Board of Directors
As on 23.08.2002
Chairman
Shri Arvind Pande
Managing Directors
Bhilai Steel Plant
Shri B.K. Singh
Durgapur Steel Plant
Dr. S.K. Bhattacharyya
Bokaro Steel Plant
Shri S. Pandey
Rourkela Steel Plant
Dr. Sanak Mishra
Functional Directors
Finance
Shri V.S. Jain
Projects
Shri S.C.K. Patne
Commercial
Shri A.K. Singh
Research & Development
Shri R.C. Jha
Directors
Dr. Y.R.K. Reddy
Shri D.V. Singh
Shri R.V. Gupta
Prof. Ram Prasad Sengupta
Shri Pyarimohan Mohapatra
Dr. Atul Sarma
Dr. Surendra Nath Mishra
Shri Dhananjaya Prasad Singh
Secretary
Shri Devinder Kumar
Registered Office
Ispat Bhawan Lodhi Road, New Delhi - 110003
Phone: 4367481; Fax-4367015
Gram: STEELINDA
Internet: www.sail.co.in
E.Mail: secy.sail@sailex.com
Bankers
State Bank of India
Bank of Baroda
C O N T E N TS
Canara Bank
Notice ....................................................................... 1
Punjab National Bank
United Bank of India
Directors’ Report ..................................................... 5
Syndicate Bank
Union Bank of India 10 Year Digest ........................................................... 9
Bank of India
Indian Overseas Bank Annual Accounts ..................................................... 10
Oriental Bank of Commerce
Central Bank of India Auditors' Report ..................................................... 44
UCO Bank
State Bank of Patiala Comments of C& AG .............................................. 50
Punjab & Sind Bank Ltd.
Allahabad Bank Review of Accounts by C & AG .............................. 55
Jammu & Kashmir Bank
State Bank of Saurashtra Corporate Governance Report ................................. 64
State Bank of Hyderabad
Bank of Maharashtra Management Discussion and Analysis Report ......... 68
State Bank of Indore
State Bank of Bikaner & Corporate Governance Certificate ............................ 76
Jaipur
State Bank of Mysore Cash Flow Statement ............................................... 76
Statutory Auditors
M/s. S.R. Batliboi & Co. Consolidated Annual Accounts ................................ 79
Chartered Accountants
Principal Executives ............................................... 102
M/s. S.N. Nanda & Co.
Chartered Accountant
Subsidiary Companies'
M/s. Chaturvedi & Co. Annual Report and Accounts
Chartered Accountants
The Indian Iron & Steel Company Limited ........... 103
Maharashtra Elektrosmelt Limited ......................... 126
Bhilai Oxygen Limited .......................................... 145
Notice
STEEL AUTHORITY OF INDIA LIMITED
REGISTERED OFFICE : ISPAT BHAWAN, LODI ROAD, NEW DELHI - 110003
NOTICE IS HEREBY GIVEN THAT the 30th Annual General Meeting
of the Members of Steel Authority of India Limited will be held at 1030
hours on Tuesday, the 24th September, 2002 at NDMC Indoor Stadium,
Talkatora Garden, New Delhi-110001 to transact the following business:
1. To receive, consider and adopt the audited Profit & Loss Account for
the year ended 31st March, 2002, the Balance Sheet as at that date
and Directors’ and Auditors’ Reports thereon.
2. To appoint a Director in place of Shri V.S. Jain who retires by
rotation and is eligible for re-appointment.
3. To appoint a Director in place of Shri A.K. Singh who retires by
rotation and is eligible for re-appointment.
4. To appoint a Director in place of Dr. S.K. Bhattacharyya who retires
by rotation and is eligible for re-appointment.
5. To appoint a Director in place of Shri R.C. Jha who retires by
rotation and is eligible for re-appointment.
6. To fix the remuneration of Auditors appointed by Comptroller &
Auditor General of India.
SPECIAL BUSINESS
7. To consider and, if thought fit, to pass with or without modification
the following resolution as an ORDINARY RESOLUTION:
“RESOLVED THAT Dr. Y.R.K. Reddy who was appointed as an
Additional Director of the Company by the Board of Directors
under Section 260 of the Companies Act, 1956, and who holds
office upto the date of this Annual General Meeting and in respect of
whom the Company has received a notice in writing proposing his
candidature for the office of Director under Section 257 of the
Companies Act, 1956, be and is hereby appointed as a Director of
the Company, liable to retire by rotation, for a period of three years
from the date of his initial appointment i.e. with effect from 23rd
September, 2001.”
8. To consider and, if thought fit, to pass with or without modification
the following resolution as an ORDINARY RESOLUTION:
“RESOLVED THAT Shri Surendra Nath Mishra who was appointed
as an Additional Director of the Company by the Board of Directors
under Section 260 of the Companies Act, 1956, and who holds
office upto the date of this Annual General Meeting and in respect
of whom the Company has received a notice in writing proposing
his candidature for the office of Director under Section 257 of the
Companies Act, 1956, be and is hereby appointed as a Director of
the Company, liable to retire by rotation, for a period of three years
from the date of his initial appointment i.e. with effect from 26th
December, 2001.”
9. To consider and, if thought fit, to pass with or without modification
the following resolution as an ORDINARY RESOLUTION:
“RESOLVED THAT Dr. Sanak Mishra who was appointed as an
Additional Director of the Company by the Board of Directors
under Section 260 of the Companies Act, 1956, and who holds
office upto the date of this Annual General Meeting and in respect
of whom the Company has received a notice in writing proposing
his candidature for the office of Director under Section 257 of the
Companies Act, 1956, be and is hereby appointed as a Director of
the Company, liable to retire by rotation.”
10. To consider and, if thought fit, to pass with or without modifications
the following Resolution as SPECIAL RESOLUTION:
“RESOLVED THAT approval of the Shareholders be and is hereby
accorded to the amendment of Articles of Association of the company
by substituting Article 69(a) as follows:
Article 69 (a)
Existing Proposed
The number of Directors of The number of Directors of
the Company shall be not less the Company shall be not less
than six and not more than less than six and not more
twenty-one. than twenty-two.
11. To consider and, if thought fit, to pass with or without
modifications the following Resolution as an ORDINARY
RESOLUTION:
Whereas the accumulated losses of the company as at 31st March,
2002 have resulted in more than 50% erosion of peak net worth
during the immediately preceding four (4) financial years and the
company is required to report this fact to the Board for Industrial
and Financial Reconstruction under the provision of Section 23 of
the Sick Industrial Companies (Special Provisions) Act, 1985;
And whereas the Board of Directors, after analyzing the reasons for
such erosion and after discussing the matter in detail have come to
the conclusion that the erosion was mainly on account of economic
slow down resulting in considerable stress on prices of steel products.
Further, with the visible improvement in market demand, increase
in net sales realisation and cost control efforts, the company expects
better results during the financial year 2002-03 and onwards.
And whereas shareholders of the company have been informed of the
said erosion and have considered the reasons for such erosion as
detailed in the Explanatory Statement attached hereto.
Resolved that in terms of the relevant provisions of Section 23 of the
Sick Industrial Companies (Special Provisions) Act, 1985 the Board
for Industrial and Financial Reconstruction be informed of the fact of
erosion of more than 50% of its peak net worth during the immediately
preceding four financial years.
12. To consider and, if thought fit, to pass with or without modifications
the following Resolution as an ORDINARY RESOLUTION:
Resolved that pursuant to the provisions of Section 293(1)(e) of
the Companies Act, 1956 and other applicable provisions, if any,
the Board of Directors of the Company be and is hereby authorised
to contribute to any charitable and other funds not directly relating
to the business of the Company or the welfare of its employees up
to a total amount of Rs.55.25 lakhs.
By order of the Board of Directors
(Devinder Kumar)
Secretary
New Delhi
23rd August, 2002
Registered Office:
Ispat Bhawan, Lodi Road,
New Delhi-110003.
1
 Notice
Notes:
1. The relevant Explanatory Statement, pursuant to Section
173(2) of the Companies Act, 1956, in respect of the business
Item Nos. 7 to 12 above are annexed hereto.
2. A MEMBER ENTITLED TO ATTEND AND VOTE AT
THE MEETING IS ENTITLED TO APPOINT A PROXY
TO ATTEND AND VOTE INSTEAD OF HIMSELF.
SUCH PROXY NEED NOT BE A MEMBER OF THE
COMPANY. PROXIES IN ORDER TO BE EFFECTIVE
MUST BE RECEIVED BY THE COMPANY NOT LESS
THAN 48 HOURS BEFORE THE COMMENCEMENT
OF THE MEETING. THE PROXY FORM IS ENCLOSED
AT THE END OF ANNUAL REPORT.
3. Only members carrying the attendance slips or holders of
valid proxies registered with the Company will be permitted
to attend the meeting. In case of shares held in joint names or
shares held under different registered folios wherein the name
of the sole holder/first joint-holder is same, only the first
joint-holder/sole holder or any proxy appointed by such holder,
as the case may be, will be permitted to attend the meeting.
4. Members attending the meeting are requested to bring their
copy of the Annual Report as extra copies will not be supplied.
5. The Register of Members of the Company will remain closed
from 27th August, 2002 to 24th September, 2002 (both days
inclusive).
6. The Company has appointed M/s. RCMC Share Registry
Private Limited as Registrar and Transfer Agent for carrying
out its entire share related activities viz. transfer/transmission/
transposition/dematerialisation/rematerialisation/split/
ANNEXURE TO THE NOTICE
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
Item No.7
On nomination by the President of India vide Government’s Notification
No.10(16)/97-SAIL-PC dated 23 rd August, 2001, Dr. Y.R.K. Reddy
was appointed as an Additional Director of the Company with effect
from 23rd September, 2001 and vacates his office of Directorship at this
Annual General Meeting, pursuant to section 260 of the Companies Act,
1956 and Articles of Association of the Company. The notice under
Section 257 of the said Act has been received from a member proposing
the name of Dr. Y.R.K. Reddy as a candidate for the office of Director of
the Company.
Dr. Y.R.K. Reddy has done MA (Management Studies) from U.K. and
Ph.D. in Econometric Analysis of Strike activity in India and his area of
specialization is Strategic Human Resource Management, Corporate
Governance, and Strategy. He is also a Director on the Board of the
following companies:
l Infotech Enterprises Limited
l Yaga Consulting Private Limited
l Dynam Venture East Private Limited
l Lumley Technologies Private Limited
Board considers it desirable that the Company should continue to avail
itself of his services as a Director and recommend this Resolution for
approval of the shareholders. None of the Directors other than Dr.
Y.R.K. Reddy to the extent of his appointment as Director is concerned
or interested in the above resolution.
2
consolidation of shares, change of address, bank mandate,
filing of nomination, dividend payment and allied activities
w.e.f. 1st November, 2001. Shareholders are requested to make
all future correspondences related to share transfer and allied
activities with this agency only at the following address:
M/s. RCMC Share Registry Private Limited,
1515 (1st Floor), Bhisham Pitamah Marg,
Kotla Mubarakpur (Near South Ext.),
New Delhi - 110 003.
7. Members should notify change in their addresses, if any,
specifying full address in block letters with PIN CODE of
their post offices, which is mandatory.
8. Members holding shares in identical order of names in more
than one folio are requested to write to the Company’s Registrar
and Transfer Agent enclosing their Share Certificates to enable
the Company to consolidate their holdings in one folio.
9. Members who have not encashed the dividend warrant(s) so
far for the years 1994-95, 1995-96, 1996-97 and 1997-98
are requested to make their claims to the Company
immediately for its revalidation and subsequent encashment.
10. Members seeking further information on the Accounts or any
other matter contained in the Notice, are requested to write
to the Company at least 7 days before the meeting so that
relevant information can be kept ready at the meeting.
11. Entry to the Stadium will be strictly against Entry Slip
available at the counters at the venue and against exchange
of Attendance Slip.
12. No Brief case or Bag will be allowed to be taken inside the
auditorium.
Item No.8
On nomination by the President of India vide Government’s Notification
No.10(16)/97-SAIL-PC(Vol.III) dated 5 th December, 2001, Shri
Surendra Nath Mishra was appointed as an Additional Director of the
Company with effect from 26th December, 2001 and vacates his office of
Directorship at this Annual General Meeting, pursuant to section 260 of
the Companies Act, 1956 and Articles of Association of the Company.
The notice under Section 257 of the said Act has been received from a
member proposing the name of Shri Surendra Nath Mishra as a candidate
for the office of Director of the Company.
Shri Surendra Nath Mishra has retired from IAS on Superannuation in
1998 after 35 years of service in State and Central Governments. He held
senior positions in Government of Orissa and in
Lok Sabha Secretariat where he functioned as Secretary – General. He has
considerable experience in the fields of minerals, mineral industries and
metals (both ferrous and non-ferrous) and as Chief Executive of Public
Sector Undertakings both at State and Central Levels including Managing
Director of Food Corporation of India. He is also a Director on the
Board of Word Portfolio Finance & Leasing Limited.
Board considers it desirable that the Company should continue to avail
itself of his services as a Director and recommend this Resolution for
approval of the shareholders. None of the Directors other than Shri
Surendra Nath Mishra to the extent of his appointment as Director is
concerned or interested in the above resolution.
Item No. 9
On nomination by the President of India vide Government's Notification
No.8(7)/2000-SAIL-PC(Vol.III) dated 22nd August, 2002, Dr. Sanak
Mishra was appointed as an Additional Director of the Company with
effect from 23rd August, 2002 and vacates his office of Directorship at
this Annual General Meeting, pursuant to section 260 of the Companies
Act, 1956 and Articles of Association of the Company. The notice under
Section 257 of the said Act has been received from a member proposing
the name of Dr. Sanak Mishra as a candidate for the office of Director of
the Company.
Dr. Sanak Mishra has done Ph.D. in Metallurgy from University of
lllinois, USA. He has considerable experience in Research & Development
in Iron & Steel, Corporate Planning and Management of an integrated
Steel Plant.
Board considers it desirable that the Company should continue to avail
itself of his services as a Director and recommend this Resolution for
approval of the shareholders.
None of the Directors other than Dr. Sanak Mishra to the extent of his
appointment as Director is concerned or interested in the above resolution.
Item No. 10
Clause 49 of the Listing Agreement relating to Corporate Governance,
inter-alia, requires that in case of a non-executive Chairman, at least one-
third of Board should comprise of independent directors and in case of
an executive Chairman, at least half of Board should comprise of
independent directors. The independent Directors were defined to mean
directors who apart from receiving Director’s remuneration do not have
any other material pecuniary relationship or transactions with the company,
its promoters, its management or its subsidiaries, which in judgement of
the Board may affect independence of judgement of the Director. Further,
SEBI has clarified that in the case of Public Sector Undertakings, the
Government nominee Directors cannot be considered as Independent
Directors for the purpose of constitution of Board of Directors.
The company need minimum of 9 Functional Directors, including
Chairman, to represent 4 integrated steel plants; Finance, Personnel,
Commercial, and Technical Directorates. With the inclusion of 2
Government nominee directors, the number of non-independent directors
would be 11. In order to keep equal number of independent and non-
independent directors as per listing requirements and SEBI’s clarification,
the strength of the Board may be enhanced to 22.
As per Article 69 (a) of Articles of Association of the company, the maximum
number of Directors, which can be appointed on SAIL Board, is limited
to 21. As such increasing the number to 22 would require the approval of
Shareholders Under Section 31(1) of the Companies Act, 1956.
The members are requested to approve amendment of Article 69 (a) of
the Articles of Association of the company as under for increasing the
maximum number of directors on Board of Directors to 22:
Article 69 (a)
Existing Proposed
The number of Directors of the The number of Directors of
Company shall be not less than the Company shall be not less
six and not more than than six and not more than
twenty-one. twenty-two.
The Directors, therefore, recommend the Special Resolution. None of
the Directors of the Company is interested or concerned in the resolution.
Item No. 11
In terms of provisions under section 23 of Sick Industrial Companies
(Special Provisions) Act 1985 (SICA), if the accumulated losses of an
industrial company as at the end of any financial year have resulted in
erosion of 50 per cent or more of its peak net worth during the immediately
preceding four (4) financial years, the company is required to report the
fact of such erosion to the Board for Industrial and Financial Reconstruction
(BIFR) within the specified time after finalisation of duly audited accounts.
Further, the shareholders of the company are also required to consider
such erosion.
The peak net worth of the Company as per SICA as at end of the financial
year 1997-98 was Rs.8553.47 crores which after erosion, due to
incurrence of losses during the last four years for the reasons explained
below, has come down to Rs.2820.83 crores as at the end of the financial
year 2001-2002.
As the members are aware, the company’s main business is production
and marketing of iron and steel. During the last four to five years, the
steel industry has witnessed a recession in domestic as well as international
market. Demand recession in the user industry, lack of resources both in
public and private sectors for financing infrastructure projects have
adversely affected financial performance of steel industry. As a result net
profit of SAIL went down from a peak of Rs.1319 crores in the financial
year 1995-96 to a loss of Rs.1707 crores during 2001-2002. The losses
have resulted in erosion of more than 50% of the peak net worth of the
company.
To overcome the adverse situation, the company had worked out a
turnaround plan and identified the areas of intervention and actions
required to be taken to ensure the long term viability of the company.
With a view to improve its long term competitive position, it had decided
to restructure its activities and to separate non-core business from its
main business of production and selling steel. Accordingly, a proposal
for financial and business restructuring of the company was submitted to
the Government of India and the same was approved by the Government
of India. The members approved the Financial and Business Restructuring
in the 28th Annual General Meeting. Further, the divestment of Captive
Power Plant-II at Bhilai Steel Plant was also approved by the Government
and by the members in the year 2001. The company has already
completed the financial restructuring and as a part of Business
Restructuring divestment of Captive Power Plants at Rourkela Steel Plant,
Durgapur Steel Plant, Bhilai Steel Plant and Bokaro Steel Plant has been
completed. Further efforts on business restructuring are under process.
Though above financial and business restructuring coupled with the cost
control measures undertaken by the company have resulted in
improvement in the performance but the same was not sufficient to
nullify the impact of input cost escalations and stress on prices of steel
products due to depressed market conditions. The fall in international
prices and continued sluggishness in the economy resulted in decline in
the price realisation in the domestic market also. The cost control measures
undertaken by the company encompassed all areas of operation in addition
to the conventional areas of savings like reduction in consumption of
coking coal/other raw materials, improvement in yield and techno-economic
parameters, reduction in energy consumption, lower consumption of
stores & spares and control on administrative expenditure. Substantial
savings were also achieved in the non-conventional areas like control on
arisings, reduction in payment of demurrage/idle freight and savings
through optimization of purchases.
3
 Notice
During current financial year the market is signalling an upward trend.
There have been price increases in steel products, which have been
absorbed by the market. There has been improvement in production
also and efforts are being made towards achieving maximum capacity
utilization matching with the increased market demand. The company is
vigorously giving greater thrust on the cost control measures during the
current year also. The Board of Directors expects that with the
improvement in market demand, increase in net sales realisation and cost
control efforts being made, the company is likely to show better results
during the financial year 2002-03 and onwards.
The Board recommends the resolution to consider the erosion of net
worth and the measures being taken by the company to overcome the
adverse situation.
None of the Directors is concerned or interested in the above resolution.
Item No.12
In the year 2001 floods in Orissa rendered lakhs of people homeless.
Floods caused vide spread devastation to the life and property of several
thousands people across the State. In order to mitigate the suffering and
for rehabilitation of the families affected by the floods, an appeal was
issued to all the employees of SAIL to donate one day’s basic pay to
provide succour to the affected families of Orissa. Based on the past
experience, it was estimated that an amount of Rs. 2 crores would be
collected through employees’ contribution for this noble cause. Pending
recoveries from the employees an amount of Rs.1 crore was remitted to
Orissa Chief Minister’s Relief Fund as an advance contribution to be
adjusted against the actual receipt. However, total collection received from
employees were to the tune of Rs. 44.75 lakhs only leaving shortfall of
Rs. 55.25 lakhs. Futher efforts are being made by appealing employees
to contribute for this cause. The amount so received will be adjusted
against the shortfall.
Section 293(1)(e) of the Companies Act requires that the Board of
Directors of a Public Company or of a Private Company which is a
subsidiary of a Public Company shall not, except with the consent of
such Public Company or Subsidiary in General Meeting contribute,
after the commencement of this Act, to charitable and other funds not
directly relating to the business of the Company or the welfare of its
employees, any amount the aggregate of which will, in any Financial Year,
exceed Rs. 50,000/- or 5% of its average net profit as determined in
accordance with the provisions of sections 349 and 350 during the three
financial years immediately preceding, whichever is greater. The Company
has incurred loss during the last three Financial Years.
It is proposed that the shortfall upto Rs. 55.25 lakhs due to non-receipt of
the contribution from employees be considered as contribution by the
Company and accordingly approval of the share holders is being obtained
as required under Section 293(1)(e) of the Companies Act.
The Board recommends the resolution for approval of the
members. None of the Directors is concerned or interested in the above
resolution.
By order of the Board of Directors
(Devinder Kumar)
Secretary
New Delhi
23rd August, 2002
Registered Office: Ispat Bhawan, Lodi Road,
New Delhi-110003

Details of Directors seeking re-appointment in Annual General Meeting furnished in terms of clause 49 of Listing Agreements.

Name of the Director Shri V.S. Jain Shri A.K. Singh Dr. S.K. Bhattacharyya Shri R.C. Jha
Date of Birth 24.07.1946 01.02.1944 25.12.1945 18.10.1942
Date of Appointment 07.11.1994 09.12.1996 12.06.1997 27.09.1999
Expertise in Specific Finance Technical, HRD Technical, Research & Technical
functional areas and Commercial Development
Qualifications B.Com (Hons), B.Tech Ph.D (Metallurgy) B. Tech
FCA, (Electrical) (Metallurgy)
FCWA
List of Companies Maharashtra Nil IIM Nil
in which outside Elektrosmelt Ltd.
Directorship held (MEL)
as on 31st March, 2002. UEC-SAIL
Information
Technology Ltd. (USIT)
Indian Iron &
Steel Co. Ltd. (IISCO)
Chairman/Member SAIL Nil Nil Nil
of the Committees Shareholder/Investor
of the Board of the Grievance Committee -
Companies on Member
which he is a IISCO
Director as Audit Committee –
on 31st March, 2002. Member

4
Directors’ Report
To,
The Members,
The Directors have pleasure in presenting the 30th Annual Report of the
Company together with audited accounts for the year ended 31st March,
2002.
FINANCIAL REVIEW
During the year, turnover of the company was Rs.15502 crores (previous
year Rs.16233 crores) showing a decline of 4.5 per cent over previous
year. This decline has resulted from dip in net sales realisation in domestic/
export market mainly due to global recession and lower sales of by-
products, scrap & secondary products. The net loss was Rs.1706.89
crores (previous year Rs.728.66 crores) after providing for interest of
Rs.1562.03 crores (previous year Rs.1751.68 crores) and depreciation
Rs.1155.89 crores (previous year Rs.1143.62 crores). In view of the
loss, the directors do not recommend dividend.
Due to fall in international prices coupled with continued sluggishness
in the economy, the price realisation in the domestic market also declined.
The Company has recorded a growth of about 5.7% in sales volume of
mild steel.
The efforts in the cost control measures including revenue maximization
continued and your company achieved a benefit of about Rs.450 crores
during the year 2001-02. The cost control savings encompasses all areas
of operation like reduction in consumption of coking coal/other raw
materials, improvement in yield and techno-economic parameters,
reduction in energy consumption, lower consumption of stores & spares
and control on administrative expenditure. Substantial savings have also
been achieved in other areas like control on arisings, reduction in payment
of demurrage/idle freight and savings through optimization of purchases.
In terms of provisions of Sick Industrial Companies (Special Provisions)
Act 1985, if the accumulated losses of an industrial company as at the
end of any financial year have resulted in erosion of 50 per cent or more
of its peak net worth during the immediately preceding 4 financial years,
the company is required to report the fact of such erosion to the Board for
Industrial and Financial Reconstruction (BIFR) within sixty days from
the date of finalisation of duly audited accounts of the company. As there
is erosion in net worth by over 50 per cent of peak net worth mainly on
account of stress on prices of steel products, report to BIFR is being
made.
However, during current financial year the market is signalling an upward
trend. There have been price increases in steel products, which have been
absorbed by the market. There has been improvement in production
also as compared to last year and efforts are being made towards achieving
maximum capacity utilisation matching with the increased market
demand. Your company is vigorously giving greater thrust on the cost
control measures during the current year as well.
With the improvement in market demand, increase in net sales realisation,
cost control efforts, your company expects much better results during the
financial year 2002-03.
BUSINESS RESTRUCTURING REVIEW
The Company achieved another landmark in asset restructuring by
divesting its Captive Power Plants at Bokaro to the Joint Venture Company
(JVC) namely Bokaro Power Supply Company Limited (BPSCL) with
Damodar Valley Corporation (DVC) as the Strategic Alliance Partner in
the JVC. Through this divestment a capital gain of Rs.391 crores was
achieved. The divestment of Captive Power Plant-II at Bhilai was also
completed successfully with NTPC as Strategic Alliance Partner in the
Joint Venture Company viz., Bhilai Electric Supply Company Limited.
This resulted in capital gain of Rs.99 crores.
The process of divestment of other non-core assets including Oxygen
Plant-2 of Bhilai Steel Plant, Salem Steel Plant, Visvesvaraya Iron & Steel
Plant, Rourkela Fertilizer Plant and Indian Iron & Steel Company Limited
is in different stages. There are certain hurdles like resistance by the
employee unions, political parties etc.
It may be recalled that one other major restructuring task was the
reorganization of the company from a functional setup to a Strategic
Business Units (SBU). Considering the scope of such a major organisation
restructuring and the implications with respect to location of head quarters
of SBU, Board structure etc., it has been decided to take up the
implementation in two Phases. In Phase-1, many critical changes such as
separation of branches and stockyards, enhanced Key Accounts
Management process, modified system of Management Information
System, improved reward and punishment system etc. have been taken
up for implementation. The 2nd Phase consisting of Organisation
structure at top level on Flat Product/Long Product basis will be taken up
later for implementation. Implementation of the other business
restructuring interventions like Rightsizing of Manpower, Purchase Cost
reduction, Sales force effectiveness etc. is also progressing satisfactorily.
The Company launched a Scheme for Leasing of Houses to Employees/
ex-employees. Over 9000 employees, spouses/legal heirs of deceased
employees have become proud owners of their own houses in their own
Steel Townships. By leasing of houses in its different townships, the
company has collected about Rs.200 crores as premium from leased
dwelling units.
SALES & MARKETING REVIEW
During the year, the steel consumption in the country registered a nominal
growth of 2.6 per cent and there was a situation of over supply.
International prices continued to dip and coupled with protective measures
by several countries including USA, the exports were under stress. Despite
this, the company could export around 5.55 lakhs tonnes of mild steel to
various destinations across the world, registering a growth of about 17
per cent over last year.
However, by adopting aggressive market oriented strategies, the company
could sell 9.3 million tonnes of mild steel registering a growth of 5.7 per
cent over previous year and has also increased its market share.
There was a significant increase in the sales of Railway material, Plates,
HR Coils & HR Sheets. The product mix was continuously reoriented
to keep pace with market demand. Higher availability of special grade
products like API Grade HR Coils, Plates, Pipes, HR Coils for Cold
Reducing segments etc. enabled the company to maintain and achieve
larger market share in value added segments. The Company has
endeavored to expand the customer base by entering into annual tie ups
with major customers and Project authorities. With a market driven
pricing system, emphasis on key customer accounts by special customer
service, increased product focus and constant reviewing of distribution
channels, company could achieve an appreciable growth in sales during
the year.
PRODUCTION REVIEW
During the year, the saleable steel production from four main steel plants
was at 9.464 million tonnes, registering a growth of about 1 per cent over
the previous year. Continuous cast production increased by 6 per cent
over previous year, with proportion of concast going upto 57 per cent
from 54 per cent last year.
5
Directors’ Report
However, production in the flat products and alloy steel segments
continued to be affected by depressed market conditions. The Company
re-oriented the product-mix in favour of long products, as per market
requirement. There has been significant increase in Rails production at
Bhilai by 24 per cent to highest ever 584,000 tonnes through in-house
improvements.
There have also been improvement in important techno-economic
parameters, such as:-
l Lowest ever coke rate of 557 kg/thm, with 2% reduction over previous
year.
l Lowest ever energy consumption of 7.69 Gcal/tcs which is 3% lower
than last year.
l Refractory consumption, declined by 6% over previous year.
The Company continued its efforts towards implementation and
maintenance of ISO Quality Assurance System (QAS) standards in its
plants and units. During the year 2001-02 Ore Bedding and Blending
Plant, Calcining Plant II and Steel Melting Shop II of Rourkela Steel
Plant and International Trade Division of Central Marketing Organisation
received ISO 9002:1994 certification. Transition to ISO 9001:2000
Quality Management System from ISO 9002:1994 QAS was achieved
for Hot Strip Mill and Plate Mill of Rourkela Steel Plant, Hot Strip Mill
and Hot Rolled Coil finishing mill of Bokaro Steel Plant and SAIL
Consultancy Division.
Materials Management
During the year the total iron ore and flux production from captive
mines was 17.462 million tonnes and 2.535 million tonnes respectively.
Almost the total requirement of iron ore for different steel plants was met
from the company’s own captive sources.
The Company has undertaken, on experimental basis, procurement of
three commodities viz. Calcium Carbide, Wire Ropes and Cables through
Reverse Auction, by introducing e-Procurement in SAIL. This has
resulted in reduction in procurement prices and substantial benefits are
expected in future. We are possibly the first Public Sector Undertaking
in the country to introduce e-Procurement through Reverse Auction.
Encouraged by the outcome, the Company has identified additional
commodities/items for e-Procurement through Reverse Auction.
MODERNISATION AND OTHER CAPITAL SCHEMES
At Bhilai Steel Plant, the Sinter Plant-3 has been dedicated to the nation
by the Hon’ble Steel Minister. The sinter charge in BF burden has
increased to about 70%, resulting in substantial improvement in the
performance of blast furnaces. Additional facilities for meeting enhanced
rail requirements of Railways were inaugurated by Hon’ble Minister of
Railways. For Long Rail Facilities, Consultancy agreement with M/s.
Corus Consulting Ltd., U.K. has been entered into for providing back-
up technological support. Tendering activities for the project are in
various stages of processing.
At Durgapur Steel Plant, Upgradation of Blast Furnace No.3 has been
completed. With the completion of this project, the hot metal capacity
has enhanced to over 2 Mtpa with 3 Blast Furnace operation. Also the
work of INBA Cast House Slag granulation Plant in Blast Furnace-3 is
being implemented. Further, additional Wheel Testing Facilities at Wheel
& Axle Plant to meet enhanced quality requirement of Railways have
been completed.
At Rourkela Steel Plant, the project for upgradation of ERW Pipe Plant to
meet the quality requirement of pipes and to produce API-5L grade of X-
70 pipes has taken-off. The tendering activities for Rebuilding of Coke
6
Oven Battery No.1 with the necessary facilities for achieving the emission
standards as per the Central Pollution Control Board (CPCB) norms
have started.
At Bokaro Steel Plant, Work Roll spindles of Finishing Stands of Hot
Strip Mill have been modified to facilitate quick work roll changing, thus
improving the quality & productivity of the Mill. Combined Blowing
Facilities in SMS-II has been commissioned in one converter. For Reheating
Furnace-2, dismantling, major concreting work and imported equipment
supply have been completed. Equipment erection work is in progress
and the Furnace is likely to be commissioned by year end. Reheating
Furnace modification will help in achieving better quality of hot rolled
coils besides reducing energy consumption in the Mill. The scheme of
installation of Tension Leveler in Slitting Line No.3 of Cold Rolling Mill
has been taken up to achieve the required flatness level of cold-rolled
products to improve their marketability.
IN HOUSE DESIGN & ENGINEERING
Centre for Engineering & Technology (CET) has been providing its
services in the areas of modernisation, technological upgradation and,
additions, modifications and replacement schemes to plants and units
within the company and clients outside the company – both in India and
abroad.
The major projects implemented during 2001-02 with in-house
consultancy services include ‘Raw Material Handling System’ of Sintering
Plant No. 3 of BSP, ‘Transportation of Sinter from Sintering Plant No. 3
to Blast Furnaces’ of BSP, ‘Installation of Combined Blowing Technology
in Converter No. 1 at SMS-II’ of BSL, ‘Upgradation of Blast Furnace
No. 1’ of RSP, ‘Augmentation of Wheel Testing Facilities in Wheel &
Axle Plant’ and upgradation of BF-3 at DSP and ‘Installation of 4.2 mw
Power Plant’ at MEL. Some of the ongoing projects being implemented
with in-house consultancy are ‘Finishing of Long Rails at Rail & Structural
Mill’ at BSP, ‘Installation of Walking Beam type Reheating Furnace No.
2’ at BSL and ‘Installation of Gas Cleaning Plant in BF-4’ at RSP.
Besides the above, CET also provided consultancy through SAIL
Consultancy Division for some of the projects under implementation for
clients outside the company. The Wire Rod Mill at NICCO, Kolkata was
commissioned during the year and installation of 3rd Cowper Stove at
Chanderiya Zinc Smelter of M/s Hindustan Zinc Ltd is under
implementation.
MARKETING OF SERVICES
During the year, the company executed orders worth Rs.469 lakhs in
fields like consulting, engineering, operational assistance and training
services to clients in India and abroad. These services, inter-alia, included
conducting 21 training programmes in Spatial Environmental Planning
for Central Pollution Control Board, India under a multilateral project
assisted by the World Bank and CDG, Germany; participation in a
UNDP project for Energy Efficiency Improvement in the Steel Rerolling
Mill Sector in India; training of over 300 technical personnel of Saudi
Iron and Steel Company in Saudi Arabia; successful completion of
Technical Assistance for Performance Improvement of Delta Steel Mills
Co., Egypt and providing engineering services to Hindustan Zinc Limited,
India etc.
RESEARCH & DEVELOPMENT
Research & Development Centre for Iron & Steel (RDCIS), of the
company completed 66 R&D projects during the year. These projects
provided technological inputs to the plants/units with thrust on cost
reduction, value addition, quality improvement and development of new
products. The Centre has filed 20 patents and 20 copyrights proposals
during the year.
During the year, 10 prestigious national awards were bagged by RDCIS
collective and 118 technical papers were published /presented.
HUMAN RESOURCES MANAGEMENT REVIEW
Your Company has always believed that Human resource is one of the
most important resources and continues to work for its development.
Ongoing restructuring process of the organisation also focuses greatly on
proper utilization of human resource and its rightsizing to make the
company healthy.
With the above in view, effective two-way communication on issues
arising out of the change process, was launched. This helped in ironing
out the road blocks which normally emerge in any restructuring exercise.
Besides creating proper awareness and urgency amongst the employees
for carrying out the large scale organizational changes, it has helped the
company in getting support for facilitating the restructuring process
particularly the divestment of power plants. Similar communication
exercise has been accepted as a continuous process to keep the employees
informed of the realities being faced by the Company, and also motivate
them to take up higher responsibilities, in tune with the requirements of
the Company.
The manpower strength as on 31 st March 2002 was 1,47,601
comprising of 16,003 executives and 131,598 non-executives registering
a reduction of 9118 employees during the year. The manpower
productivity at 111 tonnes of crude steel per man per year registered
increase of 6 per cent over the previous year. With a view to optimizing
the manpower and reducing the labour cost, a Voluntary Retirement
Scheme based on Department of Public Enterprises (DPE) guidelines
with lumpsum payment was launched whereby over 6500 employees
were separated. Further efforts on manpower rationalization through
Voluntary Retirement Scheme are continuing in the current year also.
To make incentive and reward schemes more meaningful, a modified
scheme was implemented during 2001-02 putting greater thrust on
profitability as a parameter.
Need-based training was provided to employees to equip them to meet
the challenges of the competitive environment. Over 70,000 employees
were trained during the year.
One of our colleagues from BSP was selected for Prime Minister’s Shram
Vir Award for the year 2000. A teacher from BSP was awarded President
award on Teacher’s day. Besides, a Principal from Bokaro Steel Plant was
awarded Rashtriya Shikshak Samman from the Vice-President and another
teacher from BSP was awarded the Shikshak Samman by the HRD
Minister.
Presidential Directives on Scheduled Castes and Scheduled Tribes
continued to be implemented and monitored on regular basis. Out of
the total manpower,14.6 per cent were Scheduled Castes and 11.5 per
cent were Scheduled Tribes.
The Company continued its efforts in the implementation of Official
Language Policy of the Government of India. Emphasis was laid on
creating an environment in which employees adopt Hindi in their office
work. Official Language shield and cup was awarded to your company
for excellent performance in this area.
A new Vision and Credo statements for the Company were adopted
during the year. The vision statement speaks of making the company a
respected world-class organization in quality, productivity, profitability
and customer satisfaction. HRD initiatives in the company are directed
towards the Vision of the Company and creating and nurturing a culture
that supports flexibility, learning and is proactive to change. It also
strives to work towards charting a challenging career for employees with
opportunities and rewards. Through its actions and belief, it is committed
to make a meaningful difference in the employees’ lives.
Your company continued its thrust in the sports arena. The company
was represented in the CII National Committee on Sports and also
featured in the national sports promotion body of the Ministry of Sports
and Youth Affairs. The company participated in the prestigious sports
events like IFA League, Beighton Cup and NN Mohan Memorial Cricket
Tournament.
There was overall improvement in the safety performance of the company
during the year. The declining trend of all categories of accidents was
maintained. Adequate emphasis was laid upon safety of human resources
and assets of the Company along with production and productivity.
Systematic approach to safety management was adopted through close
monitoring of adherence to safety norms & procedures.
VIGILANCE ACTIVITIES
Position in the sensitive departments were identified and transfers as per
the rotation policy effected during the year. Surprise checks and
investigation of the complaints were carried out for continuous
improvement in the existing systems. Continuous efforts have been
made to streamline the system and provide flexibility to perform as per
Business requirement in the present competitive scenario. Clearance for
‘Reverse Auction’ was obtained from CVC for purchases to keep pace
with recent trend of e-commerce.
Regular interaction were organised between the vigilance and the line
managers of Plants/Units in a structured manner to sensitize the managers
about the importance of vigilance administration.
ENVIRONMENT MANAGEMENT
SAIL has put in concerted efforts for pollution control and environmental
protection over a decade. During this span of time, tangible improvements
have been achieved in environmental indices like reduction in Particulate
Matter (PM) emission, water consumption, energy consumption and
remarkable increase in solid waste utilisation.
Bhilai and Bokaro Steel Plants have received the prestigious Lal Bahadur
Shastri Memorial Gold Awards for “Best Pollution Control
Implementation” and “Best Environmental and Ecological
Implementation” respectively from International Greenland Society for
Excellence in Indian Industries. Durgapur Steel Plant has bagged the
Indo German Green Tech Excellence Award on Environment for the year
2000-01.
Efforts to introduce structured Environments Management System (EMS)
at various units of SAIL has resulted in ISO 14001 certification for 5
units of SAIL so far. Further two more units viz. Rail & Structural Mill
of Bhilai Steel Plant and Sinter Plant II of Rourkela Steel Plant are due to
get accreditation to ISO 14001 shortly.
Life Cycle Assessment (LCA) study has been completed at Bhilai Steel
Plant and the draft report has been submitted to MoEF. First interim
report on the assignment from Central Pollution Control Board for
“Description of Clean Technology and Development of Environment
Standards for Iron Ore Mines in India” has been submitted to CPCB
and further work is in progress.
Environment training programmes are continually being taken up at
various units to create awareness among its employees and integrate it
into operational and maintenance practices. Apart from this, observance
7
Directors’ Report
of World Environment Day, Environment Month, Mines Environment
& Mineral Conservation Week etc. are regular features across SAIL units.
In order to inculcate awareness among school children, over 250 Eco
clubs have been made actively functional. Green belt development and
planned afforestation programmes have continued to receive special
attention in plants and mines this year too.
SUBSIDIARIES
The Indian Iron & Steel Company Limited (IISCO)
The Company recorded a turnover of Rs.911.94 crores. The net loss for
the year after charging depreciation of Rs.23.94 crores and interest of
Rs.11.63 crores was Rs.179.87 crores compared to net loss of Rs.187.31
crores during 2000-01.
The Company produced 346 thousand tonnes of crude steel, 292
thousand tonnes of saleable steel and 288 thousand tonnes of pig iron
during the year.
IISCO was declared a sick industrial company by the Board for Industrial
& Financial Reconstruction (BIFR) on 17th August, 1994. Your
company has appointed the Industrial Development Bank of India
(IDBI) as a global advisor for disinvestment of IISCO to a suitable
strategic partner with the company holding minority stake. Parallely, a
revival package approved by the Government of India is under examination
of IDBI, the operating agency appointed by BIFR.
IISCO-Ujjain Pipe & Foundry Company Limited, a wholly owned
subsidiary of IISCO, was decided to be wound up by BIFR in June’96.
The Official Liquidator has initiated the liquidation process.
Maharashtra Elektrosmelt Limited (MEL)
MEL achieved a turnover of Rs.155.64 crores during the year as against
Rs.186.97 crores during the previous year. MEL has incurred a net loss of
Rs.8.38 crores as compared to the loss of Rs.17.84 crores during the
previous year. The major factor contributing to the loss is high power cost.
Bhilai Oxygen Limited (BOL)
As a part of the business restructuring plan, a separate subsidiary company
with a nominal authorised capital of Rs.1 lakh was incorporated under
the name of Bhilai Oxygen Limited (BOL) on 9th February, 1999. The
process of identification/ selection of strategic alliance(s) partner and
transfer of Oxygen Plant-II of Bhilai Steel Plant to BOL is under way.
Audited Accounts of Subsidiaries
Audited Accounts of the Indian Iron & Steel Company Limited,
Maharashtra Elektrosmelt Limited and Bhilai Oxygen Limited for the
year ending 31st March, 2002 are enclosed.
Auditors Report
The Statutory Auditors’ Report on the Accounts of the Company for the
financial year ended 31st March, 2002 alongwith Management’s replies
are enclosed at Annexure-I. The comments and the review on accounts
for the year ended 31st March, 2002 by the Comptroller & Auditor
General of India under Section 619 (4) of the Companies Act, 1956
alongwith Management’s replies are placed at Annexure-II.
Report on Conservation of Energy, Technology Absorption, etc.
Information in accordance with the provisions of Section 217(1)(e) of
the Companies Act, 1956 read with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 regarding
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo is given at Annexure-III to this report.
Particulars of Employees
There was no employee of the Company who received remuneration in
excess of the limits prescribed under Section 217(2A) of the Companies Act,
8
1956 read with the Companies (Particulars of Employees) Rules, 1975.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
confirmed:
(i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed alongwith proper
explanation relating to material departures;
(ii) that the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the company at the end of the financial year and of the
profit or loss of the company for that period;
(iii) that the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company
and for preventing and detecting fraud and other irregularities;
(iv) that the directors had prepared the annual accounts on a going
concern basis.
Corporate Governance
In terms of listing agreement with the Stock Exchanges, a compliance
report on Corporate Governance is given at Annexure-IV. The
Management Discussion & Analysis Report is given at Annexure-V. A
certificate from Auditors of the company regarding compliance of
conditions of Corporate Governance is placed at Annexure-VI.
Consolidated Financial Statements
In terms of listing agreement with the Stock Exchanges, the duly audited
consolidated financial statements are placed at Annexure–VII.
Directors
Shri D. Basu ceased to be Director on completion of tenure w.e.f.
22.9.2001 (A.N.).
Dr. Y.R.K. Reddy ceased to be Director on 22.9.2001 (A/N) on
completion of his tenure of three years. However, on nomination by
Government of India he was reappointed on 23.9.2001.
On nomination by Government of India, Shri S.N. Mishra was appointed
as part-time non-official Director w.e.f. 26.12.2001.
On nomination by Government of India, Dr. Sanak Mishra was appointed
as Director w.e.f. 23.8.2002
Shri C.S. Rao ceased to be Director on 31.12.2001.
Shri Deepak Parekh resigned from the Board w.e.f. 18.01.2002.
Shri D.P. Singh, Additional Secretary & Financial Advisor, Government
of India, Ministry of Steel was appointed as Director w.e.f. 31.01.2002.
Shri M.K. Moitra, Director (P&CP) ceased to be Director of the Company
on attaining the age of superannuation w.e.f. 28.02.2002.
Dr. Isher Judge Ahluwalia resigned from the Board w.e.f. 30.07.2002.
Acknowledgment
The Board of Directors wish to place on record their appreciation for the
support and cooperation extended by every member of the SAIL family.
The Directors are thankful to the State Governments, Electricity Boards,
Railways, Banks, Suppliers, Customers and Shareholders for their
continued cooperation. The Directors also wish to acknowledge the
continued support and guidance received from the different wings of the
Government of India and more particularly from the Ministry of Steel.
For and on behalf of the Board of Directors
New Delhi (ARVIND PANDE)
Dated: 23rd August, 2002 Chairman
10 - Year Digest
Financial Highlights
2001-02 2000-01 99-2000 98-99 97-98 96-97 95-96 94-95 93-94 92-93
(Rupees in crores)
Sales 15502 16233 16250 14994 14624 14131 14710 13867 11671 10175
Other Income 852 888 -974 -31 1788 2057 1027 346 656 1422
(Net of stock Accretion/Depletion)
Expenditure 15343 14954 14075 13460 13914 13730 13025 11816 10507 9776
Operating Profit (PBDIT) 1011 2167 1202 1503 2498 2458 2712 2397 1820 1821
Depreciation 1156 1144 1133 1104 795 691 585 524 510 727
Interest & Finance charges 1562 1752 1789 2017 1554 1179 808 710 765 671
Profit before tax -1707 -729 -1720 -1618 149 588 1319 1163 545 423
Provision for tax/Income Tax Refund 0 0 0 -44 16 73 – 55 – –
Profit After tax -1707 -729 -1720 -1574 133 515 1319 1108 545 423
Equity Capital 4130 4130 4130 4130 4130 4130 4130 3986 3986 3986
Reserves & Surplus (Net of DRE) -1878 34 635 2756 4359 3868 3807 2570 1677 1286
Net Worth 2252 4165 4765 6886 8489 7998 7937 6556 5663 5272
Total Loans 14012 14251 15082 21017 20015 17421 14574 12214 11331 9521
Net Fixed Assets 14798 15177 15873 18307 14137 12624 8771 7557 7011 5398

Production Statistics
Item 2001-02 2000-01 99-2000 98-99 97-98 96-97 95-96 94-95 93-94 92-93
Main Integrated Steel Plant (Thousand tonnes)
Hot Metal 11327 11202 10939 11180 11615 11393 10901 10868 10172 9918
Crude Steel 10467 10306 9788 9858 10297 10319 9986 9821 9506 9464
Pig Iron 353 358 574 731 772 673 574 750 586 335
Saleable Steel
Semi Finished Steel 2149 2141 2592 2293 3110 2104 1784 1680 1434 1321
Finished Steel 7315 7269 6637 6034 5602 6798 7136 6951 6877 6616
Saleable Steel (4 -Plants) 9464 9410 9229 8327 8712 8902 8920 8631 8311 7937
Alloy & Special Steel Plants (Sal. Steel)* 234 293 301 275 331 333 239 210 206 199
Total Saleable Steel* 9697 9703 9530 8602 9043 9235 9159 8841 8517 8136
* Includes VISL, merged with SAIL from 1998-99 onwards

Shareholding Pattern
(Taking Account of the Beneficiary Position of Dematerialised Shares) (As on 31.3.2002)

CATEGORY NO. OF EQUITY NUMBER OF AMOUNT % OF

SHARES HELD HOLDERS RS. IN CRORES EQUITY

Government of India 3544690285 1 3544.690 85.820

Financial Institutions 346343181 13 346.343 8.385
Banks 7171700 23 7.172 0.174
Mutual Funds 20476355 23 20.476 0.496
Foreign Institutional Investors (FIIs) 24961612 35 24.962 0.604
Global Depository Receipts (GDRs) 3745105 2 3.745 0.091
Companies (Including Society & Trust) 25195712 3138 25.196 0.610
Individuals (Including Employee & NRI) 157816595 213950 157.817 3.821

Total 4130400545 217185 4130.401 100.00

9
Balance Sheet AS AT 31ST MARCH, 2002

Schedule As at As at
No. 31st March, 2002 31st March, 2001

SOURCES OF FUNDS (Rupees in crores)

Shareholders’ Funds
Share Capital 1.1 4130.40 4130.40
Reserves and Surplus 1.2 1159.97 5290.37 1160.21 5290.61
Loan Funds
Secured Loans 1.3 7051.38 7961.02
Unsecured Loans 1.4 6960.25 14011.63 6289.66 14250.68
19302.00 19541.29
APPLICATION OF FUNDS
Fixed Assets 1.5
Gross Block 27198.88 26915.59
Less: Depreciation 12400.73 11738.19
Net Block 14798.15 15177.40
Capital Work-in-Progress 1.6 555.94 15354.09 1220.59 16397.99
Investments 1.7 538.62 435.30
Current Assets, Loans & Advances
Inventories 1.8 4041.83 4518.99
Sundry Debtors 1.9 1389.41 1687.59
Cash & Bank Balances 1.10 416.37 667.43
Interest Receivable/Accrued 1.11 93.52 174.69
Loans & Advances
Subsidiary Company 1.12 23.37 14.31
Others 1.13 1165.42 1313.01
7129.92 8376.02
Less: Current Liabilities & Provisions
Current Liabilities 1.14 4653.58 4838.66
Provisions 1.15 2105.32 1955.08
6758.90 6793.74
Net Current Assets 371.02 1582.28
Miscellaneous Expenditure 1.16 577.65 371.99
(to the extent not written off or adjusted)
Profit & Loss Account Debit Balance 2460.62 753.73
19302.00 19541.29
Accounting Policies and Notes on Accounts 3
Schedules 1 and 3 annexed hereto, form part of the Balance Sheet.
For and on behalf of Board of Directors
Sd/- Sd/- Sd/-
(Devinder Kumar) (V.S. Jain) (Arvind Pande)
Secretary Director (Finance) Chairman
In terms of our report of even date
For and on behalf of
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner
Place : New Delhi
Dated : May 28, 2002

10
Profit and Loss Account FOR THE YEAR ENDED 31ST MARCH, 2002

Schedule Year ended Year ended

No. 31st March, 2002 31st March, 2001

INCOME (Rupees in crores)

Sales 2.1 15502.00 16232.63
Finished products internally consumed 181.68 167.21
Interest earned 2.2 105.30 99.76
Other revenues 2.3 920.38 482.78
Provisions no longer required written back 2.4 76.81 16786.17 31.14 17013.52

EXPENDITURE
Accretion(-)/Depletion to stocks 2.5 422.38 -103.93
Raw materials consumed 2.6 5652.44 5420.20
Purchase of semi/finished products 18.09 41.66
Employees’ Remuneration & Benefits 2.7 3249.78 3105.88
Stores & Spares Consumed 1587.97 1649.91
Power & Fuel 2.8 1700.67 1579.68
Repairs & Maintenance 2.9 162.07 186.05
Excise duty 1982.62 2122.91
Freight outward 552.85 531.21
Other expenses 2.10 1234.30 1097.72
Interest & finance charges 2.11 1562.03 1751.68
Depreciation 1155.89 1143.62
Total 19281.09 18526.59
Less : Transferred to Inter Account Adjustments 2.12 798.55 18482.54 781.99 17744.60
Loss for the year -1696.37 -731.08
Adjustments pertaining to earlier years 2.13 -10.52 2.42
Net Loss for the year -1706.89 -728.66
Debit Balance brought forward from previous year -753.73 -796.90
Transferred from Investment Allowance Reserve — 771.83
Loss carried over to Balance Sheet -2460.62 -753.73

Accounting Policies and Notes on Accounts 3

Schedules 2 and 3 annexed hereto, form part of the Profit & Loss Account.

For and on behalf of Board of Directors

Sd/- Sd/- Sd/-
(Devinder Kumar) (V.S. Jain) (Arvind Pande)
Secretary Director (Finance) Chairman
In terms of our report of even date
For and on behalf of
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner
Place : New Delhi
Dated : May 28, 2002

11
Schedules (FORMING PART OF THE BALANCE SHEET)

1.1 : SHARE CAPITAL

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Authorised
5,00,00,00,000 equity
shares of Rs. 10 each 5000.00 5000.00

Issued, Subscribed & Paid-up

4,13,04,00,545 equity shares
of Rs.10 each fully paid. 4130.40 4130.40

Note : 1,24,43,82,900 equity shares of

Rs.10 each (net of adjustments on
reduction of capital) were allotted as fully
paid up for consideration other than cash.

1.2 : RESERVES & SURPLUS

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Capital Reserve
As per last Balance Sheet 1.58 1.70
Less: Adjustment during the year 0.14 1.44 0.12 1.58

Prime Minister’s Trophy Award Fund

As per last Balance Sheet 6.89 5.37
Add : Additions during the year 0.71 1.64
7.60 7.01
Less : Adjustments towards expenses 0.12 7.48 0.12 6.89
incurred during the year

Share Premium Account

As per last Balance Sheet 236.84 237.64
Less : Adjustment towards Bond Issue Expenses 0.69 236.15 0.80 236.84

Investment Allowance Reserve

As per last Balance Sheet — 771.83
Less : Transferred to Profit & Loss Account — — 771.83 —

Bond Redemption Reserve 914.90 914.90

1159.97 1160.21

12
1.3 : SECURED LOANS
As at As at
31st March, 2002 31st March, 2001
(Rupees in crores)
Working Capital Borrowings from Banks * 4026.65 3546.86
( Including Foreign Currency Non - Resident ( Bank )
Loan of Rs.661.74 crores (Previous Year Rs.473.17crores)
Rupee Term Loan from banks / Financial Institution# 718.33 1097.50
Foreign Loans# 366.45 350.92
Non Convertible Bonds@
Interest Rate Face value of Bond Date of Redemption
(%) ( Rs. )
17 % 100,000/- 1st April 2001 — 281.98
17 % 100,000/- 5th August 2001 — 486.00
16.75% 100,000/- 1st November 2001 — 274.00
13.5% 100,000/- 1st Dec. 2002 270.00 270.00
16% 100,000/- 14th Jan 2002 — 200.00
13.75% 500,000/- 1st July 2003 175.55 175.55
14.5% 100,000/- 21st May 2004 497.00 497.00
14.0% 500,000/- 1st July 2005 394.45 394.45
14.5% 500,000/- 1st April 2006 226.90 226.90
12.95% 500,000/- 1st December 2007 100.05 100.05
11.30% 500,000/- 1st June 2008 7.25 —
11.60% 500,000/- 1st June 2008 33.95 —
11.10% 500,000/- 1st December 2008 6.50 —
11.50% 500,000/- 1st December 2008 0.30 —
13.05% 500,000/- 1st December 2010 59.80 59.80
12.10% 500,000/- 1st June 2011 91.30 —
12% 500,000/- 1st December 2011 76.90 1939.95 — 2965.73
From Karnataka Housing Board — 0.01
7051.38 7961.02
* Secured by hypothecation of Company’s inventories, book debts and other current assets.
# Secured by hypothecation of all tangible movable machinery at Bokaro Steel Plant Rs. 366.45 crores, Sinter Plant III of Bhilai Steel Plant Rs.205.83 crores and selective units of
Rourkela Steel Plants Rs.325 crores, all movable plant and machinery at Durgapur Steel Plant Rs.150 crores and current assets of the company Rs. 37.50 crores.
@ Secured by charges ranking pari-passu inter se, on all the present and future immovable and movable assets except for Bonds of face value of Rs. 5,00,000/= each which are
secured on immovable property only at Mouje - wadej of city Taluka, District Ahmedabad, Gujarat and company’s plant and machinery including the land on which it
stands, pertaining to Durgapur Steel Plant.
1.4 : UNSECURED LOANS
As at As at
31st March, 2002 31st March, 2001
(Rupees in crores)
Public Deposits 1272.46 1337.16
Interest accrued and due thereon 2.60 1275.06 2.78 1339.94
Government of India 0.27 0.27
Interest accrued and due thereon 0.35 0.62 0.28 0.55
Steel Development Fund 204.16 204.16
Interest accrued and due thereon 454.41 658.57 317.24 521.40
Foreign Loans
Long Term 1548.37 1742.03
(Guaranteed by Govt. of India / State Bank of India
Rs.913.22 crores (Previous Year Rs.1041.32 crores)
Short Term Loans from Banks 544.03 2092.40 331.29 2073.32
Term Loans From Financial Institution 150.00 300.00
Non Convertible Bonds@@
Interest Rate Face value of Bond Date of Redemption
(%) ( Rs. )
10 % 500,000/- 18th September, 2003 100.00 —
10 % 500,000/- 24th September, 2003 400.00 —
12% 500,000/- 1st Feburary, 2007 100.00 100.00
12.15% 500,000/- 1st Feburary, 2007 400.00 400.00
11.10% 500,000/- 30th March, 2007 60.00 60.00
11.25% 500,000/- 30th March, 2007 99.00 99.00
11.25% 500,000/- 15th April, 2007 400.00 400.00
11.10% 500,000/- 15th April, 2007 50.00 50.00
12.15% 500,000/- 1st September, 2007 152.35 152.35
11.30% 500,000/- 12th March, 2008 105.00 105.00
11.60% 500,000/- 12th March, 2008 15.00 15.00
10.10% 500,000/- 1st August, 2008 35.00 —
10.50% 500,000/- 1st August, 2008 35.00 —
11.50% 500,000/- 30th March, 2010 43.50 43.50
11.50% 500,000/- 15th April, 2010 21.00 21.00
12.45% 500,000/- 1st September, 2010 38.15 38.15
12.55% 500,000/- 1st September, 2010 39.40 39.40
12.65% 500,000/- 1st September, 2010 96.60 96.60
12.10% 500,000/- 12th March, 2011 195.00 195.00
11% 500,000/- 1st August, 2011 115.00 —
Others 2500.00 1815.00
Bond Application Money 83.60 39.45
Housing Finance Loans 200.00 283.60 200.00 239.45
6960.25 6289.66
@@ Guaranteed by Government of India and also secured by charges ranking paripassu-inter se on immovable property (book value as on 31.03.2002 Rs. 0.58 crores)
at Mouje-wadej, Ahemdabad,Gujarat.
Note : Secured / unsecured Loans repayable within one year Rs. 2522.80 crores (Previous year Rs. 2859.00 crores).

