Steel Authority of India

The Directors have pleasure in presenting the 36th Annual Report of
 your Company together with the audited accounts for the year ended 31st
 March, 2008.
 
 The financial year 2007-08 has been a historical year for the Company,
 being an year for commemorating its Golden Jubilee year of iron making
 from February, 2008. It was on 3rd February, 1959 that the then
 President of India, Dr. Rajendra Prasad had dedicated the first blast
 furnace of erstwhile Hindustan Steel Limited at Rourkela Steel Plant to
 the nation, followed by the dedication of the first blast furnace of
 Bhilai Steel on 4th February, 1959. These events marked the beginning
 of steel plant operations in the public sector in independent India,
 thus laying the industrial foundation for the country as envisioned by
 our first Prime Minister, Pandit Jawaharlal Nehru.
 
 FINANCIAL REVIEW
 
 The financial year 2007-08 has been another milestone year of
 achievement for your Company with an overall improvement in operational
 areas and financial performance. For the first time production of hot
 metal, crude steel and saleable steel crossed the 15 MT, 14 MT & 13 MT
 mark respectively during the year. The year saw further progress and
 strengthening in the areas of modernisation & expansion of SAIL plants,
 increase in the net worth of the Company and higher internal resource
 generation for funding the growth plan of SAIL. Your Company set a new
 record by achieving the turnover of Rs. 45,555 crore and profit before
 tax of Rs. 11,469 crore, registering a growth of 16% and 22%
 respectively over the previous year. Your Company recorded a net profit
 after tax (PAT) of Rs. 7,537 crore, an increase of 22% over previous
 year. There were improvements in all financial parameters as shown
 below:
 
                                                 (Rupees in crore)
                                              2007-08       2006-07
 
 Sales Turnover                              45,555.34    39,188.66
 
 Profit before interest, depreciation
 and tax (EBIDTA)                            12,955.15    10,966.66
 
 Less: Interest and finance charges             250.94       332.13
 
 Depreciation                                 1,235.48     1,211.48
 
 Profit before Tax (PBT)                     11,468.73     9,423.05
 
 Less: Provision for taxation                 3,931.95     3,220.76
 
 Profit after Tax (PAT)                       7,536.78     6,202.29
 
 Key Ratios EBIDTA to Net Sales (%)               32.8         32.3
 
 Return (PAT) on Net worth (%)                    32.8         36.1
 
 EBIDTA to Average Capital
 
 Employed (%)                                     48.0         46.4
 
 Earning Per Share (Rupee 10/- each)             18.25        15.02
 
 Debt Equity Ratio                              0.13:1       0.24:1
 
 While an improved demand for iron & steel helped in recording better
 financial performance, significant improvements also came by way of
 several internal initiatives viz., higher capacity utilisation at 118%,
 record production through continuous cast route, best ever performance
 in key techno-economic parameters like overall energy consumption and
 coke rate, highest production and sales of value added products,
 continuous emphasis on cost reduction and prudent fund management.
 
 Impetus on cost reduction at all levels, productivity improvements
 through benchmarking, proper utilization of in-house R&D services and
 application of new technology resulted in cost savings of Rs.328 crore
 during the year. Thrust areas during the year included achieving higher
 yields and improved techno- economic/productivity parameters.
 
 The strong financial performance continued in 2007-08 contributing to
 an enhanced cash generation to meet the strategic growth objectives.
 Debt equity ratio has improved to 0.13: 1 (as on 31st March, 2008) from
 0.24: 1 (as on 31st March, 2007). The Company had liquid assets of
 Rs.13,136 crore as at 31st March, 2008 invested in short term deposits
 with scheduled banks and considering borrowings of Rs. 3,045 crore
 maintained its virtual debt free status. The interest cost at Rs. 251
 crore was lower by Rs.  81 crore over the previous year and the Company
 earned interest of Rs.  1,105 crore during the year on short term
 deposits. The entire capital expenditure of Rs. 2,181 crore during the
 year was funded through internal accruals.
 
 During the previous year, your Company had constituted a Gratuity Trust
 under the name “Steel Authority of India Limited Gratuity Fund”. An
 amount of Rs. 1,250 crore has been contributed to this trust during the
 year 2007-08 making a cumulative contribution of Rs. 2,000 crore. This
 measure will secure gratuity payment to the employees.
 
 The Company has paid an interim dividend of 19% on the paid-up equity
 share capital during the year. The Board of Directors have further
 recommended a final dividend of 18% on paid up equity share capital
 subject to the approval of the shareholders, thus making the total
 dividend to 37% of the paid up equity share capital for the year
 2007-08 (previous year 31%). A sum of Rs.770 crore has been transferred
 to the general reserves during the year for this purpose (previous year
 Rs.635 crore).
 
