(a) Secured by charges ranking pari-passu inter-se, on all the present
and future immovable property at Mouje-Wadej of City taluka, District
Ahmeda- bad, Gujarat and Company''s Plant & Machinery, including the
land on which it stands, pertaining to IISCO Steel Plant (ISP)
(b) Secured by charges ranking pari-passu inter-se, on all the present
and future immovable property at Mouje-Wadej of City taluka, District
Ahmedabad, Gujarat and Company''s Plant & Machinery, including the land
on which it stands, pertaining to Durgapur Steel Plant. (DSP)
(c) Redeemable in 12 equal yearly instalments of Rs.14 crore each
starting w.e.f. 26th October, 2014
(d) Redeemable in 3 equal instalments of Rs.50 crore each on 15th
September of 2014, 2019 and 2024
(e) The loan availed for 7 years is secured by charges ranking
pari-passu inter-se, over movable properties pertaining to Rourkela
Steel Plant. the loan is repayable anytime within 15 days notice and no
prepayment penalty. The interest rate is Benchmark Prime lending rate
(BPLR) (-) 4.25% for B1 (Base Rate w.e.f. 1.10.2010) and BPLR (-) 4.50
% for B2
(f) Guaranteed by Government of India, Redeemable in 4 equal
instalments of 16 crore each starting w.e.f 15th October, 2010
(g) The soft basis of the loan was drawn in 3 tranches stated as 1(a),
1(b) and 1(c) at an interest rate 8.75% p.a. The interest on 1(a) is
0.75% p.a. and balance 8% p.a. is towards exchange fluctuation (4%)
and Pollution control Schemes (4%). In case of 1(b), the interest is @
3.66% p.a. and balance 5.09% p.a. is towards periphery development. The
interest on 1(c) is 0.75% p.a. and balance 8% p.a. is towards periphery
development. The principal and interest is repayable half yearly.
(h) The loan is repayble in in 3 equal instalments on 11th March
starting from 2015 at an interest rate of 6 month London Inter Bank
Operating Rate (LIBOR) 1%. Interest is paid half yearly
(i) The loan is repayble in 3 equal instalments on 11th August starting
from 2015 at an interest rate of 6 month LIBOR 1%. Interest is paid
half yearly (j) The loan is repayble in 3 equal instalments on 16th
November starting from 2015 at an interest rate of 6 month LIBOR
1.06%. Interest is paid half yearly
(k) The loan is repayble in 2030 and Interest is paid half yearly,
guaranteed by Government of India (l) Terms of repayment to be decided
by SDF Management Committee (m) Interest free loan from Government of
1. i) The Ministry of Corporate Affairs, vide order dated 10th June,
2011, approved the amalgamation of Maharashtra Elektrosmelt Limited
(MEL), with the Company under sections 391 to 394 of the Companies Act,
1956. As per order, the amalgamation is operative from the appointed
date of 1st April, 2010 and has come into effect (effective date) on
13th July, 2011.
ii) The operation of MEL includes production of manganese based
ferro-alloys, used as raw materials in the Company.
iii) As per order of amalgamation, the amalgamation has been accounted
for under the pooling of interests method as prescribed by Accounting
Standard (AS) -14, issued by the Institute of Chartered Accountants of
India. Accordingly, the assets, liabilities and reserves of MEL as at
1st April, 2010 have been taken over at their book values. As
stipulated in the Scheme of Amalgamation, all reserves of the
transferor Company have been transferred to the respective reserve
account of the Company except for balance lying in the Statement of
Profit and Loss as on 31st March, 2010 which has been credited to the
Statement of Profit and Loss Account of the Company. Accordingly, all
the assets, liabilities, reserves of the said company as on 1st April
2010 have been merged with those of the Company under the respective
heads as follows:
iv) The exchange ratio, at which the shareholders of the erstwhile MEL
have been offered Shares in SAIL, has been worked out based on the
independent valuation of shares of the companies as per the accepted
methods of valuation.
