Gujarat NRE Coke

The Directors are pleased to present the Twenty-first Annual Report
 and the Audited Financial Results of the Company for the financial year
 ended on March 31,2008.
 
 FINANCIAL RESULTS/HIGHLIGHTS
 
                                                          Rs. in crores
                                                 2007-2008    2006-2007
 
 Income from Operations                             282.99       119.02
 
 Less:  Interest                                     32.91        23.58
 
                                                    250.08        95.44
 
 Less:  Depreciation                                 23.35        20.68
 
 Profit before Tax                                  226.73        74.76
 
 Less : Provision for Current Tax/
 
 Deferred Tax / Fringe Benefit Tax                   53.85        19.03
 
 Profit after Tax                                   172.88        55.73
 
 Add : Balance brought forward_                      96.79       123.91
 
 Amount available for appropriation                 269.67       179.64
 
 Less: Appropriations
 
 Transferred to General Reserve                      50.00        50.00
 
 _Dividend for earlier year                           4.46            -
 
 Proposed dividend on equity shares                  84.25        38.76
 
 Corporate Tax on Dividend                           15.08         6.59
 
 Debenture Redemption Reserve                        25.00       (12.50)
 
 Balance carried to Balance Sheet                    90.88        96.79
 
 REVIEW OF OPERATIONS
 
 The year was an exceptional year for coke industry with surge in global
 prices on account of export tax levied twice by China, the largest
 supplier of coke, resulting in dwindling of global supplies as well as
 spurt in demand particularly from steel sector. The year also witnessed
 a chronic scarcity of basic raw material for the industry i.e. coking
 coal due to disruption in the supply chain as a result of floods in
 many of the Australian mines which has led to its price jumping up
 threefold over last one year. Your Company, with its foresight could
 withstand this scarcity due to assured supplies from its subsidiaries
 owning coking coal mines and on account of strategic investments made
 in Australia. Consequently, your Company has reported a stellar
 performance for the year under review.  The Companys Net Sales stood
 at Rs. 872.15 crores in the financial year ended March 31, 2008 as
 compared to Rs. 513.32 crores during the previous financial year going
 up by 1.70 times. Net profit after tax was up by 3.10 times to Rs
 172.88 crores (Previous Year - Rs. 55.73 crores).
 
 DIVIDEND
 
 The Companys dividend policy is based on twin objective to
 appropriately reward the shareholders and at the same time to keep
 enough capital to fuel growth needs. Accordingly, your directorsare
 pleased to recommend a higher dividend of Rs. 2.50 per share for the
 year ended March 31, 2008 up from Rs.1.50 per share for the year ended
 March 31, 2007 reflecting an increase of 67%. The total payout in
 respect of dividend for the year 2007-08 amounts to Rs. 98.57 crores as
 compared to Rs. 50.57 crores during the year 2006-07.
 
 BONUS ISSUE
 
 As we march forward, your Company believes in greater innovation in
 business models to scale new levels of success with an aim to create
 value for our stakeholders. Keeping with the tradition of rewarding our
 shareholders on a regular basis and aligning the paid up capital to
 reflect emerging scale of Companys operations, your Company is
 recommending a bonus issue at the rate of 2 (Two) Equity Shares for
 every 5 (Five) Equity Shares held. It will be a record 5th bonus issue
 of your company in a span of last 6 years.
 
 ISSUE OF EQUITY
 
 During the year under review, your Company allotted 4,98,15,134 Shares
 of Rs. 10 each at a premium of Rs.38.04 per share upon conversion of 1
 % Unsecured Foreign Currency Convertible Bonds (FCCBs) issued in 2005
 and 2,67,96,000 Shares of Rs. 10 each at a premium of Rs. 52.50 per
 share upon conversion of Zero coupon FCCBs issued in 2006 in accordance
 with conversion notices received during the year 2007-08. The Company
 had also allotted 1,40,00,000 Shares of Rs.10 each at a premium of
 Rs.27.50 per share in May 2007 and 25,00,000 Shares of Rs. 10 each at
 a premium of Rs.110 per share in March 2008 following conversion of
 warrants.
 
