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Directors’ Report

“A Winning Statement”

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Rohit

DIRECTORS’ REPORT

To The Shareholders

Your Directors have pleasure in presenting their 7th Annual Report together with Audited Statement of Accounts for the Financialyear ending March 31st, 2007.

FINANCIAL RESULTS :(Rs. in lacs)

Particulars Current Year Previous YearMarch 31st 2007 March 31st 2006

Net Sales 20,211.11 13,132.96

Earning Before Interest Depreciation and Tax (EBIDTA) 3,265.02 1,684.06

Interest 745.40 350.13

Depreciation 233.55 155.73

Profit Before Tax (PBT) 2,286.07 1,178.20

Provision for Taxation (461.19) (173.12)

MAT Credit Entitlement 218.85 99.14

Profit After Tax (PAT) 2,043.73 1,104.22

Adjustment for earlier years (28.71) —

Adjustment for Extra-ordinary Items (Net of Tax) (93.20) 1,520.09

Balance brought forward from previous year 3,337.53 1,106.18

Profit available for Appropriation 5,259.35 3,730.49

Less : Appropriated as under :

- Proposed Dividend (including Tax) 403.20 392.96

Surplus carried to Balance Sheet 4,856.15 3,337.53

DIVIDEND

The Board has recommended a dividend @ 10% (Re.1/- per share) on Equity Share Capital for the year ended 31st March, 2007.

OPERATIONAL REVIEW

Your Directors are pleased to inform that the commercial production of the Company’s Jajpur unit in Orissa has started. Presently,two furnaces are in operation and the remaning two will start production shortly.

The Bishnupur unit of the Company has maintained production at its full capacity during the year under review. The Company hasadded fourth furnace of 9 MVA which has started production from February, 2007.

Some operational highlights of the financial year 2007 vis-à-vis 2006 are :

Production of 51,157 M.T. as compared to 39,439 M.T.

Turnover of Rs. 202 crores as compared to Rs. 131 crores

Export of Rs. 104 crores as compared to Rs. 56 crores

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With firm commitment and persistent quality & efforts, your Company continues to maintain cordial relation with its global customersand added a number of new customers during the year. Our quality product and timely delivery have found wide acceptance in thehighly competitive world market. During the year under review the Company generated a Net Profit of Rs. 20.44 crores, a growthof 85% as compared to Rs. 11.04 crores in the previous year.

The product of the Company is marketed worldwide and are internationally acclaimed for its premium quality and customisation,to suit individual needs of the end-users. Your Company exports High Carbon Ferro Chrome to all major user countries, particularlyquality conscious countries in Europe, Middle-East and China.

NEW PROJECTS AND EXPANSION

The Jajpur (Orissa) project of the Company to set-up Four 16.5 MVA furnaces has been completed smoothly, despite some delayin implementation due to late delivery of critical components by the machinery suppliers, etc. This unit has started production fromDecember, 2006 and currently, two out of its four furnaces are operating. The other two furnaces are awaiting power supply fromthe utility to start its production, which is expected to be received soon. The Company is having sufficient power supply agreementwith the power supply utility NESCO.

Further, the Company recently announced addition of another 9MVA furnace (fifth) at Bishnupur, to be funded with Bank Loan andInternal Accruals. This will add another 15,000 MTPA to Bishnupur plant’s capacity. This fifth furnace is expected to start itsproduction by the end of this financial year.

After this expansion, the Company shall be the largest Merchant Producer of High Carbon Ferro Chrome in India as the totalcombined capacity of the Company after the expansion shall stand at 180,000 MTPA. The total furnace capacity will be 111 MVAcomprising of five 9 MVA and four 16.5 MVA furnaces at Bishnupur and Jajpur respectively.

PUBLIC ISSUE PROCEEDS

During the year under review, the Company has deployed its entire IPO proceeds of Rs. 50.84 crores in the Jajpur project asmentioned in the ‘Object of the Issue’ in the prospectus.

DIRECTORS

Mr. Kailash Chand Jain and Mr. Jayant Kumar Chatterjee, Directors of your Company, are retiring by rotation at this AnnualGeneral Meeting and being eligible, offers themselves for re-appointment.

A notice under Section 257 has been received from a member for the appointment of Mr. Rohit Patni as a Director of yourcompany, not liable to retire by rotation. Mr. Rohit Patni was appointed as an Additional Director of your Company on 27th August,2007 and was subsequently appointed as a Managing Director w.e.f. 27th August, 2007. Your Directors recommend his appointment.

A notice under Section 257 has also been received from a member for the appointment of Mr. Ankit Patni as a Director of yourcompany, not liable to retire by rotation. Mr. Ankit Patni was appointed as an Additional Director of your Company on 30th October,2006 and was subsequently appointed as a Jt. Managing Director w.e.f. 27th August, 2007. Your Directors recommend hisappointment.

During the year under review, Mr. S. K. Patni released the post of Chairman of the Company on 30th October, 2006, andre-designated as Managing Director. He has resigned from the post of Managing Director on 27th August, 2007 and appointed asNon-executive Chairman of the Company from the same date.

A brief resume/details relating to Directors seeking appointment/re-appointment is furnished in the explanatory statement to thenotice of the ensuing Annual General Meeting.

DIRECTORS’ RESPONISIBILITY STATEMENT

The Directors confirm :

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no materialdepartures have been made from the same;

ii) that they have selected such accounting policies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of the Company and of the profit or loss of theCompany for that period;

DIRECTORS’ REPORT

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Rohit

iii) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and

iv) that they have prepared the accounts for the financial year on a ‘going concern’ basis.

AUDITORS AND AUDITORS’ REPORT

M/s. S. Jaykishan, Chartered Accountants, Statutory Auditors of the Company hold the office until the conclusion of the ensuingAGM and are eligible for re-appointment.

The notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further comments.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits from the Public and as such, no amount of principal and interest wasoutstanding on the date of the Balance Sheet.

CORPORATE GOVERNANCE

A Management Discussion and Analysis Report, and a Report on Corporate Governance along with Certificate from CompanySecretary in practice regarding compliance with mandatory requirements as stipulated under Clause 49 of the listing agreementwith stock exchanges, form part of the annual report.

PARTICULARS OF EMPLOYEES

Details of employees during the year drawing remuneration in excess of the limit specified under Section 217(2A) of the CompaniesAct, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended :

Name Age Qualification Date of Designation Remuneration Experience LastEmployment Received Employment

(Gross)

Mr. Suresh Kumar Patni 47 Years B.Com April 07, 2000 Managing Rs. 46,50,000/- 22 years M/s Impex FerrotechDirector Limited

(Continuing as M.D.)

DISCLOSURE OF PARTICULARS

A statement giving details of Conservation of Energy, Technology Absorption, and Foreign Exchange Earning and Outgo asrequired under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the report ofBoard of Directors) Rules, 1988, is annexed to this report.

HUMAN RESOURCES & TRADE RELATIONS

Employees represent the backbone of our organisation, enhancing profitability & growth. The Company intends to continuouslyupgrade the professional and human resource skill of its employees. Your Directors wish to place on record their appreciation ofthe contribution by all employees at all levels and for their hard work, dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled your Company to grow steadily.

The Board also desires to place on record its appreciation for the support and co-operation received from State and CentralGovernment, Suppliers, Customers, Bankers, Investors, as well as the Government Agencies. Your Company has always lookedupon them as partners in its progress.

For and on behalf of the Board

Kolkata Suresh Kumar Patni27th August, 2007 Chairman

DIRECTORS’ REPORT

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ANNEXURE TO THE DIRECTORS’ REPORT

Particulars as required under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1998 :

A. CONSERVATION OF ENERGYMeasures taken for Conservation of Energy :

a) Close monitoring of high energy consuming equipments in plant.

b) Using power factor controller/capacitors to maintain power factor.

c) Keeping maximum demand under control by scheduling other loads during equipments’ testing etc.d) Continuation and increasing scale of measures taken.

FORM - A(Form for Disclosure of particulars with respect to conservation of energy)

Particulars 2006-07 2005-06

POWER & FUEL CONSUMPTION

1. Electricity :

Total units Consumed 208,083,850 167,139,50

Amount (Rs.) 397,736,574 313,993,678

Average Rate Per Unit (Rs.) 1.91 1.88

2. Coal & Coke :

Quantity (M.T.) 37,898 26,454

Total cost (Rs.) 272,585,980 207,815,766

Average Rate Per M.T. (Rs.) 7,193 7,856

CONSUMPTION PER M.T. OF PRODUCTION

1. Electricity (Unit/M.T.) 4,068 4,238

2. Coal & Coke (Kg/M.T.) 741 670

B. TECHNOLOGY, ABSORPTION, ADAPTATION & INNOVATIONResearch and DevelopmentIntensive R & D activity is an over riding priority at the Company. With the help of our Technology Partner - National MetallurgicalLaboratory (NML), the Company mainly focus on :

a) Improving & optimizing furnace efficiency, developing process for pre-heating and pre-reduction of inputs, utilisation ofnatural gas for pre-reduction, alternative process logic & reactors,

b) constant process improvement for increasing output quality to customer’s specification,c) Testing and Certification of products,d) Participation in Conference and Seminars,e) Analyzing feedback from the users to improve products.

C. FOREIGN EXCHANGE EARNING AND OUTGODuring the year under review, the Company is NET FOREIGN EXCHANGE EARNER for the Country. Total Foreign Exchangeused and earned :

Used Rs. 2,696.38 lacs

Earned Rs. 10,439.40 lacs

For and on behalf of the Board

Kolkata Suresh Kumar Patni27th August, 2007 Chairman

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Rohit

“Planning awinning strategy”

Management Discussion andAnalysis Report

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INDUSTRY STRUCTURE ANDDEVELOPMENTS

Your Company (RFTL) is in themanufacturing of High Carbon FerroChrome, a kind of Ferro Alloy producedby the pyrometallurgical reduction ofChromite Ore with Carbon and/or Siliconin high temperature Electric ArcFurnaces. This is essentially an alloy ofIron and Chromium which mayintentionally contain substantial levels ofcarbon and silicon.

Chromium is the most abundant of theGroup-VIA family of metallic elements. Ata concentration of nearly 400 parts permillion in the earth’s crust as variousminerals, it is the 13th most commonelement. It is the supreme additive,endowing alloys or materials with newproperties : Strength, Hardness,Permanence, Hygiene, Colour andResistance to Temperature, Wear andCorrosion. This versatility has madechromium indispensable in countlesseveryday applications.

Reserves & Mine Production of theChromium

At present consumption levels, thedemonstrated reserves will last forseveral centuries, whilst less economicalidentified resources are sufficient todouble that availability. As per the dataavailable for 2005, active miningoperations are widely dispersedworldwide mainly in South Africa,Kazakhstan and India, India being ranked3rd in Chromite ore production (Source:Investment Commission of India). Otherproducer of chromium includes Brazil,Finland, Turkey and Zimbabwe etc.

