Directors Report of Gujarat NRE Coke Ltd.

Mar 31, 2014

The Members,

The Directors present 27th Annual Report and the Audited Financial Statements for the financial year ended 31st March, 2014.

FINANCIAL RESULTS/HIGHLIGHTS

(Rs. in crores)

2013-14 2012-13

Total Income 1250.64 1751.94

Total Expenditure 1644.87 1336.37

Profit/(Loss) before Interest,

Depreciation and Tax (394.23) 415.57

Less: (1) Finance Cost 331.40 263.02

(2) Depreciation 61.30 58.33

Profit/(Loss) before Tax and

Exceptional Items 786.93) 94.22

Exceptional Items 47.47 47.95

Less: Provision for Taxation (273.59) 15.29

Profit/(Loss) after Tax (560.81) 30.98

Add : Amount brought forward - -

Amount available for appropriation (560.81) 30.98

Less : Amount transferred to

General Reserve 10.80 -

Add : Dividend for earlier year

written back 28.87 -

Add : Dividend tax written back 4.68 -

Less : Transferred to Debenture

Redemption Reserve - 30.98

Balance carried to Balance Sheet (538.06) -

REVIEW OF OPERATIONS

During the year under review, the Total Income from operations was Rs.1250.64 Crores as compared to Rs 1751.94 Crores in the previous year. The Company has suffered net loss of Rs. 560.81 crores during the year, as compared to the Profit of Rs. 30.98 crores during the previous year.

Steel industry, which is the largest consumer of coking coal and metcoke, continued to reel through extreme recessionary trends which has resulted in subdued demand of metcoke and also dragged its realizations to rock bottom levels. This had resulted in huge built up of inventories of coking coal and metcoke impacting the cash flows in the business.

In view of these adversities, Corporate Debt Restructuring Empowered Group (CDR EG), upon being approached by the Company, have approved CDR Package in March, 2014 under Corporate Debt Restructuring mechanism (CDR) issued by Reserve Bank of India.

The key features of CDR Package are given in detail in the Notes to the Financial Statements forming part of this Annual Report.

DIVIDEND

In view of the losses incurred, the Board does not recommend any dividend.

ISSUE OF EQUITY

The Company has allotted equity shares of Rs. 10/- as per following details:-

Date of Allotment No. of shares Particulars 22nd May, 2013 50,00,000 Issued to Promoters Group entities at a premium of Rs. 11.08 per share upon conversion of Warrants

17th June, 2014 1,21,61,222 Issued to ICICI Bank Ltd. at a premium OF Rs.1.01 per share upon conversion of Funded Interest Term Loan

17th June, 2014 3,35,00,000 Issued to Promoters Group entities at a premium of Rs. 0.90 per share upon conversion of Warrants

ISSUE OF CONVERTIBLE WARRANTS

The Company allotted 10,00,00,000 convertible warrants on 18th April, 2014 at a conversion price of Rs. 10.90 per Warrant aggregating Rs. 109.00 crores only and 6,00,00,000 convertible warrants on 17th June, 2014 at a conversion price of Rs. 10.72 aggregating Rs. 64.32 crores on preferential basis to the Promoter Group entities. Each Warrant is convertible at the option of the holders into One Equity Share of Rs. 10/- each.

NON-CONVERTIBLE DEBENTURES

During the year under review, the company redeemed Non- Convertible Secured Redeemable Debentures (NCDs) amounting Rs. 34.99 crores as per the terms of issue of these debentures. The NCDs amounting to Rs. 427.51 crores were outstanding at the end of the year under review.

LISTING

Both the Equity Shares and "B" Equity Shares of the Company are listed at the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Non-convertible Debentures of the company (including Debentures issued under QIP) are listed at BSE. The convertible warrants issued by the Company under QIP are listed at NSE and BSE. The Foreign Currency Convertible Bonds (FCCBs) are listed at Singapore Exchange Limited (SGX).

BUSINESS PLANS

The market for metcoke continued to remain sluggish during the year under review due to dwindling demand from Steel industry, the major user of metcoke. This had severely impacted realisations of our products.

Due to the market imbalances and the continued global economic slowdown, the Company has been facing liquidity constraints. This has resulted in the Company realigning its debts under CDR mechanism through CDR Package. The Company plans to gradually increase its capacity utilization along with its turnover and margins in a phased manner.

The Company''s projects for generation of power from waste heat emanating from its Coke Oven Plants in the States of Karnataka and Gujarat had to be temporarily shelved during the year under review due to liquidity constraints. However, during 2014-15 the project at Dharwad in Karnataka is proposed to be revived as it is at an advanced stage of completion. The Company is presently generating power through non polluting method i.e. through wind turbine generators having capacity to generate 87.5 MW of power.

SUBSIDIARIES

During the year, Jindal Steel & Power Ltd (Jindal Group) had acquired majority stake in Gujarat NRE Coking Coal Ltd. (GNCCL), erstwhile Australian mining subsidiary of the Company. Accordingly, GNCCL along with its three subsidiaries viz. Gujarat

Directors'' Report (Contd.)

NRE Wonga Pty Ltd, Gujarat NRE Resources NL and Southbulli Holdings Pty Ltd ceased to be subsidiaries of the company. The other five Australian subsidiaries of the Company viz. Gujarat NRE Properties Pty Ltd, Gujarat NRE Ltd, Gujarat NRE Coal (NSW) Pty Ltd, Wonga Coal Pty Ltd and Gujarat NRE India Pty Ltd also ceased to be subsidiaries during the year due to restructuring of their respective share capital.

The Company has two wholly-owned Indian Subsidiaries i.e. Manor Dealcom Pvt Ltd and Huntervalley Coal Pvt Ltd. The Financial Statements and other reports of these subsidiaries are not attached to this Annual Report pursuant to a general exemption granted under circular no 2/2011 dated 8th February 2011 of Ministry of Corporate Affairs. The relevant information of these subsidiaries as required by the said Circular of Ministry of Corporate Affairs has been provided in this Annual Report.

The Financial Statements and other reports related to these subsidiaries are available at Registered Office of the Company during the working hours and a copy thereof will be provided to the shareholders of the Company upon request.

MERGER

The Scheme of Amalgamation of Bharat NRE Coke Limited with the Company was approved by the shareholders of the Company on 28th January, 2013. However in view of subsequent development of reference of the Company to CDR EG for its debt restructuring, the said amalgamation was not allowed by the Hon''ble High Court of Calcutta.

