Jaiprakash Associates Ltd


BSE: 532532 | NSE: JPASSOCIAT | ISIN: INE455F01025 
Market Cap: [Rs.Cr.] 14,437 | Face Value: [Rs.] 2
Industry: Construction

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Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Forming part of the Report of Directors for the year ended March 31, 2013.

ECONOMIC OVERVIEW

As per ‘Monetary Policy Statement 2013-14’ released by Reserve Bank ofIndia (RBI) on May 3, 2013, the Annual Policy is formulated in an environment ofincipient signs of stabilization in the global economy and prospects of a turnaround,albeit modest, in the domestic economy. In the advanced economies (AEs), near-term riskshave receded, aided by improving financial conditions and supportive macroeconomicpolicies. RBI has also highlighted that:

a) With output expansion of only 4.5 per cent in Q3 of 2012-13, the lowest in 15quarters, cumulative GDP growth for 3 the period April-December 2012 declined to 5.0 percent from 6.6 per cent a year ago. This was mainly due to the protracted weakness inindustrial activity aggravated by domestic supply bottlenecks, and slowdown in theservices sector reflecting weak external demand. The Central Statistics Office(CSO)’s advance estimate of GDP growth for 2012-13 of 5.0 per cent implies that theeconomy would have expanded by 4.7 per cent in Q4.

b) The growth of industrial production slid to 0.6 per cent in February 2013 from 2.4per cent a month ago. Consequently, on a cumulative basis, growth in industrial productiondecelerated to 0.9 per cent during 2012-13 (April-February) from 3.5 per cent in thecorresponding period of the previous year.

c) On the demand side, the persisting decline in capital goods production during April2012–February 2013 reflects depressed investment conditions. The moderation incorporate sales and weakening consumer confidence suggest that the slowdown could bespreading to consumption spending.

d) Headline inflation, as measured by the wholesale price index (WPI), moderated to anaverage of 7.3 per cent in 2012-13 from 8.9 per cent in the previous year. The easing wasparticularly significant in Q4 of 2012-13, with the year-end inflation recording at 6.0per cent. Largely driven by food inflation, retail inflation, as measured by the newcombined (rural and urban) consumer price index (CPI) (Base: 2010=100), averaged 10.2 percent during 2012-13.

e) An analysis of corporate performance during Q3 of 2012-13, based on a common sampleof 2,473 non-government non-financial companies, indicates that growth of sales as well asprofits decelerated significantly. Early results of corporate performance in Q4 indicatecontinuing moderation in sales though profit margins increased slightly.

f) In consonance with the cuts in the policy repo rate and the cash reserve ratio (CRR)during 2012-13, the modal term deposit rate declined by 11 basis points (bps) and themodal base rate by 50 bps. Liquidity remained under pressure throughout the year becauseof persistently high government cash balances with the Reserve Bank and elevatedincremental credit to deposit ratio for much of the year.

g) The revised estimates (RE) of central government finances for 2012-13 show that thegross fiscal deficit-GDP ratio at 5.2 per cent was around the budgeted level and withinthe target set out in the revised roadmap. The current account deficit (CAD) came in at anall-time high of 6.7 per cent of GDP in Q3 of 2012-13.

h) For GDP growth during 2012-13, the CSO’s advance estimate of 5.0 per cent islower than the Reserve Bank’s baseline projection of 5.5 per cent set out in theThird Quarter Review (TQR) of January 2013, reflecting slower than expected growth in bothindustry and services.

i) During 2013-14, economic activity is expected to show only a modest improvement overlast year, with a pick-up likely only in the second half of the year. Conditional upon anormal monsoon, agricultural growth could return to trend levels. The outlook forindustrial activity remains subdued, with the pipeline of new investment drying up andexisting projects stalled by bottlenecks and implementation gaps. With global growthunlikely to improve significantly from 2012, growth in services and exports may remainsluggish. Accordingly, the baseline GDP growth for 2013-14 is projected at 5.7 per cent.

j) Keeping in view the domestic demand-supply balance, the outlook for global commodityprices and the forecast of a normal monsoon, WPI inflation is expected to be range-boundaround 5.5 per cent during 2013-14.

According to ‘Macroeconomic and Monetary Developments in 2012-13’,issued by RBI with the Monetary Policy Statement 2013-14, on May 2, 2013, RBI has givenfollowing indications on domestic as well as global economy:

i. The impact of monetary policy in boosting GDP growth is contingent upon resolutionof supply bottlenecks, governance issues impeding investments and the government’sefforts towards fiscal consolidation. Domestic energy price adjustments, inadequate supplyresponse and sustained wage pressures on inflation are expected to drag down growth forsome more time. These factors, coupled with subdued domestic business confidence, arelikely to keep recovery in 2013-14 modest.

ii. Global growth turned weaker in 2012 and is expected to stay sluggish in 2013 asfiscal adjustments drag growth in advanced economies (AEs) and, in turn, delay cyclicalrecovery in emerging market and developing economies (EMDEs). The International MonetaryFund (IMF) in its World Economic Outlook has forecast global growth to stay sluggish at3.3 per cent in 2013 before improving to 4.0 per cent in 2014. While downside tail riskshave reduced in early 2013 because of the supportive policy action in the euro area andthe measures to tackle the fiscal cliff in the US, risks to global recovery have increasedconsequent to the Chinese economy slowing down.

iii. The Indian economy remained sluggish in Q3 of 2012-13, with slowdown turningvisibly pervasive across most sectors. The deceleration in the services sector growth,which has been the mainstay of high growth in the recent period, had dragged down overalleconomic activity and employment creation. Domestic policy uncertainties, governanceconcerns, the impact of earlier monetary tightening and the slacking of external demandcontinue to adversely impact growth.

iv. External imbalances were in focus as the current account deficit (CAD) to GDP ratioreached a historic high of 6.7 per cent in Q3 of 2012-13. However, CAD in Q3 wasadequately financed by capital inflows, without any reserve depletion. Current account in2013-14 is likely to benefit from moderation in global commodity prices of oil, gold andother metals.

v. Headline, and especially the non-food manufactured product inflation pressures,softened during 2012-13, even as consumer price inflation firmed up. The average headlineWPI inflation during 2012-13 at 7.4 per cent was significantly lower than the 9.0 per centrecorded in the preceding year.

vi. Growth continued to slow down in 2012-13, but could witness a slow-paced recoverylater this year, contingent on improved governance and concerted action to resolvestructural bottlenecks. Subdued business and consumer confidence, reflected in varioussurveys, is expected to drag growth down.

vii. Growth in the index of industrial production (IIP) witnessed a slowdown to 0.9percent during April-February 2012-13, largely due to infrastructure and inputconstraints, rising costs and moderation of external demand. Contraction in capital goodsand the mining sector continue to affect the overall performance of the industrial sector.Excluding the volatile items, the truncated IIP (96 per cent of IIP) growth inApril-February 2012-13 is 1.5 per cent.

viii. Shortage of power was a major constraining factor for the growth of theindustrial sector. Growth in electricity generation decelerated during 2012-13 to 4.0 percent from 8.2 per cent in the year before. The gap between requirement and availability ofpower increased to 8.7 per cent during the period. Shortages in coal supply, delays incapacity addition and a delayed and skewed monsoon have contributed to the slower growthof power generation.

ix. Apart from domestic constraints, weak global growth was also responsible for thedomestic industrial slowdown given the strong co-movement between the domestic and globalIIP. Core industries are faced with various supply constraints, such as shortage of coaland Natural gas, stoppage of mining in some states and delays in commissioning of largeprojects.

x. Going forward, sustained efforts by the government to expediting environmentalclearances and land acquisition are needed to turnaround growth in core industries.Constraints facing the infrastructure sector need to be addressed. The Reserve Bank, onits part, has also recently relaxed the norms for external commercial borrowings forinfrastructural finance companies.

During the year various agencies have made projected India’s GDP growth for theyear 2013-14, as given in table:

Name of Agency Latest Projections Earlier Projections
Real GDP Growth Month Real GDP Growth Month
Prime Minister Economic Advisory Council (PMEAC) 6.4% Apr- 13 - -
Ministry of Finance 6.1 to 6.7 % Feb-13 - -
International Monetary Fund (IMF) 5.8% Apr- 13 6.0% Jan-13
World Bank 6.4% Jan-13 - -
The Organization for Economic Co- operation and Development (OECD) 5.9% Dec-12 6.5% Nov-12
Asian Development Bank (ADB) 6.0% Apr-13 6.5% Dec-12
National Council Applied Economic Research (NCAER) 6.2% Jan-13 - -

Source: RBI Macroeconomic and Monetary Developments in 2012-13

In March 2013 ‘World Bank’ has estimated that India’s economy maygrow over 6% during 2013-14. According to them Indian economy, was impacted by the globalslowdown like other economies of the world. Despite that current growth rate of 5% is notvery encouraging, but hope for higher levels of growth in future is promising with thesteps taken by government.

‘Asian Development Bank (ADB) Outlook 2013’ on Indian Economy stated thatIndia’s growth further decelerated as a slump in industry and investment spread toconsumption and exports. Though inflation and the fiscal deficit were reined in, thecurrent account deficit rose to a record high. Delays in resolving structural impedimentsto growth were compounded by a global trade slowdown. Boosting investment is critical fora return to high growth, but requires reforms to eliminate bottlenecks that are stallingprojects. Recent steps to address some of these challenges are expected to help growthpick up modestly.

Economic growth in fiscal year 2012 (ended 31 March 2013) decelerated to 5%, it’slowest in a decade, from 6.2% in FY2011. While tepid industrial growth and downdraft ininvestment continued from FY2011, the downturn was exacerbated by a slump in servicesactivity, weakening consumption, and contracting exports.

Selected Economic Indicators (%) - India 2013 2014
Gross Domestic Product (GDP) growth 6.0% 6.5%
Inflation 7.2% 6.8%
Current Account Balance (share in GDP) -4.4% -3.7%

Source: ADB estimates

The slowdown in domestic investment in India will need to be reversed for growth totrend upward in a sustained manner. However, recent data from the Centre for MonitoringIndian Economy on planned capital expenditures are not encouraging, as they continue toshow a downward trend in announced new projects and an increase in the number of shelvedprojects. Clearly, turning this trend around will be a major challenge.

Recent reforms include the creation of the Cabinet Committee on Investment to expeditegovernment clearances for large projects and cabinet clearance of a land acquisition bill.However, these are only first steps toward improving the investment climate in India, andfurther measures will have to be undertaken for the investment cycle to turn around. Thesewould include tough economic and politically difficult policy decisions related to delaysin environmental clearances, parliamentary approval of the land acquisition bill thatinvolves complex issues, improving the availability of fuel sources and infrastructurelinking fuel sources with power generating plants, and attaining fiscal consolidationwithout sacrificing capital expenditure.

