INTRODUCTION:

Corporate social responsibility (CSR) is about how businesses align their values and

behaviour with the expectations and needs of stakeholders - not just customers and

investors, but also employees, suppliers, communities, regulators, special interest groups

and society as a whole. CSR describes a company's commitment to be accountable to its

stakeholders.

CSR demands that businesses manage the economic, social and environmental impacts of

their operations to maximise the benefits and minimise the downsides.

Different organisations have framed different definitions - although there is considerable

common ground between them. My own definition is that CSR is about how companies

manage the business processes to produce an overall positive impact on society.

Take the following illustration:

Companies need to answer to two aspects of their operations. 1. The quality of their

management - both in terms of people and processes (the inner circle). 2. The nature of,

and quantity of their impact on society in the various areas.

Outside stakeholders are taking an increasing interest in the activity of the company. Most

look to the outer circle - what the company has actually done, good or bad, in terms of its

products and services, in terms of its impact on the environment and on local communities,

or in how it treats and develops its workforce. Out of the various stakeholders, it is financial

analysts who are predominantly focused - as well as past financial performance - on quality

of management as an indicator of likely future performance

DEFINATION OF CSR:

The World Business Council for Sustainable Development in its publication "Making Good

Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate

Social Responsibility is the continuing commitment by business to behave ethically and

contribute to economic development while improving the quality of life of the workforce

and their families as well as of the local community and society at large”

the CSR definition used by Business for Social Responsibility is:"Operating a business in a

manner that meets or exceeds the ethical, legal, commercial and public expectations that

society has of business.

On the other hand, the European Commission hedges its bets with two definitions wrapped

into one: "A concept whereby companies decide voluntarily to contribute to a better society

and a cleaner environment. A concept whereby companies integrate social and

environmental concerns in their business operations and in their interaction with their

stakeholders on a voluntary basis".

When you review each of these, they broadly agree that the definition now focuses on the

impact of how you manage your core business. Some go further than others in prescribing

how far companies go beyond managing their own impact into the terrain of acting

specifically outside of that focus to make a contribution to the achievement of broader

societal goals.

ARGUMENTS FOR AND AGAINST

CORPORATE SOCIAL RESPONSIBILITY

The major arguments for and against corporate social responsibility are shown in Exhibit 1.

The "economic" argument against CSR is perhaps most closely associated with the American

economist Milton Friedman, who has argued that the primary responsibility of business is to

make a profit for its owners, albeit while complying with the law. According to this view, the

self-interested actions of millions of participants in free markets will, from a utilitarian

perspective, lead to positive outcomes for society. If the operation of the free market

cannot solve a social problem, it becomes the responsibility of government, not business, to

address the issue.

Arguments For and Against CSR

FOR AGAINST

The rise of the modern corporation created and

continues to create many social problems.

Therefore, the corporate world should assume

responsibility for addressing these problems.

Taking on social and moral issues is not

economically feasible. Corporations

should focus on earning a profit for their

shareholders and leave social issues to

others.

In the long run, it is in corporations' best interest

to assume social responsibilities. It will increase

the chances that they will have a future and

reduce the chances of increased governmental

regulation.

Assuming social responsibilities places

those corporations doing so at a

competitive disadvantage relative to those

who do not.

Large corporations have huge reserves of human

and financial capital. They should devote at least

some of their resources to addressing social

issues.

Those who are most capable should

address social issues. Those in the

corporate world are not equipped to deal

with social problems.

The "competitive" argument recognizes the fact that addressing social issues comes at a

cost to business. To the extent that businesses internalize the costs of socially responsible

actions, they hurt their competitive position relative to other businesses. This argument is

particularly relevant in a globally competitive environment if businesses in one country

expend assets to address social issues, but those in another country do not. According to

Carroll and Buchholtz, since CSR is increasingly becoming a global concern, the differences in

societal expectations around the world can be expected to lessen in the coming years.

Finally, some argue that those in business are ill-equipped to address social problems. This

"capability" argument suggests that business executives and managers are typically well

trained in the ways of finance, marketing, and operations management, but not well versed

in dealing with complex societal problems. Thus, they do not have the knowledge or skills

needed to deal with social issues. This view suggests that corporate involvement in social

issues may actually make the situation worse. Part of the capability argument also suggests

that corporations can best serve societal interests by sticking to what they do best, which is

providing quality goods and services and selling them at an affordable price to people who

desire them.

There are several arguments in favour of corporate social responsibility. One view, held by

critics of the corporate world, is that since large corporations create many social problems,

they should attempt to address and solve them. Those holding this view criticize the

production, marketing, accounting, and environmental practices of corporations. They

suggest that corporations can do a better job of producing quality, safe products, and in

conducting their operations in an open and honest manner.

A very different argument in favor of corporate social responsibility is the "self-interest"

argument. This is a long-term perspective that suggests corporations should conduct

themselves in such a way in the present as to assure themselves of a favorable operating

environment in the future. This view holds that companies must look beyond the short-

term, bottom-line perspective and realize that investments in society today will reap them

benefits in the future. Furthermore, it may be in the corporate world's best interests to

engage in socially responsive activities because, by doing so, the corporate world may

forestall governmental intervention in the form of new legislation and regulation, according

to Carroll and Buchholtz.

