Jal - Rs. 500 Crs Shelf Im (Final)

PRIVATE AND CONFIDENTIAL

SHELF INFORMATION MEMORANDUM JAIPRAKASH ASSOCIATES LIMITED

(Formerly Jaypee Cement Limited)

(Originally Incorporated on15th November, 1995 under The Companies Act, 1956 under the name Bela Cement Limited. Its name was changed to Jaypee Rewa Cement w.e.f 30th Aug 2000 and then to Jaypee Cement w.e.f 3rd Jan 2002. The company was a wholly owned subsidiary of erstwhile Jaiprakash Industries Limited. Pursuant to the Scheme of Amalgamation of erstwhile Jaiprakash Industries, it was merged with Jaypee Cements Limited and the name has been changed to Jaiprakash Associates Limited w.e.f 11th March 2004.)

Registered Office: 5, Park Road, Hazratganj, Lucknow 226 001 Uttar Pradesh (India) Head Office: JA House, 63, Basant Lok, Vasant Vihar, New Delhi 110057 (India)

Tel No. 011 - 26141540 / 26147411, Fax No. 011 - 26145389 / 26143591 website: jilindia.com

SHELF INFORMATION MEMORANDUM (SHELF IM) FOR PRIVATE PLACEMENT OF 5000 SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES OF RS. 10,00,000/- EACH FOR CASH AT PAR

AGGREGATING RS. 500 CRORES General Risk Investment in debt instruments involves a degree of risk and investors should invest any funds in the issue only after reading the risk factors on page no. iii to page no. vi in the Shelf Information Memorandum carefully. For taking investment decision, investors must rely on their own examination of the Issuer and the issue including the risk involved. The Securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document.

Issuer’s Absolute Responsibility The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the Shelf Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect Listing The Debentures of the Company are proposed to be listed on The Stock Exchange, Mumbai. (BSE) and BSE has given its in principal approval of listing Debentures aggregating Rs. 50 crores on their exchange vide its letter dated 26th June, 2004. Company shall obtain the approval of the BSE for the remaining amount of Debentures prior to the opening of the issue and intimate the same to the investors in the term sheet.

Credit Rating: Company shall obtain the rating from the rating agencies from time to time and intimate the same to the investors in the respective term sheet.

DEBENTURE TRUSTEE UTI Bank Limited 111, Maker Tower F, Cuffe Parade, Mumbai 400 005 Phone No. (022) 22162684, 22162815 Fax No. (022) 22162467 Website: www.utibank.com

REGISTRAR TO THE ISSUE Alankit Assignment Limited 2 E/8 First Floor, Jhandewala Extension, New Delhi 110055 Tel No. 011-51540060 - 63 Fax No. 011-51540064 Email : [email protected]

Issue Opening Date Issue Closing Date Deemed Date of Allotment

Issue Opening Date, Closing Date and Deemed Date of Allotment of each issue will be intimated to the investors in the respective term sheet.

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INDEX

CONTENTS PAGE NO. DEFINITIONS & ABBREVIATIONS III RISK FACTORS & PROPOSAL TO ADDRESS THE RISK V HIGHLIGHTS IX IMPORTANT NOTICE X

PART I 1

I. GENERAL INFORMATION 1

II. CAPITAL STRUCTURE OF THE COMPANY 4

III TERMS OF ISSUE 7

IV PARTICULARS OF THE ISSUE 14

V ISSUER PROFILE 15

VI INDUSTRY SCENARIO AND ACTIVITIES OF THE ISSUER 36

VII STOCK MARKET DATA 54

VIII MANAGEMENT DISCUSSION & ANANLYSIS OF THE FINANCIAL STATEMENT FOR THE LAST TWO FINANCIAL YEARS:** 55

IX FINANCIALS OF GROUP COMPANIES PROMOTED BY PROMOTERS 58

X CAPITAL ISSUES MADE DURING LAST THREE YEARS BY THE COMPANY UNDER THE SAME MANAGEMENT 61

XI BASIS FOR ISSUE PRICE 63

XII OUTSTANDING LITIGATIONS OR DEFAULTS 64

XIII RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK 80

XIV DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM : 84

PART II 85

XV GENERAL INFORMATION 85

XVI AUDITORS REPORT & FINANCIAL INFORMATION 87

XVII OTHER PROVISIONS RELATING TO ACCOUNTS OF THE ISSUER COMPANY 98

XVIII STATUTORY AND OTHER INFORMATION 99

XIX RELATED PARTY DISCLOSURE 102

XX OTHER DETAILS 105

XXI MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 111

XXII DECLARATION 112

SCHEME OF AMALGAMATION AS APPROVED BY THE HIGH COURT 113

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DEFINITIONS/ABBREVIATIONS USED

Act The Companies Act, 1956 BSE The Stock Exchange, Mumbai CMD Chairman and Managing Director CDSL Central Depository Services Limited ED Executive Director FI Financial Institution FII Foreign Institutional Investors NAV Net Asset Value NPAs Non Performing Assets NRI(s) Non Resident Individuals NSDL National Securities Depository Limited NSE National Stock Exchange. OTCEI Over The Counter Exchange of India OCB Overseas Corporate Body RBI Reserve Bank of India SEBI Securities and Exchange Board of India Shelf IM Shelf Information Memorandum

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RISK FACTORS Internal Risk Factors Risks Related to Construction Contracts The hydro-power projects involve substantial river bed works (barrage and dams, etc.) and underground works (tunnels, power houses, etc.) and therefore carry the risks associated with floods in the river and adverse geological conditions. The law and order problem may also cause concern depending on the location of the project. Typically, the bids are made including the expected inflation factor. Thus, the risk of increase in prices of inputs is, to an extent, mitigated. With over three decades of involvement in execution of hydro-electric power projects works JAL has imbibed adequate experience to deal with and manage these risks. Further, stoppage of works due to instructions of employer or due to reasons beyond the control of the contractor would typically lead to payment of stoppage charges to the contractor, which would be over and above the contract prices. The contracts specify the quantum and nature of work to be carried out by the contractor. Any increase in the scope of work beyond the specifications due to factors such as geology, would be compensated by the contractors for an additional consideration. Contract Payment Risk In view of the fact that JAL typically takes up large size construction contracts of sizes over Rs. 500 crores which requires large scale mobilization of man power, machinery and material, the timely receipt of payments from the client is critical. Generally, the contract terms involve payment of advance for mobilization while the balance amount is linked to the physical progress of the project. JAL restricts its interest to those projects, which have the budgetary outlay / sources of finances tied up (i.e. financial closure achieved), thus, minimizing the risk of delays in payment. The outstanding receivables of JAL (other than Iraq project receivables) of JAL vis-à-vis its construction division turnover over the last 3 years have been as under: (Rs. in crores) YE 31st March 2002 2003 2004 Gross Revenue 1,599.72 1,766.26 1718.63 Receivables* 178.27 254.82 246.87 Debtors (months) 1.3 1.7 1.7

* excluding Iraq Projects dues. Implementation of Growth Strategies In order to take an advantage of the opportunities arising in the infrastructure sector, JAL has embarked on a multi-pronged growth strategy, which includes inter-alia:

Setting up hydro-electric power projects on Build-Own-Operate basis; Increasing the manufacturing capacities of the cement units; Entering the field of civil construction of railway tracks.

JAL has successfully demonstrated its expertise in the field of civil engineering and construction of river valley and hydro-electric power projects. As an extension of the

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same, it has taken up development of its own power projects having regard to existing demand-supply and source-wise power generation imbalances in the country. JAL has experienced manpower in this specialized field with requisite expertise in implementing such projects. It has already successfully implemented the 3x100 MW Baspa-II hydro-electric project in Himachal Pradesh in spite of various difficulties including a difficult terrain and interruptions like the flash floods, at a competitive cost. It has already achieved substantial progress in respect of implementation of its 400 MW Vishnuprayag Hydro-electric project with the entire debt component tied up and commissioning expected within the envisaged time frame. The success in implementation of these projects is on account of JAL’s vast experience and in-house capabilities in the design and engineering of hydel projects, commitment shown by JAL by way of bringing in its envisaged equity contribution in a timely manner for the above projects and the confidence placed in its abilities by the lending community. The cement division is undergoing a capacity expansion, which will take its capacity to 7 million TPA. The expansion includes upgradation of the facilities at its existing units and setting up of 1 million TPA grinding unit at Tanda in UP. The funds required for the program have already been tied-up and the scheme expected to be completed by September 2004. The program for the setting up two captive power units for the cement division has also achieved substantial progress and fund requirements for the same have already been tied-up. The 25 MW unit at Jaypee Puram started trial run from Nov. 2003 and fully stabilised production from May 2004 and second 25 MW coal based captive thermal plant is scheduled for commissioning in September 2004. Subsidiary Investments JAL’s investments include its holding Jaypee Hotels Ltd. (JHL) and Special Purpose Vehicles (SPVs) formed for implementation and operation of 300 MW Baspa-II and 400 MW Vishnuprayag Hydro-electric projects. JHL's operations have been profitable and Baspa-II Hydro-electric project has already achieved successful commencement of commercial operations. The Vishnuprayag Hydro-electric project is also in an advanced stage of implementation and is expected to be commissioned within the envisaged time frame i.e. by December, 2006. Both the projects are competitive in terms of capital cost per MW of installed capacity and firm power purchase agreements with minimum guaranteed returns on equity are already in place. In order to further enhance the competitiveness of tariff, JHPL has embarked on debt swapping program to reduce the interest cost in respect of Baspa-II project by taking advantage of present low interest scenario and substantially improved risk perception of the project. The gap between the demand and supply of power is expected to continue in the northern region for many more years, which will ensure adequate off-take of power from these units, thus providing steady returns to JAL in the form of dividends. Litigation against the Company and group Companies Litigation against the company and the group companies alongwith the management perception to mitigate the same is given in Clause XII titled as "Outstanding Litigation or Default" herein below.

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External Risk Factors General Economic Conditions The Indian Economy is expected to grow at over 6% p.a. in the medium term. The growth is envisaged to be driven by investments in infrastructure, aimed at de-bottlenecking the Transportation sector and achievement of sufficient and quality power at economical prices. The housing sector in the urban and semi-urban areas has also received an impetus. Having recognized these areas as growth drivers, Government has provided various incentives to the players and participants in these areas. Increasing economic activity and population is expected to increase both, per capita and aggregate, power and cement consumption. These factors are expected to positively impact the prospects of hydel power projects and the demand for cement, which are the thrust areas for JAL. Risk related to rising competition

Over the years JAL’s construction division has emerged as a leader in the field of civil engineering and construction of hydro-electric power / river valley projects in the country. The other engineering companies involved in this sector in India are HCC Ltd., L& T (ECC), Continental Construction Ltd. and Gammon India Ltd. JAL enjoys CR1, the highest contractor grading awarded by ICRA and is also placed favorably in terms of profit margins owing to its entrenched position, focus on large size contracts (typically with a size of over Rs. 500 crores), in-house design and engineering expertise, and the track record of timely and successful execution of contracts. JAL also compares favorably with other major construction firms in the country with a substantial order book to turnover ratio. In view of the above, JAL expects to retain the major slice of the market share even in respect of the hydro-power construction contracts to be awarded in future. With the existing demand-supply gap, both in terms of peak deficit as well as aggregate energy deficit, significant capacity addition is planned in the generation sector. With a need to correct the present hydel: thermal capacity ratio from 25:75 to 40:60 and long-term economic attractiveness of hydel projects, JAL can be expected to bag more construction contracts and keep its order book flowing. Generally the civil works, electro-mechanical works and specialized works in respect of the construction projects are covered by separate packages. However, in order to minimize the delays resulting from interface problems between various agencies, the construction contracts in many cases are now being awarded as a single consolidated Engineering, Procurement & Construction (EPC) package. This necessitates formation of consortia of various parties specializing in execution of different components. In view of the same, JAL, whenever deemed necessary submits its bid as a consortium partner along with other national and international players like SNC / Acres INC., SNC Lavalin / Acres Transnational, GE Canada, Voith Seimens Hydro Kraftwerkstechnik GmBH & Co. KG. etc. The cement division comprises of over 30% of the installed cement manufacturing capacity in the Satna Cluster, which is its natural marketing zone. JAL expects a likely shortfall in production of cement in the Satna cluster, which would favorably impact the cement division prospects. The setting up of the captive power units for its cement plants in addition to steps taken by it to reduce the power consumption of the units will further

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improve its competitiveness by lowering its power cost, which is one of the key inputs. The increase in the cement manufacturing capacity to 7 MTPA by debottlenecking would further improve the cement division's profitability. The Government of India has taken initiative for development of huge power generation capacity in ensuing 5 years plans with special emphasis on hydro power project development in order to correct the Hydro Thermal Mix from 25:75 to 40:60. The segment of hydro power E & C business become very eluring. This will lead to more and more players coming into the business which will increase competition, changes in policies for awarding all major EPC Contracts to ICB route would enhance, competition on global level. Such increased competition may result into reduced margins. JAL presently being well equipped including having MOU for consortium bidding would enable it to take such competition and the rising competition should not make a dent on JAL's profit and turnover.

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HIGHLIGHTS OF THE COMPANY Jaiprakash Associates Ltd. (JAL) is the Flagship Company of the Jaiprakash Group,

one of the most respected corporate houses in Northern India. The merger of Jaiprakash Industries Ltd. (JIL) with Jaypee Cement Ltd. (JCL) is driven

by numerous benefits to the merged entity viz. Jaiprakash Associates Ltd. (JAL), including internationally comparable size of operations for larger contract procurement, lower incidence of sales tax in respect of inter-company purchases besides the tax shield offered by the past accumulated losses of JCL (now JAL).

JAL is a prominent cement producer in the Satna Cluster of Central-North Region of the Country. The cement division located in Madhya Pradesh, which prides of being the largest single location cement manufacturing complex

The Construction Division has entrenched itself as the market leader in the specialized

field of hydro-power / river valley projects execution, over the three-decade period it has been active in this field.

Erstwhile JIL has been awarded CR 1 i.e. highest contractor grading by ICRA, which is indicative of Company’s project execution strengths.

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IMPORTANT NOTICE No part of this document is intended for the use of any recipient located outside India or any recipient who is not resident in India. This document is also not intended for the use of Non-Resident Indians ('NRIs') (except on non repatriation basis as stated elsewhere), Overseas Corporate Bodies ('OCBs') or Foreign Institutional Investors ('FIIs') This issue by Jaiprakash Associates Ltd. (the "Issuer"), of Secured Redeemable Non-Convertible Debentures ("Debentures") is being made strictly on a private placement basis. It is not and should not be deemed to constitute an offer to the public in general or any section or class thereof. This Memorandum ("Shelf Information Memorandum" or “IM") is neither a prospectus nor a statement in lieu of prospectus. It cannot be acted upon by any person other than to whom it has been specifically addressed, neither can this document be circulated, reproduced or redistributed in any form whatsoever. This Shelf Information Memorandum is not intended to provide the sole basis of any credit decision or other evaluation and should not be considered as a recommendation that any recipients of this Shelf Information Memorandum should invest in the Debentures proposed to be issued by Issuer. Each potential investor should make its own independent assessment of the investment merit of the Debentures and the Issuer. This Shelf Information Memorandum is made available to potential Debentures investors on the strict understanding that it is confidential. Recipients shall not be entitled to use any of the information otherwise than for the purpose of deciding whether or not to invest in the Debentures. No person including any employee of the Issuer has been authorised to give any information or to make any representation not contained in this Shelf Information Memorandum. Any information or representation not contained herein must not be relied upon as having being authorised by or on behalf of the Issuer. Neither the delivery of this Shelf Information Memorandum at any time nor any statement made in connection with the offering of the Debentures shall under the circumstances imply that any information/representation contained herein is correct at any time subsequent to the date of this Shelf Information Memorandum. The distribution of this Shelf Information Memorandum and the offering of the Debentures in certain jurisdictions may be restricted by law. Persons into whose possession this Shelf Information Memorandum comes are required by the Issuer to inform themselves about, and observe any such restrictions.

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PART I

I. GENERAL INFORMATION

Shelf Information Memorandum for Private Placement of Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs. 500 crores. JAIPRAKASH ASSOCIATES LIMITED (formerly known as Jaypee Cement Limited) (Originally Incorporated on15th November, 1995 under The Companies Act, 1956 under the name Bela Cement Limited. Its name was changed to Jaypee Rewa Cement w.e.f 30th Aug 2000 and then to Jaypee Cement Limited w.e.f 3rd Jan 2002. The company was a wholly owned subsidiary of erstwhile Jaiprakash Industries Limited. Pursuant to the Scheme of Amalgamation of erstwhile Jaiprakash Industries Limited, it was merged with Jaypee Cements Limited and the name has been changed to Jaiprakash Associates Limited w.e.f 11th March 2004.) Registered Office: 5, Park Road, Hazratganj, Lucknow 226 001 Uttar Pradesh (India) Head Office: JA House, 63, Basant Lok, Vasant Vihar, New Delhi 110057 (India) Tel No. 011 - 26141540 / 26147411, Fax No. 011 - 26145389 / 26143591 website: jilindia.com Authority for Present Issue Board of Directors of the Company has passed a resolution to raise the fund aggregating Rs. 500 crores by issuing Privately Placed Secured Redeemable Non-Convertible Debenture under the Shelf Information Memorandum vide its Board Meeting dated 7th

June, 2004. Stock Exchange Disclaimer Clause It is to be distinctly understood that the submission of the Shelf Information Memorandum to the Stock Exchange should not in any way be deemed or construed that the Shelf Information Memorandum has been cleared or approved by Exchange. Stock Exchange does not take any responsibility either for the financial or other soundness of this Issuer, or the achievement of the object for which placement is proposed to be made or for the correctness of the statement made or opinions expressed in the Shelf Information Memorandum. General Disclaimer The issuer accepts no responsibility for statements made otherwise than in the Shelf Information Memorandum or in the advertisement or any other material issued by or at the instance for the issuer and that anyone placing reliance on any other source of information would be doing so at his own risk. Listing The Debentures of the Company are proposed to be listed on The Stock Exchange, Mumbai. (BSE) and BSE has given its in principal approval of listing Debentures aggregating Rs. 50 crores on their exchange vide its letter dated 26th June, 2004. Company shall obtain the approval of the BSE for the remaining amount of Debentures prior to the opening of the issue and intimate the same to the investors in the term sheet.

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Impersonation Any person who- a) makes in a fictitious name an application to a company of acquiring, or subscribing

for any Securities therein, or b) otherwise induces a company to allot or register any transferor of Securities therein to

him, or any other person in a fictitious name shall be punishable under the extant laws.

Minimum Subscription Pursuant to the notification no. SEBI/MRD/SE/AT/46/2003 dated 22nd December 2003 issued by SEBI minimum subscription clause is not applicable to the privately placed debt securities.

Issue of Letter of Allotment/ Allotment Advice and Debenture Certificates The Issuer will execute and despatch Letters of Allotment/ Allotment advice in favour of the allottees or Refund Letter along with refund amount, not later than 45 days after the Deemed Date of Allotment. After completion of all legal formalities, the Issuer will issue the Debentures certificate(s) / credit the DP account of the allottees against surrender of the letter(s) of allotment within three month(s) of the Deemed Date of Allotment, or such extended period subject to obtaining the approvals, if any. Interest at the applicable coupon rate will be paid via interest warrants on the application money to the applicants for the relevant option applied. Such interest will be paid for the period commencing from the date of realisation of the cheque(s) / demand drafts (s) up to but excluding the Deemed Date of Allotment. The interest warrants for interest payable on application money will be dispatched by Registered Post/ Courier the next working day after the Deemed Date of Allotment. Investor may also advise the Company to credit the interest through ECS directly into their Bank Account. The letters of allotment/ allotment advice/refund orders, as the case may be, will be sent by Registered Post/ Courier /Hand Delivery within 45 days from the Deemed Date of Allotment to the first/sole applicant, at the sole risk of the applicant. The payment will be subject to deduction of tax at source at the rates prescribed under the provisions of the Income Tax Act, 1961 or any other statutory modification or re-enactment thereof.

Issue Schedule

Issue Opening Date Issue Closing Date Deemed Date of Allotment Issue Opening Date, Closing Date and Deemed Date of Allotment of each issue will be intimated to the investors in the respective term sheet.

The issuer reserves the right to close the issue earlier from the aforesaid date or change the issue time table including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice.

Names and Addresses of Auditors, Registrars, Debenture Trustees

Statutory Auditors M.P. Singh & Associates Chartered Accountants Address : B-8/14, Vasant Vihar, New Delhi 110057 Tel No. : 011-26146892 Fax No.:011-26148150 Email: [email protected]

Registrars to the issue Alankit Assignment Limited 2 E/8 First Floor, Jhandewala Extension, New Delhi 110055 Tel No. 011-51540060 - 63 Fax No. 011-51540064 Email: [email protected]

Debenture Trustees UTI Bank Limited 111, Maker Tower F, Cuffe Parade, Mumbai 400 005 Phone No. (022) 22162684, 22162815 Fax No. (022) 22162467 Email: [email protected]

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Credit Rating a. Company shall obtain the rating from the rating agencies from time to time and intimate the same to the investors in the respective term sheet. b. Company has not obtained any credit rating in the last three years and this is being the first credit rating obtained by the Company. Compliance Officer: Shri H. K. Vaid President (Corporate) & Company Secretary JA House, 63, Basant Lok, Vasant Vihar, New Delhi 110057 Tel No.: 011- 26141794 Fax No.:011-26145389 Email: [email protected] The Investor may contact the compliance officer in case of any pre-issue / post-issue related problems such as non-receipt of letters of allotment / debenture certificates / refund orders.

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II. CAPITAL STRUCTURE OF THE COMPANY Equity Shares Capital of the Company as on i.e. 30th June, 2004. Amount

(Rs. Crs.) A. Authorised Capital

98,00,00,000 equity Shares of Rs. 10 each 980.00 B. Issued Subscribed and Paid-up Capital

17,62,16,981 Equity Shares of Rs. 10 each 176.22 C. Paid Up Capital after the present issue

17,62,16,981 Equity Shares of Rs. 10 each 176.22 D. Share Premium Account (before and after issue) 254.81 Consequent to the amalgamation of Jaiprakash Industries Limited with Jaypee Cement Limited and merged entity name changed to Jaiprakash Associates Limited (formerly Jaypee Cement Limited), the entire pre arrangement equity capital of Rs. 418 crores held by the Jaiprakash Industries Limited in Jaypee Cements Limited get cancelled. The Company has allotted 17,62,16,981 Equity Shares in the ratio of 1:1 to the shareholders of erstwhile Jaiprakash Industries Limited pursuant to its scheme of amalgamation with the Company. The subscribed equity capital of the company after giving effect to the above Scheme is Rs.176.22 crores divided into 17,62,16,981 Equity Shares of Rs.10/- each fully paid-up. Details regarding Shareholders Top Ten Shareholders as on 30th June, 2004. Sr. No. Name of the Shareholder Shares Held

(Number) % Stake In Total

1 Jaypee Venture Limited 47432830 26.92 2 GMO Emerging Market Fund 14635020 8.31 3 Jaiprakash Enterprises Limited 11724262 6.65 4 Merrill Lynch Capital Markets Espana S.A. SVB 4693921 2.66 5 Arisaig Partners (Asia) PTE Limited A/c Arisaig

Fund Limited 4000000 2.27

6 H B Stockholdings Limited 2932135 1.66 7 Har Sai Investments Limited 2240267 1.27 8 Matchless Investments Limited 1920000 1.09 9 UBS AG A/C Long – Term India Investment Fund

Limited 1829784 1.04

10 Credit Capital Investment Trust Company Limited – A/c Taurus Mutual Fund Taurus The Starshares

1687081 0.96

Total 93095300 52.83

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Top Ten Shareholders two years prior to 30th June, 2004. i.e 30th June, 2002.

Sr. No.

Name of the Shareholder Shares Held (Number)

% Stake In Total

1 Erstwhile Jaiprakash Industries Limited (100% Subsidiary) alongwith its nominee

418000000 100.00

Total 418000000 100.00 Top Ten Shareholders ten days prior to 30th June, 2004. i.e 20th June, 2004. Sr. No. Name of the Shareholder Shares Held

(Number) % Stake In Total

1 Jaypee Venture Limited 47432830 26.92 2 GMO Emerging Market Fund 14372219 8.16 3 Jaiprakash Enterprises Limited 11724262 6.65 4 Merrill Lynch Capital Markets Espana S.A. SVB 5185023 2.94 5 Arisaig Partners (Asia) PTE Limited A/c Arisaig

Fund Limited 4000000 2.27

6 H B Stockholdings Limited 2920675 1.66 7 Prudential ICICI Trust Limited A/C Prudential ICICI

Mutual Fund – Power 2479763 1.41

8 Har Sai Investments Limited 2240267 1.27 9 Matchless Investments Limited 1920000 1.09

10 UBS AG A/C Long – Term India Investment Fund Limited

1829784 1.04

Total 94104823 53.41 Details regarding Shareholding of Promoters Group and Directors of the promoters The Company was originally promoted by the erstwhile Jaiprakash Industries Limited which in turns was promoted by Shri Jaiprakash Gaur and his associates. Since the erstwhile, Jaiprakash Industries Limited has now been amalgamated with the Company, its promoters have been taken as the promoters of the Company. Aggregate shareholding of the Promoters Group as on 30th June, 2004 is given below:

Sr. No.

Promoter/Promoter Group Shares held (Number)

% Stake In Total

1 Shri Jaiprakash Gaur, Shri Manoj Gaur and their families

2943198 1.67

2 Shri Nanak Chand Sharma, Shri Sunil Kumar Sharma and their families

2166626 1.23

3 Shri S. K. Jain and his family 3018366 1.71 4 Shri Raj Kumar Singh and his family 2585256 1.47

5 Smt. Kumud Jain and her family 2609777 1.48 6 Shri S. P. Joshi and his family 1601125 0.91 7 Shri G. P. Gaur and his family 1712700 0.97 8 Jaypee Venture Limited 47432830 26.92 9 Jaiprakash Enterprises Limited 11724262 6.65

10 Others 4531061 2.57

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TOTAL 80325201 45.58 Details of shares traded by the Promoter Group and its Director and maximum and minimum price at which purchases and sales were made along with the relevant dates, if any. Pursuant to the Scheme of Amalagamtion of erstwhile Jaiprakash Industries Limited, with Jaypee Cements Limited the name has been changed to Jaiprakash Associates Limited w.e.f 11th March 2004. On Amalgamation of Jaiprakash Industries Limited with Jaypee Cement Limited, 17,62,16,981 shares of Jaiprakash Associates Limited were allotted to the shareholders of erstwhile Jaiprakash Industries Limited in the ratio of 1:1 on 8th April, 2004. However, trading of the Shares of the Merged Entity i.e. Jaiprakash Associates Limited commenced on the Stock Exchanges w.e.f 14th June, 2004. Details regarding share trading by the promoters of the Company is given herein subsequent to 14th June, 2004.

Name No. of shares

purchased during last six months

Maximum Price at which

purchased with date

Minimum price at which

purchased with date

No. of shares sold

during last six months

Maximum price at which sold with

date

Minimum price at

which sold with date

Mr. Rajinder Singh

- - - 17,000 on 23/06/04

- -

Mrs. Rekha Dixit

- - - 100 on 30/06/04

- -

Mr. P. V. Vora

1250 on 25/06/04

- - 2000 on 30/06/04

- -

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III TERMS OF ISSUE Terms of the Issue Terms and Conditions of each issue will be as per the term sheet of the respective issue, which will be filed with the BSE as an addendum to this Shelf Information Memorandum. Record Date The Record Date will be 7 calendar days prior to each interest payment/ principal payment date. Payment of Interest Interest payments will be made by way of interest warrants(s)/cheque(s) which will be delivered to the debenture-holders one day prior to the due date either by hand delivery or by registered post. Investor may also advised the Company to credit the interest through ECS directly into their Bank Account The interest will be payable to the registered Debenture-holders and in case of joint holders, to the one whose name stands first in the List of Beneficial owners given by the Depository.

Place and Currency of Payment The Debentures are being issued by Jaiprakash Associates Limited in India. All obligations under these Debentures are payable solely by the Issuer in Indian Rupees only. Tax Deduction at Source Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source on the debentures. Tax exemption certificate / document / form, under Section 193 of the Income Tax Act, 1961, if any, must be lodged at the Registered Office, at least thirty days before the relevant interest payment becoming due.

