30ninl.in/web/portals/0/pdf/ar-ninl-2012.pdf · 30th annual report 2011-12 4 particulars year ... -...

30th

ANNUAL REPORT2011-2012

NEELACHAL ISPAT NIGAM LIMITED

CONTENTS

Board of Directors 03-03

Directors’ Report 04-22

Comments of C&AG 23-24

Auditors Report 25-26

Annual Accounts 30-52

BOARD OF DIRECTORS

(as on 30.08.2012)

Smt. Vijaylaxmi Joshi, IAS, Chairman

Dr. S. R. Jain

Shri D. P. Bagchi

Shri U. P. Singh, IAS

Shri R. Verma, IAS

Shri C. J. Venugopal, IAS

Shri S. Mishra, IAS

Shri S. Khurana

Shri Ved Prakash

Shri M. G. Gupta

Shri R. Singh

Shri S. P. Patnaik, Managing Director

Shri S. P. Padhi, Director (Finance)

COMPANY SECRETARY

Shri D. P. Parija

BANKERS

State Bank of India

Allahabad Bank

Indian Overseas Bank

Oriental Bank of Commerce

Bank of Baroda

State Bank of Mysore

State Bank of Travancore

Indian Bank

Union Bank of India

REGISTERED OFFICE

1st Floor, Annexe Bldg,

IPICOL House , Janpath,

Bhubaneswar – 751 022, Odisha

Tel: (0674) 2543741, 2543354, 2543231

Fax: (0674) 2541763

Web site : www.ninl.in

WORKS

Neelachal House

Kalinganagar Industrial Complex

Duburi, Jajpur, Odisha

Tel : (06726) 264002, 264003, 264008

Fax: ( 06726) 264009, 264010, 264049

AUDITORS

M/s. PAMS & Associates.

Chartered Accountants

Plot No. 506, Unit - IX,

Bhoi Nagar,

Behind Baya Baba Math,

Bhubaneswar – 751022

30th Annual Report 2011-12

4

PARTICULARS Year ended 31st

March’2012

Year ended 31st

March’2011

a) Gross Sales / Income 2055.80 1613.90

b) Net Sales / Income 1931.22 1575.66

c) Total Expenditure 1681.37 1536.15

d) Operating Profit (PBIDT)

249.85 39.51

e) Less : Interest 112.10 119.55

f) Cash Profit / (Loss) 137.75 (80.04)

g) Less : Depreciation 94.16 93.10

h) Profit / (Loss) Before Tax

43.59 (173.14)

i) Provision for Tax

- Current Tax 8.72 -

- Deferred 14.14 -

j) Add : MAT Credit Entitlement

8.72 -

k) Net Profit After Tax 29.45 (173.14)

BUSINESS PERFORMANCE

During the year under review, your company has clocked the ever highest turnover of `2055.80 crores which is 21% up compared to the previous year. Your company has also improved the bottom line and earned a net profit of `29.45 crores compared to the net loss of `173.14 crores for the previous year. This achievement was possible due to strict compliance to Techno-Economic Parameters and change in business plans.

Your Directors have recommended a dividend of 0.01% on Convertible Preference Shares for the year 2011-12 held by lenders as per the Corporate Debt

Restructuring (CDR) scheme subject to approval of the shareholders.

PRODUCTION PERFORMANCE

Financial year 2011-12 was a challenging year for NINL due to sluggish demand in pig iron market coupled with sharp increase in prices of input raw materials. The effect was more in coal due to fluctuations in international market prices. In spite of adverse market conditions, with collective efforts the Company achieved best ever production of 10,18,710t Gross sinter (previous best 10,00,200 t in 2010-11), 7,09,584 t of Gross coke (previous best 7,05,302 t in 2005-06), 3,06,992 MWH power generation (previous best 2,68,925 MWH in 2006-07). Your company has consistently maintained its position as the largest producer and exporter of Pig iron in the country. 45 new monthly and 18 new annual records were made in production, despatch and techno economic factors like improvement in BF coke yield, improvement in use of % sinter in BF, optimizing specific coal consumption and fuel consumption, efficient utilization of BF gas and power in Coke oven and Power plant area. To tide over the challenging market scenario and liquidity constraints, new innovative measures like sale of Coke and Sinter to other steel plants on conversion basis were taken up during the year. All above efforts have resulted in achieving the highest ever turnover and making a turnaround. The pig iron production during the year was curtailed in line with the reduced market off take and realization scenario.

Dear Members,

Your Directors take pleasure in presenting the 30th Annual Report of your company together with Audited Accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS(` in Crore)

23614

523394

73928

156277

576200

68764104328

351544

0

100000

200000

300000

400000

500000

600000

700000

Pig iron BF Coke G.Sinter Power Export

2010-11 2011-12

513930

1000200

254424

573375

1018710

306992

572596522595

0

200000

400000

600000

800000

1000000

1200000

Pig iron G.Sinter BF Coke Power Gen.

2010-11 2011-12

DIRECTORS’ REPORT


5

has also maintained its position of largest pig iron exporter for the 7th consecutive year. 1,04,328 MWH of power exported to GRIDCO during the year.

LAND MARKS

• NINLenteredintoacontractwithSAILforcoalto coke conversion. Under this contract NINL despatched 2,63,135 t of coke during this year.

• Also a total of 68,764 t of sinter was sold toBokaro steel plant on conversion basis during this year.

• GTGwasputoncombinedcyclemode.

STATUS OF SMS PROJECT

The equipment erection and electrical installation of SMS Complex have been completed in all respects. Cold trial run of BOF & CCP and integrated trial run of CCP are scheduled to be completed during Aug’ 2012. Finishing work of Oxygen Plant viz., PRMS work, electrical testing jobs and compressor jobs are in the verge of completion and oxygen will be made available during September’ 2012. SMS and CCP shops are scheduled for commissioning during September, 2012.

23614

523394

73928

156277

576200

68764104328

351544

0

100000

200000

300000

400000

500000

600000

700000

Pig iron BF Coke G.Sinter Power Export

2010-11 2011-12

513930

1000200

254424

573375

1018710

306992

572596522595

0

200000

400000

600000

800000

1000000

1200000

Pig iron G.Sinter BF Coke Power Gen.

2010-11 2011-12

MINING

NINL was granted revised mining lease area over 874.290 hectares by Govt. of Odisha. The Mining Plan including Progressive Mine Closure plan was approved by IBM, Nagpur and Forest Diversion Proposal has been forwarded to the Principal Chief Conservator of Forest, Bhubaneswar, Odisha by Regional Chief Conservator of Forest, Rourkela along with scrutiny report & site inspection reports during July, 2012. Public hearing in respect of Sundargarh had been conducted in June, 2011 and similarly, on 03.05.2012 another public hearing was conducted for Keonjhar District successfully. The status of compliance of conditions in Terms of Reference (TOR) issued by MoEF have been submitted to MoEF, Govt. of India pertaining to Environmental Clearance. The Stage – I forest clearance is expected during Nov., 2012 and Stage – II clearance in March, 2013. Commencement of mining operations is expected by May’ 2013 after execution of the Mining Lease.

RIGHTS ISSUE OF EQUITY SHARES

During the year 2010-11, the company had issued 18,15,00,000 equity shares of `10/- each at a premium of `10/- per share aggregating to `363 crores for subscription by the existing shareholders on rights basis in proportion to the percentage of their shareholding for funding of Phase – II project. The said Rights Issue has been fully subscribed during the year under review.

FUTURE OUTLOOK OF THE COMPANY

Despite of recessionary trend in Pig Iron market, coupled with sharp increase in the prices of input raw materials during the year 2011-12, the company could tide-over the challenging market situation by adopting new innovative measures like sale of sinter & coke and also on conversion basis.

In 2012-13, the company will be producing continuously cast Billets which are likely to add more values and returns compared to Pig Iron. Efforts are being made to produce special quality Billets for better net sales realization.

SALES PERFORMANCE

Your company has recorded sales of pig iron of 5,76,200 t during this year. Company has also despatched annual highest of 3,51,544 t of BF coke. 2,09,582 t of G.slag, 44845 t of scrap, 31,566 t of crude tar, 11,016 t of Ammonium sulphate and 68,764 t of sinter were also sold during the year. Your company


6

BOF Control Room

CCP- Control Room Desk

Converter Working Platform


7

Oxygen Plant Compressor House

Oxygen Plant

Oxygen Plant Panel Room


8

Your company has been working on a plan to enhance its capacity in phases. In addition to one coke oven battery and a multi fuel Power Plant, your company now proposes to add one Blast Furnace of appropriate size in its expansion plan. Your company is working on preparation of a strategic paper on the same. The said paper will also consider the commencement of civil work of Coke Oven Plant in the financial year 2012-13.

TECHNO-ECONOMICS AND ENERGY CONSERVATION

Your company took many measures to improve upon techno-economics of the plant operations. Some improved measures over last financial year are listed below;

• BFcokeyieldincokeovenimprovedby0.32%.

• % sinter in burden in Blast furnace improved by12.3%.

• Dry coal consumption in coke oven reduced by4.69 kg / t BF coke.

• Pigironyieldimprovedby2.73%.

• Heatconsumptioninpowerplantreducedby4.9%.

• Powerconsumption incokeovenreducedby3.32kwh / t DC

• BFgasflaringreducedby42.2%.

• Steamgenerationincokeovenimprovedby34.5%

Various improvements in process parameters to effect energy conservation were implemented during the year. Some of the improved measures over last financial year taken by the company are detailed in Annexure-I.

ENVIRONMENT & POLLUTION CONTROL

Your company is committed for preservation of environment and to minimize the environmental impact of its operations and products by adopting sustainable practices and continuous improvement in environmental performance. The production process is based on recover, reuse, recycle and energy efficiency thereby substantially reducing the environmental load. Compliant with the environmental framework is

the top priority of the company. Your company has also taken various innovative measures to minimize carbon footprint, increase the green cover in and around the peripheral areas and adopted suitable energy conservation measures.