 PRODUCTION REVIEW
 
 The year 2007-08 turned out to be another eventful year for SAIL in
 production and operational efficiencies. SAIL plants achieved all time
 best production performance by better input and logistics management,
 optimising operations and better value addition.
 
 SAIL plants recorded the highest ever hot metal production of 15.2
 million tonnes, achieving a capacity utilisation of 110% with a growth
 in production by 4% over the previous year. The increase in hot metal
 production of more than half a million tonne during the year, was
 achieved by implementing process improvements, like introduction of
 mobile equipment for cast house preparation job at BSP, installation of
 rocking runner in the cast house of BF#3 in single track, increased
 oxygen enrichment at RSP and higher furnace availability at BSL.
 Further, higher usage of auxiliary fuels and optimum utilisation of
 resources helped SAIL plants to produce more than capacity.
 
 Highest ever crude steel production of about 14.0 million tonnes by
 SAIL plants was achieved with capacity utilisation of 109%.  This was
 achieved through focused approach and maximisation of production
 through concast route, increase in hot metal & crude steel ratio with a
 reduction in pig iron production etc. Bloom Caster was also
 commissioned at DSP, which helped in increasing production through
 concast route.
 
 SAIL plants recorded highest ever saleable steel production of 13.0
 million tonnes, a growth of 4% over the previous year and best ever
 finished steel component in saleable steel at 83%. This helped in
 attaining the highest ever capacity utilisation of saleable steel
 production at 118 %, surpassing the previous best of 114% achieved
 during 2006-07. The three special steel plants (ASP/SSP/VISL) together
 recorded a growth in saleable steel production of 13% during 2007-08
 over the previous year.
 
 Special thrust was given to increase production of the value added
 products and increasing the share of special steels. Highest ever
 production of special steel/value added items of 3.7 million tonne was
 recorded during the year, with a growth of 25% over the previous year.
 This included an improvement in the production of special quality steel
 products - Electrode quality wire rods (22%), 7 fold increase in
 TMT/500/550 HCRM grade, LPG-grade HR coils/sheets/plates (11%), SAILCOR
 HR/CR coils (44%), with record production of Rails at 9,16,000 tonne.
 The long rail production exceeded one lakh tonne, up by 56% over the
 previous year.
 
 SAIL developed a number of new products during the year which includes
 Earthquake Resistant (EQR) TMT Wire Rods, with improved corrosion
 resistance. Vanadium Micro-alloyed Rail for application in tracks for
 higher axle load at high speed (SAILMA 550) and high yield strength
 rolled plates (SAILMA 550 HI) at the Bhilai Steel Plant (BSP), Armour
 steel plates for the defense sector at Rourkela Steel Plant (RSP), low
 carbon EDD HR/CR steel for auto bodies, Boron-treated Al-killed low
 carbon steel at the Bokaro Steel Plant (BSL), SUP-11 (DSP).
 
 Your Company continued to achieve improvement in efficiency parameters.
 Continuous cast production went up to a record high of 8.93 million
 tonnes, a growth of 7% over the previous year. Coke rate was the lowest
 ever at 533 kg/thm, a reduction of 8 kg over the previous year and
 energy consumption came down to lowest ever 6.95 G.cal/tcs, a reduction
 of 3% over the previous year.  There was reduction in specific power
 consumption by 1% compared to the previous best of 457 kwh/tcs achieved
 earlier.
 
 SECURING RAW MATERIALS
 
 Your company has ensured full availability of iron ore for its steel
 plants by stepping up production to about 26.37 million tonnes from its
 captive mines during 2007-08 (up by 7%). The production of limestone
 and dolomite from captive mines also increased to 2.6 million tonnes.
 The production of coking and non-coking coal crossed a million tonne
 during the year for the first time (up by 47%).
 
 The requirement of iron ore is to go up to about 42 million tonnes post
 modernization and expansion by 2011. In order to meet the higher level
 of iron ore requirement, linkages have been formulated between plants
 and mines and plans have accordingly been made for development of the
 mines. The matter of delay in renewal of leases for Chiria has been
 taken up with the respective State Governments and Central Government
 including PMO. Your company is vigorously pursuing with Government for
 renewal of leases, forest & environmental clearances etc. On
 infrastructure front, an MOU has been signed on 12th December, 2007
 amongst SAIL, Ministry of Railways, Government of Chhattisgarh and NMDC
 Ltd. for construction of railway line between Dalli-Rajhara-
 Rowghat-Jagdalpur.
 
 Your Company has taken several steps to increase production of both
 coking coal and thermal coal in captive mines at Chasnalla, Ramnagore
 and Jitpur. Process has been initiated for development of new coking
 coal mines at Tasra and Sitanala.  Grant of statutory clearances for
 production from these mines are in progress. For attaining the raw
 material security in steel related raw materials, your company has
 applied for prospecting license/mining lease in new areas for Iron ore,
 Manganese ore, Nickel, Chromium ore in the states of Jharkhand and
 Orissa.
 
