CONTENTS Proxy Form 65

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Essar Steel Orissa LimitedDuring the year following transactions were carried out with some ofthe related parties in the ordinary course of business:Nature ofTransactionsName ofPartyHoldingCompaniesFellowSubsidiaries(In Rs.)Enterprisescommonlycontrolled orinfluencedby majorshareholders/directors/keymanagerialpersonnel of theCompanyAdvance forProfessionalServices /Supplies ECIL - 587,161,279 -ECIL - (8,500,000) -EPMCL - - 9,700,000EPMCL - - -ProfessionalServices ECIL - - -ECIL - (1,683,600) -Purchase ofAsset ECIL - 242,999,444 -ECIL - - -Recovery ofRent & CommonExpenses ECIL - 427,490 -ECIL - - -EOL - - 96,551EOL - - -VESL - - 7,003,194VESL - - -Subscription tothe Share Capital EIL - - -EIL - - (499,940)Subscriptionto CumulativeConvertiblePreferenceshares ESHL 847,476,210 - -ESHL - - -Share ApplicationMoney received ESHL 1,009,750,007 - -ESHL - - -EIL - - -EIL - - (203,410,000)Short termAdvancesreceived ESCL - 30,500,000 -ESCL - (10,000) -ES(H)L - - -ES(H)L - - (10,000)EPL - - -EPL - - (50,000)Advance Receivedtowards supply ofmaterials ESTL 5,025,000 - -ESTL (3,950,000) - -Reimbursementmade on behalf ofthe Company ESTL 16,003,959 - -ESTL (193,114,026) - -EIL - - -EIL - - (180,030)Guaranteesprovided to bankson behalf of theCompany ESHL 9,500,000,000 - -ESHL - - -Guaranteesprovided to CustomAuthority on behalfof the Company ESTL 73,700,000 - -ESTL - - -Figures in brackets represents for the previous period.Closing Balance ofthe PartyAs at31st March, 2008As at31st March, 2007ECIL 532,899,214 8,500,000EIL (180,030) (180,030)EPL - 50,000EPMCL 9,700,000 -ESTL (13,550,100) (197,057,754)Figures in bracket represents amounts payable.F. The Company has initiated the process of identification of suppliersregistered under the Micro, Small and Medium EnterprisesDevelopment Act, 2006, by obtaining confirmation from all thesuppliers. Based on current information/confirmations availablewith the Company, there are no suppliers who are registeredunder the relevant Act as at March 31, 2008.G. Unhedged Foreign Currency Disclosure as at Balance Sheet Dateas on March 31, 2008ParticularsForeign Currency AmountAs at March 31, 2008Capital Advances Rs. 334,999,820(US$ 8,522,000 @ 1 US$ =Rs. 39.31) (Previous Year:Nil)Secured Loan Rs. 241,186,016(US$ 6,044,762.30 @ 1 US$= Rs. 39.90)(Previous Year: Nil)H. Lease RentalOperating LeaseOffice premises are obtained on operating lease. Lease rent ispayable as per the lease term. The Company has entered intotwo lease agreements during the current year:a) Office premises at Bhubaneswar with a lease term of 36months renewable for a further period of 36 months at theoption of the Company. The lease rent has an escalation of15% in the base rent for each block of 36 months. During theyear the Company has paid lease rent of Rs.13,49,134. Thislease rent expense is capitalized as expenditure incurredduring the construction period.b) Three Office-cum-Guest House at Paradeep and Joda hasbeen taken at with a lease term of 12 months (each of them)renewable for a further period at the option of the Company.There is no escalation clause in the agreement. During theyear the Company has paid lease rent of Rs. 583,000. Thislease rent expenses is capitalized as expenditure incurredduring the construction period.I. Earnings Per shareParticularsYear Ended31st March, 2008Period Ended31st March, 2007Net Loss as per Profit& Loss Account for thepurpose of calculatingbasic and dilutedearnings per share Rs. (5,<strong>65</strong>6,354) (292,270)Number of CumulativeConvertiblepreference sharesissued during the year Nos. 84,746,621 50,000Number of EquityShares at beginningof the year Nos. 50,000 50,00054
ParticularsYear Ended31st March, 2008Period Ended31st March, 2007Number of Equityshares at the end ofthe year Nos. 50,000 50,000Weighted AverageNumber of equityshares for thepurpose of calculatingbasic earnings perequity share Nos. 50,000 50,000Weighted AverageNumber of equityshares for thepurpose of calculatingdiluted earnings perequity share Nos. 9,080,378 -Earnings Per EquityShare of Rs. 10each – Basic Rs. (113.13) (5.85)Earnings Per EquityShare of Rs. 10each –Diluted Rs. (0.62) (5.85)J. Supplementary statutory information:-(a)(b)Expenditure in Foreign Currency (Accrual basis):-ParticularsYear Ended31st March,2008(In Rs.)Period Ended31st March,2007(In Rs.)Expenditure in foreign currency (Accrual Basis)Testing Expenses - 1,086,690Foreign Bank Charges 4,070,575 -Discounting Charges 3,336,968 -Interest 125,417 -Total 7,532,960 1,086,690Value of Imports calculated on C&F basis:-ParticularsAmountCapital Work in Progress 274,697,826Total 274,697,826K. Disclosure pursuant to Accounting Standard – 15 (Revised) –‘Employee Benefits’:a) Effective