Some of the key initiatives adopted and followed in the process are enumerated hereunder:

1. Control of Air Pollution

To assess the impact of plant activities on environment, Air Quality in respect of critical parameters is being monitored at 5 stations. The Quality Parameters are conforming to the norms. In order to abate air pollution, all the pollution control equipments such as bag filter, electrostatic precipitator, cyclone separator, dry fog system, water sprinkling system, scrubbers are being efficiently operated round the clock. All the major stacks are monitored regularly to avoid any discharge from process variation.

2. Control of Water Pollution

The effluent treatment plant at Blast Furnace is being operated efficiently and parameters are regularly monitored. The quality of effluent discharged from the plant is regularly monitored and values are within the norms. The treated effluents are reused for process cooling after cooling it through cooling tower, thus recycled within the plant. Revamping and modification has been carried out in house at Biological Oxidation Dephenolisation (BOD) Plant thereby utilizing submersible aerator and agitator which has improved the performance.

3. Solid Waste, Gaseous Waste and Hazardous Waste

Solid waste and gaseous waste generated by the process are completely reused and recycled. Gaseous waste are completely utilized for captive heating stove in Blast Furnace, Battery heating in Coke Oven and balance used for generation of power in Power Plant.

a. BF Slag - Solid Waste Material i.e. BF Slag is of very good quality; as such entire quantity generated is sold out to the cement manufacturers.

b. BF-ETP Sludge - generated in Sludge Ponds has


9

rich content of iron and Coke. As such entire sludge has been completely recycled in Sinter Plant.

c. Decanter Sludge - generated in Coke Oven Plant has high calorific value and therefore its heat content is recovered by feeding the same to CO Battery.

d. Flue Dust and APCE Dust - collected in Cyclone Separator and Air Pollution Control equipments are recycled back to Sinter Plant as raw material.

e. BFG and COG - byproducts of manufacturing process with high calorific value, are entirely utilized for captive heating of Stoves and Coke Oven Battery and for generation of Power and steam at Power Plant.

f. Hazardous Waste - used oil has been sold only to authorized recycler registered with MoEF in compliance of statutory provisions and decanter tar sludge is recycled in CO Battery for recovery of heat content. Your company has been registered as member with M/s Ramky Enviro Engineers Limited for collection, treatment & disposal of hazardous waste which are neither reusable / recyclable inside plant at their common Hazardous waste disposal facility at Sukinda (TSDF) to comply with the directives of statutory authorities.

4. Control of Noise Pollution

Acoustic enclosures have been provided in noise generating equipments to insulate noise. Further green belts have been developed around the shops and along the plant boundary which act like a natural barrier and attenuate the spread of noise level and emission from the plant.

5. Environmental Display Board

In order to communicate to the society and stake holders in a transparent way, a large size Electronic Display Board has been installed at the Plant Gate which is continuously displaying the environmental information. The environmental monitored values and norms are being continuously displayed and updated regularly.

HUMAN RESOURCE MANAGEMENT

HR Initiatives

• Industrial Relation in the company is by andlarge peaceful.

• Central/Departmental Productivity Councilmeetings were conducted regularly for improvement of production/productivity, reduction in costs, improvement in quality and of safety procedure.

• SRUJANI (suggestions received from theemployees), STAR BRIGADE (Competitiveness among the employees in shifts) concepts were introduced. Momentous/appreciation letters were awarded to the individual/groups in recognition of their efforts.

• A mass communication exercise in the nameof “MANTHAN” is being held twice a month wherein the participants suggest new ideas for the growth and development of the organization.

• Competitions like inter departmental CricketTournament, Gardening, and housekeeping were held in order to develop a congenial relationship among the employees and for creation of a clean, green atmosphere inside the plant.

Training

Different training programmes were organized during the year on :

• Skill Improvement Training in Hydraulics,Pumps, Gear Boxes, LT/HT Breakers/

Skill Development Training at SDC


10

PLC-5 Operation & Maintenance, Preventive Maintenance, Safety Management, Quality Circle, First-Aid and training on BOF & CCP at Durgapur Steel Plant, SAIL.

• Behavioural Training in Communication& Presentation Skills, Self-Management & Leadership.

• Skill Development Training to Fieldman at SDC.

• InductionTrainingforExperiencedExecutives/Junior Officers.

• ApprenticeTraining.

Safety

• The Safety department has been regularlymonitoring the project sites and conducting Safety Talk and class room training for contractor workers engaged for Project works.

• Regular Safety inspection is conducted inworks & project area by safety department to avoid unsafe condition & unsafe practices. Departmental monthly review meetings are being organized to eliminate unsafe points. Safety stewards and Safety supervisors are posted on stand by duty. Class room training has been provided to the employees of works & project area twice in a month.

• NINLhavewon the “Ispat SurakshaPuraskar-2012” for the assessment year 2011 from Joint Committee on Safety, Health & Environment in Steel Industries (JCSSI) on various events.

• National Safety Day was celebrated on 4thMarch 2012. Prizes were distributed for various safety competitions as a part of National Safety Day celebration. Safety related cultural activities were organized by the employees of NINL collective. Shri H S Mohanty, Director of Factories & Boilers, Govt. of Odisha, graced the occasion as chief Guest.

Health and Environment

Ambient Air Quality is monitored at 5 locations. Emissions from 5 nos of stacks are monitored once in every month. The monitored parameters are under the statutory norms. Noise level in critical locations are measured and found to be within limit. Corrective and protective measures are taken to avoid continuous exposure of the employees in noisy areas. The effluents generated are treated in Effluent Treatment Facility and treated effluents are utilized for moistening of coal and dust suppression purpose. Hazardous wastes generated are handled and disposed according to the Hazardous Waste Management Rule. Weather monitoring station was commissioned to know the climate change parameters in long run. One Display Board was installed at gate to display environmental parameters inside the plant premises. Health check up of employees and contract workers for occupational related diseases are carried out on regular basis. Health check up camps are organized in peripheral villages. Recently, two additional doctors and two new modern ambulances have been introduced for better medical services to our employees & their family members.

TOTAL QUALITY MANAGEMENT

Your company has adopted a “Total Quality Approach” for continual improvement through Total Quality Management System. Several concepts have been adopted for implementation of TQM, which are listed below:

• Surveillanceaudit-IIhasbeendonebyexternalauditor in January’2012. Continuation certificate has been achieved successfully.

• Sofartotal43nos.ofQualitycircles(QC)and9nos. of Quality Improvement Team (QIT) were National Safety Day 2012 Celebration


11

formed for continual improvement and problem solving through team building. Out of which 8 nos of QC teams has been formed during 2011-12. Total cost benefit achieved around `14.01 crores through the Quality Circle initiatives.

• 3’S for good house keeping have beenimplemented and being sustained in all areas of plant including Neelachal House.

• For Cost Control and maximization of theprofit a strategy was prepared and implemented in major departments of the plant. On techno economics front saving of `85 cr achieved compared to previous year. On Profit maximization strategy conversion of sinter and coke has been taken up. Through this your company has generated gross revenue in tune of `85 cr approx during the financial year under review.

• Some of the future plans envisaged for TotalQuality Management are ISO 14000 & ISO 18000 certification, BIS certification for Pig Iron, BIS certification for future steel products.

AWARDS AND ACCOLADES

• Yourcompanyhasbeenhonouredwiththemostadmired Greentech Environment Award in Metal & Mining sector at 12th Annual Global Environment & CSR Conference held on 20-21 Oct’ 11 at Srinagar organized by Greentech Foundation.

• Total 11 QC teams participated in chapterconventions at Rourkela, Durgapur and Vizag and won 9 Gold & 2 Silver awards.

• 9Goldwinning teams participated inNationalconvention at Hyderabad in Dec’11 and bagged 1 Gold (Par Excellent) 7 Silver (Excellent) and 1 Bronze (Distinguished) award.

• Yourcompanyhasbeenhonouredwiththemostadmired Greentech HR Award 2012 in ‘Best HR Strategy’ in reorganization of its achievement in HR Management.

CORPORATE SOCIAL RESPONSIBILITY

Being a socially responsible corporate house, NINL is fully committed towards the well being of society at large, with people at heart as its cardinal principle and philosophy works closely with Government, Community and other related agencies for prosperity of all for achieving inclusive growth and sustainable development. NINL defined a state of core values for itself, commitment compassion and trust to guide all its CSR initiatives.

Education

As education plays a vital role in shaping the nation, NINL extends its support through its CSR initiatives. NINL encourages students in the form of extending scholarships, construction and developing schools and its related peripherals like toilets blocks in schools, boundary walls of school premises, plantation in the premises of educational institutions etc. In this connection, NINL involves in the following activities:

• NINL signed a MoU under School ‘AdoptionProgramme’ introduced by the Govt. in respect of ST & SC Dev. Deptt. Schools. In

NINL Receiving Ispat Suraksha Award-2012 from JCSSI

Distribution of Scholarship to the students of Kapaleswar High School, Duburi


12

this regard a school Tapoban Govt. Girls High School, Rampillo was adopted for its all round development.

• Construction of boundary wall at KapileswarHigh School, Duburi.

• Distribution of Scholarship to the KapilaswarHigh school, Hingula High school, Topaban Govt Girls High School Rampilo, Primary School Gobaraghati every year.

• Construction work of Ollala Panchayat HighSchool, Danagadi Block.

• ExtendingfinancialassistancetoNeelachalHighschool, Nadiabhanga Village.

• ContinuesextendingfinancialAssistancetonineprimary schools at Mining villages till date.

• Distribution of School bags in the schools ofmining area.

Laying of Foundation Stone for Ollala Panchayat High School Building

Distribution of School Bags at Sanpatuli village in Mining Area Sundergarh

Health and Sanitation Initiatives

• Asfarasthehealthandsanitationofthelocalityis concerned, NINL conducts health check up camps at regular intervals and also undertake distribution of medicines at its periphery and mining area.

