annual report cover new for pdf - TRL Krosaki Report 2009-10(1).pdf · Fifty first annual report 2009-10 ... Mr. P. K. Bajaj Dr. (Mrs.) Prativa Ray ... who retires by rotation and

ContentsBoard of Directors ........................................................................................ 2

Notice ..................................................................................................... 3

Highlights ..................................................................................................... 8

Directors’ Report .......................................................................................... 9

— Annexure to Directors’ Report ................................................. 14

— Conservation of Energy, etc ..................................................... 15

— Particulars of Employees ......................................................... 17

Management Discussion and Analysis ..................................................... 18

Corporate Governance Report .................................................................. 22

Auditors’ Report ......................................................................................... 27

— Annexure to Auditors’ Report ................................................... 28

Balance Sheet ............................................................................................ 30

Profit & Loss Account ................................................................................ 31

Cash Flow Statement ................................................................................ 32

Schedules forming part of the Balance Sheet .......................................... 33

Schedules forming part of the Profit & Loss Account .............................. 37

Notes on the Balance Sheet and Profit & Loss Account ......................... 39

Balance Sheet Abstract and Company’s General Business Profile ........ 48

Statement Pursuant to Section 212 of the Companies Act, 1956Related to Subsidiary Companies ............................................................. 49

Accounts of Subidiary Companies ............................................................ 50

Fifty first annual report 2009-10

Tata Refractories Limited Visit us at : www.tataref.com

Annual General Meeting on Saturday, 24th July, 2010 at our Registered Office, Belpahar at 2.30 P.M.

As a measure of economy, copies of the Annual Report will not be distributed at the Annual General Meeting.

Shareholders are requested to kindly bring their copies to the meeting.

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Board of Directors(As on 13th May, 2010)

Dr. J. J. Irani (Chairman)

Mr. Ishaat Hussain

Dr. A. K. Chatterjee

Mr. P. Sri Ramulu

Prof. S. Sarin

Mr. S. N. Singh

Mr. P. K. Bajaj

Dr. (Mrs.) Prativa Ray

Mr. V. S. N. Murty

Mr. Sanjay Kumar Pattnaik

Mr. Dipankar Chatterji

Dr. A. K. Chattopadhyay (Managing Director)

Senior Executives

Mr.C.S.Das ................................................................... Executive Vice President & CFO

Mr.P.B. Panda ..............................................................Executive Vice President & COO

Company Secretary

Mr. A. Debta

REGISTERED OFFICE Belpahar - 768218Dist. : Jharsuguda (Odisha)Phone No. : 06645-258417

Fax No. : 06645-250243Website : www.tataref.com

BANKERS Central Bank of IndiaState Bank of India

HDFC Bank Limited

AUDITORS M/s. N. M. Raiji & Co.Chartered Accountants

Mumbai

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Notice

The Fifty-first Annual General Meeting of Tata Refractories Limited will be held at its Registered Office atBelpahar, Dist: Jharsuguda, Odisha – 768218 on Saturday, July 24, 2010, at 2.30 P.M. to transact the followingbusiness:

1. To receive and adopt the Audited Profit and Loss Account for the financial year ended March 31, 2010, theBalance Sheet as at that date and the Report of the Directors and Auditors thereon.

2. To declare a dividend.

3. To appoint a Director in place of Mr. Ishaat Hussain, who retires by rotation and is eligible for re-appointment.

4. To appoint Auditors and fix their remuneration and in this connection, to consider and, if thought fit, topass with or without modification(s), the following resolution, which will be proposed as Ordinary Resolution:

“RESOLVED that Messrs. N. M. Raiji & Co., Chartered Accountants, the retiring Auditors of the Company,from whom certificate pursuant to Section 224(1B) of the Companies Act, 1956 has been received, be andare hereby re-appointed Auditors of the Company to hold office until the conclusion of the next AnnualGeneral Meeting on a remuneration of Rs.5,00,000/- (Rupees Five Lakhs only) in addition to reimbursementof service tax, traveling and living and all out of pocket expenses incurred in connection with the audit ofthe Accounts of the Company for the year ending 31st March 2011.”

5. To appoint Mr. Dipankar Chatterji, as Director of the Company liable to retire by rotation, in place ofDr. (Mrs) Prativa Ray, who retires by rotation and has expressed her desire not to seek re-election, and inrespect of whom the Company has received a notice in writing from a Member proposing Mr. Dipankar Chatterjias a candidate for the office of Director under the provision of Section 257 of the Companies Act, 1956.

6. To appoint a Director in place of Mr. P. K. Bajaj, who was appointed a Director of the Company by theBoard with effect from March 16, 2010, in the casual vacancy on the Board caused by the resignation ofMr. G. Ojha and who holds office under Section 262 of the Companies Act, 1956 upto the date of theforthcoming Annual General Meeting but who is eligible for re-appointment, and in respect of whom theCompany has received a notice in writing from a Member proposing his candidature for the office ofDirector under the provision of Section 257 of the Companies Act, 1956.

7. Re-appointment of Dr. A. K. Chattopadhyay as Managing Director of the Company.

To consider and, if thought fit, to pass with or without modification(s), the following resolutions as SpecialResolutions :-

“RESOLVED THAT pursuant to the provisions of Section 198, 269, 309, 311, Schedule XIII and otherapplicable provisions, if any, of the Companies Act, 1956, (the Act) read with Article 174 of the Articles ofAssociation of the Company, the Company hereby approves of the re-appointment and terms of remunerationof Dr. A. K. Chattopadhyay, Managing Director of the Company for the period from 10th May, 2010 to9th May, 2013 upon the terms and conditions set out in the Explanatory Statement annexed to the Notice


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convening this meeting with liberty to the Directors to alter and vary the terms and conditions of the saidre-appointment in such manner as may be agreed between the Board of Directors (“the Board”) andDr. A. K. Chattopadhyay.

FURTHER RESOLVED THAT the Board be and is hereby authorized to take all such steps as may benecessary, proper and expedient to give effect to this Resolution.”

8. Dematerialisation of Securities.

To consider and, if thought fit, to pass with or without modification(s), the following resolution as SpecialResolution :-

“RESOLVED THAT pursuant to the provisions of Section 31 and all other applicable provisions, if any, ofthe Companies Act, 1956, the Articles of Association of the Company be altered in the following manner:

Insert the following Heading and Article as Article 72A after Article 72:

‘Dematerialisation of Securities’

Definitions. 72A(1) For the purpose of this Article :-

‘Beneficial Owner’ means a person or persons whose nameis recorded as such with a depository;

‘SEBI’ means the Securities & Exchange Board of India;

‘Depository’ means a Company formed and registered underthe Companies Act, 1956, and which has been granted acertificate of registration to act as a depository under theSecurities & Exchange Board of India Act, 1992; and

‘Security’ means such security as may be specified by SEBIfrom time to time.

Dematerialisation of Securities. (2) Notwithstanding anything contained in these Articles, theCompany shall be entitled to dematerialise its securities andto offer securities in a dematerialised form pursuant to theDepositories Act, 1996.

Options for investors. (3) Every person subscribing to securities offered by theCompany shall have the option to receive security certificatesor to hold the securities with a depository. Such a personwho is the beneficial owner of the securities can at any timeopt out of a depository, if permitted by the law in respect ofany security in the manner provided by the Depositories Act,and the Company shall, in the manner and within the timeprescribed, issue to the beneficial owner the requiredCertificates of Securities.

If a person opts to hold his security with a depository, theCompany shall intimate such depository the details ofallotment of the security, and on receipt of the information,the depository shall enter in its record the name of the allotteeas the beneficial owner of the security.

Securities in Depositories to be (4) All Securities held by a depository shall be dematerialisedin fungible form. and be in fungible form. Nothing contained in Sections 153,

153A, 153B, 187B, 187C and 372 of the Act shall apply to adepository in respect of the securities held by it on behalf ofthe beneficial owners.

Rights of Depositories and (5)(a) Notwithstanding anything to the contrary contained inBeneficial Owners. the Act or these Articles, a depository shall be deemed to be

the registered owner for the purposes of effecting transfer ofownership of security on behalf of the beneficial owner.

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(b) Save as otherwise provided in (a) above, the depository as theregistered owner of the securities shall not have any voting rightsor any other rights in respect of the securities held by it.

(c) Every person holding securities of the Company and whosename is entered as the beneficial owner in the records of thedepository hall be deemed to be a member of the Company.The beneficial owner of securities shall be entitled to all therights and benefits and be subject to all the liabilities in respectof his securities which are held by a depository.

Service of Document. (6) Notwithstanding anything in the Act or these Articles to thecontrary, where securities are held in a depository, the recordsof the beneficial ownership may be served by such depositoryon the Company by means of electronic mode or by deliveryof floppies or discs.

Transfer of Securities. (7) Nothing contained in Section 108 of the Act or these Articlesshall apply to a transfer of securities effected by a transferorand transferee both of whom are entered as beneficial ownersin the records of depository.

Allotment of Securities dealt with (8) Notwithstanding anything in the Act or these Articles,in a Depository. where securities are dealt with by a depository, the Company

shall intimate the details thereof to the depository immediatelyon allotment of such securities.

Distinctive numbers of securities (9) Nothing contained in the Act or these Articles regardingheld in a Depository. the necessity of having distinctive numbers for securities

issued by the Company shall apply to securities held with adepository.

Register and Index of Beneficial (10) The Register and Index of beneficial owners maintainedOwners. by a depository under the Depositories Act, 1996, shall be

deemed to be the Register and Index of Members andSecurity holders for the purposes of these Articles.”

By Order of the Board of Directors

(A. Debta)Belpahar, June 21, 2010 Company Secretary

NOTES :

(a) The relative Explanatory Statement, pursuant to Section 173 of the Companies Act, 1956, in respect of thebusiness under items No. 5, 6, 7 & 8 as set out above, is annexed hereto.

(b) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTENDAND, ON A POLL, TO VOTE INSTEAD OF HIMSELF; THE PROXY NEED NOT BE A MEMBER.

(c) Dividend as declared will be paid to those members whose names appear on the Register of Members onthe date of the Annual General Meeting or their order.

(d) Pursuant to Section 205C of the Companies Act, 1956, the amount of dividend remaining unpaid or unclaimedfor a period of seven years from the date of its transfer to the Unpaid Dividend Account of the Companyshall be transferred to the Investor Education and Protection Fund (the Fund) set up by the Government ofIndia and no payments shall be made in respect of any such claims by the Fund. Members who have notyet encashed their dividend warrant(s) for the financial year ended 31st March, 2004 onwards, are requestedto make their claims to the Company accordingly, without any delay.

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ANNEXURE TO NOTICEThe following Explanatory Statement, as required by Section 173 of the Companies Act, 1956 (hereinafter referred to as “the Act”) set

out all material facts relating to the business under items No. 5, 6, 7, & 8 mentioned in the accompanying Notice dated 21st June 2010.

Item-5. Mr. Dipankar Chatterji was appointed as Additional Director by the Board with effect from May 13, 2010. According to Section 260of the Companies Act, 1956, and Article 131 of the Articles of Association of the Company, the Additional Director shall retire fromoffice at the next following Annual General Meeting but is eligible for re-appointment. The Company has received a notice in writingtogether with the requisite deposit, from a Member proposing the candidature of Mr. Dipankar Chatterji to the office of Director underSection 257 of the Companies Act, 1956.Mr. Dipankar Chatterji, 62, is B.Com (Hons) and F.C.A. from the Institute of Chartered Accountants of India. He has over 41 years ofexperience in different fields. He joined a multinational Company in 1969, and from 1972 he is in public practice as Practising CharteredAccountants. In 1975, he joined L.B.Jha & Co, Chartered Accountants and presently Senior Partner of the firm. He is the foundermember of the Export Promotion Council setup by the Ministry of Commerce, Govt. of India. He was a member of Kelkar Committee onDirect Taxes and a member of Regional Direct Taxes Advisory Committee, Govt. of India. He is presently member of National Councilof C.I.I. and Chairman of North East Council of C.I.I. and also member of National Council of Indo-American Chamber of Commerce.He is in the Board of various Companies nominated by Banks/Financial Institutions.The Board considers it desirable for the Company to continue to avail itself of Mr. Chatterji’s valuable services as his associationwould be beneficial to the Company.Except Mr. Dipankar Chatterji, no other Director is interested or concerned in the resolution.

Item-6: In the casual vacancy caused on the Board by the resignation of Mr. G.Ojha, a Director liable to retire by rotation, the Boardappointed Mr. P. K. Bajaj with effect from 16th March, 2010. Under Section 262 of the Companies Act, 1956, Mr. Bajaj holds office onlytill the date up to which Mr. G. Ojha, in whose place he was appointed, would have held office, namely, till the date of the forthcomingAnnual General Meeting. The Company has received a notice in writing together with the requisite deposit, from a Member proposingthe candidature of Mr. P.K.Bajaj to the office of Director under Section 257 of the Companies Act, 1956.Mr. Punkaj Kumar Bajaj, 57, is a first class Metallurgical Engineer from the University of Rajasthan. He started his career with SAIL,Rourkela Steel Plant in 1974. He worked at several areas like Production Planning & Control, Projects & Modernization, Marketing &Strategic Planning, Operations & Special Steels in SAIL. He was elevated to the position of Managing Director, SAIL, Durgapur SteelPlant with effect from 1st November, 2009.The Board considers it desirable for the Company to continue to avail itself of Mr. Bajaj’s valuable services as his association wouldbe beneficial to the Company.Except Mr. P. K. Bajaj, no other Director is interested or concerned in the resolution.

Item-7. Dr. A. K. Chattopadhyay was re-appointed as Whole-time Director designated as Executive Director for a period of five years from10th May, 2005 by the Members at the 46th Annual General Meeting of the Company held on August 27, 2005. Dr. Chattopadhyay wasre-designated as “Joint Managing Director” with effect from 1st March 2008, and was elevated to the position of Managing Directorwith effect from 28th April 2009, on existing terms and conditions of his appointment. Accordingly, his tenure of appointment was uptoMay 09, 2010. The Board of Directors of the Company, at their meeting held on March 16, 2010, has re-appointed Dr.A.K.Chattopadhyayas Managing Director of the Company for a further period of 3 (three) years with effect from 10th May, 2010 till 9th May, 2013, subjectto the approval of the Shareholders.Dr. A. K. Chattopadhyay is an M.Tech in Chemical, specialized in Ceramic Technology and has done his Ph.D from Calcutta University.He was Sr. Vice President & Chief Executive (Refractories Business) of ACC Refractories (a division of ACC Limited) prior to hisappointment in the Company. Dr. Chattopadhyay has over 32 years of experience, encompassing all facets of management i.e.manufacturing of refractories, developing and implementing business strategy, productivity enhancement, financial management,restructuring etc. In view of his wide range of knowledge and experience, the Board considers that the re-appointment ofDr. Chattopadhyay would be beneficial to the Company.The main terms and conditions relating to the re-appointment of Dr. Chattopadhyay as Managing Director are as follows.

(i) Period:From 10th May, 2010 till 9th May, 2013.

(ii) Nature of Duties:The Managing Director shall carry out such duties as may be entrusted to him, subject to the supervision and control of theBoard of Directors and he shall perform such other duties and services as shall from time to time be entrusted to him by theBoard of Directors.

(iii) (A) Remuneration:Salary : Upto a maximum of Rs. 5,00,000/- per month, with annual increments effective from 1st April, every year, as maybe decided by Board, which expression shall include a Committee thereof, based on merit and taking into account theCompany’s performance for the year. The benefits, perquisites & allowances will be determined by the Board from time totime. Commission or Performance linked remuneration will be based on certain performance criteria to be prescribed bythe Board.

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(B) Minimum Remuneration:Notwithstanding anything to the contrary herein contained, where in any financial year the Company has no profits orinadequate profits, the Company will pay remuneration for a period not exceeding three years by way of salary, performancelinked remuneration, perquisites and allowances as specified above, subject to compliance with the provisions of CompaniesAct, 1956.

(iv) Summary termination of Employment:The employment of the Managing Director may be terminated by the Company without notice or payment in lieu of notice:(a) if the Managing Director is found guilty of any gross negligence, default or misconduct in connection with or affecting the

business of the Company or any subsidiary or associated Company to which he is required by the Agreement to renderservices; or

(b) in the event of any serious or repeated or continuing breach (after prior warning) or non-observance by the ManagingDirector of any of the stipulations contained in the Agreement; or

(c) in the event the Board expresses its loss of confidence in the Managing Director.

(v) The terms and conditions of the said appointment may be altered and varied from time to time by the Board which expressionshall include a Committee thereof as it may, in its discretion, deem fit, within the maximum amount payable to Managing Directorin accordance with Schedule XIII to the Companies Act, 1956, or any amendments made hereinafter in this regard.

(vi) Dr. Chattopadhyay shall be allowed leave as per rules of the Company. Leave accumulated and not availed of during his tenureas Managing Director shall be allowed to be encashed at the end of his tenure as per rules of the Company.

(vii) Dr. Chattopadhyay shall be entitled to gratuity and Company’s contribution to Provident Fund and Superannuation Fund inaccordance with the Rules and Regulations of the Company.

(viii) Dr. Chattopadhyay shall not be entitled to sitting fees for attending meetings of Board or any Committee thereof.

(ix) If at any time Managing Director ceases to be a Director of the Company for any cause whatsoever, he shall cease to be theManaging Director.

(x) If at any time Managing Director ceases to be Managing Director of the Company for any cause whatsoever, he shall cease to bea Director of the Company.

(xi) If at any time Managing Director ceases to be in the employment of the Company for any cause whatsoever, he shall cease to bea Director of the Company.

(xii) The Managing Director is appointed by virtue of his employment in the Company and his appointment is subject to the provisionsof Section 283(1)(l) of the Act, but the Managing Director is not liable to retire by rotation.The Company had earlier sent to the Members an Abstract of the terms of the appointment of Dr. A. K. Chattopadhyay andMemorandum of Interest under Section 302 of the Companies Act, 1956. The draft copy of the Agreement to be entered betweenthe Company and Dr. A. K. Chattopadhyay is available for inspection by the Members of the Company at its registered office onany working day during working hours of the Company.The Board recommends the resolution at item no. 7 for your approval.Dr. A. K. Chattopadhyay is concerned or interested in the resolution as it relates to his appointment and remuneration payable tohim. No other Director is in any way, concerned or interested in the resolution.

Item-8.The Certificates for 2,09,00,000 Equity Shares of Rs.10/- each of Tata Refractories Limited (“the Company”) are currently held by theShareholders in physical form. It is proposed that the Shares of the Company be de-materialised to allow the Shareholders of theCompany convenience of transfer of their holdings and avail themselves of the benefit of remission of stamp duty in relation to sale/purchase of shares in de-materialised form.For the purpose of de-materialising the Shares of the Company, it is necessary to incorporate an Article in the Articles of Associationof the Company, which would permit the Company to issue and maintain it’s Shares in de-materialised form and permit transfers in thesame mode.Accordingly, Article 72A - Dematerialisation of Securities is proposed to be inserted after Article 72 of the Articles of Association ofthe Company.A copy of the Articles of Association together with the proposed changes is available for inspection by the Members of the Companyat its registered office on any working day during working hours of the Company.None of the Directors is interested or concerned in the Resolution.