CORPORATE GOVERNANCE

In compliance with the requirements of clause 49 of the Listing agreement with Stock Exchanges, a Report on ''Corporate Governance'' as on 31st March, 2014 and a Report on Management Discussions and Analysis are annexed to and form a part of this Report.

Chairman & Managing Director (CEO) and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as required by the aforesaid clause of the listing agreement and the said certificate is also annexed to and forms a part of this Report.

EMPLOYEE STOCK OPTION SCHEME

The Company had granted 95,89,000 options to its Employees/Directors through four different tranches under GNCL Employee Stock Options Scheme 2007 (ESOP 2007) till the end of previous year against the approval received from shareholders to grant upto 1,21,95,302 options under the said Scheme.

As required by clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, the disclosures with regard to Stock Options in respect of GNCL Employee Stock Option Scheme 2007 as on 31st March, 2014 are given in an Annexure to this Report.

The Company has received a certificate from the Auditors that the aforesaid Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the meeting for inspection by the shareholders.

DIRECTORS

Dr Basudeb Sen and Mr Chinubhai R Shah, Non Executive Directors resigned from their office w.e.f. 18th March 2014 and

Mr Subodh Kumar Agrawal, Non Executive Director has resigned from his office w.e.f. 25th May 2014. The Board records its appreciations for the services rendered by them during their tenure in the Company.

Dr Mahendra Kumar Loyalka retires by rotation at the forthcoming Annual General Meeting and express his unwillingness to be re- appointed.

Mr Sisir Kumar Mukherjee was appointed by the Board as a Director in the casual vacancy caused by the resignation of Dr Basudeb Sen in terms of Section 161(4) of the Companies Act 2013 w.e.f. 18th March 2014 and accordingly, he retires by rotation at the ensuing Annual General Meeting.

Mr Sisir Kumar Mukherjee and Mr Murari Sananguly are proposed to be re-appointed as Directors designated as Independent Directors of the Company pursuant to the provisions of Section 149 of Companies Act 2013 w.e.f. 1st October 2014 and the Listing Agreement for a period of 5 years and they shall not be liable to retire by rotation.

Mr Gopal Prasad Dokania was appointed as an Additional Director by the Board at its meeting held on 30th June 2014 to hold office upto the date of ensuing Annual General Meeting. It is proposed to appoint him as a Director designated as Independent Director at the ensuing Annual General Meeting for a period of 5 years w.e.f. 1st October 2014 and he shall not be liable to retire by rotation.

Mr C Narasimhan has been appointed as a Nominee Director of State Bank of India w.e.f. 8th August 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, your Directors confirm having -

i) Followed in the preparation of the annual accounts the

applicable accounting standards with proper explanation relating to material departures;

ii) Selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the year under review and of the profit of the Company for the year ended on that date;

iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud or other irregularities; and

iv) prepared the annual accounts on a ''going concern basis''."

AUDITORS

M/s. N. C. Banerjee & Co., Chartered Accountants, the Statutory Auditors hold office upto the forthcoming Annual General Meeting of the Company and are eligible for reappointment. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has received written confirmation from M/s. N C Banerjee & Co., that their re-appointment as Auditors, if made, would be in conformity within the limits prescribed in the said Section and that they are not disqualified from being appointed as the Auditors of the Company.

Directors'' Report (Contd.)

AUDITORS'' REPORT

The Directors refer to the auditors'' observation in the Auditors'' Report and as required under Section 217(3) of the Companies Act, 1956, provide their explanation as under:

i. In respect of auditors'' observation in standalone financial

statements regarding default in payment of interest and repayment of dues to financial institutions, banks and NCD holders as per para (xi) of Annexure to Auditors Report :

. Due to the continued slowdown in the domestic and global

market, the operations of the company were severely impacted. The Company ended the financial year with a high operating loss mainly due to lower price realization, diminution in the value of stocks, and unusual diminutions in the value of rupees as against the US dollar. Due to above, the company was unable to meet its interest and principal liabilities under the various credit facilities from financial institutions, banks and NCD holders in time. Consequently, the Company''s debts were restructured under the Corporate Debt Restructuring (CDR) Forum. The company is also taking various steps to reduce costs and improve efficiencies to make its operations profitable.

ii. In respect of auditors'' observation in standalone financial

statements regarding delay in depositing statutory dues, as per para (ix) of Annexure to Auditors Report, with the appropriate authorities :

It is clarified that the delay arose on account of mismatch in cash flow/liquidity issues due to prevailing uncertain economic environment that adversely impacted operating conditions as stated above.

iii. In respect of auditors'' Qualifications in consolidated financial statements regarding considering Financial Statements of erstwhile five Australian Subsidiaries, which were more than six months old on the date on which these five companies ceased to be subsidiaries of the company and in respect of remaining four erstwhile Australian Subsidiaries, the Management Approved Accounts as on the date on cessation of Subsidiaries has been considered :

Due to acquisition of majority stake in the Australian mining Company Gujarat NRE Coking Coal Ltd (GNCCL) by the Jindal Steel & Power Ltd. (Jindal Group) in November 2013, the said mining Company along with its Australian subsidiaries company ceased to be subsidiaries of the Company from that date. The New Management of GNCCL has not complied with the company''s request for providing Audited Financial Statement of the erstwhile Australian Subsidiaries for the relevant period. Hence for the purposes of deconsolidation of these subsidiaries the company has considered latest available Audited Consolidate Financial Statement as on 31st March, 2013 of these companies.

As far as other erstwhile Australian Subsidiaries are concerned, the Management Approved Accounts were made available to the company on the date it ceased to be subsidiaries of the company, as Audit of these companies were not mandatory as per rules and regulation of that country.

COST AUDIT

The Company had reappointed M/s B Mondal & Co., Practicing Cost Accountants as Cost Auditor under the provisions of Section 233B of the Companies Act, 1956, to audit the cost records of its steel and metcoke plant(s) for the financial year 2013-14.

The particulars of cost auditor/cost audit report etc. as required by General Circular no 15/2011 dated 11th April 2011 issued by Cost

Audit Branch of Ministry of Corporate Affairs, Government of India are given below

a) Name & address of the Cost Auditor – M/s. B Mondal & Associates 61/H/15, Raja Naba Krishna Street, Kolkata - 700 005.

b) Name and membership no of the partner of the firm – Mr Baidyanath Mondal, Membership no - 11681.

c) Due date of filing and actual date of filing of the cost audit report for the year 2012-13

Due date of filing :- 30.09.2013

Actual date of filing :- 31.03.2014

PUBLIC DEPOSITS

The Company has not accepted or renewed any Public Deposits, as defined under Section 58A of the Companies Act, 1956, during the year under review.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed and forms a part of Annual Report.

