JINDAL STEEL AND POWER LIMITED
ANNUAL REPORT 2011-2012
Your Directors are pleased to present the 33rd Annual Report together with
the Statement of Accounts for the year ended on 31st March, 2012.
AUDITED FINANCIAL RESULTS
(Rs. in Crore)
Particulars Standalone Consolidated
Financial Financial Financial Financial
year ended year ended year ended year ended
31.03.2012 31.03.2011 31.03.2012 31.03.2011
Sales & other income 13,518.43 9,717.34 18,350.53 13,193.60
Profit before interest
and depreciation 4,246.95 3,725.72 6,935.11 6,398.17
Profit before tax 2,843.01 2,753.36 5,188.60 4,988.02
Profit after tax 2,110.65 2,064.12 4,002.26 3,804.01
Interim dividend - - 4.82 4.29
Final dividend 149.46 140.19 149.46 140.19
Corporate tax on dividend 3.15 3.75 25.03 23.44
General reserve 220.00 210.00 222.54 211.65
FURTHER ISSUE OF CAPITAL
During the period under report the Company has allotted 3,24,223 equity
shares of Rs. 1/- each on 12th December, 2011 against options granted
under the Company`s Employee Stock Option Scheme- 2005.
Your Directors recommend a dividend of Rs. 1.60 per equity share of
Rs.1/- each i.e. 160% for the financial year 2011-12. The total dividend
pay-out for the year will amount to Rs. 149.46 crore (excluding dividend
The Company has, on a consolidated basis, achieved an aggregate income of
Rs. 18,350.53 crore compared to previous year`s Rs. 13,193.60 crore.
Profit before tax has increased to Rs. 5,188.60 crore in 2011-12 from Rs.
4,988.02 crore in 2010-11. Profit after tax has also grown to Rs. 4,002.26
crore in the year under report from Rs. 3,804.01 crore in the previous
year. The Reserves and Surplus have touched Rs. 18,017.63 crore.
The Company produced 13,19,940 MT of Sponge Iron during the year under
report as against previous year`s production of 13,19,840 MT and achieved a
capacity utilisation of 96.35%.
The production of steel products during the year under report, compared to
previous year is given below:
Sl. Product Production in MT
No. (2011-12) (2010-11)
1. Finished steel products 19,44,434 15,85,327
2. Semi steel products 27,56,881 22,72,692
The Company produced 37,36,915 MT of pellets during the year under report
as against 27,87,285 MT in the previous year.
The Company generated 4,634 million Kwh of power during the year under
report as against last year`s 3,420 million Kwh of power.
Raipur Unit produced 1,778 metric tons of castings and has done machining
of 9,060 metric tons during the year under report as
against 1,569 metric tons and 8,613 metric tons respectively in the
The production of calibrated iron ore at captive mine at Tensa in Odisha
was 5.06 lacs MT as against previous year`s production of 6.69 lacs MT. The
Company has exported 2.45 lacs MT of iron ore fines as against 8.42 lacs MT
in the previous year. Coal production at captive mine was 59.98 lacs MT as
against previous year`s production of 59.99 lacs MT.
Following projects were completed during the year under report:
1. Power Plants
(i) 540 MW (4X135 MW) power plant at Dongamahua, Raigarh Chhattisgarh:
Under Phase-II, Unit I and II of 135 MW each power generation capacity were
commissioned in January, 2012. Both the Units have stabilised their
operations. With this, all the four Units of 135 MW each power generation
capacity set up at Dongamahua, Raigarh, Chhattisgarh are operational and
(ii) 810 MW (6x135 MW) power plant at Angul, Odisha: The Company is setting
up 810 MW (6x135 MW) captive power plant at Angul, Odisha for meeting power
requirement of its upcoming 6 MTPA integrated steel plant. Second Unit of
135 MW power generation capacity was commissioned in February, 2012. With
this, two units of 135 MW each are operational and generating power. Third
Unit of 135 MW power generation capacity is expected to be commissioned in
2. Machinery Division, Raipur, Chhattisgarh
The production capacity of Machinery Division of Raipur Unit has been
enhanced from 5,100 metric tons per annum to 10,000 metric tons per annum
by making investment in machine tools, expansion of covered area and
material handling equipment. The Company has received IBR Certification as
manufacturer of headers of Boilers and foundry items. This Division is
envisaging further expansion of its capacity by inclusion of more covered
area and material handling facility and has planned to install Alfa Set
Sand System in foundry for further improvement in product quality. The
Pressure Vessel Division with a capacity of 2,500 metric tons per annum has
started commercial operations.
PROJECTS UNDER IMPLEMENTATION
1. Steel Plant at Angul, Odisha
The Company is setting up 6 MTPA steel plant at Angul in the state of
Odisha. The following facilities are, at present, under installation:
1.1) Coal Washery (2x 600 TPH)
1.2) Sponge Iron Plant based on Coal Gasification (1.8 MTPA)
1.3) Steel Melting Shop (1.64 MTPA)
1.4) Plate Mill (1.5 MTPA)
1.5) Captive Power Plant (6x135 MW)
Out of the above facilities under implementation, the construction of Plate
Mill has been completed and is expected to be commissioned in financial
year 2012-13. Apart from this, work on raw material handling plant, beam
welding plant, cross country pipeline, raw water reservoir, in-take pump
house and a housing colony is at an advanced stage of implementation.
The following facilities are also being set up at Angul:
1.1) Coke Oven Plant (2.0 MTPA)
1.2) Sinter Plant (4.0 MTPA)
1.3) Pellet Plant (4.0 MTPA)
1.4) Blast Furnace (3.2 MTPA)
1.5) Sponge Iron Plant (2.0 MTPA)
1.6) Steel Melting Shop (4.36 MTPA)
1.7) Hot Strip Mill (4.5 MTPA)
Department of Water Resources, Government of Odisha has given permission
for drawing of 95.16 cusecs of water from river Bramhani for the plant.
Ministry of Environment & Forests, Government of India has issued
environmental clearance and Odisha State Pollution Control Board has issued
consent to establish for setting up of said steel plant. Technology
suppliers for Sinter Plant (4.0 MTPA), Blast Furnace (3.2 MTPA) and Sponge
Iron Plant (2.0 MTPA) have been finalised and discussions are under
progress for finalising technology suppliers for remaining facilities.
2) Steel Plant at Patratu, Jharkhand
The Company envisages setting up of 6 MTPA integrated steel plant at
Patratu in the state of Jharkhand and in its first phase, is implementing 3
MTPA steel plant.
Agreement has been signed with Government of Jharkhand for supply of 66.54
mcm of water from Damodar Basin for
the plant and an agreement with Jharkhand State Electricity Board is under
process of renewal for supply of 20 cusecs of water. Ministry of
Environment & Forests, Government of India has issued environmental
clearance and State Pollution Control Board, Jharkhand has issued consent
to establish for setting up of said steel plant. The Company has already
acquired 1,039 acres of land and process is on for acquiring balance 2,205
acres of land.
3) Steel plant, Raigarh, Chhattisgarh
The existing steelmaking capacity at Raigarh Works is 3 MTPA. Considering
the increasing demand for steel in coming years, the Company plans to
enhance steelmaking capacity at Raigarh Works to 11 MTPA and is in the
process of seeking various approvals. The Company has entered into
memoranda of understanding with the State Government of Chhattisgarh in
terms of which the State Government of Chhattisgarh will extend necessary
assistance to the Company in expeditiously obtaining various approvals,
coal and iron ore linkages, environmental clearances, acquisition of land
etc. for implementing the said expansion plan. Ministry of Environment and
Forests, Government of India has issued Terms of Reference (TOR) for the
proposed expansion in terms of which the Company has submitted draft
Environment Impact Assessment and Environment Management Plan to the
Chhattisgarh Environment Conservation Board, Raipur, Chhattisgarh.
In order to further improve and strengthen the present operations, the
following facilities are being added:-
3.1) Additional mill for pulverised coal injection is being set up which
will help in increasing the coal injection in Blast Furnace thereby
reducing the consumption of coal as well as improving the productivity.
3.2) Third Turbo-blower is being installed which will act as standby to the
existing two turbo blowers and ensure continuity of hot blast air to Blast
Furnace in case of shut down of any turbo.
3.3) Slab Caster upgradation is being done to increase the width of the
slabs. This will help in rolling the increased width plates from the Plate
3.4) Additional 6 Silos are being set up to blend different kinds of coal.
Low cost coal is blended with high grade coking coal to reduce the cost of
blended coal and thus reduces the cost of coke. This will reduce the cost
of conversion of hot metal in Blast Furnace.