Finally, some suggest that businesses should assume social responsibilities because they are

among the few private entities that have the resources to do so. The corporate world has

some of the brightest minds in the world, and it possesses tremendous financial resources.

(Wal-Mart, for example, has annual revenues that exceed the annual GNP of some

countries.) Thus, businesses should utilize some of their human and financial capital in order

to "make the world a better place."

PYRAMID OF CORPORATE SOCIAL RESPONSIBILITIES

For CSR to be accepted by a conscientious business person, it should be framed in such a way that

the entire range of business responsibilities are embraced. It is suggested here that four kinds of

social responsibilities constitute total CSR: economic, legal, ethical. and philanthropic. Furthermore.

these four categories or components of CSR might be depicted as a pyramid. To be sure. all of these

kinds of responsibilities have always existed to some extent. but it has only been in recent years that

ethical and philanthropic functions have taken a significant place. Each of these four categories

deserves closer consideration.

CARROLL PYRAMID

Economic Responsibilities

Historically. business organizations were created as economic entities designed to provide

goods and services to societal members. The profit motive was established as

the primary incentive for entrepreneurship. Before it was anything else, business

organization was the basic economic unit in our society. As such, its principal role wasto

produce goods and services that consumers needed and wanted and to make an acceptable

profit in the process. At some point the idea of the profit motive got

transformed into a notion of maximum profits, and this has been an enduring value ever

since. All other business responsibilities are predicated upon the economic

responsibility of the firm, because without it the others become moot considerations.

summarizes some important statements characterizing economic responsibilities. Legal

responsibilities are also depicted in and we will consider

them next.

Legal Responsibilities

Society has not only sanctioned business to operate according to the profit motive; at the

same time business is expected to comply with the laws and regulations promulgated by

federal, state, and local governments as the ground rules under which

business must operate. As a partial fulfillment of the "social contract" between business and

society firms are expected to pursue their economic missions within the frame workof the

law. Legal responsibilities reflect a view of "codified ethics" in the sense that they

embody basic notions of fair operations as established by our lawmakers. They are depicted

as the next layer on the pyramid to portray their historical development, but

they are appropriately seen as coexisting with economic responsibilities as fundamental

precepts of the free enterprise system.

Ethical Responsibilities

Although economic and legal responsibilities embody ethical norms about fairness and

justice, ethical responsibilities embrace those activities and practices that are expected or

prohibited by societal members even though they are not codified into law. Ethical

responsibilities embody those standards, norms, or expectations that reflect a concern for

what consumers, employees, shareholders, and the community regard as fair, just ,or in

keeping with the respect or protection of stakeholders' moral rights. In one sense, changing

erl1ics or values pre- cede the establishment of law because

they become the driving force behind the very creation of laws or regulations. For example,

the environmental, civil rights, and consumer movements reflected basic

alterations in societal values and thus may be seen as ethical bellwethers foreshadowing

and resulting in the later legislation. In another sense, ethical

responsibilities may be seen as embracing newly emerging values and norms society expects

business to meet, even though such values and norms may reflect a higher standard of

performance than that currently required by law. Ethical responsibilities in

this sense are often ill-defined or continually under public debate as to their legitimacy,and

thus are frequently difficult for business to deal with. Superimposed on these ethical

expectations emanating from societal groups are the implied levels of ethical performance

suggested by a consideration of the great ethical principles of moral philosophy. This would

include such principles as justice, rights, and utilitarianism.The business ethics movement of

the past decade has firmly established an ethical responsibility as a legitimate CSR

component. Though it is depicted as the next layer ofthe CSR pyramid, it must be constantly

recognized that it is in dynamic interplay with the legal responsibility category. That is, it is

constantly pushing the legal responsibility category to broaden or expand while at the same

time placing ever higher expectations on businesspersons to operate at levels above that

required by law.

Philanthropic Responsibilities

Philanthropy encompasses those corporate actions that are in response to

society’sexpectation that businesses be good corporate citizens. This includes actively

engagingIn acts or programs to promote human welfare or goodwill. Examples of

philanthropy

include business contributions to financial resources or executive time, such ascontributions

to the arts, education, or the community. A loaned-executive program thatprovides

leadership for a community’s United Way campaign is one illustration ofphilanthropy.The

distinguishing feature between philanthropy and ethical responsibilities is that theformer

are not expected in an ethical or moral sense. Communities desire firms to

contribute their money, facilities, and employee time to humanitarian programs orpurposes,

but they do not regard the firms as unethical if they do not provide the desired

level. Therefore, philanthropy is more discretionary or voluntary on the part ofbusinesses

even though there is always the societal expectation that businesses

provide it. One notable reason for making the distinction between philanthropic and ethical

responsibilities is that some firms feel they are being socially responsible if they are

justgood citizens in the community. This distinction brings home the vital point that CSR

includes philanthropic contributions but is not limited to them. In fact, it would be argued

here that philanthropy is highly desired and prized but actually less important than the

other three categories of social responsibility, In a sense, philanthropy is icing on the cake—

or on the pyramid, using our metaphor.