The largest Chrome Ore deposit of Indiais situated in the Sukinda valley of Jajpurdistrict surrounded by the Daitari Hillrange on one side and the Mahagiri Hillrange on the other side. The depositcontaines here is 97% of the Chrome Orereserve in India. (Source : KaliapaniMines-OMC Limited)

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Ferro Chrome

The primary commercial supply ofChromium is in the form of Ferro Chromefor the ferrous and non-ferrous metalindustries. Chromium is introduced intoirons, steels and many super alloys byalloying with the intermediate product,Ferro Chrome.

High Carbon Ferro Chrome is easilyrecycled as stainless steel and in itsmetallic form, posses no threat to theenvironment.

Stainless Steel & Ferro Chrome

About 90% of the High Carbon FerroChrome produced is used in the makingof Stainless Steel, where chromium is theunique ingredient. Unique, because it isChromium that makes stainless steel‘stainless’, the alloying element thatallows its remarkable corrosion andoxidation resistance.

Stainless Steel will normally have a10-30% chromium content and whilstother elements, such as molybdenumand nickel may be added to furtherenhance particular properties. There isno substitute for chromium for stainlesssteel production.

The additions of Ferro Chrome in lowalloy steels contribute towards a rangeof improved properties, especially toachieve a balance of through-sectionhardness and toughness in EngineeringSteels such as bearing, tool, highstrength/low-alloy and high speed steels,pumps, valves, pipes, rolls and wearplates.

OUTLOOK

The Stainless Steel consumption aroundworld has been growing with Chinamaintaining its role as the largestconsumer. This growing consumption ofStainless Steel all around the world is thekey driver for the demand of High CarbonFerro Chrome. The overall economicgrowth led by US, Japan, Europe, Chinaand India being sustained, and with theboom in the steel market witnessed overlast 3 years still continuing, the countrieslike China, India, Russia and otherdeveloping economies will be the majordemand driver.

The growth of Ferro Alloys Industry isdirectly or indirectly linked with the growthof Iron & Steel Industry. In India, theaverage compounded growth rate of steelproduction during last 3 years was 11.1%,and the consumption growth during thesame period was 11.3%. This further issupported by the user industries for steelnamely utensils, automobiles,engineering, machinery and constructionwhich continue to perform strongly. Thepublic investment in infrastructuredevelopment of the nation has also risen,leading to the growing demand of steel.Thus, the industrial outlook for the countryremains positive.

FUTURE PROSPECTS

The Company produced High CarbonFerro Chrome which is mainly used inmaking Stainless and Special grades ofSteel. The demand outlook for thisindustry is rising in the domestic as wellas international market due to massiveinvestment in core infrastructure sector,growth in consumer durables andautomobiles sectors, promotion ofstainless steel uses amongst architectsand engineers etc. With the growth inthese sector, the demand for our productis also tend to grow at an estimated rateof more than 10% per annum in the longterm. Our Company is likely to benefitmost from the increase in productioncapacity alongwith the increased demandfrom all over the world.

High Carbon Ferro Chromeis easily recycled as

Stainless Steel and in itsmetallic form, posses nothreat to the environment

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R & D ACTIVITIES

The collaborative project of the Companywith National Metallurgical Laboratory(NML), Jamshedpur taken up last yearto imporve various process parameterslike electrical power consumption, cokeconsupmtion, pre-reduction of the Oreand also improvement of the qualityturned to be fruitful whereby we haveachieved a significant reduction of powerconsumption of approx. 7.54%during thecurrent year. Our efforts are directed to-wards achieving the following technologi-cal development in a phased mannerover the next few years with the help ofour NML :

- Pre-heating of ore by using exitgasses from the furnace

- Prereduction outside the S.A.F.- Utilization of natural gas for pre-

reduction- Alternative process logic- Process modeling and control- Alternative reactors- Utilization of slag

Your Company has also achieved toproduce specific grades of Ferro Chromesuch as with low phosphorous, highcarbon etc. which fetch a good premiumin the international market.

OPPORTUNITIES AND THREATS

The Company has started productionform it’s Jajpur plant this year, and alsofrom the 4th furnace of Bishnupur Plant.Further, an addition of 5th furnace atBishnupur is proposed this year,enhancing its’ total production capacityto 180,000 MT per annum to meet thegrowing demand of it’s product in thedomestic as well as in the internationalmarket. Presently, about 60% of it’sproduction is being exported, and itmaintains a rational basis of supply

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

between domestic & internationalbuyers.

The location of Jajpur plant withproximity to Chrome Ore Mines and SeaPort will give an added advantage to theCompany in terms of savings inlogistics, and thus competitiveness inthe Industry.

The availability of raw-material andpower is the major areas of threats inthe ferro alloys industry.

The Company has long-termagreement with WBSEB and NESCO forbulk and uninterrupted power supply atit’s plants. Power constitutes the majorcost component in our industry, whichis available to the Company at verycompetitive rate. The Company hasenjoyed an average effective power rateof Rs.1.91 during the Financial Year 07.

The Company had also applied for themining lease for Chromite Ore, whichonce allotted, gives the Company anadded advantage in terms of hugesavings in the cost of raw material.

With the volatility in the market of HighCarbon Ferro Chrome, the Company isalso capable of production of other bulkFerro Alloys like Silico Manganese andFerro Manganese which are relativelystable in nature. All the furnaces of theCompany are designed to take care ofsuch eventuality and to take up anychallenges in the changing marketscenario.

RISKS AND CONCERNS

Aggressive price rise of raw materials isthe main area of concern for theCompany. The prices of Chromite Oreand Coke has risen sharply in the lastquarter of 2006-07, and are continue toremain high in the first quarter of 2007-08. However, this price rise was acrossthe industry, and thus, was mitigated bythe increased prices of the finishedproducts. This is a general phenomenon,not limited to the Company alone, but tothe industry as a whole.

In the normal course of business, theCompany is also exposed to externalrisks such as fluctuation in demand,

competition in the market etc. as wellas internal risks like variations inoperational efficiency, manpowerissues etc. The Company is alsoexposed to financial risks like changesin interest rates, foreign exchangefluctuations etc. The risks which areidentified, are taken care of by themanagement by taking appropriatesteps such as Insurance, Hedging ofForeign Currencies, Risk AssessmentExercises, Periodical review of thegeneral business risks by the auditcommittees and the Board.

INTERNAL CONTROL SYSTEMS &AUDIT

The Company has proper and adequatesystem of internal controlscommensurate with its size and natureof operations to provide reasonableassurance that all assets aresafeguarded, transactions areauthorised, recorded and reportedproperly and the applicable statutes areduly complied with. The Company has aninternal audit system, which strives toensure compliance of internal controlsystems, and the same is reviewed bythe Audit committee periodically forstrengthening and upgrading the systemto take care of changing risk parameters.

INDUSTRIAL RELATION AND HUMANRESOURCES

The industrial and employees relationremained cordial during the year. TheCompany has a team of experienced,dedicated & qualified personnel who havecontributed to the growth of the Companyin both the operational as well as themanagement level.

CAUTIONARY STATEMENT

Statements in this report in regard toprojections, estimates and expectationshave been made in good faith by themanagement. Many unforeseen factorsmay affect the actual results, which couldbe different from what the managementenvisages in terms of the futureperformance and outlook. Data andproduct information contained in thisreport have been based on theinformation gathered from variouspublished and unpublished reports, andthus, their accuracy, reliability andcompleteness can not be assured.

The growing consumptionof Stainless Steel all aroundthe world is the key driverfor the demand of the High

Carbon Ferro Chrome

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Corporate Governance Report

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Rohit

CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE PHILOSOPHYWe stand committed to good Corporate Governance, transparency, disclosure and independent supervision to increase the valueof the various stakeholders. The Company is committed to transparency in all its dealings and places high emphasis on businessethics. The basic philosophy of Corporate Governance in the Company is to achieve business excellence and dedication toincrease long-term shareholder value, keeping in view the interests of the Company’s stakeholders.BOARD OF DIRECTORSIn terms of the Company’s Corporate Governance Policy, all statutory and other significant & material informations are placedbefore the Board to enable it to discharged its responsibility of strategic supervision of the Company as trustees of the Shareholders.The Company has a Board headed by Non-Executive Chairman with 3 Executive Directors and 5 Non-Executive Directors, ofwhich, 3 are Independent.None of the Directors on the Board are member of more than ten Committees and they do not act as Chairman of more than fiveCommittees across all the Companies of which they are the Director.The composition of the Board of Directors of the Company, and the number of Board meetings attended by the Directors duringthe year are given below :

Name of the Director Status/ No. of Board Meetings No. of Membership in other WhetherDesignation Attended Boards and other Committees attended

as on March 31, 2007 # the last AGMBoard Committee $

Mr. S. K. Patni Non-Executive Chairman 12 3 2 Yes

Mr. Rohit Patni* Managing Director - 1 0 Yes

Mr. Ankit Patni** Jt. Managing Director 5 1 1 Yes

Mr. Binit Jain Executive Director 8 0 0 Yes

Mr. K. C. Jain Independent 12 2 2 (Chairman-2) Yes

Mr. J. N.Rudra Independent 9 1 2 (Chairman-1) Yes

Mr. J. K. Chatterjee Independent 10 0 0 Yes

Mrs. Sarita Patni Non-Executive 11 0 0 No

* Appointed as an Additional Director w.e.f. 27.08.2007 and as M.D. w.e.f. 27.08.2007.** Appointed as an Additional Director w.e.f. 30.10.2006 and as a Jt. M.D. w.e.f. 27.08.2007.# Excluding Foreign Companies, Private Limited Companies and Companies U/s 25 of the Companies Act,1956$ Only the two committees viz. Audit Committee and Shareholder’s Grievance Committee are considered for this purpose.

Notes :1. Mr. S. K. Patni released the post of Chairman, and was re-designated as Managing Director w.e.f. 30.10.2006. He has

resigned form the Post of Managing Director on 27th August, 2007 and appointed as a Non-Executive Chairman of theCompany w.e.f. 27th August, 2007.

2. Mr. Ankit Patni was appointed as an Additional Director on 30.10.2006 and designated as Chairman of the Company on thesame date. He has released the post of Chairman on 27.08.2007 and appointed as Jt. Managing Director w.e.f. 27th August,2007 subject to members’ approval in ensuing Annual General Meeting.

3. Mr. Rohit Patni has been appointed as an Additional Director on 27th August, 2007 and appointed as Managing Director ofthe Company from the same date subject to members’ approval in ensuing Annual General Meeting.

