Steel Authority of India

1.  CONTINGENT LIABILITIES
 
                                            As at 31st       As at 31st
                                           March, 2009      March, 2008
                                               (Rupees in crore)
 
 (i) Claims against the Company pending appellate/judicial decisions:
 
 a) Excise Duty                              1662.90          1277.39
 
 b) Sales Tax on inter-state stock transfers from plants to stockyards*.
                                              960.91          1095.48
 
 c) Other sales tax matters                   215.07           160.50
 
 d) Income Tax                                 62.44             0.75
 
 e) Other duties, cess and levies            287.15           188.20
 
 f) Civil Matters **                          193.68           201.09
 
 g) Miscellaneous                            215.03           251.21 
 No liability is expected to arise, as
 sales tax has been paid on eventual sales.
 
 ** includes claims of Rs. 24.31 crore (Rs. 19.01 crore), against which
 there are counter-claims of Rs. 26.12 crore (Rs. 25.82 crore). 
 
 (ii) Other claims against the Company not acknowledged as debt:
 
 a) Sales Tax                                   1.87            9.33
 b) Duties, cess and levies                    11.59            8.26
 c) Civil Matters                              30.82           35.86
 d) Miscellaneous $                           341.54          285.69
 $ includes claims of Rs. 11.80 crore (Rs. 11.80 crore),
 against which there are counter-claims of Rs. 8.98 Crore
 (Rs. 8.98 crore).
 
 (iii) Disputed income tax/service tax/other demand on joint venture
 company for which company may be contingently liable under the joint
 venture agreement                             140.38         121.70
 
 (iv) Guarantees/counter-guarantees given to banks/excise authorities on
 behalf of a subsidiary company and a joint venture company. As at 31
 March, 2009, the guarantees to the extent utilised amounted to Rs. 1.05
 crore (Rs. 3.14 crore)                         28.85          31.40
 
 (v) Bills drawn on customers and discounted 
 with banks                                     52.45          72.96
 
 (vi) Price escalation claims by contractors/suppliers and claims by
 certain employees, extent whereof is not ascertainable
 
 2.  FIXEDASSETS
 
 2.1 Land:
 
 (i) Includes 62093.53 acres (62111.39 acres) owned / possessed / taken
 on lease by the Company, in respect of which title/lease deeds are
 pending for registration.
 
 (ii) Includes 1844.33 acres (1854.23 acres) in respect of which title
 is under dispute.
 
 (iii) 10507.07 acres (10082.99 acres) transferred/agreed to be
 transferred or made available for settlement to various Central / State
 / Semi-Government authorities, in respect of which conveyance deeds
 remain to be executed/registered.
 
 (iv) 6186.05 acres (5999.73 acres) given on lease to various
 agencies/employees/ex-employees.
 
 2.2 Buildings include net block of Rs. 24.22 crore (Rs. 24.67 crore)
 for which conveyance deed is yet to be registered in the name of the
 Company.
 
 2.3 Foreign exchange variations aggregating to Rs. 26.14 crore (net
 debit) [Rs. 22.87 crore (net debit)] have been adjusted in the carrying
 amount of fixed assets during the year.
 
 2.4 Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) - Rs. 27988.45 crore
 (Rs. 13522.90 crore).
 
 3.  INVESTMENT, CURRENT ASSETS, LOANS &ADVANCES AND CURRENT LIABILITIES
 & PROVISIONS
 
 3.1 The Central Board of Direct Taxes vide its Notification dated 25th
 September 2001 revised the rules for computation of certain
 perquisites. The Employees Union/Association filed writ petitions with
 the Honble High Court at Kolkata challenging the above Notification.
 In pursuance of Honble Courts orders, the term deposits (including
 interest earned thereon) amounting to Rs. 139.87
 
 crore have been kept separately with bank(s) in respect of tax deducted
 on house perquisite w.e.f. 1st April 2003 and other perquisites w.e.f.
 1st October 2001, upto 31st March 2005, pending final decision of the
 Honble Court. Such deductions and deposits after 31st March 2005, have
 been made in accordance with amended law/judicial decisions. However,
 there is no impact on accounts of the company as the additional tax, if
 required, shall be recoverable from the employees.
 
