It gives me great pleasure to welcome you all to the 9th
Annual General Meeting of Jaiprakash Associates Ltd. (JAL).
The Company’s accounts for the year ended March 31, 2006,
along with the Directors’ report, Auditors’ report and Management
Discussion and Analysis, have already been circulated to you.
With your permission, I would like to take them as read.
Your Company took the pioneering step of participating in
development of 300 MW BASPA-II Hydroelectric Project on BOO
basis through its subsidiary Jaiprakash Hydro-Power Ltd. In 1992,
which was commissioned in 2003.
The company has once again demonstrated its mettle by
commissioning its second BOO project 400 MW Vishnuprayag
Hydroelectric Project for its subsidiary Jaiprakash Power
Ventures Ltd., 6 months ahead of schedule.
The above projects along with 1000 MW Karcham-Wangtoo
Hydroelectric Project being developed through the subsidiary
Jaypee Karcham Hydro Corporation Ltd. (JKHCL) would add 8 billion
units of clean and green energy by 2011 to the national grid.
Each of these projects is a Run-of-the-River project devoid of
concerns related to rehabilitation, resettlement and submergence.
With a total hydropower generating capacity of 1700 MW your Company
JAL shall be the largest entity in hydropower in Private Sector by 2011.
The successful validation of business model of Baspa II allowed
JKHCL to raise standalone non-recourse financing of Rs. 3920 crore.
The Entire debt for the project has been tied up and Rs. 750 crore
of equity already injected as on date.
The Power Purchase Agreement for Karcham-Wangtoo has been signed
on 21st March 2006 with PTC for 704 MW (constituting 80% of
saleable power). Balance 20% of saleable power (176 MW) will be
sold as merchant power, bringing additional upside to the stakeholders.
Your company has also signed MOA’s for development of over 2000
MW of Hydroelectric projects on BOO basis in the North East.
They company is extending its footprints in the power sector
by setting up pit head based Thermal Power Stations in
two phases of 500 MW each in district Siddhi and a
50 MW Wind Power Project in district Dhule of Maharashtra
in two phases of 25 MW each. The first phase of the Wind
Power Project is expected to be commissioned by January 2007
and the second phase in early part of the next financial year.
Government of India’s thrust for development of 50,000 MW of
hydropower by 2017 and objective to provide power for all by
2012 is bound to provide huge opportunities to your company
in this sector.
The group aims to achieve a total Power generation capacity
of 5000 MW by the year 2014.
ValuengineeringYour company has been well entrenched in
infrastructure projects for over 40 years with specialization
in multipurpose River Valley & Hydropower projects and has
been involved in development of 10000 MW of hydro power projects
during last about 25 years. It has had an inspiring track record
of completing for the nation 3350 MW in 2003-06 and would be
completing Hydro Power projects of 4010 MW (in various capacities)
JAL is the only engineering company in India to be assigned
CR-1’ rating by ICRA for hydro power (EPC contracts) with average
values of up to Rs. 2500 crore. The rating was upgraded last year
from Rs. 2000 crore to Rs. 2500 crore reiterating the strong
contract execution capabilities of your company.
Today, JAL is the only Indian E&C Company having the experience,
resources and talent to execute hydropower projects irrespective
of their size and intricacies involved, from concept to commissioning.
Your company is also mandated to develop the 160 km long expressway
connecting Noida with the heritage city of Agra with ribbon
development of 25 million square meters of land along the expressway.
With its glorious track record of completing challenging projects,
this project when completed, would be another landmark contribution
towards nation building.
The Company’s cement production facility at Rewa at
7 million tones per annum is the largest single location
cement manufacturing complex in the country with 100% of
power requirement being sourced from Company’s own captive thermal
While the Cement Production of our country went up from 23 MTPA
in 1982-83 to 152.9 MTPA in 2005-06, a growth of 100 MTPA over
a 20 year period, the per capita consumption cement went up
from 33 kg in 1982 to 125 kg in 2005. Cement being a core sector
industry needs to keep pace with the requirement of rapidly growing
India. The per capita consumption is slated to be in excess
of 200 kg by 2010. The cement capacity is set to grow by another
100 MTPA over the next 5 years of which your company would have
a 15 % share, which will ensure that your company has a significant
presence across, North, Central and East India.
The company has taken necessary steps to take possession of the
assets of UP State Cement Corporation Ltd. (in liq), the sale
of assets of which were confirmed in favor of the company by
Hon’ble High Court of Judicature at Allahabad on the 11th of
October 2006. Revival and modernization are in process to ensure
commencement of cement production to its capacity (>2.0 MTPA)
between March’07 and March’08. The 3.0 MTPA cement capacity
at District Solan, Himachal Pradesh is in an advanced stage
of implementation and shall be commissioned between April’07
and March’08. Your company has been issued an LOI by SAIL
to set up in JV with them a 2.5 MTPA cement capacity with
clinkerisation at Satna and slag based grinding facility
at Bhilai. Jaypee Cement Ltd. a subsidiary of your company
acquired Gujarat Anjan Cement Ltd. to set up a 1.2 MTPA cement
plant at Bhuj, Gujarat. Your company has taken up work in
district Sidhi, MP for setting up a 1.5 MTPA cement plant.
