JSW Steel

The Directors have pleasure in presenting the Fourteenth Annual Report
 of your Company along with the Audited Statement of Accounts for the
 year ended 31 March 2008.
 
 1.  FINANCIAL RESULTS
 
                                                          Rs. in Crores
 
 Sl.    Particulars                            31.03.2008    31.03.2007
 No.
 
 i)       Gross Turnover                        12,628.91      9,297.26
 ii)      Net Turnover                          11,420.00      8,554.36
 iii)     Other Income                             257.14        145.23
 iv)      Total Revenue                         11,677.14      8,699.59
 
 v)      Profit before Interest,
 
 Depreciation, Miscellaneous
 Expenditure written off &
 Taxation (EBIDTA)                               3,611.74      2,921.97
 
 vi)     Interest                                  440.44        399.54
 vii)    Depreciation and Miscellaneous
 
 Expenditure written off                           687.18        607.25
 
 viii)   Profit before Taxation (PBT)            2,484.12      1,915.18
 
 ix)     Tax including Deferred Tax
         and Fringe Benefit tax                    755.93        623.18
 
 x)      Profit after Taxation (PAT)             1,728.19      1,292.00
 xi)     Profit Brought forward from
         Previous Year                           2,267.56      1,331.66
 
 xii)    Amount available for_
         appropriation                           3,995.75      2,623.66
 
 xiii)   Appropriations
 
         Transferred from Debenture
         Redemption Reserve                         23.30         39.48
 
 Dividend on Preference
 Shares                                            (29.06)       (27.90)
 
 Interim Dividend on
 Equity Shares @ 125%                                 -         (204.98)
 
 Proposed Final Dividend on
 Equity Shares @ 140%                             (261.87)           -
 Corporate Dividend Tax                            (49.44)       (33.49)
 Transfer to General Reserve                      (172.82)      (129.21)
 Total                                            (489.89)      (356.10)
 
 xiv)   Balance carried to
        Balance Sheet                            3,505.86      2,267.56
 
 The financial results for the year under consideration are not
 comparable with that of the previous year as they include the fnancial
 results of erstwhile Southern Iron & Steel Company Limited (SISCOL)
 which was merged with the Company pu rsuant to the Scheme of
 Amalgamation with appointed date as 1 April 2007.
 
 Your Company has been expanding its capacities through Brownfield
 expansions fuelling the volume growth year after year. During the
 fiscal 2007-08, the Company formulated a Scheme of Amalgamation, which
 was sanctioned by the Hon’ble High Court of Bombay merging SISCOL with
 the Company with appointed date as 1 April 2007. This inorganic
 addition of 1 MTPA long product facility alongwith Brownfield expansion
 led to a significant growth of 37% and 27% over previous year in volume
 of crude steel production and saleable steel respectively. This
 substantial volume growth resulted in expansion in absolute terms in
 EBIDTA, Cash Profit and PAT relative to that of the previous year. The
 Company had to absorb a part of the un-precedented increase in cost of
 inputs namely; iron ore, coking coal, coke, ferro alloys and
 transportation cost squeezing the margins of the Company.  The cost
 reduction initiatives namely, commissioning of coal drying unit, hot
 metal treatment plant and use of LD gas for power generation etc. could
 offset only a part of the increase in cost and the EBIDTA margin
 (excluding onetime income) dropped by 3.5% compared to that of previous
 year. The increase in realisations has not kept pace with the
 increasing input costs particularly in the domestic market in the later
 part of the fiscal year 2007-08, while the international prices have
 seen new highs. The Company opted to absorb part of the cost increases
 without passing on to the user industry sharing the concern of
 Government of India in moderating inflation.  In spite of this
 challenging environment, the Company has registered increase in the PAT
 to Rs.1,728.19 crores with a growth of 33.76% contributed mainly by
 volume growth.
 
 Pursuant to Accounting Standard (AS) - 21 on “Consolidated Financial
 Statements” issued by the Institute of Chartered Accountants of India,
 Consolidated Financial Statements presented by the Company include
 financial information of its subsidiaries. On an application made by
 the Company under Section 212(8) of the Companies Act, 1956, to the
 Central Government seeking exemption from attaching a copy of the
 Balance Sheet, Profit & Loss Account and other documents of the
 subsidiary companies required to be attached under Section 212(1) of
 the Act to the Balance Sheet of the Company, the Central Government has
 vide its letter No. 47/179/2008-CL–III dated 2 May 2008 granted
 exemption from complying with this requirement. However, the aforesaid
 documents relating to the subsidiary companies and the related detailed
 information will be made available upon request by any member or
 investor of the Company/subsidiary companies. Further, the Annual
 Accounts of the subsidiary companies will be kept open for inspection
 by any investor at the registered office of the Company and also that
 of the subsidiary companies.
 