 SALES & MARKETING REVIEW
 
 During the financial year 2007-08, your company achieved highest ever
 sales of steel of 12.3 million tonnes recording a growth of 3.7% over
 previous year. Sales of special steel recorded 69% growth over previous
 year comprising 109% in long products and 8.5% in flat products. Major
 categories which recorded significant growth over previous year were
 TMT 54%, Plates 8%, HR Coils 7% and Medium Structurals 27%.
 
 Record sales of 2.4 million tonnes of steel was made to projects of
 national importance to meet the critical requirements of key sectors,
 like airports, railway, metro rail, highways, power projects,
 registering a growth of 32% over previous year. Record supply of rails,
 wheels & axles, sheets, plates and structurals were made to Indian
 Railways (including Rail Vikas Nigam Limited) at 9,79,152 tonnes.
 During the year record supply of long rails was made to Indian Railways
 at 101,104 tonnes registering a growth of 56% over previous year.
 Supply of TMT steel was augmented through conversion and decoiling
 arrangements which helped in stepping up supplies of TMT to 1.31
 million tonnes during 2007-08, against 0.85 million tonnes in the
 previous year (up 54%).
 
 Dealer network was extended to cover 602 districts (out of 603
 districts, in the country). With the addition of 1200 dealers during
 the year, dealers strength has gone up to 1897 as on 1st April, 2008.
 Sales through dealers at 3.3 lakh tonnes grew more than fourfold. 8 new
 stockyards were also made operational during the year. For better
 customer service, e-payment and e-receipt systems have been introduced
 at all branches of CMO. Towards improving customer satisfaction and
 greater logistics support, door delivery to customers was also stepped
 up.
 
 Your company maintained its presence in neighbouring and traditional
 markets and exported about 4.72 lakh tonnes during the year. The
 products exported were primarily Billets, Wire Rods, Plates, HR Coils
 and CRNO Coils. Exports were made to new markets viz., Argentina and
 Brazil. Diesel Loco Wheels from Durgapur Steel Plant were exported to
 Malaysia for the first time.  High Tensile and Ship Building Plates
 from Bhilai Steel Plant were exported to the European Union.
 
 GROWTH PLAN
 
 Considering the fast growing demand for steel, your company is
 implementing growth plan to enhance its Hot Metal production from the
 base level of 14.6 million tonnes to 26.2 million tonnes per annum by
 2011. The growth plan, besides targeting higher production, also
 addresses the need for eliminating technological obsolescence,
 achieving energy savings, enriching product-mix, reducing pollution,
 developing mines and collieries, introducing customer centric processes
 and developing matching infrastructure facilities.
 
 As per the study of International Iron and Steel Institute, steel
 demand in India is projected to grow to a level of around180 million
 tonnes by 2020. To maintain its current dominance in the domestic
 market and to meet the future challenges, your company is working on a
 long term directional plan Lakshaya 2020, which will steer the
 company towards meeting its strategic objectives of achieving
 profitability through growth and customer satisfaction.
 
 STRATEGIC INITIATIVES OF YOUR COMPANY
 
 During the year 2007-08, your company continued to give impetus towards
 new business initiatives including formation of new Joint Ventures,
 mergers & acquisitions, entering into Memorandum of Understandings for
 its long term strategic objectives etc. As part of such initiatives,
 during the year your company has successfully concluded 11 (eleven)
 MOUs as well as 4 (four) Joint Venture Arrangements with leading
 organisations in diverse areas. These include:
 
 - Joint Venture in cement production : A joint venture for setting up a
 2.2 million tonnes cement plant at Bokaro Steel Plant has been formed,
 which is scheduled to commence production in 2010. Also, process for
 setting up of slag cement plant at Rourkela Steel Plant has been
 initiated, for which identification of a strategic JV partner is under
 progress.
 
 - Joint Venture Agreement signed with Manganese Ore (India) Ltd. (MOIL)
 for setting up a Ferro Alloy Plant for production of ferro-alloys for
 SAIL. The plant is likely to be commissioned by 2011.
 
 - MoU signed with Rashtriya Ispat Nigam Ltd. (RINL) to jointly explore
 and develop low silica limestone mines in the Sultanate of Oman.
 
 - Towards achieving the target of making PSUs self reliant in the area
 of coking coal, Union Cabinet has accorded approval for formation of a
 Special Purpose Vehicle (SPV) comprising five companies SAIL, Rashtriya
 Ispat Nigam Limited (RINL), Coal India Limited (CIL), NTPC Limited and
 
 NMDC Limited with an initial equity capital base of upto Rs. 3,500
 crore to facilitate acquisition of coking coal assets abroad.
 
