Sesa Goa

The Board of Directors present the Annual Report of the Company
 together with the Audited Statements of Accounts for the
 Financial Year ended 31st March, 2008.
 
 The merger of the subsidiary company, Sesa Industries Limited
 (SIL) with the Company is still pending for approval of the High
 Court of Bombay at Goa, owing to objection from one shareholder
 of SIL. On receipt of the requisite approval, the Consolidated
 Annual Audited Accounts incorporating the merger effective 1st
 April, 2005 together with Annual Reports will have to be placed
 again for your approval. This report, therefore, is drawn for
 the Company on a stand-alone basis.
 
 FINANCIAL RESULTS
 
                                             Rs.1 crore = Rs.10 million
 
                                       2007-2008         2006-2007
                                    (Rupees in crore) (Rupees in crore)
 
 Profit before provisions for 
 depreciation and tax                        2279.52          931.13
 
 (Less): Depreciation                         (42.58)         (31.28)
 
 Provision for Tax
 
 -Current Tax                                (742.90)        (287.70)
 
 -Deferred Tax                                 (1.40)          (5.20)
 
 -Fringe Benefit Tax                           (0.64)          (0.54)
 
 Profit after depreciation and tax           1492.00          606.41
 
 Add: Balance brought forward from 
 the preceding year                            50.54           51.58
 
 Profit available for appropriation          1542.54          657.99
 
 Appropriations
 
 Interim dividend                              59.04           59.04
 
 Proposed final dividend                      118.09           98.41
 
 Tax on distributed profit                     30.10           25.00
 
 General Reserve                             1275.00          425.00
 
 Balance carried to Balance Sheet              60.31           50.54
 
                                             1542.54          657.99
 
 As per requirements of the Listing Agreement, a consolidated
 fnancial statement of the Company is included in this Annual
 Report. Consolidated profit after tax for the Group is Rs. 1,549
 crore for the year ended 31st March, 2008, against the
 corresponding figure of Rs. 651 crore for the previous year
 which represents an increase of 138% over the previous year. The
 earning per share (excluding minority interest) works out to Rs.
 391.65, compared to the previous year’s figure of Rs. 164.15 –
 also an increase of 138%.  sub Division (split) of equity shares
 
 The Board of Directors has proposed that each equity share of
 the face value of Rs. 10 be sub-divided into 10 equity shares of
 Re.1 each.
 
 Bonus shares
 
 Your Directors have proposed to issue bonus shares in the ratio
 of one equity share for one equity share held, i.e. in the ratio
 of 1:1 by way of capitalisation of the share premium account of
 Rs. 17.50 crore and general reserves of Rs. 22.34 crore.
 
 Dividend
 
 The Board of Directors has recommended a final dividend of Rs.
 30 per share of Rs. 10 each, or 300% of the face value of the
 shares for the year 2007-08. This is in addition to the interim
 dividend of Rs. 15 per share declared and paid during the year.
 Thus, the total dividend is 450%. The dividend has been kept at
 this level after considering the funds that may be required for
 various growth opportunities which are being looked at by your
 Company.
 
 As was communicated to you in the previous Annual Report, the
 same amount of interim and final dividend per equity share will
 also be payable to recipients of the Company’s shares on merger
 of SIL with the Company out of the appropriable profit of the
 merged company for the year. Moreover, similar distribution of
 dividend will be required out of the appropriable profit of the
 merged company for the earlier years, i.e. years ended 31st
 March, 2006 and 31st March, 2007.
 
 operations
 
 A summary of the sales turnover and the working results is given
 below:
 
                                              2007            2008
                                         Qty. in million     Value in
                                            tonnes           Rs. crore
 
 (All money values are net of freight)
 
 Sale of Iron Ore                             12.391              3,242
 
 Direct Exports                               10.181              2,820
 
 Indirect Exports                              1.406                241
 (through local exporters)
 
 Other Sales                                   0.804                181
 
 Sale of metallurgical coke                    0.260                309
 
 Profit after Tax                              1,492                 -
 
 2006                             2007
 Qty. in million                 Value in
 tonnes                          Rs. crore
 
