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DRAFT LETTER OF OFFER

January 25, 2006


For Equity Shareholders of the Company Only

JSW STEEL LIMITED


(Originally incorporated as Jindal Vijayanagar Steel Limited on March 15, 1994
The Company’s name was changed to JSW Steel Limited on June 16, 2005.)
Registered Office: Jindal Mansion, 5A, G. Deshmukh Marg, Mumbai 400 026. The Registered Office of the Company was shifted from
P.O. Toranagallu Village, Sandur Taluk, Bellary District, Karnataka effective April 29, 2005 (For changes in name and our registered office
see “History of our Company and Other Corporate Matters” on page [●] of this Draft Letter of Offer.)
Tel: (91 22) 2351 3000 Fax: (91 22) 2352 6400
E-mail: rightsissue@jsw.in; Website: www.jsw.in
Contact Person: M H Kapadia, Company Secretary
For private circulation to the Equity Shareholders of the Company only
DRAFT LETTER OF OFFER
ISSUE OF 19,624,398 EQUITY SHARES OF Rs. 10 EACH FOR CASH AT A PREMIUM OF RS. [•] PER EQUITY SHARE
AGGREGATING RS. [●] TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF ONE EQUITY SHARE
FOR EVERY EIGHT EQUITY SHARES HELD ON THE RECORD DATE. FOR EVERY EQUITY SHARE SUBSCRIBED AND
ALLOTTED ON RIGHTS BASIS, THE EQUITY SHAREHOLDERS WILL RECEIVE ONE SERIES A WARRANT AND ONE
SERIES B WARRANT. THE ISSUE OF EQUITY SHARES, SERIES A WARRANTS AND SERIES B WARRANTS WILL BE
COLLECTIVELY KNOWN AS THE “ISSUE”. THE ISSUE PRICE OF EACH EQUITY SHARE IS [•] TIMES THE FACE VALUE
OF THE EQUITY SHARE. TOTAL ISSUE EXCLUDING CONVERSION OF WARRANTS INTO EQUITY SHARES WOULD
AGGREGATE RS. [●] MILLION.
GENERAL RISKS
Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in this Issue unless they
can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment
decision in this Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including
the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does
SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to “Risk Factors” on page [•] of this Draft
Letter of Offer before making an investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information
with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer
is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are
honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or
the expression of any such opinions or intentions misleading in any material respect.
LISTING
The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (Designated Stock Exchange) (“BSE”), The
National Stock Exchange of India Limited (“NSE”) and the Bangalore Stock Exchange Limited (“BgSE”). The Company has received “in-
principle” approvals from BSE, NSE and the BgSE for listing the Equity Shares, Series A Warrants and Series B Warrants arising from this
Issue vide letters dated [•], [•] and [•], respectively.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

SBI CAPITAL MARKETS LIMITED KARVY COMPUTERSHARE PRIVATE LIMITED


202, Maker Tower E Karvy House, 46 Avenue 4,
Cuffe Parade Street No. 1,
Mumbai 400 005 Banjara Hills,
Tel: (91 22) 2218 9166 Hyderabad 500 034.
Fax: (91 22) 22188332 Tel: (91 40) 2331 2454, 2332 0751
Email: jswrights@sbicaps.com Fax: (91 40) 2331 1968
Website: www.sbicaps.com Email: jswrights@karvy.com
Contact Person: Rohan Talwar Website: www.karvy.com
Contact Person: Murali Krishna

ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR REQUEST FOR ISSUE CLOSES ON
SPLIT APPLICATION FORMS
y y y
TABLE OF CONTENTS

ABBREVIATIONS & TECHNICAL TERMS .............................................................................. 1


PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA ............. 4
FORWARD-LOOKING STATEMENTS ..................................................................................... 5
RISKS AND CONCERNS .......................................................................................................... 6
SUMMARY ................................................................................................................................. 18
THE ISSUE .................................................................................................................................. 19
SELECTED FINANCIAL INFORMATION ................................................................................ 20
GENERAL INFORMATION ....................................................................................................... 23
CAPITAL STRUCTURE .............................................................................................................. 27
OBJECTS OF THE ISSUE .......................................................................................................... 38
BASIS FOR ISSUE PRICE .......................................................................................................... 45
STATEMENT OF TAX BENEFITS ............................................................................................. 47
INDIAN STEEL INDUSTRY ....................................................................................................... 51
BUSINESS ................................................................................................................................... 57
REGULATIONS AND POLICIES ............................................................................................... 70
HISTORY OF OUR COMPANY AND OTHER CORPORATE MATTERS ................................ 72
MANAGEMENT ......................................................................................................................... 76
PROMOTERS AND PROMOTER GROUP ................................................................................ 85
GROUP COMPANIES ................................................................................................................ 90
OUR ASSOCIATE COMPANIES ............................................................................................... 97
RELATED PARTY TRANSACTIONS ......................................................................................... 100
FINANCIAL STATEMENTS ....................................................................................................... 102
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY ................................ 127
MANAGEMENT DISCUSSION AND ANALYSIS .................................................................... 129
INFRASTRUCTURE ................................................................................................................... 144
DESCRIPTION OF CERTAIN INDEBTEDNESS ...................................................................... 146
OUTSTANDING LITIGATIONS AND DEFAULTS ................................................................... 148
GOVERNMENT APPROVALS ................................................................................................... 166
STATUTORY AND OTHER INFORMATION ............................................................................ 175
TERMS OF THE ISSUE .............................................................................................................. 186
MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ................................................ 205
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ...................................... 213
DECLARATION .......................................................................................................................... 214
ABBREVIATIONS & TECHNICAL TERMS

In this Draft Letter of Offer, the terms “we”, “us”, “our”, “the Company” or “JSWSL”, unless the context
otherwise implies, refer to JSW Steel Limited. All references to “Rs.”or “INR” refer to Rupees, the lawful
currency of India, “USD” or “US$” refer to the United States Dollar, the lawful currency of the United States of
America, references to the singular also refers to the plural and one gender also refers to any other gender,
wherever applicable, and the words “Lakh” or “Lac” mean “100 thousand” and the word “million” means “10
lakh” and the word “crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or
“100 crores”. Any discrepancies in any table between the total and the sums of the amounts listed are due to
rounding off.

General Terms and Abbreviations

AGM Annual General Meeting


Articles Articles of Association of the Company
AS Accounting Standard
Auditor Refers to Lodha & Co., Mumbai, unless otherwise specified.
BgSE Bangalore Stock Exchange Limited
Board of Directors of JSW Steel Limited, which term shall include a
Board or Board of Directors
committee of the Board of Directors.
BSE Bombay Stock Exchange Limited
Capital or Share Capital Share Capital of the Company
CDSL Central Depository Services (India) Limited
DP Depository Participant
Companies Act The Companies Act, 1956, as amended from time to time
Equity Share(s) or Share(s) Means the Equity Share of the Company having a face value of Rs. 10 unless
otherwise specified in the context thereof
Equity Shareholder Means a holder of Equity Shares of the Company
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999
FERA Foreign Exchange Regulation Act, 1973
FI Financial Institutions
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws
FY / Fiscal Financial Year ending March 31
GBP Great Britain Pound Sterling
GOI Government of India
HUF Hindu Undivided Family
Issuer JSW Steel Limited, a company incorporated under the Companies Act and
having its registered office at Jindal Mansion, 5A, G. Deshmukh Marg,
Mumbai 400 026
IT Act The Income Tax Act, 1961 and amendments thereto
ITAT Income Tax Appellate Tribunal
Memorandum Memorandum of Association of the Company
MoU Memorandum of Understanding
NIC National Industrial Classification
NR Non Resident
NRI(s) Non Resident Indian(s)
NSE National Stock Exchange of India Limited
NSDL National Securities Depository Limited
OCB Overseas Corporate Bodies
RBI The Reserve Bank of India
ROC Registrar of Companies, Maharashtra at Mumbai, located at 100, Everest,
Marine Drive, Mumbai 400 002
SEBI Securities and Exchange Board of India
SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto
SEBI DIP Guidelines The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by
SEBI on January 19, 2000 read with amendments issued subsequent to that
date
SIA Secretariat for Industrial Assistance

1
Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 as amended to date
VRS Voluntary retirement scheme

Issue Related Terms and Abbreviations

CAF Composite Application Form


Co Lead Manager I-Sec
CDR Corporate Debt Restructuring
Consolidated Certificate In case of physical certificates, the Company would issue one certificate for
the fully paid up equity shares, one certificate for the partly paid up equity
shares and one certificate for each Series of Warrants allotted to one folio
(“Consolidated Certificate”). In case of partly paid up equity shares the
certificate shall indicate that Equity Shares are partly paid in nature. The
Equity Shareholders shall be sent an insignia to be placed on each certificate
to indicate that such Equity Shares are now fully paid in nature upon
conversion of the Equity Shares into fully paid up Equity Shares. The
certificate for the Warrants shall be issued by the Company also upon
conversion of the Equity Shares into fully paid up Equity Shares.
Designated Stock Exchange The designated stock exchange for the Issue shall be BSE .
Draft Letter of Offer Draft letter of offer dated January 24, 2005 filed with SEBI for its comments
DSE Delhi Stock Exchange Association Limited
Enam Financial Consultants Private Limited, a company incorporated under
Enam the Companies Act and having its registered office at 801/802, Dalamal
Towers, Nariman Point, Mumbai 400 021
Issue Issue of 19,624,398 Equity Shares for cash at a premium of Rs. [●] per
Equity Share aggregating Rs. [●] to the Equity Shareholders on rights basis in
the ratio of one Equity Share for every eight Equity Shares held on the
Record Date. For every Equity Share subscribed and allotted on rights basis,
the Equity Shareholders will receive one Series A Warrant and one Series B
Warrant
Issue Closing Date [●]
Issue Opening Date [●]
Issue Price Rs. [●] per Equity Share
Investor(s) Shall mean the holder(s) of Equity Shares of the Company as on the Record
Date, i.e. [•] and Renouncees
I-Sec ICICI Securities Limited ,a company incorporated under the Companies Act
and having its registered office at ICICI Centre, H.T. Parekh Marg,
Churchgate, Mumbai 400 020
JISCO Jindal Iron and Steel Company Limited, a company that was incorporated
under the Companies Act and had its registered office at Jindal Mansion, 5A,
G. Deshmukh Marg, Mumbai 400 026 before it was amalgamated with the
Company as of April 1, 2003
JSW Holdings Jindal South West Holdings Limited, a company incorporated under the
Companies Act and having its registered office at Jindal Mansion, 5A, G.
Deshmukh Marg, Mumbai 400 026
JVSL Jindal Vijayanagar Steel Limited
KMCC Kotak Mahindra Capital Company Limited, a company incorporated under
the Companies Act and having its registered office at 3rd Floor, Bakhtawar,
229, Nariman Point, Mumbai-400 021, India
KSIIDC Karnataka State Industrial Investment and Development Corporation Limited
Lead Manager(s) SBI CAP, Enam and KMCC
Letter of Offer / LOF Letter of Offer dated [•] as filed with the Stock Exchanges after incorporating
SEBI comments on the Draft Letter of Offer
Offer The Issue of Equity Shares and Warrants pursuant to the Letter of Offer
Vice Chairman & Managing Sajjan Jindal, a resident of India
Director
Promoters Sajjan Jindal and Savitri Devi Jindal, both residents of India and Jindal South
West Holdings Limited, a company incorporated under the Companies Act
and having its registered office at Jindal Mansion, 5A, G. Deshmukh Marg,
Mumbai 400 026

2
Record Date [●]
Registrar to the Issue or Karvy Computershare Private Limited
Registrar
Renouncees Shall mean the persons who have acquired Rights Entitlements from Equity
Shareholders
Rights Entitlement The number of Equity Shares and Warrants that a shareholder is entitled to in
proportion to his/her shareholding in the Company as on the Record Date
SBICAP SBI Capital Markets Limited, a company incorporated under the Companies
Act and having its registered office at 202, Maker Tower – E, Cuffe Parade,
Mumbai 400 005, India
Stock Exchange(s) Shall refer to the BSE, NSE and BgSE where the Shares of the Company are
presently listed
Warrant(s) Shall collectively refer to the Series A and Series B Warrant.
Warrant Conversion Price Price at which Warrants can be exercised for conversion into Equity Shares
of the Company. For details, please refer to “Terms of the Issue” at page [●]
of this Draft Letter of Offer.
Warrants Entitlement The number of Warrants that a shareholder is entitled to on rights basis under
this Issue.
Warrant Conversion Period Shall mean from the date of allotment of Equity Shares in this Issue, (i) 18 to
36 months in the case of Series A Warrants; and (ii) 24 to 48 months in the
case of Series B Warrants

Company and Industry Terms and Abbreviations

BOF Basic Oxygen Furnace


CAGR Compounded Annual Growth Rate
CCP Continuous Casting Plant
CIF Cost Insurance Freight
CRCA Cold Rolled Cold Annealed
CRM Cold Rolling Mill
DG Set Diesel Generator Set
Shall collectively refer to the manufacturing facilities of the Company located at
Downstream
Tarapur, Maharashtra and Vasind, Maharashtra
ECEPL Euro Coke & Energy Private Limited
EIISPL Euro Ikon Iron & Steel Private Limited
EPCG Scheme Export Promotion Capital Goods Scheme
FOB Freight on Board
GP/GC Galvanised Plain/Galvanised Corrugated
HR Hot Rolled
JPL JSW Power Limited
JPOCL Jindal Praxair Oxygen Company Private Limited, a company incorporated under
the Companies Act and having its registered office at Vidyanagar, Bellary,
Karnataka
JSWEL JSW Energy Limited, a company incorporated under the Companies Act and
having its registered office at Jindal Mansion, 5A, G.Deshmukh Marg Mumbai
KW Kilo Watt
LPG Liquified Petroleum Gas
MGD Million Gallons per day
MSEB Maharashtra State Electricity Board
MTPA Million Tonnes per Annum
MW Mega Watt
NMDC National Minerals Development Corporation
OECD Organisation for Economic Co-operation and Development
PPA Power Purchase Agreement
RINL Rashtriya Ispat Nigam Limited
SAIL Steel Authority of India Limited
Upstream Shall mean the manufacturing facility of the Company located at Toranagallu,
Bellary, Karnataka
VMPL Vijayanagar Minerals Private Limited, a company incorporated under the
Companies Act and having its registered office at Toranagallu, Bellary 583 123,
Karnataka

3
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA

Unless stated otherwise, the financial information used in this Draft Letter of Offer is derived from the
Company’s restated unconsolidated financial statements as of and for the years ended March 31, 2001, 2002,
2003, 2004 and 2005 and for the six months ended September 30, 2005, prepared in accordance with Indian
GAAP and the Companies Act and restated in accordance with SEBI Guidelines, as stated in the report of our
statutory Auditors, M/s. Lodha & Co, Chartered Accountants, included in this Draft Letter of Offer.

Our fiscal year commences on April 1 and ends on March 31 of a particular year. Unless stated otherwise,
references herein to a fiscal year (e.g., fiscal 2005), are to the fiscal year ended March 31 of a particular year.

In this Draft Letter of Offer, any discrepancies in any table between the total and the sum of the amounts listed
are due to rounding-off.

There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the
Indian GAAP financial statements included in this Draft Letter of Offer will provide meaningful information is
entirely dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP,
Companies Act and SEBI Guidelines. Any reliance by persons not familiar with Indian accounting practices on
the financial disclosures presented in this Draft Letter of Offer should accordingly be limited. The Company has
not attempted to explain these differences or quantify their impact on the financial data included herein, and the
Company urges you to consult your own advisors regarding such differences and their impact on financial data.

Market and industry data used in this Draft Letter of Offer has been obtained from industry publications and
internal Company reports. Industry publications generally state that the information contained in those
publications has been obtained from sources believed to be reliable but that their accuracy and completeness are
not guaranteed and their reliability cannot be assured. Although we believe market data used in this Draft Letter
of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed
by us to be reliable, have not been verified by any independent source.

4
FORWARD-LOOKING STATEMENTS

We have included statements in this Draft Letter of Offer which contain words or phrases such as “will”, “aim”,
“is likely to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”,
“contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar
expressions or variations of such expressions, that are “forwardlooking statements”.

All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause
actual results to differ materially from those contemplated by the relevant forward-looking statement. Important
factors that could cause actual results to differ materially from our expectations include but are not limited to:

• General economic and business conditions in the markets in which we operate and in the local, regional and
national economies;
• Increasing competition in or other factors affecting the industry segments in which our Company operates
• Amount that the Company is able to realize from the clients;
• Changes in laws and regulations relating to the industries in which we operate;
• Our ability to successfully implement our growth strategy and expansion plans, and to successfully launch and
implement various projects and business plans for which funds are being raised through this Issue;
• Timely and cost-effective availability of iron ore, chrome ore and other raw materials
• Our ability to meet our capital expenditure requirements;
• Fluctuations in operating costs;
• Our ability to attract and retain qualified personnel;
• Changes in technology in future;
• Changes in political and social conditions in India or in countries that we may enter, the monetary policies of
India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other
rates or prices;
• The performance of the financial markets in India and globally; and
• Any adverse outcome in the legal proceedings in which we are involved.

For a further discussion of factors that could cause our actual results to differ, please refer to the chapters titled
“Risk Factors” “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” of this Draft Letter of Offer respectively. By their nature, certain market risk disclosures are only
estimates and could be materially different from what actually occurs in the future. As a result, actual future
gains or losses could materially differ from those that have been estimated. Neither the Company nor the Lead
Managers, Co-Lead Managers nor any of their respective affiliates have any obligation to update or otherwise
revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of
underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI
requirements, the Company, Lead Managers and the Co-Lead Manager will ensure that investors in India are
informed of material developments until the time of the grant of listing and trading permission by the Stock
Exchanges.

5
RISKS AND CONCERNS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information
in this Draft Letter of Offer, including the risks and uncertainties described below before making an investment
in our equity shares. If any of the events referred to in the following risks actually materialise, our business,
results of operations and financial condition could suffer, the price of our equity shares could decline and you
may lose all or part of your investment. The financial and other implications of risks concerned, wherever
quantifiable, have been disclosed in the risk factors mentioned below. However there are a few risk factors
where the impact is not quantifiable and hence the same has not been disclosed in such risk factors.

Unless otherwise stated, the financial information used in this section is derived from our audited financial
statements under Indian GAAP, as restated.

INTERNAL RISK FACTORS

Any inability to manage our growth could disrupt our business and reduce our profitability.

We expect our business to grow significantly as a result of the planned capacity expansion. We expect this
growth to place significant demands on us and require us to continuously evolve and improve our operational,
financial and internal controls across the organisation. In particular, continued expansion increases the challenges
in:

• maintaining high levels of customer satisfaction;


• recruiting, training and retaining adequate skilled management, technical and marketing personnel;
• adhering to quality and process execution standards that meet customer expectations;
• preserving a uniform culture, values and work environment in operations;
• developing and improving our internal administrative infrastructure, particularly our financial,
operational, communications and other internal systems.

Any inability to manage our growth may have an adverse effect on our business and financial results.

Our expansion plans require significant expenditure and if we are unable to obtain the necessary funds for
expansion, our business may be adversely affected.

We will need significant additional capital to finance our business plans and in particular, our plan for capacity
expansions as referred to in “Objects of the Issue” on page [●] of this Draft Letter of Offer. Our proposed and
future capital expenditure is to be funded through a combination of debt, equity and internal cash accruals. Due
to various factors including certain extraneous factors such as changes in tariff regulations, interest rates and
other costs, borrowing or lending restrictions, if any, or our inability to obtain financing on acceptable terms, we
may not be able to finance our capital expenditure plans which would, in turn, adversely affect our business and
growth prospects.

Most of our raw materials are not produced by us and an increase in the prices of raw materials will substantially
raise our manufacturing costs and could affect our profitability.

The main raw materials that we use in the production of steel are iron ore, coal, coke, scrap and zinc. Raw
materials’ cost account for the single largest component of our expense base and constituted approximately 55%
of total income during the six month period ended September 30, 2005.

We source our iron ore requirements from various suppliers, including National Mineral Development
Corporation. Absence of long term contracts with iron ore suppliers may pose a risk of wide price fluctuations
especially in an environment where vendors prefer to export iron ore due to better realization in the export
market. The entire requirement of our coal, coke and scrap is procured from overseas suppliers. Although zinc is
largely procured from domestic suppliers and priced in Rupee terms, the pricing is highly correlated with
international dollar prices on the London Metal Exchange. The market for end product steel has entirely different
dynamics as compared to that of zinc.

Any significant increase in the prices of raw materials would increase our manufacturing costs and adversely
affect our profitability. There is no assurance that we will be able to pass on part or whole of the increased cost
to our customers.

6
Our operations may be adversely affected by a shortage of raw materials.

Our business depends on the adequate supply of high quality raw materials obtained at reasonable prices on a
timely basis. This makes our operations vulnerable to interruptions or other changes in the raw material supply.

Absence of long term contracts with iron ore suppliers may pose a risk of non-availability of raw material. Not
having adequate captive mining capacities may result in our facing bottlenecks in the supply of iron ore when we
start operating at expanded capacities.

The sourcing of raw material from few suppliers by us results in the risk of reduced supplies. For example, zinc,
a key raw material in the galvanizing process, is being presently sourced by us from only one supplier. Similarly,
our entire requirement of coal is sourced from various sources in Australia and in China. We cannot assure you
that all our raw material requirements will continue to be met by these suppliers. Our inability to obtain high-
quality raw materials in a timely and cost-effective manner would cause delays in our production and delivery
schedules besides increasing cost of production, which may result in us losing some customers and reduction in
revenues.

Our business is dependent on our manufacturing facilities. The loss of or shutdown of operations at any of
our manufacturing facilities may have a material adverse effect on our business, financial condition and
results of operations.

We currently conduct our operations at our manufacturing facilities at Tornagallu, Tarapur and Vasind in India.
Our facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply or
processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, natural
disasters, industrial accidents and the need to comply with the directives of relevant government authorities. The
occurrence of any of these risks could significantly affect our operating results. We are required to carry out
planned shutdowns of our plants for maintenance, statutory inspections and testing. We also shut down plants
for capacity expansions and equipment upgrades. The operations of our plants can also be affected by natural
disasters.

Although we take precautions to minimize the risk of any significant operational problems at our facilities, our
business, financial condition and results of operations may be adversely affected by any disruption of operations
at our facilities.

We are dependant on our associate company for the supply of industrial gases.

We source major requirement of industrial gases from Jindal Praxair Oxygen Company Private Limited
(“JPOCL”) an associate company. Any disruption in the supply of the above could significantly impact the
production of our products which in turn may affect our operational performance, financial results and reputation
in the market. We have a dispute with JPOCL relating to consideration payable for supply of industrial gases in
the past which is currently under arbitration. In the event the arbitration award is in favour of JPOCL, it may
adversely impact our financial performance.

The shortage or non-availability of electricity may adversely affect our manufacturing processes and have an
adverse impact on our operations and financial condition.

Our manufacturing processes require a substantial amount of electricity. In case of the manufacturing facility at
Toranagallu (“Upstream Facility”), apart from utilization of captive power facilities, we need to procure power
from JSW Energy Limited (“JEL”), an independent power producer having power supply agreements with other
buyers as well. Our manufacturing facilities at Vasind and Tarapur (“Downstream Facility”) have backup
arrangements in case of power failure from MSEB which are presently not sufficient to run our entire operations.
We cannot assure you that in future, our results of operations or financial condition will not be adversely affected
by power interruptions or increase in power costs.

Our operations may be affected by inadequate supply of water.


We have plans to increase our manufacturing capacity over a period of time. The permitted drawing of 20
million gallons per day (MGD) per day from Tungabhadra dam will be sufficient for expansion of steel
manufacturing capacity upto 3.8 mtpa. Non availability or shortage of an alternative source of water may hinder
our operations in the future.

7
We have issued partly paid shares where we have not been able to identify shareholders who have made
payment towards call money

We had allotted partly paid up Equity Shares and pursuant to calls made on these partly paid shares we have not
received the pending call money amounts. The Board passed a resolution dated October 30, 2000 forfeiting
outstanding partly paid up shares. However, the Company had received Rs. 3.97 million as call money without
requisite details of the shareholders. In the absence of such details, the Company was unable to issue Equity
shares to these shareholders.

As and when the details and proof of payment of call money in respect of the forfeited Equity Shares are
furnished by the respective Equity Shareholders who had made payments, the Board would annul the forfeiture
in respect of such Equity Shares.

The Company may be required to make provisions for payment of dividend on such Equity Shares where the
forfeiture is annulled for previous years when dividend has been declared. Additionally, under this Issue, the
Company would have to keep in abeyance Equity Shares and Warrants for those shareholders whose requisite
details we do not possess. Annulment of forfeiture in respect of the forfeited Equity Shares may require our
management to devote additional time to resolve the problem and may also entail costs on us, apart from
affecting our historical financial data due to a possibility of change in our Capital Structure.

Our results of operations could be adversely affected by strikes, work stoppages or increased wage demands by
our employees.

We have over 4,000 full-time employees in India at various locations including our Upstream Facility,
Downstream Facility and in Mumbai. The number of our employees will increase as our proposed expansion
plans get implemented. Currently, employees in our Indian operations are not represented by any labour unions.
While we consider our current labour relations to be good, there can be no assurance that we will not experience
future disruptions in our operations due to disputes or other problems with our work force, which may adversely
affect our business and results of operations.

Environmental regulation imposes additional costs and may affect the results of our operations.

While we believe that our facilities are in compliance in all material respects with applicable environmental laws
and regulations, additional costs and liabilities related to compliance with these laws and regulations are an
inherent part of our business. We, like other steel manufacturers, are subject to various central, state and local
environmental, health and safety laws and regulations concerning issues such as damage caused by air emissions,
wastewater discharges, solid and hazardous waste handling and disposal, and the investigation and remediation
of contamination. These laws and regulations are increasingly becoming stringent and may in future create
substantial environmental compliance or remediation liabilities and costs. These laws can impose liability for
non-compliance with health and safety regulations or clean up liability on generation of hazardous waste and
other substances that are disposed of either on or off-site, regardless of fault or the legality of the disposal
activities. Other laws may require us to investigate and remediate contamination at our properties, including
contamination that was caused in whole or in part by previous owners of our properties. While we intend to
comply with applicable environmental legislation and regulatory requirements, it is possible that such
compliance may prove restrictive and impose onerous obligations on us.

In addition to potential clean up liability, we may become subject to monetary fines and penalties for violation of
applicable laws, regulations or administrative orders. This may result in closure or temporary suspension or
adverse restrictions on our operations. We may also, in future, become involved in proceedings with various
regulatory authorities that may require us to pay fines, comply with more rigorous standards or other
requirements or incur capital and operating expenses for environmental compliance.

We face substantial competition in the steel industry, both from Indian and international companies, which may
hurt our revenues.

The Indian steel industry is highly competitive. As an integrated steel manufacturer, our direct competitors
include Steel Authority of India Limited, Tata Steel Limited, Essar Steel Limited and Ispat Industries Limited.
These major producers produce most of the flat steel products in the country including hot rolled coils, cold
rolled coils and galvanised steel and account for most of the mild steel production in the country. They also
produce a small proportion of long products and other kinds of special steel. In addition to these competitors, we
also compete with the smaller stand alone steel plants that include producers and processors of steel.

8
A number of our international competitors larger in size than us have greater financial resources. We may also
face competition from new companies that are emerging which would attempt to obtain a share in our existing
markets.

Increased competition could result in price reductions, decreased sales, lower profit margins or losses in market
share, any of which could have a material adverse effect on our business, results of operations and financial
condition. We cannot be certain that we will continue to compete successfully against either current or potential
competitors in the future.

A significant percentage of our revenues are due to exports to other countries and are subject to uncertainties.

About 49% of our revenues in FY 2005 were from exports and any slowdown in economic growth in countries
where our products are being exported could adversely affect our financial results and operations. Many
countries have imposed anti-dumping duties on imports of certain kinds of finished steel products from India.
The export of hot rolled coil, our primary product, is subject to an anti-dumping duty in Canada and the United
States. Whilst we have taken steps to reduce reliance on certain regions for our export revenues, there can be no
guarantee that such steps shall enable us to withstand any economic slowdown in these countries.

Our ability to avail of certain concessional customs duties depends on our ability to maintain certain levels of
exports.

We import capital goods under the EPCG Scheme under which capital goods may be imported at a concessional
rate of customs duty with an undertaking to achieve a certain level of exports over a certain period of time. Our
failure to achieve the required level of exports will make us liable to pay the higher rates of customs duties which
would have originally applied to us, together with interest.

We face foreign exchange risks, which may adversely affect our cash flows and results of operations.

We have a major portion of our imports (total CIF value in FY 2005: Rs. 19850.3 million), exports (total FOB
value in FY 2005: Rs 27831.6 million) and foreign currency debt servicing (interest, finance charges and
repayments in FY 2005: Rs. 2,884.95 million) denominated in US Dollars and Euro. We are exposed to timing
and quantum mismatches of inflows and outflows in foreign currency. We hedge currency exposures from time
to time as dictated by economics and market dynamics with a view to reduce variability of operating income.
Hedging contracts may at times restrict us from realizing the full potential of a favorable move in the currency
markets on receivables as well as payables side.

The restrictions imposed by our lenders and the terms of any future debt obligations may restrict our ability to
conduct our operations and expand our capacities, which may hurt our business and results of operation and
financial condition.

Some of the agreements with our lenders contain restrictive covenants that require us to obtain prior consent of
our lenders to take certain actions, including declaration of dividends; alteration of our capital structure; making
changes to our constitutional documents and merging, amalgamating or consolidating with any other company.
In addition, some of these agreements require us to maintain certain financial ratios at certain levels.

Further, some of these agreements provide certain lenders with the right to appoint a nominee director on our
Board. For example, pursuant to the terms of our Restructured Debt Facility Agreement dated June 11, 2004 with
the Administrator of Specified Undertakings of UTI (“UTI”), UTI may appoint a nominee director on our Board.
Similarly, under the terms of our Rupee Loan Agreement dated August 17, 2005 with ICICI Bank Limited,
ICICI Bank Limited may nominate one member to our Board. Our present Board has nominees of lenders such
as ICICI Bank Limited, Industrial Development Bank of India Limited, and UTI. Some of our lenders also have
the right to convert debt into equity in the event of our default under their respective agreements with us.

There can be no assurance that our lenders will grant us required consents on time or at all. If we fail to get such
consents, it may adversely affect our ability to conduct our business and operations or implement our business
plans.

Any additional financing we require to fund our planned expenditure, if met by way of additional debt financing,
may place restrictions on us which may, among other things, increase our vulnerability to general adverse
economic conditions, limit our ability to pursue our growth plans, require us to dedicate a substantial portion of
our cash flow from operations to make payments on our debt, thereby reducing the availability of our cash flow

9
to fund capital expenditures, meet working capital requirements and use for other general corporate purposes and
limit our flexibility in planning for, or reacting to, changes in our business and our industry, either through
imposition of restrictive financial or operational covenants or otherwise.

Some of our existing shareholders will continue to have the right to appoint certain directors even after the
completion of this Issue and in the future other persons may be granted the right to appoint directors.

Our Articles provide that so long as KSIIDC continues to hold 11% or Rs.500 million, whichever is less, in the
Equity Share Capital of our Company, 2 directors representing KSIIDC may be appointed to our Board. In the
event the shareholding of KSIIDC falls below 11% or Rs.500 million, whichever is less, KSIIDC will be entitled
to nominate only one director. However as long as KSIIDC holds any shares in the Equity Share Capital of our
Company, it has the right to appoint one non retiring director nominee director to our Board. Presently there is
only one director representing KSIIDC on the Board.

Our Articles further provide that our Directors have the power to agree with any lender or any person for
borrowing any money, providing security or guarantee or technical collaboration or assistance or underwriting,
or enter into any other arrangement whatsoever. Further, our Directors have the power to allow such lender or
person shall have the right to appoint or nominate by a notice in writing addressed to the Company one or more
persons, who are acceptable to the Board, as directors. Such director may not be liable to retire by rotation nor be
required to hold any qualification shares. As of the date of this draft Letter of Offer, save and except as described
in this draft Letter of Offer, no nominee director has been appointed to our Board. For more information on the
nominee directors on our Board, please refer to the section titled “General Information” on page [●] of this draft
Letter of Offer.

Certain of our lenders may reclaim the financial benefits waived by them pursuant to the restructuring of our
debt and the agreements entered into with such lenders may be modified by them and such modified terms
may be more onerous in their application to us; the financial benefits and concessions granted to us under
these agreements may be revoked or withdrawn by such lenders at a future date .

The agreements entered into with certain lenders pursuant to the restructuring of our debt contemplate that such
lenders have a “right of recompense”, that is, the lenders are entitled to reclaim all or part of the financial
benefits they have granted to us. Accordingly, for instance, our lenders may require us to pay interest as
specified in the original agreements or require us to pay amounts waived by them, if any. We therefore cannot be
sure that the benefits we are granted under the agreements pursuant to the restructuring of our debt will not be
reduced or eliminated at a future date.

In the event of the reduction or withdrawal of such benefits, our financial condition and results of operations
could be adversely affected.

Further, a retroactive application of any such modification to our restructuring terms may adversely affect our
historical financial condition and results of operations.

Changes in interest rates could significantly affect our financial condition and results of operations.

Our exposure to interest rate risk relates primarily to External Commercial Borrowings (“ECB”) availed from
State Bank of India, Frankfurt Branch, State Bank of India, London Branch, Mineral Euro Asia Limited,
Mauritius and Foreign Currency Loan (“FCL”) from ICICI Bank Limited.

We are exposed to interest rate risk on our floating rate debt and on additional debt financing that may be
periodically needed for the capital expenditures associated with our future acquisitions or expansion plans.
Upward fluctuations in interest rates increase the cost of both existing and new debt. The interest rate that we
will be able to secure in a future debt financing will depend on market conditions at the time, and may differ
from the rates on our existing debt. This may adversely impact our results of operations, planned capital
expenditures and cash flows. Although we may in the future enter into hedging arrangements against interest
rate risks, there can be no assurance that these arrangements will successfully protect us from losses due to
fluctuations in interest rates which could adversely affect our business, financial condition and results of
operations.

Our expansion plans are subject to the risk of cost and time overruns.

10
Our plan for capacity expansion as referred to in “Objects of the Issue” on page [●] of this draft Letter of Offer
contains project costs and implementation schedules estimated by us. We intend to utilise the part of the issue
proceeds to increase our cold rolling production capacity. Our expansion plans are subject to a number of
contingencies, including foreign exchange fluctuations, changes in laws and regulations, governmental action,
delays in obtaining permits or approvals, accidents, natural calamities, terrorist activity and other factors, many
of which are beyond our control and may lead to cost and time overruns.

Our proposed capacity expansion plans have been appraised by Industrial Development Bank of India Limited in
September, 2005.

Although we have completed similar projects earlier, we cannot assure you that the actual costs incurred, the
production capacity added or time taken for implementation of these plans will not vary from our estimated
parameters. The project cost estimated for our integrated steel plant at Toranagallu in June 1994 was Rs. 33,000
million. However, the actual project cost upto March 31, 2004 was Rs. 62,260 million. There were delays of upto
two years in the implementation of various projects forming part of our integrated steel plant.

Our success depends in large part upon our senior management and key personnel and our ability to attract
and retain them.

We are highly dependent on our senior management and other key personnel. Our future performance will
depend upon availability of continued services of these persons. Competition for senior management in our
industry is intense, and we may not be able to retain our senior management personnel or attract and retain new
senior management personnel in future. The loss of any of these key personnel may adversely affect our business
and results of operations.

Our insurance coverage may not adequately protect us against certain operating hazards which may have a
material adverse effect on our business.

Our significant insurance policies consist of a comprehensive coverage for risks relating to physical loss or
damage. In addition, we have obtained separate insurance coverage for personnel related risks, motor vehicle
risks and loss of movable assets risks. While we believe that the insurance coverage we maintain would
reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no
assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time.
To the extent that we suffer loss or damage that is not covered by insurance or exceeds our insurance coverage,
our results of operations and cash flow may be adversely affected.

There were deviations in the performance vis-à-vis projections made by us, and two of our group companies,
in previous issues.

Our Company made an initial public offering of simultaneous but unlinked issue of Equity Shares and secured
redeemable partly convertible debentures in 1995 with the object of establishing an integrated steel plant at
Toranagallu having capacity of 1.25 mtpa at a cost of approximately Rs. 33,000 million. There were cost and
time overruns and the actual project cost up to March 31, 2004 was approximately Rs. 62,260 million. For
details, please refer to page [●] of this draft Letter of Offer.

Our group company, Nalwa Sons Investments Limited, made a rights offering of equity shares in 1992 with the
object of enhancing its manufacturing capacity of sponge iron and pig iron to 0.6 mtpa and 0.5 mtpa respectively
as well as installing captive power generation facilities as 45 MVA at a cost of approximately Rs. 3,550 million.
There were cost overruns and the actual project cost was Rs. 4,495.2 million. Another group company, Southern
Iron and Steel Company Limited, which was taken over in FY 2004-05, made two simultaneous but unlinked
issues of equity shares and partial optional convertible debentures in 1995 with the object of part financing the
project which had suffered cost and time over run. The project had suffered a cost overrun from Rs. 4500 million
at the time of original appraisal to Rs. 10,350 million till the completion of the project in January 2003.

Some of our group/associate companies have incurred losses in recent fiscal periods.

Our group/associate companies have incurred losses as per their financial statements for the last three fiscal years
ended March 31.

11
The details of these losses are set out in the table below:

Subsidiary/Group or Associate Company Loss (Rs. in million)


FY 2003 FY FY
2004 2005
Nalwa Sons Investments Limited - (441.9) (238.3)
JSW Holdings Limited - (0.5) -
Southern Iron and Steel Company Limited * (457.0) (1534.0) -
Vijayanagar Minerals Private Limited (6.2)

* Figures are for 15 months period ending on June 30, 2004 for FY 2004 and nine months period ending on
March 31, 2005

If we are not able to renew or maintain our statutory and regulatory permits and approvals required to operate our
business it may have adverse effect on our business.

We require certain statutory and regulatory permits and approvals to operate our business. For example, we are
yet to receive the following statutory approvals which have expired and for which renewal applications have
been made:

1. Licence issued by the Joint Chief Controller of Explosives, Navi Mumbai to store petroleum class C in bulk.
The Company has applied for renewal of the licence till December 2006.

2. Licence issued by the Additional Collector Thane, for storage of solvents like furnace oil and LDO, which
was in force till April 7, 2005. The Company has applied for renewal on April 4, 2005.

3. Consent issued by the Maharashtra Pollution Control Board to manufacture galvanised coild, corrugated
sheets and tin black plates under section 25 of the Water (Prevention and Control of Pollution) Act, 1974,
section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste
(Management & Handling) Rules, 1989 and Amendment Rules, 2000. The consent was in force till May 31,
2005. The Company has applied for the renewal of the same.

4. Application No. JSWSL/VDN/A&LA/2005 dated November 29, 2005 to the Deputy Chief Controller of
Explosives, Bangalore for renewal of Licence No. MYS:4055 to store petroleum at Bellary. The present
licence expired on December 31, 2005.

5. Application No. JVSL/VDN/A&LA/05-06 dated October 5, 2005 to the Commissioner of Excise, Bangalore
for renewal of Licence No. ECE/MOL/OP/05/2004-05 dated March 4, 2005 for storage of molasses for
industrial use. The said licence expired on October 31, 2005.

6. Certificate of Registration No. ACL/KYN/ELA/RC-227/92 dated November 17, 1992, issued by the
Registering and Licensing Officer, Kalyan under section 7 of the Contract Labour (Regulation & Abolition)
Act, 1970. The certificate has expired on December 31, 2005. The Company has applied for renewal of the
same.

9. Licence No. P-12(7) 4595/MR/TH/280 dated July 19, 1999 issued by the Chief Controller of Explosives to
store petroleum classes B and C, which has expired on December 31, 2005.

10. Consent No. BO/ROK-210/Ulhas/Thane/CC-674 dated July 30, 2001 issued by the Maharashtra Pollution
Control Board to operate under section 26 of the Water (Prevention and Control of Pollution) Act, 1974,
section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste
(Management & Handling) Rules, 1989 and Amendment Rules, 2000. The consent was in force till
December 31, 2005.

11. Consent No. MPCB/WPAE/Kalyan/02/CC-05 dated January 6, 2004 issued by the Maharashtra Pollution
Control Board to handle hazardous wastes like zinc coated products and zinc dress under section 26 of the
Water (Prevention and Control of Pollution) Act, 1974, Section 21 of the Air (Prevention and Control of
Pollution) Act, 1981 and the Hazardous Waste (Management & Handling) Rules, 1989 and Amendment
Rules, 2000. The consent was in force till December 31, 2005.

12
12. Consent No. MPCB/WPAE/EIC-TN-0171-05/Thane-68 dated February 15, 2005 issued by the Member
Secretary, Maharahstra Pollution Control Board for generation of power through a captive power plant. The
consent was in force till December 31, 2005.

13. License for FO/HSD Storage (FO-340 KL & HSD-50KL) under the Petroleum Act, 1934. The present
licence expired on December 31, 2005.

In future, we will be required to renew such permits and approvals and obtain new permits and approvals for our
proposed operations. While we believe that we will be able to renew or obtain such permits and approvals as and
when required, there can be no assurance that the relevant authorities will issue such permits or approvals in the
time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or
approvals, including those set forth above, may result in the interruption of our operations or may delay or hinder
our expansion and may have a material adverse effect on our business, financial condition and results of
operations. For further information, please refer to "Government and Other Approvals" on page [ ] of this draft
Letter of Offer.

There are a number of legal proceedings against us, our Directors, our Promoters, Group Companies and
Associate Companies.

There are outstanding litigations against us, our Directors, our Promoters and Group Companies. We are
defendants in legal proceedings incidental to our business and operations. These legal proceedings are pending at
different levels of adjudication before various courts and tribunals. Should any new developments arise, such as a
change in Indian law or rulings against us by appellate courts or tribunals, we may need to make provisions in
our financial statements, which could adversely impact our business results. Furthermore, if significant claims
are determined against us and we are required to pay all or a portion of the disputed amounts, it could have a
material adverse effect on our business and profitability.

Material Litigations relating to the Company, the Promoters, the Directors, Group Companies and Associate
Companies

Against the Company

There is one criminal case filed against the Company, and also against.

There are approximately 9 labour related cases involving the Company for amounts aggregating approximately
Rs. 3.07 million.

There are approximately 12 income tax cases involving the Company for amounts aggregating approximately
Rs.307.0 million.

There are approximately 14 claims pertaining to central excise involving the Company for amounts aggregating
approximately Rs. 1,008.36 million.

There are approximately 14 claims pertaining to customs involving the Company for amounts aggregating
approximately Rs. 2,988.74 million.

There are approximately 3 claims pertaining to sales tax involving the Company for amounts aggregating
approximately Rs. 12.05 million.

There are approximately 2 claims pertaining to entry tax/ special entry tax involving the Company for amounts
aggregating approximately Rs. 53.38 million.

There is a claim pertaining to service tax against the Company for amount of Rs. 0.23 million approximately.

There are approximately 3 civil cases against the Company, for amounts aggregating approximately Rs. 10.6
million.

There are approximately 2 arbitration proceedings against the Company for amounts aggregating approximately
Rs.1,449.4 million.

13
There are approximately 22 consumer cases involving the Company filed by its shareholders, aggregating to Rs.
0.03 million.

There are approximately 22 criminal cases filed by the Company under section 138 of the Negotiable
Instruments Act aggregating to Rs.113.37 million.

There are about 3 civil cases filed by the Company aggregating to Rs. 0.95 million.

Against the Promoters

There is no litigation pending against the Directors of the Company. Please refer to the section titled
“Outstanding Litigation and Defaults” on page [●] of this draft Letter of Offer.

Against the Directors

There is no litigation pending against the Directors of the Company. Please refer to the section titled
“Outstanding Litigation and Defaults” on page [●] of this draft Letter of Offer.

Against group companies

Please refer to the section titled “Outstanding Litigation and Defaults” on page [●] of this draft Letter of Offer.

Against associate companies

Please refer to the section titled “Outstanding Litigation and Defaults” on page [●] of this draft Letter of Offer.

We have contingent liabilities under Indian Accounting Standards, which may adversely affect our financial
condition.

As on September 30, 2005, the contingent liabilities appearing in our restated financial statements were (Rs. in
million):

A) Bills Discounted 2775.1

B) Disputed statutory claims/levies, including, those pending in courts


(excluding interest leviable, if any), in respect of:

i) Excise Duty (net of possible reimbursement Rs. 226.7 millions for six 615.1
months ended September 30, 2005)
ii) Custom Duty 774.1
iii) Income Tax 313.7
iv) Sales Tax / Special Entry tax 51.1
v) Service Tax 1.2
vi) Miscellaneous 2.4
vii) Levies by local authorities 124.9

C) Claims against the Company not acknowledge as debts:


i) Claims by various suppliers of goods and services (net of possible 27.2
reimbursement / adjustments Rs. 1876.2 millions for September 30, 2005)
ii) Claims by customers and others 9.4

Our business may be affected by any action against group companies/ventures by SEBI and stock exchanges.

There are certain penalties imposed against JSWSL and erstwhile JISCO by SEBI and BSE. An investigation has
been carried out by SEBI in respect of spurt in prices and volumes of Nalwa Sons Limited (erstwhile Jindal
Strips Ltd.) during the period April to October 2004. For details, refer to page [●], [●] and [●] of the draft Letter
of Offer.

14
If any shareholders who subscribe to and are allotted the shares do not pay the full amount of the Issue Price,
the amount raised through the Issue will be lower than the proposed Issue size. Further, shares issued to the
shareholders will not be traded till the time these shares become fully paid up.

The balance amount of the Issue Price may not be paid and the amount raised through the Issue may be lower
than the proposed Issue size. Further, the shares issued on allotment will not be traded after the date of allotment
until the full amount of the Issue Price is received and corporate action for appropriation of the amounts received
towards the balance amount of the Issue Price is taken and the shares are made fully paid up. In this Issue, the
shareholders who susbscribe to and are allotted shares shall be required to make the payment of the balance
amount of the Issue Price within 30 days of the allotment of shares under this Issue. Until the corporate action
process is competed, shareholders who pay the balance amount of the Issue Price for the partly paid shares will
not be able to trade in those shares.

Our revenues are highly dependent on a limited number of buyers. The loss of any of our major buyers or a
decrease in the volume of our finished products they source from us may adversely affect our revenues and
profitability.

We derive a significant portion of our revenues from a limited number of buyers. In FY 2004-05 and first six
months of 2005-06, our five largest buyers accounted for approximately 38% and 40% of total revenue
respectively for our HR Coils division.For our Cold Roll division five largest buyers accounted for
approximately 16% of total revenue in FY 05. In FY 2004-05 and first six months of 2005-06 for our GP/GC
division five largest buyers accounted for approximately 32% and 25% of total revenue respectively As a result
of our reliance on a limited number of clients, we may face pricing pressure. In addition, there are a number of
factors, other than our performance, that could cause loss of a buyer and that may not be predictable. Our buyers
may also decide to reduce the quantity of final product sourced from us because of challenging market conditions
and other factors, internal and external, relating to their business. The loss of any of the major buyers, a decrease
in the volume of our products they source from us or decrease in the price of our products we supply may
adversely affect our revenue and profitability

Equity shares purchased in the Issue will not be traded several days after investor made the payment.
The Equity shares issued are subject to payment option at the discretion of investor. In case investor excerises
option of subscribing for partly paid up equity shares pursuant to which same will be blocked for trading.
Trading for same will take place once partly paid up equity shares are converted to fully paid up equity shares.
The entire process of conversion from closure of the issue till conversaion of partly paid up equity shares to fully
paid up equity shares will take around 10 weeks. Since our equity shares are already listed on the stock
exchange, you will be subject to market risk from the date of closure to date of listing
Amount raised through this issue might be lower than the proposed issue size in case the investor chooses the
option of subscribing for partly paid up share.
The Amount Payable on Call as per the call notice issued by us, if any, may not be paid up and the amount raised
through the Issue may be lower than the proposed Issue. Further, partly paid shareswill not be listed and traded
unless the shares are made fully paid. The process of corporate action for credit of fully paid shares to the demat
account of the shareholder may take about two weeks from the date of payment of the Amount Payable on Call.
During this period shareholders who pay the Amount Payable on Call for the partly paid shares will not be able
to trade in those shares. Please refer to “Terms of the Issue” on page [●] of this Draft Letter of Offer.

The Company has limited protection of its intellectual property.

The Company has not registered its brandname or the “JSW Steel” logo as trademarks. One of the promoter
group companies, Samarth Holdings Private Limited has applied for registration of the trademark and “JSW”
logo. Use of the Company’s brand name or logo by third parties could adversely affect the reputation of the
Company which could affect the financial performance and the market price of the shares of the Company. The
Company may also have to pay royalty or usage charges for the use of trademark and brand name as and when
the same are registered by Samarth Holdings Private Limited.

EXTERNAL RISKS

Further expansions in the steel industry may result in excess capacity, which may affect our financial condition.

Our current expansion plans envisage substantial increase in the capacity of our existing steel manufacturing
businesses.

15
The current high demand and prospects for steel manufacturing businesses could lead to other companies
increasing their production capacity in these segments. Some existing and new players are already in the process
of expanding capacity or setting up plants in the country. This could result in excess capacity in the market.
Although our products have so far been able to compete in terms of quality and price, in domestic and
international markets, no assurance can be given that we will be able to fully utilise our capacity and sell our
products.

The steel industry is cyclical in nature and factors affecting the demand for, and production of steel affect our
results of operations.
The steel industry is cyclical in nature, sensitive to general economic conditions and the condition of certain
other industries. Future economic downturns or stagnant economies in India or our key global markets could
adversely affect our business and results of operations. Over the past few years, the demand for steel has
fluctuated and may fluctuate in the future due to a number of factors, including any downturn in purchases by
traditional bulk steel end users such as auto component, automobile and infrastructure industries, slowdown in
basic manufacturing industry in India or abroad, availability and price of key raw materials, many of which are
beyond our control. Further, China is a major consumer and producer of steel in the world and any adverse
developments therein shall impact the steel industry globally. Production of steel has varied from year to year,
depending upon demand and consolidation in the industry. Unfavourable changes in the demand for steel, due to
changes in customer preferences, government policies and other factors may adversely affect the steel industry
and our business and results of operations.
We are dependent on third-party transportation providers for supply of raw materials and delivery of products.

We typically use third-party transportation providers for supply of raw materials and delivery of products to our
customers. Transportation strikes by members of various Indian truckers’ unions have had in the past, and could
also have in the future, an adverse effect on the receipt of supplies and our ability to deliver our products. Port
strike, disruption of services of railways and/or non-availability of rakes/wagons may affect the material
movement leading to stoppage of production/delay in delivery of stock. In addition, transportation costs have
been steadily increasing. Continuing increases in transportation costs may have an adverse effect on our
business and results of operations.

Changes in economic conditions may adversely affect our sales.

We operate in the steel industry and all our products are commodity grade and are to a large extent replaceable
with our competitors' products. Demand for our products is sensitive to changes in industry capacity and output
levels, cyclical changes in regional and global economic conditions and changes in consumer demand. Due to the
above factors, there can be no assurance that sales of our products will continue to improve or be maintained at
current levels. A downturn in any of the key markets for steel can have a significant impact on the selling prices
of our products and on our results of operations.

Taxes and other levies imposed by the Government of India or other state governments, as well as other
financial policies and regulations, may have a material adverse effect on our business, financial condition
and results of operations.

Taxes and other levies imposed by the central or state governments in India that affect our industry include
customs duties, excise duties, sales tax, income tax and other taxes, duties or surcharges introduced on a
permanent or temporary basis from time to time.

The central and state tax regime in India is extensive and subject to change from time to time. Any adverse
changes in any of the taxes levied by the central or state governments may adversely affect our competitive
position and profitability.

Currently we benefit from certain tax benefits which results in a decrease in the effective tax rate compared to
the tax rates that we estimate would have applied if these incentives had not been available. There can be no
assurance that these tax incentives will continue in the future. The non-availability of these tax incentives could
adversely affect our financial condition and results of operations.

Several state governments in India have recently introduced a value added tax regime. The impact of the
introduction of the value added tax regime on our business and operations will depend on a range of factors
including the rates applicable and the exemptions available to our facilities. Currently, we are unable to ascertain
the impact of the value added tax regime on our business and operations.

16
Changes in current custom duty regulations applying to the import of steel could adversely affect our overall
performance.

The Indian steel industry has been, and still is, protected against competition from imported goods through
import duties that are levied by the Indian government. However, the import duties on steel have been reduced
in the past and may be subject to further reductions, including as a result of commitments made by India under
the World Trade Organisation. The current customs duty on steel is 5% ad valorem. We cannot assure you that
any future change in the import duty regulations will not have an adverse impact on our financial condition and
results of operations. We are subject to risks arising from interest rate fluctuations, which could adversely affect
our business, financial condition and results of operations.

Any further issuance of Equity Shares by us or sales of our Equity Shares by our significant shareholders may
adversely affect the trading price of the Equity Shares.

Any future issuance of our Equity Shares by us could dilute your shareholding. Any such future issuance of our
Equity Shares or sales of our Equity Shares by any significant shareholder, including our promoters, may also
adversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through an
offering of our securities. In addition, any perception by investors that such issuances or sales might occur could
also affect the trading price of our Equity Shares.

Notes:

ƒ The net worth of our Company as on September 30, 2005 was Rs. 34,928.1 million.
ƒ Issue of 19,624,398 Equity Shares of Rs. 10 each at a premium of Rs. [●] per equity share aggregating Rs.
[●] to the Equity Shareholders on Rights Basis in the ratio of one Equity Shares for every eight Equity
Shares held on the record date. For every one Equity Share offered and subscribed on Rights Basis, the
Equity Shareholders will receive one Series A Warrant and one Series B Warrant. The issue price of each
Equity Share is [●] times the face value of the Equity Share. Total issue excluding conversion of Warrants
into Equity Shares would aggregate Rs. [●] million.
ƒ The average cost of acquisition of Equity Shares by Sajjan Jindal is Rs. 28.11 per Equity Share, Savitri Devi
Jindal is Rs. 38.04 per Equity Share and JSW Holdings is Rs. 202.26 per Equity Share and the book value
per Equity Share (including shares pending allotment on account on merger of EIISPL, ECEPL and JPL
with our Company) as on September 30, 2005 was Rs. 218.58 per Equity Share.
ƒ Investors may contact the LMs for any complaints, information or clarifications pertaining to the Issue.
ƒ Investors are advised to see “Basis for Issue Price” on page [●] of this draft Letter of Offer.
ƒ The name of our Company was changed from Jindal Vijayanagar Steel Limited to JSW Steel Limited on
June 16, 2005
ƒ Refer to Annexure III (B) (13) of “Financial Statements” on page [●] of this draft Letter of Offer for the
related party transactions.
ƒ Refer “Promoter and Promoter group” and “Management” for disclosure on interest of promoters, directors
and key management personnel.

17
SUMMARY

Overview

We are among the largest integrated steel companies in India, having established production facilities at close
proximity to the mineral resources as well as to the market for its products. Our cost of production is among the
lowest in the country.

Beginning in 1994 with the formation of Jindal Vijaynagar Steel Limited (JVSL) (the earlier name of JSW Steel
Limited) various units of the plant were commissioned between Aug-97 and Nov-02 to produce 1.57 million
tonne (Mt) of saleable steel, which has grown to the present capacity of 2.5 Mt. With effect from April 01, 2003,
steel business of Jindal Iron and Steel Company Limited (JISCO) having HR Plates, cold-rolled and galvanized
manufacturing facilities in Maharashtra was merged with our Company and after the merger the name of our
Company was changed to JSW Steel Limited. we have increased the availability of key raw materials through
strategic mergers of Euro Ikon Iron and Steel Private Limited (EIISPL, Euro Coke Energy Private Limited
(ECEPL and JSW Power Limited (JPL) with our Company with effect from April 1, 2005.

The integrated steel plant at Toranagallu in Bellary District of Karnataka produces hot rolled coils of various
Carbon and Low Alloy grades of steel for wide application ranging white goods, automotive, line-pipe, railway
wagons etc.

Our product portfolio include pellets, slabs, HR coils, CR coils, GP/GC sheets and colour coated products.

Our Competitive Strengths

Location: Our Upstream facility is located in the Iron Ore rich belt of Bellary- Hospet region of Karnataka. The
strategic location of the manufacturing units with respect to established ports and well connected rail and road
networks ensures reliable and cost efficient receipt of raw materials and dispatch of finished steel.

Technology: In order to maintain leadership in quality and cost of products we have adopted technologies such as
Vibro-compacting non-recovery Coke Ovens, the novel Corex Process as well as the conventional Blast Furnace
route of Iron Making

Integrated operations: We are a vertically integrated company with operations spanning across iron ore mining
to manufacture of value added galvanized and colour coated products.

Marketing: Having one of the largest galvanising capacities in the country, we are one of the largest exporters of
galvanized products to over 50 countries in five continents. We are one of the largest integrated steel producing
companies in India with a customer pool comprising leading domestic as well as international companies.

Professional Management: As part of our corporate governance practices, we have a qualified and experienced
management in addition to a diversified independent board.

Business/Financial Strategy

Capacity enhancement: We intend to leverage our proximity to iron ore reserves and the existing infrastructure
created by us to expand capacities at low specific investment cost per ton.

Increase vertical integration: Our impetus has been to increase the vertical integration through strategic tie-up,
longterm linkages and acquisitions aimed at ensuring availability of critical raw materials at low cost.

Improve product profile: We intend to improve the value added products in our product mix to withstand the
vagaries of price volatilities besides being able to offer suite of products to meet the growing requirements of the
customers.

Improve financial profile: Being part of a capital-intensive industry with high volatility in the product prices, we
need to maintain a healthy financial profile and put in place a robust capital structure.

Investing in technology to improve productivity and reduce wastage: We have invested in latest technologies for
efficient operations and are continuing to improve to ensure that best operating practices are followed.

18
THE ISSUE

Equity Shares issued by the Company 19,624,398 Equity Shares


Rights Entitlement One Equity Share for every eight Equity Shares held
on the Record Date
Record Date [●]
Issue Price per Equity Share Rs. [●]
(To be finalized before Stock Exchange filing)
Equity Shares outstanding prior to the Issue 156,975,517 Equity Shares
Equity Shares outstanding after the Issue 176,597,457 Equity Shares
Warrants Entitlement For every Equity Share offered and subscribed on
Rights Basis, the Equity Shareholders will receive one
Series A Warrant and one Series B Warrant.
Warrant Conversion Price For more information, see “Terms of Issue” on page
[●] of this Draft Letter of Offer.
Terms of the Issue For more information, see “Terms of Issue” on page
[●] of this Draft Letter of Offer.
Terms of Payment For more information, see “Terms of Issue” on page
[●] of this Draft Letter of Offer.

19
SELECTED FINANCIAL INFORMATION

The following table sets forth our selected financial information derived from our restated financial statements
as of and for the fiscal years ended March 31, 2001, 2002, 2003, 2004 and 2005 and half year ended September
2005. These financial statements have been prepared in accordance with Indian GAAP and the Companies Act
and the annual financial statements have been restated as described in the auditors’ report included therewith,
in the section titled “Financial Statements” appearing in this Draft Letter of Offer. The selected financial
information presented below should be read in conjunction with our financial statements, the notes thereto and
the section titled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations”presented in this Draft Letter of Offer

Statement of restated Profit and Loss


(Rs. in Million)
For the
Six For the year ended March 31,
months
ended
Sept. 30,
2005 2005 2004 2003 2002 2001
Income
Gross Sales
Of Products Manufactured by the Company 33,882.5 70,359.0 46,787.6 27,860.4 20,003.4 13,457.8
Less: Excise duty (3,094.0) (3,565.4) (3,241.0) (2,812.8) (2,645.9) (1,856.0)
Net Sales 30,788.5 66,793.6 43,546.6 25,047.6 17,357.5 11,601.8
Other Income 62.1 189.8 317.8 37.1 17.6 31.5
Increase/ (Decrease) in inventories 1,719.5 433.1 (26.4) 121.7 (25.7) (241.3)
Total 32,570.1 67,416.5 43,838.0 25,206.4 17,349.4 11,392.0

Expenditure
Raw Material Consumed 16,964.9 29,579.5 17,609.9 10,988.1 10,370.1 8,143.4
Personnel expenses 607.1 1,072.1 729.6 371.5 281.5 65.7
Other Manufacturing expenses 3,921.7 9,766.9 8,144.4 5,712.2 3,524.7 484.6
Administrative and other expenses 606.9 575.8 293.7 304.9 193.2 224.5
Selling & Distribution expenses 1,467.3 2,763.9 2,064.2 714.9 178.8 165.3
Interest & Finance charges 1,892.6 4,698.7 4,883.5 5,596.4 4,434.1 1,943.4
Depreciation & Amortization 2,327.9 4,200.2 4,394.3 3,451.0 2,681.8 861.3
Total 27,788.4 52,657.1 38,119.6 27,139.0 21,664.2 11,888.2

Profit / (Loss) before Exceptional Items &


Tax 4,781.7 14,759.4 5,718.4 (1,932.6) (4,314.8) (496.2)
Exceptional Items - (33.3) 3,907.6 (2,095.7) - -
Profit / (Loss) Before Tax 4,781.7 14,726.1 9,626.0 (4,028.3) (4,314.8) (496.2)
Provision for taxation
Current tax 282.7 745.0 462.4 - - 14.0
Deferred tax 1,421.7 5,280.0 1,229.8 (2,921.6) (804.1) -
Fringe Benefit Tax 10.8 - - - - -
Net Profit / (Loss) after tax 3,066.5 8,701.1 7,933.8 (1,106.7) (3,510.7) (510.2)

Add/(Less): Balance as per last Balance


Sheet 7,195.7 1,327.9 (6,605.8) (5,499.1) (2,638.6) (2,128.4)
Deferred Tax Asset (net) for earlier years - - - - 650.2 -

Dividend & Tax thereon - (1,713.1) - - - -

General Reserve - (870.2) - - - -

Debenture Redemption Reserve - (250.0) - - - -

Balance carried to Balance Sheet 10262.2 7,195.7 1,327.9 (6,605.8) (5,499.1) (2,638.6)

20
Statement of restated Assets and Liabilities

(Rs. in Million)

As at Sept. As at March 31,


30, 2005 2005 2004 2003 2002 2001
A. Fixed Assets

Gross Block 82,339.3 75,203.0 72,911.0 63,095.6 43,655.6 17,548.4

Less: Depreciation 16,496.2 14,439.1 10,922.5 7,198.3 4,378.1 2,296.1

Net Block 65,843.1 60,763.9 61,988.5 55,897.3 39,277.5 15,252.3

Add: Capital work in progress 9,936.2 3,493.0 657.4 614.1 17,638.6 40,425.3

Sub Total (A) 75,779.3 64,256.9 62,645.9 56,511.4 56,916.1 55,677.6

B. Investments (B) 2,295.8 2,295.7 2,295.7 2,225.9 2,225.20 1,933.4

C. Deferred Tax Asset - - 2,225.1 4,375.9 1,454.3 -

D. Current Assets, Loans &


Advances

Inventories 8,414.3 7,434.1 4,121.7 2,664.5 2,362.1 1,795.8

Sundry Debtors 2,329.7 2,666.0 2,731.1 2,796.3 2,568.9 2,783.2

Cash & Bank Balances 755.2 1,224.9 851.1 388.4 283.2 182.4

Loans & Advances 6,846.6 7,615.0 4,656.5 1,525.8 2,254.7 1,934.9

Sub Total (D) 18,345.8 18,940.0 12,360.4 7,375.0 7,468.9 6,696.3

E. Liabilities and Provisions

Advance against Share capital - - - 729.9 18.1 132.6

Secured Loans 37,682.5 35,684.4 47,047.7 54,050.0 51,681.6 45,236.8

Unsecured Loans 772.1 - 1,424.6 5,356.4 4,441.5 4,509.1

Deferred tax Liabilities 4,505.9 3,054.9 - - - -

Long Term advance from a customer 1,131.2 2,679.7 - - - -

Current liabilities & Provision 17,401.1 16,082.6 10,663.5 8,170.2 9,262.1 9,396.3

Sub Total (E) 61,492.8 57,501.6 59,135.8 68,306.5 65,403.3 59,274.8

Net Worth (A) + (B) + (C) + (D)-(E) 34,928.1 27,991.0 20,391.3 2,181.7 2,661.2 5,032.5

Represented by

Equity Share Capital 1,290.4 1,290.4 564.8 12,910.0 12,909.3 12,909.8


Shares forfeited (Amount originally
paid-up) 610.5 610.6 611.0 610.3 610.6 609.4

Preference Share Capital 2,790.3 2,790.3 2,790.3 - - -


Share capital Suspense 179.9 - 725.6 - - -

21
Statement of restated Assets and Liabilities

(Rs. in Million)

As at Sept. As at March 31,


30, 2005 2005 2004 2003 2002 2001
Reserves & Surplus (excluding
Revaluation Reserve) 33,351.1 26,805.9 19,817.2 - - -
Less: Miscellaneous Expenditure (to
the extent not written off or adjusted) 3,294.1 3,506.2 4,117.6 4,732.8 5,359.6 5,862.1
Less: Debit balance in Profit & Loss
account - - - 6,605.8 5,499.1 2,624.6

Net Worth 34,928.1 27,991.0 20,391.3 2,181.7 2,661.2 5,032.5

22
GENERAL INFORMATION

Dear Shareholder(s),

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 20,
2006 it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to
renounce:

ISSUE OF 19,624,398 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PREMIUM OF RS. [•] PER EQUITY
SHARE AGGREGATING RS. [●] TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF
ONE EQUITY SHARE FOR EVERY EIGHT EQUITY SHARES HELD ON THE RECORD DATE. FOR EVERY
EQUITY SHARE SUBSCRIBED AND ALLOTTED ON RIGHTS BASIS, THE EQUITY SHAREHOLDERS WILL
RECEIVE ONE SERIES A WARRANT AND ONE SERIES B WARRANT. THE ISSUE OF EQUITY SHARES,
SERIES A WARRANTS AND SERIES B WARRANTS WILL BE COLLECTIVELY KNOWN AS THE
“ISSUE”. THE ISSUE PRICE OF EACH EQUITY SHARE IS [•] TIMES THE FACE VALUE OF THE EQUITY
SHARE. TOTAL ISSUE EXCLUDING CONVERSION OF WARRANTS INTO EQUITY SHARES WOULD
AGGREGATE RS. [●] MILLION.

Registered Office of the Company:


JSW Steel Limited
Jindal Mansion
5A, G. Deshmukh Marg, Mumbai 400 026
Registration No. 11-152925 and new 21 digit CIN number – U 27102 MH 2005 PLC 152925
Registrar of Companies, Maharashtra located at 100, Everest, Marine Drive, Mumbai 400 002.

