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Directors Report of JSW Steel Ltd.

Mar 31, 2016

The Directors take pleasure in presenting the Twenty Second Annual Report of your Company, together with the Standalone and Consolidated Audited Financial Statements for the year ended March 31, 2016.

1. FINANCIAL RESULTS

(Rs. in crores)

Standalone Consolidated Particulars FY 2015-16 FY 2014-15 FY 2015-16 FY 2014-15

Gross turnover 40,354.48 49,657.51 45,642.48 56,571.86

Less : Excise duty 4,152.04 4,305.99 4,425.18 4,521.29

Net turnover 36,202.44 45,351.52 41,217.30 52,050.57

Add : Other operating revenues 504.48 735.80 661.58 920.94

Revenue from operations 36,706.92 46,087.32 41,878.88 52,971.51

OPERATING EBIDTA 5,722.52 8,871.64 6,072.99 9,402.29

Add : Other income 310.19 466.77 168.21 111.44

Less : Finance costs 2,687.34 2,908.69 3,302.68 3,493.03

Less : Depreciation and amortization 2,551.45 2,784.50 3,187.92 3,434.49

Profit before exceptional items and tax 793.92 3,645.22 (249.40) 2,586.21

Less : Exceptional items 5,860.45 396.30 2,125.41 47.10

Profit /(Loss) before taxation (PBT) (5,066.53) 3,248.92 (2,374.81) 2,539.11

Less : Tax expense (1,568.25) 1,082.44 (1,524.05) 819.41

Profit after taxation, but before minority interests and share of (3,498.28) 2,166.48 (850.76) 1719.70 profits/(loss) of associates

Share of Profit / (losses) of minority - - (95.03) (74.77)

Share of (losses) / Profit from associates (Net) - - 13.78 2.10

Profit after taxation (PAT) (3,498.28) 2,166.48 (741.95) 1,796.57

Add : Profit brought forward from previous year 5,229.20 3,744.93 2,218.95 1,104.69

Amount available for appropriation 1,730.92 5,911.41 1,477.00 2,901.26

Depreciation on transition to Schedule II of the Companies Act, 2013 (109.98) (47.29) (118.71) (47.39)

Transfer to debenture redemption reserve (302.44) (64.32) (302.44) (64.32)

Dividend on preference shares (27.90) (27.90) (27.90) (27.90)

Proposed final dividend on equity shares (181.29) (265.89) (181.29) (265.89)

Corporate dividend tax (42.59) (59.81) (42.59) (59.81)

Transfer to general reserve - (217.00) - (217.00)

Closing Balance 1066.72 5,229.20 804.07 2,218.95

2. RESULTS OF OPERATIONS

The financial year FY 2015-16 was marked by structural excess steel capacity globally, falling demand and steep drop in prices. Indian steel industry, in-spite of growth in demand faced severe stress and fall in margins caused by surge in steel imports at predatory prices. In these challenging conditions, the Company''s Profitability was also impacted.

(A) STANDALONE RESULTS

The Company recorded Crude Steel production at 12.56 million tonnes, lower by 1% YoY while Saleable Steel sales volume stood at 12.13 million tonnes, up by 1%. The current year volumes were lower, as the second half of the year was marked by the shutdowns of three of its furnaces for relining/modification and capacity expansion at the Vijayanagar, Dolvi and Salem units of the Company. The Blast Furnaces at Vijayanagar and Salem works were re-commissioned in February 2016 and the Blast Furnace at Dolvi works was re-commissioned in March 2016. On completion of these projects, the installed capacity of the Company has increased by about 25% – from 14.3 million tonnes per annum to 18 million tonnes per annum.

The gross turnover and net turnover for the year under review stood at Rs. 40,354 crores and Rs. 36,202 crores, respectively – registering a decline of 19% and 20%.

The topline was impacted by lower steel prices due to lower commodity prices, accentuated by elevated level of imports at predatory prices. Consequently, the operating EBITDA at Rs. 5,723 crores, was lower by 35% mainly due to weaker price realisations. EBIDTA margin was at 15.60%. The net loss after tax was at Rs. 3,498 crores after considering exceptional item charge of Rs. 5,860 crores. The exceptional item includes provisioning for diminution in value of investments, other than temporary, in the value of certain investments, loans and advances and towards certain guarantees for borrowing by the subsidiaries. The Company''s net worth was Rs. 21,753 crores as on March 31, 2016 as compared to Rs. 25,725 crores as on March 31, 2015. The Company''s net debt gearing stood at 1.41x (compared to 1.02x as on March 31, 2015) and net debt to EBIDTA was at 5.35x (compared to 2.97x as on March 31, 2015).

(B) CONSOLIDATED RESULTS

The consolidated gross turnover and consolidated net turnover for the year under review was Rs. 45,642 crores and Rs. 41,217 crores, respectively, both showing a reduction of 19% and 21% respectively, primarily on account of lower steel prices. The consolidated Operating EBIDTA declined by 35% to Rs. 6,073 crores. The net loss after tax was at Rs. 742 crores, after considering exceptional item charge of Rs. 2,125 crores.

As a result, the consolidated net worth decreased to Rs. 21,651 crores as on March 31, 2016, from Rs. 23,152 crores as on March 31, 2015. The net debt gearing was at 1.78x (compared to 1.55x as on March 31, 2015) and net debt to EBIDTA was at 6.33x (compared to 3.81x as on March 31, 2015).

In accordance with the Accounting Standards AS-21, on Consolidated Financial Statements, read with Accounting Standard AS-23 on Accounting for Investment in Associates and AS-27 on Financial Reporting of Investment in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

In terms of Section 134(3)(l) of the Companies Act, 2013, except as disclosed elsewhere in this report, no material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year and the date of this Report.

3. DIVIDEND

The Board has, subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated rate of Rs. 1 per share on the 10% Cumulative Redeemable Preference Shares of Rs. 10 each of the Company, for the year ended March 31, 2016. Considering the Company''s performance and financial position for the year under review, the Board has also recommended a dividend of Rs. 7.50 (75%) per fully paid- up Equity Share of Rs. 10 each of the Company, for the year ended March 31, 2016, subject to the approval of the Members at the ensuing Annual General Meeting. Together with Corporate Tax on dividend, the total outflow, on account of equity dividend, will be Rs. 218.20 crores, vis- à-vis Rs. 320.02 crores paid for FY 2014-15.

4. PROSPECTS

The global economic growth remained largely subdued in CY 2015. The year was marked by: a) gradual slowdown and rebalancing in China b) lower investments and subdued global trade flow growth, c) declining prices of energy and other commodities, and d) a hawkish stance by US Fed. Despite the sustained monetary easing by most of the economies, the global growth remained sluggish. The global economy saw a sizeable leg down in the last quarter of CY 2015 – in both advanced and emerging markets/developing economies. The world finished steel demand declined by 3% to 1,500 million tonnes in CY 2015 amidst the subdued economic environment. The world crude steel production decreased by 2.9% to 1,621 million tonnes. The global steel industry continued to be impacted by large overcapacities and exports from the steel surplus countries especially from China, Japan, Korea and CIS flooded the global steel markets. As steel surplus countries resorted to dumping in other countries, the margins were severely impacted. Most of the countries responded with trade remedial measures to a provide level playing field to their respective domestic steel industry.

It appears that a pickup in global activity levels will be more gradual as downside risks to growth have increased with issues related to: a) persistent deflationary environment, b) political uncertainty in EU and risk of Brexit, c) a lack of confidence on sustainability of commodity prices, and d) volatile capital flows and currencies. Developed markets prospects'' remains subdued due to low investment, unfavourable demographics, and weak productivity growth. The Euro Area and the US both face certain unfavourable factors. The Chinese economic growth is slowing down as it is transitioning to a consumption base growth path after a decade of strong credit and investment growth. The emerging economies also remain vulnerable to volatility in commodity prices, currency fluctuations and geo-political factors. The International Monetary Fund (IMF) has revised down its projections for CY 2016 World Economic Growth yet again to 3.2%.

The weakness in global steel demand is expected to continue with lower investment pipeline and weak manufacturing activities across the regions. The World Steel Association forecasts Chinese steel demand to drop by 4% in CY 2016 leading to a decline in global steel demand by 0.8% to 1,488 million tons. Amidst the environment of subdued demand and surplus capacities, mainly in China, trade remedial action will continue to intensify across the regions. Meanwhile, the iron ore and coking coal market are also expected to remain range bound.

INDIAN SCENARIO

Despite muted private Capex/investments, weakening rural consumption and depleting exports, India has emerged as the fastest growing major Global economy during FY 2015-16 – GDP grew by 7.6% as against 7.3% in FY 2014-15. – India was the only major steel consuming market globally which witnessed a demand growth at 4.5% during the year.

However, the country suffered from an unprecedented, unbridled and unfair inflow of steel imports from steel surplus countries. The steel imports sharply increased to 12.69 million tonnes up by 27%. The steel imports pressure turned severe in second half of the year. The surge in imports at predatory pricing led the Indian government to first increase import duty on carbon steel by 5% (in two steps). Subsequently, it also imposed a safeguard duty on certain hot rolled steel products. In February 2016, when these measures were ineffective, the Government imposed a minimum import price (MIP) on various steel products for a period of six months to create a level playing field for the domestic steel industry.

The Indian steel industry remains one among the most competitive steel industries in the world. However, there is a need to create a fair and level playing field amidst supply glut caused by surplus capacities in steel surplus countries. The preferential treatment to Japan, Korea and ASEAN countries, offering advantage of concessional duty rates under the free trade agreements, is also one of the major impediments in creation of fair and level playing field. The Indian steel industry continues to call for exclusion of steel from the purview of all FTA''s.

India has emerged as one of the brightest spots in a world grappling with economic turbulence and fragile growth. It is expected to be one of the fastest growing economies in the world in FY 2017 with a growth rate estimated between 7.5%-8.0% – driven by the fundamentals of strong consumption and the government''s push for streamlining business processes. Focus on infrastructure creation, extensive urbanization/Smart Cities (outlay of Rs. 2.21 lakh crore), Make in India & promoting affordable housing policy initiatives by the Government of India augers well for the Steel demand pick up in India. The consumption demand is expected to benefit from the upcoming Pay Commission award, continued low commodity prices, recent interest rate cuts, and measures announced in the Union Budget FY 2016-17 to transform the rural sector. The consumer confidence remains upbeat, while the corporate sector''s expectations of business conditions also remain positive. The monsoon, after two years of drought, is expected to be normal this year and this is likely to drive consumer discretionary spending in rural areas. Overall, the Indian economy is poised to realize the benefits of higher government spending, & policy initiatives, rural demand and continuing reforms.

The Indian government''s measures to pump prime the economy and progress on various policy reforms underpin a constructive medium term demand outlook. However, this also makes India an attractive export destination for steel surplus countries. Imposition of minimum import price on various steel products has provided some relief; however, the industry sees the need for adequate, swifter and longer shelf-life trade remedial measures to check unbridled and unfair imports of steel in to India. As per the World Steel Association (WSA), the Indian steel demand growth rate in CY 2016 is expected to be the highest amongst the top 10 steel consuming regions/ countries which account for more than 85% of the world steel consumption. The Company expects Indian steel demand to grow by about 6% in FY 2016-17.

5. PROJECTS AND EXPANSION PLANS

(A) PROJECTS COMMISSIONED DURING FY 2015-16 VIJAYANAGAR

- Reconstruction of Blast Furnace no. 1 to increase the capacity from 0.9 MTPA to 1.9 MTPA.

- The second Continuous Annealing lines (CAL) with a capacity of 0.95 MTPA.

- Electrical Steel Complex to produce 0.2 MTPA of Cold Rolled Non Grain Oriented (CRNGO) products along with annealing and coating lines (ACL).

- Slab Auto Scaring for removing surface and sub-surface defects.

- Slab sizing press at HSM-2 to provide flexibility in caster operations and increase throughout of the slab casters.

- I-Shop to machine and fabricate precision components in-house with a capacity of 2000 tons per year.

- 600 TPD Lime Kiln-12 to provide calcined lime and dolomite for steel making.

DOLVI

- Expansion work at Dolvi plant to increase its capacity from 3.3 MTPA to 5 MTPA which includes commissioning of 2.5 MTPA new Sinter Plant and capacity enhancement of Blast Furnace from 2 MTPA to 3.5 MTPA, 1.5 MTPA Billet Caster and 1.4 MTPA Bar Mill.

SALEM

- The Blast Furnace - 2 was re-commissioned successfully after completion of the capital repair.

- Installation of Hot Saw no-3 at Blooming Mill for improving quality of cut ends in final products.

(B) PROJECTS UNDER IMPLEMENTATION VIJAYANAGAR

- SMS-1, SMS-2 and SMS-3 augmentation: The facilities include modification of ladles, additional convertors, RH, Ladle heating furnaces, KR unit, additional casters, 6th Strand Biller Caster and other supporting facilities. This augmentation of casting capacities are expected to be commissioned during the FY 2016-17.

- Slitting Line-1 (5000 T/Month), part of Electrical Steel Service Center expected to be commissioned in the FY 2016-17.

DOLVI

- New covered yard for raw material handling system at Jetty.

- Fuel conversion from Coal to mixed gas at Lime Calcination Plant.

SALEM

- Installation of new Bloom caster.

- Expansion of EOF-1 capacity from 45 Ton to 65 Ton.

- Annealing lines for increasing the volume of Bar Rod Mill Products.

- A 31.5 tonne per hour waste heat recovery boiler at coke oven battery #2 to utilise COP waste heat for generating power is expected to be commissioned in FY 2016-17.

(C) KEY NEW PROJECTS VIJAYANAGAR

Pipe Conveyor System:

A pipe conveyor system for transporting Iron ore from the yard near the mines to the Vijayanagar plant would be set up with a capacity of 20 MTPA. This will be an environment friendly solution and reduce transportation costs of iron ore to the plant. The estimated project cost is Rs. 650 crores and is expected to be commissioned in a period of 24 months.

Water Reservoir:

The Company would build a water reservoir facility to augment the storage capacity of water at its Vijayanagar Plant. This investment is strategic in nature for un-interrupted operations of the plant. The estimated project cost is Rs. 520 crores and is expected to be commissioned in a period of 26 months.

6. SUBSIDIARY, JOINT VENTURE (JV) AND ASSOCIATE COMPANIES

The Company had 42 direct and indirect subsidiaries, 10 Joint Ventures and 3 Associates as on March 31, 2016.

No subsidiary companies were acquired or formed during the year.

During the year under review, Everbest Steel and Mining Holdings Limited, Argent Independent Steel (Holdings) Ltd. and JSW Mali Resources SA. ceased to be the Company''s subsidiaries. JSW Steel East Africa Limited ceased to be subsidiary w.e.f. April 8, 2016.

The details of major subsidiaries, JV and associate companies are given below:

A. INDIAN SUBSIDIARIES

1. JSW STEEL COATED PRODUCTS LIMITED (JSW STEEL COATED)

JSW Steel Coated Products Limited is the Company''s wholly-owned subsidiary. It has three manufacturing facilities in the State of Maharashtra at Vasind, Tarapur and Kalmeshwar. It is engaged in the manufacture of value added steel products which mainly consists of Galvanized and Galvalume Coils/Sheets and Colour Coated Coils/Sheets. JSW Steel Coated caters to both domestic and international markets.

The production of Galvanising / Galvalume products stood at 1.48 Million tonnes and sales at 1.53 Million tonnes during FY 2015-16. Domestic sales increased by 0.25 Million tonnes over the previous year, witnessing a 36% growth.

The gross turnover and net turnover for the year under review was Rs. 7,683 crores and Rs. 7,105 crores respectively. The operating EBITDA during FY 2015-16 was Rs. 345 crores as compared to the EBITDA of Rs. 326 crores in FY 2014-15. The operating EBIDTA margin improved to 5% from 4% in FY 2014-15. The net Profit after tax stood at Rs. 50 crores, compared to net loss after tax of Rs. 25 crores in FY 2014-15.

KEY NEW PROJECTS

Tarapur Complex – Tin Plate Mill: JSW Steel Coated Products Limited is setting up a Tin Plate Mill and related facilities at its Tarapur works to cater to the increasing demand for the tin plate. The estimated project cost is Rs. 650 crores and is expected to be commissioned in a period of 24 months.

2. AMBA RIVER COKE LIMITED (ARCL)

Amba River Coke Limited (ARCL) is a wholly owned subsidiary of the Company. ARCL has set up a 1 MTPA Coke Oven Plant and a 4 MTPA pellet plant in June 2014 and September 2014, respectively. ARCL has produced 0.95 Million tonnes of coke and 2.51 Million tonnes of pellet during FY 2015-16. The coke and pellets produced are being supplied to Dolvi unit of the Company. The Profit after tax for FY 2015-16 was Rs. 115 crores as compared to Rs. 119 crores in FY 2014-15.

3. JSW STEEL (SALAV) LIMITED (JSW SALAV)

JSW Steel Limited acquired 99.87% stake in JSW Steel (Salav) Limited (formerly known as Welspun Maxsteel Limited) on October 31, 2014. JSW Salav has a DRI plant with a capacity of 0.9 MTPA, along with a captive jetty and railway sliding.

The loss after tax for FY 2015-16 was Rs. 225 crores, compared to loss after tax of Rs. 133 crores in FY 2014- 15. The operations of JSW SALAV were temporarily suspended since August 2015, due to shutdown of Dolvi plant for capacity expansion coupled with subdued market conditions. JSW SALAV restarted its operations in March 2016.

4. JSW STEEL PROCESSING CENTRES LIMITED (JSWSPCL)

JSW Steel Processing Centres Limited (JSWSPCL) is the Company''s wholly owned subsidiary. JSWSPCL was set up as a steel service centre, comprising HR/ CR slitter and cut-to-length facility, with an annual slitting capacity of 6.5 lakh tonnes. The Company processed 4.81 lakh tonnes of steel during FY 2015- 16, compared to previous year''s 5.97 lakh tonnes, mainly due to planned shutdown of Vijaynagar plant. The Profit after tax for FY 2015-16 was Rs. 15 crores, compared to Rs. 24 crores in FY 2014-15.

5. PEDDAR REALTY PRIVATE LIMITED (PRPL)

Peddar Realty Private Limited (PRPL) is the Company''s wholly-owned subsidiary.

Profit after tax for FY 2015-16 was Rs. 2 crores, compared to Rs. 4 crores in FY 2014-15.

6. JSW BENGAL STEEL LIMITED (JSW BENGAL), ITS SUBSIDIARIES BARBIL BENEFICIATION COMPANY LIMITED, BARBIL IRON ORE COMPANY LIMITED, JSW NATURAL RESOURCES INDIA LIMITED, JSW ENERGY (BENGAL) LIMITED (JSWEBL) AND JSW NATURAL RESOURCES (BENGAL) LIMITED (JSWNRBL)

As a part of the Company''s overall growth strategy, JSW Bengal Steel''s Salboni project was planned to set up 10 MTPA capacity Steel plant in phases. All enabling work to take up implementation of the project are in place.

However, due to uncertainties in the availability of key raw materials like iron ore and coal, post cancellation of allotted coal blocks, the implementation of the project is currently put on hold. In the meantime, efforts are being made to secure long term linkages of raw materials. In the light of the new policy on the allocation of coal blocks and coal linkages from Coal India Ltd., and auction of the Iron ore mines under the Mines and Minerals Development and Regulation (MMDR) Act, the Company is hopeful of establishing raw material linkages.

7. JSW JHARKHAND STEEL LIMITED

JSW Jharkhand Steel Limited was incorporated for setting up a 10 million tonnes (in phases) steel plant in Jharkhand. It is pursuing for various approvals and clearances for setting up the project.

B. OVERSEAS SUBSIDIARIES

1. JSW Steel (Netherlands) B.V. (JSW Netherlands) JSW Steel (Netherlands) B.V. is a holding company for subsidiaries based in the US, the UK, Chile and East Africa. It also has 49% equity holding of Georgia- based Geo Steel LLC, incorporated under the laws of Georgia.

(a) JSW Steel Holding (USA) Inc. and its subsidiaries viz. JSW Steel (USA) Inc – Plate and Pipe Mill Operation and Periama Holdings LLC and its subsidiaries – West Virginia, USA- based Coal Mining Operation Plate and pipe mill operation During FY 2015-16, the US plate and pipe mill''s performance continued to be impacted due to lack of orders for pipes from oil & gas sector. This unit produced 197,408 net tonnes of plates and 54,262 net tonnes of pipes with capacity utilisation of 21% and 10%, respectively.

In view of the continuing losses at the plate and pipe mill operations, JSW Steel USA Inc. carried out an impairment assessment of its fixed assets. Since the recoverable amount determined based on the estimated discounted future cash flows was lower than the carrying value of the fixed assets and due to an ongoing antitrust law suit, JSW Steel USA Inc. has recognised an impairment and other provisions aggregating to Rs.905 crores.

Net loss after tax for FY 2015-16 was Rs. 1,361 crores, compared to Rs. 302 crores in FY 2014-15.

Coal mining operation

JSW Steel Holding (USA) Inc. has 100% equity interest in coal mining concessions in West Virginia, USA. During the year, the operation of the Company was minimal due to subdued market conditions.

During the year ended March 31, 2016, Periama Holdings LLC performed impairment tests considering coal demand supply and pricing outlook. The impairment testing indicated that estimated future discounted cash flows were lower than the carrying value for certain asset groups and accordingly, the Company recorded assets impairment charge and provision towards certain advances aggregating to Rs. 172 crores.

Loss after tax for FY 2015-16 was Rs. 175 crores, compared to Rs. 61 crores in FY 2014-15.

(b) JSW Panama Holdings Corporation (JPHC) and Chilean subsidiaries, namely Inversiones Eurosh Limitada (IEL), Santa Fe Mining (SFM) and Santa Fe Puerto S.A (SFP)

Due to weak iron ore prices in the international market, the Company has undertaken a temporary suspension of mining operations since May 2015. During FY 2015-16, the production was 83,774 tonnes as compared to 818,671 tonnes in FY 2014-15.

During the fiscal year under review, the subsidiary Inversiones Eurosh has decided not to continue with the development of the Daniel and Catalina mining assets in view of the falling international iron-ore prices and hence has made a provision of Rs. 407 crores towards these mining assets.

Loss after tax for FY 2015-16 was Rs. 507 crores, compared to Rs. 114 crores in FY 2014-15.

(c) JSW Steel UK Limited and its subsidiaries, namely Argent Independent Steel (Holdings) Limited and JSW Steel Service Centre (UK) Limited

As a part of the consolidation process, Argent Independent Steel (Holdings) Limited was dissolved on November 17, 2015 and JSW Steel Service Centre (UK) Limited is in the process of being dissolved.

(d) JSW Steel East Africa Limited

As a part of consolidation process, JSW Steel East Africa Limited was dissolved on April 8, 2016.

2. JSW Natural Resources Limited (JSWNRL) and its subsidiaries JSW Natural Resources Mozambique Lda (JSWNRML), JSW ADMS Carvao Lda and JSW Mali Resources SA

JSW Natural Resources Limited formed a wholly- owned subsidiary – JSW Natural Resources Mozambique Lda in Mozambique. This initiative was taken to acquire coal assets and engage in prospecting and exploring coal, iron ore and manganese. JSW Natural Resources Mozambique Lda completed the exploration activities in Mutara District of Tete Province and is in the process of obtaining the necessary approvals for lease of certain mining assets.

JSW ADMS Carvão Lda, a subsidiary of JSW Natural Resources Mozambique Lda, has a coal mining licence in Zumbo District of Tete province. The Company has completed exploration activities and is in the process of making various applications for obtaining the necessary approvals for mining operations.

As a part of consolidation process, JSW Mali resources SA was dissolved on June 18, 2015.

3. Nippon Ispat Singapore (PTE) Limited, Erebus Limited, Arima Holdings Limited, Lakeland Securities Limited, JSW Mali Resources S.A. There were no significant operations during the financial year.

C. JOINT VENTURE COMPANIES

1. GEO STEEL LLC

Georgia-based JV, Geo Steel LLC, in which the Company holds 49% equity through JSW Steel (Netherlands) B.V., has set up a steel rolling mill in Georgia, with 175,000 tonnes production capacity. Geo Steel produced 85,548 tonnes of rebars and 120,613 tonnes of billets, during FY 2015-16.

Profit after tax for FY 2015-16 was Rs. 7 crores, compared to Rs. 2 crores in FY 2014-15.

2. ROHNE COAL COMPANY PRIVATE LIMITED

Rohne Coal Company Pvt. Ltd. is a JV for developing Rohne coal block. While Rohne coal block was under development, the Hon''ble Supreme Court of India cancelled the allocation of coal blocks by the Government of India to State and private sectors during the financial year 2014-15. Consequently, the allocation of Rohne coal block to Rohne Coal Company Private Limited stood cancelled.

3. MJSJ COAL LIMITED (MJSJ)

The Company, along with other partners agreed to participate in the 11% equity of MJSJ Coal Limited, Odisha. This was in accordance with the JV agreement to develop Utkal-A and Gopal Prasad (West) thermal coal block in Odisha.

The Hon''ble Supreme Court of India cancelled the allocation of coal blocks by the Government of India to state and private sectors in during the financial year 2014-15. Consequently, the allocation of coal block to MJSJ stood cancelled.

The Ministry of Coal, Government of India, has not yet commenced the auction of these Coal blocks.

4. GOURANGDIH COAL LIMITED

Gourangdih Coal Ltd. (GCL) is a 50:50 JV between JSW Steel Limited and Himachal EMTA Power Corporation Ltd. (HEPL). It was incorporated to develop and mine coal from West Bengal''s Gourangdih, ABC thermal coal block. The Hon''ble Supreme Court of India cancelled the allocation of coal blocks by the Government of India to state and private sectors during the financial year 2014-15. Consequently, the allocation of the coal block to GCL stood cancelled. Gourangdih Coal block has been re-allocated to West Bengal Mineral Development & trading corporation by Ministry of Coal vide its notice dated 16th March, 2016.

5. TOSHIBA JSW POWER SYSTEMS PRIVATE LIMITED (FORMERLY KNOWN AS TOSHIBA JSW TURBINE AND GENERATOR PRIVATE LIMITED)

Toshiba JSW Power Systems Private Limited is a JV company with a 75% shareholding by Toshiba Corporation Limited, Japan, 22.52% by JSW Energy Limited and 2.48% by JSW Steel Limited. This Company is into designing, manufacturing, marketing and maintaining of mid to large-size supercritical steam turbines and generators of size 500 MW to 1,000 MW.

6. VIJAYANAGAR MINERALS PRIVATE LIMITED (VMPL)

According to the Hon''ble Supreme Court''s order to stop all mining operations in Bellary district in Karnataka, activities from Thimmappanagudi Iron Ore Mines (TIOM), operated by VMPL were halted since July 2011.

The mining operations remained suspended during FY 2015-16. As per the Apex Court direction, the mines are being operated by Mysore Minerals Limited directly.

7. JSW SEVERFIELD STRUCTURES LIMITED AND ITS SUBSIDIARY JSW STRUCTURAL METAL DECKING LIMITED

JSW Severfield Structures Limited (JSSL) is operating a facility to design, fabricate and erect structural steel work and ancillaries for construction projects.

These projects have a total capacity of 55,000 TPA at Bellary, Karnataka. JSSL produced 36,014 tonnes during the year. Its order book stood at Rs. 306 crores (32,396 tonnes), as on March 31, 2016.