CSR IN INDIA ( INITIAL STEPS)

Evolved through the concept of ‘giving’ – an integral part of

Indian culture

1. Philanthropy

2. Religious donations

Modern connotation

Gandhian concept of Trusteeship

Bombay Plan (1944-45) – First initiative by leading business

houses (Tata, Bajaj, Birla group through FICCI)

Individual initiatives by individual corporate

CSR IN INDIA – FOCUS AREAS

Traditional

1. Education

2. Health

Contemporary

Capacity Building – skill development, training

Sustainable Development – environmental protection

Community Development – education, health, poverty alleviation

Social Challenges – women's’ empowerment, girl child.

CSR IN JSW:

CSR activities in JSW group are carried out by a special purpose vehicle called

"JSW Foundation" . An independent Trust, named JSW Foundation, administers the social

development initiatives of the JSW group. Mrs Sangita Jindal chairs the Foundation. Every

year, the Foundation in consultation with plant managements and CSR teams at the plants,

finalises a set of activities that get built into the business plan. The Foundation lays

emphasis on maintaining a continuum of social development thinking into the conduct of

these activities. We are assessing a transition towards a dedicated corpus for activities of

our Foundation.

CSR VISION OF JSW:

“ Empowered Communities with Sustainable Livelihoods.”

CSR MISSION OF JSW :

To contribute towards the social & economic development of communities that we operate

in, especially women and children.

1. To ensure that we care for environment by minimizing pollution by using

environment friendly technologies by planting trees to make earth greener.

2. To nourish the soul of nation by encouraging art & cultural activities.

3. To internalize values by practicing ethical behavior in all business operations

interactions.

CSR POLICY OF JSW:

JSW cherishes people and believes in inclusive growth to facilitate creation of a value based

and empowered society through continuous and purposeful engagement of all partners in

the development process.

JSW would strive to achieve sustainable development in all spheres of life including

education, health and livelihood, promotion of arts and culture, environment protection,

and sports.

CSR INITIATIVES:

The JSW group fulfils its social development responsibility through activities that are

undertaken through four public charitable trusts, viz. Jindal South West Foundation, Hampi

Foundation, a Heal Foundation and Friends of the Sir J J School of Arts Trust. These Trusts

annually consult with the Management and other company's personnel to identify the list of

activities that are subsequently incorporated into the JSW Group's business plans.

The corporate social initiatives undertaken are in the areas of community development,

environment, sports and arts and culture. The CSR initiatives of the group are led by Mrs.

Sangita Jindal. In 2007-2008, the Mumbai Corporate office was strengthened with the

appointment of full time staff. An advisory board has also been created to suggest

programmes and strategies to mainstream for JSW CSR initiatives. Management has

approved an allocation of 1.5% of profit after tax for CSR operational expenses for 2008-

2009.

The sectors of work have been classified into:

1. Education

2. Health

3. Environment

4. Livelihood

5. Sports

6. Arts, Culture & Heritage

EDUCATION:

The Foundation's endevour is to sensitize the need for education among regular and

contract employees' children by establishing schools at the Company's vicinity. At the same

time ensuring that we create an exciting and attractive learning process for the children in

the surrounding village schools.

The Foundation also takes care to build and infuse confidence among school dropouts

encouraging them to join back. The Foundation also plays a pivotal ‘parental role' through

individual monitoring the first generation learners. Besides exploring and nurturing local

rural talents, it regularly demonstrates innovative teaching methods at neighbouring

government-run schools with an aim to improve learning standards.

HEALTH:

The Foundation provides door-to-door medical care by conducting regular general health

check-ups. It also conducts specialized healthcare for the elderly by conducting cataract

screening and performing free surgeries. This apart, it holds routine STI/RTI check-up camps

to identify potential HIV cases to prevent the spread of HIV/AIDS cases at the same time

enhancing rural awareness of the dreaded scourge. Jindal Sanjeevani Hospital (JSH), a non

profit entity is committed to providing excellent and equitable health care to each and every

patient. JSH is a joint effort of JSW Steel Ltd and Jindal Education & Medical trust. Right from

its inception in 2003, JSH has been rendering yeoman’s service to JSW Employees, Associate

Employees and people from the neighbouring areas. The 75 bed hospital is now spread over

27000/- sq ft.

The JSH boasts of state of the art medical facilities.

They are casualty and emergency wards manned

round the clock, Four Operation theatres, ICU &

burns critical care unit, computerized diagnostic,

pathology

laboratory and

radiology department. Services include computerized

ECG, TMT, colour Doppler, physiotherapy, PFT,

audiometry, computerized ophthalmology, well

equipped dental department, C-ARM equipment for

major implant surgery etc.

Facilities like a labour room, blood bank are also present. The hospital has around 20

medical staff and 40 Nursing and 20 Para- Medical/ Technicians apart from administration

staff and associate employees. JSH has a tie-up with Apollo Hospital, Hyderabad for super

specialty surgeries and also has a telemedicine facility

with the hospital.

MID-DAY MEAL PROJECT

Malnourishment is a major concern for the JSW

Foundation. It has associated with the Akshaya Patra

Foundation ISKCON and FORD Relief Foundation in

providing nutritious mid-day meal for school in select areas of Karnataka and Maharashtra.

In Karnataka 5 acres of land has been allocated to the foundation to set up their kitchen.

This proposes to reach out to over a lakh student. Mrs Sangita Jindal was recently invited on

the Advisory Board of the Akshaya Patra Foundation.