A normal monsoon is expected to substantially boost agriculture growth from thedepressed base a year earlier. This will strengthen rural consumer demand and ease pricepressures. Industry growth should improve on better domestic and external demand, butunresolved structural issues will continue to constrain investment, mining and power.Services are expected to see a stronger pickup in activity than industry, though growthwill continue to be restrained by the limited demand.

In this scenario, GDP growth nudges up to 6% in FY2013. Improved global prospects, someeasing of price pressures, and forward movement in resolving structural bottlenecks wouldallow India’s growth to increase to 6.5% in FY2014.

In the given environment of India being fairly poised towards growth, your Companystands in a strong position to grow due to its presence basically in the infra-structuresector, which is the backbone of country’s overall growth & development.

COMPANY’S BUSINESS

The Company’s business can be broadly classified in the following sectors:

1. Engineering & Construction

2. Manufacture & Marketing of Cement

3. Energy (Power, Transmission, Oil & Gas)

4. Expressways

5. Real Estate and

6. Hospitality

INDUSTRY STRUCTURE AND DEVELOPMENTS RELATING TO COMPANY’S LINES OF BUSINESS

I. ENGINEERING & CONSTRUCTION

Construction Industry was in perpetual mushroom growth mode for the past few years tillit went into reverse gear and the slow down as a consequence of economic melt down inNovember, 2008. While your Company is an acknowledged leader in the field of multipurposeriver valley and hydro- power projects and has in-house capability for undertakingchallenging assignments anywhere in the world on EPC (Engineering, Procurement andConstruction) contract basis, it is facing increasing competition from new entrants in thepackaged contract sector for the past few years, which is expected to increase due topossible reduction of opportunities in the immediate future, till the economy recovers andthe growth rate of the economy starts clawing back.

As such, there is a slight shift in the strategy through increased involvement inBuild, Own, Operate (BOO) and Build, Operate and Transfer (BOT) Projects. The Jaypee Groupis also increasing its stake in power generation by going in for more and more of its ownprojects both in hydro and thermal power sectors.

CHALLENGES AND OUTLOOK

From a macroeconomic perspective, a high level of investment in the infrastructuresector is essential for the overall revival of investment climate which may finally leadto sustainable growth in an economy. Financing of infrastructure project is a crucialfactor for the timely completion of the project. In this regard ‘The IndiaInfrastructure Finance Company Limited’ (IIFCL) has been given a important role forproviding long term financing for infrastructure projects that typically involve longgestation periods by providing guarantees for bonds issued by private infrastructurecompanies rather than expanding its direct lending operations.

However, in the current macroeconomic environment, to achieve this objective, there isneed to address sector-specific issues over the medium to long-term horizon in India.

II. CEMENT

As per the report of ICRA Ltd. (the credit rating agency) published on IndianCement Sector in January 2013, following observations are made:

a) Domestic cement production showed a relatively muted growth of 4.7% YoY duringJuly-Nov 2012, which can be mainly attributed to delayed monsoons impacting rural demandduring Jul-Aug and also delayed festive season impacting construction in Oct-Nov, Quarterto Quarter cement production declined by 8.2% during Q2 as compared to Q1 of Financialyear 2012-13, which is however a seasonal phenomenon due to onset of monsoons. Contrary toexpectations, cement demand did not witness any significant revival post monsoons (Q3 FY2012-13). The demand remained sluggish in November 2012 as the festive season (Durga Poojaand Diwali) was delayed to November this year as compared to last year. This in turndelayed the pick-up in construction activities due to migration of labour which typicallyhappens during the festive season. All-India cement production declined by 0.2% Year toyear during the month of Nov 2012 and has not seen any significant revival in the month ofDec 2012 as well. Going forward, with the end of monsoon and festive season, the demand isexpected to improve in the current quarter. As per our channel check, cement off take hasalready seen improvement in some markets in Jan driven by seasonal pick-up in demand andemphasis by government and private entities to meet their year-end targets.

b) The pace of capacity addition has slowed down in the cement industry since the peakaddition of 50 million MT seen in FY10. This can be mainly attributed to the fact thatbulk of the cement capacity addition programme had been initiated in the period FY06-FY09and completed by FY10. Fresh capacity launches has slowed down subsequently and theindustry added 20 million MT in FY11 and 10 million MT in FY12. As per report, it isexpected that - 22 MTPA of grinding capacity to be added in FY13 and 23 MTPA in FY14.However, the effective capacity additions in FY13 will be much lower since most of theprojects will become operational only in 2nd half of FY 2012-13. On anall-India basis, the capacity utilisation levels are expected to remain at around 78% inFY 2012-13, which is marginally higher than the 76% utilization seen in FY 2011-12.

c) Cement prices came under pressure a seasonal phenomenon across markets (barringSouth) in the second quarter due to monsoons, however the prices in 2nd Quarterof FY 2012-13 were much higher than those in the corresponding period in previous year,which was marked by poor realizations and weak demand. While cement prices traditionallyrecover in the third quarter, this was not the case this year. The prices continued toweaken in November and December 2012 due to weak demand. Cement prices declined by 5-15%in most markets across India (except South) between July and Dec 2012. It is important tonote that though the prices have declined across markets post Aug 2012, the currentaverage price realization are 5-15% higher across most markets on Year to Year basis.Going forward, cement prices are expected to improve in driven by pick-up in demand.

d) On the cost side, the cement industry was affected by increase in diesel prices inthe month of September 2012. The diesel prices were increased by Rs. 5/litre in Sept 2012which increased the cost by Rs. 3 per bag for cement companies. The weak demand scenariomade it difficult for most players to fully pass on this cost. However, cement companiesusing imported coal have seen moderation in their power and fuel cost as prices ofinternational coal have been declining from Jan 2012.

e) Decline in prices in Q2 of FY 2012-13 coupled with lower volume offtake owing toweak demand from construction segment due to monsoons has resulted in Quarter to Quarterdecline in revenues for most cement companies. However, on Year to Year basis, theperformance of cement companies was much better driven by higher average realizations inQ2 of FY 2012-13 as compared to the corresponding period in previous year, which wasmarked by poor realizations and demand scenario.

Future Outlook in Cement

Developments in the domestic environment and a huge number of infrastructure projectsare likely to boost demand for cement consumption in India, which is bound to increasemanifold in the coming years.

Your management is of the view that the Indian cement industry had witnessed anincredible growth in the past few years, led by the growth in the real estate,infrastructure and industrial construction. However, in recent period, cement demandgrowth took a slight breather. The cement industry has registered a drop in margins mainlydue to input cost rise and lack of pricing power. The Industry has been facing a chronicproblem of insufficient availability of the main fuel coal, driving the manufacturers toresort to use of alternatives at steep cost. As the economic growth is expected to bestable, the cement demand is expected to sustain an average growth in demand. The keydrivers of this demand shall be the continued expansion in infrastructure, real estate andindustrial sectors.

III. ENERGY

As per Economic Survey published by Government of India in February 2013, theEleventh Five Year Plan, created nearly 55,000 MW of new generation capacity, yet therecontinued to be an overall energy deficit of 8.7 per cent and peak shortage of 9.0 percent. Resources currently allocated to energy supply are not sufficient for narrowing thegap between energy needs and energy availability. Indeed, this may widen as the economymoves to a higher growth trajectory. India’s success in resolving energy bottleneckstherefore remains one of the key challenges in achieving the projected growth outcomes.Further, India’s excessive reliance on imported crude oil makes it imperative to havean optimal energy mix that will allow it to achieve its long-run goal of sustainabledevelopment.

Energy scenario during 12th five year plan and beyond: The Twelfth Planhas projected a total domestic energy production of 669.6 million tons of oil equivalent(MTOE) in 2016-17 and 844 MTOE in 2021-22. This will meet around 71 per cent and 69 percent of expected energy consumption, with the balance to be met from imports, projected tobe about 267.8 MTOE in 2016-17 and 375.6 MTOE in 2021-22. Import dependence in case ofcrude oil and coal is projected to be about 78 per cent and 22.4 per cent respectively by2016-17. Coal and lignite will continue to dominate the energy scenario and by 2021-22 theshare of these two fuel products will be about 66.8 per cent in total commercial energyproduced and about 56.9 per cent in total commercial energy supply by 2021-22. The shareof crude oil in production and consumption is expected to be 6.7 per cent and 23 per centrespectively. Energy exploration and exploitation, capacity additions, clean energyalternatives, conservation, and energy sector reforms will, therefore, be critical forenergy security.

Power generation: Electricity generation by power utilities during 2012-13 wastargeted to go up by 6.05 per cent to 930 billion units. The growth in power generationduring April to December, 2012 was 4.55 per cent, as compared to about 9.33 per centduring April to December, 2011.

Power Generation by utilities (Billion KWh)

Category April-December Growth
2011-12 2011 -12 2012-13 (%)
Power Generation 876.887 580.664 683.753 4.55
Hydroelectric# 130.510 100.178 92.543 -13.9
Thermal 708.806 454.404 561.879 8.55
Nuclear 32.286 21.183 24.653 3.54
Bhutan import 5.285 4.898 4.677 -7.49

Source : Ministry of Power

# includes generation from hydro stations above 25 mega Watts.

Thermal Power Generation during April-December 2012

Components Generation Growth PLF (in percent)
(Billion KWh) (%) Apr-Dec 2011 Apr-Dec 2012
Coal 488.92 13.90 72.23 69.49
Lignite 23.40 19.81 67.05 73.47
Gas Turbine 53.87 -25.49 62.01 43.62
Diesel 1.69 -6.44 - -
Total 561.80 8.6 71.94 69.63

Source: Ministry of Power

Capacity Addition: The Eleventh Five Year Plan initially envisaged a capacityaddition of 78,000 MW, of which 19.9 per cent capacity was hydro, 75.8 per cent thermal,and the rest nuclear. At the time of the Mid Term Appraisal (MTA) of the Eleventh Plan,the target was revised to 62,374 MW with the thermal, hydro, and nuclear segmentscontributing 50,757 MW, 8,237 MW, and 3,380 MW respectively. A capacity addition of 54,964MW has been achieved during the Eleventh Plan. The capacity addition during the TwelfthPlan period is estimated at 88,537 MW comprising 26,182 MW in the central sector, 15,530MW in the state sector, and 46,825 MW in the private sector respectively. The capacityaddition target for the year 2012-13 was set at 17,956 MW. As against it, a capacity of9,854 MW has been added till December 31, 2012.

Development of Hydro Power : As per a re-assessment study carried out by theCentral Electricity Authority (CEA), the identified hydroelectric potential of the country(having installed capacity above 25 MW) is 1,45,320 MW. As of now, 434 hydropowerprojects/schemes are at different stages of operation/ approval/investigation.

