Forming part of the Report of Directors for the year ended March 31, 2011
According to the latest numbers made available by Central Statistical Office (CSO),India's GDP at factor cost at constant prices registered an increase of 8.5 percent in theyear 2010-11. This revised estimate of 8.5 percent growth for GDP in 2010-11 is only ashade below the advance estimates that had pegged GDP growth for 2010-11 at 8.6 percent.
The GDP growth range for the year 2011-12 is expected to be 8 to 8.5 percent. Theinputs and projections provided by various participating economists show that while theagriculture and allied activities sector is projected to grow by 3.7 percent this year,industry and services sector are poised to grow by 8 percent and 9.2 percent respectively.
The key risks to growth in India in the current year are the negative impact ofcontinuous tightening of monetary policy by RBI and a slowdown in global growth due tovarious reasons such as high international oil prices etc.
INFRASTRUCTURE & CONSTRUCTION SECTOR IN INDIA
The lack of infrastructure has been one of the major constraints on India's growthpotential and aspirations. Government's focussed initiatives towards infrastructurecreation with active participation of the private sector will hold key to growth of IndianEconomy. For bridging the infrastructure deficit and for sustaining a higher growth rate,the Eleventh Five Year Plan envisages a total investment of Rs. 2,056,150 crore ininfrastructure as against Rs. 887,794 crore realized during the Tenth Plan. This ambitioustarget cannot be met with public resources alone. The Eleventh Plan, therefore, projectsthat 30% of the required investment will be made through private sector participation;which translates to private sector investment of Rs. 619,591 crore as compared to Rs.175,203 crore during the Tenth Plan.
|XIth Five Year Plan: Targets for Infrastructure sector || |
|Power ||Additional power generation capacity of about 78,577 MW |
| ||Reaching electricity to all un-electrified hamlets; providing access to all rural households |
|National Highways ||Six-laning 6,500 kilometers of Golden Quadrilateral and selected National Highways |
| ||Four-laning 6,736 kilometers on North-South and East-West Corridors |
| ||Four-laning 20,000 kilometers of National Highways |
| ||Widening 20,000 kilometers of National Highways to two lanes |
| ||Developing 1,000 kilometers of Expressways |
| ||Constructing 8,737 kilometers of roads, including 3,846 kilometers of National Highways in the North East |
|Rural Roads ||Constructing 1,29,707 kilometers of new rural roads, and renewing and upgrading existing 1,77,726 kilometers covering 60,638 rural habitations |
|Ports ||Capacity addition of 485 million MT in Major Ports, 345 million MT in Minor Ports |
|Airport ||Modernisation and redevelopment of 4 metro and 35 non-metro airports |
| ||Constructing 3 greenfield airports in North East |
| ||Constructing 7 other greenfield airports |
| ||Upgrading CNS/ATM facilities |
|Railways ||Constructing Dedicated Freight Corridors between Mumbai-Delhi and Ludhiana-Kolkata |
| ||8,132 kilometers of new railway lines; gauge conversion of 7,148 kilometers |
| ||Modernisation and redevelopment of 22 railway stations |
|Irrigation ||Developing 16 million hectares through major, medium and minor irrigation works |
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.
Review of Financial Performance
Jaiprakash Associates Ltd. had crossed the Rs. 10,000 crore plus annual Turnover markin financial year 2009-10. The key highlights of the financial performance for the year2010-11 were :
• Total revenues reached Rs.13,831 crore from Rs. 11,671 crore in the previousyear; an increase of 18.5%.
• EBIDTA was Rs. 3,242 crore against Rs. 2,891 crore in the previous year.
• Net profit after extraordinary items is Rs.1167 crore against Rs.1708 crore inthe previous year.
• EPS after extraordinary items for year 2010-11 is Rs.5.49 against Rs.8.08 in theprevious year. SEGMENT-WISE REVIEW OF OPERATIONS
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)
5. Real Estate and
1. Engineering & Construction
Keeping in mind that the key to sustaining India's growth rate lies in developing thecountry's infrastructure, the Government is targeting huge investment over the next fiveyears in the infrastructure sector.