Board of Directors

Name and Designation Age Address


Savitri Devi Jindal 56 Jindal House,
Chairperson 6, Prithviraj Road
New Delhi 110 001
Sajjan Jindal 46 Jindal House
Vice Chairman & Managing 32 Walkeshwar Road
Director Mumbai 400 006
Dr. B N Singh 57 Director’s Bunglow
Jt. Managing Director & CEO JVSL Township, Vidyanagar
Bellary 583 275
Karnataka
Seshagiri Rao M V S 47 B/1603
Director (Finance) Valencia Hiranandani Gardens
Powai, Mumbai 400 076
Zarin Daruwala 40 Bldg. No.4, Flat No.4, A H Wadia
Nominee Director of ICICI Bank Baug, Parel Tank Road,
Limited Mumbai – 400 033
Independent Director
K V Krishnamurthy 62 174, Kalpataru Residency,
Nominee Director of Industrial Tower A, 107, Road No. 8
Development Bank of India Sion (E), Mumbai 400 022
Limited
Independent Director

I M Vittala Murthy 54 No.10, Anikethana


Nominee Director of KSIIDC 1st Cross, 1st Main
Non Executive Director Dollar Layout, J P Nagar,
4th Phase, Bangalore 560 078
S Jambunathan 67 9, Prakash Co operative Housing
Nominee Director of UTI Asset Society
Management Company Private Relief Road, Daulat Nagar
Limited Santacruz (West), Mumbai 400 054
Independent Director

23
Name and Designation Age Address
Dr. S K Gupta 67 14, Singapore Garden
Non Executive Director Kanakapura Road
P.O. Doddakalasandra
Bangalore 560 062
Anthony Paul Pedder 56 87 Dore Road
Independent Director Sheffield S173ND
England
Dr. Vijay Kelkar 63 17, Vaswani Mansion
Independent Director 3rd Floor, Dinshaw Vachha Road
Churchgate, Mumbai 400 020
Sudipto Sarkar 59 31 Broad Street
Independent Director Kolkata 700 019
Uday Madhav Chitale 56 167-C, Poonawadi
Independent Director Dr. Ambedkar Road
Dadar, Mumbai 400 014
For more details regarding our Directors please refer to “Management” on page [•] of this Draft Letter of Offer.

Company Secretary and Compliance Officer

M H Kapadia
JSW Steel Limited,
Jindal Mansion
5A, G. Deshmukh Marg
Mumbai 400 026.
Tel : (91 22) 2351 3000 Extn : 212
Fax : (91 22) 2352 6400
Email : rightsissue@jsw.in
Website: www.jsw.in

Investors may contact the Compliance Officer for any pre-Issue / post-Issue related matter.

Legal Advisor for the Issue


Amarchand & Mangaldas & Suresh A. Shroff & Co.
Peninsula Chambers
Peninsula Corporate Park
Ganpatrao Kadam Marg
Lower Parel
Mumbai 400 013.
Tel: (91 22) 5660 4455
Fax: (91 22) 2496 3666

Auditors of the Company


Lodha & Co., Chartered Accountants
6, Karim Chambers
40, A. Doshi Marg, (Hamam Street)
Fort
Mumbai 400 023
Tel: (91 22) 2269 1414
Fax: (91 22) 2265 0126

Bankers of the Company

Punjab National Bank ICICI Bank Limited


Large Corporate Branch ICIC Bank Towers
Maker Tower ‘E”, Ground Floor Bandra Kurla Complex
Cuffe Parade Mumbai 400 051
Mumbai 400 005 Tel : (91 22) 2653 1414
Tel: (91 22) 2215 2058 Fax: (91 22) 2653 1374
Fax: (91 22) 2218 8451

24
State Bank of India Allahabad Bank
State Bank Bhavan Industrial Finance Branch
Madame Cama Road Apeejay House
Mumbai 400 021 3, Dinshaw Wacha road
Tel: (91 22) 2288 3019 Mumbai 400 020
Fax: (91 22) 2288 4133 Tel: (91 22) 2204 2156
Fax: (91 22) 2282 2401

Vijaya Bank State Bank of Patiala


Industrial Finance Branch Atlanta, 1st Floor
New Excelsior Building, Fort Nariman Point
Mumbai 400 001 Mumbai 400 021
Tel: (91 22) 2207 9776 Tel: (91 22) 2284 4029
Fax: (91 22) 2207 8541 Fax: (91 22) 2285 1307

State Bank of Indore State Bank of Mysore


Commercial Branch Mittal Court “C” Wing
Mittal Court “B” Wing Nariman Point
Nariman Point Mumbai 400 021
Mumbai 400 021 Tel: (91 22) 2285 1654
Tel: (91 22) 2282 1553 Fax: (91 22) 2282 3895
Fax: (91 22) 2282 1558

Banker to the Issue (To be appointed)


[•]
Tel: [•]
Fax: [•]
E-mail: [•]

Registrar to the Issue


Karvy Computeshare Private Limited
Karvy House, 46 Avenue 4
Street No. 1, Banjara Hills
Hyderabad 500 034, India
Tel: (91 40) 2331 2454, 2332 0751
Fax: (91 40) 2331 1968
Contact Person: Murali Krishna

Issue Management Team

Lead Managers to the Issue

SBI Capital Markets Limited Enam Financial Consultants Private Limited


202, Maker Tower E 801/802, Dalamal Towers
Cuffe Parade Nariman Point
Mumbai 400 005 Mumbai 400 021
Tel : (91 22) 2218 9166 Tel : (91 22) 5638 1800
Fax : (91 22) 22188332 Fax : (91 22) 2284 6824
Email: jswrights@sbicaps.com Email : jswrights@enam.com
Website: www.sbicaps.com Website: www.enam.com
Contact Person: Rohan Talwar Contact Person: Shital Shah

Kotak Mahindra Capital Company Limited


3rd Floor, Bakhtawar
229 Nariman Point
Mumbai 400 021
Tel : (91) 22 5634 1100
Fax : (91 22) 2282 6632
Email : jswrights@kotak.com
Website: www.kotak.com
Contact Person: Anup Agarwal

25
Co-Lead Manager to the Issue

ICICI Securities Limited


ICICI Centre
H.T. Parekh Marg, Churchgate
Mumbai 400 020
Tel: (91 22) 2288 2460
Fax: (91 22) 2282 6580
E-mail: jsw_rights@isecltd.com
Website: www.iseconline.com
Contact Person: Ratnadeep Acharyya
Statement of Inter Se Allocation of Responsibilities for the Issue

The following table sets forth the distribution of responsibility and coordination for various activities amongst
the Lead Managers:
Activity Responsibility Co-ordinator
Capital structuring with the relative components and formalities such SBICAP/ ENAM / SBICAP
as composition of debt and equity, type of instruments KOTAK
Drafting and Designing of the offer document and of advertisement / SBCAP SBICAP
publicity material including newspaper advertisements and brochure
/ memorandum containing salient features of the offer document. The
designated Lead Merchant Banker shall ensure compliance with the
Guidelines for Disclosure and Investor Protection and other
stipulated requirements and completion of prescribed formalities
with Stock Exchange, Registrar of Companies and SEBI.
Marketing of the Issue, which will cover, inter alia, formulating
marketing strategies, preparation of publicity budget, arrangements
for selection of (i) ad-media, (ii) centres of holding conferences of
brokers, investors etc. (iii) bankers to the issue, (iv) collection centres
(v) brokers to the issue and (vi) underwriters and the underwriting
arrangement, distribution of publicity and issue material including
application form, prospectus and brochure, and deciding on the
quantum of issue material, and in particular:

• Retail/Non-institutional marketing strategy I-SEC / SBICAP / I-SEC


ENAM / KOTAK

• Institutional marketing strategy I-SEC / SBICAP / I-SEC


ENAM / KOTAK

Selection of various agencies connected with the issue, namely I-SEC / SBICAP SBICAP
Registrars to the Issue, printers and advertisement agencies.
Follow-up with bankers to the issue to get quick estimates of SBICAP SBICAP
collection and advising the issuer about closure of the issue, based on
the correct figures.
The post-issue activities will involve essential follow-up steps, which SBICAP SBICAP
must include finalisation of basis of allotment / weeding out of
multiple applications, listing of instruments and despatch of
certificates and refunds, with the various agencies connected with the
work such as registrars to the issue, bankers to the issue, and bank
handling refund business. Even if many of these post-issue activities
would be handled by other intermediaries, the designated Lead
Merchant Banker shall be responsible for ensuring that these
agencies fulfil their functions and enable him to discharge this
responsibility through suitable agreements with the issuer company.

Credit rating

This being an issue of Equity Shares, no credit rating is required.

26
CAPITAL STRUCTURE

Aggregate Aggregate
nominal value Value at
(in Rs. Issue Price
Million) (in Rs.
million)
Authorized share capital
2000,000,000 Equity Shares of Rs.10 each 20,000.00
1000,000,000 Preference Shares of Rs.10 each 10,000.00
Issued, subscribed and paid-up capital
156,975,517 Equity Shares of Rs. 10 each* 1569.8
Shares Forfeited (Amount originally paid up) 610.6
2,790,34,907 10% Cumulative Redeemable Preference Shares of 2790.3
Rs.10 each
Present Issue being offered to the Equity Shareholders through the Letter of Offer
Equity Shares of Rs. 10 each at a premium of Rs. [•] i.e.
19,624,398 196.2 [•]
at a price of Rs. [•]
19,624,398 Series A Warrants [●] [●]
19,624,398 Series B Warrants [●] [●]
Paid up capital after the Issue
After issue of the Equity Shares being offered on Rights Basis:
176,597,457 * Equity Shares of Rs. 10 each 1766.0 [•]
Shares Forfeited (Amount originally paid up) 610.6
2,790,34,907 10% Cumulative Redeemable Preference Shares of 2790.3
Rs.10 each
Upon conversion of the Warrants into Equity Shares1:
Equity Shares of Rs. 10 each 2158.4
215,841,337 *
Shares Forfeited (Amount originally paid up) 610.6
2,790,34,907 10% Cumulative Redeemable Preference Shares of 2790.3
Rs.10 each
Securites premium Account
Existing securities premium account [●]
1630.9
Securities premium account after issue of the Equity [●] [•]
Shares being offered on Rights Basis ___________
Securities premium account upon conversion of the
NA NA
Warrants into Equity Shares of Rs. 10 each
1
Assuming conversion of all Warrants into Equity Shares by the Warrantholders.
* Excluding provision for issue of 2458 Equity Shares, Series A and Series B Warrants each kept in abeyance in this Issue
(refer note 10 on page no. [●] of this DLOF).

Notes
• 11,527,653 warrants were allotted on February 28, 2005 to the shareholders of the Company pursuant to the
Scheme.

• 80 and 21 warrants were allotted respectively on July 22, 2005 and October 20, 2005 upon annulment of
forfeiture of shares.

• As per the terms of the warrants, the warrant holders were entitled to apply for and be allotted one equity
share per warrant by paying Rs.160/- per share. Accordingly, 9,943,043 equity shares of Rs.10/- each fully
paid up were allotted on January 17, 2006 upon exercise of the aforesaid option by the warrant holders. The
unexercised warrants lapsed.

Notes to the Capital Structure

1. Build up of Equity Share Capital

27
Date of No. of Equity Face Issue Cumulative Consideration Remarks
allotment Shares Value Price issued capital
Allotted (Rs.) (Rs.) (Rs.)
August 9, 700 10 10 7,000 Cash Initial Subscribers
1994 to Memorandum of
Association
August 9, 1,980,000 10 10 19,807,000 Cash Private Placement
1994
October 7, 3,354,450 10 10 53,351,500 Cash Private Placement
1994
February 1, 260,000,000 10 10 2,653,351,500 Cash / Public Issue
1995 Conversion of
Debentures
February 1, 48,276,000 10 10 3,136,111,500 Cash / Public Issue
1995 Conversion of
Debentures
February 7, 50,000,000 10 10 3,636,111,500 Cash / Public Issue
1995 Conversion of
Debentures
February 8, 89,664,850 10 10 4,532,760,000 Cash / Public Issue
1995 Conversion of
Debentures
February 8, 41,724,000 10 10 4,950,000,000 Cash / Public Issue
1995 Conversion of
Debentures
March 15, 205,220,000 10 10 7,002,200,000 Cash / Public Issue
1995 Conversion of
Debentures
April 15, 474,780,000 10 10 11,750,000,000 Cash / Public Issue
1995 Conversion of
Debentures
December 7, 8,601,900 10 10 11,836,019,000 Cash Preferential Issue
1999
December 6,514,860 10 10 11,901,167,600 Cash Preferential Issue
16, 1999
December 11,551,100 10 10 12,016,678,600 Cash Preferential Issue
27, 1999
October 30, 126,000,000 10 10 13,276,678,600 Cash Preferential Issue
2000
October 30, (206,978,250) - 11,206,896,100 - Forfeiture for non
2000 payment of call
money
November16, 170,450,000 10 10 12,911,396,100 Cash Preferential Issue
2000

May 18, 51,400 10 - 12,911,910,100 - Annulment of


2001 forfeiture
October 27, 62,800 10 - 12,912,538,100 - Annulment of
2001 forfeiture
January 18, 29,900 10 - 12,912,837,100 - Annulment of
2002 forfeiture
March 27, (353,410) - 12,909,303,000 - Forfeiture for non
2002 payment of
allotment money
May 30, 9,900 10 - 12,909,402,000 - Annulment of
2002 forfeiture
August 23, 3,000 10 - 12,909,432,000 - Annulment of
2002 forfeiture
October 29, 24,300 10 - 12,909,675,000 - Annulment of
2002 forfeiture

28
Date of No. of Equity Face Issue Cumulative Consideration Remarks
allotment Shares Value Price issued capital
Allotted (Rs.) (Rs.) (Rs.)
March 11, 30,500 10 - 12,909,980,000 - Annulment of
2003 forfeiture
October 22, 17,500 10 - 12,910,155,000 - Annulment of
2003 forfeiture
July 27, 2004 73,200 10 - 12,910,887,000 - Annulment of
forfeiture
January 31, 8,425 10 - 12,910,971,250 - Annulment of
2005 forfeiture
February 28, 129,039,142 10 - - Reorganization of
2005 1,290,391,420 capital and issue of
shares under the
scheme of
arrangement and
amalgamation
between JISCO,
Jindal South West
Holdings Limited
and the Company
July 22, 2005 394 10 - - Annulment of
1,290,395,360 forfeiture
October 20, 101 10 - - Annulment of
2005 1,290,396,370 forfeiture
November 17,992,837 10 - 1,470,324,740 - Issue of shares
30, 2005 pursuant to the
scheme of
amalgamation of
Euro Ikon and
Steel Private
Limited, Euro
Coke and Energy
Private Limited
and JSW Power
Limited with the
Company
January 17, 9,943,043 10 160 1,569,755,170 Cash Allotment of
2006 shares upon
exercise, by the
warrant holders, of
the option attached
to the warrants
issued under the
scheme of
arrangement and
amalgamation
between JISCO,
Jindal South West
Holdings Limited
and the Company

Total 156,975,517 1,569,755,170

Except for issuance of Equity Shares under schemes of amalgamations/arrangements as stated in the table above,
our Company has not issued Equity Shares for consideration other than cash. We have not issued any shares out
of revaluation reserves.

29
2. Build up of Cumulative Redeemable Preference Shares

Date of Description No. of shares Face value Consideration


allotment (Rs)

July 19, 2003 10% Cumulative 279,034,907 10 Conversion of debt into


Redeemable Preference equity
Shares

3. Current shareholding pattern of the Company (As on January 17, 2006)

Shareholders No. of Equity % of pre- No. of Equity % of post Issue


Shares held pre- Issue Shares post Issue capital assuming
Issue capital allotment of all
Equity Shares
offered*
20,085,040 11.37
Promoter 17,853,369 11.37

Promoter Group
JSW Energy Limuited 13,746,183 8.76 15,464,456 8.76
(formerly Jindal
Thermal Power
Company Limited)
Nalwa Sons 5,116,879 2.90
Investments Limited 4,548,337 2.90
(formerly Jindal Strips
Limited)
Other companies and 39,109,902 22.15
individuals forming 34,764,357 22.14
part of the promoter
group
Total Promoter and 79,776,277 45.17
promoter group 70,912,246 45.17
shareholding
Public
5,364,693 3.04
Mutual Funds and UTI 4,768,616 3.04

Banks, Financial 14,014,719 7.94


Institutions and 7.94
Insurance Companies 12,457,528
26,099,776 14.78
FIIs
23,199,801 14.78
9,518,592 5.43
Private Corporate
8,516,971 5.43
Bodies
2,526,296 1.43
NRIs and OCBs
2,245,596 1.43
25,794,810 14.61
Indian Public 14.61
22,928,720
398,648 0.23
Trust 354354 0.23

Foreign Bodies 11,591,685 7.38 13,040,646 7.38


Corporate
Total public 54.83 96,821,180 54.83
shareholding 86,063,271

30
Shareholders No. of Equity % of pre- No. of Equity % of post Issue
Shares held pre- Issue Shares post Issue capital assuming
Issue capital allotment of all
Equity Shares
offered*

Total 156,975,517 100.00 176,597,457 100.00

4. The Promoters have confirmed that they along with their relatives and the companies controlled by
them (together hereinafter referred to as “Promoter Group” in this clause) intend to subscribe to the full
extent of their entitlement in the Issue. The Promoters reserve their right to subscribe to their
entitlement in the Issue either by themselves, their relatives or a combination of entities controlled by
them, including by subscribing for renunciation if any made within the Promoter Group to another
person forming part of the Promoter Group. The Promoter Group shall apply for additional Equity
Shares and/or Warrants in the Issue, such that at least 90% of the Issue is subscribed. As a result of this
subscription and consequent allotment, the Promoter Group may acquire shares over and above their
entitlement in the Issue, which may result in an increase of the shareholding being above the current
shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of
additional Equity Shares and/or Warrants and/or Equity Shares upon conversion of Warrants by the
Promoter Group, if any, will not result in change of control of the management of the Company and
shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than
meeting the requirements indicated in the section on “Objects of the Issue” on page [•] of this Draft
Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the
Company, even if, as a result of allotments to the Promoter Group, in this Issue, the Promoter Group’s
shareholding in the Company exceeds its current shareholding. The Promoter Group shall subscribe to
such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoter Group of
any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing
Agreement and other applicable laws prevailing at that time relating to continuous listing requirements.

Our Promoters have provided the following undertaking, in terms of the SEBI (Delisting of Securities)
Guidelines, 2003:

“We hereby undertake that, in case the Rights Issue of JSW Steel Limited is completed with the
Promoter Group subscribing to equity shares and/or Warrants over and above their entitlement and as
a result, if the public shareholding in the Company after the Rights Issue falls below the “permissible
minimum level” as specified in the listing condition or listing agreement, we will either individually
or jointly with the Promoter Group make an offer for sale of our holdings so that the public
shareholding is raised to the “permissible minimum level” within a period of three months from the
date of allotment of Equity Shares in the proposed Issue, as per the requirements of Clause 17.1 and
17.2 of SEBI (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto or any other
period as may be directed by SEBI or any appropriate authority.”

5. Details of the shareholding of the Promoter, directors of the promoter group in the Company as on
January 17, 2005 is as follows:

Name of entities No. of Shares Total No. of Shares


Promoter
Sajjan Jindal 12,764
Savitri Devi Jindal 5,682
Jindal South West Holdings Limited
17,834,923
17,853,369
Promoter Group
Relatives of Promoter
Abhyuday Jindal 5,078
Aiyush Bhuwalka 1,200
Arti Jindal 1,108
Deepika Jindal 5,466
Girish Jhunjhnuwala 13,124
Madanlal Jindal 51
Madhur Goel 4

31
Name of entities No. of Shares Total No. of Shares
Manmohan Goel 21
Navin Jindal 3,644
Nirmala Goel 5,089
O P Jindal & Sons HUF 3,882
Late Mr. Om Prakash Jindal 5,808
Parth Jindal 2,000
Prithviraj Jindal 7,387
Prithviraj Jindal HUF 3,779
Ratan Jindal 4,946
Ratan Kumar Jindal HUF 14,089
Sangita Jindal 4,813
Saroj Bhartia 139
Seema Jajodia 231
Sminu Jindal 5,588
Tanvi Jindal 2,000
Tarini Jindal 5,026
Tripti Jindal 5,066
Urmila Bhuwalka 20,500
Urvi Jindal 5,082
125,121
Companies forming part of the Promoter Group
Abhinandan Investments Limited 692,113
Aras Overseas Private Limited 2,890
Baltimore Trading Private Limited 3,666
Beaufield Holdings Limited 1,922,797
Coldrado Trading Company Limited 908,318
Estrela Investment Company Limited 416,007
Ever Plus Securities Finance Limited 526,785
Gagan Trading Company Limited 3,826,085
Goswamis Credits Investment Limited 61,888
Heston Securities Limited 425,239
Hexa Securities Finance Company 1,752,056
Limited
Jargo Investments Limited 425,000
Jindal Coated Steel Private Limited 4
Jindal Equipment Leasing & Consultancy 1,594,579
Services Limited
Jindal Holdings Limited 3,077,704
JSW Power Trading Company Limited 850,000
Jindal Saw Ltd (formerly Saw Pipes 1,362
Limited)
Jindal Steel and Alloys Limited 1,656,758
JSW Energy Limited (Formerly Jindal 13,746,183
Thermal Power Company Limited)
Kamshet Investments Private Limited 4,177
Karnataka State Industrial Investment and 2,575,454
Development Corporation Limited
Manjula Finance Limited 195,964
Mansarover Investments Limited 1,180,122
Mendeza Holdings Limited 421,809
Meredith Traders Private Limited 12,305
Musuko Trading Limited 2,714
Nacho Investments Limited 420,738
Nalwa Investments Limited 1,231,475
Nalwa Sons Investments Limited 4,548,337
(Formerly Jindal Strips Limited)
Naman Enterprises Pvt. Ltd. 4
Pentel Holding Limited 416,657

32
Name of entities No. of Shares Total No. of Shares
Renuka Financial Services Limited 197,807
Reynold Traders Private Limited 1,222,006
Rishikesh Finlease & Investments Private 6,000
Limited
Sarmento Holdings Limited 421,957
Southern Iron & Steel Co. Ltd. 1,140,000
Stainless Investments Limited 946,228
Sun Investments Limited 2,268,184
Swastik Udyog Limited 75,390
Templar Investments Limited 420,652
Vavasa Investments Limited 413,756
Vrindavan Services Limited 2,913,390
Wachovia Investments Limited 6,196
West Coast Holdings Private Limited 3,000
52,933,756
Total Promoter and Promoter Group
shareholding 70,912,246

Details of transactions in the shares of the Company during the last six months by the Promoters and the
Promoter Group are as under:

Name Date of Details of the Number of Price (in


transaction transaction Equity Shares Rs.)

JSW Power Trading Company 16.12.2005 Purchase 100000 230.94


Limited
16.12.2005 Purchase 300000 230.31
19.12.2005 Purchase 400000 233.36
21.12.2005 Purchase 50,000 225.42
Jindal Holdings Ltd 16.12.2005 Purchase 348000 227.16
17.01.2006 Shares allotted 491071 160.00
upon
conversion of
warrants
Stainless Investments Ltd 15.12.05 Sale 33000 227.12
17.01.2006 Shares allotted 42072 160.00
upon
conversion of
warrants
Nalwa Sons Investments .Ltd. 15.12.05 sale 21000 227.12
17.01.2006 Shares allotted 26795 160.00
upon
conversion of
warrants
Manasrover investments Limited 15.12.2005 sale 17000 227.12
17.01.2006 Shares allotted 21444 160.00
upon
conversion of
warrants
Abhinandan Investments 19.12.2005 sale 18000 227.12
Limited
17.01.2006 Shares allotted 23225 160.00
upon
conversion of
warrants
Jindal equipment & Leasing 16.12.2005 sale 200000 220.37
Consultancy Services Limited 19.12.2005 sale 142000 232.76
17.01.2006 Shares allotted 43762 160.00
upon

33
Name Date of Details of the Number of Price (in
transaction transaction Equity Shares Rs.)

conversion of
warrants
Jindal Steel & Alloys Limited 20.12.2005 sale 226500 226.63
17.01.2006 Shares allotted 319196 160.00
upon
conversion of
warrants
Southern Iron & Steel Company 30.11.2005 Upon 1140000
Limited Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
JSW Energy Limited 30.11.2005 Upon 1358384
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
12.12.2005 Sale 50000 216.85
12.12.2005 Sale 180000 217.85
13.12.2005 Sale 250000 223.40
13.12.2005 Sale 250000 224.17
14.12.2005 Sale 270000 227.40
16.12.2005 Sale 100000 229.61
16.12.2005 Sale 300000 229.01
19.12.2005 Sale 400000 232.02
17.01.2006 Shares allotted 1340766 160.00
upon
conversion of
warrants
Aras Overseas Pvt Ltd. 20.12.2005 sale 14161 227
17.01.2006 Shares allotted 2890 160.00
upon
conversion of
warrants
Gagan Trading Co Ltd 30.11.2005 Upon 200
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
21.12.2005 Sale 78040 224.20
22.12.2005 Sale 114000 224.96
23.12.2005 Sale 49960 218.10
17.01.2006 Shares allotted 338191 160.00
upon
conversion of
warrants
Jindal South West Holdings Ltd 30.11.2005 Upon 2200
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
21.12.2005 Sale 650000 224.71
22.12.2005 Sale 850000 225.29
17.01.2006 Shares allotted 3276732 160.00
upon
conversion of
warrants

34
Name Date of Details of the Number of Price (in
transaction transaction Equity Shares Rs.)

Musuko trading Pvt Ltd 20.12.2005 Sale 13300 229.43


17.01.2006 Shares allotted 2714 160.00
upon
conversion of
warrants
Wachovia Investments Pvt Ltd 20.12.2005 Sale 30364 228.97
17.01.2006 Shares allotted 6196 160.00
upon
conversion of
warrants
Sun Investments Pvt Ltd 30.11.2005 Upon 650148
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
20.12.2005 Sale 80000 228.83
17.01.2006 Shares allotted 73957 160.00
upon
conversion of
warrants
Vrindavan Services Pvt Ltd 30.11.2005 Upon 193616
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.
21.12.2005 Sale 219793 224.86
23.12.2005 Sale 800000 217.27
17.01.2006 Shares allotted 208129 160.00
upon
conversion of
warrants
SamarthHoldings Pvt Ltd 28.10.2005 Purchase 60000 205.93
31.10.2005 Purchase 20000 203.25
09.12.2005 Sale 80000 211.18
Reynold Traders Private Limited 30.11.2005 Upon 4
Amalgamation 10.00
of JSW Power (Face
Ltd with JSW value).
Steel Ltd.

4. Top ten shareholders

a. Top ten shareholders as on January 23, 2004

Name of the shareholders Total Shares Percentage of pre


issue capital
Jindal Iron and Steel Company Limited 366,969,100 28.43
Jindal Tractebel Power Company Limited 150,165,860 11.63
Jindal Holdings Limited 55,000,000 4.26
Hexa Securities Finance Company 50,000,000 3.87
Limited
Karnataka State Industrial Investment and 50,000,000 3.87
Development Corporation Limited
Gagan Trading Company Limited 37,815,000 2.93
Jindal Strips Limited 35,750,000 2.77
Industrial Development Bank of India 13,894,695 1.08

35
Name of the shareholders Total Shares Percentage of pre
issue capital
Ever Plus Securities Finance Limited 10,000,000 0.77
Saw Pipes Limited 10,000,000 0.77
Total 779,594,655 60.38

b. Top ten shareholders as on January 13, 2006

Name of the shareholders Total Shares Percentage of pre


issue capital
Jindal South West Holdings Limited 14,558,191 9.90
JSW Energy Limited (Formerly Jindal 12,405,417 8.44
Thermal Power Company Limited)
HSBC Global Investment Funds A/c 8,401,697 5.71
HSBC Globalinvest
Mineral Euro Asia Limited 6,556,444 4.46
Duferco Coke Investments Limited 5,035,241 3.42
Nalwa Sons Investments Limited 4,548,311 3.09
(Formerly Jindal Strips Limited)
Life Insurance Corporation of India 4,389,250 2.99
The Indiaman Fund (Mauritius) 4,022,000 2.74
Industrial Development Bank of India 3,626,545 2.47
Limited
Gagan Trading Company Limited 3,487,894 2.37
Total 67,030,990 45.59

c. Top ten shareholders as on January 20, 2006

Name of the shareholders Total Shares Percentage of pre


issue capital
Jindal South West Holdings Limited 17,834,923 11.36
JSW Energy Limited (Formerly Jindal 13,746,183 8.76
Thermal Power Company Limited)
HSBC Global Investment Funds A/c 8,401,689 5.35
HSBC Globalinvest
Mineral Euro Asia Limited 6,556,444 4.18
Duferco Coke Investments Limited 5,035,241 3.21
Nalwa Sons Investments Limited 4,548,337 2.90
(Formerly Jindal Strips Limited)
Life Insurance Corporation of India 4,392,200 2.80
The Indiaman Fund (Mauritius) 4,022,000 2.56
Industrial Development Bank of India 3,626,545 2.31
Limited
Gagan Trading Company Limited 3,826,085 2.44
Total 71,989,647 45.87

7. The total number of members of the Company as on January 20, 2006 is 676,314
8. The present Issue being a rights Issue, as per clause 4.10.1 (c) of the SEBI guidelines, the requirement
of promoters’ contribution and lock-in are not applicable.
9. The Company has not availed of “bridge loans” to be repaid from the proceeds of the Issue for incurring
expenditure on the Objects of the Issue.
10. The Company allotted 534,664,850 partly paid up Equity Shares of Rs. 10 each, where 50% of the
Equity Shares was paid up (“50% Partly Paid Shares”) and 272,920,300 partly paid up Equity Shares
of Rs. 10 each, where 20% of the Equity Shares was paid up (“20% Partly Paid Shares”) during 1995.
In respect of the above categories of Equity Shares, the Board made calls and the Company sent several
call money notices in respect of the money unpaid on them.

36
On not having received the pending call moneys the Board passed a resolution forfeiting 65,131,950
50% Partly Paid Shares and 141,846,300 20% Partly Paid Shares. However, before such forfeiture, the
Company had received Rs. 3.97 million as call money without requisite details of the shareholders.

The Board decided that if the details and proof of payment of call money in respect of the forfeited
Equity Shares were furnished by the respective Equity Shareholders who had made payments, the Board
would annul the forfeiture in respect of such Equity Shares. Accordingly, on the basis of representations
received from our shareholders, the Board vide several resolutions annulled the forfeiture of 310,925
equity shares prior to the scheme of arrangement and amalgamation between JISCO, JSWHL and the
Company and 495 Equity Shares after implementation of the scheme of amalgamation and arrangement
between JISCO, JSWHL and the Company and these Equity Shares were made fully paid up. Further,
101 warrants have also been issued upon annulment of forfeiture as provided in the Scheme.

As on December 31, 2005, Rs.2,140,200/- is the balance unappropriated call money. If the particulars in
respect of the said balance unappropriated call money are furnished, the forfeiture in respect of 16,327
Equity Shares (Post Scheme) would have to be annulled and 3,333 warrants would have to be issued. In
view of the same a provision for issue of 2458 Equity Shares, 2458 Series A and 2458 Series B
Warrants to be kept in abeyance has been made in this Issue and the benefit of the same will be given to
our shareholders on annulment, as and when it happens in future.

11. The Promoter and Directors of the Company and Lead Manager of the Issue have not entered into any
buy-back, standby or similar arrangements for any of the securities being issued through this Draft
Letter of Offer.
12. The terms of issue to Non-Resident Equity Shareholders/Applicants have been presented under the
section “Terms of the Issue” on page [•] of this Draft Letter of Offer.
13. At any given time, there shall be only one denomination of the Equity Shares of the Company.
14. No further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or public
issue or in any other manner which will affect the equity capital of the Company, shall be made during
the period commencing from the filing of the Letter of Offer with the SEBI and the date on which the
Equity Shares and Warrants issued under the Letter of Offer are listed or application moneys are
refunded on account of the failure of the Issue. Further, presently the Company does not have any
intention to alter the equity capital structure by way of split/ consolidation of the denomination of the
shares, issue of shares on a preferential basis or issue of bonus or rights or pubic issue of shares or any
other securities within a period of six months from the date of opening of the Issue.
15. The Issue will remain open for 30 days. However, the Board will have the right to extend the Issue
period as it may determine from time to time but not exceeding 60 days from the Issue Opening Date.

37
OBJECTS OF THE ISSUE

The objects of the issue are to part finance the setting up of 1 mtpa Cold Rolling Mill (CRM) Complex, Debt
repayment / reduction and strategic initiatives. We intend to use the net proceeds of the issue for following
purpose:

A) Proceeds from the issue of Equity Shares on rights basis

- To part finance the cost of setting up 1 mtpa cold rolling mill (CRM) Complex at Upstream facility;

B) Proceeds from the exercise of the Warrants

- Debt repayment / reduction and strategic initiatives including general corporate purposes.

The expenses of the Issue will also be met out of such proceeds of the Issue. The expenses of this Issue mainly
includes lead manager’s fees, printing and distribution expenses, legal fees, statutory advertisement expense and
listing fees payable to stock exchanges amongst others. The total expenses of the Issue are estimated to be [●]
million, which will be funded by the proceeds of this Issue.

The main objects clause of our Memorandum of Association and the objects incidental or ancillary to the main
objects enable us to undertake our existing activities and the activities for which the funds are being raised in the
Issue.

A) Proceeds from the Issue of Equity Shares on rights basis

Requirement of Funds:
Particulars Amount (Rs Million)
Establishment of 1mtpa CRM Complex at Toranagallu District,
10000
Bellary
Issue expenses [●]
Total [●]

Sources of funds:
Particulars Amount (Rs Million)
Proceeds from the Issue of Equity Shares on Rights basis [●]
Internal accruals [●]
Debt 6000
Total [●.]

B) Proceeds from conversion of the Warrants:

We, as approved by the Board from time to time, will utilise funds raised through conversion of warrants for debt
repayment/reduction and for strategic & general corporate purposes.

The Warrants can be exercised at any time between 18 months to 48 months from the date of allotment. Please
refer to page [●] of this Draft Letter of Offer for the terms of the Warrants. Conversion Price for each Series of
Warrants shall be at a % discount to the average of the weekly high and low of the closing prices of the Equity
Share of the Company on BSE during the four weeks immediately preceding the week in which Board of
Directors informs to the BSE for fixing the Warrant Conversion Date for conversion of Warrant. Hence it is not
possible to determine the funds expected to be raised at the time of conversion of warrants.

Capital expenditure for Cold Rolling Mill (CRM) Complex

The per capita consumption of steel in the country has been growing in line with the growth in GDP and we
believe that India is better positioned to meet the growing steel demand, in India and aborad, due to availability
of rich iron ore and skilled manpower. The concentration of the automobile and auto component sectors, which
are large consumers of steel, being in South India provides us a distinct opportunity to meet the growing steel
demand for auto sector requiring steel products of high quality with low tolerances.

38
To exploit this emerging business opportunity and also as part of our strategy of improving our product profile,
we are setting up a 1 mtpa CRM Complex, at our Upstream facility. We propose to set up the new CR facility
that will produce Auto grade CR products and special grades of HR products. In respect of this project Mecon
Limited, a Government of India undertaking has carried out the Techno-economic feasibility in April-2005 and
Industrial Development Bank of India Limited (IDBI) has carried out the appraisal of the project in September
2005.

As part of the project, we propose to install a continuous pickling line of 1.1 mtpa capacity, compact cold mill of
0.85 mtpa capacity, an electrolytic cleaning line of 0.625 mtpa capacity, batch annealing furnace of 0.625 mtpa
capacity, a skin pass mill of capacity 0.875 mtpa capacity, two recoiling cum inspection lines, grinding
machines, laser welder and high speed cranes. The following facilities will be available upon completion of the
project:

Production Facilities Quantity (mtpa)


a) Hot Rolled Slit coils 0.1
b) Hot Rolled- Pickled & Oiled coils 0.1
c) Cold Rolled- Annealed & Skin passed coils 0.6
d) Cold Rolled – Full hard Coils 0.2
Total Capacity Addition 1.0

Benefits

• The proposed expansion will enable us to emerge as the one of the integrated steel manufacturers with
ability to produce CR products in southern India, where the potential of demand growth is high.

• The demand of CR Products, which is largely used in the automobile industry, is currently met by imports
and/or sourced from manufacturers having production facilities in other parts of the country. We feel that
our products will not only find a ready market at competitive price but would also serve as a superior
substitute to the imports.

• The realisation of CR products is comparatively high and the selling prices are less volatile compared to HR
products. The proposed expansion is expected to reduce the impact on revenue due to any future drop in the
prices.

• Significant portion of our total production comprises of value added products including CR Products. In
view of the enhancement of steel capacity from 2.5 mtpa to 3.8 mtpa, a similar product mix can be
maintained subsequent to setting up of the new CRM Complex.

Means of Financing the Project

Sources of Funding of Project Rs. in Million


Proceeds from the Issue []
Internal Accruals []
Term Loans 6000
Total 10,000

We have received sanction for Rs.3,000 million from IDBI and another Rs. 3,000 Million from ICICI Bank
Limited (ICICI) as part of the term loan facility aggregating to Rs. 6000 Millions. The key terms and conditions
for term loans are as under:

Particulars IDBI ICICI


Amount Rs. 3000 Million Rs. 3000 Millions
Security Pari-passu first charge on the Pari-passu first charge on the
movable and immovable movable and immovable
properties, both present and properties, both present and
future of the CRM Complex. future of the CRM Complex.

Interest payment Monthly Monthly

39
Interest rate Long Term PLR less 225 bps ICICI Bank Advance Rate
(IBAR) less 3.00%

Repayment Schedule 54 monthly instalments 54 monthly instalments


commencing from October 2008, commencing from October 15,
with ballooning repayment 2008 and ending on March 15,
structure ending in March 2013 2013, with ballooning repayment
structure.
Sanction Letter Date November 4, 2005 September 23, 2005

Utilisation of Funds

The estimated fund requirements to set up the project are set forth below

Particulars Requirement
of Funds
(Rs. in Million)
Land and Site development 152.5
Building and Civil works 575.4
Plant and Machinery 7334.5
(Including Miscellaneous Fixed Assets, Engineering & Supervision)
Preliminary and pre-operative expenses 143.8
Interest during construction 413.5
Contingencies 897.3
Margin money for Working Capital (for 1st year of project operation) 483.0
Total project cost 10,000.00

Land and site development (Rs. 152.5 Million)

The total requirement of land in respect of the CRM project is about 60 hectares. The land required for CRM
complex is being carved out of the existing land available at upstream facility and no additional land is required
to be acquired for this project. Hence, no expenditure has been provided for towards land acquisition. The site
development expenditure estimate includes cost of laying roads, drainage system and extension of railway
tracks.

Building & Civil Works (Rs. 575.4 Million)


The cost of building and civil works includes the civil works for factory buildings, Plant & Machinery
foundation works etc. worked out on the basis of preliminary layout and facilities required for the CRM
complex. The facilities included in the estimates are factory buildings for main plant and equipment and for
auxiliary services. The cost of building and civil works cover the entire factory sheds and other structurals for
CRM complex apart from common infrastructure like administrative buildings etc. The cost estimates have been
made in-house based on experience from the past and rates for civil works as applicable in the region. The break-
up of the cost is as under:
(Rs. in Million)
Factory buildings for main plant & equipment including structural work 524.4

Factory building for auxiliary services 51.0

Total 575.4

Plant and Machinery (Rs. 7334.5 Million)

Break-up of Plant and Machinery cost is as under-


Particulars Requirement of
Funds
(Rs. in Million)
Imported plant & machinery 4465.4
Indigenous plant & machinery 1677.90
Machinery stores & spares 307.20
Foundation & installation charges on imported & indigenous 441.50

40
machinery
Cost of plant & machinery 6891.90
Modvatable amount 949.50
Cost of plant & machinery (net of modvatable amount) 5942.40
Miscellaneous fixed assets 1,142.1
Engineering and supervision charges 250.0

Total cost of Plant and Machinery 7334.5

Note- The costs of imported equipment have been taken on FOB basis and the costs of indigenous equipments
have been taken on FOR basis. The exchange rates are 1USD is equal to Rs.44 and 1 EURO is equal to Rs.58.
for estimation of cost of imported plant and machinery

The details of major purchase orders placed for plant and machinery for this project are as follows:

Particulars Cost Supplier Date of Order Expected


(Rs. in Placement Date of
Million) Supply
CCM & SPM 2173.71 Duferco Trading September 2, 2005 Dec-06
Company Holding
Ltd. (DTCHL)
BAF 560.98 DTCHL November 2, 2005 Dec-06
Eastern Equipments, September 21, 2005 Dec-06
India
Roll Grinder (RCL) 1079.11 DTCHL December 16, 2005 Feb-07
Electro Discharge Texturising 1.17 DTCHL December 16, 2005 Feb-07
CPL 371.14 Flat Products, India September 20, 2005 Dec-06
ECL 423.3 DTCHL December 16, 2005 Dec-06
Flat Products, India September 26, 2005 Dec-06
Electrical for all major units 441.93 DTCHL September 2, 2005 Dec-06
ABB, India September 9 to Dec-06
December 24, 2005
Coil Inspection 206.48 DTCHL November 22, 2005 Dec-06
Bronx India November 22, 2005 Dec-06
Total 5257.82

No second-hand machinery has been bought or is proposed to be bought for this project.

Orders remain to be placed for plant and machinery worth Rs 684.6 million forming 9.3% of total cost of
machinery for this project

The major portion of miscellaneous fixed assets (MFA) and engineering and supervision charges will be
finalized during the course of project implementation. The MFA consists of primarily of various equipment
having relatively short delivery period and the negotiations are due to commence over the next couple of months.
The Engineering and supervision charges primarily relate charges payable for various services being provided for
the project.

41
Utilities

Power

Our total power requirement at 3.8mtpa capacity is expected to be 223 MW and will require additional power
of 30 MW for the proposed CRM complex. At our Upstream facility power generation is expected to be 230
MW by March, 2006 and balance requirement would be met by drawing power from JEL which has total
generation capacity of 260 MW. Thus, we do not anticipate any difficulty in meeting the power requirement
for the project.

Water

We have approval to draw water upto 20mgd from Tungabhadra Dam, which would be adequate to meet the
requirement of the entire steel plant including CRM complex. Water requirement for CRM complex is at 145
M3/h, which is mainly required for cooling purpose. Recirculation systems have been installed to ensure
minimal drawal of fresh water.

Gas Requirement

We require Nitrogen gas for purging in the bell-annealing furnace and Corex gas for burning in the bell
annealing furnace and boilers. Nitrogen gas & Corex gas will be drawn from the existing network which is
adequately available within the existing facility. To meet the Hydrogen requirement in the bell annealing
facility, a Hydrogen generation plant of 400 M3/h capacity based on water electrolysis is being setup.

Compressed Air

The requirement of compressed air for the proposed project has been estimated at 86 NM3/h. To meet the above
requirement of compressed air, a compressor station would be provided where two units of water cooled rotary
screw compressors each of 45 NM3/min at a discharge pressure of 7 kg/cm2 (g) will be installed at present. One
air receiver of adequate water holding capacity will be installed at compressor air station to cater to system surge.

Equipment, if any, related Utilities forms a part of the Miscellaneous Fixed Assets (MFA) Budget

Pre-operative expenses (Rs.143.8 Millions)

Under this head, the expenses included are establishment charges (Rs.20.6 Millions), project management and
travel expenses (Rs. 20 Millions), rent, rates and taxes (Rs.3.6 Millions), start-up expenses (Rs.99.6 Millions),
insurance during construction and erection insurance (Rs.12.3 Millions), etc.

Interest during construction (Rs.413.5 Millions)

The interest on borrowings during construction (IDC) has been calculated considering the construction schedule
as 24 months and an interest rate of 8% p.a.

Provision for Contingency (Rs.897.3 Millions)

The cost estimates are based on budgetary quotations, past experiences, prevailing rates etc. Contingency
provision of 10% is computed on imported as well as on indigenous portion of the capital costs to cover
unforeseen aspects of the estimate.

Margin Money for Working Capital ( Rs. 483 million)

The requirement of working capital in the first full year of operation of CRM complex is estimated at Rs.1430.7
Millions based on the level of current assets and current liabilities. Bank finance for working capital is estimated
to be Rs.947.7 Millions. The margin money for working capital (Rs.483.0 Millions) has been provided in the
project cost during the first full year of operation. The incremental margin money requirement for the subsequent
years' of operations would be met out of the internal accruals.

We have an existing banking relationship with consortium of banks and have been sanctioned an aggregate fund
based limit of Rs.3040 million, which is adequate to meeting our existing requirements. As a matter of practice,
we submit and would continue to submit the Credit Monitoring Arrangement (“CMA”) data giving the detailed

42
assessment of working capital on an annual basis. In this manner we will tie up the annual limit, including the
enhancement required to meet the working capital needs arising out of the implementation of the Project on a
regular basis. We do not foresee any difficulty whatsoever in doing so.

Funds Deployed till date

The total expenditure incurred by the Company on the project as on December 31, 2005 is as follows. The same
has been certified by the A. Seenam Bhat, Chartered Accountants dated January 12, 2006:

Particulars Amount
(Rs. in Million)
Land and Site development Nil
Building and Civil works 26.87
Plant and machinery 348.10
Engineering and supervision charges 21.43
Miscellaneous fixed assets Nil
Preliminary and pre-operative expenses 28.86
Interest during construction Nil
Total 425.26

The above expenditure has been financed from the internal accruals and buyers’ credit.

The year wise proposed utilisation of funds is given below:


(Rs in Million)
FY 05-06
Jan-06 to FY 06-07 Total
Particulars Till Dec 05
March-06
Land and Site development 0.00 115.88 36.62 152.50
Building and Civil works 26.87 548.53 0.00 575.40
Plant & Machinery 348.10 473.07 5121.23 5942.40
Engineering & Supervision 21.43 0.00 228.57 250.00
Miscellaneous Fixed Assets (utilities) 0.00 143.29 998.81 1142.10
Preliminary and pre-operative expenses 28.86 0.39 114.55 143.80
Interest during construction 0.00 0.00 413.50 413.50
Contingencies 0.00 0.00 897.30 897.30
Margin money for Working Capital 0.00 0.00 483.00 483.00
Total 425.26 1281.16 8293.58 10000.00

We propose to meet the project expenditure, till the proceeds for the Issue is received, out of internal accruals
and buyers’ credit/term loans. Upon the receipt of proceeds from the Issue, the amount incurred from internal
accruals would be replenished to the extent that the sum of issue proceeds and internal accruals aggregates to
Rs.4000 million. The buyers’ credit facility has been earmarked against the term loans sanctioned for the project
and will be liquidated on the respective due dates out of the proceeds of the term loan.

Schedule of Implementation

The overall implementation schedule for the project is estimated to be as follows:

Facility Completion date


Detailed engineering August 31, 2006
Civil works September 30,2006
Structural Supply June 30, 2006
Structural Erection August 31, 2006
Major Equipment Supply November 30, 2006
Equipment Erection January 31, 2007
Trial runs and commissioning March 31, 2007

43
Approvals:

We have applied for approvals which are expected to be provided by way of Government Order by the State of
Karnataka encompassing all the necessary approvals except for environment clearance. We expect the
Government Order on the approvals to be available in due course. We have also submitted our application for
environmental approval and we do not foresee any issues in obtaining the approvals on time.

Debt repayment / reduction

The proceeds arising out of the conversion of the warrants will be partly utilised for Debt repayment / reduction.

Strategic initiatives including general corporate purposes

In addition to our proposed capital expenditure, we also intend to utilise the net proceeds arising out of the
conversion of Warrants for strategic initiatives which may include investment in strategic investments,
acquisitions and general corporate purposes.. We have in the past, grown our business and operations through
both organic and inorganic routes. Going forward, we believe that strategic investments and acquisitions may be
one of key initiatives to grow our business. While this would be a component of our strategy, presently we do not
have any legally binding commitments to enter into any such arrangements. These initiatives will be governed by
our long-term goals and other business objectives.

Utilisation of Funds

As per our current business plans, we intend to utilise the Issue proceeds for the purposes as specified above.
However, we cannot provide a definitive long-term estimate of the use of proceeds from the Issue and the
priorities or contingencies affecting them due to the rapidly shifting developments in our industry. For example,
we may wish to spend a portion of the proceeds on expansion instead of general corporate purposes if our
business outgrows our current expansion plans. Alternatively, we may wish to spend some of the proceeds
currently budgeted for expansion on strategic acquisitions and partnerships if opportunities arise. Accordingly,
we will have flexibility in applying the proceeds received by us from the Issue.

The above fund requirements are based on our current business plans. In view of the competitive and dynamic
nature of the industry in which we operate, we may have to revise our business plans from time to time and
consequently our fund requirements may also change. This may include rescheduling of our capital expenditure
plans and changes to our capital expenditure for a particular purpose vis-à-vis current plans at the discretion of
the Board.

The net proceeds of the Issue upon exercising conversion of warrants would be used to meet all or any of the
uses of funds described above. In case the funds raised are lower than our total budgeted requirements, we intend
to use internal accruals to finance the requirements. As per the statement of Cash Flows, for the fiscal 2005 and
2004, our net cash flow from operating activities were Rs. 19,984.0 million and Rs.12,149.7 million
respectively.

Interim Use of Proceeds

We, in accordance with the policies set up by the Board, will have flexibility in deploying the net proceeds
received by us from the Issue. Pending utilisation of funds for the purposes described above, the funds would be
deployed either towards temporary reduction in utilisation of working capital borrowings and / or invest in high
quality interest/dividend bearing short-term/long-term liquid investments including deposits with banks for
necessary duration.

Issue Expenses

The expenses of the Issue will be met out of proceeds of the Issue. The expenses of the issue include issue
management fees, printing and distribution expenses, legal fees, advertisement expenses, depository charges,
trustee fee and listing fees to the stock exchanges, among others. The total expenses for the Issue are estimated
not to exceed [●] % of the size of the Issue.

44
BASIS FOR ISSUE PRICE

Investors should also refer to the section “Risk Factors” and “Auditor’s Report” to get a more informed view
before making the investment decision. The face value of the shares is Rs. 10.
Qualitative Factors
ƒ Company is one of the leading private sector integrated steel manufacturer in India and the major flat steel
producer in Southern India with focus on entire value chain from iron ore to galvanized products.
ƒ Company has one of the largest galvanizing capacities in the country and its galvanised products are
exported to more than 50 countries across five continents
ƒ Company is vertically integrated with operations spanning from pellet to manufacturing of value added
galvanized and colour coated products.
ƒ Company is having captive power plant and coke oven plant.
ƒ Company has come out of CDR framework by prepaying/refinancing of out standing debt
ƒ Company has improved its financial position by prepaying debt and replacing it with low cost debt. For
details please refer section on “Financial Statements” and “Management Discussion and Analysis”
ƒ The low per capita consumption of steel in India coupled with increasing investment in infrastructure,
housing, construction and urbanization provide significant growth opportunities for the domestic steel
industry.
ƒ Management team consists of experienced professionals with diverse skills in manufacturing, sales,
marketing, finance and supply chain management.
For detailed discussion on the above factors, please refer to the section titled “Industry” and “Our Business” on
pages [●] and [●] of this Draft Letter of Offer.
Quantitative Factors
Information presented in this section is derived from our restated financial statements prepared in accordance
with Indian GAAP.
1. Earning Per Share (EPS) of face value of Rs.10
Diluted EPS before exceptional items:

Diluted EPS
Year Weight
(Rs.) a
FY 2003 (41.01) 1
FY 2004 32.06 2
FY 2005 59.78 3
Weighted Average 33.74

a
Diluted EPS for the fiscals 2003, 2004 and 2005 is calculated as Net profit after tax before exceptional
items attributable to equity shareholders divided by weighted average no. of equity shares outstanding
during the year (adjusted for the effects of dilutive options)

EPS calculations have been done in accordance with Accounting Standard 20 – “Earnings per share” issued
by the Institute of Chartered Accountants of India.

2. Price/Earning (P/E) ratio in relation to Issue Price of Rs. [●]


a. Based on the Diluted EPS of Rs.59.78 for the year ended March 31, 2005, the P/E ratio in relation
to Offer price is [●]
b. Industry P/E b
Highest : 27.9
Lowest : 1.4
Industry Average : 4.4
b
Source: Capital Market, Volume XX/22,January2 – January 16, 2005 - Industry Composite :
Steel - Large)

45
3. Average Return on Net Worth (“RoNW”)

RoNW (%)
c
Year Weight
FY 2003 (45.70) 1
FY 2004 77.96 2
FY 2005 39.17 3
Weighted Average 37.95
c
RoNW has been calculated as Net profit after tax attributable to equity shareholders divided by
Average Networth (excluding Revaluation reserve)

4. Minimum Return on Increased Net Worth Required to Maintain Pre-Issue EPS


The minimum return on increased net worth required to maintain pre-Issue EPS is [-]%#.

5. Net Asset Value per share (“NAV”) d

NAV as at March 31, 2005 is Rs. 195.30


NAV per Equity Share after the Issue is Rs. [-]#
Issue Price per Equity Share: Rs. [-]#
d
NAV calculated as Net worth (excluding Revaluation reserve) divided by Number of equity shares
outstanding at end of the year
#
To be filled in at the timing of filing of the Draft Letter of Offer

6. Comparison with industry peers


Comparison of key ratios with Indian companies of comparable size in the same industry group

Company EPS e NAV f PE Ratio g RoNW h


(Rs.) (times) (%)
Steel Authority of India 16.1 25.0 3.4 88.9
Limited
Tata Steel Limited 61.6 127.6 5.4 60.0
Essar Steel Limited 19.4 32.6 1.5 66.0
Ispat Industries Limited 5.5 20.8 5.8 35.4
JSW Steel Limited * 59.78** 195.3 3.34*** 39.17

(Source for e, f , g and h: Capital Market, Volume XX/22, January2 – January 16, 2006 - Industry Composite :
Steel - Large)
* Source: Restated Auditors Report as mentioned in this Draft Letter of Offer
** Represents diluted EPS before exceptional items for March, 2005
*** Represents PE on the basis of closing market price per share prevailing on January 23, 2006
(BSE Website)

The Lead Manager believes that the issue price of Rs. [●] per share is justified in view of the above qualitative
and quantitative parameters. The investors may also want to peruse the risk factors, Company’s business,
management, key agreements, litigations and financials of the Company including profitability and return ratios,
as set out in the Auditors Report in the Letter of Offer to have more informed view about the investment
proposition.

46
STATEMENT OF TAX BENEFITS

Listed below are the possible tax benefits available to the Company and its shareholders under the current tax
laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders
fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its
shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business
imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits
discussed below are not exhaustive.

The following tax benefits shall be available to the Company and to the shareholders under Direct Tax.

1. To the Company - Under the Income-tax Act, 1961 (“the Act”)

1.1 The Company is eligible to claim deduction of an amount equal to hundred per cent of the profits and gains
derived its captive power plant u/s 80IA of the Act for 10 consecutive years out of initial 15 years.

1.2 Under Section 32 of the Act, depreciation on plant and machinery and on rolls used in Iron & Steel Industry
is eligible at the rate of 15% and 80% respectively. Additional depreciation at the rate of 20% is eligible on
plant and machinery in the year of acquisition / installation.

1.3 Under Section 35D of the Act, the Company is eligible for deduction equal to one-fifth of certain specified
expenditure, including specified expenditure incurred in connection with the issue for the extension of the
industrial undertaking, for a period of five years subject to the limit provided and the conditions specified
under the said section.

1.4 Dividend received by the Company from its investment in shares of another domestic company is exempt
under section 10(34) read with section 115O of the Act.

1.5 Under Section 115JAA(1A) of the Act, credit is allowed in respect of any tax paid (MAT) under Section
115JB for any assessment year commencing on or after April 1, 2006. Amount of tax credit eligible for
carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the
Income-tax Act. Such MAT credit shall be available for set-off upto 5 years succeeding the year in which
the MAT credit initially arose.

2. To the Shareholders of the Company – Under the Income Tax Act, 1961 (the Act)

2.1 Resident Shareholders

(a) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in
Section 115-O of the Act is exempt from income-tax in the hands of the shareholders.

(b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder from transfer of a long
term capital asset being an equity share in the company or unit of an equity oriented mutual fund (i.e. capital
asset held for the period of twelve months or more) entered through a recognized stock exchange in India
and being such a transaction, which is chargeable to Securities Transaction Tax, shall be exempt from tax.

(c) Under section 48 of the Act, if the investments in shares are sold after being held for not less than twelve
months, the gains (in cases not covered under section 10(38) of the Act), if any, will be treated as long term
capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of
acquisition.

(d) Under Section 54EC of the Act and subject to the conditions and to the extent specified therein,, long term
capital gain gains (in cases not covered under section 10(38) of the Act) arising on transfer of shares of the
Company shall be exempt from capital gain tax if the capital gain are invested within a period of six months
from the date of transfer in the bonds issued by –
(i) National Bank for Agriculture and Rural Development established under Section 3 of the National
Bank for Agriculture and Rural Development Act, 1981;
(ii) National Highways Authority of India constituted under Section 3 of National Highways Authority of
India Act, 1988;

47
(iii) Rural Electrification Corporation Limited, a company formed and registered under the Companies Act,
1956;
(iv) National Housing Bank established under Section 3(1) of the National Housing Bank Act, 1987; and
(v) Small Industries Development Bank of India established under Section 3(1) of the Small Industries
Development Bank of India Act, 1989.

If only part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However,
the amount so exempted shall be chargeable to tax subsequently, if the new bonds are transferred or
converted into money within three years from the date of their acquisition.

(e) Under Section 54ED of the Act and subject to the conditions and to the extent specified therein, long term
capital gains (in cases not covered under section 10(38) of the Act) arising on transfer of shares of the
Company which are listed, shall be exempt from capital gain tax if the capital gain is invested in shares of an
Indian Company forming part of an eligible public issue within a period of six months from the date of such
transfer.

Eligible public issue means issue of equity shares which satisfies the following conditions, namely –
(i) the issue is made by a public company formed and registered in India;
(ii) the shares forming part of the issue are offered for subscription to the public.

If only a part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However,
the amount so exempted shall be chargeable to tax subsequently, if the new equity shares are transferred or
converted into money within one year from the date of their acquisition.

(f) Under Section 54F of the Act, long term capital gains gains (in cases not covered under section 10(38) of the
Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the Company will
be exempt from capital gain tax subject to the conditions and to the extent specified therein, if the net
consideration from such shares is utilised for purchase of residential house property within a period of one
year before or two years after the date on which the transfer took place or for construction of residential
house property within a period of three years after the date of transfer.

(g) Under Section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable
securities transactions entered into in the course of the business would be eligible for rebate from the amount
of income-tax on the income chargeable under the head ‘Profits and Gains under Business or Profession’
arising from taxable securities transactions.

(h) Under Section 111A of the Act and other relevant provisions of the Act, short term capital gains (i.e. if
shares are held for a period not exceeding twelve months) arising on transfer of investment in shares on a
recognized stock exchange, shall be taxed at the rate of 10% (plus applicable surcharge and education cess).

(i) Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains (i.e. if shares
are held for a period exceeding twelve months) (in cases not covered under section 10(38) of the Act) arising
on transfer of shares in the Company shall be taxed at a rate of 20% (plus applicable surcharge and
education cess) after indexation as provided in the second proviso to Section 48. The amount of such tax
should however be limited to 10% (plus applicable surcharge and education cess) without indexation, at the
option of the shareholder.

2.2 Non Resident Indians / Non Resident Shareholders (other than FIIs)

Apart from benefits as mentioned in points (a), (b), (d), (e), (f) & (g) of 2.1 above –

¾ Under Section 115I of the Act, the non-resident Indian shareholder has an option to be governed by the
provisions of Chapter XII-A of the Act viz. “Special Provisions Relating to Certain Incomes of Non-
Residents” which are as follows –

(a) Under Section 115E of the Act, where shares in the company are acquired or subscribed for in convertible
Foreign Exchange by a Non Resident Indian, capital gains arising to the non-resident on transfer of shares
held for a period exceeding twelve months on a recognized stock exchange, shall (in cases not covered under
section 10(38) of the Act) be concessionally taxed at the rate of 10% % (plus applicable surcharge and
education cess) (without indexation benefit but with protection against foreign exchange fluctuation).

48
(b) Under provisions of Section 115F of the Act, long term capital gains (in cases not covered under section
10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the company subscribed to
in convertible Foreign Exchange (in cases not covered under section 115E of the Act) shall be exempt from
Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer.
If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The
amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or
converted into money within three years from the date of their acquisition.

(c) As per the provisions of Section 115G of the Act, Non-Resident Indians are not obliged to file a return of
income under section 139(1) of the Act if their only source of income is investment income or long term
capital gains or both arising out of assets acquired, purchased or subscribed in convertible foreign exchange
and tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

¾ Under Section 115H of the Act, where a Non-Resident Indian, in relation to any previous year, becomes
assessable as a resident in India in respect of the total income of any subsequent year, he/she may furnish to
the assessing officer a declaration in writing, along with his/her return of income under section 139 of the
Act for the assessment year for which he/she is so assessable, to the effect that the provisions of Chapter
XII-A shall continue to apply to him/her in relation to investment income derived from any foreign
exchange asset, being an asset of the nature referred to in section 115C of the Act, in which case, the
provisions of Chapter XII-A shall continue to apply to him/her in relation to such income for that
assessment year until transfer or conversion (otherwise than transfer) into money of such assets.

2.3 Foreign Institutional Investors (FIIs)

Apart from benefits as mentioned in points (a), (b), (d), (e), (f) & (g) of 2.1 above –

As per the provisions of Section 115AD of the Act –

a) Short term capital gain referred to in section 111A of the Act shall be taxed at the rate of 10% (plus
applicable surcharge and education cess).

b) Short term capital gains (other than referred to in section 111A of the Act) shall be taxed at the rate of 30%
(plus applicable surcharge and education cess).

c) Long term capital gains (in cases not covered under section 10(38) of the Act) shall be taxed at the rate of
10% (plus applicable surcharge and education cess) (without benefit of indexation and without protection
against foreign exchange fluctuation).

2.4 Mutual Funds

As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the
Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by
public sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of
India shall be exempt from income tax.

2.5 Venture Capital Companies/ Funds

As per the provisions of section 10(23FB) of the Act, any income of Venture Capital Companies/Funds
registered with Securities and Exchange Board of India is exempt from income tax subject to the conditions
specified in that section.

3. Wealth Tax Act, 1957

Asset as defined under section 2(ea) of the Wealth Tax Act, 1957 does not include shares in companies and
hence, shares are not liable to Wealth Tax.

4. Gift Tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares
will not attract gift tax.

49
Notes:

(a) All the above benefits are as per the current tax law and will be available only to the sole/ first named holder
in case the shares are held by joint holders.
(b) In respect of non-residents, taxability of capital gains mentioned above shall be further subject to any
benefits available under the Double Taxation Avoidance Agreement, if any between India and the country in
which the non-resident has fiscal domicile.
(c) In view of the individual nature of tax consequence, each investor is advised to consult his/ her own tax
adviser with respect to specific tax consequences of his/ her participation in the scheme.

50
INDIAN STEEL INDUSTRY

The information presented in this section relating to the global steel industry has been extracted from publicly
available information. The information presented in this section relating to the Indian steel industry has been
sourced from the National Steel Policy 2005 and other publicly available information, unless otherwise
specified. These data have not been prepared or independently verified by us or the Lead Managers or any of
their respective affiliates or advisors.

OVERVIEW OF INDUSTRY
Steel – a versatile commodity, most widely used metal in the world, forms a core constituent of all major
economies. Accordingly, Steel Consumption is a derivative of the growth pattern of its various end-use sectors
viz. manufacturing, housing, infrastructure, automobile etc. which ultimately steer the country’s economy.

The global economy experienced an upturn in 2004 with a strong recovery in some of the major economies of
the world. The steel industry is believed to have been operating at around 90 per cent capacity utilization factor
in 2004. As per International Iron and Steel Institute (IISI) estimates, global steel demand has increased by
around 8.8 per cent. The growth in demand was an outcome of strong demand from almost all major consuming
centres. The strongest increase in steel consumption was recorded in North America (+15%) while the rest of the
OECD consumption increased by 3.4%, China recorded close to 11% increase in consumption.

The Indian steel industry is almost 100 years old now. Till 1990, the Indian steel industry operated under a
regulated environment with insulated markets and large-scale capacities reserved for the public sector.
Production and prices were determined and regulated by GOI. The steel sector was deregulated in 1991-92, when
controls on capacity and prices were abolished along with quantitative trade restrictions. Import tariffs were also
brought down substantially. In 2000-01, the Indian steel industry operated at finished steel production level of
26.7 million tonnes with apparent finished steel consumption at 26.9 million tonnes. However, with the onset of
liberalization, the Indian steel sector witnessed entry of several domestic private players and large private
investments flowed into the sector to add fresh capacities. In 2004-05, the indigenous production of steel was
38.4 million tonnes along with apparent finished steel consumption at 33.4 million tonnes. Today, India produces
steel of international standards conforming to almost all grades and varieties and has been a net exporter for the
past few years which shows the growing acceptability of its products in the global market and most importantly
its increasing global competitiveness. (Source: www.steel.nic.in)

TYPES OF CARBON STEEL

All steel products are made from semi-finished steel that comes in the form of slabs, billets and blooms. Though
today there are over 3500 varieties of regular and special steel available, steel products can be broadly classified
into two basic types according to their shape:

Flat Products

These products are derived from slabs and mainly comprises of hot rolled (HR) plates, coils and sheets. HR
plates are used for applications such as shipbuilding, large diameter pipes, boilers, industrial equipment,
infrastructure, fabrication, etc. HR coil/sheet, one of the most widely used varieties of steel is used for making of
value added flat products such as cold rolled steel and galvanised steel. HR coil/sheet is primarily used in various
industrial and manufacturing applications including the construction of tanks, railway cars, bicycle frames, ships,
engineering and military equipment and automobile and truck wheels, frames and body parts. Cold rolled steel is
used primarily for precision tubes, containers, bicycles, furniture and for use by the automobile industry to
produce car body panels. Galvanised steel is used for making roofs in the housing and construction sector. We
manufacture flat products.

Long Products

These products derive their name from their shape. Made using billets and blooms, they include rods, bars, pipes,
ropes and wires, which are used largely by the housing/construction sector. There are also other products like rail
tracks in the category. Bars and rods, including wire rods, constitute around 40% of the long product segment.
Bars and rods are available in various sizes ranging from 6 mm to 140 mm in diameter, the major segment being
6 mm to 25 mm. Rods of smaller diameters (5.5-14 mm) are generally produced in coil form. These are termed
wire rods.

51
GLOBAL MARKET

Steel is the most widely-used metal globally. Demand for semi-finished and finished-steel (both flat and long
products) in 2004 was approximately 935 million tonnes. Global steel supply totalled approximately 1,037
million tonnes in 2004, according to World Steel Dynamics. A summary of the global steel market is set forth in
the table below:

Global Crude Steel Production


(Figures in million metric tonnes)
European Other North South Africa Asia
Union (25) Europe America America
2004 155.04 25.98 122.22 41.98 15.04 447.17
2005 (11 months) 151.17 26.26 115.73 41.48 16.04 516.92
% Change -2.5 1.1 -5.3 -1.2 6.7 15.6

Source: IISI

The outlook for steel consumption is positive in the next couple of years. According to the National Steel Policy
2005, steel consumption in the world is expected to increase from 950 mt in 2004 to 1,380 mt in 2015, a growth
rate of 3.5 percent per annum compared to 2 percent per annum in the past fifteen years. According to OECD
estimates, global steel consumption is expected to rise by 5% in 2005 and by about 3.5% in 2006. The fastest
growth in steel demand is likely to come from Asia with China and India being the two leading demand
contributors. It is to be noted that although the demand growth in China is expected to slow down, Demand
growth in India is expected to shape up on a sustainable and strong base.

In addition the Developed Consuming Centres viz. US and the European Union (EU) are expected to continue
driving the quality product demand, an added advantage for the Growing Asian Steel base, including for India.

Increase in Price of Steel

Commodity prices are cyclical in nature and steel prices have been volatile in recent years, the medium term
scenario is relatively positive for steel prices. The world price of Hot Rolled Coil went up from US $ 386/ tonne
in Jan 2004 to US $ 650/tonne in Jan 2005 before settling at US $ 518/tonne in Sep 2005. The prices of Hot
Rolled plate, Cold Rolled Coil, Wire Rod and medium sections have shown a similar trend. Therefore for prices
to pick up a resurgent demand is required.