By Order of the Board of Directors

(A. Debta)Belpahar, June 21, 2010 Company Secretary

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Highlights(Rupees in Crores)

2009-10 2008-09 2007-08 2006-07 2005-06

Turnover 867.17 735.82 587.26 521.17 460.43

Profit Before Interest, Depreciation & Taxes 91.56 91.87 66.62 56.59 65.96

Depreciation 20.98 20.89 18.11 17.18 11.13

Profit before Taxes 59.68 53.90 36.76 30.59 51.67

Profit after Taxes 38.47 34.44 21.66 18.98 35.40

Retained Earnings 46.04 43.10 31.21 27.60 37.07

Shareholders’ Funds 248.14 223.08 200.86 187.77 182.56

Borrowings 110.38 115.72 126.93 116.11 91.14

Dividends (including tax) 13.41 12.23 8.56 8.56 9.46

Shareholders’ Funds - per Share(Rs.) 119 107 96 90 87

Dividend - (%) 55 50 35 35 50

Employees - (Numbers) 1406 1423 1398 1363 1369

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DIRECTORS’ REPORT

The Directors have pleasure in presenting the Fifty-first Annual Report and AuditedStatements of Account for the financial year ended March 31, 2010.

Financial Results

Previous Year

Rupees Crores Rupees Crores

1. Profit before interest, depreciation,employee separation compensation and taxes 91.87 91.87

2. Less: Interest 10.90 17.08

Less: Depreciation 20.98 20.89

Less: Employees Separation Compensation 0.31 —

3. Profit before Taxes 59.68 53.90

4. Provision for Income Tax :

Current (19.66) (19.25)

Deferred (0.63) 0.24

Fringe Benefit Tax — (0.45)

Taxation for earlier years (0.92) —

5. Profit after Taxes 38.47 34.44

6. Add: The balance brought forwardfrom previous year. 19.61 17.40

7. Disposable profit amounts to 58.08 51.84which the Directors have appropriated as under to :

General Reserve 20.00 20.00

Proposed Dividend 11.50 10.45

Tax on Dividend distribution 1.91 1.78———— ————

Total 33.40 32.23———— ————

8. Balance carried forward 24.67 19.61

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Dividend

Your Directors are pleased to recommend a dividend of Rs.5.50per share i.e. 55% for the year ended March 31, 2010, forapproval by the shareholders at the forthcoming Annual GeneralMeeting.

Performance

The year 2009-10, has been a year of record breaking for theoperations of the Company in terms of achieving highest everrevenues, production, sales volume and exports as well as profitbefore and after taxes. The gross revenues of the Companygrew to Rs.867 crores from Rs.736 crores of last year; anincrease of 18%. The consolidated revenues which includesthe revenues of TRL China Limited were Rs.970 crorescompared to Rs.768 crores of the previous year; an increaseof over 26%. The gross production during the year was 2,53,334 t.against 2,10,676 t. of the previous year; an increase of over20%. The overall sales volume was 3,20,399 t. against 2,58,776 t.of the previous year; an increase of over 24%.

Despite the impact of global economic slowdown in the firsthalf of the year and increase in input costs in the second halfof the year , the profit before tax of the year was Rs.60 croresagainst Rs.54 crores of the previous year; an increase of 11%.The profit after tax was Rs.38 crores against Rs.34 crores ofthe previous year; an increase of 12%. Higher sales volume;improved operational efficiency; aggressive cost reductionprogrammes and efficient finance management largelycontributed to the improved performance of the Company.

The Company continues to maintain No.1 position in Indianrefractory industry having capabilities of supplying full range

of refractories products with service back up for total refractoriessolutions. The Company has been continuously expanding itsoperations by adding new products and Plants. During the yearthe Company entered into agreements with Raasi RefractoriesLtd., Hyderabad and Eastern Refractories Ltd., Jhansi tomanufacture refractories with its technology and to market themunder its brand. Earlier the Company had entered into similararrangement with Meena Agency Limited, Gujarat. As the scopefor further expansion at Belpahar is limited due to congestion,the Company has acquired land in Visakhapatnam, AndhraPradesh to expand further its capacity.

International Business

The Company’s international business grew by 23% fromRs. 103 Crore in FY’09 to Rs. 127 Crore in FY’10. The Companyretained its No. 1 position of refractories exporting Companyin India. The Company continues to aggressively expandoverseas markets along with domestic markets. At present theCompany is exporting to more than 27 Countries. Our exportsaccount for over 25% of the total refractories exported fromIndia and 15% of the Company’s total turnover comes fromexports. During the year, yours Company established itsproducts at different Plants of Corus. The Company has takenseveral measures to further expand its footprint in globalmarkets.

During the year the Company has received the SpecialExport Award for sustained improvement in export for theyear 2008-09 from Govt. of India and the IRMA award forsustained improvement in export for the years 2006-07,2007-08 and 2008-09 from the Indian Refractories MakersAssociation.

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TURNOVER(Rs. in Crores)

05-06 06-07

PROFIT BEFORE INTEREST,DEPRECIATION, AMORTISATION

OF EXPENSES AND TAXES(Rs. in Crores)

07-08 07-0808-09 08-0909-10 09-10

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TRL China Limited

In the third year of its operations, TRL China’s turnoverwas Rs. 152 Crore against Rs.81 Crore in 2008-09. Netprofit of the company for the year was Rs. 3.04 Croreagainst loss of Rs.1.15 Crore in 2008-09. During the yearthe Company further strengthened its position in Chinesemarket apart from increasing sales in Indian market. Afterdetailed assessment of company’s product quality andmanufacturing facilities, Corus has appointed TRL Chinaas its approved supplier for Magnesia Carbon Bricks. Duringthe year, TRL China’s supply to Corus was Rs 3.74 Crores.After assessing demand, TRL China has undertaken ThirdPhase expansion to increase its capacity from 54,000 t.p.a.to 90,000 t.p.a., which has been targeted to be completedby December, 2010.

Business Excellence

The Company is one of the signatories to the Tata Brand Equityand Business Promotion (BEBP) Agreement with Tata SonsLimited. The agreement entails complying with the Tata GroupPolicies, Tata Code of Conduct (TCOC), and conductingbusiness as per the Tata Business Excellence Model (TBEM).Having crossed the first major milestone in the journey towardsbusiness excellence by receiving the award for SeriousAdoption of TBEM in 2004, the Company has continued toimprove its performance. In 2005, the Company received theActive Promotion award and in 2007, the Company jumped tothe higher score band of 550 – 650. The Company is nowstriving to achieve JRDQV Award. The Company has noweleven External Assessors which would facilitate achieving theAward.

GROSS AND NET ASSETS(Rs. in Crores)

05-06 06-07GROSS ASSETSNET ASSETS

NET WORTH AND BORROWINGS(Rs. in Crores)

05-06 06-07NET WORTH

BORROWINGS

07-08 07-08

Occupational Health & Safety

Your Company is committed to provide safe and healthy workenvironment to all its employees as well as its Contract Workers.The Company redoubled its efforts to achieve excellence insafety performance in all its operations with special attentionto improving safety related behaviour and actions of employeesat all levels and functions. Safety awareness and behaviouralsafety training programmes are organized regularly to educateand encourage employees to take adequate precautions toavoid unsafe practices and minimize risks.

Environment

Climate change is one of the most important issues facing theWorld today. The Company is committed to minimizing theenvironmental impact on its operations and on its productsthrough adoption of sustainable practices and continuousimprovements in environmental performance. In associationwith Tata Group of companies, the Company has taken severalmeasures to reduce its carbon foot print. The Company’s carbonfoot print was 0.2 million tones and specific foot print was 1.17ton / ton of product for the base year 2008-09. The specificcarbon foot print (ton / ton of product) has been reduced by3.4% during the financial year.

Social Responsibility

As its operation has grown, the Company has strengthened itsfocus on various areas of corporate sustainability. The Companybelieves that the benefits of economic growth should percolateto all sections of society and best means to action this, is touse education and skill training as the means for overalldevelopment of society.

08-09 08-0909-10 09-10

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Keeping the above objective in view, the Company has set upa modern “Self Employment Skill Development Institute”(SESDI) at Belpahar at a cost of Rs.160 lakhs for impartingskill development training to unemployed youth of underprivileged section of the society. The Company has also signeda Memorandum of Understanding with State Bank of India (SBI)for imparting training as per the guidelines fixed by Governmentof India for RSETI (Rural Self Employment Training Institute)type of institute. SBI is also associated in management andfinancing of the Institute. During the training period freeboarding and lodging facilities were provided to the trainees.In the first year, 301 youth have completed the training, out ofwhich around 228 youth are now gainfully engaged.

Some of the other major initiatives taken during the year areas follows:

(a) Health and hygiene:

(i) Around 3013 chi ldren were covered underimmunization programme run by the Government.

(ii) 331 cases of family planning operations were carriedout in association with government agencies.

(iii) Around 2719 persons have availed the benefits of fivehealth camps including a Mega Health Camporganized jointly by the company and the DistrictAuthorities at different places.

(iv) Have worked with the Gram Vikas, an NGO byproviding red bricks for construction of 331 nos. oftoilets.

(v) 4 Tube Wells, 3 Deep borewells and 2 Dug Wells wereinstalled in remote villages to provide clean drinkingwater.

(vi) The Company’s initiative of correcting cleft lip andcleft palate cases through free surgery has receivedwide publicity and during the year, 152 cases weresuccessfully operated.

(b) Education:

(i) The company has instituted a Merit-cum-Meansscholarship in BR High School and Belpahar EnglishMedium School. During the year, a total of 193students have received the scholarship.

(ii) During the year, a unique “Ekalabya” Scheme waslaunched with an objective of identifying poormeritorious students (reading in Class V) from differentrural schools and providing them higher educationfrom class VI to X in BR High School Belpahar, whichhas excellent track record and has hostel facility. Theentire expenditure of these selected students up toClass X would be borne by the company. In its firstyear, the scheme has selected three students whoare studying in BR High School free of cost. Thisprocess of selection would continue every year.

(iii) In terms of infrastructure support to various schoolsin villages, laboratory equipment, chairs and bencheswere provided to village schools. One community hallhas been provided in the nearby village.

Affirmative Action

In line with its Affirmative Action Policy, the Company strivesto serve the cause of the underprivileged section of the society,in various areas. The company has also laid down an AffirmativeAction Code in order to guide its affirmative action activities.Some of the achievements, during the year, are as follows;

(i) Employability:

The establishment of SESDI, as mentioned above, is aunique step taken towards promoting employability ofunemployed youth through various skill developmentprogrammes. During the year, around 115 nos. of SC/STcandidates were passed out from the Institute and out ofthose 90 nos. were gainfully engaged as of now.

(ii) Education:

During the year, 21 SC/ST students were given the merit-cum-means scholarship for school education. 13 SC/STstudents were given TRL scholarship for ProfessionalCourses. Besides, 56 SC/ST students, studying in BRHigh School, Belpahar, who come from BPL families, arefully exempted from paying their tutution fees.

(iii) Employment:

The company cont inues to promote “posit ivediscrimination” in its recruitment process by givingpreference to SC/ST candidates where their performancesare found at par with the others in the selection process.Besides for campus recruitment, relaxation were given inthe minimum qualifying marks for the SC/ST candidates,thereby providing them an opportunity to appear at theselection process. During the year, 21 SC/ST candidateswere recruited.

(iv) Entrepreneurship:

The Self Employment Skil l Development Instituteestablished by TRL at Belpahar would go a long way inpromoting and developing future entrepreneurs. During05-06 06-07

PAYMENT TO AND PROVISIONFOR EMPLOYEES

(Rs. in Crores)

07-08 08-09 09-10

55 –

50 –

45 –

40 –

35 –

30 –

25 –

20 –

15 –

10 –

5 –

0 –

13

the year, after taking training from the institute, around20 persons have started their own entrepreneurshipventures.

United Nations Global Compact Compliance

The company, as a signatory to the United Nations GlobalCompact programme, strives to ensure compliance to itsprinciples. The company is an equal oppornutiy employerwithout any bias to caste, religion, race, martial status, sex,disability etc. No case of violation of human rights have beenreported during the year. The company, has taken nos. ofinitiatives to control pollution, save energy and towards climatechange. Environmental norms were closely monitored andcomplied with on a continuous basis. On the corporate socialresponsibility front, the company undertook various projects /programmes in the area of health education, self employment& entrepreneurship etc. Tata Code of Conduct serves as aGuide for one and all in the company and drives ethical behavioracross the organization.

Industrial Relations

Industrial Relations remained peaceful during the year. Thoughthe wage agreement was already due for more than a year,the same could not be signed during the previous year due topending court cases arising out of intra union rivalry. However,in the year under review, for the first time in the history of theCompany, wage agreement was signed with individualworkman, in absence of their representation through Union.This proactive initiative taken by the company was appreciatedboth by the workmen and also by the statutory authorities.

The Directors wish to record their appreciation for thecooperation and support provided by the employees of theCompany in maintaining peaceful industrial relations andcontributing to the company’s overall performance.

Directors’ Responsibilities

To the best of their knowledge and belief and according to theinformation and explanation obtained by them, your Directorsmake the following statement in terms of Section 217(2AA) ofthe Companies Act, 1956:

(a) that in the preparation of annual accounts for the yearended March 31, 2010, the applicable accountingstandards have been fol lowed along with properexplanation relating to material departures, if any,

(b) that such accounting policies as mentioned in Note 1 ofthe Notes to the Accounts have been selected and appliedconsistently, and judgments and estimates have beenmade that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Companyas on March 31, 2010, and of the profit of the Companyfor the year ended on that date,

(c) that proper and sufficient care has been taken for themaintenance of adequate accounting records, inaccordance with the provisions of the Companies Act,1956, for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities,

(d) the annual accounts have been prepared on a goingconcern basis.

Directors

Mr. H. Jha, who was appointed on the Board of Directors witheffect from May 05, 2008, resigned as Director with effect from

September 10, 2009. The Board has placed on record its warmappreciation of the valuable services rendered by Mr. Jha duringhis tenure as Director of the Company.

Mr. G. Ojha, who was appointed on the Board of Directors witheffect from March 01, 2004, resigned as Director with effectfrom February 24, 2010, consequent upon his superannuationfrom services of the Steel Authority of India Limited. The Boardhas placed on record its warm appreciation of the valuableservices rendered by Mr. Ojha during his tenure as Director ofthe Company.

In the casual vacancy on the Board caused by the resignationof Mr.H.Jha, the Board appointed Mr. Sanajay Kumar Pattnaikwith effect from October 20, 2009.

In the casual vacancy on the Board caused by the resignationof Mr. G.Ojha, the Board appointed Mr. P.K.Bajaj with effectfrom March 16, 2010. Mr. Bajaj retires at the forthcoming AnnualGeneral Meeting at which Mr. G.Ojha would have retired in thenormal course. Pursuant to the provisions of Section 257 ofthe Companies Act, 1956, the Company has received a noticein writing, together with the requisite deposit from a memberproposing the candidature of Mr. P.K.Bajaj to the office ofDirector.

Pursuant to the provisions of the Companies Act, 1956 andthe Articles of Association of the Company Mr. Ishaat Hussainand Dr. (Mrs) Prativa Ray retire by rotation at the forthcomingAnnual General Meeting and are eligible for re-appointment.Dr.(Mrs) Prativa Ray, however, has expressed her desire notto seek re-election. The Directors, therefore, recommended tothe shareholders that Mr. Dipankar Chatterji be elected in placeof Dr.(Mrs) Prativa Ray. The Board has placed on record itswarm appreciation of the valuable services rendered by Dr.(Mrs)Prativa Ray during her tenure as Director of the Company.

Auditors

M/s N.M. Raiji & Co., present Auditors of the Company, retireat the forthcoming Annual General Meeting and are eligible forre-appointment. Pursuant to the provisions of Section 224 ofthe Companies Act, 1956, their re-appointment requires theapproval of the members.

Energy, Technology, Foreign Exchange etc.

Particulars, pursuant to the provisions of the Companies(Disclosure of Particulars in the Report of Board of Directors)Rules, 1988 are given in Annexure-“A”.

Particulars of Employees

As required by the provisions of Section 217(2A) of theCompanies Act, 1956, read with the Companies (Particulars ofEmployee) Rules, 1975, names and other particulars ofemployees of the Company who were in receipt of remunerationof not less than Rs.24,00,000 during the year endedMarch 31, 2010 or Rs.2,00,000 per month are set out inAnnexure-“B”.

On behalf of the Board of Directors

J. J. IraniKolkata, May 13, 2010 Chairman

14


ANNEXURES TO DIRECTORS’ REPORTAnnexure-A

Particulars pursuant to the provisions of Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988

(A) Conservation of Energy

(a) Energy Conservation measures taken :

(i) Introduction of CBFS in Carbel-1, 2, Tar plant, old 700 deg. furnace and Precast 700 deg. furnace ofMono.

(ii) Oil heating by using waste heat in FTK-1 & FTK-2 in place of electrical heating.

(iii) Combustion system modification in Shaft Kiln-2.

(b) Additional investments or proposals, if any, being implemented for reduction of consumptionof energy:

(i) Waste heat utilization in HTK, BTK, DTK-1 & 2 for oil heating.

(ii) Enhancement of Petcoke firing in RTK.

(iii) Combustion system improvement of Shaft Kiln – 3.

(iv) Petcoke firing in DTK-1 & 2.

(v) Petcoke firing in BTK.

(vi) Petcoke firing in Rotary Kiln Binder Plant.

(c) Impact of above measures :

(i) Reduction in fuel bill by Rs. 90 Lakhs/ annum on account of replacing LDO by CBFS

(ii) Recurring saving of Rs. 3 lakhs/ annum on account of use of waste heat for oil heating in place ofelectrical heating

(iii) Recurring savings of Rs. 35 Lakhs/ annum on account of improvement of fuel efficiency.

(d) Total energy consumption and energy consumption per unit of Production are given in Form-A enclosed

(B) Technology Absorption

Efforts made in technology absorption are given in Form – B enclosed.

(C) Foreign Exchange Earnings and Outgo

(a) Activities relating to exports; initiatives taken to increaseexports; development of new export markets for products &Services and export plan : Mentioned in the

Directors’ Report.