PARTICULARS OF EMPLOYEES

There was no employee during the year under review , who was in receipt of remuneration of more than Rs. 5,00,000/- per month if appointed for a part of the year or Rs. 60,00,000/- per annum, if appointed for whole year. Therefore, the particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are not applicable.

PERSONNEL / INDUSTRIAL RELATIONS

The Company maintained cordial and harmonious relations at all levels at the offices and plants of the Company and its subsidiaries throughout the year under review.

APPRECIATION

We wish to acknowledge the understanding, support and services of our workers, staff and executives which has largely contributed to efficient operations and management of the Company during the year under review. We also take this opportunity to express our deep sense of gratitude to all our customers, dealers, suppliers, bankers, government officials and all other business associates for their continuous guidance and support to the Company and their continued confidence in its management. We also take this opportunity to express our sincere thanks to our shareholders and debenture holders for the confidence and faith in our company.

For and on behalf of the Board

Place : Wollongong Arun Kumar Jagatramka Dated : 14th August, 2014 Chairman & Managing Director

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Mar 31, 2012

The Directors have pleasure in presenting the Twenty-Fifth Annual Report and the Audited Financial Results on the business and operations of the Company for the financial year ended on March 31, 2012.

FINANCIAL RESULTS/HIGHLIGHTS

Rs. in crores

2011-12 2010-11

Income from Operations 331.00 336.00

Less :Finance Cost 208.57 161.12

Less :Depreciation 56.77 50.44

Profit before Tax & Exceptional Items 65.66 124.44

Less :Exceptional Items 60.13 0.00

Profit before Tax 5.53 124.44

Less : Provision for Taxation 2.44 21.79

Profit after Tax 3.09 102.65

Add : Balance brought forward 22.75 5.95

Amount available for appropriation 25.84 108.60

Less : Appropriations

Transferred to( )/from(-)

General Reserve -10.80 0.00

Dividend and Dividend Tax for earlier year 0.00 0.00

Proposed dividend on equity shares 28.87 57.73

Corporate Tax on Dividend 4.68 9.37

Debenture Redemption Reserve 3.09 18.75

Balance carried to Balance Sheet 0.00 22.75

REVIEW OF OPERATIONS

Indian economy during the year under review, went through one of its most challenging phases in last two decades with slow growth, runaway inflation, high interest rates, falling industrial output, depreciating rupee, adverse balance of payments position and last but not the least, global uncertainty, severely hurting economic activities. Indian steel industry after witnessing a modest recovery during the previous financial year, went into a slump during 2011-12 being confronted with a series of impediments such as iron ore mining issues and its limited availability, flat demand prevailing throughout 2011-12 on account of compounding effect of slow economic growth, etc. This had a major impact on the operations of merchant metcoke producers in India like our Company, as steel industry is the largest consumer of the coking coal and metcoke. However, it is believed that with India investing heavily in infrastructure and allied industries, the demand for steel and consequently for metcoke is bound to rise in the coming years.

The Company reported income from operations amounting to Rs.331.00 Crores during the year under review as compared to Rs 336.00 Crores during the previous year as a consequence of flat demand. The net profit after tax earned during the financial year ended 31st March, 2012 was reported at Rs. 3.09 crores due to the adverse impact of depreciation in value of rupee as well as slow economic growth during the year under review, as compared net profit after tax of Rs. 102.65 crores reported during the previous year.

DIVIDEND

There being inadequacy/absence of profit for payment of dividend for the year under review, the Board unanimously decided to recommend payment of dividend considering the dividend track record of the Company by utilizing the balance lying to the credit of Profit & Loss Account and/or General Reserve in accordance with the provisions of Companies (Declaration of Dividend out of Reserves) Rules, 1975. Accordingly, the Board recommends payment of dividend of Re.0.50 per Equity Share of Rs.10 each (5%) and Re.0.50 per "B" Equity Share of Rs.10 each (5%) respectively, for the year ended 31st March 2012 subject to the approval of members of the Company and Ministry of Corporate Affairs. The total payout towards the said dividend will amount to Rs.33.55 crores (approx. with dividend tax) for the year under review as compared to Rs. 67.10 crores (with dividend tax) for the previous year.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

In terms of Sections 205A & 205C of the Companies Act, 1956, the company since the previous Directors Report, had transferred a sum of Rs. 12,21,329.00 (Rupees Twelve lacs, twenty-one thousand three hundred twenty nine only) for 2nd interim dividend 2003-04, Rs.4,31,199.00 (Rupees Four lacs, thirty one thousand, one hundred ninety nine only) for final dividend 2003- 04 and Rs.6,49,498.50 (Rupees Six lacs, forty-nine thousand, four hundred ninety eight & paise fifty only) for 1st interim dividend for 2004-06 to the Investor Education & Protection Fund (IEPF) created by the Central Government, since these dividend remained unclaimed for a period of 7 years. The Company had also transferred a sum of Rs.1,28,275.50 (Rupees one lac, twenty eight thousand, two hundred seventy five & paise fifty only) towards final dividend for the year 2003-04 paid by erstwhile FCGL Industries Ltd (since merged with the company) to the IEPF during the year under review.

ISSUE OF EQUITY

The Company allotted 1,74,07,793 Equity Shares of Rs.10 each at a premium of Rs.34.64 per share and 17,40,778 "B" Equity Shares of Rs. 10 each during the year under review consequent upon conversion of 174 (one hundred seventy-four) Zero Coupon Unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 100000 each issued in 2006 and with this conversion the entire series of these FCCBs stands converted to equity shares of the company.

The Company also allotted 52,280 Equity Shares of Rs.10 each at a premium of Rs. 13.86 per share and 5,228 "B" Equity Shares of Rs. 10 each as bonus shares upon conversion of Options issued under Employee Stock Option Scheme, 2005 and 21,700 Equity Shares of Rs. 10 each at a premium of Rs.8.05 per share and 2,170 "B" Equity Shares of Rs. 10 each as bonus shares upon conversion of Options issued under 2nd Tranche of GNCL Employee Stock Options Scheme 2007 during the year under review.