Awareness on HIV-AIDS

The Foundation is involved in generating awareness

on HIV-AIDS through collaboration with known

groups/organizations and is committed in spreading

the message around the group employees, families,

truckers and casual laborers / villagers and give a

variety of interactive media tools such as lectures, street plays, films and creative CDs.

Condom vending machines have been installed at Vijayanagar.

Mobile health units

This facility serves the local population in Barmer (Rajasthan), Mednipur (West Bengal),

Ratnagiri (Maharashtra) and Vizag (Andra Pradesh) by organising medical checkup.

ENVIROMENT:

To create an environmental friendly environ, the Foundation builds model villages by

developing rural infrastructure complete with roads and drainage system. To improve living

standards, it creates sanitary facilities for providing effective disposal of solid waste. The

Foundation also sensitizes rural eco-friendliness through enhanced tree planting.

The Foundation builds libraries and has also build an art centre for accelerating rural socio-

cultural development. To create garbage-free villages, the Foundation sets up garbage

management units using proper garbage handling mechanism. It takes utmost care to create

rural awareness on the importance of hygiene and the crucial role people can play to make

that a reality. To minimize waste produced the Foundation has introduced scientific

recycling and reusing technologies.

LIVELIHOOD:

To create livelihoods for rural women by providing revolving fund, skill training and other

linkage services to empower rural women to reduce gender-based discrimination.

SPORTS:

To encourage rural sports the JSW Foundation has formed the Jindal Squash Academy,

Jindal Badminton Academy, Jindal Swimming Academy and Jindal table Tennis Academy.

These academies provide necessary trainings and students have attained national-level

success in many events.

ART,CULTURE& HERITAGE:

To encourage rural sports the JSW Foundation has formed the Jindal Squash Academy,

Jindal Badminton Academy, Jindal Swimming Academy and Jindal table Tennis Academy.

These academies provide necessary trainings and students have attained national-level

success in many events.

RURAL BPO INITIATIVE:

Infrastructure for Rural BPO (Business Process Outsourcing ) in Collaboration with Lason Inc

USA.

Creating Opportunities for Employment to Rural Unemployed Youth in Neighboring Villages

Launched on 15 th August 2005 by Shri MP Prakash,Dy. CM

Present manpower working in BPO

Live Production - 156

On Training - 60

Around 600 to be trained in the coming months

Average Earning per candidate per month Rs. 3500with a potential to go up to Rs. 7000/-

MODERN SCIENTIFIC FARMING:

• As 70% of our population is dependent on agriculture there is an urgent need to improve

the standard of living in rural areas by introducing scientific farming technology.

•MoU with NaanDan Agro-Pro pvt. Ltd Israel for scientific farming

• Pilot project in 100 acres - 200 acres

• Better product yield and world class quality of Vegetables, Fruits &Flowers

• Better marketing network for farmers including export

NURSERY:

SPRINKLING METHOD:

DONATION TO AKSHAYA PATRA:

5 acres of land

Creating Kitchen facility - Rs. 5 Cr

Dis Rs. 2.5 Cr towards construction of Kitchen

Rs. 1 Cr every year for feeding 10,000

children

tribution vehicle cost - Rs. 2 Cr

Seeking employee contribution in terms of adopting the no.of children Approaching mines

and near by industries IT benefit available Managed by Akshaya Patra Trust under ISKCON

Group Presently catering to 12000 children in Bellary district

WHAT IS CORPORATE GOVERNANCE:

Corporate governance is a broad term that has to do with the manner in which the rights

and responsibilities are shared among owners, managers and shareholders of a given

company. In essence, the exact structure of the corporate governance will determine what

rights, responsibilities, and privileges are extended to each of the corporate participants,

and to what degree each participant may enjoy those rights. Generally, the foundation for

any system of corporate governance will be determined by several factors, all of which help

to form the final form of governing the company.

CORPORATE GOVERNANCE OF JSW:

REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2008-09

(Pursuant to Clause 49 of the Listing Agreements entered into with the Stock Exchanges)

1. COMPANY'S PHILOSOPHY:

Corporate Governance at JSW Steel Limited has been a continuous journey and the business

goals of the Company are aimed at the overall well being and welfare of all the constituents

of the system. The Company has laid a strong foundation for making Corporate Governance

a way of life by constituting a Board with balanced mix of experts of eminence and integrity,

forming a core group of top level executives, inducting competent professionals across the

organization and putting in place best systems, process and technology. The Company

combines leading edge technology and innovation with superior application and customer

service skills.

At the heart of Company's corporate governance policy is the ideology of transparency and

openness in the effective working of the management and Board. It is believed that the

imperative for good corporate governance lies not merely in drafting a code of corporate

governance but in practising it.

Your Company confirms the compliance of Corporate Governance as contained in Clause 49

of the Listing Agreement, the details of which are given below:

2. BOARD OF DIRECTORS:

2.1 Composition, Meetings and attendance record of each Director:

As on 31.03.2009, the Board of Directors comprises of 15 Directors, of which 11 are non-

executive. The Chairperson is non-executive and a Promoter of the Company. The number

of Independent Directors is 8 which is more than the stipulated one half of the total number

of Directors. Except Mrs. Savitri Devi Jindal & Mr. Sajjan Jindal, no other Directors are

related to each other.