 10.871                         1,766
 
 7.664                          1,388
 
 2.459                            267
 
 0.748                            111
 
 0.237                            203
 
   606                              -
 
 The international benchmark price of iron ore went up by 9.5% on
 FOB basis while the spot market price went up significantly
 during the year under review. Volume of iron ore sales also
 increased by around 14%. This occurred despite prolonged monsoon
 in Goa until October 2007, strike by a section of employees in
 one of the mines in Goa which affected production for more than
 two months, unseasonal rainfall in March 2008 and intermittent
 disruptions in transportation of ore in Goa/ Karnataka/Orissa.
 The increased volume is primarily on account of higher volume of
 low grade ore from Goa.
 
 The negative factors that affected business in 2007-08 were:
 
 a) Steep increase in road and railway freight for Karnataka and
 Orissa materials.
 
 b) Export duty on iron ore, now being levied at Rs. 300/- per
 WMT on Lumps and Fines above 62% Fe and Rs. 50/ per WMT on Fines
 below 62% Fe.
 
 c) Appreciation of the Indian Rupee against the US Dollar.
 
 Your Company’s geographical distribution of iron ore sales
 during 2007-08 was:
 
 * China: 66%
 
 * Pakistan: 8%
 
 * Japan: 7%
 
 * Europe: 7%
 
 * South Korea: 5%, and
 
 * Domestic sales: 7%.
 
 The metallurgical coke business was back to profit during
 2007-08, which was primarily on account of increase in
 international coke prices, coupled with higher volume of
 production and sales. In addition, your Company booked a new
 order for sale of coke technology during the year, and has
 received the first tranche of income of Rs. 4.3 crore.
 
 The world steel crude production increased during the year by
 about 8% from 1.24 billion tonnes to 1.34 billion tonnes, on the
 back of another year of high growth in Chinese crude production
 by about 16%. Crude steel production in India also increased by
 about 15% to 51 million tonnes approx. Due to strong demand for
 iron ore the spot market prices in China increased to an
 unprecedented level in spite of increased supply from Brazil and
 Australia. The higher spot market prices in China in turn
 increased the expectation of logistics service providers like
 railway and road transporters and that in turn has eroded most
 of the gains of such price increase.  The Company’s transhipper
 was dry docked during the year for renewing three cranes, out of
 a total of four. This was done successfully and within budget.
 On its return to Goa, its performance reached the expected
 level. No additional rail rakes could be deployed since the
 railways authorities did not agree to sign any further agreement
 under the prevalent Wagon Investment Scheme - which has since
 been abolished.
 
 The power plant, which was constructed on a Build-Own- Operate
 basis, commenced commercial operation from 1st June, 2007 – thus
 generating an income earning stream for the coke business from
 the supply of waste gases and future carbon credits. So far, 21
 MW of power has been the highest generation per day.
 
 outlook
 
 According to a survey by the Japan Iron and Steel Federation,
 because of increasing capacities and demand in emerging
 economies, global crude steel production is estimated to cross
 1.4 billion tonnes in 2008 - up by about 70 million tonnes over
 the year. China’s crude steel production in 2008 is expected to
 increase by about 10% over 2007 production fgure of 489 million
 tonnes. Steel Production in India, too, has been consistently
 going up - though the incremental quantity per year is much
 smaller than China’s.
 
 The demand for iron ore is, therefore, expected to remain
 strong. The international bench-mark price for the current
 financial year has already been settled with an increase of 65%
 to 71% by CVRD Brazil with various steel producers in the world.
 The other two major iron ore suppliers based in Australia are
 asking for higher price increases, and are yet to settle their
 iron ore prices to steel producers.
 
 In the short term, however, the spot market in China is showing
 some signs of lower price hikes - because of tight credit
 control imposed by the Chinese Government as well as the
 proposed stoppage of steel production for at least two months in
 all the steel mills within a radius of 300 km of Beijing to
 minimise pollution during the Olympic Games.
 