3.5) Second Ladle Refining Furnace is being installed in Steel Melting Shop
- III which will increase steel-making capacity by increasing the capacity
of secondary steel making.
4. Pellet Plant at Barbil, Odisha
The Company is setting up one more 4.5 MTPA Iron Ore Pellet Plant with wet
grinding process at Barbil for which basic engineering and proprietary
equipment have been ordered. Water approval, environmental clearance and
consent to establish for setting up 10 MTPA Pellet plant at Barbil have
already been received. Detailed engineering agency has been finalised and
critical packages ordering is in progress. The pelletisation will be a
value added process of iron ore fines and better utilisation of powdery ore
available in the mines.
5. Shadeed Sponge Iron Plant
As a part of expansion, Shadeed Iron & Steel Co. LLC, Oman, a subsidiary
company, is setting up a 2 MTPA Steel Melting Shop. M/s Danieli, Italy has
been finalised as the technology and core equipment supplier and M/s Idom,
Spain has been finalised as the Engineering Consultant.
SUBSIDIARY COMPANIES AND THEIR
Jindal Power Limited (JPL), operating 1,000 MW (4 X 250 MW) power plant in
Raigarh (Chhattisgarh) has closed financial year 2011-12 with a total sales
of Rs. 3,040.35 crore and earned a profit after tax of Rs. 1,764.99
crore. JPL is expanding its power generation capacity by setting up 2,400
MW (4 X 600 MW)
power plant adjacent to its existing works. JPL envisages setting up hydro
projects in the State of Arunachal Pradesh in Joint Venture with Hydro
Power Development Corporation of Arunachal Pradesh Limited and thermal
power projects in the states of Jharkhand and Odisha. Shadeed Iron & Steel
LLC, Oman, operating 1.5 MTPA Hot Briquette Iron plant achieved sales of
Rs. 2,794.30 crore in the financial year 2011-12 and earned a profit after
tax of Rs. 244.17 crore. Jindal Mining SA (Pty) Limited, South Africa,
operating coal mines achieved a sales of Rs. 451.02 crore in the financial
year 2011-12 and earned a profit after tax of Rs. 38.18 crore.
Africa continent and Australia are rich in mineral resources and your
Company, through its subsidiary companies, is expanding its business
activities by acquiring, exploring and operating iron, coal, limestone and
base metals. The operations in Kiepersol Colliery in South Africa
stabilised over the last year enabling a ramp up of production in the
coming years. The Company also continues to pursue more opportunities in
mining of coal, iron ore and manganese in this country. In Mozambique, the
coking coal project is in the final stages of development. The sale is
likely to start in financial year 2012-13.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to Section 205C of the Companies Act, 1956, the Company has
transferred unpaid / unclaimed final dividend for financial year 2003-04
and interim dividend for financial year 2004-05 amounting to Rs.
20,03,753/- (Rupees twenty lacs three thousand seven hundred and fifty
three only) and Rs. 16,77,124/- (Rupees sixteen lacs seventy seven
thousand one hundred twenty four only) respectively to Investor Education
Protection Fund of Government of India. The details including last date for
claiming of unclaimed / unpaid dividend amount is given at the end of the
Notice of the Annual General Meeting.
EMPLOYEES STOCK OPTION
Details of allotment of shares made pursuant to Employees Stock Option
Scheme-2005 to the employees of the Company and its subsidiary, Jindal
Power Limited during the period under report is given below:
Sl. Series No. of Equity Date of
No. Shares Allotted Allotment
1 Series III (Part III) 3,24,223 12th December 2011
As required by clause 12 of SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 information with respect to active
Stock Options as on 31st March, 2012 is given in a separate statement as
Annexure-I forming part of this Report.
The equity shares continue to be listed on BSE Limited (BSE) and the
National Stock Exchange of India Limited (NSE). Both these stock exchanges
have nation-wide terminals and therefore, shareholders / Investors are not
facing any difficulty in trading in the shares of the Company from any part
of the country. The Company has paid annual listing fee for the financial
year 2012-13 to BSE & NSE and annual custody fee to National Securities
Depository Limited and Central Depository Services (India) Limited. Shares
issued against stock options have been listed and trading permission has
been granted by these stock exchanges.
The Company has not received any fresh deposits during the year under
report. The aggregate amount outstanding in respect of fixed deposits as on
31st March, 2012 was Rs. 37.22 crore against 6,938 fixed deposit holders.
Amount of deposits that have matured but were unclaimed as on 31st March,
2012 was Rs. 1.11 crore representing 384 deposit holders. Since then 39
deposits totaling Rs. 16.28 lacs have been paid.
IDBI Bank Limited has withdrawn nomination of Shri S. Ananthakrishnan from
the Directorship from the close of business hours on 27th February, 2012
and nominated Shri Inderpal Singh Kalra as Director w.e.f. 28th February,
2012. Smt. Savitri Jindal and Shri Naushad Akhter Ansari have resigned
from the Directorship of the Company w.e.f. 26th April, 2012 and 01st May,
2012 respectively. Shri Haigreve Khaitan, Shri Hardip Singh Wirk, Shri
Rahul Mehra and Shri Sushil Maroo, Directors of the Company will retire by
rotation at the forthcoming Annual General Meeting and being eligible have
offered themselves for re-appointment as Directors of the Company, liable
to retire by rotation, in the said meeting.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN
EXCHANGE EARNINGS AND OUTGO
Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read
with Rule 2 of the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988 regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given in
Annexure-II forming part of this report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975 as amended
from time to time, the particulars of employees are set out in Annexure-III
to this Report. However, as per provisions of Section 219(1)(b)(iv) of the
said Act read with Clause 32 of the Listing Agreement, 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.
your Company has implemented the conditions of Corporate Governance as
contained in Clause 49 of listing agreement. Separate reports on Corporate
Governance and Management Discussion and Analysis along with necessary
certificates are given elsewhere in this Annual Report as Annexure IV & V.
BUSINESS RESPONSIBILITY REPORT
Ministry of Corporate Affairs (MCA), Government of India has, in July 2011,
issued National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business (Guidelines). The Guidelines list out nine
principles and core elements on ethics, transparency and accountability,
sustainability, employee well being, responsiveness towards stakeholders,
promotion of human rights, environment protection, influencing public
policy, inclusive growth and equitable development, value to customers and
The Companies in India are adviced to follow these Guidelines for reporting
their initiatives and activities relating to corporate social
responsibilities (CSR). The Company`s vision, mission and core values
enshrine these principles which are integral to the business of the
Company. The Company engages in elaborate CSR initiatives, conducts
business with transparency and accountability, looks after well being and
protection of the employees with a human face, is responsive to the needs
of all its stakeholders and takes care of quality of the products
manufactured by it, gives priority to preservation and protection of
environment and prevention of pollution and believes that business is also
a medium to contribute to the social development. Initiatives undertaken
during the year under report in respect of corporate social responsibility,
environment protection, industrial relations and human resource management
etc. are mentioned in detail in the Management Discussion and Analysis
Report which forms a part of this report as Annexure V.
M/s S.S.Kothari Mehta & Co. (Firm Registration Number -0000756N), Auditors
of the Company hold office upto the conclusion of the ensuing Annual
General Meeting. The Company has received communication from them to the
effect that their appointment, if made, would be within the limits
prescribed under Section 224(1B) of the Companies Act, 1956. They are
proposed to be appointed as Auditors of the Company for the financial year
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to the requirement under sub Section 2AA of Section 217 of the
Companies Act, 1956, with respect to the Directors Responsibility
Statement, it is hereby confirmed:-
i) that in preparation of the annual accounts for the financial year ended
on 31st March, 2012, the applicable accounting standards had been followed
along with proper explanations relating to material departures.
ii) that the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company
for the year under report.
iii) that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and by preventing and detecting fraud and other irregularities.
iv) that the Directors had prepared the accounts for the financial year
ended on 31st March, 2012 on a `going concern basis`.
Your Directors wish to place on record their gratitude for the valuable
guidance and support rendered by the Government of India, various State
Government departments, Financial Institutions, Banks and various
stakeholders, such as, shareholders, customers and suppliers, among others.
The Directors also commend the continuing commitment and dedication of the
employees at all levels, which has been critical for the Company`s success.
The Directors look forward to their continued support in future.
For and on behalf of the Board
Place : New Delhi Naveen Jindal
Dated : 27th April, 2012 Chairman and Managing Director
ANNEXURES TO DIRECTORS` REPORT
Statement as at 31st March, 2012, pursuant to Clause 12 of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999.