Issue Of Debentures in Dematerialised Form The Company has made depository arrangements with NSDL/CDSL for the Debentures. The investors will have the option to hold the debentures in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996/ Rules as notified by NSDL/CDSL from time to time. Investors desirous of receiving debenture certificate in the dematerialised form should mention their Depository Participant's name, DP-ID and beneficiary account number in the appropriate place in the application form. Debentures allotted to successful allottee(s) having depository account shall be credited to their depository account against surrender of letter of allotment. In case of incorrect details provided by the investors and inability of the Registrar to credit the Depository Account the debentures will be issued in physical form to such investors. Issue of Letter of Allotment/ Allotment Advice and Debenture Certificates The Issuer will execute and despatch Letters of Allotment/ Allotment advice in favour of the allottees, not later than 45 days after the Deemed Date of Allotment. After completion of all legal formalities, the Issuer will issue the Debentures certificate(s) / credit the DP account of the allottee against surrender of the letter(s) of allotment within

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three month(s) of the Deemed Date of Allotment, or such extended period subject to obtaining the approvals, if any. Interest at applicable coupon rate will be paid via interest warrants on the application money to the applicants for the relevant option applied. Such interest will be paid for the period commencing from the date of realisation of the cheque(s) / demand drafts (s) up to but excluding the Deemed Date of Allotment. Right to Re-purchase and Re-issue the Debentures This would be as per the prevailing guidelines/regulations of Reserve Bank of India and other statutes. Eligible Holders and Mode of Transfer The Issuer will not register any transfers of the Debentures to any NRIs (except on non-repatriation basis), OCBs, FIIs, or any persons not resident in India, unless appropriate regulatory approvals are obtained. The Issuer shall not be duty bound to take interest or trust in or over the Debentures. The title to the Debentures shall pass by execution of duly stamped transfer deed(s) accompanied by the Debentures certificate(s)/Letter of allotments(s) together with necessary supporting documents. The transferee(s) should deliver the Debenture certificates to the Issuer for registration of transfer in the Register of Debenture holders at the Registered Office. The Issuer on being satisfied will register the transfer of such Debentures in its Register of Debenture holders. The person whose name is recorded in the Register of Debenture holders shall be deemed to be the owner of the Debentures.

Request for registration of transfer, along with the necessary documents, and all other communications, requests, queries and clarifications with respect to the Debentures should be addressed to and sent to the Registered Office.

The request from Registered Debenture holder(s) for splitting/consolidation of Debenture certificates will be accepted by the Issuer only if the original Debentures certificate(s) is/are enclosed along with an acceptable letter of request. No requests for splits below the Market Lot will be entertained. Transfer of debentures in dematerialised form would be in accordance to the rules /procedures as prescribed by NSDL/CDSL. Succession In the event of demise of a Registered Debenture holder of the Debentures, or the first holder in the case of joint holders, the Issuer will recognize the executor or administrator of the demised Debenture holder or the holder of succession certificate or other legal representative of the demised Debenture holder as the Registered Debentures holder of such Registered Holder’s Debentures if such a person obtains probate or letter of administration or is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter and delivers a copy of the same to the Issuer. The Issuer may in its absolute discretion, where it thinks fit, dispense with the production of the probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the demised debentures holder on production of sufficient documentary proof or indemnity. In case the debentures are held by person other than individual, the rights in the debentures shall vest with the

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successor acquiring interest therein, including liquidator or such any person appointed as per the applicable laws. Issue of Duplicate Debenture Certificates If any Debenture certificate(s) issued in physical form is/are mutilated or defaced, then, upon production of such certificates at the Registered Office, the same will be cancelled and a new certificate issued in lieu thereof. If any Debenture certificate is lost, stolen or destroyed then, upon production of proof thereof to the satisfaction of the Issuer and upon furnishing such indemnity as the Issuer may deem adequate and upon payment of any expenses incurred by the Issuer in connection thereof, new certificate(s) shall be issued. A fee will be charged by the Issuer on each fresh Debenture certificate issued hereunder. Modifications of Rights The rights, privileges, terms and conditions attached to all Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three-fourths of the outstanding amount of Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debentureholders, carried by a majority consisting of not less than three-fourths of the persons voting there upon a show of hands or, if a poll is demanded by a majority representing not less than three-fourths in value of the votes cast on such poll, provided that nothing in such consent or resolution shall be operative against the Issuer if the same are not accepted in writing by the Issuer. Notices The notices, communications and writings to the Debentureholder(s) required to be given by the Issuer shall be deemed to have been given if sent by Registered Post to the Registered Debentureholder(s) at the address of the Debentureholder(s) registered with the Registered Office. All notices, communications and writings to be given by the Debentureholder(s) shall be sent by Registered Post or by hand delivery to the Issuer at Registered Office or to such persons at such address as may be notified by the Issuer from time to time and shall be deemed to have been received on actual receipt. Application for the Debentures

♦ How to Apply Applications for the Debentures must be made in the prescribed Debenture Application Form and must be completed in block letters in English by investors. Debentures Application forms must be accompanied by either a demand draft or cheque drawn or made payable in favour of " Jaiprakash Associates Limited”. The full amount of the face value of the Debentures applied for under any series has to be paid along with the delivery of the fully completed and executed Debenture Application Form together with other applicable documents described below. Cheques / demand drafts may be drawn on any bank which is situated and is a member or sub-member of the Banker’s Clearing House located at Mumbai, Calcutta, Chennai, or New Delhi. Investors in centres which do not have any bank which is a member or sub-member of the Banker’s Clearing House located

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at the above mentioned centres will be required to make payments only through demand drafts payable at Mumbai. The issuer assumes no responsibility for any applications / cheques / demand drafts lost in mail or transit.

♦ Who can apply Only investors who have been addressed through a communication directly are eligible to apply. Furthermore, NRIs (except on non-repatriation basis), OCBs, FIIs and minors are not eligible to apply for the Debentures.

♦ Application by Banks/Corporate Bodies / Mutual Funds / FIs / Trusts/Statutory

Corporations / NRI (non-repatriation basis). The applications must be accompanied by certified true copies of (i) Memorandum and Articles of Association Constitution / Bye-laws / Trust Deed, (ii) Resolution authorizing investment and containing operating instructions, (iii) Specimen signatures of authorized signatories, (iv) Necessary form for claiming exemption from deduction of tax at source on interest on application money. Application made by Asset Management Company or custodian of Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made.

♦ Application under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signatures of all authorised signatories must be lodged along with the submission of the completed Debenture Application form. Further modifications/additions in the power of attorney or authority should be delivered to the Issuer at Registered Office.

♦ Interest on Application Money Interest will be paid via interest warrants on the application money to the applicants of a Series at its respective coupon rate specified in the respective Term Sheet. Such interest will be paid for the period commencing from the date of realisation of the cheque(s) / demand drafts (s) up to but excluding the Deemed Date of Allotment. The interest warrants for interest payable on application money will be despatched by Registered Post/ Courier the next working day after the Deemed Date of Allotment. The letters of allotment/ allotment advice/refund orders, as the case may be, will be sent by Registered Post/ Courier /Hand Delivery within 30 days from the Deemed Date of Allotment to the first/sole applicant, at the sole risk of the applicant. The payment will be subject to deduction of tax at source at the rates prescribed under the provisions of the Income Tax Act, 1961 or any other statutory modification or re-enactment thereof. Tax exemption certificates, if applicable, in respect of non-deduction of tax on interest on application money must be submitted along with the Debentures Application Form. It is clarified that interest shall not be paid on invalid and incomplete applications.

♦ Basis of Allotment The Issuer has sole and absolute right to allot the Debentures to any applicant.

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♦ Right to Accept or Reject Applications The Issuer is entitled at its sole and absolute discretion to accept or reject any application, in part or in full, without assigning any reason. Debenture Application Forms that are not complete in all respects may be rejected at the sole and absolute discretion of the Issuer.

♦ Future Resource Mobilisation The Issuer shall be entitled, from time to time, to make further issue of Debentures, other debt securities (whether senior, pari passu or junior to the Debentures) and other instruments and securities to any person or persons including to the public or a section of the public and / or members of the Issuer and / or to raise further equity / preference shares, loans, advances and / or avail further financial and / or guarantee facilities from financial institutions, banks and / or any other person (s) without any further approval from or notice to the Debenture holders/Debenture Trustees.

However, until the Debentures are fully redeemed, the Company shall not create any mortgage or charge on the assets offered as security for the Debentures without the consent of the Trustees.

♦ Governing Laws and Jurisdiction The Debentures are governed by and will be construed in accordance with the Indian Law. The Issuer, the Debentures and Issuer’s obligations under the Debentures shall, at all times, be subject to the directions of the Reserve Bank of India and Securities & Exchange Board of India. The Debenture holders, by purchasing the Debentures, agree that the Delhi High Court shall have exclusive jurisdiction with respect to matters relating to the Debentures. However Investors and the Issuer can also refer to the Arbitrators as per the governing law in Delhi in case of any dispute in the terms and conditions of the issue.

♦ Despatch of Refund Orders The Company shall ensure despatch of refund orders of value over Rs. 1500/- and Debenture certificates by Registered Post/Hand Delivery only and adequate funds for the purpose shall be made available to the Registrars by the Issuer Company.

Undertaking by the Issuer Company:

a. The complaints received in respect of any issue of Debentures pursuant to this IM shall be attended to by the issuer company expeditiously and satisfactorily

b. All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchange where the securities are to be listed are taken within 7 working days of finalization of basis of allotment.

c. Necessary co-operation with the credit rating agency shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.

d. The Company shall disclose the complete name and address of the debenture trustee in the annual report.

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e. The Company shall provide a compliance certificate to the debenture Trustees (on yearly basis) in respect of compliance with the terms and conditions of issue of debentures.

f. The company shall forward the details of utilization of the funds raised through the debentures duly certified by the statutory auditors of the company, to the debenture trustees at the end of each half-year.

g. The Company shall furnish a confirmation certificate that the security created by the Company in favour of the Debenture Holders is properly maintained and is adequate enough to meet the payment obligation towards the Debenture Holders in the event of default.

Special Tax benefits ♦ To the Issuer There is no additional benefit arising to the Issuer under the Income Tax Act 1961 by issue of Unsecured Redeemable Non Convertible Debentures. ♦ To the Debentureholders of the Issuer (1) Under Income Tax Act, 1961

(a) To Resident Indian Debentureholders :

(i) Tax Deduction at Source

Tax will be deducted at Source as per the applicable rates, however no tax will be deducted at source from interest payable on Debentures in the following cases : Where the Debentureholder (not being a company or a firm) submits a

declaration (wherever applicable) in the prescribed form and verified in the prescribed manner.

Where on application by any Debentureholder, the Assessing Officer issues

a certificate that the total income of the Debentureholder justified no deduction as per the provisions of section 197(1) of the Income Tax Act.

(ii) Capital Gains The difference between the sale price on transfer and the cost of acquisition of the Debenture held by a Debentureholder as a capital asset, will be treated as long term capital gain/loss in the hands of the investor, provided that such Debenture was held for a continuous period of more than thirty six months. It may be noted that the Debentures under consideration, being debt instruments, will not have the benefit of cost indexation. Such long-term capital gain shall suffer income tax at 20% (plus applicable surcharge) Investors who wish to avail of the exemption from tax on capital gains on transfer of capital asset as provided in sections 54EC or 54F, may do so subject to the conditions as prescribed in those sections. Moreover, Debentureholders are advised to consult their tax advisors in this matter

(b) To Other Eligible Institutions

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Mutual fund registered under the SEBI Act or regulations made thereunder or such other mutual fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India and notified by the Central Government will, subject to the provisions of Chapter XII-E be exempt from income tax on all its income, including income from investments in Debentures under the provisions of section 10(23D) of the Income Tax Act

(2) Under Wealth Tax Act, 1957

Total exemption from wealth tax will be available on investment in Debentures

Note: This is a summary only and not complete analysis or listing of all potential tax consequences of the purpose, ownership and disposal of the Debentures. The statements made above are based on the laws in force and as interpreted by the relevant taxation authorities as of date. Investors are advised to consult their tax advisors with respect to tax consequences of their holdings based on their residential status and the relevant double taxation conventions.

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IV PARTICULARS OF THE ISSUE Objects of the Borrowing The amount to be raised by way of issuance of Debentures will be intimated to the investors in the term sheet of the respective issue. The amount to be raised by issue of Debentures is proposed to be utilised for prepaying the existing high cost debt of the Company, normal capital expenditure and general coporate purposes. Authority for the Present Offer Board of Directors of the Company has passed a resolution to raise the fund aggregating Rs. 500 crores by issuing Privately Placed Secured Redeemable Non-Convertible Debenture under the Shelf Information Memorandum vide its Board Meeting dated 7th June, 2004. Appraisal Note on the project Since the funds are not proposed to be utilized for any specific project, appraisal note on the project is not reproduced herein.

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V ISSUER PROFILE ♦ History, Main Object and Present business of the Company Jaiprakash Associates Ltd. (JAL) is the Flagship Company of the Jaiprakash Group, one of the most respected corporate houses in Northern India. The Group, promoted by Shri. Jaiprakash Gaur and his associates, has diverse interests in the areas of civil engineering, design & construction for hydro-power and river valley projects, development of private hydro-power projects, cement manufacturing, hospitality business, development and management of golf resorts, information technology and educational institutes. The other companies / associate concerns in the Group include Jaypee Hotels Ltd., Jaiprakash Hydro-Power Ltd., Jaiprakash Power Ventures Ltd., Jaypee Ventures Ltd., Jaiprakash Information Technology Ltd., Jaiprakash Sewa Sansthan, Jaiprakash Industrial & Medical Services Ltd. and Jaypee Greens Ltd. Jaiprakash Industries Limited (JIL) and Jaypee Cement Limited (JCL) were two separate companies in the group, carrying on the engineering and construction (E & C) and cement manufacturing and marketing business respectively. With a view to consolidate the construction and cement operations under one Company, JIL was merged into JCL with the approval of the Scheme of Amalgamation from the Hon’ High Court of Allahabad on March 11, 2004. The merger was effective from April 1, 2002. Subsequently, the name of the merged entity has been changed to Jaiprakash Associates Ltd. (JAL). JAL is a company with diversified interests with inter-segment synergies, entrenched leadership position in construction business, growth in volumes and operating margins expected in respect of the cement division which are expected to be bolstered in the future years by returns from its investments in own-developed operational hydropower projects. The above factors make JAL a unique and attractive investment opportunity. JAL ranks amongst Top Listed Corporates in the Country in terms of turnover as well as cash profits. The company has over four decades of experience and leadership position in the hydro-power projects construction sector. The company has been awarded CR1 i.e. the highest contractor grading by ICRA. The Cement Division has, after a period of losses, turned the corner. The performance in terms of both, volumes as well as operating margins, improved with the brown field expansion and setting up of the captive power plant. JAL has, under its umbrella, three modern, computerised process control cement plants with an aggregate installed capacity of 4.2 million tonnes in Rewa District in Madhya Pradesh, the largest single largest Cement Complex in India. In addition to above, the company has a blending unit with a capacity of 0.60 million TPA at Sadua Khurd in Allahabad District, U.P. The first cement plant with a capacity of 1 MTPA was commissioned in 1986. Second cement plant with a capacity of 1.5 MTPA was commissioned in 1991. Third cement plant with a production capacity of 1.7 MTPA was commissioned in 1996. The third cement plant was transferred as a going concern at Book Value to ‘Bela Cement Limited’, a public limited company incorporated on 15th November, 1995. The name of the Company was changed from ‘Bela Cement Limited’ to ‘Jaypee Rewa Cement Limited’ (JRCL) on August 30, 2000 and subsequently to Jaypee Cement Limited (JCL) on January 3, 2002. The cement division of JIL (comprising of the first two cement units) was hived off and merged into JCL w.e.f. April 1, 2001.

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Main Object as per Memorandum and Articles of Association

1. To produce, manufacture, treat process, prepare, refine, import, export, purchase, sell and generally to deal in either as principals or as agents either solely or in partnership with others, all types and kinds of cement, ordinary, white, coloured, Portland, Pozzolana, Alumina, Blast furnace, silica and all other varities of cements, lime and limestone, clinker and/or by-products thereof, as also cement products of any or all descriptions, such as pipes, poles, slabs, asbestos sheets, blocks, titles, garden wares, plaster of Paris lime pipes, building materials and otherwise, and articles, things compounds and preparations connected with the aforesaid products and in connection therewith to take on lease or otherwise acquire, erect, construct, establish, work, operate and maintain, factories, undertakings, quarries, mines and workshop.

2. To carry on all or any of the business as manufacturers and sellers of and dealers and workers in cements of all kinds, lime, plasters, whiting, lay, gravel, sand minerals, earth, coke, fuel, gypsum, coal, jute, hessian cloth, gunny bags, paper bags, artificial stone and all builders’ requisites made out of cement and cement products and conveniences of all kinds.

Capital structure & Shareholding After the scheme of Amalgamation as approved by the High Court all the shares of erstwhile Jaiprakash Industries Limited got cancelled and against that 17,62,16,981equity shares of JAL were issued to the shareholders of erstwhile Jaiprakash Industries Limited in the ratio of 1:1 Authorized, Subscribed and Paid-up capital (Rs. crore) Authorized capital 98,00,00,000 equity shares of Rs. 10/- each 980.00 Issued, Subscribed and Paid up 17,62,16,981 equity shares of Rs. 10/- each 176.22

The shareholding pattern of JAL as on June 30, 2004 was as under:

Sr. No.

Category No. of Shares Held

%age Holding

1 Promoters & Associates 80,325,201 45.58 2 Mutual Funds & UTI 9,762,453 5.54 3 Banks, Financial Institutions, Insurance

Companies 3,185,854 1.81

4 FIIs 32,311,721 18.34 5 Private Corporate Bodies 12,114,063 6.87 6 Indian Public 34,216,263 19.42 7 NRIs / OCBs 4,301,426 2.44

Total 176,216,981 100.00

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♦ Subsidiaries of the Company JAL has four subsidiaries in its fold, three engaged in hydro-power generation and one engaged in hospitality business as under:

Sr. No.

Subsidiary Activity JAL’s Holding

1 Jaiprakash Hydro-Power Ltd. (JHPL) Hydro-power Generation 72.50% 2 Jaiprakash Power Ventures Ltd. (JPVL) Hydro-power Generation

Project 100.00%

3 Jaypee Karcham Hydro Corporation Ltd. (JKHCL)

Hydro-power Generation Project

100.00%

4 Jaypee Hotels Ltd. (JHL) Hospitality 72.18% 1. Jaiprakash Hydro-Power Ltd. (JHPL) JHPL, is a Special Purpose Company promoted by JAL for developing and operating Baspa – II run-of-the river Hydro-electric Project (3x100 MW) on Build-Own-Operate basis. JAL holds 72.50% of JHPL’s total equity of Rs. 491 crores. The project site is located on the river Baspa, a tributary of river Sutlej in Kinnaur district (Himachal Pradesh) about 210 km from Shimla. The Project is designed to generate 1,213.18 million units in a 90% dependable year and 1,392.22 million units in a 50% dependable year. JAL has acted as the EPC contractor for execution of civil works for the Project. The salient features of the project are: Largest Hydro electric Power Plant commissioned in the private sector in the country Barrage at an elevation of 2,520.50 meters, the highest altitude as on date for any such structure to come up in India. 56.70 Km long 400 kV transmission line comprising 121 towers passing through elevation ranging from 1,500 to 2,800 m in one of the most difficult terrain, crossing the valley 13 times and River Satluj twice. Electromechanical and Hydromechanical equipment weighing more than 20,000 tons carted over 300 Km distance in a hilly terrain. Eight bridges, spanning up to maximum of 132 m were constructed at various locations to cater for a maximum load of 70R (Indian Road Congress classification for bridges to carry wheeled load up to 100 tons) Being a snow-fed Project, water availability is assessed, no resettlement / rehabilitation. The Power Purchase Agreement (PPA) in respect of the energy generated by the Project was executed between HPSEB and JHPL in June 1997. As per the PPA, HPSEB will purchase the entire energy generation of the unit for a period of 40 years (extendable by another 20 years). As per the Agreement, 12% of the energy generated by the unit will be provided by JHPL to GoHP free of cost in lieu of water charges, while the balance 88% of the energy generated by the unit will be sold to HPSEB at the tariff arrived at as per the pass through tariff mechanism provided in the PPA, including provision for deemed energy and incentives for secondary energy and higher plant availability. In the event of the unit having achieved normative level of availability but the actual energy generation falling short of the design energy for reasons attributable to hydrology, the energy

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charges for generation up to design energy shall be payable by HPSEB during first seven years of operation under the provision of deemed generation. The Project has been successfully completed at a cost of Rs. 1,624.72 crores and all the three units have commenced commercial operations with effect from June 11, 2003 and are supplying power to Jhakri for evacuation by HPSEB. The payments in respect of the saleable power evacuated by HPSEB are being received regularly. From the date of commissioning till March 31, 2004, the average plant availability has been above 97% as against the PPA required minimum level of 90%. For the period ended 31st march 2004, the company made a net profit of Rs. 57.91 Crs. (cash profit of Rs.138.82 Crs). JHPL has also embarked on a Debt Swapping Program so as to reduce its interest cost to further enhance the competitiveness of its tariff. Shareholding pattern as on 30th June, 2004 Category No. of Shares % Shareholding Promoters 356000600 72.50 Banks and Financial Institutions 135000000 27.50 Total 491000600 100.00

Board of Directors as on 30th June, 2004 Name of Director Designation

Jaiprakash Gaur Chairman Sarat Kumar Jain Vice Chairman Gopi K Arora Director B. K. Taparia Director Dr. Ramesh C. Vaish Director Dr. R. L. Saha Director (IFCI Nominee) Balkrishan Batra Director (IDBI Nominee) Bal Krishna Gupta Director (LIC Nominee) Manoj Gaur Director Sunil Kumar Sharma Director Shailendra Swarup Director Dattaram Gopal Kadkade Director Narendra Singh Director Jagdishwar Nath Gaur Whole-time Director R. K. Narang Director

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Financial performance

(Rs. In crores) For the period from 24th May 2003 to 31st March 2004 Amount Income from Operations 295.31 Interest Income 1.31 Total Income 296.62 Administrative Expenses & Salaries 11.87 Operation & Maintenance Expenses 9.70 Interest & Financial Charges 131.24 Depreciation & Misc. exp. W/o 80.91 Profit Before Tax 62.89 Provision for Tax 4.98 Profit After Tax 57.91 Cash Accruals 138.82

Balance Sheet (Rs. in Crs.) Particulars 2002 2003 2004 Gross Block 4.94 7.43 1640.11 Accu. Depreciation 0.44 0.74 72.01 Net Block 4.50 6.69 1568.10 Capital Work in Progress 893.23 1010.60 0.06 Construction Expenditure pending Allocation 363.09 523.26 -- Current Assets 30.87 12.88 124.60 Current Liabilities (including bank borrowings) 52.27 45.26 95.67 Net Working Capital (21.40) (32.38) 28.93 Secured Loans 908.35 1077.10 1067.47 Equity Share Capital 357.50 460.00 491.00 Reserves & Surplus -- -- 57.91 Misc. Ex. Not w/o 28.94 28.94 19.29 Net Worth 328.56 431.06 529.62 Secured Loans: Net Worth Ratio 2.76 2.50 2.02

2. Jaiprakash Power Ventures Ltd. (JPVL) JPVL, a wholly owned Special Purpose Company promoted by JAL, is implementing the 400 MW Vishnuprayag Hydroelectric Project, in Uttaranchal at a cost of Rs.1,901.12 crores on Build-Own-Operate basis. The project cost is proposed to be financed by way of equity of Rs. 570.34 crores, Rupee Term Loans of Rs. 1,181.50 crores and foreign currency loans of USD 30.82 million (equivalent to Rs. 149.28 crores). The debt component for the project has been fully tied up. The civil works are in full swing with an expenditure amounting to Rs. 847crores having already been incurred on the Project till May 31, 2004. As on 31st May, 2004 JAL had already contributed Rs. 329 crores against its equity commitment and the balance amount of expenditure of Rs. 518 crores has been met through drawl of term debt (Rs.

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511 crores) and creditors (Rs. 7 crores). The Project is expected to be commissioned by December, 2006 and has been designed to generate 2,060.5 million units in a 90% dependable year. The Power Purchase Agreement with Uttar Pradesh Power Corporation Ltd. is already in place. The Project does not envisage any storage and thus there will be no submergence, hence no issues relating to rehabilitation and resettlements.

Shareholding Pattern as on 30th June, 2004 Name of Shareholders Number of Equity Shares held (of Rs.10 each) Jaiprakash Associates Limited 32,89,99,400 Shri Jaiprakash Gaur 100 Shri Sarat Kumar Jain 100 Shri Satyendra Prakash Jain 100 Shri Nanak Chand Sharma 100 Shri Shyam Datt Nailwal 100 Shri Harish K. Vaid 100 Total 32,90,00,000

The beneficial interest in the shares held by the shareholders as stated hereunder are held by JAL, hence the company is a wholly owned subsidiary of JAL.

Board of Directors as on 30th June, 2004

Name of Directors Designation Shri Jaiprakash Gaur Chairman Shri N.C. Sharma Vice-Chairman Shri G.P. Singh Vice-Chairman Shri Suresh Kumar Managing Director Shri Harish Chandra Jain Director (Nominee – LIC) Shri L. P. Aggarwal Director (Nominee – IDBI) Shri D.N. Davar Director Shri B.K. Goswasmi Director Shri Manoj Gaur Director Shri M.A. Siddiqi Director Shri R.K.Jain Director Shri C.K. Agarwal Director Shri Suresh Chandra Director Shri Viren Jain Director Shri Harish K Vaid Director Shri Shailendra Gupta Director Shri Balakrishna Taparia Director Shri Sunilkumar Sharma Director Shri Rangilal Gupta Director Shri M.C.Maheshwari Director Finance and Company

Secretary

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Financial Highlights The audited financials of JPVL for last three years are as stated below:

(Rs. in Crs) For the year ended March 31, 2002 2003 2004 Share Capital 175.20 255.00 329.00 Secured Loans 100.45 276.37 469.97 Unsecured Loans (not bearing interest) -- -- 25.00 Gross Block 8.11 17.78 16.03 Less: Depreciation 0.14 0.27 0.41 Net Block 7.97 17.51 15.62 Capital work-in progress 173.04 332.58 479.60 Construction expenditure pending allocation 36.53 90.99 163.66 Current Assets 170.19 155.88 187.68 Current liabilities 33.09 66.38 23.41 Miscellaneous Exp. to the extent not w/o 0.80 0.80 0.83

3. Jaypee Karcham Hydro Corporation Ltd. (JKHCL) JKHCL, a subsidiary of JAL, is engaged in the development of 1,000 MW Karcham Wangtoo Hydro-electric Project in Himachal Pradesh, on Build, Own and Operate basis. The project cost is estimated at about Rs. 5,500 crores. The implementation of the project is expected to commence from December 2004 with the expected year of commissioning being December 2009. Shareholding Pattern as on 30th June, 2004 Name of Shareholder Number of Equity Shares held (of Rs. 10/- each) Jaiprakash Associates Limited 49,400 Shri Jaiprakash Gaur 100* Shri Sarat Kumar Jain 100* Shri Manoj Gaur 100* Shri Sunil Kumar Sharma 100* Shri Shyam Datt Nailwal 100* Shri Harish K. Vaid 100* Total 50,000 (Fifty Thousand Shares of Rs. 10/- each)

*The beneficial interest in the shares held by the above shareholders are held by JAL, hence the company is a wholly owned subsidiary of JAL.

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Board of Directors as on 30th June, 2004 Name of Directors Designation Sri Jaiprakash Gaur Chairman Sri Manoj Gaur Director Sri S.K. Sharma Director Sri Suresh Kumar Director Sri G.P.Singh Director Sri Arun Gupta Director Sri B.M. Agarwal Director

4. Jaypee Hotels Ltd. (JHL) JHL is a listed company with 72.18% of its equity held by JAL. JHL presently operates four 5-Star deluxe hotels in North India, viz. Hotel Jaypee Sidharth with 99 rooms situated in the Center of the Capital's business activity Hotel Vasant Continental with123 rooms located in Vasant Vihar, South Delhi Jaypee Palace Hotel with 350 rooms and a Convention Center with a capacity of 1200 persons built on a sprawling complex spread over 25 acres of land at Agra. Hotel Residency Manor with 90 rooms, a 'first-of-its-kind' 5-star Deluxe Luxury Resort located at the foothills of Mussoorie. This hotel is owned by JAL and is being operated by JHL. For the year 2003-04, JHL has reported a net profit of Rs. 5.27 crores on a turnover of Rs. 132.61 crores. Book Value of JHL’s property as on 31st March, 2004 stood at Rs. 181.55 crores. JHL’s equity is listed with the Stock Exchanges at Mumbai, Delhi & Kanpur. Book value of JHL’s share (face value: Rs. 10/-) as on 31st March, 2004 stood at Rs. 19.40. Shareholding pattern as on 30th June, 2004 Category No. of Shares % Shareholding Promoters 41612307 74.99 Mutual Funds and Unit Trust Of India 4500 0.01 Banks, FIs, Insurance Companies 1431600 2.58 Private Corporate Bodies 2705099 4.87 Indian Public 9528349 17.17 NRIs /OCBs 208145 0.38

Total 55490000 100.00

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Name of Directors Designation Shri Jaiprakash Gaur Chairman Shri S.G. Awasthi Vice-Chairman cum Managing Director Shri K. Subramanian Director Shri Ram Kumar Anand Director Shri Pawan Kumar Jain Director Shri S. K. Chakrabarti Director Shri Satish Kumar Dheri Director Shri Suresh Kumar Director Shri Manoj Gaur Director Shri Sunil Kumar Sharma Director Shri Santosh Kumar Bansal Director Shri Shree Prakash Director Smt. Rita Dixit Director Shri S.N.Endley Whole Time Director Shri Manju Sharma Whole Time Director Profit & Loss Account:

(Rs. in crores) For Year Ended 31st March 2002 2003 2004 Total Income 116.17 101.78 132.61 Hotel Revenue Construction / Contract division Other Income

45.67 66.40

4.10

50.28 46.30

5.20

58.33 71.50

2.78 Operating Expenses 82.12 66.10 92.60 Personnel Expenses 13.77 13.92 15.51 Gross Profit 20.28 21.76 24.50 Gross Profit Margin 17% 21% 18% Depreciation / Misc. Exp. w/o 8.09 8.47 8.29 Interest 10.81 9.58 6.43 Profit Before Tax 1.38 3.71 9.78 Provision for Tax Current Tax Deferred Tax

0.11 0.22

0.02 1.65

0.77 3.74

Profit After Tax 1.05 2.04 5.27 Cash Profits 9.36 12.16 17.30 JHL has been reporting a consistent growth in income except for FY 02-03, where the drop was due lower revenue from the construction division. JHL’s gross profit margins have been hovering in the range of 18% - 20%. For FY 01-02, hotel revenues and gross profit declined in the wake of terrorist attacks in New York. For the year ended March 31, 2004, JHL has reported a turnover of Rs. 132.61 crores, net profit of Rs. 5.27 crores and cash profits of Rs. 17.30 crores.

