To

The Members,

The Directors are pleased to present the Twenty Sixth Annual Report of your Company together with the Audited Financial Statements for the year ended 31^st March, 2016.

1. FINANCIAL HIGHLIGHTS

(Rs, in Lakhs)

2. DIVIDEND

Your Directors do not recommend any dividend on the equity shares of the Company in view of carried forward losses.

3. REVIEW OF OPERATIONS & PERFORMANCE

The overall sales during FY 2015-16 stood at 104,052 MT, increased by 17.8% over FY 2014-15 (88,292 MT). However, in terms of revenue, it has decreased by 11% from Rs, 574.21 crores to Rs, 510.53 crores, due to reduction in steel prices (from USD 550 /MT to USD 390 / MT). Further, the Company achieved Cash Profit of Rs, 3.53 crores as compared to Cash Loss of Rs, 8.83 crores of FY 2014-15.

The Steel Industry has been impacted very adversely during the year and the major challenges faced on ramping up volumes to planned levels were mainly on account of the below factors:

- Cheap imports, Dumping from China and highly competitiveness from China with supply of material in other parts of the world;

- pressure in margins to sustain Global Competition due to sluggish market condition;

- Continuous and drastic reduction in HRC Prices during the year. (Which started improving after implementation of MIP from Feb’ 16);

- Discontinuance of Open Access Power;

- Currency rate fluctuations/rupee depreciation;

- Poor monsoon;

- Slowdown in Market leading to higher cost and lower realization of sales value;

- Low order book up to Q3 FY 2015-16.

However, after the initiatives taken by the Ministry of Steel for curbing of import of steel from China and FTA Countries, a safeguard & MIP were put in place and the situation started improving from last quarter of FY 2015-16. The Company was able to achieve dreamed volume of 10000 plus MT from Dec’15 onwards and have achieved Highest Ever Sales Volume since inception of the Company of approx. 15000 MT during March 2016. During Q4 of FY 2015-16, total revenue Rs, 155.72 crores (35410 MT), EBIDTA of Rs, 3.18 crores and Operation Net Profit of Rs, 0.50 crores and total Net Profit of Rs, 15.38 crores (with sale of land of Rs, 14.88 crores). Resultantly, there is an improvement in our volumes by 61% in Q4 2015-16 as compared to Q3 2015-16 with net profit from operations.

Although there are challenges going forward in FY 2016-17, the outlook of the Company is quite optimistic in view of the following:

- Implementation of MIP and the measures taken by the Government of India towards growth of domestic steel industries and especially for downstream products;

- Strategies & markets with upcoming economy;

- Started focusing in South East Asia Market (Indonesia, Vietnam, Philippines) for CRFH & Galvanized product;

- Focused Srilanka / Myanmar for Galvanized product;

- To overcome Chinese competitiveness, started supplying into the Latin American Galvanized markets (Peru, Chili, Columbia);

- Made significance presence in Ethiopian Market;

- Started focusing on Gal & CRFH domestic market, other than current CRCA market;

- With our presence started / to be started in new Export markets/areas including South East Asia Market, Latin American markets, Ethiopian markets with flexibility in the product mix with better margins, expansion in export business with better contribution is expected;

- Considering commissioning of color coated line by Oct-16 product will be initially launched in Gujarat/Kerala/Assam/ J&K markets and after successful launching & establishing it in local market, export market will be tapped;

- Healthy outlook from order point of view.

The Company has been able to keep its Net worth positive as on 31^st March 2016 with improved performance and with the sale of Land (Subject to NOC from GIDC & Lenders). We are confident that Net Worth will remain Positive in coming times, with better future prospectus and implementation of capex plan.

4. PERFORMANCE OF SUBSIDIARY COMPANY

The Company had its wholly owned subsidiary viz, Steelco Colour Coating Ltd., (‘SCCL”) (CIN U27310GJ2015PLC082627), incorporated in March 2015, which has yet not commenced its business. However, as at the end of 31^st March 2016, SCCL ceased to be subsidiary of the Company in view of further allotment of Equity Shares of ' 10 each by it to M/s. Metchem Singapore Pte. Ltd.

5. BOARD OF DIRECTORS

During the year under review, Dr. R. S. Mamak completed his tenure as Executive Vice Chairman as on 13^th August, 2015 and accordingly, w.e.f. 14^th August, 2015, he has been re-designated as Non-Executive Vice Chairman.

Smt. Ameeta Trehan had been appointed as an Additional Director of the Company w.e.f. 16^th May, 2015 to hold the office up to the 25^th Annual General Meeting and at the 25^th Annual General Meeting held on 30^th September, 2015, she was appointed as a Director (Independent Woman Director).

As per the provisions of the new Companies Act, 2013 with regard to Sections 149 and 152 and to comply with the provisions of the said Sections, Shri Mitesh H. Shah, Managing Director of the company’s terms of appointment is changed to subject to retirement by rotation instead of not subject to retire by rotation by the Board of Directors.

