Uttam Galva Steels Limited

DIRECTORS ' REPORT

To,

The Members

Your Directors have pleasure to present Twentieth Report on the business and operations of the Company, along with the Audited Statemenof Accounts for the Financial Year ended 31 a' March, 2005.

1. FINANCIAL RESULTS:

PARTICULARSYear ended

31°' March , 2005Year ended

31•' March, 2004(Rs. in Millions ) (Rs. in Millions)

Sales & Other Income21561.12 12205.49

Gross Profit before Depreciation and Interest 1994.03 1296.03Less : Interest & Financial Charges

644.83 499.84Restructuring Financial Cost - Term Loans

- 237.83Cash Profit

1349.20 558.36Less : Depreciation

322.05 304.01Profit before Tax

1027.15 254.35Less : Provision for Tax - MAT

80.54 15.60Profit after tax

946.61 238.75Add : Balance Carried from earlier year

148.91 (89.84)Balance Carried to Balance Sheet

1092.36 148.91

Notes:-

1. The figures of the previous year have been re-grouped to bring these in line with this years figures , wherever required.2. OPERATIONS:

Your Company has achieved higher turnover of Rs.21561.12 millions in comparison to As. 12205.49 millions during the previous yeari.e. an increase of 76.65 %. Your Company has also recorded higher gross profit of Rs.1 994.03 millions in comparison to Rs.1 296.03millions during the previous year i. e. an increase of 53.86 % and recorded 403.83% growth in Profit Before Tax of Rs. 1027.15 millionsas compared to Rs.254.35 millions during the previous year.

Your Company have embarked on very ambitious growth plans to double capacity and diversify product base. This will significantly

and very positively impact Earning Per Share (EPS) in coming years and will enable the Company to thrive in any downturn in Steelcycle due to better product mix and lower long term costs.

Owing to ambitious expansions and importance of timely executions of projects, your Board feels it unwise to disturb cash flow andhas decided to plough back earnings for time being.

3. EXPORTS :

The gross export turnover was increased by 94.33 % to Rs.14421.66 millions compared to Rs.7421.10 millions during the previous

year due to higher volumes and better price realisation in stable scenario in the International Market during the year under review:

Your Company foresees volatile demand for steel worldwide and will therefore continue to focus both on exports and domesticmarket.

4. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to Clause 49 (V) (A) & (B) of the Listing Agreement

your Directors wish to report as follows:

a. Industry Structure and Development

The Steel cycle is at the peak and global outlook in short

term is unpredictable. However value added product

mix and continuous efforts to control costs will ensure

our progress in years to come.

b. Opportunities and Threats

Opportunities will exist with the increase in higher valueadded steel consumption on a steady growth path in thecountry and the expectation of strengthening of theIndian economy. However, the Indian Steel Industry isa still primarily export based.

c. Segment - wise or Product - wise Performance

Segment wise or product wise analysis or performanceis not applicable to your Company under AccountingStandard -17.

d. Outlook

The long term outlook for the industry and consequentlyfor your Company is stable and reasonably good.Demand for our products will grow continuously as theAutomobile and White Goods Industries are doing well.

e. Risks and Concerns

Ever changing scenario in international and domesticmarkets could be the only risk which may be faced bythe Steel Industry. Other risks or concerns related tofinance, production, stocks, insurance, etc. are beingmanaged adequately and efficiently by your Company.

f. Internal Control Systems and their adequacy

Effective internal operational control systems and regularinternal audit mechanism to monitor and review thesame under the overall control and supervision of theInternal Auditor and the Audit Committee of Directorsare in place and functioning well. This has substantiallycontributed to the better management. Efforts forcontinued improvements are being consistently madein this regard.

Discussion on Financial Performance with respect toOperational Performance

The financial performance with respect to the operational

performance during the year under review was reasonably

good. 53.86 % increase in gross profit over the previous

year i.e. from Rs. 1296.03 millions to Rs. 1994.03millions indicates the same.

9.

0oh. Material Development in Human Resources / industrial

Relations Front , including Number of PeopleEmployed

Implementation of healthy practices of HRD activities foroverall development of human assets and induction of

professionally qualified and skilled manpower including

internal and external training programmes are the constant

features of cur Company. Presently, your Company is

employing about 700 employees. Your Company isproud of healthy industrial relations.

i. Material Financial and Commercial Transactions :

There are no materially significant financial and

commercial transactions with the related parties conflicting

with the interest of the Company during the financial year

under review. The Promoters and the Directors are notdealing in the Equity Shares of the Company.