 On the cost front, railway freight on iron ore meant for export
 has risen by about 30% from April 2008, while the availability
 of rail rakes continues to be limited and uncertain. Global oil
 price is also steadily rising, and poses a cost threat to the
 Company. While the rupee-US dollar exchange is somewhat stable
 of late, the possibility of a recession in the US and consequent
 depreciation of US dollar, if it were to occur, will challenge
 the Company’s profitability.
 
 The high rate of domestic infiation - with WPI infiation now
 well in excess of 7% - is also a cause of concern. Wages and
 salaries are rapidly rising in India, and your Company is no
 exception. Moreover, there is the challenge of recruiting and
 retaining quality professionals.
 
 The National Mineral Policy has been finally notified by the
 Government of India. However, it gives no clear time-table for
 shifting from the old policy to the new. Moreover, some of the
 policy directions need legislative amendments; when these occur,
 they will confer some benefits to a professional mining company
 such as yours. Environmental and forest clearances required for
 renewal of existing mining leases and/ or expansion of mining
 capacity continue to be very lengthy and cumbersome. For
 instance, the prospecting license granted to your Company in
 2005 by the Jharkand Government is still awaiting Forest
 clearance.
 
 There has been a delay in land acquisition for the Panchwadi
 project, which involves a dedicated road and jetty facility in
 Goa for transporting iron ore from Company’s Goa mines.  The
 Company is making all efforts to complete the project as quickly
 as possible.
 
 Regarding the metallurgical coke business, there has been an
 unprecedented rise in international coking coal prices during
 2007-08, thus raising the price of metallurgical coke. While the
 Company is experimenting with various methodologies to increase
 metallurgical coke productivity, the compact charging project is
 yet to stabilise. The power plant has commenced commercial
 operations and, upon stabilisation, will fetch additional
 revenue for the coke business through sale of waste gases and
 carbon credit.  iso certification
 
 All the certificates under ISO: 9001-2000, ISO: 14001- 2004 and
 OHSAS 18001-1999 for Quality Management, Environment Management
 and Occupational Health and Safety Management, respectively, are
 being maintained by the Company after periodical surveillance
 audits.
 
 subsidiary company
 
 Operations of Sesa Industries Ltd. (SIL) have resulted in a net
 profit of Rs. 63 crore in 2007-08, as against Rs. 42 crore for
 the previous year. Production as well as sales were higher
 during the year. The feasibility of significant addition to the
 existing capacity of pig iron production and further value
 addition within the Sesa Group is being actively examined.
 
 sesa community Development Foundation
 
 The Foundation runs two units, viz. the Sesa Technical School
 (STS) and the Sesa Football Academy (SFA). The Company’s
 contribution during the year was Rs.1 crore to the Foundation.
 SFA trainees topped the 1st Division Tournament of the Goa
 Football Association (GFA). Now, the SFA is qualified to
 participate in the professional league of Goa. It has been
 decided to further strengthen SFA infrastructure to make it
 world class.  conservation of energy, technology Absorption,
 Foreign exchange earnings and outgo
 
 Particulars prescribed under Section 217(1) (e) of the Companies
 Act, 1956, are given in Annexure A, which forms part of this
 Report.  ecology and social Development
 
 The Company is committed to improving the ecology and the
 environment. Its mine reclamation efforts have significantly
 improved the biodiversity of the working as well as reclaimed
 mines. Successful replication of proven biotechnologies for mine
 land reclamation has become an integral part of the Company’s
 resource planning process. Trials have been also conducted to
 utilise the reject dump area for fioriculture and the
 cultivation of other forest products.
 
 A collaborative research project with the Department of
 Microbiology, Goa University, on using the ectomycorrhizal fungi
 for reclamation of mine dumps has shown satisfactory results in
 a pilot study on the waste dumps. Further studies are under
 progress.
 