The Scheme aims to take up infrastructure projects under public-private partnershipwith minimal private investment.
During the Eleventh Five year Plan (2007-2012), the Government aims to add powergeneration capacity of about 80,000 MW and provide electricity to all unelectrifiedhamlets and all rural households through the Rajiv Gandhi Grameen Vidyutikaran Yojna(RGGVY).
During the year, the Engineering & Construction Division of the Company continuedto perform well. While the Company was qualified for new Projects, new contracts were alsoawarded, as reported in the Directors' Report.
Indian Cement Industry
The Indian cement industry had witnessed an incredible growth journey in the past fewyears, led by the growth in the real estate, infrastructure and industrial construction.
The domestic cement demand growth had surpassed the economic growth rate in the periodFY 06-10. However, in FY11, cement demand growth took a slight breather. The cementindustry has registered a drop in margins in FY 11 mainly due to input cost rise and lackof pricing power.
As the economic growth now settles at a higher pedestal of 8 -8.5%, the cement demandis expected to sustain a good growth in demand. The key drivers of this strong demandshall be the continued expansion in infrastructure, real estate and industrial sectors.
JAYPEE IN CEMENT
The Company is the third largest cement producer in the country with 23.70 MTPA(Million Tonne Per Annum) installed capacity. It is continuing to add capacities to takeits tally to 35 MTPA by the year 2012 and aims to touch 50 MTPA by 201213. In doing so,the Company will script the fastest expansion in cement sector by any company in India andposition itself amongst the top cement manufacturers in Asia.
Power deficit in India has been a critical concern in the recent growth phase of Indianeconomy. Considering its potential contribution in the growth of our economy, Power sectoritself possesses tremendous growth potential/ opportunities:
• India requires an additional over 90,000 MW of new generation capacity in thenext seven years; a total investment opportunity of about US$ 200 billion over a sevenyear horizon. - A corresponding investment is required in transmission and distributionnetworks.
• Large demand-supply gap: All India average energy shortfall of 7% and peakdemand shortfall of 12%.
• Hydel power potential of 150,000 MW is untapped as assessed by the Government ofIndia.
• Renovation, modernisation, up-rating and life extension of old thermal and hydropower plants required.
• Opportunities in Transmission network ventures -additional 60,000 circuit km oftransmission network expected by 2012.
XIth Plan aims to create additional power generation capacity of about 78,577 MW; andalso to spread electricity to all unelectrified hamlets of the country and thereby provideaccess to all rural households. Like other core infrastructure sectors, Government ofIndia and even various state governments are seeking active participation of the privatesector across generation, transmission and distribution of power. A slew of reformmeasures have been taken by authorities and regulators towards making it an attractivesector for private players.
JAYPEE IN ENERGY
Jaiprakash Power Ventures Limited (JPVL) (a subsidiary Company of JAL) is the largestprivate sector Hydro Power producer with 1200 MW of operational assets (300 MW Baspa, 400Vishnuprayag, 500 MW Karcham Wangtoo), another 500 MW capacity of Karcham Wangtoo Projectis scheduled for commissioning in calender year 2011 itself. In addition, another 4420 MWof Hydro Power Project is in various stages of development.
Together with its portfolio of Thermal Power Projects, JPVL is poised to have a totalgeneration capacity of 13,519 MW by financial year 2018- 19 and shall be the only Companyin Private Sector having a mix of 65% portfolio from thermal power and 35% portfolio fromhydro power.
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 Companyshall add 12000 MW (approx) between Financial year 2010-11 and 2018-19. This shall bespread across thermal and hydro power segments, as well regulated and merchant power.
Connectivity is a key component of development, it is the pillar on which economy growsand development is witnessed. Roads formulate the path to the holistic development of thenation. Roads in India are the most preferred mode of transportation. Easy availability,adaptability to individual needs and cost savings are some of the factors working infavour of road transport.