 Consolidated Financial Statements also reflect minority interest in
 Associates as per Accounting Standard (AS) - 23 on “Accounting for
 Investments in Associates in Consolidated Financial Statements” and
 proportionate share of interest in Joint Venture as per Accounting
 Standard (AS) - 27 on “Financial Reporting of Interests in Joint
 Ventures”.
 
 As per the Consolidated Financial Statements, the Gross Turnover,
 EBIDTA and PAT of the Company are Rs.13,665.56 crores, Rs.3,739.59
 crores and Rs.1,640.04 crores respectively.  The PAT on consolidated
 basis was lower than the standalone basis mainly on account of
 unrealised profit attributable to the inventory relating to
 inter-company sales.
 
 2.  DIVIDEND
 
 The Board has, subject to the approval of the Members at the ensuing
 Annual General Meeting, recommended dividend:
 
 - at the stipulated rate of 10%, on the 27,90,34,907 10% Cumulative
 Redeemable Preference Shares of Rs.10/- each of the Company, for the
 year ended 31.03.2008; and
 
 - at the stipulated rate of 11%, on the 99,00,000 11% Cumulative
 Redeemable Preference Shares of Rs.10/- each of the Company, for the
 year ended 31.03.2008 along with arrears for the period from 10.03.2007
 to 31.03.2007.
 
 The Board has also, considering the performance of the Company for the
 year under review and the Financial Position of the Company,
 recommended dividend @ 140% (Rs. 14/- per Equity Share) on the
 18,70,48,635 Equity Shares of Rs. 10/- each of the Company for the year
 ended 31.03.2008, subject to the approval of the Members at the ensuing
 Annual General Meeting.
 
 Together with the Corporate Tax on Dividend, the total outflow on
 account of Equity Dividend is Rs.306.37 crores, vis-à-vis Rs. 233.73
 crores paid for fiscal 2006-07, an increase of 31%.
 
 3.  PROSPECTS
 
 The world economy showed a growth of 3.5% in 2007 in spite of visible
 slow down in USA triggered by sub prime crisis. The impressive growth
 in emerging Economies shielded the world Economy from the fallout of
 slowing US Economy. This led to a robust growth of 6.6% in demand for
 finished steel in the world mainly driven by BRIC and Middle Eastern
 countries.  The world steel demand for the year 2008 is expected to be
 robust in view of the attractive estimated growth of 3.3% in world
 economy, strong Fixed Asset investment and infrastructure spend in
 Emerging Economies. Indian Economy registered impressive growth of 8.7%
 in 07-08 fuelled by manufacturing sector. India has become a net
 importer of steel to meet the growing demand. The steel demand is
 expected to grow over 12% in India due to robust committed investment
 in pipeline in creating new capacities in various sectors. The fiscal
 measures announced by the Government in removing import duties,
 reducing excise duties or imposing export duty are expected to be
 temporary to contain spiralling inflation caused by rising food and
 commodity prices in international market. Growth momentum in India is
 still intact.
 
 Your Company has taken several initiatives to expand capacities rapidly
 by brown field and green field expansions to take capacity to 32 MTPA
 by 2020 in phases from the existing 4.8 MTPA. The acquisition of mining
 rights for coal and iron ore in Africa and Latin America is expected to
 increase the key raw material self sufficiency on operationalisation of
 these mines insulating the Company from volatile input prices. Your
 Company has planned the Commissioning of brown field expansions 6
 months ahead of schedule which demonstrates the project execution
 capabilities. The Plate and Pipe Mill acquisition in USA and Service
 Centre in UK is further value accretive proposition for your Company.
 Your Company is well positioned in this environment to create value for
 its stakeholders.
 
 4.  PROJECTS AND EXPANSION PLANS
 
 - The Phase II Modernisation of existing Hot Strip Mill to increase the
 capacity from 2.5 MTPA to 3.2 MTPA is expected to be completed by end
 of second quarter of fiscal 2008-09.
 
