JAIPRAKASH ASSOCIATES LIMITED
ANNUAL REPORT 2004-2005
It gives me great pleasure to welcome you all to the 8th Annual General
Meeting of Jaiprakash Associates Ltd. The Company's accounts for the year
ended March 31, 2005, along with the Directors' and Auditors' Report, a
Letter to Shareholders and Management Discussion and Analysis, have already
been circulated to you. With your permission, I would like to take them as
I take this opportunity to place on record my deep sense of appreciation
for the trust reposed by you all these years, which has been one of the
important motivating factors, for us in successfully surmounting the
challenges that we faced during the period of growth in recent times.
The sustained performance of the Company based on its sound work culture
has aroused confidence amongst all stakeholders including the global
The present economic scenario and the continuing focus on the
infrastructure sector provides us an enabling climate for future growth and
sustained profitability of the company.
The reform process initiated in early 90s, and taken forward by successive
Governments, have demonstrated their impact, fuelling multi-dimensional
growth across all sectors and have touched lives of majority of Indians.
Our beloved country, endowed with all natural resources in ample measure,
offers a great opportunity to one billion Indians to transform India from a
'Developing Nation' to a 'Developed Nation'. With impetus on
infrastructural development of the country, greater involvement of private
sector, and changing mind set for accomplishing tasks of national
importance in a time bound manner, be it participation of private sector in
power development, operationalisation of DMRC in the National Capital or
the great telecom story were unthinkable 15 years back and are changing
things for the better.
Participation In Nation Building:
Your Company has been well entrenched In Infrastructure projects for over
40 years and the opportunities which came with the Government revisiting
the lost focus on hydropower sector, necessitated by the rising cost of
power generated from sources other than hydropower, have seen your company
participating in 12 hydropower projects concurrently, which translates to
participation in 54% of hydropower projects under execution in the Tenth
Five Year Plan, in different capacities within India and Bhutan.
With the impact of globalization being felt in every sector, Engineering
and Construction Sector of the country has also not remained untouched from
this necessary transformation. Your Company foresaw this challenge and
equipped itself in time with the capability of undertaking construction of
hydro power projects on Engineering, Procurement and Construction Basis
(EPC). Today, Jaiprakash Associates Limited (JAL) has reservoir of talent
and experience responsible for the design and engineering of hydro power
projects irrespective of size and intricacies involved, a hydro-mechanical
equipment manufacturing facility and has successfully demonstrated its EPC
capability by bagging 3 out of 4 projects awarded on EP( basis in
hydropower sector in the last 20 years (as on June 2005). Its contribution
in hydropower development of the country and capabilities were recognized
with ICRA rating JAL with 'CR-1' Grade, indicating very strong contract
execution capacity in hydro power (EPC Contracts) in India with average
values of upto Rs.2000 crore. The only company to be awarded with this
rating for this value.
I continue to firmly believe that mother nature, while blessing our
country, has been particularly generous with the great natural resource
'WATER' which is and shall remain perhaps the single largest source that
would ushera new era of prosperity for our nation in this century.
Government of India's thrust for development of 50,000 MW of hydropower by
2017 would address the much needed stability for the power regime and is
likely to restore hydrothermal mix to 40:60 as recommended by the Ministry
of Power for power system of this size, while moderating the rising tariff
for the consumer all across which in turn, is bound to have a soothening
impact on inflationary trends of the economy.
Your Company took the pioneering step of participating In development of
300 MW BASPA-11 Hydroelectric Project through its subsidiary Jaiprakash
Hydro-Power Limited in 1992, which on commissioning in 2003, is India's
largest hydropower station in Private Sector.
For mystic reasons, JAYPEE GROUP has unflinching faith in future of
hydropower which made us participate in development of 400 MW Vishnuprayag
Hydroelectric Project through its subsidiary, Jaiprakash Power Ventures
Ltd., which is expected to be operational in March 2006 and 1000MW Karcham-
Wangtoo Hydroelectric Project scheduled for completion by 2010. Each of
these projects Is a Run-of the River project devoid of concerns related to
rehabilitation, resettlement and submergence.
These initiatives would not have taken the present shape without your
complete trust in the Company. With a total hydropower generating capacity
of 17000 MW your company, JAL, shall be the largest entity In hydropower In
Private Sector by 2010,
BASPA-II Hydroelectric Project and Vishnuprayag Hydroelectric Project have
long term PPAs, ensuring 100% off-take of power by the respective State
Governments and Return on Equity as per Government of India's guidelines. I
understand the maiden dividend payout from Jaiprakash Hydro-Power
Ltd.(JHPL) immediately upon listing has reached all privileged shareholders
of JAL who participated in the 'Offer For Sale' of JHPL, which was
overwhelmingly subscribed to in March 2005.