India has the world's second largest road network, aggregating over 3.34 millionkilometers (km) and carry about 65 per cent of freight and 85 per cent of passengertraffic, according to the National Highway Authority of India. Road transport also acts asa feeder service to railway, shipping and air traffic. In order to give impetus to theeconomic development of the country, the Government has embarked upon a massive NationalHighways Development Project (NHDP) in the country.
As Indian Economy grew in the early part of this decade, challenges & opportunitiesacross entire spectrum emerged and so was the case of large expressways with unique modelof ribbon development along it, which modelled as developed tracks of New India.
JAYPEE IN EXPRESSWAYS
The Group entered into construction of expressways with the Yamuna Expressway project -a 165 kilometres access controlled 6 lane super expressway along the Yamuna riverconnecting Noida 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 trigger multidimensional,socio-economic development in Western U.P. besides strengthening the Group's presence inreal estate segment in this decade.
Jaypee Infratech Limited (JIL), a subsidiary of JAL is executing the Yamuna Expresswayproject. JIL has deployed the most advanced machinery and equipment including 10 units ofconcrete batching plants, 9 units of crushers with metal breaking capacity @ 300 tph and 6integrated units comprising aggregate crushing & screening facilities distributed atintervals of 28 kilometres each along the expressway, the Company is also using 4 nos. of16 meter wide Paver (Writgen) imported from Germany which are designed to pave all 3 lanesof one side of the expressway in one go and pavers of this size are being used for thefirst time in India. The group firmly believes that this project shall foster growth inthe State of Uttar Pradesh and have a positive impact on the adjoining States. Though theConcession Agreement envisages the completion of the Expressway by April, 2013, theProject is expected to achieve commercial operations by March, 2012.
Himalyan Expressway Limited (HEL), a subsidiary of JAL, is implementingZirakpur-Parwanoo Expressway Project in the States of Punjab, Haryana and HimachalPradesh. The project consists of 17.39 Km of widening of existing two-lane carriageway tofour-lane and 10.14 Km of new four-lane bypass. The Project is expected to be completed byDecember, 2011.
Work on 1047 Km long 8-lane Access-Controlled Ganga Expressway Project connectingGreater Noida with Ghazipur-Ballia along the left bank of river Ganga will commence afterthe environment clearance is obtained.
Jaypee Agra Vikas Ltd., another subsidiary of the Company, has signed ConcessionAgreement for Development of Inner Ring Road at Agra.
5. REAL ESTATE
After one and a half years of gradual consolidation, real estate in India has fathomedits own comfortable ground, and is poised at the right threshold to take a giant leap inyears to come. While a differential pace of strengthening is evident across sectors,geographies and segments, several property market indicators point to the fact that theindustry has indeed bottomed out in the current cycle. The fears of a possible double diprecovery have given way to beliefs in the sustained healthy levels, if not a rapid growth.
The shortage of affordable housing space is one of the biggest challenges towardsensuring equitable and inclusive economic growth. The right mix of government policies andeasing of norms for land acquisition are the prerequisites to address the same.
The year 2011-12 would usher a new decade of opportunities for Indian real estate,which will be a test of sorts for its stakeholders between these two fringes of thefulcrum.
The group shall also benefit from the development of integrated towns and citiesalongside the development of expressway. Further, the Group stands to get the rights fordevelopment of an estimated 30,000 acres of land along the Ganga Expressway, the totalarea under development is estimated at 1 billion square feet.
Our real estate projects are conceptualised keeping in mind the concept of gatedcommunity with all modern amenities essential for the Indians looking to settle down intownships mirroring images of developed India.
We believe the affordable pricing structure and wide range of available layouts ofindividual units at our existing developments, including 620 square feet for a one-bedroomunit up to 2,300 square feet for a four bedroom unit at Jaypee Greens Klassic, may alsoappeal to a broad demographic.
Furthermore, because our developments are designed as integrated townships with a widerange of planned educational, recreational, commercial and retail facilities, we believethey will appeal to a diverse mix of potential residents.
