MIRA INFORM REPORT

Report Date :

27.11.2012

IDENTIFICATION DETAILS

Name :	SARDA ENERGY AND MINERALS LIMITED (w.e.f. 12.10.2007)

Formerly Known As :	RAIPUR ALLOYS AND STEEL LIMITED

Registered Office :	73/A, Central Avenue, Shri Ram Niketan, Nagpur – 440 018, Maharashtra

Country :	India

Financials (as on) :	31.03.2012

Date of Incorporation :	23.06.1973

Com. Reg. No.:	11-016617

Capital Investment / Paid-up Capital :	Rs. 358.500 Millions

CIN No.: [Company Identification No.]	L27100MH1973PLC016617

TAN No.: [Tax Deduction & Collection Account No.]	NGPR00172E

PAN No.: [Permanent Account No.]	AAACR6149L

Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.

Line of Business :	Producing Sponge Iron, Mild Steel Ingots, Billets and Rolled Products

No. of Employees :	600 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (62)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 32000000

Status :	Good

Payment Behaviour :	Regular

Litigation :	Clear

Comments :	Subject is an established company having fine track. Financial position of the company appears to be sound. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30, 2012

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

India

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

INDIAN ECONOMIC OVERVIEW

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

EXTERNAL AGENCY RATING

Rating Agency Name	CARE
Rating	Long term Bank Facilities = A+
Rating Explanation	Adequate degree of safety and low credit risk
Date	13.10.2011

Rating Agency Name	CARE
Rating	Short term Bank Facilities = A1+
Rating Explanation	Very strong degree of safety and lowest credit risk.
Date	13.10.2011

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

LOCATIONS

Registered Office :	73/A, Central Avenue, Shri Ram Niketan, Nagpur – 440 018, Maharashtra, India
Tel. No.:	91-712-2727509/ 2660071/ 5616707 / 2722407
Fax No.:	91-712-2728207/ 2641171 / 2722107
E-Mail :	rasl_fin@rediffmail.com cs@raslindia.com nagpur@seml.co.in
Website :	http://www.seml.co.in

Head Office/ Works :	Industrial Growth Center, Siltara, Raipur – 493 111, Chhattisgarh, India
Tel. No.:	91-771-2216000
Fax No.:	91-771-216198 / 2216199

Corporate Office :	125, B-Wing, Mittal Court, Nariman Point, Mumbai - 400 021. Maharashtra, India.
Tel. No.:	91-22-22880080-81
Fax No.:	91-22-22826680

Branch Office :	Located At · Delhi · Visakhapatnam · Ahmedabad · Barbil · Raigarh

Overseas Office :	Located At · Hongkong · Singapore

DIRECTORS

As on 31.03.2012

Name :	Mr. Kamal Kishore Sarda
Designation :	Chairman and Managing Director
Date of Birth/Age :	60 Years
Qualification :	B.E (Mechanical)
Experience :	38 Years

Name :	Mr. G K Chhanghani
Designation :	Executive Director
Qualification :	B.E (Mechanical)

Name :	Mr. Pankaj Sarda
Designation :	Whole Time Director

Name :	Mr. G D Mundra
Designation :	Whole Time Director

Name :	Mr. Asit Kumar Basu
Designation :	Director
Date of Birth/Age :	62 Years
Qualification :	BME
Experience :	More than 40 years in the field of finance
Date of Appointment :	31.01.2003
Other Directorships/ Partnerships :	· ICRA Online Limited · Pratibha Syntex Limited

Name :	Mr. C.K. Lakshminarayanan
Designation :	Director
Date of Birth/Age :	63 Years
Qualification :	Bachelor of Technology
Experience :	He worked as a Plant Engineer for 8 years with Madras Petrochem Limited. Thereafter, he worked with Industrial Development Bank of India, firstly in Project finance and then in Investment Banking. Lastly, he worked as President and CEO of STCMS Electric Company Private Limited, which is operating a 250 MW IPP.
Date of Appointment :	28.01.2009
Other Directorships/ Partnerships :	· Shri Kailash Logistics Limited · Madhya Bharat Power Corporation Limited

Name :	Mr. G.S. Sahni
Designation :	Director

Name :	Mr. Jitender Balakrishnan
Designation :	Director
Date of Birth/Age :	63 Years
Qualification :	B.E (Mech) National Institute of Technology (NIT) Madras University and Post Graduate Diploma in Industrial Management, Bombay University
Experience :	He has wide experience in the sectors like, Oil and Gas, Refineries, Power, Telecom, Airports, Roads, Ports, Steel, Cement, Fertilizers, Petrochemicals, Hotel, Pharmaceuticals, Paper, etc.
Date of Appointment :	30.07.2010
Other Directorships/ Partnerships :	· Bharti AXA General Life Insurance Company Limited · Bharti AXA Life Insurance Company Limited · Usha Martin Limited · Bhoruka Power Corporation Limited · Aditya Birla Finance Limited · Polyplex Corporation Limited · Binani Industries Limited · IL and FS Investment Managers Limited · S Kumars Nationwide Limited · India Glycols Limited · Essar Steel India Limited · Magus Estates and Hotels Limited · Shree Rajasthan Syntex Limited · Essar Services India Limited · Equinox Realty and Infrastructure Private Limited

Name :	Mr. P R Tripathi
Designation :	Director
Qualification :	Mining Engineer

Name :	Mr. Rakesh Mehra
Designation :	Director
Qualification :	FCWA

KEY EXECUTIVES

Name :	Mr. P. K. Jain
Designation :	Chief Financial Officer - Cum – Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.09.2012

