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SHELF INFORMATION MEMORANDUM

Jindal Stainless Limited

Incorporated as Jindal Ceramics Limited on September 29, 1980. Changed its name to Jindal Int.com. Limited on January 29, 2001 and was renamed Jindal Stainless Limited on January 28, 2003.

Registered Office: Delhi Road, Hisar – 125 005, Haryana, India Tel. No. (01662) 222471-83 Fax: (01662) 220476/220499 e mail: hsr.apgarg@jslhsr.com Website: www.jindalstainless.com

PRIVATE PLACEMENT OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES OF RS.

10,00,000 EACH FOR CASH AT PAR UPTO RS. 300 CRORES TILL 31ST MARCH, 2005

General Risk Investment in debt instruments involves a degree of risk and investors should invest any funds in the issue only after reading the risk factors on page no. iv to vi in the Shelf Information Memorandum carefully, including the risk involved. The Securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Issuer’s Absolute Responsibility The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the Shelf Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Listing The Debentures are proposed to be listed on The Stock Exchange, Mumbai (BSE). Credit Rating: Credit Analysis & Research Limited (CARE) has presently assigned rating “AA” pronounced “Double A” for Rs.300 crore (outstanding Rs. 100 crores). This rating indicates that such instruments are considered to be of High investment grade and have sufficient safety for payment of interest and principal, at the time of the rating. Further the company shall obtain the requisite rating for the remaining amount of the issue from time to time and intimate to the investor separately in their respective term sheet. DEBENTURE TRUSTEE UTI Bank Limited 111, Maker Tower F,Cuffe Parade, Colaba, Mumbai 400 005 Phone No. (022) 22162684, 22162815 Fax No. (022) 22162467

REGISTRAR AND TRANSFER AGENT Abhipra Capital Limited Ground Floor – Abhipra Complex, Dilkhush Industrial Area, A-387, GT Karnal Road, Azadpur, New Delhi 110033. Phone No. (011) 27127362, 27249773-74 Fax No. (011) 27215530.

Offer Opening Date Offer Closing Date Deemed Date of Allotment

Issue Opening, Closing and Deemed date of Allotment of the respective issue will be informed to the investors separately and shall be incorporated in the Term Sheet of respective issue attached as Annexure.

PRIVATE & CONFIDENTIAL MEANT FOR USE OF ADDRESSEE

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CONTENTS

PAGE NO.

DEFINITIONS & ABBREVIATIONS iii RISK FACTORS & PROPOSAL TO ADDRESS THE RISK iv HIGHLIGHTS vii IMPORTANT NOTICE viii

PART I

I. GENERAL INFORMATION 1

II. CAPITAL STRUCTURE OF THE COMPANY 4

III. TERMS OF THE PRESENT ISSUE 6

IV. PARTICULARS OF THE ISSUE 11

V. ISSUER PROFILE 12

VI. INDUSTRY SCENARIO AND ACTIVITIES OF THE ISSUER 20

VII. STOCK MARKET DATA 26

VIII. MANAGEMENT DISCUSSION & ANANLYSIS OF THE FINANCIAL STATEMENT FOR THE LAST THREE FINANCIAL YEARS: 27

IX. CAPITAL ISSUES DURING LAST THREE YEARS: 29

X. BASIS FOR ISSUE PRICE 30

XI. OUTSTANDING LITIGATIONS OR DEFAULTS 31

XII. RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK 33

XIII. DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM: 36

PART II

XIV. GENERAL INFORMATION 37

XV. AUDITORS REPORT & FINANCIAL INFORMATION 39

XVI. OTHER PROVISIONS RELATING TO ACCOUNTS OF THE ISSUER COMPANY 44

XVII. STATUTORY AND OTHER INFORMATION 45

XVIII. RELATED PARTY DISCLOSURE 46

XIX. OTHER DETAILS 47

XX. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 51

XXI. DECLARATION 52

ANNEXURE

RATING LETTER ERROR! BOOKMARK NOT DEFINED.

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DEFINITIONS / ABBREVIATIONS USED JSL : Jindal Stainless Limited BSE : The Stock Exchange, Mumbai CARE : Credit Analysis & Research Limited CEO : Chief Executive Officer MD : Managing Director ED : Executive Director FI : Financial Institution ISSF : International stainless steel forum ISSDA : Indian stainless steel development association. NSDL : National Securities Depository Limited RBI : Reserve Bank of India SEBI : Securities and Exchange Board of India

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RISK FACTORS Future operating results are difficult to predict.

The operating results of the company may fluctuate in the future due to a number of factors, many of which are beyond our control. Results of operations during any fiscal year and from period to period are difficult to predict. The company’s business and results of operations may be adversely affected by:

a slowdown in growth and demand for stainless steel products in the Indian and global markets, including our key exports markets;

decreasing demand for the 200 series stainless steel, the key product;

decreasing international and domestic prices for our stainless steel products;

fluctuations in the price and availability of key raw materials, including nickel and ferro-alloys;

Inability to manage the expansion of production capacity at existing plants in Hisar;

Inability to successfully develop a new projects including ferro-alloy project in the State of Orissa;

any increase in interest rates at which the company can raise debt;

adverse fluctuations in the exchange rate of the rupee versus major international currencies, including the US

dollar; any increase in import tariffs and domestic duties and taxes on raw materials or any decrease in import tariffs

and domestic duties on stainless steel products exported by competitors to India;

Levy of additional duties or anti dumping duties by other countries importing on the stainless steel products

Reduction or removal of export benefits

Change in fiscal laws and levies, without limitation, changes in Indian Sales Tax laws, MODVAT procedures etc.

increase in the cost of transportation including freight to key export markets, or non-availability of

transportation due to strikes, shortages or any other reason;

strikes or work stoppages by the employees;

changes in consumer preferences;

competition from global and Indian stainless steel producers;

changes in government policies affecting the stainless steel industry in India or globally; and accidents, natural disasters or outbreaks of diseases.

The stainless steel industry is cyclical in nature and factors affecting the demand for, and production

of, stainless steel affect our results of operations. The stainless steel industry, domestic and global, is cyclical in nature, sensitive to general economic conditions and the condition of certain other industries. Future economic downturns or stagnant economies in India and key global markets, including China, could adversely affect the business and results of operations. Over the past few years, the demand for stainless steel has fluctuated and may fluctuate in the future due to a number of factors, including the downturn in traditional bulk stainless steel end users such as the white goods and automotive sectors in Europe, the slowdown in the basic manufacturing industry in the United States and the growth of the Chinese economy, and the availability and price of key raw materials, including nickel, many of which are beyond company’s control. Production of stainless steel has varied, depending upon demand and factors affecting demand for stainless steel, consolidation in the industry. Unfavorable changes in the demand for, or production of, stainless steel, including changes in consumer

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preferences, governmental policies, or any other factor may adversely affect the stainless steel industry and the business and results of operations. Adverse economic and financial developments in China may have an adverse effect on the results of

the company. The company has large exports to China. Local and foreign manufacturers based in China are increasing their melting and production capacity to meet the demand in that market. This increased capacity may result in reduced growth in demand or reduced prices for the products. Fluctuations in the price and availability of nickel, a key raw material, can adversely affect our

business and results of operations. Nickel, one of the key raw materials required for the production of stainless steel, is not available in India. Consequently, the company imports almost all the nickel requirements at prevailing international market prices. The company’s business and results of operations are affected by changes in the cost price of nickel. There are only a few countries in the world where nickel is produced and availability of nickel also impacts the price at which it is sold in the international market. This availability is affected by factors that adversely impact the production and sale of nickel, including lack of reserves, increased production costs, production stoppage, strikes or slowdown and increased transportation and freight costs. Change in availability and price of our raw materials, including steel scrap, ferro-chrome and other

ferro-alloys, may adversely affect our business and results of operations. Steel Scrap is one of the key raw materials required for the production of stainless steel. Any decrease in the availability of steel scrap or increase in the price at which it is available to the company may adversely affect the business and results of the operations if the company is not able to pass on the price increase to the customer. The company is dependent on the ready availability of ferro-chrome and other ferro-alloys in India to maintain our competitiveness in the global market. The ore required for the production of ferro-chrome and other ferro-alloys is mined and processed in India and recently there is also a Government restriction on the volume of chrome ore that can be exported from India. Although the company produces some of this raw material internally, the company purchases approximately 65% of its current ferro chrome requirement from the market in India. Any decrease in the ready availability of these alloys, increase in the price at which they are made available or the removal of the export restriction on chrome ore may adversely affect the business and results of operations. Approximately 35% of the current ferro-chrome requirement is currently being produced at ferro-alloys plant at Vishakapatnam (“Vizag”). Supply from the Vizag plant is subject to various risks, including production stoppage due to strikes, unavailability or increase in prices of raw material, power etc. at such plant and other factors beyond our control. Coke, an important raw material for Vizag plant, is imported at prevailing international market prices. Any decrease in the availability of coke or increase in its price may adversely affect production of ferro-alloys. Majority of the chrome ore requirements of the Vizag plant is sourced from own chrome ore mines at Sukinda, in the State of Orissa, which is leased from the State Government. Pursuant to the terms of the lease, the State Government has the right to compel us to transfer all minerals on the leased land at a fair market price. Although chrome ore is available domestically, any decrease in the availability or increase in price of chrome ore may adversely affect production of ferro-alloys. Our business is dependent on the delivery of adequate and uninterrupted supply of electrical power at a

reasonable cost. Adequate and cost effective supply of electrical power is one of the key ingredients for any stainless steel producer. The ferro-alloy plant in Vizag and the melting and production plant in Hisar depend on the delivery of an adequate supply of electrical power. At the Hisar plant, in order to reduce our reliance on externally generated electrical power, the company has constructed an electricity generating facility, which is capable of meeting the existing demand. However, the company is required to purchase minimum of 10% of the electricity requirements from the Haryana State Electricity Board (“HSEB”) at prices determined by them. The operating costs will increase if the purchase price for electrical power from the HSEB increases. The company’s electricity generation facility is dependent on third party oil retailers to supply the necessary fuel to generate electricity. The availability and cost of oil is dependent on a number of factors, which are beyond control. While the company has not experienced any interruption in the supply of oil, the price at which the company purchases such oil varies, and there can be no assurance that there will be adequate and uninterrupted supply of power at this plant.

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Certain of our products have been and may become subject to anti-dumping and countervailing

proceedings or safeguard measures. In our export markets, including China, certain of our products have been or may become subject to anti-dumping and countervailing proceedings or safeguard measures. Further increases in, or new imposition of, dumping duties, countervailing duties, quotas or tariffs on our sales in the export market, including China, may have an adverse effect on our exports to these regions in the future. Lowering in our credit rating or an increase in the interest cost of our borrowings could affect our

ability to attain adequate financing and thereby adversely affect our business. The company’s cost of borrowing will be affected by the credit ratings awarded to our various debt instruments. Any downgrade in the credit rating of the debt instruments could negatively affect the ability to borrow at reasonable terms, or at all. The company has been able to reduce the borrowing costs as a result of declining interest rates on its borrowings, although there can be no assurance that it will continue to maintain low levels of interest rates on the borrowings. The occurrence of any of these factors may increase the company’s financing costs, restrict ability to borrow and thereby adversely affect the results of operations. In order to mitigate various risk involved, the company plans the following: i) Redemption Reserve: Creation of Debenture Redemption Reserve is envisaged for the proposed issue of Debentures as per the stipulated requirements under law. ii) Security for Debentures: It is proposed that the Debentures shall be secured by way of First charge on pari passu basis, on the Immovable and Movable fixed Assets of JSL in favour of lenders on Pari Passu basis. JSL has appointed a trustee to protect the interest of the investors. iii) Credit Rating: Credit Analysis & Research Limited (CARE) has presently assigned rating “AA” pronounced “Double A” for Rs.300 crore(outstanding Rs. 100 crores). This rating indicates that such instruments are considered to be of High investment grade and have sufficient safety for payment of interest and principal, at the time of the rating. Further the company shall obtain the requisite rating for the remaining amount of the issue from time to time and intimate to the investor separately in their respective term sheet.

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HIGHLIGHTS OF THE COMPANY

India’s largest stainless steel manufacturer with integrated melting, hot rolling and cold rolling facilities.

Ability to produce standard and specialty stainless steel, in each of the 200, 300 and 400 series grades, for Kitchenware, commercial and industrial applications.

Manufacture and sell a broad range of stainless steel flat products including slabs, blooms, flat bars, hot

rolled and cold rolled coils, plates and sheets and special products including, precision strips and coin blanks.

Global leader in the production of chrome-manganese (200 series) grade of stainless steel, which has become increasingly popular for certain end uses due to its ability to substitute higher nickel grade 300 series products for various applications.

In fiscal 2004 had revenues of Rs.2606 crore and net profit of Rs. 164 crore

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IMPORTANT NOTICE OR ANY OTHER IMPORTANT NOTES No part of this document is intended for the use of any recipient located outside India or any recipient who is not resident in India. This document is also not intended for the use of Non-Resident Indians ('NRIs') (except on non repatriation basis as stated elsewhere), Overseas Corporate Bodies ('OCBs') or Foreign Institutional Investors ('FIIs') This issue by JSL (the "Issuer"), of Secured Debt in the nature of Non-Convertible Debentures ("Debentures") is being made strictly on a private placement basis. It is not and should not be deemed to constitute an offer to the public in general or any section or class thereof. This Memorandum ("Shelf Information Memorandum" or “IM”) is neither a prospectus nor a statement in lieu of prospectus. It cannot be acted upon by any person other than to whom it has been specifically addressed, neither can this document be circulated, reproduced or redistributed in any form whatsoever. This Shelf Information Memorandum is not intended to provide the sole basis of any credit decision or other evaluation and should not be considered as a recommendation that any recipients of this Shelf Information Memorandum should invest in the Debentures proposed to be issued by Issuer. Each potential investor should make its own independent assessment of the investment merit of the Debentures and the Issuer. This Shelf Information Memorandum is made available to potential Debentures investors on the strict understanding that it is confidential. Recipients shall not be entitled to use any of the information otherwise than for the purpose of deciding whether or not to invest in the Debentures. No person including any employee of the Issuer has been authorised to give any information or to make any representation not contained in this Shelf Information Memorandum. Any information or representation not contained herein must not be relied upon as having being authorised by or on behalf of the Issuer. Neither the delivery of this Shelf Information Memorandum at any time nor any statement made in connection with the offering of the Debentures shall under the circumstances imply that any information/representation contained herein is correct at any time subsequent to the date of this Shelf Information Memorandum. The distribution of this Shelf Information Memorandum and the offering of the Debentures in certain jurisdictions may be restricted by law. Persons into whose possession this Shelf Information Memorandum comes are required by the Issuer to inform themselves about, and observe any such restrictions.