None of the Directors on the Board is a Member on more than 10 committees and Chairman

of more than 5 committees (as specified in clause 49) across all the Companies in which

he/she is a Director. The necessary disclosures regarding Committee positions have been

made by the Directors

2.2 Board Meetings, Board Committee Meetings and Procedures:

A. Decision making process

The Board of Directors oversee the overall functioning of the Company. The Board provides

and evaluates the strategic direction of the Company, management policies and their

effectiveness and ensures that the long-term interests of the stake holders are being served.

The Vice Chairman & Managing Director is assisted by the Executive Directors/Senior

Managerial Personnel in overseeing the functional matters of the Company.

The Board has constituted ten Standing Committees, namely Audit Committee, Project

Review Committee, Shareholders/Investors Grievance Committee, Remuneration

Committee, Finance Committee, Nomination Committee, Risk Management Committee,

Share Allotment Committee, Share/Debenture Transfer Committee & JSWSL Code of

Conduct Implementation Committee. The Board constitutes additional functional

committees, from time to time, depending on the business needs.

B. Scheduling and selection of Agenda Items for Board meetings

(i) Minimum four Board Meetings are held every year. Dates for the Board Meetings in the

ensuing quarter are decided well in advance and communicated to the Directors. The

Agenda along with the explanatory notes are sent in advance to the Directors. Additional

meetings of the Board are held when deemed necessary to address the specific needs of the

Company. In case of business exigencies or urgency of matters, resolutions are passed by

circulation.

(ii) The meetings are usually held at the Company's Registered Office at Jindal Mansion, 5A,

Dr. G. Deshmukh Marg, Mumbai - 400 026.

(iii) All divisions/departments of the Company are advised to schedule their work plans well

in advance, particularly with regard to matters requiring discussion/ approval/ decision at

the Board/Committee meetings. All such matters are communicated to the Company

Secretary in advance so that the same could be included in the Agenda for the

Board/Committee Meetings.

(iv) The Board is given presentations covering Global Outlook/Economy, Company's

Financials, Sales, Production, Business Strategy, Subsidiary performance and the Risk

Management practices before taking on record the quarterly/half yearly/annual financial

results of the Company.

C. Distribution of Board Agenda Material

Agenda and Notes on Agenda are circulated to the Directors, in advance, in the defined

Agenda format. All material information is incorporated in the Agenda papers for facilitating

meaningful and focused discussions at the meeting. Where it is not practicable to attach any

document to the Agenda, the same is tabled before the meeting with specific reference to

this effect in the Agenda. In special and exceptional circumstances, additional or

supplementary item(s) on the Agenda are considered.

D. Recording Minutes of proceedings at Board and Committee meetings

The Company Secretary records the minutes of the Proceedings of each Board and

Committee meeting. Draft minutes are circulated to all the members of the

Board/Committee for their comments. The final minutes are entered in the Minutes Book

within 30 days from conclusion of the meeting and are signed by the Chairman of the

meeting/Chairman of the next meeting.

E. Post Meeting Follow-up Mechanism

The Company has an effective post meeting follow up, review and reporting process

mechanism for the decisions taken by the Board/ Committees. Action Taken Report on

decisions of the previous meeting(s) is placed at the immediately succeeding meeting of the

Board/Committee for noting by the Board/Committee members.

F. Compliance

While preparing the Agenda, Notes on Agenda, Minutes etc. of the meeting (s), adequate

care is taken to ensure adherence to all applicable laws and regulations including the

Companies Act, 1956 read with the Rules made there under.

2.3 Meetings of Independent Directors:

The Independent Directors of the Company meet at such intervals as they deem appropriate

without the presence of Executive Directors or management personnel. These meetings are

conducted in an informal and flexible manner to enable the Independent Directors to

discuss matters pertaining to the affairs of the Company and put forth their views to the

Vice Chairman and Managing Director.

2.4 Strategy Meet:

A strategy meet of the Board of Directors is held once in every financial year to formulate,

evaluate & approve the business strategy of the Company. The Functional Heads give a brief

presentation to the Board covering their respective areas of responsibility. The meeting

focuses on strategic goals, financial management policies, management assurances &

control aspects and the growth plan of the Company.

3. AUDIT COMMITTEE:

The Audit Committee comprises of 5 Non-Executive Directors, of which, all are Independent

Directors. Mr. Uday M. Chitale is the Chairman of the Audit Committee. The Members

possess adequate knowledge of Accounts, Audit, Finance, etc.

The Broad terms and reference of Audit Committee are to review the financial statements

before submission to Board, to review reports of the Management Auditors and Internal

Audit department and to review the weaknesses in internal controls reported by Internal

and Statutory Auditors and to review the remuneration of Chief Internal Auditor. In

addition, the powers and role of the Audit Committee are as laid down under Clause 49 II C

and D of the Listing Agreement and Section 292A of the Companies Act, 1956.

Four meetings of the Committee were held during the financial year 2008-09, on

03.05.2008, 30.07.2008, 23.10.2008 and 27.01.2009. The necessary quorum was present at

the meetings.