Sl. Description Remarks
A. Options granted During the year 2011-12 no stock
options were granted to the employees
and Wholetime Directors of the Company
and its subsidiaries.
B. Pricing formula As approved by shareholders in their
Annual General Meeting held on 25th
July, 2005, price of shares arising on
exercise of Options is equivalent to
75% of the average of the daily closing
price of equity shares of the Company
during 30 trading days preceding the
date of grant of Options as quoted on
the BSE Limited, (BSE) or the National
Stock Exchange of India Limited (NSE)
wherever the trading volume of equity
shares in aggregate during the said
period is more.
C. Options vested 2,40,564 (Part III, Series II)
7,40,625 (Part III, Series III)
D. Options exercised 5,64,787
E. Total number of Ordinary 2,40,564 equity shares of Rs. 1/- each
Shares arising as a result of allotted on 14th April, 2011; 3,24,223
exercise of Options equity shares of Rs.1/- each allotted
on 12th December, 2011 aggregating to
5,64,787 equity shares of Rs.1/- each.
F. Options lapsed On account of leaving of service,
due to resignation, retirement or
otherwise, by the employees of the
Company and its subsidiary, 4,16,402
stock options lapsed during the
financial year 2011-12.
G. Variation of terms of Options NIL
H. Money realised by exercise Rs. 2,89,19,035/- (Includes premium of
of Options Rs. 2,83,54,248/-)
I. Total number of Options in Nil
J. Details of Options granted to:
i) Senior managerial personnel NA
ii) Any other employees who NA
received a grant in any one year
of Options amounting to 5% or
more of the Options granted
during that year.
iii) Identified employees who NA
were granted Options during any
one year, equal to or exceeding
1% of the issued capital
(excluding outstanding warrants
and conversions) of the Company
at the time of grant.
K. Diluted Earnings per Share Rs. 22.58
(EPS) pursuant to issue of
Ordinary Shares on Exercise of
Options calculated in accordance
with Accounting Standard
(AS) 20 `Earning Per Share.`
L. i) Method of calculation of The Company has calculated the
employee compensation cost employee compensation cost using the
intrinsic value method of accounting
to account for stock-based compensation
cost as per the intrinsic value
method for the financial year 2011-12.
ii) Difference between the The employee compensation cost would
employee compensation cost so have been increased by Rs.0.86
computed at (i) above and the crore.
employee compensation cost
that shall have been
recognised if it had used the
fair value of the Options.
iii) The impact of this The effect of adopting the fair value
difference on Profits and on method on the net income and earnings
EPS of the Company. per share is presented below:
(Rs. in crore)
Net Income, as reported 2,110.65
Add: Intrinsic Value
Compensation Cost (0.83)
Less: Fair value Compensation
Cost (Black Scholes Model) 0.03
Adjusted Net Income 2,109.79
Earning per share Basic Diluted
As reported 22.58 22.58
As adjusted 22.57 22.57
M. Weighted average exercise Options granted whose exercise price
price and weighted average fair is less than the market price of the
value of Options granted for stock (adjusted for stock split):
Options whose exercise price
either equals or exceeds or is
less than the market price of Weighted average Exercise Price : NA
Weighted average fair value : NA
N. A description of the method The fair value of each option estimated
and significant assumption used using the Black Scholes Options Pricing
during the year to estimate the Model after applying the following key
fair value of Options assumptions:
i) Risk free interest rate NA
ii) Expected life NA
iii) Expected volatility NA
iv) Expected dividend NA
v) The price of the underlying NA
shares in market at the time of
For and on behalf of the Board
Chairman and Managing Director
Place : New Delhi
Dated : 27th April, 2012
ANNEXURE - II
Particulars required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken:
1. Changing of motor connection from delta to star of FD fans of WHRB
boilers of 3x25 MW power plants.
2. Shifting of 23 kVA lighting load to the MLDB 1&2 (TG-3M - with lighting
energy saver) from MLDB 1&2 (TG-3M - without saver) in 3x25 MW power
3. Operated one transformer out of the two identified transformers having
tie breakers to reduce losses in 3x25 MW power plants.
4. Replacement of higher size raw water pump to appropriate smaller size in
2x55 MW power plant.
5. Installation of CFL lights (36 Watts, 80 nos.) in the sheds to meet
lighting requirement during holidays and plant shutdown hours in place of
lighting all the highbay luminaries (400 Watts, 420 nos.).
6. Installation of new smaller size annealing furnace for heat treatment of
small lot sizes of material (Capacity 5mtr. X 3 mtr. x 2.8 mtr.--20T) in
place of running small lot sizes in big annealing furnace ( Capacity 7mtr.
X 5 mtr. x 4.5 mtr.-40T).
7. Installation of lighting T/R in AHP of 2 x 25 MW power plant.
b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:
1. Installation of Beblac light energy saver of 150 KVA to reduce lighting
voltage in 2x25 MW power plant.
2. Installation of lighting timers in lighting SLDB`s of 2x25 MW power
3. Segregation of coke products by coke route modification in coke oven
4. Installation of soft starter in quenching pumps in coke oven plant.
5. Modification of wharf discharge mechanism in coke oven plant.
6. Changing of raw water pump motor from existing 180 KW to 132 KW as per
the requirement in Blast furnace-2.
7. Inclusion of Variable Voltage and Variable Frequency Drive in stock
house vibrofeeders (16nos-12X1.67kw &4X2.67kw) to reduce energy consumption
at Blast Furnace-1.
8. Online Nucleonic Moisture Transmitter in Coke Bunkers for reduction in
coke consumption in stock house of Blast Furnace-1.
9. Installation and commissioning of 15 KW solar photovoltaic power plant
at a cost of Rs. 16.47 lacs for meeting requirement of 11 hrs. lighting on
street between material gate to workshop (load 3.75 KW).
c) Impact of the measures at (a) and (b) for reduction of energy
consumption and consequent impact on the cost of production of goods:
1. Electrical power saving of 27 KW/hr is achieved in total 8 nos. of FD
2. Electrical power saving of 3.0 KW/hr is achieved due to shifting of
3. Electrical power saving of 15.5 KW/hr is achieved due to operation of
4. Electrical power saving of 15 KW/hr is achieved due to installation of
5. Reduction of energy consumption for shed lighting is approx. 55,351 KWHs
from October, 2011 to March, 2012.
6. Reduction of fuel consumption approx. 34 Ltrs. / ton of metal heat
treated in smaller size annealing furnace in place of large size annealing
7. Energy generation through Solar power for street lights (Per day
consumption 41.25 KWHs approx.). Reduction in import of power from state
electricity distribution company (approx. 15,056 KWHs per annum).
d) Total energy consumption and energy consumption per unit of production:
As per Form A given hereafter
FORM - A
Form for disclosure of particulars with respect to Conservation of Energy:
a. Power and fuel consumption
Current Year Previous Year
Unit in (`000 Kwh) 3,90,003.36 2,67,825.38
Total amount (Rs. in lacs) 19,748.46 12,413.33
Rate/Unit (Rs.) 5.06 4.63
(b) Own generation
i) Through diesel generator
Units (`000 Kwh) 1,077.16 25,373.17
Units per ltr. of diesel Oil 2.56 3.19
Cost / unit (Rs.) 16.88 13.20
ii) Through steam turbine / generator
Units (in `000 Kwh) 30,44,235.39 25,14,277.12
Units per ltr. of fuel Oil / Gas NIL NIL
Cost / unit (Rs.) NA NA
(a) Non Coking Coal*
Quantity (MTs) 69,46,609.03 55,04,543.91
Total cost (Rs. in lacs) 93,283.04 54,841.36
Average rate / MT (Rs.) 1,342.86 996.29
(b) Coking Coal**
Quantity (MTs) 10,70,586.70 11,33,058.00
Total cost (Rs. in lacs) 1,36,104.26 1,10,635.00
Average rate / MT (Rs.) 12,713.05 9,764.29
Quantity (MTs) 1,37,531.80 1,34,888.00
Total cost (Rs. in lacs) 20,518.40 18,584.00
Average rate / MT (Rs.) 14,919.02 13,778.00
IV. Furnace Oil
Quantity (K. ltrs) 1,18,678.06 1,02,843.00
Total cost (Rs. in lacs) 47,757.51 32,333.00
Average rate / Ltr (Rs.) 40.24 31.44
V. Others internal generation
Quantity NIL NIL
Total cost (Rs. in lacs) NA NA
Average rate / Kg. (Rs.) NA NA
* Used in the manufacturing of Sponge Iron / Power Plant.