 - Strategic decision taken to start the production facilities at Kulti
 in West Bengal for production of ferrous and non-ferrous castings for
 its steel plants. Production of non - ferrous castings has already
 commenced and for ferrous castings it will start during 2008.
 
 - MoU signed with the Korean steel giant, POSCO, to collaborate in the
 strategic areas of mutual interest.
 
 - Strategic decision taken for development of a Special Economic Zone
 (SEZ) at Salem, Tamil Nadu, which has also been approved by the
 Government of India.
 
 - Decision taken to install Steel Processing Units in different states
 where SAIL has no steel plant. This decision is in view to make
 finished steel available to the end users.
 
 Apart from this, following strategic initiatives are taken to augment
 supplies of key input raw materials and associated infrastructure on a
 long term basis:
 
 - Signed an agreement with Tata Steel for joint development of coal
 blocks.
 
 - MOU with Mineral Exploration Corporation Limited (MECL) for
 exploration by MECL at all SAIL mines for assessing the reserves and
 quality of ore available. MECL has already started exploratory work in
 Gua and Chiria mines.
 
 - MOU with M/s. Bisra Stone Lime Company Limited (BSLC) for Dolomite.
 
 - MOU with M/s. Heavy Engineering Corporation (HEC) for
 equipment/spares required for modernization/expansion.
 
 - Agreement entered with Centre for Railway Information System (CRIS),
 Indian Railways for on-line tracking of rake movements.
 
 - Merger of Bharat Refractories Limited (BRL) with SAIL
 
 Government of India has approved merger of BRL with SAIL. Both the
 companies have been permitted to initiate the process of merger under
 section 396 of the Companies Act, 1956. The necessary activities for
 merger of BRL with SAIL have been initiated and a proposal for
 obtaining approval of shareholders to the Scheme of Amalgamation has
 been included in the business to be transacted in this years Annual
 General Meeting.
 
 MODERNISATION & EXPANSION PROJECTS
 
 Your Company has undertaken a massive modernization and expansion plan
 to expand capacity of hot metal to over 26.2 million tonnes from the
 base level of 14.6 million tonnes.
 
 The implementation of growth plan is being done simultaneously in all
 the plants including mines and requires matrix planning, involvement /
 coordination with a large number of agencies, prudent fund management,
 selection of right technology etc. Your Company has already initiated
 actions in all areas including preparing the organization accordingly.
 The SAIL Board gave in- principle approvals during the year for
 modernization and expansions at BSP, RSP and DSP with an estimated
 outlay of about Rs. 24,500 crore and final approval for modernization
 and expansion at ISP, SSP and BSL (New CRM).
 
 The modernization & expansion plans include installation of new Coke
 Oven Batteries, three new Sinter Plants, three new Blast Furnaces of
 bigger capacity with upgradation of existing blast furnaces, three new
 Steel Melting Shops with addition of Converters in old shops,
 installation of new Rail Mill, Plate Mill, Compact Strip Mill, Bar and
 Rod Mills, Wire Rod Mills, Structural Mill, Universal Beam Mill, etc.
 All this will increase share of finished steel in saleable steel from
 current level of about 83% to almost 100%. Along with the addition of
 new facilities, most of the existing facilities are also being upgraded
 to enable production of value added steels, reduce energy consumption
 and improvement in productivity, etc.
 
 In addition, RSP won the prestigious Gold Icon National Award for
 e-Governance in 2007-08; SSP won the National Sustainability Award
 for the year 2007; RDCIS has won the “Golden Peacock Innovative
 Products / Service Award” for 2007.
 
 The Institute of Cost & Works Accountants of India (ICWAI) under its
 National award for excellence in Cost Management, conferred upon SAIL,
 the first prize in the category of Public Sector Undertaking, as a
 recognition of the Companys efforts in the areas of cost management
 practices and attainment of cost consciousness in the organisation for
 the year 2007. This is the fourth time, when SAILs endeavour in the
 area of cost reduction has been recognised.
 
 The Institute of Cost & Works Accountants of India (ICWAI) also
 conferred upon Rourkela Steel Plant the second award in the category of
 Public Sector manufacturing unit having turnover of more than Rs.1,000
 crore for the year 2007.
 
 Contribution of your Company towards environmental protection has been
 duly recognized with getting awards, viz. CII sustainability prize and
 Institute of Directors (IOD) Golden Peacock Environment Management
 award in Mining and Metal sector for BSP, Golden Peacock Innovation
 award and Greentech Environment Excellence Gold award for RSP and
 National Sustainability award for SSP.
 