23


Balance Sheet:

(Rs. in crores) As on 31st March, 2002 2003 2004 Gross Block 182.25 214.42 231.48 Accu. Depreciation 32.79 42.25 49.73 Net Block 149.46 172.17 181.75 Capital Work in Progress 0.78 2.76 1.45 Investments 0.72 0.72 21.43 Current Assets 37.71 22.60 24.93 Current Liabilities (including bank borrowings) 33.51 22.60 31.97 Net Working Capital 4.20 2.49 (7.04) Secured Loan 61.64 50.21 65.44 Secured Loan: Net Worth Ratio 0.76 0.47 0.58 Deferred Tax Liability 13.82 15.48 19.21 Equity Share Capital 55.49 55.49 55.49 Reserves & Surplus 52.15 52.01 57.23 Misc. Ex. Not w/o 26.95 - - Net Worth 80.69 107.50 112.72 Security Deposits from Licenced Premises - 0.22 0.22 ♦ Promoters and their background The Company was originally promoted by the erstwhile Jaiprakash Industries Limited which in turns was promoted by Shri Jaiprakash Gaur and his associates. Since the erstwhile, Jaiprakash Industries Limited has now been amalgamated with the Company, its promoters have been taken as the promoters of the Company. The details of such main propmoters are as under:

Sl. No. Name Address Profile 1 Shri Jaiprakash

Gaur, Shri Manoj Gaur, their families

A-9/27, Vasant Vihar, New Delhi - 110057

Shri Jaiprakash Gaur – Industrialist with vast experience of 54 years, having Dip. in Civil Engineering, Roorki. Shri Manoj Gaur – B.E.(Civil Hons.) from BITS, Pilani, having exp. of 19 years and Mg. Director of erstwhile JIL & the Company.

2 Shri Nanak Chand Sharma, Shri Sunil Kumar Sharma, their families

E-9/14, Vasant Vihar, New Delhi – 110 057

Shri N.C.Sharma - Diploma in Civil Engineering having 46 Years experience.

24


Shri S.K.Sharma - B.Sc.having 26 years’ experience. Mg. Director of erstwhile JIL & the Company.

3 Shri S.K. Jain, his family

B-1/12, Vasant Vihar, New Delhi - 110057

B.Sc., 46 years’ experience

4 Shri Raj Kumar Singh , his family

E-2/11, Vasant Vihar, New Delhi - 110057

Self acquired experience of 45 years.

5 Smt. Kumud Jain, her family

2A, Nemi Road, Dehradun (U.P.) - 248001

B.A., 43 years experience

6 Shri S.P. Joshi, his family

K-104, Hauz Khas, New Delhi – 110016

B.A., 50 years experience

7 Shri. G.P. Gaur, his family

A-1/7, Vasant Vihar, New Delhi-10057

37 years of self acquired experience

8. Jaypee Ventures Limited JVL was incorporated as “International Design Engineering Associates Limited” on 12th May, 1992, as a public limited company under the Companies Act, 1956 and received a Certificate of Commencement of Business dated 11th June, 1992 from the RoC, Delhi and Haryana. On an application made by the International Design Engineering Associates Limited, it was converted into a private limited company under Section 31(1) of the Companies Act and thus, the name was changed to “International Design Engineering Associates Private Limited”. Subsequently, on February 9, 2000, it became a public limited company. Furthermore, on January 1, 2001, the name of the company was changed to Jaypee Ventures Limited. JVL has been set up to carry on the business of providing consultancy services including identification of projects, basic and detailed engineering for various projects and industries related to generation of power, to provide technical services in the construction and operation of industrial plants and providing services as in the area of project assignment. Shareholding pattern as on 30th June, 2004

No. of shares % shareholding Directors & Relatives 1945450 58.90 Individuals 1356860 41.10 Total 3302310 100.00

25


Board of Directors as on 30th June, 2004 Name of Directors Designation Shri Manoj Gaur Chairman Shri S K Bansal Director Shri Viren Jain Director Shri Amit Sharma Director Shri Rahul Kumar Director Shri K P Sharma Director Shri Sunil Kumar Sharma Director Shri Pankaj Gaur Director Shri Sunil Joshi Director Shri Sameer Gaur Director Shri R. L. Gupta Whole Time Director

Financial Performance The audited financial performance of JVL for the last three years is as stated below: (Rs. in thousands,) For the year ended March 31, 2001 2002 2003 Total Income 274610 560955 295328 Profit/ (Loss) after tax 102050 290231 11202 Share Capital 653023 737023 737023 Reserves and Surplus (excluding revaluation reserves)

124788 411571 388686

Dividend (%) 0 0 0 Earning Per Share (Rs.) 32.36 53.53 3.39 Book Value per share (Rs.) 14.47 68.01 27.77

9. Jaiprakash Enterprises Limited JEL was incorporated as “Uttra Rasayan Udyog Limited” on 15th April, 1978, as a public limited company under the Companies Act, 1956 and was granted a Certificate of Commencement of Business on 1st June, 1978. Subsequently the company was renamed “Jaypee Chemicals Limited” on 16th January, 1985. Thereafter, on 13th May, 1988 it was changed to Jaiprakash Enterprises Limited. JEL is engaged in the business of construction, deployment of personnel and manufacturing marketing of paints. Shareholding Pattern as on 30th June, 2004

Name of Shareholders No. of shares % Shareholding Promoters holding 2339900 87.64 Private Corporate Bodies 250 0.01 Indian Public 329850 12.35 Total 2670000 100.00

26



Name of Directors Designation Shri Jaiprakash Gaur Chairman Shri N. C. Sharma Vice Chairman Shri Manoj Gaur Director Shri P.K. Jain Whole-time Director Shri B. K. Jain Director Shri Sachin Gaur Director Shri Rajiv Gaur Director Shri I. N. Dube Director Shri Vijaykumar Jain Director

Financial Performance The audited financial performance of JEL for the last three years is stated as below:

(Rs. in Crores,) For the year ended March 31, 2001 2002 2003 Total Revenue 21.25 35.00 57.61 Profit/ (Loss) after tax 1.19 3.43 4.00 Share Capital 2.67 2.67 2.67 Reserves and Surplus (excluding dividend) 1.18 5.42 9.20 Dividend (%) NIL NIL NIL Earning Per Share (Rs.) 4.42 12.84 14.97 Book Value per share (Rs.) 17.42 29.63 44.46

Key Managerial Personnel of JAL of as on 30th June, 2004: Engineering and Construction Division (E&C)

Last Employment Sl. No.

Employee Name

Present Position

Date of Joining

Qualification Total Professional Experience (in years)

Name of Company

Designation

1 Harish Kumar Vaid

President (Corporate) & Company Secretary

01-Jan-82

B.Com. Dip. in Commercial Practice, LLB, FCS

30 Dept. of Co. Affairs

Sr. Technical Asstt. Investigation

2 K.K.Agarwal President 01-Apr-82 Dip. (Civil ) 44 UP Irrigation J.E

3 Narendra Singh President (Tech.) 17-Aug-99 B.E. (Civil)

(Roorkee) 48 JHPL Director

27


4 K.P. Sharma Joint President 1-Apr-00 Dip. Engg.

(Civil) 30 JCL GM

5 R.K. Jain Joint President (T&C)

1-Apr-82 B.Tech.(Hons.) (Civil) 45 Indian

Railways Addl. Chief Engineer

6 M.K. Ghosh Joint President (Civil)

12-Feb-91 B.E. (Civil) 42 NHPC Chief Engineer

7 S.K. Bansal

Joint President (Architecture)

1-Apr-95 B. Sc.-B.Arch. (Roorkee) 40

G.B. Pant Agriculture University, UP.

Sr. Architect

8 Vinod Kapur Joint President (Finance)

9-Jan-04 B.Com., CA., CS (Inter) 23

Himachal Futuristic Comm. Ltd.

Sr. VP (Corporate Fin.)

9 I.N. Dube Joint President (A&T)

29-Nov-76 Matric 40 Dainik Jagran Journalist

10 Brig. M.S. Boperai (Retd.)

Sr. Vice President (Civil)

1-Feb-95 12 th, B.Sc.Engg.(C ),MIE,LDMC

40 JHL GM (C )

11 Col. S.C. Katoch (Retd.)

Sr. Vice President 15-Feb-88 B. Sc., B.E.,

M.Tech. 35 Indian Army Col.

12 L.S. Dacha Sr. Vice President (E&M)

16-Jan-92 Dip. (E) 47 Nirulaj Corner House Ltd.

Chief Engineer - Project

13 Lt. Col. S.P. Kundra (Retd.)

Sr. Vice President 1-Apr-86

B.E.(Civil), Dip.In Pers. Mgt. Labour Welfare

44 Indian Army Lt. Col.

14 Brig. H.S. Sangha (Retd.)

Sr. Vice President (HQ.)

21-May-98 Post Graduation 39 JCL VP (Admn.)

15 B.V. Raisinghani

Sr. Vice President (Purchase)

30-Nov-99 B.E.(Mech.) 28 Self Employed

16 Rajinder Kumar Anand

Sr. Vice President (Finance)

28-Oct-03 B.Com.(H)-, CA.-81 23 Chequepoi

nt Group, UK Global CFO.

17 Purushottam Das Sharma


1-May-99 B.Sc. Engg.(Civil) 41 UP Irrigation Chief

Engineer

28


18 Harpal Singh Sr. Vice President (Civil)

25-Oct-98 B. Sc.-57, B.E.(Civil) 43

Redicon (India) Pvt. Ltd.

Sr. Consultant

19 S.Balasubramanian


1-Sep-00 B.Sc. Physics, B.E. (C ) 44 Landbase

India Ltd. Chief of Construction

20 Jag Mohan Kumar

Sr. Vice President 15.11.1990 B.A., B.E. (C ) 40

Punjab Govt. (Irrigation Dept.)

Executive Engineer

21 Shri Chand Bhardwaj

Vice President 05.05.2001

B.E. (Civil) (Roorkee), M. Tech. IIT, New Delhi

35 Ansal Properties Ltd.

General Manager

22 Kamlesh KumarAgrawal

Vice President (Civil)

17-Oct-97 B.Sc., B.E. (C ) 33

Hindustan Const. Co. Ltd.

Chief Qnty. Surveyor

23 G.D. Bansal Vice President (Accounts)

1-Nov-74 B.Com. 41

Suresh Cold Storage and Ice factory, Morena

Asstt. Manager

24 K.B. Agarwal Vice President (Txation)

7-Jul-86 B.Com.CA 39 Swadeshi Cotton Mills Co. Ltd.

Dy. Executice Officer ( Taxation & Legal)

25 Shree Prakash Vice President 22-Oct-75 B.A. 29 Self

Employed

26 M.K. Bhargava Vice President (Finance)

17-Apr-98 M.Com., MA, LLB, CA(Inter) 30

Hitech Gears Ltd. (An Ancilliary of Hero Honda Motors Ltd.)

G.M. (F&A)

27 Shailendra Gupta

Vice President (Finance)

1-Nov-01 B.Com., CA-, CS(Inter) 22 JHL Sr. VP (Fin.)

28 Anil Atmaram Kamat

Vice President (T&C)

12-Jul-01 DCE, B.E.(Civil) 32 IDEA GM

29 C.B.Nuthra Vice President (Engg.)

01.08.2000 B.Sc. Engg. (Elect) 32 JHL

GM (Engineering)

30 Ashok Sharma Vice President 01.04.1995 Intermediate 32 JPTC General

Manager

29


31 Surinder Mohan Handa

Vice President (Electrical)

1-Apr-04 Inter-, B.Sc. Engg. (Mech.)

33.02 B.H.E.L Addl.GM

32 Maj.Gen. Vijay K Bhaskar (Retd.)

Vice President (Admn.)

18-Oct-03 Matric, B.E. (Hons.) 31 Indian Army Maj. Gen.

Change in Key Managerial Personnel of E&C Division in the preceding one year:

Sl. No.

Name of Employee Present Position Date of Joining

1 VINOD KAPUR JOINT PRESIDENT (FINANCE)

09-Jan-04

2 RAJINDER KUMAR ANAND

SR. VICE PRESIDENT (FINANCE)

28-Oct-03

3 SURINDER MOHAN HANDA

VICE PRESIDENT (ELECTRICAL)

01-Apr-04

4 MAJ.GEN. VIJAY K BHASKAR (RETD.)

VICE PRESIDENT (ADMN.)

18-Oct-03

Cement Division

Last Employment Sl. No.

Employee Name

Present Position

Date of Joining

Qualification Total Professional Experience (in years)

Name of Company

Designation

1 VIJAI KUMAR JAIN

SENIOR PRESIDENT

02-Jun-99 HIGH SCHOOL, Dip.

(Mech.)

32 Prism Cement President

2 G.V. BHAT PRESIDENT 10-Jul-95 HIGHER SECONDARY, B. Sc. Engg.

(Mech.)

39 KIOCL Controller Engg.

3 B.P.S. KWATRA PRESIDENT 24-Feb-03 M.Sc. (Ag) 36 Prism Cement President 4 AJAY SHARMA JOINT

PRESIDENT 26-Apr-86 BBM, LLB.

MBM 26 JK Synthetics Dy Manager

5 B.M. SUBBANNA

JOINT PRESIDENT

01-Aug-91 HIGH SCHOOL

AMIE, LME

41 ECC Jr Engr

6 RAM BAHADUR SINGH

SENIOR JT PRESIDENT

15-Jul-93 B.Com. CA 31 THDC Dy. GM (Fin.)

7 YOGENDAR PARIMU

SENIOR JT PRESIDENT

19-Jul-95 B.E. (CIVIL) 41 Indian Army Brigadier

8 ATAL BEHARI KAUSHAL

JOINT PRESIDENT

08-Aug-02 INTERMEDIAT, B.Sc. Engg.

(Mech.)

36 CCI GM

30


9 VIRENDER SINGH BAJAJ

JOINT PRESIDENT

13-Nov-99 HIGHER SECONDARY,

B.Sc. Engg. Chemical

33 United Beverages

Director & DGM

10 VINOD KUMAR SRIWASTAVA

SENIOR JT PRESIDENT

22-Feb-03 DIPLOMA IN MECHANICA,

Boiler Operation Engg. Cert.

40 NTPC GM

11 SACHIDA NAND

UPADHYAY

SENIOR VICE

PRESIDENT

19-Sep-90 INTERMEDIAT, Dip. in Mech.

33 Diamond Cement

Prodn Manager

12 SHAMBHU NATH SINGH

SENIOR VICE

PRESIDENT

01-Aug-91 HIGH SCHOOL, B.E.

(C )-87

13 ____ ____

13 RAJ SUNDER KUCHHAL

SENIOR VICE

PRESIDENT

10-Jan-01 B.Com., C.A., CS

24 CIMMCO, Birla

VP

14 BHARAT BHUSHAN

DHEER

SENIOR VICE

PRESIDENT

30-Jun-03 HIGHER SECONDARY,

B. Tech. (Mech.)

28 ECOM Group Asst VP

15 AVIJIT CHOWDHURY

VICE PRESIDENT

26-Oct-85 HIGHER SECONDARY, B. E. (Elecl.)

31 Labda Cement

Dy Chief Engr

16 D.V.PENDHARKER

VICE PRESIDENT

28-Feb-98 B.Sc., LLB 28 Satna Cement

Asst VP

17 ASHOK JAIN VICE PRESIDENT

01-Apr-02 B.Com., CA 26 Modi Rubber GM

18 VINAY KUMAR VICE PRESIDENT

29-Mar-03 HIGHER SECONDARY, B.SC. Engg.

(Mech.)

30 JK Cement Asst VP

19 VARINDER SINGH YADAV

VICE PRESIDENT

01-Aug-03 M.Sc.(DEFENCE STUDIES),

B.E. (C )

39 Indian Army Maj General

20 BHAGWAN PRASAD

PARGANIHA

VICE PRESIDENT

31-Mar-97 HIGHER SECONDARY, B.E. (Mech.)

30 Orissa Cement

Manager

31


Change in Key Managerial Personnel of the Cement Division in the preceding one year:

Sl. No. Name of Employee Present Position

Date of Joining Date of Leaving

1 BHARAT BHUSHAN DHEER SENIOR VICE PRESIDENT

30-Jun-03

2 VARINDER SINGH YADAV VICE PRESIDENT 1-Aug-03

3 GK MAHESHWARI PRESIDENT 26-June-04

BOARD OF DIRECTORS - JAL As on June 30, 2004, the Board of JAL comprised of 19 Directors out of which 7 are independent Director including 2 Institution Nominee Directors.

Name & fathers name

Date of birth

Qualifications Address & telephone

no.

Date of appnt.

Directorship in other companies Nature of interest

Jaiprakash Hydro-Power Ltd Chairman JAIPRAKASH GAUR CHAIRMAN

Jaiprakash Power Ventures Ltd Chairman

Jaypee Greens Limited Chairman Jaiprakash Enterprises Ltd. Chairman Jaypee Hotels Ltd Chairman Jaypee Karcham Hydro Corp Ltd

Chairman

Manumanik Estates Pvt.Ltd. Director Sunvin Estates Pvt.Ltd. Director Samsun Estates Pvt.Ltd. Director

Late Shri B.S. Sharma

01-Jan-31 Dip. in Civil Engineering Roorkee

A-9/27, Vasant Vihar, New Delhi-110057 26141540

15.11.1995

Ceekay Estates Pvt.Ltd. Director

SARAT KUMAR JAIN VICE-CHAIRMAN

Jaiprakash Hydro-power Ltd Vice Chairman

Late Shri S.P. Jain

19-May-38 B.S.c B-1/12, Vasant Vihar, New Delhi-110057 26141799

18.03.2004

Essjay Enterprises Pvt. Ltd. Director

Jaiprakash Hydro-Power Ltd. Director SUNIL KUMAR SHARMA MANAGING DIRECTOR

Jaypee Hotels Limited Director

Jaypee Greens Limited Director Jaypee Ventures Limited Director Jaypee Karcham Hydro Corp Ltd

Director

Suneha Estates Pvt.Ltd. Director

Shri N.C. Sharma WHOLE –TIME

01-Jul-59 B.S.c. E-9/14, Vasant Vihar, New Delhi-110057 26140313

18.03.2004

Indesign Enterprisres Pvt Ltd Director

32


Jaiprakash Power Ventures Ltd Director

JIL Information Tech. Limited Chairman MANOJ GAUR MANAGING DIRECTOR

Jaypee Ventures Limited Chairman

Jaypee Greens Limited Director Jaiprakash Power Ventures Ltd Director Jaypee Hotels Ltd. Director Jaiprakash Enterprises Ltd. Director Jaypee Karcham Hydro Corp Ltd

Director

Jaiprakash Hydro-power Ltd Director Gaur & Nagi Ltd Chairman Manumanik Estates Pvt.Ltd. Director Indesign Enterprisres Pvt Ltd Director

Shri Jaiprakash Gaur WHOLE -TIME

16-Jun-64 B.E.(Civil Hons)

A-9/27, Vasant Vihar New Delhi- 110 057 26145073

31.03.1997

Mum Engineers Pvt.Ltd. Director

GOPI K ARORA Roto Pumps Limited Chairman SARA Fund Trustee Company Ltd

Chairman

Noida Toll Bridge Co. Ltd Chairman Television Eighteen India Ltd Chairman Jaiprakash Hydro-Power Ltd Director

Late Dr. Y.N. Arora

Shalimar Wires Industries Ltd Director Alps Industries Ltd. Director Sunil Synchem Limited Director HGS India Limited Director Bengal Ambuja Housing Director

24-Jan-34 I.A.S. (Retd.) 181, Sector 15-A Noida 201301 (U.P.) 0120-2513572

18.03.2004

DND Flyway Limited

Director

Ironwill Holdings Pvt. Ltd. Director PARBODH VARAGLAL VORA

Ironwill Investments Pvt. Ltd. Director

Delhi Foams Pvt. Ltd. Director Rakesh Foods Pvt. Ltd.

Director Late Shri V.A. Vora

11-Jun-35 B.E., M.I.E. F-3/8, Vasant Vihar New Delhi - 110057

05.03.2001

SUNNY GAUR Orphic Imports & Exports Pvt Ltd Director

Sunvin Estates Pvt Ltd Director Shri Jaiprakash Gaur

30.May-69 B.A(Hons) A-9/27, Vasant Vihar, New Delhi-110057

16.01.1998

Indesign Enterprisres Pvt Ltd

Director

RAHUL KUMAR Jaypee Ventures Limited Director

Shri Suresh Kumar 23-Feb-68 Chartered

Accountant B-67, Sarvodaya Enclave, 7 New Delhi – 11001 26146855

30.06.2001

33


Sandhar Locking Devices Ltd. Director DHARMENDER NATH DAVAR

Sandhar Infosystems Ltd. Director

Sandhar Auto Components Limited

Director

Jaiprakash Power Ventures Limited

Director

Mayar India Ltd. Director OCL India Limited Director HEG LImited Director Indo - Continental Hotels & Resorts Ltd.

Director

Ansal Properties & Industries Ltd. Director Hero Honda Finlease Limited Director Indo-Asian Fusegear Ltd. Director S.P. Wahi Technology & Management Consultants Pvt.Ltd.

Director

Sandhar Steady Stream Tooling Pvt. Ltd.

Director

Adayar Gate Hotel Limited Director

Late Shri D.L. Davar

8-Aug-34 B-5/82, Safdarjung Enclave, New Delhi – 110029 26186359

21.09.2002

Moral Overseas Limited Director

RAJ NARAIN BHARDWAJ (LIC Nominee)

Life Insurance Corporation of India Limited

Managing Director

UTI Bank Ltd Director IFCI Ltd Director LIC Lanka Ltd Director LIC Mutual Fund Trustees Co. Pvt Ltd

Chairman

ABB Ltd Director LIC (Mauritius) Offshore Limited Director

Late Shri Murarilal Bharwaj

08-May-45 M.A.Economics) &DIR &PM

B-1, Jeevan Joyt, Setalvad Lane Neapean Sea Road, Mumbbai-400026 022-23693710

18.03.2004

Mahindra and Mahindra Limited

Director

RANVIJAY SINGH SRMB Dairy Farmings Pvt Ltd Director Shri Raj Kumar

Singh

19-Oct-66 B.E. (Civil) E-2/11, Vasant Vihar New Delhi-110057

27.12.1999

Usha Beltron Ltd Director Eicher Ltd Director

MANEPANDA JOYAPPA SUBBAIAH (ICICI NOMINEE)

Eicher Motors Ltd Director Infomedia Limited Director Cholamandlam Investment &

Finance Limited Director

Fedral Bank Ltd Director Listern India Shipyard Ltd Chairman

ABG Shipyard Pvt Ltd Director S/o Shri M.A. Joyappa

12-Dec-42 201, Sky Lane Apart. Langford Road Bangalore –560027

23.04.2004

Taj Lands End Limited Director

34


Jaypee Ventures Limited Director SHRI PANKAJ GAUR WHOLE-TIME DIRECTOR

Shri G.P.Gaur

18-Jan-71 B.E.(Instrument- ation)

A-1/7, Vasant Vihar New Delhi 110 057

30.06.2004

Pee Gee Estates Pvt. Ltd Director

RAKESH SHARMA Pathak Associates Pvt. Ltd. Director S/o Late Shri O.P. Sharma

05-Jun-60 B.E. Civil A-16/3, Vasant Vihar New Delhi-110057

30.06.2004 Jaypee Technical Consultants P. Ltd.

Director

Jaypee Ventures Limited Director SAMIR GAUR WHOLE-TIME DIRECTOR

Apar Builders Pvt. Ltd Director

Sunvin Estates Pvt.Ltd. Director Shri Jaiprakash Gaur

22-Apr-71 M.B.A.-U.K A-9/27, Vasant Vihar New Delhi 110 057

30.06.2004

Indesign Enterprises Pvt.Ltd. Director MAHENDRA

SHANKAR SRIVASTAVA

Late Shri B.S. Srivastava

31-Oct-40 B.S.c., B.E. M.E.

D-7/7435 Vasant Kunj New Delhi 110 070 26897059

30.06.2004

SHYAM DATT NAILWAL WHOLE -TIME DIRECTOR

Late Shri R.D. Nailwal

03-Aug-47 B.A.(Com.), F.C.S.

75, Shrestha Vihar Delhi 110 092 22142311

30.06.2004

SUREN JAIN Hicon Packings Pvt Ltd Director

Lare Shri A.K. Jain 18.08.1970 B.E.(Productio

n) Goldmadlist

A-1/8, Vasant Vihar New Delhi 110 057

30.06.2004

SATISH CHARAN KUMAR PATNE

Late Shri Umeshwari Charan

19.04.1944 B.Sc. (Engg.) Chemical

15, Ranjit Singh Block, Asian Games Villiage, New Delhi-110049

30.06.2004

35


VI INDUSTRY SCENARIO AND ACTIVITIES OF THE ISSUER INDUSTRY OVERVIEW Construction Business The execution of Engineering, Procurement & Construction contracts in the specialized segment of hydro-power / river valley projects has been the forte of the Jaiprakash Group. This segment comprises of large value, complex projects, quite often in difficult terrain, with long execution periods with very few firms in the Country having the requisite capabilities for successful and timely completion. The size and complexity also acts as an effective entry barrier. The key success factors for construction firms active in this area are: Track record in executing projects: Experience/good track record in executing projects is

almost always a prerequisite for qualification in contract tendering process. Order book position: A strong order book position and success rate in project completion Some of the other major construction firms in India active in this segment are: Hindustan Construction Company Ltd.

Undertakes construction of tunnels, railway bridges and other heavy civil engineering work, main thrust being power sector and bridges Major projects undertaken by it include the aqueduct across the river Gomti, the Lower Periyar hydel project in Kerala, the Farakka barrage in West Bengal, the Idduki dam in Kerala, and the Metro rail project in Calcutta. Presently executing: Construction of a dam, desilting chamber and head race tunnel for Tala Hydel Project, Bhutan The civil works for Gosikhurd Spillway Project, Maharashtra Civil works for the Dhauliganga Hydro-electric Project, Stage I, Lot II (280 MW), Uttar Pradesh in joint venture with Samsung Corporation, Korea. Subcontract works for the Purulia Pumped Storage Project, in W. Bengal, in Joint venture with ECC Construction Group (L&T) Civil works for head race tunnel and surge shaft for the Nathpa-Jhakri Hydel Project.

Continental Construction Ltd.

Engaged in the construction of hydro-electric and irrigation projects, marine works, airport runways, water and sewerage turnkey projects, pipelines, vertical grain silos, heavy foundations, deep drilling, open cast mining, and industrial complexes, etc. Currently executing: Rehabilitation of Kakrapara Left Bank Canal Kodasalli Dam project in Karnataka Largi Hydel Project Ambavane Dam Maneri Bhali Hydel Project Two nos. diversion tunnel for Kol dam

36


CCL has a CR2- (2 minus) grading from ICRA for contracts having average values of Rs. 350 crores.

37


L & T Ltd. (ECC) Active across almost all the construction segments with specialization

in infrastructure and industrial projects. In the hydropower projects segment, besides JAL & HCC, L&T is the only company having an average contract size of above Rs. 100 crores. It has a CR1 grading with an upper cap of Rs. 600 crores for single contract compared to Rs. 2,000 crores for JAL. Presently executing sub-contract works for the Purulia Pumped Storage Project, in W. Bengal, in Joint venture with HCC Ltd. Recently bagged an order from National Hydroelectric Power Corporation Limited (NHPC) for civil and structural work for its 2000 MW (8 x 250MW) Subansiri Lower Hydroelectric Project (Contract size: Rs. 921.6 crore).

Gammon India Ltd.

