Ispat Annual Report 2006-07

ISPAT INDUSTRIES LIMITED
CHAIRMAN EMERITUS
Mohan Lal Mittal
BOARD OF DIRECTORS
Pramod Mittal Chairman
V. K. Mittal Managing Director
U. Mahesh Rao B. P. Singh (Nominee – IDBI)
Dr. A. Besant C. Raj K.M. Jaya Rao (Nominee – ICICI)
Manu Chadha M. Sankaranarayanan (Nominee – UTI)
Sanjoy Chowdhury (Nominee - IFCI)
Vinod Garg Executive Director (Marketing)
Anil Sureka Executive Director (Finance)
PRESIDENT AND COMPANY SECRETARY

T.P. Subramanian
REGISTERED OFFICE
“Park Plaza”
71, Park Street, Kolkata - 700 016
Tel. Nos.: 91-33-22495102/3119/2213
Fax No.: 91-33-22291956
Email: ispatcal@vsnl.com
Website: www.ispatind.com
AUDITORS BANKERS REGISTRARS & TRANSFER AGENT

M/s. S.R. Batliboi & Co. State Bank of India M/s Intime Spectrum Registry Ltd.
Chartered Accountants Punjab National Bank C-13, Pannalal Silk Mills Compound,
22, Camac Street Bank of India L.B.S. Marg, Bhandup (W),
Block ‘C’, 3rd Floor Indian Overseas Bank Mumbai - 400 078.
Kolkata - 700 016 The Hong Kong and Shanghai Tel. No.: 91-22-25963838
Banking Corporation Ltd. Fax No.: 91-22-25946969
ICICI Bank Ltd. Email: isrl@intimespectrum.com
WORKS
Cold Rolling Mill and Coating Sponge Iron Plant: Hot Rolled Coil Plant: Blast Furnace Plant:
Plant Complex: Geetapuram, Geetapuram, Geetapuram,
A-10/1& 10/2, MIDC Indusrial Area, Dolvi-402 107, Dolvi-402 107, Dolvi-402 107,
Kalmeshwar-441 501, Taluka Pen, Dist. Raigad, Taluka Pen, Dist. Raigad, Taluka Pen, Dist. Raigad,
Dist. Nagpur, Maharashtra Maharashtra Maharashtra Maharashtra
1
ISPAT INDUSTRIES LIMITED ANNUAL REPORT 2006 - 07
CONTENTS
Notice ............................................................................................................................. 3
Directors’ Report ........................................................................................................... 15
Management Discussion & Analysis ............................................................................. 25
Corporate Governance Report ...................................................................................... 32
Auditors’ Report ............................................................................................................ 52
Balance Sheet ................................................................................................................ 55
Profit & Loss Account ................................................................................................... 56
Cash Flow Statement ..................................................................................................... 57
Schedules ....................................................................................................................... 59
Information Pursuant to Part IV of
Schedule VI to the Companies Act, 1956 ..................................................................... 85
Statement Pursuant to Section 212
of the Companies Act, 1956 .......................................................................................... 86
Consolidated Accounts .................................................................................................. 87
Nippon Ispat Singapore (Pte) Ltd.
Statutory Financial Information ................................................................................... 114
Ispat Energy Ltd.
Statutory Financial Information ................................................................................... 124
Attendance Slip/Proxy Form
2
NOTICE
NOTICE is hereby given that the Twenty-second Annual General Meeting of the Members of ISPAT INDUSTRIES LIMITED will
be held at Kala Mandir, Main Hall, 48, Shakespeare Sarani, Kolkata - 700 017 on Wednesday, the 25 th July, 2007 at 10.30 A.M. to
transact the following business:-
1. To receive, consider and adopt the Balance Sheet as at 31st March, 2007 and Profit and Loss Account of the Company for the year
ended on that date and the Reports of the Directors and Auditors thereon.
2. To appoint a Director in place of Mr. Pramod Mittal, who retires by rotation and, being eligible, offers himself for re-appointment.
3. To appoint a Director in place of Mr. U. Mahesh Rao, who retires by rotation and, being eligible, offers himself for re-appointment.
4. To appoint Auditors and fix their remuneration and, for that purpose, to pass, with or without modification(s), the following
resolution as a Special Resolution: -
“RESOLVED that pursuant to the provisions of Section 224A and other applicable provisions, if any, of the Companies Act,
1956, M/s S R Batliboi & Co., Chartered Accountants, be and are hereby appointed as Auditors of the Company, to hold office
from the conclusion of this meeting until the conclusion of the next Annual General Meeting of the Company and the Board of
Directors be and is hereby authorised to fix their remuneration.”
SPECIAL BUSINESS
5. To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special Resolution:-
“RESOLVED THAT in partial modification of the Ordinary Resolution passed by the members of the Company at the
17th Annual General Meeting held on 26th September, 2002 and Special Resolution passed by the members at the
18th Annual General Meeting held on 24th September, 2003 and pursuant to Sections 309 and 310 read with Schedule XIII and
other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification(s) or re-enactment thereof
for the time being in force) and subject to approvals of IFCI Ltd., the lead financial institution and such other authorities,
including Central Government, as may be required, the Company hereby approves the revision in the terms of remuneration of
Mr V K Mittal, Managing Director, with effect from 1st April, 2006, as set out in the Explanatory Statement annexed to the
Notice convening this meeting and as further set out in the draft Supplementary Agreement placed before this meeting, which
Supplementary Agreement is hereby specifically sanctioned with liberty to the Board of Directors to alter and vary the same in
such manner as may be agreed to between the Board of Directors and Mr V K Mittal.”
“RESOLVED THAT in partial modification of the Special Resolution passed by the members of the Company at the 18th Annual
General Meeting held on 24thSeptember, 2003 and pursuant to Sections 309 and 310 read with Schedule XIII and other applicable
provisions, if any, of the Companies Act, 1956 (including any statutory modification(s) or re-enactment thereof for the time
being in force) and subject to approvals of IFCI Ltd., the lead financial institution and such other authorities, including Central
Government, as may be required, the Company hereby approves the revision in the terms of remuneration of Mr Vinod Garg,
Executive Director (Marketing), with effect from 1st April, 2006, as set out in the Explanatory Statement annexed to the Notice
convening this meeting and as further set out in the draft Supplementary Agreement placed before this meeting, which
such manner as may be agreed to between the Board of Directors and Mr Vinod Garg.”
“RESOLVED THAT in partial modification of the Special Resolution passed by the members of the Company at the 21st Annual
General Meeting held on 29th August, 2006 and pursuant to Sections 309 and 310 read with Schedule XIII and other applicable
provisions, if any, of the Companies Act, 1956 (including any statutory modification(s) or re-enactment thereof for the time
being in force) and subject to approvals of IFCI Ltd., the lead financial institution and such other authorities, including Central
Government, as may be required, the Company hereby approves the revision in the terms of remuneration of Mr Anil Sureka,
Executive Director (Finance), with effect from 1st April, 2006, as set out in the Explanatory Statement annexed to the Notice
convening this meeting and as further set out in the draft Supplementary Agreement placed before this meeting, which
such manner as may be agreed to between the Board of Directors and Mr Anil Sureka.”
3
NOTICE (Contd.)
“RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310 and 311 read with Schedule XIII and other
applicable provisions, if any, of the Companies Act, 1956 and subject to approvals of IFCI Ltd., the lead financial institution, and
such other authorities, including Central Government, as may be required, the Company hereby approves the re-appointment of
Mr V K Mittal as Managing Director of the Company for a period of five years with effect from 28th June, 2007 upon the terms
and conditions including remuneration as set out in the Explanatory Statement annexed to the Notice convening this meeting
and as further set out in the draft Agreement submitted to this meeting, which Agreement is hereby specifically sanctioned with
liberty to the Board of Directors to alter and vary, subject to such approvals as may be required, the terms and conditions of the
said appointment and/or Agreement in such manner as may be agreed to between the Board of Directors and Mr V K Mittal.”
By Order of the Board

T P SUBRAMANIAN
President & Company Secretary
Mumbai,
the 6th day of June, 2007
NOTES:
1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ALSO ENTITLED TO APPOINT A PROXY TO ATTEND AND
VOTE INSTEAD OF HIMSELF/HERSELF AND THE PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER
TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY AT ITS REGISTERED OFFICE NOT LESS THAN
48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING.
2. The Explanatory Statement, pursuant to Section 173(2) of the Companies Act, 1956, in respect of business at item Nos. 5 to 8
above is annexed hereto.
th
3. The Register of Members and Share Transfer Register of the Company will remain closed from Wednesday, the 18 day of
th
July, 2007 to Tuesday, the 24 day of July, 2007 (both days inclusive).
4. Members who are holding Equity Shares in identical order of names in more than one folio are requested to write to the Registrars
and Transfer Agents of the Company to enable the Company to consolidate their holdings in one folio.
5. All requests for transfer of Equity Shares and allied matters should preferably be sent directly to the Company’s Registrars and
Transfer Agents along with the relevant transfer deeds and share certificates. Those Members who are holding their DP Account
with a Depository may send their requests for transfer and allied matters to the Depository through their DP. Trading in Equity
Shares of the Company is permitted only in dematerialized form and the members may lodge their request for dematerialization
of their shares through their DP.
6. Members are requested to intimate to the Company queries, if any, regarding these accounts/reports at least ten days before the
Annual General Meeting to enable the Company to keep the information ready at the Meeting.
7. Members whose call money is in arrear are requested to make the payment immediately.
8. The unclaimed dividends for the financial year ended 30th June, 1994 and earlier years have been transferred to the General
Revenue Account of the Central Government in terms of Section 205-A of the Companies Act, 1956. Members who have not
encashed the Dividend Warrants for the aforesaid years are requested to claim the amount from the Registrar of Companies, West
Bengal at the address given below: -
NIZAM PALACE, IInd MSO Building,
234/4, A.J.C. Bose Road,
Kolkata 700 020.
4
NOTICE (Contd.)
In terms of Section 205C introduced by the Companies (Amendment) Act, 1999 read with Section 205A of the Companies Act,
1956, as amended, the amount of unpaid dividend, matured deposits, debentures and other application money remaining unclaimed
for a period of seven years is required to be transferred to the Investor Education and Protection Fund set up by the Government
of India and no payments shall be made by the Fund in respect of any such claims. The unclaimed dividends for the financial
years ended 31st March, 1995, 31st March, 1996 and 31 st March, 1997 have been transferred to the Fund.
9. Section 109A of the Companies Act, 1956 has introduced provisions for nomination by the holders of shares and debentures. The
prescribed nomination form can be obtained from the Company’s Registrars and Transfer Agents. The members may take advantage
of this facility, if desired.
10. At the ensuing Annual General Meeting, Mr. Pramod Mittal and Mr. U Mahesh Rao retire by rotation and, being eligible, offer
themselves for re-appointment. Mr. V. K. Mittal, Managing Director and a relative of Mr. Pramod Mittal is deemed to be concerned
or interested in the re-appointment of Mr. Pramod Mittal. At the ensuing Annual General Meeting, Mr. V K Mittal is proposed to
be re-appointed as Managing Director of the Company for a period of five years with effect from 28th June, 2007. Pursuant to
Clause 49 of the Listing Agreement(s), the details of these Directors are attached to the Notice convening the ensuing Annual
General Meeting.
ANNEXURE TO NOTICE
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
Item No. 5
Mr V K Mittal is a Science Graduate with Diploma in Business Management. He has over 29 years of rich and varied experience in
the steel industry. Mr.V K Mittal oversees the business operations of the Company and monitors execution of various projects.
Mr V K Mittal is a Director of the Company since 1995. Mr V K Mittal was Joint Managing Director of the Company for the period
from 28th June, 1997 to 27th June, 2002.
At the 17th Annual General Meeting held on 26th September, 2002, members of the Company had approved, by way of an Ordinary
Resolution, the appointment and terms of remuneration of Mr V K Mittal as Managing Director of the Company for a period of five
years with effect from 28th June, 2002 upon the terms and conditions set out in the draft Agreement submitted to the said meeting with
a liberty to the Board to alter and vary the terms and conditions of the said agreement. Pursuant to the above, an agreement was
entered into with Mr V K Mittal on 26th September, 2002 on the approved terms. The said agreement, inter alia, contains the following
terms and conditions:-
1. Salary: Rs.1,25,000/- (Rupees One lac twenty-five thousand only) per month in the scale of Rs.1,00,000/- to Rs.2,50,000/-.
The annual increments will be effective 1st April each year and will be decided by the Board.
2. Commission: Such amount as may be determined by the Board from time to time, subject to overall ceiling as prescribed in
Sections 198 and 309 of the Companies Act, 1956.
3. Perquisites and Allowances:
(i) In addition to the salary and commission payable, he will also be entitled to perquisites and allowances like accommodation
(furnished or otherwise) 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; 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 V K Mittal; such
perquisites and allowances will be subject to a maximum of 125% of his annual salary.
(ii) For the purpose 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.
5
NOTICE (Contd.)
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.
(iii) 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 the tenure, shall not be included in the computation of limits for the remuneration or perquisites aforesaid.
4. Minimum Remuneration
Notwithstanding anything to the contrary herein contained where in any financial year during the currency of the tenure of
Mr V K Mittal, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of salary and
perquisites and allowances as specified above.
The terms and conditions of the said appointment and/or Agreement may be altered and varied from time to time by the Board as
it may, in its discretion, deem fit, within the maximum amount payable to managing and whole-time directors in accordance with
Schedule XIII to the Companies Act, 1956 or any amendments made hereafter in this regard.
The Agreement may be terminated by either party giving the other party three months’ notice or the Company paying three
months’ salary in lieu thereof.
Subsequently, at the 18th Annual General Meeting held on 24th September, 2003, members of the Company had approved, by way
of a Special Resolution, the appointment and terms of remuneration of Mr V K Mittal, pursuant to the provisions contained in
Sections 269, 309, 311 and other applicable provisions of Companies Act, 1956.
Pursuant to the authority conferred by the members of the Company on 26th September, 2002, the Board of Directors, based on
the recommendation of the Remuneration Committee of Directors, increased the remuneration of Mr V K Mittal, from time to
time, which was within the scale as approved by the members. The Board of Directors, based on the recommendation of the
Remuneration Committee of Directors, also fixed the Commission payable to Mr V K Mittal at Rs.18,00,000/- per annum,
subject to the overall ceiling, as prescribed in Sections 198 and 309 of the Companies Act, 1956.
Members may note that, based on the recommendation of the Remuneration Committee, the Board of Directors, at its meeting
held on 20th January, 2007, revised the scale of salary of Mr V K Mittal and also increased the remuneration payable to him with
effect from 1st April, 2006, as under, subject to the approval of the members of the Company, IFCI Ltd., the lead financial
institution, and other authorities, including Central Government, as may be required :-
Scale – Rs.6,00,000/- to Rs.10,00,000/-
Salary – Rs.6,00,000/- (Rupees six lacs only) per month. The annual increments which will be effective 1 st April each year,
would be decided by the Board.
All other terms and conditions of the appointment of Mr V K Mittal, as approved by the members on 26th September, 2002 and
24th September, 2003, remain unaltered and unchanged.
Requisite approvals, wherever required, have been obtained or are in the process of being obtained, for such increase/revision in
remuneration of Mr V K Mittal.
In view of the above, approval of the members is being sought for revision in scale of salary and remuneration payable to
Mr V K Mittal, as mentioned above, with all other terms and conditions, as contained in the Agreement dated 26th September, 2002,
and as further modified on 24th September, 2003, remaining unaltered and unchanged.
The remuneration being paid by the Company to Mr V K Mittal takes into consideration the business activities of the Company,
his experience in the steel industry, prevailing trend of executive compensation and the remuneration being paid to its
managerial personnel by Companies of comparable size in the Steel Industry. Apart from remuneration, Mr V K Mittal does
not have any pecuniary relationship, directly or indirectly, with the Company or its managerial personnel.
6
NOTICE (Contd.)
GENERAL INFORMATION
Nature of Industry
Iron and Steel.
Commencement of Commercial Production
The Company’s plants for manufacture of Direct Reduced Iron, Hot Rolled Coils, Pig Iron/ Hot Metal, Cold Rolled/Galvanised
Coils/ Sheets, Colour Coated Sheets, Sinter and Oxygen are already in Commercial Production.
Financial performance based on given Indicators

Financial performance of the Company, as may be reflected by effective capital, total income, profit and dividend declared, is as
under :-
Financial year 2006-07
(Rs. in Crores)
a. Effective Capital 8414.11
b. Total Income 7595.49
c. Profit / (Loss) (9.53)
d. Dividend declared Nil
Export Performance
Exports of Steel products during the financial year was Rs.1453.52 crores compared to exports of Rs.786.02 crores during the
previous financial year.
Sustained global economic growth promoted a strong demand for steel in emerging markets. Consolidation in steel industry was
driven by growth in emerging markets. The Company constantly seeks to develop value-added products and achieve economies in
costs to meet the varied demands of its overseas customers.
Net Foreign Exchange Earnings/Outgo

There was a net Foreign Exchange outgo of Rs.470.64 crores during the financial year largely due to increase in import prices of
various inputs.
Foreign Investment and Foreign Collaboration

The Company has invested in 7,84,502 Equity Shares of Singapore Dollar 1 each in the Equity Capital of M/s.Nippon Ispat Singapore
(Pte) Ltd., a wholly owned subsidiary of the Company, of the aggregate equivalent Rupee value of Rs.1.57 crores. The Company does
not have any foreign collaboration.
OTHER INFORMATIONS
Reasons for loss or inadequacy of profits
The following are the main reasons for the adverse performance of the Company during the year :-
Ø Increase in cost of basic inputs
Ø Non-availability of mining and prospecting licences for iron ore, non-coking coal, coking coal, etc.
Ø Higher energy costs
Ø Higher financing costs
Steps taken or proposed to be taken for improvement

Ø Strengthening operational efficiencies by using advanced processes.
Ø Increasing capacity of Hot Rolled Coil Plant by installing a Second Blast Furnace and other auxiliary facilities, upgrades and
improvements.
7
NOTICE (Contd.)
Ø Installing a coke-oven plant at the Company’s Steel Complex at Dolvi.
Ø Constructing an iron ore pellet plant at Vishakapatnam.
Ø Installing a dedicated power plant to meet energy needs.
Ø Producing higher quantities of value-added steel products.
Ø Increasing vertical integration by reducing dependence on third parties for supplies of key raw materials.
The Company expects that the above factors would improve its operational performance.
Expected increase in productivity and profits

Expected level of production during the financial year 2007-08, is as under :-
Quantity (MTs)
Direct Reduced Iron 12,96,000
Hot Rolled Coils 28,50,000
Pig Iron/ Hot Metal 18,00,000
Cold Rolled Coils/ Sheets 3,13,500
Galvanised Coils/ Sheets 3,08,750
Colour Coated Sheets 47,500
Earnings for the financial year 2007-08, before provision of interest and depreciation, is expected to be Rs.1959 Crores.
The forecasts for financial year 2007-08, though based on realistic estimates, could vary due to unforseen circumstances.
The abstract of the revised terms of remuneration has already been sent separately to the members of the Company, pursuant to
Section 302 of the Companies Act, 1956.
Your Directors recommend the resolution for your approval.
The resolutions passed at the Annual General Meeting held on 26th September, 2002 and 24th September, 2003, Agreement dated
26th September, 2002, entered into between the Company and Mr V K Mittal and draft Supplementary Agreement to be entered into
between the Company and Mr V K Mittal are available for inspection at the Registered Office of the Company on any working day
nd
upto the date of the ensuing 22 Annual General Meeting between 11.00 A.M. and 1.00 P.M. and also at the meeting.
Mr V K Mittal is deemed to be concerned or interested in the resolution. Further, Mr Pramod Mittal, relative of Mr V K Mittal, is also
deemed to be concerned or interested in the resolution. None of the other Directors of the Company is, in any way, concerned or
interested in the resolution.
Item No. 6
Mr Vinod Garg is a Fellow member of the Institute of Chartered Accountants of India. He has been associated with the Company for
the last 22 years and is having over 32 years of rich experience in marketing, operations and other allied functions. Mr Vinod Garg
overseas the entire marketing and customer-development functions of the Company.
At the Annual General Meeting held on 30th July, 1998, members had approved the appointment of Mr Vinod Garg as Whole-time
Director of the Company designated as Director-in-Charge (Steel Plant) for a period of five years with effect from 21st April, 1998.
At the 18th Annual General Meeting held on 24th September, 2003, members approved the re-appointment and terms of remuneration
of Mr Vinod Garg as Whole-time Director of the Company designated as Director-in-Charge (Steel Plant) for a period of five years
with effect from 21st April, 2003 (re-designated as Executive Director (Marketing) with effect from 27th June, 2003) upon the terms
and conditions set-out in the draft Agreement submitted to the said meeting with a liberty to the Board of Directors to alter and vary
the terms and conditions of the said re-appointment. Pursuant to the above, an Agreement was entered into with Mr Vinod Garg on
24th September, 2003 on the approved terms. The said Agreement, inter-alia, contains the following terms and conditions:-
8
NOTICE (Contd.)
1. Salary: Rs.1,50,000/- (Rupees one lac fifty thousand only) per month in the scale of Rs.75,000/- to Rs.2,50,000/-.
The annual increments which will be effective 1st April each year, will be decided by the Board and will be merit-based.
2. Commission: Rs.12,00,000/- (Rupees twelve lacs only) per annum or such amount as may be determined by the Board from time
to time, subject to overall ceiling as prescribed in Sections 198 and 309 of the Companies Act, 1956.
(i) In addition to the salary and commission payable, the Executive Director (Marketing) shall also be entitled to perquisites
and allowances like accommodation (furnished or otherwise) 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; 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 Vinod Garg; such perquisites and allowances will be subject to a maximum of 125% of his
annual salary.
(ii) For the purposes of calculating the above ceiling, perquisites shall be evaluated as per Income-tax Rules, wherever applicable.
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.
(iii) 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 the tenure, shall not be included in the computation of limits for the remuneration or perquisites
aforesaid.
4. Minimum Remuneration.
Notwithstanding anything to the contrary herein contained where in any financial year during the currency of the tenure of the
Executive Director (Marketing), the Company has no profits or its profits are inadequate, the Company will pay remuneration by
way of salary and perquisites and allowances as specified above.
The terms and conditions of the said appointment and/or Agreement may be altered and varied from time to time by the Board as it
may, in its discretion, deem fit, within the maximum amount payable to managing director and whole-time directors in accordance
with Schedule XIII to the Companies Act, 1956 or any amendments made hereafter in this regard.
The Agreement may be terminated by either party giving the other party three months’ notice or the Company paying three months’
salary in lieu thereof.
Pursuant to the authority conferred by the members of the Company on 24th September, 2003, the Board of Directors, based on the
recommendation of the Remuneration Committee of Directors, increased the salary of Mr Vinod Garg to Rs.2,00,000/- per month
with effect from 1st April, 2005, with all other terms and conditions contained in the Agreement dated 24th September, 2003 remaining
unaltered and unchanged.
Members may note that, based on the recommendation of the Remuneration Committee of Directors, the Board of Directors, at its
meeting held on 20th January, 2007, revised the scale of salary of Mr Vinod Garg and also increased the remuneration payable to him
with effect from 1st April, 2006, as under, subject to the approval of the members of the Company, IFCI Ltd., the lead financial
institution, and other authorities, including Central Government, as may be required :-
Scale – Rs.4,00,000/- to Rs.7,00,000/-
Salary – Rs.4,00,000/- (Rupees four lacs only) per month. The annual increments which will be effective 1 st April each year, would
be decided by the Board.
All other terms and conditions of appointment of Mr Vinod Garg, as approved by the members on 24th September, 2003, remain
9
NOTICE (Contd.)
Requisite approvals, wherever required, have been obtained or are in the process of being obtained for such increase/revision in
remuneration of Mr Vinod Garg.
In view of the above, approval of the members is being sought for revision in scale of salary and remuneration payable to
Mr Vinod Garg, as mentioned above, with all other terms and conditions, as contained in the Agreement dated 24th September, 2003,
remaining unaltered and unchanged.
The remuneration being paid by the Company to Mr Vinod Garg takes into consideration the business activities of the Company, his
experience in the steel industry, prevailing trend of executive compensation and the remuneration being paid to its managerial
personnel by Companies of comparable size in the Steel Industry. Apart from remuneration, Mr Vinod Garg does not have any
pecuniary relationship, directly or indirectly, with the Company or its managerial personnel.
The general information and other informations, as required under Schedule XIII of the Companies Act, 1956 are set out in the
Explanatory Statement to Item No.5 of the Notice convening the ensuing 22nd Annual General Meeting.
The abstract of the revised terms of remuneration has already been sent separately to the members of the Company, pursuant to
The resolution passed at the Annual General Meeting held on 24th September, 2003, the Agreement dated 24th September, 2003,
entered into between the Company and Mr Vinod Garg and draft Supplementary Agreement to be entered into between the Company
and Mr Vinod Garg are available for inspection at the Registered Office of the Company on any working day upto the date of the
22nd Annual General Meeting between 11.00 A.M. and 1.00 P.M. and also at the meeting.
Mr Vinod Garg is deemed to be concerned or interested in the resolution. None of the other Directors of the Company is, in any way,
concerned or interested in the resolution.
Item No. 7
Mr Anil Sureka is a Commerce Graduate and an Associate Member of the Institute of Company Secretaries of India. He has been
associated with the Company for the last 20 years and is having over 31 years of rich experience in finance, secretarial and other
allied functions. Mr. Anil Sureka overseas the entire finance, commercial and supply-chain functions of the Company.
At the Annual General Meeting held on 28th September, 2001, members had approved the appointment of and terms of remuneration
of Mr Anil Sureka as Whole-time Director designated as Director (Finance) of the Company for a period of five years with effect
from 1st February, 2001. Mr Anil Sureka was re-designated as Executive Director (Finance) with effect from 1st July, 2003. At the
Annual General Meeting held on 29th August, 2006, members had approved the re-appointment and terms of remuneration of
Mr Anil Sureka as Whole-time Director of the Company designated as Executive Director (Finance) for a period of 5 years with
effect from 1st February, 2006, upon the terms and conditions set out in the draft Agreement submitted to the said meeting with a
liberty to the Board of Directors to alter and vary the terms and conditions of the said re-appointment. Pursuant to the above, an
Agreement was entered into with Mr Anil Sureka on 29th August, 2006 on the approved terms. The said Agreement, inter-alia,
contains the following terms and conditions:-
1. Salary: Rs.2,00,000/- (Rupees two lakhs only) per month in the scale of Rs.1,50,000/- to Rs.5,00,000/-.
The annual increments which will be effective 1st April each year, will be decided by the Board, upon the recommendation of the
Remuneration Committee.
2. Commission: Rs.12,00,000/- (Rupees twelve lakhs only) per annum or such amount as may be determined by the Board from
time to time, subject to overall ceiling as prescribed in Sections 198 and 309 of the Companies Act, 1956.
(i) In addition to the salary and commission payable, the Executive Director (Finance) shall also be entitled to perquisites and
allowances like accommodation (furnished or otherwise) 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;
medical reimbursement; club fees and leave travel concession for himself and his family; medical insurance and such other
10
NOTICE (Contd.)
perquisites and allowances in accordance with the rules of the Company or as may be agreed to by the Board of Directors
and Executive Director (Finance); such perquisites and allowances will be subject to a maximum of 125% of his annual
salary.
ceiling.
leave at the end of his tenure, shall not be included in the computation of limits for the remuneration or perquisites aforesaid
4. Minimum Remuneration.
Executive Director (Finance), the Company has no profits or its profits are inadequate, the Company will pay remuneration by
way of salary and perquisites and allowances as specified above, subject to the requisite approvals as may be required to be
obtained.
The terms and conditions of the said appointment and/or Agreement may be altered and varied from time to time by the Board as it
may, in its discretion, deem fit, within the maximum amount payable in accordance with the provisions of the Companies Act, 1956
or any amendments thereto.
The Agreement may be terminated by either party giving the other party three months’ notice or the Company paying three months’
Members may note that, based on the recommendation of the Remuneration Committee, the Board of Directors, at its meeting held
on 20th January, 2007, revised the scale of salary of Mr Anil Sureka and also increased the remuneration payable to him with effect
from 1st April, 2006, as under, subject to the approval of the members of the Company, IFCI Ltd., the lead financial institution, and
other authorities, including Central Government, as may be required :-
Scale – Rs.4,00,000/- to Rs.7,00,000/-
Salary – Rs.4,00,000/- (Rupees four lacs only) per month. The annual increments which will be effective 1 st April each year, would
be decided by the Board.
All other terms and conditions of the appointment of Mr Anil Sureka, as approved by the members on 29th August, 2006, remain
Requisite approvals, wherever required, have been obtained or are in the process of being obtained for such increase/revision in
remuneration of Mr Anil Sureka.
In view of the above, approval of the members is being sought for revision in pay scale of salary and remuneration payable to
Mr Anil Sureka, as mentioned above, with all other terms and conditions contained in the Agreement dated 29th August, 2006,
remaining unaltered and unchanged.
The remuneration being paid by the Company to Mr Anil Sueka takes into consideration the business activities of the Company, his
experience in the steel industry, prevailing trend of executive compensation and the remuneration being paid to its managerial
personnel by Companies of comparable size in the Steel Industry. Apart from remuneration, Mr Anil Sureka does not have any
pecuniary relationship, directly or indirectly, with the Company or its managerial personnel.
11
NOTICE (Contd.)
The abstract of the revised terms of remuneration had already been sent separately to the members of the Company, pursuant to
The resolution passed at the Annual General Meeting held on 29th August, 2006, the Agreement dated 29th August, 2006 entered into
between the Company and Mr Anil Sureka and the draft Supplementary Agreement to be entered into between the Company and
Mr Anil Sureka are available for inspection at the Registered Office of the Company on any working day upto the date of the ensuing
22nd Annual General Meeting between 11.00 A.M. and 1.00 P.M. and also at the meeting.
Mr Anil Sureka is deemed to be concerned or interested in the resolution. None of the other Directors of the Company is, in any way,
concerned or interested in the resolution.
Item No. 8
Mr V K Mittal is a Science Graduate with Diploma in Business Management. He has over 29 years of rich and varied experience in
the steel industry. Mr V K Mittal oversees the business operations of the Company and monitors execution of various projects.
Mr V K Mittal is a Director of the Company since 1995. Mr V K Mittal was Joint Managing Director of the Company for the period
from 28th June, 1997 to 27th June, 2002.
Mr V K Mittal was appointed as Managing Director of the Company for a period of 5 (five) years with effect from 28th June, 2002.
Members approved the appointment and terms of remuneration of Mr. V K Mittal at their 17 th Annual General Meeting held on
26th September, 2002. The period of his appointment is upto 27th June, 2007.
At the aforesaid Annual General Meeting held on 26th September, 2002, the members had approved the appointment of Mr V K Mittal
as Managing Director for a period of five years on a salary of Rs.1,25,000/- per month in the scale of Rs.1,00,000/- to Rs.2,50,000/- and
perquisites and allowances not exceeding 125% of his salary and authorized the Board to decide annual increment in the salary.
Pursuant to the said authority, the Board had, based on the recommendations of the Remuneration Committee of Directors, increased
the salary of Mr V K Mittal from time to time. Other approvals, wherever required, were obtained/being obtained by the Company.
Mr V K Mittal is being paid salary of Rs.7,00,000/- per month in the scale of Rs.6,00,000/- to Rs.10,00,000/- and perquisites and
allowances not exceeding 125% of the salary, till the date of expiry of his current term of appointment as Managing Director i.e. 27th
June, 2007. Reference is invited to Explanatory Statement pertaining to Item No.5 of the Notice convening the ensuing 22nd Annual
General Meeting.
The Board of Directors of the Company, at its Meeting held on 6th June, 2007, re-appointed Mr V K Mittal as Managing Director of
the Company for a period of 5 (five) years with effect from 28th June, 2007 upto 27th June, 2012. Based on the recommendation of the
Remuneration Committee, the Board of Directors, at its said meeting held on 6th June, 2007, also approved the remuneration and
other terms and conditions of appointment of Mr V K Mittal as Managing Director of the Company. The said appointment as well as
the terms thereof are subject to the approvals of the members of the Company, IFCI Limited, the lead financial institution, and other
authorities, including the Central Government, as may be required. The draft of the agreement, to be entered into between the
Company and Mr V K Mittal, was also approved by the Board of Directors at its meeting held on 6th June, 2007.
The said draft agreement, inter alia, contains the following terms and conditions:
1. Salary: Rs.10,00,000/- (Rupees Ten lakhs only) per month in the scale of Rs.8,00,000/- to Rs.16,00,000/-.
The annual increment, not lower than Rs.1,00,000/- per month, shall be within the above mentioned scale and shall be effective
1st April each year and would be decided by the Board of Directors.
2. Commission : Not exceeding 3% of the net profits of the Company, determined in accordance with the provisions of Sections 198
and 309 of the Companies Act, 1956, as may be decided by the Board of Directors, from time to time.
3. Perquisites and Allowances :
(i) In addition to the salary and commission payable, the Managing Director will also be entitled to perquisites and allowances
like accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance together
12
NOTICE (Contd.)
with reimbursement of expenses or allowances for utilities such as gas, electricity, water, furnishings and repairs; 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
Managing Director; such perquisites and allowances will be subject to a maximum of 125% of his annual salary.
ceiling.
leave at the end of the tenure, shall not be included in the computation of limits for the remuneration or perquisites
aforesaid.
4. Minimum Remuneration :
Managing Director, the Company has no profits or its profits are inadequate, the Company shall pay remuneration by way of salary
and perquisites and allowances as specified above, subject to the requisite approvals as may be required to be obtained.
Subject to the supervision and control of the Board of Directors, the operations of the Company and implementation of the projects
shall vest in the hands of the Managing Director, who shall have the general direction and superintendence of the business of the
Company with full powers to do all acts, matters and things deemed necessary, proper or expedient for carrying on the business of the
Company. Mr V K Mittal shall also carry out such duties as may be entrusted to him from time to time by the Board of Directors.
The terms and conditions of the said re-appointment and/or Agreement may be altered and varied from time to time by the Board of
Directors as it may, in its discretion, deem fit, subject to the provisions of the Companies Act, 1956 (including any statutory
modification(s) or re-enactment thereof).
The Agreement may be terminated earlier by either party giving three months’ notice in writing to the other party, or the Company
paying three months’ salary in lieu thereof.
The remuneration proposed to be paid by the Company to Mr V K Mittal takes into consideration the business activities of the
Company, his experience in the steel industry, prevailing trend of executive compensation and the remuneration being paid to its
managerial personnel by Companies of comparable size in the Steel Industry. Apart from remuneration, Mr V K Mittal does not
have any pecuniary relationship, directly or indirectly, with the Company or its managerial personnel.
The draft Agreement to be entered into between the Company and Mr V K Mittal is available for inspection at the Registered Office
of the Company on any working day upto the date of the ensuing 22nd Annual General Meeting between 11.00 A.M. and 1.00 P.M. and
also at the meeting.
Mr V K Mittal is deemed to be concerned or interested in the resolution. Mr. Pramod Mittal, Chairman of the Company and a relative
of Mr. V K Mittal, is also deemed to be concerned or interested in the resolution. None of the other Directors of the Company is, in
any way, concerned or interested in the resolution.
By Order of the Board
T P SUBRAMANIAN
President & Company Secretary
Mumbai,
the 6th day of June, 2007.
13
DETAILS OF THE DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT IN THE

FORTHCOMING ANNUAL GENERAL MEETING
(pursuant to Clause 49 of the Listing Agreement)
Name of Director Mr U Mahesh Rao Mr Pramod Mittal Mr V K Mittal
Date of Birth 02.07.1938 08.06.1956 03.08.1957
Date of Appointment 29.09.2001 23.05.1984 31.03.1995
Qualifications B. Com. B.Com., DBM B.Sc., DBM
Expertise in specific Corporate Affairs Strategic planning and Overseeing business

functional areas especially in direction and overseeing operations and monitoring
Insurance Sector business operations. implementation of projects.
List of other companies Tata Tea Ltd Chairman Chairman

in which Directorship held Tata Coffee Ltd Gontemann-Peipers GPI Textiles Ltd
(India) Ltd Director
Balasore Alloys Ltd Gontemann-Peipers
e-Venture India Holding (India) Ltd
Pvt Ltd Balasore Alloys Ltd
Ispat Energy Ltd
Andhra Global Pellets
Ltd
Chairman/Member of the Audit Committee —— Audit Committee

Committees of the Board Member Member
of the other Companies Tata Tea Ltd Ispat Energy Ltd
on which he is a Director
Shareholders & ——
Depositories Grievances
Member
Tata Tea Ltd
14
DIRECTORS’ REPORT
Your Directors are pleased to present their Twenty-second Annual Report and Audited Accounts of the Company for the year ended
31st March, 2007.
FINANCIAL RESULTS
During the year under review, the Company’s total income from operations was Rs.7595.49 Crores.
The highlights of the financial results are as under :-
(Rs. in crores)
Year ended Year ended
31st March, 2007 31st March, 2006
1 Sales / Income from operations 8378.44 5580.02

Less : Excise Duty 891.87 621.28
7486.57 4958.74
2 Other Income 108.92 51.99
3 Total Income (1+ 2) 7595.49 5010.73
4 Total Expenditure 5977.42 4679.32
5 Profit before Interest & Finance Charges and Depreciation (3-4) 1618.07 331.41
6 Less : Interest & Finance Charges 990.87 956.83
7 Profit / (Loss) before Depreciation 627.20 (625.42)
8 Less : Depreciation 623.83 571.43
9 Profit / (Loss) before Tax 3.37 (1196.85)
10 Provision for Taxation (Net)
— Current (0.03) (0.03)
— Fringe Benefit Tax (3.00) (4.46)
Deferred Tax (Charge) / Credit (9.87) 388.67
11 Net Profit/ (Loss) (9.53) (812.67)
Less : Debenture Redemption Reserve written back 12.10 —
Add:
a) Balance brought forward from previous year. (1098.51) 214.47
b) Profit & Loss Account Debit balance as on 01.04.2005
of erstwhile Ispat Metallics India Ltd. — (500.31)
c) Adjustment towards additional Employees benefit liability (10.21) —
12 Amount carried to next year (1106.15) (1098.51)
15
DIRECTORS’ REPORT (Contd.)

