Beruflich Dokumente
Kultur Dokumente
2005-06
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Rashtriya Ispat Nigam Ltd.
VISION
To be a continuously growing world class company,
We shall
m harness our growth potential and sustain profitable growth
m deliver high quality and cost competitive products and be the first choice of customers
m create an inspiring work environment to unleash the creative energy of people
m achieve excellence in enterprise management
m be a respected corporate citizen, ensure clean and green environment and develop vibrant communities
around us.
MISSION
To attain 16 million tonne (Mt) liquid steel capacity through
technological up-gradation, operational efficiency and expansion; to
produce steel at international standards of cost and quality; and to
meet the aspirations of the stakeholders.
OBJECTIVES
m Expand plant capacity to 6.3 Mt by 2008-09 with the mission to expand further in subsequent phases
as per the Corporate Plan.
m Sustain gross margin to turnover ratio> 25%.
m Be amongst top five lowest cost liquid steel producers in the world by 2009-10.
m Achieve higher levels of customer satisfaction than competitors.
m Instill right attitude amongst employees and facilitate them to excel in their professional, personal and
social life.
m Be recognized as an excellent business organisation by 2008-09.
m Be proactive in conserving environment, maintaining high levels of safety and addressing social
concerns.
CORE VALUES
With a view to running the business in a transparent manner meeting the needs and expectation of the
stakeholders, it was felt desirable to give utmost importance to the value System in the company. Accordingly,
RINL has finalized its Core Values, which are brought out below.
m Commitment
m Customer satisfaction
m Continuous improvement
m Concern for environment
m Creativity & innovation. 2
Annual Report 2005-06
BOARD OF DIRECTORS
P. MOHAN RAO
Company Secretary
(As at the 24th Annual General Meeting held on 25th September, 2006)
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Rashtriya Ispat Nigam Ltd.
BOARD OF DIRECTORS
Chairman-cum-Managing Director Y. Siva Sagar Rao
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Annual Report 2005-06
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Rashtriya Ispat Nigam Ltd.
Glimpses of Hon’ble Minister of State (Steel) Dr. Akhilesh Das’s visit to Vizag Steel
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Annual Report 2005-06
Awards Galore
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Rashtriya Ispat Nigam Ltd.
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Annual Report 2005-06
CHAIRMAN’S STATEMENT
It gives me great pleasure to
welcome you to this very special
24th Annual General Meeting of
your company, the first after its
declaration as a Mini Ratna
Company by the Hon’ble Minister
for Steel, Chemicals and
Fertilizers, Government of India
on 20th May 2006.
“The turnaround of this steel plant is a land mark achievement. It shows that with hard work and
commitment, PSUs can perform well against competition. RINL has shown other PSUs the way forward.
I congratulate everyone associated with the remarkable turnaround. We rejoice in your success.”
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Rashtriya Ispat Nigam Ltd.
Indian Scenario :
The Indian economic scenario is robust at present backed by sustained manufacturing activity and focus
on Infrastructure development by the government. The GDP growth was around 8.4% (estimated) in 2005-
06 against 7.5% in 2004-05. Growth prospects of the economy and business opportunities exude confidence
and there is over all optimism in all sectors paving way for investments by foreign institutional investors.
This will definitely help in augmenting the infrastructure sector which will enable handsome steel growth.
Strategic Initiatives :
Raw material security has become the prime concern and various strategies have been drawn to acquire
captive mines both within the country as well as abroad through joint ventures and acquisitions. An
exclusive group is working in this direction and joint ventures with NMDC and MOIL are the results of
such efforts. Our continued efforts for captive mines has resulted in the allocation of Mahal Coking Coal
Block with an estimated reserve of 258 Million Tonnes.
To strengthen our brand leadership in the market and improve process optimization, concerted efforts are
being put to provide more value to the customers at a price that is competitive and attractive. Therefore,
an exclusive R&D Department has been formed to focus on value advantage and cost optimization.
To further enhance the operational efficiencies, Enterprise Resource Planning is given due priority and
a cross functional team has been set up to ensure its implementation at the earliest.