Medical Camp at village Baragadia

NINL Green Cup 2012 - 8th All India Football Tournament

• NINL conducted 34 numbers of health checkup camps in the peripheral villages namely Baragadia, Dholapathara, R & R Colony, Gobarghati, Rampillo etc. Similarly, health check camps were conducted 12 times in its mining villages.

• Extendedfinancialassistance toSteelconsumercouncil, ministry of steel for organizing national level health camp & plantation at Dharamgarh, Kalahandi.

Sports & Games

In order to nurture the rural talent, NINL takes up

• NINLextendedafinancialassistancetoKalingaFoundation Trust for propagation of Science.


13

sports and games activities by organizing different cricket tournaments, football tournament, Kabadi tournaments etc.

• Financial assistance to Dist. PoliceAdministration for construction of Gymnasium and Yoga Hall at Panikoili, Jajpur.

• NINL has sponsored NINL green cup forawareness of environment and contributed `2.20 lakhs to Jajpur District Athletic Association for organizing tournament every year.

• EveryyearconductsInter-DepartmentalCricketTournament.

• NINL’s mining division organized a footballtournament at Kadalia Village.

Social Development

Keeping in view the well being of the people, different welfare activities like installation of tube wells/bore wells, water supply and also supply drinking water through tankers particularly during the social and cultural programmes, distribution of relief materials to the flood affected peoples were taken up.

• Installation of Bore well at Amplaba,Desabandha, Bansnali, Sarangapur, R&R Gobarghati. Also five more borewells installed in the mining villages.

• Supplyofdrinkingwaterpouchesof111111nosfor Puri Car Festival, 2011.

• Installation of 40 nos. of solar lights in themining village namely Mithirda, Kadalia, Kriyakudar, Basada, Mandajodi, Dalita, Pirhapokhari, Handibhanga.

• Relief distribution in Badachana Block, anddifferent relief materials being distributed at Korai Block and Marthapur village near intake well at Jajpur.

• Construction of Puja Pendal at RR Colony,Gobarghati.

• Distribution of Clothes and food items toGandhi Leprosy colony, J. K. Road by NINL Ladies club.

• NINL installs the Jalachatra Sheds in itssurrounding chowks every year during summer to supply pure drinking water to the people.

Cultural development initiatives

In the area of cultural efflorescence, NINL extends its helping hand for organizing different cultural programmes. Your company has also supported various cultural organizations by contributing donations from time to time, thereby uplifting cultural activities organized in the locality and the state.

Plantation Activities

Every year NINL takes up plantation activities in large scale in the vicinity including inside plant premises to develop greenery to safeguard the environment and to produce clean and green environment. During the year 2011-12, a total of 23,314 nos. of saplings have been planted. This includes 21,214 nos. of saplings in plant premises and 2,100 nos. along the road and in other areas. Besides, 550 saplings were distributed by the NINL mines division to the villagers of the mining area.

Distribution of relief materials during flood at District Jajpur

Supply of drinking water at mining villages through tankers


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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, is given in Annexure - I.

COMMENTS OF C & AG

The Comptroller and Auditor General of India under Section 619 (4) of the Companies Act, 1956 has NIL comments on the Accounts of the Company for the year ended 31st March’ 2012. The letter of C&AG No. 699/ Report/ 01-56 (NINL)/ 2012-13 dtd. 08 August, 2012 on the same is enclosed to this report as Annexure – III.

DIRECTORS

Shri P. C. Sahu, relinquished the charge of Managing Director on 3rd March, 2012 on completion of his tenure.

Shri Deoranjan Kumar Singh, IAS Commissioner-cum-Secretary to Govt. of Odisha, Department of Steel & Mines was nominated as Director in place of Shri Manoj Ahuja, IAS, Ex-Commissioner-cum-Secretary to Govt. of Odisha, Department of Steel & Mines with effect from 06.07.2012.

Shri Rajesh Verma, IAS, Principal Secretary to Govt. of Odisha, Department of Steel & Mines was nominated as Director in place of Shri Deoranjan Kumar Singh, IAS, Ex-Commissioner-cum-Secretary to Govt. of Odisha, Department of Steel & Mines with effect from 27.08.2012.

Shri Rabindra Singh Nominee of NMDC Limited was appointed as Director in place of Shri N. K. Nanda with effect from 30.08.2012.

The Board places on record its deep appreciation for the commendable services and the contributions made by Shri P. C. Sahu, Shri Manoj Anuja, IAS, Shri Deoranjan Kumar Singh, IAS and Shri N. K. Nanda during their tenure as Director.

Shri S. P. Patnaik assumed the charge of Managing Director with effect from 21st May, 2012. In this regard resolutions have been proposed in the notice of Annual General Meeting (AGM) for approval of his appointment.

PARTICULARS OF EMPLOYEES

During the year under review, no employee of your company was in receipt of remuneration in excess of the limits as prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

CORPORATE GOVERNANCE

The company has complied with the requirement of Corporate Governance. The detail in this regard form part of this report is enclosed vide Annexure-II.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors state :

• that in the preparation of the annual accountsfor the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

• that the directors had selected such accountingpolicies 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 & loss account of the Company for the year under review;

• thatthedirectorshadtakenproperandsufficientcare for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• that thedirectorshadprepared theaccounts forthe financial year ended 31st March, 2012 on a ‘going concern’ basis.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Details of energy conservation and research & development activities undertaken by the Company along with the information in accordance with the


15

In terms of provisions of Article 76 of Articles of Association of the Company regarding rotation and retirement of Directors, Dr. S. R. Jain, Shri S. Khurana and Shri Ved Prakash, Directors shall retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment.

STATUTORY AUDITORS

M/s PAMS & Associates, Chartered Accountants, Bhubaneswar were appointed as Auditors for the Financial year 2011-12 by the Office of the Comptroller and Auditor General of India vide Letter No. CA.V/COY/CENTRAL GOVERNMENT, NISPAT(1)/800 dtd. 13.09.2011.

COST AUDITORS

Pursuant to the notification of the Companies (Cost Accounting Records) Rules, 2011 published vide GSR 429(e) dated June 3, 2011, and in reference to the order FNo. 52/26/CAB-2010 dated June 30, 2011 issued by Ministry of Corporate Affairs, Cost Audit Branch, Government of India, your Directors in their meeting held on 08.11.2011 have appointed M/s. S. S.

Sonthalia & Co., Cost Accounts, as the Cost Auditor of the company for the year 2011-12, subject to such approvals as may be applicable.

Necessary certificate and consent letter of the said Auditor has been obtained to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGEMENT

Your Directors wish to place on record their deep sense of appreciation for the hard work, dedicated contribution and commitment extended by every member of the NINL collective. Your Directors also wish to place on record their sincere appreciation for the co-operation, guidance and support received from all the stakeholders including Ministry of Commerce, Govt. of India, Ministry of Steel, Govt. of India, Department of Steel & Mines, Govt. of Odisha, other Central and State Govt. agencies, Railways, Ports, Banks and Financial Institutions, Shareholders and business associates during the year and look forward to continuance of this mutual supportive relationship and co-operation in future.

Place : New DelhiDate : 30.8.2012

For and on behalf of the Board

Vijaylaxmi Joshi Chairman


16

ANNEXURE-I

ANNEXURE TO THE DIRECTORS’ REPORT

Information in accordance with the provisions of section 217(1) (e) of the Companies Act 1956 read with Companies (Disclosure of particulars in report of the Board of Directors) Rules, 1988 and forming part of Directors’ Report for the year ended 31st March 2012.

A. CONSERVATION OF ENERGY

(a) Energy conservation measures taken and improvements over last year are

1) Heat consumption in power plant reduced by 5.36 %.

2) Power Consumption in coke oven reduced by 4.02 KWH / t DC

3) Dry coal consumption in coke oven reduced by 5.17 kg/ t BF coke.

4) BF gas flairing reduced by 42.2 %.

5) Steam generation in coke oven improved by 8.6 %..

6) % of sinter in burden in Blast furnace improved by 12.3 %.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy.

- N A

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods

- Saving of `10.90 crores during the year.

(d) Total energy consumption and energy consumption per unit of production as per Form A of the Annexure in respect of industries specifies in the schedule thereto.

-Form A enclosed

B. TECHNOLOGY ABSORPTION

(e) Efforts made in technology absorption as per Form B of the Annexure.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(f) Total foreign exchange used and earned during 2011 -12

(i) CIF Value of import - ` 91,427.54 lakhs

(ii) Expenditure in Foreign Exchange - ` 246.18 lakhs

(iii) Foreign Exchange earned - Nil


17

ANNEXURE

FORM A

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. POWER AND FUEL CONSUMPTION

2011–12 (01.04.11 to 31.03.12)

2010–11 (01.04.10 to 31.03.11)

1. (a)Electricity Purchased

Unit (kwh) 6,28,000 37,97,371

Total amount (` Lakhs) 27.38 137.84

Average rate / unit (` / kwh) 4.36 3.63

(b) Own generation

(i) Through diesel generation Unit (kwh) Nil Nil

Unit per Lit of diesel oilAverage cost per unit

NilNil

NilNil

(ii) Through Steam turbine /generator (kwh) 30,69,92,000 25,44,24,000

Unit per Lit of fuel oil / gasAverage cost per unit (`) 2.84 2.64

2. Coke used in Blast furnace (Skip) Quantity (Tons) 2,88,494 3,52,424

Total Cost (` Lakhs) 74,419 82,294

Average rate (In `/ t) 25,796 23,351

3. LDO

Quantity (Kilo Liters) 416 1341

Total cost (` Lakhs) 239 604

Average rate (In ` / Kl) 57,554 45,041

4. BF gas (internal generation)

Quantity (‘000 cum) 8,17,996 9,49,143

Total cost (` Lakhs) 8,588.42 9,461.59

Average rate (` / ‘000 cum) 1,050 997

5. Coking Coal

Quantity (Tons) (including conversion) 10,09,570 * 8,01,451

Total cost (` Lakhs) 1,53,677 1,08,979

Average rate (` / t) 15,222 13,598

* Includes use of 4,18,219 t of Coking Coal for conversion for 2011-12 and 28,819 for 2010-11.


