Jai Balaji Industries

The Directors have pleasure in presenting the ninth Annual Report of
 your Company, along with the audited statement of accounts for the year
 ended 31st March 2008.
 
 1. Financial results and appropriations
 
                                                           (Rs. in lacs)
 Particulars                                   Year ended     Year ended
                                       31st March,2008   31st March,2007
 
 Net sales and other income                  1,34,727.88    1,03,878.53
 Less: Total expenditure                     1,05,756.56      88,385.65
 Profit before interest, depreciation and tax  28,971.32      15,492.88
 Less: Interest                                11,016.81       3,541.39
 Profit before depreciation and taxation       17,954.51      11,951.49
 Less: Depreciation                             4,335.17       2,341.73
 Profit before Tax                             13,619.34       9,609.76
 Less: Current tax including FBT                2,008.01         823.60
 MAT credit entitlement                         1,073.32          56.69
 Deferred tax                                     797.35       2,625.70
 Profit after tax                              11,887.30       6,217.15
 Add: Balance brought forward from 
 previous year                                 12,674.94       7,126.45
 Profit available for appropriation            24,562.24      13,343.60
 Less: Proposed dividend                          471.27         400.58
 Tax on dividend                                   80.10          68.08
 Transfer to general reserve                   10,000.00         200.00
 Balance carried to Balance Sheet              14,010.87      12,674.94
 
 The financial results for the year under consideration are not
 comparable with that of the previous year, as they include the
 financial figures of the steel unit of HEG Limited, acquired through a
 scheme of arrangement with effect from the appointed date i.e 1st
 August 2007.
 
 2. Review of operations
 
 Your Company posted yet another year of impressive results, testifying
 to the robust corporate strategy of creating multiple drivers of
 growth. During the year under review, the Company expanded organically
 and inorganically. Your Company acquired the steel division of HEG
 Limited in the state of Chhattisgarh having a sponge iron plant of the
 capacity of 1,20,000 MT pa, steel-melting shop of the capacity of
 1,00,000 MT pa and a 12.8-MW captive power plant and 100% shareholding
 of Nilachal Iron ft Power Limited in the state of Jharkhand having a
 sponge iron plant of the capacity of 1,00,000 MT pa.
 
 During the year, the total revenue of the Company was Rs. 1,34,727.88
 lacs, representing an increase of 29.70% from Rs. 1,03,878.53 lacs in
 the financial year 2006- 07. The EBIDTA of the Company increased by 87%
 from Rs. 15,492.88 lacs in 2006-07 to Rs. 28,971.32 lacs in 2007-08 and
 the EBIDTA margin increased by 659 bsp, from 14.91% in 2006-07 to
 21.50% in 2007-08. The net profit saw a significant rise to Rs.
 11,887.30 lacs in 2007-08, representing an increase of 91% from Rs.
 6,217.15 lacs in 2006-07 and the net profit margin escalated by 284
 bps, from 5.98% in 2006-07 to 8.82% in 2007-08. The earning per share
 for the year 2007-08 was Rs. 25.23 as compared to Rs. 13.20 in 2006-
 07, representing an increase of 91%.
 
 3.  Dividend
 
 In line with the Companys philosophy of enabling shareholders to
 participate in its progressive performance, the Directors are pleased
 to recommend for approval of the members, a dividend of 10% on equity
 shares of face value of Rs. 10 each, for the financial year 2007-08.
 
 4.  Prospects
 
 The global economy witnessed a growth of 3.50% in 2007, in spite of the
 slowdown of the US economy due to the sub-prime effect. The demand for
 finished steel increased by an impressive 7.1%, mainly due to the
 strong demand in the BRIC and Middle East countries. The Indian economy
 registered remarkable growth of over 8%, driving the growth of the
 manufacturing sector.
 
 The demand for steel in India is expected to grow at around 12% per
 annum. The sector witnessed continued buoyancy because of strong demand
 in various user sectors such as automobiles, infrastructure, capital
 goods, etc.  These sectors are doing well and would need additional
 steel in the coming years.
 
 In spite of continuous rise in the input cost, your Company will
 continue to implement its growth initiatives to secure its long-term
 competitive position.
 
 5. Expansion
 
 The impressive growth of the economy resulted in a buoyant demand for
 steel. With a view of long-term prospects, the Company is planning
 expansions both by way of implementation of new projects and
 acquisitions.
 
