Essar Steel

1.  Nature of Operations
 
 The Company has an integrated steel manufacturing unit of flat rolled
 products in Hazira, District - Surat. The Company also has a
 beneficiation plant at Kirandul and a pelletisation plant at Vizag.
 
                                                As at          As at
                                    31 st March, 2009  31 st March, 2008
 
 2.  Contingent Liabilities 
 not provided for                     Rs. in Crores        Rs. in Crores
 
 (i) (a) Bills discounted                   14.29              59.66
 
 (b> Claims against the Company not 
 acknowledged as debt in respect of:
 Disputed sales tax matters in respect 
 which the Company has
 gone in appeal                            342.49             502.84
 
 [including amount already paid Rs. 147.34 
 crores {Previous year
 Rs.226.97 crores)]
 
 - Disputed Excise duty matters in 
 respect which the Company
 has gone in appeal                         1.42                1.52
 
 - Disputed Custom duty / export duty 
 matters in respect which
 the Company has gone in appeal           207.93              207.93
 
 - Tax of sale of electricity demanded 
 by sales tax authorities on
 Essar Power Limited                       45.91               45.91
 
 - Electricity duty charged on Essar 
 Power Limited by Gujarat
 Electricity Board                        509.63              465.62
 
 - Wheeling Charges demanded by Gujarat 
 Electricity Board                        215.95              149.96
 
 [including amount already paid Rs. 27.23 
 Crores (Previous year
 Rs. 27.23 Crores)]
 
 - Others                                   -                  2.98
 [including amount already paid Rs Nil (Previous year Rs. 0.15
 Crore)]
 
 Future cash outflows in respect of above matters are
 determinable only on receipt of judgments / decisions pending
 at various forums / authorities.
 
 (c) Guarantees given to various banks, financial institutions, finance
 companies, etc. on behalf of others [Balance outstanding as on
 
 31.03.2009 is Rs. 844.94 Crores (Previous Year Rs. 1,423.87 Crores)
                                       1,026.63             1,517.05
 
 The Company and Essar Power Limited (EPOL) have provided corporate
 guarantee of Rs. 1,537.00 Crores each, on behalf of Loop Telecom
 Private Limited (LOOP), favouring State Bank of India (SBI) against (a)
 Term loan of Rs. 725.00 Crores and (b) Bank guarantee of Rs. 812.00
 Crores, availed by LOOP.
 
 Of the said guarantee, LOOP has utilised guarantee of Rs. 725.00 Crores
 against the term loan availed from State Bank of India. As the Company
 and EPOL, issued the corporate guarantees simultaneously, the Company
 has considered Rs. 362.50 Crores being 50 % of Rs. 725.00 Crores as its
 contingent liability. The bank guarantee will be utilised against the
 licence fees payable by LOOP, after it starts operation.
 
 Further, the Company has also received counter guarantee for the same
 from BPL Communications Limited forRs. 1,537.00 Crores.
 
 (ii) Arrears of fixed dividend on Cumulative Redeemable Preference
 Shares                                      7.66       - 2.56
 
 3.  (a) Estimated amount of contracts remaining to be executed on
 capital account and
 not provided for .                        373.71       587.93
 
 (b) Custom duty on pending export 
 obligation under EPCG scheme               46.50       141.89
 
 4 Segment Information
 
 Primary Business Segment
 
 The Company is primarily engaged in a single business segment of
 manufacture and sale of steel, and accordingly, this is the only
 primary reportable segment.
 
 Geographical Segments
 
 Secondary segmental reporting is based on the geographical location of
 customers. The geographical segments have been disclosed based on
 revenues within India (sales to Customers within India) and revenues
 outside India (sales to customers located outside India). Secondary
 segment assets and liabilities are based on the location of such
 asset/liability.
 
 Information about Secondary Geographical Segments
 
 5 Disclosure of related party transactions as required by Accounting
 Standard - 18 Related Party Disclosures:
 
 (a) Holding Company
 
 1 Essar Steel Holdings Limited, Mauritius
 
 2 Essar Global Limited, Cayman Islands - Holding Company of Essar Steel
 Holdings Limited
 
 (b) Subsidiary
 
 1 Essar Steel (Jharkhand) Limited (ESJL)
 
 2 Essar Steel Trading FZE, Dubai (Essar FZE)
 
 (c) Fellow Subsidiary
 
 1 Essar Steel (Chhattisgarh) Limited (ESCL)
 
 2 Hazira Plate Limited (HPLT)
 
 3 Essar Steel (Hazira) Limited (ESHL)
 
 4 Hazira Pipe Mill Limited (HPML)
 
 5 Essar Construction (India) Limited (ECL)
 
 6 ETHL Global Capital Limited (ETHL)
 
 7 Essar SEZ Hazira Limited (Essar SEZ)
 
 8 Essar Shipping & Logistics Limited (ESLL) Ceased to be Subsidiary
 with effect from 22nd
 
 9 Essar Shipping Port and Logistics Limited (ESL)
 
 10 Aegis BPO Service Limited (AEGIS)
 
 11 PT Essar Indonesia (PTEI)
 
 12 Teletech Investments (India) Limited (Teletech)
 
 13 Essar Engineering Services Limited (EESL)
 
 14 Essar Logistics Limited (ELL)
 
 15 Essar Steel (Orissa) Limited (ESOL) *
 
 (d) Associates
 
 1 Essar Power Limited (EPOL)
 
 2 Bhander Power Limited (BPOL)
 
 3 Essar Bulk Terminal Limited (EBTL)
 
 (e) Key Management Personnel
 
 1 Mr. Vikram Amin, Director (Marketing) (VA)
 
 2 Mr. Robin Banerjee, Director (Finance) (RB) *
 
 3 Mr. Mahadev Iyer, Director (Finance) (Ml) **
 
 4 Mr. Dilip Oommen, Wholetime Director (DO) ***
 
 Ceased to be director of the company with effect from 16th February,
 2009.  Appointed as Director with effect from 16th February, 2009.  ***
 Appointed as Director with effect from 7th July, 2008.
 