18

B) CONSUMPTION PER UNIT OF PRODUCTION

Products (with details) Standards (if any) 2011–12 (01.04.11 to 31.03.12)

2010–11 (01.04.10 to 31.03.11)

Electricity Kwh / t HM 43 39

Coke & Nut coke (dry) Kg / t HM 559 584

BF gas Cum / t HM 656.9 665.6

Coal (wet) to Hot Metal Kg / t Hot Metal 982 989

LDO Lit/t Steam generation 0.07 0.94


19

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION

RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which developmental activities carried out by the company.

- The shape of PCM mould has been changed to reduce mould to mould gap, thereby reducing spillage and increasing PCM yield.

2. Future plan of action

- Oxygen enrichment in blast furnace

- Pulverised coal injection system in blast furnace

- Commissioning of 4th Stove in blast furnace

- Skip speed enhancement in blast furnace.

3. Expenditure on R&D

- There was no separate expenditure made under R & D head. However the expenditure for all R & D activities was charged under revenue account.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts, in brief, made towards technology absorption, adaptation and innovation.

- Technological up gradation in stock house charging system of blast furnace was carried out by incorporating new software.

2. Benefits derived as a result of the above efforts.

- Reliability of charging system has increased. Material charging rate in blast furnace improved by 15%


20

ANNEXURE - II

CORPORATE GOVERNANCE

Sl. No.

Name of the Director Category of Directorships

No. of Board Meetings held

No. of Board Meetings attended

No. of Directorships in

other Boards

1.H. S. Mann, Chairman(01.04.11 to 22.07.11)

Non-Executive 2 2 4

2.Smt. Vijayalaxmi Joshi, IAS(22.07.11 to 31.03.12)

Non-Executive 3 3 1

3.Dr. S. R. Jain(01.04.11 to 31.03.12)

IndependentNon-Executive

5 5 3

4.D. P. Bagchi(01.04.11 to 31.03.12)


5 5 9

5.Ved Prakash(01.04.11 to 31.03.12)

Non-Executive 5 3 4

6.S. Khurana(01.04.11 to 31.03.12)

Non-Executive 5 1 4

7.M. G. Gupta(01.04.11 to 31.03.12)

Non-Executive 5 4 4

8.Udai Pratap Singh, IAS(01.04.11 to 31.03.12)


5 - 2

9.Manoj Ahuja, IAS(01.04.11 to 31.03.12)

Non-Executive 5 1 1

NINL’s philosophy in relation to Corporate Governance is to ensure fairness, transparency, integrity, equity, honesty, accountability in all its transactions with its customers, employees, lenders, government and other stakeholders including shareholders. It is committed to ensure transparency, disclosures and reporting that conforms fully with laws, regulations, guidelines etc. The company ensure to achieve and maintain the highest standard of Corporate Governance.

1.0 BOARD OF DIRECTORS.

1.1 Composition.Board of Directors of the company comprised of thirteen Directors viz., a Non-executive Chairman,

two Executive Directors, eight Non-executive Directors and three Independent Directors as on 31.03.12. Details are given in 1.2. Subject to the overall superintendence and control of the Board, the day to day management of the company is vested with Shri S. P. Patnaik, Joint Managing Director.

1.2 Board Meetings and Attendance.During the year 2011-12 five (5) Board meetings were held on 10th May, 2011, 28th June, 2011, 6th September, 2011, 08th November, 2011 and 15th February, 2012.

The Directors’ attendance at the Board meeting and number of directors in other companies during the year were as follows :


21

Sl. No.

Name of the Director Category of Directorships

No. of Board Meetings held

No. of Board Meetings attended

No. of Directorships in

other Boards

10.C. J. Venugopal, IAS(01.04.11 to 31.03.12)

Non-Executive 5 1 4

11.S. Mishra, IAS(01.04.11 to 31.03.12)

Non-Executive 5 - 8

12.N. K. Nanda(01.04.11 to 31.03.12)

Non-Executive 5 - 8

13.P. C. SahuManaging Director(01.04.11 to 03.03.12)

Executive 5 5 1

14S. P. PatnaikJt. Managing Director(01.04.11 to 31.03.12)

Executive 5 5 1

15.S. P. PadhiDirector (Finance)(01.04.11 to 31.03.12)

Executive 5 5 -

2.0 COMMITTEES OF THE BOARD

2.1 Audit Committee of DirectorsThe Board of Directors of the Company has constituted the Audit Committee of Directors to oversee the company’s financial reporting process and disclosure of financial information and to review Internal Audit reports, findings of internal investigations. All accounting and financial policies of the company are being considered by the Audit

Committee before submission to the Board. The Audit Committee comprises of three Non-Executive Directors and one Executive Director. The Chairman of the Audit Committee is Non-Executive Director.

The Audit Committee of Board of Directors met five times during the year under review : i.e. on 10th May, 2011, 28th June, 2011, 06th September, 2011, 08th November, 2011 and 15th February, 2012.The particulars of the members including their attendance at the meetings during the year were as follows :

Sl. No.

Name of the Member Period No. of Meetings held

No. of Meetings attended

1.D. P. BagchiChairman, Audit Committee

01.04.2011 to31.03.2012

5 5

2.Dr. S. R. JainMember, Audit Committee

01.04.2011 to31.03.2012

5 5

3.M. G. GuptaMember, Audit Committee

06.09.2011 to31.03.2012

2 2

4.P. C. SahuManaging Director Member, Audit Committee

01.04.2011 to03.03.2012

5 5


22

Chairman, Joint Managing Director and Director (Finance) of the company also attended the above meetings to assist the committee in its deliberations. The minutes of the above meetings were submitted for the information of the Board.

2.2 Project Implementation Review Commit-tee (PIRC) of Directors:

The Project Implementation Review Committee (PIRC) of Directors constituted by the Board of Directors comprises of three Non-Executive Directors and two Executive Directors. The Committee reviews the progress of Phase-II Project and advises on critical issues, if any arise during implementation. .

The Committee met eight (8) times during the year under review i.e. on 21st April, 2011, 27th June, 2011, 12th July, 2011, 5th September, 2011, 24th November, 2011, 26th December, 2011, 7th February, 2012 and 15th March, 2012.

2.3 Bond / Debenture Committee of Directors:The Board of Directors have constituted the Bond/Debenture Committee of Directors comprising of two members to expeditiously consider and approve allotment / issue, transfer, transmission, consolidation, splitting of bonds of the Company and other related issues.

2.4 Share Committee of Directors :The Board of Directors have constituted a Share Committee of Directors comprising of four members to expeditiously consider and approve allotment of equity shares against Rights Issue. The Committee met two times during the year under review i.e. on 12th May, 2011 and 1st October, 2011.


23

ANNEXURE - III


24

COMMENT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956

ON THE ACCOUNTS OF NEELACHAL ISPAT NIGAM LIMITED, BHUBANESWAR FOR THE YEAR ENDED 31 MARCH 2012.

The preparation of financial statements of Neelachal Ispat Nigam Limited, Bhubaneswar for the year ended 31

March 2012 in accordance with the financial reporting framework prescribed under the Companies Act, 1956

is the responsibility of the Management of the Company. The Statutory Auditors appointed by the Comptroller

and Auditor General of India under Section 619(2) of the Companies Act, 1956 are responsible for expressing

opinion on these financial statements under Section 227 of the Companies Act, 1956 based on independent audit

in accordance with the Auditing and Assurance Standards prescribed by their professional body, the Institute

of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated

25.06.2012.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under

Section 619(3) (b) of the Companies Act, 1956 of the financial statements of Neelachal Ispat Nigam Limited,

Bhubaneswar for the year ended 31st March 2012. This supplementary audit has been carried out independently

and is limited primarily to inquiries of the Statutory Auditors and Company personnel and a selective examination

of some of the accounting records. On the basis of my audit, nothing significant has come to my knowledge which

would give rise to any comment upon or supplement to Statutory Auditors’ Report under Section 619(4) of the

Companies Act, 1956.

For and on behalf of the Comptroller & Auditor General of India

Nandana MunshiPrincipal Director of Commercial Audit

& Ex-officio Member, Audit Board-I,Kolkata

Place: Kolkata

Date: 08 August 2012


25

PAMS & ASSOCIATESCHARTERED ACCOUNTANTS

Plot No: - 506, Unit – IX, Bhoi NagarBehind Baya Baba Math, Bhubaneswar – 751 022

Email: jeetmishra36 @ gmail .com Tel. : 0674 – 2543 528

1. We have audited the attached Balance Sheet of Neelachal Ispat Nigam Limited (the Company) as on 31st March, 2012, the Statement of Profit and Loss and also the Cash Flow Statement 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.

2. We have 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 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.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we are enclosing herewith a statement in the Annexure on the matters

specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that :

a) 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;

b) 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;

c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) in terms of Government of India, Ministry of Finance, Department of Company Affairs Notification No. GSR 829 (E) dated 21st October, 2003, the Company is exempted from the

AUDITORS’ REPORT

TO THE MEMBERS OF NEELACHAL ISPAT NIGAM LIMITED


26

applicability of the provisions of Section 274 (1) (g) of the Companies Act, 1956;

f) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

Place : BhubaneswarDate : 25/06/2012

For PAMS & AssociatesChartered Accountants

(Firm Regn. No. 316079E)

Satyajit MishraPartner

Membership No. 057293

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.


27

PAMS & ASSOCIATESCHARTERED ACCOUNTANTS

Plot No: - 506, Unit – IX, Bhoi NagarBehind Baya Baba Math, Bhubaneswar – 751 022

Email: jeetmishra36 @ gmail .com Tel. : 0674 – 2543 528

The Annexure referred to in the auditors’ report to the members of Neelachal Ispat Nigam Limited (the Company) for the year ended March 31, 2012, we report that:

1) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

The Company has a programme of physical verification of its fixed assets by which fixed assets are verified every year except the assets embedded to earth verified once in a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

None of the fixed assets has been disposed off during the year.

