Jindal Steel & Power

The Directors are pleased to present the 29th Annual Report together
 with the Statement of Accounts for the year ended 31st March, 2008.
 
 FINANCIAL RESULTS Rs. in Crores
 
 Particulars                             Financial   Financial   Growth
                                         Year ended  Year ended   %
                                         31.03.2008  31.03.2007
 
 Sales & other income                       5459.87     3548.78   53.85
 
 Profit before interest and depreciation    2162.61     1431.58   51.06
 
 Profit before tax                          1502.51      944.84   59.02
 
 Profit after tax                           1236.96      702.99   75.96
 
 Appropriations :
 
 Equity dividend
 
 (i) Interim                                  23.09       18.48
 
 (ii) Final                                   38.93       36.95
 
 Corporate tax on dividend
 
 (i) Interim                                   3.92        2.59
 
 (ii) Final                                    6.62        6.28
 
 General reserve                             125.00       75.00
 
 DIVIDEND
 
 The Board of Directors had, vide its resolution passed by circulation
 on 18th February, 2008, approved payment of interim dividend of 150%
 which has since been paid to the shareholders. Your Directors recommend
 a final dividend of 250% i.e. Rs.2.50/- per equity share. Stock options
 under part-I of series-I have vested in the employees on 26th November,
 2007. Shares will be alloted to the employees in due course and they
 will rank pari-passu with the existing shares in all respects.
 Therefore, provision for payment of final dividend for 2007-08 has also
 been made in respect of 17,60,365 shares being maximum number of shares
 to be alloted under part-I of series-I. The total outlay on account of
 dividend payment will be Rs.39.93 crores.
 
 OPERATIONAL REVIEW
 
 During the year, the Company has achieved an aggregate income of
 Rs.5459.87 crores registering an increase of 54% over the previous
 year. Profit before tax has increased to Rs.1502.51 crores from
 previous year’s Rs.944.84 crores registering an increase of 59%. Profit
 after tax has increased by 76% to Rs.1236.96 crores from previous
 year’s Rs.702.99 crores. Reserves and Surplus now stand increased to
 Rs.3754.40 crores.
 
 SPONGE IRON
 
 The Company has produced 11,85,739 MT of Sponge Iron in the year under
 report as against previous year’s production of 11,96,330 MT and
 achieved capacity utilization of 86.55%.
 
 STEEL
 
 The production of steel products during the year under report as
 compared to previous year is given below:
 
 Production in MTs
 
 Sl. No.   Product                (2007-08)         (2006-07)
 
 1      Finished steel products    7,34,453          2,09,417
 
 2      Semi steel products       14,28,056          8,05,675
 
 FERRO CHROME
 
 The Company has produced 17,905 MT of HC Ferro Chrome during the year
 as against 31,070 MT in the previous year. The production was lower due
 to shut down of furnace for a period of three months.
 
 POWER
 
 The Company generated 2,665 million Kwh during the year as against
 2,668 million Kwh of the previous year.
 
 RAIPUR UNIT
 
 Raipur Unit produced 1,576 MT of MS ingots, 1,352 MT of casting and has
 done machining of 2,135 MT as against previous year’s figures of 1,207
 MT 1,166 MT and 3,045 MT respectively.
 
 MINING
 
 The production of calibrated Iron Ore at captive mine at Tensa in
 Orissa was 8.40 lac MT as against previous years production of 6.04 lac
 MT.  The Company has exported 8.06 lac MT of Iron Ore Fines as against
 previous years 14.19 lac MT. The production of coal at captive mine was
 59.94 lac MT as against previous years production of 59.68 lac MT.
 
 STATUS OF PROJECTS
 
 i) Completed
 
 Sl. No.  Description Capacity
 
 1 Plate Mill 1.00 million TPA
 
 2 Coke Oven 0.20 million TPA
 
 R.H. Degasser in SMS 2, Beam Welding Plant, Producer Gas Plant and Cut
 to Length Line in Plate Mill have been commissioned during the year
 under report.
 
 ii) Under Implementation
 
 a) Steel Plant in Angul, Orissa
 
 The Company is setting up 6.0 million TPA Integrated Steel Plant and
 1080 MW power plant at Angul in the state of Orissa. The technology to
 be adopted for this Integrated Steel Plant will be the DRI/BF/EAF
 route. The DRI plant has unique feature of using syn gas from the coal
 gasification plants as reductant. The DRI/coal gasification route is
 being used for the first time in the world and has the advantage of
 using high ash coal which is predominantly available in the vicinity of
 the project site. The Company has signed an agreement with M/s. Lurgi
 Sasol Technology Company, South Africa for providing technology for
 coal gasification.
 
 The major plant facilities include Sinter Plant, Pellet Plant, Coke
 Oven & By-Product Plant, Coal based Reduction Gas Facility, DRI Plant,
 Blast Furnace, Steel Melting Shop, Slab Caster, Plate Mill, Hot Strip
 Mill, Oxygen Plant, Coal Washery, Lime & Dolomite Plant and Power
 Plant. The technology suppliers for Pellet Plant, Sinter Plant, Slab
 Caster along with Hot Strip Mill, EAF, Hot DRI charging system and Lime
 & Dolomite Plant will be finalized by August’ 2008.
 