5. CORPORATE GOVERNANCE:

Your Company has been very active in implementation andpractice of corporate governance norms. Your Company hasimplemented all the mandatory requirements pursuant to

Clause 49 (as amended) of the Listing Agreement well in

advance. A detailed report on Corporate Governance along

with a certificate from the Auditors confirming the compliance

is annexed hereto and forms part of the Directors' Report andAnnexure-III

6. AUDIT COMMITTEE :

The Meetings of the Audit Committee of Directors asrequired under Section 292A of the Companies Act, 1956and Clause 49 of the Listing Agreement which consists ofthree Non-Executive Independent Directors took place on15th May, 2004, 21st July, 2004, 30th October, 2004 and15th January, 2005 during the year under review. The saidCommittee is discharging its due obligations andresponsibilities diligently as required.

7. DIRECTORS:

During the year under review Shri. V Prakash (Nominee ofICICI Bank Ltd) ceased to be Director on the Board w.e.f.from 23" June, 2004 and Smt. Shaila Sarpotdar has joinedthe Board on 240i June, 2004 in his place and Shri M. S.Natarajan (Nominee of LIC of India) ceased to be Director onthe Board w.e.f. 19'" September, 2004 and Shri S. R.Krishnaswamy has joined the Board on 20' September,2004 in his place.

In accordance with the provisions, Section 255 & 256 of theCompanies Act, 1956, Shri P. G. Kakodkar and Dr. N. S.Datar, retire by rotation and being eligible have offeredthemselves for re-appointment. The Board of Directorsrecommend their re-appointment.

Uttam Galva Steels Limited

Shri Ankil Miglani, relative of Shri Rajinder Miglani-CMD andShri Anuj Miglani DMD & COO of the Company wasappointed as Additional Director by the Board on 29'" July,2005 and holds office upto the ensuing Annual GeneralMeeting. In accordance with the provisions of section 257 ofthe Companies Act, 1956, the Company has received noticeform a member proposing Shri Ankit Miglani to be appointedas a Director at the ensuing Annual General Meeting. He isalso appointed by the Board on 29'' July, 2005 as a Whole-Time Director designated as Director (Commercial) subjecthowever, to the approval of the members at the ensuingAnnual General Meeting and prior approval of the CentralGovernment pursuant to Section 314(1 B) of the CompaniesAct, 1956.

8. DIRECTORS ' RESPONSIBILITY STATEMENT :

Pursuant to Section 217(2AA) of the Companies Act, 1956,the Directors confirm that:

i) In the preparation of the annual accounts, the applicableaccounting standards have been followed;

ii) Appropriate Accounting Policies have been selectedand applied consistently, and have made judgementsand estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of theCompany as at 31 " March, 2005 and of the Profit andLoss Account for the financial year 2004-05.

iii) Proper and sufficient care has been taken for the

maintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956. for safeguarding the assets of the Company andpreventing and detecting fraud and other irregularities;

iv) The Annual Accounts have been prepared on a'goingconcern basis'.

9. AUDITOR:

Notes to the Accounts as referred in the Auditors' Report areself - explanatory and therefore, do not call for any furthercomments or explanations.

Shri Yogesh B Mehta, Chartered Accountant, StatutoryAuditor of the Company will retire at the ensuing 201 AnnualGeneral Meeting and is eligible for re-appointment. The saidAuditor has confirmed that his appointment if made, shall bewithin the limits of Section 224(1 B) of the Companies Act,1956. The Board of Directors recommend appointment ofShri Yogesh 8 Mehta, Statutory Auditor of the Company andfix his remuneration for the Financial Year 2005-2006, tohold office till the conclusion of the 21" Annual GeneralMeeting of the Company.

10. FIXED DEPOSITS :

Your Company has not accepted Deposits from Publicu/s.58A of the Companies Act. 1956 and Companies(Acceptance of Deposits ) Rules, 1975.

11. INSURANCE :

Your Company has taken adequate insurance cover forall itsAssets.

12. LISTING OF SECURITIES;

7,99,56,373 Equity Shares of Rs. 10/- each are listed withand trading permissions received from the Stock Exchangesat Mumbai, Delhi and National Stock Exchange.

Approval for de-listing of aforesaid Equity Shares is awaitedfrom The Calcutta Stock Exchange Association Ltd.

13. DEMAT OF SECURITIES :

Nearly 76.48% of total Equity Share Capital is held indematerialized form with NSDL/CDSL.

14. SUSIDIARYCOMPANY:

There is no Subsidiary Company.