Work on these projects is underway and the commissioning of
these projects will take place during the fiscal year 2008.
Your company shall also establish a 2 MTPA capacity in
Himachal Pradesh based on recently allotted Chamba
limestone deposit by 2009.
All new capacities are coming up with their own Captive Thermal
Power Plants which will ensure most competitive power costs from
inception. The new units are strategically located to ensure fly
ash and savings in freight on onward movement of cement.
With the great strides made in conserving energy in every tonne
of cement produced and with enhancement in usage of
environmentally challenging materials, your Company is amongst
the first cement company in India to be accredited to receive
Given JAL’s experience and strengths in engineering & construction
project management in-house cement production, it is placed in
an advantageous position to diversify in the emerging E&C sectors
such as Expressways and Real Estate. The merger of Jaypee Greens Ltd.
with your company has initiated your company in the real estate
business. Your company is developing 7.3 lac square meters of premier
residential/commercial real estate at the Jaypee Greens Complex
in Greater Noida. Your company aims to achieve to turnover of
approx. Rs. 5000 crore from this development over the next 5 years.
Your company has entered into a Joint Venture agreement with
MP State Mining corporation for development of Amelia North Coal
Block, in district Sidhi, Madhya Pradesh. JAL is in the process
of setting up first phase of 500 MW Thermal Power Plant with fuel
linkage having been secured through coal block and your cement plants
being located within 50 kms of Thermal Power Plant shall gainfully
use the fly ash being produced, thereby adding economic value
along the entire process.
JHPL, a subsidiary of your company has signed an MOU with
Powergrid corporation of India Ltd. to form a JV company for
implementation of the transmission system associated with
the 1000 MW Karcham Wangtoo Hydroelectric Project. Your
company will have a 74% stake in the Joint Venture.
This would be your company’s vehicle for its foray in the
growing power transmission business.
I have touched upon some of these initiatives during interaction
of last year and you will observe focused approach of your
company has paid rich dividends in our journey of being an
integrated power player in this decade.
Your company has also bid in consortium with Prize Petroleum Ltd.
for the onland block of South REWA in the recently concluded
round of NELP VI.
The year saw JAL’s turnover go up to 26% to Rs. 3669 crore,
PAT by 208% to Rs. 640 crore and the EPS consequently grew by
165% to Rs. 31.26. The above results are inclusive of porfit
of Rs. 361.37 crore from Offer for Sale of JHPL shares held by
The salient financial indicator’s such as the average cost of
borrowings by the company, net block, shareholders funds and
net capital employed have successively grown to contribute to
higher profitability of the company. You will be pleased to
know that while your company successfully issued fresh FCCB’s
of Euro 165 million in March 2006, with a conversion price
of Rs. 558.773 per share, the FCCB’s issued in 2005 saw
a conversion rate of 84.06% as of 30th September 2006.
This only exhibits the confidence reposed by the international
investor community in your company.
While the previous year saw the market capitalization of
your company cross the USD 1 Billion mark for the first time,
I am pleased to inform you that the current market capitalization
of your company is over USD 2 Billion, almost doubling the
shareholder wealth in a short span of over a year.
Your company, with strong fundamentals, formidable presence
in becoming infrastructure sector of the country and strong
focus in creating shareholder wealth in long term is aptly
poised for sustained growth and improved profitability.
Faith Moves Mountains
Our vast country, endowed with all natural resources, with
collective will of over one billion countrymen is on threshold
of realizing its true potential in this century. With strong
fundamentals of democracy firmly in place, the untapped opportunities
are being seized with greater passion and conviction. The Indian
economy continues to grow on a robust note after 14 years of
reform process which have made every sector take into stride
the challenges, which in turn have only helped Corporates and
Government Agencies to be competitive and growth oriented.
Government of India’s belief to take the economic growth in the
country on the next plane of double digit growth in this decade
has opened gates of opportunities, as never before. With emphasis
on investment on course in development of Indian infrastructure,
your Company is well poised to harness not only its fullest potential,
but also in the process enhance the shareholders value on a consistent
Education, Enlightenment and Empowerment
As corporate citizens it is our responsibility to ensure that
the benefits of our growth are shared not just with the members
of our organization but also benefit the local environment in
which we operate, and the economically and educationally challenged
strata in our work surroundings also benefit. I firmly believe
that quality education on an affordable basis is the biggest
service which as a corporate citizen we can provide.
Jaiprakash Sewa Sansthan, a not-for-profit trust, supported by
Jaypee Group has provided platform for various educational facilities,
today imparting education in different streams to more than 16,000
students all over the country, across the entire spectrum of the
The Jaypee education system plans to take the vision of service
to society through quality education to another plane by expanding
its infrastructure to provide education to a universe of 100,000
students in less than a decade from now.
Journey thus far has been made possible with the support and
encouragement by Central and State Governments, Bankers,
Financial Institutions, Technocrats, Investors and all
dear Shareholders. We seek their continued patronage.
I greatly value the collective efforts of entire JAYPEE Team and
the contribution & involvement of my colleagues on the Board.
For and on behalf of the Jaypee Group Jaiprakash Gaur