v) In terms of the Scheme of amalgamation, the equity shares in SAIL
issued by the Company to the shareholders of MEL on 30th September
2011, rank pari passu in all respects to the existing equity shares of
SAIL with effect from the appointed date and upon the Scheme of
amalgamation becoming effective. Accordingly, the appropriation for the
dividend includes dividend on 1,24,744 Equity Shares, which have been
issued to the shareholders of MEL.
vi) The income accruing and expenses incurred by erstwhile MEL during
the period 1st April, 2010 to 31st March, 2011 have also been
incorporated in these accounts. During the period between the appointed
date and the effective date as MEL carried on the existing business in
trust on behalf of the Company, all vouchers, documents, etc., for
the period are in the name of MEL.
vii) The accounts of erstwhile MEL have been consolidated in the
accounts of the Company for the Financial Year 2011- 12. The accounts
of Company for the year Financial year 2010-11, do not include the
figures of the erstwhile MEL and hence, are not comparable with those
of the current year,
2. FIXED ASSETS
(i) Includes 62152.52 acres (62101.12 acres) owned/possessed/ taken on
lease by the Company, in respect of which title/ lease deeds are
pending for registration.
(ii) Includes 1917.06 acres (1845.71 acres) in respect of which title
is under dispute.
(iii) 10594.22 acres (10615.66 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) 6162.74 acres (6204.60 acres) given on lease to various
2.2 Buildings include net block of Rs.25.71 crore (Rs.23.71 crore) for
which conveyance deed is yet to be registered in the name of the
2.3 The Company has opted for accounting the exchange difference
arising on reporting of long term foreign currency monetary items in
line with Notification dated 31st March, 2009 issued by Ministry of
Corporate Affairs on Accounting Standard 11. During the year ended
31st March, 2012, the net foreign exchange variations of Rs.127.85 crore
(net debit) [Rs.8.09 crore (net credit)] on foreign currency loans have
been adjusted in the carrying amount of fixed assets/capital
work-in-progress. Out of the exchange differences adjusted from 1st
April, 2008 to 31st March, 2012, an amount of Rs.81.13 crore (net debit)
[Rs.33.14 crore (net credit)] is yet to be depreciated/amortised as at
31st March, 2012. Further, exchange variations amounting to Rs.334.85
crore have been treated as interest cost in accordance with paragraph
4(e) of AS-16 - ''Borrowings Costs''.
2.4 Estimated amount of contracts remaining to be executed and not
provided for (net of advances) on capital account are Rs.23860.45 crore
(Rs.25477.01 crore) and on revenue account are Rs.1236.54 crore (Rs.841.18
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 Hon''ble High Court at Kolkata challenging the above Notification.
In pursuance of Hon''ble Court''s orders, the term deposits (including
interest earned thereon) amounting to Rs.177.90 crore (Rs.161.74 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
Hon''ble 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 The amount due to Micro and Small Enterprises as defined in the
''The Micro, Small and Medium Enterprises Development Act, 2006'', (as
disclosed in Note No. 7- Trade Payables ) has been determined to the
extent such parties have been identified on the basis of information
available with the Company. The disclosures relating to Micro and Small
Enterprises as at 31st March, 2012 are as under:
3.3 Balances shown under ''Other Current Liabilities'', ''Short term
Loans & Advances'' and ''Claims Recoverable'' 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.
3.4 The Company has stock of iron ore fines of 41.18 (41.21) million
tonnes at various mines of the Company. Since the usage/sale of such
iron ore fines, 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.
3.5 i) An amount of Rs.51.34 crore has been given to Chhattisgarh State
Power Transmission Company Limited out of total amount of Rs.51.34 crore
payable as per demand letter No. CE/Trans./ PL-HTC-31/0461 and 0462
dated 04th May, 2010 for providing transmission lines and power
connection at upcoming Rowghat Mines. The amount has been reflected as
Long Term Loans & Advances - Deposits. The transmission lines will
not be owned by the Company. The MOU has been signed on 12th May, 2011.
ii) An amount of Rs.132.91 crore has been given to Railways, out of total
amount of Rs.844.23 crore payable as per MOU dated 11th December, 2007
and revised estimate by M/s. RVNL dated 17th July, 2009, for
construction of railway line for movement of ore from upcoming Rowghat
Mines. The amount has been reflected as Long Term Loans & Advances -
Deposits. As per the Agreement, the Railways will pay at the end of
every year to the Company cash @ 7% per annum for 37 years on total
contribution towards redemption of Company''s contribution, commencing
from the 1st year after commissioning of the Phase-I of the Project,
subject to fulfill-ment of certain conditions. The underlying assets
will not be owned by the Company.
