Tata Sponge Iron

The Directors take pleasure in presenting the Twenty-fifth Annual
 Report on the business and operations of the Company and its financial
 results for the year ended 31st March, 2008.
 
 FINANCIAL RESULTS
 
                                                Current     Previous
                                                year        year
                                               (Rs. Lac)   (Rs. Lac)
 
 2.  (i) Sales (Net of Excise Duty) 
 and other income                               48003       29682
 
 (ii) Profit before depreciation and 
 other non-cash expenses                        15609        4643
 
 (iii) Depreciation and other non-cash expenses  1965        1349
 
 (iv) Profit for the year                       13644        3294
 
 (v) Provision for Current Tax                   1948         291
 
 (vi) Provision for Deferred Tax                 2112         860
 
 (vii) Fringe Benefit Tax                          31          20
 
 (viii) Profit after tax                         9553        2123
 
 (ix) Profit brought forward from previous year   456         554
 
 (x) Profit available for appropriation         10009        2677
 
 (xi) Dividend : 70% (2006-2007 : 40%)           1078         616
 
 (xii) Tax on Dividend                            183         105
 
 (xiii) Transfer to General Reserve              7800        1500
 
 (xiv) Surplus carried to Balance Sheet           948         456
 
                                                10009        2677
 
 DIVIDEND
 
 3.  The directors are pleased to recommend a dividend of 70% on
 1,54,00,000 equity shares of Rs.10 each for the financial year ended
 31st March, 2008, subject to approval of the shareholders at the
 ensuing Annual General Meeting. The dividend decision has been taken by
 the Board keeping in view good financial results and the fund
 requirement for meeting the company’s financial obligations in the near
 future. The total outgo on account of dividend (ex-taxes) will be
 Rs.1078 lacs as against Rs.616 lacs in the previous year.
 
 OPERATIONS
 
 4.  During the year, all the three kilns were in operation and produced
 3,32,264 MT of sponge iron compared to 2,82,274 MT in the previous
 year. The capacity utilisation was 85 % as compared to 72% in the
 previous year, i.e. an increase of 13%.
 
 Appropriate quality and quantity availability of iron ore and coal, two
 important raw materials, is essential for smooth operation of kilns.
 Tata Steel continues to support the company in supplying the entire
 quantity of iron ore.  Due to bad road condition around the plant, the
 supply of iron ore was disrupted few times in the year. Indigenous coal
 is supplied by Coal India through long term linkages, but not in
 sufficient quantity. The company had to purchase washed indigenous coal
 from local market and had to import coal for both meeting the quantity
 shortfall and for improving the quality of coal mix.
 
 The despatch of sponge iron during the year was 3,29,002 MT as compared
 to 2,80,148 MT in the previous year.
 
 FINANCE
 
 5.  Due to remunerative market conditions, profit before and after
 taxes has gone up as compared to previous year. The earnings per share
 (Rs.62.03) has also improved compared to previous year (Rs.13.79).
 Company was regular in repayment of term loans and interest thereon.
 
 POWER
 
 6.  The 18.5 MW power plant was commissioned only towards end of the
 financial year 2006-07. Financial year 2007-08 was the first year
 during which both 7.5 MW and 18.5 MW power plants operated for the full
 year.  During the year 110.786 million kwh (net) of power was exported.
 
 DEVELOPMENT OF COAL BLOCK
 
 7.  The preliminary work in connection with development of coal block
 at Radhikapur (East) and Utkal-F in Talcher coalfields was started in
 the previous year. Substantial progress has been made during the year
 in development of coal block. Land acquisition process was started and
 has made desired progress. Mining plan was approved by Ministry of
 Coal, Government of India and background work has been done for forest
 clearance. The coal block is expected to become operational in a period
 of four years from the date of allotment in February, 2006.
 
 TATA BUSINESS EXCELLENCE MODEL
 
 8.  The company continued its effort to improve its business processes
 for addressing the aspirations of all stakeholders through TBEM
 framework. During the year company participated in JRDQV Quality Award
 competition. By improving the business processes, the company moved to
 the higher scoring band and was conferred with “Serious Adoption Award”
 by TQMS Division of Tata Sons Ltd.
 