(Source: www.steelonthnet.com)

Raw Materials

Consolidation among suppliers of key raw materials is expected to enhance price stability. High steel demand
and prices have led to significant increases in prices of inputs. For example, the price of iron ore has risen to
US$65 in December, 2005 from US$38 in December, 2004. The prices of all steel inputs, especially coking coal,
have increased significantly since 2002. The primary factors affecting the price of coking coal are the availability
of transport and suitable transportation infrastructure. The price of coking coal has increased from US$49.98 in
January, 2002 to US$85.68 in September, 2005.

(Source: www.steelonthnet.com)

Supply Scenario

Until a few years ago, Japan and USA were the leaders in crude steel production. Steelmaking is now
progressively relocating closer to sources of raw material.

Growth in global crude steel production has been concentrated in developing countries, especially China. World
crude steel production between 2000 and 2004 increased from 848 million tonnes to 1035 million tonnes, with a
CAGR of about 5% per annum. During this period, China’s crude steel production increased from 127 million
tonnes to 272 million tonnes, with a CAGR of about 21% per annum. China thereby accounted for approximately
84% of the total growth in global steel production.
(Source: International Iron & Steel Institute)

52
The global steel industry has witnessed consolidation in the past couple of years as more companies try to
achieve global capacities and economies of scale in order to have a stronger position with supplier and customer
industries, both of which are relatively more consolidated. The global share of the top 5 steel producers has
increased from approximately 15% in 2000 to approximately 20% in 2004. This is expected to continue to result
in greater discipline in production levels and pricing patterns. (Source: Metal Bulletin Third Far East Steel
Conference, 2005)

Demand Scenario

According to the IMF, global GDP will grow at 4.3% in 2005 and sustain momentum in 2006. A recovery in the
EU-15 and Japan, which have experienced slow economic growth in recent years, coupled with still-buoyant
activity in emerging Asian countries, will increase global GDP growth by up to 4.4% in 2006, according to the
IMF World Economic Outlook report of April 2005.

According to World Steel Dynamics, China’s flat steel consumption will increase 10.2% in 2005, mainly driven
by investments in fixed assets and real estate. Major ongoing projects in China include the Three Gorges dam
project, the East-West pipeline project, preparation for the 2008 Beijing Olympics and preparation for the 2010
World Expo in Shanghai. Economic expansion has brought with it a rapid increase in average incomes in China,
leading to improved standards of living and stronger consumer purchasing power. This, in turn, has led to an
increase in consumer spending on white goods and automobiles, both of which require the use of steel in their
production. The IMF forecasts that Chinese GDP will grow by 8.5% in 2005. Growth in Chinese steel demand
for flat products is expected to continue to drive the global steel industry over the next five years, which may
result in China continuing to be a net importer of flat products.

The EU and United States are the other major consumers of steel and demand is expected to continue to be
strong. The United States posted a 4.3% GDP growth in 2004, according to the IMF, with sustained demand
from strong housing and manufacturing sectors. In addition, from time to time, tariffs, quotas, anti-dumping
measures, countervailing duties and other trade barriers are imposed on steel in jurisdictions in which the
Company operates and/or seeks to sell its products.

Indian Iron and Steel Industry

India is the world’s 9th largest steel producer, with a production of approximately 38 million tonnes during the
FY’05 with a CAGR of about 7% p.a over the last 15 years. India has a consumption of 36 million tonnes, which
amounts to per capita consumption of 29 kg, against a world average of 150 kg and developed world average of
350 kg. This low per capita consumption, combined with a large population and strong GDP growth,
demonstrates the huge untapped potential of India. The steel production is expected to grow from the current 38
million tonnes during FY’05 to 65 million tonnes by FY’12 and 110 million tonnes by FY’20, which implies a
CAGR of 7.3% per annum. (Source: India’s National Steel Policy, 2005)

According to the National Steel Policy 2005, in India, the growth rate of steel production over the past fifteen
years was 7.0 percent per annum. The projected growth rate of 7.4 percent per annum in India compares well
with the projected national income growth rate of 7-8 percent per annum.

The Indian steel industry’s impressive performance, which started in FY 2003, continued in FY 2004 and FY
2005 as well. After facing trying times in FY 2002, the industries financials are now healthier on the back of high
global prices and continued strong demand. The industry’s performance in FY 2004 and FY 2005 was driven by
a sharp surge in international prices and an increase in both exports as well as domestic demand.

Structure of the Indian Steel Industry

The Indian steel industry can be divided into two distinct producer groups:

• Major producers : Also known as Integrated Steel Producers (ISPs), this group includes large steel
producers with high levels of backward integration and capacities of over 1 MT. Steel Authority of
India Limited (SAIL), Tata Steel, Rashtriya Ispat Nigam Limited (RINL), JSW Steel Limited (JSWSL),
Essar Steel Limited (Essar) and Ispat Industries Limited (Ispat) form this group.

SAIL, TISCO and RINL produce steel using the blast furnace/basic oxygen furnace (BF/BOF) route
that uses iron ore, coal/coke as the basic input mix for producing finished steel, Essar and Ispat employ

53
Electric Arc Furnace (EAF) route that uses sponge iron, melting scrap or a mix of both as input and
JSWSL uses COREX, a revolutionary technology for making steel using basically iron-ore and coal.

• Other producers: This group consists of smaller stand-alone steel plants that include producers and
processors of steel.
o Processors/Rerollers: Units producing small quantities of steel (flat/long products) from
materials procured from the market or through their own backward integration system.
o Stand alone units making pig iron and sponge iron.
o Small producers using scrap-sponge iron-pig iron combination produce steel ingots (for long
products) using Electric Arc Furnace (EAF) or Induction Arc Furnace (IAF) route.

(Source : www.indiansteelalliance.com)

SWOT Analysis of the Steel Industry

The SWOT analysis of the steel industry, as per Draft Steel Policy framed by Ministry of Steel, Government of
India, is given below:

Strengths Weakness

ƒ Availability of iron ore and coal ƒ Unscientific mining


ƒ Low labour wage rates ƒ Coking coal import dependence
ƒ Abundance of skilled labour ƒ Low R&D investments
ƒ Mature production base ƒ High cost of debt
ƒ Inadequate infrastructure

Opportunities Threats

ƒ Unexplored rural market ƒ China becoming net exporter


ƒ Growing domestic demand ƒ Protectionism in the west
ƒ Exports ƒ Dumping by competitors
ƒ Consolidation

(Source: National Steel Policy 2005)

Domestic Demand

In the eleven-year period ended FY 2005, India's steel consumption has grown by an average of 7% p.a. This has
not been a steady trend but has been bunched up with a faster rate of growth in the beginning of the period and in
the last few years. India's apparent steel consumption was about 33.4 million tonnes in FY 2005, a growth of 7%
YoY, mainly driven by the construction, infrastructure and the auto sector.

54
The low per capita consumption of steel in India of 29 kg compared to 150 kg in the world, and 350 kg in the
developed world, according to the National Steel Policy 2005, plus its large population, provide significant
growth opportunities for the domestic steel industry. The estimated urban consumption per capita per annum is
around 77 kg in India and is expected to reach approximately 165 kg in 2019-20, implying a CAGR of 5 percent.
This growth is expected to be driven mainly by the construction, automobile, oil and gas transportation sectors.
The rural consumption of steel in India remains at around 2 kg per capita per annum. The National Steel Policy
envisages raising the per capita rural consumption of steel to 4 kg per annum from the current levels by 2019-20,
implying a CAGR of 4.4 percent.

Strong export growth for steel products provides further scope for increase in domestic demand for steel. Over
the past ten years steel exports from India have been growing at a rate of around 10.4% per annum. The National
Steel Policy 2005 envisages a growth rate of 10% per annum up to 2019-20. Government of India is taking
various initiatives to promote steel exports from India such as encouraging strategic alliances with buyback
arrangements and dedicated export production through 100% export oriented units.

Steel Prices

The domestic prices of steel have been market-determined ever since the de-regulation of prices for integrated
steel plants in 1991-92. Market prices remain closely related to international prices, though generally lower. The
main policy instrument available to influence prices is the adjustment of the customs and excise duty structure.
One of the main reasons for lack of price regulation in the steel sector is the dispersal of the distribution chain in
the steel industry. Currently, there are around three thousand units manufacturing steel and steel products, which
are marketed by over 100,000 traders for ultimate consumers.

The Indian steel industry experienced significant deterioration in prices during the period 1998 to 2002 which
adversely affected the profitability of domestic steel mills. However, certain steel mills remained profitable
during this period due to price control over key inputs, value addition in the production chain and product
diversity.

The cyclical nature of the steel industry deters fresh investments due to recessionary risks. The mismatch
between demand and supply also leads to price volatility witnessed during recent times. The stagnation in steel
prices for long periods followed by sudden spurt also affects the consumers and the infrastructure industry. To
mitigate price risks inherent in the steel industry the National Steel Policy 2005 supports the efforts of various
steel players to develop risk-hedging instruments like futures and derivatives.

India is considered one of the top steel-producing markets due to the following:

• India has rich iron ore resources with average iron content in excess of 65.0% and it is strategically located
for exports to Japan and China. Proven iron ore reserves in India are estimated at 4 billion tonnes, compared
to global iron ore reserves of approximately 80 billion tonnes, according to US Geological Survey, Mineral
Commodity Summaries, January 2005. In 2004, India exported over 50% of the ore it produced according to
CRIS INFAC.
• India is conveniently located close to China, South Asia and the Middle East, which are key export markets
for India.
• India has access to educated and skilled labour at low costs.
• With the commissioning and stabilization of new steel-production facilities by existing steel mills, the
manpower cost per tonne of steel shipped is expected to further decrease in the future.

India’s natural advantages have attracted major international steel producers to set up facilities in India. POSCO
has signed a memorandum of understanding with the state government of Orissa to invest US$12.0 billion for
setting up steel-making facilities and development of iron ore mines in Orissa. Leading steel producers such as
Mittal, Arcelor, Mitsui and others have also expressed interest in investing in a project in India.

Significant Factors affecting Domestic Demand

India’s domestic demand for steel is expected to grow at a compounded annual rate of 5% from 2005 to 2010,
according to World Steel Dynamics, driven primarily by strong growth in the automotive, piping and
construction industries. In 2004, the Indian steel market grew at a rate of 6.4%.

55
The main driving force behind growth in the Indian steel industry is expected to come from the Indian
automotive industry, which has been growing at an average rate of 12% per year and produced over 150,000
medium and heavy commercial vehicles and 1 million passenger cars in 2004.

India’s construction industry is projected to grow by 11% over the Government’s Tenth Five Year Plan (2002 —
2007), according to CRIS INFAC. The Government estimates that upgrades of current infrastructure will cost
US$150.0 billion by 2007, a significant portion of which will be spent on steel.

The recent recovery in steel prices is driving significant investments in the steel sector after a recession period of
approximately five years. In the past two years, approximately 15 million tonnes of new capacity have been
announced by various domestic steel producers, out of which about 10 million tonnes are likely to be
implemented. Of this amount, almost all of the projects are expected to be in the flat product segment. With the
commissioning of these capacities, the demand/supply balance is likely to lead to overcapacity domestically, as
set forth in the estimates in the table below:
(mtpa)
Particulars 2006 E 2007 E 2008 E 2009 E 2010 E
Demand
Longs(1) 16.3 17.2 18.1 19.3 20.7
Flats(2) 23.3 25 26.7 28.6 30.6
Total 39.6 42.2 44.8 47.9 51.3

Production
Longs 16.2 17.1 18.1 19.2 20.5
Flats 28.3 29.9 31.7 33.5 35.6
Total 44.5 47 49.8 52.7 56.1
Source: CRIS INFAC

Note:
o Long products forecasts are calculated as per GDP
o Flat products are calculated as per end-user

EMERGING TRENDS IN STEEL INDUSTRY

An increasing investment in infrastructure, construction and urbanisation as well as growth in automobile, white
goods and industrial sector, is a further boost to the optimism within the domestic steel industry.

Power: Addition of 41,000 MW of power generating capacity between 2002 and 2007 and about 61,000 MW
between 2007 and 2012 should drive steel offtake, leading to an incremental consumption of 0.4 million tonnes
in FY2006 itself.

Roads: The government intends to embark on the construction of 48 new projects with a view to fourlane about
10,000 kms of roads in addition to the existing ongoing programme of National Highway Authority of India.
With steel intensity in the roads under construction being considerably higher than the legacy infrastructure, the
outlook for increased steel consumption on this count appears to be brighter.
Housing: Low interest rates and easy availability of housing finance has resulted in a housing boom; the
Housing and Urban Development Corporation intends to add two million houses every year (35 per cent in urban
areas), estimated to create an additional annual demand of 0.6 to 0.8 mtpa of steel.
Malls: From 25 malls in 2003, India expects to commission more than 220 malls by 2006 (estimated 40 million
sq ft) and 600 malls by 2010 (100 million sq ft).
Automobile and ancillaries: In 2004-5, India’s auto industry consumed about 2.8 mt of steel (about 8 per cent
of India’s steel consumption). This is expected to grow at 11-12 per cent over the next three years following
India’s emergence as a global outsourcing hub for the auto industry.
White goods: Rising income and the easy availability of low cost finance has started a white goods
(refrigerators, air conditioners and washing machines) revolution in India, leading to an increased consumption
of steel.
Industrial Projects: India’s industrial growth is encouraging a number of companies to reinvest leading to an
increased consumption of steel, the steel industry is expected to emerge as a major steel consumer itself.

The positive outlook for increasing steel demand in India along with the strategic advantages offered have
resulted in a keen interest from domestic and international steel majors for setting up steel projects in India.

56
BUSINESS

Overview

We are among the largest integrated steel companies in India, having established production facilities at close
proximity to the mineral resources as well as to the market for its products. Our cost of production is among the
lowest in the country due to locational advantages, strong leadership, and committed work force.

Beginning in 1994 with the formation of Jindal Vijaynagar Steel Limited (JVSL) (the earlier name of JSW Steel
Limited) various units of the plant were commissioned between Aug-97 and Nov-02 to produce 1.57 million
tonne (Mt) of saleable steel, which has grown to the present capacity of 2.5 Mt. With effect from April 01, 2003,
steel business of Jindal Iron and Steel Company Limited (JISCO) having HR Plates, cold-rolled and galvanized
manufacturing facilities in Maharashtra was merged with our Company and after the merger the name of our
Company was changed to JSW Steel Limited. Subsequently, we have increased the availability of key raw
materials through strategic mergers of Euro Ikon Iron and Steel Private Limited (EIISPL, Euro Coke Energy
Private Limited (ECEPL and JSW Power Limited (JPL) with our Company with effect from April 1, 2005. We
have arrangements for supply of iron ore, oxygen and power to meet part of our requirements which makes us
relatively immune to fluctuations in the prices of major raw materials. Our product range comprises of pellets,
slabs, hot-rolled coils/plates/sheets, cold-rolled coils, galvanized plain and corrugated (GP/GC) sheets and colour
coated sheets.

The integrated steel plant at Toranagallu in Bellary District of Karnataka produces hot rolled coils of various
Carbon and Low Alloy grades of steel for wide application ranging white goods, automotive, line-pipe, railway
wagons etc. We have adopted the technology of iron making using pellets through the novel Corex process as
well as in the conventional Blast Furnace route. We are among the few plants in the world to adopt and
successfully operate Vibro-compacted non-recovery coke-oven, utilizing the heat of the flue gases for power
generation.

Our Competitive Strengths

• Location: Our Upstream facility is located in the Iron Ore rich belt of Bellary- Hospet region of Karnataka.
The strategic location of the manufacturing units with respect to established ports and well connected rail
and road networks ensures reliable and cost efficient receipt of raw materials and dispatch of finished steel.
Imported raw material for the upstream unit is transported in bulk in large sized vessels to Goa and Chennai
seaports. Indigenous raw material for upstream and downstream units is transported by road and rail to the
plants. Export of finished goods from upstream unit is done in bulk and break-bulk containers out of Goa
and Chennai ports and from Mumbai and JNPT ports for downstream units. South West Port Limited, a
group company, has developed berth No. 5A and 6A at Goa port with mechanized cargo handling capacity
of 5 Mtpa.

• Technology: In order to maintain quality and cost of products we have adopted technologies such as Vibro-
compacting non-recovery Coke Ovens, the novel Corex Process as well as the conventional Blast Furnace
route of Iron Making. We are able to utilise large proportion of iron ore fines generated at the mines for
manufacture of pellets, which are used in our iron making process and also readily sold. The optimum blend
and use of various technologies, combination of low cost inputs such as iron ore, in-house power generation,
automation, and high labour productivity gives us the cost and quality advantages.

• Integrated operations: We are a vertically integrated company with operations spanning across iron ore
mining to manufacture of value added galvanized and colour coated products. We believe that our expertise
and experience in making steel has enabled us to develop products for our clients with a short turn-around
time and to reduce product development cost and cycle time. Our extensive and cost efficient facilities have
helped us to offer a short and predictable product design cycle. For preserving our competitive advantage,
we focus on developing advanced skill sets within our organization through our internal research and
development efforts as well as tie up with leading companies.

• Marketing: Having one of the largest galvanising capacities in the country, we are one of the largest
exporters of galvanized products to over 50 countries in five continents. We are one of the largest integrated
steel producing companies in India with a customer pool comprising leading domestic as well as
international companies. Our decision to focus on value added products and targeting export segments has
enabled us to become a leading steel company in India and abroad. The magnitude of our operations
provides us several competitive advantages in executing orders for our Indian and international clients. With

57
delivery of right quality and quantity in time we have maintained customer base globally. Cost efficiency
results from our scale of operations which in turn provide us the flexibility to structure delivery mechanisms
that enable our clients to effectively meet their business objectives.

• Professional Management: As part of our corporate governance practices, we have a qualified and
experienced management in addition to a diversified independent board. Our senior management team
consists of experienced professionals with diverse skills in manufacturing, sales and marketing, finance and
supply chain management. Our skilled management team from diverse background complements the
challenging nature of our assignments. We have been able to attract talent from reputed educational
institutes worldwide, including premier business schools and engineering colleges. We have also recruited
experienced professionals laterally who have a wealth of experience in the steel making business. We
believe that the experience and diversity of our senior management team gives us the ability to execute our
business strategy successfully and to generate new ideas for enhancing organic growth.

Business Strategy

o Capacity enhancement: We intend to leverage our proximity to iron ore reserves and the existing
infrastructure created by us to expand capacities at low specific investment cost per ton. We are in the midst
of increasing our capacity to 3.8 mtpa and have announced our plans to increase it to 7 mtpa. Considering
our experience in the industry the growth will be achieved through organic and inorganic means aimed at
strengthening our business.

o Increase vertical integration: Our impetus has been to increase the vertical integration through strategic tie-
up, longterm linkages and acquisitions aimed at ensuring availability of critical raw materials at low cost.
The recent merger of EIISPL, ECEPL and JPL have enable us to reduce our costs as a result of integration of
power, coke and hot metal facilities for steel making process.. We intend to look for opportunities to reduce
our cost of production by targeting strategic tie-ups and investments to secure further vertical integration.

o Improve product profile: We intend to improve the value added products in our product mix to withstand the
vagaries of price volatilities besides being able to offer suite of products to meet the growing requirements
of the customers. Aligned to this strategy, we had merged the steel business of JISCO, which was into
manufacture of value added products – HR Plates, Cold Rolled and Galvanised.We are modernizing hot strip
mill to increase hot rolled product capacities while also setting up a 1 mtpa CRM complex to meet the
growing demand for value added products.
o Improve financial profile: Being part of a capital-intensive industry with high volatility in the product prices,
we need to maintain a healthy financial profile. We have accordingly reduced our debt significantly over the
last couple of years bringing down the gearing levels. We intent to maintain low gearing ratio and propose to
reduce debt levels going forward to make us resilient to any downward pressure of steel prices and continue
smooth operations.

• Investing in technology to improve productivity and reduce wastage: We have invested in latest technologies
for efficient operations and are continuing to improve to ensure that best operating practices are followed.
The initiatives are adopted across our company including areas related to coal distribution, refractory
relining file and plant availability enabling us to improve efficiencies resulting in reduced costs.

Our Products

Our recent amalgamation of steel business of JISCO has resulted in a more robust entity with greater integration,
better cash flows and stronger balance sheet. Steel products can be broadly classified into two basic types
according to their shape: flat products and long products. Flat products include slabs, plates, and hot rolled (HR)
coils/sheets. Apart from direct applications in manufacturing of tanks, railway wagons, bicycle frames, ships
engineering, military equipment, automobile and truck wheels, frames and body parts, the HR coils are used as
feed stock for further processing such as cold rolling and galvanizing. Cold Rolled (CR) steel is used primarily
for precision tubes, containers, bicycles, furniture and automobile industry to produce car body panels.
Galvanized steel is used for industrial and domestic applications, agriculture sector, automobile, white goods,
and construction sector. Previously, our primary product was HR coils. Our products include pellets, slabs, HR
coils, CR coils, galvanized plain/ galvanized corrugated (GP/GC) sheets, and colour coated sheets and in H1 FY
05-06, approximately 38% of our turnover came from sale of value added products such as GP/CR coils and
sheets.

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The following table provides the details of our capacity and production breakup as on September 30, 2005:

Details in MTPA Installed Capacity Production Sales


(Annual) (Mt) (H1 FY 2006) (Mt) (H1 FY 2006) (Mt
Pellet plant 4.2 1.85 0.26
Slabs 2.6 1.09 -
HR coils 2.0 1.06 0.60
HR Plate 0.28 0.04 0.04
CR Products 1.0 0.40 0.04
Galvanised Products 0.9 0.36 0.34
Colour Coated 0.1 0.003 -
Manufacturing Facilities
We have integrated facilities for manufacturing 2.6 Mtpa of flat steel and 4.2 Mtpa of pellets at Tornagallu in
Bellary District in Karnataka. We also have facilities for manufacture of 0.28 Mtpa of HR Plate, 1 Mtpa of CR
coils/sheets, 0.9 Mtpa of galvanized plain/galvanized corrugated (GP/GC) coils/sheets and 0.1 Mtpa Colour
Coating Line at Vasind and Tarapur in Maharashtra. Our manufacturing operations are organized into the
upstream manufacturing facility at Tornagallu in Bellary district and downstream manufacturing facilities at
Tarapur and Vasind in Maharashtra.
Production Process
Upstream Process Flow
Coking Coal Non Coking Coal
Coal

Iron Ore

Pellet plant Pellet for sale

Flue Gas
Blast Furnace Power Plant I Corex Plant Oxygen From
JPOCL
Coke
Hot Metal Corex Gas
Oxygen

Coke Oven BOF & CCP


Plat Plant
JSW Energy
Limited
Waste Heat Recovery

Slab for sale

Power plant II Hot Strip Mill

HR Coil for sale HR Coil For Downstream


Note: Dotted Lines represent flow of gases and solid line represents flow of materials. In addition to Iron Ore & coal/ Coke,
Flux materials are added in Corex and Blast Furnace

Various Raw Materials such as iron ore, limestone, dolomite, quartzite, manganese ore, non-coking and coking
coal are stacked in the Raw Material Handling System (RMHS) yard from where they are delivered to processing
units through a network of conveyors. Coking coals are sent to Coke Ovens where they are carbonized into Coke,
which is an important input for the Blast Furnace. Non-Coking coals are conveyed to the Coal drying plant
where they are dried for further feeding into the COREX modules. The Iron Ore fines are fed into the Pellet Plant
which agglomerates them into marbles called Pellets after addition of a binder called Bentonite. These pellets are

59
the feed stock for the Corex Modules as well as the Blast furnace. Our Blast Furnace feed constitutes around 70
% pellets and the rest Calibrated Lump Ore. The Corex Modules run on pure Oxygen which is manufactured in
our associate company JPOCL with a production capacity of 5000 tpd of pure Oxygen. Our Blast furnace also
consumes Oxygen in the form of Enriched Air. Oxygen is transported to the Corex modules and Blast furnace by
means of pipelines. Corex modules as well as Blast Furnaces generate gases rich in Carbon Monoxide and
Hydrogen, which are used in Power Plant I and Power Plant II and JELto generate electricity. The power plant
uses the heat of the hot flue gases of the Coke Ovens to generate steam and then power generation in turn. JEL
has 260 MW Power plant which can run on COREX gas as well as on coal fines. This offers us a lot of synergy
as the coal fines generated on screening of the Corex Coals can be used for power generation. The Hot Metal
from the Iron making units is transported to the BOF-CCP shop through 100 t ladles. Once the Hot metal has
been refined into Liquid steel, it is cast into slabs in the Continuous Caster Plant. These slabs are conveyed to the
reheating furnaces where they are heated to the desired temperature before being delivered to hot strip mill for
converting it into hot rolled coils. Surplus slabs are dispatched to our plate making facility in Vasind works.
Downstream Process Flow

HR Coils from
Upstream

HR Slitter Pickling Line Cold Rolling Mill

Galvanizing Line Bell Annealing

CRCA Coils

GP Coils

CR Slit/ CR Coils
Sheet

GP/GC Sheet GP Coils Colour


(finish) Coating Line

Colour Coated
Products

The downstream units at Vasind and Tarapur have Cold Rolling, Galvanizing and Color Coating facilities. The
basic input for these operations is HR coil. The HR Coils, which are first pickled in Hydro Chloric Acid to
remove oxides from its surface and then the pickled Coils are cold rolled in 4 hi and 6 hi Cold rolling mills. Cold
rolling not only improves the surface finish but also imparts mechanical strength to the steel. The process of Cold
Rolling work-hardens the steel which is made softer by the process of annealing in batch type annealing
furnaces. The annealing is carried out under hydrogen atmosphere in order to prevent surface oxidation during
annealing and impart brightness to the strip surface. After annealing, the coil may either go for further cold
reduction or for galvanizing.

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Galvanizing provides barrier as well as galvanic protection to the steel. Zinc coating may be applied in ways
such as hot dip galvanizing, flux galvanizing, electro plating and powder spraying. As a barrier coating, zinc
provides a tough metallurgical bonded coating that completely protects the steel surface from corrosive action of
the environment. Additionally, zinc’s sacrificial action protects the steel even where minor discontinuity in the
coating occurs. Galvanized steel can either be packed and dispatched in coil form or in plain form or even in
corrugated form.

Color Coating lines deposit a fine layer of organic paints on the surface of Steel which not only improves its
aesthetic value but also protects it against atmospheric corrosion. Coil coating paints are applied to continuous
steel or aluminum strip in a range of colors cured in seconds and recoiled for delivery to the user. The strip is
then cut and formed without damaging the finish. The process reduces environmental impact as it applies paint
with little waste, usually burning solvents to provide energy for curing the paint. Various types of paints can be
used on the surface for different applications and properties such as polyester, epoxy, pvfd and plastisol. The
organic coating can be done on the CR steel coils, galvanized and galvalume coils, and various grades of
aluminum.

Infrastructure, Raw Materials and Utilities

Iron Ore

Our manufacturing facilities are located near the iron ore belt, which enables us to source low cost iron ore. Our
iron ore requirements are partly met from our associate company VMPL and balance from NMDC and other
suppliers having mining rights.

Coal

To ensure a regular and reliable supply of coal, we have entered into strategic sourcing of coal through reputed
traders / overseas mine owners based in Australia and China mainly on annual price contracts. We have also
optimized the use of coal used in the Corex, coke oven and blast furnace plants thereby utilizing the coal and the
fines completely.

Zinc

We are sourcing zinc from domestic supplier for manufacturing of value added galvanized products. The pricing
of Zinc is highly correlated with international USD prices on London Metal Exchange.

Limestone

We use a blend of imported and indigenous limestone for steel making. Low silica limestone which is used for
steel making is imported from UAE/ Iran. High silica limestone used in Corex is sourced indigenously.

Dolomite and Steel Scrap

The other raw materials used in steel making are dolomite and steel scrap. The entire requirement of dolomite is
sourced indigenously. Dolomite deposits (equivalent to 20 years) are located in Lokapur (Karnataka) and
Rayalachervy and Dronachalam (Andhra Pradesh) which are about 150-200 kms from the plant. The sourcing
from these two locations ensures consistent supplies at any given point of time. Strategic tie-ups with key
suppliers with yearly renewable option ensure reliable and consistent supply of dolomite. Scrap requirement is
met by recycling of scrap generated in house as well as by imports.

Refractories

All refractories for Iron and Steel making are outsourced to the refractory manufacturers on a total management
concept which includes quality, specifications, supply, inventory management, relining and repairs. We also have
strategic tie-ups with key suppliers to handle the refractory matters of cast house, steel ladle, converter, slide gate
and tundish areas.

Power

As on September 2005, our total power requirement at Upstream facility was 183 MW. There will be an
incremental requirement of 40 MW for the ongoing steel expansion project and another 30 MW for the proposed

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CRM complex. Our power requirement of 183 MW is currently being met partly out of our captive power plant
and balance from JSWEL. We are in the midst of ramping up the capcity of 2nd captive power plant of 130 MW
that is expected to be fully operational by March 2006. Thus, significant portion of power requirement will be
met from captive sources and balance requirement, if any, will be met from JSWEL.

At downstream facility, power is taken from MSEB and captive DG sets. We have 2 DG sets of 3750 kw
capacity each at Tarapur and Vasind.

Water

Water requirements of around 20 million gallon per day (MGD) for the proposed expansion of steel
manufacturing capacity from 2.5 Mtpa to 3.8 Mtpa over the period of time is already been sourced from
Tungabhadra Dam in Karnataka. The existing plant make-up and drinking water network have been considered
as the source of water for the proposed CRM project. The water requirement will mostly be for cooling purposes
with a minor part of the requirement being for drinking and other process needs. To minimize fresh water
withdrawal from the source, recirculation systems have been envisaged for the various units. The treated make
up and drinking water requirement for the proposed CRM project is estimated to be 145 m3/h.

Compressed air

Our requirement of compressed air for the proposed CRM project has been estimated at 86 Nm3/h. To meet this
requirement, a compressor station would be provided where two units of water cooled rotary screw compressors
each of 45 Nm3/min at a discharge pressure of 7 kg/cm2 (g) will be installed first and the third one would be
installed in future. One air receiver of adequate water holding capacity will be installed at compressor air station
to cater to system surge.

Nitrogen, Hydrogen and Corex gas

Our nitrogen gas requirement of 1,510 m3/hr for purging in the bell-annealing furnace would be met from the
existing nitrogen supply system. The necessary piping network will be installed for supplying nitrogen from
existing network to the consumers after required pressure boosting.

Bell annealing furnaces have been planned based on 100% H2 as protective atmosphere for ultra clean and bright
CR strip. For this purpose, one hydrogen generation plant of about 400m3/h capacity having ability to produce
99.9% purity H2 has been planned by us based on water electrolysis process.

Corex gas generated in the existing Corex modules will be used for firing in the bell annealing furnaces and
boilers. Suitable system for sourcing the Corex gas from the existing gas holder will be provided.

Logistics

The manufacturing units are strategically located with respect to established ports well connected by rail and
road networks. Imported raw materials for the upstream unit are transported in bulk in large sized vessels to Goa
and Chennai seaports. Indigenous raw materials, for upstream and downstream units are transported by road and
rail to the plants. Export of finished goods from upstream unit is done in bulk and break-bulk containers out of
Goa and Chennai ports and from Mumbai and JNPT ports for downstream units

We follow a policy of outsourcing some of the key functions for greater efficiency and to lower the cost. The
water management system for the whole plant, roll shop management system, bearing bank facillity and
lubrication system for the pellet plant have been outsourced.

Sales and Marketing


We have a dominant position in the supply of HR coils in South India. We are one of the leading flat steel
manufacturers in South India and have a port based downstream facility. We offer a diversified product range
supported by a widespread sales and distribution network. We enjoy a high level of customer satisfaction based
on a track record of reliability. Some of the key marketing initiatives we have undertaken include promoting long
term contracts with suppliers and distributors, long term logistics tie-ups with leading global shipping agencies
and maintaining strategic presence in key markets. We distribute our products in the domestic markets by selling

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directly to customers, traders, stock points and through e-selling. For the export markets we use a combination of
direct selling to customers and selling to the international trading houses.
Sales Revenue breakdown by Product for H1 FY 05-06 ended on September 30, 2005

The following chart provides a break down of our revenues product wise:
Pellets
3%
H R Plates Others
3% 8% GP Coil / Sheet
34%

H R Coil Sheet
48% CR Coil sheet
4%

The key market segments being catered by the various products manufactured by our Company include Cold
Rolled and Galvanized products for durable goods component manufacturing, pipes and tubes used for auto and
structural components, pressure vessels for LPG cylinders and high pressure vessels, medium carbon steels for
automobiles and industrial blades and straps, line pipes for transportation of natural gas and water. Some of our
key customers in these segments include Tata Motors Limited, Godrej & Boyce Manufacturing Company
Limited, Hero Cycles Limited, Bhushan Steel & Strips Limited, Maharashtra Seamless Limited, Brakes India
Limited, Tube Product of India Limited, Wheels India Limited and PSL Limited etc.

Exports

Before the merger, our focus used to be on HR coils. Post merger, we now complete the entire value chain in
steel production from iron ore to galvanized products and expect to sell colour coated steel soon. Although sales
of HR coils continue, around 35% of sales in FY 2006 are likely to be in the form of galvanized products, most
of which are exported. About 80% of galvanized coil are mainly exported to following four regions – North
America, Middle East, North Africa and Europe. Only 3%-5% of galvanized sales are expected to be to China.
Galvanized products sell at a premium of around US$170-180/tonne to HR coil prices and generally enjoy more
stable pricing as well. This is because products are made according to customer specifications. We do process
smaller orders for clients if necessary.

The geographical break-up of our exports for H1 06 are given below:

Galvanized/Cold Rolled products& HR Plates: Hot Rolled Slabs, Coils and Sheets:

Africa
USA 12% Europe 2% Africa 1%
32% China
5%
China 41%
Asia other than
China Asia other
Middle East Australia 18% than China
15% 1% 56%
Europe
Latin America 16%
1%

SWOT Analysis

Strengths
• We are a major player in the steel sector and have a diversified client base. We have adequate experience and
expertise as an integrated steel producer and have withstood the cyclic fluctuations that have characterized the
steel industry in the past.

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• We are one of the low cost producers of Hot Rolled coils, which forms a key input for our CRM project. We
also use the Corex-BOF route for making steel, which requires less amount of coke.
• We have sourcing arrangements with suppliers of power and oxygen which reduces our vulnerability to
fluctuations in the prices of these raw materials.

Weaknesses
• Our debt / equity ratio or gearing is relatively high compared to some of the other integrated steel producers
in India. We are actively taking steps to rationalize further our high cost debt to reduce our interest burden.
• The profitability of our Company is dependent on prices of key inputs such as iron ore, coal and zinc. Though
our Company mitigates these risks by entering into strategic tie-ups / sourcing contracts with raw material
suppliers, any adverse fluctuations in the input costs would affect the margins of the Company.

Opportunities
• Compared to the global per capita steel consumption average and the steel consumption average for
developed world, India’s per capita consumption of steel is extremely low. To address this low consumption
of steel the National Steel Policy 2005 envisages steel production to grow at 7.3% CAGR to 110 Mtpa from
the present levels of finished steel production at 38 Mtpa. It also envisages steel imports growing at 7.1%
CAGR from the present level of 2 Mtpa to 6 Mtpa and steel exports to grow at 13.3% CAGR from the
prevailing 4 Mtpa to 26 Mtpa leading to a healthy apparent steel consumption of 90 Mtpa by the F.Y. 2019-
20, a 6.9% CAGR growth. Several initiatives taken by the Government of India in the form of infrastructural
development programs such as the National Highway Development Programme, the Indira Awas Yojna and
the National Urban Renewal Programme are expected to have a beneficial impact on the demand for steel.
Demand for Hot Rolled, Cold Rolled and Hot Dipped Galvanized Steel products – forming the steel-value-
chain for our Company is expected to substantially benefit from the positive impact of these initiatives.
• Our Cold rolled products are used in the automobile sector. There is a major opportunity for us to market our
products on a large scale to the automobile sector resulting from robust growth in the demand for automobiles
combined with stringent regulations on pollution control pertaining to old vehicles.
• India is perceived to be one of the manufacturing destinations for steel making globally and this may propel
us to meet the demand not only domestically but also internationally.

Threats
• The steel industry is characterized by cyclical fluctuations in prices of finished steel products as well as those
of the key inputs. Any downward cyclical movement in the steel sector could reduce the demand for steel and
reduce our profitability.
• Our operating margins could come under pressure if there is a fall in the demand for steel and increase in our
input costs. However, since we are one of the lowest cost producers in the market, we may still be able to
maintain reasonable operating margins for our products.
• The Indian steel industry is highly competitive. We face substantial competition in the steel industry, both
from Indian and international companies. Domestic as well as international steel majors like Tata Steel,
POSCO and Mittal Steel have announced plans to set up manufacturing facilities in India. This could lead to
excess capacity and consequently downward pressure on the prices of finished steel products.

Initiatives adopted:

Process Improvement & Cost Reduction

As a resource-optimising organization, we have strengthened a number of processes across operational cycle at


various stages of value chain improving productivity, reducing cost, improving processes and quality of the
products. As part of this initiative we had engaged JFE, Japan to improvement the practices at the steel making
shop which has resulted in the increased availability of convertor for steel making operation besides improving
the quality.Though, this initiative is company wide followed, certain key and noteable initiatives adopted have
been in pellet plant relating to adjustment of feed bed height, increasing pressure in the fuel pipeline, reduction in
hearth layer in the furnace and improvement in the content of raw materials at the pellet plant. Similarly, we
have successfully carried out design modification to improve lining life, adopted gunniting practice to improve
refractory life, introduced hanging chain to improve distribution & fuel rate reduction at the hot metal making
facility.

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Cost Cutting Initiatives

Our manufacturing process is coke dependent and coke as a product is scarcely available with high volatility in
price. To reduce the dependence on imported coke and insulate from price volatility, we had entered into
strategic tie-up and later acquired ECEPL with a coke making capacity of 0.6 mtpa. The waste heat from the
coke ovens are proposed to be utilised for captive power generation, thereby generating additional captive power
making us a energy efficient plant and reducing the reliance on purchased power. Considering the significant
quantity of goods being imported and exported, we have entered into a strategic tie-up with South West Port
Ltd., an associate company, having berths in Goa to handle our import and export requirements reducing the
turnaround time and related costs.
Expansion Projects

We have taken various initiatives to enhance our capacities beyond 2.5 mtpa and improve the product range. We
are currently increasing our Slab making capacity to 3.8 mtpa and have plans to increase to 7 mpta thereafter.
We have also taken measures to increase Pellet plant capacity by 0.8 mtpa, HR Coils capacity by 1.2 mtpa in two
phases besides increasing plate mill capacity. In order to improve the product range we have recently installed
0.1mtpa Colour coating plant at Tarapur and propose to set up a CRM complex of 1.0 Mtpa capacity at our
upstream facility. The CRM complex would include facilities for manufacturing 0.2 mtpa of high grade HR
products and 0.8 mtpa of CR products including auto grade products. The project is expected to be completed by
March 2007. Our plans to expand capacity from 3.8 mtpa to 7 mpta is expected to cost over Rs. 50,000 millions
which may be funded by mix of internal accruals and debt or such other means as may be approved by our
Board.

Research and Development (R&D) Activities

We have put lot of emphasis on research and development activities, including the areas related to iron ore
beneficiation, iron ore pelletization, iron making, steel making, hot rolling and new product development with
focus on improvement in process parameters and their optimization, quality of intermediate and final products,
energy conservation, waste reduction and utilization and cost reduction. R&D activities were also carried out in
value added products such as development of ASTM - A653 grade 57 structural quality GI and GI CQ grade

We have successfully completed trials to identify suitable indigenous coals for iron making and have also carried
out design improvements to increase yield in beneficiation process. Software were developed and implemented
for various applications including: coal-blend design for coke ovens, mould level fluctuation index in continuous
casting, submerged entry nozzle clogging index in continuous casting and temperature prediction model for
superheat control in BOF – CCP. With improved slag splashing practice, along with quality and configuration of
refractory lining, BOF has achieved a record lining life. Besides various new grades of HR coils were also
manufactured.

Environment Management

The company has always been environment friendly to society. We consistently maintain & encourage eco-
efficiency in all our ventures. We, in our organisation, adopt all possible means to keep the surrounding healthy.
We have established 'green' engineering practices and environmentally sound technologies. Sustainable
development of the region is kept in mind during conceptualization and implementation of any project. We have
taken various initiatives to minimize pollution through:

• Monitoring of emissions
• Appropriate effluent treatment
• Efficient process control
• Waste identification, segregation and eco friendly disposal
• Disposal of waste oil and lead acid batteries to authorised re-processors
• Vacuum cleaners for roads - in plant and township
• Compulsory emission test of all the two and four wheelers
• Re-use of blow down water in dust suppression system and greenbelt development
• BOF sludge utilisation in pellet plant
• Recycling of waste acid coming from pickling instead of discharging in environment.
• Strategic tie-up with Mumbai Waste Management Ltd. for disposal of hazardous waste.
• Compliance to all statutory norms for green environment.
• Tree plantation in and around the plant

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Corporate Social Responsibility

Corporate Social Responsibility is an integral part of our vision. Our objectives are to support health, education,
artistic and sporting interests of the communities through need-based capacity and skill building besides making
them self-sustaining. The work has been supported by voluntary employee involvement and our Performance
Management Systems are customized to provide a higher weightage to employees' involvement in these
activities. Few of the programmes we support are as given under:

• Livelihood study is being carried out in the vicinity of Vijayanagar in partnership with BASIX (Hyderabad),
a leading micro-finance institution. The objectives are to identify sub-sectors in the Bellary, Sandur and
Hospet blocks to promote sustainable livelihoods. The first phase will determine the five activities to be
studied and the second phase will entail a detailed study for these five activities by sub sector analysis.

• Computer Aided Learning Center (CALC) at Vijayanagar focuses on innovation in the field of elementary
education in partnership with the Azim Premji Foundation. Our six learning centers cater to around 2200
students. Basic computer and CAD courses have been started to benefit the unemployed youth in
neighbouring villages.

• Early Childhood Education Project: In the Integrated Child Development Scheme of the Govt. of India,
Anganwadi workers are expected to serve cooked supplementary meals for children, maintain health records
of the zero to six age group, pregnant, lactating mothers and also ensure early childhood education. Centre
for Learning Resources (CLR) conducted a need assessment study in Vasind, following which the activity is
being coordinated with Child Development Project Officer (CDPO), Assistant CDPO and Block
Development Officer, to take the project ahead.

• Vocational Training Centres: More than 150 students who enrolled in Shramsadhna Vocational Training
Center at Vasind are undergoing training in various vocational skills. The centre has collaborated with
Father Agnel Polytechnic (Bandra, Mumbai) to train the students across a range of vocations like tailoring,
electrician, plumbing and TV repair etc. Trainees at Akanksha Vocational Training Center (AVTC) at
Vijayanagar are engaged in the stitching of schools uniforms for children. Welding and masonry classes are
conducted for the unemployed. It is planned to introduce school bag making, beautician, driving and
fabrication courses in FY 2006.

• HIV Awareness program: We conducted an HIV awareness program with the help of Medicare Foundation,
covering the entire employee community, their families and outsourced workers of the downstream units at
Vasind and Tarapur. A similar activity is now proposed at the upstream unit at Vijayanagar in FY 2006.

• SportsInitiatives: Keeping India sporting spirit alive. We also lend support to promote excellence in sports
and offer great exposure to rural youth. These are Jindal Squash Academy, Jindal Badminton Academy and
Jindal Swimming Academy. Talents from these academies have displayed their brilliance on the national
horizon and are now aiming for international success.

Awards and Recognition

We have been credited by various awards in the history of our Company. Some of these awards received in
recent past include:

• Gold Award in Metal Sector - 2004-05 for Outstanding Achievement in Environment Management by
Greentech Foundation
• CII-EXIM Bank Award 2005 - Commendation Certificate for Significant achievement
• Rockwell Jury award for best automation practices
• Platinum Award by Frost and Sullivan’s India Manufacturing Excellence Awards (Metal Category)
• National Quality Award – 2004’ from Indian Institute of Metals for Best Quality Management Practices
amongst Integrated Steel plants of the country
• ‘Steel Eighties Award – 2004’ from Indian Institute of Metals
• ‘Young Metallurgist Award – 2004’ from Indian Institute of Metals
• ‘Excellent Energy Efficient Unit’ National Award for Excellence in Energy Management – 2004 by CII
• NASSCOM BEST IT User Award 2004’ – for Manufacturing sector 6
• ‘National Water Management Award 2004’ constituted by CII in the category of ‘Excellent water
efficient unit’.
• ‘Silver Award in Metal Sector – 2003-04’ for outstanding Management practices in Safety & Health by
Green Tech foundation.

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• ‘National Water Management Award 2004’ constituted by CII won in the category of ‘Excellent Water
efficient unit’
• CII-EXIM Bank Award 2003 – ‘Commendation Certificate for strong commitment to TQM’
• IMC Ramakrishna Bajaj National Quality Commendation Certificate, 2003 in Manufacturing Category
Frost & Sullivan India Manufacturing Excellence Award (IMEA) 2004– Silver Award for Processes
and Special Award for Proactive Labor Management.

Industrial Relations and Human Resource Management

Our success depends to a great extent on our ability to recruit, train and retain high quality engineering and
technical professionals. We seek to have a common work ethos for fostering excellence and recognizing and
rewarding entrepreneurship despite the diversity of location, language and culture. Through empowerment,
delegation and calculated risk taking, we seek to create an organizational ambience which nurtures talent and
encourages creativity and innovation. Our workforce is non-unionised at all our manufacturing facilities.

Our manpower break-up on the basis of qualifications is given as follows:

JSW Steel employee breakup

Under
Graduates
Engineers
35%
43%

Graduates
13% Post Graduates Professionals
4% 5%

The additional manpower requirement on completion of the CRM project is expected to be about 350 including
outsource labour. The required manpower would be recruited in line with the progress in implementation of the
project.. We employees are provided with requisite training including on the site training by equipment suppliers.

We recruit at the management and graduate engineer trainee level from premier management schools and
engineering colleges. Our human resources policy has well defined training program classified under Summer
Trainee, Management Trainee and Graduate Engineer Trainee programs. During these training programs, the
trainees are exposed to various cross functional modules besides in-depth practical knowledge of their core
function. Each trainee has specific learning objectives through a project in each plant that he is assigned during
the course of his training. Additionally we also recruit high quality experienced talent to strengthen our team
strength and complement the challenging nature of our assignments.

Training and development of employees is a high focus human resource initiative. We have a tie up for imparting
training and also sponsor employees for exposure to the state-of-art technology with major international steel
plants. In addition, our employees are being trained in the United Kingdom, USA, France and Germany at the
site of the foreign collaborators and equipment suppliers to take care of the expansion and modernization of the
plant. Our training programs are classified as multi-tier programs aimed at addressing the needs of individuals at
different levels in the organization and in different functions and include functional programs to develop skills in
sales and marketing, supply chain, finance and marketing, role specific programs aimed at developing skills for
specific assignments, competency based programs that focus on building individual skills and enhancing
personal and team effectiveness, business-focused programs to address business needs, issues and practices
specific to a particular business and Outreach Programs which include management programs and team building
workshops.

Legal and Regulatory

Please see the section titled “Regulations and Policies” on page [ ] of this Draft Letter of Offer.

Property

Please see the section titled “Infrastructure” for details of property and the purchase of property on page [ ] of
this Draft Letter of Offer.

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Insurance

We have obtained the following insurance policies for our business:


• Standard fire and perils insurance policy for all our locations;
• Marine inland transit insurance policy, marine import insurance policy and marine open policies for
transport of our products to locations within and outside India;
• Group Mediclaim and Group Personal Accident Policies for our employees;
• Erection all risk policy for all expansion/new projects;
• Public liability insurance policy under Public Liability Act, 1991 to provide immediate relief to any person
involved in accidents while handling hazardous material in our premises;
• Other insurance policies such as Motor Vehicle, Electronic Equipments, Fidelity Guarantee, Burglary,
Aviation etc as per the requirement.

With a view to safeguard against various risks involved in setting up the CRM complex of 1 Mtpa capacity under
our envisaged expansion project, we propose to obtain a range of insurance policies covering various risks both
during the construction and operating stages. During construction phase, we propose to take up Engineering All
Risk, Marine and other miscellaneous policies. During the operational phase, we would cover comprehensively
all risks in line with the policies taken for other manufacturing locations.

Copyrights and Trademarks

Our business currently does not require nor do we own any patents, trademarks and intellectual property rights
related to our products and processes.

Competition

The Indian steel industry can be divided into two distinct producer groups:
• Major producers: Also known as integrated steel producers (ISPs), this group includes large steel producers
with high levels of backward integration and capacities of over 1 mtpa. Steel Authority of India Limited
(SAIL), Tata Steel (TISCO), JSW Steel Limited, Essar Steel Limited and Ispat Industries Limited form this
group.
• Other producers: This group consists of smaller stand-alone steel plants that include producers and
processors of steel.

The major producers are strategic in nature and account for most of the mild steel production in the country. The
group produces most of the flat steel products in the country including hot rolled, cold rolled and galvanized
steel. The majors also produce a small proportion of long products and other special steel being produced in the
country. Other producers account for a majority of long products being produced in the country and some of the
value added flat steel products like cold rolled steel and galvanized steel.

Risk Concerns and Risk Management

We believe volatility of steel prices, cyclical nature of the industry, regulatory interventions, dwindling export
incentives and currency fluctuations to be major areas of concern. The increased integration of global and
domestic markets also contributes to volatility. New capacities being set up both in India and abroad may create
imbalances between demand and supply. Spiraling prices of inputs and raw materials add to the business risk.
While the amalgamations completed by us are expected to minimize some of the business and industry related
risks, we have also sought to derisk our operations through following measures:

• Vertical integration by having control on key inputs like iron ore, power, oxygen and coal;
• Varied range of products like pellets, slabs, HR coils, HR plates, CRCA, galvanized coils and colour
coated products with a flexibility to increase or reduce their supplies in line with market dynamics;
• Judicious mix of domestic and export sales to eliminate risk of over- dependence on any particular
market segment;
• Maintain natural hedge against exchange rate movements;
• Increase scale of operations at low specific investment cost per ton
• Focus on use of IT and advanced technologies for operational efficiencies

The policies for dealing with various business risks is continuously evolved and improved upon by us. We
propose to institutionalize a Risk Management framework to effectively identify, assess and manage risk through

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an appropriately designed and strictly enforced system of risk controls. These controls are expected to promote
efficiency and reduce risk of asset loss besides providing a reasonable assurance on the reliability of financial
statements and compliance with laws and regulations.

With a view to have an independent identification of significant threats and risks, formulation of Risk
Management procedures pertinent to the nature, size, complexity of the existing business and the growth
planned, we have engaged the services of professional risk specialists for this task who will help us in
establishing a Risk Management framework aligned to our business objectives in line with best practices in the
industry.

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REGULATIONS AND POLICIES

There is no specific regulation in India governing the manufacturing of iron and steel.

The following regulations and legislations are the significant laws which broadly govern this industry in India:

Foreign Investment Regulations

The new industrial policy was formulated in 1991 to implement the Government’s liberalisation programme and
consequently, the industrial policy reforms relaxed industrial licensing requirements and restrictions on foreign
investment. In subsequent years, the Government has further liberalized the foreign investment regime.

At present, investments in companies manufacturing iron and steel fall under the RBI automatic approval route
for Foreign Direct Investment upto 100%.

Fiscal Regulations

Foreign Trade Policy

Under the Foreign Trade (Development and Regulation) Act, 1992, the Central Government is empowered to
periodically formulate the Export Import Policy (“EXIM Policy”) and amend it thereafter whenever it deems fit.
All exports and imports have to be in compliance with such EXIM Policy. The iron and steel industry has been
extended various schemes for promotion of export of finished goods and import of inputs. The major schemes
available to the company are Duty Exemption and Remission Scheme, Export Promotion of Capital Goods
(EPCG) Scheme and Target Plus scheme.

The Duty exemption Scheme enables duty free imports of inputs required for production of export products by
obtaining Advance license (AL)

The Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export
product. This scheme consists of Duty Free Remission Certificate (DFRC) and Duty Entitlement Pass Book
(DEPB)

While DFRC enables duty free replenishment of inputs used for manufacturing of export products, under DEPB
Scheme, exporters on the basis of notified entitled rates are granted duty credit, which would entitle them to
import goods except Capital Goods, without duty. The current DEPB rates for saleable products manufactured by
the company are ranging from 2% to 5%.

The imports of inputs under AL and DFRC for the products exported by the company are subject to Input and
Output norms as prescribed in EXIM Policy.

EPCG Scheme allows imports of capital goods at concessional rate of duty of 5% subject to additional export
obligation which is linked to the amount of duty saved at the time of import of such capital Goods as per the
provisions of EXIM Policy.

Target Plus Scheme

Under this scheme, any company having a minimum export turnover in Foreign Exchange of Rs 10 crores in the
previous Licensing Year shall be eligible for duty credit entitlement at the specified rates, provided they achieve
incremental growth in exports as mentioned in EXIM Policy.

Excise Regulations

The Central Excise Act, 1944 seeks to impose an excise duty on excisable goods which are produced or
manufactured in India. The rate at which the said duty is sought to be imposed is contained in the Central Excise
Tariff Act. However, the Government has the power to exempt certain specified goods from excise duty, by
notification. Steel products are classified under Chapter 72 of the Central Excise Tariff Act and presently attract
an ad-valorem excise duty at the rate of 16% and also an Education Cess of 2% over the duty element.

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Customs Regulations

All imports in the country are subject to duties under the Customs Act, 1962 at the rates specified under the
Customs Tariff Act, 1975. However, the Government has the power to exempt certain specified goods from
excise duty, by notification. The customs duty on iron and steel items falling under Chapter 72 of the Custom
Tariff Act, 1975 has been reduced sharply during the last five years. The current custom duty on non-alloy Steel
is 5%. The peak rate of custom duty on iron and steel items falling under Chapter 72 items was brought down
from 40% to 20% w.e.f. January 1, 2005. The current basic custom duties on import of major items of raw
materials are ranging from 0% to 10%. .

Environmental and Other Regulations

We have to comply with the provisions of the Environment Protection Act, 1986, Water (Prevention and Control
of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 the Hazardous Waste
(Management and Handling) Rules, 1989 and the Hazardous Chemicals Rules, 1989. We also frequently obtain
approvals under various other legislations including the Boilers Act, 1923.

There are other legislations such as the Factories Act, 1948 and various other labour legislations which are also
applicable to manufacturing companies such as our Company.

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HISTORY OF OUR COMPANY AND OTHER CORPORATE MATTERS

Our History

Our Company was incorporated as Jindal Vijayanagar Steel Limited on March 15, 1994 under the Companies
Act with its registered office at III Floor, “The Estate”, 121, Dickenson Road, Bangalore 560 042. It was
promoted jointly by JISCO and KSIIDC. In fiscal 1995, our Company undertook its maiden public issue of 135
million equity shares of Rs. 10 each for cash at par aggregating Rs. 1,350 million and 272.5 million 14% secured
redeemable partly convertible debentures of Rs. 40 each for cash at par aggregating Rs. 10,900 million.

Our registered office was shifted to Toranagallu Village, Sandur Taluk, Bellary District, Karnataka with effect
from February 10, 1998 and thereafter to Jindal Mansion, 5A, G. Deshmukh Marg, Mumbai 400 026 with effect
from April 29, 2005.

In fiscal 2003, our Company was referred to the Corporate Debt Restructuring (“CDR”) Cell for the realignment
of our debts under the CDR mechanism. The Revised Restructuring Package was approved by the CDR Cell in
February, 2003. This package, inter alia, included conversion of 40% of the equity share capital into 0.01%
cumulative redeemable preference shares, conversion of a part of debt/interest overdue into equity shares or 10%
cumulative redeemable preference shares, reduction in interest rates payable on the loans and restructuring of
debt etc.

In fiscal 2004, a scheme of arrangement and amalgamation between the Company, JISCO and Jindal South West
Holdings Limited was approved by the shareholders of the respective companies. The object of the scheme was
to create an integrated steel company. The scheme was sanctioned by the High Court of Karnataka and the High
Court of Judicature at Bombay as of April 1, 2003. As part of the scheme,the investment portfolio of JISCO was
transferred to Jindal South West Holdings Limited and JISCO with its steel business was merged with our
Company. Reorganisation of capital as per CDR restructuring package was carried out as part of scheme of
arrangement and amalgamation.

In fiscal 2005, our shareholders and the shareholders of EIISPL, ECEPL and JSW Power Limited approved a
scheme of amalgamation of these three companies with our Company. The Scheme was sanctioned by the
Hon’ble High Court of Judicature at Bombay as of April 1, 2005.

Our Company has come out of the corporate debt restructuring framework mechanism in September 2005 after
prepaying and refinancing the entire outstanding CDR debt.

Associate Companies

We have three Associate Companies, details in relation to which are as set out hereinafter.

1. JSW Energy Limited (“JSWEL”) was incorporated under the name ’Jindal Tractebel Power Company
Ltd.’ by way of a joint venture with Tractebel, S.A, Belgium. In December 2001, Tractebel, S.A,
Belgium sold its’ shareholding in the company to O P Jindal Group Companies and others and the
company’s name was changed to Jindal Thermal Power Company Limited. The name has been further
changed to JSW Energy Limited in December 2005. The company’s power plant is situated at
Toranagallu in district Bellary, Karnataka. The plant is designed to use both corex gas and coal as fuel
to generate 260 MW of power.

2. Vijayanagar Minerals Private Limited (“VMPL”) is a joint venture with Mysore Minerals Limited (a
Government of Karnataka Undertaking), for the purpose of supply of iron ore to our Company. VMPL
holds mining leases in the Bellary district of Karnataka. As of September 30, 2005, our Company holds
40% of the shareholding of Vijayanagar Minerals Private Limited.

3. Jindal Praxair Oxygen Company Private Limited (:JPOCL”), an arrangement with Praxair Inc. of USA
has been incorporated for the production in both gaseous and liquid form of oxygen, nitrogen, argon and
other products recoverable from separation of air.The Company has entered into a shareholders
agreement with Praxair Pacific Limited on June 30, 1995. JPOCL has entered into agreements with the
Company for the supply of the aforesaid products. As of September 30, 2005, our Company holds 26%
of the shareholding of JPOCL.

72
Objects of our Company

Our objects as contained in our Memorandum of Association include:

1. To set up iron and steel making facilities and continuous casting and hot and cold rolling mill plants for
producing ferrous and non-ferrous metals, alloy steels, steel ingots, steel slabs billets and all kinds and
all sizes of iron and steel re-rolled sections, i.e. flats, angles, rounds, squares, rails, joists, channels,
slabs, strips, coils, sheets, plates, deformed bars, plain and cold twisted bars and shaftings.

2. To carry on the business of manufacturers, processors, refiners, smelters, makers, converters, finishers,
importers, exporters, agents, merchants, buyers, sellers and dealers in all kinds and forms of steels
including tools and alloy steels, stainless and all other special steels, iron and other metals and alloys, all
kinds of goods, products, articles or merchandise whatsoever manufactured wholly or partly from steels
and other metals and alloys; and also the business and iron masters, steel and metal converters, colliary
proprietors, coke manufacturers, ferroalloy manufacturers, miners, smelters and engineers in all their
respective branches and to search for, get, work, raise, make, merchantable, manufacture, process; buy,
sell and otherwise deal in iron, pig iron, granulated slag, iron ore fines, steel and other metals, coal,
coke, brick-earth, fireclay, bricks, ores, minerals and mineral substances, gases, alloys, metal scrap,
chemicals and chemical substances of all kinds.
Changes in our Memorandum of Association

Date of shareholder approval Changes

September 15, 1994 Increase in authorised share capital from Rs.20 million divided into 2 million
equity shares of Rs. 10 each to Rs.15,000 million divided into 1,500 million
equity shares of Rs. 10 each
February 9, 1998 Shift in registered office from III Floor, “The Estate”, 121, Dickenson Road,
Bangalore 560 042 to Toranagallu Village, Sandur Taluk, Bellary District,
Karnataka.
September 1, 1998 Increase in authorised share capital from Rs. 15,000 million divided into 1,500
million equity shares of Rs. 10 each to Rs. 20,000 million divided into 2,000
million equity shares of Rs. 10 each
September 28, 1999 Reclassification of authorised share capital from Rs. 20,000 million divided
into 2,000 million equity shares of Rs. 10 each to Rs. 20,000 million divided
into 1,800 million equity shares of Rs. 10 each and 200 million preference
shares of Rs. 10 each.
March 28, 2000 Increase in authorised share capital from Rs. 20,000 million divided into 1,800
million equity shares of Rs. 10 each and 200 million preference shares of Rs.
10 each to Rs. 30,000 million divided into 2,800 million equity shares of Rs.
10 each and 200 million preference shares of Rs. 10 each.
August 17, 2001 Reclassification of authorised share capital from Rs. 30,000 million divided
into 2,800 million equity shares of Rs. 10 each and 200 million preference
shares of Rs. 10 each to Rs. 30,000 million divided into 2,200 million equity
shares of Rs. 10 each and 800 million preference shares of Rs. 10 each.
April 22, 2003 Reclassification of authorised share capital from Rs. 30,000 million divided
into 2,200 million equity shares of Rs. 10 each and 800 million preference
shares of Rs. 10 each to Rs. 30,000 million divided into 2,000 million equity
shares of Rs. 10 each and 1,000 million preference shares of Rs. 10 each.
February 16, 2005 Shift in registered office from Toranagallu Village, Sandur Taluk, Bellary
District, Karnataka to Jindal Mansion, 5A, G. Deshmukh Marg, Mumbai 400
026.
June 13, 2005 Change of name of the Company from Jindal Vijayanagar Steel Limited to
JSW Steel Limited.
Key Milestones

The key milestones in the history of the company are as follows:

March 1994 Incorporation of Jindal Vijayanagar Steel Ltd. (JVSL)


February 1995 Initial public offering of shares for setting up integrated steel plant to make

73
1.57 mtpa of HR coils
February 2005 Merger of steel business of JISCO approved effective April 1, 2003
June 2005 Name change from JVSL to JSW Steel Limited
September 2005 Merger of EIISPL, ECEPL & JPL approved effective 1st April, 2005

The details of the capital raised by our Company are given in the section entitled “Capital Structure” on page [•]
of this Draft Letter of Offer.

74
DIVIDENDS

The following are the dividend payouts on the Equity Shares in the last five years by our Company:

In Rs. Million
F. Y. Dividend
Rate Amount
Interim – 30% 387.1
FY-2005 Final – 50% 645.2
FY-2004 Nil Nil

FY-2003 Nil Nil

FY-2002 Nil Nil

FY-2001 Nil Nil

75
MANAGEMENT

Board of Directors

The following table sets forth details regarding our Board of Directors as on January 25, 2006:

Name, Designation, Father’s Name, Nationality Age Other Directorships in Indian


Address, Occupation and Term (years) companies

1. Savitri Devi Jindal Indian 56 Jindal Industries Limited


Chairperson Jindal Steel and Power Limited
W/o Late O P Jindal Nalwa Sponge Iron Limited
Jindal House, 6, Prithviraj Road Nalwa Sons Investments Limited
New Delhi 110 011 Jindal Stainless Limited
Business Sonabheel Tea Limited
Term: Up to April 17, 2009 Jindal Saw Limited
Rohit Towers Building Limited
2. Sajjan Jindal Indian 46 JSW Energy Limited (formerly Jindal
Vice Chairman & Managing Director Thermal Power Company Limited)
S/o Late O P Jindal 21st Century Printers Limited
Jindal House Jindal South West Holdings Limited
32 Walkeshwar Road South West Port Limited
Mumbai 400 006 Jindal Coated Steel Private Limited
Business
Term: Up to July 6, 2007
3. Dr. B N Singh Indian 57
Jt. Managing Director & CEO Nil
S/o Late J P Singh
Directors Bunglow
JVSL Township, Vidyanagar
Bellary 583 275
Karnataka
Service
Term: Up to October 12, 2008

4. Seshagiri Rao M V S Indian 47 JSW Aluminium Limited


Director (Finance)
S/o Suryanarayan Rao
B/1603, Valencia Hiranandani
Gardens
Powai, Mumbai 400 076
Service
Term: Up to April 5, 2009
5. Zarin Daruwala Indian 40 Nil
Independent Director
W/o Bomi Daruwala
Bldg. No.4, Flat No.4, A H Wadia
Baug, Parel Tank Road, Mumbai –
400 033
Service
Term: N.A.
6. K V Krishnamurthy Indian 62 Rap Media Limited
Independent Director Centrum Finance Limited
S/o K. Venkatesan Centrum Direct Limited
174, Kalpataru Residency, Sundaram Mutual Trustee Company
Tower A, 107, Road No. 8 Limited
Sion (E) Asset Reconstruction Company (India)
Mumbai 400 022 Limited
Company Director Essel Propack Limited
Term: N.A.
7. I M Vittala Murthy Indian 54 Karnataka Asset Management

76
Name, Designation, Father’s Name, Nationality Age Other Directorships in Indian
Address, Occupation and Term (years) companies

Non Independent Non Executive Company Private Limited


Director Karnataka Trustee Company Private
S/o Late I P Mallegowda Limited
No.10, Anikethana, 1st Cross Food Karnataka Limited
1st Main, Dollar Layout Vijayanagar Steel Limited
J P Nagar, 4th Phase Karnataka State Industrial Investment
Bangalore 560 078 and Development Corporation Limited
Service Mysore Sales International Limited
Term: N.A. Karnataka Antibiotics &
Pharmaceuticals Limited
J K Industries Limited
Murudeshwar Ceramics Limited
Mangalore Chemicals & Fertilizers
Limited
NGEF (Hubli) Limited
8. S Jambunathan Indian 67 Bombay Stock Exchange Limited
Independent Director Provogue (India) Limited
S/o Late C N Srinivas Aiyer First Policy Insurance Advisors Private
9, Prakash Co operative Housing Limited
Society
Relief Road, Daulat Nagar
Santacruz (West)
Mumbai 400 054
Retired Civil Servant
Term: N.A.
9. Dr. S K Gupta Indian 67 Jindal South West Holdings Limited
Non Independent Non Executive Vesuvius India Limited
Director Eco Coke & Power Private Limited
S/o Late S. K. Biswas Encore Software Limited
14, Singapore Garden Ferro Green Technologies Private
Kanakapura Road Limited
P.O. Doddakalasandra Sci Tech Patent Art Services Private
Bangalore 560 062 Limited
Service Bhuwalka Steel Industries Limited
Term: Subject to retirement but Hindustan Machine Tools Limited
eligible for re-appointment Bhuwalka Industires Private Limited
10. Anthony Paul Pedder British 56 Nil
Independent Director
S/o Robert Pedder
87 Dore Road
Sheffield S173ND
England
Service
Term: Subject to retirement but
eligible for re-appointment
11. Dr. Vijay Kelkar Indian 63 IDFC Private Equity Company Limited
Independent Director Tata Chemicals Limited
S/o Late Laxman Vishnu Kelkar Hero Honda Motors Limited
17, Vaswani Mansion Jet Airways(India) Limited
3rd Floor, Dinshaw Vachha Road JM Financial Asset Management
Churchgate Private Limited
Mumbai 400 020 Development Credit Bank
Retired Civil Servant SciTech Patent Art Services Private
Term: Subject to retirement but Limited
eligible for re-appointment Roche Scientific Company (India)
Private Limited
Britannia Industries Limited
Lupin Limited

77
Name, Designation, Father’s Name, Nationality Age Other Directorships in Indian
Address, Occupation and Term (years) companies

12. Sudipto Sarkar Indian 59 Nil


Independent Director
S/o Prabhas Chandra Sarkar
31 Broad Street
Kolkata 700 019
Lawyer
Term: Subject to retirement but
eligible for re-appointment
13. Uday Madhav Chitale Indian 56 Crossdomain Solutions Private Limited
Independent Director DFK Consulting Services (I) Private
S/o Madhav Purshottam Chitale Limited
167-C, Poonawadi DFK International
Dr. Ambedkar Road Vemagiri Power Generation Limited
Dadar GMR Infrastructure Limited
Mumbai 400 014
Chartered Accountant
Term: Upto the date of next Annual
General Meeting of the Company

Brief Biography of Our Directors

Savitri Devi Jindal, aged 56 years, has been the Chairman of our Company since April 18, 2005. She is the wife
of the late industrialist, Om Prakash Jindal. She is on the Board of Directors of a number of companies belonging
to the O P Jindal Group. She is also the patron of the Managing Committee of the Vidya Devi Jindal Public
School, Hissar, Haryana.