The Loss after tax for FY 2015-16 was Rs. 11 crores, compared to Profit after tax of Rs. 1 crores in FY 2014-15.

JSW Structural Metal Decking Limited (JSWSMD), a subsidiary company of JSSL is engaged in the business of designing, roll forming of structural metal decking and accessories like edge trims and shear studs. The plant''s total capacity is 10,000 TPA.

The Profit after tax for FY 2015-16 was Rs. 2 crores, compared to Rs. 0.4 crores in FY 2014-15.

8. JSW MI STEEL SERVICE CENTRE PRIVATE LIMITED (MISI JV)

JSW Steel and Marubeni-Itochu Steel signed a JV agreement on September 23, 2011, to set up steel service centres in India.

The JV Company had started the commercial operation of its steel service centre in western India (near Pune), with 0.18 MTPA initial installed capacity in March 2015. MISI JV has also started the project work for its steel service centre in Palval, Haryana, with 0.18 MTPA initial capacity. This facility is expected to be commissioned by end of FY 2016-17. The service centre is equipped to process fat steel products, such as hot rolled, cold rolled and coated products. Such products offer just-in-time solutions to automotive, white goods, construction and other value-added segments.

MISI JV incurred a loss after tax of Rs. 5 crores during FY 2015-16 in view of lower capacity utilisations, compared to Profit after tax of Rs. 3 crores in FY 2014- 15.

9. JSW VALLABH TINPLATE PRIVATE LIMITED (JSWVTPL)

JSW Steel holds 50% stake in JSWVTPL which is into tinplate business and has a capacity of 1.0 lakh tonnes.

JSWVTPL produced 75,846 tonnes during FY 2015- 16. Net Profit after tax for FY 2015-16 was Rs. 7 crores, compared to loss after tax of Rs. 6 crores in FY 2014-15.

D. ASSOCIATE COMPANIES

1. JSW PRAXAIR OXYGEN PRIVATE LIMITED (JPOPL) (FORMERLY KNOWN AS JINDAL PRAXAIR OXYGEN COMPANY PRIVATE LIMITED)

JPOPL''s oxygen plants have been working satisfactorily, primarily to meet requirements of steel plant operations at Vijayanagar Works.

2. DOLVI MINERAL & METALS PRIVATE LIMITED (DMMPL) AND ITS SUBSIDIARY DOLVI COKE

PROJECTS LIMITED (DCPL)

The Company had earlier decided to setup a 3 million tonnes per annum Coke Oven Plant at Dolvi through Dolvi Coke Projects Limited (DCPL). The Company holds 39.996% stake in Dolvi Minerals & Metals Private Limited, which, in turn, holds 100% stake in DCPL. This project was put on hold last year in view of macro economic factors. With the completion of expansion projects and installed steel making capacity increasing to 18 million tonnes per annum, the existing coke making facilities are falling short of the total coke requirement of the Company. Therefore, the Company has decided to setup, in the first phase, a 1.5 million tonnes per annum coke oven plant at Dolvi through DCPL. The total cost for this project will be about Rs. 2,000 crore and is expected to be commissioned in 18 months

E. COAL BLOCK

The Company had entered into three separate JV agreements for the development of Rohne Coal Block, Gopal Prasad (West) and Utkal (A) Coal Block and Gourangdih Coal Block. While the coal blocks were under development, the Hon''ble Supreme Court of India cancelled the allocation of coal blocks by the Government of India to state and private sectors. Consequently, the allocation of coal blocks to these three JVs stood cancelled. Subsequently, the Government of India, promulgated the Coal Mines (Special Provision) Act 2015. As per the provisions of the Act, the investment made in the block by the prior allottee, to the extent permitted under the said provisions will be reimbursed by the successful bidder of the coal block. The Company has made an assessment of recoverable amounts of investments and other assets, impacted by the said order. It has also recognised a provision of Rs. 25.39 crores as on March 31, 2016, (Rs. 21.20 crores as on March 31, 2015) considering the principle of conservatism.

7. ACQUISITIONS DURING THE YEAR

There were no acquisitions made during the FY 2015-16.

However, pursuant to the auction conducted by the Nominated Authority under the Coal Mines (Special Provisions) Act, 2015, the Company has been allotted the Moitra Coal Mine, vide vesting order No 104/21/2015/NA dated April 22, 2015 issued by the Ministry of Coal, Govt. of India.

Moitra coal mine is situated in Hazaribagh District, Jharkhand. Moitra Coal Mine has total extractable coal reserves of 29.91 million tonnes.

8. TECHNICAL COLLABORATION WITH JFE STEEL CORPORATION, JAPAN

FY 2015-16 was the 6th year of strategic collaboration between the Company and JFE Steel Corporation. The strategic partners were engaged in taking customer approvals for various grades and commercializing the grades produced in state-of-the art CRM #2 complex in Vijayanagar Works. The Company has received approvals from several major auto producers for supply of auto grades with the Company''s own substrates.

Electrical Steel facility of 0.2 MTPA was commissioned in Vijayanagar works. The major focus was to stabilize and sustain the international standards (quality & properties) in Electrical steel products, with the support of JFE.

9. RISK MANAGEMENT

The Company''s robust risk management framework identifies and evaluates business risks and opportunities. The Company recognises that these risks need to be managed and mitigated to protect its shareholders and other stakeholders interest, to achieve its business objectives and enable sustainable growth. The risk framework is aimed at effectively mitigating the Company''s various business and operational risks, through strategic actions. Risk management is embedded in our critical business activities, functions and processes. The risks are reviewed for the change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risks and future action plans.

Pursuant to the requirement of Regulation 21 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Clause 49 of the erstwhile Listing Agreement, the Company has constituted a sub-committee of Directors to oversee Enterprise Risk Management Framework to ensure execution of decided strategies with focus on action and monitoring risks arising out of unintended consequences of decisions or actions and related to performance, operations, compliance, incidents, processes, systems and transactions are managed appropriately.

The Company believes that the overall risk exposure of present and future risks remains within risk capacity.

10. INTERNAL CONTROLS, AUDIT & INTERNAL FINANCIAL CONTROLS

OVERVIEW

A robust system of internal control, commensurate with the size and nature of its business, forms an integral part of the Company''s governance policies.

INTERNAL CONTROL

The Company has a proper and adequate system of internal control commensurate with the size and nature of its business. Internal control systems are integral to company''s corporate governance framework. Some significant features of internal control system are:

- Adequate documentation of policies, guidelines, authorities and approval procedures covering all the important functions of the company.

- Deployment of an ERP system which covers most of its operations and is supported by a defined on-line authorisation protocol.

- 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; proper and authorised recording and reporting of all transactions.

- Preparation and monitoring of annual budgets for all operating and service functions.

- Ensuring reliability of all financial and operational information.

- Audit committee of Board of Directors, comprising of Independent Directors. The Audit committee regularly reviews audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards etc.

- A comprehensive Information Security Policy and continuous updating of IT Systems.

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

INTERNAL AUDIT

The Company has an internal audit function that inculcates global best standards and practices. The Company has a strong internal audit department reporting to Audit Committee comprising of Independent Directors. The Company successfully integrated the COSO framework with its audit process to enhance the quality of its financial reporting, compatible with business ethics.

AUDIT PLAN AND EXECUTION

Internal Audit department prepares a risk-based Audit Plan. The frequency of audit is decided by risk ratings of areas / functions. The audit plan is carried out by the internal team. The audit plan is reviewed periodically to include areas which have assumed significant importance in line with the regulatory changes, emerging industry trend and value of the transactions. In addition, the Audit Committee also places reliance on internal customer feedback and other external events for inclusion of areas into the audit plan.

INTERNAL FINANCIAL CONTROLS

As per Section 134(5)(e) of the Companies Act 2013, the Directors have an overall responsibility for ensuring that the Company has implemented robust system and framework of Internal Financial Controls. This framework provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The framework ensures that the Company has policies and procedures for ensuing orderly and efficient conduct of the business, safeguarding of assets of the Company, prevention and detection of frauds, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The Company has devised appropriate systems and framework including proper delegation of authority, effective IT systems aligned to business requirements, risk based internal audits, risk management framework and whistle blower mechanism.

The Company has also developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes a risks and control matrix covering entity level controls, process & operating level controls and IT general controls.

The entity level policies include anti-fraud policies such as code of conduct, confect of interest, confidentiality and whistle blower policy and other policies (viz. organization structure, insider trading policy, HR policy, IT security policy, treasury policy and business continuity and disaster recovery plan). The Company has also prepared Standard Operating Procedures (SOP) for each of its processes like procure to pay, order to cash, hire to retire, treasury, fixed assets, inventory, manufacturing operations etc.

During the year, controls were tested and no reportable material weakness in design and effectiveness was observed. There have been no significant changes in the Company''s internal financial controls during the year.

11. CREDIT RATING

During the year, Fitch Ratings downgraded the Company''s Long Term Issuer Default Rating (IDR), senior unsecured rating and rating on the outstanding USD 500 million senior unsecured fixed rate notes due 2019 (Notes) by one notch from "BB " to "BB". Moody''s Investors Service has also downgraded the Corporate Family Rating and rating on the Notes by 2 notches from Ba1 to Ba3. Outlook on the ratings by both the agencies is negative.

The domestic credit rating for long term debt/facilities/ NCD''s by CARE and ICRA has also been downgraded by one notch from "AA" to "AA-", while the short term debt/ facilities continue to be rated at the highest level of "A1 ". The outlook on the long term rating by ICRA is negative.

Your Company obtained long term credit rating from India Ratings for the first time during the year. India Ratings has assigned long term issuer rating and rating for the outstanding non-convertible debentures of the Company is "AA" with stable outlook.

The downward rating actions were driven by falling sales realizations due to continued import of steel products into the country at predatory prices affecting the operating performance of the Company during the year, adverse impact on leverage matrix due to lower EBIDTA, demand-supply imbalance in the global steel industry and negative outlook on the sector.

12. INDIAN ACCOUNTING STANDARDS (IND AS)

As per the roadmap announced by the Ministry of Corporate affairs, the Company will comply with the new Accounting Standards, IND AS in preparation of its financial statements for accounting periods beginning on April 1, 2016, along with the comparatives for the period ending March 31, 2016. IND AS will also be applicable to subsidiary Companies, Joint venture or associates of the Company. Hence the Company and JSW Steel group would prepare and report results/ financial statements under IND AS from April 1, 2016, including restatement of the opening balance sheet.

13. FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public. Therefore, it is not required to furnish information in respect of outstanding deposits under Non-banking, Non-financial Companies (Reserve Bank) Directions, 1966 and Companies (Accounts) Rules, 2014.

14. SHARE CAPITAL

There was no change in the Company''s share capital during the year under review.

The Company''s paid up equity share capital remained at Rs. 2,41,72,20,440 comprising of 24,17,22,044 equity shares of Rs. 10 each. The aggregate preference share capital remained at Rs. 76,44,49,511 comprising of 27,90,34,907, 10% cumulative redeemable preference shares of Rs. 10 each fully paid up and 48,54,14,604, 0.01% cumulative redeemable preference shares of Rs. 10 each fully paid up.

15. FOREIGN CURRENCY BONDS (FCBS)

During the year 2014-15, the Company had allotted 2,500, 4.75% Fixed Rate Senior Unsecured Notes of US$ 2,00,000 each of the Company due 2019 (the "Notes") aggregating to US$ 500 million to eligible investors. The Bonds issued by the Company in the International Market are listed on the Singapore Exchange Securities Trading Limited (the "SGX-ST").

16. CORPORATE GOVERNANCE

Your Company has complied with the requirements of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Clause 49 of the erstwhile Listing Agreement regarding Corporate Governance. A report on the Corporate Governance practices, the Auditors'' Certificate on compliance of mandatory requirements thereof are given as an annexure to this report.

17. MANAGEMENT DISCUSSION & ANALYSIS

A detailed report on the Management Discussion & Analysis is provided as a separate section in the Annual Report.

18. BUSINESS RESPONSIBILITY / SUSTAINABILITY REPORTING

The Company is deeply committed to growing the business sustainably, as well as to the nine principles enshrined in the National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business notified by the Ministry of Corporate Affairs, Government of India, in July 2011. It has also been voluntarily disclosing its sustainability performance anchored to the framework of the Global Reporting Initiative (GRI), and further embellished by third party assurance as per the International Standards for Assurance Engagements (ISAE 3000). The Company has adopted policies for each NVG principle, as approved by the Board of Directors in its meeting held on January 28, 2013 which is available at the Company''s website (http://www.jsw.in/investors/investor-relations-steel). A Committee of the Board consisting of three Independent Directors and three Executive Directors (as on March 31, 2016) review the Company''s performance in terms of Business Responsibility / Sustainability Reporting on a quarterly basis. The Group Chief Sustainability Officer is responsible for planning and implementing the sustainability initiatives as well as the stakeholder grievance redressal mechanism.

The Securities and Exchange Board of India (SEBI) has, vide its circular dated August 13, 2012, mandated the inclusion of a Business Responsibility Report (BRR) as a part of the Annual Report for the top 100 listed entities based on their market capitalisation on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited, as on March 31, 2012, and is aligned to the NVGs. Furthermore, the requirements as per Regulation 34 (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been fulfilled.

Pursuant to the press release PR No. 48/2013 and FAQs dated May 10, 2013, issued by SEBI, the Company''s BRR is hosted on its website (http://www.jsw.in/investors/ investor-relations-steel) and forms a part of this Annual Report. Any stakeholder interested in obtaining a copy of the same may write to the Company Secretary.

19. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Sajjan Jindal (DIN 00017762), retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re- appointment.

Mr. Malay Mukherjee (DIN 02861065) who was appointed as an Additional Director of the Company in the category of Independent Director, by the Board of Directors with effect from July 29, 2015 in terms of Section 161 of the Companies Act, 2013 and in terms of Article 123 of your Company''s Articles of Association, holds office until the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 160 of the Companies Act, 2013 from a shareholder of your Company, signifying his intention to propose the name of Mr. Malay Mukherjee, for appointment as a Director of your Company.

Mr. Haigreve Khaitan (DIN 00005290), who was appointed as an Additional Director of the Company in the category of Independent Director, by the Board of Directors with effect from September 30, 2015 in terms of Section 161 of the Companies Act, 2013 and in terms of Article 123 of your Company''s Articles of Association, holds office until the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 160 of the Companies Act, 2013 from a shareholder of your Company, signifying his intention to propose the name of Mr. Haigreve Khaitan, for appointment as a Director of your Company.

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

Mr. Uday M. Chitale, who was appointed as an Independent Director in the Company''s 20th Annual General Meeting held on July 31, 2014, would complete his term upon the conclusion of the ensuing 22nd Annual General Meeting of the Company and being not eligible for re-appointment in terms of the Company''s policy for appointment/re- appointment of Independent Directors, has not offered himself for re-appointment.

There were no changes in the Key Managerial Personnel of the Company during the year.

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

Matching the needs of the Company and enhancing the competencies of the Board are the basis for the Nomination and Remuneration Committee to select a candidate for appointment to the Board.

The current policy is to have a balanced mix of executive and non-executive Independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As at 31.03.2016, the Board of Directors comprises of 12 Directors, of which 8 are non- executive, including 1 woman director. The number of Independent Directors is 6, which is one half of the total number of Directors.

The policy of the Company on directors'' appointment, including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013, is governed by the Nomination Policy read with Company''s policy on appointment/re- appointment of Independent Directors. The remuneration paid to the directors is in accordance with the remuneration policy of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each of the independent directors, under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

20. BOARD EVALUATION

The Board carried out an annual performance evaluation of its own performance, the Independent Directors individually as well as the evaluation of the working of the Committees of the Board. The performance evaluation of all the Directors was carried out by the Nomination and Remuneration Committee. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. Details of the same are given in the Report on Corporate Governance annexed hereto.

21. AUDITORS AND AUDITOR''S REPORT

1.1 STATUTORY AUDITORS

At the Company''s 20th Annual General Meeting (AGM) held on July 31, 2014, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai, were appointed as the Company''s Statutory Auditors from the conclusion of the 20th AGM till the conclusion of the 23rd AGM.

In terms of Section 139 (1) of the Companies Act, 2013, the appointment of the statutory auditors to hold office from the conclusion of the 20th AGM until the conclusion of the 23rd AGM, is placed for your ratification.

The Auditors Report to the shareholders for the year under review does not contain any qualification.

No frauds have been reported by the Auditors under Section 143(12) of the Companies Act, 2013 requiring disclosure in the Board''s Report.

EXPLANATION TO AUDITOR''S COMMENT:

Auditors have in their report drawn attention to (i) note 10(1) to the Abridged Standalone Financial Statements and note 25(4)(a) to the Standalone Financial Statements regarding provision of Rs. 5,855.52 crores for other than temporary diminution in the value of investments, loans and advances doubtful of recovery and guarantees for borrowings, relating to certain subsidiaries and (ii) note 9(a) to the Abridged Consolidated Financial Statements and note 27(4)(a) to the Consolidated financial statements regarding provision of Rs. 1,829.69 crores pertaining to corresponding fixed assets, goodwill, mine development cost of the projects in the consolidated financial statements.

In the opinion of the Board, the recoverable amount of the said investments, loans and advances (in the case of standalone financial statements) and the recoverable amount of the corresponding fixed assets, goodwill, mine development and related assets (in the case of consolidated financial statements) have been arrived based on the estimate of value of businesses / assets of the said subsidiaries by independent valuers and cash flow projections considering capacity utilisation of the plants, mining plans, analyst''s commodity consensus estimates of long term prices and other factors. Based on the estimated recoverable amounts, the Board has concluded that no further provision is necessary as of 31st March, 2016, except as considered in the standalone and consolidated financial statements. These assumptions will be reviewed periodically by the respective subsidiaries and the management of the Company and adjustments if any, will be made to the amount of provisions, if conditions related to the assumptions indicate that such adjustments are appropriate Auditors have in their report drawn attention to (i) note 11 to the Abridged Standalone Financial Statements and note 25(5) to the Standalone Financial Statements regarding Company''s assessment that no provision is necessary against the carrying amount of investments (net of provisions) and loans and advances amounting to Rs. 883.42 crores relating to certain subsidiaries and joint ventures and (ii) note 10 to the Abridged Consolidated Financial Statements and note 27(5) to the Consolidated Financial Statements regarding Company''s assessment that carrying amount of Rs. 938.19 crores relating to corresponding fixed assets (including capitalwork in progress), Mining Development and Projects, advances, goodwill and inventories in the Consolidated Financial Statements is considered fully recoverable.

In the opinion of the Board, the recoverable amount of these investments and loans relating to the said subsidiaries and joint ventures (in the case of standalone financials) and corresponding fixed assets, capital work in progress, advances, goodwill, inventories, mine development expenses and license fees (in the case of consolidated financial statements) have been derived based on the estimate of value of businesses / assets , considering estimates in respect of capacity utilisation, operating performance, future raw material prices, foreign exchange rates, operating margins, terminal value etc. the plans for commencing construction of the projects and commencing mining operations and valuation of the residential complex of a subsidiary carried out by an independent valuer. The Board has concluded that no provision is required for these assets as the recoverable amounts derived as explained above are higher than the carrying amount of these assets.

21.2 COST AUDITORS

Pursuant to Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit), Amendment Rules 2014, your Company is required to get its cost accounting records audited by a Cost Auditor.

Accordingly, the Board at its meeting held on May 18, 2016, has on the recommendation of the Audit Committee, re-appointed M/s. S.R. Bhargave & Co., Cost Accountants to conduct the audit of the cost accounting records of the Company for FY 2016-17 on a remuneration of Rs. 12 lacs plus service tax as applicable and reimbursement of actual travel and out of pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification.

21.3 SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. S. Srinivasan & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit carried out is annexed herewith as Annexure "C". The report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

The Board at its meeting held on May 18, 2016, has re-appointed M/s. Srinivasan & Co., Practicing Company Secretaries, as Secretarial Auditor, for conducting Secretarial Audit of the Company for FY 2016-17.

22. RELATED PARTY TRANSACTIONS

All Related Party Transactions (RPT) that were entered into during the financial year were on arm''s length basis and in the ordinary course of business. There were no material Related Party Transactions entered during the FY 2015-16.

The policy on dealing with Related Party Transactions as approved by the Board is uploaded on the Company''s website http://www.jsw.in/investors/steel/related- party-policy. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at Arm''s Length. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and Regulation 23 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Clause 49 of the erstwhile Listing Agreement.

The disclosure of material Related Party Transactions is required to be made under Section 134(3) (h) read with Section 188(2) of the Companies Act, 2013 in Form AOC 2. Accordingly, Related Party Transactions, that, individually or taken together with previous transactions during a financial year, that exceed ten percent of the annual consolidated turnover as per the last audited financial statements, which were entered into during the year by your Company, is given in ''Annexure E'' to this report.

Your Directors draw your attention to Note 15 to the Abridged Standalone financial statements and Note No. 25(13) to the Standalone financial statements which sets out related party disclosures.

23. EMPLOYEE STOCK OPTION PLAN (ESOP)

The Board of Directors of the Company at its meeting held on January 29, 2016 formulated the JSWSL Employees Stock Ownership Plan – 2016 ("ESOP Plan"), with an objective of enabling the Company to attract and retain talented human resources by offering them the opportunity to acquire a continuing equity interest in the Company which will reflect their efforts in building the growth and the Profitability of the Company. More than being a compensation element, the plan will have a strategic significance and will act as a key enabler to achieve long-term business objectives.

At the said meeting, the Board authorized the JSWSL ESOP Committee for the superintendence of the ESOP Plan. Grant of stock options under the ESOP Plan shall be as per the terms and conditions as may be decided by the JSWSL ESOP Committee from time to time in accordance with the provisions of Companies Act, 2013, the rules made thereunder and the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("ESOP Regulations"). The new ESOP Plan is proposed to be implemented through the JSW Steel Employees Welfare Trust ("ESOP Trust"). The ESOP Trust will acquire equity shares of the Company from the secondary market for this purpose.

Under the provisions of the Companies Act, 2013 and the ESOP Regulations, approval of the members by way of a special resolution vide a postal Ballot was obtained on March 24, 2016 for the ESOP plan involving acquisition of shares of the Company from the secondary market.

A total of 28,68,700 (Twenty-Eight Lakhs Sixty-Eight Thousand Seven Hundred) options would be available for grant to the eligible employees of the Company and its director(s) excluding independent directors and a total of 3,16,300 (Three Lakh Sixteen Thousand Three Hundred) options would be available for grant to the eligible employees of the Indian Subsidiaries of the Company and their director(s) excluding independent directors, under the ESOP Plan.

7,43,685 options have been granted under this plan by the JSWSL ESOP Committee in its meeting held on 17th May 2016 under the 1st Grant to the eligible employees of the Company and its Indian Subsidiaries, including the Whole- time Directors of the Company. The Grant of ESOPs to Whole-time Directors of the Company has been approved by the Nomination and Remuneration Committee and the Board. Mr. Seshagiri Rao M.V.S, Dr. Vinod Nowal and Mr. Jayant Acharya, Whole-time Directors of the Company have been granted 19,268, 17,983 and 17,983 options respectively towards the first grant under the ESOP Plan. As per the ESOP Plan 50% of these options will vest at the end of the third year and the balance 50% at the end of the fourth year.

The applicable disclosures relating to the earlier JSWSL Employees Stock Ownership Plan – 2012 as stipulated under the ESOP Regulations pertaining to the year ended March 31, 2016 is hosted on the Company''s website at http://www.jsw.in/investors/investor-relations-steel and forms a part of this Report.

Voting rights on the shares, if any, as may be issued to employees under the JSWSL Employees Stock Ownership Plan - 2012 are to be exercised by them directly or through their appointed proxy, hence the disclosure stipulated under Section 67(3) of the Companies Act, 2013 is not applicable. As no grants have been made under the new ESOP Plan during the period under review, disclosures in respect of the new plan are not applicable.

There is no material change in the aforesaid ESOP Plans and the same are in compliance with the ESOP Regulations.

The Certificate from the Statutory Auditors of the Company certifying that the Company''s Stock Option Plans are being implemented in accordance with the ESOP Regulations and the resolution passed by the Members, would be placed at the Annual General Meeting for inspection by Members.

24. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

JSW Steel believes in inclusive growth to facilitate creation of a value-based and empowered society through continuous and purposeful engagement with society around.

The Company is well on its course to execute programs under the theme ''Janam Se Janani Tak (JSJT) – JSW Aap Ke Saath'', a long term commitment extending services to meet the pressing needs towards empowering women and children living in the Direct Influence Zone of JSW Steel''s plant locations and beyond. Through JSJT our efforts are directed towards enabling an ideal scenario where women and girls have access to quality education, healthcare and livelihood skills to build their own destinies while taking vital decisions in their families and society at large.

Guided by the belief that every life is important and must be given fair opportunities to make best out of it, the Company is working towards eradicating poverty & hunger, tackling malnutrition, promoting social development, addressing social inequalities by empowering the vulnerable section of society, addressing environmental issues, preserving national heritage and promoting sports training.

The Company is committed to:

- Continue allocating at least 2 percent of Profit Before Tax (PBT) towards special corpus for Corporate Social Responsibility as per the categories of the Companies Act 2013.

- Transparent and accountable system for social development and impact assessments through an external agency.

- Concentrate on community needs and perceptions through social processes and related infrastructure development.

- Provide special thrust towards empowerment of women through a process of social inclusion.

- Promote arts, culture and sports; and conserve cultural heritage.

- Spread the culture of volunteerism through the process of social engagement.

JSW Foundation administers the planning and implementation of all our CSR interventions. All the CSR initiatives are approved by the committee in line with the CSR policy approved by the Board on May 27, 2014 and the same are reviewed periodically. The CSR policy formulated is uploaded on the website of the Company at http://www.jswin/investors/investor-relations-steel.

Taking a note of the importance of synergy and interdependence at various levels, JSW Steel has adopted a strategy that combines working with multi-stakeholders as well as directly, depending on the appropriateness and some of this are:

- Priority is given to the villages in the immediate vicinity of the plant locations defined as Direct Influence Zone (DIZ). The policy enables plants to define their own DIZ with the provision that this could be expanded as per the size of operations. However, certain programs might be expanded beyond this geographical purview and upscale. This context is defined as Indirect Influence Zone (IIZ).

- All the interventions shall be formulated based on need assessment using different quantitative and qualitative methods that lead to measurable impact.

- All these interventions shall be implemented either directly or in partnership with both Government and civil society organizations at various levels.

- All the interventions shall be adopted based on concurrent evaluation and knowledge management through process documentation and sharing.

- Social Mobilization, advocacy at various levels, and/ or appropriate policy changes shall form part of the interventions in each sector.

Following are the Company''s thematic interventions as per Schedule VII of the Companies Act 2013:

- Improving living conditions (eradication of hunger, poverty, malnutrition etc.)

- Promoting social development (education, skill development, livelihood enhancements etc.)

- Addressing social inequalities (gender equality, women empowerment etc.)

- Ensuring environmental sustainability

- Preserving national heritage

- Sports training

- Supporting technological incubators

- Rural development projects

The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Report as Annexure D.

25. ENVIRONMENTAL INITIATIVES

The Company has always been a frontrunner in continually improving its operational performance in all areas like safety and use of natural resources. These initiatives have been taken across all production facilities to ensure they become the culture at JSW. All the stack emissions, ambient air quality, effluent quality and work zone air quality are generally within the norms.

The Company has undertaken various measures to address environmental issues at its plant locations.