 SAIL has been a pioneer in introducing e-business and under this
 effort, RSP bagged the Golden Award for “Exemplary Usage of Information
 & Communication Technology (ICT) by PSUs” under the category of
 National Awards for e-governance conferred by the Government of India.
 
 Your Company has received the FICCI Award on Rural and Community
 Development Initiatives on 15th February, 2008 which was presented by
 Honble Prime Minister, Dr. Manmohan Singh. BSP has been awarded Golden
 Peacock Award -2007 for its CSR jobs, at Portugal, on 15th February,
 2008.
 
 ENVIRONMENT MANAGEMENT
 
 Corporate Environmental Policy of your Company emphasises on
 “Conducting our operations in an environmentally responsible manner to
 comply with applicable regulations and striving to go beyond” and the
 Company recognises its responsibility and its commitment towards
 Corporate Responsibility of Environment Protection (CREP).
 
 To ensure clean environment in plants/units and in the surrounding
 habitat, your Company continued its efforts in the areas of resource
 conservation, pollution prevention, compliance to legislative &
 regulatory requirements, waste management and conservation of waste to
 wealth and has complied with the norms relating to water consumption,
 particulate emission in air etc.  Areas of major achievements during
 2007-08 are:
 
 - Lowest ever Particulate emission in air at 2.2 kg/tcs, a reduction
 over 5% over the previous year.
 
 - Solid waste utilisation touched 80%, an improvement of 3%.
 
 - Water consumption brought below 4.0 m3/tcs, an improvement of 8%.
 
 - Restored over 200 acres of degraded mining area at Purnapani, Barsua
 and Kalta under the MoU between Delhi University, Department of
 Biotechnology and SAIL.
 
 - Pisciculture has been taken in the abandoned mining areas at
 Purnapani and over 2 lakh fishlings have flourished in 100 acres of
 quarry water voids.
 
 Your Company has actively associated with fora like Asia Pacific
 Partnership for Clean Development and Climate (APPCDC), New Energy and
 Industrial Technology Development Organisation (NEDO) and International
 Iron and Steel Institute (IISI), for adoption of energy and environment
 friendly technologies.  Phasing out of Ozone Depleting Substances (ODS)
 has also been taken up in the SAIL plants under UNDP programme.
 
 Your Company has launched an ambitious programme for tapping the carbon
 benefits under Clean Development Mechanism (CDM) of the Kyoto Protocol
 agreement on climate change. Over 71 potential projects have been
 identified across the Companys plants located at Bhilai, Durgapur,
 Rourkela, Bokaro and Burnpur for availing carbon credits. The CDM
 project entitled, “LD gas recovery at Rourkela Steel Plant” has been
 registered at UNFCCC for tapping the carbon benefits.
 
 IT RELATED INITIATIVES
 
 Your Company is continuously moving ahead in innovative usage of
 Information Technology (IT). Enterprise Resource Planning (ERP) and
 Manufacturing Execution System (MES) are being implemented in SAIL. At
 BSP, ERP will go-live soon. A Wide Area Network through VSATs has been
 installed in all the mines and Raw Material Division, Kolkata, to
 establish a strong and stable data-voice network and has been linked to
 SAILs network making communication faster. Other initiatives include:-
 
 Employee Services
 
 Intranet Web Portals have been developed by plants/units for providing
 on-line facilities like leave encashment, LTC/LLTC encashment, tour
 advance, festival advance etc. to employees.  Information like
 circulars, orders, forms, pay details, PF status are available on the
 web site for employees. To provide Employee Self Services, Kiosks have
 been installed for accessing intranet web sites by the employees of
 plants/units.
 
 An on-line Executive Performance Management System (EPMS) has been
 developed with an objective to create a performance culture through
 continuous performance improvements of individual employees, teams and
 the organisation.
 
 E-Commerce
 
 Electronic commerce has been continuously given top priority to ensure
 equity and fairness besides efficiency in commercial transactions.  By
 giving continuous thrust, the e-Purchase (through Reverse Auction of
 Rs.1,508 crore and e-Sale (through Forward Auction of Rs.2,512 crore)
 totaling to Rs.4,020 crore in 2007-08, indicated a growth of 48% over
 previous year.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 SAIL has been a pioneer in the area of Corporate Social Responsibility
 (CSR) since inception, substantially contributing towards betterment of
 social indices in and around the periphery of steel plants. SAIL has
 been structuring and implementing CSR initiatives right from inception
 with the underlying philosophy and a credo to make a meaningful
 difference in peoples lives. These efforts have seen the obscure
 villages of yesterday, where SAIL plants are located, turn into leading
 industrial centres in the country today.
 
