Dear Shareholders,

2009-10 was again an important year for the Company. While the companies around the world tried to find ways to cope with the post economic meltdown issues, your Company posted a modest 19% growth in sales and crossed turnover of ‘ 2000 Crores.

The Steel sector remained extremely volatile. The Company completed the Blast Furnace expansion project increasing the capacity to 2,00,000 tons per annum and expanded the DI Pipe distribution & marketing network by setting up offices manned by highly skilled & experienced manpower across India. This expanded capacity should not only help increase sales revenues but also improve operating margins in the coming years.

The Company had hired ECS to work on various projects which would help it increase efficiency and optimize cost. Various projects were taken up in Steel Melting Shop, Rolling Mills & SI Kilns area to achieve the same. The results will be visible in the coming year.

Your Company has completed two important acquisitions in the steel and pipes division. Hans Ispat Limited, with a billet manufacturing capacity of 84,000 tons per annum and 2 Rolling Mills has been acquired in Kutch. This will free up the capacity of the structural rolling mill at the Samakhiyali Plant which will now be dedicated for production of value added Angles/Structure for Transmission line tower application only. With the structure mill now certified by Power Grid Corporation of India, orders for Angles from large transmission line players have increased & are expected to go up further. The structure mill at Hans Ispat will be dedicated to production of stainless steel.

“Electro TMT Plus” bars have emerged as a premium brand in the rebars segment in Gujarat. The additional capacity from the Bar Rolling Mill at Hans Ispat will allow the company to leverage it’s strong distribution network within Gujarat. With this, Electrotherm will also have the largest market share in the TMT Bars segment in Gujarat.

Shri Ram Electrocast Private Limited, acquired in Siriguppa, Karnataka is a strategic acquisition for Electrotherm. The plant will be expanded to produce 1,80,000 Tone of Ductile Iron Pipes. With proximity to Iron ore mines in Hospet & Bellary and the availability of local market of 4 (Four) southern states, the plant when operational will provide a huge geographical advantage to the Company in the DI Pipe segment.

The electric vehicle market continues to pose challenges for the Company. However, the support from central and various state governments is slowly but surely increasing. With a strong belief that the future of 2 wheeler transportation in India is electric, your Company continues to invest in developing the right technologies to enable introduction of robust products for the Indian roads.

Due to volatile conditions in the steel market, most small & medium enterprises deferred their decision to set-up new small /medium steel plants impacting the overall sales of the E&P (Furnace) division. Export markets also did not show any major signs of recovery. The Company, however, utilized this slow period to strength it’s key internal processes like Project management & quality systems. Also, the product development team worked extra hard to develop certain path breaking products. World’s largest 40 tons Induction Furnace for mild steel billet making application was dispatched and commissioned in Nagpur and we plan to introduce a few more products in this year to further strengthen our dominance in the steel melting ( through Induction Furnace route ) segment in India.

The transformer manufacturing has shaped well and skilled professionals have joined the team. The Company will look to acquire a major market share from the furnace transformers market & become the market leader in that segment in a short space of time. The Company is also now looking for a collaboration for entering the growing power transformer segment.

With a firm belief that our people provide us our key competitive advantage, the Company availed services of KPMG HR advisory during the year to help it further strength it’s HR practices. Large scale “Organization Transformational” initiatives were launched which should result into wide ranging benefits in the coming years.

While the market conditions remain uncertain, your Company is taking initiatives on various fronts to align it’s strategies with the changing market conditions with an objective to continue to grow profitably and achieve leadership position in the market segments it serves.

Chairman & Chief Technology Officer

Mukesh Bhandari