 (f) Individuals owning, directly or indirectly, an interest in the
 voting power that gives them control or significant influence
 
 1 Mr. Shashi Ruia, Chairman
 
 2 Mr. Ravi Ruia, Vice Chairman
 
 3 Mr. Prashant S Ruia, Director
 
 4 Mr. Anshuman S. Ruia
 
 5 Mr Rewant Ruia, Director
 
 (g) Enterprises commonly controlled or influenced by major
 shareholders/directors/Key management personnels of the company
 
 1 Click For Steel Services Limited (CFS)
 
 2 Essar Agrotech Limited (EAL)
 
 3 Essar House Limited (EHL)
 
 4 Essar Information Technology Limited (EITL)
 
 5 Essar Investment Limited (EIL)
 
 6 Essar Projects Limited (EPL)
 
 7 Essar Properties Limited (EPRL)
 
 8 Futura Travels Limited (FTL)
 
 9 India Securities Limited (ISL)
 
 10 Essar Oil Limited (EOL)
 
 11 Imperial Consultants Private Limited (ICPL)
 
 12 Essar Infrastructure Services Limited (EISL)
 
 13 Essar Steel Hypermarts Limited (Hypermart)
 
 6 (a) Investments (Others - Quoted) include 2,10,400 equity shares of
 Rs. 10 each of Essar Oil Limited (EOL) amounting to Rs. 0.90 Crore,
 pledged with ICICI Bank Limited as collateral to various loans granted
 by ICICI Bank Limited to EOL.
 
 (b) Investment (Trade - Unquoted) include 21,70,00,000 Equity Shares of
 Rs. 4 each (Previous Year Rs. 10 Each) of Essar Power Limited (EPOL)
 amounting to Rs. 163.36 Crores (Previous Year Rs. 217.00 crores), in
 respect of which the Company has executed set of Non-Disposal
 Undertakings in favour of IDBI Trusteeship Services Limited, as
 trustee, for various financial facilities availed by Essar Steel
 Holding Limited (ESHL), Essar Steel (Hazira) Limited and Essar Global
 Limited (EGL) from ICICI Bank Limited, ICICI Bank Canada Limited and
 Standard Chartered Bank pursuant to the respective facility agreements.
 
 Also, the Company has entered into a shareholders agreement with Essar
 Power Holdings Limited (EPHL) pursuant to which the Company has agreed
 to sell all or some of the shares held by it in EPOL to a third party
 buyer, such number of shares held by it, as may be specified by EPHL to
 such third party buyer (the Drag Along Right).
 
 (c) Investment (Trade - Unquoted) include 9,65,00,000 Equity Shares of
 Rs. 10 each of Bhander Power Limited amounting to Rs. 100.19 crores and
 49,940 Equity Shares of Rs. 10 each of Essar Steel (Orissa) Limited
 amounting to Rs. 0.05 crores, in respect of which the Company has
 executed set of negative lien undertakings, for various financial
 facilities availed by Essar Steel Holding Limited (ESHL), Essar Steel
 (Hazira) Limited and Essar Global Limited (EGL) from ICICI Bank
 Limited, ICICI Bank Canada Limited and Standard Chartered Bank pursuant
 to the respective facility agreements.
 
 7 Long term advances from customer are secured by a guarantee from
 Bank/Financial Institutions which has a charge on the Companys assets.
 
 8 The Company has exercised the option as per the Companies Accounting
 Standard Rules, 2009. As per the option exchange differences related to
 long term foreign currency monetary items so far as they relate to the
 acquisition of a depreciable capital assets are capitalized and
 depreciated over the useful life of the assets and in other cases, are
 transferred to Foreign Currency Monetary Item Translation Difference
 Account and amortized over the balance period of such long term
 assets/liabilities but not beyond accounting period ending on or before
 31 st March 2011, the unamortized balance in this account is Rs. 37.30
 Crore (Previous year Rs. Nil)
 
 9 The Company has issued 4,35,98,951 10% CRPS of Rs. 10 each. Each
 CRPS will be redeemable at par in 12 equal monthly installments
 commencing from October 01, 2017 to September 01, 2018. The Company
 shall have option to redeem the CRPS at par in one or more tranches
 from any or all of the existing holders, anytime after the date of
 allotment together with arrears of dividend if any and the Board shall
 give one months notice for any such redemption to the registered
 holders of the CRPS.
 
 10 The Company has circulated confirmation for the identification of
 suppliers registered under the Micro, Small and Medium Enterprises
 Development Act, 2006. The Company has not received any confirmation
 from suppliers regarding their status under the Micro, Small and Medium
 Enterprises Development Act, 2006 and hence disclosures, relating to
 amounts unpaid, if any, as at the year end together with interest paid
 / payable as required under the said Act have not been given.
 
 11 Exceptional Item represents compensation paid on account of take or
 pay  clause as per the. Framework gas sale agreement to a supplier of
 natural gas for non off take of the committed gas quantities.
 
 12 Margin and term deposits of Rs. 424.68 Crore (Previous Year Rs.
 297.07 Crore) have been pledged with banks as a security for opening
 Letters of Credit, Buyers Credit and against Bank Guarantee.
 
 13 Previous years figures have been regrouped where necessary to
 confirm to current years classification.