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PART I

I. GENERAL INFORMATION

Shelf Information Memorandum for Private Placement of Secured Redeemable Non-Convertible Debentures of Rs.10,00,000/- each for cash at par upto Rs.300 crore for the period up to 31.03.2005. Jindal Stainless Limited (A Company incorporated under the Companies Act, 1956) The Company was incorporated as Jindal Ceramics Limited on September 29, 1980. It changed its name to Jindal Int.Com Limited on January 29, 2001 and was renamed Jindal Stainless Limited on January 28, 2003. Registered Office: Delhi Road, Hisar – 125 005, Haryana, India Tel. No. (01662) 222471-83 Fax: (01662) 220476/220499 Website: www.jindalstainless.com Authority for Present Issue Board of Directors of the Company has passed a resolution to raise the fund aggregating Rs. 300 crores upto 31st March 2005 by issuing Privately Placed Secured Redeemable Non-Convertible Debenture under the Shelf Information Memorandum vide its Board Meeting dated 15th July 2004 . Stock Exchange Disclaimer Clause It is to be distinctly understood that the submission of the Shelf Information Memorandum to the Stock Exchange should not in any way be deemed or construed that the Shelf Information Memorandum has been cleared or approved by Exchange. Stock Exchange does not take any responsibility either for the financial or other soundness of this Issuer, or the achievement of the object for which placement is proposed to be made or for the correctness of the statement made or opinions expressed in the Shelf Information Memorandum. General Disclaimer The issuer accepts no responsibility for statements made otherwise than in the Shelf Information Memorandum or in the advertisement or any other material issued by or at the instance for the issuer and that anyone placing reliance on any other source of information would be doing so at his own risk. Listing Initial Application has been made to BSE. The Shelf Information Memorandum is filed with BSE. Minimum Subscription Pursuant to the notification no. SEBI/MRD/SE/AT/46/2003 dated 22nd December 2003 issued by SEBI minimum subscription clause is not applicable to the privately placed debt securities. Impersonation Any person who- a) makes in a fictitious name an application to a company of acquiring, or subscribing for any Securities therein, or b) otherwise induces a company to allot or register any transferor of Securities therein to him, or any other person in

a fictitious name shall be punishable under the extant laws. Issue of Letter of Allotment/ Allotment Advice and Debenture Certificates The Issuer will execute and despatch Letters of Allotment/ Allotment advice in favour of the allottees or Refund Letter along with refund amount, not later than 7 days after the Deemed Date of Allotment. After completion of all legal formalities, the Issuer will issue the Debentures certificate(s) /credit the DP account of the allottees against surrender of the letter(s) of allotment within three month(s) of the Deemed Date of Allotment, or such extended period subject to obtaining the approvals, if any. Interest at the applicable coupon rate will be paid via interest warrants on the application money to the applicants for the relevant option applied. Such interest will be paid for the period commencing from the date of realisation of the cheque(s) / demand drafts (s) up to but excluding the Deemed Date of Allotment. The interest warrants for interest payable on application money will be dispatched by Ordinary Post/ Courier within 30 days from the Deemed Date of Allotment. The letters of allotment/ allotment advice/refund orders, as the case may be, will be sent by Registered Post/ Courier /Hand Delivery within 7 days from the Deemed Date of Allotment to the first/sole applicant, at the sole risk of the applicant. The payment will be subject to deduction of tax at source at the rates prescribed under the provisions of the Income Tax Act, 1961 or any other statutory modification or re-enactment thereof.

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Issue Schedule

Offer Opening Date Offer Closing Date Deemed Date of Allotment

Issue Opening, Closing and Deemed date of Allotment of the respective issue will be informed to the investors separately and shall be incorporated in the Term Sheet of respective issue attached as Annexure.

The issuer reserves the right to close the issue earlier from the aforesaid date or change the issue time table including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice. Names and Addresses of Auditors, Registrars, Debenture Trustees Joint Statutory Auditors Lodha & Co. Chartered Accountants Bhagat Singh Marg, New Delhi - 110 001 Ph. 011 23364671 /2334 5168 (Telefax) S.S. Kothari Mehta & Co. Chartered Accountants 146-149, Tribhuvan Complex, Ishwar Nagar, Mathura Road, New Delhi - 110 065 Ph. No. 011 55601488-89

Registrars to the issue Abhipra Capital Limited Ground Floor – Abhipra Complex, Dilkhush Industrial Area, A-387, GT Karnal Road, Azadpur, New Delhi 110033. Phone No. (011) 27127362, 27249773-74 Fax No. (011) 27215530

Trustees to the Debenture holders: UTI Bank Limited Maker Tower “F” 111, 13th Floor, Cuffe Parade, Mumbai 400 005

Credit Rating a) Credit Analysis & Research Limited (CARE) has presently assigned rating “AA” pronounced “Double A” for Rs.300 crore(outstanding Rs. 100 crores). This rating indicates that such instruments are considered to be of High investment grade and have sufficient safety for payment of interest and principal, at the time of the rating. Further the company shall obtain the requisite rating for the remaining amount of the issue from time to time and intimate to the investor separately in their respective term sheet. b) Credit ratings obtained during the previous three years before filing of the Shelf Information Memorandum for any of its listed debt securities at the time of accessing the market through a rated debt security:

Rating Agency Date of Rating Letter

Rating Amount (Rs. Crs.)

CARE 30.4.2004 AA 200 CRORES ICRA 03.07.2004 A1+ 30 crores

Compliance Officer: Shri A. P. Garg Sr. Vice President and Company Secretary Delhi Road, Hisar – 125 005, Haryana, India Tel. No. (01662) 222471-83 Fax: (01662) 220476/220499 E.mail Id: hsr.apgarg@jslhsr.com

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The Investor may contact the compliance officer in case of any pre-issue / post issue related problems such as non-receipt of letters of allotment / debenture certificates / refund orders.

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II. CAPITAL STRUCTURE OF THE COMPANY Equity Shares as on 31st March, 2004 Amount

Rs. crore A. Authorised Capital

274,500,000 Equity Shares of Rs. 2 each 54.90 20,000,000 Redeemable Cumulative Non Convertible Preference Shares of Rs. 10/- each

20.00

100,500,000 Unclassified Shares of Rs.2/- each 20.10 Total Authorised Capital 95.00 B. Issued Subscribed and Paid-up Capital 99,912,320 Equity Shares of Rs. 2 each 19.98 C. Paid Up Capital after the present issue 99,912,320 Equity Shares of Rs. 2 each 19.98 D. Share Premium Account as on 31.03.2004 (Audited) 89.47 Debentures / Loans as on 31st March, 2004 (Audited Figure) Sr No Particulars Amount

Rs. Crs. 1 Secured Loan 647.59 2 Debenture 9.00 3 Unsecured Loans* 124.45 Total 781.04

* Includes foreign currency convertible bonds of approx. Rs.55 crore convertible into equity at pre determined conversion price of Rs.20 (post stock split) Details regarding Shareholders Top Ten Shareholders as on 30th June , 2004 Sr.No. Name of the Shareholder No. of shares %

1 Sun Investments Limited 9296780 9.30 2 Jindal Equipment Leasing & Con. Services Ltd. 5735555 5.74 3 Latin American Investment Bank Bahamas Limited 4998760 5.00 4 Assured Fin-Cap Pvt. Ltd. 3585560 3.59 5 Vrindavan Services Pvt. Ltd. 4946705 4.95 6 Mansarovar Investments Limited 3797210 3.80 7 Saw Pipes Limited 2615375 2.62 8 Gagan Trading Company Limited 2454295 2.46 9 Hexa Securities & Finance Co. Ltd. 2315800 2.32 10 Colorado Trading Company Ltd. 2082880 2.08 TOTAL 41828920 41.87

Top Ten Shareholders two years prior to 30th June 2004 i.e. on 30th June, 2002 Sr. No Name of the Shareholder No.of shares %

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1 Prithvi Raj Jindal 100 14.29 2 Ratan Jindal 100 14.29 3 Mahendra Kumar Goel 100 14.29 4 Rajendra Prakash 100 14.29 5 Mahabir Prasad Swami 100 14.29 6 Pawan Kumar Singla 100 14.29 7 Savitri Devi 100 14.29 TOTAL 700 100

Top Ten Shareholders as on – 20th June, 2004 Sr.No. Name of the Shareholder No. of shares %

1 Sun Investments Limited 9296780 9.30 2 Jindal Equipment Leasing & Con. Services Ltd. 5735555 5.74 3 Latin American Investment Bank Bahamas Limited 4998760 5.00 4 Assured Fin-Cap Pvt. Ltd. 3432184 3.44 5 Vrindavan Services Pvt. Ltd. 4946705 4.95 6 Mansarovar Investments Limited 3797210 3.80 7 Saw Pipes Limited 2615375 2.62 8 Gagan Trading Company Limited 2454295 2.46 9 Hexa Securities & Finance Co. Ltd. 2315800 2.32 10 Colorado Trading Company Ltd. 2082880 2.08 TOTAL 41675544 41.71

Mr. Ratan Jindal is the sole promoter of the Company within the purview of SEBI guidelines and holding 61680 shares of the company.

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III. TERMS OF THE PRESENT ISSUE Terms and Conditions of the each of the respective issues would be given as Annexure to this Shelf Information Memorandum. Place and Currency of Payment The Debentures are being issued by JSL in India. All obligations under these Debentures are payable solely by the Issuer in Indian Rupees only. Tax Deduction at Source Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source on the debentures. Tax exemption certificate / document / form, under Section 193 of the Income Tax Act, 1961, if any, must be lodged at the Registered Office, at least thirty days before the relevant interest payment becoming due.

Issue of Debentures in Dematerialised Form The Company has made depository arrangements with NSDL/CDSL for the Debentures. The investors will have the option to hold the debentures in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996/ Rules as notified by NSDL/CDSL from time to time. Investors desirous of receiving debenture certificate in the dematerialised form should mention their Depository Participant's name, DP-ID and beneficiary account number in the appropriate place in the application form. Debentures allotted to successful allottee(s) having depository account shall be credited to their depository account against surrender of letter of allotment. In case of incorrect details provided by the investors and inability of the Registrar to credit the Depository Account the debentures will be issued in physical form to such investors. Issue of Letter of Allotment/ Allotment Advice and Debenture Certificates The Issuer will execute and dispatch Letters of Allotment/ Allotment advice in favour of the allottees, not later than seven days after the Deemed Date of Allotment. After completion of all legal formalities, the Issuer will issue the Debentures certificate(s) / credit the DP account of the allottee against surrender of the letter(s) of allotment within three month(s) of the Deemed Date of Allotment, or such extended period subject to obtaining the approvals, if any. Interest at 6.90% p.a. will be paid via interest warrants on the application money to the applicants for the relevant option applied. Such interest will be paid for the period commencing from the date of realization of the cheque(s)/demand drafts (s) up to but excluding the Deemed Date of Allotment. Right to Re-purchase and Re-issue the Debentures This would be as per the prevailing guidelines/regulations of Reserve Bank of India and other statutes. Eligible Holders and Mode of Transfer The Issuer will not register any transfers of the Debentures to any NRIs (except on non-repatriation basis), OCBs, FIIs, or any persons not resident in India, unless appropriate regulatory approvals are obtained. The Issuer shall not be duty bound to take interest or trust in or over the Debentures. The title to the Debentures shall pass by execution of duly stamped transfer deed(s) accompanied by the Debentures certificate(s)/Letter of allotments(s) together with necessary supporting documents. The transferee(s) should deliver the Debenture certificates to the Issuer for registration of transfer in the Register of Debenture holders at the Registered Office. The Issuer on being satisfied will register the transfer of such Debentures in its Register of Debenture holders. The person whose name is recorded in the Register of Debenture holders shall be deemed to be the owner of the Debentures.

Request for registration of transfer, along with the necessary documents, and all other communications, requests, queries and clarifications with respect to the Debentures should be addressed to and sent to the Registered Office. No correspondence shall be entertained in this regard at any other Branches or any of the offices of the JSL.

The request from Registered Debenture holder(s) for splitting/consolidation of Debenture certificates will be accepted by the Issuer only if the original Debentures certificate(s) is/are enclosed along with an acceptable letter of request.

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No requests for splits below the Market Lot will be entertained. Transfer of debentures in dematerialized form would be in accordance to the rules /procedures as prescribed by NSDL/CDSL. Succession In the event of demise of a Registered Debenture holder of the Debentures, or the first holder in the case of joint holders, the Issuer will recognize the executor or administrator of the demised Debenture holder or the holder of succession certificate or other legal representative of the demised Debenture holder as the Registered Debentures holder of such Registered Holder’s Debentures if such a person obtains probate or letter of administration or is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter and delivers a copy of the same to the Issuer. The Issuer may in its absolute discretion, where it thinks fit, dispense with the production of the probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the demised debentures holder on production of sufficient documentary proof or indemnity. In case the debentures are held by person other than individual, the rights in the debentures shall vest with the successor acquiring interest therein, including liquidator or such any person appointed as per the applicable laws. Issue of Duplicate Debenture Certificates If any Debenture certificate(s) issued in physical form is/are mutilated or defaced, then, upon production of such certificates at the Registered Office, the same will be cancelled and a new certificate issued in lieu thereof. If any Debenture certificate is lost, stolen or destroyed then, upon production of proof thereof to the satisfaction of the Issuer and upon furnishing such indemnity as the Issuer may deem adequate and upon payment of any expenses incurred by the Issuer in connection thereof, new certificate(s) shall be issued. A fee will be charged by the Issuer on each fresh Debenture certificate issued hereunder. Modifications of Rights The rights, privileges, terms and conditions attached to all Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three-fourths of the outstanding amount of Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debentureholders, carried by a majority consisting of not less than three-fourths of the persons voting there upon a show of hands or, if a poll is demanded by a majority representing not less than three-fourths in value of the votes cast on such poll, provided that nothing in such consent or resolution shall be operative against the Issuer if the same are not accepted in writing by the Issuer. Notices The notices, communications and writings to the Debentureholder(s) required to be given by the Issuer shall be deemed to have been given if sent by Ordinary Post to the Registered Debentureholder(s) at the address of the Debentureholder(s) registered with the Registered Office. All notices, communications and writings to be given by the Debentureholder(s) shall be sent by Ordinary Post or by hand delivery to the Issuer at Registered Office or to such persons at such address as may be notified by the Issuer from time to time and shall be deemed to have been received on actual receipt. Application for the Debentures

♦ How to Apply Applications for the Debentures must be made in the prescribed Debenture Application Form, which would be attached with the Respective Issue Term Sheet and must be completed in block letters in English by investors. Debentures Application forms must be accompanied by either a demand draft or cheque drawn or made payable in favour of "Jindal Stainless Limited”. The full amount of the face value of the Debentures applied for under any series has to be paid along with the delivery of the fully completed and executed Debenture Application Form together with other applicable documents described below. Cheques / demand drafts may be drawn on any bank which is situated and is a member or sub-member of the Banker’s Clearing House located at Mumbai, Calcutta, Chennai, or New Delhi. Investors in centres which do not have any bank which is a member or sub-member of the Banker’s Clearing House located at the above mentioned centres will be required to make payments only through demand drafts payable at New Delhi. The issuer assumes no responsibility for any applications / cheques / demand drafts lost in mail or transit.