ENVIRONMENTAL INITIATIVES VIJAYANAGAR

The following are the highlights of the year:

AIR POLLUTION CONTROL:

- Efforts were further intensified towards reduction of air pollution by installing six additional bag filters.

- Five numbers of projects are underway in Steel Melt Shop (SMS) to reduce the roof top emissions.

- With this, the specific dust emissions have been reduced by 24%.

WATER POLLUTION CONTROL:

- Intensive reuse of fresh water has helped in reuse of more than 50,000 m3/day of blow down water in certain applications.

- The existing sewage treatment plant was upgraded to double the capacity i.e. 3000 m3/d with a new technology based on membrane process (Membrane Bio Reactor). The quality of treated water meets the new standards mandated by CPCB/KSPCB. The treated water is being used in CRM-2, there by resulting in a savings of 3000 m3/d.

- The commissioning of the world''s largest (224 m3/ hr) ceramem water treatment was completed during the year. This system is being implemented for the first time in India and treats the oily contaminated alkaline water in cold rolling mills to give a permeate, which can be recycled.

- In view of the severe water crisis, due to deficient monsoon, several measures were taken to intensify recycling of blow down water. This has helped in reducing the specific water consumption by 16%.

SOLID WASTE MANAGEMENT:

During the year under review, waste utilization was given a fllip with the commissioning of the "waste to wealth" plant. These processes iron bearing dusts & sludge to produce value added material for use in pellet plant. The plant achieved a maximum production of 600 TPD in March 2016.

Micro pellet plant and mill scale briquetting plants operated above their designed capacities.

The utilization of solid waste (dust & sludge) was enhanced to 97.35%.

Efforts to provide processed granulated blast furnace slag as an alternate to river sand in 2015-16 showed encouraging results & its acceptance, with nearly one lakh tonnes of slag sand sold to construction industry.

Steam aging process has been developed by R&D department for accelerated weathering of steel slag using steam to convert steel slag into high quality aggregates. Further, an analytical method for determining the effectiveness of the weathering has been developed & included in BIS 383.

DOLVI

To increase the efficiency of the dust extraction system and improve the work zone air quality, following measures were taken:

- Installed new dust suppression system with dry fog at Jetty.

- Installed new de-dusting system in waste material recycling area, sinter fines return conveyor and product conveyer at Sinter plant.

- Improved the efficiency of existing gas cleaning plants by installation of high temperature quenching tower 4 nos. at EAF Shell 1 & 2 and Shell 3 & 4.

- Installed new de-dusting systems at Blast Furnace Cast House and Stock house.

- Installed retractable telescopic chute at Lime Calcinations Plant (LCP) at lime loading points.

- Installed Industrial Vacuum Cleaner (IVC) to extract spillage of dust at various working platforms in the Jetty and LCP.

- Installed additional dust extraction system with venturi scrubbing in Sponge Iron Plant.

- Optimizing the combustion of fuel gas in Coke Oven for better efficiency and lesser emission.

Dolvi works has been conferred with Greentech Environment Award-2015 in Gold Category from Greentech Foundation, New Delhi.

SALEM

- To increase the effectiveness of monitoring and effective air pollution control, additional 62 online continuous emission monitoring systems were commissioned and connected real-time to Care Air Centre (CAC), TNPCB, Chennai.

- Flow details of wastewater (collection and reuse) was connected online along with CCTV camera to Water Quality Watch (WQW), TNPCB, Chennai.

- Liquid Chlorine (hazardous substance) in Captive Power Plant was replaced by Chlorine dioxide in cooling water treatment at CPP II for safer and better handling.

- BF gas fired reheating furnace at Bar & Rod Mill was commissioned for maximizing BF gas consumption thereby reducing the usage of furnace oil.

- As a major initiative in enhancing the use of renewable energy, Solar energy for street light of 5 KW capacity was installed in the plant.

- Chemical consumption in main raw water treatment plant was reduced by 10% through periodical monitoring of input water quality.

- Secondary de-dusting system was commissioned at LRF to reduce fugitive emissions.

- As a part of green belt development, 10000 nos. of trees were planted inside the plant including 5000 Bheema Bamboo trees which would consume more Carbon dioxide than the other trees.

- Rain water harvesting pond of 2200 m3 capacity was constructed near Coke Oven Plant for collection and re-using the water in the process to minimize the consumption of raw water.

- Initiative taken to install 3 numbers of continuous Air Quality Monitoring Station for continuous monitoring of ambient air quality.

- Initiative taken to eliminate DM plant regeneration wastewater by installing R.O. plant in CPP II.

The Company is dedicated to constantly improving its performance on the prevention & control of Pollution, the proper use of natural resources and the minimisation of any hazardous impact stemming from the production, development, use and disposal of any of the products and services of the Company.

26. AWARDS AND ACCOLADES

Over the years, JSW Steel has participated and won many rewards and recognitions. This includes in areas like Business Excellence, Sustainability, Industry Leadership, etc. The award won during FY 2015-16 include the following:

1. Platts Global Metals Awards- (Industry Leadership Award) JSW Steel 2015.

2a. Porter Prize for Creating Shared Value.

2b. Porter Prize of Leveraging Unique Activities - Weathering the Iron Ore crisis.

3. CII-EXIM Bank Business Excellence Award – 2015 awarded by Confederation of Indian Industries (CII): Commendation Certificate for Significant Achievement.

4. National Sustainability Award-2015: First Prize amongst the Integrated Steel Plants Category by Indian Institute of Metals.

5. CII-ITC Sustainability Award 2014: Awarded Outstanding Accomplishment in category F.

6. Steel Minister''s Trophy for the year 2013-14: Announced.

7. Governor of Karnataka Mr. Vaju Bhai Vala conferred a honorary Doctorate to Mr.Sajjan Jindal Chairman & Managing Director at the 4th Convocation of the Vijayanagar Sri Krishna Devara University held at Joladarashi Doddanagouda Ranga Mandir in Ballari on March 30, 2016.

CERTIFICATION

The surveillance audit was conducted for the IMS (Integrated Management System) which includes all the ISO-9001, ISO-14001 & BS-OHSAS-18001 for the JSW works and the JSW Township.

27. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134 sub- section 3(c) and sub-section 5 of the Companies Act, 2013, 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) Such accounting policies have been selected and applied consistently and judgements and estimates have been made that are reasonable and prudent to give a true and fair view of the Company''s state of affairs as at March 31, 2016 and of the Company''s Profit or loss for the year ended on that date.

(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) The annual financial statements have been prepared on a going concern basis.

(v) That internal financial controls were laid down to be followed and that such internal financial controls were adequate and were operating effectively.

(vi) Proper systems were devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

28. DISCLOSURES

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Regulations 17 of the Securities and Exchange Board o4f India (Listing Obligation and Disclosure Requirements) Regulation, 2015.

AUDIT COMMITTEE

The Audit Committee comprises of Three Non-Executive Directors, all of whom are Independent Directors. Mr. Uday M. Chitale is the Chairman of the Audit Committee. The Members possess adequate knowledge of Accounts, Audit, Finance, etc. The composition of the Audit Committee meets the requirements as per the Section 177 of the Companies Act, 2013 and Regulation 18 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Clause 49 of the erstwhile Listing Agreement.

There are no recommendations of the Audit Committee which have not been accepted by the Board.

EXTRACT OF ANNUAL RETURN

In accordance with the provisions of Section 134(3)(a) of the Companies Act, 2013, the extract of the annual return in Form No. MGT–9 is annexed (Annexure "B") hereto and forms a part of this report.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Company has a vigil mechanism named Whistle Blower Policy / Vigil Mechanism to deal with instance of fraud and mismanagement, if any. Details of the same are given in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There are no significant or material orders passed by the Regulators/ Courts/ Tribunals which could impact the going concern status of the Company and its future operations.

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

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given in the statement annexed (Annexure "A") hereto and forms a part of this report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required to be disclosed in the Directors'' Report pursuant to Section 197 of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is set out as Annexure "F" to this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, an abridged version of the Annual Report, excluding the aforesaid information, is being sent to the members of the Company and others entitled thereto. For those persons who have registered their e-mail addresses with the Company, the full version of the Annual Report containing the aforesaid information is being sent to them electronically. Members and other entitled persons who have not registered their e-mail addresses with the Company may access the full version of the Annual Report up to the date of the ensuing Annual General Meeting on the website of the Company; or by physically inspecting the full version of the Annual Report at the Registered Office of the Company on all working days of the Company, between 10.00 a.m. and 01.00 p.m; or by requesting a physical copy by writing to the Company Secretary.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

No complaints pertaining to sexual harassment were received during FY 2015-16.

OTHER DISCLOSURES / REPORTING

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOPs referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

29. APPRECIATION

Your Directors take this opportunity to express their appreciation for the cooperation and assistance received from the Government of India, Republic of Chile, Kenya, Mauritius, Mozambique, Mali, the USA and the UK; the State Governments of Karnataka, Maharashtra, Tamil Nadu, West Bengal and Jharkhand; 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 employees of the Company.

For and on behalf of the Board of Directors

SAJJAN JINDAL

Mumbai, dated: May 18, 2016 Chairman


Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the Twentieth Annual Report of your Company, together with the Standalone and Consolidated Audited Statement of Financial Accounts for the year ended March 31, 2014.

1. FINANCIAL RESULTS

(Rs. in crores)

Standalone Consolidated

Particulars FY 2013-14 FY 2012-13 FY 2013-14 FY 2012-13

Gross turnover 48,527.18 38,763.41 54,620.76 41,463.15

Less : Excise duty 3,997.71 3,375.78 4,211.89 3,368.19

Net turnover 44,529.47 35,387.63 50,408.87 38,094.96

Add: Other operating revenues 768.25 104.18 810.75 114.69

Revenue from operations 45,297.72 35,491.81 51,219.62 38,209.65

Operating EBIDTA 8,782.59 6,308.82 9,165.46 6,503.92

Add: Other income 331.05 260.88 85.81 69.73

Less: Finance costs 2,740.13 1,724.48 3,047.86 1,967.46

Less: Depreciation and amortisation 2,725.88 1,973.89 3,182.61 2,237.48

Profit before exceptional items and tax 3,647.63 2,871.33 3,020.80 2,368.71

Less: Exceptional items 1,692.30 367.21 1,712.75 369.37

Profit before taxation (PBT) 1,955.33 2,504.12 1,308.05 1,999.34

Less: Tax expense 620.82 702.90 920.08 845.25

Profit after taxation, but before minority interests and 1,334.51 1,801.22 387.97 1,154.09 share of profits/ (loss) of associates

Less: Share of profit / (losses) of minority - - (50.44) (34.34)

Add: Share of (losses) / profit from associates (Net)

Excluding exceptional items - - 13.54 (164.52)

Exceptional items - - - (60.80)

Profit after taxation (PAT) 1,334.51 1,801.22 451.95 963.11

Add: Profit brought forward from previous year 3,306.02 1,987.30 489.95 9.34

Amount available for appropriation 4,640.53 3,788.52 941.90 972.45

Less: Pursuant to the composite Scheme of (341.95) - 716.44 - Amalgamation and Arrangement Less: Appropriations:

Dividend on additonal Equity Shares Issued (21.77) - (21.77) -

Transfer from debenture redemption reserve (54.16) (7.82) (54.16) (7.82)

Dividend on preference shares (27.90) (27.90) (27.90) (27.90)

Proposed final dividend on equity shares (265.89) (223.12) (265.89) (223.12)

Corporate dividend tax (49.93) (42.66) (49.93) (42.66)

Transfer to general reserve (134.00) (181.00) (134.00) (181.00)

Closing Balance 3,744.93 3,306.02 1,104.69 489.95

2. FINANCIAL HIGHLIGHTS

The Scheme of Amalgamation and Arrangement ("the Scheme") between the Company and JSW ISPAT Steel Limited and others, which became effective June 1, 2013 with appointed date of July 1, 2012. Therefore, the numbers of FY 2013-14 are not comparable with FY 2012-13 as the effect of implementation of the Scheme is included in the current year figures.

(A) Standalone Results

The Company produced 12.17 million tonnes of crude steel in FY 2013-14,up 43% over the previous year. Its steel sales grew to 11.86 million tonnes, increasing by 34% year on year. The Company took several initiatives during the last financial year that helped in achieving impressive growth in production and sales volumes. The Company commissioned new facilities to enrich product mix, leveraged the export demand, diversified its inputs sourcing strategy and strengthened market penetration through wider distribution and newer formats.

The Gross Turnover and Net Turnover for the year under review was Rs. 48,527 crores and Rs. 44,529 crores, respectively, and showed a growth of 25% and 26%, respectively. The Operating EBITDA was Rs. 8,783 crores, and showed a growth of 39% with an improvement in EBIDTA margin from 17.8% to 19.4%. The net profit after tax was Rs. 1,335 crores after considering exceptional loss of Rs. 1,692 crores. The exceptional loss is due to the significant movement and volatility in the value of the rupee against US dollar.

The net worth of your Company increased to Rs. 24,284 crores as on March 31, 2014 from Rs. 19,937 crores as on March 31, 2013. The Company''s net debt gearing was at 1.10 (compared to 0.82 as on March 31, 2013) and net debt to EBIDTA was at 3.03 (compared to 2.59, as on March 31, 2013).

(B) Consolidated Results

The consolidated Gross Turnover and consolidated Net Turnover for the year under review was Rs. 54,621 crores and Rs. 50,409 crores, respectively, both showing a growth of 32%, respectively. For FY 2013-14, the consolidated Operating EBITDA was Rs. 9,165 crores, showed a growth of 41%. The net profit after tax for Consolidated Company was Rs. 452 crores, after considering exceptional loss of Rs. 1,713 crores, due to the significant movement and volatility in the value of the rupee against US dollar.

The consolidated net worth of your Company increased to Rs. 22,105 crores as on March 31, 2014, from Rs. 17,541 crores as on March 31, 2013. The consolidated net debt gearing was at 1.54 (compared to 1.11, as on March 31, 2013) and consolidated net debt to EBIDTA was at 3.71 (compared to 3.00, as on March 31, 2013).

In accordance with the Accounting Standards AS- 21, on Consolidated Financial Statements, read with Accounting Standard AS-23 on Accounting for Investment in Associates and AS-27 on Financial Reporting of Investment in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

3. DIVIDEND

The Board has, subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated rate of Rs. 1.00 per share on 10% Cumulative Redeemable Preference Shares of Rs. 10 each of the Company, for the year ended March 31, 2014.

Considering the Company''s performance and financial position for the year under review, the Board has also recommended a dividend of Rs. 11 (110%) per fully paid-up Equity Share of Rs. 10 each of the Company, for the year ended March 31, 2014, subject to the approval of the Members at the ensuing Annual General Meeting.

Together with Corporate Tax on dividend, the total outflow, on account of equity dividend, will be Rs. 311.08 crores, vis-à-vis Rs. 282.80 crores paid for fiscal 2012-13.

4. SCHEME OF ARRANGEMENT AND AMALGAMATION

A ''Composite Scheme of Arrangement and Amalgamation'' under Sections 391-394 of the Companies Act, 1956 (the "Scheme") amongst the Company, JSW ISPAT Steel Limited ("JSW ISPAT"), JSW Building Systems Limited ("JSW Building"), JSW Steel Coated Products Limited ("JSW Steel Coated") (formerly known as Maharashtra Sponge Iron Limited) and their respective shareholders and creditors was sanctioned by the Hon''ble Bombay High Court vide its Order dated May 3, 2013. The Appointed Date in terms of the Scheme is July 1, 2012. The said Scheme has become effective June 1, 2013, consequent to the filing of Hon''ble High Court''s Order with the Registrar of Companies.

5. PROSPECTS

Economy

In FY 2013-14, India was besieged by high inflation, rapidly depreciating Rupee, rising NPAs, declining manufacturing, stagnant investments and subdued exports with adverse downside risk to future economic growth. However, prudent and timely measures by RBI and the Government restored macroeconomic stability, lowering Current Account Deficit to below 2.5% and contained Fiscal Deficit at 4.6%.

World economy is projected to grow at 3.6% in CY 2014 up from 3% in CY 2013 majorly aided by steady growth in Europe from 0.2% to 1.6% and US from 1.9% to 2.8%. Emerging Markets are projected to exhibit a moderate growth at 4.9%. China is focusing on ''Quality'' engineered growth, with emphasis on increasing domestic consumption demand. Emerging countries remain vulnerable to the ongoing tapering of quantitative easing in the US, and gradual withdrawal is expected to reduce this risk.

Global commodity prices are projected to remain moderate and this could support India''s recovery. Sustained growth is expected as the Indian economy over-rides the structural impediments and policy stimulates business confidence and accelerate fiscal correction.

Steel Sector

Indian steel demand grew to 73.9 million tonne during FY 2013-14 with Flat Steel down by 2% while Longs displayed a growth of 2.6%. Impacted by inadequacy and inconsistent quality of iron ore, capacity utilisation for Indian steel declined from 81% in FY 2012-13 to 78% in FY 2013-14. Sluggish domestic demand with rising capacity and increased production resulted in growing thrust on import substitution, resulting in a sharp decline of imports by 34%. Expanding new-age steel capacities and incorporating world-class technologies and rupee depreciation helped India to increase its steel exports by 13%. This exhibits growing global competitiveness of Indian steel industry; thus transforming India into a net steel exporter.

Global crude steel capacity is projected to increase by 88 million tonnes to 2256 million tonnes during CY 2014. Steel demand in CY 2014 is expected to increase by 53 million tonnes or 3.6% to 1534 million tonnes exhibiting significant demand growth for Europe at 3.1% with Advanced Markets up by 2.5% as against -0.2% in CY 2013. Chinese steel demand projected at 728 million tonnes with its growth moderating to 4% as against 6.6% in CY 2013. There is need for the sector to restructure to increase efficiency.

The Government is undertaking proactive policy initiatives for Infrastructure development and Industrial growth, which will accelerate steel demand in line with economic growth. However, concerns like poor availability of iron ore and inconsistent quality as well as high import dependency of coking coal need to be addressed.

6. PROJECTS AND EXPANSION PLANS

I. Projects commissioned during FY 2013-14

1. Vijayanagar Works

- Pickling Cum Coupled Tandem Cold Rolling Mill (PLTCM) facility which is part of phase 1 of CRM2 Project has commenced commercial production at Vijaynagar from December 2013.

- Revamped Corex-1 to increase its capacity from 0.80 MTPA to 0.85 MTPA.

- Installed Waste Heat Recovery system at Blast Furnace-3 & 4 and at Sinter Plant 2, 3 & 4.

- Micro Pelletising Plant using BOF sludge, fine dust from various de-dusting systems.

- Mill Scale Briquetting by using mill scale generated from various mills.

- Gas Burner system in CPP-3 and CPP-4 Boiler for increasing the utilisation of waste gas and achieve Zero Flaring of gases.

2. Dolvi Works

- Commissioned 55 MW Blast Furnace Gas based Power Plant.

- Commissioned 600 TPD Lime Calcination Plant to take care of present and future requirement of Lime and Dolomite for increased scale of operation.

- Commissioned Railway Siding project to enable improved dispatch of finished goods.

- Commissioned Coke Dryer Plant to reduce moisture level of coke which in turn will reduce the consumption of coke and will improve fuel efficiency and productivity of Blast Furnace.

- Refurbishment of Raw Water Reservoir of 300 million litres capacity.

3. Salem Works

- Commissioned 4 stands 3 Roll reducing and sizing block (Kocks Block) in BRM for enhancing the quality of bars with respect to Tolerance, Quality and size.

- Commissioned online automatic inspection line for Blooming mill products which includes bundling and packing.

The benefits on commissioning these projects during FY 2013-14 are expected to accrue during FY 2014-15.

II. Projects under Implementation

1) Capacity Enhancement Projects Vijayanagar Works

a) CRM2 1 phase consisting of Continuous Annealing Line (CAL) of 0.95 MTPA is scheduled to be commissioned in the first quarter of FY 2014-15. In the second phase, 2nd CAL of 0.95 MTPA is expected to be commissioned by FY 2015-16.

b) Reconstruction of Blast Furnace – 1, increasing its capacity from 0.9 MTPA to 1.7 MTPA, subject to necessary approval.

c) New Steel Melting Shop comprising of Electric Arc Furnace along with 1.5 MTPA Billet Caster.

d) 1.2 MTPA New Bar Mill, to process the Cast Products from SMS-3.

e) 0.2 mtpa non-grain oriented Electrical Steel project at Cold Rolling Mill No.1.

f) A Service Center of annual capacity of 50,000 tonnes to handle the products of Electrical Steel Complex at Cold Rolling No.1 is proposed to be set-up at Vijayanagar.

Dolvi Works

Company has received necessary approvals to take up brownfield expansion at the Dolvi plant to enhance capacity from 3.3 MTPA to 5 MTPA. The estimated cost of the expansion project is Rs. 3,300 crores to be financed in the Debt Equity ratio of 2:1. The project will be commissioned by 30th September 2015. The proposed expansion includes setting up a Sinter Plant, Blast Furnace modification, de-bottlenecking of SMS & HSM, setting up new Billet Caster and 1.4 MTPA Bar Mill.

2) Efficiency, Productivity Improvement and Cost Reduction Initiatives

Vijayanagar Works

A Sizing Press is proposed to be installed at HSM-2 to provide flexibility in Caster operations at SMS-2 and allow an increase in throughput of the Slab Casters by an average Cast width of 1700 mm.

Dolvi Works

a) Modification of Tunnel Furnace to replace natural gas with surplus coke oven gas and thereby reducing conversion cost.

b) Modification of Sponge Iron Plant to use COG as partial replacement of Natural Gas.

c) A 23 km long new Water Pipeline is also being laid.

Salem Works

a) Reheating Furnace in BRM with BF gas fired burners replacing furnace oil fired furnace and utilizing in house BF gas and eliminating furnace oil.

b) 32 TPH WHRB in Coke Oven to harness the utilization of extra waste heat from non- recovery coke oven.

c) Turbo Generator -15 MW for effective utilization of Waste heat recovery steam.

7. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

In the context of globalising Indian economy and the increase in the number of subsidiaries, the Ministry of Corporate Affairs, vide its General Circular No. 2/2011 dated 08.02.2011 has granted General Exemption to all companies from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies to the Balance Sheet of the Company as required under Section 212(1) of the Companies Act, 1956, subject to fulfilment of certain standard conditions generally prescribed while giving specific approvals. The Company will make available these documents/ details 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.

Details of major Subsidiaries, Joint Venture and Associate Companies are given below:

A. Indian subsidiaries

1. JSW Bengal Steel Limited (JSW Bengal), its subsidiaries Barbil Beneficiation Company Limited, Barbil Iron ore Company Limited, JSW Natural Resources India Limited, JSW Energy (Bengal) Limited (JSWEBL) and JSW Natural Resources (Bengal) Limited (JSWNRBL)

JSW Bengal is proposing to set up an integrated Steel Complex at Salboni of District Paschim Medinipur in West Bengal, for which Environmental Clearance for a 3 MTPA Integrated Steel Plant and 300 MW Captive Power Plant was granted by Ministry of Environment & Forests (MoEF), which is a part of the ultimate 10 MTPA steel plant. As long term linkages of Iron ore supplies, which is an essential prerequisite for the Integrated Steel Plant, are still in process, the project erection work of Steel Plant is on slow pace.

However, field survey for laying a 68 km cross country water pipeline for the project is in progress. The first phase also includes development of 2.4 MTPA Kulti-Sitarampur Coal Blocks and 2.6 MTPA Ichhapur Coal Block, through wholly owned subsidiaries. The Company envisages that shaft sinking at coal blocks would commence on receipt of approval of the mining plan and related approvals.

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 already obtained Terms of Reference (TOR) from Ministry of Environment and Forest (MOEF), Government of India. The Company is pursuing for various other approvals/ clearances for this project and also engaged in CSR activities at the plant site.

3. JSW Steel Processing Centres Limited (JSWSPCL)

JSW Steel Processing Centres Limited (JSWSPCL) is a wholly owned subsidiary of the Company. JSWSPCL was set up as a Steel Service Centre, comprising HR/CR Slitter and cut-to-length facility, with an annual slitting capacity of 6,50,000 tonnes. The Company processed 5,30,836 tonnes of steel during FY 2013-14, as compared to 5,22,647 tonnes in the previous year.

4. Amba River Coke Limited (ARCL)

Amba River Coke Limited (ARCL) is a wholly owned subsidiary of the Company. ARCL has set up 1 MTPA Coke Oven Plant and 4 MTPA Pellet Plant at Dolvi. These products will be supplied to Dolvi Unit. The coke oven and pellet plants have started trial run in Q4 FY 2013-14 and commercial production is expected to commence in FY 2014-15.

5. JSW Steel Coated Products Limited (JSW Steel Coated)

JSW Steel Coated Products Limited (formerly known as Maharashtra Sponge ron Limited) was acquired by a wholly owned subsidiary of the Company. Pursuant to the ''Composite Scheme of Arrangement and Amalgamation'' under Sections 391-394 of the Companies Act, 1956 (the "Scheme") amongst the Company, JSW ISPAT Steel Limited ("JSW ISPAT"), JSW Building Systems Limited ("JSW Building"), JSW Steel Coated Products Limited ("JSW Steel Coated") (formerly known as Maharashtra Sponge Iron Limited) and their respective shareholders and creditors, becoming effective, the Kalmeshwar undertaking of JSW ISPAT and the Vasind and Tarapur undertakings of the Company were transferred to JSW Steel Coated from the appointed date of 1 July, 2012.

JSW Steel Coated has executed the following major projects during the year to enhance its capacity:

- Commissioning of Dual Pot Galvanizing (GI) cum Galvalume (GL) Line at Tarapur having an installed capacity of 0.2 MTPA.

- Up-gradation of Cold Rolling Mill 2 at Tarapur, increasing its capacity from 0.075 MTPA to 0.1 MTPA.

- Upgradation of existing HR Slitter and Pickling Line at Tarapur, increasing its capacity from 0.3 MTPA to 0.48 MTPA.

- Railway siding project was completed during the year at Vasind. This has facilitating bulk movement of material through rail.

- Commissioning of Colour Coating Line 2 having an annual installed capacity of 0.075 MTPA at Vasind.

- Upgradation of existing Cold Rolling Mill (TM-1) at Tarapur to state-of-art mill for rolling up to 1,350 mm width. Mill capacity has increased from 0.075 MTPA to 0.225 MTPA.

- Commissioning of Colour Coating Line 2 at Kalmeshwar with an annual installed capacity of 0.12 MTPA.

Project under Implementation

- Cold Rolling Mill with a capacity of 0.21 MTPA at Kalmeshwar

With the successful commissioning of above projects, the production capacity for galvanizing cum galvalume products and colour coated products is now 1.72 MTPA and 0.673 MTPA, respectively.

6. Peddar Realty Private Limited

Peddar Realty Private Limited (PRPL) is a wholly owned subsidiary of the Company and is engaged in the business of purchase and sale of land, development rights, immovable properties, construction, lease, mortgage, etc.

B. Overseas Subsidiaries

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

JSW Steel (Netherlands) B.V. is a holding Company for subsidiaries based in USA, UK, Chile and East Africa. It also has 49% equity holding of Georgia-based Geo Steel LLC ncorporated under the laws of Georgia. The Company also invested in the US in the plate and pipe mill and coal mining assets. Besides it also invested in iron ore mining concessions in Chile and fixed assets at the UK through the following step-down subsidiaries.

(a) JSW Steel Holding (USA) Inc. and its subsidiaries viz. JSW Steel (USA) Inc – Plate and Pipe Mill Operation and Periama Holdings LLC and its subsidiaries – West Virginia, USA-based Coal Mining Operation.