 ISSUE OF NCD
 
 During the year under review, the company raised Rs. 100 crores through
 issue of Non-Convertible Secured Redeemable Debentures on a private
 placement basis to Axis Bank Ltd in order to finance its projects for
 0.248 Million TPA Low Ash Metallurgical Coke Plant at Dharwad and 1 5
 MW Captive Waste Heat Power Plant atBhachau.
 
 STATUS OF FCCB
 
 The Company had made two consecutive issues of Foreign Currency
 Convertible Bonds (FCCBs) in 2005 & 2006. More than 99% of Unsecured 1%
 FCCBs of USD 55 million issued in March2005 and due in 2010 were
 converted during the year aggregating 4,98,15,134 shares with bonds
 worth USD 225,000 remain outstanding at the year end. Further, 62.50%
 of Unsecured Zero Coupon FCCBs of USD 60 million issued in 2006 and due
 in 2011 were converted during theyear aggregating 2,67,96,000 shares
 with bonds worth USD 22,500,000 remain outstanding at the year end. The
 proceeds of these issues were successfully deployed towards purposes
 for which they had been raised.
 
 LISTING
 
 The equity shares of your Company are listed on the National Stock
 Exchange of India Limited (NSE) and Bombay Stock Exchange Limited
 (BSE). The FCCBs of the Company are listed on the Luxembourg Stock
 Exchange (LuxSE). The Company has filed an application for delisting
 its shares from The Calcutta Stock Exchange Association Ltd. (CSE)
 which is under active consideration of CSE.
 
 EXPANDING HORIZONS
 
 Your Directors believe that growth can be achieved through integrating
 and expanding capacities as well as going for forward and backward
 integration. A Coke oven project has been undertaken at Dharwad in
 Karnataka which would be commissioned by the year 2008-09 increasing
 the capacity by further 0.248 Million TPA. The Company has also
 acquired 220 acres of land at Nellore District of Andhra Pradesh for
 setting up 1 Million TPA Coke oven plant. A new Coal Washery is also
 under implementation at Bhachau.
 
 Keeping with its commitment for providing safe and healthy environment,
 your Company has executed a project for installation of 12 Windmills
 having combined capacity of 18 MW during the year under review and has
 further undertaken a project for another 28 Windmills having combined
 capacity of 42 MW in the State of Gujarat taking the total wind power
 capacity in the company to 87.50 MW. The Company has further forayed
 into the another environment friendly Captive Power Plant project
 generating power from waste heat emanating from coke plants. Two such
 power plants are under construction at Khambhalia and Bachau having
 capacity of 15MW each and one at Dharwad with capacity of 30 MW.  Your
 Companys apprehension about industry going to face a severe resource
 crunch came true this year with industry witnessing immense shortage of
 coking coal. A third mine in Australia named Elouera was acquired by an
 Australian Subsidiary and the same was consolidated with the second
 mine, NRE Avondale which are now collectively known as NRE Wongawilli.
 Six vessels have been taken on time charter by your Company to ferry
 the requirements of coking coal to ensure supply beyond 2010. The steel
 plant at Bhachau is fully operational, and plans are also in place to
 foray into various other avenues of forward integration.
 
 SUBSIDIARIES
 
 During the year under review, the Company has consolidated overseas
 operation under its wholly owned subsidiary Gujarat NRE Ltd. (GNL)
 formerly known as Gujarat NRE Pty Ltd.
 
 Further the Australian subsidiary Gujarat NRE Minerals Ltd (formerly
 known as India NRE Minerals Ltd) listed on Australian Securities
 Exchange on July 10, 2007 subsequent to completion of an IPO.
 Thereafter, this Company successfully acquired all shares of another
 Australian subsidiary Gujarat NRE Resources NL in order to consolidate
 coal operations in Australia. This consolidation would immensely help
 in increasing the efficiency of operations, reap the benefits of
 economies of scale.
 
 Bharat NRE Coke Ltd. (BNCL), an Indian subsidiary, posted a turnover of
 Rs. 145.63 crores and PBIDT of Rs. 7.99 crores in the third year of its
 operations as compared to Rs. 64.43 crores of turnover and PBIDT of Rs.
 1.69 crores in the previous year.
 
 Both Manor Dealcom Pvt. Ltd. and Huntervalley Coal Pvt. Ltd., wholly
 owned Indian subsidiaries, completed their first year of operations.
 Manor Dealcom Pvt.  Ltd has posted an income of Rs. 0.94 Lacs and net
 profit of Rs. 0.19 Lacs and Huntervalley Coal Pvt. Ltd has posted an
 income of Rs. 1.03 Lacs and net profit of Rs. 0.26 Lacs respectively.
 