(b) Total foreign exchange used and earned :

Foreign Exchange used : Rs. 189 Crores

Foreign Exchange earned : Rs. 133 Crores

15

FORM – A

Form for disclosure of particulars with respect to Conservation of Energy

(A) Power & Fuel Consumption Current Year Previous Year

1. Electricity :

(a) Purchased :

Units (M. kwh) 40.72 37.60

Total amount (Rs. Lakhs) 1,273.97 1,193.81

Rate/Unit (Rs./kwh) 3.13 3.18

(b) Own Generation :

(i) Through Diesel Generator

Units (kwh) 406,253 230,248

Units per Ltr. of Diesel Oil 2.14 3.27

Cost/Unit (Rs.) 14.21 9.89

(ii) Through Steam Turbine/Generator — —

2. Steam Coal Grade "B"/"C" used in Gas Producers :

(For part of the year)

Quantity (Tonnes) 15,878 17,728

Total Cost (Rs. Lakhs) 894.98 643.56

Average Rate (Rs./T.) 5,637 3,630

3. Furnace Oil, L. D. Oil :

Belpahar : Quantity (KL) 27,504 20,569

Total Amount (Rs. Lakhs) 6,295.23 4,920.84

Average Rate (Rs./KL) 22,888 24,474

4. Others :

(a) L.D.OIL, DIESEL, CBFS

Belpahar : Quantity (KL) 2,284 1,076

Total Amount (Rs.Lakhs) 677.31 376.61

Average Rate (Rs./KL) 29,655 35,001

(b) PETROLEUM COKE

Quantity (Tonnes) 4,995 9,037

Total Amount (Rs.Lakhs) 550.82 1,107.57

Average Rate (Rs./T.) 11,027 12,256

(B) Consumption per unit of production of the CompanyCurrent Year Previous Year

(Refractories Per Tonne)

Electricity (kwh/tonne) 185 205

Steam Coal-Grade "B"/"C" (Kg/tonne) 76 102

Petrolium Coke (Kg/tonne) 24 52

Furnance Oil, L.D. Oil (Litrs/tonne) : 143 125Belpahar

16


FORM – B

Form for disclosure of particulars with respect to Technology Absorption

Research & Development

1. Specific areas in which R & D work was carried out by the Company.

New product development, quality improvement of existing products, process improvement for higheryields, higher productivity, reduction in raw material costs and exploration of new sources of raw materials.Major emphasis was given to the research in the field of nano-materials and eco-innovations.

2. Benefits derived as a result of the R & D programmes.

Savings through redesign of products and processes (raw materials cost, yield improvements etc.)

Sales through new and modified products : Rs.170.00Crore

3. Future plan of action

In the coming year, the Technology Division plans to focus on :

(i) Research on environmentally sensitive areas like ‘Development of Chrome-free Refractories’.

(ii) Microwave heating of Refractories.

(iii) Development of high alumina insulating bricks.

(iv) Dry vibrating mass for tundish.

(v) Development of phosphate-bonded castables for Aluminium Industries.

(vi) Synthetic raw materials.

(vii) Development of dolomite based gunning material for EAF and steel ladle.

(viii)Use of non-oxides and nano-materials in refractories.

4. Expenditure on R & D

(a) Capital : Nil

(b) Recurring : Rs. 274.46 Lakhs

(c) Total : Rs. 274.46 Lakhs

(d) Total R&D Expenditure as apercentage of total turnover : 0.32%

5. Technology Absorption, Adaptation and Innovation

(i) Efforts, in brief, made towards technology absorption, adaptation and innovations:

Thirty eight numbers of new/improved products were introduced such as burnt MgO-Al2O3 spinelbricks for Steel Ladle; 39% Al2O3 brick for BF Stove; Zircon nozzle through Microwave heating;ASC bricks for Torpedo Ladle; Al2O3-Cr2O3-ZrO2 Brick for Iron Ore Sinter Plant; Al2O3-C temperNozzle for Steel Ladle; Mag-Chrome brick for Ladle back up; Wet Patching Mass for repairing ofConverter Charge Pad; MgO-Al2O3 and MgO-ZrO2 Bricks for Lime Kiln; High Alumina PCPF Blockfor Chlorinator, High strength castable for DRI Kiln, Castables for CFBC Boilers etc.

Innovation drives are not only restricted to R&D, rather innovation culture has been nurtured inall key functions through out the Organization. People at different levels are trained throughawareness programmes on innovation in the form of MDP classes, Misson-2000 drives, classroomand shop floor teaching etc.

17

Eco-Innovative projects like Microwave heating of Refractories and Development of Chrome-free Refractories; and use of nano-materials in Refractories etc. have been taken up.

(ii) Benefits derived as a result of the above efforts :

The performance of the TRL’s products has shown superiority at customers’ end with recordlives (e.g. 160T converter of LD#1, Tata Steel lined with MgO-C bricks gave a world record life of5202 heats without slag splashing).

Number of products (as high as 22) have been approved by Corus, CRC; and this will definitelyincrease the International Business.

Savings in raw materials costs, improvement in process yield, higher product performance atcustomers end and increased customer satisfaction were achieved successfully.

(iii) Incase of imported technology (imported during the five years reckoned from the beginning ofthe financial year) following information may be furnished :

Technology Year of Import Status of implementation

—— NIL ——

ANNEXURE - B

Statement pursuant to Section 217 (2A) of the Companies Act, 1956 and the Companies(Particulars of Employees) Rules, 1975

Name Designation and Gross Net Age Total Date of Particularsnature of duties Remuneration Remuneration Qualification in Experience Commencement of last

Rs. Rs. years years of Employment Employment held

1 2 3 4 5 6 7 8 9Kamath C. D. * Managing Director 68,85,554 49,54,894 B. Tech. 66 43 01.02.1997 Executive in-charge, Ring &

(Met) Agrico Division, Tata Iron &Steel Co. Ltd.

Chattopadhyay A. K. Managing Director 84,05,829 52,95,829 M. Tech 57 32 01.05.2002 Senior Vice President &(Chem. Tech), Chief Executive,Ph. D. (Tech) (Refractories Business),

Associated CementCompanies Limited

Das C. S. Executive Vice 44,37,337 26,49,975 B.Com, 51 28 01.04.1996 Controller of Accounts &President & Chief FCA, ACS Company SecretaryFinance Officer Nilachal Refractories

LimitedPanda P. B. Executive Vice 42,21,331 26,05,409 B.Sc.(Tech.) 51 28 17.10.1981 TRL China Ltd. President &

President & Chief Ceramic Tech. CEOOperating Officer

Notes : 1. Gross Remuneration comprises Salary, allowances, monetary value of perquisites, commissions and the Company’scontribution to Provident Fund and Superannuation Fund but excludes contribution to Gratuity Fund as separatefigures are not available.

2. Net Remuneration is after tax and is exclusive of Company’s contribution to Provident Fund and SuperannuationFund and monetary value of non-cash perquisites.

3. The nature of employment is contractual.

4.* Indicate that the employee was in service only for part of the year.

On behalf of the Board of Directors

J. J. IraniKolkata, May 13, 2010 Chairman

18


MANAGEMENT DISCUSSION AND ANALYSIS

Economic Environment

The turmoil in world financial markets and economies over the past year and half has fundamentally alteredthe global financial system.

After experiencing strong contraction till H1 of calendar year 2009, global output grew rapidly during H2 ofcalendar year 2009, on the back of favourable fiscal and monetary environment facilitated by policy makersworld over. Signs of recovery in advance economies are emerging, while those in some emerging marketeconomies are experiencing strong turnaround.

Having grown by over 9% in the three years till 2007-08, India’s economic growth slipped to 6.7 per cent in2008-09 on account of impact of the global financial crisis. For the financial year 2009-10, the economy isestimated to grow by 7.2 per cent. India’s rapid turnaround after the crisis induced slowdown evidences theresilience of our economy.

Performance Review

The financial year 2009-10, has been a year that reinforced Company’s image of being a leading refractoriesmanufacturer in India. The Company has emerged as an organization capable of achieving consistent andhigher growth every year. During the year 2009-10, the Company registered commendable success andexcellence in all facets of its activities which reflects its prudent investment decision and consistent andprogressive strategy.

For the year 2009-10, the revenues of the Company at Rs.867 Crores on stand alone basis were higher byRs.131 Crores compared to previous year establishing an all time record. The consolidated revenues of theCompany along with TRL China were Rs.970 Crores against Rs.768 Crores of previous year, which was alsoan all time record.

The Company’s International Business increased to Rs.127 Crores against Rs.103 Crores of the previousyear registering a healthy growth of 23%.

19

Financial Highlights

The highlights of financial performance are given below :

Item 2009-10 2008-09 % ChangeRs.Crores Rs.Crores

1. Sale of Products and Services(including Excise Duty) 862 732 + 18

2. Other Income 5 4 + 25

3. Total Income (1 + 2) 867 736 + 18

4. Manufacturing & Other Expenses(Including Excise Duty) 775 644 + 20

5. Earning before Interest, Depreciation,and Taxes (EBIDTA) 92 92 —

6. EBIDTA margin 10.56% 12.50% —

7. Depreciation 21 21 —

8. Interest 11 17 (-)35

9. Profit Before Tax 60 54 + 11

10. Profit After Tax 38 34 + 12

The revenue growth was mainly volume driven. Interest cost was reduced by Rs.6 crores for last year due todecrease in borrowings and better interest rate. EBIDTA margin was lower mainly due to increase in inputcost and higher provision for employees’ retirement benefits. Increase in profit before and after tax was mainlycontributed by lower interest cost.

Liquidity

Throughout the year, the liquidity position of the Company was comfortable. Despite significant growth inbusiness volume and increase in capital expenditure, total borrowings of the Company as on 31st March, 2010,was Rs.110 crores, against Rs.116 Crores of 31st March, 2009, a reduction of over 5%. Efficient workingcapital management coupled with a variety of funding alternatives had not only strengthened the liquidityposition of the Company but also reduced interest cost substantially. The gross debt - equity ratio was 0.42,which demonstrates the Company’s ability to further leverage of its strong financial position to fund its growthambitions.

ICRA has assigned “LAA” (pronounced as L double A) rating to Fund Based Working Capital Limit and “A1+”(pronounced as A one plus) rating to Non-fund based Working Capital Limit and Short Term Fund BasedWorking Capital limit of the Company.

20


Technology

There has been continuous introduction of new technologies in the refractories consuming industries likeSteel, Cement, Glass, Non-Ferrous, Petro-chemicals etc. This has thrown a challenge to the refractory industry,where the consumers are looking for sophisticated cost effective refractories products. The Company recognizesthat development of new products and continuous improvement in quality of the existing products play a majorrole to meet the challenges. The Company has an unique in-house state-of-the-art Research & DevelopmentLaboratory manned by highly qualified and competent professionals, where product qualities are upgradedcontinuously and new products are developed to meet the requirements of the consuming industries.

During the year, a number of new products have been developed such as, burnt MgO-Al2O3 spinel bricks forSteel Ladle; 39% Al2O3 brick for BF Stove; Zircon nozzle through Microwave heating; ASC bricks for TorpedoLadle; Al2O3-Cr2O3-ZrO2 Brick for Iron Ore Sinter Plant; Al2O3-C temper Nozzle for Steel Ladle; Mag-Chromebrick for Ladle back up; Wet Patching Mass for repairing of Converter Charge Pad; MgO-Al2O3 and MgO-ZrO2

Bricks for Lime Kiln; High Alumina PCPF Block for Chlorinator, High strength castable for DRI Kiln, Castablesfor CFBC boilers etc.

New products developed during the past three years have contributed around 20% of total revenues duringthe year.

Human Resources

Employees are the heart of our success and progress. Harnessing, developing and rewarding their skills,energy and commitment is our priority.

The Company continues to focus on training its employees on a continuing basis on the job and throughtraining programmes conducted by internal and external faculties. During the year, 262 in-house trainingprogrammes were conducted through internal and external faculties. Apart from this, 74 external programmeswere attended by employees. Through in-house training programme, 389 workmen have been made multiskilled. Apart from imparting training to employees of the Company, JJI Learning Centre had also impartedtraining to customers, contract workers, employees of other refractories companies and employees ofneighbouring industries.

Business Strategy

The Vision of the Company is to be “A Global Refractories Company”, bench marking ourselves againstinternational standard and best practices in terms of product offering, technology and service level.

Our business strategy emphasizes the following:

Increase our market share in India’s expanding refractories market by following a disciplined growthstrategy balancing quality and volume growth while delivering high quality customer service.

Leverage our technology platform and state-of-the-art production facilities to deliver more productsand services to more customers and to control operating cost.

To develop products and services that reduce our costs.

The Company has further strengthened its “Mission 2000 Plan” which has fixed a target to achieve revenuesof Rs.2000 crores by 2012-13.

Future Outlook

The coming years bring tremendous challenges and offer immense opportunities. The Indian economy is on

21

a fast growth track and needs investment in infrastructure development. Economic survey 2009-10 haspredicted 8.5 per cent growth for 2010-11 and 9 per cent for 2011-12.

With the impending competition from Chinese suppliers the response time available will get drasticallyreduced. The Company needs to be equipped to move with speed and agility. Although the challenges aremany, the Company is well placed to face these challenges.

TRL’s products portfolio is the largest and widest in the Country and has the capability to meet the volumeand diverse requirements of consuming industries. The Company gives utmost importance to exploit thebusiness opportunities that emerge in various areas and has planned to further strengthen its servicecapabilities to provide Refractories Engineering and Management Service to various industries.

Risks and Concerns

Amid growing exuberance over the economic outlook the Reserve Bank of India strikes a note of caution in itsAnnual Policy Statement about the risks that persist from unwieldy inflationary pressures and lingeringuncertainties over the shape and pace of the global recovery. While emerging markets like India seem to begoing strong, these factors can leave the recovery vulnerable.

There is a probability of rupee and RMB becoming stronger in the current year which will have adverse impacton export revenues of the Company and its subsidiary TRL China Limited.

RBI’s actions to contain inflation may give rise to increase in interest rate.

Internal Control Systems

The Company has adequate internal control systems and procedures in place commensurate with the sizeand nature of its business. The effectiveness of internal control is continuously monitored by the InternalAudit Department of the Company. The Internal Audit’s main objective is to provide to the Audit Committeeand the Board of Directors, an independent, objective and reasonable assurance of the adequacy andeffectiveness of the organizations risk management, control and governance processes. Internal Audit alsoassesses opportuni t ies for improvement in business process, systems and controls and providesrecommendations designed to add value to the organization. Internal Audit follows up on the implementationof corrective actions and improvements in business processes after review by the Audit Committee and SeniorManagement.

The scope and authority of the Internal Auditors are derived from the Audit Chapter approved by the Board ofDirectors. The Company has an Audit Committee of Directors with three independent directors and onenon-independent and non-executive director. To ensure independence, the Chief of internal audit has a directreporting line to the Chairman of the Audit Committee and only indirectly to the Managing Director. The AuditCommittee meets the Company’s Statutory Auditors in order to ascertain their observations on financial reportsand on control concerns. The Audit Committee’s observations and suggestions are acted upon by theManagement.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections,estimates and expectations are “forward-looking statements”. Actual results can differ materially from thoseexpressed or implied. Important factors that could make a difference to Company’s operations include economicconditions affecting demand/supply, price conditions in the domestic and overseas markets, changes inGovernment regulations, tax laws and other statutory and incidental factors.

22


CORPORATE GOVERNANCE REPORT FOR THE YEAR 2009-10

1. Company’s philosophy on Corporate Governance

Tata Refractories Limited is not a Listed Company. Hence the Corporate Governance norms are notstatutorily mandatory for TRL. However your Company is committed to follow good corporate governancepractices proactively. The Company recognises the concept of trusteeship for resources entrusted to itby shareholders and other stakeholders. The Company believes that good corporate governance practicesgenerate goodwill among business partners, customers and investors, earn respect from society, bringabout a consistent sustainable growth and profitability for the company and ensure competitive returnsfor the investors. The Corporate Governance philosophy has been strengthened with the implementationof Tata Business Excellence Model and the Tata Code of Conduct applicable to the Company, its Directorsand its Employees.

2. Board of Directors

The Company has a Non-Executive Chairman and there are four Independent Directors. Except theManaging Director all other Directors are Non-Executive Directors (NEDs).

None of the Directors on the Board is a Member on more than Ten Board Committees (Audit Committeesand Shareholders’ Grievance Committees) and a Chairman of more than Five Committees, across all theCompanies in which he or she is a Director.

The names and categories of Directors on the Board, their attendance at Board Meetings during 2009-10,and at the last Annual General Meeting, and also the number of Directorships and Committee Membershipsheld by them in other Companies are given below.

Name Category No. of Board Whether attended No. of Directorships No. of CommitteeMeetings attended AGM held on in other Public Positions held in

during 2009-10 Sept. 05, 2009 Companies # other Companies*As on 31.03.2010 As on 31.03.2010

Chairman Director Chairman MemberDr. J. J. Irani (Chairman) Non-Independent 8 Yes 2 7 Nil 2

Non-Executive DirectorMr. Ishaat Hussain Non-Independent - 6 No 2 11 4 5

Non-Executive DirectorMr. V. S. N. Murty Non-Independent - 7 Yes Nil 2 Nil 4

Non-Executive DirectorMr. S. N. Singh Non-Independent - 4 No Nil 1 Nil Nil

Non-Executive DirectorMr. Sanjay Kumar Pattnaik Non-Independent - 6 No Nil Nil Nil Nil(w.e.f. 21.07.2009) Non-Executive DirectorMr. H. Jha Non-Independent -(upto 10.09.2009) Non-Executive Director 3 Yes Nil 1 Nil 1Mr. G. Ojha Non-Independent -(upto 24.02.2010) Non-Executive Director 1 No Nil 1 Nil 1Mr. P. K. Bajaj Non-Independent -(w.e.f. 16.03.2010) Non-Executive Director 1 NA Nil 1 Nil NilProf. S. Sarin Independent 8 Yes Nil Nil Nil Nil

Non- Executive DirectorDr. A. K. Chatterjee Independent

Non-Executive Director 7 Yes Nil Nil Nil NilMr. P. Sri Ramulu Independent

Non-Executive Director 8 Yes Nil Nil Nil NilDr. (Mrs.) Prativa Ray Independent

Non- Executive Director 8 Yes Nil Nil Nil NilDr. A. K. Chattopadhyay Executive Director 7 Yes Nil Nil Nil NilManaging Director

# Excludes Directorships in Private and Foreign Companies.* Chairmanship/Membership of Audit Committee and Shareholders’ / Investors’ Grievance Committee.

23

During the year ended 31st March, 2010, eight Board Meetings were held on 18 th May, 2009,21st July, 2009, 5th September, 2009, 20th October, 2009, 14th & 15th December, 2009, 19th January, 2010,22nd February, 2010 and 16th March, 2010. The gap between any two consecutive meetings did not exceedfour months.

3. Audit Committee

The Company has constituted an Audit Committee of Directors. The scope of the Committee includesinteralia:

(1) To review reports of the Internal Audit Department and discuss the same with the internal auditorsperiodically.

(2) To meet Statutory Auditors in order to discuss their findings, suggestions and other related matters.

(3) To review quarterly and annual financial statements before submission to the Board.

(4) To review weaknesses in internal controls reported by Internal and Statutory Auditors.

(5) To recommend to the Board, the appointment and remuneration of Statutory Auditors.

The Audit Committee may also review such matters as considered appropriate by it or referred to it by theBoard.

The composition of the Audit Committee and the details of meetings attended by the Directors during thefinancial year 2009-10 are given below:

Names Position Category No. of Meetings

Mr. P. Sri Ramulu Chairman Independent 6Non-Executive Director

Prof.S.Sarin Member Independent 6Non-Executive Director

Dr.(Mrs) Prativa Ray Member Independent 6Non-Executive Director

Mr. V.S.N. Murty Member Independent 5Non-Executive Director

Mr. P. Sri Ramulu, Chairman of the Committee was present at the last Annual General Meeting held on5th September, 2009.

The Audit Committee Meetings are attended by the Executive Vice President & CFO, and the GeneralManager (Internal Audit). Other senior executives of the Company attended the meetings as and wheninvited by the Committee. Representatives of Statutory Auditors were invited to the Meetings. The CompanySecretary acts as the Secretary to the Committee.