Specializes in transport engineering, energy projects & high rise structures, hydraulic works & irrigation projects, tunnel engineering, Industrial Structures, Marine Structures, Public Utility structures, etc. Executing: Works for construction of head race tunnel for Teesta Hydro-electric project (Contract size: Rs. 300 crores); Purna Dam Left Bank works (Contract size: Rs. 30 crores)

(Source: Company websites, Crisinfac and Capitaline) Generally for economic considerations the civil works, electro-mechanical works and specialized works in respect of the construction projects are covered by separate packages. However, in order to minimize the delays resulting from interface problems between various agencies, the construction contracts in many cases are now being awarded as a single consolidated Engineering, Procurement & Construction (EPC) package. Also many firms having international size have also been attempting to enter the construction segment. This necessitates formation of consortia of various parties specializing in execution of different components. In view of the same, whenever deemed necessary, JAL bids as a consortium partner along with other national and international players. For instance, JAL, as the leader of consortium comprising of other internationally reputed firms like SNC / Acres INC., SNC Lavalin / Acres Transnational and GE Canada, bid for and was awarded the EPC contract for 300 MW Chamera (Stage-II) Hydro-electric project. Similarly, JAL was awarded the EPC contract in respect of Omkareshwar Hydro-electric Project in consortium with Voith Seimens Hydro Kraftwerkstechnik GmBH & Co. KG. The hydel-power sector is expected to register an impressive growth with increasing emphasis being laid on: setting up hydel capacity to meet the increasing energy requirements, plus the power deficit; and correcting the existing hydel: thermal mix capacity ratio of 25:75 in the country to the desirable level of 40:60. Despite hydroelectric projects being recognized as the most economic and preferred source of electricity, the share of hydropower has declined in India in the past on account of difficult investigations, geological aspects, R&R issues, inter-state aspects, etc.

38


At the time of Independence, the share of hydro in the total installed capacity was around 37% which continued to rise, crossing 50% in the year 1963 and at present constitutes only about 25% of the overall installed capacity in the country. As per the studies carried out by Central Electricity Authority (CEA), the economically exploitable hydro-power potential in India as been assessed at 84,044 MW at 60% load factor, which corresponds to an approximate installed capacity of 150,000 MW from 845 schemes. Of the same about 300 schemes involving an aggregate installed capacity of about 43,000 MW are either in operation or under various stages of development. Based on the Ranking Study carried out by CEA, feasibility studies have been taken up for 162 hydro-electric projects with an aggregate installed capacity of 50,560 MW. Development of Indian Power Infrastructure Generation capacity additions have traditionally been made in the thermal sector Additions in the hydropower sector were not consistent in the 1990’s, but have been increasing in the past few years at approximately 1,000MW per year

Generation Capacity Addition

0

1,000

2,000

3,000

4,000

5,000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Nuc lear Hydel Thermal Total

(Million Watts) Despite capacity addition in the hydropower sector at 1,000MW per year, the mix of hydro power as a percentage of total power has declined rapidly. A 40:60 ratio has been recommended as the optimal mix by the Ministry of Power

33.0%41.0% 46.0% 40.0%

29.0% 25.0%

71.0% 75.0%67.0%59.0% 54.0% 60.0%

1950 1960 1970 1980 1990 2003

Hydro Thermal+Others

Hydro-thermal Mix

39


Ministry of Power 5-Year Plans The Indian Ministry of Power (“MOP”) has plans to reach a goal of additional 20,000+ MW hydropower capacity during the 11th Five-Year Plan (2007-12). The current 5 Year plan (2002-2007) aims to add more hydropower generating capacity than during the last 20 years combined The 11th plan 5 Year Plan (2007-2012) aims to increase the hydropower capacity by 20,000MW Feasibility studies are currently under review for a 50,000MW addition of Hydropower Capacity in 12th Five Year Plan (2012-2017)

50,000

20,000

14,393

4,5382,4273,8282,8733,812

1,057

1974 1979 1985 1990 1997 2002 2007 2012 2017

Hydropower Development A list of proposed hydro power projects with installed capacities of over 300 MW is hereunder: Sr. No.

Scheme State River Basin Installed Capacity (MW)

1 Dummagudem Andhra Pradesh Godavari 360 2 Etalin Arunachal Pradesh Dihang-Dibang 3,045 3 Demwe Arunachal Pradesh Dihang-Dibang 3,000 4 Oju-II Arunachal Pradesh Subansiri 2,580 5 Kalai Arunachal Pradesh Luhit 2,550 6 Oju-I Arunachal Pradesh Subansiri 1,925 7 Niare Arunachal Pradesh Subansiri 1,405 8 Naba Arunachal Pradesh Subansiri 1,290 9 Kameng Arunachal Pradesh Kameng 1,100 10 Hutong Arunachal Pradesh Luhit 950 11 Emra-II Arunachal Pradesh Dihang-Dibang 870 12 Kimi Arunachal Pradesh Kameng 535 13 Naying Arunachal Pradesh Dihang-Dibang 495 14 Tato-II Arunachal Pradesh Dihang-Dibang 360 15 Malinye Arunachal Pradesh Dihang-Dibang 335

40


Sr. No.

Scheme State River Basin Installed Capacity (MW)

16 Bhareli Lift Dam – II Arunachal Pradesh Kameng 330 17 Khab-I Himachal Pradesh Sutlej 1,640 18 Khab – II Himachal Pradesh Sutlej 425 19 Luhri Himachal Pradesh Sutlej 425 20 Jangi Thopan Himachal Pradesh Sutlej 410 21 Ratle Jammu & Kashmir Chenab 515 22 Chenari Jammu & Kashmir Jhelum 475 23 Kwar Jammu & Kashmir Chenab 440 24 Hiranyakeshi – II Maharashtra Vedganga 405 25 Lunglang Storage Mizoram Barak & others 690 26 Boinu Storage Mizoram Barak & others 635 27 Kakjam Mizoram Barak & others 545 28 Dikhu Dam Nagaland Upper Brahmaputra 470 29 Tizu Nagaland Barak & others 365 30 Baljori Orissa Baitarni 393 31 Teesta Stage – I Sikkim Tista 320 32 Tapovan Chunar Uttaranchal Dhauliganga 485 33 Harsil Dam Uttaranchal Bhagirathi 350 34 Urthing Sobala Uttaranchal Sarda 340 35 Lata Tapovan Uttaranchal Dhauliganga 320 Total 30,778

(Source: Ministry of Power) Even if half of these schemes are taken up over a period, there is immense scope of business in JAL’s core competence area of hydro-power construction projects.

41


Key Business Opportunities The initiatives taken by the Government create several business opportunities for JAL, as under: Central government E&C / EPC contracts State government E&C / EPC contracts State government BOO contracts Private sector E&C/BOO contracts

50,000 MW 162 schemes

State Private Central

E&C / EPC BOO E&C / EPC

1 2 4 3

Vertically Integrated E&C Solutions JAL’s ability to provide complete solutions from concept to implementation gives it a clear advantage over competitors. Design Conception Engineering

Planning Solution Implementation

Group’s design house was established in 1992 and currently employs over 100 engineers

Internationally renowned experts

Collaboration with Institutes and Universities

Design team is a competitive advantage in bidding contracts

JAL’s engineering house specializes in civil, hydro-mechanical and electro-mechanical engineering

Experience in planning some of India’s largest E&C projects to date

Utilizes the latest technology to offer precision solutions

JAL’s integrated design and engineering eliminates interface problems and delays

The Company has successfully executed 17 projects to date

JAL’s track record in execution proves its consistent ability to complete projects in line with initial engineering plans, costs and timing

Senior management, engineers and specialists onsite overseeing projects

Largest fleet of mobile and dedicated machinery

42


JAL’s integration capability has enabled the company to undertake projects on an engineering, procurement and construction (“EPC”) / turnkey basis and venture into BOO projects as well. Superior Cost Control JAL is able to undertake contracts at low cost levels without sacrificing quality of execution through its unique cost control measures.

Experience 40 years of experience in the E&C business

Due to the high technical nature of hydro power projects, JAL’s specialized experience in this sector is of particular significance to cost structure

In-house machinery workshop

In-house heavy machinery engineering workshop fabricating hydro-mechanical equipment Significantly reduces the capital expenditure requirements Producing 3,000 tons of equipment per year

Vertical integration

Ability to control projects from beginning to end Allows for seamless integration from design to execution, reducing delays and cost overlaps Eliminates the need for costly subcontractors

In-house design team Dedicated VSAT system since 2001

Internationally competitive design team eliminates the need to contract external design house Data voice & video through VSAT enables seamless connectivity between all offices & works throughout the country

Daily reporting system

All JAL sites are monitored through a daily reporting system that records progress of projects Daily record allows JAL to identify cost inefficiencies as they occur

On-site Management by Directors

Managing Directors monitor projects on-site Ability to make immediate decisions reduced time delay Allows for maximum coordination between management and working team

43


Cement The cement industry in India is highly fragmented, with over 50 cement players and more than 120 manufacturing plants. The industry is also highly regionalised, as cement units are concentrated in clusters, close to the limestone deposits. Competition is also regionalised since the low-value commodity makes transportation over long distances uncompetitive. During 1997-98 to 2002-03, the installed capacity of the industry increased at a CAGR of over 7 per cent to 138.96 mtpa. (The capacity of the industry is taken as the sum total of the installed capacity of the large players.) The total capacity of mini cement players (includes all capacities up to 300,000 tpa) has been estimated at 11.2 million tonnes. In 2002-03, cement production from large units touched 110 million tonnes, indicating a capacity utilisation of around 80 per cent. Cement prices and margins vary across regions, due to the variation in demand-supply balance, level of concentration and demand growth. Over the last five years, prices in the North have remained lower than the rest of the country because of the highly fragmented nature of the market. Prices in the South and West have been on a downhill ride since 2001-02, due to the addition of capacity in the regions. However, prices in the East have remained higher than the country average due to supply rationalisation by producers. Demand – Supply Scenario India is the fourth largest producer of cement in the world after China, Japan and USA. The details of aggregate demand and aggregate supply of cement in the country are given below: (Capacities in Million TPA)

Cement Clinker Exports

Capacity

Utilization

Capacity

Utilization

Proportion of Blends

Cement Production

Domestic demand

Cement

Clinker

FY 98 93 81% 102 67% 29% 75 73 2.6 1.6 FY 99 103 79% 109 68% 30% 80 82 2.1 1.5 FY 00 115 84% 110 78% 33% 96 92 2.0 1.2 FY 01 119 79% 111 76% 38% 95 91 3.2 2.0 FY 02 135 77% 115 80% 43% 104 99 3.4 1.8 FY 03 138 83% 120 84% 46% 114 107 3.5 3.5 FY 04 144 82% 124 83% 54% 118 114 3.4 5.6

(Source: i-Sec, CMA, JAL) The cement industry has strong regional characteristics with long distance transportation being an expensive proposition given the fact that cement is bulky commodity. The demand-supply imbalances within each of the regions in the country determine the price differentials.

44


Region-wise Cement Consumption Trend:

(Source: CMA & Crisinfac) While, regions of Southern and Western India are cement surplus, regions in Eastern and Northern India are cement-deficit. This is due to the concentration of lime stone reserves in Andhra Pradesh, Karnataka, Gujarat, Rajasthan, Madhya Pradesh and Maharashtra. The plants are located in clusters near limestone mines. The cluster-wise cement capacities are tabulated hereunder:

Sr. No.

Cluster Installed Capacity (TPA) (as on March 31, 2002)

1. Bilaspur 11,253,990 2. Chanderia 9,116,640 3. Chandrapur 8,430,840 4. Gulbarga 10,772,390 5. Nalgonda 6,437,420 6. Satna* 12,742,640 7. Yerraguntla 7,111,590 8. Total cluster 65,865,510 9. Non cluster 64,138,420 Grand Total** 130,003,930

* At the end of FY 200-04, the capacity of the Satna cluster (in which JAL’s units are located) is 15.9 million TPA. ** At the end of FY 200-04, the countrywide installed capacity is 144 million TPA.

(Source: JAL)

45


Region-wise cement demand & supply position for last 5 years is summarized hereunder:

(Million TPA) 1998-99 1999-00 2000-01 2001-02 2002-03 Capacity (Available) 105.2 109.7 115.9 130.0 139.0

North 23.5 24.8 26.0 28.4 31.0 South 29.0 31.6 33.5 41.3 44.6 East 8.3 8.8 8.9 21.8 22.3 West 44.3 44.6 47.4 38.5 41.0

Production 81.7 94.2 93.4 102.0 111.4 North 17.8 21.3 21.1 23.8 26.6 South 24.8 28.9 27.3 29.5 33.4 East 5.3 6.2 6.6 16.7 16.7 West 33.7 37.8 38.4 32.1 34.7

Demand 79.8 91.9 90.0 99.0 107.6 North 23.8 28.7 28.1 31.5 34.1 South 22.3 25.7 23.8 26.1 29.7 East 9.8 12.0 12.9 16.3 17.0 West 23.9 25.5 25.2 25.1 26.9

(Source: Crisinfac) The above table shows that the Northern region is having a deficit due to a comparatively higher rate of growth in demand, particularly in states like Punjab, Haryana and Delhi. The demand in this region is driven predominantly by rural demand and realizations have been improving along with increase in construction demand. Further, cement markets of Uttar Pradesh, Bihar and Madhya Pradesh may see a short supply, as a result of which prices are expected to firm up in these markets. The resultant healthy demand situation is expected to favorably impact companies such as JAL, which are located in the Satna clusters. Satna Cluster - Scenario The growth of cement production and consumption on All India basis during the period 1997-98 to 2001-02 has registered a compounded annual rate of growth (CARG) of 7.48% and 7.53% respectively. As against the aforesaid All India compounded annual rate of growth, cement consumption and market share of the Satna Cluster, in which JAL plants are located, have witnessed an appreciable increase as under:

1996-97 2003-04 Major Market Total Cement Consumption (Million MT)

% of market share of Satna Cluster

Total Cement Consumption (Million MT)

% of market share of Satna Cluster

Uttar Pradesh Madhya Pradesh Bihar

7.39 4.26 2.50

67.58 30.25 13.31

14.76 5.57 5.16

69.16 47.91 22.41

Total 14.15 25.49 (Source: JAL) It may be observed that consumption in the aforesaid market has registered an average annual growth of 11.5%. It is expected that the markets in Uttar Pradesh, Bihar and Nepal will grow by 10 percent while Madhya Pradesh will grow by 5%. Accordingly, the supply deficit in the cluster is projected to increase to 1.6 million TPA in 2003-04, 3.12 million TPA in

46


2004-05, 4.7 million TPA in 2005-06 and 6.45 million TPA in 2006-07. With the additional capacity of JAL scheduled to be fully available from FY 2005 onwards, it will be ideally placed to benefit from the improvement in market conditions. JAL primarily caters to markets in Uttar Pradesh, Bihar, Madhya Pradesh and Nepal (these markets respectively accounted for 48.8%, 8.5%, 22.8% and 5.9% of JAL’s total cement sales during FY 03-04) and hence it can be expected that in comparison to other manufacturers in the same region, JAL stands to gain significantly both in terms of market share as well as profitability since its capacity increase by way of enhancement of existing facilities as also reduction in power cost upon setting up the captive power units will make it more competitive. Currently, it enjoys a market share of 18.3% in the State of Uttar Pradesh and 14.2% in the State of Madhya Pradesh. In Bihar, the company has a market share of approx. 12%. Growth in Cement Production in the Satna cluster

13.6

12.8

13.713.2

15.0

14.1

15.315.2

15.915.7

02468

10121416

MillionMT

1999-00 2000-01 2001-02 2002-03 2003-04 YEAR

InstalledCapacity

CementProduction

Installed Capacity vis-à-vis Expected Demand The installed capacity in the Satna Cluster vis-à-vis its likely share in expected demand, based on expected consumption in Uttar Pradesh and Bihar at a growth rate of 10% and 5% growth rate of consumption in Madhya Pradesh during the next 3 years (2004-05 to 2006-07) excluding JAL's incremental capacity under development is projected as under:

(Figures in ‘000 MTs)

Sr. No.

Description 2004-05 2005-06 2006-07

1. Installed capacity in Satna Cluster 16,300 16,300 16,300 2. Likely share of Satna Cluster in expected

demand 18,022 19,609 21,347

3. Surplus / deficit vis-à-vis installed capacity -1,722 -3,309 -5,047 4. Surplus / deficit as % of installed capacity -10.56 -20.3 -30.96

(Source: JAL) Thus, there is likely to be a shortfall in production of 5.05 million TPA, corresponding to about 31.80% of the existing capacity.

47


JAL’s strategy to maintain and enhance its leading position within the Indian cement sector: Key Strategies Facility Expansion The cement division is undergoing a multi-pronged capacity expansion plan to 7.0 million TPA, largely through upgrading of the facilities at its existing units Clinker production to increase from 13,900 TPD to 16,900 TPD Thermal Energy consumption across Jaypee Cement is 690 Kcal per tonne Power Consumption across Jaypee Cement is below 85 units per tonne of cement produced

The setting up of two captive power units for the cement division has achieved substantial progress and shall result in significant production synergies for Jaypee Cement and result in an overall lower cost of production. 3rd Captive Power plant (Exp C.O.D in Oct’05) will bring the power cost across Jaypee Cement below Rs 3 per unit 1 million TPA grinding unit at Tanda near Faizabad UP is being commissioned at flyash pond of NTPC to source flyash at zero cost. Locational advantage shall accrue perpetual savings by logistics control.

Increasing Customer Focus Jaypee Cement continues to be client focused and is extremely sensitive to their requirements in the rapidly changing face of the markets.

48


Power Generation The Indian Electricity Scenario The all India installed capacity of electric power generating stations under utilities was 112,058.42 MW as on 31.3.2004 consisting of 29,500.23 MW hydro based, 77,968.53 MW thermal based and 2,720 MW nuclear and 1,869.66 MW wind based. A capacity addition target of 5,202.34 MW consisting of 3,765 MW of Hydro and 1,437.34 MW of thermal was envisaged for the year 2003-04. As against the aforesaid capacity addition target, only a capacity addition of 3,951.62 MW consisting of 2,590 MW of hydro and 1,361.62 MW of thermal was achieved. The energy requirement in 2002-03 was 5,45,674 MU, of which only 4,97,589 MU were available, leaving a shortfall of 8.8%. While the peaking requirement was 81,492 MW in 2002-03, a peak demand met was only 71,547 MW, leaving a shortage of 12.2%. Power generation in 2003-04 was 558134 MU. The 16th Electric Power Survey (EPS) carried out by the Central Electricity Authority has projected a peak demand of 1,15,705 MW and an energy requirement of 7,19,097 MU by the end of 10th Plan while the requirement by the end of 11th Plan has been projected as 9,75,222 MU and 1,57,107 MW respectively. Accordingly, during the 10th Plan period a capacity addition of 55,158 MW is required. However it is likely that a capacity addition of only 41,110 MW would be feasible during the period having regard to the financial condition of the power utilities and the level of preparedness of projects. The effort is to close the deficit by the end of the 11th Plan to ensure “ Power for all by 2012”. Power Infrastructure in India Generating Capacity as on 31.03.04

Wind 1.7%

Nuclear 2.5%

Hydro 25.0%

Thermal70.8%

Total 112,058.42 MW (* In addition Captive capacity of about 25,000 MW) (Source: Ministry of Power website) Sector-wise Installed Capacity

Central Sector 30%

State Sector 59%

Private Sector 11%

49


(Source: Ministry of Power website)

Power Supply Position (Source: Ministry of Power website) Power development - projections for next ten years Target to add more than 100,000 MW by year 2012 and 41,000 MW planned by 2007 (Source: 16th Electric Power Survey) Projected Energy Demand (million units) State / Year 2004-05 2006-07 2011-12 Northern Region 192,847 220,820 308,528 Western Region 200,269 224,927 299,075 Southern Region 171,258 194,102 262,718 Eastern Region 62,601 69,467 90,396 North-Eastern Region 8,090 9,501 14,061 Total 635,065 718,817 974,778 (Source: Crisinfac) Projected Peak Demand (MW) State / Year 2004-05 2006-07 2011-12 Northern Region 31,017 35,540 49,674 Western Region 31,386 35,223 46,825 Southern Region 27,337 31,017 42,061 Eastern Region 10,771 11,990 15,664 North-Eastern Region 1,601 1,875 2,789 Total 102,161 115,645 157,013

1992-93 1996-97 2000-01 2002-03

Power Shortages (%) Peak Shortages (%)

7.3 11.5 7.8 8.8 12.2 13.0

18.0 20.5

545 719975

M ar .'03 M ar.'07 M ar.'12

1 5 7 1 0 71 1 5 7 0 5

8 1 49 2

Peak Requirement (MW)

Energy Requirement (BU)

50


(Source: Crisinfac) Potential for Hydropower development The Indian power system requirement had been assessed to need a hydropower and thermal/nuclear power-mix in the ratio of 40:60 for flexibility in system operation depending on typical load pattern. The present ratio is 25:75, which needs to be corrected immediately to meet peak load requirements as well as system and frequency stability. Hydropower is clean power having no pollution ramifications during operation and it is most cost effective option - free from inflation linked to fuel consumption. Although it is effective tool to counter large variations between peak and off peak requirements and frequency variations, the Hydro share in global power generation has reduced from 21% to 17.1% as evident by the chart below:

Gas 12.1%

O il 24.7%

Coal 38.2%

O thers **0.7%

Nuclear3.3% Hydro

21.0%Gas

17.4%Oil 7 .9%

Coal 39.1%

Others **1.6%

Nuclear16.9%

Hydro17.1%

1973 2000

(Source: Ministry of Power website) The estimated hydro potential in the country is 1,50,000 MW (corresponding to 84,044 MW at 60% load factor) out of which only 27,010 MW amounting to 18% of the total potential has been harnessed. Despite hydroelectric projects being recognized as the most economic and preferred source of electricity, the share of hydropower has declined in India steadily. At the time of Independence, the share of hydro in the total installed capacity was around 37% which continued to rise, crossing 50% in the year 1963. The share of hydro, however, started declining thereafter. Until the late seventies, the share of hydro remained above 40%, considered to be the ideal hydrothermal mix for meeting the demand in an efficient manner. However, ever since the eighties, the share of hydro has started declining sharply and at present, the share of hydro constitutes only about 25% of the overall installed capacity of the country. The graph below shows the trend over the years (Source: Ministry of Power website)

25%29%40%46%41%33%

75%71%60%54%59%67%

'50 '60 '70 '80 '90 2003Hydro Thermal + Others

51


Faced with growing mismatch between hydro and thermal power, the Government is emphasizing more on development of hydropower generation. The target for 10th five-year plan is 14,393 MW, which is higher than 13,666 MW developed during last four 5-year plans.

1057 3812 2873 3828 2427

4538

IV V VI VII VIII IX

Actual Target 14393

20000 +

X XI

(Source: Ministry of Power website)

5 year plans

JAL entered in to the business of power generation through hydel-power project SPVs. Its (though separate subsidiaries) 300 MW Baspa – II project has already commenced operations in June 2003, while the 400 MW Vishnuprayag Hydel Project is expected to be operational by December, 2006. The works in respect of 1,000 MW Karcham Wangtoo Project are expected to commence in FY 2004-05 and the project is expected to be commissioned in 2009. The Energy & Resources Institute (TERI) had been commissioned to estimate the demand-supply gaps in the northern region of the country. TERI has provided Demand-Supply analysis for future years in respect of the states in the Northern Region viz. Delhi, Haryana, Punjab, Rajasthan and Uttar Pradesh. A summary of the same is presented hereunder:

Energy Available Year Existing (MU)

Future (MU)

UAS* (MU)

Total (MU)

Peak (MW)

Energy Requirement (MU)

Peak Load (MW)

Energy Surplus / (Deficit)

Peak Surplus / (Deficit)

Delhi 2003-04 19,865 0 2,448 22,313 3,348 20,897 3,508 6.77% (4.57%) 2005-06 20,469 1,151 2,739 24,360 3,655 23,003 3,862 5.90% (5.36%) 2007-08 20,511 4,125 3,201 27,838 4,177 25,233 4,236 10.32% (1.40%) Punjab 2003-04 27,701 435 1,119 29,256 5,391 31,544 5,800 (7.25%) (7.07%) 2005-06 28,005 1,555 1,314 30,874 5,689 34,680 6,378 (10.98%) (10.81%) 2007-08 28,215 11,096 1,660 40,970 7,549 38,153 7,017 7.38% 7.58% Haryana 2003-04 12,656 2,709 1,061 16,426 2,645 22,787 4,335 (27.91%) (39.00%) 2005-06 12,762 6,839 1,147 20,747 3,340 26,000 4,947 (20.20%) (32.47%) 2007-08 12,791 10,583 1,432 24,806 3,994 29,666 5,644 (16.38%) (29.24%) Rajasthan 2003-04 23,481 1,748 1,187 26,416 4,049 27,756 4,660 (4.83%) (13.10%) 2005-06 23,582 6,514 1,187 31,283 4,795 30,233 5,075 3.47% (5.53%) 2007-08 23,521 13,389 1,187 38,097 5,839 32,974 5,535 15.54% 5.48%

52


Uttar Pradesh 2003-04 34,855 299 2,250 37,404 5,390 48,591 7,796 (23.02%) (30.86%) 2005-06 34,882 4,111 2,250 41,242 5,943 52,968 8,508 (22.14%) (30.15%) 2007-08 34,822 5,260 2,250 42,388 6,765 57,280 9,201 (18.03%) (26.47%) Total 2003-04 118,558 5,191 8,065 131,815 20,823 151,575 26,099 (13.04%) (20.22%) 2005-06 119,700 20,170 8,637 148,506 23,422 166,884 28,770 (11.01%) (18.59%) 2007-08 119,860 44,453 9,730 174,099 28,324 183,306 31,633 (5.02%) (10.46%)

*UAS: Unallocated Share From the above it can be observed that: During 2003-04, with the exception of Delhi, the other states experience an energy deficit (13.04%), while the peak energy deficit experienced in all the above states is (20.22%). With incremental capacity additions, Delhi, Punjab and Rajasthan are expected to become energy surplus by 2007-08 while Haryana and Uttar Pradesh will continue to be energy deficient. Total energy and peak deficits in these states are likely to be 9,207 million units (5.02%) and 3,309 MW (10.46%) respectively However, except for Punjab and Rajasthan, other states will continue to remain deficient in respect of meeting the peak energy requirement. In 2007-08, energy as well as peak deficit for these states is expected to be at 5.025 and 10.46% Incremental capacity likely to be added during the period up to 2007-08 would be 25.53% of the total estimated generation. Even a delay in respect of 25% of the envisaged capacity addition will result in total energy deficit almost doubling the projected figure of 5.02%. It can be observed from the above that power deficit is likely to continue in the northern region over the next five year period. The deficit is likely to get accentuated in the event the commissioning of the capacity under construction / under planning gets delayed. Hydel power projects are economical and competitive in the long run. Power Purchase Agreements for Baspa-II and Vishnuprayag Hydel Projects have been entered into with Himachal Pradesh State Electricity Board and Uttar Pradesh Power Corporation Ltd. respectively. A Memorandum of Understanding (MoU) has been entered into with PTC for sale of entire power in respect of the Karcham Wangtoo Project. Further, the enactment of the Electricity Act, 2003 is expected to greatly benefit competitive power producers, with its emphasis on power trading and open access to transmission. The power sector reforms are expected to be pursued further, providing incentives to the State Electricity Boards to improve their operating and financial parameters, and also simultaneously introduce private sector participants in the transmission and distribution chain.

53


VII STOCK MARKET DATA Pursuant to the Scheme of Amalagamtion of erstwhile Jaiprakash Industries Limited, with Jaypee Cements Limited the name has been changed to Jaiprakash Associates Limited w.e.f 11th March 2004. Shares of the erstwhile Jaypee Cement Limited were not listed on any of the Stock exchanges as it was not a listed Company. However, trading of the Shares of the Merged Entity i.e. Jaiprakash Associates Limited commenced on the Stock Exchanges w.e.f 14th June, 2004. Therefore, the Share Market data of JAL is reproduced from 14th June, 2004. High and low prices quoted on BSE and NSE from 14th June, 2004 to 30th June, 2004 is as follows:

BSE Date of

High High(Rs) Volume

on date of High

Date of Low

Low(Rs.) Volume on date of low

Average(Rs.)

June 14, 2004

117.00 832974 June 24, 2004

73.45 545441 95.23

NSE Date of

High High(Rs) Volume

on date of High

Date of Low

Low(Rs.) Volume on date of

low

Average(Rs.)

June 14, 2004

116.80 2201698 June 24, 2004

73.65 1119016 95.23

♦ Market Price on 29th June, 2004 (Working day following the Board Meeting approving

the Debt issue) Rs.