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Annual Report 2005-06
On the energy front, in line with the vision of our Hon’ble President Dr Abdul Kalam ji, renewable energy
and generation of bio-diesel has been given due attention and action plans have been drawn to substitute
5% of the energy requirement through renewable energy. A Renewable Energy Policy has been drawn
committing our efforts towards augmenting Renewable Energy.
Continued Excellence :
The first quarter of the second fiscal has started on a bright note with the sales registering a growth of
30%. The Expansion programme has been given continued fillip and all efforts are being put for completing
the expansion by 2008-09 as promised to the government. A High Power Steering Committee is formed
to monitor the progress periodically. The task is quite daunting and therefore the need for speedy
implementation has been given specific focus through empowerment and refinement of processes and
systems. I am confident with the resources and competencies available, the RINL collective will leave no
stone unturned in accomplishing its objective.
Laurels :
The performance of your company has been well recognized and has been bestowed with a number of
accolades in various spheres of our activities. Some of them are :
- The National Energy Conservation Award for the sixth time in succession
- The ICWAI Award for Excellence in Cost Management
- Commendation Certificate for Strong Commitment in HR Excellence from CII
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Rashtriya Ispat Nigam Ltd.
The Future :
With the kick starting of the second phase of RINL, your company has now embarked in chalking out the
growth path for future. As mentioned earlier, the Corporate Plan 2020 is under preparation to leverage
the inherent strengths and create more value to the stake holders. As the steel industry becomes more and
more technology driven, the need for intensifying the R&D activities has become more imperative and due
care is taken to strengthen this area further. The integration of the existing assets with the emerging
technologies and diversification of activities in line with the market needs are the broad areas of focus
in the Corporate Plan to be released shortly.
Acknowledgements :
The journey of RINL as a Mini Ratna Company has just started and with a committed and competent
team, your company is poised to create more wealth and greater value for the shareholders. During the
current fiscal year, as the Company enters into its Silver Jubilee year, I am sure it will take on its stride
the challenges to convert them into profitable avenues to place it on a higher orbit of growth and
excellence to acquire the ‘NAVRATNA’ status in the coming years.
The sustained excellence of your company could be achieved with the commitment and contribution from
the entire RINL collective and support from various other corners, the Valued Customers, Suppliers, the
Statutory Auditors, C&AG, Financial Institutions, Banks, Officers’ Association and the Unions. I take this
opportunity to thank the Hon’ble Minister of Steel, Chemicals & Fertilizers, the Hon’ble Minister of State
for Steel, the Secretary and officials of the Ministry of Steel, Government of India for their unstinted
support. I would also like to acknowledge the support extended by the Hon’ble Chief Minister of Andhra
Pradesh and officials of the State Government. I am thankful to the assistance rendered by other Ministries/
Departments of the Government of India and the Government of Andhra Pradesh. I am grateful to the
entire Board of Directors for their guidance and support. I thank each and every employee of the Company
for their dedicated efforts and hard work in keeping the Company’s flag flying high at all times.
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Annual Report 2005-06
DIRECTORS’ REPORT
To registering a 6% growth. On the domestic front, the
The Members, industry has grown by over 16%, a remarkable
Rashtriya Ispat Nigam Ltd, Visakhapatnam. achievement indeed. This only supports the growth
anticipated in the National Steel Policy symbolizing
On behalf of the Board of Directors of the Company, robust economic growth. During the year, RINL on its
I have great pleasure in presenting the 24th Annual part achieved a capacity utilization of 120% of its rated
Report of the Company together with the Audited capacity and registered a 2% growth in Saleable Steel
Accounts for the year ended 31st March, 2006. production. The total sales turnover has improved by
3.68%. Majority of the Units have achieved a rare
It is a matter of immense satisfaction for me and the distinction of highest ever production since inception.
entire VSP collective that as your Company enters the The turnover touched an all time high since inception.
