increase in exports by approx. 16% in volume compared to last year. A new approval like FM (for "mm" pipes and fittings) was obtained to add to the existing range of approvals, to establish the quality of the products. The focus on exports is clearly established by receiving once again the Engineering Export Promotion Council, Eastern Region's Export Excellency Award for 2008-09, for the 7th year running. 9 Turnkey Projects Your Company also provides turnkey solutions to its customers in the areas of water infrastructure and sewerage management. It undertakes the activities of engineering, procurement, construction operations and management with respect to water distribution and sewerage systems, across the country. This turnkey activity also involves supply and laying of substantial quantities of the Company's pipes and fittings and thus adds to business opportunities for your Company. 9 Quality Customers are becoming more and more conscious not only regarding the value of the product but also demanding compliance of social and environmental issues prevailing at the premises of the manufacturer. They emphasize on continual improvement, rather than on maintaining the standard. Your Company is well aware of this and continuously updating their activities. Some of the steps taken and achievements obtained during the year are given below: a) Regular practice of TPM activities has brought about remarkable results in productivity, product quality, cost

Your Company has achieved FM (Factory Mutual) Certification for both AWWA and ISO/EN Pipes. This will give your Company a competitive edge to market the products for Fire Fighting.

reduction and Company culture improvement. TPM and the Kaizen Culture have percolated, both upward and downward and continue to be maintained with all the enthusiasm involving and motivating personnel at all levels. JIPM-Japan has given ' AWA R D F O R E XC E L L E N C E I N CONSISTENT TPM COMMITMENT' for the year 2010 to honour your Company's outstanding achievement. b) Company's NABL accredited laboratory has further added on its capabilities. One more test has been added in the scope of accreditation last year. c) Your Company has achieved FM (Factory Mutual) Certification for both AWWA and ISO/EN Pipes. This will give your Company a competitive edge to market the products for Fire Fighting. d) The different approval of its quality system and products and certification from the world premier certifying agencies like DVGW (Germany), BSI (UK), NSF, UL (Underwriter Laboratory), FM (Factory Mutual), and NF (France), Middle East, and approval from USA Certifying agencies. Continuously assures the customers about the world class quality of the Company's products. e) Your Company has received new approvals from East European countries like Czechoslovakia, Croatia and Kuwait. 9 Safety, Health & Environment Your Company is committed to the safety and health of its employees. The Safety Management

Systems are constantly being monitored for improvement and upgradation to compete with the best in the industry. Mechanisms for monitoring activities related to health, hygiene and safety have been set up at every plant. Your Company conducts regular training programmes to create awareness of the above, among employees. Some of the steps taken on this account are as under: a) Your Company is effectively maintaining the Environmental Management System Standard ISO: 14001-2004 in the manufacturing plants i.e at Khardah, Elavur and Haldia plants. b) In addition to normal periodical medical check ups for the employees, special tests like Pulmonary functions, audiometric tests, chest X-rays are regularly done for concerned areas. c) Use of JIPM - TPM methodology of KYT (Danger Prediction Drill) is being continuously enhanced to fur ther improve the consciousness of workmen and supervisors. In addition, to avoid failure, mistake proof (Pokayoke) and Safety assurance perfect line (SAPL) have been introduced. d) Workmen involvement at all levels is continuously enhanced by creating safety volunteers in each shop. Safety related quiz competition among staff, workers and contractor's workmen is regularly organized to increase the knowledge. e) Observations of Senior Managers in the 'Planned Visit' of the plants are paid due attention and also form one of the basis of
22 23

Management Discussion (Contd.)

improving 'Safe Operating Practices'. f) Safety audits by experts from other similar industries are a regular practice. g) There is a regular thrust on Involvement of the associate agencies like transporters, contractors etc by way of training and monitoring ensuring implementation of safe operating procedures in their area of work. h) Ambient air quality (SPM) around the Factory is regularly monitored to ensure compliance to the standards. i) j) Continuous SPM monitoring systems has been installed in the relevant chimneys at Khardah and Haldia. Your Company also focuses on the development of the eco-system and improvement of the green belt in and around its manufacturing plants.

9 Corporate Social Responsibility (CSR) Social welfare, community development, economic and environmental responsibilities are at the core of the CSR of your Company. As part of its policy for corporate social responsibility, your Company undertakes a range of activities to improve living conditions of people in the neighbourhood of all its plants. These activities include education, healthcare, sports, cultural events, vocational training such as: a) Your Company continues to operate two nos. charitable medical Institutions involving local people. b) Free Medical checkup and Blood donation camps in the Neighbourhood. c) Organising sports activities involving local schools and clubs at district level with an aim to promote sports activities in the district. Distributed volleyball & kit to Kashberia village. d) Rewards for good & bright students in the locality.

To bring performance improvement in the areas of Treasury operation, SAP FSCM (Treasury and Risk Management) has been implemented and successfully rolled out. Also the SAP system has been kept ready / aligned with forthcoming IFRS.

Distribution of Education Kit to poor children. Supplying study benches to one of the local school. e) Giving entrepreneurial opportunity to local un-employed youths to supply materials and through encouraging contract activities. f) Organising cultural programmes, Workers day for promoting cultural activities among workers, their families and locality. g) Development, repair and renovation of local Kali Temple. h) Setting up of Drinking water Kiosks in the local area. i) j) Distribution of free saris and blankets during Puja. Awareness programme on ORGANIC FARMING" was conducted at Elavur Housing Colony. Organic farming has been started at EW housing colony. Employees of ECL Elavur and Chennai Office are benefitted with Organic vegetables and fruits, which are provided, at a subsidized rate.

In order to establish a smart analytical reporting system, SAP Business Intelligence has been taken up as regular practice in the organization. It is being intensively used by the key decision makers while analyzing various business performances to spot improvement areas. Proactive measures are taken right in time based on the analytic feedback received from the Business Intelligence system. Your Company is continuously striving to make the organisation well connected. In view of the same, necessary strengthening in the area of WAN and LAN has been done. To maximize the link availability across locations, necessary backup arrangement has been implemented. This would help your Company to ensure seamless business working and bringing all processes across the organization under common umbrella called SAP. All employees have been given secured access to SAP over Employee Self Services (ESS) available through Enterprise Portal (EP). Access to core business functions per process area is allowed to select people through secured login password. To bring performance improvement in the areas of Treasury operation, SAP FSCM (Treasury and Risk Management) has been implemented and successfully rolled out. Also the SAP system has been kept ready / aligned with forthcoming IFRS. Upgradation has been done in basic IT infrastructure by revising configuration of MS Exchange server (Email), Internet proxy server and Root Domain Controller / Active directory. This upgradation has ensured performance
24 25

9 Information Technology As a constant endeavor, Information Technology (IT) has always been a thrust area for your Company. To maximize business performance in each area of operations a dedicated and energized team is constantly keeping close watch over IT opportunities in the organization. The internal IT support service is constantly evaluating best fit value adding technology solutions to accelerate performance per business function maintaining the data center with sufficient security measures.

Management Discussion (Contd.)

improvement and smooth functioning of the facilities. Necessary technology Upgradation has been done in SAP landscape to accommodate IFRS alignment and upgraded the SAP database storage capacity. We have introduced biometric attendance system for all the employees to maintain right discipline and integrated to back end ERP system. We have also brought our subsidiary operations out of Spain, France and UK under the umbrella of ERP and implemented SAP. This has helped us to strengthen our routine transaction system and achieved smart accounting practices out of those country operations. This SAP implementation would enable us to consolidate data management at corporate to create single window view of our business at macro level. It would assist us to keep ourselves informed about our performances at various areas of our business. In order to strengthen data and network security we have implemented various measures by introducing data leak prevention tool and upgraded the fire walls. We have implemented IT policy outlining various standard operating procedures as an imperative to be followed by all. We have taken all steps and implemented necessary technologies to ensure full compliance to IT policy. As part of continuous improvement, we have revamped our website www.electrosteel.com with latest updates of our performance and achievements. We have made it more visitor friendly loaded with more product information and coordinates for better reach ability for the prospective and potential customers. 9 Human Resources / Industrial Relations Your Company is about people and we believe that we can achieve very little without an engaged workforce. Other assets can be easily replicated, but people are unique, each with their unique talent. We believe that to succeed

Your Company continues to have harmonious and cordial relations with its employees, workmen and trade unions. These relations have been built over the years on a foundation of mutual trust which has resulted in an atmosphere of improved productivity, quality, enthusiasm and motivation.

sustainably in the domestic as well as in the global market under extreme competitive conditions, the Human Capital of the Company must be at the highest levels of motivation and knowledge. Not only do we select the right people at all levels, we also ensure that the human capital at Electrosteel is up to date on cutting edge technology, managerial and leadership skills, financial management and logistics through developmental programmes in each of these areas. Your Company continues to invest in improving the human capital through continuous in-house and external development programmes. We ensure that we are always on a rising learning curve. We believe in appreciating, recognizing and rewarding talent within the organization. Employees of your Company are a bunch of motivated professionals who are ever willing to take up greater challenges at all times. Your Company continues to have harmonious and cordial relations with its employees, workmen and trade unions. These relations have been built over the years on a foundation of mutual trust which has resulted in an atmosphere of improved productivity, quality, enthusiasm and motivation. 9 Risks and Concerns This has been dealt with separately in the Annual Report under Risk Management". 9 Internal Control Systems and their adequacy Your Company has adequate internal control system in all the areas. It ensures the efficiency of the operations, financial reporting and

statutory compliances. Apart from the internal control system, an independent internal auditor also reviews all activities in a systematic and structured manner. The Audit Committee regularly reviews the observations and suggestions of the internal auditors and takes the necessary corrective actions. 9 Threats Increased cost of raw materials, shipping, logistics and bottleneck in the logistics, coupled with competitive market, have created pressure on margins. However, with backward integration, cost reduction measures including hedging of commodity prices etc, de-bottlenecking logistic constraints and long term planning for raw material availability, your Company is confident of achieving sustained growth both in turnover and profits. 9 Outlook Being the largest and low cost producer of quality Ductile Pipes in India, coupled with cost control measures, rising demand and focus on exports, your Company is very optimistic of its bright future. CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis describing the Company's estimates, predictions, expectations may be "forwardlooking" within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished
26 27

goods in which the Company operates, input availability and prices, changes in government regulations, tax laws and other statutes, economic developments within the country and the countries within which the Company conducts business and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events.

Risk Management
The Company is fully committed to strengthen its risk management capability on continuous basis in order to protect and enhance shareholder value. Further, the risk management framework ensures compliance with the requirements of amended Clause 49 of the Listing Agreement. The framework establishes risk management processes across all businesses and functions of the Company. These processes are periodically reviewed to ensure that the Management controls risks through properly defined framework. The Company has already undertaken an extensive Risk Management effort that includes introducing Risk Management Manual, compiling a comprehensive profile of the key risks to the Company, identifying key gaps in managing those risks and developing preliminary action plans to address those risks. This effort accomplishes the following goals : responds to the Board's need for enhanced risk information and improved mitigation plan; provides the ability to prioritize, manage and monitor the risks in the business; and formalizes the explicit requirements for assessing risks on an ongoing basis, including an effective internal control and management reporting system. Some of the key risks affecting your Company are illustrated below : Economic Risk Due to the increase in the cost of number of inputs and raw materials used by the Company, it is faced with the threat of pressure on margins on sales.

The Company has taken various steps including backward integration which comprises own coal mines and iron ore mines and brown field expansions e.g. sinter plant, setting up sponge iron plant, coke oven plant, power plant from waste heat recovery, upgrading and expanding manufacturing capacities and increasing efforts on R&D.

To counter this, the Company has taken various steps including backward integration which comprises own coal mines and iron ore mines and brown field expansions e.g. sinter plant, setting up sponge iron plant, coke oven plant, power plant from waste heat recovery, upgrading and expanding manufacturing capacities and increasing efforts on R&D. In addition, cost control measures are an ongoing process. To avoid price volatility for critical items, the Company tries to enter into long term contracts as well as propose to foray into commodity exchanges for hedging the adverse price movements. Competitor Risk The Company is exposed to the risk of competition, as the market is highly competitive with the elimination of physical barriers and entry of new players. The Company continues to focus on increasing its market share and taking marketing initiatives that help customers in taking better-informed decisions. The quality improvement efforts have established the brand image of the product as the most preferred brand with the customers. With the thrust given by Government of India on water and water related projects and with the estimated growth in water requirement, the demand of DI Pipes is expected to grow substantially and the Company is confident of retaining its market share. Foreign Exchange Risk Considering the large export and imports of raw material, the Company is exposed to the risk of fluctuation in the exchange rates.
28 29

The Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign exchange exposures within defined parameters, through use of hedging instruments such as forward contracts, options and swaps. The Company periodically reviews and audits its risk management initiatives through an independent expert. Industrial Risk The Company is exposed to labour unrest risk, which may lead to production slowdown ultimately resulting in plant shutdown. Labour relations have been excellent throughout the year in spite of number of unions. It is the result of such cordial and harmonious relations that not a single man-day has been lost in the last 9 years. The Company believes that labour relations will continue to remain excellent. Environment Risk The Company is exposed to the risk of Environment and Pollution Controls, which is associated with such type of industries. The Company is committed to the conservation of the environment and has adopted the latest technology for pollution control. The Company is ISO-14001-2004 certified and is adhering strictly to the emission norms applicable for the industry. Payment Risk The Company is exposed to the defaults by customers in payments. Since major water infrastructure projects are government funded or foreign aided, the risk involved in payment default is minimum. Further, evaluating the credit worthiness of the customers has minimized the risk of default by other segment customer. Besides, the risk of export receivables is covered under Credit Insurance.

Corporate Governance

The Company is committed to achieve and maintain the highest standards of Corporate Governance.

(as required under Clause 49 of the Listing Agreements entered into with the Stock Exchanges)

for the year 2010-11

1. Company's philosophy on Corporate Governance The philosophy of the Company in relation to Corporate Governance is to ensure fairness, transparency, integrity, equity, honesty and accountability in its dealings with its customers, dealers, employees, lenders, Government and other stakeholders including shareholders. The Company is committed to achieve and maintain the highest standards of Corporate Governance. 2. Board of Directors Composition as on March 31, 2011 The Board of Directors of Company consists of Twelve-members which comprises of : Three promoter executive directors Three non-promoter executive directors Four independent non-executive directors Two non-independent non-executive directors The composition of the Board during the financial year was in conformity with clause 49 of the Listing Agreement entered into with the stock exchanges. The Chairman of the Board is a Non-Executive Director.
Name of the Directors Category No. of other Directorship(s) in Public Limited Companies incorporated in India 14 8 7 4 NIL NIL NIL 10 1 11 10 NIL No. of Membership(s) in other Board Committees No. of Chairmanship(s) in Other Board Committees

Mr. Pradip Kumar Khaitan Mr. Umang Kejriwal Mr. Mayank Kejriwal Mr. Uddhav Kejriwal Mr. V M Ralli Mr. R S Singh Mr. M K Jalan Mr. Jamshed J Irani Mr. Binod Khaitan Mr. Naresh Chandra Mr. MBN Rao Mr. S Y Rajagopalan

Non-Independent, Non-Executive Promoter, Executive ---do-----do--Non-Promoter, Executive ---do-----do--Independent, Non-Executive ---do-----do-----do--Non-Independent, Non-Executive

6 NIL NIL NIL NIL NIL NIL 2 NIL 9 10 NIL

NIL NIL NIL NIL NIL NIL NIL NIL NIL 1 4 NIL

30

31

Corporate Governance (Contd.)

Attendance of Directors at the Board Meetings during the financial year ended March 31, 2011 and the last Annual General Meeting (AGM) During the financial year ended March 31, 2011, five Board meetings were held on the following dates: May 14, 2010, July 09, 2010, August 09, 2010, November 02, 2010 and January 25, 2011. The gap between any two consecutive meetings did not exceed four months. The attendance details of each Director at the Board meetings and at the last Annual General Meeting (AGM) is given below:
Name of the Directors No. of Board meetings attended 5 5 5 5 5 2 4 5 5 4 4 5 Attendance at the last AGM held on July 12, 2010 No No No No No No No No No No No No

Mr. Pradip Kumar Khaitan Mr. Umang Kejriwal Mr. Mayank Kejriwal Mr. Uddhav Kejriwal Mr. V M Ralli Mr. R S Singh Mr. M K Jalan Mr. Jamshed J Irani Mr. Binod Khaitan Mr. Naresh Chandra Mr. MBN Rao Mr. S Y Rajagopalan

Code of Conduct A code of conduct has been laid down for all Board Members and Senior Management of the company who have affirmed compliance with the same. A declaration signed by the Managing Director to this effect is enclosed at the end of this report. The Code is also posted on the Company's website.

The terms of reference of the Audit Committee are in line with requirements of Clause 49 of the Listing Agreement. The Audit Committee also reviews such matters as considered appropriate by it or referred to it by the Board.

3. Audit Committee The Audit Committee was constituted on January 30, 2001 with powers and role specifically laid out to comply with the requirements of Clause 49 of the Listing Agreements with the Stock Exchanges in India and the spirit of Corporate Governance. The Audit Committee also oversees compliance with Section 292A of the Companies Act, 1956. Composition of Audit Committee As on March 31, 2011 the Audit Committee comprised of three non-executive independent Directors and one executive Director, all being, having financial and accounting knowledge. The members of the Audit Committee are Mr. Binod Khaitan, Mr. Naresh Chandra. Mr. M.B.N. Rao and Mr. Umang Kejriwal. Mr. Binod Khaitan who is an Independent, Non-Executive Director is the Chairman of the Committee. The Company's statutory auditors and the internal auditors are permanent invitees at committee meetings. Mr. Jyoti Jain, Company Secretary, acts as the Secretary to the Audit Committee. Terms of reference The Audit Committee reviews the adequacy of internal controls, reliability of financial statements, the Company's financial reporting process, accounting and financial policies and practices, monitors the risk management, reviews policies adopted by the Company and ensures compliance with regulatory guidelines, reviews reports furnished by the internal and statutory auditors and ensures that suitable corrective and follow-up actions are taken. The terms of

reference of the Audit Committee are in line with requirements of Clause 49 of the Listing Agreement. The Audit Committee also reviews such matters as considered appropriate by it or referred to it by the Board. Meetings and Attendance During the financial year ended March 31, 2011 four audit committee meetings were held on May 14, 2010, August 09, 2010, November 02, 2010 and January 25, 2011. The gap between any two consecutive meetings did not exceed four months.
Name of the Member Attended Mr. Binod Khaitan Mr. Naresh Chandra Mr. M.B.N. Rao Mr. Umang Kejriwal 4 3 3 4 No. of meetings

4. Remuneration Committee The Company is yet to form a remuneration committee, though the compensation of the Executive and Non-Executive Directors has the approval of the Board. The commission is paid to the Wholetime Directors as per terms of appointment with the Board's approval. The Commission payable to non Executive Directors are also approved by the Board of Directors. The total remuneration paid to Directors are within the overall limit of the Companies Act, 1956.

32

33

Corporate Governance (Contd.)

Details of remuneration paid to Directors in 2010-11

Name of the Directors Mr. Pradip Kumar Khaitan Mr. Umang Kejriwal Mr. Mayank Kejriwal Mr. Uddhav Kejriwal Mr. V. M. Ralli Mr. R. S. Singh Mr. M. K. Jalan Mr. J. J. Irani Mr. Naresh Chandra Mr. Binod Khaitan Mr. M.B.N. Rao Mr. S. Y. Rajagopalan *This represents the fixed component. Salary* (Rs.) 24,00,000 24,00,000 23,37,500 24,60,000 24,60,000 24,60,000 Benefits (Rs.) 20,75,656 18,41,454 31,38,572 86,50,846 81,46,770 85,99,051 Commission (Rs.) 2,50,000 2,00,00,000 2,00,00,000 1,70,00,000 12,00,000 12,00,000 2,50,000 6,00,000 4,00,000 Sitting Fees (Rs. 1,00,000 1,00,000 1,40,000 3,20,000 1,60,000 1,00,000 Total (Rs.) 3,50,000 2,44,75,656 2,42,41,454 2,24,76,072 1,11,10,846 1,06,06,770 1,10,59,051 13,00,000 13,40,000 5,70,000 7,60,000 5,00,000

The above remuneration is within the limits prescribed under the provisions of the Companies Act, 1956. The remuneration of the Directors appointed during the year are given from the respective date of their appointment and are also subject to approval of shareholders in the forthcoming Annual General Meeting. The details of shares/convertible instruments held by the non-executive Directors of the Company as on March 31, 2011 are as follows :
Name Mr. Pradip Kumar Khaitan Mr. Binod Khaitan Mr. Jamshed J Irani Mr. Naresh Chandra Mr. M.B.N. Rao Mr. S.Y. Rajagopalan No. of shares held Nil 2000 Nil Nil Nil 5100 No. of convertible instruments held Nil Nil Nil Nil Nil Nil

5. Shareholder / Investor Grievances Committee The company constituted a Shareholders' / Investors Grievances Committee on May 15, 2002 to oversee the redressal of grievances of shareholders and investors on

A code of conduct has been laid down for all Board Members and Senior Management of the company who have affirmed compliance with the same.

issues like share transfer, non-receipt of annual report / declared dividends, among others. In accordance with Clause 49 para VI (D) of the Listing Agreement of the stock exchanges, the Board has delegated powers of share transfers to M/s. Maheshwari Datamatics Pvt. Ltd. (MDPL), 6, Mangoe Lane, Kolkata-700 001. MDPL reviews share transfers ever y fortnight. During the financial year ended March 31, 2011, meeting of the Shareholders/Investors Grievance Committee was held on January 25, 2011. Composition as on March 31, 2011 As on March 31, 2011 the Committee comprised of Mr. Binod Khaitan (Chairman - Independent, Non-Executive and Mr. Uddhav Kejriwal (Promoter, Executive).

Compliance Officer Mr. Jyoti Jain, Company Secretary of the Company was appointed as the Compliance Officer on behalf of the Company and is responsible for monitoring the Share Transfer process and report to the Shareholders'/Investors' Grievance Committee. Shareholders' Complaints At the beginning of the year under review there was no unresolved complaint. During the year, the company received 40 complaints and 40 complaints were resolved. There was no complaint pending at the year-end. Pending Share Transfers No shares were pending for transfers as on March 31, 2011. 6. General Body Meetings A. Location and time for last three Annual General Meetings :
Date of AGM July 12, 2010 Venue Rathod Colony, Rajgangpur Dist. Sundergarh Orissa Rathod Colony, Rajgangpur Dist. Sundergarh Orissa Rathod Colony, Rajgangpur Dist. Sundergarh Orissa Time 11.00 a.m.

Financial Year 2009 - 2010

2008 - 2009

August 18, 2009

09.30 a.m.

2007 - 2008

August 01, 2008

09.30 a.m.

34

35

Corporate Governance (Contd.)

B. Special Resolutions were passed at the AGM held on August 01, 2008, August 18, 2009 and July 12, 2010. C. Last year no resolution through Postal Ballot was passed by the Company. Further no resolution is proposed to be passed through Postal Ballot during the current year. D. Information about Directors proposed to be appointed and re-appointed as required under Clause 49 IV (G) (i) of the Listing Agreement with the stock exchanges forms part of the explanatory statement of the notice for Annual General Meeting annexed to the Annual Report. 7. Disclosures None of the transactions with any of the related parties were in conflict with the interests of the Company. However, the details of related party relationships and transactions are disclosed in Note 30 in Schedule 17 to the Accounts. The Company complied with regulatory requirements on capital markets. No penalties / strictures have ever been imposed against it. All mandatory requirements of Clause 49 of the Listing Agreement have been complied with and the disclosure on adoption of non-mandatory requirements are dealt with at the end of the report.

8. Means of Communication The Company's quarterly/yearly financial results are published in widely circulated national and local dailies like The Economic Times, Times of India, Business Line, Business Standard, Financial Express and Sambad. These financial results were not sent individually to shareholders. The Company's results and official news releases were displayed on the company's web site www.electrosteel.com. A comprehensive Management Discussion and Analysis report forms a part of this Annual Report.

The Company's quarterly/yearly financial results are published in widely circulated national and local dailies like The Economic Times, Times of India, Business Line, Business Standard, Financial Express and Sambad.
9. General Shareholder information July 11, 2011, Monday at 11.30 A.M Rathod Colony, Rajgangpur, Dist. Sundergarh, Orissa. April 1st to March 31st July 05, 2011 to July 11, 2011 (both days inclusive) Not Applicable Warrants : 3,35,68,312 nos. (entitles the holder to receive 1 (one) Equity Share of Re.1/- each upon conversion at any time during normal business hours on and after three years from date of allotment i.e 08.02.2010 and upto sixty months from the date of allotment in no event thereafter) The paid-up equity capital will increase by Rs. 335.68 Lakhs on conversion of aforesaid warrants. Global Deposits Receipts (GDRs) : 27,70,000 nos. Zero Coupon Convertible Bond (ZCCBs) : US $ 20.45 million ZCCB holders have an option to convert the ZCCBs into equity shares at a conversion price of Rs 42.44 per share (subject to certain adjustments under specified circumstances) as per the offer document at a fixed exchange rate of US $ 1.00 = Rs 44.84 at any time on or after July 04, 2006 and prior to the close of business on May 16, 2011. Upon such conversion the equity share capital and share premium will increase by Rs.216.06 Lakhs and Rs.8953.72 Lakhs respectively. Listing at Stock Exchanges Equity and Warrants a) Bombay Stock Exchange Ltd P. J. Towers, Dalal Street, Mumbai 400 001 b) National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor Bandra Kurla Complex, Bandra (East) Mumbai 400 051 Global Depository Receipt (GDR) London Stock Exchange Plc. 10, Patemoster Square, London-EC4M7LS Zero Coupon Convertible Bonds (ZCCB) Stock Code Singapore Exchange Securities Trading Limited 2, Shenton Way, 19-00 SGX Centre 1 Singapore-068804 Equity Shares & Warrants BSE - 500128 NSE ELECTCAST GDR London Stock Exchange-B0K6M89 ZCCB Singapore Exchange Securities Trading Limited-7MKB Listing fees for 2011-12 have been paid to NSE and BSE.

Date, time and venue of the Annual General Meeting Financial Year Book Closure Period Interim Dividend Payment Date Outstanding ADRs / GDRs / warrants or any convertible instruments, conversion date and likely impact on equity.

Listing Fee

36

37

Corporate Governance (Contd.)

Stock Market Price for the financial year Bombay Stock Exchange (BSE) Month's April-10 May-10 June-10 July-10 August-10 September-10 October-10 November-10 December-10 January-11 February-11 March-11 Month's High Price 56.15 51.90 50.30 51.20 55.70 56.00 49.00 44.25 40.85 43.40 35.50 33.30 Month's Low Price 44.80 43.80 44.50 46.50 47.10 45.65 40.10 35.40 35.00 34.20 29.00 28.50 Volume 9082449 4189739 4803535 4543407 11905268 8447081 5483231 3251395 1495319 2657531 1497539 3868533 National Stock Exchange (NSE) Months Months High Price Low Price 56.10 51.65 50.40 51.25 54.55 56.00 49.00 44.30 41.00 43.35 35.35 33.35 48.25 38.00 40.80 46.40 46.90 45.55 39.50 35.50 35.00 34.05 29.50 29.90 Volume 16063547 8371331 8188581 8158827 17063275 13661654 10060911 5451021 2604492 3794052 2181443 3125413

Share price performance in comparison to broad based indices BSE Sensex and NSE Nifty for the Financial Year 2010-11 BSE Sensex % change in ECL share price 41.50 % change in sensex 10.77 NSE Nifty % change in ECL share price 42.28 % change in index 11.14

Shareholding pattern as on March 31, 2011 Profile of shareholders Promoters & Associates Financial Institutions, Banks, Mutual Funds and Insurance Companies NRI, FIIs,GDRs etc. Private corporate bodies Indian public Total No. of shares 15,83,13,939 Percent of holding 48.45
(15.82%) NRI, FIIs, GDRs etc. (6.19%) Private Corporate Bodies (19.59%) Indian Public (48.45%) Promoters & Associates

3,25,13,478 5,16,87,513 2,02,08,278 6,40,29,497 32,67,52,705

9.95 15.82 6.19 19.59 100.00

(9.95%) Financial Institutions, Banks & Mutual Funds etc.

