JSW Steel - Annual Report - 2008-2009

JSW STEEL LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Dear Members,

Your Directors have pleasure in presenting the Fifteenth Annual Report of
your Company along with the Audited Statement of Accounts for the year
ended 31 March 2009.

1. FINANCIAL RESULTS
(Rs. in crores)
Sl. Particulars FY 2008-09 FY 2007-08
No.

i) Gross Turnover 15,179.29 12,628.91
ii) Net Turnover 14,001.25 11,420.00
iii) Other Income 259.56 152.25
iv) Total Revenue 14,260.81 11,572.25
v) Profit before Interest,
Depreciation, & Taxation (EBIDTA) 3,092.67 3,506.85
vi) Interest 797.25 440.44
vii) Depreciation 827.66 687.18
viii) Profit before Taxation &
Exceptional Items 1,467.76 2,379.23
ix) Exceptional Items 790.13 (104.89)
x) Profit before Taxation (PBT) 677.63 2,484.12
xi) Tax including Deferred Tax and
Fringe Benefit tax 219.13 755.93
xii) Profit after Taxation (PAT) 458.50 1,728.19
xiii) Profit brought forward from
previous year 3,505.86 2,267.56
xiv) Amount available for Appropriation 3,964.36 3,995.75
xv) Appropriations
Transferred from debenture
redemption reserve 20.45 23.30
Dividend on preference shares (28.99) (29.06)
Proposed final dividend on equity
shares @ 10% @ 140% for FY 2007-08) (18.71) (261.87)
Corporate dividend tax (8.11) (49.44)
Transfer to general reserve (45.85) (172.82)
Total (81.21) (489.89)
xvi) Balance carried to balance sheet 3,883.15 3,505.86

The current global crisis has no parallel after the great depression of
1930, which shook the world economy. The Financial Systems across the world
got disrupted leading to severe contraction in demand, steep fall in
prices, heightened risk aversion. The flight of capital from emerging
economies had put pressure on the currencies including Indian rupee. In
spite of this turbulence and turmoil, your Company posted a Crude steel
production of 3.724 Mn tonnes and sold 3.428 Mn tonnes of various steel
products during the year under review showing a growth over the previous
year. The growth would be much higher if the trial production and its sales
of 0.140 Mn tonnes and 0.076 Mn tonnes respectively from the recently
commissioned expansion project in February 09 were included with the
volumes from existing operations. While the world crude steel production
contracted by 25%, due to production cuts caused by severe demand
contraction, your Company, in spite of temporary production cuts for a
period of 2 months, restored normal production in January 2009 and also
commissioned the expansion project in February 2009 to become a leading
player in the Indian Steel Industry with the installed capacity of 7.8
MTPA.

Your Company achieved a growth of 20% in gross sales compared to previous
year mainly on account of higher realisations in the first half of the
year. Even though the net sales went up and the volumes were higher than
the last year, the Company's EBITDA margin was lower at 21.8% as increased
higher prices under long term contract for iron ore and coal remained for
the year under review when the realisations fell by more than 50% in the
second half of fiscal 2009. Though the Company registered an EBITDA of
Rs.3,092.67 crores including other income, the exceptional volatility in
foreign exchange market led to steep depreciation of rupee against the US$
resulting into an foreign exchange loss of Rs.790.13 crores. While the
Company reported a cash profit of Rs. 2295.42 crores and even after
absorbing this exceptional loss its net protit was Rs. 458.50 crores. The
Company adopted two pronged strategy of reducing the cost of production and
of leveraging the domestic demand, which was less impacted by global
crisis, to increase the Company's market share. In view of the swift
changes in strategies and the inherent strength of your Company, it
remained profitable despite the unprecedented, deep and longer duration of
global crisis.

Pursuant to Accounting Standard (AS) - 21 on 'Consolidated Financial
Statement' 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 and 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.
47/226/2009CL-III dated 17 April 2009 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 Sales, EBI DTA and
PAT of the Company were Rs. 17,112.88 crores, Rs. 3,253.50 crores and
Rs.274.91 crores respectively. The PAT on consolidated basis was lower than
the standalone basis mainly on account of inventory write-down and
lower/negative margins in the second half of FY 2008-09 in the overseas
operations in UK and USA accounted by continuous fall in product prices.

2. DIVIDEND

The Board, subject to the approval of the Members at the ensuing Annual
General Meeting, recommended dividend at the stipulated rate:

* of Re.1 per Share on the 27,90,34,907, 10% Cumulative Redeemable
Preference Shares of Rs.10 each of the Company, for the year ended
31.03.2009; and

* of Rs.1.10 per Share on the 99,00,000, 11% Cumulative Redeemable
Preference Shares of Rs.10 each of the Company, for the year ended
31.03.2009.

The Board, considering the Company's performance and financial position for
the year under review, also recommended dividend at Re. 1 per Equity Share
on the 18,70,48,682 Equity Shares of Rs. 10 each of the Company for the
year ended 31.03.2009, 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 will be Rs. 21.89 crores, vis-a-vis Rs. 306.37 crores
paid for fiscal 2007-08.

3. PROSPECTS

While the steel demand and realisations scaled new high in the first half
of calendar year 2008, they retraced in just two months due to global melt
down contracting the demand by more than 25% and the prices by 50%. Even
though the impact of this melt down is expected to be deep and of a longer
duration, the optimism stems from the swift policy responses by various
Central banks and the Governments in a co-ordinated manner to stimulate the
global economy with large stimulus packages and easing the monetary policy
by lowering the interest rates and pumping in massive liquidity into the
financial system. It is heartening to note that the signs of revival due to
these co-ordinated measures are being felt from the improving sentiments
about the economic outlook. The emerging economies are expected to lead
this recovery with higher infrastructure spend and larger fixed assets
investments which is positive for the steel industry.

International Monetary Fund has estimated a negative GDP growth of 2.5% for
the world economy for the year 2009 and while at the same time China and
India continues to grow albeit at a slower pace. India is projected to be
the second largest growing economy in the world. The optimism is further
corroborated by sizable investment plans by the Govt. of India in creating
robust infrastructure. Some of which are as follows:

* The power generation capacity addition under the Eleventh Plan is
expected at 78,577 MW. Out of the planned target, projects totalling 63,312
MW are under implementation, of which 18,177 MW are in the private sector.

* The Indian Railways has drawn up plans towards up gradation of rail
infrastructure and procurement of new assets of rolling stock during
financial year 2009-10 with an estimated expenditure of Rs. 37,500 crores.
Besides, it is also undertaking the construction of a dedicated freight
corridor, the biggest infrastructure development activity of Indian
Railways since independence - an investment of Rs. 3,000 crores in 2009-10
has been earmarked for this initiative.

* The National Highways Authority of India plans to award 105 new road
projects worth Rs. 1,00,000 crores in 2009-10.

* An investment of Rs.11,000 crores has been earmarked towards the
development of new green field airports in the 11th Plan period.

* The total housing requirement during the 11th Plan Period is estimated at
26.53 million. Conservative estimates as per NUHHP-2007 suggest an
investment of Rs. 3,61,318 crores over the 11th Plan period to meet this
requirement - this has now been revised to approximately Rs. 5,10,000
crores.

Your Company has poised itself to an unassailable position to capture a
larger share of the expanded domestic steel market which is likely to
offset the impact of the global slowdown in the demand to a great extent.

Your Company has commenced commercial operations of its 2.8 MTPA expansion
project on 10 April 2009. The total capacity of 7.80 MTPA comprises of 5.30
MTPA (68%) flat products and 2.50 MTPA (32%) of long products. Besides the
value added products in the flat product segment constitutes 34% (1.80
MTPA). The robust demand in the rural and semi urban areas and the wide net
work of your Company across India through JSW Shoppe and dealer network
throws up an opportunity in these interesting times to increase the market
share. When some of the competitors are not able to sustain production
level in these difficult times, your Company has worked out a business plan
for the fiscal year 2010 to produce and sell 6.4 Mn tonnes and 6.1 Mn
tonnes respectively of various steel products showing a growth of 72% and
78% respectively over year under review. The lower long term contract
prices for key inputs namely; iron ore and coal will bring down the cost of
production further improving the operating margins of the Company.

4. PROJECTS AND EXPANSION PLANS

Vijayanagar Works

(a) Projects commissioned during FY 2008-09

* The Phase II Modernization of existing Hot Strip Mill (HSM) to scale up
the capacity from 2.5 MTPA to 3.2 MTPA was completed during the fiscal
2008-09. HSM achieved maximum production of 275,130 tonnes in March 2009,
which on annualised basis surpassed the enhanced capacity level of 3.2
MTPA.

* The implementation of the Crude Steel capacity expansion project by 2.8
MTPA to reach 6.8 MTPA at Vijayanagar Works was also completed during
fiscal 2008-09. All major facilities such as Blast Furnace #3, SMS #2
comprising of Converters, Slab Caster and Billet Caster, Long Product Mills
comprising of Wire Rod Mill and Bar Rod Mill were commissioned and trial
run operations commenced during the last Quarter of FY 2008-09. Other
support facilities such as Coke Ovens #3, Sinter Plant #2, Raw Material
Handling Systems, Utilities and other infrastructural facilities such as
internal Logistics, Roads, etc. forming part of the expansion projectwere
completed. Further, in respect of the Iron making and Steel Melt Shop, some
of other features which are added subsequently in April 2009, includes,
Pulverized Coal Injection Unit in Blast Furnace and RH Degasser Unit and
LHF #2 in Steel Melt Shop. With the completion of this expansion project,
the Company is a leading player in the Steel Industry in the country. The
Company commenced commercial operations of this expansion project from 10
April 2009 on stabilisation.

(b) Projects under Progress

* The state-of-the art new Hot Strip Mill with a capacity of 5 MTPA is
being implemented in two phases. The Phase-I with a capacity of 3.5 MTPA is
expected to be completed by March 2010. The Phase-II will be completed
coinciding with the commissioning of expansion project to 10 MTPA at
Vijayanagar works.

* Further expansion of Crude Steel capacity by 3.2 MTPA to reach 10 MTPA at
Vijayanagar Works along with associated facilities is also under
implementation to be completed by March 2011.

* Beneticiation plant of 20 MTPA is being executed in two phases. First
phase of 10 MTPA capacity is expected to be completed by March 2010 and
second phase is planned to be completed by March 2011.

* The new captive power plant of 300 MW is also expected to be commissioned
by March 2011 to achieve self sufficiency in power at 10 MTPA stage.

Salem Works

(a) Major modifications undertaken during 2008-09

The following moditications/improvements were made during 2008-09.

* Additional 24 Coke ovens

* Ladle Re-heating Furnace - 1 (LRF-1) shifted to achieve better
synchronisation of operations

* Lime powder charging system in sinter plant

* ID Fan and Venturi modification in Energy Optimisation Furnace-1 (EOF-1)

* Super sonic lancing system modification in EOF-1 & EOF-2

* Shuttle conveyor and drilling machine feed beam modification in blast
furnace

(b) Projects under progress

The phase-II expansion to increase the production capacity from 0.4 MTPA to
1 MTPA was completed except Blooming Mill, 300TPD lime kiln, second VD
boiler and third railway line and wagon tippler. This phase is rescheduled
to be commissioned by December 2009/March 2010 to achieve 1 MTPA rolling
capacity matching with cast steel capacity.

Vasind & Tarapur Works

(a) Projects commissioned during 2008-09

* New Colour Coating Line No 2 was set up at Tarapur in August 2008 with
additional capacity of 0.132 MTPA.

* The second Galvanising line at Tarapur was converted into Galvalume line
with dual pot facility during August 2008. Balance two more Galvanising
lines are expected to be converted into Galvalume line during FY 2009-10.

(b) Projects under progress

* 30 MW Power Plant

The Company is close to the commissioning of 30 M W captive power plant at
Tarapur. Erection of all equipment viz, boiler, turbine, coal handling
system, cooling tower, HT system, MCC, PCC etc., has been completed. This
project is expected to be commissioned in Q1, FY 2009-10.

* Railway Siding

The Company got in principle approval from Railway authorities for setting
up a Railway Siding at Vasind. The Railway Siding will help the Company in
bringing the Raw material from Vijayanagar Works & dispatch finished goods
from Vasind Plant to various parts of the country, in a cost effective way.

5. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

A. Indian Subsidiaries

1. JSW Bengal Steel Limited (JSW Bengal) and its Subsidiary Barbil
Beneficiation Company Limited

JSW Bengal Steel Limited was incorporated for setting up a Steel Plant in
the State of West Bengal. The Company is in possession of land required for
this project. Furthermore, the Project has received Government of India's
approval granting SEZ status for the project.

During the year, JSW Bengal Steel Limited formed a wholly owned subsidiary
Barbil Beneficiation Company Limited to set up a Beneticiation plant.

It is proposed to implement the project in phases. The first phase will be
the beneticiation and pelletisation plant. Considering the current
turbulence in the finance market and uncertainties on the timing of
recovery in the global economy, the implementation of this project is
slowed down and it will be taken up for accelerated implementation on
achieving financial closure.

2. JSW Jharkhand Steel Limited

JSW Jharkhand Steel Limited was incorporated for setting up a Steel Plant
in the State of Jharkhand. The Company has obtained a Mining Lease for iron
ore and also got the mining plan approved. The Company is pursuing for
various approvals/clearances for this project.

3. JSW Steel Processing Centres Limited (JSWSPCL)

The Company's wholly owned Subsidiary, JSW Steel Processing Centres Limited
commissioned Steel Service Centre consisting of HR/CR Slitter and cut to
length facility with annual capacity of 500,000 tonnes. The company
processed 104,010 tonnes during the year 2008-09, in the first year of
operations, including 21,644 tonnes from trial run operations.

4. JSW Building Systems Limited (JSWBSL)

JSW Building Systems Limited (JSWBSL) was incorporated on 28 March 2008
with the main object to design, make, prepare, develop, create, alter,
replace, repair pre-fabricated building systems & technologies. This
Company became the fully owned subsidiary of JSW Steel Limited effective 13
October 2008.

JSWBSL will be participating in the 50% equity capital of JSW Severtield
Structures Limited, a Joint Venture Company incorporated on 19 March 2009
with 50:50 equity participation by JSWBSL and Severtield-Rowen Mauritius
Limited. The project having a capacity of 35000 tonnes per annum will be
set up at an estimated Project Cost of Rs. 220 Crores. The Project is
proposed to be funded through a debt equity ratio of 2:1. The Joint Venture
Company will be engaged in design, fabrication and erection of structural
steelwork and ancillaries, including decking for construction projects in
India, Pakistan, Bangladesh, Nepal, Sri Lanka and Bhutan.

B. Overseas Subsidiaries

1. JSW Steel (Netherlands) B.V. (JSW Netherlands)

JSW Netherlands is a holding Company for USA, UK and Chile Operations.
During the previous year, it invested Rs.25.94 crores (USD 6.86 million) in
49% equity of Georgia based Geo Steel LLC, incorporated under the laws of
Georgia. The Company also invested in the plate and pipe mill in USA and
iron ore mining concessions in Chile and service centre in UK through the
following step down subsidiaries.

(a) JSW Steel Holding (USA) Inc. and its subsidiary JSW Steel (USA) Inc.

The operating company JSW Steel (USA) Inc. reported excellent performance
in fiscal 2007-08 after completion of take over of 90% stake in plate and
pipe mill operations on 5 November 2007. In view of the booming oil and gas
sector in USA in which the Company's products are used, this Company
reported an EBIDTA of US$ 74.63 million from 1 April 2008 to 30 September
2008. The crash in oil prices to less then US$ 40 per barrel made several
Companies in the USA to delay their ongoing projects and hold back their
future investments. As US economy was deeply impacted by the global crisis,
the JSW Steel (USA) Inc. had to cut down its production due to lack of
demand from October 2008. Besides, the Company had to take losses on write
down of inventories during the year under review. However, the Company
reported a positive EBI DTA of US $12.23 million for the fiscal year ended

31.03.2009. The large stimulus package announced by new OBAMA
administration is expected to have some impact for a gradual recovery in
USA. Accordingly a conservative business plan has been prepared for fiscal
2010 factoring the current slow recovery in USA. At the same time this
Company is also exploring various opportunities outside USA to build its
order book.

(b) JSW Steel (U K) Limited and its Subsidiaries namely Argent Independent
Steel (Holdings) Limited and JSW Steel Service Centre (UK) Limited

During the year ended 31.03.2008, the Company acquired 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. JSW Steel Service Centre (UK) Limited
has slitting and blanking facilities to cater to specific customer
requirements.

This Service Centre has been established as a reliable supplier in UK
markets. Due to steep fall in prices this Company had to take write down on
the inventories resulting in losses during the last fiscal. It is expected
that this Company will continue to act as an outlet to market the steel
products of JSW Steel in the UK markets.

During the year under review, JSW Steel Service Centre (UK) Limited
achieved a turnover of GBP 16.73 million.

(c) JSW Panama Holdings Corporation and Chilean subsidiaries namely
Inversiones Eurosh Limitada, Santa Fe Mining and Santa Fe Puerto S.A

During the year ended 31 March 2008, JSW Steel (Netherlands) B.V. has
acquired 70% stake in Santa Fe Mining, Chile through other step down
subsidiaries.

The exploration activities were carried out on part of the mines acquired
in this Company to determine the quantity and quality of reserves and to
set up a beneticiation plant in Chile. Following the crash in commodity
prices including iron ore and fall in demand from China for iron ore, the
Company slowed down the implementation in operationalising the mines in
Chile. This project will be taken up after the visible signs of recovery
are established in the international steel markets.

2. JSW Natural Resources Limited (JSWNRL) and its Subsidiary

JSW Natural Resources Mozambique LIDA (JSWNRML)

JSW Natural Resources Limited was incorporated in Mauritius to pursue
acquiring coal assets/other assets relating to steel business.

JSW Natural Resources Limited formed a wholly owned subsidiary in
Mozambique to acquire Coal assets and to develop Coal Mines in Mozambique.

The Company has started geological survey, due diligence and other
formalities to start the mining activities on some of these concessions in
Mozambique. A detailed plan for drilling and exploration work has been
submitted to Ministry of Mines, Mozambique as part of the regulations by
the Ministry. The Company has completed around 2300 Meters of Diamond Core
drilling and water Bore Holes on the second mining concession. Totally
about 14 Bore Holes by Diamond Drilling and 3 Water Bore Holes have been
completed. Core samples from these drilling are being analysed for the
partial geological modeling. The Company already completed the initial
drilling and survey in the first concession. After receiving the reports on
core samples of the second mine about the quality and quantity of reserves,
an appropriate plan will be finalized for further engagement in this
activity in Mozambique.

C. Joint Venture Companies

1. Geo Steel LLC

Georgia based Joint Venture Geo Steel LLC in which your Company holds 49%
equity through JSW Steel (Netherlands) B.V, is setting up a steel rolling
mill in Georgiawith 1,75,000 tonnes annual capacity across 13.50 hectares
in the industrial area of Rustavi in Georgia. The plant is being designed
to produce rebar through hot rolling process by using steel billets
produced from the Electric Arc Furnace Route.

The project is expected to be commissioned in FY 2009-10.