During the year, the group launched prestigious residential projects like The CastilleApartments, Jaypee Greens The Orchards, Jaypee Greens Krescent Homes, Jaypee Greens PebbleBeach Residences, Kingswood Oriental Villas and Aman II. It received encouraging responseto these projects.
Indian tourism industry is coming of age. The growth in economic activity is not onlytranslating in increased Foreign Tourist arrivals but also in increased disposableearnings, which in turn is augmenting the domestic travel sector as well.
Government of India's focussed promotional campaign 'Incredible India', the recentlyheld world level sporting events and ensuing Formula 1 race being organised in India forthe first time in October 2011 by Jaypee Group and continued development of country'sinfrastructure augur well for Indian tourism industry. 'The World Travel and TourismReport 2010' has predicted robust recovery in Indian Tourism.
The contribution from Travel & Tourism to Gross Domestic Product (GDP) is expectedto grow to Rs. 5,438 billion by the Financial year 2019-20. With India share being just1.2% of total demand of global travel, the prospects for the industry remain promising asthe growth of the Tourism Industry has shown positive signs. In view of the country'srapid economic growth the hotel industry is expected to remain buoyant.
JAYPEE IN HOSPITALITY
The Hotels Division of the Company has 5 'five-star' luxury hotels, finest ChampionshipGolf Course, Integrated Sports Complex and Town Centre strategically located to servicethe needs of discerning business and leisure travellers. In New Delhi, the Division hastwo hotels - Jaypee Siddharth with 94 rooms and Jaypee Vasant Continental with 119 rooms.The largest property of the Company Jaypee Palace Hotel and Convention Centre is locatedat Agra with an inventory of 341 rooms and Jaypee Residency Manor at Mussoorie has 90rooms 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, UP. 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 hasbeen conferred with the prestigious BEST TOURISM FRIENDLY GOLF COURSE award bythe MINISTRY OF TOURISM, Govt. 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 with ISO9001 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).
Jaiprakash Associates Ltd. has an established growth record as a leading infrastructureCompany with decisive competitive advantages. We believe that the next decade in Indiabelongs to infrastructure sector. While even the smallest constituents of infrastructuresector will immensely benefit from it, Jaiprakash Associates Ltd. shall not only benefitfrom the ensuing growth phase of Infrastructure but actually lead the Infrastructuredevelopment of India. Its future outlook appears bright for the following reasons:
• It is Right Placed in the core infrastructure sectors of cement,power, roads, and realty
• It has Right Blend i.e. diverse business mix leading to de-riskedbusiness model
• It is Right Scaled as it has leadership positions in almost all ofits business domains and scaling up of capacities across all of them. Ready and rollingcapacities will help it maximise from the growing demand
• It has the Right Span from northern to southern India, western toeastern through central India within its span of reach.
It is based on the above facts that the Company's outlook appears very positive and theCompany shall continue growing at a rate higher than the economy and most of the industrysub-verticals it operates in.
OPPORTUNITIES & THREATS
1. Engineering & Construction Industry: With the renewed thrust by theGovernment of India to add hydropower generation in India to meet growing power demand, itis expected that large number of new hydropower projects will be taken up by variousGovernment undertakings. This will result in more opportunities for the Company whichspecializes in development of Hydro power and River Valley Projects. Similar Governmentalcontinued thrust on other infrastructure projects including highways/ expressways, willbring lot of opportunities for India and your Company. Keeping in view the expertise ofthe Company, no threat is perceived in this area of operation.
2. Power Generation: 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 onBOO basis by the Company.
3. Hospitality & Real Estate: Growth in economic activity world oversupplemented with Government of India's focussed promotional campaign IncredibleIndia, international level sporting events etc. are translating in increased foreigntourist arrivals. With the increasing economic activity in the country & the ensuingFormula 1 race being organised in India for the first time in October 2011 by JaypeeGroup, are believed to facilitate growth in the Hospitality sector. The Government hasintroduced many progressive reforms to unlock the potential of the real estate sector andalso meet increasing demand levels. The quality real estate development undertaken by theCompany is selling well inspite of other players being in the market. This business as awhole is looking bright.