Names of Shareholders	No. of Shares	Percentage of Holding

(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	8153428	22.74
Bodies Corporate	14691129	40.98
Any Others (Specify)	1000000	2.79
Firm	1000000	2.79
Sub Total	23844557	66.51
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	23844557	66.51
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	754834	2.11
Financial Institutions / Banks	5580	0.02
Insurance Companies	250	0.00
Foreign Institutional Investors	2237880	6.24
Any Others (Specify)	1804891	5.03
Foreign Bodies Corporate	1804891	5.03
Sub Total	4803435	13.40
(2) Non-Institutions
Bodies Corporate	3474729	9.69
Individuals
Individual shareholders holding nominal share capital up to Rs. 1 lakh	2912526	8.12
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh	704240	1.96
Any Others (Specify)	110513	0.31
Directors & their Relatives & Friends	15457	0.04
Non Resident Indians	94056	0.26
Trusts	1000	0.00
Sub Total	7202008	20.09
Total Public shareholding (B)	12005443	33.49
Total (A)+(B)	35850000	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	35850000	0.00

BUSINESS DETAILS

Line of Business :

Producing Sponge Iron, Mild Steel Ingots, Billets and Rolled Products

Products :

Product Description	Item Code (ITC Code)
Sponge Iron	7203
Steel Billets	7207
Ferro Alloys	3322
Thermal Power	98010003

PRODUCTION STATUS AS ON 31.03.2011

Particulars	Unit	Installed Capacity	Actual Production
Coal	MT	NA	431728
Pellet	MT	600000	173668
Sponge Iron	MT	460000	219143
Steel Ingots / Runner Riser	MT	40000	--
Steel Billets	MT	200000	80840
Wire Road	MT	180000	40937
Ferro Alloys	MT	66000	61232
Power	MW / KWH	81.50	468873066
Fly Ash Bricks, Blocks and Tiles	MT	192000	36502

GENERAL INFORMATION

No. of Employees :

600 (Approximately)

Bankers :

· Union Bank of India

· Bank of Baroda

· UCO Bank

· Axis Bank Limited

· HDFC Bank Limited

Facilities :

(Rs. In Millions)

Secured Loan	As on 31.03.2012	As on 31.03.2011
Bonds/debentures
1,250 (1,250) 9.55 % Redeemable nonconvertible debentures of Rs.10/- lacs each	1250.000	1250.000
Term loans
From banks Indian rupee loan	122.000	206.000
Foreign currency loan	1752.797	2048.422
From other parties Indian rupee loan from financial institutions	1250.000	150.000
From banks Hire purchase loan	0.183	1.192
Short term loans	250.000	390.000
Working capital loans	679.384	745.935
Working capital buyers credit loans	341.666	819.572
Total	5646.030	5611.121

Unsecured Loan	As on 31.03.2012	As on 31.03.2011
Deferred payment liabilities
Deferred sales tax loan	131.925	158.468
Loans repayable on demand
From banks Short term loans	699.998	0.000
Other loans and advances
Advances from customers	67.288	50.284
Total	899.211	208.752
Terms of repayment a) The Non-Convertible Debentures are redeemable in three equal annual installments commencing from July, 2015. The Company has an option to redeem these debentures earlier; however, no redemption will take place before the end of 3rd year from the date of allotment. b) External Commercial Borrowings availed in foreign currencies are payable in 5 Annual installments (First three installments are 1/6th of the loan amount and remaining 2 installments are 1/4th of the loan amount). First two installments have already been paid. c) Rupee term loan from a financial institution is payable in 12 equal quarterly installments commencing from September, 2013. d) Rupee term loan of Rs.192.000 Millions from Bank is payable in monthly installment of Rs.7.000 Millions. e) Deferred Sales Tax loan is interest free and payable at the end of fifth year from the end of the financial year of accrual. Security The Non-convertible Debentures are also secured by a registered mortgage of an immovable property of the Company situated at Ahmedabad. Term Loans from Bank, Financial Institution, External Commercial Borrowing and Debentures are secured by first paripassu charge by way of hypothecation of entire movable assets of the Company situated at Industrial Growth Centre, Siltara, Raipur subject to prior charge on current assets in favour of Working Capital Bankers and by way of joint equitable mortgage of immovable properties of the Company situated at Industrial Growth Centre, Siltara. Besides this, the Term Loan from Bank and Non Convertible Debentures are also secured by unconditional and irrevocable personal guarantees of Mr. K. K. Sarda and Mr. Manish Sarda. Security Working Capital loans from banks are secured by first pari-passu charge on stocks and book debts and second paripassu charge on all present and future movable Plant and Machinery and second charge by way of joint equitable mortgage of immovable properties located at Industrial Growth Centre, Siltara, Raipur. These facilities are also secured by irrevocable personal guarantees of Mr. K. K. Sarda and Mr. Manish Sarda. Mortgage loan of Rs.250.000 Millions is payable in 3 monthly installments starting from November, 2012. Mortgage loan is also secured by irrevocable personal guarantees of Mr. K. K. Sarda and Mr. Manish Sarda, Corporate Guarantee of M/s. Chhattisgarh Investments Limited and Rishabh Mining and Transport Company Private Limited. The Loan of Rs.0.183 Million is secured by hypothecation of related vehicle is payable in monthly installment of Rs.0.092 Million.