** Used in Coke oven and ultimately consumed in Blast Furnace.
b. Consumption per unit of production:
Current Year Previous Year
For Sponge Iron Mfg. (unit / ton) 75.50 73.11
For Silico Magenese Mfg. (unit / ton) 3,966.15 4,564.90
For Slabs / Rounds / Beam /Blank Mfg. (unit/ton) 513.40 524.13
For Rails / Beams / Channels Mfg. (unit/ton) 145.99 173.03
For Plate / Coil Mfg. (unit / ton) 121.16 116.00
For Wire Rod (unit / ton) 229.02 314.54
For TMT Bar (unit / ton) 393.05 NIL
For Medium Light Section (unit / ton) 173.24 354.01
For Cement (unit / ton) 55.20 63.37
For Steel melting (Ingots & Casting) (unit/ton) 1,261.00 1,225.44
For Machine / Machinery parts Mfg. (unit / ton) 501.00 507.58
For Pellet (unit/ ton) 61.35 60.44
II. Fuel Oils
For Sponge Iron Mfg. (litre / ton) NIL NIL
For Sponge Iron Mfg. (mt. / ton) 1.36 1.37
For Silico Magenese Mfg. (mt. / ton) 0.69 0.39
For Power Plant (Kg / Kw) 0.98 0.95
B. TECHNOLOGY ABSORPTION
Efforts made in technology absorption as per Form B given below:
FORM - B
(Form for disclosure of particulars with respect to absorption)
Research and Development (R&D):
A. Specific areas in which R&D carried out by the Company:
1. Commissioning of new section 350 mm Dia cast round for seamless line
2. Development of Ultra Low Sulphur Steel round of 200 mm dia with sulphur
content 0.0015% max for line pipe application.
3. Study on root cause and remedial measures for occurence of fish cracks
in plates in collaboration with IIT Kanpur.
4. Development of boiler quality grade (ASTM A516Gr 70) with impact
guarantee of 27 J at -46 degC up to 63mm plate thickness.
5. Study on the effect of tundish argon gas diffuser on steel cleanliness.
6. Development of ultra low sulphur steel (S<0.002%) for API plates.
7. Study on root cause and remedial measures on formation of Rolled Burr
Pits (RBP) in parallel flange beams.
8. Development of structural grade E410 in accordance with IS 2062: 2006 in
section UB 457 X 152mm.
9. Development of sheet pile (Larson IV).
10. Development of medium light structurals (channels, angles and beams) in
following sections: Channel: 125-200mm, Angle: 100-200mm, Beam: 180 &
11. Trial development of lead steel (12L14) for wire rod application.
12. Installation of hearth monitoring system in Blast Furnace.
13. Blending non coking coal with coking coal for coke production without
deteriorating the coke quality for Mini Blast Furnace.
14. Establishing the standard deviation and variation of CSR and CRI
results between Main and Pilot Coke Oven.
15. Development of API X70 grade in coils up to 12 mm thickness.
16. Reducing the carbon rate in production of Silico Manganese in SAF.
B. Benefits derived as a result of the above R&D:
1. New section developed to cater to the customer requirements in the field
of seamless line pipe application.
2. New grade developed to cater to the stringent quality requirements of
the customers for critical line pipe application with extra low sulphur
3. The reduction in defects will reduce the rework cost. The dispatch
schedule will not get hampered due to elimination of rework activity on
4. By development of this new grade the Company is now able to supply
special quality plates in a new market segment.
5. A detailed report was generated on trial conducted at slab caster of the
Company and suggested to supplier for further modification in flow pattern
to improve the product quality.
6. The Company is in a position to supply plates in new market segment with
stringent quality standards.
7. Based on data analysis and observations, recommendations were given to
minimise RBP in structurals.
8. The Company is in a position to supply Beams in new market segment with
stringent quality standards.
9. The Company is in a position to supply Sheet Piles for new market
segment with stringent quality standards.
10. The Company is in a position to supply Medium Light structural grades
for new market segment with stringent quality standards.
11. New grade (12L14) has been developed to cater to the business in a new
market segment. "Free Cutting Steel - 12L14" has been developed which is
widely used as Machining quality steel grade.
12. The hearth monitoring system was installed in Blast Furnace-2 which
helps in controlling the PCI injection rate and oxygen flow through tuyers.
It also helps in continuous monitoring of the inside refractory wall
pattern in hearth.
13. This has led to considerable saving till now and will also generate
14. Trials confirm that average CSR of coke from pilot coke oven is 4
points lesser than Main coke oven and similarly average CRI of coke from
Pilot coke oven is 4 points higher than Main coke oven. With the help of
these results, trials can be conducted at pilot coke oven with the help of
which the values would be predicted at main coke oven with a higher
15. The Company is in a position to supply plates in a very prestigious
market segment with stringent quality standards.
16. Specific coal consumption (per ton) reduced.
C. Future Plan of Action:
1. Study on reduction of ovality in cast rounds.
2. Analysis of MMR of individual and blended coking coal for coal
characterisation and establishing the relationship to predict CSR and CRI
3. Study the root cause of formation and remedial actions for accretion
formation in DRI kilns with collaboration of National Council for Cement
and Building Materials, Ballabhgarh.
4. Establishing the correlation between CSR - CRI results of Pilot Coke
Oven and Commercial non recovery Coke Oven.
5. Optimisation of maximum percentage use of non coking coal in blending of
coking coal through pilot coke oven study to reduce the production cost.
6. Commissioning of slag detection system and study its effect on steel
7. Study on the enhancement of the Roll campaign life.
8. Study on root cause analysis and remedial measures for centerline cracks
in billets in low carbon grades.
9. Recycling and reuse of formed accretion in coal based DRI Kilns.
10. Study the Apex radius at MLSM.
D. Expenditure on R&D during 2011-12:
a. Capital : Rs. 2.51 crore
b. Recurring : Rs. 6.46 crore
c. Total : Rs. 8.98 crore
d. Total R&D expenditure as a percentage
of total turnover : 0.07% (turnover 13,270.67
Technology Absorption, Adaptation and Innovation:
a) Efforts in brief, made towards technology absorption, adaptation and
innovation and benefits derived as a result:
1. Development of safe and standard mechanism for Tuyers Pulling in Blast
2. Eliminating unwanted stoppage due to Pinch Roll in Plate Mill.
3. Realisation of burnt lance pipe in Blast Furnace.
4. Coke Flow control device in Coke oven.
5. Development of online replacement methodology of hearth spray cooling
header in Blast Furnace.
6. Minimising deviation in product quality due to sagging of Coal Throw
Pipe in DRI.
7. Modification in flow meter in transport air line in PCI in Blast
8. Boost production (quality & quantity) via innovative wireless system for
kiln temperature monitoring in DRI.
9. Process improvement for productivity & waste utilisation in DRI.
10. Process improvement for productivity of CTL-1 by innovative idea with
in-house material utilisation in Plate Mill.
11. Innovative practices for longer sequence in Slab Caster in SMS.
12. Add new gauge led display board in FM area in Plate Mill.
b) In case of imported technology (imported during the last 5 years
reckoned from the beginning of the financial year) following information
may be furnished.
1. Technology Imported:
1) RH degasser
1) 100T Electric Arc Furnace, Ladle Furnace and FES from Sarrale, Spain
1) Medium Light Structural Mill supplied by M/S Danielle
2) Slag grinding unit for production of cement using fly ash and blast
1) New straightening machine installed to straighten Beams beyond 700mm.
Technology and equipment supplied by SM S Meer
2. Year of import: as given above
3. Has technology been fully absorbed Rs. Yes
4. If not fully absorbed, areas where this has not taken place, reasons
thereof and future plan of action: N/A
FOREIGN EXCHANGE EARNINGS AND OUTGO
a. Activities relating to Export:
I) INITIATIVES TAKEN TO INCREASE EXPORT:
Further to the initiatives taken in 2010-11 to improve upon the offering of
the Company`s products in the export markets, significant progress was
achieved in various areas.
