Welcome to Bhushan.com

	Invester Relations

	Earnings Outlook
	After successful implementation of various CR & GP/GC projects and establishing a comfortable presence as supplier for automobile, white goods and export markets, the Company, to have control on the raw material in terms of pricing, availability and quality is now moving further in process/ value chain of steel through backward integration and is setting up an Integrated Steel Project in the State of Orissa for manufacture of HR Coil, Billets and Power Plant. With the coming on stream of Stage I in June 06 and Stage II of Phase I in Dec 06, the bottom line is going to be strengthened.

	Risks & Concerns

	HRC availability and Input Costs
	Indian Steel industry has only recently seen new investments in capacities. However these new investments will take at least three-four years to yield results. Till such time the availability as well as the cost of raw materials is going to be a key concern. Access to raw material (HRC) would be the critical factor determining industry profitability and integrated producers with HRC manufacturing facility would be the clear gainers. Till the Orissa project is operational, HRC availability along with increases in the prices of key inputs, such as iron ore and coal, as well as in the costs of freight and energy could pose a problem for BSL in the event the market tightens.

	In the case of BSL, this risk is already largely mitigated given that it is presently a conversion player, and caters to the less price sensitive OEM market and has been able to pass the increase to the customers. In the long run upon the completion of the Orissa project even risks arising from the supply constraints on HRC would be eliminated.

	Project execution
	This project will be the Company’s first integrated project thereby exposing it to typical implementation and execution risks.

	These risks are however mitigated with the appointment of well-established consultants and suppliers, such as MECON, BHEL, RITES, WAPCOS, Lurgi, Humboldt-Wedag, SMS Demag for providing technical assistance and equipment for the project. Further, the Company is using tested and proven technology that further mitigates the risk of delayed implementation for various sections of the project. Finally, the Company has a strong track record in project implementation, as evidenced by its completion of its previous Khopoli project within cost and six months ahead of its scheduled completion date.

	Cyclical nature of the steel industry
	Steel being a global commodity follows a cyclical trend. Global as well as domestic steel industry demand has been seeing an uptrend for the past three years - so there is a possibility of the cycle turning down in the medium term. If the industry experiences a trough by the time BSL implements the Orissa project, there would be excess capacity impacting the Company’s cash generation/ debt servicing capacity and funding of its investment program.

	This risk is mitigated by the fact that the company has been able to hold on to its margins due to OEM customer base. In addition, the expansion would effectively start coming online in stages, thereby limiting any impact of a recession at a later date, since a substantial portion of the capacities would have come on stream and a majority of costs already been incurred. In addition to this, access to captive sources of raw materials is also going to be a mitigating factor.

	Internal Control Systems And Their Adequacy
	The Company has an adequate system of internal controls implemented by the management towards achieving the following objectives

	Efficiency of operations, Accuracy and promptness of financial reporting, Compliance with the laid down policies and procedures, Compliance with laws and regulations.

	Financial Performance With Respect To Operational Performance
	Financial Performance of a Company depend upon the Operational Performance namely operating performance margins. The Company employs World -Class Technologies and manufacturing practices with modern management style to produce its products at minimum cost. The good financial results are direct outcome of the excellence in operational performance. A committed and dedicated work force is conscious of its responsibility or contributing to the Financial front. Gross Profit being 15.27 % of the net sales, which is quite good for a Steel Company.

	Net Sales for the year 2005-06 were at Rs. 2805.15 Crores. The Company achieved Export Turnover of Rs. 1005 Crores. Gross Profit (earning before interest, depreciation and tax) was Rs. 408.45 Crores. The operational profit was Rs. 325.42 Crores.

	Quality
	In today’s global competition and open economy, quality plays a vital role in marketing the products and stay ahead of others. Therefore, great emphasis is given to manufacturing products that meet high standards of quality in the global market and customer satisfaction.

	Proactive efforts are directed towards determining customers’ requirements and achieving all-round customer satisfaction. This is primarily achieved through automated systems (reducing manual handling to a minimum), high attention to complaint resolution, online communication and information exchange, quality circles.

	Human Resource Development / Industrial Relations Front
	Your Company fully values the Human capital, it deploys and credits its success to them. It has been the consistent endeavor of the Company to create a congenial and challenging working atmosphere wherein every employee can develop his own strength and deliver to his full potential.

	Industrial relations remain cordial throughout the year and the Board records its appreciation for the contribution of all employees towards the growth of the company without which the achievements made would not have been possible.

	As on March 31, 2006 the total employee strength was 2155.

	Bhushan Steel encourages individuals to go beyond the scope of their work, undertake voluntary projects that enable them to learn and contribute innovative ideas in meeting goals of the Company.

	Auditors’ Report On Corporate Governance
	We have examined the compliance of conditions of Corporate Governance by Bhushan Steel Ltd., for the year ended 31/03/2006 as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchange (s).

	The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

	In our opinion and to the best of our information and according to the explanation given to us and the representation made by the Directors and the management, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

	On the basis of representation received from Registrars and share transfer Agents and as per the records maintained by the Company which are presented to the shareholders / Investor Grievance Committee, we state that during the year ended31/03/2006 no investor grievances were pending for a period exceeding one month.

	We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

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