Dear shareholders,

2013-14 has been a challenging year for the Indian economy as a whole & domestic steel industry in particular. The country faced multiple challenges of currency depreciation, rising current account deficit and above all policy paralysis which resulted in meagre GDP growth of 5% and nominal steel consumption growth of 0.60%.

In the global arena, China which accounts for about 50% of the annual steel manufacturing capacity globally has widening demand supply gap which send tremors to the industry across the globe. On the domestic front, with virtually no demand from infrastructure sector, demand in long products segment nosedived & prices remaining subdued all through the year.  on top of that, the pressure of imports took the toll on domestic manufacturing sector. Further, the problem was exaggerated by iron ore mining bans in Karnataka & Orissa and de-allocation of coal mines across the sector were a major setback for the industry.

Even in the backdrop of such challenging environment, we have gone ahead & successfully commissioned 1.2 MTPA Iron Ore Pellet plant in fiscal 13-14 taking the total capacity to 2.4 million tons per annum.. After the initial teething issues, the plant is well settled now and operating satisfactorily. All efforts are now being concentrated on reducing the production cost and improvement in operating efficiency, which when completed, will significantly improve the operating margins.

FY 2013 -14 was another year of record setting for us, as we have another first in our feather – successful commissioning of India’s first 50 MWe Solar thermal power project in Jaisalmer, Rajasthan. Being the first of its kind; the project was a big learning curve for the team. Despite several challenges, the whole team worked very hard to ensure timely completion of the project and build state-of-the-art facilities in such a difficult terrain. In the first year of operation itself, the project has won many accolades.

In the midst of difficult market conditions, the company has achieved a turnover of Rs 2350 crore for the year as compared to 2663 crore in preceding financial year and earned operating profit of Rs 362.79 crore as against Rs 345.71 crore during previous year. On account of higher interest and depreciation cost for newly commissioned capacities, the company registered lower net profit after tax of Rs 58 crore as against Rs 148 crore in the last fiscal. The Board of Directors have recommended a dividend of Rs 2.50 per share for the year.

Outlook

Although the global economic situation was on the path to recovery in fiscal 13-14, after a massive meltdown in the past couple of years, the domestic policy paralysis led to demand slowdown in infrastructure space. With a stable government in place at the Centre, we look forward to policy initiatives in the core infrastructure space viz. streamlining approval process for acquisition of land for greenfield & brownfield expansions, iron ore mining, coal mining, environmental issues etc. A clear industrial policy with special emphasis on manufacturing and infrastructure growth will be the key for revival of demand & investment in the sector. Thus the policy guidelines have to be re-framed with a long term objective and in view of the impending infrastructure & industrial growth in the country. A quicker decision making is essential to regain the momentum & confidence of the industry.

With the worst of slowdown behind us, we are very optimistic and confident of the new initiatives from the Central Government for long term sustainable growth of the country & its people.

Although total insulation from the cyclical movements of the steel industry is difficult, we continue to focus on captive mining, back ward integration and continued innovations across the product range to bring down cost of manufacturing and thereby insulating ourselves from the market disruptions.  We are also committed to make our best contribution towards India’s long term growth story.

It gives me immense pleasure to inform you that your Company has recently started development activities in Boria Tibu iron ore mines allotted to the Company and mining operations in full swing are expected to be started from Q3FY15. Your Company has also initiated process for expansion in capacity of existing Ari Dongri mines from 0.7 million tons to 1.20 million tons, for which forest approval has been received and environmental approval is in process. We are hopeful of getting the approval during the current year, which only will lead to increase in mining production and reduce the input cost and dependence on market for purchase of iron ore.

Before I conclude, I would like to convey my gratitude to all at GPIL, lenders, shareholders and other stakeholders for your trust and faith reposed in us in our journey so far and look forward to your unstinted support as we move along.

With best wishes,

Sincerely,

B.L.Agrawal

Managing Director