15. DISCLOSURES:

Information of conservation of energy, technology absorption,foreign exchange earnings and outgo required to be givenpursuant to section 217(1)(e) of the Companies Act, 1956read with Companies (Disclosure of Particulars in theReport of the Board of Directors) Rules, 1988 is annexedhereto (Annexure - 1) and forms part of this report.

Information required to be given pursuant to the provisionsof Section 217(2A), of the Companies Act, 1956 is enclosedherewith, marked Annexure-II and forms part of this report.

16. ACKNOWLEDGEMENT:

Your Directors take this opportunity to express their deepsense of gratitude to the Central, State Governments andLocal Governments. Financial Institutions and Banks fortheir continued support, co-operation and guidance.

At this point your Directors like to place on record theirsincere appreciation for the total commitment, dedicationand hard work put in by every member of the Uttam Family.

And to you our Shareholders, we are deeply grateful for theconfidence and faith that you have always placed in us.

Your Directors express their deepest gratitude to the esteemedcustomers of the Company for their continuous confidenceand faith, which they have in the products and services ofyour Company.

Place : Mumbai RajinderMiglaniDate : 29'^ July, 2005 Chairman & Managing Director

For and on behalf of the Board

Uttam Galva Steels Limited

5 YEARS' HIGHLIGHTS

SALES & EARNINGS

LOCAL SALES

EXPORT SALES

GROSS SALES.,==

OTHER INCOME

TOTAL INCOME

LESS : CENTRAL EXCISE DUTY II

LESS : SELLING & DISTRIBUTION EXPENSES !

SALES AND OTHER INCOME ( EFFECTIVE )

MATERIAL COST ( INCL. STOCK VARIATION)f

OTHER EXPENDITURE

PSIDT'si

INTEREST & FINANCIAL CHARGES

PROFIT BEFORE DEPRECIATION & TAX (PBDT)

DEPRECIATION

PROFIT BEFORE TAX

PROFIT AFTER TAX <

CASH ACCRUALS

ASSETS & LIABILITIES

FIXED ASSETS: GROSS

F2004-05

7139

14422

21561

54

21615

644

1306 I

19665

16507

1164

1994

645

1349

322

1027

947

1269

NET 6335

TOTAL ASSETS : NET 7691

REPRESENTED BY

NET WORTH 2639 ISHARECAPITAL -EQUITY 800 i

-PREFERENCE 54

SHARE / WARRANT APPLICATION MONEY 7RESERVES 1779

BORROWINGS 5052

LONG TERM SECURED 3882LONG TERM - UNSECURED 66SHORT TERM 1104

TOTAL FUNDS 7691

RATIOS

EARNING PER EQUITY SHARE RS. 12 . 57BOOK VALUE PER EQUITY SHARE RS . 32.92DEBT : EQUITY RATIO C 1.47: 1

2003-04 2002-03 2001-02 2000-0)^

(Rs in Millions)4784 3254 3532 4190F7421 5279 2392 2474

'12205 b533 '', 666440 23 7 9

12246 8557 5931 6674580 448 456 551630 526 373 336

11035 7583 5102 5787

8738 5721 4041 44601001 809 655 700

1296 1052 `x106 627738 672 341 744

558 381 65 (117)304 278 274 270

254 10:3 209) (386)

239 103 (209) (386)543 381 65 (117)

669 6117 5706 56234622 4348 4215 4404

5533 5000 4701 4953

I1533 1300 1116 1297695 670 670 53254 54 54

1 63 356783 634 634 476

4000 3701 3586 36563012 2978 2891 2927

224 227 241 252763 495 454 478

5533 5000 4701 4953j

f1 )

1.44I (3.12) (7.26)

22.04 18.45 16.64 17.68

i 96:1 2.29:1 1 '2.59: 1 2.26: 1

ON SECURED LONG TERM BORROWINGS

5 YEARS' HIGHLIGHTS

350

300

250

NOW

0(1)41 a

KIM

7(100

NAM

-V))

401x)

3150)

2)55)

1(X1)

SALEABLE PRODUCTION

Otyin'000 M.T.