 Work for setting up of DRI plant of 2.0 million TPA capacity, Plate
 Mill of 1.5 million TPA capacity and 1080 MW Power Plant has started.
 
 b) Steel plant in Patratu, Jharkhand
 
 The Company is setting up 6.0 million TPA Integrated Steel Plant at
 Patratu in the State of Jharkhand. Work for setting up of Wire Rod mill
 of 0.6 million TPA capacity and Bar mill of 1.0 million TPA capacity
 has started. Contract has been finalised with MECON for detailed
 engineering for setting up 3.0 million TPA steel plant. Blast Furnace
 contract has been finalised with SIEMENS VAI, Germany.  Arrangements
 for financial tie ups are being made.
 
 The Company has acquired 642 acres of land out of the total requirement
 of 3,100 acres. State Government of Jharkhand has allocated 69 MCM
 water for the project and Damodar Valley Corporation has committed to
 supply 175 MVA power to the project on 220 KV line. Environment
 clearance for the project has been obtained from Ministry of
 Environment and Forest.
 
 c) El-Mutun Iron Ore Mine, Bolivia
 
 Consequent to the awarding of exploitation rights by the Government of
 Republic of Bolivia over an area of El Mutun Mine which has an
 estimated reserves of 20 billion tonnes of Iron Ore, a Joint Venture
 agreement has been executed on 18th July, 2007 between Jindal Steel
 Bolivia S. A. (JSB), a subsidiary of the Company and Empresa
 Siderurgica Del Mutun (ESM) an entity of Government of Bolivia. This
 agreement has been approved by the Bolivian parliament. The Joint
 Venture agreement shall be valid for a period of 40 years.
 
 The Company proposes to invest US$ 2.10 billion in next 8 years for
 development of the mine in the granted concession and setting up mining
 facilities, steel making facilities and the requisite infrastructure
 through JSB.
 
 d) Power plant
 
 Work for setting up of 270 MW (2 X 135 MW) Power Plant at Raigarh has
 begun and orders for 13 packages have been placed. The estimated cost
 of the project is Rs.1,107 crores.
 
 e) Steel Melting Shop
 
 Work on setting up of third Steel Melting Shop of 1.00 million TPA at
 Raigarh has started. Orders for machinery and equipment have been
 placed. The estimated cost of the project is Rs.335 crores.
 
 f) Prefabricated Plant
 
 This plant is being set up at Raigarh at an estimated cost of Rs.29
 crores. Civil work for construction of building and fabrication of
 structures has already started.
 
 SUBSIDIARY COMPANIES’ OPERATIONS
 
 Jindal Power Limited (JPL) is setting up 1,000 MW power project in
 Raigarh (Chhattisgarh). Two units of 250 MW each have already started
 generation and another unit of 250 MW capacity has commenced trial run.
 The plant will be fully operational by July, 2008. The Company has
 closed its financial year 2007-08 with an income of Rs.125.86 crores
 and earned profit after tax of Rs.19.43 crores. The Company proposes to
 set up 2,640 MW (4X660MW) power plant at the existing site at Tamnar,
 Raigarh. Estimated cost of this project would be Rs.12,500 crores.
 Jindal Minerals & Metals Africa Limited and its subsidiary Jindal
 Minerals and Metals Africa Congo SPRL are pursuing exploration and
 mining of diamond in Democratic Republic of Congo. Jindal Steel & Power
 (Mauritius) Limited is pursuing the business of trading in steel and
 minerals and another subsidiary namely PT Jindal Overseas is pursuing
 the business of acquisition of coal mines and coal trading. Jindal
 Steel Bolivia S. A. has started work on development of El-Mutun mine
 and setting up of manufacturing facilities in Bolivia. This Company has
 a subsidiary namely, Gas to Liquids International for exploration and
 trading of natural gases. Chhattisgarh Energy Trading Company Limited
 is in the business of trading of power and has applied for ‘C’ category
 power trading license.
 
 TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
 
 Pursuant to Section 205C of the Companies Act ,1956, the Company has
 transferred, during the year under report, following amounts to the
 Investor Education and Protection Fund of Government of India.
 
 Particulars Amount (Rs.) Date of transfer
 
 15th Instalment of interest on 12.5% NCDs 1,18,257 30.04.2007
 
 4th Redemption of 12.5% NCDs 15,42,750 12.06.2007
 
 16th Instalment of interest on 12.5% NCDs 1,36,823 25.10.2007
 
 Dividend (1999-2000) 10,31,608 30.11.2007
 
 5th Redemption & 17th instalment of interest on 12.5% NCDs 12,13,551
 13.03.2008
 
 EMPLOYEES STOCK OPTION
 
 Options granted under Series I of the ESOS-2005 of the Company on
 26.11.2005 have vested in the employees on 26.11.2007 and the exercise
 period is six months during which they have to apply for allotment of
 shares. The employees are exercising their options for seeking
 allotment of these shares and the allotment is under process.
 