The total tonnage of steel products exported in the year 2011-12 was
2,69,000 MT against 2,00,000 MT last year registering a Year on Year growth
of 34%. Last year we could capture significant market share in the
neighbouring countries of the Indian subcontinent including Nepal,
Bangladesh and Sri Lanka. Against the general trend of lower international
prices visa-vis the domestic market, prices in the neighbouring countries
usually being governed by the domestic market sentiments are more
remunerative. Further, the lower freight incidence for these markets
compared to those for EU and MENA regions make them more attractive markets
In the cast round market internationally, which forms a large percentage of
total exports, this year the Company exported higher quantities of value
added alloy grades over the last year. Further while the Company generated
more business in the Seamless Pipe Industry, the Company has also been
successful in tapping into overseas forging industry. More efforts will be
made in this direction so that the Company is perceived as a producer of
value added steel and is able to carve out a niche in the international
Another significant development has been restrengthening of the Company`s
presence in the MENA region for structural section product range. A renewed
effort has been directed at promoting medium and heavy parallel flange
beams and columns for which MENA region offers a natural market. The
Company has been able to consistently register sales of structural sections
last year in this region, clocking 15,000 MT sale during second half of the
financial year 2011-12. The endeavour is to reach a level of approximately
5,000 MT per month of sales on a consistent basis in the coming year.
Regarding the development of rail business, while the order of Iranian
Railways system continued to be serviced during the year, discussions are
underway for supply of rails to other countries including Ethiopia, Brazil,
Saudi Arabia and Tunisia with many being in advance stages of sales cycle.
Experience gathered from supply of rails to Iranian Railways System and
aforesaid new avenues will enable the Company to obtain international
recognisation and certifications for development of rail business.
Last but not the least, establishment of a separate port recognition and
ship chartering desk at the Company has enabled it to streamline shipping
operations and commence a gradual shift of the business terms from FOB to
CNF, which, going forward, will be important in attracting greater buyer
interest from the international market.
II) DEVELOPMENT OF NEW EXPORT MARKET FOR PRODUCTS AND SERVICES AND EXPORT
This year the Company intends to have a special focus on the MENA region.
As per World Steel Association, steel use in MENA is forecast to resume
growth in 2012 at a rate of 7.9%. Other markets of special interest will
include countries in Latin America and South East Asia region. The focus on
MENA region will be aided by setting up of a service center in Dubai and
increasing the Company`s presence through new offices in the region to
strengthen the end customer base.
The Company`s upcoming state-of-the-art Plate Mill facility at Angul which
is equipped with latest wide plate rolling, finishing and heat treatment
facilities, will enable the Company to tap value added plate segment in the
international market. Advance production capabilities combined with
proximity to a port location makes it ideal for the high end plate export
b. Total Foreign Exchange used and earned
I) FOREIGN EXCHANGE USED : Rs. 256.83 crore
II) FOREIGN EXCHANGE EARNED : Rs. 1,428.84 crore
For and on behalf of the Board
Chairman and Managing Director
Place : New Delhi
Dated : 27th April, 2012
MANAGEMENT DISCUSSION AND ANALYSIS
The global economic environment, which was moving ahead steadily took
adverse turn in the middle of financial year 2011-12 due to the turmoil in
the euro zone and slow growth outlook on the US economy. The global
economic activities have slowed down and become more uneven. European
countries are facing financial turmoil because they could not reach a
consensus on restructuring their economies, debt and budgetary outlays in
the face of public protests. Public unrest swelled in some oil-producing
countries resulting in uncertainties in oil production/ price. Rising
international prices of crude oil have affected the global economies badly.
Japan was struck by the devastating earthquake and tsunami affecting, in
particular, developing economies.
The growth prospects have become more uncertain due to global economic
slowdown. The renewed stress has undermined financial markets and
institutions in developed economies. Global trade and capital flows have
declined, resulting in slow growth in emerging and developing economies
too. However, growth prospects in China, India, Brazil, Russia and South
Korea appear better and are expected to be stronger in view of projected
economic growth in these countries. The shift is clearly towards emerging
markets which are expected to spearhead the growth in the global economy.
The Indian economy is expected to grow by about 6.9% in financial year
2011-12, after having registered a growth rate of 8.4% in each of the two
preceding years. The agriculture and services sector performed well, but
overall industrial growth has slowed down. Manufacturing growth during the
financial year 2011-12 is expected to remain sluggish. Inflation remained
high for most of the period during the year, but came down substantially at
the year end. Supply-side factors have triggered inflation particularly in
food items. The tightening of monetary policy by Reserve
Bank of India in order to control inflation has resulted in slowing down of
investment and growth, particularly in the industrial sector. The growth
rate of investment in the Indian economy declined significantly during the
year under report. Interest rates have increased resulting in higher costs
of borrowings impacting profitability and internal accruals. Revenues of
the Government have remained less than anticipated and with higher than
budgeted expenditure, there is a strong possibility of high fiscal deficit.
Despite difficult conditions in the global economy, exports continued to do
better in financial year 2011-12 and are expected to grow at 14.3% in real
terms over and above 22.7% growth achieved in financial year 2010-11, as
per advance estimates of Economic Survey. Imports are likely to end the
year with a real growth rate of 17.5% as against 15.6% in financial year
OPPORTUNITIES AND THREATS
In financial year 2011-12, the world crude steel production reached
1,491.54 million tons which includes 72.20 million tons of crude steel
produced in India. India is the fifth largest steel producer at the global
front and is striving to become the second largest producer in the coming
years. Europe and the United States are showing weakness in industrial
production and as such their Gross Domestic Product is expected to grow by
less than 2.0% in 2012, as against an expected 9.0% and 6.5% growth in 2012
for China and India, respectively. In China, however, there is already
significant excess steelmaking capacity. Chinese crude steel capacity is
expected to be 840 million tons in 2012, which would be 22% in excess of
the expected consumption of 688 million tons during this period. In terms
of consumption, world steel use grew by 6.5% in 2011 whereas in India, it
grew at a much lower rate of 4.3%. As for 2012, it is expected that growth
of 5.4% in world steel consumption will come mostly from emerging economies
and 70% of world growth in steel over the coming years will come from these
economies with China and India making significant contribution. Rapid
infrastructure growth in the emerging economies will make them large
consumers of steel.
India is expected to perform better with consumption estimated to grow
faster due to increasing demand in oil and gas sector, huge spending on
infrastructure sector coupled with growth in other sectors, like, housing,
consumer durables, automobile, transportation, industrial applications etc.
Construction and Infrastructure sectors will, in particular, continue to be
consumers of steel in India. Moreover, stainless steel, is finding
innovative applications, due to its corrosion resistive property, in
industrial as well as domestic field.
India has acquired a central position on the global steel map with its
large steel plants, acquisition of global scale capacities, continuous
modernisation and upgradation of old plants, improving energy efficiency
and backward integration. Steel industry is playing a significant role in
the country`s economic growth. The Government expects steel production to
rise to 100 million tons per annum by financial year 2019-20. Global steel
giants from across the world have shown interest in the industry due to its
During 2009-11, average prices of iron ore increased at a CAGR of 46.7% and
that of coking coal grew by 30.2%. The impact of this rise in raw material
prices (based on usage per unit of steel production) on a steel player`s
profits is phenomenal. Raw material is in short supply and suppliers have
seemingly upper hand in fixing prices. Steelmaking has generally taken a
form of raw material processing or beneficiation and not the creator of
value. In response to these changes, the business model of steelmaking
needs to change suitably so that rise in prices of supply-constrained raw
materials is passed directly to steel customers and demand fluctuations of
customers are met with more flexible production responses.
Availability of iron ore and coal at competitive prices will be a challenge
for steel producers in India. Recent developments in connection with
allotment of public resources and decisions by the Supreme Court may lead
to policy shift by the Government. Public outcry and mobilisation of public
opinion against allotment and utilisation of scarce public resources is a
cause of concern. Acquisition of land for expansion and setting up of new
projects is becoming time consuming exercise and cause for delay in
execution. Power is also one of the main inputs for steel making and its
supply and pricing will decide the production and pricing of steel in the
With the restrictions in Karnataka iron ore mining, steel industry in India
is struggling to meet the production requirements. With severe shortage of
raw material, many units are likely to face shut downs. The Supreme Court
of India is presently supervising all mining activities in the Bellary and
Tumkur regions in the southern state of Karnataka after the Central
Empowerment Committee report indicated that mining had caused severe
environmental damage in the region. Karnataka produces approximately 18
million tons of iron ore annually. Steel manufacturers have
set up plants in the iron ore-rich region of Bellary. Indian steel makers
are now investing in iron ore exploration overseas with their domestic
growth largely affected by regulatory issues. This is despite the fact that
India is gifted with huge unexplored ore deposits.
Following the recent directive from the office of the President of India,
Coal India Limited (CIL) is currently agreement-bound to supply coal to the
power stations in the country. The state-owned CIL is the primary source of
coal for steelmakers, power producers and other industries to meet supply
requirements. With the major portion of coal supply going to power
producers, main sufferers of the fuel shortage will be steel mills and
cement producers. After this directive, it will be difficult for CIL to
maintain balance in distributing coal to steel mills, power producers and
the cement manufacturers.