Income from sales during the year under review was Rs.8378.44 Crores representing an increase of 50% over income during the
previous year. After considering other income of Rs.108.92 Crores, profit before interest and finance charges and depreciation was
Rs.1618.07 Crores compared to such profit of Rs.331.41 Crores during previous year, representing an increase of over 388%.
After providing for interest and finance charges of Rs.990.87 Crores, profit before depreciation was Rs.627.20 Crores compared to
loss before depreciation of Rs.625.42 Crores during the previous year. After providing for depreciation of Rs.623.83 Crores, the
profit before tax for the year was Rs.3.37 Crores compared to loss before tax of Rs.1196.85 Crores for the previous year. Considering
provisions for wealth tax and fringe benefit tax credit aggregating to Rs.3.03 Crores and deferred tax charge of Rs.9.87 Crores, the
loss after tax for the year was Rs.9.53 Crores. After considering losses of Rs.1098.51 Crores brought forward from the previous year
and adjustments towards Debenture Redemption Reserve written back Rs.12.10 Crores and additional Employee Benefit Liability of
Rs.10.21 Crores, the losses as at 31st March, 2007 was Rs.1106.15 Crores. The said losses are proposed to be carried to next year’s
accounts.
DIVIDEND
In view of the losses during the year under review, the Board of Directors does not recommend any dividend on the Equity Shares.
The Board of Directors does not declare dividend on Cumulative Redeemable Preference Shares.
OPERATIONS
Demand for steel, both in domestic and international markets, remained stable through the year. Steel prices were firm for most part
of the year, while input costs continued to rise significantly. Economic growth witnessed in emerging markets has led to stability in
demand behaviour.
Production of Hot Rolled Coils at 2.68 Million Tons was higher by 25% over previous year.
Production of Direct Reduced Iron (Sponge Iron) at 1.15 Million Tons was higher by 30% over previous year. Production of Direct
Reduced Iron, however, continues to be impaired due to lower availability of Natural Gas. As a result, utilization of available
capacities is affected with adverse impact on availability of inputs and costs thereof.
Production of Hot Metal/ Pig Iron was 1.51 Million Tons, which was higher by 7% over previous year. Gunning of Blast Furnace
and non-availability of one blower during the first quarter of the financial year had impacted production of Hot Metal/ Pig Iron. Blast
Furnace operations are being continuously monitored for achieving higher productivity and operating efficiencies.
Production of Cold Rolled Steel Coils and Galvanized Coils at 0.30 Million Tons and 0.26 Million Tons were higher by 9% and 11%,
respectively, over previous year.
While steel plant operations were stable for most part of the year, the Company’s financial results were affected due to higher input
costs and lower availability of Natural Gas.
EXPORTS
The year witnessed sustained global economic growth and strong demand for steel in the new emerging markets. Consolidation in
steel industry was prompted by growth in emerging economies as well as increasing opportunities in new markets. The global
consolidation in the steel industry has resulted in a mature and stable market behaviour and facilitated synergy in marketing efforts.
Apparent steel use is predicted to grow over 6%, world-wide, during 2007-08.
Export earnings during the year at Rs.1454 Crores was higher by 85% over the previous year. Product portfolios are constantly
re-aligned and re-positioned to meet the diverse requirements of global customers. The varied needs of an interconnected global
economy are sought to be effectively addressed through a mix of stringent quality measures, addition to value-added products and
developing firm relationships with consumer groups.
EXPANSION AND NEW PROJECTS

With gradual embracement of new processes and initiatives, it is imperative that the Company continues to focus on achieving
reduction in production costs at every conceivable level of activity to match global standards and withstand competitiveness.
As part of our vertical integration strategy, we intend to reduce our dependence on third party raw material suppliers, exposure to
16

price volatility of basic inputs and risk of shortages by mining raw materials and producing iron ore pellet and coke.
With this end in view, it is proposed to undertake creation of certain additional cost-saving and capacity-enhancing capital projects as
under :-
a) 1.0 Million Tons Per Annum Coke Oven Plant at Dolvi
The Coke Oven Plant shall partly cater to the coke requirements of the Blast Furnaces. The cost of production of Coke is
expected to be substantially lower than its market price. The facility would also reduce the risk of restricted coke availability and
further ensure consistency in the quality of coke.
b) 4.5 Million Tons Per Annum Pellet Plant at Vishakhapatnam
The pellet plant shall cater to the complete pellet requirement at Dolvi Steel Complex. The cost of production of pellets is
expected to be substantially lower than its market price. The plant shall not only reduce the risk of restricted availability of pellets
but would also ensure consistency in the quality of pellets.
c) Enhancement of the existing Hot Rolled Coil (HRC) Plant capacity from the existing 3.0 Million Tons to 3.6 Million Tons Per
Annum alongwith auxillary facilities, enhancing capacity of existing Sponge Iron and Sinter Plants and addition of a Blast
Furnace.
The enhancement of the capacity of the HRC plant from 3.0 Million Tons to 3.6 Million Tons per annum shall be achieved by de-
bottlenecking, modification and installation of certain additional facilities.
The installation of an additional Blast Furnace of suitable capacity would provide adequate quantities of Hot Metal to meet the
enhanced requirements of the HRC Plant.
The Company proposes to de-bottleneck its Sinter Plant and Sponge Iron Plant to enable increase in capacities to 2.5 Million
Tons per annum and 1.80 Million Tons per annum respectively.
Techno-economic feasibility of the aforesaid projects has already been carried out. The aggregate cost of implementation of the
aforesaid projects is presently estimated at Rs.2123 Crores. For financing the estimated project implementation costs, the Company
proposes to issue Foreign Currency Notes aggregating to US Dollars 500 Million, subject to receiving requisite approvals.
The Company has also entered into the following separate Memoranda of Understanding with the respective State
Governments :-
a. Government of Maharashtra for expansion in steel-making capacity at Dolvi Steel Complex to 5 Million Tons annually.
b. Government of Jharkhand for setting-up an integrated steel plant of the annual capacity of 2.8 Million Tons (which can be
enhanced to 5 Million Tons).
c. Government of Chattisgarh for setting-up a coal-based power plant of the capacity of 1200 MW.
CAPTIVE POWER PLANT OF ISPAT ENERGY LIMITED
Financial tie-up for Captive Power Plant (combined capacity 110 MW) of Ispat Energy Limited has been achieved. Erection
activities have commenced and the project is expected to be operational by early 2009.
DIRECTORS
Mr V K Mittal has been re-appointed as Managing Director of the Company for a period of five years with effect from 28 th June,
2007, subject to the approvals of the shareholders and other authority (ies), as may be required.
A resolution seeking approval of the members for the re-appointment of Mr V K Mittal as Managing Director is being
proposed at the ensuing Annual General Meeting. The Board of Directors recommends adoption of the resolution. Brief resume of
Mr V K Mittal, nature of his expertise and other details are attached to the Notice convening the ensuing Annual General Meeting.
Mr B P Singh was nominated as Director by Industrial Development Bank of India Ltd. , in place of Mr C P Philip, with effect from
18th September, 2006.
17

The Board records its deep appreciation for the services rendered by Mr C P Philip during his tenure as Director of the
Company.
Mr Pramod Mittal and Mr U Mahesh Rao retire by rotation at the ensuing Annual General Meeting and, being eligible, offer
themselves for re-appointment.
Brief resumes of the retiring Directors, nature of their expertise and other details, are attached to the Notice convening the ensuing
Annual General Meeting.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors’ Responsibility Statement, it is hereby
confirmed that : -
(i) in the preparation of the annual accounts for the financial year ended 31stMarch, 2007, the applicable accounting standards have
been followed and there have been no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and
of the loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; and
(iv) the Directors have prepared the annual accounts for the financial year ended 31st March, 2007 on a going concern basis.
The above statement has been taken note of by the Audit Committee at its meeting held on 6th June, 2007.
SUBSIDIARY COMPANIES
The Directors’ Reports of Nippon Ispat Singapore (Pte) Ltd., a wholly owned subsidiary and Ispat Energy Limited, a subsidiary of
your Company and their audited Statement of Accounts together with respective Auditors’ Reports thereon for the year ended
31st March, 2007 form part of this Report. Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary
Companies, as at 31st March, 2007, is also annexed to this Report
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Accounting Standard AS21 on Consolidated Financial Statements, the Consolidated Financial Statements are
attached and form part of the Annual Report and Accounts.
AUDITORS
The Auditors, M/s. S R Batliboi & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have expressed
their willingness to be re-appointed.
In terms of Section 224 (1B) of the Companies Act, 1956, the Company has obtained a letter from the above Auditors to the effect that
re-appointment, if made, will be in conformity with the limits specified in the said Section.
AUDITORS’ REPORT
The Auditors in their Report have, while referring to Note No.9 of Schedule 22 forming part of the Accounts for the year ended
31st March, 2007, commented their inability to express any opinion on future profitability projections made by the Company and
their consequential impact, if any, on Deferred Tax Asset recognized in the said Accounts.
The Auditors, in their statement under Companies (Auditor’s Report) Order 2003 annexed to the aforesaid Report, have drawn
attention to the following :-
18

a. Delays in few cases in depositing undisputed statutory dues;
b. Accumulated losses as at end of the financial year, without considering the impact of Deferred Tax Asset indicated in Note No.9
of Schedule 22, exceeding fifty percent of the Company’s net worth, and
c. Certain delays in repayment of dues to domestic financial institutions, banks and debentureholders during the year and the
arrears of such dues as on the Balance Sheet date.
In the opinion of Board of Directors, based on future profitability projections and the significant turnaround in the operational
performance during the financial year 2006-07, which trend is likely to continue, the Company is virtually certain that there would be
sufficient taxable income in the future, to claim the tax credit.
Further, the Board of Directors inform that :-
a. Delays in few cases in depositing undisputed statutory dues have been due to mis-matches in cash flows, which were subsequently
rectified.
b. In the opinion of the Board, based on future profitability projections and the significant turnaround in the operational performance
during the financial year 2006-07, which trend is likely to continue, the Company is virtually certain that there would be sufficient
taxable income in the future, to claim the tax credit.
c. Delays were mainly due to mis-matches in cash-flows, which were subsequently rectified.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussions and Analysis and Corporate
Governance Report together with the Certificate from the Auditors of the Company confirming compliance of the conditions of
Corporate Governance form part of this Report.
SECRETARIAL COMPLIANCE REPORT

The Company voluntarily appointed M/s. Robert Pavrey & Associates, Practising Company Secretaries, to review Secretarial
Compliance for the financial year ended 31st March, 2007. The Secretarial Compliance Certificate addressed to the Board of Directors
of the Company is attached to the Annual Report. The Secretarial Compliance Certificate confirms that the Company has complied
with all the applicable provisions of the Companies Act, 1956, Depositories Act, 1996, Listing Agreement with Stock Exchanges and
all the Regulations of SEBI as applicable to the Company including SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 and the SEBI (Prohibition of Insider Trading) Regulations, 1992.
Though not mandatory, the Secretarial Compliance Certificate is also obtained, on a quarterly basis, from the aforementioned
Practising Company Secretaries, and reviewed by the Board.
LISTING OF SHARES
a. Listing of Equity Shares and 0.01% Cumulative Redeemable Preference Shares (CRPS)
As reported during the previous year, Company’s Equity Shares and 0.01% CRPS were listed in Bombay Stock Exchange Ltd.
and National Stock Exchange of India Ltd. effective 20th April, 2006. Subsequently, the said Equity Shares and 0.01% CRPS
have also been listed in The Calcutta Stock Exchange Association Ltd., and trading has commenced effective 17 th July, 2006.
b. Listing of Company’s 10% and 12% Cumulative Redeemable Preference Shares (CRPS)
Pursuant to its applications, Company’s 10% CRPS of Rs.10/- each and 12% CRPS of Rs.100/- each were listed in Bombay
Stock Exchange Ltd. and National Stock Exchange of India Ltd., effective 28th August, 2006.
c. Delisting from Delhi Stock Exchange
The Company’s equity shares stand voluntary delisted with Delhi Stock Exchange effective 14th August, 2006.
19

CODE OF CONDUCT
The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct
has been posted on the Company’s website.
Board Members and Senior Management personnel have affirmed compliance with the Code for the financial year 2006-07. A
separate declaration to this effect is annexed to the Corporate Governance Report.
CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
OUTGO.
In accordance with the requirements of Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988, particulars with respect to Conservation of Energy, Technology Absorption and
Foreign Exchange Earnings and Outgo are annexed hereto and form part of this Report.
PERSONNEL
Employee relations continued to be harmonious during the year. The Company has a robust Performance Management System
(PMS) to evaluate individual performance. Extensive need-based training programmes are continuously initiated and the Company
is committed to achieving employee empowerment of the highest level. The Company has initiated an EVA- linked Performance
Measurement System for facilitating institution of best practices and ensuring efficient deployment of human resources.
The Board wishes to place on record its appreciation for the efforts of all employees.
Information in terms of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975 forms part of this Report. However, as per the provisions of Section 219 (1)(b) (iv) of the Companies Act, 1956, the Annual
Report is being sent to all the Shareholders of the Company excluding the statement of particulars of employees. The statement of
particulars of employees referred to hereinabove shall be made available for inspection at the Registered Office of the Company
during working hours for a period of 21 days before the date of the Annual General Meeting. Any shareholder interested in obtaining
a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.
APPRECIATION
Your Directors record their appreciation for the support extended to the Company by its lenders, the Central and State Governments
as well as its business partners. Your Directors also thank the members for their continued support.
For and on Behalf of the Board
ANIL SUREKA V K MITTAL

Mumbai, Executive Director (Finance) Managing Director
20
ANNEXURE TO THE DIRECTORS’ REPORT

STATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMPANIES (DISCLOSURE OF PARTICULARS
IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF DIRECTORS' REPORT.
A) CONSERVATION OF ENERGY
a. Hot Strip Mill at Dolvi
● Additional VVVF (Variable Voltage Variable Frequency) drives with soft starter have been installed.
● Cooling Tower fans are being monitored automatically with sump water temperature.
● Additional soft starters cum energy savers have been installed.
● Connection of LT capacitor banks at Mill, GCP and SMS is completed.
● Intelligent Energy saver for AC packages have been installed.
● Cyclic load energy saver installed in Motive Load at O2 & Caster.
● Electronic chokes have been installed.
● PLC Program has been modified for controlling ID Fan damper.
b. Blast Furnace, Sinter Plant and Sponge Iron Plant at Dolvi
● Additional soft starters-cum-energy savers and load-point capacitors have been installed.
● PLC program has been modified for controlling Flux & fuel ID Fan damper.
● Power generation from Gas Expansion Turbine (GET) using Blast Furnace Gas has commenced.
● Dischange-end ESP for damper opening has been reduced form 100% to 80%.
● Sinter-sizing ESP for damper opeining has been reduced form 100% to 80%.
● Electronic Chokes have been Installed.
c. Cold Rolling Mill, Galvanising & Colour Coating Plant at Kalmeshwar
● Capacitor banks of adquate capacity have been installed in H.T. and L.T. side to achieve unity Power factor.
● Inefficient compressors have been replaced with high efficient compressors.
● Controls of cooling tower motors have been switched over through automatic water temperature Sensors.
● To avoid using lamps in daytime in the plant, transparent sheet has been installed in the roof to get natural light during
day time.
● In place of air-conditioning unit for panel cooling, VORTEX Cooler system is being used, which requires no power.
The above steps initiated by the Company have enabled savings in energy consumption. The Company constantly undertakes various
energy-saving measures at its respective plant locations.
The required data with regard to Conservation of Energy, as applicable to our industry, is furnished below:
For the year ended For the year ended
31.03.2007 31.03.2006
1 ELECTRICITY
a) Purchased (Units in '000) 1959884 1433354
Total Amount (Rs. in Crores) 769.05 484.65
Rate/Unit (in Rs.) 3.92 3.38
b) i) Own generation
(Units in '000) 60101190 57902283
Unit/Ltrs of Diesel oil 4.29 3.70
Cost/Unit (in Rs.) 7.74 8.31
ii) Through Steam Turbine/ Generators
Units (in 'MT) 79400 48929
Units/Ltr of Diesel oil 12.61 12.92
Cost/Unit (in Rs.) 1136 1037
21
ANNEXURE TO THE DIRECTORS’ REPORT (Contd.)

For the year ended For the year ended
31.03.2006 31.03.2005
2 COAL
Quantity (MT) 63885 76310
Total Cost (Rs. in Crores) 31.81 39.10
Avg. Rate/Unit (in Rs.) 4979 5124
3 FURNACE OIL (LDO & Kerosene)
Quantity (Ltrs in '000) 44204 47253
Total amount (Rs. in Crores) 94.34 103.71
Avg. Rate/Unit (in Rs.) 21.34 21.95
4 LPG/PROPANE
Quantity (in MT) 56901 34193
Avg. Rate/Unit (in Rs.) 30121 29039
5 OXYGEN
Quantity (in MT) 75140 2596
Avg. Rate/Unit (Rs. in '000) 2373 5663
6 OTHERS
Quantity (in Ltrs) 1075 —
Total Amount (Rs. in Crores) 0.03 —
Avg. Rate/Unit (in Rs.) 303 —
7 Consumption per M.T. of Production
Galvanised Sheets
Electricity (in Units) 97 99
Furnace Oil (Ltrs.) 0.26 0.30
L.P.G./Propane (in Kgs.) 23 22
Cold Rolled Steel Sheets
Furnace Oil (Ltrs.) 3.31 3.56
Coal (in Kgs.) 32 40
L.P.G. (in Kgs.) 2.11 2.09
Colour Coated Sheets
L.P.G. (in Kgs.) 0.74 —
Propane (in Kgs.) 26 40
Sponge Iron
L.P.G. (in Kgs.) 30 18
Gas (M3) 239 262
Hot Strip Mill
Furnace Oil (Ltrs.) 15 22
Propane (in MT) 4 5
Blast Furnace
Coal (in Kgs.) 36 46
L.P.G./Propane (in Kgs.) 2 1.06
Oxygen (in MT) 0.05 0.03
22

B) TECHNOLOGY ABSORPTION, QUALITY ASSURANCE AND RESEARCH & DEVELOPMENT
As a result of continuous research, plant level modifications and developments have been carried out. Consequently, the following
new products are being developed so as to serve high-end discerning customers :-
a. Hot Strip Mill at Dolvi
● API 5L X 60 in 1570 mm width - rolling special pipeline steel.
● HR460 for automobile segment - developed automobile parts.
● Production of IF Steel and API X 70 in thickness higher than 12 mm.
● Dual Phase steel DP600 - automobile parts under development.
● Export qualtity LPG Grade Steel-EN 10120P295 - for cylinders.
● Medium Carbon Steel (C26, C30, C45) for engineering applications.
b. Cold Rolling Mill at Kalmeshwar

● Development of E34 CRCA 0.80-2.00 for Structural for Auto Body.
● Development of Corten Steel - 0.80 - 2.00 for Boiler/Rail Coach.
● Development of MC11 - 0.30-1.60 for Automobile Chain.
● Development of C30 Strapping Steel - 0.56-0.80 for Strapping.
● Development of High tensile CRCA 46 F40-0.80-3.00 for Thicker gauge for Automation components.
● Development of High Tensile CRCA 43 F35-0.80-3.00 CRCA for Refrigerators.
● Tension Leveling for CR & GP- table top material for thickness of 0.30 to 4.00 MM - CRCA, GPSP. Used in Panel
Applications in white goods, Auto Components & Electrical Panels.
c. Continuous Galvanizing Line at Kalmeshwar
● High Tensile Galvanised Grade 50 - 1.20 - 3.00 for Structural Zpurline.
● GPSP with GUARD film - 0.50 - 1.00 for Electrical Panels.
● His gal for Roofing/Cladding & House Appliances.
● GPSP EDD Grade DX54D - 1.00 - 3.00 for Auto Components.
d. Colour Coating Line at Kalmeshwar
● CCS Cold Rolled - 0.40 - 0.60 for Appliance.
● Metallic Finish - 0.30 - 0.60 for Refrigerator Door.
● Teak Wood finish - 0.40 - 0.60 for Internal Bus Body.
● Thinner Gauge - 0.20 - 0.30 for Roofing.
● PVDF (Poly Vinyl Difloanide) - 0.40 - 0.60 for Roofing.
● Hiscol - 0.40 - 0.60 for Roofing.
Consequent to development of new products, the Company's market penetration stands strengthened. The Company's future plans are
aimed at developing value-added steel products at economic costs, to meet the diverse needs of end-users.
II. EXPENDITURE ON QUALITY ASSURANCE & R & D

a) Capital : Nil
b) Recurring : Expenses incurred are charged to separate heads and not allocated separately.
c) Total : Not determinable
d) Total R&D expenditure : Not determinable
23

C. FOREIGN EXCHANGE EARNINGS AND OUTGO
(Rs. Crores)
— Foreign Exchange Earnings 1453.52
— Foreign Exchange Outgo -
1. CIF value of Imports
Raw Materials, Components and Spare Parts 1773.49
Capital Goods 12.94
2. Other Expenditure 137.73
For and on Behalf of the Board

Mumbai, Executive Director (Finance) Managing Director
24
MANAGEMENT DISCUSSIONS AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS
Indian Steel Scenario

The Indian steel industry witnessed a robust growth during the completed financial year, in line with the global trend. Alongwith
Brazil, Russia and China, India is expected to be a strong growth engine for global steel demand in the coming years. The current
GDP growth and strong economic fundamentals would enable increase in steel consumption in India in the coming years. Overall
steel production is expected to rise from the current level of over 49 Million Tons to 110 Million Tons by 2020. Steel production
grew by over 10% during 2006-07. The growth in steel consumption is characterized by substantial investments in the sector, both
towards enhancement of existing capacities as well as setting-up of green-field projects. Domestic steel consumption during the year
was higher by 11% over the previous year. The current growth rate of Indian economy is likely to sustain the surge witnessed in
domestic consumption during the year.
Apparent steel consumption in India during the fiscal 2006-07 was over 43 Million Tons. Consumption of both flat and long products
grew by a healthy 11%.
Changes in market demand structure are likely to see a significant shift of focus to developing Asian economies like China and India.
The year witnessed a growth of over 6% in exports of steel products.
Additionally, the surge in demand for steel in China and the overall economic growth witnessed in US and EU Nations present a
strong platform to Indian steel-makers to intensify their export options. Technological innovations would further enable Indian steel-
makers to cut on input costs, improve production efficiencies and achieve global competitiveness.
Global Steel Scenario

Global Steel Industry is currently characterized by growth in volumes and profitability and analysts predict an optimistic future in the
near and medium term.
Global Steel scenario witnessed intensification of efforts towards restructuring and consolidation. The center gravity of steel industry
has been steadily shifting towards the East with China and India emerging as major future markets. The growth of emerging markets,
namely, Brazil, Russia, India and China, has prompted consolidation at a level, not hitherto witnessed in the Steel Industry.
Apparent steel consumption, world-wide, during 2006-07 was over 1113 Million Tons, which was higher by 8% over the previous
year. The prestigious International Iron and Steel Institute has projected an apparent steel use of over 1250 Million Tons by 2008 at
an annual growth exceeding 6%.
While steel production has historically been concentrated in the European Union, North America, Japan and the former Soviet
Union, steel production in China and elsewhere in Asia has grown in importance over the past decade. This production shift to Asia
has largely been the result of proximity to the major growth markets for steel consumption and the greater availability of key raw
materials. Moreover, while production in the European Union, Japan and the United States remains significant, steel producers in
these regions have increasingly focused on rolling and finishing of semi-finished products. In 2006, China was the largest single
producer of steel in the world, producing approximately 422 Million Tons of steel, representing an 18% increase in production over
the previous year and further representing approximately 33% of total world steel production in 2006.
The robust growth in steel production has led to an increased demand for basic inputs, such as, iron ore, scrap, pellets, coal, coke etc.
Procuring stable supply of inputs is a major challenge today for any steel plant. The shortages in availability of basic raw materials
and bottlenecks in logistics resulted in higher prices of inputs during the year. Raw material prices are widely expected to rule firm
during the current year at levels higher than prices which had prevailed during the previous year.
Industry Outlook for 2007-08
The growth patterns witnessed in US economy and the momentum of European Union economy are significant pointers towards
higher steel consumption during 2007-08. Additionally, backed by strong demand from China, Brazil, South America, India and
other Asian countries, world steel consumption is projected to grow by 6% during 2007 and 2008, according to the International Iron
and Steel Institute. Apparent steel demand in China is expected to be over 405 Million Tons during 2007.
25
MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

In India, the growth in automotive sector, investments in housing projects, thrust on infrastructure development and the increase in
disposable incomes of households are expected to trigger a growth in demand for steel by over 10% during 2007-08. The growth in
overall steel demand is likely to be influenced by growth in demand for both flat and long products.
OPPORTUNITIES AND THREATS

Opportunities
Domestic demand is expected to grow at a rate of 7% on a compounded basis over the next decade. Additionally, global demand is
expected to grow by over 6%, creating enormous opportunities for being explored by main-line steelmakers. The positive growth
outlook is expected to propel additional investment and production of high-grade value-added steel products to meet the growing
needs of end-users.
Consolidation has enabled steel Companies to lower production costs and has also allowed stringent supply-side discipline. Value-
added approach to steel would ensure concentration of efforts on manufacture of high-end products with resultant positive multiplier
effect on margins. Better demand forecasting and availability of suitable information on capacity development would enable steelmakers
to rapidly change and adjust their product portfolios.
Threats
Indian Steel Industry faces the following threats :-
Ø Tightening of monetary policy to contain rising inflationary pressures, with consequent impact on spending on infrastructure etc.
Ø Per capital consumption of steel continuing to remain low.
Ø Strengthening Rupee denominating lower export realizations.
Ø Continuing exports of iron ore and implications thereof on domestic availability and prices.
Ø High transportation costs.
Ø Higher duties of Excise on Finished Steel Products.
Ø Shortening business cycles and volatile economies.
Ø Growing steel capacity in China and resultant concerns of overcapacity.
Ø Volatility in long-term supplies of raw materials.
Ø Surge in prices of oil.
Company’s Strategies
The Company has evolved a robust internal mechanism to constantly review market conditions and adjust its strategies to meet
various challenges.
The Company’s strategies are directed towards :-
Ø Increase vertical integration by reducing dependence on third parties for supplies of key raw materials;
Ø Reduce exposure to volatility in prices of raw materials and risks of shortages by mining raw materials and producing pellets and
coke.
Ø Acquire mining and prospecting leases for iron-ore, non-coking and coking coal.
Ø Increase capacity of Hot Rolled Coils steel plant by 0.60 Million Tons by installing a second blast furnace and completing other
auxiliary facilities and improvements.
Ø De-bottleneck Sinter and Sponge Iron Plants to increase their capacities.
Ø Install a coke oven plant of the capacity of 1.00 Million Tons at Dolvi Steel Complex.
Ø Construct an Iron Ore Pellet Plant of the capacity of 4.5 Million Tons at Vishakapatanam.
26

Ø Develop value-added grades of steel through continuous internal research.
Ø Install and operate a dedicated power plant to meet energy needs and ensure availability of cost-effective power supply.
Ø Enhance operational efficiencies at all stages of production, by using advanced technologies and processes and implementing
best practices through knowledge integration programmes.
PRODUCT PERFORMANCE
Sponge Iron Plant
Production of Sponge Iron was 1.15 Million Tons during the year representing capacity utilization of 72%. Though, production was
higher by 30% compared to previous year, operations in the Sponge Iron Plant continue to be affected due to lower availability of
Natural Gas. The consequent impact on capacity utilization had led to higher costs of inputs.
Hot Rolled Coil Plant

Production of Hot Rolled Coils was 2.68 Million Tons during the year representing growth of 25% over previous year. As informed
earlier, the plant capacity was enhanced to 3.0 Million Tons in December, 2005 and the plant could achieve 89% capacity utilization
during the year. Operational parameters are reviewed continuously to enhance efficiencies.
The Company continues to develop various grades of Special Steels, such as Auto-grade, API grade, LPG grade, Dual Phase grade
steel etc., with a view to enhance presence in matured segments.
Blast Furnace Plant

Production of Hot Metal/ Pig Iron in the Blast Furnace plant was 1.51 Million Tons during the year representing capacity utilization
of 75% and a growth of 7 % compared to previous year. Gunning of Blast Furnace and non-availability of one blower during the first
quarter had impacted production of Hot Metal/ Pig Iron during the year. Blast Furnace Operations are subjected to constant monitoring
for achieving cost-savings in steel production.
Sinter Plant
As earlier informed, Sinter Plant of the capacity of 2.24 Million Tons was commissioned during December 2005. Sinter plant
operations have stabilized and integration of various plant facilities and operations stand enhanced.
Cold Rolling & Coating Plant

Production of Cold Rolled Carbon Steel Coils/ Sheets and Galvanized Coils/Sheets improved during the year. Production of 0.30
Million Tons of Cold Rolled Coils/Sheets and 0.26 Million Tons of Galvanised Coils/Sheets were achieved during the year. Production
of PVC Coated Sheets registered a growth of 45% compared to previous year due to improved demand conditions.
EXPORTS
The Company’s strategies for maximizing export earnings are driven by proper analysis of demand fluctuations in international
markets and development of value-added steel products to cater to the needs of mature markets.
Export earnings during the year was Rs.1454 Crores, which was higher by 85% compared to previous year. Export of various steel
products during the year was as follows :-
Product Segment Quantity MTs
Hot Rolled Coils 376895
Cold Rolled Coils/ Sheets 1164
Galvanised Coils/ Sheets 127924
Colour Coated Sheets 7506
27