2. Rohne Coal Company Private Limited

As per the terms of the Joint Venture Agreement to develop Rohne coking
coal block in Jharkhand, your Company participated in the 49% equity of
newly formed Rohne Coal Company Private Limited along with three other
partners. This JV Company received the final allotment letter from the
Government of India for development of Rohne Coal block. The topographical
survey has been completed and environmental clearance is awaited. The
mining plan has been approved by the Ministry of Coal.

3. MJSJ Coal Limited

In terms of the Joint Venture Agreement to develop Utkal-A and Gopal Prasad
(West) thermal coal block in Orissa, your Company agreed to participate in
the 11% equity of newly formed MJSJ Coal Limited, Orissa along with four
other partners. The Government of India has decided to allot 1,522 acres of
Gopal Prasad west area to MJSJ Coal Limited. Mahanadi Coalfields Ltd, a
Public sector company holds 60% of the equity. Land requirement for the
project is about 2,535 acres, the acquisition of which is under progress.

4. Toshiba JSW Turbine and Generator Private Limited

Toshiba JSW Turbine and Generator Private Limited has been incorporated as
a Joint Venture company to carry on the business of design, manufacture,
marketing and maintenance services of mid to large sized supercritical
steam turbines and generators. The Company will be investing up to Rs. 15
crores, equivalent to 5% of the paid up equity. Out of the balance equity,
75% will be held by Toshiba Corporation Ltd., Japan and 20% by JSW Energy
Ltd.

The manufacturing facility is proposed to be located near the Ennore port,
Chennai. This Joint Venture initiative is expected to have a strong
foothold in the rapidly growing supercritical power plant equipment
manufacturing sector in India and abroad. Phased manufacture of steam
turbine generator is expected to commence from 2010-11.

5. Vijayanagar Minerals Private Limited (VMPL)

During the financial year 2008-09, VMPL supplied 1.5 Mn tonnes of Iron Ore
from Thimmappanagudi Iron Ore Mines. VMPL is set to enhance the production
capacity to 2 Mn tonnes in the financial year 2009-10.

To reduce the cost of logistics and to bring eco friendly dispatch system,
VMPL is making a study to install the conveyer system at mines for
transportation of ore from the hill top to hill bottom. The conveyer system
of transport will reduce the pollution which is created by road movement
and will be cost effective also.

It is a matter of pride that during the State level celebration of Safety
Week -08, VMPL has bagged the following awards:

- Over All Performance - Zone level - 2nd Prize
- Over All Performance - State level - 2nd Prize
- Welfare Amenities Mechanized - 1st Prize

D. Associate Companies

1. JSW Energy (Vijayanagar) Limited

JSW Energy (Vijayanagar) Limited, an Associate of the Company, merged with
JSW Energy Limited through a Scheme of Amalgamation sanctioned by the
Honourable Bombay High Court vide its order dated 10 October 2008 with the
appointed date as 1 April 2008. The Company has been allotted 3,11,92,200
equity shares of Rs.10 each of JSW Energy Limited at the share exchange
ratio of 258 equity shares of Rs. 10 each for every 1,000 equity shares
held in JSW Energy (Vijayanagar) Limited. Your Company holds 5.7% of equity
share capital in JSW Energy. This Company has commissioned at Vijayanagar
the first unit of 300 MW power plant in May 2009 and the second unit of 300
M W power plant is expected to be completed in Q2 FY 2009-10.

2. Jindal Praxair Oxygen Company Private Limited (JPOCL)

The oxygen plants of JPOCL have been working satisfactorily, primarily to
meet the requirement of the steel plant at Vijayanagar Works. During 2008-
09, the combined production of the oxygen plant module #1 and module #2 of
JPOCL was: gaseous oxygen -1,028 million nm3; gaseous nitrogen - 325
million nm3; liquid oxygen -13 million nm3; liquid nitrogen - 20 million
nm3 and Argon - 11 million nm3.

6. CREDIT RATING

The rating for long-term/medium term debt and various Bank facilities
sanctioned and/or availed by the Company has been revised by Credit
Analysis & Research Ltd. (CARE) as 'CARE AA=(Double A Minus) from earlier
assigned rating of 'CARE AA' (Double A).

The rating for the various Non-Convertible Debentures (NCDs) of the Company
(outstanding Rs. 604.71 crores as at 31.03.2009) has been reduced by one
notch to 'CARE AA - (Double A Minus)' by CARE. 'CARE AA =' rating indicates
high safety for timely servicing of debt obligations and very low credit
risk.

The rating for the short-term debt/facilities sanctioned and/or availed by
the Company has been assigned as 'PR1 +'. 'PR1+' 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.

The rational for the reduction of long-term rating by one notch as provided
by the Rating Agency is as under:

* Rising debt level, corporate guarantees extended to fund overseas
acquisitions and to support overseas subsidiaries and the sharp slowdown in
demand co-incident with significant capacity expansion.

* Project execution risk related significant capacity expansion programmes,
lack of complete backward integration, risk arising from significant
foreign exchange exposure of the company, significant corporate guarantee
given to subsidiaries and inherent cyclicality of the steel industry.

However, the ratings derive strength from your Company's significant
presence in the steel sector, proven management capability, geographical
diversity of sales and healthy mix of value-added and upstream products
coupled with its ability to implement capacity expansion programmes within
the scheduled time and cost and its ability to sell larger volumes in a
downturn.

7. 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.

8. SHARE CAPITAL

The Board of Directors of your Company had, in their meeting held on 22
January, 2007 and 28 January, 2008, annulled the forfeiture in respect of
1,400 and 7,100 equity shares as per the terms of the Scheme of Arrangement
and Amalgamation between the Company, Jindal Iron and Steel Company Ltd.
and Jindal South West Holdings Ltd. upon receipt of particulars relating to
unidentified call money received and its appropriations.

As per Clause 26.1 of the Scheme of Arrangement and Amalgamation between
the Company, Jindal Iron and Steel Company Ltd. and Jindal South West
Holdings Ltd., the shareholders who have been issued equity shares on
annulment of forfeiture are also entitled to receive warrants as specified
in Clause 17 and 23 of the Scheme.

As the validity of the warrants has lapsed, 47 equity shares against the
conversion of warrants were allotted directly by the Board of Directors in
its meeting held on 31 July 2008, to the eligible shareholders who have
complied with the terms of conversion.

Accordingly, during the year under review, your Company's paid-up equity
share capital has increased from Rs. 187,04,86,350 (comprising 18,70,48,635
equity shares of Rs.10 each) to Rs. 187,04,86,820 (comprising 18,70,48,682
equity shares of Rs. 10 each).

9. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

During the F.Y 2007-2008, your Company had issued 3250 Zero Coupon Foreign
Currency Convertible Bonds (FCCBs) of US$ 100,000 each due 2012 (ISIN
XS0302937031), aggregating to US$ 325 million to international investors to
part finance the capital expenditure programme of the Company. 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. 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.

Out of the aforesaid 3,250 Bonds issued, 8 Bondswere converted into 33,799
equity shares which were allotted on 4 January 2008.

Considering the FCCBs being traded at a substantial discount to the issue
price in view of the prevalent global economic recession and the
substantial gain that could accrue to the Company by opting for the buyback
of the FCCBs, your Directors had in their meeting held on 28 January 2009
accorded their consent to buyback opportunistically Company's outstanding
FCCBs, depending on the availability of funds and the discount at which the
FCCBs are available in the market in accordance with the regulations issued
by Reserve Bank of India from time to time.

Your Directors are pleased to inform that the Company repurchased and
cancelled 15.36% of its remaining outstanding zero coupon Foreign Currency
Convertible Bonds of US$ 1,00,000 each, aggregating to US$ 49.80 million
(US$ 2 million in April 2009) in accordance with the A.P. (DIR Series)
Circular No. 39 dated 8 December, 2008 issued by the Reserve Bank of India.

The principal amount of Bonds outstanding after this repurchase and
cancellation is US$ 274.40 million.

Your Company will continue to explore this opportunity going forward.

10. DIRECTORS

Mr. Sajjan Jindal, Dr. S.K. Gupta and Dr. Vinod Nowal, Directors, retire by
rotation at the forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment.

Mr. Kannan Vijayaraghavan and Mr. JayantAcharya who were appointed by the
Board of Directors of your Company in its meeting held on 16 June 2008 & 7
May 2009 as Additional Directors w.e.f. 16 June 2008 and 7 May 2009
respectively in terms of Article 123 of the Articles of Association of your
Company, hold office up to the date of the ensuing Annual General Meeting.
Your Company has received notices under Section 257 of the Companies Act,
1956 from two shareholders proposing Mr. Kannan Vijayaraghavan & Mr. Jayant
Acharya for the Office of Director to be elected by the members in the
ensuing Annual General Meeting.

Mr. Jayant Acharya who was inducted as an Additional Director on the Board
of Directors of the Company w.e.f 7 May 2009 has also been appointed as a
Whole-time Director of the Company designated as 'Director (Sales &
Marketing)', subject to your approval in the ensuing Annual General
Meeting, for a period of five years w.e.f. 7 May 2009.

Your Directors have in their meeting held on 7 May 2009, re-appointed Mr.
Seshagiri Rao M.V.S. as a Whole-time Director of your Company for a period
of five years w.e.f 6 April 2009 and have also re-designated him as Jt.
Managing Director & Group CFO' w.e.f. 6 April 2009, subject to your
approval. Your Directors have also in their aforesaid meeting held on 7 May
2009 re-designated Dr. Vinod Nowal as Director & CEO (Vijayanagar Works)'
w.e.f. 1 April 2009 subject to your approval.

The proposals regarding the appointment/ re-appointment/change in the terms
of appointment of the aforesaid Directors are placed for your approval.

Mr. Y. Siva Sagar Rao will cease to be a Director and Whole-time Director
designated as 'Jt. Managing Director & CEO' of the Company w.e.f. 15 May
2009 consequent to his resignation from the Board.

Mr. Biswadip Gupta, Director and Dr. Ajay Shah, Additional Director, have
ceased to be Directors of the Company with effect from 7 May 2009
consequent to their resignation from the Board.

Other changes in the Board of Directors of your Company during the year
under review are as follows:

Karnataka State Industrial Investment and Development Corporation Limited
nominated Mr. V. Madhu, IAS as its nominee on the Board of your Company in
place of Mrs. Sobha Nambisan, IAS w.e.f. 13 June 2008.

UTI Asset Management Company Limited withdrew the nomination of Mr. S.
Jambunathan, IAS (Retd.) w.e.f. 15 May 2008 and appointed Mr. G.R.
Sundaravadivel in his place on 14 July 2008.

Mr. Nagesh Pinge has ceased to be a Director of your Company w.e.f. 23
January 2009 consequent to his resignation from the Board.

Your Directors place on record their deep appreciation of the valuable
services rendered by Mrs. Sobha Nambisan, IAS, Mr. S Jambunathan, IAS
(Retd.) Mr. Nagesh Pinge, Dr. Ajay Shah and Mr. Biswadip Gupta during their
tenure as Directors & by Mr. Y Siva Sagar Rao, during his tenure as Jt.
Managing Director & CEO of your Company.

11. 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 (1 B) of the Act.

12. PARTICULARS REGARDING CONSERVATION OF ENERGY AND 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.

13. 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.

14. AWARDS AND ACCOLADES

Your Company and its employees received the following awards during the
year:

i. Greentech Safety Award 2007: Gold award in metal and mining sector for
Outstanding Achievement in Safety Management by Greentech Foundation (10
April 2008, at Mumbai).

ii. G3 Awards for Good Green Governance 2007: Winner's trophy in the
Manufacturing Category by SRISHTI, New Delhi (22 April 2008).

iii. TERI Corporate Environmental Award 2008: Certificate of appreciation
for efforts towards environmental management and innovative initiatives
amongst corporations with a turnover above Rs. 500 crores (31 May 2008).

iv. CII National Energy Management Award 2008: Excellent Energy Efficient
Unit by CII (August 2008).

v. Greentech Environment Excellence Award 2008: Gold award in metal and
mining sector for Outstanding Achievement in Environment Management (6
September 2008, at Goa).

vi. CII-EXIM Award 2008: Commendation Certificate for Significant
Achievement towards business excellence (6 November 2008, at Bangalore).

vii. National Sustainability Award 2008: First prize for excellent
performance in integrated steel plant operations (14 November 2008, at New
Delhi).

viii. CII-ITC Sustainability Awards 2008: Commendation Certificate for
Significant Achievement on the journey towards sustainable development (12
December 2008 at New Delhi).

ix. National Award for Excellence in Water Management 2008: Adjudged as
'Water Efficient Unit' by CII during National Competition for Excellence in
Water Management (16 and 17 December 2008 at Hyderabad).

x. Golden Peacock Award 2008: Winner of Golden Peacock Award for Corporate
Social Responsibility (26 February 2009, at Vilamoura, Portugal).

xi. IMC Ramkrishna Bajaj National Quality Award 2008: Performance
Excellence Trophy in the manufacturing category (24 March 2009, at Mumbai).

Individual & team recognitions:

i. IIM Platinum Medal won by Dr. S.K. Gupta, Director, for his outstanding
contribution to the metallurgical profession, education, research at
National Metallurgists' Day (NMD) celebrations on 14 November 2008. This
award was instituted by the Indian Institute of Metals.

ii. Young Metallurgist of the year Award: Jointly shared by Mr. K. P.
Mrunmay and Mr. Pramod Kumar Gupta of R & D and Scientific Services
department. This award is given to young metallurgists to encourage
research in the field of metallurgy, on 14 November 2008, at NMD
celebrations, New Delhi.

iii. ICCQC 2008, Bangladesh: Tungabhadra team of your Company won extra-
ordinary category award at recently concluded International Chapter
Convention on Quality Circles 2008, at Dhaka in Bangladesh. The ICCQC
competition was held from 23 to 26 September and the theme selected was -
'Improving the performance of the Double Deck Roller Screen'. Team members:
Mr. Raghu M, Mr. B.I. Karabhari, Mr. Rajashekar Hiremath, Mr. G.B. Kesapur,
Mr. Shivakumar K. and Mr. Nagendra.

iv. NCQC 2008, Baroda: 'Swayam' QC Team from Coke Oven unit of your Company
won Excellent Category, and 'Genius' QC Team from BOF-CCP unit won
Distinction Category, during National Convention on Quality Circles at
Baroda on 10 November 2008.

15. 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, the Auditors' Certificate
on compliance of mandatory requirements thereof and Management Discussion
and Analysis are given as annexure to this report.

16. 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 along with 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 the Company and for preventing and detecting
fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis.

17. 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
TamiINadu, the financial institutions, banks as well as the shareholders
and debenture holders during the year under review. The Directors also wish
to place on record their appreciation of the devoted and dedicated services
rendered by all the employees of the Company.

For and on behalf of the Board of Directors

Savitri Devi Jindal
Date : 7 May 2009 Chairperson

ANNEXURE A' TO DIRECTORS' REPORT

PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE
REPORT OF BOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY

Conservation of Energy is the major thrust area in the Company since its
inception. The same trend continued in the year under review as well:

Development initiatives

Various energy conservation initiatives had been undertaken in different
plants over the year. Process optimisations, Six Sigma, de-bottlenecking,
automation, modification, etc., were some of the methods used.

Energy conservation initiatives at Vijayanagar Works:

* Achieved Specific Energy consumption of 6.70 Gcal/tcs against 6.847
Gcal/tcs in the last year.

* Captive power generation utilising by-product gases i.e. BF gas & Corex
gas increased from 86.87 MW to 93.35 MW by stabilisation of BF gas pressure
with the help of BF gas holder.

* Waste heat utilization and by product gas utilization improved at Non-
recovery type coke oven based captive power plant resulting in increase of
power generation from 59.16 MW to 72.38 MW.

* By effective control of off blast and increased plant availability the
coke rate in Blast furnace was reduced by 3.5% and also increase in the CDI
rate by 18.39% over the last year.

* By effectively controlling power consumption during the period of shut
down/idling the specific power consumption at Sinter plantwas reduced by
7.90% over last year.

* LD gas recovery increased by 45.47% over the last year. This was achieved
due to installation of additional booster to take care of LD gas transport
during booster shutdown and replacement of delivery mesh.

* Corex gas utilization improved from 93% to 94.18% with modification in
controls in flaring system.

* LPG consumption reduced from 12.61 Tonnes/day to 10.9 Tonnes/day with the
replacement of LPG by Corex gas in BF flare stack pilot, sand heating
system in BOF and in BF boiler.

Energy conservation initiatives at Salem Works:

Several initiatives were taken for the conservation of energy and the
following were achieved during the year.

* Significant increase in Coal injection at Blast Furnace, from 80 kg to
140 kg per ton of hot metal.

* Improvement in utilisation of Oxygen by scheduling

* Significant improvement in waste water disposal

* From the Heat- Recovery coke ovens, the sensible heat of the hot flue
gases are now being harnessed for power generation through Waste heat
Boilers.

* Waste Coke Fines from coke oven quenching water settling tanks are being
reused at Power Plant

* Tapping Temperature at EOF improved leading to reduction of power
consumption at ladle furnace.

Energy conservation initiatives at Vasind Works:

Various energy conservation initiatives such as Process optimisation, Six
sigma, De-bottlenecking, automation, were undertaken.

* In Hot Rolling Plate Mill, VVVF drives were provided in furnace
combustion blowers and optimised motor ventilation blowers & auxiliary
equipments. This resulted in a saving of 8 kwh/tonne.

* Power consumption in CGL2 was reduced by 7 KWH/MT by optimising the
process through Six sigma project. Major impactwas by optimisation of
Ceramic pot inductors, Cooling blowers, water inletflow of HOT Well pump,
cooling tower fan and PHF Combustion Blower, close loop control of CAG
blowers etc.

* AC VVVF drives provided for CRM 3 & 4 coolant pumps and CRM4 Coolant lift
pump to run the pumps at 20% speed during idle time in mill, has resulted
in savings of 8 Kwh/tonne. AC drives provided for CRM4 FOR EPC power pack
and motor ventilation blower.

* Energy efficient insulated DSL was provided in HRM grinding bay.

* AC VVVF drives were provided for CGL1 EPC Power pack.

* Steam condensate recovery system was provided in Pickling to reduce
Furnace oil consumption.

Energy conservation initiatives at Tarapur Works:

Various energy conservation initiatives were undertaken in Tarapur in the
last year. The major initiatives were in process optimization & automation.

* In the Cold Rolling Division, VVVF drives were provided for TM-6 pump
house, TM-4 coolant pump & exhaust blower motors.

* In the Galvanizing division, reduced the idle run time of motors by
modifying the programme in CSD-1. In CSD-2, three VVVF drives were
installed in cooling blower motors.

* In Galvanizing line (CSD-3), the insulation of GL & pre-melt pot was
improved, temperature optimization was carried out at the entry of zinc
pot, speed control was carried out for induction blower, temperature
optimization for induction furnace heating and APC blowers' speed was taken
into closed loop with pyrometer temperature feedback.

Total energy consumption and energy consumption per unit of production are
given in Form A'.

B. TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION

Efforts made in Technology Absorption are given in Form B'.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to exports, initiatives taken to increase exports,
development of new export markets for products and services and export
plans:

Exports has always been a strategic move at JSW with a clear focus on
Value-Addition, Customisation and expanded geographical reach. Inspite of
demand contraction in international market during fiscal 2008-09, your
Company exported 0.967 Mn tonnes expanding its reach to five continents.

b) Total Foreign Exchange used and earned:

(Rs. in crores)
2008-09 2007-08

i) Foreign Exchange earned 4,194.70 3,298.66
ii) Foreign Exchange used 8,293.63 4,707.17

Form A'

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. POWER & FUEL CONSUMPTION

Particulars 2008-09 2007-08

1. Electricity

a) Purchased

Unit (kwh) (in Lacs) 2261.70 1921.41
Total Amount (Rs. in crores) 114.78 85.91
Rate/Unit (Rs.) 5.07 4.47

b) Own Generation

i) Through Captive power plant

Unit (kwh) (in Lacs) 17972.36 15201.21
Total Amount (Rs. in crores) 547.30 303.21
Cost/Unit (Rs.) 3.05 1.99

ii) Through diesel generator

Unit (kwh) (in Lacs) 532.99 1013.74
Unit per per Itr of diesel 2.54 4.83
Total Amount (Rs. in crores) 25.75 43.50
Cost/ Unit (Rs.) 4.83 4.29

2. Coal + Coke

Quantity (tonnes) 48,49,085 t 40,11,080 t
of Coal of Coal + +
4,88,667 t 7,86,701 t
of Coke of Coke

Total Amount (Rs. in crores) 5,862.15 3,215.06
Coal Rate (Rs. / t) 9872 5138
Coke Rate (Rs. / t) 22006 14669

3. Furnace Oil

Quantity (K. Ltrs) 10810 11402
Total Amount (Rs. in crores) 28.45 23.57
Average Rate (Rs./Ltrs) 26.32 20.67

4. LPG

Quantity (tonnes) 19603 22646
Total Amount (Rs. in crores) 74.72 76.80
Average Rate Rs./t 38116 33914

B. CONSUMPTION PER UNIT OF PRODUCTION

Particulars Standards 2008-09 2007-08
(if any)

1. Hot Rolled Coils/ Steel plates/sheets:

Electricity (kwh/t) 350 371 363
LPG (Kg/t) 1.30 1.38 1.60

2. Steel Billets & Blooms:

Electricity (kwh/t) 149 185 177

3. Rolled Products:

Electricity (kwh/t) 90 114 97

4. Galvanised Coils/Sheets:

Electricity (kwh/t) 218 186 194
LPG (Kg/t) 20 19 19

Form B'

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION
RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which R & D activities were carried out by the Company

Research and Development activities were carried out in various
technological areas, including beneticiation of iron-ore, pelletisation and
sintering of iron-ore, coke making, iron making in corex and blast furnace,
steel making and casting, hot rolling, cold rolling and waste utilisation,
with emphasis on improvement in quality, productivity, energy conservation,
waste utilisation, cost reduction and environment protection.

R & D was also carried out for development of value added products in the
form of 32 new grades to meet specific requirements of customers,
including:

* Micro alloyed steels like 27MnSiVS6, SMnB3H for forging application

* SAE 9254 for spring wire application

* Electrode, C02 grade welding wire rod

* Development of improved morphology for free cutting steels

* Wire and rods

2. Benefits derived as a result of R&D efforts

* Optimisation of coal blend for recovery coke ovens to produce consistent
BF grade coke of CSR less than 65%

* Reduction in fuel rate by 15 kg/thm through optimisation of slag regime
in Corex

* Reuse of burnttuyears in Corex by copper casting of nose, reducing the
replacement cost

* The Blast Furnace 1 productivity was increased from 2.3 to 2.5 t/m3/d by
optimising burden distribution, material discharge rate, soft blowing
philosophy and improvement in tapping practice

* PCI rate was enhanced up to 90 kg/thm in BF#1 by improving permeability
in the lower part of the furnace

* Change in tundish internal design and optimisation of operating arameters
during grade transition through water modelling for nclusion flotation and
increased yield

* Reduction in coke moisture by modifying spray arrangement in quenching
chamber

* Using of semi soft coking coal up to 20% in coal blend

* Reduction in coal cake breakages at the end by using watering of coal
cakes while stamping

* Introduction of box tests of different coal blends to predict the
properties of coke with a coal blend in advance

* Lime slaking was introduced and stabilised at 40kg/t

* Blending technique of all raw material was established for sintering

* Net coke utilisation increased to 65kg/t

* Development of 160 dia. rounds and 100 sq. billets in cast section

* Development of 40 mm TMT rebars

* Development of 6 mm wire rods

* Improvement in yield properties of TMT bars by in house modification of
water quenching techniques along with increased productivity

* Reduction in oil consumption at reheating furnaces using increased amount
of BF gas.

* Development of Predictive Models:

* Heat Balance Model for non-recovery coke ovens

* Mass Balance Model for Sinter Plant

* Heat Balance Model for BF.

3. Intellectual Capital

a) Patent -

Following patent applications were tiled:

* Dust burner system in CORER for Injecting Recycled-Dust in Melter-
Gasitier with increased dust load and longer life

* A dust recycling system for enhanced availability of Corex. International
patent applications tiled in Korea, China, South Africa and Austria

* A Tundish adapted for reduction in residual metal losses and a method
thereof

* A multi-function lance burner flame sensing system for RH Degasser

* A method for improving productivity of Cold Rolling Mills avoiding
stickiness between wraps of coil.

b) Copyrights-

* Heat and Mass Balance Model for Corex

* Mass Balance Model for Sinter

* Vision Mission and Policies Statement of JSW- Booklet

* Burden Distribution Model for Blast Furnace

* Heat Balance Model for Blast Furnace

* Mass Balance Model for Blast Furnace

* Iron Atlas.

4. Plan of action

It is planned to set up off-line simulation facilities, such as
beneticiation lab, a pilot coke oven lab, an agglomeration lab, a physical
model lab, a product development lab, and characterisation facilities under
R & D. Such facilities will enable optimisation of the existing processes
and development of new processes and products. Another thrust area would be
to further increase the utilisation of solid wastes generated within the
plant. A lab scale/pilot scale facility is under consideration for
development of technology for converting waste into wealth.

5. Expenditure on R & D (2008-09)

Capital : Rs. 5.31 crores
Recurring : Rs. 7.07 crores
Total : Rs. 12.38 crores

R & D Expenditure as % of total turnover: 0.08%

6. Technology Absorption, Adoption and Innovation

A) Vijayanagar works

* Design and development of moving wall pilot coke oven with stamp charging
facility for optimization of blend for coke ovens. The system is yet to be
installed.

* Design of end wall and under flue in non-recovery coke ovens to improve
the life of non-recovery coke oven battery. Its life after modifications is
under review.

* Development of new Dust Burners in CORER which enabled recycling of high
dust loads into the Melter-Gasitier and enhanced life from 3 months to 9
months.

* Development of a process for producing cold bonded pellets from solid
wastes generated in integrated steel plants through lab scale R & D trials.

* Development of new 900 bend design, for pipes conveying granular material
for higher service life from three to six months using fluid dynamics
software.

* Introduction of new indices for process control in hot metal de
siliconisation and de-phosphorisation treatment, first of its kind in
India. This reduced the flux and oxygen consumption by 20%.

B) Salem works

* In Coke oven, an improved box testwas developed for prediction of coke
properties. Utilised for several blend combinations to precisely predict
the coke properties. Such experiments paved way for maximum utilisation of
semi soft coking coals in the blend in the coke production. Even to an
extent of 20-25% such coking coals were used in the blend without
compromising the quality. Good quality coke, rich with carbon was produced
using anthracite in the blend besides reduction of volatile matter content
in the coal blend.

C) Vasindlrarapurworks

* Converted CSD-3 at Tarapur to galvalume with dual pot arrangement for
galvanizing & galvalume. The line can be switched from one product to other
within 8 hours time. While doing the conversion process speed is also
increased from 120 mpm to 150 mpm.

* Z test facility for HR plate testing developed in-house.

* New ABB make AGC commissioned for better thickness control in Hot Rolling
Mill.

* Electrostatic oiler (Ravarini, Italy make) was commissioned in Skin Pass
Mill for uniform oil control.

Imported Technologies:

Major imported technologies commissioned during the year include:

* Recovery type coke oven by Sino Steel MECC (China) and China Shougang
International Trading Corporation

* Sinter plant 2 by OUTOTEC

* Blast furnace No. 3 Siemens VAI

* Critical equipment of steel making Shop -2 by SMS Demag and SMS Mevac

* Slab Caster, SMS-2 from SMS Demag

* Billet Caster from Concast (Switzerland)

* Wire Rod Mill - Morgan (USA)

* Bar Mill - Morgan (USA)

* Lime Calcination Plant from Cimprogecci, Italy

All the above technologies have been commissioned in 2008-09 and the
technology is fully absorbed.

The following technologies were imported during the year 2008-09:

* Scanning electron microscope for characterisation and failure analysis.
The equipment is extensively used.

* Thermo Mechanical Simulator by Gleeble, USA. It is expected to be
commissioned in the financial year 2009-10.

MANAGEMENT DISCUSSION AND ANALYSIS

(A) OVERVIEW

(1) Global Economy

The global economy initially estimated to grow over 3% in 2008, declined in
the second half of 2008 bringing down the overall growth to 2.1 %. Even
though Us economy has been slowing down since 2007 due to sub-prime crisis,
the depth and duration of these crisis and the domino effect on the world
economy could not be predicted accurately by Experts/Analysts.

The financial system was paralysed with mounting sub-prime losses leading
to collapse of certain large global Financial Institutions in the second
half of 2008. The failure of major financial institution had a devastating
impact on the real economy with widening credit spreads, liquidity crunch,
steep fall in demand and falling margins. The de-coupling theory of
developing economies remained unaffected with the recession/slow down in
the advanced economies was proved invalid after having seen the swift slow
down in these economies. However, developing economies constitute 25% share
in the global economy in terms of nominal G DP and about 44% in terms of
PPP. The growth in the developing economies even though at a slower pace is
expected to cushion the impact of global melt down in the world economy.

Real GDP growth
(%)
Region 2004 2005 2006 2007 2008 2009 (F)

World 4.0 3.4 3.9 3.8 2.1 (2.5)
Advanced economies 3.2 2.6 3.0 2.7 0.9 (3.8)
Developing economies 7.5 7.1 8.0 8.3 6.1 1.6

(Source: IMF)

IMF estimates that the world economy in 2009 contracts by 2.5% while
developing countries continue to grow at a slower pace of 1.6%. The central
banks and the governments of various countries acted swiftly to counter the
global economic melt down in a coordinated manner by announcing massive
stimulus packages and by easing monetary system. These measures are
expected to lessen the impact of the crisis and also make the recovery
faster.

(2) Global Steel Industry

Steel industry accounts for approximately 2% of the global economy and 3.5%
of the global merchandise trade. The Global Steel Industry witnessed two
sharply divergent trends in 2008; the first half witnessed a surge in steel
demand leading to a record prices followed by a steep slide in demand and
prices in the second half.

The slow down in investment activity, the primary driver for steel
consumption coupled with lower consumption demand due to declining income
caused byjob losses led to accelerated fall in demand for steel. Responding
to the collapsing demand and prices, the Global Steel Industry announced
production cuts, resulting into 25% fall in world steel production in
October to December 2008. World Crude Steel production declined by 1.6%
from 1,351 Mn tonnes in 2007 to 1,330 Mn tonnes in 2008, as steel output
de-grew for the first time in six years and the top ten steel companies
declared production cuts in the later part of 2008.

In 2008, steel production declined nearly in all major steel producing
regions including the EU, North America, South America and CIS. Overall,
Asia produced 750 Mn tonnes of crude steel in 2008, accounting for 56% of
world's total production and reporting a 1.6% degrowth over the previous
year.

Of the top 10 largest steel producing nations, only China, India and South
Korea registered production increases in 2008.

Top-10 steel producing countries (Crude Steel Production)

Country Rank 2008 2007 % growth
(Mn Tonnes) (Mn Tonnes)

China 1 500.5 489.9 2.2
Japan 2 118.7 120.2 (1.2)
US 3 91.5 98.1 (6.7)
Russia 4 68.5 72.4 (5.4)
India 5 55.1 53.1 3.7
South Korea 6 53.8 51.5 4.5
Germany 7 45.8 48.5 (5.5)
Ukraine 8 37.1 42.8 13.3
Brazil 9 33.7 33.8 0.27
Ital 10 30.5 31.5 3.2
Top-10 1,035.2 1,041.8 (0.6)
World 1,329.7 1,351.3 (1.6)
(Source: WSA)

World Finished Steel Consumptions:

The global finished steel consumption showed a negative growth of 1.4%
during 2008 as against production degrowth of 1.6% which established the
de-stocking of inventory. The fall in production was steeper than the
decline in apparent consumption which is a positive sign for the steel
industry.

(Mn Tonnes)
Steel Consumption 2007 2008

Advanced economies 402.0 365.9
China 413.7 425.7
Rest of the world 398.7 405.9
World 1214.4 1197.4
(Source: WSA)

Though the decline in consumption was significant in advanced economies,
the China and rest of the world registered a growth in consumption inspite
of global meltdown.

(3) The China Factor

China had a steel manufacturing capacity of 677 Mn tonnes at the end of
2008 compared with 588 Mn tonnes at the end of 2007. China is the first
country to produce more than 500 Mn tonnes in a year. Steel Production in
2008 was 500.5 Mn tonnes against 489 Mn tonnes in 2007 even when world
steel production de-grew. China's production volume tripled in eight year
from 151 Mn tonnes in 2001.

China is a leading player in the world steel industry with production and
consumption constituting about 40% of the world. Any slow down in the
Chinese economy is expected to create surplus to be exported to world
markets creating further pressure on demand and prices. In view of the
massive increase in capacities created in China, the production outpaced
the demand and China became the net exporter of steel. It is therefore
relevant to track the developments in china to formulate a reasonable steel
industry outlook during 2009.

China Steel Equation

The global economic slow down affected Chinese steel industry too, which
posted a meager growth of 2.9% in finished steel consumption for 2008 at
426 Mn Tonnes.

(Mn Tonnes)
Particulars 2004 2005 2006 2007 2008

Production CS 280.5 355.8 422.9 489.9 500.5
Consumption FS 275.8 340.2 369.8 413.7 425.7
Export 20.4 27.7 52.1 69.1 60.5
Import 33.2 27.2 18.9 17.1 15.7
Net export 12.8 0.5 33.2 52 44.8

(Source: WSA/mysteel) (CS: Crude Steel, FS: Finished Steel)

China Outlook

Even in the current global meltdown, China is one of the fastest growing
economies in the world. The large stimulus package announced by the Chinese
government is expected to mitigate the impactof falling exports replaced by
higher incremental domestic demand. While the steel production is expected
to be lower in the year 2009, it is estimated that the exports will also be
lower in the current year over 2008. Hence China is not expected to
increase steel exports during 2009 which was also demonstrated by lower
exports in the first quarter of 2009.

(4) Indian Economic Review

As per estimates of RBI the Indian economy is likely to grow 6.5% in 2008-
09 as against 9% in 2007-08. The six core infrastructure segments of
finished steel, cement, crude petroleum, petroleum refinery, power and coal
grew by 2.7% in 2008-09 compared with 5.9% in 2007-08.

Contributors to GDP

Particulars 2004-05 2005-06 2006-07 2007-08 2008-09
(est.)

GDP at factor cost (%) 7.5 9.0 9.6 9.0 6.5-7.1*
Agriculture (%) 20.2% 19.5% 18.5% 17.8% 17.1%
Manufacturing (%) 15.1% 15.1% 15.3% 15.2% 14.8%
Industry (%) 26.2% 26.4% 26.7% 26.5% 26.9%
Service (%) 53.6% 54.1% 54.8% 55.7% 57.0%

(Source: CSOlR81)

* CSO estimate 7.1% while RBI estimates 6.5%.

Economy booster shots

The Indian Government announced stimuli packages to revive the economy
through monetary, fiscal and export promotion measures. The key features of
these packages include:

* Reduced Excise duty by 4% to 10%, this will reduce the cost of goods.

* Reduced Excise duty to 4% on petroleum products.

* Increased infrastructure investment for port and highways.

* Concessional finance for home loans and loans to small and medium
enterprises.

* Incentives to certain ailing sectors to boost demand.

(5) The Indian Steel Industry

Overview:

* The Indian steel industry has an installed capacity of 60 Mn tonnes.

* Around 35% of the total steel was produced by the public sector, 35% by
large private manufacturers and 30% by small players.

* The Indian steel industry witnessed divergent trends in 2008-09; while
the first half was buoyant with steel prices and demand touching an all-
time high, the second half was muted as the steel demand contracted.

* Starting 2007-08, India emerged as net steel importing country, giving
ample opportunity to domestic players to meet the growing demand.

India's crude steel production registered a growth of 1.2% from 53.9 Mn
tonnes in 2007-08 to 54.5 Mn tonnes in 2008-09 (Source: JPC). The positive
growth in steel production even during the period of severe global meltdown
is quite encouraging.

The finished steel production for the FY 2008-09 registered a growth of
0.6% over FY 2007-08. Steered by a robustdemand from semi-urban and rural
area coupled with an accelerating investment-led economic growth, the
Indian steel demand was less impacted by global slow down relative to most
other economies. The domestic production grew at CAGR of 8.1% for the last
8 years.

The first half of fiscal 2008-09 witnessed an unprecedented demand spurt on
account of expanding oil and gas sector, large infrastructure spend and
higher disposable incomes triggering demand in housing/ Consumer
durables/Auto sectors. Finished steel consumption growth slackened
significantly in the third quarter of 2008-09 due to the domino effect of
the global financial crisis on the Indian financial markets.

Although the steel demand fell during the third quarter of fiscal 08-09
mainly due to tight liquidity conditions following the various monitory and
fiscal initiatives announced by Reserve Bank of India and the Central
government the demand started picking up during fourth quarter of fiscal
2008-09. The following are the main reasons for such smart recovery

* Timely announcement of monetary and fiscal stimulus measures with a focus
on infrastructure and consumer spending.

* High density of semi-urban and rural demography, that was relatively
unaffected by global turmoil, coupled with rising affordability due to the
falling inflation.

* Inventory levels nearly bottomed out at the producer, user and dealer
level - creating fresh demand.

* Opportunity to substitute imports with domestic supplies.

Per capita consumption

India's per capita steel consumption continued to be low at 46 kg compared
to global average of 198 kg in 2008. The National Steel Policy aspires to
double the rural per capita steel consumption to 4 kg per person in the
next few years.

This will present an attractive opportunity for the industry to expand the
existing capacities and create further green field capacities, considering
that around 70% of the Indian population is rural. (Source: WSA)

(B) STEEL MAKING AT JSW

(1) Indian Operations

The Company has an installed crude steel making capacity of 4.8 MTPA in
India with value added products constituting 37.5% (1 .8 MTPA capacity)
spread across four locations, namely; Toranagallu (Vijayanagar Works),
Salem (Salem Works), Vasind and Tarapur (Downstream Units). The Company
commissioned the expansion project at Vijayanagar Works increasing the
capacity from 3.8

MTPA to 6.8 MTPA in February 09 which was under trial run as on 31 March
2009. The commercial production from this project started on 10 April 2009.