 ENVIRONMENTAL MANAGEMENT
 
 9.  The company continues to lay emphasis on environmental management
 by implementation of Environment Management System ISO : 14001. The
 company is a role model for coal based sponge iron industry in the
 field of environmental management. During the year, the company
 received following prestigious State and National awards/recognitions
 in the field of environment management.
 
 i) Certificate of Appreciation by The Energy and Resources Institute
 (TERI) for company’s efforts towards environmental management and
 innovative initiatives.
 
 ii) Greentech Environment Excellence Gold Award for the year 2006-07 by
 Greentech Foundation in recognition of company’s initiatives in
 conserving the environment.
 
 OTHER AWARDS
 
 10.  During the year, the Company also secured following
 awards/recognitions :
 
 - Serious Adoption Award” by TQMS Division of Tata Sons Ltd.
 
 - Golden Peacock National Quality Award – 2007” under the small
 category.
 
 QUALITY MANAGEMENT
 
 11.  The Company also continues to maintain the ISO- 9001 (2000)
 quality standard.
 
 LISTING FEES
 
 12.  The Annual Listing Fee for the year 2007-2008 has been paid to
 those Stock Exchanges where the Company’s shares are listed.
 
 DIRECTORS
 
 13.  Mr. B. Muthuraman, who was nominee of Tata Steel Limited
 (Promotors) relinquished his office of Chairmanship of the company on
 23rd July, 2007.
 
 The Board placed on record its deep appreciation of the sincere
 services and invaluable advice rendered to the company by Mr. B.
 Muthuraman during his association as a Director and the Chairman of the
 Board of Directors of the Company
 
 14.  Mr. A.D. Baijal, who was a Director on the Board, was nominated as
 a Special Director by Tata Steel Limited
 
 according to the provisions of Article 110 of the Articles of
 Association of the Company and assumed the post of Chairman of the
 Company. According to Article 110, the Special Director so nominated
 shall not be liable to retire by rotation.
 
 15.  Mr. Arun Misra, who was appointed Additional Director on 16th
 October, 2007 and who holds office up to the date of the forthcoming
 Annual General Meeting of the Company, has been proposed in writing by
 a shareholder for the office of Director.
 
 16.  Mr. D.K. Banerjee retires by rotation and, being eligible, offers
 himself for re-appointment.
 
 17.  Mr. K.K. Varughese retires by rotation and, being eligible, offers
 himself for re-appointment.
 
 18.  Dr. Amit Chatterjee, who is also due to retire at the forthcoming
 Annual General Meeting, had informed the Company that he does not wish
 to seek reappointment.
 
 A resolution pursuant to Section 256 of the Companies Act, 1956, for
 not filling the vacancy caused by the retirement of Dr. Amit Chatterjee
 has been included in the Notice of the 25th Annual General Meeting.
 
 SOCIAL RESPONSIBILITY
 
 19.  Social Responsibility is an integral part of the Company’s
 philosophy of Corporate Governance, Vision and Mission. To meet this
 responsibility, the Company continued its efforts with greater vigour.
 A detailed note on this topic is included in the Annual Report.
 
 AFFIRMATIVE ACTION PLAN
 
 20.  The company adheres to the principle of social equity and equal
 opportunity. The company had earlier adopted the Policy Statement of
 CII on Affirmative Action to support socially and economically
 disadvantaged sections of the society, specifically the scheduled caste
 and scheduled tribe communities. During the year, the company provided
 financial support for education of this section of the society. It has
 facilitated a nearby ITI with drinking water project in the campus. The
 company has also developed entrepreneurs from the SC/ST community.
 Awareness was given to employees regarding need for implementation of
 Affirmative Action plans in the company.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO.
 
 21.  As required under Sub-section 1(e) of Section 217 of the Companies
 Act, 1956, read with the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988, particulars regarding
 conservation of energy, technology absorption, foreign exchange
 earnings and outgo are annexed to this report.
 
