Gujarat Mineral Development Corporation Ltd

To

The Shareholders,

Gujarat Mineral Development Corporation Limited

Your Directors have pleasure in presenting 48^th Annual Report along with theaudited accounts of your Corporation for the financial year 2010-2011. Our profit aftertax for the year is Rs 37476.35 lacs as against Rs 27986.88 lacs last year.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 withrespect to Directors' Responsibility Statement, it is hereby confirmed that :

(1) in the preparation of the accounts for the financial year ended 31^stMarch, 2011, the applicable accounting standards have been followed along with properexplanation relating to material departures.

(2) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that were reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit or loss of the Company for the year under review.

(3) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

(4) the Directors have prepared the accounts for the financial year ended 31^stMarch, 2011 on a going concern basis.

DIVIDEND

Your Directors have pleasure to recommend a dividend of 150 %, including specialdividend of 25% on account of Swarnim Gujarat Year, i.e. Rs 3 per share on equity shares.An amount of Rs 9540 Lacs on equity share capital of Rs 6360 lacs shall be paid asdividend.

CONTRIBUTION TO STATE EXCHEQUER:

The Corporation has contributed to the State Exchequer an amount of Rs 31893 lacsincluding Royalty of Rs 8032 lacs and Sales Tax of Rs 23861 lacs.

SHARE CAPITAL

During the year under review the issued, subscribed and paid-up share capital remainedconstant at Rs 63.60 Crores divided into 31,80,00,000 equity shares of Rs 2 each.

FINANCE AND TAXATION

Income Tax assessment of the Corporation has been completed up to the Financial Year2007-08 and the Sales Tax assessment has been completed up to the Financial Year 2006-07.

INTERNAL AUDIT

M/s. Sandip Desai & Company, Chartered Accountants were appointed as InternalAuditor of the Corporation for the year 2010-11.

STATUTORY AUDIT

M/s. Jain Seth & Co., Chartered Accountants were appointed Statutory Auditors ofthe Corporation by the Comptroller & Auditor General of India for the year 2010-11.

COST AUDIT

M/s Manish Analkat were appointed as Cost Auditors in respect of Akrimota Thermal PowerStation for the year 2010-11.

REVIEW OF THE OPERATIONS

During the year, your Corporation operated five lignite mines, namely, Panandhro,Mata-No-Madh, Rajpardi, Tadkeshwar and Bhavnagar Lignite Mines. Inspite of stiffcompetition from alternate fuels such as petcoke and imported coal, the total lignitesales were sustained and during the year, 102.32 MT of lignite were produced from thesemines. The mine-wise production figures are as follows :

FLOURSPAR PROJECT, KADIPANI (DIST. VADODARA)

During the year 2010-11, production of 4,801 MT of all grade concentrate is producedtill Nov., 2010. The efforts are being made to find out some solution for removal of solidplant tailing waste lying at Kadipani to restart plant operations.

BAUXITE

During the year under review, the Gadhsisa Group of Mines produced 95240 M.T. Highgrade; 453110 M.T. Low grade (<54%) bauxite ,135000 MT Mine Dust .

The CB plant was not in operation. So no Calcined bauxite produced and generated arevenue of Rs 66.58 Crores. The bauxite sold was 78,930 M.T. of High grade (>54%),585695 M.T. of Low grade (<54%), 124661 MT Mine dust, 3,872 M.T. ofCalcined bauxite, 688 M.T. of C.B. Balls and 2,067 M.T. of Plant dust. Thehigh grade Bauxite,Calcined Bauxite, CB Balls, Plant dust produced was supplied to theunits in the State and the low grade bauxite produced was supplied to the units in thecountry and Part of low grade was also exported.

MANGANESE

During the period 2010-11, the Corporation disposed off 2.45 Lac MT of Mn Ore Wastedump lying at Shivrajpur area. GMDC generated Rs 491.29 Lac of the total sale value.

POWER PROJECT - NANI CHHER

During the year under review, the total generation of Akrimota Thermal Power Stationwas 1171 MUs. The power project generated the revenue of Rs 233.67 Crores. During theyear, this project generated profit of Rs 31.16 crores.

WIND FARM

Your directors are pleased to inform you that Wind Farms with a capacity of 40.5 MWwere progressively commissioned by 31.03.2011. The total Wind farm capacity as on date is60 MW and it earned revenue of Rs1804 lacs. The work of 40.5 MW final phase of Wind farmproject has been started and is expected to be completed within next four months. Withthis, the total Wind farm capacity will reach 100.5 MW.

SOLAR POWER

Your Directors are happy to inform you that your Corporation is actively considering toset up a 5 MW Solar Power Plant in Kutch region to harness the solar energy.