227

2000-01

2(1111-(1

p GALVANISED PRODUCTS n COLD ROLLED PRODUCTS 1

VALUE ADDITION

Ill,. In Millions)

2111111.11 1

IXY(11

'002-03

2004-05

2003-04 2(11)4-115

®'111X1111 2lM(l-112 ®21111`-03 II(NNI,,,IW ®' 11111-(IS

FIXED ASSETS

111-0_ 11' ,li 014" 11405

DGROSS FINED ASSET'S ONi:T FIXED ASSETS

25000 T

20000

15000

10000 410444

TOTAL SAI.F.S

4190 S 5924 527950003532 n

2474MJ 2392

0 EXPORT SALES n LOCAL SALES q TOTAL SALES

(Rs. In Millions)

2000.01 2001-02 2002-03 2003-04 2004-05

I'll IDT/PBDT/PROFIT BEFORE TAX

2500 -I

2000

1500

(Rs. In SI iIIlnnn)

2000.01 2001-02 200203 2003.04 200405

I D q PAT

NETWORTII AND BORROWINGS

Will

5(100

4()410 1 365n

0I-1(2 02-01

(Rs. in Milli is)

-AN03 114 (14.05

1127 NET W OR Ill ®H ( IRR(4SV

Uttam Galva Steels Limited

BALANCE SHEET AS AT 31ST MARCH, 2005

SOURCES OF FUNDSSHAREHOLDERS' FUNDSShare CapitalShare/Warrants Application MoneyReserves & Surplus

LOAN FUNDSSecuredUnsecured

TOTAL

APPLICATION OF FUNDSFIXED ASSETSGross BlockLess: Depreciation

NET BLOCKCapital Work- in-Progress

INVESTMENTSCURRENT ASSETS , LOANS & ADVANCES

InventoriesSundry DebtorsCash & Bank BalancesLoans & Advances

As at 31.03.2005 As at 31.03.2004Rupees Rupees Rupees

Schedule (Millions) (Millions) (Millions)

A

B

CD

E

853.25 748.966.95 0.90

1778.85 783.25

4986.2165.64

2639.05 1533.11

3775.30224.44

3999.74

7690.90 5532.85

5051.85

6827.52 6397.302393.56 2072.69

4433.96 4324.611901.20 297.03

6335.16 4621.640.65 1.05

3302.45 3619.32564.55 555.01591.85 66.952117.77 884.47

Less : CURRENT LIABILITIES & PROVISIONS HCurrent LiabilitiesProvisions:

NET CURRENT ASSETS

TOTAL

ACCOUNTING POLICIES & NOTES TO ACCOUNTS P

As per my report attachedFor Yogesh B. MehtaChartered Accountant

6576.62 5125.75

5140.99 4199.9980.54 15.60

5221.53 4215.591355.09 910.16

7690.90 5532.85

For and on behalf of the Board

Rajinder Miglani Praveen MiglaniChairman & Managing Director Director

Yogesh B . Mehta Rajendra Kumar HaranProprietor Company SecretaryPlace : MumbaiDated : 20th May, 2005

0PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005

For the Year Ended31.03.2005

For the Year Ended31.03.2004

Schedule Rupees ( Millions ) Rupees ( Millions)

INCOMESales 7139.46 4784.39

Local 14421.66 7421.10Export

21561.12 12205.49Gross Sales (644.01) (580.22)Less: Excise Duty

20917.11 11625.27

Other IncomeOperational 53.78 40.09Non Operational

53.78 40.09

20970.89 11665.36TOTAL

EXPENDITURE 16456.09 9264.01Materials Cost 50.58 (526.17)(Increase)/Decrease in Stock K 886 .68 718.09Other Manufacturing Expenses L 1305.97 630.33Selling & Distribution Expenses M 170 ,33 148.32Payment to Employees N 107.21 134.75Administrative Cost

18976.86 10369.33

1994.03 1296.03Profit before Interest & Depreciation 644 83 499 84Interest & Financial Charges 0 . .

237.83Restructuring Financial cost - Term Loans(Refer Note 7.0 in Notes on Accounts) 1349.20 558.36Profit/(Loss ) before Depreciation 322.05 304.01Depreciation 151027 254.35Profit/ ( Loss ) before TaxLess : Provision for Tax - MAT

.80.54

115.60

238 75Profit/ ( Loss ) after Tax

946.6 .84)(89

Add: i) Balance C/F from earlier years - P&L A/C148.91

2.

91148Profit/(Loss) available for Appropriations

1095.5 .

Appropriated as under:(i) Credits / (Debits) pertaining to prior years - Taxes (3.16)

1092 36 148 91(i) Balance Carried to Balance Sheet

. .433

Basic & Diluted Earnings Per share (in Rs.)12.57 .

ACCOUNTING POLICIES & NOTES TO ACCOUNTS P

As per my report attachedFor Yogesh B. MehtaChartered Accountant

Yogesh B. MehtaProprietor

Place : MumbaiDated : 20th May. 2005

For and on behalf of the Board

Rajinder Miglani Praveen MiglaniChairman & Managing Director Director

Rajendra Kumar HaranCompany Secretary