4. Cement: Cement consumption and demand in India has been growing during the lastfew years. However, due to market conditions, the selling price had been under pressureduring the year under review and for the present as well. To meet the challenge, theCompany keeps taking steps to improve economy in operations on continuous basis. The panIndia presence of the Company for manufacturing and marketing of Cement will give theCompany inherent locational advantages and economies of scale.
5. Mining: The Company has procured Captive Coal Blocks to meet the requirements ofits business as per Government of India's latest guidelines. This would not only meet itslong term energy needs, but would also bring down the cost of production substantially.
6. General: The Indian Economy is expected to grow at over 8% 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 concerns varyfrom 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 in energy costmight affect Company's business adversely. The setting up of the captive power units inaddition to the proactive steps towards reducing power consumption helps the Companycounter this threat effectively. It has commissioned captive thermal power plants. Thecement industry is cyclical in nature and also witnesses seasonal reduction in consumptionduring monsoon season. With the consistent demand growth as witnessed in India, theCompany has been ramping up its capacities. It carefully evaluates the regional mismatchesand deploys capacities to minimise from the cyclical risks.
2. The Engineering & Construction Division of the Company provides performanceguarantees in relation to certain of its projects and other activities.
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 (Engineering & ConstructionDivision) comes from a limited number of customers. It relies heavily on Central and StateGovernments and public sector undertakings (subject to political influence).
5. Contract Payment Risk
In view of the fact that JAL typically takes up large size construction contracts ofsizes over Rs.500 crores which requires large scale mobilization of man power, machineryand material, the timely receipt of payments from the client 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
The Company has an internal control system commensurate with its size and nature ofbusiness. The system focuses on optimum utilisation of resources and adequate protectionof Company's assets. It monitors and ensures efficient communication between the Projectsand the Head Office; efficiently manages the information system and reviews the ITsystems; ensures accurate & timely recording of transactions; stringently checks thecompliance with prevalent statutes, listing agreement provisions, management policies& procedures in addition to securing adherence to applicable accounting standards andpolicies.
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.
The Company's Safety Policy comprises a statement of the Organization's objectivesregarding safety of Man and Equipment in operation at work sites. The Management'sendeavour is to establish Risk-Free and zero accident work environment.
As at 31.03.2011, the Company had a total workforce of approx. 20,000 persons,including managers, staff and regular/casual workers.
Industrial relations in the organization continued to be cordial and progressive.
HEALTH AND SAFETY
The Company places considerable emphasis on health and safety throughout its operationand displays commitment to ensure the high standards being maintained in compliance withapplicable laws and regulations.
Training programmes have been implemented for all its staff and employees, and theCompany carried out regular safety audits in relation to its operations.
The cement division of the Company has been awarded a number of national and statesafety awards in India.
As a diversified engineering, construction and manufacturing conglomerate, the Companyis required to comply with various laws and regulations relating to the environment.
Stack emission is a key environmental concern in cement manufacturing. The Company'scement plants comply with current stack emission limits for air pollution. Its cementunits take proactive environmental management actions like adopting a comprehensive firefighting scheme, permanent bonding and grounding of equipments in order to reduce staticelectricity hazards; equipping electric installations with heat sensors and an automaticwater spray system; fitting the coal mill gas circuits with explosion flaps to immediatelyrelieve pressure for the protection of personnel and equipment etc.
The Company consistently undertakes water conservation and rain water harvestingmeasures. In the areas adjacent to the limestone mines, the Company has created reservoirswith huge surface area and storage capacity.
In Jaypeepuram, the Company has created three reservoirs. A garland canal system laidalong the mines periphery area has also been created to collect run-off rainwater in thesereservoirs and lakes. These reservoirs and lakes serve the water requirements of theCompany's cement plants and thermal power plants.
Utilisation of water from these reservoirs and lakes avoids the need to extractsub-soil water and accordingly has led to an increase in the water level in the vicinity,serving to mitigate drought conditions in the vicinity which often occur in March/Julyeach year.