FINANCIAL PERFORAMNCE IN RELATION TO OPERATIONAL PERFORAMNCE
(Rs. in crores)
Previous
Sr. Year ended Year ended
No. 31st March 2007 31st March, 2006
1 Sales / Income from operations 8378.44 5580.02
7486.57 4958.74
2 Other Income 108.92 51.99
3 Total Income (1+ 2) 7595.49 5010.73
4 Total Expenditure 5977.42 4679.32
5 Profit before Interest & Finance Charges and Depreciation (3-4) 1618.07 331.41
6 Less : Interest & Finance Charges 990.87 956.83
7 Profit / (Loss) before Depreciation 627.20 (625.42)
8 Less : Depreciation 623.83 571.43
9 Profit / (Loss) before Tax 3.37 (1196.85)
10 Provision for Taxation (Net)
— Current (0.03) (0.03)
— Fringe Benefit Tax (3.00) (4.46)
Deferred Tax (Charge) / Credit (9.87) 388.67
11 Net Profit/ (Loss) (9.53) (812.67)
Add:
a) Balance brought forward from previous year. (1098.51) 214.47
b) Profit & Loss Account Debit balance as on 01.04.2005
of erstwhile Ispat Metallics India Ltd. — (500.31)
c) Adjustment towards additional Employees benefit liability (10.21) —
12 Amount carried to next year (1106.15) (1098.51)
Income from sales during the year at Rs.8378.44 Crores was higher by 50% over previous financial year. Profit before interest and finance
charges and depreciation was Rs.1618.07 Crores representing growth of 388% over previous financial year. After providing for depreciation
of Rs.623.83 Crores, profit before tax was Rs.3.37 Crores during the year. Considering provisions for wealth tax and fringe benefit tax
credit aggregating to Rs.3.03 Crores and deferred tax charge of Rs.9.87 Crores, the loss after tax for the year was Rs.9.53 Crores.
The Company’s performance was affected due to the incidence of high input costs and volatility in availability of basic inputs. Low
availability of Natural Gas also impacted operations of the Direct Reduced Iron (Sponge Iron) Plant with consequential adverse
impact on input costs.
MANAGEMENT OF RISKS AND CONCERNS
The Company views risk assessment and management as a comprehensive process-oriented approach for understanding and managing
its business risks and opportunities. Identification and assessment of risks are undertaken regularly and process for minimization of
identified risks and concerns are subjected to internal review. Standard Operating Procedures (SOP) are defined for different areas of
operations. The SOPs are regularly reviewed and modified, wherever process changes so demand. Well-defined Charts of Authority
(COA) have been put in place across the organization with a view to strengthen internal control systems.
Strategic and operational risks have been clearly segregated and aligned to the Annual Business Plans of the Company. This ensures
a proper cross-functional involvement in the risk mitigation process. While identifying risks, the root-causes are properly defined to
facilitate preparation of robust mitigation plants.
The risk mitigation plans include, inter-alia :
a. Carrying out modifications in processes and technologies;
28

b. Strategizing for additional capacities and new projects and finalizing capital expenditure plans therefor;
c. Developing value-added products to meet requirements of customer groups;
d. Strengthening various internal control systems and processes;
e. Managing foreign exchange and interest rate exposures through a clearly defined Forex Risk Management Policy.
The risk identification processes and mitigation plans are subject to review by the Board of Directors and suitable corrective actions
are initiated.
Confirmation of compliance with applicable statutory requirements are obtained from the respective units/ divisions and further
subjected to an elaborate verification process by the Internal Auditors. Quarterly Reports on Statutory Compliances, duly certified by
Internal Auditors, are submitted to the Audit Committee as well as the Board of Directors for review. Compliance(s) with exception(s),
if any, are also duly reported to the Audit Committee and the Board of Directors. Status of Demands/Notices on the Company, under
various Acts and Rules, as well as status of litigations are subject to review, each quarter, by the Board of Directors.
While undertaking such reviews, the Audit Committee as well as the Board of Directors are entitled to seek expert independent
opinion, wherever deemed necessary. Cases with revenue authorities are subjected to detailed risk-evaluation by independent experts,
every quarter, and their findings are furnished to the Board of Directors for being reviewed.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company’s internal control systems and procedures are commensurate with its size and nature of operations. All Standard
Operating Procedures and Charts of Authority are subjected to periodic internal review for enhancing their efficacy. Internal Control
Systems are regularly monitored and reviewed by the Company’s Corporate Audit and Risk Assurance (CARA) Department.
Implementation of corrective actions suggested by the Audit Committee are also monitored by the CARA Department.
The Annual Audit Plan of the CARA Department is approved by the Audit Committee. Integral to the Audit Plan are the following
major objectives of the CARA Department:
a. Review of SOPs and COAs and ensure modifications, wherever found necessary;
b. Review of risk mitigation plans;
c. Review of adherence to applicable regulatory provisions;
d. Ensure implementation of Audit Committee’s recommendations as well as management directives;
e. Suggest improvements to internal control mechanisms so as to secure transparency in reporting systems;
f. Review of Management control information systems to enhance effectiveness;
g. Management audit of areas, such as, cost control, profit management, productivity etc.
The reports and findings of CARA Department are subjected to regular review by the Audit Committee and corrective actions are
initiated. Areas of concern, if any, are reported to the Board of Directors.
Internal Control Systems are strengthened by robust IT applications which cover significant initiatives such as Customer Relationship
Management (CRM), Supply Chain Management (SCM), etc. An advanced mySAP Business Process project has been undertaken to
cover various operational areas with a view to enhance employee productivity, eliminate non-value added processes, compress
process lead times, improve service levels etc.
HUMAN RESOURCES & INDUSTRIAL RELATIONS
The Company’s human resources plan is directed towards attracting, developing and retaining people to perform as a team to achieve
its goals. The plan envisages fostering a culture of belonging and mutual trust. HR objectives encompass talent retention and
building proper leadership style.
The Company’s internal HR Committee constantly undertakes review of all employee-related issues so as to ensure adherence to the
HR Plan. The Company has put in place a well-structured Performance Management System for regular review of individual
performance, assessment of core competencies and identification of training needs. Additionally, an elaborate Economic Value
Added (EVA) linked variable pay system has been devised, in consultation with internationally recognized consultants, to secure the
highest level of individual and team performances and adherence to corporate goals. Employment engagement and leadership sensitizing
and capability assessments are regularly conducted through internationally reputed consultants so as to instill leadership traits in
individual managers. An exhaustive career Development Policy has also been formulated to provide employees with alternate avenues
within the Company so as to facilitate their growth from wthin.
The Company’s training philosophy is directed towards developing the best training practices with a view to enhance managerial competency
and expertise. Training needs are continuously identified and programmes initiated for development of various operational skills. In
recognition of efforts undertaken by the Company to impart training to its employees, the Company has been conferred the prestigious
Golden Peacock National Training Award, 2006, by the Institute of Directors.
29

All management initiatives, namely, Supply Chain Management, Customer Relationship Management, Total Productive Management,
Six Sigma etc. continue to be provided constant thrust so as to achieve the planned operational efficiencies.
Industrial relations continued to be harmonious in all units of the Company. As at 31st March, 2007, the total number of employees
in the Company was 3328.
AWARDS AND RECOGNITIONS
In recognition of efforts undertaken, the Company has been conferred with the following Awards during the year:-
Ø Best Kaizen Award for Mould and Segment Team at the 1st Quality Convention on Kaizen Quality Circle Forum of India.
Ø JCSSI Suraksha Puraskar Award, 2005, was awarded to Safety, Health and Environment (SHE) Pillar .
Ø Golden Peacock Environment Management Award, 2006, awarded by Institute of Directors, was won by TPM SHE Pillar.
Ø Golden Peacock National Training Award, 2006, awarded by Institute of Directors.
Ø Safety Innovation Award, 2006, awarded by Institute of Directors, was awarded to TPM SHE Pillar.
Ø Par Excellence Award and Excellence Award, awarded by Confederation of Indian Industries for Business Excellence, were won
by SIP Kaizen Team and CRS and Mill Roll Shop respectively.
Ø TPM Excellence Award (1st Category), awarded by JIPM, Japan. The Company is the first integrated steel plant in the country to
be conferred the award.
Ø Kaizen Excellence Award, at National Conference on QC, conducted by Quality Circle Forum of India, was awarded to Roll Shop Team.
Ø Excellent Presentation Award of Quality Circle Forum of India, Nagpur Chapter for Case Study Competition, 2006.
MANAGEMENT OF ENVIRONMENT
The Company continues to provide immense thrust on environment improvement and waste management at its manufacturing units.
Pollution Control measures, process innovations and waste management methods are subjected to strict internal scrutiny and review.
Audit of housekeeping is conducted on a regular basis and “5S” scores are assigned to the respective plant zones. Pollution Control
initiatives have also been subjected to review at the apex level by the Board of Directors.
At Dolvi Steel Complex
Ambient air quality, stack emission, secondary emissions, waste water quality, dust collection systems etc., are regularly monitored.
All actions towards improvement of environment are benchmarked to Maharashtra Pollution Control Board(MPCB) norms. Various
directions/observations of MPCB are implemented on a continuous basis.
Significant Pollution Control and Environment Management efforts undertaken during the year include :-
a. New gas cleaning plant for Shells 1 and 2 of Hot Strip Mill have been commissioned thereby enabling reduction in dust and fume
emissions in SMS area;
b. Fume Extraction System commissioned at cast house of Blast Furnace. The system facilitates reduction of dust and fume emissions
from cast houses;
c. Dust Extraction Systems have been provided at material handling section for effective control of dust emissions from lime and DRI;
d. Pneumatic charging system has been provided for lime handling;
e. Ladle cover has been provided to avoid emissions during casting at Hot Strip Mill;
f. Concretization of roads within the plant to reduce dust emissions.
Extensive horticultural activities are being carried out in the plant area. As at end March, 2007, over 103000 trees have been planted
alongwith over 261000 shrubs. Lawn development has been undertaken in over 140000 Sq. Ft. within the plant premises.
At Kalmeshwar Complex
Environment assessment is undertaken on regular basis to ensure clean and green environment in and around the plant area. During
the year, the following pollution control measures have been initiated to maintain an ambient environment and also promote awareness
among the people in the complex and adjoining areas:-
a) Filter press unit has been commissioned for separating ETP Sludge and Water. Water extracted from the unit is clear with Ph value
of 6.5 to 9.0.
b) Rain water harvesting project, covering 60,000 Sq. Mtrs. area, has been undertaken to:-
Ø Stop processed water from flowing outside the factory premises.
Ø Develop greenery in landfilled area near CGL- II.
Ø Increase ground water level to maintain greenery during summer months.
Ø Create pleasant environmental ambience for complying EMS (ISO 14001) requirements.
Ø Use treated water regularly in nearby forest for growth of trees.
Ø Reduce chloride content in ground water.
30

c) Plantation of approximately 4000 forest species trees and about 100000 ornamental plants was undertaken. Plantation of teak
trees and development of fruit orchard was undertaken in 50000 Sq. Mtrs. area adjoining CRM, ETP, BF and LPG yard.
d) Development of green field covering about 54000 Sq. Mtrs. area was undertaken. Development of orange orchard and land-
scaping covering 16000 Sq. Mtrs area, was also undertaken.
e) World Environment Day was celebrated. Plantation was done by officials of the local public administration body and the Company.
f) Partial sponsorship of Exhibition on environment organized by MPCB at National Environmental Engineering and Research
Institute, Nagpur.
CORPORATE SOCIAL RESPONSIBILITY
The Company’s Corporate Social Responsibility (CSR) initiatives continue to address significant social engineering issues. The
Company seeks to provide utmost thrust on securing the health and welfare of its employees and their families, enriching ecology and
environment, promoting sports, farming, Animal Husbandry, Aqua Farming and enriching community’s social health. The Company
seeks to promote a better sustainable society and has committed itself to greater community welfare and social development.
The social initiatives undertaken by the Company are, broadly, as under:-
At Dolvi Steel Complex
Ø Distribution of school uniforms every year to the economically deprived students of local schools.
Ø Distribution of notebooks every year to the economically deprived students of local schools.
Ø Providing vocation training in various skills to local youths or groups to start small business units for achieving self dependence.
Ø Renovation of local school buildings and providing sanitary facilities.
Ø Training of villagers in multi-farming, horticulture, fish breeding and agro tourism.
Ø Full year medical camps to be conducted in nearby villages covering pediatrics, skin care, cataract detection, refractive errors in
eyes, ENT etc.
Ø Arranging Family Planning, AIDS awareness and health awareness camps.
Ø Imparting, in association with Maharashtra Centre for Entrepreneurial Development, vocational training to youth especially
women in fashion designing, food processing and make-up to enable the individual or group to start small business units for
being self sufficient.
Ø Sponsorship of Kabaddi and Cricket Tournaments. Sponsorship of individuals excelling in various sports, Bhajans, Kirtans,
Dindi yatras, Jayantis and cultural activities in schools etc. in Grampanchayats surrounding Dolvi Complex.
Ø Ispat Marathon is held annually at Alibag with an aim to nurture an interest in sports among the youth. The races are handled by
the officials of the district sports office.
Ø Construction of water spout, development of lake garden and erection of shed over crematorium in nearby villages.
At Kalmeshwar Complex
Ø Gift and stationery sponsored for General Knowledge Competition organized by Dr. Bhabha Institute of Science and Public
Education.
Ø Inter-school General Knowledge competition organized by the Company’s English-medium school.
Ø Drinking water facility being provided during summer season in Kalmeshwar town.
Ø Health check-up, Blood donation and pulse polio camps were organized. Over 1500 persons participated.
Ø TT immunization and AIDS awareness camps were organized.
Ø Healthy Baby Contest and Health Awareness contest for housewives were organized.
Ø Donated computers for E-Police Service.
Ø Ispat Cup Football Tournament was organized which was participated by different local schools.
Ø Inter-school sports and cultural competitions were organized by the Company’s English-medium school.
Ø Volley-ball and Karate Training Camps were conducted for school children.
CAUTIONARY STATEMENT
Statements in this Management’s Discussion and Analysis detailing the Company’s objectives, projections, estimates, expectations or
predictions may be “forward – looking statements” within the meaning of applicable securities laws and regulations. Actual results
could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations
include global and Indian demand – supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and
pricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India
and the Countries within which the Company conducts business and other factors such as litigation and labour negotiations.
31
CORPORATE GOVERNANCE REPORT

1. COMPANY’S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE
The Company firmly believes that Corporate Governance is very closely linked to its core values and is associated with best
practices, a fine blend of law, regulation and voluntary practices with the overall objective of protecting the interests of its
stakeholders. The Company continuous to focus on best practices in the area of Corporate Governance with specific emphasis
on ensuring accountability and transparency.
The Company believes in Corporate Governance that is dynamic and continuously evolving with passage of time. Accordingly,
the Company has sought to institutionalize best governance practices to effectively fulfill its corporate responsibilities.
The Company is committed to a high level of transparency, accountability, integrity, ethical conduct and fairness and contributing
towards the social and environmental growth of the surroundings in which it operates.
2. GOVERNANCE PRACTICES
The Company’s Corporate Governance practices seek to go beyond the regulatory requirements. With a view to ensure
implementation of governance practices that are robust and long-term, the Company has put in place the following:-
a. Code of Conduct
The Company’s document on Code of Conduct, which is required to be followed by the Board members and members of
Senior Management (upto level of General Managers), is based on the principle that business should be conducted with
honesty and integrity to the exclusion of personal gains. The document also requires conduct of business in a professional
manner directed towards maintaining and enhancing the reputation of the Company.
b. Business Policies
The Company’s Business Policies ensure transparency of operations and better accountability to its stakeholders. The
policies encourage and support professional development of employees, fair market practices and high level of integrity in
financial reporting. The policies also seek to promote health, safety and quality of environment.
c. Prohibition of Insider Trading

The Company’s Code of Conduct for prevention of Insider Trading, which applies to the Board Members and all officers
and employees, seeks to prohibit trading in the securities of the Company based on insider or privileged information.
d. Risk Management
The Company has formulated a comprehensive risk identification, assessment and minimization plan. The risk management
procedures are clearly defined and subjected to periodic review by the Board of Directors.
e. Environment Policy
The Company’s environment policy is aimed towards achieving continuous improvement of environment and strengthening
pollution prevention and control measures.
f. Equal employment opportunity

The Company is committed to a policy of equal employment opportunity and ensures no discrimination on grounds of
race, colour, religion, sex, age or marital status.
3. BOARD OF DIRECTORS
The Board of the Company presently comprises eleven Directors. Out of them, seven are Independent Non-Executive Directors.
The Chairman of the Board is a Non-Executive Director. The composition of the Board is in compliance with Clause 49 of the
Listing Agreement (s) with Stock Exchanges.
32
CORPORATE GOVERNANCE REPORT (Contd.)

During the year, ten Board meetings were held on the following dates:
10th May, 2006, 27th May, 2006, 31st July, 2006, 11th August, 2006, 29th August, 2006, 13th October, 2006, 18th October, 2006,
20th January, 2007, 2nd March, 2007 and 29th March, 2007.
The composition of the Board of Directors, attendance of Directors at the Board Meetings and at the last Annual General
Meeting as also the number of Directorships and Committee Memberships held by the Directors in other companies are given
below: -
Name of Director Category No. of Attendance No. of Directorship No. of Membership

Board at the last in other Companies in Committee of
Meeting AGM @ Directors in other
Attended held on Companies #
29.08.2006
Chairman Director Chairman Member
Mr. Pramod Mittal Promoter 3 Yes 2 Nil Nil Nil
(Chairman) Non-Executive
Mr. V.K. Mittal Promoter 9 Yes 1 4 Nil 1
(Managing Director) Executive
Mr. U. Mahesh Rao Independent 9 Yes Nil 2 Nil 2
Non-Executive
Dr. A. Besant C. Raj Independent 8 Yes 1 3 2 3
Non-Executive
Mr. Manu Chadha Independent 10 Yes Nil 6 Nil 2
Non-Executive
Mr. M. Sankaranaryanan Independent 8 Yes Nil Nil Nil Nil
(UTI Nominee) Non-Executive
Mr. K.M. Jaya Rao Independent 3 No Nil 4 Nil 2
(ICICI Nominee) Non-Executive
Mr. Sanjoy Chowdhury Independent 6 No 1 Nil Nil Nil
(IFCI Nominee) Non-Executive
Mr. B. P. Singh Independent 5 N.A. Nil 1 Nil Nil
(IDBI Nominee) Non-Executive
(w.e.f. 18.09.2006)
Mr. Vinod Garg Executive 10 Yes Nil Nil Nil Nil
Executive Director
(Marketing)
Mr. Anil Sureka Executive 10 Yes Nil 2 Nil 1
Executive Director
(Finance )
@ Excludes Foreign Companies and Private Limited Companies.
# Only Audit Committee, Investor / Shareholders’ Grievance Committee and Remuneration Committee have been considered.
None of the Directors on the Board is a Member on more than ten Committees and Chairman of more than five Committees, as
specified in the revised Clause 49 of the Listing Agreement.
33

Attendance at Board Meetings held during the year and at the Annual General Meeting by Director, who had ceased to hold office
during the year under review:
Name of Director Category Date of Cessation No. of Board Attendance at the last
Meeting Attended AGM held on 29.08.2006
Mr. C. P. Philip Independent 18.09.2006 3 No
During the financial year 2006-07, the Company did not have any material pecuniary relationship or transactions with its Non-
Executive Directors. None of the Independent Non-Executive Directors:
a) are related to the promoters or persons occupying management positions at Board level or at one level below the Board;
b) has been an executive of the Company in the immediately preceding three financial years.
c) is a partner or an executive or was a partner or an executive during the preceding three years of the statutory auditors or internal
auditors or legal/consulting firms having a material association with the Company.
d) is a material supplier, service provider or customer or lessor or lessee of the Company.
e) is a substantial shareholder of the Company.
None of the Non-Executive Directors is holding any share in the Company, except Mr. Pramod Mittal, Non-Executive Promoter, who
is holding 674558 Equity Shares (0.06%) and 279672 – 0.01% Cumulative Redeemable Preference Shares (0.06%).
4. BOARD PROCEDURE
The Board of the Company plays a significant role in deciding policies, monitoring performance and ensuring good Corporate
Governance. The Board directs the activities of the Management to ensure that the Corporate goals are met and seeks accountability
with a view to ensure that the Corporate mission is accomplished.
The Board reviews the Company’s business plans and strategies, annual capital and operating budgets, performance of operations,
implementation of projects, risk assessment procedures and minimization plans, compliance of applicable statutory / regulatory
requirements, major legal issues, significant labour matters, quarterly / annual financial results as well as minutes of deliberations at
the respective Committees of the Board. Minutes of deliberations at the meetings of Board of Directors of Ispat Energy Limited, the
unlisted subsidiary Company, is also reviewed by the Board. Information as required under Annexure-IA to Clause 49 of the Listing
Agreement is made available to the Board.
While reviewing compliance reports of applicable laws, the Board also takes suitable steps to rectify non-compliances, if any.
The agenda for Board meetings are sent in advance to all the Directors, accompanied by comprehensive notes and copies of related
documents.
5. AUDIT COMMITTEE
The Company has an independent Audit Committee constituted in terms of Clause 49 of the Listing Agreement and Section 292A of
the Companies Act, 1956. The Committee exercises the powers and discharges the functions as stipulated in Clause 49 of the Listing
Agreement and Section 292A of the Companies Act, 1956.
The terms of reference of the Audit Committee are, broadly, as under:-
i) Review of accounting policies, financial reporting processes and disclosure of financial informations.
ii) Recommend to the Board appointment/re-appointment of Statutory and Internal Auditors, fixation of audit fees as well as fees
for other services being rendered by them.
iii) Review quarterly/annual financial results with the management and recommend the same to the Board.
iv) Review reports of internal auditors and concurrent auditors and management response thereto.
34

v) Review adequacy of internal control systems of the Company.
vi) Review performance of statutory and internal auditors and adequacy of internal audit function, including structure of internal
audit department etc.
vii) Review statutory compliances.
The Audit Committee also undertakes and reviews such other matters as may be delegated by the Board from time to time.
Besides having access to all the required information from within the Company, the Committee can obtain external legal or professional
advice wherever required. The Committee can investigate any activity within its reference terms, seek information from any employee
and also seek attendance of outsiders with relevant experience, if it so considers necessary. The Committee is empowered to review
the appointment/re-appointment of Internal Auditors and Statutory Auditors as well as remuneration payable to them and recommend
the same to the Board.
The reports of Internal Auditors, the Corporate Audit and Risk Assurance Department and the Concurrent Auditors are reviewed by
the Audit Committee. The Committee reviews adequacy of internal control systems with the Auditors as well as the Company. The
Committee reviews with the Statutory Auditors their observations and suggestions on accounts and accounting policies.
The Committee also undertakes review of:-
i) Adequacy of internal audit functions including structure of Corporate Audit and Risk Assurance Department;
ii) Performance of Statutory and Internal Auditors as well as Corporate Audit and Risk Assurance Department;
iii) Significant findings if any, of internal auditors.
iv) Related Party transactions, if any;
v) Changes in accounting policies, if any;
vi) Management discussion and analysis of financial condition and results of operation;
vii) Reasons for substantial defaults, if any, in payments to debenture-holders and lenders.
The Audit Committee reviews the quarterly and annual financial statements with the management before submission to the Board.
The minutes of the Audit Committee Meetings are circulated to the Board, discussed and taken note of.
The Audit Committee presently comprises seven members, all of whom are Independent Non-Executive Directors. The Chairman of
the Audit Committee, a Chartered Accountant, possesses extensive experience in accounting and financial management. The Chairman
of the Audit Committee was present at the last Annual General Meeting of the Company held on 29th August, 2006.
Apart from the Committee Members, the meetings of Audit Committee are also attended by the Executive Director (Finance),
Executive Director (Marketing) and other Operational / Departmental Heads.
The President and Company Secretary acts as the Secretary to the Committee.
Ten meetings of the Audit Committee were held during the financial year 2006-2007. The dates of the meetings are:
21st April, 2006, 9th May, 2006, 28th July, 2006, 31st July, 2006, 13th October, 2006, 18th October, 2006, 5th January, 2007,
20th January, 2007, 7th February, 2007 and 29th March, 2007.
35

The composition of the Audit Committee and the meetings attended by the members are as under:-
Name of Director Category No. of Meeting attended
Mr. Manu Chadha, Chairman of the Committee Independent 10
Non-Executive
Mr. U. Mahesh Rao Independent 9
Non-Executive
Dr. A. Besant C. Raj Independent 9
Non-Executive
Mr. M. Sankaranarayanan Independent 8
Mr. B P Singh Independent 6
appointed with effect from 13.10.2006
Mr. K.M. Jaya Rao Independent 2
Mr. Sanjoy Chowdhury Independent 8
Mr. C. P. Philip Independent 3
ceased with effect from 18.09.2006
6. SHARE TRANSFER AND INVESTORS GRIEVANCE COMMITTEE

The Share Transfer and Investors Grievance Committee approves transfer of shares, consolidation/sub-division of shares, issue of
duplicate shares and other allied matters. The Committee also looks into the investors’ grievances pertaining to share transfers,
dematerialization of shares, issue of duplicate shares and all other matters concerning shareholders/investors and gives direction from
time to time for effective settlement of investors’ grievances.
Ten meetings of the Committee were held during the financial year 2006-2007. The dates of the meetings are:
21st April, 2006, 27th May, 2006, 28th July, 2006, 29th August, 2006, 29th September, 2006, 25th October, 2006, 29th November, 2006,
5th January, 2007, 7th February, 2007 and 29th March, 2007.
The composition of the Committee and the meetings attended by the members are as under:-
1. Mr. U. Mahesh Rao, Independent 9
Chairman of the Committee Non-Executive
2. Mr. Manu Chadha Independent 10
Non-Executive
3. Mr. Anil Sureka Executive 10
The Chairman of the Committee is an Independent Non-Executive Director. The Chairman of the Committee was present at the
Annual General Meeting held on 29th August, 2006.
36

Name and Designation of Compliance Officer:
Mr. T P Subramanian, President & Company Secretary is the Compliance Officer.
The minutes of the Share Transfer and Investors Grievance Committee Meetings are circulated to the Board, discussed and
taken note of.
During the year under review, 821 complaints were received from shareholders. All complaints were replied/resolved and there was
no complaint pending to be resolved as at 31st March, 2007. 68 requests for transfer comprising 860 Equity Shares and 25 requests
for transfer comprising 1150 – 0.01% Cumulative Redeemable Preference Shares were pending as on 31st March, 2007, which were
subsequently dealt with within the stipulated time. 243 requests for dematerialization of 35508 Equity Shares and 138 requests for
dematerialization of 12972 - 0.01% Cumulative Redeemable Preference Shares were pending as on 31 st March, 2007, which were
subsequently addressed / confirmed in a week’s time.
7. REMUNERATION COMMITTEE
The broad terms of reference of the Remuneration Committee are as under:
i) Review of Remuneration Policy in relation to Managing Director and Whole-time Directors.
ii) Recommend to the Board remuneration including salary, perquisites and commission to be paid to Managing Director and
Whole-time Directors.
The Committee comprises four members all of whom are Independent Non-Executive Directors. During the year, one meeting of the
Remuneration Committee was held on 5thJanuary, 2007.
The composition of the Committee and attendance at the meeting are as under:-
Name of Director Category Attendance at the meeting
Mr. U. Mahesh Rao, Independent Attended
Chairman of the Committee Non-Executive
Dr. A. Besant C. Raj Independent Attended
Non-Executive
Mr. M. Sankaranarayanan Independent Attended
Mr. Manu Chadha Independent Attended
Non-Executive
The Chairman of the Remuneration Committee was present at the Annual General Meeting held on 29th August, 2006.
8. REMUNERATION POLICY
Non-Executive Directors of the Company are paid sitting fees of Rs.20,000/- for attending each meeting of Board of Directors and
Audit Committee of Directors and Rs.12,000/- for attending each meeting of other Committees of Directors. Besides sitting fees, the
Non-Executive Directors are not paid any other remuneration or commission.
The Company pays remuneration to its Managing Director and Whole-time Directors in the form of a fixed component, comprising
of salary, perquisites and allowances. No other benefits, bonuses or performance linked incentives are being paid to Managing
Director and Whole-time Directors.
Payment of salary to Managing Director and Whole-time Directors is within the ranges approved by the Shareholders of the Company.
Perquisites and allowances are paid as a percentage of salary, within the ceiling approved by the Shareholders. Commission (variable
component), as calculated with reference to net profits of the Company in any financial year, is determined by the Board of Directors,
based on the recommendation of the Remuneration Committee, subject to overall ceilings prescribed under Sections 198 and 309 of
the Companies Act, 1956. Payment of commission is also subject to the overall limits as may be approved by the Shareholders.
37

Increase in salary is considered and approved by the Board, based on the recommendation of the Remuneration Committee. Approvals
of appropriate authorities, wherever required, is obtained.
While deciding the remuneration package of the Managing Director and the Whole-time Directors, the following factors are considered:
a) Employment scenario in general;
b) Business activities of the Company;
c) Prevailing trend of executive compensation across all sectors of the economy;
d) Background, experience etc. of the concerned managerial personnel.
The details of the remuneration paid to the Managing Director and Whole-time Directors, during 2006-2007, are as under:-
Name of Director Salary & Perks Commission Total Service Contract

(Rs.in Lacs) (Rs in Lacs) (Rs. in Lacs) Years Period
Mr. V. K. Mittal 167.48 Nil 167.48 5 (28.06.2002 – 27.06.2007)
(Managing Director)
Mr. Vinod Garg 119.18 Nil 119.18 5 (21.04.2003 – 20.04.2008)
Executive Director
(Marketing)
Mr. Anil Sureka 118.77 Nil 118.77 5 (01.02.2006 – 31.01.2011)
Executive Director
(Finance)
Notice Period — The service contract with the Managing Director and Whole-time Directors may be terminated by either
party giving three months’ notice, in writing, to the other party, or the Company paying three months’
Severance Fee — No Severance Fee is payable to any of the aforementioned Managing/Whole-time Directors.
Stock Option — NIL
9. OTHER COMMITTEES
In addition to the Committees mentioned hereinabove, the Board has constituted the following Committees :-
a) Project Management Committee
b) Special Committee of Directors for Property Development
c) Committee of Directors
d) FCCB Committee renamed as FCN Committee.
a) Project Management Committee
The broad terms of reference of the Project Management Committee are as under:-
i) Overview implementation of various capital projects, including status of progress, critical areas affecting project implementation
schedules etc.
ii) Overview financing of projects, capital expenditure budgets, project costs incurred etc.
Apart from the Committee Members, the meetings of Project Management Committee are also attended by Heads of respective
projects, representatives of key contractors, project consultants etc.
38

Three meetings of the Project Management Committee were held during the financial year 2006-2007. The dates of the meetings are:
21st April, 2006, 11th August, 2006 and 5th January, 2007.
The composition of the Project Management Commitee and the meetings attended by the members are as under:-
Mr. U. Mahesh Rao Independent 3
Non-Executive
Dr. A. Besant C. Raj Independent 3
Non-Executive
Mr. B. P. Singh Independent 1
(IDBI Nominee) appointed with effect from 13.10.2006 Non-Executive
(IDBI Nominee) ceased with effect from 18.09.2006 Non-Executive
Mr. Vinod Garg, Executive Director (Marketing) Executive 3
Mr. Anil Sureka, Executive Director (Finance) Executive 3
b) Special Committee of Directors for Property Development
The broad terms of reference of the Special Committee of Directors for Property Development are as under : -
i) Review progress in development of building property located at Peddar Road, Mumbai.
ii) Review status of legal compliances, approvals of concerned statutory authorities, engagement of engineers/architects/consultants,
variance in market prices etc.
iii) Review status of project costs etc.
Three meetings of the Special Committee of Directors for Property Development were held during the financial year 2006-2007. The
dates of the meetings are:
21st April, 2006, 31st July, 2006 and 5th January, 2007.
The composition of the Special Committee of Directors for Property Development and the meetings attended by the members are as under:-
Mr. V. K. Mittal, Managing Director Promoter Executive 1
Mr. B. P. Singh Independent 1
ceased with effect from 18.09.2006
Mr. Anil Sureka, Executive Director (Finance) Executive 3
39

c) Committee of Directors
The broad terms of reference of the Committee of Directors are as under: -
i) Appointing attorneys/representatives to represent the Company before various authorities;
ii) Fixing Record Date(s)/Book Closure Date(s).
iii) Accepting working capital facilities that may be sanctioned by Banks/Lenders upto such amount as may be authorized by the
Board.
iv) Opening/closure of Bank Accounts and changes in authorizations.
v) Opening of Depots, Offices, Warehouses etc.
The terms of reference, as stated hereinabove, are routine in nature and exercised by the Committee in the event(s) of urgency/
exigency.
No meeting of the Committee of Directors was held during the financial year 2006-2007.
The composition of the Committee of Directors is as under:-
Name of Director Category

Mr. V. K. Mittal, Managing Director Promoter Executive
Mr. Sanjoy Chowdhury (IFCI Nominee) Independent Non-Executive
Mr. Vinod Garg, Executive Director (Marketing) Executive
Mr. Anil Sureka, Executive Director (Finance) Executive
d) FCCB Committee renamed as FCN Committee

The broad terms of reference of the FCCB Committee (renamed as FCN Committee) is to attend to various operational matters
relating to the proposed issue of Foreign Currency Notes (FCN).
No meeting of the FCCB Committee (renamed as FCN Committee) was held during the financial year 2006-2007.
The composition of the FCCB Committee (renamed as FCN Committee) is as under:-
Name of Director Category

Mr. V. K. Mittal, Managing Director Promoter Executive
Mr. Manu Chadha Independent Non-Executive
Mr. K. M. Jaya Rao (ICICI Nominee) Independent Non-Executive
Mr. B. P. Singh (IDBI Nominee) Independent Non-Executive
Mr. Sanjoy Chowdhury (IFCI Nominee) Independent Non-Executive
Mr. Anil Sureka, Executive Director (Finance) Executive
40

10. GENERAL BODY MEETINGS
1. Location and time, where last three AGMs held:
For the Year ended Location Date Time
31.03.2004 Kala Mandir Main Hall, 14.09.2004 10.30 A.M.
48 Shakespeare Sarani
Kolkata – 700 017
Kolkata – 700 017
Kolkata – 700 017
1.2 Whether any special resolution passed in the previous 3 AGMs : Yes
1.3 Whether special resolutions:
a) (i) Were put through postal ballot last year : No
(ii) Details of voting pattern : N.A.
(iii) Person who conducted the postal ballot exercise : N.A.
b) (i) Are votes proposed to be conducted through
Postal ballot this year : No
(ii) Procedure for Postal ballot : N.A.
11. POSTAL BALLOT

The following Ordinary Resolutions were passed on 18th April, 2007 through Postal Ballot :-
a. Increase in Borrowing Powers of the Company, pursuant to Section 293(1) (d) of the Companies Act, 1956;
b. Creation of charge, pursuant to Section 293(1) (a) of the Companies Act, 1956.
The above resolutions were passed with the requisite majority, as detailed below :-
Sl. No. Particulars of resolution Percentage of votes cast in
favour of the resolution
a. Increase in Borrowing Powers 99.95
b. Creation of charge 99.95
Mr. Rajiv Lall, Advocate, was appointed as Scrutinizer for conducting the Postal Ballot.
The Company has complied with the applicable provisions of Companies (Passing of the Resolution by Postal Ballot) Rules, 2001.
12. DISCLOSURES
a. The particulars of transactions between the Company and its related parties, as defined in terms of Accounting Standard 18, are
set out in Page Nos. 76 to 79 of the Annual Report. However, these transactions are not likely to have any potential conflict with
the Company’s interest.
b. The Company has complied with the requirements of the Stock Exchanges, Securities and Exchange Board of India and other
statutory authorities on matters relating to Capital Markets during the last three years.
41

No penalties/strictures have been imposed on the Company by Stock Exchanges or Securities and Exchange Board of India
(SEBI) or any statutory authority on any matter related to capital market during the last three years except for the following:
An order was passed on 31st March, 2004 and issued on 5th April, 2004, by SEBI, whereby the company was instructed to be
more careful in future and ensure compliance with the SEBI Act, Rules and Regulations framed there under and more specifically
with the Code of Corporate Disclosures, while disclosing any information which may be construed to be price sensitive in nature.
However, subsequently, an order was issued by Adjudicating Officer, SEBI on 1st December, 2005, levying a penalty of Rs.1 Lac
on the Company in the same matter. The Company has preferred an appeal against the said Order to Securities Appellate Tribunal
(SAT). The Company’s appeal has been admitted by SAT on 13th February, 2006, and recovery of penalty has been stayed during
pendency of appeal.
c. A certificate from the Managing Director and Executive Director (Finance) with regard to the Annual Audited Accounts for the
financial year ended 31st March, 2007 was placed before the Board, in compliance with Clause 49 of the Listing Agreement. The
Certificate is annexed to this Report.
d. The Company has adopted and complied with all mandatory requirements under Clause 49 of the Listing Agreement.
e. The Company has adopted non-mandatory requirement under Clause 49 of the Listing Agreement to the extent relating to
setting-up of Remuneration Committee. Please refer details provided under Section “Remuneration Committee” of this Report.
13. MEANS OF COMMUNICATION
Half yearly report sent to each household Since the unaudited quarterly/half-yearly results are published in the
of shareholders newspapers and displayed on the Company’s website, the same were
not sent to each household of shareholders.
Quarterly results - which Financial Express and Business Standard (in English)
Newspapers normally published in? Sangbad Pratidin (Bengali version)
Web sites where quarterly results are displayed. www.ispatind.com
Whether it also displays official news releases Not Applicable
and presentation made to institutional investors
or to the analysts?
Whether Management Discussion & Analysis is Yes
part of Annual Report?
14. COMPANY’S CORPORATE WEBSITE

The Company’s website is a comprehensive reference on Ispat’s management, vision, mission, policies, processes, social responsibility
initiatives, investor relations, updates and news.
15. GENERAL SHAREHOLDERS’ INFORMATION

15.1 Annual General Meeting
Day, Date and Time Wednesday, 25th July, 2007 at 10.30 A.M.
Venue Kala Mandir, Main Hall, 48 Shakespeare Sarani, Kolkata – 700 017
15.2 Book Closure Date 18th July, 2007 to 24th July, 2007 (both days inclusive)
15.3 Dividend Payment Date Not Applicable since dividend not declared.
15.4 Financial Calendar :
Year Ending March 31
Annual General Meeting July / August
Board Meeting for considering Un-audited Within one month from the end of each quarter.
Quarterly Results for first three-quarters of
the financial year ending 31st March, 2008.
Board Meeting for considering Audited Results of the Within three months from the end of the financial year.
Company for the Financial Year ending 31st March, 2008.
42