 - The Crude steel capacity expansion project by 2.8 MTPA to reach 6.8
 MTPA at Vijayanagar works is now planned to be commissioned by
 September 2008 as against original scheduled date of March 2009.
 
 - The State of the Art new Hot Strip Mill with 3.5 MTPA capacity (Phase
 I) is scheduled to be commissioned by September 2009 and its expansion
 to 5 MTPA (Phase II) is expected to be operational by September 2010.
 
 - Further expansion of Crude steel capacity by 3.2 MTPA to reach 10
 MTPA is also running ahead of schedule and is expected to be
 commissioned prior to the scheduled date of September 2010.
 
 - Conversion of two Galvanising lines at Tarapur to Galvalume is
 scheduled in fiscal 2008-09.
 
 - 30 MW Captive Power Plant is being set up at Tarapur to meet the
 requirement of Downstream units. Civil work is in progress & the plant
 is scheduled to commissioned by October 2008.
 
 - New Colour Coating Line No 2 is being set up at Tarapur and is
 scheduled to be commissioned by end September 2008.
 
 - Setting up of a Railway Siding at Vasind is in progress.  Approval
 from Railways has been received. The scheduled date of completion is in
 fiscal 2008-09.
 
 - The Blooming Mill at Salem unit will also be commissioned in fiscal
 2008-09 increasing the capacity of rolled products from 0.45 MTPA to
 0.90 MTPA.
 
 NEW PROJECTS
 
 a) Beneficiation Plant 20 MTPA
 
 The Company has taken up implementation of a beneficiation Plant with
 20 MTPA feed capacity to be completed in two phases of 10 MTPA each by
 March 2010 at an estimated cost of Rs.850 crores. This beneficiation
 plant facilitates to use low Fe grade iron ore to improve the Fe
 content to +63% and to reduce the Alumina and Silica content. On
 commissioning of this project the Company stands to benefit in reducing
 the procurement of cost of iron ore and also achieve the lower fuel
 consumption in iron making due to lower Alumina content and higher
 productivity.
 
 b) New Captive Power Plant 300 MW
 
 The Company currently operates captive power plant of 230 MW at
 Vijayanagar Works. When the Crude steel capacity goes upto 10 MTPA at
 Vijayanagar by 2010, the power requirement goes up by 600 MW. While 300
 MW power plant is under implementation as a part of expansion project,
 the balance 300 MW power plant is now proposed to be taken up for
 implementation at an estimated cost of Rs.825 crores to be commissioned
 by October 2010.
 
 5.  OTHER DEVELOPMENTS
 
 a) Scheme of Amalgamation
 
 The Company has acquired Southern Iron & Steel Company Limited (SISCOL)
 through a Scheme of Amalgamation sanctioned by the Hon’ble Bombay High
 Court vide its order dated 22nd February, 2008 with appointed date as
 1st April, 2007. The erstwhile SISCOL was having a 0.3 MTPA long
 products plant which was expanded to 1 MTPA (completed in the Quarter 4
 fiscal 2007-08). This acquisition added 1 MTPA of production capacity
 thus making JSW Steel the 2nd largest Steel Company in the private
 sector in India. While this unit has a rolling capacity of 0.45 MTPA, a
 new Blooming Mill is now being set up to increase the rolling capacity
 from 0.45 MTPA to 0.90 MTPA in fiscal 2008-09.
 
 b) Steel Plant at Georgia, Eastern Europe
 
 The Company has been continuously striving for expanding its global
 footprint in overseas markets. The Company has identified an
 opportunity for setting up a Steel Plant for manufacturing of TMT Bars
 (Rebars) for catering to the growing needs of construction industry in
 Eastern European countries mainly in Georgia, Armenia, Azerbaijan,
 Russia and former CIS Countries.
 
 It is proposed to invest to the extent of 49% of Equity of Geo Steel
 LLC (GSL), a company incorporated under the laws of Georgia which is
 setting up a Steel Rolling Mill facility in Georgia initially with a
 capacity of 175,000 tonnes per annum (tpa) Rebars. The plant is being
 designed to produce Rebars through hot rolling process by using
 Constructional Steel Billets produced through Electric Arc Furnace
 Route.
 