2) The inventory of the Company has been physically verified by the management after the year end. In our opinion, the frequency of the verification is reasonable.

In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

On basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operation of the Company.

3) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act., 1956. Accordingly, paragraph 4(iii) of the Order is not applicable.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods. The activities of the Company do not involve sale of any services. We have not observed any major weakness in the internal control system during the course of the audit.

5) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements, the particulars of which need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(v) of the order is not applicable.

6) The Company has not accepted any deposits from the public. Accordingly paragraph 4 (vi) of the Order is not applicable.

7) In our opinion, the Company has an internal audit commensurate with the size of the Company and nature of its business.

8) We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima

Annexure to the Auditors’ Report


28

facie the prescribed cost records have been maintained. We have, however, not made detailed examination of cost records with a view to determine whether they were accurate or complete.

9) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Excise duty and other material statutory dues have

been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, Wealth tax, Service tax, Cess, Customs duty and Employees’ State Insurance.

As at 31st March, 2012, according to the records of the Company and the information and explanations given to us, the following are the particulars of dues on account of taxes and duties that have not been deposited on account of any dispute:-

Sl. No.

Name of the Statute Amount in dispute

(Rs. In lacs)

Period to which it relates

Forum where dispute is pending

1.OST, CST, VAT and Entry Tax Act.

1768.48 1998-99 to 2004-05 Orissa Sales Tax Tribunal

2.OST, CST, VAT and Entry Tax Act.

474.79 2004-05Assistant Commissioner, Sales Tax (Appeal)

3. Central Excise Duty 1.20 2005-06 CESTAT

4. Customs Duty 112.37 2000-01Commissioner of Central Excise, Customs & Service Tax

5. Central Excise Duty 12,999.56 2005-06 to 2010-11Commissioner of Central Excise, Customs & Service Tax

6. VAT 350.29 2005-06 Commissioner , Sales Tax

7. Income Tax (TDS) 2,010.55 2005-06 to 2009-10 Commissioner of Income Tax

Total 17,717.24

10) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year but has incurred cash losses in the immediately preceding financial year.

11) The Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

12) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other

securities. Accordingly, paragraph 4 (xii) of the Order is not applicable.

13) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, paragraph 4 (xiii) of the Order is not applicable.

14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, paragraph 4 (xiv) of the order is not applicable.


29

15) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, paragraph 4 (xv) of the Order is not applicable.

16) According to the records of the Company examined by us and the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained.

17) Based on the information and explanations given to us and on an overall examination of the balance sheet of the company, in our opinion, there are no funds raised on short term basis which have been used for long term investments.

18) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act., 1956. Accordingly, paragraph 4 (xviii) of the Order is not applicable.

19) According to the information and explanations given to us, the security or charge has been created by the Company in respect of Secured Non-Convertible Redeemable Bonds.

20) The Company has not raised any money by public issues during the year. Accordingly, paragraph 4 (xx) is not applicable.

21) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

Place : BhubaneswarDate : 25/06/2012

For PAMS & AssociatesChartered Accountants

(Firm Regn. No. 316079E)


Membership No. 057293


30


Place : BhubaneswarDate : 25.06.2012

D.P. ParijaCompany Secretary

S.P. PadhiDirector (Finance)

M.G. GuptaDirector

S.P. PatnaikManaging Director

BALANCE SHEET AS AT 31ST MARCH, 2012

(` in lakh)

Note As at 31st March, 2012 As at 31st March, 2011

EQUITY AND LIABILITIES

Shareholders' Funds

Share Capital 1 60,265.13 50,086.77

Reserves & Surplus 2 39,502.34 99,767.47 31,853.34 81,940.11

Share application money pending allotment - 18,068.55

Non-current Liabilities

Long-term borrowings 3 151,520.93 154,156.83

Deferred tax liability (Net) 9,634.03 2,746.25

Other long term liabilities 4 14,233.85 175,388.81 13,042.34 169,945.42

Current Liabilities

Short-term borrowings 5 19,723.11 25,054.38

Trade payables 6 30,959.41 41,055.10

Other current liabilities 7 7,095.96 6,653.16

Short-term provisions 8 2,728.28 60,506.76 2,324.40 75,087.04

TOTAL 335,663.04 345,041.12

ASSETS

Non-Current Assets

Fixed Assets

Tangible Assets 9 136,533.79 121,769.75

Capital Work-in-Progress 10 133,206.85 130,256.10

Long-term loans and advances 11 7,914.54 277,655.18 7,551.17 259,577.02

Current Assets

Inventories 12 42,519.30 52,259.04

Trade Receivables 13 1,615.65 1,303.96

Cash and cash equivalents 14 8,855.15 24,999.98

Short-term loans and advances 15 5,017.76 58,007.86 6,901.12 85,464.10

TOTAL 335,663.04 345,041.12

For and on behalf of Board of DirectorsFor PAMS & AssociatesChartered Accountants

Significant Accounting Policies Notes on Financial Statements 1 to 25

In terms of our report of even date


31





M.G. GuptaDirector



STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2012

(` in lakh)

Significant Accounting Policies Notes on Financial Statements 1 to 25


Particulars Note For the year ended 31st March, 2012

For the year ended 31st March,2011

Revenue from operations 16 205,580.57 161,390.44

Less: Excise duty 12,458.91 3,824.17

193,121.66 157,566.27

Other income 17 1,977.30 898.17

Total Revenue 195,098.96 158,464.44

Expenses:

Cost of materials consumed 18 125,113.55 146,648.57

Changes in inventories of finished goods and work-in -progress

19 19,699.89 (18,549.25)

Accretion / (Depletion) to excise duty liability on stock of finished goods

20 (1,328.94) 1,919.32

Employee benefits expense 21 7,849.40 6,690.14

Finance costs 22 11,209.61 11,954.87

Depreciation and amortization expense 9 9,416.18 9,310.00

Other expenses 23 18,780.60 17,804.72

Total expenses 190,740.29 175,778.37

Profit before tax 4,358.67 (17,313.93)

Tax Expenses

Current Tax 872.07 -

Deferred Tax 1,414.17 -

Add: MAT credit entitlement 872.07 -

Profit for the period 2,944.50 (17,313.93)

Earnings per equity share of face value of Rs. 10 each (Basic and Diluted in Rupees)

0.450 -4.138


32

CASH FLOW STATEMENT(` in lakh)

Notes : 1) The above Cash Flow Statement has been prepared under the indirect method set out in AS - 3 issued by the Institute of Chartered Accountants of India.

2) Figures in negative indicate cash outflow. 3) Significant accounting policies & Notes on financial statements form an integral part of the Cash Flow Statement.


For the year ended 31st March, 2012

For the year ended 31st March,2011

A. Cash Flow from Operating Activities :Net profit as per the Statement of Profit & Loss 2,944.50 (17,313.93)

Add Deferred tax 1,414.17 -

Add Depreciation (After adjustment) 9,416.18 9,310.00

Add Financing Costs 11,209.61 11,954.87

Operating Cash Flow before changes in working capital

24,984.46 3,950.94

Changes in Working Capital :

Increase (-) / Decrease (+) in Inventory 9,739.74 (27,910.64)

Increase (-) / Decrease (+) in Sundry Debtors (311.69) 19,171.96

Increase (-) / Decrease (+) in Loans & Advances 1,519.99 (3,639.98)

Increase (+) / Decrease (-) in Current Liabilities (7,003.41) 41,575.37

Increase (+) / Decrease (-) in Provisions 403.88 4,348.51 (681.07) 28,515.64

Net Cash from Operating Activities 29,332.97 32,466.58

B. Cash Flow from Investing Activities :Purchase / Capitalisation of Fixed Assets (24,180.22) (11.08)

Sale / Adjustment of Fixed Assets - 1.87

Reduction in / Addition to Capital Work in Progress (2,950.75) (33,370.01)

Net Cash from Investing Activities (27,130.97) (33,379.22)

C. Cash Flow from Financing Activities :Equity (including security premium) 2,288.18 34,011.82

Working Capital Loan from Banks (7,980.76) (1,048.91)

Proceeds from borrowings other than working capital (1,444.40) 3,644.07

Financing Costs incurred (11,209.61) (11,954.87)

Dividend on Preference Shares including Dividend Distribution Tax

(0.24) -

Net Cash from Financing Activities (18,346.83) 24,652.11

Net Increase / (-) Decrease in Cash & Cash Equivalent (A+B+C)

(16,144.83) 23,739.47

Cash & Cash Equivalents (Opening) 24,999.98 1,260.51

Cash & Cash Equivalents (Closing) 8,855.15 24,999.98

(Represented by Cash & Bank balances)





M.G. GuptaDirector




33

NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012

(` in lakh)

As at 31st March, 2012


Authorised :

90,00,00,000 (previous year 90,00,00,000) Equity Shares of `10/- each 90,000.00 90,000.00

10,00,00,000 (previous year 10,00,00,000) 0.01% Convertible Preference Shares of `10/- each

10,000.00 10,000.00

Issued :



2,135.72 2,135.72

Total 60,957.73 60,957.73

Subscribed:



2,135.72 2,135.72

Total 60,957.73 59,813.65

Paid up :


1,38,52,000 (previous year 1,38,52,000) Equity Shares of `10 each are allotted as partly paid-up of `5/-

692.60 692.60


2,135.72 2,135.72

Total 60,265.13 50,086.77

1.1 Preference shares of `10 each are redeemable in 12 equal instalments commencing from 01.04.2018 and ending on 01.03.2019.

1.2 Preference shares have the right to convert into equity in the ratio of 1 : 1 or else to be redeemed at par.

1.3 Preference shareholders shall have no right to vote on any resolution except resolution directly affecting their rights.

1.4 Out of issued, subscribed and paid up share capital, 2,90,49,484 no. of equity shares were allotted to bankers in pursuant to CDR as fully paid up without payment received in cash during the year 2006-07.