15.5 Listing on Stock Exchanges
Equity Shares Global Depository Receipts (GDRs)
The Calcutta Stock Exchange Association Limited The Luxembourg Stock Exchange
7 Lyons Range, Kolkata 700 001. Societe de la Bourse de Luxembourg, 11, Avenue De La
Porte Neuve, L- 2227, Luxembourg
National Stock Exchange of India Limited
Exchange Plaza, Bandra Kurla Complex,
Bandra (E), Mumbai 400 051.
Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers,
Dalal Street, Mumbai 400 023.
0.01% Cumulative Redeemable Preference Shares 10% Cumulative Redeemable Preference Shares
The Calcutta Stock Exchange Association Limited National Stock Exchange of India Limited
7 Lyons Range, Kolkata 700 001. Exchange Plaza, Bandra Kurla Complex,
National Stock Exchange of India Limited Bombay Stock Exchange Limited
Exchange Plaza, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers,
Bandra (E), Mumbai 400 051. Dalal Street, Mumbai 400 023.
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 023.
12% Cumulative Redeemable Preference Shares
National Stock Exchange of India Limited
Exchange Plaza, Bandra Kurla Complex,
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 023.
Note: 1. The Company’s Equity Shares as well as 0.01% Cumulative Redeemable Preference Shares have also been listed
on Calcutta Stock Exchange Association Ltd. and trading in the above shares has commenced with effect from
17thJuly, 2006.
2. The Company’s shares are de-listed from Delhi Stock Exchange Association Ltd. with effect from 14th August, 2006
pursuant to an application filed by the Company for voluntary delisting of Equity Shares existing prior to implementation
of Scheme of Reconstruction and Amalgamation.
3. The Company’s 10% Cumulative Redeemable Preference Shares of Rs.10/- each and 12% Cumulative Redeemable
Preference Shares of Rs.100/- have been listed on Bombay Stock Exchange Ltd. and National Stock Exchange of India
Ltd. Trading in the above shares has commenced with effect from 28th August, 2006 on both the Exchanges.
4. Annual Listing Fees for the year 2007-2008 have been duly paid to all the above Stock Exchanges. Annual Custodial fees
for the year 2007-2008 have been duly paid to National Securities Depository Ltd. and Central Depository Services
(India) Ltd.
43

15.6 Stock Market information
(i) Stock Code:
<> National Stock Exchange of India Ltd.:
Equity Shares of Rs.10/- each : ISPATIND
(Series EQ)
0.01% Cumulative Redeemable : ISPATIND
Preference Shares of Rs.10/- each (Series P1)
10% Cumulative Redeemable : ISPATIND
12% Cumulative Redeemable : ISPATIND
<> Bombay Stock Exchange Ltd.:-
Equity Shares of Rs.10/- each : 500305
0.01% Cumulative Redeemable
Preference Shares of Rs.10/- each : 700109
10% Cumulative Redeemable
12% Cumulative Redeemable
<> The Calcutta Stock Exchange Association Ltd.:-
Equity Shares of Rs.10/- each : 10019278
0.01% Cumulative Redeemable
(ii) ISIN Nos. of Dematerialised Shares :

<> Equity Shares of Rs.10/- each : INE136A01022
<> 0.01% Cumulative Redeemable : INE 136A04034
Preference Shares of Rs.10/- each
<> 10% Cumulative Redeemable : INE136A04018
<> 12% Cumulative Redeemable : INE136A04026
44

(iii) Market Price
Month Bombay Stock Exchange (BSE) National Stock Exchange (NSE)
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April-06 23.00 17.99 25.00 15.00
May-06 20.20 13.45 20.85 13.05
June-06 15.07 10.42 18.10 10.10
July- 06 14.12 11.80 14.60 11.50
August-06 12.53 11.79 13.25 11.50
September-06 11.97 10.71 12.25 10.00
October-06 12.65 11.17 13.20 11.00
November-06 11.74 10.74 12.10 10.70
December-06 12.01 10.60 12.35 10.20
January-07 16.66 11.01 17.90 10.95
February-07 15.85 13.90 16.85 13.00
March-07 14.43 12.76 15.00 12.55
MARKET PRICE VS NSE NIFTY

4500 30
NSE NIFTY- Monthly High
4000
Share Price on NSE

25
3500
3000 20
2500
15
2000
1500 10
1000
5
500
0 0
Ja er 06
ve er, 6
O ber 06
ce er, 6
Fe ary 006
ch 007
ay 06
ne 06
7
pt st 06
Au ly, 2 6
M y, 2 7
No tob 200
De mb 200
00
Ju 200
r 0
20
0
M 20
Ju , 20
Se gu 0
ua 0
em , 2
nu , 2
,2
br , 2
,
,
,
ril
Ap
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c
NSE Nifty Market Price
45

15.7 Registrars & Transfer Agents : M/s.Intime Spectrum Registry Limited
C-13, Pannalal Silk Mills Compound,
LBS Marg, Bhandup (West),
Mumbai-400 078.
Ph. Nos. 91-22-25963838
Fax Nos. 91-22-25946969
E-mail: isrl@intimespectrum.com
(Registered with SEBI as Share Transfer Agent - Category I)
M/s. MCS Limited were Registrars & Transfer Agents of the Company upto 30th September, 2006.
15.8 Share Transfer System

The Company’s Equity Shares and 0.01% Cumulative Redeemable Preference Shares of Rs.10/- each (0.01% CRPS) are admitted for
dealings with the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), under
the Depositories Act, 1996. As such, facilities for dematerializations of the Company’s Equity Shares and 0.01% CRPS are available
vide ISIN No. INE 136A 01022 and INE 136A 04034 respectively, at both the depositories. Similarly, facilities for dematerialization
of the Company’s 10% Cumulative Redeemable Preference Shares of Rs.10/- each and 12% Cumulative Redeemable Preference
Shares of Rs.100/- each are also available vide ISIN No. INE136A04018 and INE136A04026 respectively at NSDL and CDSL.
To expedite the process of transfer, the Company has authorized M/s.Intime Spectrum Registry Limited, Registrar & Share Transfer
Agents, to effect the transfer, who attend to share transfer formalities at least once in a fortnight. In terms of the Rules and Regulation
prescribed by SEBI and provisions of the Listing Agreement entered into with the Stock Exchanges, Share transfers in physical
form are carried out and returned to the shareholders within 15-20 days from the date of receipt, subject to the transfer documents
being valid and complete in all respects. Those who are desirous of holding their shares in the Company in electronic form have to
approach their Depository Participant for dematerialization of their shares.
The Share Transfer and Investors Grievance Committee looks into issues relating to share transfers and investor grievances. This
Committee generally meets on regular basis. The total number of such meetings held during the year under review was ten (previous
year - ten). Total number of Equity Shares physically transferred during the year were 3,18,945 (Previous Year – 5,71,982) and total
number of 0.01% CRPS physically transferred during the year were 1,44,584. No transfer request was received during the year in
respect of 10% Cumulative Redeemable Preference Shares and 12% Cumulative Redeemable Preference Shares.
15.9 Investor Grievance Redressal System

M/s Intime Spectrum Registry Limited, Registrars and Share Transfer Agents, in consultation with the Secretarial Department of the
Company, handles all Investors’ grievances. The Registrars have adequate skilled staff with professional qualifications and advanced
computer systems for speedy redressal of investors’ grievances. It is ensured that the total process of settlement of a complaint right
from its receipt to disposal does not exceed 15 days.
Periodical Review meetings are held, at least once in a fortnight, between the officials of the Registrars & Share Transfer Agents and
the Company to discuss the various issues relating to share transfer and other allied matters, dematerialisation of shares, investors
complaints, etc.
The following e-mail ID of the Compliance Officer has been designated exclusively for registering complaints of the investors :
investorgrievance_cell@ispatind.com
The investors may send their grievance to the said e-mail address. The investors may also send their grievance to the e-mail address
of the Company’s Registrars and Share Transfer Agents, M/s.Intime Spectrum Registry Ltd, as under :-
helpline@intimespectrum.com
46

15.10 (a) Distribution of Equity Shareholding as on 31st March, 2007
No. of Equity Shares held No. of % of No. of % of
Shareholders Shareholders Shares held Shares held
001 to 5000 269217 83.70 37616204 3.08
5001 to 10000 30283 9.41 21448949 1.75
10001 to 50000 19161 5.96 38421498 3.14
50001 to 100000 1789 0.56 12683302 1.04
100001 and above 1197 0.37 1112272265 90.99
Total 321647 100.00 1222442218 100.00
15.10 (b) Categories of Equity Shareholders as on 31st March, 2007

Particulars No. of Shares held Percentage to Total
Shareholding
Promoter Group 618203918 50.58
Financial Institutions / Banks
Insurance Companies / Mutual Funds 443799296 36.30
NRIs / OCBs / Other Foreign Shareholders
(Other than Promoter Group) 7775489 0.64
Public & Others 152663515 12.48
TOTAL 1222442218 100.00
15.11 Dematerialization of Shares and liquidity : Approximately 81% of the Equity Shares has been dematerialized
up to 31st March, 2007.
Trading in Equity Shares of the Company is permitted only in
dematerialized form w.e.f. 08.05.2000 as per notification issued by
the Securities and Exchange Board of India.
15.12 Outstanding Global Depository Receipts (GDRs) : 118150 GDRs representing 118150 Equity Shares of Rs.10/- each.
15.13 Plant Locations : 1) Cold Rolling Mill & Coating Complex:
A-10/1 MIDC Industrial Area,
Kalmeshwar 441501
Dist. Nagpur, Maharashtra
2) Sponge Iron Plant:
Geetapuram, Dolvi 402 107
Taluka Pen,
Dist. Raigad, Maharashtra
3) Hot Strip Mill Plant:
Taluka Pen,
4) Blast Furnace Plant:
Taluka Pen,
47

15.14 Address for Correspondence by Investors
Ispat Industries Limited Unit- in-Charge
“Park Plaza” Unit: Ispat Industries Limited
71 Park Street, Intime Spectrum Registry Limited
Kolkata 700 016 C-13, Pannalal Silk Mills Compound,
Ph.Nos.:91-33-22495102/22493119/ 22492213 LBS Marg, Bhandup (West),
Fax No.:91-33-22291956 Mumbai-400 078.
Email:investorgrievance_cell@ispatind.com Ph. Nos. 91 -22-25963838
Fax Nos. 91 -22-25946969
E-mail: helpline@intimespectrum.com
Note: Shareholders holding shares in electronic mode should address all correspondence to their respective depository participants.
DECLARATION IN TERMS OF AMENDED CLAUSE 49(1)(D)(ii) OF LISTING AGREEMENT

It is hereby confirmed that all Board Members and Senior Management Personnel have affirmed compliance with the Code of
Conduct, laid down by the Board of Directors, for the financial year 2006-2007.
V K MITTAL
6th day of June, 2007. Managing Director
CEO/ CFO CERTIFICATION IN TERMS OF AMENDED CLAUSE 49 OF LISTING AGREEMENT
June 6, 2007
The Board of Directors

Ispat Industries Limited
Dear Sirs,
Re: CEO/ CFO Certification in terms of amended Clause 49 of Listing Agreements with Stock Exchanges.
In pursuance to the amended Clause 49 of the Listing Agreements with the Stock Exchanges, we wish to certify as under with regard
to the Annual Audited Accounts of the Company for the financial year ended 31st March, 2007, including the Schedules and Notes
forming part thereof, as well as the Cash Flow Statement for the financial year ended on that date:
a. We have reviewed the Annual Accounts, including the Schedules and Notes forming part thereof, and Cash Flow Statement for
the financial year ended 31st March, 2007 and that to the best of our knowledge and belief :
i. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might
be misleading;
ii. these statements together present a true and fair view of the Company’s affairs as per the Companies Act, 1956, and are in
compliance with existing Indian accounting standards, all applicable laws and regulations.
b. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the financial year which
are fraudulent, illegal or violative of the Company’s Code of Conduct.
48
c. We accept responsibility for establishing internal controls and authorizing respective process owners to maintain such internal
controls. The internal control systems are subject to continuous evaluation and deficiencies in the design or operation of such
internal controls, if any, of which we are aware have been disclosed to the Auditors and the Audit Committee and steps have
been taken to rectify these deficiencies.
d. There were no significant changes in the internal control systems during the financial year, which were to be indicated to the
Auditors and the Audit Committee.
e. There have been no significant changes in accounting policies during the financial year.
f. There have been no instances of significant fraud during the financial year, of which we have become aware of and the involvement
therein of the management or any employee having a significant role in the Company’s internal control system.

Executive Director (Finance) Managing Director
AUDITORS’ CERTIFICATE TO THE MEMBERS OF ISPAT INDUSTRIES LIMITED

We have examined the compliance of conditions of Corporate Governance by Ispat Industries Limited for the year ended on
31st March, 2007, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchange(s).
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness
with which the management has conducted the affairs of the Company.
For S. R. BATLIBOI & CO.

Chartered Accountants
Per (R. K. AGRAWAL)
a Partner
Membership No. 16667
Date : 6th June 2007
49
SECRETARIAL COMPLIANCE CERTIFICATE

To,
The Board of Directors,
Ispat Industries Limited
We have examined the registers, records, books and papers of Ispat Industries Limited (“the Company”) as required to be maintained
under the Companies Act, 1956, (“the Act”) and SEBI Act/Listing Agreement and the Rules made there-under and also the provisions
for the financial year ended on 31st March, 2007. In our opinion and to the best of our information and according to the examinations
carried out by us and explanations furnished to us by the Company, its officers and agents, we hereby report and certify that:
1. The Company has kept and maintained all registers and other records required as per the provisions and the rules made there
under the Act, either in physical or electronic mode, as applicable, and all entries therein have been duly recorded.
2. The Company has duly filed all the requisite forms, returns and documents required under the Act and Rules made there under
with the Registrar of Companies.
3. The Company being a public limited Company has the minimum prescribed paid-up capital.
4. The Board of Directors and its Committees duly met as per the requirement of the Act and the proceedings were properly
recorded in the Minutes Book maintained for the purpose.
5. The Company has held the Annual General Meeting during the year in accordance with the provisions of the Act. The Company
had closed its Register of Members for the purpose of said Annual General Meeting, in accordance with the Listing Agreement.
Due notices were given to the members of the Company for holding the Annual General Meeting and for the Book closure. The
resolutions passed at the Annual General Meeting were duly recorded in Minutes Book maintained for the purpose.
6. No Extra-Ordinary General Meeting was held during the year. However, resolutions were proposed to be passed by means of a
postal ballot for increase in borrowing limit of the Board, under Section 293(1)(d), and for creation of charge on the assets of the
Company, under Section 293(1)(a) of the Act. The Company complied with all the requirements in terms of Section 192A of the
Act and Companies (Passing of Resolutions by Postal Ballot) Rules, 2001. The resolutions put to vote through Postal Ballot
were passed by requisite majority. The results were informed to the stock exchanges and posted on the website of the Company.
The results were also published in two newspapers, in Financial Express (English) and in Sangbad Pratidin (Bengali), in terms
of the requirements under Section 192A of the Act and Rules made thereunder.
7. The Company has neither advanced any loans to its directors or persons or firms or companies referred to under Section 295 of
the Act, nor has entered into contracts falling within the meaning of Section 297 of the Act.
8. The Company has issued Duplicate Share Certificates during the year.
9. The Company :
(i) Has delivered all the certificates in respect of the transfer and/or transmission of shares made during the said period in
accordance with the provisions of the Act.
(ii) Was not required to deposit any amount in a separate bank account, as no dividend was declared during the said year.
(iii) Was not required to post any warrants to any member of the Company as no dividend was declared during the said year.
(iv) Was not required to transfer any amount to the Investor Education and Protection Fund Account under Section 205C of the
Act, since during the said year no amount was due for transfer in terms of the said section.
(v) Has complied with the requirements of Depositories Act, 1996 in respect of dematerialization/rematerialisation of shares.
10. The Board of Directors of the Company is duly constituted and the appointment of Mr. B. P. Singh, IDBI nominee in place of
Mr. C. P. Philip has been duly made.
11. The Board of Directors revised the remuneration payable to the Managing Director and Whole-time Directors, based upon the
recommendation of the Remuneration Committee with effect from 1st April, 2005 and 1st April, 2006, respectively. The revision
in remuneration is subject to the approval of IFCI Limited, the shareholders and the Central Government.
Applications have been made to the Central Government for its approval of such revision in the remunerations of Managing Director
and Whole-time Directors. Application has also been made to the Central Government for re-appointment of Mr Anil Sureka as
Whole-time Director designated as Executive Director (Finance) with effect from 1st February, 2006. The approvals are awaited.
12. The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the
Act and the Rules made there under, wherever applicable.
13. The Company has neither issued any shares, debentures, or any other securities nor has bought back any shares.
50
SECRETARIAL COMPLIANCE CERTIFICATE (Contd.)

14. The Company has not invited or accepted any deposits including any unsecured loans falling within the purview of Section 58A
of the Act.
15. The borrowings made by the Company as at the end of the financial year are within the limits as authorized by the members of
the Company in terms of Section 293(1) (d) of the Act. The Company has filed necessary charges/ modification of charges
during the year.
16. The Company has complied with the provisions of Section 372A in respect of loans/ investments/ guarantees/ securities provided
to other bodies Corporate during the year. The Company has, wherever required, obtained necessary approvals of the Board,
Committee thereof, shareholders, the Central Government or any other authority (ies) as per the requirement of the Act and
made entries, wherever required, in the register kept for the purpose.
17. The Company has neither altered the provisions of the Memorandum of Association nor Articles of Association during the year
under report.
18. The Company had received an Order dated December 1, 2005, from the Adjudicating Officer, SEBI passed in the adjudication
proceedings held in terms of Rule 5 of the SEBI (Procedure of Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995 levying a penalty of Rs. 100,000 on the Company for non-disclosure of information to the stock exchange and the
public as required under Clause 36 of the Listing Agreement and Regulation 12(2) of the SEBI (Prohibition of Insider Trading)
Regulations, 1992. The Company had preferred an appeal against this Order to the Securities Appellate Tribunal (SAT) on
January 19, 2006. The matter was heard on February 13, 2006 and an Order was passed by SAT admitting the appeal and staying
the recovery of the penalty during the pendency of the appeal. The matter has since not come up for hearing. Apart from this
Order, we have been informed that there was no prosecution initiated against or show cause notices received by the Company
and no fines and penalties or any other punishment imposed on the Company, during the said period, for offences under the
Companies Act, SEBI Act or Listing Agreement.
19. The Company being a listed Company has complied with the requirement of minimum public holding as per the SEBI Act/
Listing Agreement.
20. The Company has duly filed all the information/reports with the Stock Exchanges/SEBI as required under the various provisions
of Listing Agreement/SEBI Act for the year.
21. The Company has complied with the relevant clauses of the Listing Agreement with the Stock Exchanges pertaining to submission
of statements, documents, disclosure requirements, publication in newspapers, press releases, Corporate Governance standards
as prescribed in Clause 49, EDIFAR requirements in Clause 51, within the time limit specified in the Listing Agreement.
22. The Company has listed its equity as well as 0.01% Cumulative Redeemable Preference Shares issued and allotted pursuant to
the Scheme of Reconstruction and Amalgamation approved by the High Courts at Calcutta and Bombay and upon completion of
legal formalities, with The Calcutta Stock Exchange Association Limited, Bombay Stock Exchange Limited and National Stock
Exchange of India Limited, during the year under report.
23. The Company has also listed its 10% Cumulative Redeemable Preference Shares of Rs.10/- each and 12% Cumulative Redeemable
Preference Shares of Rs.100/- each with Bombay Stock Exchange Limited and National Stock Exchange of India Limited
during the year under report.
24. The Company’s shares are de-listed from Delhi Stock Exchange Association Limited with effect from 14th August, 2006 pursuant
to an application filed by the Company for voluntary delisting of Equity Shares, existing prior to implementation of Scheme of
Reconstruction and Amalgamation.
25. The Company has also complied with the relevant provisions of the SEBI Act and the Rules made thereunder, including
SEBI(Substantial Acquisition of Shares and Take overs) Regulations 1997 and SEBI (Prohibition of Insider Trading) Regulations,
1992 as amended from time to time.
26. The Company has also introduced the Code of Conduct for Directors and other senior executives as required under the
Clause 49 of the Listing Agreement.
For ROBERT PAVREY & ASSOCIATES
Company Secretaries
Place: Mumbai ROBERT PAVREY
Dated: 31st May, 2007. Proprietor
C. P. No. : 1848
51
AUDITORS’ REPORT TO THE MEMBERS

We have audited the attached Balance Sheet of Ispat Industries Limited as at 31st March, 2007 and also the Profit and Loss Account
and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of
Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5
of the said Order.
Further to our comments in the Annexure referred to above, we report that:
1. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the
purposes of our audit.
2. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination
of those books and proper returns, adequate for the purposes of our audit, have been received from the branches/ sales depots not
visited by us.
3. The Balance sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in agreement with the books
of account.
4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, read with our comments in Para
6 below.
5. On the basis of written representations received from the directors, as on 31st March 2007, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on 31st March 2007 from being appointed as director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
6. Attention is drawn to Note No. 9 on Schedule 22 regarding recognition of net deferred tax asset (DTA) of Rs 623.61 crores (net
of reversal of Rs 9.87 crores for the year) in the accounts upto 31st March 2007 based on the future profitability projections
made by the management. However, we are unable to express any opinion on the above projections and their consequent impact,
if any, on such Deferred Tax Asset. This had also caused us to qualify our audit opinion on the financial statements relating to
the preceding year.
Had the impact of above item been considered, there would be a loss of Rs. 633.14 crores (including DTA of Rs 628.30 crores
accounted for upto 31st March 2006 and DTA of Rs 5.18 crores on employees’ benefits liability upto 31st March 2006 in terms
of revised Accounting Standard 15) as against the reported loss of Rs 9.53 crores for the year and the Profit and Loss account
debit balance would have been Rs 1729.76 crores as against the reported debit balance of Rs 1106.15 crores.
7. In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts, subject to
Para 6 above, give the information required by the Companies Act 1956, in the manner so required and give a true and fair view
in conformity with the accounting principles generally accepted in India:
a. In the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2007;
b. In the case of Profit and Loss Account, of the loss for the year ended on that date; and
c. In the case of Cash Flow Statement, of the cash flows for the year ended on that date.entered into the register maintained
under Section 301 of the Companies Act, 1956.
22, Camac Street S. R. BATLIBOI & CO.
Block ‘C’, 3rd Floor Chartered Accountants
Kolkata – 700 016.
Per ( R. K. AGRAWAL )
Date : 6th June, 2007
a Partner
52
ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in our report of even date to the members of Ispat Industries Limited as at and for the year ended 31st March 2007)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of
fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme
of verification in a phased manner to cover all the items over a period of three years which, in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were
noticed on such verification of fixed assets during the year.
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation
to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. As informed, no material discrepancies were noticed on such
physical verification.
(iii) As informed, the Company has neither granted nor taken any loan, secured or unsecured, to/ from companies, firms or other
parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence, clause (iii) (a) to (g) of the
Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some
of the items purchased are of a special nature and alternative sources do not exist for obtaining quotations thereof, it appears
that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for
the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of these areas.
(v) According to the information and explanations provided by the management, there have been no transactions that need to be
entered into the register maintained under Section 301 of the Companies Act, 1956.
(vi) As informed, the Company has not accepted any deposit from the public.
(vii) The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central
Government for the maintenance of cost records in respect of the company’s products under section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained.
(ix) (a) The Company has been generally regular in depositing undisputed statutory dues including provident fund, investor
education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty,
excise duty, cess and other statutory dues with the appropriate authorities though there had been delays in a few cases.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund,
investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, custom
duty, excise duty, cess and other statutory dues were outstanding, at the year end for a period of more than six months
from the date they became payable, except as under:
Nature of dues Amount (Rs. in crores) Period to which the amount relates
Stamp duty payable for landed property,
pending registration in the Company’s name 4.45 1997-98
DEPB Benefits 1.79 2004-05 & 2005-06
53
ANNEXURE TO THE AUDITORS’ REPORT (Contd.)

(c) According to the records of the Company, the dues in respect of income tax, sales tax, wealth-tax, service tax, custom
duty, excise duty, cess etc. on account of any dispute are as follows:
Nature of Statute Nature of Dues Amount Period to which Forum where
(Rs in crores) the amount relates dispute is pending
Central Excise Act Cenvat on Inputs & Capital 2.12 1998-99 to 2003-04 Custom Excise & Service Tax
Goods not allowed etc. Appellate Tribunal
State Sales Tax Act Miscellaneous 3.96 1989-90 to 2004-05 Assistant/ Deputy/ Joint
Commissioner (Appeals) /
Tribunal Commercial Taxes
(x) The Company’s accumulated losses at the end of the financial year, without considering the impact of deferred tax asset as
indicated in Note No. 9 on Schedule 22, are more than fifty percent of its net worth. The Company has not incurred cash loss
in the current year, however, it has incurred cash loss in the immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has
delayed in repayment of dues to domestic financial institutions, banks & debenture holders during the year to the extent of Rs.
1948.89 Crores, which includes Rs 1288.71 crores towards working capital facilities (the delay in such repayments being for
less than 90 days in each individual case) and Rs 60.83 Crores of such dues were in arrears as on the balance sheet date (the
delay being for a period of less than 30 days in each individual case).
(xii) According to the information and explanations given to us and based on the documents and records produced, the Company
has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause
4(xiii) of the Order are not applicable.
(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable.
(xv) According to the information and explanations given to us, the Company has given guarantees of Rs 22 crores for loans taken by
others from banks or financial institutions, the terms and conditions whereof, in our opinion, based on the management representation
and considering the trade relations with such parties, are not prima-facie prejudicial to the interest of the Company.
(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which
these were obtained.
(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company,
we report that no funds raised on short term basis have been used for long term investment.
(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) As informed to us, adequate security has been created in respect of debentures issued by the Company and outstanding at the
year-end.
(xx) The Company has not raised any money through a public issue during the year.
(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and
as per the information and explanations given by the management, we report that no fraud on or by the Company has been
noticed or reported during the course of our audit.
FOR S. R. BATLIBOI & CO.
22, Camac Street
Kolkata – 700 016. Per (R. K. AGRAWAL)
Camp: Mumbai Partner
Date : 6th June, 2007 Membership No. 16667
54
BALANCE SHEET AS AT 31ST MARCH 2007

(Rs.in crores)
Schedule As at 31st As at 31st
March, 2007 March, 2006
SOURCES OF FUNDS
1. Shareholders’ Fund
Share Capital 1 2288.74 2288.70
Reserves & Surplus 2 1759.08 859.62
4047.82 3148.32
2. Loan Funds
Secured Loans 3 7849.07 8241.06
Unsecured Loans 4 466.43 20.03
8315.50 8261.09
TOTAL 12363.32 11409.41
APPLICATION OF FUNDS
1. Fixed Assets
Gross Block 5 13067.37 11455.71
Less : Depreciation 3244.04 2554.27
Net Block 9823.33 8901.44
Capital Work-in-Progress 6 54.68 398.19
Pre-operative & Trial Run Expenses (Pending Allocation) 7 — 217.65
9878.01 9517.28
2. Investments 8 113.59 113.32
3. Deferred Tax Asset (Net) 9 623.61 628.30
4. Current Assets, Loans & Advances
Inventories 10 1056.19 985.61
Sundry Debtors 11 645.02 594.13
Cash & Bank Balances 12 327.65 128.86
Loans, Advances & Deposits 13 778.85 587.65
2807.71 2296.25
Less: Current Liabilities & Provisions
Current Liabilities 14 2136.94 2231.83
Provisions 15 28.81 12.42
2165.75 2244.25
Net Current Assets 641.96 52.00
5. Profit and Loss Account Debit balance 1106.15 1098.51
TOTAL 12363.32 11409.41
Significant Accounting Policies & Notes on Accounts 22
Schedules referred to above form an integral part of the Balance Sheet.
As per our Attached Report of even date
For S. R. BATLIBOI & CO. For and on behalf of the Board

Per (R K Agrawal) T P Subramanian Anil Sureka V K Mittal
Partner President Executive Director (Finance) Managing Director
Membership No. 16667 & Company Secretary
22, Camac Street,

Kolkata – 700 016
Camp: Mumbai,
55
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs.in crores)
Schedule 2006-2007 2005-2006
INCOME
Sales 16 8378.44 5580.02
7486.57 4958.74
Other Income 17 108.92 51.99
TOTAL (A) 7595.49 5010.73
EXPENDITURE
Decrease/(Increase) in stocks 18 (28.13) (84.68)
Excise Duty & Cess on stocks (2.07) 11.15
(Refer Note No.7 on Schedule 22)
Raw Materials Consumed (Net) 3643.46 2910.12
Purchase of Finished Goods 58.58 —
Personnel Cost 19 165.34 131.55
Manufacturing, Selling & Distribution and
Administrative Expenses [Including Prior Period expenses
Rs. 8.56 crores (Rs.6.61 crores)] 20 2140.24 1711.18
Interest & Finance Charges 21 990.87 956.83
Depreciation 724.54 594.05
Less: Transfer from Revaluation Reserve 100.71 22.62
623.83 571.43
TOTAL (B) 7592.12 6207.58
Profit/(Loss) before Tax (A-B) 3.37 (1196.85)
Add/(Less): Provision for Wealth Tax (0.03) (0.03)
Add/(Less): Deferred Tax Credit/(Charge) (Refer Note No. 9 on Schedule 22) (9.87) 388.67
Add/(Less) : Fringe Benefit Tax (3.00) (4.46)
Profit/(Loss) after Tax (9.53) (812.67)
Less/(Add):Surplus/(Deficit) brought forward from Previous Year (1098.51) 214.47
Add: Profit & Loss Account Debit Balance as on 1st April 2005 of erstwhile
Ispat Metallics India Limited [IMIL] — (500.31)
Add: Adjustment towards additional Employee Benefit Liability (10.21) —
(Net of Deferred Tax Credit Rs. 5.18 crores, Refer Note No. 15 on Schedule 22)
Loss carried to Balance Sheet (1106.15) (1098.51)
Basic and Diluted Earning per Share (Rs.) (0.81) (7.93)
Schedules referred to above form an integral part of the Profit and Loss Account

22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
56
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs in crores)
2006-2007 2005-2006
A: Cash Flow from Operating Activities :
Profit/(Loss) before Tax 3.37 (1196.85)
Adjustments For :
Loss on Fixed Assets Sold / Discarded (Net) 13.47 15.17
Loss/(Gain) on Exchange Rates/Forward Exchange Contracts (Net) (24.92) 15.98
Loss/(Gain) on Exchange Fluctuation on Term Loans (31.51) 20.02
Advances/Debts/Deposits/Claims Provided For / Written Off (Net) 1.66 10.02
Interest & Finance Charges (Net) 1022.38 936.81
Liabilities no Longer Required Written Back (38.24) (16.95)
Provision for Diminution in Value of Investments Written Back (0.22) (0.13)
Operating Profit Before Working Capital Changes 1569.82 355.50
Adjustments For :
Trade & other Receivables (242.24) 2.32
Inventories (53.33) (74.51)
Trade & other Payables 162.70 548.84
Cash Generated from Operations 1436.95 832.15
Income Tax Paid (3.56) (5.12)

Net Cash Generated from Operating Activities (A) 1433.39 827.03
B: Cash Flow from Investing Activities :

Acquisition of Fixed Assets (308.45) (237.02)
Project Development Expenses Paid to Subsidiary Company (18.73) (10.78)
Purchase of Investments (0.05) —
Loss/(Gain) on Exchange Rates/Forward Exchange Contracts (Net) 24.92 (15.98)
Proceeds from Sale of Fixed Assets 0.49 36.41
Interest Received 6.80 4.41
Net Cash used in Investing Activities (B) (295.02) (222.96)
57
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs in crores)
2006-2007 2005-2006
C: Cash Flow from Financing Activities :

Receipt of Calls in Arrear and Share Premium 0.09 0.08
Advance Paid Against Share Capital — (0.19)
Long Term Borrowings Received 420.82 177.08
Long Term Borrowings Paid (340.60) (327.53)
Short Term Borrowings Received (Net) 179.19 303.07
Interest & Finance Charges Paid (1216.57) (775.50)
Net Cash used in Financing Activities (C) (957.07) (622.99)
Net Increase / (Decrease) in Cash and Cash Equivalents (A+B+C) 181.30 (18.92)
Cash & Cash Equivalents as on 1st April, 2006 (Opening Balance) 71.13 80.63
Cash & Cash Equivalents as on 1st April, 2006
(Opening Balance Pertaining to Erstwhile Ispat Metallics India Limited) — 9.42
Cash & Cash Equivalents as on 31st March, 2007 (Closing Balance) 252.43 71.13
Notes :-
Cash & Cash Equivalents
Cash, Cheque / Drafts in Hand & Remittances in Transit 250.41 38.44
Balance with Scheduled Banks:
In Current /Collection Account 2.00 4.19
In Fixed Deposits (Non-Pledged/ Maturing within 3 months) — 28.21
Balance with Non Scheduled Banks 0.02 0.29
252.43 71.13

22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
58
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET

(Rs.in crores)
As at 31st As at 31st
SCHEDULE - 1
SHARE CAPITAL
AUTHORISED
4,00,00,00,000 Equity Shares of Rs. 10 each 4000.00 4000.00
10,00,00,000 Preference Shares of Rs. 100 each 1000.00 1000.00
1,00,00,00,000 Preference Shares of Rs. 10 each 1000.00 1000.00
6000.00 6000.00
ISSUED, SUBSCRIBED & PAID UP
Less : Allotment & Call Money in Arrears 4.04 4.06
(Due from other than Directors)
(A) 1218.40 1218.38
4,31,99,500 12% Cumulative Redeemable Preference Shares (CRPS)
of Rs. 100 each fully paid-up (Redeemable at par in Thirteen annual
installments commencing from 31st March 2008) 431.99 431.99
15,51,12,156 10% Cumulative Redeemable Preference Shares (CRPS)
of Rs. 10 each fully paid-up (Redeemable at par in Eight quarterly
installments commencing from 15th June 2018) 155.11 155.11
48,59,08,844 0.01% Cumulative Redeemable Preference Shares (CRPS)
of Rs. 10 each fully paid-up (Redeemable at par in Eight quarterly
installments commencing from 15th June 2018) 485.91 485.91
1073.01 1073.01
Less : Allotment & Call Money in Arrears (Due from other than Directors) 2.67 2.69
(B) 1070.34 1070.32
(A+B) 2288.74 2288.70
Note: Out of above 18,31,09,080 equity shares of Rs. 10 each, 1,36,00,000 12 % CRPS of Rs. 100 each and 12,20,72,720 0.01%
CRPS of Rs. 10 each, fully paid up, were issued for consideration other than cash to the shareholders of the amalgamating company
Ispat Metallics India Limited.
SCHEDULE - 2
RESERVES & SURPLUS
Capital Reserve
(i) Investment Subsidy (as per last Account) 0.20 0.20
(ii) Revaluation Reserve
As per last Account 328.49 356.44
Add : Additions during the year 1018.38 —
Less : Adjustments in respect of Fixed Assets Sold/ Discarded 6.16 5.33
1340.71 351.11
Less : Transfer to Profit & Loss Account 100.71 1240.00 22.62 328.49
Share Premium * 445.56 445.51
Debenture Redemption Reserve
Less : Transfer to Profit & Loss Account 12.10 73.32 — 85.42
1759.08 859.62
* Net of Rs. 9.97 crores (Rs. 10.02 crores) due on Allotment & Call Money in Arrears.
59
(Rs.in crores)
SCHEDULE - 3
SECURED LOANS
A) Debentures:
(i) Secured Redeemable Non-Convertible Privately Placed Debentures of Rs. 100 each
Nos. Coupon Rate
4,27,78,174 8% 427.78 427.78
Add: Settled Interest Amount 238.93 238.93
Less: Payments Made (373.43) 293.28 (171.93) 494.78
(ii) 10 % Secured Redeemable Debentures of Rs. 100 each 0.18 0.18
Less : Calls in Arrears (0.11) (0.11)
0.07 0.07
Less : Redeemed (0.07) — (0.03) 0.04
B) Term Loans
I) Rupee Loans
1) From Financial Institutions
(i) Term Loans 2857.58 3234.82
(ii) Zero Coupon Loans 172.84 3030.42 172.84 3407.66
2) From Banks
(i) Term Loans (including Working Capital
Term Loan Rs. 98.96 crores) 853.60 1202.12
II) Foreign Currency Loans
(i) Financial Institutions 2737.74 2420.71
(ii) Banks 310.19 3047.93 99.69 2520.40
C) Working Capital Finance
From Banks
(i) In Rupees 578.49 409.49
(ii) In Foreign Currency 42.08 620.57 31.89 441.38
D) Deferred Payment Credits under Hire Purchase from Bank 0.10 —
E) Interest Accrued & Due — 171.51
7849.07 8241.06
60
SCHEDULE – 3 (Contd.)
NOTES
A. 8% Non-Convertible Debentures of Rs. 327.78 crores together with interest and remuneration of the Trustees for Debenture
holders are secured by a first legal mortgage/equitable mortgage on the Company’s immovable properties and pari-passu first
charge by way of hypothecation of all the moveable properties of the Company (save and except book debts) including moveable
machinery, machinery spares, tools and accessories both present and future, subject to prior charges created and/or to be created
in favour of the Company’s bankers on the stock of raw materials, finished goods, work in process, consumable stores and book
debts for securing borrowings for working capital requirements.
8% Non-Convertible Debentures of Rs. 100 crores together with interest and costs are secured by legal mortgage of a landed
property in Gujarat and guarantee of a financial institution, which in turn is secured by a pari-passu first charge on the Fixed
Assets of the Company.
The remaining debentures of Rs. 293.28 crores, are redeemable at par in monthly installments by February, 2008.
B. (i) The Rupee Term Loans from Financial Institutions & Banks and Foreign Currency Term Loans from Financial Institutions
& Banks, are secured / to be secured by way of equitable mortgage by deposit of title deeds of the Company’s immovable
properties at Kalmeshwar (Nagpur) and Geetapuram (Dolvi) both in the State of Maharashtra and a first charge by way of
hypothecation of the Company’s movables (save and except book debts) including movable machinery, machinery spares,
tools and accessories, present and future, subject to prior charges created and/or to be created in favour of the Company’s
Bankers on the stock of raw materials, finished goods, process stock, consumable stores and book debts for securing working
capital facilities.
(ii) All the mortgages and charges created / to be created in favour of the Financial Institutions, Banks and Trustees for Debenture
holders rank pari-passu inter se, except where specifically stipulated otherwise.
(iii) A second charge on the fixed and current assets has been created in favour of the working capital lenders and term loan
lenders respectively.
(iv) Term Loans & Debentures, except for Rs. 438.71 crores are also secured / to be secured by pledge of a portion of the
shareholding of promoters. Further, Term Loans are also secured by the personal guarantees of Mr. Pramod Mittal and
Mr. V. K. Mittal, directors of the Company. Term Loans aggregating to Rs. 143.00 crores are also secured by personal
guarantee of Mr. M. L. Mittal, a former director of the Company.
(v) Term Loans of Rs.143.68 crores are also secured by the Corporate Guarantee of another Body Corporate.
C. Cash Credit and other working capital facilities from Banks are secured / to be secured by the hypothecation of consumable
stores, raw materials, finished goods, process stock, book debts, etc. (both present and future), and second charge over the entire
fixed assets of the Company. The working capital facilities from banks, other than Hong Kong & Shanghai Banking Corporation
Limited are also secured by personal guarantees of Mr. Pramod Mittal and Mr. V. K. Mittal, directors of the Company. A part of
the cash credit and other facilities from Punjab National Bank and Bank of India are also secured by personal guarantee of Mr. M.
L. Mittal, a former director of the Company.
D. Other loans of Rs. 0.10 crore (Rs.Nil) are secured by hypothecation of the vehicles acquired thereagainst.
E. Term Loans & Debentures aggregating to Rs. 868.80 crores (Rs. 327.49 crores) are payable within one year.
SCHEDULE - 4
UNSECURED LOANS
(Rs.in crores)
(Not bearing Interest)
Sales Tax Loan from Government of Maharashtra 18.34 18.66
Deferred Sales Tax/ Value Added Tax 218.10 1.37
From Others 229.99 —
* 466.43 20.03
* Includes amount falling due for payment within one year Rs. 0.97 crore (Rs. 0.54 crore)
61
SCHEDULE - 5
62
FIXED ASSETS
(Rs. In crores)
Gross Block Depreciation Net Block
Particulars As at 31st Added Additions / Sales / As at 31st Up to 31st For the On Sales Up to 31st As at 31st As at 31st
March,2006 on Adjustments Adjustments March,2007 March, 2006 Year /Adjustments March, 2007 March, 2007 March,2006
Revaluation
Land
Leasehold 0.66 7.04 — — 7.70 0.16 0.09 — 0.25 7.45 0.50
Freehold 62.30 53.54 4.57 — 120.41(A) — — — — 120.41 62.30
62.96 60.58 4.57 — 128.11 0.16 0.09 — 0.25 127.86 62.80
Buildings 396.70 70.53 47.14 0.11 514.26(B) 67.14 14.94 0.01 82.07 432.19 329.56
Railway Sidings & Locomotives 49.09 7.11 3.19 — 59.39 5.28 2.26 — 7.54 51.85 43.81
Plant & Machinery 10259.23 857.49 578.40 69.12 11626.00 2274.93 656.60 33.47 2898.06 8727.94 7984.30
Vessels 33.45 — 6.70 — 40.15 1.10 3.85 — 4.95 35.20 32.35
Electrical Installations 572.91 22.67 17.67 0.67 612.58 162.42 41.51 0.14 203.79 408.79 410.49
Vehicles 14.33 — 0.83 1.98 13.18(C) 6.46 1.13 1.08 6.51 6.67 7.87
Furniture & Fixtures,

Airconditioners, Office Equipment,
Computers & Refrigerators 67.04 — 6.92 0.26 73.70 36.78 4.16 0.07 40.87 32.83 30.26
TOTAL 11455.71 1018.38(E) 665.42(D) 72.14 13067.37 2554.27 724.54 34.77 3244.04 9823.33 8901.44
Previous Year’s Total 10716.42 — 808.97 69.68 11455.71 1990.98 594.05 30.76 2554.27 8901.44
Notes:-
A) Includes Rs. 2.58 crores (Rs 4.46 crores) being the cost of 74.23 acres (152.06 acres) land,which is yet to be registered in the Company’s name.
B) Includes Rs.0.12 crore (Rs.0.12 crore) being the cost of shares in Cooperative Housing Society and Rs.0.04 crore (Rs.15.06 crores) being the cost of a flat,which is pending registration in the company’s name.
C) Includes Rs 0.10 crore (Rs. Nil ) under the Hire Purchase Scheme.
D) Includes exchange difference de-capitalised Rs. 28.08 crores (Rs. 17.96 crores Capitalised ).
E) Land,Buildings, Railway Sidings, Plant & Machinery and Electrical Installations revalued by the approved valuers on 31st March, 1991, 31st March , 1997and 31st March, 2002, have been again revalued during the year,
on Replacement Cost basis, based on the balances of respective fixed assets as on 31st March, 2006 and the net increase of Rs. 1018.38 crores has been transferred to Revaluation Reserve.
ANNUAL REPORT 2006 - 07
(Rs.in crores)
SCHEDULE - 6
CAPITAL WORK-IN-PROGRESS (AT COST)
Land & Site Development Expenses 3.29 3.89
Buildings 22.79 20.89
Plant & Machinery and Other Assets 417.46 892.20
Capital Goods in Stock & in Transit 11.76 27.07
Materials in Stock & with Contractors / Fabricators 4.97 14.59
460.27 958.64
Less: Transfer to Fixed Assets 405.59 560.45
# 54.68 398.19
# Includes advances against capital goods Rs. 8.93 crores (Rs. 10.57 crores) and Exchange difference Rs.Nil (Rs.24.70 crores)
SCHEDULE - 7
PREOPERATIVE & TRIAL RUN EXPENSES
(PENDING ALLOCATION)
OPENING BALANCE BROUGHT FORWARD 217.65 302.97
Add : Balance as on 1st April, 2005. pertaining to erstwhile IMIL — 217.65 3.38 306.35
Payments to & Provisions for Employees
Salaries, Bonus,Incentives,etc 0.58 4.83
Contribution to Provident & Superannuation Funds 0.08 0.48
Staff Welfare 0.05 0.71 0.22 5.53
Raw Material Consumption — 39.80
Manufacturing, Selling & Distribution and Administration Expenses
Power & Fuel 0.03 18.57
Consumption of Stores & Consumables — 0.73
Bank Commission & Charges — 2.13
Miscellaneous Expenses 0.14 0.14
Technical Consultancy Fees & Expenses — 0.17 0.19 21.76
Interest & Finance Charges
To Financial Institutions & Banks on Term Loans 0.23 13.96
To Banks & Others (Net) 0.04 0.27 4.05 18.01
SUB-TOTAL (A) 218.80 391.45
Less :
Sales of Finished Goods — 46.66
SUB-TOTAL (B) — 46.66
TOTAL (A - B) 218.80 344.79
TOTAL — 217.65
63
SCHEDULE - 8
INVESTMENTS
(Rs.in crores)
No. of Shares Face value As at 31st As at 31st
per Share March, 2007 March, 2006
(Rs.)
Long Term (Trade)
(i) In Equity Shares - Unquoted
SICOM Ltd. 4,37,500 10 3.52 3.52
STEELSCAPE Consultancy Pvt. Ltd. 50,000 10 0.05 —
(—)
Kalyani Mukand Ltd. @ 4,80,000 10 — —
(ii) In Equity Shares - Quoted
Ispat Profiles India Ltd. @ 15,00,000 10 — —
(iii) Equity Shares in Subsidiary Companies - Unquoted
Nippon Ispat Singapore (Pte) Ltd. (Includes 2 Shares 7,84,502 S’pore $1 1.57 1.57
held in the name of the nominees) *
Ispat Energy Limited 11,00,00,000 10 110.00 110.00
115.14 115.09
Less : Provision for diminution in value of Investments 1.55 1.77
TOTAL 113.59 113.32
Cost Market Cost Market
Value Value
Aggregate Amount of Investments — Quoted —@ —# —@ —#
— Unquoted 115.14 — 115.09 —
TOTAL 115.14 — 115.09 —
Notes :
* Valued at the exchange rate prevailing on the date of allotment.
@ Value written off in earlier years.
# Quotation not available
SCHEDULE - 9
DEFERRED TAX ASSET/(LIABILITY) (NET)
As per Last account 628.30 (8.83)
Add : Balance as on 1st April, 2005 pertaining to erstwhile IMIL — 248.46
Add: Deferred Tax Asset on Employee Benefit Liability as on 1st April, 2006 5.18 —
Add: Deferred Tax Asset/(Liability) for the year (9.87) 388.67
* 623.61 628.30
* Refer Note No. 9 on Schedule 22
64
(Rs.in crores)
SCHEDULE - 10
INVENTORIES
At Lower of Cost and Net Realisable Value
Landed Property (Refer Note No 10 on Schedule 22) 105.00 105.00
Stores, Spares & Production consumables # 165.94 137.53
Raw Materials 534.52 515.77
Work-in Process 11.05 8.16
Finished Goods 188.71 207.33
Saleable Scrap 14.19 11.07
By-products 36.78 0.75
* 1056.19 985.61
# Including discarded /idle fixed assets Rs.17.91 crores (Rs.1.11 crores)

* Including in Transit / Bonded Warehouses, Materials on Loan / with third parties, etc.
SCHEDULE - 11
SUNDRY DEBTORS
(Unsecured, Considered Good)
Debts outstanding for more than six months
[Net of Doubtful Debts fully provided for Rs. 15.88 crores (Rs.16.14 crores)] 71.57 138.09
Other Debts 573.45 456.04
645.02 594.13
SCHEDULE - 12
CASH & BANK BALANCES
Cash in hand
[Including Stamps, Cheques/Drafts in hand Rs. 18.86 crores (Rs. 33.52 crores)] 19.19 33.69
Balances with Scheduled Banks in :
— Current & Collection Accounts 2.00 4.19
Fixed Deposit Account (including Margin Money) 75.22 85.94
Balance with Non-scheduled Banks
with China Merchant’s Bank, Beijing in Current Account
[Maximum Balance outstanding during the year Rs. 0.31 crore (Rs.0.46 crore)] 0.02 0.29
Remittances in Transit 231.22 4.75
327.65 128.86
65
(Rs.in crores)
SCHEDULE - 13
LOANS, ADVANCES & DEPOSITS
Project Development Expenditure recoverable from a Subsidiary Company
- Ispat Energy Limited 301.27 282.54
Advances recoverable in cash or in kind or for value to be
received or pending adjustments 274.86 71.43
[including loans to employees Rs. 1.51 crores (Rs. 1.66 crores)]
Sundry Deposits [Including deposit with Government/Semi
Government Authorities Rs.12.45 crores (Rs. 14.91 crores)] 65.26 64.68
Balances with Excise, Port Trust & Custom Authorities 49.56 39.35
Advance Income Tax/Tax Deducted at source (net of provisions) 1.90 1.44
Export Incentives Receivable 23.16 94.38
Sales Tax, VAT, Excise Duty, Custom Duty, Octroi, etc. Recoverable 60.38 31.18
[Including under appeal]
Interest Receivable 2.46 2.65
* 778.85 587.65
* Net of Doubtful Advances, Deposits etc. fully provided for Rs. 4.28 crores (Rs. 3.76 crores)
SCHEDULE - 14
CURRENT LIABILITIES
Sundry Creditors 1734.04 1863.58
Trade and other deposits 0.73 53.13
Advances from Customers (partly bearing interest) 380.83 277.98
Interest Accrued but not due on Loans 21.34 37.14
2136.94 2231.83
SCHEDULE - 15
PROVISIONS
Gratuity 17.12 9.23
Leave Salary 11.40 2.83
Fringe Benefit Tax (Net of advances) 0.29 0.36
28.81 12.42
66
SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT

(Rs.in crores)
SCHEDULE - 16
SALES 2006-2007 2005-2006
Less: Claims, Trade Discounts etc. 39.12 106.28
8188.27 5406.55
Transfer to Fixed Assets — 12.19
8188.27 5418.74
Saleable Scrap & By products 135.19 128.42
Export Benefits 54.98 32.86
8378.44 5580.02
2006-2007 2005-2006
SCHEDULE - 17
OTHER INCOME
Insurance Claims 14.12 18.38
Liabilities no longer required written back 38.24 16.95
Custom Duty Refund for earlier years 8.87 —
Miscellaneous Receipts 19.57 12.69
Provision for diminution in value of Investments Written back 0.22 0.13
Rent received 5.88 7.65
Less: Rent paid 2.90 2.98 3.81 3.84
Gain on Exchange Rates / Forward Exchange Contracts (Net) 24.92 —
108.92 51.99
67
(Rs.in crores)
2006-2007 2005-2006
SCHEDULE - 18
DECREASE/(INCREASE) IN STOCKS
OPENING STOCKS
[Including Saleable Scrap Rs. 11.07 crores (Rs 2.98 crores)]
Add : Stock acquired on merger of IMIL — 218.40 8.66 132.60
Work - in - process 8.16 7.60

By Products 0.75 0.25
Landed property 105.00 105.00
332.31 247.63
LESS: CLOSING STOCKS

Finished Goods
[Including Saleable Scrap Rs. 14.19 crores (Rs 11.07 crores)] 202.90 218.40
Landed Property 105.00 105.00
355.73 332.31
(23.42) (84.68)
Transfer to Fixed Assets 4.71 —
(28.13) (84.68)
SCHEDULE - 19
PERSONNEL COST
Salaries, Bonus, Incentives etc. 127.27 100.30
Staff Welfare 23.26 20.53
Managerial Remuneration 4.17 1.99
165.34 131.55
68
(Rs.in crores)
2006-2007 2005-2006
SCHEDULE - 20
MANUFACTURING, SELLING & DISTRIBUTION AND
ADMINISTRATIVE EXPENSES
Power & Fuel (Net, Refer Note No.16 on Schedule 22) 1153.52 849.86
Consumption of Stores, Spare Parts, Chemicals etc. 404.47 365.91
Slitting, Packing and other Expenses 16.96 14.52
Repairs & Maintenance :
— Plant & Machinery 110.75 74.75
— Buildings 3.95 7.98
— Others 12.56 127.26 5.08 87.81
Freight & Forwarding Charges (Net) 150.89 122.33
Commission on Sales 23.63 29.17
Advertisement 8.07 1.63
Insurance 19.54 18.81
Rent & Hire 39.31 33.37
Rates & Taxes 3.01 6.70
Auditors’ Remuneration :
— Audit Fee 1.10 0.90
— Tax Audit Fee 0.20 0.18
— In Other Capacity 1.05 0.72
— Travelling & Out of Pocket Expenses 0.13 2.48 0.14 1.94
Items pertaining to Previous Years (Net) 8.56 6.61
Legal & Professional Charges 32.08 25.87
Postage & Communication expenses 6.59 8.08
Bank Commission & charges 70.53 42.84
Directors’ Fees 0.26 0.32
Loss on Fixed Assets sold/Discarded (Net) 13.47 15.17
Irrecoverable Advances/Debts/Claims written off (Net) 7.40 7.73
Less: Adjusted against provisions 5.09 1.00
2.31 6.73
Add: Provision for Doubtful debts/Advances/Deposits and Claims 5.35 3.29
Less: Recovery of Bad Debts 6.00 1.66 — 10.02
Loss on Exchange Rates/Forward Exchange Contracts (Net) — 15.98
2140.24 1711.18
SCHEDULE - 21
INTEREST & FINANCE CHARGES
To Banks & Others 219.40 139.10
On Debentures 35.34 1029.09 49.81 942.23
Loss/(Gain) on Exchange Fluctuation on term loans (31.51) 20.02
Less: At Credit (Gross) [Tax deducted at source Rs. 0.28 crore
(Rs. 0.01 crore)]
— On Bank Deposits 5.49 3.78
— From Others (Net) 1.12 1.64
— Liability no longer required written back 0.10 6.71 — 5.42
990.87 956.83
69
SCHEDULE – 22
SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS
A) SIGNIFICANT ACCOUNTING POLICIES
1) BASIS OF PREPARATION OF ACCOUNTS:
The Company follows the concept of accrual system in the preparation of accounts except in respect of interest income
on allotment / call money in arrears and insurance & other claims, which on the ground of prudence or uncertainty in
realisation, are accounted for as and when accepted / received.
2) FIXED ASSETS:
a) Fixed Assets are stated at cost of acquisition inclusive of duties (net of CENVAT / VAT), taxes, incidental expenses,
erection/commissioning expenses and interest etc. up to the date the asset is put to use. In case of revaluation of
fixed assets, the cost as assessed by the valuer is considered in the accounts and the differential amount is transferred
to revaluation reserve.
b) Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical
assessment is expected to be non-regular are capitalised and depreciated prospectively over the residual life of the
respective asset.
c) The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of
impairment thereof based on external / internal factors. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount, which represents the greater of the net selling price of assets
and their ‘value in use’. The estimated future cash flows are discounted to their present value at appropriate rate
arrived at after considering the prevailing interest rates and weighted average cost of capital.
3) DEPRECIATION:
a) The classification of Plant & Machinery into continuous and non-continuous process is done as per technical
certification and depreciation thereon is provided accordingly.
b) Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 or at rates determined based on the useful life of the assets, whichever
is higher. In case of ocean going vessel, higher depreciation is provided to write it off over a period of seven years
being the remaining useful life of the vessel.
c) Depreciation on value adjustments made to the fixed assets due to change in foreign exchange rates prevailing at
the end of the year, is provided prospectively over the residual life of the assets.
d) Depreciation on revalued assets is provided at the rates specified in Section 205 (2) (b) of the Companies Act, 1956.
However, in case of fixed assets whose life is determined by the valuer to be less than their useful life under Section
205, depreciation is provided at the higher rates, to ensure the write off of these assets over their useful life.
e) Leasehold Land is being amortised over the period of lease.
f) Assets created but not owned by the Company, are amortised over a period of five years.
g) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over their
remaining useful life.
4) FOREIGN CURRENCY TRANSACTIONS:

a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the
transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed when the values were determined.
c) Exchange Differences
Exchange differences arising on the settlement / conversion of monetary items are recognized as income or expenses
in the period in which they arise except for those relating to acquisition of fixed assets from outside India, in
which case such exchange differences are capitalized.
70
SCHEDULE – 22
SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS (Contd.)
d) Foreign Exchange Contracts
The premium or discount arising at the inception of forward exchange contracts is amortized as expenses or
income over the life of the respective contracts. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contract is recognized as income or expense for the year.
5) INVESTMENTS:
Current quoted investments are stated at lower of cost and market rate on individual investment basis. Unquoted and
long term investments are considered at cost, unless there is an “other than temporary” decline in value thereof, in which
case, adequate provision/write off is made in the accounts.
6) INVENTORIES:
Inventories are valued at cost (determined on annual/moving average basis) or net realisable value whichever is lower.
7) BORROWING COSTS:
Borrowing costs relating to the acquisition / construction of qualifying assets are capitalized until the time all substantial
activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
8) EXCISE DUTY & CUSTOM DUTY:
Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and
accordingly is considered for valuation of finished goods stock lying in the factories as on the balance sheet date.
Similarly, customs duty on imported materials in transit / lying in bonded warehouse is accounted for at the time of
import / bonding of materials.
9) EARNING PER SHARE:
Earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders
and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive
potential equity shares.
10) PROVISION:
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an
outflow of resources will be required to settle such obligation, in respect of which a reliable estimate can be made.
11) SALES:
Revenue from sale of goods is recognized on passage of title thereof to the customers, which generally coincides with
delivery. Sales are net of returns, claims, trade discounts etc.
12) RETIREMENT AND OTHER EMPLOYEE BENEFITS:
a) Retirement benefits in the form of Provident and Superannuation Funds are defined contribution schemes and these
contributions are charged to the Profit and Loss Account in the year when these become due to the respective funds.
b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at
the end of each financial year.
c) Short term compensated absences are provided for based on estimates. Long term compensated absences are
provided for based on actuarial valuation.
d) Actuarial gains/losses are immediately taken to the profit and loss account and are not deferred.
13) TAXATION:
Tax expense comprises of current & deferred income tax and fringe benefit tax. Current income tax and fringe benefit
tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act.
Deferred tax is recognised, subject to consideration of prudence, on timing differences, being difference between taxable
and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent
period (s). Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future
71
SCHEDULE – 22
SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS (Contd.)
taxable income will be available against which such deferred tax assets can be realised. If the Company has unabsorbed
depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by
convincing evidence that such deferred tax assets can be realised against future taxable profits.
14) SEGMENT REPORTING:
The Company has identified Iron and Steel products as its sole operating segment and the same has been treated as the
primary segment. The Company’s secondary geographical segments have been identified based on the location of customers
and are demarcated into Indian and Overseas revenue earnings.
15) LEASES :
a) For assets acquired under operating lease, rentals payable are charged to the Profit & Loss Account.
b) For assets acquired under finance lease, the assets are capitalized at lower of their respective fair value and present
value of minimum lease payments after discounting them at an appropriate discount rate.
16) CONTINGENT LIABILITIES:
Contingent liabilities are not provided for in the accounts and are separately disclosed in the “Notes on Accounts”.
B) NOTES ON ACCOUNTS:
(Rs. in crores)
1. Contingent liabilities not provided for in respect of: As at 31st March, 2007 As at 31st March, 2006
a) Claims against the Company not acknowledged as debts
i) Excise & Custom Demands under dispute/ appeal 1.22 7.45
ii) Others 7.56 10.46
b) Letters of Credit , Bills discounted and Bank Guarantees outstanding 355.72 321.10
c) Income Tax demands under appeal 8.25 17.53
d) Corporate Guarantees issued to Financial Institutions and
others on behalf of various bodies corporate 48.00 93.00
e) Sales Tax matters (under dispute/appeal) 7.05 34.64
f) Custom Duty on import of equipments and spare parts under EPCG-scheme 456.10 625.25
2. Estimated amount of contracts remaining to be executed on
Capital Account and not provided for [Net of Advances
Rs. 8.93 crores (Rs. 10.57 crores)] 70.23 104.74
3. Arrear Dividend (including tax) on Cumulative
Redeemable Preference Shares for the period
from 1999 -2000 to 2006 – 2007 503.51 413.89
4. Sundry Creditors include Acceptances 1054.54 964.93
5. a) In respect of cancellable operating leases, the significant leasing arrangements relate to premises (residential,
office, etc.) and oxygen plant, which are renewable by mutual consent and lease rentals payable are accordingly
charged as ‘Rent & Hire’ under Schedule 20.
b) The Company has taken certain plant and equipments on non-cancellable operating leases for a minimum term of
3 to 15 years, which are renewable on expiry of the lease term at mutually acceptable terms. Lease payments
recognized in the profit & loss account under ‘Rent & Hire’ amount to Rs 25.16 crores (Rs. 21.09 crores) for the
year and the particulars of future lease payments are as under:
(Rs. in crores)
Up to 1 year Later than 1 year and not later than 5 years More than 5 years
23.85 82.97 73.11
(10.20) (32.82) (29.79)
72
SCHEDULE – 22
NOTES ON ACCOUNTS (Contd.)
6. The Company has given undertakings to financial institutions not to dispose off its shareholding in Ispat Profiles India
Ltd till its loan is repaid in full.
7. Excise Duty & Cess on Stocks represents differential excise duty and cess on opening and closing stock of finished
goods, saleable scrap & by-products.
8. A Captive Power Plant is being developed by Ispat Energy Ltd (IEL) a subsidiary company. The Company has paid /
spent a total sum of Rs. 301.27 crores (Rs. 282.54 crores) as on the Balance sheet date, which was recoverable from IEL
in 13 annual instalments commencing from March, 2006 as stipulated in the approved Corporate Debt Restructuring
(CDR) Scheme. However, in terms of the recent approval accorded by the lenders, the above amount would be recovered
by the Company after the full repayment of loans to its lenders by IEL.
9. In terms of Accounting Standard - 22, net deferred tax asset (DTA) of Rs. 623.61 crores (including Rs. 5.18 crores on
employee benefit liability upto 31st March, 2006, in terms of revised Accounting Standard 15 and net of reversal of Rs
9.87 crores for current year) has been recognized in the accounts up to 31st March 2007. There is carried forward
unabsorbed depreciation and business losses as at the Balance Sheet date. However, based on future profitability
projections, the Company is virtually certain that there would be sufficient taxable income in future, to claim the above
tax credit.
The break-up of DTA of Rs. 623.61 crores (Rs. 628.30 crores) is as follows:
(Rs. in crores)
Particulars As at 31st March 2007 As at 31st March 2006
a. Unabsorbed Depreciation 1326.86 1427.20
b. Unabsorbed Business Losses 304.78 285.56
c. Timing Difference in Depreciable Assets (1241.43) (1139.44)
d. Other Timing Differences 233.40 54.98
Net Deferred Tax Asset 623.61 628.30
10. Landed property as indicated in Schedule 10 is under commercial development, for which the Company has entered into
an agreement on a ‘principal to principal’ basis and property development rights therein have been transferred to a
developer. As per the agreement, the developer shall construct the building on such land at its own costs and fifty percent
share of the constructed property will belong to the Company in lieu of land cost. Pending the sale of constructed flats,
the quantum of profit is presently unascertainable and hence not accounted for in the books of account.
11. Directors’ Remuneration includes Rs 2.73 crores (Rs 0.27 crore) paid to the Managing and other Whole Time Directors,
which is in excess of the limit sanctioned earlier by the Central Government. The Company has made an application to
the Central Government for approval of such excess remuneration.
12. Debts, Loans & Advances include the following interest free advances due from Subsidiary Companies:
(Rs. in crores)
Particulars Amount as on Maximum
31st March 2007 Amount due
during the year
Ispat Energy Limited 301.27 301.27
(282.54) (282.54)
Nippon Ispat Singapore (Pte) Limited 0.87 0.87
(0.29) (0.29)
73
SCHEDULE – 22
13. Basis for calculation of basic and diluted earnings per equity share is as under:
2006-2007 2005-2006
A Loss after Tax
[After considering notional dividend on cumulative
redeemable preference shares Rs. 89.62 crores
(Rs.76.85 crores)] Rs in crores 99.15 889.52
B Present weighted average number of equity shares
Nominal Value of Equity Shares Nos. 1,222,442,218 1,121,864,845
Rs. 10 10
C Basic and Diluted Earnings per Share Rs. (0.81) (7.93)
14. Segment Information:

a) The Company’s business activity primarily falls within a single business segment i.e., Iron & Steel Business and
hence there are no additional disclosures to be made under Accounting Standard 17, other than those already
provided in the financial statements.
b) Geographical Segments
(Rs. in crores)
Revenue (Gross Sales) 2006-2007 2005-2006
Domestic 6794.75 4718.00
Overseas (including export benefits) 1583.69 862.02
15. Gratuity and Other post-employment benefit plans:

The Company has decided to early adopt AS 15 (revised) – “Employee Benefits” and in accordance with the transitional
provisions in the standard, a sum of Rs. 10.21 crores (net of deferred tax credit of Rs. 5.18 crores thereon) being the
impact of such change on the respective liabilities upto 31st March 2006, has been adjusted with the Profit and Loss
Account debit balance as on 1st April 2006. The Company provides for gratuity and leave expenses on the basis of
actuarial valuation. The Company does not have any fund for Gratuity liability and the same is accounted for as provision.
The following tables summarise the components of net benefit/ expense recognised in the Profit and Loss Account and
Balance Sheet for the respective plans.
(a) Expenses recognized in the Profit and Loss Account for the year ended 31st March 2007
(Rs in crores)
Gratuity Leave
Current service cost 1.98 1.57
Interest cost 1.15 0.73
Actuarial ( gains) / losses (1.67) (0.58)
Past service cost * — —
Net expense 1.46 1.72
* Impact for past service cost considered separately in the Opening Balance of Profit & Loss Account in terms of
transitional provision under AS 15 (revised).
74
SCHEDULE – 22
NOTES ON ACCOUNTS (Contd.) (Rs.in crores)
(b) Net Asset / (Liability) recognized in the Balance Sheet as at 31 March 2007
Gratuity Leave
Defined benefit obligation 17.12 11.40
Fair value of plan assets — —
Less: Unrecognised past service cost — —
Net Asset / (Liability) (17.12) (11.40)
(c) Changes in the present value of the defined benefit obligation are as follows
Gratuity Leave
Opening defined benefit obligation 16.81 10.64
Benefits paid (1.15) (0.96)
Actuarial (gains) / losses (1.67) (0.58)
Closing defined benefit obligation 17.12 11.40
(d) The Principal Actuarial Assumptions used in determining gratuity and leave liabilities are as shown below:
Discount rate 8.10%
Mortality table Standard Table LIC(1994-1996)
(e) Amount provided for defined contribution plans are as follows:
(Rs. in crores)
Defined Contribution to: 2006-2007
Provident Fund 6.07
Superannuation Fund 5.12
(f) The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.
(g) Since AS 15 (revised) on Employee Benefits has been adopted from 1st April 2006, disclosures given above are
only for the current year.
16. The Company had paid Regulatory Liability Charges (RLC) of Rs.201.57 crores (including Rs.51.09 crores during
April 2006 to September 2006) to Maharashtra State Electricity Distribution Company Limited (MSEDCL) between
December 2003 to September 2006. Effective from 1st October, 2006, these charges were ordered to be discontinued
vide order dated 20th October, 2006 issued by Maharashtra Electricity Regulatory Commission (MERC). While
determining the Annual Revenue Requirements (ARR) of MSEDCL for the years 2007-2008 to 2009-2010 and its tariff
structure for the year 2007-2008, MERC, vide its order dated 18th May, 2007, has directed MSEDCL to refund a part of
such RLC (described in the order as being in the nature of loan to MSEDCL) to the specified consumer categories,
including the Company, during 2007-2008. Although no specific period for the refund of the balance amount of such
RLC has been indicated, yet MERC has clearly stated in its aforesaid order that it should be possible for MSEDCL to
refund such RLC in the near short term. The Company has obtained legal opinions which clearly establish RLC as a loan
refundable by MSEDCL, based on MERC’s order, and whose recovery by the Company is certain in the future years.
Accordingly, RLC dues of Rs.201.57 crores, which were charged as expense by the Company in the respective years,
have been recognized as income, by crediting the Power and Fuel charges account during the year, with a corresponding
debit to Loans & Advances in the accounts.
75
SCHEDULE – 22
17. Issued, Subscribed and Paid up Equity Share Capital includes 615,594,388 (627,194,388) equity shares held by Global
Steel Holdings Ltd, the ultimate holding company and its subsidiaries.
18. Related Party Disclosures:

(a) Name of the related parties:
Persons having a direct or indirect control over the Company Global Steel Holdings Ltd.
Subsidiary Companies Ispat Energy Ltd.
Nippon Ispat Singapore (Pte) Ltd.
Associate Company Kalyani Mukand Limited
Fellow Subsidiary Companies Ispat Steel Holdings Ltd
Ispat Holdings (P) Ltd
Ispat Finance Ltd
Mudra Ispat Ltd.
Denro Holding (P) Ltd
Mita Holdings (P) Ltd
Goldline Tracom (P) Ltd
Gontermann Peipers India Ltd.
Kartik Credit (P) Ltd
Ushaditya Investments (P) Ltd
Kanoria Plastokem Pvt Ltd
GPI Textiles Ltd.
Elephanta Gases Ltd.
Geetapuram Port Services Ltd.
Key Management Personnel and their Relatives Mr. M. L. Mittal
Mr. Pramod Mittal
Mr. V. K. Mittal
Mr. Vinod Garg
Mr. Anil Sureka
Mr. B. K. Singh
Mr. V. R. Sharma
Enterprises over which Key Management Personnel /
Share Holders / Relatives have significant influence* Balasore Alloys Ltd.
* The party stated above is a related party in the broader sense of the term and is included for making the financial
statements more transparent.
76
SCHEDULE – 22
(b) Related party disclosures:
(Rs. in crores)
Nature of Transactions Persons Subsidiary Fellow Key Enterprises Total
having a Companies Subsidiary Management over which
direct or Companies Personnel Key
indirect and their Management
control over Relatives Personnel /
the Company Share Holders /
Relatives have
significant
influence
Sales of raw materials, intermediaries and finished goods
Gontermann Peipers India Ltd 1.27 1.27
(1.28) (1.28)
Purchases of raw materials, intermediaries and finished goods
(27.59) (27.59)
Others — —
(0.16) (0.16)
Sale of Fixed Assets
Mudra Ispat Ltd — —
(0.36) (0.36)
Others — —
(0.01) (0.01)
Services received
Geetapuram Port Services Ltd 1.87 1.87
(3.04) (3.04)
Elephanta Gases Ltd 4.15 4.15
(4.11) (4.11)
Others 0.12 0.12
(0.35) (0.35)
Services given
(0.22) (0.22)
Balasore Alloys Limited — —
(0.04) (0.04)
77
SCHEDULE – 22
(Rs. in crores)
Relatives have
significant
influence
Salary/Managerial Remuneration
Mr. V. K. Mittal 1.79 1.79
(0.60) (0.60)
Mr. Anil Sureka 1.19 1.19
(0.50) (0.50)
Mr. Vinod Garg 1.19 1.19
(0.50) (0.50)
Mr. B. K. Singh 1.67 1.67
(1.60) (1.60)
Mr. V.R. Sharma 0.50 0.50
(0.42) (0.42)
Mr. V.V Jamnis — —
(0.39) (0.39)
Rent Expense (including Lease Rent)
Ispat Finance Ltd. 0.05 0.05
(0.42) (0.42)
(1.00) (1.00)
Kanoria Plastokem Pvt. Ltd 0.36 0.36
(—) (—)
Others 0.25 0.25
(0.11) (0.11)
Guarantees Obtained
Mr. M. L. Mittal 553.00 553.00
(553.00) (553.00)
Mr. Pramod Mittal 8,634.00 8,634.00
(8,365.00) (8,365.00)
Mr. V. K. Mittal 8,634.00 8,634.00
(8,365.00) (8,365.00)
78
SCHEDULE – 22
NOTES ON ACCOUNTS (Contd.) (Rs. in crores)
Relatives have
significant
influence
Allotment & Call Money Receivable
(13.08) (13.08)
Balance outstanding as at the year end – Debit
Ispat Energy Ltd. 301.27 301.27
(282.54) (282.54)
Others 0.87 33.88 1.63 36.38
(0.29) (35.27) (1.64) (37.20)
Balance outstanding as at the year end – Credit
(6.35) (6.35)
Others 0.08 — 0.08
(0.32) (0.27) (0.59)
Allotment of Shares
Ispat Steel Holdings Ltd. — —
(97.78) (97.78)
Others — — — —
(5.79) (148.02) (2.72) (156.53)
Purchase of Equity Shares
Ispat Energy Ltd — —
(109.95) (109.95)
19. Managerial Remuneration (Rs. in crores)

2006-2007 2005-2006
(a) Managing Director
Salary 0.72 0.30
Perquisites 0.87 0.22
Total 1.79 0.60
79
SCHEDULE – 22
(b) Other Whole-time Directors
Salary 0.96 0.54
Contribution to Provident and Superannuation Funds 0.27 0.16
Total 2.38 1.39
Note :
The above excludes gratuity and leave encashment liability.
20. Based on the information / documents available with the Company, information as per the requirement of Section 22 of
The Micro, Small and Medium Enterprises Development Act, 2006 are as under:
(Rs. in crores)
2006-2007
(i) Principal amount remaining unpaid to suppliers at the end of accounting year. 1.36
(ii) Interest due on above. 0.01
Total of (i) & (ii) 1.37
(iii) Amount of interest paid by the Company to the suppliers —
(iv) Amounts paid to the suppliers beyond the respective due date 0.22
(v) Amount of interest due and payable for the period of delay in payments but
without adding the interest specified under the Act. —
Figures for the previous year have not been given above as the said Act is applicable from the current year.
21. Sundry Creditors include Rs. 0.69 Crore (Rs. 0.81 Crore) due to Small Scale and ancillary industrial undertakings (SSI)
to the extent such parties, have been identified from the available documents/information. There being no claim from the
parties, interest on over-due payments, if any, is unascertainable and thus not provided for. The names of SSI Units to
whom amounts are due for more than 30 days are as under:
Aditya Air Products Pvt. Ltd. Parag Fans & Cooling Systems Ltd.
B. B. Coatings & Chemicals Praweg Conveyors
Krunish Engineers Tirupati Traders
22 (a) Derivative instruments outstanding at the year end represent the following :
(i) Forward Cover contracts of Euro 36,374,285 (US$ 50,147,766) for minimizing the risk of currency exposure
on trade receivables.
(ii) Outstanding Principal only Swap (POS) contracts for US$ / CHF $ 30,000,000 with a double knock out
options and US$ / JP¥ 10,000,000 with a window knockout barrier together with a right to receive differential
interest on principal amount.
(iii) Interest swap contract payable at LIBOR plus 5.05% Margin vis-à-vis pre-determined fixed rate relating to
loans of US $ 50,000,000 (US $ 50,000,000).
(iv) Outstanding options and futures purchase hedge contracts for 1575 MT Zinc as at 31 st March 2007.
(b) The Company has following un-hedged exposures in various foreign currencies as at the year end:
(Rs. in crores)
Sr. No. Particulars As at 31st March, 2007 As at 31st March, 2006
(i) Trade Receivables 321.62 248.12
(ii) Advances (including balance with bank) 219.85 2.99
(iii) Trade Payables (including customer advances) 754.48 644.63
(iv) Borrowings (including interest) 2878.74 2520.40
(v) Investment in Subsidiary Companies 1.57 1.57
80
SCHEDULE – 22
2006-2007 2005-2006
23. Quantitative information of goods Installed Production Installed Production
manufactured / traded Capacity (b) Capacity (b)
(a) Installed Capacity and Production MT MT MT MT

Direct Reduced Iron 1,600,000 1,149,076 1,600,000 886,311
Hot Rolled Coils 3,000,000 2,680,770 3,000,000 2,143,763
Cold Rolled Steel Coils/Sheets 330,000 295,468 330,000 271,433
Galvanised Coils/Sheets 325,000 258,328 325,000 232,448
PVC Coated Sheets 50,000 47,486 50,000 32,786
Pig Iron/Hot Metal 2,000,000 1,514,587 2,000,000 1,421,033
Notes: (a) Licensed Capacity is not applicable as the industry is delicensed

(b) Certified by the Company’s Technical Experts.
2006-2007 2005-2006
(b) Sales * Quantity Value Quantity Value
(MT) (Rs. In crores) (MT) (Rs. In crores)
Direct Reduced Iron — — 10,574 12.79
Hot Rolled Coils / skelp 2,402,794 6933.09 1,810,190 4415.09
Cold Rolled Steel Coils/Sheets 30,630 109.45 37,692 116.85
Galvanised Coils/Sheets 210,823 845.47 195,574 633.50
PVC Coated Sheets 44,156 235.36 30,968 151.00
Pig Iron/Hot Metal 40,567 64.90 49,330 77.32
8188.27 5406.55
* Excludes transfers for further processing
(c) Purchase of finished goods

Hot Rolled Coil / skelp 21,175 58.58 — —
81
SCHEDULE – 22
(d) Stocks of Finished Goods
(After adjustment of shortages / excess)
2006-2007 2005-2006
Quantity Value Quantity Value
in MT (Rs. in crores) in MT (Rs. in crores)
Opening Stock
Direct Reduced Iron 10,019 6.70 17,769 11.92
Hot Rolled Coils 53,789 125.96 21,726 55.32
Cold Rolled Steel coils/ sheets 5,993 16.64 3,752 10.70
Galvanised coils / Sheets 13,917 44.16 11,670 35.16
Pig Iron / Hot Metal 2,286 2.79 5,338 8.66
207.33 129.62
Closing Stock*
Direct Reduced Iron 8,328 7.92 10,019 6.70
Hot Rolled Coils 35,661 87.98 53,789 125.96
Cold Rolled Steel coils/ sheets 8,322 23.82 5,993 16.64
Galvanised coils / Sheets 14,042 48.81 13,917 44.16
Pig Iron / Hot Metal 2,200 3.00 2,286 2.79
188.71 207.33
*Excludes stock of saleable scrap Rs.14.19 crores (Rs.11.07 crores) & By Products Rs.36.78 crores (Rs. 0.75 crore).
2006-2007 2005-2006
24. Raw Materials Consumption Quantity Value Quantity Value
(After adjustment of shortage/excesses) (MT) (Rs. in crores) (MT) (Rs. in crores)
Iron Ore Pellets $ 885,442 412.66 1,583,244 774.38
Calibrated Lump Iron Ore $ 1,394,080 572.73 1,967,158 598.79
Oxide Fines 1,812,793 456.62 53,859 11.95
Sinter* 1,648,691 570.51 268,491 68.31
Coke 911,837 869.87 866,124 852.24
Coal 54,417 30.45 65,529 36.65
Direct Reduced Iron * 1,357,313 1436.30 914,814 874.93
Hot Metal * 1,468,357 2014.97 1,368,109 1913.41
Hot Briquette Iron 280,878 393.84 103,788 115.98
Melting scrap 167,328 229.96 135,994 183.72
Pig Iron & Pcm Jam * 6,259 8.77 6,886 9.43
82
SCHEDULE – 22
2006-2007 2005-2006
Quantity Value Quantity Value
(MT) (Rs. in crores) (MT) (Rs. in crores)
HR Coils * 311,716 814.05 286,054 629.46

CR Coils * 262,472 759.48 231,472 579.09
GP Coils * 46,794 164.99 33,641 100.17
Zinc & Zinc Alum. Alloy 7,807 128.99 10,905 93.33
Ferro Alloys 247.35 171.48
Others 81.50 40.23
Total 9193.04 7053.55
Less: Inter Unit transfer of own produced materials 5549.58 4143.43
Net consumption of raw materials 3643.46 2910.12
$ Excluding fines generation 207,772 MT (136,791 MT)

* Includes consumption of materials [after changes in stocks, Rs. 64.22 crores (Rs. 6.25 crores)] transferred for further processing
Sinter 1,648,691 570.51 268,491 68.31

Direct Reduced Iron 1,144,067 1152.59 886,502 837.31
Hot Metal 1,468,357 2014.97 1,368,109 1913.41
Pig Iron & Pcm Jam 6,259 8.77 6,886 9.43
HR Coils 311,716 814.05 286,054 629.46
CR Coils 262,472 759.48 231,472 579.09
GP Coils 46,794 164.99 33,641 100.17
25. Value of consumption of Imported & Indigenous raw materials and stores, spare Parts, chemicals etc.
Raw Materials # Stores, Spare Parts, Chemicals etc. # $
Value % of total Value % of total
(Rs. in crores) consumption (Rs. In crores) consumption
Imported 1758.18 48.26 161.62 33.01
(1265.12) (43.47) (79.46) (18.94)
Indigenous 1885.28 51.74 327.99 66.99
(1645.00) (56.53) (339.98) (81.06)
# excluding Inter Unit transfers
$ Includes Rs. 85.14 Crores (Rs. 53.53 Crores) charged to other account heads
83
SCHEDULE – 22
26. Value of Imports on C.I.F. basis (including through canalizing agencies):
(Rs. in crores)
2006-2007 2005-2006
Raw materials 1616.41 1244.70
Components, Spare Parts & Production Consumables 157.08 112.23
Capital Goods 12.94 131.21
27. Expenditure in foreign currency:

(On cash basis and including for projects) (Rs. in crores)
2006-2007 2005-2006
Technical Know-how fees & expenses 9.96 11.70
Travelling & Others 11.85 11.55
Freight & Demurrage 110.83 62.85
Interest, Finance & Commitment charges 0.16 4.67
Rebate/Discount & Commission on Sales 2.82 8.90
Research & Development 0.52 0.58
Professional Charges 1.59 0.64
28. Earnings in foreign exchange: (Rs. in crores)

2006-2007 2005-2006
FOB Value of Exports 1453.52 786.02
29. Amount remitted in foreign currency on account of dividends:

2006-2007 2005-2006
i) No. of non-resident shareholders Equity 3,709 4,084
Preference 3,924 4,084
ii) No. of Shares held Equity 407,066,705 406,602,283
Preference 240,602,190 240,553,599
iii) Amount remitted as dividend Nil Nil
30. Figures in brackets represent previous year’s figures, which have been rearranged/ regrouped wherever necessary.
Signatories to Schedules 1 to 22
22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
84
INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

I. Registration Details
Registration No. 37519 State Code 21
Balance Sheet Date 31.03.2007
II. Capital Raised during the year (Amount in Rs.’000):
Public Issue Nil Rights Issue Nil
Bonus Issue Nil
Private Placement Nil
III. Position of Mobilisation and Deployment of Funds (Amount in Rs.’000):
Total Liabilities 123633162 Total Assets 123633162
Sources of Funds Application of Funds
Paid up – Capital 22887355 Net Fixed Assets 98779986
Reserves and Surplus 17590705 Investments 1135912
Secured Loans 78490794 Net Current Assets 6419552
Unsecured Loans 4664308 Deferred Tax Asset/(Liability) 6236179
Accumulated Loss 11061533
IV. Performance of the Company (Amount in Rs. ‘000)
Turnover 75954929
Total Expenditure 75921274
Extra ordinary items Nil
Profit before Tax 33655
Loss after Tax 95300
Earnings per share in Rs. (Basic) (0.81)
Earnings per share in Rs. (Diluted) (0.81)
Dividend Rate Nil
V. Generic names of Principal Products/Services of the Company (as per monetary terms)
Item Code No.(ITC Code) Product Description
720310 00 Direct Reduced Iron
720826 00 Hot Rolled Coil
720927 00 Cold Rolled Sheets
721030 00 Galvanised Sheets
720110 00 Pig Iron/Hot Metal
For and on behalf of the Board
T P Subramanian Anil Sureka V K Mittal

President Executive Director (Finance) Managing Director
& Company Secretary
Mumbai,
85
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO THE
SUBSIDIARY COMPANY
1 Name of the Subsidiary : NIPPON ISPAT SINGAPORE (PTE) LTD. ISPAT ENERGY LIMITED
2 The financial year of the Subsidiary

Company ended on : 31st March, 2007 31st March, 2007
3 (a) Number of Shares held by Ispat : 7,84,502 Shares of Singapore 11,00,00,000 Shares of Rs.10
Industries Ltd. with its nominees in $1 each fully paid up each fully paid up.
the subsidiary at the end of the
financial year of the subsidiary
company.
(b) Extent of interest of holding : 100% 99.99%

Company at the end of the
financial year of subsidiary company.
4 The net aggregate amount of the subsidiary

Company profit/ (loss) so far as it concerns
the members of the holding company
a) Not dealt with in the holding accounts

i) For the financial year ended : Loss of Singapore $ 217,646 The project is under construction.
31st March, 2007 (equivalent to Rs. 72,43,491/-) Hence no profit is earned by the
Company.
ii) For the previous financial year of : Loss of Singapore $ 117,084 The project is under construction.
the subsidiary Company since it became (equivalent to Rs. 31,72,976/-) Hence no profit is earned by the
the holding Company’s subsidiary. Company.
b) Dealt with in the holding Company’s accounts
i) For the financial year ended

31st March, 2007 : Nil Nil
ii) For the previous financial year of the : Nil Nil

subsidiary Company since it became
the holding Company’s subsidiary.
T P Subramanian Anil Sureka V K Mittal

President Executive Director (Finance) Managing Director
& Company Secretary
Mumbai,
86
ISPAT INDUSTRIES LIMITED AND ITS
SUBSIDIARY COMPANIES ANNUAL REPORT 2006 - 07
AUDITORS’ REPORT TO THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL

STATEMENTS OF ISPAT INDUSTRIES LIMITED AND ITS SUBSIDIARIES
1. We have audited the attached Consolidated Balance Sheet of Ispat Industries Limited and its subsidiaries as at 31st March 2007
and also the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year then ended, annexed
thereto and prepared in accordance with the accounting principles generally accepted in India. These consolidated financial
statements are the responsibility of the Ispat Industries Limited’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with the generally accepted auditing standards in India. These Standards require that we
plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An
audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating
the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.
3. The financial statements of Indian and Foreign subsidiaries (referred to in Note. A1 on Schedule 22) as at and for the year ended
31st March 2007, which reflect total assets of Rs. 427.10 Crores as at 31 st March, 2007 and total expenditure of Rs 0.73 Crores
& cash flows of Rs. 0.03 Crores for the year then ended, have been audited by other auditors whose reports have been furnished
to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on these
reports.
4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements
of Accounting Standard (AS) 21 ‘Consolidated Financial Statements’ and AS 23 ‘Accounting for Investments in Associates in
Consolidated Financial Statements’, issued by the Institute of Chartered Accountants of India and on the basis of the separate
financial statements of Ispat Industries Ltd. and its subsidiaries and associate included in the consolidated financial statements.
5. Attention is drawn to Note No. B(8) on Schedule 22 regarding recognition of net deferred tax asset (DTA) of Rs 623.61 Crores
(net of reversal of Rs 9.87 Crores for the year) in the accounts upto 31st March 2007 based on the future profitability projections
made by the management. However, we are unable to express any opinion on the above projections and their consequent impact,
if any, on such Deferred Tax Asset. This had also caused us to qualify our audit opinion on the financial statements relating to
the preceding year.
Had the impact of above item been considered, there would be a consolidated loss of Rs. 633.87 Crores (including DTA of Rs
628.30 crores accounted for upto 31st March 2006 and DTA of Rs 5.18 crores on employees’ benefits liability upto 31st March
2006 in terms of revised Accounting Standard 15) as against the reported consolidated loss of Rs 10.26 Crores for the year and
the Consolidated Profit and Loss account debit balance would have been Rs. 1731.35 Crores as against the reported debit
balance of Rs. 1107.74 Crores.
6. On the basis of information and explanations given to us and on consideration of the separate audit reports on individual audited
financial statements of Ispat Industries Limited and its subsidiaries, subject to our observations in Para 5 above, we are of the
opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles
generally accepted in India:
a. in the case of consolidated balance sheet, of the state of affairs of Ispat Industries Limited and its subsidiaries as at 31st
March 2007;
b. in the case of consolidated profit and loss account, of the loss of Ispat Industries Limited and its subsidiaries for the year
ended on that date; and
c. in the case of consolidated cash flow statement, of the cash flows of Ispat Industries Limited and its subsidiaries for the
year ended on that date.
22, Camac Street S. R. BATLIBOI & CO.

Block ‘C’, 3rd Floor Chartered Accountants
Kolkata – 700 016.
Per (R. K. AGRAWAL)
Date: 6th June, 2007 Partner
87
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH 2007

(Rs. in crores)
Schedule 2006-2007 2005-2006
SOURCES OF FUNDS
1. Shareholders’ Fund
Share Capital 1 2288.74 2288.70
Reserves & Surplus 2 1759.80 860.28
4048.54 3148.98
2. Minority Interest {Full amount Rs. 12,495/-(Rs 12,496/-)} — —
3. Loan Funds
Secured Loans 3 7849.07 8241.06
Unsecured Loans 4 466.43 20.03
8315.50 8261.09
TOTAL 12364.04 11410.07
1. Fixed Assets
Gross Block 5 13067.39 11455.73
Less : Depreciation 3244.05 2554.28
Net Block 9823.34 8901.45
Capital Work-in-Progress 6 322.01 689.88
Pre-operative & Trial Run Expenses (Pending Allocation) 7 153.44 374.67
10298.79 9966.00
2. Investments 8 2.02 1.75
3. Deferred Tax Asset (Net) 9 623.61 628.30
4. Current Assets, Loans & Advances
Inventories 10 1056.19 985.61
Sundry Debtors 11 645.02 594.13
Cash & Bank Balances 12 329.75 128.87
Loans, Advances & Deposits 13 480.93 308.61
2511.89 2017.22
Current Liabilities 14 2151.13 2290.10
Provisions 15 28.88 12.47
2180.01 2302.57
Net Current Assets 331.88 (285.35)
5. Profit and Loss Account Debit balance 1107.74 1099.37
TOTAL 12364.04 11410.07
Schedules referred to above form an integral part of the Consolidated Balance Sheet.

22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
88
CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs. in crores)
Schedule 2006-2007 2005-2006
INCOME
Sales 16 8378.44 5580.02
7486.57 4958.74
Other Income 17 108.77 51.99
TOTAL (A) 7595.34 5010.73
EXPENDITURE
Decrease/(Increase) in Stocks 18 (28.13) (84.68)
Excise Duty & Cess on Stocks (2.07) 11.15
(Refer Note No. 7 on Schedule 22)
Raw Materials Consumed(Net) 3643.46 2910.12
Purchases of Finished Goods 58.58 —
Personnel Cost 19 165.70 131.71
Administrative Expenses {including Prior Period expenses
Rs. 8.56 crores (Rs.6.61 crores)} 20 2140.45 1712.23
Interest & Finance Charges 21 990.87 956.83
Less: Transfer from Revaluation Reserve 100.71 22.62
623.83 571.43
TOTAL (B) 7592.69 6208.79
Profit/(Loss) before Tax (A-B) 2.65 (1198.06)
Add/(Less): Provision for Wealth Tax (0.03) (0.03)
Add/(Less): Deferred Tax Credit/(Charge)
(Refer Note No. 8 on Schedule 22) (9.87) 388.67
Add/(Less) : Fringe Benefit Tax (3.01) (4.48)
Profit/(Loss) after Tax (10.26) (813.90)
Less/(Add):Surplus/(Deficit) brought forward from Previous Year (1099.37) 164.77
Add: Profit & Loss Account Debit Balance as on
1st April 2005 of erstwhile Ispat Metallics India Limited [IMIL] — (450.24)
Add: Adjustment towards additional Employee Benefit Liability (10.21) —
(Net of Deferred Tax Credit of Rs. 5.18 crores)
Loss carried to Balance Sheet (1107.74) (1099.37)
Basic and Diluted Earning per Share (Rs.) (0.82) (7.94)
Schedules referred to above form an integral part of the Consolidated Profit & Loss Account.
22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
89
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs. in crores)
2006-2007 2005-2006
A: CASH FLOW FROM OPERATING ACTIVITIES :
PROFIT/(LOSS) BEFORE TAX 2.65 (1,198.06)

Adjustments for :
Loss on Fixed Assets Sold / Discarded (net) 13.47 15.17
Loss/(gain) on Exchange Rates/Forward Exchange Contracts (net) (24.77) 16.01
Loss/(gain) on Exchange Fluctuation on Term Loans (31.51) 20.02
Advances/Debts/Deposits/Claims Provided For / Written Off (net) 1.66 10.02
Interest & Finance Charges (net) 1,022.38 936.81
Liabilities no Longer Required Written Back (38.24) (16.95)
Provision for Diminution in Value of Investments Written Back (0.22) (0.13)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 1,569.25 354.32

Adjustments for :
Trade & other Receivables (244.13) (6.91)
Inventories (53.33) (74.51)
Trade & other Payables 124.25 559.35
CASH GENERATED FROM OPERATIONS 1,396.04 832.25

Income Tax Paid (3.58) (5.15)
NET CASH GENERATED FROM OPERATING ACTIVITIES (A) 1,392.46 827.10
B: CASH FLOW FROM INVESTING ACTIVITIES :
Acquisition of Fixed Assets (285.62) (243.82)
Purchase of Investments (0.05) —
Loss/(gain) on Exchange Rates/Forward Exchange Contracts (net) 24.77 (16.01)
Exchange Difference on Consolidation 0.06 0.12
Proceeds from Sale of Fixed Assets 0.49 36.39
Interest Received 6.86 4.41
NET CASH USED IN INVESTING ACTIVITIES (B) (253.49) (218.91)
90
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007
(Rs. in crores)
2006-2007 2005-2006
C: CASH FLOW FROM FINANCING ACTIVITIES :

Receipt of Calls in Arrear and Share Premium 0.09 0.08
Advance Paid Against Share Capital — (0.19)
Long Term Borrowings Received 420.82 177.08
Long Term Borrowings Paid (340.60) (328.75)
Short Term Borrowings Received (net) 179.19 303.07
Interest & Finance Charges Paid (1217.14) (778.40)
NET CASH USED IN FINANCING ACTIVITIES (C) (957.64) (627.11)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) 181.33 (18.92)
Cash & Cash Equivalents as on 1st April, 2006 (Opening Balance) 71.14 80.64
Cash & Cash Equivalents as on 1st April, 2006
(Opening Balance Pertaining to Erstwhile Ispat Metallics India Limited) — 9.42
Cash & Cash Equivalents as on 31st March, 2007 (Closing Balance) 252.47 71.14
Notes :-
Cash & Cash Equivalents
Cash, Cheque / Drafts in hand & Remittances in Transit 250.41 38.44
Balance with Scheduled Banks:
In Current /Collection Account 2.03 4.20
In Fixed Deposits (Non-pledged/ maturing within 3 months) — 28.21
Balance with Non-Scheduled Banks 0.03 0.29
252.47 71.14

22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
91
SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET
(Rs.in crores)
SCHEDULE - 1
SHARE CAPITAL
AUTHORISED
4,00,00,00,000 Equity Shares of Rs. 10 each 4,000.00 4000.00
10,00,00,000 Preference Shares of Rs. 100 each 1,000.00 1000.00
1,00,00,00,000 Preference Shares of Rs. 10 each 1,000.00 1000.00
6000.00 6000.00
Less :Allotment & Call Money in Arrears 4.04 4.06
(A) 1218.40 1218.38
4,31,99,500 12% Cumulative Redeemable
Preference Shares (CRPS) of Rs. 100 each fully paid-up 431.99 431.99
(Redeemable at par in Thirteen annual installments
commencing from 31st March, 2008)
15,51,12,156 10% Cumulative Redeemable
Preference Shares of Rs. 10 each fully paid-up 155.11 155.11
(Redeemable at par in Eight quarterly installments
commencing from 15th June, 2018)
48,59,08,844 0.01% Cumulative Redeemable
Preference Shares of Rs. 10 each fully paid-up 485.91 485.91
(Redeemable at par in Eight quarterly installments
commencing from 15th June, 2018)
1073.01 1073.01
Less :Allotment & Call Money in Arrears 2.67 2.69
(B) 1070.34 1070.32
(A+B) 2288.74 2288.70
Note:
Out of above 18,31,09,080 equity shares of Rs. 10 each, 1,36,00,000 12 % CRPS of Rs. 100 each and 12,20,72,720 0.01% CRPS of
Rs. 10 each, fully paid up, were issued for consideration other than cash to the shareholders of the amalgamating company Ispat
Metallics India Limited
SCHEDULE - 2
RESERVES & SURPLUS
Capital Reserve
(i) Investment Subsidy (as per last Account) 0.20 0.20
(ii) Revaluation Reserve
Add : Additions during the year 1018.38 —
Less : Adjustments in respect of Fixed Assets Sold/
Discarded 6.16 5.33
1340.71 351.11
Less : Transfer to Profit & Loss Account 100.71 1240.00 22.62 328.49
Share Premium * 445.56 445.51
Debenture Redemption Reserve
Less : Transfer to Profit & Loss Account 12.10 73.32 — 85.42
Foreign Curreny Translation Reserve (arising on consolidation)
Add : Additions during the year 0.06 0.72 0.12 0.66
1759.80 860.28
* Net of Rs. 9.97 crores (Rs. 10.02 crores) due on Allotment & Call Money in Arrears.
92
(Rs.in crores)
SCHEDULE - 3
SECURED LOANS
A) Debentures:
(i) Secured Redeemable Non-Convertible Privately Placed Debentures of
Rs. 100 each
Nos. Coupon Rate
42778174 8% 427.78 427.78
Add: Settled Interest Amount 238.93 238.93
Less: Payments Made (373.43) 293.28 (171.93) 494.78
(ii) 10 % Secured Redeemable Debentures of Rs. 100 each 0.18 0.18