ENTERPRISE RESOURCE PLANNING PROJECT - iMine

During the year under review, your Corporation implemented an integrated one of itskind ERP Project - iMine. The project proposes to introduce efficiency and transparencywith IT intervention. The integrated IT platform offers unique solutions for allfunctionality across the board, viz. Sales and Dispatch, Maintenance, Power Generation,Geology, Finance, Purchase, Human Resource Management and Investors' Grievance. The uniquefeatures of the software will enable consumers to order and pay online. Moreover, the ERPfacility will make available real time information.

NEW PROJECTS AND SCHEMES OF THE CORPORATION

A) During the period under review, your Corporation executed MoUs with followingparties during Vibrant Gujarat Global Investors' Summit 2011 held in January, 2011 forparticipation in mining projects abroad.

B) Setting up of Alumina and Aluminium Smelter Plant in Kutch District based onnon-plant grade bauxite to be supplied by GMDC.

It has been decided to call for financial bids from selected seven parties and finallyone of them shall be selected, to go ahead with the project.

MOUs have been signed with the following parties.

D) Setting up of 200 MW Group Captive Power Plant for textile weaving sector based onsupply of lignite by GMDC from its Bhavnagar mine

Four Companies listed below have shown interest in this regard.

1. Univision Textile Gujarat Limited

2. Ahmedabad Textile Processors' Association

3. Pradip Energy Limited

4. Suryachakra Energy & Infrastructure Pvt. Ltd.

One out of the above four shall be selected with approval of Govt. of Gujarat, to goahead with the project.

E) Setting up of Cement Plant based on supply of limestone by GMDC

Based on EOI, the following have been shortlisted for long term supply of overburdenlimestone from the lignite mines of GMDC

F) Setting up of Power Plant based on allocation of coal Blocks to GMDC by Govt. ofIndia

Based on EOI, the following parties have been identified to approach GOI for allocationof Coal Blocks

1. Reliance Power Limited

2. Shyam Emco Infrastructure Limited

3. Adani Power Limited

4. Tata Power

5. Ispat Industries Limited

6. Indiabulls Power Limited

7. Jaiprakash associates Limited

8. Pradip Energy Limited

9. Suryachakra Energy (Chhatisgarh) Pvt. Ltd.

10. ATHA Group.

G) Lignite based Value addition projects

H) Exploration and prospecting of mineral resources in the State

1. Credo Ventures Ltd.

I) Mining of Manganese, Iron Ore and setting up of value addition plants outsideGujarat but within the country.

J) Setting up of 100 MW Solar Power Plant - Santech Power LLC

ENVIRONMENT PROGRAMME

Environment is governed by number of factors which requires proactive measures resolvebefore it becomes alarming. Keeping this in view GMDC has declared "EnvironmentalPolicy-20" statement as part of commitment to emphasize on adopting environmentfriendly measures in the whole sphere of operation. GMDC has obtained environmentalclearance from Ministry of Environment and Forests New Delhi for three projects namelyMevasa-1 bauxite mine, Mata no Madh lignite mine and Tadkeshwar lignite mine. Being closerto the sanctuary, Mata no Madh and Mevasa-1 mining proposal is being submitted for theapproval of Standing Committee on Wildlife.

Your company has taken up massive plantation through Forest department anddepartmentally on 228.0 ha area in the year 201011 which is 14% higher than last year tocontribute for environmental protection and conservation and restoration of mined outareas. A total of 2.97 lakh saplings have been planted. For the environmental awarenessand sensitization of people, your company has conducted group training programme as wellas community plantation drives such as Van Mahotsav celebration.

Your company is well concerned with the environmental protection and takes appropriatepreventive and curative measures to maintain environment. For control of pollution andenvironmental protection, your Company is following an effective environment managementsystem at all its projects with regular water sprinkling for dust suppression,electrostatic precipitator for stack dust emission, sewage and Effluent Treatment Plantsfor the control of water pollution and regular vibration measurement for controlling noisepollution from machines.

In addition to above, your company has intensified environmental protection measures byway of reclamation of mined out area by backfilling and afforestation, plantation onoverburden dump, virgin area and roadside through in house sources as well as throughForest department. Company has its own environmental department at Corporate Office headedby Chief General Manager. Your company is regularly monitoring polluting parametersinternally as well as through external agencies and maintaining the environmental controlmeasures and standards very effectively.

Environment audit is conducted by an external agency recognized by the GujaratPollution Control Board regularly and the Environmental Audit Report is submitted toGujarat Pollution Control Board and compliances of environmental clearance are submittedto Ministry of Environment and Forests, New Delhi.