Sajjan Jindal, aged 46 years, has been on the Board of Directors of the Company since March 15, 1994. He has
been designated as the Vice Chairman & Managing Director of our Company since February 10, 2005. He holds
a bachelors degree in engineering from the Bangalore University. He is the seond eldest son of the late
industrialist, Om Prakash Jindal. He has experience of over 20 years in the steel industry and was instrumental in
the establishment of the Company. He was also the Chairman and Managing Director of the erstwhile Jindal and
Iron Steel Company Limited. He is currently the Chairman of Jindal South West Holdings Limited, JSW Energy
Limited (formerly Jindal Thermal Power Company Limited), South West Port Ltd. and 21st Century Printers
Limited. He is also director of the Indian Institute of Management, Indore and a member of TTD Development
Advisory Council and Bombay Chapter of the Young President Organisation.

Dr. B N Singh, aged 57 years, has been the Jt. Managing Director & CEO of our Company since October 13,
2003. He has a B.Sc (Engineering) in metallurgy from BIT, Sindri and a M.Tech (metallurgy) from IIT, Kanpur.
He has also obtained a post graduate diploma in business management from XLRI, Jamshedpur and a Ph.D in
metallurgy from the Ranchi University. He has over 35 years experience in the iron and steel industry and prior
to joining our Company, he has been employed with Tata Steel, SAIL, Rashtriya Ispat Nigam Limited and Ispat ,
Annaba in Algeria in various capacities including Managing Director, Rourkela Steel plant; Director (Personnel),
SAIL; Chairman cum Managing Director, Rashtriya Ispat Nigam Limited and Managing Director, Ispat, Annaba
in Algeria. Dr Singh has received various awards including the SAIL Gold Medal in 1980, the National
Metallurgists Award in 1984 and the Dr. Rajendra Prasad Gold Medal and Metals and Materials Science Gold
Medals subsequently.

Seshagiri Rao M V S, aged 47 years, is the Director (Finance) of our Company. He holds a Bachelors of
Commerce degree and a diploma in business finance from the Institute of Chartered Financial Analysts of India.
He is also a certified associate of the Indian Institute of Bankers as well as an associate member of the Institute
of Cost and Works Accountants of India and a member of the Institute of Company Secretaries of India. He has
more than 27 years experience in the field of banking, finance and accountancy. Prior to joining our Company,
he has worked with VST Industries, Andhra Bank, Essar Steel Limited and Nicholas Piramal India Limited in
various capacities.

Dr. S K Gupta, aged 67 years, has over 46 years experience in the iron and steel industry. He has graduated in
metallurgical engineering from BIT, Sindri and has a Ph.D and a D.Sc. (Tech). He was formerly on the Board of
Directors of SAIL as well as the Chairman cum Managing Director of Mecon Limited. He has also been the head

78
of the metallurgical engineering department of the Indian Institute of Technology, Bombay as well as the
Chairman of the Task Force “Steel Growth Plan till 2010” constituted by the Government of India. He is an
honorary mmber of the Indian Institute of Metals, Kolkata and has received the National Metallurgist Award in
1998.

I M Vittala Murthy, aged 54 years, is an IAS officer and a bureaucrat. He is a post graduate in economics from
Central College, Bangalore. He is the Managing Director of KSIIDC. He has held important posts in the past
such as the Managing Director of Mysore Sales International Limited and the Commissioner of Tourism and
Managing Director of Karnataka State Tourism Development Corporation Limited.

K V Krishnamurthy, aged 62 years, is a commerce graduate, FCA and FIIB.. He has been the Chairman and
Managing Director of Bank of India and Syndicate Bank, executive director of Bank of Baroda and Managing
Director of Indo Hong Kong Finance Company Limited.

Zarin Daruwala, aged 40 years, is ICICI Bank’s nominee on the board. She is a qualified Chartered Accountant
and a Company Secretary and has over 15 years extensive experience in the field of corporate finance and
investment banking. She is a General Manager at ICICI Bank and the zonal head of the corporate banking group
- west, handling a team of more than 100 corporate client bankers, including public sector companies.

Anthony Paul Pedder, aged 56 years, has experience of over 33 years in the industry. He is a maths graduate
from the West Ham College and a post graduate in operations research and management studies from Imperial
College, London. He was formerly the Chief Executive of Corus Plc, a member of the Board of Directors of
Corus and British Steel and member of the British Steel Executive Committee. He is currently Chairman of
Sheffield Forge Masters and a director of various companies.

S Jambunathan, aged 67 years, is a retired IAS officer. He is a post graduate in mathematics from the Madras
University. He has held various positions with the Government of Maharashtra and Government of India, such as
as the Chairman cum Managing Director of Export Credit Guarantee Corporation, Additional Chief Secretary
(Home), Government of Maharashtra. Following his retirement, he has held important assignments in the
corporte sector including Chairman of BSE..

Vijay Kelkar, aged 63 years, is a science graduate from the University of Pune and has a MS from the
University of Minnesota, USA. He also has a Ph.D from the University of California at Berkeley, USA. He is on
the Board of Directors of various companies and is the Chairman of IDFC Asset Management Company Limited,
JM Financial Asset Management Private Limited. In the past, he has been the Finance Secretary to the
Government of India and a Executive Director at the International Monetary Fund.

Sudipto Sarkar, aged 59 years, is a senior advocate and barrister. He is a maths graduate from the Presidency
College, Kolkata. He also has a bachelor’s degree in law and a LL. M in international law and MA (Law) from
the University of Cambridge,. He has been practising as an advocate for over 35 years. He is also the editor of
various legal publications

Uday Madhav Chitale, aged 56 years, is a chartered accountant and a senior partner at M P Chitale and
Company, Chartered Accountants. He has extensive experience of corporate auditing, business advisory services
and commercial mediation, conciliation and arbitration. He has served on various expert committees set up by
organisations such as SEBI, RBI, IRDA, Institute of Chartered Accountants of India.

Compensation of our Directors

For more details, please refer to the section entitled ‘Terms of Appointment of our Directors’ on page [•] of this
Draft Letter of Offer.

Shareholding of Our Directors in our Company


Our Articles of Association do not require our Directors to hold any Equity Shares in our Company. The
following table details the shareholding of our Directors in their personal capacity and either as sole or first
holder, as at the date of this Draft Letter of Offer.

79
Name of Directors Number of Number of
Equity Shares Equity Shares
(Pre-Issue) (Post-Issue)*
Sajjan Jindal 12,764 14,360
Savitri Devi Jindal 5,682 6,392
Dr. S K Gupta 1,734 1,951

* The number of shares for the column titled Number of Equity Shares (Post-Issue) has been calculated assuming
full subscription to rights entitlement in this Issue excluding conversion of Warrants.

Changes in our Board of Directors during the last three years

Name Date of Appointment Date of Cessation Reason


B R Sethi October 25, 2000 June 5, 2003 Resigned
K K Mishra August 23, 2002 July 23, 2003 Resigned
U Mahesh Rao September 1, 1998 October 6, 2003 Resigned
Dr. B N Singh October 13, 2003 - Appointed
J K Tandon November 5, 1997 December 13, 2003 Resigned
Mooza Raza August 13, 1996 April 1, 2004 Resigned
N D Pinge March 2, 2000 May 7, 2004 Resigned
P Kotilingangoud October 28, 2002 June 19, 2004 Resigned
S S Jha August 18, 2000 June 29, 2004 Resigned
Subir Hari Singh July 23, 2003 July 13, 2004 Resigned
K Jairaj June 19, 2004 October 11, 2004 Resigned
I M Vittalamurthy November 22, 2004 - Appointed
R P Singh June 29, 2004 March 30, 2005 Resigned
P R Jindal August 13, 1996 April 14, 2005 Resigned
Savitri Devi Jindal April 18, 2005 - Appointed
Anthony Paul Peddar April 18, 2005 - Appointed
Sudipto Sarkar May 9, 2005 - Appointed
Vijay Kelkar May 9, 2005 - Appointed
S Jambunathan May 9, 2005 - Appointed
K V Krishnamurthy July 14, 2005 - Appointed
R N Roy June 25, 2002 July 14, 2005 Resigned
Ramaswany A Aiyar September 28, 1999 July 23, 2005 Resigned
S David Chandrasekhar June 5, 2003 September 20, 2005 Resigned
N Gokulram July 13, 2004 October 20, 2005 Resigned
Uday M Chitale October 20, 2005 - Appointed
Raman Madhok February 4, 2005 November 7, 2005 Resigned
Balaji Swaminathan May 7, 2004 December 14, 2005 Resigned
Zarin Daruwala December 14, 2005 - Appointed

Corporate Governance

There are three Board Level Committees in our Company, which have been constituted and function in
accordance with the relevant provisions of the Companies Act and the Listing Agreement. These are the (i) Audit
Committee, and (ii) Investor Grievance Committee and (iii) Remuneration Committee. A brief on each
Committee, its scope, composition and meetings for the current year is given below:

(i) Audit Committee

Members

• Uday M. Chitale, Chairman of the Committee


• Dr. S K Gupta
• Zarin Daruwala, Nominee Director (ICICI Bank Ltd.); and
• K V Krishnamurthy, Nominee Director (IDBI)

80
The Audit Committee met 3 times during the course of this fiscal year, on April 18, 2005; July 21, 2005
and October 20, 2005.

Scope and terms of reference

The scope of the Audit Committee is to review reports of the concurrent auditors and internal auditors
and to review the weakness in internal controls reported by concurrent, internal and statutory auditors.
The Audit Committee has also been empowered to exercise the powers and functions enumerated under
the Clause 49 of the Listing Agreement which deals with corporate governance, and Section 292 A of
the Companies Act, 1956 as amended from time to time.

(ii) Shareholders’ / Investors’ Grievance Committee

Members

• K V Krishnamurthy, Nominee Director (IDBI), Chairman of the Committee


• Uday M. Chitale
• Dr. S K Gupta; and
• Zarin Daruwala, Nominee Director (ICICI Bank Ltd.)

The Investors Grievances Committee has met once during the course of this fiscal year, on October 20,
2005.

Scope and Terms of Reference

• Review the reports submitted by the Registrars and Share Transfer Agents of the Company at
half yearly intervals;
• Periodically interact with the Registrars and Share Transfer Agents to ascertain and look into
the quality of the Company’s shareholders / investors grievance redressal system and to review
the report on the functioning of the said investor grievances redressal system;
• Follow-up on the implementation of suggestions for improvement; and
• Periodically report to the Board of Directors of the Company about serious concerns if any.

During the fiscal year 2005, our Company received 9,733 complaints from shareholders, 154 of which
were pending redressal as on March 31, 2005.

(iii) Remuneration Committee

Members

• K V Krishnamurthy, Nominee Director (IDBI), Chairman of the Committee


• Uday M Chitale
• Dr. S K Gupta; and
• Zarin Daruwala, Nominee Director (ICICI Bank Ltd.)

The Remuneration Committee has met once during the course of this fiscal year, on July 21, 2005.

Scope and terms of reference

The Remuneration Committee has been set up to determine and recommend to the Board of Directors
the Company’s policy on remuneration of executive directors and senior management personnel
including pension rights and any compensation payment.

There are other Committees of Directors which are constituted from time to time as and when required.

81
Key Managerial Personnel

The details of our key managerial personnel other than executive Directors are as follows:
Name Age Designation Qualifications Previous Total Date of Gross
Employment Experience Joining Salary Paid
(in years) in Fiscal
2005 (in
Rs.)
Jai Prakash 57 Executive B.Sc., Met. Engg., Ispat 35 June 14, 2,662,376
Narain Lal Director AMIIM International 2002
(Operation)
Dr. Vinod Nowal 50 Executive MBA, PhD M/s VSL 26 February 2,664,927
Director (inventory Limited 14, 1984
(Commercial) Management)
Pochappan 56 Sr. V.P. Bachelor of Essar Steel 35 May 9, 2,014,220
Sasindran Engineering Limited 1998
D. Ravi Chandar 49 Sr. Bachelor of Bhushan steel 27 November 2,014,284
V.P.(Projects) Engineering, AMIE, Limited 18, 1994
Dip. Mgmt.(AIMA),
Diploma in Business
Finance (ICFAI)
Saralaya 56 Sr. V.P.(Iron ME (Metallurgy) M/s Ashapura 30 September 1,885,666
Lakshminarayan Zone) Group of 7, 2001
D. Industries
Kanwal Sarover 52 Sr. V.P.(Plate BE (Mech.) M/s. Jindal 27 July 2, -
Mill) Stainless Steel 2005
Pawan Kedia 46 Sr. V.P. B.Com, FICWA Essar Steel 23 October 1,640,271
(Commercials) Limited 26, 2005
Dileep Bhatt 47 Sr. V.P. B.Com, PGDMS Tata Exports 26 April 29, 2,264.237
DITM 1995
Jayant Acharya 42 Sr. V.P. M.Sc (Hons) Essar Steel 19 July 1, 2,400,625
Physics, BE (Hons) Limited 1999
Chemical, MBA

All the abovementioned key managerial personnel are permanent employees of our Company. [The remuneration
of each of our key personnel is as per the statement pursuant to Section 217(2A) of the Companies Act and the
Companies (Particulars of Employees) Rules, 1975].

The organization structure of the senior management of our Company is given below:

82
Organization Structure Chart

Board Structure

Board Of Directors

Executive Directors Non-Executive Directors Nominee Directors Independent Directors

Audit Committee Shareholder’s/Investor’s Remuneration Committee


Grievance Committee

Management Structure

Vice Chairman & Managing Director

Joint Managing Director & CEO Director (Finance)

ED (Operations) ED (Commercial & CSR)

83
Shareholding of our key managerial personnel in our Company

Name of Key Managerial Personnel No. of Equity Shares held


(Pre-Issue)
Sajjan Jindal 12,764
Jai Prakash Narain Lal 301
Dr. Vinod Nowal 4
Pochappan Sasindran 100
D. Ravi Chandar 4
Kanwal Sarover 513
Jayant Acharya 400

Interest of Promoters, Directors and key managerial personnel

Except as stated in “Related Party Transactions” on page [•] of this Draft Letter of Offer, and to the extent of
shareholding in our Company, our Promoters and promoter group do not have any other interest in our business.

The key managerial personnel of our Company do not have any interest in our Company other than to the extent
of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement
of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held
by them in our Company, if any.

Details of loans taken by key managerial personnel in our Company

Except as stated otherwise in this Draft Letter of Offer, we have not entered into any contract, agreement or
arrangement during the preceding two years from the date of this Draft Letter of Offer in which our Directors are
interested directly or indirectly and no payments have been made to them in respect of these contracts,
agreements or arrangements or are proposed to be made to them. Our Directors and our key managerial
personnel have not taken any loan from our Company.

Changes in our key managerial employees during the last three years

Name of Key Managerial Date of Appointment Date of Cessation Reason


Employee
Raman Madhok February 4, 2005 November 7, 2005 Resigned
J K Tandon November 5, 1997 December 13, 2003 Resigned
J S Charlu December 4, 1996 June 30, 2002 Superannuation
Rajneesh Mahajan January 18, 1995 January 31, 2003 Superannuation
S W Wagh October 6, 1997 February 28, 2003 Superannuation
D N Ghorai January 18, 1995 February 28, 2003 Superannuation
Dr. S K Gupta April 25, 1994 December 19, , 2003, Ceased to be
2003 Executive Vice
Chairman
Raaj Kumar May 16, 2003 January 17, 2005 Transferred to Jindal
Thermal Power
Company Limited
K N Patel August 28, 1995 April 27, 2005 Transferred to Jindal
South West Holdings
Limited
K Sarovar July 2, 2005 - Appointed

84
PROMOTERS AND PROMOTER GROUP

Promoters

The Promoters of our Company are Sajjan Jindal, Savitri Devi Jindal and Jindal South West Holdings Limited

Sajjan Jindal
For more details see the section on “Management” on page [•] of this Draft
Letter of Offer.

Passport No.: F 0256563


PAN No.: AADPJ5110D
Voter ID: Applied for
Driving License: 44304 / Hissar

Savitri Devi Jindal


For more details see the section on “Management” on page [•] of this Draft
Letter of Offer.

Passport No.: F 2181466


PAN No.: ACPPJ0130M
Voter ID: HR/09/74/414060
Driving License: NA

Jindal South West Holdings Limited

Corporate Information

Jindal South West Holdings Limited was incorporated under the Companies Act on July 12, 2001 and has its
registered office at Jindal Mansion, 5A, G. Deshmukh Marg, Mumbai 400 026. It is a non banking finance
company registered with the RBI.

The main object of Jindal South West Holdings Limited is to engage in investment activities by investing in
shares, stocks and other securities. It also provides management consultancy services.

Shareholding Pattern as on December 31, 2005

Serial Category Number of shares Percentage of


No. held holding

A. Promoter’s Holding
1. Promoters
Indian Promoters 6,208,236 55.93
Foreign Promoters Nil Nil
2. Persons Acting in Concert 996 0.01
Sub Total (a) 6,209,232 55.94

B. Non-Promoters holding
3. Institutional Investors:
a) Mutual Funds and UTI 638,392 5.75

85
b) Banking, Financial institutions, Insurance Companies 205,633 1.85
(Central/State Government Institutions, Non-Government
Institutions)
c) FIIs 1,883,904 16.97

Sub Total (b) 2,727,929 24.58

4. Others
a) Private Corporate bodies 382,182 3.44

b) Indian public 1,549,849 13.96

c) NRIs/ OCBs 172,309 1.55

d) Any other
Trust 58,124 0.52
Sub Total (c) 2,162,464 19.48

Grand Total (a+b+c) 11,099,625 100.00

Board of Directors
The Board of Directors of Jindal South West Holdings Limited is as follows:
1. Sajjan Jindal;
2. K N Patel;
3. N K Jain;
4. Dr. S K Gupta;
5. Atul Desai; and
6. Shailesh Haribhakti

Share Quotation

The shares of Jindal South West Holdings Limited are listed on BSE, NSE and the DSE.

Highest and lowest price on BSE in the last six months:

Month High (Rs.) Date Low (Rs.) Date


July, 2005 269.00 July 12, 2005 189.10 July 1, 2005
August, 2005 231.85 August 16, 2005 197.00 August 13, 2005
September, 2005 243.95 September 20, 2005 187.25 September 23, 2005
October, 2005 209.00 October 10, 2005 162.05 October 31, 2005
November, 2005 186.40 November 14, 2005 161.00 November 29, 2005
December, 2005 237.90 December 30, 2005 164.65 December 1, 2005
(Source: BSE Website)

Highest and lowest price on NSE in the last six months:

Month High (Rs.) Date Low (Rs.) Date


July, 2005 273.00 July 12, 2005 188.95 July 1, 2005
August, 2005 221.00 August 16, 2005 190.60 August 2, 2005
September, 2005 228.00 September 21, 2005 191.10 September 8, 2005
October, 2005 209.60 October 4, 2005 169.00 October 31, 2005
November, 2005 194.90 November 16, 2005 164.00 November 29, 2005
December, 2005 238.90 December 30, 2005 171.00 December 8, 2005
(Source: NSE Website)

Closing price on the BSE as of January 23, 2006 was Rs. 189.40.

Market Capitalisation on the BSE as of January 23, 2006 was Rs. 2,102.27 million.

86
Financial Performance
(In Rs. millions, except share data)
Year ended Year ended Year ended
March 31, 2003 March 31, 2004 March 31, 2005
Income 0.05 0.03 56.07
rofit after tax 0.023 (0.51) 52.95
Equity Share Capital 1.00 1.00 110.99
Reserve and Surplus 0.023 - 5212.11
Earning per Share (of Rs. 10 each) 0.23 (5.09) 4.77
Net Asset Value per share (of Rs.10 each) 9.59 (3.09) 479.45

The Promoter’s permanent account number, bank account number and passport number have been provided to
BSE, NSE and BgSE. Similarly, the permanent account number, bank account number,Company registration
number and the address of ROC where Jindal South West Holdings Limited is registered has been submitted to
Stock Exchanges where the listing is proposed.

Promoter Group

Relatives of the Promoters that are part of the promoter group

The following relatives form part of our promoter group:

S.No. Name Relationship with Sajjan Jindal


1. Abhyuday Jindal Nephew
2. Aiyush Bhuwalka Nephew
3. Arti Jindal Sister-in-law
4. Late Chandrawati Grandmother
5. Deepika Jindal Sister-in-law
6. Girish Jhunjhunwala Brother-in-law
Kamal Kishore Bhartia Brother-in-law
7. Madanlal Jindal Father’s brother
8. Madhur Goel Nephew
9. Manmohan Goel Brother-in-law
10. Navin Jindal Brother
11. Nirmala Goel Sister
12. O P Jindal & Sons HUF -
13. Late Om Prakash Jindal Father
14. Parth Jindal Son
15. Prithviraj Jindal Brother
16. Prithviraj Jindal HUF -
17. Ratan Jindal Brother
18. Ratan Kumar Jindal HUF -
19. Sandeep Jajodia Brother-in-law
20. Sangita Jindal Wife
21. Sarika Jhunjhunwala Sister
22. Saroj Bhartia Sister
24. Seema Jajodia Sister
25. Shaloo Jindal Sister-in-law
26. Sminu Jindal Niece
27. Sushilkumar Bhuwalka Brother-in-law

87
S.No. Name Relationship with Sajjan Jindal
28. Tanvi Jindal Daughter
29. Tarini Jindal Daughter
30. Tripti Jindal Niece
31. Urmila Bhuwalka Sister
32. Urvi Jindal Niece

As of January 17, 2006, the relatives of the Promoters collectively hold about 0.08% of the issued and subscribed
capital of our Company.

The Equity Shares are held through companies owned/controlled by the Promoters and their relatives forming
part of the promoter group include:

S. No Name of the shareholders


1. Abhinandan Investments Limited
2. Aras Overseas Limited
3. Baltimore Trading Private Limited
4. Beaufield Holdings Limited
5. Coldrado Trading Company Limited
6. Estrela Investment Company Limited
7. Ever Plus Securities Finance Limited
8. Gagan Trading Company Limited
9. Goswamis Credits Investment Limited
10. Heston Securities Limited
11. Hexa Securities Finance Company Limited
12. Jargo Investments Limited
13. Jindal Coated Steel Private Limited
14. Jindal Equipment Leasing & Consultancy Services Limited
15. Jindal Holdings Limited
16. Jindal Steel and Alloys Limited
17. JSW Energy Limited (formerly Jindal Thermal Power Company Limited)
18. JSW Power Trading Company Limited
19. Kamshet Investments Private Limited
20. Manjula Finance Limited
21. Mansarover Investments Limited
22. Mendeza Holdings Limited
23. Meredith Traders Private Limited
24. Musuko Trading Limited
25. Nacho Investments Limited
26. Nalwa Investments Limited
27. Nalwa Sons Investments Limited (formerly Jindal Strips Limited)
28. Naman Enterprises Private Limited
29. Pentel Holding Limited
30. Renuka Financial Services Limited
31. Reynold Traders Private Limited
32. Rishikesh Finlease & Investments Private Limited
33. Samarth Holdings Private Limited
34. Sarmento Holdings Limited
35. Southern Iron & Steel Company Limited
36. Jindal Saw Limied (formerly Saw Pipes Limited)
37. Stainless Investments Limited
38. Sun Investments Limited
39. Swastik Udyog Limited
40. Templar Investments Limited
41. Vavasa Investments Limited
42. Vrindavan Services Limited
43. Wachovia Investments Limited
44. West Coast Holdings Private Limited

88
As of January 17, 2006, the promoter group being companies owned/controlled by the Promoters and their
relatives collectively hold about 32.08% of the issued and subscribed capital of the Company. Besides,
Karnataka State Industrial Investment and Development Corporation Limited, a constituent of the promoter
group holds about 1.64% of the issued and subscribed capital of the Company

For details of shareholding of our Promoter and promoter group, refer to the section “Capital Structure” on page
[•] of this Draft Letter of Offer.

89
GROUP COMPANIES

Details of our top five listed group companies in terms of market capitalisation are as under:

I. Jindal Stainless Limited

Jindal Stainless Limited was incorporated under the Companies Act on September 29, 1980 as Jindal
Ceramics Limited with its registered office at Delhi Road, Hissar 125 005, Haryana. The name of the
company was subsequently changed to Jindal Intcom Limited with effect from January 25, 2001 and to
Jindal Stainless Limited with effect from January 27, 2003.

The main object of Jindal Stainless Limited is the manufacture and sale of a broad range of stainless
steel flat products including slabs, blooms, flat bars, hot rolled and cold rolled coils, plates and sheets.

Shareholding as of December 31, 2005


S. No Name of the Shareholder No. of shares Percentage of holding
1. Promoters 52,979,245 46.55
2. Banks, FIs, Mutual Funds and FIIs 27,924,709 24.53
3. Private Bodies Corporate 7,186,722 6.31
4. Resident Individuals 21,559,699 18.94
5. 4,166,497 3.66
NRIs/OCBs
6. Others (Non Domestic Companies) - -
Total 113,816,872 100.00

Board of Directors
The Board of Directors of Jindal Stainless Limited is as follows:

1. Savitri Devi Jindal


2. Ratan Jindal
3. R G Garg
4. Naveen Jindal
5. Rajinder Parkash
6. L K Singhal
7. Suman Jyoti Khaitan
8. N C Mathur

Financial Performance

The operating results of Jindal Stainless Limited for fiscal 2003, 2004 and 2005 are as hereunder:

(In Rs. Million except per share data)


As at and for the year ended March 31
2003 2004 2005
Gross sales 19,899.3 26,055.8 34,165.7
Net Sales 18,456.93 24,168.94 31,891.91
Profit/ (loss) after tax 901.5 1,641.9 2,458.5
(before adjustments)
Equity capital (par 138.3 199.8 219.8
value Rs. 10 per share)
Reserves 3,918.0 5,372.5 7,707.9
Earnings per share 9.30 17.08 23.96
Book value per Share 58.13 55.57 71.98
(of Rs. 10 each)

Share Quotation

The shares are listed on BSE, NSE and DSE. The details of the highest and lowest price on BSE and
NSE during the preceding six months are as follows:

90
Highest (Rs.) Date Lowest (Rs.) Date
BSE 160.95 September 16, 2005 94.30 December 29, 2005
NSE 160.75 September 16, 2005 94.30 December 29, 2005
Source: BSE and NSE Website

The share capital history of Jindal Stainless Limited during the preceding six months is as follows:

Date of No. of Face Issue Cumulative Consideration Remarks


allotment Equity Value Price paid-up
Shares (Rs.) (Rs.) capital (Rs.
Allotted in million)
July 22, 36,497 2 119.87 219.9 Cash Conversion of 0.5%
2005 Foreign Currency
Convertible Bonds
September 182,486 2 119.87 220.3 Cash Conversion of 0.5%
16, 2005 Foreign Currency
Convertible Bonds
September 2,675,247 2 119.87 225.6 Cash Conversion of 0.5%
23, 2005 Foreign Currency
Convertible Bonds
October 1,012,798 2 119.87 227.6 Cash Conversion of 0.5%
14, 2005 Foreign Currency
Convertible Bonds

The Company has engaged the services of a Registrar & Transfer Agent to handle the grievances of the
investors. The average time taken by the Company for redressal of Complaints varies from 7 to 10 days,
depending on the Type of Complaint. Particulars of investor complaints during the period 01.04.2005 to
31.12.2005 are as follows:

Complaints received 405


Complaints resolved 396
Complaints pending 9

II. Southern Iron and Steel Company Limited

Southern Iron and Steel Company Limited was incorporated under the Companies Act on September
11, 1991 with its registered office at Pottaneri, M Kalipatti Village, Mecheri 636 453, Salem,Tamil
Nadu.

The main object of Southern Iron and Steel Company Limited is operating an integrated steel plant
having facilities for production of pig iron, steel billet and rolled steel products in the long product
category.

Shareholding as of December 31, 2005

S. No Name of the Shareholder No. of shares Percentage of holding


1. Promoters 108,672,232 40.70
2. Banks, FIs, Mutual Funds and FIIs 5,574,863 2.09
3. Private Bodies Corporate 37,392,951 14.00
4. Resident Individuals 113,204,161 42.40
5. NRIs/OCBs 2,159,288 0.81
6. Others (Non Domestic Companies) - -
Total 267,003,495 100.00

Board of Directors

The Board of Directors of Southern Iron and Steel Company Limited is as follows:

91
1. N K Jain
2. Vijay Sharma
3. K T Krishna Deshika
4. P Shanmugasundaram
5. S Ragothaman
6. V Prakash.

Financial Performance

The operating results of Southern Iron and Steel Company Limited for fiscal 2003, 2004 and 2005 are
as hereunder:

(In Rs. Million except per share data)


As at and for the As at and for the 15 As at and for the 9
year ended March months ended June months ended March
31, 2003 30, 2004 31, 2005
Gross sales including 3083.8 3879.7 3649.6
Other incomes
Net Sales 2,684.4 3,414.5 3184.2
Profit/ (loss) after tax (457.0) (1534) 390.5
(before adjustments)
Equity capital (par 1,603.9 1,603.9 1603.9
value Rs. 10 per share)
Reserves 760.8 760.8 760.8
Earnings per share (6.05) (20.31) 5.17
Book value per Share 30.64 (123.06) (83.96)
(of Rs. 10 each)

Share Quotation
The shares are listed on BSE, Chennai Stock Exchange and the Coimbatore Stock Exchange. The
details of the highest and lowest price on BSE during the preceding six months are as follows:

Highest (Rs.) Date Lowest (Rs.) Date


BSE 35.00 September 20, 2005 15.30 December 28, 2005
Source: BSE Website

The share capital history of Southern Iron and Steel Company Limited during the preceding six months
is as follows:

Date of No. of Face Issue Cumulative Consideration Remarks


allotment Equity Value Price paid-up
Shares (Rs.) (Rs.) capital (Rs.
Allotted in million)
May 21, 173,713,227 10 10 3,253.33 Cash Rights Issue
2005
September 17,750,418 10 62 4,353.85 Cash Conversion of
22, 2005 preference
shares/unsecured loan
into equity shares

Investor Grievance

The Company has engaged the services of a Registrar & Transfer Agent to handle the grievances of the
investors. The average time taken by the Company for redressal of Complaints varies from 1 to 2 weeks,
depending on the Type of Complaint. Particulars of investor complaints during the period 01.04.2005 to
30.09.2005 are as follows:

Complaints received 312


Complaints resolved 312
Complaints pending Nil

92
III. Jindal Steel and Power Limited

Jindal Steel and Power Limited was incorporated under the Companies Act as Orbit Strips Private
Limited on September 28, 1979 with its registered office at Delhi Road, Hissar 125005, Haryana. The
name of the company was subsequently changed to Jindal Steel and Power Limited with effect from
June 12, 1998.

The main object of Jindal Steel and Power Limited is to set up steel furnaces and continuous casting and
hot and cold rolling mill plants for producing ferrous and non- ferrous metals, alloys steels etc. and to
carry on the business to generate, receive, produce, buy, sell, transmit, distribute etc., or otherwise deal
in electric power.

Shareholding as of December 31, 2005

S. No Name of the Shareholder No. of shares Percentage of holding


1. Promoters 18,262,399 59.31
2. Banks, FIs, Mutual Funds and FIIs 7,844,393 25.48
3. Private Bodies Corporate 649,104 2.11
4. Resident Individuals 3,536,840 11.49
5. NRIs/OCBs 453,891 1.47
6. Others (Non Domestic Companies) 45,641 0.15
Total 30,792,268 100.00

Board of Directors

The Board of Directors of Jindal Steel and Power Limited is as follows:

1. Savitri Jindal
2. Ratan Jindal
3. Naveen Jindal
4. Vikrant Gujral
5. Ashok Alladi
6. Amir Z Singh Pasrich
7. Rajendra Singh
8. Anand Goel
9. Sushil K Maroo
10. Suresh Baid
11. M L Gupta

Financial Performance

The operating results of Jindal Steel and Power Limited for fiscal 2003, 2004 and 2005 are as
hereunder:

(In Rs. Million except per share data)


As at and for the year ended March 31,
2003 2004 2005
Gross sales including Other incomes 10,016.8 14,039.4 24,673.0
Net Sales 9887.2 12,616.1 25,536.0
Profit/ (loss) after tax (before 1,450.8 3,054.6 5,157.0
adjustments)
Equity capital (par value Rs. 10 per 146.3 154.0 154.0
share)
Reserves 5,581.8 8,398.0 13,029.8
Earnings per share 104.00 100.22 167.48
Book value per Share (of Rs. 10 each) 195.00 277.00 428.00

93
Share Quotation

The shares are listed on BSE, NSE and the Calcutta Stock Exchange (“CSE”). The details of the highest
and lowest price on BSE, NSE and CSE during the preceding six months are as follows:

Highest (Rs.) Date Lowest (Rs.) Date


BSE 1,586.90 December 30, 2005 844 July 1, 2005
NSE 1,589.90 December 30, 2005 845 July 1, 2005
Source: BSE and NSE Website

There has been no change in capital structure in the last six months.

Investor Grievance

The company has engaged the services of a Registrar & Transfer Agent to handle the grievances of the
investors. The average time taken by the company for redressal of complaints varies from 1 to 2 weeks,
depending on the type of complaint. Particulars of investor complaints during the period April 1, 2005
to December 31, 2005 are as follows:

Complaints received 138


Complaints resolved 137
Complaints pending 1

IV. Jindal Saw Limited

Jindal Saw Limited was incorporated under the Companies Act on October 31, 1984 as Saw Pipes
Limited with its registered office at A-1, UPSIDC Industrial Area, Nandgaon Road, Kosi Kalan,
Mathura 281 403, Uttar Pradesh.
.
The main object of Jindal Saw Limited is the manufacture of sub-merged arc welded pipes, seamless
pipes and coating thereof.

Shareholding as of December 31, 2005


S. No Name of the Shareholder No. of shares Percentage of holding
1. Promoters 20,456,458 42.30
2. Banks, FIs,.Mutual Funds and FIIs 14,706,404 30.41
3. Private Bodies Corporate 2,410,077 4.98
4. Resident Individuals 4,424,393 9.15
5. NRIs/OCBs 6,367,126 13.16
6. Others (Non Domestic Companies) - -
Total 48,364,458 100.0

Board of Directors

The Board of Directors of Jindal Saw Limited is as follows:

1. Savitri Devi Jindal


2. Prithvi Raj Jindal
3. Sminu Jindal
4. H.S. Chaudhary
5. Purshottam Lal
6. A.J.A. Tauro
7. Kuldip Bhargava
8. Devi Dayal
9. M.V. Satya Prasad

Financial Performance

The operating results of Jindal Saw Limited for fiscal 2003, 2004 and 2005 are as hereunder:

94
(In Rs. Million except per share data)
As at and for the year ended September 30,
2003 2004 2005
Gross sales including Other 8,069.9 11,293.1 24,072.6
incomes
Net Sales 8,049.6 10,820.5 23,136.2
Profit/ (loss) after tax (before 760.8 562.4 1,007.3
adjustments)
Equity capital (par value Rs. 10 389.8 389.8 471.1
per share)
Reserves 2,903.4 3,355.6 6,792.3
Earnings per share 19.41 14.43 25.62
Book value per Share (of Rs. 10 91.90 102.58 158.65
each)

Share Quotation

The shares are listed on BSE, NSE and the Calcutta Stock Exchange (“CSE”). The details of the highest
and lowest price on BSE and NSE during the preceding six months are as follows:

Highest (Rs.) Date Lowest (Rs.) Date


BSE 454.5 October 4, 2005 337 October 19, 2005
NSE 500 October 11, 2005 335.10 October 19, 2005
Source: BSE and NSE Website

The share capital history of Jindal Saw Limited during the preceding six months is as follows:

Date of No. of Face Issue Cumulative Consideration Remarks


allotment Equity Value Price paid-up
Shares (Rs.) (Rs.) capital (Rs.
Allotted in million)
September 8,135,000 10 350 471.1 Cash Issue of Global
20, 2005 Depository Shares
October 1,250,000 10 350 483.64 Cash Issue of Global
17, 2005 Depository Shares

Investor Grievance

The company has engaged the services of a Registrar & Transfer Agent to handle the grievances of the
investors. The average time taken by the company for redressal of Complaints varies from 1 to 10 days,
depending on the type of complaint. Particulars of investor complaints during the period October 1,
2004 to September 30, 2005 are as follows:

Complaints received 12
Complaints resolved/replied 12
Complaints pending Nil

V. Nalwa Sons Investments Limited

Nalwa Sons Investments Limited was incorporated under the Companies Act as Jindal Stips Private
Limited on November 18, 1970 with its registered office at Delhi Road, Hissar 125 005, Haryana. The
name was changed to Nalwa Sons Investments Limited with effect from April 29, 2005.

Nalwa Sons Investments Limited is registered as a non banking finance company with the RBI and it is
engaged in dealing and investing in securities.

Shareholding as of December 31, 2005

S. No Name of the Shareholder No. of shares Percentage of holding

95
1. Promoters 2,856,900 55.62
2. Banks, FIs,.Mutual Funds and FIIs 92,517 1.80
3. Private Bodies Corporate 293,410 6.72
4. Resident Individuals 1,129,877 22.00
5. NRIs/OCBs 763,459 14.86
6. Others (Non Domestic Companies) - -
Total 5,136,163 100.0

Board of Directors

The Board of Directors of Nalwa Sons Investments Limited is as follows:

1. Savitri Devi Jindal;


2. Ratan Jindal;
3. Deepika Jindal;
4. R G Garg;
5. Rajinder Parkash; and
6. Rakesh Garg

Financial Performance

The operating results of Nalwa Sons Investments Limited for fiscal 2003, 2004 and 2005 are as
hereunder:
(In Rs. Million except per share data)
As at and for the year ended March 31,
2003 2004 2005
Interest and dividend income 115.6 124.4 98.1
Profit/ (loss) after tax (before adjustments) 27.0 (441.9) (238.3)
Equity capital (par value Rs. 10 per share) 51.3 51.3 51.3
Reserves 2,934.6 2,492.6 2,254.4
Earnings per share 5.26 (86.05) (46.4)
Book value per Share (of Rs. 10 each) 81.24 495.22 448.88

Share Quotation

The shares are listed on BSE, NSE and DSE. The details of the highest and lowest price on BSE and
NSE during the preceding six months are as follows:

Highest (Rs.) Date Lowest (Rs.) Date


BSE 487.65 September 6, 2005 271 July 1, 2005
NSE 479 September 6, 2005 334 December 27, 2005
Source: BSE and NSE Website

There has been no change in capital structure in the last six months.

Investor Grievance

The company has engaged the services of a Registrar & Transfer Agent to handle the grievances of the
investors. The average time taken by the company for redressal of complaints varies from 7 to 10 days,
depending on the type of complaint. Particulars of investor complaints during the period April 1, 2005
to December 31, 2005 are as follows:

Complaints received 446


Complaints resolved 441
Complaints pending 5

96
OUR ASSOCIATE COMPANIES

I. JSW Energy Limuited (formerly Jindal Thermal Power Company Limited)

JSWEL was incorporated under the Companies Act on March 10, 1994 with its registered office at Jindal
Mansion, 5A, G.Deshmukh Marg Mumbai. It is engaged in the business of generation of power. We hold
50% of the paid up equity share capital of JSWEL.

Shareholding as of January 18, 2006.

No.of equity Percentage of


Name of the Shareholder
shares shreholding
Nalwa Sons Investments Limited (earlier Jindal Strips Limited) 100 0.00
JSW Holdings Limited 100 0.00
Mr. Sajjan Jindal 100 0.00
Mr. Prithvi Raj Jindal 100 0.00
Mr. Ratan Jindal 100 0.00
JSW Steel Limited 144,499,400 50.00
Gagan Trading Company Limited 12,655,100 4.38
Sun Investments Private Limited 73,002,000 25.26
Vrindavan Services Private Limited 29,685,000 10.27
Indus Capital Group Ltd., Mauritius 13,158,000 4.55
Steel Traders Ltd., Mauritius 16,000,000 5.54
Total 289,000,000 100.00

Board of Directors

The Board of Directors of JSW Energy Limited is as follows:

1. Sajjan Jindal
2. N. K. Jain
3. Raaj Kumar
4. K.T. Krishna Deshika
5. Siby Antoy
6. P. Abraham
7. D. J. Balaji Rao
8. Prashant Deshpande

Financial Performance

The operating results of JSW Energy Limited for fiscal 2003, 2004 and 2005 are as hereunder:

(In Rs. Million except per share data)


As at and for the As at and for the As at and for the
year ended March year ended March year ended March
31, 2003 31, 2004 31, 2005
Gross sales including Other 5,219.2 5,580.3 4,936.7
incomes
Profit/ (loss) after tax (before 214.6 1,955.6 603.5
adjustments)
Equity capital (par value Rs. 10 per 2,890.0 2,890.0 2,890.0
share)
Reserves 1,003.2 2,958.8 3,561.3
Earnings per share 0.74 6.77 2.08
Book value per Share (of Rs. 10 370.76 584.88 645.13
each)

The shares of JSWEL are not listed.

97
II. Vijayanagar Minerals Private Limited

VMPL is a joint venture with Mysore Minerals Limited. As of March 31, 2005, we hold 40% of the paid up
equity share capital of VMPL. VMPL was incorporated under the Companies Act on June 17, 1997 with its
registered office at Toranagallu, Bellary 583 123, Karnataka.

VMPL is engaged in the business of mining and extraction of minerals, metals and ores.

Shareholding as of December 31, 2005

S.
Name of the Shareholder No. of equity shares Percentage of holding
No
1. JSW Steel Limited 4,000 40.00
2. Mysore Minerals Limited 3,000 30.00
3. Gagan Trading Company Limited 1,500 15.00
4. Sun Investments Limited 1,500 15.00
Total 10,000 100.00

Board of Directors

The Board of Directors of Vijayanagar Minerals Private Limited is as follows:

1. Jija Madhavan Hari Singh


2. Anil Sood
3. N K Jain
4. D L Saralaya
5. P Krishne Gouda
6. M A Venkateshan
7. Yogendra Tripati
8. U V Singh

Financial Performance

The operating results of Vijayanagar Minerals Private Limited for fiscal 2003, 2004 and 2005 are as
hereunder:

(In Rs. Million except per share data)


As at and for the As at and for the As at and for the
year ended March year ended March year ended March
31, 2003 31, 2004 31, 2005
Gross sales including Other 166.5 229.0 313.2
incomes
Net Sales 166.4 228.3 311.7
Profit/ (loss) after tax (before (6.2) 16.6 27.9
adjustments)
Equity capital (par value Rs. 0.1 0.1 0.1
10 per share)
Reserves (63.0) (46.3) (18.4)
Earnings per share (614) 1664 2791
Book value per Share (of Rs. (4.95) (2.83) 0.75
10 each)

The shares of VMPL are not listed.

II. Jindal Praxair Oxygen Company Private Limited

JPOCL is a joint venture with Praxair Pacific Limited. As of March 31, 2005, we hold 26% of the paid up
equity share capital of JPOCL. JPOCL was incorporated under the Companies Act on September 27, 1995
with its registered office at Vidyanagar, Bellary, Karnataka.

98
JPOCL is engaged in the business of manufacture of liquid and gaseous oxygen, nitrogen and liquid argon.

Shareholding as of December 31, 2005

No. of equity
S. No Name of the Shareholder Percentage of holding
shares
1. Praxair Pacific Limited 112,480,000 74.00
2. JSW Steel Limited 39,520,000 26.00
Total 152,000,000 100.00

Board of Directors

The Board of Directors of JPOCL is as follows:

1. N. K. Jain
2. I Qureshi
3. Moosa Raza
4. Asit Gangopadhyay
5. Gerry Reidy
6. Sharad Madhok
7. K Kalyana Sundaram
8. John Panikar
9. C Muralidhara
10. Venkatesh Prabhu
11. Vikas Sharma

Financial Performance

The operating results of JPOCL for fiscal 2003, 2004 and 2005 are as hereunder:

(In Rs. Million except per share data)


As at and for the year As at and for the year As at and for the year
ended March 31, 2003 ended March 31, 2004 ended March 31, 2005
Gross sales including 3321.9 3400.4 3321.9
Other incomes
Net Sales 2,350 2,668 2,573.7
Profit/ (loss) after tax 298.5 355.8
291
(before adjustments)
Equity capital (par value 1,520 1,520
1,520
Rs. 10 per share)
Reserves 475.2 773.7 1,129.5
Earnings per share 1.91 1.96 2.34
Book value per Share (of 15.09 17.43
13.11
Rs. 10 each)

The shares of JPOCL are not listed.

99
RELATED PARTY TRANSACTIONS

The list of related parties and the transactions entered into during the current period are as follows:

As a policy, we enter into transactions with related parties on an arms-length basis.

S. No Particulars Name of Party


1. Associate Companies Jindal Praxair Oxygen Company Private Limited
Jindal Thermal Power Company Limited
Vijayanagar Minerals Private Limited
Jindal Strips Limited
Jindal Stainless Limited (From 2003-04)
Jindal Steel & Alloys Limited
Jindal Saw Limited
Jindal Steel and Power Limited
Southern Iron & Steel Company Limited (From 2004-05)
South West Port Limited (from 2004-05)
Jindal Iron & Steel Company Limited (up to 2002-03)
2. Key Managerial Sajjan Jindal
Personnel Dr. B.N.Singh
Raman Madhok (Resigned w.e.f November 7, 2005)
Seshagiri Rao M.V.S

Details of related party transactions are as follows:


(Rs. in Million)
For the Six For the year ended March 31,
months
ended Sept.
30, 2005 2005 2004 2003 2002
Transactions during the year with
Associates:
Purchases of Goods/Power & Fuel 2,251.7 6,172.9 6,387.3 4,942.6 4,076.2

Sales of Goods/Power & Fuel 2,692.2 3,683.9 3,493.5 14,390.6 10,181.2

Purchase of assets 152.5 290.6 7.1 9.9 5.6

Deposit received against leased assets - - 15.0 0.6 39.0

Assets sold - - - 0.3 280.0

Rendering of services @ @ 5.8 2.6 0.7

Receiving of services from associates 284.8 361.5 110.4 25.1 37.2

Purchase of Equity/Preference shares and - - 73.4 73.4 294.4


payment of advance against equity

Refund made of advance against equity - - - 18.1 114.5

Guarantees and collaterals issued - - - - 355.0

Writing back of provision of - - - - 5.7


advances/doubtful debts during the year
Transactions during the year with Key
management personnel:
Remuneration to key management 45.1 100.4 8.9 6.0 4.9

100
personnel

Closing balances of Associates:


Payable:
Trade payables 703.3 570.3 572.2 2,009.3 1,955.8

Lease deposit 103.2 103.2 103.2 88.2 87.6

Receivable:
Trade receivables 613.5 512.0 561.5 2,378.4 2,330.2

Advance for Equity 40.6 40.6 40.6 113.9 40.6

Other advances 205.6 254.5 248.1 2.5 2.5

Closing balances of Key management


personnel:
Payable to Key management personnel - - 2.6 - -

Investments made 2,246.9 2,246.9 2,246.9 2,173.5 2,173.5


Guarantees and collaterals :
Guarantees and collaterals provided by 1,840.2 1,840.2 1,840.2 1,840.2 1,840.2
the Company
Guarantees and collaterals provided on - - - 5,356.4 4,441.5
company's behalf
@ Less than Rs.50,000/-

101
FINANCIAL STATEMENTS

AUDITORS’ REPORT

The Board of Directors,


JSW Steel Limited.

We have examined the financial information (given in Annexure I to XVI attached to this report) of JSW Steel
Limited (‘the Company’) as approved by the Board of Directors of the Company. The said financial information
is the responsibility of the management and has been prepared in terms of the requirements of -

(i) Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956;

(ii) Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘the
Guidelines’) issued by the Securities and Exchange Board of India (“SEBI”) on January 19,2000 in
pursuance of Section 11 of SEBI Act, 1992 the SEBI Guidelines and amendments made thereto, to the
extent applicable; and

(iii) Your mandate dated January 20, 2006 wherein you have requested us to examine the financial
information referred to above and proposed to be included in the Letter of Offer of the Company in
connection with its’ proposed rights issue of equity shares.

Based on our examination of the aforesaid annexures, we report as under:

1. (a) In our opinion, the financial informations contained in the ‘Statement of restated profit and loss’
(Annexure I) and ‘Statement of restated cash flows’ (Annexure III) for each of the financial years
ended March 31 2001, 2002, 2003, 2004, 2005 and for the period of six months ended September 30,
2005 and ‘Statement of restated assets and liabilities’ (Annexure II) as on those dates have been
extracted from the financial statements audited by us and after making the necessary and relevant
disclosures and adjustments required to be made, which is in accordance with the provisions of Part II
of Schedule II of the Companies Act, 1956 and the Guidelines and found correct. The said audited
financial statements for each of the financial years ended March 31, 2001, 2002, 2003, 2004 and 2005
were adopted by the members of the Company and that for the period ended September 30, 2005 has
been approved by the Board of directors of the Company.

(b) There have been two schemes of arrangements and amalgamation, one with Jindal Iron and Steel Co.
Limited (JISCO) in the financial year ended March 31, 2004 w.e.f. the appointed date April 1, 2003
and another with Euro Ikon Iron & Steel Private Limited (Euro Ikon), Euro Coke & Energy Private
Limited (Euro Coke) and JSW Power Limited (JPL) in the half year ended September 30, 2005 w.e.f the
appointed date April 1, 2005. Therefore, figures for the different years/period given in the annexures are
not comparable.

2. The matters stated in following annexures have been extracted from the financial statements
audited by us and have been correctly recorded/computed/restated.

Annexure No. Matters stated there in


IV (A) Significant Accounting Policies adopted by the Company
IV (B) Selected notes to the restated financials
V Related party disclosure (Restated)
VI Statement of Dividends paid
VII Statement of Other Income (Restated)
VIII Statement of Accounting Ratios (Restated)
IX Capitalisation statement
X Statement of secured loans and principal terms of loans and assets charged as
security
XI Statement of working capital loans and principal terms of loans and assets
charged as security.
XII Statement of unsecured loans and long term advance from customer
XIII Statement of tax shelter (Restated)

102
XIV Breakup of ageing schedule of sundry debtors (Restated)
XV Loans and advances given to promoter/promoter group companies and others
(Restated)
XVI Statement of investments

3. The material changes as per Accounting Standard - 4 (Contingencies and Events occurring after the
balance sheet date) occurring in the capital structure of the Company after September 30, 2005 are as
follows:

i. 1,79,92,837 Equity shares were issued on November 30, 2005 pursuant to the scheme of
Amalgamation between the Company, Euro Ikon Iron & Steel Private Limited, Euro Coke &
Energy Private Limited and JSW Power Limited.

ii. 99,43,043 Equity shares were issued on January 17, 2006 on conversion of 99,43,043 warrants
issued pursuant to the scheme of Arrangement & Amalgamation between the Company, Jindal
Iron & Steel Co. Limited (JISCO) & Jindal South West Holdings Limited (JSWHL).

4. We confirm that restatements or adjustments wherever required have been made as per SEBI Guidelines in
respect of the financial information.

5. Except for the information referred to in the aforesaid, other pages of Letter of Offer have not been reviewed
by us. This report is intended solely for the use of JSW Steel Limited, for the purpose of inclusion in the
Letter of Offer in connection with the proposed Right issue of the Company. This report may not be used or
relied upon by, or disclosed, referred to or communicated by yourself (in whole or in part) to, any third party
for any purpose other than the stated use, except with our written consent in each instance, and which
consent, may be given, only after full consideration of the circumstances at that time.

For Lodha & Co.,


Chartered Accountants

N. Kisore Bafna
Place: Mumbai Partner
Date: January 24, 2006 (Membership No.7642) N

103
Annexure I

Statement of restated Profit and Loss


(Rs. in Million)
For the
For the year ended March 31,
Six
months
ended
Sept. 30,
2005 2005 2004 2003 2002 2001
Income
Gross Sales
Of Products Manufactured by the
Company 33,882.5 70,359.0 46,787.6 27,860.4 20,003.4 13,457.8
Less: Excise duty (3,094.0) (3,565.4) (3,241.0) (2,812.8) (2,645.9) (1,856.0)
Net Sales 30,788.5 66,793.6 43,546.6 25,047.6 17,357.5 11,601.8
Other Income 62.1 189.8 317.8 37.1 17.6 31.5
Increase/ (Decrease) in inventories 1,719.5 433.1 (26.4) 121.7 (25.7) (241.3)
Total 32,570.1 67,416.5 43,838.0 25,206.4 17,349.4 11,392.0

Expenditure
Raw Material Consumed 16,964.9 29,579.5 17,609.9 10,988.1 10,370.1 8,143.4
Personnel expenses 607.1 1,072.1 729.6 371.5 281.5 65.7
Other Manufacturing expenses 3,921.7 9,766.9 8,144.4 5,712.2 3,524.7 484.6
Administrative and other expenses 606.9 575.8 293.7 304.9 193.2 224.5
Selling & Distribution expenses 1,467.3 2,763.9 2,064.2 714.9 178.8 165.3
Interest & Finance charges 1,892.6 4,698.7 4,883.5 5,596.4 4,434.1 1,943.4
Depreciation & Amortization 2,327.9 4,200.2 4,394.3 3,451.0 2,681.8 861.3
Total 27,788.4 52,657.1 38,119.6 27,139.0 21,664.2 11,888.2

Profit / (Loss) before Exceptional


Items & Tax 4,781.7 14,759.4 5,718.4 (1,932.6) (4,314.8) (496.2)
Exceptional Items - (33.3) 3,907.6 (2,095.7) - -
Profit / (Loss) Before Tax 4,781.7 14,726.1 9,626.0 (4,028.3) (4,314.8) (496.2)
Provision for taxation
Current tax 282.7 745.0 462.4 - - 14.0
Deferred tax 1,421.7 5,280.0 1,229.8 (2,921.6) (804.1) -
Fringe Benefit Tax 10.8 - - - - -
Net Profit / (Loss) after tax 3,066.5 8,701.1 7,933.8 (1,106.7) (3,510.7) (510.2)

Add/(Less): Balance as per last Balance


Sheet 7,195.7 1,327.9 (6,605.8) (5,499.1) (2,638.6) (2,128.4)
Deferred Tax Asset (net) for earlier years - - - - 650.2 -

Dividend & Tax thereon - (1,713.1) - - - -

General Reserve - (870.2) - - - -

Debenture Redemption Reserve - (250.0) - - - -

Balance carried to Balance Sheet 10262.2 7,195.7 1,327.9 (6,605.8) (5,499.1) (2,638.6)

104
Annexure II

Statement of restated Assets and Liabilities


(Rs. in Million)
As at As at March 31,
Sept. 30,
2005 2005 2004 2003 2002 2001
A. Fixed Assets

Gross Block 82,339.3 75,203.0 72,911.0 63,095.6 43,655.6 17,548.4

Less: Depreciation 16,496.2 14,439.1 10,922.5 7,198.3 4,378.1 2,296.1

Net Block 65,843.1 60,763.9 61,988.5 55,897.3 39,277.5 15,252.3

Add: Capital work in progress 9,936.2 3,493.0 657.4 614.1 17,638.6 40,425.3

Sub Total (A) 75,779.3 64,256.9 62,645.9 56,511.4 56,916.1 55,677.6

B. Investments (B) 2,295.8 2,295.7 2,295.7 2,225.9 2,225.20 1,933.4

C. Deferred Tax Asset - - 2,225.1 4,375.9 1,454.3 -

D. Current Assets, Loans &


Advances

Inventories 8,414.3 7,434.1 4,121.7 2,664.5 2,362.1 1,795.8

Sundry Debtors 2,329.7 2,666.0 2,731.1 2,796.3 2,568.9 2,783.2

Cash & Bank Balances 755.2 1,224.9 851.1 388.4 283.2 182.4

Loans & Advances 6,846.6 7,615.0 4,656.5 1,525.8 2,254.7 1,934.9

Sub Total (D) 18,345.8 18,940.0 12,360.4 7,375.0 7,468.9 6,696.3

E. Liabilities and Provisions

Advance against Share capital - - - 729.9 18.1 132.6

Secured Loans 37,682.5 35,684.4 47,047.7 54,050.0 51,681.6 45,236.8

Unsecured Loans 772.1 - 1,424.6 5,356.4 4,441.5 4,509.1

Deferred tax Liabilities 4,505.9 3,054.9 - - - -


Long Term advance from a
customer 1,131.2 2,679.7 - - - -

Current liabilities & Provision 17,401.1 16,082.6 10,663.5 8,170.2 9,262.1 9,396.3

Sub Total (E) 61,492.8 57,501.6 59,135.8 68,306.5 65,403.3 59,274.8

Net Worth (A) + (B) + (C) + (D)-


(E) 34,928.1 27,991.0 20,391.3 2,181.7 2,661.2 5,032.5

105
Represented by

Equity Share Capital 1,290.4 1,290.4 564.8 12,910.0 12,909.3 12,909.8


Shares forfeited (Amount
originally paid-up) 610.5 610.6 611.0 610.3 610.6 609.4

Preference Share Capital 2,790.3 2,790.3 2,790.3 - - -

Share capital Suspense 179.9 - 725.6 - - -


Reserves & Surplus (excluding
Revaluation Reserve) 33,351.1 26,805.9 19,817.2 - - -
Less: Miscellaneous Expenditure
(to the extent not written off or
adjusted) 3,294.1 3,506.2 4,117.6 4,732.8 5,359.6 5,862.1
Less: Debit balance in Profit &
Loss account - - - 6,605.8 5,499.1 2,624.6

Net Worth 34,928.1 27,991.0 20,391.3 2,181.7 2,661.2 5,032.5

Annexure III

Statement of restated Cash Flows


(Rs. in Million)
For the
Six For the year ended March 31,
months
ended
Sept. 30,
2005 2005 2004 2003 2002 2001

CASH FLOW FROM


A. OPERATING ACTIVITIES

NET PROFIT / (LOSS) BEFORE


TAX AND EXCEPTIONAL
ITEMS AND TAXATION 4,781.7 14,759.4 5,718.4 (1,932.6) (4,314.8) (496.2)

Adjustments for:
Depreciation 2,022.6 3,595.4 3,751.6 2,805.9 2,026.9 769.1
Miscellaneous Expenditure written
off 305.3 604.8 642.7 645.1 654.9 92.2
(Profit)/Loss on sale of fixed assets 1.6 (7.2) 31.0 (0.2) (1.2) 1.2
Interest Income (23.9) (48.3) (35.9) (38.1) (9.4) -
Profit on sale of Investment - - (0.5) - - -
Dividend Income (0.3) (0.3) (0.2) (8.0) (0.3) -
Interest 1,542.7 4,356.7 4,388.1 5,267.9 4,225.8 1,885.9
Foreign exchange variation (net) (1.9) 6.0 (163.4) (7.9) 14.1 (1.8)
Wealth Tax 2.7 5.2 - 1.5 1.2 1.1
Miscellaneous Expenditure Paid (75.2) (42.2) 27.5 - (135.4) (1.1)
Diminution in the value of
Investments - - - - - 2.1
Provision for doubtful
Loans/Advances - - - - 6.0 102.5
Provision for doubtful debts - - - - - 14.0
Provision no longer required written
back (4.7) (94.7) (166.6) (17.3) (5.8) (26.7)

106
Operating profit before working
capital changes 8,550.6 23,134.8 14,192.7 6,716.3 2,462.0 2,342.4

Adjustments for:
Trade and other receivables 1,448.6 (2,728.0) (3,465.8) (447.9) 222.9 214.8

Trade payables (915.7) 3,643.2 1,722.6 (236.8) 826.9 (573.0)


Inventories (973.5) (3,312.3) 34.1 (302.3) (628.2) (180.3)
Cash flow before taxation &
exceptional items 8,110.0 20,737.7 12,483.6 5,729.3 2,883.6 1,803.9

Direct Taxes Paid (401.6) (720.4) (333.9) - (13.4) -


Cash flow before exceptional
items 7,708.4 20,017.3 12,149.7 5,729.3 2870.2 1803.9

Exceptional items - (33.3) - - - -


NET CASH FLOW FROM
OPERATING ACTIVITIES 7,708.4 19,984.0 12,149.7 5,729.3 2870.2 1803.9

CASH FLOW FROM


INVESTING ACTIVITIES
B.
Purchase of fixed assets and capital
advances (6,194.4) (4,399.8) (1,240.2) (668.9) (1,252.1) (3,600.6)

Sale of Fixed Assets 13.6 19.7 12.9 3.9 4.9 1.2

Sale of Investments - - 5.5 - - -

Interest received 22.0 41.0 37.4 34.4 14.7 45.9

Dividend received 0.3 0.3 0.2 7.2 0.3 4.3

Purchase of Investments - - - - (24.7) (5.0)

Loans and Advances 4.0 45.5 14.8 (11.1) (607.2) (193.2)

Other Payables 2,198.7 198.1 (333.5) (514.3) (33.1) (1,987.8)


NET CASH (USED IN) / FROM
INVESTING ACTIVITIES (3,955.8) (4,095.2) (1,502.9) (1,148.8) (1,897.2) (5,735.2)

CASH FLOW FROM


C FINANCING ACTIVITIES

Proceeds from issue of Share Capital 816.6 - 152.1 - 0.0 2,971.6


Receipt of Advance against share
capital - - - 729.9 - -
Repayment of Advance against
share capital - - - (18.1) (114.5) (1,324.5)
Receipts against Debts
Securitisation - 4,783.5 - - - -
Repayments against Debts
Securitisation (1,554.4) (2,103.8) - - - -
Proceeds from Long Term
Borrowings 15,064.0 10,750.0 - 7,060.0 3,684.2 9,610.2
Repayment against Long Term
Borrowings (16,555.3) (24,409.3) (5,841.6) (1,609.8) (536.6) (3,557.2)

107
Increase / decrease in Bank
Borrowings for working capital 814.0 20.5 71.0 (84.5) (154.6) 223.0

Interest Paid (1,490.8) (4,327.6) (4,517.7) (10,715.4) (3,744.5) (4,177.3)

Dividend Paid (1,053.9) (659.2) (145.1) - - -


NET CASH (USED IN) / FROM
FINANCING ACTIVITIES (3,959.8) (15,945.9) (10,281.3) (4,637.9) (866.0) 3,745.8

NET INCREASE /
(DECREASE) IN CASH AND
CASH
EQUIVALENTS (A+B+C) (207.2) (57.1) 365.5 (57.4) 106.9 (185.3)

CASH AND CASH


EQUIVALENTS - OPENING
BALANCES 432.3 456.9 91.4 147.5 40.6 225.9

CASH AND CASH


EQUIVALENTS - CLOSING
BALANCES 225.1 399.8 456.9 90.1 147.5 40.6

Notes:

(1) The above cash flow statement has been prepared by using the indirect method as per Accounting Standard 3
- Cash Flow Statement issued by the Institute of Chartered Accountants of India.
(2) Cash and cash equivalents exclude balance in margin money, short term deposits and balance in debenture
Interest/ installments/dividend payments.

108
Annexure IV

A. Significant Accounting Policies adopted by the Company

1. General

The financial statements are prepared under the historical cost convention, on the basis of a going concern
and as per applicable Indian accounting standards. The Company follows mercantile system of accounting
and recognizes income and expenditure on accrual basis except liability for customs duty in respect of capital
goods lying in bonded premises and those with significant uncertainties.

2. Valuation of Inventories

a) Raw materials, Production consumables, Construction materials and Stores and Spares are valued at lower
of cost, computed on weighted average basis and net realizable value. Obsolete, defective, unserviceable
and slow/non moving stocks are duly provided for.

b) Finished goods and work in progress are valued at lower of cost and net realizable value. Cost for this
purpose includes direct materials, direct labour, excise duty and appropriate overheads for bringing the
inventory to it’s present location and condition including freight costs up to the ports in respect of finished
goods meant for exports.

3. Fixed Assets, Depreciation and Impairment Loss

a) Fixed Assets are stated at cost of acquisition or construction less depreciation.

b) Preoperative expenditure during construction period / trial run: Direct expenses as well as clearly
identifiable indirect expenses, incurred on project during the period of construction are being capitalized
along with the respective assets; and all other allocable expenses (net of expenses charged to revenue
according to the ratio determined and certified by Company’s costing department) are being
capitalized/treated as deferred revenue expenses, as approved by the Management.

c) Depreciation on assets is provided on straight-line method at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.

d) Depreciation on machinery spares of the nature of capital/insurance spares and having irregular use is
provided prospectively over a period, not exceeding the useful life of the fixed asset to which they relate.

e) Continuous process plants as defined in Schedule XIV to the Companies Act, 1956 have been considered
on technical assessment and depreciation provided accordingly.

f) Depreciation on the amount capitalized on account of foreign exchange fluctuations is provided


prospectively over the residual life of the asset.

g) In case, the recoverable amount of the fixed assets is lower than its carrying amount, a provision is made
for the impairment loss.

4. Borrowing Costs

Borrowing costs attributable to the acquisition and construction of an asset are capitalized as part of the cost
of such asset up to the date when such asset is ready for its intended use. Expenses incurred in connection
with raising of funds are amortized over the tenure of the borrowing. Other borrowing costs are charged to a
profit and loss account.

5. Investments

a) Long term investments are stated at cost. In case, there is a permanent diminution in the value of any
investments, a provision for the same is made in the accounts.

b) (i) Quoted current investments are stated at the lower of cost and market value.

109
(ii) Unquoted current investments are stated at the lower of cost and fair value when available.

c) Cost of each investment is arrived at on the basis of the average carrying amount of the total holding of
that investment.

6. Miscellaneous Expenditure

a) Preliminary and Share issue expenses are written off over a period of ten years from the year of
commencement of commercial production.

b) Debenture issue expenses are written off over the tenure of the debentures.

c) Deferred Revenue Expenditure is written off over a period up to ten years, depended upon the nature and
benefit of such expenditure in future.

7. Transactions in Foreign Currencies

a) Transactions are recorded at the exchange rates prevailing on the date of the transaction.

b) Foreign currency designated assets, liabilities and capital commitments are restated at the year-end rates.

c) The exchange differences are adjusted to:


i) Carrying cost of fixed assets, if they relate to fixed assets and
ii) Profit and Loss account in other cases.

d) In case of forward contracts, the exchange differences are dealt with in the Profit and Loss account over
the period of the contracts except in respect of liabilities incurred for acquiring fixed assets in which case,
the differences are adjusted in their carrying cost.

8. Retirement Benefits

a) Contribution to Provident and Family Pension Funds are funded as a percentage of salary/wages.

b) Gratuity liability is funded as per group gratuity scheme of Life Insurance Corporation of India.

c) Leave encashment liability is provided for on the basis of actuarial valuation as at the year-end.