Less : Calls in Arrears (0.11) (0.11)
0.07 0.07
Less : Redeemed (0.07) — (0.03) 0.04
B) Term Loans
I) Rupee Loans
1) From Financial Institutions
(i) Term Loans 2857.58 3234.82
2) From Banks
(i) Term Loans (including Working Capital
Term Loan Rs. 98.96 crores) 853.60 1202.12
II) Foreign Currency Loans
(i) Financial Institutions 2737.74 2420.71
(ii) Banks 310.19 3047.93 99.69 2520.40
C) Working Capital Finance
From Banks
(i) In Rupees 578.49 409.49
(ii) In Foreign Currency 42.08 620.57 31.89 441.38
D) Deferred Payment Credits under
Hire Purchase from Bank 0.10 —
E) Interest Accrued & Due — 171.51
7849.07 8241.06
93
NOTES:
A. 8% Non-Convertible Debentures of Rs. 327.78 crores together with interest and remuneration of the Trustees for Debenture
holders are secured by a first legal mortgage/equitable mortgage on the Company’s immovable properties and pari-passu first
charge by way of hypothecation of all the moveable properties of the Company (save and except book debts) including moveable
machinery, machinery spares, tools and accessories both present and future, subject to prior charges created and/or to be created
in favour of the Company’s bankers on the stock of raw materials, finished goods, work in process, consumable stores and book
debts for securing borrowings for working capital requirements.
8% Non-Convertible Debentures of Rs. 100 crores together with interest and costs are secured by legal mortgage of a landed
property in Gujarat and guarantee of a financial institution, which in turn is secured by a pari-passu first charge on the Fixed
Assets of the Company.
The remaining debentures of Rs. 293.28 crores, are redeemable at par in monthly installments by February, 2008.
B. (i) The Rupee Term Loans from Financial Institutions & Banks and Foreign Currency Term Loans from Financial Institutions
& Banks, are secured / to be secured by way of equitable mortgage by deposit of title deeds of the Company’s immovable
properties at Kalmeshwar (Nagpur) and Geetapuram (Dolvi) both in the State of Maharashtra and a first charge by way of
hypothecation of the Company’s movables (save and except book debts) including movable machinery, machinery
spares, tools and accessories, present and future, subject to prior charges created and/or to be created in favour of the
Company’s Bankers on the stock of raw materials, finished goods, process stock, consumable stores and book debts for
securing working capital facilities.
(ii) All the mortgages and charges created / to be created in favour of the Financial Institutions, Banks and Trustees for
Debenture holders rank pari-passu inter se, except where specifically stipulated otherwise.
(iii) A second charge on the fixed and current assets has been created in favour of the working capital lenders and term loan
lenders respectively.
(iv) Term Loans & Debentures, except for Rs. 438.71 crores are also secured / to be secured by pledge of a portion of the
shareholding of promoters. Further, Term Loans are also secured by the personal guarantees of Mr. Pramod Mittal and Mr.
V K Mittal, directors of the Company. Term Loans aggregating to Rs. 143.00 crores are also secured by personal guarantee
of Mr. M. L. Mittal, a former director of the Company.
(v) Term Loans of Rs.143.68 crores are also secured by the Corporate Guarantee of another Body Corporate.
C. Cash Credit and other working capital facilities from Banks are secured / to be secured by the hypothecation of consumable
stores, raw materials, finished goods, process stock, book debts, etc. (both present and future), and second charge over the
entire fixed assets of the Company. The working capital facilities from banks, other than Hong Kong & Shanghai Banking
Corporation Limited are also secured by personal guarantees of Mr. Pramod Mittal and Mr. V. K. Mittal, directors of the
Company. A part of the cash credit and other facilities from Punjab National Bank and Bank of India are also secured by
personal guarantee of Mr. M. L. Mittal, a former director of the Company.
D. Other loans of Rs. 0.10 crore (Rs.Nil) are secured by hypothecation of the vehicles acquired thereagainst.
E. Term Loans & Debentures aggregating to Rs. 868.80 crores (Rs. 327.49 crores) are payable within one year.
(Rs.in crores)
SCHEDULE - 4
UNSECURED LOANS
(Not bearing interest)
Sales Tax Loan from Government of Maharashtra 18.34 18.66
Deferred Sales Tax/ Value Added Tax 218.10 1.37
From Others 229.99 —
* 466.43 20.03
* Includes amount falling due for payment within one year Rs. 0.97crore (Rs. 0.54 crore)
94
SCHEDULE - 5
FIXED ASSETS
(Rs. In crores)
Gross Block Depreciation Net Block
Particulars As at 31st Added Additions / Sales / As at 31st Up to 31st For the On Sales / Up to 31st As at 31st As at 31st
March, 2006 on Adjustments Adjustments March,2007 March, 2006 Year Adjustments March, 2007 March, 2007 March, 2006
Revaluation
Land
Leasehold 0.66 7.04 — — 7.70 0.16 0.09 — 0.25 7.45 0.50
Freehold 62.30 53.54 4.57 — 120.41(A) — — — — 120.41 62.30
62.96 60.58 4.57 — 128.11 0.16 0.09 — 0.25 127.86 62.80
Buildings 396.70 70.53 47.14 0.11 514.26(B) 67.14 14.94 0.01 82.07 432.19 329.56
Railway Sidings & Locomotives 49.09 7.11 3.19 — 59.39 5.28 2.26 — 7.54 51.85 43.81
SUBSIDIARY COMPANIES
Plant & Machinery 10259.23 857.49 578.40 69.12 11626.00 2274.93 656.60 33.47 2898.06 8727.94 7984.30
Vessels 33.45 — 6.70 — 40.15 1.10 3.85 — 4.95 35.20 32.35
Electrical Installations 572.91 22.67 17.67 0.67 612.58 162.42 41.51 0.14 203.79 408.79 410.49
Vehicles 14.33 — 0.83 1.98 13.18(C ) 6.46 1.13 1.08 6.51 6.67 7.87
Furniture & Fixtures,
Airconditioners,
Office Equipment,
Computers & Refrigerators 67.06 — 6.92 0.26 73.72 36.79 4.16 0.07 40.88 32.84 30.27
Total 11455.73 1018.38(E) 665.42(D) 72.14 13067.39 2554.28 724.54 34.77 3244.05 9823.34 8901.45
Previous Year’s Total 10716.44 — 808.97 69.68 11455.73 1990.99 594.05 30.76 2554.28 8901.45 —
Notes:-
A) Includes Rs. 2.58 crores (Rs 4.46 crores) being the cost of 74.23 acres (152.06 acres) land,which is yet to be registered in the Company’s name.
B) Includes Rs.0.12 crore (Rs.0.12 crore) being the cost of shares in Cooperative Housing Society and Rs.0.04 crore (Rs.15.06 crores) being the cost of a flat,which is pending
registration in the company’s name.
C) Includes Rs 0.10 crore (Rs. Nil ) under the Hire Purchase Scheme.
D) Includes exchange difference de-capitalised Rs. 28.08 crores (Rs. 17.96 crores capitalised).
E) Land,Buildings, Railway Sidings, Plant & Machinery and Electrical Installations revalued by the approved valuers on 31st March, 1991, 31st March, 1997 and 31st March, 2002,
have been again revalued during the year, on Replacement Cost basis, based on the balances of respective fixed assets as on 31st March, 2006 and the net increase of Rs. 1018.38
crores has been transferred to Revaluation Reserve.
95
ANNUAL REPORT 2006 - 07
(Rs.in crores)
SCHEDULE - 6
Land & Site Development Expenses 8.32 8.92
Buildings 42.09 25.44
Plant & Machinery and Other Assets 422.60 897.85
Capital Goods in Stock & in Transit 248.84 302.60
Materials in Stock & with Contractors / Fabricators 5.75 15.52
727.60 1250.33
# 322.01 689.88
# Includes advances against capital goods Rs. 13.16 crores (Rs. 24.74 crores)
and Exchange difference Rs.0.01 crore (Rs.24.96 crores)
SCHEDULE - 7
PREOPERATIVE & TRIAL RUN EXPENSES
(PENDING ALLOCATION)
OPENING BALANCE BROUGHT FORWARD 374.67 455.78
Add : Balance as on 1st April, 2005. pertaining erstwhile IMIL — 374.67 3.38 459.16
Salaries, Bonus,Incentives,etc 0.91 5.32
Staff Welfare 0.11 1.13 0.29 6.15
Raw Material Consumption — 39.80
Administration Expenses
Power & Fuel 0.03 18.58
Consumption of Stores & Consumables — 0.73
Repairs & Maintenance (Others) — —
{Full amount Rs Nil (Rs 6,646)}
Insurance 0.76 0.71
Rent 0.01 0.02
Rates & Taxes (Full amount Rs 2,500) — 0.03
Audit Fees 0.04 0.01
Professional Charges 0.09 —
Exchange Difference (net) (0.01) (0.22)
Bank Commission & Charges 0.01 2.14
Technical Consultancy Fees & Expenses — 1.27 0.19 22.46
96
(Rs.in crores)
SCHEDULE - 7 (Contd.)
Interest & Finance Charges
To Banks & Others (Net) 0.31 4.76
Finance Charges 0.30 0.84 2.20 20.92
Depreciation {Full amount Rs.2,976 (Rs 18,357)} — —
SUB-TOTAL (A) 377.91 548.49
LESS :
Sales of Finished Goods — 46.66
Interest received from Banks on deposits (TDS Rs.0.01 crore) 0.07 5.67 — 46.68
SUB-TOTAL (B) 5.67 46.68
TOTAL (A - B) 372.24 501.81
LESS: Transfer to Fixed Assets 218.80 127.14
TOTAL 153.44 374.67
SCHEDULE - 8
INVESTMENTS
(Rs.in crores)
No. of Shares Face value As at 31st As at 31st
per Share March, 2007 March, 2006
(Rs.)
Long Term (Trade)
(i) In Equity Shares - Unquoted
SICOM Ltd. 4,37,500 10 3.52 3.52
STEELSCAPE Consultancy Pvt. Ltd. 50,000 10 0.05 —
(-)
Kalyani Mukand Ltd. @ 4,80,000 10 — —
(ii) In Equity Shares - Quoted
Ispat Profiles India Ltd. @ 15,00,000 10 — —
3.57 3.52
Less : Provision for diminution in value of Investments 1.55 1.77
TOTAL 2.02 1.75
Cost Market Cost Market
Value Value
Aggregate Amount of Investments — Quoted —@ —# —@ —#
— Unquoted 3.57 — 3.52 —
TOTAL 3.57 — 3.52 —
Notes :
@ Value written off in earlier years
# Quotation not available
97
(Rs.in crores)
SCHEDULE - 9
DEFERRED TAX ASSET/(LIABILITY) (NET)
As per Last account 628.30 (8.83)
Add : Balance as on 1st April, 2005 pertaining to erstwhile IMIL — 248.46
Add: Deferred Tax Asset on Employee Benefit Liability as on 1st April, 2006 5.18 —
Add: Deferred Tax Asset/(Liability) for the year (9.87) 388.67
* 623.61 628.30
* Refer Note No. 8 on Schedule 22
SCHEDULE - 10
INVENTORIES
At Lower of Cost and Net Realisable Value
Landed Property (Refer Note No 9 on Schedule 22) 105.00 105.00
Stores, Spares & Production consumables # 165.94 137.53
Raw Materials 534.52 515.77
Work-in-Process 11.05 8.16
Saleable Scrap 14.19 11.07
By-products 36.78 0.75
* 1056.19 985.61
# Including discarded /idle fixed assets Rs.17.91 crores (Rs.1.11 crores)
* Including in Transit / Bonded Warehouses, Materials on Loan / with third parties etc.
SCHEDULE - 11
SUNDRY DEBTORS
Debts outstanding for more than six months
[Net of Doubtful Debts fully provided for Rs. 15.88 crores (Rs.16.14 crores)] 71.57 138.09
Other Debts 573.45 456.04
645.02 594.13
SCHEDULE -12
Cash in hand
[Including Stamps, Cheques/Drafts in hand Rs. 18.86 crores (Rs. 33.52 crores)] 19.19 33.69
Balances with Scheduled Banks in :
— Current & Collection Accounts 2.03 4.20
Fixed Deposit Account (including Margin Money) 77.28 85.94
Balances with Non-Scheduled Banks in:
— Current Accounts 0.03 0.29
Remittances in Transit 231.22 4.75
329.75 128.87
98
(Rs.in crores)
SCHEDULE - 13
Advances recoverable in cash or in kind or for value to be
received or pending adjustments 276.95 74.41
[including loans to employees Rs. 1.51 crores (Rs. 1.66 crores)]
Sundry Deposits [Including deposit with Government/Semi
Government Authorities Rs.12.95 crores (Rs. 15.41 crores)] 65.76 65.18
Balances with Excise, Port Trust & Custom Authorities 49.56 39.35
Advance Income Tax/Tax Deducted at source (net of provisions) 1.92 1.45
Export Incentives Receivable 23.16 94.38
Sales Tax, VAT, Excise Duty, Custom Duty, Octroi etc. Recoverable 61.11 31.19
[Including under appeal]
Interest Receivable 2.47 2.65
* 480.93 308.61
* Net of Doubtful Advances, Deposits etc. fully provided for Rs. 4.28 crores (Rs. 3.76 crores)
SCHEDULE - 14
CURRENT LIABILITIES
Sundry Creditors 1748.23 1921.85
Trade and other deposits 0.73 53.13
Advances from Customers (partly bearing interest) 380.83 277.98
Interest Accrued but not due on Loans 21.34 37.14
2151.13 2290.10
SCHEDULE - 15
PROVISIONS
Gratuity 17.16 9.27
Leave Salary 11.43 2.84
Fringe Benefit Tax (Net of advances) 0.29 0.36
28.88 12.47
99
SCHEDULES ANNEXED TO AND FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Rs.in crores)
2006-2007 2005-2006
SCHEDULE- 16
SALES
Less: Claims, Trade Discounts etc. 39.12 106.28
8188.27 5406.55
Transfer to Fixed Assets — 12.19
8188.27 5418.74
Saleable Scrap & By products 135.19 128.42
Export Benefits 54.98 32.86
8378.44 5580.02
SCHEDULE - 17
OTHER INCOME
Insurance Claims 14.12 18.38
Custom Duty Refund for earlier years 8.87 —
Miscellaneous Receipts 19.57 12.69
Provision for diminution in value of Investments Written back 0.22 0.13
Rent received 5.88 7.65
Less: Rent paid 2.90 2.98 3.81 3.84
Gain on Exchange Rates / Forward Exchange Contracts (net) 24.77 —
108.77 51.99
SCHEDULE - 18
DECREASE/(INCREASE) IN STOCKS
OPENING STOCKS
[Including Saleable Scrap Rs. 11.07 crores (Rs 2.98 crores)]
Landed property 105.00 105.00
332.31 247.63
LESS: CLOSING STOCKS
Finished Goods
[Including Saleable Scrap Rs. 14.19 crores (Rs 11.07 crores)] 202.90 218.40
Landed Property 105.00 105.00
355.73 332.31
(23.42) (84.68)
Transfer to Fixed Assets 4.71 —
(28.13) (84.68)
100
(Rs.in crores)
2006-2007 2005-2006
SCHEDULE - 19
PERSONNEL COST
Salaries, Bonus, Incentives etc 127.59 100.45
Staff Welfare 23.29 20.54
Managerial Remuneration 4.17 1.99
165.70 131.71
SCHEDULE - 20
MANUFACTURING, SELLING & DISTRIBUTION AND
ADMINISTRATIVE EXPENSES
Power & Fuel (Net, Refer Note No.14 on Schedule 22) 1153.52 849.86
Consumption of Stores, Spare Parts, Chemicals etc. 404.47 365.91
Slitting, Packing and other Expenses 16.96 14.52
Repairs & Maintenance :
— Plant & Machinery 110.75 74.75
— Buildings 3.95 7.98
— Others 12.56 127.26 5.08 87.81
Freight & Forwarding Charges (Net) 150.89 122.33
Commission on Sales 23.63 29.17
Advertisement 8.07 1.63
Insurance 19.54 18.82
Rent & Hire 39.32 33.37
Rates & Taxes 3.01 6.70
Auditors’ Remuneration :
— Audit Fee 1.11 0.91
— Tax Audit Fee 0.20 0.18
— In Other Capacity 1.05 0.72
— Travelling & Out of Pocket Expenses 0.13 2.49 0.14 1.95
Items Pertaining to Previous Years (Net) 8.56 6.61
Legal & Professional Charges 32.09 25.87
Postage & Communication expenses 6.66 8.11
Bank Commission & charges 70.53 42.84
Directors’ Fees 0.26 0.32
Share Issue Expenses — 0.89
Loss on Fixed Assets Sold / Discarded (Net) 13.47 15.17
Irrecoverable Advances/Debts/Claims written off (Net) 7.40 7.73
Less: Adjusted against provisions 5.09 1.00
2.31 6.73
Add : Provision for Doubtful debts/Advances/Deposits and Claims 5.35 3.29
Less : Recovery of Bad Debts 6.00 1.66 — 10.02
Loss on Exchange Rates/Forward Exchange Contracts(net) — 16.01
2140.45 1712.23
101
SCHEDULE - 21
INTEREST & FINANCE CHARGES
(Rs.in crores)
2006-2007 2005-2006
To Banks & Others 219.40 139.10
On Debentures 35.34 1029.09 49.81 942.23
Loss/(Gain) on Exchange Fluctuation on term loans (31.51) 20.02
Less: At Credit (Gross) [Tax deducted at source
Rs. 0.28 crore (Rs. 0.01 crore)]
— On Bank Deposits 5.49 3.78
— From Others (Net) 1.12 1.64
— Liability no longer required written back 0.10 6.71 — 5.42
990.87 956.83
SCHEDULE - 22
SIGNIFICANT ACCOUNTING POLICIES & NOTES ON CONSOLIDATED ACCOUNTS
A) SIGNIFICANT ACCOUNTING POLICIES
1) PRINCIPLES OF CONSOLIDATION:
a) The Consolidated Financial Statements present the consolidated Accounts of Ispat Industries Ltd (IIL) and its
following Subsidiaries:
Name of the Subsidiary Country of Proportion of
Incorporation Ownership/Interest
31st March, 2007 31st March, 2006
Ispat Energy Limited (IEL) India 99.99 99.99
Nippon Ispat Singapore (PTE) Limited (NISL) Singapore 100 100
In terms of Accounting Standard 21, issued by the Institute of Chartered Accountants of India, minority interest
has been computed in respect of IEL, a non-fully owned subsidiary, which has not yet commenced commercial
operations. NISL, which is in the business of import & export of steel, textile and other related items and commission
agent, has not been engaged in the trading activities since 1999 due to high volatility in the market conditions.
b) The financial statements of the Company and its subsidiaries have been consolidated on a line-by-line basis by
adding together the book value of like items of asset, liabilities, income and expenses, after fully eliminating
intra-group balances, intra-group transactions and any unrealized profits.
c) In terms of Accounting Standard 23 “Accounting for investment in Associates in Consolidated Financial Statements”
issued by the Institute of Chartered Accountants of India, Kalyani Mukand Ltd (KML), incorporated in India, in
which the Company holds 24% shares, is an associate company. However, Since the entire value of Investments
in KML aggregating to Rs 6.69 crores has been charged off to revenue in an earlier year, the proportionate share
of KML’s profitability has not been considered in these accounts.
d) The consolidated financial statements have been prepared using uniform accounting policies for like transactions
and are presented, to the extent possible, in the same manner as the Company’s separate financial statements.
e) In translating the financial statements of the non-integral foreign Subsidiary for incorporation in the consolidated
financial statements, the assets and liabilities, both monetary and non-monetary are translated at the closing rate;
income and expense items are translated at average exchange rate; and all resulting exchange differences are
accumulated in foreign currency translation reserve.
102
2) BASIS OF PREPARATION OF ACCOUNTS:

The Company follows the concept of accrual system in the preparation of accounts except in respect of interest income
on allotment / call money in arrears and insurance & other claims, which on the ground of prudence or uncertainty in
realisation, are accounted for as and when accepted / received.
3) FIXED ASSETS:
a) Fixed Assets are stated at cost of acquisition inclusive of duties (net of CENVAT / VAT), taxes, incidental expenses,
erection / commissioning expenses and interest etc. up to the date the asset is put to use. In case of revaluation of
fixed assets, the cost as assessed by the valuer is considered in the accounts and the differential amount is transferred
to revaluation reserve.
b) Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical
assessment is expected to be non-regular are capitalised and depreciated prospectively over the residual life of the
respective asset.
c) The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of
impairment thereof based on external / internal factors. An impairment loss is recognized wherever the carrying
amount of an asset exceeds its recoverable amount, which represents the greater of the net selling price of assets
and their ‘value in use’. The estimated future cash flows are discounted to their present value at appropriate rate
arrived at after considering the prevailing interest rates and weighted average cost of capital.
4) DEPRECIATION:
a) The classification of Plant & Machinery into continuous and non-continuous process is done as per technical
certification and depreciation thereon is provided accordingly.
b) Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 or at rates determined based on the useful life of the assets, whichever
is higher. In case of ocean going vessel, higher depreciation is provided to write it off over a period of seven years
being the remaining useful life of the vessel.
c) Depreciation on value adjustments made to the fixed assets due to change in foreign exchange rates prevailing at
the end of the year, is provided prospectively over the residual life of the assets.
d) Depreciation on revalued assets is provided at the rates specified in Section 205 (2) (b) of the Companies Act, 1956.
However, in case of fixed assets whose life is determined by the valuer to be less than their useful life under Section
205, depreciation is provided at the higher rates, to ensure the write off of these assets over their useful life.
e) Leasehold Land is being amortised over the period of lease.
f) Assets created but not owned by the Company, are amortised over a period of five years.
g) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over their
remaining useful life.
5) FOREIGN CURRENCY TRANSACTIONS:

a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the
transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed when the values were determined.
103
c) Exchange Differences
Exchange differences arising on the settlement / conversion of monetary items are recognized as income or
expenses in the period in which they arise except for those relating to acquisition of fixed assets from outside
India, in which case such exchange differences are capitalized.
d) Foreign Exchange Contracts
The premium or discount arising at the inception of forward exchange contracts is amortized as expenses or
income over the life of the respective contracts. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contract is recognized as income or expense for the year.
6) INVESTMENTS:
Current quoted investments are stated at lower of cost and market rate on individual investment basis. Unquoted and long term
investments are considered at cost, unless there is an “other than temporary” decline in value thereof, in which case, adequate
provision/write off is made in the accounts.
7) INVENTORIES:
Inventories are valued at cost (determined on annual / moving average basis) or net realisable value whichever is lower.
8) BORROWING COSTS:
Borrowing costs relating to the acquisition / construction of qualifying assets are capitalized until the time all substantial
activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
9) EXCISE DUTY & CUSTOM DUTY:

Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and accordingly,
is considered for valuation of finished goods stock lying in the factories as on the balance sheet date. Similarly, customs duty
on imported materials in transit / lying in bonded warehouse is accounted for at the time of import / bonding of materials.
10) EARNING PER SHARE:

Earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders
and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential
equity shares.
11) PROVISION:
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an
outflow of resources will be required to settle such obligation, in respect of which a reliable estimate can be made.
12) SALES:
Revenue from sale of goods is recognized on passage of title thereof to the customers, which generally coincides with delivery.
Sales are net of returns, claims, trade discounts etc.
13) RETIREMENT AND OTHER EMPLOYEE BENEFITS:

a) Retirement benefits in the form of Provident and Superannuation Funds are defined contribution schemes and these
contributions are charged to the Profit and Loss Account in the year when these become due to the respective funds.
b) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at
the end of each financial year.
104
c) Short term compensated absences are provided for based on estimates. Long term compensated absences are
provided for based on actuarial valuation.
d) Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
14) TAXATION:
Tax expense comprises of current & deferred income tax and fringe benefit tax. Current income tax and fringe benefit tax is
measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred tax
is recognised, subject to consideration of prudence, on timing differences, being difference between taxable and accounting
income / expenditure that originate in one period and are capable of reversal in one or more subsequent period (s). Deferred tax
assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If the Company has unabsorbed depreciation or carry forward tax losses,
deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that such deferred tax
assets can be realised against future taxable profits.
15) SEGMENT REPORTING:

The Company has identified Iron and Steel products as its sole operating segment and the same has been treated as the primary
segment. The Company’s secondary geographical segments have been identified based on the location of customers and are
demarcated into Indian and Overseas revenue earnings.
16) LEASES :
a) For assets acquired under operating lease, rentals payable are charged to the Profit & Loss Account.
b) For assets acquired under finance lease, the assets are capitalized at lower of their respective fair value and present value
of minimum lease payments after discounting them at an appropriate discount rate.
17) CONTINGENT LIABILITIES:

Contingent liabilities are not provided for in the accounts and are separately disclosed in the “Notes on Accounts”.
B) NOTES ON ACCOUNTS:
(Rs. in crores)
st
1. Contingent liabilities not provided for in respect of: As at 31 As at 31st
a) Claims against the Company not acknowledged as debts
i) Excise & Custom Demands under dispute/ appeal 1.22 7.45
ii) Others 7.56 10.46
b) Letters of Credit , Bills discounted and Bank Guarantees outstanding 357.72 321.10
c) Income Tax demands under appeal 8.25 17.53
d) Corporate Guarantees issued to Financial Institutions and others on
behalf of various bodies corporate 48.00 93.00
e) Sales Tax matters (under dispute/appeal) 7.05 34.64
f) Custom Duty on import of equipment and spare parts under EPCG-scheme. 504.99 639.43
2. Estimated amount of contracts remaining to be executed on Capital Account
and not provided for [Net of Advances Rs. 13.16 crores (Rs. 24.74 crores)]. 100.45 150.96
3. Arrear Dividend (including tax) on Cumulative
Redeemable Preference Shares for the period from 1999 -2000 to 2006 – 2007 503.51 413.89
4. Sundry Creditors include Acceptances. 1054.54 964.93
105
5. a) In respect of cancellable operating leases, the significant leasing arrangements relate to premises (residential,
office, etc.) and oxygen plant, which are renewable by mutual consent and lease rentals payable are accordingly
charged as ‘Rent & Hire’ under Schedule 20.
b) The Company has taken certain plant and equipments on non-cancellable operating leases for a minimum term of
3 to 15 years, which are renewable on expiry of the lease term at mutually acceptable terms. Lease payments
recognized in the profit & loss account under ‘Rent & Hire’ amount to Rs 25.16 crores (Rs. 21.09 crores) for the
year and the particulars of future lease payments are as under:
(Rs. in crores)
Up to 1 year Later than 1 year and More than 5 years
not later than 5 years
23.85 82.97 73.11
(10.20) (32.82) (29.79)
6. The Company has given undertakings to financial institutions not to dispose off its shareholding in Ispat Profiles India
Ltd till its loan is repaid in full.
7. Excise Duty & Cess on Stocks represents differential excise duty and cess on opening and closing stock of finished
goods, saleable scrap & by-products.
8. In terms of Accounting Standard - 22, net deferred tax asset (DTA) of Rs. 623.61 crores (including
Rs. 5.18 crores on employee benefit liability upto 31st March, 2006, in terms of revised Accounting Standard 15 and net
of reversal of Rs 9.87 crores for the current year) has been recognized in the accounts up to 31st March, 2007. There is
carried forward unabsorbed depreciation and business losses as at the Balance Sheet date. However, based on future
profitability projections, the Company is virtually certain that there would be sufficient taxable income in future, to
claim the above tax credit.
The break-up of DTA of Rs. 623.61 crores (Rs. 628.30 crores) is as follows:
(Rs. in crores)
Particulars As at 31st As at 31st
a. Unabsorbed Depreciation 1326.86 1427.20
b. Unabsorbed Business Losses 304.78 285.56
c. Timing Difference in Depreciable Assets (1241.43) (1139.44)
d. Other Timing Differences 233.40 54.98
Net Deferred Tax Asset 623.61 628.30
9. Landed property as indicated in Schedule 10 is under commercial development, for which the Company has entered into
an agreement on a ‘principal to principal’ basis and property development rights therein have been transferred to a
developer. As per the agreement, the developer shall construct the building on such land at its own costs and fifty percent
share of the constructed property will belong to the Company in lieu of land cost. Pending the sale of constructed flats,
the quantum of profit is presently unascertainable and hence not accounted for in the books of account.
10. Directors’ Remuneration includes Rs 2.73 crores paid to the Managing and Other Whole time directors, which is in
excess of the limit sanctioned earlier by the Central Government. The Company has made an application to the Central
Government for approval of such excess remuneration.
106
11. Basis for calculation of basic and diluted earnings per equity share is as under:
2006-2007 2005-2006
A Loss after Tax [After considering notional dividend on
cumulative redeemable preference shares Rs. 89.62 Crores
(Rs. 76.85 Crores)] Rs in Crores 99.88 890.75
B Present weighted average number of equity shares Nos. 1,222,442,218 1,121,864,845
Nominal Value of Equity Shares Rs. 10 10
C Basic and Diluted Earning per Share Rs. (0.82) (7.94)
12. Segment Information:

a) The Company’s business activity primarily falls within a single business segment i.e., Iron & Steel Business and
hence there are no additional disclosures to be made under Accounting Standard 17, other than those already
provided in the financial statements.
b) Geographical Segments
(Rs. in crores)
Revenue (Gross Sales) 2006-2007 2005-2006
Domestic 6794.75 4718.00
Overseas (including export benefits) 1583.69 862.02
13. Gratuity and Other post-employment benefit plans:

The Company has decided to early adopt AS 15 (revised) – “Employee Benefits” and in accordance with the transitional
provisions in the standard, a sum of Rs. 10.21 crores (net of deferred tax credit of Rs. 5.18 crores thereon) being the
impact of such change on the respective liabilities upto 31st March, 2006, has been adjusted with the Profit and Loss
Account debit balance as on 1st April 2006. The Company provides for gratuity and leave expenses on the basis of
actuarial valuation. The Company does not have any fund for Gratuity liability and the same is accounted for as provision.
The following tables summarise the components of net benefit/ expense recognised in the profit and loss account and
balance sheet for the respective plans.
(Rs in Crores)
(a) Expenses recognized in the Profit and Loss Account / Pre-Operative Expenses for the year ended
31st March, 2007
Gratuity Leave
Actuarial ( gains) / losses (1.69) (0.58)
Past service cost * — —
Net expense 1.46 1.75
* Impact for past service cost considered separately in the Opening Balance of Profit & Loss Account in terms of
transitional provision under AS 15 (revised).
107
(b) Net Asset / (Liability) recognized in the Balance Sheet as at 31st March, 2007:
Gratuity Leave
Defined benefit obligation 17.16 11.43
Net Asset / (Liability) (17.16) (11.43)
(c) Changes in the present value of the defined benefit obligation are as follows:
Gratuity Leave
Opening defined benefit obligation 16.85 10.65
Benefits paid (1.15) (0.96)
Actuarial (gains) / losses (1.69) (0.58)
Closing defined benefit obligation 17.16 11.43
(d) The Principal Actuarial Assumptions used in determining gratuity and leave liabilities are as shown below:
Discount rate 8.10%
Mortality table Standard Table LIC(1994-1996)
(e) Amount provided for defined contribution plans are as follows:
(Rs. in crores)
Defined Contribution to: 2006-2007
Provident Fund 6.08
Superannuation Fund 5.13
(f) The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.
(g) Since AS 15 (revised) on Employee Benefits has been adopted from 1st April 2006, disclosures given above are
only for the current year.
14. The Company had paid Regulatory Liability Charges (RLC) of Rs.201.57 crores (including Rs.51.09 crores
during April 2006 to September 2006) to Maharashtra State Electricity Distribution Company Limited (MSEDCL)
between December 2003 to September 2006. Effective from 1st October, 2006, these charges were ordered to be
discontinued vide order dated 20th October, 2006 issued by Maharashtra Electricity Regulatory Commission
(MERC). While determining the Annual Revenue Requirements (ARR) of MSEDCL for the years 2007-2008 to
2009-2010 and its tariff structure for the year 2007-2008, MERC, vide its order dated 18th May, 2007, has
directed MSEDCL to refund a part of such RLC (described in the order as being in the nature of loan to MSEDCL)
to the specified consumer categories, including the Company, during 2007-2008. Although no specific period for
the refund of the balance amount of such RLC has been indicated, yet MERC has clearly stated in its aforesaid
order that it should be possible for MSEDCL to refund such RLC in the near short term. The Company has
obtained legal opinions which clearly establish RLC as a loan refundable by MSEDCL, based on MERC’s order,
and whose recovery by the Company is certain in the future years. Accordingly, RLC dues of Rs.201.57 crores,
which were charged as expense by the Company in the respective years, have been recognized as income, by
crediting the Power and Fuel charges account during the year, with a corresponding debit to Loans & Advances in
the accounts.
108
15. Issued, Subscribed and Paid up Equity Share Capital includes 615,594,388 (627,194,388) equity shares held by Global
Steel Holdings Ltd, the ultimate holding company and its subsidiaries.
16. (a) Material lying in stock & with contractors / fabricators amounting to Rs.0.78 crore at IEL is subject to reconciliation
and confirmation.
(b) Advances recoverable in cash or kind include Rs 2.90 crores given by NISL to Global Steel Holdings Ltd (the
ultimate holding company), which are outstanding for long, however it is considered good of recovery by the
management.
(c) Sundry creditors include Rs. 0.41 crore outstanding at NISL to certain parties which are pending for confirmation.
17. Related Party Disclosures:
(a) Name of the related parties:

Persons having a direct or indirect control
over the Company : Global Steel Holdings Ltd.
Associate Company : Kalyani Mukand Limited
Fellow Subsidiary Companies : Ispat Steel Holdings Ltd
Ispat Holdings (P) Ltd
Ispat Finance Ltd
Mudra Ispat Ltd.
Denro Holding (P) Ltd
Mita Holdings (P) Ltd
Goldline Tracom (P) Ltd
Gontermann Peipers India Ltd.
Kartik Credit (P) Ltd
Ushaditya Investments (P) Ltd
Kanoria Plastokem Pvt Ltd
GPI Textiles Ltd.
Elephanta Gases Ltd.
Geetapuram Port Services Ltd.
Key Management Personnel and their Relatives : Mr. M. L. Mittal
Mr. Pramod Mittal
Mr. V K Mittal
Mr. Vinod Garg
Mr. Anil Sureka
Mr. B K Singh
Mr. V R Sharma
Enterprises over which Key Management Personnel /
Share Holders / Relatives have significant influence * : Balasore Alloys Ltd.
* The party stated above is a related party in the broader sense of the term and is included for making the financial statements
more transparent.
109
(b) Related party disclosures:

(Rs. in crores)
Nature of Transactions Persons Fellow Key Enterprises Total

having a Subsidiary Management over which
Relatives have
significant influence
Sales of raw materials, intermediaries and finished goods

(1.28) (1.28)
Purchases of raw materials, intermediaries and finished goods
(27.59) (27.59)
Others — —
(0.16) (0.16)
Sale of Fixed Assets
Mudra Ispat Ltd — —
(0.36) (0.36)
Services received
(3.04) (3.04)
(4.11) (4.11)
Others 0.12 0.12
(0.35) (0.35)
Services given
(0.22) (0.22)
Balasore Alloys Limited — —
(0.04) (0.04)
Salary/Managerial Remuneration
Mr. V. K. Mittal 1.79 1.79
(0.60) (0.60)
110
(Rs. in crores)

Relatives have
Mr. Anil Sureka 1.19 1.19

(0.50) (0.50)
Mr. Vinod Garg 1.19 1.19
(0.50) (0.50)
Mr. B. K. Singh 1.67 1.67
(1.60) (1.60)
Mr. V.R. Sharma 0.50 0.50
(0.42) (0.42)
Mr. V.V Jamnis — —
(0.39) (0.39)
Rent Expense (including Lease Rent)
(0.42) (0.42)
(1.00) (1.00)
Kanoria Plastokem Pvt. Ltd 0.36 0.36
(—) (—)
Others 0.25 0.25
(0.11) (0.11)
Guarantees Obtained
Mr. M. L. Mittal 553.00 553.00
(553.00) (553.00)
Mr. Pramod Mittal 8,634.00 8,634.00
(8,365.00) (8,365.00)
Mr. V. K. Mittal 8,634.00 8,634.00
(8,365.00) (8,365.00)
Allotment & Call Money Receivable
(13.08) (13.08)
111
(Rs. in crores)

Relatives have
Balance outstanding as at the year end – Debit

Ispat Holdings (P) Ltd. 4.67 4.67
(4.70) (4.70)
Denro Holding (P) Ltd. 4.17 4.17
(4.19) (4.19)
Mita Holding (P) Ltd 4.02 4.02
(4.04) (4.04)
Goldline Tracom (P) Ltd. 8.03 8.03
(8.08) (8.08)
Kartik Credit (P) Ltd. 5.06 5.06
(5.09) (5.09)
Ushaditya Investments (P) Ltd. 4.16 4.16
(4.18) (4.18)
Elephanta Gases Ltd. 3.75 3.75
(4.58) (4.58)
Others 2.90 0.02 1.63 4.55
(3.03) (0.40) (1.64) (5.07)
Balance outstanding as at the year end – Credit
(6.35) (6.35)
Others 0.08 — 0.08
(0.32) (0.27) (0.59)
Allotment of Shares
Ispat Steel Holdings Ltd. — —
(97.78) (97.78)
Others — — — —
(5.79) (148.02) (2.72) (156.53)
112
18 (a) Derivative instruments outstanding at the year end represent the following :
(i) Forward Cover contracts of Euro 36,374,285 (US$ 50,147,766) for minimizing the risk of currency exposure on
trade receivables.
(ii) Outstanding Principal only Swap (POS) contracts for USD/CHF $ 30,000,000 with a double knock out options
and US$ / JP¥ 10,000,000 with a window knockout barrier together with a right to receive differential interest on
principal amount.
(iii) Interest swap contract payable at LIBOR plus 5.05% Margin vis-à-vis pre-determined fixed rate relating to loans
of US $ 50,000,000 ( US $ 50,000,000).
(iv) Outstanding options and futures purchase hedge contracts for 1575 MT of Zinc as at 31 st March, 2007.
(b) The Company has following un-hedged exposures in various foreign currencies as at the year end:
(Rs. in crores)
Sr. No. Particulars As at 31st As at 31st
(i) Trade Receivables 324.52 248.12
(ii) Advances (including balance with bank) 220.64 2.99
(iii) Trade Payables (including customer advances) 755.76 656.75
(iv) Borrowings (including interest) 2878.74 2520.40
19. Managerial Remuneration
(Rs. in crores)
2006-2007 2005-2006
(a) Managing Director
Salary 0.72 0.30
Total 1.79 0.60
(b) Other Whole-time Directors
Salary 0.96 0.54
Contribution to Provident and Superannuation Funds 0.27 0.16
Total 2.38 1.39
Note : The above excludes gratuity and leave encashment liability.
20. Figures in brackets represent previous year’s figures, which have been rearranged/ regrouped wherever necessary.
Signatories to Schedules 1 to 22

22, Camac Street,
Kolkata – 700 016
Camp: Mumbai,
113
NIPPON ISPAT SINGAPORE (PTE) LIMITED ANNUAL REPORT 2006 - 07
REPORT OF THE DIRECTORS

The directors present their report together with the audited financial statements of the company for the financial year ended
31 March, 2007.
1. DIRECTORS
The directors of the company in office at the date of this report are:
Kanchan Murarka
Kamla Prasad, S/o Ramjit Gwala
2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF

SHARES AND DEBENTURES
Neither at the end of the financial year nor at any time during the year did there subsist any arrangement whose object was to
enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or
any other body corporate.
3. DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES

The directors holding office at the end of the financial year and their interest in the share capital of the company and related
corporations as recorded in the register of directors’ shareholdings kept by the company under Section 164 of the Singapore
Companies Act, Cap. 50 were as follows:-
Ordinary Shares of S$1 each
Company
Name of director At beginning of year At end of year
Kanchan Murarka 1 1
4. DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to
be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the company or a related
corporation with the director or with a firm of which he is a member, or with a company in which he has substantial financial
interest.
5. OPTIONS TO TAKE UP UNISSUED SHARES

During the financial year, no option was granted to take up unissued shares of the company.
6. OPTIONS EXERCISED
During the financial year, there were no shares of the company issued by virtue of the exercise of options to take up unissued
shares.
7. UNISSUED SHARES UNDER OPTIONS

There were no unissued shares of the company under option as at the end of the financial year.
8. AUDITORS
The auditors, M/s. Rama & Co., Certified Public Accountants, have expressed their willingness to accept re-appointment.
KANCHAN MURARKA KAMLA PRASAD, S/o RAMJIT GWALA

Director Director
Singapore, 10 April, 2007
114
STATEMENT BY DIRECTORS
We, being the directors of the company, do hereby state that in our opinion:-
(a) the accompanying financial statements set out on pages 6 to 15 are drawn up so as to give a true and fair view of the state of
affairs of the company as at 31 March 2007, and of the results, changes in equity and cash flows of the company for the financial
year ended on that date; and
(b) at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when
they fall due.
KANCHAN MURARKA KAMLA PRASAD, S/o RAMJIT GWALA

Director Director
Singapore, 10 April, 2007
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
We have audited the accompanying financial statements of NIPPON ISPAT SINGAPORE (PTE) LTD., which comprises the balance
sheet as at 31 March 2007, and profit and loss statement, statement of changes in equity and cash flow statement and a summary of
significant accounting policies and other explanatory notes set out on pages 6 to 15 for the financial year ended 31 March 2007.
Directors’ responsibility
The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with
Singapore Financial Reporting Standards and the Singapore Companies Act Cap. 50 (the “Act”). This responsibility includes: designing,
implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Except as disclosed in the following
paragraph, we conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.
An audit involves performing procedures to obtain audit evidence about amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors,
as well as evaluating the overall presentation of the financial statements.
The auditors’ report for the year ended 31 March 2006 was qualified as follows:
“We are unable to ascertain the validity of the other payables amounting to S$154,643 as disclosed in Note 7 to the financial
statements as we are unable to obtain the confirmation of the stated balance. There are no other alternative audit procedures that we
could adopt to verify the stated balances”.
115
“We are unable to ascertain the validity as at 31 March 2007 of the other payables amounting to S$144,593 as disclosed in Note 8 to
the financial statements as we are unable to obtain the confirmation of the stated balances. There are no other alternative audit
procedures that we could adopt to verity the stated balances.”
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to
satisfy ourselves as to the matters referred to in the preceding paragraph 5:
(a) the financial statements are properly drawn up in accordance with the provisions of the Act, and Singapore Financial Reporting
Standards so as to give a true and fair view of the state of affairs of the company as at 31 March 2007 and the results, changes
in equity and cash flows of the company for the year then ended on that date; and
(b) the accounting and other records required by the Act to be kept by the company have been properly kept in accordance with the
provisions of the Act.
RAMA & CO.