 Since inception your company has established 40 primary health centres,
 11 reproductive and child health centres 31 hospitals and 8
 super-speciality hospitals. These have resulted in access to improved
 health infrastructure for 2.2 crore people from ailments from common
 cold to measles, diabetes, reproductive and child health care, open
 heart surgery, neuro surgery, kidney transplantation etc. Your Company
 has opened about 138 schools in the steel townships to provide modern
 education to about 81,000 children. Besides adopting and providing free
 education and facilities to tribal children, company has provided
 assistance to over 1407 schools, with more than 1,64,000 students of
 around 435 villages surrounding its units. In this endeavour, SAIL has
 achieved a Girl:Boy ratio of 1:1 for all levels of education and a
 survival rate (i.e. rate of retaining enrolled students) of 90% in all
 SAIL secondary schools and 95% in all SAIL primary schools. SAIL has
 started 5 free schools exclusively for the poor, under privileged
 children - one each at its 5 Integrated Steel Plant locations. Students
 are being provided free meals, uniforms, tuition, books & stationery
 and transportation, etc. in these schools.
 
 In addition to contributing in areas of education and health, your
 Company provides access to potable water to about 1.1 lakh persons
 every year and constructs/ repairs 33 km of (pucca) roads per year,
 thereby providing access to more than 2 lakh persons across 435
 villages per year. During 2007-08, 61 kms of pucca road was built, 423
 new water resources were created and 402 solar lights were provided.
 
 Your Company has adopted 79 villages as Model Steel Villages across
 eight states. The developmental activities planned for these villages
 include medical and health services, education, roads and connectivity,
 sanitation, community centres, livelihood generation, sports
 facilities, etc. Out of the 79 villages, 13 villages have been
 developed as Model Steel Villages, during the year 2007-08.
 
 Your Company is also working towards preserving culture and heritage.
 Some of the key activities include assistance to maintenance of
 monuments in Lodhi Garden, New Delhi; contribution towards the
 development of infrastructural facilities and amenities etc. at
 Archeological Sites of Lauria Nanandangarh and Chankigarh in West
 Champaran District of Bihar and Light and Sound Show organised on 10th
 May, 2007 on the occasion of 150th anniversary of First War of
 Independence at Dhyan Chand National Stadium, New Delhi.
 
 Besides, the Company extended support to a number of activities for the
 benefit of physically challenged persons and destitute. 193 physically
 challenged and hearing impaired persons from peripheral villages were
 identified and crutches, artificial limbs and hearing aids were
 provided with the help of Bharat Vikash Parishad, a reputed NGO;
 Besides 150 hearing aids, computer lab and furniture, 15 tricycle and 5
 wheel chairs were also provided.  CSR is ingrained in all spheres of
 industrial life and social responsibility for the Company and it is not
 only a virtue but a business imperative.
 
 The objective of the Company is to focus on the following thematic
 themes/causes as part of Corporate Social Initiatives and Women
 Upliftment :
 
 - Income Generating Schemes ( through Self Help Groups);
 
 - Education; and
 
 - Health issues
 
 In line with the above themes, SAIL is working in tandem with State
 Government of Chattisgarh for establishing a Technical University at
 Bhilai, Chattisgarh. An ITI was inaugurated at Gua Mines in
 September07 by Shri Madhu Koda, Honble Chief Minister of Jharkhand in
 which classes in two streams have started.
 
 Project Jaladhara was taken up under the Corporate Social
 Responsibility initiatives of SAIL / CMO in tribal villages in
 Vishakapatnam District. The project aimed to provide drinking water to
 the hamlets of Dummaguda and Sarada Bonguda village from the natural
 springs of the Ranajilledu water falls in the picturesque Araku Valley.
 Water from the perennial natural springs (at a height of 60m from the
 village) is brought down to the villages by taking advantage of the
 natural gradient (by the gravity) by constructing a cistern at the
 tapping point, laying a main pipeline (1.6 kms long) through mountain
 terrain to convey the water from the cistern at the tapping point to
 three tiny hamlets housing a population of about 450 in the village
 premises where filtration tanks and distribution tanks with taps are
 provided and distributed.  Earlier the village folk (especially ladies)
 had to trek nearly 2.5 kms to collect water from the Ranajilledu Falls.
 The entire facility was handed over to the Sarpanch of the village on
 15th December 2007.
 