The Independent Directors on the Board of the Company as on date are Shri J. Mehra, Shri Mahendra Lodha, Shri S. S. Ranjan & Smt. Ameeta Trehan (Woman Director) and the Company has received confirmation / declarations from the Independent Directors of the Company under Section 149(6) of the Companies Act, 2013 and applicable provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

6. KEY MANAGERIAL PERSONNEL

During the year under review, the details of Key Managerial Personnel are as under:

7. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Clause 49 of the listing agreement, as may be applicable, a structured questionnaire was prepared after taking into consideration of the various aspects of the Board’s functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. Respective member of the Board does not participate in the discussion of his / her evaluation. The Board of Directors expressed their satisfaction with the evaluation process.

8. NUMBER OF MEETINGS OF THE BOARD

The Company has complied with the provisions for holding Board Meetings and the gap between any two meetings did not exceed 120 days. Five meetings (including one adjourned meeting) of the Board of Directors of the Company were held during the year under review on 16/05/2015, 28/05/2015 (adjourned), 13/08/2015, 06/11/2015 & 05/02/2016.

9. WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Company has a Whistle Blower Policy pursuant to Section 177 of the Companies Act, 2013 and the rules made there under and applicable provisions of the listing agreement and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, to report genuine concerns of Directors and Employees. The Policy has been posted on website of the Company, www.steelcogujarat.com.

10. NOMINATION AND REMUNERATION POLICY

The Policy of the Company has been framed on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and remuneration of Key Managerial Personnel and other employees of the Company pursuant to Sub-section (3) of Section 178 and Regulation 19 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details of this policy have been elaborated in the Corporate Governance Report. The Policy has been posted on website of the Company, www.steelcogujarat.com.

11. CORPORATE GOVERNANCE

Your Company is compliant of all mandatory requirements pursuant to Clause 49 of Listing Agreement and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. A separate report on Corporate Governance as stipulated by Regulation 72 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, along with the required certificate from a Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated by the said Regulations is given in Annexure - 3.

12. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is given in Annexure- 4.

13. RELATED PARTY TRANSACTIONS

All transactions entered with related parties during the year under review were on arms length basis and in ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. The related party transaction entered into with the Steelco Colour Coating Limited, the then Wholly Owned Subsidiary Company, for sale of partial land of the Company, approval of the Audit Committee and Board has been obtained and shareholders’ approval is sought at the ensuing Annual General Meeting. Further, there is no material related party transaction during the year under review with the promoters, directors or key managerial personnel.

14. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of the knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(4) (c) of the Companies Act, 2013:

i. That in preparation of the annual accounts for the year ended 31^st March, 2016, the applicable accounting standards read with requirements set out under Schedule III have been followed along with proper explanation relating to material departures, if any;

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2016 and of the loss of the Company for the year ended on that date;

iii. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other regularities;

iv. The annual accounts have been prepared on a ‘Going Concern’ basis;

v. That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively, and

vi. That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

15. STATUTORY AUDITORS

The present statutory auditors M/s Mukesh M. Shah & Co., Chartered Accountants, Ahmadabad, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received consent and requisite certificate from the Auditors to the effect that their reappointment, if made, would be within the prescribed limit under Section 141 of the Companies Act, 2013, confirming their eligibility for re-appointment as Auditors of the Company.

16. COST AUDITORS

Your Directors have appointed M/s A. G. Tulsian & Co., Cost Accountants, Ahmadabad, as Cost Auditors in compliance with the Companies (Cost Accounting Records) Rules, 2011. The Cost Auditors have filed the Cost Audit Report for the financial year ended 31^st March, 2015 within the due date.

Pursuant to provisions of section 148 of the Companies Act, 2013 and the Companies (Audit & Auditors) Rules, 2014, the Board on the recommendation of the Audit Committee, has approved the appointment of M/s A. G. Tulsian & Co., Cost Accountants, Ahmadabad as the Cost Auditors and remuneration payable to them, to conduct the audit of the cost records of the Company for the financial year ending 31^st March, 2017. The Company has received a letter from M/s A. G. Tulsian & Co., Cost Accountants, Ahmedabad showing their willingness to be appointed as Cost Auditors, certifying that they are not disqualified under section 148(5) read with section 141(3) of the Companies Act, 2013.

17. SECRETARIAL AUDITOR

The Company has received consent and requisite certificate from M/s. Devesh Vimal & Co., Practising Company Secretaries, Vadodara, present Secretarial Auditors, to the effect that their reappointment, if made, would be within the prescribed limit, confirming their eligibility for re-appointment as Auditors of the Company Accordingly, M/s. Devesh Vimal & Co. has been re-appointed to act as Secretarial Auditors of the Company for the FY 2016-17.