Future Outlook in Energy

Considering the huge potential in the Energy sector, your Company through itssubsidiaries is well equipped and is making every effort to make its breakthrough.

IV. EXPRESSWAYS

India, having one of the largest road networks of 42.4 lakh km, consists of NationalHighways, Road Highways, Expressways, State Highways, Major District Roads, Other DistrictRoads and Village Roads with the following length distribution:

National Highways/ Expressways 70,934 KM
State Highways 1,54,522 KM
Major and other District Roads 25,77,396 KM
Rural Roads 14,33,577 KM

Source: Annual report 2010-11, Ministry of Road Transport and Highways, Government ofIndia About 60% of freight and 87.4% passenger traffic is carried by road.

Although National Highways constitute only about 1.7% of the road network, it carries40% of the total road traffic. Easy availability, adaptability to individual needs and thecost savings are some of the factors which go in favor of road transport. The rapidexpansion and strengthening of the road networks is imperative to provide for both presentand future traffic and for improved accessibility to the hinterland. In addition, roadtransport needs to be regulated for better energy efficiency, less pollution and enhancedroad safety.

National Highway Development Projects as per Economic Survey February 2013: As ofnow about 24 per cent of the total length of National Highways (NHs) is singlelane/intermediate lane, about 51 per cent is two-lane standard, and the balance 25 percent is four-lane standard or more. In 2012-13, the achievement under various phases ofthe National Highways Development Project (NHDP) up to December 2012 has been about 1,605km and projects have been awarded for a total length of about 878 km.

Future Outlook in Expressways

Your Company having a vast experience & resources and depending upon the interestshown by the Government would expand its business further in Roads & Expressways atsuitable times.

V. REAL ESTATE

The real estate sector is a critical sector of our economy. It has a huge multipliereffect on the economy and therefore, is a big driver of economic growth. It has beeninstrumental in changing the face of India from being a under developed country towardsaccelerating its way to a developed country, that is evidenced from the state of artinfrastructure development, buildings, townships etc. across urban and semi urban areas.

Besides acting as a catalyst for sustainable and inclusive economic growth, this sectorhas emerged as the 5th largest destination of foreign investment. Though theglobal economic slowdown had its effect on this sector as well slowing the pace of growth,the Indian real estate sector is breaking new ground. Rapid growth in businessopportunities, inflow of foreign investment into the sector and the entry of secondgeneration entrepreneurs are largely the reasons for future growth in this sector. Withthe Government’s commitment to the extensive and efficient infrastructuredevelopment, the Indian real estate sector is likely to stay ahead providing ampleopportunities for employment generation and sustenance of the other ancillary industries.

The Group continues to focus on the development of Integrated Townships alongside theExpressway to synergize the benefits of this unique revenue model.

Future Outlook in Real Estate

Your Company having a large land bank and offering in various segments, from Luxury tomid income, is all set to gain from the rapidly growing real estate market.

VI. HOSPITALITY

ICRA Limited, in its report on Indian Hotel Industry February, 2013 has given followingkey overview for the FY 2012-13:

• Global tourist volumes growth slows down: During the 2012, global touristvolumes are estimated to have grown by a modest 3-4% as compared to 5.9% during previousyear i.e. 2011. United Nations World Tourist Organization (UNWTO) projects a moderated2-4% growth for year 2013 in view of the continued global uncertainties is key outboundtourist countries in Europe.

• Foreign Tourist arrivals (FTAs) to India grew by a muted 5.4% during the year2012, slowing down considerably during the last year.

• Since May-12, domestic air travel in India has been declining; for Year TurnoverDetail (YTD) November-12 the domestic Revenue Passenger Kilometers (RPKM) has declined2.2% y-o-y, against a 15.9% growth during the same period in the preceding fiscal

Significant supply addition expected across key markets in India during 2012-13,particularly in Chennai and the NCR. Supply addition in 2013-14 also expected to berobust, which coupled with muted demand has led to continued pricing pressure in the nextfiscal.

The Indian sub-continent continues to face pressure on operational metrics with supplyadditions in several pockets outpacing demand growth. During the current fiscal, pan IndiaAverage Room Revenue (ARRs) have consistently hit new lows (seasonally adjusted) everymonth while occupancies, barring some pick up in October-12, has been lower than theprevious fiscal.

In the wake of continued business weakness hotels are focusing on non-room revenuesegments like Food & beverage (F&B) and Meetings, Incentives, Conferences andEvents (MICE), to mitigate the impact. The F&B segment has been witnessing healthydemand on the back of increasing purchasing power and changing aspirations of consumers– willing to pay for new cuisines and experiences. This has resulted in increase inspecialty restaurants and fine dining options in the premium properties, which includesopening of branches of international restaurants in some properties.

Future Outlook in Hospitality

Industry hits new lows during Quarter 2 of financial year 2012-13 with falling Revenueper available rooms (RevPARs) and escalating power costs eroding operating margins whichcoupled with increase in fixed costs (interest and depreciation) resulted in many playersin the industry posting net losses.

REVIEW OF FINANCIAL PERFORMANCE

The key indicators of the financial performance of the Company for the year 2012-13were as under:

S. NO. ITEM FY 2012-13 FY 2011-12
Rs. CR.

Rs. CR.

1 Total Revenues 13,512.08 13,117.61
2 Profit Before Exceptional Items, Prior Period Items & Tax 741.45 1,308.25
3 EBIDTA 3478.93 3,704.14
4 Profit Before Tax 750.75 1,314.34
5 Net Profit After Tax 501.28 1,026.38
6 Basic EPS after extra-ordinary items (in Rs. Per share) 2.34 4.83

SEGMENT – WISE PERFORMANCE & REVIEW OF OPERATIONS

The segment-wise performance is as under:

FY 2012- 13 FY 2011- 12
Segment Revenue

Rs. Crore

Rs. Crore

(a) Cement and Cement Products 6045.92 5464.96
(b) Construction 5314.31 5842.26
(c) Power 38.19 35.57
(d) Hotel/ Hospitality & Golf Course 231.41 196.54
(e) Real Estate 1686.00 1416.96
(f) Investments 120.75 201.21
(g) Others 155.07 1.33
(h) Unallocated 59.98 71.77
Total 13651.63 13230.60
Less: Inter-segment Revenue 139.55 112.99
Total Sales/ Income 13512.08 13117.61
Segment Results (Profit before tax)
(a) Cement and Cement Products 702.07 652.57
(b) Construction 1382.12 1605.36
(c) Power 17.52 15.61
(d) Hotel/ Hospitality & Golf Course 20.93 3.58
(e) Real Estate 585.33 664.67
(f) Investments 119.50 201.21
(g) Others (3.78) (4.68)
Total 2823.69 3138.32
Less :
(a) Finance Costs 2011.35 1781.74
(b) Other Un-allocable Expenditure
net off Un-allocable Income 61.59 4.24
Sub-total 2072.94 1823.98
Profit before Tax 750.75 1314.34

JAYPEE IN ENGINEERING & CONSTRUCTION

This year also, the Engineering & Construction Division of the Company continued toperform well. The Company has been qualified for new Projects, as reported in theDirectors’ Report. The Company has successfully completed Zirakpur–ParwanooHighway, Yamuna Expressway and Civil and Structural work of Bokaro Jaypee Cement Limited.

While your Company is facing the pressures of Indian economy as well as globalconditions coupled with liquidity crunch and weak demands, the Company also remainsconfident about India’s strong fundamentals as well as Company’s own strength,expertise and experience in the infra-structure sector, which is the backbone ofIndia’s growth potential.

As a multi-disciplinary infrastructure player, Jaiprakash Associates Ltd. (JAL) isgeared up to participate in the infrastructure development of the country. Its leadershipas an EPC player, a Cement producer, a Power Producer, an Expressway developer, a premiumtownship developer and a niche hospitality player is well established. With rapid capacityexpansion across most of its business domains, it shall reap rich dividends from theforthcoming infrastructure boom and create substantial value for all its stakeholders.

JAYPEE IN CEMENT

Your Company, alongwith its subsidiaries, is the third largest cement producer in thecountry with 35.30 MTPA (Million Tonne Per Annum) installed capacity. Out of 35.30 MTPA,32.55 MTPA is operative capacity and 2.75 MTPA is under implementation. Out of 32.55 MTPA,4.30 MTPA is through two joint ventures with SAIL and 9.80 MTPA is through wholly ownedsubsidiary.

JAYPEE IN ENERGY

Jaiprakash Power Ventures Limited (JPVL) (a subsidiary Company of JAL) is the largestprivate sector Hydro Power producer with 1700 MW of operational assets, with plantcapacities of 300 MW Baspa, H.P., 400 MW Vishnuprayag, Uttarakhand, 1000 MWKarcham-Wangtoo, H.P. In addition, another 3,920 MW of Hydro-Power Projects are in variousstages of development.

Together with its portfolio of Thermal Power Projects, JPVL is poised to have a totalgeneration capacity of 13,469 MW by financial year 2018- 19 and shall be the only Companyin Private Sector having a mix of 65% from thermal power and 35% from hydro power. BinaThermal Power plant Phase-1 with a capacity of 500 MW located at M.P is also operationalfrom August, 2012 to take the total operational asset (Hydro+Thermal) to 2200 MW.

The group plans to execute significant proportion of its capacity expansion plans overthe next few years. As per the current drawn out capacity addition plans, the Companyplans to add 12,000 MW approx. between year 2012 and 2019. This shall be spread acrossthermal and hydro power segments.

JAYPEE IN EXPRESSWAYS

Jaypee Infratech Limited (JIL), a subsidiary of JAL has successfully executed theYamuna Expressway project, which was inaugurated in the month of August, 2012 a 165kilometres access controlled 6 lane super expressway along the Yamuna river connectingNoida and Agra on Build – Own – Transfer basis. The project envisages ribbondevelopment along the expressway at 5 locations aggregating 25 million square meters ofland for residential/ industrial/ institutional purposes and has triggeredmulti-dimensional, socio-economic development in Western U.P. besides strengthening theGroup’s presence in real estate segment in this decade.

Himalyan Expressway Limited (HEL), a subsidiary of JAL, had successfully implementedZirakpur-Parwanoo Expressway Project in the States of Punjab, Haryana and Himachal Pradeshin April, 2012. The project consists of 17.39 Km of widening of existing two-lanecarriageway to four-lane and 10.14 Km of new four-lane bypass.

Work on 1047 Km long 8-lane Access-Controlled Ganga Expressway Project connectingGreater Noida with Ghazipur-Ballia along the left bank of river Ganga has been suspendedfor the time being since the environmental clearance is yet to be obtained by the StateGovernment.