 The estimated project cost of USD 42 Million is proposed to be financed
 by way of debt of USD 28 Million and the balance through equity of USD
 14 Million. Out of the total equity capital of USD 14 million required
 for setting up of the project, upto 49% i.e. USD 6.86 million will be
 invested by the Company.
 
 c) Rohne & Utkal Coal Blocks
 
 The Company has been allocated Coking Coal Block in Rohne in Jharkhand
 with a share of 69% and Thermal Coal Block in Utkal in Orissa with a
 share of 11% to meet the captive requirements.
 
 The Company has entered into a joint venture agreement with other two
 partners to develop the Rohne Coking Coal Block allotted in Jharkhand.
 This Coal Block will be developed in the joint venture company, namely
 Rohne Coal Company Private Limited. This joint venture company
 initiated topographical survey work and environmental and sociological
 data collection for preparation of Environmental Management Plan. The
 Company has also signed another agreement with other 4 partners to
 develop the Thermal Coal Block at Utkal at Orissa. A draft project
 report for developing this mine with a 15 MTPA capacity has been
 prepared and the preparation of Environmental Management Plan is in
 progress.
 
 d) Pre Engineered Building Solutions
 
 The Company is considering a foray into Pre Engineered Building
 solutions business (PEBs). Pre Engineered steel buildings will be
 designed and fabricated at the plant to be set up.
 
 The Company’s entry into this fast growing business segment will give
 synergy by using the Company’s products such as steel plates,
 galvanized, colour coated and galvalume products as raw materials and
 at the same time will provide an opportunity for the Company to enter
 into high end solutions using steel products as the base.
 
 6.  SUBSIDIARIES
 
 A.  Indian Subsidiaries:
 
 i) JSW Bengal Steel Limited
 
 JSW Bengal Steel Limited has been incorporated with an authorized
 capital of Rs.100 crores with a proposed shareholding of 89% by the
 Company and balance 11% by West Bengal Industrial Development
 Corporation (WBIDC), West Bengal Mineral Development and Trading
 Corporation Limited (WBMDTC).
 
 The Company has originally planned to set up a 3 MTPA Integrated Steel
 Plant in West Bengal in Phase I and expand it to 10 MTPA in suitable
 phases over a period of 12 years. After evaluating various options, it
 is found attractive to set up a 6 MTPA plant upto slab stage at once
 considering the economies of scale and the cost benefit analysis.  The
 project is proposed to be implemented in Special Economic Zone (SEZ)
 since a significant portion of the output from the plant is intended to
 be exported.  The application to implement the project in a SEZ has
 been cleared by Government of West Bengal Screening Committee and has
 been forwarded to Central Government.
 
 The Company has got possession of land required for implementing this
 project and is in the process of signing Coal Raising and Supply
 Agreement with Government of West Bengal for getting Coal from certain
 Coal Blocks allotted to West Bengal Government. The project will be
 taken up for implementation during the fiscal 2008-09 with or without
 modification in the scope of project taking into account the current
 prevailing volatile conditions in fnancial markets in achieving the
 financial closure.
 
 ii) JSW Jharkhand Steel Limited
 
 JSW Jharkhand Steel Limited was incorporated on 7 June 2007 with the
 main objects to set up a 10 MTPA Integrated Iron and Steel Plant and
 800 MW Greenfield Thermal Power Plant and related facilities in the
 State of Jharkhand, at an investment of Rs. 35,000 crores in phases.
 The Company had signed an MOU with Jharkhand Government during November
 2005.
 
 The Company has been allotted a prospecting licence for iron ore on
 1388 acres of land in the State of Jharkhand. A site has been
 identified for which application has been made to the Government for
 allotment. The project will be taken up for implementation once land
 acquisition is complete and the raw material linkages are established.
 
 iii) JSW Steel Processing Centres Limited
 
 JSW Steel Processing Centres Limited was incorporated to set up service
 centres with a view to expand the reach of CRCA and HRPO steel products
 manufactured across the value chain and to meet the exacting demands of
 the user industry. The Service Centre is expected to be operational in
 first quarter of fiscal 2008-09.
 
 B.  Overseas Subsidiaries
 
 i) JSW Steel (Netherlands) B.V.
 
 The Company has formed a wholly owned subsidiary in Amsterdam,
 Netherlands known as JSW Steel (Netherlands) B.V. with the object to
 acquire and make investment in all steel related and steel allied
 businesses and in mining assets relating to steel and power businesses.
 This Company acquired Plate and Pipe mill in USA and iron ore mining
 concessions in Chile through the following step-down subsidiaries.
 