4. None of the Non-executive Directors have any pecuniary relationship or transactions with the Company except for holdingdirectorship & receiving sitting fee except Mr. S. K. Patni and Mrs. Sarita Patni who are also promoter/director of the Companiesthat has a business relation with our Company.

5. Fourteen Board Meetings were held during the year 2006-07 and the gap between two meetings did not exceed four months.The dates on which the Board Meetings were held are as follows :5th April, 2006; 17th May, 2006; 6th June, 2006; 17th July, 2006; 26th July, 2006; 28th July, 2006; 10th August, 2006; 15thSeptember, 2006; 26th, September, 2006; 30th October, 2006; 10th November, 2006; 29th January, 2007; 7th March, 2007and 30th March, 2007.The information as specified in Annexure - I to the clause 49 of the Listing Agreement entered into with the Stock Exchanges,is regularly made available to the Board wherever applicable.

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Code of Conduct

The Code of Conduct for the Board of Directors and Senior Management Personnel as adopted is available on the Company’swebsite http://www.rohitferrotech.com. All the members of the Board and senior Management Personnel have affirmed thecompliance with the Code.

Declaration

As provided under Clause 49 of the listing agreement entered into with the Stock Exchanges, the Board Members andSenior Management Personnel of the Company have affirmed compliance with the code of conduct of the Company forthe year ended 31st March, 2007.

ROHIT PATNIKolkata, 27th August, 2007 Managing Director

COMMITTEES OF DIRECTORS

1. AUDIT COMMITTEEThe Company has an Audit Committee with the scope as set out in Clause 49 of the Listing Agreement read with Section 292A ofthe Companies Act, 1956.The terms of reference of the Audit Committee includes the powers as laid down in Clause 49 (II) (C) and the role as stipulated inClause 49 (II) (D) of the Listing Agreement.Mr. K.C. Jain, Independent Director having expertise in finance, is the Chairman of the Audit Committee, and was present at theAnnual General Meeting held on 21st September, 2006.The Annual Accounts for the year ended 31st March, 2007 were duly reviewed by the Audit Committee at it’s meeting held on 29thJune, 2007 prior to adoption by the Board.During the financial year ended 31st March, 2007, five Audit Committee Meetings were held on 6th June, 2006; 28th July, 2006;30th October, 2006; 29th January, 2007 and 30th March, 2007. The necessary quorum was present at these meetings.The composition of the Audit Committee and the details of meetings attended by the Directors during the year are given below :

Name of the Director Category No. of meeting attended

Mr. K. C. Jain Independent Director (Chairman) 5

Mr. J. N. Rudra Independent Director 4

Mr. J. K. Chatterjee Independent Director 5

The Chairman, Managing Director and VP-Finance are permanent invitees to the Committee. The Company Secretary acts asthe Secretary of the Audit Committee. The Audit Committee invites, as and when considers appropriate, the Auditors to be presentat the meeting of the Committee.2. REMUNERATION COMMITTEEThe Company has a remuneration committee consisting of 3 independent directors, Mr. J. N. Rudra (Chairman), Mr. K. C. Jainand Mr. J. K. Chatterjee.The terms of reference of the Remuneration Committee are broadly as follows :a) to determine and recommend to the Board of Directors the remuneration package of the Managing Director and Whole-time

Directors including periodical revisions therein.b) to approve, in the evernt of loss or inadequate profit in any year, the minimum remuneration payable to the Managing Director

and Wholetime Directors within the limits and subject to the parameters prescribed in Schedule XIII to the Companies Act,1956.

The committee met thrice during the year on 17th May, 2006; 10th August, 2006 and 30th March, 2007. All the members of theCommittee have attended all the meetings.Remuneration PolicyA. For Executive / Managing Director :

The Board of Director/ Remuneration Committee is authorized to decide the remuneration of the Managing Director/ ExecutiveDirectors subject to the approval of members. The remuneration structure comprises only of the salary. No severance fees ispayable to the Directors on termination of the employment. The Company does not have any scheme for Stock-option eitherfor the directors or the employees.

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B. For Non-Executive Directors :

Sitting fee to Non-Executive Directors including Independent Directors are within the limits prescribed under the CompaniesAct,1956 for payment for sitting fees without approval of the Central Government.

Remuneration of Executive Directors

The Company pays a consolidated sum by way of Salary to its Managing Director and Executive Director. The Company has paidremuneration by way of salary to its Managing Director and Executive Director within the limit specified under Schedule XIII of theCompanies Act, 1956 and approved by the Board as well as by the shareholders of the Company. The details of remunerationpaid for the year ended 31st March, 2007 are as follows :

Name of the Director Salary (Rs.) Period of Contract Notice PeriodFrom To

Mr. Suresh Kumar Patni, MD 4,650,000/- 01.07.2004 30.06.2009 2 Month

Mr. Binit Jain, ED 300,000/- 01.06.2006 31.05.2009 2 Month

Remuneration of Non-Executive Directors

The remuneration of Non-Executive Directors consists only of sitting fees amounting to Rs. 28,000/- for attending Board meetingsand Rs. 21,000/- for attending other committee meetings. The details of sitting fee paid during the year and the Shares held byNon-Executive Directors as on 31st March, 2007 are :

Name of the Director Sitting fee paid (Rs.) Shares held as on 31.03.2007

Mrs. Sarita Patni 6,000 680,100

Mr. K. C. Jain 10,000 Nil

Mr. J. N. Rudra 13,000 Nil

Mr. J. K. Chatterjee 15,000 Nil

Mr. Ankit Patni* 5,000 383,807

Mr. Suresh Kumar Patni** N.A. 10,20,100

* Appointed as Joint Managing Director w.e.f. 27th August, 2007.

** Resigned from the post of Managing Director w.e.f. 27th August, 2007 and is now a Non-Executive Director.

3. INVESTOR GRIEVANCE CUM SHARE TRANSFER COMMITTEE

The Investor Grievance cum Share Transfer Committee has three Directors in compliance with the Clause 49 of the ListingAgreement.

The Committee shall comply with following :

a) To review and ensure compliance of statutory provisions of the Companies Act, the guidelines of SEBI and the Stock Exchangesand other statutory requirements relating to transfer and transmission of share/debenture of the Company.

b) To review and ensure that the Registrar/Company’s Transfer House implements all statutory provisions as above.

c) Approve transfer/transmission of shares/debentures and demat / remat of the shares/debentures.

d) Approve issue of duplicate share certificates, consolidate/sub-division of share certificates on completion of the proceduresas may be stipulated.

e) Ensure all shareholders queries, grievances and complaints like transfer of shares, non-receipt of balance sheet, non-receiptof declared dividends etc. are attended and redressed in an expeditious manner.

f) Any other matter referred by the Board relating to equity shareholders of the Company.

The Committee met 7 times during the year for approving transfer/split/remat and reviewing the investor’s complaints/ grievancesetc. on 31st May, 2006; 31st July, 2006; 30th October, 2006; 10th November, 2006; 29th January, 2007; 31st January, 2007 and29th March, 2007.

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The composition of the Committee & the details of meeting attended by the Directors during the year are given below :

Name of the Director Category No. of meeting attended

Mr. J. K. Chatterjee Independent Director (Chairman) 7

Mr. J. N. Rudra Independent Director 6

Mr. S. K. Patni Non- Executive Director 4

Company Secretary, Mr. Pramod Kumar Jain has been designated as secretary to the committee and as compliance officer ofthe Company. The committee in its last meeting held on 16.08.2007 has delegated the authority to approve the requests fortransfers/transmission, split and remat/demat of shares to the Company Secretary of the Company.The Company has received total 22 Investor’s grievances during the year ended 31st March, 2007, all of which were replied/resolved during the period by our Registrar & Transfer Agents M/s. Maheshwari Datamatics Pvt. Ltd.The Chairman of the committee has attended the last Annual General Meeting for giving replies to shareholder’s queries.CEO/CFO CERTIFICATIONIn accordance with the provisions of Clause 49 (V) of the Listing Agreement, a certificate duly signed by the CEO and CFO inrespect of the financial year ended 31st March, 2007 has been placed before the Board in the meeting held on 29th June, 2007.GENERAL BODY MEETINGS1. AGM :Date, Time & Venue, where last three AGMs held :

Financial Year Date Time Place

2003-2004 30th September, 2004 11AM 35, C.R.Avenue, Kolkata-700 012

2004-2005 5th September, 2005 11AM 35, C.R.Avenue, Kolkata-700 012

2005-2006 21st September, 2006 11AM ‘ROTARY SADAN’94/2, Chowringhee RoadKolkata - 700 020

Special Resolutions Passed at the last three AGMs :

Financial Year Items

2003-2004 None

2004-2005 Amendment in Articles of Association

2005-2006 None

No special resolution requiring postal ballot was placed before the last Annual General Meeting. No special resolution requiringpostal ballot is being proposed at the ensuing Annual General Meeting.DISCLOSURES- There are no materially significant related party transactions, i.e. transactions of the Company of material nature with its

promoters, directors or the management or relatives etc. that may have potential conflict with the interests of the Company atlarge. A statement in summary form of transactions with related parties in the ordinary course of business is placed periodicallybefore the Audit Committee. The pricing of all the transactions with the related parties were on an arms length basis. Adisclosure of related party relationship and transactions as per AS-18 is given in the ‘Related Party Transactions’ Note No. 10in Schedule-22 to the Annual Accounts of the Company.

- While preparation of financial statements during the period under review, no accounting treatment which was different from thatprescribed in the Accounting Standards are followed.

- The Company has complied with all the requirements of the listing agreement with the Stock Exchanges as well as regulationsand guidelines of SEBI. No strictures or penalty were imposed on the Company by Stock Exchanges or SEBI or any statutoryauthority, on any matter related to capital markets during the last three years.

- Proceeds from the Public Issue : During the year under review, the Company has raised Rs.50.84 crores by issuing 16,947,745equity shares of Rs. 10/- each at premium of Rs.20/- to part-funding its Jajpur project. The Company has utilized the entireproceeds in the said project as per the object of the issue stated in the prospectus.

- The Company does not have any subsidiary.- All mandatory requirements and one non-mandatory requirement have been appropriately complied with, and the

other non-mandatory requirements are dealt with at the end of this report.

14

Rohit

MEANS OF COMMUNICATION

1. Financial Results

In compliance with the requirements of the Listing Agreement, the Company has intimated Audited Financial Results as well asthe Unaudited Quarterly Results to the Stock Exchanges immediately after they are taken on record by the Board. Furthercoverage has been given for the benefit of the shareholders and investors by publication of the financial results in the leadingnational dailies and a local vernacular newspaper widely circulated in the State of West Bengal. The results were also availableon the company’s website at http://www.rohitferrotech.com. Results for quarter ended 30th September, 2006 and onwards arealso available on the SEBI’s EDIFAR system which can be accessed at http://www.sebiedifar.nic.in or http://www.sebi.gov.in

2. Other Information

The Company has its own website http://www.rohitferrotech.com wherein other related information is available. The Company hasa dedicated help desk email ID : ipo@rohitferrotech.com in the Secretarial Department for providing necessary information to theinvestors. Again, as required by BSE, the Company has setup another email ID : grievance@rohitferrotech.com for registeringany complaints / grievances. The Company proposes to hold press meets / analyst meets to appraise and make public theinformation relating to the Company’s working and future outlook.