Date BSE NSE Open High Low Close Open High Low Close

29.06.04 102.05 105.04 97.50 98.85 104.00 105.35 97.15 98.75 Volume on

the date

923997

2538024

54


VIII MANAGEMENT DISCUSSION & ANANLYSIS OF THE FINANCIAL STATEMENT FOR THE

LAST TWO FINANCIAL YEARS:** Profit & Loss Account:

(Rs. in crores) For Year Ended 31st March, JAL JAL(Consolidated)

2003 2004 2003 2004 Total Income (Net of changes in stock)

2,767.27 2,735.77 2558.07 2873.84

Construction Revenue Cement Sales Sale of Power Hotel Revenue Dividends & Other Income

1,682.08 988.17

-- 9.45 87.56

1,607.55 996.07

-- 10.13 122.02

1442.38 988.10

-- 58.77 68.82

1435.18 996.02 295.31 67.66 79.67

Increase / (Decrease) in Stocks

2.05 1.59 2.05 1.59

Operating Expenses 1,622.50 1,418.54 1440.26 1292.24 Excise Duty 164.63 176.68 164.63 176.68 Personnel Expenses 90.09 89.00 95.62 99.82 Selling & Distribution 179.50 211.09 179.50 211.85 Other Expenses 161.77 242.80 159.51 265.11 EBDITA 550.83 599.25 520.60 829.73 Depreciation 108.25 127.12 117.71 208.08 Interest 205.31 204.65 214.64 339.29 Profit Before Tax 237.27 267.48 188.25 282.36 Provision for Tax Current Tax - Deferred Tax

13.58

111.52

33.49 64.25

13.60 113.18

39.24 67.99

Profit After Tax 112.17 169.74 61.47 175.13 Cash Profit 331.94 361.11 179.18 383.21 Earnings Per Share 6.45 9.63 3.54 9.94 Cash Earnings per Share 18.84 16.85 10.17 21.75

** JAL came into existing on merger of Jaiprakash Industries Limited with Jaypee Cement Limited pursuant to the scheme of amalgamation w.e.f. 1st April, 2002 hence financial data of the merged entity for last two year only are given hereinabove. Turnover and Cash profits of the JAL are to the tune of Rs. 2,767.27 crores and Rs. 331.94 crores respectively for FY 2002-03. For FY 2003-04, the same stood at Rs. 2,735.77 crores and Rs. 361.11 crores respectively. JAL ranks amongst Top Listed Corporates in the Country in terms of turnover as well as cash profits. The Net Profit and Cash Profit of the merged entity for FY 03-04 are of the tune of Rs. 169.74 crores and Rs. 361.11 crores respectively.

55


During the FY 2003-04, total turnover was lower than in the previous year. However, EBDITA margin has improved to 21.90% compared to 19.90% in the previous year, contributing to the improvement in profitability. Balance Sheet

(Rs. in crores) As on 31st March, JAL JAL(Group Consolidated) 2003 2004 2003 2004 Gross Block 2,355.80 2517.04 2591.85 4405.15 Accu. Depreciation 827.77 931.24 871.08 1054.80 Net Block 1,528.03 1585.80 1720.77 3350.35 Capital Work in Progress 243.53 682.97 2162.50 1235.16 Investments 697.98 754.27 12.53 25.23 Deferred Tax Asset 57.22 5.10 76.52 21.91 Current Assets, Loans & Advances

1928.25 1760.18 1932.04 1956.18

Current Liabilities 1402.32 1292.34 1351.56 1332.88 Net Current Assets, Loan and advances

525.93 467.84 580.48 623.30

Unsecured Loans 193.76 173.15 193.98 198.37 Secured Loans 1532.94 1843.06 2907.58 3430.96 Deferred Tax Liability 396.79 408.92 431.57 444.95 Equity 176.22 176.22 176.22 176.22 Reserves & Surplus 760.30 899.20 746.04 872.93 Misc. expenditure not w/o 7.32 4.57 62.50 49.77 Net Worth 929.20 1070.85 859.76 999.38 Secured Loans/Net Worth 1.65 1.72 3.38 3.43

JAIPRAKASH ASSOCIATES LIMITED confirms that: 1. There have been no unusual or infrequent events or transactions, since the date of

the Auditors Report contained herein. 2. There are no significant economic changes that materially affected or are likely to

materially affect income from continued operations. 3. There are no known trends or uncertainties that have had or are likely to have a

material adverse impact on the revenue or income from continuing operations. 4. There have been no changes in the activity of the Issuer which may have had a

material effect on the statement of profit / loss for the last five years. Material Development: In the opinion of the Jaiprakash Associates Limited, since the date of the last financial statement disclosed in the Shelf Information Memorandum, there have been no circumstances that materially and adversely affect or are likely to affect the trading or profitability of the issuer, or the value of its assets, or its ability to pay its liabilities, within the next twelve months.

56


Corporate Governance: The Company complies with Corporate Governance as applicable to listed Companies and has constituted the committees such as Audit Committee, Shareholders / Investors Grievance & Share Transfer Committee and Remuneration Committee.

57


IX FINANCIALS OF GROUP COMPANIES PROMOTED BY PROMOTERS Financial Information of promoters group Companies as on 31st March, 2003

(Rs in Lacs) Sl. No

Name of the Company

Nature of Activity

Total Sale/ Income

Profit before Tax

Profit after tax

Paid up Capital

Reserves and

Surplus

Net Worth EPS for the

year

Book Value per

share Rs

1 Jaypee Ventures Limited

Technical Consultancy

2,953.28 566.22 112.02 7,370.23 3,886.86 11,242.39 3.39 127.26 2 Jaiprakash

Enterprises Limited ($)

Engineering and

Construction 5,761.47 688.89 399.61 267.00 920.31 1,187.31 14.97 44.47 3 Jaypee

Hotels Limited ($)

Hospitality

10,178.29 371.24 203.86 5,549.00 5,118.88 8,128.35 0.37 14.65 4 Jaypee

Greens Limited

Hospitality

495.64 (865.25) (865.25) 7,004.14 - 4,843.89 - 5.34 5 Jaiprakash

Hydro-Power

Limited*

Power Generation

46,000.06 43,106.31 - 9.37 6 Jaiprakash

Power Ventures Limited*

Powe Generation

25,500.00 25,419.78 - 9.97 7 Jaypee

Karcham Hydro

Corporation Limited*

Powe Generation

5.00 (22.00) - 8 JIL

Information Technology

Ltd

Powe Generation

629.06 8.72 64.50 829.02 - 654.75 0.78 7.90 9 Gaur & Negi

Limited** Information Technology

& Marketting 102.09 1.70 0.36 10.65 8.27 18.90 3.38 177.46 10 Siddharth

Utility PrivateLimited

Information Technology

& Marketting 952.82 (1,179.32) (1,179.32) 2,307.20 (3,802.80) (1,495.60) - 11 Ironwill

Holdings Private Limited

Investment

14.33 14.26 13.14 1.01 (518.26) (517.25) 130.10 - 12 Ironwill

Investments Private Limited

Investment

1.27 1.03 0.95 1.01 (19.74) (18.73) 9.41 - 13 Delhi Foams

Private Limited**

Investment

1.49 1.43 1.32 1.00 (29.50) (28.50) 132.00 14 Avantika

Rasayan Private Limited

Investment

3.12 1.26 1.16 1.00 31.96 32.96 11.60 329.60 15 Acura

Technocraft Industries Private Limited

Investment

2.88 1.73 1.14 1.29 127.14 128.43 8.84 995.58

58


16 Essjay

Enterprises Private Limited

Investment

50.39 40.15 38.38 18.00 123.81 141.81 21.33 78.80 17 Mum

Engineers Private

Limited**

Investment

4.20 0.07 (0.49) 42.24 34.32 76.56 - 181.25 18 Apar Builder

Private Limited**

Investment

3.53 2.83 1.76 35.50 23.06 58.56 4.96 164.96 19 Orphic

Imports & Exports Private Limited

Investment

3.25 2.54 1.58 26.05 31.36 57.41 0.61 22.04 20 SP Farms

Private Limited

Investment

0.64 0.54 0.54 2.06 24.54 26.60 5.13 242.65 21 Jaiprkash

Exports Pvt. Limited

Investment

2.77 2.57 2.37 1.15 (11.34) (10.19) 20.54 22 Sunshine

Detective & Securities

Private Limited

Investment

0.38 0.14 0.13 1.00 (37.49) (36.49) 1.30 23 Luckystrike

Financiers Private Limited

Investment

4.50 2.73 1.81 1.18 117.66 118.84 15.40 1,011.40 24 Aadarshila

Developers Private

Limited**

Investment

1.90 0.61 0.32 1.03 108.32 109.35 31.19 10,657.89 25 Hicon

Packaging Private

Limited**

Investment

5.31 (3.14) (3.14) 1.96 40.72 42.68 3,978.10 26 Sudershan

Properties Private Limited

Investment

1.24 0.85 0.45 28.05 (52.31) (24.26) 0.16 - 27 Patahk

Associates Private Limited

Investment

0.09 (0.19) (0.19) 3.38 9.47 12.85 38.01 28 Mega

Properties Private Limited

Investment

2.64 0.14 0.13 1.01 38.42 39.43 1.29 390.40 29 SRMB Dairy

Farmings Private

Limited**

Investment

2.07 (1.89) (2.00) 2.11 76.47 78.58 3,724.17 30 Peartree

Enterprises Private Limited

Investment

37.48 3.83 3.83 27.00 83.72 110.72 1.42 41.01 31 Pac Pharma

Drugs & Chemical

Private Limited

Investment

2.59 (0.20) (0.20) 1.00 (20.14) (19.14) - -

59


32 Eposil Plast Private Limited

Investment

1.64 (1.54) (1.54) 1.43 4.57 6.00 - 52.31 33 Pratique

Advertising &

Consultants Private

Limited**

Investment

0.61 0.39 0.24 1.00 0.54 1.54 24.23 154.00 34 Angad

Growth Firm Pvt Limited

Investment

0.54 0.29 0.27 1.00 4.23 5.23 2.69 52.30 35 Sparton

Growth Fund Private

Limited

Investment

0.37 0.09 0.06 1.00 8.13 9.13 0.60 91.30 Investment

* Project under implementation / Construction stage. ** Paid up value per share is Rs. 100/- $ Listed Companies

Companies at Sr. No. 11 to 35 are basically investment Companies of the promoters and their family members.

60


X CAPITAL ISSUES MADE DURING LAST THREE YEARS BY THE COMPANY UNDER THE

SAME MANAGEMENT Jaiprakash Associates Limited The Company has allotted 17,62,16,981 Equity Shares in the ratio of 1:1 to the shareholders of erstwhile Jaiprakash Industries Limited pursuant to its scheme of amalgamation with the Company. The subscribed equity capital of the company after giving effect to the above Scheme is Rs.176.22 crores divided into 17,62,16,981 Equity Shares of Rs.10/- each fully paid-up. Listed Ventures of Promoters: (a) Jaiprakash Enterprises Limited The Company originally known as Uttra Rasayan Udyog Limited (URL), was incorporated on 14-4-1978 and its name was changed to Jaypee Chemicals Limited on 14-2-1985. The Allied Construction Company Limited was amalgamated with Jaypee Chemicals Limited on 13-1-1986 and the name of Jaypee Chemicals Limited was changed to JAIPRAKASH ENTERPRISES LIMITED on 13-5-1988.

Issue Details Issue Size (Rs. in crores) Time of Issue Public Issue of Equity Shares of Rs. 10/- each at par

0.306 October, 1980

URL made the issue to set up the project for manufacturing of Malathion Technical at Sikandrabad Industrial Area, Distt. Bulandshahr (U.P.) wherein no projections regarding sales and profitability were made. As per the Delhi Stock Exchange’s Daily Quotations List, share was last traded on 23.09.2000 @ Rs.23/- per share. (b) Jaypee Hotels Limited

Issue details Issue size(Rs. in crores) Time of Issue Issue of 27,000,000 Equity shares of Rs.10/- each at a premium of Rs.15/- per share to the existing Shareholders of the Company (both Equity and Preference), Jaiprakash Industries Ltd. and Jaiprakash Enterprises Ltd. and employees of Jaypee Hotels Ltd. and Associate Companies

67.5 April 1993

61


JHL made the issue with the object to finance the cost of constructing, equipping and furnishing of 5-star deluxe hotel cum Convention Centre at Agra and for capital expenditure and long term working capital requirements (the said objects were achieved). The projections of sales and profitability were made as follows: -

Year Projected Sales

Actual Sales

Variance %

Projected Net Profit

Actual Net Profit

Variance %

1993 25.00 4.93 26.68 6.72 4.75 3.79 1994 38 14.50 33.88 (10.84) 8.77 (39.51) 1995 43 33.75 (21.51) 16.00 4.69 (70.68)

As per the Stock Exchange, Mumbai (BSE) during last six month high price of the shares was Rs. 25.70/- on 10th May, 2004 and Low Price of the shares was Rs. 15.05/- on 24th June, 2004.

62


XI BASIS FOR ISSUE PRICE

Issue is based at par and interest has been benchmarked based on the credit rating of the company, current market scenario and the financials of the Company.

63


Rs. 901,95,24,045

XII OUTSTANDING LITIGATIONS OR DEFAULTS Outstanding litigations pertaining to Jaiprakash Associates Limited Contingent liabilities not provided for as on March 31, 2004:

Contingent Liability not provided for in respect of:

(a) Outstanding balance of Bank Guarantees (Previous Year Rs. 573,42,47,484/-)

Margin Money Paid against the above (Previous Year Rs 27,80,93,569/-) Rs. 48,80,56,285

(b) (i) for Term Loans, NCDs and Deferred Payment Guarantees from Financial

Institutions/Banks to Jaiprakash Hydro-Power Limited (subsidiary company) [Previous Year Rs.1077,10,13,836/-]

(iii) for Term Loans from ICICI Bank to Jaypee Hotels Limited (subsidiary company) [Previous Year Rs.6,30,00,000/-]

(c)

Corporate Guarantees:

(ii) for Term Loans from Indian Overseas Bank to Jaypee Hotels Limited (subsidiary company) [Previous Year 42,62,50,000/-]

(iv) for Term Loan from Punjab National Bank to Jaiprakash Power Ventures Limited (subsidiary company) [Previous Year Rs.20,82,57,844/-]

(v) for Rupee Term Loans and Foreign Currency Loans from Power Finance Corporation Limited to Jaiprakash Power

Ventures Limited (JPVL)] (subsidiary company) [Previous Year Rs.100,54,70,100/-]

Claims against the Company not acknowledged as debts (Previous Year Rs 8,02,80,126/-)

Rs.1057,46,98,954

Rs. 45,50,00,000 Rs. 16,00,00,000 Rs. 20,01,47,945 Rs. 1,66,69,77,273 Rs. 304,71,04,907

(d)

Rs. 50,82,32,918 Outstanding Letters of Credit (Previous Year Rs.31,25,53,900/-)

Margin Money against the above (Previous Year Rs.4,49,98,480/-) Rs. 4,68,24,085

The Company has imported Capital Goods under Export Promotion Capital Goods Scheme [EPCG], where-under the Company is required to fulfill export obligation/deemed exports to the extent of 3.6 times the CIF Value of Imports upto 2010-2011. The liability aggregating to Rs. 34.80 Crores ( Previous Year Rs.36.10 Crores) may arise alongwith interest in the event of non-fulfilment of export obligation.

(e)

(f) The Madhya Pradesh Government through the Collector, Rewa issued a notice raising a demand on account of change in the conversion factor for calculation of Royalty on Limestone raised upto July, 1996 in respect of Jaypee Rewa Plant. The Company has contested the demand and the Hon’ble Madhya Pradesh High Court has stayed the demand [Previous Year Rs.5,83,64,425/-]. Amount deposited under protest Rs.2,33,45,768/- [Previous Year Rs.2,33,45,768/-].

Rs. 5,83,64,425

(g) Trade Tax rebate of 25% on sale of Cement manufactured with fly ash purchased from U.P. has been disputed by the U.P. Trade Tax Department [Previous Year Rs.35,04,66,387/-]. The Hon’ble High Court at Allahabad disposed the Writ Petition on 29.01.2004 in favour of the Company. The Department has thereafter filed SLP in the Hon’ble Supreme Court of India, which has been admitted and an interim order has been passed that pending disposal of the SLP, [i] the Department shall not take any step to encash the Bank Guarantees amounting to Rs.16,69,36,481/- [Previous Year Rs.25,86,34,597/-] and [ii] granted interim stay for refund of amount deposited under protest Rs.16,73,31,838/- [Previous Year Rs.9,18,30,271/] with the Department.

Rs. 45,49,44,677

64


(h)

Rs. 6,79,51,832

The Government of U.P. has imposed Entry Tax on Cement @ 2% on value of the goods w.e.f. 16.05.2003. This was challenged by the Company in the Hon’ble High Court at Allahabad and was decided in favour of the Company. However, the Order of the Hon’ble High Court has been challenged by the Department in the Hon’ble Supreme Court of India, the decision of which is awaited. The Company has deposited Rs.3,49,51,832/- under protest.

(i) Bihar Sales Tax under appeal.[Previous Year Rs.2,07,47,730/-] Rs. 1,71,20,206

(j)

(k)

(l)

Excise matters under appeal [Previous Year Rs.95,19,645/-] U.P. Trade Tax under appeal [Previous Year Rs.23,13,661/-] Entry Tax under appeal [Previous Year Rs.19,88,497/-]

Rs. 44,78,110

Rs. 32,70,909

Rs. 34,99,928

(m) Income Tax matters under appeal in respect of Assessment Year 2001-02 Rs. 19,81,69,225 Outstanding litigation as on March 31, 2004 A. Criminal Cases 1. There are 12 criminal cases pending before various courts and forums including

District Court at Chamoli and the Indore High Court. These cases have been filed for various reasons which interalia include theft, cheating, rash and negligent driving. The aggregate amount involved is approximately Rs. 1,600,000/-.

2. Further JAL has filed a case for misappropriation of the Accounts against Shri D.

Sinha of Tala Project and a Charge Sheet has been filed by the police in the Court of Chief Metropolitan Magistrate, Kolkata. The amount claimed by the Company in the matter is Rs.5,33,281.25.

B. Motor Claim Cases 1. There are 77 cases pending before various motor vehicle tribunals and the claims

in these cases have been filed for various reasons which interalia include claims made for damage caused to property and accidents resulting due to death of the victims. The aggregate amount involved is approximately Rs. 30,000,000/-.

C. Monopolies Restrictive Trade Practices Cases

1. There are three cases pending before the pending before the MRTP Commission, situated at New Delhi. The details of these cases are as follows:

This case was filed by the Directorate General (I&R) against the Cement

Manufacturers Association & Or wherein JIL is Respondent No. 16. A notice of Enquiry was issued by the Hon’ble Commission on the application of the Directorate General that the Respondents’ Cement Companies including JAL have unreasonably increased the cartelisation between the period February 1990 to August, 1990. This matter is pending yet pending before the Commission.

This case was filed by S.S. Mokha & Anr. against Cement Manufacturers Association & Ors wherein erstwhile J.P. Cement Limited (now JAL) is Respondent No. 9. Notice of Enquiry was issued by the Hon’ble Commission on the application of the Complainant that the Respondents’ Cement Companies including JAL

65


have unreasonably increased the cartelisation between the period July 2000 to December, 2000. This matter is pending yet pending before the Commission. This case has been filed by Shree Cements Ltd. & Ors against the erstwhile JIL (now JAL wherein JIL is Respondent No. 3. The Hon’ble Commission has terminated the Enquiry vide its order dated 3.12.2001.

The erstwhile JIL has filed various claims amounting to Rs.334,577,800/- which is pending before the Madhya Pradesh Arbitration Tribunal, Bhopal.

D. Labour Cases 1. There are 77 cases pending before various courts and forums including Labour

Courts situated at Rewa and Lucknow. These cases have been filed for various reasons which interalia include compensation claimed for the death of workmen due to accidents caused at the work place, reinstatement with full back wages and cases for the payment of wages. The aggregate amount involved is approximately Rs. 4,689,600/-.

2. Further for the period April 1990 to February 2001, for Rewa Plant, proceedings

under the sections 7Q and 14 B of the Provident Funds Act are under process for damages and interest amounting to Rs. 86,030/- in aggregate.

3. Further the period September 1997 to December 2000, for Bela Plant,

proceedings under the sections sections 7Q and 14 B of the Provident Funds Act are under process for damages and interest involving Rs. 72,000/- in aggregate.

F. Contract Labour Matters

Two complaints have been filed under Section 24 of CL (R&A) Act, 1970. G. Arbitration cases

These cases are pending before various courts and forums which interalia include Madhya Pradesh Arbitration Tribunal, Bhopal. The details of some of these cases are as follows

The erstwhile JIL has made a claim for an amount of Rs.336,876,473/- which is

pending at Madhya Pradesh Arbitration Tribunal, Bhopal.

JAL has made another claim on account of stoppage of work for a sum of

Rs.57.31 crores upto June 1994 and the said case is pending for cross-examination of the Company’s second witness. An additional claim subsequent to June 1994 was filed for a sum of Rs. 15,98,342.77 per month. The Company has also claimed past, pedentlite and future interest @ 19.5% p.a. on the awarded amount.

JAL has made a claim for a sum of Rs. 0.53 lacs. In the present case, an affidavit

of the Company’s witness has been filed. In the meanwhile the learned Sole Arbitrator, Shri J.M. Shrivastava passed away on 11.2.2004 and a request for the appointment of another Arbitrator is pending. An additional claim subsequent to December 1994 was filed for a sum of Rs. 9,395/- per month. Past, pedentlite and future interest @ 19.5% p.a has also been claimed on the awarded amount.

66


JAL has filed a claim on account of stoppage of work for a sum of Rs. 15.62 crores

upto June 1994 and the said case is pending for cross-examination of the Company’s second witness. Further an additional claim subsequent to June 1994 was filed for a sum of Rs. 15,283.45 per month. The Company has also claimed for Past, pedentelite and future interest @ 19.5% p.a on the awarded amount.

The Company has further made another claim for a sum of Rs.0.47 lacs KINDLY

CONFIRM THE AMOUNT] for recovery of payment made for the first installment of the lump sum payment for the items care and diversion of river during construction. The Company has also claimed for Past, pedentelite and future interest @ 18% p.a on the awarded amount.

The Government of Uttar Pradesh has filed an appeal in the High Court at Nainital

against the award passed in favour of JAL for reimbursement on account of increase in minimum wages. The said award was for an amount 0.35 crores, which included an Award, plus cost plus interest minus payment received which was made by the Rule of the Court on 16.7.1984.

Arbitration Cases for various claims filed by JIL of Rs.19.901,878/- are pending at

Madhya Pradesh Arbitration Tribunal, Bhopal. A Counter Claim for an amount of Rs.2,03,08,556/- has been filed by the Department against the erstwhile JIL is still pending.

The Company has filed this case to appoint an Arbitrator to decide the dispute

regarding the encashment of the Bank Guarantees furnished for the release of Hypothecated equipment. The lower Court has directed the LR to appoint an Arbitrator. However, the Government has filed an appeal before the High Court, Nainital, which is still pending.

2 cases are pending before the Court at Tehri challenging the award made by the Arbitrator in favor of the Company in respect of Agreement No.1/TDC-1/77-78 for reimbursement on account of increase in the minimum wages of the employees of JAL. The total amount of the order is Rs.2.21crores.

There is another case pending before the Nainital High Court. In this case, the

award in favour of JAL for a sum of Rs.0.50 crores (Award plus cost plus interest) was made The case is yet to be listed for final disposal at Nainital High Court.

The Government has filed an appeal before the High Court at Nainital against

the Award of Rs.0.07 crores passed by the Arbitrator in favour of JAL. THDC has filed an appeal which is pending before the High Court at Nainital

against the Award of the Arbitrator in favor of JAL for the payment for extra lead in disposal of excavated material for a sum of Rs.0.44 crores (Award and interest).

There are two cases pending before the High Court, Nainital against the Award

of Rs.0.83 crores (Award plus cost plus interest) which was passed in favour of JAL. The Award was made by the Arbitrator on account of reimbursement of refund of excess interest recovered on advance payments, delay in making payments

67


of intermediate bills and increase in minimum wages The said case pending before the Nainital High Court.

There are two cases pending for final arguments in the High Court, Nainital for

the refund of Rs.0.08 crores (Award plus cost plus interest) of Sales-tax recovered from the bill.

The Government has filed an appeal before the High Court against the order of

the Lower Court for appointing the Arbitrator to decide the dispute regarding the encashment of Bank Guarantee for release of hypothecated equipment is pending in the High Court. The case is yet to be listed in the Nainital High Court.

One matter regarding compensation for damage caused to the house of the claimant due to underground and tunneling work at Chamera-II site is pending.

H. Civil Cases 2 land related cases have been filed against JAL (formerly known as JIL) wherein the

plaintiff has challanged the purchase of a plot of Land by JAL and in the other, JAL has been accused of encroaching the land of one Mr. Prem Singh. Both the matters are pending.

JAL (formerly known as JIL) has filed 3 cases against Power Corporation Uttaranchal

seeking an injunction. In two of the three suits, JAL has sought mandatory injunction against the recovery of the bill amount, which is more than the actual. In the third case JAL has sought a temporary injunction against the threat of Power Corporation to disconnect the electricity connection, in case of non-payment of arrears.

JAL (formerly known as JIL) has filed a case against THDC for a sum of Rs. 2,70,00,000/-

for the Transit Fees of rip-rap material for the Dam obtained from Asena Quarry. The said case is pending before the Nainital High Court.

A claim of Rs.17 lakhs has been filed by the Company regarding the reimbursement

of the Royalty charges paid for extraction of sand in respect of SC 8.1 of Special Conditions of Contract Agreement which is pending at NHDC, Narmada Nagar.

Case No. 52,53,54,55,56,57, 58/A-67/93-94 dated 27.11.2001 for refund of fine

imposed on non payment of Royalty on Sand Extraction for Rs.26,280/- are pending at District Magistrate Court Khandwa.

I. Sales Tax Matters

One sale tax matter is pending involving the proposal of a refund of approximately Rs. 5,500,000 million to JIL for the assessment year 2001-2002. The Notice for re-assessment and show cause has already been forwarded.

JAL has filed a claim of Rs.13,700,000 million which is pending before the Indore High

Court Bench. The case is in relation to the reimbursement of commercial tax in respect of GC 45.2 of General Conditions of Contract Agreement.

68


The Company has filed an appeal against the order of the Assistant Commissioner, Commercial Tax, regarding tax on imported steels. The said appeal has been filed by JAL for an amount of Rs.5,600,000 at Commercial (Sales-tax Tribunal Bhopal).

Five cases are pending in the Courts/Tribunals in U.P. regarding Sales Tax involving Rs. 3,283,000.

An Appeal has been filed by for the year 1993-94 is pending before the Karnataka High Court. For the year 1993-94 a regular Assessment Order under Section 12 (3) of KST Act, 1957 was passed by the Assessing Officer. Since certain points were not considered, hence an Appeal Petition was filed in the Office of the First Appellate Authority. The Appeal was allowed and the case was remanded back to the Assessing Officer. Since the Assessing Officer errored while recomputing the turn over, an application for rectification was filed. The Assessing Officer rejected the Application and endorsement was issued accordingly. Against the endorsement, an Appeal was filed and the same was allowed. After the second Appeal was allowed the Revisional Authority initiated the proceedings and passed the ex-parte order by modifying the Assessment Order. The additional Tax for Rs.20,43,748/- was levied against the said order. The Appeal is pending in the High Court of Karnataka.

Five cases are pending before the Commercial Taxes Tribunal, Deputy. Commercial Appeal & High Court of Madhya .Pradesh. regarding Sales Tax, MPCT, CST, Entry Tax and Niraykar involving an amount of Rs. 3,211,853/-.

An Appeal has been filed for the year 1991-92 and the same is pending before the Appellate Tribunal . For the year 1991-92 a regular Assessment Order under Section 12 (3) of KST Act, 1957 was passed by the Assessing Officer. Revisional Authority reopened the case under Section 21 of the Act for which a notice was issued. An ex-parte order was passed by the Revisional authorities against which an appeal was filed and the same was allowed and the case was remanded to the Revisional Authority for fresh disposal. Thereafter the Revisional Authority passed the ex-parte order. Once again the Appeal is pending in the Karnataka Appellate Tribunal against the said order. The tax levied in the present case is Rs.2,567,086/-.

WCT @ 2% is to be deducted/deposited by JSS i.e. Rs.25,62,896/- as such the balance

tax due was Rs.90,00,697/-. Out of this a sum of Rs.49,52,800/- has been deposited by DD No.130821 dated 23.6.2003. The balance tax due of Rs.40,47,897/- is to be deposited. The Sales-tax proceedings are going on.

J. Compensation Cases One compensation case has been filed against a Director of JAL (formally known as

JIL) for a claim of Rs. 31,000/- for the death of a cow and buffalo.

Four compensation cases are pending before the High Court at Shimla. In one of the matter, persons seriously injured in an accident involving the truck of JIL have been awarded compensation of Rs. 4.2 lacs. The same has been challenged by United India Insurance Co. In the connected matter, the injured who were awarded

69


compensation of Rs. 420,000/- lacs havechallenged the award for enhancement of the awarded amount to Rs. 2 million

HPSEB has filed a recovery suit against JAL (formerly known as JIL) for an amount of

Rs. 18,75,527/- with costs and interest for the damage caused to HPSEB store and machinery due to the collapsing of the store retaining wall of JAL.

15 compensation cases of Rs. 4,900,000 (7,600,000 ) have been filed against JIL. In

two cases, the claimant was not working with the contractor where he suffered injury. In one matter the claimant got injured due to a personal fight with another labour. All dues were paid to him but he has filed a claim for Rs. 200,000/-. In another matter, the death took place outside the project area but a claim of Rs. 400,000 has been filed.

K. Excise duty & service tax 1. There are 71 cases pending before various courts and forums which include

Commissioner CEX, CEGAT, New Delhi and Mumbai, Assistant Commissioner, C.E.X., Satna. These cases have been filed for various reasons which interalia include CENVAT on capital goods and inputs, rejection of eligibility of capital goods, MODVAT on capital goods and inputs. The aggregate amount involved in all these pending cases is approximately Rs. 101,127,691/-.

L. Writ Petitions A Public Interest Litigation has been filed against JAL (formerly known as JIL)

before the High Court situated at Nainital for various reliefs which interalia include that JAL be directed to stop construction work as the same would be harmful to the environment and that the erstwhile JIL had started construction of a Motor Marg without obtaining requisite permission from the relevant authorities. However this case has not been listed.

