Steel Authority of India [SAILs] Ltd.

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'Notes to Accounts' Steel Authority of India [SAILs] Ltd.

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.

 

 

 

 

 

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