 (a) JSW Steel Holding (USA) Inc. and its subsidiary JSW Steel (USA)
 Inc.
 
 JSW Steel (Netherlands) B.V. has acquired three companies in US i.e.
 Jindal United Steel Corporation (JUSC) having 1.2 Mn Net ton Slab
 feeding capacity, Saw Pipes USA (SPU) having 0.55 Mn Net ton Pipe
 producing capacity and Jindal Enterprises LLC (JE) having 0.55 Mn Net
 ton Double Jointing capacity along with 0.35 Mn Net ton of Coating
 capacity, all of which are located in Baytown, Texas. The location of
 the business is in the heart of the US oil and gas industry located in
 the Gulf of Mexico. It has a principal competitive advantage due to its
 own Barge unloading facility and excellent Rail and truck
 transportation facilities.
 
 JSW Steel (Netherlands) B.V. has formed one US subsidiary company
 namely JSW Steel Holding (USA) Inc. who in turn has formed its own
 subsidiary namely JSW Steel (USA) Inc. for the purpose of this
 acquisition. All the above three acquired entities were merged with JSW
 Steel (USA) Inc.  as part of acquisition closing. The above acquisition
 of these three companies were completed on 5th November, 2007. JSW
 Steel Holding (USA) Inc. has acquired 90% stake in the merged entity
 with 10% stake being kept by the erstwhile shareholder.
 
 With this acquisition, the Company will be able to make significant
 value addition on surplus slabs available at its manufacturing
 facilities in India by supplying the same to its acquired US operation
 for further value addition in the form of plates and pipes.
 
 b) JSW Steel (UK) Limited and its subsidiaries Argent Independent Steel
 (Holdings) Limited and JSW Steel Service Centre (UK) Limited
 
 The Company acquired a 100% stake in UK based Service Centre, JSW Steel
 Service Centre (UK) Limited (formerly, Argent Independent Steel
 Limited) through JSW Steel (UK) Limited and Argent Independent Steel
 (Holdings) Limited. The Company has slitting and blanking facilities to
 cater to specific customer requirements.
 
 c) JSW Panama Holding Corporation and Chilean subsidiaries namely
 Inversiones Eroush Limitada, Santa Fe Mining and Santa Fe Puerto S.A.
 
 JSW Steel (Netherlands) B.V. has acquired 70% stake in Santa Fe Mining
 on 30th January, 2008 through other step down subsidiaries.
 
 Santa Fe Mining has interests on 124 mining concessions in 4 mines
 (i.e. Bellavista, Cuca, Rebote and Vinita) along with right to use the
 existing port and also has right to use new port to be constructed for
 which maritime concession application is already fled. These mining
 concessions are divided into two projects called Bellavista and Vinita.
 Bellavista project consists of mines namely Bellavista, Cuca and
 Rebote.
 
 The mines are at a distance of about 70-90 Km from the port and are
 connected to port through well-developed roads. Railway tracks are also
 available which would require some up-gradation.
 
 The mines will be developed over a period of next 36 months to 20 MTPA
 with the initial capacity of 4 MTPA.
 
 Besides, Inversiones Eroush Limitada, Chile owns another 8 mining
 concessions in mines namely Daniel and Catalina in Chile.
 
 ii) JSW Steel Natural Resources Limited and its subsidiary viz. JSW
 Steel Natural Resources Mozambique Limitada (JSWNRML) JSW Natural
 Resources Limited was incorporated in Mauritius to pursue acquiring
 coal assets/other assets relating to steel business.
 
 JSW Natural Resources Limited has formed a wholly owned subsidiary in
 Mozambique to acquire Coal assets and to develop Coal mines in
 Mozambique.
 
 The Company had entered into MoUs to acquire four concessions with a
 Mozambican party (through its constituted attorney), who has been
 allotted prospecting and exploration licence for coal and associated
 minerals. The Company has started geological survey, due diligence and
 other formalities to start the mining activities on some of these
 concessions in Mozambique in fiscal 2008-09.
 
 A Memorandum of Understanding (MoU) has also been entered into on 14th
 November, 2007 between JSWNRML and CCFB (Companhia dos Caminhos de
 Ferro da Beira, SARL- Railway Company of Beira) for the transportation
 of Coal from Tete to Beira.
 