During the year ended 31st March, 2010, six Audit Committee Meetings were held on 17th May, 2009, 17th

July, 2009, 5th September, 2009, 20th October, 2009, 18th January, 2010 and 22nd February, 2010.

4. Remuneration & Governance Committee

The Board has constituted a Remuneration & Governance Committee. The broad terms of reference ofthe Remuneration Committee are as follows:

(a) Review the performance of the Executive Director(s) after considering Company’s performance.

(b) Recommend to the Board the remuneration including salary, perquisites and commission to be paidto the Executive Director(s).

(c) Finalize the perquisites packages of the Executive Director(s) within the overall ceiling fixed by theBoard.

(d) Recommend to the Board, retirement benefits to be paid to the retired Managing Director(s) / Wholetime Director(s) under the Retirement Benefits Guidelines adopted by the Board.

24


(e) To deal with matters relating to induction of Directors and shareholders’ grievances.

The composition of the Remuneration & Governance Committee and the details of meetings attendedby the Directors during the financial year 2009-10 are given below:


Dr. A. K. Chatterjee Chairman Independent Non-Executive Director 1

Prof. S. Sarin Member Independent Non-Executive Director 2

Dr. J. J. Irani Member Non-Independent Non-Executive Director 2

Mr. Ishaat Hussain Member Non-Independent Non-Executive Director 2

During the year ended 31st March, 2010, two Meetings of the Remuneration & Governance Committeewere held on 18th May, 2009 and 16th March, 2010.

Remuneration Policy

While recommending the remuneration package of the Executive Director(s), the Remuneration Committee takesinto consideration the following aspects:

(a) Track Record of the Executives;

(b) Remuneration packages of managerial talent in different industries in general and in the Refractories Industryin particular;

(c) Company’s Performance.

The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission/performance linked remuneration (variable component) to Executive Director(s). Salary is paid within the rangeapproved by the Shareholders. Annual increments, effective from 1st April each year, are recommended by theRemuneration Committee and are subsequently approved by the Board. The ceiling on perquisites and allowancesas a percentage of salary is determined by the Board. Within the prescribed limits, the perquisites package isapproved by the Remuneration Committee. Commission is calculated with reference to net profits of the Companyin a particular financial year and is determined by the Board of Directors at the end of the financial year based on therecommendations of the Remuneration Committee. This is also subject to overall ceilings stipulated in Sections 198and 309 of the Companies Act, 1956. In absence or inadequacy of profit, performance linked remuneration isconsidered within the overall ceiling of Schedule-XIII to the Companies Act, 1956.

The Non-Executive Directors (NEDs) are paid remuneration by way of Commission and Sitting Fees. In terms ofshareholders’ approval obtained at the Annual General Meeting held on September 29, 2007, the commission ispaid at a rate not exceeding 1% per annum of the net profits of the Company (computed in accordance with Section309(5) of the Companies Act, 1956) for a period of five years from 2007-08. The logic for distribution of Commissionamongst the NEDs is approved by the Board. The Commission is distributed broadly on the basis of Board Meetingsand various Committee Meetings attended by the NEDs.

The Company paid Sitting Fees of Rs.15,000/- per meeting to its NEDs, for attending Board and Committees Meetings.

Details of Remuneration for 2009-10

Non-Wholetime Directors (Rs. Lakhs)

S. No. Name of the Director Commission * Sitting Fee1. Dr. J. J. Irani 8.23 2.552. Mr. Ishaat Hussain 3.34 1.953. Dr. A. K. Chatterjee 3.60 2.104. Prof. S. Sarin 4.11 2.405. Mr. P. Sri Ramulu 5.14 2.106. Mr. G. Ojha 0.25 0.157. Mr. S.N. Singh 1.02 0.608. Dr. (Mrs) Prativa Ray 3.60 2.109. Mr. H. Jha 0.77 0.45

10. Mr. V. S. N. Murty 3.08 1.8011. Mr. S. K. Pattnaik 1.54 0.9012. Mr. P. K. Bajaj 0.25 0.15

Note : (a) * Payable in 2010-11.(b) The amounts indicated against Mr. G. Ojha, Mr. S. N. Singh and Mr. P. K. Bajaj were

paid/payable to Steel Authority of India Limited.

25

Managing Director

Name Salary Perquisites Commission @ Stock OptionsRs. lakhs & Rs. lakhs

AllowancesRs. Lakhs

Dr. A. K. Chattopadhyay 23.60 35.46 32.00 Nil

@ Payable in 2010-11.

Other than above, the Non-Executive Directors do not have any other pecuniary relationship or transactions withthe Company during 2009-10.

The present term of Managing Director is for 3 years from 10.05.2010 to 09.05.2013, subject to the approval ofshareholders in the ensuing annual general meeting. After approval of the Shareholders, the Company will enterinto a contract with the Managing Director. The contract may be terminated by either party by giving not less than sixmonths’ notice in writing or the Company by paying six months’ salary in lieu thereof. There is no separate provisionfor payment of severance fees.

5. Committee of the Board

In addition to the above Committees on Corporate Governance, the Board has also constituted an additional committeeknown as Committee of Board.

The Committee of Board (COB) was constituted on 10th October, 2003 and its terms of reference amongst its otherfunctions is to periodically review (1) Business and Strategy (2) Financial matters requiring special attention,(3) Long term financial projections and cash flow, (4) Capital expenditure programmes, (5) Organizational Structure.COB shall also periodically review Company’s business plans, profit projections, ways and means position etc.

The composition of the COB and details of the meetings attended by the Directors during the financial year 2009-10,are given below:


Dr. J. J. Irani Chairman Non-Independent Non-Executive Director 7

Mr. Ishaat Hussain Member Non-Independent Non-Executive Director 5

Dr. A. K. Chatterjee Member Independent Non-Executive Director 6

Dr. A. K. Chattopadhyay Member Executive Director 6(Managing Director)

During the year ended 31st March, 2010, seven COB Meetings were held on 18th May, 2009, 21st July, 2009,9th May, 2009, 20th October, 2009, 14th December, 2009, 19th January, 2010 and 22nd February, 2010.

6. General Body Meetings

Location and date, where the last three AGMs were held :

Company’s Location Date Time No. of SpecialFinancial Year Resolutions passed

2008-09 Tata Refractories Limited 05.09.2009 3.00 PM NilBelpahar, Jharsuguda,Orissa – 768 218

2007-08 Tata Refractories Limited 02.08.2008 4.00 PM OneBelpahar, Jharsuguda,Orissa – 768 218

2006-07 Tata Refractories Limited 29.09.2007 4.00 PM OneBelpahar, Jharsuguda,Orissa – 768 218

26


7. (a) Shareholding Pattern as on March 31, 2010

Number of Number of % of Number of % ofShares Slab Shareholders Shareholders Shares held Shares held

1-100 20 18.69 1578 0.01

101-500 23 21.50 7848 0.04

501-1000 14 13.08 13350 0.06

1001-5000 16 14.95 44000 0.21

5001-10000 6 5.61 43500 0.21

10001-100000 21 19.63 635254 3.04

Above 100000 7 6.54 20154470 96.43

Total : 107 100.00 20900000 100.00

(b) Distribution of shareholding as on March 31, 2010

Category of Shareholder Number of shares held Percentage of share capital

Foreign Holdings Nil Nil

Government Companies 2203150 10.54

FIs, Insurance Companies & Banks 962500 4.61

Other Corporate Bodies 16476354 78.83

Mutual Funds Nil Nil

Directors & Relatives Nil Nil

Individual & Others 1257996 6.02

Total 20900000 100.00

8. Other Disclosures

The Board has received disclosures from key managerial personnel relating to financial and commercialtransactions where they and/or their relatives have personal interest. There are no materially significant relatedparty transactions, which have potential conflict with the interests of the Company at large.

9. General Shareholder Information

Address for correspondence

Company Secretary,Tata Refractories LimitedPO: Belpahar – 768 218Dist: JharsugudaOdisha. INDIA

Phone : +91 6645 258417Fax : +91 6645 250243e-mail : [email protected]

27

AUDITORS’ REPORTTO THE MEMBERS OF TATA REFRACTORIES LIMITED

1. We have audited the attached Balance Sheetof Tata Refractories Limited, as at March 31,2010, and also the Profit and Loss account andthe Cash Flow statement for the year endedon that date annexed thereto. These financials ta tements are the respons ib i l i t y o f theCompany’s management. Our responsibility isto express an opinion on these f inancialstatements based on our audit.

2. We conducted our audit in accordance withauditing standards generally accepted in India.These Standards require that we plan andper fo rm the aud i t to ob ta in reasonab leassurance about whether the f inanc ia lstatements are free of material misstatements.An audit includes examining, on a test basis,ev idence suppor t ing the amounts anddisclosures in the financial statements. Anaudit also includes assessing the accountingprinciples used and significant estimates madeby management, as well as evaluating theoverall financial statement presentation. Webelieve that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditors’Report) (Amendment) Order, 2004 (hereinafterreferred to as the ‘Order’) issued by the CentralGovernment of India in terms of sub-section(4A) of Section 227 of the Companies Act,1956, we enclose in the Annexure, a statementon the matters specified in paragraphs 4 and5 of the said Order.

4. Further to our comments in the Annexurereferred to above, we report that:

(a) We have obtained all the informationand explanations which, to the best ofour knowledge and belief, were neces-sary for the purposes of our audit;

(b) In our opinion, proper books of account,as required by law, have been kept bythe Company, so far as it appears fromour examination of those books;

(c) The Balance Sheet, Profit and Lossaccount and Cash Flow statement dealtwith by this report are in agreement withthe books of account;

(d) In our opinion, the Balance Sheet, Profitand Loss account and Cash F lowstatement deal t wi th by th is reportcomply with the Accounting Standardsre fe r red to in sub-sec t ion (3C) o fSect ion 211 of the Companies Act,1956;

(e) On the bas is o f the wr i t tenrepresentations received from directorsof the Company, as on March 31, 2010and taken on record by the Board ofDirectors, we report that none of thedirectors is disqualified as on March 31,2010 from being appointed as a directorin terms of clause (g) of sub-section (1)of Section 274 of the Companies Act,1956; and

(f) In our opinion, and to the best of ourin fo rmat ion and accord ing to theexplanat ions g iven to us, the sa idaccounts give the information requiredby the Companies Act, 1956, in themanner so required and give a true andfa i r v iew in con fo rmi ty w i th theaccount ing p r inc ip les genera l l yaccepted in India;

(i) in the case of the Balance Sheet,of the state of affairs of the Com-pany as at March 31, 2010;

(ii) in the case of the Profit and Lossaccount, of the profit for the yearended on that date; and

(iii) i n the case o f Cash F lowstatement, of the cash flows forthe year ended on that date.

For N. M. Raiji & Co.Chartered Accountants

Firm Registration No. 108296W

VINAY D. BALSEPartner

Membership No. 39434

Place : MumbaiDated : May 13, 2010

28


(i) (a) The Company has maintained properrecords showing full particulars includingquantitative details and situation of FixedAssets.

(b) In accordance w i th the phasedprogramme for verification of fixed assets,cer ta in i tems o f f i xed asse ts werephysically verified by the managementdur ing the year and no mater ia ld iscrepanc ies were not iced on suchverification.

(c) Fixed assets disposed off during the yearwere not substantial so as to affect thegoing concern assumption.

(ii) (a) S tocks o f inven to r ies have beenphysically verified during the year by themanagement . The Company has aperpe tua l inven to ry sys tem. In ouropinion, the frequency of such verificationis reasonable. In respect of stocks lyingwith third parties, related confirmationshave been obtained by the Company.

(b) The procedures for physical verificationof inventory followed by the managementare reasonable and adequate in relationto the size of the Company and the natureof its business.

(c) The Company has maintained properrecords of inventory. The discrepanciesnot iced on ver i f i ca t ion be tween thephysical stock and the book stock werenot material in relation to the operationsof the Company and have been properlydealt with in the books of account.

(iii) According to the information and explanationsgiven to us, the Company has neither grantednor taken any loans, secured or unsecured,to/from companies, f i rms or other part iescovered in the register maintained underSection 301 of the Companies Act, 1956.Consequently, clause 3(b), (c), (d), (e), (f) and(g) of the Order are not applicable.

(iv) In our op in ion , and accord ing to theinformation and explanations given to us, thereare adequate in te rna l con t ro l sys temscommensurate with the size of the Companyand nature of its business for the purchase ofinventory and fixed assets and for the sale ofgoods and services.

(v) (a) In our op in ion and accord ing to theinformation and explanations given to us,particulars of contracts or arrangementsthat need to be entered into the registerin pursuance o f Sec t ion 301 o f theCompanies Act, 1956, have been entered.

(b) In our opinion and according to the informationand explanations given to us, the transactionsmade in pursuance of contracts orarrangements entered in the registermaintained under Section 301 of theCompanies Act, 1956 and exceeding the valueof rupees five lakhs in respect of any partyduring the year, have been made at priceswhich are reasonable, having regard toprevailing market prices at the relevant time.

(vi) In our opinion and according to the informationand explanations given to us, the Company hascomplied with the directives issued by theReserve Bank of India and the provisions ofSection 58A, Section 58AA or any other relevantprovisions of the Companies Act, 1956 and therules framed thereunder with regard to depositsaccepted from the public. There have been noproceedings before the Company Law Board orNational Company Law Tribunal or Reserve Bankof India or any Court or any other Tribunal in thismatter.

(vii) In our opinion, the Company has an internal auditsystem commensurate with its size and the natureof its business.

(viii) According to the information and explanationsgiven to us, the Central Government has notprescribed maintenance of cost records underSection 209 (1) (d) of the Companies Act, 1956for any of the products of the Company.

(ix) (a) According to the information andexplanations given to us and on the basis ofour examination of the books of account, theCompany has been generally regular indeposit ing undisputed statutory duesincluding Provident Fund, Investor Educationand Protection Fund, Employees StateInsurance, Income-tax, Sales-tax, WealthTax, Service Tax, Custom Duty, Excise Duty,Cess and any other dues, during the year,with the appropriate authorities.

(b) According to the information andexplanations given to us and on the basis ofour examination of the books of account, noundisputed amounts payable in respect ofIncome-tax, Sales-tax, Wealth Tax, ServiceTax, Custom Duty, Excise Duty, Cess, werein arrears, as at March 31, 2010 for a periodof more than six months from the date theybecame payable.

(c) According to the information andexplanations given to us, following are thedues of Income-tax, Sales-tax, Excise Duty,Holding Tax, Provident Fund and Cess whichhave not been deposited on account ofdisputes with the related authorities:

ANNEXURE TO THE AUDITORS’ REPORTof Tata Refractories Limited(Referred to in Paragraph 3 of our Report of even date)

29

(x) The Company does not have any accumulatedlosses at the end of the financial year and hasnot incurred cash losses in the financial yearand in the financial year immediately precedingfinancial year.

(xi) In our opinion and according to the informationand explanations given to us, the Companyhas not defaulted in repayment of dues tofinancial institutions or banks. The Companydoes not have any outstanding debentures.

(xii) According to the information and explanationsgiven to us, the Company has not grantedloans and advances on the basis of securityby way of pledge of shares, debentures andother securities.

(xiii) To the best of our knowledge and belief andaccording to the information and explanationsgiven to us, the Company is not a chit fund ora n idh i /mutua l benef i t fund /soc ie ty .Accordingly, the provisions of clause 4 (xiii)o f the Order a re no t app l i cab le to theCompany.

(xiv) To the best of our knowledge and belief andaccording to the information given to us, theCompany is not dealing in or trading in shares,securities, debentures and other investments.Accordingly, the provisions of clause 4 (xiv)o f the Order a re no t app l i cab le to theCompany.

(xv) According to the information and explanationsgiven to us, the Company has not g ivenguarantees for loans taken by others frombanks or financial institutions.

(xvi) According to the information and explanationsg iven to us , te rm loans ava i led by theCompany have been used for the purpose forwhich the loans were obtained.

(xvii) According to the information and explanationsgiven to us, and on an overall examination ofthe Balance Sheet of the Company, fundsraised on short-term basis have, prima facie,not been used during the year for long-terminvestments.

(xviii) To the best of our knowledge and accordingto the information and explanations given tous , the Company has no t made anypreferential allotment of shares to parties andcompanies covered in the Register maintainedunder Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstandingdebentures during the year. As such, nosecurity or charge has been created.

(xx) The Company has not raised any money duringthe year by way of public issue.

(xxi) To the best of our knowledge and belief andaccording to the information and explanationsgiven to us, no fraud on or by the Companywas noticed or reported during the year.