INDUSTRIAL RELATIONS, HEALTH AND SAFETY

The relations between Corporation and its employees continued to be cordial throughoutthe year. Corporation continued to take care of the health and safety of project staff andinhabitants within the surrounding areas of mines by providing :

1. Well equipped and staffed dispensaries at Panandhro, Rajpardi, Kadipani and atAkrimota Power Projects. There is a facility of telemedicine at select hospitals whichprovide state of the art techno-medical intervention.

2. Ambulance Vans to Taluka Panchayats of Kutchh.

3. Uniform, ISI & DGMS approved safety shoes helmets and all safety devices as perthe provisions of the Mines Act.

SOCIALLY RESPONSIBLE AND INCLUSIVE DEVELOPMENT

Your corporation has been sensitive towards the needs of the society within which itoperates and has continuously strived to make a difference to the lives of people andcommunity in some of the remotest regions where it operates. During the year, yourCorporation rigorously advocated the Micro Irrigation Scheme in collaboration withGovernment agencies in the arid regions of Kutch and assisted small and marginal farmersto adopt Micro Irrigation for better yields. And the results have been very good. Kutch,where your Corporation has predominant presence, is a perennial water scarce region. Inorder to address the problem of scarcity of water for the local community, yourCorporation also undertook special drive for creation of water bodies to harvest andretain rain water. These water bodies have proved to be an alixir for the localcommunities as during the year that passed by saw good monsoon season. These initiativeshave helped in improving the livelihood and income generation for the rural poor. Specialinitiatives were also launched to upgrade the skill of the rural women artisans in thevillages of Lakhpat taluka to leverage their traditional handicraft skills for incomegeneration. Your corporation has charted out a focused policy to carry out its socialresponsibilities for an inclusive growth.

PARTICULARS OF EMPLOYEES

No employee was in receipt of emoluments in excess of Rs2,00,000 per month orRs24,00,000 per annum during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Additional information on conservation of energy, technology absorption, foreignexchange earnings and outgo as required by the Companies (Disclosure of particulars in thereport of Board of Directors) Rules, 1988 is annexed at Annexure-I and forms part of thisreport.

BOARD-OF-DIRECTORS

During the year under review, there was no change in the Board of Directors of yourCorporation.

CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the various Stock Exchanges, thedetailed report on the Corporate Governance is given in Annexure-II.

ACKNOWLEDGEMENT

Your Directors are pleased to place on record their deep appreciation for the sincereservices and co-operation extended by the officers, employees and workmen of theCorporation at all levels. They also wish to place on record their gratitude for theconfidence placed in them by financial institutions and investors. Further, your Directorswish to thank various departments of the Central Government viz. the Ministry ofEnvironment and Forest, Ministry of Coal, Ministry of Mines and various bodies of StateGovernment of Gujarat viz. Industries & Mines Department, the Finance Department,Commissionerate of Geology and Mining and Gujarat State Pollution Control Board. TheDirectors also extend their heartiest thanks to the esteemed customers and shareholders ofthe Corporation for their valued co-operation.

(a) Energy Conservation Measures taken

(i) Solar Power Plant of 10 kwp commissioned at Corporate Office

(ii) Solar Power Plant of 20 kwp commissioned at Bhavnagar Office

(b) Additional Investments and Proposal for Reduction of Consumption of Energy

(i) Proposal to set up roof top solar power plants at various project offices of theCorporation

(c) Impact of the above measures

(i) Alternative non conventional energy source will result in saving of traditionalenergy

B. Technology absorption

The disclosure is made in the prescribed Form B.

C. Foreign Exchange Earnings and outgo

Total foreign exchange used : Euro 92524 Total foreign exchange earned : NIL

Research and Development

Particular fields in which Research and Development carried out by the Corporation areas follows :

1. Specific Areas in which R & D carried out by Company

NIL

2. Benefits derived as a result of above R & D

NIL

3. Future Plan of Action

1. Value addition of low grade manganese mineral.

2. Development of Deep seated lignite and coal deposit thorough Underground CoalGasification method.

3. Laterite and low alumina content bauxite value addition for use in proposed Aluminaprojects.

4. Value addition of Silica Sand of Rajpardi mine

5. Exploration of lignite, bauxite, limestone and manganese.

6. Setting up of 5 MW Solar and 100 MW Wind Farm project.

1. Efforts in brief made towards technology absorption, adaptation and innovation :

1. Installation of wind power farms with a capacity of 60 MW.

2. Proposal to set up 5 MW solar power plant

2. Benefits derived as a result of the above efforts:

Generation of clean and sustainable energy.