 According to the approved Plantation Management Plan of
 reclaimed Sanquelim mine, the Company does only the selective
 felling of trees. Simultaneously, different species of bamboo
 and rattan saplings have been planted. The Plantation Management
 Plan will be implemented in a phased manner over a period of
 three years to improve the bio-diversity of the area. The
 Company also proposes to develop a Butterfly Park & set up a
 Bamboo Pavilion during 2008-09.
 
 During the monsoon, about 85,000 saplings of different native
 species have been planted in and around various establishments
 of the Company.
 
 As part of its Corporate Social Responsibility (CSR) initiative,
 your Company has adopted one village in Goa for complete
 infrastructure development along with the Mineral Foundation of
 Goa (MFG) an NGO created and run with the contribution of all
 major iron ore mining companies of the state, including your
 Company. This initiative has the support of the Government of
 Goa and the local community.
 
 During the year under review, a new community medical centre has
 been set up in Barbil, Orissa, which is run by an NGO and fully
 funded by your Company. Two such community development centres
 are already being operated in Goa. Various other activities like
 water harvesting, supplying agricultural equipment, setting up
 medical camps, and creating and running of women self help
 groups are also part of CSR activities of your Company.
 
 More on the Company’s CSR and sustainable development
 initiatives are given in the chapter on Management Discussion
 and Analysis that forms a part of this Annual Report.
 
 Fixed Deposits
 
 As reported last year, the Company has discontinued renewal of
 its fixed deposits on maturity. As on 31st March, 2008, all
 fixed deposits had matured. 25 deposits amounting to Rs.  0.05
 crore remained unclaimed. All these depositors are regularly
 advised about maturity of their deposits and urged to claim
 these as soon as they can.
 
 safety
 
 The FSI is an index which simultaneously takes into account both
 the frequency and severity of accidents. The Company’s safety
 performance is given below:
 
 Mining                                     1.880 0.946
 
 Shipping Division                          0.173 0.448
 
 Ship Building Division                     0.100 0.635
 
 Metallurgical Coke Division                0.141 3.530
 
 total                                      1.435 1.810
 
 Group structure
 
 The Agarwal Group being a group defined under the Monopolies and
 Restrictive Trade Practices Act, 1969, controls the Company. A
 list of its group entities is given below:
 
 sr. No.  Name of Group companies
 
 1.  Volcan Investments Limited, Bahamas
 
 2.  Vedanta Resources plc, United Kingdom
 
 3.  Vedanta Finance Jersey Limited, Jersey
 
 4.  Vedanta Resources Holdings Limited, United Kingdom
 
 5.  Twinstar Holdings Limited, Mauritius
 
 6.  Welter Trading Limited, Cyprus
 
 7.  Vedanta Resources Finance Limited, United Kingdom
 
 8.  Vedanta Resources Cyprus Limited, Cyprus
 
 9.  Richter Holding Limited, Cyprus
 
 10.  Westglobe Limited, Mauritius
 
 11.  Finsider International Company Limited, United Kingdom
 
 12.  Hindustan Zinc Limited, India
 
 13.  Sesa Industries Limited, India
 
 14.  Konkola Copper Mines Plc, Zambia
 
 15.  Vedanta Aluminium Limited, India
 
 16.  Sterlite Industries (India) Limited, India
 
 17.  Sterlite Paper Limited, India
 
 18.  Sterlite Opportunities and Ventures Limited, India
 
 19.  The Madras Aluminium Company Limited, India
 
 20.  Bharat Aluminium Company Limited, India
 
 21.  THL KCM Limited, Mauritius
 
 22.  KCM THL Limited, Mauritius
 
 23.  Vedanta Resources Investments Limited, United Kingdom
 
 24.  THL Aluminum Limited, Mauritius
 
 25.  Monte Cello BV, Netherlands
 
 26.  Sterlite Energy Limited, India
 
 27.  Copper Mines of Tasmania Pty. Ltd., Australia
 
 28.  Fujairah Gold FZE, UAE
 
 29.  Thalanga Copper Mines Pty. Ltd., Australia
 
 30.  Monte Cello NV, Netherlands Antilles
 
 31.  Anil Agarwal Discretionary Trust, Bahamas
 
 32.  Onclave PTC Limited, Bahamas
 
 33.  Mr. Anil Agarwal
 
 Directors Responsibility statement
 
 Your Directors confirm that:
 