NON-CONVERTIBLE DEBENTURES

During the year under review, the company redeemed Non- Convertible Secured Redeemable Debentures (NCDs) amounting Rs. 25 crores which were issued to Life Insurance Corporation of India (LIC) as per the terms of issue of these debentures. The NCDs outstanding at the end of the year under review, aggregated to Rs. 375 crores comprising of Qualified Institutional Placement (QIP) issue of NCDs amounting Rs.250 crores issued during the year 2010-11 and the balance comprising of NCDs issued to LIC and nationalised banks in the years prior to 2010-11.

LISTING

Both the Equity Shares and "B" Equity Shares of your Company are listed at the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Non- convertible Debentures of the company (including Debentures issued under QIP) are listed at Bombay Stock Exchange. The convertible warrants issued by the Company under QIP are also listed at both NSE and BSE.

BUSINESS PLANS

We believe that the current decade till 2020 would continue to be interesting and exciting, similar to the one that has gone by. Coking Coal and metcoke are going to be in huge demand with steel demand rising, as Indian economy grows with investments in infrastructure and other industries. We are in a sector which is one of the most lucrative business possible in the current times. We have everything going for us, a well developed market, and a global mismatch of demand and supply with demand outstretching supply. Our company has an irrefutable advantage of secured supply of excellent quality raw materials, a dedicated team and most importantly a supportive share holder family, making us the undisputable leader in our business with strong fundamentals.

During the year under review, the company through its Australian subsidiary(ies) took an important step towards achieving its plan for ramping up coking coal production at Australian mines to above 5 MTPA (million tonnes per annum) by 2015-16 by installing longwall mining machinery at one of its mines i.e. at NRE No 1 after receiving necessary Departmental approval. Steps have also been initiated for expanding the production capacity of metcoke in India and we expect to raise the production capacity to around 4 MTPA in the next 4 years.

The Company is presently generating power through non polluting method i.e. through wind turbine generators having capacity to generate 87.5 MW. Further, the projects for generation of power having an aggregate capacity of 60 MW, from waste heat emanating from the Company's coke oven plants are at various stages of completion.

SUBSIDIARIES

The Company has two Indian Subsidiaries and nine Australian Subsidiaries at the close of the financial year under review. The consolidated financial statements presented by the company and annexed to the Annual Report 2011-12 include the financial information of the subsidiaries prepared in accordance with the applicable accounting standard. The Ministry of Corporate Affairs vide its circular no 2/2011 dated 8th February 2011 has granted a general exemption under Section 212(8) of the Companies Act 1956, from attaching the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies to the balance sheet of any company upon compliance of certain conditions. As the company is in compliance with the said circular and as per consent of Board through a resolution, the Balance Sheet, Profit & Loss Account and other documents of the subsidiaries are not attached to this Annual Reports & Accounts. However, the annual accounts of the subsidiary companies and related detailed information shall be made available to the shareholders of the company and its subsidiaries seeking such information in writing at any point of time. The annual accounts of the subsidiary companies are available at Registered Office of the Company during the working hours and also available at the respective offices of the Subsidiary companies.

FINANCIAL OBLIGATIONS

The Company has been regular in the payment of interest and/or repayment of loans to financial institutions and/or banks or in meeting its other financial obligations during the year under review.

CORPORATE GOVERNANCE

In compliance with the requirements of clause 49 of the Listing agreement with Stock Exchanges, a Report on 'Corporate Governance' as on 31st March, 2012 and a Report on Management Discussions and Analysis are annexed to and forms a part of this Report.

Chairman & Managing Director (CEO) and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as required by the aforesaid clause of the listing agreement and the said certificate is also annexed to and forms a part of this Report.

EMPLOYEE STOCK OPTION SCHEME

The Company had granted 11,15,000 options under Employee Stock Option Scheme 2005 (ESOP 2005) against the authority from shareholders to grant 11,75,000 options. The employees/Directors of the company exercised 8,24,148 options during the exercise period. The validity of the said scheme expired on 12th January 2012 and accordingly, the outstanding options under the scheme have also expired.

The Company had granted 60,29,000 options to its Employees/Directors through three different tranches under GNCL Employee Stock Options Scheme 2007 (ESOP 2007) till the end of previous year. A fourth tranche of options aggregating 35,60,000 were granted under ESOP 2007 to the Employees/Directors of the company during the year under review. The Company has therefore granted a total of 95,89,000 options under various tranches of ESOP 2007 Scheme till 2011-12 against the approval received from shareholders to grant upto 1,21,95,302 options under the said Scheme.

As required by clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, the disclosures with regard to Stock Options in respect of GNCL Employee Stock Option Scheme 2007 as on 31st March, 2012 are given in an Annexure to this Report.

The Company has received a certificate from the Auditors that the aforesaid Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certificate would be available at 25th Annual General Meeting for inspection by the shareholders.

DIRECTORS

Dr Mahendra Kumar Loyalka and Mr Murari Sananguly, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re- appointment in terms of the Articles of Association of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, your Directors confirm having -

i) Followed in the preparation of the annual accounts the applicable accounting standards with proper explanation relating to material departures, if any;

ii) Selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the year under review and of the profit of the Company for the year ended on that date;

iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud or other irregularities; and

iv) prepared the annual accounts on a 'going concern basis.

AUDITORS

M/s. N. C. Banerjee & Co., Chartered Accountants, the Statutory Auditors hold office upto the forthcoming Annual General Meeting of the Company and are eligible for reappointment i.e. to audit the Accounts of the Company for the financial year 2012-13. In compliance with the provisions of Section 224(1B) of the Companies Act, 1956, the Company has received written confirmation from M/s. N C Banerjee & Co., that their re- appointment as Auditors, if made, would be in conformity within the limits prescribed in the said Section and that they are not disqualified from being appointed as the Auditors of the Company within the meaning of Section 226 of the said Act.

AUDITORS' REPORT

The observations of the Auditors in their Report read with relevant notes on the accounts, as annexed are self-explanatory and need no elaboration.

COST AUDIT

Cost Audit Branch of the Ministry of Corporate Affairs vide its order no 52/26/CAB-2010 dated 30th June 2011 has made it mandatory for company(ies) which is/are engaged in production of steel products to appoint a Cost Auditor to audit cost records of steel plant/unit(s) for the financial year 2011-12. Our Company has accordingly, appointed M/s B Mondal & Co., Practicing Cost Accountants as Cost Auditor under the provisions of Section 233B of the Companies Act, 1956, to audit the cost records of steel plant located at Bhachau in the State of Gujarat for the financial year 2011-12.