JAL has filed a Writ Petition for lower rate of TDS is pending in the High Court of Sikkim.

JAL has further filed a Writ Petition in the High Court of Nainital against the demand of Rs. 700,000/- raised by the Government for payment of royalty on stone obtained from excavation done for foundation of the building. The said Writ Petition is pending before the Nainital High Court.

Another writ petition has been filed by the erstwhile JIL against DDA challenging

its demand for 50% unearned increase, amounting to Rs. 2 crores approximately, in respect of vesting of properties in the company.

A Writ Petition is pending before the High Court of Sikkim for lower rates on the Tax Deducted at Source.

Trade Tax pertaining to U.P. and Uttaranchal (Lakhwar Project) There are 10 cases pending in relation to the payment of Trade Tax in the State of

Uttar Pradesh. These cases are pending and they involve an mount of Rs. 2,054,170.78. Out of the 10 cases 7 cases have been filed by erstwhile JIL against

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the Commissioner for the liability of Trade Tax on sale of rock bolts, Chain Link Fabric and the liablility of trade tax on the transfer of right to use the equipments given by JIL to J.P. Hotels. The other 3 cases have been filed by the Commissioner against the erstwhile JIL.

M. Share Related Cases Of JAL

There are 59 matters that are pending against JAL before various Consumer Forum all over India.

P. Taxation matters

Further in one case THDC has filed an appeal before the High Court at Nainital for revision of Lower Court order in favour of JAL regarding liability of Trade Tax on machinery taken from THDC on rental basis.

1. 188 cases relating to shares of JAL are pending before various Courts in all over

India.

N. Consumer Court Matters

In one of these matters, a consumer complaint had been filed by the

Complainant before the District Consumer Forum for damages of Rs. 1.70 lacs along with interest @ 18% per annum. An appeal is pending before the State Commission Lucknow, to set aside the order of the District Consumer Forum of dismissing the complaint.

O. Insurance Claims Nine claim cases are pending with the Insurance Company involving insurance of

vehicles/machinery involving claims of approximately Rs.1,400,000 approximately and four claim cases involving personal accidental insurance are pending involving claims of approximately Rs. 2,700,000 approximately.

Five Insurance claims are pending with the Insurance Company involving claims of

approximately Rs. 1,700,000. These claims interalia included claim due to death by accident.

The Claim has been filed by Shri.Gyani Ram for a sum of Rs.3,00,000/- on 7.9.2003. The Claim involves Motor Policy regarding Tata Hitachi UH-181 for a sum of

Rs.1,150,000/- dated 11.02.2003. Mr. Rakesh Kumar has filed an insurance claim pertaining to the Waknaghat and the

same has been registered Claim No. 2004/21. The claim amount involved is Rs. 1,93,654/-.

One insurance case which pertains to Waknaghat site was filed by Late Shri Randhir Singh on 19.7.2003 which has been registered as Claim No. 2004/47. The claim amount involved is Rs.5,00,000/-. This case is being processed by Insurance Section H.O.

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An Application under Section 35 of Income-tax Act is pending before Deputy Commissioner, Bhopal for reduction in Tax Deducted at Source. The same is yet pending before the relevant authorities.

Appeal for the year 2000 – 2001 for Rs.51,040/- on the turn over of Annapurna Sale has been filed and is pending.

The Special Investigation Branch had surveyed and seized books of account of

erstwhile JIL and the proceedings of the same are pending.

One sales tax barrier case going on in Delhi.

In these two cases JIL is seeking recovery of approximately Rs. 2.6 crores in

aggregate from Sardar Sarover Narmada Nigam Ltd. and the Government of CE [ Please provide the Full form of CE] respectively. In the first of the two cases, where JIL offered a fixed amount of rebate, rebate was calculated by Sardar Sarovar Narmada Nigam Ltd. at 11% of the value of the work, thus taking escalation as well as increase in tender amount in to account. The 2nd matter relates to payment for pre-cooling of concrete.

along with interest @ 18% per annum are pending before various Courts and Consumer Forums against Jaiprakash Associates. Of these, eight cases have

JIL has filed three cases which are pending before the High Court at Shimla for charging of passengers tax on the buses carrying the staff to and fro from their place of residence to their work sites and for levying goods tax on Dimper and Dozes etc.

Proceedings against notice from AETC Chamba for misuse of RC is pending. Proceedings against notice for re-assessment for the year 1993-94, 1994-95 from

AETC Chamba is pending. Appeal of JIL and Hyudai before Additional Commission, Shimla is pending. The

approximate demand is Rs.1.5 lakhs. Refund of Rs.63 lakhs from Excise and Taxation Department, H P is pending. An Application under Section 35 of the Income - Tax Act is pending before

Deputy Commissioner, Bhopal for the reduction in TDS. An Appeal for imported material is pending before the Tribunal Commercial Tax,

Bhopal.

Proceedings against notice from ACCT regarding liability of entry tax for the year 2000-2001 and 2001- 2002.

Q. Recovery Suits

1. There are 5 recovery suits pending before various courts and forums. The details of 2 of the 5 cases is as follows:

Twenty money recovery suits involving Rs. 74.50 lacs approximately in aggregate

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been filed for recovery for damages caused due to inferior quality of cement supplied.

JAL has filed a case against the villagers of Chain, Lambagarh and Ravigram who had obstructed the roads leading to various work sites, disrupting the transportation of project vehicles and causing damage to vehicles/equipments of JAL. A Stay has been granted by the court in this case.

2. Ten money recovery suits have been filed by Jaiprakash Associates, which are

pending before the various Courts involving Rs.116.20 lacs approximately along with interest @ 18% per annum.

R. Miscellaneous Cases

JAL has further filed a case against one Mr. Bhopal Singh for creating obstructions

in the construction work of the project and also for disobeying the order of the Court.

In another matter, JAL had received wrong electricity bills and notice had been issued by the department to disconnect the electricity supply. Stay was granted against disconnection of electricity UPCL went in appeal but no relief has been given to UPCL by the High Court at Nainital.

There are 8 cases filed by erstwhile JIL (now JAL) against UJVNL and are pending

before the High Court situated at Nainital. These cases have been instituted on account of the assessment of theft of electricity as alleged by the Uttar Pradesh State Electricity Board. The total amount involved in these cases is approximately Rs. 21,822,889. Further in 5 of the 8 cases JAL has furnished Bank Guarantees for the half the amount involved in the said cases as per the interim orders passed by the High Court.

HB Stockholding has filed an Appeal challenging the order of the Hon’ble High

Court of Allahabad sanctioning the Scheme of Amalgamation for hiving off of the cement business to its wholly owned subsidiary. The said appeal is pending before the Division Bench of Allahabad High Court.

In another case HB Stockholding filed its objections to the scheme of amalgamation of JIL with Jaypee Cement before the Allahabad High Court . The Company has filed its reply to the objections raised. HB Stockholdings has further filed an application requesting the Court to summon the records of the dispatch of notices for the meeting of 29.3.2003 (is this the same meeting as that of the creditors and shareholders dated 26.3.2003) alleging that the meeting was not held properly. The erstwhile JIL is in the process of filing its reply. The Chairman appointed by the Court has already submitted the proceedings of the meetings and his affidavit before the Court confirming proper convening and holding of its meeting.

HB Stockholdings has filed an appeal before the Allahabad High Court against the order passed by the Company Law Board in favor of JAL. The said order passed by the CLB was made pursuant to a petition made by JAL in accordance with Section 163(3) of the Companies Act praying for directions to supply a copy of Register of Members.

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Case has been filed by Ms. Meenu Jain and Ors. against the erstwhile JIL at Muzaffar Nagar Court before the ADJ. In this matter vehicle of the Claimant was hit by trailer of JIL involving the death of 2 persons.

HB Stockholdings has further filed two suits and one contempt petition before the Delhi High Court against the erstwhile JIL. In the two suits filed , HB Stockholding sought stay of the 18th and 19th Annual General Meeting respectively of the erstwhile JIL on the ground that the accounts of the Company for the year 2000-2001 were not corrected. Due to absence of the counsel of HB Stockholdings on the date of hearing of the case, the matters came up for hearing after the Annual General Meeting of the erstwhile JIL was held. The Delhi High Court passed an Ex Parte Ad Interim injunction restraining the Company from implementing or acting upon Resolution No.1 (Relating to adoption of Balance Sheet of the Company) and Resolution No.9 (relating to investment in the equity of subsidiary Company). On receiving the Ex Parte Ad Interim Injunction, the erstwhile JIL approached the Hon’ble Delhi High Court for vacation of the same while noting the fact of the absence of Counsel for HB Stockholding in spite of service of notice of the party. The Delhi High Court was pleased to allow the company to carry on its day to day business including statutory obligations and investments by the company.

In another matter, TCSL has filed a case, regarding fake shares of the Company

being pledged with TCSL. The same is pending before the Court at Calcutta. In this matter an application of the Company is also pending before Delhi High Court.

M/S Cemmco has filed a winding up petition against JIL before the Lucknow

Bench of the Allahabad High Court. SEBI has carried out an investigation into the allegations of violation of takeover

regulation by the promoters and persons acting in concert. JAL has filed a case before the High Court of Allahabad challanging the

notification issued by the UP Government appointing a one man Commission for Enquiry in respect of the JAL's Taj Expressway Project, proceedings as well as the Report of the Enquiry Commission.

One Smt.Vandhana Agarwal has filed a case against erstwhile JIL which is

pending at a Consumer Production Cell for a sum of Rs.500,000 in relation to the non receipt of claim amount.

One Mr. Bhola Singh has filed a case against erstwhile JIL at CJM Court at New

Tehri in relation to the death of horse of the Claimant due to accident caused at the Asena Quarry.

One matter is pending before the Allahabad Tribunal in U.P. involving Rs. 2.37

lacs. Two matters are pending before the High Court at Jabalpur and Chhatisgarh respectively regarding Sales Tax, CST and Niraykar involving Rs. 1,55,56,000/-. In one matter, a writ has been filed challenging the Niraykar for the period 1.5.1997 to 20.5.1997 and in the other matter conditional stay has been

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granted for exemption of CST on coal purchases from SECL, Chhatisgarh. Bank Guarantees have been submitted to SECL.

JAL had filed a case for permanent injunction against the encashment of a Bank

Guarantee for Rs. 0.33 crores which was furnished for the release of hypothecated equipment in Delhi. This case has now been transferred to the Dehradun Court and the Court has granted a temporary injunction in this case.

Outstanding litigation as on March 31, 2004.

JAL had filed a case pertaining to the encashment of a Bank Guarantee for Rs.1.24 crores which was furnished for release for hypothecated equipment. The lower Court has granted permanent injunction in favour of the Company. However, the Department has filed an appeal in the High Court, Nainital, which is pending.

JAL has filed a case for the encashment of Bank Guarantee for Rs. 4.06 crores

which was furnished against security deposit and adhoc advance. The lower Court has granted permanent injunction in fvour of the Company. However, the Department has filed an appeal in the High Court, Nainital , which is pending.

[A claim of Rs.81.86 crores invoking Bank Guarantee submitted by M/s Jaiprakash

Hyundai Consortium against retention money and performance security to Satluj Jal Vidyut Nigam Ltd. Shimla is pending in the Delhi High Court.

Litigation/Disputed cases under Dispute Review Board (Local Body as per contract)

A Claim filed by erstwhile JIL of Rs.245.99 crores under extension of time and costs is pending.

A Claim filed by erstwhile JIL of Rs.143.42 crores for productivity loss is pending.

Miscellaneous claims filed by JIL for Rs.120.30 crores

Outstanding Litigation involving the Group Companies of JAL 1. JIL Information Technology Limited ("JPITL") Contingent liabilities not provided for as on March 31, 2003:

Bank Guarantee has been given in favour of Governor of Uttar Pradesh through Trade Tax Officer, NOIDA for an amount not exceeding Rs.50,000 against security for Sales Tax Registration. Margin money paid against the same is Rs.50,000 by way of Fixed Deposit, excluding interest thereon.

NIL 2. Jaiprakash Power Ventures Ltd. ("JPVL")

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Contingent liabilities not provided for as on March 31, 2003: NIL Outstanding litigation as on March 31, 2004

4. Jaypee Hotels Limited (" JHL")

Outstanding Bank Guarantees furnished by the bankers on behalf of the Company

(secured by Cash Margin Rs.0.55 Lacs and FDR with Banks Rs.22.68 Lacs) Rs.212.61 Lacs

Outstanding litigation as on March 31, 2004

Cases filed against JHL

A. Criminal Cases

There are eight labour cases filed by the workers of JHL against JHL alleging their termination as illegal. The same are pending before the Tis Hazari Courts and Karkardooma Courts at Delhi.

NIL 3. Jaypee Karcham Hydro Corporation Ltd. ("JKHL") Contingent liabilities not provided for as on March 31, 2003: Nil

Outstanding litigation as on March 31, 2004 NIL

Contingent liabilities not provided for as on March 31, 2003: Contingent Liabilities not provided for in respect of :-

Amount payable to UTI on premature redemption of Debentures, amount not

determinable.

There are four criminal cases filed against JHL and/or its employees pending before the Patiala House, Delhi. In one of the above mentioned four cases, a criminal complaint was filed by Crime Branch of Delhi Police against the Company and two of its employees alleging negligence at the time when a fire broke out in the hotel premises in January, 1986. In another case an employee Jayper Siddharth whose fingers were cut while working in the bakery has filed a case against Supervisors/Offices of the Company. The other two cases have been filed against two employees of JHL for rash and negligent driving, causing injuries in one case and death in the other. B. Labor Cases

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C. Civil Suits

Two Licensors of the shopping premises of one of the hotels namely JVC of the Company have filed two suits against JPL for the restoration of their premises and rights of licence/lease after renovation of the said hotel. These cases have recently been transferred from the High Court of Delhi to the District Court.

1. JPL has filed six suits for recovery of approx. Rs. 30 lacs from various parties like Modiluft Tours & Travels, Span Tours & Travels, CWN Entertainments (P) Ltd., UVI Holiday Ltd., DESU (DVB) Ltd. The said cases are pending before the Tis Hazari Courts, Delhi.

Contingent liabilities not provided for as on March 31, 2003:

There are few cases that have been filed by Mussorie Development Authority/District Authority against JPL before JRM, Mussorie in relation to the payment of property tax on hotel property, scavenging tax and conversation of forest.

Cases filed by JHL

A. Civil suits

B. Writ Petitions JPL has filed a writ petition against the orders of assessment of the property tax in respect of two of its hotels i.e. JVC & JS. Both the writs are pending at the High Court of Delhi. JPL has filed a suit against Government of NCT of Delhi for the enhancement of amounts of compensation in lieu of the acquisition of a small piece of land of JS. 5. Jaiprakash Enterprises Limited ("JEL")

Corporate Guarantee(s) against Mobilisation Advance: 3,28,00,000

Counter Guarantee(s) given to Banks & others in respect of Guarantee(s) furnished by Banks: (FDR held for Rs. 3,35,000/-

Corporate Guarantee(s) against performance of contract: 40,99,000 Outstanding litigation as on March 31, 2004 Cases filed against JEL A. Income Tax Cases The Income Tax Department has raised certain Income Tax demands for the assessment years 1984-85 to 1999-2000 to the extent of Rs.35, 247,965 /-. However, an amount of Rs.19, 890,839/- has been adjusted/recovered by the Department as Tax Deducted at Source. For the balance amount of Rs. 17,548,253/-, the matters are pending before the Income Tax Appellate Tribunal.

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6. Jaypee Greens Limited ("JGL") Contingent liabilities not provided for as on March 31, 2003:

Contingent Liabilities not provided for in respect of :-

Outstanding Bank Guarantees furnished by the bankers on behalf of the Company (secured by Cash Margin Rs.0.55 Lacs and FDR with Banks Rs.22.68 Lacs) Rs.212.61 Lacs (Previous Year Rs.252.59 Lacs)

Amount payable to UTI on premature redemption of Debentures, amount not determinable. Outstanding litigation as on March 31, 2004 Cases filed against JGL A. Civil Suits A recovery suit has been filed by one Mr. Jagrit Khaitan against JGL for the recovery of

Rs.53,000/- paid as Membership Fees. The same is pending for arguments before the District Court at New Delhi.

There has been a case filed by Sterling Holiday Resorts India Limited (SHRIL) against

Greater Noida Industrial Development Authority (GNIDA) and JGL as the Second Party, for reinstatement of their leasehold rights on JGL land and in the alternative for a compensation of Rs.800 million be given to SHRIL. Further SHRIL has also sought that the Ex SHRIL members be treated as members of Jaypee Green Golf Resort. The said case is pending before the District Court at Greater Noida.

B. Labor Matters There are 110 Reconciliation cases been filed by Ex-Sterling Employees against JGL and the same are pending before the Assistant Labor Commissioner, Noida. C. Cases under the Monopolies Restrictive Trade Practices There have been certain cases instituted against JGL by the Ex-employees of SHRIL Members seeking directions for the Ex-SHRIL Members to be treated as members of the Jaypee Greens Golf Resort and declare that JGL has been involved in Restrictive Trade Practices. Certain cases have further been filed to restrain JGL from admitting any new member till the final decision on the matter. The said cases are pending before the MRTP Commission, New Delhi. Cases filed by JGL A. Motor Accident Claims There have been two separate cases filed for compensation against JGL in a case wherein a company jeep met with an accident at Dadri on its way back from Gaziabad and three persons died on the spot. The Motor Accident Claims Tribunal at Gaziabad has exempted JGL of any liability and has decided that the liability of compensation lies only

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on the Insurance company. A similar application has been filed before Motor Accident Claims Tribunal at Meerut by JGL to avail exemption from liability on the same grounds as was decided upon by the Motor Accident Claims Tribunal at Gaziabad. B. Injunction JGL has filed two suits against the Ex-Sterling Employees seeking permanent injunction to hold Dharna/ Demonstration within a distance of 500 meters. The Courts have already granted a temporary injunction for the said purpose. The said cases are pending before the District Courts at Gautam Budh Nagar,

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XIII RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK

Internal Risk Factors Risks Related to Construction Contracts The hydro-power projects involve substantial river bed works (barrage and dams, etc.) and underground works (tunnels, power houses, etc.) and therefore carry the risks associated with floods in the river and adverse geological conditions. The law and order problem may also cause concern depending on the location of the project. Typically, the bids are made including the expected inflation factor. Thus, the risk of increase in prices of inputs is, to an extent, mitigated. With over three decades of involvement in execution of hydro-electric power projects works JAL has imbibed adequate experience to deal with and manage these risks. Further, stoppage of works due to instructions of employer or due to reasons beyond the control of the contractor would typically lead to payment of stoppage charges to the contractor, which would be over and above the contract prices. The contracts specify the quantum and nature of work to be carried out by the contractor. Any increase in the scope of work beyond the specifications due to factors such as geology, would be compensated by the contractors for an additional consideration. Contract Payment Risk In view of the fact that JAL typically takes up large size construction contracts of sizes over Rs. 500 crores which requires large scale mobilization of man power, machinery and material, the timely receipt of payments from the client is critical. Generally, the contract terms involve payment of advance for mobilization while the balance amount is linked to the physical progress of the project. JAL restricts its interest to those projects, which have the budgetary outlay / sources of finances tied up (i.e. financial closure achieved), thus, minimizing the risk of delays in payment. The outstanding receivables of JAL (other than Iraq project receivables) of JAL vis-à-vis its construction division turnover over the last 3 years have been as under: (Rs. in crores) YE 31st March 2002 2003 2004 Gross Revenue 1,599.72 1,766.26 1718.63 Receivables* 178.27 254.82 246.87 Debtors (months) 1.3 1.7 1.7

* excluding Iraq Projects dues. Implementation of Growth Strategies In order to take an advantage of the opportunities arising in the infrastructure sector, JAL has embarked on a multi-pronged growth strategy, which includes inter-alia:

Setting up hydro-electric power projects on Build-Own-Operate basis; Increasing the manufacturing capacities of the cement units; Entering the field of civil construction of railway tracks.

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JAL has successfully demonstrated its expertise in the field of civil engineering and construction of river valley and hydro-electric power projects. As an extension of the same, it has taken up development of its own power projects having regard to existing demand-supply and source-wise power generation imbalances in the country. JAL has experienced manpower in this specialized field with requisite expertise in implementing such projects. It has already successfully implemented the 3x100 MW Baspa-II hydro-electric project in Himachal Pradesh in spite of various difficulties including a difficult terrain and interruptions like the flash floods, at a competitive cost. It has already achieved substantial progress in respect of implementation of its 400 MW Vishnuprayag Hydro-electric project with the entire debt component tied up and commissioning expected within the envisaged time frame. The success in implementation of these projects is on account of JAL’s vast experience and in-house capabilities in the design and engineering of hydel projects, commitment shown by JAL by way of bringing in its envisaged equity contribution in a timely manner for the above projects and the confidence placed in its abilities by the lending community.

The cement division is undergoing a capacity expansion, which will take its capacity to 7 million TPA. The expansion includes upgradation of the facilities at its existing units and setting up of 1 million TPA grinding unit at Tanda in UP. The funds required for the program have already been tied-up and the scheme expected to be completed by September 2004. The program for the setting up two captive power units for the cement division has also achieved substantial progress and fund requirements for the same have already been tied-up. The 25 MW unit at Jaypee Puram started trial run from Nov. 2003 and fully stabilised production from May 2004 and second 25 MW coal based captive thermal plant is scheduled for commissioning in September 2004.

Subsidiary Investments JAL’s investments include its holding Jaypee Hotels Ltd. (JHL) and Special Purpose Vehicles (SPVs) formed for implementation and operation of 300 MW Baspa-II and 400 MW Vishnuprayag Hydro-electric projects. JHL's operations have been profitable and Baspa-II Hydro-electric project has already achieved successful commencement of commercial operations. The Vishnuprayag Hydro-electric project is also in an advanced stage of implementation and is expected to be commissioned within the envisaged time frame i.e. by December, 2006. Both the projects are competitive in terms of capital cost per MW of installed capacity and firm power purchase agreements with minimum guaranteed returns on equity are already in place. In order to further enhance the competitiveness of tariff, JHPL has embarked on debt swapping program to reduce the interest cost in respect of Baspa-II project by taking advantage of present low interest scenario and substantially improved risk perception of the project. The gap between the demand and supply of power is expected to continue in the northern region for many more years, which will ensure adequate off-take of power from these units, thus providing steady returns to JAL in the form of dividends.

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Litigation against the Company and group Companies Litigation against the company and the group companies alongwith the management perception to mitigate the same is given in Clause XII titled as "Outstanding Litigation or Default" herein below. External Risk Factors General Economic Conditions The Indian Economy is expected to grow at over 6% p.a. in the medium term. The growth is envisaged to be driven by investments in infrastructure, aimed at de-bottlenecking the transportation sector and achievement of sufficient and quality power at economical prices. The housing sector in the urban and semi-urban areas has also received an impetus. Having recognized these areas as growth drivers, Government has provided various incentives to the players and participants in these areas. Increasing economic activity and population is expected to increase both, per capita and aggregate, power and cement consumption. These factors are expected to positively impact the prospects of hydel power projects and the demand for cement, which are the thrust areas for JAL. Risk related to rising competition

Over the years JAL’s construction division has emerged as a leader in the field of civil engineering and construction of hydro-electric power / river valley projects in the country. The other engineering companies involved in this sector in India are HCC Ltd., L& T (ECC), Continental Construction Ltd. and Gammon India Ltd. JAL enjoys CR1, the highest contractor grading awarded by ICRA and is also placed favorably in terms of profit margins owing to its entrenched position, focus on large size contracts (typically with a size of over Rs. 500 crores), in-house design and engineering expertise, and the track record of timely and successful execution of contracts. JAL also compares favorably with other major construction firms in the country with a substantial order book to turnover ratio. In view of the above, JAL expects to retain the major slice of the market share even in respect of the hydro-power construction contracts to be awarded in future. With the existing demand-supply gap, both in terms of peak deficit as well as aggregate energy deficit, significant capacity addition is planned in the generation sector. With a need to correct the present hydel: thermal capacity ratio from 25:75 to 40:60 and long-term economic attractiveness of hydel projects, JAL can be expected to bag more construction contracts and keep its order book flowing. Generally the civil works, electro-mechanical works and specialized works in respect of the construction projects are covered by separate packages. However, in order to minimize the delays resulting from interface problems between various agencies, the construction contracts in many cases are now being awarded as a single consolidated Engineering, Procurement & Construction (EPC) package. This necessitates formation of consortia of various parties specializing in execution of different components. In view of the same, JAL, whenever deemed necessary submits its bid as a consortium partner along with other national and international players like SNC / Acres INC., SNC Lavalin /

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Acres Transnational, GE Canada, Voith Seimens Hydro Kraftwerkstechnik GmBH & Co. KG. etc.

of hydro power E & C business become very eluring. This will lead to more and more players coming into the business which will increase competition, changes in policies for awarding all major EPC Contracts to ICB route would enhance, competition on global level. Such increased competition may result into reduced margins.

The cement division comprises of over 30% of the installed cement manufacturing capacity in the Satna Cluster, which is its natural marketing zone. JAL expects a likely shortfall in production of cement in the Satna cluster, which would favorably impact the cement division prospects. The setting up of the captive power units for its cement plants in addition to steps taken by it to reduce the power consumption of the units will further improve its competitiveness by lowering its power cost, which is one of the key inputs. The increase in the cement manufacturing capacity to 7 MTPA by debottlenecking would further improve the cement division's profitability. The Government of India has taken initiative for development of huge power generation capacity in ensuing 5 years plans with special emphasis on hydro power project development in order to correct the Hydro Thermal Mix from 25:75 to 40:60. The segment

JAL presently being well equipped including having MOU for consortium bidding would enable it to take such competition and the rising competition should not make a dent on JAL's profit and turnover.

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XIV DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM :

To ensure that Investors grievances are attended to expeditiously the issuer has appointed M/s. Alankit Assignments Limited as its Registrar and Share Transfer Agent :

Tel No. 011-51540060 - 63

Compliance Officer:

Tel No.: 011- 26141794

Alankit Assignments Limited 2 E/8, First Floor, Jhandewala Extension, New Delhi 110055

Fax No. 011-51540064 Email : [email protected] Further, investors may note that a compliance officer has also been appointed by the Issuer and he may be contacted in case of any grievances at the following address :

Shri H. K. Vaid President (Corporate) & Company Secretary JA House, 63, Basant Lok, Vasant Vihar, New Delhi 110057

Fax No.:011-26145389 Email: [email protected] The details regarding normal time taken for disposal of various types of investors grievances is given below: 1. Transfer/Transmission of equity shares : 30 days 2. Change of Address : 7 days 3. Issuance of duplicate share certificates : 45 days 4. Non receipt of share certificates : 7 days 5. Non receipt of dividend warrants : 7 days 6. Noting of bank mandate : 7 days As on date there is no outstanding grievances against Jaiprakash Associates Limited from investors/ shareholders.

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PART II

XV GENERAL INFORMATION Consent Board of Directors at its meeting dated 7th June, 2004 had approved the issue of Debentures to the extent of Rs. 500 crores and further authroised Finance Committee to do all such acts, deeds and things in relation thereto. M/s. M. P. Singh & Associates, the Statutory Auditors of the Issuer have their written consent to their report being included in the form and content in which it appears in this Shelf Information Memorandum. UTI Bank Limited has given its written consent to act as Trustees to the issue and for including their name in the Shelf Information Memorandum. M/s Alankit Assignments Limited has given its consent written consent to act as Registrar to the issue and for including its name in the Shelf Information Memorandum Registrar. Change in Directors of Jaiprakash Associates Limited during the Last Three Years The following Persons have been appointed and inducted into the Board as Directors during the last 3 years.

Sr. No.

Name of Director Date of Appointment

1 Shri Rahul Kumar 30/06/2001 2 Shri Vijay Kumar Jain 30/06/2001 3 Shri Ram Bahadur Singh 30/06/2001 4 Shri D. N. Davar 21/09/2002 5 Shri B. K. Taparia 08/09/2003 6 Shri R. N. Bhardwaj (LIC Nominee) 18/03/2004 7 Shri Gopi K. Arora 18/03/2004 8 Shri S. K. Jain 18/03/2004 9 Shri S. K. Sharma 18/03/2004

10 23/04/2004 Shri M. J. Subbaiah (ICICI Bank Nominee)

11 Shri M. S. Srivastava 30/06/2004 12 Shri Samir Gaur 30/06/2004 13 Shri Pankaj Gaur 30/06/2004 14 Shri Rakesh Sharma 30/06/2004 15 Shri S. D. Nailwal 30/06/2004 16 Shri Suren Jain 30/06/2004 17 Shri S. C. K. Patne 30/06/2004

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The following Persons have ceased to be Directors during the last 3 years

Sr. No.

Name of Director Date Reason

1 Shri I. N. Dube 12/09/2002 Resigned 2 Shri S. P. Joshi 12/09/2002 Resigned 3 Shri S. C. Bhargava (LIC Nominee) 25/02/2004 Nomination withdrawn 4 Shri Harish K. Vaid 18/03/2004 Resigned 5 Shri Vijay Kumar Jain 18/03/2004 Resigned 6 Shri Ram Bahadur Singh 18/03/2004 Resigned 7 Shri B. K. Taparia 20/06/2004 Resigned

Change in Auditors of Jaiprakash Associates Limited During The Last Three Years There are no changes in the Auditors of the Company in last three years. Authority for the Present Offer Board of Directors of the Company has passed a resolution to raise the fund aggregating Rs. 500 crores by issuing Privately Placed Secured Redeemable Non-Convertible Debenture under the Shelf Information Memorandum vide its Board Meeting dated 7th June, 2004.