For N. M. RAIJI & CO.Chartered Accountants

Firm Registration No. 108296W

VINAY D. BALSEPlace : Mumbai PartnerDated : May 13, 2010 Membership No. 39434

Sl. Name of the statute Amount under dispute Forum where the dispute is pendingNo. (Rs. Lakhs)

1. Central Excise 15.00 Before CESTAT

2. Sales Tax (CST) 150.96 Before Hon. High Court, Cuttack

3. Sales Tax (CST) 300.35 Before Commissioner

4. Sales Tax (CST) 15.24 Before Joint Commissioner

5. Sales Tax (OST) 4.93 Before Assistant Commissioner

6. Sales Tax (LST) 24.80 Before Joint Commissioner

7. Entry Tax 62.48 Before Commissioner

Total 573.76

30


As per our report annexed For and on behalf of the Board

For N. M. Raiji & Co. J. J. Irani ChairmanChartered Accountants

A. K. Chattopadhyay Managing Director

VINAY D. BALSEPartnerMembership No. : 39434 A. DebtaMumbai, May 13, 2010 Company Secretary Kolkata, May 13, 2010

BALANCE SHEET AS AT 31ST MARCH, 2010As at 31.03.2009

SOURCES OF FUNDS Schedule Rupees Rupees

1. Share Capital A 20,90,00,000 20,90,00,000

2. Reserves and Surplus B 227,24,06,850 202,17,97,395

3. Total Shareholders’ Funds 248,14,06,850 223,07,97,395

4. Loans :

a) Secured C 66,48,23,421 73,93,24,289

b) Unsecured D 43,89,53,678 41,79,19,149

5. Deferred Tax Liability (Net) 16,63,04,080 13,57,95,265

6. Provision for Employee Separation Compensation 4,32,27,189 6,11,80,161

7. Total Funds Employed 379,47,15,218 358,50,16,259

APPLICATION OF FUNDS

8. Fixed Assets E

(a) Gross Block 372,47,52,176 351,78,37,812

(b) Less : Depreciation 191,88,73,868 174,24,29,846

(c) Net Block 180,58,78,308 177,54,07,966

9. Investments F 33,89,34,595 33,89,34,595

10. Current Assets, Loans and Advances

(a) Stores and Spare Parts (at cost) 11,52,81,424 10,20,75,839

(b) Loose Tools 20,56,388 20,24,454

(c) Stock-in-Trade G 110,24,89,077 115,41,85,839

(d) Sundry Debtors H 125,88,17,764 103,78,08,544

(e) Cash and Bank Balances I 13,07,78,726 9,55,95,526

(f) Income accrued on Deposits 35,720 4,547

(g) Loans and Advances J 46,43,05,293 47,83,69,820

307,37,64,392 287,00,64,569

11. Less : Current Liabilities & Provisions

(a) Current Liabilities K 115,79,53,602 112,62,88,950

(b) Provisions L 26,59,08,475 27,31,01,921

142,38,62,077 139,93,90,871

12. Net Current Assets 164,99,02,315 147,06,73,698

13. Total Assets (Net) 379,47,15,218 358,50,16,259

Contingent Liabilities (refer note 2 of Schedule 5)Notes on Balance Sheet and Profit & Loss Account 5

31





PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010As at 31.03.2009

Schedule Rupees RupeesINCOME

1. Sale of Products and Services 1 862,14,05,056 732,27,59,645

Less : Excise duty 42,54,62,102 52,34,66,290

819,59,42,954 679,92,93,355

2. Other Income 2 5,03,32,551 3,54,66,772

3. Total Income 824,62,75,505 683,47,60,127

EXPENDITURE

4. Manufacturing and Other Expenses 3 735,94,51,243 595,56,16,792

5. Depreciation 20,97,70,302 20,89,02,247

6. Interest 4 10,89,91,339 17,08,02,023

7. Less : Expenditure included in aboveitems (other than interest) Capitalised (3,18,73,617) (3,95,55,053)

8. Employee Separation Compensation 31,22,756 –

Total Expenditure 764,94,62,023 629,57,66,009

PROFIT BEFORE TAXES 59,68,13,482 53,89,94,118

9. Provision for Income Tax :

a) Current (19,66,00,000) (19,25,00,000)

b) Deferred (63,25,950) 24,00,312

c) Fringe Benefit Tax – (44,75,000)

d) Taxation for earlier years (92,36,261) –

PROFIT AFTER TAXES 38,46,51,271 34,44,19,430

10. Balance brought forward from last year 19,61,39,411 17,39,79,756

11. Amount available for appropriation 58,07,90,682 51,83,99,186

12. Appropriations :

a) Proposed dividend 11,49,50,000 10,45,00,000

b) Corporate Dividend Tax 1,90,91,816 1,77,59,775

c) Transferred to General Reserve 20,00,00,000 20,00,00,000

Balance Carried to Balance Sheet 24,67,48,866 19,61,39,411

Earnings per Share(refer note 19 to Schedule 5) Basic / Diluted 18.40 16.48

Face Value per Share 10.00 10.00

Notes on Balance Sheet and Profit & Loss Account 5

32


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010Year ended Year ended31.03.2010 31.03.2009Rs. Lakhs Rs. Lakhs

A. Cash Flow from Operating Activities:Net profit Before Tax and Extraordinary Items 5,968.13 5,389.95

Adjustments for :Depreciation 2,097.70 2,089.03Dividend Income (17.65) (15.97)(Profit) / Loss on sale of assets/ assets written off (101.99) (7.72)Interest Income (97.77) (151.19)Interest charged to Profit & Loss Account 1,089.91 1,708.02Employee Separation Compensation 31.23 –Provision for Wealth Tax 0.95 1.39

3,002.38 3,623.56

Operating Profit before Working Capital change 8,970.51 9,013.51Adjustments for :Trade and other Receivables (2,347.23) 2,230.05Inventories 384.60 (3,197.02)Trade Payables and other Liabilities 137.20 659.86

(1,825.44) (307.11)

Cash Generated from Operations 7,145.07 8,706.40Direct tax paid (net of refunds) (1,603.98) (2,304.68)

(1,603.98) (2,304.68)

Cash Flow before Extraordinary Item 5,541.09 6,401.72

Employee Separation Compensation paid (210.76) (262.41)

Net Cash from Operating Activities: ......A 5,330.33 6,139.31

B. Cash Flow from Investing Activities:Purchase of Fixed Assets (2,404.81) (2,156.55)Sale of Fixed Assets 104.39 7.72Net movement in Creditors for Capital Goods 127.29 (12.36)Interest Received 60.20 2.51Dividend Received 17.65 15.97

Net Cash used in investing Activities ......B (2,095.28) (2,142.71)

C. Cash Flow from Financing Activities:Proceedings from borrowings 26,106.86 25,593.34Repayment of borrowings (26,641.53) (26,713.92)Interest Paid (1,125.95) (1,712.05)Dividends paid (1,222.60) (855.82)

Net Cash from Financing Activities ......C (2,883.22) (3,688.45)

Net Increase/(decrease) in cash and cash equivalents (A+B+C) 351.83 308.15

Cash and cash equivalents as at 1st April, 2009(Opening Balance) 955.96 647.81

Cash and cash equivalents as at 31st March, 2010(Closing Balance) 1,307.79 955.96

Note: i) Figures in brackets represent outflows.ii) Previous Year figures have been recast/restated wherever necessary.





33

SCHEDULES FORMING PART OF BALANCE SHEETAs at 31.03.2010 As at 31.03.2009

Rupees Rupees RupeesSCHEDULE A : SHARE CAPITAL

AUTHORISED2,50,00,000 Equity Shares of Rs. 10 each 25,00,00,000 25,00,00,000

ISSUED2,09,00,000 Equity Shares of Rs. 10 each 20,90,00,000 20,90,00,000

SUBSCRIBED2,09,00,000 (2,09,00,000) Equity Shares of Rs. 10 each,fully paid-up 20,90,00,000 20,90,00,000

Out of the above :

a) 15,00,000 (15,00,000) Shares of Rs. 10 each were allottedas fully paid-up bonus shares by capitalisation of GeneralReserve.

b) 1,48,98,360 (1,48,98,360) equity shares of Rs. 10 each,fully paid up, are held by Tata Steel Limited, the HoldingCompany.

Note : Figures in brackets relate to Previous Year.

SCHEDULE B : RESERVES AND SURPLUS

1. Capital Reserve

Balance as per last account 76,23,192 76,23,192

2. Securities Premium

Balance as per last account 75,73,04,560 75,73,04,560

3. General Reserve

Balance as per last account 106,07,30,232 86,07,30,232

Add : Amount transferred from Profit and Loss Account 20,00,00,000 20,00,00,000

126,07,30,232 106,07,30,232

4. Profit and Loss AccountBalance carried forward 24,67,48,866 19,61,39,411

227,24,06,850 202,17,97,395

SCHEDULE C : SECURED LOANS

i) Term Loan from Central Bank of India 13,95,00,000 23,95,00,000Secured by a pari passu mortgage of immovable properties andhypothecation of movable assets, except book debts, both presentand future, subject to prior charge on stocks and stores in favourof Central Bank of India and State Bank of India.

ii) Term Loan from State Bank of India 9,00,00,000 12,00,00,000Secured by a pari-passu first charge with other lenders on fixedassets, both present and future.

iii) Other Loans from Banks 42,14,44,910 37,59,16,116Secured by hypothecation of stocks and debtors by way of pari -passu first charge.

iv) Interest accrued and due thereon 1,38,78,511 39,08,173

66,48,23,421 73,93,24,289

34



Rupees Rupees

SCHEDULE D : UNSECURED LOANS

i) Fixed Deposits 3,88,53,000 1,78,65,000

ii) Short Term Loans from Banks 40,00,00,000 40,00,00,000

iii) Interest accrued and due thereon 100,678 54,149

43,89,53,678 41,79,19,149

SCHEDULE E : FIXED ASSETS

Description Gross Block Additions Deductions Gross Block Accumulated Depreciation for the Year Total Net Blockat cost as at at cost as at Depreciation Depreciation as at01.04.2009 31.03.2010 as at Additions Deductions up to 31.03.2010

01.04.2009 31.03.2010

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

1. Land 22,37,613 7,26,94,593 – 7,49,32,206 – – – – 7,49,32,206

(22,37,613) ( – ) ( – ) (22,37,613) ( – ) ( – ) ( – ) ( – ) (22,37,613)

2. Buildings & Roads 33,58,26,626 10,36,68,570 – 43,94,95,196 10,31,91,990 82,71,717 – 11,14,63,707 32,80,31,489

(295,776,036) (40,050,590) ( – ) (33,58,26,626) (9,60,10,627) (71,81,363) ( – ) (10,31,91,990) (23,26,34,636)

3. Plant & Machinery 294,25,79,030 6,40,52,214 2,26,47,557 298,39,83,687 153,60,53,861 183,824,953 2,26,17,874 169,72,60,940 128,67,22,747

(283,65,66,521) (109,870,155) (38,57,645) (294,25,79,031) (136,88,40,176) (17,10,71,329) (38,57,644) (153,60,53,861) (140,65,25,170)

4. Railway Siding 2,46,80,832 – – 2,46,80,832 74,69,406 10,49,064 – 85,18,470 1,61,62,362

(2,46,80,832) ( – ) ( – ) (2,46,80,832) (64,20,342) (10,49,064) ( – ) (74,69,406) (1,72,11,426)

5. Furniture, Fixture and 7,36,39,336 1,44,40,050 465,303 8,76,14,083 4,95,91,155 1,03,15,874 465,303 5,94,41,726 2,81,72,357

Office Equipments (6,87,34,663) (49,04,673) – (7,36,39,336) (367,68,482) (128,22,674) – (495,91,156) (2,40,48,180)

6. Vehicles 4,98,53,626 46,07,232 1,04,53,930 4,40,06,928 3,13,53,051 63,08,694 1,02,43,103 2,74,18,642 1,65,88,286

(4,55,80,169) (46,37,975) (3,64,519) (4,98,53,625) (149,39,750) (167,77,817) (364,517) (313,53,050) (1,85,00,575)

7. Technical Know-how Fees 1,47,70,383 – – 1,47,70,383 1,47,70,383 – – 1,47,70,383 –

(1,47,70,383) ( – ) ( – ) (1,47,70,383) (1,47,70,383) ( – ) ( – ) (1,47,70,383) ( – )

————––– ————––– ————––– ————––– ————––– ————––– ————––– ————––– ————–––344,35,87,446 25,94,62,659 3,35,66,790 366,94,83,315 174,24,29,846 20,97,70,302 3,33,26,280 191,88,73,868 175,06,09,447

(328,83,46,217) (15,94,63,393) (42,22,164) (344,35,87,446) (153,77,49,760) (20,89,02,247) (4,222,161) (174,24,29,846) (170,11,57,600)

8. Buildings, Plant and Machinery etc. under erection including advances for Capital Expenditure 5,52,68,861

Rs.1,56,452 (Previous Year Rs 11,74,976) (7,42,50,366)————–––180,58,78,308

(177,54,07,966)————–––

Note : Figures in brackets relate to the previous year.

35

SCHEDULE FORMING PART OF BALANCE SHEET

SCHEDULE F : INVESTMENTS - LONG TERM

No. of equity shares As at 31.03.2010 As at 31.03.2009of Face Value of Rupees RupeesRs. 10 each fully

paid-up unlessotherwise specified

Trade Investments (At Cost)

Equity Shares (Un-quoted)

1. Almora Magnesite Limited 77,990 77,99,000 77,99,000(Face Value of Rs. 100 each)

2. Tata International Limited(Face Value of Rs. 1000 each 1,870 1,87,000 1,87,000including 1,683 bonus shares)

Investments in Subsidiary Company

TRL Asia Private Limited 1,14,34,254 32,88,38,325 32,88,38,325(Face Value of SG$ 1 each)

Other than Trade Investments (At Cost)

Equity Shares/Debentures/Bonds

Equity Shares (Quoted)

1. Tata Investment Corporation Limited 8,493 1,00,270 1,00,270

2. Tata Construction and Projects Limited 1,44,202 18,42,020 18,42,020

Less : Provision for permanent diminution invalue of investment (18,42,020) (18,42,020)

3. HDFC Bank Limited 1,000 10,000 10,000

Equity Shares (Un-quoted)

1. Jamshedpur Injection Powder Limited 2,00,000 20,00,000 20,00,000

Debentures (Quotation not available)

1. Tata Construction and Projects Limited(10% Secured Debentures - Face Value Rs. 100 each) 8,000 8,00,000 8,00,000

Less : Provision for permanent diminution invalue of investment (8,00,000) (8,00,000)

33,89,34,595 33,89,34,595

Note : Aggregate value of Quoted Investments :

Cost (Net of provision for diminution) 1,10,270 1,10,270

Market Value 61,18,700 29,21,665

Aggregate value of Unquoted Investments :Cost (including Quoted Investments in respectof which quotation is not available) 33,88,24,325 33,88,24,325

36



Rupees RupeesSCHEDULE G : STOCK-IN-TRADE(including goods-in-transit)

(i) Finished Products produced and purchased by 47,12,81,571 46,14,57,020the company at lower of cost and net realisablevalue ( including purchased goods - in - transit at cost)

(i) Work-in-progress 15,24,49,118 15,41,12,093(at lower of cost and net realisable value)

(ii) Raw Materials 47,87,58,388 53,86,16,726(including purchased raw materials-in-transit at cost)

110,24,89,077 115,41,85,839

SCHEDULE H : SUNDRY DEBTORS

(Unsecured, considered good unless otherwise stated)

(i) Over six months old :

Considered Good 12,69,98,155 20,04,87,913

Considered Doubtful 32,68,698 1,95,44,470

13,02,66,853 22,00,32,383

(ii) Less : Provision for doubtful debts 32,68,698 1,95,44,470

12,69,98,155 20,04,87,913

(iii) Others 113,18,19,609 83,73,20,631

125,88,17,764 103,78,08,544

SCHEDULE I : CASH AND BANK BALANCES

(i) Cash in hand 9,28,329 5,27,810

(ii) Cheques in hand 24,90,925 1,19,34,209

(iii) Remittance-in-transit – 51,54,744

(iv) Balances with Scheduled Banks :

— On Current Account 12,73,59,472 7,79,78,763

13,07,78,726 9,55,95,526

SCHEDULE J : LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

(i) Advance recoverable in cash or in kind or for valueto be received :

Considered Good 20,77,76,428 19,83,43,270

Considered Doubtful 14,55,619 12,58,142

20,92,32,047 19,96,01,412

Less : Provision for Doubtful Advances 14,55,619 12,58,142

20,77,76,428 19,83,43,270

(ii) Advances with Public bodies 21,60,22,090 20,00,62,759

(iii) Advance payment of Income-tax (Net of provision) 4,05,06,775 7,99,63,791

46,43,05,293 47,83,69,820

Note :- Advances with public bodies include balances with Custom,Port Trust, etc.- Rs 1,57,43,625 (Previous Year - Rs 1,22,05,427)

37


Rupees RupeesSCHEDULE K : CURRENT LIABILITIES

(i) Acceptances 14,44,49,930 7,71,99,808

(ii) Sundry Creditors : (refer note 5 of Schedule 5)

a) for Goods Supplies and Services

- Total outstanding dues of Micro & Small enterprises 75,24,705 97,66,299

- Total outstanding dues of creditors other 40,86,46,864 49,75,48,355than Micro & Small enterprises

b) for Accrued Wages & Salaries 14,83,16,177 12,00,14,745

c) for Other Liabilities 31,44,33,627 26,60,26,603

(iii) Subsidiary companies 5,88,02,700 4,58,06,024

(IV) Advances received from Customers 6,83,12,589 9,99,57,841

(v) Interest accrued but not due 57,87,883 93,92,351

(vi) Unclaimed Dividend and Fixed Deposit 16,79,127 5,76,924

115,79,53,602 112,62,88,950

Note : (i) There is no amount due and outstanding to be credited to Investors Education and Protection Fund.

(ii) No interest paid , accrued , due and payable for the period of delay in making payment as specifiedunder the Micro, Small and Medium Enterprises Developement Act, 2006.

SCHEDULE L : PROVISIONS(i) Provision for Employee Benefits 11,43,00,000 10,39,93,700

(ii) Provision for Taxation (Net of Advance) 1,75,66,659 4,23,73,446

(iii) Provision for Fringe Benefit Tax – 44,75,000

(iv) Proposed Dividend 11,49,50,000 10,45,00,000

(v) Corporate Dividend Tax 1,90,91,816 1,77,59,775

26,59,08,475 27,31,01,921

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT

Previous yearRupees Rupees

SCHEDULE 1 : SALE OF PRODUCTS AND SERVICES

(a) Sale of Products (including Excise Duty recovered) 836,68,16,983 710,11,40,191

(b) Income from Services 16,56,74,590 16,28,05,183

(c) Other Operating Income 8,89,13,483 5,88,14,271

862,14,05,056 732,27,59,645

SCHEDULE 2 : OTHER INCOME

(a) Interest on Advances and Deposits (Gross)(Tax deducted at source - Rs.8,51,603; Previous year : Rs.33,69,135) 97,76,810 1,51,19,290

(b) Income from Investments (Gross)

(i) Trade Investments – 5,61,000

(ii) Other Investments 17,64,790 10,35,895

(c) Profit on sale of assets 1,01,98,946 772,229

(d) Credit Balances / Provisions no longer required written back (Net) 1,23,16,233 1,79,78,358

(e) Provision for Doubtful Debts no longer required written back 1,62,75,772 –

5,03,32,551 3,54,66,772

38


SCHEDULE FORMING PART OF PROFIT AND LOSS ACCOUNT

Previous yearRupees Rupees Rupees

SCHEDULE 3 : MANUFACTURING AND OTHER EXPENSES1. Purchase of Traded Products 184,22,12,857 143,55,50,0072. Raw Materials Consumed

Opening Stock 53,86,16,726 32,00,00,068Add : Purchases 290,09,87,505 259,82,79,413

343,96,04,231 291,82,79,481Less : Closing Stock 47,87,58,388 53,86,16,726

296,08,45,843 237,96,62,7553. Payments to and Provision for Employees

(a) Wages,Salaries and Bonus 41,49,47,259 31,66,62,865(b) Contribution to Provident & Other Funds 6,20,03,648 4,76,48,319(c) Workmen and staff welfare expenses 3,07,72,929 5,84,71,159

50,77,23,836 42,27,82,3434. Operation and Other Expenses

(a) Stores & Spares consumed 13,69,67,304 13,07,71,628(b) Fuel consumed 85,74,20,123 71,73,34,677(c) Purchase of power 12,38,85,667 11,61,15,418(d) Repairs to buildings 5,54,21,135 4,17,84,771(e) Repairs to machinery 15,25,71,872 13,01,97,469(f) Refractories management Expenses 7,58,88,735 7,28,00,836(g) Conversion Charges 1,63,98,778 1,59,33,065(h) Rent 1,15,80,727 88,74,172(i) Royalty 11,47,249 13,04,679(j) Rates and Taxes 17,89,702 34,09,909(k) Insurance 18,66,624 20,48,131(l) Commission and discounts 9,89,21,149 7,35,98,577(m) Provision for Doubtful Debts & Advances 1,97,477 14,60,788(n) Provision for Wealth Tax 95,000 1,39,092(o) Other Expenses 20,81,00,458 20,59,82,207

174,22,52,000 152,17,55,4195. Freight and Handling Charges 29,09,54,340 27,31,70,6536. Excise Duty (Net) 2,36,23,943 68,70,2157. (Increase)/Decrease in Stock of

Finished and Semi-Finished Products(a) Closing Stock Work - in - progress 15,24,49,118 15,41,12,093

Finished products 47,12,81,571 46,14,57,02062,37,30,689 61,55,69,113

(b) Less: Opening Stock Work - in - progress 15,41,12,093 13,47,68,145Finished products 46,14,57,020 39,66,26,368

61,55,69,113 53,13,94,513(81,61,576) (8,41,74,600)

735,94,51,243 595,56,16,792NOTES ON SCHEDULE 3MANUFACTURING AND OTHER EXPENSESItem No. 4(a) – Stores & spares consumed - Rs. 13,69,67,304 is exclusive of Rs. 17,59,30,884 (Previous Year : Rs.15,51,80,621) charged to

Repairs to buildings and Repairs to machinery and other accounts.Item No. 4(d) – Repairs to buildings - Rs. 5,54,21,135 is exclusive of Rs. 6,72,475 (Previous Year : Rs. 6,21,456) charged to wages, salaries

and other revenue accounts.Item No. 4(e) – Repairs to machinery - Rs. 15,25,71,872 is exclusive of Rs.4,03,82,933 (Previous Year : Rs.3,66,06,201) charged to wages,

salaries and other revenue accounts.Previous Year

Item No. 4(l) – Commission and discount include :- Rupees Rupeesi) Commission paid to selling agents 9,14,61,009 6,38,54,505ii) Discounts 74,60,140 97,44,072

Item No. 4(o) – Includes :a) Fees and out-of-pocket expenses paid to Auditors are as follows :

i) Services as Auditors ( including for audit in terms of Section 44 AB ofthe Income Tax Act, 1961 Rs.1,37,875; Previous Year Rs.1,40,450) 12,54,662 14,11,433

ii) Fees for other Services 4,41,200 19,102iii) Travelling and out-of pocket expenses 118,569 65,539

39

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNTPrevious year

Rupees RupeesSCHEDULE 4 : INTEREST

a) Fixed Loans 5,59,88,971 7,81,76,586

b) Other Loans 5,30,02,368 9,26,25,437

10,89,91,339 17,08,02,023

SCHEDULE - 5

NOTES ON THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. ACCOUNTING POLICIES :

Accounts are maintained under the mercantile system of accounting, adopting historical cost convention.The significant accounting policies are :

(i) Revenues :

a) Sales comprise of sale of goods & services, net of trade discounts and include exchangedifferences arising on sales transactions.

b) Export incentives under the Duty Entitlement Pass Book Scheme are recognised on the basis ofcredits afforded in the pass book.

c) Bonus claims, linked to operating efficiency of products, are recognised upon crystallisation.