PUBLIC DEPOSITS

The Company has not accepted or renewed any Public Deposits, as defined under Section 58A of the Companies Act, 1956, during the year under review.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of this Report as an Annexure. A copy of the said Annexure is annexed hereto.

PARTICULARS OF EMPLOYEES

The information on Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 in respect of employees of the Company forms a part of this Report as an Annexure. A copy of the said Annexure is annexed hereto.

PERSONNEL / INDUSTRIAL RELATIONS

The Company maintained cordial and harmonious relations with its workers/employees at all levels at the offices and plants of the Company and its subsidiaries throughout the year under review.

APPRECIATION

We wish to acknowledge the understanding, support and services of our workers, staff and Executives which has largely contributed to efficient operations and management of the Company during the year under review. We also take this opportunity to express our deep sense of gratitude to all our customers, dealers, suppliers, bankers, government officials and all other business associates for their continuous guidance and support to the Company and their continued confidence in its management. We also take this opportunity to express our sincere thanks to our shareholders and debenture holders for the confidence and faith in our company.

For and on behalf of the Board

Place : Kolkata Arun Kumar Jagatramka

Dated : 27th May, 2012 Chairman & Managing Director

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Mar 31, 2011

The Members,

The Directors have pleasure in presenting the Twenty-Fourth Annual Report and the Audited Financial Results on the business and operations of your Company for the financial year ended on March 31, 2011.

FINANCIAL RESULTS/HIGHLIGHTS

Rs. in crores

2010-11 2009-10

Income from Operations 325.96 246.98

Less :Interest 151.08 126.14

Less :Depreciation 50.44 46.47

Profit before Tax 124.44 74.37

Less : Provision for Taxation 21.79 22.50

Profit after Tax 102.65 51.87

Add : Balance brought forward 5.95 80.39

Amount available for appropriation 108.60 132.26

Less : Appropriations

Transferred to General Reserve 0.00 5.00

Dividend and Dividend Tax for

earlier year 0.00 0.50

Proposed dividend on equity shares 57.73 55.29

Corporate Tax on Dividend 9.37 9.27

Debenture Redemption Reserve 18.75 56.25

Balance carried to Balance Sheet 22.75 5.95

REVIEW OF OPERATIONS

The steel industry witnessed recovery during the financial year 2010-11. Consequently, coking coal and met coke being major raw material for steel industry and market, also witnessed consolidation with rise in prices. The Company reported higher income from operations amounting to Rs.325.96 Crores during the financial year ended 31st March, 2011 as compared to Rs 246.98 Crores during the previous year as a consequence of better realizations and a continuous focus on cost management during the year under review. Consequently, the net profit after tax earned during the financial year ended 31st March, 2011 was higher at Rs. 102.65 crores as compared to Rs. 51.87 crores during the previous year.

DIVIDEND

The Directors are pleased to recommend a dividend of Re.1/- per Equity Share of Rs.10 each and Re.1/- per "B" Equity Share of Rs.10 each respectively for the year ended March 31, 2011. While there is no change in rate of dividend as compared to previous year, the total payout will amount to Rs.67.10 crores (with dividend tax) as compared to Rs.64.56 crores (with dividend tax) for the previous year.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

In terms of Sections 205A & 205C of the Companies Act, 1956, the company had transferred during the year under review, a sum of Rs. 5,99,015.50 (Rupees Five lacs, Ninety nine thousand fifteen and paise fifty only) and Rs.7,56,351.93 (Rupees Seven lacs, Fifty six thousand, three hundred fifty one and paise ninety three only) to the Investor Education & Protection Fund created by the Central Government towards dividend for the years 2002-03 & 2003-04 (1st interim) respectively, since these dividend remained unclaimed for a period of 7 years.

ISSUE OF EQUITY

The Company allotted 4,98,19,421 "B" Equity Shares of Rs.10 each on 10th May, 2010 pursuant to a bonus issue in the ratio of 1 "B" Equity Share of Rs. 10 each for every 10 Equity Shares held.

The Company also allotted 1,00,044 Equity Shares of Rs.10 each at a premium of Rs.34.64 per share and 10,004 "B" Equity Shares of Rs. 10 each as bonus shares during the year under review, upon conversion of 1 (one) Zero Coupon Unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 100000 each issued in 2006.

The Company also allotted 85,50,000 Equity Shares of Rs.10 each at a premium of Rs.55.78 per share and 8,55,000 "B" Equity Shares of Rs. 10 each as bonus shares upon conversion of warrants by promoters/promoter group companies. The Company further allotted 4,26,795 Equity Shares of Rs.10 each at a premium of Rs. 13.86 per share and 42,679 "B" Equity Shares of Rs. 10 each as bonus shares upon conversion of Options issued under Employee Stock Option Scheme, 2005 and 1,27,300 Equity Shares of Rs. 10 each at a premium of Rs.8.05 per share and 12,730 "B" Equity Shares of Rs. 10 each as bonus shares upon conversion of Options issued under 2nd tranche of GNCL Employee Stock Options Scheme 2007.

QUALIFIED INSTITUTIONAL PLACEMENT

The Company made a Qualified Institutional Placement (hereinafter referred to as QIP) comprising of 11% Secured Redeemable Non convertible Debentures (NCDs) amounting Rs. 250 crores along with 2,08,00,000 Warrants at a conversion price of Rs.120 each to Qualified Institutional Buyers during the year under review to raise funds for capex and general corporate purposes.

NON-CONVERTIBLE DEBENTURES

During the year under review, the company redeemed Non- Convertible Secured Redeemable Debentures (NCDs) for an amount of Rs. 150 crores issued to Axis Bank Ltd. The NCDs outstanding at the end of the year under review aggregated to Rs. 400 crores comprising of QIP issue of NCDs amounting Rs.250 crores and NCD issued to LIC and nationalised banks in the previous year(s) amounting to Rs. 150 crores.

STATUS OF FCCBs

Your Directors are pleased to inform that 1% Unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 55 million were fully converted by its holders before its due date of redemption.

Further, at the year end, bonds worth USD 17.40 million remain outstanding out of the Unsecured Zero Coupon FCCBs of USD 60 million issued in 2006 and due for redemption in 2011. However, subsequent to the close of the year under review, the Company has received notices and it has since converted all the outstanding bonds worth USD 17.40 million on 8th April, 2011.

LISTING

Both the Equity Shares and "B" Equity Shares of your Company are listed at the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Non- convertible Debentures of the company including Debentures issued under QIP are listed at Bombay Stock Exchange. The warrants issued by the Company under QIP are listed at both NSE and BSE.