Plate and pipe mill operation

During FY 2013-14, the US plate and pipe mill''s performance continued to be impacted due to challenging economic environment in USA, resulting in lower capacity utilisation. For FY 2013-14, 389,902 net tonnes of plates and 44,614 net tonnes of pipes were produced with capacity utilisation of 39% and 8%, respectively.

During FY 2014-15, the US operations are expected to improve in terms of operational performance with enhanced capacity utilisation.

Coal mining operation

JSW Steel Holding (USA) Inc. has 100% equity interest in coal mining concessions and integrated rail and barge load out facility in West Virginia, USA. While some of the mines are currently operational, statutory clearance/permits for other mines are in advanced stage of approval. A 500 tph Preparation Plant is under construction and is expected to be completed during FY 2014-15.

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

During FY 2013-14, mining activity with a capacity of 1 MTPA through dry process route was undertaken. The Company had 10 shipments of iron ore concentrate, aggregating to 0.76 million tonnes. Work on establishing a wet beneficiation plant is currently being pursued and necessary statutory and environmental approvals are awaited.

2. JSW Natural Resources Limited (JSWNRL) and its subsidiaries JSW Natural Resources Mozambique Lda (JSWNRML), JSW ADMS Carvao Lda and JSW Mali Resources SA

JSW Natural Resources Limited formed a wholly-owned subsidiary – JSW Natural Resources Mozambique Lda in Mozambique to acquire coal assets and engage in prospecting and exploring coal, iron ore and manganese. JSW Natural Resources Mozambique Lda is planning to undertake extensive exploration program in Mutarara, Tete area during FY 2014-15.

JSW ADMS Carvão Lda, a subsidiary of JSW Natural Resources Mozambique Lda, has a coal mining licence in Zumbo District of Tete Province. The Company has completed extensive exploration activities including Diamond drilling, Large Diameter drilling, Geotechnical drilling and hydro geological drilling. Geological report and Geological model is in process to confirm the coal resource estimate. The Company has initiated activities like pre-feasibility study, EIA report for applying for mining license.

During the year JSW Natural Resources Mozambique Limitada purchased 15% holding of JSW ADMS Carvao Lda from minority shareholders.

3. There were no significant operations during the financial year in JSW Steel (UK) Limited and its subsidiaries, Nippon Ispat Singapore (PTE) Limited, Erebus Limited, Arima Holdings Limited, Lakeland Securities Limited, JSW Mali Resources S.A. and JSW Steel East Africa Limited.

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., has set up a steel rolling mill in Georgia, with a production capacity of 175,000 tonnes. Geo Steel produced 1,49,527 tonnes of rebars and 1,32,178 tonnes of billets during FY 2013-14. The net turnover was USD 101.55 million during the year.

2. Rohne Coal Company Private Limited

Rohne Coal Company Pvt. Ltd. is a joint Venture with two other partners. Environmental clearance is obtained. MOEF has accorded in- principle approval of Stage I Clearance.

The Company is pursuing for various other approvals / clearance for this project.

3. MJSJ Coal Limited (MJSJ)

In terms of the Joint Venture Agreement to develop Utkal-A and Gopal Prasad (West) thermal coal block in Odisha, your Company, along with four other partners, agreed to participate in the 11% equity of MJSJ Coal Limited, Odisha.

The Government of India decided to allot 1522 acres of Gopal Prasad West area to MJSJ in which Mahanandi Coal Fields Limited, a Public Sector Company hold 60% of the equity.

4. Gourangdih Coal Limited

Gourangdih Coal Ltd (GCL) is a 50:50 Joint Venture between JSW Steel Limited(JSW) and Himachal EMTA Power Corporation Ltd (HEPL). It has been incorporated to develop and mine coal from West Bengal''s Gourangdih, ABC thermal coal block. It is currently having pre- mining activities. A mining plan was submitted to the government authorities.

In November 2012, the Ministry of Coal, Government of India, issued de-allocation letter citing the recommendations of the Inter- Ministerial Group (IMG) of ''unsatisfactory progress, both in development of coal mine and implementation of end-use plants''. The Ministry intimated its decision to de-allocate the Gourangdih ABC coal block in the state of West Bengal from the joint allocates, i.e. JSW and HEPL. It also aimed to forfeit 50% of Bank Guarantee amounting to Rs. 6.67 crores.

Both the co-allocatees (JSW and HEPL) have filed separate legal proceedings challenging the recommendations of the IMG. JSW Steel Limited filed a Writ Petition before Delhi High Court and High Court passed an interim order to stay de-allocation of the coal block and encashment of Bank Guarantee. In relation to the Writ Petition filed by JSW Steel Limited before Delhi High Court, a Transfer Petition bearing no. 430 of 2014 has been filed before Supreme Court of India by Union of India. There are no further orders for listing.

Himachal EMTA filed a separate Writ Petition before High Court of Himachal Pradesh and obtained stay of operation of the recommendations of IMG. In relation to the Writ Petition filed by Himachal EMTA before Himachal Pradesh High Court, a Transfer Petition bearing no. 174 of 2014 has been filed before Supreme Court of India by Union of India. There are no further orders for listing.

5. Toshiba JSW Power Systems Private Limited (Formerly known as Toshiba JSW Turbine and Generator Private Limited)

Toshiba JSW Power Systems Private Limited is a Joint Venture company with a shareholding of 75% by Toshiba Corporation Limited, Japan, 22.46% by JSW Energy Limited and 2.54% by the Company to design, manufacture, market and maintain services of mid to large-size Supercritical Steam Turbines and Generators of size 500 MW to 1,000 MW.

The name of the Company has been changed from "Toshiba JSW Turbine & Generator Private Limited" to "Toshiba JSW Power Systems Private Limited" consequent to the demerger of Toshiba Thermal Power System division from Toshiba India Private Limited and its merger into the Company. The Company is now capable of providing comprehensive Engineering, Procurement and Construction services for the Power Plants.

During the year, Company has received order from NTPC Ltd. for 2 Units of 800 MW Super critical Turbines and Generators for Darlipalli Power Project in Orissa. This is in addition to the earlier orders received from NTPC Ltd. for 3 Units of 800 MW Supercritical Turbine and Generator sets for Kudgi Power plant in Karnataka and 2 Units of 660 MW Supercritical Turbine Generator sets for Meja Power Project in Uttar Pradesh which are at an advanced stage of manufacturing and progressive dispatch to NTPC Ltd.

It is expanding its annual production capacity of the Manufacturing facility from 3000 MW to 6000 MW of Supercritical Steam Turbine & Generators and construction work for the same is under progress and is expected to be completed shortly.

6. Vijayanagar Minerals Private Limited (VMPL)

According to the order of the Hon''ble Supreme Court to stop all mining operations in Bellary District in Karnataka, activities from Thimmappanagudi Iron Ore Mines (TIOM) operated by VMPL was halted since July 2011. VMPL operations and financial results were affected due to the above reasons during FY 2013-14. Thereafter, the Honourable Supreme Court directed that this mine should be operated only by MML. The legal options are being evaluated in this regard.

7. JSW Severfield Structures Limited and its subsidiary JSW Structural Metal Decking Limited

JSW Severfield Structures Limited (JSSL) is operating a structural steelwork facility to design, fabricate and erect structural steelwork and ancillaries for construction projects with a total capacity of 55,000 TPA at Bellary, Karnataka. The Company has produced 26,099 tonnes during the year. Its order book stood at 431 crores (43,402 tonnes), as on March 31, 2014.

JSW Structural Metal Decking Limited (JSWSMD), a subsidiary company of JSSL is engaged in the business of designing, roll forming of structural metal decking and accessories, with total plant capacity of the plant is 10,000 tonnes at Bellary, Karnataka. The Company has orders of around 1,43,000 square meters, as on March 31, 2014.

8. JSW MI Steel Service Center Private Limited

JSW Steel and Marubeni-Itochu Steel signed a Joint Venture Agreement on September 23, 2011, to set up Steel Service Centres in India.

The JV Company proposes to set up its Steel Service Centre in North and West India with an initial installed capacity of 0.18 MTPA (Phase-I), which will subsequently be enhanced to 0.5 MTPA. The project is under progress and expected to be completed by September 2014.

The Service Centre will be equipped to process flat steel products, such as hot rolled, cold rolled and coated products, to offer just-in- time solutions to the automotive, white goods, construction and other value-added segments.

D. Associate Companies

Jindal Praxair Oxygen Company Private Limited (JPOCL)

The oxygen plants of JPOCPL have been working satisfactorily primarily to meet the requirements of steel plant operations at Vijayanagar Works. During FY 2013-14, the combined production of the oxygen plant module #1 and module # 2 of JPOCPL was: gaseous oxygen – 1,024 million Nm3; gaseous nitrogen – 334 million Nm3; Liquid oxygen – 38 million Nm3; Liquid nitrogen – 22 million Nm3 and Argon – 11 million Nm3.

8. ACQUISITION OF CEMENT RAIGAD GRINDING FACILITY FROM HEIDELBERG CEMENT INDIA LIMITED

During the year, the Company acquired a Cement grinding facility in Maharashtra, having a capacity of 0.6 MTPA, from Heidelberg Cement India Ltd as a going concern on a slump sales basis.

9. ACQUISITION OF EQUITY STAKE IN VALLABH TINPLATE PRIVATE LIMITED (VTPL)

Keeping in view the Company''s strategic goal to enhance its share of value added products segment in its overall product basket to about 40%, the Company, during April''14, acquired 50% equity stake in Vallabh Tinplate Private Limited (VTPL), having an annual capacity of 60,000 tonnes. This acquisition marks JSW Steel''s entry into growing Tinplate business in India.

10. CREDIT RATING

Your Company''s credit rating for the long-term debt/facilities/NCDs is "AA" by Credit Analysis & Research Ltd. (CARE). CARE continues to rate the Company''s short-term debt/facilities at the highest level of A1 .

The rating continues to derive strength from your Company''s significant presence in India''s steel sector, proven management capability and well diversified mix of value-added and upstream products.

AA rating for long-term/medium-term debt/facilities/ NCDs indicates a high degree of safety regarding timely servicing of financial obligations and very low credit risk.

A1 rating for short-term debt/facilities is the highest in the category and indicates a very strong degree of safety regarding timely payment of financial obligations and lowest credit risk.

11. 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.

12. SHARE CAPITAL

Upon the ''Composite Scheme of Arrangement and Amalgamation'' under Sections 391-394 of the Companies Act, 1956 (the "Scheme") amongst the Company, JSW ISPAT Steel Limited ("JSW ISPAT"), JSW Building Systems Limited ("JSW Building"), JSW Steel Coated Products Limited ("JSW Steel Coated") (formerly known as Maharashtra Sponge Iron Limited) and their respective shareholders and creditors sanctioned by the Hon''ble Bombay High Court vide its Order dated May 3, 2014 becoming effective, 1,86,04,844 equity shares of Rs. 10 (Rupees ten only) each fully paid up and 48,54,14,604, 0.01% Cumulative Redeemable Preference Shares of Rs. 10 (Rupees ten only) each of the Company were issued and allotted.

Accordingly, during the year under review, your Company''s paid up equity share capital has increased from Rs. 2,23,11,72,000 to Rs. 2,41,72,20,440 comprising of 24,17,22,044 equity shares of Rs. 10 each and the aggregate preference share capital has increased from Rs. 2,79,03,49,070 to Rs. 7,64,44,95,110 comprising of 27,90,34,907, 10% Cumulative Redeemable Preference Shares of Rs. 10 each fully paid up and 48,54,14,604, 0.01% Cumulative Redeemable Preference Shares of Rs. 10 each fully paid up.

13. TECHNICAL COLLABORATION WITH JFE STEEL CORPORATION, JAPAN

The Company has entered into a Strategic Collaboration Agreement with JFE Steel Corporation, Japan (JFE) in 2010.

The Company is benefiting from JFE''s expertise in Auto grade steel production. As a culmination of the Automotive steel collaboration with JFE,

CRM 2 - India''s Largest Auto grade Steel Plant, was successfully commissioned in October 2013.

Keeping in view its strategy to increase its portfolio of value added products, the Company continues to collaborate with JFE in various areas like development of electrical steel grade. The first Phase of the cold rolled non grain oriented (CRNO) project is in progress and modifications in upstream facilities have also been initiated under the guidance of JFE to suit production of this high- grade product.

As a part of knowledge sharing process, Company''s employees from various departments such as IT, Marketing, Material Planning, Production Control and Product Development and Quality control are being sent to JFE to learn the best practices and implement these in various plants of JSW Steel, to achieve strategic and sustainable cost reduction.

14. IRON ORE STATUS

After banning Iron ore mining activity in Karnataka''s Bellary, Chitradurga and Tumkur districts in July 2011, the Hon''ble Supreme Court of India allowed resumption of mining operations in all Category ''A'' mines vide its order dated April 18, 2013. The apex court also allowed resumption of all mining operations in Category ''B'' mines, subject to compliance with the terms and conditions stipulated by CEC. While sale of sub-grade iron ore was allowed by the apex court, mining licences of all Category ''C'' mines were cancelled. A transparent bidding process for allotment of the said mines was ordered.

Considering the constrained availability of Iron ore in the State of Karnataka, the Company decided to source a part of its Iron ore requirement from NMDC, Bacheli and from the State of Odisha. The Company also identify usable sub-grade of Iron Ore lying at various mining leases in Karnataka and could source approximately 5.5 million tons of sub-grade Iron ore in FY 2013-14.

With regards to Category C mining leases, the State Government has already sent notification for cancellation of all the 51 leases. Hon''ble Supreme Court has directed to comply with auctioning of category C leases by August''14. However, the scheme for auctioning is under preparation by State Government of Karnataka which is yet to be approved by the Hon''ble Supreme Court.

15. SEARCH AND SEIZURE OPERATIONS BY INCOME TAX AUTHORITIES

Further to the search and seizure operations by the Income-tax Authorities in March 2011, the Department issued Notice u/s 153A (a) of the Income Tax Act, 1961, dated October 24, 2011 for submission of Income Tax Returns u/s 153A (a) from Assessment Year 2005-06 to 2010-11 in pursuance of the search conducted u/s 132 of the Income Tax Act, 1961. The Company has filed return in response to notices and furnished details and explanations as required by authorities. Assessments have been completed for Assessment Year 2005-06 to 2007-08 and appeals before CIT(A)/ITAT are pending. The Company does not expect any major liability arising due to search and seizure action except routine legal disputes in these assessments.

16. DIRECTORS

In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Seshagiri Rao M.V.S., Director, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

Mr. Sudipto Sarkar, Director also retires by rotation at the ensuing Annual General Meeting under the applicable provisions of the erstwhile Companies Act, 1956. Dr. S.K. Gupta, Dr. Vijay Kelkar, Mr. Uday M. Chitale, Mr. K. Vijayaraghavan and Mrs. Punita Kumar Sinha are directors whose period of office is liable to determination by retirement of directors by rotation under the erstwhile applicable provisions of the Companies Act, 1956. In terms of Section 149 and other applicable provisions of the Companies Act, 2013, the aforesaid directors being eligible and offering themselves for appointment, are proposed to be appointed as Independent Directors under Section 149 of the Companies Act, 2013, to hold office as per their tenure of appointment mentioned in the notice of the forth coming Annual General Meeting of the Company.

In the opinion of the Board, Mr. Sudipto Sarkar, Dr. S.K. Gupta, Dr. Vijay Kelkar, M r. Uday M. Chitale, Mr. K. Vijayaraghavan and Mrs. Punita Kumar Sinha fulfil the conditions specified in the Companies Act, 2013 and rules made thereunder for their appointment as Independent Directors of the Company and are independent of the management.

The proposals regarding the appointment/ re-appointment of the aforesaid Directors are placed for your approval. The Board of Directors recommend their appointment/re-appointment.

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

Mrs. Zarin Daruwala ceased to be a Director of the Company consequent to the withdrawal of her nomination by ICICI Bank Limited w.e.f. October 23, 2013.

Karnataka State Industrial Infrastructure and Development Corporation Limited (KSIIDC) nominated Mr. V.P. Baligar, IAS, as its nominee on your Company''s Board in place of Mr. P.B. Ramamurthy, IAS with effect from May 7, 2014.

Your Directors place on record their deep appreciation of the valuable services rendered by Mrs. Zarin Daruwala and Mr. P. B. Ramamurthy during their tenure as Directors of the Company.

17. AUDITORS AND AUDITOR''S REPORT

At the 19th Annual General Meeting (AGM) of the Company held on July 30, 2013, M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, were appointed as the Statutory Auditors of the Company from the conclusion of the 19th AGM till the conclusion of the 20th AGM.

M/s. Deloitte Haskins & Sells has since been converted into a Limited Liability Partnership (LLP) with the name "Deloitte Haskins & Sells LLP" under the provisions of the Limited Liability Partnership Act, 2008 with effect from November 20, 2013. In terms of the General Circular No. 09/2013 dated 30 April, 2013 issued by the Ministry of Corporate Affairs, Government of India and in accordance with the provisions of Section 58(4)(b) of the Limited Liability Partnership Act, 2008, the Board, at its meeting held on January 28, 2014, has taken note of such conversion. Consequent to the said conversion, the audit of the Company for the financial year 2013-14 has been conducted by Deloitte Haskins & Sells LLP.

Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors, have expressed their willingness to continue as auditors of the Company, if appointed. They have further confirmed that the said appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

In terms of Rule 6 of the Companies (Audit and Auditors) Rules, 2014 Deloitte Haskins & Sells LLP having held office as Auditor for a period of 8 years prior to the Commencement of the Companies Act, 2013, are eligible to be appointed as Auditors for a period of three more years, that is, until the conclusion of the 23rd Annual General Meeting of the Company.

Explanation to Auditor''s Comment

Auditors have, in their report to standalone financials statement, drawn attention to note no. 26(5) of accounts for the year relating to the Company''s assessment that no provision is presently necessary against the carrying amounts of investments and loans aggregating to Rs. 2,007.46 crores and with respect to financial guarantees of Rs. 2,752.57 crores [considered as Contingent Liabilities] to one of its subsidiary, JSW Steel (USA) Inc.

Auditors have, in their report to consolidated financial statements, drawn attention to note no. 26(5) of accounts for the year relating to the Company''s assessment that no provision is necessary for the carrying amounts of the Fixed Assets of Rs. 4,697.93 crores pertaining to Steel Operations at JSW Steel (USA) Inc, a subsidiary of the Company.

In the opinion of the Board, considering recent independent valuation of the underlying fixed assets, review and assessment of business plan and expected future cash flows of JSW Steel (USA) Inc., the decline is temporary and no provision is required.

18. COST AUDITORS

In accordance with the Order dated June 30, 2011 issued by the Ministry of Corporate Affairs pursuant to Section 233B of the Companies Act, 1956, your Company is required to get its cost accounting records audited by a Cost Auditor and has accordingly appointed M/s. S.R. Bhargave & Co., Cost Accountants for this purpose for FY 2013-14. The Cost Audit for FY 2012-13 was completed within specified time and report was filed with ROC.

The Board at its meeting held on May 27, 2014 has on the recommendation of the Audit Committee, re-appointed M/s. S.R. Bhargave & Co., Cost Accountants to conduct the audit of the cost accounting records for FY 2014-15 on a remuneration of Rs. 10 lacs plus service tax as applicable and reimbursement of actual travel and out of pocket expenses. The said remuneration is subject to the ratification of the Members in terms of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014. The payment of remuneration to M/s. S.R. Bhargave & Co. approved by the Board is accordingly placed for your ratification.

19. SECRETARIAL AUDITOR

In terms of Section 204 the Companies Act, 2013, the Board at its meeting held on 27.05.2014, has appointed M/s. Srinivasan & Co, Practicing Company Secretaries, as Secretarial Auditor, for conducting Secretarial Audit of the Company for the FY 2014-15.

20. 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 and forming a part of the report.

21. EMPLOYEE STOCK OPTION PLAN (ESOP)

The Board of Directors of your Company at its meeting held on 26 July, 2012 formulated the JSWSL Employees Stock Ownership Plan 2012 ("ESOP Plan") to be implemented through the JSW Steel Employees Welfare Trust ("Trust"), with an objective of achieving sustained growth of the Company and creation of shareholder value by aligning the interests of the employees with the long term interests of the Company.

The ESOP Plan involved acquisition of Shares from the Secondary market. SEBI vide Circular No. CIR/CFD/DIL/3/2013 dated 17 January, 2013 made amendments to Equity Listing Agreement and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which inter alia prohibits ESOP/ESPS Schemes from acquiring securities of the Company from the secondary market. In order to comply with the provisions of the Circular, the Company terminated the ESOP Plan and accordingly no further grants under the Plan have been made. However, the options which have already been granted under the ESOP Plan i.e. 49,36,940 shares shall vest as per the vesting schedule and the Trust shall continue to hold these shares till the options are exercised or until September 30, 2017, whichever is later

Disclosure relating to the JSWSL Employees Stock Ownership Plan - 2012 in terms of Clause 12 of the SEBI (Employee Stock Option Schemes and Employee Stock Purchase Scheme) Guidelines, 1999 is given in Annexure "B" to the Directors Report.

22. ENVIRONMENTAL INITIATIVES_

The Company has undertaken various measures to address safety and environmental issues at its plant locations.

Vijayanagar

- Commissioned Water Recycle System at Guard Ponds to reuse about 50,000 m3 of water per day.

- Commissioned eight bag filters in the iron making area to reduce fugitive dust during material transportation.

- Installed 12 new bag filters in the lime calcinations area.

- Commissioned four of waste water treatment and recirculation schemes at Coke Oven.

- Deployed a specilly developed slime beneficiation technology to recovers iron value in the iron ore slime by using a specially developed slime.

- Installed 0.2 MTPA Mill Scale Bnguettmg plant and 0.6 MTPA Micro Pellet Plant for waste reuse.

- Commissioned waste heat recovery system at Blast Furnaces 3 and 4 and at Sinter Plant 2, 3 and 4.

- Established environment control centre for environment data capture and information dissemination.

- Established state-of-the-art Environment Quality Laboratory, which has been accredited Grade-A by Karnataka State Pollution Control Board (KSPCB).

- Installed BOF slurry dewatenng facility to reuse the sludge in micro pellet plant.

Dolvi

- Commissioned Online Stack Monitoring system at Sponge Iron Plant for all five of stacks.

- Installed Organic Composting Machine to treat the solid waste generated from Canteen into manure.

- Dolvi Works has implemented Environmental Management System (EMS) - ISO 14001 for all it''s units at Dolvi this year.

- Conferred "Maharashtra Safety Award" by National Safety Council - Maharashtra Chapter for "Longest Accident Free Period" under scheme I & II.

- Provided "Auto Signal with Boom Barrier" near railway crossing for safe movement of Loco/ Torpedo Ladle from BF to HSM.

- Lock out and Tag out system started at various locations for energy isolation.

Salem

- Installed six stack of on-line monitoring of suspended particulate matters and connected to Care Air Centre (CAC) of Tamilnadu Pollution Control Board (TNPCB).

- Installed Stack dust monitors to curtail emissions of Suspended Particulate Matter (SPM), SOx, NOx and for AFBC stack of CPP-II and connected to Carbon Arc cutting (CAC).

- Commissioned secondary deducting system of Blast Furnace II Cast House to improve working conditions and minimizing environmental emission levels of SPM and respirable suspended particulate matters (RSPM).

- Uti lized of dry slag fromB Fas Ballast for Railway Track laying and concrete road construction by replacing natural stone (aggregate).

- Increased power generation through replacement of ID fan motor resulting in higher utilization of Waste Heat Recovery Boiler from coke oven flue gas. This further reduces the coal consumption in the AFBC boiler

- Installed additional Waste Heat Recovery Boiler No.4.

- Installed Guard pond for facilitating process waste water storage for effective recycling and reuse.

- Used 12-20 mm EOF slag in Sinter plant for hearth layer instead of iron ore fines and recycled the waste generated.

- Used EOF crushed dry slag instead of Iron Ore are lumps as coolant for maintaining hot metal temperature in the furnace.

23. 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 set out in the Annexure to the Directors Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report, excluding the aforesaid information, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary for a copy.

24. CERTIFICATION AND RECOGNITION

Your Directors have pleasure in informing you that all the Company''s Vijayanagar townships, viz. Vidyanagar, Vijay Vittal Nagar and Shankargudda townships, have been accredited for quality, environment systems safety and health systems in operations and maintenance of residential townships. The townships received the following certifications:

1) ISO 9001 - 2008

2) ISO 1401 2004 cor.1:2008

3) BSOHSAS 18001 - 2007

25. AWARDS AND ACCOLADES

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

- Prime Minister''s Trophy for excellence in performance in 2012-13 for Vijayanagar Works which was adjudged the Best Integrated Steel Plant in India.

- ''Industry Leadership Award'' at Platts Global Metals Awards for achievements in steel, metals and mining.

- Golden Peacock Eco-lnnovation Award 2013 by the National Jury.

- IMC Ramaknshna Bajaj National Quality Award 2013 for ''Strong Commitment To Sustainability'' under category E for Vijayanagar Works.

- IMC Ramknshna Bajaj National Quality (RBNQ) Performance Excellence Trophy 2013-14.

- Silver Prize, 14th Annual Greentech Environment Award 2013 in Metal and Mining sector

- Tamil Nadu Government State Safety Award 2012.

- Best Supplier Award from Tata Motors and WABCO for Salem Works.

- Green Manufacturing Excellence Award ''Green Challengers'' 2014 from Frost & Sullivan.

- Silver Prize, India Manufacturing Excellence Award 2013 from Frost & Sullivan.

- Commendation Certificate, CII-EXIM Bank Award 2013 for Significant Achievement at Bangalore.

- Commendation Certificate, Cll ITC Sustainability Award 2013.

Second Prize, National Sustainability Award 2013-14 from Indian Institute of Metals

26. 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 annexures to this report.

27. BUSINESS RESPONSIBILITY / SUSTAINABILITY REPORTING

Your Company is fundamentally committed to sustainable business and to the nine principles of National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, it has been pursuing in spirit. It has also been reporting on GRI framework assured by third party independently on International Standards for Assurance Engagements (ISAE) 3000. The policies in the context of these principles, given on the Company''s website, www.jsw.in, have been approved by the Board in its meeting held on January 28, 2013. A Committee of Board comprising of three Independent Directors and three Executive Directors are overseeing the same, quarterly. The Chief Sustainability Officer (CSO) implements the sustainability oversight reporting and Grievance Redressal Mechanism.

SEBI vide its Circular No. CIR/CFD/DIL/8/2012 dated August 13, 2012 mandated the top 100 listed entities based on market capitalisation at BSE and NSE, to nclude Business Responsibility Report (BRR) as part of the Annual Report describing the initiatives taken by the companies from environmental, social and governance perspective. Pursuant to the above, the stock exchanges included in the listing agreement, a suggested framework of a BRR. Accordingly, the BRR is attached which forms part of the Annual Report.

28. 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, applied them consistently and made judgements and estimates that are reasonable and prudent to give a true and fair view of the Company''s state of affairs at the end of the financial year and of the Company''s profit or loss 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, to safeguard the Company''s assets and to prevent and detect fraud and other irregularities.

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

29. APPRECIATION

Your Directors take this opportunity to express their appreciation for the co-operation and assistance received from the Government of India, Republic of Chile, Kenya, Mauritius, Mozambique, Mali, USA and the UK; the state Governments of Karnataka, Maharashtra, Tamil Nadu, West Bengal and Jharkhand; 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 employees of the Company.