JAYPEE IN REAL ESTATE

The Group did receive overwhelming response to all its products across residential,commercial and institutional segments during the year 2012-13. The Group has followed awell balanced approach of readying itself to deliver its various projects in the comingyear along with continuous infrastructure development providing educational, recreational,healthcare and other facilities. While the various initiatives taken by the Group in theeducational and sports are already in operation, a 550 beds super speciality hospital islikely to commence operation during the year 2013-14.

The Group primary focus shall remain on the development of the integrated townshipsalong the Yamuna Expressway with a wide range of planned product mix to suit all strata ofthe population.

JAYPEE IN HOSPITALITY

The Hotels Division of the Company has 5 ‘five-star’ luxury hotels, finestChampionship Golf Course, Integrated Sports Complex and Town Centre strategically locatedto service the needs of discerning business and leisure travellers. In New Delhi, theDivision has two hotels - Jaypee Siddharth with 94 rooms and Jaypee Vasant Continentalwith 119 rooms. The largest property of the Company Jaypee Palace Hotel and ConventionCentre is located at Agra with an inventory of 341 rooms and Jaypee Residency Manor atMussoorie has 90 rooms and soon new 45 rooms more shall be added to its inventory.

Jaypee Greens Golf & Spa Resort, a prestigious presentation by Jaypee Hotels in theluxury segment, offers 170 state of art rooms and world renowned "Six SensesSpa" overlooking the Championship 18 hole Greg Norman Golf Course at Jaypee Greens,Greater Noida, U.P. It has emerged as a preferred choice of upmarket business travellers.

The Company has India’s first Greg Norman Signature Golf Course at Jaypee Greens,Greater Noida. It is the finest 18 hole Championship Golf Course.

In recognition of our hospitality, the Golf Course at Jaypee Greens, Greater Noida wasconferred with the prestigious "BEST TOURISM FRIENDLY GOLF COURSE" award by theMINISTRY OF TOURISM, Government of India.

In the close proximity to the Golf Course is Atlantis-The Club, an integrated sportscomplex that offers World Class sporting events & tournament facilities, rooms &conference facilities and Jaypee DelCourt, offering hospitality with a difference, offers27 well appointed rooms and 36 service apartments making it a viable destination forcorporate entrepreneurs, expats business and leisure stays.

The Company’s Hotels at New Delhi, Agra and Mussoorie have been accredited withISO 9001 for Quality Management System (QMS), ISO 14001 for Environment Management System(EMS), ISO 22000 for Food Safety Management System (FSMS) and Hazard Analysis and CriticalControl Point (HACCP).

OUTLOOK

The Company has an established growth record as a leading infrastructure Company withdecisive competitive advantages. We believe that the next decade in India belongs toinfrastructure sector. While even the smallest constituents of infrastructure sector willimmensely benefit from it, Jaiprakash Associates Ltd. shall not only benefit from theensuing growth phase of Infrastructure but actually lead the Infrastructure development ofIndia. Its future outlook appears bright for the following reasons: (i) It is "RightPlaced" in the core infrastructure sectors of cement, power, roads, and realty. (ii)It has "Right Blend" i.e. diverse business mix leading to de-risked businessmodel. (iii) It is "Right Scaled" as it has leadership positions in almost allof its business domains and scaling up of capacities across all of them. Ready and rollingcapacities will help it maximise from the growing demand. and (iv) It has the "RightSpan" from northern to southern India, western to eastern through central Indiawithin its span of reach.

It is based on the above facts that the Company’s outlook appears very positiveand the Company should grow at a rate higher than the economy and most of the industrysub-verticals it operates in.

OPPORTUNITIES & THREATS

1. Engineering & Construction Industry: Your Company is an establishedleader in the field of Civil Engineering and EPC Contracting. Companies with proven trackrecord and established credentials have an edge over others for securing large contractson EPC, BOOT and BOO basis and your Company enjoys this status. Though increasedcompetition from the new entrants in the field sometimes appears a huge threat to thebusiness prospects of large established companies, yet the established companies need nothave any reservations in this regard. Timely completion of projects shall remain the mostimportant requirements of major and high value projects, which shall keep the scale tiltedin favour of the established players.

2. Cement: Cement consumption and demand in India has been growing duringthe last few years. However, due to market conditions, the selling price had been underpressure during the year under review and for the present as well. To meet the challenge,the Company keeps taking steps to improve economy in operations on continuous basis. Thepan India presence of the Company for manufacturing and marketing of Cement will give theCompany inherent locational advantages and economies of scale.

3. Energy: The necessity for addition of power generation capacity of thecountry and the various incentives provided by the Government of India for private sectorparticipation in development of power will be key to the development of Power projects onBuild, Own, Operate (BOO) basis by the Company.

4. Hospitality & Real Estate: Growth in economic activity world oversupplemented with Government of India’s focussed promotional campaign"Incredible India", international level sporting events etc. are translating inincreased foreign tourist arrivals. With the increasing economic activity in the countryare believed to facilitate growth in the Hospitality sector. The Government has introducedmany progressive reforms to unlock the potential of the real estate sector and also meetsincreasing demand levels. The quality real estate development undertaken by the Company isselling well inspite of other players being in the market. This business as a whole islooking bright.

General: The Indian Economy is expected to grow at around 6% p.a. in the mediumterm. The growth is envisaged to be driven by investments in infrastructure includingRoads, Ports, Power Sector etc. Besides, housing sector in the urban and semi-urban areasis poised for growth.

Increasing economic activity and population is expected to increase both, per capitaand aggregate, cement and power consumption, besides housing & hospitality needs.These factors are expected to positively impact the prospects of demand for Company’sproducts.

The Company has emerged as a Significant Infrastructure Company with diversification inReal Estate, Expressways and Hospitality business. Already on a higher trajectory ingrowth curve, the Company is poised to seize every opportunity to expand the existing lineof business or enter into new related line of businesses. The Company is well equipped tohandle threats of competition and challenges which might emanate from Cement Industry orthe Company’s ongoing execution of Projects on Mountainous Regions and at difficultterrains.

RISKS & CONCERNS

With the fairly diversified nature of Jaypee’s business, the risks and concernsvary from one business to other. With Company’s span of businesses falling under coreinfrastructure domain, the continuing infrastructure development phase of India providesconsiderable cushion. The divisions cross leverage strengths to each other and helpmitigate major risks at Company level.

1. Cement industry being highly energy intensive, any possible rise inenergy cost might affect Company’s business adversely. The setting up of the captivepower units in addition to the proactive steps towards reducing power consumption helpsthe Company counter this threat effectively. It has commissioned captive thermal powerplants. The cement industry is cyclical in nature and also witnesses seasonal reduction inconsumption during monsoon season. Keeping in view the demand growth, the Company has beenramping up its capacities. It carefully evaluates the regional mismatches and deployscapacities to minimise from the cyclical risks.

2. The Engineering & Construction Division Hydro-Power Projects areinvariably located in mountainous regions and have to face the direct challenges fromnature, such as fury of flood, rock fall triggered by snowfall/rain. The Company has towork in the river bed for dams, water conductor systems including tunnels, undergroundpower houses and other components which pose a serious challenge because so much dependsupon the quality of rock geology encountered during construction. These risk areas andconcerns will definitely draw upon the in-depth experience and expertise of establishedplayer in the field, like your Company, but the end product (generated power) will morethan compensate for the hazards involved.

The Company provides the Performance Guarantee which depends on the terms andconditions as stipulated by the Clients and is up to 5% of the contract price and is inline with the general practice prevailing in the country for awards of contracts.

3. Cyclical and Political Condition affecting businesses:

The Cement Industry is cyclical in nature and consumption level of cement reducesduring monsoon seasons. However, the level of spending on housing sector is dependent onthe growth of economy, which is predominantly dependent on agriculture since India is anAgricultural centric economy. Cement Industry has maintained a good Growth Rate duringlast few years.

Engineering & Construction Growth in infrastructure sector is dependent onpolitical stability. There has been continuous emphasis on development of Infrastructureand Housing by successive governments after reform process was initiated in nineties.

4. A significant proportion of the Company’s revenues of Engineering& Construction Division comes from a limited number of customers. It relies heavily onCentral and State Governments and public sector undertakings which are subject topolitical influence.

5. Contract Payment Risk: In view of the fact that JAL typically takes uplarge size construction contracts of sizes over Rs. 500 crores which requires large scalemobilization of man power, machinery and material, the timely receipt of payments from theclient is critical.

Generally, the contract terms involve payment of advance for mobilization while thebalance amount is linked to the physical progress of the project. JAL restricts itsinterest 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.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

Your Company is ISO 9001:2008 certified company and accredited by NABCB and UKAS. YourCompany has developed very efficient communication systems between the Projects and theHead Office, which is the key to its high performance levels. This is of utmost assistancein ordering materials, spares and meeting other requirements, pertaining to finalisationof construction drawings, project monitoring and control. These aspects, along with theManagement Information Systems, are the areas on which your Company is continuously tryingto scale new peaks.The Company has an internal control system commensurate with its sizeand nature of business. The system focuses on optimum utilisation of resources andadequate protection of Company’s assets. It monitors and ensures efficientcommunication between the Projects and the Head Office; efficiently manages theinformation system and reviews the IT systems; ensures accurate & timely recording oftransactions; stringently checks the compliance with prevalent statutes, listing agreementprovisions, management policies & procedures in addition to securing adherence toapplicable accounting standards and policies.

The internal control system provides for adherence to approved procedures, policies,guidelines and authorization. In order to ensure that all checks and balances are in placeand all the internal control systems and procedures are in order, regular and exhaustiveinternal audit is conducted by the qualified Chartered Accountants. Internal audit reportsare reviewed by the Audit Committee on a quarterly basis.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

The core of achieving business excellence lies in a committed, talented and focussedworkforce. Under the exemplary leadership of its Founder Chairman, the Company has createda highly motivated pool of professionals and skilled workforce that share a passion andvision of the Company. The resultant power of HR pool gets reflected in the phenomenalgrowth of the Company in the recent past.

The Company adopts latest techniques in evaluating the potential and training needs ofthe employees at all levels. Designing of tailor-made training programmes that fill theknowledge/skill gap and imparting in-house training in addition to utilising externalprogrammes are significant functions of HR Department of the Company.

As at 31.03.2013, the Company had a total workforce of approx. 20,600 persons,including managers, staff and regular/casual workers.

Industrial relations in the organization continued to be cordial and progressive.

ENVIRONMENTAL MATTERS, HEALTH AND SAFETY AND CORPORATE SOCIAL RESPONSIBILITY

The initiatives taken by the Company from an environmental, social and governanceperspective, towards adoption of responsible business practices, in the areas ofEnvironmental Management and Corporate Social Responsibility more specifically in thesphere of Education and Healthcare have been described in detail in the BusinessResponsibility Report forming part of this Annual Report.