PROFILE OF DIRECTORS SEEKING APPOINTMENT / REAPPOINTMENT

Resume and other informations of the Directors seeking appointment / re-appointment at the ensuing Annual General Meeting asrequired under Clause 49 of the listing agreement are given in the ‘Explanatory Statement’ to the Notice of ensuing AnnualGeneral Meeting.

MANAGEMENT DISCUSSION & ANALYSIS

A Management Discussion and Analysis Report is given separately, and forms part of Annual Report.

GENERAL SHAREHOLDER INFORMATION

1. Annual General Meeting (AGM)

Day, Date & Time : Friday, 28th September, 2007 at 11 a.m.

Venue : ‘Rotary Sadan’ , 94/2, Chowringhee Road, Kolkata - 700 020

2. Date of Book Closure : 21st September, 2007 to 28th September, 2007 (both days inclusive)

3. Dividend payment date : On or after 28th September, 2007

4. Financial Calendar

Indicative calendar of events for the financial year 2007-2008 is as under :

Unaudited Financial Results for :

First Quarter - Already disclosed on 11th July , 2007

Second Quarter - October, 2007

Third Quarter - January, 2008

Fourth Quarter - April, 2008

5. The International Security Identification Number (ISIN) for NSDL & CDSL : INE248H01012

6. Listing of the Equity Shares on Stock Exchange

Name of the Stock Exchange Address Stock Code

Bombay Stock Exchange Ltd. “Phiroze Jeejeebhoy Tower” 532731(BSE) Dalal Street

Mumbai - 400 001

The National Stock Exchange of India Ltd. “Exchange Plaza” ROHITFERRO(NSE) Bandra - Kurla Complex

Bandra (E)Mumbai - 400 051

The Equity Shares of the Company has been listed w.e.f. 13th April, 2006 on BSE & NSE.

15

7. Market Price Data

The Shares of the Company were listed on BSE & NSE w.e.f. 13th April, 2006. The Stock Market data on BSE & NSE for thelast twelve months, Post-listing, are provided herein :

(Amount in Rs.)

Month National Stock Exchange Bombay Stock Exchangeof India Limited Limited

High Low High Low

April, 2006 52.05 28.10 52.55 28.20

May, 2006 61.70 42.80 63.55 43.35

June, 2006 60.00 38.60 60.50 39.10

July, 2006 55.50 44.00 54.50 43.70

August, 2006 58.95 43.00 58.50 43.20

September, 2006 56.00 46.00 56.50 45.40

October, 2006 50.20 39.50 49.70 39.50

November, 2006 41.25 31.10 41.10 31.10

December, 2006 39.50 31.00 39.10 31.25

January, 2007 39.50 27.70 40.00 31.55

February, 2007 44.60 27.60 44.50 27.55

March, 2007 30.85 24.00 30.90 24.45

8. Stock Performance in comparision with BSE Sensex and NIFTY (from 13th April, 2006 to 31st March, 2007)

9. Shareholding Pattern as on 31.03.2007

Category of Shareholders No. of Shares %-Age

Indian Promoters 20886507 60.61

Financial Institutions / Banks 250 0.00

Domestic Bodies Corporate 8571019 24.87

Resident Individuals 4959431 14.39

Non-Resident Individuals 45738 0.13

TOTAL 34462945 100.00

Rohit Ferro-TechBSE Sensex

Rohit Ferro-TechNSE Nifty

16

Rohit

10. Distribution of Shareholding as on 31st March, 2007

No. of shares held No. of Shareholders % of Total No. of Shares % of Total

Upto 500 4816 74.92 968015 2.81

501 to 1000 737 11.47 620155 1.80

1001 to 10000 729 11.34 2114656 6.14

10001 to 100000 113 1.76 3380663 9.81

100001 and above 33 0.51 27379456 79.44

TOTAL 6428 100.00 34462945 100.00

11. Dematerialisation of shares and Liquidity

The Shares of the Company are compulsorily traded in dematerialized form which is available for trading on both NSDL andCDSL. As on 31st March, 2007, 17,363,722 shares representing 50.38% of the Share Capital are held in dematerialized form viz.CDSL 75,11,272 and NSDL 98,52,450.

12. Registrar and Share Transfer Agent

Maheshwari Datamatics Pvt. Ltd. of 6, Mangoe Lane (Surendra Mohan Ghosh Sarani), 2nd Floor, Kolkata-700 001 is the Registrarsand Share Transfer Agent of the Company, both for Physical and Demat Segments. Accordingly, all communications on mattersrelating to Share transfers, dividend etc. may be sent directly to them. Complaints, if any, on these matters may also be sent to theCompliance Officer of the Company.

13. Share Transfer System

The share transfer requests are processed on behalf of the Company by Registrar & Transfer Agents M/s. Maheshwari DatamaticsPvt. Ltd. and are placed before the Company Secretary who has been delegated by Investor Grievance cum Share TransferCommittee to approve transfers. During the year, 1 request for physical transfer has been received, and effected.

14. Name, Designation & Address of Compliance Officer for Complaints & Correspondence :

Mr. PRAMOD KUMAR JAIN ROHIT FERRO-TECH LIMITEDCFO & Company Secretary 35, C. R. Avenue, 4th Floor, Kolkata - 700 012, India

Tel : +91 33 2211 9805/9806, Fax :+91 33 2211 0522E-mail : ipo@rohitferrotech.com / grievance@rohitferrotech.com

15. Plant Location

BISHNUPUR WBIIDC Road, P.O. Dwarika, Bishnupur - 722 122, Dist. Bankura (West Bengal)

JAJPUR Kalinganagar Industrial Complex, Duburi - 755 026, Dist. Jajpur (Orissa)

NON-MANDATORY REQUIREMENTS

1. Chairman of the Board

A Chairman’s office with requisite facilities is being provided and maintained at the Company’s expense for use by theNon-Executive Chairman. All expenses incurred in furtherance of the Company’s business interest are reimbursed by the Company.

2. Remuneration CommitteeThe Company has formed a Remuneration Committee comprising of 3 Non-Executive Independent Directors as stated under‘Committees of Directors’ in this report.3. Audit QualificationThe Company does not have any Audit qualification and it attempts to move towards a regime of Unqualified Financial Statement.4. Other ItemsThe rest of the non-mandatory requirements such as Shareholder’s Rights, Training of Board Members, Mechanism for evaluationof Non-Executive Board Members, and Whistle Blower Policy will be implemented by the Company as and when required.

For and on behalf of the Board

Kolkata Suresh Kumar Patni27th August, 2007 Chairman

17

Certificate of compliance with the Corporate Governance requirements underClause 49 of the Listing Agreement

ToThe Members ofRohit Ferro-Tech Limited

We have examined the compliance of conditions of Corporate Governance by Rohit Ferro-Tech Limited, for theyear ended on 31st March, 2007 as stipulated in Clause 49 of the Listing Agreement of the said Company with theStock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examinationhas been limited to a review of the procedures and implementations thereof adopted by the Company for ensuringcompliance of conditions of Corporate Governance as stipulated in the said Clause. It is neither an audit nor anexpression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to explanations given to us, we certify that theCompany has complied with the conditions of Corporate Governance as stipulated in the Clause 49 of the above-mentioned Listing Agreement.

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

For A J & ASSOCIATES Company Secretaries

Abhijeet JainKolkata Partner27th August, 2007 C.P. No.- 3426

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Rohit

“Achieving winning heights”

Financial Statements

19

AUDITORS’ REPORT

ToThe Members ofRohit Ferro-Tech Limited

1. We have audited the attached Balance Sheet of ROHITFERRO-TECH LIMITED as at 31st March, 2007 and alsothe Profit & Loss Account and the Cash Flow Statementfor the year ended on that date, annexed thereto. Thesefinancial statements are the responsibility of theCompany’s management. Our responsibility is to expressan opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accounting principlesused and significant estimates made by the management,as well as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,2003 (as amended) issued by the Central Government interms of sub-section (4A) of Section 227 of the CompaniesAct, 1956, and on the basis of such checks as weconsidered appropriate, and according to the informationand explanations given to us, we enclose in the Annexurea statement on the matters specified in paragraphs 4 and5 of the said Order to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to inparagraph 3 above, we report that :

a) We have obtained all the information and explanationswhich, to the best of our knowledge and belief, werenecessary for the purposes of our audit;

b) In our opinion, proper books of account, as requiredby law have been kept by the Company so far asappears from our examination of those books;

c) The Balance Sheet, Profit & Loss Account and CashFlow Statement dealt with by this report are inagreement with the books of account;

d) In our opinion, the Balance Sheet, Profit & LossAccount and Cash Flow Statement dealt with by thisreport comply with the Accounting Standards referredto in sub-section (3C) of Section 211 of the CompaniesAct, 1956;

e) On the basis of the written representations receivedfrom the directors and taken on record by the Boardof Directors, none of the directors is disqualified ason 31st March, 2007 from being appointed as adirector in terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidstatements of accounts read with the AccountingPolicies and Notes thereon, give the informationrequired by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformitywith the accounting principles generally accepted inIndia :

i) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2007,

ii) in the case of the Profit & Loss Account, of theprofit of the Company for the year ended on thatdate, and

iii) in the case of the Cash Flow Statement, of thecash flows for the year ended on that date.

For S. JAYKISHANChartered Accountants

B. K. NEWATIAKolkata Partner29th June, 2007 Membership No. 050251

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Rohit

i) (a) The Company has maintained proper records to showfull particulars, including quantitative details andsituation of its fixed assets.

(b) We are informed that fixed assets of significant valuehave been physically verified by the management atreasonable intervals, in a phased programme and nomaterial discrepancies were noticed in respect of theassets verified.

(c) The Company has not made any disposal of FixedAssets during the year.

ii) (a) As explained to us, inventories have been physicallyverified by the management during the year atreasonable intervals.

(b) In our opinion, the procedures of physical verificationof inventories followed by the management arereasonable and adequate in relation to the size of theCompany and the nature of its business.

(c) In our opinion, the Company has maintained properrecords of inventories and the discrepancies noticedon physical verification as compared to book recordswere not material.

iii) (a) The Company has not granted any loans, secured orunsecured, to companies, firms or other partiescovered in the register maintained under Section 301of the Companies Act, 1956.