Steel Industry in India seems to be positive despite continuing global
economic slowdown. This optimism stems from many factors. The Indian steel
industry is in some ways insulated from the events affecting steel industry
on a global scale as it does not rely on exports to the developed markets.
Despite high interest rates and marginal slowdown in economic activity, the
basic economic fundamentals will ensure stable performance of the economy
in coming years. The expected domestic consumption of steel in the
infrastructure and consumer durables sector is likely to see an upward
trend. A massive investment to the tune of about Rs. 50 lac crore in
infrastructure sector has been envisaged during the 12th Five Year Plan
starting this year. At the same time, there is a greater emphasis on the
manufacturing sector which is likely to witness growth in the coming years.
This highlights the potential of steel consumption growth as rough estimate
of incremental demand for steel in the country will be approximately 40
million tons in infrastructure sector alone.
Emergence of the rural market which is currently consuming a meagre 10 kg
per annum will contribute to overall consumption significantly buoyed by
projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana and Rajiv
Gandhi Awaas Yojana. In 2011, India`s per capita steel consumption stood at
57 kg compared to 1,157 kg in South Korea, 507 kg in Japan, 460 kg in
China, 284 kg in the US and World average of 216 kg.
Your Company has built strong fundamentals over the years and is
appropriately positioned to benefit from the expected increasing demand in
the country for steel. The steel production capacity is being enhanced by
setting up integrated steel plants in Angul (Odisha) and Patratu
(Jharkhand) and by increasing present steelmaking capacity of Raigarh Unit
(Chhattisgarh). The Company is procuring state-of-the-art technology for
these projects. Shadeed Iron & Steel Co. LLC, a subsidiary company is
planning to set up steelmaking facility with an annual production capacity
of 2.0 million tons. The proposed enhancement in the production capacity of
steel making is in line with the increasing consumption of steel and the
Company will be in a position to market its products. Marketing department
has been strengthened appropriately which is exploring various market
segments in India and abroad.
In view of expected overcapacity, increasing domestic market volatility and
margin pressures, the Company is changing its approach to suit the changing
market conditions. The Company is evolving itself to be able to respond to
vagaries of emerging markets in a better manner. It includes use of
improved technologies, cost efficiencies, greater partnering with key
customers, innovative pricing of products, broadening product service
offerings, focusing on more profitable and value added steel segments and
prioritising on markets. The Company is also taking steps to improve the
supply chain efficiency and special attention is given to operational
logistics. Enhancing supply chain flexibility and its robustness will not
only help the Company to compete in a dynamic economic environment but will
also enable it to enhance its market position. In terms of adapting to a
volatile environment, the Company is also working towards flexibility in
production and will also adjust its capacity utilisation to match market
conditions or adjust product mix to suit the demand prevailing in the
In view of planned enhancement of steelmaking capacity and with a view to
ensure constant supply of iron ore and coal, the Company has been pursuing
with Central and State Governments for allotment of iron ore and coal mines
and also for raw material linkages. Vigorous efforts are also being made
for acquisition of iron ore and coal mines in Australia and Africa
continent. Power, which is in short supply in the country, is another key
input for steel making. However, captive power generation is adequately
meeting the present power requirements of the steel manufacturing
facilities of the Company.
Power sector growth in the country has persistently lagged behind and acute
deficiency in power supply has provided enormous opportunities to the
private sector to enter this field of enterprise. Your Company is also in
the business of power generation through its subsidiary company, namely,
Jindal Power Limited (JPL), which is operating 1,000 MW (4x250 MW) power
plant at Tamnar (Chhattisgarh), the power generation capacity of which is
being enhanced by setting up another 2,400 MW (4x600 MW) power project. JPL
is also envisaging setting up of thermal and hydro power projects with an
estimated aggregate power generation capacity of 12,700 MW. This business
activity will add strength and speed to the growth of your Company and
ensure rich returns to all the stakeholders.
The Company`s overall operational performance has been satisfactory. During
the financial year 2011-12, it achieved sales and other income of Rs.
13,518.43 crore as against last year`s Rs. 9,717.34 crore, registering an
impressive growth of about 39%. Profit before interest and depreciation
increased from Rs. 3,725.72 crore to Rs. 4,246.95 crore, registering a
remarkable growth of about 14%. Profit before tax increased from Rs.
2,752.94 crore to Rs. 2,843.00 crore, registering a growth of about 3%.
Net profit increased by about 2% from Rs. 2,064.12 crore to Rs. 2,110.64
crore. Cash profit increased from Rs. 2,915.22 crore to Rs. 3,167.32
crore growing by about 9%. Reserves and surplus stood at Rs. 10,751.92
crore. Net block of assets including capital work in progress stood at Rs.
INTERNAL CONTROLS AND SYSTEMS
Irrespective of size of the business, internal controls and systems should
be efficient, effective and ever evolving. The business of the Company has
grown phenomenally, production capacities are being enhanced at a fair
speed, business activities are being diversified through subsidiaries
within the country and abroad, speed of flow of business information has
increased, demand for prompt decision making based on information and data
has also increased. Accordingly there is imperative need to revise and
update internal controls and systems regularly considering the quantity of
information, reports, records, documents, transaction statements etc.
generated continuously in the Company. Authentic information serves as a
strong foundation for effective decision-making which has long
lasting consequences on the business growth. The Company has set up
internal control systems and procedures which are compatible with size of
its business operations and anticipated enhancement in production
capacities and are being updated regularly to be in line with the business
requirements. Audit of operations, establishments, marketing offices and
stockyards is conducted quarterly by outside chartered accountant firms
appointed by Audit Committee to ensure that systems are adhered to and
controls are not flouted. Their reports cover all aspects of operations,
accounts, purchases, stores, production and marketing. Omissions and
deviations are properly recorded and discussed thoroughly in the Audit
Committee meetings and remedial actions suggested and monitored. Cost
Auditors are separately appointed to audit cost accounting records and
their report is discussed in the Audit Committee meetings before being
approved by the Board and submitted to the Central Government. The Audit
Committee monitors effectiveness and operational efficiency of internal
control systems periodically, provides valuable suggestions to improve the
business processes, systems and internal controls and briefs the Board of
Directors about the areas of concern. Annual internal audit plans are
prepared by internal auditors in consultation with Audit Committee and
audit is conducted in accordance with this plan. A separate department
headed by a senior officer looks after internal control systems and assists
internal auditors and the Audit Committee and provides desired inputs to
The increasing requirement of funds is consistent with the growing
business. Two main sources of funds are internal accruals and borrowing
from lenders. Internal accruals alone cannot fund the Company`s expansion
at existing works and setting up of new plants. The Company is raising
funds for working capital and project implementation from banks, financial
institutions and other lenders, nationally and internationally, which are
providing multiple financial facilities. Various credit options offered by
lenders are thoroughly examined to find out their competitiveness and based
on their terms and conditions, need based funds are borrowed. The financial
facilities are appropriately serviced and secured as per terms of sanction.
The Company`s senior management monitors the requirement and arrangement of
funds, servicing of debts and management of internal accruals. The Company
has arranged Rs. 4,277.93 crore from banks and FIs to meet capital
expenditure during the financial year 2011-12.
CORPORATE SOCIAL RESPONSIBILITY
The Company believes that business enterprises impact society and the
environment through their operations, products and services. With this
background the Company has, since inception, made sustained efforts for
upliftment of the underprivileged and backward people. As a responsible
corporate citizen, the Company is committed to community development and
believes that an effective growth policy must also take into account the
fulfilment of basic needs of people around its plants. It deploys resources
to help improve infrastructure, education, health, water, sanitation and
environment, among others, in the areas of its operation. CSR activities
undertaken during the year under report at the Company`s plants and mines
are briefly given hereunder.
i) Community Health
General health in India is a cause of concern, more so for the rural folk.