FORWARD LOOKING / CAUTIONARY STATEMENT

Certain statements in the Management Discussion & Analysis Report detailing theCompany’s objectives, projections, estimates, expectations or predictions may beforward looking statements within the meaning of applicable securities laws andregulations. These statements being based on certain assumptions and expectation of futureevent, actual results could differ materially from those expressed or implied. Importantfactors that could make a difference to the Company’s operations include economicconditions affecting domestic demand supply conditions, finish goods prices, changes inGovernment Regulations and Tax regime etc. The Company assumes no responsibility topublically amend, modify or revise any forward looking statements on the basis ofsubsequent developments, information or events.

BUSINESS RESPONSIBILITY REPORT

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

Jaiprakash Associates Ltd. is the flagship company of the Jaypee Group, which is adiversified infrastructure conglomerate with business interests including Engineering& Construction, Power, Cement, Real Estate, Hospitality, Fertilizers, Sports, Aviationand Education (not-for-profit).

Corporate Identity Number L14106UP1995PLC019017
Name of the Company Jaiprakash Associates Limited
Registered address Sector - 128, Noida Uttar Pradesh – 201304
Website www.jalindia.com
E-mail id jal.investor@jalindia.co.in
Financial Year reported 2012-13

The major products and services that Jaiprakash Associates Ltd. provides areEngineering and Construction, Manufacture and marketing of Cement, Hotels and Hospitality,and Real Estate.

Sectors that the Company is engaged in (industrial activity code-wise)1:

Activity National Industrial Classification
Section Division Description
(Group)
Engineering, Construction and Real Estate development F - Construction 41 Construction of buildings Civil Engineering Specialized construction activities
42
43
Manufacture of cement C - Manufacturing 23 (239) Manufacture of cement, lime and plaster
Hotels I - Accommodation 55 (551) Hotels and Motels
Operation of Golf and Spa Resort R - Entertainment and Recreation 93 (931) Operation of Sports facilities
Wind power generation D - Electricity Supply 35 (351) Electric power generation, transmission and distribution
Energy from Municipal Solid Waste E - Waste Management Activities 38 (382) Waste treatment and disposal

1As per National Industrial Classification (2008), Ministry of Statistics andProgram Implementation, GoI

Total number of locations where business activity is undertaken by the Company

The diversified businesses of the Company are currently operating in 35 locations invarious States/ Union Territories across the country including Delhi, Uttar Pradesh,Madhya Pradesh, Himachal Pradesh, Andhra Pradesh, Gujarat, Uttarakhand, Jammu &Kashmir, Haryana and Jharkhand.

Number of National Locations

The Integrated Engineering and Construction division of the Company operates at thelocations of its clients. The Company is also engaged in the business of manufacture andmarketing of Cement across the country.

In addition, the Company owns five five-star hotels in New Delhi, Mussoorie, Agra andGreater Noida and a golf course with associated recreational and residential facilities inGreater Noida as part of its Real Estate business. In addition to these, the Company has apan-India presence through its sales offices and dealerships, especially in the States ofChandigarh, Rajasthan, Punjab, Maharashtra and Bihar.

Number of International Locations

The Company is currently operating in two international locations:

(i) Mangdechhu, in Trongsa District, Bhutan Construction of 720 MW HydroelectricProject

(ii) Punatsangchhu - II, Bhutan

Construction of 990 MW joint implementation Hydro Electric Project by the RoyalGovernment of Bhutan and the Government of India

Markets served by the Company

The primary focus of the Company’s products and services has been the nationalmarket. While the Company is making continuous efforts to explore and develop existing aswell as new export markets for its products, there is no specific export plan for thesame.

SECTION B: FINANCIAL DETAILS OF THE COMPANY

Paid up Capital Rs. 4,43,81,67,118
Total Turnover Rs.13512,08 Lacs
Total profit after taxes (PAT) Rs.501,28 Lacs
Total spending on Corporate Social Responsibility (CSR) as percentage of PAT 5.75% (approx.)

Activities in which expenditure above has been incurred The Company funds socialprojects at each of the different project sites that the Company operates in, that arespecific to the needs of that location, as detailed in Principle 8 of Section E.

The major activities the Company focuses on are imparting education, and ruralinfrastructure development through contributing to the building of roads, communitycentres, schools, healthcare and sports facilities, etc.

In addition the Company provides financial support towards relief and reconstructionafter national catastrophes like earthquakes.

SECTION C: OTHER DETAILS

The Company has twenty two subsidiaries which are engaged in various businessactivities, including power generation and distribution, cement manufacturing,infrastructure development, sports, fertilizers and aviation.

While many of these subsidiaries, as well as other entities that the Company doesbusiness with, carry out Business Responsibility-related activities under their owninitiative, these are not covered under this report.

SECTION D:

BUSINESS RESPONSIBILITY INFORMATION

1. Details of Director responsible for Business Responsibility

a) Details of the Directors responsible for implementation of the BusinessResponsibility policy

DIN Number : 00020779
Name : Rahul Kumar
Designation : Director & C.F.O.
b) Details of the Business Responsibility head
Name : Rahul Kumar
Designation : Director & C.F.O.
Telephone number : 0120-4609000
e-mail id : rahul.kumar@jalindia.co.in

2. Principle-wise (as per National Voluntary Guidelines) Business ResponsibilityPolicy/policies

Questions Principles
1 2 3 4 5 6 7 8 9
1 Do you have a policy for…: Yes
2 Has the policy been formulated in consultation with the relevant stakeholders? The policy has been formulated taking into account the needs of the Company’s various stakeholders.
3 Does the policy conform to any national / international standards? If yes, specify. Yes, the policy has been formulated in line with the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs in July, 2011
4 Has the policy been approved by the Board? The Policy has been approved by the Management and signed by the Executive Chairman
Is yes, has it been signed by MD/ owner/CEO/ appropriate Board Director?
5 Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? Yes
The Company has constituted a Sustainability Committee to oversee the implementation of the policy.
6 Indicate the link for the policy to be viewed online http://www.jalindia.com/ sdpolicy.pdf
7 Has the policy been formally communicated to all relevant internal and external stakeholders? Yes
The Policy has been made available to all internal and external stakeholders through the Company website: www. jalindia.com
8 Does the company have an in-house structure to implement the policy/policies? Yes
The Company has defined a governance structure from the Corporate level to the individual locations in order to implement and monitor the policy.
Details for the governance structure are provided at http:// www.jalindia.com/brreport.pdf
9 Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders' grievances related to the policy/ policies? Yes
10 Has the Company carried out independent audit/evaluation of the working of this policy by an internal or external agency? Since, this is the first year, Company has not appointed any agency for the evaluation.

3. Governance related to BR

The Sustainability Committee will endeavour to meet at least once annually in order toassess the BR performance of the Company.

This is the first year that the Company is publishing a Business Responsibility report,and plans to publish the same every year.

The Business Responsibility Report can be viewed online athttp://www.jalindia.com/brreport.pdf

SECTION E: PRINCIPLE-WISE PERFORMANCE

PRINCIPLE 1 – CORPORATE GOVERNANCE

Businesses should conduct and govern themselves with Ethics, Transparency andAccountability

Jaiprakash Associates Ltd. is committed to the highest standards of ethical conduct inall that it does. It is the Company’s deeply-held belief that "integrity in ouractions engenders trust in our stakeholders, which is the cornerstone of ourbusiness." The Company has created a comprehensive Sustainable Development Policythat codifies its approach to ensuring that its business practices remain sustainable inthe long-term.

The Company’s philosophy on Corporate Governance aims at attaining the highestlevel of transparency and accountability towards its stakeholders – including, amongothers, shareholders, employees, the Government and lenders – and at maximizingreturns to shareholders through creation of wealth on a sustainable basis.

The Company strives to be a responsible corporate citizen, abiding by the letter andspirit of all applicable national and state laws, and also encourages the entities it doesbusiness with, to do the same. The Company is compliant with the Corporate Governancenorms laid down in Clause 49 of the Listing Agreement, and is also in the process ofimplementing the recommendations contained in the Corporate Governance VoluntaryGuidelines, released by the Ministry of Corporate Affairs in 2009.

The Directors and Senior Management of the Company are guided by the Code of Conductthat details their responsibilities towards shareholders, society and the country.

The Company is extremely responsive to any complaints received from stakeholders; theCompany has received 692 complaints from investors and shareholders in the last financialyear regarding issues such as transfer/non-receipt of shares, dividend warrants notreceived, loss of shares, demat complaints, etc., all of which have been resolved beforethe close of the financial year.

PRINCIPLE 2 – PRODUCTS AND SERVICES

Businesses should provide goods and services that are safe and contribute tosustainability throughout their life cycle

The Company places significant emphasis on Research and Development focused onoptimizing existing engineering techniques, and creating new methods in order to achievehigher efficiencies.

The major divisions of the Company are Engineering and Construction, Cement, Windpower, Real Estate and Hospitality. Over almost five decades, the Company has executedsome of the most noteworthy projects in the country that create significant long-termimprovement in the lives of people both near and far.

1. ENGINEERING AND CONSTRUCTION DIVISION

a) Hydro power projects

The Company has been a leader in the construction of river valley and hydropowerprojects on turnkey basis for more than four decades, and holds the distinction ofparticipating in 54% of new hydropower projects under India’s Tenth Five Year Plan.

The Company is currently executing various projects in hydropower and irrigation, andholds the distinction of simultaneously executing 13 hydropower projects over 6 Indianstates and Bhutan, for generating 10,290 MW of power.

Advantages of hydro power projects:

• Does not generate pollution or wastes

• Does not generate greenhouse gases

• Saves natural resources

• Dependable, controllable and predictable source of renewable energy

• Dams act as a reservoir and source for irrigation water

Some of the Company’s major recent hydro power projects include:

Baglihar Hydroelectric project:

This 450 MW project in Jammu and Kashmir is the first state-owned power project2in J&K, and represents a milestone in the development of the state's rich hydropowerresources. Baglihar will provide clean and non-polluting power to the people of J&Kand nearby areas, and ensure that developmental activity in the region receives a boost.

Punatsangchhu Hydroelectric project (Bhutan)

This 990 MW hydroelectric project has been set-up under a bilateral agreement betweenthe Government of India and the Royal Government of Bhutan, and is an important milestonein reaching the target of 10,000 MW generation from hydropower sources by 20203.

2 http://articles.economictimes.indiatimes.com/2008-09-05/news/28485087_1_baglihar-power-project-clean-chit.

3 http://www.infraline.com/details/india-bhutan-reiterate-commitment-to-achieve-10-000-mw-target-power-generation-by-2020-161977.htm

b) Expressways:

The Company undertakes construction of expressways that are part of the national roadnetwork, and are designed for high-speed traffic.