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♦ Who can apply Only investors who have been addressed through a communication directly are eligible to apply. Furthermore, NRIs (except on non-repatriation basis), OCBs, FIIs and minors are not eligible to apply or hold the Debentures.

♦ Application by Banks/Corporate Bodies / Mutual Funds / FIs / Trusts/Statutory Corporations. The applications must be accompanied by certified true copies of (i) Memorandum and Articles of Association Constitution / Bye-laws / Trust Deed, (ii) Resolution authorizing investment and containing operating instructions, (iii) Specimen signatures of authorized signatories, (iv) Necessary form for claiming exemption from deduction of tax at source on interest on application money. Application made by Asset Management Company or custodian of Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made.

♦ Application under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signatures of all authorised signatories must be lodged along with the submission of the completed Debenture Application form. Further modifications/additions in the power of attorney or authority should be delivered to the Issuer at Registered Office.

♦ Interest on Application Money Interest will be paid via interest warrants on the application money to the applicants of a Series at its respective coupon rate specified in the respective Term Sheet. Such interest will be paid for the period commencing from the date of realisation of the cheque(s) / demand drafts (s) up to but excluding the Deemed Date of Allotment. The interest warrants for interest payable on application money will be despatched by Ordinary Post/ Courier within 30 days after the Deemed Date of Allotment. The letters of allotment/ allotment advice/refund orders, as the case may be, will be sent by Registered Post/ Courier /Hand Delivery within 7 days from the Deemed Date of Allotment to the first/sole applicant, at the sole risk of the applicant. The payment will be subject to deduction of tax at source at the rates prescribed under the provisions of the Income Tax Act, 1961 or any other statutory modification or re-enactment thereof. Tax exemption certificates, if applicable, in respect of non-deduction of tax on interest on application money must be submitted along with the Debentures Application Form. It is clarified that interest shall not be paid on invalid and incomplete applications.

♦ Basis of Allotment The Issuer has sole and absolute right to allot the Debentures to any applicant.

♦ Right to Accept or Reject Applications The Issuer is entitled at its sole and absolute discretion to accept or reject any application, in part or in full, without assigning any reason. Debenture Application Forms that are not complete in all respects may be rejected at the sole and absolute discretion of the Issuer.

♦ Future Borrowings The Issuer shall be entitled, from time to time, to make further issue of Debentures, other debt securities (whether senior, pari passu or junior to the Debentures) and other instruments and securities to any person or persons including to the public or a section of the public and / or members of the Issuer and / or to raise further loans, advances and / or avail further financial and / or guarantee facilities from financial institutions, banks and / or any other person (s) without any further approval from or notice to the Debenture holders/Debenture Trustees.

♦ Governing Laws and Jurisdiction The Debentures are governed by and will be construed in accordance with the Indian Law. The Issuer, the Debentures and Issuer’s obligations under the Debentures shall, at all times, be subject to the directions of the Reserve Bank of India and Securities & Exchange Board of India. The Debenture holders, by purchasing the Debentures, agree that the Delhi High Court shall have exclusive jurisdiction with respect to matters relating to the Debentures.

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♦ Despatch of Refund Orders The Company shall ensure despatch of refund orders of value over Rs. 25000/- and Debenture certificates by Registered Post/Hand Delivery only and adequate funds for the purpose shall be made available to the Registrars by the Issuer Company.

Undertaking by the Issuer Company: a. The complaints received in respect of any issue of Debentures pursuant to this IM shall be attended to by

the issuer company expeditiously and satisfactorily b. All steps for completion of the necessary formalities for listing and commencement of trading at all

stock exchange where the securities are to be listed are taken within 7 working days of finalization of basis of allotment.

c. No further issue of securities shall be made till the securities offered through this Shelf Information Memorandum are listed or till the application moneys are refunded on account of non-listing.

d. Necessary co-operation with the credit rating agency shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.

e. The Company shall forward the details of utilisation of the funds raised through the debentures duly certified by the statutory auditors of the company, to the debenture trustees at the end of each year.

f. The Company shall disclose the complete name and address of the debenture trustee in the annual report.

g. The Company shall provide a compliance certificate to the debenture holders (on yearly basis) in respect of compliance with the terms and conditions of issue of debentures as contained in the Shelf Information Memorandum duly certified by the debenture trustee.

Special Tax benefits ♦ To the Issuer There is no additional benefit arising to the Issuer under the Income Tax Act 1961 by issue of Secured Redeemable Non Convertible Debentures.

o To the Debentureholders of the Issuer (1) Under Income Tax Act, 1961

(a) To Resident Indian Bondholders :

(i) Tax Deduction at Source

No Income tax will be deducted at source from interest payable on Bonds in the following cases: Where the debentureholder (not being a company or a firm) submits a declaration (wherever

applicable) in the prescribed form and verified in the prescribed manner. Where on application by any debentureholder, the Assessing Officer issues a certificate that the

total income of the debenture holder justified no deduction as per the provisions of section 197(1) of the Income Tax Act.

(ii) Capital Gains The difference between the sale price on transfer and the cost of acquisition of the debenture held by a debentureholder as a capital asset, will be treated as long term capital gain/loss in the hands of the investor, provided that such debenture was held for a continuous period of more than thirty six months. It may be noted that the debentures under consideration, being debt instruments, will not have the benefit of cost indexation. Such long-term capital gain shall suffer income tax at 20% (plus applicable surcharge) Investors who wish to avail of the exemption from tax on capital gains on transfer of capital asset as provided in sections 54EC or 54F, may do so subject to the conditions as prescribed in those sections. Moreover, debentureholder are advised to consult their tax advisors in this matter

(b) To Other Eligible Institutions Mutual fund registered under the SEBI Act or regulations made there under or such other mutual fund set up by a public sector bank or a public financial institution or authorized by the Reserve Bank of India and

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notified by the Central Government will, subject to the provisions of Chapter XII-E be exempt from income tax on all its income, including income from investments in bonds under the provisions of section 10(23D) of the Income Tax Act

(2) Under Wealth Tax Act, 1957

Total exemption from wealth tax will be available on investment in debentures Note: This is a summary only and not complete analysis or listing of all potential tax consequences of the purpose, ownership and disposal of the debentures. The statements made above are based on the laws in force and as interpreted by the relevant taxation authorities as of date. Investors are advised to consult their tax advisors with respect to tax consequences of their holdings based on their residential status and the relevant double taxation conventions.

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IV. PARTICULARS OF THE ISSUE Objects of the Borrowing Object of each series of debentures would be stated in respective Term Sheet. Authority for the Present Offer The Board of Directors of the Company at its meeting held on 15th July 2004 has approved the issue of SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES as part for an amount upto Rs. 300 crore in one or more tranches up to 31st March 2005 at a appropriate rate of interest to be decided by the Board of Directors from Institutional Investors including Indian Bodies Corporate, Banks, Financial Institutions, Mutual Funds, Insurance Companies and Trusts by way of Private Placement on such other terms and conditions to be approved by the Vice Chairman and Managing Director and subject to guidelines issued by SEBI, RBI and other regulatory authorities.

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V. ISSUER PROFILE History, Incorporation and Background The Company was incorporated as Jindal Ceramics Limited on September 29, 1980. It changed its name to Jindal Int. Com Limited on January 29, 2001 and was renamed Jindal Stainless Limited on January 28, 2003. Pursuant to a High Court approved Scheme of Arrangement and Demerger, effective April 1, 2002, all properties, assets, rights, powers and liabilities relating to the stainless steel undertaking of Jindal Strips Limited have been transferred to the Company. The stainless steel operations of JSL were originally part of Jindal Strips Limited, which also held certain investments in other companies. In order to create a focused stainless steel company, the business of Jindal Strips Limited was restructured by demerging the stainless steel business from Jindal Strips Limited to the Company with effect from April 1, 2002. The company also merged the stainless steel lifestyle and architectural innovation businesses carried out by Austenitic Creations Pvt. Limited and J- Inox Creations Pvt. Limited respectively with effect from April 1, 2003. The company is India’s largest stainless steel manufacturer with integrated melting, hot rolling and cold rolling facilities. The company produce standard and specialty stainless steel, in each of the 200, 300 and 400 series grades, for Kitenware, commercial and industrial applications. The company manufacture and sell a broad range of stainless steel flat products including slabs, blooms, flat bars, hot rolled and cold rolled coils, plates and sheets and special products including, precision strips and coin blanks. Share Capital History

Allotment Particulars Date of Allotment

No. of Shares Allotted

Total Shareholding

(No. of Shares)

Total Share Capital

(in Rupees) Initial Allotment 29-Sep-80 700 700 7,000 Further Allotment 21-Nov-02 50,000 50,700 507,000 Amalgamation of Austenitic Creations Private Limited and J-Inox Creations Private Limited

23-Sep-03 2 50,702 507,020

Merger of the Stainless Steel Division of Jindal Strips Limited pursuant to the Scheme of Arrangement & Demerger

24-Sep-03 13,778,717 13,829,419 138,294,190

Bonus Shares issued pursuant to the Scheme of Arrangement

24-Sep-03 5,153,293 18,982,712 189,827,120

Part conversion of FCCBs 13-Jan-04 999,752 19,982,464 199,824,640 Stock Spilt 10-Mar-04 99,912,320 199,824,640 Main objects of the Company to set up steel and non-ferrous melting furnaces, converters, annealing and pickling lines and casting facilities to

produce stainless steel, ferrous and non-ferrous metals, alloy steels, steel and non-ferrous ingots, continuous cast slabs, blooms, rounds, billets of various cross-sections, alloys and special steel, to make and deal in ferrous/non-ferrous and special alloys & steels including non-metallic for the purpose of use in defense, aero & space nuclear and other applications;

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to set up hot and cold rolling facilities to shape the cast metal into flats, angles, rounds, squares, rails, joists, channels, slabs, strips, sheets, plates, coils both hot & cold, deformed bars, plain and cold twisted bars and shafting and blank-coins; and

to search, win, work, get, raise, quarry, smelt, refine, dress, manufacture, manipulate, convert, make merchantable, sell, buy, import, export or otherwise deal in iron ore, all kinds of metal, metalligerous ore, manganese ore, chrome ore, nickel ore, coal, lignite, limestone, quartz, zinc ore, copper based ore and all other minerals and substances, whatsoever and to manufacture, sell, buy, import and otherwise deal in any such articles and commodities.

To carry on all or any of the business of manufacturing, developing, assemblers, fitters, engineers, consultants, erectors, founders, smelters, refiners, makers, drawers, sinkers, miners, workers, repairers, hire purchase dealers, import and export agents, representatives, Contractors and dealers of and forging, Casting of Steel, Stainless and Special Steels, alloys and ferrous and non-ferrous metals, auto parts, tools and implements, dies, jigs, steel pipes and tubes and pipe fittings, iron and Steel products, cast iron and Steel and tubular structural.

To manufacture, deal, import and export stainless steel, pig iron, sponge iron, ferro silicon, ferro chrome, ferro manganese and other ferrous substances and metals of every description and grades and to manufacture, deal, import, and export all kinds and varieties of non-ferrous raw metals such as aluminum, copper, tin, lead etc . and the by products obtained in processing and manufacturing these raw metals.

To carry on in India or elsewhere the business to generate, receive, produce, improve, buy, sell resell, acquire, use, transmit, accumulate, employ, distribute, develop, handle, protect, supply and to act as agent, broker, representative, consultant, collaborator, or otherwise to deal in electric power in all its branches at such place or places as may be permitted by appropriate authorities by establishments of diesel power plants, thermal power plants, hydraulic power plants, atomic power plants, wind power plants, solar power plants and other power plants based on any source of energy as may be developed or invented in future.

To carry on the business of manufacturing, producing, compressing and liquefying Oxygen, Argon, Nitrogen, hydrogen, Acetylene, Carbolic Acid, Chlorine, Neon, Helium and any other gases of kindred substances or any compounds thereof by any process and of dealing in such gases, substance and compounds and to manufacturer, by, sell let on hire on otherwise deals in cylinders, compressors, plants, machineries, apparatus tools, equipments, spare parts and other articles and things or manufacturing, compressing, liquefying, solidifying, storing and transporting all kinds of gases and to do all such things as are incidental to the said business.

LOCATION OF THE PROJECT & COST ANALYSIS: Location of the Project Project Details The company proposes to set up backward integrated ferro alloy project at Duburi, Jajpur District, Orissa. The Project envisages the following plant facilities:

Facility Capacity Ferro Chrome Furnaces 150000 TPA Ferro Manganese Furnace 30000 TPA Silico Manganese Furnaces 60000 TPA Coke Oven Batteries 300000 TPA Waste Gas Recovery – Power Plant (Fr Cr) 13 MW Waste Gas Recovery –Power Plant (Coke Oven) 25 MW

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Locations and Site Location The site for the proposed project is located about 80 km north of Cuttack city of Orissa State which lies between 20 deg. 53 min. and 20 deg. 59 min. north latitude and 86 deg. 00 min. and 86 deg. 05 min. east longitude. It. The plant area is bounded by South Eastern Railway’s line connecting Jakhapura and Daitari railway station on the east and the Jajpur-Talcher State Highway on the north. The site is adjacent to the Railway line connecting Jakhapura to Daitari. The river Brahmani flows from west to east on the southern side of the site.