BUSINESS PLANS

Coking Coal and Metcoke are commodities which are in high demand globally. We at Gujarat NRE believe in investing in our capacities and to take advantage of any upside in the market due to increased demand and supply mismatch. The Metcoke producing capacity of the company in India is presently at 1.43 MTPA which is planned for increase to 4 MTPA in another 4-5 years at an investment of around Rs. 800 crores. Similarly, there are plans to ramp up production of coking coal in Australia mines to 6 MTPA by 2015 from existing production levels of around 1.55 MTPA, at an additional investment of around AUD 400 million.

The company is in the process of commissioning its first waste heat power plant of 15 MW out of the total 60 MW waste heat power generation facilities being built near its coke plants. This only reiterates the company's commitment to the environment, having already invested in 87.5 MW power generating capacity through wind mills.

SUBSIDIARIES

The consolidated financial statements presented by the company include the financial information of the subsidiaries prepared in accordance with the applicable accounting standard. The Ministry of Corporate Affairs vide its circular no 2/2011 dated 8th February 2011 has granted a general exemption under Section 212(8) of the Companies Act 1956, from attaching the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies to the balance sheet of any company upon compliance of certain conditions. As the company is in compliance with these conditions, the Balance Sheet, Profit & Loss Account and other documents of the subsidiaries are not attached to this Annual Reports & Accounts. However, the annual accounts of the subsidiary companies and related detailed information shall be made available to the shareholders of the company and its subsidiaries seeking such information at any point of time. The annual accounts of the subsidiary companies are also available at the Registered office of the Company during the working hours and also at the respective offices of the Subsidiary companies.

FINANCIAL OBLIGATIONS

The Company has been regular in the payment of interest and/or repayment of loans to financial institutions and/or banks or in meeting its other financial obligations during the year under review.

CORPORATE GOVERNANCE

Your Company continues to be committed to Good Corporate Governance aligned with best-of-breed practices. A Report on 'Corporate Governance' as on 31st March, 2011 in accordance with the provisions of Clause 49 to the Listing Agreement is annexed hereto. The same has been certified by the Statutory Auditors of the Company. A Report on Management Discussions & Analysis is also annexed hereto and forms a part of this Report.

Chairman & Managing Director (CEO) and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as required by clause 49 of the listing agreement and the said certificate is also annexed to this Annual Report.

EMPLOYEE STOCK OPTION SCHEME

With a view to remain a preferred employer, Stock Options were granted to the Directors/Employees of the Company/its subsidiaries under Employee Stock Options Scheme 2005 and GNCL Employee Stock Options Scheme 2007 during the financial years 2006-07 and 2007-08 respectively. The Directors further granted 32,14,000 options on 9.7.2010 under 3rd Tranche of GNCL Employee Stock Option Scheme, 2007.

The Options under Employee Stock Option Scheme 2005 got vested on 20th January, 2010. The eligible employees/Directors exercised 10,58,224 options under this scheme till the end of the year under review.

As required by clause 12 of the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999, the disclosures with regard to Stock Options in respect of both Employee Stock Option Scheme, 2005 and GNCL Employee Stock Option Scheme 2007 as on 31st March, 2011 are given in an Annexure to this report.

DIRECTORS

Dr Basudeb Sen and Mr Chinubhai R Shah, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment in terms of the Articles of Association of the Company.

The present tenure of Chairman & Managing Director, Mr Arun Kumar Jagatramka would expire on 27th March 2012. It is proposed to reappoint him as Chairman & Managing Director for a period of 5 years w e f 28th March 2012 and a resolution seeking the approval of shareholders in this regard is included in the notice of 24th Annual General Meeting.

Mr Rajendra Prasad Jain resigned from the post of Executive Director with effect from 21st October 2010 due to health reasons.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, your Directors confirm having

i) Followed in the preparation of the annual accounts, the applicable accounting standards with proper explanation relating to material departures, if any;

ii) Selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the year under review and of the profit of the Company for the year ended on that date;

iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud or other irregularities; and

iv) prepared the annual accounts on a 'going concern basis'."

AUDITORS

M/s. N. C. Banerjee & Co., Chartered Accountants, the Statutory Auditors hold office upto the forthcoming Annual General Meeting of the Company and are eligible for reappointment to audit the Accounts of the Company for the financial year 2011-12. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has received written confirmation from M/s. N C Banerjee & Co., that their re- appointment as Auditors, if made, would be in conformity within the limits prescribed in the said section and that they are not disqualified from being appointed as the Auditors of the Company within the meaning of Section 226 of the said Act.

AUDITORS' REPORT

The observations of the Auditors in their Report read with relevant notes on the accounts, as annexed are self-explanatory and need no elaboration.

PUBLIC DEPOSITS

The Company has not accepted or renewed any Public Deposits, as defined under Section 58A of the Companies Act, 1956, during the year under review.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of this Report as an Annexure. However, as permitted by Section 219(1)(b)(iv) of the Act, this Annual Report is being sent to all the members of the Company excluding the said Annexure.

PARTICULARS OF EMPLOYEES

The information on Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this Report as an Annexure. However, as permitted by Section 219(1) (b)(iv) of the Companies Act, 1956 this Annual Report is being sent to all the members of the Company excluding the said Annexure.

PERSONNEL / INDUSTRIAL RELATIONS

The Company maintained cordial and harmonious relations at all levels at the offices and plants of the Company and its subsidiaries throughout the year under review.

APPRECIATION

We wish to acknowledge the understanding, support and services of our workers, staff and Executives which has largely contributed to efficient operations and management of the Company during the year under review. We also take this opportunity to express our deep sense of gratitude to all our customers, dealers, suppliers, bankers, government officials and all other business associates for their continuous guidance and support to the Company and their continued confidence in its management. We also take this opportunity to express our sincere thanks to our shareholders and debenture holders for the confidence and faith in our company.

For and on behalf of the Board

Place : Kolkata Arun Kumar Jagatramka

Date : 15th day of July, 2011 Chairman & Managing Director

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Mar 31, 2010

The Directors are pleased to present the Twenty-third Annual Report and the Audited Financial Results of the Company for the financial year ended on March 31, 2010.