9. Income Tax

Provision for current tax is made on the basis of relevant provisions of the Income Tax Act, 1961. The
deferred tax for timing differences between the book and tax profits for the year is accounted for, using the
tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets
arising from timing differences are recognized to the extent there is virtual / reasonable certainty that these
would be realized in future.

10. Research and Development expenditure

Revenue expenditure is charged to profit and loss account and capital expenditure added to cost of fixed
assets.

11. Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying
economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed by
way of notes to accounts. Contingent assets are not recognized or disclosed in the financial statements

B. Selected notes to the restated financials

a) For the half year ended September 30, 2005

1. Scheme of Amalgamation:

110
Pursuant to the Scheme of Amalgamation (Scheme), of Euro Ikon Iron & Steel Private Limited (Euro Ikon),
Euro Coke & Energy Private Limited (Euro Coke) and JSW Power Limited (JPL) with the Company, has been
sanctioned by the Hon'ble High Court of Bombay at the hearing held on 30th September’ 2005, all the related
assets and liabilities as on the appointed date 1st April, 2005 of Euro Ikon, Euro Coke and JPL, were transferred
to and vested with the Company.

2. Contingent Liabilities not provided for:

a) Bills Discounted Rs. 2775.1 million (Previous year Rs.4870.1 million).

b) Disputed statutory claims/levies, including, those pending in courts (excluding interest leviable, if any),
in respect of (i) Excise Duty Rs. 615.1 million (Previous year Rs.414.3 million) net of possible
reimbursement Rs.226.7 million (Previous year Rs.194.1 million); (ii) Custom Duty Rs.774.1 million
(Previous year Rs.616.1 million); (iii) Income Tax Rs. 313.7 million (Previous year Rs.313.7 million);
(iv) Sales Tax / Special Entry tax Rs.51.1 million (Previous year Rs.27.0 million); (v) Service Tax Rs.
1.2 million (Previous year Nil); (vi) Miscellaneous Rs.2.4 million (Previous year Rs.2.4 million) and
(vii) Levies by local authorities Rs. 124.9 million (Previous year Rs.124.9 million).

c) Claims against the Company not acknowledged as debts: (i) claims by various suppliers of goods and
services Rs. 27.2 million (Previous year Rs.48.7 million) net of possible reimbursement / adjustments
Rs.1876.2 million (Previous year Rs.1641.7 million) and (ii) claims by customers and others Rs. 9.4
million (Previous year Rs.9.4 million).

3. Estimated amount of contract remaining to be executed on capital account and not provided for (net of
advances) Rs. 11,562.3 million.

4. Loans and Advances include certain overdue amounts aggregating to Rs.194.1 million towards supply of
raw materials and Rs.200.1 million for others. No provision for the same is considered necessary by the
management, as concerted efforts are being made for recovery and it is expected to be realised in due course
of time.

5. There is a diminution of Rs.29.0 million in the value of equity shares of SICOM Ltd. based on its break up
value (fair value unascertained) worked out as per its audited Balance Sheet as at 31.03.2005. However, there
is a reasonable certainty (in view of strong asset base and improved financials of the Investee Company) that
there would not be any loss on disposal of these shares, accordingly no provisioning has been considered
necessary.

6. In respect of benefit availed of Rs. 2363.4 million under EPCG Scheme, there is a pending export obligation,
which would be fulfilled in due course of time.

7. Net Deferred tax Liability comprises timing differences on account of:

Particulars Rs. in Million


LIABILITIES:
Depreciation (Net) (5,509.8)
ASSETS:
Credit for MAT Tax paid 282.7
Provision for doubtful debts/ capital advances 334.1
Expenses including interest to Financial
Institutions allowable on payment basis 387.1
Net Deferred Tax Liability (4,505.9)

b) For the year ended 31st March 2005

The exceptional item represents amount charged to the profit and loss account towards exercise of right of
recompense by certain lenders as per Corporate Debt Restructuring cell (CDR) approved restructuring
package.

111
c) For the year ended 31st March 2004

1) Scheme of Arrangement and Amalgamation:

In accordance with the Scheme of Arrangement and Amalgamation (Scheme), as approved by the Hon'ble
High Courts of Bombay and Karnataka vide order dated 3rd September, 2004 and 20th January, 2005
respectively, the steel business along with related assets and liabilities of the erstwhile Jindal Iron & Steel
Company Limited (JISCO), whose principal business was of manufacturing galvanized and cold rolled steel,
has been transferred to and vested with the Company with effect from appointed date 1st April, 2003. The
figures for the year ended 31st March , 2004 has been restated to give effect to the aforesaid merger.

2) Exceptional Items

The exceptional item represents waiver of dues (including waiver of principal amount of Rs.2284.6 million)
on settlement with certain lenders who are not parties to CDR system.

d) For the year ended 31st March 2003

Exceptional item represents additional interest paid/payable as per revised restructuring package.

C. The Company is primarily engaged in the segment of “Iron and Steel Products” and there are no
reportable segments as per Accounting Standard (AS 17).

D. Changes in Accounting Policies:

a) The Company has accounted for Deferred Tax Assets/Liabilities from accounting year 2001-02. The
accounts prior to this have not been restated as Accounting Standard 22 - Accounting for Taxes on
Income became applicable from 1st April 2001.

b) During the year 2001-02, the policy for amortising certain deferred revenue expenditure aggregating to
Rs.572.6 million was changed from 5 years to 10 years. The first year of amortization of the said
expenditure was 2001-02 and therefore, this being the first year of expenditure the accounts for the year
ended March 31, 2001 need not be restated.

Annexure V

Related party disclosure (Restated)

a) Parties with whom the Company has entered into transactions:

1) Associates

Jindal Praxair Oxygen Company Pvt. Ltd. (JPOCL)


Jindal Thermal Power Company Ltd. (JTPCL)
Vijayanagar Minerals Pvt. Ltd.
Jindal Strips Ltd.
Jindal Stainless Ltd. (From 2003-04)
Jindal Steel & Alloys Ltd.
Jindal Saw Ltd.
Jindal Steel and Power Ltd. (JSPL)
Southern Iron & Steel Company Ltd. (SISCOL) (From 2004-05)
South West Port Ltd. (From 2004-05)
Jindal Iron and Steel Company Ltd. (JISCO) (up to 2002-2003)

2) Key Management Personnel

Mr. Sajjan Jindal


Dr. B.N.Singh
Mr. Raman Madhok (From 2003-04, Resigned w.e.f November 7, 2005)
Mr. Seshagiri Rao M.V.S

112
b) Related party relationships have been identified by the management and relied upon by the auditors.

c) Related Party Transactions:


(Rs. in Million)
For the Six For the year ended March 31,
months
ended Sept.
30, 2005 2005 2004 2003 2002
Transactions during the year with
Associates:
Purchases of Goods/Power & Fuel 2,251.7 6,172.9 6,387.3 4,942.6 4,076.2
Sales of Goods/Power & Fuel 2,692.2 3,683.9 3,493.5 14,390.6 10,181.2
Purchase of assets 152.5 290.6 7.1 9.9 5.6
Deposit received against leased assets - - 15.0 0.6 39.0
Assets sold - - - 0.3 280.0
Rendering of services @ @ 5.8 2.6 0.7
Receiving of services from associates 284.8 361.5 110.4 25.1 37.2
Purchase of Equity/Preference shares and - - 73.4 73.4 294.4
payment of advance against equity
Refund made of advance against equity - - - 18.1 114.5
Guarantees and collaterals issued - - - - 355.0
Writing back of provision of - - - - 5.7
advances/doubtful debts during the year
Transactions during the year with Key
management personnel:
Remuneration to key management 45.1 100.4 8.9 6.0 4.9
personnel

Closing balances of Associates:


Payable:
Trade payables 703.3 570.3 572.2 2,009.3 1,955.8
Lease deposit 103.2 103.2 103.2 88.2 87.6

Receivable:
Trade receivables 613.5 512.0 561.5 2,378.4 2,330.2
Advance for Equity 40.6 40.6 40.6 113.9 40.6
Other advances 205.6 254.5 248.1 2.5 2.5

Closing balances of Key management


personnel:
Payable to Key management personnel - - 2.6 - -

Investments made 2,246.9 2,246.9 2,246.9 2,173.5 2,173.5


Guarantees and collaterals :
Guarantees and collaterals provided by 1,840.2 1,840.2 1,840.2 1,840.2 1,840.2
the Company
Guarantees and collaterals provided on - - - 5,356.4 4,441.5
company's behalf
@ Less than Rs.50,000/-

113
Annexure VI

Statement of Dividends paid

(Rs. in
Million)
For the year ended March 31,
For the Six
months
ended Sept.
30, 2005 2005 2004 2003 2002 2001

Equity Share Capital (Rs.


Million) *** 1470.3 1290.4 1290.4 12910.0 12909.3 12911.4

Number of Equity Shares *** 147,032,373 129,039,142 129,035,569 1,290,998,000 1,290,930,300 1,291,139,610

Face Value per Share (Rs.) 10 10 10 10 10 10

Preference Share Capital (Rs.


Million) 2,790.3 2,790.3 2,790.3 - - -

Number of Preference Shares 279,034,907 279,034,907 279,034,907 - - -

Face Value per Share (Rs.) 10 10 10 - - -

Rate of Dividend (%)

Preference - 10% - - - -

Equity – Interim - 30% - - -

-- Final ** - 50% - - -

Amount of Dividend (Rs.


Million)
Preference 475.0

Equity - Interim - 387.1 - - - -

- Final - 645.2 - - - -

Corporate Dividend Tax (Rs.


Million) - 205.8 - - - -

** For FY 2004 and FY 2005.


*** Including Share Capital Suspense

114
Annexure VII

Statement of Other Income (Restated)

For the For the year ended March 31,


six 2005 2004 2003 2002 2001 Nature of item
months
ended
Sept. 30,
2005

Dividend on investments 0.3 0.3 0.2 8.0 0.3 - Recurring

Profit on sale of fixed assets - 11.5 4.0 0.2 1.2 - Non recurring

Profit on sale of investments - - 0.5 - - - Non recurring


Miscellaneous income (Sale
of Scrap, etc) 57.1 83.3 146.5 11.6 10.3 4.8 Recurring
Provisions no longer required
written-back 4.7 94.7 166.6 17.3 5.8 26.7 Recurring

Total 62.1 189.8 317.8 37.1 17.6 31.5


Note: Interest Income has been netted off from Interest and Finance charges.

Annexure VIII

Statement of Accounting Ratios (Restated)

For the six For the year ended March 31,


months 2005 2004 2003 2002 2001
ended Sept.
30, 2005
A) Earning per share (Rs.)
--Before Exceptional Items

Basic 19.94 65.12 34.93 (41.01) (62.16) (10.17)

Diluted 18.48 59.78 32.06 (41.01) (62.16) (10.17)

--After Exceptional Items

Basic 19.94 64.98 59.99 (19.59) (62.16) (10.17)

Diluted 18.48 59.66 55.06 (19.59) (62.16) (10.17)

Not
Annualized

B) Return on Net Worth (%) 20.28 39.17 77.96 (45.70) (91.24) (9.86)

C) Net Asset Value per share


(Rs.) 218.58 195.30 136.40 38.63 47.12 89.12

Notes:

115
1. Basic Earning per share (Rs.) = Net profit after tax attributable to equity shareholders
Weighted average number of equity shares outstanding during the year

2. Diluted Earning per share (Rs.) = Net profit after tax attributable to equity shareholders
Weighted average number of equity shares outstanding during the year
(adjusted for the effects of dilutive warrants)

3. Return on Net Worth (%) = Net profit after tax attributable to equity shareholders
Average Net worth (excluding Revaluation reserve)

4. Net Asset Value per share (Rs.) = Net worth (excluding Revaluation reserve)
Number of equity shares outstanding at end of the year

5. The ratios for the above years / period has been computed based on the number of equity shares outstanding
including share capital suspense.

Annexure IX

Capitalisation Statement
(Rs. in Million)
Pre issue as
at September Post
30, 2005 issue
Long Term Debts

Secured loans 37,682.5 37,682.5

Add: Unsecured loans 772.1 772.1

Add : Long term Advance from Customer 1,131.2 1,131.2

Total Debts 39,585.8 39,585.8

Less: Short term debts (2,035.1) (2,035.1)

Total long term debts (A) 37,550.7 37,550.7

Share holders’ Funds

Equity Share Capital 1,290.4 [.]

Shares Forfeited 610.5 610.5

Share Capital suspense 179.9 -

Add: Reserve & Surplus (excluding Revaluation Reserve) 33,351.1 [.]

Preference Share Capital 2,790.3 2,790.3

Less: Miscellaneous expenditure (3,294.1) (3,294.1)


Total Shareholders Funds (excluding Amalgamation Reserve)
(B) 34,928.1 [·]

Long Term Debt / Equity Ratio [(A)/ (B) (times)] 1.08 [·]

116
[.] To be updated at the time of filing with the Stock Exchange.

Annexure X

Statement of secured loans and principal terms of loans and assets charged as security as on September 30,
2005
(Rs in Million)
Name of the Bank / Principal Rate of
Financial institution Amount Interest Repayment Security
HDFC Bank 54.2 11.00% 24 EMIs from April Exclusive charge by way
2005 of mortgage of the
properties.
Zero Coupon Loan
Industrial Development 315.3
Bank of India Limited Dec 2009 to Sept 1) 1st pari passu charge
IFCI 105.3 0.00% 2013, payable on the Upstream SBU
quarterly/monthly in fixed assets and 2nd pari
Industrial Investment 31.9 equal installments. passu charge on working
Bank of India capital assets.
National Insurance 8.9 of Upstream SBU except
Company Limited inventories and book
debts.

2) Pledge of Promoter’s
shareholdings.

3) Personal guarantee of
vice chairman and
managing director.
NCD -UTI 574.7
Jan 2004 to Dec 2008 1) 1st pari passu charge
NCD-Others 2711.4 payable monthly on the Upstream SBU
fixed assets and 2nd pari
passu charge on working
capital assets
of Upstream SBU except
8.00% inventories and book
debts.

2) Collateral security by
way of Pledge of
promoter shares.

Refinancing 7.25% 1) 1st pari passu charge


RTL on the Upstream SBU
State Bank of India 3,000.0 3 quarterly installment fixed assets and 2nd pari
of Rs. 600 million passu charge on working
each from Feb 2007 & capital assets
balance in Nov 2007 of Upstream SBU except
State Bank of Patiala 3 quarterly installment inventories and book
900.0 of Rs. 180 million debts.
each from Feb 2007 &
balance in Nov 2007 2) Collateral security by
State Bank of Indore 7.25% 3 quarterly installment way of Pledge of
500.0 of Rs. 100 million promoter shares.
each from Feb 2007 &
balance in Nov 2007 3) Personal guarantee of

117
State Bank of Bikaner 3 quarterly installment vice chairman and
and Jaipur 250.0 of Rs. 50 million each managing director.
from Feb 2007 &
balance in Nov 2007
State Bank of 3 quarterly installment
Hyderabad 250.0 of Rs. 50 million each
from Feb 2007 &
balance in Nov 2007
SBI Commercial & 3 quarterly installment
International Bank 100.0 of Rs. 20 million each
Limited from Feb 2007 &
balance in Nov 2007

118
Name of the Bank / Principal Rate of
Financial institution Amount Interest Repayment Security
Refinancing6.50%
RTL

Ind ustrial 1) 1st pari passu charge on


Development Bank of 1,500.0 6.50% 12 monthly the Upstream SBU fixed
India Limited installment of Rs. 250 assets and 2nd pari passu
million each from charge on working capital
May 2005. assets of Upstream SBU
except inventories and
book debts.

1) 1st pari passu charge on


State Bank of India 499.0 6.50% 11 monthly the Upstream SBU fixed
installment of Rs. assets and 2nd pari passu
83.5 million each charge on working capital
from April 2005 & assets of Upstream SBU
last installment of Rs. except inventories and
81.5 million on book debts.
March 2006.
2) Collateral security by
way of Pledge of promoter
shares.

3) Personal guarantee of
vice chairman and
managing director.

Refinancing 8% RTL
8 quarterly 1) 1st pari passu charge on
State Bank of India 1,000.0 installment of Rs. 50 the Upstream SBU fixed
million each from assets and 2nd pari passu
June 2008 & 4 charge on working capital
quarterly installment assets of Upstream SBU
8.00% of Rs.150 million except inventories and
each from June 2010. book debts.

8 quarterly 2) Collateral security by


United Bank of India 750.0 installments of Rs. way of Pledge of promoter
37.5 million each shares.
from June 2008 & 4
quarterly installments 3) Personal guarantee of
of Rs.112.5 million vice chairman and
each from June 2010. managing director.

8 quarterly
State Bank of Patiala 1,250.0 installments of Rs.
62.5 million each
from July 2008 & 4
quarterly installments
of Rs.187.5 million
each from July 2010.

119
8 quarterly
State Bank of Bikaner 250.0 installments of
and Jaipur Rs.12.5 million each
from August 2008 &
4 quarterly
installments of
Rs.37.5 million each
from August 2010.
8 quarterly
Bank of Baroda 1,000.0 installments of Rs. 50
million each from
August 2008 & 4
quarterly installments
of Rs.150 million
each from August
2010.
8 quarterly
State Bank of Maysore 750.0 installments of Rs.
37.5 million each
from September 2008
& 4 quarterly
installments of
Rs.112.5 million each
from September
2010.

Name of the Bank / Principal Rate of


Financial institution Amount Interest Repayment Security
Refinancing 8% RTL
(I)
1) 1st pari passu charge
State Bank of India 2,000.0 8 monthly installments of on the Upstream SBU
1.25% each from August fixed assets and 2nd pari
Punjab National Bank 2,250.0 2006 passu charge on working
capital assets of Upstream
Bank of Baroda 1,500.0 12 monthly installments of SBU except inventories
0.42% each from April 2007 and book debts.
State Bank of Patiala 500.0
Oriental Bank of 8.00% 12 monthly installments of
Commerce 2,000.0 0.63% each from April 2008
State Bank of
Travencore 500.0 12 monthly installments of
State Bank of 2.29% each from April 2009
Saurashtra 170.0
12 monthly installments of
Yes Bank 180.0 1.25% each from April 2010

Union Bank 189.0 12 monthly installments of


1.88% each from April 2011

4 monthly installments of
3.13% each from April 2012
Expansion Debts
United Bank of India 200.0
Union Bank of India 50.0
1st pari passu charge on
Vijaya bank 500.0 16 equal quarterly the Upstream SBU fixed

120
Canara Bank 400.0 8.00% installments from April 2008 assets and 2nd pari passu
charge on working capital
Central Bank of India 200.0 assets of Upstream SBU
Dena Bank 100.0 except inventories and
book debts.

Canara Bank 472.2 8.50% 16 quarterly installments of Exclusive charge on the


Rs.29.5 million each starting fixed assets of Blast
from Nov 05’. Furnace Plant.

United Bank of India 218.8 8.50% 16 quarterly installments of Exclusive charge on the
Rs. 15.6 million each starting fixed assets of Blast
from April 05’. Furnace Plant.

State Bank of India 641.6 8.50% Repayable in 72 monthly Exclusive charge on the
installments commencing fixed assets of Coke Oven
from April 2005 Plant.

State Bank of Mysore 229.2 8.50% Repayable in 72 monthly Exclusive charge on the
installments commencing fixed assets of Coke Oven
from April 2005 Plant.

NCD - UTI Bank 600.0 1st pari passu charge on


Canara Bank 525.0 (a) first ranking legal
Punjab National Bank 525.0 40 quarterly installments from mortgage on the
15 July 2006 Company’s' immovable
ICICI Bank Ltd 375.0
8.50% properties in Maharashtra
including movable assets
both present and future,
Current assets and
Receivables, Company's
interest in project
documents & retention
accounts (b) first charge
by way of equitable
mortgage of the
Company's immovable
properties in Karnataka,
both relating to the
100MW and 130MW
Power Plants.

121
Name of the Bank / Principal
Financial institution Amount Rate of Interest Repayment Security
NCD -UTI Bank 100.0 8.50% 40 quarterly installments 1st pari passu charge by
from 30th June 2006 way of legal mortgage of
the Company's
immovable properties in
Tamilnadu, hypothecation
of current assets and
charge on the company's
interest in Project
documents and retention
accounts, all relating to
the 2x30MW power plant
being set up in the
premises of Southern Iron
& Steel Co. Ltd. in
Salem.
Industrial 145.0 12.00% 4 equal quarterly 1st pari passu charge on
Development Bank of installments of Rs. 25 the Downstream SBU
India Limited million from April 01, 2005 fixed assets and 2nd pari
and 4 equal quarterly passu charge on working
installments of Rs. 30 capital assets of
million from April 01, 2006 Downstream SBU except
inventories & book debts
and by an equitable
mortgage on the
immovable property of a
third party.
NCD (UTI) 2027.5 10.00% 4 monthly installments of 1) 1st pari passu charge
Rs.76.2 million from April on the Downstream SBU
30, 2005, 1 installment of fixed assets and 2nd pari
Rs.102.9 million on August passu charge on working
31, 2005, 27 monthly capital assets of
installment of Rs.77.1 Downstream SBU except
million from September 30, inventories & book debts.
2005 and last installment of
Rs.63.5 million on December 2) Personal guarantee of
31, 2007. vice chairman and
managing director.
Foreign Currency
Loans
SBI-London 439.9 Libor+2.5% 4 Half yearly Installments of 1) 1st pari passu charge
+G.C. 1% $ 2.50 million from on the Upstream SBU
27.12.2005 fixed assets and 2nd pari
SBI-Frankfurt 136.7 Libor+1.75% 3 Half yearly Installments of passu charge on working
+G.C.0.75% $ 1,036,127.86 from capital assets of Upstream
04.12.2005 SBU.
Export Import Bank of 5.95% 4 Half yearly Installments of
The United States 506.7 +G.C. 2.40 % $ 2,879,476 from 15-01- 2) Collateral security by
2006 way of Pledge of
RZB, Austria-CFA-I 1157.9 7.75% 7 Half yearly Installments of promoter shares.
+G.C. 2.37% EUR 3,115,679 from
31.03.2006 3) Personal guarantee of
RZB Austria-CFA-III 381.2 8.25% 10 Half yearly Installments vice chairman and
+G.C. 1.60% of Euro 718,111 from managing director.
04.12.2005
ICICI Bank 626.1 Libor+3.5% 30 quarterly installments 1) 1st pari passu charge
from April 05’. on the Downstream SBU
fixed assets and 2nd pari
passu charge on working

122
capital assets of
Downstream SBU except
inventories & book debts
and by an equitable
mortgage on the
immovable property of a
third party.

2) Personal guarantee of
vice chairman and
managing director.

Total 35,647.5
Note: G.C. = Guarantee Commission

Annexure XI

Statement of working capital loans and principal terms of loans and assets charged as security as on September 30,
2005

Sr. Name of the Lender Facility Rs. in Rate of Repayment Security


no. Million Interest Schedule
1. Allahabad Bank Various 622.9 As 1) Pari passu first charge by
2. ICICI Bank Limited facilities - negotiated way of hypothecation of
3. Punjab National Bank like - from Inventory and book debts.
4. State Bank of India cash 662.6 time 2) Pari passu second charge
5. State Bank of Indore credit/ - to As per the on moveable properties , both
6. State Bank of Mysore packing 59.2 time nature of present and future.
7. State Bank of Patiala credit. 329.2 with Facility. 3) Pledge of 1,10,00,000
8. Vijaya bank 361.2 reference equity shares of Jindal Coated
to Steel Limited and 120,75,000
various equity shares of the Company
facilities. held by promoters,only to
downstream SBU lenders
4) Personal guarantee of vice
chairman and managing
director only to Downstream
SBU Lenders.
Total 2,035.1

Annexure XII

Statement of unsecured loans and long term advance from customer as on September 30, 2005

Name of the
Bank/Financial Principal Amt. Rate of
Institution (Rs. in Million) interest Repayment
Punjab National Bank 500.0 7.00% Within a year
Mineral Euro Asia 272.1 5.57% 6 yearly installments starting from
June 2006
Export Advance 1,131.2 4.17% 6 monthly installments of US$42,85,714
(Securitisation) each from Sept 05’ and last installment of
US$ 42,85,716.
Total 1903.3

123
Annexure XIII

Statement of tax shelter (Restated)


(Rs. in Million)
Assessment Year 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02
Financial Year 30.09.05** 2004-05 2003-04 2002-03 2001-02 2000-01

Normal Tax rate (including 33.66% 36.59% 35.88% 36.75% 35.70% 39.55%
surcharge & education cess)

Net Profit/(Loss) before tax (A) 4,781.75 14,726.07 9,626.10


(4,028.37) (4,314.84) (496.20)

Add/(Less) Adjustments
(net) in respect of

(a) Difference between Book 769.12


Depreciation and Tax (911.13) (3,962.76) (5,969.85) (9,438.34) (8,240.56)
Depreciation
(b) Deferred Revenue 301.49 558.53 638.00 624.17 49.89
Expenditure 643.04
(c) Expenses allowable on 165.02 2,757.83 772.27
payment basis u/s 43B (10.68) (558.73) (2,115.69)
(d) Waiver of Loan & Interest - - - - -
(3,144.81)
(e) Others 39.28 94.35
(36.92) (313.91) (192.74) (423.58)

Total Adjustments (B) 1,685.63


(581.04) (3,276.13) (9,349.30) (11,103.73) (5,282.14)

Gross Total Income / (Loss) (C=A+B) 4,200.71 11,449.94 276.80 1,189.43


(15,132.10) (9,596.98)

Less: Set-off of Brought (D) (4,200.71) - -


Forward Unabsorbed Loss / (11,449.94) (276.80) (1,189.43)
Depreciation

Net Taxable Income/(Loss) (E=C-D) - - - -


(15,132.10) (9,596.98)

Unabsorbed Loss / (F) # 13,745.73 25,195.67 10,340.37 743.39


Depreciation Carried 10,348.37 25,472.47
forward

Taxable Income under MAT (G) 3,359.75 9,195.68 2,977.38 - - -

Rate of MAT (including (H) 8.4150% 7.8413% 7.6875% 7.8750% 7.6500% 8.4750%
surcharge & education cess)

MAT Payable (I=G*H) 282.72 721.06 228.89 - - -

124
Notes:

1. ** Figures for six months period ended September 30 ,2005.


2. # Includes Unabsorbed Depreciation aggregating to Rs.803.35 million as on March 31, 2005
pertaining to Euro Ikon Iron & Steel Co. Pvt. Ltd. & Euro Coke & Energy Pvt. Ltd. Consequent upon
merger of these companies with the Company w.e.f. the appointed date April 1,2005.
3. Credit is allowed in respect of tax paid under MAT from A.Y. 2006-07.

Annexure XIV

Breakup of ageing schedule of sundry debtors (Restated)

(Rs. in Million)
For the Six For the year ended March 31,
Particulars months 2005 2004 2003 2002 2001
ended Sept.
30, 2005

Debts outstanding over six


months

-- Considered good 519.0 302.6 167.5 151.1 39.9 203.4

-- Considered doubtful 72.2 73.9 77.9 22.3 14.0 14.0

Other debts

-- Considered good 1,810.7 2,363.4 2,563.6 2,645.2 2,529.0 2,579.8

-- Considered doubtful 0.4 1.9 - - - -

Provision for doubtful debts (72.6) (75.8) (77.9) (22.3) (14.0) (14.0)

Total sundry debtors 2,329.7 2,666.0 2,731.1 2,796.3 2,568.9 2,783.2

Receivable from Directors


and relatives of directors/
Promoter/ Promoter group
Companies. 613.5 512.0 561.5 2,378.4 2,330.2 2538.3

Others 1,716.2 2,154.0 2,169.6 417.9 238.7 244.9

Total sundry debtors 2,329.7 2,666.0 2,731.1 2,796.3 2,568.9 2,783.2

125
Annexure XV

Loans and advances given to promoter/promoter group companies and others (Restated)

(Rs. in Million)
Particulars As at Sept. 30, As at March 31,
2005 2005 2004 2003 2002 2001

Loans & Advances given to


Directors and relatives of
directors/ Promoter/ Promoter
group Companies. 246.2 295.1 288.7 116.4 43.1 762.5
Others 6,600.4 7,319.9 4,367.8 1,409.4 2,211.6 1,172.4
Total Loans & Advances 6,846.6 7,615.0 4,656.5 1,525.8 2,254.7 1,934.9

Annexure XVI

Statement of Investments
(Rs. in Million)
As at March 31,
As at Sept.
30, 2005 2005 2004 2003 2002 2001

Aggregate Book Value


- Quoted Investments - - - 3.6 2.9 2.9

- Unquoted Investments 2,295.8 2,295.7 2,295.7 2,222.3 2,222.3 1,930.6

Aggregate Market
Value - Quoted
Investments - - - 3.6 2.9 2.9

126
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY

Our Equity Shares are listed on the BSE, NSE and BgSE. As our Company’s shares are actively traded on the
BSE and NSE, our Company’s stock market data have been given separate for each of these Stock Exchanges.

The high and low closing prices recorded on the BSE and NSE for the preceding three years and the number of
Equity Shares traded on the days the high and low prices were recorded are stated below:

BSE

Year High (Rs.) Date of Volume on Low (Rs.) Date of Volume on Average
ending High date of Low date of low price for
March 31 high (no. (no. of the year
of shares) shares) (Rs.)
2003 7.10 July 9, 3,252,591 1.85 April 3, 472,001 5.02
2002 2002
2004 25.11 August 19, 13,793,909 3.85 April 1, 346,780 13.46
2003 2003
2005 22.25 February 52,139,530 6.58 May 17, 897,257 15.16
10, 2005 2004
457.40* March 23, 1,961,577 356.70* March 24, 851,971 376.15
2005 2005
April 1, 391.30 April 1, 651,818 201.10 October 27, 55,911 277.34
2005 to 2005 2005
December
31, 2005

NSE

Year High (Rs.) Date of Volume on Low (Rs.) Date of Volume on Average
ending High date of Low date of low price for
March 31 high (no. (no. of the year
of shares) shares) (Rs.)
2003 - - - - - - -
2004 24.75 August 19, 3,232,2769 4.45 May 8, 429,585 13.89
2003 2003
2005 22.20 February 116,836,72 6.00 May 18, 1,953,174 14.76
10, 2005 7 2004
458.50* March 23, 2,087,710 356.65* March 31, 1,203,015 387.21
2005 2005
April 1, 391.55 April 1, 1,056,290 200.45 October 27, 107,665 277.34
2005 to 2005 2005
December
31, 2005

* Post Scheme of Arrangement and Amalgamation between the Company, Jindal Iron & Steel Co. Ltd. and Jindal South West Holdings Ltd.
and their respective members and creditors.

The high and low prices and volume of Equity Shares traded on the respective dates during the last six months is
as follows:

BSE

Month, High (Rs.) Date of Volume on Low (Rs.) Date of Volume on Average
Year High date of Low date of low price for
high (no. (no. of the month
of shares) shares) (Rs.)
December, 238.80 December 191,646 203.80 December 250,95 224.30
2005 20, 2005 6, 2005

127
Month, High (Rs.) Date of Volume on Low (Rs.) Date of Volume on Average
Year High date of Low date of low price for
high (no. (no. of the month
of shares) shares) (Rs.)
December, 238.80 December 191,646 203.80 December 250,95 224.30
2005 20, 2005 6, 2005

November, 228.70 November 176,365 200.65 November 72,482 213.18


2005 14, 2005 24, 2005
October, 300.00 October 4, 52,150 200.00 October 28, 76,249 248.10
2005 2005 2005
September, 324.00 September 310,690 270.00 September 101,263 297.19
2005 19, 2005 5, 2005
August, 296.45 August 18, 140,272 264.15 August 3, 43,490 282.20
2005 2005 2005
July, 2005 284.00 July 21, 693,777 246.00 July 1, 92,183 269.93
2005 2005
June, 2005 317.00 June 1, 123,081 246.00 June 28, 117,667 274.61
2005 2005

NSE

Month, High (Rs.) Date of Volume on Low (Rs.) Date of Volume on Average
Year High date of Low date of low price for
high (no. (no. of the month
of shares) shares) (Rs.)
December, 239.70 December 310,013 203.55 December 44,333 222.88
2005 14, 2005 6, 2005
November, 229.40 November 317,574 201.05 November 104,544 212.90
2005 14, 2005 24, 2005
October, 299.40 October 3, 112,396 199.50 October 27, 107,665 245.51
2005 2005 2005
September, 322.95 September 377,529 269.50 September 253,020 295.33
2005 19, 2005 5, 2005
August, 296.30 Augu 18, 269,222 261.00 August 3, 196,721 281.32
2005 2005 2005
July, 2005 282.25 July 21, 365,889 247.15 July 1, 220,765 268.49
2005 2005
June, 2005 317.00 June 1, 283,295 245.55 June 28, 233,968 276.21
2005 2005

The market price was Rs. [●] on BSE on [●], the trading day immediately following the day on which Board
meeting was held to finalize the offer price for the Issue.

The market price was [●] on NSE on [●], the trading day immediately following the day on which Board
meeting was held to finalize the offer price for the Issue.

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MANAGEMENT DISCUSSION AND ANALYSIS

You should read the following discussion of our financial condition and results of operations together with our
audited restated financial statements for and as of the fiscal years ended March 31, 2002, 2003, 2004 and 2005,
and our audited restated financial statements for and as of the six-month period ended September 30, 2005,
including the significant accounting policies and notes thereto and reports thereon which appear in this draft
Letter of Offer. These financial statements have been prepared in accordance with Indian GAAP, the Companies
Act and have been restated as required under the SEBI Guidelines. Our fiscal year ends on March 31 of each
year, so all references to a particular fiscal year are to the twelve months period ended March 31 of that year.

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may
differ from those projected in the forward-looking statements. Factors that might cause future results to differ
significantly from those projected in the forward-looking statements include, but are not limited to, those
discussed below and elsewhere in this draft Letter of Offer, particularly under “Risk Factors” on pages [ ] to [ ]
of this draft Letter of Offer.

The Scheme of Arrangement and Amalgamation between Jindal Vijayanagar Steel Limited (JVSL), Jindal Iron
and Steel Company Limited (JISCO) and Jindal South West Holdings Limited (JSWHL) was made effective in FY
2005 with appointed date as April 1, 2003. Subsequently, the name of the merged entity was changed to JSW
Steel Limited. Further, Euro Ikon Iron & Steel Private Limited, Euro Coke & Energy Private Limited and JSW
Power Limited merged with JSW Steel Limited under a Scheme of Amalgamation with appointed date as April 1,
2005. In view of the above, the figures reported by us are recast wherever necessary from the appointed dates of
respective schemes and are not comparable.

OVERVIEW

We are one of the leading integrated steel manufacturers in India. We produce pellets, slabs, hot rolled steel, cold
rolled coils/sheets, galvanized and colour coated steel products. We are one of the largest exporters of galvanized
products with presence in over 50 countries across the world. In FY 2005, 41%, 38%, 6% and 2% of our net
sales were contributed by hot rolled, galvanized, pellets and cold rolled products respectively and 49% of our net
sales were accounted for by exports.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our financial condition and results of operations are affected by numerous factors including the following:

General economic and business conditions: The Indian steel industry is part of the global steel industry and is
therefore affected by developments in the sector elsewhere. As a result, any trend reversal in the global market
could impact the Indian steel industry in general and us in particular. The demand for our products is dependent
on the general economic conditions in India and in the countries where our customers are primarily located. Our
manufacturing operations will be affected by changes in business conditions in India and abroad.

Demand: The steel industry is highly capital intensive and cyclical in nature. Its growth is intertwined with the
growth of the economy at large, and in particular, with the steel consuming industries such as manufacturing,
construction and automobile. The demand for our products is a derived demand, being dependent upon the
production and sale of other products. By introducing high value added products in different industries, we
intend to reduce our dependence on any major application or industry. We have a diversified customer base and
seek to expand it throughout the world. The prospects and earnings growth of the industries we serve will have
an impact on our ability to generate sales.

Competition: Selling prices of our products may be affected if competition intensifies because of various factors,
including increased capacity of flat products, adoption of aggressive pricing strategies by our competitors, entry
of new competitors or change in import duties of finished steel in the markets we serve.

Success of our proposed expansion plan: We are currently expanding Pellet plant capacity by 0.8 mtpa, HR Coils
capacity by 1.2 mtpa in two phases. We are also expanding our steel capacity from 2.5 mtpa to 3.8 mtpa, and
have plans to expand capacity to 7 mtpa. We are also setting up a CRM complex of 1.0 mtpa at our existing
manufacturing facility at Tornagallu, district Bellary. These new facilities are being set up based on the high
growth in demand currently being seen for both HR coil and value added products in India as well as abroad. Our
ability to increase market share will depend upon our ability to complete our expansion plans as scheduled. We

129
believe that the scale of production, and lower per unit operating costs due to economies of scale would give us
an edge.

Cost of Raw Materials and Utility: Raw materials and utilities constitute a major portion of our total expenses.
Availability of raw materials such as iron ore, coal, met coke, zinc and melting scrap at low costs is crucial for
us. Production of steel is also an energy intensive process. Any change in the cost of raw materials and utilities
may alter our cost structure and in consequence affect our profitability. We have taken several initiatives to
mitigate these risks such as increased sourcing of iron ore requirements from our associate company and tying up
with major suppliers, acquiring of coke oven and power generating facilities.

Other factors: While developed countries have put numerous tariff and non-tariff barriers on steel exports from
the country, the domestic industry is exposed to cheaper imports from competing nations. Import duty on HR
coil has been reduced from 15% in March 2004 to 5% in August 2004. The export of HR coil from India, our
primary product, is subject to an anti-dumping duty of in Canada and United States. Reduction in consumption of
steel in major steel producing countries would lead to dumping in international markets. This could impact steel
prices globally which would adversely impact our profitability.

Income

Our revenue primarily comprises of sale of flat steel products. We also derive some other income mainly on
account of sale of scrap, dividend on investments, profit on sale of fixed assets, etc. The following table sets
forth the contribution of different components of our revenue towards total income during each of the fiscal
2002, 2003, 2004, 2005 and six months ended September 30, 2005.
(in Rs. million)

Revenue Details For the Six For the year ended March 31,
(excluding inventory months
adjustment) ended Sept
30, 2005

2005 2004 2003 2002


Sale of Products 30,788.50 66,793.60 43,546.60 25,047.60 17,357.50
Manufactured by the
Company (Net of
excise duty)

Other Income 62.1 189.8 317.8 37.1 17.6


Total Income 30,850.60 66,983.40 43,864.40 25,084.70 17,375.10

Revenue from sale of products manufactured by the company


We derive revenue primarily from the sale of pellets, slabs, hot rolled, cold rolled and galvanized products. The
product wise break up of our net sales is as under:

For the Six For the year ended March 31,


months ended
Sept 30

2005 2005 2004 2003 2002


Rs. mn. % Rs. % Rs. % Rs. % Rs. mln. %
mln. mln. mln.
GP 10,449 34% 25,122 38% 16322 37% - - - -
Coil /
Sheet
CR 1,236 4% 1,398 2% 2155 5% - - - -
Coil /
Sheet

130
For the Six For the year ended March 31,
months ended
Sept 30

2005 2005 2004 2003 2002


Rs. mn. % Rs. % Rs. % Rs. % Rs. mln. %
mln. mln. mln.
HR 14,676 48% 27508 41% 17610 40% 21,056 84% 14,244 82%
Coil /
Sheet
MS - - 784 1% - 300 1% 1,296 7%
Slabs

HR 934 3% 526 1% 589 1% - - - -


Plates

Pellets 1,074 3% 3,997 6% 2,498 6% 805 3% - -


Others 2,420 8% 7,459 11% 4,374 10% 2,887 12% 1,818 11%
Total 30,789 100% 66,794 100% 43,547 100% 25,048 100% 17,358 100%

Export Revenue

Our export sales have been increasing over the past three and a half years. The following table represents the
break up of total sales into domestic and exports:

Particulars For the Six For the year ended March 31,
months
ended Sept
30

2005 2005 2004 2003 2002


% % % % %

Export Sales 35% 49% 43% 17% 2%

Domestic
Sales 65% 51% 57% 83% 98%

Total Sales 100% 100% 100% 100% 100%

Geographical distribution of export sales

Due to our conscious efforts to de-risk our geographical dependence we have expanded our export markets. The
following table represents the breakup of our export sales of major product groups in quantitative terms:

a) GP/CR Products and HR Plates

Region For the Six FY 2005 FY 2004 FY 2003 FY 2002


months ended
Sept. 30, 2005

Qty. Qty. Qty. Qty. Qty.


(MT) % (MT) % (MT) % (MT) % (MT) %
Africa 27,773 11.8 36,075 6.3 57,606 11.1 - - - -

131
Region For the Six FY 2005 FY 2004 FY 2003 FY 2002
months ended
Sept. 30, 2005

Qty. Qty. Qty. Qty. Qty.


(MT) % (MT) % (MT) % (MT) % (MT) %
China 11,712 5 12,642 2.2 113,790 21.9 - - - -
Asia other than 42,300 18 29,699 5.2 90,271 17.4 - - - -
China
Australia 1,736 0.7 8,319 1.4 9,385 1.8 - - - -
Europe 37,760 16.1 189,638 33 84,986 16.3 - - - -
Latin/South 1,780 0.8 1,730 0.3 4,410 0.8 - - - -
America
Middle East 35,605 15.2 57,651 10 47,014 9 - - - -
USA 75,722 32.4 238,079 41.6 112,514 21.7 - - - -
Total 234,388 100 573,833 100 519,976 100 - - - -

• HR coils/sheets & slabs

Region For the Six FY 2005 FY 2004 FY 2003 FY 2002


months ended
Sept. 30, 2005
Qty. Qty. Qty. Qty. Qty.
(MT) % (MT) % (MT) % (MT) % (MT) %
Africa 546 0.5 - - 459 0.5 433 0.2 81 0.2
China 44,972 40.6 20,889 9.1 10,531 10.4 54,574 24.6 - -
Asia other than
China 62,708 56.5 72,852 31.8 65,706 64.8 83,118 37.6 29,779 84.1
Australia - - - - 973 1 - - - -
Europe 2,615 2.4 134,611 58.7 21,823 21.6 68,561 30.9 - -
Middle East - - 830 0.4 1,753 1.7 14,908 6.7 5,560 15.7
Total 110,842 100 229,182 100 101,245 100 221,592 100 35,420 100

• Pellets

For the Six


months ended
Region Sept 30, 2005 FY 2005 FY 2004 FY 2003 FY 2002
Qty. Qty. Qty. Qty. Qty.
(MT) % (MT) % (MT) % (MT) % (MT) %
China 261,222 100 271,220 36.1 789,537 100 568,151 100 - -
Europe - - 213,480 28.4 - - - - - -
Middle - - 267,183 35.5 - - - - - -
East
Total 261,222 100 751,883 100 789,537 100 568,151 100 - -
(B)

Expenditure

The table below sets forth the main constituents of our cost derived from our restated financial statements for
fiscal 2002, 2003, 2004, 2005 and six months ended September 30, 2005.

Costs as a percentage of Total Expenditure (excluding Interest and Depreciation)

132
Expenditure Details For the 6 For the year ended March 31
months ended
Sep 30, 2005 2005 2004 2003 2002
Raw Material 72.0% 67.6% 61.1% 60.7% 71.3%
Consumed

Personnel expenses 2.6% 2.5% 2.5% 2.1% 1.9%


Other Manufacturing 16.6% 22.3% 28.2% 31.6% 24.2%
expenses

Administrative & other 2.6% 1.3% 1.0% 1.7% 1.3%


expenses

Selling & Distribution 6.2% 6.3% 7.2% 4.0% 1.2%


expenses

Total 100% 100% 100% 100% 100%

Costs as a percentage of Total Income

Particulars For the 6 For the year ended March 31


months ended
Sep 30, 2005 2005 2004 2003 2002
Raw Material 55.0% 44.2% 40.1% 43.8% 59.8%
Consumed

Personnel expenses 2.0% 1.6% 1.7% 1.5% 1.6%


Other Manufacturing 12.7% 14.6% 18.6% 22.8% 20.3%
expenses

Administrative & other 2.0% 0.9% 0.7% 1.2% 1.1%


expenses

Selling & Distribution 4.8% 4.1% 4.7% 2.8% 1.0%


expenses

Raw Materials: Raw Materials consumed mainly comprise of iron-ore, met coke, coal, limestone and zinc.

Personnel Expenses: Personnel Expenses comprise of salaries, wages, bonus, allowances paid to factory workers
and office personnel and contributions made by us to the provident / gratuity fund.

Other Manufacturing Expenses: Other Manufacturing expenses comprise of variable costs such as stores, spares
and consumables, power and fuel charges and repairs and maintenance charges.

Administrative & Other Expenses: Administrative expenses comprise of rent, rates and taxes, insurance, Foreign
exchange fluctuation and miscellaneous expenses including traveling, printing & stationery, postage and
telephones etc.

Selling & Distribution Expenses: Selling & Distribution costs comprise of sales commissions, cash discounts,
freight, etc.

Our significant accounting policies

Our financial statements are prepared in accordance with generally accepted accounting principles, the applicable
accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the
Companies Act, 1956. Certain accounting policies are particularly important to the portrayal of our financial
position and results of operations and require the application of assumptions and estimates of our management.

133
For further details see, “Significant Accounting Policies adopted by the Company” on page [ ] of this Letter of
Offer.

The significant accounting policies are given as under:

1. Valuation of Inventories

a) Raw materials, Production consumables, Construction materials and Stores and Spares are valued at lower
of cost, computed on weighted average basis and net realizable value. Obsolete, defective, unserviceable
and slow/non moving stocks are duly provided for.

b) Finished goods and work in progress are valued at lower of cost and net realizable value. Cost for this
purpose includes direct materials, direct labor, excise duty and appropriate overheads for bringing the
inventory to it’s present location and condition including freight costs up to the ports in respect of finished
goods meant for exports.

2. Fixed Assets, Depreciation and Impairment Loss

a) Fixed Assets are stated at cost of acquisition or construction less depreciation.

b) Preoperative expenditure during construction period / trial run: Direct expenses as well as clearly
identifiable indirect expenses, incurred on project during the period of construction are being capitalized
along with the respective assets; and all other allocable expenses (net of expenses charged to revenue
according to the ratio determined and certified by Company’s costing department) are being
capitalized/treated as deferred revenue expenses, as approved by the Management.

c) Depreciation on assets is provided on straight-line method at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956.

d) Depreciation on machinery spares of the nature of capital/insurance spares and having irregular use is
provided prospectively over a period, not exceeding the useful life of the fixed asset to which they relate.

e) Continuous process plants as defined in Schedule XIV to the Companies Act, 1956 have been considered
on technical assessment and depreciation provided accordingly.

f) Depreciation on the amount capitalized on account of foreign exchange fluctuations is provided


prospectively over the residual life of the asset.

g) In case, the recoverable amount of the fixed assets is lower than its carrying amount, a provision is made
for the impairment loss.

4. Transactions in Foreign Currencies

a) Transactions are recorded at the exchange rates prevailing on the date of the transaction.

b) Foreign currency designated assets, liabilities and capital commitments are restated at the year end rates.

c) The exchange differences are adjusted to:


i) Carrying cost of fixed assets, if they relate to fixed assets and
ii) Profit and Loss account in other cases.

d) In case of forward contracts, the exchange differences are dealt with in the Profit and Loss account over
the period of the contracts except in respect of liabilities incurred for acquiring fixed assets in which case,
the differences are adjusted in their carrying cost.

5. Retirement Benefits

ƒ Contribution to Provident and Family Pension Funds are funded as a percentage of salary/wages.
ƒ Gratuity liability is funded as per group gratuity scheme of Life Insurance Corporation of India.
ƒ Leave encashment liability is provided for on the basis of actuarial valuation as at the year-end.

134
6. Income Tax

Provision for current tax is made on the basis of relevant provisions of the Income Tax Act, 1961. The
deferred tax for timing differences between the book and tax profits for the year is accounted for, using the
tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets
arising from timing differences are recognized to the extent there is virtual / reasonable certainty that these
would be realized in future.

7. Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying
economic benefits will be required to settle an obligation. Contingent liabilities, if material, are disclosed by
way of notes to accounts. Contingent assets are not recognized or disclosed in the financial statements.

COMPARISON BETWEEN PERFORMANCES IN SUCCESSIVE PERIODS

Financial Performance for FY 2005 compared to FY 2004

Sales

The Net Sales for FY 2005 were Rs. 66,793.6 million compared to Rs. 43,546.6 million in FY 2004, which is an
increase of 53%. The Export and Domestic Sales increased by 75% and 37% respectively. The increase in Net
Sales is due to an increase in sales quantity of GP products and HR coils and better price realization for all the
products.

Raw Materials Consumed

Raw Materials Cost increased to Rs. 29579.5 million in FY 2005 from Rs. 17609.9 million FY 2004. This was
on account of growth in sales of GP products and HR coils and increase in the prices of primary raw materials
like coal, melting scrap and iron ore. Raw Material Cost as a percentage of total income increased to 44.2% in
FY 2005 from 40.1% in FY 2004.

Personnel Expenses

Personnel expenses increased to Rs. 1,072.1 million in FY 2005 from Rs. 729.6 million in FY 2004. Although
there is an increase in personnel expenses in absolute terms mainly on account of increase in production and
consequent increase in manpower, but personnel expenses as a percentage of total income decreased to 1.6% in
FY 2005 from 1.7% in FY 2004. This was primarily on account of increased productivity of labour, automation
and higher sales revenue.

Other Manufacturing Expenses

Other manufacturing expenses costs increased to Rs. 9766.9 million in FY 2005 from Rs. 8144.4 million in FY
2004. Although there is an increase in other manufacturing costs in absolute terms on account of increase in
production, the other manufacturing expenses as a percentage of total income decreased to 14.6% in FY 2005
from 18.6% in FY 2004. This was primarily on account of cost control initiatives, operational efficiencies and
higher sales revenue.

Administrative and other Expenses

Administration and other expenses increased to Rs. 575.8 million in FY 2005 to Rs. 293.7 million in FY 2004.
Administration and other expenses as a percentage of total income increased to 0.9% in FY 2005 from 0.7% in
FY 2004.

Selling and Distribution Expenses

Selling & Distribution expenses increased to Rs. 2,763.9 million in FY 2005 to Rs. 2064.2 million. Although
there is an increase in selling & distribution expenses in absolute terms on account of increased in sales quantity,
the selling & distribution expenses as a percentage of total income decreased marginally to 4.1% in FY 2005
from 4.7% in FY 2004.

135
Interest and Finance Expenses

Interest and Finance charges reduced from Rs. 4,883.5 million in FY 2004 to Rs. 4,698.7 million in FY 2005. As
a percentage of total income, interest and finance charges have reduced to 7% in FY 2005 from 11.1% in FY
2004. This reduction in interest & finance charges was primarily due to debt reduction and refinancing of high
cost debt. The Company has reduced its debt by Rs. 12,787.9 million, to Rs.35,684.4 million as on March 31,
2005 from Rs.48,472.3 million as at March 31, 2004.

Depreciation and Amortization

Depreciation and Amortization cost decreased marginally to Rs. 4,200.2 million in FY 2005 from Rs. 4,394.3
million in FY 2004. Depreciation and Amortization as a percentage of total income was 6.3% for FY 2005 as
compared to 10% for FY 2004 which is mainly due to increase in sales revenue..

Profits

The increase in sales volume, improved realization and reduction in interest costs have contributed to Profit
before Tax of Rs. 14,726.1 million for FY 2005, as compared to Rs. 9,626.0 million for FY 2004, which is an
increase of around 53%. Profit after Tax grew to Rs. 8,701.1 million in FY 2005, which is an increase of 9.7%
over the figure of Rs. 7,933.8 million in FY 2004.

Financial Performance for FY 2004 compared to FY 2003

In view of Scheme of Arrangement & Amalgamation between Jindal Vijayanagar Steel Limited (JVSL), Jindal
Iron and Steel Company Limited (JISCO) and Jindal South West Holdings Limited (JSWHL), effective from FY
2004, the figures reported by us for FY 2003 and FY 2004 are not comparable.

Sales

Net sales increased from Rs. 25,047.6 million in FY 2003 to Rs. 43,546.6 million in FY 2004, an increase of
around 74%.

Raw Materials Consumed


Raw Materials Cost in FY 2004 was Rs. 17,609.9 million. Raw Material Cost as a percentage of total income
decreased to 40.1% in FY 2004 from 43.8% in FY 2003.

Personnel Expenses

Personnel expenses in FY 2004 were Rs. 729.6 million. Employees Cost as a percentage of total income
marginally increase to 1.7% in FY 2004 from 1.5% in FY 2003

Other Manufacturing Expenses

Other Manufacturing expenses in FY 2004 were Rs. 8,144.4 million. Manufacturing Costs as a percentage of
total income decreased to 18.6% in FY 2004 from 22.8% in FY 2003.

Administrative and other Expenses

Administration and other expenses in FY 2004 was Rs. 293.7 million. Administration Costs as a percentage of
total income decreased to 0.7% in FY 2004 from 1.2% in FY 2003.

Selling and Distribution Expenses

Selling & Distribution expenses in FY 2004 was Rs. 2,064.2 million. Selling & Distribution Costs as a
percentage of total income increased to 4.7% in FY 2004 from 2.8% in FY 2003.

Interest and Finance Charges

Interest and finance charges in FY 2004 were Rs. 4,883.5 million. The interest and finance charges as a
percentage of total income decreased substantially to 11.1% in FY 2004 from 22.3% in FY 2003.

136
Depreciation and Amortization

Depreciation and Amortization in FY 2004 was Rs. 4,394.3 million. Depreciation and Amortization as a
percentage of total income was 10% for FY 2004 as compared to 13.8% for FY 2003

Profits

We had Profit before Tax of Rs. 9,626 million for FY 2004 compared to a loss of Rs. 4,028.3 million for FY
2003. We had a Profit after Tax of Rs. 7,933.8 million for FY 2004 compared to a loss of Rs. 1,106.7 million in
FY 2003.

Financial Performance for FY 2003 compared to FY 2002

Sales

Net sales increased from Rs. 17,357.5 million in FY 2002 to Rs. 25,047.6 million in FY 2003, which is an
increase of around 44.4%. The reason was mainly due to substantial increase in net sales realization and a
increase in volumes.

Raw Materials Consumed

Raw Materials Cost increased to Rs. 10,988.1 million in FY 2003 from Rs. 10,370.1 million, which is an
increase of around 6%. Raw Material Cost as a percentage of total income decreased to 43.8% in FY 2003 from
59.7% in FY 2002.

Personnel Expenses

Personnel expenses in FY 2003 were Rs. 371.5 million as compared to Rs. 281.5 million in FY 2002, which is an
increase of 32%. Although there was an increase in personnel expenses mainly on account of salary revision and
additional manpower requirement for higher level of production, but as a percentage of total income, the
personnel expenses marginally decreased to 1.5% in FY 2003 from 1.6% in FY 2002.

Other Manufacturing Expenses

Other Manufacturing expenses in FY 2003 were Rs. 5712.2 million compared to Rs. 3524.7 million in FY 2002,
which is an increase of 62%. This increase was mainly due to additional power requirement after the
commissioning of iron making unit and pelletising plant (new facilities). Manufacturing Costs as a percentage of
total income increased marginally to 22.8% in FY 2003 from 20.3% in FY 2002.

Administrative and other Expenses

Administration and other expenses in FY 2003 was Rs. 304.9 million compared to Rs. 193.2 million in FY 2002.
The increase in Administrative cost was 57.8% which was largely on account of additional level of activities
consequent to commissioning of new facilities. Administration Costs as a percentage of total income increased to
1.2% in FY 2003 from in 1.1% FY 2002.

Selling and Distribution Expenses

Selling & Distribution expenses in FY 2003 was Rs. 714.9 million compared to Rs. 178.8 million in FY 2002,
which is an increase of around 300%. This increase was mainly due to higher freight and handling charges on
account of significant growth in export of coils, slabs and pellets. Selling & Distribution Costs as a percentage of
total income increased to 2.8% in FY 2003 from 1.0% in FY 2002.

Interest and Finance Charges

Interest and finance charges in FY 2003 were Rs. 5596.4 million compared to Rs. 4434.1 million in FY 2002.
Although, there was an increase in Interest and Finance Charges in absolute terms on account of charges
pertaining to facilities capitalised during the year, the interest and finance charges as a percentage of total income
decreased to 22.3% in FY 2003 from 25.5% in FY 2002.

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Depreciation and Amortization

Depreciation and Amortization in FY 2003 was Rs. 3451.0 million compared to Rs. 2681.8 million in FY 2002.
The increase in Depreciation and Amortisation was due the capitalization of new facilitites. Depreciation and
Amortization as a percentage of total income was 13.8% for FY 2003 as compared to 15.4% for FY 2002.

Profits

We had a loss before tax of Rs. 4028.3 million for FY 2003 compared to a loss of Rs. 4,314.8 million for FY
2002. We had loss after tax of Rs. 1,106.7 million for FY 2003 compared to a loss after tax of Rs. 3510.7
million in FY 2002.The loss in FY 02-03 had reduced on account of additional revenue pursuant to
commissioning of new facilities, increased net sales realisation and provision for deferred tax liability.

Liquidity and Capital Resources

Our primary liquidity needs have been to finance our working capital requirements, our capital expenditures and
reduction of debt. To fund these costs, we have relied on cash flow from operations and short term and long term
borrowings.

Net Working Capital

As of March 31, 2004 and March 31, 2005 our Net Working Capital , defined as the difference between current
assets and current liabilities was Rs. 1,696.9 million and Rs. 2,857.4 million respectively.

Cash Flows

The table below summarizes our cash flows for fiscals 2002, 2003, 2004 and 2005:

(in Rs. million)


Particulars For the year ended March 31,
2005 2004 2003 2002
Net cash generated by operating 19,984.00 12,149.70 5,729.30 2,870.20
activities

Net cash (used in)/ from investing (4095.20) (1502.90) (1148.80) (1897.20)
activities

Net cash generated from/(used in) (15945.90) (10281.30) (4637.90) (866.00)


financing activities

Net increase/(decrease) in Cash & (57.10) 365.50 (57.40) 106.90


Cash Equivalents

As of March 31, 2005, cash and cash equivalents amounted to Rs. 399.8 million. The principal sources of cash
and cash equivalents in fiscal 2005 were cash flows from operations amounting to Rs. 19,984.0 million and
proceeds from long term borrowings amounting to Rs. 10,750 million. These funds were used principally for the
purchase of fixed assets and capital advances of Rs. 4,399.8 million, repayments against long term borrowings of
Rs. 24,409.3 million and interest payment of Rs. 4,327.6 million.

As of March 31, 2004 cash and cash equivalents amounted to Rs. 456.9 million. The principal sources of cash
and cash equivalents in fiscal 2004 were cash flows from operations amounting to Rs. 12,149.7 million. These
funds were used principally for the repayments against long term borrowings of Rs. 5,841.6 million and interest
payment of Rs. 4,517.7 million.

As of March 31, 2003 cash and cash equivalents amounted to Rs. 90.1 million. The principal sources of cash and
cash equivalents in fiscal 2003 were cash flows from operations amounting to Rs. 5,729.3 million and proceeds
from long term borrowings amounting to Rs. 7,060.0 million. These funds were used principally for the purchase

138
of fixed assets of Rs. 668.9 million, repayments against long term borrowings of Rs. 1,609.8 million and interest
payment of Rs. 10,715.4 million.

As of March 31, 2002 cash and cash equivalents amounted to Rs. 147.5 million. The principal sources of cash
and cash equivalents in fiscal 2002 were cash flows from operations amounting to Rs. 2,870.2 million and
proceeds from long term borrowings amounting to Rs. 3,684.2 million. These funds were used principally for the
purchase of fixed asset of Rs. 1,252.1 million, repayments against long term borrowings of Rs. 536.6 million and
interest payment of Rs. 3,744.5 million.

INDEBTEDNESS

The following tables summarize the secured and unsecured loans of our Company for the past three and a half
years:

(in Rs. million)


Six months ended Year ending on 31st March
Particulars Sep 30, 2005 2005 2004 2003 2002
Secured Loans 37682.5 35684.4 47047.7 54050 51681.6
Unsecured Loans 772.1 - 1424.6 5356.4 4441.5
Total 38454.6 35684.4 48472.3 59406.4 56123.1

With a view to strengthen our financial profile, we have sought to reduce our debt and interest cost. Over the
years we have reduced the debt represented by the amount of outstanding non-convertible debentures, buyers’
credit, foreign currency term loans and rupee term loans from banks and financial institutions. We have also
refinanced the expensive debt with loans at relatively lower interest rate. We propose to avail loans for financing
our capital expenditure project with elongated repayment schedules enabling us to spread our repayment
liabilities over longer tenure. Overall secured debt has reduced substantially over the years and even the
marginal increase in the last six months is primarily due to the additional debt accreted upon merger of EIISPL,
ECEPL and JPL. The quantum of Unsecured debts have also come down during the above periods.

For details of debts of our outstanding debt as on September 30, 2005, refer Annexure X, XI and XII of the
Auditors’ Report on page [ ] of this draft Letter of Offer.

List of small-scale undertakings to which we owe any sum, together with interest outstanding for more than 30
days as on September 30, 2005

An amount totaling Rs. 8.8 million is due for more than 30 days to Radix Sensors Pvt Ltd., Panchsheel Water
Proof, Rateria Laminators Private Limited, Mas Equipment Pvt. Ltd. and Reliable Electricals. This is based on
the details available with us regarding the status of supplier as defined under the “Industries (Development and
Regulation) Act, 1951” and the “Interest on Delayed Payment to Small Scale Ancillary Industrial Undertaking
Act, 1993.

Export Obligation

As on September 30, 2005, we have availed an export benefit of around Rs. 2,363 million under EPCG scheme
and there is pending export obligation which is expected to be fulfilled in due course of time.

Off-Balance Sheet Arrangements

As of September 30, 2005, we were not a financial guarantor of obligations of any entity, and we were not a
party to any similar off-balance sheet obligation or arrangement, save and except the following:

The investment in shares of JSWEL and JPOCPL by the Company have been pledged as security in favour of
certain financial institutions for loans granted to JSWEL / JPOCPL.

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Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risk from changes in foreign exchange rates, interest rates and certain commodity
prices.

Exchange rate risk

With exports constituting about 49% of total sales for fiscal 2005, we are subject to fluctuations in exchange
rates to the extent of receivables denominated in currencies other than Indian rupees. Major source of our foreign
currency expenditure is accounted for by import of raw materials and capital equipment. Other expenditure in
foreign currency includes interest payments on dollar denominated loans and commissions etc.

Revenues earned by us in foreign currency (FOB value of exports) in the fiscal 2003, 2004 and 2005 were Rs.
3,686.5 million, Rs. 15,348.1 million and Rs. 28,731.6 million respectively. Our total foreign exchange outflow
was Rs. 7,702.2 million, Rs. 9,243.5 million and Rs.21,689.6 million in fiscals 2003, 2004 and 2005
respectively.

Appreciation of the Indian rupee relative to the currency of our receivables can decrease our earnings derived
from unhedged export revenues. In order to hedge this risk we have partly converted our rupee denominated
debt obligations into foreign currency loans, which allows us to neutralize the effect of rupee movement through
foreign exchange liabilities.

Interest rate risk

Over the past years, we have been able to reduce our interest costs due to the following factors:

• Reduction in debt levels over the years


• Falling rates of interest in India
• Refinancing of high cost debt with loans at relatively low interest rates
• Use of hedging mechanism to have appropriate mix of currency, fixed and floating rates according to market
conditions

Our working capital loans are linked to the Prime Lending Rate (PLR) of the respective banks participating in the
working capital consortium, which are subject to change from time to time. Such changes apply to the working
capital loans with prospective effect, unless otherwise specified, as such any upward revision in PLR can affect
the interest cost of the Company. Further, foreign currency loans raised by us are linked to London Inter Bank
Offered Rate (LIBOR) and are subject to periodic resets. Any upward revision in the LIBOR can have adverse
effect on our interest cost in respect of the unhedged portion.

Significant Accounting and Regulatory Changes

a) We have accounted for Deferred Tax Assets/Liabilities from accounting year 2001-02. The accounts prior to
this have not been restated as Accounting Standard 22 - Accounting for Taxes on Income became applicable
from 1st April 2001.

b) During FY 2002, the policy for amortising certain deferred revenue expenditure aggregating Rs.572.6
million was changed from five years to 10 years. The first year of amortization of the said expenditure was
FY 2002 and therefore, this being the first year of expenditure the accounts for the year ended March 31,
2001 need not be restated.

c) Reduction in DEPB rates

Over last three and a half years export of finished steel products constitutes 35% to 45% of total sales.. This
makes us eligible to avail of benefits under several export promotion schemes including the DEPB scheme
of the Government of India.

Under the Foreign Trade Policy, exporters are eligible for Duty Entitlement Pass Book (DEPB) Scheme.
Under this scheme, exporters on the basis of notified entitlement rates, are granted duty credits in the form
of DEPB certificates which can be utilized for paying customs duty at the time of imports. These certificates
are freely transferable. The DEPB scheme was temporarily suspended from March 27, 2004 and re-launched

140
on July 12, 2004 for the export of steel items. Since April 2003, the DEPB rates have been substantially
reduced. Over the period April 2003 to May 2005, DEPB rates on various products viz. CR/GP/GC
sheet/coil, HR GP sheet/coil, HR coil/plate and iron ore pellets have been reduced from 20%, 15%, 19% and
7% respectively to 4%, 3%, 3% and 3% respectively.

The reduction in the DEPB rates translates into a substantial reduction in the DEPB benefit earned by us.
The DEPB benefit as a percentage of export sales fell from 14.93% in FY 04 to 5.87% in FY 05. In H1
2006, this percentage stood at 3.17%. As a percentage of Net Sales the DEPB benefit declined from 5.91%
in FY 04 to 2.62% in FY 05 and further to 1.08% in H1 2006.

In value terms, the total DEPB benefit earned by us has decreased from Rs. 2,415.9 million in FY 2004 to
Rs. 1,703.3 million in FY 2005 and further to Rs. 330.2 million in H1 2006.

Presently, as per various press releases, Government is proposing to replace the existing DEPB scheme with
a new scheme. In case the new scheme is less favourable than the existing scheme, it may impact our
profitability adversely.

Besides DEPB, we availed of the benefit under Duty Free Replenishment Certificate, Duty Free Entitlement
Credit Certificate and Target Plus Schemes. The total amount availed on account of above was Rs. 256.5
million in FY 2004 and Rs. 2,197.2 million in FY 2005 which was 1.58% and 7.57% of export sales in FY
2004 and FY 2005 respectively. For FY 2006, the Target Plus Scheme benefit can be ascertained only after
the end of financial year.

General
Merger of EIISPL, ECEPL and JPL with JSW Steel Limited

Our company had entered into operation and maintenance agreement with EIISPL and ECEPL for supply of key
input namely hot metal and metallurgical coke. EIISPL had set up a blast furnace with capacity of 0.9 mtpa to
produce hot metal while ECEPL had set up a coke oven plant with capacity to produce 0.62 mtpa of
metallurgical coke JPL had set up a 100 MW gas based power plant which was taken on lease for our captive
consumption. JPL had also taken up implementation of additional 130 MW at upstream facility and 60 MW at
SISCOL, an associate company, on similar lease arrangements.

Merger with EIISPL, ECEPL & JPL was envisaged to provide backward integration to our operation besides
elimination of uncertainties over expiry of their current contractual arrangements. Setting up these facilities
would have required longer gestation period at higher costs. Accordingly, these companies merged with us with
appointed dated as April 1, 2005 on stock swap basis without impacting our cash flows.