Terrain and Land The company has been allotted 640 acres of the land by IDCO (Industrial Development Corporation of Orissa) and an additional 600 acres is understood to have been reserved. The terrain of the land gradually slopes down from northwest to southeast direction. The difference between the maximum and minimum contour levels is approximately 30 m. Location Advantages The project site possesses various advantages with regard to the proximity to various mines and transport facilities. Following are the key advantages: Proximity to Raw Material Resources The chrome ore reserves are in Kaliapani & neighbouring areas. The distance is about 35-50 km from the plant site. The manganese ore reserves are located in the Barbil-Koira area of Keonjhar and Sundergarh districts and are about 200-250 km from the plant site. Transport and Logistics Railways: The nearest railway stations are Jajpur Keonjhar Rd and Jakhapura, which are 8 km and 2 km from the plant site respectively. These railway stations are on the Howrah Chennai route and fall in the East Coast Railway. The nearest railway sidings are Manpur & Jakhapur, which are 1.5 & 2 km respectively from the plant site. Road: The plant site is connected by road to Jajpur, which in turn is connected to the National Highway No 6. Bhubaneswar is approx 125 km from the site. Seaport: The nearest seaport is Paradip, which is about 110 km from the plant site and is connected by road. Airport: The nearest airport is Bhubaneswar, which is about 125 km from plant site.

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Raw Material Access The production of one tonne of Ferro alloys involves consumption of about 2-3 tonnes of various raw materials. Transportation cost of raw materials is also an important consideration while identifying the raw material sources with respect to the location of the plant. Besides, the raw materials must fulfill the quality specifications demanded by process, equipment and technology. The major raw materials required for the proposed plant are chrome ore fines and manganese ore. A brief description of potential sources of various raw materials, their availability and quality with respect to location and requirement of plant is as follows: Raw materials requirement The gross annual requirement of main raw materials of the proposed plant and their indicative sizes are given in table below:

Particulars Approx. Consumption per MT of Output

Approx. Annual Raw Material Requirement

(MT) Ferro Chrome Furnace Chrome Ore Friable (51.5%) 1.670 237,975 Chrome Ore Lumps (41.5%) 0.465 66,263 Ferro Manganese Furnace Manganese Ore - 46% Mn 1.521 43,349

Plant

Chrome Ore Mines

(35-50 Kms.) Kaliapani

Manganese Ore Mines(200-250 Kms.)

Barbil Koira, Keonijar& Sundergarh

Railway Station (8 Km)

Jajpur Keonjhar RoadRailway Station

(2 Km) Jakhapura

Railway Sidings ( 0-1.5 Km)

Manpur

Railway Sidings ( 0-2 Km) Jakhapur

National Highway No. 5

( 20-25Km)

Sea Port ( 105-110 Km)

Paradeep

Airport ( 120-125 Km) Bhubaneswar

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Manganese Ore - 48%+ Mn 0.415 11,828 Silico Manganese Furnaces Manganese Ore - 48%+ Mn 0.747 42,579 Manganese - Orissa - 42% 0.782 44,574 Coke Oven Batteries Coking Coal 1.430 407,550

Source of raw materials Chrome ore

The annual requirement of about 2.379 lakh tonnes of chrome ore fines with 48-50% Cr2O3 content is proposed to be met from the operating mines of Sukinda valley region of Orissa. The Orissa Mining Corporation (OMC) Ltd. possesses a number of chromite mines of different capacities in this region. South Kaliapani, Kalarangi, Sukarangi, Kathpal and Birsal mines of OMC Ltd. are the potential sources of chromite in this region. Among these, the South Kaliapani area is the potentially very rich in chromite and has the major share of total reserves of chromite ore of Sukinda Ultramafic Complex. The total reserves of the order of 12 million tonnes of all grades of chrome ore occur in this area. The high-grade chrome ore reserves of about 3.0 million tonnes with 48-54% Cr2O3 content have been reported to occur in this area. Manganese ore

The requirement of manganese ore for iron making is proposed to be met through purchase from the captive mines of OMC, OMDC and other private mines located in Barbil-Banspani area in Orissa. The manganese ore deposits worked in this region have been the traditional sources of most of the integrated steel plants to meet the requirement of both blast furnace and Ferro-manganese. About 2.5 Lakh tonnes of manganese ore of different grade are being produced manually.

Coking Coal Total import of coking coal is envisaged in the project. The company will enter into suitable supply agreements with the overseas suppliers in China and Australia for the import of coking coal. Transport linkages Rail The Howrah – Chennai coastal line of southeastern railway runs to the southeast of the plant site. Proposal to connect Jakhapura, a station on the main line, to Banspani has been partly implemented. The track between Jakhapura to Daitari has already been laid and laying of track between Daitari and Banspani is in progress. The plant is proposed to be connected from this Jakhapura – Banspani line by taking a connection from Sukinda Railway station. This railway station is about 0.5 km from the site. The site is about 360 km by rail from Kolkata, 160 km from Paradip port and 110 km from Bhubneshwar.

Road The plant site can be connected by a link road from the State Highway between Jajpur Road and Talcher . A good road network exists in this area connecting the site to Bhubaneswar, the capital city of Orissa state and other places. The Expressway connecting Daitari mines and Paradip port is 8 km from the plant. Sea Port Paradip one of the major ports of India and the main out-let and in-let of the sea- borne trade of the eastern part of the country is about 110 Km from the plant site and is connected by road. Project Cost The company has estimated the cost for the expansion program at about -Rs.950 Crore, a summary of which is as under and detailed break-up of the project cost is enclosed at AnnexureVII.

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SI. No Estimated Project Cost Rs. in crore 1 Land & Site Development 37.3

2 Building & Civil Works 98.7

3 Plant & Machinery 533.6

4 Miscellaneous Fixed Assets 136.6

5 Preliminary & Preoperative Expenses 40.8

6 Contingency 38.7

7 Interest During Construction 24.4

8 Margin Money 39.5

Total 949.6

Say (rounded off) 950.0 The above capital cost is based on the company’s in-house estimates and budgetary quotations obtained by the company. The itemized details are as under: The project is proposed to be financed in debt/equity of 2:1. Promoters and their background Ratan Jindal, 42, the Vice Chairman and Managing Director of the Company was appointed as Director in Jindal Strips Ltd. in 1979 and elevated as Managing Director in the year 1989. Since then he has been working with Jindal Strips Ltd. and now joined the Company as Vice Chairman and Managing Director w.e.f. 23rd July 2003. Under his dynamic leadership the company today is the largest integrated producer of stainless steel in India. He holds a bachelor’s degree in commerce and has attended the Advanced Management Program at Wharton Business School, U.S. He is currently on the board of the International Stainless Steel Forum (ISSF), which functions under the auspices of the International Iron & Steel Institute, Belgium established to focus on the development of stainless steel worldwide. He has over 23 years of experience in the steel industry. Key Managerial Personnel: R.G. Garg, 56, Deputy Managing Director, oversees all the operations of the Company. He is also responsible for formulating and implementing the Company’s business strategy and annual plans. He has over 36 years of experience in the steel industry. He holds a B.Sc-Engg. (Honours) degree in mechanical engineering from Punjab Engineering College, Chandigarh. N.C. Mathur, 59, Director (Corporate Affairs & International Marketing), represents the Company at various fora such as the Steel furnace association of India as Chairman, the Confederation of Indian Industry and the Indian Stainless Steel Development Association, International Stainless Steel Forum. He has about 38 years of experience in the various industries including steel industry. He holds a B.Tech (Honours) from BITS, Pilani. B.P. Goyal, 62, Executive Director (Projects), is responsible for the execution of projects from concept to commissioning, which includes developing project plans and ensuring their execution within the budgeted time and cost. An engineering graduate from Punjab Engineering College, Chandigarh, he has been with us for eight years and has 40 years of experience in steel industry- RMI Steels, MECON and SAIL Arvind Parakh, 46, Director (Finance), is responsible for sourcing of funds through long term and short-term debt, arranging international funding, foreign currency loans, euro bonds etc. His responsibilities also extend to overall financial management including treasury & portfolio management He is a qualified chartered accountant and has been with us for eight years. He has 21 years of experience and his last assignment was in Jakarta, Indonesia with PT Indo Rama Synthetics]. A.P. Garg, 54, Senior Vice President (Taxation) and Company Secretary, is responsible for secretarial functions and statutory compliance. He is a qualified chartered accountant and company secretary. He represents the Company in matters before various regulatory authorities. He has 27 years of experience and has been associated with the company since 1978.

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R.K. Goyal, 45, Vice President & Head (Commercial), is in charge of sourcing, supply management, logistics and marketing. As head of marketing, he is responsible for the development of new markets, in India as well as overseas. He holds an engineering degree from BITS, Pilani and an MBA degree from Gujarat University. He has 21 years of experience and has been with us for four years. His previous assignment was with Saw Pipes Limited S. Hajela, 46, Vice President (Materials), is responsible for total procurement. He is also involved in materials planning and inventory management. He is a management graduate from XLRI with a bachelor’s degree in electrical engineering from IT, BHU. He has 23 years of experience in the steel industry and was associated with the Tata Steel prior to joining the company in 1995. S. K. Jain, 44, Vice President (Group HR), is head of the human resource functions of the Company and is responsible for manpower planning, training, performance management, compensation & rewards management and employee communication. He is a post graduate in personnel management and industrial relations from [XISS] and has been with us for 12 years. He has 20 years of experience in engineering and steel industry and was associated with Bharat Heavy Electricals Limited before joining JSL. S. Bhattarcharya, 42, Vice President (SMS &CR), is responsible for the operations relating to [steel making and] cold rolling. He has a Masters in metallurgy from REC, Durgapur. He has 21 years of experience in the steel industry and joined the company in 1993. Before that he was with Hindustan Motors Limited and Alloy Steel Plant, Durgapur (SAIL). Change in Key Managerial Personnel in the preceding one year: No changes

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Board of Directors:

Sr. No.

Name of director & address Directoship in other companies Holding more than 2% of the paid up capital

1 Sh. O.P. Jindal Jindal Steel & Power Ltd. Nalwa Investments Ltd.Jindal Stainless Limited Jindal Strips Ltd. Nalwa Sponge Iron Ltd.Delhi Road, Rohit Tower Building Ltd. Sonabheel Tea Ltd.Hisar - 125 005 Jindal Industries Ltd. Jindal Transworld Pvt. Ltd.

Nalwa Sponge Iron Ltd.

2 Sh. Ratan Jindal Jindal Strips Ltd. Nalwa Cement Ltd.Jindal Centre, Cross-Border IT (India) Ltd. Jindal Transworld Pvt. Ltd.12, Bhikaji Cama Place, Jindal Equipment Leasing &

Consultancy Services Ltd.Nalwa Sponge Iron Ltd.

New Delhi - 110 066 Shalimar Paints Ltd.Jindal Steel & Power Ltd.Nalwa Farms Pvt. Ltd.Massillon Stainless Inc. , USAJindal Stainless Mauritius Ltd.Sonabheel Tea Ltd.

3 Sh. Naveen Jindal Jindal Steel & Power Ltd. Jindal Coal Pvt. Ltd.Jindal Centre, Navin Sponge Iron Pvt. Ltd. Shree Venkatesh Packaging Ltd.12, Bhikaji Cama Place, Jindal Power Ltd. Jindal Sporting Arms Pvt. Ltd.New Delhi - 110 066 Aseem Travels Ltd. Opelina Finance & Invst.Pvt. Ltd.

Nalwa Farms Pvt. Ltd. Navin Sponge Iron Pvt. Ltd.

4 Sh. R.G. Garg Jindal Strips Ltd. -Jindal Stainless LimitedDelhi Road,Hisar - 125 005

5 Sh. N.C. Mathur - -Jindal Centre,12, Bhikaji Cama Place,New Delhi - 110 066

6 Sh. Rajinder Parkash Jindal Strips Ltd. -Jindal Stainless Limited Nalwa Investments Ltd.Delhi Road,Hisar - 125 005

7 Sh. Suman Jyoti Khaitan Hindustan Vidyut Products Ltd. -W-13, Greater Kailash-II, Jindal Polyster Ltd.New Delhi - 110 048. KPL International Ltd.

Oriental Carbon & Chemicals Ltd.Rameswara Transport Ltd.Lumax Industries Ltd.

8 Dr. Lokesh Kumar Singhal Jindal Iron & Steel Co. Ltd. -AICTE-INAE DistinguishedVisiting Professor,Flat No. 207, C-58/10, Sector - 62,NOIDA

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VI. INDUSTRY SCENARIO AND ACTIVITIES OF THE ISSUER Stainless Steel – the product Stainless steel is a value added engineering product with high corrosion resistant properties primarily due to the presence of a minimum of 10.5% chromium. This chromium combined with oxygen forms a chrome-oxide surface layer that prevents further oxidation, which results in staining or rusting of a surface. Higher levels of chromium and additions of other alloy elements such as nickel and molybdenum enhance this surface layer and improve the corrosion resistance of the stainless material. Stainless steel today has varied end-uses in production of utensils, household wares, automobiles, architecture, building, construction, surgical equipment, razor blades and coin blanks, industrial applications, railway wagons. Currently, there are primarily three distinct grades of stainless steel that are produced in the world, comprising the 200 series, the 300 series and the 400 series. The following table sets forth the chemical composition, physical and material characteristics and end use for each of these different series of stainless steel. Series 200 300 400 Chemical composition Manganese 5.5 % to 12% 2% maximum 1% maximum Nickel 1% to 4% 6% to 22% 2% maximum Chromium 10.50 % to 20% 15 % to 25% [10%] to 30% Iron Rest Rest Rest Key End Uses Utensils and Household ware Refineries Razor blade Kitchenware/sinks Petrochemicals Exhaust system for automobiles Tubes and pipes Nuclear applications Tower packing for petrochemicals Architecture/decorative Railway coaches Coinage Automobiles/railways/

transport/furniture Automobiles

Potable water tubing Railway coaches and wagons

Power plants Consumer durables _____________ Source: [ISSDA] Historically, the 300 series has experienced the maximum demand globally except in a few countries like India, where the 200 series has been popular since the late 1980s, and recently in China, where it has experienced increased demand. Although, the 200 series was originally produced in the U.S. during the first world war, it was primarily developed in India in the late 1980s due to high nickel prices, foreign exchange and import restrictions combined with availability of domestic reserves of chrome ore and manganese. Global Stainless Steel Industry Overview According to the International Stainless Steel Federation (“ISSF”), the world production of stainless steel in 2003 was 22.828 million metric tons, having increased from 20.679 million metric tons in 2002. Capacity expansions have helped drive production growth in 2003, as all major regions improved on 2002 production levels. Key trends of the industry in recent years include the following:

Continued evolution of the major market participants through realignment, rationalization and relocation. Prior to 2000, there was only one stainless group in the world with a production capacity in excess of 1.5 million metric tons per annum. The year 2001 saw the emergence of four more groups with production capacity of this size.

The increasing importance of Asian markets, particularly China as the largest consumer of stainless steel;

The increasing prices of stainless steel products due to rising prices of key raw materials, nickel and chrome;

and

The increasing production of, and demand for, 200 series.