While Vijayanagar Works existing operations produce flat steel products,
Salem Works focus is only on long products. The Downstream Units produce
CR/Galvanised, Colour coated value added flat steel products.

The Production performance during FY 2008-09 was as under:

(Mn Tonnes)
Location Product 2007-08 2008-09

Vijayanagar Works: Slabs 3.171 3.079
HR Coils 2.717 2.519
CR 0.060 0.344

Downstream Units: HR Plates 0.226 0.245
Galvanised/Galvalume 0.745 0.723
Colour Coated 0.090 0.090

Salem Works: Billets & Blooms 0.456 0.645
Rolled long 0.329 0.330

Total Crude Steel Production 3.627 3.724
Total Saleable Steel Sales 3.405 3.428

When the global financial crisis hit the Indian economy in September 2008,
the Company was operating its plants at full capacity and was also ready to
commission the new expansion projects enhancing the capacity to 7.8 MTPA.
The liquidity crunch was so severe that the user industries particularly
automobile, construction and infrastructure sectors were not able to
sustain their operations. Consequently, the company had to cut production
at the existing operations by shutting down two of its Blast Furnaces
temporarily and also postpone the commissioning of the expansion project to
arrest the piling up of finished good inventories. Thereafter the Company
quickly adopted twopronged strategy of reducing the cost and finding new
customers & markets to restore the normal operations. The competitive
strengths of your Company in terms of low conversion cost, rich product
mix, locational advantages and swift change in marketing strategies enabled
the Company to quickly tide over the downturn and secure fresh orders by
end of December 2008. The Company immediately restored normal production in
January 2009 followed by successful commissioning of expansion project in
February 2009.

Inspite of disruption in production for a period of two months when several
steel companies continued production cuts for a longer period of time, your
company achieved a growth of 3% in Crude steel production and 1 % in volume
of sales. The growth would be higher in case Crude steel production and
sales of 0.140 Mn tonnes and 0.076 Mn tonnes respectively from trial
operations of expansion project commissioned in February 2009 was included
to the volumes of existing operations.

The Product profile from various locations is as under:

Products from Products from Products from
Vijayanagar Downstream Salem Works
Works

- Slabs - HR plates - Billets & Blooms
- Billets - CRCA products - Rebars
- HR coils - Galvanised products _ Wire Rod
- HR plates - Galvanised colour _ Structural steel
coated products
- CRCA products _ Galvalume products
- Rebars - Galvalume colour
- Wire Rod coated products

(a) Vijayanagar Works

Overview

Prior to commissioning of 2.8 MTPA Brownfield expansion project in February
2009, the Vijayanagar Works was operating at 3.8 MTPA Crude steel capacity.
All the existing operating facilities have been accredited with various
quality certifications such as OHSAS-18001, ISO-9001:2000 and ISO-14001.

Vijayanagar Works has integrated operations starting from Beneticiation
plant to 1 MTPA Cold Rolling Mill complex. The new 2.8 MTPA expansion
project commissioned in February 2009 includes Coke Oven plant, Sinter
plant, Blast Furnace, Steel Melt Shop, Slab Caster, Billet caster, Wire Rod
Mill and Bar Mill. Part of these facilities were under trial production and
had commenced commercial operation from 10th April, 2009.

Key Highlights-2008-09

* Reduced dependence on bought out & imported Coke by commissioning all the
blocks of new Recovery type Coke ovens with a capacity of 1.5 MTPA.

* Base mix blending station commissioned which enables proper blending of
inputs such as Iron Ore, Fluxes, Coke breeze, etc. for improvement in the
feed to the Sinter Plants for achieving better quality of sinter.

* Established Rail connectivity at low cost by in-house designing, between
existing 3.8 MTPA operations and new 2.8 MTPA facilities for better
operational flexibility.

* Modernization of the HSM Mill completed to enhance the Capacity from 2.5
MTPA to 3.2 MTPA.

* Stabilized operations in Cold Rolling Mill leading to significant
increase in production of Value added CR products.

* Created Jumbo HR Coils during HR Pickling by welding 2 to 3 HR Coils
together and further carried out rolling in CR Mill, minimizing losses from
2.5-3.0% to 1.8-1.9%, improving the productivity of the Mill.

* Commissioned of new wide Slab Caster & Billet Caster which widens the
product range with a mix of Long and Flat products.

* Wire Rod Mill & Rebar Mill add to the basket of value added products.

Key Improvements:

* Increased coal dust injection from 60 kg/T to 70 Kg/T in Blast Furnace.

* Successfully developed API X-70 Grade Slab used in manufacture of pipes
for transportation of petroleum products and gases.

* Using Lime as substitute for Calcium Carbide in BOF to save cost.

* LID Gas Recovery improved from 70 cum/T to 101 cum/T.

* 200 TPH Boiler commissioned leading to increased captive power generation
capacity to 130 MW at CPP2.

* Increased utlisation of Corex gas & Blast furnace gas for further
reduction of cost.

Key Initiatives:

* Replaced the usage of Corex gas in new recovery Coke Ovens by
implementing the auxiliary consumption of coke oven gas generated within
the unit, thereby saving the corex gas for better utilization in the plant.

* Started higher usage of the coke oven gas by mixing with Blast furnace
gas, for various operational requirements in the plant.

* Improved temperature controls at Ladle Refining Furnace (LRF) leading to
accurate casting.

* Increased Product range in HSM with rolling of wider HR Coils from 1270
mm to 1320 mm, thereby facilitating 3 slits compared to 2 slits earlier in
service centre, resulting in yield improvement by about 0.5%.

* Applied for TS 16949 quality certification in CRM, which is a globally
accepted and recognized standard for automobile steel.

Way Ahead.

* Stabilisation of the new facilities of 2.8 MTPA expansion project which
was under trial run.

* Installation of Pulverized Coal Injection in new Blast Furnace and RH
Degasser & LHF2 in SMS2.

* Commissioning of new HSM2 Mill (3.5 MTPA- Phase 1) by March 2010 to
convert surplus slabs into value added HR Coils.

* Further expansion of crude steel capacity by 3.2 MTPA to scale up the
overall capacity to 10 MTPA at Vijayanagar works, construction is slowed
down and revised target of completion is March 2011.

(b) Downstream Units

Overview

The Slabs and HR Coils produced at Vijayanagar Works are transferred to
Downstream Units at Vasind and Tarapur for further processing into value
added HR plates, CR, Galvanized, Galvalume and Colour Coated Products. The
Downstream Units are currently operating at an overall capacity of 1 MTPA
of Cold Rolling, 0.9 MTPA of Galvanizing / Galvalume, 0.232 MTPA of Colour
Coated Products and 0.32 MTPA of HR Plates.

Key Highlights

* New Colour coating Line (0.132 MTPA) was commissioned in August 08.

* Increased the production of HR Plates by 8%.

* Operated galvanizing Unit at over 100% of the rated capacity in January
2009 and manufactured more than 80,000 tonnes against the Installed
capacity of 75,000 tonnes per month.

Key Improvements

* Optimised processes through Six-Sigma projects in CGL 2, primarily in the
ceramic pot inductors and cooling blowers, among others resulting in power
savings by 7kwh/t at Vasind.

* Reduced Furnace Oil consumption by 100 KL per annum by installing steam
condensate recovery system at Vasind.

* Power savings by 2 lakhs KWH per annum at Tarapur by installing VVVF
drive in pump houses.

Key Initiatives:

* Converted CSD 3 atTarapur to galvalume with dual pot arrangement for
galvanizing and galvalume. The line can be switched from one product to
another in just 8 hours. The process speed is increased from 120 mpm to 150
mpm during conversion.

* Developed the Z-test facility for HR plates.

* Commissioned the new automatic gauge control system for better thickness
control in hot rolling mill for consistent plate thickness.

* Commissioned the Dolly car in one of the galvanising lines to minimise
strip side tracking.

* Commissioned the electrostatic oiler in the skin-pass mill for uniform
oil control and lower oil consumption.

* Introduced additional port facility at Dharamtar (Alibaug) to accelerate
material dispatch/stuffing in Containers & import of coal for 30 MW CPP at
Tarapur under commissioning.

Way Ahead.

* To commission the 30 MW captive coal based power plant at Tarapur. This
will supply uninterrupted power at rates lower than MSEB.

* To commission a railway siding at Vasind to facilitate material movement
at lower cost (land acquisition for the project is under progress).
Received in-principal approval from Central Railway, Mumbai division for
the same.

(c) Salem Works

Overview

The Salem Unit has an integrated manufacturing facility with an overall
crude steel making capacity of 1 MTPA, comprising of Sinter Plant, Blast
Furnace, EOF, BilletCaster, Bloom Caster and Rolling Mill with associated
facilities such as Coke Oven, Power Plant, Oxygen Plant, etc. The Plant
mainly produces Long Products and Special grade long Products ranging from
5.5 mm to 60 mm and is also capable of making Rounds & Flats for Automobile
and other sophisticated Engineering Industry.

Key improvements

* Initiated the blending of low cost semi-soft coking coals and fine coke
breeze for coke manufacture without quality compromise

* The quenching pond coke breeze and coke lumps are being screened to
recover the lump cokes and use the breeze in power plant for steanypower
generation.

* Replacement of part of Iron ore fines in Sinter Plant with solid waste
such as iron bearing sludge & flue dust to the extent of 160 Kg/T.

* Increased use of mill scales from rolling mill in Sinter Plant leading to
reduction in Coke breeze and Iron ore fines usage.

* Coal dust injection increased from 57 Kg/T to 120 Kg/T in Blast Furnace.

* Increased the heat size from 42 tonnes per heat in 2007-08 to 47 tonnes
in 2008-09 by altering the refractory lining pattern.

* Reused 80 % of safety lining bricks in BOF and 10-15% of working Lining
leading to savings in refractory cost.

* Designed in-house the ladles (45 T & 65 T) in steel melting zone.

* Reduced furnace oil consumption by 5 Litres/Tonne by utilizing Blast
Furnace gas in reheating furnaces of Bar and Rod Mill.

* Improved yield in Bar and Rod Mill by reducing the length of end cutting
from 8 inch to 6 inch.

* Replaced steam turbo Blowers with electric blowers in Blast furnace,
resulting in Power Generation increase by 0.6 MW.

Way Ahead...

* Commissioning Blooming Mill in Q4 FY 2009-10 to match the rolling
capacity with the casting capacity.

(d) JSW Steel Processing Centres Limited, Subsidiary

Overview

JSW Steel Processing Centres Limited was incorporated in December 2003 to
set up a Steel Service Centre at Vijayanagar Works to meet customer's
specific requirement.

The facility consist of two lines of CR Slitter, one line of HR Slitter,
three lines of CR cut to length and one line of HR cut to length. Annual

capacity is 0.50 million tonnes.

Operational and financial performance:

Steel processed: 1,04,010 tonnes, including 21,644 tonnes from trial run
production.

The service centre was operating at lower capacity during the year under
review. Eventhough the unit earned positive EBIDTA of Rs. 6.38 crores, the
profit after tax was negative at Rs. 7.20 crores due to lower capacity
utilization.

(e) Other operating units

The Company procures key inputs namely iron ore, power & gases from Joint
Venture Companies and Associate Companies. Vijayanagar Minerals Pvt. Ltd.,
a Joint Venture with Mysore Minerals Ltd. (a Government of Karnataka
undertaking) supplied 20% of iron ore requirement of the Company in the
fiscal 2008-09. The Company procured part of the gas requirements from
Jindal Praxir Oxygen Co. Pvt. Ltd. and part of the power requirement from
JSW Energy Ltd.

(f) Projects under implementation

The Company has taken up the following Greenfield projects for setting up
steel plants and also to develop iron ore and coal mines for raw material
integration.

* To set up a 10 MTPA Steel Plant in the State of West Bengal in phases
through a subsidiary, JSW Bengal Steel Ltd.

* To set up 10 MTPA Steel Plant in the State of Jharkhand - in phases
through a subsidiary, JSW Jharkhand Steel Ltd.

* To set up 35,000 tonnes design, fabrication & erection, structural
steelmaking and ancillary facilities in a Joint Venture with 50% equity
stake through a subsidiary, JSW Buildings Systems Ltd.

* To develop a Coking Coal mine in a Joint Venture at Rohne in the state of
Jharkhand.

* To develop Thermal Coal mine in a Joint Venture in the State of Orissa.

* To Set up a manufacturing facility in a Joint Venture in the State of
Tamilnadu to produce super critical power plant equipment.

While the Company is pursuing to develop the coal mines in the joint
venture companies, the implementation of steel projects in West Bengal &
Jharkhand are slowed down. The power plant equipment manufacturing facility
and structural steel making facility will be commissioned in 2010-11.

(2) Overseas Operations

The Company has the following operating facilities overseas:

* Plate mill (1 .2 Mn net tonnes per annum), Pipe mill (0.55 Mn net tonnes
per annum) and Double Jointing & Coating facilities (0.35 Mn net tonnes per
annum) in Baytown in the state of Texas, USA.

* Service Centre (with capacity of 0.15 MTPA) at New Port, UK.

While 90% stake in the Plate and Pipe mill was acquired in November 2007
through the Wholly Owned Subsidiary in Netherlands, the UK service centre
was acquired in June 2007. The Company made these acquisitions as a step
towards forward integration for the basic steel produced in India. Even
though both the units were turned out to be profitable upto September 2008,
they incurred losses due to lower capacity utilisation and write down of
inventory. Once UK and USA economies start recovering in the later part of
2009, as forcasted by several experts, it is expected that these units will
turn around and reach optimum capacity gradually.

Overseas project in development Stage

* Iron ore Mining concessions in Chile

* Coal Mining concessions in Mozambique

* Steel Rebar plant with a capacity of 0.175 MTPA in Georgia

The Company acquired the iron ore and coal mining concessions in Chile &
Mozambique respectively to enhance the raw material integration for the
steel making facilities in India. Both the projects are under development
stage. Considering the current global economic environment, the
implementation of these projects is slowed down. The implementation of
these projects will be accelerated once stability in the world economy is
established.

The Company through its Wholly Owned Subsidiary in Netherlands, acquired
49% equity stake in Georgia based Geo Steel. The project is under
implementation and is expected to be commissioned in the fiscal year 2009-
10.

(C) OTHER CRITICAL FUNCTIONS

(1) Material procurement

Accomplishments

Initiatives Impact

Maintained balance between long-term Reduced input costs
contracts and spot purchases

Increased procurement of Iron Ore from the Reduced costs
joint venture mining company

Stopped external coke procurement with the Reduced operational costs
commissioning of the recovery coke ovens

Increased iron ore procurement at Reduced input costs
favourable spot rates

Renegotiated prices with domestic and Reduced input costs
international vendors with assured offtake

Sourced important Ferro-alloys from diverse Reduced ferro alloy costs
sources

Developed alternative raw material Mitigated the risk of
procurement sources for key inputs depending on few suppliers
Strategic blueprint

* To reduce costs through improved procurement.

* To commence mining on Captive Mines.

* To pursue clearance from regulatory agencies to get additional Iron Ore
Mines.

(2) Material handling Accomplishments

The raw material handling system was created through in-house design,
installation and optimization of the additional equipment for seamless
handling of the additional load.

Initiatives Impact

Altered wagon tippler design Increased the capacity utilization for
(3&4) the tipplers, reduced tippling time
from 6 hours to about 41/2 hours
Reduction in railway demurrages

Installed mobile hoppers (for Facilitated emptying rakes and
stacking and reclaiming) simultaneously loading the material
on conveyors; can handle two different
materials simultaneously (one for
stacking and the other for reclaiming)

Installed belt rupture system Seamless material flow, minimizing
detection of ruptures in the material loss due to conveyors snaps
in the conveyor belts for
early conveyor belt

Installed cable less control Increased availability, reliability and
for stacker re-claimers efficiency of re-claimers

Introduced non-contac tdevices Increased reliability for the wagon
for measuring various angles tipplers Received a patent for process
in wagon tipplers to replace innovation
the mechanical mechanism
- a patented process

Modified the hydraulicsystem Increased wagon tippler availability
of the wagon tippler

Installed HDPA net across Reduced loss of coal fines due to high
the boundary of coal stacking wind speed Reduced air pollution in the
yard neighbouring areas


Strategic blueprint:

* To introduce bin vibrators in various transfer chutes at wagon tipplers,
stacker, re-claimers and junction houses to prevent equipment jamming due
to sticking of raw materials

* To install close circuit televisions at wagon tipplers for efficient
monitoring of tunnels and surrounding areas

* To connect a stacker with the beneficiation plant to de-link iron-ore
fine unloading (used in beneficiation plant) from plant operations,
reducing transportation time and increasing yard storage capacity by 50,000
tonnes.

(3) Logistics management

Achievements

* Enhanced logistics infrastructure following capacity expansion.

* Connected existing hot metal facility with new steel melting shop
(catering to the expansion facility) at only 1% of the estimated cost,
pending the commissioning of the new blast furnace.

Initiatives Achievements

Created a separate iron ore Achieved seamless iron ore
corridor from Banihatti to handling
Vijayanagar Works


Created the Y-connection' from Reduced rake movement time
the railway siding to the from 2 hours to 19 minutes
existing Banihatti-Ranjitpura
line

Monitored material loading and Reduced the demurrage and
unloading wharfage charges, saving around
Rs. 3-4 per tonne of steel

Added a load cell on the second Reduced material movement time
track for initiating hot metal Minimized heat loss in the hot
weighment when transferred from metal, reducing fuel rate in the
iron-making zone to steel SMS unit
melting shop
Reduced locomotive need in the
hot metal zone

Grouped the points and crossings, Reduced manpower by appointing
which were earlier dispersed one man for a group of points and
across the internal railway crossing as against one person
network with every locomotive previously


Increased focus on road Achieved a rail-road equation of
dispatches by motivating fleet 61:39 in 2008-09, compared with
owners to increase fleet 63:37 in 2007-08
size by:

1. Reducing turnaround time
to 4 hours, compared with
the previous 6 hours

2. Providing product matching
capacity and minimum weight
guarantee

Optimised the rail/road Increased dispatches
modes of dispatch for
finished goods and reduced
the congestion and waiting
period for commercial
vehicles

Strategic blueprint

The logistics team is creating multiple entry-and-exit points from the
Vijayanagar site for load management. As a result, the team has undertaken
two major initiatives:

* Created a link from certain iron ore mines to the Vijayanagar Works by
drawing a direct link from the newly built Nariallah station.

* New connections facilitating speedy dispatch and reducing congestion; to
ensure seamless internal logistics.

Intelligent gradient use:

Following an intelligent gradient use - the 3.8 MTPA 'Hot metal Production'
facility was connected to the 6.8 MTPA production zone through a novel and
an innovative track linkage whereby proper integration and synergy between
these two facilities could be established. This has led to the immediate
commissioning of BOF-2 though BF 3 was not ready. The team set a standard
operating practice to transfer the hot metal from the ironmaking zone to
the steel melting shop by torpedoes (specialized ladles) hauled by 700-
tonne horse power locomotives, as against the conventional 1,400-tonne
horse power locomotives.

