CEO's Statement

The year 2013 to 2014 has been a year fraught with challenges on all fronts. Yet, while these challenges have certainly taken their toll on the overall revenues as well as the profitability of the Company, we have simultaneously been able to tackle the key challenges head-on and prepared ourselves for better prospects.

During the course of the year market demand for our products fell secularly across all the sectors and geographies that we serve. The domestic market witnessed a severe contraction in demand from the bearing, construction, powergen, and automotive sectors. In the engineering sectors this demand contraction was due to the market slowdown while in the commodity seamless tube markets it was due to the drastic increase in imports at economically unviable prices. Concurrently, there was a reduction in demand from the U.S. markets resulting from the Antidumping investigation launched by the U.S. Commerce Department. The European markets continued to be extremely fragile through the year and inspite of focused efforts we could push only marginal additional volumes into this market. As a result, we saw pressure on volumes as well as realizations. Together these two factors had a severe impact on our revenues as well as our profitability.

Having said the above, we now see considerably better prospects ahead of us. As this Annual Report goes to the press we have been able, after more than two years of effort, to secure the levy of a Safeguard Duty of 20% on the import of seamless tubes into India as a result of which we expect a substantial improvement in sales volumes and margins. In combination, we expect a major boost to the top-line as well as the bottom-line of the Company.

We have also made progress in our discussions with the Maharashtra State Electricity Distribution Company Limited to resolve the impasse with respect to the Energy Banking Agreement that we signed with them and the monies that are owed to us on this account. We expect to conclude this matter soon.

During the course of the year we have taken numerous steps to streamline the operations of the Company so that we are able to function with minimal inventory across all workstations and with tight control on process costs.

As we speak, we are witnessing a revival in demand particularly on the domestic front. With the positivism that has been created by the change of government we are seeing incremental growth across virtually all sectors. If this growth continues, as we hope it will, the steps that we have taken should see us emerge in a strong competitive position.

I would like to take this opportunity to express our gratitude to our customers, banks, and business associates for their continued support and for the trust that they have placed in us.

Thank you,

Salil Taneja

Pune, August 19, 2014