The International Securities Identification Number (ISIN) of the Company, as allotted by NSDL and CDSL, is INE086A01029.

Distribution of shareholding as on March 31, 2011 Equity Shares held 1-500 501-1000 1001-2000 2001-3000 3001-4000 4001-5000 5001-10000 Above 10000 Total No. of Shareholders 46757 8865 5286 1745 964 760 1197 1069 66643 % of Shareholders 70.16 13.30 7.93 2.62 1.45 1.14 1.80 1.60 100.00 Number of Shares held 9140204 7770693 8769689 4555196 3559374 3621258 8933392 280402899 326752705 % of Shares held 2.80 2.38 2.68 1.39 1.09 1.11 2.73 85.82 100.00

Share transfer system Share transfers are registered and returned within the period of 30 days from the date of lodgement if the documents are complete in all respects. As per directives issued by the SEBI, it is compulsory to trade in the Company's equity shares in dematerialized form. The Company offers the facility of transfer cum dematerialization to its shareholders. Registrars for physical & dematerialised shares Maheshwari Datamatics Pvt. Ltd. 6, Mangoe Lane, 2nd Floor, Kolkata-700 001. Phone : 033-22482248/22435029, Fax : 033-22484787 E-mail : mdpl@cal.vsnl.net.in Dematerialization of shares and liquidity The Company's shares are tradable compulsorily in electronic form and are available for trading in the depository systems of both National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). The International Securities Identification Number (ISIN) of the Company, as allotted by NSDL and CDSL, is INE086A01029. As on March 31, 2011, 96.48% of the shares stand dematerialized. Plant locations Unit 1 : 30, B.T. Road Sukchar, Khardah 24-Parganas (North) West Bengal-743 179
38 39

Corporate Governance (Contd.)

Unit 2 : Gummodipoondi Taluk P.O. Elavur Dist. Chengal, MGR Tamil Nadu-601 211 Unit 3 : Haldia Kasberia, P.O.Khanjan Chawk Haldia, Midnapore (East) West Bengal Unit 4 : Parbatpur Coal Mine P.O. Batbinor Dist : Bokaro -827013 Jharkhand 10. Status of non-mandatory requirements Audit qualifications There are no qualifications or adverse remarks in the Auditors' Report which require any clarification/explanation. The Notes to Accounts forming part of the financial statements are self explanatory and needs no further explanation. Other Items The non-mandatory requirments viz. Remuneration Committee, Shareholding Rights,Training of Board Members & Tenure of Independent Directors, Mechanism for performance evaluation of non-executive Board Members and Whistle Blower Policy will be implemented by the Company when required and/or deemed necessary by the Board. UMANG KEJRIWAL Managing Director UDDHAV KEJRIWAL Wholetime Director

Address for Communication Mr. Jyoti Jain Electrosteel Castings Ltd. G.K. Tower 19, Camac Street Kolkata-700 017 Phone : (033) 2283 9990 Email : jjain@electrosteel.com

DECLARATION BY THE MANAGING DIERCTOR UNDER CLAUSE 49 (I)(D)(ii)OF THE LISTING AGREEMENT

To, The Members of Electrosteel Castings Limited I hereby declare that to the best of my knowledge and belief, all the Members of the Board and senior management personnel of the Company have affirmed their respective compliance with the Code of Conduct of the Company for the year ended March 31, 2011.

Place : Kolkata Date : 12.05.2011

Place : Kolkata Date : 12.05.2011

U. KEJRIWAL Managing Director

Auditors Certificate
To The Members of Electrosteel Castings Limited

on Corporate Governance

We have examined the compliance of conditions of corporate governance by Electrosteel Castings Limited, for the year ended on March 31, 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges in India. 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 the Corporate 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 Clause 49 of the abovementioned 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 Lodha & Co. Chartered Accountants Firm ICAI Regn. No. : 301051E H. K. Verma Partner Membership no.: 55104
40

Place : Kolkata Date : 12.05.2011

41

Ten Year Summary Financial

Rs. in lakhs Year 2001-02 2002-03 2003-04 2004-05 Turnover 57916.03 65686.62 72444.91 94198.00 Gross Profit 12756.62 13852.26 13130.02 14985.84 13643.90 19208.81 14726.11 26117.43 36021.73 26930.00 Depreciation 1826.76 2039.05 2278.67 2518.02 2856.18 3366.78 3660.59 5212.48 5230.06 5441.26 Tax 2469.01 2067.04 3483.14 3600.08 3142.94 5226.05 (156.16) 6865.54 10162.78 6025.00 Profit After Tax 8460.84 9746.17 7368.21 8867.74 7644.78 10615.98 5201.58 14039.41 20628.89 15463.74 Gross Block Net Block 27432.43 18652.09 27940.05 17507.85 30204.37 17821.81 35965.68 21690.40 48295.10 31698.03 53309.28 33863.80 62779.30 40479.08 78184.12 50688.80 84200.94 52462.54 91435.90 53804.79 Capital Employed 64488.17 71792.26 85358.26 100829.20 117140.97 150580.12 190943.89 243673.62 287267.53 320054.39 2005-06 100312.88 2006-07 117621.51 2007-08 138442.11 2008-09 189557.52 2009-10 146664.11 2010-11 174967.18

Turnover
200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0
7 8 9 0 -1 09 20 20 2 3 4 5 -0 -0 03 -0 40 -0 6 -0 -0 -0 01 02 05 06 07 08 20 0 20 20 20 20 20 20 20 10 -1 1

Net Block
60000 50000 40000 30000 20000 10000 0

20 01 -0 2 20 02 -0 3 20 03 -0 4 20 04 -0 5

20 05 -0 6 20 06 -0 7 20 07 -0 8 20 08 -0 9 20 09 -1 0 20 10 -1 1

Auditors Report
The Members Electrosteel Castings Limited 1. We have audited the attached Balance Sheet of Electrosteel Castings Limited (the Company) as at March 31, 2011 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (the "Order"), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 ('the Act') and according to the information and explanations given to us and on the basis of such checks as we considered appropriate, we report that: i. a) The Company has maintained proper records showing full particulars, including quantitative details and situations of fixed assets During the year, fixed assets have been physically verified by the management according to a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verifications. In our opinion, during the year, the Company has not disposed off substantial part of its fixed assets. In our opinion, the disposal of such assets has not affected the going concern status of the Company. As informed, the inventory of the Company except for materials in transit and those lying with third parties have been physically verified by the management during the year. In our opinion and according to the information and explanations given to us, the frequency of such verification is reasonable. As the Company's inventory of raw materials comprises mostly of bulk materials such as coal, coke, iron ore, etc. requiring technical expertise for quantification, the Company has hired an independent agency for the physical verification of the stock of these materials. Considering the above, in our
42 43

b)

c)

ii. a)

b)

Auditors Report (Contd.)

opinion, the procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. The Company has not granted or taken loans secured or unsecured to/from companies, firms or parties covered in the register maintained under Section 301 of the Act. Accordingly, clause 4(iii) of the Order is not applicable to the Company. iv. In our opinion and having regard to the explanations given to us that certain purchases of inventories and fixed assets and sale of goods being of special nature where suitable alternative sources do not exist/ were not available for obtaining comparable quotations, the internal control system for the purchase of inventory and fixed assets and for the sale of goods and services is commensurate with the size of the Company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. v. (a) To the best of our knowledge and belief and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section. According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements as aforesaid and aggregating during the year to rupees five lakhs or more in respect of each party, have been made at the prices which are reasonable having regard to prevailing market prices.

(b)

vi. The Company has not accepted any deposits from public covered under Sections 58A, 58AA or any other relevant provisions of the Act and rules framed thereunder. vii. Internal audit of the Company has been carried out by a firm of Chartered Accountants. In our opinion, the internal audit system is commensurate with the size and nature of the business of the Company. viii. According to the information and explanations given to us, the Central Government has not prescribed for maintenance of cost records under Section 209(1)(d) of the Act in respect of any of the product of the Company. ix. (a) According to the information and explanations given to us, during the year, the Company has generally been regular in depositing with appropriate authorities undisputed
Nature of Dues Excise Duty Amount (Rs. in lakhs) 165.98 30.72 16.42 11.63 The Central Excise Act Sales Tax Act Service Tax Sales Tax 1154.17 6.86 90.61 247.21 16.48 404.17 22.50 9.8

statutory dues including Provident Fund, Investor Education Protection fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other statutory dues as applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues as aforesaid were outstanding as at March 31, 2011 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, the details of disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty, service tax, and cess, if any, as at March 31, 2011, are as follows:
Forum where dispute is pending Tribunal Commissioner (Appeals) Additional Commissioner High Court Tribunal Commissioner (Appeals) Tribunal Special Commissioner Jt. Commissioner Additional Commissioner High Court Dy. Commissioner

Name of the Statue The Central Excise Act

Period to which the amount relates 1996-99 2004-07 2005-06, 2007-09, 2009-10 2007-09 1995-98 2005-10 2009-10 1974-78, 1985-87, 1992-95 1997-98, 1999-2000, 2004-05 2002-03 2005-06 2007-08 2008-09 2004-09

44

45

Auditors Report (Contd.)

x.

The Company does not have any accumulated losses as at the end of the year and the Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. In our opinion and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders. According to the information and explanations given and based on documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company. Based on our examination of documents and records and evaluation of the related internal controls, in respect of dealings/trading in securities, in our opinion, proper records have been maintained of the transactions and contracts and timely entries have been made in those records. We also report that the Company has held the shares, securities, debentures and other investments in its own name. The Company has given guarantees for loans taken by others from banks and financial institutions. In our opinion and according to the information and explanations given to us, the terms and conditions of these guarantees are prima facie not prejudicial to the interest of the Company. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than Rs.16493.09 lakhs which have been temporarily invested in fixed deposits with banks pending utilisation for the intended use. According to the information and explanations given to us and based on an overall examination of the balance sheet of the Company, in our opinion, no funds raised on short term basis have been used for long term investment. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. The Company has not issued any secured debenture during the year. Accordingly, clause 4(xix) of the Order is not applicable to the Company.

xi.

xii.

xiii.

xiv.

xv.

xvi.

xvii.

xviii

xix.

xx. xxi.

The Company has not raised any money by public issue during the period under audit. During the course of our examination of books of account carried out in accordance with generally accepted auditing practices in India, we have neither come across any incidence of fraud on or by the Company nor have we been informed of any such cases by the management.

vii.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes as given in Schedule 17 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: a. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011, b. In the case of the Profit and Loss Account, of the profit for the year ended on that date and, c. In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

4. Further to our comments made in above paragraphs, 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; 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; The above accounts incorporate the transactions relating to the Company's branch in Abu Dhabi, the transactions of which have been audited on the basis of returns, records, information and explanations received from such branch which we have not visited; The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement referred to in this report are in agreement with the books of account; In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement of the Company dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Act; On the basis of written representation received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March, 2011 from being appointed as a director in terms of clause (g) of Sub-Section (1) of Section 274 of the Act;

ii.

iii.

For Lodha & Co. Chartered Accountants Firm ICAI Regn. No.: 301051E H. K. Verma Partner Membership No.: 55104

iv.

Place: Kolkata Date : 12.05.2011

v.

vi.

46

47

ELECTROSTEEL CASTINGS LIMITED

Balance Sheet
Sources of Funds Shareholders Funds Capital Reserves and Surplus Loan Funds Secured Loans Unsecured Loans Deferred Tax Liabilities (Net) Application of Funds Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in-Progress Investments Current Assets, Loans and Advances Interest accrued on investments Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Liabilities Provisions Net Current Assets Notes on Accounts

as at March 31, 2011

Schedule As at March 31, 2011 Rs. in lakhs Rs. in lakhs As at March 31, 2010 Rs. in lakhs

1 2

32,67.53 16,52,15.31 16,84,82.84

32,67.53 15,51,09.86 15,83,77.39 11,29,73.79 1,12,19.23 14,71,62.87 44,08.68 32,00,54.39 12,41,93.02 46,97.12 28,72,67.53

3 4

12,40,57.21 2,31,05.66

5 9,14,35.90 3,76,31.11 5,38,04.79 4,47,17.92 9,85,22.71 6 1,16.27 7 8 9 10 5,19,79.58 4,88,62.68 1,89,73.19 2,08,12.55 14,07,44.27 11 4,60,26.48 1,31,73.78 5,92,00.26 8,15,44.01 32,00,54.39 17 1,82,96.47 1,16,67.95 2,99,64.42 9,33,12.93 28,72,67.53 13,99,87.67 8,42,00.94 3,17,38.40 5,24,62.54 3,90,96.03 9,15,58.57 10,23,96.03 3,56,73.13 3,74,10.81 2,80,92.53 2,21,00.88 12,32,77.35

The Schedules referred to above form an integral part of the Balance Sheet As per our report of even date. For Lodha & Co. Chartered Accounts H. K. Verma Partner Kolkata May 12, 2011 48 For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

ANNUAL REPORT 2010-11

Profit & Loss Account

Income Sales Less: Excise Duty Increase/(Decrease) in Finished and Process Stock Other Income Expenses Purchases Raw Materials Consumed Manufacturing and Other Expenses Interest (Net) Depreciation Profit Before Taxation Provision for Income Tax Current Deferred Profit After Taxation Balance brought forward from previous year Less: Dividend paid for previous year Tax on dividend paid for previous year Profit available for appropriation Appropriations Transfer to Debenture Redemption Reserve General Reserve Proposed Dividend Tax on Dividend Balance carried to Balance Sheet

for the year ended March 31, 2011

Schedule Year ended March 31, 2011 Rs. in lakhs Rs. in lakhs 17,49,67.18 38,23.72 12 13 17,11,43.46 20,22.73 70,32.90 18,01,99.09 1,09,65.95 7,67,45.45 6,07,89.61 47,68.08 54,41.26 15,87,10.35 2,14,88.74 63,13.44 (2,88.44) 1,01,01.73 1,01,01.73 2,55,65.47 Year ended March 31, 2010 Rs. in lakhs 14,66,64.11 37,86.64 14,28,77.47 22,85.85 1,25,41.85 15,77,05.17 49,51.00 5,79,12.29 5,44,13.25 44,06.90 52,30.06 12,69,13.50 3,07,91.67 91,56.13 10,06.65 2,06,28.89 89,64.65 1,75.00 29.75 2,93,88.79

14 15 16

60,25.00 1,54,63.74

22,00.00 1,00,00.00 40,84.41 6,62.59 1,69,47.00 86,18.47 4.73 4.43 32,67,52,705 34,83,59,176

27,00.00 1,18,24.28 40,84.41 6,78.37 1,92,87.06 1,01,01.73 6.45 5.97 31,98,37,491 34,56,96,047

Basic Earning per Share (Rs.) Diluted Earning per Share (Rs.) Number of Shares used in computing earning per share Basic Diluted Notes on Accounts 17

The Schedules referred to above form an integral part of the Profit and Loss Account. As per our report of even date. For Lodha & Co. Chartered Accounts H. K. Verma Partner Kolkata May 12, 2011 For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

49

ELECTROSTEEL CASTINGS LIMITED

Cash Flow Statement

A.

for the year ended March 31, 2011

(Rs. in lakhs) Year ended Year ended March 31 March 31 2011 2011 2,14,88.74 54,41.26 (9,93.66) 1,46.33 3,08.54 4,73.01 18.26 78,60.27 4,47.69 30,58.91 3,92.18 0.68 1,63,06.45 90,33.69 20,40.29 (2,46,56.30) 1,32,54.01 3,47,42.75 52,30.06 (99,60.84) 18,45.39 1,25.39 33,40.00 1,02.90 46,39.74 2,32.71 8,92.57 30,45.35 (5,41.46) 31,37.40 (2,14,96.86) 16,95.78 (21,64.38) 53,22.64 3,61,14.31 Year ended March 31 2010 Year ended March 31 2010 3,07,91.67

CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Taxes Add : Depreciation/Amortisation/Written off Foreign Exchange (gain)/loss Bad Debts & Pipe rectification LD charges (net of provision) Pipe mould written off Provision for others Provision for losses on mark to market basis on derivative transactions Interest Less: Interest Received Income from Investments Provisions / Liabilities no longer required written back Profit/(Loss) on sale /discard of Fixed Assets (Net) Operating Profit before Working Capital changes Less: Increase/(Decrease) in Inventories Increase/(Decrease) in Trade Receivables Increase/(Decrease) in Loans & Advances (Increase)/Decrease in Trade Payables Cash generation from Operations Less: Direct Taxes paid Net cash flow from Operating activities

38,99.46 3,08,43.29

36,29.17 3,24,85.14

27,24.13 2,81,19.16 60,02.81 2,21,16.55

(1,88,28.06) 5,13,13.20 1,07,57.15 4,05,56.05

B.

CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets/movements in Capital work in progress Share Application money paid Fixed Assets sold/discarded (Purchase)/Sale of Investment (net) Investment in subsidiaries, associate and joint venture Advances and Loans to subsidiaries Interest Received Dividend received from subsidiary Dividend received Net Cash flow from Investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of share capital Proceeds/(Repayments) from borrowings (net) Proceeds from share warrants Proceeds / (Redemption / Repayment) of Debentures/Term Loan

(1,18,93.17) (36.74) 3,64.96 (2,89,79.54) (57,88.14) 17,01.99 26,28.36 10.30 3,81.90 (4,16,10.08) (4,16,10.08) 2,61,36.69 (28,12.50) 2,33,24.19 (81,98.78) (40,71.61) (6,78.37)

(1,76,06.46) (24.25) 4,16.46 (3,03,45.53) (33,19.84) 2,35.84 9.95 8,82.49

(4,97,51.34) (4,97,51.34)

C.

Interest Paid Dividend paid Tax on Dividend Net cash flow from Financing activities Cash and Cash equivalents (A+B+C) Cash and Cash equivalents as at 1st April Add / (Less) : Unrealised exchange gain / (loss) on Bank balances, ECB Proceeds (net) Cash and Cash equivalents as at 31st March Note : 1) Cash and Cash equivalents represents cash in hand and deposits/balances with Banks 2) The Cash flow statement has been prepared under indirect method as per Accounting Standard 3 on Cash Flow Statement As per our report of even date. For Lodha & Co. Chartered Accounts H. K. Verma Partner Kolkata May 12, 2011 50

1,03,75.43 1,03,75.43 (91,18.10) 2,80,92.53 (1.24) 1,89,73.19 1,89,73.19

28,98.00 (2,00,03.12) 10,07.05 5,42,71.01 3,81,72.94 (48,81.58) (40,73.75) (6,94.15)

2,85,23.46 2,85,23.46 1,93,28.17 85,96.74 1,67.62 2,80,92.53 2,80,92.53

For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 1 SHARE CAPITAL: Authorised 50,00,00,000 shares of Re 1/- each (Previous year - 50,00,00,000 shares of Re. 1/- each) Issued, Subscribed and Paid up : 32,67,52,705 equity shares of Re 1/- each (Previous year - 32,67,52,705 equity shares of Re. 1/- each). Out of above 8,87,61,600 shares of Re. 1/each have been allotted as fully paid up bonus shares by capitalisation of Share Premium and General Reserve SCHEDULE 2 RESERVES AND SURPLUS : (A) CAPITAL RESERVE Capital subsidy as per last account Others Amount forfeited on warrants not exercised as per last account Add: During the year Amount received on issue of warrants as per last account Add: During the year (B) DEBENTURE REDEMPTION RESERVE As per last account Add: Transfer from Profit and Loss account (C) GENERAL RESERVE As per last account Add: Transfer from Profit and Loss account (D) SHARE PREMIUM ACCOUNT As per last account Add: Premium on issue of shares Less: Provision for premium on redemption of ZCCB (E) PROFIT AND LOSS ACCOUNT 46.52 30,94.71 10,07.05 41,48.28 37,00.00 22,00.00 59,00.00 7,50,00.00 1,00,00.00 8,50,00.00 6,21,59.85 6,21,59.85 6,11.29 6,15,48.56 86,18.47 16,52,15.31 46.52 30,94.71 10,07.05 41,48.28 10,00.00 27,00.00 37,00.00 6,31,75.72 1,18,24.28 7,50,00.00 5,00,61.13 1,24,96.65 6,25,57.78 3,97.93 6,21,59.85 1,01,01.73 15,51,09.86 As at March 31, 2011 Rs. in lakhs 50,00.00 As at March 31, 2010 Rs. in lakhs 50,00.00

32,67.53 32,67.53

32,67.53 32,67.53

SCHEDULE 3 SECURED LOANS : 11.80% Non Convertible Debentures 9.15% Non Convertible Debentures External Commercial Borrowing from Banks Term Loans from Export Import Bank of India Working Capital facility from Banks: Indian currency Foreign Currency Floating rate Non Convertible Debentures 1. 1,00,00.00 2,00,00.00 3,45,57.26 2,21,87.50 2,08,84.12 1,64,28.33 12,40,57.21 1,00,00.00 2,00,00.00 3,47,89.76 2,50,00.00 1,20,91.56 95,92.47 15,00.00 11,29,73.79

2.

11.80% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on company's fixed assets (immovable and movable) including land and buildings both present and future other than certain property located at Chennai. These debentures were allotted on 20th March, 2009 and are redeemable at par in three equal annual installments at the end of 3rd, 4th and 5th year from the date of allotment i.e. from 20th March, 2012. However, there is a Put and Call option available to the issuer / investor which can be excercised at the end of three years from the date of allotment. 9.15% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on company's fixed assets (immovable and movable) including land and buildings both present and future other than certain property located at Chennai. These debentures were allotted on 8th February, 2010 and redeemable at par on 8th February, 2013. 51

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

3. 4. 5. External Commercial Borrowings are secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than certain property located at Chennai. Term Loans from Export Import Bank of India are secured by way of first pari-passu charge over the movable fixed assets, lands and other immovable properties of the Company both present and future other than certain property located at Chennai. Working Capital facilities from Banks are secured by way of joint hypothecation of inventories and book debts, both present and future.

SCHEDULE 4 UNSECURED LOANS : Zero Coupon Convertible Bonds (ZCCB) Short Term Loans From Banks Indian Currency Foreign Currency

As at March 31, 2011 Rs. in lakhs 91,18.66 1,37,78.08 2,08.92 2,31,05.66

As at March 31, 2010 Rs. in lakhs 91,80.01 20,39.22 1,12,19.23

SCHEDULE 5 FIXED ASSETS : GROSS BLOCK Description Cost as on April 01, 2010 2 36,60.49 13,05.77 94,27.77 2,53.94 6,75,15.69 5,32.80 9,72.58 5,30.79 1.11 8,42,00.94 PREVIOUS YEAR 7,81,84.12 Additions Sales/ Cost as on Upto Adjustments March 31, March 31, 2011 2010 4 16,29.92 0.04 1,00.18 17,30.14 33,28.60 39.85 8,45.35 74,64.13 26.44 66.85 23.96 15.32 89,65.10 93,45.42 5 41,43.69 13,45.62 1,02,73.12 2,53.94 7,33,49.90 5,59.20 9,39.25 5,54.75 15.32 1.11 9,14,35.90 8,42,00.94 6 65.18 37,10.55 59.95 2,68,81.98 3,15.76 4,99.53 2,05.45 3,17,38.40 2,74,95.32 DEPRECIATION Rs. in lakhs NET BLOCK For the Sales/ Upto As on As on Year Adjustments March 31, March 31, March 31, 2011 2011 2010 7 14.54 4,68.26 26.94 57,76.22 46.56 93.18 1,07.19 1.06 65,33.95 62,68.13 8 5,66.52 0.04 74.68 6,41.24 20,25.05 9 79.72 41,78.81 86.89 3,62.28 5,18.03 3,12.64 1.06 3,17,38.40 10 41,43.69 12,65.90 60,94.31 1,67.05 1,96.92 4,21.22 2,42.11 14.26 1.11 5,24,62.54 11 36,60.49 12,40.59 57,17.22 1,93.99 4,06,33.71 2,17.04 4,73.05 3,25.34 1.11

1 LAND-FREEHOLD LAND-LEASEHOLD BUILDINGS RAILWAY SIDING PLANT AND MACHINERY FURNITURE AND FIXTURES VEHICLES INTANGIBLE ASSETS (COMPUTERS SOFTWARES) MINING RIGHTS LIVESTOCK

3 4,83.20

3,20,91.68 4,12,58.22

3,76,31.11 5,38,04.79 5,24,62.54

Notes : 1. Plant and Machinery includes Rs. 3,40.87 lakhs (Previous year Rs.3,40.87 lakhs) being contribution for laying the Power line, the ownership of which does not vest with the company. 2. Depreciation for the year includes Rs.10,92.69 lakhs (Previous year Rs.10,38.07 lakhs) transferred to Pre-operative expenses. 3. Leasehold Land of Rs. 2,04.00 lakhs (Previous Year Rs.9,47.26 lakhs) is pending execution of lease agreement and registration thereof. 4. Freehold land includes Rs. 2,05.97 lakhs (Previous year Rs.7,02.49 lakhs) in respect of which the execution of conveyance deeds is under process. 5. Plant and Machinery includes Rs. 24,98.72 lakhs (Previous year Rs. 27,63.71 lakhs) being cost of wagons procured under "Wagon Investment Scheme". 52

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Long term and fully paid up except otherwise stated) Particulars PREFERENCE SHARES Quoted Mukand Limited (0.01% Cumulative Redeemable Preference Shares face value of Rs. 10/-each) EQUITY SHARES (A) Trade Investments Quoted Mukand Limited (Face value of Rs.10/- each) - sold during the year Mahindra Ugine Steel Co. Ltd.(Face value of Rs.10/- each) - sold during the year Welcast Steels Limited (Face value of Rs.10/- each) - sold during the year R.G. Ispat Limited (Face value of Rs.10/- each) Unquoted Rainbow Steels Limited(Face value of Rs.10/- each) Metal Scrap Trade Corporation Limited.(Face value of Rs. 10/- each) (B) Other Investments Quoted Associates Lanco Industries Limited (Face value of Rs.10/- each) Electrosteel Steels Ltd. (Formerly Electrosteel Integrated Ltd.) (Face value Rs. 10/-each) (Unquoted in Previous Year) Unquoted Subsidiaries Electrosteel Europe SA (Face value of Euro 10 each) Electrosteel Algeria SPA (Face value of 1000 Algerian Dinar each) Electrosteel Castings (UK) Ltd. (Face value of Gbp 1 each) Singardo International Pte Ltd(Face value of S$ 1 each) Electrosteel USA, LLC Associate Electrosteel Thermal Power Ltd.(Face value of Rs.10/- each) Joint Venture Domco Pvt Ltd (Face value of Rs. 100/- each) North Dhadhu Mining Company Pvt Ltd (Face value of Rs.10/- each) Other Companies Electrocast Sales India Ltd.(Face value of Rs.10/- each) N Marshall Hi-tech Engineers Pvt. Ltd.(Face value of Rs.10/- each) Sky-B (Bangla) Pvt. Ltd.(Face value of Rs.10/- each) Vishwa Utilities Pvt. Ltd. (Face value of Rs. 10/- each) Biswa Microfinance Private Limited (Face value of Rs.10/-each) Less: Provision # Towards 100% Capital Contribution Current Investments Equity Shares (Quoted) Coal India Limited (Face value of Rs 10/-each) Jindal Drilling & Industries Ltd (Face value of Rs 5/- each) Manganese Ore India Ltd ( Face value of Rs 10/- each) Reliance Industries Ltd ( Face value of Rs 10/- each) Rural Electrificaiton Corporation Ltd ( Face value of Rs 10/- each) Hero Honda Ltd ( Face value of Rs 2/- each) Less: Provision As at March 31, 2011 Holding Nos. Rs. in lakhs 16 0.00 As at March 31, 2010 Holding Nos. Rs. in lakhs 16 0.00

