01 CORPORATE INFORMATION
Tata Sponge Iron Limited which has its manufacturing facility at
Bileipada Odisha is engaged in production of sponge iron by direct
reduction method of iron ore and generation of power from waste heat.
Rights, preferences and restrictions attached to shares
The company has one class of equity shares having a par value of Rs.10
per share. Each shareholder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.
02 Estimated amounts of contracts remaining to be executed on capital
account and not provided for : Rs.918.99 lacs (As at 31.3.2011: Rs.
658.98 lacs) [Net of advances Rs. 6.10 lacs (Asat31.03.2011
03 The Company had been allotted a Coal block along with two other
companies in 2006-07. The investment and the operation of the mine
would be done by the company as the leader of the group. The company
has paid advance payments for acquisition of land. The Company has
arranged for bank guarantee of Rs. 3250.00 lacs as at 31.03.2012 (As at
31.03.2011 Rs.3250.00 lacs ).
04 SALES TAX
a). The Company had filed a writ petition before the High Court of
Orissa for sales tax exemption for a period of two years w.e.f. 10th
June 1997 as a Pioneer Unit. The High Court initially ruled that the
Company should pay the sales tax under dispute pending disposal of the
writ petition. Accordingly, the Company paid Sales tax, which had not
been collected from customers, and amounts aggregating to Rs 573.73
lacs had been charged to the Profit & Loss Account during the years
1997-98 to 1999-2000.
The High Court directed the Sales Tax Authorities to refund the amount
after ascertaining that the said refund shall not unjustly enrich the
Company. The Sales Tax Officer passed the order stating that the refund
shall unjustly enrich the Company against which the Company has filed a
writ petition in the High Court challenging the correctness of the
assessment and the same is pending. No credit has been taken in the
accounts, as the matter has not reached finality.
b). As per Industrial Policy Resolution 1992 of Government of Orissa,
the company has to pay a minimum sales tax of Rs. 252.56 lacs before
availing exemption from sales tax on incremental sale of Sponge Iron
from Kiln 1 and 2. The company was paying the above amount until the
rate of sales tax was reduced. With reduction in rate of sales tax, the
company contends that the above limit of Rs. 252.56 lacs has to
correspondingly reduce and accordingly is making reduced payment. The
company however has provided for the differential amount of Rs. 513.83
lacs as at 31st March 2012 (Asat31.03.2011 Rs. 397.92lacs).
05. The Company is engaged in production and sale of Sponge Iron and
hence Sponge Iron is the only reportable segment in accordance with
Accounting Standard 17 - Segment Reporting.
06. Based on and to the extent of information obtained from suppliers
regarding their status as Micro, Small or Medium enterprises under
Micro, Small and Medium Enterprises Development Act, 2006, there are no
amounts due to them as at the end of the year.
07. DERIVATIVE INSTRUMENTS
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations. The use of foreign
currency forward contracts is governed by the Company''s strategy
approved by the Board of Directors, which provide principles on the use
of such forward contracts consistent with the Company''s Risk
Management Policy. The Company does not use forward contracts for
08. DISCLOSURE AS REQUIRED UNDER AS 29
Provisions for Sales tax and Entry tax have been recognised in the
financial statements considering the following:
i). The company has a present obligation as a result of past event
ii). It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
iii). A reliable estimate can be made of the amount of the obligation
09. The Revised Schedule VI has become effective from 1 April, 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year''s figures have been regrouped / reclassified
wherever necessary to correspond with the current year''s classification