13
Schedules (FORMING PART OF THE BALANCE SHEET)

1.5 : FIXED ASSETS

GROSS BLOCK (AT COST)

Description As at Additions / Less : Sales / As at
31st Adjustments Adjustments 31st
March during the during the March
2001 year year 2002

A. PLANTS, MINES, OTHERS (Rupees in crores)

Land (including cost of development)
— Freehold Land 54.70 0.15 0.24 54.61
— Leasehold Land 32.60 -0.01 2.59 30.00
Right and Patents 6.59 2.53 — 9.12
Railway Lines & Sidings 220.43 -0.27 0.60 219.56
Roads, Bridges & Culverts 145.48 0.11 0.57 145.02
Buildings 1656.27 0.97 39.45 1617.79
Plant & Machinery
— Steel Plant 21295.52 1013.32 621.95 21686.89
— Others 1440.17 -12.69 26.50 1400.98
Furniture & Fittings 71.50 0.05 1.92 69.63
Vehicles 412.39 1.98 6.44 407.93
Water Supply & Sewerage 283.40 1.17 1.03 283.54
EDP Equipments 196.73 3.50 1.23 199.00
Miscellaneous Articles 215.59 2.56 1.78 216.37
Sub-total ‘A’ 26031.37 1013.37 704.30 26340.44
Figures for the Previous Year 25927.25 596.81 492.69 26031.37

B. SOCIAL FACILITIES
Land (including cost of development)
— Freehold Land 8.80 — 0.13 8.67
— Leasehold Land 6.95 0.27 — 7.22
Roads, Bridges & Culverts 43.14 — — 43.14
Buildings 559.79 0.18 26.45 533.52
Plant & Machinery-Others 71.91 0.06 1.57 70.40
Furniture & Fittings 11.40 0.07 0.07 11.40
Vehicles 6.97 -0.02 0.20 6.75
Water Supply & Sewerage 92.06 0.06 0.02 92.10
EDP Equipments 1.99 0.02 — 2.01
Miscellaneous Articles 81.21 2.27 0.25 83.23
Sub-total ‘B’ 884.22 2.91 28.69 858.44
Figures for the Previous Year 896.07 -7.41 4.44 884.22
Total (‘A’+’B’) 26915.59 1016.28 732.99 27198.88
Figures for the Previous Year 26823.32 589.40 497.13 26915.59

14
1.5 : FIXED ASSETS

DEPRECIATION NET BLOCK

Description Up to For Less : On Sales Up to As at As at
31st the Adjustments 31st 31st 31st
March Year during the March March March
2001 year 2002 2002 2001

A. PLANTS, MINES, OTHERS (Rupees in crores)

Land(including cost of development)
— Freehold Land — — — — 54.61 54.70
— Leasehold Land 7.55 0.60 0.29 7.86 22.14 25.05
Right and Patents 5.78 1.19 — 6.97 2.15 0.81
Railway Lines & Sidings 113.14 8.13 0.51 120.76 98.80 107.29
Roads, Bridges & Culverts 27.70 2.46 0.17 29.99 115.03 117.78
Buildings 581.29 49.47 19.28 611.48 1006.31 1074.98
Plant & Machinery
— Steel Plant 9155.47 966.50 441.80 9680.17 12006.72 12140.05
— Others 813.97 61.45 22.10 853.32 547.66 626.20
Furniture & Fittings 43.99 3.22 0.94 46.27 23.36 27.51
Vehicles 268.12 17.44 6.20 279.36 128.57 144.27
Water Supply & Sewerage 165.17 9.50 0.26 174.41 109.13 118.23
EDP Equipments 145.97 14.74 0.95 159.76 39.24 50.76
Miscellaneous Articles 107.55 9.22 1.21 115.56 100.81 108.04
Sub-total ‘A’ 11435.70 1143.92 493.71 12085.91 14254.53 14595.67
Figures for the Previous Year 10669.23 1128.70 362.23 11435.70 14595.67

B. SOCIAL FACILITIES
Land(including cost of development)
— Freehold Land — — — — 8.67 8.80
— Leasehold Land 3.93 0.26 — 4.19 3.03 3.02
Roads, Bridges & Culverts 11.74 0.78 — 12.52 30.62 31.40
Buildings 128.00 8.27 7.03 129.24 404.28 431.79
Plant & Machinery-Others 44.70 2.86 0.91 46.65 23.75 27.21
Furniture & Fittings 9.95 0.25 0.03 10.17 1.23 1.45
Vehicles 5.33 0.17 0.17 5.33 1.42 1.64
Water Supply & Sewerage 55.31 3.24 — 58.55 33.55 36.75
EDP Equipments 1.70 0.07 0.01 1.76 0.25 0.29
Miscellaneous Articles 41.83 4.69 0.11 46.41 36.82 39.38
Sub-total ‘B’ 302.49 20.59 8.26 314.82 543.62 581.73
Figures for the Previous Year 281.30 22.38 1.19 302.49 581.73
Total (‘A’+’B’) 11738.19 1164.51 501.97 12400.73 14798.15 15177.40
Figures for the Previous Year 10950.53 1151.08 363.42 11738.19 15177.40

Note : Allocation of depreciation Current Previous

Year Year

(a) Charged to Profit & Loss Account 1155.89 1143.62

(b) Charged to expenditure during construction 0.39 0.46
(c) Debited to adjustments pertaining to earlier years 8.23 7.00

Total 1164.51 1151.08

15
Schedules (FORMING PART OF THE BALANCE SHEET)

1.6 : CAPITAL WORK-IN-PROGRESS

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Expenditure during construction

pending allocation (Schedule 1.6.1) 40.43 39.76

Capital Work-in-progress
Steel Plants & Units 278.79 364.60
Township 4.68 5.49
Ore Mines and Quarries 0.55 284.02 0.48 370.57

Capital equipments pending erection, 56.36 68.46

installation, commissioning and adjustments

Construction – Stores and Spares 22.62 24.53

Less: Provisions 2.51 20.11 2.48 22.05

Advances 156.70 725.29

Less: Provisions 1.68 155.02 5.54 719.75

555.94 1220.59

Particulars of advances
Unsecured, Considered Good 155.02 719.75
(including advances backed by
Bank Guarantees Rs.13.85 crores,
Previous year Rs.19.28 crores)
Unsecured, Considered Doubtful & provided for 1.68 5.54

156.70 725.29

16
1.6.1 : EXPENDITURE DURING CONSTRUCTION
(pending allocation)

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Opening balance (a) 39.76 53.94

Expenditure incurred during the year

Employees’ Remuneration & Benefits
Salaries, Wages & Bonus 16.37 15.18
Company’s contribution to Provident 1.12 1.17
and other Funds
Travel Concession 0.01 0.03
Welfare Expenses 0.02 0.15
Gratuity 0.39 17.91 1.12 17.65

Technical Consultants’ fees & know-how — 1.62

Repairs & Maintenance
Buildings — 0.02
Plant & Machinery 0.10 0.03
Others 0.37 0.47 0.24 0.29
Stores and Spares 3.05 0.08
Power & Fuel 5.82 2.50
Raw Material 3.21 0.00
Rates & Taxes 0.01 0.01
Other Expenses 2.30 2.34
Interest & Finance Charges 39.81 87.55
Depreciation 0.39 0.46

72.97 112.50
Less: Income
Interest Earned 1.14 1.91
Liquidated Damages 0.91 0.75
Hire Charges 1.45 1.10
Internal consumption of sinter 15.55 0.00
Sundries 0.77 19.82 2.97 6.73

Net expenditure during the year (b) 53.15 105.77

Total (a)+(b) 92.91 159.71

Amount allocated to Fixed Assets/

Capital Work-in-progress 52.48 119.95
Balance carried forward 40.43 39.76

Total 92.91 159.71

17
Schedules (FORMING PART OF THE BALANCE SHEET)

1.7 : INVESTMENTS (AT COST) — LONG TERM

Number of Face As at As at
Fully Paid up value per 31st March, 31st March,
Equity Shares Share 2002 2001
(Rs.)
(Rupees in crores)
Quoted
Housing Development Finance Corporation 6,000 10 0.01 0.01
Limited (Market Value Rs 41,07,600 ;
Previous year Rs. 32,69,100)
HDFC Bank Limited 500 10 —* 0.01 —* 0.01
(Market Value Rs 1,17,575 ;
Previous year Rs. 1,15,000)
Unquoted
Trade Investments
Tata Refractories Limited 10,00,000 10 1.12 1.12
Almora Magnesite Limited 40,000 100 0.40 0.40
North Bengal Dolomite Limited 97,900 100 0.98 0.98
Indian Potash Limited 2,40,000 10 0.18 0.18
SAIL Power Supply Company Pvt. Limited 5,86,50,050 10 58.65 58.65
Bokaro Power Supply Company Limited 8,40,25,000 10 84.02 —
Bhilai Electric Supply Company Limited 1,66,00,000 10 16.60 —
SAIL- Bansal Service Centre Pvt. Limited 27,23,200 10 2.72 0.04
(40,000)
Metaljunction.Com Pvt. Limited 4,000 10 —* 164.67 —* 61.37
Other Investments -
Subsidiary Companies
Indian Iron & Steel Company Limited 38,76,65,757 10 374.94 374.94
Maharashtra Elektrosmelt Limited 2,37,87,935 10 23.79 23.79
Bhilai Oxygen Limited 98 10 —* 398.73 —* 398.73

Other Companies
Management & Technology Application
(India) Limited 16,334 10 0.02 0.02
UEC SAIL Information Technology Limited 1,80,000 10 0.18 0.18
Cement & Allied Products (Bihar) Limited 2 10 —* —*
Chemical & Fertilizer Corporation
(Bihar) Limited 1 10 —* —*
Bhilai Power Supply Company Limited 5 10 —* —*
Romelt SAIL (India) Limited 63000 10 0.06 0.02
(18,000)
MSTC Limited 20,000 10 0.01 0.01
Shares in Co-operative Societies (1.7.1) 0.14 0.41 0.14 0.37
563.82 460.48
Less : Provision for diminution in value of investments 25.20 25.18
538.62 435.30

* Cost being less than Rs. 50,000/-, figures not given.

18
1.7.1 : SHARES IN CO-OPERATIVE SOCIETIES
Number of Face As at As at
Fully Paid-up value per 31st March, 31st March,
Shares Share 2002 2001
(Rs.)

(In Rupees)

Rajhara Employees’ Co-operative

Stores Limited 25 100 2500 2500

Nandini Employees’ Co-operative

Stores Limited 25 100 2500 2500

BSP Employees’ Consumers’ Co-operative

Stores (Sector 4) Limited 25 100 2500 2500

Bhilai Steel Employees’ Consumers’

Co-operative Society Limited (Sector-8) 250 10 2500 2500

Bokaro Steel Employees’ Co-operative 6,250 20

Credit Society Limited 1,16,500 10 1290000 1290000

BSP Kamgar Consumers’ Co-operative

Stores Limited (Sector-7) 250 10 2500 2500

Bokaro Steel City Central Consumers’

Co-operative Stores Limited 250 10 2500 2500

NMDC Meghahatuburu Employees’

Consumers Co-operative Society Limited 25 100 2500 2500

DSP Employees’ Co-operative

Society Limited 1377 100 137700 137700

Bolani Ores Employees’ Consumer

Co-operative Society Limited 200 25 5000 5000

1450200 1450200

19
Schedules (FORMING PART OF THE BALANCE SHEET)

1.8 : INVENTORIES*
As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Stores & spares 888.82 942.00

Add: In-transit 76.20 63.67

965.02 1005.67
Less: Provision 77.89 887.13 76.36 929.31

Raw materials 496.75 523.39

Add: In-transit 138.73 128.23

635.48 651.62
Less: Provision 2.41 633.07 1.15 650.47

Semi/finished products 2500.12 2922.50

(including scrap)
Salvaged/Scrapped fixed assets 21.51 16.71

4041.83 4518.99

* Valued as per Accounting Policy No. 1.6

1.9 : SUNDRY DEBTORS

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Debts over six months 367.94 399.92

Other debts 1183.35 1414.43

1551.29 1814.35
Less: Provision for doubtful debts 161.88 126.76

1389.41 1687.59

Particulars
Unsecured, considered good 1389.41 1687.59
(Including debts backed by
bank guarantees Rs.353.80 crores);
Previous year Rs.426.15 crores)
Unsecured, considered doubtful 161.88 126.76

1551.29 1814.35

20
1.10 : CASH & BANK BALANCES
As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Cash and Stamps on hand 1.49 2.32

Cheques on hand 261.68 305.95

With Scheduled Banks on :

Current Account 19.40 21.55
Unpaid Dividend Account 0.42 0.42
Term Deposits Account * 132.83 152.65 336.70 358.67

With post office 0.01 0.01

(Deposits pledged with excise authorities)
Remittances-in-transit 0.54 0.48
416.37 667.43

* Includes Rs. 58 crores held in escrow account for Voluntary Retirement Payments (previous year Rs.315 crores)

1.1 1 : INTEREST RECEIVABLE/ACCRUED

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Loans to subsidiary company 0.67 0.28

Loans to other companies 0.53 77.51
Employees 82.60 84.32
Others 15.91 17.93
99.71 180.04
Less: Provision for doubtful interest 6.19 5.35
93.52 174.69
Particulars
Unsecured, considered good 93.52 174.69
Unsecured, considered doubtful & provided for 6.19 5.35
99.71 180.04

1.12 : LOANS AND ADVANCES TO SUBSIDIARY COMPANY

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)
Loans 9.33 0.27
Stores issued on loan 14.04 14.04
23.37 14.31
Particulars
Unsecured, considered good 23.37 14.31

21
Schedules (FORMING PART OF THE BALANCE SHEET)

1.13 : LOANS & ADVANCES – OTHERS

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Loans
Employees 204.76 241.84
Others 115.87 320.63 109.00 350.84

Advances recoverable in cash or in

kind or for value to be received
Claims recoverable 305.23 410.55
Contractors & suppliers 75.07 116.88
Employees 1.42 18.03
Advance Income Tax and Tax deducted at source* 84.27 53.78
For purchase of shares** 4.00 —
Export Incentives Receivable 58.74 69.75
Others 212.59 741.32 206.47 875.46

Deposits
Port Trust, Excise Department, Railways, etc. 85.06 110.25
Others 111.06 196.12 108.69 218.94

1258.07 1445.24
Less : Provision for doubtful Loans & Advances 92.65 132.33

1165.42 1313.01

* (Including Rs. 82.65 crores paid against disputed demands ; previous year Rs.52.65 crores)
** For Metalijunction.com Pvt. Ltd. a joint venture Company

Particulars of Loans & Advances – Others

Secured, considered good 201.04 235.39
Unsecured, considered good 964.38 1077.62
(Including loans & advances backed by
bank guarantees Rs. 0.77 crores,
Previous year Rs. 0.86 crores)
Unsecured, considered doubtful & provided for 92.65 132.33

1258.07 1445.24

Amount due from

— Directors 0.02 0.04
— Officers — 0.02

Maximum amount due at any time during the year from

— Directors 0.04 0.05
— Officers 0.02 0.02

22
1.14 : CURRENT LIABILITIES
As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Sundry creditors
Capital works 253.95 263.41
Others (Including Rs. 3.61 crores
due to subsidiary companies,
Previous year Rs.63.80 crores) 1596.02 1849.97 1650.17 1913.58

Advances from
Customers 223.81 246.92
Others 32.96 256.77 33.25 280.17

Security deposits 183.01 173.41

Less : Investments received as
security deposit 0.21 182.80 0.07 173.34

Interest accrued but not due on Loans 1082.10 1240.44

Dividend warrants - unencashed 0.42 0.42

Other liabilities 1281.52 1230.71

4653.58 4838.66

1.15 : PROVISIONS FOR

As at As at
31st March, 2002 31st March, 2001

(Rupees in crores)

Gratuity 1090.06 877.84

Accrued Leave Liability 557.70 378.72
Pollution control & peripheral development
Opening Balance 30.08 21.36
Add : Provision during the year 14.48 14.74
Less : Amount utilised during the year 1.40 43.16 6.02 30.08
Exchange Fluctuation
Opening Balance 22.93 11.61
Add : Provision during the year 11.10 11.32
Less : Amount utilised during the year 18.10 15.93 — 22.93
Voluntary Retirement Compensation 246.79 289.75
Employee Family Benefit Scheme 86.58 —
Wage Revision 9.03 268.84
Others 56.07 86.92
2105.32 1955.08

23
Schedules (FORMING PART OF THE BALANCE SHEET)

1.16 : MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Balance Additions Total Amount Balance

as at during Charged as at
31st the Off 31st
March year during the March
2001 year 2002

(Rupees in crores)

(i) Development Expenditure

(a) On Mines 29.22 18.15 47.37 15.92 31.45

(b) On New Projects 0.38 — 0.38 0.10 0.28

Total (i) 29.60 18.15 47.75 16.02 31.73

(ii) Deferred Revenue Expenditure

(a) Voluntary Retirement 297.53 328.70 626.23 170.90 455.33

Compensation

(b) Employee Family Benefit Scheme — 86.58 86.58 17.32 69.26

(c) Others 44.86 4.77 49.63 28.30 21.33

Total (ii) 342.39 420.05 762.44 216.52 545.92

Total (i+ii) 371.99 438.20 810.19 232.54 577.65

Previous year 499.97 14.34 514.31 142.32 371.99

Current Previous
Year Year
Charged Off to:

Raw Materials 13.16 9.67

Other Expenses & Provisions 219.38 133.29

Prior Period Adjustments/EDC — -0.64

232.54 142.32

24
Schedules (FORMING PART OF THE PROFIT & LOSS ACCOUNT)

2.1 : SALES
Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Direct 8716.43 9303.79
From Stockyards 6180.10 6259.91
Exports 530.97 556.11
Export Incentive 52.89 66.38
Others 21.61 46.44
15502.00 16232.63

2.2 : INTEREST EARNED

Year ended Year ended
31st March, 2002 31st March, 2001

(Rupees in crores)
Loans & advances to subsidiary companies 0.51 —
Loans & advances to other companies 8.39 15.48
Customers 37.66 51.45
Employees 16.55 18.65
Term Deposits 35.28 8.39
Others 6.91 5.79
105.30 99.76

2.3 : OTHER REVENUES

Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Social amenities-recoveries 92.84 93.95
Sale of empties etc. 30.67 26.12
Liquidated damages 8.76 12.01
Service charges * 3.51 4.28
Subsidy 7.70 7.23
Hire charges etc. 0.79 0.82
Claims for finished products 4.19 0.71
(Shortages & missing wagons)
Dividend from Other investments 5.74 0.26
Profit on sale of fixed assets (net) 0.25 8.36
Profit on sale of power plants 490.58 286.89
Profit on sale/lease of houses 171.64 —
Sundries * 103.71 42.15
* (Tax deducted at source Rs.0.10 crores
previous year Rs. 0.07 crores) 920.38 482.78

24
25
Schedules (FORMING PART OF THE PROFIT & LOSS ACCOUNT)

2.4 : PROVISIONS NO LONGER REQUIRED WRITTEN BACK

Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Loans & advances 19.55 2.58
Sundry debtors 12.79 9.79
Stores & spares 5.87 9.77
Others 38.60 9.00
76.81 31.14

2.5 : ACCRETION(-)/DEPLETION TO STOCK

OF SEMI/FINISHED PRODUCTS
Year ended Year ended
31st March, 2002 31st March, 2001

(Rupees in crores)
Opening stock 2922.50 2818.57
Less : Closing stock 2500.12 2922.50
422.38 -103.93

2.6 : RAW MATERIALS CONSUMED

Year ended Year ended
31st March, 2002 31st March, 2001
Quantity Value Quantity Value
Tonnes Rs./crores Tonnes Rs./crores

Iron ore 18565736 833.47 18352721 825.79

Coal 11502422 3473.06 11385432 3112.00
Coke 128215 70.38 127831 67.36
Limestone 3165910 322.59 3107173 314.33
Dolomite 2305359 122.53 2376860 126.79
Naphtha 18730 25.53 51954 72.17
Ferro Manganese 51842 118.42 50059 107.85
Ferro Silicon 16329 52.96 16742 56.36
Silico Magenese 71384 157.92 70205 149.68
Hot Rolled Stainless Steel Coils 15856 58.16 7148 37.45
Intermediary Products 13817 85.23 28276 195.62
Zinc 10977 68.85 11766 90.74
Aluminium 13544 111.13 11132 96.34
Others 152.21 167.72
5652.44 5420.20

NOTES :1. Consumption of raw materials includes shortages Rs. 4.44 crores (previous year Rs. 5.06 crores) to the extent not covered
by normal handling losses and excess to the extent of Rs. 5.35 crores (previous year Rs. 2.00 crores).
2. Value of raw materials consumed is after adjustments relating to Inter Plant Transfers.

26
26
2.7 : EMPLOYEES’ REMUNERATION & BENEFITS
Year ended Year ended
31st March, 2002 31st March, 2001

(Rupees in crores)
Salaries, wages & annual bonus 2567.99 2649.51
Contribution to provident fund 240.81 179.99
& other funds
Travel concession 7.69 3.37
Welfare expenses 104.96 101.61
Gratuity 328.33 177.60
3249.78 3112.08
Less : Grants-in-Aid received from National Renewal Fund — 6.20
3249.78 3105.88
Note :
Expenditure on Employees’
Remuneration and Benefits not
included above and charged to:
a) Expenditure During Construction 17.91 17.65
b) Deferred Revenue Expenditure 170.90 101.46
c) Net expenditure on Social Amenities charged
to various primary revenue heads 176.22 153.79
365.03 272.90

2.8 : POWER & FUEL

Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Purchased power 1388.11 1018.43
Duty on own generation 25.08 36.37
Boiler Coal/Middling 211.08 428.27
Furnace Oil/LSHS/LDO 60.24 78.65
Others 16.16 17.96
1700.67 1579.68
Note :
Expenditure on Power & Fuel not
included above & charged off to:
— Expenditure During Construction 5.82 2.50

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Schedules (FORMING PART OF PROFIT & LOSS ACCOUNT)

2.9 : REPAIRS & MAINTENANCE

Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Buildings 23.03 23.44
Plant & Machinery 89.54 105.70
Others 49.50 56.91
162.07 186.05

Note :
Expenditure on repairs & maintenance
not included above and charged to:

a) Employees’ Remuneration & Benefits

Buildings 35.94 28.83
Plant & Machinery 408.09 340.43
Others 55.37 55.26
499.40 424.52

b) Stores & Spares

Buildings 8.87 8.76
Plant & Machinery 630.27 752.64
Others 33.31 45.26
672.45 806.66

c) Expenditure during Construction

Buildings — 0.02
Plant & Machinery 0.10 0.03
Others 0.37 0.24
0.47 0.29
Total (a+b+c) 1172.32 1231.47

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2.10 : OTHER EXPENSES
Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Commission to selling agents 11.50 7.62
Directors’ Fees 0.03 0.01
Export sales expenses 24.28 27.98

Handling expenses
— Raw Material 75.59 82.28
— Finished goods 59.89 54.34
— Scrap recovery expenses 62.80 198.28 67.32 203.94

Insurance 6.96 8.08

Postage, telegram & telephone 17.32 19.69
Printing & stationery 7.39 7.10

Provisions
— Doubtful debts, loans and advances 72.65 61.16
— Investments 0.02 0.01
— Stores, Spares and Sundries 35.70 108.37 44.33 105.50

Rates & Taxes 21.59 20.32

Remuneration to Auditors
— Audit fees 0.47 0.32
— Tax Audit fees 0.12 0.08
— Out of pocket expenses 0.62 0.56
— In other capacities 0.20 1.41 0.11 1.07

Cost Audit Fees 0.01 0.01

Rent 24.55 20.83
Royalty and cess 35.79 36.05
Security expenses 73.28 85.31
Travelling expenses 96.91 94.64

Write Offs
— Miscellaneous & Deferred Revenue Expenditure 219.38 133.29
— Others (Net of provision of Rs.29.08 crores) 7.08 226.46 13.28 146.57

Cash Discount 52.96 40.31

Training expenses 5.34 5.02
Conversion charges 26.21 35.43
Foreign Exchange Fluctuation (net) 45.80 53.35
Water charges & Cess on water pollution 23.24 24.50
Contribution to Joint Plant Committee Funds 2.27 2.14
Miscellaneous (include Donation Rs. 0.50 lakhs, 224.35 152.25
previous year Rs.0.35 lakhs)
1234.30 1097.72

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Schedules (FORMING PART OF THE PROFIT & LOSS ACCOUNT

2.11 : INTEREST & FINANCE CHARGES

Year ended Year ended
31st March, 2002 31st March, 2001

(Rupees in crores)
Public Deposits 167.61 220.84
Foreign Currency Loans 136.42 181.12
Non Convertible Bonds 576.73 653.53
Bank Borrowings - working capital 453.28 440.40
Steel Development Fund Loans 37.48 23.82
Others 176.11 201.08
Finance Charges 40.64 30.89
Less : Interest subsidy received from GOI 1588.27 1751.68
26.24 —
1562.03 1751.68
Note :
Expenditure on interest not included above & charged to:
Expenditure During Construction
Public Deposit — 4.92
Foreign Currency Loans 1.69 5.32
Non Convertible Bonds 24.56 54.05
Steel Development Fund Loans 9.48 13.39
Others 3.43 9.86
Finance Charges 0.65 0.01
39.81 87.55
2.12 : INTER ACCOUNT ADJUSTMENTS
Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Raw materials 560.31 552.82
Departmentally manufactured stores 211.68 207.32
Services transferred to capital works 21.30 21.01
Coke subsidy to Employees 0.51 0.34
Others(Net) 4.75 0.50
798.55 781.99
2.13 : ADJUSTMENTS PERTAINING TO EARLIER YEARS
Year ended Year ended
31st March, 2002 31st March, 2001
(Rupees in crores)
Sales 0.73 5.69
Other revenues 0.66 -4.97
Raw materials consumed -1.88 -0.25
Purchase of semi/finished products — 0.03
Employees’ remuneration & benefits 1.42 -5.35
Stores & spares consumed -5.01 -5.63
Power & fuel -5.30 -0.92
Repairs & Maintenance -0.24 -0.20
Excise duty -1.56 0.34
Freight Outward — 0.92
Other Expenses & Provisions 10.01 -3.83
Interest 3.46 4.75
Depreciation 8.23 7.00
Net Debit 10.52 -2.42
* (-) indicate credit items

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SCHEDULE 3 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting
principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to ‘Capital Reserve’.
The expenditure on development of land including lease-hold land, is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under
‘Capital work-in-progress’ at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final
adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company’s contribution/expenditure towards construction/development of assets on land owned by the Government/Semi-
Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their
book value. Grants-in-aid related to revenue items are netted against the related expenses.
Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is
expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value till the acceptance of
disposal proposals thereagainst, and due provisions are made to take care of the shortfall, if any, in their respective realisable value.
However, fixed assets that have been retired from active use and whose disposal proposals have been accepted, are de-capitalised and
included under “Inventories” at lower of book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying assets are capitalised until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However,
where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount
is provided prospectively over the residual useful life of the asset based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of addition/disposal thereof.
Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments
are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for
diminution in the value of such investments is made to recognise a decline, other than temporary, on individual investment basis.
1.6 INVENTORIES
Semi/Finished products, are valued at lower of cost and net realisable value of the respective plants.
Raw-materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous year’s realisable value
of pig iron.

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Schedules
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net
realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is
arrived at by applying the ratio of finished product’s realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and also those which have
not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the
transferor plant. Materials out of inter-plant transfers, lying in stock after further processing, are valued at transfer price plus
processing cost of the transferee plant or realisable value, whichever is lower. Such inter-plant transferred materials used for
capitalisation have, however, been considered at cost (ii) Stores and spares are valued at cost of the transferor plant
(iii) Raw materials at plants are valued at lower of cost and net realisable value. Cost is determined based on the average of purchase
cost and transfer price.
Cost is arrived on weighted average basis.

1.7 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE

Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects
and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical
know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the
project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as deferred revenue expenditure and
written-off in five years. Further, annual increase/decrease to the above liability actuarially ascertained, is taken to Profit & Loss
Account, after adjustment of payments thereof during the year. Incremental payments against Voluntary Retirement Schemes due to
wage revision is charged corresponding to the period for which deferred revenue expenditure relating to such Voluntary Retirement
Scheme is amortised, with the first charge being made for the entire lapsed period in the year in which such wage agreement is
finalised. In case of Voluntary Retirement Schemes which envisage monthly payments, the payments are charged off as per
contractual terms, while the future liability to the disabled employee/legal heirs of deceased employees under the Family Benefit
Schemes is treated as deferred revenue expenditure and written-off over a period of 5 years.
Other deferred revenue expenditure including expenditure on consultancy/ technological assistance for strategic cost reduction and
quality improvements is written-off in five years.

1.8 FOREIGN CURRENCY TRANSACTIONS

Foreign currency assets and liabilities (other than those covered by forward contracts) as on the Balance Sheet date are converted at
the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit &
Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rates prevailing on the date of
transactions.
In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate
prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may
be, proportionately over the contract period.

1.9 RESEARCH & DEVELOPMENT EXPENDITURE

Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on
fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company.
These are treated as income on completion of the projects/final settlement.
Suppliers’/Contractors’ claims for price escalation are accounted for, to the extent such claims are accepted by the Company.

1.11 RETIREMENT BENEFITS

The provisions for gratuity and leave encashment liabilities are made on the basis of year end actuarial valuation.

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1.12 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as
income/expenditure of current year.

1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the
company’s name, pending collection of payments, since the significant risks and rewards in such cases are passed on to the buyers on
despatch of materials. Export sales are treated as sales on issue of Bills of lading.

1.14 EXPORT INCENTIVES

Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme and duty
drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the
year.
1.15 LEASES
(a) Where the Company is lessor
Assets given under finance lease are recognised as receivable at an amount equal to the net investment in the lease. Lease
rentals are apportioned between principal and interest on the basis of internal rate of return. The principal amount received
is reduced from the net investment in the lease while interest recovery is recognised as revenue. In those cases where the entire
lease premium/consideration is received up front, the difference between consideration money and net book value of the assets
is recognised as income in the Profit & Loss Account.
Assets subject to operating lease are included in fixed assets and the lease income is recognised in the Profit & Loss Account
on a straight line basis over the lease term. Expenses including depreciation in relation thereto, are recognised as an expense
in the Profit & Loss Account.
(b) Where the Company is lessee
Finance leases which effectively transfer to the Company substantially all the risks and rewards incidental to the ownership of
the leased items, are capitalised at the lower of the face value and present value of the minimum lease payments at the inception
of the lease term. Leased payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining liability. Capitalised leased assets are depreciated over the lease term or
estimated useful life of the relevant assets, whichever is shorter.
All leases except for those specified above, are classified as operating leases. Lease payments, in such cases, are recognised as
an expense in the Profit & Loss Account on a straight line basis over the lease term.

1.16 TAXATION
Provision for income tax comprises of current tax and deferred tax charged or realised. Deferred tax is recognised, subject to
consideration of prudence on timing differences, being the differences between taxable and accounting income/expenditure that
originate in one period and are capable of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless
there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets will be realised.
1.17 SEGMENT REPORTING
(a) Identification of Segments
The Company has identified that its operating segments are primary segments. The Company’s operating business are
organised and managed separately for all the manufacturing units, with each business unit representing a strategic segment.
Accordingly, each manufacturing unit has been identified as an operating segment for reporting purposes.
The analysis of geographical segments is based on the areas in which the customers of the Company are located.
(b) Allocation of Common costs
Common expenses are allocated to each segment on appropriate basis. Revenue and expenses not allocated to segments, have
been included under the head “unallocated – common expenses”.
The Accounting Policies adopted for segment reporting are in line with those of the Company.

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Schedules
NOTES ON ACCOUNTS
2.1 CONTINGENT LIABILITIES
As at 31st As at 31st
March, 2002 March, 2001
(Rs. in crores)
i) Claims against the Company pending appellate/judicial decisions 1445.12 1150.85
ii) Other claims against the Company not acknowledged as debt 572.71 562.91
iii) Guarantee given to Banks on behalf of a subsidiary Company 28.85 28.85
iv) Bills drawn on customers and discounted with banks 30.30 29.51
v) Claims by certain employees and escalation claims, — —
extent whereof is not ascertainable
2.2 Sales Tax authorities have raised demands for Rs.1041.86 crores (As at 31st March, 2001 - Rs. 989.38 crores) on account of sales tax
on stock transfers made by the plants over the years to stockyards situated in different States, under various marketing schemes. The
demands of Sales Tax authorities at plants have been contested by the Company which are pending at various stages of appeal. As sales
tax liability has been discharged by the respective stockyards on sale of such stocks by depositing sales tax with the respective Sales
Tax authorities in different States, no liability is expected to arise, as sales tax is leviable only once.

3. FIXED ASSETS
3.1 Land includes:
i) 61473.20 acres (As at 31st March 2001 – 61510.27 acres) owned/ leased/ possessed by the Company, in respect of which title/
lease deeds are pending for registration.
ii) 4442.30 acres (As at 31st March 2001 – 4442.30 acres) gifted by State Governments, which are pending for registration and
included in (i) above.
iii) 4991.43 acres (As at 31st March 2001 - 3860.46 acres) given on lease to various agencies/ employees/ex-employees.
iv) 14459.72 acres (As at 31st March, 2001 – 14459.72 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.
Out of the above, 10626.73 acres (As at 31st March, 2001- 10626.73 acres) have already been adjusted in the accounts.
v) 13117.70 acres (As at 31st March, 2001 - 13117.70 acres) in respect of which title is unascertained.
3.2 Fixed assets include Rs.8000/- (As at 31st March, 2001: Rs.8000/-) being the cost of shares in a Co-operative Housing Society.
3.3 Foreign exchange variations aggregating to Rs. 56.95 crores (net debit) [previous year Rs 67.56 crores (net debit)] have been
included in the carrying amount of fixed assets during the year.
3.4 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) – Rs.254.79
crores (As at 31st March, 2001 - Rs.358.45 crores).

4. INVESTMENTS, CURRENT ASSETS, LOANS & ADVANCES AND CURRENT LIABILITIES

& PROVISIONS
4.1 The Company has equity investments aggregating to Rs.374.94 crores (As at 31st March 2001 - Rs.374.94 crores) in its subsidiary
company, the Indian Iron & Steel Co. Ltd. (IISCO), a sick company, the proposal for revival of which is pending with BIFR. The
value of IISCO’s land and buildings as on 31st March, 2000 has been determined by an independent agency which, if taken together
with the value of assets like plant & machinery, mines etc. is quite adequate to cover the company’s investments in IISCO. In view
of the above and also considering the long-term nature of these investments, there is no permanent diminution in the value of
investments and thus no provision thereof is called for in the accounts.
4.2 Sundry debtors, Loans & Advances include Rs. 16.59 crores (including Government of India loan and interest thereon amounting
to Rs. 0.62 crores) due from IISCO Ujjain Pipe & Foundry Co. Ltd., a subsidiary company of IISCO, for which the Official
Liquidator has been appointed and who has taken over the possession of the assets. The company has got the land and buildings of
IISCO Ujjain Pipe & Foundry Co. Ltd. as on 31st March, 2000, re-valued by an independent agency and the re-valued amount of
the above assets, along with the value of other assets like plant & machinery, etc. is quite adequate to cover the above loans and
advances made by the company which are, therefore, considered to be recoverable.

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4.3 At Durgapur Steel Plant, recoverable advances/dues of Rs. 138.37 crores from Hindustan Steel Works Construction Limited
(HSCL) include (i) Rs. 133.40 crores (As at 31st March, 2001 - Rs.133.40 crores) paid over the years in excess of contractual
obligations included in Capital Work-in-Progress (ii) Rs. 2.54 crores (As at 31st March, 2001- Rs.2.54 crores) paid against future
jobs to be awarded (iii) Estate dues of Rs. 2.43 crores (As at 31st March, 2001 -Rs.1.45 crores). HSCL has disputed the above
advances and has made further claims against the Company and the Company, in turn, has also made counter claims. These matters
have been referred to a conciliator. Pending conciliation and HSCL being Government of India Undertaking, the advances and other
dues have been considered recoverable. Adjustment/provision, if any, required with regard to such advances/dues shall be carried out
on finalisation of conciliation proceedings/settlement of claims/counter claims.
Further, an amount of Rs. 42.75 crores (net) is due from HSCL at Bokaro Steel Plant and Bhilai Steel Plant towards advances against
future jobs to be executed, estate dues etc. These are considered as recoverable, since the Company has continuous dealings with
HSCL and expects to recover these advances in due course
4.4 At Bhilai Steel Plant, advances of Rs. 9.84 crores due from Bharat Refractory Ltd., under BIFR, are considered as recoverable, since
the Company has continuous dealings with these companies and expects to recover these advances in due course.
4.5 Claims recoverable (Schedule-1.13) include Rs.44.76 crores due from M/s TPE, Russia towards claims for short weight of equipments
(less than contractual estimates) and equipments getting shipped through shorter route resulting in freight refunds to Bhilai Steel
Plant during the years 1976 to 1984. The above claims have already been accepted by the party in Nov.’97 and recovery thereof is
being followed up through Inter-Governmental meetings/protocol.
4.6 The Capital Work-in-progress (Schedule 1.6) includes Rs.16.31 crores towards expenditure incurred on Hot Dip Galvanising Line
project in Assam. The Company has initialled an MOU for entering into a joint venture with M/s N E Steel Private Limited to
undertake the above project. Based on the terms & conditions for such joint venture, a sum of Rs.15.90 crores is recoverable from
the Joint Venture company, the balance has been provided for.
4.7 Unlike previous years, the future liability for benefits payable to the disabled employees / legal heirs of deceased employees under the
Employee Family Benefit Scheme have been provided and treated as deferred revenue expenditure as referred to in Accounting Policy
1.7 above, resulting into an increase in loss for the year by Rs. 17.32 crores.
4.8 Sundry creditors, other liabilities, sundry debtors, claims recoverable, deposits and advances to parties include some old unlinked
balances pending reconciliation/confirmation/adjustments. Adequate provisions wherever considered necessary have been made for
such old balances. Further adjustments as necessary, will be accounted for in the year of reconciliation/settlement/realisation of the
respective balances.
4.9 The Company has substantial carried forward losses and unabsorbed depreciation under the Income Tax Act, 1961 and accordingly
deferred tax asset of about Rs.2117.00 crores has arisen as on 31.3.2002 (including Rs.675.00 crores for the current period) as per
Accounting Standard-22 on ‘Accounting for taxes on income’. However, in consideration of prudence, the above deferred tax asset
has not been recognised in the financial statements and the same would be considered at appropriate time keeping in view the
availability of sufficient taxable income against which such deferred tax asset can be realised.
4.10 On behalf of employees, an amount of Rs. 1 crore was paid during the year to Orissa Chief Minister Relief Fund to provide relief to
the affected families caused by the devastating flood in Orissa during July 2001 in anticipation of recoveries from the employees for
this cause. Rs. 44.62 lakhs were recovered from the employees during the year and efforts are on for the recovery of the balance
amount.

5. PROFIT & LOSS ACCOUNT

5.1 The Company has transferred and assigned for Rs. 670.50 crores, its Captive Power Plants at Bokaro and Bhilai on 18th September,
2001 and 19th March, 2002 to the then subsidiary companies, Bokaro Power Supply Company Limited and Bhilai Electric Supply
Co. Ltd. respectively, which later converted into joint venture companies with Damodar Valley Corporation and National Thermal
Power Corporation Limited respectively for generation and sale of power to the company. The profit of Rs. 490.58 crores on such
transfer has been included under ‘Other Revenues’ as 'Profit on sale of Power Plants’.
5.2 The long term agreements for employees’ salaries & wages had expired on 31.12.1996. The Company has implemented the revised
salaries & wages payment w.e.f. 1.1.2001 with fitment on the basis of notional increment over the period from 1.1.1997 to
31.12.2000 and appropriate adjustments thereof have been carried out in the accounts. However, the issue of wage revision
(including other benefits) for the period from 1.1.1997 to 31.12.2000 is to be discussed separately with the employees. Liability,

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if any, in this regard is unascertainable. Further, following the past practice, adhoc adjustable advances/Interim Relief of Rs.420.35
crores for the above period (including Rs.127.62 crores during the year) have been charged to “Employees’ Remuneration and
Benefits” in the respective years.
5.3 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.
5.4 The Research and Development costs charged to Profit & Loss Account and fixed assets during the year amount to Rs. 48.15 crores
(previous year - Rs 50.15 crores) and Rs.1.70 crores (previous year - Rs.1.68 crores) respectively.
5.5 Sundry creditors include Rs.3.40 crores due to small scale and ancillary undertakings to the extent such parties have been identified.
The Company has normally made payments to SSI units in due time and also there being no claims from the parties, interest, if any,
on overdue payments is unascertainable and thus not provided for. There are no SSI units to whom amounts in excess of Rs.1 lakh
are due for more than 30 days.
5.6 Amount of foreign exchange differences in respect of forward exchange contracts to be recognised in the Profit & Loss Account for
subsequent periods is Rs. 15.43 crores (net debit).
5.7 The Company vide a Resolution passed by its Board of Directors at the meeting held on 26th April 2002, has withdrawn the benefits
relating to Leave Travel Concession (LTC)/Liberalised Leave Travel Concession (LLTC) for the block calendar years of 1998-99,
2000-01 and 2002-03. Accordingly, there exists no liability towards LTC/LLTC for the above periods.
5.8 The Central Board of Direct Taxes vide its Notification dated 25th September 2001 has revised the rules for computation of certain
perquisites. The Employees’ Union/Association have filed writ petitions with the Hon’ble High Court at Kolkata challenging the
above Notification. The Hon’ble High Court, Vide it’s Order dated 25.1.2002, has directed that the Income Tax calculated on the
perquisites shall be deducted and kept separately and not deposited with the Income Tax Department and vide order dt. 30.1.2002
has granted an interim stay restraining the Company from deduction of tax on perquisite on accommodation provided to the
employees by the Company. Accordingly the company has not deducted tax on house perquisite and tax on other perquisites has
been deducted and kept in separate account for all employees. Necessary accounting adjustments in the above matter would be
carried out on the disposal of appeals filed by the Employees’ Union/Association.
5.9 The Company has granted long term lease, in respect of certain residential premises at its various units to the employees, ex-
employees etc. and profit of Rs. 171.64 crores arising on leasing of such assets has been included under ‘Other Revenues’ as 'Profit
on sale/lease of houses’.
5.10 In order to comply with Accounting Standard-2, unlike previous years, the stocks of iron ore, limestone, dolomite, etc. raised at the
Company’s Mines for captive consumption, have been valued as lower of cost or net realisable value, resulting into an increase in loss
for the year by Rs. 5.87 crores.
5.11 The amount of public deposits as per the computerised list, containing depositor-wise details is higher by Rs.2.14 crores
as compared to the overall balance as per financial records. The above difference has been adjusted in the books through credit to
deposits and charged as prior period expense. Adjustments, if any, in this regard would be carried out after further verification/
reconciliation.
5.12 The classification of plant and machinery into continuous and non-continuous has been made on the basis of technical opinion and
depreciation thereon is provided accordingly.

6. GENERAL
6.1. Segment Reporting
i) Business Segment: The four 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. The whole of India has been
considered as a geographical segment and exports as other segments. The disclosures of segment-wise information is given at
Annexure-I.

36
36
6.2 Related party
As per Accounting Standard - 18 - ‘Related party disclosures’ issued by the Institute of Chartered Accountants of India, the name of
the related parties are given below:
Name of the related parties
Joint Venture SAIL Bansal Service Centre Limited
Metaljunction.Com Pvt. Limited
UEC SAIL Information Technology Limited
Key Management Personnel: Shri Arvind Pande
Shri V.S.Jain
Shri S.C.K.Patne
Shri B.K.Singh
Dr. S.K.Bhattacharyya
Shri A.K.Singh
Shri Suresh Pandey
Shri Barun Ghoshal
Dr. Sanak Mishra
Shri R.P.Singh
Shri Sudhakar Jha
Shri D.A.Pikle
Shri S.Panigrahi
Shri S.N.P.Singh
Shri M.N.Thakur
Shri M.Roy
The details of transactions between the company and the related parties, as defined in the Accounting Standard, are given below :
Sl. Nature of transactions Amount Ref. Schedule & Account
No. Rs./crores head of the Accounts
Joint Venture Key
Management
Personnel
I) Advances for purchase 4.00 1.13: Loans &
of Shares Advances – Others
ii) Other Advances 0.10 0.08 1.13: Loans &
Advances – Others
iii) Investments 2.68 1.7: Investments
iv) Payments made against 0.05
services rendered during
previous year
v) Managerial Remuneration 1.23 2.7: Employees’
Remuneration and Benefits
6.3. Earning Per Share (EPS)
In terms of Accounting Standard-20 issued by the Institute of Chartered Accountants of India, the calculation of EPS is given below:
2001-02 2000-01
i. Loss as per Profit & Loss Account (Rs. in crores) -1706.89 -728.66
ii. Weighted average number of equity shares 4,13,04,00,000 4,13,04,00,000
outstanding during the year
iii. Basic and diluted EPS (In Rupees) -4.13 -1.76
6.4 Figures have been rounded off to the nearest rupee in crores as approved by the Company Law Board.
6.5 Previous year’s figures are given in brackets and these have been re-arranged/ re-grouped wherever necessary.

36
37
Schedules
7(a). Licensed Capacity, Installed Capacity, Production
Own Products Licensed Installed Production
Capacity (i) Capacity
(Quantity : Tonnes)
Main Steel Plants
Pig Iron 1797000 353242
(1797000) (358394)
Crude Steel (ii) 11987000 10466919
(11987000) (10306241)
Saleable Steel 10190000 9463747
(10190000) (9410240)
Alloy Steels Plants
Pig Iron 205000 21544
(205000) (25757)
Crude Steel 301078 209838
(301078) (230977)
Saleable Steel 435000 233660
(435000) (292840)
Others
Calcium Ammonium Nitrate 360000 315
(in terms of 25% N) (360000) (9618)
Notes: i) “Licensed Capacity” Not applicable(N.A.) in terms of Government of India Notification No.S.O.477(E) dated 25th July, 1991.
ii) Crude Steel installed capacity is in terms of solid steel as per IISI requirements.
7(b). Opening Stock, Purchases, Turnover and Closing Stock
Opening Stock Purchases Sales Closing Stock
Quantity Value Quantity Value Quantity Value Quantity Value

(Quantity : Tonnes)
OWN PRODUCTS (Value : Rs./crores)
Main Steel Plants
Pig Iron 23458 13.93 — — 279914 197.80 23080 14.95
(41672) (23.78) (—) (—) (258557) (183.03) (23458) (13.93)
Steel Ingots 226742 170.03 — — 26895 22.46 128128 114.81
(253131) (200.61) (—) (—) (14775) (12.14) (226742) (170.03)
Saleable Steel 1328881 1772.20 — — 9255359 13548.75 997147 1344.97
(1238891) (1587.32) (—) (—) (8755303) (13837.22) (1328881) (1772.20)
ALLOY STEELS PLANTS
Pig Iron 196 0.14 — — 20826 15.49 189 0.14
(2) (—) (—) (—) (25173) (18.49) (196) (0.14)
Steel Ingots 13138 33.57 — — 0 — 10288 34.03
(8847) (23.10) (—) (—) (0) (—) (13138) (33.57)
Saleable Steel 52252 272.97 — — 210284 736.55 53735 268.24
(51183) (276.36) (—) (—) (279732) (930.04) (52252) (272.97)
OTHERS
Calcium Ammonium 4857 — — — 250 0.19 4921 —
Nitrate (in terms of 25% N) (7160) (1.16) (—) (—) (11739) (7.67) (4857) (—)
SUNDRIES
Cinders 21601 — — — 0 — 21601 —
(21601) (—) (—) (—) (0) (—) (21601) (—)
Others 659.58 — 962.38 722.69
(706.01) (—) (1202.04) (659.58)
TRADING ACTIVITIES
Indigenous Steel 50 0.08 9679 18.09 9638 18.38 91 0.29
(139) (0.23) (24988) (41.66) (25077) (42.00) (50) (0.08)
2922.50 18.09 15502.00 2500.12
(2818.57) (41.66) (16232.63) (2922.50)
Notes: i) The classification of the company’s own products for the purpose of quantitative data is in accordance with the Company Law Board’s
Order No.3/19/80—CL VI dated 16th July 1980. However, in respect of an item (Sundries), the particulars of installed capacity and
production have not been given, as this being an omnibus head, clubbing of various products and by-products under one head would
not give meaningful information.
ii) Sales are net of rebates / price concessions allowed on certain Iron & Steel products.
iii) Figures of closing stock are after adjustment for inter-plant transfers, internal consumption, transfer to capital works etc.

38
38
7(c). Pig Iron and Saleable Steel Quantitative Reconciliation

Pig Iron Saleable Steel

(Main Steel (Alloy Steels (Main Steel (Alloy Steels
Plants) Plants) Plants) Plants)

(Quantity : Tonnes)

Opening Stock 23458 196 1328881 52252

(41672) (2) (1238891) (51183)

Production 353242 21544 9463747 233660

(358394) (25757) (9410240) (292840)

Total 376700 21740 10792628 285912

(400066) (25759) (10649131) (344023)

Sales 279914 20826 9255359 210284

(258557) (25173) (8755303) (279732)

Inter Plant Transfers 15580 0 208192 16586

(20316) (0) (290368) (13240)

Internal Consumption (incl. 62383 581 68543 482

for capital works) (94451) (299) (58083) (439)

Assorted length/Cuttings/Ingot etc. 0 0 99541 940

(0) (0) (178129) (0)

Depletion/Accretion (-) in 0 0 134166 4617

In-process stock (including (-1775) (0) (14768) (-2635)
of inter plant transfers)

Shortages/excesses(-) due to -4257 144 29680 -732

sectional weight variation (5059) (91) (23599) (995)
transportation, handling etc.

Closing Stock 23080 189 997147 53735

(23458) (196) (1328881) (52252)

Total 376700 21740 10792628 285912

(400066) (25759) (10649131) (344023)

Notes to 7(a), 7(b) & 7(c)

Figures in brackets pertain to previous year and have been rearranged/regrouped inter-se wherever necessary.

38
39
Schedules
Current Previous
Year Year

(Rupees in crores)
8. Expenditure incurred in foreign
currency on account of
Know-how 10.79 24.52
Interest 106.76 142.77
Training expenses & payments to 15.74 19.03
Foreign Technicians
Others 0.05 2.14

Total 133.79 188.46

9. Earnings in foreign exchange on account of

Export of goods(Calculated on FOB basis) 531.55 552.91
Royalty, Know-how, professional 3.43 1.72
and consultation fees
Interest and Dividend — 0.06

534.98 554.69

10. Value of imports during the period

(Calculated on CIF basis)
Raw materials 1775.25 1630.92
Capital goods 33.23 26.60
Stores, Spares and Components 130.81 134.36

Total 1939.29 1791.88

11. Value of raw materials consumed during the year

Rs/crores % Rs/crores %
Imported 2394.74 42.37 2215.39 40.87
Indigenous 3257.70 57.63 3204.81 59.13
5652.44 100.00 5420.20 100.00

12. Value of stores/spares & components consumed during the year

Rs/crores % Rs/crores %
Imported 145.14 9.12 149.51 9.06
Indigenous 1445.88 90.88 1500.48 90.94
1591.02 100.00 1649.99 100.00

13. Particulars of Directors’ Remuneration

Current Previous
Year Year

Salaries 0.44 0.29

Company’s contribution to provident 0.05 0.02
fund & other funds
Medical benefits 0.01 0.01
Provision for gratuity / Accrued Leave 0.23 0.28

Total 0.73 0.60

40
40
14. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :

I. REGISTRATION DETAILS
Registration No. 6 4 5 4 State Code 5 5
Balance Sheet Date 3 1 0 3 0 2
Date Month Year
II. CAPITAL RAISED DURING THE YEAR
(Amount in Rs. lakhs)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
N I L N I L
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS
(Amount in Rs. lakhs)
TOTAL LIABILITIES TOTAL ASSETS
1 9 3 0 2 0 0 1 9 3 0 2 0 0
SOURCES OF FUNDS
Paid-up Capital Reserves & Surplus
4 1 3 0 4 0 1 1 6 0 2 1
Secured Loans Unsecured Loans
7 0 5 1 3 8 6 9 6 0 2 5
APPLICATION OF FUNDS
Net Fixed Assets Investments
1 5 3 5 4 0 9 5 3 8 6 2
Net Current Assets Misc. Expenditure
3 7 1 0 2 5 7 7 6 5
Accumulated Losses
2 4 6 0 6 2
IV. PERFORMANCE OF THE COMPANY (Amount in Rs. lakhs)
Turnover/Other Income Total Expenditure
1 6 7 8 6 1 7 1 8 4 9 3 0 6
Loss Before Tax Loss After Tax
- 1 7 0 6 8 9 - 1 7 0 6 8 9
Earnings Per Share (Rs.) Dividend Rate (%)
N I L N I L
V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY
(As per Monetary Terms)

Item Code No. (ITC Code) : 7 2 0 8 3 7 0 0 / 7 2 0 8 3 8 0 0

7 2 0 8 3 9 0 0
Product Description : HOT ROLLED PLATES
Item Code No. (ITC Code) : 7 2 0 7 1 9 0 5 / 7 2 0 7 1 9 0 0
Product Description : SEMI-FINISHED PRODUCT
Item Code No. (ITC Code) : 7 3 0 2 1 0 0 1
Product Description : RAILWAY RAILS

40
41
Schedules
Current Previous
Year Year

(Rupees in crores)

Expenditure on public relations departments

Employees remuneration & benefits 5.11 3.62
Expenditure on institutional publicity 1.29 1.45
Other items of expenditure under publicity 2.23 4.36

Total 8.63 9.43

Turnover 15502.00 16232.63

Percentage 0.06 0.06

SOCIAL AMENITIES

Expenses Township Education Medical Social & Co- Transport Total Previous
cultural operative & year
activities societies dairy

(Rupees in crores)

Employees’ Remuneration & Benefits

— Salaries, wages &
Annual Bonus 81.19 70.29 94.70 3.24 0.63 11.67 261.72 223.99
— Company contribution 7.59 7.11 9.66 0.31 0.05 1.07 25.79 22.84
to PF & other funds
— Travel concessions 0.44 0.31 0.53 0.02 0.01 0.18 1.49 1.11
— Welfare expenses 2.69 3.02 15.04 2.27 3.88 0.46 27.36 26.18
— Consumption of medicines 0.29 — 21.93 — — — 22.22 23.52
— Coke & Other Subsidy — — — — 0.11 — 0.11 0.27
— Gratuity 4.97 3.46 4.66 0.31 0.02 0.80 14.22 8.12

Total 97.17 84.19 146.52 6.15 4.70 14.18 352.91 306.03

Stores & Spares 9.29 0.27 1.14 0.08 0.01 1.69 12.48 13.49
Repair & maintenance 22.87 0.30 1.20 0.13 0.02 2.20 26.72 31.79
Power & fuel 172.48 1.12 3.37 0.74 0.07 0.21 177.99 142.17
Miscellaneous expenses 20.97 2.69 4.96 0.38 0.03 2.25 31.28 37.91
Depreciation 15.98 0.52 3.71 0.16 0.01 0.21 20.59 22.38

Total 338.76 89.09 160.90 7.64 4.84 20.74 621.97 553.77

Less: Income 66.71 3.32 22.39 0.06 — 0.36 92.84 93.95

Net Deficit 272.05 85.77 138.51 7.58 4.84 20.38 529.13 459.82

42
42
 Annexure - I
Segment information as at and for the year ended 31st March, 2002 (Refer to para 6.1 of Schedule 3)

A. BUSINESS SEGMENT
( Rs. in crores )

PARTICULARS BSP DSP RSP BSL ASP SSP VISL Other Inter SAIL
Unallocated Segment
Sales

REVENUE
- External Sales 5428.97 2089.80 2309.84 4857.15 199.20 334.58 262.80 19.66 15502.00
- Inter-Segmental Sales 127.32 104.98 15.54 125.18 88.35 4.10 2.76 334.90 -803.13 —
- Total Revenue 5556.29 2194.78 2325.38 4982.33 287.55 338.68 265.56 354.56 -803.13 15502.00

RESULT
- Operating profit / 812.75 -119.33 -645.78 69.92 -120.06 -72.18 -85.13 14.95 -144.86
(-) loss ( Before
Interest Expenses )
- Interest expenses 1562.03 1562.03

- Net Loss ( - ) -1706.89

OTHER INFORMATION
- Segment assets 4055.23 4607.69 5104.81 4871.30 390.35 836.48 348.12 3386.30 23600.28
- Segment Liabilities 1250.46 627.07 798.80 1375.18 194.07 48.01 123.34 2341.97 6758.90
- Capital expenditure 137.89 95.04 30.20 55.07 0.21 9.33 2.54 21.35 351.63
- Depreciation 217.57 293.72 278.58 253.50 10.70 45.77 10.66 45.39 1155.89

B. GEOGRAPHICAL SEGMENT
PARTICULARS AMOUNT
(Rs. in crores)
Sales Revenue
India 14971.03
Foreign Countries 530.97
Total 15502.00

Note :
1. Segment assets/Liabilities exclude inter-unit balances.
2. Total carrying amount of segment assets by geographical location of assets, for the Company's overseas operation are below 10% of
the total assets of all segments, and hence not disclosed.

42
43
Auditors' Report ANNEXURE-I TO THE DIRECTORS’ REPORT

COMMENTS MANAGEMENT’S REPLIES

To
The Members of Steel Authority of India Limited
We have audited the attached Balance Sheet of STEEL AUTHORITY OF
INDIA LIMITED, as on 31st March 2002 and the annexed Profit &
Loss Account of the Company, for the year ended on that date, in which
are incorporated the accounts of Plants, Units, Branches and other Offices
audited by the Branch Auditors in accordance with the letter of
appointment of Comptroller & Auditor General of India. These financial
statements are the responsibility of the Company’s Management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material mis-statement. An Audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As required by the Manufacturing and Other Companies (Auditors’
Report) Order, 1988 issued by the Company Law Board in terms of
Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure
a statement on the matters specified in paragraphs 4 & 5 of the said
Order.
Further to our comments in the Annexure referred to above, we report
that :
1. The reports on the accounts of the Plants, Units, Branches and Other
Offices audited by the Branch Auditors have been forwarded to us
and we have duly considered the same in preparing this Report;
2. We have obtained all the information and explanations, which to
the best of our knowledge and belief were necessary for the purpose
of our audit;
3. In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examinations
of the books;
4. The Balance Sheet and the Profit & Loss Account dealt with by this
report, are in agreement with the books of account;
5 In our opinion, read with our comments in Paragraphs 7(a) & 7(c) Reply as at 7(a) and 7(c)
herein below regarding investments in terms of Accounting Standard-
13 and deferment of future liability payable under Employee Family
Benefit Scheme in terms of Accounting Standard-15, the Balance
Sheet and the Profit & Loss Account have been drawn up in
accordance with the accounting standards referred to in sub-section
(3C) of Section 211 of the Companies Act, 1956;
6. On the basis of the written representations received from the directors,
and taken on record by the Board of Directors, we report that none
of the directors is disqualified as on 31st March, 2002 from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956. However in terms of

44
 COMMENTS
letter dated 22nd March 2002 from the Department of Company
Affairs, the provisions of Section 274(1)(g) are not applicable to
the directors nominated by the Government of India.
7. (a) No provision has been made for the likely shortfall in the value
of equity investments of Rs.374.94 crores in Indian Iron &
Steel Co. Ltd. (under BIFR) as stated in Note No. 4.1 in
Schedule 3 whose impact on the company’s loss is not presently
ascertainable.
(b) Advances, claims etc. to the extent of Rs. 252.31 crores as
indicated in Note Nos. 4.2 to 4.5 in Schedule 3 are considered
fully recoverable by the management. However, since all the
items referred to are outstanding since long, we are unable to
offer our comments on the recoverability thereof.
(c) Liability of Rs. 86.58 crores for future benefits payable under
Family Benefit Scheme as referred to in Note no. 4.7 in Schedule:
3 has been deferred over a period of 5 years instead of charging
it off fully in the current year. Because of the above, the loss for
the year is understated by Rs. 69.26 crores.
(d) Loans and advances include Rs. 0.55 crore being the balance
amount of Rs. 1 crore given to the Orissa Chief Minister’s
Relief Fund as stated in Note No. 4.10 of Schedule 3.
The Management has stated that efforts are being made to
recover the above amount from the employees and, any
shortfall in this regard will be treated as ‘donation’ and due
approval thereof u/s 293 of the Companies’ Act 1956 will be
obtained.
(e) Pending finalisation and ascertainment of the arrear salaries and
wages of employees for the period from 1.1.1997 to 31.12.2000,
we are unable to comment on the adequacy of the provision of
Rs. 420.35 crores (including Rs. 127.62 crores provided during
the year) as referred to in Note No.5.2 in Schedule 3.
MANAGEMENT’S REPLIES
IISCO, being in losses, was taken over by the Government of India and
later on made a subsidiary company of SAIL in 1978. Provision for
diminution in value of investments is made to recognise a decline, other
than temporary, on individual investment basis. The value of IISCO’s
assets including mines, plant & machinery, land & building etc. is
considered adequate to cover the company’s investment in it. In our
view, there is no permanent diminution in the value of company’s
investment in IISCO and hence no provision is required. Government
has recently approved IISCO’s revival plan, including VR compensation
and the same is under detailed evaluation/ implementation.
Advances of Rs. 16.59 crores paid to IISCO Ujjain Pipe & Foundry Co.
Ltd, a subsidiary company of IISCO, under liquidation is considered
realisable as the value of land and buildings of IISCO Ujjain Pipe &
Foundry Co. Ltd., re-valued by an independent agency is adequate to
cover these advances.
The advances/dues of Rs. 138.37 crores relate to Hindustan Steelworks
Construction Limited (HSCL), a public sector undertaking. The matter
has been referred to a conciliator. Adjustment as required shall be carried
out on finalisation of conciliation proceedings/ settlement of claim with
the party. Further, adjustable/recoverable advances to the tune of
Rs. 42.75 crores given to M/s HSCL are considered as recoverable, since
the Company has continuous dealings with it and also considering that
Government has recently provided relief to HSCL.
In respect of Rs. 9.84 crores as advance given to BRL, the Company has
continuous dealings with the party. Govt. has also recently approved
revival/relief package for BRL.
Claim of Rs. 44.76 crores has been agreed to by TPE, Russia. Recovery
thereof is being followed up through Inter-Governmental meetings/
protocol.
The expenditure incurred upto 31st March 2002 has been fully charged
to Profit and Loss Account and the future liability has been treated as
deferred revenue expenditure to be written-off in five years as in the case
of compensation payable under the Voluntary Retirement Scheme.
Efforts are been made for the recovery of the balance amount.
Wage agreements have been finalised with employees, notionally from
1.1.97 to 31.12.2000 and implemented from 1.1.2001. The liability
has been provided accordingly including towards adhoc advances paid
for the period 1.1.97 to 31.12.2000. Arrears for this period are to be
discussed separately, keeping in view the financial health of the company.
Liability if any will be provided only on settlement.
45
Auditors' Report
COMMENTS MANAGEMENT’S REPLIES

(f) The company has withdrawn the benefits relating to Leave Travel As the Company has withdrawn the benefits relating to Leave Travel
Concession (LTC)/Liberalised Leave Travel Concession (LLTC) Concession (LTC)/Liberalised Leave Travel Concession (LLTC) for the
for various block periods from 1998-99 to 2002-03 as indicated block calendar years of 1998-99, 2000-01 and 2002-03, there exists no
in Note No. 5.7 in Schedule: 3. Because of the above withdrawal, liability towards LTC/LLTC for these periods.
no liability towards LTC/LLTC has been provided in the
accounts. However, in view of specific agreements with the
unions and terms of employment for extension of above benefits
to the employees, we are unable to comment whether, such
liabilities have accrued or not. (amount unascertained).
(g) The amount of public deposits as per the detailed computerized Liability of Rs.2.14 crores has been provided pending reconciliation/
list was higher by Rs 2.14 crore as compared to the financial verification. Internal controls are being further strengthened.
records as on the Balance Sheet date as indicated in Note No.
5.11 in Schedule 3. The deposits have been increased by this
amount and debited to Profit & Loss Account as a ‘Prior Period
Expense’. Internal control procedures in this regard are required
to be strengthened. The above account having not yet been
reconciled/ verified and in the absence of adequate detail/
supportings justifying the above adjustment we are unable to
offer comments in this matter.
Without considering item Nos (a), (b) and (d) to (g) of
paragraph 7 above, whose effect on the Company’s loss/Profit
and Loss Account Debit Balance, is not presently ascertainable,
had the impact of item (c) of paragraph 7 above been considered,
the loss for the year would have been Rs. 1776.15 crores as
against reported loss of Rs.1706.89 crores and the Debit Balance
would have been Rs.2529.88 crores, as against the reported
figures of Rs. 2460.62 crores.
8. Subject to the above and read with the accounting policies and
notes appearing in the Schedule 3, give the information required
by the Companies Act, 1956 in the manner so required and
give a true and fair view in confirmity with the accounting
principles generally accepted in India:
i. in case of Balance Sheet, of the state of affairs of the Company
as at 31st March 2002 and
ii. in case of Profit & Loss Account, of the Loss of the Company
for the year ended on that date.