 7.  ASSOCIATED COMPANIES FOR POWER, OXYGEN AND MINING
 
 - JSW Energy (Vijayanagar) Limited (JSWEVL)
 
 JSWEVL is setting up a 2X300 MW Power Plant adjacent to steel plant of
 JSW Steel Limited in the state of Karnataka. A long term Power Purchase
 Agreement (PPA) has been signed with your Company to sell 300 MW Power
 on two part tariff basis.
 
 JSWEVL has received the necessary approvals for the evacuation of upto
 600 MW of power through the state grid and the necessary infrastructure
 is being built as part of the project.
 
 Construction work on both units is progressing as per schedule. The
 synchronization of Unit I is expected by October 2008 and unit II by
 December 2008.
 
 - Jindal Praxair Oxygen Company Private Limited (JPOCL)
 
 The arbitration initiated by JPOCL relating to consideration for the
 sale and supply of products such as Oxygen, Nitrogen and Argon to the
 Company as well as taxes & interest thereon has been amicably resolved
 between the parties. A settlement agreement has been executed on 25
 September 2007 to record the understanding between the parties for
 settling the disputed amount of the past and the terms and conditions
 to be applicable going forward for the remaining period of the
 contract. Based on the settlement agreement, a Final Award has also
 been made by the Arbitrators in February 2008.
 
 Oxygen Plant Module # 1 & Module # 2 of JPOCL have been working
 satisfactorily and supplying Oxygen, Nitrogen and Argon for meeting the
 steel plant requirement of the Company.
 
 - Vijayanagar Minerals Private Limited (VMPL)
 
 During the financial year 2007-08, VMPL has supplied 1.2 Million tons
 of Iron Ore from Thimmappanagudi Iron Ore Mines. VMPL is in close touch
 with Mysore Minerals Limited for getting the additional areas to
 enhance the production capacity to 2.00 Million tons in the current
 financial year 2008-09. Papers have been submitted to forest department
 for clearances of additional area for enhancing the production to meet
 the additional requirement of the Company.
 
 In addition to above, VMPL is working on exploring the possibility of
 usage of low grade Iron Ore and BHQ by upgrading them through washing
 and beneficiation processes, for consumption at the Company. It may
 further enhance the reserves availability in the Company and extend the
 life of the mines.
 
 It is a matter of pride that during the State level celebration of
 Safety Week - 07, VMPL has bagged the following awards:
 
 - Over All performance - Zone level - 1st Prize
 
 - Over All performance - State level - 1st Prize
 
 - Welfare Amenities - 1st Prize
 
 - Hazardous identification
 
 and risk management - 1st Prize
 
 - Human Resources development - 1st Prize
 
 - Operation & maintenance
 
 of machineries - 2nd Prize
 
 Recognition by getting the awards has further strengthened the
 commitment of VMPL to have safe practice of production.
 
 8.  CREDIT RATING
 
 Credit Analysis & Research Ltd. (CARE) has assigned a rating of “CARE
 AA (Double A) to the Secured Non Convertible Debentures (NCDs) issue
 of Rs.100 crores which in fact was upgraded from AA - (Double A minus)
 during the fiscal 2007-08, taking into account Company’s improved
 fnancial performance, significant presence in the steel sector, proven
 management capability, geographical diversity of sales and healthy mix
 of value added and other products.
 
 The additional Rs.350 crores NCDs issued by the Company during the year
 are also assigned CARE AA (CARE Double A) rating by CARE.
 
 Your Company’s rating for long-term/medium term debt/ facilities has
 been assigned “CARE AA” (CARE Double A) rating by CARE and they have
 also assigned PR (PR One Plus) rating to the short term
 debt/facilities, availed by the Company.
 
 - CARE AA rating indicates a high safety for timely servicing of debt
 obligations and very low credit risk.
 
 - PR rating is the highest rating in the category and indicates a
 strong capacity for timely payment of short-term debt obligations and
 lowest credit risk.”
 
 9.  FIXED DEPOSITS
 
 Your Company has not accepted any Fixed Deposits from the public and is
 therefore not required to furnish information in respect of outstanding
 deposits under Non-Banking Non- Financial Companies (Reserve Bank)
 Directions, 1966 and Companies (Acceptance of Deposits) Rules, 1975.
 