Banking Relations :	--

Auditors :
Name :	M. M. Jain and Associates Chartered Accountants
Address :	Shreemohini, Kingsway, Nagpur, Maharashtra, India

Subsidiaries :	· Sarda Energy and Minerals Hongkong Limited, Hongkong · Sarda Global Ventures Pte Limited, Singapore · Sarda Metals and Alloys Limited · Sarda Energy Limited · Parvatiya Power Limited · Madhya Bharat Power Corporation Limited · Sarda Hydro Power Private Limited · Raipur Fabritech Private Limited · Raipur Industrial Gases Private Limited

Associate Companies :	· Chhattisgarh Bricks Private Limited · Natural Resources Energy Private Limited

Related enterprises where significant influence exist	· Sarda Agriculture and Properties Private Limited · R.R. Sarda and Company
	·
Joint Ventures :	· Raipur Infrastructure Company Limited · Madanpur South Coal Company Limited
	·
Controlled Entities	· Chhattisgarh Hydro Power LLP · Shri Ram Electricity LLP

CAPITAL STRUCTURE

As on 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount

50000000	Equity Shares	Rs.10/- each	Rs.500.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount

35850000	Equity Shares	Rs.10/- each	Rs.358.500 Millions

Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

Particular	No.	Rs. In Millions
Shares outstanding at the beginning of the year	3,58,50,000	358.500
Shares Issued during the year	--	--
Shares bought back during the year	--	--
Shares outstanding at the end of the year	3,58,50,000	358.500

Terms/rights attached to equity shares

The Company has only one class of shares - equity shares - having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012, the amount of per share dividend proposed for distribution to equity shareholders is Rs.3/- (P.Y. Rs.3/-).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders

Details of shareholders holding more than 5% shares in the Company

Particular	No. of Shares Held	% of Holding
Equity shares of Rs.10/- each fully paid
Chhattisgarh Investments Limited	1,04,90,657	29.26%
Sarda Agriculture and Properties Private Limited	26,35,150	7.35%
Orange Mauritius Investments Limited	21,65,680	6.04%
Infrastructure Development Finance Company Limited	18,42,105	5.14%
Asia Minerals Limited	18,04,891	5.03%

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		358.500	358.500	340.451
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		7723.465	6579.475	5305.302
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8081.965	6937.975	5645.753
LOAN FUNDS
1] Secured Loans		5646.030	5611.121	4472.064
2] Unsecured Loans		899.211	208.752	123.027
TOTAL BORROWING		6545.241	5819.873	4595.091
DEFERRED TAX LIABILITIES		499.614	360.740	285.921

TOTAL		15126.820	13118.588	10526.765

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		7339.363	6877.753	4265.057
Capital work-in-progress		1087.694	1240.341	3733.443

INVESTMENT		2131.284	1522.841	664.600
DEFERREX TAX ASSETS		0.000	0.000	0.000

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	2272.222	2587.588	1519.844
	Sundry Debtors	431.304	433.595	143.948
	Cash & Bank Balances	9.475	16.865	246.657
	Other Current Assets	259.859	26.327	0.000
	Other Non-Current Assets	12.102	6.309	0.000
	Loans & Advances	3475.550	2106.909	912.226
Total Current Assets		6460.512	5177.593	2822.675
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	834.863	657.853	489.556
	Other Current Liabilities	924.696	828.167	349.985
	Provisions	132.474	213.920	119.493
Total Current Liabilities		1892.033	1699.940	959.034
Net Current Assets		4568.479	3477.653	1863.641

MISCELLANEOUS EXPENSES		0.000	0.000	0.024

TOTAL		15126.820	13118.588	10526.765

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	11001.770	8847.423	5228.163
		Other Income	584.391	252.771	72.752
		TOTAL (A)	11586.161	9100.194	5300.915

Less	EXPENSES
		Cost of materials consumed	6287.740	5602.623
		Purchases of stock-in-trade	140.477	440.739
		Changes in inventories of finished goods, work-in-progress and stock-in-trade	(4.124)	(632.574)	4013.857
		Employee benefits expense	408.701	330.019
		Other expenses	2377.670	1759.313
		TOTAL (B)	9210.464	7500.120	4013.857

Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		2375.697	1600.074	1287.058

Less	FINANCIAL EXPENSES (D)		702.767	316.568	127.232

	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		1672.930	1283.506	1159.826

Less/ Add	DEPRECIATION/ AMORTISATION (F)		632.336	576.267	387.978

	PROFIT BEFORE TAX (E-F) (G)		1040.594	707.239	771.848

Less	TAX (H)		(103.395)	210.511	139.859

	PROFIT AFTER TAX (G-H) (I)		1143.989	496.728	631.989

Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		NA	3444.701	3082.205

Less	APPROPRIATIONS
		Transfer to General Reserve	NA	150.000	150.000
		Transfer to Debenture Redemption Reserve	NA	62.500	0.000
		Dividend	NA	107.550	102.135
		Tax on Dividend	NA	17.447	17.358
	BALANCE CARRIED TO THE B/S		NA	3603.933	3444.701

	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	1135.110	1174.588	636.746
		Interest Received	4.722	0.718	19.265
		Other Earnings	266.550	4.230	32.901
	TOTAL EARNINGS		1406.382	1179.536	688.912

	IMPORTS
		Raw Materials	834.933	1854.606	705.785
		Components and Spare Parts	73.366	7.113	1.000
		Capital Goods	46.970	95.953	84.255
	TOTAL IMPORTS		955.269	1957.672	791.04