18. OBSERVATION OF STATUTORY AUDITORS’ REPORT AND SECRETARIAL AUDIT REPORT

Note No. 35 relating to preparation of financial statement on Going Concern basis, in spite of accumulated losses and their impact on net worth, is self-explanatory as regards the observation made by the Statutory Auditors in their report.

In Secretarial Audit Report Observations, as regards

- observation (a) relating to order of SEBI for non-compliance / delayed compliance of Minimum Public Shareholding, please refer to clause IX, para 3 of Corporate Governance Report, which is self-explanatory.

- observation (b) relating to order of Collector and Additional Superintendent of Stamps, Gujarat State, Gandhinagar regarding recovery of deficient stamp duty, the Company is in process of making payment against the said order as per the decision of the the Board of Directors of the Company

19. POTENTIAL SICK COMPANY

The Company had become potentially sick company within the meaning of Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), as the accumulated losses of the Company as at 31^st March, 2015 have resulted in to erosion of more than 50 % of the its peak net worth, during the immediately preceding four financial years and therefore, the Board of Directors at its meeting held on 28^th May, 2015, formed an opinion to report to the Board for Industrial and Financial Reconstruction.

Accordingly, the fact under Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was reported to the shareholders of the Company at the Annual General Meeting held on 30^th September, 2015 and to Board for Industrial and Financial Reconstruction in November 2015.

20. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the rules made there under, the Company has appointed M/s. Devesh Vimal & Co. Practicing Company Secretaries, Vadodara to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure -5 and forms an integral part of this report.

21. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9, as required under section 92 of the Companies Act, 2013 is included in this Report as Annexure - 6 and forms an integral part of this report.

22. INTERNAL FINANCIAL CONTROLS

The Company has appointed M/s. CNK & Associates LLP, Chartered Accountants, to report on adequacy and effectiveness of internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable weakness in the design or operation was observed by them. The Statutory Auditors have opined that the Company has, in all material respects, internal financial controls over financial reporting, which is required to be strengthened further and its operative effectiveness requires improvement.

23. ENVIRONMENT & SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company’s policy requires conduct of operations in such a manner so as to ensure safety of all concerned compliances environmental requirement regulations and preservation of natural resources.

The Company has been awarded Gold Safety Award 2016 from Greentech Foundation, New Delhi at their Annual Award Function for outstanding achievements in Safety Management.

24. ANTI-SEXUAL HARASSMENT POLICY

As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women under Workplace (Prevention Prohibition and Redressal) Act, 2013.

25. HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. The Company has structured induction process and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas (KRAs) are in place for senior management staff. The Company is committed to nurturing, enhancing and retaining top talent through superior learning & organizational development.

26. CREDIT RATING

During the year under review, the Company has got its rating renewed by an independent credit rating agency M/s Brickwork Ratings India Pvt. Ltd. and the ratings awarded were same as earlier, i.e. BWR ‘B’ in respect of long term debts and BWR ‘A4’ in respect of Short term Debts.

27. DISCLOSURE OF PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The disclosure of particulars relating to conservation of energy and technology absorption and foreign exchange earnings and outgo as required by Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is given in Annexure - 1.

28. CORPORATE SOCIAL RESPONSIBILITY

Considering the losses and exposure, the CSR requirements are not applicable to your Company; hence, the Company has not framed Corporate Social Responsibility (CSR) Policy.

29. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197 (12) of the Act read with Rules 5(1), 5(2) and Rules 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees and the Disclosure pertaining to remuneration and other details are set out in Annexure - II to the Board’s Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

None of the employees listed in the said Annexure - II is a relative of any Director of the Company. None of the employees hold (by himself or along with his / her spouse and dependent children) more than two percent of the equity shares of the Company.

30. GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a) Details relating to deposits covered under Chapter V of the Act.

b) Details of remained, unpaid or unclaimed dividend at the end of year.

c) Issue of equity shares with differential right as to dividend, voting or otherwise.

d) Issue of shares (including Sweat Equity Shares) to employees of the Company under any scheme.

e) Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

f) No significant or material orders passed by the Regulators or Courts or Tribunals, which impact the going concern status and Company’s operations in future.

31. ACKNOWLEDGEMENT

Your Directors take this opportunity to express their appreciation for the co-operation and assistance received from the Government of India, Government of Gujarat, Financial Institution, the Company’s Bankers, Electricity Companies, Palej Gram Panchayat, other Government Agencies, Customers, Suppliers and Investors. Your Directors express gratitude to the investors for their confidence reposed in the Company and Co-operation, and especially to the employees for their dedicated service and support.

32. CAUTIONARY STATEMENT

Statement in the Board’s Report and Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations or predictions may be ‘Forward Looking Statements’ within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that may make difference to the Company’s operations include raw material availability and its prices, cyclic demand and the pricing in the Company’s principal markets, changes in government policies, regulations, tax regimes, economic developments within India and countries in which the Company conducts business.

For and on behalf of the Board of Directors

Place : Mumbai Jatinder Mehra Mitesh H. Shah

Date :20^th May, 2016 Director Managing Director