(b) Since the Company has not granted any Loans asaforesaid, sub-clauses (b) (c) & (d) of this clause arenot applicable.

(c) Except interest-free Unsecured Loans ofRs. 15,00,000/- (repaid during the year) from adirector, the Company has not taken any loan,secured or unsecured, from companies, firms orother parties covered in the register maintained underSection 301 of the Companies Act, 1956.

(d) The terms and conditions of Loan taken from adirector as aforesaid are prima facie not prejudicialto the interest of the Company.

iv) In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol procedures commensurate with the size of theCompany and the nature of its business, for the purchaseof inventory and fixed assets and for the sale of goods.

ANNEXURE TO THE AUDITORS’ REPORT (Referred to in Paragraph 3 of our Report of even date)

Further, on the basis of our examination of the booksand records of the Company, we have neither comeacross nor have we been informed of any continuingfailure to correct major weaknesses in the aforesaidinternal control system.

v) (a) To the best of our knowledge and belief andaccording to the information and explanations givento us, we are of the opinion that the particulars of thecontracts or arrangements that need to be enteredin the register maintained under Section 301 of theCompanies Act, 1956, have been so entered.

(b) In our opinion, the transactions made in pursuanceof such contracts or arrangements and exceedingthe value of five lakh rupees in respect of any partyduring the year have been made at prices which arereasonable having regard to prevailing market pricesat the relevant time.

vi) The Company has not accepted any deposit during theyear from the public within the meaning of the provisionsof Sections 58A and 58AA of the Companies Act, 1956,and the rules framed there under.

vii) In our opinion, the Company has an internal audit systemcommensurate with the size and the nature of its business.

viii) The maintenance of cost records under Section 209(1)(d)of the Companies Act, 1956, has not been prescribed bythe Central Government in respect of the products of theCompany.

ix) (a) According to the records of the Company examinedby us, the Company is generally regular in depositingundisputed statutory dues including Provident Fund,Employees’ State Insurance, Income Tax, Sales Tax,Wealth Tax, Service Tax, Custom Duty, Excise Duty,Cess and any other statutory dues with the appropriateauthorities. According to the information andexplanations given to us, there is no undisputedoutstanding statutory dues as at the end of the yearfor a period exceeding six months from the date theybecame payable.

(b) On the basis of our examination of records andaccording to explanations given to us, there are nodues as on 31st March, 2007 of Sales Tax, IncomeTax, Custom Duty, Wealth Tax, Service Tax, ExciseDuty and Cess which have not been deposited onaccount of any dispute.

21

x) The Company has neither accumulated losses at theend of the financial year nor has it incurred cash lossesin the financial year under report or in the immediatelypreceding financial year.

xi) According to the records of the Company examined byus and the information and explanations given to us, theCompany has not defaulted in repayment of dues tofinancial institutions or banks.

xii) As explained to us, the Company has not granted anyloans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

xiii) Clause (xiii) of the Order is not applicable, as theCompany is not a chit fund company or nidhi/mutualbenefit fund/society.

xiv) In respect of shares, securities, debentures and otherinvestments dealt or traded by the Company, properrecords have been maintained of the transactions andcontracts and timely entries have been made therein. Allthe investments have been held by the Company in itsown name.

xv) According to the information and explanations given tous, the Company has not given any guarantee for loanstaken by others from banks or financial institutions.

xvi) On the basis of review of utilisation of funds pertainingto term loans on a overall basis and related informationas made available to us, we are of the opinion that theCompany has applied the term loans for the purpose forwhich they were obtained during the year.

ANNEXURE TO THE AUDITORS’ REPORT

xvii) In our opinion and according to the information andexplanations given to us, the funds raised on short-termbasis have not been used for long-term investment.

xviii) The Company has made fresh allotment of shares duringthe year to parties and companies covered in the Registermaintained under Section 301 of the Companies Act,1956. The same is not considered as preferentialallotment.

xix) No debentures have been issued by the Company andhence the question of creating security or charge inrespect thereof does not arise.

xx) To the best of our information and according to theexplanations given to us, we have verified the end useof money raised by public issue as disclosed in the noteson accounts.

xxi) According to the information and explanations given tous, no fraud on or by the Company has been noticed orreported during the year.

For S. JAYKISHANChartered Accountants

B. K. NEWATIAKolkata Partner29th June, 2007 Membership No. 050251

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Rohit

Schedule 1 to 13 & 22 referred above form an integral part of the Balance Sheet

As per our report of even date attached

For S. JAYKISHANChartered AccountantsB. K. NewatiaPartner For and on behalf of the BoardMembership No. 050251Kolkata Pramod Kumar Jain Ankit Patni Suresh Kumar Patni29th June, 2007 CFO & Company Secretary Chairman Managing Director

BALANCE SHEET As at 31st March, 2007

Schedule 31st March, 2007 31st March, 2006

(Amount in Rs.)

SOURCES OF FUND

Shareholders’ Fund

Share Capital 1 344,629,450 175,152,000

Share Application Money – 508,432,350

Reserves and Surplus 2 878,500,168 363,683,072

Loan Fund

Secured 3 1,446,145,023 856,961,519

Unsecured 4 115,524,339 7,461,304

Deferred Tax Liability 45,560,880 23,226,614

TOTAL 2,830,359,860 1,934,916,859

APPLICATION OF FUND

Fixed Assets 5

Gross Block 1,211,359,234 379,774,818

Less : Depreciation 52,783,831 29,428,542

Net Block 1,158,575,403 350,346,276

Capital Work-in-Progress 565,177,563 455,381,454

Investments 6 849,026 –

Current Assets, Loans & Advances

Inventories 7 813,691,833 304,775,909

Sundry Debtors 8 142,011,339 41,568,664

Cash & Bank Balances 9 112,511,461 719,367,578

Loans & Advances 10 606,707,347 512,582,529

1,674,921,980 1,578,294,680

Less : Current Liabilities & Provisions

Current Liabilities 11 521,553,510 390,593,393

Provisions 12 63,612,818 62,244,965

Net Current Assets 1,089,755,652 1,125,456,322

Miscellaneous Expenditure 13 16,002,216 3,732,807

TOTAL 2,830,359,860 1,934,916,859

Significant Accounting Policies & Notes on Accounts 22

23

Schedule 1 to 13 & 22 referred above form an integral part of the Balance Sheet

As per our report of even date attached

For S. JAYKISHANChartered AccountantsB. K. NewatiaPartner For and on behalf of the BoardMembership No. 050251Kolkata Pramod Kumar Jain Ankit Patni Suresh Kumar Patni29th June, 2007 CFO & Company Secretary Chairman Managing Director

PROFIT AND LOSS ACCOUNT For the year ended 31st March, 2007

Schedule 31st March, 2007 31st March, 2006

(Amount in Rs.)

INCOMESales 14 2,149,773,520 1,427,684,541Less : Excise Duty (128,662,128) (114,388,129)

2,021,111,392 1,313,296,412Other Income 15 15,273,011 3,325,029Increase/(Decrease) in Stock 16 97,369,311 (10,150,137)

2,133,753,714 1,306,471,304EXPENDITURERaw Materials Consumed 17 1,051,885,948 671,680,677Trading Purchases 95,204,585 –Manufacturing Expenses 18 479,878,222 364,128,206Payments to & Provisions for Employees 19 21,251,514 9,242,245Administrative, Selling & Other Expenses 20 159,031,863 93,014,430Interest & Finance Charges 21 74,539,776 35,013,534Depreciation 23,355,289 15,572,693

1,905,147,197 1,188,651,785Profit Before Tax 228,606,517 117,819,519Provision for Taxation : - Current (23,062,799) (9,914,513) - Deferred (22,334,266) (6,975,374) - Fringe Benefit Tax (721,461) (422,198)Deferred MAT Credit Entitlement 21,884,956 9,914,513Profit After Tax 204,372,947 110,421,947Less : Income Tax for Earlier Years (2,870,965) –Add/(Less) : Extra-ordinary item (net of tax) (See note 4) (9,319,864) 152,009,212Surplus from last year 333,753,072 110,618,286Balance Available for Appropriations 525,935,190 373,049,445APPROPRIATIONSProposed Dividend 34,462,945 34,462,945Corporate Tax on Dividend 5,856,978 4,833,428Balance carried to Balance Sheet 485,615,268 333,753,072

525,935,190 373,049,445Earnings Per Share (Face Value - Rs. 10/- each)Before extraordinary item - Basic 5.96 6.35 - Diluted 5.96 5.92After extraordinary item - Basic 5.61 15.10 - Diluted 5.61 14.07

Singnificant Accounting Policies & Notes on Accounts 22

24

Rohit

As per our report of even date attached

For S. JAYKISHANChartered AccountantsB. K. NewatiaPartner For and on behalf of the BoardMembership No. 050251Kolkata Pramod Kumar Jain Ankit Patni Suresh Kumar Patni29th June, 2007 CFO & Company Secretary Chairman Managing Director

(Amount in Rs.)

Year ended 31st March, 2007 Year ended 31st March, 2006

CASH FLOW STATEMENT For the year ended 31st March, 2007

A. Cash Flows from Operating ActivitiesNet Profit before Tax & Extraordinary Items 228,606,517 117,819,519Adjustments for :Depreciation 23,355,289 15,572,693Provision for Gratuity 710,093 –Loss on sale of Assets – 62,296Loss due to Fire – 942,272Loss on Investment 1,516,711 –Interest Income (6,633,310) (3,321,753)Interest Expenses 74,539,776 35,013,534Exchange Fluctuation Loss/Gain – 461,372Share Issue Expenses written off 3,967,262 –Preliminary Expenses written off 133,168 97,588,989 133,168 48,863,582Operating Profit before Working Capital Changes 326,195,506 166,683,101Adjustments for :Trade & Other Receivables (175,793,203) (215,855,066)Inventories (508,915,924) (37,021,782)Trade Payables & Other Liabilities 353,070,157 (331,638,970) (30,789,949) (283,666,797)Cash Generated from/(used in) Operations (5,443,464) (116,983,696)Direct Taxes Paid (22,732,504) (8,504,475)Extraordinary item (10,497,707) –Power Subsidy for earlier years – (33,230,211) 152,009,212Net Cash from/(used in) Operating Activities (38,673,675) 26,521,041

B. Cash Flows from Investing ActivitiesPurchase of Fixed Assets & Capital W.I.P. (941,380,525) (595,114,181)Purchase of Investment (2,365,737) –Interest Received 6,633,310 3,321,753Insurance Claim Received – 569,393Deposits (18,713,784) (89,981,223)Net Cash used in Investing Activities (955,826,736) (681,204,258)

C. Cash Flows from Financing ActivitiesIssue of Share Capital including securities premium – 29,970,000Capital Investment Subsidy Received 24,000,000 –Share Application Money Received – 730,557,210Share Application Money Refunded (222,110,040) –Proceeds from Borrowings 697,246,539 567,823,320Share Issue Expenses (16,369,839) (2,134,371)Interest Paid (74,539,776) (35,013,534)Dividend Paid (34,462,945) –Corporate Dividend Tax (4,833,428) –Net Cash from/(used in) Financing Activities 368,930,511 1,291,202,625Net Increase/(Decrease) in Cash and CashEquivalents (A+B+C) (625,569,901) 636,519,407Cash and Cash Equivalents at the beginning of period 640,530,529 4,011,123Cash and Cash Equivalents at the end of period 14,960,628 640,530,529

Note : i) The above Cash Flow has been prepared under “Indirect Method” as set out in Accounting Standard - 3 on Cash Flow Statementissued by Institute of Chartered Accountants of India.

ii) This is the cash flow referred to, in our report of even date.