 Your Company signed an Memorandum of Agreement (MOA) with the
 Government of West Bengal on 4th October 2007 for setting up an
 integrated steel plant of 5 mn tpa capacity, a cement plant of 3 mn tpa
 capacity and a captive power plant of 1,215-MW capacity in the Purulia
 district of West Bengal at a total investment of Rs. 16,000 crore.
 
 The Board of Directors of your Company approved projects consisting of
 40 MW power plant, 0.4 mn tpa coke oven plant, 1.125 mn tpa pellet
 plant, 0.24 mn tpa tube and pipes plant, 0.025 mn tpa ferro alloys
 plant and 0.30 mn tpa rolling mill to be set up in Durgapur, West
 Bengal for a total investment of Rs. 1,055 crores.
 
 The Board of Approval for the Special Economic Zones (SEZs) of the
 Government of India, in their meeting held on 5th June 2007, granted
 in-principle approval to the Company for setting up a steel plant in
 5EZ in the state of West Bengal.
 
 6. Strategic acquisitions and alliances
 
 The Scheme of Arrangement for transfer of the steel unit of HEG Limited
 at the Industrial Growth Centre, Borai, Vill. Rasmada, Durg, in the
 state of Chhattisgarh, consisting of a sponge iron plant of the
 capacity of 1,20,000 MT pa, steel-melting shop of the capacity of
 1,00,000 MT pa and a 12.80-MW captive power plant has been approved by
 the Honble High Courts at Calcutta and Jabalpur on 9th May 2008 and
 16th May 2008 respectively.  With effect from 9th June 2008, the said
 unit stands transferred to the Company from the appointed date i.e 1st
 August 2007.
 
 Your Company acquired 100% shareholding of Nilachal Iron ft Power
 Limited on 26th October 2007 having a sponge iron plant of 1,00,000
 MTpa capacity at Ratanpur, Kandra- Chandil Road, Dist. Saraikela
 Kharsawan, Pin - 832 402, Saraikela, Jharkhand. The said subsidiary
 also presented tremendous growth during the year under review. The
 production increased by 68% and was 78,405.67 mt in 2007-08 as compared
 to 46,692.95 mt in 2006-07. The revenue comprising of sales & other
 income of the said subsidiary increased by 107% and was Rs. 8,283.95
 lacs in 2007-08 as compared to Rs. 3,999.30 lacs in 2006-07.
 
 The said acquisitions enabled a focused business approach for the
 maximisation of benefits to all stakeholders in the Company to realise
 the substantial benefits of greater synergies between their businesses,
 besides availing of the financial resources as well as the managerial,
 technical, distribution and marketing resources of each other.
 
 7.  Preferential issue
 
 During the year, the Company has issued, 83,59,000 zero coupon
 compulsorily convertible debentures (CCDs) to Citi Venture Capital and
 India Equity Partners on private- placement basis and 96,00,000
 warrants to promoters and non-promoters on private- placement basis at
 an issue price of Rs. 326.90 each. As on 31st March 2008, a sum of Rs.
 335.04 crore has been received by the Company against the said issue of
 CCDs and warrants. Each CCD and warrant is convertible into one equity
 share within a period of 18 months from the date of allotment, at a
 conversion price of Rs. 326.90 per equity share.
 
 8. Change of name
 
 The name of the Company has been changed from Jai Balaji Sponge
 Limited to Jai Balaji Industries Limited w.e.f. 22nd June 2007; vide
 a fresh Certificate of Incorporation issued by the Goverment of India,
 Ministry of Corporate Affairs, Registrar of Companies, West Bengal.
 
 9.  Listing on the Bombay Stock Exchange Limited
 
 The equity shares of your Company were traded on the Bombay Stock
 Exchange under the permitted securities category. With effect from 2nd
 June 2008, the equity shares of your Company have been listed on the
 said exchange.
 
 10.  Conservation of energy, technology absorption, foreign exchange
 earnings and outgo As per the requirements of Section 217(1)(e) of the
 Companies Act, 1956, read with the Companies (Disclosures of
 Particulars in the Report of Board of Directors) Rules, 1988, the
 relevant information pertaining to conservation of energy, technology
 absorption and foreign exchange earnings and outgo are given in the
 Annexure forming part of this report.
 
 11.  Directors responsibility statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
 confirm that:
 
 i) In the preparation of annual accounts, the applicable accounting
 standards have been followed;
 
 ii) They have selected such accounting policies and applied them
 consistently and made judgments and estimates that were reasonable and
 prudent, so as to give a true and fair view of the statement of affairs
 of the Company as at 31st March 2008 and of the profit of the Company
 for the year ended on that date;
 
 iii) They have taken 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
 
 iv) The annual accounts have been prepared on a going concern basis.
 