S.R. Batliboi & Co. S.N. Nanda & Co. For and on behalf of the Board of Directors
Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/-

(R.K. Agrawal) (S.N. Nanda) (Arvind Pande)
Partner Partner Chairman

Chaturvedi & Co.

Chartered Accountants

Sd/-
(S.C. Chaturvedi)
Partner

Place : New Delhi Place : New Delhi

Dated : 28th May, 2002 Dated : 23rd August, 2002

46
 ANNEXURE TO THE AUDITORS’ REPORT
[Referred to in paragraph 2 of our Report of even date]

COMMENTS MANAGEMENT’S REPLIES

1. (a) The Company has maintained proper records showing in most cases, full At Durgapur Steel Plant, steps have been taken
particulars including quantitative details and situation of its fixed assets, for updation of fixed assets register covering
except for Durgapur Steel Plant where such records are under preparation/ recently commissioned modernized facilities.
updation.
(b) The fixed assets of the Company, except in some cases have been physically Physical verification of fixed asset are carried out
verified by the management during the year in accordance with a regular in a cycle of three years. This is a continuous
programme of verification which, in our opinion requires strengthening process.
having regard to the size of the Company and the nature of its assets. As
informed to us, no material discrepancies have been noticed with respect
to those fixed assets where the reconciliation has so far been completed,
and the same have been duly adjusted in the books. As regards the fixed
assets not yet verified/reconciled, the discrepancies are not presently
ascertainable.
2. The fixed assets of the Company have not been revalued during the year.
3. Except in a few cases, the stocks of semi/finished products and raw materials
have been physically verified by the management at all its locations with
reasonable frequency during the year. Stores and spare parts, except in
a few cases, are verified in accordance with a regular programme of
verification which in our opinion, is generally reasonable. In certain cases,
the stocks of scraps and middlings have been verified on the basis of visual
survey/estimates.
4. In our opinion and according to the information and explanations given to us,
the procedures for physical verification of stocks followed by the management
are generally reasonable and adequate in relation to the size of the company and
the nature of its business.
5. The discrepancies between physical stocks and book records arising out of
physical verification, which were not material, have been dealt with in the
books of account.
6. In our opinion and on the basis of our examination, the valuation of stocks is fair
and proper in accordance with the normally accepted accounting principles and
read with Note No. 5.10 in Schedule 3, is on the same basis as in the preceding
year.
7. The Company has not taken any loans, secured or unsecured, from companies,
firms or other parties listed in the register maintained under Section 301 of the
Companies Act, 1956. In terms of Sub-section (6), the provisions of Section
370 of the aforesaid Act, are not applicable to a company on or after 31st
October, 1998.
8. The Company has granted loans to certain companies listed in the
register maintained under Section 301 of the Companies Act, 1956 and
according to the information and explanations given to us, the rate of
interest and the terms and conditions thereof, are not prejudicial to the interest
of the Company.

47
Auditors' Report
9. Loans and advances in the nature of loans have been given by the The amount of Rs. 207.55 crores pertains to
Company to the employees, their co-operative societies and other parties advances given to IISCO Ujjain Pipe and Foundry
and they are repaying, in most cases, the principal amounts as stipulated Co. Ltd., HSCL and BRL. Reply given at 7(b) of
and are also generally regular in payment of interest, where applicable except for the Auditors’ Report.
Rs.207.55 crores due from certain public sector undertakings where recovery of
principal and interest as stipulated has not been made during the year. The above
amount includes an advance of Rs.165.24 crores, which has been given in excess
of the contractual amount to a public sector undertaking, for recovery of which no
stipulations have been agreed to (Refer Note No.4.3 in Schedule 3). We are
informed that reasonable steps have been taken for recovery in the
defaulting cases.

10. In our opinion and according to the information and explanations given to us,
having regard to the explanation that some of the items purchased are of special
nature and suitable alternative sources do not exist for obtaining comparable
quotations thereof, there are adequate internal control procedures commensurate
with the size of the Company and the nature of its business for the purchase of
stores, raw materials including components, plant and machinery, equipment
and other assets and for the sale of goods.

11. According to the information and explanations given to us, the transactions of
purchase of goods and materials and sale of goods, materials and services made
in pursuance of contracts or arrangements entered in the Register maintained
under Section 301 of the Compaines Act, 1956 and aggregating during the year
to Rs.50,000 or more in respect of each party, have been made at prices which
are reasonable having regard to the prevailing market prices for such goods,
materials or services or the prices at which such transactions for similar goods or
services have been made with other parties.

12. As explained to us, the Company has a regular procedure for the determination
of unserviceable or damaged stores, raw materials and finished goods and on
such basis, adequate amounts have been written off or provided for in the
accounts against such stocks.

13. In our opinion and according to the information and explanations given to us,
the Company has complied with the provisions of Section 58A of the Companies
Act, 1956 and the applicable rules framed thereunder with regard to the deposits
accepted from the public.

14. In our opinion, reasonable records have been maintained by the Company for
the sale and disposal of scraps and by-products where applicable and significant,.

15. In our opinion, the Company’s internal audit system is commensurate with the
size and nature of its business. However, it needs to be further strengthened and
its scope to be enlarged.

16. We have broadly reviewed the records maintained by the Plants for production
of Fertilisers (Ammonium Sulphate & Calcium Ammonium Nitrate), Chemicals
(Benzene & Tolune), Industrial gases and Steel products pursuant to the rules
made by the Central Government for the maintenance of cost records under
Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that
prima facie, the prescribed accounts and records have been maintained. We
have not however, made a detailed examination of the records with a view to
determine whether these are accurate and complete.

48
17. According to the records of the Company Provident Fund dues have generally
been regularly deposited during the year with the appropriate authorities. As
informed to us, the Employees’ State Insurance Act is not applicable to the
Company.
18. According to the information and explanations given to us, except for An amount of Rs. 2.60 crores against excise duty
Rs. 2.64 crores in respect of excise duty and sales tax, there are no undisputed will be paid at the time of raising of supplementary
amounts payable in respect of income-tax, sales tax, custom duty and invoices. As regards Rs. 0.04 crores on account of
excise duty which have remained outstanding as at 31st March, 2002 for a sales tax, the same has since been paid.
period of more than six months, from the date they became payable.

19. According to information and explanations given to us and the records of the
Company examined by us, no personal expenses have been charged to revenue
account, other than those payable under contractual obligations or in accordance
with the generally accepted business practices.
20. The Company is not a sick industrial company within the meaning of Clause (0)
of sub-section 3 of the Sick Industrial Companies (Special Provisions) Act,
1985.
21. In respect of the Company’s trading activities, damaged goods as explained to us
by the management, have been ascertained and adequately dealt with in the
accounts.
22. In respect of service activities carried out by the Company, which are not
significant in view of the size of the Company, in our opinion there is a reasonable
system of recording receipts, issues and consumption of materials and stores
and allocation of materials and man-hours to the relative jobs. There is also a
reasonable system of authorisation at proper levels and adequate system of
internal controls, commensurate with the size of the Company and the nature
of its business, on the issue of stores and allocation of stores and man-hours to
the relative jobs.

S.R. Batliboi & Co. S.N. Nanda & Co. For and on behalf of the Board of Directors
Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (Arvind Pande)
Partner Partner Chairman
Chaturvedi & Co.
Chartered Accountants
Sd/-
(S.C. Chaturvedi)
Partner

Place : New Delhi Place : New Delhi

Dated : 28th May, 2002 Dated : 23rd August, 2002

49
Comments of C&AG
COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA
UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE
ACCOUNTS OF STEEL AUTHORITY OF INDIA LIMITED
FOR THE YEAR ENDED 31ST MARCH, 2002
COMMENTS
A. PROFIT & LOSS ACCOUNT
A reference is invited to item 7 of the Statutory
Auditors’ Report dated 28th May, 2002 wherein it
has been stated that the loss for the year would
have been Rs.1776.15 crore as against reported
loss of Rs.1706.89 crore. Loss of the company for
the year would increase further in view of the
following :
1. Expenses have been understated by Rs.307.67
crore due to the following :
(i) Under/non-provision towards stores & spares
not moved for more than 5 years (Rs.57.63 crore).
(ii) Non-charging of the foreign supervision cost,
training and storage expenses incurred for
reconstruction of Blast Furnace-I of Durgapur Steel
Plant which was abandoned (Rs.7.88 crore)
(iii) Non-provision of liability for entry tax, interest
and penalty on procurement of low silica limestone
(Rs.59.84 crore)
50
ANNEXURE - II TO THE DIRECTORS’ REPORT
MANAGEMENT’S REPLIES
There is a well defined procedure in the company for declaration of items as
obsolete/surplus stores and spares. Usability of materials in other shops / sister
units / subsidiary companies is ascertained before such declaration. As per
Accounting policy for stores and spares declared obsolete/surplus and also
those which have not moved for five years or more, provision is made at 75%
and 10% respectively of the book value and charged to revenue. This policy is
being followed consistently. As on 31st March, 2002, there is a provision of
Rs.76.35 crore in the books towards stores and spares which have not moved
for five years and more and which are surplus/obsolete, which is considered
adequate.
Plant and equipment structurals, refractories, designs, drawings etc. initially
meant for Blast Furnance (BF)-1 were transferred and utilised for reconstruction
of BF-3 which is now in operation. The items which could not be used, have
been provided for. Foreign supervision costs pertaining to manufacturing the
plant and equipment and controlling the quality, storage expenses etc. are part
of capital costs. As regards training cost, employees have been trained for
operating all the three blast furnaces at the plant which are of similar type. The
trained people are now operating the furnace. Thus, all the expenditure
incurred as part of the reconstruction of BF No.1, and utilised in BF No.3 up-
gradation, has been properly capitalised.
The Hon’ble High Court of Chhatisgarh has admitted the writ petition filed by
Bhilai Steel Plant against the orders of Additional Commissioner of Commercial
Tax. The Operation of the Department’s orders has also been stayed. As the
dispute on classification of low-silica limestone is unresolved, the amount of
demand has been shown as ‘Contingent Liability’ as per consistent practice.
 COMMENTS
(iv) Non-provision against doubtful and disputed
advance of Rs.133.40 crore paid in excess of
contractual obligation, outstanding for more than
5 to 10 years, payment of Rs.2.54 crore for future
job and irrecoverable estate dues of Rs.2.43 crore
in case of Durgapur Steel Plant and financial
assistance of Rs.34.11 crore given to M/s HSCL
by Bokaro Steel Plant.
(v) Non-provision for the amount due from Bhilai
Refractory Plant (a unit of BRL) which is under
BIFR and its closure has already been approved by
BIFR (Rs.9.84 crore).
2. Inventories have been overstated by Rs.106.20
crore due to:
(i) Overvaluation of closing stock of rollable slab/
steel skull scrap/defective G.P. Sheets/HR&CR
Coil sheets due to valuation of materials at the
price applicable to the prime product or at cost
higher than the NSR, etc. (Rs.29.36 crore).
(ii) Valuation of residual, accumulated,
unmarketable mixed coke embedded with soil at
Bokaro Steel Plant (Rs.65.63 crore).
(iii) Overvaluation of closing stock of semi-finished
product/scrap either not covered by order or
returned by the customers due to valuation at listed
price/cost instead of market price (Rs.11.21 crore).
MANAGEMENT’S REPLIES
In the interest of early completion of the Projects, time to time adjustable/
recoverable advances were given to M/s HSCL, being a Public Sector
Undertaking. All the issues regarding adjustment/recovery of advances to
M/s HSCL were envisaged to be settled on closure of contracts. In order to
settle the issue alongwith the disputed claims of HSCL relating to Durgapur
Steel Plant, the matter has been referred to a conciliator. The conciliation
proceedings are under progress and appropriate adjustments would be made
based on the decision arising out of conciliation proceedings. As regards dues
of Bokaro Steel Plant, as there are continuous dealings with M/s HSCL, these
would be recovered in due course. Adjustments/ recovery of advances is being
followed up. The matter has been duly disclosed in the Notes on Accounts at
Note No.4.3 of Schedule-3. Government has also recently provided financial
relief to M/s HSCL.
The Government of India has recently approved a revival package of M/s Bhilai
Refractory Plant (BRP), which includes financial support for working capital
and manpower restructuring support. On implementation of revival package
and resumption of supply of refractory bricks, the outstanding receivables shall
be adjusted/recovered from their supply bills. The matter has been duly disclosed
in the ‘Notes on Accounts’ at Note No.4.4 of Schedule 3.
The inventory of Semi/Finished products is valued at lower of cost or net
realisable value of the respective plants as per consistent accounting policy
followed by the company. For arriving at net realisable value of the products,
average discounts/rebates for the year are considered which inter-alia takes
care of the price reduction due to quality defects besides other rebates. However,
stock of defective steel materials has been valued at lower of cost or net sales
realisation of defective steel products. The derived net sales realisation for
rollable slabs not meant for sale are arrived at on the basis of net sales realisation
of the tested quality finished materials. As regards valuation of iron and steel
scrap, it has been valued as per the accounting policy No. 1.6 forming part of
schedule 3 to the accounts. This accounting treatment has been consistently
followed.
Mixed Coke lying at Bokaro Steel Plant is usable within the plant and has also
a good market outside. Mixed Coke lying in the yard is being continuously
drawn and used in the sinter plant. M/s MECON, an independent agency,
during the year have also surveyed the stock and confirmed the availability,
usability and valuation of the same.
The Semi/Finished products are valued at lower of cost or net realisable value
of the respective plants as per consistent accounting policy followed by the
company. There is no change in the status or nature of materials lying in stock
which are not covered by order. These are sold as prime products in normal
course and are accordingly valued. The materials returned by customers for
non-conformance to specifications are re-processed/re-conditioned and supplied
against same order/matching order. However, the valuation of returned materials
has been made at 60% of the prime product price on a conservative basis.
Thus, there is no overvaluation of inventory.
51
Comments of C&AG
COMMENTS
3. Accountal of excess subsidy on account of interest
on loan raised for VRS (Rs.16.02 crore).
4. Depreciation has been understated due to adoption
of lower rate of depreciation at Bokaro Steel Plant
(Rs.18.11. crore).
5. Income of the company has been overstated by
Rs.9.74 crore due to accountal of material worth
Rs.179.03 crore as sales although the company had
not endorsed the railway receipts in favour of the
customer or materials were not delivered or bill of
lading was not issued within 31 March, 2002.
B. BALANCE SHEET
1. Fixed Assets include the following idle/surplus assets:
(i) Ferro Silicon Furnaces, D.G. Set, Stamping
machine, Tundish Feeder Skids of RHF-1, load
cells, IPU Schemes and computerized combustion
control system lying unused at Bokaro Steel Plant
for last 3-10 years due to non-completion of the
scheme/premature failure/for want of requirement,
etc. (Rs.62.12 crore).
(ii) ID Motor for Rail & Structural Mill of Bhilai
Steel Plant imported in 1997 lying unused since
procurement (Rs.8.83 crore).
(iii) Rotary Kiln of RSP, weigh bridge, Twin Hearth
Furnace and Railway track at DSP lying unused for
the last 5-10 years (Rs.42.02 crore)
52
MANAGEMENT’S REPLIES
The Financial & Business Restructuring proposal of SAIL approved by the
GOI in February 2000, inter-alia, provided for GOI’s guarantees of Rs.1500
crores, with 50% interest subsidy on the funds, to be raised from the market by
SAIL for reduction in manpower through VRS. In line with the decision of the
GOI, the funds were raised during 2000-01 and 2001-02 from the market and
subsidy @ 50% of the interest paid to the Bond holders from the date of
allotment of Bonds was claimed and received from the GOI.
As per company’s rules, employees are released after they settle their dues,
vacate company’s accommodation etc. Thus, the employees were released over
a period of time and the VRS funds parked in the escrow account were withdrawn
and utilised in phases. Interest subsidy has been correctly claimed in line with
fund raised and interest paid thereon.
The assets mentioned by the Audit were capitalised during 1992 to 1997 and
there is no change in the rates of depreciation adopted during the year. Based
on the actual nature and utilisation of the respective assets like single/double/
triple shifts, continuous process plant etc., the depreciation rates have been
applied as per Schedule XIV of the Companies Act, 1956.
Sales are accounted for consistently based on the delivery of goods to the
carriers wherein significant risks and rewards of ownership have been passed on
to the customers. In the cases referred, the despatches have been made to the
customers and accordingly included in the sales. However, the documents
were held in the custody of the company for securing the payments.
It is a normal accounting principle that a transaction of sale/revenue gets
recognised even when an enterprise retains an insignificant risk of ownership
i.e. legal title to the goods by delaying endorsement of RRs etc. to protect the
collectability of amount due. Further, the position is adequately clarified
through the accounting policy of the company which states that ‘Materials sold
in domestic market are treated as sales on delivery to carriers including the
cases where delivery documents are in the company’s name, pending collection
of payments’.
Some facilities/assets do remain idle for some time due to technical or commercial
reasons or as a standby equipment. As per normal accounting practice,
depreciation continues to be charged on such assets. Some items also remain
under work-in-progress on account of disputes with the contractors, mid-term
review of schemes and other market related considerations. Status of each
scheme is being reviewed regularly.
 COMMENTS
(iv) HDGL Project at Assam which has become
commercially unviable and has been kept in
abeyance for more than 2 years (Rs.17.64 crore).
(v) PSP of OPP at Bolani which is damaged and
lying unused for the last 5 years (Rs.2.34 crore).
C. NOTES ON ACCOUNTS
(a) Contingent liabilities do not include the
following:
(i) Arrears of pay & allowances for the period from
1.1.1997 to 31.12.2000 in respect of employees
(Rs.1500 crore).
(ii) Claims lodged by HSCL and BTS on Durgapur
Steel Plant under modernization packages
(Rs.394.70 crore).
(iii) Claims made by contractors on Bokaro Steel
Plant relating to modernization of Bokaro Steel
Plant (Rs.238.24 crore).
(b) The profit of Rs.171.64 crore towards leasing
of houses/flats has been accounted for without
transfer of ownership of houses/flats to the lessee.
D. GENERAL
Following disclosure though significant have not
been made in the Accounts:
(i) Undertaking/commitment given by the company
to the lenders of SAIL Power Supply Company
Ltd. (SPSCL) regarding its obligation towards
SPSCL.
(ii) Initial disclosure about the plan for divestment
of Alloy Steels Plant.
MANAGEMENT’S REPLIES
The company has entered into a Memorandum of Understanding (MOU)
with another company for formation of joint venture for execution of Hot Dip
Galvanising Line (HDGL) at Assam. The JV partner has provided a security
deposit to SAIL towards this project. The HDGL project is under active
consideration for commercial use.
The Primary Stock Pile (PSP) of Ore Processing Plant, except for minor
portion, is in use and cannot be treated as an idle asset.
Wage agreements have been finalised with the employees, notionally from
1.1.1997 to 31.12.2000 and implemented from 1.1.2001. The liability has
been provided accordingly as the matter relating to arrears, if any, for the
period from 1.1.1997 to 31.12.2000 is to be discussed separately, keeping in
view the financial health of the company. Liability if any, will be provided only
on settlement. Contingent liability arises when there are disputes on existing
agreement/contract. There is no agreement for wage revision prior to 1.1.2001.
The matter has also been adequately disclosed in Note No.5.2 of Schedule 3 to
the Notes on Accounts.
The claims of HSCL and BTS against Durgapur Steel Plant and counter claims
of DSP alongwith advances and other dues recoverable against them are under
conciliation process. Claims of HSCL and BTS get off-set against our counter
claims. Position with regard to HSCL is adequately disclosed in Note No.4.3
of Schedule 3 - 'Notes on Accounts'.
The counter claims of BSL are more than the claims of Rs.173.81 crores made
by VAI and its consortium members with regard to CCD Package which are
under conciliation proceedings. As regards balance claims of Rs.64.43 crores of
SMS (AG) and its consortium members, we are of the view that these are
untenable on contractual grounds.
As per Accounting Standard-19, Lease transactions and other events are
accounted for and presented in accordance with their substance and financial
reality and not merely with their legal form. In the leasing of houses, the risk
and rewards incidental to ownership have been transferred to lessees and the
transactions have been properly accounted for. Appropriate disclosure has
been made in the notes on accounts at Note No. 5.9 of Schedule 3.
The undertaking/commitment given by SAIL to lender of SPSCL to make
priority payment, is not significant and does not require any separate disclosure
in the accounts.
Alloy Steels Plant is having continuous operations and its activities are being
properly accounted for as a going concern.
53
Comments of C&AG
COMMENTS
(iii) Valuation of inventory of raw materials at cost
at Bhilai Steel Plant, which is a deviation from the
accounting policy of the company.
(iv) Idle/abnormal costs have been included in the
valuation of inventory of iron ore/limestone/mag
carbon bricks.
(v) The Company does not have any Accounting
Policy for accounting of waste material coming out
alongwith ore in its mines based on some technical
evaluation or on scientific basis.
(vi) the company has transferred its captive power
plants of Durgapur, Rourkela, Bokaro and Bhilai
to the joint venture companies. As a result of
transfer of captive power plants, the liability of pay
and allowance etc. of surplus/redundant manpower
(1918) returned or likely to be returned to SAIL
would have to be borne by the company.
(vii) Liabilities on account of post retirement
medical facilities and settlement expenses are not
being recognised in accordance with AS 15.
Sd/-
(R.B. Sinha)
Principal Director of
Commercial Audit &
Ex-Officio Member,
Audit Board, Ranchi
Place : Ranchi
Date : 20th August, 2002
54
MANAGEMENT’S REPLIES
As per Accounting Standard-2, materials and other supplies held for use in the
production of inventories are not written down below cost if the finished
products in which they will be used are expected to be sold at or above cost.
Accordingly, at Bhilai Steel Plant, the inventory of raw-materials are valued at
cost.
Idle/abnormal costs have not been considered for valuation of inventory of iron
ore/limestone/mag carbon bricks. As per Accounting Standard-2, the allocation
of production overheads for the purpose of their inclusion in the cost of
conversion is based on the normal capacity of production facilities and the
actual level of production may be used if it approximates normal capacity.
Therefore, actual level of production has been considered as normal capacity
for valuation of inventory.
The accounting for mining operation has been carried out with reference to
actual operations. Waste/over-burden removal is essential part for the operation
of a mine and is carried out as and when required. The expenditure of over
burden/ waste removal has been properly accounted for on actual basis.
Such employees of the company who are not absorbed by the Joint Venture
companies, continue to be regular employees of SAIL and their remuneration
is charged to revenue like expenses on other employees.
Accounting Standard (AS)-15 applies to retirement benefits in the nature of
either a defined contribution scheme or defined benefit scheme. The medical
facilities and settlement expenses as provided by the company to retired
employees do not fall within the definition of defined contribution scheme or
defined benefit scheme.
For and on behalf of
the Board of Directors
Sd/-
(Arvind Pande)
Chairman
Place : New Delhi
Date : 21st August, 2002
Review of Accounts ANNEXURE - II TO THE DIRECTORS’ REPORT

REVIEW OF ACCOUNTS OF STEEL AUTHORITY OF INDIA LIMITED FOR THE YEAR ENDED
31ST MARCH, 2002 BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA
(Review of Accounts has been prepared without taking into account the impact of comments of the COMPTROLLER & AUDITOR GENERAL
OF INDIA under Section 619( 4 ) of the Companies Act, 1956 and qualifications contained in the Statutory Auditors’ Report).
1. Financial Position
The table below summarises the financial position of the Company under broad headings for the last three years :-
Description 1999-00 2000-01 2001-02
(Rs. in crore)
LIABILITIES
(a) Paid up-Capital
i) Government 3544.69 3544.69 3544.69
ii) Others 585.71 585.71 585.71
(b) Reserves & Surplus
i) Free Reserves & Surplus — — —
ii) Share Premium Account 237.64 236.84 236.15
iii) Specific Reserves 1693.80 923.37 923.82
(c) Borrowings from
i) (a) Government of India 0.27 0.27 0.27
(b) Steel Development Fund 204.16 204.16 204.16
ii) Foreign Sources - Long-term 2230.78 2092.95 1914.82
iii) Term Loan 1487.50 1397.50 868.33
iv) Non Convertible Bonds 4431.40 4780.73 4439.95
v) Bond Application Money 400.00 39.45 83.60
vi) Housing Finance Loans 115.99 200.01 200.00
vii) Deferred Credit 0.01 — —
viii) Public Deposits 2095.14 1337.16 1272.46
ix) Working capital borrowings from Banks 3604.98 3546.86 4026.65
x) Foreign Sources - Short-term 305.27 331.29 544.03
Total Borrowings ( i to x ) 14875.50 13930.38 13554.27
xi) Interest accrued and due 206.92 320.30 457.36
(d) i) Trade dues, Current Liabilities and Provisions
(excluding Gratuity & Accrued Leave Provisions) 5026.88 5273.77 4857.19
ii) Provision for Gratuity & Accrued leave 782.33 1256.56 1647.76
iii) Sundry Creditors for capital works 340.91 263.41 253.95
Total (a to d) 27294.38 26335.03 26060.90
Rs. 2522.80 crore of loans fall due for repayment in next financial year.
ASSETS
(e) Gross Block 26823.32 26915.59 27198.88
(f) Less : Cumulative Depreciation 10950.53 11738.19 12400.73
(g) Net Block 15872.79 15177.40 14798.15
(h) Capital Work-in-Progress 1474.62 1220.59 555.94
(i) Investments 376.62 435.30 538.62
(j) Loans & Advances to Subsidiary Companies 14.31 14.31 23.37
(k) Current Assets, Loans and Advances 8259.17 8361.71 7106.55
(l) Miscellaneous Expenditure ( to the extent
not written-off or adjusted) 499.97 371.99 577.65
(m) Profit & Loss Account Debit Balance 796.90 753.73 2460.62
Total (e to m) 27294.38 26335.03 26060.90
(n) Working Capital [k-d(i)-c(xi)] 3025.37 2767.64 1792.00
(o) Capital Employed (g + n) 18898.16 17945.04 16590.15
(p) Net Worth [(a)+b(i)+b(ii)-l-m] 3071.71 3241.52 1328.28*
(q) Net Worth per Rupee of Paid-up Capital (Re.) 0.74 0.78 0.32
(r) Profit / Loss ( - ) before Tax -1720.02 -728.66 -1706.89
(s) Profit / Loss ( - ) after Tax -1720.02 -728.66 -1706.89
N:B. The figures for the previous years wherever necessary have been re-arranged / regrouped wherever necessary.
* The Company has become a potential sick company in terms of section 23 of the Sick Industrial Companies Act, 1985

55
Review of Accounts
2. Ratio Analysis
Some important financial ratios on the financial health and working of the Company at the end of last 3 years are as under :-
1999-00 2000-01 2001-02
(In Percentages)
A. Liquidity
i) Current ratio (current assets to current liabilities &
provisions and interest accrued & due but excluding
provisions for Gratuity and accrued leave [k/(d(i)+c(xi)] 157.80 149.47 133.72
ii) Acid Test Ratio (quick assets i.e. cash and bank balances,
sundry debtors and loans and advances (excluding balances
with Customs, Excise, Port Trust and Railways, etc., and
stores issued on loan) to current liabilities (excluding
provisions and deferred credits and stores received on loan) 71.60 72.67 59.42
The deterioration in Acid Test Ratio to 59.42% in 2001-02 from
72.67% in 2000-01 was due to reduction in Cash & Bank Balance and
Sundry Debtors.
B. Debt Equity Ratio
Long term debt to Equity
[c(i) to (viii)/(a+b(i)+b(ii)] 2.51 2.30 2.06
The decrease in debt equity ratio during 2001-02 is due to
decrease in Long-term Borrowing by Rs.1068.64 crore.
C. Profitability Ratios Due to Loss Profitability Figures are in negative.
3. Working Capital
i) The following indicates the percentage of working capital to Sales during the last three years :-
1999-00 2000-01 2001-02
(Rupees in crore)
a) Working capital 3025.37 2767.64 1792.00
b) Sales 16250.16 16232.63 15502.00
c) % of Working capital to Sales 18.62 17.05 11.56
The working capital of the Company decreased by 35.25% during the year 2001-02 as compared to 2000-01.
ii) The Company has made credit arrangements with consortium of Banks, lead Bank being the State Bank of India, secured by Company’s
inventories, book debts and other current assets. The actual utilisation at the year end, during the last three years, was as under :
Years Utilisation
(Rs. in crore)
1999-00 3604.98
2000-01 3546.86
2001-02 4026.65
4. Sources and Utilisation of Funds
Funds amounting to Rs. 849.88 crore from internal and external sources were realised and utilised during the year ended
31st March, 2002 as given below :
(Rs. in crore)
I. Sources of Funds
a) Loss after tax -1706.89
Add : Depreciation (including Rs. 8.23 crores relating to prior period) 1164.12
Less: Increase in miscellaneous expenditure 205.66
Less : Profit on sale of fixed assets 662.47 -1410.90
b) Decrease in working capital 975.64
c) Sale of fixed assets 32.67
d) Sale of Power Plants 670.50
e) Sales/Lease of houses 190.32
f) Increase in Gratuity/Accrued Leave Provision 391.20
g) Increase in Capital Reserve( incl. P.M’s Trophy Award Fund) 0.45
Total ( a to g ) 849.88

56
 (Rs. in crore)
II. Utilisation of Funds
a) Additions to fixed assets 1016.28
Less : Decrease in Capital W-I-P ( excl. depreciation on own 665.04 351.24
equipments used for construction)
b) Decrease in borrowed funds 376.11
c) Decrease in sundry creditors for capital works 9.46
d) Decrease in share premium (Net) 0.69
e) Increase in Investment 103.32
f) Increase in loans and advances of Subsidiary Company 9.06
Total (a to e ) 849.88
5. Working Results
5.1 The working results of the Company for the last three years are tabulated below :
1999-00 2000-01 2001-02
(Rs. in crore)
a) Sales 16250.2 16232.63 15502.00
b) Cash profit / loss ( Profit/Loss before depreciation and tax) -587.23 414.96 -551.00
c) Net profit / loss before tax -1720.02 -728.66 -1706.89
d) % of Cash profit to Sales -ve 2.56 -ve
e) % of Net profit to Sales -ve -ve -ve
(i) The Company recorded a net loss of Rs. 1706.89 crore in 2001-02 against the loss of Rs. 728.66 crore in 2000-01mainly
due to decrease in turnover arising out of reduction in sales price.
(ii) The net loss of Rs. 1706.89 crore include profit of Rs. 622.22 crore on sale of power plant/lease of houses which was not
related to normal business operation of the company.
(iii) The cash loss of Rs. 551 crore is not sufficient to meet the repayment obligation of loans amounting to Rs. 2522.80 crore which
falls due for repayment in the next financial year.
5.2 Trends
The percentage of finished/semi-finished goods in stock at the end of the year to sales has increased from 17.34 in 1999-00 to 18.00 in
2000-01 and decreased to 16.13 in 2001-02 as indicated below :
Year Semi/Finished Stock Sales Percentage

(Rs. in crore) (Rs. in crore)

1999-00 2818.57 16250.16 17.34
2000-01 2922.50 16232.63 18.00
2001-02 2500.12 15502.00 16.13

6 (a) Cost Trends

The table below indicates the percentage of cost of sales to net sales realisation during the last three years :
Particulars 1999-00 2000-01 2001-02
(Rs. in crore)
Sales 16250.16 16232.63 15502.00
Less :
Excise duty 1938.71 2122.91 1982.62
Freight outward 474.97 531.21 552.85
JPC Cess 2.25 2.14 2.27
Other Export Sales Expenses 51.04 35.6 35.78
Total Deductions 2466.97 2691.86 2573.52
Net Sales Realisation 13783.19 13540.77 12928.48
Add : Loss -1720.02 -728.66 -1706.89
Cost of Sales 15503.21 14269.43 14635.37
Percentage of Cost of Sales to 112.48 105.38 113.20
Net Sales Realisation

57
Review of Accounts
6 (b) Value of Production
The value of production including excise duty, freight outwards, etc. during the last three years is indicated below :
1999-00 2000-01 2001-02
(Rs. in crore)
i) Sales 16250.16 16232.63 15502.00
ii) Closing stock of finished/semi-finished products 2818.57 2922.50 2500.12
iii) Opening stock of finished/semi- finished products 4781.60 2818.57 2922.50
iv) Value of Production (i+ii-iii) 14287.13 16336.56 15079.62
The percentage of value of production to Net Worth is 465.20 in 1999-00 and 503.98 in 2000-01 and 1135.27 in 2001-02. The percentage
of value of production to total net assets of the company was 52.34 in 1999-00 and 62.03 in 2000-01 and 57.86 in 2001-02.
7. The following table gives the comparative position of Inventory (net of provisions ) and its broad details at the close of the last three years :
1999-00 2000-01 2001-02
(Rs. in crore)
i) Stores & Spares (excluding in-transit) 961.82 865.64 810.93
ii) Raw Materials (excluding in-transit) 513.70 522.24 494.34
iii) Stock in trade 2818.57 2922.50 2500.12
iv) Others 52.36 16.71 21.51
Total 4346.45 4327.09 3826.90
The stock of stores & spares is equivalent to 6.67 months’ consumption of stores and spares in 1999-00, 6.30 months’ consumption in
2000-01 and 6.13 months’ consumption in 2001-02. The stock of raw materials represents 2.08 months’ consumption in 1999-00, 1.16
months’ consumption in 2000-01 and 1.05 months’ consumption in 2001-02 . The stock in trade is equivalent to 2.08 months’ sales in
1999-00, 2.16 months’ sales in 2000-01 and 1.94 months’ sales in 2001-02.
8. Sundry Debtors and Turnover
a) The following table indicates the volume of book debts and sales for the last three years:
As on Total Book Debts Sales Percentage of total
31st March Considered good Considered doubtful Total Debts to Sales

(Rs. in crore)
2000 1817.36 104.03 1921.39 16250.16 11.82
2001 1687.59 126.76 1814.35 16232.63 11.18
2002 1389.41 161.88 1551.29 15502.00 10.01
Though the percentage of Sundry debtors to sales has decreased, the percentage of doubtful debt to sundry debtors increased substantially
from 5.41 in 1999-00 to 6.99 in 2000-01 and to 10.43 in 2001-02. This indicates deteriorating position so far as recoverability of debtors
is concerned.
b) The following table indicates the details of the debts outstanding for more than one year as on 31st March, 2002:
Government Departments/Undertakings Private Parties
(Rs. in crore)
1. Debts outstanding for more than one year but less than 2 years 66.50 26.72
2. Debts outstanding for more than two year but less than 3 years 26.04 14.67
3. Debts outstanding for three years or more 93.75 84.85
9. Contingent Liabilities
The following table indicates the details of contingent liabilities and net current assets for the last three years:
1999-00 2000-01 2001-02
(Rs. in crore)
(i) Contingent Liabilities 2627.83 2813.98 3118.84
(ii) Net Current Assets 2123.35 1582.28 371.02
(iii) Percentage of contingent liabilities to net current assets 123.76 177.84 840.61
The percentage of Contingent liabilities to net current assets which was 123.76 in 1999-00 increased to 177.84 in 2000-01 and further
increased to 840.16 in 2001-02.
Sd/-
(R.B. Sinha)
Dated : 20th August, 2002 Principal Director of Commercial Audit
Place : Ranchi & Ex-officio Member, Audit Board, Ranchi

58
ANNEXURE - III TO THE DIRECTORS’ REPORT

(A) CONSERVATION OF ENERGY Rourkela Steel Plant (RSP)

(a) Energy Conservation Measures Taken
The overall specific energy consumption in SAIL (4 integrated steel
plants) during 2001-02 has been 7.69 Gcal/tcs, which is less than
previous year figure of 7.96 Gcal/tcs. Few important energy
conservation schemes implemented during the year 2001-02 are
listed below:
Bhilai Steel Plant (BSP)
• Coal injection in BF-6
• Introduction of computer control in the soaking pits of BBM
• Introduction of improved design of ladle heating stands in SMS-I
• Improvement in the heat treatment of MgO-C bricks in RMP-II
Durgapur Steel Plant (DSP)
• Reduction of lime consumption in BOF
• Utilisation of wash oil in place of furnace oil in the boiler and
reheating furnaces
• Optimisation of operation of reheating furnace in the Hot Strip
Mill
• Improvement in the design and operation of continuous annealing
furnaces in CRM
• Optimisation of burden distribution using MTA in
Blast Furnace # 1
Bokaro Steel Plant (BSL)
• Introduction of slit burners in the ignition hood at Sinter Plant
• Measures for improving performance of Blast Furnace # 3
Visveswaraya Iron and Steel Plant (VISL)

• Computerisation of Merchant Mill reheating furnace • Increase in utilisation of BF gas in the boilers for saving oil
• Computerisation of Section Mill reheating furnace • Introduction of BF gas firing in the tempering furnace of HTS

Rourkela Steel Plant (RSP) • Introduction of BF gas firing in the continuous annealing furnace
• Optimisation of operation of blast furnaces for coke rate reduction. of IAS

• Introduction of slit burners in the sinter ignition hood at Sinter (c) Impact of measures on energy consumption
Plant-I
The overall Specific energy consumption during the year has reduced
Bokaro Steel Plant (BSL) as compared to previous year.

• Improvement of thermal efficiency of bell annealing furnaces in (d) Total Energy Consumption & Energy Consumption per unit
the Annealing Line #1 of Cold Rolling Mills of Production
• Development of process model for BF stove operation Form ‘A’ enclosed.
• Optimsation of heating and rolling regimes in Hot Strip Mill
(B) TECHNOLOGY ABSORPTION
• Introduction of coke oven and and PCM dual fuel burners in the Efforts made in Technology Absorption are given in Form ‘B’.
rotary kilns of RMP
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO
(b) ADDITIONAL INVESTMENT AND PROPOSAL, IF ANY,
BEING IMPLEMENTED FOR REDUCTION IN ENERGY (Rs. in crores)
CONSUMPTION i) Foreign exchange earned from
exports and other activities 534.98
Bhilai Steel Plant (BSP)
ii)Foreign exchange used:
• Introduction of slit burners in the ignition hood at Sinter Plant-2
(a) CIF value of import 1939.29
• Enhancement of coal dust injection in Blast Furnace # 6 (b) Other expenditure in foreign currency 133.79

• Increased sinter charge in the Blast Furnaces

• Utilisation of excess Blast Furnace Gas in Boiler # 6 at Power For and on behalf of the
Plant-I Board of Directors

Durgapur Steel Plant (DSP)

Sd/-
• Improvement in performance of Coal Washery
(Arvind Pande)
• Improvement in the operation of reheating furnace in Skelp Mill Chairman
Place : New Delhi
• Improvement in the design of furnaces in Wheel and Axle Plant Dated : 23rd August, 2002

59
ANNEXURE - III TO THE DIRECTORS’ REPORT

FORM A
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO
CONSERVATION OF ENERGY

Particulars 2001-02 2000-01

A. 1. ELECTRICITY
a) Total Power Purchased
Units (Million KWH) 4559 2679
Total amount (Rs. crores) 1344 938
Average Rate per Unit (Rs./KWH) 2.95 3.50
b) Own Generation
i) Through Diesel Generator
Units (Thousand KWH) 0.463 0.076
Units per litre of Diesel Oil (KWH) 3.44 3.64
Average Cost per Unit (Rs./KWH) 3.20 3.02
ii) Through Steam Turbine/Generator
Unit (Million KWH) 1839 4126
Units per Gega Calories of Energy Input 284 261
Average Cost per Unit (Rs./KWH) 2.19 1.65
2. COAL
i) Coking Coal
Quantity (Million Tonnes) 11.50 11.39
Total Cost (Rs. crores) 3473 3112
Average Rate (Rs./Tonne) 3019 2733
ii) Non-coking Coal
Quantity (Million Tonnes) 1.91 4.34
Total Cost (Rs. crores) 212 428
Average Rate (Rs./Tonne) 1108 987
3. FUEL - OILS
Quantity (‘000 Kilo.Liters) 56 73
Total Cost (Rs. crores) 60 79
Average Rate (Rs./Kilo Liters) 10775 10714
4. OTHERS
i) Purchased Coke,
LPG, Oxygen, Gases, Steam, etc. (Rs. in crores) 87 82

B. CONSUMPTION PER TONNE OF PRODUCTION

STEEL ALLOY & SPL. GROSS CAN
(4 Integrated STEELS AT ROURKELA
Steel Plants) (ASP, SSP & VISL)* FERTILIZER PLANT
Purchased Electricity (kwh) 435 1265 1079
(241) (905) (646)
Fuel-oils (Litres) 3 286
(6) (108)
Coking Coal (kgs.) 1183
(1182)
Non-coking Coal (kgs.) 197
(451)
* ASP, SSP & VISL stand for Alloy Steels Plant, Salem Steel Plant and Visvesvaraya Iron & Steel Plant.
Note : 1. Purchase power quantity consists of power from Joint Venture also.
2. Figures in brackets are for the previous year. In view of divestment of Power Plants, the last year's figures are not comparable.

60
 FORM’B’
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

1. Specific areas in which R&D activities were carried out by the company
l Quality Improvement
l Yield / Productivity improvement
l Energy Conservation
l New Technology/Product Development
2. Benefits Derived as a result of R&D efforts
Quality Improvement
l Various technological measures including reduction of BOF tapping temperature from 16600C to 16450C, minimisation of slag carry over,
introduction of delayed deoxidation practice and partial replacement of aluminium with coke were introduced in SMS-II at BSL. These
improvements enabled control of nitrogen and total oxygen content to <45 ppm each in special steels, like EDD/API/WTCR & LPG. Further,
aluminium consumption decreased by more than 20%.
l A modified roll coolant application system has been designed and commissioned in all the stands of TCM-I, CRM at BSL with optimum
impact density of the coolant on to the roll surface for achieving higher heat transfer. The total coolant flow has been redistributed for intense
cooling of work rolls and mild cooling of back-up rolls. Introduction of these measures resulted in reduction of : temperature difference between
centre to edge of roll from 7-8 to 3-40C; premature roll spalling by 50%; specific roll consumption by 30% and specific oil consumption by
10%.
l An innovative loop sensor has been designed, and installed in all the five loopers of finishing stands of Hot Strip Mill, RSP, to measure looper
angle with accuracy upto ±0.350. The sensor has been interfaced with the existing looper position control system. Average cobble generation
has reduced by 30% after installation of the system.
l In order to upgrade the quality of conventional 90 UTS rails, five micro alloyed rail heats with addition of Nb were made through BOF-LF-
RH route at BSP and processed into R-52/R-60 rails as per IRS-T-12/96 specification. The properties of these rails showed higher yield ratio
of 0.59 in comparison to a value of 0.52 (achievable for standard C-Mn 90 UTS rails). The other improvements in the properties are higher
yield strength and higher fracture toughness properties attained through formation of reduced interlamellar spacing in the pearlite structure.
l In order to improve the end-straightness of rails and minimise generation of Cut Bar and Refinishing (CBRF), a number of measures were
adopted at BSP, which include elimination of impact of hot rails against stopper bar; controlling temperature of rails in the range 400–5000 C
before transferring to slow cooling pit, modification of slow cooling pit bottom surface etc. The implementation of these measures helped in
improving the end-straightness of rails as well as in reducing the generation of CBRF by 10%.
Cost Reduction
l The bed height of sinter machine at SP II, RSP was increased from 550 to 600 mm along with installation of “Permeability Bars” in the lower
layer in the bed. The productivity improved by about 5% and the +10 mm fraction in sinter increased from 58 to 63%.
l A low alloy wear resistant steel was developed for sinter screen decks substituting AISI 304 grade stainless steel presently used. The decks were
installed in all the 10 large cold sinter screens of BF shop at BSL, which increased the life of screens by two times. The screening efficiency was
also improved by arresting over size fraction in return sinter. The sinter return load reduced by 13 %.
l A system was designed and installed to ensure uniform discharge of Tar Decanter Sludge (TDS) on coal charge over conveyor at BSL. The
system resulted in elimination of TDS disposal in the dump yard. Incorporation of this eco-friendly system has led to the savings of coal charge
to the tune of 3000 TPA.
l Technology for injection of ilmenite sand through tuyeres was developed and implemented in BF-7 at BSP and BFs #3 & 4 at IISCO. The
rate of ilmenite injection varied between 700-900 kg/hr. through different tuyeres. Average heat flux after ilmenite sand injection decreased in
the critical coolers by 1500–3000 kcal/hr (15–20%) in BF #7 at BSP and about 20–25% in IISCO’s BFs. Hearth erosion was kept under
check by uniform coating at the eroded area of hearth by localised deposition.
l The Process technology was developed for use of iron ore as a substitute of scrap, to the extent of 25 kg/t in the charge for BOF at BSL. Proper
addition sequence along with modified lance practice has resulted in an increase in yield by about 1% and reduction in specific oxygen
consumption by 3 Nm3/t.
l Extensive trials were carried out to reveal the major cause of cold return heat from CCP at DSP. With corrective measures, the incidence of cold
return heat reduced from 4.37% to 2.04%.
l A width measurement system was commissioned at Roughing Stand of Plate Mill at BSP based on principle of digital pulse encoders for linear
distance measurement replacing the earlier width meter. The new system ensures the measuring tolerance band within ±10mm for all sizes of
plates as against ±50 mm. The trials indicated that the new system enable Plate Mill to reduce trimming allowance from 60 mm to 25 mm on
either side of the plate. Rejection on account of No Trimming Allowance decreased from 0.82% to 0.46%.
l A mill set up system was developed and implemented in the 6 stand Continuous Billet Mill at BSP. It calculates the tension / compression
values in the five inter-stands by measuring and comparing the main armature current of all stands and maintains the desired tension levels
by real time speed corrections. It minimises the initial shock of the roll & stand assembly through speed adjustment at suitable time. Benefits
of the system include reduction in average deviation in length of billets by 20-25%, and cobbles by 23%.

61
ANNEXURE - III TO THE DIRECTORS’ REPORT

Energy Conservation
l A dual fuel burner was designed and installed in rotary kiln # 4 of RMP at BSL for firing coke oven gas and tar firing. With tar firing, the
production of calcined limestone/dolomite has been achieved in the range of 95-100 t/shift with 2-5% L.O.I. Using coke oven gas firing, the
production has been achieved in the range of 80-95 t/shift with L.O.I. in the range of 1.2 to 4.5%. Now rotary kiln # 3 has been also
modified with the new design of dual fuel burner, in view of the encouraging results obtained.
l An innovative pressure control system was introduced in the ignition hood of M/C-8, of SP II at BSP by installation of modified dampers in
the wind legs under the hood. This resulted in 25% reduction of gaseous fuel consumption from 1600 to 1200 m3 /hr.
l A highly energy efficient multi-slit burner system was developed & installed in one machine in SP-I at RSP. The system provides a curtain type
flame across the width of sinter bed, facilitating efficient heat transfer & effective ignition of the top layer of sinter mix. The new burner system
being compact has reduced the size of the ignition hood substantially utilizing lower volume of gas for sintering process. The new system
yielded following benefits :
l Reduction in gas consumption by about 67% (from 60 Mcal/t to 20 Mcal/t)
l Increase in productivity by around 10%

l Elimination of over heating of side plates of the pallets

l In the galvanising furnace No.2 in CRM at RSP, lining was modified with insulating veneering modules of ceramic fibres. The synthesis gas
consumption as a result of this modification has reduced to 140–150 Nm3/hr from earlier consumptin level of 250–300 Nm3 /hr. Further,
a decrease in the shell temp. of the furnace (85-1000C) has improved the working environment as well as reduced the chances of shell buckling.
New Technology/Product Development
l Technology development for commercial production of API X–60 & X–65 grade plates, was taken up at BSP & RSP. The basic considerations
for production of these grades of steels were design of a suitable steel chemistry, micro-alloying with Nb+V and appropriate selection of steel
making and concast processing parameters to achieve a sound defect free cast structure. The other equally concerned area had been to achieve the
desired strength – ductility – toughness combination through controlled rolling and accelerated cooling of plates. A combination of both the
practices was used while processing plates with thickness more than 15 mm at BSP.
l Based on standard operating practices established, BSP has supplied more than 50,000 tons of API X-60 & X-65 grades of plates in different
gauges with mechanical properties conforming to the requirements of customers.
l At RSP, the technology has been established for commercial production of API X-60 plates up to 20 mm thickness in spite of the limitations
of a low powered plate mill (~3000 tons) and absence of accelerated cooling facility. More than 5000 tons of API X-60 grade plates have been
supplied. The overall yield of accepted plates from OK steel for API X–60 & X–65 grades were greater than 70% & 65% respectively. Such
high level of yields was achieved primarily by controlling steel chemistry and modification of casting practise.
l A corrosion resistant variety of copper-phosphorus bearing TMT ribbed bar, fulfilling the stipulations of revised specification of IS:1786 Gr.
Fe 415/Fe 500 has been developed at BSP and DSP, to meet the demand of the construction sector. This rebar has C=0.15 (max) and is
characterized by a hard tempered martensitic rim and a soft ferrite-pearlite core, produced through on-line thermo-mechanical treatment in a
THERMEXTM unit. The corrosion resistance of this rebar is over two times that of conventional TMT rebar, besides having adequate elevated
temperature strength up to 6000C and good ambient temperature impact toughness. Over 1500 tonnes of rebar (diameter 16 to 32 mm) have
been dispatched to different regions.
l In order to improve the formability property, fixing of nitrogen by addition of Ti (0.015 – 0.02%) was considered as a viable option for
commercial production of LPG grade steel at BSL. A number of Ti bearing heats with reduced Mn content (0.35%) was made through BOF-
LF-CC route and rolled under optimised parameters. The test results of newly developed steel show that formability property improved
significantly in comparison to that of conventional grade (non Ti) of LPG steel. This is reflected by lower strain ageing index, higher percentage
of elongation and strain hardening index (n). The major advantages realized include : Reduction in incidence of failure in both halves of LPG
cylinder, Minimization of die wear & forming load, Uniformity in mechanical property of the formed component, and Higher yield (60 nos./
ton as against 59 nos./ton).
l A new variety of high strength superior corrosion resistant structural steel has been commercially produced through SMS-1 route at BSP. The
corrosion resistance property of this steel has been imparted by addition of copper along with phosphorus. The later element is known to
segregates above grain boundary and affect toughness property. This problem has been addressed by maintaining minimum ratio of
phosphorus to nitrogen in the steel. Corrosion index of this grade (as per ASTM G-101) was found to vary in the range of 6.3 to 6.9 against
minimum requirements of 6.
3. Future Plan of Action
R&D programmes identified for the next five years are as follows:
Technology Areas Objectives
Coal, Coke & Improvement in performance of coal washery and coke oven; Improvement in coal carbonization practice and coke quality;
Chemicals Introduction of process automation for improvement in quality and yield of by-products; Improvement in service life of coke
oven battery.
Mineral Engg. & Development of newer beneficiation and agglomeration schemes through lab/pilot studies; Technological up gradation of
Agglomeration beneficiation plants, Improvement in sintering technology to achieve performance of sinter plant to international level;
Optimisation of sintering process parameters to improve sinter quality/yield; Introduction of innovative agglomeration
technologies and their horizontal transfer.

62
 Technology Areas Objectives
Iron Making Maximising of BF productivity; Reduction in coke rate; Assimilation of new iron making technologies; Improvement in
process parameter for increasing productivity and reducing cost of BF hot metal.
Steel Making & Production of cast billets for automotive/engineering sector through introduction of EMS technology; Control of steel
Casting making & casting parameters for production of quality slabs of Line Pipe/EDD steels; Thermo-mechanical simulation of
continuous casting process.
Refractories Improvement in life of ladles for handling hot metal and steel by using better refractory lining; Introduction of low/ultra low
cement castables in SAIL plants; Laboratory development of refractory cement from dolomite; Development and application
of models for state-of-art customised lining design and life prediction aimed at reduction of specific refractory consumption;
Introduction of self flow castable in BF tuyere stock lining to increase campaign life.
Rolling Technology Improvement in the operational efficiency of Rolling Mills; Elimination of surface defects; Improvement in the productivity
and surface quality of cold rolled products; Control of process parameters for improving the quality of rails and yield
improvement of primary mills.
Product Development of process for advanced hot dip coated products using hot dip process. Production of low aluminium wheel
Development and optimization of heat treatment practice; Improvement in yield and quality of special quality plates; Development of
special steel grades for automobile, agriculture and oil segments, corrosion resistant rail steel, auto body quality sheets & coils;
Improvement in the performance of lubrication systems to enhance life of critical equipment; Promoting the application of
new SAIL products in different sectors like - agriculture, automobile and construction.
Energy Conservation Development and introduction of fuel efficient burners; Optimisation of heating and rolling regime for reduction in energy
consumption; Modifications of combustion system in heating/ heat treatment furnaces; Improvement in utilization of BF
gas; Energy conservation using computerised process and combustion control systems.
Automation & Development of integrated coking control system in coke oven battery and Bell Annealing Furnace; Introduction of
Computerisation automation and control systems for productivity, yield and quality improvement in steel plant units like – reheating furnaces,
heat treatment furnaces, finishing lines and rolling mills; Development of integrated communication and instrumentation
system; Development and application of softwares for various applications.
Environment & Assessment of PAH and NOX in coke oven working zone of different steel plants; Evaluation of impact of hazardous wastes
Pollution Control and studies on their reuse/safe disposal.

4. Expenditure on R&D
Rs. in crores
Capital 1.70
Revenue 48.15
Total 49.85
% of Turnover 0.32
TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION
Through Technology Strategy and intensive R&D efforts, Technology development, absorption, adaptation and further improvement are continuously
taking place in various units of SAIL Plants. The following new technologies are installed/being installed as a part of modernisation/continuous
improvement:
l Coal Dust Injection in Blast Furnace (for reduction in cost of hot metal), Slag Splashing in BOF Converter (for improved lining life of vessel), RH
Degassing of liquid steel (for improved quality of rail steel), Ladle Furnace (for sequence casting of steel in concast), Facilities for production of long
rails (for market retention) and Ultrasonic & Eddy Current testing facilities (for quality assurance of rails) at BSP.
l Selective Crushing of Coal (for improved coke quality),Slag Splashing in BOF Converter(for improved lining life of vessel), Continuous Casting
of billets (for cost reduction and product improvement), Electromagnetic Stirrer in the caster (for improved product quality) and Slit Rolling in
Merchant Mill (for increased productivity and broader product range) at DSP.
l Base Blending for Sinter mix (for improved sinter quality), Partial Briquetting of Coal Charge (for improved coke quality), Two Stage Gas Cleaning
Plant for Blast Furnace (for improved quality of BF gas), Post Mixer Desulphurisation of hot metal (for improved product quality), Continuous
Casting of slabs (for cost reduction and product improvement), Slag Splashing in BOF Converter (for improved lining life of vessel) and Ladle
Furnace (for sequence casting of steel in concast) at RSP.
l Coal Dust Injection in Blast Furnace (for reduction in cost of hot metal), Combined Blowing in 300t Converter (for improvement in yield and
quality of steel), Slag Splashing in BOF Converter (for improved lining life of vessel), Laminar Strip Cooling, Hydraulic Automatic Gauge
Control, Work Roll Bending (all for improved product quality) in Hot Strip Mill at BSL.
l Electromagnetic Stirrer in the caster(for improved product quality) at VISL.
These technologies are /will be gradually absorbed by the plants.
No other major technologies were imported by the company during the last five years.