 There is a requirement for attachment of Directors Report, Balance
 Sheet and Profit & Loss Account of these Subsidiaries to this Annual
 Report & Accounts.  Pursuant to an application made under Section
 212(8) of the Companies Act, 1956 for exemption from the said
 requirement, this Annual Report does not contain these particulars of
 subsidiaries. The Annual Accounts of the subsidiary Companies and the
 related detailed information will be made available to the Companys
 and Subsidiary Companys investors seeking such information at any
 point of time. The Annual accounts of the Subsidiary Companies are also
 kept open for inspection by any investor at the Registered Office of
 the Company.
 
 Further, the Consolidated Financial Statements of the Company prepared
 in accordance with Accounting Standard 21, which forms a part of the
 Annual Report, have taken into account the financial information of its
 subsidiaries.
 
 ACCREDITATION
 
 Your Company has been accredited with Environmental Management System
 Standard IS014001:2004 Certification, Occupational Health and Safety
 Management Standard OHSAS18001:1999 Certification and Quality
 Management System Standard ISO9001:2000 Certification for Manufacture
 and Supply of Low Ash Metallurgical Coke at Khambhalia, Jamnagar,
 Gujarat.
 
 FINANCIAL OBLIGATIONS
 
 The Company has been regular in the payment of interest and/or
 repayment of loans to financial institutions and/or banks during the
 year under review.
 
 CORPORATE GOVERNANCE
 
 Pursuant to the and Clause 49 of the Listing Agreement with the Stock
 Exchanges, a separate Section titled Corporate Governance has been
 included in this Annual Report along with a report on Managements
 Discussionand Analysis.
 
 All Board Members and senior Management Personnel have affirmed
 compliance with Code of Conduct for the year 2008-09.
 
 Vice Chairman & Managing Director (CEO) and Chief Financial Officer
 (CFO) have certified to the Board with regard to the financial
 statements and other matters as required in clause 49 of the listing
 agreement and the said certificate is also annexed to this Annual
 Report.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Manpower is a key resource for the continuing growth and development of
 the Company. To retain talent and align the interest of employees with
 shareholders, the Board of Directors on the recommendation of the
 Remuneration/ Compensation Committee, at its meeting held on January
 20, 2007, had offered 11,15,000 options to employees/directors under
 Employees Stock Option Scheme, 2005.  The Company has also offered
 25,06,000 options to eligible employee/directors in accordance with
 GNCL Employees Stock Option Scheme, 2007, as recommended by the
 Remuneration/Compensation Committeeand approved by the Board at its
 meeting held on 2nd June, 2007. A second tranche under GNCL Employees
 Stock Option Scheme, 2007 was offered to the new recruits aggregating
 3,09,000 grants on 19th January, 2008.
 
 As required by clause 12 of SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme) Guidelines, 1999, the disclosures of
 Stock Options are given in an Annexureto this report
 
 DIRECTORS
 
 Shri Rajendra Prasad Jain was appointed as an Additional Director and
 Executive Director in the capacity of Whole Time Director of the
 Company by the Board at its meeting held on January 19, 2008 upon the
 recommendation of the Remuneration/Compensation Committee and subject
 to the approval of members for a period of 5 years. Resolution(s)
 seeking approval of the members to his appointment has been included in
 the notice to this Annual Report.  Shri Chinubhai R Shah and Dr.
 Basudeb Sen, Directors of the Company retire by rotation at the
 forthcoming Annual General Meeting and being eligible, offer themselves
 for re-appointment in terms of the Articles of Association of the
 Company.  During the year under review, Board of Directors upon the
 recommendation of the Remuneration/Compensation Committee approved,
 subject to the approval of members, payment of remuneration to all the
 Non-Executive Directors not exceeding 1 % of the net profits of the
 Company payable on annualized basis for a period of 3 years from 1st
 April, 2007 provided the company earns a net profit of not less than
 Rs. 100 crores in corresponding financial year. A resolution for such
 payment is also included in the notice to this Annual Report.  The
 members had passed a resolution at the last AGM held on 28.09.2007
 authorising the Remuneration/Compensation Committee/Board to revise the
 remuneration of Shri Arun Kumar Jagatramka, Vice Chairman & Managing
 Director, subject to the provisions of Section 198,309 read with
 Schedule XIII and other applicable provisions of the Companies Act,
 1956. Board upon recommendation of Remuneration/Compensation Committee,
 had accordingly revised the existing remuneration of Mr. A. K.
 Jagatramka by including thereto, a payment of 1% of the net profits of
 the Company payable on annualized basis from 1st April, 2007 for the
 remaining tenure of his current term provided the company earns a net
 profit of not less than Rs. 100 crores in corresponding financial year.
 The revised remuneration is within the limits as prescribed by Sec.
 198, 309 read with Schedule XIII of the Companies Act, 1956. A
 resolution for such payment is also included in the notice to this
 Annual Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements under Section 217(2AA) of the Companies
 Act, 1956 with respect to Directors Responsibility Statement, it is
 hereby confirmed that:
 
