CONTENTS Proxy Form 65

equirements. The facility is repayable in three equal installmentspayable on the 8th, 10th and 12th month from the date of therespective draw down. Interest is charged at LIBOR plus 0.75%(2007: Nil).- a trade advance facility of USD 15 million was obtained during the2008 financial year from the Bank of India, Singapore branch. Thefacility is repayable in one bullet payment on maturity date which is12 months from the date of the first draw down. Interest is chargedat LIBOR plus 0.75% p.a. (2007: Nil).The security provided for these loans comprises:• Corporate guarantee issued by Essar Steel Limited, India.• Pledge over collection account.• Assignment of Purchase and sale contract (PSC) by Stemcor(S.E.A) Pte Ltd, Singapore to Bank of Tokyo- Mitsubishi UFJ.• Assignment of Advance payment and supply agreement (APSA)by Essar Steel Trading FZE, Dubai to Bank of Tokyo - MitsubishiUFJ.• Assignment of Advance payment and supply agreement by EssarSteel Trading FZE, Dubai to BBVA.• Assignment and pledge over proceeds account.• Bank of India (Mumbai branch) corporate guarantee towards theprincipal amount of the export advance as well as the interest portionthere on.Further the above bank facilities are subject to certain restrictivecovenants relating to maintenance of minimum debt-equity and currentratios, and routing of minimum amount of cash flow through the lendingbanks of the holding company.10 RELATED PARTY TRANSACTIONSRelated parties represent the shareholder, directors and keymanagement personnel of the Establishment, and entitiescontrolled, jointly controlled or significantly influenced by suchparties. Pricing policies and terms of these transactions areapproved by the Establishment’s management.Transactions with related parties included in the income statementare as follows:Major shareholder:1 April 2007to 31 March 2008SalesUSDPurchasesUSDEssar Steel Limited Nil 76,975,44414 June 2006to 31 March 2007Balances with a related party included in the balance sheet are asfollows:Major shareholder:2008 2007Receivables Payables Receivables PayablesUSD USD USD USDEssar Steel Limited 106,306,349 12,324 25,518,836 -11 ACCOUNTS PAYABLE AND ACCRUALS2008 2007USDUSDAccrued expenses 1,269,295 345,580Due to a related party (note 10) 12,324 -1,281,619 345,580Interest rate riskThe Establishment is exposed to interest rate risk on its interestbearing liabilities (term loans).The following table demonstrates the sensitivity of the incomestatement to reasonably possible changes in interest rates, withall other variables held constant.The sensitivity of the income statement is the effect of the assumedchanges in interest rates on the Establishment’s profit for one year,based on the floating rate financial assets and financial liabilitiesheld at 31 March 2008.There is no impact on the Establishment’s equity.Increase/ Effect ondecrease profit for thein basisyearpointsUSD2008USD +15 (232,500)USD - 10 155,0002007USD +15 (37,500)USD - 10 25,000Liquidity riskThe Establishment limits its liquidity risk by ensuring bank facilitiesare available.The Establishment’s terms of sales require amounts to be paidwithin 30 days of the date of sale.The table below summarises the maturities of the Establishment’sundiscounted financial liabilities at 31 March 2008, based oncontractual payment dates and current market interest rates.At 31 March 2008Less than 3 to 12 1 to 53 months months years >5 years TotalUSD USD USD USD USDSalesUSDPurchasesUSDDue to a related party - 12,324 - - 12,324Term loans 28,921,518 113,973,030 15,983,607 - 158,878,155Total 28,921,518 113,985,354 15,983,607 - 158,890,479Major shareholder:Essar Steel Limited - -At 31 March 2007Less than 3 to 12 1 to 53 months months years >5 years TotalUSD USD USD USD USDThe Establishment is in the process of issuing additional shares tothe major shareholder.Term loans - 740,058 7,878,616 20,573,770 - 29,192,444Total 740,058 7,878,616 20,573,770 - 29,192,44463