1.5 Out of issued, subscribed and paid up share capital, 2,13,57,172 no. of preference shares were alloted to bankers in pursuant to CDR as fully paid up without payment received in cash during the year 2006-07.

1. SHARE CAPITAL


34




Equity shares -

Issued :

Equity Shares at the beginning of the year 588,220,143 406,720,143

Equity Shares at the end of the year 588,220,143 588,220,143

Subscribed :

Equity Shares at the beginning of the year 576,779,253 406,720,143

Add : Shares issued on Right issue basis 11,440,890 170,059,110


Paid up & partly paid up :

Equity Shares at the beginning of the year (fully paid up) 472,584,509 392,868,143

Equity Shares at the beginning of the year (partly paid up) 13,852,000 13,852,000

Add : Shares issued on Right issue basis (fully paid-up) 101,783,634 79,716,366


Equity Shares at the end of the year (partly paid up) 13,852,000 13,852,000

0.01% Convertible preference shares -

Issued, subscribed and paid up :

0.01% Convertible Preference Shares at the beginning of the year 21,357,172 21,357,172

0.01% Convertible Preference Shares at the end of the year 21,357,172 21,357,172

1.7 The reconciliation of the number of shares outstanding is set out below :

1.6 The details of the share holders holding more than 5% shares :

Name of the shareholdersAs at

31st March, 2012As at

31st March,2011

No. of Shares % held No. of Shares % held

Equity Shares of Rs.10/- each

MMTC Ltd. 289,342,744 49.78 1,999,000,000 41.50

Industrial Promotion & Investment Corporation of Orissa Ltd.

88,868,389 15.29 88,868,389 18.53

NMDC Ltd. 74,799,878 12.87 71,245,198 14.86

The Odisha Mining Corporation Ltd. 71,598,530 12.32 63,972,028 13.34

0.01% Convertible Preference Shares of Rs.10/- each redeemable in 12 equal instalments

State Bank of India 6,219,864 29.12 6,219,864 29.12

Vijaya Bank 1,264,244 5.92 1,264,244 5.92

Indian Overseas Bank 2,709,441 12.69 2,709,441 12.69

Bank of Baroda 3,869,304 18.12 3,869,304 18.12

The Jammu & Kashmir Bank Ltd. 2,430,814 11.38 2,430,814 11.38

Bank of India 3,385,776 15.85 3,385,776 15.85


35


2. RESERVES & SURPLUS

3. LONG-TERM BORROWINGS

(` in lakh)

(` in lakh)



Securities Premium Account

As per last Balance Sheet 7,971.64 -

Add : On issue of shares during the year 10,178.36 7,971.64

Sub-total 18,150.00 7,971.64

Debenture Redemption Reserve

As per last Balance Sheet 1,111.11 1,111.11

Add : For the year 555.55 -

Sub-total 1,666.66 1,111.11

Profit and Loss Account

As per last Balance Sheet 22,770.59 40,084.52

Add: Profit for the year 2,944.50 (17,313.93)

Less: Appropriations / Adjustments -

Tax adjustment 5,473.61 -

Dividend on Preference Shares 0.21 -

Tax on preference dividend 0.03 -

Debenture redemption reserve 555.56 -

Sub-total 19,685.68 22,770.59

Total 39,502.34 31,853.34



Secured Loans

Bonds/debentures

Interest Rate 8.40% - 533.33

10.45% 20,000.00 20,000.00 20,533.33

Term Loans

from banks - 131,024.41 133,126.98

from other parties 37.04 37.04

Loans and advances from related parties

151,061.45 153,697.35

Unsecured Loans

Zero Rated Unsecured Instruments 459.48 459.48

Total 459.48 459.48

151,520.93 154,156.83


36


4. OTHER LONG TERM LIABILITIES (` in lakh)



Retention money on contracts 14,122.54 12,853.12

Eastern Money & Security Deposits 111.31 189.22

Total 14,233.85 13,042.34

3.1 Each bond is having face value of Rs. 10 lakh each. Bonds carrying rate of interest of 10.45% are redeemable in 4 equal annual installments commencing from 19.02.2018 without put and call option. The bonds are secured by registered mortgage on 1463.30 sq. mtrs. of land situated in the state of Gujarat and also secured by extention of the scope of mortgage / charge on the entire immovable property and plant & machinery attached to the earth or permanently fastened to anything attached to the earth of the company with Indian Bank (as Trustee for 10.45% Bond Holders) and Canara Bank (as Trustees for other bond holders) ranking pari pasu with other parties and banks.

3.2 The Term Loans from Banks and other parties are secured by first charge on the assets of the company both present & future save & except book debts.Out of which loans availed amounting to `89,235.14 lakh (`1,04,351.76 lakh) are secured by way of second charge on all current assets of the company both present & future.

3.3 The company is regular in payment of principal and interest to banks and other parties during the year.

3.4 Maturity profile and Rate of interest of Non- Convertible Redeemable Debentures are set out below:

Rate of Interest 2017-18 2018-19 2019-20 2020-21

10.45% 5,000 5,000 5,000 5,000

Rate of Interest 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

14% 1,189 1,189 1,189 1,189 1,784 1,807

8% 866 866 866 866 1,299 1,309

10.4% 202 202 202 202 303 308

9.59% 17,625 20,563 23,500 11,750 - -

14% 3,698 7,385 7,385 7,385 4,934 4,397 4,397 2,167

3.5 Maturity profile and Rate of interest of Term Loans are set out below :

3.6 Repayment of Zero Rated Unsecured Instruments will commence after the financial year 2020-21.


37

5.1 Each bond is having face value of `5 lakh each except 8.40% bonds having the face value of `10 lakh each. Both the bonds mentioned above are redeemable within 31.03.2013. The bonds are secured by registered mortgage on 1463.30 sq. mtrs. of land situated in the state of Gujurat and also secured by extention of the scope of mortgage / charge on the entire immovable property and plant & machinery attached to the earth or permanently fastened to anything attached to the earth of the company with Canara Bank (as Trustees for other bond holders) ranking pari pasu with other parties and banks.

5.2 The Term Loans from Banks and other parties are secured by first charge on the assets of the company both present & future save & except

book debts and are also secured by way of second charge on all current assets of the company both present & future.

5.3 Loans from HUDCO is secured by equitable mortgage on 14.70 acres of separate lease hold land alongwith all buildings, structures and fixtures thereon.

5.4 Working capital borrowings are secured by hypothecation of company’s inventories, book debts and other current assets and also secured by extension of mortgage / charge on the entire immovable properties and plant & machinery attached to the earth or permanently fastened to anything attached to the earth of the company on second charge basis.

5.5 The company is regular in payment of principal and interest to banks and other parties during the year.

6. TRADE PAYABLES (` in lakh)



Sundry Creditors - Due to Micro and Small Enterprises 43.35 4.38

Sundry Creditors - Other than Micro and Small Enterprises 30,863.10 40,997.76

Advance from Customer 52.96 52.96

Total 30,959.41 41,055.10

6.1 The amount due to Micro and Small Enterprises as defined in the “The Micro, Small and Medium Enterprises Development Act, 2006” has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to Micro and Small Enterprises as at 31st March, 2012 are as under:


5. SHORT TERM BORROWINGS (` in lakh)



Secured Loans

Bonds/debentures

Interest Rate 10.00% - 800.00

8.40% 533.33 533.33 1,333.33

Term Loans from banks - 15,220.00 11,750.00

Other Loans and advances:

from HUDCO 20.52

Working Capital Borrowings 3,969.78 11,950.53

Total 19,723.11 25,054.38


38

7. OTHER CURRENT LIABILITIES

8. SHORT-TERM PROVISIONS

(` in lakh)

(` in lakh)

(` in lakh)



Earnest Money & security deposit 204.80 206.45

Interest Accrued but not due on Loans 247.22 274.01

Other Liabilities 6,643.94 6,172.70

Total 7,095.96 6,653.16

Balance as at 31st March,

2011

Additions dur-ing the year

Payments / Utilisation /

Charged off / Adjustments

during the year

As at 31st March,

2012

Arrear Salary 870.12 - - 870.12

Accrued Leave Liability 836.89 268.47 - 1,105.36

Gratuity Liability 490.22 - 9.91 480.31

Post Retirement Settlement Expenses Liability 75.15 5.12 - 80.27

Dividend on Preference Shares - 0.21 - 0.21

Tax on Preference Dividend - 0.03 - 0.03

Employees' Family Benefit Scheme 52.02 139.96 - 191.98

Total 2,324.40 413.79 9.91 2,728.28

Description As at 31st March, 2012


1) The principal amount remaining unpaid to the suppliers as at the end of accounting year

43.35 4.38

2) The interest due thereon remaining unpaid to the suppliers as at the end of the accounting year

Nil Nil

3) The amount of interest paid in terms of section 16, alongwith the amount of the payment made to the suppliers beyond the appointed day during the year.

Nil Nil

4) The amount of interest due and payable for the period of delay in making payment (which has been paid but beyond the appointed day during the year) but without adding the interest specified under this Act.

Nil Nil

5) The amount of interest accrued during the year and remaining unpaid at the end of the accounting year.

Nil Nil

6) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprises, for the purpose of disallowance as a deductible expenditure under section 23.

Nil Nil



39

(` in lakh)

Sl. No. Gratuity Leave Encashment

Post Retirement Settlement

Benefit

Employee Family Benefit

Scheme

Present value of projected benefit obligations as at 01.04.2011

1019.94 836.89 75.15 52.02

Current Service Cost 152.33 146.33 - -

Interest Cost 84.54 58.73 6.39 4.42

Actuarial Gains(-) / Losses (+) (+)192.83 (+)355.23 (-)1.27 (+)135.54

Benefits Paid 50.76 291.82 - -

Present value of projected benefit obligations as on 31.03.2012

1398.88 1105.36 80.27 191.98

As at 31.03.2012

Fair Value of Plan Asset at the beginning of the year 529.72

Acquisition Adjustment -

Expected Return on Plan Asset 42.38

Contributions 386.04

Benefits Paid 50.76

Actuarial Gain (+) / Loss (-) on Plan Assets (+)11.19

Fair Value of Plan Asset at the end of the year 918.57

(c) As against gratuity liability of Rs. 1398.88 lakh as at 31.03.2012, the company has plan assets of the fund amounted to Rs. 918.57 lakh as at 31.03.2012. The other defined benefit obligations are unfunded.