 3.2 Balances shown under creditors, debtors, claims recoverable and
 advances include balances subject to confirmation/ reconciliation and
 consequential adjustment, if any. Reconciliations are carried out on
 on-going basis. Provisions, wherever considered necessary, have been
 made.
 
 3.3 The Company has stock of iron ore fines of 42.01 million tonnes at
 various mines of the Company. Since the usage/sale of such iron ore
 fines, not being readily usable /saleable, involves elements of
 uncertainties, as a matter of prudence, no valuation of such fines has
 been made in the accounts. However, the revenue earned from actual
 disposal thereof during the year has been recognised in the books of
 accounts.
 
 3.4 Ministry of Steel, Government of India, vide letter dated T° May,
 2008 approved the scheme of amalgamation of Bharat Refractories
 Limited, a Government Company, with the Company with appointed date
 being 1  April 2007. Pending approval of the Ministry of Corporate
 Affairs, under section 396 and the relevant provisions of the Companies
 Act, 1956, the effect of the said scheme of amalgamation has not been
 given in the accounts.
 
 4.  PROFIT & LOSS ACCOUNT
 
 4.1 The long-term agreement for wage revision expired on 31 December.
 2006. Pending finalisation of fresh agreement w.e.f 1st January 2007,
 provision towards salaries and wages revision of Rs. 5236.54 crore (Rs.
 2638.42 crcre for the year) and Rs. 51.12 crore (Rs. 39.73 crore for
 the year) have been charged to Profit & Loss Account and Expenditure
 during construction respectively, on estimated basis. Against the
 provision made, ad-hoc adjustable advance amount of Rs. 492.30 crore
 has been paid and adjusted in the accounts. Further, payments of Rs.
 584.94 crore during the year to the employees, on account of merger of
 deamess allowance with basic pay, have been adjusted against the
 provision made.
 
 4.2 Power& Fuel does not include expenses for generation of power and
 consumption of certain fuel elements produced by the plants which have
 been included under the primary heads of account.
 
 4.3 The Research and Development expenditure charged to Profit & Loss
 Account and allocated to Fixed Assets, during the year, amount to Rs.
 112.48 crore (previous year- Rs. 99.62 crore) and Rs. 5.72 crore
 (previous year - Rs. 2.24 crore) respectively.
 
 4.4 The Company reviews the carrying amount of its fixed assets on each
 balance sheet date for the purpose of ascertaining ^impairment, if any,
 by considering assets of entire one plant as Cash Generating Unit. On
 such review as at 31st March, 2009, no provision is required to be
 made, as the net realisable value thereof, assessed by an independent
 agency as at 31 st March, 2008 for Visvesvaraya Iron & Steel Plant,
 IISCO Steel Plant and internal technical valuation as at 31 st March,
 2009 for Alloy Steels Plants, is more than the carrying amount.
 
 4.5 During the year, the inventory of process scrap has been valued at
 lower of cost or net realiable value, as against the past practice of
 valuing at net realisable value. As a result, the profit for the year
 is lower by Rs. 10.96 crore.
 
 4.6 Pursuant to the Companies (Accounting Standards) Amendment Rules,
 2009 notified on 31 March, 2009, the Company, on exercise of the
 option, has accounted for the exchange differences arising on reporting
 of Long-term foreign currency monetary items at the rates different
 from those at which they were initially recorded during the year or
 reported in the previous financial statement in so far as they relate
 to acquisition of depreciable capital assets, by adding exchange
 differences upto 31st March, 2009 of Rs. 5.63crore to the cost of asset
 and adding Rs. 0.01 crore, to General Reserve in respect of exchange
 differences upto 31st March, 2008. The cost of the capital assets thus
 changed shall be depreciated over the balance life of the assets. There
 are no other long term foreign currency monetary items. As a result,
 the profit for the year is higher by Rs. 5.41 crore (Net).
 
 4.7 Voluntary retirement compensation, hitherto treated as deferred
 revenue expenditure upto 31s1 March, 2008 to be written off in five
 years not beyond 31 March, 2010, has been charged off to the Profit
 and Loss account during the year. Asa result of the change in the
 policy, the profit for the year is lower by Rs. 70.09 crore.
 