63
Corporate Governance ANNEXURE - IV TO THE DIRECTORS’ REPORT

(a) Company’s philosophy and the Company’s auditing, accounting and financial re-
The company is committed to attain the highest standard of porting process generally.
Corporate Governance. It recognises that the Board is The Audit Committee reviews reports of the Internal Audi-
accountable to all shareholders for good governance. The tors, meets Statutory Auditors and discusses their findings,
philosophy of the company in relation to corporate governance suggestions and other related matters and reviews major ac-
is to ensure transparency in all its operations, make disclosures counting policies followed by the Company. The Audit Com-
and enhance shareholders value without compromising in any mittee reviews with management, the quarterly and annual
way in compliance with laws and regulations. financial statements before their submission to the Board.
(b) Board of Directors The minutes of the audit committee meetings are circulated
The Board of Directors comprises of a full time Chairman, 7 to the Board, discussed and taken note of.
Whole Time Directors (WTD) and 9 non-executive Directors ii) Composition:
(Non-ED). During the year, 9 Board meetings were held on The Audit Committee of the Board was formed in 1998.
28.05.2001, 06.07.2001, 31.07.2001, 28.08.2001, 21.09.2001, However, the Audit Committee was reconstituted on 21st
31.10.2001, 26.12.2001, 29.01.2002 and 21.03.2002. March, 2001, consisting of four non-executive Directors. At
The composition of directors and their attendance at the board present Shri R.V. Gupta, Shri D.V. Singh, Dr. Atul Sarma and
meetings during the year and at the last Annual General Meeting Prof. Ram Prasad Sengupta are the members of the Audit
as also number of other directorships are as follows: Committee.
Name of the Director Category of No. of Board Attendance No. of other During the last year, the committee met 8 times and attendance
Directorship Meetings at last directorship
attended AGM held as on at the meetings are as follows:
31.3.2002*
Shri Arvind Pande Chairman 9 Yes 1 Name of the Director Status No. of meetings
Shri V.S. Jain WTD 9 Yes 3 attended
Shri S.C.K. Patne WTD 9 Yes 4
Shri B.K. Singh WTD 8 Yes 4 Shri R.V. Gupta Chairman 8
Shri A.K. Singh WTD 8 Yes -
Dr. S.K. Bhattacharyya WTD 8 Yes -
Shri D.V. Singh Member 7
Shri S. Pandey WTD 9 Yes 1 Dr. Atul Sarma Member 7
Dr.Y.R.K. Reddy Non-ED 9 Yes 5 Prof. Ram Prasad Sengupta Member 2
Shri D.V. Singh Non-ED 9 - 1
Shri R.C. Jha WTD - - - (since 23.1.2002)
Shri R.V. Gupta Non-ED 8 Yes 4 Shri D. Basu (upto 22.9.2001) Chairman 4
Prof. Ram Prasad Sengupta Non-ED 7 Yes -
Shri Pyarimohan Mohapatra Non-ED 4 - 2 (d) Nomination & Compensation Committee
Dr. Atul Sarma Non-ED 7 - -
Dr. Isher Judge Ahluwalia Non-ED 4 - - i) Being a Government company, the nomination and fixation
Shri S.N. Mishra Non-ED 2 - 1 of terms and conditions for appointment as Director is made
(w.e.f. 26.12.01)
Shri D.P. Singh Non-ED 1 - 3 by Government of India. As such, the Nomination and
(w.e.f.31.1.2002) Compensation Committees has not been constituted.
Shri D. Basu Non-ED 3 Yes
(upto 22.09.2001) ii) The details of remuneration to whole time directors are
Shri Deepak Parekh Non-ED - - given below:
(upto 18.01.2002)
Shri V. Gujral (demitted WTD -
(Rs. in crores)
office on 7.4.2001) Name of Salary Retirement & Total
Shri C.S. Rao Non-ED 6 -
(upto 31.12.2001) the Director other Benefits
Shri M.K. Moitra WTD 8 Yes
(upto 28.02.2002)
Shri Arvind Pande 0.06 0.05 0.11
Shri S.C.K. Patne 0.05 0.05 0.10
* Includes Directorships in Private companies. The details in respect of diretors who are not in office
as on 31st March, 2002 are not available. Shri V.S.Jain 0.05 0.04 0.09
Shri M.K. Moitra 0.05 0.04 0.09
(c) Audit Committee: Shri A.K. Singh 0.05 0.03 0.08
i) Terms of reference: Shri S. Pandey 0.05 0.02 0.07
The primary function of the Audit Committee is to assist the Shri B.K. Singh 0.05 0.03 0.08
Board of Directors in fulfilling its oversight responsibilities Shri R.C. Jha 0.02 - 0.02
by reviewing the financial reports; the Company’s systems of Dr. S.K. Bhattacharyya 0.05 0.03 0.08
internal controls regarding finance, accounting and legal com- Shri V. Gujral 0.01 - 0.01
pliance that management and the Board have established; Total 0.44 0.29 0.73

64
 iii) The non-executive Directors are paid only sitting fees of (f ) General Body Meetings:
Rs.5,000/- for each Board/Board Sub-Committee Meetings Location and time where last three AGMs held:
attended by them.
Financial Date Time Location
iv) The salary of the whole time directors is fixed and does not
Year
include performance linked incentive except amount payable
as per the Productivity Linked Incentive Scheme of the 2000-2001 21.09.2001 10.30 a.m. NDMC Indoor Stadium,
Company. Talkatora Garden,
v) Terms & Conditions New Delhi
1999-2000 22.09.2000 10.30 a.m. NDMC Indoor Stadium,
The whole time directors are nominated by Government of Talkatora Garden,
India for appointment as Director for a period of 5 years or New Delhi
till the age of Superannuation, which ever is earlier. They 1998-1999 22.09.1999 10.30 a.m. Air Force Auditorium,
are initially appointed by the Board as Additional Directors Subroto Park, New Delhi
and thereafter by the shareholders in the Annual General
Meeting in terms of the provisions of the Companies Act, (g) Disclosures:
1956. There were no transactions of material nature with its promoters,
The appointment may, however, be terminated by either the directors or the management, their subsidiaries or relatives
side on three months notice or on payment of three months etc. that may have potential conflict with the interests of company
salary in lieu thereof. at large. The non-executive Directors had no pecuniary
relationships or transactions vis-à-vis the company during the
(e) Shareholders/Investors Grievance Committee
year except receipt of sitting fee for attending the meetings of
i) A Shareholders/Investors Grievance Committee under the Board/Board Sub-Committee.
the Chairmanship of a non-executive director namely There were no instances of non-compliance by the company,
Shri R.V. Gupta and comprising of two whole time penalties, strictures imposed on the company by Stock Exchange
directors namely Shri V.S. Jain and Shri S.C.K. Patne as or SEBI or any statutory authority, on any matter related to
members has been formed to look into the redressal of capital markets, during the last three years.
shareholders and investors complaints like non-transfer of
shares, non-receipt of balance sheet, non-receipt of (h) Means of Communication:
declared dividend etc. Quarterly results are published in prominent daily newspapers
ii) Name of compliance officer: Shri Devinder Kumar, Company as per requirements. The quarterly/Annual results are made
Secretary available at the website of the Company. The Management’s
Discussion & Analysis Report forms part of the annual report.
iii) Number of shareholder complaints received during the
period from 01.04.2001 to 31.03.2002: (i) General Shareholders Information:
i) Annual General Meeting is proposed to be held on
Nature of the Complaint Source from which 24th September, 2002 at NDMC Indoor Stadium,
complaint was received Talkatora Garden, New Delhi.
Direct SEBI Exchanges TOTAL ii) Dates of Book Closure - 27th August to 24th
September, 2002
(A) Non-receipt of shares 2 - - 2
after Transfer iii) The shares of the Company are listed at the following
stock exchanges:
(B) Delay in issuing Duplicate - - - -
share certificates The Delhi Stock Exchange Association Limited,
DSE House, 3/1, Asaf Ali Road, New Delhi-110002.
(C) Non-receipt of - - 1 1
Dividend Warrants The Stock Exchange, Mumbai
(D) Non-receipt of - - - -
Phiroze Jeejeebhoy Towers, Dalal Street, Fort
Annual Reports Mumbai-400001
(Stock Code No.113)
TOTAL 2 - 1 3
The National Stock Exchange of India Limited,
Mahindra Towers, A Wing, 1st Floor, RBC, Worli,
l Complaints not solved to the satisfaction of shareholders : NIL
Mumbai-400018.

65
Corporate Governance
The Calcutta Stock Exchange Association Limited, vii) Distribution of Shareholdings as on 31st March, 2002
7, Lyons Range, Kolkata-700001.
Share holding Share holders Amount
Madras Stock Exchange Limited, Number % to Total (In Rupees) % to Total
Exchange Building, Post Box No.183, 11, Second Line
(1) (2) (3) (4) (5)
Beach, Chennai-600001.
The Stock Exchange Ahmedabad, Upto 5,000 175,630 80.8785 336,984,970 0.8159

Kamdhenu Complex, Near Polytechnic, Panjara Pole, 5,001 - 10,000 20,188 9.2967 185,892,860 0.4501

Ahmedabad-380015. 10,001 - 20,000 10,046 4.6262 169,590,870 0.4106

20,001 - 30,000 3,467 1.5966 92,945,400 0.2250
The London Stock Exchange,
30,001 - 40,000 1,541 0.7096 57,422,020 0.1390
London EC2N 1HP, UK
40,001 - 50,000 2,075 0.9555 101,211,680 0.2450
It is confirmed that Annual Listing Fee has been paid to
50,001 - 1,00,000 2,288 1.0536 177,853,720 0.4306
each of the stock exchanges.
1,00,001 and above 1,918 0.8832 40,182,103,930 97.2838
iv) The monthly high and low quotation of the company’s
TOTAL 217,153 100.0000 41,304,005,450 100.0000
shares during each month in the last financial year at the
Mumbai Stock Exchange (BSE) and its comparative
performance with the broad base BSE Sensex during the viii) Shareholding pattern as on 31st March, 2002
year 2001-02 are indicated below :
Category No. of %age of
MONTH SENSEX SAIL at BSE Shares held Holding
& YEAR
HIGH LOW HIGH LOW A. Promoters’ holding

APR '01 3676.82 3096.51 6.35 5.20 1 Promoters

- Indian Promoters viz, 3,544,690,285 85.820
MAY '01 3759.96 3420.14 6.20 5.35 the Govt of India
JUN '01 3651.32 3287.94 5.95 5.35 - Foreign Promoters - -
JUL '01 3513.79 3241.66 5.50 4.95 2 Persons acting in Concert - -
AUG '01 3359.07 3241.12 5.15 4.90 Sub-Total 3,544,690,285 85.820
SEP '01 3267.93 2594.87 4.95 3.95
OCT '01 3083.65 2718.41 4.95 4.05 B. Non-Promoters Holding

NOV '01 3377.81 3003.95 6.00 4.40 3 Institutional Investors

DEC '01 3500.20 3100.57 5.30 4.50 a Mutual Funds and UTI 301,466,836 7.299

JAN '02 3466.73 3236.76 5.15 4.70 b Banks, Financial Institutions,

Insurance Companies (Central/
FEB '02 3758.11 3290.00 6.70 4.85 State Govt. Institutions/
MAR '02 3758.27 3454.27 5.30 4.70 Non-Govt. Institutions) 72,524,400 1.756
c FIIs 24,961,612 0.604
v) Registrar and Share Transfer Agent Sub-Total 398,952,848 9.659
M/s. RCMC Share Registry Private Limited, 4 Others
1515 (1st Floor), Bhisham Pitamah Marg,
a Private Corporate Bodies 22,038,910 0.534
Kotla Mubarakpur,
New Delhi - 110 003. b Indian Public 157,360,264 3.810
c NRIs/OCBs 3,613,133 0.087
vi) Share Transfer System:
d Any other (Please specify) 3,745,105 0.091
The Share Transfer Committee of the Board meets at
- GDR
regular intervals, almost every fortnight, so that shares
lodged for transfer are despatched back well within the Sub-Total 186,757,412 4.522
time limit prescribed in this respect under the listing
agreements. GRAND TOTAL 4,130,400,545 100.000

66
ix) Status of dematerialisation as on 31.03.2002 Research & Development Centre
for Iron & Steel,
Particulars No. of shares % of No. of Ranchi-834002,
capital Accounts Jharkhand

NSDL 558048103 13.51 82847 Centre for Engineering & Technology,

Ranchi-834002,
CDSL 540750 0.01 1988 Jharkhand
Total Dematerialised 558588853 13.52 84835 Central Coal Supply Organisation,
Dhanbad-828127,
Physical - Government 3544690285 85.82 1
Jharkhand
of India
Growth Division,
Physical - Other 27121407 0.66 132349
97, Park Street, Kolkata-700016,
shareholders
West Bengal
Total 4130400545 100.00 217185 Management Training Institute,
Ranchi-834002,
Apart from the shares held by the Government of India, 95.37% of Jharkhand
the disinvested shares have already been dematerialised by
Raw Materials Division,
31.03.2002.
10, Camac Street, Industry House,
x) The Company’s plants/units/subsidiaries are located at: Kolkata-700017, West Bengal
STEEL PLANTS
Environment Management Division,
Bhilai Steel Plant,
6, Ganesh Chandra Avenue,
Bhilai-490001,
(5th Floor), Kolkata-700013,
Chhatisgarh
West Bengal
Durgapur Steel Plant,
Durgapur-713203, SAIL Safety Organisation,
West Bengal Ranchi-834002,
Jharkhand
Rourkela Steel Plant,
Rourkela-769011, SAIL Consultancy Division,
Orissa Hindustan Times House,
14th Floor, 18-20 Kasturba Gandhi Marg,
Bokaro Steel Plant,
New Delhi-110001.
Bokaro Steel City-827001,
Jharkhand. SUBSIDIARIES
The Indian Iron & Steel Company Limited,
Salem Steel Plant,
Burnpur-713325,
Salem-636013,
West Bengal
Tamil Nadu
Alloy Steels Plant, Maharashtra Elektrosmelt Limited,
Durgapur-713208, Chandamul Road, Chandrapur-442401,
West Bengal Maharashtra.

Visvesvaraya Iron & Steel Plant, Bhilai Oxygen Limited,

Bhadravati. Ispat Bhawan, Lodi Road,
Karnataka New Delhi – 110 003.

UNITS xi) Address for correspondence from shareholders for queries

Centre Marketing Organisation, complaints, if any:
Ispat Bhawan,
M/s. RCMC Share Registry Private Limited,
40, Jawahar Lal Nehru Road,
1515 (1st Floor), Bhisham Pitamah Marg,
Kolkata-700071,
Kotla Mubarakpur, New Delhi - 110 003.
West Bengal.

67
Management Discussion and Analysis Report
The Management of Steel Authority of India Limited presents its
analysis report covering performance and outlook of the Company.
A. INDUSTRY STRUCTURE & DEVELOPMENTS
General Economic Environment
The Financial Year 2001-02 witnessed yet another difficult period in
the steel industry world-wide. Prices nose dived, consumption
remained stagnant and export was hindered through tariff and non
tariff barriers in the foreign countries. All these factors have lead to
unprecedented crisis in steel sector and almost all the major steel
producers have reported huge loss/substantial reduction in profits
from operation.
During the last two years (2000-01 and 2001-02), GDP growth is
estimated to have been 4.0% and 5.4% respectively. The
manufacturing sector, which grew by 6.7% in 2000-01, grew by only
3.3% in 2001-02 (source: Economic Survey). Construction sector
average growth was 2.9% but in the second half of the year the
growth rate was about 5%. The growth in finished steel consumption
was 5.7% in 2000-01 but dropped to 2.6% in 2001-02, thus affecting,
financial health of Steel companies. However, there are signs of
improvement in the economy and indications of a growth in demand
for steel products. International prices have started picking up. The
government has also responded to the sluggish economic condition
by taking a number of fiscal and non-fiscal measures. All these factors
have stimulated the domestic price sentiment in the country.
Production vis-à-vis Demand for Steel in India.
The low growth of investment in infrastructure and manufacturing
activities, led to a comparatively low growth in steel consumption.
Domestic consumption of finished steel was 26.5 million tonnes in
2000-01 and is estimated to have been 27.2 million tonnes in 2001-
02. Capacity for steel production is estimated to be 33 million tonnes.
Total import of finished steel in 2001-02 is estimated at 1.37 million
tonnes and export of finished steel 3.0 million tonnes. The demand
supply mismatch is one of the major reasons for decline in the
profitability of steel industry.
Position of SAIL
Steel Authority of India Limited (SAIL) is the 14th largest steel
producer in the world in 2001 (source : IISI Report) and is the
largest producer in India with about 39% share of domestic crude
steel production in 2001-02.
B. OPPORTUNITIES & THREATS FOR SAIL
Opportunities
SAIL has a total capacity of 10.2 million tonnes for saleable steel. In
the past decade SAIL has substantially modernised its facilities at the
integrated steel plants. The modernised facilities provide scope for
cost reduction as well as capability to produce superior quality
products. SAIL is progressively increasing the volume of high value/
special products. Thus, SAIL has the opportunity to increase the
percentage of special/high value products in its product-mix. SAIL
68
ANNEXURE - V TO THE DIRECTORS' REPORT
has the advantage of producing steel of requisite quality, type, size,
grade etc.
Increased orders from the Railways resulted in a production rise of
24% in rails from Bhilai Steel Plant to 5.8 lakh tonnes in 2001-02.
The supply of rails from Bhilai is expected to reach 6.5 lakh tonnes in
2002-03 on account of expansion plan of the Railways.
SAIL would be benefited from further incentives provided to the
construction sector through an improved offtake of long steel products.
In the area of long products, there is a extensive scope for growth
from likely investment in infrastructure particularly construction of
roadways, bridges, over-bridges etc.
SAIL has traditionally supplied hot rolled coils to the steel tube-
making sector. Steel tubes are used widely for rural and urban water
supply, an activity which is likely to grow as water supply – and
particularly drinking water - becomes increasingly critical. In addition,
the growing white goods and automobile sectors present a market for
cold rolled coils and sheets.
The oil and gas sector presents a major area of growth through the
requirement of pipelines. Rourkela Steel Plant (RSP) is presently
manufacturing API 5L-65 quality pipes, which are standard
requirements for the sector. RSP is upgrading its pipe production
facilities for production of higher category/quality pipes.
In the last few years, the Company has effected substantial operational
cost reduction, which has helped in neutralizing the impact of input
cost escalations. This trend will continue and further improve the
cost competitiveness of SAIL plants.
Threats
Surplus indigenous capacity particularly for flat steel products is an
area of concern for steel industry. In 2001-02 the surplus capacity
is estimated to have been 4.4 million tonnes for hot rolled coils
and sheets, 2.2 million tonnes for cold rolled coils and sheets and
0.8 million tonnes for plain and corrugated galvanised sheets
and coils.
In the countries like USA, Canada and European Union, anti dumping
measures have been taken. Besides, USA has also imposed safeguard
duty. Such developments may adversely affect the Indian steel industry
through restricted market access to these countries and due to likely
diverted imports in the Indian market from such protection.
Recently, China has also taken safeguard measures against imports.
This will further affect the Indian steel industry as China has been
the major steel market after closure of the market in the western
countries.
Reduction in peak level of customs duty from 35% to 30% in India
would also encourage imports.
The substitution of steel by plastics is a threat in the areas of tubes
and packaging material.
Entry of new players in production of rails, a monopoly item for SAIL
will be a potential source of competition for SAIL.
C. RISKS AND CONCERNS The average growth in steel consumption in the last six years has
The international steel prices have remained weak for a considerable been only about 4% against the average growth of over 18% in
period in recent past. If this trend persists, the domestic prices may earlier years.
not firm up, as they are governed by global scenario under open Year Steel Consumption % Growth over
market conditions. In such a scenario escalations in key inputs/ (Qty in MT) Previous Year
salaries etc. are likely to squeeze margins.
The integrated steel plants of SAIL consume around 6 million tonnes 2001-02 27.21 2.56
of imported coal. Any adverse movement in foreign exchange will 2000-01 26.53 5.71
impact operating margins. Increase in exchange rate will also impact 1999-00 25.09 6.6
outstanding foreign exchange debt liabilities.
1998-99 23.55 4.0
The business and financial restructuring initiated in 2000, inter-alia, 1997-98 22.63 2.3
included measures such as divestment of non-core assets, viz. – Special
Steel Plants, Rourkela Fertiliser Plant and Oxygen Plant at BSP. The 1996-97 22.13 3.9
implementation of these divestment measures has been affected due 1995-96 21.29 14.9
to socio-political climate/resistance of unions. 1994-95 18.53 22.0
For historical reasons, the public sector steel plants are
carrying excess manpower. SAIL plans to reduce the manpower to 1.1 The business performance of SAIL also reflects the cyclic nature
around 100,000 in next few years. The manpower reduction would of the steel business. Overall profits, which peaked at Rs.1319
be effected both by natural and voluntary separations. However, if crores in 1995-96, declined to a loss of Rs. 1720 crores in
the VRS is unable to attract requisite number of people or is affected 1999-00 and Rs. 729 crores during 2000-01. During the year
due to resource constraints, planned rightsizing of manpower may 2001-02 SAIL has incurred a loss of Rs.1707 crores. Major
be affected. reasons are :
SAIL has regulated production as per customer/market demand. Ø General slow down in the economy resulting in stagnation
This has led to lower utilization of assets in steel plants, some of in steel consumption
which have made substantial investment during the modernisation. Ø Fall in international prices due to global recession has also
D. OUTLOOK adversely affected sales realisation in the domestic market
by about 8% during the year
Indian demand, which had suffered from sluggish conditions for long
period, has also begun to show some signs of improvement. There are Ø Higher manpower cost : As the steel plants were set up
signs of firming up of global prices and expectation of rise in global about 4 decades back in areas where infrastructure facilities
demand. With the sign of recent recovery, the sentiment in the steel were hardly available and regional development &
industry is upbeat as is evident from the pick up in sales. The market employment generation being major objectives, large
has absorbed increase in the price announced in the recent past. number of persons were provided employment. Though,
the number has reduced from 1,89,506 (31.03.1995) to
For the next year (2002-03) the thrust is on higher production to 1,47,601 (31.03.2002), labour cost is still higher at about
optimize the inherent potential of the plant. The increased production 19% of cost of production as against 4-5% of new entrants
level would also help in achieving better techno-economic parameters. in the steel market.
The thrust is on exploiting the full potential of the plant and increase
cost competitiveness of various production shops. Ø Social cost/township – Since steel plants were green field
projects, the townships were set up, which are by any
In the longer term, measures taken by Government are expected to
standard well kept and provide good amenities to its
stimulate investment in infrastructure, construction and industry,
residents. The expenditure on providing social amenities in
which is essential for increasing demand for steel.
the townships was Rs.529 crores for 2001-02.
The re-structuring programme of SAIL is also expected to improve
the financial health and cost competitiveness of the company. 1.2 Initiatives taken to put it back on the path of profitability
With all these developments, Company expects to turnaround soon. In view of the SAIL’s pre-eminent position in the domestic steel
industry, its large number of employees and also the large number
E. REVIEW OF FINANCIAL PERFORMANCE of suppliers and ancillaries dependant on it, the financial health
1. FINANCIAL OVERVIEW OF SAIL of SAIL is important. The corrective steps taken by the
Management in the recent past are as under:
Steel Industry has been going through very difficult phase for
last six years and the growth of steel sector has been very subdued. Ø Business Restructuring, which envisaged:

69
Management Discussion and Analysis Report
Ø Divestment of following non-core assets while protecting
jobs of existing employees.
Ø Captive Power Plants at BSL, DSP, RSP and BSP.
] 2x60 MW Captive Power Plant-II at RSP and the
Central Power Training Institute at Rourkela
] 2x60 MW Captive Power Plant-II at DSP.
] 122 MW (2x55 MW + 12 MW back pressure turbine)
Captive Power Plant-I, 3x60 MW Captive Power Plant-
II and steam generating capacity of 660 MT/hour at
BSL.
] 74 MW captive power plant (CPP II) at BSP Bhilai.
Ø Oxygen Plant-II of BSP.
Ø Salem Steel Plant (SSP), Salem.
Ø Alloy Steels Plant (ASP), Durgapur.
Ø Visvesvaraya Iron & Steel Plant (VISL), Bhadravati.
Ø Fertiliser Plant at Rourkela.
Ø Conversion of IISCO into a joint venture with SAIL holding
minority share holding.
During financial year 2000-01, power plants at DSP and RSP
have been transferred and assigned to the then subsidiary company
“ SAIL Power Supply Company Limited later converted into
joint venture company with National Thermal Power
Corporation Limited for generation and sale of entire power to
the Company.
During current financial year (2001-02) power plant (including
steam generation facilities) of Bokaro has been divested to
subsidiary of SAIL – Bokaro Power Supply Company Ltd. in
joint venture with DVC(profit on sale/divestment Rs.391
crores). Power Plant at BSP has been divested to a joint venture
company with NTPC(profit on sale/divestment Rs. 99 crores.)
Sale/lease of houses to employees/ex-employees in the steel
townships resulted in profit on sale/divestment of Rs.172 crores
during 2001-02.
Ø Intensive cost control
To improve the financial position of the Company in the
short and long term, number of initiatives have been taken
to combat the present market scenario, cost control
measures being one of them. The cost control savings have
been achieved in almost all the major areas of operation:
] Reduction in consumption of coking coal & other raw
materials; lower expenditure on stores & spares/
contractual maintenance and savings in power & fuel
consumptions.
] Improvement in techno-economic factors viz. blast
furnace productivity, energy consumption, mill yields.
] Purchase cost reduction in areas like ferro-alloys,
refractories, rolls etc.
] Austerity measures have also been adopted which
include trimming/closure of Liaison Offices, judicious
70
use of telecommunication facilities instead of
undertaking journeys, withdrawal of leave travel
concession facility, reduction of other administrative
expenses.
] For the financial year 2001-02, cost control savings of
Rs. 450 crores (including Rs. 99 crores of revenue
maximization) has been achieved.
The major impact of cost control measures is that inspite
of substantial increase in almost all the major inputs like
indigenous coal price, imported coal price, power rate etc.
in the last five years, variable cost of production during
2001-02 has been contained within 1996-97 level.
Ø Control on capital expenditure
] Fresh investment proposals are virtually on hold except
ongoing schemes and schemes relating to customer
needs, pollution control/safety etc. The capital
expenditure (cash basis) during the year 2001-02 was
restricted to about Rs. 350 crores. The capital
expenditure during last two years was restricted to
Rs.426 crores (2000-01) and Rs. 777 crores (1999-
00) as against about Rs. 2000 crores/year in earlier
years when the modernisation was in full swing.
] Based on availability of resources, some important
capital schemes like long rails at BSP, Pipe Plant at
Rourkela are being taken up to improve competitive
strength of the Company.
Ø Market oriented product-mix, reinforcing sales and
marketing efforts, greater focus on customer satisfaction.
] Central Marketing Organisation (CMO),SAIL have
been giving special emphasis on customer contact and
nurturing customer loyalty to increase sales. CMO has
also adopted a focused marketing strategy on various
steel consuming segments, e.g., tube makers,
automobiles, cold rolling units, white good segment,
oil and gas sectors, railways, machinery manufacturers,
re-rollors, wire drawing units, etc.
] CMO has introduced the Key Account Management
(KAM) process in most of its major branches. The
KAM process calls for special attention towards the
customers to understand and meet their requirements
to their satisfaction covering all marketing aspects
including marketing services.
] CMO has been reorganized into Flat products and
long products structure.
Rightsizing of Manpower
Ø SAIL introduced Voluntary Retirement Schemes (VRS)
in 1998 and 1999 on deferred payment basis which
resulted in separation of about 19600 employees.
Ø New VR Scheme based on DPE pattern envisaging lump-
 sum payment was opened for employees in 2001. Under and Tin plates also form part of the rich product mix of
this scheme about 6500 persons have opted for VR. SAIL’s mild steel business. The sales turnover of various
SAIL has launched another VR Scheme on similar pattern group of products during 2001-02 is as under :
(with minor modification) in 2002 envisaging lump-sum
payment and also expects that 6500 employees would Saleable steel – 4 Integrated steel plants
further separate. Flat Products 47%
Long Products 38%
2. FINANCIAL PERFORMANCE OF SAIL DURING THE
PET Products 2%
YEAR 2001-02
(Pipes, Electrical sheets, Tin plates)
Rs./crs
Total mild steel 87%
2001-02 2000-01 Variation Alloy & Special Steel Plants 5%
Turnover 15502 16233 -731 Secondary products comprising ingots,
pig iron, scrap etc. and coal chemicals
Operating Profit 1011 2167 -1156
including fertilizers 8%
(PBDIT)
Interest 1562 1752 190 The sales turnover of the company mainly consists of sales
Cash Profit -551 415 -966 of various iron & steel products from the four integrated
Depreciation 1156 1144 -12 steel plants and special/alloy products from three Alloys/
Special steels plants. The sales turnover during the year
Net Profit/Loss(-) -1707 -729 -978
was Rs.15502 crores (Previous year : Rs.16233 crores)
[PBT]
inspite of increase in the sales volume of saleable steel by 5
lakh tonnes and better product/sales mix over previous
Ø Net loss has increased by Rs. 978 crores over previous year year. Sales turnover is 4.5% lower over previous year mainly
mainly due to decline in net sales realization (NSR) of on account of 8% dip in net sales realization (NSR), lower
saleable steel in domestic market by about 8% in the sales of secondary products and special steel plants during
current year. The steep decline in prices of steel products the year. The decline in flat products NSR was high at 17%
are mainly due to sluggishness in Indian economy, fall in due to over supply situation in the flat market. SAIL has
international prices, over supply situation in domestic sold 9.255 million tonnes of mild steel as compared to
market. 8.755 million tonnes in the previous year. Sales of secondary
Ø Besides there have been increase in prices of major inputs products like pig iron, ingot steel, coal chemicals and other
like coal, power, and also expenses on salaries which could by-products were lower than the previous year. Domestic
partly be neutralized due to cost control savings achieved market continues to be the main source of sales turnover
during the year. for SAIL which constitutes about 96% of the total sales
turnover. Export sales (including export incentive) during
Ø During current year (2001-02) power plant of Bokaro has
the year was at Rs.584 crores (Previous year : Rs. 622
been divested to subsidiary of SAIL – Bokaro Power Supply crores.) Exports were also adversely affected due to
Company Ltd. in joint venture with DVC(profit Rs. 391 countervailing/antidumping/ safeguard levies in US market.
crores). Power Plant at BSP has been divested to a joint
venure company with NTPC (profit Rs. 99 crores.). In b) Interest Earned
addition to above sale/lease of houses to employees/ex- SAIL earns its interest income from advances to customers
employees in the steel townships resulted in profit of and employees. During the year 2001-02, SAIL earned
Rs.172 crores during 2001-02. interest of Rs. 105 crores (Previous year : Rs. 100 crores).
c) Other Revenue
2.1 INCOME
Other revenue mainly comprises social amenities recoveries
a) Sales Turnover towards township facilities, sale of empties, subsidy, profit/
Ø The product mix of SAIL is evenly balanced and cater to capital gain from sale of assets, dividend income, etc. During
the entire gamut of mild steel business – flat products in the year other revenue was Rs.920 crores as against Rs. 483
the form of HR Coils/sheet, CR Coils/Sheets, GP/GC crores in the previous year. Other income for the year 2001-
sheets, long products comprising, rails, semis, structurals, 02 includes Rs.491 crores being capital gain from divestment
wire rods, merchant products etc. In addition, tubular of power plants at BSL and BSP and Rs.172 crores on
products viz. pipes (ERW & SW), Electrical steel sheets account of sale/lease of houses/land in SAIL township.

71
Management Discussion and Analysis Report
2.2 EXPENDITURE ANALYSIS g) Interest
The total expenditure (including stock depletion) during the As a result of reduction in total borrowing by Rs. 239
year was Rs.18,483 crores which is Rs. 738 crores higher w.r.t. crores and substitution of high cost borrowings with low
previous year (2000-01). The major variation are explained as cost borrowings, the total interest & finance charges
under : (including interest charged to capital items) have reduced
a) Stock depletion of semi/finished steel by about Rs.239 crores. The reduction in interest charges
The stock depletion in semi/finished steel during the year on operation account is for Rs.190 crores.
was Rs.422 crores. In terms of quantity, the depletion in 2.3 BALANCE SHEET ANALYSIS
mild steel inventory (four integrated steel plants) was about
3.32 lakh tonnes, whereas in the previous year, there was a) Equity
accretion in stock by about 0.90 lakh tonnes. The issued, subscribed & paid up equity of SAIL as
b) Raw material on 31.03.2002 is Rs.4130 crores which is same as
previous year. 85.82% of equity is held by Government
The raw material expenditure has increased during the year of India.
by Rs.232 crores on account of higher production of hot
metal by 1%, increase in the price of indigenous/imported b) Loans
coal and variation in exchange rate. Part of the input cost The borrowing position of SAIL as on 31.3.2002 and as on
escalation has been neutralized by cost control efforts in 31.03.2001 is as detailed below :
operational areas such as improvement in yields, reduction
(Rs./crores)
in specific consumption of raw materials etc.
c) Employees Remuneration and Benefits Items 31.3.2002 31.3.2001
The salary & wages expenditure during the year 2001-02 Working Capital Borrowings 4027 3547
was Rs. 3250 crores as against Rs. 3106 crores in the from banks
previous year. The increase in Salary & wages by Rs. 144
Bonds (Unguaranteed) 2025 3005
crores during the year 2001-02 was due to wage revision
given to employees with effect from 1.1.2001, normal Bonds (Guaranteed) 2500 1815
increase on account of inflations/increments, VRS, etc. Term Loan from banks/Institutions 868 1398
d) Stores & Spares Foreign currency borrowings 2458 2424
Despite increase in the production level, the stores & spares GOI /SDF loans 659 522
expenditure during the year was about Rs. 1588 crores
Public Deposit Scheme 1275 1340
which is lower than last year expenditure of Rs. 1650 crores.
This has been possible mainly due to increased utilisation Housing loans 200 200
of captive engineering shops and foundry shops resulting in Total 14012 14251
reduced procurement of stores & spares from external
sources, reduction in refractory consumption, etc. During the year there is a net reduction in borrowings by
e) Power & Fuel Rs.239 crores and also high cost borrowings have been
Power & Fuel expenditure during the year was Rs. 1701 substituted with low cost borrowings.
crores and is higher as compared to previous year by about c) Gross Block
Rs.121 crores. While a part of the increase is due to increase
in the level of production, it is also due to increase in the The total gross block of the company as on 31.03.2002 is
power tariff by state electricity Boards. In addition, part of at Rs. 27199 crores as against Rs. 26916 crores as on
the increase in power & fuel expenditure is also due to 31.03.2001. During the year, about Rs. 1016 crores of the
formation of joint venture companies because of which ongoing schemes were capitalized which includes Rs. 793
some of the fixed expenses viz. salary & wages, stores & crores of capitalization of Sinter Plant-III at BSP. However,
spares, depreciation, interest etc. are now forming part of assets of about Rs. 733 crores were sold/disposed off which
the power & fuel expenditure which were earlier booked included divestment of power plant at BSL and BSP and
under respective primary heads. sale/lease of houses/land in SAIL township.
f) Excise d) Capital Work-in-progress
Excise duty during the year 2001-02 was Rs. 1983 crores as As on 31st March’2002, the capital work-in-progress is Rs.
compared to Rs.2123 crores during 2000-01. The decline 556 crores. Major schemes in progress include upgradation
in duty is due to dip in net sales realisation. of BF 3 at DSP.

72
e) Investments 2.4 PLANTWISE PROFIT & LOSS
Total investment of SAIL as on 31.3.2002 is Rs.539 crores Rs./crs.
as against Rs. 435 crores as on 31.3.2001. During the year 2001-02
SAIL has made an investment of Rs. 84 crores in Bokaro
BSP 477
Power Supply Company Ltd, a joint venture company
DSP -262
formed in association with DVC with 50:50 equity holding.
SAIL also made investment of Rs. 16.60 crores in Bhilai RSP -1036
Electric Supply Company a Joint Venture Company with BSL -459
NTPC. ASP -149
SSP -153
f) Working capital
VISL -103
(Rs./crores)
Other Units -22
As on As on Reduction SAIL -1707
31.03.2002 31.03.2001
F. HUMAN RESOURCES/INDUSTRIAL RELATIONS
Current Assets
Human resource is one of the most important resources for
Inventory
SAIL. Personnel activities across the company are oriented
Semi-finished 2500 2923 423 towards implementation of business goals of the company.
Stores & Spares 887 902 15 Ongoing restructuring process of SAIL also focuses greatly on
Raw Materials 633 650 17 proper utilization of human resource and its rightsizing to make
the company healthy.
Other 22 44 22
With the above in view, effective two-way communication on
Total Inventory 4042 4519 477 issues arising out of the change process, was launched. This
helped in ironing out the road blocks which normally emerge in
Sundry debtors 1389 1688 299 any restructuring exercise. Besides creating proper awareness
Cash & bank balance 416 667 251 and urgency amongst the employees for carrying out the large
scale organizational changes, it has helped the company in getting
Interest receivable/accrues 94 175 81
support for facilitating the restructuring process particularly the
Loans and advance – others 1165 1313 148 divestment of power plants. Similar communication exercise
Total current assets 7107 8362 1255 has been accepted as a continuous process in SAIL to keep the
employees informed of the realities facing the Company and
Current Liabilities also motivate them to take up higher responsibilities, in tune
Current liabilities 4400 4575 175 with the requirements of the Company.
(excl. for capital works) The manpower employed by SAIL as on 31st March 2002 is
Provisions 458 699 241 147601 comprising 16,003 executives and 131,598 non-
(excl. gratuity/leave) executives. The manpower productivity at 111 tonnes of crude
steel per man per year registered increase of 6 % percent over
Total current liabilities 4857 5274 417 the previous year. With a view to optimizing the manpower and
reducing the labour cost, implementation of Voluntary
Working capital 2249 3088 839
Retirement Schemes (VRS) for employees in 1998 and 1999 on
deferred payment basis resulted in separation of about 19,600
The working capital has reduced by Rs. 839 crores. The reasons employees. A Voluntary Retirement Scheme based on
for variation are as under : Department of Public Enterprises (DPE) guidelines with
During the year there was reduction of Rs. 477 crores in the lumpsum payment was introduced in 2001 and about 6500
inventory of which Rs.422 crores reduction is in the semi/ employees were separated. Another VR scheme has been
finished inventory. In terms of quantity, the depletion in saleable launched in 2002 which is under operation currently.
steel inventory was about 3.3 lakh tonnes. To make incentive and reward schemes more meaningful, a new
Sundry debtors have been reduced by Rs. 299 crores as a result scheme was implemented during 2001-02 introducing
of special thrust given on debt realization and selective credit profitability also as a parameter and this facilitated bringing in a
extension. focus towards profitability for the company.

73
Management Discussion and Analysis Report
SAIL has always believed that objective evaluation and appraisal
against pre-set tasks and targets are crucial for instilling result
orientation in the organization. The new performance appraisal
system evolved by Public Enterprises Selection Board for top
level executives of the Company was accepted well in the
Company.
H. PROJECT MANAGEMENT
After extensive deliberations, new schemes have been introduced
to give greater thrust on ‘performance orientation’ in the
Company. Changes in the Promotion Policy were also made
during 2001-02, especially for the senior management positions,
where interview based selections have been introduced for
placement to the next higher grade.
A new Vision and Credo statements for the Company were
adopted during the year. The vision statement speaks of making
SAIL a respected world-class organization in quality, productivity,
profitability and customer satisfaction.
HRD Function of SAIL is committed to contributing its mite
towards the Vision of the Company and creating and nurturing
a culture that supports flexibility, learning and is proactive to
change. It also strives to works towards charting a challenging
career for employees with opportunities and rewards.
G. INTERNAL CONTROL SYSTEM
The Company has an adequate system of internal controls
implemented by the management towards achieving the following
objectives:
Ø Efficiency of operations
Ø Protection of resources
Ø Accuracy and promptness of financial reporting
Ø Compliance with the laid down policies and procedures
Ø Compliance with laws and regulations.
In SAIL, Internal Audit is a multi-disciplinary function which
reviews, evaluates and appraises the various systems, procedures/
policies laid down by the Company and suggests meaningful and
useful improvements. It helps management to accomplish its
I.
objectives by bringing a systematic and disciplined approach to
improve the effectiveness of risk management towards good
corporate governance.
SAIL has taken a number of steps in the recent past to make
audit function more effective viz. establishment of a Board level
Audit Committee, independence of internal audit function,
emphasis on transparency in the systems and internal controls,
placement of right type of skill mix of people in the Internal
Audit etc. Continuous efforts are being made to make internal
audit a meaningful exercise and be an effective tool to
management.
74
Internal Audit prepares audit programs of the plants/units of
the company to cover vital areas and ensures its compliance.
Audit reports giving details of control factors, identification/
management of risk factors and preventive suggestions, are
submitted to Management.
SAIL incurred a capital expenditure of about Rs. 350 crore
during 2001-02.The capital expenditure has been regulated by
exercising control over sanction of new schemes and by exercising
control over expenditure on account of reduced availability of
resources. However, essential schemes are being taken up to
improve organisational competitive strength. 8 AMR schemes
valued at Rs.132 crore were approved during the year for
implementation. Upgradation of ERW Pipe Plant at RSP to
meet the quality requirement of Pipes and to produce API-5L
grade of X-70 Pipes is being taken up.
Ten schemes costing around Rs.331 crore have also been accorded
‘In-principle’ approval. This includes Coke Oven Battery - 1 at
RSP, Long Rails Project at BSP, Automation of Tandem Mill - II
& Upgradation of Tandem Mill - I of CRM and Coke Oven
Battery - 5 at BSL.
Addition/ Modification/ Replacement (AMR) schemes valued
at Rs.990 crore were completed during the year. With
commissioning of Sinter Plant-3 at Bhilai, the sinter charge in
BF burden has increased to about 70%, resulting in substantial
improvement in the performance of blast furnaces. Also, at
Rourkela, Thyristorisation of DC Drives of CRM involving
replacement of MG sets of DC drives by thyristors has been
completed. This will enable higher level of automation, extensive
self-diagnostic fault-finding and saving of energy. With the
completion of the scheme of upgradation of BF-3 at DSP in
July, 2002, DSP is now in a position to provide 2 million tonnes
of Hot Metal per annum with 3 BF operation.
The major scheme under implementation includes Upgradation
of ERW Pipe Plant at RSP.
ENVIRONMENT MANAGEMENT
SAIL linked its business activities to environment management
by adopting a Corporate Environment Policy and environment
management as one of the key areas of operations.
Environment Management Division has been pursuing and
achieving environmental goals through implementation of
effective Environment Management System (EMS) linked to
ISO 14001 minimisation of resource utilization, reduction in
waste generation and above all through adoption of cleaner
technologies/processes. Resource conservation is being taken
up as one of the thrust areas and considerable reduction in
water, energy and raw material consumption has been achieved
over the past five years.
Solid waste utilization is continuously on the increase through
the adoption of innovative reuse/recycle schemes. Recycling of
ferruginous sludge after mixing with hot sintered dolomite fines
at RMP-I and recycling of waste refractory bricks from BF stoves
at BSP are a couple of examples on solid waste utilization during
the year.
Pollution control/prevention schemes are taken up at the plants
and mines on regular basis to comply with statutory norms.
Some of the specific pollution control schemes implemented
during the year include:
Ø Commissioning of coke-oven gas firing system in kilns of
RMP-I at BSP.
Ø Installation and commissioning of a Vapoclave for treatment
of Bio-medical wastes at Ispat General Hospital, RSP.
Ø Commissioning of a facility for recycling of Decanter Tar
Sludge into coke-oven at BSL.
This is manifested by bagging of the Indo-German Green Tech
Excellence Award on Environment for the year 2000-01 by
Durgapur Steel Plant and the prestigious Lal Bahadur Shastri
Memorial Gold Awards for ‘Best Pollution Control
Implementation’ and ‘Best Environmental Implementation’ by
Bhilai and Bokaro Steel Plants respectively.
Efforts to obtain ISO-14001 Certification for Rail and Structural
Mill of BSP, Cold Rolling Mill of BSL and Sinter Plant-II of
RSP are progressing satisfactorily.
SAIL employees at all levels are being continually imparted
training for bringing them up-to-date not only with the latest
technologies but also for inculcating environmental awareness
in various aspects of operations. World Environment Day, Earth
Day, Environment Month, Mines Environment and Mineral
Conservation Week, etc. are being organized in various units of
SAIL to enhance consciousness towards better and cleaner
environment.
A MOU has been signed with the Indian Council of Forest
Research and Education (ICFRE), Dehradun to undertake a
five year project on eco-restoration of mined out areas of SAIL
in Bihar-Orissa region.
J. ENERGY CONSERVATION
SAIL has given a major impetus in the area of energy
conservation which has contributed to significant reduction in
energy consumption from a level of 11.27 G.cal/tcs in mid 80’s
to 7.69 G.cal/tcs in 2001-2002 inspite of increase in the
production of quality steel which consumes more energy.
Measures have been taken not only to reduce the energy
consumption in different units of iron and steel making, but
also to improve generation of by-product fuels and recovery of
waste heat. This has resulted in a considerable reduction of
petro-fuels consumption in SAIL steel plants. Reduction in
specific energy consumption is primarily due to reduction in
coke consumption in Blast Furnace, closure of high heat
consumption processes and through the increased use of
continuous casting machines, efficient reheating furnaces and
through automation and computerization of various processes.
Adoption of improved operational practices and implementation
of various energy conservation schemes have contributed further
in the reduction of specific energy consumption.
SAIL has drawn up its corporate plan to bring down specific
energy consumption further through it’s R&D input by
implementing energy conservation schemes in all steel plants.
75
Corporate Governance Certificate ANNEXURE - VI TO THE DIRECTORS' REPORT

To
The Members of
Steel Authority of India Limited
We have examined the compliance of the conditions of Corporate Governance by Steel Authority of India Limited for the year
ended 31st March , 2002, as stipulated in clause 49 of the Listing Agreements of the said company with the various stock exchanges.
The compliance of the conditions of corporate governance is the responsibility of the management. Our examination was limited to
the procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the
Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.
We certify that, in our opinion, and to the best of our information and according to explanations given to us, the company has
complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.
We state that no investor grievance is pending for a period exceeding one month against the company, as per the records maintained
by the Shareholders/Investors Grievance Committee.
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.

S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/-

(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner

Place : New Delhi

Dated : May 28, 2002

Cash Flow Statement

The Board of Directors,
Steel Authority of India Limited
We have examined the attached Cash Flow Statement of Steel Authority of India Limited for the year ended 31st March, 2002.
The Statement has been prepared by the Company in accordance with the requirements of listing agreements with various Stock
Exchanges in India and is based on and in agreement with the corresponding Profit and Loss Account and Balance Sheet of the
Company covered by our report of 28th May, 2002 to the members of the Company.
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/-

(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner

Place : New Delhi

Dated : May 28, 2002

76
Cash Flow Statement
Cash Flow Statement for the year 2001-02 2000-01
(Rupees in crores)
A. Cash flow from Operating Activities
Net loss (-) before taxation, and extraordinary items -1706.89 -728.66
Add : Adjustments for :
Depreciation 1164.12 1150.62
Profit on sale of Fixed Assets 662.47 295.25
Provision for diminution in value of investments 0.02 0.01
Interest Expenses 1562.03 1751.68
Bad debts written-off 7.08 13.28
Deferred revenue expenditure (Charged during the year) 232.54 142.32
Less : Adjustments for :-
Interest Income 105.30 99.76
Dividend Income 5.74 0.26
Operating profit before working capital change 485.39 1933.98
Less : Adjustments for :-
Inventories -477.16 -104.00
Sundry Debtors -291.10 -116.49
Loans and Advances -138.53 51.16
Current Liabilities and Provisions -132.96 -956.11
Deferred Revenue Expenditure (Additions) 438.20 14.34
Net Cash from Operating Activities 1086.94 3045.08
B. Cash flow from Investing Activities
Purchase of Fixed Assets 322.03 326.77
Fixed Assets sold /discarded -32.67 -37.96
Sale of Captive Power Plants -670.50 -391.00
Sale / Lease of houses -190.32 0.00
Purchase / Sale of investments (net) 103.34 58.69
Interest received -186.47 -89.36
Dividend received -5.74 -0.26
Net Cash from Investing Activities -660.33 -133.12
C. Cash flow from Financing Activities
Bond Issue Expenses -0.69 -0.80
Prime Minister's Trophy Award Fund 0.59 1.52
Capital Reserve -0.14 -0.12
Proceeds from Borrowings (net) -239.05 -831.73
Interest and Finance Charges paid 1716.43 1975.49
Interest and Finance Charges (Capitalised) 42.61 96.83
Net Cash from Financing Activities -1998.33 -2903.45
Net Increase / Decrease (-) in Cash & Cash Equivalents (A-B+C) -251.06 274.75
Cash & Cash Equivalents (Opening) 667.43 392.68
Cash & Cash Equivalents (Closing) * 416.37 667.43
(Represented by Cash & Bank balances)
* Includes Rs.58 crores held on escrow account for Voluntary Retirement payments
(previous year Rs.315 crores)
For and on behalf of Board of Directors
Sd/- Sd/- Sd/-
(Devinder Kumar) (V.S. Jain) (Arvind Pande)
Secretary Director (Finance) Chairman
In terms of our report of even date
For and on behalf of
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner
Place : New Delhi
Dated : May 28, 2002

77
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956, RELATING TO SUBSIDIARY COMPANIES

NAME OF THE SUBSIDIARY INDIAN IRON & MAHARASHTRA BHILAI

COMPANY STEEL COMPANY ELEKTROSMELT OXYGEN
LIMITED LIMITED LIMITED

1. Financial year of the subsidiary ended on 31st March, 2002 31st March, 2002 31st March, 2002
2. Date from which they became subsidiary 1st May,1978 18th October, 1986 9th Feburary, 1999
3. Share of the subsidiary held by the
company as on 31st March, 2002
a) Number & face value 38,76,65,757 equity 2,37,87,935 equity 98 equity shares of
shares of Rs.10/- shares of Rs.10/- Rs.10/- each fully
each fully paid-up. each fully paid-up. paid-up.

b) Extent of holding 100% 99.12% 98%

4. The Net aggregate amount of the subsidiary

companies Profit/(loss) so far as it concerns
the member of the holding company : (Rupees in Crores ) ( In Rupees )

a) Not dealt with in the holding

company’s accounts

i) For the financial year ended (179.87) (8.38) (11080)

31st March, 2002

ii) Upto the previous financial years ( 617.27 ) (39.70) (20649)

of the subsidiary companies

b) Dealt with in the holding

company’s accounts

i) For the financial year ended Nil Nil Nil

31st March, 2002

ii) For the previous financial years Nil Nil Nil

of the subsidiary companies
since they became the holding
company’s subsidiaries

Notes :
Indian Iron & Steel Company Limited holds 30,00,000 equity shares of Rs.10 each in IISCO Ujjain Pipe & Foundry Co. Ltd. The
cumulative loss of IISCO Ujjain Pipe & Foundry Co. Ltd. upto 10th July’ 97 was Rs.17.05 crores. The Hon’ble High Court of Calcutta
vide its order dated 10th July, 1997 had directed winding-up of the Company from the said date i.e. 10.7.1997 and the official liquidator
has taken over the possession of the assets of the Company.
For and on behalf of Board of Directors

Sd/- Sd/- Sd/-

(Devinder Kumar) (V.S. Jain) (Arvind Pande)
Secretary Director (Finance) Chairman

78
 ANNEXURE - VII TO THE DIRECTORS' REPORT

Consolidated Balance Sheet AS AT 31ST MARCH, 2002

Schedule As at
No. 31st March, 2002

SOURCES OF FUNDS (Rupees in crores)

Shareholders’ Funds
Share Capital 1.1 4130.40
Reserves and Surplus 1.2 1163.63 5294.03
Loan Funds
Secured Loans 1.3 7200.22
Unsecured Loans 1.4 7013.84 14214.06
19508.09
APPLICATION OF FUNDS
Fixed Assets 1.5
Gross Block 28699.68
Less: Depreciation 13569.00
Net Block 15130.68
Capital Work-in-Progress 1.6 567.99 15698.67
Investments 1.7 163.75
Current Assets, Loans & Advances
Inventories 1.8 4253.44
Sundry Debtors 1.9 1458.72
Cash & Bank Balances 1.10 441.33
Interest Receivable/Accrued 1.11 94.17
Loans & Advances 1.12 1223.29
7470.95
Less: Current Liabilities & Provisions
Current Liabilities 1.13 5360.97
Provisions 1.14 2325.44
7686.41
Net Current Assets -215.46
Miscellaneous Expenditure 1.15 591.64
(to the extent not written off or adjusted)
Minority Interest 1.16
Profit & Loss Account Debit Balance 0.24
3269.25
19508.09
Accounting Policies and Notes on Accounts 3
Schedules 1 and 3 annexed hereto, form part of the Consolidated Balance Sheet.
For and on behalf of Board of Directors
Sd/- Sd/-
(V.S. Jain) (Arvind Pande)
Director (Finance) Chairman
In terms of our report of even date
For and on behalf of
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner
Place : New Delhi
Dated : June 25, 2002

79
Consolidated Profit and Loss Account FOR THE YEAR ENDED 31ST MARCH, 2002

Schedule Year ended

No. 31st March, 2002

INCOME (Rupees in crores)

Sales 2.1 16323.27
Finished products internally consumed 184.97
Interest earned 2.2 105.49
Other revenues 2.3 938.44
Provisions no longer required written back 2.4 103.08 17655.25

EXPENDITURE
Depletion to stocks 2.5 450.75
Raw materials consumed 2.6 6141.87
Purchase of semi/finished products and others 69.87
Employees’ Remuneration & Benefits 2.7 3608.96
Stores & Spares Consumed 1674.92
Power & Fuel 2.8 1887.69
Repairs & Maintenance 2.9 175.67
Excise duty 2085.03
Freight outward 574.47
Other expenses 2.10 1369.38
Interest & finance charges 2.11 1575.49
Depreciation 1181.09
Total 20795.19
Less : Transferred to Inter Account Adjustments 2.12 1256.44 19538.75
Loss for the year -1883.50
Adjustments pertaining to earlier years 2.13 -11.65
Net Loss for the year -1895.15
Less : Minority Interest 0.07
Balance brought forward from previous year (net) -1895.08
(Refer Note No.3.4 in schedule - 3) -1374.17
Loss carried over to Balance Sheet -3269.25

Accounting Policies and Notes on Accounts 3

Schedules 2 and 3 annexed hereto, form part of the Consolidated Profit & Loss Account.
For and on behalf of Board of Directors
Sd/- Sd/-
(V.S. Jain) (Arvind Pande)
Director (Finance) Chairman
In terms of our report of even date
For and on behalf of
S.R. Batliboi & Co. S.N. Nanda & Co. Chaturvedi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Sd/- Sd/- Sd/-
(R.K. Agrawal) (S.N. Nanda) (S.C. Chaturvedi)
Partner Partner Partner
Place : New Delhi
Dated : June 25, 2002

80
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.1 : SHARE CAPITAL

As at
31st March, 2002

(Rupees in crores)

Authorised
5,00,00,00,000 equity
shares of Rs. 10 each 5000.00

Issued, Subscribed & Paid-up

4,13,04,00,545 equity shares
of Rs.10 each fully paid. 4130.40

Note : 1,24,43,82,900 equity shares of

Rs.10 each (net of adjustments on
reduction of capital) were allotted as fully
paid up for consideration other than cash.

1.2 : RESERVES & SURPLUS

As at
31st March, 2002

(Rupees in crores)

Capital Reserve
As per last Balance Sheet 4.88
Less: Adjustment during the year 0.14 4.74

Prime Minister’s Trophy Award Fund

As per last Balance Sheet 6.89
Add : Additions during the year 0.71
7.60
Less : Adjustments towards expenses 0.12 7.48
incurred during the year

Share Premium Account

As per last Balance Sheet 237.20
Less : Adjustment towards Bond Issue Expenses 0.69 236.51

Bond Redemption Reserve

As per last Balance Sheet 914.30

1163.63

81
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.3 : SECURED LOANS

As at
31st March, 2002
(Rupees in crores)
Working Capital Borrowings from Banks (a) 4101.63
[ Including Foreign Currency Non - Resident ( Bank )
Loan of Rs.661.74 crores]
Term Loan from Banks / Financial Institutions 749.28
Interest accrued and due thereon 41.42 790.70 (b)
Foreign Loans (b) ` 366.45
Non Convertible Bonds (c)
Interest Rate Face value of Bond Date of Redemption
(%) ( Rs. )
13.5 % 100,000/- 1st December, 2002 270.00
13.75% 500,000/- 1st July, 2003 175.55
14.5% 100,000/- 21st May, 2004 497.00
14.0% 500,000/- 1st July, 2005 394.45
14.5% 500,000/- 1st April, 2006 226.90
12.95% 500,000/- 1st December, 2007 100.05
11.30% 500,000/- 1st June, 2008 7.25
11.60% 500,000/- 1st June, 2008 33.95
11.10% 500,000/- 1st December, 2008 6.50
11.50% 500,000/- 1st December, 2008 0.30
13.05% 500,000/- 1st December, 2010 59.80
12.10% 500,000/- 1st June, 2011 91.30
12 % 500,000/- 1st December, 2011 76.90 1939.95
Housing Development Finance Corporation Limited 1.45
Interest Accrued and due thereon 0.04 1.49 (d)
Notes : 7200.22
(a) Secured by hypothecation of inventories, book debts and other current assets.
(b) Includes Rs.1157.15 crores as follows : Hypothecation of all tangible movable machinery at Bokaro Steel Plant Rs. 366.45 crores. Sinter Plant III of Bhilai Steel Plant Rs.205.83
crores. Selective units of Rourkela Steel Plants Rs.325 crores. All movable plant and machinery at Durgapur Steel Plant Rs.150 crores. Current assets of SAIL Rs. 37.50 crores.
Rs.72.37 crores secured by First Mortagage of the properties and undertakings of IISCO together with a floating charge on the whole of the undertakings and assets of IISCO
ranking pari-passu interse of the Consortium Members.
(c) Secured by charges ranking pari-passu inter se, on all the present and future immovable and movable assets of SAIL except for Bonds of face value of Rs.5,00,000/- each which
are secured by immovable property only at Mouje-wadej of city Taluka, District Ahmedabad, Gujarat and company's plant and machinery including the land on which it stands,
pertaining to Durgapur Steel Plant, SAIL.
(d) Secured against documents of title of the house property of the Employees.

1.4 : UNSECURED LOANS

As at
31st March, 2002
(Rupees in crores)
Public Deposits 1272.46
Interest accrued and due thereon 2.60 1275.06
Government of India 0.27
Interest accrued and due thereon 0.35 0.62
Steel Development Fund 248.84
Interest accrued and due thereon 454.41 703.25
Foreign Loans
Long Term 1548.37
(Guaranteed by Govt. of India / State Bank of India
Rs.913.22 crores
Short Term 544.03 2092.40
Term Loans From UTI 1.00
Interest accrued and due thereon 2.00 3.00
Term Loans From Financial Institutions 155.91
Non Convertible Bonds*
Interest Rate Face value of Bond Date of Redemption
(%) ( Rs. )
10 % 500,000/- 18th September, 2003 100.00
10 % 500,000/- 24th September, 2003 400.00
12% 500,000/- 1st Feburary, 2007 100.00
12.15% 500,000/- 1st Feburary, 2007 400.00
11.10% 500,000/- 30th March, 2007 60.00
11.25% 500,000/- 30th March, 2007 99.00
11.25% 500,000/- 15th April, 2007 400.00
11.10% 500,000/- 15th April, 2007 50.00
12.15% 500,000/- 1st September, 2007 152.35
11.30% 500,000/- 12th March, 2008 105.00
11.60% 500,000/- 12th March, 2008 15.00
10.10% 500,000/- 1st August, 2008 35.00
10.50% 500,000/- 1st August, 2008 35.00
11.50% 500,000/- 30th March, 2010 43.50
11.50% 500,000/- 15th April, 2010 21.00
12.45% 500,000/- 1st September, 2010 38.15
12.55% 500,000/- 1st September, 2010 39.40
12.65% 500,000/- 1st September, 2010 96.60
12.10% 500,000/- 12th March, 2011 195.00
11% 500,000/- 1st August, 2011 115.00 2500.00
Others
Bond Application Money 83.60
Housing Finance Loans 200.00
283.60
7013.84
* Guaranteed by Government of India and also secured by charges ranking pari-passu inter se on immovable property (book value as on 31.03.2002 Rs. 0.58 crores)
at Mouje-wadej, Ahemdabad,Gujarat.
Note : Secured / unsecured Loans repayable within one year Rs. 2524.37 crore.