 In the field of health care, free medical health centres for poor have
 been set up at Bhilai, Bokaro, Rourkela, Burnpur (Gutgutpara) and
 Durgapur providing free medical consultation, medicines, etc. In
 addition, over 400 medical camps have been held in 2007-08 by all the
 plants and units in 12 states (Bihar, Jharkhand, Chattisgarh, Orissa,
 West Bengal, Tamil Nadu, Karnataka, Maharashtra: Madhya Pradesh,
 Haryana, Himachal Pradesh, Rajasthan) for providing free health
 check-up, path lab treatment, medicines, immunization, etc to to over 5
 lakh of the needy persons. Surgical cases were referred to plant
 hospitals (free stay, to and fro transport and food with 1 attendant
 each) with the facility for post operative check up etc. In one of
 these camps organized by SSP, a 18 months old girl was detected with
 congenital cataract in both the eyes (nearly blind) and was restored
 vision after surgery at SSP hospital.  Ten (10) numbers of Mobile
 Medicare units have also been provided to different organizations
 during 2007-08
 
 Thirty three (33) child labour rescued by an NGO operating in MSV
 Thirumalaiviri, Salem, are being supported by taking care of their
 education, livelihood, hygiene and health care. Massive flood relief
 operation was organized by SAIL. Almost 100 employees were pressed into
 service. Flood relief operation was undertaken in 46 districts in 3
 states namely, Bihar, Uttar Pradesh and Assam (in North East).
 
 Your company is one of the first PSUs to get associated as an
 inter-sectoral collaborator of National AIDS Control Organisation
 (NACO), Ministry of Health and Family Welfare, Government of India.
 SAIL has continued its efforts to contribute to the society in
 prevention and control of HIV/AIDS through Information, Education and
 Communication (IEC) Programmes where more than one lakh people were
 covered. In the schools, AIDS Education Programme (for Class IX and
 above) has been taken up across the Company, in line with NACO
 guidelines.
 
 In the field of Income generating schemes, vocational training has been
 provided to around 25,000 villagers in SMART Model for Vegetable
 Cultivation , WADI, Amrapali Drip Watering, Teak Plantation , Poultry
 Farming , Water Harvesting , Mobile Artificial Insemination,
 Vermiculture etc.
 
 Your Company has well planned sports policy, with an accent on
 nurturing young talents through four specialized academies promoting
 Athletics, Hockey, Football and Cricket. SAIL sponsored several
 sporting tournaments at the national and the international levels to
 promote sports in the country. In order to provide impetus to sports,
 Archery Academy has been set up at Kiriburu Mines, Jharkhand. A host of
 tribal sports festivals have also been organized like SAIL Tribal
 Sports Festival-2007 at Durgapur, Gramin Khel Melas in Athletics,
 Football, Volleyball and Khokho for tribal students at Narayanpur,
 Chattisgarh.. Another prestigious programme under sports promotion was
 SAIL sponsoring ADPROS Asian Tour Golf Tournament (SAIL Open Golf
 Tournament) and Nehru Champion Colleges Hockey Tournament besides
 supporting UP Badminton Association for UPA Badminton Academy.
 
 CORPORATE COMMUNICATION
 
 SAIL continued its efforts to project the image of the company by
 taking up brand building measures that included advertising through the
 outdoor and print media, participation in exhibitions sponsorships of
 various sports and cultural events, etc.
 
 Sustained efforts were made to build the SAIL brand image as a steel
 producer of international repute and to generate confidence amongst
 customers and all the stakeholders through internal and external
 communication. Our house journal “Sail News” played an important role
 as an effective medium of communication amongst the employees and it
 has also provided a platform for sharing views of employees and their
 family members.
 
 To commemorate the Golden Jubilee Year of Production on 4th February,
 2008, at Vigyan Bhawan, New Delhi, a SAIL Logo on 50th Year of
 Production, was released. Several events have been planned to celebrate
 the Golden Jubilee Year of Production in all the plant/unit locations
 till 3rd February, 2009.
 
 The Company continued to disseminate vital information related to
 Performance, Expansion Plans, Safety, Vigilance activities and Growth
 Plan through its house magazines, hoardings, posters, booklets and
 other channels.
 
 VIGILANCE ACTIVITIES
 
 The Vigilance Department of your Company has received the coveted ISO
 9001:2000 Certification for all its Plants/Units in 2007-08. Vigilance
 Department is playing a proactive role for continuous simplification of
 systems and procedures to facilitate faster and effective decision
 making, in a transparent manner. On the initiative of Corporate
 Vigilance, Integrity Pact has been implemented in the Company w.e.f.
 16.8.07 for all procurements / contracts above Rs.100 crore. A
 procedure for procurement of quality medicines and consumables for its
 hospitals has been made by Corporate Vigilance in December, 2007 and
 implemented across the Company.
 
 More than 160 training workshops involving around 3400 participants
 were held for enhancing Vigilance Awareness of employees. SAIL
 Vigilance also organized two training programmes at MTI, Ranchi for
 executives of other PSUs under the Ministry. The programmes were
 related to Disciplinary Proceedings, Purchase Procedures, CVC
 guidelines, RTI Act etc. As a step towards creating awareness of
 Vigilance matters, a half-yearly house publication titled “INSPIRATION”
 was launched during the Vigilance Awareness Week celebrated in
 November, 2007.
 