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Globally stainless steel industry has shown growth rate of 5-6%, with major part of growth in last 3-4 years being derived from Asia especially countries like China, Korea and India. China stainless steel consumption has shown compounded growth rate trend of 21% over last decade and Indian stainless steel consumption has shown growth rate in excess of 14%. The region wise consumption trends and the respective growth rates are as under: Stainless steel consumption is a factor of per capita GDP of the country. The following table sets forth the per capita consumption of stainless steel in different countries in 2003: Stainless Consumption Country Kg/Capita U.S. ····································································································· 6.9 Japan ··································································································· 13.5 United Kingdom ·················································································· 4.6 Germany······························································································ 16.7 Canada································································································· 7.6 France·································································································· 8.1 Italy ····································································································· 24.4 Spain ··································································································· 11.7 Taiwan································································································· 31.5 South Korea························································································· 20.9 Mexico ································································································ 1.2 Brazil··································································································· 1.4 South Africa ························································································ 3.6 Thailand ······························································································ 2.5 China··································································································· 2.5 India ···································································································· 0.8 ___ Average - all of the above ···································································· 4.1 Excluding China and India··································································· 8.6

Regional Consumption TrendsBase 100

100

200

300

400

500

600700

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Western World India China Global Consumption

Compounded Growth Global Consumption 5.20%Western World 4.00%China 21.00%India 14.60%

Source: Inco Limited

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The GDP and Stainless steel consumption for various countries can be summarized as under:

Source: Inco Limited According to ISSDA, demand for stainless steel in India in 2003 was approximately 875,000 metric tons and the per capita usage of stainless steel in India was 0.9 kg, compared to the global average of 4.0 kg. The growth in per capita GDP in countries like India leaves a wide scope of usages of stainless steel in new application areas. In 1993, USA and Japan were the two major stainless steel markets with a combined volume of 3.7 million tons. In 2003, China alone consumes 4.2 mill tons (stainless steel flats products consumption of 3.5 million tons & balance for stainless steel rounds) well ahead of USA and Japan. The concentration of the top consumers has reduced as all the other markets have managed to expand their demand at above average rates. The Global Apparent Consumption of Stainless Steel Flats (HR & CR) during 2003 amongst top ten countries is as under

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Mill

ion

M to

ns

China

Japan

USAGerm

any

Italy

South kor

ea

India

Taiwan

Spain

Fran

ce

Source: CRU

India is placed seventh in terms of apparent consumption. The Chinese Market As per China Steel Monthly report, China was the world’s largest consumer of stainless steel in 2003, consuming 4.2 metric tons (31.25 percent higher than 2002), representing approximately 18% of world stainless steel production during the year. As per report, China produced 1.57 million tons of stainless steel products and imported 2.92 million tons of stainless steel products.

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Key factors responsible for growth in demand from China are- - Continued high levels of economic growth; - Creation of industrial and manufacturing capacity, driven by substantial investment by domestic and foreign companies; and - High levels of residential and commercial construction. Some of the reports on stainless steel indicates that there will continue to be a deficit in stainless steel production in China for several years, as demand for stainless steel exceeds domestic supply. The growth in the Chinese market has contributed to a growth in demand for 200 series stainless steel, which is now being used in certain specific product applications and providing low cost alternate product to costly 300 series with high level of nickel content. The trends of China’s domestic stainless steel production & consumption are as under: The company expects that 200 series is expected to become extremely popular in China & other asian countries going forward,

- as small scale re-rollers, who are increasingly shifting towards the low-nickel 200 series, are expected to contribute significantly to the overall stainless steel growth in China

- increasing nickel prices and expected shortage of nickel at global level - appropriate for non industrial Pipes & Tubes and Kitchenware, which are increasingly moving towards 200 series

grade Indian Market Overview According to ISSDA, in 2003 India was the eighth largest producer of stainless steel in the world with an estimated production of 1.25 million metric tons and the seventh largest consumer of stainless steel. Stainless steel production in India increased nearly ten times between 1980 and 1995 from 50,000 to 500,000 metric tons, a CAGR of approximately 17% per annum. Between 1995 and 2002, this growth stabilized to 8%. In 2003, the stainless steel is estimated to have grown by 10.4% compared to 2002. ISSDA estimates growth rate for the period 2004 to 2008 to be between 6% and 7%, driven by emerging applications for stainless steel, rising per capita income in India and continued demand for the 200 series grade of stainless steel from key export markets such as China, each of which is expected to increase consumption. The key trends of the Indian stainless steel industry in recent years include the following:

• Growth in global demand for 200 series products, where Indian stainless producers are the leaders; • Increase in exports, particularly to China and other Asian countries; • Development of a market for high end value added products; • Increase in production levels; and • Reduction in customs tariffs on key raw materials, nickel and hot rolled and cold rolled products.

According to ISSDA, the utensil sector market in India in 2003 accounted for approximately 75% of the stainless steel demand & remainder was used in industrial applications such as processing, building and construction, transport,

China Production and Consumption Gap

0

2 ,0 0 0

4 ,0 0 0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Pro d uct io n (M elt ing ) C o ns ump t io n

Source: Inco Limited

24

machinery and appliances. The following segments would constitute the growth sectors for the domestic stainless steel industry:

- Indian railways including Metro Rail project in Metros, - Up gradation of Airports - Automobiles sector, - Architecture, building and construction sectors - Fast food chains - Entertainment plazas, Shopping malls & Multiplexes - White goods sector - Dairy & process industry - Capital goods segment - Pipe, tubing & hand rail segment

The following table sets forth demand for stainless steel products for various applications in India and China

The above comparison shows the potential for domestic Indian stainless steel demand in key growth sectors like Building & construction, transport, processing segment. Export Market ISSDA expects that in addition to the Chinese market, there will be a growth in demand in other South East Asian countries including Vietnam, Indonesia, Malaysia Korea, Philippines & Thailand As per reports, the consumption trends of stainless steel in Eastern Europe countries like Czech Republic, Poland & Romania and Middle East is also likely to improve in the periods 2003 to 2008. The company has over years been able to increase its export base to various new countries. The country wise exports over last four years is as under:

Main Stainless Steel Applications in China & India 2002

0%

20%

40%

60%

80%

100%

China India

Others

Transport

Processing

Pipe & tube Production

Building & Construction

Metal Products

25

Chin

aVi

etna

mM

alay

siaBa

ngla

desh

USA

Italy

Kore

aO

ther

s 03-04

02-03

01-02

00-01

0%

20%

40%

60%

80%

100%

Production The Indian domestic stainless steel industry is characterized by different types of producers as described below:

- Producers with melting, hot rolling and cold rolling facilities; - Producers of flat bars by induction/EAF with secondary refining and rolling facilities; - Producers of flat bars by very small induction furnaces without refining facilities; - Producers of long products; and - Downstream processing units, which use milled products manufactured by producers for further processing and other complementary services.

Currently there are only two stainless steel manufacturers in India the Steel Authority of India Limited (“SAIL”) and the company. The company is the only fully integrated producer having our own chrome mining, Ferro-alloy production, steel melting, refining, continuous casting, steckel mill and cold rolling facilities. SAIL purchases stainless steel slabs either from the company or through imports.

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VII. STOCK MARKET DATA

a) The high price of the shares of the company was Rs.569.85 in month of January 2004. The stock was split subsequently on 10th March, 2004 to paid up value of Rs.2 instead of Rs.10 each earlier and the low price after split was Rs.40.15 in month of May 2004.

b) Monthly High/Low for last six months of Mumbai Stock Exchange:

No. of No. of Date Open (Rs.) High (Rs.) Low (Rs.) Close (Rs.) Shares Trades

February 2004 434.10 468.00 398.00 428.30 1036846 11542 March 2004 87.00 88.90 58.25 70.25 2254489 17600 April 2004 67.50 77.00 63.00 63.90 1202742 12270 May 2004 63.10 69.90 40.15 52.05 943108 10181 June 2004 53.00 55.50 46.60 50.60 423438 5436 July 2004 50.75 72.00 49.00 70.40 2524035 21906

c) The market price immediately after the Board resolution dated 15th July 2004 approving the proposed

borrowing was Rs.69.00.

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VIII. MANAGEMENT DISCUSSION & ANANLYSIS OF THE FINANCIAL STATEMENT FOR THE

LAST THREE FINANCIAL YEARS: STATEMENT OF PROFITS & LOSSES

Rs. crores

Year ending 31st March 2003 2004 Net Sales 1,845.69 2,416.89Earning before interest depreciation, taxes and amortization (EBIDTA) 336.35 396.99

Interest 84.26 24.75Depreciation 110.13 106.91Misc. Expenditure written off 1.24 1.71Exceptional Items 9.94 30.57PBT 130.76 233.05Taxes 40.61 68.86PAT 90.15 164.19 STATEMENT OF ASSETS & LIABILITIES

Rs. crores

Year ending 31st March 2002 2003 2004

Share Capital 0.00 33.83 19.98

Reserves - 391.80 537.25

Deferred Tax liability - 158.67 201.29

Loan funds: Secured loans - 594.74 656.59 Unsecured loans - 211.98 124.45

Total 0.00 1,391.03 1,539.56

Fixed Assets Gross Block - 1,151.40 1,416.34 Depreciation - 97.11 190.07 - 1,054.29 1,226.27 Capital WIP 0.00 94.52 65.69

0.00 1,148.81 1,291.96

Investments - 54.31 31.21

Current Assets Inventories - 319.34 433.88 Sundry Debtors - 141.92 144.47 Cash and Bank Balances 0.00 32.72 31.77 Loans and advances 0.02 127.25 261.86 0.02 621.23 871.98

Less: Current liabilities & Provisions Liabilities 0.03 426.59 621.75 Provisions - 10.41 35.84

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0.03 437.01 657.59

Net Current Assets (0.01) 184.23 214.39

Miscellaneous Expenditure not w/o 0.00 3.69 2.00

Total 0.00 1,391.03 1,539.56 The following discussion and analysis should be read in conjunction with financial statements. The company acquired the stainless steel operations with effect from 1st April 2002. Till 31st March 2002 the company was almost dormant without any major business activity. Hence the past performance would not be comparable. The net sales of the company has increased from Rs.1845 crore in the FY 2002-03 to Rs.2417 crore in FY 2003-04 representing a growth of 31%. The operating profit before Interest depreciation and taxes (EBIDTA) during FY 2003-04 of Rs.397 crore has shown growth of 18% over FY 2002-03 of Rs.336 crore. The profit after taxes of Rs.164 crore during FY 2003-04 has shown growth of 82% over previous year figure of Rs.90 crore. The company confirms that: 1. There have been no unusual or infrequent events or transactions, since the date of the Auditors Report (15th July

2004) contained herein. 2. There are no significant economic changes that materially affected or are likely to materially affect income from

continued operations. 3. There are no known trends or uncertainties that have had or are likely to have a material adverse impact on the

revenue or income from continuing operations. 4. There have been no changes in the activity of the Issuer which may have had a material effect on the statement of

profit / loss for the last five years. Material Development: In the opinion of the company, since the date of the last financial statement disclosed in the Shelf Information Memorandum, there have been no circumstances that materially and adversely affect or are likely to affect the trading or profitability of the issuer, or the value of its assets, or its ability to pay its liabilities, within the next twelve months. Corporate Governance The Company complies with Corporate Governance as applicable to listed Companies and has constituted the committees such as Sub Committee of Directors, Audit Committee, Shareholders/Investors Grievance Committee, share transfer committee.

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IX. CAPITAL ISSUES DURING LAST THREE YEARS: Share Capital History

Allotment Particulars Date of Allotment

No. of Shares Allotted

Total Shareholding (No.

of Shares)

Total Share Capital

(in Rupees) Initial Allotment 29-Sep-80 700 700 7,000Further Allotment 21-Nov-02 50,000 50,700 507,000Amalgamation of Austenitic Creations Private Limited and J-Inox Creations Private Limited

23-Sep-03 2 50,702 507,020

Merger of the Stainless Steel Division of Jindal Strips Limited pursuant to the Scheme of Arrangement & Demerger

24-Sep-03 13,778,717 13,829,419 138,294,190

Bonus Shares issued pursuant to the Scheme of Arrangement

24-Sep-03 5,153,293 18,982,712 189,827,120

Part conversion of FCCBs 13-Jan-04 999,752 19,982,464 199,824,640Stock Spilt 10-Mar-04 99,912,320 199,824,640

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X. BASIS FOR ISSUE PRICE Issue is based at par and interest has been benchmarked based on the credit rating of the company.

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XI. OUTSTANDING LITIGATIONS OR DEFAULTS Outstanding litigations pertaining to the company (Some of the Litigation been transferred along with the stainless steel operation from Jindal Strips Limited to the company under scheme of arrangement and demeger) (i) Case pertaining to Entry Tax pending before the Supreme Court The Haryana Government passed the Haryana Local Area Development Tax Act, 2000 (“Act”) which came into force with effect from May 5, 2000 and provided for levy and collection of tax on the entry of goods into the local areas of Haryana for consumption for use therein and matters incidental thereto and connected therewith. The Act seeks to impose entry tax @ 4% on all goods brought into a local area i.e. on all materials purchased from outside Haryana including material imported from outside the country and material used for export out of the country, claiming that it has been imposed in lieu of octroi. The Company along with a number of other companies in the State of Haryana challenged the vires of the Haryana Local Area Development Tax Act, 2000 in the Punjab & Haryana High Court. However, the case has been decided against the Company and the other parties in the High Court in December, 2001 and thus, a special leave petition was filed in the Supreme Court by the Company and other affected companies. The Supreme Court vide its order dated September 26, 2003 referred the case to the Constitutional Bench and the same is now pending before the Constitutional Bench. During the pendency of this writ petition, the Government exempted goods used for export outside the country from entry tax. In any case, the Company has made a provision for Rs.9.94 crore and shown it as an exception item in its accounts for the financial year 2002-2003. (ii) Litigation with Haryana State Electricity Board (HSEB) (a) The HSEB obtained an order from the Haryana Electricity Regulatory Commission (HERC) mandating the Company to either enter into Power Purchase Agreement or stop utilizing the lines of HSEB and consequently, disconnected the power supply to the Company. As per the order of the District Judge, Hisar dated June 14, 1995 wherein the court has declared that the company is legally entitled to continuous supply of 10 amps load during the power cut/load restriction period/peak load hours as per the contract between the parties as continuous process industry for the purpose of regulation of power supply and the disconnection of electricity power connection of the company’s account no. LS-35 by the defendants on July 9, 1991 is illegal without notice, unlawful and thus, the district judge issued a mandatory injunction directing the defendants to allow 10 amps of load of electricity continuously during the year and keep the electricity lines at Hisar alive for synchronization and indemnify the damage that was caused. In addition, the district judge issued a prohibitory injunction restraining the defendants from causing interference/obstruction in any manner whatsoever including switching off the lines. In relation to the aforesaid, the HSEB has filed an appeal before the Punjab and Haryana High Court and is pending hearing.