 As required by Clause 12 of SEBI (Employees Stock Option Scheme and
 Employees Stock Purchase Scheme) Guidelines, 1999 information with
 respect to active Stock Options as on 31st March, 2008 is given in a
 separate statement as Annexure-I forming part of this Report.
 
 LISTING
 
 The equity shares continue to be listed on The Bombay Stock Exchange
 Limited (BSE) and the National Stock Exchange of India Limited (NSE).
 Both these stock exchanges have nation wide terminals and therefore,
 shareholders / Investors are not facing any difficulty in trading in
 the shares of the Company from any part of the country. The Company has
 paid annual listing fee for 2008-09 to The Bombay Stock Exchange
 Limited and the National Stock Exchange of India Limited and annual
 custody fee to National Securities Depository Limited and Central
 Depository Services (India) Limited.
 
 FIXED DEPOSITS
 
 The Company has received Rs.10.79 crores by way of fresh deposits
 during the year under report. The aggregate amount outstanding in
 respect of fixed deposits as on 31.03.2008 was Rs.22.27 crores
 representing 6531 number of fixed deposit holders. Out of above the
 amount of fixed deposits that have matured but were unclaimed as on
 31.03.2008 was Rs.74.03 lacs representing 327 deposit holders. Since
 then 50 deposits totaling Rs.11.92 lacs have subsequently been paid /
 renewed.
 
 DIRECTORS
 
 Shri Suresh Baid ceased to be director at the conclusion of 28th Annual
 General Meeting of the Company held on 28th September, 2007. Shri A. K.
 Purwar joined the Board on 30th July, 2007 against casual vacancy
 caused by demise of Rajendra Singh. Shri R. V. Shahi joined the Board
 as an Additional Director from 15th October, 2007. ICICI Bank Limited
 has nominated Smt. Ramni Nirula as director from 1st November, 2007 in
 place of Shri Ashok Alladi. Shri Ashok Alladi joined the Board as an
 Additional Director from 1st November, 2007. Shri P. S. Rana resigned
 from directorship/ wholetime directorship of the Company from 1st
 April, 2008. Shri Arun Kumar Mukherji was appointed as an additional
 director and wholetime director of the Company from 1st April, 2008.
 Smt. Savitri Jindal, Chairperson and Shri A.K. Purwar, Director retire
 by rotation at the forthcoming Annual General Meeting and being
 eligible offer themselves for re-appointment.
 
 PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Information pursuant to Section 217(1) (e) of the Companies Act, 1956
 read with Rule 2 of the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules 1988 regarding conservation of
 energy, technology absorption and foreign exchange earnings and outgo
 is given in the Annexure II forming part of this report.
 
 PARTICULARS OF EMPLOYEES
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 the particulars of employees are set out in Annexure-III to this
 Report. However, as per the provisions of Section 219(1)(b)(iv) of the
 said Act read with Clause 32 of the Listing Agreement, the Annual
 Report excluding the aforesaid information is being sent to all the
 members of the Company and others entitled thereto. Any member
 interested in obtaining such particulars may write to the Company
 Secretary at 28, Najafgarh Road, New Delhi-110015.
 
 CORPORATE GOVERNANCE
 
 Your Company has implemented the conditions of Corporate Governance as
 contained in clause 49 of listing agreement. A Separate report of
 Corporate Governance and Management Discussion and Analysis along with
 necessary certificates are given elsewhere in this report as Annexures
 IV & V and form a part of this report.
 
 AUDITORS
 
 M/s S.S.Kothari Mehta & Co., Auditors of the Company hold office upto
 the conclusion of the ensuing Annual General Meeting. The Company has
 received communication from them to the effect that their appointment,
 if made, would be within the limits prescribed under Section 224(1B) of
 the Companies Act, 1956. They are proposed to be appointed as Auditors
 of the Company for the financial year 2008-09.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under sub Section 2AA of Section 217 of the
 Companies Act, 1956 with respect to the Directors Responsibility
 Statement, it is hereby confirmed:- i) that in preparation of the
 annual accounts for the financial year ended 31.03.2008, the applicable
 accounting standards had been followed along with proper explanations
 relating to material departures.
 
 ii) that the Directors had selected such accounting policies and
 applied them consistently and made judgements 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 financial year and of the
 profit of the Company for the year under report.
 
 iii) that the Directors had 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 by preventing and detecting fraud and other
 irregularities.
 
 iv) that the Directors had prepared the accounts for the financial year
 ended 31.03.2008 on a ‘going concern basis’.
 
 APPRECIATION
 
 Your Directors wish to place on record their gratitude for the valuable
 guidance and support given by Government of India, various State
 Government departments, Financial Institutions, Banks, and various
 stake holders, such as, shareholders, customers, suppliers etc. The
 Directors also commend the continuing commitment and dedication of the
 employees at all levels which has been critical for the Company’s
 success. The Directors look forward to their continued support in
 future.
 
                                         For and on behalf of the Board
 
 Date  : 27th May, 2008                       SAVITRI JINDAL
 Place : New Delhi                            CHAIRPERSON