Silver Jubilee year of its existence, it has posted a The year shall also be reckoned as a landmark and
sterling performance encompassing all facets of memorable one for RINL, because it could secure
corporate excellence. For the past twenty four years, the final approval /clearance of the Government of
your company has focused on its core competencies India in a record time of 10 months for its Expansion
without any diversions. It has put in all out efforts for Project from 3Mt to 6.3 Mt of Liquid Steel i.e. almost
excellence in almost all fields of its functioning and in doubling its rated capacities thus paving way for a
spite of various adverse factors and situations over sustainable growth path in coming years as well.
the last twenty four years, the Company ultimately
emerged as a profit making company wiping out all its FINANCIAL REVIEW
accumulated losses and setting industry standards in
The Financial year 2005-06 was an eventful year for
many technical parameters benchmarking with the best
RINL. It has created Record Turnover of over Rs.8,482
in the world of Steel industry.
crores. For the fifth consecutive year it earned Net
Profit and for the year it is Rs.1,252 crores after
2005-06 : AN YEAR OF SUSTAINED GROWTH
taxes. This is apart from payment of (a) Income Tax
The year 2005-06 has been a significant one for the of Rs.500 crores towards Corporate Tax, (b) over
Steel industry in general with the world steel production Rs.1000 crores towards Excise Duty and (c) over
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Rashtriya Ispat Nigam Ltd.
Rs.250 crores by way of Sales Tax to different State The summary of Financial performance is as follows:
Governments. With the current year's net profit, all the Rs. In Crores
accumulated losses of the company since its inception
Description 2005-06 2004-05
have been fully wiped out. With this, RINL became a
real profit making company and it has, therefore, been
Turnover (Gross) 8482.44 8181.34
classified as a MINIRATNA CATEGORY-I PSE by Govt.
Total Income 7761.59 7646.15
of India vide Ministry of Steel's letter No.1(9)2004-VSP
dated 25th May, 2006. It is indeed a great journey Total expenditure 5392.54 4375.16
from a time when the company has reported to BIFR Gross margin 2369.04 3270.99
its erosion of Net Worth and now conferred with Interest charges 31.24 11.11
MINIRATNA status.
Cash Profit 2337.80 3259.88
Depreciation 448.29 447.25
The Company was conferred National Award for
Excellency in Cost Reduction instituted by the Institute Profit before exceptional items 1889.51 2812.63
of Cost and Works Accountants of India (ICWAI) for Depreciation of earlier years - 558.87
the year 2005 in recognition of its efforts for effective Profit before tax 1889.51 2253.76
implementation of Cost and Management Accounting
Provision for tax
tools, quality of cost accounting records, optimum
Current Tax 474.97 87.18
utilization of resources, waste management, etc. by
the Ministry of Company Affairs, Government of India. Fringe benefit Tax 3.94 -
This is one more feather in the cap of RINL. The Deferred Tax 158.23 158.49
Finance and Accounts Department of the Company Net Profit 1252.37 2008.09
secured the ISO 9001 Certificate, which is unique in
Accumulated loss (-) / profit (+) (+) 346.38 (-) 905.99
Public Sector Steel Plants in the Country.
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Annual Report 2005-06
SALES AND MARKETING REVIEW The revenue generation increased with higher sales
realization value as well as the increased sale of value
Marketing Performance during April 2005 - March
added products. Sale of value added products grew
2006
by 5 % in 2005-06 as compared to 2004-05.
As against the MOU target of Rs. 8793 Crs. for the
year 2005-06, VSP achieved a sales realisation of Total sales in Steel volume during 2005-06 registered
Rs. 8482 Crs., thus registering a fulfilment of 96% record sales of 3.3 million tons (since inception) with
and a growth of 4% over the sales turnover of a 6% growth over previous year. Domestic steel
Rs. 8181 Crs. in 2004-05. The Sales turn over of volume of 3.10 million tons recording a growth of 1%
Rs.8482 Crs. of 2005-06 were the best ever since over 2004-05 (3.06 million tons).
inception. And this could be possible against the
To further strengthen the Exports, 2.02 lakh tonnes of
backdrop of sluggish market conditions right throughout
steel was exported during the year to the countries
the year which has brought price line under tremendous
viz. Bangladesh, Myanmar, Nepal, Sri Lanka, Thailand
pressure for any year. Domestic sales turnover of Rs.
and USA being our strategic markets, compared to
8040 Crs. in 2005-06 was also the best ever till date.
0.56 lakh tons last year.
Sales performance w.r.t. MOU Target 2005-06 : Sales of By-Products during the year was Rs 150 Crs.