(ii) Claims :

Claims on underwriters/ carriers towards losses/ damages are accounted when there is a certaintythat the claim are realisable.

(iii) Research and Development :

Revenue expenditure on Research and Development (R&D) is charged as expenditure of the year inwhich it is incurred. Capital expenditure on R&D is treated as an addition to fixed assets.

(iv) Retirement Benefits :

a) Contribution to Provident Fund and Superannuation Fund (applicable to Officers only) is madeat a predetermined rate to the Provident Fund Trust / Superannuation Fund Trust and charged tothe Profit and Loss Account on accrual basis.

b) Provision for gratuity liability, accrued leave salary due to employees, post retirement medicalbenefit and sick leave salary are made on the basis of actuarial valuation. Pensions to ex-managing directors are made on discounted value.

(v) Employee Separation Scheme :

Compensation to employees who have opted for retirement under the Friendly Departure Scheme of theCompany is charged off in the year in which the employee is relieved from the services of the Company.

(vi) Fixed Assets :

Fixed assets are valued at cost less depreciation.

(vii) Borrowing Costs :

Borrowing costs attributable to the acquisition of fixed assets and incurred up to the point of installation/ commissioning of the assets are added to the cost of the respective assets.

(viii) Depreciation :

Depreciation is provided under the straight line method, applying the rates specified in Schedule XIVof the Companies Act.,1956, or based on the estimated life, whichever is higher. With effect fromApril 1, 2008, assets individually costing upto Rs.25000/- are fully depreciated in the year ofacquisition. The estimated useful life of Motor Cars, Furniture & Fixtures, Fans, Air Conditioners,Refrigerators and Office Equipments is 5 years.

40


(ix) Impairment of Assets :

Impairment is recognized to the extent that the recoverable amount of the assets of a cash generatingunit is lower than it’s carrying amount; such impairment being charged to the profit and loss accountin the year in which the impairment occurs.

(x) Foreign Exchange Transactions :

Foreign currency transactions and forward exchange contracts used to hedge foreign currencytransactions are initially recognised at the spot rate on the date of the transaction/ contract.

Monetary assets and liabilities relating to foreign currency transactions and forward exchangecontracts, remaining unsettled at the end of the year, are translated at the year end rates.

The differences in transactions and realised gains and losses on foreign exchange transactions, arerecognised in the Profit and Loss Account. Further, in respect of transactions covered by forwardexchange contracts, the difference between the contract rate and the spot rate on the date of thetransaction is recognised in the Profit and Loss Account over the period of the contract.

(xi) Investments :

Investments, being long term investments, are valued at cost less provision for permanent diminutionin the value of such investments.

(xii) Inventories :

Raw Materials are carried at lower of cost and net realisable value.

Purchased Raw Materials in transit are carried at cost.

Stores and spare parts are valued at or below cost.

Semi Finished products and Finished products are valued at lower of cost or net realisable value.

Cost of inventories is generally ascertained on the ‘weighted average’ basis. Finished and semi-finished products are valued on full absorption cost basis.

(xiii) Deferred Tax :

Deferred Tax is accounted for by computing the tax effect of timing differences which arise in oneyear and reverse in subsequent periods. Deferred tax assets are recognized only to the extent thatthere is a reasonable or virtual certainity,as the case may be, that they will be realised in future.Deferred tax assets are reviewed at each balance sheet date for the appropriateness of their respectivecarrying values.

2. CONTINGENT LIABILITIES

a) Contingent Liability in respect of sales tax, income tax, excise duty and service tax, demanded butcontended as not due and, therefore, not provided in accounts - Rs.469.95 Lakhs (Previous Year :Rs.469.95 lakhs), Nil (Previous Year: Nil), Rs.15.00 lakhs (Previous Year : Rs:15.00 lakhs) and Nil(Previous Year : Nil) respectively.

b) Guarantees amounting to Rs.2584.92 Lakhs (Previous Year: Rs.2343.43 Lakhs).

c) Bills Discounted Rs.3120.02 Lakhs (Previous Year: Rs.1669.81 Lakhs)

d) Other claims not acknowledged as debts - Rs.115.91 Lakhs (Previous Year: Rs. 113.91 Lakhs).

3. The Company has given a letter of comfort to HSBC Bank, Dalian Branch and State Bank Of India, ShanghaiBranch, that it would continue to maintain its 88% ownership in TRL Asia Private Limited, a companyregistered in Singapore, who would continue to hold 100% share in TRL China Limited.

4. Estimated amount of contracts remaining to be executed on Capital Account and not provided for -Rs. 245.95 Lakhs (Previous Year : Rs.274.29 Lakhs ).

5. The amount payable within one year under the Friendly Departure scheme aggregates Rs.163.03 Lakhs(Previous Year : Rs.223.48 Lakhs).

6. Raw material consumption, sale of products and other expenses includes exchange difference relating toPurchases, Sales and Commission Rs.393.65 Lakhs (Gain), (Previous Year : Rs.21.85 Lakhs (Loss)Rs.141.37 Lakhs (Loss), (Previous Year : Rs.286.44 Lakhs (Gain) and Rs.30.45 Lakhs (Gain), (PreviousYear : Rs.14.62 Lakhs (Loss)), respectively.

41

7. For the purpose of reporting in compliance with Accounting Standard-17, issued by the Institute of CharteredAccountants Of India on segment reporting, the business segment has been considered as the primarysegment and the geographic segment has been considered as the secondary segment. Refractoriessegment being the only business segment, necessary information has already been given in the BalanceSheet and Profit and Loss Account. The Company has two geographic segments; domestic and exportsa les . Revenue f rom geograph ic segments based on locat ion o f cus tomers is - domest ic :Rs.73471.27Lakhs (Previous Year : Rs 62919.43 Lakhs) and rest of the world : Rs.12742.78 Lakhs(Previous Year : Rs.10308.17 Lakhs); Total - Rs.86214.05 lakhs (Previous Year : Rs.73227.60 Lakhs).

8. Manufacturing and Other Expenses and depreciation shown in the Profit & Loss Account includes Rs.274.46Lakhs (Previous Year : Rs.269.81 Lakhs) and Rs.42.85 Lakhs (Previous Year : Rs. 41.18 Lakhs),respectively, in respect of Research & Development activities undertaken during the year.

9. (A) Managerial Remuneration : Previous Year

For Managing Director, other Whole-time Director and Rs. Lakhs Rs. LakhsNon-Whole-time Directors.

Salaries 26.16 44.40

Commission 67.00 95.00

Company’s contribution to Provident and Superannuation Funds 7.06 11.99

Perquisites (*) 52.92 28.95

Sitting Fees 17.25 12.30

170.39 192.64

(*) Excludes contribution to Gratuity Fund as separate figures arenot available, the Company having contributed on a group basis.

(B) Computation of Net Profit in accordance with Section 198 andsection 309(5) of the Companies Act, 1956Profit before taxes 5,968.13 5,389.95

Add: (a) Managerial remuneration and Directors’ fees 170.39 192.64

(b) Provision for doubtful debts and advances 1.97 14.61

(c) (Profit) / Loss on assets sold or discarded (101.98) (7.72)

6,038.51 5,589.48

Deduct : (a) Profit on sale of Investments — —

(b) Provision for Bad debts and Advances Written Back 162.76 10.38

5,875.75 5,579.10

Commission :

(a) Whole Time Directors 32.00 65.00

(b) Non Whole Time Directors - 1% of the Net Profit Rs. 5875.75 Lakhs(Previous Year : Rs. 5579.10 Lakhs) restricted to 35.00 30.00

10. Detailed quantitative information in respect of goodsmanufactured (Refractories) during the year:

Tonnes Tonnes(a) Licensed Capacity Not Applicable Not Applicable

(b) Licensed Capacity Installed Capacity per annum (as certified by theManagement and accepted by the Auditors) 2,50,760 2,45,200

(c) Actual Production (exclusive of internal consumption of : 1375 tonnes)(Previous Year : 2508 tonnes) 2,51,959 2,08,168

i) Including conversion by third parties in to Finished Goods for sale.

ii) Including semi- finished of 353 tonnes meant for sale.

iii) including 15181 tonnes of purchased refractories reprocessed.(Previous Year : 3138 tonnes)

42


11. Turnover, Opening and Closing Stock :

Class of products Turnover Closing Stock Opening StockQty (MT) Rs. Lakhs Qty (MT) Rs. Lakhs Qty (MT) Rs. Lakhs

(1) Refractories(Exclusive of Internal 248774 68,002.46 16418 3,926.80 13233 3,129.22consumption) (208049) (56,837.29) (13233) (3,129.22) (13114) (2530.99)

(2) Purchased materials(a) Refractories 71,625 15,558.74 1,837 809.77 3284 1485.00

(50727) (13,969.46) (3284) (1,485.35) (3246) (1435.28)(b) Raw materials 106.97

(204.65)Total 83,668.17 4,736.57 4,614.22

(71,011.40) (4,614.57) (3,966.27)

Previous Year12. Raw Materials consumed: Qty (MT) Rs. Lakhs Qty (MT) Rs. Lakhs

(i) Magnesite 29,166 7542.54 25,351 5,091.10 (ii) Calcined Bauxite 14,665 2934.54 17,149 2,757.92 (iii) Fireclay 50,965 697.26 44,268 611.62 (iv) Quartzite 46,437 1026.44 42,171 864.69 (v) Fused Alumina 8,218 3073.53 4,209 1,463.76 (vi) Andalusite 3,955 919.91 4,057 793.08 (vii) Raw Dolomite 146,299 1845.36 98,550 1,477.14 (viii) Resin 368 337.99 342 346.52

(ix) Tabular Alumina 3,992 1708.73 5,158 2428.24 (x) Others – 9522.16 – 7,962.56

29,608.46 23,796.63

13. Value of Imports (CIF Value): Rs. Lakhs Rs. Lakhs(i) Raw Materials 9306.16 8843.05

(ii) Finished/ Semi Finished Products 8578.85 6219.71 (iii) Components and Spares 118.41 117.15 (iv) Capital Goods 115.14 422.14

Total 18118.55 15602.05

14. Value of consumption of directly Imported andIndigenously obtained Raw Materials, Stores Raw Materials Stores, spare partsand Spare parts and the percentage of each & componentsto the total consumption : Rs.Lakhs % Rs. Lakhs %

(a) Directly Imported 12,182.09 41 118.4 4(9,208.22) (39) (69.71) (2)

(b) Indigenously obtained 17,426.37 59 3,128.97 96(14588.41) (61) (2859.52) (98)

Total : 29,608.46 100 3,247.37 100(23,796.63) (100) (2929.23) (100)

Previous YearRs. Lakhs Rs. Lakhs

15. Earnings in Foreign Exchange:-i) Export of Finished Products (FOB Value) 12,893.32 9,796.83

(net of export claims)ii) Commission 412.39 208.55

16. Expenditure in Foreign Currency :i) Commission 581.57 408.73ii) Foreign branch expenses 44.83 45.84iii) Royalty 11.47 13.05iv) Payable on other accounts 174.02 148.68

Total 811.89 616.30

43

17. Employee Benefits

a) The Company has adopted Accounting Standard (AS) 15 (revised 2005) on Employee Benefits, issued by theInstitute of Chartered Accountants of India, with effect from April 1, 2006. In line with the disclosure requirementsunder the said standard, following are the relevant details with respect to employee benefits:

b) The Company has recognized, in the profit and loss account of the year ended 31.03.2010, an amount ofRs.395.61 lakhs (Previous Year: Rs.351.28 lakhs) expenses under defined contribution plans as given below:

Benefit (Contribution to) Previous YearRs. Lakhs Rs. Lakhs

Provident Fund 172.38 138.51Superannuation Fund 142.39 134.83Employees Pension Scheme 80.84 77.94

Total 395.61 351.28

The Company’s Provident Fund is exempted under section 17 of the Employees’ Provident Fund andMiscellaneous Provisions Act, 1952. Conditions for grant of exemption stipulate that the employershall make good the deficiency, if any, in the interest rate.

c) The company operates post retirement defined benefit plans as follows :a. Funded :

i. Post Retirement Gratuityb. Unfunded :

i. Post Retirement Medical benefitsii. Pensions to Directors

d) Details of the post retirement gratuity plan are as follows :

Description Previous YearRs. Lakhs Rs. Lakhs

1) Reconciliation of opening and closing balances of obligationa. Obligation as at the beginning of the year 1,502.48 1,386.58b. Current Service Cost 72.21 63.81c. Interest Cost 106.41 107.04d. Actuarial (gain)/loss 156.26 42.22e. Benefits paid (204.69) (97.17)f. Obligation as at the end of the year 1,632.67 1,502.48The defined benefit obligation as at the end of the year is whollyfunded by the company.

2) Change in Plan Assets (Reconciliation of opening& closing balances)a. Fair Value of plan assets as at the beginning of the year 1,174.02 939.79b. Expected return on plan assets 100.71 81.04c. Actuarial gain/(loss) 9.74 6.83d. Contributions 374.34 243.53e. Benefits paid (204.69) (97.17)f. Fair Value of plan assets as at the end of the year 1,454.12 1,174.02

3) Reconciliation of fair value of assets and obligations atthe end of the yeara. Fair value of plan assets 1,454.12 1,174.02b. Present value of obligation 1,632.67 1,502.48c. Amount recognised in the balance sheet 178.55 328.46

4) Expense recognized in the yeara. Current service cost 72.21 63.81b. Interest cost 106.41 107.04c. Expected return on plan assets (100.71) (81.04)d. Actuarial (gain)/loss 146.52 35.39e. Expense recognized in the year 224.43 125.20The expense is disclosed in the line item – Payments to & Provisionsfor Employees (Co’s contribution to Provident & other funds)

44


5. Investment DetailsThe full amount has been invested in cash accumulation scheme of Life Insurance Corporation ofIndia.

6. Assumptions 31.03.2010 31.03.2009a. Discount rate (per annum) 8.00% 7.60%b. Estimated rate of return on plan assets (per annum) 9.40% 8.00%c. Rate of escalation in salary (per annum) 5.00% 5.00%

e) Details of unfunded post retirement defined benefit obligations are as follows :Previous Year

Description Rs. Lakhs Rs. LakhsMedical Ex-MD Pension Medical Ex-MD Pension

1. Reconciliation of opening and closingbalances of obligation

a. Obligation as at the beginning of the year 674.62 78.11 436.14 25.08

b. Current Service Cost 10.85 — 6.23 —

c. Interest Cost 50.26 5.23 33.75 —

d. Actuarial (gain)/loss (127.92) 318.58 227.00 16.81

e. Benefits paid (26.63) (18.65) (28.50) (5.04)

f. Obligation as at the end of the year 581.18 383.27 674.62 36.85

2. Expense recognized in the period

a. Current service cost 10.85 — 6.23 —

b. Interest cost 50.26 5.23 33.75 —

c. Actuarial (gain)/loss (127.92) 318.58 227.00 16.81

d. Expense recognized in the year (66.81) 323.81 266.98 16.81

The expense amounting to Medical :Rs.(66.81) lakhs (Previous Year: Rs.266.98lakhs) and Others - Rs.323.81 lakhs (PreviousYear: Rs.16.81 lakhs) are disclosed under theline item - Workmen and Staff WelfareExpenses.

3. Assumptions Medical Medical31.03.2010 31.03.2009

a. Discount rate (per annum) at the beginning of the year 7.60% 8.00%

b. Discount rate (per annum) at the end of the year 8.00% 7.60%

c. Medical costs inflation rate 5.00% 5.00%

d. Average Medical Cost (Rs./person) 963 1076

f. Effect of 1% change in health care cost, on

1% Increase Rs.lakhs Rs. lakhs

— aggregate current service and interest cost 71.56 47.32

— closing balance of obligation 81.38 99.59

1% Decrease

— aggregate current service and interest cost (52.76) (35.00)

— closing balance of obligation (66.92) (81.38)

The estimate of future salary increases, considered in actuarial valuation,takes into account inflation, seniority, promotions and other relevant factors.

45

f) Amounts for the current and previous three years are as follows: Rs/lakhs

(i) Gratuity (Funded) 31.03.10 31.03.09 31.03.08 31.03.07

Defined benefit obligation 1,632.67 1,502.48 1,386.58 1,234.54

Plan assets 1,454.12 1,174.02 939.79 734.95

Surplus / (deficit) (178.55) (328.46) (446.79) (499.59)

Experience adjustments on plan assets 9.74 6.83 4.21 N.A

Experience adjustments on plan liabilities (201.57) (0.63) (61.46) N.A

(ii) Post Retirement Medical Benefits 31.03.10 31.03.09 31.03.08 31.03.07

Defined benefit obligation 581.18 674.62 436.14 368.19

Plan assets — — — —

Surplus / (deficit) (581.18) (674.62) (436.14) (368.19)

Experience adjustments on plan assets — — — N.A

Experience adjustments on plan liabilities 98.07 (193.43) (37.50) N.A

The above information has been certified by the actuary and has been relied upon by the Auditors.

g) Provident Fund

In keeping with the Guidance on implementing Accounting Standard (AS) 15 (Revised) on Employee Benefitsnotified by the Companies (Accounting Standards) Rules, 2006, employer established provident fund trustsare treated as Defined Benefit Plans, since the Company is obliged to meet interest shortfall, if any, withrespect to covered employees. According to the Management, the Actuary has opined that actuarial valuationcan not be applied to reliably measure provident fund liabilities in the absence of guidance from the ActuarySociety of India. Accordingly, the Company is currently not in a position to provide other related disclosuresas required by the aforesaid AS 15 read with the Accounting Standards Board Guidance.

