RECOMMENDED DATE:24.05.2010 VOLUME NO: 3/2010 ISSUE NO:41.

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STOCK REPORT- A VIRGIN STEEL STOCK. COMPANY.UNTRACKED AND UNKNOWN.
AML STEEL LIMITED (FORMERLY ASHOK MAGNETICS LTD) • STEEL OPERATIONS IN INDIA AND SRILANKA.

• GREENFEILD EXPANSION IN JHARKHAND OPERATIONAL. • 384 ACRES OF IRON ORE MINES AWAITING FOREST DEPT APPROVAL IN JHARKHAND.(SARAIKELA DISTRICT) • IRON ORE LEASE APPROVED BY GOVT OF INDIA FOR 20 YEARS FOR 40 MT.

KEY STATS:• • • • • Code AMLSTEEL FY09 BV CMP :

• IT IS TRADING AT A DISCOUNT TO ITS REPLACEMENT VALUE AT DISCOUNT WITH MOST SECOND RUNG STEEL STOCKS IN CENTRAL INDIA.

Market cap : 285mln : 76.48 :38 Total Debt :2402 mln

TEAM STOCKRESEARCHERS Pvt. Ltd.
3 SUBHASHNAGAR CORNER,RAIYA ROAD, RAJKOT, Gujarat, 360007 www.niftyviews.com CONTACT:09327744250

HEADLINE
AML Steel Limited is the flagship company of the group, which was established during 1993 to set up a plant to manufacture video and audio cassettes, which was considered to be one of the largest plants for such products in the whole of South India. Later, it was decided to diversify into steel making and therefore it was conceptualized to set up a steel plant in Pondicherry near Chennai. As an offshoot of the plan, first project to manufacture steel ingots out of scrap iron was commissioned near Pondicherry where abundant and uninterrupted power supply is available. In order to enrich presence in the steel sector, AML Steel Ltd., during the year 2003 made some overseas acquisitions by name Ashok Steel Industries Sri Lanka. Around the same time another acquisition too was made near Pondicherry under the name of Ankit Ispat Pvt Ltd., All the above companies have been fully turned around and started generating good cash returns.
In order to further enhance it's knowledge and presence in steel sector AML Steel Ltd., has set up a company called AML Steel & Power Ltd., by which as per the MOU signed with State of Jharkhand, Ministry of Mines, Government of India has allocated 384 acres of Iron ore mines with the deposit of about 40 million metric tonnes on a 20 year lease vide their letter dated 16th August 2005 and negotiations are on for further allotment of mines upto 150 million metric tonnes. As of now the company has not made significant progress in the operationalization of the mine.The company has 280000 tpa of coal linkage with CCL. The Company recently got relisted in NSE as the company was earlier listed in Madras Stock exchange as part of the recent MOU between the two exchanges.
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HIDDEN VALUE
The company posts standalone results to NSE which does not reflect upon the current state of
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financials of the company. For example while the standalone results show the quartelrly sales of 257 millions with a negative PAT of 1.60 mlns. This does not reflect the state of financials of the company.

The company can benefit tremendously from the current bull run in steel peices.Kindly note that the company uses sponge iron in its integrated steel plant in Saraikela and thus gets insulated from volatile coking coal prices. The company will be a multibagger only when the iron ore mine gets operational. Since we don’t have complete financial details of the company at this stage for FY2010. We initiate coverage on the stock with an ACCUMULATE rating on the stock and target price of 75 (FY09 BV) ,Important disclosure enclosed.

Last year while the standalone sales was 899 millions consolidated sales was 2933 millions The company also owns 73000 shares in Polaris Ltd. Worth approx 1.6 crs or 2 rs per share. Way back in 2006 company had filed a DRHP with SEBI for raising as much as 120 crs via a FPO.Promoter contribution to the same was 20 crs and fresh issue to public was 100 crs. Due to poor market sentiment the company did not went via the equity route and took the debt funding instead for its greenfeild expansion. The company SriLankan based subsidiary Ashok steel industries limited is generating profits to the tune of 2.5 crs and can significantly ramp up its sales seeing better GDP growth from the island nation.

MANDATORY DISCLOSURES:

This document is for information only and is meant for the use of the Recipient & not for circulation. The information contained in this document has been taken from publicly available information trade and statistical services & other sources. While the information contained herein is
from sources believed to be reliable, we do not hold ourselves responsible for its Completeness and Accuracy. All opinions and estimates included in this report constitute our judgment as of this date and are Subject to change without notice. Investors are expected to use the information contained in this report at their own risk. This report is not and should not be construed as an offer or the Solicitation of an offer to buy or sell any
securities. TEAM STOCKRESEARCHERS and its affiliates may act as market maker or have assumed an underwriting position in the securities of companies discussed herein and may sell them to or buy them from customers on a principal basis.The author holds shares in AML STEEL in his portfolio with investment viewpoint.

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