Volum e in '000 t registering a growth of 5% over 2004-05 (Rs.142
2005-06
ITEM 2004-05 Growth Crs.). This includes exports of 6.95 lakh tons of Blast
Target Actual Ful-mnt
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Rashtriya Ispat Nigam Ltd.
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Annual Report 2005-06
5S was implemented in almost all areas of Stores for Committee were approved and modules are being
better house keeping and service. A 20 T Gantry tested. MIS System for port operations and Major Raw
crane, lying idle for almost two decades, was made material order placement were made online.
operative through in-house efforts.
PRODUCTION REVIEW AND TECHNO
The inventory of Stores and Spares at cost as on
ECONOMIC FACTORS
31.03.2006 was Rs. 294.72 crores (provisional) and
was Rs. 290.83 crores as on 31.3.2005. While adding Rated capacity of the Plant has been surpassed for
In-transit/under inspection items and reducing the fifth consecutive year. VSP continued to honour
obsolescence and non-moving items, the level of the commitments made in the MOU for the year 05-06
Inventory was brought down from Rs.279.26 crores in entered into with the Government of India in almost all
2004-05 to Rs.273.54 crores in 2005-06. During the shops by registering more than 100% fulfillment in Oven
period under consideration, project inventory of Coke Pushing (104%), Bars Mill products (108%), Wire Rods
Oven Battery IV has gone up from Rs.16.12 crores to (113%), MMSM products (116%), Billets (103%),
Rs.32.81 crores Saleable Steel (104%), Liquid Steel (103%), Hotmetal
(104%) and Sinter (104%).
The Internal procurement Leadtime stood at 84 days
and the Total Leadtime at 206 days. Initiatives like Six Highlights on Production front are briefly stated below:
Sigma, simplification of Purchase Procedures, Total
Logistics Management etc., were taken to reduce the • Production of 2.973 Mt Finished Steel with 3%
Procurement Leadtime. growth over last year.
• Value added production of 8,89,112 t is the highest
The total earnings during the year 2005-06 stood at
with 1% growth over 04-05.
Rs.10258.57 lakhs with earnings from Disposal -
• Highest no. of Iron and Steel rakes (859 rakes in
Rs. 947.76 lakhs; Cenvat - Rs. 8217.46 lakhs; Early
a year, 102 rakes in a month) dispatched since
despatch of vessels- Rs.1082.83 lakhs; Charter agency
inception.
- Rs. 65.74 lakhs; Customs agency- Rs.6.82 lakhs.
Savings through negotiations was Rs. 8.51 Crores. • Highest no. of Road vehicles dispatched in a month
(10776 in March 06)
In order to improve the existing online MIS system
• Labour productivity of 282 t/man-yr [6% growth
and to make it more effective, a Committee was formed
over last year (265t/man-yr)] is the best so far.
on Data Ware Housing. The recommendations of the
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Rashtriya Ispat Nigam Ltd.
• Gross Water consumption of 2.56 cum/t LS (8% RAW MATERIALS / CAPTIVE MINES
reduction over last year) is the best so far. The performance of Jaggayyapeta Limestone Mine for
• Gross Power consumption of 457 Kwh/t LS is the the year 2005-06 was excellent with all time production
lowest so far. record of 4,10,325 tonnes and dispatch record of
4,03,611 tonnes of limestone. The % growth in respect
• Lowest Semis of 8.13% in Saleable Steel so far.
of JLM production was 7.74% and dispatch was
• Highest BF Productivity (w.r.t. Working Volume) 12.31% as compared to 2004-05.
2.07 t/day
The performance of Madharam Dolomite Mine for the
year 2005-06 was also excellent with all time production
COST REDUCTION MEASURES record of 6,80,293 tonnes and dispatch record of
a) Maximizing the utilization of waste products like: 6,48,185 tonnes of dolomite. The % growth in respect
of MDM production was 9.65% and dispatch was 6.65%
i) LD Slag used in SP, BF and SMS to replace as compared to 2004-05.
limestone to the extent of 78,523 t.