Socio-economic disadvantages like poverty, illiteracy and traditional
belief apparently make modern
medicalfacilitiesinaccessibletomostvillagers.TheCompany is providing world-
class health facilities to the people of Raigarh at the 100-bed multi-
specialty O. P. Jindal Hospital & Research Centre. The facilities include:
medicine, surgery, gynaecology, orthopeadics and pediatrics. The hospital
has four well-equipped operation theatres, a Cardiac ICU, a Burn ICU and a
Neo-Natal ICU. Mobile Medical Units with qualified medical professionals
regularly visited the villages around factories and mines and provided
essential health care services including on the spot diagnostic and
curative clinical facilities and free medicines. Mega health camps were
organised to address health issues of the people and health checkups were
conducted. Corrective surgery camp for Post Polio deformities followed by
Prosthesis were organised in association with Akhil Bhartiya Viklang Chetna
Parishad and Lions Club, Raigarh. Immunisation camps for cholera, dengue,
malaria, chickenpox, polio were held and voluntary blood donation camps
were conducted. Health awareness camps about health of women, infant and
child care, family planning, HIV, Malaria, T.B, leprosy, anaemia, hygiene
were also conducted. Specific referral cases were also assisted for
availing best possible medical facilities and financial assistance was
provided to the needy patients. Trauma Centre has started functioning at
Punjipathra, Raigarh to handle emergency medical cases. Free ambulance
facilities are available round the clock and takes patients to the
hospitals for treatment.
Education can single handedly rid the country of a number of social evils.
Education is pivotal to all round development. Access to quality
educational services still remains elusive for rural and backward people of
the country resulting in unemployment, poverty, health hazards etc. To
spread education and help transform lives, the Company has set up
educational and vocational training institutions under the banner of O.P.
Jindal Institute of Technology & Skills (OPJITS) at Angul, Patratu and
Godda. These institutions impart competence-based skill-oriented technical
and vocational training in multiple trades, such as, electrical work,
welding, carpentry, plumbing, fitting, computer operations, cutting and
tailoring, motor mechanic, masonry etc. O.P. Jindal Community Colleges
(OPJCC), established at Angul and Barbil (Odisha), Godda and Patratu
(Jharkhand), and Punjipathra (Chhattisgarh), are providing technical
courses duly recognised by NCVT and IGNOU. OPJCC emphasises employability
as well as educational and economic mobility. Vocational training
programmes prepare students for employment, entrepreneurship and further
studies. Programmes include plumbing, welding, masonry, air conditioning
and refrigeration, electronics, electrical wiring (industrial and home),
manufacturing and metallurgy. Nursing and paramedical programmes and
hospitality courses are new additions. OPJCC also operates four Industrial
Training Institutes (ITIs) that have been adopted under the Public Private
Partnership (PPP) Scheme of the Government of India. The ITIs are located
at Sarangarh, Kharsia, Gharghoda (in Chhattisgarh), and Barbil (in Odisha).
The Jindal Institute of Technology (JIT), Raigarh is affiliated to the
Chhattisgarh Swami Vivekanada Technical University, Bhilai and is
recognised by AICTE. The Institute offers 4-year undergraduate engineering
programmes in mechanical, electrical, electronics, civil and metallurgy
courses. The curriculum for the courses is diverse and enriching, which
helps students to deliver in new and creative ways. It has opened
opportunities for the students of Raigarh and surrounding villages to avail
of undergraduate technical qualification and multiplying their chances of
getting better remunerative employment. The Company is operating O. P.
Jindal School, a 10+2 coeducational school with all modern facilities at
Raigarh, which has over the years created competitive learning atmosphere
amongst students and developed keen interest in them to get higher
During the year under report, the Company provided scholarships, rewards
and recognition to meritorious students, created learning environment
through infrastructural support such as providing of tables and chairs,
electrification, science laboratory, school fee, uniform, books and access
to technology through computer labs, computers and printers, conducted
coaching classes for weaker students, appointed community teachers,
provided grants for school development, conducted adult education
programmesand opened adult education centres in Angul, Patratu and Raigarh,
organised quiz competition among school students, undertook repair and
renovation of school / college buildings, opened pre-nursery schools in
rehabilitation colonies and creche for workers` children, provided
transportation facility to students etc. which has increased attendance of
students in the schools.
iii) Community Infrastructure Development
One of the most important measures of an improved quality of life is the
reduction of the rural-urban divide. Easy access to modern amenities and
improved surroundings will help in reducing this divide. Company is making
efforts to create strong infrastructure that will meet the requirements of
rural communities around works, projects, mines which will enable them to
live in clean and improved surroundings complete with the basic amenities.
The Company has installed/ repaired borewells, submersible pumps, hand
pumps including PVC pipes for providing clean drinking water, constructed
boundary walls in schools, renovated classrooms, deepened/ cleaned and
constructed ponds and covered them with barbed wire fencing, constructed
drains, chabutaras, vocational training centre buildings, community halls,
bus stops and places of worship for the community, provided electrification
and transformers in the villages, promoted community participation in the
form of `shramdaan`, upgraded civic amenities, provided forward and
backward linkages for economic activities, constructed roads, community
halls, cultural stages, box culverts, gym halls, veterinary hospital
buildings and toilets etc.
iv) Sustainable Livelihood
The Company interventions in this area focus on institution building at the
grassroots to promote entrepreneurial capacities. This is done through
organising communities into Self Help Groups and training them on basics of
micro-enterprise. The other part relates to imparting a multitude of
vocational skills for better employability at individual level. Aimed to
generate additional income, such interventions also serve the crucial
purpose of developing community goodwill, which manifests in the rising
numbers of men and women coming together to work for a common cause.
During the year under report, the Company organised skill upgradation of
youth and women and promoted income generation activities through training
in apparel making and designing, stitching, cutting and tailoring,
embroidery, readymade garments, uniform making, mushroom cultivation,
mixture making , potato chips / papad making, mobile phones/ refrigerator/
air-condition repairing and gave financial support for running these
business activities. The Company also provided financial assistance in
other income generation activities like jute product making, vegetable,
poultry units and herbal products, organic herbal body care products, low
cost sanitary napkin, phenyl making, agarbatti making, leaf-cup making and
paper cup making, production of shoppers bags, bottle bags and decorative
items, promoted food preservation units like pickles, sauces, chutneys,
snacks, assisted in fly-ash brick making by village women and initiation of
vermi-composting units etc. In partnership with the district fisheries
department in Barbil, the Company is promoting scientific pisciculture
among the communities.
v) Sports, Art and Culture
Youth form a significant part of country`s population and the Company is
channelising their energy and directing it towards development of
communities. Company has collaborated with various village level youth
clubs in organising various sports and cultural events throughout the year
to identify and nurture exceptional talent and foster stronger community
During the year under report, the Company organised cricket, kabaddi,
volleyball tournaments, provided sports accessories like cricket kits and
uniforms, volleyball kits and uniforms and uniforms for kabaddis, diet
support to players, organised summer camps for kids, installed multi
gymnasium, provided new equipments, coaching facilities for nurturing young
talent and assisted in formation of youth sports / cultural clubs, provided
financial assistance for organising State level sports competitions and
cultural programmes, helped in increased participation in kala sangam to
promote traditional art and culture, provided support to karma (folk dance
- cultural) group, provided musical instruments and support to street plays
for awareness about AIDS, hygiene and sanitation.
vi) Rehabilitation and empowerment of physically challenged persons
The Company through O.P. Jindal Asha Vocational & Rehabilitation Centre
(OPJAVRC), commonly known as ASHA-The Hope, is empowering the differently
abled persons to augment their income and live a better life. The Centre is
providing the children with special needs, a platform to access community
based rehabilitation services involving early diagnosis and early
intervention apart from helping families to understand the special needs of
During the year under report, the Company has provided comprehensive
institution based rehabilitation services like physiotherapy, occupational
therapy, speech therapy, and special education, conducted community based
rehabilitation camps, provided counselling and guidance sessions and
distributed calipers and mobility aids, facilitated in seeking disability
certificate and railway concession from concerned authorities, arranged
participation in special sports programme conducted on world disability day
on 03rd December, 2011, provided training to people with disabilities
including women on various livelihood skills through the vocational
training programme initiated this year.
India lives in her villages and livestock are part of the rural development
in as much as it provides farmers a source of income. Farmers not only
produce food grains but also manage livestock and are heavily dependent on
it. The Company is promoting livestock and working for the development of
livestock in the operating areas. Veterinary
Health Camps for livestock were organised in the operating areas and
doctors visit regularly in such camps to provide treatment to the animals.
Vaccination drives were also organised to prevent poultry birds from
Ranikhet disease and other ailments.
The Company attempts to strike the right balance between environment and
growth. The manufacturing Units are operated in accordance with sound
environment management practices and utmost care is taken in forwarding the
green agenda. The Company`s Mission and Vision statement amply expresses
its approach to environment sustainability. The guiding principles
environment, need for sustainable development and importance for
environmental impact and social welfare, maximising participation of
employees, contractors, customers, communities and for that matter all
stakeholders in preserving the ecological balance, optimising use of
natural resources and striving for continuous improvement through
monitoring, regular review and adoption of latest technologies.