Financial Restructuring:

A Financial restructuring package was approved under CDR mechanism in February 2003 with the cut-off date
as September 30, 2002. The restructuring package envisaged reduction of equity, conversion of part of the debt
into equity, conversion of part of the debt into 10% Cumulative Redeemable Preference Shares, reduction of
interest rate and reschedulement of debt repayment apart from implementation of a Trust and Retention Account
mechanism. We complied with all the covenants under the CDR approved restructuring package as stipulated
and modified including the reduction in equity capital and conversion of debt into equity, which were
implemented as part of the scheme of arrangement and amalgamation for merger of steel business of JISCO. We
have since exited from CDR mechanism in September 2005 upon the repayment of CDR debt out of internal
accruals & refinanced debt and settlement of right of recompense. Upon the exit from CDR framework the
restrictive covenants are also not applicable to us.

We have also restructured debt outside of CDR with certain domestic and international lenders and these have
been implemented and commitments are being met as per schedule.

Significant economic changes that materially affect or (are likely to) affect income from continuing operations

We have major portion of our imports (total CIF value 2004-2005: Rs. 19,850.3 million), exports (total FOB
value 2004-2005: Rs 27,831.6 million) and Foreign Currency Debt Servicing (Total Interest and Finance Charges
2004-2005: Rs. 263.8 million) denominated in US Dollars. To a great extent this is an effective natural hedge.
However, we are still exposed to timing and quantum mismatches of inflows and outflows in foreign currency.
We hedge currency exposures from time to time as dictated by economics and market dynamics with a view to

141
reduce variability of operating income. Hedging contracts may at times restrict us from realizing the full
potential of a favorable move in the currency markets on receivables as well as payables side. Nevertheless these
hedges reduce the negative fallout from market vagaries and protect the bottom line.

Any change in the economic policies and laws affecting iron and steel companies, pace of deregulation, foreign
investment, currency exchange rates and other matters could adversely affect our business, financial condition
and operations.

Significant events taking place after the Financial Statement mentioned in this Draft Letter of Offer

Conversion of warrants

99,43,043 Equity shares were issued on January 17, 2005 on conversion of 99,43,043 warrants issued pursuant
to the scheme of Arrangement & Amalgamation between the Company, Jindal Iron & Steel Co. Limited (JISCO)
& Jindal South West Holdings Limited (JSWHL)

Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue
or income from continuing operations and future changes in relationship between costs and revenues
There could be material increases in prices of iron ore, coal, power and fuel forming the major input for
production. Future cost increases in these or other inputs may not be passed on to the customers, which would
adversely affect our margins.

Steel is generally considered to be a commodity with cyclical pattern of demand, which will peak out and again
subside over a period of four to five years.

Any significant dependence on a single or a few suppliers or customers

Zinc is a key raw material in the galvanizing process. We are presently sourcing zinc from only one supplier. As
a consequence of this supplier concentration, any downtime in the supplier's plant can adversely stop production
at our plants as well. We presently source our entire requirement of coal used for Corex plant from Australia and
in China. Dependence on few suppliers exposes us to the risk of non availability of raw material and other risks
that may arise in connection with a limited vendor/supply source.

Impact of Budgetary Allocation to Infrastructure

Several initiatives have been taken by the Government of India to promote infrastructural development in India.
These initiatives include infrastructural development programs such as the National Highway Development
Programme, the Indira Awas Yojna for providing housing to weaker sections of society, and the National Urban
Renewal Programme, setting up Special Purpose Vehicles (SPV’s) to fund road, ports and airport development
and rural electrification initiatives. These initiatives are expected to have a beneficial impact on the demand for
steel in general and product off take of our Company in particular. Demand for hot rolled, cold rolled and hot
dipped galvanized steel products of our Company is expected to improve from the positive impact of these
initiatives.

National Steel Policy 2005

The Indian average steel consumption is extremely low in relation to the global average steel consumption
benchmarks. The National Steel Policy specifically identifies and compares the status of current levels of Indian
steel consumption including per-capita consumption vis-à-vis the global norms and specifically emphasizes
various enablers for increasing the same. Further, the policy identifies the resource requirements as of today with
that of tomorrow along with the need to support expanding steel capacities in the country. To address the issue of
under-consumption of steel, the National Steel Policy 2005 envisages steel production to grow at 7.3% CAGR to
110 mtpa from the present levels of finished steel production at 38 mtpa. It also envisages steel imports growing
at 7.1% CAGR from the present level of 2 mtpa to 6 mtpa and steel exports to grow at 13.3% CAGR from the
prevailing 4 mtpa to 26 mtpa leading to a healthy apparent steel consumption of 90 mtpa by the FY 2020, a
CAGR growth of 6.9%. We expect to play an important role in the augmentation of capacity in the country.

142
Expansion of Steel Capacity

We propose to expand our steel making capacity at Torangallu to 7mtpa at an estimated investment cost of about
Rs. 50 billion since we have existing infrastructure to expand at low specific investment cost. This expansion is
proposed to be financed by a mix of internal accruals and debt or as may be approved by the Board. We have
placed an order with Seimens VAI to set up the blast furnace for the project apart from modernizing the existing
blast furnace with hot metal capacity of 0.9 mtpa.

We have signed an MoU for setting up a 10 mtpa integrated steel plant and an 800MW power plant in the state of
Jharkhand in phases with total investment of about Rs. 350 billion. The plant is proposed to be located near
Hesalong in Saraikela Kharsawan capitalizing on the availability of vast natural resources in the state for steel
making.

143
INFRASTRUCTURE

Property

Our Company has several premises which are owned, leased or obtained on leave and licence basis in various
locations in India and overseas.

Commercial Premises of Our Company

A summary of our major properties in India is given below.

No Location Area Ownership and other details Purpose


1. Mumbai 16,200 Sq. On lease from Gagan Trading Co. Corporate office
feets Limited.
2. Vasind, Thane 4,300 sq. Freehold property Manufacturing
mtrs. plant
3. Vasind, Thane 4,170 sq. Freehold property Manufacturing
mtrs. plant
4. Vasind, Thane 12,000 sq. Freehold property Manufacturing
mtrs. plant
5. Vasind, Thane 26,190 sq. Freehold property Manufacturing
mtrs. plant
6. Vasind, Thane 16,550 sq. Freehold property Manufacturing
mtrs. plant
7. Vasind, Thane, 1,25,200 sq. Freehold property Manufacturing
Maharashtra mtrs plant
8. Tarapur, Thane 1,31,202 sq. On leave and licence basis from Manufacturing
mtrs. Maharashtra Industrial Development plant
Corporation
9. Tarapur, Thane 10,864 sq. On leave and licence basis from Manufacturing
Mtrs. Maharashtra Industrial Development plant
Corporation
10. Saravali, Palghar, 5,028 sq. Freehold property Residential colony
Thane mtrs.
11. Kurgaon, Boisar, 5,362 sq. Freehold property Residential colony
Thane mtrs.
12. Tarapur, Thane 3,160 sq. On lease from Maharshtra Industrial Manufacturing
mtrs. Development Corporation plant
13. Toranagallu, Bellary 3430.16 Freehold property Manufacturing
acres plant
14. Toranagallu, Bellary 4.87 acres Freehold property Manufacturing
plant
15. Toranagallu, Bellary 14.27 acres Leasehold property Residential colony
16. Toranagallu, Bellary 15.32 acres Leasehold property Manufacturing
plant
17. Toranagallu, Bellary 615.00 acres Leasehold property Manufacturing
plant
18. Powai, Mumbai 33,880 sq. Freehold property Vacant land
yards
19. Ratnagiri, 2,000.0 Freehold property Vacant land
Maharashtra acres

Office Premises of Our Company

We have various offices and godowns in Ahamedabad, Bangalore, Bellary, Mumbai, Nanded, Chennai,
Coimbatore, Hyderabad, Secunderabad, Indore, Ghaziabad, Jaipur, Patna, Guwahati, and China. All these
premises are held by us on freehold or leave and licence basis.

144
Residential Premises of Our Company

We have various residential properties at Mumbai, Tarapur, Vasind and Bellary, which are owned, leased or
obtained on leave and licence basis. We have guest houses which are owned, leased or obtained on leave and
licence basis at various places including Mumbai, Bangalore, Vasind, Bellary, and Delhi for use by our senior
executives and officers.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The Company had availed of various rupee term loans, domestic foreign currency loans and unsecured external
commercial borrowings aggregating approximately Rs. 53,510 million as well as sanctioned working facility
debt of Rs. 4,890 million as on September 30, 2002. It was referred to the Corporate Debt Restructuring
(“CDR”) Cell for restructuring of its debts under the CDR mechanism and a CDR scheme was approved by the
CDR Empowered Group on January 21, 2003 and notified to the Company and the lenders vide letter dated
February 24, 2003. The Company has prepaid the entire debt under CDR, except zero coupon loans aggregating
Rs. 470 million, and the CDR Empowered Group at its meeting held on September 28, 2005 notified the
Company’s exit from the CDR mechanism.

A summary of the debt Profile of the Company for September 30, 2005 is given below:

Long Term Rupee Debt Exposure as on September 30, 2005


(Amounts in Rs. Million)
Sr. No. Name of the lender Rupee Term Loan
1 ICICI Bank 375.0
2 IDBI 1960.3
3 IFCI 105.3
4 Industrial Investment Bank of India 31.9
5 National Insurance Company 8.9
6 State Bank of India 7140.6
7 Punjab National Bank 2775.0
8 HDFC 54.2
9 State Bank of Patiala 2650.0
10 State Bank of Indore 500.0
11 State Bank of Bikaner and Jaipur 500.0
12 State Bank of Hydrabad 250.0
13 SBICI 100.0
14 United Bank of India 1168.8
15 Bank of Baroda 2500.0
16 State Bank of Mysore 979.2
17 Oriental Bank of Commerce 2000.0
18 State Bank of Travancore 500.0
19 State Bank of Saurashtra 170.0
20 Yes Bank 180.0
21 Union Bank of India 239.0
22 Vijaya Bank 500.0
23 Canara Bank 1397.2
24 Central Bank of India 200.0
25 Dena Bank 100.0
Total 26385.4

Secured Redeemable Non Convertible Debentures


Sr Particulars Amount Outstanding (Rs Mn.)
No
1 10% NCD's 2,027.50
2 8% NCD's 3,286.10
3 8.50% NCD's 700.00
Total 6,013.60

146
Short term rupee borrowings as on September 30, 2005

Sr. No. Name of the lender Amount ( Rs in Million)

1. Punjab National Bank 500

Foreign currency liabilities as on September 30, 2005


Sr. No. Particulars Currency Amount ( Rs in Million)

1. State Bank of India – London USD 439.9


2. State Bank of India – Frankfurt USD 136.7
3. Export Import Bank of the United States USD 506.7
4. ICICI Bank USD 626.1
6. Minerals Euro Asia Limited, Mauritius USD 272.1
7. Raiffessen Zentral Bank, Austria – CFA I EUR 1,157.9
8. Raiffessen Zentral Bank, Austria – CFA III EUR 381.2
Total 3520.6
*Exchange rates: 1 USD = Rs. 43.99
1 EUR = Rs. 53.09

Working capital facilities as on September 30, 2005


(Amounts in Rs. million)
Sr. No Name of the bank Fund based facilities Non-fund based limits
Limits Outstanding Limits Outstanding
1. State Bank of India 884.00 662.6 361.60 202.9
2. State Bank of Mysore 120.00 59.2 621.50 460.3
3. State Bank of Indore 60.00 - 588.50 504.8
4. Vijaya Bank 490.70 361.2 1,438.20 1,221.80
5. Allahabad Bank 792.10 622.9 1,824.10 1,656.90
6. ICICI Bank 60.00 - 651.00 627
7. State Bank of Patiala 334.00 329.2 136.70 125.9
8. Punjab National Bank 300.00 - 4,278.50 3,733.80
Total 3,040.00 2035.1 9,901.10 8,533.40

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OUTSTANDING LITIGATIONS AND DEFAULTS
Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions,
proceedings or tax liabilities against our Company, our Directors, our Promoters or group companies and there
are no defaults, non payments of statutory dues to banks/financial institutions, defaults in dues payable to
holders of any debentures, bonds or fixed deposits, and arrears on preference shares issued by our Company
(including past cases where penalties may or may not have been awarded and irrespective of whether they are
specified under paragraph (i) of Schedule XIII of the Companies Act, 1956). The following are the outstanding
or pending litigations or suits or proceedings involving the Company having a claim of Rupees One million and
more, and criminal complaints or cases, defaults, non-payment or overdues of statutory dues, proceedings
initiated for any economic or civil offences and disciplinary action taken by SEBI or stock exchanges against the
Company, its subsidiaries and other group companies and the outstanding or pending litigations or suits or
proceedings against the subsidiaries and other group companies.

I. Our Company

Litigation filed against our Company

A. Labour suits

1. 12 employees of the Company have filed complaint No. 482 of 2001 before the Industrial Court at Thane
against the Company alleging that the action of the Company in suspending the operations of its HRM
division amounted to a lock out which was illegal and that it contravened the provisions of chapter VB of the
Industrial Disputes Act, 1947. The complainants have also alleged that the Company is engaging in unfair
labour practices by sending them on deputation and/or transfer in breach of their service conditions. The
complainants also sought interim relief for directions to the Company to maintain status quo in respect of the
complainants and restraining the Company from transferring the complainants to other units as well as
restraining the Company from shifting the plant and machinery from the HRM division pending disposal of
the complaint. The Court passed an order dated April 20, 2002 directing the Company not to alienate or
permanently shift the plant and machinery, but rejected the prayer for the other reliefs. Against this order
dated April 20, 2002 the complainants filed writ petition No. 6645 of 2002 before the Bombay High Court
against the Company. The High Court passed an order dated November 30, 2002 allowing the writ petiton
and directing the Company to allow the complainants to continue to work at their existing place of
employment. The complaint No. 482 of 2001 is pending disposal.

2. The Assistant Provident Fund Commissioner, Bellary passed an order dated August 18, 2003 directing the
Company to remit an amount aggregating approximately Rs. 0.76 million, being the provident fund dues
allegedly payable by the Company on behalf of the contractors engaged by it from April 1998 to April 2001.
The Company has filed an appeal (Appeal No. 727(6)/2003) before the Employees’ Provident Funds
Appellate Tribunal against this order. The Company had also filed Writ Petition No. 39332 of 2003 before
the High Court of Karnataka against the order of the Assistant Provident Fund Commissioner dated August
18, 2003. The High Court, in its order dated January 4, 2005 has disposed of the writ petition in view of the
appeal filed before the Employees’ Provident Fund Appellate Tribunal. However, in the aforesaid order, the
High Court has stated that its interim order dated September 3, 2003 wherein it had stayed the operation of
the order of the Assistant Provident Fund Commissioner dated August 18, 2003 shall continue pending the
disposal of the appeal before the Employees’ Provident Funds Appellate Tribunal. The appeal is pending.

3. In another order, the Assistant Provident Fund Commissioner, Bellary passed an order dated March 16, 2004
directing the Company to pay an amount aggregating approximately Rs. 0.71 million, being the provident
fund dues allegedly payable by the Company on behalf of the contractors engaged by it. The Company has
filed an appeal (Appeal No. 233 (6)/2004) before the Employees’ Provident Funds Appellate Tribunal
against this order. The Company had also filed Writ Petition No. 12247 of 2004 before the High Court of
Karnataka against the order of the Assistant Provident Fund Commissioner dated March 16, 2004. The High
Court, in its order dated February 16, 2005 has disposed of the writ petition in view of the appeal filed
before the Employees’ Provident Fund Appellate Tribunal. However, in the aforesaid order, the High Court
has stated that its interim order dated March 25, 2004 wherein it had stayed the operation of the order of the
Assistant Provident Fund Commissioner dated August 18, 2003 shall continue for three months. The appeal
before the Employees’ Provident Fund Appellate Tribunal is pending.

148
B. Tax proceedings

(a) Income Tax

Appeals filed by the Company

1. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-V,
Mumbai, disputing in relation to income for the assessment year 1999-2000, additions / disallowances made
to normal income amounting to Rs. 57.28 million which include surplus on account of forfeiture and
repurchase of own debentures, unutilized modvat credit and club expenses and an addition of Rs. 35.72
million to book profits in respect of provision for doubtful debts and advances and amount transferred to
lease equalisation. The appeal is pending.

2. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-V,
Mumbai, disputing in relation to income for the assessment year 2000-2001, additions/disallowances of Rs.
35.03 million to its normal income which include unutilized modvat credit and club expenses and an
addition of Rs. 61.85 million to book profits in respect of provision for doubtful debts and advances, amount
transferred to lease equalisation and deduction under S.80HHC. The Company has also disputed failure to
add Rs. 28.06 million on account of increase in opening stock. The appeal is pending.

3. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-VII,
Mumbai for additions/disallowances made to normal income amounting Rs. 32.24 million for the assessment
year 1996-1997which include write-back of creditor balance, provision for leave encashment and deductions
and calculation of deduction under Section 80HHC and Section 80I of the Income Tax Act. The appeal is
pending.

4. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-VII,
Mumbai disputing in relation to income for the assessment year 1997-1998, additions of Rs. 66.93 million to
its income on grounds which include surplus on repurchase of own debentures and additions made to book
profit amounting to Rs. 21.79 million in respect of amount transferred to lease equalisation and provision for
doubtful debts and advances and deduction of Rs. 635.43 million in respect of provision for debenture
redemption reserve. The appeal is pending.

5. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-VII,
Mumbai disputing in relation to income for the assessment year 1998-1999, additions of Rs. 24.93 million to
its normal income on grounds which include claim of depreciation on account of reducing the sale
consideration of assets of Nasrapur Unit from the block of assets and additions of Rs. 17.62 millon made to
book profit in respect of amount transferred to lease equalisation and provision for doubtful debts and
advances and deduction of Rs. 312.50 million in respect of provision for debenture redemption reserve.
The appeal is pending.

6. The Company has filed an appeal before the CIT (Appeals)-V, Mumbai against the assessment order passed
under Section 143(3) of the IT Act, disputing in relation to income for the assessment year 2001-2002,
additions / disallowances of Rs. 194.08 million, which include club expenses, interest claimed under Section
36(1)(iii), unutilised modvat credit, interest under Section 14A and additions of Rs. 45.88 million to book
profit in respect of provision for doubtful debts and advances and provision for dimunition in value of long
term investments. Further, the Company has demanded an increase in opening stock of Rs. 34.91 million.
The appeal is pending.

7. The Company has filed an appeal before the CIT (Appeals) against the assessment order for the assessment
year 2003-2004. The Company has challenged the computation of interest of Rs. 3.67 million and Rs. 3.71
million charged under Section 234B and 234C of the Income Tax Act. The appeal is pending

8. The Company has filed an appeal before the CIT (Appeals)-XII, New Delhi challenging the assessment
order for the assessment year 1992-1993 whereby deduction of Rs. 4.53 million and Rs. 25,000 was not
allowed. The matter is pending.

9. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT(Appeals) –V,
Mumbai in respect of inclusion of land amounting to Rs. 46.23 million at Powai, Mumbai for wealth tax
purposes.

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10. The Company has filed an appeal before the CIT (Appeals)-V, Mumbai against the assessment order passed
u/s 143(3) disputing in relation to income for assessment year 2002-2003, additions/disallowances made to
normal income amounting to Rs. 146.62 million which include club expenses, interest claimed u/s 36(1)(iii),
unutilized Modvat credit, interest u/s 14A, write off of interest receivable, disallowance u/s 43B and
additions made to book profit amounting to Rs. 72.65 million in respect of provision for doubtful debts and
advances and provision for diminution in value of long term investments. Further, the Company has
demanded an increase in opening stock of Rs. 94.93 million. The appeal is pending.

11. The Company has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-V,
Mumbai confirming penalty levied u/s 271(1)(c) for the assessment year 2000-2001 amounting to Rs. 13.44
million. The appeal is pending..

Appeals filed by Income Tax Department

1. The Department has filed an appeal before the High Court of Karnataka challenging the order passed by the
ITAT, Bangalore wherein it is disputing the order that the income of Rs. 110.7 million earned by the
Company in the assessment year 1995-96 from interest discounting charges and sale of treasury bills be held
as ‘business income’ and not as ‘income from other sources’. The Department has also challenged the
deduction of expenditure of Rs. 154.34 million and debenture issue expenses of Rs. 107.75 million for the
assessment year 1995-96. The matter is pending.

2. The Department has filed an appeal before the ITAT, Mumbai against the order of the CIT (Appeals)-VII,
Mumbai for an amount aggregating Rs. 53.84 million for the assessment year 1996-1997. The grounds of
appeal include deletion of addition made in respect of unutilised modvat credit, start up expenses, deduction
under Section 80M and computation of deduction under Section 80HHC of the Income Tax Act. The appeal
is pending disposal.

(b) Central Excise

1. The Commissioner of Central Excise, Thane issued demand cum SCN No. V.Adj(SCN)30-45/Th-II/05 dated
July 8, 2005 to the Company demanding an amount aggregating approximately Rs. 5.09 million as the
alleged irregular CENVAT credit availed by the Company for the period June 2000 to May 2005 in respect
of furnace oil in addition to interest thereon, as well as penalty. The Company filed its replies dated
September 23 and 29, 2005. Personal hearings were held on September 23 & November 29, 2005. Further
written submissions arising out of the issues in the personal hearing on November 29, 2005 have been filed
on December 12, 2005.The matter is pending disposal.

2. The Commissioner of Central Excise, Mumbai has issued demand cum SCN No. V.Adj(SCN)15-156/R-
VII/K-I/M-III/2001/480 dated June 30, 2001 to the Company demanding an amount aggregating
approximately Rs. 3.67 million as the alleged irregular credit availed by the Company in respect of furnace
oil in addition to interest thereon as well as penalty. The Commissioner passed an order dated February 25,
2002 confirming the demand of approximately Rs. 3.67 million. The Commissioner ordered the
appropriation of the said amount debited by the Company and imposed a penalty of approximately Rs. 3.67
million as well as interest thereon of approximately Rs. 1.11 million. The Company has filed an appeal dated
May 30, 2002 before the CEGAT, Mumbai challenging the imposition of the penalty and interest. The
appeal is pending disposal.

3. The Additional Commissioner of Central Excise, Thane has issued two demand cum SCNs bearing Nos.
V/Adj./(SCN)15-145/Th-I/2004/2289 and V/Adj./(SCN)15-11/Th-I/2005/3264 dated November 10, 2004
and February 25, 2005 to the Company for an amount aggregating approximately Rs. 5.79 million as the
duty on the interest charged for delayed payment in addition to interest thereon and penalty. In addition, the
Commissioner of Central Excise, Thane has issued demand cum SCN No. V/Adj./(SCN)15-145/Th-
I/2004/2367 dated November 3, 2004 for an amount aggregating Rs. 4.62 million on the same grounds. The
Dy. Commissioner of Central Excise Kalyan has issued demand cum SCN No. V/AdJ(SCN) 15 – 145 / TH-
1/2004 /498 dated 27/12 /2004 & SCN No. V/ADJ (SCN) 15-45/TH-I/2005/384 dated 27/04/2005 to the
Company aggregating appox. Rs. 0.36 Million on same ground. The Company has filed its replies praying
that the SCNs be set aside and the proceedings be dropped. The matter is pending disposal.

4. The Commissioner of Central Excise, Thane has issued a demand cum SCN No. V/Adj/(SCN)15-
53/Jindal/Th-I/2004/3135 dated January 17, 2005 to the Company for an amount aggregating approximately

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Rs. 1.89 million in addition to interest thereon and penalty in respect of goods cleared by the Company from
its unit at Vasind to its own unit at Tarapur. The Company has filed its reply dated April 25, 2005 praying
for the SCNs to be set aside and the proceedings to be dropped. A personal hearing was granted on August
8, 2005 and further written submissions have been made on that date. The matter is pending disposal.

5. The Deputy Commissioner of Central Excise, Kalyan has issued two demand cum SCNs bearing Nos.
V/Adj(SCN)15-169/R-VII/K-I/M-III/2001/529 and V/Adj(SCN)15-206/R-VII/K-I/M-III/2001/756 dated
July 3, 2001 and September 19, 2001 to the Company demanding an aggregate amount of approximately Rs.
10.8 million in addition to interest thereon and penalty in respect of goods cleared by the Company from its
unit at Vasind to its own unit at Tarapur. The Company filed its replies dated August 31, 2001 and
November 1, 2001 praying for the SCNs to be set aside and the proceedings to be dropped. The Deputy
Commissioner passed an order dated March 5, 2002 confirming the duty demanded and imposing a penalty
of Rs. 1 million. Aggrieved by this order dated March 5, 2002, the Company has filed an appeal dated May
8, 2002 before the Commissioner of Central Excise (Appeals), Mumbai praying that the order of the Deputy
Commissioner be set aside. The appeal is pending disposal.

6. The Commissioner of Central Excise, Belgaum issued SCN No. V/72/15/88/2000Adjn. dated January 17,
2001 to the Company demanding an amount aggregating approximately Rs. 17.98 million being 8 per cent
of the price of corex gas allegedly required to be paid by Company since input credits were availed by the
Company for the same, along with interest thereon and penalty. The Company submitted its reply dated
April 14, 2001 praying that the SCN be quashed. The Commissioner of Central Excise, Belgaum passed an
order dated August 29, 2001 confirming the demand for Rs. 17.98 million and further imposing a penalty of
approximately Rs. 17.98 million along with interest. The Company filed an appeal dated November 30, 2001
before the Customs, Excise and Gold (Control) Appellate Tribunal (“CEGAT”), Bangalore praying that the
order dated August 29, 2001 be set aside. The CEGAT passed an order dated August 22, 2003 sending the
matter to the Commissioner of Central Excise, Belgaum, to re-determine the issues of recovery of credits.
The matter was heard on March 17, 2005. The Commissioner has passed an order dated November 16, 2005
confirming the demand for approximately Rs. 17.98 million and further imposing a penalty of approximately
Rs. 17.98 million along with interest.

7. The Assistant Commissioner of Central Excise & Customs, Bellary issued SCN No. IV/8/16/2002/B-1 dated
November 6, 2002 to the Company demanding an amount aggregating approximately Rs. 64.62 million
being 8 per cent of the price of corex gas allegedly required to be paid by the Company since input credits
were availed by the Company for the same, along with interest thereon and penalty. The Company has
submitted its reply dated January 6, 2003 praying that the demand be struck down. The Commissioner of
Central Excise, Belgaum passed an order dated December 8, 2005 confirming the demand for Rs. 64.62
million and further imposing a penalty of Rs. 64.62 million along with interest.

8. The Commissioner of Central Excise, Bellary issued two SCNs bearing Nos. IV/8/49/2002/2958 and
IV/8/27/2003/5234 dated March 5, 2003 and June 12, 2003 to the Company demanding an amount
aggregating approximately Rs. 150.59 million being 8 per cent of the price of corex gas allegedly required to
be paid by the Company since input credits were availed by the Company for the same, along with interest
thereon and penalty. The Company submitted its replies, both dated October 8, 2003, praying that the
demand be stuck down. The Commissioner of Central Excise passed a common order dated July 30, 2004
confirming the demand aggregating approximately Rs. 150.59 million and imposed a penalty of Rs. 20
million as well as interest thereon. The Company has filed an appeal dated October 27, 2004 before the
Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”), Bangalore against this order dated July
30, 2004 praying that the order be set aside. The Company has also filed an application dated October 27,
2004 for stay on recovery of the amount and the CESTAT granted the stay on March 15, 2005. The matter is
pending disposal.

9. The Commissioner of Central Excise, Belgaum issued three SCNs bearing Nos. V/72/15/15/2004Adjn.,
V/72/15/44/2004Adjn. and V/72/15/90/2004Adjn. dated April 15, 2004, June 30, 2004 and January 19, 2005
to the Company demanding an amount aggregating approximately Rs. 209.98 million being 8 per cent of the
price of corex gas allegedly required to be paid by the Company since input credits were availed by the
Company for the same, along with interest thereon and penalty. The Company submitted its replies dated
October 12, 2004 and February 22, 2005 praying that the demand be stuck down. The Commissioner of
Central Excise passed a common order dated July 6, 2005 confirming the demand aggregating
approximately Rs. 209.98 million and further imposed a penalty aggregating approximately Rs. 209.98
million as well as interest thereon. The Company has filed an appeal dated September 28, 2005 before the
CESTAT, Bangalore against this order dated July 6, 2006 praying that the order be set aside. The Company

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has also filed an application dated September 28, 2005 for stay on recovery of the amount. The matter is
pending disposal.

10. The Commissioner of Central Excise & Customs, Belgaum issued SCN No. V/72/15/43/2005 dated July 13,
2005 to the Company demanding an amount aggregating approximately Rs. 71.50 million being 8 per cent
of the price of corex gas allegedly required to be paid by the Company since input credits were availed by
the Company for the same, along with interest thereon and penalty.

11. The Company has filed an appeal in 2005 before the CESTAT, Bangalore against the order of the
Commissioner of Central Excise (Appeals)-V, Mumbai dated September 26, 2005 directing the Company to
pay a duty of Rs. 0.88 million along with a penalty of the same amount. The demand has been raised by the
department on reversal of the CENVAT credit available to the Company on sale of non granulated slag. The
appeal is pending.

12. The Assistant Commissioner of Central Excise has issued several show cause notices to the Company
denying it the rebate of education cess amounting to Rs. 1.05 million on the export of galvanized products
while allowing the Company to claim rebate on excise duty payable on such products. On appeal by the
Company, the Deputy Commissioner vide order dated November 1, 2004 has allowed the rebate. Aggrieved
by the said order, the department has filed an appeal before the Commissioner of Central Excise (Appeals).
The appeal is pending.

13. The Commissioner of Central Excise (Appeals), Belgaum has filed an appeal in 2005 before the Supreme
Court of India against the order dated April 19, 2005 passed by the CESTAT, Bangalore. The said order
passed by CESTAT has set aside a demand by the department directing the Company to pay Rs. 90.76
million and imposing a penalty of Rs. 5 million and Rs. 50 million respectively. The department has claimed
excise duty on notional interest of Rs. 575.85 million accrued on an advance of Rs. 1,500 million from
JISCO to the Company. The department has claimed that the notional interest should form part of the
assessable value of goods sold by the Company to JISCO from June 29, 1998 to November 30, 2000. The
appeal is pending.

(c) Service Tax

1. The Dy. Commissioner of Central Excise Kalyan Division has issued a demand cum SCN bearing
No.C.Ex./R-II/K-II/JVSL /SCN/CERA/2005/208 dated 13th July 2005 to the company demanding an
aggregate amount approximately Rs.0.23 Million in respect of Cenvat Credit availed on Service Tax paid
on freight in respect of outward transportation beyond the place of removal. The company has filed its
replies praying that the show cause notice be set aside and the proceeding be dropped. The matter is pending
disposal.

(d) Customs

1. The Commissioner of Customs, Chennai has issued SCN No. SCN/SIIB/37/2003 dated September 9, 2003
to the Company seeking to add the proportionate engineering costs, license fees and costs of technical
services to the actual assessable value of the consignments in respect of the import of “equipment for iron-
ore pelletising plant” from M/s. Kvaerner Metals, USA and ‘equipment for gasifier corex plant C-2000
module No. 2” from M/s. Voest-Alpine, Austria. The Commissioner of Customs alleged that the Company
had attempted to evade a total duty aggregating approximately Rs. 133.57 million in respect of the
consignments of the said goods cleared through the Chennai port and demanded the payment of the
differential duty of an amount aggregating approximately Rs. 133.57 million from the Company. The
Company filed its reply dated February 4, 2004 denying its liability to pay the differential duty demanded.
The preliminary hearing of the matter was held on March 12, 2004 and the final hearing is yet to take place.

2. The Commissioner of Customs, Mumbai has issued a SCN dated September 9, 1998 to the Company
demanding additional duty by adding the engineering charges, license fees and cost of advisory services to
the cost of basic equipment imported by the Company. The Commissioner, after adjudication, passed an
order demanding an amount aggregating approximately Rs. 1,208.24 million. Against this order of the
Commissioner, the Company filed an appeal before the CESTAT. The CESTAT passed an order dated May
11, 2001 allowing the appeal. Against this order dated May 11, 2001, the Customs department has filed an
appeal before the Supreme Court. The appeal is pending disposal.

3. The Commissioner of Customs Mangalore, issued SCN No. VIII/10/09/2004/Adjn. dated December 1, 2004
demanding additional duty aggregating approximately Rs. 496.35 million and penalty by adding the

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engineerinfg charges, licence fees and cost of advisory services to the cost of basic equipment imported by
the Company. The Company submitted its reply dated February 11, 2005. Personal hearing was held on
April 25, 2005. The matter is pending disposal.

4. The Deputy Commissioner of Central Excise & Customs, Bellary issued SCN dated July 27, 2000 to the
Company asking it to show cause as to why the ‘end use certificate’ under notification No. 20 of 1999 in
respect of “shredded scrap” imported by the Company should not be denied as the same is not eligible for
concessional duty under the said notification. After personal hearing, the Deputy Commissioner of Central
Excise passed an order dated August 7, 2000 denying the said end-use certificate. Thereafter, the Deputy
Commissioner of Customs, Marmagoa issued two SCNs dated August 9, 2000 and a further SCN dated
November 6, 2001 demanding an amount aggregating approximately Rs. 74.01 million along with interest at
the rate of 24 per cent per annum, on the ground that the Company had failed to submit the end use
certificate for availing of concessional duty. The Company has filed appeal No. 236 of 2000 before the
Commissioner of Central Excise (Appeals), Mangalore against the order dated August 7, 2000 and seeking a
direction to the Deputy Commissioner of Central Excise and Customs, Bellary to issue the end use
certificate to the Company. The Commissioner of Central Excise (Appeals), Mangalore passed an order
dated December 23, 2003 rejecting this appeal. Against this order dated December 23, 2003, the Company
has filed appeal dated March 18, 2004 before the CESTAT praying that the Deputy Commissioner of
Central Excise be directed to issue the end use certificate. The appeal is pending disposal. The Deputy
Commissioner of Customs, Chennai has also issued a SCN dated December 29, 2001 against the Company
for an amount aggregating approximately Rs. 17.90 million on the grounds that an end use bond executed by
the Company has expired on November 21, 2004 and that the conditions under the bond have not been
fulfilled.

5. The Commissioner of Customs, Bangalore issued a SCN No. VIII/10/10/98 Cus Adjn. dated May 21, 1998
asking the Company to show cause as to why the goods worth approximately Rs. 11.58 million seized by the
customs department as allegedly removed clandestinely by the Company from the customs bonded
warehouse should not be confiscated. The SCN also sought to impose import duty aggregating
approximately Rs. 4.31 million on the said goods as well as interest of approximately Rs. 1.41 million as
well as penalty. The Company filed its reply dated August 28, 1998 denying any liability. The
Commissioner of Customs passed an order dated May 5, 1999 demanding a sum of Rs. 12.93 million as the
import duty on the said goods as well as the payment for redeeming them, interest thereon and penalty.
Aggrieved by this order dated May 5, 1999, the Company filed an appeal before the CEGAT, Madras. The
CEGAT passed an order dated August 31, 1999 allowing the appeal and remanding the matter to the
Commissioner of Customs for fresh consideration in light of specific observations made by it. The
Commissioner of Customs, Mangalore, after fresh hearing, passed an order dated April 30, 2001 confirming
the demand of duty and other levies. Aggrieved by this order dated April 30, 2001, the Company filed an
appeal before the CEGAT, Bangalore. The CEGAT passed an order dated March 22, 2002 remanding the
case for fresh consideration in light of the specific observations made by it. The Company filed two writ
petitions bearing Nos. 22391-22392 before the Karnataka High Court challenging the order dated March 22,
2002 and praying for directions to the CEGAT to dispose the case on merits rather than remitting it back to
the Commissioner of Customs. The High Court passed an order dated February 18, 2003 issuing directions
to the Commissioner of Customs to strictly follow the specific observations made by the CEGAT in its order
dated August 31, 1999. The Commissioner of Customs took up adjudication of the case and passed an order
dated May 9, 2003 confirming the demand for duty aggregating approximately Rs. 4.31 million and interest
of Rs. 1.41 million as well as penalty of Rs. 5 million. The Company filed writ petition No. 32291 of 2003
against this order dated May 9, 2003. The High Court passed an order dated March 22, 2004 directing the
Company to file an appeal before the CESAT. Accordingly, the Company filed appeal No. C/197/04 before
the CESTAT against the order dated May 9, 2003. The CESAT passed its final order dated July 27, 2004
allowing the appeal only to the extent of holding that no penalty or interest could be demanded but
confirmed the demand of duty aggregating approximately Rs. 4.31 million. Aggrieved by this order dated
July 27, 2004 of the CESTAT, the Company has filed appeal No. 2 of 2005 before the Karnataka High
Court. The Commissioner of Customs has also filed an appeal dated November 26, 2004 against this order
dated July 27, 2004 in respect of an amount aggregating approximately Rs. 6.41 million as interest an
penalty that were dropped by the CESTAT. The appeal is pending disposal.

6. The Company had preferred a refund claim for an amount aggregating approximately Rs. 10.44 million
being the differential duty paid by it in respect of the ‘heating unit for lock hoppers’ and ‘refractories’
imported by it. The Deputy Commissioner of Customs and Central Excise, Bellary passed two orders, both
dated October 27, 1999, sanctioning the refund of the said amount. Aggrieved by the orders dated October
27, 1999 the Commissioner of Customs, Mangalore filed appeal Nos. 106 – 107 of 2000 before the

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Commissioner of Customs and Central Excise (Appeals), Bangalore. The Commissioner (Appeals) passed
an order dated November 15, 2002 allowing the appeals and setting aside the refund order. Against this
order dated November 15, 2002 the Company has filed appeal dated February 18, 2003 praying that the
order be set aside. The appeal is pending disposal. The Deputy Commissioner of Central Excise, Bellary
issued SCN No. V/18/12/99 dated June 6, 2000 to the Company demanding an amount aggregating
approximately Rs. 10.26 million being the amount allegedly refunded to the Company erroneously as the
excess duty paid by the Company in respect of refractories imported by the Company for a later period. The
hearing was completed on January 1, 2006. The matter is pending disposal.

7. The Deputy Commissioner of Central Excise, Bellary, has issued a SCN No, VIII/40/29/2000 B-2 dated
August 1, 2000 asking the Company to show-cause as to why the concession under Notification No. 69 of
2000 dated May 19, 2000 should not be denied to the Company and why the registration certificate issued
under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)
Rules, 1996 should not be cancelled. The Deputy Commissioner of Central Excise also issued an order dated
July 31, 2000 ordering the registration certificate to be invalid till the adjudication of the said SCN. The
Company filed writ petition Nos. 33157 – 58 of 2000 before the Karnataka High Court against the Union of
India, the Commissioner of Central Excise, the Commissioner of Customs and another seeking the quashing
of Notification No. 69 of 2000 dated May 19, 2000 on the ground that it is allegedly ultra vires Articles 14
and 19(1)(g) of the Constitution of India insofar as it makes a distinction between importers and
manufacturers of pig iron and steel on the basis of processes adopted and restricts its applicability only to
manufacturers of pig iron and steel using blast furnace. The Company also sought directions against the
respondents to apply Notification No. 69 of 2000 to the Company and to allow it to import metallurgical
coke from China without paying anti-dumping duty and directions against the Commissioner of Customs,
Chennai to refund the sum of Rs. 26.27 million recovered from the Company by way of anti-dumping duty.
The Company further sought the setting aside of the proceedings pertaining to the order dated July 31, 2000
and the SCN dated August 1, 2000 and restraining the respondents from implementing the said order and the
SCN. The Company also sought an ex parte ad interim order of stay on the order dated July 31, 2000 and the
SCN dated August 1, 2000 and directions permitting clearance of metallurgical coke to be imported by the
Company for the manufacture of pig iron and steel using corex technology without payment of anti-dumping
duty. The Karnataka High Court admitted the writ petitions on October 16, 2000 and granted, by way of
interim relief, permission to the Company to import metallurgical coke by paying only 50 per cent of the
disputed duty and furnishing bank guarantee for the balance. The Court also stayed the operation of the
order dated July 31, 2000 and the SCN dated August 1, 2000 for a period of eight weeks. This order was
further extended from time to time. The Court passed an order dated April 18, 2001 permitting the Company
to clear consignments of imported metallurgical coke by furnishing corporate guarantee to the extent of the
anti-dumping duty demanded. Notification No. 69 of 2000 was also challenged by Tata Chemicals Limited
and others by filing writ petition No. 558 of 2000 before the Supreme Court. Since the questions of law
involved in writ petition Nos. 33157 – 58 of 2000 are the same or substantially the same questions of law of
general public importance pending before the Supreme Court in writ petition No. 558 of 2000, the Union of
India filed transfer petition Nos. 846 – 47 of 2001 before the Supreme Court praying that writ petition Nos.
33157 – 58 be withdrawn from the Karnataka High Court and transferred to the Supreme Court and
adjudicated and disposed off by the Supreme Court. The Supreme Court passed an order dated February 18,
2002 allowed the transfer petitions and transferred writ petition Nos. 33157 – 58 of 2000 to itself to be heard
along with writ petition No. 558 of 2000. The cases have been registered as transferred case (civil) Nos. 44
and 45 of 2002. In November 2005, the Company has filed a Miscellaneous Application before the Supreme
Court for remanding the writ petition back to Karnataka High Court on the ground that the issue involved in
the Tata Chemicals Writ Petition and the Company’s Writ Petition is different and that if the Supreme Court
decides the matter, the Company will lose its opportunity of right of appeal. The Miscellaneous Application
was listed on November 29, 2005 and has been adjourned to post Christmas Vacation.

8. The Company had filed writ petition No. 35476 of 2001 before the Karnataka High Court against the Union
of India, the Commissioner of Customs and others seeking a declaration that Notification No. 17 of 2001
dated March 1, 2001 as amended by Notification No. 44 of 2001 dated April 26, 2001 was ultra vires
Articles 14 and 19(1)(g) of the Constitution of India to the extent that the description of the terms of serial
No. 69A thereof makes a distinction between the importers and manufacturers of pig iron and steel on the
basis of the process adopted and restricting its applicability only to the manufacturers of pig iron or steel
using a blast furnace. Notification No. 69 of 2000 dated May 19, 2000 was issued by the Union of India for
the levy of anti-dumping duty on goods imported from China. Notification No. 17 of 2001 exempts the levy
of anti-dumping duty on the said goods if imported by manufacturers of pig iron or steel using blast
furnaces. The Company was importing metallurgical coke from China for manufacturing steel using corex
technology and was denied the benefit of Notification No. 17 of 2001 and was compelled to pay customs

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duty at 15 per cent as valorem. The Court passed conditional interim order dated October 11, 2001 ordering
the Company to pay basic customs duty at 5 per cent and to furnish a bank guarantee for 5 per cent. The
Court passed a final order dated October 25, 2002 directing the Company to file an appropriate
representation with all material particulars with technical or technological details with the Union of India
and the Union of India was ordered to, on receipt of the representation, consider whether the Company’s
technology is the same or similar to that of manufacture of pig iron or steel using blast furnace. Till the issue
was decided, the respondents were ordered not to enforce the bank guarantee and the Company was ordered
to keep the bank guarantee alive. The Company made a representation dated November 22, 2002 to the
Secretary, Ministry of Finance (Department of Revenue) of the Union of India requesting it to issue suitable
orders to extend the benefit of the reduced duty to steel manufacturers using corex technology during the
period the benefit was exclusively not available to steel manufacturers using corex technology (the benefits
were extended to steel manufacturers using corex technology by Notification No. 21 of 2002 dated February
28, 2002). The Ministry of Finance vide its order dated January 6, 2003 informed the Company that it had
not been found possible to accede to extend the benefit of the concessional rate of customs duty with
retrospective effect. Aggrieved by this order of the Ministry of Finance, the Company filed writ petition
Nos. 2741 – 42 of 2003 before the Karnataka High Court. The Company also sought an order interim order
of stay, staying the consequent proceedings pursuant to the impugned order dated January 6, 2003. The
Court by its order dated January 28, 2003 rejected the prayer of the Company for grant of an interim stay;
however, the Court ordered that if the Company succeeded before it, the respondent authorities should
refund the amounts paid together with interest stipulated under the Customs Act, 1962. The Court passed an
order dated October 21, 2003 allowing the appeal and directing the Union of India to extend the benefit of
Notification No. 17 of 2001 to the manufacturers of pig iron and steel using corex technology. The Court
also directed the Company to file an appropriate application seeking refund of the amount due with the
respondents who were ordered to dispose of the same within four weeks. The Company filed an application
dated December 10, 2003 for a refund of an amount aggregating approximately Rs. 130.7 million. The
Commissioner of Customs has filed an appeal No. 5 of 2004 before a division bench of the Karnataka High
Court. The refund of an amount aggregating approximately Rs. 82.90 million payable by the Customs
department has been stayed.

9. The Deputy Commissioner of Customs (Contract Cell) Mumbai issued SCN F.No.S/5-95/96CC dated
November 29, 2005 asking the Company to show cause as to why provisional duty bond executed by the
Company for the clearance of descaling system for HSM imported in 1996 through the Mumbai Customs
should not be enforced by assessing the goods on merit basis which amounts to Rs. 8.26 million since the
Company has not completed project reconciliation and finlaization of project contract registered with them.
A preliminary hearing before the Deputy Commissioner of Customs, Mumbai was held on December 22,
2005. The matter is pending disposal.

10. The Deputy Commissioner of Customs, Marmagoa has issued two show cause notices SCN F.No. S/99-
364/05 dated September 1, 2005 and F.No.S/99-364/05 dated August 18, 2005 directing the Company to pay
Rs. 49.93 million and Rs. 110.42 million respectively. The demand has been raised on the ground that the
ash content of the coking coal is greater than 12 per cent and therefore, it is not eligible for duty exemption.
The department has, vide letter F. No. S/99-450/05-AP dated November 11, 2005 increased the demand in
the show cause notice dated August 18, 2005 to Rs. 337.26 million on the ground that the earlier duty was
calculated on the basis of an incorrect duty.

11. The Deputy Commissioner of Customs, Chennai has issued SCN No. File No. DEPB/UT/620/2000/GR7A
dated December 29, 2001 directing the Company to pay Rs. 17.90 million on the grounds that an end use
bond executed by the Company had expired on November 21, 2001. However, the conditions for the bond
were not fulfilled. The Company has vide its reply dated February 15, 2002 denied the charges.

(e) Sales Tax

1. The Assistant Commissioner of Sales Tax, Palghar issued a notice of demand dated July 6, 2005 to the
Company demanding an amount aggregating approximately Rs. 2.88 million being the sales tax payable by
the Company for the period 1996 – 1997 and penalty. Against this demand dated July 6, 2005, the Company
filed an appeal before the Deputy Commissioner of Sales Tax, Thane in respect of the said amount. The
Deputy Commissioner passed an order dated October 28, 2005 admitting the appeal and granting a stay on
the recovery proceedings till the decision of the appeals. A personal hearing was granted on November 28,
2005. The matter is pending disposal.

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2. The Sales Tax Officer, Palghar passed an assessment order dated March 30, 2002 against the Company
levying purchase tax for the period 1998 – 1999 for an amount aggregating approximately Rs. 9.12 million.
The Company has filed an appeal before the Assistant Commissioner of Sales Tax, Thane on the grounds
that the Sales Tax Officer had erred in levying the said purchase tax. The matter is pending disposal.

3. The Deputy Commissioner of Commercial Taxes, Bellary, passed an assessment order dated May 27, 2005
against the Company levying tax under the Karnataka Tax on Entry of Goods Act, 1979 for an amount
aggregating approximately Rs. 3.10 million (as disputed tax). The Company filed an application dated June
10, 2005 with the Deputy Commissioner for rectification of certain errors apparent on the face of the record,
inasmuch as the Deputy Commissioner had concluded that the commercial invoices in respect of the
purchase of plant, machinery and equipment of a value exceeding Rs. 10 million had been absent. Since no
rectification order was forthcoming within the limitation period for filing an appeal, the Company filed
appeal No. 48 of 2005 - 2006 before the Joint Commissioner of Commercial Taxes (Appeals), Davangere.
The Company filed an application dated July 23, 2005 before the Joint Commissioner for withdrawing
appeal No. 48 of 2005 – 2006 under the sincere belief that the Deputy Commissioner would issue a
rectification order giving full relief to the Company. However, the Deputy Commissioner passed an order
dated July 25, 2005 rectifying only some a portion amounting to Rs. 1.59 million. However, the balance
portion relating to Rs. 1.51 million was not rectified in the said assessement order.. The Company filed an
application with the Joint Commissioner to restore the appeal withdrawn in respect of the grounds omitted
by the Deputy Commissioner.

(f) Other Taxes

1. The Deputy Commissioner of Commercial Taxes (Assessments), Bellary, issued notices of provisional
monthly assessment and demand on the Company levying special entry tax of an amount aggregating
approximately Rs. 50.28 million for the period from November 2004 to November 2005. These notices were
issued in accordance with notification No. FD 133 CET 04 dated September 30, 2004 read with sections 3
and 4 of the Karnataka Special Tax on Entry of Certain Goods Act, 2004, as amended (“Entry Tax Act”).
The Company has filed writ petitions bearing Nos. 1606 of 2005, 19321 of 2005 and 20675 of 2005 before
the Karnataka High Court against the State of Karnataka seeking a writ in the nature of certiorari quashing
the notices of provisional monthly assessment and demand and a declaration that sections 3 and 4 of the
Entry Tax Act read with notification No. FD 133 CET 04 are ultra vires the Constitution of India, inasmuch
as they are, inter alia, violative of Articles 14, 19(1)(g), 301 and 304(b) thereof. The High Court has passed
orders staying the operation of the impugned notices of provisional monthly assessment and demand. The
writ petitions are pending disposal.

C. Civil cases

1. Mewar Growth Limited (“MGL”) (formerly known as Bangur Finance Limited) and others have filed civil
suit No. 538 of 1999 before the Calcutta High Court against Bank of Rajasthan Limited, the Company and
others seeking a declaration that they are absolute owners of 916,860 equity shares of Bank of Rajasthan
Limited and that the purported transfer and/or sale of the same in favour of the defendants was illegal, null
and void. MGL and others have also sought a perpetual injunction restraining the Company and others from
exercising any rights, including voting rights, or selling or transferring, encumbering or otherwise dealing
with the same. MGL made an oral application on October 6, 1999 for withdrawal of the suit upon which the
Court was passed an order dated October 6, 1999 dismissing the suit for non-prosecution. Thereafter MGL
and others filed an application dated April 26, 2002 seeking leave to withdraw the oral application after
setting aside the order dated October 6, 1999 and restore the suit to the file of the Court. The application is
pending disposal.

2. Tiger Steel LLC and another filed case No. 161 of 1997 against the Company and another before the Dubai
Court of First Instance for an amount aggregating approximately Dirham 460,155 together with interest at
the rate of 12 per cent per annum being the amount payable by the Company for the alleged short supply and
damage in respect of the goods sold and supplied by the Company. The Dubai Court of First Instance passed
an order dated December 22, 1999 dismissing the case as being time-barred. Aggrieved by this order dated
December 22, 1999, Tiger Engineering Limited filed appeal No. 114 of 2002 before the Court of Appeal at
Dubai. The Court of Appeal passed an order dated April 22, 2002 directing the Company to pay an amount
aggregating approximately Dirham 460,155 together with interest at the rate of 9 per cent per annum. Tiger
Steel LLC and another filed an execution application No. 229 of 2003 before the Bombay High Court
praying for leave to take out execution proceedings against the Company to give effect to the order dated
April 22, 2002 passed by the Court of Appeal at Dubai without issuance of notice under Order 21, Rule 22

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of the Code of Civil Procedure, 1908. The High Court passed an order dated October 17, 2003 granting such
leave. Thereafter, on June 1, 2004 two warrants of attachment were issued for the attachment of movables
lying the Company’s office at Mumbai and the amount in its cash credit account with the State Bank of
India, CAG Branch. The Company filed appeal No. 355 of 2004 against the order dated October 17, 2003
before a division bench of the Bombay High Court. The division bench passed an order dated June 29, 2004
directing the Company to furnish a bank guarantee for the sum of approximately Rs. 9.89 million upon
which the attachment of the current account would stand raised. The attachment of the said movables was
also suspended for a period of six weeks. The division bench granted the Company liberty to file its
objections to the execution application and for raising of the attachment in respect of the movables.
Accordingly, the Company filed its objections dated July 8, 2004 praying that the High Court disallow Tiger
Engineering Limited to execute the order dated April 22, 2004. The bank guarantee has been renewed
successively till June 29, 2006.

D. Arbitration Proceedings

1. Balli Kloeckner GmBH, Germany has initiated arbitration proceedings on April 20, 2004 before the
International Court of Arbitration against the Company for an amount aggregating approximately USD
22.82 million as consideration for steel slabs sold and delivered to the Company. It also filed company
petition No. 76 of 2004 before the Bombay High Court as an objecting creditor objecting to the scheme of
arrangement and amalgamation of JISCO, JSW Holdings Limited and JVSL and their respective members
and creditors. The High Court passed an order dated September 3, 2004 requiring the Company to furnish a
bank guarantee for a sum of Rs. 1,330 million in the Court and to keep it alive till the completion of the
arbitration proceedings. Accordingly the Company has furnished the requisite bank guarantee and the same
is currently alive. The arbitration proceedings are pending.

2. JPOCL has initiated arbitration proceedings before an arbitral tribunal of three arbitrators for an amount
aggregating approximately Rs. 119.45 million as consideration for the sale and supply of products such as
oxygen, nitrogen and argon to the Company, as well as taxes and interest thereon. The arbitration
proceedings are pending.

E. Consumer Cases

1. 22 shareholders have filed cases against the Company before various consumer forums, inter alia, on the
grounds that the shares were lodged for transfer, but they have not received the share certificates, for non-
receipt of the debenture interest, illegal forfeiture, etc. These cases are at various stages of the proceedings.

F. Other miscellaneous cases

1. The Maharashtra Pollution Control Board has filed a legal proceeding against the Company alleging that the
Company has been operating the plant of captive power generation without having valid consent from
Maharashtra Pollution Control Board, which is pending for disposal.

2. M Veeresh has filed original suit No. 35 of 2005 and an application for interim injunction against the
Company in the Court of the Civil Judge (Junior Division) at Bellary seeking to restrain the Company from
trespassing and interfering with the peaceful possession and enjoyment of a plot of land allegedly belonging
to him and through which the Company has laid a pipeline for the disposal of slime from its factory. The
Company has filed its written statement and reply to the application for interim injunction. The suit is
pending disposal.

3. By a Writ Petition No. 5215/2005 (GM-RES) Smt. Rudramma had preferred an application before the High
Court of Karnataka making the Assistant Commr., Bellary and JVSL also as party claiming 100% ex-gratia
to herself against the land allotted to us for establishment of Slime Pond. The company has already filed its
objections through its advocate. Now, the case is pending for trial before the Hon’ble High Court. Smt.
Rudramma has also filed a case in the same matter before the Civil Judge (Jr.Dvn.) & JMFC, Sandur vide
Original Suit No.4/2005 for which JSW has already filed its counter.

4. Based on the complaint lodged by the JPOCL, the Toranagallu Police have filed Case No.381/03 before the
Civil Judge (Jr. Division) & JMFC, Sandur against Jindal Vijayanagar Steel Ltd., alleging that trucks
belonging to JPOCL were restrained from entering through JVSL which has hampered their dispatching &
resulted in to production loss. The case is pending before the court for further re-examination of chief
witnesses before the court.

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G. Penalty imposed by SEBI

1. A penalty was levied on JISCO under Section 15A of the SEBI Act aggregating Rs. 125,000 for non
submission of periodical disclosures required to be made to the stock exchanges under regulations 6(2), 6(4)
and 8(3) of the SEBI (Substantial Acquisition of Shares and ) Regulations, 1997 for the years 1998,. 1999
and 2001. The Company agreed for settlement by consent order with a request to reduce the penalty amount
to Rs. 100,000 on the grounds that the Company has complied with the regulations for the year 2001. The
order of the adjudicating officer appointed by SEBI is awaited.

Litigation filed by the Company

A. Criminal cases

1. The Company has filed 10 criminal cases before various forums for offences under section 138 of the
Negotiable Instruments Act, 1881, in respect of an amount aggregating approximately Rs. 67.86 million due
to it as consideration for goods sold and supplied it. These cases are at various stages of the proceedings.

2. The Company has filed two criminal cases No. CC 376 of 2000 and CC 377 of 2000 against
Southern Steel Limited at Hyderabad under Section 138 of the Negotiable Instruments Act 1881. Both the
cases have been stayed by the Supreme Court on the SLP filed by Southern Steel Limited. The amount
involved is Rs. 64.26 lakhs.

3. The Company has filed a Criminal Case No. CC 15 of 2004 Sahil Tubes Limited in JMFC, Sandur. The
amount involved is Rs. 44.63 lakhs.

B. Civil cases

1. The Company has filed civil suit No. 3696 of 1999 against MGL before the Bombay High Court for an
amount aggregating approximately Rs. 222.84 million with further interest. The Company had, pursuant to a
loan agreement dated April 17, 1995 between the Company and MGL, lent and advanced Rs. 200 million to
MGL. The loan was secured, inter alia, by the pledge of 916,860 shares of Bank of Rajasthan Limited with
Global Trust Bank Limited in terms of a custodial agreement dated April 17, 1995. The loan was initially in
the form of an inter-corporate deposit but the amount thereafter was adjusted and appropriated against
secured non-convertible debentures issued by MGL to the Company. The repayment of the loan was due on
April 19, 1996. In terms of the loan agreement and the custodial agreement, MGL issued post dated cheques
to the Company for repayment of the principal amount of Rs. 200 million, but these cheques were
dishonoured. Thereafter, on June 19, 1996, MGL acknowledged their debt of Rs. 200 million in writing and
issued further post dated cheques for an aggregate sum of Rs. 200 million in terms of a revised repayment
schedule, whereunder the full amount was to be paid by August 16, 1996. However, these cheques were also
dishonoured upon presentation. Thereafter, on September 26, 1996 MGL redeemed in part the non-
convertible debentures and repaid a sum of Rs. 100 million to the Company but defaulted in respect of the
balance amount. In view of the diverse breaches and defaults committed by MGL, the Company called upon
Global Trust Bank Limited to hand over the 916,860 shares of Bank of Rajasthan Limited that had been
pledged as security. These shares were handed over by Global Trust Bank Limited to the Company on
October 17, 1997. The Company has adjusted approximately Rs. 19.25 million being the market value on
916,860 pledged shares on June 10, 1999 against the outstanding dues of MGL and has filed the instant suit
for recovery of the balance amount. The suit is pending for final disposal.

2. The Company has filed a summary suit No. 6196 of 1999 before the Bombay High Court against Balkrishna
Singh Dogra, proprietor of Singh Acids and Chemicals for an amount aggregating approximately Rs. 11.94
million due to it as consideration for the goods sold and supplied by the Company together with interest
thereon and costs. The matter is pending disposal

3. The Company has filed a suit No. 3414 of 2000 before the Bombay High Court against Manisha Chemicals
and its partners for an amount of Rs. 1.76 million with interest thereon, aggregating approximately Rs. 3.02
million due to it as consideration for the goods sold and supplied by the Company. The Company has also
prayed for interim reliefs restraining the defendants from alienating, transferring or encumbering its movable
property. The matter has not come up for hearing.

158
4. The Company has filed a summary suit No. 470 of 2002 before the Bombay High Court against RBT
Industries Limited for an amount aggregating approximately Rs. 1.09 million due to it as consideration for
the goods sold and supplied by the Company along with interest thereon. The High Court passed an order
dated January 8, 2004 decreeing the suit and ordering RBT Industries Limited to pay an amount aggregating
approximately Rs. 2.14 million. The Company has issued a legal notice dated March 12, 2004 to RBT
Industries Limited under section 434 of the Companies Act calling upon RBT Industries to pay the decreetal
amount, failing which the Company will be entitled to file a petition for winding up of RBT Industries
Limited.

5. The Company has filed summary suit No. 139 of 2002 before the Bombay High Court against Kailash
Swami, proprietor of Hindustan Iron and Steel Traders, for an amount aggregating approximately Rs. 1.30
million due to it as consideration for the goods sold and supplied by the Company.

6. The Company had filed summary suit No. 515 of 1999 before the Bombay High Court against Orion, a
partnership firm, for an amount of approximately Rs. 2.56 million together with interest thereon aggregating
approximately Rs. 3.63 million, due to it as consideration for the goods sold and supplied by the Company.
The Court passed an order dated December 8, 1999 decreeing the suit in favour of the Company and
ordering Orion to pay the Company an amount of Rs. 3.63 million. The Company is yet to receive the
decreetal amount.

7. The Company has filed a company petition No. 924 of 1998 before the Bombay High Court against Abaqs
Building Systems Private Limited, for the winding up of Abaqs Building Systems Private Limited in view of
the failure of Abaqs to pay a sum of Rs. 1.18 million due and payable to the Company. The parties filed
consent terms on June 8, 2000 before the Court under the terms of which Abaqs agreed to pay a sum of Rs.
1.2 million to the Company in twelve equal installments, upon which the petition would stand disposed off.

8. The Company has filed summary suit No. 932 of 2003 before the Bombay High Court against Ketan
Construction Limited, for an amount of Rs. 3.12 million together with interest thereon aggregating
approximately Rs. 5.53 million, due to it as consideration for the goods sold and supplied by the Company.
The Company filed a summons for judgment No. 477 of 2003. The Court passed an order dated August 16,
2005 dismissing the summons for judgment and granting the defendants unconditional leave to defend. The
matter is pending disposal.

9. The Company filed suit No. 1165 of 2000 before the Bombay High Court against Punjab and Sind Bank and
Surindra Engineering Company Limited for an amount aggregating approximately Rs. 8.45 million for
refusing to honour a letter of credit, due to the company as consideration for the goods sold and supplied by
the Company. The Court passed an order dated April 4, 2000 disposing off the notice of motion moved by
the Company and directing Punjab and Sind bank to deposit the suit amount with the Prothonotary and
Senior Master of the Bombay High Court, which the Company was allowed to withdraw after furnishing
adequate bank guarantee to the satisfaction of the Prothonotary and Senior Master. The Company has
furnished the necessary bank guarantee and received the amount. The suit is pending disposal.

10. The Company has filed writ petiton No. 36293 of 2001 before the High Court of Karnataka against the
Bellary Urban Development Authority (“BUDA”) and the State of Karnataka for setting aside a demand
notice of Rs. 124.88 million dated July 17, 1996 issued by BUDA. The said demand by BUDA was towards
payment of betterment charges and scrutiny fees. During the pendency of the writ petition, BUDA issued a
fresh demand dated June 2, 2001 for the said amount. The High Court, in its interim order dated July 16,
2005 has stayed operation of the demand notice dated June 2, 2001 subject to the Company depositing an
amount of Rs. 30 million with BUDA. The petiton before the High Court is pending disposal.

11. The Company has filed suit No. 41 of 2005 against H Veeresh and H Gangamma before the Court of Civil
Judge (Jr. Division) & JMFC at Sandur seeking to restrain the parties from trespassing and interfering into
the land allotted to it for the purpose of laying of Slime Pipeline to connect from the Company to Slime
Pond (for which the party is allegedly claiming as his Patta land). The suit is pending for final disposal
before the Court at Sandur.

12. The Company has filed an Arbitration suit No. 48 of 2001 before City Civil Court, Bangalore, challenging
the Arbitration award dated July 16, 2000 obtained by one of the debenture holder namely Image Securities
Limited (an OCB) for alleged delay in getting RBI approval by JSW and the delay in the dispatch of
debenture certificate to the debenture holder after the Public Issue by the Company (JVSL it was then called)
during February 1995. The amount involved is Rs. 3,73,200/-. The suit is pending for final disposal.

159
C. Arbitration Proceedings

1. The Company has initiated arbitration proceedings against Oriental Insurance Company Limited (“OIC”)
for an amount aggregating approximately Rs. 101.97 million with further interest thereon at the rate of 21
per cent per annum. The Company had obtained a “marine-cum-erection insurance policy” dated December
26, 1994 from OIC in respect of brand new/second hand machinery and equipment for integrated steel
project at Bellary for Rs. 25.46 billion and covered all risks upto completion and of commissioning and
testing. During the course of the testing process October 30, 1998 there was a loss of corex module due to
chilling and the Company communicated the same to OIC by its letter dated December 3, 1998. After the
necessary assessments, on October 14, 1999 the Company lodged its claim for a sum of Rs. 434.62 million
with OIC. This amount stood reduced to Rs. 288.92 million after taking into account the items not claimable,
the value of the materials salvaged and the excess that the Company was entitled to. OIC made three part
payments aggregating approximately Rs. 186.94 million. The Company has initiated the instant proceedings
for the balance amount. OIC has filed its reply and the matter is pending disposal.

2. The Company has initiated arbitration proceedings against Sudamin Trading Limited before the London
Court of International Arbitration in London for amounts aggregating approximately USD 6.1 million, inter
alia, as compensation for the loss suffered by the breach of a contract dated October 20, 2004 for the supply
of metallurgical coke from China. Sudamin Trading Limited has filed its statement of defence and the matter
is pending disposal. The Company has also initiated arbitration proceedings against Sudamin Trading
Limited before an arbitral tribunal comprising Justices Jagannath Shetty, S. P. Bharucha and Arvind Sawant
in India for amounts aggregating approximately USD 3.32 million, being the difference in value of the
metallurgical coke payable by the Company due to the non-performance by Sudamin Trading Limited of a
contract dated November 6, 2004 for the supply of the same. The tribunal has granted time to Sudamin
Trading Limited to file its reply. Sudamin Trading Limited has filed its written statement. By an order dated
November 29, 2005, the Indian Arbitration has been consolidated with the London Arbitration and further
procedural order has been passed by the Arbitrator at London in this regard.

Notice

The Company has issued a legal notice dated June 9, 1999 to Kitty Steels Limited demanding an amount
aggregating approximately Rs. 7.27 million together with interest at the rate of 18 per cent thereon as the
amount due to the Company as consideration for the ‘HR plates’ sold and supplied to it by the Company.
Kitty Steels Limited, vide its letter dated September 1, 1999 to the Company’s advocate, denied its liability
to the Company and also informed the Company that it was registered with BIFR on June 24, 1999.

II. Subsidiaries

Our Company has no subsidiaries.

III. Directors

There is no outstanding litigation, disputes, overdues to banks/financial institutions, defaults against


banks/financial institutions, proceedings initiated for any economic/civil/ any other offences, involving the
Directors of our Company.

IV. Promoters

1. Jindal South West Holdings Limited

There are no contingent liabilities not provided for, outstanding litigation, disputes, non payment of statutory
dues, overdues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues
towards instrument holders like debenture holders, fixed deposits and arrears on cumulative preference shares
issued by the company, defaults in creation of full security as per terms of issue/other liabilities, proceedings
initiated for any economic/civil/ any other offences, involving Jindal South West Holdings Limited.

160
2. Sajjan Jindal

There is no outstanding litigation, disputes, overdues to banks/financial institutions, defaults against


banks/financial institutions, proceedings initiated for any economic/civil/ any other offences, involving Sajjan
Jindal.

V. Group Companies

Except as described below, there are no contingent liabilities not provided for, outstanding litigation, disputes,
non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial
institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on
cumulative preference shares issued by the company, defaults in creation of full security as per terms of
issue/other liabilities, proceedings initiated for any economic/civil/ any other offences, involving our Group
Companies.