50 100 1,000

0.00 0.01 0.05 0.06

65 75 25 50 100 1000

0.00 0.01 0.00 0.00 0.01 0.05 0.07

19301218 700000000

63,33.53 7,24,88.47

19301218 700000000

63,33.53 7,00,00.00

380000 82500 1100000 1500000 # 15000 30000 5880000 50000 4340000 3708 -

23,23.41 5,20.33 10,59.26 4,39.89 11,04.15 1.50 30.00 5,88.00 5.00 4,34.50 0.37 8,53,28.47 4,21.10 8,49,07.37 61.25 10,09.66 14.23 1,21.83 5.08 16.11 12,28.16 1,73.01 10,55.15

80000 82500 100000 1500000 # 15000 30000 5880000 1000 50000 4340000 550000

4,53.38 5,20.33 3,55.46 4,39.89 3,78.69 1.50 30.00 5,88.00 0.51 5.00 4,34.50 55.00 7,95,95.79 4,21.10 7,91,74.69 -

25000 176500 3794 13000 2000 1000

53

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars BONDS (QUOTED) 8.80% SBI Tier II 2021 of Rs. 1,00,000 each 9.35% ILFS 2035 of Rs. 1,000 each 0.00% RRVPNL 14/01/2028 of Rs. 5,00,000 each 0.00% RRVPNL 31/12/2023 of Rs. 5,00,000 each 9.33% IDFC 2026 of Rs. 10,00,000 each 0.00% RRVPNL 14/01/2027 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2025 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2023 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2024 of Rs. 5,00,000 each 9.75% IFCI 2030 of Rs. 10,00,000 each 8.65% L&T Ltd. 26/05/2020 of Rs. 1,00,000 each 9.70% GE Shipping 2023 of Rs. 10,00,000 each 9.70% GE Shipping 2021 of Rs. 10,00,000 each 9.98% IFCI 2030 of Rs. 10,00,000 each 9.95% SBI 2026 of Rs. 10,000 each 7.50% WSPF 2020 of Rs. 1,00,000 each 11.80% TISCO Perpetual of Rs. 10,00,000 each 10% DHFL 2017 of Rs. 1,00,000 each 9.70% IFCI 04/05/2030 of Rs. 10,00,000 each 10.40% DHFL 2020 of Rs. 1,00,000 each Commercial Paper - OTHERS (QUOTED) OBC 21/12/2011 of Rs. 1,00,000 each AIRCEL CP 30/05/2011 of Rs. 5,00,000 each MUTUAL FUNDS (QUOTED) ICICI Prudential FMP 51-13 months Plan C (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP 52-1year Plan A- Cumulative (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP 51-14 months Plan D (Purchased 30,000,000 units and sold nil units during the year) Kotak 18 M Series 4-Growth (Purchased 20,000,000 units and sold nil units during the year) Reliance Fixed Horizon XIV-Series 2-Growth Plan (Purchased 20,000,000 units and sold nil units during the year) Reliance Fixed Horizon XIV-Series 7-Growth Plan (Purchased 20,000,000 units and sold nil units during the year) BSL Fixed Term Plan - Series CF - Growth (Purchased 10,000,000 units and sold nil units during the year) Birla Sun Life Fixed Term Plan Series CL Growth (Purchased 10,000,000 units and sold nil units during the year) Birla Sun Life Fixed Term Plan Series CP Growth (Purchased 10,000,000 units and sold nil units during the year) Birla Sun Life Fixed Term Plan Series CQ Growth (Purchased 10,000,000 units and sold nil units during the year) Kotak FMP Series 28 - Growth (Purchased 5,000,000 units and sold nil units during the year) Kotak FMP Series 30 - Growth (Purchased 10,000,000 units and sold nil units during the year) Kotak FMP 370 Days Series 9 - Growth (Purchased 10,000,000 units and sold nil units during the year) HDFC FMP 370D February (1) - Growth - Series XVI (Purchased 10,000,000 units and sold nil units during the year) HDFC FMP 370D March (1) - Growth - Series XVI (Purchased 10,000,000 units and sold nil units during the year) As at March 31, 2011 Holding Nos. Rs. in lakhs 2 10000 190 132 22 206 206 180 206 37 400 42 53 91 10,136 2,204 247 2,690 333 4,022 560 222 10000000.000 10000000.000 30000000.000 20000000.000 20000000.000 20000000.000 10000000.000 10000000.000 10000000.000 10000000.000 5000000.000 10000000.000 10000000.000 10000000.000 10000000.000 19.50 99.50 1,91.81 1,94.18 2,20.29 2,28.47 2,75.77 2,90.90 3,03.03 3,78.41 4,00.00 4,20.00 5,30.06 9,26.30 10,53.64 22,32.70 24,95.67 27,23.91 33,30.76 40,39.30 5,18.67 10,52.15 10,00.00 10,00.00 30,00.00 20,00.00 20,00.00 20,00.00 10,00.00 10,00.00 10,00.00 10,00.00 5,00.00 10,00.00 10,00.00 10,00.00 10,00.00 As at March 31, 2010 Holding Nos. Rs. in lakhs 10000000.000 10000000.000 30000000.000 20000000.000 20000000.000 20000000.000 10,00.00 10,00.00 30,00.00 20,00.00 20,00.00 20,00.00 -

54

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars Canara Robeco Fixed Maturity Plan -Series 6 -13 Months (Plan A) - Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund Xiv- Series 9-Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xv Series 8-Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvi - Series 1-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvi Series 5-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvii Series 1-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) DSP FMP 12M Series 10 - Growth (Purchased 5,000,000 units and sold nil units during the year) IDBI FMP - 367 Days Series - 1 (February 2011) - A - Growth (Purchased 10,000,000 units and sold nil units during the year) Religare Fixed Maturity Plan - Series VI - Plan B (370 Days) - Growth (Purchased 10,000,000 units and sold nil units during the year) SBI Debt Fund Series - 370 Days - 10 - Growth (Purchased 10,000,000 units and sold nil units during the year) IDFC Fixed Maturity Yearly Series 38 Growth (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP Series 53 - 1 Year Plan A Cumulative (Purchased 5,000,000 units and sold nil units during the year) ICICI Prudential FMP Series 55 - 1 Year Plan D Cumulative (Purchased 15,000,000 units and sold nil units during the year) ICICI Prudential FMP Series 55-1Year Plan E Growth option (Purchased 10,000,000 units and sold nil units during the year) MUTUAL FUNDS (UNQUOTED) Birla Sunlife Savings Fund-InstIitutional-Daily Dividend Reinvestment (Purchased 17604025.71 units sold 20602536.85 units during the year) LICMF Savings Plus Fund-Daily Dividend Plan (Purchased 11568592.899 units sold 99487245.73 units during the year) Reliance Medium Term Fund-Daily Dividend Plan (Purchased 18433121.764 units sold 19187688.648 units during the year) Reliance Liquidity Fund-Daily Dividend Reinvestment Option (Purchased 226962810.715 units sold 226964290.909 units during the year) UTI Treasury Advantage Fund-Institutional plan (Daily Dividend Option) -Reinvestment (Face Value Rs 1000 each) (Purchased 392754.71 units sold 592731.79 units during the year) UTI Fixed Income Interval Fund-Monthly Interval Plan series-1-Institutional Daily Dividend Plan - Reinvestment (Purchased nil units and sold10000000 units during the year) Peerless Liquid Fund-Super Institutional Daily Dividend (Purchased 31817673.55 units and sold 25817304.97 units during the year) Aggregate amount of Quoted Investments In Mutual Funds In Bonds and Commercial Papers Other investments Aggregate amount of Unquoted Investments In Mutual Funds Other Investments As at March 31, 2011 Holding Nos. Rs. in lakhs 10000000.000 10000000.000 10000000.000 5000000.000 5000000.000 5000000.000 5000000.000 10000000.000 10000000.000 10000000.000 10000000.000 5000000.000 15000000.000 10000000.000 10,00.00 10,00.00 10,00.00 5,00.00 5,00.00 5,00.00 5,00.00 10,00.00 10,00.00 10,00.00 10,00.00 5,00.00 15,00.00 10,00.00 As at March 31, 2010 Holding Nos. Rs. in lakhs -

2998511.138 87918652.830 754566.884 1480.194 199977.085

3,00.06 87,91.86 1,29.00 0.15 20,00.20

6000368.580

6,00.13 13,99,87.67

10000000.000 -

10,00.00 10,23,96.03

3,15,00.00 2,19,25.02 7,98,77.16 6,00.13 60,85.36

13,33,02.18 66,85.49 13,99,87.67

1,10,00.00 63,33.55 1,22,21.26 7,28,41.22

1,73,33.55 8,50,62.48 10,23,96.03

55

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars Aggregate amount of Market value of Quoted Investments In Mutual Funds In Bonds and Commercial Papers Other investments Aggregate amount of Market value of Unquoted Investments in Mutual Funds As at March 31, 2011 Holding Nos. Rs. in lakhs 3,26,41.06 2,27,33.58 6,59,82.62 12,13,57.26 6,00.13 As at March 31, 2010 Holding Nos. Rs. in lakhs 1,10,31.53 1,25,65.32 2,35,96.85 1,22,22.03

Notes : 1. 500000000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Ltd. (Formerly Electrosteel Integrated Limited) aggregating Rs.5,00,00.00 lakhs held by the Company as Investment have been pledged in favour of Electrosteel Steels Ltd. lenders for securing financial assistance to Electrosteel Steels Ltd. 2. (a) Units of mutual fund purchased & sold during the year (Face value Rs.10/-each except otherwise stated) (b) Units of bonds purchased & sold during the year (Face value of Rs 1,00,000/- each except otherwise stated 3. Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value,whichever is lower except in case of debenture,bonds and government securities where the net present value at current yield to maturity have been considered. Units of mutual fund purchased & sold during the year NAME OF SCRIP Birla Sun Life Cash Manager-IP-Daily Dividend-Reinvestment Birla Sun Life Cash Plus-Institutional Premium -Daily Dividend Reinvestment Canara Robeco Liquid Super Instl Daily Div Reinvestment Fund HDFC Floating Rate Income Fund-Short Term Plan-Wholesale Option-Dividend Reinvestment HDFC Cash Mgmt. Fund-Savings Plan-Daily Dividend Reinvestment HDFC Cash Mgmt Fund-Treasury Advantage Plan-Wholesale-Daily Dividend Reinvestment IDFC Cash Fund Super Inst Plan C Daily Dividend (Formerly Known as GCCD IDFC Cash Fund Super Inst Plan C Daily Dividend ) IDFC Money Manager Fund - TP - Super Instituional Plan C - Daily Dividend (Formerly Known as GFCD IDFC Money Manager Fund - TP Super Instituional Plan C - Daily Dividend ) JM High Liquidity Fund-Super Institutional Plan-Daily Dividend Kotak Flexi Debt Scheme Institutional-Daily Dividend Kotak Liquid (Institutional Premium)-Daily Dividend Kotak Floater Long Term - Daily Dividend LIC MF Liquid Fund Dividend Plan JP Morgan India Liquid Fund-Super Instl Daily Dividend Plan - Reinvestment JP Morgan India Treasury Fund-Retail-Daily Dividend Plan - Reinvestment Religare Liquid Fund-Institutional Daily Dividend Religare Liquid Fund-Super Institutional Daily Dividend Religare Ultra Short Term Fund-Institutional Daily Dividend L&T Freedom Income STP Instl-Daily Dividend Reinvestment Plan L&T Liquid instl Daily Dividend Reinvestment Plan Principal Floating Rate Funds FMP Institutional Option Daily Dividend Reinvestment ICICI Prudential Liquid Super Institutional Plan - Dividend - Daily ICICI Prudential Flexible Income Plan Premium - Daily Dividend ICICI Prudential Ultra Short Term Plan Regular Daily Dividend ICICI Prudential Ultra Short Term Plan Premium Plus Daily Dividend ICICI Prudential Ultra Short Term Plan Super Premium Daily Dividend Reliance Money Manager Fund Institutional Option Daily Dividend Plan (Face Value of Rs 1000/-each) Reliance Liquid Fund-Treasury Plan - Institutional Option -Daily Dividend Option UTI Liquid Cash Plan Institutional -Daily Income Option -Reinvestment UTI Floating Rate Fund- Short Term Plan-Institutional Daily Dividend Plan - Reinvestment Templeton India Treasury Management Account-Super Institutional Plan-Daily Dividend (Face Value of Rs1000/- each) Templeton India Short Bond Fund Institutional-Daily Dividend Reinvestment 56 Nos 8601533.600 78020580.705 24876697.340 18115147.420 6816920.936 30255142.823 11259641.822 305061906.264 103237621.006 205058688.700 43037208.762 10474627.673 38483378.370 498468.570 400285.220 500313.050 1997235.410 4778261.670 4201470.060 9579637.136 7096360.441 25015817.199 655006.490 867327.451 51499.389 1026373.080 3349406.690 Current Year Cost Rs. in lakhs 8,60.41 78,17.27 25,01.35 18,26.17 7,25.07 30,26.27 11,26.13 3,05,56.53 1,03,72.80 2,50,74.78 43,38.06 11,50.12 38,51.38 50.01 40.04 50.07 2,00.07 4,85.24 4,25.03 95,81.76 75,03.34 25,06.84 65,59.05 88,41.93 5,15.39 1,02,70.64 3,35.30 Previous Year Cost Rs. in lakhs 5,46,46.95 3,96,41.96 4,54,70.87 3,20,63.25 2,84,56.08 4,33,98.91 4,18,50.73 78,00.61 5,00.12 29,60.25 19,10.64 1,00.05 16,11.35 20,15.06 1,15,07.78 6,50.16 1,10,27.86 -

Nos 545405965.147 372700925.217 453280824.565 320552335.140 284518143.786 354911308.563 415194020.011 71043150.192 4995057.520 2959600.034 1807004.183 998396.399 16079736.580 20108380.678 1149466.412 4252963.631 1101936.495 -

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars Units of Bonds purchased & sold during the year. NAME OF SCRIP 8.30% GOI 2040 9.20% HDFC Ltd 2016 23.328% ICICI Bank 2021 9.65% IDBI Bank Perpetual 8.57% IDBI Bank 2025 9.35% GE SHIPPING 2019 9.70% GE SHIPPING 2023 7.75% REC 2012 7.60% REC 2013 8.75% REC 08/07/2025 8.75% REC 12/07/2025 8.90% BOB PERPETUAL 9.55% IFCI 2025 9.70% IFCI 04/05/2030 9.70% IFCI 18/05/2030 IFCI DEEP DISCOUNT 2040 IFCI DEEP DISCOUNT 2039 IFCI DEEP DISCOUNT 2038 IFCI DEEP DISCOUNT 2037 IFCI DEEP DISCOUNT 2036 IFCI DEEP DISCOUNT 2035 IFCI DEEP DISCOUNT 2034 IFCI DEEP DISCOUNT 2033 IFCI DEEP DISCOUNT 2032 IFCI DEEP DISCOUNT 2031 9.75% IFCI 13/07/2030 9.75% IFCI 16/07/2030 9.98% IFCI 29/10/2030 8.80% IDFC 21/07/2025 8.79% IDFC 15/09/2020 8.77% IDFC 20/09/2020 8.86% IDFC 20/09/2025 8.48% IDFC 28/09/2013 8.72% IDFC 29/09/2020 8.82% IDFC 29/09/2025 8.50% IDFC 19/10/2012 8.90% IDFC 19/11/2025 9.15% IDFC 06/01/2026 9.35% IDFC 17/02/2026 500000.000 3.000 1000.000 860.000 285.000 350.000 4.000 10.000 100.000 570.000 908.000 48.000 100.000 1229.000 1125.000 20738.000 20738.000 20738.000 20738.000 52428.000 54238.000 62208.000 20738.000 20738.000 36738.000 1092.000 431.000 898.000 500.000 56.000 96.000 556.000 180.000 36.000 400.000 120.000 40.000 80.000 100.000 4,93.30 30.53 23,45.50 87,88.25 28,32.77 35,00.00 40.00 1,01.00 10,19.21 56,74.87 90,78.85 4,80.00 10,00.00 1,22,91.71 1,12,51.06 6,16.13 6,16.13 6,16.13 6,16.13 14,44.27 16,17.78 20,88.31 6,16.13 6,16.13 13,66.85 1,09,17.20 42,99.20 91,78.58 49,97.00 5,60.00 9,62.69 55,60.00 18,00.00 3,60.00 40,00.00 12,00.00 4,00.00 8,00.00 10,00.00 As at March 31, 2011 Holding Nos. Rs. in lakhs As at March 31, 2010 Holding Nos. Rs. in lakhs

57

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars 8.96% IDFC 05/04/2025 8.90% IDFC 09/04/2025 8.84% IDFC 28/05/2025 7.50% IDFC 10/07/2013 8.80% IDFC 15/06/2025 8.79% IRFC 2030 8.72% IRFC 2035 8.83% IRFC 2031 8.83% IRFC 2032 8.83% IRFC 2033 8.83% IRFC 2034 8.83% IRFC 2035 8.50% IRFC 2020 8.80% SBI Tier II 2021 8.96% SBI Upper Tier II 2021 9.05% SBI PERPETUAL 8.95% INFOTEL 2020 8.60% LICHF Ltd. 2020 8.88% LICHF Ltd. 2020 11.15% PFC 2011 8.70% PFC 2015 8.70% PFC 14/05/2020 8.70% PFC 2025 8.75% PFC 2025 7.10% PFC 2012 8.70% PFC 15/07/2020 9.05% OBC PERPETUAL 10% DHFL 2017 10.40% DHFL 2020 9.02% IREDA 2025 7.40% IOC 2015 6.85% NABARD 2013 Aircel CP 30/05/2011 8.57% CBI 2025 8.68% Exim Bank 2030 10.75% Tata Bluescope Steel 2019 9.65% Yes Bank 2020 9.30% Yes Bank 2030 0.00% RRVPNL 31/12/2019 0.00% RRVPNL 31/12/2020 0.00% RRVPNL 31/12/2021 As at March 31, 2011 Holding Nos. Rs. in lakhs 100.000 10,00.00 200.000 20,00.00 850.000 85,00.00 60.000 6,07.65 500.000 50,01.28 660.000 66,09.76 50.000 5,00.00 317.000 31,83.96 584.000 58,60.21 330.000 33,13.72 209.000 20,95.18 200.000 20,08.30 400.000 40,00.00 13.000 1,26.76 10.000 98.11 4.000 40.12 3350.000 3,34,77.92 350.000 35,00.70 91.000 9,10.46 13.000 1,30.90 50.000 5,11.25 50.000 5,00.75 50.000 4,97.75 500.000 50,12.05 100.000 9,88.60 10.000 1,00.20 215.000 21,50.00 12750.000 1,25,09.03 12258.000 1,22,23.61 126.000 12,70.08 15.000 1,39.07 4.000 40.00 400.000 18,22.08 484.000 48,49.34 28.000 2,80.00 1400.000 1,41,86.00 100.000 10,00.00 140.000 14,00.00 257.000 5,50.88 257.000 5,01.30 257.000 4,56.30 As at March 31, 2010 Holding Nos. Rs. in lakhs -

58

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 6 INVESTMENTS (Contd.) (Long term and fully paid up except otherwise stated) Particulars 0.00% RRVPNL 31/12/2022 0.00% RRVPNL 31/12/2023 0.00% RRVPNL 31/12/2024 0.00% RRVPNL 31/12/2025 0.00% RRVPNL 31/12/2026 0.00% RRVPNL 31/12/2027 0.00% RRVPNL 31/12/2028 0.00% RRVPNL 14/01/2020 0.00% RRVPNL 14/01/2021 0.00% RRVPNL 14/01/2022 0.00% RRVPNL 14/01/2023 0.00% RRVPNL 14/01/2024 0.00% RRVPNL 14/01/2025 0.00% RRVPNL 14/01/2026 0.00% RRVPNL 14/01/2027 0.00% RRVPNL 14/01/2028 0.00% RRVPNL 14/01/2029 9.05% State Bank of Hyderabad Perpetual 9.30% SBOP upper Tier II 2022 9.85% Sundaram Fin 2020 10.25% Shriram Transport Finance Company Limited 2015 8.84% PGC 21/10/2018 8.84% PGC 2025 6.85% IIFCL Taxfree 2014 8.74% APPFCL 2022 9.35% ILFS 2035 7.50% WSPF 2020 0.00% Indiabulls Ltd. 2013 10% Indiabulls Ltd 2015 10.15% Tata Autocomponent 2020 9.13% NACIL 2020 7.15% TATA CAP 2011 Shares purchased & sold during the year. Coal India Ltd Punjab & Sind Bank Reliance Industries Ltd. Rural Electrification Corporation Ltd Punjab National Bank As at March 31, 2011 Holding Nos. Rs. in lakhs 257.000 125.000 257.000 257.000 257.000 257.000 257.000 468.000 468.000 468.000 288.000 262.000 262.000 468.000 262.000 278.000 468.000 85.000 20.000 20.000 1000.000 4.000 40.000 80.00 36.000 450000.000 1280.000 290.000 340.000 248.000 1091.000 400.000 29034 19551 8000 4000 1000 4,15.34 1,83.88 3,44.03 3,13.15 2,85.04 2,59.45 2,36.10 10,06.19 9,15.93 8,33.98 4,68.47 3,88.40 3,53.65 5,73.10 2,93.36 2,83.34 4,32.54 8,49.92 1,98.86 2,04.00 10,00.00 50.23 5,00.00 81.78 3,60.00 45,03.00 13,05.60 29,48.00 34,01.70 25,23.65 1,12,82.56 39,84.00 71.13 23.46 78.75 9.73 11.59 As at March 31, 2010 Holding Nos. Rs. in lakhs -

59

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 7 INVENTORIES : As taken,Valued and Certified by the Management Stores and Spare Parts Raw Materials Stock-in-trade : Finished Stock Process Stock Work in Progress Less: Progress payments received Rs. in lakhs As at March 31, 2011 Rs. in lakhs 43,17.99 3,14,08.95 1,19,90.39 27,63.05 15,99.39 100.19 14,99.20 5,19,79.58 SCHEDULE 8 SUNDRY DEBTORS : Unsecured Debts outstanding for a period exceeding six months - Considered good Other Debts - Considered good As at March 31, 2010 Rs. in lakhs 51,18.63 1,73,45.66 1,02,11.78 16,25.72 24,92.60 11,21.26 13,71.34 3,56,73.13

52,57.91 4,36,04.77 4,88,62.68

1,19,27.72 2,54,83.09 3,74,10.81

SCHEDULE 9 CASH AND BANK BALANCES : Cash balance on hand Bank Balances With Scheduled Banks : Current Accounts Fixed Deposits (including interest accrued thereon) With Non - Scheduled Bank : National Bank of Abu Dhabi Current Accounts [Maximum Amount outstanding during the year Rs. 3,10.89 lakhs (Previous year Rs. 1,82.78 lakhs)] SCHEDULE 10 LOANS AND ADVANCES (Unsecured) : Advances and Loans to subsidiaries Advances recoverable in cash or in kind or for value to be received - Considered Good - Considered Doubtful Less: Provision for Doubtful Advances Advance Tax including tax deducted at source (net of provisions) [including provision for FBT Rs. NIL (Previous year Rs. 30.17 lakhs)] Balances with Government Authorities Other Deposits

10.13 14,43.75 1,74,69.69 1,89,13.44 49.62 1,89,73.19

3.85 8,89.17 2,70,56.48 2,79,45.65 1,43.03 2,80,92.53

16,17.85 1,26,04.62 7,67.16 1,33,71.78 7,67.16 1,26,04.62 10,07.46 55,82.62 2,08,12.55

33,19.84 1,18,11.00 7,73.95 1,25,84.95 7,73.95 1,18,11.00 2,60.65 7,53.22 59,56.17 2,21,00.88

60

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 11 CURRENT LIABILITIES AND PROVISIONS : CURRENT LIABILITIES : Acceptance Sundry Creditors Dues of Micro enterprises and Small enterprises Others** Advance From Customers Other Liabilities Interest accrued but not due on loans Unclaimed Dividend* PROVISIONS : For Taxation (net of advance tax and tax deducted at source) [including net Fringe Benefit Tax Rs. 30.17 lakhs] For Dividend For Tax on Dividend For Redemption Premium on ZCCB For losses on derivative transactions on mark to market basis For Others 5,55.66 40,84.41 6,62.59 30,43.60 11,87.52 36,40.00 1,31,73.78 * The same is not due for payment to Investor Education and Protection Fund. ** Includes Rs. 19.22 lakhs (previous year Rs. Nil) due to subsidiaries. SCHEDULE 12 INCREASE/(DECREASE) IN FINISHED AND PROCESS STOCK : Closing Stock : Finished Process Work in Progress Less : Opening Stock : Finished Process Work in Progress 1,19,90.39 27,63.05 15,99.39 1,63,52.83 1,02,11.78 16,25.72 24,92.60 1,43,30.10 20,22.73 SCHEDULE 13 OTHER INCOME : Rent Income from Investments (Gross) (Note 6 - Schedule 17) Profit on sale/discard of Fixed Assets (Net) Provisions / Liabilities no longer required written back Provision for Mark to Market losses no longer required written back Incentives on Exports Miscellaneous Income 91.50 4,14.41 0.68 2,89.28 1,02.90 34,22.92 27,11.21 70,32.90 88.41 8,92.44 19,35.16 11,10.19 29,86.50 55,29.15 1,25,41.85 1,02,11.78 16,25.72 24,92.60 1,43,30.10 58,75.14 23,12.98 38,56.13 1,20,44.25 22,85.85 5,92,00.26 40,84.41 6,78.37 24,32.31 11,32.86 33,40.00 1,16,67.95 2,99,64.42 2,39,67.81 0.05 1,69,96.87 38.14.12 5,77.82 5,43.79 1,26.02 4,60,26.48 1,46,24.63 18,92.60 8,00.13 8,65.89 1,13.22 1,82,96.47 Rs. in lakhs As at March 31, 2011 Rs. in lakhs As at March 31, 2010 Rs. in lakhs