(b) The HSEB had agreed to sell a piece of land admeasuring 2 acres to the company for Rs.6 lakhs per acre. The company had constructed a shed on this land pursuant to discussions with HSEB and a letter detailing its construction plan. However, HSEB has filed a suit against the company for trespassing on its land. The Civil Judge (Senior Division) has, vide its order dated February 19, 2002 decreed a mandatory injunction directing HSEB to execute a sale deed in respect of the land at the rate of Rs. 6 lakhs per acre within two months of the order.

HSEB has appealed against the judgment of the Civil Judge (Senior Division) and the case is pending with status quo being maintained by all the parties. (iii) The Company also has one sales tax case (with a liability of Rs. 1,58,27,580) and four excise tax cases (with a total liability of Rs.3,63,99,040) pending in relation to its plant at Vishakhapatnam. (iv) The Company is a party in the public interest litigation filed by Mr. A. Alexander and others in relation to the disinvestments of the Salem plant by the Steel Authority of India Limited. The petitioners contends that the selection of

32

the company is in violation of Article 14 of the Constitution of India, 1950 and the company ought to be disqualified and thus, seeks a writ declaring that the entire tender process is illegal, null and void. The Company has represented that the Court has not passed any order in this case and the next date of hearing is awaited. There are no matters likely to affect operation and finances of the company including the disputed tax liabilities. There are no court proceedings pending for economic offence against the Directors, Promoters Apart from the above and to the best of our knowledge and belief there are no criminals proceeding against any of our officials in any court/Tribunals. There are no defaults in payment of statutory dues, institutional dues and any other dues and claim of material nature against the company.

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XII. RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK Future operating results are difficult to predict.

The operating results of the company may fluctuate in the future due to a number of factors, many of which are beyond our control. Results of operations during any fiscal year and from period to period are difficult to predict. The company’s business and results of operations may be adversely affected by:

a slowdown in growth and demand for stainless steel products in the Indian and global markets, including our key exports markets;

decreasing demand for the 200 series stainless steel, the key product;

decreasing international and domestic prices for our stainless steel products;

fluctuations in the price and availability of key raw materials, including nickel and ferro-alloys;

Inability to manage the expansion of production capacity at existing plants in Hisar;

Inability to successfully develop a new projects including ferro-alloy project in the State of Orissa;

any increase in interest rates at which the company can raise debt;

adverse fluctuations in the exchange rate of the rupee versus major international currencies, including the US

dollar; any increase in import tariffs and domestic duties and taxes on raw materials or any decrease in import tariffs

and domestic duties on stainless steel products exported by competitors to India;

Levy of additional duties or anti dumping duties by other countries importing on the stainless steel products

Reduction or removal of export benefits

Change in fiscal laws and levies, without limitation, changes in Indian Sales Tax laws, MODVAT procedures etc.

increase in the cost of transportation including freight to key export markets, or non-availability of

transportation due to strikes, shortages or any other reason;

strikes or work stoppages by the employees;

changes in consumer preferences;

competition from global and Indian stainless steel producers; changes in government policies affecting the stainless steel industry in India or globally; and

accidents, natural disasters or outbreaks of diseases.

The stainless steel industry is cyclical in nature and factors affecting the demand for, and production

of, stainless steel affect our results of operations. The stainless steel industry, domestic and global, is cyclical in nature, sensitive to general economic conditions and the condition of certain other industries. Future economic downturns or stagnant economies in India and key global markets, including China, could adversely affect the business and results of operations. Over the past few years, the demand for stainless steel has fluctuated and may fluctuate in the future due to a number of factors, including the downturn in traditional bulk stainless steel end users such as the white goods and automotive sectors in Europe, the slowdown in the basic manufacturing industry in the United States and the growth of the Chinese economy, and the

34

availability and price of key raw materials, including nickel, many of which are beyond company’s control. Production of stainless steel has varied, depending upon demand and factors affecting demand for stainless steel, consolidation in the industry. Unfavorable changes in the demand for, or production of, stainless steel, including changes in consumer preferences, governmental policies, or any other factor may adversely affect the stainless steel industry and the business and results of operations. Adverse economic and financial developments in China may have an adverse effect on the results of

the company. The company is dependent on exports to China. Local and foreign manufacturers based in China are increasing their melting and production capacity to meet the demand in that market. This increased capacity may result in reduced growth in demand or reduced prices for the products. Fluctuations in the price and availability of nickel, a key raw material, can adversely affect our

business and results of operations. Nickel, one of the key raw materials required for the production of stainless steel , is not available in India. Consequently, the company imports almost all the nickel requirements at prevailing international market prices. The company’s business and results of operations are affected by changes in the cost price of nickel. There are only a few countries in the world where nickel is produced and availability of nickel also impacts the price at which it is sold in the international market. This availability is affected by factors that adversely impact the production and sale of nickel, including lack of reserves, increased production costs, production stoppage, strikes or slowdown and increased transportation and freight costs. Change in availability and price of our raw materials, including steel scrap, ferro-chrome and other

ferro-alloys, may adversely affect our business and results of operations. Steel Scrap is one of the key raw materials required for the production of stainless steel. Any decrease in the availability of steel scrap or increase in the price at which it is available to the company may adversely affect the business and results of the operations if the company is not able to pass on the price increase to the customer. The company is dependent on the ready availability of ferro-chrome and other ferro-alloys in India to maintain our competitiveness in the global market. The ore required for the production of ferro-chrome and other ferro-alloys is mined and processed in India and recently there is also a Government restriction on the volume of chrome ore that can be exported from India. Although the company produces some of this raw material internally, the company purchases approximately 65% of its current ferro chrome requirement from the market in India. Any decrease in the ready availability of these alloys, increase in the price at which they are made available or the removal of the export restriction on chrome ore may adversely affect the business and results of operations. Approximately 35% of the current ferro-chrome requirement is currently being produced at ferro-alloys plant at Vishakapatnam (“Vizag”). Supply from the Vizag plant is subject to various risks, including production stoppage due to strikes, unavailability or increase in prices of raw material, power etc. at such plant and other factors beyond our control. Coke, an important raw material for Vizag plant, is imported at prevailing international market prices. Any decrease in the availability of coke or increase in its price may adversely affect production of ferro-alloys. Majority of the chrome ore requirements of the Vizag plant is sourced from own chrome ore mines at Sukinda, in the State of Orissa, which is leased from the State Government . Pursuant to the terms of the lease, the State Government has the right to compel us to transfer all minerals on the leased land at a fair market price. Although chrome ore is available domestically, any decrease in the availability or increase in price of chrome ore may adversely affect production of ferro-alloys. Our business is dependent on the delivery of adequate and uninterrupted supply of electrical power at

a reasonable cost. Adequate and cost effective supply of electrical power is one of the key ingredients for any stainless steel producer. The ferro-alloy plant in Vizag and the melting and production plant in Hisar depend on the delivery of an adequate supply of electrical power. At the Hisar plant, in order to reduce our reliance on externally generated electrical power, the company has constructed an electricity generating facility, which is capable of meeting the existing demand. However, the company is required to purchase minimum of 10% of the electricity requirements from the Haryana State Electricity Board (“HSEB”) at prices determined by them. The operating costs will increase if the purchase price for electrical power from the HSEB increases. The company’s electricity generation facility is dependent on third party oil retailers to supply the necessary fuel to generate electricity. The availability and cost of oil is dependent on a number of factors, which are beyond control. While the company has not experienced any interruption in the supply of oil, the

35

price at which the company purchases such oil varies, and there can be no assurance that there will be adequate and uninterrupted supply of power at this plant. Certain of our products have been and may become subject to anti-dumping and countervailing

proceedings or safeguard measures. In our export markets, including China, certain of our products have been or may become subject to anti-dumping and countervailing proceedings or safeguard measures. Further increases in, or new imposition of, dumping duties, countervailing duties, quotas or tariffs on our sales in the export market, including China, may have an adverse effect on our exports to these regions in the future. Lowering in our credit rating or an increase in the interest cost of our borrowings could affect our

ability to attain adequate financing and thereby adversely affect our business. The company’s cost of borrowing will be affected by the credit ratings awarded to our various debt instruments. Any downgrade in the credit rating of the debt instruments could negatively affect the ability to borrow at reasonable terms, or at all. The company has been able to reduce the borrowing costs as a result of declining interest rates on its borrowings, although there can be no assurance that it will continue to maintain low levels of interest rates on the borrowings. The occurrence of any of these factors may increase the company’s financing costs, restrict ability to borrow and thereby adversely affect the results of operations. In order to mitigate various risk involved, the company plans the following: i) Redemption Reserve: Creation of Debenture Redemption Reserve is envisaged for the proposed issue of Debentures as per the stipulated requirements under law. ii) Security for Debentures: It is proposed that the Debentures shall be secured by way of First charge on pari passu basis, on the Immovable and Movable fixed Assets of JSL in favour of lenders on Pari Passu basis. JSL has appointed a trustee to protect the interest of the investors. iii) Credit Rating: Credit Analysis & Research Limited (CARE) has presently assigned rating “AA” pronounced “Double A” for Rs.300 crore(outstanding Rs. 100 crores). This rating indicates that such instruments are considered to be of High investment grade and have sufficient safety for payment of interest and principal, at the time of the rating. Further the company shall obtain the requisite rating for the remaining amount of the issue from time to time and intimate to the investor separately in their respective term sheet.

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XIII. DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM: To ensure that Investors grievances are attended to expeditiously the issuer has appointed M/s. Abhipra Capital Limited as its Registrar and Share Transfer Agent: Abhipra Capital Limited Ground Floor – Abhipra Complex, Dilkhush Industrial Area, A-387, GT Karnal Road, Azadpur, New Delhi 110033. Phone No. (011) 27127362, 27249773-74 Fax No. (011) 27215530. Further, investors may note that a compliance officer has also been appointed by the Issuer and he may be contacted in case of any grievances at the following address : Mr. AP Garg Sr. Vice President & Company Secretary Jindal stainless Limited Registered Office: Delhi Road, Hisar – 125 005, Haryana, India Tel. No. (01662) 222471-83 Fax: (01662) 220476/220499 e mail: hsr.apgarg@jslhsr.com The details regarding normal time taken for disposal of various types of investor’s grievances is given below: PARTICULARS OF GRIEVANCES NO. OF DAYS TAKEN FOR ACTION Transfer / Transmission of equity shares 15-20 days Change of address 12-15 days Issuance of duplicate share certificates 20-25 days Non receipt of share certificates 15-20 days Non receipt of dividend warrants 12-15 days Noting of bank mandate 12-15 days As on date there are no major outstanding grievances against JSL from investors/ shareholders.

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PART II

XIV. GENERAL INFORMATION Consent M/s. Lodha & Co. and M/s SS Kothari Mehta & Co, the Joint Statutory Auditors of the Issuer have their written consent to their report being included in the form and content in which it appears in this Shelf Information Memorandum UTI Bank Limited has given its written consent to act as Trustees to the issue and for including their name in the Shelf Information Memorandum. M/s Abhipra Capital Limited has given its consent written consent to act as Registrar to the issue and for including its name in the Shelf Information Memorandum Registrar Change in Directors of Jindal Stainless Limited during the Last Three Years

The following person have been appointed and inducted into the Board as Directors during the last three years.

Sr. No. Name of Director Date of Appointment 1 Sh. Arvind Parakh 21.11.2002 2 Sh. Bikram Kumar 21.11.2002 3 Sh. Mahabir Prasad Swami 21.11.2002 4 Sh. Ratan Jindal 23.7.2003 5 Sh. R.G. Garg 23.7.2003 6 Sh. N.C. Mathur 23.7.2003 7 Sh. Rajinder Parkash 23.7.2003 8 Sh. O.P. Jindal 1.8.2003 9 Sh. Naveen Jindal 1.8.2003 10 Sh. Suman Jyoti Khaitan 1.8.2003 11 Dr. L.K. Singhal 1.8.2003 12 Dr. B.C. Jain 9.10.2003

The following person have ceased to be Directors during the last three years

Sr. No. Name of Director Date Reason 1 Sh. Arvind Parakh 23.7.2003 In view of restructuring of Jindal Strips Ltd. &

Jindal Stainless Ltd., the Board was reconstituted.

2 Sh. Bikram Kumar 23.7.2003 - do - 3 Sh. Mahabir Prasad Swami 23.7.2003 - do - 4 Dr. Mahendra Maloo 23.7.2003 - do - 5 Sh. H.V. Mishra 23.7.2003 - do - 6 Sh. S.S. Saxena 23.7.2003 - do - 7 Dr. B.C. Jain 20.2.2004 Nomination withdrawn by IDBI

Change in Auditors of Jindal Stainless Limited During The Last Three Years The current statutory auditors of the company and statutory auditors for financial year ending 31st March 2004

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Joint Statutory Auditors: Lodha & Co. Chartered Accountants 12, Bhagat Singh Marg, New Delhi - 110 001 Ph. 011 23364671 /2334 5168 (Telefax) S.S. Kothari & Mehta Co. Chartered Accountants 146-149, Tribhuvan Complex, Ishwar Nagar, Mathura Road, New Delhi - 110 065 Ph. No. 011 55601488-89 The Statutory auditor of the company for financial year ended 31st March 2002 and 2001 was: N C Aggarwal & Co., Harsha House, Karampura commercial complex, New Delhi 110015. Authority for the Present Offer The Board of Directors of the Company at its meeting held on 15th July 2004 has approved the issue of SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES as part for an amount up to Rs. 300 crore in one or more tranches up to 31st March 2005 at a appropriate rate of interest to be decided by the Board of Directors from Institutional Investors including Indian Bodies Corporate, Banks, Financial Institutions, Mutual Funds, Insurance Companies and Trusts by way of Private Placement on such other terms and conditions to be approved by the Vice Chairman and Managing Director and subject to guidelines issued by SEBI, RBI and other regulatory authorities. Procedure and time schedule for allotment and issue of certificates. Debentures would be allotted by Board of Directors of the Issuer and Letter of Allotment would be issued / credited within 7 days from date of allotment and Debenture Certificate in Dematerliased form would be issued / credited within 3 months from the date of allotment. Name and address Mr. AP Garg Vice President & Company Secretary Jindal stainless Limited Registered Office: Delhi Road, Hisar – 125 005, Haryana, India Tel. No. (01662) 222471-83 Fax: (01662) 220476/220499 e mail: hsr.apgarg@jslhsr.com