4) Energy management:

Accomplishments

Initiative Impact

Managed prudently Reduced energy *Increased BF and
by-product gas consumption per tonne Corex gas utilisation
between metallurgical of steel. from 82% to 86%
units and power and 93% to 94%
plants; especially respectively
by controlling the *improved LD gas
heating regime and recovery from 70 to
minimizing losses 101 Nm3 / tonne of
of by-product gases. liquid steel

Improvement in LD This resulted in saving
gas recovery by in cost.
synchronizing the
parallel tapping,
eliminating the
human interface &
improving gas
evacuation.

Altered the Corex More Corex gas for Overall waste gas
gas circuit and plant use with utilization increased
reduced flaring significant cost from 94% in 2007-08 to
from 6% to 2%. saving. 97% in 2008-09

Replaced LPG Significant cost
consumption with savings.
Corex and coke oven
gas for the initial
heating of the
recovery coke ovens.

Adopted the delay Significantly reduced
strategy' in the the volume of hot
reheating furnace; gasses used to fuel the
if waste gas reheating furnace.
temperature escalated
higher than
stipulated value,
process optimisation
retained the
additional heat
in the furnace.

Increased coal Reduced the energy
injection in BF1 and consumption cost in iron
BF2. making.

Strategic blueprint:

* Implementing the 'delay strategy' across all reheating furnaces.

* Reduce the specific heat requirement for every unit of power generated by
ensuring steady gas supply for captive power units, enhancing power
generation without additional cost.

* Minimise in-plant consumption of LPG/LDO/LFO with Corex and coke oven
gas.

Excellence is challenging conventions:

By design, the technology provider stipulated 4% of Corex gas flaring to
withstand in-system pressure shocks and avoid gas-circuit breakdown.
Additionally, 2% gas is to be flared to balance the consumption generation
disparity. JSW's engineering innovations reduced the flare from 6% to 2%.

5) Research and development

Team Patents filed

26 members 5
March 31, 2009 March 31, 2009

Innovation is driven by its skilled R & D team. The team has created
national and global benchmarks by innovating processes to improve
productivity and reduce costs. Accomplishments: Getting more from the
machine

Coke oven:

Initiatives Achievements

Optimised the coal blend Optimised the coal blend and achieved
(prime and inferior varieties) a CSR rate of over 6 % consistently
for recovery type coke ovens


Blended the high calorific Generated gas with the same calorific
value coke from the recovery value as that of Corex gas for heating
coke ovens with blast purposes, saving costs
furnace gas

Optimised coke oven operations Usage of semi soft coking coal for
using different types of coal making coke in the non-recovery coke
blend in the non-recovery coke ovens, reducing operational costs
ovens

Sinter plant

Initiatives Achievements

Introduced a process to use Converted waste to a usable resource
iron ore micro-fines (an by using waste from the dust catchers
otherwise waste) by using for iron ore agglomeration
an Irish blender

Introduced the fluxing process Reduced fuel rate in the blast furnace
in the sinter plant keeping in and improved productivity
mind that the input blend in
the blast furnace comprises
pellet, sinter and calibrated
ore

Implemented successfully the Converted waste from coke ovens to
use of coke fines resource, reducing operational costs

Blast furnace:

Initiatives Achievements

Introduced the use of pellets Helped to enhance productivity and to
along with sinter and coke in reduce cost
the burden and optimised the Patented the burden distribution
burden distribution process for technique
even burden distribution


Improved permeability in the Increased PCI rate to 90 kg per ton
lower part of the blast furnace of hot metal
through process optimization


Developed an offline heat model Enhanced furnace knowledge,
to predict heat distribution improved the furnace efficiency and
inside the furnace decreased fuel rate

Corex unit:

Initiatives Achievements

Optimised the slag regime by Fuel rate declined by 10 kg per ton of
increasing slag Al2O3 from 17.5% hot metal
to 18%

Experimented the hot metal Reduced the coke rate in the unit from
process with lower grade coal 20% to 16%

Developed a process to utilize Utilised waste through Corex
the sinter fines through Corex
melter-gasifier

Steel making

Initiatives Achievements

HMPT

Developed the process of Saving production time and reducing
desiliconisation and the use of fluxes in SMS as HMPT
de-phospherisation works at a slag basicity of 1, while
in hot metal pre-treatment the converter operates at a basicity
stage with new indices for of 3
the first time in India

Carried out de-sulphurisation ladles can be handled by the
using lime fines at the HMPT SMS with reduced operating cost
stage as opposed to the
conventional practice

Replaced calcium carbide with Reduced operational costs
lime fines for de-sulphurisation

SMS

Devised a discipline of proper Material handling loss declined
cleaning of ladles to reduce slag by 0.6 %
deposition in the ladle

Tundish

Raised the dam height of tundish Improved steel cleanliness by allowing
and introduced slots with the slag/inclusions to float on the top.
help of water modelling studies

Designed new 900(degree) bends Improved pipe durability and increased
for pipes conveying granular plant availability
material with the help of fluid
dynamics software

Adding to the product basket:

* Introduced 32 new value-added products during the year.

* Introduced high grade pipe APIX70 to cater to the oil and gas
infrastructure segment.

* Developed value-added IF grade steel for auto sector

Growing the knowledge capital:

* Filed 5 patent applications.

* Applied for copyrights of 7 processes.

* Experimenting to replace the present organic binder bentonite that
provides pellets of the required strength, but leaves impurities (alumina
and silica) which are detrimental to pellet quality.

* Several processes are at laboratory stage, expected to be commercialized
in 2009-10.

Strategic blueprint

* Beneficiation laboratory

* Pilot coke oven

* Product development laboratory

* Off line simulations for pelletisation and sintering

(6) Marketing

* Maximising Value added products, Customisation, Import Substitution along
with expanding Pan India Reach.

* Consistent product quality and timely deliveries enabled a long-term
business relationship with its valued set of customers, both in the
Domestic as well as International markets.

* A prominent domestic supplier of Flat and Long steel products and a
leading strategic exporter of coated products.

* Leveraging plant's locational advantages to increase market share
strategically in Southern and Western regions.

* Growing focus towards rural and semi-urban domestic markets having a
large demand potential.

Saleable steel International Dealer JSW
presence base Shoppe

3.428 Over 100 Over 300 50
Mn Tonnes countries Nos. Outlets
2008-09 March 31, 2009 March 31, 2009 March 31, 2009

Hot rolled products:

The Hot Rolled Products comprise of Hot Rolled Coils, Sheets and Plates.
The Company markets its hot rolled products primarily to domestic clients.
During the year, majority of its business was generated by institutional
clients (Approx. 85%), while retail clients accounted for around 15% of the
offtake.

Key business drivers

* Substituting imports with focus on product quality, Customisation and
timely deliveries.

* Thrust on project based orders from sectors such as Oil & Gas conforming
upto Grade API 5L X-70, water pipe-line projects and other infrastructure
and construction projects.

* By virtue of its longstanding relationship, the Company emerged as a
preferred supplier, leading to consistent and sustained orders, despite a
downturn in the latter part of 2008-09.

* A prudent mix of long-and-short-term contracts to balance volumes with
value.

* Leveraged retail market potential, compensating the volume drop from the
automobile segment.

* Strong distribution network with close proximity and strategic focus in
Southern India, helped during the period of sagging demand in the later
half of 2008-09.

Cold rolled products:

The Cold Rolled Products comprise of mainly CRCA Steel. The Company markets
its CRCA products mainly to domestic clients. While majority of the
business was transacted through its dealer network, the institutional
clients are being developed gradually.

Key business drivers

* Developed strong distribution network assuring consistent sales along
with an expanded reach.

* Approval process with Automobile majors helped to graduate the quality
ladder along with other process and supply related parameters.

* South India being supply deficit region helped to achieve sales volumes
through extended distribution network.

Coated products:

Coated Products comprise of Galvanized Steel, Galvalume, Pre-painted
Galvanized and Pre-painted Galvalume steel. Coated products are mainly used
in the Construction sector for rooting and Industrial construction
including Consumer Durable sector. Dealer-Network, JSW-Shoppe outlets and
stockyards helped to reach the less impacted Semi-Urban and Rural sector,
when the Company strategically reduced exports due to slump in the
International markets.

Key business drivers

* Higher Sales in Semi-Urban and Rural areas.

* Extended presence by adding new dealers and opening new JSW Shoppe
outlets (Branded Distribution Network).

* Construction Sector: Trained architects and consultants on product
installation and appraised them of the product benefits.

* Entered into long-term contracts with suppliers for telecom and power
sector which continue to grow at a rapid pace.

* Strategic foray into Pre-Engineered Building segment catering to growing
demand for Industrial Construction.

* Focus on Government funded projects including Defence and other sectors.

The Company emerged as the leader in the manufacture of Coated Products and
the market share increased from 13% in 2007-08 to around 20% in 2008-09.

Long products:

The segment comprises TMT Rebars, Wire Rods, Spring Steel Flats and
Merchant Bars. These products are marketed through dealer network and a set
of reputed institutional clients. The Company recently commissioned a
state-of-the-art 1.5 MTPA long products manufacturing facility at its
Vijayanagar works, taking the total capacity to 2.5 MTPA includeing 1 MTPA
Long product facility at Salem works.

Key business drivers

* Niche value-added long products from Salem works, while Vijayanagar works
to service bulk volume requirements.

* A wide variety of Product basket encompassing Alloy-Steel and Carbon
Steel Long products.

* The onlyAlloy-Steel plant in the Southern India- known for its high
degree of Auto-Component sector concentration.

* Increased product range for TMT Rebars from 8 mm to 40 mm.

* Only Indian producer to manufacture heavy Coil weight Wire-Rods (2.5 mt
per coil), delivering high productivity to the customer.

* Increasing cost of construction unfolds opportunity for High-End quality
steel products viz. High-Tensile, Corrosion Resistant Rebars etc

(7) Intellectual capital:

Employees Locations

7,669 5

Recruitment:

The Company recruits fresh graduates and diploma engineers; experienced
executives are recruited only for critical positions for which skill sets
are not adequate in the existing team.

Strategy Process

Hire fresh engineering and
management graduates The Company visits reputed
from premiere institutes colleges (RECs, NITs and Xavier
Hire fresh chartered Institute of Management, among others)
accountants O P Jindal Entrance Test for O P Jindal
Group of companies in Haryana and Campus
Connect Programme for campus recruitment
Sponsoring various events

Target the alumni group JSW website for direct application
of the various premiere
institutes

Employee refer ral for Personal interview
experienced people

The Company outsources certain routine jobs to contractors supplementing
the key functional areas.

Training

JSW consistently invested in growing the team learning curve. For an
important reason: it believes that this is the most important asset,
providing sustained growth over the long-term.

Induction training: The Company provides a compressed induction training
programme of 15 days for all new recruits. This programme comprised in-
depth technical and operational training at the shop floor level. Every
theory class in the training is followed by a physical visit of the plant.
Besides, training is also imparted on behavioural, safety and environmental
aspects. As part of the induction programme, the new members are taken to
all the plant locations and the entire process of steel making is
explained, in addition they are also provided knowledge of the entire
group. After the induction training, individual interaction is done with
the new recruits for suitable placements. The entire training module is
uploaded in the HR portal for easy access by all the team members.

Year-round training: The Company create a training calendar, based on
senior management's feedback and in line with the developmental needs
identified during the performance appraisal. The training modules include
stress management and yoga classes.

Overseas training: The Company regularly sends teams to reputed global
steel manufacturers to strengthen their insight into steel manufacture.

Training effectiveness is evaluated by comparing pre-training performance
with that of post-training.

Leadership development and succession management:

Silent revolution continues unabated: creating tomorrow's leaders through
identification and nurture of potential talent. The Company has taken
numerous initiatives for leadership development:

Initiatives Details

Leadership Define leadership competencies for organizational
competency success
framework Reinforce competencies through focused training,
feedback and mentoring-coaching initiatives

Succession Identify key leadership positions
management Groom leaders from within the organization
process

1800 input Identify the leadership potential
process (GMs get for leaders to till the identified positions
the programme Backed by individual development plan and organisation
exposure) wide leadership development plan

Horizontal Responsibility delegated to top executives
integration Aims to make the organization leaner

Employee welfare:

The Company initiated various employee welfare activities, enhancing
motivational levels.

Facility Details

Township Three townships (Vijayanagar, Vidyanagar and Shankarguda)
have a total residential population of more than 10,000
families

Equipped with amenities like road linkages, 24x7
electricity and water supply

Facilities include ATMs of all major banks, shopping
facility for daily needs

Local car dealers participate in weekly auto exhibitions
Weekly car service programme at a subsidized cost to the
car owners at the townships

Medical Jindal Sanjivani Hospital - a 75 bedded multi-speciality
facilities hospital at Toranagallu
Employees are covered against personal accident under
Group Insurance Scheme

Sports State-of-the-art sports club with facilities like squash
facilities court, badminton court, table tennis, billiard, swimming
pool, football and cricket ground, volleyball court and
gymnasium, among other facilities

Education Established two schools (Jindal Vidyamandir and JAV
facilities School) for employees

Transport Transportation facilities for employees commuting from
facilities Bellary, Hospet and Sandur
Bus service available on Sunday from the township to
Bellary for shopping for the township residents
Subsidised transportation facility
Interdepartmental transportation is available inside the
plant Bus service to Bangalore everyday

Vehicle loan Employees are provided soft loans for the purchase of two
wheelers or four wheelers, repayable in easy instalments

Recreation State-of-the-art movie theatre
facility Subsidized food at in-house restaurants

The Company also created a township for its associate employees,
accommodating over 2,000 families.

New initiatives:

* Identified 97 diploma engineers for three years degree in process
engineering with BITS, Pilani.

* Initiated management (junior and mid level) development programmes,
widening career growth opportunities.

* Sponsored M.Tech course in steel processing in association with IIT,
Powai.

* Formed Echo for young professionals; the members organise quizzes,
debates, etc.

HR milestones:

* Achieved low attrition levels 9.05% against a 14% industry average.

* Awarded the Ramakrishna Bajaj National Quality Award for Performance
Excellence-2008-09.

* Covered associate employees under production linked incentive scheme and
performance management scheme, a first of its kind in India.

* Achieved high productivity levels through optimal people utilization.

* Reinforced brand visibility through extensive campus visits (IITs and
leading management institutes) and summer training projects.

Rewards and recognitions:

Rewards strengthen an employee's competitive spirit and motivational
levels; this corporate reality is reinforced by the following:

Individual reward system:

Type of Reward Rationale

Retention Bonus To recognize the potential and criticality of job
Best suggestion To reward the innovation and creativity
award

Late For exemplary display of safety, performance
S. Chandrasekhar on the job, communication skills, interpersonal
Memorial best skills, judgement and company's image building
employee award exercise.

Best Safety Man For maintaining highest standards in safety
Award

Young thinkers For giving maximum implementable suggestions
Award

Bravery and For exhibiting outstanding bravery and courage
courage Award

Best Quality To reward the innovation and creativity at the
Circle grass root level

Best Employee for For consistent good performance, concern for
JSW & Associate safety, good interpersonal skills, communication
Employees skills, mental alertness/judgement, Company's
image building activities and high level discipline

Intellectual For copy rights, patents and international
Property Rights publications

Best Contractor For providing excellent services with high quality
of work
Group rewards:

Type of Reward Rationale

Significant For extraordinary performance in the job
performance (Team)

Exemplary Work For all round exemplary performance

Intellectual For copy rights, patents and international
Property publications
Rights

Best Suggestions For promoting innovative and creative ideas in the
work place

Best Safety For exhibiting high level safety standards in the
Department department

Interdepartmental- For encourage small group activities to bring
Best Quality quality consciousness and improvements at grass
Circle root level.

Best Quality For the QCs have won the award at state, national
Circle- State, and international level competitions.
National &
International

Best Green Belt For taking manifold steps towards preserving and
Development Award cultivating natural resources

(8) Corporate communications

The corporate communications team facilitates communication to reinforce
brand-building, enhance visibility and a long-term PR policy through the
following initiatives:

* Building JSW's brand equity

* Coordinating PR activities to strengthen the image

* Building a central team to create communication synergy

* Streamlining PR and promotional events

* Facilitating senior management's participation in global corporates,
spiritual philanthropic forums and foundation-related activities.

Media relations:

The Company maintains cordial relations with media professionals. Its media
transparency is critical for correct and factual information dissemination,
building a positive brand perception. The communication activities
conducted during the fiscal under review comprised the following:

Press conferences: The team organized 10 press conferences to announce
quarterly results, policy issues and key business decisions in 2008-09.

* Quarterly results

* Commissioning of India's largest blast furnace in Vijayanagar Works

* Visit of AI Gore to India to establish The Climate Project- India'

* Establishment of Earth Care Awards

* Inaugural ceremony for Steel plant in West Bengal

Financial communications: The Company's financial PR involved proactive
two-way communications with global investors, analysts and securities
professionals.

* Analysts meets were organized every quarter.

* Analyst and Investors visits were conducted to plant locations.

CEO's media training workshop: The media team organized a one-day workshop
for the top management covering media management, do's and don'ts of media
relations and inter-personal management with the media. The workshop was
attended by more than 20 top management team members.

Media visits: Print and electronic media visits were organized to
Vijayanagar Works.

Positioning platforms

The Company's communication modes comprised the following: physical (print,
poster, banner, gift, giveaway, face-to-face), digital (advertising, audio/
visual), web (internet/intranet) and experiential (events, exhibitions,
associate gatherings, project execution, recruitment). It instituted
communication guidelines as well as focused communications and commitment
to deliver the brand promise.

Understanding the JSW Brand

The Company's branding strategy is to nurture the JSW brand as an asset and
manage stakeholder perceptions to maximize business value.

The crisscross patterns in the corporate logo represent a networked
organization - networking across people, technology and skills. The base

represents a strong foundation and the apex points towards continuous
growth.

Internal communications:

The Company emphasizes internal communication to help employees interact
with the senior management. The Company's quarterly news journal called
Connect' covers relevant organizational (including overseas Subsidiaries)
information.

Website management

In a world where information is critical, the Company's website is
regularly updated to disseminate time-critical stakeholder information. The
corporate communication team posts news briefings, minimizing paper use.

Daily news brief: The Company introduced an easy-to-access and paper saving
communication mode for employees. The Daily News Brief covers all important
news items published in newspapers.