82
1.5 : FIXED ASSETS
GROSS BLOCK (AT COST)
Description As at Additions / Less : Sales / As at
31st Adjustments Adjustments 31st
March during the during the March
2001 year year 2002

A. PLANTS, MINES, OTHERS (Rupees in crores)

Goodwill * — 651.42 — 651.42
Land (including cost of development)
— Freehold Land 113.04 0.15 0.24 112.95
— Leasehold Land 33.39 0.04 2.59 30.84
Right and Patents 6.59 2.53 — 9.12
Railway Lines & Sidings 226.27 -0.27 0.60 225.40
Roads, Bridges & Culverts 148.42 0.11 0.57 147.96
Buildings 1688.91 3.37 39.45 165283
Plant & Machinery
— Steel Plant 21790.69 1029.55 622.09 22198.15
— Others 1523.05 -7.75 25.10 1490.20
Furniture & Fittings 74.90 0.10 1.92 73.08
Vehicles 454.67 2.01 7.37 449.31
Water Supply & Sewerage 288.38 1.17 1.03 288.52
EDP Equipments 200.68 3.55 1.23 203.00
Miscellaneous Articles 220.83 2.61 1.78 221.66
Sub-total ‘A’ 26769.82 1688.59 703.97 27754.44

B. SOCIAL FACILITIES
Land (including cost of development)
— Freehold Land 9.00 — 0.13 8.87
— Leasehold Land 6.95 0.27 — 7.22
Roads, Bridges & Culverts 45.77 — — 45.77
Buildings 608.30 0.26 26.45 582.11
Plant & Machinery-Others 80.44 0.06 1.57 78.93
Furniture & Fittings 12.68 0.07 0.07 12.68
Vehicles 8.51 -0.02 0.25 8.24
Water Supply & Sewerage 111.65 0.06 0.02 111.69
EDP Equipments 2.00 0.02 — 2.02
Miscellaneous Articles 85.65 2.31 0.25 87.71
Sub-total ‘B’ 970.95 3.03 28.74 945.24
Total (‘A’+’B’) 27740.77 1691.62 732.71 28699.68

83
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.5 : FIXED ASSETS

DEPRECIATION/AMORTISATION NET BLOCK
Description Up to For Less : On Sales Up to As at
31st the Adjustments 31st 31st
March Year during the March March
2001 year 2002 2002

A. PLANTS, MINES, OTHERS (Rupees in crores)

Goodwill * — 651.42 — 651.42 —
Land(including cost of development)
— Freehold Land — — — — 112.95
— Leasehold Land 7.75 0.60 0.29 8.06 22.78
Right and Patents 5.78 1.19 — 6.97 2.15
Railway Lines & Sidings 117.43 8.23 0.51 125.15 100.25
Roads, Bridges & Culverts 29.22 2.52 0.17 31.57 116.39
Buildings 600.36 50.16 19.30 631.22 1021.61
Plant & Machinery
— Steel Plant 9492.01 983.64 442.96 10032.69 12165.46
— Others 876.70 64.42 22.06 919.06 571.14
Furniture & Fittings 46.44 3.35 0.94 48.85 24.23
Vehicles 298.69 18.76 6.75 310.70 138.61
Water Supply & Sewerage 167.78 9.61 0.26 177.13 111.39
EDP Equipments 149.27 14.91 0.95 163.23 39.77
Miscellaneous Articles 110.22 9.44 1.21 118.45 103.21
Sub-total ‘A’ 11901.65 1818.25 495.40 13224.50 14529.94

B. SOCIAL FACILITIES
Land(including cost of development)
— Freehold Land — — — — 8.87
— Leasehold Land 3.93 0.26 — 4.19 3.03
Roads, Bridges & Culverts 12.18 0.82 — 13.00 32.77
Buildings 139.68 9.11 7.03 141.76 440.35
Plant & Machinery-Others 48.72 3.23 0.91 51.04 27.89
Furniture & Fittings 10.72 0.31 0.03 11.00 1.68
Vehicles 6.78 0.19 0.27 6.70 1.54
Water Supply & Sewerage 61.78 4.04 — 65.82 45.87
EDP Equipments 1.71 0.07 0.01 1.77 0.25
Miscellaneous Articles 44.43 4.90 0.11 49.22 38.49
Sub-total ‘B’ 329.93 22.93 8.36 344.50 600.74
Total (‘A’+’B’) 12231.58 1841.18 503.76 13569.00 15130.68

Note : Allocation of depreciation/Amortisation Current

Year

(a) Charged to Profit & Loss Account 1181.09

(b) Charged to expenditure during construction 0.44
(c) Debited to adjustments pertaining to earlier years 8.23
(d) Debited to Accumulated losses as on 31.03.2001 651.42
(Refer Note No.3.4 in Schedule 3)
Total 1841.18
* Arising out of Consolidation of Subsidiary Accounts

84
1.6 : CAPITAL WORK-IN-PROGRESS
As at
31st March, 2002

(Rupees in crores)

Expenditure during construction

pending allocation (Schedule 1.6.1) 40.43

Capital Work-in-progress
Steel Plants & Units 290.66
Township 4.71
Ore Mines and Quarries 0.55 295.92

Capital equipments pending erection, 56.36

installation, commissioning and adjustments

Construction – Stores and Spares 22.62

Less: Provisions 2.51 20.11

Advances 161.14
Less: Provisions 5.97 155.17

567.99

Particulars of advances
Unsecured, Considered Good 155.17
(including advances backed by
Bank Guarantees Rs.13.85 crores)
Unsecured, Considered Doubtful 5.97

161.14

85
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.6.1 : EXPENDITURE DURING CONSTRUCTION

(pending allocation)

As at
31st March, 2002

(Rupees in crores)

Opening balance (a) 43.58

Expenditure incurred during the year

Employees’ Remuneration & Benefits
Salaries, Wages & Bonus 17.34
Company’s contribution to Provident 1.21
and other Funds
Travel Concession 0.02
Welfare Expenses 0.04
Gratuity 0.43 19.04

Technical Consultants’ fees & know-how 0.02

Repairs & Maintenance
Plant & Machinery 0.10
Others 0.37 0.47
Stores and Spares 3.05
Power & Fuel 5.82
Rent 3.21
Rates & Taxes 0.01
Other Expenses 2.30
Interest & Finance Charges 39.81
Depreciation 0.44

74.17
Less: Income
Interest Earned 1.14
Liquidated Damages 0.95
Hire Charges 1.45
Internal consumption of sinter 15.55
Sundries 0.77 19.86

Net expenditure during the year (b) 54.31

Total (a)+(b) 97.89

Amount allocated to Fixed Assets/

Capital Work-in-progress 57.46
Balance carried forward 40.43

Total 97.89

86
1.7 : INVESTMENTS (AT COST) — LONG TERM
Number of Face As at
Fully Paid up value per 31st March,
Equity Shares Share 2002
(Rs.)
(Rupees in crores)
Quoted
Housing Development Finance Corporation 6,000 10 0.01
Limited (Market Value Rs 41,07,600 )
HDFC Bank Limited 500 10 —*
(Market Value Rs 1,17,575 )
Industrial Credit & Investment Corporation 57,200 10 0.05 0.06
of India Ltd. (Market value Rs.34,86,340)
Unquoted
Trade Investments
Tata Refractories Limited 10,00,000 10 1.12
Almora Magnesite Limited 40,000 100 0.40
North Bengal Dolomite Limited 97,900 100 0.98
Indian Potash Limited 2,40,000 10 0.18
SAIL Power Supply Company Pvt. Limited 5,86,50,050 10 58.65
Bokaro Power Supply Company Limited 8,40,25,000 10 84.02
Bhilai Electric Supply Company Limited 1,66,00,000 10 16.60
SAIL–Bansal Service Centre Pvt. Limited 27,23,200 10 2.72
Metaljunction.Com Pvt. Limited 4,000 10 —*
South India Export Co. (P) Limited 7,500 10 0.01
India Standard Wagon Company Limited 130 100 —*
Hoogly Docking and Engg. Company Limited 1,433 100 0.02
Satna Stone Lime Company Limited 33,804 10 0.03 164.73
Other Investments -
Subsidiary Companies
IISCO Ujjain Pipe & Foundray Company Ltd. 30,00,000 10 3.00 3.00
(Refer Note No.5.2.3 of schedule 3)
Other Companies
Management & Technology Application
(India) Limited 16,334 10 0.02
UEC SAIL Information Technology Limited 1,80,000 10 0.18
Cement & Allied Products (Bihar) Limited 2 10 —*
Chemical & Fertilizer Corporation
(Bihar) Limited 1 10 —*
Bhilai Power Supply Company Limited 5 10 —*
Romelt SAIL (India) Limited 63000 10 0.06
MSTC Limited 20,000 10 0.01
Bihar State Financial Corporation 500 100 0.01
Government Securities 0.06
Shares in Co-operative Societies (1.7.1) 0.19 0.53
Less : Provision for diminution in value of investments 168.32
4.57
163.75
* Cost being less than Rs. 50,000/-, figures not given.

87
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.7.1 : SHARES IN CO-OPERATIVE SOCIETIES

Number of Face As at
Fully Paid-up value per 31st March,
Shares Share 2002
(Rs.)

(In Rupees)

Rajhara Employees’ Co-operative

Stores Limited 25 100 2500

Nandini Employees’ Co-operative

Stores Limited 25 100 2500

BSP Employees’ Consumers’ Co-operative

Stores (Sector 4) Limited 25 100 2500

Bhilai Steel Employees’ Consumers’

Co-operative Society Limited (Sector-8) 250 10 2500

Bokaro Steel Employees’ Co-operative 6,250 20

Credit Society Limited 1,16,500 10 1290000

BSP Kamgar Consumers’ Co-operative

Stores Limited (Sector-7) 250 10 2500

Bokaro Steel City Central Consumers’

Co-operative Stores Limited 250 10 2500

NMDC Meghahatuburu Employees’

Consumers Co-operative Society Limited 25 100 2500

DSP Employees’ Co-operative

Society Limited 1377 100 137700

Bolani Ores Employees’ Consumer

Co-operative Society Limited 200 25 5000
Barajamda Iron Ore Mines Central Co-operative
Stores Limited 400 25 10000
IISCO Employees Primary Co-operative
Stores Limited 23000 20 460000
1920200

88
1.8 : INVENTORIES* 1.10 : CASH & BANK BALANCES
As at As at
31st March, 2002 31st March, 2002

(Rupees in crores) (Rupees in crores)

Stores & spares 947.47 Cash and Stamps on hand 1.77

Add: In-transit 78.51 Cheques on hand 261.81

1025.98 With Scheduled Banks on :

Less: Provision 88.51 937.47 Current Account 37.91
Unpaid Dividend Account 0.42
Raw materials 517.54 Margin Money Account 0.95
Add: In-transit 142.36 Term Deposits Account * 133.06 172.34

659.90 With post office 0.01

Less: Provision 2.91 656.99 (Deposits pledged with
excise authorities)
Semi/finished products 2627.56 Remittances-in-transit 5.40
(including scrap)
441.33
Salvaged/Scrapped fixed assets 77.94
Less : Provision 46.52
31.42 * Includes Rs. 58 crores held in escrow account for Voluntary
Retirement Payments)
4253.44

* Valued as per Accounting Policy No. 1.6 in schedule No.3

1.9 : SUNDRY DEBTORS 1.11 : INTEREST RECEIVABLE/ACCRUED

As at As at
31st March, 2002 31st March, 2002
(Rupees in crores) (Rupees in crores)

Debts over six months 409.20 Loans to subsidiary company 0.35

Other debts 1232.40 (Refer Note No.5.2.1 of schedule 3)
Loans to other companies 0.53
1641.60 Employees 83.34
Less: Provision for doubtful debts 182.88 Others 16.19

1458.72 100.41
Less: Provision for doubtful interest 6.24
Particulars 94.17
Unsecured, considered good 1458.72
(Including debts backed by Particulars
Unsecured, considered good 94.17
bank guarantees Rs.353.80 crores); Unsecured, considered doubtful 6.24
Previous year Rs.426.15 crores)
Unsecured, considered doubtful 182.88 100.41

1641.60

89
Schedules (FORMING PART OF THE CONSOLIDATED BALANCE SHEET)

1.12 : LOANS & ADVANCES 1.13 : CURRENT LIABILITIES

As at As at
31st March, 2002 31st March, 2002
(Rupees in crores) (Rupees in crores)
Loans Sundry creditors
Employees 207.81
Stores issued 14.14 Capital works 259.68
Subsidiary company 2.38 Others 1991.53 2251.21
(Refer Note No.5.2.1 of schedule 3)
Others 115.87 Advances from
Customers 273.01
340.20 Others 33.57 306.58
Less : Provision 2.11 338.09
Advances recoverable in cash or in Security deposits 199.64
kind or for value to be received Less : Investments received as
Claims recoverable 326.37 security deposit 0.26 199.38
Contractors & suppliers 86.65
Employees 4.30 Interest accrued but not due on Loans 1082.53
Advance Income Tax and 84.92
Tax deducted at source* Dividend warrants - unencashed 0.42
Bills Receivable 0.10 Other liabilities 1520.85
For purchase of shares** 4.00
Export Incentives Receivable 58.74 5360.97
Others 216.05 781.13
Deposits
Port Trust, Excise 90.92
Department, Railways, etc. 1.14 : PROVISIONS
Others 120.33 211.25
1330.47 As at
31st March, 2002
Less : Provision for doubtful
Loans & Advances 107.18 (Rupees in crores)
1223.29
Gratuity 1258.17
* (Including Rs. 82.65 crores paid
Accrued Leave Liability 591.13
against disputed demands.
** For Metalijunction.com Pvt. Ltd. Taxation 0.04
a joint venture Company Pollution control & peripheral
development
Particulars of Loans & Advances Opening Balance 30.08
– Others
Secured, considered good 203.88 Add : Provision during the year 14.48
Unsecured, considered good 1019.41 Less : Amount utilised during the year 1.40 43.16
(Including loans & advances backed Exchange Fluctuation
by bank guarantees Rs. 0.77 crores)
Opening Balance 22.93
Unsecured, considered doubtful 107.18
Add : Provision during the year 11.10
1330.47 Less : Amount paid during the year 18.10 15.93
Amount due from
— Directors 0.02 Voluntary Retirement Compensation 248.78
— Officers — Employee Family Benefit Scheme 87.90
Maximum amount due at any time
Wage Revision 9.03
during the year from
— Directors 0.04 Others 71.30
— Officers 0.02 2325.44

90
1.15 : MISCELLANEOUS EXPENDITURE
(To the extent not written off or adjusted)

Balance Additions Total Amount Balance

as at during Charged as at
31st the Off 31st
March year during the March
2001 year 2002

(Rupees in crores)

(i) Development Expenditure

(a) On Mines 29.94 18.41 48.35 16.71 31.64

(b) On New Projects 0.38 0.20 0.58 0.14 0.44

Total (i) 30.32 18.16 48.93 16.85 32.08

(ii) Deferred Revenue Expenditure

(a) Voluntary Retirement 299.88 329.02 628.90 171.89 457.01

Compensation

(b) Employee Family Benefit Scheme — 101.53 101.53 20.31 81.22

(c) Others 44.86 4.77 49.63 28.30 21.33

Total (ii) 344.74 435.32 780.06 220.50 559.56

Total (i+ii) 375.06 453.93 828.99 237.35 591.64

Current
Year
Charged Off to:

Raw Materials 13.16

Other Expenses & Provisions 223.60

Prior Period Adjustments/EDC 0.59

237.35

Current
Year
1.16 : MINORITY INTEREST
Balance of Equity as on the date of Investment -0.43
Add : Movement in Equity and proportionate share of losses from the date of investment 0.19
upto to 31.03.2002 -0.24

91
Schedules (FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT

2.1 : SALES 2.4 : PROVISIONS NO LONGER REQUIRED

WRITTEN BACK
Year ended
31st March, 2002 Year ended
31st March, 2002
(Rupees in crores)
(Rupees in crores)
Direct 9243.04
Loans & advances 20.78
From Stockyards 6460.21
Sundry debtors 13.50
Exports 554.33
Stores & spares 9.39
Export Incentives 53.32
Others 59.41
Others 12.37
103.08
16323.27

2.5 : DEPLETION TO STOCK OF SEMI/FINISHED

2.2 : INTEREST EARNED PRODUCTS
Year ended Year ended
31st March, 2002 31st March, 2002
(Rupees in crores) (Rupees in crores)
Loans & Advances 8.39 Opening stock 3079.47
Customers 37.81 Less : Closing stock 2628.72
Employees 16.74 450.75
Term Deposits 35.29
Others 7.26
105.49 2.6 : RAW MATERIALS CONSUMED
Year ended
31st March, 2002
2.3 : OTHER REVENUES
Quantity Value
Year ended Tonnes Rs./crores
31st March, 2002
Iron Ore 19820153 911.12
(Rupees in crores) Coal 12813926 3774.57
Social amenities-recoveries 102.10 Coke 127077 72.09
Sale of empties etc. 30.17 Limestone 3306876 338.91
Liquidated damages 9.01 Dolomite 2454931 130.33
Service charges * 3.23 Naphtha 18730 25.53
Grant-in-aid 0.03 Ferro Manganese 57784 129.90
Subsidy 9.45 Ferro Silicon 17359 56.21
Hire charges etc. 0.88 Silico Magenese 71384 157.96
Claims for finished products 4.62 Hot Rolled Stainless Steel Coils 15856 58.16
(Shortages & missing wagons) Intermediary Products 3082 85.95
Dividend (Gross) from investments 5.80 Zinc 10977 68.85
Profit on sale of fixed assets (net) 0.25 Aluminium 13544 111.63
Profit on sale of power plants 490.58 Others 220.66
Profit on sale of houses 171.64 6141.87
Sundries * 110.68
Note : Consumption of raw materials includes shortages Rs. 6.07
938.44 crores to the extent not covered by normal handling losses and
* (Tax deducted at source Rs.0.10 crores) excess to the extent of Rs.16.82 crores.

92
92

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2.7 : EMPLOYEES’ REMUNERATION & BENEFITS 2.9 : REPAIRS & MAINTENANCE
Year ended Year ended
31st March, 2002 31st March, 2002
(Rupees in crores) (Rupees in crores)

Salaries, wages & annual bonus 2846.29 Buildings 25.88

Contribution to provident fund 269.84 Plant & Machinery 96.29
& other funds
Travel concession 9.17 Others 53.50
Welfare expenses 120.94 175.67
Gratuity 362.72
3608.96 Note :
Expenditure on repairs & maintenance
Note : not included above and charged to:
Expenditure on Employees’
Remuneration and Benefits not a) Employees’ Remuneration & Benefits
included above and charged to:
a) Expenditure during Construction 19.04 Buildings 43.69
b) Deferred Revenue Expenditure 171.89 Plant & Machinery 450.34
c) Net expenditure on Social Amenities charged
Others 62.46
to various primary revenue heads 183.55
556.49
374.48

b) Stores & Spares

2.8 : POWER & FUEL Buildings 11.40

Year ended Plant & Machinery 659.07

31st March, 2002 Others 33.63
(Rupees in crores) 704.10

Purchased power 1557.30

c) Expenditure during Construction
Duty on own generation 25.66
Boiler Coal/Middlings 226.22 Plant & Machinery 0.10
Furnace Oil/LSHS/LDO 60.30
Others 0.37
Others 18.21
0.47
1887.69
Total (a+b+c) 1261.06
Note :
Expenditure on Power & Fuel not
included above & charged off to:
— Expenditure during Construction 5.82

92
93

c:\sail\sail02\sail-sc1 p65 01 08 02 (93)

Schedules (FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT)

2.10 : OTHER EXPENSES 2.11 : INTEREST & FINANCE CHARGES

Year ended Year ended
31st March, 2002 31st March, 2002
(Rupees in crores) (Rukpees in crores)

Commission to selling agents 12.44 Public Deposits 167.61

Directors’ Fees 0.03 Foreign Currency Loans 136.42
Non Convertible Bonds 576.73
Export sales expenses 24.33 Bank Borrowings - working capital 462.93
Handling expenses Steel Development Fund Loans 37.48
Others 179.58
— Raw Material 129.68 Finance Charges 40.98
— Finished goods 72.04
— Scrap recovery expenses 68.49 270.21 1601.73
Less : Interest subsidy received from GOI 26.24
Insurance 7.46 1575.49
Postage, telegram & telephone 18.56
Printing & stationery 8.03 Note :
Expenditure on interest not included
Provisions above & charged to:
— Doubtful debts, loans and Expenditure during Construction
advances 77.04 Foreign Currency Loans 1.69
Non Convertible Bonds 24.56
— Investments 0.05 Steel Development Fund Loans 9.48
— Stores, Spares and Sundries 41.13 118.22 Others 3.43
Finance Charges 0.65
Rates & Taxes 23.45 39.81
Remuneration to Auditors
— Audit fees 0.51 2.12 : INTER ACCOUNT ADJUSTMENTS
— Tax Audit fees 0.13 Year ended
— Out of pocket expenses 0.64 31st March, 2002
— In other capacities 0.20 1.48
(Rupees in crores)
Cost Audit Fees 0.01 Raw materials 987.63
Rent 25.17 Departmentally manufactured stores 211.68
Royalty and cess 44.70 Services transferred to capital works 21.30
Coke subsidy to Employees 1.94
Security expenses 84.99 Inter plant transfer of stocks/stores 28.15
Travelling expenses 104.72 Others (Net) 5.74
Write Offs 1256.44
— Miscellaneous & Deferred
Revenue Expenditure 223.60 2.13 : ADJUSTMENTS PERTAINING TO EARLIER
— Doubtful debts, advances etc. 7.95 231.55 YEARS
Year ended
Cash Discount 52.96 31st March, 2002
Training expenses 5.37
Conversion charges 26.21 (Rupees in crores)
Foreign Exchange Fluctuation (net) 45.81 Sales 1.81
Other revenues 0.48
Water charges & Cess on water pollution 23.29 Raw materials consumed -0.47
Contribution to Joint Plant Committee Funds 2.27 Employees’ remuneration & benefits 1.42
Miscellaneous (include Donation Rs. 0.51 lacs) 238.12 Stores & spares consumed -4.73
Power & fuel -6.02
1369.38 Repairs & Maintenance -0.24
Excise duty -1.56
Other Expenses & Provisions 9.27
Interest 3.46
Depreciation 8.23
Net Debit 11.65
* (-) indicate credit items

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SCHEDULE 3 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical
cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally
and the corresponding amount is credited to ‘Capital Reserve’. The
expenditure on development of land including lease-hold land, is
capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement
schemes is capitalised, based on the mean of the balances under
‘Capital work-in-progress’ at the beginning and close of the year
under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are
initially capitalised on the basis of estimated costs and final
adjustments for costs and depreciation, if any, are made retrospectively
on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till
the concerned assets are ready for commercial production.
The contribution/expenditure towards construction/development
of assets on land owned by the Government/Semi-Government
authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction
from the gross value of the assets concerned in arriving at their book
value. Grants-in-aid related to revenue items are netted against the
related expenses.
Machinery spares which can be used only in connection with an
item of fixed assets and whose use as per technical assessment is
expected to be irregular, are capitalised and depreciated over the
residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are
exhibited under fixed assets at their book value till the acceptance of
disposal proposals thereagainst, and due provisions are made to
take care of the shortfall, if any, in their respective realisable value.
However, fixed assets that have been retired from active use and
whose disposal proposals have been accepted, are de-capitalised and
included under “Inventories” at lower of book value and estimated
realisable value.
1.3 BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying
assets are capitalised until the time all substantial activities necessary
to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use.
All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified
in Schedule-XIV to the Companies Act, 1956. However, where the
historical cost of a depreciable asset undergoes a change, the
depreciation on the revised unamortised depreciable amount is
provided prospectively over the residual useful life of the asset
based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is
provided with respect to the month of addition/disposal thereof.
Cost of acquiring mining rights is amortised over the lease period.
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1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one
year are classified as long term investments, while other investments
are classified as current investments.
Current quoted investments are valued at lower of cost or market
value on individual investment basis.
Investments in long-term and unquoted investments are valued at
cost. However, provision for diminution in the value of such
investments is made to recognise a decline, other than temporary,
on individual investment basis.
1.6 INVENTORIES
Semi/Finished products, are valued at lower of cost and net realisable
value of the respective plants.
Raw-materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued
at 75% and 90% respectively of the previous year’s realisable value
of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and
middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the
finished stage only, the realisable value of process materials is arrived
at by applying the ratio of finished product’s realisable value and
its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and
spares declared obsolete/surplus and also those which have not moved
for five years or more, provision is made at 75% and 10% respectively
of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/
finished products is valued at lower of cost or realisable value of the
transferor plant. Materials out of inter-plant transfers, lying in stock
after further processing, are valued at transfer price plus processing
cost of the transferee plant or realisable value, whichever is lower.
Such inter-plant transferred materials used for capitalisation have,
however, been considered at cost (ii) Stores and spares are valued at
cost of the transferor plant (iii) Raw materials at plants are valued at
lower of cost and net realisable value. Cost is determined based on the
average of purchase cost and transfer price.
Cost is arrived on weighted average basis exept for raw materials (other than
coke) at MEL, which is arrived on 'First In First Out' basis.
1.7 DEVELOPMENT/DEFERRED REVENUE
EXPENDITURE
Expenditure incurred on development of new projects, removal of
over-burden at mines, cost of feasibility studies for new projects
and payments for technical know-how/documentation is treated as
development expenditure.
Expenditure incurred on removal of over-burden in mines is written
off in five years except for IISCO wherein expenditure incurred
during the year for regular mining operation is charged to Profit
and Loss account. Expenditure on feasibility studies, technical
know-how/documentation and other development expenditure is
added to the capital cost of the project, if implemented. In case the
project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial
valuation, is treated as deferred revenue expenditure and written-off
in five years. Further, annual increase/decrease to the above liability
actuarially ascertained, is taken to Profit & Loss Account, after
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adjustment of payments thereof during the year. Incremental
payments against Voluntary Retirement Schemes due to wage revision
is charged corresponding to the period for which deferred revenue
expenditure relating to such Voluntary Retirement Scheme is
amortised, with the first charge being made for the entire lapsed
period in the year in which such wage agreement is finalised. In
case of Voluntary Retirement Schemes which envisage monthly
payments, the payments are charged off as per contractual terms,
while the future liability to the disabled employee/legal heirs of
deceased employees under the Family Benefit Schemes is treated as
deferred revenue expenditure and written-off over a period of 5 years.
Other deferred revenue expenditure including expenditure on
consultancy/ technological assistance for strategic cost reduction and
quality improvements is written-off in five years.
1.8 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by
forward contracts) as on the Balance Sheet date are converted at the
year end exchange rates and loss or gain arising thereon, is adjusted
in the carrying amount of fixed assets or charged to Profit & Loss
Account, as the case may be.
Transactions in foreign currencies other than those covered by forward
contracts are recorded at the rates prevailing on the date of
transactions.
In case of foreign currency transactions covered by forward contracts,
the difference between contract rate and exchange rate prevailing on
the date of transactions, is adjusted to the cost of fixed assets or
charged to the Profit & Loss Account, as the case may be,
proportionately over the contract period.
1.9 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and
Loss Account in the year of incurrence. However, expenditure on
fixed assets relating to research and development, is treated in the
same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/
ESCALATION
Claims for liquidated damages are accounted for as and when these
are deducted and/or considered recoverable by the Company.
These are treated as income on completion of the projects/final
settlement.
Suppliers’/Contractors’ claims for price escalation are accounted
for, to the extent such claims are accepted by the Company.
1.11 RETIREMENT BENEFITS
The provisions for gratuity and leave encashment liabilities are
made on the basis of year end actuarial valuation.
1.12 ADJUSTMENTS PERTAINING TO EARLIER
YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses
which do not exceed Rs.5 lakhs in each case are treated as income/
expenditure of current year.
1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to
carriers including the cases where delivery documents are in the
company’s name, pending collection of payments, since the
significant risks and rewards in such cases are passed on to the
buyers on despatch of materials. Export sales are treated as sales on
issue of Bills of lading.
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1.14 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned
under Duty Entitlement Pass Book Scheme and duty drawback, are treated
as income in the year of export, at estimated realisable value/actual credit
earned on exports made during the year.
1.15 LEASES
(a) Where the group is lessor
Assets given under finance lease are recognised as receivable at
an amount equal to the net investment in the lease. Lease rentals
are apportioned between principal and interest on the basis of
internal rate of return. The principal amount received is reduced
from the net investment in the lease while interest recovery is
recognised as revenue. In those cases where the entire lease
premium/consideration is received up front, the difference
between consideration money and net book value of the assets is
recognised as income in the Profit & Loss Account.
Assets subject to operating lease are included in fixed assets and
the lease income is recognised in the Profit & Loss Account on
a straight line basis over the lease term. Expenses including
depreciation in relation thereto, are recognised as an expense in
the Profit & Loss Account.
(b)Where the group is lessee
Finance leases which effectively transfer to the Company
substantially all the risks and rewards incidental to the ownership
of the leased items, are capitalised at the lower of the face value
and present value of the minimum lease payments at the inception
of the lease term. Leased payments are apportioned between the
finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining liability.
Capitalised leased assets are depreciated over the lease term or
estimated useful life of the relevant assets, whichever is shorter.
All leases except for those specified above, are classified as operating
leases. Lease payments, in such cases, are recognised as an expense in
the Profit & Loss Account on a straight line basis over the lease term.
1.16 TAXATION
Provision for income tax comprises of current tax and deferred tax
charged or realised. Deferred tax is recognised, subject to
consideration of prudence on timing differences, being the differences
between taxable and accounting income/expenditure that originate
in one period and are capable of reversal in one or more subsequent
period(s). Deferred tax assets are not recognised unless there is
virtual certainty that sufficient future taxable income will be available,
against which such deferred tax assets will be realised.
1.17 SEGMENT REPORTING
(a) Identification of Segments
The group has identified that its operating segments are primary
segments. The group’s operating business are organised and
managed separately for all the manufacturing units, with each
business unit representing a strategic segment. Accordingly,
each manufacturing unit has been identified as an operating
segment for reporting purposes.
The analysis of geographical segments is based on the areas in
which the customers of the Group are located.
(b) Allocation of Common costs
Common expenses are allocated to each segment on appropriate
basis. Revenue and expenses not allocated to segments, have
been included under the head “unallocated – common expenses”.
The Accounting Policies adopted for segment reporting are in
line with those of the group.
NOTES ON ACCOUNTSs in MEL as on 31st March, 2001, has been adjusted against the
accumulated loss of the group as on 31st March, 2001. Similarly,
2.1 CONTINGENT LIABILITIES provision of Rs.23.79 crores made in SAIL accounts for the
diminution in the value of investments in MEL, has been credited
As at 31st
to the accumulated loss of the Group as on 31st March, 2001.
March, 2002
3.5 Goodwill (as stated in para 3.4 above) in relation to the shares in
(Rs. in crores) IISCO and MEL has been calculated on step-by-step basis, based
i) Claims against the group pending on the acquisition made during each year, subsequent to the
appellate/judicial decisions 1495.04 formation of Steel Authority of India Ltd., presuming such
ii) Other claims against the group not acquisitions to be on the last date of the respective years, irrespective
acknowledged as debt 680.93 of the actual date of such acquisition.
iii) Bills drawn on customers and 3.6 In terms of the guidelines issued by the Institute of Chartered
discounted with banks 30.76 Accountants of India in relation to Accounting Standard-21, previous
iv) Guarantee given to banks 28.85 year’s figures have not been furnished in the consolidated accounts.
v) Claims by certain employees and escalation claims,
extent whereof is not ascertainable —
4. FIXED ASSETS
4.1 Land includes:
2.2 Sales Tax authorities have raised demands for Rs.1041.86 crores on i) 61473.20 acres owned/ leased/ possessed by the Company, in
account of sales tax on stock transfers made by the plants over the respect of which title/lease deeds are pending for registration.
years to stockyards situated in different States, under various marketing
ii) 4442.30 acres gifted by State Governments, which are pending
schemes. The demands of Sales Tax authorities at plants have been
for registration and included in (i) above.
contested by the Company which are pending at various stages of
appeal. As sales tax liability has been discharged by the respective iii) 4991.43 acres given on lease to various agencies/ employees/
stockyards on sale of such stocks by depositing sales tax with the ex-employees.
respective Sales Tax authorities in different States, no liability is expected iv) 14459.72 acres transferred/agreed to be transferred or made
to arise, as sales tax is leviable only once. available for settlement to various Central/State/Semi-
Government authorities, in respect of which conveyance deeds
3. PRINCIPLES OF CONSOLIDATION OF remain to be executed/registered. Out of the above, 10626.73
FINANCIAL STATEMENTS : acres have already been adjusted in the accounts.
The consolidated financial statements which relate to Steel Authority
v) 13117.70 acres in respect of which title is unascertained.
of India Ltd. (SAIL) and its various subsidiary companies have
been prepared on the following basis - 4.2 Foreign exchange variations aggregating to Rs. 56.95 crores (net
debit) have been included in the carrying amount of fixed assets
3.1 The subsidiary companies considered in the financial statements during the year.
are as follows :
4.3 Estimated amount of contracts remaining to be executed on capital
Name Country of % of Voting account and not provided for (net of advances) – Rs.288.51 crores.
Incorporation power as on
31st March,
5. INVESTMENTS, CURRENT ASSETS, LOANS &
2002 ADVANCES AND CURRENT LIABILITIES &
PROVISIONS
Indian Iron & Steel Co. Ltd. (IISCO)India 100.00
Maharashtra Elektrosmelt Ltd. (MEL)India 99.12 5.1 The Indian Iron & Steel Co. Ltd. (IISCO), was declared a Sick
Industrial Company by the Board for Industrial and Financial
3.2 The financial statements of the Company and its subsidiaries are Reconstruction (BIFR) on 17th August, 1994. The Industrial
combined on a line-by-line basis by adding together the book Development Bank of India has been appointed as operating agency
values of like items of assets, liabilities, income and expenditure, and the proposal for revival of IISCO is pending with BIFR. The
after fully eliminating intra group balances, intra group transactions accounts of IISCO have been drawn up based on the assumption
and any unrealised profit/loss included therein. However, materials that it is a going concern.
lying in stock against inter-group company transfers and profit 5.2.1 IISCO-Ujjain Pipe & Foundry Co. Ltd.(IISCO-Ujjain), a wholly
margins included therein; the quantum whereof is insignificant, owned subsidiary company of IISCO, is under liquidation and an
have been accounted for based on the management certificates. official liquidator has been appointed on 10th July 1997 by the
3.3 The consolidated financial statements have been prepared using Hon’ble High Court of Kolkata, who has taken over the possession
uniform accounting policies for like transactions and are presented of the assets. As IISCO-Ujjain is held exclusively with a view to its
to the extent possible in the same manner as the Company’s separate disposal in the near future, consolidation of the accounts of IISCO-
financial statements. However, raw materials (other than coke) Ujjain is not called for with the group in terms of AS-21.
inventory of Rs.1.13 crores at MEL has been valued on the ‘First In 5.2.2 Bhilai Oxygen Ltd, a wholly owned subsidiary of the Company is
First Out’ method as against the general policy of the group to value held exclusively with a view to its disposal in the near future and
such raw material on the weighted average cost basis. The resultant therefore, the consolidation of its accounts is not called for with the
impact of such deviation is not material. group in terms of AS-21.
3.4 Goodwill amounting to Rs.651.42 crores, being the excess of cost 5.2.3 Sundry debtors and Loans & Advances include Rs 18.70 crores
of investment to SAIL over the proportionate net worth of the (including Government of India loan and interest thereon amounting
subsidiary companies, and Rs.0.38 crore being minority interest to Rs. 0.62 crores) due from IISCO Ujjain Pipe & Foundry Co.

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Ltd. The land and buildings of IISCO Ujjain Pipe & Foundry
Co. Ltd. as on 31st March, 2000, were re-valued by an independent
agency and the re-valued amount of the above assets, along with the
value of other assets like plant & machinery, etc. is quite adequate to
cover the above loans and advances made by the company which
are, therefore, considered to be recoverable. However, provision for
diminution in the value of the investment in equity shares of
Rs. 3.00 crores and for other dues amounting to Rs. 2.11 crores
have been made in the accounts.
5.3 At Durgapur Steel Plant, recoverable advances/dues of Rs 138.37 crores
from Hindustan Steel Works Construction Limited (HSCL) include (i)
Rs 133.40 crores paid over the years in excess of contractual obligations
included in Capital Work-in-Progress (ii) Rs. 2.54 crores paid against
future jobs to be awarded (iii) Estate dues of Rs. 2.43 crores. HSCL has
disputed the above advances and has made further claims against the
Company and the Company, in turn, has also made counter claims.
These matters have been referred to a conciliator. Pending conciliation and
HSCL being a Government of India Undertaking, the advances and other
dues have been considered recoverable. Adjustment/provision, if any,
required with regard to such advances/dues shall be carried out on finalisation
of conciliation proceedings/settlement of claims/counter claims.
Further, an amount of Rs. 42.75 crores (net) is due from HSCL at
Bokaro Steel Plant and Bhilai Steel Plant towards advances against
future jobs to be executed, estate dues etc. These are considered as
recoverable, since the Company has continuous dealings with HSCL
and expects to recover these advances in due course.
5.4 At Bhilai Steel Plant, advances of Rs. 9.84 crores due from Bharat
Refractory Ltd., under BIFR, are considered as recoverable, since
the Company has continuous dealings with these companies and
expects to recover these advances in due course.
5.5 Claims recoverable (Schedule-1.12) include Rs.44.76 crores due
from M/s TPE, Russia towards claims for short weight of equipments
(less than contractual estimates) and equipments getting shipped
through shorter route resulting in freight refunds to Bhilai Steel
Plant during the years 1976 to 1984. The above claims have
already been accepted by the party in Nov.’97 and recovery thereof
is being followed up through Inter-Governmental meetings/protocol.
5.6 The Capital Work-in-Progress (Schedule 1.6) includes Rs.16.31
crores towards expenditure incurred on Hot Dip Galvanising Line
project in Assam. The company has initialled an MOU for entering
into a joint venture with M/s N E Steel Private Limited to undertake
the above project. Based on the terms & conditions for such joint
venture, a sum of Rs.15.90 crores is recoverable from the Joint
Venture company, and the balance amount of Rs.0.41 crores has
been provided for.
5.7 Unlike previous years, the future liability for benefits payable to the disabled
employees / legal heirs of deceased employees under the Employee Family
Benefit Scheme have been provided and treated as deferred revenue
expenditure as referred to in Accounting Policy 1.7 above, resulting into an
increase in loss for the year by Rs. 20.31 crores.
5.8 Sundry creditors, other liabilities, sundry debtors, claims
recoverable, deposits and advances to parties include some old
unlinked balances pending reconciliation/ confirmation/adjustments.
Adequate provisions wherever considered necessary have been made
for such old balances. Further adjustments as necessary, will be
accounted for in the year of reconciliation/settlement/realisation of
the respective balances.
5.9 The group has substantial carried forward losses and unabsorbed
depreciation under the Income Tax Act, 1961 and accordingly
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deferred tax asset of about Rs.2513.06 crores has arisen as on
31.3.2002 (including Rs.719.95 crores for the current period) as
per Accounting Standard-22 on ‘Accounting for taxes on income’.
However, in consideration of prudence, the above deferred tax asset
has not been recognised in the financial statements and the same
would be considered at appropriate time keeping in view the
availability of sufficient taxable income against which such deferred
tax asset can be realised.
5.10 On behalf of employees of the Company, an amount of Rs. 1 crore was paid
during the year to Orissa Chief Minister Relief Fund to provide relief to the
affected families caused by the devastating flood in Orissa during July
2001 in anticipation of recoveries from the employees for this cause. Rs.
44.62 lakhs were recovered from the employees during the year and efforts
are on for the recovery of the balance amount.
6. PROFIT & LOSS ACCOUNT
6.1 The Company has transferred and assigned for Rs. 670.50 crores,
its Captive Power Plants at Bokaro and Bhilai on 18th September,
2001 and 19th March, 2002 to the then subsidiary companies,
Bokaro Power Supply Company Limited and Bhilai Electric Supply
Co. Ltd. respectively, which later converted into joint venture
companies with Damodar Valley Corporation and National Thermal
Power Corporation Limited respectively for generation and sale of
power to the company. The profit of Rs 490.58 crores on such
transfer has been included under ‘Other Revenues’ as Profit on sale
of Power Plants’.
6.2.1 The long term agreements for employees’ salaries & wages of SAIL
& MEL had expired on 31.12.1996. The Companies have
implemented the revised salaries & wages payment w.e.f. 1.1.2001
with fitment on the basis of notional increment over the period
from 1.1.1997 to 31.12.2000 and appropriate adjustments thereof
have been carried out in the accounts. However, the issue of wage
revision (including other benefits) for the period from 1.1.1997 to
31.12.2000 is to be discussed separately with the employees.
Liability if any, in this regard is unascertainable. Further, following
the past practice, adhoc adjustable advances/Interim Relief of
Rs.422.90 crores for the above period (including Rs.128.34 crores
during the year) have been charged to “Employees’ Remuneration
and Benefits” in the respective years.
6.2.2 In respect of Colliery employees and other units of IISCO, the long
term agreements for employees’ pay revision have expired on 30th
June, 1996 and on 31st December, 1996 respectively. No provision
has been made for pay revision and arrears, if any, in view of
Government directives applicable to companies under BIFR.
Liability, if any, in this regard is unascertainable. However, interim
relief @12% is being paid and the paid amount of Rs. 39.62 crores
(including Rs.18.95 crores during the year) has been provided for,
pending final decision, for the period from 01.07.1996 for collieries
and from 01.01.1997 to 31.03.1998 and thereafter from
01.01.2001 for other units.
6.3 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.
6.4 Amount of foreign exchange differences in respect of forward
exchange contracts to be recognised in the Profit and Loss Account
for subsequent periods is Rs. 15.43 crores (net debit).
6.5 The benefits relating to Leave Travel Concession (LTC)/Liberalised Leave
Travel Concession (LLTC) for the block calendar years of 1998-99, 2000-01
and 2002-03 have been withdrawn and accordingly, there exists no liability
towards LTC/LLTC for the above periods.
6.6 The Central Board of Direct Taxes vide its Notification dated 25th Key Management Personnel : Shri Arvind Pande
September 2001 has revised the rules for computation of certain Shri V.S.Jain
perquisites. The Employees’ Union/Association have filed writ
Shri S.C.K.Patne
petitions with the Hon’ble High Court at Kolkata challenging the
above Notification. The Hon’ble High Court, Vide it’s Order Shri B.K.Singh
dated 25.1.2002, has directed that the Income Tax calculated on Dr. S.K.Bhattacharyya
the perquisites shall be deducted and kept separately and not deposited Shri A.K.Singh
with the Income Tax Department and vide order dt. 30.1.2002 has Shri Suresh Pandey
granted an interim stay restraining the Company from deduction of
tax on perquisite on accommodation provided to the employees by Shri Barun Ghoshal
the Company. Accordingly, no tax has been deducted on house Dr. Sanak Mishra
perquisite and tax on other perquisites has been deducted and kept Shri R.P.Singh
in separate account for all employees. Necessary accounting Shri Sudhakar Jha
adjustments in the above matter would be carried out on the disposal
of appeals filed by the Employees’ Union/Association. Shri D.A.Pikle
6.7 The Company has granted long term lease, in respect of certain Shri S.Panigrahi
residential premises at its various units to the employees, ex- Shri S.N.P.Singh
employees etc. and profit of Rs. 171.64 crores arising on leasing of Shri M.N.Thakur
such assets has been included under ‘Other Revenues’ as Profit on Shri M.Roy
sale/lease of houses’.
Shri A.K. Jaiswal
6.8 In order to comply with Accounting Standard-2, unlike previous
years, the stocks of iron ore, limestone, dolomite, etc. raised at the Shri R.K. Gupta
Company’s Mines for captive consumption, have been valued at
lower of cost or net realisable value, resulting into an increase in loss The details of transactions between the company and the related
for the year by Rs. 5.87 crores. parties, as defined in the Accounting Standard, are given below :
6.9 The amount of public deposits accepted by the Company, as per the
Sl. Nature of transactions Amount Ref. Schedule & Account
computerised list, containing depositor-wise details is higher by
No. Rs./crores head of the Accounts
Rs.2.14 crores as compared to the overall balance as per financial
records of the Company. The above difference has been adjusted in Joint Key Mgt.
the books through credit to deposits and charged as prior period Venture Personnel
expense. Adjustments, if any, in this regard would be carried out
after further verification/reconciliation. i) Advances for purchase 4.00 1.13 : Loans & Advances
of Shares Others
6.10 The classification of plant and machinery into continuous and non-
continuous has been made on the basis of technical opinion and ii) Other Advances 0.10 0.08 1.13 : Loans & Advances
depreciation thereon is provided accordingly. Others
6.11 Interest aggregating to Rs.46.42 crores (including Rs.3.57 crores for the year) iii) Investments 2.68 1.7 : Investments
on SDF loans to IISCO has been deemed to have been waived.
iv) Payments made
7. GENERAL against services rendered
during previous year. 0.05
7.1. Segment Reporting
i) Business Segment: The four integrated steel plants and three v) Managerial Remuneration 1.32 2.7 : Employees' Remuneration
and Benefits
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. 7.3 Earning Per Share (EPS)
ii) Geographical segments have been considered for Secondary Segment
Reporting. The whole of India has been considered as a geographical In terms of Accounting Standard-20 issued by the Institute of
segment and exports as other segments. The disclosures of segment- Chartered Accountants of India, the calculation of EPS is given
wise information is given at Annexure-I. below :
7.2 Related party 2001-02
As per Accounting Standard - 18 - ‘Related party disclosures’
issued by the Institute of Chartered Accountants of India, the name Loss (-) as per Profit & Loss Account (-) 1895.15
of the related parties of the group are given below: (Rs. in crores)
Name of the related parties
Joint Venture Weighted average number of equity shares
SAIL, Bansal Service Centre Limited outstanding during the year 4,13,04,00,000
Metaljunction.Com Pvt. Limited
UEC SAIL Information Technology Limited Basic and diluted EPS. (Rs.) (-) 4.59

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AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF STEEL AUTHORITY OF INDIA LIMITED
ON THE CONSOLIDATED FINANCIAL STATEMENTS OF
STEEL AUTHORITY OF INDIA LIMITED AND ITS SUBSIDIARIES
We have examined the attached Consolidated Balance Sheet of Steel Authority of India Limited (SAIL) and its subsidiaries as at 31st March
2002 and the Consolidated Profit and Loss Account for the year then ended.
These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance with the generally accepted auditing standards in India. These
standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all
material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes,
examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe
that our audit provides a reasonable basis for our opinion.
We did not audit the financial statements of the Company’s subsidiaries, whose financial statements reflect total assets of Rs.699.65 crores
as at 31st March 2002 and total revenues of Rs.1118.42 crores for the year then ended. These financial statements have been audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included in respect of the subsidiaries,
is based solely on the report of the other auditors.
We report that, subject to our observation vide paragraph (i) below, the consolidated financial statements have been prepared by the Company
in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of
Chartered Accountants of India and on the basis of the separate financial statements of Steel Authority of India Limited and its subsidiaries
included in the consolidated financial statements.
On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited
financial statements of Steel Authority of India Limited and its aforesaid subsidiaries, we report that:
i) The Accounts of IISCO Ujjain Pipe & Foundry Co. Ltd, a subsidiary of Indian Iron and Steel Company Ltd. (the Company’s subsidiary) and
Bhilai Oxygen Ltd. have not been consolidated in these accounts for the reasons mentioned vide note nos. 5.2.1 and 5.2.2 in Schedule 3.
ii) Attention is drawn to the following notes in Schedule 3 whose impact on the Group’s Loss for the year as well as accumulated loss as on
the Balance Sheet date is indicated in the respective notes below:
a. Advances, claims etc. to the extent of Rs. 252.31 crores as indicated in Note Nos. 5.2.3 to 5.5 in Schedule 3 are considered fully recoverable
by the management. However, since all the above items are outstanding since long, we are unable to offer our comments on the recoverability
thereof.
b. Liability of Rs. 101.53 crores for future benefits payable under Family benefit Scheme as referred to in Note no. 5.7 in Schedule 3 has been
deferred over a period of 5 years instead of charging it off fully in the current year. Because of the above, the loss for the year is understated by
Rs. 81.22 crores.
c. Loans and advances include Rs. 0.55 crore being the balance amount of Rs. 1 crore given to the Orissa Chief Minister’s Relief Fund as stated
in Note No. 5.10 of Schedule 3. The Management has stated that efforts are being made to recover the above amount from the employees and,
any shortfall in this regard will be treated as ‘donation’, in due course.
d. Pending finalisation and ascertainment of the arrear salaries and wages of employees for the period from 1.1.1997 to 31.12.2000, as referred
to in Note Nos. 6.2.1 and 6.2.2 in Schedule-3, we are unable to comment on the adequacy of the provision of Rs.462.52 crores (including
Rs.147.29 crores provided during the year).
e. The group has withdrawn the benefits relating to Leave Travel Concession (LTC) / Liberalised Leave Travel Concession (LLTC) for various
block periods from 1998-99 to 2002-03 as indicated in note No. 6.5 in Schedule 3. Because of the above withdrawal, no liability towards
LTC/LLTC has been provided in the accounts. However, in view of specific agreements with the unions and terms of employment for extension
of above benefits to the employees, we are unable to comment whether, such liabilities have accrued or not. (amount unascertained)
f. The amount of public deposits as per the detailed computerized list was higher by Rs. 2.14 crore as compared to the financial records of SAIL
as on the Balance Sheet date as indicated in Note No. 6.9 in Schedule 3. The deposits have been increased by this amount and debited to Profit
& Loss Account as a ‘Prior Period Expense’. Internal control procedures in this regard are required to be strengthened. The above account
having not yet been reconciled/ verified and in the absence of adequate details / supportings justifying the above adjustment, we are unable to
offer comments in this matter.
g. IISCO, a subsidiary Company, has become sick and referred to BIFR as indicated in Note no. 5.1 in schedule 3. However, IISCO continues
to prepare its accounts on historical cost basis as a Going concern.
h. Goodwill of Rs. 651.42 crores arisen on consolidation has been debited to accumulated loss as on 31st March 2001, instead of charging it
to the current year’s Profit & Loss Account, as indicated in Note no. 3.4 in Schedule 3.

100
100

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Without considering item Nos. (a), and (c) to (g) above, whose effect on the Group’s loss / Profit and Loss Account debit balance, is not presently
ascertainable, had the impact of items (b) & (h) above been considered, the loss for the year would have been Rs.2627.79 crores as against the reported
loss of Rs.1895.15 crores and Profit and Loss Account debit balance would have been Rs.3350.47 crores, as against the reported figures of Rs. 3269.25
crores.
Subject to the above and read together with other ‘Notes’ appearing in Schedule 3, on the basis of the information and explanations given
to us, and on the consideration of separate audit reports on individual audited financial statements of Steel Authority of India Limited and
its subsidiaries, we are of the opinion that,
a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of Steel Authority of India Limited and
its subsidiaries as at 31st March 2002; and
b) the Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations of Steel Authority of
India Limited and its subsidiaries for the year then ended.

S.R. Batliboi & Co. S.N.Nanda & Co.

Chartered Accountants Chartered Accountants

Sd/- Sd/-
[R.K.Agrawal] [S.N.Nanda]
Partner Partner

Chaturvedi & Co
Chartered Accountants

Sd/-
[S.C. Chaturvedi]
Partner

Place : New Delhi

Dated : 25th June, 2002

100
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Principal Executives AS ON 23.8.2002

CORPORATE OFFICE STEEL PLANTS ORGANISATIONS

NEW DELHI Durgapur Steel Plant Research & Development Centre
Managing Director for Iron & Steel
Chairman Dr. S.K. Bhattacharyya Director
Arvind Pande Executive Directors R.C. Jha
Directors Works Executive Director
Finance Y. Prasad Sudhakar Jha
V.S. Jain Projects
S.K. Sinha Raw Materials Division
Projects Executive Director I/c
Finance & Accounts
S.C.K. Patne S. Panigrahi
D. Mitra
Commercial Executive Director
A.K. Singh Bokaro Steel Plant U. Mishra
Managing Director
Chief Vigilance Officer S. Pandey Centre for Engg. & Technology
S.K. Panda Executive Directors Executive Director
Works D.A. Pikle
Executive Directors
H.M.P. Singh Growth Division, Kolkata
SAILCON
Materials Management Executive Director
T.Tiwari
R.P. Chourasia M. Roy
Rajinder Nath
Projects
Internal Audit K.P. Choudhary Central Marketing Organisation
B.K. Verma Medical Executive Director
Corporate Planning Dr. C.R. Das Commercial
Ashis Das Personnel & Administration P. Ganesan
Projects U.N. Jha
K.K. Khanna Transport & Shipping
Bhilai Steel Plant B. Basu
Chairman’s Sectt. Managing Director
R.B. Majumdar B.K. Singh Personnel & Administration
Operations Executive Directors A.K. Mukerji
U.P. Singh Works Marketing - Long Product
Coal Import Group B.M.K. Bajpai Dr. S. Dubey
A.P. Singh Projects Marketing - Flat Product
Finance & Accounts R.P. Singh S.K. Roongta
R.K. Gupta Finance & Accounts
Law P.K. Chakraborty SUBSIDIARIES
A.K. Shahi Rourkela Steel Plant
The Indian Iron & Steel Co. Ltd.
Materials Management Managing Director
Executive Director I/c
K. Chandra Dr. Sanak Mishra
A.K. Jayswal
HRD Executive Directors
Personnel & Administration Executive Director
S.C.L. Das
G. Jagannathan Works
Environment Management A.K. Das
Works
Dr. M.N. Thakur
S.C. Das Projects
Chief Expert (Raw Materials-Blast Projects R.K. Pujari
Furnace & Sinter) B.B. Mohanty
B.R. Satpathi Central Growth Works, Kulti
Materials Management
General Manager
Chief of Corporate Affairs S. Padhi
V.C. Dimri
Shoeb Ahmed Alloy Steels Plant
Maharashtra Elektrosmelt Ltd.
Executive Director
Company Secretary Executive Director
N.P. Jayaswal
Devinder Kumar R.K. Gupta
Salem Steel Plant
Executive Director
S.N.P. Singh
Visvesvaraya Iron & Steel Plant
Executive Director
R.P. Singh

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Directors' Report
To
The Members,
The Board of Directors have pleasure in presenting the 85 th Annual
Report of the Company together with the Audited Accounts for the year
ended 31st March, 2002.
FINANCIAL REVIEW
During 2001-2002 the Company achieved a turnover of Rs. 911.94
crores (previous year Rs 941.37 crores). The Net Loss for the year after
charging depreciation (Rs. 23.94 crores) and interest (Rs. 11.63 crores)
was Rs. 179.87 crores compared to the net loss of Rs. 187.31 crores
during 2000-2001. Net Loss for the year could be contained mainly
due to higher Net Sales Realisation, higher volume of Saleable Steel
production/Sales and favourable techno-economic factors, which were,
however, partly reduced by higher input cost.
PRODUCTION REVIEW
Burnpur Works
The production of Hot Metal was 688 thousand tonnes, Pig Iron 288
thousand tonnes, Crude Steel 346 thousand tonnes and Saleable Steel
292 thousand tonnes. Production of Crude Steel and Saleable Steel
surpassed previous year’s production.
On the techno-economic front the plant achieved the lowest ever Specific
Energy Consumption of 9.339 G.Cal/tcs and lowest ever Refractory
Consumption of 21.8 kg/tcs during the year.
Rapid water quenching system was introduced in M&R Mill for
production of TMT Bars in sizes of 16 mm dia to 32 mm dia meeting
quality specifications.
Kulti Works
Spun Pipe production was 15.7 thousand tonnes (previous year 17.6
thousand tonnes). Total Casting output for the year was 17.02 thousand
tonnes (previous year 11.5 thousand tonnes). Sale of Spun Pipe was
16.7 thousand tonnes (previous year 16.1 thousand tonnes)
Collieries
Total Coal raisings from three Captive Collieries was 1154.7 thousand
tonnes. Clean Coal output from Chasnalla Washery was 567.51 thousand
tonnes and despatch of Clean Coal to Burnpur was 501.58 thousand
tonnes.
Ore Mines
Total Iron Ore Lump production was 1307 thousand tonnes.
Lump Ore despatch from two Captive Ore Mines was 1276 thousand
tonnes.
SALES AND MARKETING REVIEW
Domestic Sales
Sale of Saleable Steel was 293.3 thousand tonnes. Sale of Pig Iron was
245.1 thousand tonnes.
Export
12.8 thousand tonnes of Steel Materials and 13.5 thousand tonnes of
Pig Iron was exported.
CAPITAL SCHEMES REVIEW
During the year 2001-2002, the Company incurred cash expenditure
to the tune of Rs. 7.45 crores on various Capital Schemes including
Additions/Modifications/Replacements. Financial constraints continued
to affect the progress of work against ongoing schemes.
Under the Scheme for Revamping and upgradation of Merchant and
Rod (M&R) Mill, Rapid Water Quenching System for production of
thermo-mechanical treated bars of size range 16 to 32 mm was introduced
THE INDIAN IRON & STEEL COMPANY LIMITED
and the Project was commissioned in May, 2001. Performance of this
system was found satisfactory and Performance Guarantee Tests for the
same were successfully completed in October, 2001.
Another part of revamping and upgradation scheme for Merchant &
Rod Mill comprising Installation of slit rolling facility for production of
10 & 12mm dia thermomechanical treated bars was approved in May,
2001 at a cost of Rs. 346.76 lakhs. Major orders covering Design &
Engg., supply of major equipment and supervision of manufacture/
installation/commissioning of the Project has already been awarded to
MECON in June, 2001. It is likely to be commissioned by middle of
August, 2002. Tendering activities for the last phase of revamping and
upgradation of Merchant & Rod Mill comprising upgradation of Mill
Control System has also been taken up. In addition, few more schemes,
e.g. augmentation of 11 KV distribution net work for Steel Section etc. are
also being implemented.
Guarantee tests for 6t capacity medium frequency induction furnace
installed at SPP-2 of Kulti Works have been completed and the Furnace
was taken over for regular use from February, 2002. Also Thyristor
Control System for the electric arc furnace of steel foundry at Kulti Works
has been installed and successfully commissioned.
ENVIRONMENT MANAGEMENT
Environment Management and pollution control has been given priority
in all the activities of the company. Ambient air, stack emission and work
environment quality are within specified limits of statutory authority.
Industrial water consumption was limited per tonne of crude steel to
7.66 Cu.M/tcs in 2001-2002.
Environment awareness campaign through observance of the world
Environment Day, SAIL Environment month and Workshop/Training
on Environment Management were organised for different section of
Employees at Burnpur, and Eco-club members and students of affiliated
schools. Pollution Control Laboratory, Burnpur have received recognition
from Central Pollution Control Board, New Delhi. About 1200 saplings
of different plants were planted in township and works area. Dust extraction
system at A & B Boilers, Dolomite Plant & T.H.F. have been working
effectively. Consent for air emission, effluent discharge and hazardous
waste handling/disposal have been received from State Pollution Control
Board.
HUMAN RESOURCE MANAGEMENT REVIEW
The Company gives great importance to the development of its human
resource to improve efficiency and productivity.
Manpower Utilisation
The Manpower strength as on 31st March, 2002 was 22767 comprising
1045 executives and 21722 non-executives. There was a reduction of
manpower strength by 903 compared to the previous year.
During 2001-2002, 66 Employees were given Voluntary Retirement.
Industrial Relations
The Industrial Relations remained cordial and peaceful during the year.
However, in the Collieries and Ore Mines there were occasions of stoppages
of work and economic blockade for demands relating to wage revision.
Safety & Occupational Health
The thrust towards Safety and Occupational Health continued. 26 bi-
partite meetings of Safety were held. 2271 regular employees and 482
contract labourers were trained on various safety aspects.
Training
The endeavour to make training more result and skill oriented continued.
During the year 2051 employees were trained in various fields.
Scheduled Castes and Scheduled Tribes
Scheduled Caste and Scheduled Tribe employees were 12.28 percent
and 3.22 percent respectively of the total manpower as on 31.03.2002.
103
Directors' Report
Awards
6 Executives and 12 Non-executives were given Jawahar and Nehru
Awards respectively for extra ordinary, innovative or exemplary jobs in
their fields of work. 4 employees were given Netaji Subhas Award for
significant achievement in various fields of activities.
Official Language Policy
During the year the Company continued to pursue vigorously the
implementation of Official Language Policy of the Government. Employees
were encouraged to carry out their official work in Hindi and liberal
incentives for such work were given. Official Language Fortnight
Celebrations, Hindi Workshops and seminars on technical writing in
Hindi were organised. Hindi poem competition amongst the
School students and Computer training programmes for doing work on
Hindi software were also organised during the year. Rajbhasha Shields
and cash prizes were awarded in various competitions to encourage
the employees.
Employees’ Welfare
The Company undertook various welfare measures like maintenance of
houses, education for children, medical facilities, socio-cultural activities
and other facilities and spent Rs. 37.16 crores (Net) during the year.
Sports
During the year, various sports activities were conducted for employees
and their dependants.
- IISCO Bridge Team became champion of Inter Steel
Championship.
- 7 Junior wards of IISCO employees were awarded SAIL Sports
scholarships 2001-2002 in Cricket, Basketball and Volleyball
disciplines.
STATUS ON REHABILITATION
IISCO was declared a Sick Industrial Company by the Board for Industrial
and Financial Reconstruction (BIFR) on 17-08-1994. Industrial
Development Bank of India has been appointed as Operating Agency
and the proposal for revival/modernisation is in process.
SUBSIDIARY
IISCO Ujjain Pipe & Foundry Co. Ltd. (IISCO Ujjain) a wholly-
owned Subsidiary of IISCO, was decided to be wound up by BIFR in
June, 1996. The Official Liquidator has initiated the liquidation process.
AUDITORS’ REPORT
Replies of the Board of Directors to the observations made in the Report
of the Statutory Auditors on the Accounts are enclosed at Annexure-I.
The comments and review of Accounts by the Comptroller and Auditor
General of India along with management’s replies are enclosed at
Annexure-II
REPORT ON CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION ETC.
Information in accordance with provisions of Section 217(1)(e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 regarding Conservation
of Energy, Technology Absorption and Foreign Exchange Earnings and
Outgo is given at Annexure-III to this report.
PARTICULARS OF EMPLOYEES
There was no employee of the Company who received remuneration in
excess of the limits prescribed in Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975
as amended up-to-date.
104
THE INDIAN IRON & STEEL COMPANY LIMITED
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 [As amended
by Companies (Amendment) Act, 2000], it is hereby confirmed :-
(i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper
explanation relating to material departures;
(ii) that the directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the
state of affairs of the company at the end of the financial year
2001-2002 and of the Profit & Loss Account of the company for
the financial year ended 2001-2002;
(iii) that the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with
the provisions of the Companies Act for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) that the directors had prepared the annual accounts on a going
concern basis.
COMPOSITION OF AUDIT COMMITTEE
Pursuant to Section 292A of the Companies Act, 1956 [As amended by
Companies (Amendment) Act, 2000] an Audit Committee consisting
of the following Directors has been constituted by the Board of Directors
of the Company :-
(i) Shri D.V. Singh
(ii) Shri V.S. Jain
(iii) Shri S.C.K. Patne
Shri D.V. Singh is the Chairman of the Audit Committee.
DIRECTORS
Shri G. Upadhyaya was appointed as Additional Director on
06-03-2002. Shri Upadhyaya resigned on 31-03-2002.
Shri D.P. Singh has been appointed as Additional Director w.e.f.
05-03-2002.
Shri B. Ghoshal and Shri Ashis Das have been appointed as Additional
Directors w.e.f. 06-03-2002.
Shri T. Tiwari, Shri C.S.Rao, Shri M.K. Moitra and Shri B.K. Singh
resigned w.e.f. 17-07-2001, 31-12-2001, 28-02-2002 and
11-03-2002 respectively. The Board has placed on record its appreciation
of the valuable services rendered by Shri T. Tiwari, Shri C.S. Rao, Shri
M.K. Moitra and Shri B.K. Singh.
ACKNOWLEDGEMENT
The Directors place on record their sincere appreciation for the services
rendered and co-operation extended by the employees at all levels and
hope that they will continue to contribute their best to the continuous
efforts of the Management for optimising the resources and improving
the operations of the Company. The Directors whole-heartedly thank the
State Government Agencies, Financial Institutions, Bankers, Suppliers,
Customers and Auditors for their co-operation, assistance and patronage.
The Directors also wish to acknowledge the continuous support and
guidance received from Steel Authority of India Ltd., Government of
West Bengal and the different Departments of the Government of India
and more particularly from the Ministry of Steel.
For and on behalf of the Board of Directors
Sd/-
(Arvind Pande)
Chairman
Place : New Delhi
Date : 23rd August, 2002
Balance Sheet AS AT 31ST MARCH, 2002
THE INDIAN IRON & STEEL COMPANY LIMITED