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SCHEDULES TO THE BALANCE SHEET(Amount in Rs.)

31st March, 2007 31st March, 2006

SCHEDULE 1 SHARE CAPITALAuthorised40,000,000 Equity Shares of Rs.10/- each 400,000,000 400,000,000Issued , Subscribed & Paid-up34,462,945 Equity Shares of Rs. 10/- each fully paid up in cash 344,629,450 175,152,000(Previous year - 17,515,200 Equity Shares of Rs.10/- each)

344,629,450 175,152,000

SCHEDULE 2 RESERVES & SURPLUSSecurities PremiumAs per last account 29,930,000 12,500,000Add : Received during the year 338,954,900 17,430,000

368,884,900 29,930,000Capital Investment SubsidyReceived during the year 24,000,000 –Surplus as per Profit & Loss Account annexed 485,615,268 333,753,072

878,500,168 363,683,072

SCHEDULE 3 SECURED LOANSTerm LoansState Bank of India 297,552,675 194,142,102State Bank of Travancore 100,000,000 100,857,956State Bank of Hyderabad 99,997,714 79,095,757United Bank of India 267,777,637 207,086,099WBIDC Ltd. (Bridge Loan) – 12,500,000

Working Capital LoanCash Credit- State Bank of India 301,910,122 136,516,966- State Bank of Hyderabad 78,932,144 –- United Bank of India 154,981,581 –Buyers’ Credit- State Bank of India 117,504,444 126,762,639- State Bank of Hyderabad 27,488,706 –

1,446,145,023 856,961,519

Notes :

1) Term Loans from State Bank of India, State Bank of Travancore, State Bank of Hyderabad and United Bank of India are secured by wayof pari passu charge on Land and Building, Plant and Machinery and other Fixed Assets owned by the Company and landed propertyheld in the name of Subham Complex (P) Ltd.

2) Working Capital Loan is secured by way of charge on Inventories, Book Debts and Other Current Assets with collateral charge onCompany’s Fixed Assets, Office Premises and Personal Guarantee of two Directors & Corporate Guarantee of group Companies.

SCHEDULE 4 UNSECURED LOANS

From IDBI Ltd. 112,500,000 –(Personally guaranteed by the promoterdirectors & one of the group companies)From Other Bodies Corporate 3,024,339 7,461,304

115,524,339 7,461,304

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Rohit

SCHEDULES TO THE BALANCE SHEET

(Amount in Rs.)

31st March, 2007 31st March, 2006

SCHEDULE 5 FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCKAdjustment

Particulars As on Additions/ As on As on For the during the As on As on As on01.04.2006 Deductions 31.03.2007 01.04.2006 year Period 31.03.2007 31.03.2007 31.03.2006

Leasehold Land and Site Development 36,520,032 14,681,173 51,201,205 – – – – 51,201,205 36,520,032Factory Building 96,270,430 232,871,405 329,141,835 4,538,236 4,525,690 – 9,063,926 320,077,909 91,732,194Office Building 3,069,783 4,813,750 7,883,533 122,419 60,986 – 183,405 7,700,128 2,947,364Guest House 1,725,500 - 1,725,500 28,126 28,126 – 56,252 1,669,248 1,697,374Plant & Machinery 156,387,216 510,454,410 666,841,626 15,256,213 13,326,065 – 28,582,278 638,259,348 141,131,003Electrical Installations 74,664,498 54,504,139 129,168,637 8,122,814 4,186,702 – 12,309,516 116,859,121 66,541,684Tools & Equipments 3,303,847 4,411,245 7,715,092 221,658 190,647 – 412,305 7,302,787 3,082,189Air Conditioner 575,552 1,725,487 2,301,039 55,131 53,187 – 108,318 2,192,721 520,421Office Equipments 510,303 519,550 1,029,853 55,913 34,333 – 90,246 939,607 454,390Computers 1,067,091 1,104,496 2,171,587 237,059 235,538 – 472,597 1,698,990 830,032Motor Cars 3,175,549 2,256,538 5,432,087 505,164 482,358 – 987,522 4,444,565 2,670,385Furniture & Fixtures 2,474,692 4,242,223 6,716,915 282,002 230,215 – 512,217 6,204,698 2,192,690Fire Extinguisher 30,325 — 30,325 3,807 1,440 – 5,247 25,078 26,518TOTAL 379,774,818 831,584,416 1,211,359,234 29,428,542 23,355,289 – 52,783,831 1,158,575,403 350,346,276Figure as on 31.03.06 258,309,438 121,465,380 379,774,818 13,814,843 15,723,513 109,814 29,428,542 350,346,276 244,494,595Note :The original cost of Vehicles & Equipments includes Rs. 77,907,040 (Previous year - Rs. 76,423,525) acquired from loans taken from banks & financial institutions, of whichRs. 2,019,625 (Previous year - Rs. 4,421,913) were outstanding as at 31.03.2007.

SCHEDULE 6 INVESTMENTS (Short Term - Other than trade)

Unquoted :Investments in Mutual Fund 849,026 –

849,026 –

SCHEDULE 7 INVENTORIES (As taken, valued & certified by the management)

Raw Materials 660,119,890 255,873,250Finished Goods 46,464,019 8,870,792Work-in-Progress 97,814,940 31,160,907Stores & Spares inluding Packing Materials 9,292,984 8,870,960

813,691,833 304,775,909

SCHEDULE 8 SUNDRY DEBTORS

Secured (Less than Six Months) 82,459,307 32,710,233Unsecured (Considered Good) :- Due for more than 6 months 2,398,270 4,126,440- Others 57,153,762 4,731,991

142,011,339 41,568,664

27

SCHEDULES TO THE BALANCE SHEET(Amount in Rs.)

31st March, 2007 31st March, 2006

SCHEDULE 9 CASH & BANK BALANCES

Cash in Hand(As Certified by the Management) 9,499,967 2,405,875

Balances With Scheduled Banks :

In Current Accounts 5,235,296 4,047,444In Public Issue Account :- HDFC Bank Ltd. 14,820 634,077,210

In Dividend Account :- HDFC Bank Ltd. 210,545 –

In Fixed Deposit Accounts :(Pledged with Banks as margin for Bank Guarantee and Letter of Credit facility)

- State Bank of India 73,787,833 38,837,049

- State Bank of Hyderabad 5,763,000 40,000,000

- United Bank of India 18,000,000 –

112,511,461 719,367,578

SCHEDULE 10 LOANS & ADVANCES (Unsecured, Considered good)

Advances recoverable in cash or in kind or for value to be received :- For Capital Goods 51,170,993 177,841,468- To Suppliers & Others 117,067,096 8,688,805

CENVAT/VAT Receivable 56,873,215 35,133,185Security & Other Deposits 76,518,376 54,221,876Balance Lying with Excise Department 42,916,769 6,193,567DEPB Licence/Receivable 20,474,168 30,654,523Power Subsidy Receivable 191,036,593 165,114,304Income Tax Payments (including TDS) 4,070,673 6,080,694Accrued Interest on FDR 324,155 3,923,879Prepaid Expenses 2,684,346 1,951,210Welfare Cess Receivable 80,564 72,930MAT Credit Entitlement 43,490,399 22,706,088

606,707,347 512,582,529

SCHEDULE 11 CURRENT LIABILITIES

Acceptances 199,089,823 39,935,996

Sundry CreditorsDues to Small Scale Industrial Units – –

Dues to others :- For Supplies 63,422,263 4,611,833- For Capital Goods 108,197,305 38,297,065- For Expenses 136,276,927 76,577,723- For Pending Disbursements 9,110,205 3,385,930

Interest accrued but not due 1,397,703 –Unpaid Dividend Account for 2005-06 210,545 –Share Application Money Refundable 14,820 222,124,860Advances from Parties 3,833,919 5,367,304Income Received in Advance – 292,682

521,553,510 390,593,393

28

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31st March, 2007 31st March, 2006

SCHEDULES TO THE BALANCE SHEET(Amount in Rs.)

SCHEDULE 13 MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted)

Preliminary ExpensesOpening Balance 266,336 399,504Addition during the year – –

266,336 399,504Less : Amortised during the year 133,168 133,168

133,168 266,336Share Issue ExpensesOpening Balance 3,466,471 1,332,100Addition during the year 16,369,839 2,134,371

19,836,310 3,466,471Less : Amortised during the year 3,967,262 –

15,869,048 3,466,471

16,002,216 3,732,807

SCHEDULE 12 PROVISIONS

For Taxation 21,884,956 22,706,088For Fringe Benefit Tax 697,847 242,504For Gratuity 710,093 –For Proposed Dividend 34,462,945 34,462,945For Corporate Tax on Dividend 5,856,978 4,833,428

63,612,818 62,244,965

29

31st March, 2007 31st March, 2006

SCHEDULES TO THE PROFIT & LOSS ACCOUNT(Amount in Rs.)