 PARTICULARS OF EMPLOYEES
 
 22.  As required under Sub-section 2A of Section 217 of the Companies
 Act, 1956 read with the Companies (Particulars of Employees) Rules,
 1975, as amended from time to time, the particulars of such employees
 are given in a statement annexed to this report.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 23.  Pursuant to Section 217(2AA) of the Companies Act, 1956, the
 Directors, based on the representations received from the Operating
 Management, confirm that:- (i) in the preparation of annual accounts,
 the applicable accounting standards have been followed and that there
 are no material departures;
 
 (ii) they have, in the selection of accounting policies, consulted the
 statutory Auditors and have 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 2007-08 and of the profit of the company for that
 period;
 
 (iii) they have taken proper and sufficient care, to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act, 1956,
 for safeguarding the assets of the company and for preventing and
 detecting fraud and other irregularities;
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 REPORT ON CORPORATE GOVERNANCE
 
 24.  Pursuant to Clause 49 of the Listing Agreements with the Stock
 Exchanges, the followings form part of this Annual Report :
 
 (i) Managing Director’s declaration regarding compliance of Code of
 Conduct by Board Members and Senior Management personnel;
 
 (ii) Management Discussion and Analysis;
 
 (iii) Report on the Corporate Governance;
 
 (iv) Auditors’ Certificate regarding compliance of conditions of
 Corporate Governance.
 
 VOLUNTARY DELISTING OF THE COMPANY’S EQUITY SHARES FROM CERTAIN STOCK
 EXCHANGES
 
 25.  The Equity Shares of the Company have been voluntarily delisted
 from The Stock Exchange, Ahmedabad and The Delhi Stock Exchange
 Association Ltd. during 2004-05 and from Bhubaneswar Stock Exchange
 during 2006-07. However, the Company’s application for voluntary
 delisting is pending with the Calcutta Stock Exchange Association Ltd.
 
 Shares of the Company are actively traded in the National Stock
 Exchange of India Ltd. and Bombay Stock Exchange Ltd.
 
 AUDITORS
 
 26.  The Auditors, Messrs S.B. Billimoria & Company, Chartered
 Accountants, retire at the conclusion of the ensuing Annual General
 Meeting. They are part of Messrs Deloitte Haskins & Sells, Mumbai in
 India. Messrs S.B.  Billimoria & Co. have informed the Company that
 they do not wish to seek re-appointment as statutory auditors of the
 Company for the financial year 2008-09 at the forthcoming Annual
 General Meeting. The Company has received a special notice from a
 member proposing the name of Deloitte Haskins & Sells as auditors of
 the company. Deloitte Haskins & Sells have expressed their willingness
 and confirmed that, if appointed as auditors at the ensuing Annual
 General Meeting, their appointment would be within the limits
 prescribed under Section 224 (1B) of the Companies Act, 1956.
 
 25TH ANNIVERSARY OF THE COMPANY
 
 27.  The Company celebrated its 25th anniversary on 31st July, 2007.
 The company was incorporated exactly 25 years ago on 31st July, 1982
 with the name of IPITATA Sponge Iron Limited. Subsequently, the name
 was changed to Tata Sponge Iron Limited. It started commercial
 production from Kiln -1 on 1st April, 1986. Later, it added two more
 kilns and two power plants. Today, the total installed capacity of
 Sponge Iron is 3,90,000 tonnes per annum from the three kilns and that
 of power generation is 26 MW from the two power plants. The company has
 continuously been paying dividend since 1993-94.
 
 The Board takes this opportunity to sincerely thank all its
 stakeholders namely, shareholders, customers, suppliers/contractors,
 employees, government agencies, local authorities, and the immediate
 society for their un- stinted support and co-operation right from the
 inception of the company and throughout its journey over 25 years.
 
                                 On behalf of the Board of Directors
 
                                              A.D. Baijal
                                                 Chairman
 
 Kolkata,
 29th April, 2008