18. Related Party Disclosures

(a) List of Related Parties :

Parties where control exists :

Tata Steel Limited (Holding Company)

Other Related parties with whom transactions have taken place during the year.

Subsidiaries :TRL Asia Private LimitedTRL China Limited

Fellow Subsidiaties :The Indian Steel and Wire Products LimitedNat Steel Asia Pte LimitedTata Metaliks LimitedCorus U. K. LimitedTayo Rolls Limited

Associates :Almora Magnesite LimitedJamipol LimitedTata Sponge & IronTRF Limited

Key Management Personnel :Dr. A. K. Chattopadhyay, Whole Time Director

Relatives of Key Management Personnel :Mrs. Supriya ChatterjeeMs. Poulomi ChatterjeeMs. Rituparna Chatterjee

46


Current Year Previous YearApril’09 to April’08 to

(b) Transactions with Related Parties Mar’10 Mar’09

(I) Purchase of Raw Material and Components Rs. Lakhs Rs. Lakhs

Holding Company : 25.94

Subsidiaries: 4,692.17 5,895.02

Associates : 82.00 138.26

(II) Sales,Services and Other Income

Holding Company : 10,123.22 14,033.46

Fellow Subsidiaries: 1,545.25 980.08

Associates : 428.21 219.04

Subsidiaries : 687.53 154.93

(III) Receiving of services from

Holding Company : 30.42 29.33

Fellow Subsidiaries : – –

(IV) Rendering of Services to

Holding Company : 336.00 –


(V) Dividend paid for the year 2008-09


(VI) Dividend received for the year 2008-09

Fellow Subsidiaries: – –


(VII) Outstanding balances as at 31st Mar 2010

Debtors

Holding Company : 878.97 1,209.26


Fellow Subsidiaries : 437.49 54.74


(VIII) Loans and Advances Given


Associates : – –

(IX) Provision for doubtful debts and advances

Fellow Subsidiaries: – –

Associates : – –

(X) Advance from Customer


Fellow Subsidiaries – –

(XI) Creditors


Subsidiaries: 588.03 458.06

Associates : 12.60 –

(XII) Remuneration to Managing and whole time Director as per note no. 10(A) to Schedule-5.

(XIII)Fixed Deposit received from relatives of key management personnel-Nil (Previous Year: Rs.1.54lakhs) and interest thereon-Nil (Previous Year: Rs 0.15 lakhs).

47

20. Earnings per Share (EPS)

EPS is calculated by dividing the profit attributable to the equity shareholders by the average number of sharesoutstanding during the year. The basic and diluted earings per share has been calculated below :

Current Year Previous YearApril’09 to April’08 to

Mar’10 Mar’09

a) Profit after Tax (in lakhs) Rs 3,846.51 3,444.20

b) Profit attributable to Ordinary Share Holders Rs 3,846.51 3,444.20

c) No of ordinary Shares of Basic EPS (in lakhs) Nos 209.00 209.00

d) Nominal Value per share Rs 10.00 10.00

e) Basic Earning per Ordinary Shares Rs 18.40 16.48

21. Major Components of Deferred Tax Assets and Deferred Tax LiabilitiesPrevious Year

Amount AmountRs. Lakhs Rs. Lakhs

I) Deferred Tax Assets

a) Tax on expenditure allowed on payment basis U/S 43B of theIncome Tax Act 1961.(“the Act”) 345.51 610.32

b) In respect of unpaid royalty U/s 40(a) of the Act. 1.08 1.48

c) In respect of provision for doubtful debts andadvances U/s 36(2) of the Act 16.05 70.71

d) Tax on difference between the amount charged in the booksin respect of Early Retirement Compensation and thededuction allowed in respect thereof under the Act. 135.66 224.46

498.30 906.97

II) Deferred Tax Liabilities

On the timing Difference between Book Depreciation andIncome Tax Depreciation 2,161.34 2,264.92

Net deferred tax liability 1,663.04 1,357.95

22. Figures in respect of the previous year have been recast to correspond to groupings of current year.





48






BALANCE SHEET ABSTRACT ON COMPANY’S GENERAL BUSINESS PROFILE1. Registration Details :

Registration No. : 349/8

State Code : 15

Balance Sheet Date : 31st March, 2010

Rupees2. Capital Raised during the year :

Public issue : NILRights issue : NILBonus issue : NILPrivate Placement : NIL

3. Position of Mobilisation and Deployment of Funds :Total Liabilities : 379,47,15,218Total Assets : 379,47,15,218

Sources of Funds :Paid-up Capital : 2,09,00,000Reserves & Surplus : 227,24,06,850Secured Loans : 66,48,23,421Unsecured Loans : 43,89,53,678Deferred Tax Liabilities : 16,63,04,080Other Liabilities : 4,32,27,189

Application of Funds:Net Fixed Assets : 180,58,78,308Investments : 33,89,34,595Net Current Assets : 164,99,02,315Misc. Expenditure : —Accumulated Losses : —

4. Performance of Company :Turnover : 8,67,17,37,607Total Expenditure : 7,64,94,62,023Profit before Tax : 59,68,13,482Profit after Tax : 38,46,51,271Earning Per Share in Rs. : 18.40Dividend Rate % : 55

5. Generic Names of Three Principal Products of Company :

a) Item Code No. : 69021004Product Description : Bricks & Shapes, Magnesia Carbon

b) Item Code No. : 69039004Product Description : Monolithics/Castables (Fireclay, Basic,

Silica, High Alumina, Insulating)

c) Item Code No. : 69022002Product Description : Bricks & Shapes, High Alumina

49

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956,RELATED TO SUBSIDIARY COMPANIES

Name of the Subsidiary TRL Asia Pvt. Ltd. TRL China Ltd.

1. Financial year of the subsidiary ended on 31st March 2010 31st March 2010 (a)

2. Shares of the subsidiary held by the Company on the above date

(a) Number 11,434,254 64,963,552(11,434,254) (64,963,552)

Face value Shares ofSG$1.00 each

(b) Extent of holding 88% 100% (b)(88%) (100%)

3. Net aggregate amount of profits/(losses) of the subsidiary for theabove financial year of the subsidiary so far as they concern membersof the Company :

(a) dealt with in the accounts of the Company for the year ended31st March 2010 Nil Nil

(Nil) (Nil)

(b) not dealt with in the accounts of the Company for the year ended31st March 2010 SG$ (14546) Nil

Rs. (4.77) Lakhs (d)SG$ 3143

Rs. 0.98 Lakhs (Nil)

4. Net aggregate amount of profits/ (losses) for previous years ofsubsidiary, since it became a subsidiary so far as they concernmembers of the Company :

(a) dealt with in the accounts of the Company for the year ended31st March 2010 Nil Nil

(Nil) (Nil)

(b) not dealt with in the accounts of the Company for the year ended31st March 2010 SG$ (27724) Nil

Rs. (9.08) Lakhs (d)SG$ (30868)

Rs. (9.63) Lakhs (Nil)

(a) Though the finanacial year of the Company ends on 31.12.09, for the purpose of reporting under section 212 of the CompaniesAct , 1956 the audited accounts for the year ended 31.03.10 has been considered.

(b) TRL China Limited is the Wholly Owned Foreign Enterprise (WOFE) of the TRL Asia Private Ltd. which itself is a subsidiary ofthe Company. TRL China Ltd. became a subsidiary of the Company by virtue of the provisions of Section 4(1) (c) of theCompanies Act, 1956

(c) The amounts shown under 3(b) and 4(b) above represent the net aggregate amounts of (losses) of the subsidiary attributableto the direct holdings of the Company in them.

(d) Converted at the average exchange of SG $ 1 = Rs.32.7697 as on 31st March 2010 (Previous Year SG $ 1 = Rs.31.2112 on31st March 2009.

(e) As per the Articles of Association of TRL China Ltd, registered capital of the company is 8.2 million USD without any referenceto number of shares which has been fully subscribed by TRL Asia Pvt. Ltd.

(f) Figures in italics are in respect of the previous year.

For and on behalf of the Board

J. J. Irani Chairman


Kolkata, May 13, 2010 A. Debta Company Secretary

50


REPORT OF THE DIRECTORS

The directors present their report together with the audited financial statements of the company for the financial year ended March 31, 2010.

1 DIRECTORS

The directors of the company in office at the date of this report are:

Aniruddha Banerjee

Arup Kumar Chattopadhyay (Appointed on April 27, 2009)

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enablethe directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other bodycorporate.

3 DIRECTORS’ INTEREST IN SHARES OR DEBENTURES

The directors of the company holding office at the end of the financial year had no interests in the share capital and debentures of thecompany and related corporations as recorded in the register of directors’ shareholdings kept by the company under Section 164 of theSingapore Companies Act except for Mr Aniruddha Banerjee who holds 180 Ordinary shares at Rupees 10 each of Tata Steel Limited and134 Cumulative Convertible Preference shares at Rupees 100 each of Tata Steel Limited at the beginning of year and end of year.

4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosedunder Section 201(8) of the Singapore Companies Act, by reason of a contract made by the company or a related corporation with thedirector or with a firm of which he is a member, or with a company in which he has a substantial financial interest. The directors receivedremuneration from related corporations in their capacity as directors and/or executives of those related corporations.

5 SHARE OPTIONS

(a) Options to take up unissued sharesDuring the financial year, no options to take up unissued shares of the company were granted.

(b) Options exercisedDuring the financial year, there were no shares of the company issued by virtue of the exercise of options to take up unissued shares.

(c) Unissued shares under optionsAt the end of the financial year, there were no unissued shares of the company under options.

6 AUDITORS

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

(Aniruddha Banerjee)

(Arup Kumar Chattopadhyay)

Date: May 19, 2010

TRL ASIA PRIVATE LIMITED(Incorporated in Singapore)

51

STATEMENT BY DIRECTORSIn the opinion of the directors, the financial statements of the company as set out on pages 6 to 19 are drawn up so as to give a true and fair viewof the state of affairs of the company as at March 31, 2010 and of the results, changes in equity and cash flows of the company for the financialyear then ended and at the date of this statement, there are reasonable grounds to believe that the company will be able to pay its debts when theyfall due.

Aniruddha Banerjee

Arup Kumar Chattopadhyay

Date: May 19, 2010

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TRL ASIA PTE LIMITED

We have audited the financial statements of TRL Asia Pte Ltd which comprise the statement of financial position of the company as at March 31, 2010,statement of comprehensive income, statement of changes in equity and statement of cash flows of the company for the year then ended, and a summaryof significant accounting policies and other explanatory notes, as set out on pages 6 to 19.The financial statements for the financial year ended March 31, 2009 were audited by another auditor whose report dated May 7, 2009 expressed anunqualified opinion on those financial statements.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the SingaporeCompanies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system ofinternal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; andtransactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balancesheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonablein the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standardson Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether thefinancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion,(a) the accompanying financial statements of the company are properly drawn up in accordance with the provisions of the Act and Singapore Financial

Reporting Standards so as to give a true and fair view of the state of affairs as at March 31, 2010 and of the results, changes in equity and cash flowsfor the year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the company have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche LLPPublic Accountants andCertified Public Accountants

Singapore

Date: May 19, 2010


52


STATEMENT OF COMPREHENSIVE INCOMEYEAR ENDED MARCH 31, 2010

(Restated)2010 2010 2009 2009

NOTE RMB Rs. * RMB Rs. **

Interest Income 130 857 1,512 9,891

Administrative expenses 42,770 2,81,927 42,274 2,76,552

Loss before income tax (42,640) (2,81,070) (40,762) (2,66,661)

Income tax expenses 11 — — — —

Loss for the year, representing totalcomprehensive expense for the year 12 (42,640) (2,81,070) (40,762) (2,66,661)

STATEMENT OF FINANCIAL POSITION

MARCH 31, 2010

(Restated)2010 2010 2009 2009

NOTE RMB Rs. * RMB Rs. **

ASSETS

Current asset

Bank balances 7 443,696 29,24,711 466,656 30,52,817

Non-current assets

Investment in subsidiary 8 64,963,552 42 ,82,20,246 64,963,552 42 ,49,85,061

Total assets 65,407,248 43 ,11,44,957 65,430,208 42 ,80,37,878

LIABILITY AND EQUITY

Current liability

Other payables 9 39,005 2,57,110 19,325 1,26,423

Capital and accumulated losses

Share capital 10 65,852,333 43,40,78,823 65,852,333 43,07,99,377

Accumulated Loss (484,090) (31,90,976) (441,450) (28,87,922)

Total equity 65,368,243 43,08,87,847 65,410,883 42,79,11,455

Total liability and equity 65,407,248 43 ,11,44,957 65,430,208 42 ,80,37,878

* The rupee equivalent of RMB has been given at the exchange rate as on 31st March, 2010 (RMB 1.00 = Rs.6.5917)

** The rupee equivalent of RMB has been given at the exchange rate as on 31st March, 2009 (RMB 1.00 = Rs.6.5419)


53

STATEMENT OF CHANGES IN EQUITYYEAR ENDED MARCH 31, 2010

Share Accumulated Share AccumulatedCapital Loss Total Capital Loss Total

RMB RMB RMB Rs. * Rs. * Rs. *

Balance at April 1, 2008 65,852,333 (400,688) 65,451,645 43,40,78,823 (26,41,215) 43,14,37,608(Restated)

Total comprehensive expense — (40,762) (40,762) — (2,68,691) (2,68,691)

for the year (Restated)

Balance at March 31, 2009 65,852,333 (441,450) 65,410,883 43,40,78,823 (29,09,906) 43,11,68,917(Restated)

Total comprehensive expensefor the year — (42,640) (42,640) — (2,81,070) (2,81,070)

Balance at March 31, 2010 65,852,333 (484,090) 65,368,243 43,40,78,823 (31,90,976) 43,08,87,847

STATEMENT OF CASH FLOWS

YEAR ENDED MARCH 31, 2010

2010 2010 2009 2009RMB Rs. * RMB Rs. **

Operating activities

Loss before income tax, representingcash flows before movements in working capital (42,640) (2,81,070) (40,762) (2,66,661)

Other payables 19,680 1,29,725 2,540 16,616

Cash used in opeartions,representing net cash used in operating activities (22,960) (1,51,345) (38,222) (2,50,045)

Net decrease in cash and bank balances (22,960) (1,51,345) (38,222) (2,50,045)

Bank balances at beginning of year 466,656 30,76,056 504,878 33,02,862

Bank balances at end of year 443,696 29,24,711 466,656 30,52,817




54


NOTES TO THE FINANCIAL STATEMENTSMARCH 31, 2010

1 GENERALThe company (Registration No. 200515287D) is incorporated in the Republic of Singapore with its principal place of business and registered office at22 Tanjong Kling Road, Singapore 628048. The financial statements are expressed in Chinese Renmibi (“RMB”).The principal activity of the company is that of a holding company.The principal activity of its subsidiary is disclosed in Note 8 to the financial statements.The financial statements of the company for the year ended March 31, 2010 were authorised for issue by the Board of Directors on 19 May, 2010.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING – The financial statements have been prepared in accordance with the historical cost basis, except as disclosed in theaccounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial ReportingStandards (“FRS”).The accounting policies adopted are consistent with those followed in the preparation of the company’s financial statements for the financial yearended March 31, 2009, except as disclosed below:

Restatement of functional currencyPrior to April 1, 2009, the financial statements had been prepared and presented in Singapoe dollars.FRS 21 The Effects of Changes in Foreign Exchange Rates requires an entity to determine its functional currency taking into consideration theprimary economic environment in which the company operates. The management has re-assessed and determined that the functional currencyshould be Chinese Renminbi. Consequently, prior year’s results had been restated.ADOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the company has adopted all the new and revised FRSs andInterpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after April 1, 2009. The adoptionof these new/revised FRSs and INT FRSs disclosed below does not result in changes to the company’s accounting policies and has no material effecton the amounts reported for the current or prior years.

FRS 1 – Presentation of Financial Statements (Revised)The revised standard has introduced terminology changes (including revised titles for the financial statements) and changes in the format and contentof the financial statements. In addition, the revised standard requires the presentation of a third statement of financial position at the beginning of theearliest comparative period presented if the company applies new accounting policies retrospectively or make retrospective restatements or reclassifiesitems in the financial statements.

Amendments to FRS 107 Financial Instruments: Disclosures - Improving Disclosures about Financial InstrumentsThe amendments to FRS 107 expand the disclosures required in respect of fair value measurements and liquidity risk.At the date of authorisation of these financial statements, there were FRSs, INT FRSs and amendments to FRSs which were issued but not effective.Management anticipates that the adoption of these FRSs, INT FRSs in future periods will not have a material impact on the financial statements of thecompany in the period of their initial adoption.BASIS OF CONSOLIDATION – One set of consolidated financial statements of the company and its subsidiary has not been prepared as the companyis a wholly-owned subsidiary of another company. Consolidated financial statements which are available for public use, are prepared by its ultimateholding company, Tata Steel Limited, incorporated in India, whose registered address is Bombay House, 24 Homi Mody Street, Mumbai 400001,India.SUBSIDIARY – A subsidiary is an enterprise which the company, directly or indirectly, holds more than half of the issued share capital, or controlsmore than half of the voting power, or where the company controls the composition of its board of directors or equivalent governing body. Investmentin subsidiary is carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on the company’s statement of financial position when thecompany becomes a party to the contractual provisions of the instrument.

Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense overthe relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected lifeof the financial instrument, or where appropriate, a shorter period.

Financial assetsBank balancesBank balances comprise cash at bank that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes invalue.


55

Derecognition of financial assetsThe company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial assetand substantially all the risks and rewards of ownership of the asset to another entity. If the company neither transfers nor retains substantially all therisks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and anassociated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financialasset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instrumentsClassification as debt or equityFinancial liabilities and equity instruments issued by the company are classified according to the substance of the contractual arrangements enteredinto and the definitions of a financial liability and an equity instrument.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instru-ments are recorded at the proceeds received, net of direct issue costs.

Financial liabilitiesOther payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effectiveinterest method, with interest expense recognised on an effective yield basis except for short-term payables when the recognition of interest would beimmaterial.

Derecognition of financial liabilitiesThe company derecognises financial liabilities when, and only when, the company’s obligations are discharged, cancelled or they expire.IMPAIRMENT OF ASSETS – At the end of each reporting period, the company reviews the carrying amounts of its assets to determine whether thereis any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimatedin order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, thecompany estimates the recoverable amount of the cash-generating unit to which the asset belongs.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset for which the estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of itsrecoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately inprofit or loss.PROVISIONS - Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probablethat the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reportingperiod, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated tosettle the present obligation, its carrying amount is the present value of those cash flows.INTEREST INCOME - Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensiveincome because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxableor tax deductible. The company’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enactedby the end of the reporting period.Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding taxbases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generallyrecognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will beavailable against which deductible temporary differences can be utilised.The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the taxrates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities andwhen they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a netbasis.