Some advantages of expressways are as follows:

• Fast and safe connectivity resulting in savings in fuel, travel time andtransportation cost to society

• Development of local industry, agriculture and handicrafts

• Better approach to medical and educational services

• Quick transportation of perishable goods like fruits, vegetables and dairyproducts

• Provide flood protection to large population and number of villages along rivers

Yamuna Expressway:

The Company has constructed a 165-km long, six-lane highway connecting Delhi and Agra,and which has the following specific benefits:

- Reduces pollution and carbon footprint of vehicles travelling between New Delhi andAgra

- Improves vehicle fuel efficiency, reduces wear and tear on vehicles, and reduceslogistical costs

- Connects the main townships and commercial centres on the eastern side of the Yamuna

- Helps social and economic development of adjoining areas

- Enables farmers in western Uttar Pradesh to move agricultural, horticultural and milkproducts rapidly to major cities

- Accelerates movement of supplies and help to affected areas during Yamuna floods andother emergencies.

2. CEMENT DIVISION

The Company has taken all efforts to ensure that the processes followed in its cementmanufacturing plants are as optimal as possible. In addition to setting up new cementplants which deploy the latest state-of-the-art technology, the Company has also beenupgrading the technologies and processes used in the existing plants on a continual basis,so that they be as energy efficient as possible, and make use of advanced pollutioncontrol and monitoring equipment.

Some examples of the technologies and processes that are used are:

- In the production of clinker, pet coke is used as an alternate fuel – every tonof pet coke that is used reduces the use of 1.3 tons of coal.

- The fly ash generated from the coal fired boilers is used as Pozzolanic materialinput for the manufacture of cement – what earlier had to be sent to a landfill isnow a raw material.

- Cement grinding operations are equipped with Vertical Roller Mills with highefficiency separators which consume comparatively less energy.

- High efficiency Bag Houses/ Filters are used in almost all the areas whereelectrostatic precipitators (ESPs) are installed. All such bag houses, bag filters andESPs are designed for emission levels much lower than the statutory limits of 50 mg/ Nm3.

- High fuel efficiency burners are installed in all kilns, which emit low NOx in thestack gases.

- Captive Power Plants, which are located at the cement sites, use high efficiencyboilers and ESPs which ensure stack emissions at lower level than the statutory limits.

3. REAL ESTATE DIVISION

Use of renewable energy

Wish Town Noida, the Company’s integrated township, is being fitted with solarlighting and hot water systems. This will result in significant reductions in electricityconsumption over the lifetime of the township.

4. WIND POWER DIVISON

The Company has been operating wind power projects at Dhule and Sangli in Maharashtra,and at Kutch in Gujarat, with a combined capacity of 49 MW.

Wind power is one of the most sustainable forms of energy because of the followingreasons:

- It provides clean power, since it produces zero carbon emissions

- It is renewable – it does not deplete natural resources

- Once the wind turbines are in place, they have low overhead – they requireminimal maintenance, and wind power is free

- It is the least expensive among all forms of alternative energy, and iscost-competitive to other sources

Sustainable Sourcing and Local Procurement

The Company has developed and institutionalized internal processes to ensure that thesources and means of transportation of the raw materials and components which are input tothe different projects are sustainable in the long-term.

The Company evaluates its major suppliers and contractors to ensure that they are incompliance with legal and environmental norms in their business activities.

In the Cement division, approximately 68% of the total materials procured are fromlocal suppliers. The Company undertakes Annual Rate Contract agreements with suppliers inorder to provide them with certainty regarding the volumes required, and to avoidrecurring tendering for regularly procured materials.

The Engineering and Construction division of the Company primarily undertakeslarge-scale projects that require specialized machinery and equipment, many of which areimported in order to meet the stringent quality parameters that are adhered to. The rawmaterials such as cement and steel that go into the construction projects are also sourcedfrom reputed national firms, irrespective of distance.

Wherever possible, and with all other factors remaining equal, the Company prefers toprocure raw materials and spare parts from vendors and dealers that are nearest to theproject sites. Local markets are continuously explored and encouraged to arrange formaterial suitable for construction.

At many of the Company’s major ongoing project sites – Jammu and Kashmir,Bhutan and Andhra Pradesh – the Company endeavours to hire locally as far aspossible.

In the Hospitality division, approximately 60% of our procured materials are sourcedfrom local suppliers.

Reuse and Recycling

The company has always followed the philosophy of ‘Reduce, Reuse andRecycle’, wherever practically feasible. For example, fly ash, which was earlierconsidered as industrial waste, is now being recycled and used as a process material inthe cement plants. Around 30% of fly ash used in PPC grade is either generated from thecaptive power plants, or purchased from the market. This reduces the clinker requirementby about 30%.

Within the Engineering and Construction division, due to the nature of the business,there is limited scope for the recycling of products. However, all the Company’sproject offices make use of a significant level of reusability – the camps andworkshops that are erected at each of the sites are made almost entirely of material andcomponents taken from earlier dismantled project sites. The individual elements like doorand window frames are designed in such a way as to be sturdy, and also be easily reusable.Excavated material, stones and boulders are reused for the back-fill and constructionactivity, and any steel scrap is disposed off to agencies for re-rolling.

In the Hospitality division, significant initiatives have been taken to recycle water,and to reuse heat and wastes. Recent initiatives include the installation of scrubbers forequipments operated on fossil fuel, and conversion of fuel from High Speed Diesel to PipedNatural Gas which have resulted in reduction of CFC release by 30%, and consequent reducedcontribution to ozone depletion and global warming.

PRINCIPLE 3 – EMPLOYEE RELATIONSHIPS

Businesses should promote the wellbeing of all employees

Since its founding, the Company has fostered a work culture based on values of trust,mutual respect and dialogue. The management and employees across the various divisions andunits endeavour to create and maintain positive individual and collective relationships,and are expected to do so as an integral part of their job.

The Company is committed to providing a work environment in which every employee istreated fairly, has the opportunity to contribute to business success and also to realizetheir full potential as individuals. The Company strives for proactive improvement of itsrelationships with all its employees, and accomplishes this through organized structuresand programs by the Human Resources department at both Corporate and unit levels

Employee Demographics

In the FY 2012-13, the Company employed 20,658 employees, the break-up of which is asfollows:

Category Total
Permanent employees 19216
Temporary/contract/casual workforce 1442
Permanent employees who are female 415
Permanent employees with disabilities 29

Employee Unions

While the Company respects the right of employees to join organizations of theirchoosing and engage in constructive negotiations, the Company’s management havealways maintained a harmonious working relationship with the employees characterized bytrust and open dialogue; none of the employees of the Company have formed or becomemembers of an employee associations or unions while they were employed at the Company.

Employee engagement programmes

The Company has become one of largest and most reputed infrastructure conglomeratesbecause of the dedication and perseverance of its employees.

The Company strives to create a stimulating work environment through its HR practices,with the aim of attracting and retaining the best people, regardless of their background,beliefs or social culture.

Complaints and Grievance-handling mechanisms

Category Complaints filed Complaints pending
Child/ forced/ involuntary labour

Nil

Nil

Sexual harassment

Nil

Nil

Discriminatory employment Nil Nil

Although the Company has not adopted an explicit Whistleblower Policy, the Company hasnot denied any personnel access to the Management or the Audit Committee on any issue.

Safety of Workers & Employees

The Company places considerable emphasis on health and safety throughout its operationsand displays commitment to ensure that high standards are maintained in compliance withall applicable laws and regulations. The Company’s Safety Policy comprises astatement of the Organization’s objectives regarding Safety of Man and Equipment inoperation at work sites. The Management’s endeavour is to establish a risk-free and"Zero accident" work environment.

Safety training is imparted to employees to make them aware of the procedures that needto be followed while working. The Company has won multiple national awards over the pastyears for its safety performance.

Training & Development

Category Percentage who underwent training
Permanent Employees 33.87%
Permanent Women Employees 64.09%
Casual/Temporary/Contractual Employees 35.78%
Employees with Disabilities 51.72%

The Company is well-known for developing talent in its employees. The Companyendeavours to attract, support, retain and motivate the best people in the field, and itstraining programs are designed to enhance the capabilities of its individuals, provideopportunities to develop skills and increase knowledge in order to maintain a competitiveadvantage.

Training programs

The Company provides various opportunities to employees of all levels to upgrade theirskills:

• Structured Training Plan: It is an in-house training program which focuses onthe technical aspects of various engineering disciplines.

• Computer Literacy Campaign: Different aspects of computer operations are coveredin order to keep employees at the cutting edge of technology and latest trends.

• Future Managerial Cadre Program: supports development of managerial cadre. TheCompany selects cadre from the existing pool of engineers and managers and also carriesout direct recruitment through campus interviews from institutions of repute.

Apart from this, customized training programs are also conducted by outside institutesand agencies like Management Development Institute, National Institute for ConstructionManagement and Research, IIM Lucknow, etc. covering different aspects of management.

• External Training Programs for Senior Executives: In order to keep pace with thechanging times and to spot opportunities and perceive possible threats, existing skillsneed to be continually updated. Senior executives within the organization are continuallyupgrading their competencies through various courses of short duration.

PRINCIPLE 4 – STAKEHOLDER RELATIONSHIPS

Businesses should respect the interests of, and be responsive towards all stakeholders,especially those who are disadvantaged, vulnerable and marginalized

Stakeholder mapping and engagement

The Company has identified its stakeholders and takes steps to engage with them throughvarious formal and informal processes.

The major stakeholders have been identified and classified as:

Engaging with the Disadvantaged, Vulnerable and Marginalized Stakeholders

The Company’s relationship with its employees, customers, business partners andsuppliers are governed by more formal processes than that with some other stakeholdergroupings. Nevertheless, the Company ensures that all stakeholder concerns, includingthose of the most disadvantaged and vulnerable, are incorporated into the Company’sstrategic thinking and decision-making.

The Company takes all practical steps to ensure that all communication withstakeholders is clear, transparent, timely and complete, and respects their right to beinformed, so that everyone can make decisions and act in a knowledgeable fashion.Dialogue, review and feedback are also encouraged wherever possible. While the managementhas the accountability for stakeholder strategy and engagement, the Company believes thatevery employee in the Company has a responsibility towards ensuring satisfactorystakeholder relationships.

Some of the initiatives and channels used in the process of engaging with stakeholdersinclude face-to-face meetings, both individual and group (including the shareholders’meetings); media and stock exchange announcements; presentations; conference calls; formalgrievance mechanisms; financial reports; newsletters, circulars and e-mail updates;regular customer, business partner and supplier meetings; formal consultations and auditprocesses; and updates on the JAL website – www. jalindia.com

PRINCIPLE 5 – HUMAN RIGHTS

Businesses should respect and promote human rights

Human Rights of our Stakeholders

The Company has always been committed to developing an organizational culture thatsupports internationally recognized human rights, as well as the human rights enumeratedin the Constitution.

