DIRECTORS' REPORT

To

The Members,

Your Directors have pleasure in presenting the 21st Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2014

PERFORMANCE

Your Company recorded an impressive performance for the year ended March 31, 2014. It scaled new heights in terms of sales and profits. Net sales stood at Rs. 8695.64 million were 15.14% higher than Rs. 7552.17 million for the previous year. Profit before tax was Rs. 1,849.92 million as against Rs. 1560.12 million in the previous year, registering a growth of 18.58% in the profit before tax.

EXPANSION

The Company (MISL) has clearly set its vision to position itself as a leading player in the brick and mortar sectors, which promote nation building, and a diversified mining company. Early this year, the group's vision was created by its employees and promoters which states as follows:

"Mesco group commits to the brick and mortar sectors of economy which promote nation building. Our core competence is in steel and minerals which we will consolidate and diversify into sectors where we have past experience and synergies. In all these sectors we will strive to be the most efficient producer by creating value for the stakeholders."

At the core of the strategic goals to meet the vision is MISL's consolidation in India as a major integrated steel player of at least 4.5 million tonnes per annum capacity by 2020. MISL is exploring both organic and inorganic options for this achievement. Among these are our plan for brownfield expansion at our Jajpur unit to take the finished steel capacity to 3.5 million tonnes in 2 phases and inorganic growth through M&A in companies which provide a strategic fit. MISL is in discussions with the financers and promoters of such assets to which we can add significant value on account of our experience and operational synergies.

To increase the competitiveness, we plan to commence operation of a 0.5 mtpa cement plant using BF slag at our Jajpur unit in the next 2 years. This year we commissioned the railway siding of 6mtpa material handling and we plan to expand it to 9 mtpa for which we have received the necessary permissions. We will install a wagon tippler in our raw material handling yard at a cost of Rs. 50 crores to improve the efficiency and throughput. We are also completely refurbishing one of our blast furnaces at the cost of Rs.30 crores which will include refractories, top charging equipment, bag filters etc.

In order to retain the competitive edge, we have made ownership of strategic raw materials as our priority. MISL is pursuing the process of acquiring environment and forest clearances for its allotted coking coal block in Chindwara, Madhya Pradesh. MISL is also actively looking for an acquisition of a coking coal mine in the Bowen Basin of Australia.

DIVIDEND

Your Directors recommended a dividend of Rs. 0.75 i.e. 7.5% per equity share of Rs. 10 each. The dividend distribution will result in a cash outgo of X120.98 million (including tax on dividend of X17.57 Million).

PUBLIC DEPOSIT

Your Company has not accepted any deposits u/s 58A of the Companies Act, 1956, during the year under review.

INSURANCE

The Company has taken adequate insurance to cover the risks on the fixed assets of the Company including Plant & Machinery, Stock etc. during the year under review and it is sufficient to take care of the unforeseen situation, if any.

DIRECTORS

At the ensuing Annual General Meeting, two directors are liable to retire by rotation namely, Mr. Purna Chandra Sahu and Mrs. Natasha Sinha. These directors are eligible for re­appointment and expressed their willingness to be re-appointed.

Necessary resolutions for the re-appointment of the aforesaid Directors have been included in the Notice convening the Annual General Meeting.  None of the Directors of the Company are disqualified for being appointed as Directors as specified inSection 164(2) (a) and (b) of the Companies Act, 2013.

AUDITORS  STATUTORY AUDITORS

M/s. Todarwal & Todarwal, Chartered Accountants and M/s Sangram Paul & Co, Chartered Accountants, joint Statutory Auditors of the Company, hold office until the conclusion of the  ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Company has received confirmation from both of them to the effect that their re-  appointment, if made, would be within the prescribed limits under Section 139(1) of the Companies Act, 2013 and also that they are not disqualified for such re-appointment within the meaning of Section 141 of the said Act. The Notes on Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further explanation.

COST AUDITORS

Pursuant to the provision of Section 148 of the Companies Act, 2013, Circular issued by the Ministry of Corporate Affairs and applicable provisions, if any, your directors have re­appointed M/s. S. S. Sonthalia & Co., Cost Accountants, Bhubaneswar, as the Cost Auditors to conduct the Cost Audit of your Company for the financial year ending on 31st March, 2015.

The Cost Auditors have certified that they are not disqualified under any of the provisions of Section 141 read with Section 139 and Section 148 of the Companies Act, 2013, and that the  appointment made is within the prescribed limit. A declaration to this effect has been  submitted by the Auditors to the Audit Committee. A Certificate from the Cost Auditors of their  being an independent firm of Cost Accountants and at Arm's length relationship with the  Company has also been submitted to the Audit Committee.

INTERNAL AUDITORS

Pursuant to the provision of Section 138 of the Companies Act, 2013 and Rule 13 of the Companies (Accounts) Rules, 2014, your directors have re-appointed SRB & Associates, Chartered Accountants, Bhubaneswar, as the Internal Auditors to conduct the Internal Audit of your Company for the financial year ending on 31st March, 2015.

CORPORATE GOVERNANCE

A report on corporate governance along with a certificate from the Auditors of the Company regarding compliance of the conditions of corporate governance pursuant to clause 49 of the listing agreement is annexed as Annexure A.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report, as required under the Listing Agreement with the Stock Exchange, is annexed as Annexure B.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors" Responsibilities Statement, your Directors confirm as under:

i. That in the preparation of the annual accounts for the financial year ended 31st March, 2014, the applicable accounting standards have been followed and that there are no material departures from the same;

ii. That 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 31st March, 2014 and of the profit 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, 1956, for safeguarding the assets of the Company and for preventing and  detecting fraud and other irregularities; and

iv. That the Directors have prepared the accounts for the financial year ended 31st March, 2014 on a "going concern" basis.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees are required to be furnished in a statement to be annexed to this report. However, as per the provisions of Section 219 (1) (b) (v) of the Companies Act, 1956, the Annual Report is being  sent to all the shareholders of the Company excluding the aforesaid information. Any  shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The Statement of particulars with respect to Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo pursuant to provision of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith as Annexure C to the Directors' Report.

ACKNOWLEDGMENT

The Directors acknowledge, with gratitude, the co-operation and assistance received from the Government, Banks, other Business constituents, Members and Employees during the year under review.

FOR AND ON BEHALF OF THE BOARD

RITA SINGH

CHAIRPERSON CUM MANAGING DIRECTOR

Place: New Delhi

Date : 11.08.2014