	Earnings Per Share (Rs.)		31.91	13.86	18.56

QUARTERLY RESULTS

PARTICULARS	30.06.2012	30.09.2012
Type	1^st Quarter	2^nd Quarter
Net Sales	3412.830	3530.080
Total Expenditure	2834.110	2808.800
PBIDT (Excl OI)	578.720	721.280
Other Income	67.940	30.170
Operating Profit	646.660	751.450
Interest	192.420	179.090
Exceptional Items	0.000	0.000
PBDT	454.240	572.360
Depreciation	158.690	157.750
Profit Before Tax	295.550	414.610
Tax	93.040	138.990
Provisions and contingencies	0.000	0.000
Profit After Tax	202.510	275.620
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	202.510	275.620

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	9.87	5.46	11.92

Net Profit Margin (PBT/Sales)	(%)	9.46	7.99	14.76

Return on Total Assets (PBT/Total Assets}	(%)	0.75	5.87	10.88

Return on Investment (ROI) (PBT/Networth)		0.13	0.11	0.13

Debt Equity Ratio (Total Liability/Networth)		1.04	1.08	0.98

Current Ratio (Current Asset/Current Liability)		3.41	3.05	2.94

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	----------------------
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	----------------------
22]	Litigations that the firm / promoter involved in	----------------------
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	----------------------
26]	Buyer visit details	----------------------
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	No
31]	Date of Birth of Proprietor/Partner/Director, if available	Yes
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	Yes

OPERATIONS

During the year, all existing manufacturing facilities and coal mine achieved record output. This could be achieved through constant endeavor at all levels for excellence. The operations at iron ore mines remained suspended due to law and order problems in the surrounding area.

For detailed plant wise analysis, members are requested to refer to the Management Discussion and Analysis, forming a part of Annual Report.

PROJECTS

During the year, the Wire Drawing Mill, Coal Washery and 2^nd Bricks plant were commissioned at a total capital outlay Rs.416.393 Millions.

Debottlenecking, Modernization and Expansion project

The company has planned capital expenditure of Rs.5500.000 Millions for debottlenecking, modernisation and expansion of existing manufacturing, coal mining and coal washery to be executed over next 2 years. Union Bank of India has appraised and sanctioned part debt funds for the project. Balance amount is being syndicated from other member banks of consortium.

Pithead Thermal Power Plant

The company has acquired required land for the proposed 350 MW thermal power plant at Kolam, Raigarh near its captive coal mines. Water Resources Department, Government of Chhattisgarh has allocated required quantity of water for the project. Environmental clearance is awaited. The site work and release of orders for plant and machinery and other facilities for the project will start after receipt of statutory clearances. Coal mining plan is under preparation to meet coal requirement of the project.

Mining projects

Iron Ore

The company has executed 4 Prospecting Licenses for iron ore in Narayanpur district of Chhattisgarh. The company is in process of getting various statutory clearances.

Manganese Ore

The application for forest and environment clearance for manganese ore mines of the company in Goa is awaiting State Government clearance, pending finalization of Mining/Forest Policy of the State.

The comapny received prior permission from Central Government under Mines and Minerals (Development and Regulation) Act for one prospecting license in Balaghat district, Madhya Pradesh.

Having completed the Reconnaissance, the company has moved three applications for grant of Mn ore prospecting licenses in Miragpur area (Madhya Pradesh), which are under consideration of the State Government.

Coal

The work on the Indonesian coal mine under wholly owned subsidiary is progressing steadily. Forest clearance has been received. Land acquisition is going on.

AWARDS/APPRECIATION

During the year the company received the following awards:

· Engineering Export Promotion Council (Western Region) “EEPC Star Performer Award in the product group “ferro alloys” for its outstanding export performance during FY 2009-10 when the country was reeling under recession post-Lehman fiasco. The company had received the award for 2008-09 also.

· Certificate of Merit from Chhattisgarh State Renewable Energy Development Agency (CREDA), Dept. of Energy, Govt. of Chhattisgarh in appreciation of the achievement in Energy Conservation at State Level for the year 2011.

· Trophy for “General Safety Consciousness” in Annual Coal Mines Safety Fortnight 2011 at South Eastern coalfields Limited, Bilaspur Region.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENT

The company operates primarily in Steel and Ferro Alloys sector as an integrated producer backed by captive coal mines and captive power plant. The company has also focused on the energy sector mainly through subsidiaries.

The country’s economic scenario and recent developments in the sectors related with the company’s business are discussed here under.

ECONOMIC SCENARIO

Global Economy on the whole is witnessing turbulent times. While there are some signs of recovery, sustained progress will depend upon a solution to the Euro debt crisis.

The Indian GDP growth has moderated to 6.5 percent reflecting the impact of international economic downturn and continued monetary tightening. Managing growth and price stability were conflicting challenges in macroeconomic policy making. Indian rupee weakened by more than 14% during the year. WPI inflation remained high around 9% during 2011. Corporates found it increasingly difficult to pass on rise in input cost to the customers.

Due to stratified mining sector, dominated by the public sector undertakings, only 10% of the country’s landmass has been explored. Growth of mining industry in 2012 and beyond will remain big challenge to sustain a high GDP growth. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals such as coal and iron ore in a bid to meet fast-rising domestic demand.

STEEL

Over the last decade there has been a structural shift in the demand for steel from developed economies to emerging economies. The demand has shifted towards emerging markets primarily due to strong economic growth coupled with higher share in fixed assets investments as a percentage of GDP. China has replaced Japan, Korea and some of the European companies as driver of the steel market. In 2011 global steel production registered a growth of 6.8% with total output of 1490 Mn tonnes. China produced 683 Mn tonnes of the world steel output registering a growth of 9%. India ranked fourth with production of 72 Mn tonnes steel registering a growth of 6%. Japan and African continent registered negative growth.