For and on behalf of the Board of Directors

Sajjan Jindal

Place: Mumbai Chairman & Managing Director

Date : May 27, 2014


Mar 31, 2013

To the Members of JSW STEEL LIMITED,

The Directors take pleasure in presenting the Nineteenth Annual Report of your Company, together with the Standalone and Consolidated Audited Statement of Financial Accounts for the year ended March 31, 2013.

1. FINANCIAL RESULTS

(Rs. in crores)

Particulars Standalone Consolidated

FY 2012-13 FY 2011-12 FY 2012-13 FY 2011-12

Gross Turnover 38,763.41 34,658.48 41,463.15 36,719.83

Less : Excise duty 3,375.78 2,598.01 3,368.19 2,596.18

Net Turnover 35,387.63 32,060.47 38,094.96 34,123.65

Add: Other Operating Revenues 104.18 62.19 114.69 244.40

Revenue from Operations 35,491.81 32,122.66 38,209.65 34,368.05

Operating EBIDTA 6,308.82 5,630.80 6,503.92 6,101.89

Add: Other income 260.88 179.30 69.73 76.85

Less: Finance costs 1,724.48 1,186.41 1,967.46 1,427.30

Less:Depreciation and amortisation 1,973.89 1,708.17 2,237.48 1,933.15

Profit before Exceptional items and tax 2,871.33 2,915.52 2,368.71 2,818.29

Less:Exceptional items (367.21) (820.96) (369.37) (824.94)

Profit before taxation (PBT) 2,504.12 2,094.56 1,999.34 1,993.35

Less: Tax expense 702.90 468.70 845.25 500.15

Profit after taxation, but before minority interests and 1,801.22 1,625.86 1,154.09 1,493.20 share of profits/ loss of Associates

Less: Share of profit / (losses) of minority - - (34.34) 18.92

Add: Share of (losses) / profit from Associates (Net):

Excluding exceptional items - - (164.52) (226.21)

Exceptional items - - (60.80) (710.39)

Profit After Tax (PAT) 1,801.22 1,625.86 963.11 537.68 Add:Profit brought forward from previous year 1,987.30 2,788.36 9.34 1,899.35

Amount available for appropriation 3,788.52 4,414.22 972.45 2,437.03

Less: Appropriations:

Transfer from/to Debenture Redemption Reserve (7.82) 125.00 (7.82) 125.00

Dividend on Preference Shares (27.90) (27.90) (27.90) (27.90)

Proposed final Dividend on Equity Shares (223.12) (167.34) (223.12) (167.34)

Corporate Dividend Tax (42.66) (31.68) (42.66) (31.68)

Transfer to General Reserve (181.00) (2,325.00) (181.00) (2,325.77)

Closing Balance 3,306.02 1,987.30 489.95 9.34

2. FINANCIAL HIGHLIGHTS

(A) Standalone Results

The Company produced 8.52 million tonnes of crude steel in FY 2012-13, up 15% over the previous year. Its steel sales grew to 8.87 million tonnes, increased by 14% year on year. The Company took several initiatives during the last financial year viz; 2nd phase of Beneficiation plant, augmented in-bound and out-bound logistics infrastructure to enhance flexibility in utilisation of inputs and despatch of finished products, commissioning of 4th Stove of BF 3 and enhanced product portfolio by completing 2nd phase of HSM II, increased capacities of Colour coated products at Vasind and Tarapur Works and also achieved increased sales volumes through its retail outlets ''JSW Shoppe''. These initiatives helped in achieving impressive growth of volume production and sales.

The Gross Turnover and Net Turnover for the year under review was Rs. 38,763 crores and Rs. 35,388 crores respectively, showed a growth of 12% and 10% respectively. The Operating EBITDA was Rs. 6,309 crores, showed a growth of 12% with an improvement in EBIDTA margins to 17.8%. The net profit after tax was Rs. 1,801 crores showing a growth of 11%, after considering exceptional loss of Rs. 367 crores, due to the significant movement and volatility in the value of the rupee against US dollar.

The net worth of your Company increased to Rs. 19,937 crores as on March 31, 2013, from Rs. 18,497 crores as on March 31, 2012. The Company''s net debt gearing was at 0.82 (compared to 0.69, as on March 31, 2012) and net debt to EBIDTA was at 2.59 (compared to 2.27, as on March 31, 2012).

(B) Consolidated Results

The consolidated Gross Turnover and consolidated Net Turnover for the year under review was Rs.41,463 crores and Rs. 38,095 crores respectively, showed a growth of 13% and 12% respectively. For FY 2012-13, the consolidated Operating EBITDA was Rs. 6,504 crores, showed a growth of 7%. The net profit after tax for Consolidated Company was Rs. 963 crores growth of 79%, after considering exceptional loss of Rs. 369 crores, due to the significant movement and volatility in the value of the rupee against US dollar.

The consolidated net worth of your Company increased to Rs. 17,541 crores as on March 31, 2013, from Rs. 16,967 crores as on March 31, 2012. The Company''s net debt gearing was at 1.11 (compared to 0.98, as on March 31, 2012) and net debt to EBIDTA was at 3.00 (compared to 2.73, as on March 31, 2012).

In accordance with the Accounting Standards AS- 21, on Consolidated Financial Statements, read with Accounting Standard AS-23 on Accounting for Investment in Associates and AS-27 on Financial Reporting of Investment in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

3. dividend

The Board has, subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated rate of Rs. 1.00 per share on 10% Cumulative Redeemable Preference Shares of Rs. 10 each of the Company, for the year ended March 31, 2013.

Considering the Company''s performance and financial position for the year under review, the Board has also recommended a dividend of Rs. 10 (100%) per fully paid-up Equity Share of Rs. 10 each of the Company, for the year ended March 31, 2013, subject to the approval of the Members at the ensuing Annual General Meeting.

Together with Corporate Tax on dividend, the total outflow, on account of equity dividend, will be Rs. 261.04 crores, vis-a-vis Rs. 194.49 crores paid for fiscal 2011-12.

On the Scheme referred to in Para 4 of this report, becoming effective, and if equity shares pursuant to the Scheme are allotted to the shareholders of JSW ISPAT Steel Limited before the record date, then equity dividend of Rs. 10 per share will also be payable on these shares, as per Clause 12.1.6. of the Scheme and there would be an additional cash outflow of Rs. 21.77 crores including Corporate Tax on Dividend.

4. scheme of amalgamation

Your Directors in their meeting held on September 1, 2012, have considered and approved a ''Composite Scheme of Arrangement and Amalgamation'' under Sections 391-394 of the Companies Act, 1956 (the "Scheme") amongst the Company, JSW ISPAT Steel Limited ("JSW ISPAT"), JSW Building Systems Ltd. ("JSW Building"), JSW Steel Coated Products Limited ("JSW Steel Coated") (formerly known as Maharashtra Sponge Iron Ltd.) and their respective shareholders and creditors relating to the following matters (to be effected in the sequence set forth herein below), with 1 July 2012 being the appointed date:

(a) Transfer of the ''Kalmeshwar'' undertaking of JSW ISPAT to JSW Steel Coated (an indirect wholly owned subsidiary of the Company).

(b) Transfer of the ''Vasind'' and ''Tarapur'' undertaking of the Company to JSW Steel Coated.

(c) Amalgamation of JSW Building (a wholly owned subsidiary of the Company) with the Company.

(d) Amalgamation of Residual JSW ISPAT with the Company, pursuant to which the shareholders of JSW ISPAT will be entitled to shares of the Company as under:

(i) The equity shareholders of JSW ISPAT will be entitled to 1 (One) fully paid-up equity share of face value Rs. 10/- (Rupees Ten Only) each of the Company for every 72 (Seventy Two) fully paid up equity shares of Rs. 10/- (Rupees Ten Only) each of JSW ISPAT held by them ("Share Exchange Ratio"); and

(ii) The preference shareholders of JSW ISPAT will be entitled to 1 (One) fully paid up non-convertible cumulative redeemable preference share of face value Rs. 10/- (Rupees Ten Only) each of the Company for every 1 (One) fully paid up non-convertible cumulative redeemable preference share of face value Rs. 10/- (Rupees Ten Only) each of JSW ISPAT held by them.

Following implementation of the Scheme and the issue of shares as above, your Company''s aggregate equity capital would stand increased from Rs. 223,11,72,000 to Rs. 241,72,20,440 consisting of 24,17,22,044 equity shares of Rs. 10 each, subject to minor changes, if any, upon rounding off of fractional entitlements. Besides, your Company''s aggregate preference capital would stand increased from Rs. 279,03,49,070 to Rs. 764,44,95,110 comprising of 27,90,34,907 - 10% cumulative redeemable preference shares of Rs. 10/- each and 48,54,14,604 - 0.01% non-convertible cumulative redeemable preference shares of Rs. 10/- each, subject to minor changes, if any, upon rounding off of fractional entitlements.

The Company''s shareholding in JSW ISPAT will stand cancelled under the Scheme. Upon allotment of the new shares, the shareholding of JFE Steel International Europe B.V, the affiliate of the Company''s Foreign Collaborator, JFE Steel Corporation, Japan will stand diluted to 14.92% of the equity share capital of the Company from 16.17%.

The said Scheme has been approved by the requisite majority of shareholders on January 30, 2013 and the Competition Commission of India (CCI) and has the No-objection of the National Stock Exchange of India Limited and that of BSE Limited. On May 3, 2013 the Bombay High Court sanctioned the said Scheme with effect from July 1, 2012, being the appointed date. The certified copy of the Court Order is awaited, on receipt of which the Company will initiate requisite formalities to give effect to the Scheme. Accordingly, the accounting treatment laid out in the Scheme and consequential adjustments that would arise will be dealt with by the Company in the financial statements, once the Scheme is implemented.

5. PROSPECTS

Indian economy witnessed one of its most challenging times during FY''13 with high inflation, elevated interest rates, low industrial production, depreciating Indian Rupee which adversely affected its external trade resulting in skewed trade and fiscal deficits and subdued economic growth estimated at 5%. Country''s under performance was partly due to the muted and uneven Global economic recovery in 2012 with World GDP slowing down to 3.2%.

Outlook for Global economy is expected to progressively improve with more accommodative monetary policies, improving fiscal stability and assuming absence of any adverse events resulting in a gradual restoration of confidence during 2013 through 2014. In accordance, IMF has projected World GDP to grow at 3.3% during 2013 and increasing to 4% in 2014. Positive influence of Global economy coupled with gaining prospects for proactive Reformatory Policy measures is expected to help Indian economy recover with an estimated growth of 6-6.5% during FY''14. Current account deficit is expected to witness a further reduction under a modest recovery of exports, improved inflows & remittances assuming stability in Oil / Gold import basket.

Global Steel sector witnessed a destocking during C.Y. 2012 influenced by growing economic uncertainties coupled with a soft lending for Chinese economy - resulting in a marginal growth of 1.2% each for Global steel production as well as demand. During FY''13, Indian crude steel capacity increased by production increased by 5.4% to 78 million tonnes while domestic demand saw a growth of 3.3% to 73 million tonne. The demand was majorly affected by underperforming investment growing @ 1.7%, depressed industrial growth at 1%, decelerating auto production growing at 2% and Rupee witnessing a sharp depreciation of 14% putting further pressure on margins.

World steel demand is projected to witness an increment of 41 million tonnes moderately up by 2.9% to 1454 million tonnes in C.Y. 2013 with China expected to grow by 3.5% to 669 million tonnes - contributing 46% to World steel demand. However, the large "Effective Surplus" capacity of approximately 350 million tonne coupled with almost stagnant domestic demand projected for major exporting economies including Japan, Korea, Russia and Ukraine remains a major challenge for a sustainable growth of Global steel industry.

In expectation of a normal monsoon, the growing income of farm sector is expected to translate into rising consumption. Further, accelerated approach to reformatory policy initiatives with reducing subsidies, expanding FDI limits in Multiple-brand retail, Insurance, Banking etc., proactive role of Cabinet Committee for Investment for timely clearances of projects coupled with improving industrial production and growing focus on Infrastructure development is expected to witness a more sustainable economic development and growth with a moderate inflation and declining deficits. At the back of a modest economic recovery Indian Steel industry remains optimistically cautious with demand expected to complement the country''s economic performance in FY''14. However, surging imports at incentivized duty rates under the Free Trade Agreements with Korea and Japan coupled with depreciating Indian Rupee remain major challenges for the Indian steel industry.

6. PROJECTS AND EXPANSION PLANS

I. Projects commissioned during FY 2012-13

1. Vijayanagar Works

- Revamped Corex 2 with added feature of Aerial Gas Distribution system (AGD) to increase its capacity from 0.80 MTPA to 0.85 MTPA.

- Enhanced the hot metal capacity in Blast Furnace II from current 1.3 MTPA to 1.4 MTPA by distributing feed burden better and replacing top charging system with improved design.

- Enhanced capacity of HSM II by 1.5 MTPA from 3.5 MTPA to 5 MTPA.

- Completed second phase of Beneficiation Plant, taking the capacity to 20 MTPA.

- Commenced dry quenching of coke from the CDQ project commissioned by JSW Projects Ltd.

- Commissioned 60 tonnes per hour (tph) Blast Furnace gas-fired boiler to minimise flaring of gases from furnaces.

2. Salem Works

- Commissioned 75 tph coke drying unit to reduce coke moisture, leading to substantial savings.

3. Vasind/Tarapur Works

- Enhanced capacity of colour coating line at Tarapur from 0.232 MTPA to 0.276 MTPA.

- Commissioned state-of-the-art new colour coating line with capacity of 0.15 MTPA at Vasind.

- Commissioned a new 300 KL per day capacity effluent treatment plant.

The benefits on commissioning these projects during FY 2012-13 are expected to accrue during FY 2013-14.

II. Projects under Implementation

1) Capacity Enhancement Projects Vijayanagar Works

a) Revamping and enhancing capacity of Corex-1 from 0.80 MTPA to 0.85 MTPA.

b) Augmenting casting capacity at steel melting shop No. 1 by adding 1,600 mm wide caster.

c) Augmenting secondary steel melting capacity by adding one ladle heating furnace.

d) Installing Nodulizer for better granulometry of low-grade iron ore in Sinter Plant No. 1, 2 and 3.

e) Increasing the capacity of Blast Furnace-I from 0.9 MTPA to 1.8 MTPA.

f) Expected commissioning 0.2 MTPA non- grain oriented electrical steel project in FY 2014-15.

Salem Works

a) Installation of Kocks block for reducing and sizing block capacity and quality of bar and rod mill.

b) Automatic inspection line for Blooming Mill, de-bundling, de-barring and second straightener.

Vasind/Tarapur Works

a) Appliance grade Colour Coating Line with a capacity of 0.075 MTPA at Vasind

b) New Galvanising Line with dual pot of Galvalume cum Galvanising line with capacity of 0.2 MTPA at Tarapur.

c) Upgradation of Cold Rolling Mill TM - I & II at Tarapur.

2) Efficiency, Productivity improvement and Cost reduction Initiatives

Vijaynagar Works

a) Installed waste heat recovery system at Sinter Plant 2, 3 and 4.

b) Installed waste heat recovery system at Blast Furnace 4.

c) Utilised surplus gases within the plant to generate power and to achieve zero flaring of gases.

d) Used BOF sludge and fine dust fumes for micro pellet plant.

e) Used mill scale generated from various mills for mill scale briquetting.

f) Installed burner system in existing CPP 3 and 4 boiler for increasing the utilisation of waste gas.

Salem Works

a) Installed 32 tph waste heat recovery boiler.

b) Commissioned new wagon tippler to reduce demurrage and handling loss.

Vasind/Tarapur Works

a) Converted LPG heating system to natural gas system.

b) Commissioned railway siding at Vasind to achieve 100% inward rail movement.

3) Other Projects Vijayanagar Works

CRM II 1st phase, comprising 2.30 MTPA of pickling line, and Tandem Cold Rolling Mill (PLTCM), Continuous Annealing Line (CAL) of 0.95 MTPA and Continuous Galvanising Line (CGL) of 0.4 MTPA, is scheduled to be commissioned in the third quarter of 2013. Moreover, in Phase II, the second CAL line is expected to be commissioned by December 31, 2014.

The Company is also setting up a new melting shop with 1.5 MTPA capacity, comprising Electric Arc Furnace with a 1.5 MTPA billet caster. This new melting shop, along with a new Bar Mill with a capacity of 1.2 MTPA, is scheduled to be commissioned in FY 2014- 15. This project will enable the Company to produce 10 MTPA finished steel at Vijayanagar works.

7. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

In the context of globalising Indian economy and the increase in the number of subsidiaries, the Ministry of Corporate Affairs, vide its General Circular No. 2/2011 dated 08.02.2011 has granted General Exemption to all companies from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies to the Balance Sheet of the Company as required under Section 212(1) of the Companies Act, 1956, subject to fulfilment of certain standard conditions generally prescribed while giving specific approvals. The Company will make available these documents/details 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.

Details of major Subsidiaries, Joint Venture and Associate Companies are given below:

A. Indian subsidiaries

1. JSW Bengal Steel Limited (JSW Bengal), its subsidiaries Barbil Beneficiation Company Limited, JSW Natural Resources India Limited and JSW Energy (Bengal) Limited (JSWEBL)

JSW Bengal progressed significantly towards setting up an integrated 10 MTPA-capacity steel plant at Sal bo n i, Paschim Medinipur District, West Bengal, in phases (Project). As against the proposed first phase, approval has been received from Ministry of Environment & Forest (MOEF) and Pollution Control Board, for setting up a 3 MTPA integrated steel plant and associated power plant. The first phase also includes development of 2.4 MTPA Kulti- Sitarampur coal blocks and 2.6 MTPA Ichapur coal block, through the Company''s wholly owned subsidiaries.

2. JSW Jharkhand Steel Limited

JSW Jharkhand Steel Limited was incorporated to set up a steel plant in the State of Jharkhand. The company is pursuing various approvals/ clearances for raw material linkages, land acquisition, environmental clearances, among others, for this project.

3. JSW Steel Processing Centres Limited (JSWSPCL)

JSW Steel Processing Centres Limited (JSWSPCL) is a 100% subsidiary of the Company. JSWSPCL was set up as a Steel Service Centre, comprising of HR/CR Slitter and cut-to-length facility, with an annual slitting capacity of 6,50,000 tonnes. The Company processed 5,22,647 tonnes of steel during FY 2012-13, as compared to 4,99,218 tonnes in the previous year.

4. Amba River Coke Limited (ARCL)

The Company has acquired 100% holding in ARCL to set up 1 MTPA Coke oven to be supplied to JSW ISPAT Steel Limited (JISL) under long-term take or pay contract with return on equity of 25% to the Company. The Coke oven plant, is expected to be completed in two phases commencing from March 2014. It is also in the process of setup a 4 MTPA Pellet Plant which is expected to be commissioned in FY 2014-15.

5. JSW Steel Coated Products Limited (JSW Steel Coated)

JSW Steel Coated (formerly known as Maharashtra Sponge Iron Ltd.) was acquired by wholly owned subsidiary of the company during the year.

Upon the scheme referred to in para 4 of this report becoming effective, ''Kalmeshwar'' undertaking of JSW ISPAT and ''Vasind'' and ''Tarapur'' undertaking of JSW Steel will be transferred to JSW Steel Coated Products Limited from the appointed date.

B. Overseas Subsidiaries

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

JSW Steel (Netherlands) B.V. is a holding Company for subsidiaries based in USA, UK, Chile and East Africa. It also has 49% equity holding of Georgia-based Geo Steel LLC, incorporated under the laws of Georgia. The Company also invested in the US in the plate and pipe mill and coal mining assets. Besides, it also invested in iron ore mining concessions in Chile and fixed assets at the UK through the following step-down subsidiaries.

(a) JSW Steel Holding (USA) Inc. and its subsidiaries viz. JSW Steel (USA) Inc - Plate and Pipe Mill Operation and Periama Holdings LLC and its subsidiaries - West Virginia, USA- based Coal Mining Operation.

Plate and pipe mill operation

During FY 2012-13, the US plate and pipe mill''s performance continued to be impacted due to challenging economic environment in USA, resulting in lower capacity utilisation. For FY 2012-13, 339,165 net tonnes of plates and 84,874 net tones of pipes were produced with capacity utilisation of 35% and 15%, respectively.

During FY 2014, the US operations are expected to progress in terms of operational performance with enhanced capacity utilisation.

Coal mining operation

JSW Steel Holding (USA) Inc. has 100% equity interest in coal mining concessions and integrated rail and barge load out facility in West Virginia, USA.

While some of the mines are currently operational, statutory clearance/permits for other mines are in advanced stage of approval.

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

During FY 2012-13, contract mining activity with a capacity of 1 MTPA through dry process route was undertaken. The Company received 12 shipments of iron ore concentrate, aggregating to 0.94 million tonnes.

Work on establishing a wet beneficiation plant is currently being pursued and necessary statutory and environmental approvals are awaited.

(c) JSW Steel East Africa Limited (JSWSEAL)

JSWSEAL has rights to explore manganese ore in Coast Province, Kenya, under Memorandum of Understanding (MoU) with the Government of Kenya.

The Company has completed Phase-I exploration activities for identifying prospective area for manganese ore in Coast Province, Kenya. The Phase-I final report is under preparation, which will indicate the probable areas with the potential of manganese ore occurrence.

The Company is also identifying manganese- bearing areas outside Coastal Province to enhance its exploration portfolio in Kenya.

2. JSW Natural Resources Limited (JSWNRL) and its subsidiaries JSW Natural Resources Mozambique Lda (JSWNRML), JSW ADMS Carvao Lda

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

JSW Natural Resources Limited formed a wholly owned subsidiary - JSW Natural Resources Mozambique Lda in Mozambique - to acquire coal assets and engage in prospecting and exploring coal, iron ore and manganese ore.

JSW Natural Resources Mozambique Lda, along with its subsidiary JSW ADMS Carvao Lda, has a coal mining licences in Mutarara and Zumbo District of Tete Province. The Company has carried out general exploration activities for preliminary evaluation of the quantity and quality of coal in this area. It has also initiated activities, like pre-feasibility study, EIA report and others, which are necessary to apply for mining license.

A step-down subsidiary of JSW Natural Resources Limited, Mauritius, has been incorporated in Mali under the name of JSW Mali Resources SA. It aims to invest in and / or acquire iron ore assets in the country through Exploration Permits/Licenses.

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., set up a steel rolling mill in Georgia, with a production capacity of 175,000 tonnes. Geo Steel produced 1,17,127 tonnes of rebars and 1,40,780 tonnes of billets during 2012-13. The net turnover was USD 73.42 million.

2. Rohne Coal Company Private Limited

Rohne Coal Company Pvt. Ltd. is a joint venture with three other partners. Forest clearance and mining lease proposals are being pursued with government authorities. Jharkhand State Pollution Control Board has accorded NOC for Consent to Establish. Prior approval by Ministery of Coal has been received for Mining Lease & Prospecting Lease.

3. MJSJ Coal Limited (MJSJ)

In terms of the Joint Venture Agreement to develop Utkal-A and Gopal Prasad (West) thermal coal block in Odisha, your Company, along with four other partners, agreed to participate in the 11% equity of MJSJ Coal Limited, Odisha.

The Government of India decided to allot 1522 acres of Gopal Prasad west area to MJSJ. Mahanadi Coalfields Limited, a Public Sector Company holds 60% of the Equity.

4. Gourangdih Coal Limited

Gourangdih Coal Ltd (GCL) is a 50:50 Joint Venture between JSW Steel Limited and Himachal EMTA Power Corporation Ltd (HEPL). It has been incorporated to develop and mine coal from West Bengal''s Gourangdih, ABC thermal coal block. It is currently having pre-mining activities. A mining plan was submitted to the government authorities and is under consideration.

In November 2012, the Ministry of Coal, Government of India, issued de-allocation letter citing the recommendations of the Inter-Ministerial Group (IMG) of unsatisfactory progress, both in development of coal mine and implementation of end-use plants. The Ministry intimated its decision to de-allocate the Gourangdih ABC coal block in the state of West Bengal from the joint allocates, i.e. HEPL and JSW. It also aimed to forfeit 50% of Bank Guarantee amounting to Rs. 6.67 crores. Further, the co-allocates shall not be eligible for allocation of any alternative coal block in lieu of the de-allocated coal block.

Both the co-allocatees (HEPL and JSW Steel) have filed separate legal proceedings challenging the recommendation of the IMG. In the Writ Petition filed by JSW Steel before Delhi High Court, the High Court passed an interim order that if Ministry of Coal intends to encash the Bank Guarantee, three working days prior notice shall be given to JSW Steel. Himachal EMTA filed a separate Writ Petition before High Court of Himachal Pradesh and obtained stay of operation of the recommendation of IMG.

5. Toshiba JSW Turbine and Generator Private Limited

Toshiba JSW Turbine and Generator Private Limited is a Joint Venture with a shareholding of 75% by Toshiba Corporation Limited, Japan, 22.46% by JSW Energy Limited and 2.54% by the Company. This Joint Venture aims to design, manufacture, market and maintain services of mid to large-size supercritical steam turbines and generators of size 500 MW to 1,000 MW.

The Company has commenced the production activity for supply of 3 X 800 MW Supercritical Turbine and Generators sets for Kudgi Power plant, Karnataka and 2 X 660 MW Supercritical Turbine sets for Meja Power Project, Uttar Pradesh, under the orders recently received from National Thermal Power Corporation. The Company has decided to expand the Manufacturing facility to enhance annual production capacity from 3,000 MW to 6,000 MW and construction work for the same is under progress.

6. Vijayanagar Minerals Private Limited (VMPL)

According to the order of the Hon''ble Supreme Court to stop all mining operations in Bellary District in Karnataka, activities from Thimmappanagudi Iron Ore Mines (TIOM) operated by VMPL was halted since July 2011. VMPL operations and financial results were affected due to the above reasons during FY 2012-13. TIOM mines are classified under category A by the Central Empowered Committee (CEC).

7. JSW Severfield Structures Limited and its subsidiary JSW Structural Metal Decking Limited

JSW Severfield Structures Limited (JSSL) is operating a structural steelwork facility to design, fabricate and erect structural steelwork and ancillaries for construction projects with a total capacity of 35,000 TPA at Bellary, Karnataka. The Company has produced 36,067 tonnes during the year. Its order book stood at Rs. 228 crores (21,751 tonnes), as on March 31, 2013. The Company is implementing an expansion of its facility with estimated cost of Rs. 56 crores to increase the production capacity from 35,000 TPA to 55,000 TPA which to be commissioned in FY 2013-14.

JSW Structural Metal Decking Limited (JSWSMD), a subsidiary company of JSSL is engaged in the business of designing, roll forming and installation of structural metal decking and ancillaries. These include deals in shear connectors for construction projects, with a total plant capacity of 10,000 TPA at Bellary, Karnataka. The Company has orders of around 1,50,000 square meters, as on March 31, 2013.

8. JSW MI Steel Service Center Private Limited (MISI JV)

JSW Steel and Marubeni-Itochu Steel signed a Joint Venture Agreement on September 23, 2011, to set up Steel Service Centres in India.

The JV Company, JSW MI Steel Service Center Pvt. Ltd., proposes to set up its Steel Service Centres in North India (NCR) and in West India (Near Pune) with an initial installed capacity of 0.18 MTPA (Phase-I), which will subsequently be enhanced to 500,000 TPA. The project is estimated to be completed within 12 months from the date of land acquisition.