Schedule As at As at
No. 31st March, 2002 31st March, 2001

(Rupees in crores)
SOURCES OF FUNDS
Shareholders’ Fund
Share Capital 1.1 387.66 387.66
Reserves and Surplus 1.2 3.51 391.17 3.51 391.17

Loan Funds
Secured Loans 1.3 131.71 125.61
Unsecured Loans 1.4 47.68 179.39 47.52 173.13

570.56 564.30

APPLICATION OF FUNDS
Fixed Assets 1.5
Gross Block 793.74 785.68
Less: Depreciation 487.57 466.33

Net Block 306.17 319.35

Capital Work-in-Progress 1.6 11.93 318.10 17.56 336.91

Investments 1.7 0.07 0.10

Current Assets, Loans & Advances

Inventories 1.8 178.86 213.56
Sundry Debtors 1.9 71.85 176.91
Cash & Bank Balances 1.10 21.97 22.47
Interest Receivable/Accrued 1.11 0.23 0.31
Loans & Advances
Subsidiary Companies 1.12 0.00 0.00
Others 1.13 30.71 35.45

303.62 448.70

Less: Current Liabilities & Provisions

Current Liabilities 1.14 649.51 661.59
Provisions 1.15 210.69 178.72

860.20 840.31

Net Current Assets -556.58 -391.61

Miscellaneous Expenditure 1.16 11.83 1.63
(to the extent not written off or adjusted)
Profit & Loss Account Debit Balance 797.14 617.27

570.56 564.30
Accounting Policies and Notes on Accounts 3
Schedules 1 to 3 annexed hereto,
form part of the Balance Sheet

In terms of our report of even date

For and on behalf of For and on behalf of For and on behalf of Board of Directors
M/s Guha Nandi & Co. M/s S. Ghose & Co.
Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/- Sd/- Sd/- Sd/-

(Dr. B.S. Kundu) (Chandan Chatterjee) (A.K. Mukherjee) (A.K. Jayswal) (V.S. Jain) (Arvind Pande)
Partner Partner Secretary Exe.Director. I/C Director Chairman

Place : New Delhi

Dated : 30th May, 2002

105
Profit and Loss Account THE INDIAN IRON & STEEL COMPANY LIMITED
FOR THE YEAR ENDED 31ST MARCH, 2002

Schedule Year ended Year ended

No. 31st March, 2002 31st March, 2001

(Rupees in crores)

INCOME
Sales 2.1 911.94 941.37
Finished products internally consumed 3.29 4.93
Interest earned 2.2 0.10 0.98
Other revenues 2.3 19.74 9.73
Provision no longer required written back 2.4 26.27 5.56
Stock transfer to other units 0.00 961.34 0.00 962.57

EXPENDITURE
Accretion(-)/Depletion to stocks 2.5 31.26 25.57
Raw materials consumed 2.6 486.32 478.07
Purchase of semi/finished products 53.16 40.44
Employees Remuneration & Benefits 2.7 338.56 349.06
Stores & Spares consumed 107.44 110.50
Power & Fuel 2.8 100.09 87.36
Repairs & Maintenance 2.9 13.34 15.54
Excise duty 102.15 98.87
Freight outward 21.62 18.06
Other expenses 2.10 128.96 132.92
Interest & finance charges 2.11 11.63 11.74
Depreciation 23.94 29.25
Total 1418.47 1397.38
Less: Transferred to Inter
Account Adjustments 2.12 278.39 1140.08 249.68 1147.70

Profit/Loss(-) for the year -178.74 -185.13

Adjustments pertaining to earlier years 2.13 -1.13 -2.18

Net Loss(-) -179.87 -187.31

Balance brought Forward from previous year -617.27 -429.96

Balance carried over to Balance Sheet -797.14 -617.27

Accounting Policies and Notes on Accounts 3

Schedules 2 to 3 annexed hereto,
form part of the Profit & Loss Account

Schedules 2 to 3 and Accounting Policies annexed form part of the Accounts

In terms of our report of even date

For and on behalf of For and on behalf of For and on behalf of Board of Directors
M/s Guha Nandi & Co. M/s S. Ghose & Co.
Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/- Sd/- Sd/- Sd/-

(Dr. B.S. Kundu) (Chandan Chatterjee) (A.K. Mukherjee) (A.K. Jayswal) (V.S. Jain) (Arvind Pande)
Partner Partner Secretary Exe.Director. I/C Director Chairman

Place : New Delhi

Dated : 30th May, 2002

106
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

1.1 SHARE CAPITAL As at As at 1.4 UNSECURED LOANS As at As at

31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in crores) (Rupees in crores)
Authorised
54,70,00,000 Equity Shares Steel Development Fund 44.68 44.68
of Rs.10/- each 547.00 547.00
3,00,000 5% Cumulative Interest accrued and due thereon* 0.00 44.68 0.00 44.68
preference shares of Term Loans From UTI 1.00 1.00
Rs.100/- each 3.00 3.00
Interest accrued and due thereon 2.00 3.00 1.84 2.84
Issued, Subscribed & Paid-up*
36,94,84,257 Equity Shares 47.68 47.52
of Rs.10/- each
fully paid-up in cash 369.48 369.48
1,81,81,500 Equity Shares
of Rs.10/-each fully paid-up for
consideration other than cash
(including 1,24,40,899 and 1.5 FIXED ASSETS
20,73,483 fully paid Bonus Shares
allotted by Capitalisation of GROSS BLOCK (AT COST)
General Reserves and from
Share premium respectively) 18.18 18.18 Description As at 31st Additions Less : Sales / As at 31st
March, Adjustments Adjustments March,
387.66 387.66 2001 during the during the 2002
year year
* (All the shares are held by Steel Authority of India Ltd.
of which the company is a wholly owned subsidiary) (Rupees in crores)

A. PLANTS, MINES, OTHERS

Land (including cost of
1.2 RESERVES & SURPLUS As at As at development)
31st March, 31st March,
— Freehold Land 58.04 0.00 0.00 58.04
2002 2001
— Leasehold Land 0.79 0.05 0.00 0.84
(Rupees in crores) Railway Lines & Sidings 4.75 0.00 0.00 4.75
Capital Reserve
As per last Balance Sheet 3.15 3.98 Roads, Bridges & Culverts 2.94 0.00 0.00 2.94
Add: Grant-in-Aid from Government Buildings 28.52 0.00 0.00 28.52
of India 0.00 0.05
Plant & Machinery
Less: Adjustment during the year 0.00 3.15 0.88 3.15
Share Premium Account — Steel Plant 465.96 3.40 0.14 469.22
As per last Balance Sheet 0.36 0.36 — Others 82.88 6.21 0.79 88.30
Less : Adjustment towards Bond Issue 0.00 0.36 0.00 0.36 Furniture & Fittings 2.44 0.03 0.00 2.47
Vehicles 41.93 0.03 0.93 41.03
Expenses 3.51 3.51
Water Supply & Sewerage 4.98 0.00 0.00 4.98
EDP Equipments 3.54 0.02 0.00 3.56
1.3 SECURED LOANS As at As at
31st March, 31st March, Miscellaneous Articles 5.24 0.05 0.00 5.29
2002 2001
Sub-total 'A' 702.01 9.79 1.86 709.94
(Rupees in crores)
Figures for the previous year 615.13 88.37 1.55 701.95
Working Capital Borrowings from Banks* 59.34 56.58
Term Loan from Banks/Financial
Institutions# 30.95 30.95 B. SOCIAL FACILITIES
Interest accrued and due thereon 41.42 72.37 38.08 69.03
Land (including cost of
131.71 125.61 development)

* Secured by hypothecation Company's inventories, — Freehold Land 0.20 0.00 0.00 0.20
book debts and other current assets. Roads, Bridges & Culverts 2.63 0.00 0.00 2.63
# (Consortium Loan for plant Buildings 45.51 0.08 0.00 45.59
rehabilitation Loan from Consortium
Plant & Machinery-Others 8.53 0.00 0.00 8.53
(Consisting of Industrial Development
Bank of India, United Bank of India, Furniture & Fittings 1.28 0.00 0.00 1.28
Allahabad Bank, Central Bank of India, Vehicles 1.54 0.00 0.05 1.49
Grindlays Bank Ltd., Industrial Finance
Corporation of India Ltd., Industrial Water Supply & Sewerage 19.59 0.00 0.00 19.59
Credit & Investment Corporation of India EDP Equipments 0.01 0.00 0.00 0.01
Limited and Life Insurance Corporation of
India) secured by First Mortgage of the Miscellaneous Articles 4.44 0.04 0.00 4.48
properties and undertakings of the Sub-total 'B' 83.73 0.12 0.05 83.80
Company together with a floating charge
Figures for the previous year 83.56 0.23 0.06 83.73
on the whole of the undertakings and
assets ranking pari-passu interse of the Total (A+B) 785.74 9.91 1.91 793.74
Consortium Members. Figures for the previous year 698.69 88.60 1.61 785.68

107
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

1.5 FIXED ASSETS (Contd.)

DEPRECIATION NET BLOCK

Description Up to 31st For the Less : On Sales / Upto 31st As at 31st As at 31st
March, 2001 year Adjustments March, 2002 March, 2002 March, 2001
during the year
(Rupees in crores)
A. PLANTS, MINES, OTHERS
Land (including cost of development)
— Freehold Land - - - - 58.04 58.05
— Leasehold Land 0.20 0.00 0.00 0.20 0.64 0.59
Railway Lines & Sidings 3.26 0.10 0.00 3.36 1.39 1.48
Roads, Bridges & Culverts 1.52 0.06 0.00 1.58 1.36 1.40
Buildings 17.06 0.54 0.02 17.58 10.94 11.44
Plant & Machinery
— Steel Plant 314.39 16.16 1.16 329.39 139.83 151.56
— Others 62.73 2.97 0.88 64.82 23.48 20.13
Furniture & Fittings 1.80 0.09 0.00 1.89 0.58 0.63
Vehicles 30.29 1.30 0.55 31.04 9.99 11.64
Water Supply & Sewerage 2.61 0.11 0.00 2.72 2.26 2.38
EDP Equipment's 2.95 0.15 0.00 3.10 0.46 0.57
Miscellaneous Articles 2.67 0.22 0.00 2.89 2.40 2.60
Sub-total 'A' 439.48 21.70 2.61 458.57 251.37 262.47
Figures for the previous year 411.98 26.93 -0.57 439.48 262.47
B. SOCIAL FACILITIES
Land (including cost of development)
— Freehold Land - - - - 0.20 0.20
Roads, Bridges & Culverts 0.44 0.04 0.00 0.48 2.15 2.18
Buildings 11.05 0.79 0.00 11.84 33.75 34.46
Plant & Machinery – Others 4.02 0.37 0.00 4.39 4.14 4.51
Furniture & Fittings 0.77 0.06 0.00 0.83 0.45 0.49
Vehicles 1.45 0.02 0.10 1.37 0.12 0.08
Water Supply & Sewerage 6.47 0.80 0.00 7.27 12.32 13.12
EDP Equipments 0.01 0.00 0.00 0.01 0.00 0.00
Miscellaneous Articles 2.60 0.21 0.00 2.81 1.67 1.84
Sub-total 'B' 26.81 2.29 0.10 29.00 54.80 56.88
Figures for the previous year 24.36 2.47 -0.02 26.85 56.88
Total ('A'+'B') 466.29 23.99 2.71 487.57 306.17 319.35
Figures for the previous year 436.34 29.40 -0.59 466.33 319.35

NOTE: ALLOCATION OF DEPRECIATION Current Year Previous Year

(a) Charged to Profit & Loss Account 23.94 29.25
(b) Charged to expenditure during construction 0.05 0.05
(c) Debited to adjustments pertaining to earlier years 0.00 0.09
TOTAL 23.99 29.39
* Net Block as on 31.03.2002 includes Rs.0.08 crores being assets retired from active use (Provision thereagainst Rs.0.05 crores held under 'Other Provisions')

1.6 CAPITAL WORK-IN-PROGRESS As at As at 1.6.1 EXPENDITURE DURING As at As at

31st March, 31st March, CONSTRUCTION 31st March, 31st March,
2002 2001 2002 2001
(Rupees in crores)
(Rupees in crores)
Expenditure during construction Opening balance (a) 1.88 0.39
awaiting allocation (Schedule 1.6.1) 0.00 1.88 Expenditure incurred during the year
Employees Remuneration & Benefits
Capital Work-in-progress Salaries & Wages 0.62 1.80
Company’s contribution to
Steel Plants & Units 11.75 12.71
Provident Fund and other Funds 0.06 0.16
Township 0.03 2.71
Travel Concession 0.01 0.02
Ore Mines and Quarries 0.00 11.78 0.00 15.42
Gratuity 0.04 0.73 0.11 2.09
Advances * 4.44 5.42
Depreciation 0.05 0.05
Less: Provisions 4.29 0.15 5.16 0.26
0.78 2.14
11.93 17.56
Less: Income
Liquidated Damages 0.04 0.22
Particulars of advances
Hire Charges 0.00 0.01
Unsecured, Considered Good 0.15 0.26 Sundries 0.00 0.04 0.00 0.23
Unsecured, Considered Doubtful 4.29 5.16 Net expenditure during the year (b) 0.74 1.91
Total (a)+(b) 2.62 2.30
4.44 5.42 Amount allocated to Fixed Assets/
* Include Rs.2.34 crores earmarked Capital Work-in-Progress 2.62 0.42
for low cost housing scheme Balance carried forward 0.00 1.88
(Against Capital Reserve) Total 2.62 2.30

108
 THE INDIAN IRON & STEEL COMPANY LIMITED

1.7 INVESTMENT (AT COST) Number Face As at As at 1.9 SUNDRY DEBTORS As at As at

– Long Term of Fully value per 31st March, 31st March, 31st March, 31st March,
Paid-up Share (Rs.) 2002 2001 2002 2001
Equity Shares
(Rupees in crores)
(Rupees in crores)
Quoted Investments Debts over six months 40.92 111.62
Industrial Credit & Investment
Corporation of India Ltd. 57200 10 0.05 0.05 Other debts 51.74 83.74

(Market Value Rs. : Previous 92.66 195.36

Year Rs.)
Less: Provision for doubtful debts 20.81 18.45
Unquoted Investments
71.85 176.91
Trade Investments
South India Export Co. (P) Ltd. 7500 10 0.01 0.01
Particulars
India Standard Wagon Unsecured, considered good 71.85 176.91
Company Ltd. 130 100 0.00 0.00
Unsecured, considered doubtful 20.81 18.45
Hoogly Docking and Engg.
Company Limited 1433 100 0.02 0.02 92.66 195.36
Satna Stone Lime
Company Limited 33804 10 0.03 0.06 0.03 0.06
Other Investments 1.10 CASH & BANK BALANCES As at As at
Subsidiary Companies
31st March, 31st March,
IISCO Ujjain Pipe &
Foundary 2002 2001
Company Limited 30,00,000 10 3.00 3.00 (Rupees in crores)
Other Companies Cash and Stamps on hand 0.27 0.50
Bihar State Financial Corporation 500 100 0.01 0.01

Government Securities 0.06 0.06 With Scheduled Banks

Current account* 17.26 12.03
Shares in Co-operative Societies (1.7.1) 0.05 0.05
Margin money 0.95 1.18
3.23 3.23 Term deposits 0.03 18.24 7.06 20.27
Less : Provision for diminution in
value of investments 3.16 3.13 Remittances-in-transit 3.46 1.70

0.07 0.10 21.97 22.47

* Cost being less than Rs.50,000/- figures not given.
* {Includes balance with Lloyds Bank Ltd. (Rs.0.05 lakhs) &
Midland Bank Ltd. (Rs.0.07 Lakhs) London}
(Maxium balance same)
1.7.1: SHARES IN CO-OPERATIVE SOCIETIES

Barajamda Iron Ore Mines Central

Co-operative Stores Limited 400 25 10000 10000 1.11 INTEREST RECEIVABLE/ACCRUED As at As at
31st March, 31st March,
IISCO Employees Primary 2002 2001
Co-operative Stores Limited 23000 20 460000 460000
(Rupees in crores)
470000 470000 Deposits 0.03 0.04
Employees 0.22 0.29
0.25 0.33
1.8 INVENTORIES As at As at Less: Provision for doubtful interest 0.02 0.02
31st March, 31st March, 0.23 0.31
2002 2001
Particulars
(Rupees in crores) Unsecured, considered good 0.23 0.31
Unsecured, considered doubtful 0.02 0.02
Stores & spares* 55.76 59.68 0.25 0.33
Add: In-transit 2.31 1.63
58.07 61.31
Less: Provision 9.16 48.91 12.26 49.05 1.12 LOANS AND ADVANCES TO As at As at
SUBSIDIARY COMPANIES 31st March, 31st March,
Raw materials * 18.05 22.62
2002 2001
Add: In-transit 3.61 1.89
21.66 24.51 (Rupees in crores)
Less: Provision 0.48 21.18 0.88 23.63 Loans 2.11 2.11
Semi/finished products* 100.07 132.51 Other Advances 0.00 2.11 0.00 2.11
(including scrap) Less: Provisons 2.11 2.11
Add: In–transit 4.33 104.40 3.94 136.45
At book or assessed or realisable value 0.00 0.00
whichever is lower: Particulars
Salvaged/Scrapped fixed assets 15.22 14.90 Unsecured, considered good 0.00 0.00
Less : Provision 11.55 3.67 11.26 3.64 Unsecured, considered doubtful 2.11 2.11
Others (at cost) 0.70 0.79
178.86 213.56 2.11 2.11
* Valued as per Accounting Policy No.1.6

109
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

1.13 LOANS & ADVANCES — OTHERS As at As at 1.14 CURRENT LIABILITIES As at As at

31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001

(Rupees in crores) (Rupees in crores)

Loans
Sundry creditors
Employees 0.16 0.22
Stores issued 0.10 0.10 Capital works 5.73 6.36

Others 0.00 0.26 0.00 0.32 Others 354.02 359.75 393.63 399.99

Advances from
Advances recoverable
in cash or in kind or for Customers 48.69 45.64
value to be received
Others 0.61 49.30 0.61 46.25
Claims recoverable 20.71 19.30
Contractors & suppliers 10.65 14.55 Security deposits 14.56 13.21
Employees 2.85 4.05 Less: Investment received as
Advance Income Tax * 0.23 0.18 security deposit 0.05 14.51 0.05 13.16
and Tax deducted at source
Interest accrued but not due on
Bills Receivable 0.10 0.10 Loans 0.43 0.43
Others 1.83 36.37 2.42 40.60
Stores received on loan 0.10 0.10
Deposits
Others Liablities 225.42 201.66
Port trust, excise department, 5.74 5.71
Railways, etc.
649.51 661.59
Others 1.96 7.70 1.57 7.28

44.33 48.20
Less: Provision for doubtful
Loans & Advances 13.62 12.75

30.71 35.45
1.15 PROVISIONS FOR As at As at
31st March, 31st March,
Particulars of Loans & 2002 2001
Advances—Others
(Rupees in crores)
Unsecured, considered good 30.71 35.45
Unsecured, considered doubtful 13.62 12.75 Gratuity 163.91 148.43
Acc rued Leave Liability 31.55 28.75
44.33 48.20
Middlings stocks 0.91 0.36
Others 14.32 1.18

210.69 178.72

1.16 MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Balance Additions Total Amount Balance

as at during Charged Off/ as at
31st the Transferred 31st
March, 2001 year during the year March, 2002
(Rupees in crores)
(i) Development Expenditure
(a) On Mines 0.72 0.26 0.98 0.79 0.19
(a) On New Projects 0.00 0.20 0.20 0.04 0.16
Total (i) 0.72 0.46 1.18 0.83 0.35

(ii) Deferred Revenue Expenditure

(a) Voluntary Retirement Compensation 0.91 -0.01 0.90 0.32 0.58
(b) Employee's Family Benefit Scheme 0.00 13.63 13.63 2.73 10.90
Total (ii) 0.91 13.62 14.53 3.05 11.48
Total (i+ii) 1.63 14.08 15.71 3.88 11.83
Previous year 2.00 0.04 2.04 0.41 1.63
Charged Off to:
Current Year Previous Year
Other Expenses & Provisions 3.29 0.32
Adjustments pertaining to earlier years 0.59 0.00
3.88 0.32

110
 THE INDIAN IRON & STEEL COMPANY LIMITED

2.1 SALES Year ended Year ended 2.6 RAW MATERIALS CONSUMED Year ended Year ended
31st March, 31st March, 31st March, 2002 31st March, 2001
2002 2001
Quantity Value Quantity Value
(Rupees in crores)

Direct 605.43 681.96 Tonnes Rs./lakhs Tonnes Rs./lakhs

From Stockyards 283.15 243.32
Iron ore 1254416 77.65 1265088 76.09
Exports 23.36 16.09
Indigeneous Coal 1261485 284.11 1466990 273.57
Imported Coal 50020 17.40 83393 25.23
911.94 941.37
Coke 7797 3.30 111 4.45
Limestone 140966 16.32 129780 13.82
Dolomite 149572 7.80 156452 7.90
2.2 INTEREST EARNED Year ended Year ended Pig Iron 29382 18.48 23723 15.13
31st March, 31st March, Scrap 56104 27.98 51301 23.25
2002 2001 Nickel 6 0.25 - 0.29
Ferro Manganese 5941 11.48 5880 11.43
(Rupees in crores) Ferro Silicon 1030 3.25 814 3.94
Customers 0.04 0.23 Silico Magenese - 0.04 - 0.17
Employees 0.01 0.04 Other Ferrous Metals 2 0.20 - 0.20
Term Deposits 0.01 0.71 Intermediary Products - 10.37 - 16.74
Others 0.04 0.00 Tin 6 0.20 - 0.15
Copper - 3.04 - 2.20
0.10 0.98 Aluminimum - 0.50 - 0.55
Others 3.95 2.96
486.32 478.07

2.3 OTHER REVENUES Year ended Year ended NOTE: 1) Consumption of raw materials includes shortages
31st March, 31st March, Rs.1.63 crores (Previous year Rs.2.49 crores)
2002 2001 to the extent not covered by normal handling
losses and excess to the extent of Rs.11.47 crores.
(Rupees in crores) (previous year Rs.10.01 crores)
2) Value of raw materials consumed is after
Social amenities–recoveries 9.19 5.04 adjustments relating to Inter Plant Transfers.
Sale of empties etc. 0.07 0.14
Liquidated damages 0.24 0.27
Service charges 0.13 0.30 2.7 EMPLOYEES’ REMUNERATION & BENEFITS
Grant-in-aid 0.03 0.01 Year ended Year ended
Subsidy 1.75 1.65 31st March, 31st March,
Hire charges etc. 0.09 0.23 2002 2001
Claims for finished products 0.43 0.00 (Rupees in crores)
(Shortages & missing wagons)
Salaries & wages 262.24 277.13
Dividend from Other investments 0.06 0.03
Duty drawback 0.43 0.13 Company’s contribution to
provident fund & other funds 27.46 25.97
Foreign Exchange Fluctuation (Net) -0.01 0.03
Sundries 7.33 1.90 Travel concession 1.37 2.13
Welfare expenses 14.93 14.04
19.74 9.73 Gratuity 32.56 29.79

338.56 349.06

2.4 PROVISIONS NO LONGER REQUIRED Note :

WRITTEN BACK Year ended Year ended Expenditure on Employees’
31st March, 31st March, Remuneration and Benefits
2002 2001 not included above and
charged to:
(Rupees in crores) a) Expenditure during Construction 0.73 2.09
Loans & advances 1.23 0.01 b) Deferred Revenue Expenditure 0.32 0.32
Sundry debtors 0.71 0.69 c) Net expenditure on Social Amenities charged 7.33 0.00
Stores & spares 3.52 1.01 to various primary revenue heads
Others 20.81 3.85
8.38 2.41
26.27 5.56

2.8 POWER & FUEL Year ended Year ended

2.5 ACCRETION(-)/DEPLETION TO STOCK
31st March, 31st March,
OF SEMI/FINISHED PRODUCTS Year ended Year ended
2002 2001
31st March, 31st March,
2002 2001 (Rupees in crores)

(Rupees in crores) Purchased power 77.86 69.76

Duty on own generation 0.58 0.55
Opening stock 136.81 162.38 Boiler Coal/Middlings 19.60 14.54
Less: Closing stock 105.55 136.81 Others 2.05 2.51
31.26 25.57 100.09 87.36

111
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

2.9 REPAIRS & MAINTENANCE Year ended Year ended 2.11 INTEREST & FINANCE CHARGES Year ended Year ended
31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in crores) (Rupees in crores)
Buildings 2.75 2.94
Plant & Machinery 6.68 9.20
Bank borrowings - working capital 7.34 7.12
Others 3.91 3.40
13.34 15.54 Others 4.04 4.13

Note : Finance Charges 0.25 0.49

Expenditure on repairs & maintenance
not included above and charged to: 11.63 11.74
a) Employees Remuneration & Benefits
Buildings 7.75 7.53
Plant & Machinery 42.25 42.27
Others 7.09 6.92
57.09 56.72

b) Stores & Spares

Buildings 2.53 3.14
Plant & Machinery 28.80 35.73 2.12 INTER ACCOUNT ADJUSTMENTS
Others 0.32 0.45 Year ended Year ended
31st March, 31st March,
31.65 39.32
2002 2001
Total (a)+(b) 88.74 96.04
(Rupees in crores)

Raw materials 247.84 224.39

Coke subsidy to Employees 1.41 1.77

2.10 OTHER EXPENSES
Year ended Year ended Inter plant transfer of stocks/stores 28.15 22.52
31st March, 31st March,
2002 2001 Others (Net) 0.99 1.00

(Rupees in crores) 278.39 249.68

Commission to selling agents 0.94 1.07
Demurrage & wharfage 0.09 0.06
Expenses connected with Imports 0.01 0.01
Export sales expenses 0.05 0.01
Handling expenses
— Handling expenses - Raw Material 51.34 57.63
— Handling expenses - Finished goods 11.57 10.58
— Scrap recovery expenses 5.61 68.52 5.91 74.12
2.13 ADJUSTMENTS PERTAINING
Insurance 0.33 0.47
TO EARLIER YEARS Year ended Year ended
Law charges 0.45 0.49
31st March, 31st March,
Postage, telegram & telephone 1.05 1.22
2002 2001
Printing & stationery 0.61 0.65
Provisions (Rupees in crores)
— Doubtful debts & loans and 4.39 4.35
advances Sales 1.08 0.63
— Investments 0.03 0.00 (semi/finished products)
— Sundries 4.84 9.26 5.64 9.99
Rates & Taxes 1.22 1.29 Other revenues -0.18 -0.15
Remuneration to Auditors
— Audit Fees 0.03 0.03 Raw materials consumed 1.41 1.27
— Tax Audit Fees 0.01 0.01
— Out of pocket expenses 0.01 0.02 Employees’ remuneration & benefits 0.00 -0.83
— In other capacities 0.00 0.05 0.00 0.06
Rent 0.54 0.45 Stores & spares consumed 0.28 0.00
Royalty and cess 8.91 8.23
Security expenses 11.66 11.77 Power & fuel -0.72 0.18
Travelling expenses 7.20 5.73
Write Offs Other Expenses & Provisions -0.74 0.99
— Miscellaneous & Deferred Revenue 3.29 0.32
Expenditure
— Advances 0.38 0.00
— Others 0.49 4.16 0.00 0.32
Net Debit (Credit) 1.13 2.18
Training expenses 0.02 0.01
Conversion charges 0.00 0.64
Water charges & Cess on water pollution 0.05 0.10
Miscellaneous (include Donation Rs.0.01 13.84 16.23
lakhs (Previous year Rs.0.01 lakhs) * (-) indicate credit items.
128.96 132.92

112

SCHEDULES 3 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost conven-
tion as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
The expenditure on development of land including lease-hold land, is capitalised
as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capit-
alised, based on the mean of the balances under ‘Capital work-in-progress’ at the
beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capi-
talised on the basis of estimated costs and final adjustments for costs and deprecia-
tion, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned
assets are ready for commercial production.
The Company’s contribution/ expenditure towards construction/ development of
assets on land owned by the Government/Semi-Government authorities, is capi-
talised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross
value of the assets concerned in arriving at their book value. Grants-in-aid related
to revenue items are netted against the related expense.
Machinery spares which can be used only in connection with an item of fixed assets
and whose use as per technical assessment is expected to be irregular, are capit-
alised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under
fixed assets at their book value till the acceptance of disposal proposals there against,
and due provisions are made to take care of the shortfall, if any, in their respective
realisable value. However, fixed assets that have been retired from active use and
whose disposal proposals have been accepted, are de-capitalised and included
under “Inventories” at lower of book value and estimated realisable value.
1.3 BORROWING COST
Borrowing costs relating to the acquisition/construction of qualifying assets are capi-
talised until the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-
XIV to the Companies Act, 1956. However, where the historical cost of a depre-
ciable asset undergoes a change, the depreciation on the revised unamortised de-
preciable amount is provided prospectively over the residual useful life of the asset
computed on the basis of rates specified in schedule XIV as stated above.
Depreciation on assets installed/ disposed off during the year is provided with
respect to the month of addition/disposal thereof.
Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified
as long term investments, while other investments are classified as current invest-
ments.
Current quoted investments are valued at lower of cost or market value on indi-
vidual investment basis.
Investments in subsidiary Companies and other long-term and unquoted invest-
ments are valued at cost. However, provision for diminution in the value of such
investments is made to recognise a decline, other than temporary, on individual
investment basis.
1.6 INVENTORIES
Semi/Finished products, are valued at lower of cost or net realisable value of
the respective plants.
Raw materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and
90% respectively of the previous year’s realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and
middlings /rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the finished stage
only, the realisable value of process materials is arrived at by applying the ratio of
finished product’s realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares
declared obsolete/surplus and also those which have not moved for five years or
more, provision is made at 75% and 10% respectively of the book value and
charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products
THE INDIAN IRON & STEEL COMPANY LIMITED
is valued at lower of cost or realisable value of the transferor plant. Materials out
of inter–plant transfers , lying in stock after further processing, are valued at
transfer price plus processing cost of the transferee plant or realisable value , which-
ever is lower. Such inter-plant transfer materials used for capitalisation have, how-
ever, been considered at cost (ii) Stores and spares are valued at cost of the
transferor plant (iii) Raw materials at plants are valued at lower of cost and net
realisable value.
Cost is arrived on weighted average basis.
1.7 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at
mines, cost of feasibility studies for new projects and payments for technical know-how/
documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years.
Expenditure on feasibility studies, technical know-how/documentation and other
development expenditure is added to the capital cost of the project, if implemented.
In case the project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation incurred by the company is treated as deferred
revenue expenditure and written-off in five years. Future liability to the disabled
employees / legal heirs of deceased employees under the Family Benefit Scheme is
treated as deferred revenue expenditure and written-off over a period of five years.
Other deferred revenue expenditure including expenditure on consultancy/ tech-
nological assistance for strategic cost reduction and quality improvements is writ-
ten-off in five years.
1.8 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by forward con-
tracts) as on the Balance Sheet date are converted at the year end exchange rates
and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets
or charged to Profit & Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts
are recorded at the rate prevailing on the date of transaction.
In case of foreign currency transactions covered by forward contracts, the differ-
ence between contract rate and exchange rate prevailing on the date of transac-
tions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account,
as the case may be, proportionately over the contract period.
1.9 RESEARCH AND DEVELOPMET EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in
the year of incurrence. However, expenditure on fixed assets relating to research
and development, is treated in the same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted
and/or considered recoverable by the Company. These are treated as income on
completion of the projects/final settlements.
Suppliers’/Contractors’ claims for price escalation are accounted for, to the extent
such claims are accepted by the Company.
1.11 RETIREMENT BENEFITS
The provision for gratuity and Leave encashment liabilities is made on the basis
of year end actuarial valuation.
1.12 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID
EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not
exceed Rs.5.00 lakhs in each case, are treated as income/expenditure of current year.
1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers
including the cases where delivery documents are in the company’s name, pending
collection of payments. Export sales are treated as sales on issue of Bills of lading.
1.14 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under
Duty Entitlement Pass Book Scheme (DEPB) and duty drawback, are treated as
income in the year of export, at estimated realisable value/actual credit earned on
exports made during the year.
1.15 TAXATION
Provision for income tax comprises of current tax and deferred tax charged or
realised. Deferred tax is recognised, subject to consideration of prudence of timing
differences, being the differences between taxable and accounting income/ex-
penditure that originate in one period and are capable of reversal in one or more
subsequent period(s). Deferred tax assets are not recognised unless there is “virtual
certainty” that sufficient future taxable income will be available, against which
such deferred tax assets will be realised.
1.16 SEGMENT REPORTING
The Company has identified that its operating segments are primary segments.
The analysis of geographical segments is based on the areas in which the customers
of the Company are located. Common expenses are allocated to each segment on
appropriate basis.
113
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

NOTES ON ACCOUNTS – 2001-02 period up to January, 1996 and from October, 1996 to December, 1996. In terms
2.1 CONTINGENT LIABILITIES NOT PROVIDED FOR of the injunction issued by the Hon’ble Kolkata High Court deposit is being made
(Rupees in crores) under EFP-1971, the old scheme, and the remaining amount i.e. the amount
payable under 1995 scheme over the amount payable under 1971 scheme is
As at As at being kept deposited with the P.F. Trusts. Accordingly, a sum of Rs.5.39 crores had
31.03.2002 31.03.2001 been deposited under old scheme i.e. EFP-1971 covering period from 16.11.95
A. Claims against the Company to 31.3.2000. Further, with effect from April, 2000 deposit is being made under
not acknowledged as debts: EFP-1971 and the remaining amount is being deposited with the P.F. Trusts. The
i) Pending Judicial decisions 48.16 69.88 amount lying deposited with the P.F. Trusts on account of pension fund stands at
Rs. 46.34 crores (previous year Rs. 44.03 crores).
ii) Sales Tax 7.69 13.76
4.5 Unlike previous years, the future liability for benefits payable to the disabled
iii) Income Tax 1.04 1.04
employees / legal heirs of deceased employees under the Employee Family Benefit
iv) Interest on Consortium Loan 28.78 28.16 Scheme have been provided and treated as deferred revenue expenditure as
v) Central Excise Duty 54.52 37.98 referred to in Accounting Policy 1.7 above, resulting into an increase in loss for the
B. Asansol Municipal Corporation year by Rs. 2.73 crores.
Holding Tax 9.19 7.35 5. PROFIT & LOSS ACCOUNT
C. Estimated amount of contracts 5.1 Interest of Rs.3.57 crores for the year (previous year Rs.3.57 crores) aggregating
remaining to be Executed on Capital to Rs.46.42 crores (previous year Rs.42.85 crores) on SDF loan has been deemed
account and not provided For. 16.81 17.46 to have been waived.
5.2 The long term agreements for employees’ pay revision have expired on 30th June,
2.2 In view of the principles laid down by the Hon’ble Supreme Court and the judge-
1996 in respect of colliery employees and on 31st December, 1996 for employees
ment passed by the Kolkata High Court on 25th November, 1992, the Company
of other units of the Company. No provision has been made for pay revision and
has ceased to provide cess on coal arising out of the provisions of the West Bengal
arrears, if any, in view of Government directives applicable to companies under
Primary Education Act, 1973 and West Bengal Rural Employment and Produc-
BIFR. Liability, if any, in this regard is unascertainable. However, interim relief
tion Act, 1976 from the year 2000-01. However, in view of special leave petition
@12% has been and is being paid and provided for, pending final decision, from
preferred by the Government of West Bengal against such judgment of the Kolkata
01.07.1996 for collieries and from 01.01.1997 to 31.03.1998 and thereafter
High Court, the liability upto 31st March 2000 amounting to Rs. 83.69 crores has
from 01.01.2001 for other units.
not been written back pending disposal of the petition. The liability for the year
5.3 Expenditure on over burden removal incurred during the year for regular mining
2000-01 and 2001-2002 amounting to Rs.30.68 crores has been disclosed as
operation has been charged to Profit & Loss Account.
a contingent liability.
5.4 Sundry Creditors include Rs.0.44 crores due to small scale and ancillary
3. FIXED ASSETS undertakings to the extent such parties have been identified . As the company
i) Physical verification of fixed assets and corresponding linking of the same with generally makes payments to SSI units in due time and there being no interest
Assets Register is being carried out on continuous basis. claims from the creditors, interest on overdue payments, if any, is not ascertainable
ii) Land includes also those awaiting execution of conveyance deed in favour of and thus not provided for. There are no SSI units to whom amounts in excess of
the company. Rs. 1 lakh are due for more than 30 days.
iii) In the case of lease hold property the cost of acquiring the lease right is written
6. GENERAL
off over the lease period.
6.1 Segment Reporting
4. INVESTMENTS, CURRENT ASSETS, LOANS & ADVANCES AND The steel plant, foundry, collieries and mines have been considered as primary
CURRENT LIABILITIES & PROVISIONS business segments for reporting under Accounting Standard-17 issued by the
4.1 The Company has equity investment aggregating to (at cost) Rs. 3.00 crores. Institute of Chartered Accountants of India. Geographical segments have been
(Previous year Rs. 3.00 crores) in its subsidiary company IISCO Ujjain Pipe & considered for secondary segment reporting. The whole of India has been
Foundry Co. Ltd. as at 31st March 2002. The Company has other dues of Rs. 2.11 considered as a geographical segment and exports as other segments. The disclosures
crores (previous year Rs. 2.11 crores) from it. Board for Industrial and Financial of segment-wise information is given in Annexure-I.
Reconstruction (BIFR) has directed winding up of the company which has been
6.2 Related Party
subsequently upheld by the Appellate Authority for Industrial and Financial
As per Accounting Standard –18 –“Related Party Disclosures’ issued by the
Reconstruction. An official liquidator has been appointed on 10th July 1997 by
Institute of Chartered Accountants of India, the name of the related party and
the Hon’ble High Court of Kolkata. Provision for diminution in the value of the
nature of related party relationship where control exists, are given below :
investment in equity share of Rs. 3.00 crores and for other dues amounting to Rs.
2.11 crores have been made in the accounts. Name of related parties :
4.2 Sundry creditors, other liabilities, sundry debtors, claims recoverable, deposits Shri A. K. Jaiswal, Executive Director I/C – Key management personnel
and advances to parties include some old unlinked balances pending reconciliation/ Description of transactions with related parties:
confirmation/adjustments. Adequate provisions wherever considered necessary There has been no transaction between the company and the related parties, as
have been made for such old balances. Further adjustments as necessary, will be defined in the Accounting Standard.
accounted for in the year of reconciliation/settlement/realisation of the respective
6.3 Consolidated Financial Statement
balances.
Since IISCO Ujjain Pipe & Foundry Co. Ltd., the only subsidiary of IISCO, is
4.3 The company has substantial carried forward losses and unabsorbed depreciation
under liquidation, no consolidated financial statement is required to be made
under the Income Tax Act, 1961 and accordingly, deferred tax assets of about Rs.
under AS-21.
378.77 crores has arisen as on 31.3.2002 (including Rs. 42.74 crores for the
6.4 The Company was declared a Sick Industrial Company by the Board for Industrial
current period) as per Accounting Standard – 22 on “Accounting for Taxes on
and Financial Reconstruction (BIFR) on 17th August, 1994. The Industrial
Income” . However, in consideration of prudence, the above deferred tax asset
Development Bank of India has been appointed as operating agency and the
has not been recognized in the financial statements and the same would be
proposal for revival/modernization is in process. The company is, however,
considered at appropriate time keeping in view the availability of sufficient taxable
income against which the deferred tax can be realised. continuing the assumption of going concern in the preparation of its financial
4.4 In terms of Employees Provident Fund and Miscellaneous provisions (Amendment) statements.
Ordinance, 1995 for employees covered under Employees Family Pension Scheme, 6.5 Figures have been rounded off to the nearest rupee in crores as approved by the
a new pension scheme had been made effective from 16th November, 1995 in Company Law Board.
respect of which Rs. 3.52 crores had been deposited with RPFC covering the 6.6 Previous year’s figures have been re-arranged/re-grouped wherever necessary.

114
 THE INDIAN IRON & STEEL COMPANY LIMITED

7. (a) Licensed Capacity, Installed Capacity, Production

Own Products Licensed Installed Production
Capacity (i) Capacity
(Tonnes) (Tonnes) (Tonnes)
Steel Ingots 1300000 1000000 345729*
(1300000) (1000000) (329564)**
Saleable Steel 1048000 800000 291986***
(1048000) (800000) (276880)
Cast Iron Spun Pipes (I & II) 156960 156960 15354
(156960) (156960) (15891)
Cast Iron Spun Pipes (III) — 9000 392
(—) (9000) (1761)
Steel Castings 5484 5300 2302
(5484) (5300) (1714)
Non Ferrous Castings 564 530 189
(564) (530) (103)
Other Castings 82716 77916 14528
(82716) (77916) (9641)
Note : * Including Steel Casting 1205 M.T.
** Including Steel Casting 1135 M.T.
*** Excluding converted Steel 10459 M.T.

7. (b) Opening Stock, Purchases, Turnover and Closing Stock

Opening Stock Purchases Turnover Closing Stock

Quantity Value Quantity Value Quantity Value Quantity Value

(Tonnes) (Rs/crores) (Tonnes) (Rs/crores) (Tonnes) (Rs/crores) (Tonnes) (Rs/crores)

Saleable Steel 15990 21.72 — — 293283 411.57 7977 10.97

(23369) (32.12) (—) (—) (278819) (386.84) (15990) (21.72)
Pig Iron 14375 10.36 — — 245099 192.61 9727 7.00
(10976) (7.48) (—) (—) (282426) (217.24) (14375) (10.36)
Cast Iron Spun Pipes 10427 14.53 — — 16687 27.96 8739 11.77
(8497) (13.10) (—) (—) (16114) (27.70) (10428) 14.53
Steel Castings 2105 8.17 — — 1863 5.21 2607 10.88
(2001) (8.78) (—) — (1742) (4.15) (2105) (8.17)
Non Ferrous Castings 134 3.69 — — 167 3.06 157 2.68
(141) (4.18) (—) (—) (112) (1.61) (135) (3.69)
Other Castings 7575 13.03 — — 15194 12.52 6488 11.52
(9855) (18.90) (—) (—) (11456) (10.47) (7576) (13.03)
Others 65.24 — — 0 203.85 0 50.67
(77.30) (—) (—) (0) (249.40) (0) (65.24)
TRADING ACTIVITIES
Indigenous Steel 7 0.01 31888 53.16 31888 55.16 0 0.00
(500) (0.46) (25187) (40.44) (25187) (43.96) (7) (0.01)
Purchased Pipe & Castings 98 0.06 0 0.00 0 0.00 98 0.06
(98) (0.06) (0) (0.00) (0) (0.00) (98) (0.06)
136.81 53.16 911.94 105.55
(162.38) (40.44) (941.37) (136.81)
Notes:
i) The classification of the company's own products for the purpose of quantitative data is in accordance with the Company Law Board's Order No.3/19/80-CL VI dated 16th July 1980. However, in respect
of item (Sundries), particulars of installed capacity and production have not been given, as this being an omnibus head, clubbing of various products and by-products under one head would not give
meaningful information.
ii) Sales are net of rebates/price concessions allowed on certain Iron and Steel products.
iii) Figures of closing stock are after adjustment for inter-plant transfers, internal consumption, transfer to capital works, shortages/excess etc.

7. (c) Pig Iron and Saleable Steel Quantitative Reconciliation

Pig Iron Saleable Steel
Opening Stock 14375 15990
(10976) (23369)
Production 287743 291986
(330911) (276880)
Total 302118 307976
(341887) (300249)
Sales 245099 293283
(282426) (278819)
Inter Plant Transfer 32299 1454
(27814) (1476)
Internal Consumption (including for capital works) 10250 1216
(11160) (1961)
Assorted Length/Cuttings etc. 0 3996
(0) (2336)
Depletion/Acrcretion(-) in In-process stock (including out of inter plant transfers) — —
(—) (—)
Shortages/Excesses(-) due to Sectional Weight variation transportation, handling etc. 4743 50
(6112) (-333)
Closing Stock 9727 7977
(14375) (15990)
Total 302118 307976
(341887) (300249)
Note to 7(a), 7(b) & 7(c) Figures in brackets pertain to previous year and have been rearanged/regrouped inter-se. A total quantity of 10,459 tonnes, rolled on conversion account for CMO, is not
including figures of saleable steel during the year 2001-02.

115
Schedules THE INDIAN IRON & STEEL COMPANY LIMITED

8. Expenditure incurred in foreign 9. Earnings in foreign exchange

currency on account of Current Previous on account of Current Previous
Year Year Year Year
(Rupees in crores) (Rupees in crores)
Know-how 0.00 0.00
Interest 0.00 0.00 Export of goods (Calculated on FOB basis) 16.86 12.72
Training expenses & payments to Foreign Technicians 0.00 0.00
Others 0.00 0.00 16.86 12.72
Total 0.00 0.00

10. Value of imports 11. Value of raw materials consumed during the year
during the period
Rs./crores % Rs./crores %
(Calculated on CIF basis)
Current Previous Imported 17.40 3.58 25.23 5.28
Year Year Indigenous 468.92 96.42 452.84 94.72
(Rupees in crores) 486.32 100.00 478.07 100.00

Raw materials 14.45 13.87

Stores, Spares and 12. Value of stores/spares & components consumed during the year
Components 4.63 4.34
Rs./crores % Rs./crores %
Total 19.08 18.21
Imported 3.96 3.69 6.73 6.09
Indigenous 103.48 96.31 103.77 93.91
107.44 100.00 110.50 100.00

13. Particulars of Directors’ Remuneration SCHEDULE 4

Current Previous EXPENDITURE ON PUBLIC RELATIONS DEPARTMENTS
Year Year Current Previous
Year Year
(Rupees in crores)
(Rupees in crores)
Salaries 0.00 0.00
Company’s contribution to provident Employees remuneration & benefits 0.27 0.25
fund & other funds 0.00 0.00 Expenditure on institutional publicity 0.04 0.06
Leave travel concession 0.00 0.00 Other items of expenditure under publicity 0.05 0.07
Medical benefits 0.00 0.00
Provision for gratuity 0.00 0.00 Total 0.36 0.38
Estimated value of perquisites 0.00 0.00
(Excluding facilities provided in Company's Turnover 911.94 941.37
hospitals the value of which is not readily Percentage 0.04 0.04
ascertainable).
Total 0.00 0.00

SCHEDULE 5

SOCIAL AMENITIES

Expenses Township Education Medical Social & Co-operative Transport Total Previous
Cultural Societies & Dairy year
activities

(Rupes in crores)
Employees’
Remuneration & Benefits
Salaries & wages 8.02 2.02 9.73 0.55 0.00 1.76 22.08 21.15
Annual Bonus 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.53
Co. contribution to PF & other funds 0.68 0.21 0.86 0.06 0.00 0.19 2.00 1.94
Travel concession 0.27 0.08 0.13 0.01 0.00 0.02 0.51 0.43
Welfare expenses 0.08 0.04 0.15 0.02 0.00 0.03 0.32 0.30
Consumption of medicines 0.02 0.01 1.80 0.19 0.00 0.01 2.03 2.04
Coke subsidy 1.64 0.00 0.00 0.00 0.00 0.00 1.64 1.64
Gratuity 0.51 0.25 0.36 0.04 0.00 0.09 1.25 0.97

Total 11.22 2.61 13.03 0.87 0.00 2.10 29.83 29.00

Stores & Spares 0.77 0.00 0.14 0.00 0.00 0.12 1.03 0.93
Repair & maintenance 1.20 0.00 0.03 0.00 0.00 0.12 1.35 1.14
Power & fuel 7.88 0.18 0.60 0.18 0.00 0.00 8.84 8.39
Miscellaneous expenses 1.14 1.00 0.75 0.31 0.00 0.01 3.21 2.79
Depreciation 1.70 0.06 0.21 0.01 0.00 0.22 2.20 2.23
Total 23.91 3.85 14.76 1.37 0.00 2.57 46.46 44.48
Less: Income 7.48 0.06 1.55 0.00 0.00 0.21 9.30 5.32

Net Deficit 16.43 3.79 13.21 1.37 0.00 2.36 37.16 39.16

116
 THE INDIAN IRON & STEEL COMPANY LIMITED

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. 2 9 3 7 State Code 2 1

Balance-Sheet Dated 3 1 0 3 2 0 0 2

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement N I L

III. Position of Mobilisation and Redeployment of Funds (Amount in Rs. Thousands)

Total Liabilities 6 2 1 7 9 0 0 Total Assets 6 2 1 7 9 0 0

Sources of Funds

Paid-up Capital 3 8 7 6 6 0 0 Reserves & Surplus 3 5 1 0 0

Secured Loans 1 3 1 7 1 0 0 Unsecured Loans 4 7 6 8 0 0

Application of Funds

Net Fixed Assets 3 1 8 1 0 0 Investments 7 0 0

Net Current Assets — 5 5 6 5 8 0 0 Misc. Expenditure 1 1 8 3 0 0

Accumulated Losses 7 9 7 1 4 0 0

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover 9 1 1 9 4 0 0 Total Expenditure 1 0 9 1 8 1 0 0

Profit Before Tax — 1 7 9 8 7 0 0 Profit After Tax — 1 7 9 8 7 0 0

Earnings per Share — V E Dividend Rate % N I L

(Annualised) (Rs.)

V. Generic Names of Three Principal Products/Services of Company (as per Monetary Terms)

Item Code No.(ITC Code) 7 2 0 1 1 0 0 0 / 1 2 0

Product Description P I G I R O N

Item Code No.(ITC Code) 7 2 1 6 6 6 0 0 2

Product Description S A L E A B L E S T E E L

Item Code No.(ITC Code) 7 3 2 5

Product Description C A S T I N G S

117
Auditors' Report ANNEXURE-I TO THE DIRECTORS
THE INDIAN IRON & STEEL COMPANY LIMITED
T

COMMENTS MANAGEMENT'S REPLY

To
The Members of THE INDIAN IRON & STEEL CO. LTD.
1.0 We have audited the attached Balance Sheet of The Indian Iron & Steel Co. Ltd. as at 31st March,
2002 and the Profit & Loss Account for the year ended on that date annexed thereto, in which the
accounts of plants, collieries, iron ore mines and stockyards-cum- sales offices are incorporated.
These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.
2.0 We have conducted our audit in accordance with auditing standards generally accepted in India.
Those Standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
3.0 We report as follows:
3.1 Liability of Rs.13.63 crore for future benefits payable under Family Benefit Scheme as referred to The expenditure incurred upto 31st March 2002 has been fully charged to Profit & Loss Account and
in note no. 4.5 in schedule 3 has been deferred over a period of 5 years instead of charging it off fully the future liability has been treated as deferred revenue expenditure to be written-off in five years as in
in the current year. Because of the above, the loss for the year is understated by Rs.10.91 crore. the case of compensation payable under the Voluntary Retirement Scheme.

3.2 We are unable to comment on the pay revision liability, if any, in view of Government directives
applicable to companies under BIFR (note no. 5.2 in schedule 3).
The long term agreements for employees' pay revision have expired on 30.06.96 for collieries & on
31.12.96 for other Units. Pending finalisation of wage agreements and in view of the Company being
under BIFR, no provision towards the pay revision has been made. Liability, if any, in this regard is
unascertainable. The position has been appropriately disclosed in Notes on Accounts at para 5.2 of
Schedule 3 forming part of the accounts.

3.3 Attention is drawn to note no. 6.4 in schedule 3 regarding underlying assumption of going concern IISCO is having continuous operation and is thus, being properly accounted for as a going concern.
in the preparation of financial statements of the Company.
4.0 As required by the Manufacturing & Other Companies (Auditor’s Report) Order, 1988 issued
by the Company Law Board in terms of section 227(4A) of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in the said Order.
5.0 Further to our comments in paragraphs 3.0 and 4.0 above, we report that:
5.1 We have obtained all the information and explanations, which to the best of our knowledge and
belief were necessary for the purposes of our Audit.
5.2 In our opinion, proper books of account as required by law have been kept by the Company
so far as appears from our examination of those books and proper returns adequate for the
purposes of our audit have been received from stockyards-cum-sales offices not visited by us.
5.3 The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the
books of account.
5.4 In our opinion, read with our comments in paragraph 3.1 above regarding deferment of future Reply as at 3.1
liability payable under Employees’ Family Benefit Scheme which is not in terms of Accounting
Standard – 15 issued by the Institute of Chartered Accountants of India, the Balance Sheet and
the Profit & Loss Account dealt with by this report comply with the Accounting Standards
referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
5.5 On the basis of written representations received from the directors, and taken on record by the
Board of Directors, we report that none of the directors is disqualified as on 31st March, 2002
from being appointed as director in terms of clause (g) of sub section (1) of section 274 of the
Companies Act, 1956. However, in terms of letter dated 22nd March, 2002 from the Department
of Company Affairs, the provisions of section 274(1)(g) are not applicable to the directors
nominated by the Government of India.
6.0 In our opinion and to the best of our information and according to the explanations given
to us, subject to our comments in paragraph 3.1 and 3.2 above, the impact of paragraph
3.2 being not ascertainable, the said Accounts read together with the Accounting Policies and
Notes on Accounts appearing in Schedule 3, give the information required by the Companies Act,
1956, in the manner so required and also give a true and fair view in conformity with the
accounting principles generally accepted in India :
i) in the case of the Balance Sheet, of the state of affairs of the Company as on 31st March, 2002;
and
ii) in the case of the Profit & Loss Account, of the Loss for the year ended on that date.