 10.  FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
 
 During the year, your Company made an offering of 3250 Zero Coupon
 Foreign Currency Convertible Bonds (FCCBs) of US$ 100,000 each,
 aggregating to US$ 325 Million to international investors to finance
 capital expenditure, including capacity expansion and other approved
 purposes. As per the option attached to the FCCBs, each bond is
 convertible into equity share of the face value of Rs.10/- each of the
 Company at a conversion price of Rs.953.40 per share , at any time on
 or after 7 August 2007 until the close of business on 21 June 2012,
 unless previously redeemed, converted or purchased and cancelled and
 except during a closed period. The conversion price fixed at Rs.953.40
 per share was at 50% premium to closing price of the shares on the
 National Stock Exchange of India on 29 May 2007 i.e. Rs.635.60. The
 bonds, which are not redeemed, converted or purchased and cancelled,
 are redeemable on 28 June 2012 at an amount equal to the principal
 amount of the bonds multiplied by 142.801 per cent.
 
 11.  SHARE CAPITAL
 
 Forfeiture in respect of 7,100 equity shares (Pre-Scheme) were annulled
 upon appropriation of unidentified call money and 311 equity shares
 were issued during fiscal 2007-08 in accordance with the terms of the
 Scheme of Arrangement & Amalgamation between the Company, Jindal Iron
 and Steel Company Limited and Jindal South West Holdings Limited.
 
 33,799 Equity Shares of Rs.10/- each were allotted to Deutsche Bank AG
 London upon exercise of option attached to the Foreign Currency
 Convertible Bonds (FCCBs) held by them.
 
 15,00,000 (Fifteen Lakh) Equity Shares of Rs.10/- each to Mr. Sajjan
 Jindal & 65,00,000 (Sixty Five Lakh) Equity Shares of Rs.10/- each to
 JSW Investments Private Limited (formerly known as Samarth Holdings
 Private Limited) were allotted on 28 March 2008 at a price of Rs. 272/-
 per share upon exercise of option attached to ‘Series B’ Equity
 Warrants held by them.
 
 Upon the Scheme of Amalgamation of Southern Iron & Steel Company
 Limited (SISCOL) with the Company becoming effective, 1,50,35,712
 Equity Shares of Rs. 10/- each and 99,00,000 11 % Cumulative Redeemable
 Preference Shares of Rs. 10/- each of the Company were issued to the
 shareholders of SISCOL.
 
 Accordingly, during the year under review, your Company’s paid up
 equity share capital has increased from Rs.163,97,88,130 to
 Rs.187,04,86,350 comprising of 18,70,48,635 equity shares of Rs.10/-
 each.
 
 12.  DIRECTORS
 
 Mr. Seshagiri Rao MVS, Mr. Uday M. Chitale and Mr. Sudipto Sarkar,
 Directors, retire by rotation at the forthcoming Annual General Meeting
 and being eligible, offer themselves for re- appointment. The proposals
 regarding their re-appointment as Directors are placed for your
 approval.
 
 Mr. Y. Siva Sagar Rao was appointed as an Additional Director by the
 Board of Directors of your Company in its meeting held on 24th July,
 2007. In the same meeting, Mr. Y. Siva Sagar Rao was also appointed as
 whole-time Director of the Company designated as Jt. Managing Director
 & CEO for a period 3 years w.e.f. 24th July, 2007 and his appointment
 was approved by the Members in the Extra Ordinary General Meeting held
 on 28th December, 2007.
 
 Mr. Nagesh Dinkar Pinge was appointed by the Board of Directors of your
 Company in its meeting held on 28th December, 2007 as an Additional
 Director w.e.f.  28th December, 2007 in terms of Article 123 of the
 Articles of Association of your Company and he holds office upto the
 date of the ensuing Annual General Meeting. Your Company has received
 notice under Section 257 of the Companies Act, 1956 from a shareholder
 proposing him for the Office of Director to be elected by the members
 in the ensuing Annual General Meeting.
 
 The proposal regarding his appointment as Director is also placed for
 your approval.
 
 Other changes in the Board of Directors of your Company during the year
 under review are as follows:
 
 Dr. B. N. Singh, Jt. Managing Director & CEO of the Company prematurely
 superannuated as a Director and Whole-time Director w.e.f. 1st June,
 2007.
 