Name and address :

Procedure and time schedule for allotment and issue of certificates. Debentures would be allotted by Board of Directors of the Issuer and Letter of Allotment would be issued / credited within 45 days from Deemed date of allotment and Debenture Certificate in Dematerialised form would be issued / credited within 3 months from the date of allotment.

Company Secretary Shri H. K. Vaid President (Corporate) & Company Secy. JA House, 63, Basant Lok, Vasant Vihar, New Delhi 110057 Tel No.: 011- 26141794 Fax No.:011-26145389 Email: [email protected]

Auditors: M.P. Singh & Associates Chartered Accountants Address : B-8/14, Vasant Vihar, New Delhi 110057 Tel No. : 011-26146892 Fax No.:011-26148150 Email id. : [email protected]

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XVI AUDITORS REPORT & FINANCIAL INFORMATION

20th July, 2004 To, The Managing Director, Jaiprakash Associates Limited New Delhi

Auditors Report for your privately placed Debentures aggregating Rs. 500 crores

Dear Sir, We were engaged to report on the financial information of Jaiprakash Associates Limited (‘formerly known as Jaypee Cement Limited) annexed to this report, which is required to be prepared in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘the Guidelines’), issued by Securities and Exchange Board of India (‘SEBI’) on 19 January 2000 in pursuance of section 11 of the Securities and Exchange Board of India Act, 1992. The financial information is proposed to be included in the Offer Document of the Company in connection with the issue of Secured Redeemable Non Convertible Debentures of Rs 500 crores on a private placement basis. We were engaged to report on the annexed statements of assets and liabilities of the Company (after merger) as at 31 March 2004, 31 March 2003 and of erstwhile Jaiprakash Industries Limited and erstwhile Jaypee Cement Limited (before scheme of Amalgamation) as at 31 March 2002, 31 March 2001 and 31 March 2000 and the annexed statements of Profit and loss for each of the years ended on those dates (‘the summary statements’) (Annexure I). The summary statements have been extracted from the financial statements drawn up in confirmation with the provisions of sub section (1), (2) and (5) of section 211 and sub section (5) of the Companies Act, 1956, audited by us. Based on our audit of the financial statements, we confirm that: The summary statements have been reproduced from the audited financial statements of the respective years. The following changes in accounting policy may also be considered, while going through the summary statements. a. Year ended March 31, 2001 “Revenue Recognition

(i) Revenues/Incomes and Costs/Expenditures are accounted for on accrual basis as they are earned or incurred. However, as a matter of prudence, with effect from 1st April 2000, the retention money deducted by the clients from works bills related to engineering contracts shall be recognized as revenue in the year in which it is released by the client after fulfillment of contractual obligations.” “Consequent, upon the decision stated under significant Accounting Policies that the retention money deducted from the works bills related to engineering

87


contracts should be recognized as revenue in the year in which it is released by the clients after fulfillment of the contractual obligations, the retention money amounting to Rs. 41.39 crores deducted from the works bills during the year shall be recognized as revenue in the year in which the same is released by the clients. The revenue and profit for the year would have been more by Rs. 41.39 crores had the previous accounting policy been continued.”

b. Year ended 31st March 2004

“Accounting for “Construction Contracts” AS-7 [Revised] has been made mandatory for contracts entered into w.e.f. 1st April, 2003. For uniformity in accounting, the Company has decided to follow AS-7 [Revised] for all existing contracts also w.e.f. 1st April, 2003. Accordingly the Retention Money aggregating to Rs. 172.37 crores consisting of Rs. 131.63 crores pertaining to earlier years and Rs. 40.74 crores for the year ended 31st March, 2004 in respect of existing Contracts, which was hitherto accounted for as Revenue in the year in which defect liability period ceased on completion of the respective Contracts, has been recognized as Revenue for the year. Had this policy not been changed, the Gross Revenue and Profit for the year would have been lower by Rs.172.37 crores.”

The Company’s management is responsible for the preparation of the summary statements and the Capitalization statement. Our responsibility is to report based on the work done. We have performed such tests and procedures, which, in our opinion, were necessary for our reporting to you. These procedures include comparison of the annexed financial information with the Company’s audited financial statements. This report is intended solely for your information and for the Company to comply with the provision of the SEBI Guidelines and may not be suitable for any other purpose. Yours Sincerely, for M.P. SINGH & ASSOCIATES Chartered Accountants (Ravinder Nagpal) Partner Membership No: 81594

88


ANNEXURE I STATEMENT OF PROFITS AND LOSSES OF JAIPRAKASH ASSOCIATES LIMITED (JAL) FOR FY 2002-03 AND 2003-04 AND JAIPRAKASH ASSOCIATES LIMITED (GROUP CONSOLIDATED) FOR FY 2002-03 AND 2003-04

(Rs. in crores) For Year Ended 31st March, JAL JAL (Group Consolidated)

2003 2004 2003 2004 Total Income (Excl. changes in stock)

2,602.64 2,559.09 2,393.44 2,697.15

Construction Revenue Cement Sales Sale of Power Hotel Revenue Dividends & Other Income

1,682.08 823.54

-- 9.45 87.57

1,607.55 819.39

-- 10.13 122.02

1442.38 823.47

-- 58.77 68.82

1435.18 819.34 295.31 67.65 79.67

Increase / (Decrease) in Stocks

2.05 1.59 2.05 1.59

Operating Expenses 1,622.50 1,418.54 1440.26 1292.24 Personnel Expenses 90.09 89.00 95.62 99.82 Selling & Distribution 179.50 211.09 179.50 211.85 Other Expenses 161.77 242.80 159.51 265.11 EBDIT 550.83 599.25 520.60 829.72 Depreciation 108.25 127.12 117.71 208.08 Interest 205.31 204.65 214.64 339.29 Profit Before Tax 237.27 267.48 188.25 282.35 Provision for Tax - Current Tax - Deferred Tax

13.58

111.52

33.49 64.25

13.60 113.18

39.24 67.99

Profit After Tax 112.17 169.74 61.47 175.13 Cash Profit 331.94 361.11 292.36 451.19 Earnings Per Share 6.45 9.63 3.54 9.94 Cash Earnings per Share 18.84 16.85 16.59 25.60

89


STATEMENT OF ASSETS AND LIABILITIES OF JAL FOR FY 2002-03 AND 2003-04 AND JAL (GROUP CONSOLIDATED) FOR FY 2002-03 AND 2003-04

(Rs. in crores) As on 31st March, JAL JAL(Group Consolidated) 2003 2004 2003 2004 Gross Block 2,355.80 2517.04 2591.85 4405.15 Accu. Depreciation 827.77 931.24 871.08 1054.80 Net Block 1,528.03 1585.80 1720.77 3350.35 Capital Work in Progress 243.53 682.97 2162.50 1235.16 Investments 697.98 754.27 12.53 25.23 Deferred Tax Asset 57.22 5.10 76.52 21.91 Current Assets, Loans & Advances

1928.25 1760.18 1932.04 1956.18

Current Liabilities 1402.32 1292.34 1351.56 1332.88 Net Current Assets, Loan and advances

525.93 467.84 580.48 623.30

Unsecured Loans 193.76 173.15 193.98 198.37 Secured Loans 1532.94 1843.06 2907.58 3430.96 Deferred Tax Liability 396.79 408.92 431.57 444.95 Equity 176.22 176.22 176.22 176.22 Reserves & Surplus 760.30 899.20 746.04 872.93 Misc. expenditure not w/o 7.32 4.57 62.50 49.77 Net Worth 929.20 1070.85 859.76 999.38 Secured Loans/Net Worth 1.65 1.72 3.38 3.43

90


STATEMENT OF PROFITS AND LOSSES OF ERSTWHILE JAIPRAKASH INDUSTRIES LIMITED (JIL) FOR THE FINANCIAL YEAR 1999-00, 2000-01, 2001-02.

(Rs. in crores)

Erstwhile Jaiprakash Industries

Ltd. For Year Ended 31st March 2000 2001 2002 Total Income (Excl. changes in stock)

1264.57 1651.27 1,599.72

Increase/(Decrease) in Stocks 18.40 (12.36) - Operating Expenses 884.70 1104.71 1,002.23 Personnel Expenses 57.33 72.65 59.76 Selling & Distribution Expenses 87.75 85.65 - Other Expenses 99.04 114.64 151.90 EBITDA 241.90 346.91 385.83 Depreciation 57.87 69.87 56.95 Interest 138.03 169.04 169.40 Add: Extraordinary Items - - (18.00) Profit Before Tax 46.00 108.00 177.48 Provision for Tax Current Tax Deferred Tax

5.41

-

9.25

-

25.31 24.19

Profit After Tax 40.59 98.75 127.98 Cash Accruals 98.46 168.62 209.12 Earnings Per Share 2.57 6.24 7.43 Cash Earnings Per Share 6.22 10.65 12.15 Dividend Dividend Tax

- -

- -

19.01 1.13

Dividend (%) - - 12% EBITD Margin 16.99% 21.01% 24.12% PBT/Total Revenue 3.64% 6.54% 11.09%

91


STATEMENT OF ASSETS AND LIABILITIES OF ERSTWHILE JAIPRAKASH INDUSTRIES LIMITED (JIL) FOR THE FINANCIAL YEAR 1999-00, 2000-01, 2001-02. (Rs. in crores)

Erstwhile Jaiprakash Industries Ltd.

As on 31st March, 2000 2001 2002 Gross Block 1372.67 1570.96 1,101.61 Accu. Depreciation 450.73 514.52 325.54 Net Block 921.94 1056.44 776.07 Capital Work in Progress 44.99 38.66 77.27 Investments 539.07 834.49 1,035.85 Current Assets, Loan & Advances 1854.67 1881.42 1,947.59 Current Liabilities 1164.40 1381.64 1,269.32 Net Current Assets, Loan and advances

690.27 499.78 678.27

Unsecured Loans 128.02 126.90 69.31 Secured Loan 1136.74 1272.20 1,285.88 Deferred Tax Liability (NET) - - 197.28 Equity 158.24 158.24 172.17 Reserves & Surplus 773.30 872.05 842.82 Net Worth 931.51 1030.27 1,014.99

92


STATEMENT OF PROFITS AND LOSSES OF JAYPEE REWA CEMENT LIMITED FOR FINANCIAL YEAR ENDED 30TH SEPTEMBER 2000 (18 MONTHS) AND JAYPEE CEMENT LIMITED FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2002 (18 MONTHS). (Rs. in crores)

Jaypee Rewa

Cement Ltd.

Jaypee Cement Limited

For FY Ended 30.09.2000 31.03.2002 18 months 18 months Total Income (Excl. changes in stock)

401.21 1,001.58

Increase / (Decrease) in Stocks 2.83 (1.04) Manufacturing Expenses 241.50 537.08 Personnel Expenses 8.13 28.04 Selling & Distribution 96.79 200.94 Other Expenses 10.52 31.21 EBDIT 47.11 202.57 EBDIT Margin 9.52% 17.01% Depreciation - 66.27 Interest 69.08 73.62 Depreciation in respect of previous years

- 59.08@

Profit / (Loss) Before Tax (21.97) 63.39 Provision for Tax Current Tax Deferred Tax

- -

-- --

Profit / (Loss) After Tax (21.97) 4.31 Cash Accruals - 129.66

STATEMENT OF ASSETS AND LIABILITIES OF JAYPEE REWA CEMENT LIMITED FOR FINANCIAL YEAR ENDED 30TH SEPTEMBER 2000 (18 MONTHS) AND JAYPEE CEMENT LIMITED FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2002 (18 MONTHS). (Rs. in crores)

Jaypee

Rewa Cement

Ltd

Jaypee Cement

Ltd

As on 30.09.2000 31.03.2002 18 months 18 months Gross Block 476.17 1,112.48 Accu. Depreciation 28.02 395.14 Net Block 448.15 717.34 Capital Work in Progress 5.16 11.47 Current Assets 66.95 234.52 Current Liabilities & Provisions 72.73 190.36

93


Jaypee Rewa

Cement Ltd

Jaypee Cement

Ltd

As on 30.09.2000 31.03.2002 18 months 18 months Unsecured loans 24.67 286.26 Secured Loans 173.18 215.95 Deferred Tax Liability(NET) - 30.75

CAPITALISATION STATEMENT OF JAIPRAKASH ASSOCIATES LIMITED (JAL)

(Rs. Crs.) Particulars Pre issue as on As Adjusted for the issue

25th June, 2004 Short Term Debt (Borrowings) 130.00 130.00

Long Term Debts 1595.28 2095.28 Total 1725.28 2125.28 Shareholders Funds Share Capital (As per audited accounts of 31.03.2004)

176.22 176.22

Reserves (As per Audited Accounts of 31.03.2004)

899.20 899.20

Total Shareholder's Funds after taking into consideration miscellaneous expenditure

1070.85 1070.85

Long Term Debt / Networth 1.48 1.97

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ANNEXURE II

SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31ST MARCH 2004

General (i) The accounts are prepared on the historical cost basis and on the principles of a

going concern. (ii) Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles. Revenue Recognition (i) (a) Construction Division: Construction Revenue/Incomes and

Costs/Expenditures are accounted for on accrual basis as they are earned or incurred.

(b) Cement Division: Cement Sales are net of Excise Duty/Sales Tax/Trade Tax. (ii) Time Share - Mussoorie Hotel

Advances received for Time Share Weeks are reckoned as income in equal amounts spread over the Time Share period commencing from the year in which full payment is received.

(iii) Escalations / Claims

Escalations/claims have been taken in the accounts on the basis of receipts or as acknowledged by the clients.

(iv) Contract Expenses (a) The costs that are incurred before a contract is secured are treated as

expenses for the year in which these are incurred and charged to revenue.

(b) The costs attributable to contracts are normally identified with reference to respective contracts. However, the costs which cannot be identified / identifiable to a specified contract are charged to the general revenue in the year in which such costs are incurred.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known/materialised. Fixed Assets: Fixed Assets are stated at Cost of acquisition or construction inclusive of freight, erection & commissioning charges, duties and taxes and expenditure during construction period.

95


Depreciation: Depreciation on Fixed Assets is provided on Straight Line Method as per the classification and in the manner specified in Schedule-XIV to the Companies Act, 1956. Investments: Investments are stated at Cost, and a provision is made, where there is permanent diminution in the value of investments where applicable. Dividend is accounted for as and when received. Retirement Benefits: Retirement Benefits are provided in the books in the following manner: (a) Gratuity and Leave Encashment on Retirement - as per actuarial valuation. (b) Provident Fund and Family Pension are contributed as a percentage of salary /

wages. Inventories: (a) Stock of cement is valued at estimated cost or net realisable value, whichever is

less. Value of cement and clinker lying in the factory premises include excise duty, pursuant to the Accounting Standard (AS-2) [Revised].

(b) The closing stocks have been valued on the basis of Weighted Average Cost Method.

(c) Work-in-progress/Material -in-Process are valued at estimated cost. Foreign Currency Transactions (a) Loans repayable in Foreign Currency and outstanding at the close of the year

are expressed in Indian Currency at the rate of exchange prevailing on the date of Balance Sheet.

(b) Transactions in Foreign Currency are recorded in the Books of Account at the rate of exchange prevailing on the date of transaction or as provided in the respective contracts.

Lease Rentals [a] Operating Leases: Rentals are expensed with reference to lease terms. [b] [i] Finance Leases prior to 1st April, 2001: Rentals are expensed with reference

to lease term. [ii] Finance Leases on or after 1st April, 2001: The lower of the fair value of the

assets and present value of the minimum lease rentals will be capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental will be adjusted against the lease liability and the interest component will be charged to Profit & Loss Account.

Research and Development: Revenue expenditure on research and development is charged to Profit & Loss Account in the year in which it is incurred. Capital expenditure on research and development is shown as an addition to Fixed Assets. Miscellaneous Expenditure (i) Preliminary, Share Issue Expenses are amortised over a period of ten years.

96


(ii) Deferred Revenue Expenditures incurred upto 31st March, 2003 are amortised over a period of five years and Expenditures incurred after 1st April, 2003 will be written-off. in the year in which these are incurred in terms of AS-26.

Expenditure during Construction Period Expenditure incurred on projects/assets during implementation is capitalised and apportioned to projects/assets on commissioning. Earnings Per Share Basic earnings per equity share are being computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year. Borrowing Costs

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that accordingly taken substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

Segment Reporting Revenue, operating results, assets and liabilities have been identified to represent separate segments on the basis of their relationship to the operating activities of the segment. Assets, Liabilities, Revenue and Expenses which are not allocable to separate segment on a reasonable basis, are included under “Unallocated”. Taxes on Income Current Tax is determined as the amount of Tax payable in respect of Taxable Income for the year. Deferred Tax Liability is provided pursuant to Accounting Standard [AS-22]. Deferred Tax Asset and Deferred Tax Liability are calculated by applying tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

97


XVII OTHER PROVISIONS RELATING TO ACCOUNTS OF THE ISSUER COMPANY ♦ Jaiprakash Associates Limited confirms that there have been no changes in the

activity of the Issuer which may have had a material effect on the statement of profit/loss for the last five years.

For the year ended March 31, 2003 2004 Earnings per share 6.45 9.63 Return on Net Worth 12.07 15.85 Net Asset Value per share 52.72 60.76

98


XVIII STATUTORY AND OTHER INFORMATION a) Minimum Subscription

Pursuant to the notification no. SEBI/MRD/SE/AT/46/2003 dated 22nd December 2003 issued by SEBI minimum subscription clause is not applicable to the privately placed debt securities.

b) Expenses of the Issue giving separately fee payable: Trusteeship Fees: Fees for the Trusteeship shall be mutually agreed between

the parties. Registrar and Transfer Agent Fees as may be mutually agreed between the

parties. c) Commission/Brokerage:

Debt : Nil

d) Previous issue for cash:

Equity : Nil Debt : Nil

e) Previous public or rights issue, if any: Nil (during last five years) .

f) Issue of shares otherwise than on cash

Pursuant to scheme of Amalgamation as approved by the High Court all the shares of erstwhile Jaiprakash Industries Limited got cancelled and against that 17,62,16,981equity shares of JAL were issued to the shareholders of erstwhile Jaiprakash Industries Limited in the ratio of 1:1.

g) Debentures and Redeemable Preferece Sharees as on 30th June 2004 is as follows:

(a) Redeemable Preference Shares : Nil (b) Debentures Cement Division 70,00,000 16.5% Non-convertible Debentures of Rs.100/- 105,000,000.00 each fully paid-up in cash (Rs.85/- per Debenture Redeemed) 1,100 13.5% Non convertible Secured Debentures of 110,000,000.00 Rs.1,00,000/ each fully paid-up in cash

99


900 13.5% Non convertible Secured Debentures of 90,000,000.00 Rs.1,00,000/ each fully paid-up in cash 1000 13.5% Non convertible Secured Debentures of 100,000,000.00 Rs.1,00,000/ each fully paid-up in cash ( Previous year Advance Subscription against Debentures of Rs.10,00,00,000/ ) 400 13.5% Non convertible Secured Debentures of 40,000,000.00 Rs.1,00,000/ each fully paid-up in cash ( Previous year Advance Subscription against Debentures of Rs.45,91,624/ ) 1,000 12% Non convertible Secured Debentures of 100,000,000.00 Rs.1,00,000/ each fully paid-up in cash 2,000 12% Non convertible Secured Debentures of 200,000,000.00 Rs.1,00,000/ each fully paid-up in cash 745,000,000.00 Construction Division 53,00,000 16.5% Non-convertible Secured Debentures of 265,000,000.00Rs.100/- each fully paid-up in cash [Rs.50/- per Debenture

Redeemed] [Previous Year Rs.50/-] 5,00,000 15% Non-convertible Secured Debentures of 25,000,000.00Rs.100/- each fully paid-up in cash [Rs.50/- per Debenture Redeemed] [Previous Year Rs.25/-] 5,00,000 15% Non-convertible Secured Debentures of 25,000,000.00Rs.100/- each fully paid-up in cash [Rs.50/- per Debenture Redeemed] [Previous Year Rs.25/-] 50,00,000 16.5% Non-convertible Secured Debentures of 325,000,000.00Rs.100/- each fully paid-up in cash [Rs.35/- per Debenture redeemed] [Previous Year Rs.30/-] 300,000,000.003,000 14.25% Non-convertible Secured Debentures of Rs.1,00,000/- each fully paid-up in cash 200,000,000.002,000 13.75% Non-convertible Secured Debentures of Rs.1,00,000/- each fully paid-up in cash 950,000,000.001,00,00,000 12% Non-convertible Secured Debentures of Rs.100/- each fully paid-up in cash 2,090,000,000.00 g) Security for the above Debentures Non Convertible Debenturs mentioned hereinabove together with interest, liquidated damages, remuneation payable to the Trustees and other monies due in respect thereof

100


are secured by Legal Mortgage in English Form by way of first mortgage and charge on the Companies property in the state of Gujarat and equitable mortgage of immovable property and hypothecation of movables both present and future, ranking pari passu subject to prior charge on specified movable properties created in favour of Companies banker for working capital facilities h) Option to subscribe The Issuer has made depository arrangement with NSDL / CDSL for the Debentures. The investors will have the option to hold the debentures in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996/Rules as notified by NSDL / CDSL from time to time. Investors desirous of receiving the debenture certificate in the dematerialised from should mention their Depository Participant’s name, DP-ID and beneficiary account number in the appropriate place in the application form. Debentures allotted to successful allottee(s) having depository account shall be credited to their depository account against surrender of letter of allotment. In case of incorrect details provided by the investors and inability of the Registrar to credit the Depository Account, the Debentures will be issued in physical form to such investors.

101


XIX RELATED PARTY DISCLOSURE Related Parties disclosures, as required in terms of “Accounting Standard [AS] 18" are given below:

Relationships

(a) Subsidiary Companies: [i] Jaiprakash Hydro-Power Limited [ii] Jaiprakash Power Ventures Limited

[iii] Jaypee Hotels Limited and [iv] Jaypee Karcham Hydro Corporation Ltd.

(b) Joint Venture Company : Jaypee DSC Ventures Limited [till 03.02.04] (c) Associate Companies:: [i] Jaypee Ventures Limited

[ii] Jaypee Greens Limited [iii] Jaypee Industrial & Medical Services Pvt. Ltd. [w.e.f. 23.03.04]

[iv] JIL Information Technology Pvt. Ltd. [v] Gaur & Nagi Ltd.

[vi] Indesign Enterprises Pvt. Ltd.

(d) Key Management Personnel: [I] Shri Jaiprakash Gaur, Chairman [ii] Shri Sarat Kumar Jain, Vice Chairman [till 11.03.04 & w.e.f. 18.03.04] [iii] Shri Manoj Gaur, Managing Director [iv] Shri Sunil Kumar Sharma, Managing Director [till 11.03.04 & w.e.f. 18.03.04]

Whole-time Directors: [i] Shri Sunny Gaur [ii] Shri Ranvijay Singh [iii] Shri Rahul Kumar

[iv] M.S. Srivastava [till 11.03.04]

[v] Shri S.D. Nailwal [till 11.03.04]

[vi] Shri Har Prasad [till 11.03.04] [vii] Shri Rakesh Sharma [till 11.03.04] [viii] Shri Sameer Gaur [till 11.03.04]

[ix] Shri Pankaj Gaur [till 11.03.04]

Note: Related party relationships are as identified by the Company and relied upon by the Auditors.

[x] Shri R.B. Singh [till 18.03.04] [xi] Shri V.K. Jain [till 18.03.04]

(e) Relatives of Key Management Personnel, where transactions have taken place: [i] Shri Gyan Prakash Gaur [ii] Shri Sameer Gaur [from 11.03.04 onwards] [iii] Smt. Rekha Dixit [iv] Shri Praveen Kumar Singh [v] Shri Naveen Kumar Singh [vi] Shri Sachin Gaur

102


Nature of Transactions Referred in

1(a) above Rupees

Referred in 1(b) above

Rupees

Referred in 1(c) above

Rupees

Referred in 1(d) above

Rupees

Referred in 1(e) above

Rupees

Income

Contract Receipts 172,36,25,995 (239,69,87,020)

383,23,521 (-)

7,05,44,290 (12,99,22,967)

- -

Sale of Cement 5,48,640 (7,41,400)

23,53,677 (7,31,193)

- 1,76,695 (-)

Service Charges - (1,71,851)

- - -

Machinery Hire Charges 41,56,57,417 (18,19,18,112)

- - -

Interest - (11,64,900)

- - -

Rent 1,28,64,000 (1,04,64,000)

- - -

Expenditure

Contract Expenses 71,50,16,277 (46,29,65,344)

- - -

Lease Rent 97,20,000 (96,00,000)

-

- -

Nature of Transactions Referred in 1(a) above Rupees

Referred in 1(b) above Rupees

Referred in 1(c) above Rupees

Referred in 1(d) above Rupees

Referred in 1(e) above Rupees

Technical Consultancy - 47,74,65,834 (30,12,33,492)

- -

Service Charges 1,33,69,907 (1,47,46,978)

20,38,913 (-)

- -

Salaries & Other Amenities etc..

- - 2,09,82,522 (2,13,62,064)

42,64,151 (39,28,271)

Security & Medical Services - 27,13,178 - -

Rent - 2,903 - -

Fixed Assets Purchased 97,92,000 - - -

Outstandings

Receivables Advances to Suppliers, Mobilisation Advances, Security Deposits and Debtors.

(-)

54,59,17,776 (76,31,71,542)

1,38,17,95,176 (89,70,76,024 )

-

1,76,695

103


Payables Mobilisation & Machinery Advances, Unsecured Loans, Security/Earnest Money and Creditors

84,85,41,770 (107,06,16,119)

- (24,57,097)

1,68,15,805 (114,03,735)

59,223 (20,223)

86,323 (3,22,470)

Note: 1. Guarantees provided and Investments made in the Subsidiaries, Joint Venture & Associates are disclosed elsewhere in the Notes to the Account. 2. Previous Year figures are given in brackets.

104


XX OTHER DETAILS (a) Details of appointment, Terms and Conditions, Remuneration & Other Benefits of the Directors.

Name & Address Directorship in other Companies

Nature of Interest in other Companies

Shri Manoj Gaur A-9/27, Vasant Vihar New Delhi- 110 057

JIL Information Tech. Limited Jaypee Ventures Limited Jaypee Greens Limited Jaiprakash Power Ventures Ltd Jaypee Hotels Ltd. Jaiprakash Enterprises Ltd. Jaypee Karcham Hydro Corp Ltd Jaiprakash Hydro-power Ltd Gaur & Nagi Ltd Manumanik Estates Pvt.Ltd. Indesign Enterprisres Pvt Ltd Mum Engineers Pvt.Ltd.

Chairman Chairman Director Director Director Director Director Director Chairman Director Director Director

Shri Sunil Kumar Sharma E-9/14, Vasant Vihar New Delhi- 110 057

Jaiprakash Hydro-Power Ltd. Jaypee Hotels Limited Jaypee Greens Limited Jaypee Ventures Limited Jaypee Karcham Hydro Corp Ltd Suneha Estates Pvt.Ltd. Indesign Enterprisres Pvt Ltd Jaiprakash Power Ventures Ltd

Director Director Director Director Director Director Director Director

Shri Sunny Gaur A-9/27, Vasant Vihar, New Delhi-110057

Orphic Imports & Exports Pvt Ltd Sunvin Estates Pvt Ltd Indesign Enterprisres Pvt Ltd

Director Director Director

Shri Rahul Kumar B-67, Sarvodaya Enclave, 7 New Delhi – 110001

Jaypee Ventures Limited Director

Shri Samir Gaur A-9/27, Vasant Vihar New Delhi 110 057

Jaypee Ventures Limited Apar Builders Pvt. Ltd Sunvin Estates Pvt.Ltd. Indesign Enterprises Pvt.Ltd.

Director Director Director Director

Shri Pankaj Gaur A-1/7, Vasant Vihar New Delhi 110 057

Jaypee Ventures Limited Pee Gee Estates Pvt. Ltd

Director Director

Shri S D Nailwal 75, Shrestha Vihar Delhi 110 092

Shri. Manoj Gaur, Managing Director Shri Manoj Gaur, who was appointed as Managing Director of the Company by the Board of Directors at its meeting held on 31st March, 2001 for a period of five years w.e.f 1st April, 2001 without any remuneration and whose aforesaid appointment was approved by the shareholders at their Annual General Meeting held on the 26th June,

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2002, is paid the remuneration during his remaining tenure as Managing Director, w.e.f. the 12th March, 2004 as detailed hereinbelow

Salary:

Rs.1,50,000/- per month Pay Scale: Rs1,50,000-20,000-3,00,000/-

Perquisites : Perquisites which may include accommodation/ HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to Provident Fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure etc., shall be allowed in addition to salary. Perquisites shall be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII of the Companies Act, 1956 as amended from time to time, whichever is less.