The accounting treatment of above mentioned issues has been referred to
the Expert Advisory Committee (EAC) of the Institute of Chartered
Accountants of India (ICAI) for opinion. The accounting of the above
referred issues and similar cases will be done as per the opinion of
the EAC of ICAI.
4. STATEMENT OF PROFIT & LOSS
4.1 Sales include sales to Government agencies recognised on
provisional contract prices during the year ended 31st March 2012:
Rs.3479.04 crore (Previous year: Rs.3466.59 crore) and upto 31st March,
2012: Rs.14642.06 crore (Previous year: Rs.11272.27 crore).
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 Statement of
Profit & Loss and allocated to Fixed Assets, during the year, amount to
Rs.129.08 crore (Rs.127.06 crore) and Rs.5.37 crore (Rs.5.08 crore)
respectively. The aggregate amount of revenue expenditure incurred on
Research and Development is shown in the respective head of accounts.
The break-up of the amount is as under:
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, 2012, no provision for the loss making
units is required to be made, as the net realisable value thereof,
assessed by an independent agency as at 31st March, 2011 for IISCO
Steel Plant, Alloy Steels Plant, Visvesvaraya Iron & Steel Plant and as
at 31st March, 2012 for Salem Steel Plant, is more than the carrying
4.5 During the year, the basis of valuation of scrap has been revised,
resulting in higher profit of Rs.164.34 crore for the year.
4.6 The long-term agreement for wage revision for non-executives
expired on 31st December 2011. Pending finalisation of fresh agreement
w.e.f. 1st January 2012, provision towards salaries and wages revision
of Rs.61.08 crore and Rs.0.19 crore have been charged to Statement of
Profit & Loss and Expenditure during construction respectively, on an
4.7 Provision for pension under superannuation benefits has been made
for executives as per DPE Guidelines and approval of the Board. As the
issue remains to be discussed at later date for non-executives and as
on date is undecided and there exists no liability, no provision has
4.8 During the year, the unspent carried forward amount of Rs.25.73
crore on account of Corporate Social Responsibility (CSR) activities
pertaining to the year 2010-11, was incurred in full. Against the
approved budgeted amount of Rs.64 crore towards the CSR activities for
the year 2011-12, the Company incurred Rs.35.52 crore. The balance
budgeted amount of Rs.28.48 crore, will be spent in due course. Since the
Company does not have any contractual obligation/liability as on 31st
March, 2012, the unspent amount has not been provided in the books and
would be accounted for as and when spent/ incurred.
4.9 Information on leases as per Accounting Standard 19 on '' Leases'':
(a) The Company has granted lease of properties to the employees and
third parties for varying periods. The lease premium received up-front,
after adjusting against book value, is booked to other revenues in the
year of lease. Renewal premium, ground rent and service charges of
properties, pending for renewal, given on lease are treated as income
in the year of receipt.
(b) In respect of assets taken on lease/rent :
(i) The Company has various operating leases for, office facilities,
guest houses and residential premises for employees that are renewable
on a periodic basis. Rental expenses for these leases recognised in the
Statement of Profit and Loss during the year is Rs.11.92 crore (Rs.14.66
(ii) Sub-lease recoveries recognised in the accounts are Rs.Nil crore
4.10 The matter with regard to imposition of Entry Tax on Coking Coal
and Iron Ore in Bhilai Steel Plant (BSP), Bhilai of the Company is
pending in the Hon''ble Supreme Court of India and is sub-judice. As
per the Court''s Order dated 9th Feb, 2010, BSP is paying Entry Tax @3%
adhoc on Coking Coal and Iron Ore, on month to month basis and as per
the same order, the payments towards Entry Tax are being treated as
deposits. Till previous year, liability towards Entry Tax (including
interest) was provided @6% on Coking Coal and Iron Ore. During the
year, based on the legal opinion, the liability towards Entry Tax on
Coking Coal and Iron Ore has been retained in the books to the extent
of 3% adhoc payments made and the balance liability alongwith interest
amount of Rs.511.20 crore provided till previous year, has been written
back. The same has been disclosed as contingent liability and shown as
Exceptional Item in the Statement of Profit & Loss for the year
resulting in increase of Profit by Rs.511.20 crore.