The Company takes steps to ensure that human rights principles are upheld within itsworkplaces.

There have been no complaints regarding violation of human rights from stakeholders inthe past financial year.

"We will not enjoy security without development, we will not enjoy developmentwithout security, and we will not enjoy either without respect for human rights."

~ Kofi Annan

(United Nations Secretary-General,1997-07)

PRINCIPLE 6 – ENVIRONMENTAL MANAGEMENT

Business should respect, protect, and make efforts to restore the environment

The Company believes that harmony between man and his environment is the essence ofhealthy life and living, and the sustenance of ecological balance is therefore ofparamount importance. The Company is cognizant of its responsibilities as a diversifiedengineering, construction and manufacturing conglomerate and as a global corporatecitizen; sustaining an equitable balance between economic growth and environmentpreservation has always been of paramount importance for the Company. Its environmentmanagement approach has led to efficient and optimum utilization of available resources,minimization of waste and is carried out through the adoption of the latest technology.

Recognizing its responsibility to protect and preserve the environment, the Company hasundertaken afforestation drives in different parts of the country; this has resulted insignificant resource conservation, water conservation, air quality improvement and noisepollution control, and created a "green oasis" amidst the limestone belt at itscement complex in Rewa. Similar initiatives have been taken in other regions where theGroup has manufacturing units, such as Uttar Pradesh, Himachal Pradesh, Gujarat, AndhraPradesh and Karnataka.

Environmental Risk Assessment

The Company has constituted Project Groups at the project, regional and corporatelevels to carry out specific environmental-related functions. These groups initiate andsustain measures to mitigate, monitor and control the impact of project implementation onthe environment.

Air pollution and emissions reduction

The Company is one of the leading national producers of cement, which is considered tobe a polluting industrial sector.

The Company has always proactively attempted to go beyond compliance with respect tothe regulations relating to the emissions. The cement business has undertaken majorinitiatives to reduce dust emissions including adoption of new technologies. The cementdivision has established a state-of-the-art Environment Management Cell which hosts afully functional laboratory with modern testing and monitoring equipment to ensure thatall emissions and dust that is generated is within permissible limits. All Captive PowerPlants use high efficiency boilers and ESPs which ensure Stack emissions at lower levelthan the statutory limits of 50 mg/Nm3.

Regular environmental audits are conducted at the Company’s cement plants andstack/ambient emission monitoring is carried out on a regular basis.

Energy conservation

The Company ensures that all possible measures are taken to conserve energy includingidentification of potential areas of saving energy, installation of energy efficientequipment such as capacitor control panels to improve power factor, and use of energyefficient lamps and compact florescent lamps (CFLs) wherever possible.

The Company’s cement plants have all installed high efficiency pollution control& monitoring equipment such as Vertical Roller Mills, which consume comparatively lowenergy, for raw-meal and coal grinding units.

Some of the specific energy conservation measures taken at the different sites are:

Plant Process/technology improvement
Rewa Water pump for separator circuit replaced with higher efficiency pump.
Bela Installation of APFC Unit for improvement of Power Factor.
Sidhi Cement mill transportation group interlocking time reduced, resulting in power saving.
Dalla Modification at VRM inlet gas path to increase gas flow, for improvement in productivity and power saving.
Sikandrabad Air being provided to the plant and bag house now supplied from one compressor instead of two, resulting in lower power consumption.
Baga Variable Frequency Drives installed for Swirl air fan, for better control and reduction in energy consumption.
Bagheri Additional Capacitor Banks installed which increase PF from 0.93 to 0.99.
Roorkee Unloading of dry fly ash directly at bin instead of unloading first at silo and then transporting it to bin resulting in power saving.
Panipat Capacitors connected at motor termination to reduce Power Consumption.

Water consumption reduction

The Company actively undertakes water conservation and rain water harvesting measures.

In the areas adjacent to the limestone mines, the Company has created reservoirs withhuge surface area and storage capacity. In Jaypeepuram, the Company has created threereservoirs, and a garland canal system has been laid along the mines periphery area inorder to collect runoff rainwater in the reservoirs and lakes. These provide for the waterrequirements of the Company’s cement plants and thermal power plants. Utilization ofwater from these reservoirs and lakes avoids the need to extract subsoil water andaccordingly has led to an increase in the water level in the vicinity, serving to mitigatedrought conditions which often occur in March to July each year.

A unique water conservation measure adopted in the captive power plant is the adoptionof the air cooled condenser technology, which greatly reduces the water consumption in thecooling tower makeup, resulting in reduction in consumption of about 300 crore litres ofwater per year.

Rainwater harvesting

Four rainwater harvesting reservoirs covering nearly 47 hectares have been developed inthe vicinity of the Mines. These reservoirs having a capacity of 32.2 lakh m3 have helpedin ground water replenishment, and have benefited nearby villages by raising the waterlevel of surrounding wells. The stored water is also used for manufacturing and coolingprocesses, and no ground or surface water is drawn for this purpose. Each drop ofrainwater is conserved in the plant by an innovative garland canal covering a periphery of6.2 km.

Similarly, at the Company’s Sewagram cement plant in Gujarat, the company hasdeveloped two ponds for rain water harvesting and the quantity of rain water beingcollected near the cement plant is 7.5 lakh m3.

Wastewater treatment

Thermal power and cement plants are equipped with secondary and tertiary treatmentfacilities for waste water so that most of the water can be recycled, making these unitspractically ‘Zero discharge’ Units.

Waste reduction and recycling

The Company utilizes the fly ash generated from the coal fired boilers as Pozzolanicmaterial in the manufacture of cement, ensuring no solid waste from captive power plants.

Biodegradable wastes from project canteen, colony, etc are utilized for generatingbiogas. Besides leaf litter is converted to compost through vermi composting, subsequentlyused for horticulture and plantation as natural manure.

Impact on biodiversity

Efforts are made to maintain ecological balance without doing any harm to the localflora and fauna. The Company has also undertaken green initiatives, afforestation drives,resource conservation, water conservation, air quality control and noise pollution controlprojects, and created a "green oasis’’ amidst the limestone belt at itscement complexes.

The Company has undertaken Green Belt Development and Biodiversity Mapping surveys atBina, Nigrie & Sidhi in Madhya Pradesh and Karcham in Himachal Pradesh. The surveyshelped in analyzing the importance of sites from the biodiversity point of view andconservation measures to be implemented.

Green belts have been designed keeping in mind utility as well as ecological aspects.The focus has been on conserving indigenous species, retaining and enhancing surroundinglandscape, creating habitat for birds and insects, planting a mix of species that are apart of rural, urban and native landscapes and also raising environmental awareness. Thecreation of functional green belts with native species, has resulted in practicalconservation of flora and fauna of the region.

Green belts and afforestation

The Company has an active plantation scheme, with horticultural plans drawn up on ayearly basis for the forestation of reclaimed areas within the vicinity of theCompany’s limestone mines. A continual afforestation drive is undertaken in mines,plants and township areas to improve overall environment and as a safeguard againstpollution. A well-organized Horticulture Department under the guidance of professionalHorticulturists looks after the plantation activity. Local plant species have been chosenin accordance with the soil quality, fertility and also in consultation with theDivisional Forest Officer; plantation of over 11.5 lakh trees has been done around variousproject locations with a survival rate of approximately 85%.

In addition to this, ecologically beneficial mangroves have been planted in 50 hectaresof coastal area in Kutch, Gujarat. The Company also carries out social forestry in theadopted villages surrounding the cement plants and mines, as well as in the areas madeavailable by local Administrative Body.

Green Initiative in Corporate Governance

The Company fully supports the Ministry of Corporate Affairs’ initiative tominimize the use of paper for all official communication. In line with this, the Companysends all notices and documents, including the Annual Report, to shareholders who haveregistered for the same, by e-mail. This has led to a significant reduction in paperconsumption annually.

Compliance

The Company complies with all applicable environmental norms regarding wastes,effluents or emissions, as prescribed by the Central and State Pollution Control Boardsfor the sectors the Company operates in. There are no pending show-cause or legal noticesfrom the past financial year.

PRINCIPLE 7 – POLICY ADVOCACY

Businesses, when engaged in influencing public and regulatory policy, should do so in aresponsible manner

The Company believes that it is the Company’s responsibility to work with policymakers and other relevant stakeholders, and to communicate its views ethically andtransparently.

Government policies on major issues, as well as national and state programs forinfrastructure development, may directly affect the Company’s business. The Companytries to inform these debates in an appropriate manner, based on the Company’sin-depth understanding of the sector, of market needs and of potential risks andchallenges.

Membership in Trade Chambers and Associations

The Company is a member of various industry and trade chambers and associations. TheCompany is proud to be associated with these groups because they represent theconstruction sector in various forums, and help the industry reach consensus on relevantissues.

The following are the major trade chambers and associations that the Company is amember of:

• Confederation of Indian Industry (CII)

• Federation of Indian Chambers of Commerce and Industry (FICCI)

• Associated Chambers of Commerce and Industry of India (ASSOCHAM)

• PHD Chamber of Commerce and Industry (PHDCCI)

• Cement Manufacturers Association (CMA)

Priority advocacy areas for the Company

In 2012-13, the top issues for which the Company lobbied at the national level are:

• Economic reforms

• Inclusive development policies

• Energy security

• Sustainable Business principles

• Environmental policy

PRINCIPLE 8 – SOCIETAL COMMITMENT

Businesses should support inclusive growth and equitable development

To seek inclusive and sustainable growth is intrinsically woven into the DNA of theCompany. Community development is viewed as a principal pillar of sustainable business,and is pursued as conscientiously as any other aspect of Company’s business.

For over five decades, JAL has supported the socio-economic development of localcommunities, and ensured that they are also benefited from the Company’s growth. TheCompany believes that, as a responsible corporate citizen, it is the Company’s dutyto ensure that the benefits of growth are not just shared by the members of theorganization but also the communities in which it operates.

In the last financial year, the Company has spent Rs.2881 lacs on Corporate SocialResponsibility-related activities. As part of its social responsibility, the Companycarries out construction, renovation and regular upkeep of roads, schools, hospitals &dispensaries, and irrigation & drainage systems. In addition, the Company also extendsbasic amenities like medical facilities, drinking water, etc. to villagers around itsplants.

The Company has also made donations in times of natural calamities like earthquakes aswell as to charitable causes.

Jaiprakash Sewa Sansthan

In order to channel the Company’s efforts towards discharging its responsibilitytowards society, the Jaiprakash Sewa Sansthan (JSS) has been established, and is blessedby Shri Jaiprakash Gaur, the Founder Chairman of the Jaypee Group. The aim of the Trust isto realize the corporate philosophy of "Growth with a Humane Face", and tocontribute to the overall socio-economic development of local communities in a holisticmanner, by focusing on the areas of education, infrastructure improvement and healthcare.

