GUJARAT MINERAL DEVELOPMENT CORPORATION LIMITED ANNUAL REPORT 2001-2002 CHAIRMAN'S REPORT Address by Shri Mukesh Zaveri, Chairman, GMDC before the 39th Annual General Meeting held on 30th September 2002. I am glad to welcome my esteemed shareholders, colleagues on the Board of Directors, officers and staff of GMDC on this happy occasion of Annual General Meeting for the year 2001-2002. The increasing use of computer based Internet, E-mail and E-commerce facilities in the global trade and industry in the last few years, has developed trade and industry at the international level - far beyond the boundaries of State and the nation. It is now imperative for a manufacturer or trader to deliver high quality products at reasonable price if they are to sustain in their trade or vocation in the long term. In my last AGM speech, I had highlighted that the Government's economic liberalization policy had forced our Company to face stiff competition from dumping of imported coal. And that while last January's major earthquake affecting a large part of Gujarat shook up the entire economic system, our Company withstood the onslaught of nature's fury. It sustained its production, marketing and other activities through efficient and prudent administration and long-term proactive planning and registered 13% rise in its net profits. Since last year, the Company has begun offering discount to bulk consumers in order to promote Sales which has resulted in substantial rise in sales. Lignite Projects I am happy to inform that this year also saw a significant rise in production and sale of lignite. As against production of 45.61 lakh tonnes last year, current year's production at 48.48 lakh tonnes reflects a rise of 6.30%. In terms of sale value, this year's sale has been to the tune of Rs.211 crores as against Rs.203.40 crores last year resulting in growth of about 4%. This is a notable example of persistent growth achieved despite recessionary trends prevalent in the industrial sector and competition from imported coal. Further, to fulfil its responsibility of catering to lignite fuel requirements of South Gujarat Industries, your Company has acquired new areas near the currently operational Rajpardi mines to augment lignite production. In yet another step in this direction, your Company has initiated efforts to acquire mining lease at Tadkeshwar in Surat district. Lignite Project, Mata-no-madh In order to promote lignite production in Kutch district, your Company has obtained mining leases in Mata-no-madh and initiated action for commencing lignite mining. Initial overburden removal has been completed and the project is expected to be fully operational by next month. Lignite Project, Bhavnagar There is very large demand of lignite in Saurashtra and especially in South Gujarat region from cement and chemical industries and is currently met by far off supplies from Kutch. To increase convenience and reduce freight charges for lignite transportation, mining plans are being formulated to exploit huge lignite reserves available around Thordi, Rampar, Bhumbhali and Bhutesar villages of Ghogha and Bhavnagar taluka in Bhavnagar district. It is envisaged to commence lignite production from these areas in next two years. Your Company has achieved a distinct status in lignite mining and is working towards retaining this unique position in years ahead. Calcined Bauxite Project In my speech three years ago, I had pledged to restart the Calcined Bauxite Project at Gadhsisa. This Project has been operational for last three years and is now yielding a production of 34,258 tonnes of Calcined Bauxite this year against 33,743 tonnes last year. This project lying closed three years ago is doing very well and contributes a total income of Rs.10 crores. Besides, the Company proposes to introduce dual firing system using petcock and furnace oil from single burner to affect savings in fuel and production costs and increase profitability. Currently, bauxite mining is proceeding in Ratadiya, Wandh and Guniasar, Naredi, Balachhod and Bhatia areas and efforts are being made for acquiring additional areas through mining leases. Fluorspar Project Fluorspar project located at Kadipani, recognised as 'Mother Plant', is the oldest project of the Company and has been operational for the last 30 years. The modernisation of the plant is now deemed necessary to keep up with the times and it has been decided to equip the plant with the latest state-of-the-art technology, Modernisation will significantly improve quality, increase efficiency and productivity and raise end product quality which in turn will result in marked improvement and increase in profitability. As a part of this modernisation campaign, the Company has despatched a representative sample of fluorspar for analysis to Canada based M/s. Lake Field Research Laboratory, Toronto. Analysis of the samples has shown very encouraging results. In order to ensure similar results from laboratory scale tests on a pilot plant scale, M/s. McNally Bharat Engineering Company has been engaged to perform tests at Kadipani. It will be pertinent to note that 30 years ago, M/s. McNally Bharat Engineering Company had commissioned this plant on turnkey basis. It is a highly experienced and renowned company in this field. A decision for financial investment will be taken after detailed study of the report. Multi-metal Project, Ambaji I had informed in last year's AGM that steps are being taken to re-start the Ambaji Multimetal Project. In this context, I am happy to inform that we have formulated a plan for starting this project in joint sector. To this end, a Memorandum of Understanding has been signed with Binani Group and Rajasthan State Mineral Development Corporation. There is a proposal to put up a large scale plant using ore and mineral deposit at Ambaji and adjoining Rajasthan areas. I am glad to inform that an American agency has extended assistance of US $5,00,000 for analysis of raw ore and preparation of detailed feasibility report and its detailed report will be available by December 2002. Necessary steps are taken between our Company and partner companies to realise these plans and increase possibilities of re-starting this closed project. Power Project, Akrimota Implementation of the 250 MW Akrimota Power Plant, a star project of the Corporation, is progressing as per schedule. Construction of first boiler is nearing completion and the turbine set has been positioned in place. Structure of one of the chimneys has been erected to the stipulated height. Reverse Osmosis Plant for filtration of sea-water has become operational; condenser has been placed on foundation; installation of process water piping is in progress; and facilities for drawing sea-water to the power plant have been completed. In terms of work status, a total of Rs.490 crores have been spent and for balance expenditure, a final decision has been taken to avail financial assistance from banks and financial institutions. The power plant, likely to commence operations around July 2003, will generate about 15,000 lakh units of energy, which will be provided to the Gujarat Electricity Board. An Agreement covering all the facets of this arrangement have been finalised and consent has been received from the Gujarat Electricity Board for operating the Escrow account. received from the Gujarat Electricity Board for operating the Escrow account. It is a matter of pride and pleasure that your Company's net profits grew by 13% - Rs.66.18 crores this year against Rs.58.75 crores last year. Our Board has recommended dividend @ 40% and earning per share of Rs.20.81 (as against Rs.11.83 last year). Book value of the 10 rupee share of the Company has significantly shot up from Rs.155.19 last year to Rs.168.40 this year. Thus, in spite of overall recession on a world-wide scale and a huge requirement of funds for the Power Project, the Company made appreciable profit and decided to pay dividend at the rate of Rs.4 per share a generous consideration on the part of the Company towards its shareholders. The option of share holding in Demat form is available to the company's shareholders from the very beginning and the Company has made necessary agreements with National Securities Depositories Limited and Central Depositories Limited. Further, 90% of the 26% share holding disinvested has been dematerialised. Currently, the trading of Company's shares is compulsorily transacted in Demat form. Social Obligation From its inception, the Company has been honouring its social responsibilities. The Company has provided mobile dispensary vans for the benefit of the people of surrounding areas of its Projects. Company has made available facilities for higher education and medical treatment in a big way and has also constructed check dams. There has been valuable co-operation from different departments of the State Government in the activities of the Corporation. Wholehearted co- operation has also come from various ministries and related departments of the Central Government. We have been constantly receiving help and co- operation from the State Geology and Mining Department. In the activities of the Corporation, land acquisition plays a crucial role. District and taluka level administration has been lending a helping hand in this regard which I note with appreciation. During this year, relations with the employees and officers have remained cordial and I am sure similar harmonious and amicable industrial relations will be maintained in the future also. Thank You. Vande Mataram!