 12.  Corporate Governance and Management Discussion and Analysis
 
 Sound Corporate Governance practices and ethical business conduct
 remain at the core of the Companys value system. Adequate steps have
 been taken to comply with the amended clauses of the Listing Agreement
 prescribed from time to time. Pursuant to Clause 49 of the Listing
 Agreement with the stock exchanges, the Corporate Governance Report,
 the Management Discussion and Analysis Report and Auditors Certificate
 regarding compliance of the conditions of Corporate Governance are
 annexed to this report.
 
 13. Safety, health and environment protection
 
 A part of our corporate vision being the improvement of safety and
 quality of employee health, your Company has undertaken various
 environment-friendly measures in its different units for promoting a
 better environment. The Company has in place adequate pollution control
 equipments and all the equipments are in operation.
 
 14. Auditors
 
 M/s. S. R. Batliboi ft Co., Chartered Accountants, the statutory
 auditors of your Company, retire at the conclusion of the ensuing
 Annual General Meeting and being eligible, offers themselves for
 re-appointment.
 
 15.  Directors
 
 The Board has re-appointed Shri Sanjiv Jajodia, whose term as the
 Whole-time Director of the Company expired on 30th April 2008, as the
 Whole-time Director for a further period of five (5) years w.e.f. 1st
 May 2008, on the terms and conditions as specified in the agreement
 entered into between Shri Sanjiv Jajodia and the Company.
 
 Shri Mahesh Keyal, Shri Ashok Kumar Jaiswal and Shri Jayanta Kumar Basu
 have resigned from the Board w.e.f 31st October 2007, 30th June 2008
 and 1st August 2008 respectively.  The Board wishes to place on record
 its sincere appreciation of their valuable contribution to the Company.
 
 Shri Ashim Kumar Mukherjee, Director, will retire by rotation at the
 ensuing Annual General meeting and, being eligible, offers himself for
 re-appointment.
 
 Your Directors have appointed Shri Shailendra Kumar Tamotia w.e.f 31st
 October 2007, Shri Shyam Bahadur Singh w.e.f 17th December 2007, Gourav
 Jajodia w.e.f 31 st January 2008, Shri Manoj Banthia and Shri Gaurav
 Mathur w.e.f 7th February 2008, Shri S.C. Gupta w.e.f 30th June 2008
 and Shri Vivek Chhachhi w.ef.  14th August 2008 as Additional Directors
 of the Company. They will hold office up to the date of the ensuing
 Annual General Meeting.  The Company has received special notices under
 Section 257 of the Companies Act, 1956, proposing the names of the
 above- mentioned Additional Directors to be appointed as the Directors
 of the Company. In view of their considerable experience, your
 Directors recommend their appointment.
 
 16.  Particulars of employees
 
 Your Directors wish to acknowledge the support and valuable
 contributions made by the employees at all levels.
 
 The particulars of employees as required to be furnished pursuant to
 Section 217(2A) of the Companies Act, 1956, read with Companies
 (Particulars of Employees) Rules, 1975, form part of this report.
 
 17.  Human resources
 
 The Company acknowledges the tremendous contribution of employees of
 all ranks towards its growth in leading, thinking, working, creating,
 processing, dealing, motivating, etc.  The management continuously
 strengthens the human resource system by making available better tools,
 technology and techniques at the workplace to properly harness the
 entire workforce. Employee health and safety measures are in force at
 the work- places, shop floors, manufacturing areas, etc.  The nature of
 the Companys business presupposes sound work expertise, effective
 teamwork and continuous dedication. To ensure this, the Company has an
 elaborate HR system to promote a safe, competitive and transparent work
 environment.
 
 18. Acknowledgement
 
 Your Directors wish to acknowledge the understanding, support and
 services of the sincere and hardworking workers, staff and executives
 of the Company, which have largely contributed to its efficient
 operations and management. The Directors also wish to place on record
 the valuable co-operation and support extended by the investors,
 financial institutions/banks, regulatory and government authorities,
 customers, suppliers and all other business associates.
 
                                     On behalf of the Board of Directors
 
                                                          Aditya Jajodia
                                            Chairman & Managing Director
 
 Place: Kolkata
 Date : 14th August 2008