For and on behalf of the Board of Directors

For and on behalf of
Guha Nandi & Co. S. Ghose & Co.
Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/-

(Dr. B.S. Kundu) (Chandan Chatterjee) (Arvind Pande)
Partner Partner Chairman
Place : New Delhi. Place : New Delhi
Date : 30th May, 2002. Dated : 23rd August, 2002

118
Auditors' Report THE INDIAN IRON & STEEL COMPANY LIMITED

ANNEXURE TO AUDITORS’ REPORT

(Referred to in paragraph 4.0 of our Report of even date)

COMMENTS MANAGEMENT'S REPLY

1. The Company has maintained proper records showing in most cases, full particulars including quantitative details and situation
of its fixed assets.
2. The fixed Assets of the Company, except in some cases, have been physically verified by the management and the discrepancies
noticed on such verification have been ascertained which are not material and necessary provisions have been made in the accounts.
We are informed by the management that the physical verification is conducted in a phased manner by the physical verification teams
of the Company. Having regard to the size of the Company and the nature of its assets, the programme of physical verification,
in our opinion, is reasonable.
3. The Fixed assets of the Company have not been revalued during the year.
4. Except in few cases, stock of semi-finished/finished products and raw materials have been physically verified by the management
at its various locations at the year end. Stores and spare parts are verified in accordance with a regular programme of verification
which, in our opinion, is reasonable. Year end stock of scraps, middlings and boiler-ash have been estimated on the basis of visual
survey/estimates.
5. In our opinion and according to the information and explanations given to us, the procedures for physical verification of stocks,
followed by the Management are generally reasonable and adequate in relation to the size of the Company and the nature of its business.
6. The discrepancies between the physical stocks and book records arising out of physical verification, as stated in foregoing
paragraph, which were material in some cases, have been properly dealt with in the books of account.
7. In our opinion and on the basis of our examination, the valuation of stocks is fair and proper in accordance with the normally
accepted accounting principles and is on the same basis as in the preceding year.
8. The Company has not taken any loan secured or unsecured from companies, firms or other parties listed in the register maintained
u/s 301 of the Companies Act, 1956 or from the companies under the same management as defined under section 370(1B) of the
Companies Act, 1956. Nothing contained in section 370(1B) is, however, applicable with effect from 31.10.1998.
9. The Company has not granted any loan, secured or unsecured, to companies, firms or other parties listed in the register maintained IISCO Ujjain Pipe & Foundry Co.Ltd.(in liquidation) is under Official
under section 301 of the Companies Act, 1956 or to companies under the same management within the meaning of section 370(1B) Liquidator of Hon’ble High Court of Kolkata. In view of above, no interest
of the Companies Act, 1956. However, in respect of dues of Rs. 211.28 lakhs (previous year Rs. 211.28 lakhs) from IISCO Ujjain has been charged on the amount of advance.
Pipe & Foundry Co. Ltd. (in liquidation), a wholly owned subsidiary of the Company, the terms and conditions of the advance
which is in the nature of loan are not specified and no interest is charged during the year on the same.
10. Employees and other parties to whom loans and advances in the nature of loans have been given, are generally repaying the principal
amount as stipulated and are also regular in payment of interest wherever applicable except where such loans and advances are treated
as doubtful. Reasonable steps have been and are being taken for recovery in the defaulting cases.
11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its business for the purchase of stores, raw materials including
components, plant & machinery, equipment and other assets and for the sale of goods.
12. On the basis of our test checks and having regard to the explanations that some of the items purchased are of special nature and
comparable prices are not available, the transactions for the purchase of goods, materials and services, made in pursuance of contracts
and arrangements listed in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year
to Rs.50,000/- or more in respect of each party, have been made at prices which are reasonable having regard to prevailing market
prices for such goods, materials or services or the prices at which transactions for similar goods, materials and services have been
made with other parties.
13. As explained to us, the Company has in general a regular procedure for the determination of unserviceable or damaged stores, raw
materials and finished goods. Reasonable provisions have been made in the accounts for the same.
14. The Company has not accepted any public deposits during the year. With regard to the balance deposit of Rs.0.25 lakhs accepted
earlier, the Company has during the year deposited the same in Investor Education and Protection Fund as required u/s 205C
of the Companies Act, 1956
15. Reasonable records are maintained by the Company for sale, disposal or usage of realisable scraps and by-products.
16. The Internal Audit System of the Company is generally commensurate with its size and nature of business.
17. Maintenance of cost records has not been prescribed by the Central Government under section 209(1)(d) of the Companies Act,
1956 excepting for chemicals. On broad review of the relevant records relating to the said product, we are of the opinion that, prime
facie, the prescribed accounts and records have been maintained.
18. Although the Company is not regular in depositing Provident Fund dues with appropriate authorities, namely the P.F. Trusts, Reconciliation is in progress
as explained to us the Company has more or less deposited the entire amount payable by it within the year. However, attention
is drawn to pending reconciliation of its various provident fund related accounts scattered over the different units which as a whole
is to be taken into consideration.
19. As explained to us no undisputed amounts payable in respect of Wealth Tax, Excise Duty and Customs Duty were outstanding Due to adverse liquidity problem, dues on account of Sales Tax & Income
as on 31st March, 2002 for a period exceeding six months from the date they became payable. However, in respect of Income Tax Tax could not be paid within 31.03.2002. However, Income Tax dues have
deducted at source and Sales Tax collected, undisputed amounts payable for more than six months as at the year end stand at Rs. 93.13 since been deposited with the Income Tax Authorities. Sales Tax dues would
lakhs and Rs. 527.46 lakhs respectively. be cleared with expected improvement in realization arising out of IISCO's
revival package which is under consideration of various agencies.
20. According to the information and explanations given to us no personal expenses have been charged to revenue other than that payable
under contractual obligation or in accordance with the generally accepted business practice.
21. The Company is a sick industrial company within the meaning of Section 3(1)(o) of Sick Industrial Companies (special Provisions)
Act, 1985 and a reference was made on 22.06.1994 under section 15 of the said Act to BIFR, decision of which is pending.
22. In respect of the Company’s trading activities, we are informed that damaged goods have been ascertained and adequately dealt with
in the accounts. For and on behalf of the Board of Directors
For and on behalf of
Guha Nandi & Co. S. Ghose & Co.
Chartered Accountants Chartered Accountants

Sd/- Sd/- Sd/-

(Dr. B.S. Kundu) (Chandan Chatterjee) (Arvind Pande)
Partner Partner Chairman
Place : New Delhi. Place : New Delhi
Date : 30th May, 2002. Dated : 23rd August, 2002

119
Comments of C&AG THE INDIAN IRON & STEEL COMPANY LIMITED
ANNEXURE-II TO THE DIRECTORS’ REPORT

COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT,1956
ON THE ANNUAL ACCOUNTS OF THE INDIAN IRON & STEEL COMPANY LIMITED
FOR THE YEAR ENDED 31ST MARCH, 2002.

COMMENTS MANAGEMENT'S REPLIES

A. Profit & Loss Account

Loss of Rs.179.87 crore for the year would increase further in view of the
following:-
1. Schedule -2.8 – Power & Fuel Rs.100.09 crore : Accepted for appropriate adjustments in the accounts for 2002-03.
Non-provision of liability for the amount payable to DVC towards delayed
payment surcharge on Electricity Bill as per agreement - Rs.1.62 crore
2. Schedule 2.5 – Accretion/Depletion to Stock of Semi/Finished Products –
Rs.31.26 crore
(a) Overvaluation of stock of old Cast Iron Spun Pipes having no market and The stock of Cast Iron Spun Pipes is saleable, satisfying the test of quality. Pipe market
accumulated over the years - Rs.1.80 crore is cyclic in nature and its demand varies linked with various urban/rural projects.
There is pick up in the market for Cast Iron Pipes in the current year. As the stocks are
usable, valuation of Cast Iron Pipes has been made at appropriate rates.

(b) Overvaluation of stock of cast iron general/special castings, steel castings and As per consistent practice followed, the stock of castings is valued at lower of cost or
non-ferrous castings due to adoption of higher rates - Rs.0.75 crore net realisable value. Net realisable value is considered based on weighted average
price applicable for the captive consumption and outside customers. Thus, valuation
of castings has been made at appropriate rates.

(c) Overvaluation of stock of unmoved Refractory Brick Bats - Rs.0.90 crore Despatches have recently started. As the stocks are usable, the valuation of Refractories
Brick Bats has been made at appropriate rates.

B. Notes on Accounts
Liabilities on account of post retirement medical facilities and settlement Accounting Standard (AS)-15 applies to retirement benefits in the nature of either
expenses are not being recognised as per actuary estimate in accordance with a defined contribution scheme or defined benefit scheme. The medical facilities and
AS-15. settlement expenses as provided by the company to retired employees do not fall
within the definition of defined contribution scheme or defined benefit scheme.

Sd/- Sd/-
(R.B.Sinha) (Arvind Pande)
Principal Director of Commercial Audit & Chairman
Place : Ranchi Ex-Officio Member, Audit Board, Ranchi. Place : New Delhi
Dated : 22nd August, 2002 Date : August 23, 2002

120
Review of Accounts THE INDIAN IRON & STEEL COMPANY LIMITED
ANNEXURE-II TO THE DIRECTORS’ REPORT

REVIEW OF ACCOUNTS OF THE INDIAN IRON & STEEL COMPANY LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2002 BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
Note : Review of Accounts has been prepared without taking into account the Comments Under 1999-2000 2000-01 2001-02
Section 619(4) of the Companies Act, 1956 and qualification contained in the Statutory
Auditors’ Report. (in percentages)
1. Financial Position : B. Debt Equity Ratio -ve -ve -ve
The table below summarises the financial position of the Company under broad headings for (Long term debt to equity) [c(i to v but
the last three years: excluding short term loans)/o]
1999-2000 2000-01 2001-02 C. Profitability Ratios
(Rs. in crores) a) Profit before tax to
LIABILITIES i) Capital Employed -ve -ve -ve
a) Paid-up capital ii) Net Worth -ve -ve -ve
i) Government 387.67 387.67 387.67 iii) Sales -ve -ve -ve
ii) Others — — — b) Profit after tax to Equity -ve -ve -ve
b) Reserve & Surplus
i) Free Reserves — — — c) Earning per share -ve -ve -ve
ii) Share Premium Account 0.36 0.36 0.36 (in Rs.)
iii) Capital Reserve 3.97 3.14 3.14 3. Sources and uses of Funds
c) Borrowings
i) From Govt.of India — — — Funds amounting to Rs. 155.70 crore from internal and external sources were realised and
ii) From Financial Institutions/Banks 31.95 31.95 31.95 utilised during this year as given below :-
iii) Foreign Currency Loans — — — (Rs. in crore)
iv) Cash Credit 56.68 56.68 59.34 Source of Funds
v) Others 44.68 44.68 44.68
Total Borrowing (i to v) 133.31* 133.21* 135.97 1. Decrease in working capital 152.94
vi) Interest accrued and due 36.41* 39.92 43.42 2. Increase in Borrowing 2.76
d) i) Current Liabilities and Provisions 597.13 691.45 696.29
ii) Provision for Gratuity 137.87 148.41 163.91 Total 155.70

Total 1296.72 1404.16 1430.76 Utilisation of Funds

1) Loss for the year 179.87
*The Government of India has waived Rs. 1946.17 crore as a part of Financial & Business restructuring during 1999-2000.
Less: Depreciation 29.39
ASSETS Less: Gratuity 15.48 39.47 140.40
e) Gross Block 698.67 785.71 793.74 Less: Miscellaneous Expenditure 10.20 150.60
f) Less : Depreciation 436.34 466.31 487.57
2) Addition to Fixed Assets 9.91
g) Net Block 262.33 319.40 306.17 Add: Adjustment of Assets 0.80
h) Capital Work-in-Progress 85.60* 18.27 11.93 Less : Depreciation WIP 5.63 5.08
I) Investments 0.09 0.09 0.07
3) Decrease in Investments 0.02
j) Current Assets, Loans and Advances 517.46 448.22 303.62
k) Misc. expenditure not written off 1.28 0.91 11.83
Total 155.70
l) Accumulated loss **429.96 617.27 797.14
Total 1296.72 1404.16 1430.76 4. WORKING RESULTS
m) Working Capital [j-d(i)-c(vi)] -116.08 -283.15 -436.09 The table below indicates sales, net loss, etc. during the last three years :
n) Capital Employed (g+m) 146.25 36.25 -129.92
o) Net Worth [a+b(i)+b(ii)-k-l] -43.21 -230.15 -420.94 1999-2000 2000-01 2001-02
p) Net Worth per Rupee -ve -ve -ve
of Paid-up capital (in Rs.) (Rs. in crore)
* The waiver of loan of Rs. 252.30 crore has been adjusted against the accumulated loss. a) Sales 918.06 941.37 911.94
b) Net loss during the year *210.37 187.31 179.87
** The waiver of loan by Government of India of Rs. 1693.87 crore has been adjusted against the c) Percentage of net loss to sales 22.91 19.89 19.72
accumulated loss.
* Due to waiver of loan/interest by Government of India as a part of Financial structuring
(i) The cumulative loss of Rs. 797.14 crore as on 31st March 2002 represents 205.63% of the of SAIL, net loss was decreased by Rs. 238.38 crore.
paid-up capital. The Net Worth having become negative, the Company has been declared sick
and referred to Board for Industrial & Financial Reconstruction (BIFR) on 22 June 1994. 5. INVENTORY LEVELS
2. Ratio Analysis The following table indicates the inventory levels (Net of Provisions) during the last three
Some important financial ratios on the financial health & work of the Company at the end of years :
last 3 years are as under : 1999-2000 2000-01 2001-02
1999-2000 2000-01 2001-02 (Rs. in crore)
(in percentages) Stores & Spares 55.15 47.41 46.60
A. Liquidity Ratio (excluding in transit)
Current Ratio (Current assets to 82 61 41 Raw Materials 25.93 24.19 17.57
Current Liabilities & Provisions (excluding in transit)
and interest accrued and due Semi/Finished goods 151.31 129.69 100.07
but excluding provision for Gratuity) (excluding in transit)
[j/(d(i)+c(vi)] Scrap & Others 7.69 3.69 4.37

6. SUNDRY DEBTORS
The following table indicates the Sundry Debtors and Sales in the last three years :
As on 31st Sundry Debtors Sundry Debtors Total Sundry Sales Percentage of Sundry
March considered good considered doubtful Debtors Debtors to Sales
(Rs. in crore)
2000 238.53 16.18 254.71 918.06 28
2001 176.90 18.46 195.36 941.37 21
2002 71.85 20.81 92.66 911.94 10
Sd/-
(R.B. Sinha)
Place : Ranchi Principal Director of Commercial Audit
Date : 22.08.2002 & Ex-Offcio Member of Audit Board, Ranchi

121
 THE INDIAN IRON & STEEL COMPANY LIMITED
ANNEXURE-III TO THE DIRECTORS’ REPORT

INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS
IN THE REPORT OF THE BOARD OF DIRECTORS)RULES, 1988

A. Conservation of Energy:

Specific energy consumption during 2001-2002 was 9.339 G.cal/tcs against 9.629 G.cal/tcs achieved in 2000-2001. The specific energy consumption was 3.0% lower than
2000-2001 and was lowest ever achieved in IISCO, Burnpur Works.

a) Energy conservation measures taken in 2001-2002 are as follows :

i) Phased out steel making through Open Hearth Furnace route after April, 2001.
ii) Arresting steam leakages by on-line techniques and conventional methods and by installation/replacement of steam traps and valves.
iii) Thermal insulation of bare heating surfaces of boiler & H.P.Steam Lines (Phase-III).
iv) Reduction of boiler coal consumption by (i) minimising process requirements (ii) reconditioning of de-aerators in boiler house No. 3A (iii) sustaining steam quality.
v) Replacement of 51 metres of H.P. Coke Oven Gas pipeline from Burnpur to Kulti Works.
vi) On line sealing of leakages on B.F. Gas and C.O. Gas Mains
vii) Improvement in operational & maintenance practices in Coke Oven to increase C.O. Gas recovery.
viii) Patch repair of detected damages in deck of B.F. Gas holder in a short shutdown

b) Additional investments and proposals being implemented for reduction of consumption of energy during 2002-2003:

i) Arresting steam leakages using on-line conventional methods and by installation/replacement of steam traps and valves.
ii) Replacement of 75 metres of H.P. Coke Oven Gas pipeline from Burnpur to Kulti Works.
iii) On line sealing of leakages on B.F. Gas and C.O. Gas Mains
iv) Overhauling of Blast Furnace Gas Holder
v) Optimisation of performance of R.H. Furnace in M&R Mill
vi) Optimisation of performance of Soaking Pits Nos. 5 & 6
vii) Recommissioning of Gas Mixing Stations at Rolling Mills Complex
viii) Recommissioning of ratio controller in stoves of B.Fce.3 for automatic control of combustion air volume

c) Impact of measures at (a) and (b) above for reduction of energy and cost are as follows :

Measures taken during 2001-2002

i) 13,877 G. cal worth Rs. 36 lakhs (of energy equivalent) was saved
ii) Eliminated leakage @ 1 tph of steam
iii) Heat savings @ 0.44 G cal/hr due to reduction of losses
iv) Boiler coal consumption of Rs. 2 crores was reduced over budget
v) Provision for supplying additional C.O. Gas to Kulti Works was created following partial elimination of choked pipeline.
vi) Gas losses worth Rs. 13 lakhs were arrested by on-line leak sealing of C.O. Gas and B.F. Gas Mains and Gas hazards were eliminated.
vii) C.O. Gas yield improved by 1% over budget. C.O. Gas yield achieved was 298 m³/tdc against APP of 295 m³/tdc
viii) B.F. Gas leakage in B.F. Gas holder was reduced by 300 m³/hr.

Measures planned to be taken up during 2002-2003 :

i) Steam leakage elimination is expected to reduce steam leakage @ 1 tonne/hr.

ii) Further pipeline replacement during 2002-2003 is expected to improve C.O. Gas supply and thereby help in Oil Conservation.
iii) Online sealing of Gas Pipeline leakages will minimise gas losses and will help to ensure industrial safety.
iv) Overhauling of B.F. Gas holder will help in arresting leakage from the gas holder. Expected financial savings Rs. 35 lakhs per year.
v) Optimisation of operation of the existing reheating furnace at M&R Mill is expected to improve productivity, specific heat consumption and scale loss.
vi) Recommissioning of Gas Mixing station in Rolling Mills will help in the improvement of thermal regime in reheating furnaces, which will lead to better quality of steel
and improve byproduct gas management.
vii) Recommissioning of air gas ratio controller in stoves of B.Fcs.3 is expected to optimise combustion air flow in stoves and thereby improve overall stove efficiency.

122
 THE INDIAN IRON & STEEL COMPANY LIMITED

FORM - A FORM - A
FORM FOR DISCLOSURE OF PARTICULARS WITH FORM FOR DISCLOSURE OF PARTICULARS
RESPECT TO CONSERVATION OF ENERGY WITH RESPECT TO CONSERVATION OF ENERGY

Pariticulars Unit Current year Previous year Pariticulars Unit Current year Previous year
2001-2002 2000-2001 2001-2002 2000-2001

BURNPUR WORKS : KULTI WORKS:

A. Power & Fuel Consumption : A. Power & Fuel Consumption:

1. Electricity 1. Electricity
6
a) Purchase Unit 10 KWH 112.70 101.28 6
a) Purchase Unit 10 KWH 31.68 32.75
Total Amount Rs./Lakhs 3606.87 3157.69
Rate/Unit Rs./KWH 3.20 3.12 Total Amount Rs./Lakhs 1051.50 1093.50

b) Own Generation: Rate/Unit Rs./KWH 3.32 3.34

Through diesel
generator Set Nil Nil Nil b) Own Generation _ _ _
Through Steam
Turbine/ 2. Coal ‘000T 0.3 _
6
Generator Unit 10 KWH 121.48 124.69 Rs./Lakh 3.78 –
Units per litre
of Fuel Oil/Gas KWH/G.Cal 179.01 176.10 3. Furnace Oil Rs./T 1216.41
Cost/Unit Rs./KWH 3.34 3.07
Quantity KL 274.818 179.651
2. Coal Total Amount Rs./Lakhs 24.43 15.68
a) Coking Coal
(indigenous) Average Rate Rs./KL. 8889.52 8728.03
Used in
Coke Ovens: 4. Others/Internal
Quantity (wet) Tonne 963820 975492 Generation _ _ _
Total Cost Rs./Lakhs 24582.54 21984.56
Avg.Rate Rs./Tonne 2550.53 2253.69 5. CONSUMPTION PER UNIT OF PRODUCTION
Electricity _ _ _
b) Coking Coal(imported)
Used in coke Ovens: Spun Pipes KWH/MT 212 270
Quantity(wet) Tonne 50020 83993
Total cost Rs./Lakhs 1740.04 2523.47 Castings KWH/MT 449 662
Avg.Rate Rs./Tonne 3478.69 3004.38
(This excludes electricity Consumption for Services and Non-works
c) Non-Coking Coal Departments which is 626 KWH/MT in 2001-2002 and 700
Used in Boilers: KWH/MT in 2000-2001)
Quantity(wet) Tonne 183533 184341
Total cost Rs./Lakhs 1905.54 1405.22
Avg.Rate Rs./Tonne 1038.25 762.29

3. Furnace Oil Quantity KL 3.0 5.0

Total Amount Rs./Lakhs 0.12 0.21
Avg.Rate Rs./KL 4140 4140
Other/Internal
Generation - - -

B. Consumption Per Unit

of Production
Electricity KWH/TCS 553.4 580.0
Furnace Oil KL/TCS - -
Coking Coal T/TCS 2.932 3.216
Non-Coking Coal T/TCS 0.531 0.559

123
 THE INDIAN IRON & STEEL COMPANY LIMITED
ANNEXURE-III TO THE DIRECTORS’ REPORT

FORM - B
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

Research & Development

1. Following projects were carried out in the year 2001-2002 in continuation from the year 2000-2001 :
a) Statutory monitoring of particulate PAH in Coke Oven work zone
b) Development of technology for protection of hearth in BF Nos. 3 & 4 by charging ilmenite sand through tuyeres of Blast Furnace.
c) Improvement in the productivity and quality of structurals at Light Structural Mill resulting reduction in operational delay and reduction of
cobble generation.
2. Future Plan of Action
a) Improvement in productivity and reduction in operational delay in LS Mill (Ongoing)
b) Improvement of clean coal quality at Chasnalla
c) Study to improve the operation of Re-heating Furnace in M&R Mill
d) Statutory monitoring of particulate PAH in Coke Oven work zone
3. Expenditure on R&D
a) Capital : Nil
b) Revenue : Rs. 25 lakhs
c) Total of R&D expenditure as a percentage of total turnover : 0.03%

Technology Absorption, Adaptation and Innovation

1) Rapid water quenching system was successfully introduced in M&R Mill for production of TMT bars in sizes of 16mm dia to 32mm dia.
Corrosion resistant steel was manufactured and rolled successfully into TMT bars, in Fe 500 grade.
2) Injection of ilmenite sand through tuyere at Blast Furnaces was introduced for protection of furnace hearth.
3) Use of unscreened sinter brought from DSP (upto 50% sinter in the burden), was successfully tried out in Blast Furnaces achieving beneficial
results.
4) Roller guides were successfully introduced in finishing stand of LS Mill for 50 mm dia to 80 mm dia Round, for increasing productivity,
reduction of relegation and reduction of cobbles.
5) Slag separator system introduced in Twin Hearth Furnace at Steel Melting Shop to minimise non metallic inclusions content in steel and to
increase recovery of Fe alloys thereby its savings.
6) On line purging facilities was introduced in Twin Hearth furnace at Steel Melting Shop for better homogeneity of steel and to minimise
temperature loss of steel of the order of 30ºc to 40ºc.
7) Manufacturing of intricate castings like Coke Oven door frame, door body was started in Foundry of Burnpur Works directly from Hot Metal
of Blast Furnace.
8) Use of LD Slag in Blast Furnace was intensified upto 60 Kg/MT.

124
 THE INDIAN IRON & STEEL COMPANY LIMITED

Primary Business Segment-Wise information for the year ended 31.03.2002

(Rs. in crores)
Particulars Burnpur Kulti Collieries Ore Total Eliminations Total
Mines Segment Enterprise
REVENUE
External Sales 795.33 47.14 58.23 11.24 911.94 911.94
Inter segment sales 31.84 23.51 173.62 25.77 254.74 -254.74 0.00
TOTAL REVENUE 827.17 70.65 231.85 37.01 1166.68 -254.74 911.94
Total revenue of each segment
as a % of total revenue of all segment 70.90 6.06 19.87 3.17
RESULT
Operating profit(+)/loss(–) -144.64 -41.39 18.81 -1.12 -168.34
Interest expenses 9.29 0.99 0.60 0.75 11.63
Interest income 0.09 0.01 0.00 0.00 0.10
Income Taxes 0.00 0.00 0.00 0.00 0.00
Net Profit (+)/Loss(–) -153.84 -42.37 18.21 -1.87 -179.87
OTHER INFORMATION
Segment assets (excl.capital WIP & int Rec./Acc.)456.95 63.27 68.78 20.58 609.58 609.58
Unallocated Corporated Assets 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL ASSETS 456.95 63.27 68.78 20.58 609.58 609.58
Segment liabilities (excl. interest Acct. But not due)541.41 82.42 208.30 28.07 860.20 860.20
Unallocated Corporate Liabilities 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 541.41 82.42 208.30 28.07 860.20 860.20
Capital Expenditure 8.59 0.07 6.75 0.13 15.54
Depreciation 15.78 1.21 5.56 1.39 23.94
Non–cash expenditure other than depreciation 12.57 0.57 4.26 0.90 18.30
(based on Actuarial valuation)

Secondary Business segment-wise (Geographical) information for the year ended 31.03.2002
(Rs. in crores)
Particulars Amount %
Sales Revenue
India 888.58 97.44
Foreign Countries 23.36 2.56
TOTAL 911.94 100.00

Assets Carrying amount Addition

of segment to fixed
assets assets

India 609.58 13.63

TOTAL 609.58 13.63

125
Directors’ Report MAHARASHTRA
MAHARASHTRA ELEKTROSMELT
ELEKTROSMELTLIMITED
LIMITED

To RESEARCH & DEVELOPMENT

The Members, Studies were carried out for production of Medium Carbon Ferro Manganese through
thermit process towards reduction in the cost of production and utilisation of Ferro
The Directors have pleasure in presenting the 29th Annual Report of the Company Manganese and Silico Manganese fines.
together with the Audited Accounts for the year ended 31st March, 2002.
HUMAN RESOURCES MANAGEMENT REVIEW
FINANCIAL REVIEW Manpower and its development has been the prime concern for MEL. The employees
During the year the Company has recorded a turnover of Rs. 155.64 crores (including have been trained with a view to gain multi skills and enable them to perform all critical
conversion income of Rs. 133.92 crores) as compared to Rs. 186.97 crores (including jobs. The employees participation and involvement in the overall improvement was the
conversion income of Rs.76.94 crores) in the previous year. Due to increase in power main thrust during the year. In the area of shop improvement, quality circles were
tariff, raw material cost and sluggish market conditions, the Company has incurred a loss formed in the works as well as non-works areas. Suggestion scheme was activated.
of Rs.8.38 crores. (previous year Rs.17.84 crores). The financial results are summarised
below: A Company-wide mass communication exercise has been started involving all the
executives and a major cross section of non-executives with a view to appraise the
Rs. in crores employees about financial status of the Company and the plans for the next financial
2001-2002 2000-2001 year. In the communication workshops the employees are made aware of Company’s
strength, weakness, opportunities and threats. During the workshops various working
Turnover 155.64 186.97 groups are formed to interact among themselves to make action plans for further
improvements and to meet future challenges.
Operating Profit/Loss(-) (-) 4.78 (-) 8.32
Regular training programmes were organised during the year wherein 120 executives
Interest 2.34 8.39 and 346 non-executives were covered in various thrust areas viz. Enhancing managerial
Depreciation 1.26 1.13 effectiveness, skill development, etc.

Net Loss (-) 8.38 (-) 17.84 The manpower strength as on 31st March, 2002 was 885 comprising of 135 Executives
& 750 Non-Executives, out of which 121 were Scheduled Castes & 42 were Scheduled
In view of the loss, the Directors do not recommend any dividend for the year. Tribes. A total of 15 executives and 28 non-executives were separated under Voluntary
Retirement Scheme during 2001-2002.
PRODUCTION REVIEW
The Company’s production of different grades of ferro alloys was as under: During the year conducive and congenial Industrial Relations were maintained through
the support and co-operation of the Trade Union and Officers’ Association.
(M.T.)
ENVIRONMENT
2001-2002 2000-2001 Environment Management and pollution control continued to get top priority in
High Carbon Ferro Manganese 47,299 53,356 company’s activities during the year. To keep environment clean for ecological
protection, thrust was given in the areas of green belt development in and around the
Silico Manganese 32,147 37,011 plant premises, solid waste management, monitoring of liquid and air effluent for
various environmental parameters. In addition to the regular maintenance of existing
Medium Carbon Ferro Manganese: 16,000 teak trees, further 4500 tree saplings were planted during the year.
At plant 1,048 563 To comply with the environmental standards set up by Maharashtra Pollution Control
Through Conversion Agent — 158 Board (MPCB), the capacity of one of the neutralization pits has been enlarged in
secondary treatment of trade effluents. Gas Cleaning Plant for SAF-I & II would also
Medium Carbon FeMn (Thermit) 2 — enhance the availability of clean gas for gainful utilization as a fuel to Sintering Plant,
Lime Kiln and Gas based 4.2 MW Captive Power Plant.
Low Carbon FeMn 2 —
Continuous steps were taken towards gainful utilization of High MnO Slag in SiMn
SALES & MARKETING REVIEW Production, Lumpy SiMn Slag as rail ballast and Sale of SiMn Slag for road construction.
During the year, the Company continued conversion arrangements with SAIL Steel
TOTAL QUALITY & INDUSTRIAL SAFETY
Plants to maximise revenue generation. Vigorous efforts were made by the Company to
Quality Assurance System (QAS) addressed to ISO-9002 (1994) International
find markets outside SAIL, but due to sluggish market conditions, higher sales did not
Standard was successfully maintained in the orgnisation during the year 2001-2002
materialise. Sales volume of different grades of Ferro Alloys were as under:
and was verified by the Certifying Body M/s. LRQA, Mumbai, by conducting
(M.T.) surveillance audit. In addition to the above, the transition activities from ISO-9002
(1994) QAS to ISO-9001-2000 (QMS) has also been carried out on account of
2001-2002 2000-2001 revision in ISO-9000 standards. Accordingly, revised standards ISO-9001-2000 has
recently been implemented.
SAIL STEEL PLANTS
During the year under review in Industrial Safety, the Company has been awarded the
High Carbon Ferro Manganese 42,488 46,562
SAIL Chairman’s Silver Plaque for No Fatal Accident during 2000 and Special
Silico Manganese 30,155 29,037 Commendation Certificate from Ministry of Labour, Govt. of India, for meritorious
performance in Industrial Safety for the year 1999.
Medium Carbon Ferro Manganese 683 615
SICK COMPANY
OTHER CUSTOMERS Though the Company has taken various steps to improve its performance, the Company
has continuously incurred loss due to increase in raw material cost, sluggish market
High Carbon Ferro Manganese 3,003 9,451
conditions and enhanced power tariff, which have eroded its networth as on 31/3/
Silico Manganese 851 7,777 2001. Thus the Company became a sick company under Section 3(o) of the Sick Industrial
Companies (Special Provisions) Act, 1985. Reference under Section 15 of the said Act
Medium Carbon Ferro Manganese 230 — has been registered by the BIFR.

126

FUTURE PLAN
To achieve the objectives of the Corporate Plan 2005, studies were carried out for
production of Medium Carbon Ferro Manganese through thermit process towards
reduction in the cost of production and utilisation of Ferro Manganese and Silico
Manganese fines.
Installation of 30 MW Power Plant on Build, Operate, Lease and Transfer (BOLT)
basis is under consideration.
Production of special Ferro Alloys like Ferro Titanium, Ferro Molybdenum is under
examination.
REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
ETC.
Information in accordance with the provisions of Section 217(1)(e) of the Companies
Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 regarding Conservation of Energy, Technology Absorption and
Foreign Exchange Earnings and Outgo, is given at Annexure —I, II & III to this report.
PARTICULARS OF EMPLOYEES
There was no employee of the Company who received remuneration in excess of the
limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees) Rules, 1975.
DIRECTORS
Shri A.K. Jayswal, Director, has resigned w.e.f. 15th January, 2002.
Shri G. Upadhayaya, Director, has resigned w.e.f. 31st March, 2002.
Shri B.K. Singh has been appointed as Director w.e.f. 20th March, 2002.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956 it is hereby confimred that:
i) in the preparation of the annual accounts, the applicable accounting standards
had been followed along with proper explanation relating to material departures;
ii) the directors had selected such accounting policies and applied them consistently
and made judgements and estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company at the end of the financial
MAHARASHTRA ELEKTROSMELT LIMITED
year and of the profit or loss of the Company for that period;
iii) the directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with provisions of the Companies Act for
safeguarding the assets of the Company and for preventing and detecting fraud
and other irregularities ;
iv) the directors had prepared annual accounts on a going concern basis.
CORPORATE GOVERNANCE
In terms of listing agreement with the Stock Exchanges a report on Corporate Governance
is given at Annexure-IV to this report. The Management Discussion & Analysis Report
is given at Annexure-V. A certificate from Auditors of the company regarding compliance
of conditions of Corporate Governance is placed at Annexure-VI to this report.
AUDITORS' REPORT
The Statutory Auditors’ Report on Accounts of the Company for the financial year
ended 31st March, 2002 alongwith Management’s replies are enclosed. The comments
of Comptroller and Auditor General of India under Section 619(4) of the Companies
Act, 1956 alongwith review on accounts of the Company for the year ended 31st March,
2002 are also enclosed at Annexure-VII.
ACKNOWLEDGEMENT
The Board of Directors wish to place on record their appreciation for the support, Co-
operation and loyalty extended by every employee of the Company. They wish to
acknowledge the continued support extended by Steel Authority of India Limited. The
Directors also greatly appreciate the excellent support the Company received from
Shareholders, Auditors, Bankers, Financial Institutions, Central & State Governments,
Local Authorities, Maharshtra Electricity Regulatory Commission (MERC), Electricity
Board and the Suppliers and Customers.
For & on behalf of the Board
Sd/-
Place : New Delhi. (V. S. JAIN)
Date : 29th June, 2002 Chairman
127
 Balance Sheet AS AT 31ST MARCH, 2002
MAHARASHTRA ELEKTROSMELT LIMITED

Schedule As at 31st As at 31st

NO. March, 2002 March, 2001
(Rupees in lakhs)

SOURCES OF FUNDS :
SHAREHOLDERS’ FUNDS:
Share Capital 1.1 2400.00 2400.00
Reserves & Surplus 1.2 15.00 15.00

2415.00 2415.00
LOAN FUNDS:
Secured Loans 1.3 1712.93 1536.05
Unsecured Loans 1.4 1497.34 591.78
3210.27 2127.83

TOTAL 5625.27 4542.83

APPLICATION OF FUNDS:
FIXED ASSETS :
Gross Block 1.5 5471.22 3943.63
Less: Depreciation 2835.40 2709.76

Net Block 2635.82 1233.87

Capital Work-in-progress 1.6 11.86 1444.69

2647.68 2678.56
CURRENT ASSETS, LOANS AND ADVANCES
Inventories 1.7 3276.06 2831.12
Sundry Debtors 1.8 204.46 305.19
Cash and Bank Balances 1.9 299.22 464.03
Interest Receivable 1.10 74.03 80.74
Loans and Advances 1.11 1285.55 1378.05

5139.32 5059.13
Less: CURRENT LIABILITIES & PROVISIONS 1.12 7220.90 7343.97

Net Current Assets –2081.58 –2284.84

Miscellaneous Expenditure 1.13 215.54 143.58
(To the Extent not written off or adjusted)
Profit & Loss Account 4843.63 4005.53

TOTAL 5625.27 4542.83

Notes on Accounts 3
Schedules 1 to 3 form part of Accounts

As per our report of even date attached For and on behalf of Board of Directors
FOR A.K. JHUNJHUNWALA & CO. Sd/- Sd/-
Chartered Accountants (R. ASHOKKUMARR) (R.K. GUPTA)
Company Secretary Executive Director

Sd/- Sd/- Sd/-

(M.A. GOHEL) (T.K. GUPTA) (V.S. JAIN)
Partner General Manager (F&A) Chairman

Place : New Delhi

Date : 29th May, 2002

128
Profit and Loss Account MAHARASHTRA ELEKTROSMELT LIMITED
FOR THE YEAR ENDED 31ST MARCH, 2002

Schedule Year ended Year ended

No. 31st March, 2002 31st March, 2001
(Rupees in lakhs)

INCOME
Sales 2.1 15564.22 18697.16
Accretion/Depletion in Stock of Finished Goods 2.2 447.53 –792.26
Interest Earned 2.3 60.30 113.93
Other Revenues 2.4 83.67 113.20
Provision no longer required written back 0.14 7.28

TOTAL 16155.86 18139.31

EXPENDITURE
Raw Materials Consumed 2.5 1556.03 3300.23
Employees’ Remuneration and Benefits 2.6 2061.72 1614.23
Stores and Spares Consumed — 303.59 330.80
Power and Fuel — 9139.59 10079.78
Repairs and Maintenance 2.7 26.43 34.24
Excise Duty — 2790.43 2796.73
Other Expenses and Provisions 2.8 756.53 815.25
Interest 2.9 233.85 838.97
Depreciation 125.89 113.36

TOTAL 16993.96 19923.62

Net Loss for the year -838.10 -1784.31

Profit/Loss brought forward from previous year –4005.53 –2221.22

Balance of Loss carried forward to Balance Sheet –4843.63 –4005.53

Notes on Accounts 3
Schedules 1 to 3 form part of Accounts

As per our report of even date attached For and on behalf of Board of Directors
FOR A.K. JHUNJHUNWALA & CO. Sd/- Sd/-
Chartered Accountants (R. ASHOKKUMARR) (R.K. GUPTA)
Company Secretary Executive Director

Sd/- Sd/- Sd/-

(M.A. GOHEL) (T.K. GUPTA) (V.S. JAIN)
Partner General Manager (F&A) Chairman

Place : New Delhi

Date : 29th May, 2002

129
Schedules MAHARASHTRA ELEKTROSMELT LIMITED

1.1 SHARE CAPITAL As at As at 1.3 SECURED LOANS As at As at

31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in lakhs) (Rupees in lakhs)
TERM LOANS FROM :
Authorised :
30,000,000 Equity Shares of Housing Development Finance
Rs.10/- each 3000.00 3000.00 Corporation Ltd. 145.43 178.56
[Due for repayment within
3000.00 3000.00 one year Rs.42.73 lakhs
(Rs.36.11 lakhs)]

Issued : Interest accrued and due 3.88 4.54

24,000,000 Equity Shares of 149.31 183.10
Rs.10/- each 2400.00 2400.00
CASH CREDIT FROM BANKS : 1563.62 1352.95
Subscribed and Paid-up : [Secured by hypothecation of '
24,000,000 Equity Shares of stocks, stores and book debts
Rs.10 /- each fully paid-up [*] 2400.00 2400.00 and are guaranteed by the
Steel Authority of India Limited
TOTAL 2400.00 2400.00 (Holding Company)]

[*] Of the above, 237,87,935(237,87,935) TOTAL 1712.93 1536.05

Equity Shares are held by
Steel Authority of India Limited -
Holding Company

1.2 RESERVES & SURPLUS As at As at 1.4 UNSECURED LOANS As at As at

31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in lakhs) (Rupees in lakhs)
FROM SICOM LIMITED
CAPITAL RESERVE 15.00 15.00
(Represents amount received Interest free loan :
from Central Government by For sales tax 591.78 591.78
way of Capital subsidy) [Due for repayment within
one year Rs.113.84 lakhs
(Rs.90.88 lakhs)]
GENERAL RESERVE
As per last Balance Sheet 0.00 77.13 From Steel Authority of India Limited
(Holding Company)
Less : Transferred to Profit & Loss A/c. 0.00 77.13 Interest Bearing Loans 905.56 0.00
(Due for repayment within one year Rs. Nil lakhs
0.00 0.00 (Rs. Nil lakhs)
TOTAL 15.00 15.00 TOTAL 1497.34 591.78

1.5 FIXED ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Sales/ As at Up to During On Sales/ Up to As at As at
31st During Adjust- 31st 31st the Adjust- 31st 31st 31st
March, the ments March, March, year ments March, March, March,
2001 year (Net) 2002 2001 (Net) 2002 2002 2001
(Rupees in lakhs)
Land - Freehold 29.79 0.00 0.00 29.79 0.00 0.00 0.00 0.00 29.79 29.79
Building and Roads
- Factory Buildings 387.81 240.44 0.00 628.25 184.01 14.96 0.00 198.97 429.28 203.80
- Other than Factory Buildings 300.10 0.00 0.00 300.10 62.85 4.89 0.00 67.74 232.36 237.25
Railway Sidings 108.58 0.00 0.00 108.58 103.15 0.00 0.00 103.15 5.43 5.43
Plant and Machinery 2920.65 1202.61 0.00 4203.26 2215.29 97.47 0.00 2312.76 1890.50 705.36
Tubewells 24.31 0.00 0.00 24.31 17.01 0.46 0.00 17.47 6.84 7.30
Furniture and Fixtures 95.97 2.26 -0.20 98.03 65.12 4.26 -0.08 69.30 28.73 30.85
Computers 41.60 2.82 -0.34 44.08 34.15 1.58 -0.17 35.56 8.52 7.45
Vehicles 34.82 0.00 0.00 34.82 28.18 2.27 0.00 30.45 4.37 6.64

Total 3943.63 1528.13 –0.54 5471.22 2709.76 125.89 -0.25 2,835.40 2635.82 1233.87

Previous Year Total 3933.90 26.65 –16.92 3943.63 2611.21 113.36 -14.81 2709.76 1233.87 1322.69

130
 MAHARASHTRA ELEKTROSMELT LIMITED

1.6 CAPITAL WORK-IN-PROGRESS As at As at 1.9 CASH AND BANK BALANCES As at As at

31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in lakhs)
Expenditure during construction 0.00 194.07 (Rupees in lakhs)
pending allocation (Schedule 1.6.1) Cash on hand 1.17 0.97
Capital work-in-progress
Ferro alloy plant 57.42 77.63 Cheques/Drafts on hand 12.87 0.00
Plant & Machinery 20.35 18.02
77.77 95.65 Remittance in Transit 140.00 389.34
Less : Provision 75.44 18.02
2.33 77.63 With Scheduled Banks in :
Power Plant 9.53 1,172.99
— Current Account 125.48 45.79
TOTAL 11.86 1,444.69
— Term Deposit 19.70 27.93

TOTAL 299.22 464.03

1.6.1 EXPENDITURE DURING CONSTRUCTION
(pending allocation) As at As at
31st March, 31st March,
2002 2001 1.10 INTEREST RECEIVABLE As at As at
(Rupees in lakhs) 31st March, 31st March,
Opening Balance 194.07 159.51 2002 2001
Expenditure incurred during the year
Employees’ Remuneration & Benefits (Rupees in lakhs)
Salaries & Wages 39.49 29.00 Employees 52.36 48.43
Technical Consultants’ fees & know-how 1.89 0.79
Stores & Spares 0.46 0.30 Others 24.70 35.34
Other Expenses 0.47 4.47
Interest 0.00 0.00 77.06 83.77
Less : Provision for doubtful interest 3.03 3.03
TOTAL 236.38 194.07 74.03 80.74
Amount allocated to Fixed Assets/CWIP 236.38 0.00
Balance carried forward 0.00 194.07 TOTAL 74.03 80.74

1.7 INVENTORIES 1.11 LOANS AND ADVANCES

(As taken, valued and As at As at (Unsecured, considered good unless otherwise stated)
certified by Management) 31st March, 31st March,
2002 2001 As at As at
(Rupees in lakhs) 31st March, 31st March,
2002 2001
Stores and Spares 392.45 385.76
Add : In transit 0.00 13.54 (Rupees in lakhs)
392.45 399.30 Loans to employees
Less : Provision 146.09 144.08 [Secured Rs.283.60 lakhs 289.46 323.97
246.36 255.22 (Rs.318.69 lakhs)]
Raw Materials : 474.10 456.80
Add : In transit 1.69 12.72 Advances recoverable in cash or
475.79 469.52 kind or for value to be received :
Less : Provision 2.34 2.34
473.45 467.18 Claims recoverable 43.43 86.46
Finished products, by-products
and scrap 1933.05 1485.52 Contractors and Suppliers 93.39 38.97
Less : Provision 1.05 1.05
1932.00 1484.47 Employees 2.91 8.69
Salvaged / Scrapped Fixed Assets 775.08 775.08
(At book or assessed or realisable Income tax deducted at source 42.16 43.83
value whichever is lower)
Less : Provision 150.83 150.83 Accrued Export Incentinve 0.00 45.15
624.25 624.25
TOTAL 3,276.06 2,831.12 Others 162.25 207.08
344.14 430.18
Less : Provision for doubtful
1.8 SUNDRY DEBTORS As at As at advances 91.35 89.90
(Unsecured) 31st March, 31st March, 252.79 340.28
2002 2001
(Rupees in lakhs) Deposits :
Debts due for more than six months 33.66 39.29
Others 189.19 284.29 With Excise Authorities 7.43 2.62
222.85 323.58 With MSEB and Others 735.87 711.18
Less : Provision for doubtful debts 18.39 18.39
204.46 305.19 743.30 713.80
204.46 305.19
PARTICULARS TOTAL 1285.55 1378.05
Considered Good 204.46 305.19
Considered Doubtful 18.39 18.39 1. Amount due from
Steel Authority of India Limtied 3.81 12.35
TOTAL 222.85 323.58 (Holding Company)
Note :
(i) Due from Steel Authority of India 153.72 241.14 Maximum amount due at
Limited (Holding Company) any time during the year 9.51 655.64

131
 Schedules MAHARASHTRA ELEKTROSMELT LIMITED

1.12 CURRENT LIABILITIES AND 2.4 OTHER REVENUES Year ended Year ended
PROVISIONS As at As at 31st March, 31st March,
31st March, 31st March, 2002 2001
2002 2001
(Rupees in lakhs)
(Rupees in lakhs)
CURRENT LIABILITIES : Social amenities-recoveries 6.98 5.09
Sundry Creditors :
Sundry Sales 5.06 15.90
SSI Units 94.51 60.46
Others 4,507.49 4602.00 5,077.52 5,137.98 Liquidated damages 0.73 0.10
Advances From Customers 51.29 81.81
Security Deposits 206.68 195.80 Profit on sale of surplus stores 0.00 0.09
Interest accrued but not due on loans 31.87 0.00
Unclaimed Dividend 0.24 0.24 Profit on sale of Fixed Assets 0.00 0.00
Other Liabilities 1385.41 1,286.51
6,277.49 6,702.34 Sundries 70.90 92.02
PROVISIONS :
Gratuity 419.80 327.20 TOTAL 83.67 113.20
Accrued Leave 188.11 113.43
Income Tax 4.36 12.16
Voluntary Retirement Compensation 198.69 188.84
Employees Family Benefit Scheme 132.45 0.00 2.5 RAW MATERIAL CONSUMED Year ended Year ended
TOTAL 7220.90 7343.97 31st March, 31st March,
2002 2001

1.13 MISCELLANEOUS EXPENDITURE Quantity Rs./lakhs Quantity Rs./lakhs

(To the extent not written off or adjusted) [MT] [MT]

Balance Additions Total Amount Balance Manganese Ore 46269 909.17 114443 2245.98
as at during Charged off as at
31.03.2001 the year during 31.03.2002 Coke 2113 120.62 21455 721.89
the year
Miscellaneous 526.24 332.36
(Rupees in lakhs)
DEFERRED TOTAL 1556.03 3300.23
REVENUE EXPENDITURE :
Voluntary Retirement
Compensation 143.58 32.87 176.45 66.87 109.58 NOTE : Consumption is net of
Employees Family Sale proceeds of
Benefit Scheme 0.00 132.45 132.45 26.49 105.96 Rs.599.86 lakhs
143.58 165.32 308.90 93.36 215.54 (Rs.684.73 lakhs).
Previous year 191.44 0.00 191.44 47.86 143.58

2.6 EMPLOYEES' REMUNERATION

2.1 SALES Year ended Year ended AND BENEFITS Year ended Year ended
31st March, 31st March, 31st March, 31st March,
2002 2001 2002 2001
(Rupees in lakhs) (Rupees in lakhs)
Ferro Alloys 2134.16 10554.41 Salaries and wages 1605.63 1335.58
Conversion 13391.78 7694.17
Exports 0.00 347.85 Co’s contribution to provident
Export Incentive 0.00 45.15 and other funds 156.92 114.87
Others 38.28 55.58
TOTAL 15564.22 18697.16 Travel concession 11.15 0.96

Welfare expenses 104.64 102.93

2.2 ACCRETION/DEPLETION IN Gratuity 183.38 59.89
STOCK OF FINISHED GOODS Year ended Year ended
31st March, 31st March, TOTAL 2061.72 1614.23
2002 2001
(Rupees in lakhs)
Closing Stock 1933.05 1485.52
Less : Opening Stock 1485.52 2277.78 2.7 REPAIRS AND MAINTENANCE Year ended Year ended
INCREASE/DECREASE TOTAL 447.53 -792.26 31st March, 31st March,
2002 2001

2.3 INTEREST EARNED (GROSS) Year ended Year ended (Rupees in lakhs)
31st March, 31st March,
2002 2001 Buildings and roads 10.16 14.52
(Rupees in lakhs) Plant and machinery 6.92 6.20
Employees 18.46 22.59
Others * 41.84 91.34 Others 9.35 13.52
TOTAL 60.30 113.93
TOTAL 26.43 34.24
* Tax deducted at source Rs.5.65 lakhs (Rs.9.21 lakhs).

132
 MAHARASHTRA ELEKTROSMELT LIMITED

2.8 OTHER EXPENSES AND PROVISIONS Machinery spares which can be used only in connection with an item of fixed assets and
Year ended Year ended whose use as per technical assessment is expected to be irregular are capitalised.
31st March, 31st March, 1.2 DEPRECIATION:
2002 2001 Depreciation is provided on straight line method at the rates and in the manner specified in
Schedule XIV of the Companies Act,1956.
(Rupees in lakhs) Low value items costing Rs.5000 or below are depreciated fully in the year of its acquisition.
Depreciation on assets installed/disposed off during the year is provided with respect to the
Export Sales Expenses 0.00 5.49 month of addition/disposal thereof.
Extra shift depreciation is provided treating a particular plant as one unit.
Bank charges 14.17 26.71 Machinery spares capitalised and adjustment to fixed assets on account of fluctuations in
Demurrage and wharfage -0.16 1.96 foreign exchange rates are depreciated over residual usefull life of the respective assets.
1.3 GOVERNMENT GRANTS
Handling and scrap recovery Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of
- Contractors 340.66 340.15 the assets concerned in arriving at their book value.
Insurance 16.74 23.01 Grants-in-aid related to revenue items are netted against the related expenses.
1.4 BORROWING COST
Legal charges 2.56 1.99 Borrowing costs relating to the acqulsition/construction of qualifying assets are capitalised
Postage, telegram & telephone 19.15 14.56 until the time all substantial activities necessary to prepare the qualifying assets for their
intended use are complete.
Printing and stationery 2.70 3.98 A qualifying asset is one that necessarily takes substantial period of time to get ready for its
intended use.
Rates and taxes 64.04 30.65
All other borrowing costs are charged to revenue.
Rent 8.40 8.60 1.5 INVENTORY:
Inventory is valued on the following basis:
Travelling expenses 60.76 57.03 Finished products : Cost
Sundries 72.87 82.05 Or
Net realisable value whichever is lower.
Remuneration to auditors: Raw Materials : Cost
Audit fees 1.09 0.98 Or
Net realisable value whichever is lower.
Tax audit fees 0.33 0.32 Cost is arrived for :
Coke – Weighted average cost.
Out of pocket expenses 0.43 0.19 Others – First in First out
In Other Capacities 0.00 0.60 Stores & Spares : Weighted average cost. However, in the case of
stores & spares declared obsolete/surplus and
1.85 2.09 stores & spares not moved for five years or more,
Provisions : provision is made at 75% and 10% respectively of
the book value and charged to revenue.
Doubtful debts 0.00 0.01 By products and process
Scrap/ Mn Ore Fines/Coke
Doubtful advances 0.00 0.00 rejects/Steel process material : Net realisable value
Doubtful interest 0.00 0.00 Sinters : Replacement cost of Mn Ore.
1.6 DEFERRED REVENUE EXPENDITURE:
Diminuation in the value of Expenses incurred on development of new projects, cost of feasibility studies for new projects,
fixed asset & materials 59.43 169.14 payment of technical knowhow/documentation, is treated as development expenditure.
Deferred Revenue Expenditure 93.36 47.86 Expenditure incurred on feasibility studies, technical know-how/documentation and other
development expenditure is added to the capital cost of the project, if implemented. In case
152.79 217.01 the project is abanoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as
TOTAL 756.53 815.28 deferred revenue expenditure and written off in five years. Further, annual increase/decrease
to the above liability actuarially ascertained, is taken to Profit and Loss account, after adjustment
of payments thereof during the year. Incremental liability against Voluntary Retirement
Schemes due to wage revision is charged corresponding to the period for which deferred
2.9 INTEREST Year ended Year ended revenue expenditure relating to such Voluntary Retirement Scheme is amortised, with the
31st March, 31st March, first charge been made for the entire lapsed period in the year in which such wage agreement
2002 2001 is finalised. The future liability to the disabled employees/legal heirs of deceased employees
under the Employees' Family Benefit Schemes is treated as deferred revenue expenditure and
(Rupees in lakhs)
written off over period of 5 years.
Cash credit & Other deferred revenue expenditure including expenditure on consultancy/technological
other financing charges 239.48 281.80 assistance for strategic cost reduction and quality improvements is written off in five years.
1.7 FOREIGN CURRENCY TRANSACTIONS:
Other -5.63 557.71 Foreign currency assets and liabilities (other than those covered by forward contracts) as on
the Balance Sheet date are converted at the year end exchange rates and loss or gain arising
TOTAL 233.85 838.97 thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss
Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded
at the rated prevailing on the date of transactions.
In case of foreign currency transactions covered by forward contracts, the difference between
contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost
ACCOUNTING POLICY :
of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately
1. BASIS OF ACCOUNTING: over the contract period.
The company prepares its accounts on accrual basis under historical cost convention as per
1.8 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATIONS
the generally accepted accounting principles. Claims for liquidated damages are accounted for as and when these are deducted from the
1.1 FIXED ASSETS: Suppliers’ bill. These are treated as income on completion of the projects/final settlement.
All fixed assets are stated at historical cost less depreciation. Suppliers’/Contractors’ claims for price escalation are accounted for, to the extent such
Fixed assets whose actual costs can not be accurately ascertained are initially capitalised on claims are accepted by the company.
the basis of estimated cost and final adjustments for cost and depreciation, if any, are made
1.9 RETIREMENT BENIFITS:
retrospectively on ascertainment of actual cost. The provisions for gratuity and leave encashment liabilities are made on the basis of year-end
Expenditure incurred during trial run period are capitalised till the concerned assets are actuarial valuation.
ready for commercial production.

133
 Schedules MAHARASHTRA ELEKTROSMELT LIMITED

1.10 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES: earlier accounted for has been adjusted during the year. Arising out of this, no further interest
Income/expenditure relating to prior periods and prepaid expenses, which do not exceed has been provided for as the existing liability for the same is adequate.
Rs.5.00 lakh in each case, are treated as income/expenditure of the current year. 2.10 The Company has retained Rs.54.83 lakhs (Rs.54.86 lakhs) under Employees’ Family Benefit
1.11 SALES: Scheme which is exempt under section 58 A of the Companies Act, 1956.
Materials sold in domestic market are treated as sales on delivery to carriers. Export sales are 2.11 Unlike previous years, the future liability for benefits payable to the disabled employees/legal
treated as Sales on issue of Bill of Lading. heirs of deceased employees under the Employees’ Family Benefit Scheme have been provided
“Sales and conversion charges” include packing charges, excise duty but exclude sales tax. and treated as deferred revenue expenditure as referred to in Accounting Policy 1.6 above,
1.12 EXPORT INCENTIVE: resulting into an increase in loss for the year by Rs.26.49 lakhs.
Export incentives in the form of Special/Advance Licenses and credit earned under Duty Entitlement 2.12 The Central Board of Direct Taxes vide its Notification dated 25th September,2001 has revised
Pass Book Scheme (DEPB) and Duty Drawback, are treated as income in the year of export, the rules for computation of certain perquisites. The Employees’ Union/Association of SAIL
at estimated realisable value/actual credit earned on exports made during the year. (our holding company) have filed writ petitions with the Hon’ble High Court at Kolkata
1.13 TAXATION challenging the above notification. The Hon’ble High Court, vide it’s order dated 30-1-2002,
Provision for income tax comprises of current tax and deferred tax charged or realised. Deferred has granted an interim stay restraining from deduction of tax on perquisite on accommodation
tax is recognised subject to consideration of prudence on timing differences, being the differences provided to the employees. Accordingly, the company has not deducted tax on house perqui-
between taxable and accounting income/ expenditure that originate in one period and are capable sites. Necessary accounting adjustments in the above matter would be carried out on the disposal
of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless of appeals filed.
there is “virtual certainty “ that sufficient future taxable income will be available, against which 2.13 The Board of Directors has withdrawn the benefits relating to Leave Travel Concession (LTC)/
such deferred tax assets will be realised. Liberalised Leave Travel Concession (LLTC) for the block calendar years of 1998-99, 2000-
2. NOTES ON ACCOUNTS: 01 and 2002-03. Accordingly, there exists no liability towards LTC/LLTC for the above peri-
2.1 Sales and raw materials consumed are not comparable with that of previous year as the ods.
conversion activities were carried out during part of the previous year. 2.14 Power & Fuel does not include expenses for generation of power which have been included
Out of total production of 47299 MT (53356 MT) of High Carbon Ferro Manganese and under the primary heads of account.
32147 MT (37011 MT) of Silico Manganese, 42162 MT (28641 MT) of High Carbon 2.15 The classification of plant and machinery into continuous and non-continuous has been made
Ferro Manganese and 26638 MT (16425 MT) of Silico Manganese are under conversion on the basis of technical opinion and depreciation thereon is provided accordingly.
arrangement. 2.16 Sundry Creditors, other liabilities, Sundry Debtors, claims recoverable and advances to parties
2.2 In accordance with past practice, quantities of inventories of bulk raw materials and finished are subject to confirmation. The response to letters requesting confirmation of balances has been
goods have been taken as per weight-volume-ratio as determined by the Production/Technical insignificant except that of units of Steel Authority of India Ltd.
Department. 2.17 Estimated amount of contracts remaining to be executed on capital account and not provided for
2.3 Out of Rs. 300 lakhs received by the company in the previous year from the National Renewal Rs.4.63 lakhs (Rs.2.18 lakhs).
Fund as a Grant –in-Aid for disbursement under voluntary retirement scheme, a sum of 2.18 Stock of Slag and Khad has been considered in accounts based on pending orders on hand.
Rs.218.79 lakhs (Rs. 81.21 lakhs) has been accounted for during the year. The amount 2.19 There is no related party transaction as defined in the Accounting Standard –18 on ‘ Related
remaining to be disbursed to the employees to the extent of Rs. 119.36 lakhs has been retained Party Disclosures’.
in a no-lien account. 2.20 The requirement under Accounting Standard – 17 on Segment Reporting is not applicable
2.4 Inventory of finished goods at the year-end was physically verified and the surplus quantity of since the company is having line of products subject to same risks and returns and operating
381MT (Previous year shortage of 688 MT) valued at Rs.84.37 lakhs (Previous year shortage in economic environment subject to same risk & returns.
of Rs.135.66 lakhs) has been accounted for. Further, since the whole of India has been considered as a geographical segment and exports
2.5 On account of loss for the year and accumulated losses of previous years, no provision for as other segment, even geographical segment is also one in the absence of any export during
Income tax has been made in the accounts. the year.
2.6 The company has substantial carried forward losses and unabsorbed depreciation under the 2.21 In terms of Accounting Standard-20 issued by the Institute of Chartered Accountants of
Income Tax Act, 1961 and accordingly deferred tax asset of about Rs.1728.66 lakhs has arisen India, the calculation of EPS is given below:
as on 31-03-2002 (including Rs.221.42 lakhs (approx.) for the current year) as per Accounting 2001-02 2000-01
Standard-22 on ‘Accounting for taxes on income’. However, in consideration of prudence, the
i. Loss as per Profit & Loss Account (Rs.in lakhs) -838.10 -1784.31
above deferred tax asset has not been recognised in the financial statements and the same would
be considered at appropriate time keeping in view the availability of sufficient taxable income ii. Weighted average number of equity shares 24,000,000 24,000,000
against which such deferred tax asset can be realised. outstanding during the year
2.7 The long term agreements for employees’ salaries and wages had expired on 31.12.1996. The iii. Basic and diluted EPS. -3.49 -7.43
company has implemented the revised salaries and wages w.e.f. 1.1.2001 with fitment on the 2.22 Previous year figures have been rearranged / regrouped wherever necessary.
basis of notional increment over the period from 1.1.1997 to 31.12.2000 and appropriate Previous year’s figures have been given in brackets.
adjustments thereof have been carried out in the accounts. However, the issue of wage revision
3. CONTINGENT LIABILITIES:
(including other benefits) for the period from 1.1.1997 to 31.12.2000 is to be discussed
Contingent Liabilities not provided for -
separately with the employees. Liability if any, in this regard is unascertainable. Further, following
3.1 Claims against the Company pending judicial decision Rs. 176.03 lakhs (Rs.279.84 lakhs)
the past practice, adhoc adjustable advances/ interim relief of Rs.255.39 lakhs for the above
period (including Rs.72.39 lakhs paid during the year) have been charged to “Employees’ 3.2 Other claims against the Company not acknowledged as debts Rs. 688.08 lakhs
Remuneration & Benefits” in the respective years. (Rs. 1035.23 lakhs)
2.8 The company has normally made payments to SSI units in due time and also there being no 3.3 Probable levy of penal interest by Sales Tax Authority which may amount to Rs.11.80 lakhs
claims from the parties, interest, if any, on overdue payments is unascertainable and thus not (Rs. 12.81 lakhs)
provided for. There are no SSI units to whom amounts in excess of Rs.1 lakh are due for more 3.4 Bills drawn on customers and discounted with Bank Rs. 46.11 lakhs (Rs. 484.38 lakhs).
than 30 days. 3.5 Guarantee provided to supplier on behalf of holding company in the form of Post Dated cheques
2.9 In terms of the understanding reached, pending final settlement of related claims between the Rs.1210.46 lakhs (Rs. 587.04 lakhs).
company and MSEB a net sum of Rs. 154.19 lakhs (Dr) in respect of interest and power charges 3.6 Claims by certain employees and selling agents/ contractors, extent of the same is unascertainable.