The environmental impact studies are conducted, necessary environmental
clearances are obtained and action plans are put in place for effective
compliances of all prescribed conditions, which comprises identification,
assessment and management of environment impact, integration of good
environment management practices, adoption of clean, energy efficient and
environment-friendly technologies, promotion of efficient use of energy and
natural resources, ensuring safe and proper storage, use and disposal of
materials, enhancing awareness and skill of employees, contractors,
suppliers and service providers for sound environment performance,
increasing the greenery in and around plant and coal mines, making project/
business Unit heads responsible for the implementation of environmental
laws and regulations, making the head of corporate environment department
responsible for co-ordination with all project/ Unit heads for
environmental compliance. The Company is complying with all statutory
requirements, environmental regulations and in accordance with the
guidelines published by the Ministry of Environment and Forest from time to
The best international practices on environment, occupational health and
safety areas are adopted at the Company`s Units and mines. The Company has
pursued the Environmental Management System (EMS) ISO 14001 and the
Occupational Health and Safety Assessment System OHSAS 18001 at its Units
resulting in improvement in waste management, water and energy
conservation, noise reduction, control of stack and fugitive emissions with
improved housekeeping, improved work zone environment have been certified
for ISO 14001 & OHSAS 18001 by reputed national and international
Environmental risk through air emission, noise and water pollution, solid
waste generation are identified through environmental impact assessment
studies and accordingly environment management plans and programmes are
adopted to eliminate and or minimise each adverse impact. The Company has
built up a strong Environment Management Department (EMD) having
multidisciplinary team of professional and technical staff at each of
Unit/mine reporting to Unit Head. EMD has established a modern
environmental laboratory having sophisticated instruments to monitor
environmental quality to assess the environmental risk.
The technology selection for new equipments is based on their environment
friendliness and the state of art pollution control devices are installed
to manage the terminal discharges. High efficiency Pulsejet bag filters,
Electro Static Precipitators, scrubbers & dust suppression systems etc are
installed at required locations to control air pollution. The Company has
installed online ambient air quality monitoring stations around the
factories to monitor air quality. Waste minimisation and its utilisation
are integral to the environment management efforts. The Waste gases from
DRI and Coke Ovens are utilised for generation of power. The flu gas from
Blast Furnace and Producer Gas Plant is used as fuel for running turbines.
Water conservation is done to the maximum and close circuit arrangement
exists to maintain zero discharge. The sewage from townships and office
areas are completely treated in Sewage treatment plants and the treated
sewage water is fully utilised for gardening and horticulture activities.
Rainwater harvesting is done through injection wells and water reservoirs.
The Company is expanding its rainwater-harvesting project to larger areas
including adjoining villages.
The Company, through extensive R & D activities, has identified various
solid wastes that could be used as productive inputs. The Company pursues
the policy of three R`s -- Recycle, Reduce and
Reuse - to manage its waste. Many innovative projects under "Wealth from
Waste" have been implemented for solid waste utilisation. Fly ash
utlilistaion avenues includes cement products & concrete manufacturing,
land development, road embankment construction, ash dyke raising, building
products such as bricks/ blocks/ tiles, reclamation of coal mine and as a
soil amender and source of micro and macro-nutrients in agriculture. Power
is generated from coal rejects, fines and middlings in AFBC boilers. Blast
furnace slag is 100% reused in cement manufacturing and along with ash in
A total of about 12.5 million bricks were produced in the year under report
and are used in various construction activities. Tailor made Sinter Plant
will utilise mill scale and flu dust generated in Blast Furnace. SMS slag
is used for road making. The vermi-compost plant allows conversion of
organic waste to manure by using earthworms and the resultant manure is
used for the purpose of gardening.
To promote a green and clean environment, the Company continuously
implements the concept of Green Productivity and takes preventive measures
in and around its factories and mines. Conservation of natural resources
and pollution control initiatives feature as a part of its operation
module. Environment planning and preservation is an integral part of its
project activities. The Company undertakes afforestation programmes
covering vast tracts of land in and around factories and mines in a
concerted bid to counter the growing ecological threat.
Tree plantation is integral to the environment management plan of the
Company. Mass tree plantation programmes are regularly organised in
consultation with the Forest Department covering vast tracts of land in and
around factories and mines in a concerted bid to increase green cover of
the area. Green belts are properly maintained. More than 2.1 lacs saplings
were planted in the year under report. Till date the Company has planted
more than 45 lacs trees. Saplings are also given to villagers free of cost
to encourage greenery.
Training is imparted to employees for environment protection and
recognition through awards like `Green Department`. Programmes are also
conducted for environment awareness by conducting seminars, annual flower
and vegetable shows, observing World Environment Day etc.
INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT
The Company is fast emerging as a global company with strong fundamentals.
This has been possible due to strong leadership at the top and very capable
and dynamic leadership teams built across the organisation. The key of
success has been the employees and the constant endeavour of the Company
has been to hone and harness the best potential of each individual employee
to become leader in the function and area where they work. Role of Human
Resource Department (HRD) as a function of the Company has been fourfold:
As an analyst to business As an intervention specialist As a change
manager, and As an evaluator
The above fourfold role is infused within the organisation and the whole
process of the above Plan, Do, Check and Act (PDCA) mechanism has become
the DNA of the Company.
Strategic integration of HR as a part and parcel of all business decisions
and transactions has been the hallmark of the Company. It has been possible
due to careful and deliberate designing of the whole decision making
process in the organisation in such a manner where people matters are core
focus of delivering business result as the Company strongly believes in
creating high performance work culture and winning team in its journey.
The Competency Framework of the Company is derived from its core values.
Assessment and reward is based on objective criteria to assess the
achievements and the behavioural attributes having clear linkages with the
Company`s core values. The process of panel review at different career
group levels has been institutionalised in the Company which lay emphasis
on talent ownership and corresponding decision on vertical and horizontal
movement, inculcating values of meritocracy, rewarding high performance and
develop Individual Development Plans (IDPs).
Leadership frame of identifying top, early and future leaders has started
giving rich dividends in terms of capable leaders in the organisation, Wave
One - succession planning has been institutionalised to ensure robustness
in the leadership system. The value based reward and recognition system
covering all levels of executives has been institutionalised and executives
of different categories are being rewarded on the overall group level,
business level, unit level and department level. This year HRD has also
started Large Scale Interactive Program (LSIP) across the organisation to
align employees with the Company`s Core values.
The Company has made remarkable progress in adding housing facilities and
other amenities at the works / mines. The hallmark of organisational
hygiene of the Company has been maintained in all aspect of working life of
the employees and people around the works / mines. Requisite measures are
undertaken from time to time to maintain high levels of safety at all the
works / mines. Policies are reviewed and modified in consonance with the
new business challenges/content.
Overall maturity in HR process in the organisation was well recognised and
the Company has been awarded by various reputed organisations. Some of the
recent awards are:
Greentech HR Excellence Gold Award 2012 in the categories of Training,
Excellence and Innovation in Employees Retention Strategies.
Strong Commitment to HR Excellence during 2nd CII National HR Excellence
Asia Pacific HR Excellence Award 2011 for Organisation with Innovative HR
Practices (1st Prize).
Indian National Suggestion Schemes Association (INSSAN) Organisational
Excellence in Suggestion Scheme. Winner in 24th Regional Works Skill
Competition (Eastern Region) in Refrigeration & Instrument Mechanic Trade
Winner in 11th National Supervisory Skills Competition in Operation &
Production Category 2011-12. Confederation of Indian Industry (CII)
National HR Excellence Award 2011 commendation for `Strong commitment to
Human Resource Excellence`.
The Company Secretary, as Compliance Officer, ensures compliance of the
Companies Act, 1956, the SEBI regulations and provisions of the Listing
Agreements. Compliance certificates are obtained from various Units of the
Company and the Board is informed of the same at every Board meeting.
This report contains projections, estimates and expectations etc. which are
just "forward-looking statements". Actual results could differ from those
expressed or implied in this report. Important factors that may have impact
on Company`s operations include economic conditions affecting demand /
supply and price conditions in the domestic and overseas markets, changes
in the Government regulations / policies, tax laws and other statutes and
other incidental factors. The Company assumes no responsibility to publicly
modify or revise any forward looking statements on the basis of any future
events or new information. Actual results may differ from those mentioned
in the report.
For and on behalf of the Board
Place : New Delhi Naveen Jindal
Dated : 27th April, 2012 Chairman and Managing Director