BALASORE ALLOYS LIMITED ANNUAL REPORT 2009-2010 CHAIRMAN'S REPORT Dear Shareholder, The lingering aftereffects of the global financial meltdown continued for initial part of the year 2009-10 as well. The financial crisis was a testing time for the economy and also for our Company. The strong battering of the west had taken a toll on the projections and future growth prospects. The roller coaster ride which your Company witnessed for the last two years brought to the fore one of the very important je nai sais quoi of the Company: Your Company has the resilience and strength to withstand all adverse circumstances and unflinching determination and indomitable courage to lift itself out of the quagmire of difficult and murky sea of recession. All around adversities lay dissipated. With the worldwide product demand taking a plunge, over stock piles, subdued price realization, lack of liquidity, vapouring up of working capital, freezing of the credit markets etc. - all of them adversely impacted the Ferro Chrome industry as a whole. With the global demand for steel dropping substantially, Ferro Chrome industry in the country was also severely affected. Though the severity of the recessionary phase globally could not be felt much in India because of the decoupling effect, but the substantial amount of drying of the funds, drying foreign inflows forced your Company to strategically adjust to the change in the environment and we can proudly say that we have been able to sustain the tumultuous water. Your Company took several proactive measures which helped to sustain full scale operation against all odds and emerge as a much stronger entity with a robust business model. Your Company has taken aggressive steps to meet the challenges of these difficult times through major initiatives in cost reduction, production rationalization, marketing acumen & foresight as well as overall operational excellence. The excellent customer relationship management of your Company helped in generating additional revenue through trading activity. Production rationalisation is being undertaken to right mix of raw material in manufacturing facilities. Your Company continued to maintain less than two days inventory during the difficult market scenario. Though the profitability of your Company had been impacted during this phase, we could still achieve PBT of Rs. 2084.78 lacs and PAT of Rs.1254.91 lacs. The future of Ferro Chrome industry appears to be quite promising with a growing demand of Stainless Steel at global level which has driven by growth in infrastructure and related sectors with corresponding increase in Ferro Chrome demand. Your Company is well organized to utilize every opportunity since it has achieved significant improvement in all operational parameters and optimized the productivity levels with the existing infrastructure. We are also looking at new horizons and with a vision to be a leader in the Ferro Alloys Industry, your Company has planned for strategic investment in the area of Capacity enhancement, Captive Power Generation & Various developmental activities in mining operations. The second restructuring package under CDR mechanism were implemented in 2009. However, in view of better financial performance, the Board of Directors have recommended to explore the possibilities to exit from CDR mechanism. Your Company continues to accord high priority to meet the requirement of various stakeholders like customers, suppliers, bankers, employees & society. However, the spirit of your Company's employees, coupled with their commitment to meet the challenges, I am sure, will see your Company come out of this difficult period, as a more cost-effective Ferro Chrome manufacturer with a stronger global market presence and an enhanced capability in producing new grades of Ferro Alloys to better serve its customers. Your Company has also maintained a very congenial relationship in the periphery and the society at large which has generated lot of goodwill and support. Finally, I would like to thank all stakeholders for their support and understanding through the year and feel overwhelmed with the faith they have instilled upon us and expect continuing support, trust and understanding in times to come. They have collectively made the Company what it is today and will help to lead the Company into tomorrow. I trust that the year ahead will be marked with overall development and growth, while adding value for all stakeholders. I am confident that all of you will prolong to support us in our journey of excellence to reach newer pinnacles. Thanking you, R K Jena Managing Director