61

ELECTROSTEEL CASTINGS LIMITED

Schedule Forming Part of Account

SCHEDULE 14 RAW MATERIALS CONSUMED : Opening Stock Add : Purchases Less: Closing Stock Rs. in lakhs 1,73,45.66 9,08,08.74 10,81,54.40 3,14,08.95 7,67,45.45 As at March 31, 2011 Rs. in lakhs As at March 31, 2010 Rs. in lakhs 1,79,85.48 5,72,72.47 7,52,57.95 1,73,45.66 5,79,12.29

SCHEDULE 15 MANUFACTURING AND OTHER EXPENSES : Stores and Spare Parts (Note 7 Schedule 17) Handling and Transportation Charges Power and Fuel Excise Duty on Stock Salaries, Wages, Bonus and Allowance,etc Contribution to Provident and Other Funds Employees Welfare Repairs: Machinery Buildings Others Rates and Taxes Rent Insurance Freight and Forwarding charges [net of realisation of Rs. 57,19.99 lakhs(Previous year Rs. 48,13.18 lakhs)] Commision to Selling Agents Directors Fees and Commission Job charges Provision for diminution in value of Current Investments Provision for losses on mark to market basis on derivative transactions (refer note no. 25 of schedule 17) Bad debts Less: Provision for bad and doubtful debts Loss on sale / discard of fixed assets (net) Miscellaneous Expenses

1,10,07.60 11,45.87 1,26,40.72 3,43.95 1,11,24.44 7,30.09 4,32.83 3,38.19 1,22.17 11,04.00 10,09.63 5,15.86 2,51.40 65,64,58 65,45.71 48.20 14,27.24 1,73.01 18.26 38.09 52,07.77 6,07,89.61

1,08,11.91 9,57.87 1,05,15.51 56.19 96,81.06 5,56.98 3,70.06 3,95.59 1,63.18 9,60.23 7,80.50 4,50.45 2,33.51 36,60.87 48,46.80 42.20 17,42.04 1,02.90 33,34.98 (14,89.59) 5,41.46 56,98.55 5,44,13.25

SCHEDULE 16 INTEREST AND FINANCIAL CHARGES (NET) : Interest On Debentures On Term Loan On Others Financial Charges Less: Interest on Bonds (Gross) [Tax deducted at source Rs. 8.53 lakhs (previous year Rs. Nil)] - current Investments other than trade Profit on sale of current Investments other than trade Interest on Loans, Deposits, Overdue debts etc. (Gross) [Tax deducted at source Rs. 30.64 lakhs (Previous year Rs. 16.02 lakhs)]

36,44.92 18,78.84 22,03.65 1,32.86 78,60.27 22,98.22 3,46.28 4,47.69 30,92.19 47,68.08

18,59.63 16,29.23 7,03.89 4,46.99 46,39.74 0.13 2,32.71 2,32.84 44,06.90

62

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 17 NOTES ON ACCOUNTS 1. A. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION OF FINANCIAL STATEMENTS The accounts have been prepared under the historical cost convention in accordance with the provisions of the Companies Act, 1956 and accounting standards notified vide Companies (Accounting Standards) Rules, 2006. Accounting policies unless specifically stated to be otherwise, are consistent and are in consonance with generally accepted accounting principles. USE OF ESTIMATES The preparation of financial statements require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and the reported amounts of income and expenses during the year. Contingencies are recorded when it is probable that a liability will be incurred and the amounts can reasonably be estimated. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized. FIXED ASSETS AND DEPRECIATION 1) Tangible Assets (i) Gross Block : Fixed Assets are stated at cost of acquisition and subsequent improvements thereto. Cost of acquisition includes taxes, duties (net of cenvat availed), inward freight, installation expenses and adjustment for exchange differences wherever applicable. For major projects, interest and other costs incurred on / related to direct borrowings to finance projects / fixed assets during construction period and pre-operative expenses, if appropriate, are capitalized. Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized. (ii) Depreciation : (a) Depreciation on Fixed Assets, except where otherwise stated, is provided as per Schedule XIV of the Companies Act, 1956 on straight line method in respect of Plant and Machinery of Ductile Iron Foundry Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge Iron Plant, Coke Oven Plant and Sinter Plant and on written down value method on other assets. Certain Plant and Machinery have been considered Continuous Process Plant on the basis of technical assessment. Depreciation on upgradation of fixed assets is provided over the remaining useful life of the mother plant / fixed assets. (b) Assets costing Rs. five thousand or less are being depreciated fully in the year of addition/acquisition. (c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are depreciated over a period of 3 years. Pipe Moulds upto 350 mm are charged to consumption in the year of issue. (d) Blast Furnace and Coke Oven Battery relining are depreciated on straight line method over a period of 2 and 5 years respectively (average expected life) as per technical assessment. Wagons acquired under "Wagon Investment Scheme" are depreciated over a period of 10 years and Heavy Earth Moving Machinery used for coal mines are depreciated over a period of 5 years on straight line method. (e) Leasehold land is amortised on straight line method over the period of the lease. (f) Machinery Spares which can be used only in connection with an item of Fixed Asset and whose use is expected to be irregular are amortised over the useful life of the respective fixed assets and the amount amortised is included under stores and spares consumed. (iii) Capital Work-in-progress includes preoperative expenses, machinery to be installed, construction and erection materials, advances etc. (iv) Development Expenses net of Income of the Projects / Mines under development are booked to Development Account and grouped under Capital Work in progress till the projects/ mines are brought to Revenue Account, except otherwise specifically stated in the Project Report to determine the commercial readiness of the project to yield production on a sustainable basis and completion of required development activity during the period of construction, projects and mines under development are brought to revenue: (a) From beginning of the financial year immediately after the year in which the project achieves physical output of 50% of rated capacity as per approved project report, or (b) One year of touching of coal, or (c) From the beginning of the financial year in which the value of production is more than total expenses, whichever event occurs first. 2) Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization. Computer software packages are amortised over a period of 5 years. Amortsation is done on straight line basis. Mining rights are amortised on straight line method over the available period of mining lease

B.

C.

D.

INVESTMENTS Long-term investments are stated at cost less provision, if any, for diminution in value other than temporary. Current investments are carried at lower of cost or fair value, computed category wise. 63

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 17 NOTES ON ACCOUNTS (Contd.) E. INVENTORIES (i) Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on 'weighted average' basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. (ii) Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods represents prime cost, and includes appropriate portion of overheads and excise duty. (iii) Cost in respect of process stock represents, cost incurred upto the stage of completion. (iv) Cost in respect of work-in-progress represents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company. IMPAIRMENT Fixed assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of fixed assets is determined. An impairment loss is recognized, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the greater of assets net selling price or its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate. An impairment loss is reversed if there has been a change in the recoverable amount and such loss either no longer exists or has decreased. Impairment loss/reversal thereof is adjusted to the carrying value of the respective assets, which in case of CGU, are allocated to its assets on a prorata basis. Subsequent to recognition of impairment loss/reversal thereof, depreciation is provided on the revised carrying amount of the asset, on a systematic basis, over its remaining useful life. FOREIGN CURRENCY TRANSACTI ONS AND DERIVATIVES Transactions in foreign currencies are accounted for at the exchange rate prevailing on the date of the transaction. Foreign currency monetary assets and liabilities at the year end are translated at the year end exchange rates. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. The loss or gain thereon and also on the exchange differences on settlement of the foreign currency transactions during the year are recognized as income or expense and are adjusted to the profit and loss account under respective heads of account except where such liabilities and/or transactions relate to fixed assets / projects and were entered into before 1-4-2004, in which case, these are adjusted to the cost of respective fixed assets. Revenue/expenditure earned/incurred by the overseas office is translated at the respective month end rate during which such revenue /expenditure is so earned / incurred. Exchange differences arising with respect to forward contracts other than those entered into, to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are recognized in the period in which they arise and the difference between the forwards rate and exchange rate at the date of transaction is recognized as income / expense over the life of the contract. Keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding accounting for derivatives, mark to market losses on all other derivatives contracts (other than forward contracts dealt as above) outstanding as at the year end , are recognized in the accounts. REVENUE RECOGNITION All expenses and income to the extent considered payable and receivable respectively unless specifically stated to be otherwise are accounted for on mercantile basis. SALES Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment sales etc. are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of sales account from the respective consignee. Revenue against Turnkey Contracts undertaken by the Company is recognized progressively on the basis of percentage of completion method. Stage of completion of contracts in progress is determined by reference to the physical proportion of the contract work completed. EMPLOYEE BENEFITS Employee benefits are accrued in the year services are rendered by the employees. Contribution to defined contribution schemes such as Provident Fund, Superannuation Fund etc. are recognized as and when incurred. Long-term employee benefits under defined benefit scheme such as contribution to gratuity, leave etc. are determined at close of the year at present value of the amount payable using actuarial valuation techniques. Actuarial gain and losses are recognized in the year when they arise. RESEARCH AND DEVELOPMENT Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred.

F.

G.

H.

I.

J.

K.

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ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 17 NOTES ON ACCOUNTS (Contd.) L. EXPORT BENEFITS Export benefits arising on account of entitlement for duty free imports are accounted for through import of materials. Other export benefits are accounted for as and when the ultimate realisibility of such benefits are established. GOVERNMENT GRANTS Revenue grants including subsidy/rebates are credited to Profit and Loss Account under "Other Income" or deducted from the related expenses. Grants relating to fixed assets are credited to Capital Reserve Account or adjusted in the cost of such assets as the case may be, as and when the ultimate realisability of such grants are established. INCOME TAX Provision for tax is made for current and deferred taxes. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing differences, which are capable of reversal in subsequent periods are recognized using tax rates and tax laws, which have been enacted or substantively enacted. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty" that such deferred tax assets can be realized against future taxable profits. PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events, it is probable that there will be an outflow of resources and a reliable estimate can be made, of the amount of the obligation. Contingent assets are neither recognized nor disclosed in the financial statement. Contingent liabilities are not provided for and are disclosed by way of notes. (Rs. in lakhs) 2010-11 2. 3. 2009-10 Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances): 89,34.18 33,00.31 Contingent Liabilities not provided for in respect of: a) Various show cause notices/demands issued/raised, which in the opinion of the management are not tenable and are pending with various forum / authorities: i) Sales Tax 8,12.80 4,89.74 ii) Excise, Custom Duty and Service tax [net of provision of Rs. 500.00 lakhs (previous year Rs. 500.00 lakhs)] 68,51.18 60,85.79 b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March08 to January10. In the opinion of the management demand is adhoc and arbitrary and is not sustainable legally. 96.11 1,13.13 c) Demand of Tamilnadu Electricity Board disputed by the Company. 8.20 8.20 d) During the year 1994 UPSEB had raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending before Honble High Court at Allahabad. 2,61.74 2,61.74 e) Corporate guarantee issued to banks by the Company on behalf of : (i) Subsidiary Companies 14,15.22 60,46.00 (ii) Associate 21,00.00 f) Standby Letter of Credit issued by banks on behalf of the company in favour of (i) Subsidiary Companies 2,08,10.53 87,95.53 g) Guarantees given by banks on behalf of the Company 1,85,33.31 1,73,87.30 h) Bills Discounted with Banks. 88,94.72 44,36.01 i) The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently. Note : Future cash outflows, if any, in respect of (a) to (d), and (i) above is dependent upon the outcome of judgments / decisions.

M.

N.

O.

65

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

SCHEDULE 17 NOTES ON ACCOUNTS (Contd.) (Rs. in lakhs) Current Year 4. Auditors Remuneration. (a) Audit Fees (b) Other services- Certificates, etc. Management Services a) Directors Remuneration: (i) Managing/Jt. Managing/Whole-time Directors: Salary Contribution to Provident and Superannuation Funds Gratuity and Leave Perquisites Commission (ii) Other Directors Commission 11.50 4.20 10.50 Previous Year 10.50 14.90

5.

4,07.94 23.82 12.45 25.49 5,70.00 10,39.70 39.00 10,78.70 9.20 10,87.90 2,14,88.74 10,78.70 2,25,67.44 3,68.50 0.68 2,21,98.26 4,00.00 1,70.00 39.00

1,79.19 14.14 12.01 14.67 8,25.80 10.45.81 32.00 10,77.81 10.20 10,88.01 3,07,91.67 10,77.81 3,18,69.48 (5,41.46) 3,24,10.94 5,70.00 2,55.80 32.00

Sitting fees to Non-executive Directors Total b) Computation of Directors Commission: Profit Before Taxes Add: Directors Remuneration Less: Profit on Sale of Investments Profit/(loss) on Sale/discard of Fixed Assets (net) Net Profit for the purpose of Directors Commission Managing/Joint Managing Directors Commission Whole-time Directors Commission Other Directors Commission 6. Income from Investments (Net) represent: a) Trade InvestmentsLong Term Dividend Profit on Sale of Long Term Investments Dividend from subsidiary company b) Other than Trade Investments: Dividend from current investments

2,90.30 22.21 10.30 91.60 4,14.41

1,93.79 9.95 6,88.70 8,92.44 1,25.78

7. 8. 9.

Stores and spares consumption include pipe moulds written off

3,08.54

No allocation has been made in respect of stores and spare parts and wages for repairs to Machinery and Building. (a) Miscellaneous expenses include Charity and Donation of Rs. 63.97 lakhs (previous year Rs. 2,82.45 lakhs), Rs. 3,00.00 lakhs towards relocation of certain assets of Elavur unit, Job charges includes Rs. 33.17 lakhs (previous year Rs. 51.74 lakhs) incurred towards insurance on Turnkey Contracts. (b) Miscellaneous income include gain on exchange difference of Rs. 6,55.34 lakhs (previous year Rs. 42,68.18 lakhs)

66

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

SCHEDULE 17 NOTES ON ACCOUNTS (Contd.) 10. Employee Benefits The disclosures required under Accounting Standard 15 on ''Employee Benefits'' notified in the Companies (Accounting Standards) Rules 2006, are given below: Defined Contribution Scheme Contribution to Defined Contribution Plan, recognized for the year are as under : (Rs. in lakhs) Employer's Contribution to Provident Fund Employer's Contribution to Pension Fund Employer's Contribution to Superannuation Fund 2010-11 2,26.47 99.65 66.16 2009-10 1,96.24 1,02.06 62.33

Defined Benefit Scheme The employee's gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. (Rs. in lakhs) Gratuity (Funded) 2010-11 i. Change in the present value of the defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows : Liability at the beginning of the year Interest Cost Current Service Cost Actuarial (gain) / loss on obligations Benefits paid Liability at the end of the year ii. Changes in the Fair Value of Plan Asset representing reconciliation of opening and closing balances thereof are as follows : Fair value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions by the Company Benefits paid Actuarial gain / (loss) on Plan Assets Fair value of Plan Assets at the end of the year Total actuarial gain / (loss) to be Recognized iii. Actual return on Plan Assets Expected return on Plan assets Actuarial gain / (loss) on Plan Assets Actual Return on Plan Assets iv. Amount Recognized in Balance Sheet Liability at the end of the year Fair value of Plan Assets at the end of the year 10,64,79 89.82 1,06.44 88.44 (1,68.80) 11,80.69 8,85.88 78.03 1,00.53 39.06 (38.71) 10,64.79 7,82.44 66.74 87.92 32.31 (83.53) 8,85.88 6,76.49 54.71 75.25 39.99 (64.00) 7,82.44 2009-10 2008-09 2007-08

7,04.89 55.08 81.52 (1,68.80) (0.63) 6,72.05 89.07 55.08 (0.63) 54.45 11,80.68 6,72.05 5,08.63

5,85.66 51.63 73.35 (38.71) 32.96 7,04.89 6.10 51.63 32.96 84.59 10,64.79 7,04.89 3,59.90

5,49.44 45.40 81.75 (83.53) (7.40) 5,85.66 39.71 45.40 (7.40) 38.00 8,85.88 5,85.66 3,00.22

4,95.76 39.20 68.32 (64.00) 10.16 5,49.44 29.83 39.20 10.16 49.36 7,82.44 5,49.44 2,33.00

67

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) (Rs. in lakhs) Gratuity (Funded) 2010-11 v. Expenses Recognized in the Income Statement Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial (gain) / loss to be Recognized Expenses Recognized in Profit & Loss Account vi. Balance Sheet Reconciliation Opening Net Liability Expenses as above Employers Contribution Amount Recognized in Balance Sheet Compensated Absences The obligation for compensated absences is recognized in the same manner as gratuity. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the Company as at 31.03.2011 is given below: (Rs. in lakhs) Particulars Privileged Leave Sick Leave vii. Principal Actuarial assumptions as at the Balance Sheet date Discount Rate Rate of Return on Plan Assets Notes: i) ii) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled. The Company expects to contribute Rs 1,00.00 lakhs (previous year Rs 90.00 lakhs) to Gratuity fund in 2011-12. 31.03.2011 6,97.31 3,51.46 8.00% 8.00% 31.03.2010 6,03.54 2,66.79 8.00% 8.00% 359.90 230.25 (81.52) 5,08.63 3,00.22 1,33.03 (73.35) 3,59.90 2,33.00 1,48.97 (81.75) 3,00.22 1,80.73 1,20.59 (68.32) 2,33.00 1,06.44 89.82 (55.08) 89.07 2,30.25 1,00.53 78.03 (51.63) 6.10 1,33.03 87.92 66.74 (45.40) 39.71 1,48.97 75.25 54.71 (39.20) 29.83 1,20.59 2009-10 2008-09 2007-08

11. In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required. 12. Balance of Sundry Debtors including for Turnkey Contracts, Work-in-progress, Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained. 13. Rs. 61,87.39 lakhs being net gain (previous year Rs 57,78.95 lakhs being net gain) on account of exchange difference has been adjusted to the respective heads of account in Profit and Loss Account. 14. Disclosure of sundry creditors under current liabilities is based on the information available with the company regarding the status of the suppliers as defined under the " Micro, Small and Medium Enterprise Development Act, 2006" (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding as at the balance sheet date. Based on above the relevant disclosures u/s 22 of the Act are as follows: (Rs. in lakhs) 2010-11 1. 2. 3. Principal amount outstanding at the end of the year Interest amount due at the end of the year Interest paid to suppliers 0.05 Nil Nil 2009-10 Nil Nil Nil

68

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 15. Other deposits under Loans and Advances include Rs. 5,57.50 lakhs (previous year Rs. 5,57.50 lakhs) with Private Limited companies in which directors are interested as a member / director. 16. Based on the current Exchange Control Procedure in Algeria, as per the Algerian Finance Law, there is a restriction in repatriating the advance amount given by the Company to its wholly owned subsidiary at Algeria. This is to be converted into equity, however pending outcome on the representation made by the company through Indian Embassy at Algeria, this advance continued to be reflected under Loans & Advances. 17. Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters carrying amount at the end of the year Rs. 500.00 lakhs and carrying amount at the beginning of the year Rs. 500.00 lakhs. No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands - carrying amount at the end of the year Rs. 28,40.00 lakhs and at the the beginning of the year Rs. 28,40.00 lakhs. Amount reversed during the year and additional provisions made during the year was Rs. 18,40.00 lakhs. Outflows in these cases would depend on the developments/settlements. 18. Fixed Deposits with Scheduled Banks include Fixed Deposit of Rs. 4,08.28 lakhs (previous year Rs. 3,51.60 lakhs) lodged with Government Departments, Customers and Bank. 19. (a) The break up of deferred tax assets and deferred tax liabilities are as given below : (Rs. in lakhs) Particulars Deferred Tax Assets: 1. Expenses Allowable on Payment Basis 2. Provision for doubtful debts, advances and stock 3. Provision for losses on Derivatives on Mark to Market basis 4. Others Deferred Tax Liabilities: 1. Depreciation etc. 2. Liquidated Damages and Retention money Net Deferred Tax Liability (b) Calculation of Earning Per Share is as follows : Particulars Net profit for basic earnings per share as per profit and loss account (i) Adjustment for the purpose of diluted earnings per share Exchange (gain)/loss on realignment of ZCCB and conversion rate difference Net profit for diluted earnings per share (ii) Weighted average number of equity shares for calculation of basic and diluted earnings per share (Face value Re. 1/- per share) a) Basic earnings per share b) Diluted earnings per share 2010-2011 1,54,63.74 Opening as on 01-04-2010 3,18.39 2,57.09 34.18 12,31.47 62,10.95 3,27.30 46,97.12 Charge or Credit during the Year (5.92) (8.19) (28.26) 75.76 (1,49.20) (1,05.85) (2,88.44) Closing as at 31-03-2011 3,12.47 2,48.90 5.92 13,07.23 60,61.75 2,21.45 44,08.68 (Rs. in lakhs) 2009-2010 2,06,28.89

(34.14) 1,54,29.60

6.75 2,06,35.64

326752705 348359176 326752705 21606471 4.73 4.43

319837491 345696047 319837491 25858556 6.45 5.97 69

(iii) Weighted average number of equity shares outstanding Add: Weighted average number of potential equity shares that could arise on conversion of ZCCB, warrants iv) Earnings per share: a) Basic b) Diluted

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 20. The expenses incurred for projects/assets during the construction/mine development period are classified as Pre-operative Expenses pending capitalization and are included under capital work in progress and will be allocated to the assets on completion of the project/assets. The details of these expenses are as follows: (Rs. in lakhs) 2010-2011 2009-2010 Preoperative expenses brought forward Salaries, Wages, Bonus and Allowances etc. Contribution to Provident and Other Fund Employees Welfare Stores and Spares Consumption Handling and Transportation Power and Fuel Repairs Machinery Others Rent Insurance Miscellaneous Expenses Interest Paid On Term Loan On Others Finance Charges Depreciation Excise Duty on Coal Stock Total preoperative/development expenses Less: Allocated/Transferred during the year to completed assets Coal transferred for Captive Consumption [22304.22 mt (previous year 28707.32 mt)] Stock of Coal [39503.58 mt (previous year 27449.39 mt)] Interest on deposit (Gross) [Tax deducted at source Rs.1,12,29 lakhs (Previous year 14.26 lakhs)] and is net of provision of for current tax Rs. 5,05.47 lakhs (previous year Rs. 2,74.63 lakhs) Total preoperative expenses carried forward pending allocation 1,19,09.68 7,01.22 26.47 5.26 86.93 1.96 2,37.66 0.32 23.89 17.45 32.98 11,60.25 65.72 14,97.79 2.20 10,92.69 66.36 1,69,28.83 60.34 2,56.50 4,54.29 8,73.84 1,52,83.86 90,72.21 6,63.47 23.02 3.70 33.02 87.28 3,96.24 0.55 29.00 22.84 30.30 6,29.66 2,33.21 6,89.28 1,27.82 10,38.06 1,30,79.66 3,22.55 3,15.67 5,31.76 1,19,09.68

21. Disclosure of Loans and Advances as per the requirement of clause 32 of the listing agreement with the stock exchanges in India. Amount Maximum Amount Maximum outstanding amount outstanding amount at the year outstanding at the year outstanding end during the year end during the year 2010-11 Rs. in lakhs Loans and advances in the nature of loans to Subsidiaries and Associates: (a) Electrosteel Europe SA (b) Electrosteel Algeria SPA (c) Electrosteel (UK) Ltd. Loans and advances in the nature of loans to Employees where there is: (a) Repayment beyond seven years (b) No interest or Interest below Section 372A of the Companies Act, 1956. - To employees as per general rules of the Company. Loans and advances in the nature of loans to Firms/Companies in which directors are interested Loans and advance in the nature of loans and loanee has invested in : (a) Shares of Parent Company (b) Shares of a Subsidiary (including sub/fellow subsidiary) 70 Rs. in lakhs 2009-10 Rs. in lakhs Rs. in lakhs

57.20 15,60.65 53.00

18,70.94 16,68.96 53.00

16,16.04 17,03.80 32.73

16,75.26 20,03.65 32.73

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 22. (a) Category wise outstanding derivatives contracts entered for hedging as on March 31, 2011 are as follows :2010-11 Sl.No. Category Currency No. of Deals Amount in Foreign Currency 94,588,325 2,577,986 6,203,268 36,666,545 38,334,118 10,000,000 21,000,000 16,000,000 3,50,00,000 2009-10 No. of Deals Amount in Foreign Currency 21,24,05,859 35,28,895 1,44,19,794 2,20,12,855 55,12,131 22,00,000 1,80,00,000 3,50,00,000

1. 2. 3. 4. 5. 6. 7. 8. 9.

Sell Forward Sell Forward Sell Forward Sell Forward Option Option Option Swap

USD/INR SGD/USD GBP/USD Euro/USD EURO USD USD USD

35 9 10 38 9 3 5 2 3

142 8 24 32 11 1 3 3

Buy Forward USD/INR

(b) Unhedged Foreign Currency exposures as on March 31, 2011 are as follows : Nature Payables Imports ZCCB* (include proportionate premium) ECB Payable (include accrued interest) Buyers Credit / Acceptances (include accrued interest) Others Others Others Others Others * ZCCB: Zero Coupon Convertible Bond 23. Premium payable on ZCCB has been provided proportionately and accordingly Rs. 6,11.29 lakhs (out of total redemption premium amounting to Rs. 31,37.73 lakhs) (previous year Rs. 3,97.93 lakhs, out of total redemption premium amounting to Rs. 31,58.84 lakhs) on this account has been debited to Share Premium Account. 24. The Company through Qualified Institutional Placements had issued 3,35,68,312 warrant at a price of Rs. 3/- each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years from the date of allotment (i.e 08/02/2010) and upto five years from the date of allotment (i.e 08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve account. 25. The Marked-to-Market losses on derivative contract for the year stood at Rs. 18.26 lakhs (previous year Rs. 1,02.90 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the profit and loss account for the year. USD USD USD USD EURO GBP AED HKD JPY Currency 2010-11 Amount in Foreign Currency 1,40,02.744 37,75,740 70,491,548 6,46,56,157 2,49,595 7,576 50,923 24,729 9,20,055 2009-10 Amount in Foreign Currency 1, 21,94,403 2,58,68,370 7,05,34,578 39,18,616 46,269 12,494

71

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 26. a) The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the Company on various matters including for forfeiture of the Company's investment in equity shares of the DPL. The Company had inter alia filed petition before the Hon'ble High Court of Jharkhand at Ranchi. The Hon'ble High Court of Jharkhand at Ranchi upheld the Company's appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Hon'ble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since , the other Venturer are not providing the financial statements of DPL, disclosures as regards contingent liability and capital commitments, if any, aggregate amounts of each of the assets, liabilities, income and expenses related to the Company's interest in DPL has not been made in these accounts. During the year, the Company has invested in equity shares of Vishwa Utilities Pvt. Ltd. (VUPL), a company incorporated in India, has joint control over VUPL being 11% interest alongwith other venturers. However, the Company has aquired and held this interest exclusively with a view to its subsequent disposal in the near future and accordingly interest in the said Joint Venture Company has been accounted for as an investment in accordance with Accounting Standard 13 on Accounting for Investment. Information on other joint venture S. No. (i) Name of the Joint Venture North Dhadhu Minining Private Limited Country of Incorporation India Percentage of ownership interest 48.98 (Rs. in lakhs) 2010-11 (ii) Contingent liabilities in respect of Joint Ventures. a. Guarantee given by banks on behalf of the Company 27,45.47 2009-10 27,45.47

b)

c)

(iii) Interest in assets, liabilities, income and expenses with respect to jointly controlled entities. A) Assets : a) Fixed Assets (Net Block) : Capital Work-in-Progress b) Current Assets, Loans And Advances Cash & Bank Balances Loans & Advances c) B) Miscellaneous Expenditure 13.16 3.45 2.01 8.90 1.69 2.01 0.45 6,23.47 0.48 5,95.46

Liabilities : a) Current Liabilities 0.91 1.20

72

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 27. As regards construction contracts in progress as on 31.03.2011, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 2,87,81.12 lakhs, Rs. 8,23.69 lakhs and Rs.7,90.41 lakhs respectively. (Previous year Rs. 4,34,45.65 lakhs, Rs. 9,35.54 lakhs and Rs. 13,68.23 lakhs respectively). 28. The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 yrs. Term of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred on account of rent during the year and recognized in the Profit and Loss account amounts to Rs. 5,15.86 lakhs (previous year Rs. 4,50.45 lakhs). 29. During the year, the Company has incurred Rs. 83.26 lakhs (previous year Rs 80.93 lakhs) on account of research and development expenses which has been charged to profit and loss account. 30. Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on "Related Party Disclosures" are as follows: A) Names of related parties and description of relationship 1) Subsidiary Company Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Electrosteel USA, LLC WaterFab, LLC (100% subsidiary of Electrosteel USA, LLC) Lanco Industries Ltd. Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited) Electrosteel Thermal Power Ltd. North Dhadhu Mining Company Pvt. Ltd. Domco Private Limited Mr. Umang Kejriwal (Managing Director) Mr. Mayank Kejriwal (Joint Managing Director) Mr. Uddhav Kejriwal (Wholetime Director) Mr. Vyas Mitre Ralli (Wholetime Director) Mr. Mahendra Kumar Jalan (Wholetime Director) Mr. Rama Shankar Singh (Wholetime Director) Mr. S Y Rajagopalan (Director) Smt. Uma Kejriwal - mother of Mr. Umang Kejriwal, Managing Director Mr. S.Y. Ganapathy - brother of Mr. S.Y. Rajagopalan, Director

2)

Associate Company

3) 4)

Joint Venture Key Management Personnel (KMP) and their relative

5)

Enterprise where KMP/Relatives of KMP have signifinant influnce or control Global Exports Ltd. G. K. & Sons Private Limited Badrinath Industries Ltd. Akshay Ispat & Ferro Alloys Pvt. Ltd. * Acharya Multicon Pvt. Ltd. Electrocast Sales India Ltd. * Flora Constuctions Pvt. Ltd. ** Highrise Multicon Pvt. Ltd. ** Kabir Projects Pvt. Ltd. ** New City Enclave Pvt. Ltd.