1. Jindal Saw Limited

Contingent liabilities (not provided for as of March 31, 2005)

• Counter guarantees given to bankers for guarantee given by them are Rs. 2.29 billon.
• Letters of Credit Outstanding (Net of Liabilities provided in the books) are Rs. 4290.2 million.
• Claims against Jindal Saw Limited not acknowledged as debt (being under dispute) are 0.18 million.
• Guarantees given to banks for credit facilities to Jindal Enterprises LLC (wholly owned subsidiary abroad)
are 581.55 million.
• Liability in respect of corporate guarantee (for 100 per cent EOU unit at Mundra) is Rs. 208.73 million.
• Bank guarantee given to custom authorities for export obligation for export under EPCG scheme is Rs.
39.98 million.

Outstanding litigation as of December 31, 2005


Criminal complaints

• 2 criminal complaints have been filed by the Gujarat Pollution Control Board for alleged violations of
environmental laws.

Civil cases

• 4 cases have been filed before the Gujarat High Court to restrain Jindal Saw Limited from carrying on its
manufacturing and construction activities.
• 1 suit for eviction of Jindal Saw Pipes from the lands where its industry has been set up is pending before the
Gujarat High Court.

Arbitration matters

• 2 arbitration proceedings are pending for an amount aggregating approximately Rs. [●].

2. Jindal Steel & Power Limited

Contingent liabilities (not provided for as of March 31, 2005)

• Estimated amount of contracts remaining to be executed on capital and not provided for (net advances) is
Rs. 8841.52 million.
• Guarantees issued by bankers are Rs. 231.6 million.
• Letters of credit opened by banks are Rs. 4391.13 million.
• Corporate guarantees / undertakings issued on behalf of third parties are Rs. 83.08 million.
• Disputed excise duty and other demands are Rs. 67.50 million.
• Future liability on account of lease rent for unexpired period is Rs. 24.22 million.
• Bonds executed for machinery imports under EPCG scheme are Rs. 1104.51 million.

Outstanding litigation as of December 31, 2005

161
Criminal cases

• 5 cases have been filed by Jindal Steel & Power Limited under section 138 of the Negotiable Instruments
Act, 1881 and otherwise for non-receipt of payment for an amount aggregating approximately Rs. 4.10
million.

Excise cases

• 39 disputes are pending before various forums in respect of an amount aggregating approximately Rs. 78
million.

State and central sales tax cases

• 7 disputes are pending before various forums in respect of an amount aggregating approximately Rs. 13.34
million.

Other taxes

• 6 disputes in relation to entry tax are pending before various forums in respect of an amount aggregating
approximately Rs. 0.98 million.
• 1 notice has been received in relation to gram panchayat local body tax of an amount aggregating
approximately Rs. 0.06 million.

Civil cases

• 3 cases are pending before various forums for an amount aggregating Rs. 3.11 million.

3. Southern Iron and Steel Company Limited

Contingent liabilities (not provided for as of March 31, 2005)

• Claims against SISCOL not acknowledged as debts are Rs. 1.87 million
• Disputed claims, including those pending in courts, for excise and customs duties, sales tax, income tax and
other levies are Rs. 77.99 million

Outstanding Litigation as of December 31, 2005

Excise cases

• 3 disputes are pending before various forums involving an amount aggregating approximately Rs. 77
million.

Cases against the Tamil Nadu Electricity Board

• 1 case is pending before the Madras High Court in relation to the levy of tax on the sale of electricity
involving an amount aggregating approximately Rs. 30.9 million.
• 1 case is pending before the Madras High Court in relation to the collection of BPSC involving an amount
aggregating approximately Rs. 1.6 million.
• 1 case is pending before the Madras High Court in relation to the levy of additional electricity tax where the
amount involved cannot be quantified.

Water charges

• A demand has been raised for the payment of water charges for an amount aggregating approximately Rs.
20.53 million.

Civil cases

• An order of attachment has been issued in respect of an amount aggregating approximately Rs. 10 million.
• 3 petitions are pending before the Madras High Court and the Supreme Court challenging the acquisition of
land for the coke oven plant.

162
Litigation involving labour laws and winding up petition

• 3 disputes are pending before various forums where the amount involved cannot be ascertained.

4. Jindal Stainless Limited

Contingent liabilities (not provided for as of March 31, 2005)

• Counter guarantees given to bankers for guarantees given by them are Rs. 297.8 million.
• Letters of Credit outstanding (Net of liability provided for in the books) are Rs. 2371.2 million.
• Bills/cheques purchased / discounted by bank under BP/BD limit are Rs. 1067.8 million.
• Sales tax against which appeals have been preferred by Jindal Stainless Limited amounts to Rs. 37.9 million.
• Disputed Excise Duty amounts to Rs. 152.1 million.
• Corporate guarantees given to government / banks on behalf of other body corporate against credit
facilities/financial assistance are Rs. 1093.6 million.
• Corporate guarantees given to government / banks on behalf of other body corporate against others are 5.5
million.
• Corporate guarantees given to custom authorities for import under EPCG Scheme are 243.8 million.

Outstanding litigation as of December 31, 2005

Income tax

• 1 dispute is pending before the Delhi High Court in respect of an amount aggregating approximately Rs.
29.8 million.

Excise cases

• 30 disputes are pending before various forums in respect of an amount aggregating approximately Rs.
256.94 million.

Sales tax

• 4 disputes are pending before various forums in respect of an amount aggregating approximately Rs. 37.28
million.

Electricity charges

• 3 disputes are pending before the Andhra Pradesh High Court in respect of an amount aggregating
approximately Rs. 42.76 million.

Civil cases

• 3 disputes are pending before various forums in respect of an amount aggregating approximately Rs. 30.32
million.
• 4 disputes are pending before various forums where the amount involved cannot be ascertained.

Litigation involving labour laws

• 5 disputes are pending before various forums where the amount involved cannot be ascertained.

Other cases

• 1 dispute is pending before the Orissa High Court in respect of an amount aggregating approximately Rs.
32.04 million claimed under the Orissa Rural infrastructure and Socio-Economic Development Act, 2004.

5. Nalwa Sons Investments Limited

Contingent liabilities (not provided for as of March 31, 2005)

163
• Disputed duties / tax liabilities (against which appeals have been preferred by Nalwa Sons Investments
Limited) are 9.37 million.

Outstanding Litigation as of December 31, 2005

Criminal case

• 1 case has been filed by Nalwa Sons Investment Limited under section 138 of the Negotiable Instruments
Act, 1881 for non-receipt of payment for an amount aggregating approximately Rs. 5.3 million.

Cases related to securities

• 3 disputes are pending before various forums in respect of an amount aggregating approximately 0.09
million.
• 12 disputes are pending before various forums where the amount involved cannot be ascertained.

Civil cases

• 5 petitions are pending before the Supreme Court in respect challenging the non-allocation of land to Nalwa
Sons Investments Limited
• 1 claim is pending for an amount aggregating approximately Rs. 0.98 million.
• 4 disputes are pending before various forums where the amount involved cannot be ascertained.

Arbitration matter

• 1 petition under section 9 of the Arbitration and Conciliation Act is pending before the Delhi High Court.

Winding up petition

• 1 winding up petition has been filed by Nalwa Sons Investments Limited in respect of an amount
aggregating approximately Rs. 0.34 million.

VI. Joint Ventures

Except as described below, there are no contingent liabilities not provided for, outstanding litigation, disputes,
non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial
institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on
cumulative preference shares issued by the company, defaults in creation of full security as per terms of
issue/other liabilities, proceedings initiated for any economic/civil/ any other offences, involving our Joint
Ventures.

1. Vijayanagar Minerals Private Limited

There are no contingent liabilities not provided for, outstanding litigation, disputes, non payment of statutory
dues, overdues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues
towards instrument holders like debenture holders, fixed deposits and arrears on cumulative preference shares
issued by the company, defaults in creation of full security as per terms of issue/other liabilities, proceedings
initiated for any economic/civil/ any other offences, involving Jindal South West Holdings Limited.

2. Jindal Praxair Oxygen Company Private Limited

Contingent liabilities (not provided for as of March 31, 2005)

• Bank Guarantees given are Rs. 8.32 million.


• Claims against the Company not acknowledged as debts (including excise duty, sales tax and entry tax
claims) are Rs. Rs. 799.43 million.

Outstanding Litigation

Criminal case

164
• A complaint has been filed by the Inspector of Factories, Bellary against the occupier of the company, Vikas
Sharma in connection with an accident at the factory site. The same is pending before the Bellary Court.

Arbitration matter

• The company has initiated arbitration proceedings against Jindal Vijayanagar Steel Limited (now known as
JSW Steel Limited) wherein the company has made a claim of Rs. 111.94 million for supplies effected from
August 2003 to September 30, 2004. For further information, please refer to page [●] of this Draft Letter of
Offer.

Excise cases

There are 50 excise cases involving the company. The amount involved is Rs. 557.6 million.

3. JSW Energy Limited

Income Tax

There are two income tax claims pending against the company and the amount involved is Rs. 11.66 million.

1. The Company has filed a writ petition vide WP 12605/2005 in Karnataka High Court under article 301,
304 clause 4(a) & (b) and article 14 of the Constitution of India for levy of Special Entry Tax. The
disputed amount is Rs. 10.48 lacs.

2. Bellary Urban Development Authority (BUDA) has demanded betterment fees of Rs. 90.51 lacs from
the Company. The Company contested the claim by filing a Writ Petition in High Court of Karnataka
vide Writ Petition No. 36298/2001 (LB).

3. Karnataka Electricity Regulatory Commission (KERC) passed orders in July 2002 reducing the tariff
applicable for supplies to Karnataka Power Transmission Corporation Limited (KPTCL), with
retrospective effect from August 2000. The Company had filed appeal against the KERC’s orders
before the Karnataka High Court. Hon’ble High Court of Karnataka has passed final orders on 8th
April, 2004 setting aside the KERC’s order and directing the KPTCL to comply with the tariff rate
specified in the order of Government of Karnataka dated 12th May, 1999 and Power Purchase
Agreement (PPA) dated 7th November, 2000. KPTCL has not made any payment till date towards the
arrears of Rs. 105 crores being the tariff difference. KPTCL has filed Special Leave Petition before the
Supreme Court (No.18607 of 2004). The case is yet to be heard.

4. The Industrial Tribunal has awarded a compensation of Rs. 3 lakhs to Mr. Shaikh Shakeel Ahmed
Mohammad Yousuf, the ex-employee for termination of his services. However, Mr. Shaik Shakeel has
refused to accept the compensation and filed a writ petition against the award of compensation given by
Industrial Tribunal, Hubli seeking reinstatement in the company & back wages. Objection to the writ
petition & separate writ petition against the award of compensation has been filed in the Karnataka High
Court by JSW Energy Ltd.

165
GOVERNMENT APPROVALS

In view of the approvals listed below, we can undertake this Issue and our current business activities and no
further material approvals are required from any Government authority or the RBI to continue such activities.
We have received the following Government approvals that are material to our business.

General

1. PAN: AAACJ4323N

2. TAN:

Bellary: BLRJ00511A

Vasind: PNEJO5353F

Tarapur: PNEJ05355A

Mumbai: MUMJ05285A

Factory Approvals

A. Bellary

Approvals relating to manufacture

1. Licence No. P/SM/KA/11/394 (P105449) dated September 10, 1999 issued by the Deputy Chief Controller
of Explosives, Mangalore for use of petroleum class A and class B for Bouser. The licence is valid up to
December 31, 2007.

2. Licence No. KTK:2672 dated May 5, 2005 issued by the Director of Factories and Boilers, Bangalore for the
use of Blast Furnace – I.

3. Licence No. BLR-2/BRP/REV/CR-140/04-05 dated May 27, 2005 issued by the Director of Factories and
Boilers, Bangalore for recognition as manufacturer of steel under the Indian Boiler Regulations, 1950. The
licence is valid for two years up to March 31, 2007.

4. Licence No. SOB/BLR/CFH-11/05-06 dated May 31, 2005 issued by the Joint Director of Boilers,
Bangalore for use of a boiler for the period from May 31, 2005 to May 25, 2006.

5. Consent No. 17 CAT/APC/JVSL/2005-2006/142 dated August 4, 2005 issued by the Karnataka State
Pollution Control Board to operate under Section 21 of the Air (Prevention and Control of Pollution) Act,
1981. The consent is in force till June 30, 2006.

6. Consent No. 17 CAT/WPC/JVSL/2005-2006/142 dated July 23, 2005 issued by the Karnataka State
Pollution Control Board to operate under Section 26 of the Water (Prevention and Control of Pollution) Act,
1974. The consent is in force till June 30, 2006.

7. Consent No. 107/KSPCB/HWM/306 dated July 29, 2005 issued by the Karnataka State Pollution Control
Board for handling of hazardous wastes under the Hazardous Waste (Management & Handling) Rules, 1989
and Amendment Rules, 2003.

8. Consent No. CFE-CELL/JVSL(TUS)/EIA-173/2004-2005/63 dated January 17, 2005 the Karnataka State
Pollution Control Board for establishment of 5.28 MTPA truck unloading system to handle iron ore to raw
material handling system, which will remain in effect till January 16, 2008.

9. Consent No. 17 CAT/APC/JSW/2005-2006/184 dated September 1, 2005 issued by the Karnataka State
Pollution Control Board to JSW Power Limited (since merged with the Company) under Section 21 of the
Air (Prevention and Control of Pollution) Act, 1981 to operate its power plant. The consent is in force till
June 30, 2006.

166
10. Consent No. 17 CAT/WPC/JSW/2005-2006/183 dated September 1, 2005 issued by the Karnataka State
Pollution Control Board to JSW Power Limited (since merged with the Company) under Section 26 of the
Water (Prevention and Control of Pollution) Act, 1974 to operate its power plant. The consent is in force till
June 30, 2006.

11. Consent No. KSPCB/HW/1575 dated December 17, 2005 issued by the Karnataka State Pollution Control
Board to JSW Power Limited (since merged with the Company) for handling of hazardous wastes under the
Hazardous Waste (Management & Handling) Rules, 1989 and Amendment Rules, 2003. The consent is in
force till June 30, 2008.

Approvals relating to employment and labour

1. Certificate of Registration No. ALCD/CLA/RGN-87/94-95 dated September 19, 1994, issued by the
Assitant Labour Commissioner, Davanagere, under Section 7 of the Contract Labour (Regulation &
Abolition) Act, 1970.

2. Order No. KN/16863/PF/Exempt/Relaxation Order/284/96 dated July 26, 1996 issued by the Regional
Provident Fund Commissioner, Bangalore relaxing requirements in relation to provident fund.

B. Vasind

Approvals relating to manufacture

1. Factory Licence No. KALYAN/27105/16-A dated February 4, 2002 issued by the Joint Director Industrial
Safety and Health, Kalyan. The license has been renewed till 2005. The Company has filed an application
dated October 28, 2005 for renewal of the same.

2. Licence No. PV (WC) S-626/MS/MR/TH/PVS-170 dated January 18, 1994 issued by the Joint Chief
Controller of Explosives, Thane to store compressed gas in pressure vessel or vessels for LPG, which shall
remain in force till March 31, 2006.

3. Licence No. PV (WC) S-626/MS/MR/TH/PVS-200 dated September 18, 1996 issued by the Chief
Controller of Explosives, Thane to store hydrogen gas, which shall remain in force till March 31, 2006.

4. License No. P/HQ/MH/15/5266 (P16322) dated October 23, 2002 issued by the Joint Chief Controller of
Explosives, Thane to import and store 352 KL of petroleum, which shall remain in force till December 31,
2006.

5. License No. G/WC/MH/06/1481 dated August 24, 2004 issued by the Joint Chief Controller of Explosives,
Thane to store compressed gas in cylinders, which shall remain in force till March 31, 2007.

6. Approval No. MR/TH/HP-496 dated October 11, 2000 issued by the Chief Controller of Explosives, Navi
Mumbai for the storage of 42 KL of petroleum class C.

7. Approval No. MR/TH/HP-497 dated October 11, 2000 issued by the Chief Controller of Explosives, Navi
Mumbai for the storage of 36 KL of petroleum class C.

8. Certificate for the use of Boilers issued by the Director of Steam Boiler Department to use the following
Boiler:

• Boiler Registry No. MR/11620 for a period extending from May 30, 2005 to May 29, 2006 by
certificate No. 877 dated October 8, 2005.

9. Certificate for the use of Boilers issued by the Bombay Boiler Inspection Department to use the following
Boiler:

• Boiler Registry No. MR/12629 for a period extending from July 26, 2005 to July 25, 2006 by certificate
No. 95 dated July 30, 2005.

167
10. Amendment No. MPCB/Amendment/Kalyan/224/CC-541/B-3183 dated September 17, 2004 to Consent No.
BO/ROK-210/Ulhas/Thane/CC-674 dated July 30, 2001 and Consent No. MPCB/WPAE/Kalyan/02/CC-05
dated January 6, 2004 to handle hazardous wastes like hydrochloric acid, ETP line sludge, zinc dress, zinc
dust, waste oil and mud under section 26 of the Water (Prevention and Control of Pollution) Act, 1974,
section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste
(Management & Handling) Rules, 1989 and Amendment Rules, 2003.

C. Tarapur

Approvals relating to manufacture

1. Factory Licence No. VASAI/2M(i)/350/1/44 dated November 18, 1999 issued by the Chief Inspector of
Factories, Mumbai. The licence has been renewed till December 31, 2007.

2. License No. G/WC/MH/06/1367 (CG14431) dated March 24, 2004 issued by the Chief Controller of
Explosives, Navi Mumbai to store compressed gas in cylinders, which shall remain in force till March 31,
2006.

3. License No. S/HO/MH/03/449 (S710) dated October 17, 2005 issued by the Chief Controller of Explosives,
Navi Mumbai for addition / alteration in LPG Storage, which shall remain in force till March 31, 2006.

4. Approval No. AIP/WC/MH/15 2229 (P125503) dated August 12, 2004 issued by the Department of
Explosives for the storage of petroleum class C (furnace oil).

5. Approval No. MR/TH-HP 419 dated August 7, 2000 issued by the Joint Chief Controller of Explosives,
Navi Mumbai to store petroleum class C (furnace oil).

6. Approval No. MR/TH-HP 420 dated August 7, 2000 issued by the Joint Chief Controller of Explosives,
Navi Mumbai to store petroleum products (LDO).

7. Letter No. ENV(NOC)2002/1327/CR190/01 dated February 11, 2003 by the Deputy Secretary to the
Environment Department of the Government of Maharashtra granting ‘no objection’ of the department to
install 7.6 MW captive power generation plant.

8. Certificates for the use of Boilers issued by the Bombay Boiler Inspection Department to use the following
Boilers:

• Boiler Registry No. MR/12628 for a period extending from March 10, 2005 to March 9, 2006 by
certificate No 2273 dated March 16, 2005;
• Boiler Registry No. MR/13362 for a period extending from October 27, 2005 to October 26, 2006 by
certificate No. 889 dated November 9, 2005.

9. Consent No. BO/CC/Thane/J-S/ Ac-37 dated January 9, 2002 issued by the Maharashtra Pollution Control
Board to operate captive power generation under section 25 of the Water (Prevention and Control of
Pollution) Act, 1974, section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and the
Hazardous Waste (Management & Handling) Rules, 1989 and Amendment Rules, 2000. The consent is in
force till the commissioning of the plant.

10. Consent No. BO/CC/Thane/ 834/ AX-267 dated April 30, 1998 issued by the Maharashtra Pollution Control
Board to manufacture of galvanized plain and corrugated sheets and tin black plate under section 25 of the
Water (Prevention and Control of Pollution) Act, 1974, section 21 of the Air (Prevention and Control of
Pollution) Act, 1981 and the Hazardous Waste (Management & Handling) Rules, 1989 and Amendment
Rules, 2000. The consent is in force till the commissioning of the plant.

Service Tax

Bellary

Service tax registration No. 320202-0914 issued by the Ministry of Finance, Government of India for collection
of service tax on goods transport agency, erection and commission services and auxiliary services.

168
Vasind

Service tax code No. AAACJ4323NST003 issued by the Ministry of Finance, Government of India for collection
of service tax on goods transport agency, erection and commission services and auxiliary services.

Tarapur

Service tax registration No. AAACJ4243NST004 issued by the Ministry of Finance, Government of India for
collection of service tax on goods transport agency, erection and commission services and auxiliary services.

Mumbai

Service tax distributor registration No. ISD/40 issued by the Ministry of Finance, Government of India.

Excise

1) Central Excise Registrate Certificate dated July 12, 2005 issued by the Assistant Commissoner of Central
Excise, Bellary under Rule 9 of the Central Excise Rules, 2002 registering the Bellary factory for
manufacturing of excisable goods; the factory was allotted the Registration No. AAACJ4323NXM001.

2) Licence No. EXE/DST/BLY.RSII/04/2005-06 dated June 30, 2005 issued by the Deputy Commossioner of
Excise (State), Bangalore for usage of rectified spirit for industrial purpose. The said licence is valid up to
June 30, 2006.

3) Licence No. ECE/MOL/OP/05/2004-05 dated March 4, 2005 issued by the Commossioner of Excise,
Bangalore for for usage of molasses for industrial purpose.

4) Central Excise Registrate Certificate dated July 6, 2005 issued by the Assistant Commissoner of Central
Excise, Kalyan under Rule 9 of the Central Excise Rules, 2002 registering the Vasind factory for
manufacture of excisable goods; the factory was allotted the Registration No. AAACJ4323NXM002.

5) Central Excise Registrate Certificate dated July 7, 2005 issued by the Assistant Commissoner of Central
Excise, Thane under Rule 9 of the Central Excise Rules, 2002 registering the Tarapur factory for
manufacture of excisable goods; the factory was allotted the Registration No. AAACJ4323NXM003.

6) Central Excise Registrate Certificate dated August 31, 2005 issued by the Assistant Commissoner of Central
Excise, Faridabad under Rule 9 of the Central Excise Rules, 2002 registering the Faridabad depot for
operating a manufacturer’s depot; the godown was allotted the Registration No. AAACJ4323NXD012.

7) Central Excise Registrate Certificate dated August 10, 2005 issued by the Deputy Commissoner of Central
Excise, New Delhi under Rule 9 of the Central Excise Rules, 2002 registering the New Delhi depot for
operating a manufacturer’s depot; the godown was allotted the Registration No. AAACJ4323NXD011.

8) Central Excise Registrate Certificate dated May 2, 2005 issued by the Assistant Commissoner of Central
Excise, Ahmedabad under Rule 9 of the Central Excise Rules, 2002 registering the Ahmedabad depot for
operating a manufacturer’s depot; the godown was allotted the Registration No. AAACJ4323NXD009.

9) Central Excise Registrate Certificate dated December 2, 2005 issued by the Assistant Commissoner of
Central Excise, Hyderabad under Rule 9 of the Central Excise Rules, 2002 registering the Hyderabad depot
for operating a manufacturer’s depot; the godown was allotted the Registration No. AAACJ4323NXD005.

10) Central Excise Registrate Certificate dated July 12, 2005 issued by the Deputy Commissoner of Central
Excise, Ghaziabad under Rule 9 of the Central Excise Rules, 2002 registering the Ghaziabad depot for
operating a manufacturer’s depot; the godown was allotted the Registration No. AAACJ4323NXD008.

Sales tax and VAT

A. Maharashtra

169
1. Registration Certificate No. 400026/C/1048 dated December 12, 1998 issued by the Sales Tax Officer,
Churchgate, Mumbai under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for
resale of iron and steel, ferrous and non-ferrous metals, with effect from November 1, 1998.

2. Registration Certificate No. 400026/S/1192 dated December 4, 1998 issued by the Sales Tax Officer,
Churchgate, Mumbai, under sections 22 and 22A of the Bombay Sales Tax Act, 1959, with effect from
November 1, 1998.

3. Registration Certificate No. 421604/S/104 dated March 4, 2005 issued by the Assistant Commissioner of
Sales Tax, Kalyan, under sections 22 and 22A of the Bombay Sales Tax Act, 1959, with effect from
February 4, 2005.

4. Registration Certificate No. 401506/S/1179 dated March 5, 2005 issued by the Registration Officer, Palghar,
under sections 22 and 22A of the Bombay Sales Tax Act, 1959, with effect from February 4, 2005.

B. Karnataka

1. Registration Certificate No. 80256715 dated August 17, 1994 issued by the Assistant Commissioner of
Commercial Taxes, Bangalore under rule 5 of the Central Sales Tax (Registration and Turnover) Rules,
1957, with effect from August 3, 1994.

2. Registration Certificate No. 80256712 dated August 17, 1994 issued by the Assistant Commissioner of
Commercial Taxes, Bangalore under the Karnataka Sales Tax Act, 1957, with effect from August 3, 1994.

3. Provisional VAT Registration dated April 6, 2003 issued by the Deputy Commissioner of Commercial
Taxes (Assessments), Bellary allotting Tax Identification Number (“TIN”) 29630016301.

4. Entitlement certificate dated June 4, 2005 issued by the Joint Commissioner of Commercial Taxes, Bellary
under section 5 of the Karnataka Value Added Tax Act, 2003 to avail tax incentive of Rs. 36.65 billion for a
period of 14 years from March 29, 1997 to March 29, 2011. The Company is eligible to avail the un-availed
balance of tax incentive of Rs.28.89 billion for remaining period.

5. Notification No. FD 12 CSL 99 (1) dated August 4, 1999 further amended by Notification No. FD 89 CSL
2001(4) dated January 5, 2002 issued by the Government of Karnataka under section 19-C of the Karnataka
Sales Tax Act, 1957 exempting the tax payable on the purchase of raw materials and consumables which are
liable to tax at the purchase point under clause (b) of sub section (3) of section 5 of the Act for a period of 14
years.

6. Notification No. FD 89 CSL 2001(6) dated January 5, 2002 issued by the Government of Karnataka under
section 19-C of the Karnataka Sales Tax Act, 1957 exempting the tax payable on the sale of finished goods,
waste products and by-products including coal fines, coke fines, pellets fine iron ore rejects, lime fines, lime
stone fines, dolomite fines, quartzite fines and flux fines, corex gas, cold rigs, granulated corex slag, corex
sludge, corex dumped slag, corex dust, muck, debris, BCF gas, BOF slag and BOP sludge, crop ends, scrap,
mills scale, flue tunnel scale, jam spoilage and skulls manufactured for a period of 14 years from the date of
commencement of commercial production, subject to fulfillment of certain conditions mentioned therein.

7. Notification No. FD 89 CSL 2001(7) dated January 5, 2002 issued by the Government of Karnataka under
section 19-C of the Karnataka Sales Tax Act, 1957 exempting the tax payable in respect of goods
manufactured and sold in course of interstate trade or commerce for a period of 14 years from the date of
commencement of commercial production.

8. Notification No. FD 89 CSL 2001(8) dated January 5, 2002 issued by the Government of Karnataka under
section 5 of the Karnataka Sales Tax Act, 1957 exempting the tax payable by a registered dealer in
Karnataka for the sale of plant & machinary equipment only if each individual purchase invoice is of a value
greater than Rs. 10 million for a period of 14 years from October 11, 1994.

9. Notification No. FD 89 CSL 2001(10) dated January 5, 2002 issued by the Government of Karnataka under
section 19-C of the Karnataka Sales Tax Act, 1957 exempting the tax payable by a registered dealer in
Karnataka on his sales of raw materials and consumables effected to the Company for a period of 14 years
from the date of commencement of commercial production for each phase of the project subject to
fulfillment of certain conditions mentioned therein from May 25, 1999.

170
10. Notification No. FD 293 CSL 2003(I) dated December 3, 2003 issued by the Government of Karnataka
under section 8A of the Karnataka Sales Tax Act, 1957 exempting the tax payable on the sale of slag cement
manufactured by the company from the date of commencement of production in terms of GO No. CI 66 SPI
2003 dated 04.09.03.

11. Notification No. FD 293 CSL 2003(II) dated December 3, 2003 issued by the Government of Karnataka
under section 8 (5) section (8) of the CST Act-1956 read with section 19 C of the Karnataka Sales Tax Act,
1957 exempting the tax payable on the sale of slag cement manufactured by the company.

12. Notification No. FD 293 CSL 2003(III) dated December 3, 2003 issued by the Government of Karnataka
under section 8 A of the KST Act 1957 exempting the tax payable on the sale of raw materials and
consumables for use in the manufacture of slag cement manufactured by the company.

13. Notification No. FD 56 CSL 2005(1) dated April 18, 2005 issued by the Government of Karnataka under
section 5 (2) of the Karnataka Value Added Tax Act, 2005 for the refund of net tax payable.

14. Notification No. FD 56 CSL 2005(3) dated April 18, 2005 issued by the Government of Karnataka under
section 5 (2) of the Karnataka Value Added Tax Act, 2005 for the refund of tax paid on the goods
purchased.

15. Notification No. FD 56 CSL 2005(4) dated April 18, 2005 issued by the Government of Karnataka under
section 8 (5) of the Central Sales Tax Act, 1956 for the exemption in respect of interstate sales.

C. Assam

1. Registration Certificate No. Gau/CST/7956 dated February 17, 2005 issued by the Superintendent of Taxes,
Gauhati under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for resale of GP, CR,
GC sheets and coils, HR and SCR plates, patta & trimming, GP trimming, HR and CR leader end, HR, CR,
GP scrap, HR, CR, GP and GC coil ends and cut sheets, with effect from February 4, 2005.

2. Registration Certificate No. Gau/AGST/A/3904 dated February 17, 2005 issued by the Superintendent of
Taxes, Gauhati under section 11 of the Assam General Sales Tax Act, 1993 for dealing in GP & CR Sheets
& coils, GC sheets, HR & CR plates, patta & trimming, GP trimming, HR & CR leader end, HR & CR &
GP scrap, HR, CR, GP and GC coil ends & cut sheets, with effect from February 5, 2005.

3. VAT Registration Certificate dated February 17, 2005 issued by the Superintendent of Taxes, Gauhati
allotting TIN 1854037775 under the Assam Value Added Sales Tax Act, 2002, with effect from February 5,
2005.

D. Andhra Pradesh

1. VAT Registration Certificate dated July 12, 2002 issued by the Commercial Tax Officer, Hyderabad
allotting TIN 28270149921 under section 18 of the Andhra Pradesh Value Added Tax Act, 2002, with effect
from April 1, 2005.

E. West Bengal

1. Registration Certificate No. 19711454294 dated June 24, 2003 issued by the Assistant Commissioner of
Commercial Taxes, Howrah under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957
for resale of iron and steel, with effect from May 2, 2003.

2. Registration Certificate No. 197114544197 dated June 24, 2003 issued by the Assistant Commissioner of
Commercial Taxes, Howrah under rule 8 of the West Bengal Sales Tax Rules, 1995 as importer-reseller of
iron and steel, with effect from April 30, 2003.

F. Tamil Nadu

1. Registration Certificate No. 1561032/97-98 dated August 11, 1997 issued by the Commercial Tax Officer,
Chennai under section 20 of the Tamil Nadu General Sales Tax Act, 1959 as a dealer, with effect from July
30, 1997.

171
2. Registration Certificate No. 700782 dated August 11, 1997 issued by the Commercial Tax Officer, Chennai
under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for, resale of HR coils, sheets,
plates and pig iron, with effect from July 30, 1997.

G. Haryana

1. Registration Certificate No. 06331323969 dated April 6, 2005 issued by the Notified Authority, Faridabad
under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957, with effect from February 9,
2005.

2. VAT Registration Certificate dated April 6, 2005 issued by Assessing Authority, Faridabad allotting TIN
06331323969 under section 11 of the Haryana Value Added Tax Act, 2003, with effect from February 9,
2005.

H. Gujarat

1. Registration Certificate No. Guj-99916501 dated March 2, 2005 issued by the Sales Tax Officer,
Ahmedabad under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 as re-seller
manufacturer, with effect from August 24, 2003.

2. Registration Certificate No. 0729027996 dated February 3, 2005 issued by the Sales Tax Officer,
Ahmedabad under rule 10 of the Gujarat Sales Tax Rules, 1970 as manufacturer, with effect from August
24, 2003.

I. Rajasthan

1. Registration Certificate No. 08021760170 dated February 15, 2005 issued by the Notified Authority, Jaipur
under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 as wholesaler and retailer of
iron and steel, GP/GC sheets, GP coils, CR coils, CR sheets, HR sheets, HR coils, GC coils, with effect from
February 15, 2005.

2. Registration Certificate No. 08021760170 dated February 15, 2005 issued by the Assistant Commissioner of
Sales Tax, Jaipur under rule 18 of the Rajasthan Sales Tax Rules, 1994 as wholesaler and retailer of iron and
steel, GP/GC sheets, GP coils, CR coils, CR sheets, HR sheets, HR coils, GC coils, with effect from
Febraury 4, 2005.

J. Uttar Pradesh

1. Registration Certificate No. GC 5053739 dated October 8, 2002 issued by the Commercial Tax Officer,
Ghaziabad, under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for import and
sale of iron and steel, with effect from August 14, 2002.

2. Registration Certificate No. GC 0086788 dated October 8, 2002 issued by the Commercial Tax Officer,
Ghaziabad, under rule 55 of the Uttar Pradesh Commercial Taxes Rules, 1957, with effect from August 12,
2002.

K. Bihar

1. Registration Certificate dated May 4, 2004 issued by the Deputy Commissioner of Commercial Taxes, Patna
allotting CST TIN 10122442179 under section 7 of the Central Sales Tax Act, 1986, for resale of iron and
steel, with effect from April 15, 2004.

2. VAT Registration Certificate dated April 20, 2004 issued by the Deputy Commissioner of Commercial
Taxes, Patna allotting TIN 10122442082 under section 19 of the Bihar Value Added Tax Ordinance, 2005,
with effect from April 15, 2004.

L. Delhi
1. Registration Certificate No. LC/063/07560283404/0305 dated March 28, 2005 issued by the Sales Tax
Officer, Delhi under rule 5 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for resale of
iron and steel, with effect from March 2, 2005.

172
2. Registration Certificate No. LC/063/07560283404/0305 dated March 28, 2005 issued by the Sales Tax
Officer, Delhi under the Delhi Sales Tax Act, 1975 for sale of iron and steel, with effect from March 2,
2005.

Entry tax

1. Entry Tax Registration Certificate issued by the Deputy Commissioner of Commercial Taxes, Patna allotting
TIN 10122442276 under section 5 of the Bihar Special Tax on Entry of Goods into Local Area for
Consumption, use or sale therein Ordinance, 1993, with effect from February 9, 2005.

2. Entry Tax Registration Certificate No. BN/ET/XXIV/553/94-95 dated August 17, 1994 issued by the
Assistant Commissioner of Commercial Taxes, Bangalore, with effect from June 3, 1994.

3. Certificate No. ID.E3.ENTRY.EIISL.04-05 dated June 29, 2004 issued by the Department of Industries &
Commerce, Government of Karnataka certifying the eligibilty of a unit for entry tax exemption on plant and
machinery, equipments purchased by the unit during the implementation of the project for a period of 3
years from May 9, 2003.

4. Notification No. FD 89 CSL 2001(9) dated January 5, 2002 issued by the Government of Karnataka under
section 11-A of the Karnataka Tax on Entry of Goods Act, 1979, exempting the tax payable on entry of plant
and machinery equipments where value of goods in each individual purchases invoice is more than Rs. 10
million, into a local area caused by an integrated steel plant of not less than 1.25 million tons per annum
capacity, established in Karnataka for manufacture of such goods for a period of 14 years from February 14,
1995, subject to fulfillment of certain conditions specified therein.

5. Notification No. FD 12 CSL 99 (2) dated August 4, 1999 issued by the Government of Karnataka under
section 11-A of the Karnataka Tax on Entry of Goods Act, 1979, exempting the tax payable on entry of Raw
materials and consumables caused by the integrated steel plant of 1.25 MTPA capacity for use in the
manufacture of finished goods for a period of 14 years

6. FD 293 CSL 2003(IV) dated 03.12.03 issued by the Government of Karnataka under section 11-A of the
Karnataka Tax on Entry of Goods Act, 1979, exempting the tax payable on entry of Raw ,materials and
components caused by the company in the manufacture of Slag cement in terms o0f Govt. order No. CI 66
SPI 2003 dated 04.09.03.

Approvals applied for but not yet received

The Company has applied for the following approvals, but is yet to receive them.

1. The Joint Director of Steam Boilers, Mumbai has by letter dated October 1, 2005 informed the Company
that the Boiler Registry No. MR/13431 has been inspected and found satisfactory and that the working
certificate in respect of the same will be issued upon payment of the requisite charges. The same have been
paid by the Company on Ocotber 15, 2005.

Approvals that have expired

The following approvals have expired or lapsed:

Licence No. P/HQ/MH/15/1641 (P6955) issued by the Joint Chief Controller of Explosives, Navi Mumbai to
store petroleum class C in bulk. The Company has applied for renewal of the licence till December 2006.

1. Licence No. 23/2002 dated April 8, 2002 by the Additional Collector Thane, for storage of solvents like
furnace oil and LDO, which was in force till April 7, 2005. The Company has applied for renewal on April
4, 2005.

2. Consent No. Bo/TB/WPAE/Thane-140/CC384 dated July 14, 2004 issued by the Maharashtra Pollution
Control Board to manufacture galvanised coild, corrugated sheets and tin black plates under section 25 of
the Water (Prevention and Control of Pollution) Act, 1974, section 21 of the Air (Prevention and Control of
Pollution) Act, 1981 and the Hazardous Waste (Management & Handling) Rules, 1989 and Amendment

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Rules, 2000. The consent was in force till May 31, 2005. The Company has applied for the renewal of the
same.

3. Application No. JSWSL/VDN/A&LA/2005 dated November 29, 2005 to the Deputy Chief Controller of
Explosives, Bangalore for renewal of Licence No. MYS:4055 to store petroleum at Bellary. The present
licence expired on December 31, 2005.

4. Application No. JVSL/VDN/A&LA/05-06 dated October 5, 2005 to the Commissioner of Excise, Bangalore
for renewal of Licence No. ECE/MOL/OP/05/2004-05 dated March 4, 2005 for storage of molasses for
industrial use. The said licence expired on October 31, 2005.

5. Certificate of Registration No. ACL/KYN/ELA/RC-227/92 dated November 17, 1992, issued by the
Registering and Licensing Officer, Kalyan under section 7 of the Contract Labour (Regulation & Abolition)
Act, 1970. The certificate has expired on December 31, 2005. The Company has applied for renewal of the
same.

6. Licence No. P-12(7) 4595/MR/TH/280 dated July 19, 1999 issued by the Chief Controller of Explosives to
store petroleum classes B and C, which has expired on December 31, 2005.

7. Consent No. BO/ROK-210/Ulhas/Thane/CC-674 dated July 30, 2001 issued by the Maharashtra Pollution
Control Board to operate under section 26 of the Water (Prevention and Control of Pollution) Act, 1974,
section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste
(Management & Handling) Rules, 1989 and Amendment Rules, 2000. The consent was in force till
December 31, 2005.

8. Consent No. MPCB/WPAE/Kalyan/02/CC-05 dated January 6, 2004 issued by the Maharashtra Pollution
Control Board to handle hazardous wastes like zinc coated products and zinc dress under section 26 of the
Water (Prevention and Control of Pollution) Act, 1974, Section 21 of the Air (Prevention and Control of
Pollution) Act, 1981 and the Hazardous Waste (Management & Handling) Rules, 1989 and Amendment
Rules, 2000. The consent was in force till December 31, 2005.

9. Consent No. MPCB/WPAE/EIC-TN-0171-05/Thane-68 dated February 15, 2005 issued by the Member
Secretary, Maharahstra Pollution Control Board for generation of power through a captive power plant. The
consent was in force till December 31, 2005.

10. License for FO/HSD Storage (FO-340 KL & HSD-50KL) under the Petroleum Act, 1934. The present
licence expired on December 31, 2005.

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STATUTORY AND OTHER INFORMATION

Authority for the Issue

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 20,
2006 it has been decided to make the following offer to the Equity Shareholders of the Company with a right to
renounce.

Prohibition by SEBI

Neither we, nor our Directors or the Promoter Group Companies, or companies with which our Directors are
associated with as directors or promoters, have been prohibited from accessing or operating in the capital
markets under any order or direction passed by SEBI.

Eligibility for the Issue

JSW Steel Limited is an existing company registered under the Companies Act whose Equity Shares are listed on
BSE, NSE and BgSE. It is eligible to offer this Issue in terms of Clause 2.4.1(iv) of the SEBI DIP Guidelines.
The Company, its Promoter, its Directors or any of the Company’s associates or group companies are currently
not prohibited from accessing the capital market under any order or direction passed by SEBI. Further the
Promoter, their relatives (as per Companies Act), the Company, group companies, associate companies are not
detained as wilful defaulters by RBI / Government authorities.

Disclaimer Clause

AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO THE
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY
UNDERSTOOD THAT THE SUBMISSION OF THIS DRAFT LETTER OF OFFER TO SEBI SHOULD
NOT, IN ANY WAY BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN CLEARED OR
APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY EITHER FOR THE
FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS
PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR
OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER ICICI
SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THIS DRAFT
LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI
GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME
BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE
CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE
FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION
IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE
DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY
ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGER SBI
CAPITAL MARKETS LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE
DATED [●], 2006 WHICH READS AS FOLLOWS:

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO


LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES WITH
COLLABORATORS, ETC. AND OTHER MATERIALS MORE PARTICULARLY
REFERRED TO IN THE ANNEXURE HERETO IN CONNECTION WITH THE
FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE


COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES,
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS
OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS
MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE
COMPANY;

WE CONFIRM THAT:

175
a) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH
THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO
THE GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT
AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY
COMPLIED WITH;

c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR
AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED
DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE;

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN


THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH
REGISTRATION IS VALID

The filing of this Draft Letter of Offer does not, however, absolve the Company from any liabilities under
Section 63 or Section 68 of the Companies Act or from the requirement of obtaining such statutory or other
clearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up, at
any point of time, with the Lead Manager any irregularities or lapses in this Draft Letter of Offer.

Caution

The Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft
Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the
instance of the Company and anyone placing reliance on any other source of information would be doing so at
his own risk.

The Lead Manager and the Company shall make all information available to the Equity Shareholders and no
selective or additional information would be available for a section of the Equity Shareholders in any manner
whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer
with SEBI.

Disclaimer with respect to jurisdiction

This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and
regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate
court(s) in Mumbai, India only.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for
that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations and SEBI has given
its observations. Accordingly, the equity shares represented thereby may not be offered or sold, directly or
indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with the
legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Letter of Offer nor any sale
hereunder, shall under any circumstances create any implication that there has been no change in our affairs from
the date hereof or that the information contained herein is correct as of any time subsequent to this date.

The Draft Letter of Offer has been filed with SEBI, Mittal Court, ‘A’ Wing, Nariman Point, Mumbai 400021, for
its observations. After SEBI gives its observations, the final Letter of Offer will be filed with the Designated
Stock Exchange as per the provisions of the Act.

Disclaimer Clause of the BSE

Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated [•] permission to the Issuer to
use the Exchange’s name in this Draft Letter of Offer as one of the Stock Exchanges on which this Issuer’s
securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its limited
internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. The Exchange does
not in any manner: (i) warrant, certify or endorse the correctness or completeness of any of the contents of this
Draft Letter of Offer; or (ii) warrant that this Issuer’s securities will be listed or will continue to be listed on the
Exchange; or (iii) take any responsibility for the financial or other soundness of this Issuer, its Promoters, its
management or any scheme or project of this Issuer; and its should not for any reason be deemed or construed

176
that this Draft Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply
for or otherwise acquires any securities of this Issuer may do so pursuant to independent inquiry, investigation
and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be
suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of
anything stated or omitted to be stated herein or for any other reason whatsoever.

Disclaimer Clause of the NSE

As required, a copy of this Draft Letter of Offer has been submitted to National Stock Exchange of India Limited
(hereinafter referred to as NSE). NSE has given vide its letter dated [•] granted permission to the Issuer to use
the Exchange’s name in this Draft Letter of Offer as one of the Stock Exchanges on which the Issuer’s securities
are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its limited internal purpose
of deciding on the matter of granting the aforesaid permission to the Issuer. It is to be distinctly understood that
the aforesaid permission given by NSE should not in any way be deemed or construed that the draft letter of offer
has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this draft letter of offer; nor does it warrant that the Issuer’s securities will
be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or
other soundness of the Issuer, its Promoters, its management or any scheme or project of the Issuer.

Every person who desires to apply for or otherwise acquire any securities of the Issuer may do so pursuant to
independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by
reason of any loss which may be suffered by such person consequent to or in connection with such
subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason
whatsoever.

Disclaimer Clause of the Bangalore Stock Exchange

As required, a copy of this Draft Letter of Offer has been submitted to Bangalore Stock Exchange Limited.
Bangalore Stock Exchange Limited has given vide its letter dated [•], permission to the Bank to use Bangalore
Stock Exchange Limited’s name in this Draft Letter of Offer as one of the stock exchanges on which our further
securities are proposed to be listed. Bangalore Stock Exchange has scrutinised this Draft Letter of Offer for its
limited internal purpose of deciding on the matter of granting the aforesaid permission to us. Bangalore Stock
Exchange Limited does not in any manner:

1. Warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of
Offer; or

2. Warrant that this Company’s securities will be listed or will continue to be listed on Bangalore Stock
Exchange; or

3. Take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this Draft Letter of Offerhas been cleared
or approved by Bangalore Stock Exchange Limited. Every Person who desires to apply for or otherwise acquires
any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall
not have any claim against Bangalore Stock Exchange whatsoever by reason of any loss which may be suffered
by such Person consequent to or in connection with such subscription/acquisition whether by reason of anything
stated or omitted to be stated herein or for any other reason whatsoever.

Filing

This Draft Letter of Offer was filed with SEBI, Mittal Court, Nariman Point, Mumbai 400 021. All the legal
requirements applicable till the date of filing the Letter of Offer with the Stock Exchanges have been complied
with.

A copy of the Letter of Offer, required to be filed under SEBI DIP Guidelines would be filed with ROC located
at 100, Everest, Marine Drive, Mumbai 400 002.

177
Listing

The existing Equity Shares are listed on the BSE, NSE and BgSE. The Company has made applications to the
BSE, NSE and BgSE for permission to deal in and for an official quotation in respect of the Equity Shares and
Warrants being offered in terms of this Draft Letter of Offer. The Company has received in-principle approvals
from BSE, NSE and BgSE by letters dated [•], [•] and [•] respectively. The Company will apply to the BSE,
NSE and BgSE for listing of the Equity Shares and Warrants to be issued pursuant to this Issue.

If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock
Exchanges mentioned above, within 42 days from the Issue Closing Date, the Company shall forthwith repay,
without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is
not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of
the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable
to repay the money with interest as prescribed under the Section 73 of the Act.

Consents

Consents in writing of the Auditors, Lead Manager, Co-Lead Manager, Legal Advisors, Registrar to the Issue
and Banker to the Issue to act in their respective capacities have been obtained and filed with SEBI, along with a
copy of the Draft Letter of Offer and such consents have not been withdrawn up to the time of delivery of this
Letter of Offer for registration with the stock exchanges.

The Auditors of the Company have given their written consent for the inclusion of their Report in the form and
content as appearing in this Draft Letter of Offer and such consents and reports have not been withdrawn up to
the time of delivery of this Draft Letter of Offer for registration to the Registrar of Companies, Maharashtra.

Lodha & Co., auditors have given their written consent for inclusion of income tax benefits in the form and
content as appearing in this Draft Letter of Offer, accruing to the Company and its members.

To the best of our knowledge there are no other consents required for making this Issue. However, should the
need arise, necessary consents shall be obtained by us.

Expert Opinion, if any

Nil

Expenses of the Issue

The expenses of the Issue payable by the Company including brokerage, fees and reimbursement to the Lead
Manager, Registrars, printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are
estimated at Rs. [●] million (around [●]% of the total Issue size) and will be met out of the proceeds of the Issue.

Fees Payable to the Lead Manager and Co-Lead Manager to the Issue

The fees payable to the Lead Manager to the Issue are set out in the Memorandum of Understanding entered into
by the Company with Lead Manager and Co-Lead Manager, copies of which are available for inspection at the
Registered Office of the Company.

Fees Payable to the Registrars to the Issue

The fee payable to the Registrars to the Issue is as set out in the relevant documents, copies of which are kept
open for inspection at the Registered Office of the Company.

Previous Issues by the Company

The Company has not undertaken any previous public or rights issue during the last five years.

Date of listing on the Stock Exchange

The Equity Shares of our Company were listed on the Bombay Stock Exchange on May 2, 1995. The Equity
Shares were also listed on the Bangalore Stock Exchange, Ahmedabad Stock Exchange, Calcutta Stock

178
Exchange, Delhi Stock Exchange, Madras Stock Exchange, Mangalore Stock Exchange, Cochin Stock Exchange
and Hyderabad Stock Exchange. Thereafter, the Equity Shares were listed on the National Stock Exchange of
India Limited. Subsequently, the Equity Shares of our Company have been delisted form all stock exchanges
save and except the NSE, BSE and BgSE.

Capital Structure

Issues for consideration other than cash

Except issuance of shares pursuant to merger, amalgamations, scheme of arrangements as stated in the Capital
Structure on page [•] of this Draft Letter of Offer, the Company has not issued Equity Shares for consideration
other than cash or out of revaluation reserves within the two years preceding the date of this Draft Letter of
Offer.

Option to Subscribe

Other than the present Issue, the Company has not given any person any option to subscribe to the shares of the
Company.

Stock market data for equity shares of the Company

Please refer to page [•] of the Draft Letter of Offer for further information pertaining to stock market data for the
equity shares of the Company.

Impersonation

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection
(1) of Section 68A of the Companies Act which is reproduced below:

“Any person who makes in a fictitious name an application to a company for acquiring, or subscribing for, any
shares therein, or otherwise induces a company to allot, or register any transfer of shares therein to him, or any
other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five
years”

Government Approvals

Our Company was incorporated on March 15, 1994 under the Indian Companies Act. We have obtained all
necessary approvals to undertake our activities and we do not propose to enter into any new activities through
this Issue, for which further approvals may be required to be obtained, except as may be required to be obtained
in the normal course of our business and for intended use of Objects of the Issue. For further details, please refer
to the section on “Government Approvals” on page [●] of this Draft Letter of Offer.

Important

• This Issue is pursuant to the resolution passed by the Board of Directors at its meetings held on January 20,
2006 and the resolution passed by the Rights Issue Committee on [●].

• This Issue is applicable to those Equity Shareholders whose names appear as beneficial owners as per the list
to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of
Members of the Company at the close of business hours on the Record Date, after giving effect to the valid
share transfers lodged with the Company upto the Record Date.

• Your attention is drawn to the section entitled ‘Risk Factors’ appearing on Page [•] of this Draft Letter of
Offer.

• Please ensure that you have received the Composite Application Form (“CAF”) with this Draft Letter of
Offer.

• Please read the Draft Letter of Offer and the instructions contained herein and in the CAF carefully before
filling in the CAF. The instructions contained in the CAF are an integral part of this Draft Letter of Offer

179
and must be carefully followed. An application is liable to be rejected for any non-compliance of the
provisions contained in the Draft Letter of Offer or the CAF.

• All enquiries in connection with this Draft Letter of Offer or CAF should be addressed to the Registrar to the
Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned
in the CAF.

• All information shall be made available to the Investors by the Lead Manager, Co-Lead Manager and the
Issuer, and no selective or additional information would be available by them for any section of the Investors
in any manner whatsoever including at road shows, presentations, in research or sales reports, etc.

• The Lead Manager and the Company shall update this Draft Letter of Offer and keep the public informed of
any material changes till the listing and trading commences.

Issue Schedule

Issue Opening Date: [●]


Last date for receiving requests for split forms: [●]
Issue Closing Date: [●]

Allotment Letters / Refund Orders

The Company will issue and dispatch letters of allotment / share certificates/ demat credit or letters of regret
along with refund order or credit the allotted securities to the respective beneficiary accounts, if any within a
period of 42 days from the date of closure of the Issue. If such money is not repaid within eight days from the
day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under
Section 73 of the Act.

Shareholders residing in 15 centres where clearing houses are managed by the Reserve Bank of India (RBI), will
get refunds through ECS (Electronic Clearing Service) only except where shareholders is otherwise disclosed as
applicable eligible to get refunds through direct credit and RTGS (Real Time Gross Setlement).

Letters of allotment/ share certificates / demat credit / refund orders above the value of Rs. 1,500 will be
dispatched by registered post/ speed post to the sole/ first applicant’s registered address. However, refund orders
for value not exceeding Rs. 1,500 shall be sent to the applicants by way of under certificate of posting. Such
cheques or pay orders will be payable at par at all the centres where the applications were originally accepted and
will be marked ‘A/c payee’ and would be drawn in the name of the sole/ first applicant. Adequate funds would
be made available to the Registrar to the Issue for dispatch of the letters of allotment/ share certificates/ demat
credit/ refund orders.

In case the Company issues letters of allotment, the corresponding share certificates will be kept ready within
three months from the date of allotment thereof or such extended time as may be approved by the Company Law
Board under Section 113 of the Companies Act or other applicable provisions, if any. Allottees are requested to
preserve such Letters of Allotment, which would be exchanged later for the share certificates.

Promise v. Performance

We made an intial public issue of equity shares and a simultaneous but unlinked issue of secured redeemable
partly convertible debentures in 1995.

The details of which are as hereunder:

Issue opened on February 10, 1995


Issue closed on February 21, 1995

The Objects of the issue for our earlier issue were as hereunder:
In Rs. Million
Cost
Establishment of integrated steel plant at
Toranagallu having capacity of 1.25 million tonnes
per annum 1,350

180
• Issue of shares
• Issue of secured redeemable partly 10,900
convertible debentures
Total 12,250

The actual performance achieved is as follows:

The project cost estimated for the integrated steel plant in June 1994 was Rs. 33,000 million. However, the actual
project cost upto March 31, 2004 was Rs. 62,260 million. During the time of initial project implementation itself,
modifications were effected to the basic design of the main plant and additional plant/facilities like pellet plant,
converter caster, hot charging systems in hot strip mill (“HSM”) were added to enchance the overall capacity of
the steel plant to 1.57 million tonnes per annum. The schedule of implementation and the actual implementation
for the various projects forming part of the integrated steel plant was as follows:

Nature of Project Scheduled Implementation Actual Implementation


HSM October 1996 March 1997
Corex-1 March 1997 August 1999
Corex-2 September 1997 April 2001

Investor Grievances and Redressal System

The Company has adequate arrangements for redressal of Investor complaints. A correspondence system has
been developed for letters of routine nature. The share transfer and dematerialization for the Company is being
handled by Karvy Computershare Private Limited, Share Transfer Agents. Letters are filed category wise after
having attended to. Redressal norm for response time for all correspondence including shareholders complaints is
ten days. However, the Company endeavours to redress all the complaints within five days of the receipt of
complaint.

A Shareholders/Investors Grievance Committee was constituted on May 25, 2000. The Committee consists of
Uday M Chitale, Dr. S K Gupta, Zarin Daruwala, Nominee Director (ICICI Bank Ltd) and K V Krishnamurthy,
Nominee Director (IDBI). K V Krishnamurthy, Nominee Director (IDBI) is the Chairperson of the Committee.
Mehernosh H Kapadia, Company Secretary, is the compliance officer of the Company. A meeting of
Shareholders/Investors Grievance Committee is held normally once every six months.

There were 154 complaints pending redressal as on March 31, 2005. During the period from April 1, 2004 to
March 31, 2005, 9,733 complaints were received.

Status of Complaints

No. of shareholders complaints as of March 31, 2005: 154


Total number of complaints received during last financial year (2004-05): 9,733
Total number of complaints received during current financial year (2005-06): 24,311 as of December 31, 2005
Status of the complaints: There were 32 complaints pending redressal as of December 31, 2005.
Time normally taken by it for disposal of various types of Investor grievances: 10 days

Investor Grievances arising out of this Issue

The Company’s investor grievances arising out of the Issue will be handled by Karvy Computershare Private
Limited, Registrars to the Issue. The Registrars will have a separate team of personnel handling only our post
Issue correspondence. Investor grievances are settled expeditiously and satisfactorily by us. The agreement
between us and the Registrars will provide for retention of records with the Registrars for a period of at least one
year from the last date of dispatch of Letter of Allotment/ share certificate / warrant/ refund order to enable the
Registrars to redress grievances of Investors.

All grievances relating to the Issue may be addressed to the Registrars to the Issue giving full details such as
folio no., name and address of the first applicant, number of shares/ warrants applied for, Application Form serial
number, amount paid on application and the name of the bank and the branch where the application was
deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the
renouncee should be furnished.

181
The average time taken by the Registrar for attending to routine grievances will be 10 days from the date of
receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the
endeavour of the Registrars to attend to them as expeditiously as possible. We undertake to resolve the Investor
grievances in a time bound manner.

Investors may contact the Compliance Officer in case of any pre-Issue/ post -Issue related problems such as non-
receipt of letters of allotment/share certificates/demat credit/refund orders etc.

Changes in Auditors during the last three years

There have been no changes in our statutory auditors over the last three years.

Capitalisation of Reserves or Profits

The Company has not capitalized any of its reserves or profits for the last five years.

Revaluation of Fixed Assets

There has been no revaluation of the Company’s fixed assets for the last five years.

Minimum Subscription

If the Company does not receive minimum subscription of 90% of the issued amount on the date of closure of the
Issue or the subscription level falls below 90% after the closure of the Issue on account of cheques having being
returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription
amount received. If there is a delay beyond eight days after the date from which the Company becomes liable to
pay the amount, the Company shall pay interest as prescribed under Section 73 of the Companies Act.

Terms of Appointment of our Directors

Chairperson

Savitri Devi Jindal

Savitri Devi Jindal has been the non executive Chairperson of our Company since April 18, 2005.

Vice Chairman & Managing Director

Sajjan Jindal

Sajjan Jindal has been redesignated as the Vice Chairman & Managing Director of our Company since February
4, 2005 till July 7, 2007, on the following terms and conditions:

S. Particulars
No.
1. Basic salary Rs. 1,500,000 per month in the scale of Rs.1,500,000/- to
2,500,000/-
2. Commission 0.5% of net profits
3. Perquisites and Allowances In addition to the salary payable, he will also be entitled to
perquisites and allowances like furnished accommodation or house
rent allowance in lieu thereof; house maintenance allowance
together with reimbursement of expenses or allowances for
utilities such as gas, electricity, water, furnishings and repairs;
Performance Incentive; medical reimbursement; club fees and
leave travel concession for himself and his family; medical
insurance and such other perquisites and allowances in accordance
with the rules of the Company or as may be agreed to by the
Board of Directors and Mr. Jindal; such perquisites and
allowances will be subject to a maximum ceiling of 125% of his
Basic salary.

182
S. Particulars
No.
The perquisites and allowances together with the Basic Salary will
further be subject to a maximum ceiling of Rs.56,25,000/- p.m.

For the purposes of calculating the above ceiling, perquisites shall


be evaluated as per Income-tax Rules, wherever applicable. In the
absence of any such Rules, perquisites shall be evaluated at actual
cost.

Provision for use of the Company’s car for official duties and
telephone at residence (including payment for local calls and long
distance official calls) shall not be included in the computation of
perquisites for the purpose of calculating the said ceiling.

Company’s contribution to Provident Fund and Superannuation or


Annuity fund, to the extent these either singly or together are not
taxable under the Income-tax Act, gratuity payable as per the rules
of the Company and encashment of leave at the end of his tenure,
shall not be included in the computation of limits for the
remuneration or perquisites aforesaid.

The perquisites currently applicable are as under:

1. Accommodation Furished Company accommodation


2. Leave Travel Allowance One month’s basic salary
(yearly)
3. Medical reimbursements Actuals for self and family
4. Contribution to Provident 12% of Basic Salary
Fund
5. Conveyance Company maintained chauffeur driven car
6. Telephone Actuals
7. Water, electricity and gas Free of cost
8. Club Membership fees Reimbursement including life membership fees
9.. Personal Accident Insurance As per Company Policy
10. Gratuity As per Company Policy
11. Leave Salary As per Company Policy
12. Performance Incentive Maximum 50% of Basic salary

Other Directors

Dr. B N Singh

Dr. B N Singh has been appointed as the Jt. Managing Director and CEO of our Company from October 13,
2003 for a period of five years, on the following terms and conditions:

S. Particulars
No.
1. Basic salary Rs. 2,80,000/- (Rupees Two Lac Eighty Thousand Only) per
month in the scale of Rs. 2,00,000/- - Rs. 4,00,000/-.
2. Perquisites and Allowances In addition to the salary payable, he will also be entitled to
perquisites and allowances like furnished accommodation or house
rent allowance in lieu thereof; house maintenance allowance
together with reimbursement of expenses or allowances for
utilities such as gas, electricity, water, furnishings and repairs;
project allowance; medical reimbursement; club fees and leave
travel concession for himself and his family; medical insurance
and such other perquisites and allowances in accordance with the

183
S. Particulars
No.
rules of the company or as may be agreed to by the Board of
Directors and Dr. B.N. Singh; such perquisites and allowances
will be subject to a maximum of 125% of his annual salary.

For the purposes of calculating the above ceiling, perquisites shall


be evaluated as per Income-tax Rules, wherever applicable. In the
absence of any such Rules, perquisites shall be evaluated at actual
cost.

Provision for use of the Company’s car for official duties and
telephone at residence (including payment for local calls and long
distance official calls) shall not be included in the computation of
perquisites for the purpose of calculating the said ceiling.

Company’s contribution to Provident Fund and Superannuation or


Annuity fund, to the extent these either singly or together are not
taxable under the Income-tax Act, gratuity payable as per the rules
of the Company and encashment of leave at the end of his tenure,
shall not be included in the computation of limits for the
remuneration or perquisites aforesaid.

The total salary including all allowances /perquisites excluding Provident Fund contribution, gratuity and leave
salary shall not at any time exceed Rs. 900,000 per month.

The details of remuneration as currently applicable are as under:

S. Particulars
No.
1. Basic salary Rs. 345,000 per month
2. Accommodation Furished Company accommodation
3. Bonus/Project Allowance 20% of Basic salary
4. Leave Travel Allowance One month’s basic salary
(yearly)
5. Medical reimbursements Actuals for self and family
6. Conveyance Company maintained chauffeur driven car
7. Contribution to Provident 12% of basic salary
Fund
Telephone As per actuals
8. Water, electricity and gas Free of cost
9. Club Membership fees For two clubs. No admission and life membership fees is
reimbursed.
9. Insurance (Personal Accident) As per Company Policy
10. Medical Insurance As per Company Policy
11. Gratuity As per Company Policy
12. Leave Salary As per Company Policy
13. Retention Bonus Rs. 800,000 after April 1, 2008

Seshagiri Rao M V S

Seshagiri Rao M V S has been reappointed as the Director (Finance) of our Company from April 6, 2004 for a
period of five years, on the following terms and conditions:

S. Particulars
No.
1. Salary Salary of such sum as may be fixed by the Board of Directors of
the Company from time to time within an overall ceilng approved
by the Members in General Meeting.

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S. Particulars
No.
Salary and aggregate value of all the perquisites like Rent free and
maintained accommodation or HRA in case the Director (Finance)
is occupying any premises of his own, Gas, Electricity, Water,
Furniture and Furnishings, LTA for self and family, Club fees,
Medical benefits, Personal Accident Insurance, Interest subsidy on
Housing loans, Annual fees for professional bodies and other
allowances / benefits etc. in accordance with the rules of the
Company and Performance Linked Incentive / Reward / Bonus
shall not exceed the overall ceiling approved by the Members in
General Meeting.

The following perquisites shall not be included in the computation


of the ceiling on remuneration specified above:

a) Company’s contribution to Provident Fund and Superannuation


Fund or Annuity fund to the extent these either singly or put
together are not taxable under the Income-tax Act, 1961

b) Gratuity as per rules of the Company (which shall not exceed


one half month’s Salary for each completed year of Service);
and

c) Earned leave with full pay or encashment as per rules of the


Company.

The details of remuneration as currently applicable are as under:

S. Particulars
No.
1. Basic salary Rs. 225,000 per month
2. Accommodation/ HRA Rs. 100,000 per month
3. Bonus/Project Allowance 20% of Basic salary
4. Leave Travel Allowance One month’s basic salary
5. Medical reimbursements Actuals for self and family
6. Conveyance Company maintained chauffeur driven car
7. Contribution to Provident 12% of basic salary
Fund
8. Telephone Actuals
9. Club Membership fees For two clubs. No admission and life membership fees is
reimbursed.
9. Insurance (Personal Accident) As per Company Policy
10. Medical Insurance As per Company Policy
11. Gratuity As per Company Policy
12. Leave Salary As per Company Policy
13. Retention Bonus Rs. 700,000 after April 1, 2008

Ceiling on total salary including all allowances/perquisites excluding provident fund contribution, gratuity and
leave salary Rs. 900,000 per month.

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TERMS OF THE ISSUE

The Equity Shares and Warrants, now being issued, are subject to the terms and conditions contained in this
Draft Letter of Offer, the enclosed Composite Application Form (CAF), the Memorandum and Articles of
Association of the Company, approvals from the RBI, the provisions of the Companies Act, guidelines issued by
SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by
Government of India and/or other statutory authorities and bodies from time to time, terms and conditions as
stipulated in the allotment advice or letter of allotment or security certificate and rules as may be applicable and
introduced from time to time.

Authority for the Issue

This Issue is being made pursuant to the resolution passed by the Board of Directors of the Company under
Section 81(1) of Companies Act at its meeting held on 20 January, 2006 and the meeting of the Rights Issue
Committee on [●].

Basis for the Issue

The Equity Shares and Warrants are being offered for subscription for cash to those existing Equity Shareholders
whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the
shares held in the electronic form and on the Register of Members of the Company in respect of shares held in
the physical form at the close of business hours on the Record Date, i.e., [•] fixed in consultation with the Stock
Exchanges.

The Equity Shareholders shall be entitled to the following:


• One Equity Share for every eight Equity Shares held as on the Record Date; and
• One Series A and one Series B Warrants for every Equity Share being subscribed and allotted on rights basis
under this Issue.

Nomination facility

In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares and Warrants. The
applicant can nominate any person by filling the relevant details in the CAF in the space provided for this
purpose.

A sole Equity Shareholder/Warrantholder or first Equity Shareholder/Warrantholder, along with other joint
Equity Shareholders/Warranholders being individual(s) may nominate any person(s) who, in the event of the
death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity
Shares/Warrants. A Person, being a nominee, becoming entitled to the Equity Shares/Warrants by reason of the
death of the original Equity Shareholder(s)/Warrantholder(s), shall be entitled to the same advantages to which
he would be entitled if he were the registered holder of the Equity Shares/Warrants. Where the nominee is a
minor, the Equity Shareholder(s)/Warrantholder(s) may also make a nomination to appoint, in the prescribed
manner, any person to become entitled to the Equity Share(s)/Warrant(s), in the event of death of the said holder,
during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity
Share/Warrant by the person nominating. A transferee will be entitled to make a fresh nomination in the manner
prescribed. When the Equity Share/Warrant is held by two or more persons, the nominee shall become entitled to
receive the Shares/Warrants only on the demise of all the holders. Fresh nominations can be made only in the
prescribed form available on request at the office of the Registrar or such other person at such addresses as may
be notified by the Company. The applicant can make the nomination by filling in the relevant portion of the
CAF.

Only one nomination would be applicable for one folio. Hence, in case the Shareholder(s)/Warrantholder(s) has
already registered the nomination with the Company, no further nomination needs to be made for Equity
Shares/Warrants to be allotted in this Issue under the same folio.

In case the allotment of Equity Shares/Warrants is in dematerialised form, there is no need to make a separate
nomination for the Equity Shares/Warrants to be allotted in this Issue. Nominations registered with respective DP
of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform
their respective DP.