 a) in the preparation of annual accounts for the financial year ended
 March 31, 2008, the applicable accounting standards had been followed
 and that no material departures have been made from the same;
 
 b) the Directors had selected appropriate accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the year under review and of
 the profit of the Company for the year ended on that date;
 
 c) the Directors took proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 d) Directors had prepared the annual accounts for the financial year
 ended March 31,2008 on a going concern basis.
 
 AUDITORS
 
 M/s. N. C. Banerjee & Co., Chartered Accountants, retire as auditors of
 the Company at the conclusion of ensuing Annual General Meeting and are
 eligible for re-appointment. As required under Section 224 of the
 Companies Act, 1956, the Company has received a written confirmation
 from them to the effect that their re- appointment as Auditors, if
 made, would be in conformity with the limits prescribed in the said
 section and they are also not disqualified from such appointment within
 the meaning of Section 226 of the said Act.
 
 AUDITORS REPORT
 
 The observations of the Auditors in their Report read with relevant
 notes on the accounts, as annexed are self-explanatory and need no
 elaboration.
 
 PUBLIC DEPOSITS
 
 The Company has not accepted or renewed any Public Deposits, as defined
 under section 58A of the Companies Act, 1956, during the year under
 review.
 
 PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The Particulars of conservation of energy, technology absorption and
 foreign exchange earnings and outgo as required under section 217(1)(e)
 of the Companies Act, 1956, read with the Companies (Disclosure of
 Particulars in the Report of the Board of Directors) Rules, 1988 are
 required to be set out in the Annexure to the Directors Report.
 However, as per the provisions of Section 219(1 )(b)(iv) of the Act,
 the Annual Report is being sent to all the members of the Company
 excluding the aforesaid information. Any member interested in obtaining
 such particulars is requested to send a formal request to the Company.
 
 PARTICULARS OF EMPLOYEES
 
 Particulars of employees as required under section 217(2A) of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 Rules, 1975 is required to be set out in the Annexure to the Directors
 Report. However, as per the provisions of Section 219(1 )(b)(iv) of the
 Act, the Annual Report is being sent to all the members of the Company
 excluding the aforesaid information. Any member interested in obtaining
 such particulars is requested to send a formal request to the Company.
 
 PERSONNEL/ INDUSTRIAL RELATIONS
 
 We fully recognize that people are the lifeline of our organisation.
 Hence, we invest in people and in skill development. In line with its
 talent management initiatives, your Company invests significant time
 and efforts on training its talent pool on a regular basis.
 
 Your Directors take great pride in the harmonious relations that
 characterize your Companys various plants and units. In line with our
 vision of being an achievement focused, development oriented and people
 sensitive organization, your Company endeavours to create an
 environment of holistic growth.
 
 ACKNOWLEDGEMENTS
 
 Your Directors wish to convey their appreciation to all the Companys
 employees for their enormous personal efforts as well as their
 collective contribution to the Companys record performance. Your
 Directors also thank the investors, customers, dealers, suppliers,
 bankers, financial institutions, media, Government and their agencies
 and all other business associates for the continuous support given by
 them to the Company and their confidence in the management of the
 Company.
 
                                         For and on behalf of the Board
 
 Place: Kolkata                             Girdhari Lal Jagatramka
 Dated: the 18th day of July 2008                 Chairman