Sesa Goa

I have great pleasure in welcoming you all to 
 the 14th Annual General Meeting of your Company. 
 The Annual Report of the Company for the year 2006-07 
 has already been circulated to you and the same must 
 be in your hands now.
 
 You would be aware that the entire shareholding
 of FINCO, U.K., the principal shareholder of Sesa Goa
 Limited, your Company’s Holding Company, has been 
 acquired by two wholly owned Subsidiary Companies 
 of Vedanta Resources plc., U.K. Consequently, your 
 Company has become a part of Vedanta Group. Vedanta 
 is listed on London Stock Exchange and is one of the 
 world’s leading metal and mining companies with 
 significant base in Copper, Aluminum, Zinc, Lead 
 and now iron ore with metallurgical coke and pig 
 iron of Sesa Group.
 
 As already stated in the Annual Report, the 
 proposed merger of your Company with the Holding Company,
 Sesa Goa Limited (SGL) is still awaiting approval 
 of the High Court of Bombay at Goa, owing to objection 
 from one shareholder. In view of the pending merger 
 with effect from 1st April, 2005, no dividend could 
 be proposed inspite of available profit for appropriation; 
 however you will receive the total dividend declared 
 by SGL for the year 2005-06 and 2006-07 on the shares 
 of SGL that you would receive upon approval of 
 the merger. SGL has already declared and paid dividend 
 of 400% for the year 2005-06, interim dividend of 
 150% for the year 2006-07 and proposed a final 
 dividend of 250%. 
 
 Economic Environment
 
 The global economy is expected to continue its
 growth trend with about 5% despite slow-down in 
 the US economy. However, Asia could sustain the 
 growth rate led primarily by China. India is one 
 of the fastest growing economies globally with 
 GDP growing at 9.4% last year.
 
 The global pig iron production – both merchant 
 and for internal consumption, has grown 8.5% 
 in the first eight months of 2007 compared with 
 the same period last year. Pitted against the 
 robust growth in world pig iron industry, the 
 Indian pig iron industry is also poised to 
 perform satisfactorily. Production of merchant 
 pig iron in India during 2006-07 was 4.960 million
 tons as compared to 4.695 million tons during 2005-06,
 a growth of 5.6%.
 
 In India, merchant pig iron consumption has shown 
 a strong growth due to rapid growth in automobile, 
 infrastructure and real estate sectors. The apparent 
 consumption has gone up to 4.649 million tons, an 
 increase of 12.4% as compared to 2005-06.
 
 With the automobile and engineering sector expected 
 to grow at 10% and 5% respectively, pig iron 
 consumption is also likely to witness growth of 
 7-10% in the medium term.
 
 Performance
 
 Your company has earned a net profit of Rs.416 
 million as against Rs.307 million for the previous year.
 Consequent upon commissioning of Hot Blast Stoves,
 production increased significantly during the year,
 despite shut down of one blast furnace for 50 days
 for relining. Production for the year was 0.243 
 million tones as against 0.207 million tones for the 
 previous year, an increase of about 0.036 million. 
 Sales too increased by about 49000 tonnes to 0.249
 million tonnes as against 0.199 million tonnes.
 
 During the year, there was a significant reduction
 in cost of metallurgical coke, a major raw material 
 for pig iron production due to lower international 
 price (used as benchmark for purchase price of coke 
 from the parent company) and lower consumption due to 
 commissioning of Hot Blast Stoves. However, the benefit 
 was partly offset by higher price of iron ore owing 
 to its strong demand in both domestic and 
 international market. The inventory particularly of pig 
 iron has come down significantly – both quantity and 
 value – during the year. As I had reported to you 
 in my last year’s statement, your Company continues 
 to be debt-free. 
 
 Business Outlook
 
 Rapid growth in Indian infrastructure, real estate 
 and automobile industries is likely to give fillip 
 to the demand for metallicks and consequently to 
 sustainable demand for pig iron also. The demand 
 is particularly favorable to the plant location of 
 your Company in the south west part of the country 
 owing to the continuous growth of the auto and auto 
 component sector in this region. However, increasing 
 prices of metallurgical coke lately and continuous 
 spurt in iron ore prices exert pressure on margins. 
 Availability of high-grade lumpy iron ore, volatility 
 in the price of pig iron and high rate of inflation 
 also remain a cause of concern. 
 
 The Power Plant set up by the Videocon Group has 
 become operational and is expected to stablise during 
 the year. This will facilitate your Company to augment 
 income as well as savings in cost of power by supply of 
 excess waste gases . The income of your Company is 
 expected to be further augmented by sale of carbon 
 credits in future.
 
 Your company continues to have its niche customer 
 base with supplies of consistent quality and timely 
 deliveries. Sesa’s position in the value chain of 
 its customers continues to be enviable.
 
 Your company is also seriously considering to further 
 de-bottleneck the production capacity.
 
 Acknowledgement
 
 I convey my heartfelt thanks to all our shareholders 
 for their continued trust and confidence in the Management 
 of the Company. My gratitude is due to my colleagues on 
 the Board for their valuable guidance. I convey my deep 
 appreciation to the Company’s Management team under the 
 able leadership of Mr. P K Mukherjee, Managing Director 
 for posting commendable results for the year. The Company 
 could come out with yet another successful year owing to 
 the strong support of all stakeholders and business 
 associates and I convey my sincere thanks to our customers, 
 suppliers, bankers, auditors, legal advisors, consultants 
 and all other business associates and the Government and 
 various authorities for their continued support, interest 
 and confidence in the Company and its Management.
 
 I also convey my heartfelt appreciation for the 
 dedication and contribution of the employees of 
 the Company at all levels.