SCHEDULE 14 SALES

Export Sales 1,104,041,310 578,638,349Domestic Sales 1,016,310,016 807,800,757Export Incentives 29,422,194 41,245,435

2,149,773,520 1,427,684,541

SCHEDULE 15 OTHER INCOME

Interest on Credit Sales 3,270,034 1,970,676(TDS - Rs. 670,446/-, Previous year - Rs. 403,177/-)Interest on Fixed Deposits 3,363,276 1,351,077(TDS - Rs. 580,062/-, Previous year - Rs. 282,678/-)Exchange Fluctuation Gain 8,487,659 –Miscellaneous Income 152,042 3,276

15,273,011 3,325,029

SCHEDULE 18 MANUFACTURING EXPENSES

Labour Charges 18,521,132 14,920,105Power & Fuel 397,736,574 313,993,678Water Supply Charges 810,515 738,933Stores, Spares & Consumables (including Packing Materials) 55,131,067 32,129,045Material Handling Charges 5,311,129 1,377,110Repairs & Maintenance- To Factory Shed & Buildings 588,106 104,159- To Plant & Machinery 1,779,699 865,176

479,878,222 364,128,206

SCHEDULE 17 RAW MATERIALS CONSUMED

Opening Stock 255,873,250 212,429,770

Add : Purchases (including freight) 1,456,132,588 715,124,157

1,712,005,838 927,553,927

Less : Closing Stock 660,119,890 255,873,250

1,051,885,948 671,680,677

SCHEDULE 16 INCREASE/(DECREASE) IN STOCK

Closing Stock of Finished Goods 46,464,019 8,870,792Closing Work-in-Progress 97,814,940 31,160,907

144,278,959 40,031,699Less : Opening Stock of Finished Goods & Work-in-Progress 40,031,699 52,141,983

104,247,260 (12,110,284)Excise Duty on variation in Stock (6,877,949) 1,960,147

97,369,311 (10,150,137)

30

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31st March, 2007 31st March, 2006

SCHEDULES TO THE PROFIT & LOSS ACCOUNT(Amount in Rs.)

SCHEDULE 19 PAYMENTS TO & PROVISIONS FOR EMPLOYEES

Factory Wages 8,359,025 5,247,168Contribution to Providend Fund 669,572 480,957Salaries 5,432,764 1,885,948Gratuity 710,093 –Directors’ Remuneration 4,950,000 850,000Welfare Expenses 1,130,060 778,172

21,251,514 9,242,245

SCHEDULE 20 ADMINISTRATIVE, SELLING & OTHER EXPENSES

Rent 563,772 281,500Rates & Taxes 631,897 59,155Electricity Charges 131,669 191,307Insurance 4,297,702 1,102,610Printing & Stationery 519,690 319,946Postage,Telegram & Courier 334,479 162,551Telephone Charges 1,144,311 1,010,191Travelling & Conveyance 4,412,683 1,689,709Car Running & Maintenance 1,937,014 1,086,686Other Repairs & Maintenance 217,330 205,251Security Service Charges 7,129,332 3,534,196Membership & Subscription 451,622 258,609Legal & Professional Charges 2,160,439 882,168Auditors Remuneration : - For Audit 57,500 40,000 - For Tax Audit 15,000 10,000 - Others 10,500 4,500Directors Sitting Fees 49,000 –Miscellaneous Expenses 3,512,903 1,355,171Premium on Foreign Exchange Forward Contract – 246,368Bank Charges 23,184,685 13,506,887Processing Fees to WBIDC Ltd. 7,275,412 8,366,243Testing & Inspection Charges 2,471,942 1,192,633Donations 1,250,000 –Advertisement, Publicity & Sales Promotion 2,726,652 526,730Clearing & Forwarding Expenses on Export 28,783,640 16,620,689Transportation, Loading & Labour Charges 57,706,577 36,261,765Commission on Sales 1,584,270 1,428,053Discounts 45,290 504,535Exchange Fluctuation Loss – 461,372Loss due to Fire – 942,272Loss on Investment 1,516,711 –Excise Duty/Sales Tax for earlier years 659,660 181,729Prior Period Expenses (Net) 149,751 448,436Preliminary Expenses Written Off 133,168 133,168Share Issue Expenses Written Off 3,967,262 –

159,031,863 93,014,430

SCHEDULE 21 INTEREST & FINANCE CHARGES

Interest to Banks/Financial Institutions :- On Term Loan 22,861,381 17,455,074- Others 51,313,458 16,777,026Motor Car Finance Charges 69,313 35,440Equipment Finance Charges 155,663 355,432Interest - Others 139,961 390,562

74,539,776 35,013,534

31

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention and in accordance with Generally Accepted AccountingPrinciples (Indian GAAP), mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the provisionsof the Companies Act, 1956.

2. Fixed Assets

a) Fixed Assets are stated at cost less accumulated depreciation. Direct costs inclusive of inward freight, duties and taxes, interestrelating to acquisition, other incidental expenses and cost of improvements thereon are capitalised until fixed assets are ready forthe intended use. Fixed Assets not ready for their intended use as at the reporting date of the financial statements are shown asCapital Work-in-Progress. Capital Assets and Capital Work-in-Progress are net of CENVAT/VAT credit availed or available thereon.

b) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner prescribed in the Schedule XIV tothe Companies Act, 1956.

c) The cash generating assets are evaluated at the Balance Sheet date to ascertain the estimated recoverable amount/value in useas against the Written Down Value. Impairment loss, if any, is recognised whenever the Written Down Value exceeds estimatedrecoverable amount/value in use.

3. Revenue Recognition

a) The Company generally follows the mercantile system of accounting and recognises income & expenditure on accrual basis exceptthose with significant uncertainties.

b) Sales are recognised at the point of despatch of goods to customers which coincides with transfer of significant risk and rewards ofownership. Sales are inclusive of excise duty but net of Trade Discounts and VAT. Differential duty on sales at depo/consignees, ifany, is provided on demand being raised by the Excise Department.

c) Purchases are inclusive of Freight and net of CENVAT & VAT Credit, Discounts and Claims. High Seas purchases are recognisedon clearance from Customs.

d) Export Incentives arising out of Export Sales are accounted for on accrual basis.

4. Inventories

Inventories are valued at Lower of Cost and Net Realisable Value. Cost of Inventories comprises of material cost, labour & manufacturingoverheads incurred in bringing the inventories to their present location and condition. Excise Duty on stock of finished goods isprovided for in the accounts and included in the valuation of stocks.

5. Retirement Benefits

Liability towards future payment of gratuity in respect of eligible employees is provided for on the basis of actuarial valuation. Liabilityfor leave encashment benefit is determined in accordance with the rules of the Company and charged to revenue.

6. Subsidy

a) The Company is registered under the West Bengal Incentive Scheme, 2000, of the Director of Industries, Government of WestBengal. Under the said scheme, the Company is entittled to receive Capital Investment Subsidy, Interest Subsidy, EmploymentGeneration Subsidy, Waiver of Electricity Duty and Remission of Stamp Duty & Registration Fees which, except Electricity Duty, areaccounted for in the year of receipt.

b) The Company has been granted Eligibility Certificate (EC) under the West Bengal Incentives to Power Intensive Industries Scheme,2005, promulgated by the Department of Commerce & Industries, Government of West Bengal, vide notification no. 276-CI/O/Incentive/052/05/I dated 19.05.2005, effective from 1st April, 2004. Under the said scheme, the Company is entitled to receiveincentive on energy charges, which is accounted for in the books on accrual basis.

7. Foreign Currency Transactions

Foreign Currency Transactions are recorded in the books at the prevailing bank rates as on the date of transaction. Export Sales inForeign exchange are converted at the exchange rates fixed by the CBE & C prevailing on the date of despatch of goods from thefactory premises. The difference in the exchange between the date of transaction and the date of realisation/payment is debited/credited to the Foreign Exchange Fluctuation Account. Monetary Assets & Liabilities related to Foreign Currency Transactions remainingunsettled at the end of the year are translated at year end rates.

8. Investments

Investments in Mutual Fund are valued at Cost or Net Asset Value as at the end of the year, whichever is lower.

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 22 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

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SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 22 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd.)

9. Taxes on Incomea) Current Tax is determined at the amount of tax payable in respect of taxable income for the year, computed in accordance with

relevant tax rates and tax laws. In case of tax payable as per provisions of MAT under Section 115JB of the Income Tax Act, 1961,deferred MAT Credit entitlement is separately recognised as Advance.

b) Deferred Tax is recognised, subject to the consideration of prudence, at substantive enacted rates on timing differences, being thedifference between taxable income and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods.

10. Contingent LiabilitiesContingent Liablities are not provided for in the accounts and are shown seperately through Notes on Account.

11. Earnings Per Share (EPS)Earnings Per Share has been calculated as per Accounting Standard - 20 issued by the Institute of Chartered Accountants of India.

12. Preliminary and Share Issue ExpensesPreliminary and Share Issue Expenses are amortised over a period of 5 years under Section 35D of the Income Tax Act, 1961.

B. NOTES ON ACCOUNTS1. Contingent Liabilities not provided for in the Books of Accounts :

a) In respect of Bank Guarantees - Rs. 25,621,748/- (Previous year - Rs. 100,000/-)b) In respect of Bills Discounted with Banks, outstanding as on 31st March, 2007 - Rs. 434,504,322/- (Previous year - Rs.139,030,494/-).c) In respect of Letters of Credit opened in favour of suppliers, outstanding as on 31st March, 2007 - Rs. 112,846,245/-

(Previous year - Rs. 255,617,691/-)d) Income Tax Liability in respect of completed assessment for Accounting Year 2004-05 amounting to Rs. 802,702/-, disputed in

appeal.e) Estimated amount of Commitments on Capital Account (Net of Advances) - Rs. 23,657,346/-, (Previous year - Rs. 267,021,321).

2. In the opinion of the Board of Directors, the Current Assets, Loans & Advances have a value on realisation in the ordinary course ofbusiness at least equal to the amount at which they are stated in the accounts. Adequate provisions have been made for all knownlosses and liabilities.

3. Certain balances of the Sundry Creditors, Sundry Debtors, Unsecured Loans and Advances are subject to confirmation.4. Extraordinary item represents writeoff of Export Incentive (Net of Tax) due to retrospective reduction in the rate of incentive under

Target Plus Scheme of Government of India in respect of Financial year 2005-06.5. The Company’s liability for gratuity to employees under the Payment of Gratuity Act, 1972, and/or under the Employment Rules, as the

case may be, has been provided in the accounts for Rs. 710,093/-. In earlier years, the Company has been accounting gratuity on cashbasis. Had the earlier method been followed during the year, the profit of the Company for the year would have been higher by thatamount.

6. Advances include Rs. 32,810,334/- to Ankit Metal & Power Ltd., a company under the same management. (Maximum amount due atany time during the year - Rs. 36,810,334/-)

7. The Company has not received any information from any of its suppliers of their being a Small Scale Industrial Unit. Hence, theamounts due to Small Scale Industrial Units as at 31st March, 2007, are not ascertainable.

8. During the year, the Company allotted 16,947,745 Equity Shares of Rs. 10 each for cash at premium of Rs. 20 per share, aggregatingto Rs. 5084.32 lacs against Initial Public Offer (IPO) made in March, 2006. The utilisation of IPO proceeds as at 31st March, 2007, isas under :

Purpose Amount (Rs in Lacs)

Ferro Alloy Project at Jajpur, Orissa 4824.56

Public Issue Expenses 259.76

Total 5084.32

9. The Components of Deferred Tax Liabilities/Assets are as under :

Components of Deferred Tax Liability

Difference in the WDV as per Income Tax rules and as per Companies Act, 1956 Rs. 45,560,880/- (P.Y. - Rs. 23,226,614/-)

Components of Deferred Tax Asset Nil

Net Deferred Tax Liability Rs. 45,560,880/- (P.Y. - Rs. 23,226,614/-)

33

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 22 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd.)