Audit Committee meetings are also attended by the Jt. Managing Director & CEO, Director

(Finance), Director (Commercial), Operational Heads of each Location, Vice President

(Internal Audit), General Manager (Risk Management), the Company Secretary and the

representative of the Statutory and Management Auditors. The Company Secretary is the

Secretary of the Audit Committee.

The Chairman of the Audit Committee was present at the last Annual General Meeting.

4. REMUNERATION COMMITTEE:

The Remuneration Committee, which is a non-mandatory requirement of Clause 49, was

constituted on 23.03.2002.

The terms of reference of the committee are as follows:

i. To determine on behalf of the Board and on behalf of the Shareholders, the Company's

policy on specific remuneration packages for Executive Directors including pension rights

and any compensation payment.

ii. To approve the payment of remuneration to Managerial Personnel as per the Policy laid

down by the Committee.

No meeting of the Remuneration Committee was held during the financial year 2008-09.

The Chairman of the Remuneration Committee is Dr. S. K. Gupta. The Company has

complied with the non-mandatory requirement of Clause 49 regarding the Remuneration

Committee.

4.1 Remuneration Policy and Details of Remuneration paid to Directors:

The Remuneration Committee recommends the remuneration package for the Executive

Directors of the Board. In framing the remuneration policy, the Committee takes into

consideration the remuneration practices of Companies of similar size and stature and the

Industry Standards. The Directors' compensation is based on the appraisal system wherein

their individual goals are linked to the organisational goals. Executive Directors (ED) are paid

compensation as per the agreements entered into between them and the Company, subject

to the approval of the Board and of the Company in General Meeting and such other

approvals, as may be necessary.

The present remuneration structure of ED comprises of salary, perquisites, allowances,

performance linked incentive and contributions to PF and Gratuity.

The Non-Executive Directors, except for Mr. Biswadip Gupta and Mr. Nagesh Pinge, are paid

remuneration by way of Commission and Sitting fees. The Commission payable to the Non-

Executive Directors is based on the number of meetings of the Board/ Committee attended

by them and their contribution to the Company during the year. The Company pays sitting

fees at the rate of Rs.20,000/- for each meeting of the Board and sub-committees attended

by them.

Shareholding of the Non-Executive Directors in the Company as on 31.03.2009:

None of the Non-Executive Directors other than those named below hold any shares in the

Company.

5. SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE:

The Shareholders /Investors Grievance Committee comprises of 4 Non-Executive Directors

of which all are Independent Directors.

Dr. S. K. Gupta is the Chairman of the Committee.

The terms of reference of the 'said committee' are as follows:

a) Review the reports submitted by the Registrars and Share Transfer Agents of the

Company at half yearly intervals.

b) Periodically interact with the Registrars and Share Transfer Agents to ascertain and look

into the quality of the Company's Shareholders/ Investors grievance redressal system and to

review the report on the functioning of the said Investor grievances redressal system.

c) Follow-up on the implementation of suggestions for improvement.

d) Periodically report to the Board about serious concerns if any.

No. of Shareholders' Complaints received during the year ended 31.03.09 : 2701

Number not solved to the satisfaction of Shareholders : Nil

No. of pending Complaints as on 31.03.2009 : Nil

No. of pending Share Transfers as on 31.03.2009 : 46*

* There were no share transfers pending for registration for more than 15 days as on the

said date.

6. GENERAL BODY MEETINGS:

Special Resolutions passed through Postal Ballot:

Consent of the shareholders was sought through Postal Ballot for the following:

1. Alteration of Clause III C (Other Objects Clause) of the Memorandum of Association of the

Company by incorporating a new sub-clause 100.

2. Commencement of business specified in sub-clause 100 of Clause III C of the

Memorandum of Association of the Company as altered.

The resolutions were sent to the shareholders for their approval through postal ballot which

was returnable by 27.06.2008. The results were declared and approved at the meeting on

01.07.2008 at the Registered Office of the Company at Jindal Mansion, 5A, Dr. G. Deshmukh

Marg, Mumbai - 400 026.

Mr. Prem Rajani of Rajani Associates, Advocates & Solicitors, Mumbai, was appointed as

Scrutiniser to receive and scrutinise the completed postal ballot papers received from the

Members and for conducting the Postal Ballot process in a fair and transparent manner.

At present, the Company does not have any proposal for Postal Ballot this year.

7. DISCLOSURES:

i. There were no materially significant related party transactions i.e. transactions of the

Company of material nature with its Promoters, Directors or the Management, their

relatives or Subsidiaries etc. which could conflict with the interests of the Company.

ii. No penalties or strictures have been imposed on the Company by the Stock Exchanges or

SEBI or any Statutory Authority on any matter related to capital markets during the last

three years.

iii. The Company has laid down procedures to inform Board members about the risk

assessment and minimisation procedures, which are periodically reviewed.

8. WHISTLE BLOWER POLICY:

The Whistle Blower Policy (WBP) adopted by the Company in line with Clause 7 of Annexure

1D to Clause 49 of the Listing Agreement, which is a non mandatory requirement,

encourages all employees, officers and directors to report any suspected violations promptly

and intends to investigate any good faith reports of violations. The Whistle Blower Policy

specifies the procedure and reporting authority for reporting unethical behaviour, actual or

suspected fraud or violation of the Code or any other unethical or improper activity

including misuse or improper use of accounting policies and procedures resulting in

misrepresentation of accounts and financial statements.