Shri Sunil Kumar Sharma, Managing Director

At the meeting of Board of Directors held on 18th March, 2004 Shri Sunil Kumar Sharma has been appointed as Managing Director of the Company for a period of five years w.e.f. the 18th March, 2004 on the following terms and conditions:

Salary:

Rs.1,50,000/- per month. Pay Scale: Rs1,50,000-20000-3,00,000/-


In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration.

Shri Sunny Gaur, Director

At the meeting of Board of Directors held on 18th March, 2004 and subject to the approval of the shareholders at general meeting and other approvals, as may be required, the salary of Shri Sunny Gaur, Director of the Company was revised w.e.f. the 1st April, 2004 for the remaining period of his tenure, i.e., upto 30.12.2004, as under:-

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Salary : Rs.70,000/- per month

Pay Scale : Rs.60,000-5000-75,000-10,000-1,55,000/- Perquisites : Perquisites which may include accommodation/ HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to Provident Fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure etc., shall be allowed in addition to salary. Perquisites shall be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII of the Companies Act, 1956 as amended from time to time, whichever is less. In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration. Shri Rahul Kumar, Director

At the meeting of Board of Directors held on 18th March, 2004 and subject to the approval of the shareholders at general meeting and other approvals, as may be required, the salary of Shri Rahul Kumar, Director of the Company was revised w.e.f. the 1st April, 2004 for the remaining period of his tenure, i.e., upto 29.6.2006. Salary: Rs.70,000/- per month Pay Scale : Rs.60,000-5000-75,000-10,000-1,55,000/- Perquisites: Perquisites which may include accommodation/ HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to Provident Fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure etc., shall be allowed in addition to salary. Perquisites shall be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII of the Companies Act, 1956 as amended from time to time, whichever is less. In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration. Shri Samir Gaur, Director

At the meeting of Board of Directors held on 30th June, 2004 Shri Samir Gaur was appointed as Additional Director of the Company. Further, Samir Gaur was appointed as Whole-time Director of the Company for a period of 5 years w.e.f. 1st July, 2004 on the following terms and conditions:

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Remuneration : Rs.70,000/- per month. Pay Scale: Rs.60,000-5,000-75,000-10,000-1,55,000/- Perquisites : Perquisites which may include accommodation/ HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to Provident Fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure etc., shall be allowed in addition to salary. Perquisites shall be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII of the Companies Act, 1956 as amended from time to time, whichever is less. In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration. Shri Pankaj Gaur, Director At the meeting of Board of Directors held on 30th June, 2004 Shri Pankaj Gaur was appointed as Additional Director of the Company. Further, Shri Pankaj Gaur was appointed as Whole-time Director of the Company for a period of 5 years w.e.f. 1st July, 2004 on the following terms and conditions:

Remuneration : Rs.70,000/- per month. Pay Scale: Rs.60,000-5,000-75,000-10,000-1,55,000/-

Perquisites : Perquisites which may include accommodation/ HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to Provident Fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure etc., shall be allowed in addition to salary. Perquisites shall be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII of the Companies Act, 1956 as amended from time to time, whichever is less. In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration.

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Shri S D Nailwal, Director

At the meeting of Board of Directors held on 30th June, 2004 Shri S D Nailwal was appointed as Additional Director of the Company. Further, Shri S D Naliwal was appointed as Whole-time Director of the Company for a period of 5 years w.e.f. 1st July, 2004 on the following terms and conditions:

Remuneration : Rs.70,000/- per month. Pay Scale: Rs.60,000-5,000-75,000-10,000-1,55,000


In the event of absence or inadequacy of profits, the aforesaid remuneration will be paid as the minimum remuneration.

(b) Rights of Debentureholders Debentureholders do not carry any rights regarding voting, dividend, lien on shares. (c) Modifications of Rights

The rights, privileges, terms and conditions attached to all Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three-fourths of the outstanding amount of Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debentureholders, carried by a majority consisting of not less than three-fourths of the persons voting there upon a show of hands or, if a poll is demanded by a majority representing not less than three-fourths in value of the votes cast on such poll, provided that nothing in such consent or resolution shall be operative against the Issuer if the same are not accepted in writing by the Issuer. (d) Restrictions, if any, on Transfer and Transmission of Debentures and on their Consolidation The Issuer will not register any transfers of the Debentures to any NRIs (except on non-repatriation basis), OCBs, FIIs, or any persons not resident in India, unless appropriate regulatory approvals are obtained. The Issuer shall not be duty bound to take interest or trust in or over the Debentures.

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The title to the Debentures shall pass by execution of duly stamped transfer deed(s) accompanied by the Debentures certificate (s) / Letter of allotments (s) together with necessary supporting documents. The transferee(s) should deliver the Debenture certificates to the Issuer for registration of transfer in the Register of Debentureholders at the Registered Office. The Issuer on being satisfied will register the transfer of such Debentures in its Register of Debentureholders. The person whose name is recorded in the Register of Debentureholders shall be deemed to be the owner of the Debentures. Request for registration of transfer, along with the necessary documents, and all other communications, requests, queries and clarifications with respect to the Debentures should be addressed to and sent to the Registered Office. No correspondence shall be entertained in this regard at any other Branches or any of the offices of the Issuer. Transfer of debentures in dematerialised form would be in accordance to the rules /procedures as prescribed by NSDL /Depository Participant. (e) Consolidation and Splitting of Debentures The request from Registered Debentureholder(s) for splitting / consolidation of Debenture certificates will be accepted by the Issuer only if the original Debentures certificate(s) is / are enclosed along with an acceptable letter of request. No requests for splits below the Market Lot will be entertained. (f) Transmission In the event of demise of a Registered Debenture holder of the Debentures, or the first holder in the case of joint holders, the Issuer will recognize the executor or administrator of the demised Debenture holder or the holder of succession certificate or other legal representative of the demised Debenture holder as the Registered Debentures holder of such Registered Holder’s Debentures if such a person obtains probate or letter of administration or is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter and delivers a copy of the same to the Issuer. The Issuer may in its absolute discretion, where it thinks fit, dispense with the production of the probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the demised debentures holder on production of sufficient documentary proof or indemnity. (g) Revaluation of Assets There has been no revaluation of Issuer’s assets during the last five years.

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XXI MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS The following contracts and also documents for inspection referred to hereunder, may be inspected at the registered office of the company at Ahmedabad from 11.00 am to 1.00 pm from the date of this Shelf Information Memorandum until the date of closure of this Issue. ♦ MATERIAL CONTRACTS Resolution appointing MD/ED/WD with their terms and conditions Letters received from R & T Agent agreeing to act as Registrar and Transfer Agent. Letters received from the Trustees agreeing to act as Debenture Trustees ♦ DOCUMENTS 1. Memorandum and Articles of the Issuer as amended from time to time 2. Certificate of Incorporation of the Issuer dated and Certificate of Commencement of

Business. 3. Audited Accounts of the Issuer for the year ended March 31, 2004, 2003, and Audited

Account of Jaiprakash Industries Limited and Jaypee Cement Limited for the year ended March 31, 2002, 2001 and 2000 respectively and the Auditors’ Report thereon.

4 Copy of Board Resolution dated 7th June, 2004, authorising the issue .

5. Copy of application made to Stock Exchanges.

6. Copy of in-principal approval received from the Stock Exchange for Rs. 50 crores NCD issue.

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XXII DECLARATION We declare that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with and no statement made in this Shelf Information Memorandum is contrary to the provisions of the Companies act, 1956. Signed for and on behalf of Jaiprakash Associates Limited. Sd/- Director

Date: 20th July, 2004 Place : New Delhi

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SCHEME OF AMALGAMATION AS APPROVED BY THE HIGH COURT

SCHEME OF AMALGAMATION

OF

JAIPRAKASH INDUSTRIES LIMITED

WITH

JAYPEE CEMENT LIMITED

PART - I – DEFINITIONS 1.0 In this Scheme, unless repugnant to the meaning or context thereof, the under-

mentioned expressions shall have the following meaning:

1.01 “Act” means the Companies Act, 1956 and shall include any statutory modifications, re-enactment or amendment thereof for the time being in force.

1.02 “Appointed Date” means `1st of April 2002’. 1.03 “Court” means the Hon’ble High Court of Judicature at Allahabad. 1,04 “Effective Date” or “coming into effect of this Scheme” or “effectiveness of this

Scheme” or the like terms used in the Scheme means the date on which the certified copy of the order of the Hon’ble High Court of Judicature at Allahabad sanctioning the Scheme is filed with the Registrar of Companies Uttar Pradesh at Kanpur.

1.05 “Scheme” means this Scheme in its present form as submitted to the Court or this

Scheme with such modification(s), if any, as may be made by the shareholders and the Creditors of the Transferor and the Transferee Companies in their meetings to be held as per directions of the Court or such modifications(s) as may be imposed by any competent authority and accepted by the respective Board of Directors of the two Companies and/or directed to be made by the Court while sanctioning the Scheme.

1.06 “Shareholders” with reference to the Transferor company means persons holding

equity shares in the said Company either in physical form or in electronic form and whose names are entered and registered as members in the Register of Members of the said Company or whose names appear as the beneficial owners of the equity shares of the Transferor Company in the records of the Depositories.

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AND with reference to the Transferee Company means persons holding equity shares in the said Company.

1.07 “Transferee Company” or ‘JCL” means JAYPEE CEMENT LIMITED, a Company

incorporated under the Companies Act and having its registered office at 5 Park Road, Hazrat Ganj, Lucknow-226001 (UP)

1.08 “Transferor Company” or “JPI” means JAIPRAKASH INDUSTRIES LIMITED, a

Company incorporated under the Companies Act and having its registered office at 5 Park Road, Hazrat Ganj, Lucknow – 226001 (UP)

PART - II - INTRODUCTION 2.01 The Transferee Company was incorporated on 15-11-1995 in the State of Uttar

Pradesh under the Companies Act, 1956 under the name ‘Bela Cement Limited’. Its name was changed to ‘Jaypee Rewa Cement Limited’ with effect from 30-8-2000. The name was again changed to its present name i.e. ‘Jaypee Cement Limited' with effect from 3-1-2002. The Transferee Company commenced its business on 29-1-1996.

The Transferor Company was incorporated on 21-1-1983 in the State of Uttar Pradesh under the name of ‘Jaypee Rewa Cement Limited’. Its name was changed to its present name ‘Jaiprakash Industries Limited’ with effect from 1-9-1986. The Transferor Company commenced its business on 5.4.1983.

2.02 The present authorized and issued, subscribed and paid up capital of the two

Companies is as under – TRANFEREE COMPANY : AUTHORISED CAPITAL : 80,00,00,000 Equity Shares of Rs. 10 each Rs 800,00,00,000

ISSUED, SUBSCRIBED AND PAID UP CAPITAL :

41,80,00,000 Equity Shares of Rs. 10 each fully paid up Rs. 418,00,00,000

The Transferee Company is a wholly owned subsidiary of the Transferor company and its entire share capital is beneficially held by the Transferor company.

TRANSFEROR COMPANY : AUTHORISED CAPITAL : 18,00,00,000 Equity Shares of Rs.10 each Rs. 180,00,00,000

ISSUED, SUBSCRIBED AND PAID UP CAPITAL : 17,62,16,981 Equity Shares of Rs. 10 each fully paid up Rs. 176,21,69,810

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The Transferor company is a widely held company and its shares are listed on the Stock Exchanges at Ahmedabad, Calcutta, Delhi, Mumbai and Kanpur. Steps are being taken to get the shares listed on National Stock Exchange also.

2.03 LATEST FINANCIAL POSITION :

The audited accounts of the two Companies have been presented to the shareholders up to the financial year ended on 31-3-2002. The summarized financial position of the two companies as per the above Accounts is as under :

TRANSFEREE COMPANY : ( Rs. in lacs) As at 31-3-2002

ASSETS : Fixed Assets (WDV) 72881.53

Current Assets : 23451.58 Investments .11

Less Current Liabilities & Provisions 19035.94 4415.64

Misc. Expenditure not written off 503.43 Debit Balance of Profit & Loss A/c 17295.24 TOTAL 95095.95 LIABILITIES : Share Capital 41800.00 Loans – Secured and Unsecured 50220.82 Deferred Tax Liability 3075.13 TOTAL 95095.95

TRANSFEROR COMPANY : (Rs.in lacs) ASSETS : As on 31-3-2002 Fixed Assets (WDV) 85334

Less Current Liabilities

Investments 103585 Current Assets 194759

& Provisions 126932 67827 TOTAL 256746 LIABILITIES : Share Capital 17217 Reserves & Surplus 84282 Loans – Secured and Unsecured 135519 Deferred Tax Liability 19728 TOTAL 256746

Full details of the financial position are given in the published Accounts of the two companies for the year ended 31-3-2002.

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PART – III – TRANSFER AND VESTING

3. 01 With effect from the Appointed Date, all the undertakings, the entire business, all the properties (whether movable or immovable, tangible or intangible), plant and machinery, buildings and structures, offices, residential and other premises, capital work in progress, furniture, fixture, office equipment, appliances, accessories, power lines, railway siding, depots, deposits, all stocks, assets, investments of all kinds (including shares, scrips, stocks, bonds, debenture stock, units or pass through certificates), cash balances with banks, loans, advances, contingent rights or benefits, receivables, benefit of any deposits, financial assets, leases (including lease rights, prospecting leases and mining leases, if any), and hire purchase contracts and assets, lending contracts, benefit of any security arrangements, reversions, powers, authorities, allotments, approvals, permits and consents, quotas, rights, entitlements, contracts, licenses (industrial and otherwise), municipal permissions, tenancies in relation to the office and/or residential properties for the employees or other persons, guest houses, godowns, warehouses, leases, licenses, fixed and other assets, benefits of assets or properties or other interest held in trust, registrations, contracts, engagements, arrangements of all kind, privileges and all other rights including sales tax deferrals, loans, title, interests, other benefits (including tax benefits) and advantages of whatsoever nature and wheresoever situated belonging to or in the ownership, power of possession and in the control of or vested in or granted in favour of or enjoyed by the Transferor Company, including but without being limited to trade and service names and marks, patents, copyrights, and other intellectual property rights of any nature whatsoever, authorisations, permits, approvals, rights to use and avail of telephones, telexes, facsimile, email, internet, leased line connections and installations, utilities, electricity and other services, reserves, provisions, funds, benefits of all agreements, all records, files, papers, computer programmes, manuals, data, catalogues, sales and advertising materials, lists and other details of present and former customers and suppliers, customer credit information, customer and supplier pricing information and other records in connection with or relating to the Transferor Company and all other interests of whatsoever nature belonging to or in the ownership, power, possession or the control of or vested in or granted in favour of or held for the benefit of or enjoyed by the Transferor Company, whether in India or abroad, shall, pursuant to Section 394 (2) of the Act,without any further act, instrument or deed, be and stand transferred to and vested in the Transferee Company as a going concern so as to become as and from the Appointed Date, the estate, assets, rights, title and interests and authorities of the Transferee Company.

3.02 Without prejudice to clause 3.01 above, in respect of such of the assets of the

Transferor Company as are movable in nature or are otherwise capable of transfer by manual delivery or by enforcement and/or delivery, the same may be so transferred by the Transferor Company, and shall, upon such transfer, become the property, estate, assets, rights, title, interest and authorities of the Transferee Company.

3.03 All the licenses, permits, quotas, approvals, permissions, incentives, sales tax deferrals, loans, subsidies, concessions, grants, rights, claims, leases, tenancy rights, liberties, rehabilitation schemes, special status and other benefits or privileges enjoyed or conferred upon or held or availed of by and all rights and benefits that have accrued, which may accrue to the Transferor Company, shall,

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pursuant to the provisions of Section 394(2) of the Act and without any further act, instrument or deed, be and stand transferred to and vested in and or be deemed to have been transferred to and vested in and be available to the Transferee Company so as to become as and from the Appointed Date the licenses, permits, quotas, approvals, permissions, incentives, sales tax deferrals, loans, subsidies, concessions, grants, rights, claims, leases, tenancy rights, liberties, rehabilitation schemes, special status and other benefits or privileges of the Transferee Company and shall remain valid, effective and enforceable on the same terms and conditions to the extent permissible under law. It is hereby clarified that all inter party transactions between the Transferor Company and the Transferee Company shall be considered as intra party transactions for all purposes from the Appointed Date.

3.04 All Assets, estate, rights, title, interest, licenses and authorities acquired by or

permits, quotas, approvals, permissions, incentives, sales tax deferrals, loans or benefits, subsidies, concessions, grants, rights, claims, leases, tenancy rights, liberties, rehabilitation schemes and other assets, special status and other benefits or privileges enjoyed or conferred upon or held or availed of by and/or all rights and benefits that have accrued or which may accrue to the Transferor Company after the Appointed Date and prior to the Effective Date, shall, pursuant to the provisions of Section 394(2) of the Act, without any further act, instrument or deed, be and stand transferred to and vested or deemed to have been transferred to and vested in the Transferee Company.

3.05 With effect from the Appointed Date and pursuant to the provisions of Section

394 of the Act and without any further act, instrument or deed,

(i) All secured and unsecured debts, (whether in rupees or in foreign currency), all liabilities, duties and obligations of the Transferor Company along with any charge, encumbrance, lien or security thereon (hereinafter referred to as the “said Liabilities”) shall be and stand transferred to and vested in or deemed to have been transferred to and vested in, so as to become the debts, liabilities, duties and obligations of the Transferee Company, and further that it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such debts, liabilities, duties and obligations have arisen in order to give effect to the provisions of this Clause. It is clarified that in so far as the assets of the Transferor Company are concerned, the security or charge over such assets or any part thereof, relating to any loans, debentures or borrowing of the Transferor Company, shall, without any further act or deed continue to relate to such assets or any part thereof, after the Effective Date and shall not relate to or be available as security in relation to any or any part of the assets of the Transferee Company, save to the extent warranted by the terms of the existing security arrangements to which the Transferor and the Transferee Companies are party, and consistent with the joint obligations assumed by them under such arrangement.

(ii) All debentures, bonds, notes or other debt securities of the Transferor Company, whether convertible into equity or otherwise, (the “JIL’s Securities”), be and shall become securities of the Transferee Company and all rights, powers, duties and obligations in relation thereto shall be and stand transferred to and vested in or deemed to have been transferred to and vested in and shall be exercised by or against the Transferee Company as if it were the Transferor

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Company in respect of JIL’s Securities so transferred. If JIL’s Securities are listed on any stock exchange, the same shall, subject to applicable regulations, be listed on the relevant stock exchange/s, where JIL’s Securities were listed on the same terms and conditions unless otherwise modified in accordance with the provisions hereof.

(iii) Loans, advances and other obligations (including any guarantees, letters of

credit, letters of comfort or any other instrument or arrangement which may give rise to a contingent liability in whatever form), if any, due or which may at any time in future become due between the Transferor Company and the Transferee Company shall be and stand discharged and there shall be no liability in that behalf on either party.

3.06 Where any of the liabilities and obligations of the Transferor Company as on the

Appointed Date transferred to the Transferee Company have been discharged by the Transferor Company after the Appointed Date and prior to the Effective Date, such discharge shall be deemed to have been for and on account of the Transferee Company.

3.07 All loans raised and utilised and all debts, duties, undertakings, liabilities and

obligations incurred or undertaken by the Transferor Company after the Appointed Date and prior to the Effective Date, shall be deemed to have been raised, used, incurred or undertaken for and on behalf of the Transferee Company and to the extent they are outstanding on the Effective Date, shall, upon the coming into effect of this Scheme be and stand transferred to or vested in or be deemed to have been transferred to and vested in the Transferee Company pursuant to the provisions of Section 394 of the Act and without any further act, instrument or deed, and shall become the debt, duties, undertakings, liabilities and obligations of the Transferee Company which shall meet, discharge and satisfy the same.

3.08 All estates, assets, rights, titles, interests and authorities accrued to and/or acquired by the Transferor Company after the Appointed Date and prior to the Effective Date, shall have been and deemed to have accrued to and/ or acquired for and on behalf of the Transferee Company and shall, upon the coming into effect of this Scheme, pursuant to the provisions of Section 394(2) of the Act and without any further act, instrument or deed, be and stand transferred to or vested in or be deemed to have been transferred to or vested in the Transferee Company to that extent and shall become the estates, assets, right, title, interests and authorities of the Transferee Company.

3.09 With effect from the Appointed Date and upto the Effective Date : (i) The Transferor Company shall carry on and shall be deemed to have carried on

all its business and activities as hitherto and shall hold and stand possessed of and shall be deemed to have held and stood possessed of all its business including assets on account of, and for the benefit of and in trust for, the Transferee Company;

(ii) All the profits or incomes accruing or arising to the Transferor Company or

expenditure or losses arising or incurred (including the effect of taxes, if any, thereon) by the Transferor Company, shall, for all purposes, be treated and be

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deemed to be and accrue as the profits or incomes or expenditure or losses or taxes of the Transferee Company, as the case may be.

3.10 Upon the coming into effect of this Scheme, all suits, actions and proceedings by

or against the Transferor Company pending and/or arising on or before the Effective Date shall be continued and be enforced by or against the Transferee Company pursuant to the provisions of Section 394 of the Act and without any further act, instrument or deed, as effectually and in the same manner and to the same extent as if the same had been pending and/or arising by or against the Transferee Company.

3.11 Upon the coming into effect of this Scheme and subject to the provisions of this Scheme, all contracts, deeds, bonds, agreements, arrangements and other instruments (including all tenancies, leases, licenses and other assurances in favour of the Transferor Company or powers or authorities granted by or to it) of whatsoever nature, to which the Transferor Company is a party or to the benefit of which the Transferor Company may be eligible, and which are subsisting or having effect immediately before the Effective Date, shall, pursuant to the provisions of Section 394 of the Act and without any further act, instrument or deed, be in full force and effect against or in favour of the Transferee Company, as the case may be, and may be enforced as fully and effectually as if, instead of the Transferor Company the Transferee Company had been a party or beneficiary or obligee thereto.

3.12 The Transferee Company may, at any time after the coming into effect of this Scheme, if so required, under any law or otherwise, enter into, or issue or execute deeds, writings, confirmations, novations, declarations, or other documents with, or in favour of any party to any contract or arrangement to which the Transferor Company is a party or any writings as may be necessary to be executed in order to give formal effect to the above provisions.

3.13 The name of the Transferee Company shall, forthwith upon the Scheme taking

effect, stand changed to Jaiprakash Associates Limited without any further act or deed. The new name has been made available by the office of the Registrar of Companies, UP, Kanpur vide its letter dated 5.2.2003.

3.14 Upon the coming into effect of the Scheme : (i) All the employees of the Transferor Company in service on the Effective Date,

shall become the employees of the Transferee Company on such date without any break or interruption in service and on terms and conditions as to remuneration and otherwise, not less favourable than those subsisting (with reference to the Transferor Company), as on the effective date.

(ii) The existing provident fund, gratuity fund, and pension and/or superannuation

fund or trusts created by the Transferor Company or any other special funds created or existing for the benefit of the employees of the Transferor Company shall at an appropriate stage be transferred to the relevant funds of the Transferee Company and till such time, shall be maintained separately.

3.15 Upon the coming into effect of the Scheme,all the taxes paid (including T D S) by

the Transferor Company from the Appointed Date, regardless of the period to

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which they relate, shall be deemed to have been paid for and on behalf of and to the credit of the Transferee Company as effectively as if the Transferee Company had paid the same.

PART - IV – GENERAL TERMS AND CONDITIONS

3.16 Upon the coming into effect of this Scheme, and in consideration of the transfer of and vesting of the Assets and the Liabilities of the Transferor Company in terms of this Scheme, the Transferee Company shall issue and allot to the equity shareholders of the Transferor Company whose names are recorded in the Register of Members on the Record Date to be fixed by the Board of Directors of the Transferee Company or a Committee of such Board of Directors, equity shares of Rs. 10/- (Rupees Ten only) each, credited as fully paid up, in the ratio of 1 (one) equity share of Rs. 10/- (Rupees Ten only) each in the Transferee Company for every 1 (one) equity share of Rs. 10/- (Rupees Ten only) each fully paid up held in the Transferor Company.

3.17 Upon the coming into effect of this Scheme, all the existing shares / share certificates of the Transferor Company as on the Record Date shall stand cancelled and will become invalid and shall cease to be tradable thereafter. The Board of Directors of the Transferee Company may not require the shareholders of the Transferor Company, who might be holding the shares in physical form, to surrender their share certificates before issuing the new share certificates for the shares allotted in terms of Clause 3.16.

3.18 Upon the coming into effect of this Scheme, all the equity shares beneficially held by the Transferor Company (including shares held jointly with its nominees) in the Transferee Company, as on the Record Date, shall stand cancelled without any further act or deed.

3.19 The equity shares issued and allotted by the Transferee Company in terms of this

Scheme shall be subject to the provisions of the Memorandum and Articles of Association of the Transferee Company.

3.20 Upon the coming into effect of this Scheme, the equity shares issued and allotted by the Transferee Company in terms of this Scheme shall be listed by all such Stock Exchanges in India, where the equity shares of the Transferor Company are listed.

4.01 Until the coming into effect of this Scheme :

(i) The right of the Transferor and the Transferee Companies to declare and pay dividends, whether interim or final, to their respective equity shareholders in respect of any accounting period falling before or after the Appointed Date, shall remain unaffected.

(ii) The shareholders of the Transferor and the Transferee Companies shall, save as expressly provided otherwise in this Scheme, continue to enjoy their existing rights under their respective Articles of Association including the right to receive dividends.

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4.03 Upon coming into effect of the Scheme :-

(i) The resolutions including resolutions passed under Section 293(1)(d) of the Act, if any, of the Transferor Company, which are valid and subsisting on the Effective Date, shall, mutatis mutandis, continue to be valid and subsisting and be considered as resolutions of the Transferee Company and if any such resolutions have upper monetary or other limits being imposed under the provisions of the Act, or any other applicable provisions, then the said limits shall be added and shall constitute the aggregate of the said limits in the Transferee Company.

(ii) The Authorised Share capital of the Company shall stand combined with the Authorised share capital of the Transferee Company. The filing fee and stamp duty already paid by the Transferor Company on its Authorised Share Capital, shall be deemed to have been so paid by the Transferee Company on the combined Authorised Share Capital and accordingly, the Transferee Company shall not be required to pay any fee / stamp duty on the Authorised Share Capital so increased.

4.06 The Board of Directors of the Transferee Company may give such directions, as they may consider necessary, to settle any question or difficulty arising in regard to the implementation of the Scheme or in any matter connected therewith

(iii) It is clarified that the aforesaid provisions in respect of declaration of dividends, whether interim or final, are enabling provisions only and shall not be deemed to confer any right on the shareholders to demand or claim any dividends which, subject to the provisions of the Act, shall be entirely at the discretion of the respective Board of Directors of the Company concerned and subject, wherever necessary, to the approval of the shareholders of the respective company.

4.02 The Transferee Company shall account for the assets and liabilities of the

Transferor Company taken over in terms of this Scheme at the book values appearing in the books of the Transferor Company. The difference between the aggregate of such book values of assets less liabilities over the paid-up value of the shares issued and allotted pursuant to this Scheme, shall be accounted for and dealt within the books of the Transferee Company as per the relevant Accounting Standard issued by the Institute of Chartered Accountants of India.

(III) Irrespective of the date of actual allotment of shares in terms of Clause 3.16, the

issued, subscribed and paid-up Capital of the Transferee Company shall, with effect from the effective date, be equivalent to the number of shares that will be allotted pursuant to the provisions of the Scheme and such allotment, when made, shall take effect from the effective date.

4.04 The Transferor and the Transferee Companies shall with all reasonable despatch, make all applications/petitions under Section 391 and 394 and other applicable provisions, including Section 100 of the Act to the Court and obtain all approvals, sanctions and consents as may be required under law.

4.05 The respective Board of Directors of the Transferor and the Transferee Companies may assent to any alterations or modifications of this Scheme which the Court and/or any other competent authority may deem fit to approve or impose.

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(including any question or difficulty arising in connection with any deceased or insolvent shareholder) such that the same shall be binding on all parties, in the same manner as if the same were specifically incorporated in this Scheme.

(i) The Scheme is approved by the requisite majority of the shareholders and the creditors of the Transferor and the Transferee Companies as may be required under the Act and/or the orders of the Court ;

(ii) The Scheme is sanctioned by the Court under Section 394 of the Act ;

(iii) The certified copy of the order of the Court sanctioning the Scheme is filed with the Registrar of Companies, Uttar Pradesh, Kanpur.

4.10 All costs, charges and expenses in connection with this Scheme and incidental to

the completion of the amalgamation of the Transferor Company with the Transferee Company shall be borne and paid by the Transferee Company.

4.07 This Scheme shall become effective when all the following conditions are fulfilled

:

4.08 The Transferor Company shall stand dissolved without winding up with effect from

the date on which the certified copy of the order of the Court sanctioning the Scheme is filed with the Registrar of Companies, U.P., Kanpur.

4.09 In the event of this Scheme failing to take effect by 31st December, 2003 or by such later date as may be agreed by the respective Board of Directors of the Transferor and the Transferee Companies, this Scheme shall become null and void and in that event, no rights and liabilities whatsoever, shall accrue to or be incurred inter-se by the parties or their shareholders or creditors or employees or any other person. In such case, each Company shall bear its own costs or as may be mutually agreed.

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Documents

Jal - Rs. 500 Crs Shelf Im (Final)