 4.8 Pending issuance of accounting and disclosure practices on emission
 trading by the Institute of Chartered Accountants of India, carbon
 credit earned by the Company upto 31st March, 2009 in the form of VER
 (Voluntary Emission Reduction) has not been considered in the accounts.
 
 4.9 Pending finalisation of new long term rate contract for imported
 coal effective from 1st April 2009, supply of the same advanced during
 February - March 2009 has been accounted for at ad-hoc rates, as
 communicated by the suppliers. The implication, if any, will be known
 on finalisation of rates.
 
 5.  GENERAL
 
 5.1 Employee Benefits
 
 5.1.1. General description of defined benefit schemes:
 
 Gratuity
 
 : Payable on separation @15 days pay for each completed year of service
 to eligible employees who render continuous service of 5 years or more.
 Maximum amount of Rs.10 lakh has been considered for actuarial
 valuation for executives based on the office memorandum dated
 26.11.2008, issued by Department of Public Enterprises, for revision of
 scales of pay of executives of Central Public Sector Enterprises.
 
 Leave Encashment
 
 Payable on separation to eligible employees who have accumulated earned
 and half pay leave. Encashment of accumulated earned leave is also
 allowed upto 30 days once in a financial year.
 
 Provident Fund
 
 12% of Basic Pay Plus Dearness Allowance, contributed to the Provident
 Fund Trusts by the company.
 
 Post Retirement Medical Benefits
 
 Available to retired employees at companys hospitals and/or under the
 health insurance policy.
 
 Post Retirement Settlement Benefits:
 
 Payable to retiring employees for settlement at their home town.
 
 Employees Family Benefit Scheme
 
 Monthly payments to disabled separated employees / legal heirs of
 deceased employees in lieu of prescribed deposit till the notional date
 of superannuation.
 
 Long Term Service Award
 
 Payable in kind on rendering minimum 25 years of service and also on
 superannuation.
 
 5.2 Segment Reporting
 
 i) Business Segments: The five integrated steel plants and three alloy
 steel plants, being manufacturing units, have been considered as
 primary business segments for reporting under Accounting Standard-17 -
 Segment Reporting issued by the Institute of Chartered Accountants of
 India.
 
 ii) Geographical segments have been considered for Secondary Segment
 Reporting, by treating sales revenue in India and foreign countries as
 separate geographical segments.
 
 The disclosure of segment-wise information is given at Annexure-I.
 
 5.3 Related Party
 
 As per Accounting Standard -18 - Related Party Disclosures issued by
 the Institute of Chartered Accountants of India, the names of the
 related Darties are aiven below: -
 
 Joint Venture
 
 SAIL Bansal Service Centre Limited
 Mjunction Services Limited
 UEC-SAIL Information Technology Limited
 Romelt SAIL (India) Limited
 N.E. Steel & Galvanising Pvt. Limited
 Bhilai Jaypee Cement Limited
 Bokaro Jaypee Cement Limited
 S & T Mining Co. Pvt. Limited
 
 Key Management Personnel
 
 Shri S.K.Roongta
 Shri V.Shyam Sunder
 Shri B.N.Singh (upto 3(f November 2008)
 Shri V.K.Srivastava
 Shri G.Ojha
 Shri R.Ramaraju
 Shri Soiles Bhattacharya
 Shri S.S.Ahmed
 Shri V.K.Gulhati
 Shri S.P. Rao
 Shri S.N. Singh (w.e.f. 06.12.2008)
 Shri A.J. Vijh
 Shri B.B. Singh
 Shri M.K.Bhattacharya
 Shri S.P. Patnaik
 Shri Jagdish Singh
 Shri Kiran Kapoor
 Shri R.K.Agarwal
 Shri A.S. Mathur
 Shri M. Singh (upto 31st January 2009)
 Shri S.R. Subhedar (w.e.f. 1 March 2009)
 
 6.  Figures in brackets pertain to previous year and have been
 re-arranged / re-grouped / re-cast, wherever necessary.