56


Current and deferred tax are recognised as an expense or income in profit or loss.FOREIGN CURRENCY TRANSACTIONS - The financial statements of the company is measured and presented in the currency of the primaryeconomic environment in which the entity operates (i.e. its functional currency) which is Renminbi.Transactions in currencies other than the company’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction.At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the end of thereporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYIn the application of the company’s accounting policies, which are described in Note 2, management is required to make judgement, estimates andassumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associatedassumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period inwhich the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects bothcurrent and future periods.i) Critical judgements in applying the company’s accounting policies

Management is of the opinion that any instances of application of judgements are not expected to have a significant effect on the amountsrecognised in the financial statements.

ii) Key sources of estimation uncertaintyThe key assumptions concerning the future, and other key sources of estimation uncertainty at the end of reporting period, that have a significantrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is discussed below.

Investment in subsidiaryAn investment in subsidiary is stated at cost less impairment loss. The Company follows the guidance of FRS 36 Impairment of Assets to determinewhen its investment in the subsidiary is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates,among other factors, the market and economic environment in which the subsidiary operates and economic performance of the entity, the durationand extent to which the cost of investment in the entity exceed its net tangible assets values and fair value of investment less cost to sell.The Company had considered and assessed the value of its investment and satisfied that no impairment is necessary.If the performance of the subsidiary and/or market conditions were to deteriorate which will affect the Company’s investment in the subsidiary,impairment may be required.

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT(a) Categories of financial instruments

The table below shows sets out the financial instruments as at the end of the reporting period:2010 2009RMB RMB

(Restated)Financial assetsBank balances 443,696 466,656

Financial liabilitiesAmortised cost 39,005 19,325

(b) Financial risk management policies and objectives(i) Foreign exchange risk

The company transacts business and conducts its operations mainly in Singapore dollars and United States dollars. As at yearend, the carrying amounts of monetary assets denominated in currencies other than Renminbi are as below.

Assets Liabilities

2010 2009 2010 2009RMB RMB RMB RMB

(Restated) (Restated)

United States dollars 423,857 458,975 – –Singapore dollars 19,839 7,681 39,005 19,325


57

Foreign currency sensitivityThe management has assessed that if the respective currencies were to strengthen/weaken by 10% against the Renminbi, assuming allother variables remain constant, the company’s loss will decrease/increase by RMB40,469 (2009 : RMB44,733).

(ii) Interest rate riskThe company exposure to interest rate risk is minimal as the company does not have any significant interest earning asset or interestbearing liability.

(iii) Credit riskCredit risk is the risk that counterparty will default on its contractual obligations resulting in a financial loss to the company. Credit risk isminimal as the company places its cash balances with creditworthy financial institutions.

(iv) Liquidity riskLiquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company maintainssufficient cash and cash equivalents, and internally generated cash flows to finance its activities.The company’s financial assets and liabilities are non-derivative in nature, non-interest bearing and are due on demand or within a year.

(v) Fair value of financial assets and financial liabilitiesThe carrying amounts of cash and bank balances and other payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments.The company had no financial assets or liabilities carried at fair value in 2009 and 2010.

(c) Capital risk management policies and objectivesThe company manages its capital to ensure that the company will be able to continue as a going concern. The capital structure of the companyconsists of issued capital and accumulated losses. The company’s overall strategy remains unchanged from prior year.

5 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONSThe company’s immediate holding company is Tata Refractories Ltd, a company incorporated in India. The company’s ultimate holding company isTata Steel Limited, a company incorporated in India.Related companies in these financial statements refer to members of the ultimate holding company’s group of companies. Related party in thesefinancial statements is an entity with common direct or indirect shareholders and/or directors.There were no transactions and arrangements between members of the group during the financial year.

6 RELATED PARTY TRANSACTIONSRelated parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has theability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Compensation of directors and key management personnelThere are no key managerial personnel other than the directors of the company. These directors are paid remuneration by related company for theircapacity as executive of the related company.

7 BANK BALANCESSignificant bank balances that are not denominated in the Renminbi are as follows:

2010 2009RMB RMB

(Restated)United States dollars 423,857 458,975Singapore dollars 19,839 7,681

8 INVESTMENT IN SUBSIDIARY2010 2009RMB RMB

(Restated)Unquoted equity shares, at cost 64,963,552 64,963,552

Details of the company’s subsidiary as at the end of the reporting period are as follows:Country of

incorporation/ PercentageName of subsidiary Principal activities Place of business of equity held

2010 2009% %

TRL China Ltd Produces refractories and China 100 100conduct other business


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9 OTHER PAYABLESOther payables mainly comprise of on-going operating costs and are denominated in Singapore dollars.

10 SHARE CAPITAL 2010 2009 2010 2009Number of ordinary shares RMB RMB

Issued and paid up capitalat beginning and end of year 12,993,470 12,993,470 65,852,333 65,852,333

The company has one class of ordinary share which has no par value, carry one vote per share and carry a right to dividends when declaredby the company.

11 INCOME TAXDomestic income tax is calculated at 17% (2009 : 17%) of the estimated assessable loss for the year. The total income tax for the year canbe reconciled to the accounting loss as follows:

2010 2009RMB RMB

(Restated)Loss before tax (42,640) (40,672)

Income tax credit at domestic tax rate (7,249) (6,930)Effect of expenses that are not deductible 7,249 6,930

– –

12 LOSS FOR THE YEARLoss for the year has been arrived at after charging :

2010 2009RMB RMB

(Restated)Foreign exchange adjustment loss 1,655 12,350

There is no staff costs incurred in current year and prior year. The administrative service was performed by the company’s intermediateholding company at no charge.

13 COMPARATIVE FIGURESThe comparative figures have been restated as a consequence of determining that the company functional currency should be ChineseRenminbi.

Previously After reported reclassification

2010 2009SGD RMB

Statement of financial positionCurrent Asset 103,831 466,656Non-current asset 12,862,434 64,963,552Current liability (4,300) (19,325)Total equity (12,961,965) (65,410,883)

Statement of comprehensive incomeProfit (Loss) before income tax 3,572 (40,762)


59

AUDITORS’ REPORT

YING ZHONG KUAI SHEN ZI [2010] No.0191

To the Board of Directors of TRL CHINA LIMITED,

We have audited the attached Balance Sheet of TRL CHINA LIMITED (hereafter the Company) as atMarch 31, 2010 and the Profit and Loss account and the Cash Flows Statement for the period ended on thatdate and Footnotes of the Accounting Statements.

I. The Responsibility of the Company’s Management

It is the responsibility of the Company’s management to follow the Accounting Standard for BusinessEnterprises and ENTERPRISES ACCOUNTING REGULATIONS for preparing the financial statements. Itincludes: 1, Planning, performing and vindicating internal control that is related to the compiling of financialstatements, in order to avoid the material misstatement that is resulted in fraudulent practices or mistakes;2, Selecting and using a proper accounting policy; 3, Working out a reasonable accounting estimate.

II. The Responsibility of the Certified Public Accountant

Our responsibility is to express an audit opinion on these financial statements based on our audit. Weconducted our audits in accordance with the Independent Auditing Rules of Chinese Certified PublicAccountants. Those rules require that we obey the personal ethics, plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement.

An audit includes performing audit procedures, in order to obtain evidence supporting the amounts anddisclosures in the financial statements. The audit procedures we selected, including the risk evaluationof the material misstatement resulted in fraudulent practices or mistakes are laid on the judgment of ourcertified public accountants. We take the internal control that is related to the compiling of financialstatements into account to plan proper audit procedures during the risk evaluation, but it does not meanthat we have any opinions to the internal control. The audits also include the evaluation of the account-ing policy Appropriateness and the accounting estimates rationality that Company’s management havechosen, and evaluation the overall presentation of financial statements.

We believe the audit evidences we obtained are sufficient and appropriate, it provide a advantage for theresult of audit opinion.

III. The audit opinion.

In our opinion, the Company’s financial statements have been properly prepared in conformity with En-terprise Accounting Rules and ENTERPRISES ACCOUNTING REGULATINS of PRC issued by state andrelevant laws by adopting consistency policy for the bookkeeping and given a true and fair view of thefinancial position on March 31, 2010, the operation results and cash flows for the year ended on the dateof the Company.

Yingkou ZhongkehuaPublic AccountantCertified Public Accountants: Yang JiajunCertified Public Accountant: Zhao Bo

Statements attached: Balance Sheet, Income Statement, Cash Flows Statement, Foot notes of AccountingStatements.

Address: NO. 15 West Section, Bohai Avenue, Yingkou City, Liaoning

Report Date: 14th April, 2010

TRL CHINA LIMITED

60


TRL CHINA LIMITED

Balance Sheet as at 31st March, 2010

As at 31.03.2010 As at 31.03.2009

RMB Rs. * RMB Rs.**

FUNDS EMPLOYED

1. Paid Up Capital 64,963,552 428,220,246 64,963,552 424,985,061

2. Reserves and Surplus 4,023,782 26,523,565 — —

3. Loan fund

(a) Un Secured Loan 24,112,506 158,942,406 30,996,678 202,777,168

4. Total Funds Employed 93,099,840 613,686,217 95,960,230 627,762,229

APPLICATION OF FUNDS

5. Fixed Assets

(a) Gross Block 84,008,384 553,758,065 83,882,430 548,750,469

(b) Less: Depreciation 18,264,418 120,393,564 11,689,383 76,470,775

(c) Net Block 65,743,966 433,364,501 72,193,047 472,279,694

6. Current Assets, Loans and Advances

(a) Stores & Spare Parts 1,383,908 9,122,306 1,235,927 8,085,311

(b) Stock-in-Trade 14,088,610 92,867,891 18,779,472 122,853,428

(c) Sundry Debtors 75,577,047 498,181,221 20,674,077 135,247,744

(d) Cash and Bank Balances 3,631,691 23,939,018 7,069,065 46,245,116

(e) Loans and Advances 1,073,336 7,075,109 922,040 6,031,893

95,754,592 631,185,545 48,680,581 318,463,492

7. Less : Current Liabilities & Provisions

(a) Current Liabilities 70,592,231 465,322,809 28,643,493 187,382,867

8. Net Current Assets 25,162,361 165,862,736 20,037,088 131,080,625

9. (a) Misc.Expenditure to the extent notW/off or adjusted 2,193,513 14,458,980 3,142,957 20,560,910

(b) Profit & Loss Account (Debit Balance) — — 587,139 3,841,000

10. Total Assets (Net) 93,099,840 613,686,217 95,960,230 627,762,229



61

TRL CHINA LIMITED

Profit and Loss Account for the year ended 31 March, 2010

From April-09 to March-10 From April-08 to March-09

RMB Rs. * RMB Rs.**

INCOME

1 Sale of Products and Services 229,047,625 1,509,813,230 121,029,050 791,759,942

Less : VAT 31,846,646 209,923,536 16,342,169 106,908,835

197,200,979 1,299,889,694 104,686,881 684,851,107

2 Other Income 1,997,716 13,168,345 170,330 1,114,282

3 Total Income 199,198,695 1,313,058,039 104,857,211 685,965,389

EXPENDITURE

4 Manufacturing and Other Expenses 185,750,348 1,224,410,569 98,110,284 641,827,667

5 Depreciation 6,634,549 43,732,957 5,784,082 37,838,886

6 Interest 2,202,877 14,520,704 2,719,434 17,790,265

Total Expenditure 194,587,774 1,282,664,230 106,613,800 697,456,818

PROFIT BEFORE TAXES 4,610,921 30,393,809 (1,756,589) (11,491,429)

7 Provision for Income Tax — — — —

PROFIT AFTER TAXES 4,610,921 30,393,809 (1,756,589) (11,491,429)

8 Balance brought forward from last year (587,139) (3,870,244) 1,169,450 7,650,429

Balance Carried to Balance Sheet 4,023,782 26,523,565 (587,139) (3,841,000)



62


TRL CHINA LIMITED

CASH FLOWS STATEMENTYEAR ENDED MARCH 31, 2010

Year Ended 31st March, 2010 Year Ended 31st March,2009

RMB Rs. * RMB Rs.**A. Cash Flows from Operating Activities

Net Profit / (Loss) for the Period 4,610,921 30,393,808 (1,756,589) (11,491,431)

Less: Financial Income (1,997,716) (13,168,345) (170,330) (1,114,279)

Add: Depreciation & Amortisation 6,575,035 43,340,658 5,777,932 37,798,651

Add: Financial Charges 2,202,877 14,520,704 2,719,434 17,790,268

Operating Profit before working capital changes 11,391,117 75,086,825 6,570,447 42,983,209

Changes in Operating assets and liabilities :

Increase in Inventories. 4,542,880 29,945,302 (8,646,284) (56,563,126)

Increase in Trade and other Receivables (55,054,265) (362,901,199) 26,815,286 175,422,923

Increase in Trade Paybles and Other Liabilites 41,948,738 276,513,496 (19,332,244) (126,469,607)

Net cash flow from Operating activities 2,828,470 18,644,424 5,407,206 35,373,399

B. Cash Flows from Investing Activities

Fixed Assets (125,954) (830,251) (17,836,043) (116,681,607)

Financial Income 1,997,716 13,168,345 170,330 1,114,279

Pre-Operative Expenses 949,445 6,258,457 (859,482) (5,622,643)

Net cash flow from Investing activities 2,821,206 18,596,551 (18,525,195) (121,189,971)

C. Cash Flow from Financing Activities

Cash from Borrowings (6,884,172) (45,378,397) 18,996,678 124,274,370

Financial Charges (2,202,877) (14,520,704) (2,719,434) (17,790,268)

Net cash flow from Financing activities (9,087,049) (59,899,101) 16,277,244 106,484,102

Net Increase /(decrease) in cash andcash equivalents (3,437,373) (22,658,126) 3,159,255 20,667,530

Cash and cash equivalentsas at Ist April, 2009 7,069,065 46,597,144 3,909,810 25,577,586(Opening Balance)

Cash and cash equivalentsas at 31st March, 2010 3,631,691 23,939,018 7,069,065 46,245,116(Closing Balance)

Note : (i) Figures in brackets represent outflows.

(ii) Previous Year figures have been recast/restated whenever necessary.



63

TRL CHINA LIMITED

Footnotes of Accounting Statements

I. A Brief Introduction of the Company

TRL CHINA LTD. (hereafter the company) is a Wholly Owned Foreign Enterprise (WFOE) established byTRL ASIA PRIVATE LIMITED in China. Upon the ratifying of the People’s Government of Liaoning prov-ince on 5th Jan. 2006, the Company received Certificate of Approval No. 8601[2006] from Liaoning For-eign Economic Bureau and received Business License No.001544 from the General Administration forIndustry and Commerce of the People’s Republic of China on 9th January, 2006. The registered capital ofthe company will be USD8.2Mn and the total investment of the company will be USD16Mn. The durationof the company shall be 30 years.

The company will engage in development, production and sale of various types of refractories.

II. Main Accounting Policies

1. Accounting Rules:

The main accounting policies adopted by the company for preparing the accounting statements is inaccordance with the “Business Accounting Principles and Rules of the People’s Republic of China”and the certain regulations of the accounting for the foreign enterprises.

2. Fiscal year:

The fiscal year of the company is from 1st January to 31st December.

3. The Rules of Book keeping and Valuation method:

The books have been maintained on accrual basis system. The valuation bases on actual cost.

4. Foreign Currency Transaction:

The standard currency of the company for bookkeeping is RMB. The foreign currency is convertedto RMB according to the exchange rate issued by the China People’s Bank at the first day of themonth when the transaction has occurred. The foreign currency balance amount at the close of theperiod is transferred at the closing rate. The exchange gain/loss for the period is transferred toexpenses/income account.

5. Inventory accounting method:

Issued material and finished goods are valued on the basis of weighted-average cost method.

6. Low value Items Amortization:

50% value of the Low and perishable articles (i.e. items less than RMB 2000) will be charged asexpenses in same period in which it has been purchased and balance 50% will be charged asexpenses in the period in which assets declared as not useable.

7. Fixed assets and depreciation:

Depreciation has been calculated on Straight-line method, that is, the amount of the original costsof the fixed assets after deducting 10% residual cost and divided the balance by estimated usefullife. The estimated useful life of the fixed assets is as follows:

Types of fixed assets Useful life Annual depreciation rate (%)

Building and Structures 20 years 4.5

Machinery Equipment 10 years 9

Electronic Equipment 5 years 18

Transport Facilities and Other Equipment 5 years 18

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8. Intangible assets and apportionment:

The land use rights will be apportioned within 50 years starting from May, 2006.

9. Deferred assets and apportionment:

These will be apportioned within 5 years.

10. Operation revenue realization:

Revenue is recognized once the goods are dispatched and ownership is transferred to the buyerand there is certainty about the realization of the amount.

11. Tax

Value-added Tax: The Tax Rate is 17%;

Income tax: Tax rate is 25%; According to the People’s Republic of China foreign-invested enter-prise and foreign-invested enterprise income tax law, the company will enjoy free Income tax up toFY 2009. The tax rate will be 12.5% for next three years.

12. Paid up Capital: As on 31st March, 2010 – 64,963,551.97 RMB

Investor Opening Balance Increased during Closing Balanceas on 1st April, 2010 the period as on 31st March, 2010

TRL Asia Private Limited 64,963,551.97 RMB NIL 64,963,551.97 RMB

Registered Capital-USD 8,200,000.00 NIL 82,00,000.00

The above Paid up capital has already been certified by this Yingkou CPA firm and the CapitalContribution Certificate has already been given vide Certificate No: 65 Dated 26th March, 2007.

III. Any other Related Matters

TRL China Limited is using BaaN- 4 ERP system for their accounting. Raw Material issue accounting isdone through the system.

TRL CHINA LIMITED

Date Month Year

14th Apr, 2010

TRL CHINA LIMITED

65

Regd. Office: Belpahar-768218, Dist: Jharsuguda (Odisha)

PROXY FORM

I/We .........................................................................................................................................................................

of .......................................................................... in the district ......................................................................... being

a Member/Members of the above named Company, hereby appoint ...............................................................................

.................................................................... of .......................................................................................... in the district

of ............................................................ or failing him ....................................................................................... of

........................................................... in the district of ........................................................................... as my/our

Proxy to attend and vote for me/us on my/our behalf at the FIFTY-FIRST ANNUAL GENERAL MEETING of theCompany to be held on Saturday, July 24, 2010 at 2.30 P.M. and at any adjournment thereof.

Signed this ................................. day of ........................... 2010

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

Folio No.

Address ...................................................................................

Notes : 1. The proxy need not be a member.

2. The proxy form duly signed across revenue stamp of 15 paise should reach the Company's RegisteredOffice at least 48 hours before the time of the meeting.

Affix15 PaiseRevenue

Stamp

Documents

annual report cover new for pdf - TRL Krosaki Report 2009-10(1).pdf · Fifty first annual report 2009-10 ... Mr. P. K. Bajaj Dr. (Mrs.) Prativa Ray ... who retires by rotation and