January 1, 2007, the Company adopted AccountingStandard – 15 (Revised 2005) on “Employee Benefits”issued by ICAI.b) The Company has classified various employee benefits asunderA) Defined Contribution PlansThe Company has recognised Rs. 375,566 inthe Preoperative Expenses for the year towardscontribution to Employees’ Provident Fund.B) Defined Benefit PlanThe Company operates Gratuity Plans wherein everyemployee is entitled to the benefit equivalent to fifteendays salary, last drawn for each completed year ofservice depending on the date of joining and eligibilityterms upto maximum limit of Rs. 350,000.The same is payable on the termination of service orretirement whichever is earlier. The benefit vests afterfive years of continuous service. However, this doesn’tapply in the case of death of an individual.The following table summaries the components ofnet benefit expenses recognised in the Pre Operativeexpenses and amounts recognized in the BalanceSheet for the Gratuity.Valuation in respect of Gratuity have been carried outby an independent actuary, as at the Balance Sheetdate, based on the following assumptions:-1. Actuarial assumptions for the year:Discount Rate 8.00%Rate of Increase in Compensation Levels 7.50%Rate of Return on Plan AssetsN.A.Mortality LIC (1994-96)The estimates of future salary increases, considered inactuarial valuation, take account of inflation, seniority,promotion and other relevant factors, such as supply anddemand in the employment market.The current year being the first year of adoption of AS 15(revised) by the Company, the previous year comparativeinformation is not available and hence not furnished2. Change in Benefit Obligation:(In Rs.)Liability at the beginning of the period 117,787Interest Cost 9,449Service Cost 166,888Benefits paid NilActuarial (gain) loss on obligations (114,390)Liability at the end of the year 179,7343. The Amounts to be recognized in the Balance Sheet:Present Value of Obligation 179,734Fair value of Plan AssetsNilFunded Status (179,734)Unrecognised Actuarial gains (losses) NilLiability Recognised in Balance Sheet (179,734)4. Net Periodic Cost (included in Pre-operative expenses ReferSchedule III):Current Service Cost 166,888Interest Cost 9,449Expected Return on Plan AssetsNilNet Actuarial (gain) loss recognised in (114,390)the yearExpenses Recognised in the Income 61,947StatementL. Legal & Professional Fees:-Legal & Professional fees comprises of Auditor’s Remunerationwhich consist off the Statutory Audit fees*ParticularsYear ended31st March, 2008(Rs.)Period ended31st March, 2007(Rs.)Statutory Audit Fees* 100,000 100,000Out of PocketExpenses12,672 -Total 112,672 100,000*exclusive of service tax.M. Previous year’s figures have been regrouped where necessaryto conform to this year’s classification.As per our report of even dateS.R. Batliboi & Co.For and on behalf of Board of DirectorsChartered Accountants Essar Steel Orissa Limitedper Hemal Shah V.G. Raghavan Manish KediaPartner Director DirectorMembership No. 42<strong>65</strong>0Place : MumbaiPlace : MumbaiDate: August 27, 2008 Date: August 27, 200855
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BOARD OF DIRECTORSShashi RuiaRavi R
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Sales and Marketing Sales of flat r
Page 6 and 7: Annexure - ‘A’ to Directors’
Page 8 and 9: FORM BRESEARCH AND DEVELOPMENT (R &
Page 10 and 11: Auditors’ Report to the Members o
Page 12 and 13: Name of the statute Nature of dues
Page 14 and 15: Profit and Loss Account for the yea
Page 16 and 17: Schedules forming part of Balance S
Page 19 and 20: Essar Steel LimitedSchedules formin
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Page 23 and 24: Essar Steel LimitedSchedule forming
Page 25 and 26: Essar Steel LimitedShort term compe
Page 27 and 28: Essar Steel Limited4 Essar Steel (H
Page 29 and 30: Essar Steel LimitedRs. CroresThe As
Page 31 and 32: Essar Steel Limited9. Earnings per
Page 33 and 34: Essar Steel Limited15. Consumption
Page 35 and 36: Essar Steel LimitedAs at31st March
Page 37 and 38: Essar Steel Limited(ii)Provision fo
Page 39 and 40: Essar Steel LimitedCash Flow Statem
Page 41 and 42: Essar Steel Jharkhand LimitedFormer
Page 49 and 50: Essar Steel Orissa LimitedToThe Mem
Page 51 and 52: Balance Sheet as at 31st March, 200
Page 53 and 54: As at31st March, 2008As at31st Marc
Page 55: are consistent with the currency an
Page 59 and 60: Cash Flow Statement for the period
Page 61 and 62: Income Statement for the year ended
Page 63 and 64: NOTES TO THE FINANCIAL STATEMENTSAt
Page 65 and 66: equirements. The facility is repaya
Page 67: ESSAR STEEL LIMITEDRegd. Office: Po
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CONTENTS Proxy Form 65

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