73

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) ** Nilmoni Developers Pvt. Ltd. * Nimpith Developers Pvt. Ltd. * Paramount Tracom Pvt. Ltd. * Stewart Agencies Pvt. Ltd. Tulsi Highrise Pvt. Ltd. Wilcox Merchants Pvt. Ltd. ** Royal Multicon Pvt. Ltd. * Samar Properties Pvt. Ltd. ** Tulip Fabicon Pvt. Ltd. Murari Investment & Trading Company Ltd. Electrosteel Thermal Power Ltd. * Amalgmated into Tulsi Highrise Pvt. Ltd. as per Hon'ble Calcutta High Court order dated 06-10-2010 ** Amalgmated into Wilcox Merchants Pvt. Ltd. as per Hon'ble Calcutta High Court order dated 06-10-2010 B) Related Party Transaction
Subsidiary Associate Joint Venture KMP & Relatives KMP have control Total Outstanding as on 31.03.11 337.80 14,271.15 3,505.75 791.02 5,338.20 252.93 4.61 1,466.34 25,967.80 0.74 80.90 52.56 134.20 (Rs. in lakhs) Outstanding as on 31.03.10 486.72 8,764.19 9,607.53 661.51 3,035.52 10.51 4.61 0.06 0.51 0.46 349.83 -

Sale Electrosteel USA, LLC Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Electrosteel Steels Limited Akshay Ispat & Ferro Alloys Pvt. Ltd. Lanco Industries Ltd. Total Previous Year Electrosteel USA, LLC Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Electrosteel Steels Limited Akshay Ispat & Ferro Alloys Pvt. Ltd. Lanco Industries Ltd. Interest Received Lanco Industries Ltd. Previous Year Lanco Industries Ltd. Purchase Electrosteel USA, LLC Lanco Industries Ltd. Electrosteel Steels Limited Total Previous Year Electrosteel USA, LLC Singardo International Pte Ltd. Lanco Industries Ltd. Akshay Ispat & Ferro Alloys Pvt. Ltd.

443.77 20,921.43 11,046.93 1,289.00 6,335.61 40,036.74 509.88 16,670.27 12,151.33 2,131.29 4,999.30 0.23 0.23 13.02 2.61 -

1,710.12 6,576.37 8,286.49 1,730.17 1,651.39 62.77 8,169.83 121.33 8,291.16 4,123.04 -

0.11 123.72

443.77 20,921.43 11,046.93 1,289.00 6,335.61 1,710.12 6,576.37 48,323.23 509.88 16,670.27 12,151.33 2,131.29 4,999.30 1,730.17 0.11 1,651.39 62.77 0.23 8,169.83 121.33 8,291.39 13.02 2.61 4,123.04 123.72

74

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) B) Related Party Transaction (Contd.)
Subsidiary Associate Joint Venture KMP & Relatives KMP have control Total Outstanding as on 31.03.11 90.02 90.02 (Rs. in lakhs) Outstanding as on 31.03.10

Job Charges Received Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Lanco Industries Ltd. Remuneration Mr. Umang Kejriwal (MD) Mr. Mayank Kejriwal (JMD) Mr. Uddhav Kejriwal (Director) Mr. Vyas Mitre Ralli (Director) Mr. Mahendra Kumar Jalan (Director) Mr. Rama Shankar Singh (Director) Others Total Previous Year Mr. Umang Kejriwal (MD) Mr. Mayank Kejriwal (JMD) Mr. Uddhav Kejriwal (Director) Others Rent Paid Global Exports Ltd. Badrinath Industries Ltd. Others Total Previous Year Global Exports Ltd. Badrinath Industries Ltd. Others Service Charges Paid Global Exports Ltd. Previous Year Global Exports Ltd. Loan Electrosteel Algeria SPA Electrosteel Castings (UK) Limited Total Previous Year Electrosteel Algeria SPA Electrosteel Castings (UK) Limited Reimbursements Electrosteel USA, LLC Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Electrosteel Europe SA Total Previous Year Electrosteel USA, LLC Singardo International Pte Ltd. Electrosteel Europe SA Share Application Money Paid North Dhadhu Mining Company Pvt. Ltd. Total Previous Year North Dhadhu Mining Company Pvt. Ltd. Corporate Guarantee and Standby Letter of Credit Electrosteel Europe SA Electrosteel Algeria SPA Electrosteel Castings (UK) Limited Singardo International Pte Ltd. Total Previous Year Lanco Industries Ltd. Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Bank Guarantee North Dhadhu Mining Company Pvt. Ltd. Total Previous Year North Dhadhu Mining Company Pvt. Ltd.

1,799.66 1,799.66 199.74 2.22 -

244.76 242.41 224.76 111.11 110.59 106.07 25.89 1,065.59 326.62 323.71 288.92 106.57 -

15.00 15.00 104.43 134.43 15.00 15.00 113.59 38.00 39.06 -

1,799.66 1,799.66 199.74 2.22 244.76 242.41 224.76 111.11 110.59 106.07 25.89 1,065.59 326.62 323.71 288.92 106.57 15.00 15.00 104.43 134.43 15.00 15.00 113.59 38.00 39.06 (49.59) (1,825.93) (1,875.52) 1,616.04 1,703.80 168.53 2.87 12.21 57.20 240.81 189.15 7.09 16.75 36.74 36.74 24.25 9,363.90 2,501.88 11,865.78 4,306.53 8,978.00 -

(433.79) 2.22

200.00 200.00 170.00 570.00

285.00 285.00 240.00 15.80

(49.59) (1,825.93) (1,875.52) 1,616.04 1,703.80 168.53 2.87 12.21 57.20 240.81 189.15 7.09 16.75 9,363.90 2,501.88 11,865.78 4,306.53 8,978.00 -

36.74 36.74 24.25 -

1,560.65 1,560.65 1,616.04 1,703.80 57.20 57.20 60.99 60.99 24.25 4,485.75 13,822.90 2,501.88 1,415.22 22,225.75 2,100.00 4,306.53 9,250.93 1,283.95 2,745.47 2,745.47 2,745.47

75

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) B) Related Party Transaction (Contd.)
Subsidiary
Investment Electrosteel USA, LLC Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Lanco Industries Ltd. Electrosteel Steels Limited North Dhadhu Mining Company Pvt. Ltd. Domco Private Limited Electrosteel Thermal Power Ltd. Total Previous Year Electrosteel USA, LLC Electrosteel Europe SA Electrosteel Algeria SPA Singardo International Pte Ltd. Electrosteel Castings (UK) Limited Lanco Industries Ltd. Electrosteel Steels Limited North Dhadhu Mining Company Pvt. Ltd. Electrocast Sales India Ltd Domco Private Limited Biswa Microfinance Pvt. Ltd. Electrosteel Thermal Power Ltd. Commission Electrosteel Europe SA Total Previous Year Electrosteel Europe SA Security Deposits Lanco Industries Ltd. Electrosteel Thermal Coal Ltd. Others Total Previous Year Lanco Industries Ltd. Electrosteel Thermal Coal Ltd. Others Dividend Received Singardo International Pte Ltd. Lanco Industries Ltd. Total Previous Year Singardo International Pte Ltd. Lanco Industries Ltd. Rent Receipts Electrosteel Steels Limited Murari Investment & Trading Company Ltd. G. K. & Sons Private Limited Electrocast Sales India Ltd. Lanco Industries Ltd. Total Previous Year Electrosteel Steels Limited Murari Investment & Trading Company Ltd. Lanco Industries Ltd. Service Charges Received Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Sale of DEPB Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Advances Given Lanco Industries Ltd. Total Previous Year

(Rs. in lakhs) Associate Joint Venture KMP & Relatives

-

KMP have control

30.00 1.50 (45.00) 4.05 0.90 0.90 5.85 5.25 -

Total

Outstanding as on 31.03.11
1,104.15 2,323.41 520.33 439.89 1,059.26 6,333.53 72,488.47 588.00 30.00 1.50 84,888.54

Outstanding as on 31.03.10

725.46 1,870.04 703.80 3,299.30 378.69 34.89 34.89 13.22 10.30 10.30 9.95 -

2,488.47 2,488.47 53,517.50 (180.00) (180.00) (32.52) 289.52 289.52 193.01 85.29 0.36 85.65 76.88 0.40 11.40 11.40 9.18 11.25 11.25 24.19 53.73 53.73 -

725.46 1,870.04 703.80 2,488.47 5787.77 378.69 53,517.50 30.00 1.50 34.89 34.89 13.22 (180.00) (180.00) (32.52) (45.00) 10.30 289.52 299.82 9.95 193.01 85.29 4.05 0.90 0.90 0.36 91.50 76.88 5.25 0.40 11.40 11.40 9.18 11.25 11.25 24.19 53.73 53.73 -

378.69 453.38 520.33 439.89 355.46 6,333.53 70,000.00 588.00 0.51 30.00 1.50

18.48 18.47 13.22 4,081.00 185.00 4,266.00 4,435.96 185.00 0.60 0.60 1.20 0.40 0.92 0.92 -

53.73 53.73 -

76

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 31. TURNOVER, OPENING STOCK & CLOSING STOCK
UNIT a) Own Products 1) 2) 3) 4) 5) 6) b) D.I. Fittings C.I. Spun Pipes D.I. Spun Pipes Pig Iron Metallurgical Coke Sponge Iron MT MT MT MT MT MT 143 (126) 1812 (3157) 7175 (5160) 7541 (1447) 28622 (8587) 1381 (562) 117.59 (106.76) 530.63 (1097.79) 2351.73 (1759.95) 1398.85 (321.88) 4790.36 (1865.27) 256.08 (131.65) 4896 (4672) 5470.10 (4832.31) 266 (143) 1561 (1812) 12633 (7175) 1460 (7541) 30700 (28622) 839 (1381) 221.75 (117.59) 517.93 (530.63) 4635.75 (2351.73) 328.80 (1398.85) 5505.67 (4790.36) 174.26 (256.08) OPENING STOCK Qty. Rs. PURCHASE Qty. Rs. Qty. TURNOVER* Rs. (Rs. in lakhs) CLOSING STOCK Qty. Rs.

30450 12499.05 (41996) (16318.05) 264870 130755.91 (233448) (112194.41) 258511 4154.98 (215062) (1217.80) 162249 1190.90 (121002) 30473 (30454) 499.62 (557.10)

Other Products i) ii) iii) iv) Rubber Gaskets** Pipe Fittings** Others Domolite 311.62 (421.69) 177.95 (170.15) 1484.14 (1276.61) 990.11 (431.40) (2.49) 8262.66 (4884.23) 3608.20 (3818.93) 294.29 (311.62) 296.82 (177.95) 14.75 -

c) d)

Turnkey Contracts Traded Product a) b) c) d) e) Purchased D I Pipes DI Fittings Iron Ore Coke / Coal Misc Items Turnkey Contracts # # 10211.78 (5875.14) 585 276.97 3685 (3862) 390.18 (18) 9729 (4679) 33605 (16995) 1714.61 (1600.10) 354.35 (9.09) 79.29 (38.13) 5922.80 (1389.72) 420.65 (205.95) 10965.95 (4951.00) 4,264 (3277) 390.18 (18) 9729 (4679) 33605 (16995)

2053.74 (1363.03) 440.31 (32.70) 110.91 (53.34) 5922.80 (1389.72)

6 (585) -

0.37 (276.97) -

174967.18 (146664.11)

11990.39 (10211.78)

* ## **, # #

Turnover in quantity of D.I. Fittings and D.I. Spun Pipes include 17.688 mt. (previous year 17.612 mt.) and 1145.72 mt. (previous year 3142.41 mt.) respectively used in turnkey contract. Turnover in quantity of Pig Iron, Metallurgical Coke and Sponge Iron include 241060.09 mt (previous year 204926.54 mt), 143810.81 mt (previous year 108564.66 mt) and 27046.85 mt (previous year 27379.63 mt) respectively used for captive consumption. Turnover includes gain on exchange difference of Rs. 56,73.01 lakhs (previous year Rs.15,92.75 lakhs exchange gain). The corresponding turnover is included under " Turnkey Contracts" Represent bought out components/ misc items sold without processing, the purchase and sale of such components/items ancillary to the manufacturing/turnkey activity. In view of wide variety of such items, fittings & rubber gaskets where the quantitative figure would not give fair and comparable picture and hence, have not been stated.

77

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 32. The company operates mainly in one business segment viz Pipes being primary segment and all other activities revolve around the main activity. The secondary segment is geographical, information related to which is given as under : (Rs. in lakhs) Particulars Sales (Gross) Sundry Debtors and other assets Within India 112660.86 (95949.34) 351661.56 (290038.49) The fixed assets of the company are located in India (Previous year figures are shown in bracket) 33. Raw Materials Consumed : 2010-11 Quantity MT a) b) c) d) e) f) g) h) Iron Ore Hard Coke Coal Pig Iron MS Scrap C.I.Scrap Ferro Silicon Others 4,95,184 24,763 * 2,89,791 ** 21,932 *** 60,864 3,337 5,892 Value Rs.in lakhs 20457.17 2271.84 28538.17 4644.22 4418.08 595.15 4076.34 11744.48 76745.45 2009-10 Quantity MT 4,68,597 42,270 2,55,922 31,491 4,550 2,735 4,988 Value Rs.in lakhs 11114.54 4884.30 22842.03 5795.08 856.84 363.66 2694.54 9361.30 57912.29 Outside India 62306.32 (50714.77) 27593.09 (27193.45) Total 174967.18 (146664.11) 379254.65 (317231.94)

Consumption of Pig Iron, MS Scrap and Ferro Silicon include Rs.363.75 lakhs (previous year Rs.8.58 lakhs ) being cost of 1721.58 mt (previous year 49.82mt), Rs. nil (previous year Rs.23.92 lakhs) being cost of nil (previous year 135.63 mt), Rs. 13.73 lakhs (previous year nil) being cost of 24.99 mt (previous year nil) respectively sold during the year. * Excluding 1,43,810.81 Mt (previous year 1,08,564.66 Mt) captively consumed. ** Include 22445.94 mt (previous year 23091 mt) of coal consumed during preoperative period. *** Excluding 2,35,414.33 Mt and 5,645.76 Mt (previous year 2,00,857.21 Mt and 4,069.39 Mt) captively consumed in DI Spun Pipe plant and DI Fititng plant respectively.

78

ANNUAL REPORT 2010-11

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 34. Information in respect of Goods produced/manufactured : Installed Capacity* As on 31-Mar-11 C. I. Spun Pipes D. I. Spun Pipes D.I.Fittings Pig Iron** Metallurgical Coke *** Sponge Iron # * As Certified by Management. 90,000 280,000 5,000 250,000 295,000 60,000 As on 31-Mar-10 90,000 280,000 5,000 250,000 2,95,000 60,000 (In Tonnes) Production 2010-11 30,199 270,327 5,038 252,430 164,428 29,931 2009-10 40,651 235,463 4,683 218,027 140,922 31,273

** Includes 2,35,414.33 Mt and 5,645.76 Mt (previous year 2,00,857.11 Mt and 4,069.43 Mt) captively consumed in DI Spun Pipe plant and DI Fitting plant respectively. *** Including 1,43,810.81 Mt (previous year 1,08,564.66 Mt) captively consumed. # Includes 27,046.85 Mt (previous year 27,379.63 Mt ) captively consumed in DI Spun Pipe plant. Note : Licensed capacity is not applicable in terms of Government of India's Notification No. S.O.477(E) dated: 25th July 1991. 2010-11 Rs.in lakhs 35. C.I.F. Value of Imports (a) (b) (c) Raw Materials Spare Parts & Components Capital Goods 43388.79 2304.54 1694.51 20342.67 3378.71 4773.82 2009-10 Rs.in lakhs

36. Expenditure in Foreign Currency: $ (a) (b) (c) (d) (e) (f) (g) Travelling Expenses Journals & Periodicals Technical/Consultancy Fees Interest Paid Commission Others Payment of Dividend on Equity Shares in foreign currency* - No. of Non-Resident holders - No. of shares held - Dividend (Rs.) 2 2,74,80,414 343.51 2 2,74,80,414 348.58 108.43 3.37 225.37 589.98 586.98 4922.66 146.60 0.46 248.57 1366.47 393.30 3401.62

* Excluding Rs. 36.12 lakhs (Previous year - Rs. 1,53.97 lakhs) remitted to 762 (Previous year - 466) non-resident shareholders [holding 2889459 shares (Previous year - 12317646 shares)] Bankers/Mandatee in India.

79

ELECTROSTEEL CASTINGS LIMITED

Schedules Forming Part of Accounts

S C H E D U L E 17 NOTES ON ACCOUNTS (Contd.) 37. Value of Imported & Indigenous Raw materials, Spare Parts & Components Consumed : 2010-11 Rs. in lakhs RAW MATERIALS Imported Indigenous 30487.37 46258.08 76745.45 SPARE PARTS & COMPONENTS Imported Indigenous 2672.45 8335.15 11007.60 38. Earnings in Foreign Exchange : 2010-11 Rs.in lakhs (a) FOB Value of Exports (b) (c) Interest Others 57240.97 1136.90 2009-10 Rs.in lakhs 49524.72 53.84 459.90 24.28 75.72 100.00 2549.38 8262.53 10811.91 23.58 76.42 100.00 39.73 60.27 100.00 27642.92 30269.37 57912.29 47.73 52.27 100.00 % 2009-10 Rs. in lakhs %

39. Previous Years Figures have been re-grouped/re- arranged wherever neccessary.

The Schedules referred to above form an integral part of the Balance Sheet As per our report of even date. For Lodha & Co. Chartered Accounts H. K. Verma Partner Kolkata May 12, 2011 For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

80

ANNUAL REPORT 2010-11

Balance Sheet Abstract & Companys General Business Profile

I. Registration Details Registration No. 015-310 II. Balance Sheet date March 31, 2011 State Code 15

Capital raised during the Year (Amount Rs. in lakhs) Public Issue NIL Bonus Issue NIL Rights Issue NIL Private Placement NIL

III. Position of Mobilisation and Deployment of Funds (Amount Rs. in lakhs) Total Liabilities 37,92,54.65 Sources of Funds Paid-up Capital 32,67.53 Secured Loans 12,40,57.21 Application of Funds Net Fixed Assets 9,85,22.71 Net Current Assets 8,15,44.01 IV. Performance of Company (Amount Rs. in lakhs) Turnover 17,49,67.18 Profit/Loss Before Tax 2,14,88.74 V. Total Expenditure 15,87,10.35 Profit/Loss After Tax 1,54,63.74 Earnings per Share in Rs. 4.73 Dividend Rate % 125 Misc. Expenditure NIL Investments 13,99,87.67 Accumulated Losses NIL Other liabilities 44,08.68 Reserves & Surplus 16,52,15.31 Unsecured Loans 2,31,05.66 Total Assets 37,92,54.65

Generic names of Three Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC CODE) 73030030 73030030 72011000 Product Description C. I. PIPES D. I. PIPES PIG IRON

Kolkata May 12, 2011

For and on behalf of the Board Managing Director U. Kejriwal Director Uddhav Kejriwal Company Secretary Jyoti Jain 81

ELECTROSTEEL CASTINGS LIMITED

Section 212
Statement pursuant to Section 212 of the Companies Act, 2956 relating to Subsidiary Companies Electrosteel Castings (UK) Limited 1. Financial Year of Subsidiary Twelve months ended 31st March, 2011 Singardo International Pte. Limited Twelve months ended 31st March, 2011 Electrosteel Europe S.A. Twelve months ended 31st March, 2011 Electrosteel Algerie SPA Twelve months ended 31st March, 2011 Electrosteel USA, LLC

Twelve months ended 31st March, 2011

2. Holding Companys Interest : Fully paid up equity shares Face Value of each (a) Number of Shares (b) Extent of Holding 3. Net aggregate amount of Profit/(Loss) of the Subsidiary, so far as they concern members of the Holding Company. (a) Dealt with in the accounts of Holding Company (i) For the said financial year of the Subsidiary

1 1,100,000 100%

S$1 1,500,000 60%

10 380,000 100%

DZD1,000 82,500 100%

$1 * 100%

GBP

S$

EURO

Algerian Dinars

Nil

Nil

Nil

Nil

Nil

(ii) For the previous financial years of the Subsidiary since it became the Holding Companys Subsidiary (b) Not dealt wih in the Accounts of Holding Company (i) For the said financial year of the Subsidiary

Nil

Nil

Nil

Nil

Nil

(399,802)

40,185

310,088

24,109,268

(667,743)

(ii) For the previous financial years of the Subsidiary since it became the Holding Companys Subsidiary 4. Material changes, if any, between the end of the financial year of the Subsidiary Company and that of the Holding Company Notes : 1. * Towards 100% Capital Contribution.

1,916

451,730

165,091

(212,486,850)

(243,644)

NA

NA

NA

NA

NA

For and on behalf of the Board Managing Director Kolkata May 12, 2011 82 Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

ANNUAL REPORT 2010-11

Auditors Report
TO THE BOARD OF DIRECTORS OF ELECTROSTEEL CASTINGS LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ELECTROSTEEL CASTINGS LIMITED, ITS SUBSIDIARIES, JOINT VENTURE AND ASSOCIATES. 1 We have audited the attached Consolidated Balance Sheet of Electrosteel Castings Limited (the Company), its subsidiaries, joint ventures and associates as at 31st March 2011 and the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These Consolidated Financial Statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are prepared, in all material respect, in accordance with an identified financial reporting framework and are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall Financial Statement Presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinion. We did not audit the financial statements of any of the subsidiary companies whose financial statements reflect total assets of Rs. 48,463.65 Lakhs as at 31st March 2011, total revenue of Rs. 57,044.83 lakhs and net cash flows of Rs. 1134.84 lakhs for the year ended as on that date. The financial statements of these subsidiaries were audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the reports of the other auditors. We did not audit the financial statements of associates of the Company, which were audited by the other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of such associates, is based solely on the reports of the other auditors. We did not audit the financial statements of North Dhadhu Mining Company Pvt Limited, a jointly controlled entity whose financial statements reflect the Companys proportionate share of total assets of Rs. 6,42.55 Lakhs as at 31st March 2011, total revenue of Rs. NIL and net cash flows of Rs. 13.91 lakhs for the year ended as on that date. The financial statements of the said jointly controlled entity were audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the said jointly controlled entity, is based solely on the reports of the other auditors. 6 We report that : (i) the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS)-21 on Consolidated Financial Statements, AS-23 on Accounting for Investments in Associates in Consolidated Financial Statement and AS-27 on Financial Reporting of Interests in Joint Ventures, on the basis of the individual financial statements of Electrosteel Castings Limited, its subsidiary companies, associates and joint venture included in the aforesaid consolidation and,

(ii) in our opinion, based on our audit and the report of other auditors on separate financial statements, the Consolidated Financial Statements referred to above give a true and fair view of the financial position of Electrosteel Castings Limited, its subsidiary companies, associates and joint venture as at 31st March, 2011 and of the results of their operations for the year then ended in conformity with generally accepted accounting principles in India : a) In the case of the Consolidated Balance Sheet, of the consolidated state of affairs as at 31st March, 2011; In the case of the Consolidated Profit and Loss Account, of the consolidated results of operations for the year ended on that date, and In the case of Consolidated Cash Flow Statement, of the Cash Flows for the year ended on that date.

b)

c)

Place: Kolkata Date : 12th May, 2011 14, Government Place East Kolkata- 700 069

For Lodha & Co. Chartered Accountants ICAI Regn. No. : 301051E H. K. Verma Partner Membership No : 55104 83

ELECTROSTEEL CASTINGS LIMITED

Consolidated Balance Sheet

Schedule Sources of Funds Shareholders Funds Capital Reserves and Surplus Loan Funds Secured Loans Unsecured Loans Minority Interest Deferred Tax Liabilities (Net) Application of Funds Fixed Assets Goodwill on Consolidation Gross Block Less : Depreciation Net Block Capital Work-in-Progress Investments Current Assets, Loans and Advances Interest accrued on investments Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Liabilities Provisions Net Current Assets Miscellaneous Expenditure (To the extent not written off or adjusted) Notes on Accounts 17 6 1,16.27 7,03,57.85 4,80,12.96 2,04,84.79 2,45,43.92 16,35,15.79 11 5,53,85.73 1,30,99.43 6,84,85.16

as at March 31, 2011

As at March 31, 2010 Rs. in lakhs

As at March 31, 2011 Rs. in lakhs Rs. in lakhs

1 2

32,67.53 17,13,97.05 17,46,64.58

32,67.53 15,87,97.07 16,20,64.60 11,30,34.98 1,67,89.74 12,98,24.72 4,93.59 46,87.10 29,70,70.01

3 4

12,65,96.90 3,20,56.10 15,86,53.00 5,17.37 43,92.10 33,82,27.05

5 2,26.81 9,33,44.31 3,82,46.86 5,50,97.45 4,53,65.26 10,04,62.71 14,25,04.89 2,26.81 8,57,92.91 3,22,36.22 5,35,56.69 3,96,91.49 9,32,48.18 10,67,40.06

7 8 9 10

4,95,91.41 2,97,55.29 2,98,60.16 2,08,18.00 13,00,24.86

2,13,14.51 1,18,57.40 9,50,30.63 2.01 33,82,27.05 3,31,71.91 9,68,52.95 2.01 29,70,70.01

The Schedules referred to above form an integral part of the Balance Sheet As per our report of even date. For Lodha & Co. Chartered Accountants H. K. Verma Partner Kolkata May 12, 2011 84 For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

ANNUAL REPORT 2010-11

Consolidated Profit & Loss Account

Schedule Income Sales Less: Excise Duty Increase/(Decrease) in Finished and Process Stock Other Income Expenses Purchases Raw Materials Consumed Manufacturing and Other Expenses Interest (Net) Depreciation Profit Before Taxation Provision for Income Tax Current Deferred Profit after Taxation Add Share of profit/(loss) in Associate Add/(Less) : Share of unrealised profit Net Profit Before Minority Interest Minority Interest Net Profit Balance brought forward from previous year Less : Dividend paid for previous year Tax on dividend paid for previous year Appropriations Transfer to : Debenture Redemption Reserve Legal reserve General Reserve Proposed dividend Tax on Dividend Balance carried to Balance sheet Basic Earning per Share Diluted Earning per Share Number of shares used in computing Earning per share Basic Diluted Notes on Accounts As per our report of even date. For Lodha & Co. Chartered Accountants H. K. Verma Partner Kolkata May 12, 2011 17 12 13

for the year ended March 31, 2011

Year ended Year ended March 31, 2011 March 31, 2010 Rs. in lakhs Rs. in lakhs 16,18,64.16 37,86.64 15,80,77.52 10,31.65 1,14,99.52 17,06,08.69 77,34.05 5,79,12.29 6,34,23.53 49,86.00 53,50.72 13,94,06.59 3,12,02.10 95,23.74 9,93.47 2,06,84.89 28,45.38 (36.74) 2,34,93.53 68.97 2,34,24.56 91,09.14 1,75.00 29.74 3,23,28.96 27,00.00 5.06 1,23,88.06 40,84.41 6,78.37 1,69,47.00 1,34,84.34 5.50 5.16 32,67,52,705 34,83,59,176 1,98,55.90 1,24,73.06 7.32 6.78 31,98,37,491 34,56,96,047

Rs. in lakhs 19,10,79.69 38,23.72 18,72,55.97 64,82.71 65,12.07

20,02,50.75 14 15 16 1,94,36.42 7,67,45.45 7,06,33.74 55,10.25 55,88.12 17,79,13.98 2,23,36.77 64,04.86 (2,95.00) 18,00.21 (38.20)

61,09.86 1,62,26.91 17,62.01 1,79,88.92 30.64 1,79,58.28 1,24,73.06 3,04,31.34

1,24,73.06

22,00.00

1,00,00.00 40,84.41 6,62.59

The Schedules referred to above form an integral part of the Profit and Loss Account.