CERTIFIED PUBLIC ACCOUNTANTS
Singapore, 10 April 2007
116
BALANCE SHEET AS AT 31 MARCH 2007

NOTE 2007 2006
S$ S$
ASSETS
Current Assets:
Amount due from Ultimate holding company (6) 1,019,981 1,090,876
Cash at bank (7) 3,748 1,579
Total assets 1,023,729 1,092,455
LIABILITY AND EQUITY
Current Liability:
Payables (8) 456,873 267,758
Total current liability 456,873 267,758
CAPITAL AND RESERVE:

Issued Capital (9) 784,502 784,502
Accumulated (Losses)/Profits (217,646) 40,195
Total equity 566,856 824,697
Total liability and equity 1,023,729 1,092,455
The annexed notes form an integral part of these financial statements.
PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31 MARCH 2007
NOTE 2007 2006
S$ S$
REVENUE — —
Administrative expenses (217,646) 117,084
Loss before income tax (217,646) (117,084)
Income tax (10) — —
Loss for the year (11) (217, 646) (117,084)
117
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2007

Issued Accumulated
Capital Profits/(Loss) Total
S$ S$ S$
Balance as at 1.4.2005 784,502 157,279 941,781
Net loss for the year — (117,084) (117,084)

Balance as at 31.3.2006 784,502 40,195 824,697
Net loss for the year — (257,841) (257,841)

Balance as at 31.3.2007 784,502 (217,646) 566,856
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007

2007 2006
S$ S$
Cash flows from operating activities

Adjustment for unrealised foreign currency

exchange adjustment loss — 12,797
Operating loss before working capital changes (257,841) (104,287)
Receivables 70,895 —
Payables 189,115 102 ,363

Net cash used in operating activities 2,169 (1,924)
Effect of changes in exchange rate changes on cash — (700)

Net decrease in cash 2,169 (2,624)
Cash at beginning of year 1,579 4,203

Cash at end of year 3,748 1,579
118
NOTES TO THE FINANCIAL STATEMENTS — 31 MARCH 2007

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. GENERAL
The company (Registration number: 199303132W) is a limited private company, which is domiciled and incorporated in the
Republic of Singapore with its registered office at:
17 Phillip Street #05-01
Grand Building
Singapore 048695
The principal activities of the company are to carry on the business of importers, exporters of steel, textiles and other related
items and commission agents. Due to high volatility in the steel market and depressed steel market conditions, the company has
not been able to engage in trading activities since 1999.
The financial statements of the company for the year ended 31 March 2007 were authorised for issue in accordance with the
directors’ resolution dated 10 April 2007.
2. Significant Accounting Policies

2.1 Basis of Accounting
The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting
policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial
Reporting Standards (“FRS”).
In the current financial year, the company has adopted all the new and revised FRSs and Interpretations of FRS (“INT
FRS”) issued by the Council on Corporate Disclosure and Governance that are relevant to its operations and effective for
annual periods beginning on or after 1 January 2005. The adoption of these new/revised FRSs and INT FRSs has no
material effect on the financial statements except as described below:
The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the
process of applying the company’s accounting policies. It also requires the use of accounting estimates and assumption that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during the financial year. Although these estimates
are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those
estimates.
2.2 Income Tax

Tax expense is determined on the basis of tax effect accounting, using the liability method, and it is applied to all significant
temporary differences arising between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, except that a debit to the deferred tax balance is not
carried forward unless there is probable realisation in the foreseeable future.
2.3 Foreign Currency Transactions

Transactions in foreign currencies have been converted into Singapore dollars at the rates of exchange ruling at the date of
the transaction. Monetary assets and liabilities in foreign currencies at the balance sheet date have been converted into
Singapore dollars at the rates of exchange approximating those ruling at that date. All resultant exchange differences are
dealt with the profit and loss statement.
2.4 Provisions
Provisions are recognised when the company has a present obligation as a result of a past event where it is probable that it
will result in an outflow of economic benefits that can be reasonably estimated.
119
NOTES TO THE FINANCIAL STATEMENTS — 31 MARCH 2007 (Contd.)

2.5 Employee Leave Entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated
liability for annual leave as a result of services rendered by employees up to the balance sheet date.
2.6 Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic
environment in which the company operates (“the functional currency”). The financial statements of the company are
presented in Singapore dollars, which is also the functional and presentation currency of the company.
3. FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the company balance sheet when the company becomes a party to the
contractual provisions of the instrument.
3.1 Bank Balances
Bank balances comprise demand deposits that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
3.2 Receivables
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less allowance for impairment. An allowance for impairment of receivables is established when there is objective
evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. The
amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The amount of the allowance is recognised in the income statement.
3.3 Financial Liabilities and Equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. Financial liabilities include only other payables which are stated at their nominal value. Equity instruments are
recorded at the proceeds received, net of direct issue costs.
4. CRITICAL JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES

4.1 Critical accounting judgements
In the process of applying the company’s accounting policies, management is of the opinion that there are no critical
judgements involved that have significant effect on the amounts recognised in the financial statements.
4.2. Key sources of estimation uncertainties
The management is of the opinion that there are no key sources of estimation uncertainty at the balance sheet date that have
a significant effect on the amounts of assets and liabilities within the next financial year.
5. FINANCIAL RISKS AND MANAGEMENT

The company’s overall risk management policy seeks to minimise potential adverse effects on the financial performance of the
company. The company, however, does not have any written risk management policies and guidelines. The directors monitor the
following risks management of the company and believe that the financial risks associated with these financial instruments are
minimal.
a) Credit Risk
The carrying amounts of cash at bank and receivables represent the company’s maximum exposure to credit risk in relation
to financial assets.
Receivables are balances due from the ultimate holding company, which have been long outstanding. Directors are, however,
of the opinion that the other receivables are recoverable. The credit risk on liquid fund is limited because the counterparty
is a bank with high credit rating assigned by international credit agencies.
120

No other financial assets carry a significant exposure to credit risk.
b) Foreign Currency Risk
The other receivables and payables of the company are denominated in foreign currencies and the company’s largest
currency exposure is in United States dollars. Foreign exchange exposures are minimised through natural hedge of receivables
and payable balances. Hence the company does not use derivative financial instruments to mitigate this risk.
c) Fair value of financial assets and financial liabilities
The carrying amounts of cash at bank, receivables and payables approximate their respective fair values due to the relatively
short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are
disclosed in the respective notes to financial statements.
6. HOLDING COMPANY
The company is a wholly owned subsidiary of Ispat Industries Limited, incorporated in India. The ultimate holding company is
Global Steel Holdings Limited, incorporated in Isle of Man.
Receivables comprise amount due from the ultimate holding company, which has been long outstanding. However, the directors
of the company are of the opinion that the stated balances are recoverable.
The carrying amount of receivables approximate their fair value.
Receivables are denominated in the following currency.
2007 2006
S$ S$
United States dollars 1,019,981 1,097,876
7. BANK BALANCES 2007 2006

S$ S$S
Bank balances 3,748 1,458
3,748 1,458
Bank balances, which approximate their fair value are denominated in the following currencies:
2007 2006
S$ S$
Singapore dollars 2,016 788
United States dollars 1,732 670
3,748 1,458
8. PAYABLES
2007 2006
S$ S$
Holding company (Note 5) 307,060 105,735
Outside parties 144,593 154,643
Accrued expenses 5,220 7,380
456,873 267,758
121

The carrying amounts of payables approximate their fair value and are denominated in the following currency:
2007 2006
S$ S$
United States dollars 451,653 260,378
Singapore dollars 5,220 7,380
456,873 267,758
9. ISSUED CAPITAL
Issued share capital
2007 2006
S$ S$
784,502 ordinary shares 784,502 784,502
Pursuant to the Singapore Companies (Amendment) Act 2005, effective from 30 January 2006, the concept of “par value”
and “authorised capital” were abolished.
The company has one class of ordinary shares, which carry no right to fixed income.
10. LOSS FOR THE YEAR

Loss for the year has been arrived at after charging/(credit):
2007 2006
S$ S$
Foreign currency exchange adjustment loss 52,963 12,797
Employee benefit expenses 115,459 63,000
Cost of defined contribution plans included
in employee benefit expenses 2,025 —
Office rental 4,800 —
11. INCOME TAX

No provision for income tax (2006: Nil) is made in the financial statements of the company as it has no trading income
(2006: Nil) during the year.
122
DETAILED PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31 MARCH 2007
2007 2006
S$ S$
REVENUE — —
LESS : ADMINISTRATIVE EXPENSES
Auditors’ remuneration 2,000 2,000
Bank charges 120 —
Commission paid 1,400 —
Computer and peripherals 3,890 1,005
CPF 2,025 —
Education 7,759 —
Entertainment 4,874 2,500
Foreign currency exchange adjustment loss 52,963 12,797
Leave allowances 15,000 —
Medical expenses 5,227 1,992
Office expenses 1,703 3,469
Office rental 4 ,800 —
Penalties and interest 2 —
Postage 956 636
Printing and Stationery 2,955 1,277
Professional fee 750 750
Salaries & bonus 90,000 46,500
Secretarial fee and charges 2,470 2,470
Sinda fund & SDF 120 —
Special audit engagement — 2,160
Staff insurance 3,087 3,087
Staff resettlement expense — 11,421
Subscription
— Current year 1,046 —
— Prior years under provision 630 —
Telecommunications 24,478 8,981
Travel 29,586 16,039
(257,841) (117,084)
This schedule does not form part of the audited statutory financial statements.
123
ISPAT ENERGY LIMITED ANNUAL REPORT 2006 - 07
DIRECTORS’ REPORT
Your Directors are pleased to present their Tenth Annual Report and Audited Accounts of the Company for the year ended
31st March, 2007.
PROJECT
The Company is setting up a power plant of the combined capacity of 110MW to meet the captive power requirements of Ispat
Industries Limited, its holding Company, at Dolvi in Raigad District, Maharashtra. Since the steel plant of Ispat Industries Limited is
already in operation, the power off-take would stand adequately assured.
The imported equipments have already arrived at the plant site at Dolvi. Civil construction, refurbishment and structural activities
have commenced. Major contracts for engineering services etc., have either been concluded or are being finalized. The project is
expected to be commissioned by early 2009.
FINANCIAL STATUS
Financial tie-up for the estimated project cost of Rs.348 Crores has been achieved.
PREOPERATIVE EXPENSES
Pre-operative expenditure (pending allocation) incurred during the year under review, net of certain income of Rs.6,81,533/-, is
Rs.3,56,55,875/-. Pre-operative expenditure (pending allocation) as at the Balance Sheet date is Rs.153,48,54,205/-.
Capital work-in-progress as at the Balance Sheet date is Rs.267,33,03,394/-.
DIRECTORS
Mr. V. K. Mittal retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.
AUDITORS
The Auditors, M/s Singhi & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have expressed their
willingness to be re-appointed.
M/s Singhi & Co. have furnished a letter under Section 224(1B) of the Companies Act, 1956 confirming that their appointment, if
made, will be within the limits specified in the said Section.
AUDITORS’ REPORT
M/s Singhi & Co., Statutory Auditors, in their report have referred to the notes forming part of the accounts. The said notes are self-
explanatory and do not require further elucidation.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors' Responsibility Statement, it is hereby
confirmed that : -
(i) in the preparation of the annual accounts for the financial year ended 31st March, 2007, the applicable accounting standards have
been followed and there have been no material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and
of the loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; and
(iv) the Directors have prepared the annual accounts for the financial year ended 31st March, 2007 on a going concern basis.
The above statement has been taken note of by the Audit Committee at its meeting held on 31st May, 2007.
124
CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO.
In accordance with the requirements of Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules 1988, the particulars with respect to Foreign Exchange Earnings and Outgo are annexed
hereto and form part of this report. However, since the Company's power plant project is yet to be commissioned, particulars in
relation to Conservation of Energy and Technology Absorption are not forming part of this report.
PERSONNEL
During the year under review, your Company continued to maintain cordial relationship with its employees.
The Board records its appreciation of the commitment and support of employees at all levels.
Since your Company has no employee drawing salary envisaged in the provisions contained in Section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the said provisions are not applicable and, hence, no
statement of particulars of employees is annexed to this report.

ANIL SUREKA KANCHAN MURARKA
Director Director
Mumbai,
the 31st day of May, 2007.
ANNEXURE TO THE DIRECTORS’ REPORT

STATEMENT CONTAINING PARTICULARS PURSUANT TO THE COMAPANIES (DISCLOSURE OF PARTICULARS
IN THE REPORT OF BOARD OF DIRECTORS.) RULES, 1988 AND FORMING PART OF DIRECTORS' REPORT.
FOREIGN EXCHANGE EARNINGS AND OUTGO in Rs.
1. CIF Value of Imports :

– Capital Goods NIL
(Previous year – Rs.NIL)
2. Other Expenditure
– Travelling Rs. NIL
(Previous Year Rs.98,917/-)
– Others Rs.35,990/-
(Previous Year Rs. 65,626)

ANIL SUREKA KANCHAN MURARKA
Director Director
Mumbai,
the 31st day of May, 2007.
125
AUDITORS’ REPORT TO THE SHAREHOLDERS

We have audited the attached Balance Sheet of ISPAT ENERGY LIMITED as at 31st March 2007, and also the Pre-operative
expenditure for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financials statements are free of material misstatement. An audit
includes examining, on a test check basis, evidence supporting the amount and disclosures in the financials statements. An audit
includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section
(4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and
5 of the said Order.
Further to our comments in the in the Annexure referred to above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for
purposes of our audit;
ii. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination
of those books;
iii. The Balance Sheet and Pre-operative Expenditure dealt with by this report are in agreement with the books of account;
iv. In our opinion, the attached Balance Sheet and the Pre-operative Expenditure dealt with by this report comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
v. On the basis of written representations received from the Directors as on March 31, 2007, and taken on record by the Board of
Directors, we report that none of the Directors are disqualified as on 31st March 2007 from being appointed as a Director in
terms of Clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the
Notes give the information required by the Companies act, 1956, in the manner so required and also give a true and fair view in
conformity with the accounting principles generally accepted in India;
a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007 and
b. in case of Preoperative Expenditure, of the expenses of the company for the year ended on that date.
For SINGHI & CO.

S Chandrasekhar
Place : Mumbai Partner
Dated: 31st May, 2007 Membership No. 7592
126
ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in our report of even date to the members of Ispat Energy Limited as at and for the year ended 31 st March 2007)
(i) a. The company has maintained proper records showing full particulars, including quantitative details and situation of fixed
assets.
b. The fixed assets have been physically verified during the year by the management. According to the information and
explanations given to us, no material discrepancies have been noticed on such verification.
c. There was no disposal of Fixed Assets during the year.
(ii) a. As explained to us, Project materials in stock were physically verified during the year by the management at reasonable
intervals.
b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature
of its business.
c. In our opinion and according to the information and explanation given to us, the company is maintaining proper records
of inventory and no material discrepancies were noticed on physical verification.
(iii) According to the information and explanations given to us, during the year the company has not granted or taken any loan
secured or unsecured to or from companies, firms or parties covered in the register maintained under section 301 of the Companies
Act,1956.
(iv) In our opinion, and according to the explanations given to us, there are adequate internal control procedures commensurate
with the size of the company and the nature of its business with regard to the purchases of its fixed assets.
(v) According to the information and explanations provided by the management, there has been no transactions that need to be
entered into a register maintained under section 301 of the Companies Act, 1956.
(vi) In our opinion, and according to the information and explanations given to us, the company has not accepted any deposits from
the public as stipulated under the provisions of Section 58A and 58AA of the Companies Act,1956.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
(viii) The clause relating to maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 is not applicable to the
company for the year under reference.
(ix) a. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues
including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, service
tax, wealth tax, custom duty, excise duty, cess and other applicable statutory dues applicable to it with the appropriate
authorities except custom duty on import of power plant lying at bonded warehouse amounting to Rs. 8,30,24,261/-.
b. There are no undisputed outstanding statutory dues as at the year end for a period of more than six months from the date
they become payable.
c. According to the records of the company, there are no dues outstanding of Sales Tax, Income Tax, Custom Duty, Excise duty
and Cess which has not been deposited on account of any dispute as on 31 st March 2007.
(x) The Company does not have accumulated losses at the end of financial year and it has not incurred cash losses in the current and
immediately preceding financial year as the power plant is still under construction stage.
(xi) Based on the audit procedures and on the information and explanations given by the management, the company has not borrowed
any money from financial institutions, banks and through debenture issue. Therefore the provisions of clause 4 (xi) of the
Companies (Auditor’s Report) Order, 2003 (as amended), are not applicable to the Company.
(xii) According to the information and explanations given to us and based on the documents and records produced to us, the company
has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the company is not a chit fund or nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii)
of the Companies (Auditor’s Report) Order, 2003 (as amended), are not applicable to the Company.
(xiv) The company does not deal or trade in shares, securities, debentures and other investments. Therefore the provisions of clause
4 (xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended), are not applicable to the Company.
127
(xv) According to the information and explanations given to us, the company has not given any corporate guarantees in favour of
financial institution/bank for loans taken by others.
(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the company has not
availed any term loan during the year.
(xvii)According to the information and explanation given to us, on an overall basis, funds raised on short term basis have, prima
facie, not been used during the year for long term investment and vice versa.
(xviii)The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained
under section 301 of the Companies Act, 1956. Therefore the provisions of clause 4 (xviii) of the Companies (Auditor’s Report)
Order, 2003 (as amended), are not applicable to the Company.
(xix) The company did not have any outstanding debentures during the year. Therefore the provisions of clause 4 (xix) of the
Companies (Auditor’s Report) Order, 2003 (as amended), are not applicable to the Company.
(xx) The company has not raised any money through a public issue during the year.
(xxi) Based on the examination of books and records of the Company, carried out in accordance with the generally accepted auditing
practice in India and according to the information and explanations given to us, no fraud on or by the company, noticed or
reported during the year.
For SINGHI & CO.,

S Chandrasekhar
Place : Mumbai Partner
Dated : 31st May, 2007 Membership No. 7592
128
BALANCE SHEET AS AT 31ST MARCH 2007

(Amount in Rupees)
Schedule As at 31st As at 31st
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital 1 1,100,012,600 1,100,012,600
1,100,012,600 1,100,012,600
Fixed Assets
Gross Block 2 215,146 215,146
Less : Depreciation 163,054 160,078
Net Block 52,092 55,068
Capital Work-in-Progress 3 2,673,303,394 2,916,924,090

Pre-Operative Expenses (Pending Allocation) 4 1,534,854,205 1,570,510,080
4,208,209,691 4,487,489,238
Current Assets, Loans & Advances
Cash & Bank Balances 5 20,923,505 48,392
Loans, Advances & Deposits 6 13,235,182 7,682,606
34,158,687 7,730,998
Liabilities 7 3,150,525,991 3,403,571,759
Provisions 8 718,000 524,090
3,151,243,991 3,404,095,849
Net Current Assets (3,117,085,304) (3,396,364,851)
Share Issue Expenditure 8,888,213 8,888,213
(To the extent not written off or adjusted)
1,100,012,600 1,100,012,600
Significant accounting policy & notes on accounts 9
As per our attached report of even date

For Singhi & Co. For and on behalf of the Board
S CHANDRASEKHAR ANIL SUREKA K K MURARKA

Partner Director Director
Membership No. 7592
101, Turf Estate, Mahalaxmi,
Mumbai - 400 011
The 31st day of May, 2007
129
CASH FLOW STATEMENT

(Amount in Rupees)
For Year Ended For Year Ended
31st March’07 31st March’06
A. CASH FLOW FROM INVESTING ACTIVITIES :

(Increase)/Decrease in Capital Work In Progress 243620696 (58435543)
(Increase)/Decrease in Pre-Operative Expenses 35658851 (42121908)
(Increase)/Decrease in current Assets relating to Project (445761340) 1726735
NET CASH GENERATED FROM INVESTING ACTIVITY (166481793) (98830716)
B. CASH FLOW FROM FINANCING ACTIVITIES
Increase In Share Capital — 1099512600
Decrease In Advance against Equity — (1099512600)
Advance received from Holding Company 187356906 107721083
Share Issue Expenditure — (8888213)

NET CASH GENERATED FROM FINANCING ACTIVITY 187356906 98832870
NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENT (A+B) 20875113 2154
CASH & CASH EQUIVALENT AS ON 01.04.2006 (OPENING BALANCE) 48392 46238
CASH & CASH EQUIVALENT AS ON 31.03.2007 (CLOSING BALANCE) 20923505 48392


Membership No. 7592
Mumbai - 400 011
130
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET
(Amount in Rupees)
SCHEDULE - 1
SHARE CAPITAL
AUTHORISED
1100,80,000 Equity Shares of Rs. 10 each 1,100,800,000 1,100,800,000
1,100,800,000 1,100,800,000

1100,01,260 Equity Shares of Rs. 10 each fully paid up 1,100,012,600 1,100,012,600
(Out of above 1100,00,000 Shares are held by -
Ispat Industries Ltd - Holding Company)
1,100,012,600 1,100,012,600
SCHEDULE - 2
FIXED ASSETS
(Amount in Rupees)
GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions / As at Upto For the Upto As at As at
Description 31st March, Adjustments 31st March, 31st March, period 31st March, 31st March, 31st March,
2006 2007 2006 2007 2007 2006
Air Conditioners 51,846 — 51,846 11,693 2,463 14,156 37,690 40,153
Computers 152,500 — 152,500 144,875 — 144,875 7,625 7,625
Telephone 10,800 — 10,800 3,510 513 4,023 6,777 7,290
Total 215,146 — 215,146 160,078 2,976 163,054 52,092 55,068
Previous Year Total 215,146 — 215,146 141,721 18,357 160,078 55,068
(Amount in Rupees)
SCHEDULE - 3
Site Development Expenses on Leased Land 50,317,635 50,268,421
Buildings 193,031,494 45,535,658
Plant & Machinery and Other Assets 51,388,205 56,468,053
Plant & Machinery in Transit - In Bond and in Transit * 2,328,454,810 2,613,674,343
Advance against Capital Goods** 42,330,958 141,660,000
Materials in Stock & with Contractors / Fabricators 7,780,292 9,317,615
(Under reconciliation)
2,673,303,394 2,916,924,090
* Including Exchange fluctuation Rs.62,48,60,134/- net {for the period April’06 to Mar’07 RsNil} .
**Including Exchange fluctuation Rs.1,48,372/-
131
(Amount in Rupees)
SCHEDULE - 4
PRE OPERATIVE EXPENDITURE
(Pending Allocation)
Opening Balance 1,570,510,080 1,528,369,815
(A) Expenditure
Salary, Bonus, etc.(Including Gratuity Rs.40,007/-) 3,267,108 4,895,546
Contribution to PF & Superannuation Fund 290,341 553,961
Staff Welfare Expenses 576,363 695,622
Administrative Expenses
Repairs & Maintenance - others — 6,646
Stores Consumption — 39,920
Insurance 7,630,494 7,129,078
Rent (Net) 125,000 210,884
Rates & Taxes 2,500 252,500
Auditor’s Remuneration:
— Audit Fee 224,480 112,240
— In Other Capacity 224,480 448,960 — 112,240
Bank Commission & Charges 86,261 114,826
Professional Charges 858,516 11,014
Director’s Sitting Fee 20,000 —
Miscellaneous Expenses 2,033,136 1,296,998
Exchange Difference (92,161) (2,188,321)
Fringe Benefit Tax 69,832 168,467
Interest & Financial Charges

Interest to Others 2,672,135 7,413,325
Financial Charges 3,000,000 22,000,000
Depreciation 2,976 18,357
Total (A) 20,991,461 42,731,063
(B) Income from Banks & Others

Interest on Deposit & Others (TDS Rs.1,52,793/-) 681,533 342,554
Liability no longer required written back 55,965,803 248,244
Total (B) 56,647,336 590,798
Total (A-B) (35,655,875) 42,140,265
Grand Total 1,534,854,205 1,570,510,080
132
(Amount in Rupees)
SCHEDULE -5
Balances with Scheduled Banks:
In Current Accounts 293,622 48,392
Fixed Deposit with bank 20,629,883 —
20,923,505 48,392
SCHEDULE - 6
Loans, Advances & Deposits
Advances recoverable in cash or in kind or for value to be 611,733 2,522,704
received or pending adjustments
Other Advances
— Deposits (Including Deposit with Govt /
Semi Govt Authorities Rs. 50,05,000/-) 5,005,000 5,005,000
— Advance Income Tax/Tax Deducted at source 243,987 91,194
— Sales Tax,VAT Recoverable 7,323,448 63,708
— Interest accrued on Fixed Deposit with bank 51,014 —
13,235,182 7,682,606
SCHEDULE - 7
CURRENT LIABILITIES
Project Development Expenses {Net of Material 3,012,707,907 2,825,351,001
given on Loan Rs. 89,99,697/-(previous year Rs.4,771,467/-)}
(Payable to Ispat Industries Ltd - Holding Co.)
Sundry Creditors 137,818,084 578,220,758
3,150,525,991 3,403,571,759
SCHEDULE - 8
PROVISIONS
Gratuity 372,000 396,213
Leave Salary 346,000 127,877
718,000 524,090
133
SCHEDULE – 9
SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS ANNEXED TO AND FORMING PART OF THE
BALANCE SHEET AS AT 31ST MARCH, 2007
A. SIGNIFICANT ACCOUNTING POLICIES
a) ACCOUNTING SYSTEM
The Company follows the concept of accrual system in the preparation of accounts.
b) FIXED ASSETS
All fixed assets are carried at cost.
c) DEPRECIATION
Depreciation on fixed assets has been provided on straight line method at the rates & manner prescribed in Schedule-XIV
to the Companies Act, 1956 (as amended).
d) BORROWING COSTS
Borrowing Costs relating to acquisition/construction of qualifying assets are capitalised until the time all substantial activities
necessary to prepare qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use.
e) CONTINGENT LIABILITIES
Contingent liabilities are not provided for in the accounts and are separately shown in the Notes on Accounts.
f) MISCELLANEOUS EXPENDITURE
Share Issue Expenditure
Share issue expenditure will be amortised after start up of commercial production.
g) Pre-Operative expenses will be capitalised after project completion.
B. NOTES ON ACCOUNTS
1. Contingent liabilities not provided for in respect of:
(i) Estimated amount of contracts to be executed on Capital Account and not provided for Rs.34,44,62,074/- , Advance paid
Rs.4,23,30,958/- .
(ii) Bank Guarantee given to Custom Authority Rs.2,00,00,000/-.
(iii) Custom duty liability for import of power plant under EPCG license Rs. 48,88,64,630/-
2. Gratuity and other post-employment benefit plans:
The Company provides for gratuity expenses on the basis of actuarial valuation. The company does not have any fund for
Gratuity liabilities and the same is accounted for as provision.
The following tables summarise the components of net benefit/ expense recognised in the Pre-operative account and the funded
status and amounts recognised in the balance sheet for the respective plans.
Pre-Operative Account
Net employee benefit expense (recognised in Employee Cost) (Amount in Rupees)
Gratuity Leave
As at 31st March 2007 As at 31st March 2007
Current service cost 48,000 37,000
Interest cost on benefit obligation 34,000 22,000
Net actuarial( gain) / loss recognised in the period (1,87,000) (27,000)
Past service cost — —
Net expense (1,05,000) 32,000
134
(Amount in Rupees)
Balance sheet
Details of Provision for gratuity and leave liability
Gratuity Leave
st st
As at 31 March 2007 As at 31 March 2007
Defined benefit obligation 3,72,000 3,46,000
Plan asset / (liability) (3,72,000) (3,46,000)
Changes in the present value of the defined benefit obligation are as follows:
Gratuity Leave
Opening defined benefit obligation 4,77,000 3,14,000
Interest cost 34,000 22,000
Current service cost 48,000 37,000
Benefits paid NIL NIL
Actuarial (gains) / losses on obligation (1,87,000) (27,000)
Closing defined benefit obligation 3,72,000 3,46,000
The principal assumptions used in determining gratuity and leave liability for the Company’s plans are shown below:
Gratuity Leave
Discount rate 8.10% 8.10%
Increase in Compensation cost 9% 9%
3. M/s. Ispat Industries Limited (Holding Company) (IIL) has incurred a sum of Rs. 301,27,07,907/- as on the Balance Sheet Date,
which was payable to IIL in 13 annual instalments commencing from March,2006. However, IIL has now agreed to recover the
above amount after the repayment of the proposed loan by the Company.
4. Related Party Disclosures.

Name of the related parties:
Persons having a direct or indirect control over the Company : Global Steel Holdings Limited. (Ultimate control)
Holding Company : Ispat Industries Limited
Fellow Subsidiary Company Nippon Ispat Singapore Pte. Ltd
135
(Amount in Rupees)
Transactions with Holding Company.
A) Transactions during the year 2006-07 2005-06
1. Receipt from Holding Company (Net of material given on
loan to Holding Company Rs.42,28,230/-) 18,73,56,906/- 10,77,21,083/-
2. Allotment of Shares to Holding Company — 109,95,12,600/-
B) Balance outstanding at year end
1. Project Promotional Dues Payable (Closing Balance- net of
material given on loan to Holding Company Rs.89,99,697/-) 301,27,07,907/- 282,53,51,001/-
5. The Company has un-hedged foreign currency exposures at the year end as follows:
Foreign Currency Payables Advances Paid Total
EURO NIL 1,37,700 1,37,700
Total Amount in INR NIL 79,12,586 79,12,586
6. No profit and loss account has been prepared as the Power Plant being set up by the company is in implementation stage.
7. Material lying in stock/with Contractors is subject to reconciliation and confirmation.
8. Expenditure in Foreign Currency for Project (On Cash Basis):
2006-07 2005-06
a) Travelling NIL Rs.98,917/-
b) Others Rs.35,990/- Rs.65,626/-
CIF Value of Import :

2006-07 2005-06
Capital Goods NIL NIL
9. Name of the Small Scale Industrial unit to whom amount is due for more than 30 days is Nil.
10. Previous year figures have been regrouped / re-arranged wherever found necessary.


Membership No. 7592
Mumbai - 400 011
136
INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES

ACT, 1956
( Amount in’000)
I Registration Details
Registration No. : 110834
State Code : 11
Balance Sheet date : 31.03.2007
II Capital Raised during the year

Public Issue : Nil
Bonus Issue : Nil
Rights Issue : Nil
Private Placement : Nil
III Position of Mobilisation and deployments of Funds

Total Liabilities : 11,00,013
Total Assets : 11,00,013
Sources of Funds
Paid-up Capital : 11,00,013
Reserves & Surplus : Nil
Secured Loans : Nil
Advance against Equity : Nil
Unsecured Loans : Nil
Application of Funds
Net Fixed Assets : 52
Capital Work in progress (including Pre operative Expenditure) : 42,08,158
Investments : Nil
Net Current Assets : (31,17,085)
Accumulated Losses : Nil
Misc. Expenditure (Share issue Expenditure) : Nil
IV Performance of Company
Income : Nil
Total Expenditure : Nil
Profit/Loss Before Tax : Nil
Profit/Loss After Tax : Nil
Earnings per Share in Rs. : Nil
V Generic names of three Principal Products/Services of the

Company (as per monetary terms) Not Applicable
Mumbai, ANIL SUREKA K K MURARKA

The 31st day of May, 2007 Director Director
137
NOTES
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ATTENDANCE SLIP
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Registered Office: ‘Park Plaza’, 71, Park Street, Kolkata - 700 016.
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PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL
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Joint shareholders may obtain additional Attendance Slip on request at the vanue of the meeting.
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D.P. Id* Master Folio No.

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Client Id*
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NAME AND ADDRESS OF THE SHAREHOLDER:

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✄
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No. of Share(s) held :

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I/We hereby record my/our presence at the TWENTY SECOND ANNUAL GENERAL MEETING of the Company held on Wednesday, the
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25th day of July, 2007 at 10:30 A.M. at Kala Mandir, Main Hall, 48, Shakespeare Sarani, Kolkata-700 017.
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Signature of the shareholder or proxy

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*Applicable for investors holding shares in electronic form.

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✄
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○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
CUT ALONG
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
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PROXY FORM
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Registered Office: ‘Park Plaza’, 71, Park Street, Kolkata - 700 016.
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D.P. Id* Master Folio No.

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Client Id*
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I/We .................................................................................................................................................................................. of
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................................................................................................................ being a member/members of Ispat Industries Limited

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hereby appoint ....................................................................................... of ..............................................................................

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.....................................................................or failing him.............................................................................................

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of ..........................................................................................................................................................................................................
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or failing him ........................................................................ of ...........................................................................................................................

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........................................................................ as my/our proxy to vote for me/us and on my/our behalf at the Twentysecond Annual
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General Meeting to be held on Wednesday, the 25th day of July, 2007 at 10:30 A.M. or at any adjournment thereof.
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Signed this ................................................... day of ...................................................................... 2007. Affix a

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Revenue
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Stamp
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*Applicable for investors holding shares in electronic form.

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Note: The Proxy in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the
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Company not less than 48 hours before the time for holding the aforesaid meeting. The Proxy need not be a member of the Company.
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ISPAT INDUSTRIES LIMITED

PRESIDENT AND COMPANY SECRETARY

AUDITORS BANKERS REGISTRARS & TRANSFER AGENT

By Order of the Board

Financial performance based on given Indicators

Net Foreign Exchange Earnings/Outgo

Foreign Investment and Foreign Collaboration

Steps taken or proposed to be taken for improvement

Expected increase in productivity and profits

DETAILS OF THE DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT IN THE

Name of Director Mr U Mahesh Rao Mr Pramod Mittal Mr V K Mittal

Date of Birth 02.07.1938 08.06.1956 03.08.1957

Date of Appointment 29.09.2001 23.05.1984 31.03.1995

Qualifications B. Com. B.Com., DBM B.Sc., DBM

Expertise in specific Corporate Affairs Strategic planning and Overseeing business

List of other companies Tata Tea Ltd Chairman Chairman

Chairman/Member of the Audit Committee —— Audit Committee

1 Sales / Income from operations 8378.44 5580.02

DIRECTORS’ REPORT (Contd.)

EXPANSION AND NEW PROJECTS

DIRECTORS’ REPORT (Contd.)

DIRECTORS’ REPORT (Contd.)

DIRECTORS’ REPORT (Contd.)

SECRETARIAL COMPLIANCE REPORT

DIRECTORS’ REPORT (Contd.)

ANIL SUREKA V K MITTAL

ANNEXURE TO THE DIRECTORS’ REPORT

ANNEXURE TO THE DIRECTORS’ REPORT (Contd.)

ANNEXURE TO THE DIRECTORS’ REPORT (Contd.)

b. Cold Rolling Mill at Kalmeshwar

II. EXPENDITURE ON QUALITY ASSURANCE & R & D

ANNEXURE TO THE DIRECTORS’ REPORT (Contd.)

For and on Behalf of the Board

MANAGEMENT DISCUSSIONS AND ANALYSIS

Indian Steel Scenario

Global Steel Scenario

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

OPPORTUNITIES AND THREATS

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

Hot Rolled Coil Plant

Blast Furnace Plant

Cold Rolling & Coating Plant

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

MANAGEMENT DISCUSSIONS AND ANALYSIS (Contd.)

CORPORATE GOVERNANCE REPORT

c. Prohibition of Insider Trading

f. Equal employment opportunity

CORPORATE GOVERNANCE REPORT (Contd.)

Name of Director Category No. of Attendance No. of Directorship No. of Membership

CORPORATE GOVERNANCE REPORT (Contd.)

CORPORATE GOVERNANCE REPORT (Contd.)

CORPORATE GOVERNANCE REPORT (Contd.)

6. SHARE TRANSFER AND INVESTORS GRIEVANCE COMMITTEE

CORPORATE GOVERNANCE REPORT (Contd.)

CORPORATE GOVERNANCE REPORT (Contd.)

Name of Director Salary & Perks Commission Total Service Contract

CORPORATE GOVERNANCE REPORT (Contd.)

CORPORATE GOVERNANCE REPORT (Contd.)