(d) Table showing changes in Fair Value of Plan Assets in respect of Gratuity:

(` in lakh)

8.1 Employee Benefits

Gratuity: Payable on separation @ 15 days for each completed year of service or part thereof in excess of six months to eligible employees on death or who have rendered continuous service of 5 years or more subject to a maximum of `10 lakh.

Leave Encashment: Payable on separation to eligible employees who have accumulated earned and half pay leave. Encashment of accumulated earned leave is also allowed upto 30 days every year.

Provident Fund: 12% of Basic Pay Plus Dearness Allowance, contributed to the Employees’ Provident Fund Organisation.

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.

Other disclosures, as required under Accounting Standard (AS) – 15 (revised) on ‘Employee Benefits’, in respect of defined benefit obligations are:

(a) The provision towards gratuity, accrued leave, post retirement settlement scheme are made by actuarial valuation in terms of provisions of AS–15 (Revised).

(b) Reconciliation of Present Value of Defined Benefit Obligations:



40

As at 31.03.2012

Present Value of Obligation at the end of the year 1398.88

Fair Value of Plan Asset at the end of the year 918.57

Funded Status (-)480.31

Net Asset / (Liability) Recognised in Balance Sheet (-)480.31

(e) Table showing funded status in respect of Gratuity: (` in lakh)


Particulars GratuityLeave

Encashment


Benefit


Scheme

Service Cost 152.32 146.33 - -

Interest Cost 84.54 58.73 6.39 4.42

Actuarial Gains(-) / Losses (+) (+)181.64 (+)355.23 (-)1.27 (+)135.54

Expected return on plan assets 42.38 - - -

Amount charged to 376.12 560.29 5.12 139.96

- Employee benefits expense (Note-20)

Description As at 31.03.2012

Mortality Table LICI 1994-1996

Superannuation Age 60 years

Early Retirement & Disablement 10 per thousand p.a.

6 above age 45

3 between 29 and 45

1 below age 29

Discount Rate 8.5

Inflation Rate 6

Return on Asset (in case Gratuity Fund) 9.3

Remaining Working Life 20

Accidental Mortality & Disablement Rate 0.14%

Attrition Rate 10 per thousand

Formula Used Projected Unit Credit Method

(f) Expenses recognized in the statement of Profit & Loss Account for the year ended 31.03.2012:

(` in lakh)

(g) Actuarial assumptions


41

Particulars GratuityLeave

Encashment


Benefit


Scheme

Opening Net Liability 490.22 - - -

Expenses as above 376.12 560.29 5.12 139.96

Contributions 386.04 - - -

Closing Net Liability 480.31 560.29 5.12 139.96

Closing Fund / Provision at the end of the year 1,398.88 1,105.36 80.27 191.98

(` in lakh)

(h) Table showing Movement in the liability of Gratuity, Leave Encashment and Post Retirement Settlement Benefit recognized in Balance Sheet:



42

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43

10. CAPITAL WORK-IN-PROGRESS

11. LONG-TERM LOANS AND ADVANCES

12. INVENTORIES

(` in lakh)

(` in lakh)

(` in lakh)



Construction and Erection work in progress 130,096.05 126,403.72

Stock of Construction Material 3,110.80 3,852.38

Total 133,206.85 130,256.10



Advance to contractors for capital works # 1,962.06 2,767.38

Deposit with Govt. Department 651.78 355.11

Deposit with others 311.27 311.32

MAT credit entitlement 4,989.43 4,117.36

Total 7,914.54 7,551.17



(As Certified by the Management)

Stores and Spares 3,493.72 3,312.56

Stores and Spares in Transit 99.58 240.39

Raw Materials 25,230.58 14,811.33

Raw Materials in Transit 559.31 1,058.76

Finished Goods 12,333.35 31,964.17

Materials in process 802.76 871.83

Total 42,519.30 52,259.04

10.1 Amount spent on development of mines pending execution of lease deed is shown under the broad head of capital work in progress.

# Unsecured , Considered Good

12.1 Stock of raw materials does not include 332 t of coal supplied by SAIL under conversion arrangement as ownership lies with the supplier.



44

13. TRADE RECEIVABLES

14. CASH & CASH EQUIVALENTS

(` in lakh)

(` in lakh)



Over six months 679.34 248.07

Others 936.31 1,055.89

Total 1,615.65 1,303.96

Particulars of Trade Receivables :

Unsecured, considered good 1,615.65 1,303.96

13.1 Pending settlement of issues lying before OERC, amount due from GRIDCO has been classified as debts over six months.



Cash balance on hand 0.36 0.30

Balances with scheduled Banks :

In Current Account 240.62 1,006.21

In Fixed Deposit Account* 8,614.17 23,993.47

Total 8,855.15 24,999.98

14.1 Fixed deposits with banks include - a) deposit of `6.75 lakh (previous year `5.10 lakh) with maturity of more than 12 monthsb) margin money for LC / BG amounting to `1114.17 lakh (previous year `993.47 lakh)



45

16. REVENUE FROM OPERATIONS

17. OTHER INCOME

(` in lakh)

(` in lakh)



Sale of products 195,614.71 147,696.40

Other operating revenues 9,965.86 13,694.04

Total 205,580.57 161,390.44



Sale of MS scrap 394.23 227.28

Sale of Tender paper 1.25 0.83

Sale of emepty Bags 1.14 2.01

Interest on Term deposit 1,577.69 657.26

Misc. Receipts 2.99 10.79

Total 1,977.30 898.17

15. SHORT-TERM LOANS AND ADVANCES



Advances recoverable in cash or in kind or for value to be received :

Advance to Employees 61.53 3.20

Advance to Suppliers for Stores, Spares & Raw Materials 339.46 1,106.40

Advance to Others 115.56 34.20

Prepaid Expenses 12.12 26.50

Claims Receivable 3,532.67 2,663.00

Export Incentive Receivable 9.87 2,300.66

Income tax paid in advance / recoverable 946.55 767.16

Total 5,017.76 6,901.12

Particulars of Loans & Advances:-

Unsecured, considered good 5,017.76 6,901.12

Unsecured, considered doubtful - -

Total 5,017.76 6,901.12

(` in lakh)



46

18. COST OF MATERIALS CONSUMED

19. CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS

(` in lakh)

(` in lakh)



Iron Ore 30,381.71 35,089.64

Coke 35.67 -

Coking Coal 91,729.33 108,979.10

Dolomite 1,339.06 1,092.45

Limestone 984.64 1,036.47

Sand 17.24 10.48

Quartzite 15.23 13.55

Sulphuric Acid 610.67 426.88

Total 125,113.55 146,648.57



Opening Stock 32,836.00 14,286.75

Less: Closing Stock 13,136.11 32,836.00

Changes in inventories of finished goods and work-in-progress

19,699.89 (18,549.25)

20. ACCRETION / (DEPLETION) TO EXCISE DUTY LIABILITY ON STOCK OF FINISHED GOODS

(` in lakh)



Excise Duty Liability on Closing Stock 1,187.80 2,516.74

Less Excise Duty Liability on Opening Stock 2,516.74 597.42

Accretion / (Depletion) to Excise Duty Liability on Stock of Finished Goods

(1,328.94) 1,919.32



47

23. OTHER EXPENSES (` in lakh)



Consumption of stores and spare parts 3,614.70 3,486.51

Power and fuel 961.13 803.86

Rent 17.41 24.06

Repairs to buildings 70.79 20.57

Repairs to machinery 624.87 433.39

Insurance 199.97 156.74

Rates and taxes, excluding taxes on income 43.52 35.29

Office & Administrative Expenses 920.33 989.40

Trade Margin on Sales 5,763.87 4,580.30

Export expenses 2,631.63 3,373.71

Water Charges 659.59 356.22

Material handling charges & outsourcing expenses 3,261.58 3,535.66

Remuneration to auditors# 2.75 2.15

Miscellaneous Expenses 8.46 6.86

Total 18,780.60 17,804.72

# Remuneration to auditors -

As Auditor 2.25 1.75

For Taxation Matters 0.50 0.40

Total 2.75 2.15

22. FINANCE COSTS (` in lakh)



Interest expense 10,895.79 11,918.30

Other borrowing costs 313.82 36.57

Total 11,209.61 11,954.87


21. EMPLOYEE BENEFITS EXPENSE (` in lakh)



Salaries, Wages and Allowances 5,838.67 5,239.02

Company's Contribution to Provident & Other Funds 601.27 559.46

Staff Welfare Expenses 1,008.01 784.89

Gratuity 401.45 106.77

Total 7,849.40 6,690.14


48

24. SIGNIFICANT ACCOUNTING POLICIES

24.1.0 BASIS OF ACCOUNTING

24.1.1 The financial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by The Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956. However, LTC / LLTC benefits payable to employees are accounted for on cash basis.

24.2.0 USE OF ESTIMATES

24.2.1 In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates shall be recognized in the period the same is determined.

24.3.0 FIXED ASSETS

24.3.1 Fixed assets are stated at historical cost less Depreciation. Cost of acquisition is inclusive of freight, duties, taxes, allocated incidental expenditure during construction and net of CENVAT credit wherever applicable.

24.3.2 Expenses of capital nature incurred on assets laid on land not belonging to the company are capitalized under appropriate asset heads.

24.3.3 All identifiable capital expenditure not yet capitalised, including works / Capital Stores / Materials received, inspected, accepted and certified on the basis of bills, advances paid to suppliers / contractors for capital works.

24.3.4 Stock of construction materials has been valued at cost on weighted average basis. Stock of scrap of construction materials are valued at cost or net realizable value whichever is lower.

24.3.5 Trial run expenditure, net of revenue, if any, are capitalized on an appropriate basis to different fixed assets before those are put into use.