The Company utilises fly ash, which is a waste product, for the generation of thermalpower. The Company is now able to utilise substantial amounts of fly ash in its productionprocess including generated from Company's captive thermal power plants.
Regular environmental audits are conducted at the Company's cement plants andstack/ambient emission monitoring is carried out on a regular basis.
In relation to its hydro power projects, the Company undertakes environmental impactassessments (EIA) and prepares environmental management plans(EMP) for each project. This is carried out in conjunction with the NationalEnvironmental Engineering Research Institute (NEERI) set up by the Government.
The Company also has an active plantation scheme, with horticultural plans drawn up ona yearly basis for the forestation of reclaimed areas within the vicinity of the Company'slimestone mines. Over the reclaimed areas within our mining leases and in the plants,townships, along the roads, we have planted large number of trees, including teak trees.
A unique water conservation measure adopted in the captive power plant is the adoptionsof the air cooled condenser technology, which greatly reduces the water consumption in thecooling tower makeup.
The Company believes that it complies in all material respects with all such statutesapplicable to it and with the regulations hereunder. In particular, it has all theconsents from the appropriate regulatory authorities necessary to carry on its business.There are currently no proceedings pending or, to the knowledge of the Company, threatenedagainst the Company or any of its directors, officers or employees in relation to suchstatutes or regulations.
The Company expects the environmental rules and regulations to become more stringent soas to reduce emission. The Company has already taken steps in this direction and most ofthese parameters have been achieved by the cement business. The cement business hasundertaken major initiatives to reduce dust emissions including adoption of newtechnologies.
CORPORATE SOCIAL RESPONSIBILITY
To seek an inclusive and sustainable growth is intrinsically woven in the DNA of theCompany. Community development is viewed as the principal pillar of sustainability andpursued as carefully as any other aspect of Company's business. The Company extends basicfacilities like its hospitals, drinking water etc. to villagers around its plants. It alsoundertakes the regular upkeep of public roads in the vicinity. Various schools andvocational training institutes of the group enrol children from the surrounding villages.
It is considered to be a matter of privilege of the Organisation to improve the livesof the people that come in contact with the Organisation around its project sites/cementcomplexes while it endeavours in the task of nation building. A Comprehensive RuralDevelopment Program (CRDP) was initiated in 1993 in villages surrounding the cement plant,at Madhya Pradesh. In Madhya Pradesh over 28 villages are benefitting from the activitiesof CRDP, and as we expand in other regions the CRDP plan is expanding its reach to cover alarge number of villages.
We believe, as a responsible corporate citizen it is our duty to ensure that thebenefits of our growth are not just shared by the members of our organization but also thelocal environment in which we operate. We have set up a 24-bedded hospital at our 'cementcomplex', which benefits over one lac villagers.
An equal number of villagers in areas around our various project locations benefit fromfree medical treatment, safe drinking water and huge water reservoirs, medical facilitiesand free animal care at various locations. Jaiprakash Sewa Sansthan (JSS) is not justimproving lives of people but also making a better tomorrow. Also, with construction andrenovation of our roads, village schools, healthcare facilities, irrigation, drainagesystem and religious structures. JSS is striving to build a satisfied and contentedcommunity- for a stronger nation. A desalination plant setup by the Company in the waterstarve district of Bhuj, in the State of Gujarat, at its cement plant is providing scarcewater to over 100 villages which have struggled for this resource for generations.
FORWARD LOOKING / CAUTIONARY STATEMENT
Certain statements in the Management Discussion & Analysis Report detailing theCompany's objectives, projections, estimates, expectations or predictions may be forwardlooking statements within the meaning of applicable securities laws and regulations. Thesestatements being based on certain assumptions and expectation of future event, actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the Company's operations include economic conditions affectingdomestic demand supply conditions, finish goods prices, changes in Government Regulationsand Tax regime etc. The Company assumes no responsibility to publically amend, modify orrevise any forward looking statements on the basis of subsequent developments, informationor events.