FINANCIAL RESULTS/HIGHLIGHTS

2009-10 2008-09

Income from Operations 246.98 357.01

Less: Interest 126.14 64.75

Less: Depreciation 46.47 39.35

Profit before Tax & Exceptional Items 74.37 252.91

Less: Exceptional Items 0.00 114.72

Profit before Tax 74.37 138.19

Less: Provision for Taxation 22.50 30.95

Profit after Tax 51.87 107.24

Add : Balance brought forward 80.39 90.88

Amount available for appropriation 132.26 198.12 Less : Appropriations

Transferred to General Reserve 5.00 -

Dividend & Dividend Tax for earlier year 0.59 0.02

Proposed dividend on equity shares 54.80 47.19

Corporate Tax on Dividend 9.10 8.02

Debenture Redemption Reserve 56.25 62.50

Balance carried to Balance Sheet 6.52 80.39



REVIEW OF OPERATIONS

The unprecedented crash in the commodity prices witnessed during the second half of the financial year 2008-09 coupled with global financial crisis had a major impact on the companys performance during the year under review. The market took its own time to regroup, stabilise and commence recovery. The lower commodity price along with the fall in margins affected the companys topline and bottomline. Consequently, the Company reported income from operations of Rs.246.98 Crores during the financial year ended 31st March, 2010 as compared to Rs 357.01 Crores during the previous year. The net profit after tax earned during the financial year ended 31st March, 2010 amounted to Rs. 51.87 crores as compared to Rs.107.24 crores during the previous year.

ISSUE OF EQUITY

The Company allotted 1,91,008 Equity Shares of Rs.10 each at a premium of Rs.24.31 per share during the year upon conversion of 6 (six) 1% Unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 25000 each issued in 2005 and 50,02,240 Equity Shares of Rs.10 each at a premium of Rs.34.64 per share upon conversion of 50 ( fifty) Zero Coupon Foreign Currency Convertible Bonds (FCCBs) of USD 100000 each issued in 2006.

The Company also allotted 1,64,50,000 Equity Shares of Rs.10 each at a premium of Rs.55.78 per share to promoters/promoter group companies and 40,00,000 Equity Shares of Rs.10 each at a premium of Rs.40 per share to non-promoter entity on preferential/private placement basis apart from an allotment of 6,31,429 Equity Shares of Rs.10 each at a premium of Rs. 13.86 per share upon conversion of Options issued under Employee Stock Option Scheme, 2005.

BONUS ISSUE

The Board recommended a bonus issue of "B" Equity Shares of Rs. 10 each in the ratio of 1 "B" Equity Share for every 10 Equity shares held during the year under review, to handover a new instrument to its shareholders. These "B" Equity Shares carry similar rights as carried by Equity Shares except right to vote as every 100 "B" Equity Shares carry 1 voting right as compared to every Equity Share carrying 1 voting right.

This was 6th bonus issue by your Company in the span of last 7 years. The Company accordingly allotted 4,98,19,421 "B" Equity Shares of Rs. 10 each on 10th May, 2010 after the close of year under review upon receipt of approval from shareholders through Postal ballot and requisite exemptions from SEBI.

ISSUE OF NON-CONVERTIBLE DEBENTURES

During the year under review, the company raised Rs. 50 crores through issue of Non-Convertible Secured Redeemable Debentures (NCDs) on a private placement basis to Corporation Bank and State Bank of Hyderabad amounting Rs.40 crores and Rs. 10 crores respectively for Capex and General Corporate purposes. The aforesaid NCD issues are in addition to NCDs worth Rs. 250 crores issued to Axis Bank Ltd & Life Insurance Corporation of India in the preceding years. The redemption of these Debentures is being made as per their respective terms of issue.

QUALIFIED INSTITUTIONAL PLACEMENT

The Company also made a Qualified Institutional Placement (QIP) comprising of 11% Secured Redeemable Non convertible Debentures amounting Rs. 250 crores alongwith 2,08,00,000 Warrants at a conversion price of Rs.120 each to Qualified Institutional Buyers on 29th April, 2010 after the close of year under review to raise funds for Capex and General Corporate purposes.

STATUS OF FCCBs

Your Directors are pleased to inform that 1% Unsecured Foreign Currency Convertible Bonds (FCCBs) of USD 55 million were fully converted by its holders before its due date of redemption.

Further, at the year end, bonds worth USD 17.50 million remain outstanding out of Unsecured Zero Coupon FCCBs of USD 60 million issued in 2006 due for redemption in 2011.

DIVIDEND

The Directors are pleased to recommend a dividend of Re.1 per Equity Share of Rs.10 each and Re.1 per "B" Equity Share of Rs.10 each for the year ended March 31, 2010 as compared to Re. 1/- per Equity share for the year ended March 31, 2009. The total payout will amount to Rs.63.90 crores (with dividend tax) as compared to Rs.55.80 crores for the previous year.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

In terms of Sections 205A & 205C of the Companies Act, 1956, the company had transferred a sum of Rs.2,90,326.55 (Rupees Two lacs, ninety thousand three hundred twentysix & paise fifty five only) to the Investor Education & Protection Fund created by the Central Government towards dividend for the year 2001-02 remaining unclaimed for a period of 7 years.

LISTING

The equity shares of your Company are listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The FCCBs of the Company are listed on the Luxembourg Stock Exchange (LuxSE) and the Non-convertible Debentures of the company including debentures issued under QIP are listed at Bombay Stock Exchange.

The warrants issued under QIP are listed at both Bombay Stock Exchange and National Stock Exchange w.e.f. 18th May, 2010. The bonus issue of "B" Equity Shares was also listed at both Bombay Stock Exchange and National Stock Exchange w.e.f. 26th May, 2010.

BUSINESS PLANS

Your Company continues to focus its business plans on its core competence i.e. coking coal and metcoke. It owns and operates through its Subsidiaries, two coking coal mines in Australia having an estimated resource of 560 million tonnes of good quality coking coal.

The mines are under production and are undergoing extensive expansion, which would take the projected output to around 6 million tonnes in next 3-4 years. It also holds strategic stakes in various resource companies in Australia and New Zealand through its Australian Subsidiaries.

The Company also plans to increase its existing metcoke producing capacity of 1.25 MTPA by setting up Greenfield and Brownfield coke plants in the States of Andhra Pradesh, Gujarat and Karnataka by ramping up the total production capacity to around 4 million tonnes per annum in a period of another 3-4 years.

In line with its commitment to cleaner environment, your Company has already undertaken implementation of power plants through waste heat recovery for captive consumption having a capacity of 60 MW which are expected to be implemented in phases by 2011-12 in addition to the existing capacity to generate 87.5 MW of power through wind mills.