The Service Centres will be equipped to process flat steel products, such as hot rolled, cold rolled and coated products, to offer just- in-time solutions to the automotive, white goods, construction and other value-added segments.

D. Associate Companies

1. Jindal Praxair Oxygen Company Private Limited (JPOCL)

The oxygen plants of JPOCL have been working satisfactorily with the primary aim to meet the requirements of steel plant operations at Vijayanagar Works. During FY 2012-13, the production of the oxygen plant of JPOCL was as follows: gaseous oxygen - 887 million Nm3; gaseous nitrogen - 302 million Nm3; Liquid oxygen - 40 million Nm3; Liquid nitrogen - 24 million Nm3; and Argon - 11 million Nm3.

2. JSW Ispat Steel Limited (JISL)

Revenue(net) from operations (standalone) for the financial year (9 months) ended 31st March 2013 was Rs. 8113 crores and EBIDTA was Rs. 737 crores . After providing for finance cost and depreciation and considering other income and exceptional items as well as deferred tax asset, net profit for the financial year was Rs. 86 crores , compared to net loss of Rs. 317 crores during the previous financial year (12 months) ended 30th June 2012.

Highest production of Hot Metal and Sinter was recorded during the period. Production of Hot Rolled Coils at Dolvi Unit was 1.95 MnT, registering a capacity utilisation of 79%.

The auditors of JISL have qualified recognition of net deferred tax assets of Rs. 2381 crores as at 31st March 2013. In view of various measures undertaken by JISL for enhancing operating efficiency, tie-up of reliable alternate sources of power and critical inputs, setting-up of crucial projects aimed at achieving raw material integration , major savings in input costs as well as future profitability projections and the envisaged Composite Scheme of Amalgamation and Arrangement, JISL is virtually certain that there would be sufficient taxable income in future , to claim the tax credit.

Company holds 46.75% stake in JISL as on March 31, 2013. Company has not considered deferred tax assets while recognizing its proportionate share of profit/ losses from JISL

8. CREDIT RATING

Your Company''s credit rating for the long-term debt/facilities/NCDs is "AA" by Credit Analysis & Research Ltd. (CARE). CARE continues to rate the Company''s short-term debt/facilities at the highest level of A1 .

With improvements in availability of iron ore and clarity on the impact of merger of JSW ISPAT Steel Limited, the rating has been removed from credit watch.

The rating continues to derive strength from your Company''s significant presence in India''s steel sector, proven management capability and well diversified mix of value-added and upstream products.

AA rating for long-term/medium-term debt/ facilities/NCDs indicates a high degree of safety regarding timely servicing of financial obligations and very low credit risk.

A1 rating for short-term debt/facilities is the highest in the category and indicates a very strong degree of safety regarding timely payment of financial obligations and lowest credit risk.

9. 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.

10. SHARE CAPITAL

There was no change in the Company''s share capital during the financial year under review.

At the end of 2012-13, your Company''s paid up equity share capital remained at Rs. 2,23,11,72,000 (comprising of 22,31,17,200 equity shares of Rs. 10 each).

11. TECHNICAL COLLABORATION WITH JFE STEEL CORPORATION, JAPAN

The Company signed a Strategic Collaboration Agreement with JFE Steel Corporation, Japan, in 2010. In line with this agreement, both companies entered into an agreement to collaborate in automotive steel manufacturing at Vijayanagar works.

Keeping in view its strategy to increase its portfolio of value-added products, the Company continued to collaborate with JFE in the field of electrical steel by signing various agreements in the month of November 2012.

Electrical Steel is a high-grade product, which has experienced scant development in India, as the technology required is largely inaccessible. Due to the technological constraints involved in the production of Electrical Steel, the market is significantly dependant on imports.

The Company plans to set up cold rolled non- grain oriented (CRNO) manufacturing facility of 0.6 MTPA capacity at its integrated steel works at Vijayanagar. The first phase of the facility shall produce 0.2 MTPA CRNO. To meet its target, the Company has already placed order for major equipment; these are expected to be commissioned by FY 2014-15.

12. IRON ORE STATUS

The Hon''ble Supreme Court of India cited environmental violations and banned mining iron ore in Karnataka''s Bellary, Chitradurga and Tumkur districts. The apex court, on representation made by the steel industry in Karnataka, granted relief to the National Mineral Development Corporation (NMDC) in mining. It allowed it to mine 1 MnT iron ore per month and make the material available to steel companies through E-auction. It also permitted e-auction of 1.5 MnT of iron ore per month from the total stock pile of 25 MnT.

The E-auction process commenced on September 14, 2011. However, due to several procedural, logistics and pricing constraints, the steel companies could not get a regular supply of iron ore in adequate quantities.

The apex court, Central Empowered Committee (CEC), Monitoring Committee and State Government, took several steps to smoothen the process of E-Auction and ensure quick dispatch of auction material from time to time.

In September, 2012, the Hon''ble Supreme Court allowed resumption of mining operations in 18 Category ''A'' mining leases, subject to compliance with all the statutory requirements. This resumption also helped satisfy the Monitoring Committee on implementation of Reclamation and Rehabilitation (R&R) plan. According to the Category ''B'' mines requirements, such as compensatory payment, implementation of R&R Plans, payment of guarantee money based on estimates from each mines, reimbursement of 15% of the sale proceeds to fulfil the needs of the monitoring Committee and undertaking for payment of additional penalty are to be complied with prior to the resumption of mining in Category B mines.

Subsequently, on April 18, 2013, the Hon''ble Supreme Court of India allowed resumption of all mining operations in the remaining Category A mines. The apex court also allowed resumption of all mining operations in Category B mines, subject to compliance with the terms and conditions stipulated by CEC. While sale of sub-grade iron ore was allowed by the apex court, mining licences of all Category C mines were cancelled. A transparent bidding process for allotment of the said mines was ordered.

With this, the estimated quantity of iron ore that could be available for the industries from the fresh production reached around 20 MTPA for FY 2013- 14 vis-a-vis demand of more than 30 MTPA. The shortfall is likely to be met by the sub-grade of iron ore, as may be cleared by the Hon''ble Supreme Court. The Department of Mines Geology has identified around 7 MnT of sub-grade iron ore in Bellary, which is likely to be put for sale in the coming months.

13. SEARCH AND SEIZURE OPERATIONS BY INCOME TAX AUTHORITIES

Further to the search and seizure operations by the Income-tax Authorities in March 2011, the Department issued Notice u/s 153A (a) of the Income Tax Act, 1961, dated October 24, 2011 for submission of Income Tax Returns u/s 153A (a) from Assessment Year 2005-06 to 2010-11 in pursuance of the search conducted u/s 132 of the Income Tax Act, 1961. The Company has filed return in response to notices and furnished details and explanations as required by authorities. Assessments have been completed for Assessment Year 2005-06 to 2007-08 and is in progress for remaining years.

14. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)

During FY 2007-2008, your Company had issued 3,250 Zero Coupon Foreign Currency Convertible Bonds (FCCBs) of USD 100,000 each, due on June 28, 2012 (ISIN XSO302937031) to international investors to part-finance the capital expenditure programme of the Company. These coupons aggregated to USD 325 million. Each bond was convertible into equity shares 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 August 7, 2007, unless previously redeemed, converted or purchased and cancelled. The principal amount of FCCBs outstanding after conversion of eight bonds and repurchase and cancellation of 15.36% of the remaining outstanding FCCBs aggregating to USD 49.80 million was USD 274.40 million.

As per the terms of issue of the Zero Coupon Convertible Bonds, your Company has redeemed the FCCBs at 142.801% of the outstanding principal amount of USD 274.40 million. The Company has, thus fully discharged its obligation towards the holders of these FCCBs, by making payment aggregating to USD 391.85 million (inclusive of redemption premium) to the Principal Paying Agent, Citibank N.A., London, on 28.06.2012.

As a result of the above redemption, there has been no dilution in the Company''s equity share capital, which would have otherwise occurred through the issue of 1,15,93,069 equity shares of Rs. 10 each, arising out of such conversion of the said FCCBs.

15. EXTERNAL COMMERCIAL BORROWING OF USD 275 MILLION (INCLUDING A GREEN SHOE OPTION OF USD 75 MILLION) WITH A CONVERTIBILITY OPTION

The Company had entered into an indicative, non-binding term sheet with an arranger for an external commercial borrowing (ECB) of USD 275 million, which included a green shoe option of USD 75 million.

The lenders of the ECB facility were to have an option to convert, in whole or in part, the outstanding ECB at a conversion price of Rs. 892.99 per share into fully paid equity shares of face value of Rs. 10 each, with full voting rights (Equity Shares) or into Global Depository Receipts (GDRs) with underlying Equity Shares subject to necessary approvals.

Since the necessary approval from the relevant regulatory authority was not received, your Company decided not to go ahead and the transaction stands withdrawn.

16. DIRECTORS

Mr. Anthony Paul Pedder, Mr. Uday M. Chitale and Dr. Vijay Kelkar, Directors, retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mrs. Punita Kumar Sinha who was appointed by the Board of Directors of your Company in its meeting held on October 28, 2012 as an Additional Director w.e.f. October 28, 2012 pursuant to Section 260 of the Companies Act, 1956 and in terms of Article 123 of your Company''s Articles of Association holds office upto the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 257 of the Companies Act, 1956 from a shareholder of your Company, signifying his intention to propose the name of Mrs. Punita Kumar Sinha for appointment as a Director of your Company.

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

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

Karnataka State Industrial Infrastructure and Development Corporation Limited (KSIIDC) nominated Dr. Sandeep Dave, IAS, as its nominee on your Company''s Board in place of Dr. Rajneesh Goel, IAS, with effect from October 5, 2012. Subsequently, KSIIDC nominated Mr. P.B. Ramamurthy, IAS, as its nominee on your Company''s Board in place of Dr. Sandeep Dave, IAS with effect from December 5, 2012.

JFE Steel Corporation nominated Mr. Hiromu Oka as its nominee on the Board of the Company, in place of Mr. Yasushi Kurokawa, with effect from May 23, 2013.

Dr. Vinod Nowal, Director & CEO has been re- designated as Dy. Managing Director with effect from May 23, 2013.

Your Directors place on record their deep appreciation of the valuable services rendered by Dr. Rajneesh Goel, Dr. Sandeep Dave and Mr. Yasushi Kurokawa during their tenure as Directors of the Company.

17. AUDITORS AND AUDITOR''S REPORT

M/s. Deloitte Haskins & Sells, Chartered Accountants, auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting. They have expressed their willingness to continue as auditors of the Company, if appointed. They have further confirmed that the said appointment would be in conformity with the provisions of Section 224 (1B) of the Act.

Explanation to Auditor''s Comment

- Auditors have, in their report for the year, drawn attention to note no. 26 (4), relating to the Scheme of Amalgamation and Arrangement sanctioned by the Hon''ble High Court of Judicature at Bombay on May 3, 2013. The certified copy of the Court Order is awaited. On receipt of the certified copy, the Company will initiate requisite formalities to implement the Scheme. Accordingly, therefore, the accounting treatment laid out in the Scheme and consequential adjustments that would arise will be dealt with by the Company in the financial statements, once the Scheme is implemented.

The above note, forming a part of the Accounts referred to in Auditors'' Report of the Company, is self-explanatory and, therefore, does not call for any further explanation under Section 217 (3) of the Act.

- Auditors have, in their report, drawn attention to note no. 26(5) of accounts for the year, relating to the Company''s assessment that no provision against the carrying amounts of its long-term strategic investment and loans extended to its subsidiary, JSW Steel (USA) Inc. of Rs. 3,155.65 crores is presently necessary.

According to the Board of Directors, considering recent independent valuation of the underlying fixed assets, review and assessment of business plans and expected future cash flows of JSW Steel (USA) Inc., the decline in carrying amounts of investment and loans is temporary and no provision is required.

18. 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 and forming a part of the report.

19. EMPLOYEE STOCK OPTION PLANS (ESOP):

The Board of Directors of your Company at its meeting held on 26.07.2012 formulated the JSWSL Employees Stock Ownership Plan 2012 ("ESOP Plan") with an objective of achieving sustained growth of the Company and creation of shareholder value by aligning the interests of the employees with the long term interests of the Company.

The ESOP Plan involving acquisition of Shares from the Secondary market was being implemented through the JSW Steel Employees Welfare Trust ("Trust"). 49,97,493 equity shares of the Company were acquired from the secondary market for transfer by the Trust to the employees upon exercise of their options. Out of these, options in respect of 49,36,940 equity shares (including employees of Indian Subsidiaries/ Associate Entities) have already been granted pursuant to the ESOP Plan.

SEBI vide Circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013 made amendments to Equity Listing Agreement and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI (ESOS and ESPS) Guidelines, 1999") which inter alia prohibits ESOP/ ESPS Schemes acquiring securities of the Company from the secondary market. In order to comply with the provisions of the Circular, the Company has taken the following steps:

- The options which have been granted under the ESOP Plan i.e. 49,36,940 shares shall vest as per the vesting schedule and the Trust shall continue to hold these shares till the options are exercised or until 30.09.2017.

- The shares for which options are not exercised by 30.09.2017 shall be disposed off and the net proceeds after taxes, if any, shall be used by the Trust to repay the loans to the Company and the surplus, if any, will be used for the benefits of the employees in accordance with the terms of Trust Deed and the Plan.

- The ESOP Plan has been terminated and accordingly no further grants under the Plan will be made.

Information relating to the JSWSL Employees Stock Ownership Plan - 2012 is given in Annexure "B" to the Directors Report.

20. ENVIRONMENTAL INITIATIVES

The Company has undertaken various measures to address safety and environmental issues at its plant locations.

Vijayanagar

- Commissioned water recycle system at Gourd Pond-3 to reuse about 2,000 m3 of water per day.

- Commissioned coke dry quenching facilities in coke-3 to recover waste energy; the system also incorporates the modified coke bucket with cover to reduce coke emission during the coke quenching process.

- Commissioned five bag filters in the iron- making area to reduce fugitive dust during material transportation.

- Installed 12 bag filters in the lime calcinations area.

- Started water reuse from slime pond (approx 300m3/hr).

- Commissioned waste water treatment and recirculation scheme at Coke Oven.

- Recovers iron value in the iron ore slime by using a specially developed slime beneficiation technology..

- Installed 0.2 MTPA Mill Scale Briquetting plant and 0.6 MTPA Micro Pellet Plant for waste reuse.

- Commissioned waste heat recovery system at Blast Furnaces 3 and 4.

- Established environment control centre for environment data capture and information dissemination.

Salem

- Installed and commissioned fugitive dust collecting system of energy optimising furnace I and II and blast furnace - II of cast house to collect secondary emission and minimise atmospheric emission levels of suspended particulate matters (SPM) and respirable suspended particulate matters (RSPM).

- Provided windscreen around the plant periphery to control dusts.

- Recertified Environmental Management System (EMS) - ISO 14001: 2004 by the certification agency M/s Bureau Veritas Certification and valid till 22 July, 2016.

- Connected online ambient air quality monitoring station with air care centre of TNPCB.

- Tested the usage of EOF Slag in place of stones in dynamically loaded foundations.

- Minimised usage of and eliminated High TDS wastewater in CPP II by 100% utilisation of raw water as cooling water makeup.

- Incinerated used oil and oil chocked cotton waste in-house.

- Started and stabilised the use of EOF slag in place of iron ore as coolant at EOF.

- Utilised external waste, at 50 kgs / t in SP 1 and 20 kgs / t in SP 2 of iron oxide waste charging at Sinter plant.

- Used BF slag as ballast in the new railway siding.

Vasind and Tarapur

- Installed new ETP to cater to CCL effluents, along with existing effluent commissioned in February 2013; the quality of treated effluents is suitable for recycling them for CCL requirements.

- Installed multi-effect evaporator to achieve zero liquid discharge.

- Carried out rain water harvesting projects across the plant; collected rain water from all the sources and used to meet water requirement of the process (Saving of 5,000 KL water).

- Obtained consent to operate from Maharashtra Pollution Control Board (MPCB) for steel process and captive power generation, which were valid for three years; received consent to establish for the upcoming projects.

21. 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 set out in the Annexure to the Directors Report. Having regard to the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual Report, excluding the aforesaid information, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary for a copy.

22. CERTIFICATION AND RECOGNITION

Your Directors have pleasure in informing you that all the Company''s Vijayanagar townships, viz. Vidyanagar, Vijay Vittal Nagar and Shankargudda townships, have been accredited for quality, environment systems, safety and health systems in operations and maintenance of residential townships. The townships received the following certifications:

1) ISO 9001 : 2008

2) ISO 14001 : 2004 Cor.1:2009

3) BS OHSAS 18001 : 2007

23. AWARDS AND ACCOLADES

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

1. Conferred the Excellent Energy-efficient Unit award by CII at the 13th National Award for Excellence in Energy Management 2012 on August 22 and 23, 2012 at HICC, Hyderabad.

2. Awarded the CII-EXIM Bank Award for Business Excellence in the category, Commendation Certificate for Significant Achievement towards Business Excellence, for JSW Steel, Vijayanagar Works on November 5, 2012, at Bangalore.

3. Conferred the National Sustainability Award on November 16, 2012, when the Company emerged as first among India''s Integrated Steel Plants by Indian Institute of Metals.

4. Awarded in the Commendation Certificate in the Manufacturing Category of the IMC Ramkrishna Bajaj National Quality Award 2012 by Indian Merchant Chambers on March 13, 2013.

5. Ranked fourth among the best 34 operating steel plants globally according to the World Steel Dynamics, World Class Steelmakers Ranking, on January 2013.

6. Emerged first in the Best Fuel-efficient Boiler Category 2012 (JSW Steel, Captive Power Plant -2. Toranagallu, Bellary) at the State Level Safety Competition on March 4, 2013, on the eve of 42nd National Safety Day Celebrations.

7. Received the Businessworld - FICCI CSR recgonisation for 2011-12 for commendable work in CSR.

24. 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 annexures to this report.

25. BUSINESS RESPONSIBILITY/ SUSTAINABILITY REPORTING

Your Company is fundamentally committed to sustainable business and to the nine principles of National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, it has been pursuing in spirit. It has also been reporting on GRI framework assured by third party independently on International Standards for Assurance Engagements (ISAE) 3000. The policies in the context of these principles, given on the Company''s website, www.jsw.in, have been approved by the Board in its meeting held on 28.01.2013. A Committee of Board comprising of three Independent Directors and three Executive Directors are overseeing the same, quarterly. The Chief Sustainability Officer (CSO) structure implements the sustainability oversight reporting and Grievance Redressal Mechanism.

26. 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, applied them consistently and made judgements and estimates that are reasonable and prudent to give a true and fair view of the Company''s state of affairs at the end of the financial year and of the Company''s profit or loss 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, to safeguard the Company''s assets and to prevent and detect fraud and other irregularities.

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

27. APPRECIATION

Your Directors take this opportunity to express their appreciation for the cooperation and assistance received from the Government of India, Republic of Chile, Kenya, Mauritius, Mozambique, Mali, USA and the UK; the state Governments of Karnataka, Maharashtra, Tamil Nadu, West Bengal and Jharkhand; 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 employees of the Company.

For and on behalf of the Board of Directors

Mumbai Sajjan Jindal

May 23, 2013 Chairman & Managing Director


Mar 31, 2011

The Directors take pleasure in presenting the Seventeenth Annual Report of your Company, together with the Standalone and Consolidated Audited Statement of Financial Accounts for the year ended March 31, 2011.

1. FINANCIAL RESULTS

(Rs. in crores) Particulars Standalone Consolidated F.Y. F.Y. F.Y. F.Y. 2010-11 2009-10 2010-11 2009-10

Gross Turnover 25,130.76 19,456.64 25,867.80 20,211.33

Less: Excise duty 1,967.52 1,254.16 1,967.56 1,254.16

Net Turnover 23,163.24 18,202.48 23,900.24 18,957.17

Other Income 282.64 529.08 284.03 532.16

Total Revenue 23,445.88 18,731.56 24,184.27 19,489.33

Profit before Interest, Depreciation, & Taxation (EBIDTA) 4,856.17 4,801.98 4,946.77 4,602.83

Net Finance Charges 695.18 858.92 945.41 1,104.17

Depreciation and amortisation 1,378.71 1,123.41 1,559.71 1,298.66

Profit before Taxation (PBT) 2,782.28 2,819.65 2,441.65 2,200.00

Tax including Deferred Tax 771.61 796.91 782.27 646.71

Profit after Taxation but before minority interest and share of profit of Associates 2,010.67 2,022.74 1,659.38 1,553.29

Share of Losses of Minority - - (23.87) (33.21)

Share of Profit of Associates (Net) - - 70.73 11.05

Profit after Taxation (PAT) 2,010.67 2,022.74 1,753.98 1,597.55

Profit brought forward from previous year 5,327.78 3,883.15 4,695.46 3,676.02

Amount available for Appropriation 7,338.45 5,905.89 6,449.44 5,273.57

Appropriations Transfer to Debenture Redemption Reserve - (125.00) - (125.00)

Transfer to Capital Redemption Reserve - (9.90) - (9.90)

Dividend on Preference Shares (27.90) (28.92) (27.90) (28.92)

Proposed Final Dividend on Equity Shares (273.32) (177.70) (273.32) (177.70)

Corporate Dividend Tax (48.87) (34.31) (48.87) (34.31)

Transfer to General Reserve (4,200.00) (202.28) (4,200.00) (202.28)

Total (4,550.09) (578.11) (4,550.09) (578.11)

Balance carried to Balance Sheet 2,788.36 5,327.78 1,899.35 4,695.46

The Company achieved a favourable product mix during the year, mainly due to increase in rolled products, with the rolling of most of the available cast products. This helped in reducing the sale of semis (cast products) in the overall product mix to around 6% (vis-à-vis 22% in last year) which in turn helped in improvement in blended sales realization compared to that of with previous year.

The Company achieved a volume growth over previous year of 7% in crude steel production during the current year. It had achieved crude steel production of 6.427 Million tonnes (the overall production was 6.506 Million tonnes, considering trial run production from the expansion project) and volume of sales of 6.099 million tonnes.

The interest cost has come down due to prepayment and repayment of high cost debt out of proceeds of equity investment by strategic investor JFE Corporation, Japan.

The Gross Turnover and Net Turnover for the year stood at Rs. 25,130.76 crores and Rs. 23,163.24 crores, respectively, showing a growth of 29% and 27% over the previous year mainly driven by growth in volumes and improved product mix and increase in blended sales realizations.

The EBIDTA for the year was Rs. 4,856.17 crores and EBIDTA margin for the year was 20.8%. Your Company posted PAT of Rs. 2,010.67 crores.

Pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, consolidated financial statements presented by the Company include financial information of its subsidiaries. In the context of globalising Indian economy and the increase in the number of subsidiaries, the Ministry of Corporate Affairs, vide its General Circular No. 2/2011 dated 08.02.2011 has granted General Exemption to all companies from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies to the Balance Sheet of the Company subject to fulfilment of certain standard conditions generally prescribed while giving specific approvals. The Company will make available these documents/details 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 Turnover, Net Turnover, EBIDTA and PAT of the Company are Rs. 25,867.80 crores, Rs. 23,900.24 crores, Rs. 4,946.77 crores and Rs. 1,753.98 crores, respectively. The PAT on consolidated basis was lower than the standalone net profit, due to losses in overseas subsidiaries attributable to slow recovery from global meltdown.

2. DIVIDEND

The Board has, subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated rate of Rs. 1.00 per Share on the 27,90,34,907, 10% Cumulative Redeemable Preference Shares of Rs. 10 each of the Company, for the year ended March 31, 2011.

The Board has also, considering the Companys performance and financial position for the year under review, recommended a dividend of Rs. 12.25 per Equity Share (122.5%) on the 22,31,17,200 Equity Shares of Rs. 10/- each of the Company, for the year ended March 31, 2011, subject to the approval of the Members at the ensuing Annual General Meeting.

Together with Corporate Tax on dividend, the total outflow on account of Equity dividend will be Rs. 317.66 crores, vis-à-vis Rs. 207.21 crores paid for fiscal 2009-10.

3. PROSPECTS

2010 reflected recovery and revival across most of the economies after witnessing the pain and panic of the 2008 financial crisis. Advanced Market Economies (AMEs) showed a mix of higher volatility and moderate recovery while Unemployment, Debt and Deficit continued to remain as challenges. On the other count, Chinese Economic growth remained robust @ 10.3% in 2010 fuelled by rising investments (+23.8%). Global Steel Production grew by 15% at 1,414 MnT, while Chinas steel production was up by 9.3% to 627 MnT.

Economic recovery is expected to continue its positive momentum across most of the economies. China, with its 12th Five Year Plan to commence from 2011 onwards, is slated to shift focus from growth to income distribution while encouraging Energy Efficiency, Emission Reduction, Resource Conservation and Social aspects. China is also expected to intensify its focus on exploring domestic demand and restructuring of steel industry coupled with elimination of inefficient and marginal capacities. Rest of the world is also expected to witness improved growth led by expanding Investments and consumption with an improving global trade, even though inflation is a challenge that most of emerging economies needs to address while keeping the growth momentum intact. Overall the Steel sector is expected to see a good demand and higher price realization driven mainly by restocking and surging input cost.

4. PROJECTS AND EXPANSION PLANS

The status of progress made on various Projects of the Company was as follows:

Vijayanagar Works

(a) Projects commissioned during FY 2010-11

(i) The implementation of the state-of-the art new Hot Strip Mill with a capacity of 5 mtpa was taken up in two phases. Phase-I with a capacity of 3.5 mtpa was successfully commissioned on March 28, 2010. After successful trial runs, the Mill commenced commercial operations on April 10, 2010. Phase II implementation is progressing well.

(ii) The 3.2 mtpa expansion project at Vijayanagar Works is progressing in full swing. The overall crude steel capacity of the Company will go upto 11 mtpa on completion of this project. The following facilities were commissioned / part commissioned during the year:

- Ladle Heating Furnace-3&4, Converter-3&4 and Caster-3&4 were commissioned in phases by March 2011.

- Sinter plant 3 (5.75 mtpa capacity) was commissioned in February 2011 - the largest such facility in India.

- 300MW captive power plant (CPP 3) was commissioned in September 2010.

- Two of the four batteries (Battery A&B) of coke oven 4 (1.95 mtpa capacity) were commissioned in December 2010. Battery C was commissioned in the month of April 2011 while heating of Battery D is underway.

(iii) First phase of the 20 mtpa beneficiation plant was commissioned in phases in April 2011.

(b) Projects under Progress

Following projects are under different stages of implementation:

- The balance units of 3.2 mtpa expansion project viz, Blast Furnace 4, Lime plant, Water pipeline will be commissioned by June 2011.

- Second phase (capacity of 1.5 mtpa) of the new HSM, taking the rolling capacity of this facility to 5 mtpa by September 2012.

- Pellet plant 2 (capacity 4.2 mtpa) expected to be commenced by June 2011.

- Second phase of the Beneficiation plant by November 2011, taking the total capacity of beneficiation to 20 mtpa.

- 300 MW Captive Power Plant (CPP4) at Vijayanagar, to be commissioned by December 2011.

(c) Projects proposed

New Cold Rolling Mill Complex:

The Company has decided to set-up a new Cold Rolling Mill Complex of 2.3 mtpa in two phases at its Vijayanagar Works, considering the growing demand from consumer durable and automobile segment for CRCA products. The proposed complex will have 2.3 mtpa of Pickling cum coupled tandem Cold Rolling Mill, 1.9 mtpa (two lines of 0.95 mtpa each) of State of the art Continuous Annealing lines and 0.4 mtpa of Galvanising cum Galvannealing line.