For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain 85

ELECTROSTEEL CASTINGS LIMITED

Consolidated Cash Flow Statement

A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Taxes Add : Depreciation/Amortisation/Written off Foreign Exchange loss / (gain) Bad Debt & Pipe rectification LD charges Pipe mould written off Dividend Plant & Machinery Written off Provision for others Provision for losses on mark to market basis on derivative transactions Interest Less: Interest Received Income from Investment Provisions / Liabilities no longer required written back Profit/(Loss) on sale of Fixed Assets (Net) Operating Profit before Working Capital changes Less: Increase/(Decrease) in Inventories Increase/(Decrease) in Trade Receivables Increase/(Decrease) in Loans & Advances (Increase)/Decrease in Trade Payables Cash generation From Operations Less: Direct Taxes paid (Net of Refund) Net cash flow from Operating activities B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets / movements in Capital work in progress Share Application money paid Fixed Assets sold/discarded (Purchase)/Sale of Investment (net) Investment in subsidiaries, associate and joint venture Interest Received Dividend received Net Cash flow from Investing activities C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of share capital Proceeds/(Repayment) from borrowings (net) Repayment of Finance Lease Proceeds from share warrants Proceeds from share application money Proceeds/(Redemption / Repayment) of Debentures/Term Loan Interest Paid Dividend paid Tax on Dividend Net cash flow from Financing activities Cash & Cash equivalents (A+B+C) Cash & Cash equivalents as at 1st April Add / (Less) : Unrealised exchange gain / (loss) on Bank balances, Fixed deposits out of ZCCB / ECB Proceeds (net) Cash & Cash equivalents as at March 31 Note : 1) Cash and Cash equivalents represents cash in hand and deposits/balances with Banks 2) The Cash flow statement has been prepared under indirect method as per Accounting Standard 3 on Cash Flow Statement Year ended March 31 2011

for the year ended March 31, 2011

(Rs. in lakhs) Year ended March 31 2011 2,23,36.77 Year ended March 31 2010 Year ended March 31 2010 3,12,02.10 53,55.40 (1,05,05.49) 19,33.47 1,25.39 (9.95) 33,40.00 1,42,17.87 3,65,54.64 1,02.90 50,71.61 2,33.58 6,79.66 30,45.35 (5,18.27) 18,83.19 (2,47,03.57) 72,87.32 (16,48.97) 54,13.33 3,66,15.43

55,88.20 (10,90.60) 1,67.66 3,08.54 (10.32) 0.36 6,32.62 18.96 86,02.45 4,48.17 27,59.09 3,92.18 8.83 2,07,85.44 (37,41.50) 12,02.90 (82,60.42)

36,08.27 3,29,46.37

34,40.32 3,31,75.11

99,86.42 2,29,59.95 59,11.84 1,70,48.11

(1,71,82.03) 5,03,57.14 1,14,95.69 3,88,61.45

(1,23,09.66) (36.74) 3,91.92 (2,56,80.25) (57,88.14) 26,28.85 3,92.22

(4,04,01.80) (4,04,01.80)

(1,78,29.92) (24.25) 4,39.65 (3,07,24.27) 2,36.71 8,82.49

(4,70,19.59) (4,70,19.59)

3,04,64.14 (8.59) 34.29 (28,12.50) 2,76,77.34 (89,40.95) (40,78.46) (6,78.37)

1,39,79.56 1,39,79.56 (93,74.13) 2,98,60.16 (1.24) 2,04,84.79 2,04,84.79

14,48.43 (1,83,47.95) 10,07.05 19.60 5,42,71.01 3,83,98.14 (53,13.44) (40,80.38) (6,94.15)

2,83,10.17 2,83,10.17 2,01,52.03 95,40.51 1,67.62 2,98,60.16 2,98,60.16

As per our report of even date. For Lodha & Co. Chartered Accountants H. K. Verma Partner Kolkata May 12, 2011 86 For and on behalf of the Board Managing Director Director Company Secretary U. Kejriwal Uddhav Kejriwal Jyoti Jain

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 1 SHARE CAPITAL : Authorised

Forming Part of Consolidated Accounts

As at March 31, 2011 Rs. in lakhs 50,00.00 As at March 31, 2010 Rs. in lakhs 50,00.00

50,00,00,000 shares of Re 1/- each (Previous year - 50,00,00,000 shares of Re. 1/- each) Issued, Subscribed and Paid up : 32,67,52,705 equity shares of Re 1/- each (Previous year - 32,67,52,705 equity shares of Re. 1/- each). Out of above 8,87,61,600 shares of Re. 1/- each have been allotted as fully paid up bonus shares by capitalisation of Share Premium and General Reserve

32,67.53 32,67.53

32,67.53 32,67.53

SCHEDULE 2 RESERVES AND SURPLUS : (A) CAPITAL RESERVE Capital subsidy as per last account Others Amount forfeited on warrants not excercised as per last account Add : During the year Amount received on issue of warrants as per last account Add : During the year (B) DEBENTURE REDEMPTION RESERVE As per last account Add : Transfer from Profit and Loss account 66.01 30,94.71 10,07.05 41,67.77 37,00.00 22,00.00 59,00.00 (C) LEGAL RESERVE As per last account Add : Transfer from Profit and Loss account (D) GENERAL RESERVE As per last account Add : Transfer from Profit and Loss account Less : Transfer to Profit & Loss account in respect of retained earnigs of subsidiary (E) SHARE PREMIUM ACCOUNT As per last account Add : Premium on issue of shares Less : Provision for premium on redemption of ZCCB (F) PROFIT AND LOSS ACCOUNT Add : Transfer from General Reserve in respect of retained earnigs of subsidiary 33.82

66.01 30,94.71 10,07.05 41,67.77 10,00.00 27,00.00 37,00.00

28.76 5.06 33.82 6,38,74.52 1,23,88.05 7,62,62.57

33.82 7,62,62.57 1,00,00.00 8,62,62.57 17,03.84 8,45,58.73 6,21,59.85

7,62,62.57 5,00,61.13 1,24,96.65 6,25,57.78 3,97.93 6,21,59.85 1,24,73.06

6,21,59.85 6,11.29 6,15,48.56 1,34,84.34 17,03.84 1,51,88.18 17,13,97.05

1,24,73.06 15,87,97.07

87

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 3 SECURED LOANS

Forming Part of Consolidated Accounts

As at March 31, 2011 Rs. in lakhs 1,00,00.00 2,00,00.00 3,45,57.26 2,21,87.50 2,08,84.12 1,64,28.33

As at March 31, 2010 Rs. in lakhs 1,00,00.00 2,00,00.00 3,47,89.76 2,50,00.00 1,20,91.56 95,92.47 15,00.00 61.19 11,30,34.98

11.80% Non Convertible Debentures 9.15% Non Convertible Debentures External Commercial Borrowing from Banks Loan from Export Import Bank of India Working Capital facility from Banks : Indian Currency Foreign Currency Floating rate Non Convertible Debentures Other Loan from Body Corporate/ Banks

25,39.69 12,65,96.90

1.

11.80% Non Convertible Debentures (privately placed) are secured by first pari-passu charge on companys fixed assets (immovable and movable) including land and buildings both present and future other than certain property located at Chennai. These debentures were allotted on 20th March, 2009 and are redeemable at par in three equal annual installments at the end of 3rd, 4th and 5th year from the date of allotment i.e. from 20th March, 2012. However, there is a Put and Call option available to the issuer / investor which can be excercised at the end of three years from the date of allotment. 9.15% Non Convertible Debentures (privately placed) are secured by second pari-passu charge on companys fixed assets (immovable and movable) including land and buildings both present and future other than certain property located at Chennai. These debentures were allotted on 8th February, 2010 and redeemable at par on 8th February, 2013. External Commercial Borrowings are secured by way of first pari-passu charge on all immovable and movable Fixed Assets, both present and future of the Company other than certain property located at Chennai. Term Loans from Export Import Bank of India are secured by way of first pari-passu charge over the movable fixed assets, lands and other immovable properties of the Company both present and future other than certain property located at Chennai. Working Capital facilities from Banks are secured by way of joint hypothecation of inventories and book debts, both present and future.

2.

3. 4.

5.

SCHEDULE4 UNSECURED LOANS Zero Coupon Convertible Bonds (ZCCB) Short Term Loans from Banks Indian Currency Foreign Currency

As at March 31, 2011 Rs. in lakhs 91,18.66 1,37,78.08 91,59.36 3,20,56.10

As at March 31, 2010 Rs. in lakhs 91,80.01

76,09.73 1,67,89.74

88

ANNUAL REPORT 2010-11

Schedules
S C H E D U L E 5 (i) FIXED ASSETS :
Description 1 LAND-FREEHOLD LAND-LEASEHOLD BUILDINGS RAILWAY SIDING PLANT AND MACHINERY FURNITURE AND FIXTURES VEHICLES INTANGIBLE ASSETS (COMPUTERS SOFTWARES) MINING RIGHTS LIVESTOCK Total Share of Joint Venture(Note 4 (c) - Schedule 17) Furniture & Fittings Computers Total Grand Total Previous Year Notes : 1. 2. 3. 4. 5. Cost as on Apr 1, 2010 2 36,60.50 17,12.38 96,00.73 2,53.94 6,81,76.92 7,05.52 11,20.53 5,60.75 1.11 8,57,92.38

Forming Part of Consolidated Accounts

(Rs. in lakhs) GROSS BLOCK
Additions 3 4,83.20 39.85 8,45.36 77,14.75 57.97 1,01.31 71.88 15.32 93,29.64 Sales/ Adjustments 4 16,42.51 0.04 1,35.75 17,78.30 Cost as on Mar 31, 2011 5 41,43.70 17,52.23 1,04,46.09 2,53.94 7,42,49.16 7,63.45 10,86.09 6,32.63 15.32 1.11 9,33,43.72 Upto Mar 31, 2010 6 65.18 37,40.30 59.95 2,72,00.44 4,21.96 5,26.55 2,21.79 3,22,36.17

DEPRECIATION
For the year 7 14.54 4,73.97 26.94 58,59.76 67.11 1,24.74 1,12.67 1.06 66,80.79 Sales/ Upto Adjustment Mar 31, 2011 8 5,73.97 0.04 96.23 6,70.24 9 79.72 42,14.27 86.89 3,24,86.23 4,89.03 5,55.06 3,34.46 1.06 3,82,46.72

NET BLOCK
As on Mar 31, 2011 10 41,43.70 16,72.51 62,31.82 1,67.05 4,17,62.93 2,74.42 5,31.03 2,98.17 14.26 1.11 5,50,97.00 As on Mar 31, 2010 11 36,60.50 16,47.20 58,60.43 1,93.99 4,09,76.48 2,83.56 5,93.98 3,38.96 1.11 5,35,56.21

0.35 0.18 0.53 8,57,92.91 7,95,54.00

0.06 0.06 93,29.70 96,20.94

17,78.30 33,82.03

0.41 0.18 0.59 9,33,44.31 8,57,92.91

0.05 0.05 3,22,36.22 2,79,25.85

0.03 0.06 0.09 66,80.88 63,88.84

6,70.24 20,78.47

0.08 0.06 0.14 3,82,46.86 3,22,36.22

0.33 0.12 0.45 5,50,97.45 5,35,56.69

0.30 0.18 0.48 5,35,56.69 5,16,28.15

Plant and Machinery includes Rs. 3,40.87 lakhs (Previous year Rs.3,40.87 lakhs) being contribution for laying the Power line, the ownership of which does not vest with the company. Depreciation for the year includes Rs.10,92.69 lakhs ( Previous year Rs.10,38.07 lakhs) transferred to Pre-operative expenses. Leasehold Land of Rs. 2,04.00 lakhs ( Previous Year Rs.9,47.26 lakhs) is pending execution of lease agreement and registration thereof. Freehold land includes Rs. 2,05.97 lakhs ( Previous year Rs.7,02.49 lakhs) in respect of which the execution of conveyance deeds is under process. Plant and Machinery includes Rs. 24,98.72 lakhs (Previous year Rs. 27,63.71 lakhs) being cost of wagons procured under Wagon Investment Scheme.

S C H E D U L E 5(ii) Capital Work-in-Progress : Capital Work-in-Progress Share of Joint Venture (Note 4(c), Schedule 17) (includes depreciation for the year Rs. 0.09 lakhs [(Previous year Rs. 0.05 lakhs)] Total

As at March 31, 2011 Rs. in lakhs

As at March 31, 2010 Rs. in lakhs

4,47,41.79

3,90,96.03

6,23.47 4,53,65.26

5,95.46 3,96,91.49

89

ELECTROSTEEL CASTINGS LIMITED

Schedules

Forming Part of Consolidated Accounts

SCHEDULE 6 INVESTMENTS (Long term and fully paid up except otherwise stated)
Particulars PREFERENCE SHARES Quoted Mukand Limited (0.01% Cumulative Redeemable Preference Shares face value of Rs. 10/- each) EQUITY SHARES (A) Trade Investments Quoted Mukand Limited (Face value of Rs.10/- each Mahindra Ugine Steel Co. Ltd.(Face value of Rs.10/- each) Welcast Steels Limited (Face value of Rs.10/- each) R.G. Ispat Limited (Face value of Rs.10/- each) Saint Gobain - PAM (Face Value of Euro. 4/- each) Van Roll (Face Value of Euro 0.071 each) Unquoted Rainbow Steels Limited(Face value of Rs.10/- each) Metal Scrap Trade Corporation Limited.(Face value of Rs. 10/- each) (B) Other Investments Quoted Associates Lanco Industries Limited (Face value of Rs.10/- each) (Cost of acquisition including goodwill of Rs. 44,91.37 lakhs (Previous year Rs. 44,91.37 lakhs) Add : Share of Profits/Losses for the year (net) Less : Dividend Received Electrosteel Steels Ltd. (Formerly Electrosteel Integrated Ltd.) (Face value Rs. 10/-each) (Cost of acquisition including goodwill of Rs 24,90.24 lakhs) (Previous year Rs. 1.77 lakhs) (Unquoted in Previous Year) Add : Addition during the year towards share premium Add : Share of Profits/Losses for the year (net) Unquoted Associate Electrosteel Thermal Power Ltd.(Face value of Rs.10/- each) [Cost of acquisition including goodwill of Rs 0.70 lakhs (Previous year Rs. 0.70 lakhs) Add : Share of Profits/(Losses) for the year(net) Joint Venture Domco Pvt Ltd (Face value of Rs 100/- each) North Dhadhu Mining Company Pvt Ltd (Face value of Rs10/- each) (Cost of acquisition including goodwill of Rs 0.24 lakhs (Previous year 0.24 lakhs) Less: Proportionate consolidation Other Companies Electrocast Sales India Ltd.(Face value of Rs.10/- each) N Marshall Hi-tech Engineers Pvt. Ltd.(Face value of Rs.10/- each) Sky-B (Bangla) Pvt. Ltd.(Face value of Rs.10/- each) Vishwa Utilities Pvt. Ltd. (Face value of Rs.10/- each) Biswa Microfinance Private Limited (Face value of Rs.10/-each) Less : Provision 588.00 1,34,13.00 Rs. in lakhs

As at March 31, 2011 Holding Nos. Rs. in lakhs

As at March 31, 2010 Holding Nos. Rs. in lakhs

16

0.00

16

0.00

0 0 0 50 12 10 100 1000

0.00 0.00 0.00 0.00 0.27 0.05 0.01 0.05 0.38

65 75 25 50 12 10 100 1000

0.00 0.01 0.00 0.00 0.27 0.05 0.01 0.05 0.39

19301218

1,51,30.42

19301218 1,34,13.01

20,06.94 2,89.52 7,00,00.00 700000000 7,22,43.61 700000000 7,00,00.00

24,88.47 (2,44.86)

1.48 (0.06)

15000

1.42

15000

1.48

30000 5880000

30.00 -

30000 5880000

30.00 -

588.00 50000 4340000 3708 5.00 4,34.50 0.37 8,78,45.32 4,21.10 8,74,24.22 1000 50000 4340000 550000 0.51 5.00 4,34.50 55.00 8,39,39.50 4,21.10 8,35,18.40

90

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Schedules
S C H E D U L E 6 (Contd.) INVESTMENTS
Particulars

Forming Part of Consolidated Accounts

As at March 31, 2011 Holding Nos. Rs. in lakhs

As at March 31, 2010 Holding Nos. Rs. in lakhs

Current Investments Equity Shares (Quoted) Coal India Limited (Face value of Rs 10/-each) Jindal Drilling & Industries Ltd (Face value of Rs 5/- each) Manganese Ore India Ltd ( Face value of Rs 10/- each) Reliance Industries Ltd ( Face value of Rs 10/- each) Rural Electrificaiton Corporation Ltd ( Face value of Rs 10/- each) Hero Honda Ltd ( Face value of Rs 2/- each) Less : Provision BONDS (QUOTED) 8.80% SBI Tier II 2021 of Rs. 1,00,000 each 9.35% ILFS 2035 of Rs. 1,000 each 0.00% RRVPNL 14/01/2028 of Rs. 5,00,000 each 0.00% RRVPNL 31/12/2023 of Rs. 5,00,000 each 9.33% IDFC 2026 of Rs. 10,00,000 each 0.00% RRVPNL 14/01/2027 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2025 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2023 of Rs. 5,00,000 each 0.00% RRVPNL 14/01/2024 of Rs. 5,00,000 each 9.75% IFCI 2030 of Rs. 10,00,000 each 8.65% L&T Ltd. 26/05/2020 of Rs. 1,00,000 each 9.70% GE Shipping 2023 of Rs. 10,00,000 each 9.70% GE Shipping 2021 of Rs. 10,00,000 each 9.98% IFCI 2030 of Rs. 10,00,000 each 9.95% SBI 2026 of Rs. 10,000 each 7.50% WSPF 2020 of Rs. 1,00,000 each 11.80% TISCO Perpetual of Rs. 10,00,000 each 10% DHFL 2017 of Rs. 1,00,000 each 9.70% IFCI 04/05/2030 of Rs. 10,00,000 each 10.40% DHFL 2020 of Rs. 1,00,000 each COMMERCIAL PAPER -OTHERS (QUOTED) OBC 21/12/2011 of Rs. 1,00,000 each AIRCEL CP 30/05/2011 of Rs. 5,00,000 each MUTUAL FUNDS (QUOTED) ICICI Prudential FMP 51-13 months Plan C (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP 52-1year Plan A- Cumulative (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP 51-14 months Plan D (Purchased 30,000,000 units and sold nil units during the year) Kotak 18 M Series 4-Growth (Purchased 20,000,000 units and sold nil units during the year) Reliance Fixed Horizon XIV-Series 2-Growth Plan (Purchased 20,000,000 units and sold nil units during the year) Reliance Fixed Horizon XIV-Series 7-Growth Plan (Purchased 20,000,000 units and sold nil units during the year) BSL Fixed Term Plan - Series CF - Growth (Purchased 10,000,000 units and sold nil units during the year) Birla Sun Life Fixed Term Plan Series CL Growth (Purchased 10,000,000 units and sold nil units during the year)

25000 176500 3794 13000 2000 1000

61.25 10,09.66 14.23 1,21.83 5.08 16.11 12,28.16 1,73.01 10,55.15

2 10000 190 132 22 206 206 180 206 37 400 42 53 91 10136 2204 247 2690 333 4022 560 222 10000000 10000000 30000000 20000000 20000000 20000000 10000000 10000000

19.50 99.50 1,91.81 1,94.18 2,20.29 2,28.47 2,75.76 2,90.90 3,03.03 3,78.41 4,00.00 4,20.00 5,30.06 9,26.30 10,53.64 22,32.70 24,95.67 27,23.91 33,30.76 40,39.30 5,18.67 10,52.15 10,00.00 10,00.00 30,00.00 20,00.00 20,00.00 20,00.00 10,00.00 10,00.00

10000000 10000000 30000000 20000000 20000000 20000000 -

10,00.00 10,00.00 30,00.00 20,00.00 20,00.00 20,00.00 -

91

ELECTROSTEEL CASTINGS LIMITED

Schedules
S C H E D U L E 6 (Contd.) INVESTMENTS
Particulars

Forming Part of Consolidated Accounts

As at March 31, 2011 Holding Nos. 10000000 10000000 5000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 5000000 5000000 5000000 5000000 10000000 10000000 10000000 10000000 5000000 15000000 10000000 Rs. in lakhs 10,00.00 10,00.00 5,00.00 10,00.00 10,00.00 10,00.00 10,00.00 10,00.00 10,00.00 10,00.00 5,00.00 5,00.00 5,00.00 5,00.00 10,00.00 10,00.00 10,00.00 10,00.00 5,00.00 15,00.00 10,00.00

As at March 31, 2010 Holding Nos. Rs. in lakhs -

Birla Sun Life Fixed Term Plan Series CP Growth (Purchased 10,000,000 units and sold nil units during the year) Birla Sun Life Fixed Term Plan Series CQ Growth (Purchased 10,000,000 units and sold nil units during the year) Kotak FMP Series 28 - Growth (Purchased 5,000,000 units and sold nil units during the year) Kotak FMP Series 30 - Growth (Purchased 10,000,000 units and sold nil units during the year) Kotak FMP 370 Days Series 9 - Growth (Purchased 10,000,000 units and sold nil units during the year) HDFC FMP 370D February (1) - Growth - Series XVI (Purchased 10,000,000 units and sold nil units during the year) HDFC FMP 370D March (1) - Growth - Series XVI (Purchased 10,000,000 units and sold nil units during the year) Canara Robeco Fixed Maturity Plan -Series 6 -13 Months (Plan A) - Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund Xiv- Series 9-Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xv Series 8-Growth Plan (Purchased 10,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvi - Series 1-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvi Series 5-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) Reliance Fixed Horizon Fund - Xvii Series 1-Growth Plan (Purchased 5,000,000 units and sold nil units during the year) DSP FMP 12M Series 10 - Growth (Purchased 5,000,000 units and sold nil units during the year) IDBI FMP - 367 Days Series - 1 (February 2011) - A - Growth (Purchased 10,000,000 units and sold nil units during the year) Religare Fixed Maturity Plan - Series VI - Plan B (370 Days) - Growth (Purchased 10,000,000 units and sold nil units during the year) SBI Debt Fund Series - 370 Days - 10 - Growth (Purchased 10,000,000 units and sold nil units during the year) IDFC Fixed Maturity Yearly Series 38 Growth (Purchased 10,000,000 units and sold nil units during the year) ICICI Prudential FMP Series 53 - 1 Year Plan A Cumulative (Purchased 5,000,000 units and sold nil units during the year) ICICI Prudential FMP Series 55 - 1 Year Plan D Cumulative (Purchased 15,000,000 units and sold nil units during the year) ICICI Pru FMP Series 55-1Year Plan E Growth option (Purchased 10,000,000 units and sold nil units during the year) MUTUAL FUNDS (UNQUOTED) Birla Sunlife Savings Fund-InstIitutional-Daily Dividend Reinvestment (Purchased 17604025.71 units sold 20602536.85 units during the year) LICMF Savings Plus Fund-Daily Dividend Plan (Purchased 11568592.899 units sold 99487245.73 units during the year) Reliance Medium Term Fund-Daily Dividend Plan (Purchased 18433121.764 units sold 19187688.648 units during the year) Reliance Liquidity Fund-Daily Dividend Reinvestment Option (Purchased 226962810.715 units sold 226964290.909 units during the year)

2998511 87918653 754567 1480

3,00.06 87,91.87 1,29.00 0.15

92

ANNUAL REPORT 2010-11

Schedules
S C H E D U L E 6 (Contd.) INVESTMENTS
Particulars

Forming Part of Consolidated Accounts

As at March 31, 2011 Holding Nos. Rs. in lakhs -

As at March 31, 2010 Holding Nos. 199977 Rs. in lakhs 20,00.20

UTI Treasury Advantage Fund-Institutional plan (Daily Dividend Option) -Reinvestment (Face Value Rs 1000 each) (Purchased 392754.71 units sold 592731.79 units during the year) UTI Fixed Income Interval Fund-Monthly Interval Plan series-1-Institutional Daily Dividend Plan - Reinvestment (Purchased nil units and sold10000000 units during the year) Peerless Liquid Fund-Super Institutional Daily Dividend (Purchased 31817673.55 units and sold 25817304.97 units during the year)

6000369

6,00.13

10000000

10,00.00

14,25,04.89 Aggregate amount of Quoted Investments In Mutual Funds In Bonds and Commercial Papers Other investments Aggregate amount of Unquoted Investments In Mutual Funds Other Investments Aggregate amount of Market value of Quoted Investments In Mutual Funds In Bonds and Commercial Papers Other investments Aggregate amount of Market value of Unquoted Investments in Mutual Funds Notes : 1. 2. 3,15,00.00 2,19,25.01 8,84,29.50 6,00.13 50.25 1,10,00.00 1,34,13.35 1,22,21.26 7,01,05.45

10,67,40.06

14,18,54.51

2,44,13.35

6,50.38 14,25,04.89 3,26,41.06 2,27,33.58 6,59,82.62 12,13,57.26 6,00.13

8,23,26.71 10,67,40.06 1,10,31.53 1,25,65.32 2,35,96.85 1,22,22.03

500000000 Equity shares of Rs 10/- each fully paid up of Electrosteel Steels Ltd. (Formerly Electrosteel Integrated Limited) aggregating Rs5,00,00.00 lakhs held by the Company as Investment have been pledged in favour of Electrosteel Steels Ltd. lenders for securing financial assistance to Electrosteel Steels Ltd. Quoted Investments for which quotations are not available have been included in the market value at the face value/paid up value,whichever is lower except in case of debenture,bonds and government securities where the net present value at current yield to maturity have been considered.