24.3.6 Expenses on development of land including leasehold land are capitalized as part of land cost.

24.4.0 DEPRECIATION

24.4.1 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 unamortized depreciable amount is provided for over the residual useful life of the asset.

24.4.2 Depreciation on addition / deletion of assets during the year is provided on pro-rata basis.

24.4.3 Assets laid on land not belonging to the company are depreciated over a period of five years.

24.4.4 Cost of leasehold land including development expenses thereon is amortised on straight line method over the remaining period of lease.

24.4.5 Classification of plant and machinery into continuous and non-continuous process plant is made on the basis of technical opinion and depreciation has been provided for accordingly.

24.5.0 BORROWING COST

24.5.1 Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets have been capitalized as part of cost of such assets in accordance with Accounting Standard-16.

24.5.2 Borrowing costs that are not directly attributable to the acquisition, construction and production of qualifying assets but eligible for capitalization are determined by applying a capitalization rate based on the weighted average rate of the borrowing costs in accordance with Accounting Standard-16.


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24.5.3 All other borrowing costs are recognized as expense in the period in which these have been incurred.

24.6.0 INVENTORIES

24.6.1 Finished / Semi Finished goods:

Semi/Finished products are valued at lower of cost & net realizable value except Iron Scrap, Slag, Nut Coke, Coke Breeze, Coke Dust, Coal Tar and Ammonium Sulphate which are valued at net realizable value.

24.6.2 Raw materials:

Raw materials are valued at average cost net of cenvat credit wherever applicable.

24.6.3 Process Rejects:

Process rejects are valued at net realizable value.

24.6.4 Stores & spares:

Stores & spares are valued at weighted average cost and net of cenvat credit wherever applicable.

24.7.0 RETIREMENT BENEFITS

24.7.1 Contribution to Provident Fund is recognised on the basis of actual liability. The provisions / liability towards gratuity, accrued leave, post-retirement settlement benefits and future payments to the disabled employees / legal heirs of deceased employees under Employees’ Family Benefit Scheme are made based on the actuarial valuation as at the end of the year and charged to the profit and loss account along with actuarial gain / losses.

24.8.0 FOREIGN CURRENCY TRANSACTIONS

24.8.1 Transactions for both capital and revenue during the year in foreign currencies are being recognised at the rate prevalent in force on the date of settlement of transactions.

24.8.2 All foreign currency liabilities other than those relating to fixed assets as on the date of balance sheet are converted at the year end exchange rates and loss or gain thereon, is charged to profit & loss account.

24.8.3 Exchange differences in respect of liabilities relating to fixed assets are adjusted in the carrying amount of such assets.

24.9.0 RECOGNITION OF REVENUE

24.9.1 Sales include excise duty and are net of rebates / price concessions.

24.9.2 Sales in the domestic market are recognized at the time of despatch of materials to the buyer.

24.9.3 Export sales are recognized at the time of despatch of goods for the purpose of export with proper documents.

24.9.4 Export incentives in the form of credit earned under Duty Entitlement Pass Book / Duty Drawback Scheme are treated as income in the year of export at estimated realizable value/ actual credit earned on exports made during the year in accordance with AS - 9.

24.9.5 Claims are accounted for on certainty of their realization.

24.9.6 Interest receivables are accounted for on certainty of realization.

24.10.0 CLAIMS FOR LIQUIDATED DAMAGES / ESCALATION

24.10.1 Claims for liquidated damages are accounted for as and when these are deducted and / or considered recoverable by the company. These are adjusted to capital cost or recognized in the profit and loss account, as the case may be, on its final settlement.

24.10.2 Suppliers’/contractors’ claims for price escalation are accounted for to the extent such claims are accepted by the company.

24.11.0 ACCOUNTING FOR TAXES ON INCOME

24.11.1 Provision for income tax comprises of current tax and deferred tax charged or realized. Deferred tax is recognized, 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


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reversal in one or more subsequent period(s). Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets will be realized.

24.12.0 PROVISIONS

24.12.1 Provisions are recognized when the company has a present legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation.

24.13.0 BOND REDEMPTION RESERVE

Bond Redemption Reserve to the extent of 25% of the value of 10.45% Non-convertible Bonds is created out of the profits, if any, every year until the date of redemption of first installment.

25. NOTES ON FINANCIAL STATEMENTS

25.1.0 CONTINGENT LIABILITIES

25.1.1 The Company is Contingently liable in respect of :

(i) Claims against Company not acknowledged as debts `40,094.56 lakh (Previous year `39,183.40 lakh)

(ii) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advance) - `28,441.38 lakh (Previous year `50,466.51 lakh).

25.1.2 Foreign Currency outgo during the year is `246.18 lakh (Previous year ` 6,248.63 lakh).

25.1.3 The balances shown under secured loans, loans and advances, receivables including sundry debtors, creditors, capital stores are reconciled as per accounts. The company is in process of

obtaining confirmation of balances from the concerned parties and hence these are subject to consequential adjustments, if any.

25.2.0 STATEMENT OF PROFIT AND LOSS

25.2.1 During the current year `1,414.17 lakh deferred tax liability has been provided for in the accounts.

25.2.2 As per Section 441A of the Companies Act, 1956, Cess on turnover is leviable. Government of India has not yet framed any rules / guidelines in this regard and hence no amount has been provided or paid.

25.3.0 GENERAL

25.3.1 Segment reporting

Company is considering its manufacturing units as one segment and also there is no separate geographical segment.

25.3.2 Impairment of assets

The entire plant has been considered as a Cash Generating Unit. As recoverable amount of Cash Generating Unit, being its value in use is in excess of its carrying amount, there is no impairment loss in terms of the Accounting Standard (AS) - 28.

25.3.3 Related party

25.3.3.1 As per Accounting Standard – AS 18 – ‘Related Party disclosures’ issued by the Institute of Chartered Accountants of India, the name of the related parties are given below ;

Nature of relationship Name of the related parties

Key ManagementPersonnel

Shri P.C. Sahu, Managing Director

Shri S.P. Padhi, Director (Finance)

Shri S.P. Patnaik, Jt. Managing Director


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25.3.3.2 Particulars of directors’ remuneration :

Sl. No. Name of the Transaction Amount ` in Lakh Ref. Note Account Head

1 Remuneration 60.24(Previous Year ` 45.41 lakh)

21 Employees’ remuneration and benefits

25.3.4 Calculation of earnings per share as required by paragraph 48 of AS – 20 for the year 2011-12:

A) Calculation of Weighted Average Number of Shares:No. of equity shares Date of allotment Period of Outstanding

(Days)Amount paid-up per

share (`)Weighted Average

No. of Shares

47,25,84,509 366 10.00 47,25,84,509

17,56,176 12.05.2011 325 10.00 15,59,446

10,00,27,458 01.10.2011 183 10.00 5,00,13,729

1,38,52,000 366 5.00 69,26,000

Total 53,10,83,684

B) Profit after tax, bond redemption reserve and preference dividend & tax thereon as per Profit & Loss Account (`/ lakh)

2,388.69

Basic & Diluted Earning Per Share (B/A) (`) 0.450

25.3.5 The company is providing employment to the displaced persons against land acquisition in a phased manner as per the rules, instructions and guidelines issued by the Government of Orissa. Remaining number of displaced families to be given employment by the company as on 31.03.2012 is 5.

25.3.6 Previous year’s figures have been re-arranged / re-grouped / re-cast wherever felt necessary to make the figures comparable with the current year’s figures.

25.3.7 Figures have been rounded off to the nearest rupees in lakh.

25.3.8 Disclosures of Sales of Finished goods under broad heads

Major Products Sales Closing Stock Opening Stock

Pig Iron 144,523.13 9,949.33 21,694.80

( 107,902.50 ) ( 21,694.80 ) ( 6,117.67 )

Granulated slag 860.56 94.12 121.91

( 1,262.01 ) ( 121.91 ) ( 219.15 )

Scrap 9,965.86 57.23 1,073.31

( 13,694.04 ) ( 1,073.31 ) ( 60.77 )

BF Code 23,582.54 1,155.58 6,661.63

( 28,143.69 ) ( 6,661.63 ) ( 6,107.30 )

Crude Tar 8,893.26 106.27 452.19

( 5,251.61 ) (452.19 ) ( 457.42 )

Ammonium Sulphate 873.00 39.72 14.56

( 445.75 ) ( 14.56 ) ( 21.29 )

Others 17,143.20 1,733.86 2,817.60

( 4885.21 ) ( 2,817.60 ) ( 1,303.15 )

Total 205,841.55 13,136.11 32,836.00

( 161,584.81 ) ( 32,836.00 ) ( 14,286.75 )

(Value in ` / lakh)


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25.3.10 Value of Imports during the period (Calculated on CIF Basics)

(` in lakh)

(` in lakh)

Current Year Previous Year

25.3.9 Expenditure incurred in Foreign currency on account of

Know – How Nil Nil

Interest Nil Nil

Training expenses & payments to

Foreign Technicians 29.36 13.63

Others Nil Nil

Total 29.36 13.63


Raw Material 91,349.83 85,220.01

Capital Goods 77.71 4,944.28

Total 91,427.54 90,164.29

25.3.11 Value of Raw Material Consumed during the year

25.3.12 Value of Stores/Spares & components consumed during the year

Rs. in Lakhs % Rs. in Lakhs %

Imported 91,293.29 72.97 108,979.10 74.31

Indigenous 33,820.26 27.03 37,669.48 25.69

Total 125,113.55 100.00 146,648.58 100.00

Rs. in Lakhs % Rs. in Lakhs %

Imported 139.11 3.85 1,290.72 37.02

Indigenous 3,475.59 96.15 2,195.76 62.98

Total 3,614.70 100.00 3,486.48 100.00

25.3.13 Particulars of Directors Remuneration(` in lakh)


Salaries 55.26 39.53

Companies contributions to provident fund & other fund 4.98 5.88

Total 60.24 45.41






M.G. GuptaDirector



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