Joint Statutory Auditors: Lodha & Co. Chartered Accountants 12, Bhagat Singh Marg, New Delhi - 110 001 Ph. 011 23364671 /2334 5168 (Telefax) S.S. Kothari Mehta & Co. Chartered Accountants 146-149, Tribhuvan Complex, Ishwar Nagar, Mathura Road, New Delhi - 110 065 Ph. No. 011 55601488-89

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XV. AUDITORS REPORT & FINANCIAL INFORMATION AUDITORS REPORT: Lodha & Co. Chartered Accountants 12, Bhagat Singh Marg, New Delhi - 110 001 Ph. 011 23364671 /2334 5168

S.S. Kothari Mehta & Co. Chartered Accountants 146-149, Tribhuvan Complex , Ishwar Nagar, Mathura Road , New Delhi - 110 065 Ph. No. 011 23359261-63

The Board of Directors Jindal Stainless Limited New Delhi. AUDITORS REPORT We were engaged to report on certain financial information of Jindal Stainless Limited (‘the Company’) annexed to this report, which is required to be prepared in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘the Guidelines’), issued by Securities and Exchange Board of India (‘SEBI’) on 19 January 2000 in pursuance of section 11 of the Securities and Exchange Board of India Act, 1992. The said financial information is proposed to be included in the Offer Document of the company in connection with the issue of secured debt aggregating to Rs. 300 Crores in the nature of Non-Convertible Secured Debentures (NCSDs) on a private placement basis. We were engaged to report on the annexed restated statements of assets and liabilities of the company as at 31 March 2004, 31 March 2003, 31 March 2002, 31 March 2001 and 31 March 2000 and the annexed restated statements of Profit and loss for each of the years ended on those dates (‘the summary statements’) (Annexure I –(i) & (ii)) The summary statements and significant accounting policies (Annexure – II) have been extracted from the financial statements drawn up in accordance with the provisions of Section 211 of the Companies Act, 1956, audited by us for the year ended 31 March 2004 and 31 March 2003 and by M/s N C Aggarwal & Co, Chartered Accountants for the years ended 31 March 2002, 31 March 2001 and 31 March 2000 . The Company’s management is responsible for the preparation of the summary statements. Our responsibility is to report based on the work done. We have performed such tests and procedures, which, in our opinion, were necessary for our reporting to you. These procedures include comparison of the annexed financial information with the Company’s audited financial statements and do not constitute either an audit or review.. Based on such procedures carried out by us and review examination of the records produced to us and the information and explanations given to us by the company’s management, we confirm that nothing has come to our attention to show non- compliance of clause 6.18.1 of said SEBI Guidelines. This report is intended solely for the purpose of inclusion in Shelf Information Memorandum for issue of NCSDs and for the Company to comply with the provision of the said SEBI Guidelines and will not be suitable for any other purpose. Yours Sincerely, for Lodha & Co for SS Kothari Mehta & Co Chartered Accountants Chartered Accountants N K Lodha Arun K Tulsian Partner Partner Membership No.: 85155 Membership No.: 89907 Dated: 22.07.2004

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Annexure – 1 (i) Jindal Stainless Limited Statement of Assets and Liabilities

As of 31st March 2000 2001 2002 2003 2004 In Rupees Rs. crore Share Capital - Equity Capital (Incl. Share Capital Suspense Account)

7,000.00 7,000.00 7,000.00 13.83 19.98

- Preference Capital - - - 20.00 - Reserves - - - 391.80 537.25 Deferred Tax liability (Net) - - - 158.67 201.29 Loan funds: - - - Secured loans - - - 594.74 656.59 Unsecured loans 36,982.60 36,982.60 36,982.60 211.99 124.45

Total 43,982.60 43,982.60 43,982.60 1,391.03 1,539.56 Fixed Assets Gross Block - - - 1,151.40 1,416.34 Depreciation - - - 97.11 190.07 - - - 1,054.29 1,226.27 Capital WIP (Inc. preopertive expenses) 28,150.46 40,015.46 41,065.46 94.52 65.69 28,150.46 40,015.46 41,065.46 1,148.81 1,291.96 Investments - - - 54.31 31.21 Current Assets Inventories - - - 319.34 433.88 Sundry Debtors - - - 141.92 144.47 Cash and Bank Balances 371.55 25,371.55 10,006.55 32.72 31.77 Loans and advances - 200,000.00 200,000.00 127.25 261.86

371.55 225,371.55 210,006.55 621.23 871.98 Less: Current liabilities & Provisions Liabilities 6,780.25 243,645.25 229,330.25 426.59 621.75 Provisions - 10.42 35.84 6,780.25 243,645.25 229,330.25 437.01 657.59

Net Current Assets (6,408.70) (18,273.70) (19,323.70) 184.22 214.39 Miscellaneous Expenditure not w/o 22,240.84 22,240.84 22,240.84 3.69 2.00

Total 43,982.60 43,982.60 43,982.60 1,391.03 1,539.56 Pursuant to the Scheme of Arrangement and Demerger under section 391 & 394 of the Companies Act, 1956 between Jindal Strips Ltd and Jindal Stainless Ltd approved by the Hon’ble High Court of Punjab and Haryana at Chandigarh vide order dated 30thTh May 2003, effective April 1, 2002, all properties, assets, rights, powers and liabilities relating to the stainless steel undertaking of Jindal Strips Limited have been vested in and transferred to the Company. The stainless steel operations of the company until March 31 2002 were part of Jindal Strips Limited, which also held certain investments in other companies. In order to create a focused stainless steel company, the business of Jindal Strips Limited was restructured by demerging the stainless steel business from Jindal Strips Limited to the Company with effect from April 1, 2002. The company also merged the stainless steel lifestyle and architectural innovation businesses carried out by J- Inox Creations Pvt. Limited and Austenitic Creations Pvt. Limited respectively with effect from April 1, 2003.

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Jindal Stainless Limited Annexure – 1 (ii)

Statement of Profit & Loss For the year ended 31st March 2000 2001 2002 2003 2004

In Rupees Rs. Crore

INCOME

Sales:

- Of products manufactured by the company - - - 1,986.66 * 2,591.43

- Of products traded in by the company - - - 3.27 14.15

Total - - - 1,989.93 2,605.58

Less: Excise Duty - - - 169.30 188.69

Net sales & operational income - - - 1,820.63 2,416.89

Other Income - - - 4.43 3.27

- - - 1,825.06 2,420.16

EXPENDITURE

Material, manufacturing and other - - - 1,377.64 * 1,886.70

Personnel - - - 29.14 34.30

Administrative & Selling Expenses 1,360 11,865 1,050 81.94 102.17

Interest & Bank charges - - - 84.26 24.75

Miscellaneous Expenditure written off - - - 1.24 1.71

Depreciation - - - 110.13 106.91

1,360 11,865 1,050 1,684.35 2,156.54

Profit /(Loss) before exceptional items (1,360) (11,865) (1,050) 140.71 263.62

Less: Exceptional items - - - 9.95 30.57

Profit/(Loss) before tax (1,360) (11,865) (1,050) 130.76 233.05

less: Provision for taxation - - - 9.26 25.69

Previous year taxation adjustment - - - 0.01 0.28

Provision for deferred tax - - - 31.34 42.89

Profit/(Loss) after taxation (1,360) (11,865) (1,050) 90.15 164.19

Dividend

- Equity Capital - - - 60.0% 100%

- Preference Share Capital - - - 10.5% 10.5%**

*Net of Interdivisional transfer of Rs 25.06 crores netted off to confirm to the classification and disclosure in the accounts for the year ended 31st March 2004 ** On proportionate basis The company commenced operations with effect from 1st April 2002 after acquiring stainless steel operations of Jindal Strips Limited under Scheme of Arrangement & Demerger. All expenses till 31st March 2002 are under pre-operational period.

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Annexure – II

1. SIGNIFICANT ACCOUNTING POLICIES: i) Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention as a going concern. The Company follows the Mercantile System of Accounting and recognises income & expenditure on accrual basis except certain claims like those relating to Railways, Insurance, Electricity, Customs, Excise etc., which are accounted for on acceptance basis on account of uncertainties.

A) Fixed Assets & Depreciation :

a) Fixed Assets

Fixed Assets are stated at cost of acquisition inclusive of incidental expenses related thereto and are net of cenvat/vat credit. Assets vested in the company pursuant to the Scheme of Arrangement & Demerger are stated at their fair market values based on the valuation report of financial consultant.

b) Depreciation & Amortisation :

Depreciation on Fixed Assets is provided on Straight Line Method (SLM) basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. For assets acquired pursuant to the scheme of Arrangement and Demerger where the residual life of assets are estimated at less than that worked out on the basis of rates under Schedule XIV, the same are depreciated over their respective residual lives.

B) Intangible Assets

Expenditure incurred on rights/properties where benefit is expected to follow in future are disclosed as intangible assets. These intangible assets are amortised/written off over the expected duration of benefit or 10 years, whichever is lower and include following items:-

Expenditure incurred on cost of acquisition and implementation of new software package thereof are amortised over the period of 5 years.

Technical Know-How Expenses are written off over the expected duration of benefits i.e. 10 years. C) Expenditure during construction period

Expenditure related to and incurred during implementation of new/expansion-cum-modernisation projects is included under Capital Work-In-Progress and the same is allocated to the respective fixed assets on the completion of its construction/erection.

iii) Borrowing Costs

Interest and other costs to the extent related to the acquisition /construction of qualifying assets are capitalized as part of cost of such assets and other borrowing costs are charged to revenue.

iv) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of the transactions. All exchange differences are dealt with in Profit and Loss Account except those relating to acquisition of fixed assets which are adjusted in the cost of assets. Current Assets, Loans other than for financing fixed assets and current liabilities in foreign currency outstanding at the year end are translated at the rate of exchange prevailing at the close of the year and resultant gains/losses are recognised in the Profit and Loss Account of the year except in cases where they are covered by forward foreign exchange contracts in which cases these are translated at the contracted rates of exchange and the resultant gains/losses recognised in Profit and Loss Account over the life of the contract. However, gain or loss on reinstatement on the forward exchange transaction or on cancellation of forward exchange contracts, if any, is reflected in the Profit & Loss Account or capitalised as the case may be.

v) Investments:

Long term investments are stated at cost. When there is a decline other than temporary in their value, the carrying amount is reduced on an individual investment basis and decline is charged to the Profit & Loss Account. Appropriate adjustment is made in carrying cost of investment in case of subsequent rise in value of investments. When investment is made in partly convertible debentures with a view to retain only the convertible portion of the debentures, the excess of the

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face value of the non-convertible portion over the realisation on sale of such portion is treated as part of the cost of acquisition of the convertible portion of the debentures. Current Investments are stated at lower of cost or market value.

vi) Valuation of Inventories: Inventories are valued at the lower of cost and net realisable value except scrap which is valued at

net realisable value. The cost is computed on Weighted Average basis except Raw Material scrap which is valued on FIFO basis. Finished goods and Work in Progress includes cost of conversion and other overheads incurred in bringing the inventories to their present location and condition.

vii) Retirement Benefits: Liability in respect of retirement benefits is provided and/or funded and charged to the Profit &

Loss Account as follows: Gratuity :- Liability in respect of Gratuity to employees is covered under the Group Gratuity

Scheme with the Life Insurance Corporation of India and premium is charged by LIC on actuarial valuation basis.

Leave Encashment: - On the basis of actuarial valuation as determined at the year end.

viii) Miscellaneous Expenditure Miscellaneous expenditure includes and amortised as under:-

a) Preliminary expenses are written off over the period of 10 years.

b) Debentures/Bonds/Preference Shares issue expenses and premium on redemption are written off over the expected duration of benefit or life of the debentures/bonds/preference shares whichever is earlier.

c) Mines development expenses for developing and preparing new mines are written-off over the expected duration of benefits i.e.10 years.

ix) Sales

Sales is recognized at the point of despatch of goods to customers and is inclusive of captive consumption but net of sales tax. Materials returned/rejected are accounted for in the year of return/rejection.

x) Research and Development Expenditure:

Revenue expenditure is charged to the Profit & Loss Account and capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xi) Taxation:

Provision is made for income-tax liability estimated to arise on the results for the year at the current rate of tax in accordance with Income-Tax Act, 1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for, at the income tax rates subsequently enacted till the Balance Sheet date, to the extent that the timing differences that originate in one year are capable of reversal in one or more subsequent years. Deferred Tax Assets arising on account of brought forward losses and unabsorbed depreciation are recognized only when there is virtual certainty of realizations supported by convincing evidence.

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XVI. OTHER PROVISIONS RELATING TO ACCOUNTS OF THE ISSUER COMPANY

Note of Change in Activity of the issuer: Pursuant to a High Court approved Scheme of Arrangement and Demerger, effective April 1, 2002, all properties, assets, rights, powers and liabilities relating to the stainless steel undertaking of Jindal Strips Limited have been vested to the Company. The stainless steel operations of the company were originally part of Jindal Strips Limited, which also held certain investments in other companies. In order to create a focused stainless steel company, the business of Jindal Strips Limited was restructured by demerging the stainless steel business from Jindal Strips Limited to the Company with effect from April 1, 2002. The company also merged the stainless steel lifestyle and architectural innovation businesses carried out by Austenitic Creations Pvt. Limited and J- Inox Creations Pvt. Limited respectively with effect from April 1, 2003.

Capitalization Statement

Rs. crore Pre-issue as on

31.03.2004 As adjusted

for issue

Short Term Debt 151.43 151.43 Long Term Debt* 629.59 929.59

Shareholder funds: - Equity Share Capital 19.98 19.98 - Reserves 537.25 537.25 Total Shareholder Funds 557.23 557.23 Long Term Debt/Shareholder funds 1.40 1.94

Significant Financial ratios For the year ended 31st March 2000 2001 2002 2003 2004

Earning per share* (Rs. per share) - Basic - - - 9.30 17.08 - Diluted - - - 7.22 12.97

Return on Net worth - - - 21.97% 29.47%

Net Asset value per share (21.80) (21.80) (21.80) 58.25 55.76 * after excluding extraordinary itemsThe company commenced operations with effect from 1st April 2002 after acquiring stainless steel operations of Jindal Strips Limited under Scheme of Arrangement & Demerger.

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XVII. STATUTORY AND OTHER INFORMATION

a) Minimum Subscription Pursuant to the notification no. SEBI/MRD/SE/AT/46/2003 dated 22nd December 2003 issued by SEBI minimum subscription clause is not applicable to the privately placed debt securities.

b) Expenses of the Issue giving separately fee payable: Trusteeship Fees: Initial acceptance fees and annual fee as mutually agreed between the company and the

Trustee. Registrar and Transfer Agent Fees: Nil

c) Option to subscribe: The Issuer has made depository arrangement with NSDL / CDSL for the Debentures. The investors will have the option to hold the debentures in dematerialized form and deal with the same as per the provisions of Depositories Act, 1996/Rules as notified by NSDL / CDSL from time to time.