'First mover advantage' available to your Group In hydropower sector have
opened now opportunities which shall help In building now capacity for the
nation and ensuring lasting prosperity for Its stakeholders,
Your Company's footprint in Cement manufacturing today with a seven million
tonne cement manufacturing facility at Rewa in Central India and a three
million tonne new cement manufacturing facility coming up in Himachal
Pradesh has catapulted your Company amongst the top five Cement Majors. The
Company's cement production facility at Rewa is the largest single location
cement manufacturing complex in the country and it is amongst the most cost
effective cement producers with more than 65% power requirement being
sourced from Company's own captive thermal power plants. With continued
focus on enhancement of productivity and efficiency, the cost of power,
which accounts for 33% of the production cost, will further come down with
the commissioning of the 38 MW captive thermal power plant by March 2006,
making the cement complex source 100% power requirement from its captive
thermal power plants.
With the cement consumption across the entire country registering a
sustained CAGR of 8% in last 5 years, and your Company's cement facilities
catering to India's fastest growing Northern Region, a bright future awaits
for this stream of business.
With the great strides made in conserving energy in every tonne of cement
produced, and with enhancement in usage of environmentally challenging
material, your Company is in the forefront amongst eligible producers who
are likely to get Carbon Credit, in the near future.
The company has taken lead in various environmental Initiatives that
include afforestation in and around its cement complex with over 4 lakh
trees, rainwater harvesting resulting in creation of manmade reservoirs to
store 35 lakh cu.m of water as also using technologies in its thermal
plants that conserve precious water, which have benefited the villages
around the cement complex at REWA.
Financial Performance constitutes the basis of an organisation's larger
economic contribution. Your Company, with strong fundamentals, formidable
presence in booming infrastructure sector of the country and strong focus
in creating shareholder wealth in long term is aptly poised for sustained
The year saw JAL's turnover go up by 15.66% to Rs 2957 crore with PAT going
up by 22.35% to Rs 207 crore. Post amalgamation of the erstwhile Jaiprakash
Industries Ltd. into Jaypee Cement Limited has seen a 3 year compounded
annual growth rate of PAT of 36% and EPS of 36%.
During this period Total Shareholder Returns measured in terms of increase
in market capitalization and dividend grew at a compound rate of well over
60% per annum.
You will be pleased to know that the market capitalization of your Company
crossed the USD 1 Billion mark in July 2005, for the first time.
FAITH IS TO BELIEVE WHAT YOU DON'T YET SEE, REWARD OF FAITH IS TO SEE WHAT
Our belief in country's great potential providing enormous opportunities to
its countrymen today is more than it ever was. With an untapped potential
of almost 130,000 MW of hydropower and with unmatched credentials to
undertake any hydropower project in any terrain, your Company is best
equipped to grow in this important sector, be it for package contracts, EPC
contracts or as developer on Build, Own & Operate basis. Your Company is
pursuing these challenges with renewed vigor to ensure its effective
participation in development of this key sector in different regions of the
Taking forward our footprint in power generation, we are also pursuing
opportunities in the transmission sector and development of pit head
thermal power plant to enable the Group play an important part in the
energy sector as an integrated player in the current decade.
People with resources must contribute towards making a better tomorrow for
I firmly believe that quality education on an affordable basis is the
biggest service which as a corporate citizen, we can provide. Education
brings enlightenment, which in turn empowers people to pursue their dreams.
Jaiprakash Sewa Sansthan, a not for profit Trust, supported by Jaypee Group
has provided platform for various educational facilities, today imparting
education in different streams to more than 14,000 students all over the
country, across the entire spectrum of the education curve.
We have pledged amongst us to continue our endeavor to make this initiative
attain larger dimensions as we move forward.
Before I conclude, let me reiterate that we have demonstrated and would
continue to strive to enhance our:
* Credibility with our clients
* Credibility with the Financial Institutions / Banks, and
* Credibility with all our stakeholders.
Voyage thus far, would not have been possible without the support and
encouragement by Central and State Governments, Bankers, Financial
Institutions, Technocrats, Investors and all dear Shareholders. We continue
to seek their patronage.
I greatly value the collective efforts of entire JAYPEE Team and the
contribution & involvement of my colleagues on the Board.
Note : Excerpts from the Chairman's speech at the 8th Annual General
Meeting held on 27th September, 2005 in Lucknow.
This does not purport to be a record of the proceedings of the Annual
5 Park Road, Hazratganj,
Lacknow - 226 001
Source : The Financial Express
Dated : 29th September, 2005