93

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 7 INVENTORIES

Forming Part of Consolidated Accounts

As at March 31, 2011 Rs. in lakhs As at March 31, 2010 Rs. in lakhs

As taken, valued and certified by the Management Stores and Spare Parts Raw Materials Stock-in-trade : Finished Stock Process Stock Work in Progress Less: Progress payments received 15,99.39 1,00.19 14,99.20 7,03,57.85 SCHEDULE 8 SUNDRY DEBTORS Unsecured Debts outstanding for a period exceeding six months - Considered good - Considered doubtful Less : Provision for Doubtful Debts Other Debts - Considered good 51,73.38 2,19.82 53,93.20 2,19.82 51,73.38 4,28,39.58 4,80,12.96 SCHEDULE 9 CASH AND BANK BALANCES Cash balance on hand Bank Balances With Scheduled Banks : Current Accounts Fixed Deposits (including interest accrued thereon) With Foreign Banks In Current Accounts Total Share of Joint Venture- (Note 4 (c) - Schedule 17) Grand Total 15,39.49 2,04,71.63 13.16 2,04,84.79 18,96.38 2,98,51.26 8.90 2,98,60.16 14,43.75 1,74,69.69 1,89,13.44 8,89.17 2,70,56.48 2,79,45.65 18.70 9.23 46,77.13 76.49 47,53.62 76.49 46,77.13 2,50,78.16 2,97,55.29 3,03,68.66 27,63.05 2,41,30.06 16,25.72 24,92.60 11,21.26 13,71.34 4,95,91.41 43,17.99 3,14,08.95 51,18.63 1,73,45.66

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Schedules
SCHEDULE 10

Forming Part of Consolidated Accounts

As at March 31, 2011 Rs. in lakhs Rs. in lakhs As at March 31, 2010 Rs. in lakhs

LOANS AND ADVANCES (Unsecured) Advances recoverable in cash or in kind or for value to be received - Considered Good - Considered Doubtful Less : Provision for Doubtful Advances Advance Tax including tax deducted at source (net of provision) Balances with Government Authorities Bills of Exchange Other Deposits Total Share of Joint Venture- (Note 4 (c) - Schedule 17) Grand Total SCHEDULE 11 CURRENT LIABILITIES AND PROVISIONS CURRENT LIABILITIES : Acceptances Sundry Creditors Dues of Micro enterprises and Small enterprises Others Advance From Customers Other Liabilities Interest accrued but not due on loans Bank Overdraft Unclaimed Dividend* Total Share of Joint Venture- (Note 4 (c) - Schedule 17) Grand Total PROVISIONS : For Taxation (net of advance tax and tax deducted at source) [Net Fringe Benefit Tax Rs. Nil (Previous year Rs. 30.17 lakhs)] For Dividend For Tax on Dividend For Redemption Premium on ZCCB For losses on derivative transactions on mark to market basis For Others

1,26,19.58 7,67.16 1,33,86.74 7,67.16 1,26,19.58 10,19.07 13,35.57 95,66.25 2,45,40.47 3.45 2,45,43.92

1,18,26.61 7,73.95 1,26,00.56 7,73.95 1,18,26.61 5,42.14 7,53.22 76,94.34 2,08,16.31 1.69 2,08,18.00

2,39,67.81 0.05 2,04,48.40 41,10.23 6,99.48 5,43.79 54,89.04 1,26.02 5,53,84.82 0.91 5,53,85.73

1,68,06.76 24,81.33 8,05.50 8,65.89 2,40.61 1,13.22 2,13,13.31 1.20 2,13,14.51

4,56.07 40,84.41 6,62.58 30,43.60 11,88.25 36,64.52 1,30,99.43 6,84,85.16

40,84.41 6,78.37 24,32.31 13,17.85 33,44.46 1,18,57.40 3,31,71.91

* The same is not due for payment to Investor Education and Protection Fund.

95

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 12

Forming Part of Consolidated Accounts

Year ended March 31, 2011 Rs. in lakhs Rs. in lakhs Year ended March 31, 2010 Rs. in lakhs

INCREASE/(DECREASE) IN FINISHED AND PROCESS STOCK Closing Stock : Finished Process Work in Progress Less : Opening Stock : Finished Process Work in Progress 2,41,30.07 16,25.72 24,92.60 2,82,48.39 64,82.71 2,10,22.82 23,12.98 38,80.93 2,72,16.73 10,31.65 3,03,68.66 27,63.05 15,99.39 3,47,31.10 2,41,30.06 16,25.72 24,92.60 2,82,48.38

SCHEDULE 13 OTHER INCOME Rent Income from Investments (Note 6 of Schedule 17) Profit on sale/discard of Fixed Assets (Net) Provision / Liabilities no longer required written back Provision for Mark to Market losses no longer required written back Incentive on Exports Miscellaneous Income 91.50 1,15.08 9.70 3,04.87 1,02.90 34,22.92 24,65.10 65,12.07 88.41 6,89.48 19,56.44 11,10.19 29,86.50 46,68.50 1,14,99.52

SCHEDULE 14 RAW MATERIALS CONSUMED Opening Stock Add : Purchases Less : Closing Stock 1,73,45.66 9,08,08.74 10,81,54.40 3,14,08.95 7,67,45.45 1,79,85.48 5,72,72.47 7,52,57.95 1,73,45.66 5,79,12.29

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ANNUAL REPORT 2010-11

Schedules
SCHEDULE 15

Forming Part of Consolidated Accounts

Year ended March 31, 2011 Rs. in lakhs Rs. in lakhs 1,10,07.60 22,33.01 1,27,31.86 3,43.95 1,33,16.17 10,48.39 4,94.11 3,68.39 1,22.17 12,32.15 13,81.60 11,97.72 6,50.36 86,05.33 68,76.27 58.48 14,27.24 1,73.01 1,39.55 18.26 76.42 9.85 66.57 1.22 71,40.33 7,06,33.74 Year ended March 31, 2010 Rs. in lakhs 1,08,11.91 35,70.51 1,05,97.02 56.19 1,17,83.12 8,59.74 4,43.97 3,95.60 1,63.18 10,81.49 10,71.34 11,48.39 6,34.65 36,60.87 51,35.58 70.65 17,42.04 68.56 1,02.90 33,84.01 (14,89.59) 5,18.27 76,13.13 6,34,23.53

MANUFACTURING AND OTHER EXPENSES Stores and Spare Parts (Note 7 - Schedule 17) Handling and Transportation Charges Power and Fuel Excise Duty on Stock Salaries, Wages, Bonus and Allowance etc. Contribution to Provident and Other Fund Employees Welfare Repairs : Machinery Buildings Others Rates and Taxes Rent Insurance Freight and Forwarding charges [net of realisation of Rs. 48,13.18 lakhs (Previous year Rs. 57,23.41 lakhs)] Commision to Selling Agents Directors Fees and Commission Job charges Provision for diminution in value of Investments Provision for Bad and Doubtful Debts Provision for losses on mark to market basis on derivative transactions (refer note no. 23 of schedule 17) Bad debts Less : Provision for bad and doubtful debts Loss on sale / discard of fixed assets (net) Miscellaneous Expenses

SCHEDULE 16 INTEREST AND FINANCIAL CHARGES (NET) Interest On Debentures On Term Loan On Others Financial Charges Less : Interest on Bonds (Gross)[Tax deducted at source Rs. 8.53 lakhs (previous year Rs. Nil) - current Investments other than trade Profit on sale of current Investments other than trade Interest on Loans, Deposits, Overdue debts etc. (Gross)[Tax deducted at source Rs. 30,64.64 lakhs (Previous year Rs. 16.02 lakhs)]

36,44.92 18,78.84 29,45.83 1,32.86 86,02.45 22,98.22 3,46.29

18,59.63 16,29.24 11,35.75 5,95.09 52,19.71 0.13

4,47.69 30,92.20 55,10.25

2,33.58 2,33.71 49,86.00

97

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17 NOTES ON ACCOUNTS 1. a.

Forming Part of Consolidated Accounts

SIGNIFICANT ACCOUNTING POLICIES The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard (AS) - 21 on "Consolidated Financial Statements", AS - 23 on "Accounting for Investments in Associates in Consolidated Financial Statements" and AS - 27 on " Financial Reporting of Interest in Joint Ventures" notified vide Companies (Accounting Standards) Rules, 2006 The Consolidated Financial Statements relate to Electrosteel Castings Limited (the Company), its subsidiaries, joint venture and associate (Group). The details are as given below : Name of the subsidiaries Electrosteel Europe SA Electrosteel Algeria SPA Electrosteel Castings (UK) Limited Electrosteel USA, LLC WaterFab LLC (acquired 100% share capital through wholly owned subsidiary Electrosteel USA, LLC) Singardo International Pte Limited Name of the Associate Companies Lanco Industries Limited Electrosteel Steels Limited Electrosteel Thermal Power Limited Name of the Joint Venture Companies Domco Private Limited North Dhadhu Mining Company Pvt Ltd c. Country of Incorporation France Algeria United Kingdom USA USA Singapore Country of Incorporation India India India Country of Incorporation India India Proportion of ownership interest 100% 100% 100% 100%

b.

60% Proportion of ownership interest 48.54% 34.40% 30.00% Proportion of ownership interest 50.00% 48.98%

CONSOLIDATION PROCEDURE : i. The financial statements of the parent Company and its subsidiaries have been prepared based on a line-by-line consolidation by adding together the book value of like items of assets and liabilities, income and expenses as per the respective financial statements. Intra group balances; intra group transactions and the unrealised profits on stocks arising out of intra group transaction have been eliminated. ii. For the purpose of consolidation of these accounts, Singardo International Pte Limited, a joint venture of the Company, has been consolidated as a subsidiary of the Company in terms of AS-21 read with AS-27 as aforesaid. iii. As far as possible, the consolidated financial statements are prepared using uniform accounting policies for similar material transactions and other events in similar circumstances otherwise as stated elsewhere. iv. The difference between the costs of investment in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognised in the financial statements as Goodwill or Capital reserve as the case may be. v. Minority Interests 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 the shareholders of the Company. The excess of loss over the minority interest in the equity is adjusted in majority interest. vi. Minority Interests share of net assets of consolidated subsidiaries is identified and presented in the consolidated Balance Sheet separate from liabilities and the equity of the Companys shareholders. vii. In terms of AS 11 on The Effects of Changes in Foreign Exchange Rates, foreign subsidiaries of the Company are integral to the operations of the Company. Financial statements of these subsidiaries have been translated at following exchange rates : (a) Revenue and expenses: At the average exchange rates during the year. (b) Fixed Assets and Investment: At Average exchange rates in the year of purchase. (c) All other assets and liabilities: Closing rates prevailing at the year end. Any exchange difference arising on consolidation is recognised in the profit and loss account. viii. Investments in Associates are accounted in accordance with AS-23 on Accounting for Investments in Associates in Consolidated Financial Statements, under equity method. Unrealised profit/loss are eliminated other than in respect of transactions pertaining to non depreciable assets. ix. The difference between the cost of investment in the associates and the share of net assets at the time of acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital reserve as the case may be.

98

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17 x. d. e.

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) The groups interest in the jointly controlled entity is accounted using proportionate consolidation. Investments other than in subsidiaries, joint ventures and associates have been accounted as per AS- 13 on Accounting for Investments. OTHER SIGNIFICANT ACCOUNTING POLICIES :

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The accounts have been prepared under the historical cost convention in accordance with the provisions of the Companies Act, 1956 and accounting standards notified vide Companies (Accounting Standards) Rules, 2006. Accounting policies unless specifically stated to be otherwise, are consistent and are in consonance with generally accepted accounting principles. B. USE OF ESTIMATES The preparation of financial statements require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and the reported amounts of income and expenses during the year. Contingencies are recorded when it is probable that a liability will be incurred and the amounts can reasonably be estimated. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized. C. FIXED ASSETS AND DEPRECIATION 1) Tangible Assets (i) Gross Block : Fixed Assets are stated at cost of acquisition and subsequent improvements thereto. Cost of acquisition includes taxes, duties (net of cenvat availed), inward freight, installation expenses and adjustment for exchange differences wherever applicable. For major projects, interest and other costs incurred on / related to direct borrowings to finance fixed assets during construction period and pre-operative expenses, if appropriate, are capitalized. Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized. (ii) Depreciation : (a) Depreciation on Fixed Assets, except where otherwise stated, is provided as per Schedule XIV of the Companies Act, 1956 on straight line method in respect of Plant and Machinery of Ductile Iron Foundry Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge Iron Plant, Coke Oven Plant and Sinter Plant and on written down value method on other assets. Certain Plant and Machinery have been considered Continuous Process Plant on the basis of technical assessment. Depreciation on upgradation of fixed assets is provided over the remaining useful life of the mother plant / fixed assets. (b) Assets costing Rs. Five Thousand or less are being depreciated fully in the year of addition/acquisition. (c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are depreciated over a period of 3 years. Pipe Moulds upto 350 mm are charged to consumption in the year of issue. [A] In case of the Company :

(d) Blast Furnace and Coke Oven Battery relining are depreciated over a period of 2 and 5 years respectively (average expected life) as per technical assessment. Wagons acquired under Wagon Investment Scheme are depreciated over a period of 10 years and Heavy Earth Moving Machinery used for coal mines are depreciated over a period of 5 years on straight line method. (e) Leasehold land is amortised on straight line method over the period of the lease. (f) Machinery Spares which can be used only in connection with an item of Fixed Asset and whose use is expected to be irregular are amortised over the useful life of the respective fixed assets and the amount amortised is included under stores and spares consumed.

[B] In case of the subsidiaries, depreciation is provided on straight line method on the basis of estimated useful life of the assets applying the depreciation rates ranging from 3.03% to 35% per annum. In case of Singardo International Pte. Ltd., and Electrosteel Castings (UK) Ltd. assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. (iii) Capital Work-in-progress includes preoperative expenses, Machinery to be installed, Construction and Erection Materials, Advances etc. (iv) Development Expenses net of Income of the Projects / Mines under development are booked to Development Account and grouped under Capital Work in progress till the projects/ mines are brought to Revenue Account, except otherwise specially stated in the Project Report to determine the commercial readiness of the project to yield production on a sustainable basis and completion of required development activity during the period of construction, projects and mines under development are brought to revenue : (a)From beginning of the financial year immediately after the year in which the project achieves physical output of 50% of rated capacity as per approved project report, or (b)One year of touching of coal, or (c)From the beginning of the financial year in which the value of production is more than total expenses, whichever event occurs first. 99

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17 2) Intangible Assets

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) Intangible assets are stated at cost of acquisition less accumulated amortization. Computer software packages are amortised over a period of 5 years. Amortisation is done on straight line basis. Mining rights are amortised on straight line method over the available period of mining lease. D. INVESTMENTS Long-term investments are stated at cost less provision, if any, for diminution in value other than temporary. Current investments are carried at lower of cost or fair value, computed category wise. E. INVENTORIES (i) Inventories are valued at lower of the cost or net realisable value. Cost of inventories is ascertained on weighted average basis. (ii) In case of subsidiaries : (a) Inventories of Electrosteel Algeria SPA are valued at moving weighted average price method (b) Inventories of Singardo International Pte Limited are valued at First in First Out (FIFO) method (c) Inventories of USA is valued at lower of cost or market, with cost determined on the basis of the average cost of all similar item. (iii) Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. (iv) Cost in respect of raw materials and stores and spares include expenses incidental to procurement of the same. Cost in respect of manufactured finished goods represents prime cost, and includes appropriate portion of overheads and excise duty wherever applicable. Cost in respect of purchased finished goods comprises of procurement cost and other expenses incurred in bringing such goods to the present location and condition. (v) Cost in respect of process stock represents, cost incurred upto the stage of completion. (vi) Cost in respect of Work-in-progress represents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company. F. IMPAIRMENT Fixed assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of fixed assets is determined. An impairment loss is recognized, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the greater of assets net selling price or its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate. An impairment loss is reversed if there has been change in the recoverable amount and such loss either no longer exists or has decreased. Impairment loss/reversal thereof is adjusted to the carrying value of the respective assets, which in case of CGU, are allocated to its assets on a prorata basis. Subsequent to recognition of impairment loss/reversal thereof, depreciation is provided on the revised carrying amount of the asset, on a systematic basis, over its remaining useful life.

G. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are accounted for at the exchange rate prevailing on the date of the transaction. Foreign currency monetary assets and liabilities at the year end are translated at the year end exchange rates. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. The loss or gain thereon and also on the exchange differences on settlement of the foreign currency transactions during the year are recognized as income or expense and are adjusted to the profit and loss account under respective heads of accounts except in case of the Company where such liabilities and/or transactions relates to fixed assets / projects and were entered into before 1-4-2004, in which case, these are adjusted to the cost of respective fixed assets. Revenue/expenditure earned/incurred by the Overseas Office is translated at the respective month end rate during which such revenue /expenditure is so earned/incurred. Exchange differences arising with respect to forward contracts other than those entered into, to hedge foreign currency risk on unexecuted firm commitments or of highly probable forcast transactions are recognized in the period in which they arise and the difference between the forwards rate and exchange rate at the date of transaction is recognized as income / expense over the life of the contract. Keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding accounting for derivatives, mark to market losses on all other derivatives contracts (other than forward contracts dealt as above) outstanding as at the year end , are recognized in the accounts. H. REVENUE RECOGNITION All expenses and income to the extent considered payable and receivable respectively unless specifically stated to be otherwise are accounted for on mercantile basis. 100

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17 I.

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) SALES Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment sales etc. are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of sales account from the respective consignee. Revenue against Turnkey Contracts undertaken by the Company is recognised progressively on the basis of percentage of completion method. Stage of completion of contracts in progress is determined by reference to the physical proportion of the contract work completed. DIVIDEND POLICY In case of Singardo International Pte. Ltd. dividends to the companys shareholders are recognised when the dividends are approved for payment.

J.

K. EMPLOYEE BENEFITS Employee benefits are accrued in the year services are rendered by the employees. Contribution to defined contribution schemes such as Provident Fund, Superannuation Fund etc. are recognized as and when incurred. In case of the company, long-term employee benefits under defined benefit scheme such as contribution to gratuity, leave etc. are determined at close of the year at present value of the amount payable using actuarial valuation techniques. In case of Singardo International Pte. Ltd, employee entitlements to annual leave are recognized when they accrue to employees. An accrual is made of the estimated liability for leave as a result of services rendered by employees upto the balance sheet date Actuarial gain and losses are recognized in the year when they arise. L. RESEARCH AND DEVELOPMENT Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred.

M. EXPORT BENEFITS Export benefits arising to the Company on account of entitlement for duty free imports are accounted for through import of materials. Other export benefits are accounted for as and when the ultimate realisibility of such benefits are established. N. GOVERNMENT GRANTS Revenue grants including subsidy/rebates are credited to Profit and Loss Account under Other Income or deducted from the related expenses. Grants relating to fixed assets are credited to Capital Reserve Account or adjusted in the cost of such assets as the case may be, as and when the ultimate realisability of such grants are established. O. INCOME TAX In case of the Company, provision for tax is made for current and deferred taxes. Current Tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing differences, which are capable of reversal in subsequent periods are recognized using tax rates and tax laws, which have been enacted or substantively enacted. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty that such deferred tax assets can be realized against future taxable profits. In case of Foreign companies, tax liabilities and assets are recognized in accordance with the local laws. P. LEASES In case of Electrosteel Castings (UK) Ltd., rentals paid under operating leases are charged to income as incurred which in case of Singardo International Pte. Ltd. are charged to income statement on a straight line basis over the term of the relevant lease. In case of Singardo International Pte. Ltd. and Electrosteel Castings (UK) Ltd., leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Q. PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events, it is probable that there will be an outflow of resources and a reliable estimate can be made, of the amount of the obligation. Contingent assets are neither recognized nor disclosed in the financial statement. Contingent liabilities are not provided for and are disclosed by way of notes. 101

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17 Contingent Liabilities 2 3

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) 2010-11 89,49.91

(Rs. in lakhs) 2009-10 33,00.31

Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances): Contingent Liabilities not provided for in respect of : a) Various show cause notices/demands issued/raised, which in the opinion of the management are not tenable and are pending with various forum/authorities: i. Sales Tax ii. Excise, Custom Duty and Service Tax [net of provision of Rs. 5,00 lakhs (previous year Rs. 5,00 lakhs)] b) Employees State Insurance Corporation has raised demand for contribution in respect of Gross Job Charges for the year 2001-02, 2003-04 and March08 to January10. In the opinion of the management demand is adhoc and arbitrary and is not sustainable legally. c) Demand of Tamilnadu Electricity Board disputed by the Company. d) During the year 1994 UPSEB raised demand for electricity charges by revising the power tariff schedule applicable to the Company retrospectively from Feb86. In the opinion of the management the revised power tariff is not applicable to the Company and accordingly the Company disputed the demand and the matter is pending before Honble High court at Allahabad e) Corporate guarantee issued to banks by the Company on behalf of : (i) Subsidiary Companies (ii) Associate f) Standby Letter of Credit issued by banks on behalf of the company in favour of (i) Subsidiary Companies g) Guarantees given by bank on behalf of i) The Company ii) Singardo International Pte Ltd. h) Letter of credit i) Receivables factored j)

8,12.80 68,51.18

4,89.74 60,85.95

96.11 8.20

1,13.13 8.20

2,61.74 14,15.22 2,08,10.53 1,85,33.31 0.71 74.01 37,37.29

2,61.74 60,46.00 21,00.00 87,95.53 1,73,87.30 0.96 2,58.50 16,61.91

The Company has disputed downward revision in the prices affected by the purchaser subsequent to sale of certain specified materials. In the opinion of the management and also on the merit of the case, as advised legally no liability is likely to arise. The matter is subjudice and pending final judgement the amount payable, if any is not ascertainable presently. Note : Future cash outflows in respect of (a) to (d) and (j) above is dependent upon the outcome of judgements / decisions.

4 (a) The Company has investment in equity shares of Domco Private Limited (DPL), a Company incorporated in India, and has joint control (proportion of ownership interest of the Company being 50%) over DPL along with other venturers (the Venturers). The Venturers had filed a petition before the Company Law Board, Principal Bench, New Delhi (CLB) against the company on various matters including for forfeiture of the Companys investment in equity shares of the DPL. The Company had inter alia filed petition before the Honble High Court of Jharkhand at Ranchi. The Honble High Court of Jharkhand at Ranchi upheld the Companys appeal and decided that the matter would have to be referred for Arbitration. The Venturer has challenged the aforesaid judgment in the Divisional Bench of the Honble High Court of Jharkhand at Ranchi. Pending final outcome of the matter and since, the other Venturer are not providing the financial statements of DPL, disclosures as regards contingent liability and capital commitments, if any, aggregate amounts of each of the assets, liabilities, income and expenses related to the Companys interest in DPL has not been made in these accounts. (b) During the year, the Company has invested in equity shares of Vishwa Utilities Pvt. Ltd. (VUPL), a company incorporated in India, has joint control over VUPL being 11% interest alongwith other venturers. However, the Company has aquired and held this interest exclusively with a view to its subsequent disposal in the near future and accordingly interest in the said Joint Venture Company has been accounted for as an investment in accordance with Accounting Standard 13 on Accounting for Investment. (c) Information on other joint venture S. No. Name of the Joint Venture (i) Country of Incorporation Percentage of ownership interest 48.98 North Dhadhu Mining Company Private Limited India

102

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) (Rs. in lakhs ) 2010-11 (ii) Contingent liabilities in respect of Joint Ventures. a. Guarantees given by banks on behalf of the Company (iii) Interest in assets, liabilities, income and expenses with respect to jointly controlled entities. A) Assets : a) Fixed Assets ( Net Block ) : Capital Work-in-Progress b) Current Assets, Loans And Advances Cash & Bank Balances Loans & Advances c) Miscellaneous Expenditure B) Liabilities : a) Current Liabilities 0.45 6,23.47 13.16 3.45 2.01 0.91 0.48 5,95.46 8.90 1.69 2.01 1.20 (Rs. in lakhs) 2010-11 5 Auditors' Remuneration : (a) Audit Fees (b) Other services - Certificates, etc. Management Services Income from Investments (Net) represent : a) Trade InvestmentsLong Term- Dividend Profit on Sale of Long Term Investments b) Other than Trade Investments : Dividend from current investment Stores and spares consumption include pipe moulds written off. 65.52 4.20 10.50 1.27 22.21 91.60 1,15.08 3,08.54 2009-10 49.64 16.41 0.78 6,88.70 6,89.48 1,25.78 27,45.47 2009-10 27,45.47

7 8

The Company operates mainly in one business segment viz Pipes being primary segment and all other activities revolve around the main activity. The secondary segment is geographical, information related to which in respect of the Group is given as under : (Rs. in lakhs) Particulars Within India Outside India Total Sales (Gross) Sundry Debtors & other Assets Cost Incurred for acquisition of Tangible and in tangible fixed assets 11,26,60.86 (9,59,49.34) 36,17,97.41 (29,71,02.15) 1,45,86.99 (1,88,32.61) 7,84,18.83 (6,59,14.82) 4,49,12.80 (3,31,37.76) 4,16.49 (3,06.41) 19,10,79.69 (16,18,64.16) 40,67,10.21 (33,02,39.91) 1,50,03.48 (1,91,39.02)

9 10 11 12

(Previous year figures are shown in bracket) No allocation has been made in respect of stores and spare parts and wages for repairs to Machinery and Building. In the opinion of the Board of Directors, current assets and loans and advances have the value at which these are stated in the Balance Sheet, unless otherwise stated and adequate provisions for all known liabilities have been made and are not in excess of the amount reasonably required. In case of the Company, balances of Sundry Debtors including for Turnkey Contracts, Work-in-progress and Creditors and advances are subject to confirmation/reconciliation and adjustments in this respect are carried out as and when amounts thereof, if any are ascertained. Rs. 57,42.91 lakhs being net gain (previous year Rs. 55,96.61 lakhs being net gain) on account of exchange difference has been adjusted to the respective heads of account in Profit and Loss Account. 103

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17 13 14

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) In case of the Company, other deposits under Loan and Advances include Rs.5,57.50 lakhs (previous year Rs 5,57.50 lakhs) with Private Limited Companies in which directors are interested as a member/director. Other provisions include (a) provision relating to indirect taxes in respect of proceedings of various excise duty matters carrying amount at the end of the year Rs. 500.00 lakhs and carrying amount at the beginning of the year Rs. 500.00 lakhs. No amount was used and reversed during the year. Outflows in these cases would depend on the final developments/outcomes; (b) Other class of provisions related to disputed customer claims/rebates/demands carrying amount at the end of the year Rs. 28,40.00 lakhs and at the beginning of the year Rs. 28,40.00 lakhs. Amount reversed during the year and additional provisions made during the year was Rs. 18,40.00 lakhs. Outflows in these cases would depend on the developments/settlements. Fixed Deposits with Scheduled Bank include Fixed Deposit of Rs. 4,08.28 lakhs (previous year Rs. 3,51.60 lakhs) lodged with Government Departments and Customers. Employee Benefits The disclosures required under Accounting Standard 15 Employee Benefits notified in the Companies (Accounting Standards) Rules 2006, are given below : Defined Contribution Scheme Contribution to Defined Contribution Plan, recognized for the year are as under : (Rs. in lakhs) 2010-11 2009-10 Employers Contribution to Provident Fund Employers Contribution to Pension Fund Employers Contribution to Superannuation Fund 2,26.47 99.65 66.16 1,96.24 1,02.06 62.33

15 16

Defined Benefit Scheme The employees gratuity fund scheme managed by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Ltd. is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. (Rs in lakhs) Gratuity (Funded) i. Change in the present value of the defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows : Liability at the beginning of the year Interest Cost Current Service Cost Actuarial (gain) / loss on obligations Benefits paid Liability at the end of the year Changes in the Fair Value of Plan Asset representing reconciliation of opening and closing balances thereof are as follows : Fair value of Plan Assets at the beginning of the year Expected Return on Plan Assets Contributions by the Company Benefits paid Actuarial gain / (loss) on Plan Assets Fair value of Plan Assets at the end of the year Total actuarial gain / (loss) to be Recognized Actual return on Plan Assets Expected return on Plan assets Actuarial gain / (loss) on Plan Assets Actual Return on Plan Assets 2010-11 2009-10 2008-09 2007-08

10,64.79 89.82 1,06.44 88.44 (1,68.80) 11,80.69

8,85.88 78.03 1,00.53 39.06 (38.71) 10,64.79

7,82.44 66.74 87.92 32.31 (83.53) 8,85.88

6,76.49 54.71 75.25 39.99 (64.00) 7,82.44

ii

7,04.89 55.08 81.52 (1,68.80) (0.63) 6,72.05 89.07 55.08 (0.63) 54.45

5,85.66 51.63 73.35 (38.71) 32.96 7,04.89 6.10 51.63 32.96 84.59

5,49.44 45.40 81.75 (83.53) (7.40) 5,85.66 39.71 45.40 (7.40) 38.00

4,95.76 39.20 68.32 (64.00) 10.16 5,49.44 29.83 39.20 10.16 49.36

iii.

