Driven by passion, nurtured with Values and guided by the vision of my father, Late Shri OP Jindal, your company has scaled new heights of glory. I take this opportunity to share with you JSW Steel’s remarkable resurgence in 2009-10 and our strategy to consolidate and sustain the growth momentum in the years to come.

Global Economy: Back on rails

Last year, the successful fight against recession provided a great learning experience for economies and companies across the world. This should be a great confidence booster for all of us. The International Monetary Fund (IMF) has revised upwards its forecast for growth in global economy and also put on record the fact that the world economy is recovering better than expected. With a 4.2% growth predicted for the global economy and a 6.3% growth for emerging economies, the future looks promising indeed.

A 500 million euro stabilization fund put together by European policymakers is a positive and timely step. It will help ensure the sovereign debt crisis which engulfed Greece, will not spread to other European nations. We should however closely monitor the challenges of increasing debt in the developed world and inflation in emerging economies.

Indian economy: Off the blocks

India was amongst the first few countries to come out of the global recession. The economic recovery, which began in the second half of the last financial year, should continue through the current year as well. There are a lot of positives going for us. Stable political scenario, pro-active Government, sound banking principles, huge domestic market, lower unemployment figures, flow of fresh investments, all add up to a fundamentally strong economy. We are confident that not only will the Indian economy grow at 8% plus this year but very soon we shall achieve our dream of a double digit growth. These healthy figures and estimates reveal India’s domestic consumption led growth story to be quite intact. Coupled with increasing outlays on infrastructure spending in the coming years it will be a huge positive for all sectors.

Steel: The sheen is back

On the back of a growth in global economy, World Steel Association estimates an improvement of 10.7% in global steel use in 2010, after a demand shrinkage of 6.7% in 2009. Steel use in India is expected to be much higher at about 14%, given that we have been growing at a faster rate, along with China. Clearly there are indications of a robust growth in the steel industry.

JSW Steel: On the path of sustained growth

In the year under review your Company’s crude steel output rose to 5.987 million tonnes, up from 3.72 million tonnes the previous year registering a growth of 61%. This was achieved despite unprecedented heavy rains and floods in October, 2009. Our saleable steel figures too grew by 67%. We concentrated on domestic sales and tapped the rural and semi-urban Indian markets. JSW Shoppe accounted for a healthy 16% of overall domestic sales. The rising popularity of Shoppe highlights the fact that consumers want steel products at their doorstep, in a form and quantity of their choice, just like any other product.

All these efforts led to your company posting an impressive net profit of around Rs. 1597 crores on a consolidated basis showing a growth of 481%.

I am also happy to report on certain key projects which significantly improved your company’s competitive positioning in the marketplace. The first phase of a state-of-the-art hot strip mill, with a capacity of 3.5 million tonnes per annum was commissioned in March this year and has commenced commercial operations. A 30 MW power plant has been commissioned at Tarapur in December, 2009 that has helped in reducing the cost of production and will also enable us to sell our surplus power.

The major project under progress, as you all know, is the expansion of crude steel capacity to 10 million tonnes per annum at Vijayanagar Works. This project is on schedule to achieve completion by March 2011. The new captive power plant of 300 MW is also expected to be commissioned in the current financial year. A whole host of other projects are also under implementation, with the objective of reducing costs in transport and warehousing, and in the manufacturing process itself.

Our efforts have been internationally recognized and today JSW Steel has been ranked second amongst the best operating steel plants in the world by the World Steel Dynamics.

Overseas operations: An air of optimism

Overseas operations during the year have shown an improvement. With an increase in capacity utilization, lower costs and improved market demand our US subsidiary has achieved a positive EBIDTA during Q4, 2009-10. This has happened for the first time since the 2008 global financial crisis.

In Chile we have decided to commence mining and the first consignment is expected to be ready by October, 2010.These are huge positives for us and augurs well for the future.

Raw material security

I am happy to report that your company has taken some major steps towards achieving a much needed backward integration by acquiring coking coal mines in the USA. As per our estimates, these mines have resources aggregating to 123 million tonnes.

In view of the stated objective of achieving 32 million tonnes per annum of steel by 2020, your company continues to look for even more raw material assets both within India and globally. Coal and iron mining leases in various regions within the country are in different stages of regulatory approvals. The mining activities will begin on receipt of these approvals.

Outlook for the future

The past few months has seen a correction in steel prices. We feel that this is mainly on account of de-stocking. This led to a reduction in apparent demand while the real demand for steel is still intact. Hence, far from being unduly worried we actually feel that this would work out well for long term stabilization of prices.

We feel that India should watch out for the rising trend in steel imports at a price that is significantly lower than the realization in their countries which is very disturbing. This, coupled with the exports of iron ore, will put the domestic steel industry at a disadvantage. We shall continue to impress upon the Government to take appropriate steps and implement policies which will arrest this trend.

In India, the government has renewed its thrust on infrastructure and your company is poised to be a key supplier of the building blocks of a new and resurgent India. Your company proposes to spend 75,000 crore rupees for brown-field and Greenfield capacity expansions that will take us to the 32 Million Tonnes per annum capacity by 2020. Our Greenfield projects in the states of West Bengal and Jharkhand are making good progress.

Your company is taking certain strategic steps to infuse further equity to strengthen the financials of the Company in order to kick off the next phase of growth.

CSR & inclusive growth

I have always believed that Corporate Social Responsibility is the soul behind our steel. You will be proud to know that your company is engaged in a number of socially constructive and community building projects. Our CSR projects are carefully chosen and tailor made to the requirements of the communities living in the vicinity of our steel plants. The newly instituted Earth Care Awards jointly with the Times of India is another initiative by your company, to promote environment and cultural consciousness in society.

Acknowledgements

Finally, I’d like to place on record my gratitude to all our shareholders, investors, bankers, financial institutions, lenders, contractors, vendors, suppliers, and above all, our customers who have faith in our products.

I’d also like to thank the Central Government, the State Governments and the Governments of all countries where JSW Steel and its subsidiaries operate.

I’d like to thank each and every member of the board and each and every employee of our organization for their unstinted support, hard work and dedication. You all are responsible for making JSW what it is today.

I’m sure with your continued support and encouragement your company will reach greater heights and play an even greater role in the development of community and country.

With best wishes,

SAJJAN JINDAL