Indian steel industry faced shortage of iron ore, coal and natural gas adversely affecting production of steel and in particular sponge iron. During FY 2011-12 India produced 20.56 Mn tonnes of DRI as against 23.26 Mn tones produced during last year registering a negative growth of 12%. India, however, continues to be the largest producer of DRI in the world. The ban on iron ore mining in Karnataka, issues related to illegal mining, delay in grant of clearances for coal mining and reduced output of gas from KG basin adversely affected steel output.

Poor quality and high price of coal also affected steel industry. Fuel Supply Agreement (FSA) has caused Coal India to supply only 11-12 million tonnes of coal to the sponge iron producers against the demand of 32 million tonnes forcing the sponge iron producers to resort to procurement through high cost e-auctions and imports, leading to spike in input costs.

The Steel Ministry has proposed a research and development fund for pilot projects of alternate iron and steel technologies developed indigenously. Along with it the ministry has also proposed a five per cent interest subsidy for value addition in iron-ore fines and energy efficiency in the secondary steel plants. This fund will primarily focus on three projects - development of alternate iron-making technology, development of alternate technology for utilizing slime and development of CRGO-electrical steel.

FERRO ALLOYS

Manganese, serves as an important additive for the production of steel. The input quantum of ferro alloys in steel making depends on required end use properties of steel. China and to a lesser extent India are key players in the global ferro alloys industry. While demand side of ferro alloys industry continued to be strong, on the back of record steel production supply also increased substantially through new capacity build-up resulting in pressure on selling prices throughout the year. In the past, China was exporting manganese alloys but on account of a combination of internal factors, including imposition of export duty, exports from China dried up and in 2012 China has become net importer of manganese alloys. Increased fuel/ power cost in ferro alloys producing countries and stronger currencies of major ore producing countries namely Australia and South Africa have put pressure on production costs and producer margins. However, the prices of ferro alloys have started showing upward trends since March, 2012.

The global manganese alloys production was 15.9 Mn tonnes as against 14.8 Mn tonnes in 2010 registering a growth of 7% in line with growth of steel industry. Silico Manganese (SiMn) constituted 62% and Ferro Manganese (FeMn) 28% of total ferro alloys production. Although ferro alloys output was at all-time high, uncertainty about sustainability of global GDP growth and strong competition kept performance of ferro alloys producers subdued in 2011. The Mn ore production also increased marginally from 47 Mn tonnes to 48 Mn tonnes. In terms of Mn content it increased to 15.8 Mn tonnes registering growth of 9% with average Mn content of 32.8%. China imported a record high of 13 Mn tones of sea borne ore in 2011. India also meets major part of its requirement of high grade Mn ore through imports. MOIL Limited, a PSU, is controlling major Mn ore operating reserves of the country. MOIL produced 1.07 Mn tonnes of Mn ore against 1.15 Mn tonnes in the previous year.

New manganese mining capacity of about 10 Mn tonnes/year (gross weight ore) is planned, mainly in South Africa where three mining projects with a total output of 6.3 Mtpy of saleable ore or sinter are planned.

POWER

The installed capacity of power in the country has crossed two Lacs megawatt mark which includes 1,32,013 MW capacity in the thermal sector, 38,991 MW in hydro, 4,780 MW in nuclear and 24,503 MW in renewable energy. Total generation was 876.43 Bn units registering a growth of 8.05%. In 2011-12, 20,501 MW was added. Inspite of being the fifth largest electricity generation capacity in the world, India still faces huge power shortage and load-shedding.

Over the last few years, India has been facing acute shortage of coal. Despite having vast coal reserves, in the recent years India’s dependence is increasing on imports mainly on account of exploration, technical, environmental and logistical issues.

India is blessed with 84000 MW of hydro-electric potential at 60% load factor and ranks 5th in terms of exploitable hydro-potential on global scenario. India is endowed with rich solar energy resource. India receives the highest global solar radiation on a horizontal surface. India plans to generate 1 GW of power by 2013. To promote renewable energy and to make itself sustainable, the government has provided impetus to investors and imposed renewable purchase obligation on conventional energy buyers/consumers in order to balance costs and prices.

OUTLOOK

With the concerted policy actions around the world, the global GDP for 2012 is expected to grow at 3.3% with emerging and developing economies leading the growth (+5.5%) and developed economies growing by 1.2%. Indian economy is expected to grow by +7%. Uncertainty remains with Euro Zone. Barring some softening, Chinese growth is expected to remain strong. In view of above demand for steel, ferro and power is expected to grow steadily.

Steel and ferro alloys prices have shown improvement in current year. However, the momentum seems to have lost steam and capacity utilization in many regions remains below 80%. Raw material prices initially showed resilience at lower levels but are expected to remain relatively stable.

The price of power to the industry has gone up across the country. The company is having captive power generation capacity. This has a positive impact on the company. The ferro alloys plant at Vizag will be operational in the current year. China becoming net importer of ferro alloys will help in boosting Indian ferro alloys export. With concerted efforts capacity utilization and margins of existing production facilities are also expected to improve.

The company has chalked out a strategy to expand and grow on the strength of natural resources held by/allotted to the company. Accordingly, the projects will be executed to coincide with the availability of captive raw material resources.

Overall the company expects to better its performance in the current year.