(9) Information technology

Accomplishments

Initiatives Impact

Set up a state-of-the-art Tier III Consolidated all data in one
data centre at Bangalore having location; facilitated data
facilities such as computer maintenance, management and
systems, communications, easy data access. Consolidation
storage and security devices. of ERP enabled its availability
It also provides guarantee of at all locations
99.82% availability

Upgraded ERP from 9i to 10g. Higher Flexibility in terms of
capacity utilization and management.
Better usage of systems to enhance
data backup, security and processing
Disaster Recovery Environment
Improved interfacing, as related
technologies will operate on the
same platform

Implemented the Oracle Improvement of operational
Order Management (OM) in efficiencies at branches and
downstream branches and agents by the automation
consignment agents of order booking, invoicing
and cash flow monitoring

Improved connectivity across Enhanced redundancy and provided
locations; provided dual linking seamless connectivity
between key facilities

Installed the video conferencing Reduced travelling expenses
facility at major locations significantly and provided
better co-ordination of
resources/functions across
locations to enhance productivity

Enhanced the level 3 system Improved the bunching of orders
at shop floor at the Vijayanagar leading to faster order turnaround,
Works minimized human error in operations
and improved plant utilization.

Strategic blueprint:

* Integration and standardization of systems and processes across all
units.

* Formalizing and implementing the Company's IT vision.

(10) Internal control and audit

Internal control

Internal control systems are integral to the company's corporate
governance. It is:

* Ensuring complete compliance with laws, regulations, standards and
internal procedures and systems.

* De-risking the Company's assets/ resources and protecting them from any
loss.

* Ensuring the integrity of the accounting system; the proper and
authorized recording and reporting of all transactions.

* Ensuring a reliability of all financial and operational information.

The internal control systems and procedures were designed to assist in the
identification and management of risks, the procedure-led verification of
all compliance as well as an enhanced control consciousness.

The Company's internal control system provides for the adequate
documentation of policies, guidelines, authorities and approval procedures
covering all the important functions at the Company. It has a proper and
adequate system of internal control commensurate with the size and nature
of its business. The deployment of an ERP covers most of its operations
supported by a defined on-line authorization protocol.

Internal audit

The Company has an internal audit function that inculcates global best
standards and practices of international majors into the Indian operations.
The Company has a strong internal audit department comprising around 25
executives reporting to the Audit Committee comprising Independent
Directors who are experts in their field.

The Company successfully integrated the COSO (Committee of Sponsoring
Organizations of the Treadway Commission) framework with its audit process
to enhance the quality of its financial reporting, compatible with business
ethics, effective controls and governance.

The Company extensively practices delegation of authority across its team,
which creates effective checks and balances within the system to arrest all
possible gaps within the system. The internal audit team has access to all
information in the organization - this is largely facilitated by ERP
implementation across the organization.

Audit plan and execution

Internal Audit department prepares Risk Based Audit Plan, which is approved
by the Audit Committee. The frequency of audit is decided by risk ratings
of areas/functions. The audit plan is carried out by the internal team.

Addition to the audit plan: The audit plan is reviewed periodically to
include areas which have assumed significant importance in line with the
emerging industry trend and the aggressive growth of the Company. In
addition, the reliance is placed on customer and other external agency
feedback for inclusion of areas into the audit plan.

(11) De-risking at JSW

An institutionalised de-risking framework is embedded in our business
model.

To win without risk, is to triumph without glory' - Pierre Comeille

Risk management

The Company has integrated, prudent & proactive approach to Risk Management
to ensure that organisational objectives are achieved with reasonable
predictability & resilience in the fast changing globally connected
business world more so in the light of growth initiatives taken up by the
company.

Risk management framework

Company follows Committee of Sponsoring Organisations' (COSO) Framework of
Risk Management.

Risk identification & review

Process specific risks for 85 processes are identified & reviewed regularly
by process owners. Risk Assessment

Risks are assessed for probability of occurrence & impact on occurrence.
Impact on Strategy, Operations, Reporting, Compliance, Employees,
Environment/Health & Safety & is analysed. Inherent Controls & Mitigation
measures are considered. Considering company's preparedness residual risks
are classified as High Medium & Low.

Information, communication and monitoring

Process owners maintain process specific risk register & update regularly.

Risk registers are uploaded on company's intranet. Internal audit team
reviews risks identified, controls & actions being taken.

New high risks, movement in high risks & action status are discussed in
quarterly locational committee meetings.

A Risk sub committee of Directors consisting of 3 Independent & 2 Executive
Directors is held quarterly. Chairmen of locational meetings are invited to
the meeting. The committee reviews minutes of locational meetings, location
& process specific high risks to get comfort over risk management at
locations. The committee then discusses in detail top risks arising due to
external trends, reviews internal preparedness & gives guidelines. Board of
Directors is informed quarterly of discussions at the committee

All above activities are co-ordinated by a Chief Risk officer.

(12) Safety, health and environment

A patch of excellence cannot be built on the matrix of misery' - JSW Steel
slogan

Quality, environment, occupational health and safety policy

Our pledge

* Endeavouring to protect employee health and safety and of the society at
large on a proactive basis.

* Implementing effective environmental management practices in all its
activities.

* Complying with all legal statutory rules and regulations of the state and
central government and other requirements to which the company subscribes.

* Pursuing this policy through organisational objectives and targets with
employee participation.

* Creating a niche in the domestic and international markets in our
structured approach towards risk identification and management.

Our path:

* Pollution prevention by zero waste generation through recovery, recycle
and resource techniques.

* Knowledge and skill development of all employees, including contract
employees through continuous education and training.

* Periodical review of objectives and targets and their implementation to
ensure that they remain relevant and are communicated to all concerned.

Our position

This dedicated drive towards achieving world-class safety standards
resulted in OHSAS 18001 certification for all units.

(a) Safety

Importance

The Company's moto is to manufacture steel in a safe working environment.
For an important reason: steel-making involves handling of materials at
high temperature; exposure to hazardous gases, high-speed moving parts and
machinery as well as dealing with hot solid and gaseous waste. The focus is
clearly on prevention rather than remedial action.

Safety measures

The Company undertook proactive measures to ensure proper employee safety
at the shop floor. Capacity expansion from 3.8 MTPA to 6.8 MTPA meant
arrangement of adequate safety instruments for additional safety
requirements.

Safety management team: The Company has a 31-member team that takes care of
the safety needs of the plant Its responsibilities include formulating the
safety training calendar, arrangement and maintenance of safety equipment
at respective shop floors and maintenance of safety records. The team
designated one safety manager at every shop floor to ensure adherence to
safety norms during operations.

Safety equipment: All employees at the plant are provided with denim
trousers, denim jackets with neon strips (for better visibility in the
dark) to be worn compulsorily everyday. In addition, members of the shop
floor are provided safety helmets, special boots, goggles, hand gloves, ear
puffs and breathing apparatus. Employees managing the operations at the hot
metal zone are given specially designed aluminium suits for prevention from
any burn injury.

Safety at the shop floor: All the walkways in the plant are demarcated to
avoid accidents. The tire extinguishers inside the plant are properly
identified to avoid confusion during emergency. Speed limits are clearly
specified for all in-plant vehicles, viewing mirrors are provided at sharp
turns to avoid collision with vehicles from the other direction. Alarm
switches are provided at in-plant railway crossings.

Safety training: The safety management team conducts various training
programmes:

Induction training, Regular training, Permit to work, Mock drills, Tool box
talk, Diploma in industrial safety & Safety audit

Key initiatives

* Introduced a safety mobile van in the safety vehicle fleet. The Company
has dedicated the van to the state of Karnataka. The van is well equipped
with safety apparatus and an LCD television displaying safety film all the
time.

* Procured and commissioned one fire tender.

* Invitations to safety experts to conduct facility audits strengthened
global compliance and internal vigil. The Company's facilities were audited
12 times in 2008-09.

Strategic blueprint:

Planned the following measures to strengthen employee safety in the plant:

* Reducing the noise level specially in the bar mill area by introducing
caustic boots.

* Redesigning the emergency plan by including disaster management with
technical help from associates from the US and the UK.

* Renovating the safety centre to strengthen its facilities.

(b) Health

The Company places a high importance on employee health as it enables the
Company to attain higher man-hour productivity. This led the Company to
undertake numerous health-benefiting measures.

Initiatives taken

The Company has taken the following initiatives to maintain proper health
standards:

Health infrastructure: The Company has in-plant occupational health centers
with proper medicines, equipment and two qualified doctors along with
supporting staffs. The health center also has separate rooms for eye test
and audiometry test. Besides, the Company has its own hospital -Sanjivani -
which takes care of major health-related issues. The Company has two
ambulances covering the plant area.

Pre-medical check-ups: The Company conducts pre-medical checkup for all
employees joining the organization to assess their health condition. The
employees are issued medical certificates based on this test.

Height test: All the employees who are working at a place higher than the
ground level are made to pass through a special height test to ensure their
adaptability.

Health check-up camps: Regular health check-up camps are organized in the
plant every six months for assessing the health condition of employees.
Besides, special tests such as audiometry tests are conducted and eye
checkup arranged for car drivers and crane operators.

Executive health check-up camps: Over 40-year old employees ware provided
special check-ups at the Company's Hospital or reputed private Hospital.
This includes eye test, diagnosis of diabetes and blood pressure check,
among others.

(c) Environment

JSW Steel - the green' steel manufacturer

Philosophy

Steel manufacturing involves considerable natural resource usage and toxic
waste emission that could affect the ecology of the location.

The philosophy to give back more than what is withdrawn' guides every
strategic organizational decision and operation.

The Company's environment commitment extends beyond the ordinary to create
a benchmark for the Indian steel industry. Its focus is notjust commerce
but the community, not merely products in the narrow sense but holistic
progress. It strives to meet the needs of the present generation, without
compromising the ability of future generations to meet theirs.

Air pollution management

Air is polluted by the waste gases from chimneys, toxic chemical gases and
dust from the plant. The Company follows a structured procedure for
combating air pollution; it has divided air pollutants into two distinct
sections, primary (associated directly with the manufacturing process) and
secondary (associated indirectly with steel making).

Minimizing primary pollutants

* For clearing the waste gases from chimneys, the Company fitted state of-
the-art ESPs, bag filters, scrubbers, cyclones and dust suppression systems
across its 118 chimneys. Chimney heights are at 15-125 meters, minimizing
the release of hazardous elements.

* For minimizing emission during coal cake charging, the Company
incorporated a jumper technique.

* For minimizing the load on the air pollution system, waste gases from the
coke oven, corex units and blast furnaces are recycled for power generation
and various production processes.

Secondary pollution management:

The Company invested in state-of-the-art equipment to minimize secondary
air pollution not covered by the statutory norms, through the following
initiatives:

* Invested in 4 vacuum cleaners for road sweeping 3 times in a day.

* Installed CCTV cameras at the top of its corex units, a proactive
monitoring system for fugitive emission.

* Used closed containers for transporting the dust collected in bag filters
and other devices.

* Installed a unique vacuum spillage system to collect material spillage
between conveyors and junction boxes.

Initiatives for improving ambient air:

* Increased the number of bag filters across the plant in line with
enhancedoperational scale. Redesigned the bag filter emission limits at 50
mg per m3 of air - much lower than the national standard of 150 mg per m3
of air - which will significantly reduce the emission level.

* Commissioned de-sulphurisation station at the new coke oven to reduce
sulphur dioxide emission.

* Introduced the dust suppression system that sprays water in the material
stacking yard and conveyor belts to reduce spreading of dust.

* Installed the dry fog dust suppression system that controls the dust in
the air.

Water management

Effective water management is indicated by zero effluent discharge from its
plant.

The Company sources its daily water requirement from the dam on the rain-
fed Tungabhadra river situated 30 km far from the site. It built water pipe
to draw water from the dam to meet its daily requirements.

It created a cascading system of water reuse, where the blow-down water
from one process is effectively utilized for another; whatever remains is
stored in a guard pond (10,000 m3 capacity) and is used to meet the
requirement of the beneticiation plant and horticultural purposes. The
Company invested in water treatment plants at all operating units, with
primary and secondary cleaning stages for water recycling.

This resulted in the Indian steel industry's lowest freshwater consumption
per tonne of steel.

Water conservation initiatives

* Collected water from the seepages in the pond which would have been
otherwise wasted, amounting to 12,000 m3 of water daily; the seepages are
connected with necessary pipes.

* Initiated the re-use of blow-down water from Captive power plant II,
Corex I and II for slag and coke quenching and ore beneficiation, among
others. The ore beneficiation plant uses recycled water everyday.

* Upgraded the sewerage system atthe Vijayanagar and Vidyanagartownships
which will recycle drainage water, rendering it usable for gardening.

* Initiated the use of special chemicals which enables the Company
torecycle water.

Hazardous waste management

The hazardous waste mainly comprises oil derived from hydraulic lube and
waste water treatment plant. This oil is sold to government approved re-
processor in Gujarat. The other hazardous wastes like sludge from BOF
plant, CRM oil sludge, cyanide and phenol from the water treatment plant
are incinerated through incinerator installed at the plant.

Solid waste management

The steel manufacturing processes at works generates three kinds of solid
wastes-slag, sludge and mill scales. The Company opted for efficient
technology to reuse solid waste. It also created a centralized waste
collection system, where solid waste is segregated into various heads to be
sold, enhancing revenues.

Slag: Slag is generated largely from blast furnaces and the steel melting
shop.

To manage the slag quantity, the Company installed a slag granulation
facility (for granulating the slag) and magnetic suppression mechanism (for
extracting the iron content in the slag).

Of the total slag generated, around 60% is sold to cement manufacturers; a
smaller quantum is used in the sinter plant and Corex units to utilize the
lime content; some are used to extract the iron content to be utilized as
scrap in the steel melting zone. Fines are used for building slime pond.

Sludge: Sludge is generated in water treatment plants, iron-making zone
(Corex unit and BF) and the steel melting shop. The pellet plant is the
largest sludge consumer - accounting for 90% of the BOF sludge and 65% of
Corex and BF sludge. The unutilised quantity is securely stored in the
slime pond.

Mill scales: Mill scales are mainly generated from the HSM plant, CRM plant
and continuous casting units.

Waste management: Being iron-rich waste, the entire mill scales is recycled
through the sinter plant.

Other solid wastes

Lime plant waste: Lime plant generates lime tines. About 70% of the lime
tines are sent to the sinter plant and around 30% is consumed in the hot
metal pre-treatment facility.

Refractory waste: Out of the refractory waste generated, 60% is used for
rebuilding the converters used in the steel melting shop.

Non-process solid waste: Non-process waste includes tyres, bag filter,
rubber goods, copper cable, etc. The non-usable wastes are incinerated by
an incinerator with a capacity of 250 kg per hour, while the rest are sold
off.

Usage of ozone depleting substances

The Company does not use any ozone depleting substances such as CFC gas and
R11 gas, among others.

Green cover

The Company landscaped its unit with a singular vision - operating a steel
plant within a garden'- through a number of initiatives:

* Planted more than 1.2 million trees in only 12 years; about 55,000
treeswere planted in 2008-09.

* Created a separate department for managing the in-plant landscape.

(13) CSR - Corporate caregivers

'Life is a gift and if we accept it we must contribute in return'-

Albert Einstein

Philosophy:

The Company's overarching philosophy is to emerge as corporate caregivers,
investing around 1.5% of our net profit to accelerate inclusive and
participatory societal growth. The JSW Group has formed a trust - JSW
Foundation - to drive its CSR activities.

CSR snapshot

Programmes/Activities Beneficiaries

Supported small businesses (dairies) through SHG 350 rural women
formation and federated them as Mahila Dairy
Development Group

Set up rural BPO centres 300 women

Trained and employed rural women with JSW's 81 rural girls
associate companies.

Imparted training on tailoring to rural women 200 rural women

Enhanced technical training through Computer 6,614 primary school
Assisted Learning Centres in government schools students

Established 8alwadischools 322 children and 25
local girls

Introduced accelerated learning methodology 925 slow learners
(children)

Set up mobile libraries for children 1,062 children

Set up village learning centres 400 dropouts

Introduced Akshaya Patra mid-day meal for schools 1,14,000 children from
402 schools

'Provided plates and glasses for mid-day meal 2,700 children
schemes 'Provided slates, notebooks and sports kit

Developed rural infrastructure (school compound Nearly 10,000 families
walls, class rooms, toilets, roads, drainages,
garbage management and drinking water facilities)

Conducted vocational training courses (welding & 92 youths and 75 girls
gas cutting, masonry, tailoring, self-employment
and educational training)

Set up general health camps 4252 patients

Conducted eye camps 1,165 patients

Conducted HIV/AIDS awareness programme 1,008 employees
85 BPO employees
35 school teachers
87 truckers on national
highway
15,000 families of
surrounding villagers


Organized sports camps; sponsored individuals and Around 100 children
teams
Conducted Agro Eco Systems Improvement programme 60 farmers from four
villages

Organised garbage management in surrounding Covered five villages;
villages 7,350 families and a
population of 32,500

Popularised model village development Vaddu village (1,700
families covering 7500
people)
Education:

Objectives

* To sensitise the need for education among regular and contract employees'
children by establishing schools at the Company's vicinity.

* To make the learning process in surrounding village schools more exciting
for children.

* To build confidence among school dropouts to join back.

* To provide a parental role' through monitoring first generation
learners.

* To demonstrate innovative methods at government schools, improving
learning standards.

* To explore and nurture rural talents.

Programmes:

Jindal Education Trust: Jindal Education Trust runs three English medium
schools -Jindal Vidya Mandir and Jindal Adarsh Vidya Mandir at Vidyanagar,
along with Jindal Vidya Mandir at Vasind. The IMC-Ramkrishna Bajaj national
quality cell has recognized the quality of education imparted at the Vasind
School. Over 17 children from a labour colony (Vidyanagar) were admitted to
school in 2008-09, totalling 28 children (11 children in 2007-08).

Rajeev Gandhi Institute for Steel Technology: Collaborating with the
Karnataka government, the Company has formed the Rajeev Gandhi Institute
for Steel Technology, offering courses in line with steel industry
requirements. The institute aims at conducting formal diploma, degree and
PG courses in engineering (especially steel manufacture, mining, management
and safety, among others).

Fulfilling education needs for employees: The Company collaborates with
premiere engineering colleges (BITS, Pilani) to enhance employee skills and
knowledge priorities.

Scholarship for employee community achievement: The Company provides an
annual scholarship (Rs. 25,000) to help talented children of employees.

Educational initiatives for surrounding villages: School Development and
Monitoring Committee was formed to drive rural educational initiatives,
helping villagers to avail of the Company's educational initiatives.

Activities

Akshayapatra, the mid-day meal programme for school children: The JSW
Foundation has collaborated with Akshayapatra to provide mid-day meal to
more than 1,13,861 students from 402 government schools in and around
Karnataka's Bellary district to prevent dropout levels; the Foundation
provides Rs. 1 crore annually for this initiative with enthusiastic
contributions from the Company's employees.

Computer-assisted learning centres: Collaborating with Azim Premji
Foundation and the Government of Karnataka, the Company has set up Computer
Assisted Learning Centres in 25 government schools with 107 computers.
Local youth are appointed to teach in these centres for one year,
benefiting 10,000 students in 25 schools. Nearly 104 girls were trained in
typing skills at various CALC centres with 43 joining Datahalli (rural
BPOs).

Accelerated learning programme: Covering 19 government primary schools - in
co-ordination with Akshara Foundation -the programme aims to improve
reading, writing and numerical abilities of slow learners. Around 954
students from 19 schools were targeted and around 775 students completed
this programme.