Total investment is about Rs. 4,025 crores, and is proposed to be funded by a debt equity ratio of 2:1. The target date of completion is Q1 2013-14 for Phase-I and Q1 2014-15 for Phase-II.

Augmenting crude steel capacity from 10 mtpa to 12 mtpa at Vijayanagar works:

The Company has made assessment of the existing facilities at Vijayanagar Works and based on the findings, it has been decided to increase the capacity by an additional 2 mtpa.

The proposed project cost is about Rs. 2,695 crores and is to be financed out of cash accruals of Rs. 945 crores and the balance by debt and is expected to be commissioned by June 2013.

Salem Works

(a) Projects commissioned during FY 2010-11

Phase I of the Blooming Mill (capacity 0.25 mtpa) was commissioned in September 2010.

(b) Projects under progress

Phase II of the Blooming Mill (capacity 0.25 mtpa) is in progress and the same is expected to be commissioned by September 2011. On completion of phase II the Company will have matching rolling capacity for cast product at Salem unit.

Vasind Works

Projects under progress

- Railway siding project is in an advanced stage of completion.

- Project RLNG to replace expensive fuel usage, is expected to be completed by June 2011.

5. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

A. Indian Subsidiaries

1. JSW Bengal Steel Limited (JSW Bengal), its Subsidiaries Barbil Beneficiation Company Limited, JSW Natural Resources India Limited and its Associate JSW Energy (Bengal) Limited (JSWEBL)

JSW Bengal Steel Limited was incorporated for setting up an Integrated Steel Plant in the State of West Bengal. The Company has already acquired and is in possession of Land required for this project. Boundary wall work at Salboni site has been completed to a major extent. The Company has also started construction of a residential complex by the name "Ankur" for the employees stay during construction of the plant. All the major survey work has already been completed at site. Power as well as water for construction is already tied up. Drilling and 3 Dimensional High Resolution Seismic Survey (3 DHRSS) are in progress at Kulti-Sitarampur Coal block by JSW Natural Resources India Ltd.

JSW Bengal is planning to invest Rs. 16,000 crores in phase I of this project. The Company is drawing up plans for 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. Approvals for setting up the project are being pursued.

3. JSW Steel Processing Centres Limited (JSWSPCL)

JSWSPCL is a 100% subsidiary of the Company. The subsidiary company was set up as Steel Service Centre consisting of HR/ CR Slitter and cut to length facility with annual slitting capacity of 5,00,000 tonnes. The Company processed 4,97,112 tonnes of steel during the FY 2010-11, as compared to 3,04,718 tonnes in the previous year.

During the previous year, JSWSPCL purchased 3 Slitting Lines and 1 Multi Strand Blanking lines from its fellow subsidiary JSW Steel Service Centre (UK) Limited.

4. JSW Building Systems Limited (JSWBSL)

JSWBSL, a 100% subsidiary, was incorporated with its main object as to design, make, prepare, develop, create, alter, replace, repair pre-fabricated building systems and technologies.

B. Overseas Subsidiaries

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

JSW Netherlands is a holding Company for USA, UK and Chile based subsidiaries. It has participation in 49% equity of Georgia based Geo Steel LLC, incorporated under the laws of Georgia. The Company has also invested in plate and pipe mill in USA, Coal mining assets in USA, iron ore mining concessions in Chile and Service Centres (since shutdown) at UK through the following step down subsidiaries.

(a) JSW Steel Holding (USA) Inc. and its subsidiaries viz. JSW Steel (USA) Inc - Plate and Pipe Mill Operation and Periama Holdings LLC and its subsidiaries - West Virginia, USA based Coal Mining Operation.

Plate and Pipe Mill operation

For the year 2010-11, the Subsidiary Company produced 119,887 net tonnes of Plates and 42,148 net tonnes of Pipes and achieved capacity utilization of 11% and 8% respectively. Considering the signs of improvement in US economy, it is expected that plate and pipe mills performance should improve during FY 2011-12.

Coal Mining operation

During the previous year, JSW Steel Holding (USA) Inc. acquired 100% equity interest in West virginia, USA based coal mining concessions along with barge load out facility.

Out of the total seven mines acquired, one mine is currently operational. For other mines, process of getting statutory clearance/permits is at an advanced stage of approval.

It is expected to produce approximately 0.50 million tonnes of Coal in the FY 2011-12 subject to receipt of requisite permits, which is planned to be ramped up to 3 million tonnes in over 3 years.

(b) JSW Steel (UK) Limited and its Subsidiaries namely Argent Independent Steel (Holdings) Limited and JSW Steel Service Centre (UK) Limited While the European economy is still struggling to come out of recessionary condition, there is growth of Auto and Consumer Durables Industry in India and there is a logical growth of Steel Stockholding and Service Centre Industry in India. In these circumstances, Plant & Machinery of UK Service Centre consisting of 3 Slitting Lines and 1 Multi Strand Blanking lines was sold to JSW Steel Processing Centres Limited, a subsidiary of the Company for relocation and use in India.

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

During the financial year 2010-11, SFM commenced the contract mining activity through dry process route with a capacity of 1 mtpa. The first shipment of Iron ore concentrate was made in April 2011.

Work on putting up a wet beneficiation plant of 2.5 mtpa is currently being examined and necessary statutory and environmental approvals are being applied for.

SFP, a subsidiary of SFM received maritime concession in April 2011 for developing a cape size port in North Caldera. The environmental and other regulatory approvals are applied for and are in progress.

2. JSW Natural Resources Limited (JSWNRL) and its Subsidiaries JSW Natural Resources Mozambique Lda (JSWNRML), JSW ADMS Carvão Lda

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 - JSW Natural Resources Mozambique Lda in Mozambique to acquire Coal assets and engaging in the business of prospecting and exploration of Coal, Iron Ore and Manganese.

In one of the mining concession where coal is found, Company has started with detailed drilling activities to establish JORC compliant reserve estimates.

JSW Natural Resources Mozambique Lda incorporated JSW ADMS Carvão Lda on October 8, 2010 wherein 85% stake is owned by JSWNRML and remaining 15% stake is with minority shareholder. It has a mining concession in Zumbo District Tete Province. The Company has initiated drilling activities to prove and confirm the quality and quantity of coal reserve.

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, has set up a steel rolling mill in Georgia with annual production capacity of 175,000 tonnes across 13.50 hectares

in the industrial area of Rustavi in Georgia. The plant became operational during year 2009-10. It is designed to produce rebar through hot rolling process by using steel billets produced through the Electric Arc Furnace Route.

Geo Steel produced 85,449 tonnes of Rebar and 95,901 tonnes of Billets during the FY 2010-11.

2. Rohne Coal Company Private Limited

Your Company holds 49% equity in Rohne Coal Company Pvt. Ltd. (JSW group is holding 69.01%, including that of the Company), which is a Joint Venture with three other partners (two partners from outside the Group). Forest clearance and Mining lease proposal is being pursued with Government authorities.

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 acquisition process is under progress.

4. Gourangdih Coal Limited

Gourangdih Coal Ltd (GCL) is a 50:50 Joint Venture between JSW Steel Limited and Himachal EMTA Power Corporation Ltd (HEPL) incorporated for development and mining of coal from Gourangdih ABC Thermal coal block in the state of West Bengal. It is currently progressing on pre mining activities.

5. Toshiba JSW Turbine and Generator Private Limited

Toshiba JSW Turbine and Generator Pvt. Ltd. has been incorporated with a shareholding of 75% by Toshiba Corporation Ltd., Japan, 20% by JSW Energy Ltd. and 5% by the Company, to design, manufacture, marketing and maintenance services of mid to large sized Supercritical Steam Turbines & Generators of size 500 MW to 1,000 MW.

Trial production of blades started on March 2011. The construction and erection of main plant equipment erection is progressing well.

6. Vijayanagar Minerals Private Limited (VMPL)

During the financial year 2010-11, VMPL supplied 2.20 million tonnes of Iron Ore from Thimmappanagudi Iron Ore Mines, vis-à-vis 1.76 million tonnes in the last FY 2009-10. VMPL has planned to supply 3.00 million tonnes during the next FY 2011-12.

7. JSW Severfield Structures Limited and its Subsidiary JSW Structural Metal Decking Limited

JSW Severfield Structures Ltd (JSSL) has set up a Greenfield project for design, fabrication and erection of structural steelwork and ancillaries, including decking for construction projects with a total plant Capacity of 35,000 tonnes per annum at Bellary in Karnataka. The commercial production of the first fabrication line commenced in November 2010 and the second fabrication line was commissioned in March 2011. The Company has produced a total of 3425 tonnes during the year. The order book of the Company stood at X 120 crores (8370 tonnes) as on March 31, 2011.

JSW Structural Metal Decking Limited (JSWSMD), a subsidiary company of JSSL is engaged in business of the design, roll forming and installation of structural metal decking and ancillaries, including shear connectors, for construction projects with a total plant capacity of 10,000 tonnes per annum at Bellary in the

State of Karnataka and started its commercial production in October 2010.

D. Associate Companies

(a) Jindal Praxair Oxygen Company Private Limited (JPOCPL)

The oxygen plants of JPOCPL have been working satisfactorily primarily to meet the requirement of the steel plant operations at Vijayanagar Works. During the financial year 2010-11, the combined production of the oxygen plant module #1 and module # 2 of JPOCPL was: Gaseous oxygen - 1003.17 million Nm3; Gaseous nitrogen - 361.26 million Nm3; Liquid oxygen - 23.06 million Nm3; Liquid nitrogen - 30.25 million Nm3 and Argon - 11.01 million Nm3.

(b) Ispat Industries Limited (IIL)

IIL re-started its operations in December 2010. It produced 0.729 million tonnes of HR Coils during the Quarter January to March 2011, and capacity utilization achieved was 88%. The volume of sales including downstream products improved to 0.712 million tonnes with an EBIDTA of Rs. 407 crores. Reflecting the synergies of acquisition, ML turned into a profit making Company reporting a net profit of Rs. 70 crores.

The Board of Directors have taken note of the matters to which the Auditors of IIL have drawn attention in their report, regarding overdue sundry debtors amounting to Rs. 571.60 crores, non-reconciliation of credit balances of Rs. 118.69 crores and raw material in-transit amounting to Rs. 104.83 crores.

The Board of Directors have also taken note of the confidence expressed by the management of ML confirming that these matters will not have any material impact on the financial statements of ML and relying on this, no provisioning has been considered necessary by the Board in respect of these items.

6. CREDIT RATING

The credit rating of your Company for the Long Term Debt/Facilities/ Non Convertible Debentures has been upgraded to "AA" (Double A) from AA- (Double A minus) by credit rating agency Credit Analysis & Research Ltd. (CARE). The Short Term Debt /Facilities continue to be rated at the highest rating of "PR1+" (PR one plus).

The revision in the long term rating takes into account the improved capacity utilization, profitability margins and reduced leverage on account of improved cashflows besides equity infusion by JFE Corporation, Japan and the promoters.

The rating continues to derive strength from your Companys significant presence in the steel sector, management capability and well diversified mix of value added products.

"AA" rating by CARE indicates a high safety for timely servicing of debt obligations and very low credit risk.

"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.

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

Pursuant to the decisions taken in the Board meeting held on July 27, 2010 and the Extra Ordinary General Meeting held on August 26, 2010, and in terms of the Subscription Agreement entered into by the Company with JFE Steel Corporation, Japan (JFE) on July 27, 2010, the Share Allotment Committee of the Board of Directors in its meeting held on September 08, 2010 had allotted 1 (one) Fully and Compulsorily Convertible Debenture of face value of Rs. 48,007,197,458 (FCD) to JFE.

Upon the mandatory and automatic conversion on October 07, 2010 of the aforesaid FCD held by JFE, the Share Allotment Committee of Directors of the Company in its meeting held on October 08, 2010 allotted 32,004,798 (thirty two million four thousand seven hundred ninety eight) Equity Shares of the Company, of face value of Rs. 10/- each, fully paid up, to JFE, in accordance with the terms and conditions of the FCD.

Further, pursuant to the decisions taken by the Board of Directors in its meeting held on October 26,2010 and by the Members by way of a Postal Ballot, and in terms of the Subscription Agreement entered into by the Company with JFE, on July 27, 2010, the Share Allotment Committee of Directors of the Company in its meeting held on December 14, 2010 allotted:

a) 9,77,906 (Nine lakhs seventy seven thousand nine hundred and six) Equity Shares of the Company, of face value of Rs. 10/- each, fully paid up, to JFE, on a preferential basis at a price of Rs. 1,500/- per Equity Share; and

b) 3,085,814 (Thirty lakhs eighty five thousand eight hundred and fourteen) Equity Shares of Rs. 10 each, in favour of the local custodian of the Depository i.e. Citibank N.A., underlying equivalent number of non-voting, non-transferable Global Depository Receipts (GDRs) issued to JFE Steel Corporation, Japan.

Accordingly, during the year under review, your Companys paid up equity share capital has increased from Rs.187,04,86,820 (comprising 18,70,48,682 equity shares of Rs. 10 each) to Rs. 223,11,72,000 (comprising 22,31,17,200 equity shares of Rs.10 each).

9. WARRANTS ISSUED TO SAPPHIRE TECHNOLOGIES LIMITED, A PROMOTER GROUP ENTITY ON A PREFERENTIAL BASIS

Pursuant to the decisions taken in the Board meeting held on May 03, 2010 and the Extra Ordinary General Meeting held on June 02, 2010, the Share Allotment Committee of Directors of the Company in its meeting held on June 16, 2010 allotted 1,75,00,000 (One crore seventy five lakhs) Warrants to Sapphire Technologies Limited, a Promoter Group Company, on a preferential basis.

Each warrant entitles the holder to apply for and be allotted one equity share of the Company of par value of Rs. 10/- each, at a price of Rs. 1,210/- per equity share, at any time within 18 months from the date of allotment of the warrants, i.e. within December 15, 2011.

During the year under review, the Warrant holder did not exercise the option to convert any of the warrants held by it into equity shares of the Company.

10. TECHNICAL COLLABORATION WITH JFE STEEL CORPORATION, JAPAN

In continuation of the Strategic Collaboration Agreement entered into on November 19, 2009, between the Company and JFE Steel Corporation ("JFE"), the execution of several definitive agreements, which represent the next phase of the multi-faceted collaboration plan consistent with the long-term vision of both the parties for future growth were concluded on July 27, 2010.

Pursuant to the execution of the aforesaid agreements on July 27, 2010 between the Company and JFE for the supply of certain technology and the provision of certain technical assistance to the Company, including foreign collaboration agreements, technical assistance agreement for automotive steel and general technical assistance agreement for plant performance improvement, JFE has become a foreign collaborator of the Company.

This collaboration would help the Company to achieve operational excellence and also move up in the value chain with access to cutting edge technology.

Through this unique collaboration, your Company gains:

- Access to cutting edge technologies.

- Access to fast-growing automotive market.

- Lower cost of production through operational excellence; and

- Deleveraged balance sheet to fuel next phase of growth.

11. ACQUISITION OF MAJORITY STAKE IN ISPAT INDUSTRIES LIMITED

Ispat Industries Limited (IIL), with a production capacity of 3.3 mtpa, is inherently seen as a pioneering company that brought new technologies into India like the Twin Shell ConArc furnace and Thin Slab Casting facility. The Twin Shell ConArc furnace provides the steel making facility with a great amount of flexibility. Along with the state-of-the-art Compact Strip Mill, Ispat also has an in-house jetty, with a cargo handling capacity of 12 mtpa, which gives it an added advantage.

IIL has been incurring losses constrained by inadequate working capital, lack of integration and expensive debt and has been looking for a strategic investor to carry forward the business and growth of the Company. The Company in turn has been looking at growth opportunities/expansions to reach 34 mtpa by 2020 and has plans to further expand steelmaking capacity in West Bengal and Jharkhand with 10 mtpa capacity each. Any greenfield project has a gestation period of about 3-4 years. While many greenfield projects have been announced and MOUs executed, however due to challenges towards land acquisition, environmental and various other Government clearances, not many greenfield projects are expected to get into operations in the near future.

Considering the synergies and strategic fit, the Company initiated dialogue with the management of IIL for strategic collaboration and arrived at a proposal whereby the Company would acquire a majority stake in IIL.

Accordingly, in accordance with the Subscription cum Shareholders Agreement dated December 20, 2010, the Company has acquired 1,08,66,49,874 equity shares of Ispat Industries Ltd. (IIL) on January 24, 2011 (aggregating to 45.53% of the equity share capital of IIL as on date).

In view of the above, the Company also made a mandatory open offer for the shares of IIL ("Open Offer") under Regulations 10 and 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 ("Takeover Regulations"). The Open Offer was made to the shareholders of IIL to acquire 64,72,38,458 Equity Shares of IIL of face value of Rs. 10 each representing in the aggregate 20% of the Fully Diluted Equity Share Capital of IIL at a price of Rs. 20.54 (Rupees twenty and paise fifty four only) per fully paid up equity share, which was further revised to Rs. 22.25 (Rupees twenty two and paise twenty five only) per fully paid up equity share on March 24, 2011.

The Offer was open from March 17, 2011 to April 05, 2011 during which time the Company received valid applications for sale of 8,99,40,890 equity shares from the shareholders of IIL. The Company has accepted all such valid applications and transferred the full amount of the purchase consideration to the Special Account opened for payment to the successful applicants on April 8, 2011.

Post the above acquisition, the Company holds 1,17,65,90,764 shares representing 49.30% of the total paid-up capital of Ispat Industries Limited as on that date.

Your Company has also put in a systematic plan to turnaround Ispat Industries by developing synergies in the competitive steel market. The Company will also facilitate sourcing of key inputs like coke, pellet and power which will bring down the cost of production substantially. The Companys extensive Pan India Network will provide IIL with better market penetration. By improving the levels of efficiency and by rationalizing the sou rcing of Iron ore lumps and fines, the Company will reduce the cost of production.

12. SEARCH AND SEIZURE OPERATIONS BY INCOME TAX AUTHORITIES

The Income-tax Authorities carried out a search and seizure operations at certain locations of the Company in March 2011. The Company co-operated with the authorities and various statements were recorded during the course of these operations. The Company has also informed the stock exchanges about the search and seizure operations by the Income-tax Authorities.

The Company has not received any communication from the Income- tax Authorities till date regarding documents seized during the search proceedings having any potential financial or tax implications on the Company. No notice has been received from the Income-tax Authorities till date. The Income-tax Authorities are yet to conclude the search and seizure proceedings on the Company.

13. 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$ 1,00,000 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 shares 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 August 7, 2007 until the close of business on June 21, 2012, unless previously redeemed, converted or purchased and cancelled. The Bonds, which are not redeemed, converted or purchased and cancelled, are redeemable on June 28, 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 bonds were converted into 33,799 equity shares which were allotted on 4 January 2008.

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$ 47.80 million in March 2009 and US$ 2 million in April 2009) in accordance with the A.P. (DIR Series) Circular No. 39 dated December 8, 2008 issued by the Reserve Bank of India.

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

14. DIRECTORS

Mr. Seshagiri Rao M.V.S, Mr. Sudipto Sarkar, Mr. Jayant Acharya and Mr. Kannan Vijayaraghavan, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

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

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

JFE Steel Corporation nominated Mr. Shigeru Ogura as its nominee on the Board of your Company w.e.f. September 08, 2010. Subsequently, JFE nominated Mr. Yasushi Kurokawa as its nominee on the Board of the Company, in place of Mr. Ogura w.e.f. May 16, 2011.

Karnataka State Industrial Investment and Development Corporation Limited (KSIIDC) nominated Mr. M. Maheshwar Rao, IAS as its nominee on the Board of your Company in place of Mrs. Vandita Sharma, IAS w.e.f. February 04, 2011.

Your Directors place on record their deep appreciation of the valuable services rendered by Mr. Shigeru Ogura and Mrs. Vandita Sharma, IAS during their tenure as Directors of the Company.

15. 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 (1B) of the Act.

16. 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.

17. ENVIRONMENTAL INITIATIVES

The Company has undertaken various measures to address environmental issues at its Plant Locations:

- Environment Control Laboratories have been developed for carrying out monitoring of water, waste-water and air pollutants. The monitoring carried out includes ambient air, stack and in- plant sampling, drinking water, and effluents.

- Every effort is made to prevent pollution by recycling solid wastes and liquid treated waste-water for reuse in the premises.

18. 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 set out in the Annexure to the Directors Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary for a copy.

19. AWARDS AND ACCOLADES

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

1. PMs Trophy Award: (Runners-up Trophy known as Steel Ministers Trophy) for the best performing integrated Steel Plant in the country for the year 2007-08, awarded on July 31, 2010.

2. National Award for Excellence in Energy Management 2010: Excellent Energy Efficient Unit Award 2010 at National Award for Excellence in Energy Management 2010 conducted by CII - Godrej GBC on September 1 & 2, 2010 at Chennai Trade Centre, Chennai.

3. National Sustainability Award 2010: First Prize amongst the Integrated Steel Plants Category. The award was presented at 48th National Metallurgists Day Celebrations and 64th Annual Technical Meeting of Indian Institute of Metals, on November 14, 2010 at Bangalore.

4. CII-EXIM Award 2010: "Commendation Certificate for Significant Achievement" for Business Excellence by Confederation of Indian Industries, on November 14, 2010 at Bangalore.

5. National Award for Excellence in Water Management 2010:

Excellent Water Efficient Unit Award 2010 at National Award for Excellence in Water Management 2010 conducted by CII, on December 10 & 11, 2010 at Hyderabad.

6. IMC Ramkrishna Bajaj National Quality Award 2010:

Commendation Certificate in the manufacturing category on March 16, 2011 at Mumbai.

7. Global HR Excellence Award 2010 for Innovative HR Practices at Asia Pacific HRM Congress held on September 3, 2010 at Bangalore.

8. Best Practices in Talent Management Award at Talent 2010 hosted by Osney Media Ltd on November 10 & 11, 2010 at London.

9. "Institution Building Award" at Global HR Excellence Awards World HR hosted by World HR Congress on February 11, 2011 at Taj Lands End, Mumbai.

Individual and Team Recognitions:

1. Mr. Seshagiri Rao M.V.S, Jt. Managing Director & Group CFO was awarded the Best Performing CFO in Metals & Commodities Sector by CNBC TV18 at a glittering ceremony in Mumbai on October 27, 2010.

2. Ms. Sharmila Bannerjee, Vice President- Corporate Communication, was awarded WILLS Womens Choice Award in Mumbai on October 28, 2010.

3. Mr Prachethan Kumar, Manager (R&D and SS), was conferred with Young Metallurgist of the Year Award - 2010 at the 48th National Metallurgists Day Celebrations held on November 14, 2010 at Bangalore.

20. 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 an annexure to this report.

21. 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.

22. APPRECIATION

Your Directors take this opportunity to express their appreciation for the cooperation and assistance received from the Government of India, Republic of Chile, Central Government of Mozambique, USA and UK; the Government of Karnataka, Maharashtra, Tamil Nadu, West Bengal and Jharkhand; 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 employees of the Company.

For and on behalf of the Board of Directors

Savitri Devi Jindal

Date: May 16, 2011 Chairperson


Mar 31, 2010

The Directors present the Sixteenth Annual Report of your Company together with the Standalone and Consolidated Audited Statement of Financial Accounts for the year ended 31 March 2010.

1. FINANCIAL RESULTS

Rupees in crores

Standalone Consolidated

F.Y. F.Y. F.Y. F.Y.

Particulars 2009-10 2008-09 2009-10 2008-09

Net Turnover 18,202.48 14,001.25 18,957.17 15,934.84

Other Income 532.84 259.56 536.00 271.66

Total Revenue 18,735.32 14,260.81 19,493.17 16,206.50

Profit before Interest, Depreciation, & Taxation (EBIDTA) 4,805.74 3,092.67 4,606.67 3,253.50

Interest 862.68 797.25 1,108.01 1,155.62

Depreciation 1,123.41 827.66 1,298.66 987.77

Profit before Taxation & Exceptional Items 2,819.65 1,467.76 2,200-00 1,110.11

Exceptional Items - 790.13 - 794.78

Profit before Taxation (PBT) 2,819.65 677.63 2,200.00 315.33

Tax including Deferred Tax 796.91 219.13 646.71 72.60

Profit after Taxation but before minority interest and share of profit of Associates 2,022.74 458.50 1,553.29 242.73

Share of Losses of Minority - - (33.21) (20.53)

Share of Profit of Associates (Net) - - 11.05 11.65

Profit after Taxation (PAT) 2,022.74 458.50 1,597.55 274.91

Profit brought forward from earlier year 3,883.15 3,505.86 3,676.02 3,482.32

Amount available for Appropriation 5,905.89 3,964.36 5,273.57 3,757.23

Appropriations

Transferred (to) / from Debenture Redemption Reserve (125.00) 20.45 (125.00) 20.45

Transferred to Capital Redemption Reserve (9.90) - (9.90) -

Dividend on Preference Shares (28.92) (28.99) (28.92) (28.99)

Proposed Final Dividend on Equity Shares (177.70) (18.71) (177.70) (18.71)

Corporate Dividend Tax (34.31) (8.11) (34.31) (8.11)

Transfer to General Reserve (202.28) (45.85) (202.28) (45.85)

Total (578.11) (81.21) (578.11) (81.21)

Balance carried to Balance Sheet 5,327.78 3,883.15 4,695.46 3,676.02

The fiscal year under review would be marked as an important year for the domestic steel industry. When the year began, the Indian economy, invalidating the theory of coupling, started showing signs of growth, amidst the global slowdown that was still prevailing, however, during the course of FY 2009-10, the export dependency on the advanced world declined substantially, driven by stimulated domestic demand.

During the current financial year, your Company took various strategic initiatives to improve its volumes and profitability, which helped the Company to post an impressive performance for the year.

The 2.8 MTPA Crude Steel Expansion Project at Vijayanagar Works commenced commercial production on 10th April 2009 enhancing the Crude Steel manufacturing capacity to 6.8 MTPA and scaling up the overall steel manufacturing capacity of the Company to 7.8 MTPA. With the completion of this expansion project, the Company has scaled new heights as a leading player in the steel industry in the country. The Expansion facilities stabilized quickly and achieved hot metal production of 2.2 Million tonnes during the current year, which worked out to around 78% of the Installed capacity.

Consequently, the Company achieved a significant volume growth of 61 % in crude steel production and 67% in saleable steel during the current year, compared to that of last year, despite disruptions in the plant operations at Vijayanagar Works due to unprecedented and incessant rains followed by floods in southern part of India in October 2009. The Company achieved normal operations by December 2009 and during the current Financial Year 2009-10, it had achieved crude steel production of 5.987 Million tonnes (the overall production was 6.02 Million tonnes, considering trial run production from the expansion project) and saleable steel of 5.720 Million tonnes (the overall sales was 5.74 Million tonnes, considering trial run sales), which works out to around 94% of volume guidance of 6.4 Million tonnes and 6.1 Million tonnes, respectively for the fiscal year under review. The operational performance could have been much better if the normalcy was there during October and November 2009.

During the year, the production of Rolled Products, both Long and Flat (including Value Added Flat), went up significantly compared to last fiscal. HR Coil production has reached highest levels at 3.399 Million tonnes during the year, which is around 106% of enhanced rated capacity of 3.2 Million tonnes. The HR Coil production is expected to go up further, on stabilization of the state-of-the-art new Hot Strip Mill, commissioned at Vijayanagar Works in March 2010.