Community Development

Community Development activities are carried out in consultation with the localcommunities in order to bring about tangible and positive changes. Stakeholderconsultation is an ongoing process to understand local issues and address the sameholistically. This year, the Company also launched the Rs.Employee Volunteerism’initiative wherein employees and students from the Jaypee Institutions engage with NGOs bycontributing skills, time and resources.

Impact Assessment of programs

JSS is focused on not just improving the lives of people today but also making a bettertomorrow. Periodic assessments are carried out for each of the programs that are initiatedto ensure that there is a tangible and measurable improvement in the projectparticipants’ lives, over time. Feedback is sought from the participants, and stepsare taken to ensure that the initiative is executed in as efficient and effective a manneras possible and its benefits are for the long-term.

Comprehensive Rural Development Programme

A Comprehensive Rural Development Program (CRDP) was initiated in 1993 in the villagessurrounding the cement plant at Madhya Pradesh. Under the CRDP, free health care andveterinary programmes have been undertaken. The trust also helps in times of naturalcatastrophes to reach out to and assist the affected communities in distress.

Over the years, the Company has expanded the CRDP activities to cover a large number ofvillages across project sites in states of Andhra Pradesh, Chhattisgarh, Gujarat, Haryana,Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Uttar Pradesh andUttarakhand. The CRDP currently serves more than 200 villages surrounding theCompany’s cement and power plants in different parts of the country. Lakhs ofvillagers in areas around the Company’s various project locations benefit from hugewater reservoirs, safe drinking water and free veterinary services. A desalination plantsetup by the Company in the water-starved district of Bhuj in Gujarat provides water toover a hundred villages which have struggled for this resource for generations. To helpthe ladies of adopted villages to become self-reliant, tailoring classes are organized bythe Sansthan. On successful completion of the training course, each lady is given oneSewing Machine free of cost. A group of selected village women are also trained in makingpapads and wadis.

Other activities of CRDP include

• Free medical camps

• Health check-ups for village school children

• Literacy campaigns for young girls and adult education

• Creating huge water reservoirs in different villages and delivering safedrinking water

• Creating opportunities for self employment

• Renovation of old temples, schools and hospitals in adjoining adopted villages.

• Free veterinary and animal care camps

Rural Development

The Group has set up milk collection centers in the villages of Gautam Budh Nagar,Aligarh and Mathura, thus eliminating the middlemen and providing direct benefit to thefarmers in the rural areas. Rural incomes have been raised considerably in the process.

In addition, veterinary camps are held on a regular basis to assist farmers inmonitoring health of their animals.

EDUCATION

The Company firmly believes that education is the cornerstone of economic development,and the strength of one billion Indians can be realized by education alone. With thisperspective in mind, the Company believes that quality education on an affordable basis isthe biggest service that it can provide to the country.

The Group has built 30 Schools, six ITIs, two polytechnics, a Post Graduate College, aB.Ed. College, a Construction Skills Training Institute, an International Engineering& Vocational Centre and three Universities catering to the educational needs of over30,000 students across the following locations - Anoopshahar, Rewa, Bhuj, Sidhi, Kevadia,Baga, Chitta, Dalla, Chunar, Churk, Gurma, Samirpur, Guna, Sholtu, Solan, Chandpur,Singrauli, Bina, Dankaur, Tomri, Noida and Greater Noida.

To spread education amongst the disadvantaged segments of society, the Group runs theSardar Patel Uchattar Madhyamik Vidyalayas – a chain of CBSE schools in differentstates catering to children of farmers having landholding of less than four acres, andfamily income below Rs. 3000. The institutions have well-equipped libraries and ICT basedlearning. Physical training and various life skills programmes are built into thecurriculum. Scholarships are provided for meritorious students for pursuing higherlearning. In addition, coaching is provided for competitive exams for entrance to IITs,NDA, etc. and several students from underprivileged rural backgrounds have qualified.Village children are initiated into the learning atmosphere through Rs.Balwadis’which deploy interesting and creative learning methodology.

HEALTH CARE

The Company has set up 14 hospitals and 28 dispensaries at various project sites forproviding free medical facilities, which has helped in reducing infant mortality rate, andincreasing the life expectancy in the regions surrounding the Company’s plants. Thesehospitals, dispensaries, and health camps are managed by highly qualified medicalpractitioners – physicians, surgeons, gynecologists, dentists, eye specialists, etc.

Medical Facilities and Camps

The Company has set up a 16-bed hospital at the cement complex which benefits over onelakh villagers; a 40-bed hospital at Sholtu in H.P. close to the Jaypee Karcham HydroPower Plant which benefits over 20,000 villagers; and a 30-bed hospital in the townshiparea of Jaypee Himachal Cement Plant at Baga, in the Bilaspur district of HP, whichbenefits over 18,000 villagers.

The medical facilities given at these hospitals and dispensaries include the following:

• Free Consultation

• Free Medicine

• ECG

• X-ray

• Lab Facilities

The Company conducts year-round medical camps such as:

• Pulse Polio camps

• Jachha Bachha camps

• Health Checkup of Village Children

• Health & Hygiene Awareness Camps

A new initiative in providing health care has been launched wherein Advance IntensiveCare Life Support Ambulances are being provided to the sites. These ambulances areequipped with state-of-the-art life support equipment designed to provide fast and directresponse in order to save life by providing timely treatment to critical patients whilebeing taken to the hospital.

In total, approximately 8 lakh people in about 300 villages in various states acrossthe country have been benefitted from the free health care services and safe drinkingwater provided by the Company at various locations.

Women empowerment

Women empowerment receives impetus through programmes for developing skills such assewing classes, computer lessons, making of candle and incense sticks and buildinglinkages with organizations to provide employment opportunities for trained women. Adulteducation classes are conducted for both men and women, and have been received well.

PRINCIPLE 9 – CUSTOMER SATISFACTION

Businesses should engage with and provide value to their customers and consumers in aresponsible manner

Customer engagement and satisfaction

The Company is committed to delivering a consistent standard of product quality andservice, as well as a high level of customer engagement in order to best serve itscustomers’ needs and concerns.

Cement

Dealer satisfaction surveys are conducted by M/s Market Pulse, a leading marketresearch and analytics firm, on a half-yearly basis using questionnaires to measuresatisfaction on parameters such as product quality, sales service, technical service,profitability and commercial terms, and price management. In the last survey that wasconducted, it was found that 85% of the dealers were satisfied or delighted with theCompany.

Real estate

In the real estate division, customer satisfaction studies are carried out on aperiodic basis in order to understand and measure the satisfaction of customers regardingthe home purchase process with regard to:

a) pre-sale experience with Jaypee Greens and its channel partners

b) post-sale experience.

Feedback was sought from consumers residing in Delhi using a structured questionnaireand face-to-face meetings by M/s Market Pulse, an independent market research agency. Over75% of the respondents were satisfied with Jaypee Greens and 78% were likely to recommendJaypee Greens to others.

Hospitality

In the hospitality sector, the Company has put in place robust mechanisms to ensurethat it receives, and takes action on, constant and timely feedback. Feedback Forms aresought from guests, and follow up is done with the concerned department on a prioritybasis.

In the last financial year, the Company received about 8700 complaints/suggestions inthe Feedback Forms from the approximately two lakh guests whom the Company had servedacross its five hotels, and all of them have been processed and addressed satisfactorily.

Customer complaints

There are four consumer cases, and two by the Competition Commission of India, filedagainst the Company in the past financial year and the Company is committed to resolvingthem at the earliest.

In the Cements division, there were 4 complaints pending from the previous financialyear, and 275 customer complaints received during the last financial year; of these, 273have been addressed and resolved satisfactorily, and slightly more than 2% of cases arepending.

In the Engineering and Construction division, the Company has received positivefeedback from the overwhelming majority of its clients and customers over the years,indicating high levels of satisfaction with the products and projects delivered to them.

Product labeling and communication

The Company ensures that all product and service-related communication is timely andaccurate. Cement is the major product that the Company manufactures, for which productlabeling is done in compliance with labeling requirements regarding brand name, weight,grade, name and address of the manufacturer, etc.

   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
DLF 36,460.91 40.05 2.19 21.72 2.9 7.2 1.09
JP Associates 14,436.63 34.91 0.96 10.49 4.0 7.7 1.80
Prestige Estates 8,841.00 26.01 2.98 13.45 11.4 12.5 0.56
Oberoi Realty 8,617.68 32.53 3.15 16.07 13.8 18.4 0.00
IRB Infra.Devl. 8,294.04 28.78 4.80 11.41 12.1 10.5 1.13
Unitech 6,920.11 88.17 0.70 17.64 1.8 4.1 0.38
NBCC 5,448.60 20.73 4.83 0.00 23.8 26.7 0.00
Phoenix Mills 5,399.28 35.40 2.88 17.54 7.8 10.0 0.17
Godrej Propert. 4,680.67 54.10 2.61 23.96 6.2 7.7 0.78
Jaypee Infratec. 4,632.08 15.51 0.77 8.92 11.6 10.8 1.27
Sobha Developer. 4,536.26 23.29 2.02 9.16 9.5 13.6 0.52
H D I L 3,716.53 13.56 0.36 6.60 5.6 8.7 0.34
Indbull.RealEst. 3,277.89 22.69 0.57 6.95 4.7 7.0 0.19
Sadbhav Engg. 3,109.37 21.51 3.25 11.19 4.1 9.0 0.76
Puravankar.Proj. 2,689.17 28.78 1.49 8.33 7.3 13.0 0.95

Futures & Options Quote

 
Expiry Date
59.50 2.70  [4.3]%
Instrument: FUTSTK
Expiry Date: 31 Jul 2014
Open Price: 62.20
Average Price: 60.83
No. of Contracts Traded: 85,912,000
Open Interest: 86,888,000
Underlying: JPASSOCIAT
Market Lot: 8000
Previous Close: 59.50
Day’s High | Low: 63.80 | 58.55
Turnover (Cr.): 522.60
Open Int. Change: -40,576,000.00 ( [31.8]% )
View detailed F& O quotes >>

Key Information

Key Executives:

Manoj Gaur , Executive Chairman & CEO  

Sunil Kumar Sharma , Executive Vice Chairman  

Sarat Kumar Jain , Vice Chairman  

R N Bhardwaj , Director  


Company Head Office / Quarters:
Sector 128,
,
Noida,
Uttar Pradesh-201304
Phone : 91-120-4609000/2470800
Fax : 91-120-4609496/4609464
E-mail : jal.investor@jalindia.co.in
Web : http://www.jalindia.com
Registrars:

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