 To ensure compliance of laid-down system and procedures, around 2900
 surprise checks, including 500 joints checks, were conducted during the
 year and based on their outcome, actions were initiated for system
 improvement. During the 2007-08, about 49 system improvement
 initiatives were taken across the company which will smoothen the
 decision making process and enhance transparency in day to day working.
 
 Vigilance Department maintained the thrust on e-governance as a result
 of which EPS system has been introduced in RSP and BSP and is being
 implemented in other Plants/Units also.
 
 MANAGEMENT DISCUSSION & ANALYSIS REPORT
 
 The Management Discussion & Analysis Report covering the performance
 and outlook of the company is enclosed.
 
 AUDITORS REPORT
 
 The Statutory Auditors Report on the Accounts of the company for the
 financial year ended 31st March, 2008 along with Managements replies
 thereon is enclosed at Annexure-I. The Comptroller & Auditor General of
 India (C&AG) vide its letter dated 20th June, 2008 has given nil
 comments on the accounts of the company on accounts for the year ended
 31st March, 2008, under Section 619 (4) of the Companies Act, 1956. A
 copy of the above letter of C&AG is enclosed at Annexure II.
 
 REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.
 
 Information in accordance with the provisions of Section 217(1)(e) of
 the Companies Act, 1956 read with 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 at Annexure-III to this report.
 
 PARTICULARS OF EMPLOYEES
 
 There was no employee of the company who received remuneration in
 excess of the limits prescribed under Section 217(2A) of the Companies
 Act, 1956 read with the Companies (Particulars of Employees) Rules,
 1975.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
 confirmed:
 
 i) that in the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 ii) that the directors had selected such accounting policies and
 applied them consistently and made judgments 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) that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 
 iv) that the directors had prepared the annual accounts on a going
 concern basis.
 
 CORPORATE GOVERNANCE
 
 In terms of listing agreement with the Stock Exchanges and the
 guidelines on Corporate Governance for Central Public Sector
 Enterprises issued by the Government of India, Department of Public
 Enterprises, a compliance report on Corporate Governance is given at
 Annexure-IV A certificate from Auditors of the company regarding
 compliance of conditions of Corporate Governance is placed at
 Annexure-V The Board has laid down a Code of Conduct for all Board
 Members and Senior Management of the Company. The Code of Conduct has
 been posted on the website of the Company. All the Board Members and
 Senior Management Personnel have affirmed compliance with the code.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In terms of listing agreement with the Stock Exchanges, the duly
 audited consolidated financial statements are placed at Annexure-VI.
 
 SUBSIDIARY
 
 The Maharashtra Elektrosmelt Limited (MEL) recorded a turnover of
 Rs.396.41 crore. The Net Profit after Tax (PAT) for the year was
 Rs.36.32 crore after charging depreciation of Rs.1.91 crore,
 interest/finance charges of Rs 0.11 crore and tax of Rs. 19.55 crore.
 MEL produced 64584 tonne of High Carbon Ferro Manganese and 37640 tonne
 of Silico Manganese during the year.  Audited Accounts of Maharashtra
 Elektrosmelt Limited for the year ended 31st March, 2008 are enclosed
 as Annexure-VII.
 
 IISCO-Ujjain Pipe & Foundary Company Limited, a wholly owned subsidiary
 of the erstwhile Indian Iron & Steel Company Limited (IISCO), was
 ordered to be wound up by BIFR. The Official Liquidator is continuing
 its liquidation process. SAIL (including IISCO) has received an amount
 of Rs. six crore from the liquidator as partial settlement.
 
 DIRECTORS
 
 Shri K.K. Khanna, Director (Technical) ceased to be Director w.e.f.
 30.09.2007 on attaining the age of superannuation.
 
 Shri AK. Rath resigned from the Board we.f. 16.11.2007
 
 Shri VK. Gulhati has been appointed as Director (Technical) w.e.f.
 01.10.2007.
 
 Shri B.S. Meena has been appointed as Director w.e.f. 20.12.2007
 
 Shri Nilotpal Roy, MD, ISP ceased to be Director w.e.f. 31.01.2008 on
 attaining the age of superannuation.
 
 Shri S.P Rao has been appointed as MD, ISP w.e.f. 15.02.2008.
 
 ACKNOWLEDGEMENT
 
 The Board of Directors wish to place on record their appreciation for
 the support and cooperation extended by every member of the SAIL family
 The Directors are thankful to the State Governments, Electricity
 Boards, Railways, Banks, Suppliers, Customers and Shareholders for
 their continued cooperation. The Directors also wish to acknowledge the
 continued support and guidance received from the different wings of the
 Government of India, particularly from the Ministry of Steel.
 
                            For and on behalf of the Board of Directors
 
                                              (S.K. Roongta)
                                                 Chairman
 New Delhi
 Dated: 31st July, 2008