NATURE OF OPERATION

The Company has integrated steel manufacturing facility starting from iron ore and coal mining to the finished steel in the form of wire rod and wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The Company has also promoted hydro power projects through SPVs.

CONTINGENT LIABILITIES

Rs. In Millions

Particulars	31.03.2012	31.03.2011
Guarantees given by company’s bankers	70.489	71.944
Share of guarantees given by the jointly controlled entity	90.000	90.000
Guarantees given to dgft on behalf of wholly owned subsidiary for meeting export obligation	6.387	6.387
Guarantees given to assistant commissioner of customs on behalf of wholly owned subsidiary	33.421	4.257
Penal interest for non creation of securities for rupee term loan from IDFC	6.543	--
Post dated cheques given to Axis Bank Limited for disbursement of term loan to Sarda Metal and Alloys Limited, wholly owned subsidiary of the company, pending creation of security for sanctioned facilities	NIL	1212.810
Bills discounted with the company’s bankers under letters of credit	162.577	171.205
Claims against the company not acknowledged as debt and disputed in Appeals	8.529	9.687
Excise duty and service tax demand	35.390	23.048
Vat, cst and entry tax	20.020	5.078
Income tax	398.614	189.637
Energy development cess	218.980	156.740

i) Guarantee (equal to Company’s share in Joint Venture) given by the Company to IDBI Bank Limited against guarantee issued by the Bank in favour of Government of India on behalf of Madanpur South Coal Company

Limited (The Joint Venture Company for Coal Mining) Rs.90.000 Millions ( P.Y. Rs.90.000 Millions).

ii) Guarantee given to Director General of Foreign Trade Rs.6.387 Millions (P.Y. Rs.6.387 Millions) and Assistant Commissioner of Customs Rs.30.113 Millions (P.Y. Rs.4.257 Millions) on behalf of Sarda Metal and Alloys Limited, wholly owned subsidiary of the Company for fulfillment of Export Obligation against import of capital goods under Export Promotion Capital Goods Scheme.

iii) Excise Duty and Service Tax

a) Excise duty demand of Rs.2.056 Millions (P.Y. Rs.2.056 Millions) raised on account of Cenvat credit availed, which the Company has disputed in High Court.

b) Excise Duty demand of Rs.16.538 Millions (P.Y. Rs.17.038 Millions) raised on account of Cenvat credit availed which the Company has disputed and has filed appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT).

c) Excise Duty demand of Rs.9.787 Millions (P.Y. Rs.1.023 Millions) raised on account of Cenvat credit availed which the Department has disputed and has filed appeal before the CESTAT.

d) Rs.0.697 Million (P.Y. Rs.0.697 Million) on account of duty on VAT Collected by the Company against which the Company has filed an appeal before the CESTAT.

e) Rs.0.696 Million (P.Y. Rs.0.444 Million) on account of duty on sale of waste and scrap by the Company. The case has been decided in favour of the Company by Commissioner Central Excise (Appeals) (CCE(A)). The Central Excise Department has filed appeal before the CESTAT against decision of the CCE(A).

f) Excise Duty demand of Rs.1.010 Millions (P.Y. Rs.1.028 Millions) raised on account of Cenvat credit availed has been disputed before Commissioner (Appeals), Raipur.

g) Excise Duty demand of Rs.0.762 Million (P.Y. Rs.0.762 Million) raised on account of Modvat credit availed has been disputed before Commissioner (Appeals), Raipur.

h) Service Tax demand of Rs.3.844 Millions (P.Y. NIL) raised on account of Service Tax on foreign services availed, which the Company has disputed and has filed appeal before Commissioner (Appeals), Raipur.

iv) Value Added Tax/Central Sales Tax/Entry Tax Value Added Tax/Central Sales Tax/ Entry Tax demands of Rs.20.020 Millions (P.Y. Rs.5.078 Millions) are pending in appeal against assessment of various years.

v) Income Tax

Rs.189.634 Millions ( P.Y. Rs.189.634 Millions) for the Assessment Year 2008-09 and Rs.208.980 Millions ( P.Y. NIL) for the Assessment year 2009-10 on account of partial disallowance of deduction claimed under Section 80IA of the Income Tax Act, 1961 disputing the transfer pricing of Power captively consumed by other divisions. The Company has filed appeal before CIT (Appeals). The CIT (Appeals) has decided the similar issue in favour of the Company for the Assessment Year 2007-08. This issue has also been decided in favour of the Company by the Income Tax Appellate Tribunal for earlier Assessment years.

vi) Energy Development Cess of Rs.218.980 Millions (P.Y. Rs.128.800 Millions) net of amount deposited Rs.29.434 Millions (P.Y. Rs.29.434 Millions) demanded by the Chief Electrical Inspector, Govt. of Chhattisgarh for the period May, 2006 to January, 2012. The Honorable High Court of Chhattisgarh has held the levy of Energy Development Cess as unconstitutional vide its Order dated 20th June, 2008. The State Govt. has filed a Special Leave Petition before the Honorable Supreme Court.