The domestic sales volume continued to show rising trend, constituting 84% of the total sales for current year as against 72% in the last year, in line with Companys strategy of increased focus in the domestic markets. The number of JSW Shoppe outlets went up to 174 and the Retail sales for the current fiscal, through JSW Shoppe, accounted for 16% of domestic sales, excluding semis.

The various cost reduction initiatives taken by the Company, such as, increased coal injection in blast furnace, tower usage of fluxes, higher captive power generation, increase in utilization of Corex Gas, usage of Coke Oven Gas from Recovery Type Coke Ovens, etc., along with lower input costs led to reduction in cost of production.

The Gross Turnover and Net Turnover for the year stood at Rs. 19,456.64 crores and Rs. 18,202.48 crores, respectively, showing a growth of 28% and 30% over the previous year mainly driven by growth in volumes, in spite of drop in blended sales realizations by 21 %, relative to that of previous fiscal year.

The EBIDTA for the year was Rs. 4,805.74 crores inclusive of forex gains of Rs. 412.95 crores. The EBIDTA margin for the year was 26.2% as against 21.8% in the previous year.

Your Company posted a highest ever Profit after Tax of Rs. 2,022.74 crores, up 341% over the last year.

Pursuant to the Accounting Standard (AS) - 21 on "Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India, consolidated financial statements presented by the Company include financial information of its subsidiaries. The Company has made an application to the Government of India seeking exemption under Section 212(8) of the Companies Act, 1956 from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies to the Balance Sheet of the Company. The Company will make available these documents/details upon request by any member or investor of the

Company/subsidiary companies. Further, the Annual Accounts oftfie 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 Turnover, Net Turnover, EBIDTA and PAT of the Company were Rs. 20,211.33 crores, Rs. 18,957.17 crores, Rs. 4,606.67 crores and Rs.1,597.55 crores, respectively. The PAT on consolidated basis was lower than the standalone Net Profit; mainly due to global slow down adversely impacting the overseas operations in USA and UK.

2. DIVIDEND

The Board has, subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated fate of Re. 1.00 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 March 2010.

The Board had also vide a Circular Resolution passed by it on 17 February 2010, approved the Redemption ofithe Companys 99,00,000 11% Cumulative Redeemable Preference Shares of Rs.10 each o« 8 March 2010, along with dividend due thereon for the Financial year 2009-10 upto the date of redemption, at the stipulated rate of 11% per annum.

The Board considering the Companys performance and financial position for the year under review, also recommended payment of dividend of Rs. 9.50 per Equity Share on the 18,70,48,682 Equity Shares of Rs. 10 each of the Company, for the year ended 31 March 2010, subject to the approval of the Members at the ensuing Annual General Meeting.

Together with Corporate Tax on dividend, the total outflow on account of Equity dividend will be Rs. 207.21 crores, vis-a-vis Rs. 21.89 crores paid for fiscal 2008-09.

3. PROSPECTS

Having witnessed faster recovery in World Economy in 2009., IMF estimates a positive economic rebounp: in 2010. World GDP growth is estimated at the rate of 4.2% in 2010 while Advanced World and Emerging World is estimated to grow 2.3% and 6.3%, respectively. Further WTO projects World Trade to expand by 9.5% with Advanced World increasing by 7.5% and Emerging World by 11%. Nonetheless, with the timely stimulated economic efforts, the depth, span and intensity of the economic catastrophic spread of 2008, seems to1 be partially taken care of albeit caution continues with certain probable sovereign defaults to continue to haunt the world in near term.

In these "Trying and Managing Times" India has proved its mettle reflecting a strong note of positive Economic Growth of 7.2% stimulated by timely Economic measures, both towards Investment and Consumption expenditure. Capitalizing the high degree of domestic consumption, low credit leverage and debt exposure with expanding focus towards immense opportunities for Investment and Consumption, prospects for Indian Economy look far better and premising in 2010-11 and ahead. Preliminary guidance by various agencies for the economic growth in 2010-11 is in the range of 8%-8.5%, coupled with 9% in 2011-12 and double-digit growth projections in times ahead.

Steel Facts and Estimates

The global steel production and consumption in 2009 declined by 8% and 6.7%, respectively, inspite of rebound in the second half of calendar year 2009. The impact of economic crisis in Advanced Countries continued to depress the steel demand. China and India showed resilience due to strong domestic demand cushioning the slow recovery in Advanced Economies. India, posted a growth of 8.1 % and 4.2% in steel consumption and production, respectively in FY 2009-10. As the demand outpaced the production, the import of steel products grew by 23%. India is expected to continue to be the net importer of steel considering the strong demand from infrastructure, construction, real estate, Automobiles and white goods industry and tardy progress in creating new capacities.

Your Company will be in an advantageous position to derive the full benefit from the growing domestic demand, with the increase in capacity utilization from its 7.8 MTPA steel plant operations. The newly commissioned Hot Strip Mill at Vijayanagar Works and blooming mill at Salem Works to be commissioned in July 2010 will enhance the proportion .: of value added rolled steel products with better sales realizations.

Your Company has worked out a business plan for the fiscal year 2010-11 to produce and sell 7.0 Million tonnes and 6.75 Million tonnes, respecfively of various steel products showing a growth of 17% and 18%, respectively, over fiscal year 2009-10 under review. The increase in bench mark prices for key inputs viz., Iron ore and Coal is likely to push up the cost of production in FY 2010-11. As the raw material suppliers insisted for quarterly pricing in lieu of traditional yearly pricing methodology, uncertainties in the pricing of key inputs beyond Q1 in FY 2010-11 will prevail. However, the Company expects that the steel product prices will fluctuate in sympathy with the change in raw material prices with lead and lag effect. The increase in cost is likely to be neutralized by anticipated rise in sales realizations and possible improvement due to change in product mix.

The Company is planning to start some of its new facilities, which are part of 10 MTPA expansion project, during FY 2010-11, to have better cost advantage at Vijayanagar Works.

4. PROJECTS AND EXPANSION PLANS

Vijayanagar Works

(a) Projects commissioned during FY 2009-10

- The implementation of the Crude Steel capacity expansion project by 2.8 MTPA to reach 6.8 MTPA at Vijayanagar Works was completed, with the commissioning of Pulverized Coal Injection Unit and Top Gas Recovery Turbine in Blast Furnace#3 and RH Degasser unit and LHF#2 in Steel Melt Shop#2, during first quarter of FY 2009-10.

- 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 along with the other support facilities such as Coke Oven#3, Sinter Plant#2, Raw Material Handling systems, Utilities and other infrastructural facilities forming part of this expansion project, which were commissioned during last fiscal 2008-09, achieved its full capacity production levels during the current year.

- 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 has been successfully commissioned on March 28, 2010. After successful trial runs, the Mill commenced commercial operations on 10 April 2010. Phase-ll is under implementation.

(b) Projects under Progress

- Further expansion of crude Steel capacity by 3.2 MTPA to reach . 10 MTPA at Vijayanagar Works along with associated facilities is under implementation and targeted for completion by March 2011.

(c) Other Projects

Beneficiation plant of 20 MTPA is being executed in two phases. One of the three units of first phase came in operation in December 2009. 2nd & 3rd units will be completed by July 2010 & December 2010, respectively. Phase II is planned for completion in FY 2011-12.

- To enhance productivity levels in the Blast Furnaces, one more Pellet Plant of 4.2 MTPA capacity is being added and is planned for commissioning by March 2011.

- The new captive power plant of 300 MW is also expected to be commissioned in FY 2011-12 to achieve self sufficiency in power at 10 MTPA stage.

Salem Works

(a) Major modifications undertaken during FY 2009-10

The following modifications/improvements were made during FY 2009-10:

Adapted tuyere gas control and a "Jugad" slag-splash technique for improving the refractory life of EOF.

- Introduced Economizer in captive power plant (CPP) to enhance fuel efficiency.

- Islanding scheme was implemented in the electrical power system.

- Imposed loop-control rolling mill giving enhanced productivity for special steel.

(b) Projects under progress

Blooming Mill Phase I and Phase ll,300TPD lime kiln, third railway line and Wagon Tippler will be commissioned during FY 2010-11. With the commissioning of Blooming Mill in FY 2010-11, Salem Works will complete expansion of rolling capacity, matching with the existing cast steel production capacity.

Vasind and Tarapur Works

(a) Projects commissioned during FY 2009-10

30 MW Power Plant has been commissioned at Tarapur in December 2009, equipped with latest ESP system and designed tor zero affluent discharge. This has not only helped the Company in reducing the cost of production vis-a-vis procuring costly power from the state electricity grid for the manufacturing operations but the Company has also entered into an agreement with Maharashtra State Eiectricity Distribution Co. Ltd. (MSEDCL) for sale of the surplus power. Since December 2009, the Company has been selling the surplus power to MSEDCL.

(b) Projects under progress

- Railway Siding at Vasind - expected to be commissioned in January 2011.

- RLNG Project at Vasind to replace costly fuels being used (Furnace Oil in HRM & LPG in Galvanizing Lines) - expected to be commissioned in January 2011.

- Galvalume Project - For conversion of existing CGL 1 & CSD II Galvanizing lines, equipment procurement in progress.

5. SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

A. Indian Subsidiaries

1. JSW Bengal Steel Limited (JSW Bengal), its Subsidiary Barbil Beneficiation Company Limited and Associate JSW Energy (Bengal) Limited (JSWEBL)

JSW Bengal Steel Limited was incorporated for setting up a Steei Plant in the State of West Bengal. The Company is in possession of Land required for this project. Boundary wall work at Salboni site is in progress. It is proposed to implement the project in phases.

The first phase will be 4 MTPA Integrated Steel Plant with an estimated project cost of Rs. 15,000 crores. The Company is drawing up plans to take up implementation of the project in FY 2010-11 on achieving financial closure.

JSW Bengal has entered into sole and exclusive long term Coal Supply Agreement in March 2010, with West Bengal Mineral Development Corporation Limited (WBMDTC), for supply of coal from the Kulti and Sitarampur coal blocks.

A new SPV namely JSW Energy (Bengal) Limited (JSWEBL) has been incorporated on 8th February 2010, with 26% of share holding by JSW Bengal and 74% by JSW Energy Limited. JSWEBL proposes to set up a 2X800 MW captive power plant to meet the power requirement of JSW Bengal and sell excess power to WBEPCLV JSW Power Trading Co. Limited, at an estimated project cost of Rs. 9,680 crores, including investment for Coal Mine development of Rs. 2,000 crores, which is proposed to be funded by way of Debt and Equity in the ratio of 3:1. Target date for completion is FY 2014-15.

2. JSW Jharkhand Steel Limited

JSW Jharkhand Steel Limited was incorporated for setting up a steel plant in the State of Jharkhand. The Company is pursuing for various approvals/clearances viz., raw material linkages, land acquisition, environmental clearances, etc., for this project.

3. JSW Steel Processing Centres Limited (JSWSPCL)

JSW Steel Processing Centres Limited (JSWSPCL) is a 100% subsidiary of the Company. The subsidiary company was set up as Steel Service Centre consisting of HR/CR Slitter and cut to length facility with annual slitting capacity of 500,000 tonnes. The Company processed 3,04,718 tonnes of steel during the FY 2009-10, as compared to 1,04,110 tonnes in the previous year.

4. JSW Building Systems Limited (JSWBSL)

JSWBSL, a 100% subsidiary, was incorporated on 28 March, 2008 with its main objects as to design, make, prepare, develop, create, alter, replace, repair pre-fabricated building systems and technologies. It was envisaged that JSWBSL will be participating in the 50% equity capital of JSW Severfield Structures Limited, a JV Company incorporated in March 2009 with 50:50 Equity participation by JSWBSL and Severfield-Rowen Mauritius Limited. During the year, the Company has directly invested 50% Equity in the JV Company, instead of through JSWBSL.

B. Overseas Subsidiaries

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

JSW Netherlands is a holding Company for USA, UK and Chile Operations. It has 49% participation in the Equity of Georgia based Geo Steei LLC, incorporated under the laws of Georgia. The Company 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.

During the financial year 2009-10, the performance of Plate and Pipe Mill in USA continued to be impacted due to high cost Raw material inventory and lower capacity utilization. For the year 2009-10, the Subsidiary Company produced 195,275 net tonnes of Plates and 73,969 net tonnes of Pipes, and achieved capacity utilization of 19% and 13%, respectively.

There has been improvement in US operations during the last quarter i.e. Q4 FY 2009-10, with increase in capacity utilization at the back of improved market demand and lower costs. The US Subsidiary achieved positive EB1DTA of US$ 2.08 Million during Q4 FY 2009-10.

It is expected that during the next fiscal FY 2010-11, US operations will show progress in terms of operational

performance with improved capacity utilization and also improved financial performance with better realizations,

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

JSW Steel Service Centre (UK) Limited has slitting and blanking facilities to cater to specific customer requirements.

The latest demand forecasts indicate massive processing overcapacity, in the industry as a whole, reduced consumer demand and poor margins in the first half of FY 2010. Given this situation, the Company has to respond to these market pressures and at the same time generate revenues from the lowest possible cost base. It has been decided that until the market improves significantly, the Company will explore alternate Markets and opportunities.

During the year under review, JSW Steel Service Centre (UK) Limited processed 11,143 tbnnes of steel.

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

During the financial year 2009-10, the feasibility studies were carried out by the Subsidiary Company for starting beneficiation operations using wet process. Preparation of Feasibility report for beneficiation operations Is in progress.

Considering rebound in commodity market leading to increase in long-term Annual Price for FY 2010-11, the Subsfdiary Company has decided to commence mining under the dry method by contractual mining route.

Parallelly, the Subsidiary Company contemplates to commence work on putting up wet beneficiation plant of 2.5 to 3 MTPA beneficiated ore to be operational In FY 2011-12. i 2. JSW Natural Resources Limited (JSWNRL) and its Subsidiary

JSW Natural Resources Mozambique Lda (JSWNRML)

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

JSW Natural Resources Limited fdrmed a wholly owned subsidiary in Mozambique to acquire Coal assets and engaging in the business of prospecting and exploration of Coking/Thermal Coal.

While thermal coal was found on drilling and on receipt of test report, in one of the Mining concessions held in Mozambique, the drilling of second concession did not yield any positive result. Efforts are in progress to explore and evaluate other alternatives to acquire and develop coal mines.

C. Joint Venture Companies

1. Geo Steel LLC

Georgia based Joint Venture Geo Slteel LLC in which your Company holds 49% equity through JSW Steel (Netherlands) B.V, has set up a steel rolling mill in Georgia with annual production capacity of 175000 tonnes in the industrial area of Rustavi in Georgia. The plant became operational during cuitrent year 2009-10. It is designed to produce rebar through hot rolling process by using steel billets produced through the Electric Arc Furnace Route.

Geo Steel had started commercial production with effect from January 2010 and has produced 16260 tonnes of Billets and 7435 tonnes of Rebar during the quarter January - March 2010. The Gross Turnover was USD 7.3 Million.

2. Rohne Coal Company Private Limited

Your Company holds 49% equity in Rohne Coal Company Pvt. Ltd. (JSW group is holding 69%, including that of the Company), which is a joint Venture with three other partners (two partners from outside the Group). This JV Company received the final allotment letter from the Government of India for development of Rohne Coal Block. Mining plan has been approved by Ministry of Coal. The application for Mining Lease is under consideration. In-principle approval for railway siding for Coal Mine has been obtained from East Central Railway. Environmental clearance has been recommended by the Expert Appraisal Committee and the final clearance from Ministry of Environment and Forests (MoEF) is awaited. Forest clearance is under process.

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 acquisition is under progress.

4. Gourangdih Coal Limited

Ministry of Coal (MoC), Government of India has allocated Gourangdih ABC Thermal coal block in the State of West Bengal having a geological reserve of 131.7 million tonnes of thermal coal for captive mining jointly by the Company and Himachal EMTA Power Corporation Ltd. (HEPL) by working through a 50:50 Joint Venture Company for meeting their proportionate share of requirement of coal. To pursue this objective, a JV Company, Gourangdih Coal Ltd. (GCL), has been incorporated on 26th October 2009 with its Registered Office inKolkata.

5. Toshiba JSW Turbine and Generator Private Limited

Toshiba JSW Turbine & Generator Pvt. Ltd. was incorporated with a shareholding of 75% by Toshiba Corporation Ltd., Japan, 20% by JSW Energy Ltd. and 5 % by the Company, to design, manufacture, marketing and maintenance services of mid to large sized Supercritical Steam Turbines & Generators of size 500 MW to 1000 MW.

Land lease agreement has been signed with Government of Tamilnadu for setting up of manufacturing facility of JV Company near Ennore port, Chennai. Technology transfer agreement has been signed between Toshiba Corporation, Japan and Toshiba JSW Turbine & Generator Pvt. Ltd. for transferring supercritical turbine manufacturing technology. The land development, civil work, engineering and procurement of equipment have commenced. The phased manufacturing of different components of Steam Turbine Generator is expected to commence from early 2011.

6. Vijayanagar Minerals Private Limited (VMPL)

During the financial year 2009-10, VMPL supplied 1.76 million tonnes of iron Ore from Thimmappanagudi Iron Ore Mines, vis-a-vis 1.50 million tonnes in the last financial year 2008-09. VMPL has planed to supply 2.5 million tonnes during the next FY 2010-11. VMPL is set to enhance the production capacity to 4 million tonnes in TIOM subject to Forest and Environment clearance.

7. JSW Severfield Structures Limited (JSSL) and its Subsidiary JSW Structural Metal Decking Limited (JSWSMD)

JSSL a Joint Venture Company was incorporated on 19 March 2009, with 50:50 Equity participation by the Company and Severfield- Rowen Mauritius Limited.

The Project having a capacity of 35000 tonnes per annum of Structural Steelwork facility is being set up at Vijayanagar Works and is under implementation.

JSSL 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. The Company is expected to start commercial production during FY 2010-11.

JSWSMD a downstream subsidiary company of JSSL being 67:33 joint venture with SMD Asia LLP, UK was incorporated on 18 December, 2009. JSWSMD will be engaged in the business of the design, roll forming and installation of structural metal decking and ancillaries, including shear connectors, for construction projects primarily In India but also covering Pakistan, Bangladesh, Nepal, Sri Lanka and Bhutan (Jointly the "Core Markets"). The Company is expected to start commercial production during FY 2010-11.

O. Associate Companies

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 operations at Vijayanagar Works. During the financial year 2009-10, the combined production of the oxygen plant module #1 and module # 2 of JPOCL was: gaseous oxygen - 1,009 million Nm3; gaseous nitrogen - 309 million Nm3; Liquid oxygen - 8.8 million Nm3; Liquid nitrogen - 14.8 million Nm3 and Argon - 12.5 million Nm3.

6. MOU WITH JFE

Your Company has signed a Strategic Collaboration Agreement with JFE Steel Corporation, the world renowned Japanese steel company on 19 November 2009 at Mumbai. This collaboration agreement provides an ideal platform for both the steel companies to come together and leverage each others strength to their mutual benefit.

The parties have in principle agreed, subject to (i) obtaining all regulatory approvals, (ii) entering into definitive agreements, and (iii) fulfilling all conditions precedent as may be agreed to between the parties in the definitive agreements, to collaborate with each other in India in the area of automotive steel including production technologies and supply of substrate materials for hot rolled, cold rolled and galvanized products. The scope also covers joint service activities including application engineering and product development for automotive customers. Separate detailed agreements which shall spell out the scope and time-frames will be executed between the two companies area by area.

JFE and the Company have also arrived at a broad consensus on the areas where possible mutual collaboration can be explored in India in the near future in accordance with applicable laws. The areas include:

1) Production of steel products other than automotive steel

2) Energy reduction programmes

3) Environmental programmes

4) Quality and yield improvement programmes

5) Performance audit of JSW facilities

6) Benchmarking of techno-economic parameters between the parties

7) Procurement of raw materials both in and outside of India

8) Project for building and operating an integrated steel production facility in JSWs West Bengal Steel Project

9) Mutual Stockholding

10) Other items which may come in the mutual interest of the parties.

Dedicated teams from both the Companies are working on certain areas identified in the Strategic Collaboration Agreement.

7. ACQUISITION OF COKING COAL MINES IN USA

The Company identified certain Coking Coal Assets in USA along with Railway Load out and Barge facility. Following the due diligence, the Board has approved the acquisition of these Assets. As per Companys estimates, these mines have resources aggregating to 123 million tonnes. The Company is in the process of formalising the acquisition. While one of these mines is operating, balance mines can be made operational over 24 Months. The business plan envisages commencing production of Coking Coal of 1 million tonnes in the first year to be ramped up to 3 million tonnes in 3rd year.

8. CREDIT RATING

Various long-term debt, medium term debt and bank facilities sanctioned and/or availed by the Company has been rated by Credit Analysis & Research Limited (CARE) as "CARE AA-" (Double AA minus).

The long term Non Convertible Debentures (NCDs) of the Company has also been assigned "CARE AA-" rating. "CARE AA-" indicates high safety for timely servicing of debt obligations and very low credit risk.

The short term debt/facilities sanctioned and/or availed by the Company has been assigned "PR1 +" rating by CARE. Short term NCDs have been assigned "PR1 +" rating. "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.

9. FIXED DEPOSITS

Your Company has not accepted any fixed deposits from 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.

10. SHARE CAPITAL

The Companys 99,00,000 11% Cumulative Redeemable Preference Shares of Rs. 10 each (11% CRPS) were redeemed at a premium of Re. 1 per share on 8 March 2010, along with dividend due thereon for the Financial year 2009-10 up to the date of redemption, at the stipulated rate of 11% per annum, in terms of the Circular Resolution passed by the Board on 17 February 2010. There were no other changes in the Share Capital of the Company during the Financial Year under review.

11. ISSUE OF WARRANTS TO SAPPHIRE TECHNOLOGIES LIMITED, A PROMOTER GROUP ENTITY ON A PREFERENTIAL BASIS

An issuance of 1,75,00,000 warrants convertible into equity shares, to Sapphire Technologies Limited, a Promoter Group Entity has been approved by the Board, subject to necessary approvals, including that of the Members in an Extra Ordinary General Meeting to be convened on 2 June 2010 for the purpose. Each of these warrants will be convertible into 1 (one) Equity Share of par value of Rs.10 each at the option of the Warrant holder within 18 months from the date of their allotment. The Warrants will be issued at a price not less than the minimum price determined as per the provisions of Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

The shareholding of 45% held by the promoters as on 31 March 2010 will increase to 49.71 % of the post issue share capital on conversion of the aforesaid 1,75,00,000 warrants without considering the equity shares that may be issued upon conversion, if any, of the Companys outstanding Foreign Currency Convertible Bonds (FCCBs).

12. 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 USS 325 Million to international investors to part finance the capital expenditure programme of the Company. Each Bond is convertible into equity shares 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 percent.

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

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 (USS 47.80 million in March 2009 & USS 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 USS 274.40 million.

13. DIRECTORS

Mrs. Savitri Devi Jindal, Mr. Anthony Paul Pedderand Mr. Uday M. Chitate, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Dr. Vijay Kelkar who was appointed by the Board of Directors of your Company in its meeting held on 20 January 2010 as an Additional Director w.e.f. 20 January 2010 in terms of Article 123 of the Articles of Association of your Company, holds office upto the date of the ensuing Annual General Meeting. Your Company has received a notice under Section 257 of the Companies Act, 1956 from a shareholder of your Company, signifying his intention to propose the name of Dr. Vijay Kelkar for appointment as a Director of your Company.

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

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 (KSIIDC) nominated Mr. N. C. Muniyappa, IAS as its nominee on the Board of your Company in place of Mr. V. Madhu, IAS w.e.f. 16 June 2009. Subsequently KSIIDC nominated Mrs. Vandita Sharma, IAS, as its nominee on the Board of your Company, in place of Mr. N. C. Muniyappa, IAS w.e.f. 19 November 2009.

UTI Asset Management Company Ltd. withdrew the nomination of Mr. G. R. Sundaravadivel as a Director of your Company w.e.f. 11 May 2009 and appointed Mr. B. Babu Rao in his place. Subsequently UTI Asset Management Company Ltd. withdrew the nomination of Mr. B Babu Rao as a Director of the Company w.e.f. 1 February 2010 since the Company paid the entire outstanding and there were no dues to UTI as on date.

Your Directors place on record their deep appreciation of the valuable services rendered by Mr. V. Madhu, IAS, Mr. N. C. Muniyappa, IAS, Mr. G. R. Sundaravadivel & Mr. B. Babu Rao during their tenure as Directors of the Company.

14. 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 (1B) of the Act.

15. 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.

16. 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.

17. AWARDS AND ACCOLADES

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

i. Karnataka Chapter Safety Award 2009: Unnatha Suraksha Puraskara, a trophy and certificate was presented for outstanding safety performance and management systems in Metals category of industries during 2006-08, by National Safety Council, Karnataka Chapter, on 09 September 2009 at Bengaluru.

ii. Greentech Environment Excellence Award 2009: Gold award in metal and mining sector for outstanding achievement in Environment Management (10 October 2009, Kovalam).

iii. ISO-14001:2004 Certification: Vidyanagar Township was recommended for certification of ISO-14001:2004 for environmental management practices, on 23 September 2009, by TUV Rheinland Group.

iv. National Award for Excellence in Energy Management 2009:

Excellent Energy Efficient Unit Award 2009 for Best Energy Management Practices (19,20 November 2009, Chennai), by CII- Godrej Green Business Centre.

v. PMs Trophy 2007-08: Runner-Up of the best performing Integrated Steel Plant in the country, known as Steel Ministers Trophy (declared on 13 November 2009).

vi. CII-EXIM Award 2009: "Commendation Certificate for Significant Achievement" for Business Excellence by Confederation of Indian - Industries, on 17 December 2009 at Delhi.

vii. IMC Ramkrishna Bajaj National Quality Award: "Performance Excellence Trophy in the Manufacturing Category* by Indian Merchant Chambers Quality Cell, on 19 March 2010 at Mumbai.

Individual and Team Recognitions:

1. Dr. Madhu Ranjan, VP (R & D and SS), has been conferred with Metallurgist of the Year Award - 2009 instituted by the Ministry of Steel, Govt, of India, at the 47th National Metallurgists Day Celebrations held on the 14 November 09 at Kolkata.

2. Oral Presentation Category at 63rd Annua! Technical Meet, Kolkata a. Second Prize was won by -

1. Mr. Pranav Tripathi

2. Mr. Sujay P. Patil

3. Mr. D. Satish Kumar

4. Mr. Abhijit Sarkar

5. Mr. P. C. Mahapatra

b. Third Prize was won by -

1. Mr G.S. Rathore

2. Mr Mukul Verma.

3. National Award for Excellence in Energy Management 2009

Most Useful Presentation Award was won by JSW Steel team for making excellent presentation, on 20 November 2009 at Cll-Godrej Green Business Centre, Chennai.

18. 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 an annexure to this report.

19. 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.

20. APPRECIATION

Your Directors take this opportunity to express their appreciation for the cooperation and assistance received from the Central Government of India, Republic of Chile, Central Government of Mozambique, USA and UK; the State Government of Karnataka, Maharashtra, Tamil Nadu, West Bengal and Jharkhand; 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 employees of the Company.

For and on behalf of the Board of Directors

Savitri Devi Jindal

Date: 3 May 2010 Chairperson

 
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