 Dr. Vijay Kelkar stepped down from the Board of our Company with effect
 from 31st December, 2007 to assume the charge of chairmanship of
 Finance Commission constituted by the President of India in pursuance
 of Clause (1) of Article 280 of the constitution.
 
 Your Directors place on record their deep appreciation of the valuable
 services rendered by Dr. B. N. Singh and Dr. Vijay Kelkar during their
 tenure as Directors.
 
 13.  AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the
 Company, retire at the conclusion of the ensuing Annual
 
 General Meeting and have expressed their willingness to act as Auditors
 of the Company, if appointed, and have further confirmed that the said
 appointment would be in conformity with the provisions of Section 224
 (1B) of the Act.
 
 14.  PARTICULARS REGARDING CONSERVATION OF ENERGY & TECHNOLOGY
 ABSORPTION
 
 Information in accordance with the provisions of Section 217(1)(e) of
 the Companies Act, 1956 read with Companies (Disclosure of Particulars
 in the Report of the Board of Directors) Rules, 1988 regarding
 conservation of energy, technology absorption and foreign exchange
 earnings and outgo is given in the statement annexed (Annexure “A”)
 hereto forming part of the report.
 
 15.  PARTICULARS OF EMPLOYEES
 
 The information required under Section 217(2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules, 1975 is
 given in the statement annexed (Annexure “B”) hereto forming part of
 the report.
 
 16.  AWARDS & ACCOLADES
 
 Your Company and its employees are the proud recipients of the
 following awards during the year:
 
 - CII-ITC Sustainability Award-2007: Commendation Certificate for
 Significant Achievement in economic, environment and social performance
 (on 12th December, 2007 at New Delhi).
 
 - CII-Exim Bank Award-2007: Commendation certificate for significant
 achievement towards business excellence” (on 1 November 2007 at
 Bangalore).
 
 - TERI Corporate Social Responsibility Award 2007:
 
 Certificate of appreciation in recognition of corporate leadership for
 good corporate citizenship and sustainable initiatives amongst
 corporations with a turnover of above Rupees 500 crore.
 
 - IMC Ramkrishna Bajaj National Quality Award 2007: Special Award for
 Performance Excellence in the manufacturing category” (on 21 March 2008
 at Mumbai).
 
 Recognitions by Employees or teams:
 
 - Tungabhadra Quality Circle Team won gold medal at ICCQC-2007, at
 Beijing (October 2007)
 
 - Mr. J.K. Tandon, Director (Projects) received the National
 Metallurgist Award-2007, at 45th National Metallurgists Day, 2007.
 
 - Young Metallurgist of the year award was jointly won by Mr.  D.
 Satish Kumar, Assistant Manager (R&D and SS), and Mr. T. Rajendra,
 Manager (SMS-1) at 45th National Metallurgists Day, 2007.
 
 - The prestigious IIM Steel Eighties Award for ‘meritorious
 contribution for advancement of Steel Technology’ for the year 2007 was
 awarded to Dr. Madhu Ranjan, Associate Vice President (R & D and SS).
 
 17.  CORPORATE GOVERNANCE
 
 Your Company has complied with the requirements of Clause 49 of the
 listing agreement regarding Corporate Governance.
 
 A report on the Corporate Governance practices followed by the Company,
 the Auditors’ Certificate on compliance of mandatory requirements
 thereof and Management Discussion and Analysis are given as annexure to
 this report.
 
 18.  DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements under Section 217(2AA) of the Companies
 Act, 1956, your Directors hereby state and confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed alongwith proper explanation
 relating to material departures;
 
 (ii) they have 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 or loss
 of the Company for that period;
 
 (iii) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of this
 Act for safeguarding the assets of your Company and for preventing and
 detecting fraud and other irregularities;
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 19.  APPRECIATION
 
 Your Directors take this opportunity to express their appreciation for
 the co-operation and assistance received from the Central Government,
 the Government of Karnataka, the Government of Maharashtra, the
 Government of Tamilnadu, the Financial Institutions, Banks as well as
 the Shareholders and Debenture holders during the year under review.
 Your Directors also wish to place on record their appreciation of the
 devoted and dedicated service rendered by all the employees of your
 Company.
 
                         For and on behalf of the Board of Directors
 
                         Savitri Devi Jindal
 
 Date : 5 May 2008       Chairperson