104

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) (Rs in lakhs) Gratuity (Funded) iv. Amount Recognized in Balance Sheet Liability at the end of the year Fair value of Plan Assets at the end of the year Expenses Recognized in the Income Statement Current Service Cost Interest Cost Expected Return on Plan Assets Net Actuarial (gain) / loss to be Recognized Expenses Recognized in Profit & Loss Account vi. Balance Sheet Reconciliation Opening Net Liability Expenses as above Employers Contribution Amount Recognized in Balance Sheet 2010-11 11,80.68 6,72.05 5,08.63 v. 1,06.44 89.82 (55.08) 89.07 2,30.25 3,59.90 2,30.25 (81.52) 5,08.63 2009-10 10,64.79 7,04.89 3,59.90 1,00.53 78.03 (51.63) 6.10 1,33.03 3,00.22 1,33.03 (73.35) 3,59.90 2008-09 8,85.88 5,85.66 3,00.22 87.92 66.74 (45.40) 39.71 1,48.97 2,33.00 1,48.97 (81.75) 3,00.22 2007-08 7,82.44 5,49.44 2,33.00 75.25 54.71 (39.20) 29.83 1,20.59 1,80.73 1,20.59 (68.32) 2,33.00

Compensated Absences The obligation for compensated absences is recognized in the same manner as gratuity. The actuarial liability of Compensated Absences (unfunded) of accumulated privileged and sick leaves of the employees of the Company as at 31.03.2011 is given below : (Rs. in lakhs) Particulars Privileged Leave Sick Leave vii. Principal Acturial assumptions as at the Balance Sheet date Discount Rate Rate of Return on Plan Assets Notes : i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled. The Company expects to contribute Rs 1,00.00 lakhs (previous year Rs 90.00 lakhs) to Gratuity fund in 2011-12. 8.00% 8.00% 31.03.2011 6,97.31 3,51.46 Gratuity (Funded) 8.00% 8.00% 31.03.2010 6,03.54 2,66.79

ii)

105

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) 17 The break up of deferred tax assets and deferred tax liabilities are as given below. (Rs. in lakhs) Particulars Deferred Tax Assets : 1. Expenses Allowable on Payment Basis 2. Provision for doubtful debts, advances and stock 3. Provision for losses on Derivatives on Mark to Market basis 4. Others Deferred Tax Liabilities : 1. Depreciation 2. Liquidated Damages and retention money Net Deferred Tax Liability 62,19.67 3,27.30 46,87.10 (1,56.35) (1,05.85) 2,95.00 60,63.32 2,21.45 43,92.10 3,18.39 2,57.09 34.18 12,50.21 (5.92) (8.19) (28.26) 75.17 3,12.47 2,48.90 5.92 13,25.38 Opening as on 01-04-2010 Charge or Credit during the Year Closing as at 31-03-2011

18 In accordance with Accounting Standard (AS-20) on Earning Per Share computation of basic and diluted earning per share is as under : Particulars Net profit for basic earnings per share as per profit and loss account i) Adjustment for the purpose of diluted earnings per share Exchange (gain)/loss on realignment of ZCCB and conversion rate difference Net profit for diluted earnings per share ii) Weighted average number of equity shares for calculation of basic and diluted earnings per share (Face value Re. 1/- per share) a) Basic earnings per share b) Diluted earnings per share iii) Weighted average number of equity shares outstanding Add : Weighted average number of potential equity shares that could arise on conversion of ZCCB, warrants and share application money iv) Earnings per share : a) Basic b) Diluted 5.50 5.16 7.32 6.78 326752705 348359176 326752705 21606471 319837491 345696047 319837491 25858556 (34.14) 1,79,24.14 6.75 2,34,31.31 2010-11 Rs. in lakhs 1,79,58.28 2009-10 Rs. in lakhs 2,34,24.56

106

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) 19 The expenses incurred for projects/assets during the construction period are classified as "Pre-operative Expenses" pending capitalization and are included under capital work in progress and will be allocated to the assets on completion of the project/assets. The details of these expenses are as follows : 2010-11 Rs.in lakhs 1,19,09.68 7,01.22 26.47 5.26 86.93 1.96 2,37.66 0.32 23.89 17.45 32.98 11,60.25 65.72 14,97.79 2.20 10,92.69 66.36 1,69,28.83 60.34 2,56.50 4,54.29 2009-10 Rs. in lakhs 90,72.21 6,63.47 23.02 3.70 33.02 87.28 3,96.24 0.55 29.00 22.84 30.30 6,29.66 2,33.21 6,89.28 1,27.82 10,38.06 1,30,79.66 3,22.55 3,15.67

Preoperative expenses brought forward Salaries, Wages, Bonus and Allowances etc. Contribution to Provident and Other Fund Employees Welfare Stores & Spares Consumption Handling & Transportation Power & Fuel Repairs Machinery Others Rent Insurance Miscellaneous Expenses Interest Paid On Term Loan On Others Finance Charges Depreciation Excise duty on coal Stock Total preoperative expenses Less : Allocated/Transferred during the year to completed assets Coal transferred for Captive Consumption [22304.22 mt (previous year 28707.32 mt)] Stock of Coal[39503.58 mt (previous year 27449.39 mt)] Interest on deposit (Gross)[Tax deducted at source Rs. 1,12.29 lakhs (Previous year Rs. 14.26 lakhs) and is net of provision of for current tax Rs. 5,05.47 lakhs (previous year Rs. 2,74.63 lakhs) Total preoperative expenses carried forward pending allocation

8,73.84 1,52,83.86

5,31.76 1,19,09.68

20 As regards construction contracts in progress as on 31.03.2011, aggregate amount of costs incurred and recognised profit (less recognized losses) upto the year end (to the extent ascertained by the management), aggregate amount of advances received and aggregate amount of retentions are Rs. 2,87,81.12 lakhs, Rs. 8,23.69 lakhs and Rs.7,90.41 lakhs respectively.(previous year Rs. 4,34,45.65 lakhs, Rs. 9,35.54 lakhs and Rs. 13,68.23 lakhs respectively). 21 Premium payable on ZCCB has been provided proportionately and accordingly Rs. 6,11.29 lakhs (out of total redemption premium amounting to Rs. 31,37.73 lakhs) (previous year Rs. 3,97.93 lakhs, out of total redemption premium amounting to Rs. 31,58.84 lakhs) on this account has been debited to Share Premium Account. 22 The Company through Qualified Institutional Placements had issued 3,35,68,312 warrant at a price of Rs. 3 each, entitling the holder to 1 (one) equity share. As per terms and conditions of the issue, the warrant holders have an option to convert, warrant into equity at any time on or after three years from the date of allotment (i.e 08/02/2010) and upto five years from the date of allotment (i.e 08/02/2010) at exercise price of Rs. 59.58 per share. The warrant issue price aggregating to Rs. 10,07.05 lakhs, being non adjustable/non refundable has been credited to Capital Reserve account.

107

ELECTROSTEEL CASTINGS LIMITED

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) 23 The Marked-to-Market losses on derivative contract as at March 31, 2011 stood at Rs. 18.26 lakhs (previous year Rs. 1,02.90 lakhs). Even though such losses have not been determined and accrued during the year, keeping in view the announcement of Institute of Chartered Accountants of India dated March 29, 2008 regarding Accounting for Derivatives, the Company has recognized losses in the profit and loss account for the year. 24 The Company has certain operating lease arrangements for office accommodations etc. with tenure extending upto 9 years. Terms of certain lease arrangements include escalation clause for rent on expiry of 36 months from the commencement date of such lease and deposit / refund of security deposit etc. Expenditure incurred by the Company on account of rent during the year and recognised in the Profit and Loss account amounts to Rs. 12,31.59 lakhs (previous year Rs. 11,48.39 lakhs). 25 (a) Category wise outstanding derivatives contracts entered by the Company for hedging as on March 31, 2011 are as follows :Sl. No. Category Currency 2010-11 No. of Deals Amount in Foreign Currency 35 9 10 38 9 3 5 2 3 9,45,88,325 25,77,986 62,03,268 3,66,66,545 3,83,34,118 1,00,00,000 2,10,00,000 1,60,00,000 3,50,00,000 2009-10 No. of Deals Amount in Foreign Currency 142 8 24 32 11 1 3 3 21,24,05,859 35,28,895 1,44,19,794 2,20,12,855 55,12,131 22,00,000 1,80,00,000 3,50,00,000

1 2 3 4 5 6 7 8 9

Sell Forward Sell Forward Sell Forward Sell Forward Buy Forward Option Option Option Swap

USD/INR SGD/USD GBP/USD Euro/USD USD/INR EURO USD USD USD

(b) Unhedged Foreign Currency exposures of the Company as on March 31, 2011 are as follows :Nature Payables Imports ZCCB* (include proportionate premium) ECB Payable (include accrued interest) Buyers Credit / Acceptances (include proportionate premium) Others Others Others Others Others Others * ZCCB : Zero Coupon Convertible Bond 108 USD USD USD USD EURO GBP AED HKD JPY SGD Currency 2010-11 Amount in Foreign Currency 1,40,02,744 37,75,740 7,04,91,548 6,46,56,157 2,49,595 7,576 50,923 24,729 9,20,055 87,325 2009-10 Amount in Foreign Currency 1,21,94,403 2,58,68,370 7,05,34,578 39,18,616 46,269 12,494 2,74,326

ANNUAL REPORT 2010-11

Schedules
SCHEDULE 17

Forming Part of Consolidated Accounts

NOTES ON ACCOUNTS (Contd.) 26 At the Balance Sheet date, the following are the commitments in respect of (a) Operating lease : (Rs. in lakhs) Name of the Companies 1. 2. Singardo International Pte. Ltd. Electrosteel Castings (UK) Limited Due within one year 28.22 (89.27) 6.43 (41.98) Due between two and five years 7.11 (13.67) 52.90 (42.94)

(b)

Finance Lease Name of the Companies 1. Singardo International Pte. Ltd. Due within one year 20.26 (18.38) Due between two and five years 57.39 (70.44)

27 In respect of unrealized profits resulting from intragroup transactions that are included in the carrying amount of inventory are eliminated in full. The aforesaid inventory is as certified by the respective management. 28 During the year, basis of valuation of inventory in Electrosteel Algeria SPA has been changed from moving weighted average to weighted average to fall in line with basis of valuation followed by the Company. Consequent upon this change there is no material impact on the profit. 29 Based on the current Exchange Control Procedure in Algeria, as per the Algerian Finance Law, there is a restriction in repatriating the advance amount given by the Company to its wholly owned subsidiary at Algeria. This is to be converted into equity, however pending outcome on the representation made by the company through Indian Embassy at Algeria, this advance continued to be reflected under Loans & Advances. 30 During the year, the company has incurred Rs. 83.26 lakhs (previous year Rs 80.93 lakhs) on account of research and development expenses which has been charged to profit & loss account.

109

ELECTROSTEEL CASTINGS LIMITED

Schedules
A)

Forming Part of Consolidated Accounts

31 Related party disclosure as identified by the management in accordance with the Accounting Standard (AS) 18 on Related Party Disclosures are as follows : Names of related parties and description of relationship 1) Associate Company Lanco Industries Ltd. Electrosteel Steels Limited (Formerly Electrosteel Integrated Limited) Electrosteel Thermal Power Ltd. 2) 3) Joint Venture Key Management Personnel (KMP) and their relative North Dhadhu Mining Company Pvt. Ltd. Domco Private Limited Mr. Umang Kejriwal (Managing Director) Mr. Mayank Kejriwal (Joint Managing Director ) Mr. Uddhav Kejriwal (Whole Time Director) Mr. Vyas Mitre Ralli (Wholetime Director) Mr. Mahendra Kumar Jalan (Wholetime Director) Mr. Rama Shankar Singh (Wholetime Director) Mr. S Y Rajagopalan (Director) Smt. Uma Kejriwal-mother of Mr. Umang Kejriwal-Managing Director Mr. S.Y. Ganapathy-brother of Mr. S.Y. Rajagopalan-Director

4)

Enterprise where KMP/Relatives of KMP have signifinant influnce or control

* * ** ** ** ** * * *

** * **

Global Exports Ltd. G. K. & Sons Private Limited Badrinath Industries Ltd. Akshay Ispat & Ferro Alloys Pvt. Ltd. Acharya Multicon Pvt. Ltd. Electrocast Sales India Ltd Flora Constuctions Pvt. Ltd. Highrise Multicon Pvt. Ltd. Kabir Projects Pvt. Ltd. New City Enclave Pvt. Ltd. Nilmoni Developers Pvt. Ltd. Nimpith Developers Pvt. Ltd. Paramount Tracom Pvt. Ltd. Stewart Agencies Pvt. Ltd. Tulsi Highrise Pvt. Ltd. Wilcox Merchants Pvt. Ltd. Royal Multicon Pvt. Ltd. Samar Properties Pvt. Ltd. Tulip Fabicon Pvt. Ltd. Murari Investment & Trading Company Ltd. Electrosteel Thermal Power Ltd.

* Amalgamated into Tulsi Highrise Pvt. Ltd. as per Honble Calcutta High Court order dated 06-10-2010 ** Amalgamated into Wilcox Merchants Pvt. Ltd. as per Honble Calcutta High Court order dated 06-10-2010

110

ANNUAL REPORT 2010-11

Schedules
B) Related Party Transaction

Forming Part of Consolidated Accounts

(Rs. in lakhs) Associate Joint Venture KMP & Relatives KMP have control Total Outstanding Outstanding as on as on 31.03.11 31.03.10 252.93 4.61 1,466.34 1,723.88 80.90 52.56 133.46 90.02 90.02 200.00 200.00 170.00 570.00 10.51 4.61 0.06 349.83 (433.79) 2.22 285.00 285.00 240.00 15.80 -

Sale Electrosteel Steels Limited Akshay Ispat & Ferro Alloys Pvt. Ltd. Lanco Industries Ltd. Total Previous Year Electrosteel Steels Limited Akshay Ispat & Ferro Alloys Pvt. Ltd. Lanco Industries Ltd. Purchase Lanco Industries Ltd. Electrosteel Steels Limited Total Previous Year Lanco Industries Ltd. Akshay Ispat & Ferro Alloys Pvt. Ltd. Job Charges Received Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Lanco Industries Ltd. Remuneration Mr. Umang Kejriwal (MD) Mr. Mayank Kejriwal (JMD) Mr. Uddhav Kejriwal (Director) Mr. Vyas Mitre Ralli (Director) Mr. Mahendra Kumar Jalan (Director) Mr. Rama Shankar Singh (Director) Others Total Previous Year Mr. Umang Kejriwal (MD) Mr. Mayank Kejriwal (JMD) Mr. Uddhav Kejriwal (Director) Others Rent Paid Global Exports Ltd. Badrinath Industries Ltd. Others Total Previous Year Global Exports Ltd. Badrinath Industries Ltd. Others Service Charges Paid Global Exports Ltd. Previous Year Global Exports Ltd. 38.00 39.06 38.00 39.06 244.76 242.41 224.76 111.11 110.59 106.07 25.89 1,065.59 326.62 323.71 288.92 106.57 15.00 15.00 104.43 134.43 15.00 15.00 113.59 244.76 242.41 224.76 111.11 110.59 106.07 25.89 1,065.59 326.62 323.71 288.92 106.57 15.00 15.00 104.43 134.43 15.00 15.00 113.59 1,799.66 1,799.66 199.74 2.22 1,799.66 1,799.66 199.74 2.22 8,169.83 121.33 8,291.16 4,123.04 123.72 8,169.83 121.33 8,291.16 4,123.04 123.72 1,730.17 1,651.39 0.11 1,730.17 0.11 1,651.39 1,710.12 6,576.37 8,286.49 1,710.12 6,576.37 8,286.49

111

ELECTROSTEEL CASTINGS LIMITED

Schedules
Share Application Money Paid North Dhadhu Mining Company Pvt. Ltd. Total Previous Year North Dhadhu Mining Company Pvt. Ltd.

Forming Part of Consolidated Accounts

(Rs. in lakhs) Associate Joint Venture KMP & Relatives KMP have control Total Outstanding Outstanding as on as on 31.03.11 31.03.10 60.99 60.99 2,745.47 2,745.47 6,333.53 72,488.47 588.00 30.00 1.50 79,441.50 4,081.00 185.00 4,266.00 24.25 2,100.00 2,745.47 6,333.53 70,000.00 588.00 0.51 30.00 1.50 4,435.96 185.00 -

2,488.47 2,488.47 53,517.50 (180.00) (180.00) (32.52) 289.52 289.52 193.01 85.29 -

36.74 36.74 24.25 -

30.00 1.50 (45.00) 4.05

36.74 36.74 24.25 2,488.47 2,488.47 53,517.50 30.00 1.50 (180.00) (180.00) (32.52) (45.00) 289.52 289.52 193.01 85.29 4.05

Corporate Guarantee and Standby Letter of Credit Lanco Industries Ltd. Total Previous Year Lanco Industries Ltd. Bank Guarantee North Dhadhu Mining Company Pvt. Ltd. Total Previous Year North Dhadhu Mining Company Pvt. Ltd. Investment Lanco Industries Ltd. Electrosteel Steels Limited North Dhadhu Mining Company Pvt. Ltd. Domco Private Limited Electrosteel Thermal Power Ltd. Total Previous Year Lanco Industries Ltd. Electrosteel Steels Limited North Dhadhu Mining Company Pvt. Ltd. Electrocast Sales India Ltd Domco Private Limited Biswa Microfinance Pvt. Ltd. Electrosteel Thermal Power Ltd. Security Deposits Lanco Industries Ltd. Electrosteel Thermal Coal Ltd. Total Previous Year Lanco Industries Ltd. Electrosteel Thermal Coal Ltd. Dividend Received Lanco Industries Ltd. Total Previous Year Lanco Industries Ltd. Rent Receipts Electrosteel Steels Limited Murari Investment & Trading Company Ltd.

112

ANNUAL REPORT 2010-11

Schedules
G. K. & Sons Private Limited Electrocast Sales India Ltd. Lanco Industries Ltd. Total Previous Year Electrosteel Steels Limited Murari Investment & Trading Company Ltd. Lanco Industries Ltd. Service Charges Received Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Sale of DEPB Electrosteel Steels Limited Total Previous Year Electrosteel Steels Limited Advances Given Lanco Industries Ltd. Total Previous Year

Forming Part of Consolidated Accounts

(Rs. in lakhs) Associate 0.36 85.65 76.88 0.40 11.40 11.40 9.18 11.25 11.25 24.19 53.73 53.73 Joint Venture KMP & Relatives KMP have control 0.90 0.90 5.85 5.25 Total 0.90 0.90 0.36 91.50 76.88 5.25 0.40 11.40 11.40 9.18 11.25 11.25 24.19 53.73 53.73 Outstanding Outstanding as on as on 31.03.11 31.03.10 0.60 0.60 1.20 0.92 0.92 53.73 53.73 0.40 -

32 Figures pertaining to the subsidiary Companies have been reclassified, wherever necessary to bring them in line with the parent Companys financial statements. 33 Previous Years Figures have been re-grouped/re-arranged wherever necessary.

The Schedules referred to above form an integral part of the Consolidated Balance Sheet and Profit and Loss Account. As per our report of even date. For Lodha & Co. Chartered Accountants For and on behalf of the Board H. K. Verma Partner Managing Director U. Kejriwal Director Uddhav Kejriwal Kolkata May 12, 2011 Company Secretary Jyoti Jain 113

Statement Pursuant to Exemption received under Section 212(8) of the Companies Act, 1956 relating to Subsidiray Companies
( Rs in lakhs.) Year Exchange Rate Capital Reserves Total Assets Total Liabilities Investment other than investment in subsidiary
0.35 0.34 351.67 (279.14) 98.43 (109.37) 3,505.34 3,880.40 18.13 157.65 3.92 12.65 26,660.40 21,436.37 284.47 159.82 88.62 59.68 195.86 100.14 14.22 145.00 18.60 (297.75) - (109.37) 9,598.47 (285.77) 7,941.21 9.48 1.32 (287.09) 8.18 1.31 18,137.32 149.31 14,648.27 (1,044.50) 149.31 608.62 - Algeria - Algeria - United Kingdom - United Kingdom - France - France 17.69 Singapore 16.05 Singapore - USA - USA

ELECTROSTEEL CASTINGS LIMITED

114

Schedules

Sl. No.

Name of the Subsidiary

Reporting Currency

Turnover

Profit before Tax

Provision Profit Proposed Country for after dividend Taxation Taxation

1 GBP 2010-11 2009-10 63.16 60.66 35.38 32.10 44.59 44.89 1,070.16 359.12 (406.39) (109.37) 1,038.18 753.76 1,038.18 753.76 884.51 802.47 464.60 424.65 2,881.75 2,258.91 2,881.75 2,258.91 2,400.15 485.24 990.31 762.93 23,091.01 14,926.88 23,091.02 14,926.88 71.48 68.15 786.30 68.15 (61.29) 214.04 9,908.75 5,671.59 9,908.75 5,671.59

Electrosteel Algerie SPA*

DZD 2010-11 2009-10

0.62 0.63

510.93 517.41

60.38 11,802.70 (90.06) 12,667.99

11,802.70 12,667.99

Electrosteel Castings (UK) Limited

3 SGD 2010-11 2009-10 USD 2010-11 2009-10

Electrosteel Europe S.A.

EURO 2010-11 2009-10

Singardo International Pte. Limited

Electrosteel USA, LLC

Forming Part of Consolidated Accounts

Notes : 1. Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as on 31.03.2011 2. * The financial year of the company ends on December 31st. However, the results given are as of March 31, 2011

ANNUAL REPORT 2010-11

NOTES

115

ELECTROSTEEL CASTINGS LIMITED

NOTES

116

TEAR HERE

ECS MANDATE FORM

Maheswari Datamatics Pvt. Ltd. Unit : Electrosteel Castings Ltd. 6, Mangoe Lane, 2nd Floor (Surendra Mohan Ghosh Sarani) Kolkata - 700 001 Dear Sirs, Change in mode of payment to ECS I hareby consent to have the amount of dividend on my equity shares credited through the Electronic Clearing Service (ECS). The particulars are: 1. Folio No. / Client ID No. / DPID No._________________________________________________ 2. Shareholders Name___________________________________________________________________ 3. Shareholders Address _______________________________________________________ ________________________________________________________________________________ ___________________________________________________________________________________________ 4. Income Tax Permanent Account Nos:- 10 Digits (for issue of TDS certificate)_________________________ (PAN should be latest and correct) 5. Particulars of the Bank
l l l
(Folio No. given in equity share certificate(s) / Customer ID Nos. given by your DPs)

For Shares held in Physical Mode Please complete the form and mail to Shares held in Electronic Mode Should inform respective DPs

Bank Name______________________________________________________________ Bank Name and Address____________________________________________________

Mention the 9 digit-code number of the Bank and branch appearing on the MICR cheque issued by the bank. ______________________________________________________________________________________ (Please attach the photocopy of a cheque or a cancelled bank cheque issued by your bank for verifying the accuracy of the code number)
l l

Account type (Please 3 )

Savings

Current

Cash Credit

Account number (as appearing on the MICR cheque book)

6. Date from which the mandate should be effective I hereby, declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for reasons of incomplete or incorrect information or non availability of ECS facility with Companys banks at my place / city, I would not hold the Company / Registrar & Share Transfer Agents of the Company responsible. I also undertake to advice any change in the particulars of my account to facilitate updation of records for purpose of credit of dividend amount through ECS ________________________________ Signature of the first / sole shareholder

TEAR HERE

ELECTROSTEEL CASTINGS LIMITED

Registered Office: Rathod Colony, Rajgangpur, Dist. Sundergarh, Orissa-770017 56th Annual General Meeting - July 11, 2011, Monday at 11-30 A.M.

ADMISSION SLIP
Full Name of the member in Block Letters.................................................................................................. Folio No............................................ DP ID No.*....................................... Client ID No.*............................ *Applicable for member holding shares in electronic form. I certify that I am a registered shareholder of the Company and hold............................................... shares please 3 in the box MEMBER PROXY _____________________ Members Signature _____________________ Proxys Signature

______________________________ Name of the Proxy in Block Letters

Note: 1. Shareholder/Proxyholder wishing to attend the meeting must bring the Admission Slip to the meeting and hand it over at the entrance duly signed.
TEAR HERE

ELECTROSTEEL CASTINGS LIMITED

PROXY FORM
I /We........................................................................................................................................................ of............................................................................................................................................................. being a member/members of Electrosteel Castings Limited hereby appoint ..................................................................................of.......................................................................... or failing him.............................................................of.......................................................................... ..................................................................................... as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on Monday, the July 11, 2011 as witness my /our hand(s) this ............................................. day of............................................. 2011
Affix signed by the said ..................................................................................................................................

Folio No.................................................................................................................................................. Revenue

Stamp No. of Shares held....................................................................................................................................

Rupee 1/-

Note: The Proxy Form must be returned so as to reach the Registered Office of the Company not less than 48 hours before
the time for holding the aforesaid meetiong.