 (i) the applicable accounting standards have been followed along
 with proper explanations relating to material departures, if
 any, for preparation of the annual accounts;
 
 (ii) the accounting policies have been selected and applied
 consistently and judgments and estimates have been made 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 ended 31st March, 2008 and of the profits of the Company
 for that year;
 
 (iii) proper and suffcient care has been taken to maintain
 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 or other
 irregularities;
 
 (iv) the annual accounts have been prepared on a going concern
 basis.
 
 Directors
 
 Mr. S. D. Kulkarni and Mr. G. D. Kamat retire by rotation at the
 ensuing Annual General Meeting and, being eligible, offer
 themselves for re-appointment as Directors.
 
 The Board of Directors, at its meeting held on 30th October,
 2007 appointed Mr. Kuldip Kumar Kaura, Mr. Din Dayal Jalan and
 Mr. Akhilesh Joshi as Additional Directors of the Company. In
 terms of Section 260 of the Companies Act, 1956, they will be
 holding office up to the ensuing Annual General Meeting, and,
 being eligible, offer themselves for re-appointment.
 
 Auditors
 
 At the Annual General Meeting, members will be required to
 appoint Auditors for the current year and fix their
 remuneration.
 
 M/s. S.J. Thaly & Co., the retiring Auditors though eligible for
 appointment have expressed their inability to offer themselves
 for re-appointment under the Companies Act.
 
 In view of the above, and based on the recommendation of the
 Audit Committee, the Board of Directors has, at its meeting held
 on 28th April, 2008, proposed the appointment of M/s. Deloitte
 Haskins & Sells as the Statutory Auditors, who are of
 international repute, in place of M/s. S.J. Thaly & Co.  M/s.
 Deloitte Haskins & Sells have furnished a certificate regarding
 their eligibility for appointment as Statutory Auditors of the
 Company.
 
 The Directors recommend that they be appointed as Auditors of
 the Company for the current year.
 
 compliance certificate
 
 A certificate from the Auditors of the Company regarding
 compliance of conditions of Corporate Governance as stipulated
 under Clause 49 of the Listing Agreement is attached to this
 Report along with report on Corporate Governance.
 
 Listing
 
 As stipulated under Clause 32 of the Listing Agreement, the
 names and addresses of Stock Exchange on which the Company’s
 equity shares are listed are:
 
 1) Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Dalal
 Street
 
 Mumbai - 400 001
 
 2) National Stock Exchange of India Ltd.  Exchange Plaza
 
 Bandra Kurla Complex Bandra East Mumbai - 400 051
 
 Your Company confirms that Annual Listing Fees for the year
 2007-08 have been paid.  employees
 
 The Directors appreciate the support and co-operation from all
 employees in achieving the record performance, both in terms of
 volume and profit, for another year. While a section of mining
 employees in Goa resorted to strike and disruptive work
 practices during a part of the year under review, the Directors
 appreciate their cooperation when rejoining duties after the
 strike period. The Directors urge all employees to maintain a
 congenial work atmosphere and follow the safest work practices
 to support the Company in its journey to become one of the best
 world class mining and iron making organisations in the world.
 
 Statement of Particulars of Employees as required in terms of
 Section 217 (2A) of the Companies Act, 1956 read with the
 Companies (Particulars of Employees) Rules 1975, is annexed
 hereto.
 
 Acknowledgement
 
 The Directors would like to thank the employees and employee
 unions, shareholders, customers, suppliers, bankers, regulatory
 authorities and all the other business associates of the Company
 for their confidence and support to its Management.
 
                            For and on behalf of the Board of Directors
 
 Place  : Mumbai                               S. D. KULKARNI
 Dated  : 10th May, 2008                          Chairman