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4 Jindal Steel & Power Limited Business Leadership Sustainable Operations Excellent Governance Robust FinancialsCMD’s PerspectiveAnnual Report 2011-125CMD’sperspectiveNaveen JindalChairman & Managing DirectorDear Shareholders,The global economic upheaval is bound to pave the way forbetter and stronger socio-economic institutions. The emergingeconomies can draw important lessons from the Euro crisis.The most important lesson would be that no economic bloc cangrow sustainably without the foundation of a strong institutionalframework and legislations, which bind the countries togetheras one unified whole. The process of drafting and implementingreforms becomes cumbersome in the absence of a generalconsensus, as in the case of Europe. Economic growth in the USis also not encouraging, but unlike Europe it has no problemsof integration among states. Eurozone today reflects severalwarring factions, vying for attention. As a result, USA’s returnto economic stability and sustainable growth is expected to bemuch faster than that of Europe.India’s economic growth still does not reflect the participationof its 1.2 billion people. The need of the hour is to lay moreemphasis on reforms “to revive the animal spirit in thecountry’s economy” as the Prime Minister has rightly pointedout. The infrastructure sector needs additional support fromall quarters to accelerate growth and uplift millions of peoplefrom poverty and ignorance and provide them with betterhousing, education, livelihood and healthcare. Encouragingly,the 12th Five-Year Plan (2012-2017) has envisaged aninvestment of over ` 50 lac crore in the infrastructure sector,half of which will come from the private sector.Steel plays an important role in infrastructure creationand its consumption is a reliable index to measure economicdevelopment and social well being. India is the fifth largestglobal steel producer and is well positioned to become thesecond largest producer in the near future. The steel industryin India holds considerable optimism, despite the globaleconomic slowdown. This optimism has an important basis.The industry does not rely heavily on exports to thedeveloped world. India’s enormous domestic market cansupport its growth. The domestic steel consumption in theinfrastructure and consumer durables sector is likely to seean upward trend. JSPL is committed to play an active role inIndia’s steel industry.Notwithstanding challenges, we performed commendably in2011-12. Our total income grew 39% from ` 13,194 crore in2010-11 to ` 18,351 crore in 2011-12, thanks to enhancedscale, increased demand and escalating realisations. Ouroperational profit increased 8% from ` 6,398 crore in2010-11 to ` 6,935 crore in 2011-12. Our net profit increased5% from ` 3,804 crore in 2010-11 to ` 4,002 crore in 2011-12and cash profit surged 9% from ` 5,115 crore in 2010-11 to` 5,575 crore in 2011-12.We are consistently growing our steel making capacity toachieve the target of 18 MTPA steel capacity by the year 2020.Therefore, our steel production capacity is being enhancedby setting up steel plants in Angul (Odisha) and Patratu(Jharkhand). We have also increased our current steelmakingcapacity at Raigarh (Chhattisgarh) and are in the process totake it to 10 MTPA. Our Shadeed Iron & Steel Co. LLC, Oman,is operating a 1.5 MTPA hot briquetted iron plant at Sohar inOman and we plan to set up a 2 MTPA steelmaking facility.We have signed an MoU with the Government of Odisha toset up a downstream Industrial Park for the developmentand industrialisation of Angul in Odisha; leveraging our largesteel and power manufacturing capacity along with the CoalGasification plant and 80,000 barrel per day CTL project. Thispark will provide a unique opportunity to the entrepreneursof Odisha to set up industrial units at a faster rate. Moreover,there will be a focus on select target recovery based industriesand other medium and small-scale downstream units, whichwould both add value and increase industrial activity. With aninvestment commitment of ` 500 crore, the park will createdirect and indirect employment for over 32,000 people.Total investment by prospective entrepreneurs in the park isexpected to be over ` 5,000 crore. This park is expected tobecome operational by the end of 2014.It has always been our endeavour to inculcate the bestpractices from across the globe. We signed an MoU with theAustralian mining major, Rio Tinto to jointly work towards globalcommercialisation of the Hismelt (high-intensity smelting)technology to be used in a fully integrated steel making facility.We will be introducing the Hismelt technology for the first timein the world other than a pilot plant commissioned in Australia.We are looking for acquisition opportunities of iron ore and coalmines in Australia and Africa to secure raw material sources.Our performance in 2011-12 is once again due to the effortsof our exceptional team of talented and highly motivatedprofessionals. We also think that it takes a value-driven cultureto bring out the potential of our people. Our people are takingresponsibility for their actions; making decisions in the bestinterests of the Company; and executing with focus, excellenceand integrity.JSPL’s business priorities have never overshadowed itscommunity efforts. In fact, we have always looked upon ourbusiness as an enabling force for social advancement. JSPL’sCSR programmes focus on education, health and family welfare,agriculture, animal husbandry, water resource management,infrastructure development, on-farm and off-farm livelihoodenhancement, capacity building and women empowerment.Moreover, we are uplifting underprivileged communities andsupporting locals to develop professional skills and earn abetter livelihood. The O.P. Jindal Community College marksthe fulfilment of Shri O.P. Jindal’s vision to educate and traina skilled workforce, who can deliver products and services ofglobal standards.OUR PERFORMANCE IN 2011-12 ISONCE AGAIN DUE TO THE EFFORTSOF OUR EXCEPTIONAL TEAM OFTALENTED AND HIGHLY MOTIVATEDTEAM. WE ALSO THINK THAT IT TAKES AVALUE-DRIVEN CULTURE TO BRING OUTTHE POTENTIAL OF OUR PEOPLE.At JSPL, all business decisions are guided by sensitivitytowards the environment and an emphasis on social welfare,with the participation of employees, contractors, customers,communities and all other stakeholders. We are enhancingour focus more on the use of green technologies to reduce ourcarbon footprint and optimise the use of natural resources.I thank our Board of Directors, employees, business associates,shareholders and the wider community of stakeholders formaking JSPL’s value leadership an inspiration for the world.Naveen JindalChairman & Managing Director