4.11 Pending final decision by the Hon''ble Supreme Court of India on
levy of entry tax in Uttar Pradesh, the entry tax demand of Rs.62.58
crore during the year in Uttar Pradesh, under dispute, has been treated
as contingent liability.
4.12 During the year, the amount of income/expenditure relating to
prior period and prepaid expenses, which do not exceed Rs.10 lakhs in
each case, as against Rs.5 lakhs considered upto previous year, have been
treated as income/expenditure of current year. As a result, the prior
period income/expenditure and prepaid expenses of Rs.0.22 crore (net
debit) and of Rs.07 crore respectively have been charged to normal heads
of revenue and expenditure during the year.
5.1 Defined Benefit Schemes
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 lakhs for executives and without any
monetary limit for non-executives has been considered for actuarial
Leave Encashment : Payable on superannuation to eligible employees who
have accumulated earned and half pay leave, subject to maximum limit of
300 days for earned leave and 240 days of half pay leave. Encashment of
accumulated earned leave is also allowed upto 30 days once in a
Provident Fund :12% of Basic Pay Plus Dearness Allowance, contributed
to the Provident Fund Trusts by the company.
Post Retirement Medical Benefit : Available to retired employees at
company''s 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.
(b) Reconciliation of Fair Value of Assets and Obligations:
The Company has partly funded the gratuity liability through a separate
Gratuity Fund. The fair value of the plan assets is mainly based on the
information given by the insurance companies through whom the
investments have been made by the Fund. The reconciliation of fair
value of assets of the Gratuity Fund and defined benefit gratuity
obligations is as under:
* The company does not expect to contribute any amount to the Gratuity
Fund during the year 2012-13, after considering the return on the
The defined benefit obligations, other than gratuity, are unfunded.
(c) Provident Fund : Company''s contribution paid/payable during the
year to Provident Funds are recognised in the Statement of Profit &
Loss. The Company''s Provident Fund Trusts are exempted under section 17
of Employees'' Provident Fund and Miscellaneous Provisions Act, 1952.
The conditions for grant of exemptions stipulate that the employer
shall make good deficiency, if any, in the interest rate declared by
the Trusts vis-a-vis statutory rate. The Company does not anticipate
any further obligations in the near foreseeable future having regard to
the assets of the funds and return on investment, as confirmed by
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
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 parties, excluding Government controlled enterprises, are given
5.4 Disclosures of provisions required by Accounting Standard (AS) 29
''Provisions, Contingent Liabilities and Contingent Assets: Brief
Description of Provisions :
Mines afforestation costs - Payable on renewal (including deemed
renewal) / forest clearance of mining leases to Government authorities,
towards afforestation cost at mines for use of forest land for mining
Mines closure costs - Estimated liability towards closure of mines, to
be incurred at the time of cessation of mining activities.
Overburden backlog removal costs - To be incurred towards removal of
overburden backlog at mines over the future years.
* Out of outstanding amount, Rs.2.53 crore ( Rs.2.53 crore), being doubtful
of recovery, has been provided for.
ii) No loans have been given (other than loans to employees), wherein
there is no repayment schedule or repayment is beyond seven years; and
iii) There are no loans and advances in the nature of loans, to
firms/companies, in which directors are interested.
6. The financial statements for the year ended 31st March, 2011 had
been prepared as per the then applicable, pre- revised Schedule VI to
the Companies Act, 1956. Consequent to the notification under the
Companies Act, 1956, the financial statements for the year ended 31st
March, 2012 are prepared under the revised Schedule VI. Accordingly,
the previous year''s figures have been re-arranged/re-grouped/re-cast,
wherever necessary. Figures in brackets pertain to previous year.