1. CONTINGENT LIABILITIES
As at 31st As at 31st
March, 2008 March, 2007
[Rupees in crores]
is] Claims against the Comp. pending
appellate/judicial decisions :
as] Excise Duty 1277.39 1313.74
bs] Sales Tax on inter-state stock
transfers from plants to stockyards*. 1155.87 1178.18
cs] Other sales tax matters 100.12 113.70
ds] Income Tax 0.75 0.71
es] Other duties, cess & levies 188.20 159.94
fs] Civil matters ** 201.09 203.46
gs] Miscellaneous ** 251.21 172.03
* No liability is expected to arise, as sales tax has been paid on
eventual sales.
** includes claims of Rs. 19.01 crore [As at 31st March 2007 :
Rs.19.01 crores], against which there are counter-claims of Rs.25.82
crore [As at 31st March 2007 : Rs.25.82 crores].
iis] Other claims against the Comp. not acknowledged as debt:
as] Sales Tax 9.32 8.06
bs] Duties, cess & levies 8.26 4.91
cs] Civil matters $ 35.86 34.05
ds] Miscellaneous $ 285.69 317.29
$ includes claims of Rs. 11.80 crore [As at 31st March 2007 Rs.58.65
crores], against which there are counter-claims of Rs.8.98 crore [As at
31st March 2007 Rs. 48.00 crores]
iiis] Disputed income tax/service tax demand
on joint venture Comp. for which Comp. 121.70 80.70
may be contingently liable under the
joint venture agreement
ivs] Guarantees/counter-guarantees given to
banks/excise authorities on behalf of 31.40 31.40
subsidiary Comp. & a joint venture company.
vs] Bills drawn on customers & discounted
with banks. 72.96 17.01
vis] Price escalation claims by contractors/
suppliers & claims by certain employees, - -
extent whereof is not ascertainable
[Figures in brackets pertain to previous years]
2. FIXED ASSETS
2.1 Land includes:
is] 62161.37 acres [62116.84 acress] owned / possessed / taken on lease
by the Company, in respect of which title/lease deeds are pending for
registration.
iis] 5999.73 acres [5958.95 acress] given on lease to various agencies/
employees/ex-employees.
iiis] 10082.99 acres [9832.99 acress] 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.
ivs] 1854.23 acres [ 1854.23 acress] in respect of which title is under
dispute.
2.2 Buildings include net block of Rs. 24.67 crore [Rs. 30.83 crores]
for which conveyance deed is yet to be registered in the name of the
Company.
2.3 Foreign exchange variations aggregating to Rs. 22.89 crore [net
debits] [Rs. 5.61 crore [net debits]] have been adjusted in the carrying
amount of fixed assets during the year.
2.4 Estimated amount of contracts remaining to be executed on capital
account & not provided for [net of advancess] Rs. 13525.42 crore [
Rs.1970.72 crores].
[Figures in brackets pertain to previous years]
3. INVESTMENTS, CURRENT ASSETS, LOANS and ADVANCES AND CURRENT
LIABILITIES and PROVISIONS
3.1 The Central Board of Direct Taxes vide its Notification dated 25th
September 2001 revised the rules for computation of certain
perquisites. The Employees Union/Association filed writ petitions with
the Honble High Court at Kolkata challenging the above Notification.
In pursuance of Honble Courts orders, the amount of tax deducted at
source on house perquisite w.e.f. 1st April 2003 & other perquisites
w.e.f. 1st October 2001, upto 31st March 2005 has been kept separately
as term deposits with banks, pending final decision of Honble
Court. Such deductions & deposits after 31st March 2005, have been
made in accordance with amended law/judicial decisions. However, there
is no impact on Acc. of Comp. as the additional tax, if
required, shall be recoverable from the employees.
3.2 Balances shown under creditors, debtors, claims recoverable and
advances include balances subject to confirmation/reconciliation and
consequential adjustment, if any. Reconciliations are carried out on
on-going basis. Provisions, wherever considered necessary, have been
made.
3.3 The Comp. has stock of iron ore fines of 43.62 million tonnes at
various mines of Company. Since the usage/sale of such iron ore
fines, not being readily useable /saleable, involves elements of
uncertainties, as a matter of prudence, no valuation of such fines has
been made in the accounts. However, the revenue earned from actual
disposal thereof during the year has been recognised in the books of
accounts.
4. PROFIT and LOSS ACCOUNT
4.1 The long-term agreement for wage revision expired on 31st December,
2006. Pending finalisation of fresh agreement w.e.f. 1st January 2007,
provision towards salaries & wages revision of Rs. 2598.12 crore [Rs.
2428.33 crore for years] & Rs. 11.39 crore [Rs. 11.12 crore for
the years] has been charged to Profit and Loss Account & Expenditure
during construction respectively, on estimated basis. Against the
provision made, ad-hoc adjustable advance of Rs. 492.37 crore, has been
paid & adjusted during the year.
4.2 Power and Fuel doesn't include expenses for generation of power and
consumption of certain fuel elements produced by plants which have
been included under the primary heads of account.
4.3 The Research & Development expenditure charged to Profit and Loss
Account & allocated to Fixed Assets, during the year, amount to Rs.
99.62 crore [previous year - Rs. 71.30 crores] & Rs. 2.24 crore
[previous year - Rs. 5.55 crores] respectively.
4.4 The Comp. had represented for withdrawal of Joint Plant Committee
[JPCs] cess on sale of certain steel products in view of decontrol of
steel prices in earlier years, which was confirmed by JPC during the
year. As a result, an amount of Rs. 17.39 crore provided in earlier
years has been written back.
4.5 The Comp. reviews the carrying amount of its fixed assets on each
balance sheet date for purpose of ascertaining impairment, if any,
by considering assets of entire one plant as Cash Generating Unit. On
such review as at 31st March, 2008, wherever there was an indication of
impairment, no provision is required to be made, as the net realisable
value thereof, assessed by an independent agency as at 31st March,
2008, is more than the carrying amount.
4.6 The policy relating to accounting of exports sales, hitherto
recognised on the basis of issue of bill of lading has been changed
during the year, as disclosed in 'Schedule 3.1.13: Accounting
Policies', resulting in increase in sales & profit for year by
Rs.139.02 crore & Rs.56.84 crore respectively.
5. GENERAL
5.1 Employee Benefits
5.1.1. General description of defined benefit schemes:
Gratuity - Payable on separation @15 days pay for each completed year
of service to eligible employees who render continuous service of 5
years or more. Maximum amount in the case of executive employees is Rs.
3.50 lakhs as per the scheme. Maximum amount of Rs.10 lakhs has been
considered for actuarial valuation based on the recommendations of 6th
Pay Commission for Central Government employees.
Leave Encashment - Payable on separation to eligible employees who have
accumulated earned & half pay leave. Encashment of accumulated earned
leave is also allowed upto 30 days once in a financial year.
Provident Fund - 12% of Basic Pay Plus Dearness Allowance, contributed
to the Provident Fund Trusts by Company.
Post Retirement Medical Benefits - Available to retired employees at
companys hospitals and/or under the health insurance policy.
Post Retirement Settlement Benefits - Payable to retiring employees for
settlement at their home town.
Employees Family Benefit Scheme - Monthly payments to disabled
separated employees/legal heirs of deceased employees in lieu of
prescribed deposit till the notional date of superannuation.
Long Term Service Award - Payable in kind on rendering minimum 25 years
of service & also on superannuation.