4.1(a) LICENSED, INSTALLED CAPACITY AND PRODUCTION :

*LICENSED CAPACITY **INSTALLED CAPACITY #PRODUCTION
[TONNES] [TONNES] [TONNES]
High Carbon Ferro Manganese 47,299
(53,356)
Silico Manganese 100,000 100,000 32,147
(100,000) (100,000) (37,011)
Medium Carbon Ferro Manganese 1,048
(563)
Low Carbon Ferro Manganese 2
(Nil)
Medium Carbon Ferro Manganese (Thermit) 2
(Nil)
NOTE : * Re-endorsed capacity.
** As Certified by Management and not verified by auditors, being a technical matter.
# Including jigged Ferro/Silico Manganese and Metal dust & adjustment relating to excess/shortage on account of physical verification.

134
 MAHARASHTRA ELEKTROSMELT LIMITED

4.1(b) OPENING STOCK, SALES AND CLOSING STOCK :

[Qty. in MT, Value in Rs. in lakhs]
OPENING STOCK SALES CLOSING STOCK
QTY. VALUE QTY. VALUE QTY. VALUE
High Carbon Ferro Manganese 2,634 504.09 45,491 7,730.54 4,096 917.40
(5,446) (1,155.40) (56,013) (10211.60) (2,634) (504.09)
Silico Manganese 3,082 698.50 31,006 7,391.05 3,236 703.89
(3,618) (831.21) (36,814) (8,147.85) (3,082) (698.50)
Medium Carbon 112 39.65 913 404.35 238 91.00
Ferro Manganese (6) (1.05) (615) (282.13) (112) (39.65)
Low Carbon Ferro 0 0.00 0 0.00 2 1.00
Mangenese (Nil) (Nil) (Nil) (Nil) (Nil) (Nil)
Medium Carbon Ferro 0 0.00 0 0.00 2 1.44
Manganese (Thermit) (Nil) (Nil) (Nil) (Nil) (Nil) (Nil)
SUB TOTAL 5,828 1,242.24 77,410 15,525.94 7,574 1,714.73
(9,070) (1,987.66) (93,442) (18,641.58) (5,828) (1,242.24)
Steel 52 1.06 0 0.00 52 1.06
(52) (1.06) (Nil) (Nil) (52) (1.06)
Others 46,985 242.22 6,767 38.28 40,218 217.26
(57,417) (289.06) (10,432) (55.58) (46,985) (242.22)
TOTAL 52,865 1,485.52 84,177 15,564.22 47,844 1,933.05
(66,539) (2,277.78) (103,874) (18,697.16) (52,865) (1,485.52)
NOTE : * Sales of High Carbon Ferro Manganese and Silico Manganese include conversion.

4.1(c) FERRO ALLOYS QUANTITATIVE RECONCILIATION : 5. EXPENDITURE IN FOREIGN CURRENCIES

(Rs. in lakhs)
FERRO SILICO MEDIUM CARBON LOW CARBON MEDIUM CARBON
MANGANESE MANGANESE FERRO MANGANESE FERRO MANGANESE FERRO MANGANESE CURRENT PREVIOUS
[MT] [MT] [MT] [MT] (THERMIT) [MT] YEAR YEAR
Opening Stock 2,634 3,082 112 0 0 i) Bank charges Nil 0.30
(5,446) (3,618) (6) (Nil) (Nil) ii) Others 0.30 0.20
Production 47,299 32,147 1,048 2 2 TOTAL 0.30 0.50
(53,356) (37,011) (721) (Nil) (Nil)
TOTAL 49933 35,229 1160 2 2
(58,802) (40,629) (727) (Nil) (Nil) 6. EARNING IN FOREIGN CURRENCIES (Rs. in lakhs)
Sales/ 45,491 31,006 913 0 0 CURRENT PREVIOUS
Adjustments (56,013) (36,814) (615) (Nil) (Nil) YEAR YEAR
Internal 346 987 9 0 0 Export of goods on FOB basis Nil 347.85
Consumption (155) (733) (Nil) (Nil)
Closing Stock 4,096 3,236 238 2 2
(2,634) (3,082) (112) (Nil) (Nil) 7. VALUE OF IMPORTS CALCULATED ON CIF BASIS
(Rs. in lakhs)
TOTAL 49,933 35,229 1,160 2 2
(58,802) (40,629) (727) (Nil) (Nil) CURRENT PREVIOUS
I) Sales of High Carbon Ferro Manganese and Silico Manganese include conversion. YEAR YEAR
2) Production of Medium Carbon Ferro Manganese includes NIL MT (157.285 MT) produced through conversion agent. Stores & Spares 8.26 6.04

8. VALUE OF IMPORTED & INDIGENOUS RAW MATERIALS, STORES & SPARES CONSUMED :
RAW MATERIALS CONSUMED STORES & SPARES CONSUMED
Current Year Prev. Year Current Year Prev. Year
Value % Value % Value % Value %
(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)
Imported 0.00 0.00 0.00 0.00 10.48 3.45 5.27 1.60
Indigenous 1,556.03 100.00 3,300.23 100.00 293.11 96.55 325.53 98.40
TOTAL 1,556.03 100.00 3,300.23 100.00 303.59 100.00 330.80 100.00

9. REMUNERATION TO DIRECTORS : (Rs. in lakhs)

CURRENT PREVIOUS
YEAR YEAR
Remuneration 4.23 3.30
Contribution 0.44 0.31
TOTAL 4.67 3.61
SIGNATURE TO SCHEDULES 1 TO 3 For and on behalf of Board of Directors
As per our report of even date attached
FOR A.K. JHUNJHUNWALA & CO. Sd/- Sd/-
Chartered Accountants (R. ASHOKKUMARR) (R.K. GUPTA)
Company Secretary Executive Director
Sd/- Sd/- Sd/-
(M.A. GOHEL) (T.K. GUPTA) (V.S. JAIN)
Partner General Manager (F&A) Chairman
Place : New Delhi
Date : 29th May, 2002

135
 Schedules MAHARASHTRA ELEKTROSMELT LIMITED

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. 1 7 4 0 2 of 1974-75 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 2

Date Month Year

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 5 6 2 5 2 7 Total Assets 5 6 2 5 2 7

Sources of Funds

Paid-up Capital 2 4 0 0 0 0 Reserve & Surplus 1 5 0 0

Secured Loans 1 7 1 2 9 3 Unsecured Loans 1 4 9 7 3 4

Application of Funds

Net Fixed Assets 2 6 4 7 6 8 Investments N I L

Net Current Assets – 2 0 8 1 5 8 Misc.Expenditure 2 1 5 5 4

Accumulated Losses 4 8 4 3 6 3

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover 1 5 5 6 4 2 2 Total Expenditure 1 6 9 9 3 9 6

Profit Before Tax – 8 3 8 1 0 Profit After Tax – 8 3 8 1 0

Earning per share in Rs. N I L Dividend Rate % N I L

V. Generic Names of Three Principal Products/Services of Company (as per Monetary Terms)

Item Code No.(ITC Code) —

Product Description F E R R O A L L O Y S

For and on behalf of Board of Directors

FOR A.K. JHUNJHUNWALA & CO. Sd/- Sd/-
Chartered Accountants (R. ASHOKKUMARR) (R.K. GUPTA)
Company Secretary Executive Director

Sd/- Sd/- Sd/-

(M.A. GOHEL) (T.K. GUPTA) (V.S. JAIN)
Partner General Manager (F&A) Chairman

Place : New Delhi

Date : 29th May, 2002

136
 MAHARASHTRA ELEKTROSMELT LIMITED

ANNEXURE - I
PARTICULARS REQUIRED UNDER THE COMPANIES
(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.
CONSERVATION OF ENERGY
Major areas of energy conservation include:
— Gainful utilisation of waste gas of Submerged Arc Furnace for generation of Power in 4.2 MW Gas Based Power Plant.
— Stoppage of Air Compressors in Sinter Plant-II and use of Blower for supply of air for Sintering for 30% reduction in specific power consumption.
— Use of low reactivity coke & charcoal to reduce specific power consumption for Silico Manganese production.
— Conservation of water by Recirculation of effluent water after filtration.
— Improvement in quality of inputs with respect to both physical & chemical composition.
— Use of alternative reductant and manganese bearing wastes in ferro alloy production.
— Change in the slag regime to improve productivity.
— Statistical Process Control for control of major elements in ferro alloys.
ANNEXURE - II
FORM ‘A’
CONSERVATION OF ENERGY

2001-2002 2000-2001

POWER & FUEL CONSUMPTION

ELECTRICITY
1. PURCHASED
Unit Million kwh 251.09 294.00
Total Amount Rs/Lakhs 8812.25 10334.53
Rate Rs../kwh 3.51 3.51
2. OWN GENERATION Million kwh 10.24 Nil
3. COAL Nil Nil
4. FURNACE OIL
Unit KL 612.49 Nil
Total Amount Rs./Lakhs 62.54 Nil
Rate Rs./Kl 10211 Nil
CONSUMPTION PER UNIT OF PRODUCTION

ELECTRICITY FURNACE OIL COAL

(Kwh/Tonne) (Tonne) (Tonne)
2001-02 2000-01 2001-02 2000-01 2001-02 2000-01

Ferro Manganese 2662 2600 — — — —

Silico Manganese 4167 4184 — — — —
Medium Carbon 1388 1396 — — — —

ANNEXURE - III
FORM ‘B’
RESEARCH & DEVELOPMENT (R&D)

1. SPECIFIC AREA IN WHICH R&D CARRIED OUT BY THE COMPANY

— Production of Medium Carbon Ferro Manganese through Thermit Process.

2. BENEFITS DERIVED AS A RESULT OF ABOVE R & D

— In-house utilisation of FeMn & SiMn fines.
— Utilisation of wastes

3. FUTURE PLAN OF ACTION :

— Production of Low Carbon Ferro Manganese and Special Ferro Alloys like Ferro Titanium, Ferro Molybdenum.
— Use of sludge in Sinter Production.

4. EXPENDITURE ON R & D
Research work is undertaken jointly with RDCIS, SAIL and as such no specific expenses on R&D are apportionable.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. As an effective cost reduction measure and also as a strategy to conserve high grade manganese ores, use of low grade high silica are in Silico Manganese has been increased.
2. Use of reject material like Khad in Silico Manganese production.

FORM ‘C’
FOREIGN EXCHANGE EARNINGS & OUTGO
Rs./Lakhs
EARNINGS : Nil
OUTGO : 0.30

137
 Report on Corporate Governance MAHARASHTRA ELEKTROSMELT LIMITED
ANNEXURE - IV

(a) COMPANY’S PHILOSOPHY (d) Nomination & Compensation Committee

The Company is committed to attain the highest standard of Corporate Governance. It recognises
that the Board is accountable to all stakeholders for good governance. The philosophy of the
company in relation to corporate governance is to ensure transparency in all its operations, make
appropriate disclosures and enhance shareholders value without compromising in any way in
compliance with laws and regulations.
(i) Being a Government Company, the nomination and fixation of terms and conditions for
appointment as Director is made by Government of India. As such, the Nomination and
Compensation Committee has not been constituted.
(ii) The details of remuneration to whole time director during the year is given below:

(b) BOARD OF DIRECTORS (Rs. In Lakhs)

The Board of Directors at present comprises of non-executive Chairman, whole time Executive
Name of the Salary Other Retirement Total
Director (WTD) and 4 Non-Executive Directors (Non-ED). During the year, seven Board
Director Benefits Benefits
Meetings were held on 29/5/2001, 6/7/2001, 31/7/2001, 28/8/2001,
31/10/2001, 30/1/2002 and 20/3/2002. Shri A.K. Jayswal 2.23 0.17 0.27 2.67
(salary upto 31/8/2001)
The composition of directors and their attendance at board meetings during the year
and at the last Annual General Meeting as also number of other directorships are as follows: Shri R.K. Gupta 1.57 0.26 0.17 2.00
(salary w.e.f. 16/11/2001)
Name of the Category of Board Attendance No. of other
Director Directorship Meetings at last AGM Directorship (iii) No sitting fees is paid to the Non-Executive Directors for attending Board/Board Sub-
Attended held as on Committee Meetings.
(Nos.) 31/3/2002
(iv) The salary of the whole time director is fixed and does not include performance linked
Shri V. S. Jain Chairman 7 Yes 4 incentive except amount payable as per the Productivity Linked Incentive Scheme of the
Shri S. C. K. Patne Non-ED 6 Yes 4 Company.

Shri T. Tiwari Non-ED 1 — — (v) Terms & Conditions

(upto 6th July, 2001) The Executive Director is an employee of Company on transfer from Steel Authority of
India Limited. He has been inducted on the Board of the Company as a Director. The
Shri Ashis Das Non-ED 5 — 3
appointment may be terminated by either side on three months notice or on payment of
(effective from
three months salary in lieu thereof.
6th July, 2001)
Shri G. Upadhayaya Non-ED 6 — — (e) Shareholders/Investors Grievance Committee
(upto 31/3/2002) (i) A Shareholders/Investors Grievance Committee is constituted under the Chairmanship
of a non-executive director. The committee consists of Shri Ashis Das and Shri R.K. Gupta
Shri B. K. Singh Non-ED 1 — 5 to look into the redressal of shareholders and investors complaints like non-transfer of
(Effective from shares, non-receipt of balance sheet, non-receipt of declared dividend etc.
20th March, 2002)
(ii) Name of compliance officer : Shri R. Ashokkumarr, Company Secretary.
Shri Sunil Porwal Non-ED — — —
(iii) Number of shareholder complaints received during the period from 01/04/2001 to
Shri A. K. Jayswal WTD 4 Yes — 31/03/2002.
(upto 15th Jan. 2002)
Shri R. K. Gupta WTD 2 — — Source from which complaint was received
(effective from
Number of the Complaint Direct SEBI Exchange Total
30th Jan. 2002)
A Non-receipt of shares
(c) AUDIT COMMITTEE
after transfer — — — —
(1) Terms of Reference B Delay in issuing Duplicate
The primary function of the Audit Committee is to assist the Board of Directors in share certificates — — — —
fulfilling its oversight responsibilities by reviewing the financial reports; the Company’s
C Non-receipt of
systems of internal controls regarding finance, accounting and legal compliance that
Dividend Warrants — — — —
management and the Board have established; and the Company’s auditing, accounting and
financial reporting process generally. D Complaint-reg Transmission
of Shares — — — —
The Audit Committee review reports of the Internal Auditors, meet Statutory Auditors and
discuss their findings, suggestions and other related matters and reviews major accounting Total * — — — —
policies followed by the Company. The Audit Committee reviews with management, the
quarterly and annual financial statements before their submission to the Board. * Complaints not solved to the satisfaction of shareholders : N I L

The minutes of the audit committee meetings are circulated to the Board, discussed and (f) GENERAL BODY MEETINGS
taken note of.
Financial year Date Time Location
(2) Composition 2000-2001 20/08/2001 12.00 Noon “Nirmal” 10th floor, Nariman Point,
The Audit Committee of the Board was formed in January, 2001. However, the reconstituted Mumbai-400 021.
Audit Committee consists of three non-executive Directors. At present Shri V.S. Jain,
Shri S.C.K. Patne, Shri Ashis Das are members of the Audit Committee. Duing the last 1999-2000 30/08/2000 12.00 Noon —do—
year, the committee met 6 times and attendance at the Meetings are as follows: 1998-1999 28/08/1999 11.30 A.M. —do—
Name of the Director Status No. of meetings attended
(g) Disclosures
Shri S.C.K. Patne Chairman 6 There were no transactions of material nature with its promoters, the directors or the management,
Shri V.S. Jain Member 2 their subsidiaries or relatives etc. that may have potential conflict with the interests of company
(Upto 6/7/2001 and at large. The non-executive Directors had no pecuniary relationships or transactions viz-a-viz the
again w.e.f . 29/5/2002 company during the year.
Shri Ashis Das Member 5 There were no instances of non-compliance by the company, penalties, strictures imposed on the
(Since 6/7/2001) company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital
Shri G. Upadhyaya Member 4 markets, during the last three years.
(Upto 31/7/2001 (h) Means of Communication
Shri T. Tiwari Chairman 1 Quarterly results are published in the Newspapers as per the requirements. There is no website
(Upto 29/5/2001 of the Company.

138
 MAHARASHTRA ELEKTROSMELT LIMITED

(i) General Shareholders Information

Report on Corporate Governance

(i) Annual General Meeting is proposed to be held on 27th July, 2002 at 12.00 noon at the
Registered Office at “Nirmal” 10th floor, Nariman Point, Mumbai-400 021.
(viii) Distribution of shareholding as on 31st March, 2002 :

Categoary Shares held % age of

(Nos.) Holding
(ii) Date of Book Closure : 18th July, 2002 to 23rd July, 2002.
(iii) The shares of the Company are listed at the following stock exchanges: A. Promoter’s holding : Holding Company- SAIL 2,37,87,935 99.12
1) The Stock Exchange Mumbai Sub-Total 2,37,87,935 99.12
Phiroze Jeejeebhoy Towers, Dalal Street, MUMBAI-400 001 B. Non-Promoters Holding :
2) The Stock Exchange Ahmedabad Banks 300 —
Kamdhenu Complex, Opp. Sahajanand College, Panjarapole,
AHMEDABAD-380 015. Sub-Total 300 —

It is confirmed that Annual Listing Fee has been paid to each of the stock exchanges. C. Others
Private Corporate Bodies 10,050 0.04
(iv) Stock code : 4824
Indian Public 2,00,665 0.84
(v) Market price data : High/Low : No floor trading in the last financial year. NRIs 1,050 —
during each month in last OCBs Nil Nil
financial year
Any other - (Please specify) Nil Nil
vi) Registrar and Transfer Agent : M/s. IIT Corporate Services Limited, IIT Sub-Total 2,11,765 0.88
House, Off. M. Vasanji Road, Opp. Vazir Glass,
Near J.B. Nagar, Andheri (East), Mumbai – Grand Total 2,40,00,000 100
400 059.
(ix) Dematerialization of shares : Shares are not dematerialised. Tradeable
(vii) Share transfer system : The Board has delegated powers to the Executive and liquidity as on 31/3/2002. stock is 0.88% only. Thus liquidity is negligible.
Director for transfer of shares. The shares lodged (x) Address for correspondence from shareholders for queries/complaints, if any:
for transfer are despatched back well within the
M/s Maharashtra Elektrosmelt Limited
time limit prescribed in this respect under the
Chanda-Mul Road, Chandrapur-442 401
listing agreements.
Fax. No. 07172-55812, 07172-55437 Phone No.07172-55789

Management Discussion and Analysis Report (MDAR) ANNEXURE - V

The Management of Maharashtra Elektrosmelt Limited presents its analysis report covering performance and outlook of the Company.
INDUSTRY STRUCTURE & DEVELOPMENT
General Economic Environment
During the year 2000-01 and 2001-02, GDP growth is estimated to have been 4.0%
and 5.4% respectively. The manufacturing sector, which grew by 6.7% in 2000-01,
grew by only 3.3% in 2001-02. The growth in finished Steel consumption was 5.7%
in 2000-01 but dropped to 2.6% in 2001-02. Since Ferro alloys are exclusively
utilised as raw materials in steel making, the growth in ferro alloy consumption is
directly related to the growth in steel consumption. The financial year 2001-02
witnessed yet another difficult period in steel industry world-wide.
Demand for ferro alloys in India
The demand for ferro alloys in India is almost constant for the last 3-4 years due to
overall industrial recession and demand for steel is lower. The finished steel consump-
tion in the country in 2001-02 is 27 million tonnes against the steel production of
30.6 million tonnes. The demand of Manganese based ferro alloys is in the range of
3.25 to 3.35 lakh tonnes which includes about 1.5 lakh tonnes of Silico Manganese
and 1.75 lakh tonnes of High Carbon Ferro Manganese. In line with the growth
potential in terms of steel consumption, growth potential for ferro alloys also exists.
Capacity for ferro alloys production
Over capacity in the area of Manganese based ferro alloys exists due to existence of
small units especially in the eastern part of the country. Growth has taken place to
avail the advantage of cheap power offered by those states exclusively for ferro alloys
industry. Due to over capacity, most of the bigger units had to close down/curtail their
operations, bringing down capacity utilisation to mere 48%.
Exports
Due to anti-dumping duty levied by United States, the export of ferro alloys have
practically stopped & this has led to stress on margins in the domestic market.
Position of MEL
MEL is the largest producer of manganese based ferro alloys in the country with 30%
market share in the production.
OPPORTUNITIES & THREATS FOR MEL
Opportunities
MEL being the largest ferro alloy producer in India having total capacity of One lakh
tonnes for ferro alloys. MEL has the advantage of producing High Carbon Ferro
Managanese, Medium Carbon Ferro Managanese and Silico Manganese to requisite
quality for steel plants.
MEL has achicved capacity utilisation of 98% during the year. Being ISO-9002 com-
pany, it has got good potential with highly motivated workforce and professionals not
only to maintain the level of production, but also to improve productivity, techno-
economic parameters etc.
Abundant and rich reserves of Manganese Ore are available in Maharashtra for con-
tinuous supply of raw material. This is an added advantage for MEL to get quality raw
materials.
The 4.2 MW Power Plant is being operated using furnace waste gas as a fuel. This has
provided good scope for savings on account of power and fuel expenses.
Installation of 30 MW Captive Power Plant on Build, Operate, Lease and Transfer
(BOLT) basis is being pursued. This shall help in drastic reduction in the expenses on
power.
MEL is gearing up for production of special Ferro Alloys like Ferro Titanium, Ferro
Molybdenum. MEL has also taken up cost reduction steps particularly through waste
utilisation, improvement in productivity, reduction in purchase price and right sizing
of manpower.
Threats
High power tariff in Maharashtra has made the ferro alloy industry unviable
as power is a major element of cost. High powr tariff is eroding its margins
considerably.

139
 Management Discussion and Analysis Report (MDAR)
The State Government of West Bengal and Chhattisgarh have offered cheap power alongwith several
other concessions to ferro alloys units situated there. Due to the above concessions by such State
Govetnments within the country and denial of such benefit by Government of Maharashtra, the
Company's survival has become a matter of great concern.
Due to increase in raw material cost, power rate and sluggish market condition MEL has incurred
losses and has become a sick company under Section 3(o) of the Sick Industrial Companies (Special
Provisions) Act, 1985. Reference under Section 15 of the said Act, has been registered by the BIFR.
SEGMENTWISE OR PRODUCTWISE PERFORMANCE
Due to recession and also poor health of the furnaces, there was a decline in the production volurne
during the year. The technoeconornic parameters were also adversely affected during the year due
to lower capacity utilisation of the furnaces.
OUT LOOK
Indian demand, which had suffered from sluggish conditions for long period, has also begun to
show some signs of improvement. There are signs of firming up to global prices and expectation of
irse in global demand. With the sign of recent recovery, the sentiment in the steel industry is upbeat
as is evident from the pick up in sales. This trend in steel industry will improve the performance of
the ferro alloy industry.
The Company has a good potential with mativated and dedicated work force. It has produced in the
past more than the rated capacity and has maintained its quality standard. It has the capacity to cater
to the SAIL plants in addition to supply to non-SAIL customers including exports. However, it
needs help from State Government in the form of power tariff in line with that provided by the State
Govt. of West Bengal/Chhattisgarh.
In order to internalise the cost of power in addition to 4.2 MW Power Plant installed, installation
of 30 MW Plant on BOLT basis is being pursued.
RISK AND CONCERNS
The Ferro Alloy industry is hard hit due to over supply, cheap imports and recession in the steel
industry. Expenditure on electrical power attributes to 54-60% of the cost of production. This has
been further aggravated by continuous increase in power tariff by MSEB. The ferro alloy producers
in other States like West Bengal and Chhattisgarh are getting cheaper power and therefore, can
produce their products at lower cost, thus affecting the viability of the ferro alloy industry in
Maharashtra.
INTERNAL CONTROL SYSTEMS
The Company has an adequate system of internal controls implemented by the management towards
achieving the following objectives.
— Efficiency of operations.
CERTIFICATE
To,
The Members of
Maharashtra Elektrosmelt Limited
We have examined the compliance of the conditions of corporate governance by Maharashtra Elektrosmelt Limited for the year ended 31st March, 2002 as stipulated in clause 49 of
the Listing Agreement of the said company with the Mumbai and Ahmedabad Stock Exchange.
The compliance of the conditions of corporate governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted
by the company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.
We certify that in our opinion, and to the best of our information and according to explanations given to us, the company has complied with conditions of Corporate Governance as
stipulated in the above mentioned Listing Agreements.
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.
Place : New Delhi
Date : 29th May, 2002
140
MAHARASHTRA ELEKTROSMELT LIMITED
— Protection of resources.
— Accuracy and promptness of financial reporting.
— Compliance with the laid down policies and procedures.
— Compliance with laws and regulations.
In MEL, Internal Audit Department reviews, evaluates and appraises the various systems, proce-
dures/policies laid down by the Company and suggests meaningful and useful improvements. It
helps management to accomplish its objectives by bringing a systematic and disciplined approach
to improve the effectiveness of management towards good corporate governance.
Internal Audit prepares audit programs to cover vital areas and ensures its compliance. Audit reports
giving details of control factors, identification/management of risk factors and preventive sugges-
tions, are submitted to Management.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
During the year the company has achieved a turnover of Rs.155.64 crores as against Rs.186.97
crores in the previous year. However, the turnover is not comparable as the conversion activities were
carried out during part of the previous year. Value of earning through conversion arrangement was
Rs.133.92 crores as against Rs.76.94 crores during the previous year. On the operational front,
company has achieved a capacity utilisation of 98%. Sales of ferro alloys during the year was 77410
tonnes as against 93442 tonnes during the previous year.
In spite of lower production, high cost of power in Maharashtra, increase in cost of raw materials
and other inputs including salary & wages due to pay revision, the company has ended with a loss
of Rs.8.38 Crores as against Rs.17.84 Crores in the previous year thereby reducing loss by 53%
in the current year which is primarily due to improvement in conversion price & reduction in
interest obligation to MSEB towards arrears.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS
Human resource is one of the most important resources for MEL. MEL focuses greatly on proper
utili
across the company got reoriented for maximum capacity utilisation, better operational control,
quality products, enlarge the market coverage and cost reduction measures.
The manpower employed by MEL as on 31st March, 2002 was 885 comprising of 135 executives
and 750 non-executives. With a view to optimise the manpower and reduce the labour cost a
Voluntary Retirement Scheme based on Department of Public Enterprises (DPE) guidelines with
lumpsum payment was introduced resulting in separation of 43 employees during the year.
ANNEXURE - VI
For A. K. JHUNJHUNWALA & CO.
Chartered Accountants
Sd/-
(M.A. GOHEL)
Partner
Auditor's Report ANNEXURE - VII
MAHARASHTRA ELEKTROSMELT LIMITED

COMMENTS MANAGEMENT'S REPLY

To the Members of Maharashtra Elektrosmelt Limited
We have audited the attached Balance Sheet of MAHARASHTRA ELEKTROSMELT LIMITED as
at 31st March, 2002 and also the Profit and Loss Account for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
As required by the Manufacturing and Other Companies (Auditors’ Report) Order, 1988 issued by
the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act,
1956, we annex hereto a statement on the matters specified in the paragraphs 4 and 5 of the said order;
Further to our comments in the annexure referred to in paragraph ‘3’ above, we report that:-
1. We have obtained all the information and explanations, which to the best of our knowledge and
belief were necessary for the purpose of our audit.
2. In our opinion, proper books of accounts as required by law have been kept by the Company
so far as appears from our examination of the books of the Company.
3. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the
Books of Account of the Company.
4. In our opinion, the said Balance Sheet and Profit and Loss Account dealt with by this report
comply with the accounting standards referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956, to the extent applicable.
5. Based on the representations made by the Directors of the Company and information and explana-
tions as made available to us, none of the Director of the Company is disqualified from being
appointed as Director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
6. (i) The expenditure incurred upto 31st March 2002 has been fully charged to Profit and Loss Account and
Scheme as referred to in Note No. 2.11 in Schedule : 3.0 has been deferred over a period of 5 the future liability has been treated as deferred revenue expenditure to be written-off in five years as in
years instead of charging it off fully in the current year. Consequently, the Loss for the year is the case of compensation payable under the Voluntary Retirement Scheme.
understated by Rs. 105.96 Lacs.
(ii) Pending finalisation and ascertainment of the arrear salaries and wages of employees for the Wage agreements have been finalised with employees, notionally from 1.1.97 to 31.12.2000 and
period from 01.01.1997 to 31.12.2000, we are unable to comment on the adequacy of the implemented from 1.1.2001. The liability has been provided accordingly including towards adhoc
provision of Rs. 255.39 Lacs ( including Rs. 72.39 lacs provided during the year) as referred advances paid for the period 1.1.97 to 31.12.2000. Arrears for this period are to be discussed separately,
to in Note No. 2.7 in Schedule : 3.0.
keeping in view the financial health of the company. Liability if any will be provided only on settlement.

(iii) The Company has withdrawn the benefits relating to Leave Travel Concession (LTC) / As the Company has withdrawn the benefits relating to Leave Travel Concession (LTC)/Liberalised
Liberalised Leave Travel Concession ( LLTC) for various block periods from 1998-99 to Leave Travel Concession (LLTC) for the block calendar years of 1998-99, 2000-01 and 2002-03 there
2002-03 as indicated in Note No.2.13 in Schedule : 3.0. Consequently, no liability towards exists no liability towards LTC/LLTC for these periods.
LTC / LLTC has been provided in the accounts. However, in view of specific agreements with
the unions and terms of employment for extension of above benefits to the employees, we are
unable to comment whether, such liabilities have accrued or not ( amount unascertained ).
Without considering Items No. (ii) and (iii) of Paragraph 6 above, whose effect on the Company’s Loss
for the year and Profit and Loss Account debit balance, is not presently ascertainable, had the impact
of Item No. (i) of paragraph 6 above, been considered, the Loss for the year would have been Rs. 944.06
lacs as against reported Loss of Rs. 838.10 lacs and the Debit balance of the Profit and Loss Account
would have been Rs. 4,949.59 lacs as against the reported figure of Rs. 4,843.63 lacs.
Subject to the foregoing, in our opinion and to the best of our information and according to the
explanations given to us, the said Accounts, read together with significant Accounting Policies and
other relevant notes thereon in Schedule ‘3.0’, give the information required by the Companies Act,
1956, in the manner so required and present a true and fair view in conformity with the accounting
principles generally accepted in India:-
a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2002
and
b. In the case of the Profit and Loss Account, of the Loss for the year ended on that date.

For A.K. JHUNJHUNWALA & CO

Chartered Accountants
Sd/-
(M.A. Gohel) For and on behalf of Board of Directors
Partner
Sd/-
Place : New Delhi Place : New Delhi (V.S. Jain)
Dated : 29th May, 2002 Date : 29th June, 2002 Chairman

ANNEXURE TO THE AUDITORS’ REPORT

ANNEXURE REFERRED TO IN PARAGRAPH ‘1’ OF THE AUDITORS’ REPORT OF EVEN DATE TO THE MEMBERS OF MAHARASHTRA ELEKTROSMELT LIMITED ON THE
ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2002

COMMENTS MANAGEMENT'S REPLY

On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that :-
FIXED ASSETS:
1. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. The fixed assets of the Company
have been physically verified by the management in accordance with regular programme of verification, which in our opinion is reasonable, having regard to the
size of the Company and the nature of its assets. We are informed that the reconciliation of physical verification with book records has been completed and
discrepancies noticed on such verification have been properly dealt with in the books of account.
2. None of the Fixed Assets have been revalued during the year.
INVENTORIES:
3. The Stock of finished goods, stores, spare parts and raw materials of the Company has been physically verified by the management at reasonable intervals. Stock-
in-transit as at 31st March, 2002 has been verified by the management with reference to subsequent receipt of goods. The shortage / surplus as compared with
book records have been properly dealt with in the books of account. The stock of Slag and Khad has been taken on the basis of orders on hand.

141
Auditor's Report MAHARASHTRA ELEKTROSMELT LIMITED

COMMENTS MANAGEMENT'S REPLY

4. In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the Company and the nature of its business.
5. The discrepancies noticed on physical verification of stocks referred to in (3) above, as compared to book records i. e. the shortage / surplus, have
been properly dealt with in the books of account of the Company.
6. In our opinion and on the basis of examination of the valuation of stocks referred to in (3) above, the valuation of stocks is fair and proper in accordance
with the normally accepted accounting principles and is on the same basis as in the immediately preceding year.
7. As explained to us, the Company has a regular procedure for determination of unserviceable or damaged stores, raw materials and finished goods.
According to the information and explanations given to us, adequate provision has been made in the accounts for the loss arising on the items so determined.
8. In our opinion and according to the information and explanations given to us, the Company has maintained reasonable records for the sale and disposal
of realisable scrap and by-products.
9. In respect of service activities carried out by the Company, in our opinion there is a reasonable system of recording receipts, issues and consumption
of materials and stores and allocation of materials and man-hours to the relative jobs. There is also reasonable system of authorisation at proper level
and adequate system of internal controls, commensurate with size of the Company and nature of its business, on the issue of stores and allocation of
stores and man-hours to the relative jobs.
LOANS AND ADVANCES :
10. The rate of interest and other terms and conditions on which the Company has taken an Unsecured Loan from its Holding Company, are, in our
opinion, prima facie, not prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not
taken any loans, secured or unsecured, from firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956
or a company under the same management within the meaning of Section 370(1B) (non-operative) of the Companies Act, 1956.
11. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to firms or other parties
listed in the register maintained under Section 301 of the Companies Act, 1956 or a company under the same management within the meaning of Section
370(1B) (non-operative) of the Companies Act, 1956.
12. The employees to whom Loans or advances in the nature of loans have been given by the Company are generally repaying the principal amount as
stipulated and are also generally regular in payment of interest, wherever applicable.
INTERNAL CONTROLS:
13. In our opinion, the Company’s internal audit system is commensurate with the size and nature of its business. However, the same needs to be Further strengthening and enhancement in the scope
strengthened further and its scope needs to be enlarged. of Internal Audit is being reviewed.
14. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased and
sold are of special nature and suitable alternative source does not exist for obtaining comparable quotations, there are generally adequate internal control
procedures commensurate with the size of the Company and nature of its business for the purchase of stores, raw materials, plant and machinery,
equipment and other assets and for the sale of goods.
RELATED PARTIES:
15. According to the information and explanations given to us and on the basis of test checks carried out by us, there were no transactions of purchase
of goods and materials and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the register maintained
under Section 301 of the Companies Act, 1956 aggregating during the year to Rs.50,000 or more in respect of each party.
FIXED DEPOSITS:
16. The Company has not accepted any deposits from the public other than the amount retained under Employees’ Family Benefit Scheme for which
exemption under Section 58A of the Companies Act, 1956 has been obtained.
STATUTORY LIABILITIES:
17 (i) According to the records of the Company, the Provident Fund dues have been generally regularly deposited during the year with the appropriate authorities.
(ii) As explained to us, the provisions of Employees’ State Insurance Act, are not applicable to the Company.
18. According to the information and explanations given to us, no undisputed amount payable in respect of Income tax, Wealth tax, Sales tax, Customs
duty and Excise duty were outstanding as at 31st March, 2002 for a period of more than six months from the date they became payable.
OTHERS :
19. The Central Government has not prescribed maintenance of the Cost records under Section 209 (1)(d) of the Companies Act, 1956.
20. On the basis of (i) the examination of the Books of Accounts, (ii) vouchers produced to us for our verification, (iii) explanations given and
representations made to us on our inquiries, (iv) the check and control relating to authorising expenditure on the basis of contractual obligations to
the employees and (v) accepted business practices, having regard to the Company’s needs and exigencies, we have not come across any expenses charged
to revenue which, in our opinion and judgment and to the best of our knowledge and belief, could be regarded as personal expenses.
21. The Company is a sick industrial Company within the meaning of Clause (O) of Section 3(1) of the Sick Industrial Companies (Special Provisions)
Act, 1985. According to the information and explanations given to us, a reference has been made to the Board for Industrial and Financial Reconstruction
under Section 15 of that Act.

For A.K. JHUNJHUNWALA & CO

Chartered Accountants
Sd/-
(M.A. Gohel) For and on behalf of Board of Directors
Partner
Sd/-
Place : New Delhi Place : New Delhi (V.S. Jain)
Dated : 29th May, 2002 Date : 29th June, 2002 Chairman

Comments of C&AG ANNEXURE - VII

COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE
COMPANIES ACT, 1956 ON THE ACCOUNTS OF MAHARASHTRA ELEKTROSMELT LIMITED
FOR THE YEAR ENDED 31ST MARCH 2002.

I have to state that the Comptroller & Auditor General of India has no comments upon or supplement to the Auditors’ Report under Section 619(4) of the Companies
Act, 1956, on the accounts of Maharashtra Elektrosmelt Limited for the year ended 31 March, 2002.

Sd/-
(BALVINDER SINGH)
Principal Director of Commercial Audit &
Mumbai Ex-Officio Member, Audit Board-1, Mumbai.
21.06.2002

142
 Review of Accounts MAHARASHTRA ELEKTROSMELT LIMITED

REVIEW ON THE ACCOUNTS OF MAHARASHTRA ELEKTROSMELT LIMITED FOR THE YEAR ENDED 31ST MARCH, 2002
BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
(Review of Accounts has been prepared without taking into account the comments under Section 619(4) of
the Companies Act,1956 and qualification contained in Statutory Auditor’s Report)

1. FINANCIAL POSITION: 4. SOURCES AND UTILISATION OF FUNDS:

The table below summarise the financial position of the company under the broad headings Funds amounting to Rs.369.98 lakh were generated and utilised during the year as below:
for the last 3 years:
SOURCES OF FUNDS: (Rs.in lakhs)
LIABILITIES : 1999-2000 2000-2001 2001-2002 Loss for the year –838.10
Depreciation 125.89
(Rs.in lakhs) Less : Adjustment 0.25
a) Paid-up Capital:
i) Government 2378.79 2378.79 2378.79 125.64
ii) Others 21.21 21.21 21.21 1082.44
b) Reserve and Surplus: Increase in borrowings 369.98
i) Free Reserve & Surplus 77.13 — — APPLICATION OF FUNDS:
ii) Share premium Accounts — — —
iii) Capital Reserves 15.00 15.00 15.00 Additions to fixed assets 1527.59
iv) Committed Reserves — — — Less: Decrease in CWIP 1432.83
c) Borrowings: 94.76
i) From Govt.of India — — —
ii) From Financial Institutions 795.17 770.34 737.21 Increase in deferred revenue expenses 71.96
iii) Foreign currency loan — — — Increase in working capital 203.26
iv) Cash Credit 1362.18 1352.95 1563.62 Total 369.98
v) Others — — 905.56
vi) Interest accrued and due — 4.54 3.88 5. WORKING CAPITAL:
d) i) Current Liabilities & Provisions 9758.23 7016.77 6801.10 The working capital (i.e., Current Assets, Loans and Advances less Current Liabilities
ii) Provision for Gratuity 304.26 327.20 419.80 and Provisions including Interest Accrued and Due) of the company at the close of three
TOTAL 14711.91 11886.80 12846.17 years ending 31 March 2002 amounted Rs.(–) 2.14 lakhs, Rs.(–) 1962.18 lakhs and
Rs.(-)1665.66 lakhs respectively. The sales during three years were Rs.16925.76 lakhs,
ASSETS: Rs.15900.43 lakhs and Rs.12773.79 lakhs respectively.
e) Gross Block 3933.90 3943.63 5471.22 6. INVENTORY LEVEL:
f) (Less) Depreciation 2611.21 2709.76 2835.82
g) Net Block 1322.69 1233.87 2635.82 The inventory level at the end of the three years upto 2001-2002 are given below:
h) Capital work-in-progress 1143.40 1444.69 11.86 (Rs.in lakhs)
i) Investments — — —
j) Current Assets, Loans and 1999-2000 2000-2001 2001-2002
Advances 9756.09 5059.13 5139.32
k) Misc.expenditure to the i) Raw Materials 1343.53 467.18 473.45
extent not written off 191.44 143.58 215.54 ii) General Spare Parts 283.21 255.22 246.36
l) Accumulated Loss 2298.35 4005.53 4843.63 iii) Stock Under Process — — —
TOTAL 14711.97 11886.80 12846.17 iv) Finished Products 2276.73 1484.47 1932.00
7(a). SUNDRY DEBTORS:
m) Working Capital [j-d(i)-c(vi)] –2.14 –1962.18 –1665.66
n) Capital employed [g+m] 1320.55 –728.31 970.16 The position of Sundry Debtors vis-à-vis sales for the last three years ending 31 March
o) Net Worth [a+b(i)+b(ii)-k-l) –12.66 –1749.11 –2659.17 2002 were as follows:
p) Net Worth per rupee of paid- (Rs.in lakhs)
up capital in Rs. — — —
As on Considered good Sundry Total Sales % of
2. WORKING RESULTS: 31st Debtors (excluding Sundry
Working results of the Company for the last three years are given under : March Conside- subsidiary Debtors to
Particulars 1999-2000 2000-2001 2001-2002 red & including Sales
Doubful/ Excise
(Rs.in lakhs) Bad Duty)
I) Sales 19614.28 18697.16 15564.22
ii) Less : Excise Duty 2688.52 2796.73 2790.43 2000 2838.51 25.49 2864.00 19614.28 14.60
iii) Net Sales 16925.76 15900.43 12773.79 2001 305.19 18.39 323.58 18697.16 1.73
iv) Other or Misc.Income 638.12 234.41 144.11 2002 204.46 18.39 222.85 15564.22 1.43
v) Profit/Loss before tax and prior
period adjustment (1615.56) (1784.31) (838.10) 7(b). ANALYSIS OF SUNDRY DEBTORS:
vi) Prior period adjustment 5.75 — —
vii) Profit/Loss before tax (1609.81) (1784.31) (838.10) i) Age-wise analysis of Sundry Debtors
viii) Tax Provision - earlier years 0.24 — — be given as below: (Rs.in lakhs)
ix) Profit/Loss after tax (1610.05) (1784.31) (838.10)
x) Proposed Dividend — — — Debtors less than 6 months 189.19
Debtors more than 6 months but less than 1 year 0.38
Company has been declared as Sick Company and referred to BIFR. Debtors more than 1 year but less than 2 years 12.01
Debtors more than 2 years but less than 3 years 2.88
3. RATIO ANALYSIS:
Debtors more than 3 years 18.39
Some important financial ratios on the financial health and working of the company at the
end of last three years are as under: Total 222.85
Particulars 1999-2000 2000-2001 2001-2002 ii) Debts outstanding from:
(In Percentage) Government (Central & State)/
A. Liqudity Ratio Government Department —
Current assets to current liabilities 0.97:1 0.69:1 0.71:1 Public Sector Undertakings/Companies 200.92
B. Debt Equity Ratio — — — Private Companies & Others 21.93
C. Profitability Ratio:
222.85
a) Profit before tax
i) Capital Employed — — —
ii) Net Worth — — —
iii) Sales Sd/-
b) Profit after tax to equity — — — (BALVINDER SINGH)
c) Earning per share (in rupees) — — — Mumbai Principal Director of Commercial Audit &
21.06.2002 Ex-Officio Member Audit Board-1, Mumbai.

143
Cash Flow Statement MAHARASHTRA ELEKTROSMELT LIMITED
FOR THE YEAR ENDED 31ST MARCH, 2002.

To,
The Board of Directors,
Maharashtra Elektrosmelt Limited
We have examined the attached Cash Flow Statement of Maharashtra Elektrosmelt Limited for the year ended 31st March, 2002. The Statement has been prepared by the
company in accordance with the requirements of Listing Agreement clause 32 with Mumbai & Ahemadabad Stock Exchange and is based on and in agreement with the
corresponding Profit and Loss Account and Balance Sheet of the company covered by our report of 29.05.2002 to the members of the company.
FOR A.K. JHUNJHUNWALA & CO.
Chartered Accountants
Sd/-
Place : New Delhi (M.A. Gohel)
Date : 29th May, 2002 Partner

2001-2002 2001-2002

(Rs.in lakhs) (Rs.in lakhs)

A. CASH FLOW FROM OPERATING ACTIVITIES B. Adjustments for Inventories
Net Profit before tax and dividend –838.10 Inventory as on 31st March, 2001 2206.87
Adjustment for : (Net of value of discarded assets)
Depreciation 125.93 Inventory as on 31st March, 2002 2651.81
Investments Income 0.00 (Net of value of discarded assets) –444.94
Interest and Finance Charges 233.85
Provision for fixed assest discarded 57.42 C. Adjustments for Sundry Debtors
Misc.Expenditure (Deferred) charged during the year 93.36 Sundry Debtors as on 31st March, 2001 305.19
Operating Profit before working capital changes –327.54 Sundry Debtors as on 31st March, 2002 204.46 100.73

D. Adjustment for Interest Receivable

Adjustment for :
Interest Receivable as on 31st March, 2001 80.74
Inventories –444.94
Sundry Debtors 100.73 Interest Receivable as on 31st March, 2002 74.03 6.71
Interest Receivable 6.71 E. Adjustment for Loans and Advances
Loans and Advances 92.50
Loans and Advances as on 31st March, 2001 1378.05
Current Liabilities and Provisions –123.07
Loans and Advances as on 31st March, 2002 1285.55 92.50
Misc. Expenditure (Deferred) created during the year –165.32
F. Adjustment for Current Liabilities and Provisions
Cash Generated from Operations –860.93
Income tax provision during the year 0.00 Current Liabilities as on 31st March, 2002 6277.49
Current Liabilities as on 31st March, 2001 6702.34 –424.85
Net Cash from Operating Activities –860.93
Provision as on 31st March, 2002 943.41
Provision as on 31st March, 2001 641.63 301.78
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets –152.71 G. Purchase / Addition of Fixed Assets
Sale of Fixed Assets 0.24 Purchase (including insurance spares) 1528.13
Sale of Investments 0.00
Less : Value of assets written back 0.00
Interest received from investments 0.00
–1528.13
Net Cash from Investing Activities –152.47 Capital WIP as on 31st March, 2001 1462.71
Capital WIP as on 31st March, 2002 87.29
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital 0.00 1375.42
Proceeds from Borrowings 1082.44 TOTAL –152.71
Interest and finance charges –233.85
H. Sale of Fixed Assets
Dividend Paid during the year 0.00
Net Cash from Financing Activities 848.59 Cost of Assets sold during the year 0.54
Add Profit on sale of Fixed Assets 0.00
Net Increase /(Decrease) in Cash & Cash Equivalents –164.81
Less Depreciation on Assets sold 0.30 0.24
Cash & Cash Equivalents as on 31st March, 2001 464.03
I. Interest and Finance Charges
Cash & Cash Equivalents as on 31st March, 2002 299.22
Cash Credit 239.48

SCHEDULES 2001-2002 MSEB 0.00

OTHERS –5.63 233.85
(Rs.in lakhs)
A. Depreciation J. Proceeds from Borrowings
Charged to P&L Accounts 125.89 Total Borrowings as on 31st March, 2002 3210.27
Depreciation to adjustments 0.04
Pertaining to earlier years — 125.93 Total Borrowings as on 31st March, 2001 2127.83 1082.44

For and on behalf of Board of Directors

For A.K. Jhunjhunwala & Co.
Chartered Accountants Sd/- Sd/-
(R. ASHOKKUMARR) (R.K. GUPTA)
Sd/- Company Secretary Executive Director
(M.A. GOHEL)
Partner
Sd/- Sd/-
Place : New Delhi (T.K. GUPTA) (V.S. JAIN)
Date : 29th May, 2002 General Manager (F&A) Chairman

144
Directors' Report BHILAI
BHILAIOXYGEN
OXYGENLIMITED
LIMITED

To
The Members
The Directors have pleasure in presenting the 3rd Annual Report of the Company together with
Balance Sheet AS AT 31ST MARCH, 2002
audited accounts for the year ended 31st March, 2002.
Schedule As at 31st As at 31st
Financial & Operational Review No. March, 2002 March, 2001
As the members are aware that the company was incorporated with an objective to acquire, promote, (Rupees) (Rupees)
develop, establish, own, operate and maintain Oxygen plants of all types and capacities and manu-
facture, purchase and supply Oxygen, Nitrogen, Acetylene, Hydrogen and other industrial gases SOURCES OF FUNDS
to the Steel Plants, other agencies and consumer etc. The company was to take over assets covered Share holders’ Fund
under the Business Restructuring of SAIL relating to Oxygen Plant -II of Bhilai Steel Plant. Due
Share Capital 1.1 1000 1000
to delay in the restructuring process, no asset has been transferred to the Company so far. As such,
no commercial activity has been carried out by the company during the period. The company has, 1000 1000
however, spent Rs.11,080/- on various miscellaneous matters. There being no income, loss for the
period was also Rs.11,080/-. APPLICATION OF FUNDS
SAIL invited the bids from the interested parties to become Strategic Alliance Partner (SAP) in the Current Assets, Loans and Advances
Company along with SAIL. Detailed discussions were held with the short listed party, which finally Cash and Bank Balances 0 680
failed. However, SAIL has started the efforts afresh for identification and selection of SAP for the Less : Current Liabilities and Provisions
Company. Current liabilities 1.2 31150 20750
Auditor's Report Net Current Assets -31150 -20070
The Statutory Auditor's Report on the Accounts of the Company for the financial year ended 31st Profit & Loss Account 32150 21070
March, 2002 is enclosed at Annexure-I. The Comptroller & Auditor General of India has decided
not to review the report of the auditors for the year 31st March, 2002 on the accounts of Bhilai 1000 1000
Oxygen Ltd. and as such he has no comments to make under Section 619(4) of the Companies Act, Accounting Policies and
1956. A copy of the Non-Review Certificate is placed at Annexure-II.
Notes on Accounts 3
Report on Conservation of Energy, Technology Absorption, etc.
Since, no commercial activity was carried out by the Company, the disclosure of information in Schedules 1 & 3 annexed, hereto form part of Balance Sheet.
accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 regarding In terms of our report of even date. For and on behalf of Board of Directors
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is not for Rohtas & Hans
applicable. Chartered Accountants
Particulars of Employees
Since, the company has no employees, the particulars prescribed under Section 217(2A) of the Sd/- Sd/- Sd/-
Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are not (Hans Jain) (R. K. Gupta) (A.K. Das)
required to be given. Partner Director Director
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed that : Place : New Delhi.
(i) in the preparation of the annual accounts, the applicable accounting standards had been fol- Dated : May 31, 2002
lowed alongwith proper explanation relating to material departures;
(ii) the directors had selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of
the state of affairs of the company at the end of the financial year and of the profit or loss of
the company for that period; Profit and Loss Account FOR THE YEAR ENDED 31ST MARCH, 2002
(iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of this Act for safeguarding the assets of the com- Schedule Year ended 31st Year ended 31st
pany and for preventing and detecting fraud and other irregularities; No. March, 2002 March, 2001
(iv) the directors had prepared the annual accounts on a going concern basis. (Rupees) (Rupees)
Directors
Shri Suresh Pandey resigned from the Board on 16th July, 2001. INCOME
Shri M.K. Moitra, Director, SAIL was appointed as Director on the Board on 30th July, 2001 and Sales — —
resigned on 28th February, 2002.
Shri B. Ghoshal , Executive Director, SAIL was appointed as Director on the Board on EXPENDITURE
30th July, 2001 and resigned on 24th December, 2001.
Other Expenses 2.1 11080 9260
Shri B.K. Singh, Director, SAIL was appointed as Director w.e.f. 26th December, 2001.
Shri S.C.K. Patne resigned from the Board on 22nd March, 2002. Loss for the year -11080 -9260
Shri P.K. Chakraborty resigned from the Board on 22nd March, 2002.
Loss brought forward from previous year -21070 -11810
Shri Ashis Kumar Das, Executive Director, SAIL was appointed as Director on the Board
on 21st March, 2002. Loss carried over to Balance Sheet -32150 -21070
Shri R.K. Gupta, Executive Director, SAIL was appointed as Director on the Board
on 21st March, 2002. Accounting Policies and Notes
on Accounts 3
Acknowledgment
The Board of Directors wish to place on record their appreciation for the support and cooperation
extended by Steel Authority of India Limited. The Directors also wish to acknowledge the continued Schedules 2 & 3 annexed, hereto form part of Profit & Loss Account.
support and guidance received from the different wings of the Government of India and more In terms of our report of even date. For and on behalf of Board of Directors
particularly from the Ministry of Steel. for Rohtas & Hans
Chartered Accountants

For and on behalf of the Board of Directors Sd/- Sd/- Sd/-

(Hans Jain) (R. K. Gupta) (A.K. Das)
Sd/- Partner Director Director
New Delhi (A.K. DAS) Place : New Delhi.
Dated : 24th July, 2002 Director Dated : May 31, 2002

145
Schedules BHILAI OXYGEN LIMITED

1.1 SHARE CAPITAL As at 31st As at 31st

March, 2002 March, 2001

(Rupees)
Authorised
10,000 Equity shares of Rs. 10/- each 1,00,000 1,00,000

Issued,Subscribed and Paid-up *

100 Equity shares of Rs. 10/- each fully paid-up 1,000 1,000

*(Out of 100 shares, 98 shares are held by

Steel Authority of India Limited)(Holding Company)

1.2 CURRENT LIABILITIES As at 31st As at 31st

March, 2002 March, 2001

(Rupees)
Sundry Creditors 31150 20750

2.1 OTHER EXPENSES Year ended 31st Year ended 31st

March, 2002 March, 2001

(Rupees)
Bank Charges 680 60
Remuneration to Auditors 6300 6300
Miscellaneous Expenses 4100 11080 2900 9260
11080 9260

SCHEDULE 3 - ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

1. ACCOUNTING POLICIES

1.1 The Company prepares its Annual Accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.

1.2 The accounts are drawn up following the Merchantile System of Accounting.

2. NOTES ON ACCOUNTS

2.1 The Company was incorporated on 9th February, 1999 as a Private Limited Company and was later converted into a deemed Public Limited Company u/s 43A of the Companies Act, 1956 on 24th
February, 1999. This is the third accounting year of the company.

2.2 There are no contingent liabilities.

2.3 There are no contracts remaining to be executed on capital account.

2.4 In view of the fact that no commercial activity has been carried out during the period under report, the quantitative details and information on licensed/installed capacities etc. are not being given.

2.5 No expenses have been incurred in foreign currency.

2.6 No managerial remuneration has been paid during the period under report.

In terms of our report of even date. For and on behalf of Board of Directors
for Rohtas & Hans
Chartered Accountants

Sd/- Sd/- Sd/-

(Hans Jain) (R. K. Gupta) (A.K. Das)
Partner Director Director

Place : New Delhi.

Dated : May 31, 2002

146
 BHILAI OXYGEN LIMITED

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. 9 8 3 0 3 State Code 5 5

Balance Sheet Date 3 1 0 3 0 2

II. Capital raised during the year (Amount in Rs.)

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs.)

Total Liabilities 1 0 0 0 Total Assets 1 0 0 0

Sources of Funds

Paid-up Capital 1 0 0 0 Reserve & Surplus N I L

Secured Loans N I L Unsecured Loans N I L

Application of Funds

Net Fixed Assets N I L Investments N I L

Net Current Assets - 3 1 1 5 0 Misc.Expenditure N I L

Accumulated Losses 3 2 1 5 0

IV. Performance of the Company (Amount in Rs.)

Turnover/Other Income N I L Total Expenditure 1 1 0 8 0

Profit Before Tax – 1 1 0 8 0 Profit After Tax - 1 1 0 8 0

Earning per share (Rs.) N I L Dividend Rate % N I L

V. Generic Names of Three Principal Products/Services of Company (as per Monetary Terms)

Item Code No.(ITC Code)

Product Description O X Y G E N

Item Code No.(ITC Code)

Product Description

Item Code No.(ITC Code)

Product Description

147
Auditor's Report ANNEXURE - I
BHILAI OXYGEN LIMITED

To
The Members of Bhilai Oxygen Limited
We have audited the attached Balance Sheet of BHILAI OXYGEN LIMITED, as at 31st March, 2002 and the annexed Profit & Loss Account of the
Company for the period ended on that date in accordance with the letter of appointment of Department of Company Affairs, Government of India.
We report as follows :
1. The provisions of MAOCARO, 1988 are not applicable as the company has not carried out any commercial activity.
2.1 We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purpose of our audit.
2.2 In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of the books.
2.3 The Balance Sheet and the Profit & Loss Account dealt with by this report, are in agreement with the books of account.
2.4 In our opinion, the Profit & Loss Account and the Balance Sheet have been drawn up in accordance with the accounting standards referred to in
sub-section (3C) of Section 211 of the Companies Act, 1956.
2.5 The said accounts, in our opinion and to the best of our information and according to the explanations given to us, and read with the accounting
policies and notes appearing on Schedule 3, give the information required by the Companies Act, 1956 in the manner so required and give a true
and fair view :-
a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2002.
a n d
b) in the case of Profit & Loss Account, of the Loss of the Company for the period ended on that date.

For ROHTAS & HANS

Chartered Accountants
Sd/-
Place : New Delhi (Hans Jain)
Dated : 31st May, 2002 Partner

Comments of C&AG ANNEXURE - II

Comments of the Comptroller and Auditor General of India under section 619(4) of the Companies Act, 1956 on the accounts of
Bhilai Oxygen Limited for the year ended 31st March, 2002.

The Comptroller & Auditor General of India has decided not to review the report of the auditors for the year ended 31st March, 2002 on the accounts
of Bhilai Oxygen Limited and as such he has no comments to make under section 619(4) of the Companies Act, 1956.

Sd/-
(R.B. Sinha)
Place : Ranchi Principal Director of
Dated : 10th July, 2002 Commercial Audit

148
 STEEL AUTHORITY OF INDIA LIMITED
Registered Office: Ispat Bhawan, Lodi Road
New Delhi - 110 003

ATTENDANCE SLIP

Folio No:

Name and Address ...............................................................................................................................................................................................

............................................................................................................................................................................................................................

I certify that I am a registered shareholder/proxy for the registered shareholder of the Company.

I hereby record my presence at the 30th ANNUAL GENERAL MEETING of the Company at 1030 hours on 24th September, 2002 at NDMC
Indoor Stadium, Talkatora Garden, New Delhi.

Member’s/Proxy’s Name (In Block Letters) ..........................................................................................................................................................

Member’s/Proxy’s Signature .................................................................................................................................................................................

Note:
1. Please sign this attendance slip and hand over at the Attendance Verification Counter at the Entrance of the Meeting Hall.
2. This attendance slip is valid only in case shares are held on the date of meeting.
3. The members holding shares in Dematerialised (D Mat) Form are advised to bring with them their DP ID and Client ID Numbers.
4. REGRET NO GIFTS.

STEEL AUTHORITY OF INDIA LIMITED

✄

Registered Office: Ispat Bhawan, Lodi Road

New Delhi - 110 003

PROXY FORM

I/We ..................................................................................................... of ..........................................................................................................

in the district of ...................................................................................................................................................................................................

............................................................................................................................................................................................................................
(Write full address)
hereby appoint ...................................................................................... of ..........................................................................................................
(Write full address)
or failing him ........................................................................................ of ..........................................................................................................
(Write full address)
as my/our proxy and to vote for me/us or my/our behalf at the 30th Annual General Meeting of the Company to be held on 24th September, 2002
at 1030 hours and at any adjournment thereof.

Signed this ................................................ day of .................................... 2002

Please
Signature(s) ...................................................................................................... affix
30 paise
Ledger Folio/DP ID & Client ID No ..............................................................
Revenue
No. of Shares held ........................................................................................... Stamp

NOTE: 1) The Proxy need NOT be a member.

2) The Proxy Form signed across 30 paise revenue stamp should reach the Company’s Registered Office atleast 48 hours before the
scheduled time of meeting.
3) Please fill in full particulars.
 BOOK POST (U.P.C)

TO,

If undelivered please return to:

Contad / Delhi Press

Ispat Bhawan, Lodi Road, New Delhi - 110 003