STATEMENT OF UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 30TH SEPTEMBER, 2012

Rs. In Millions

	Particulars	Quarter Ended		Half Year Ended
		30.09.2012 Unaudited	30.06.2012 Unaudited	30.09.2012 Unaudited
1	Income from Operations
	Sales/Income from Operations (Gross)	3861.514	3698.522	7560.036
	Less: Excise Duty	352.417	328.169	680.586
	a) Net Sales/Income from Operations (net of excise duty)	3509.097	3370.353	6879.450
	b) Other Operating Income	20.978	42.482	63.459
	Total Income from Operations (Net)	3530.075	3412.835	6942.909
2	Expenses
	a) Cost of Materials consumed	1993.402	1975.601	3969.003
	b) Purchase of stock in-trade	92.568	147.603	240.171
	c) Changes in inventories of finished goods, work-in-progress and stock-in-trade	63.324	(121.538)	(58.214)
	d) Employee benefit expenses	117.882	118.266	236.149
	e) Depreciation and amortization expense	157.753	158.692	316.445
	f) other expenses	541.624	714.182	1255.806
	Total Expenses	2966.553	2992.806	5959.360
3	Profit /(Loss) from operations before other income, finance
	costs and exceptional items (1-2)	563.522	420.029	983.548
4	Other Income	30.170	67.944	98.114
5	Profit /(Loss) from ordinary activities before finance costs and
	exceptional items (3+4)	593.692	487.973	1081.664
6	Finance Costs	179.087	192.424	371.510
7	Profit /(Loss) from ordinary activities after finance costs but before exceptional items (5-6)	414.605	295.549	710.154
8	Exceptional Items	-	-	-
9	Profit /(Loss) from ordinary activities before tax	414.605	295.549	710.154
10	Tax Expense	138.990	93.035	232.026
11	Net Profit /(Loss) from ordinary activities after tax (9-10)	275.615	202.514	478.129
12	Extraordinary items (net of tax expense)	-	-	-
13	Net Profit /(Loss) for the period (11-12)	275.615	202.514	478.129
14	Paid up equity share capital (Eq. shares of Rs.10/- each)			358.500
15	Reserve excluding revaluation reserves			8076.647
16	Earnings per share (before/after extraordinary items) of Rs.10/-each
	Basic	7.69	5.65	13.34
	Diluted	7.69	5.65	13.34
17	Debt Service Coverage Ratio			4.24
18	Interest Service Coverage Ratio			4.68

A	Particulars of shareholding
1	Public Shareholding
	- No. of Shares	12,005,443	12,005,443	12,005,443
	- Percentage of Shareholding	33.49%	33.49%	33.49%

2	Promoters and promoter group shareholding a) Pledged/Encumbered
	- Number of shares	0.000	0.000	0.000
	- Percentage of shares ( as a % of the total shareholding of the promoter and promoter group)	0.000	0.000	0.000
	- Percentage of shares (as a % of the total share capital of the Company)	0.000	0.000	0.000
	b) Non- encumbered
	- Number of shares	23,844,557	23,844,557	23,844,557
	- Percentage of shares ( as a % of the total shareholding of the promoter and promoter group)	100.00%	100.00%	100.00%
	- Percentage of shares (as a % of the total share capital of the Company)	66.51%	66.51%	66.51%

B	Investor Complaints
	Pending at the beginning of the quarter	0
	Received during the quarter	2
	Disposed during the quarter	2
	Remaining unresolved at the end of the quarter	0

NOTES :-

1. The above accounts were reviewed by the Audit Committee and considered and approved in the meeting of the Board of Directors held on 27.10.2012.

2. Other expenses includes forex fluctuaion loss / (gain).

3. The figures for the corresponding previous periods have been restated / regrouped, wherever necessary, to make them comparable.

4. Ratios have been computed as under :-

(i) DSCR = EBIDTA/(Interest +Scheduled Principal Payments)

(ii) ISCR = EBIDTA/Interest Expenses (Excluding Notional Interest) Interest excludes exchange differences to the extent regarded as adjustment to interest cost.

SEGMENT WISE REVENUE, RESULTS AND CAPITAL EMPLOYED FOR THE QUARTER ENDED 30TH SEPTEMBER, 2012

Rs. In Millions

	Particulars	Quarter Ended		Half Year Ended
		30.09.2012 Unaudited	30.06.2012 Unaudited	30.09.2012 Unaudited
1	Segment Revenue
	a) Steel	2364.115	2081.573	4445.688
	b) Ferro Alloys	1104.145	1245.960	2350.105
	c) Unallocated	74.931	103.113	178.043
	Total	3543.191	3430.646	6973.836
	Less: Inter Segment Revenue	13.116	17.811	30.927
	Net Sales/Income from operations	3530.075	3412.835	6942.909

2	Segment Results Profit/(Loss) before tax and interest and forex fluctuation gain/(loss)
	a) Steel	355.421	265.736	621.157
	b) Ferro Alloys	186.693	329.553	516.246
	Total	542.114	595.289	1137.403
	Add: i) Interest and Forex fluctuation Gain/(Loss)	(99.476)	(312.433)	(411.909)
	ii) Unallocable expenditure net off unallocable income. Gain/(Loss)	(28.033)	12.693	(15.340)
	Total Profit before tax	414.604	295.549	710.154

3	Capital Employed (Segment Assets - Segment Liabilities) (Based on estimates in terms of available data)
	a) Steel	8118.682	7959.025	8118.682
	b) Ferro Alloys	446.515	936.062	446.515
	c) Unallocated	2498.383	2582.448	2498.383
	Total	11063.580	11477.535	11063.580

Note:

1 Previous year/quarter figures are regrouped and reclassified to confirm to current year/quarter classification

STATEMENT OF ASSETS AND LIABILITIES

Rs. In Millions

			Standalone
		Particulars	30.09.2012 UNAUDITED
A		EQUITY AND LIABILITIES
1		Shareholders' Fund
	a)	Share Capital	358.500
	b)	Reserves and Surplus	8076.647
	c)	Money received against share warrants	-
		Subtotal - Shareholders' Fund	8435.147
2		Share Application money pending allotment	-
3		Minority Interest
4		Non-Current Liabilities
	a)	Long-Term Borrowings	4559.454
	b)	Deferred Tax Liability (net)	526.543
	c)	Other Long term liabilities	55.367
	d)	Long-term provisions	91.123
		Subtotal - Non-current Liabilities	5232.487
5		Current Liabilities
	a)	Short-term borrowings	1577.638
	b)	Trade Payables	1347.946
	c)	Other Current Liabilities	1226.703
	d)	Short -term provisions	99.692
		Subtotal - Current Liabilities	4251.979

		TOTAL - EQUITY AND LIABILITIES	17919.613

B		ASSETS
1		Non-current Assets
	a)	Fixed Assets	8354.190
	b)	Non-current investments	3043.293
	c)	Deffered tax assets	-
	d)	Long-term loans and advances	1693.268
	e)	Other non-current assets	10.259
		Subtotal - Non-current Assets	13101.010
2		Current Assets
	a)	Current investments	3.619
	b)	Inventories	2719.534
	c)	Trade Receivables	384.124
	d)	Cash and Bank Balances	10.665
	e)	Short-term loans and advances	1537.514
	f)	Other current assets	163.147
		Subtotal - Current Assets	4818.603

		TOTAL - ASSETS	17919.613

FIXED ASSETS

· Land

· Coal Mines

· Building

· Plant and Machinery

· Furniture and Fixtures

· Equipment

· Vehicles

WEB SITE DETAILS

PROFILE

Subject is one of the lowest cost producers of steel (sponge iron, billets, ingots, TMT bars) and one of the largest manufacturers and exporters of ferro alloys in India. Headquartered in Raipur, Chhattisgarh, the company merged with Chhattisgarh Electricity Company Limited (CECL) in 2007 with a vision to becoming a leading energy and minerals company.

Over the last three decades the company has continuously diversified its product portfolio to include many customized value added products. The company firmly believes in benchmark product quality, customer centric approach, people focus, ethical business practices and good corporate citizenship. Building on these values, Subject has become the supplier of choice for many domestic and international customers across more than 60 countries.

Subject differentiates itself from its peers by not being just another steel company. It foresaw the importance and emergence of energy and minerals as two critical ingredients for developing economies and particularly for India. Synergy in Energy became the basis of all its future endeavors. Today, SEML is one of the very few companies to become completely self-sufficient in terms of its energy requirements and is well on its way to achieve self sufficiency in other mineral resources. The company has acquired iron ore, coal and manganese mines in India and is aggressively looking for mineral resources across the globe

Subject is listed on Bombay Stock Exchange (504614) and on National Stock Exchange of India Limited (SARDAEN).

BOARD OF DIRECTORS

Kamal Kishore Sarda

Chairman and Managing Director

Kamal Kishore Sarda, born on 12 June, 1952, did his Bachelors in Mechanical Engineering from National Institute of Technology (formerly Vishveshvarya Regional College of Engineering), Nagpur, MH, India. He has also taken courses in Strategic Management and Human Resources from IIM, Ahmedabad and XLRI, Jamshedpur.

Mr. Sarda has over three decades of experience in the iron and steel industry. He is the Chairman of SEML's Board and Managing Director and is responsible for steering SEML towards the path of growth. Since, taking over SEML (erstwhile Raipur Alloys and Steel Limited) a sick and closed unit in 1979, he has been instrumental in turning around the company and expanding its product portfolio to include high value added steel products, minerals and energy.

He is associated with the Friends of Tribal Society in the capacity of Vice President of the Raipur chapter and was the Ex-Chairman of Confederation of Indian Industry (CII), Chhattisgarh Chapter.

Gopal Krishna Chhanghani

Executive Director

Gopal Krishna Chhanghani, was born on 24 September 1952 and has been on SEML's Board since 25 November 1997. He has done his Bachelors in Mechanical Engineering from Government Engineering College, Jodhpur. He has over three decades of experience in the steel industry and is associated with SEML with more than two decades. Before joining SEML he has worked with various organizations like Zenith Steel and Pipes Limited, Usha Alloys and Steel Limited, Special Steels Limited etc.

With his rich experience in the field, he provides direction to the company's mining operations as well as its corporate planning function.

He is Regional Director of SIMA (Sponge Iron Manufacturers Association), New Delhi, Chairman - Power HT-Sub Committee, URLA Industries Association and Chairman - Mining Panel, CII, Chhattisgarh Chapter.

Pankaj Sarda

Whole time Director

Pankaj Sarda, born on 24 October, 1979 is the son of Kamal Kishore Sarda. He completed his Bachelors in Industrial Engineering from Nagpur University, Nagpur, MH, India in 2001 and Masters of Science in Industrial Administration from Purdue University, USA in 2004. He was appointed to SEML's Board as Whole Time Director in November 2007 and has more than five years of industry experience.

Ghanshyam Das Mundra

Whole time Director

Ghanshyam Mundra was born on 20 July 1961 and is a Chartered Accountant with more than 25 years of experience in the field of finance and accounting. He is associated with SEML since the beginning of his career and was appointed to SEML Board in December 2000 as a Whole Time Director.

He provides his expertise to the company in matters related to corporate finance, banking and investment activities. He is also a member of the Audit Committee and Shareholders' Grievance Committee at SEML.

Prabhakar Ram Tripathi