SUBSIDIARIES

Your company strongly believes that coking coal imports would be essential to keep the Indias steel dreams burning as India takes giant strides in its quest to become second largest producer of steel by 2020. Accordingly, the Company has already invested around $ 300 million in its mining operations in Australia with plans to further invest $ 400 million to ensure sufficient supply of coking coal to its production facilities in India. The Company manages its mining operations in Australia through its wholly owned subsidiary M/s. Gujarat NRE Ltd and other wholly owned subsidiaries as well as step down subsidiaries. The mining of premium quality low ash coking coal at both the mines in Australia are going on as per schedule and it is expected to cross 2 MTPA by the end of the financial year 2010-11. The summary of financial performance of the these subsidiaries is provided in the statements under Section 212 of the Companies Act, 1956 annexed to the Annual Accounts.

The wholly owned Indian subsidiaries of the Company, M/s. Manor Dealcom Pvt. Ltd recorded an income of Rs.3.72 lacs and net profit after tax of Rs.3.13 lacs for the year under review as compared to an income of Rs. 0.80 Lacs and net profit after tax of Rs. 0.14 Lacs respectively reported last year. M/s. Huntervalley Coal Pvt. Ltd recorded an income of Rs.4.48 lacs and net profit after tax of Rs.3.78 lacs as compared to an income of Rs. 0.74 Lacs and net profit after tax of Rs. 0.13 Lacs respectively reported last year.

There is a requirement for attachment of Directors Report, Balance Sheet & Profit & Loss Account of the subsidiaries to the Annual Report & Accounts of the Company. The Central Government has granted an exemption to your Company under Section 212(8) of the Companies Act, 1956 from the said requirement. Accordingly, the same have not been annexed hereto. However, the Consolidated Financial Statements of the Company prepared in accordance with Accounting Standard 21, which forms a part of the Annual Report, have taken into account the financial information of all the subsidiaries.

The Annual Accounts of the subsidiary Companies and the related detailed information will be made available to the Companys and Subsidiary Companys investors seeking such information at any point of time. The Annual accounts of the Subsidiary Companies are also kept open for inspection by any investor at the Registered Office of the Company.

ACCOLADES

Your Company believes in continuously striving for Excellence, Quality and Leadership with a commitment to improve. Therefore, your Company continues to receive better rankings year on year and some notable rankings of your Company for the year 2009 are as follows –

- The Financial Express has upgraded the Companys Composite rankings to 146 among top 500 companies for the year 2009 as compared to a ranking of 185 for the year 2008.

- Business Standard has ranked your company at 260 for the year 2009 among top 1000 companies as compared to a ranking of 374 for the year 2008.

FINANCIAL OBLIGATIONS

The Company has been regular in the payment of interest and/or repayment of loans to financial institutions and/or banks or in meeting its other financial obligations during the year under review.

CORPORATE GOVERNANCE

Your Company continues to be committed to Good Corporate Governance aligned with best-of-breed practices. A Report on ‘Corporate Governance as on 31st March, 2010 in accordance with the provisions of Clause 49 to the Listing Agreement is annexed hereto. The same has been certified by the Statutory Auditors of the Company. A Report on Management Discussions & Analysis is also annexed hereto and forms a part of this Report.

Chairman & Managing Director (CEO) and Chief Financial Officer (CFO) have certified to the Board with regard to the financial statements and other matters as required by clause 49 of the listing agreement and the said certificate is also annexed to this Annual Report.

EMPLOYEE STOCK OPTION SCHEME

With a view to remain a preferred employer, Stock Options were granted to the Directors/Employees of the Company/its subsidiaries under Employee Stock Options Scheme 2005 and GNCL Employee Stock Option Scheme 2007 during the financial years 2006-07 and 2007-08. The Options under Employee Stock Option Scheme 2005 got vested on 20th January, 2010. The eligible employees/Directors exercised 6,31,429 options under this scheme till the end of the year under review.

As required by clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, the disclosures with regard to Stock Options in respect of both Employee Stock Option Scheme, 2005 and GNCL Employee Stock Option Scheme 2007 as on 31st March, 2010 are given in an Annexure to this report.

DIRECTORS

Mr Subodh Kumar Agrawal and Mrs Mona Jagatramka, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment in terms of the Articles of Association of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed that:

a) in the preparation of annual accounts for the financial year ended March 31, 2010, the applicable accounting standards had been followed and that no material departures have been made from the same;

b) the Directors had selected appropriate accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the year under review and of the profit of the Company for the year ended on that date;

c) the Directors took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors had prepared the annual accounts for the financial year ending March 31, 2010 on a ‘going concern basis.

AUDITORS

M/s. N. C. Banerjee & Co., Chartered Accountants, who are Statutory Auditors hold office upto the forthcoming Annual General Meeting of the Company and are eligible for reappointment to audit the Accounts of the Company for the financial year 2010-11. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has received written confirmation from M/s. N C Banerjee & Co., that their re-appointment as Auditors, if made, would be in conformity with the limits prescribed in the said section and that they are not disqualified from being appointed as the Auditors of the Company within the meaning of Section 226 of the said Act.

AUDITORS REPORT

The observations of the Auditors in their Report read with relevant notes on the accounts, as annexed are self-explanatory and need no elaboration.

PUBLIC DEPOSITS

The Company has not accepted or renewed any Public Deposits, as defined under Section 58A of the Companies Act, 1956, during the year under review.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of this Report as an Annexure. However, as permitted by Section 219(1) (b)(iv) of the Act, this Annual Report s being sent to all the members of the Company excluding the said Annexure.

PARTICULARS OF EMPLOYEES

The information on Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this Report as an Annexure. However, as permitted by Section 219(1) (b)(iv) of the Companies Act, 1956 this Annual Report is being sent to all the members of the Company excluding the said Annexure. PERSONNEL / INDUSTRIAL RELATIONS

Industrial Relations remained cordial and harmonious at the offices and plants of the Company and its subsidiaries throughout the year under review. APPRECIATION

Your Directors take this opportunity to express their deep sense of gratitude to its customers, dealers, suppliers, bankers, government and all other business associates for their continuous guidance and support to the Company and their confidence in its management. We would also like to place on record our sincere appreciation for the total commitment, dedication and hard work put in by every member of Gujarat NRE Family. We are deeply grateful to our shareholders for the confidence and faith that they have always reposed in us.

For and on behalf of the Board

Arun Kumar Jagatramka

Chairman & Managing Director

Place : Kolkata

Dated the 9th day of July 2010