In 2008-09, the programme helped around 312 slow learners and 185 dropouts
across 20 Village Learning Centres.

Balwadis: JSW Foundation has setup 19 balwadis to provide quality education
to rural children, creating employment opportunities to local women. These
women run balwadis in their houses charging nominal fees. JSW Foundation's
Vishala balwadis are run free of cost; about 14 balawadis (334 children)
and 18 mobile library centres (1010 children) are being run in surrounding
villages.

Children mobile libraries: The Company has taken an initiative to set up
mobile libraries at 20 villages to grow reading habits among rural children
(6-14 years). The balwadi teachers charge nominal fees for library
membership, helping 500 children and creating livelihoods for 181 rural
women.

Village learning centres: Spread across 20 villages these centres help
rural school dropouts (6-14 years); rural educated women conduct bridge
courses' for these dropouts, enhancing motivational levels through special
evening programmes and bringing these young people back into the
mainstream; around 1,000 children were benefited through these
interventions.

Summer camps: Organized during summer holidays across 20 villages these
camps to enhance creative skills of rural children; around 785 children
participated so far, of which 297 children from 11 villages benefited in
2008-09.

Plant visit for local school children: JSW Foundation organised plant
visits for local school children in Vijayanagar; around 1,147 school
children from seven government primary schools participated in this
exercise.

School infrastructure up-gradation: JSW Foundation upgraded school
infrastructure (construction and extension of school compounds and class
rooms).

Education and women empowerment

Shivagangamma, a widow with two children, sought job assistance from JSW
Foundation. She was motivated to set up a balwadi (creche) centre in her
village (Chikka Antapura). She was provided teaching and playing materials
worth around Rs. 5,000 and a 10-day entrepreneurship and skill training.
She earned Rs. 1000 as an honorarium and later she charged nominal fees
from the balwadi children. She started her balwadi centre with around six
children and later her students increased. She also conducts evening
tuition classes and runs a children library for which books are provided by
JSW Foundation. She earns around Rs. 3,000 monthly by looking after 45
local children.

Women empowerment

Objectives

* To create livelihoods for rural women by providing revolving fund, skill
training and other linkage services.

* To empower rural women to reduce gender-based discrimination.

Programmes

Mahila Dairy Development Group (MDDGYSeIf Help Groups (SHGs): JSW
Foundation formed the Mahila Dairy Development Group (MDDG), providing
loans (Rs. 80,000 to Rs. 1 lakh) to encourage rural entrepreneurship. The
programme now covers around 350 members - started with four women - divided
into 25 SHGs. The groups are also encouraged to save (Rs. 100 each member)
to extend loans in the form of micro finance. Around 136 SHG members - 74
people took loans for dairy activity and the rest for small businesses.

Tailoring training: JSW Foundation has set up a tailoring centre to provide
tailoring training to the women in the neighbouring villages. So far around
three hundred women have been trained on tailoring and about fifty have
been facilitated to pass the tailoring examination conducted by Dept. of
Technical Education, Govt. of Karnataka, Bangalore. The women are also
facilitated to undergo an advanced training in tailoring in coordination
with Dept. of Small Scale Industries, Bellary. Around 200 women have been
trained in tailoring trade. The center is upgraded with modern tailoring
machines.

Unorthodox job trainings: JSW Foundation has initiated training for
operating heavy earth moving vehicles for the women having higher secondary
level of education. So far Around 80 women from the surrounding villages
have been facilitated for placement with the Associate Companies of the
Company.

Dairy - a way to enhance livelihood

Parvati Shankrappa's income (Rs.800 per month) was inadequate to run her
family; her husband's sickness made the entire family dependent on her
meagre income. She joined a SHG (Atnal Maremma) - formed and supported by
JSW Foundation under the Mahila Dairy Development Group -who encouraged her
to buy a buffalo and start dairy activity. Today, she is a proud owner of
five buffaloes earning around Rs. 3,000 to Rs. 4,000 monthly. She can now
take care of her family and even send her children to school. Parvati is
grateful to JSW Foundation for the difference it has made in her life, and
even encourages other rural women to follow her example.

Community health

Objectives

* To provide doorstep medical care by conducting general health check ups.

* To provide a special healthcare for the old persons by conducting
cataract screening and free surgeries.

* To identify potential HIV cases through STI/RTI check-up camps.

* To prevent the spread of HIV/AIDS cases, enhancing rural awareness.

Programmes

Health check up camps: JSW Foundation conducts two general health check-up
camps every month across 19 villages providing screening and free
medication facilities to around 150 patients on an average. Around 35
general health campswere organised, of which 23 were conducted in 2008-09,
totalling 5,289 patients, of which 3,857 were treated in 2008-09. Conducted
household surveys in selected villages around the plant locations to
ascertain prevalence and intensity of physical and mental disability in
collaborations with vocational training providers for this segment.

Free cataract camps: Free cataract camps are conducted every month to treat
cataract patients; on an average 100-130 patients are screened and 40-50
patients are operated in each camp. Around 10 eye camps were organised and
a total of 1,165 were screened, 442 were identified with cataract and 383
were operated.

Sexually transmitted infections and reproductive tract infection camps: One
camp is conducted each month in the surrounding villages of Plant. with the
coordination of MYRADA (NGO). Around 70-100 patients are screened every
month-through door-to-door visits-and free medication is arranged by the
JSW Foundation. Around seven STI/RTI camps were held and 564 patients
availed of the opportunity to get treated for gynaecological problems.

HIV/AIDS intervention: To prevent and create awareness against HIV/AIDS,
JSW Foundation undertakes various initiatives like organising street plays
- 18 street plays were organised so far - and celebrating World AIDS Day,
among others.

Model village

Objectives

* Developing rural infrastructure (roads, drainage system, library and art
centre, among others).

* Creating sanitary facilities for effective disposal of solid waste and
improving living conditions.

* Sensitising rural eco-friendliness through enhanced tree planting.

* Accelerating rural socio-cultural development.

Village development programme

JSW Foundation selected Vaddu to develop as a model village; the village
had around 1,700 households in June 2008.

Divided into two phases, the first phase would focus on the following:
development of roads and pathways; drainage system up-gradation;
construction of public toilets; garbage management; street lights and tree
plantation. Around 450 metres of drainage work,1,930 metres of road work
and community toilet centre for women were developed. Phase II of the
programme would comprise construction of schools, drinking water
facilities, public-health centre and ranga mandira; roof water harvesting
would also be initiated.

Garbage management

Objectives

* To create garbage-free villages by using garbage handling mechanism.

* To create rural awareness about the importance of hygiene and the
critical role people can play to make that a reality.

* To minimize wastes produced by introducing recycling and reusing
technologies.

Programme

The Company initiated Shuchi Grama' - a garbage management project - in
the villages of Toranagallu, along with Vaddu, Basapura and Talur villages,
covering 7,350 families. The Company developed this programme in
consultation with local panchayat members, local leaders and gram panchayat
secretaries, women self-help groups, youth organizations and school
authorities.

The solid waste management focuses on: primary collection of wastes;
sweeping of streets and cleaning of drainages; secondary collection,
transportation, disposal and recycle of wastes in the dumping yard. The
bio- degradable and non bio-degradable wastes are collected separately and
transported to dumping yards. The bio- degradable waste is spread to these
units layer by layer (about 1 ft. height) every day in the dumping yard and
suitable compost cultures are added so that the material gets decomposed
faster.

Besides, various programmes were implemented to enhance awareness about
health and hygiene and the surrounding environment through door-to-door
campaigns, mass campaigning by school children and SHGs, street plays and
workshop for suchi mitras, among others.

Art and culture

Objectives

* Conservation of select monuments at Hampi (world heritage site)

* Promotion of local arts, including performing arts.

Programmes

Monument restoration: The Company approached the Asiatic Society of India
and the Government of Karnataka to restore the heritage temples at Hampi
through the formation of Hampi Foundation. The Company also restored
Manmatha Kunda' - a pond of mythological importance near Sri
Virupaksheshwara temple. The Hampi festival is annually co-sponsored by the
Company and also re-published a book on Hampi - New Light on Hampi'.

Other programmes: To promote and restore art and culture, the Company has
taken the following initiatives:

* Promoted the local performing arts such as bylata', dollu kunitha'and
mythological dramas in the surroundings areas of its plant in Toranagallu.

* JSW Foundation constructed Rangamandira, an art theatre in Vaddu (model
village).

* JSW Foundation has formed Kala Sangha' - art association among the
employees for promoting local arts and culture; this group performs
programmes to highlight the local art and culture periodically. They also
identify the renowned local artists and felicitate them. Local troupes ware
invited to perform on specific themes to enhance awareness among rural folk
and township residents.

* A workshop was commissioned to conduct residential art camps for artists
across the country.

* Kaladham (art centre) was developed in Vidyanagartownship, promoting
various art forms.

Agriculture

Objectives

* Enhance crop yields by improving farming techniques.

* Adopt ecological farming practices to reduce soil-and-water pollution.

* Achieve self sufficiency in quality seed availability.

* Integrate horticulture and dairy activities in the farming system.

* Make pesticide-free farm outputs available to consumers.

Programmes

The project area comprises four villages (Antapura, Kodal, Nagarapura and
Kurekuppa) based on the crops grown and the farmer interests; around 60
locales were selected and divided into six groups. The Foundation has
formed linkages with the University of Agricultural Sciences (Dharwad) for
providing critical bio-inputs and the Department of Agriculture (Karnataka)
for supplying seed material and gypsum.

During 2008-09, the Company organised study tours for farmers to the
University of Agricultural Sciences (Dharwad), introducing farmers to
innovativefarming practices. They were given regular training on
compositing, vermin compositing, preparation of bio-fertilizers and bio-
pesticides. The result was encouraging: farming input cost declined by Rs.
900 per acre, keeping the yield at the same level.

Two groups were formed in Kurekuppa with 17 members and Antapurawith 14
farmers during June 08 and bank accounts were opened for the implementation
of farm-based livelihood programmes.

Other initiatives comprised: crop plans for 52 farmers (kharif season
during April-June 2008); trainings conducted on pest management in cotton
and jowar, bio-mass generation and composting during June 2008. During July
2008, four trainings on crop management and two group meetings were
conducted in Kurekuppa and Nagalapura villages. Farmer meetings were
organized in Kurekuppa for sharing the experiences of natural farming with
that of Bellary Organic association members. One orientation meeting was
conducted in Gangalapura village of Taranagar Panchayat on soil fertility
management and crop protection through botanicals.

Natural farming can enhance soil fertility

Mr. Nagabhushana of Kodal village used to apply chemical fertilisers for
his seven acres for producing onion, sunflower and jowar. But after
attending the training programme on composting, mulching and Jeevamrutha
(biofertiliser) preparation he switched to natural farming. He stopped
burning crop residues and used them for the preparation of compost. He
prepared Jeevamrutha for onion crop, producing quality onions. Mr.
Nagabhushana is now convinced that the application of Jeevamrutha can
enhance soil fertility. He is determined never to use any chemical
fertiliser and is even encouraging other farmers to emulate his technique.
Vocational training Objectives

* Realizing participatory and inclusive growth

* Nourishing local talent to enhance employability

* Maintaining social harmony by improving quality of life

* Catering to industry requirements in Bellary and other places

* Arresting distress migration through livelihood creation

Programmes

JSW Foundation engaged the Nettur Technical Training Foundation (NTTF), -
an ISO 9001 certified and world renowned vocational training provider, - to
impart vocational training in the field of mechanical maintenance,
electrical maintenance and computer application. Each year around 200
students benefit through these training courses, which enhance their
employable skills. The training is imparted at subsidized tuition fees and
students from the entire state of Karnataka can enrol. The courses are
conducted at the newly built O.P. Jindal Vocational Training Centre at
Toranagallu; programme duration is one year and after successful
completion, the trainees are issued certificates. The successful candidates
are also provided 100% job placement.

Shramsadhana' Vocational Training Centre (SVTC) at Vasind: Started in
March 2003 with 30 students in 2003 the facility has expanded to cover 266
students. A need assessment study to determine the trades to be offered.

Rural BPO

The JSW Foundation, along with a leading BPO consultant, has formed a
100seater non-voice BPO to enhance rural employment for women; over 400
girls across 30 villages and three towns across a 40 km radius of the
Company's Vijayanagar Works were benefited. The project provides a monthly
earning potential of up to Rs. 5,500 for girls who had completed secondary
and senior secondary standards. Four girls from the BPO got employment
opportunities in the government-run Nemmadi Kendras' (e-governance cells).
The women received intensive training on personality development and career
planning.

Sports

To encourage rural sports the JSW Foundation has formed the Jindal Squash
Academy, Jindal Badminton Academy, Jindal Swimming Academy and Jindal table
Tennis Academy. These academies provide necessary trainings and students
have attained national-level success in many events.

Recognitions

JSW Foundation's CSR initiatives won the following accolades:

* Golden Peacock Award in February 2009 from The World Council of Corporate
Governance in recognition of the Company's initiatives in establishing
sustainable development projects for Corporate Social Responsibility.

* The Certificate of Appreciation from the prestigious TERI Corporate
Social Responsibility Award in 2007.

* The second prize in DMA-Erehon HR innovative Award 2006 for integration
of CSR activities with Annual Performance Appraisal.

(D) LOOKING INTO THE FINANCIAL STATEMENTS (STANDALONE)

Highlights 2008-09

The net sales for the FY 2008-09 stood at Rs. 14,001 crores, showing a
growth of 23% over the previous year. The increase in net sales was
accounted by a growth of 1% in the volume of saleable steel and higher
blended sales realization of 20%. The Company could not maintain its
margins in spite of growth in volume and higher realization as the cost of
production went up by 49%. This led to a drop of 8.5% in the EBIDTA margin
which stood at 21.8% for the year ended 31 March 2009. The flight of
capital from equity markets of emerging countries following the turmoil in
financial markets put pressure on currencies including Indian rupee. The
steep depreciation of rupee by 27.5% during the year resulted into a net
foreign exchange loss of Rs.790 crores.

The standalone Company's Turnover, EBIDTA and Net Profit for FY 2008-09
were Rs.15,179 crores, Rs.3,093 crores and Rs.459 crores, respectively,
with reported net profit after considering exceptional item of foreign
exchange losses of Rs. 790 crores.

The Standalone Company's adjusted long term debt gearing was at 1.24 (as
against 0.93 as on 31.03.2008). The weighted average cost of debt was at
8.22%.

1. Revenue Aanalysis

Rs. in crores
2008-09 2007-08 Change Change %

Domestic Turnover 10,681 9,022 1,659 18%
Export Turnover 4,450 3,496 954 27%
Sale of Carbon Credits 48 111 63 -57%
GrossTurnover 15,179 12,629 2,550 20%
Less: Excise duty 1,178 1,209 (31) -3%
Net Turnover 14,001 11,420 2,581 23%

The Company registered a growth of 20% in the gross sales despite temporary
production cut for two months due to demand contraction and lower
realisation in the second half of FY 2008-09 mainly on account of
following:

* Value added products: Leveraging the robust rural and semi urban demand
for value added steel products, the Company utilised the value added
production facilities fully and sold these products in these market
segments. The growth in the volume of sales of value added products was 15%
in the current fiscal year over the previous year contributing to higher
revenues.

* Focus on Domestic market: The Company shifted its focus on the Domestic
market in the second half of the current year as the impact of global
crisis was relatively less in India compared to overseas market.
Accordingly, the Company sold 2.461 Mn tonnes steel in the Domesticmarket.
Out of which 60% was sold in the second half of 2009. This change in the
marketing strategy helped the Company to add to the revenues with higher
volume in the Domestic market over previous year.

Geography wise revenue break-up

Domestic: Domestic revenue increased 18% from Rs. 9,022 crores in 200708 to
Rs. 10,681 crores in 2008-09. This significant increase was due to the
increased focus on the domestic market pursuant to the slump in global
economies in the second half of 2008-09. The Company strengthened its
dealership network across India which enabled it to market its products on
a Pan-India basis.

Export: The Company has export footprint over 100 countries. Majority of
the exports comprised value added products. Interestingly, in the first
half of 2008-09, export realisations ware higher than that of domestic
market as the steel industry voluntarily agreed with Government of India to
hold back the hike in steel product prices in the local market.

Product wise quantity break-up (Mn Tonnes)
2008-09 2007-08
Products Domestic Export Domestic Export

Semis 0.262 0.280 0.084 0.207
Rolled products - Flat 1.389 0.210 1.662 0.300
Rolled products - Long 0.293 Nil 0.291 Nil
Value added products 0.517 0.477 0.377 0.484

2. Other income Rs. in crores
2008-09 2007-08 Change Change

Other Income 260 152 108 71%

Other income of the Company increased by 71% from Rs. 152 crores in 2007-08
to Rs. 260 crores in 2008-09. Other income included income of Rs.97 crores
from Extinguishment of liability on buyback of FCCB's during 2008-09.

3. Materials
Rs. in crores
2008-09 2007-08 Change Change %

Materials 8,450 5,694 2,756 48%

The Company's expenditure on raw materials increased 48% from Rs. 5,694
crores in 2007-08 to Rs. 8,450 crores in 2008-09. The increase was largely
due to the surge in long-term contract and spot raw material prices. Raw
material procurement was reduced during the month of November and December
as the Company throttled operations by 20%.

Raw material price trend for the company:

Rs. per tonne
Raw materials 2006-07 2007-08 2008-09

Iron ore 1155 2111 2275
Coke 9641 14669 22006
Coal 5334 5138 9872

Iron ore: The Company sourced iron ore from its own joint venture upto 20%
of the total iron ore requirement and the rest from NMDC & other private
mine owners. The Company enhanced the proportion of iron ore procurement at
spot prices in the second half of 2008-09 to capitalize on declining spot
iron ore prices. The Company spent around Rs. 1,682 crores for procuring
iron ore in 2008-09 against Rs.1,458 crores in 2007-08.

Coke: The Company commissioned its third set of coke oven batteries which
meet 100% of the Company's coke requirement from September 2008 - import of
coke was completely stopped. The coke cost stood Rs. 1,075 crores in 2008-
09 against Rs. 1,154 crores in 2007-08 - the decline was due to higher
usage of captive coke.

Coal: The Company imported coal primarily from Australia and South Africa.
The Company renegotiated the procurement prices under the long-term coal
contracts with certain supplier which reduced input cost. Besides, it
blended soft-coking and semi soft-coking coal with coking coal for coke
manufacture that reduced the cost of production. The Company's coal cost
increased 132% from Rs. 2,061 crores in 2007-08 to Rs. 4,787 crores in
2008-09 mainly due to increase of 211 % in the long term contracted prices.

4. Employee Remuneration and Benefits

Rs. in crores
2008-09 2007-08 Change Change
Employees Remuneration
and Benefits 289 274 15 5%

Employee Remuneration and Benefits increased by 5% from Rs. 274 crores in
2007-08 to Rs. 289 crores in 2008-09 mainly due to annual increments. The
Company employed about 7669 employees as on 31 March 2009.