WBP also provides safeguards against victimisation or unfair treatment of the employees

who avail of the mechanism and no personnel has been denied access to the Audit

Committee.

Minor modifications were made to the WBP during the period under review and the

amended WBP was adopted by the Board in its meeting held on 24.10.2008.

9. SUBSIDIARY MONITORING FRAMEWORK:

All the subsidiary companies of the Company are Board managed with their Boards having

the right and obligations to manage such companies in the best interest of their stake

holders. As a majority shareholder, the Company nominates its representatives on the

Boards of subsidiary companies and monitors the performance of such companies, inter

alia, by the following means:

a) A copy of the Minutes of the Meetings of the Board of Directors of the Company's

subsidiaries along with Exception Reports and quarterly Compliance Certificates issued by

CEO/ CFO/CS are tabled before the Company's Board quarterly.

b) A summary of the Minutes of the Meetings of the Board of Directors of the Company's

subsidiaries are circulated to the Company's Board quarterly.

c) A statement containing all significant transactions and arrangements entered into by the

unlisted subsidiary companies is placed before the Company's Board.

10. MEANS OF COMMUNICATION:

a) Quarterly/ Half Yearly/ Annual Results: The Quarterly, Half Yearly and Annual Results of

the Company are sent to the Stock Exchanges immediately after they are approved by the

Board.

b) News Releases: The Quarterly, Half Yearly and Annual Results of the Company are

published in the prescribed proforma within 48 hours of the conclusion of the meeting of

the Board in which they are considered, atleast in one English newspaper circulating in the

whole or substantially the whole of India and in one Vernacular newspaper of the State

where the Registered Office of the Company is situated.

c) Website: The Company's website www.jsw.in contains a separate dedicated section

"Investor Relations" where latest shareholders information is available. The Quarterly/ Half

Yearly/ Annual Results are simultaneously posted on the website. The latest official press

releases are also available on the website.

d) Presentations to Analysts: Four presentations were made to analysts during the financial

year 2008-09 on 05.05.2008, 31.07.2008, 24.10.2008 and 28.01.2009 and the same are

available on the Company's web site. The presentations broadly covered operations,

financials and industry outlook.

e) Corporate Filing and Dissemination System (CFDS) Filing: As per the requirements of

Clause 52 of the Listing Agreement, all the data relating to quarterly financial results,

shareholding pattern etc. have been electronically filed on the Corporate Filing and

Dissemination System (CFDS) portal, www.corpfiling.co.in, within the time frame prescribed

in this regard.

f) Annual Report: Annual Report containing, inter alia, Audited Annual Accounts,

Consolidated Financial Statements, Director's Report, Auditors' Report and other important

information is circulated to members and other entitled thereto. The Management

Discussion and Analysis (MD & A) Report forms part of the Annual Report. The Annual

Report is also available on the Company's website.

g) Chairman's Communique: Printed copy of the Chairman's Speech is distributed to all the

shareholders at the Annual General Meetings. The same is also placed on the website of the

Company.

h) Reminder to Investors: Reminders for unpaid dividend/unpaid interest on debentures are

sent to the Shareholders/ Debenture holders as per records at appropriate intervals.

Share Transfers in physical form can be lodged with Karvy Computershare Private Limited at

the above mentioned address. The transfer requests are normally processed within 15 days

of receipt of the documents, if documents are found in order. Shares under objection are

returned within two weeks.

The Board has delegated the authority for approving transfers, transmissions etc. of the

Company's securities to the Share/Debenture Transfer Committee, The decisions of

Share/Debenture Transfer Committee are placed at every Board Meeting. The Company

obtains from a Company Secretary in Practice half yearly certificate of compliance with the

share transfer formalities as required under Clause 47(c) of the Listing Agreement with Stock

Exchange and files a copy of the certificate with the Stock Exchanges.

11.6 Dematerialisation of Shares and Liquidity:

The Company has arrangements with both National Securities Depository Limited (NSDL)

and Central Depository Services (India) Limited (CDSL) for demat facility. 18,10,17,709

Equity Shares aggregating to 96.78 % of the total Equity Capital is held in dematerialised

form as on 31.03 2009 of which 95.24% (17,81,46,808 Equity Shares) of total equity capital

is held in NSDL & 1.54 %(28,70,901 Equity Shares) of total equity capital is held in CDSL as on

31.03. 2009.

11.7 Physical Share Purchase Scheme:

Having regard to the difficulties experienced by the shareholders in disposing off their

shares held in physical form and to mitigate the hardship caused to them, the Company has,

alongwith Karvy Computershare Private Limited (Karvy), formulated a Physical Share

Purchase Scheme in 2005-06.

The equity shares in physical mode tendered by the shareholders under the scheme are sold

by Karvy at the prevailing market price and the net sale proceeds thereof are distributed to

the concerned shareholders. The shareholders who wish to avail benefit of the scheme may

kindly contact Karvy.