10. Related Party Disclosure

A. List of related parties over which control of the Company exists – None.

B. Names of the Related Parties with whom the Company had transactions during the year :

Name of the Related Party RelationshipSuresh Kumar Patni KMP

Binit Jain KMP

Sarita Patni Relative of KMP

Impex Metal & Ferro Alloys Pvt. Ltd. Control of KMP

Impex Ferro Tech Ltd Control of KMP

Ankit Metal & Power Ltd. Control of KMP

C. Transactions with related parties :

Name of the Party Nature of Relationship Details of TransactionSuresh Kumar Patni KMP Director’s Remuneration - Rs. 4,650,000/-

Binit Jain KMP Director’s Remuneration - Rs. 300,000/-

Sarita Patni Relative of KMP Loan Received - Rs. 1,500,000/-

Loan Repaid - Rs. 1,500,000/-

Balance as on 31.03.07 - NIL

Impex Metal & Ferro Alloys Pvt. Ltd. Control of KMP Sale of Goods - Rs. 69,665,102/-

Purchase of Goods - Rs. 8,320,000/-

Balance outstanding Credit - Rs. 7,386,178/-Ankit Metal & Power Ltd. Control of KMP Purchase of Goods - Rs. 32,232,891/-

Sale of Goods - Rs. 986,051/-

Advance Paid - Rs. 66,510,334/-

Advance refunded - Rs. 33,700,000/-

Balance outstanding Debit - Rs. 32,810,334/-

Balance outstanding Credit - Rs.8,162,033/-

Impex Ferro Tech Ltd. Control of KMP Advance Paid - Rs. 61,500,000/-

Advance refunded - Rs. 61,500,000/-

Balance Outstanding - NIL

Note : KMP means Key Managerial Personnel.

34

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SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 22 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd.)

11. Earnings Per Share (EPS)

Particulars 31st March, 2007 31st March, 2006

a) Number of Shares considered as weighted average shares forcalculation of Basic Earnings Per Share 17,380,2161) Number of equity shares at the beginning of the year 17,515,200 191,947

2) Equity shares issued on 5.04.2006 16,947,745

34,462,945 34,085,269

Total Weighted Average Shares as on 31.03.2007 34,277,216

Add : Dilutive effect of potential shares outstanding – 1,269,611

Number of shares considered as weighted average sharesand potential shares outstanding for calculation of Diluted EPS 34,277,216 18,649,827

b) (i) Profit after tax, before extraordinary item (Rs.) 204,372,947 110,421,947

(ii) Profit after tax, after extraordinary item (Rs.) 192,182,118 262,431,159

c) Nominal Value of Ordinary Shares (Rs.) 10.00 10.00

d) Earning Per Share (Basic) in Rs. :(i) Before extraordinary item 5.96 6.35(ii) After extraordinary item 5.61 15.10

e) Earning Per Share (Diluted) in Rs. :(i) Before extraordinary item 5.96 5.92(ii) After extraordinary item 5.61 14.07

12. The Company is mainly engaged in the business of manufacturing of H.C. Ferro-Chrome, which constitutes a single business segment.Since the revenue generated from trading in TMT Bars and Coke is less than 10% of the total revenue, segment reporting as requiredunder Accounting Standard - 17 issued by The Institute of Chartered Accountants of India is not applicable.

13. Provision for Current Tax has been made under Section 115JB of the Income Tax Act, 1961, as the Company is entitled to 100%income tax exemption under Section 80IB of the Income Tax Act, 1961, in respect of its existing unit at Bishnupur, West Bengal. TheCompany shall be entitled to credit for the same under Section 115JAA of the Act from the tax payable in the future years and,therefore, the amount provided is carried as “MAT Credit Entitlement” under the head “Loans and Advances”.

14. Pre-operative expenses upto 28.02.07 in respect of 4th Furnace at Bishnupur unit have been capitalised by allocating to Building,Plant & Machinery and Electrical Installations in proportion to their respective costs.

15. The Company has commenced commercial production at its Jajpur unit from 1st furnace on 30.11.06 and from 2nd furnace on15.02.07. Accordingly, pre-operative expenses upto the respective dates have been capitalised by transfer to Building, Plant & Machinery& Electrical Installations in proportion to their respective costs.

16. Capital Work-in-Progress includes Rs. 53,275,524/- as pre-operative expenses relating to projects under implementation, pendingallocation to Fixed Assets.

35

As per our report of even date attached

For S. JAYKISHANChartered AccountantsB. K. NewatiaPartner For and on behalf of the BoardMembership No. 050251Kolkata Pramod Kumar Jain Ankit Patni Suresh Kumar Patni29th June, 2007 CFO & Company Secretary Chairman Managing Director

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 22 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd.)

17. Additional information persuant to the provisions of paragraphs 3 & 4 of Part II of Schedule VI to the CompaniesAct,1956.

A) Capacity, Production, Sales & StockLicenced Capacity: N.A.Installed Capacity : H.C. Ferro Chrome 101,525 M.T. Per Annum (Previous year - 36,400 M.T.)(Installed Capacity has been certified by the management and not verified by the auditors being a technical matter)

Particulars For the year ended 31.03.2007 For the year ended 31.03.2006

Qty. (M.T.) Value (Rs.) Qty. (M.T.) Value (Rs.)H.C. Ferro ChromeOpening Stock 282.740 8,870,792 532.250 20,049,142Production 51157.400 – 39438.770 –Sales 50369.040 1,923,258,775 39688.280 1,313,296,412Closing Stock 1071.100 46,464,019 282.740 8,870,792

B) Raw Materials ConsumedChrome Ore 146252.462 699,373,519 97007.200 419,115,178Coke 37897.940 272,585,980 26453.945 207,815,766Others (being less than 10% of total consumption) 79,926,450 44,749,733

1,051,885,948 671,680,677Break-upImported 232,443,799 173,434,977

22.10% 25.82%Indigenous 819,442,149 498,245,700

77.90% 74.18%Total 1,051,885,948 671,680,677

100.00% 100.00%C) Stores, Spares & Consumables (all indigenous) 55,131,067 32,129,045D) Purchases & Sales of Items traded

i) PurchasesTMT Bars 1369.28 39,084,615 – –Coke 11552.40 56,119,970 – –

12921.68 95,204,585 – –ii) Sales

TMT Bars 1369.28 39,023,526 – –Coke 11552.40 58,829,092 – –

12921.68 97,852,618 – –E) Value of Imports/Expenditure in Foreign Currency

CIF Value of Imports 268,407,737 173,563,267Expenditure in Foreign Currency 1,230,470 182,930 (Travelling & Conveyance)

F) Earnings in Foreign CurrencyFOB Value of Exports 1,043,940,287 558,095,027

18. Previous year’s figures have been re-grouped/re-arranged, wherever considered necessary.

36

RohitInformation as required under Part-IV of Schedule-VI of the Companies Act, 1956

As per our report of even date attached

For S. JAYKISHANChartered AccountantsB. K. NewatiaPartner For and on behalf of the BoardMembership No. 050251Kolkata Pramod Kumar Jain Ankit Patni Suresh Kumar Patni29th June, 2007 CFO & Company Secretary Chairman Managing Director

(Amount in Rs. Thousand)

Balance Sheet and Company’s General Business Profile

a) Registration Details

Registration No. 9 1 6 2 9 State Code 2 1

Balance Sheet Date 3 1 0 3 2 0 0 7D D M M Y Y Y Y

b) Capital raised during the year

Public Issue 1 6 9 4 7 7 . 4 5 Bonus Issue N I L

Right Issue N I L Private Placement N I L

c) Position of Mobilisation and Deployment of Fund

Total Liabilities 2 8 3 0 3 6 0 Total Assets 2 8 3 0 3 6 0

Sources of Funds

Paid-up Capital 3 4 4 6 2 9 Share Application Money N I L

Reserves & Surplus 8 7 8 5 0 0 Secured Loans 1 4 4 6 1 4 5

Unsecured Loans 1 1 5 5 2 4 Deferred Tax Liability 4 5 5 6 1

Application of Funds

Net Fixed Assets 1 1 5 8 5 7 5 Capital Work-in-Progress 5 6 5 1 7 8

Investments 8 4 9 Net Current Assets 1 0 8 9 7 5 6

Miscellaneous Expenditureto the extent not written off 1 6 0 0 2

d) Performance of Company

Total Income 2 0 3 6 3 8 4 Total Expenditure 1 8 0 7 7 7 8

Profit Before Tax 2 2 8 6 0 7 Profit After Tax 2 0 4 3 7 3

Earning Per Share (Rs.) 5 . 9 6 Dividend Rate (%) 1 0

e) Generic Name of Principal Products/Services of the Company (As per Money Terms)

Item Code No. (ITC Code) 7 2 0 2 2 1 0 0 Product Description F E R R O A L L O Y S

37

Registered Office : 35, Chittaranjan Avenue, Kolkata - 700 012

FORM OF PROXY

I/We .............................................................................................................................................................................of ..................................................................................................................................................................................................................................................................................... being a Member(s) of the above named Company,

hereby appoint ............................................................................................................................................................of .................................................................................................................................................................................or failing him ................................................................................................................................................................of ....................................................................................................................... as my/our proxy to vote for me/us onmy/our behalf at the Annual General Meeting of the Company to be held on Thursday, the 28th September 2007, at11 A.M. and at any adjournment thereof.

Signed this ............................................................................ day of ................................................................. 2007

Signature .....................................................................................................................................................................

Folio No. ......................................DP ID No. .....................................Client ID No. .................................

Note : This Form of Proxy must be deposited at the Registered Office of the Company, 35, Chittaranjan Avenue,Kolkata - 700 012, not later than 48 hours before the time for holding the meeting.

Registered Office : 35, Chittaranjan Avenue, Kolkata - 700 012

ATTENDANCE SLIP(To be handed over at the entrance of the Meeting Hall)

I hereby record my presence at the Annual General Meeting of the above named Company held at ‘Rotary Sadan’,94/2, Chowringhee Road, Kolkata - 700 020 on Thursday, the 28th September, 2007 at 11 A.M.

Full Name of Member/Proxyattending the meeting .................................................................................................................................................

Full Name of First Holder(if Joint Holder/Proxy attending) ..................................................................................................................................

Folio No. ............................................................... ...................................................................................... Signature of the Member/Proxy

DP ID No. ............................................................. (To be signed at the time of handing over this slip)

Client ID No. .........................................................

AffixRevenue

Stamp

Members, who come to attend the meeting are requested to bring their copies of the Annual Report with them.

Rohit