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Offer to Non-Resident Equity Shareholders/Applicants

Applications received from NRIs and non-residents for allotment of Equity Shares and Warrants shall be inter
alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management
Act, 2000 (FEMA) in the matter of receipt and refund of application moneys, allotment of Equity Shares and
Warrants, issue of letter of allotment / share and warrant certificates, payment of interest, dividends, etc. General
permission has been granted to any person resident outside India to purchase shares offered on rights basis by an
Indian company in terms of FEMA and regulation 6 of notification No. FEMA 20/2000-RB dated May 03, 2000.
The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by
RBI while approving the allotment of Equity Shares and Warrants, payment of dividend etc. to the non-resident
shareholders. The rights Shares and Warrants purchased by non-residents shall be subject to the same conditions
including restrictions in regard to the repatriability as are applicable to the original shares against which rights
shares are issued.

By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (“OCBs”)
have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign
Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies) Regulations, 2003.
Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its
circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are
not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident
entities. Thus, OCBs desiring to participate in this Issue must obtain prior approval from the RBI. Such approval
shall be submitted along with the CAF. The Letter of Offer and CAF shall only be dispatched to non-resident
Equity Shareholders with registered address in India / outside India.

Principal Terms and Conditions of the Issue

Equity Shares

Face value

Each Equity Share shall have the face value of Rs. 10.

Issue Price

Each Equity Share is being offered at a price of Rs. [●] (including a premium of Rs. [ ])

Rights Entitlement Ratio

The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the
ratio of one Equity Share for every eight Equity Shares held as on the Record Date. For every Equity Share
subscribed and allotted on Rights Basis, the Equity Shareholders will be entitled to receive one Series A Warrant
and one Series B Warrant.

Market lot

The market lot for the Equity Shares and Warrants in dematerialised mode is one. In case of physical certificates,
the Company would issue one certificate for the fully paid up equity shares, one certificate for the partly paid up
equity shares and one certificate for each Series of Warrants allotted to one folio (“Consolidated Certificate”). In
case of partly paid up equity shares held in physical form, the certificate shall indicate that Equity Shares are
partly paid in nature. Upon payment of allotment money, the Equity Shareholders shall be sent an insignia to be
placed on each certificate to indicate that such Equity Shares are now fully paid in nature.. The certificate for the
Warrants shall be dispatched by the Company also upon Equity Shares becoming fully paid up.

The partly paid up equity shares and warrants allotted with such partly paid equity shares will not be
traded and transferable until the full amount of the Issue Price is received and such equity shares are
made fully paid up.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Issue of Equity Shares to the extent of
the amount payable on application (excluding the amounts on the rights entitlement on the Equity Shares held in

187
abeyance as explained in the notes to the section entitled ‘Capital Structure’), the entire subscription shall be
refunded to the applicants within forty-two days from the date of closure of the Issue. If there is a delay in the
refund of subscription by more than eight days after the Company becomes liable to repay the subscription
amount, i.e. forty-two days after closure of the Issue, the Company will pay interest for the delayed period, at the
rates prescribed in sub-sections (2) and (2A) of Section 73 of the Companies Act.

The Issue will become undersubscribed after considering the number of shares applied as per entitlement plus
additional shares. The undersubscribed portion shall be applied for only after the Issue Closing Date. The
Promoter or any other person shall subscribe to such undersubscribed portion as per the relevant provisions of
the law. Allotment to the Promoter of any unsubscribed portion, over and above their entitlement shall be done in
compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous
listing requirements.

The above is subject to the terms mentioned under the section entitled ‘Basis of Allotment’ on page [•] of this
Draft Letter of Offer.

Fractional entitlements

All Equity Shareholders holding less than eight Equity Shares will be eligible for one Equity Share. If the
shareholding of the Equity Shareholder is equal to or more than eight Equity Shares, all fractional right
entitlement of less than 0.5 shall be ignored and fractional entitlement of 0.5 and more shall be rounded off to
one.

The additional Equity Shares needed for issuance of such shares will be first adjusted from the unsubscribed
portion of the Issue, if any and in the event of any further requirement, the same shall be adjusted from the
Promoter/Promoter Group’s entitlement at the time of the allotment.

Terms of payment

The Payment Methods available to the Equity Shareholders applying for allotment of Equity Shares under this
Issue are as follows:

Payment Method – 1: On application, the full amount of Rs. [●] per Equity Share shall be payable;

Payment Method – 2: On application, Rs. [●], which constitutes 50% of the full amount of the Issue Price of Rs.
[●] shall be payable (“Application Money”). Rs. [●], which constitutes the remaining 50% of the full amount of
the Issue Price shall become payable at anytime before the end of 30 days from the Allotment Date. The Board/
Committee Of Directors may at its discretion extend the last date for payment of allotment money for such
period(s) as it may consider appropriate. The payment on application and on allotment would be applied as
under:

Amount Payable Face Value (per Premium Total


Equity Share)
On application Rs. 5 Rs. [●] Rs. [●]
On allotment Rs. 5 Rs. [●] Rs. [●]
Total Rs. 10 Rs. [●] Rs. [●]

Under Payment Method-2, if the amount paid by the Equity Shareholder is equal to or higher than the amount
payable on application, then for the purposes of this Issue, we reserve the right to adjust the excess amount
towards the balance amount payable towards the Issue Price and issue fully paid up Equity Shares. The excess
amount, if any, after adjusting the balance amount payable towards Issue Price, shall be refunded to Equity
Shareholder. A tabular illustration of the manner in which the excess application money shall be adjusted under
Payment Method-2 is given below:

No. of Equity Shares Allotted Equity Shares, of which


Applied for Allotted Fully paid up Partly paid up
50 50 0 50
100 75 25 50
69 36 33 3

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Failure to pay the amount due on allotment on or before the last date fixed for payment of allotment money or
such extended date as the Board/Committee Of Directors may in its sole and absolute discretion determine, shall
render the allottees liable to pay interest at the rate of up to 18% per annum on the amount outstanding from the
last date fixed for payment to the date of actual payment. Failure to pay the amount as aforesaid shall also render
the Shares, including the amount already paid thereon and also the Warrants allotted in respect of such Shares,
liable to forfeiture in accordance with the provisions regarding forfeiture of shares contained in the Articles of
Association. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the
forfeited Equity Shares and not actually paid before the forfeiture. Neither the receipt by the Company of a
portion of any money which shall from time to time be due from any Equity Shareholder to the Company in
respect of his Equity Shares, either by way of principal or interest, nor any indulgence granted by the Company
in respect of the payment of any such money, shall preclude the Company from thereafter proceeding to enforce
a forfeiture of such Equity Shares as hereinafter provided. Any Equity Share so forfeited shall be deemed to be
the property of the Company, and may be sold, re-allotted, or otherwise disposed of, either to the original holder
thereof or to any other person, upon such terms and in such manner as the Board shall think fit.

As per article 31 of the Articles of Association of the Company, the Equity Shareholders would be given not less
than 15 days time for the payment of the call money.

Important Note: The partly paid Equity Shares will not be traded and transferable until the full amount
of the Issue Price is received and the corporate action for appropriation of the balance of the Issue Price is
taken.. Till the process of corporate action is completed, even Equity Shareholders who pay the balance
amount of the Issue Price before the same becomes due will not be able to trade in those partly paid
Equity Shares or transfer partly paid Equity Shares.

Separate ISINs on application and on payment of balance amount of the Issue Price

In addition to the present ISIN for the existing fully paid up Equity Shares, the Company would obtain a separate
ISIN No. for the partly paid up Equity Shares allotted under this Issue. On payment of the balance of the Issue
Price in respect of the partly paid up Equity Shares, such Equity Shares on which the balance of the Issue Price
has been duly paid would be converted into fully paid up Equity Shares and merged with the existing ISIN for
fully paid up Equity Shares of the Company.

Principal Terms of the Warrants

Entitlement

For every Equity Share being subscribed and allotted on a Rights Basis under this Issue, each Equity Shareholder
will be entitled to one Series A Warrant and one Series B Warrant. The Warrants would be allotted along with
partly paid or fully paid Equity Shares. These Warrants can be freely and separately traded. However, Warrants
allotted along with partly paid Equity Shares shall be available for trading only upon the conversion of such
partly paid Equity Shares into fully paid up Equity Shares.

Separate ISIN for Warrants allotted

The Company shall also obtain separate ISIN Nos. for the Series A Warrants and Series B Warrants that would
be allotted along with the fully paid up equity shares, respectively.

In addition, separate ISIN Nos. shall also be obtained for Series A Warrants and Series B Warrants that would be
allotted along with the partly paid up Equity Shares, respectively. The ISIN Nos. for these Warrants allotted
along with partly paid up Equity Shares shall be terminated upon these partly paid up Equity Shares becoming
fully paid up Equity Shares and will instead be allotted the ISIN nos. relevant to fully paid up Equity Shares as
above.

In the case of Series A Warrants and Series B Warrants allotted with partly paid up Equity Shares and held in
physical form, the certificate for Warrants shall be dispatched by the Company upon the partly paid up Equity
Shares becoming fully paid up.

Important Note: The Warrants issued upon partly paid Equity Shares will not be traded and transferable
until the full amount of the Issue Price is received and the corporate action for appropriation of the
balance of the Issue Price is taken. Till the process of corporate action is completed, even Equity

189
Shareholders who pay the balance amount of the Issue Price before the same becomes due will not be able
to trade in those Warrants or transfer Warrants.

Warrant Conversion

The Warrant holder will be entitled to exercise his right to apply for one Equity Share(s) of Rs. 10/- each at the
Warrant Conversion Price for each Warrant held on the Warrant Conversion Date, in the manner set out below.

Warrant Conversion Period

Warrant Conversion Period for Series A Warrants shall be the period commencing after 18 months from the Date
of Allotment upto 36 months from the Date of Allotment. The Warrant Conversion Period for Series B Warrants
shall be the period commencing after 24 months from the Date of Allotment upto 48 months from the Date of
Allotment. The Date of Allotment for the Warrants shall be same as date of allotment of the Equity Shares.

Record date for Warrant Conversion

The Board may fix a record date for Warrant Conversion for the purpose of determining the Warrant holders who
would be eligible to convert their Warrants into Equity Shares of the Company. Separate record dates for
Warrant Conversion may be fixed in respect of Series A and Series B Warrants.

Procedure for Exercise of Warrants and Warrant Exercise Period

The Board may fix a reasonable period (not less than 30 days) within the respective Warrant Conversion Periods
for Series A and Series B Warrants, for the purpose of enabling eligible Warrantholders to exercise their right to
convert their Warrants into Equity Shares (“Warrant Exercise Period”). Warrant Exercise Periods may be fixed
by the Board for the conversion of (i) only Series A Warrants; (ii) only Series B Warrants; or (iii) both Series A
and Series B Warrants. Warrantholders can exercise their right to apply for the Equity Shares only upon the
Board of Directors calling upon the Warrantholders to convert such Warrants into Equity Shares of the Company
during the Warrant Exercise Period and not otherwise by way of notice to the eligible Warrantholders
(“Warrant Exercise Notice”). The Warrant Exercise Notice will be sent by ordinary post to the address
available with the Registrar and will also be published in one English national daily newspaper with wide
circulation, one Hindi national daily newspaper with wide circulation and one Marathi regional daily newspaper
with wide circulation. Further the Warrants not converted during the Warrant Exercise Period shall lapse
and no Equity Shares shall be allotted against such Warrants.

Warrant Conversion Price

Warrant Conversion Price for each Series of Warrants shall be at a [●]% discount to the average of the weekly
high and low of the closing prices of the Equity Share of the Company on BSE during the four weeks
immediately preceding the week in which Board of Directors informs to the Stock Exchanges for fixing the
Warrant Conversion Date for conversion of Warrant.

The Warrant Conversion Price shall be payable in such instalments and within such period as the Board may
decide.

The face value of each Equity Share of the Company is Rs. 10. In the event of any sub-division or consolidation
of the face value, the share entitlement on each Warrant shall be proportionately increased/decreased such that
the aggregate nominal value of the entitlement remains the same as the nominal value of the Equity Shares
immediately prior to such subdivision or consolidation e.g. in case the Company decides to reduce the face value
of Equity Shares to Rs. 5 each, then upon exercise of each Warrant by making payment under the Warrant
Conversion Price, the Warrant holder would get two Equity Shares of Rs. 5 each instead of one Equity Share of
Rs. 10 each.

In the event of the Company making a bonus issue of equity or a rights issue of securities prior to allotment of
Equity shares resulting from the exercise of the rights attached to each Series of Warrants:

a) The right to equity shares of each Series of Warrant holders shall stand augmented in the same
proportion in which the bonus shares are issued to the then existing shareholders.

190
b) Each Series of Warrant holders shall be offered the same securities which have been offered as rights
in the same proportion in which the rights issue of securities is being offered to the then existing
shareholders.

The above would be subject to the approval of the shareholders and other relevant authorities.

Procedure for Conversion of Warrants being issued with Equity Shares under this Issue

The exact procedure and manner of payment of Warrant Conversion Price for Conversion of Warrants into
Equity Shares of the Company will be communicated to the Warrant holders along with the Warrant Exercise
Notice. Application for issue of Equity Shares should be made on the prescribed Warrant Exercise Application
Form. This application form would be sent to all the Warrant holders separately. The same would also be
available on request with the Registrar.

Payment on Conversion of Warrants

Upon the Warrant Exercise Notice being sent, the Warrantholder shall be obliged to pay the Warrant Conversion
Price within the date and according to the procedure indicated therein.

Modification to the Terms of the Warrants

The rights attached to the Warrants shall be varied only with the consent in writing of the holders of not less than
three-fourths of the outstanding Warrants of that Series or with the sanction of a special resolution passed at a
separate meeting of holders of outstanding Warrants of that Series.

Rights of Warrant holders

• Subject to the above, the Warrants shall be transferable and transmittable in the same manner and to the
same extent and be subject to the same restrictions and limitations and other related matters as in the
case of Equity Shares of the Company.
• The Warrants shall not confer upon the holders thereof any right to receive any notice of the meeting of
the Shareholders of the Company or Annual Report of the Company and or to attend/vote at any of the
General Meetings of the Shareholders of the Company held, if any.
• Save and except the right of subscription to the Company’s Equity Shares as per the terms of the Issue
of Warrants, the holders of the Warrants in their capacity as Warrant holders shall have no other rights
or privileges.
• The Warrant holders inter-se, shall rank pari passu without any preference or priority of one over the
other or others.

A separate register of warrant holders would be maintained by the Company.

Ranking of the Equity Shares

The Equity Shares shall be subject to the Memorandum and Articles of Association of the Company. The Equity
Shares allotted on conversion of Warrants shall rank pari passu in all respects including dividends with the
existing Equity Shares of the Company. The partly paid up Equity Shares, until fully paid up, shall rank pari
passu in relation to dividends and voting rights with the existing Equity Shares of the Company and in
accordance with the Articles of Association of the Company. The Board of Directors of the Company reserve the
right, in accordance with the Articles of Association of the Company, to adjust the dividends declared on such
partly paid up Equity Shares towards the balance amount payable of the Issue Price.For more details, refer to
“Main Provisions of Our Articles of Association” on page [●] of this Letter of Offer.

Option available to the Equity Shareholders

The CAF clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to.

If the Equity Shareholder applies for an investment in Equity Shares, then he can:

• Apply for his entitlement in part;

• Apply for his entitlement in part and renounce the other part;

191
• Apply for his entitlement in full;

• Apply for his entitlement in full and apply for additional Equity Shares.

Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional
Equity Shares.

For every Equity Share subscribed by and allotted to the Equity Shareholders, they will receive one Series A and
one Series B Warrants. There is no need to apply separately for the Warrants.

Irrespective of the option chosen by the Equity Shareholder, such Equity Shareholder remains entitled to use
either of the Payment Methods. The Payment Method chosen should be clearly indicated at the appropriate
place(s) in the CAF. Once the choice is indicated, the Equity Shareholder may not revise this selection. No
Equity Shareholder can select both the Payment Methods in a CAF.

Utilisation of Issue Proceeds

The Board of Directors declares that:

(i) The funds received against this Issue will be transferred to a separate bank account other than the bank
account referred to in sub-section (3) of Section 73 of the Act.

(ii) Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in
the balance sheet of the Company indicating the purpose for which such moneys has been utilised.

(iii) Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate
separate head in the balance sheet of the Company indicating the form in which such unutilised moneys
have been invested.

The funds received against this Issue will be kept in a separate bank account and the Company will not have any
access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that
the minimum subscription of 90% of the Issue has been received by the Company.

Undertakings by the Company

1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and
satisfactorily.

2. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock
Exchanges where the securities are to be listed will be taken within six weeks from the issue closing date.

3. The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post shall be
made available to the Registrar to the Issue.

4. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the
specified time.

5. No further issue of securities affecting equity capital of the Company shall be made till the securities
issued/offered through the Issue are listed or till the application moneys are refunded on account of non-
listing, under-subscription etc.

6. The Company accepts full responsibility for the accuracy of information given in this Letter of Offer and
confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any
statement made in this Letter of Offer misleading and further confirms that it has made all reasonable
enquiries to ascertain such facts.

7. All information shall be made available by the Lead Manager and the Issuer to the Investors at large and no
selective or additional information would be available for a section of the Investors in any manner
whatsoever including at road shows, presentations, in research or sales reports etc.

192
How to Apply

Resident Equity Shareholders

Applications should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be
completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted
by the Lead Manager or by the Registrar to the Issue or by the Company at any offices except in the case of
postal applications as per instructions given elsewhere in the Draft Letter of Offer.

Non-resident Equity Shareholders

Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares and
Warrants shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in the
matter of refund of application moneys, allotment of Equity Shares and Warrants, issue of letters of allotment/
certificates/ payment of dividends etc.

The CAF consists of four parts:


Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares
Part B: Form for renunciation
Part C: Form for application for renouncees
Part D: Form for request for split application forms

Acceptance of the Issue

You may accept the Equity Shares offered under this Issue, either in full or in part by filling Block III of Part A
of the enclosed CAF and submit the such CAF along with the application money payable to the Bankers to the
Issue at any of its branches as mentioned on the reverse of the CAF before the close of the banking hours on or
before the Issue Closing Date or such extended time as may be specified by the Board in this regard. Applicants
at centers not covered by the branches of collecting banks can send their CAF together with a cheque either
payable at par or drawn on a local bank at Hyderabad/demand draft payable at Hyderabad to the Registrar to the
Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be
rejected.

There is no requirement to apply separately for the Warrants or to communicate in any way the acceptance
thereof.

Renunciation

As an Equity Shareholder, you have the right to renounce your entitlement for the Equity Shares in full or in part
in favor of one or more person(s). Your attention is drawn to the fact that the Company shall not allot and/or
register any Equity Shares in favor of:

• More than three persons including joint holders

• Partnership firm(s) or their nominee(s)

• Minors

• Hindu Undivided Family

• Any Trust or Society (unless the same is registered under the Societies Registration Act, 1860 or any other
applicable Trust laws and is authorized under its Constitutions to hold Equity Shares of a Company)

The right of renunciation is subject to the express condition that the Board/ Committee of Directors shall be
entitled in its absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason
thereof.

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Procedure for renunciation

To renounce the whole offer in favour of one renouncee

If you wish to renounce the offer indicated in Part A, in whole, please complete Part B of the CAF. In case of
joint holding, all joint holders must sign Part B of the CAF. The person in whose favour renunciation has been
made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renouncees must sign
this part of the CAF.

Renouncee(s) shall not be entitled to further renounce the entitlement in favour of any other person.

To renounce in part/or renounce the whole to more than one person(s)

If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of
two or more renouncees, the CAF must be first split into requisite number of forms.

Please indicate your requirement of split forms in the space provided for this purpose in Part D of the CAF and
return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the
last date of receiving requests for split forms. On receipt of the required number of split forms from the
Registrar, the procedure as mentioned in paragraph above shall have to be followed.

In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the
specimen registered with the Company, the application is liable to be rejected.

Renouncee(s)

The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the Application
Form and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date
along with the application money.

Change and/ or introduction of additional holders

If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not
already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation
shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to
renunciation and the procedure, as stated above shall have to be followed.

However, this right of renunciation is subject to the express condition that the Board of Directors of the
Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s)
without assigning any reason thereof.

Please note that:

• Part A of the CAF must not be used by any person(s) other than those in whose favour this Offer has been
made. If used, this will render the application invalid.

• Request for split form should be made for a minimum of 1 Equity Shares or in multiples thereof and one
Split Application Form for the balance Equity Shares, if any.

• Request by the applicant for the Split Application Form should reach the Company on or before [•].

• Only the person to whom this Draft Letter of Offer has been addressed to and not the renouncee(s) shall be
entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again.

• Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.

Additional Equity Shares

You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are
entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or
in part in favor of any other person(s). Applications for additional Equity Shares shall be considered and

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allotment shall be in the manner prescribed under the section entitled ‘Basis of Allotment’ on page [•] of this
Draft Letter of Offer. The renouncees applying for all the Equity Shares renounced in their favor may also apply
for additional Equity Shares.

In case of application for additional Equity Shares by non-resident equity shareholders, the allotment of
additional securities will be subject to the permission of the RBI.

Where the number of additional Equity Shares applied for exceeds the number available for allotment, the
allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

The summary of options available to the equity shareholder is presented below. You may exercise any of the
following options with regard to the Equity Shares offered, using the enclosed CAF:

Option Available Action Required


1. Accept whole or part of your entitlement Fill in and sign Part A (All joint holders must sign)
without renouncing the balance.

2. Accept your entitlement in full and apply Fill in and sign Part A including Block III relating to the
for additional Equity Shares. acceptance of entitlement and Block IV relating to
additional Equity Shares (All joint holders must sign)

3. Renounce your entitlement in full to Fill in and sign Part B (all joint holders must sign)
one person (Joint renouncees are indicating the number of Equity Shares renounced and
considered as one). hand it over to the renouncee. The renouncees must fill in
and sign Part C (All joint renouncees must sign)

4. Accept a part of your entitlement and Fill in and sign Part D (all joint holders must sign)
renounce the balance to one or more requesting for Split Application Forms. Send the CAF to
renouncee(s) the Registrar to the Issue so as to reach them on or before
the last date for receiving requests for Split Forms.
OR Splitting will be permitted only once.

Renounce your entitlement to all the On receipt of the Split Form take action as indicated
Equity Shares offered to you to more below.
than one renouncee
For the Equity Shares you wish to accept, if any, fill in
and sign Part A.

For the Equity Shares you wish to renounce, fill in and


sign Part B indicating the number of Equity Shares
renounced and hand it over to the renouncees. Each of the
renouncees should fill in and sign Part C for the Equity
Shares accepted by them.

5. Introduce a joint holder or change the This will be treated as a renunciation. Fill in and sign Part
sequence of joint holders B and the renouncees must fill in and sign Part C.

For details of Payment Methods available, please refer to “Terms of Payment” on page [●] of this Draft Letter of
Offer.

Availability of duplicate CAF

In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a
duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID
number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate
CAF should reach the Registrar to the Issue within 15 days from the Issue Opening Date. Please note that those
who are making the application in the duplicate form should not utilize the original CAF for any purpose

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including renunciation, even if it is received/ found subsequently. If the applicant violates any of these
requirements, he / she shall face the risk of rejection of both the applications.

Application on Plain Paper

An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate
CAF may make an application to subscribe to the Issue on plain paper, along with an Account Payee Cheque
drawn on a local bank at Hyderabad/ at par cheque anywhere in India/Demand Draft payable at Hyderabad
which should be drawn in favor of the Company and send the same by registered post directly to the Registrar to
the Issue.

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per
specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing
Date and should contain the following particulars:

• Name of Issuer, being JSW Steel Limited

• Name and address of the Equity Shareholder including joint holders

• Registered Folio Number/ DP and Client ID no.

• Number of shares held as on Record Date

• Number of Rights Equity Shares entitled

• Number of Rights Equity Shares applied for

• Number of additional Equity Shares applied for, if any

• Total number of Equity Shares applied for

• Payment method chosen

• Total amount paid at the rate of Rs. [●] per Equity Share in accordance with the chosen payment method

• Particulars of cheque/draft

• Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be
depositing the refund order

• PAN number, Income Tax Circle/Ward/District, photocopy of the PAN card/ PAN communication / Form
60 / Form 61 declaration where the application is for Equity Shares of a total value of Rs. 50,000 or more for
the applicant and for each applicant in case of joint names

• Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of
the Company.

Please note that those who are making the application otherwise than on original CAF shall not be entitled to
renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is
received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection
of both the applications as well as forfeiture of amounts remitted along with the applications.

Last date of Application

The last date for submission of the duly filled in CAF is [•]. The Board or any committee thereof will have the
right to extend the said date for such period as it may determine from time to time but not exceeding 60 (sixty)
days from the Issue Opening Date.

If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on
or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/
Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have been declined

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and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as
provided under the section entitled “Basis of Allotment”.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES AND WARRANTS OF THE
COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED
FORM.

Basis of Allotment

Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association of the Company and
the approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the
following order of priority:

(a) Full allotment of Equity Shares and Warrants to those Equity Shareholders who have applied for their rights
entitlement either in full or in part and also to the renouncee(s) who has/ have applied for Equity Shares
renounced in their favour, in full or in part.

(b) All Equity Shareholders holding less than eight Equity Shares will be eligible for one Equity Share. If the
shareholding of the Equity Shareholder is equal to or more than eight Equity Shares, all fractional right
entitlement of less than 0.5 shall be ignored and fractional entitlement of 0.5 and more shall be rounded off
to one

(c) The additional Equity Shares needed for issuance of such shares will be first adjusted from the unsubscribed
portion of the Issue, if any and in the event of any further requirement, the same shall be adjusted from the
Promoter/Promoter Group’s entitlement at the time of the allotment. (For further details please see the
section “Terms of the Issue – Fractional Entitlements” on page [●] of this Draft Letter of Offer).

(d) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of
the Issue and have also applied for additional Equity Shares, the allotment of such additional Equity Shares
will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held
by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a)
and (b) above. The allotment of such Equity Shares will be at the sole discretion of the Board/Committee of
Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential
allotment.

(e) Allotment to the renouncees who having applied for the Equity Shares renounced in their favour have also
applied for additional Equity Shares, provided there is an under-subscribed portion after making full
allotment in (a) and (b) above and to the extent allotted in (d). The allotment of such additional Equity
Shares will be made on a proportionate basis at the sole discretion of the Board/ Committee of Directors but
in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential
allotment.

After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the
same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which
would be available for allocation under (c) and (d) above. After considering the above allotment, if the Issue does
not have subscription to the extent of 90% of the Issue size, the Promoter and the promoter group shall subscribe
to such portion to ensure that the Issue is successful. After such allotments as above and to the Promoters and the
Promoter Group, including the application for rights/renunciation and additional equity shares, any additional
Equity Shares shall be disposed off by the Board or committee of the Board of Directors authorised in this behalf
by the Board of Directors of the Company, in such manner as they think most beneficial to the Company and the
decision of the Board or committee of directors of the Company in this regard shall be final and binding. In the
event of oversubscription, allotment will be made within the overall size of the issue.

Allotment to Promoters of any unsubscribed portion, over and above their entitlement shall be done in
compliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time.

Underwriting

The present Issue is not underwritten.

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Allotment / Refund

The Company will issue and dispatch letters of allotment/ share certificates/warrant certificates/demat credit and/
or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts,
if any, within a period of six weeks from the Issue Closing Date. If such money is not repaid within eight days
from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated
under Section 73 of the Act.

Shareholders residing in 15 centres where clearing houses are managed by the Reserve Bank of India (RBI), will
get refunds through ECS (Electronic Clearing Service) only except where shareholders is otherwise disclosed as
applicable eligible to get refunds through direct credit and RTGS (Real Time Gross Setlement).

In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialised form by
using electronic credit under the depository system, an advice regarding the credit of the Equity Shares and
Warrants shall be given separately.

In case of those Shareholders who have opted to receive their rights entitlement shares in physical form and the
Company issues letters of allotment, the corresponding share/warrant certificates will be kept ready within three
months from the date of allotment thereof or such extended time as may be approved by the Companies Law
Board under Section 113 of the Companies Act or other applicable provisions, if any. Allottees are requested to
preserve such letters of allotment, which would be exchanged later for the share/warrant certificates. For more
information, please refer to the section entitled ‘Letters of Allotment / Share Certificates /Warrant
Certificate/Demat Credit’ on page no. [•] of this Draft Letter of Offer. However, in case of partly paid up Equity
Shares, the certificate of Warrants allotted along with such partly paid up shares shall be dispatched by the
Company only after the allotment money on such partly paid up shares is paid in full along with overdue interest
if any.

Letters of allotment/ share certificates/warrant certificates/demat credit/ refund orders above the value of Rs.
1,500 will be dispatched by registered post/ speed post to the sole/ first applicant’s registered address. However,
refund orders for value not exceeding Rs. 1,500 shall be sent to the applicants by way of under certificate of
posting. Such cheques or pay orders will be payable at par at all the centres where the applications were
originally accepted and will be marked ‘A/c payee’ and would be drawn in the name of the sole/ first applicant.
Adequate funds would be made available to the Registrar to the Issue for the dispatch of such letters of
allotment/ share certificates/ demat credit and refund orders.

As regards allotment/ refund to non-residents, the following further conditions shall apply:

In case of non-residents, who remit their application monies from funds held in NRE/ FCNR accounts, refunds
and/ or payment of interest/ dividend and other disbursement, if any, shall be credited to such accounts, details of
which should be furnished in the CAF. Subject to the approval of the RBI, in case of non-residents, who remit
their application monies through Indian Rupee draft purchased from abroad, refund and/ or payment of dividend/
interest and any other disbursement, shall be credited to such accounts (details of which should be furnished in
the CAF) and will be made net of bank charges/ commission in US Dollars, at the rate of exchange prevailing at
such time. The Company will not be responsible for any loss on account of exchange fluctuations for converting
the Indian Rupee amount into US Dollars. The share certificate(s) will be sent by registered post at the Indian
address of the non-resident applicant.

Letters of Allotment / Share Certificates / Demat Credit

Letter(s) of allotment/ share certificates/warrant certificates/demat credit or letters of regret will be dispatched to
the registered address of the first named applicant or respective beneficiary accounts will be credited within 6
(six) weeks, from the date of closure of the subscription list. In case the Company issues letters of allotment, the
relative share certificates will be dispatched within three months from the date of allotment. Allottees are
requested to preserve such letters of allotment (if any) to be exchanged later for share certificates. Export of
letters of allotment (if any)/ share certificates/ demat credit to non-resident allottees will be subject to the
approval of RBI. However, in case of partly paid up Equity Shares, the certificate of Warrants allotted along with
such partly paid up shares shall be dispatched by the Company only after the allotment money on such partly
paid up shares is paid in full along with overdue interest if any.

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Option to receive Equity Shares in Dematerialized Form

Applicants to the Equity Shares of the Company issued through this Issue shall be allotted the securities in
dematerialised (electronic) form at the option of the applicant. The Company signed a tripartite agreement with
National Securities Depository Limited (NSDL) and Registrar on February 26, 1997 which enables the Investors
to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of physical
certificates. The Company has also signed a tripartite agreement with Central Depository Services (India)
Limited (CDSL) and Registrar on June 24, 2000 which enables the Investors to hold and trade in securities in a
dematerialised form, instead of holding the securities in the form of physical certificates.

In this Issue, the allottees who have opted for Equity Shares in dematerialised form will receive their Equity
Shares in the form of an electronic credit to their beneficiary account with a depository participant. Investor will
have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do
not accurately contain this information, will be given the securities in physical form. No separate applications for
securities in physical and/or dematerialized form should be made. If such applications are made, the application
for physical securities will be treated as multiple applications and is liable to be rejected. In case of partial
allotment, allotment will be done in demat option for the shares sought in demat and balance, if any, will be
allotted in physical shares.

The Equity Shares and Warrants of the Company will be listed on the BSE, NSE and BSE.

Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under:

• Open a beneficiary account with any depository participant (care should be taken that the beneficiary
account should carry the name of the holder in the same manner as is exhibited in the records of the
Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the
holders in the same order as with the Company). In case of Investors having various folios in the Company
with different joint holders, the Investors will have to open separate accounts for such holdings. Those equity
shareholders who have already opened such Beneficiary Account (s) need not adhere to this step.

• For equity shareholders already holding Equity Shares of the Company in dematerialized form as on the
Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later
or those who change their accounts and wish to receive their Equity Shares pursuant to this Offer by way of
credit to such account, the necessary details of their beneficiary account should be filled in the space
provided in the CAF. It may be noted that the allotment of securities arising out of this Issue may be made in
dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless,
it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names
are in the same order as in the records of the Company.

Responsibility for correctness of information (including applicant’s age and other details) filled in the CAF vis-à-
vis such information with the applicant’s depository participant, would rest with the applicant. Applicants should
ensure that the names of the applicants and the order in which they appear in CAF should be the same as
registered with the applicant’s depository participant.

If incomplete / incorrect beneficiary account details are given in the CAF the applicant will get Equity Shares in
physical form.

The Equity Shares pursuant to this Offer allotted to Investors opting for dematerialized form, would be directly
credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any)
would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will
provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account.

Renouncees will also have to provide the necessary details about their beneficiary account for allotment of
securities in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

General instructions for applicants

a) Please read the instructions printed on the enclosed CAF carefully.

b) Application should be made on the printed CAF, provided by the Company and should be completed in
all respects. The CAF found incomplete with regard to any of the particulars required to be given

199
therein, and/ or which are not completed in conformity with the terms of this Draft Letter of Offer are
liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and
after deduction of bank commission and other charges, if any. The CAF must be filled in English and
the names of all the applicants, details of occupation, address, father’s / husband’s name must be filled
in block letters.

c) The CAF together with cheque/demand draft/at par cheque should be sent to the Bankers to the Issue /
Collecting Bank or to the Registrar to the Issue and not to the Company or Lead Manager to the Issue.
Applicants residing at places other than cities where the branches of the Bankers to the Issue have been
authorised by the Company for collecting applications, will have to make payment by Demand Draft/at
par cheque or cheque payable at Hyderabad and send their application forms to the Registrar to the
Issue by REGISTERED POST. If any portion of the CAF is / are detached or separated, such
application is liable to be rejected.

d) Applications for a total value of Rs. 50,000 or more, i.e. where the total number of securities applied for
multiplied by the Issue price, is Rs. 50,000 or more the applicant or in the case of application in joint
names, each of the applicants, should mention his/ her PAN number allotted under the Income-Tax Act,
1961 and also submit a photocopy of the PAN card(s) or a communication from the Income Tax
authority indicating allotment of PAN (“PAN Communication”) along with the application for the
purpose of verification of the number. Bidders who do not have PAN are required to provide a
declaration in Form 60 / Form 61 prescribed under the I. T. Act along with the application. Bid cum
Application Forms without this photocopy/ PAN Communication/ declaration will be considered
incomplete and are liable to be rejected.

e) With effect from July 1, 2005, SEBI has decided to suspend all fresh registrations for obtaining Unique
Identification Number (UIN) and the requirement to contain/quote UIN under the SEBI (Central
Database of Market Participants) Regulations, 2003 as amended from time to time vide its circular
MAPIN/Cir-13/2005.

f) Applicants are advised to provide information as to their savings/current account number and the name
of the Company with whom such account is held in the CAF to enable the Registrar to the Issue to print
the said details in the refund orders, if any, after the names of the payees. Application not containing
such details is liable to be rejected.

g) The payment against the application should not be effected in cash. In case payment is effected in
contravention of this, the application may be deemed invalid and the application money will be
refunded and no interest will be paid thereon.

h) Signatures should be either in English or Hindi or in any other language specified in the Eight Schedule
to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be
attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity
Shareholders must sign the CAF as per the specimen signature recorded with the Company.

i) In case of an application under power of attorney or by a body corporate or by a society, a certified true
copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the
relevant investment under this Offer and to sign the application and a copy of the Memorandum and
Articles of Association and / or bye laws of such body corporate or society must be lodged with the
Registrar to the Issue giving reference of the serial number of the CAF. In case these papers are sent to
any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the
application is liable to be rejected.

j) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as
per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are
renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if
any, will be made in the first applicant’s name and all communication will be addressed to the first
applicant.

k) Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for
allotment of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to
time by the RBI under FEMA in the matter of refund of application money, allotment of Equity Shares,
subsequent issue and allotment of Equity Shares, interest, export of share certificates, etc. In case a

200
Non-Resident or NRI Equity Shareholder has specific approval from the RBI, in connection with his
shareholding, he should enclose a copy of such approval with the CAF. OCB’s shall obtain prior
approval from RBI for participating in this issue. A copy of RBI approval must be enclosed along
with the CAF, failing which the application shall be rejected.

l) All communication in connection with application for the Equity Shares, including any change in
address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of
allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers
and CAF number. Please note that any intimation for change of address of Equity Shareholders, after
the date of allotment, should be sent to the Registrar and Transfer Agents of the Company, Karvy
Computershare Private Limited in the case of Equity Shares held in physical form and to the respective
depository participant, in case of Equity Shares held in dematerialized form.

m) Split forms cannot be re-split.

n) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be
entitled to obtain split forms.

o) Applicants must indicate the payment method chosen. The applicant must chose only one of the
payment methods.

p) Applicants must write their CAF number at the back of the cheque / demand draft.

q) Only one mode of payment per application should be used. The payment must be either in cash or by
cheque / demand draft/at par cheque drawn on any of the banks, including a co-operative bank, which is
situated at and is a member or a sub member of the Bankers Clearing House located at the centre
indicated on the reverse of the CAF where the application is to be submitted.

r) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated
cheques and postal / money orders will not be accepted and applications accompanied by such cheques /
demand drafts / money orders or postal orders will be rejected.

s) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/
Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at
the bottom of the CAF.

Grounds For Technical Rejections

Applicants are advised to note that applications are liable to be rejected on technical grounds, including the
following:

• Payment method not chosen or both payment methods chosen;

• Amount paid does not tally with the amount payable for;

• Age of First Applicant not given;

• PAN photocopy/ PAN Communication/ Form 60 / Form 61 declaration not given if Application is for Rs.
50,000 or more;

• In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant
documents are not submitted;

• If the signature of the existing shareholder does not match with the one given on the Application Form and
for renouncees if the signature does not match with the records available with their depositories;

• If the Applicant desires to have shares in electronic form, but the Application Form does not have the
Applicant’s depository account details;

• Application Forms are not submitted by the Applicants within the time prescribed as per the Application
Form and the Letter of Offer;

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• Applications not duly signed by the sole/joint Applicants;

• Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest
in the Issue;

• Applications accompanied by Stockinvest;

• In case no corresponding record is available with the Depositories that matches three parameters, namely,
names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity
(DP ID) and the beneficiary’s identity;

• Applications by US persons;

• Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable


local laws) and where last available address in India has not been provided.

• OCB’s shall obtain prior approval from RBI for participating in this issue. A copy of RBI approval must be
enclosed along with the CAF, failing which the application shall be rejected.

Mode of payment for Resident Equity Shareholders/ Applicants

• All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on
the reverse of the CAF), crossed ‘A/c Payee only’ and marked ‘Name of the Bank A/c JSW Steel Limited
Rights Issue’

• Applicants residing at places other than places where the bank collection centres have been opened by the
Company for collecting applications, are requested to send their applications together with Demand Draft for
the full application amount favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked ‘Name
of the Bank A/c- JSW Steel Limited Rights Issue’ payable at Hyderabad directly to the Registrar to the
Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the
Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Mode of payment for Non-Resident Equity Shareholders/ Applicants

As regards the application by non-resident equity shareholders, the following further conditions shall apply:

Payment by non-residents must be made by demand draft / cheque or funds remitted from abroad in any of the
following ways:

Application with repatriation benefits

1. By Indian Rupee drafts purchased from abroad or funds remitted from abroad; or

2. By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account; or

3. By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India; or

4. FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.

All cheques/drafts submitted by non-residents should be drawn in favour of the Bankers to the Issue and marked
‘Name of the Bank A/c JSW Steel Limited Rights Issue – NR’ and must be crossed ‘A/c Payee only’ for the
amount payable. The CAF duly completed together with the amount payable on application must be deposited
with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the
Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

Payment will not be accepted out of Non Resident Ordinary (NRO) Account of the non-residents holding shares
on a repatriation basis. Payment by drafts should be accompanied by bank certificate confirming that the draft
has been issued by debiting to NRE or FCNR account and the same should be enclosed with the CAF. Otherwise
the application shall be considered incomplete and is liable to be rejected.

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New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

Application without repatriation benefits

As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified
above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account or Rupee Draft
purchased out of NRO Account. In such cases, the allotment of Equity Shares will be on non-repatriation basis.

All cheques/drafts submitted by non-residents should be drawn in favour of the Bankers to the Issue and marked
‘Name of the Bank A/c JSW Steel Limited Rights Issue ’ and must be crossed ‘A/c Payee only’ for the amount
payable. The CAF duly completed together with the amount payable on application must be deposited with the
Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue
Closing Date. A separate cheque or bank draft must accompany each CAF.

Payment by drafts should be accompanied by bank certificate confirming that the draft has been issued by
debiting to NRO account and the same should be enclosed with the CAF . Otherwise the application shall be
considered incomplete and is liable to be rejected.

New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

Note:

• In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment
in Equity Shares and Warrants can be remitted outside India, subject to tax, as applicable according to
Income Tax Act, 1961.

• In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity
Shares cannot be remitted outside India.

• The CAF duly completed together with the amount payable on application must be deposited with the
Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue
Closing Date. A separate cheque or bank draft must accompany each CAF.

• In case of an application received from non-residents, allotment, refunds and other distribution, if any, will
be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such
allotment, remittance and subject to necessary approvals.

Disposal of application and application money

No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers
to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the
acknowledgment slip at the bottom of each CAF.

The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part,
and in either case without assigning any reason thereto.

In case an application is rejected in full, the whole of the application money received will be refunded. Wherever
an application is rejected in part, the balance of application money, if any, after adjusting any money due on
Equity Shares allotted, will be refunded to the applicant within six weeks from the close of the Issue.

For further instruction, please read the CAF carefully.

Important

• Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully
followed; otherwise the application is liable to be rejected.

• All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for Split
Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the

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CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed ‘JSW
Steel Limited - Rights Issue’ on the envelope) to the Registrar to the Issue at the following address:

Karvy Computershare Private Limited


Karvy House, 46, Avenue 4
Street No. 1
Banjara Hills
Hyderabad 500 034
Tel: (91 40) 2331 2454, 2332 0751
Fax: (91 40) 2331 1968
Email: jswrights@karvy.com

• It is to be specifically noted that this Issue of Equity Shares is subject to the section entitled ‘Risk Factors’
beginning on page [•] of this Draft Letter of Offer.

The Issue will not be kept open for more than 30 days unless extended, in which case it will be kept open for a
maximum of 60 days.

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MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

Capitalised terms used in this section have the meaning that has been given to such terms in the Articles of
Association.
Pursuant to Schedule II of the Companies Act, 1956 and SEBI Guidelines, the main provisions of the Articles of
Association of the Company are set forth below.

Capital and Increase and Reduction of Capital

4. Subject to the provisions of the Act, KSIIDC shall limit its equity participation to 11% or Rs.50 Crores
in the Share Capital of the Company whichever is less. JISCO and its associates/nominees shall be
allotted and hold 26% of the equity share capital of the Company. The remaining shares shall be offered
to the public with such reservations as may be permitted by Securities and Exchange Board of India
(SEBI) as per the applicable guidelines after getting it underwritten wherever necessary or as may be
decided by the term lending Financial Institutions. Such offer to the public shall be made through
prospectus with the arrangements for listing of all the shares in one or more recognized Stock
Exchanges as may be mutually decided by both KSIIDC and JISCO. KSIIDC shall release its prorata
share contribution towards Equity Share Capital of the Company against JISCO bringing in its share of
contribution towards Equity Share Capital of the Company. However KSIIDC shall disburse its
contribution only after in principle approvals have been obtained from the Financial Institution/Banks.
The land cost will be counted towards KSIIDC’s equity contribution. The balance equity will be
disbursed over the implementation period of 4 years.

5. The investment in the manner aforesaid can be made by KSIIDC and JISCO directly in their respective
names or partly in the names of their respective nominees or associates.

6. Any further issue of capital shall be made in such manner so as to ensure that the participation of
KSIIDC and JISCO in the total issued Equity Share Capital of the Company shall all times remains in
the same proportion as that provided herein as that the shareholding of KSIIDC in the Equity Share
Capital of the Company shall always be limited to 11% or Rs. 50 Crores whichever is less and that of
JISCO shall be minimum 26% of such equity and neither KSIIDC nor JISCO shall without the consent
of each other reduce directly or indirectly its proportion of its shareholdings in the issued share capital
of the Company.

7. The Company in General Meeting may, from time to time, increase the capital by the creation of new
shares, such increase to be of such aggregate amount and to be divided into shares of such respective
amounts as the resolution shall prescribe. Subject to the provisions of the Act, any shares of the original
or increased capital shall be issued upon such terms and conditions and with such rights and privileges
annexed thereto, as the General Meeting resolving upon the creation thereof, shall direct and if no
direction be given as the Directors shall determine and in particular, such shares may be issued with a
preferential or qualified right to dividends, and in the distribution of assets of the Company, and with a
rights of voting at general meetings of the Company in conformity with Section 87 and 88 of the Act.
Whenever the capital of the Company has been increased under the provisions of the Article, the
Director shall comply with the provisions of Section 97 of the Act.

8. Except so far as otherwise provided by the condition of issue or by these presents, any capital raised by
the creation of new share shall be considered as part of the existing capital and shall be subject to the
provision herein contained, with reference to the payment of calls and instalments, forfeiture, lien,
surrender, transfer and transmission, voting and otherwise.

13. Whenever the capital, by reason the issue of Preference Share or otherwise, is divided into different
classes of shares, all or any of the rights and privileges attached to each class may, subject to the
provisions of Section 106 and 107 of the Act, be modified, commuted, affected or abrogated or dealt
with by agreement between the Company and any person purporting to contract on behalf of that class,
provided such agreement is ratified in writing by holders of at least threefourths in nominal value of the
issued shares of the class or is confirmed by a special Resolution passed at a separate general meeting of
the holders of shares of that class.

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Share and Certificates

17. Subject to the provisions of these Articles and of the Act, the Shares (iIncluding any shares forming part
of any increased capital of the Company) shall be under the control of the Directors, who may allot or
otherwise dispose of the same to such persons in such proportion on such terms and conditions and at
such times as the Directors think fit and subject to the sanction of the Company in General Meeting with
full power, to give any person the option to call for or be allotted shares of any class of the Company
either (subject to the provisions of Sections 78 & 79 of the Act) at a premium or at par or at a discount
and such option being exercisable for such time and for such consideration as the Directors think fit.
The Board shall cause to be filed the returns as to allotment as provided for in Section 75 of the Act

18. In addition to and without derogating from the powers for that purpose conferred on the Board under
Article 16 and 17 the Company in general meeting may,; subject to the provisions of Section 81 of the
Act determine that any shares (whether forming part of the original capital or of any increased capital of
the Company) shall be offered to such person (whether members or not) in such proportion and on such
terms and conditions and either (subject to compliance with the provisions of Sections 78 and 79 of the
Act) at a premium or at par or at a discount, such option being exercisable at such times and for such a
consideration as may be directed by such General Meeting or the Company in general meeting may
make any other provision whatsoever for the issue, allotment or disposal of any shares.

25. Except as ordered by a Court of competent jurisdiction or as by law required, the Company shall not be
bound to recognise any equitable, contingent, future or partial interest in any share, or (except only as is
by these Article otherwise expressly provided) any right in respect of a share other than an absolute
right thereto in accordance with these Articles in the person from time to time registered as the holder
thereof; but the Board shall be at liberty at their sole discretion to register any share in the joint names
of any two or more persons or the survivor or survivors of them.

26. None of the funds of the Company shall be applied in the purchase of any share of the Company, and it
shall not give any financial assistance for or in connection with the purchase or subscription of any
shares in the Company or in its holding Company save as provided by Section 77 of the Act.

Underwriting and Brokerage

27. Subject to the provision of Section 76 of the Act, the Company may at any time pay a commission to
any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or
conditionally) for any shares or debentures in the Company, or procuring, or agreeing to procure,
subscriptions (whether absolute or conditional) for any shares or debentures in the Company, but so that
the commission shall not exceed in the case of shares five percent of the price at which the shares are
issued and in the case of debentures two and a half per cent of the price at which the debentures are
issued. Such commission may be satisfied by payment of cash or by allotment of fully or partly paid
share or the other.

Calls

30. The Board may, from time to time, subject to the terms on which any shares may have been issued and
subject to the conditions of allotment, by a resolution passed at a meeting of the Board (and not by
circular resolution) make such calls as it thinks fit upon the members in respect of all money unpaid on
the shares held by them respectively and each member shall pay the amount of every call so made on
him to the person or persons and at the times and places appointed by the Board. A call may be made
payable by instalments.

31. Fifteen days’ notice in writing of any call shall be given by the Company specifying the time, place of
payment, and the person or persons to whom such call shall be paid.

Forfeiture of Shares

44. If any member fails to pay any call or instalment of a call on or before the day appointed for the
payment of the same or any such extension thereof as aforesaid, the Board may at any time thereafter,
during such time as the call or instalment remains unpaid, give notice to him requiring him to pay the
same together with any interest that may have accrued, and all expenses that may have been incurred by
the Company by reason of such non-payment.

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48. Any share so forfeited shall be deemed to be the property of the Company, and may be sold, re-allotted,
or otherwise disposed of, either to the original holder thereof or to any other person, upon such terms
and in such manner as the Board shall think fit.

49. Any member whose shares have been forfeited shall notwithstanding the forfeiture, be liable to pay and
shall forthwith pay to the Company, on demand all calls, instalments, interest and expenses owing upon
or in respect of such shares at the time of the forfeiture, together with interest thereon from the time of
the forfeiture, until a payment, at such rate not exceeding 18 percent per annum as the Board may
determine and the Board may enforce the payment thereof, if it thinks fit.

Transfer and Transmission of Shares

55. The Company shall keep a “Register of Transfers” and therein shall be fairly and distinctly entered
particulars of every transfer or transmission of any share.

56. Share in the Company may be transferred by an instrument in writing as provided by the Provision of
the Act, such instrument of transfer shall be in the form prescribed and shall be duly stamped and
delivered to Company within the prescribed period.

57. The instrument of transfer duly stamped and executed by the transferor and the transferee shall be
delivered to the Company in accordance with the provisions of the Act. The instrument of transfer shall
be accompanied by such evidence as the Board may require to prove the title of transferor and his right
to transfer the shares and every registered instrument of transfer shall remain in the custody of the
Company until destroyed by order of the Board. The transferor shall be deemed to be the holder of such
shares until the name of the transferee shall have been entered in the Register of Members in respect
thereof. Before the registration of a transfer, the certificate of the shares must be delivered to the
Company.

59. Subject to the provisions of Section 111 of the Act, Board may, in due and strict accordance and
compliance with the provision of Section 22A of the Securities Contract (Regulation) Act, 1956, decline
to register or acknowledge any transfer of shares, whether fully paid or not, (notwithstanding that the
proposed transferee be already a member), but in such cases it shall, within two months from the date on
which the instrument of transfer was lodged with the Company, send to the transferee and the transferor
notice of the refusal to register such transfer. The registration of transfer shall not be refused on the
ground of the transferor being either alone or jointly with any other person or persons indebted to the
Company on any account whatsoever except a lien on shares.

65. A person entitled to a share by transmission shall, subject to the right of the Directors to retain such
dividends or money as hereinafter provided, be entitled to receive and may give a discharge for, any
dividend or other moneys payable in respect of the share.

66. There shall be paid to the Company in respect of the transfer or transmission of any number of shares
such fee, if any as the Directors may require.

68. Neither KSIIDC nor JISCO shall without prior consent in writing of the other sell, transfer or otherwise
dispose any or all of the shares held by it in the Company for the period as agreed upon between
KSIIDC and JISCO; provided however, as between the JISCO and its nominees and associate
companies, the shares can be transferred inter se without the consent of the KSIIDC.

69. (a) If either KSIIDC or JISCO desires to part with or transfer its shareholding or any part thereof in the
equity share capital of the Company, such party shall give the first option to the other party for the
purchase of such shares at the price referred to hereunder subject to the approval or such restrictions as
may be imposed by the Government of India or the State Government or the Financial
Institutions/Banks who have granted loans to the Company and/or subscribed for the shares in the
company and also subject to the provisions of the Companies Act 1956, as amended from time to time.
The sale price of such shares shall be determined by adopting the following three methods and the
highest price arrived at by any one of these methods shall be taken as the final price of such shares
offered to the other party unless the KSIIDC and JISCO otherwise agree in writing for any special
reason.

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(i) The paid up value of the shares plus interest compounded yearly at the rate of 20 % p.a. from
the date of investment minus dividends declared by the manufacturing Company upto the
period of such sale.
or
(ii) The assessed value of the shares as determined by the auditors of the Company on the basis of
the net worth of the Company as on the date of offer.
or
(iii) The average price of the share ruling on the stock exchange/exchanges on which the shares are
quoted for the preceding 3 months of such offer being made.
or
(b) The aforesaid offer of sale of shares shall remain open for ninety days from the receipt of
notice thereof and only in the event of either KSIIDC or JISCO declining to accept the same or
not accepting the same within the aforementioned period of ninety days, the proposer can sell
or transfer the same to any third party at the price or value at which it was offered for sale to
the other party as above and not below such price or value. In case the proposing transferor is
unable to sell the shares at that price, he must offer the shares once again for any reduced price
to the other party and follow the same procedure as mentioned above until he is able to sell the
shares in favour of the other party or any third party as the case may be.

(c) KSIIDC and JISCO hereby agree that the JISCO shall have an option to purchase the equity
shares held in the name of the KSIIDC in the share capital of the company over a period of not
more than five years commencing from the date of the investment or from the date of
commercial production whichever is earlier.

Borrowing Powers

71. Subject to the provision of Section 292 and 293 of the Act the Board may, from time to time at its
discretion by a resolution passed at a meeting of the Board, accept deposits from members either in
advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums
of money for the purpose of the Company provided however, where the moneys, to be borrowed
together with the moneys already borrowed (apart from temporary loans obtained from the Company’s
bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the Company
and its free reserves (not being reserves set apart for any specific purpose) the Board shall not borrow
such moneys without the consent of the company in General Meeting.

Meeting of Members

90. Five members present in person shall be quorum for General Meeting.

93. The Chairman (if any) of the Directors shall be entitled to take the Chair at every General Meeting
whether Annual or Extraordinary. If there be no such Chairman of the Directors, or, if at any meeting he
shall not be present within fifteen minutes of the time appointed for holding such meeting or if he shall
be unable or unwilling to take the Chair, then the Vice-Chairman (if any) of the Directors shall be
entitled to take the Chair and if there be no such Vice-Chairman or if he be not so present, the members
present shall elect another director as Chairman, and if no Director be present or if all the Directors
present decline to take the Chair, then the members present shall elect one of their member to be the
Chairman.

96. At any General meeting, a resolution put to vote of the meeting shall be decided on a show of hands,
unless a poll is (before or on declaration of the result of the show of hands) demanded by any member
or members present in person or by proxy and holding shares in the Company which confer a power to
vote on the resolution not being less than one-tenth of the total voting power in respect of the resolution
or on which an aggregate sum of not less than fifty thousand rupees has been paid-up and unless a poll
is demanded, a declaration by the Chairman that a resolution has on a show of hands been carried or
carried unanimously, or by a particular majority or lost and an entry to that effect in the Minute Book of
the Company shall be conclusive evidence of the face without proof of the number or proportion of the
votes recorded in favour of or against that resolution.

97. In the case of an equality of votes, the Chairman shall both on show of hands and at a poll (if any) have
a casting vote in addition to the vote or votes to which he may be entitled as member.

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103. Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions
as to voting for the time being attached to any class of shares for the time being forming part of the
capital of the Company, every member not disqualified by the last preceding Articles shall be entitled to
be present, and to speak and vote at such meeting, and on a show of hands every member present in
person shall have one vote and upon a poll the voting right of every member present in person or by
proxy shall be in proportion to his share of the paid-up equity share capital of the Company. Provided,
however, if any preference shareholder be present at any meeting of the Company save as provided in
clause (b) of sub-section (2) of Section 87, of the Act, he shall have a right to vote only on resolutions
placed before the meeting which directly affect the rights attached to his preference shares.

107. Subject to the provision of these Articles votes may be given either personally or by proxy. A body
corporate being a member may vote either by a representative duly authorised in accordance with
Section 187 of the Act and such representative shall he entitled to exercise the same rights and powers
(including the right to vote by proxy) on behalf of the body corporate which he represents as that body
could exercise if it were an individual member.

Directors

118. (1) Until otherwise determined by a General Meeting of the Company and subject to the provisions of
Section 252 of the Act, the number of Directors (excluding Debenture and Alternate Directors) shall not
be less than three nor more than eighteen.

(2) The first Directors of the Company shall be

1. Shri Sajjan Jindal

2. Shri P.R. Jindal

3. Shri Ratan Jindal

119. (a) The number of directors representing KSIIDC on the Board of Directors of the Company shall
be Two (2) so long as they continue to hold 11% or Rs.50 Crores in the Equity Share Capital of
the Company whichever is less. In the event the shareholding of KSIIDC falls below 11% or
Rs.50 crores whichever is less, in that event, KSIIDC will be entitled to nominate only one
director. However as long as KSIIDC hold any equity p articulation in the Company, one of the
nominee Director of KSIIDC shall be a non retiring director.

(b) The chairman of the company shall be a nominee of JISCO and be appointed by mutual
consent between KSIIDC and JISCO. The Chairman of the Company shall have a casting vote.

(c) If in the opinion of the KSIIDC, circumstances such as mis-appropriation, misfeasance of


funds and the Company incurring losses, warranting a stricter control of the Company’s
finances, it shall be open to KS1IDC to request the Board to appoint a nominee of the KSIIDC
as a whole time Finance Director for such period as the Board may consider necessary.

120. Whenever Directors enter into a contract with any Government, Central, State or Local, any bank or
financial institution or any person or persons hereinafter referred to as (“the appointer”) for borrowing
any money or for providing any guarantee or security or for technical collaboration or assistance or for
underwriting or enter into any other arrangement whatsoever, the Directors shall have, subject to the
provisions of section 255 of the Act, the power to agree that such appointer shall have the right to
appoint or nominate by a notice in writing addressed to the Company one or more persons, who are
acceptable to the Board, as Directors on the Board for such period and upon such conditions as may be
mentioned in the agreement and that such Director or Directors may not be liable to retire by rotation
nor be required to hold any qualification shares. The Directors may also agree that any such Director or
Directors may be removed from time to time by the appointer entitled to appoint or nominate them and
the appointer may appoint another or other in his or their place and also fill in vacancy, which may
occur as a result of any such Director or Directors ceasing to hold that office for any reason whatever.
The Directors appointed or nominated under this Article shall be entitled to exercise and enjoy all or
any of the rights and privileges exercised and enjoyed by the Directors of the Company including
payment of remuneration and travelling expenses to such Director or Directors as may be agreed by the
Company with the appointer.

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123. Subject to the provisions of Section 260, 261 and 264 of the Act, the Board shall have power at any time
and from time to time to appoint any other qualified person to be an Additional Director, but so that the
total number of Directors shall not at any time exceed the maximum fixed under Article 118. Any such
Additional Director shall hold office only up to the date of the next Annual General Meeting.

124. Subject to the provisions of Section 261, 264 and 284 (6) of the Act, the Board shall have power at any
time and from time to time to appoint any other qualified person to be Director to fill a casual vacancy.
Any person so appointed shall hold office only up to the date upto which the Director in whose place he
is appointed would have held office if it had not been vacated by him.

125. A Director of the company shall not be bound to hold any qualification share.

131. A Director of the Company who is in any way, whether directly or indirectly concerned or interested in
a contract or arrangement or proposed contract or arrangement entered into or to be entered into by or
on behalf of the Company, shall disclose the nature of his concern or interest at a meeting of the Board
in the manner provided in Section 299(2) of the Act; provided that it shall not be necessary for a
Director to disclose his concern or interest in any contract or arrangement entered into or to be entered
into with any other company where any of the Directors of the Company or two or more of them
together holds not more than two per cent of the paid-up share capital in any such Company.

133. No Director shall as a Director, take any part in the discussion of, or vote on any contract or
arrangement entered into or to be entered into by or on behalf of the Company, if he is in any way,
whether directly or indirectly, concerned or interested in such contract or arrangement; nor shall his
presence count for the purpose of forming a quorum at the time of any such discussion or vote; and if he
does vote, his vote shall be void; provided however that nothing herein contained shall apply to

(a) any contract of indemnity against any loss which the Directors, or any one or more of them,
may suffer by reason of becoming of being sureties and or surety for the Company.

(b) any contract or arrangement entered into or to be entered into with a public company or private
company which is subsidiary of a public company in which the interest of’ the Director
consists solely:

(i) in his being :-

(a) a director of such company, and

(b) the holder of not more than shares of such, number or value therein as is
requisite to qualify him for appointment as a Director thereof, he having been
nominated as such director by the Company.

(ii) in his being a member holding not more than 2 % of its paid up share capital.

145. Subject to the provisions of the Act and of these Articles, the Board shall have power to appoint from
time to time any one or more of its number as the managing Director or Managing Directors or whole
time Director or Directors (including Technical Director) of the company who shall be nominee of
JISCO for fixed term not exceeding five year at a time and upon such terms and conditions as the Board
thinks fit, and subject to the provisions of Article 146 the Board may, by resolution, vest in such
Managing Director or Managing Directors or whole-time Director or Directors (including Technical
Director) such of the powers hereby vested in the Board generally as it thinks fit, and such powers may
be made exercisable for such period or periods, and upon such conditions and subject to such
restrictions as it may determine. The remuneration of Managing Director or Managing Directors or
Whole-time Director or Directors (including Technical Director) may be, by way of monthly payment,
fee for each meeting or participation in profits, or by any or all these modes, and/or any other mode not
expressly prohibited by the Act.

146. The managing Director shall not exercise the powers to

(a) make calls on shareholders in respect of money unpaid on the shares in the Company.

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(b) issue debentures and except to the resolution passed at the Board meeting under section 292 of
the Act shall also not exercise the powers to,

(c) borrow moneys, otherwise than on debentures;

(d) invest the funds of the Company, and

(e) make loans.

Proceeding of the Board of Directors

151. Subject to Section 287 of the Act the quorum of a meeting of the Board shall be one-third of its total
strength (excluding Directors, if any whose places may be vacant at the time and any fraction contained
in that one-third being rounded off as next number one), or two Directors whichever is higher; Provided
that where at any time the number of interested directors exceeds or is equal to two-thirds of the
strength, the number of the remaining Directors, who are not interested, present at the meeting being not
less than two shall be the quorum during such time.

154. The Directors may, from time to time, elect from among their number, a Chairman of the Board and a
Vice -Chairman of the Board who shall be nominee of JISCO and determine the period for which they
are respectively to hold office. If at any meeting of the Board the Chairman is not present within fifteen
minutes after the time appointed or holding the same, the Vice-Chairman shall act as the Chairman of
the meeting and if the Vice-Chairman be also not so present, the Directors present may choose one of
their member to be chairman of the Meeting.

155. Questions arising at any meeting of the Board of directors shall be decided by majority of votes and in
the case an equality of votes, the Chairman shall have a second or a casting vote.

157. Subject to the restriction contained in Section 292 of the Act the Board may delegate any of their power
to Committees of the Board consisting of such Member or Members of its body as it thinks fit, and it
may from time to time revoke and discharge any such Committee of the Board either wholly or in part
and either as to person or purposes, but every Committee of the Board so formed shall, in the exercise
of the powers so delegated; confirm to any regulations that may from time to time be imposed on it by
the Board. All acts done by any such Committee of the board in conformity with such relations and
fulfilment of the purposes of their appointment, but not otherwise, shall have the like force and effect as
if done by the Board.

Dividends

168. The profit of the Company, subject to any special right relating thereto created or authorised to be
created by these Articles and subject to the members in proportion to the amount of capital paid-up or
credited as paid-up on the shares held by them respectively.

169. The Company in General Meeting may declare dividends to be paid to members according to their
respective rights, but no dividend shall exceed the amount recommended by the Board, but the
Company in General Meeting may declare smaller dividend.

170. No dividend shall be declared or paid otherwise than out of profits of the financial year arrived at after
providing for depreciation in accordance with the provisions of Section 205 of the Act or out of the
profits of the Company for previous financial year or years arrived at after providing for depreciation in
accordance with these provisions and remaining undistributed or out of both; Provided that:

(a) If the Company has not provided for depreciation for any previous financial year or years it
shall before declaring or paying a dividend for any financial year, provide for such depreciation
out of profits of the financial year or out of the profits of any other previous financial year or
years.

(b) If the Company has incurred any loss in any previous financial year or years the amount of the
loss or an amount which is equal to the amount provided for depreciation for that year or those
years whichever is less, shall be set off against the profits of the Company for the year for
which the dividend is proposed to be declared or paid of against the profit of the Company for

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any previous financial year or years arrived at in both cases after providing for depreciation in
accordance with the provision of subsection (2) of Section 205 of the Act or against both.

177. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of
the transfer.

179. No unpaid dividend shall bear interest as against the Company.

179a. There shall be no forfeiture of unclaimed dividends before the claim becomes barred by law.

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts (not being contracts entered into in the ordinary course of business carried on by us or
entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed
material have been entered or are to be entered into by us. These contracts and also the documents for inspection
referred to hereunder, may be inspected at the Registered Office of the Company situated at Jindal Mansion, 5A,
G. Deshmukh Marg Mumbai 400 026 from 10 a.m. to 4 p.m. from the date of this Draft Letter of Offer until the
date of closure of the Subscription List.
A. Material Contracts

1. Memorandum of Understanding between the Company, ICICI Securities Limited, Enam Financial
Consultants Private Limited, Kotak Mahindra Capital Company Limited and SBI Capital Markets
Limited dated January 20, 2006.

2. Memorandum of Understanding between the Company and Registrar to the Issue dated January 24,
2006.
B. Documents
1. Memorandum and Articles of the Company.

2. Certificate of Incorporation of the Company dated March 15, 1994.

3. Fresh certificate of incorporation consequent on change of name from Jindal Vijayanagar Steel
Limited to JSW Steel Limited dated June 16, 2005.

4. Shareholders Resolution passed at the last Annual General Meeting held on June 13, 2005
reappointing Lodha & Co. as statutory auditors for the financial year 2005-2006.

5. Copy of the Board Resolution dated January 20, 2006 approving this Issue.

6. Consents of the Directors, Auditors, Lead Manager to the Issue, Legal Counsel to the Issue,
Bankers to the Issue and Registrars to the Issue, to include their names in the Draft Letter of Offer
to act in their respective capacities.

7. Appointment of Company Secretary as Compliance Officer

8. Letter dated January 24, 2006 from the Auditors of the Company confirming Tax Benefits as
mentioned in this Draft Letter of Offer.

9. The Report of the Auditors, Lodha and Co. as set out herein dated in relation to the restated
financials of the Company for the last five financial years and for the six month period ended
September 30, 2005.

10. Annual Report of the Company for the last five Financial Years.

11. In-principle listing approval dated _________, _________ and _________ from BSE, NSE and
BgSE respectively.

12. Letter No. __________ dated _______ issued by SEBI for the Issue.

13. Due Diligence Certificate dated [•] from SBI Capital Markets Limited

14. Tripartite Agreement dated February 26, 1997 between the Company, the Registrar and NSDL to
establish direct connectivity with Depository.

15. Tripartite Agreement dated June 24, 2000 between the Company, the Registrar and CDSL to
establish direct connectivity with Depository.

16. Techno Economic Feasibility Report of Mecon and Information Memorendum of Industrial
Development Bank of India Limited.

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