11.8 Electronic Clearing Service (ECS) Facility:

The Company, with respect to payment of dividend to shareholders, provides the facility of

ECS at the following cities:

Agra, Ahmedabad, Allahabad, Amritsar, Aurangabad, Bangalore, Bhopal, Bhubaneswar,

Belgum, Bhilwara, Calicut, Chandigarh, Chennai, Cochin, Coimbatore, Dehradun, Dhanbad,

Durgapur, Erode, Gorakhpur, Gwalior, Guwahati, Hyderabad, Haldia, Hubli, Indore, Jabalpur,

Jalandhar, Jammu, Jamnagar, Jamshedpur, Jodhpur, Jaipur, Kanpur, Kolkata, Kakinada,

Kolhapur, Lucknow, Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, New Delhi,

Nasik, Nellore, Patna, Pune, Panjim, Puducherry, Raipur, Rajkot, Ranchi, Salem, Shimoga,

Sholapur, Silguri, Simla, Surat, Trichy, Trivandrum, Tirupati, Trichur, Udaipur, Udupi,

Vadodara, Varanasi, Vijayawada and Visakhapatnam.

The Company shall also endeavour to remit the dividend payment through National

Electronic Clearing Service (NECS) to the shareholders having accounts with Branches of

Banks covered under CBS (Core Banking Solution).

Equity Shareholders holding shares in physical form, who wish to avail the ECS facility, may

send their ECS mandate in the format attached to the Company's R & T Agents, in the event

they have not done so earlier. Equity Shareholders holding shares in electronic mode may

send the ECS mandate form to the concerned Depository Participant (DP) directly. The ECS

mandate form can also be availed from the Company's R & T Agents or downloaded from

the Company's website.

11.9 Outstanding GDRs/ADRs or Warrants or any Convertible Instrument, conversion dates

and likely impact on equity:

The Company had issued 3,250 Foreign Currency Convertible Bonds (FCCBs), of US $100,000

each during the financial year 2007-08. As per the option attached to the FCCBs, each Bond

is convertible into Equity Shares of face value of Rs. 10/- each of the Company at a

conversion price of Rs. 953.40 per share, at any time on or after 07.08.2007 until the close

of business on 21.03.2012, unless previously redeemed, converted or purchased and

cancelled and except during a closed period.

In the previous year, one of the Bond Holders i.e. Deutsche Bank AG London, had opted for

the conversion of 8 Bonds into Equity Shares on 31.12.2007 and accordingly the Company

had issued 33,799 Equity Shares of face value of Rs. 10/- each of the Company to Deutsche

Bank AG London.

The Board of Directors at its meeting held on 28.01.2009, resolved to explore opportunities

to buy back a portion of the Company's outstanding Foreign Currency Convertible Bonds

(FCCBs). During the year, 14.74% of the Company's outstanding Zero Coupon Foreign

Currency Convertible Bonds of US $ 1,00,000 each due on 2012 (ISIN XS0302937031),

aggregating to US $ 47.80 million were repurchased in accordance with the A.P. (DIR Series)

Circular No. 39 dated 08.12.2008 issued by the Reserve Bank of India and subsequently

cancelled.

The principal amount of FCCBs outstanding as at 31.03.2009 after this repurchase and

cancellation is US $ 276.40 Million.

The Company adheres to the highest standards of business ethics, compliance with

statutory and legal requirements and commitment to transparency in business dealings. A

Code of Conduct for Board Members and Senior Management and a Code of Conduct for

Prevention of Insider Trading as detailed below has been adopted pursuant to clause 49 (D)

of the Listing Agreement & the Securities & Exchange Board of India (Prohibition of Insider

Trading) Regulations, 1992 (as amended), respectively:

a) Code of Conduct for Board Members and Senior Management

The Board of Directors of the Company adopted the Code of Conduct for its members and

Senior Management at their meeting held on 20.10.2005. The Code highlights Corporate

Governance as the cornerstone for sustained management performance, for serving all the

stake holders and for instilling pride of association.

Minor modifications were made to the Code of Conduct during the period under review.

The amended Code of Conduct was adopted by the Board in its meeting held on 24.10.2008.

The Code is applicable to all Directors and specified Senior Management Executives The

Code impresses upon Directors and Senior Management Executives to uphold the interest of

the Company and its stake holders and to endeavour to fulfil all the fiduciary obligations

towards them. Another important principle on which the code is based is that the Directors

and Senior Management Executives shall act in accordance with the highest standard of

honesty, integrity, fairness and ethical conduct and shall exercise utmost good faith, due

care and integrity in performing their duties. The Code has been posted on the website of

the Company www.jsw.in.

Declaration affirming compliance of Code of Conduct

The Company has received confirmations from the Directors as well as Senior Management

Executives regarding compliance of the Code of Conduct during the year under review.

A declaration by the Jt. Managing Director & Group CFO affirming compliance of Board

Members and Senior Management Personnel to the Code is also annexed herewith.

b) Code of Conduct for Prevention of Insider Trading

The Company has adopted a Code of Conduct for Prevention of Insider Trading for its

Management, Staff and Directors. The Code lays down guidelines and procedures to be

followed and disclosures to be made by directors, top level executives and staff whilst

dealing in shares. The Company Secretary has been appointed as the Compliance Officer

and is responsible for adherence to the Code.

Compliance Certificate by Auditors:

The Company has obtained a certificate from the statutory auditors regarding compliance of

conditions of corporate governance as stipulated in clause 49 which is annexed herewith.