Investors desirous of receiving the debenture certificate in the dematerialized from should mention their Depository Participant’s name, DP-ID and beneficiary account number in the appropriate place in the application form. Debentures allotted to successful allottee(s) having depository account shall be credited to their depository account against surrender of letter of allotment. In case of incorrect details provided by the investors and inability of the Registrar to credit the Depository Account, the Debentures will be issued in physical form to such investors.

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XVIII. RELATED PARTY DISCLOSURE Related Parties Transactions: -

B) Transactions during the year ended 31st March 2004

Transactions 2003-04 ( Rs. In Lacs )Key Management Enterprises

Personnels Controlled by keyManagementPersonnels &their Relatives

Purchase of Goods* 0.00 7791.44Sale of Goods 0.00 349.00Receiving of Services 191.04 0.02Rendering of Services 0.00 0.07Rent Received 0.00 0.00Rent Paid 0.00 3.60Loan Contribution 0.00 10802.46Loan recovered 0.00 6510.28Interest Income 0.00 355.68Sharing of Exp. Recd./Accrued 0.00 79.09Sharing of Exp. Paid/due 0.00 23.96Outstanding Balance as on 31.03.2004Loans & Advances 0.00 4468.56Debtors 0.00 7.29Creditors 0.00 3038.19

Description

A List of Related Party & Relationship ( As identified by the Managment )

a) Key Management Personnel :1 Shri O.P.Jindal Chairman2 Shri Ratan Jindal Vice-Chairman & Managing Director3 Shri R.G. Garg Deputy Managing Director4 Shri Arvind Parakh Director ( Finance )5 Shri Rajinder Parkash Executive Director6 Shri N.C. Mathur Director-International Marketing7 Shri B.P. Goyal Director - Project8 Shri A.P. Garg Sr. Vice - President ( Taxation ) & Company Secretary

b) Enterprises over which Key Management Personnel and their relatives exercise significantinfluence with whom transactions have been taken place during the year:

1 Jindal Iron & Steel Co. Ltd.2 Jindal Strips Ltd.3 Jindal Vijayanagar Steel Ltd.4 Jindal Steel & Power Ltd.5 Bir Plantation P. Ltd.6 Bharat Metals7 Nalwa Sponge Iron Ltd.8 Jindal Pipes Ltd.9 Cross Border IT (India) Ltd.

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XIX. OTHER DETAILS

A. Director’s Remuneration: 1) Particulars of terms and conditions and remuneration of Mr. Ratan Jindal Revised Remuneration from 1.4.2004 to 22.7.2008: (a) Salary: Rs.10,00,000 per month in the scale of Rs.10,00,000–Rs.1,50,000– Rs.16,00,000. (b) Commission: 1% Commission on the Net Profits of the company. (c) Perquisites and allowances:

In addition to the salary and commission payable, the Vice Chairman & Managing Director shall also be entitled to: i) Residential accommodation to be provided by the company, for which 10% of his salary shall be

deducted as rent or allow him House Rent Allowance in lieu thereof as per norms of the company. ii) Reimbursement of medical expenses for self and family. iii) Leave travel allowance for self and family (including foreign trip) in accordance with the rules of

the company. iv) Payment of Club fees including life membership fees. v) Contribution to Provident Fund and/or Superannuation Fund in accordance with the rules of the

company. vi) Personal Accident Insurance, the annual premium for which does not exceed Rs.75,000/-. vii) Premium for Keyman’s Insurance Policy, for an amount not exceeding Rs.10 Crores. viii) Gratuity payment computed at half a month’s salary for each completed year of service. ix) Free use of car with driver. x) Free telephone facility at residence. All personal long distance calls shall be billed by the company. xi) Earned leave on full pay and allowance as per the rules of the company. xii) Other allowances as per rules of the company.

2. Minimum Remuneration:

Notwithstanding anything to the contrary herein contained, where in any financial year during the currency of the tenure of the Sh. Ratan Jindal, Vice Chairman & Managing Director, the company has no profits or its profits are inadequate, the company will pay remuneration by way of salary, perquisites and allowances as specified above, subject to Central Government approval.

3. He shall also be entitled to reimbursement of expenses actually and properly incurred by him for the business

of the company. 4. He shall not be paid any sitting fees for attending the meetings of the Board of directors or committees

thereof. 5. The above remuneration payable to him shall be subject to the limits of 5% and 10% of the Net Profits of the

company, as the case may be as laid down in section 309 of the Companies Act, 1956 read with Schedule XIII to the Companies Act, 1956 and the overall limit of 11% of the Net Profits of the company as laid down in Section 198(1) of the said Act.

6. He shall not be liable to retire by rotation.

2) Particulars of terms and conditions and remuneration of Mr. NC Mathur: a) Basic Salary : Rs. 63,500 ( Rupees sixty three thousand five hundred only) per month plus usual allowances as

per rules of the company. b) Perquisites:

The perquisites in Category “A”, Category “B” and Category “C” will be restricted to an amount equivalent to the annual salary as per para (a) above.

CATEGORY A: i) Residential accommodation will be provided as per rules of the company. ii) Reimbursement of medical expenses actually incurred for self and family, as per rules of the company. iii) Leave travel concession for self and family once in a year not exceeding one month’s salary, in

accordance with the rules of the company. CATEGORY B: Contribution to Provident Fund, and gratuity shall be payable as per rules of the company.

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CATEGORY C: i) Chauffeur driven car/ Reimbursement of conveyance expenses, and other allowances shall be payable as

per rules of the company. ii) Free telephone facility at residence. All personal long distance calls shall be billed by the company.

Minimum Remuneration: Notwithstanding anything to the contrary herein contained, wherein any financial year during the currency of the tenure of Sh. N.C. Mathur, Director – International Marketing the company has no profits or its profits are inadequate, the company will pay remuneration by way of salary and perquisites and allowances as specified above, subject to Central Government approval.

The above remuneration payable to him shall be subject to the limits of 5% and 10% of the net profits of the company, as the case may be, as laid down in Sections 198 and 309 of the Companies Act, 1956 read with Schedule XIII to the said Act and overall limit of 11% of the net profits of the company as laid down in Section 198(1) of the said Act.

He shall also be entitled to reimbursement of expenses actually and duly incurred by him for the business of the company.

He shall not be paid any sitting fee for attending meetings of the Board of directors or Committee(s) thereof. His

appointment shall be subject to retirement by rotation.

3) Particulars of terms and conditions and remuneration of Mr. RP Jindal: a) Basic Salary : Rs. 48,000 ( Rupees forty eight thousand only) per month plus usual allowances as per the rules of

the company. b) Perquisites:

The perquisites in Category “A”, Category “B” and Category “C” will be restricted to an amount equivalent to the annual salary as per para (a) above.

CATEGORY A: i) Residential accommodation will be provided as per rules of the company. ii) Reimbursement of medical expenses actually incurred for self and family, as per rules of the company. iii) Leave travel concession for self and family once in a year not exceeding one month’s salary, in

accordance with the rules of the company. CATEGORY B: Contribution to Provident Fund, and gratuity shall be payable as per rules of the company. CATEGORY C: i) Chauffeur driven car / reimbursement of conveyance expenses, and other allowances shall be payable as

per rules of the company. ii) Free telephone facility at residence. All personal long distance calls shall be billed by the company.

Minimum Remuneration:- Notwithstanding anything to the contrary herein contained, wherein any financial year during the currency of the tenure of Sh. Rajinder Parkash, Executive Director, the company has no profits or its profits are inadequate, the company will pay remuneration by way of salary and perquisites and allowances as specified above, subject to Central Government approval. The above remuneration payable to him shall be subject to the limits of 5% and 10% of the net profits of the company, as the case may be, as laid down in Sections 198 and 309 of the Companies Act, 1956 read with Schedule XIII to the said Act and overall limit of 11% of the Net Profits of the company as laid down in Section 198(1) of the said Act. He shall also be entitled to reimbursement of expenses actually and duly incurred by him for the business of the company. He shall not be paid any sitting fee for attending meetings of the Board of Directors or Committee(s) thereof. His appointment shall be subject to retirement by rotation.

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4) Particulars of terms and conditions and remuneration of Mr. RG Garg: a) Basic Salary : Rs. 76,000 (Rupees seventy thousand only) per month plus usual allowances as per rules of the

company. b) Perquisites:

The perquisites in Category “A”, Category “B” and Category “C” will be restricted to an amount equivalent to the annual salary as per para (a) above.

CATEGORY A: i) Residential accommodation will be provided as per rules of the company. ii) Reimbursement of medical expenses actually incurred for self and family, as per rules of the company. iii) Leave travel concession for self and family once in a year not exceeding one month’s salary, in accordance

with the rules of the company.

CATEGORY B: Contribution to Provident Fund, and gratuity shall be payable as per rules of the company.

CATEGORY C: i) Chauffeur driven car/ Reimbursement of conveyance expenses, and other allowances shall be payable as per

rules of the company. ii) Free telephone facility at residence. All personal long distance calls shall be billed by the company.

Minimum Remuneration: Notwithstanding anything to the contrary herein contained, wherein any financial year during the currency of the tenure of Sh. R.G. Garg, Dy. Managing Director the company has no profits or its profits are inadequate, the company will pay remuneration by way of salary and perquisites and allowances as specified above, subject to Central Government approval. The above remuneration payable to him shall be subject to the limits of 5% and 10% of the net profits of the company, as the case may be, as laid down in Sections 198 and 309 of the Companies Act, 1956 read with Schedule XIII to the said Act and overall limit of 11% of the net profits of the company as laid down in Section 198(1) of the said Act. He shall also be entitled to reimbursement of expenses actually and duly incurred by him for the business of the company. He shall not be paid any sitting fee for attending meetings of the Board of Directors or Committee(s) thereof. His appointment shall be subject to retirement by rotation. B) The company has acquired the following property within two years from The company has primarily acquired entire properties of Jindal Strips Limited under the scheme of arrangement and demerger approved by High Court of Punjab and Haryana vide its order dated 30th May 2003. For its expansion plan in Orissa, the Company has taken 640 Acres of Land in Jajpur, Orissa from State Government of Orissa on lease hold basis for a period of 85 years for Rs.11.82 crore. C Rights of Debenture holders Debenture holders do not carry any rights regarding voting, dividend, lien on shares. D Modifications of Rights The rights, privileges, terms and conditions attached to all Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three-fourths of the outstanding amount of Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debenture holders, carried by a majority consisting of not less than three-fourths of the persons voting there upon a show of hands or, if a poll is demanded by a majority representing not less than three-fourths in value of the votes cast on such poll, provided that nothing in such consent or resolution shall be operative against the Issuer if the same are not accepted in writing by the Issuer.

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E Restrictions, if any, on Transfer and Transmission of Debentures and on their Consolidation The Issuer will not register any transfers of the Debentures to any NRIs (except on non-repatriation basis), OCBs, FIIs, or any persons not resident in India, unless appropriate regulatory approvals are obtained. The Issuer shall not be duty bound to take interest or trust in or over the Debentures. The title to the Debentures shall pass by execution of duly stamped transfer deed(s) accompanied by the Debentures certificate (s) / Letter of allotments (s) together with necessary supporting documents. The transferee(s) should deliver the Debenture certificates to the Issuer for registration of transfer in the Register of Debenture holders at the Registered Office. The Issuer on being satisfied will register the transfer of such Debentures in its Register of Debenture holders. The person whose name is recorded in the Register of Debenture holders shall be deemed to be the owner of the Debentures. Request for registration of transfer, along with the necessary documents, and all other communications, requests, queries and clarifications with respect to the Debentures should be addressed to and sent to the Registered Office. No correspondence shall be entertained in this regard at any other Branches or any of the offices of the Issuer. Transfer of debentures in dematerialised form would be in accordance to the rules /procedures as prescribed by NSDL /Depository Participant. F. Consolidation and Splitting of Debentures The request from Registered Debenture holder(s) for splitting / consolidation of Debenture certificates will be accepted by the Issuer only if the original Debentures certificate(s) is / are enclosed along with an acceptable letter of request. No requests for splits below the Market Lot will be entertained. G Transmission In the event of demise of a Registered Debenture holder of the Debentures, or the first holder in the case of joint holders, the Issuer will recognize the executor or administrator of the demised Debenture holder or the holder of succession certificate or other legal representative of the demised Debenture holder as the Registered Debentures holder of such Registered Holder’s Debentures if such a person obtains probate or letter of administration or is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter and delivers a copy of the same to the Issuer. The Issuer may in its absolute discretion, where it thinks fit, dispense with the production of the probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the demised debentures holder on production of sufficient documentary proof or indemnity. H Revaluation of Assets There has been no revaluation of Issuer’s assets during the last five years.

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XX. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS The following contracts and also documents for inspection referred to hereunder, may be inspected at the registered office of the company at Hisar (Haryana) from 11.00 am to 1.00 pm from the date of this Shelf Information Memorandum until the date of closure of this Issue. ♦ MATERIAL CONTRACTS

Board resolution dated 19th March 2004 approving change in remuneration of Mr. Ratan Jindal, Vice Chairman cum Managing Director with effect from 1st April 2004 subject to necessary approvals.

Board resolution dated 1st August 2003 approving appointment of Mr. N C Mathur as Director – International marketing with effect from 23rd July 2003. .

Board resolution dated 1st August 2003 approving appointment of Mr. Rajinder Parkash as Executive Director with effect from 23rd July 2003.

Board resolution dated 1st August 2003 approving appointment of Mr. R.G. Garg as Dy. Managing Director with effect from 23rd July 2003.

Letter dated 4th May, 2003 appointing Abhipra Capital Limited as Registrar and Transfer Agent and its remuneration.

♦ DOCUMENTS 1. Memorandum and Articles of the Issuer as amended from time to time 2. Certificate of Incorporation of the Issuer dated 29th September 1980, and Certificate of Commencement of Business

dated 24th July 1981. 4. Audited Accounts of the Issuer for the year ended March 31, 2004, 2003, 2002, 2001 and 2000 and the Auditors’

Report thereon. 5 Copy of Board Resolution dated 15th July 2004 authorizing the issue.

6. Copy of application made to Stock Exchanges.

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XXI. DECLARATION We declare that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with and no statement made in this Shelf Information Memorandum is contrary to the provisions of the Companies act, 1956 and rules there under: Signed for and on behalf of Jindal Stainless Limited. Sd/- Executive Director Date: August 6, 2004 Place: Hisar