5. Manufacturing and Other expenses

Rs. in crores
2008-09 2007-08 Change Change
Manufacturing and Other
Expenses 2,429 2,098 331 16%

Manufacturing and Other expenses increased by 16% from Rs. 2,098 crores in
2007-08 to Rs. 2,429 crores in 2008-09. The major reasons for such
increases were

a) Increase in power and fuel cost by 25% (Rs. 134 crores) due to increase
in rate of Coal and other fuel used in generation of power.

b) Increase in Rate and taxes by Rs. 46 crores on account of imposition of
export duty by government during first half of FY 2008-09.

c) Increase in Carriage and Freight by Rs. 51 crores mainly due to high
rate of crude oil price during the year.

6. Interest
Rs. in crores
2008-09 2007-08 Change Change %

Interest and Finance 797 440 357 81%
Charges (net)

The interest cost went up from Rs. 440 crores in 2007-08 to Rs.797 crores
showing an increase of Rs. 357 crores. This increase was accounted by
higher interest of Rs. 96 crores on Long-term loans and balance Rs. 261
crores on working capital borrowings. The interest on Long term Loans went
up mainly due to commencement of certain facilities under 2.8 MTPA
expansion project during 2008-09 and new Cold Rolled Complex at Vijayanagar
& expansion project at Salem during 2007-08. The higher input prices and
volume increased the working capital requirements which resulted into
higher interest on working capital borrowings.

7. Depreciation;
Rs. in crores
2008-09 2007-08 Change Change

Depreciation 828 687 141 21

Depreciation increased by 21% from Rs.687 crores in 2007-08 to Rs.828
crores in 2008-09 due to

Commencement of the following project:

* Some facilities under 2.8 MTPA expansion project.

* Hot Strip Mill capacity expansion from 2.5 MTPA to 3.2 MTPA.

* Commissioning of New coated products line at Tarapur Works.

8. Exceptional Items

The flight of capital from equity markets following the turmoil in
financial markets put pressure on currencies including Indian rupee.
Exceptional Items represented net exchange loss of Rs.790 crores due to the
27.5% depreciation in the value of the rupee against US $.

9. Fixed Assets
Rs. in crores
2008-09 2007-08 Change Change %

Gross Block 16,897 13,952 2,945 21%
Less: Depreciation 3,811 2,997 814 27%
Net Block 13,086 10,955 2,131 19%
Capital Work-in Progress 9,243 5,613 3,630 65%
Total 22,329 16,568 5,761 35%

Gross Block increased during the year due to capitalization of the
following
projects:

* Some facilities under 2.8 MTPA expansion project.

* Hot Strip Mill expansion capacity from 2.5 MTPA to 3.2 MTPA.

* Commissioning of New coated products line at Tarapur Works.

* Addition of some support facilities at Salem Works.

Capital work-in-progress increased from Rs. 5,613 crores in 2007-08 to
Rs.9,243 crores in 2008-09. The growth in capital work-in-progress was due
a number of projects which are under implementation at the different
locations:

* 2.8 MTPA expansion project at Vijayanagar

* New Hot Strip Mill at Vijayanagar

* 3.2 MTPA expansion project at Vijayanagar

* Beneticiation plant of 20 MTPA at Vijayanagar

* 300 MW Power Plant at Vijayanagar

* Railway siding at Vasind

* 30 MW Power Plant at Tarapur

* Blooming Mill at Salem

10. Investment
Rs. in crores
2008-09 2007-08 Change Change %

Investments 1,2501 9241 3261 35%

Total investment increased from Rs. 924 crores in 2007-08 to Rs. 1,250
crores in 2008-09 mainly due to infusion of equity capital in subsidiaries
of Rs. 403 crores.

11. Inventories
Rs. in crores
2008-09 2007-08 Change Change %

Raw Materials 801 819 (18) -2%
Production Consumables
and Stores & Spares 317 186 131 70%
Work-in-Progress 132 44 88 199%
Semi Finished/ Finished
Goods 789 436 353 81%
Traded Goods 12 64 (52) -81
Total 2,051 1,549 502 32%

Inventories increased by 32% from Rs. 1,549 crores in 2007-08 to Rs. 2,051
crores in 2008-09. The average inventory holding in terms of number of days
as on 31 March 2009 was 53 days compared to 50 as on 31 March 2008.
Increase in stores & spares was mainly due to commencement of new
facilities. Increase of Finished Goods was mainly due to inventory (Rs.101
crores) arising out of trial run production of 2.8 MTPA expansion project.

12. Sundry Debtors

Rs. in crores
2008-09 2007-08 Change Change %

Debtors 415 357 58 16%
Less: Provision for
Doubtful Debts (17) (20) 3 -15%
398 337 61 18%

Sundry debtors increased by 18% from Rs. 337 crores in 2007-08 to Rs. 398
crores in 2008-09. The average debtors in terms of number of days as on 31
March 2009 was 10 days compared to 10 days as on 31 March 2008.

13. Loans and Advances

Rs. in crores
2008-09 2007-08 Change Change %

Loans and Advances 1,745 840 905 108%

Loans and Advances increased by from Rs. 840 crores in 2007-08 to Rs. 1,745
crores in 2008-09. The increase was mainly due to a) Loans and advance
given to JSW Steel (Netherlands) B.V. amounting to Rs. 664 crores.

b) Minimum Alternative Tax credit entitlement of Rs. 95 crores.

14. Current Liabilities

Rs. in crores
2008-09 2007-08 Change Change %

Liabilities 7,476 3,738 3,738 100%
Provisions 81 364 (283) -78%
Total 7,557 4,102 3,455 84%

The current liabilities increased from Rs. 4,102 crores in 2007-08 to
Rs.7,557 crores in 2008-09. The increase was mainly due to increase in the
value of purchases/services on account of expansion projects.

15. Secured and Unsecured Loans

Rs. in crores
2008-09 2007-08 Change Change %

Secured Loans 8,215 5,497 2,718 49%
Unsecured Loans 3,058 2,050 1,008 49%
Total 11,273 7,547 3,726 49%

The Company's total debt comprised secured loan including debentures,
longterm loans from banks and financial institutions and working capital
loans from banks and unsecured loans including long term advances from
buyers, foreign currency loans, zero coupon convertible bonds among the
others.

The increase in total debt from Rs. 7,547 crores as on 31 March 2008 to
Rs.11,273 crores as on 31 March 2009 were mainly due to

* Increased scale of production and the global financial crisis
necessitating an increase in working capital funds for day-to-day
operations.

* Drawal of additional fund for completion of mission critical projects.

* Increase in borrowings accounted by translation losses due to steep
depreciation of Rupee against US$.

The Company met its entire repayment schedule in 2008-09. The adjusted long
term debt equity ratio for the Company increased from 0.93 as on 31 March
2008 to 1.24 as on 31 March 2009.

Rs. in crores
2007-08 2008-09

Loan repayment 983 1,040

16. Capital Employed

Total capital employed increased 27 % from Rs. 15,224 crores as on 31 March
2008 to Rs. 19,288 crores as on 31 March 2009 due to increased scale of
operation and due to the funds invested for completion of ongoing projects
which are expected to be commissioned over the next 24 months.

Return on capital employed declined from 20.84% in 2007-08 to 12.20% on
account of the following reasons:

* Decline in the profitability due to lower realization, higher input cost
and production cuts caused by sharp demand contraction.

* Projects commissioned during the year which are expected to generate the
commensurate returns only in the following 12 months.

* Funds invested in projects which are yet to be commissioned - hence
generating no returns at present.

This is expected to correct over the next 12-18 months, with the demand for
steel picking up (improving profitability) and with the
stabilization/commissioning of projects (adding to the revenue and
profitability stream) - growing returns from the money invested.

17. Own Funds

Networth increased from Rs. 7,677 crores as on 31 March 2008 to Rs. 7,959
crores as on 31 March 2009. This was due to plough back of operational
surplus into the business to fund the future growth initiatives of the
Company.

Return on networth was lower from 27.09% in 2007-08 to 5.64% in 2008-09 due
to the decline in the profitability of the Company. Shareholders can expect
a sizeable correction in this performance matrix due to the cost cutting
measures adopted during the second half of 2008-09 and the commissioning of
the new blast furnace which is expected to further reduce the overall cost
of production and improve profitability. The book value of equity share
improved from Rs. 395 as on 31 March 2008 to Rs. 410 as on 31 March 2009.

Reserves: Reserves and surplus increased from Rs. 7,140 crores as on 31
March 2008 to Rs. 7,422 crores as on 31 March 2009. This is a zero cost
fund which strengthen the ability of the company to undertake growth
initiatives.

(E) LOOKING INTO THE FINANCIAL STATEMENTS (CONSOLIDATED)

The Company's consolidated financial statements include the financial
performance of the following Subsidiaries, Joint Ventures and Associate.

Subsidiaries:

i. JSW Steel (Netherlands) B.V.
ii. JSW Steel (UK) Limited
iii. Argent Independent Steel (Holdings) Limited
iv. JSW Steel Service Centre (UK) Limited
v. JSW Steel Holding (USA) Inc.
vi. JSW Steel (USA) Inc.
vii. JSW Panama Holdings Corporation
viii. Inversiones Eroush Limitada
ix. Santa Fe Mining
x. Santa Fe Puerto S.A.
xi. JSW Natural Resources Limited
xii. JSW Natural Resources Mozambique Limitada
xiii. JSW Steel Processing Centres Limited
xiv. JSW Bengal Steel Limited
xv. Barbil Beneticiation Company Limited
xvi. JSW Jharkhand Steel Limited
xvii. JSW Building Systems Limited

Joint Ventures:

i. Vijayanagar Minerals Private Limited
ii. Rhone Coal Company Private Limited
iii. Geo Steel LLC
iv. JSW Severtield Structures Limited

Associate:

i. Jindal Praxair Oxygen Company Private Limited

The Company reported a consolidated Turnover, EBIDTA and Net Profit of
Rs.17,113 crores, Rs.3,254 crores & Rs.275 crores respectively after
incorporating the financials of subsidiaries, joint ventures and
associates. The net profit for the consolidated Company was lower at Rs.275
crores compared to Rs. 459 crores in the stand-alone Company mainly due to
writing down of inventory and fall in realization & capacity utilisation
caused by demand contraction in USA and UK. The consolidated adjusted long
term debt gearing was at 1.79.

(F) OUTLOOK:

Silver lines at the horizon

Domestic steel industry outlook

The outlook for the steel sector remains promising in the coming years
tempered by lower estimated GDP growth of 6.5% for 2009-10. This is based
on revival in demand in certain user industries due to Government's
initiatives to mitigate the impact of global melt down.

To counter the economic slowdown, the Government announced monetary and
fiscal stimulus measures. Some of the measures which are expected to be
favourable to the steel sector are as under:

* Reduced the excise duty from 14% to 10% and to 8%; an initiative
toencourage affordability and consumption.

* Reintroduced the DEPB scheme (withdrawn in March 2008) to encourage
exports to neutralize the impact of local taxes.

* Reinstated basic customs duty for steel imports to protect India from
dumping of cheap and distressed exports.

* Encouraged the auto sector, an important steel consumer, through
variousmeasures namely:

* Allowed Government departments to replace government vehicles within the
permissible budget.

* Provided financial assistance to the State Governments to purchase buses
for urban transport under the JNNURM scheme.

* Allowed a one-time accelerated depreciation benefit C@3 50% (as against
approx. 15% normal) on the purchase of commercial vehicles up to 30
September 2009.

* Provided a series of benefits to the housing and real estate sector, a
major consumer of long steel products.

* Provided NHB with the refinancing facility from RBI for financing low-
cost housing.

* Housing loans for new homes at concessional rate of interest at 8% along
with limiting the margin money to a maximum 15%.

* State Governments to release lands for low and middle income housing
schemes.

* Real-Estate developers allowed to access ECB for Integrated Townships.

* Introduced other schemes for improving the liquidity for the
infrastructure sector.

Steel Consumption pattern - Sectorwise

Others 10%
Construction & Infrastructure 64%
Auto 12%
Manufacturing 14%

Source: IDS
Data for 2007-08

The apparent consumtion of steel from construction and infrastructure
sectors constitutes 64%. The Government of India accorded special focus in
the eleventh five year plan to Infrastructure sector, a big positive for
the steel industry.

Infrastructure

The Government of India is targeting Rs. 1,000 bn infrastructure
investments over the next two years.

Power

Rapid growth of the economy will lead to a huge demand for consistent power
supply on a pan India basis. As a result, significant steel demand is
expected to come from the power segment.

Oil and gas

India is creating the National Gas Grid at an investment of US$ 9 bn -
linking any source to any market

In the Indian gas segment, opportunities for steel demand abound.

* The expected growth in the power generation capacity in the Eleventh Plan
will necessitate creation of the feedstock (gas) transportation
infrastructure, driving the demand for steel.

* Bids are being invited for urban natural gas distribution; city gas
distribution (CG D). This could witness an estimated Rs 140 bn investment-
Rs 2 bn investment per city- over the next five years, creating a sizeable
demand for steel pipes of all sizes.

In addition, the irrigation sector offers a sizeable opportunity for
increased steel off take. The Eleventh Plan expects to create around 9
Million hectares of irrigation through large and medium irrigation
projects. The government has allocated Rs. 4 bn for micro irrigation in
Budget 2009-10.

Railways

More than Rs 2,000 bn investments are expected to boost railway
infrastructure during the Eleventh Plan.

* Indian Railways has drawn up plans for up gradation of rail
infrastructure and procurementof new assets of rolling stock during the
current financial year with an estimated expenditure of Rs. 375 bn.

* It has undertaken the construction of dedicated freight corridor, the
biggest infrastructural development activity of Indian Railways since
independence. An investment of Rs. 4 bn is envisaged in 2008-09 and Rs. 30
bn has been earmarked for 2009-10.

* The railway up-gradation plan comprises the renewal of 2,941 km railway
track, requiring about 339,228 tonnes of steel.

* It has undertaken the renewal of sleepers of 2,382 km which will require
about 38.59 lakh pre-stressed concrete (PSC) sleepers. Since the sleeper
renewal would be required for other purposes aswell, the railways are
looking at renewing 44.5 lakh PSC sleepers. This will require 88,200 MT
steel.

Roads & highways

India is developing an average 100 km of rural roads every day under the
Pradhan Mantri's Gram Sadak Yojana.

A good road network constitutes the basic infrastructure that propels the
development process through connectivity and opening up the backward
regions to trade and investment. The Indian Government is significantly
upgrading and expanding its road and highway infrastructure over the coming
years which are expected to fuel the demand for steel over the coming
years.

* The National Highways Authority of India plans to award 105 new road
projects worth Rs. 1,000 bn in 2009-10. Of the 105 projects, 40 projects
worth Rs. 400 bn are slotted for bidding in April 2009.

* The Ministry of Road Transport and Highways (MOSRT & H) has initiated
four-laning of 10,000 kms of road.

* Around Rs. 600 bn has been allocated under the Pradhan Mantri Gram Sadak
Yojana.

* The World Bank has funded (Rs 13.65 bn) the development of road
infrastructure in Himachal Pradesh.

* Future road projects comprise the creation of 15,000 kms of expressways
by 2020 at Rs. 1,500 bn investment.

* The fund requirement for Eleventh Plan for improving the National
Highways infrastructure is estimated at Rs. 25 bn.

* The targetfor new addition including widening, strengthening and multi-
laning of the national highway network in Eleventh Plan is about 7,000 kms

Automobile industry

As per UNIDO, India ranks 12th among the world's top 15 automakers. Despite
the recent sluggish demand, India still holds exciting growth potential for
the automobile industry. The low vehicular penetration in India compared to
the global average and compared to that of other developed/developing
nations is expected to correct - providing buoyancy to the automobile
sector and stimulating steel demand.

Inspite of global economic slowdown, the domestic automobile industry is
seeing signs of revival in Q1 CY 09 primarily from the robust domestic
demand. Besides, the World Trade Organization has ruled against China,
imposing a 25% import duty on auto-components. This is expected to benefit
the Indian auto-component manufacturers, fuelling steel demand. [Source:
IBEFj.

Housing

India's real estate sector is projected to grow 30% annually over the next
decade, attracting around $30 billion foreign investments. [Source:
ASSOCHAMj

Housing is significant engine for growth and development of the economy.
The buoyancy in the housing sector has a cascading impact on more than 250
related sectors. India has consistently faced a shortage of dwelling units.

Source: NBO

* The total housing requirement during the 11 th Plan Period will be 26.53
mn. The conservative estimates as per NUHHP -2007, highlight an investment
of Rs. 3613.18 bn during the Eleventh Plan to meet this requirement. This
has since been revised to about to Rs. 5100 bn.

* The Government amended FDI rule in the real estate sector which will
attract incremental FDI.

As per a DB Research report, by 2030 India will require about 10 mn new
units annually.

Overall Outlook

The opinion of optimists 'The worst is over' is gaining momentum based on
the latest release of data points on leading indicators of various
countries. While the pace of contraction is slowing in advanced countries,
the emerging economies showing signs of recovery. Even though the recovery
may be slow or gradual, the sentiment is turning positive. Current global
crisis, inspite of creating devastating impact on global economy, have been
combated through swift coordinated actions by Governments/Central banks
with the announcement of massive stimulus packages and easing of monetary
policies by using unconventional tools. These measures are expected to
increase the infrastructure spend which is positive for Steel Industry.

India and China continues to be torch bearers in this depressed environment
still showing a positive G DP growth. India, less impacted by global
crisis, in view of healthy financial system, started its march towards high
growth trajectory with early signs of recovery in core sectors. Large
outlays are proposed to be earmarked for building physical and social
infrastructure in India.

The apparent consumption exceeding the crude steel production world wide
establishes the fact that the de-stocking cycle is coming to an end. The
International Steel Prices are stable and the signs of revival in demand
are strong.

In these circumstances, the Company with rich product mix,estimated volume
growth of 72% and low conversion cost will be in a position to enhance its
market share by accessing robust rural domestic demand. The reset of long
term coking coal and iron ore contract prices at significantly lower levels
in the fiscal year 2009-10 will be an added advantage to the Company to
improve its margins even in the scenario of stable steel prices. The
company switched its focus to domestic market and exports are intended to

be reduced to 14% of total volume of sales in fiscal 09-10.

Forward looking and Cautionary Statements:

Certain statements in the Management Discussion and Analysis concerning our
future growth prospects are forward looking statements, which involve a
number of risks, and uncertainties that could cause actual results to
differ materially from those in such forward looking statements. The risks
and uncertainties relating to these statements include, but are not limited
to, risks and uncertainties regarding fluctuations in earnings, our ability
to manage growth, intense competition within Steel Industry including those
factors which may affect our cost advantage, wage increases in India, our
ability to attract and retain highly skilled professionals, time and cost
overruns on fixed-price, fixed-time frame contracts, client concentration,
restrictions on immigration, our ability to manage our internal operations,
reduced demand for steel, our ability to successfully complete and
integrate potential acquisitions, liability for damages on our service
contracts, the success of the companies in which-has made strategic
investments, withdrawal of fiscal governmental incentives, political
instability, legal restrictions on raising capital or acquiring companies
outside India, unauthorized use of our intellectual property and general
economic conditions affecting our industry. The Company does not undertake
to update any forward looking statements that may be made from time to time
by or on behalf of the Company.