The production of manganese at Garbham Manganese
ii) Scrap to the extent of 6,769t was reclaimed Mine was 13,467 tons and dispatch was 12,989 tons.
from maintenance activities and used in SMS. Production achieved was 70.14% of the budget. The
usage of sand was reduced and achieved 46.00% of
b) Separate Calcining of lime and dolomite and using
sand from Nellimarla Sand Mine and Sarepalli Sand
the flux separately in the converters has reduced
Mine, which was opened on 16.12.2004.
the consumption of flux per tonne of Liquid Steel
drastically from 52.7 kg to 45 kg. The Karajada Sand Mine at Vamshadhara river in
Srikakulam district will be operated during 2006-07. It
In addition to the techno-economic parameters being
is proposed to operate a Quartz Mine during this
focused and monitored by Works Division, the other
financial year 2006-07 at Kintada Village, K Kotapadu
functional areas like Finance, Materials Management
Mandal, Visakhapatnam district to maintain uniformity
and Marketing have also adopted various measures in
in quality of quartz and reduce usage of sand.
order to achieve cost reduction in freight, transportation
and handling charges in respect of both inward and The Company has submitted 5 mining lease
outward movement of materials including export as applications for iron ore deposit in the State of Orissa
well as reduction in interest expenses. (4415.8807 ha.), two applications in the state of
Blast Furnace
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Annual Report 2005-06
Chhattisgarh (4606.34 ha.) and two applications in the SMS LIMESTONE JOINT VENTURES
State of Andhra Pradesh (1384.27 ha). These RINL received proposals and samples from different
applications are pending with respective State agencies of Oman, Malaysia, Thailand and Philippines.
Governments and the same is being followed up with So far no agency is finalized for Joint Venture with
Ministry of Mines through Ministry of Steel. RINL/VSP due to non-matching of required
specification. The processing is continuing for selecting
ACQUISITION OF COAL MINES IN INDIA AND
suitable Mine for Joint Venture.
ABROAD
Government of India allotted "Mahal Block" (Medium SAFETY, ENVIRONMENT & HEALTH CARE :
Coking Coal) to RINL/VSP. Work Order is issued for Safety
"Pre-Feasibility Study" to Central Mining Plan and Visakhapatnam Steel Plant is the first integrated steel
Design Institute Ltd (CMPDIL), Ranchi. RINL/VSP plant to be certified for "Occupational Health & Safety
applied for Tenughat Jhirkhi Coking Coal Block to the Management System" as per British Standards Institute
Ministry of Coal and also applied for three Non-coking specification in the year 2002 and re-certified again in
coal blocks in Khammam District to the Ministry of the year 2005. Two Surveillance Audits were
Coal. Ministry of Coal forwarded it to the Ministry of conducted in the year 2005-06. Continuous efforts in
Steel for their comments. implementation of safety standards, monitoring of
hazards in the activities had helped in achieving a
"Expression of interest for acquisition of Hard Coking
10.67% reduction of reportable accidents.
Coal Mines abroad" was placed in VSP's website.
Responses from Australia, USA and Canada have been HIGHLIGHTS AND ACHIEVEMENTS :
received and the Evaluation Process is continuing for • "Zero Accident" was achieved in 17 departments
selecting suitable mine for Joint Venture. Consultant is viz. ACVS, CED, CSD, Canteens, EnMD, ETL,
proposed to be appointed by the Company for further L&H, OHSRC, PPM, PEM, PD, RMD, StED,
evaluation of the proposals. Systems, TELECOM, TS, and T&DC.
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Rashtriya Ispat Nigam Ltd.
• 10.67% reduction of Reportable accidents was Measurable targets were set in respect of Safety
achieved during the year 2005-06. and Occupational Health for each department and
• First and Second Surveillance Audits of OHSAS- corresponding management programs had been
18001 were successfully completed and well prepared and monitored for achieving the
appreciated by the external auditors. objectives.
• Internal Safety Audits were conducted in respect • On site emergency plan and Safety Report were
of 16 departments. updated.
• Two plant level Mock Drills were conducted to • One training Program was organized for the Central
check the emergency preparedness and response Safety Committee members, including a plant visit
of various agencies. to NTPC Simhadri. Departmental Safety Committee
• National Safety Day was celebrated on 4th March, meetings were held in every month in various
2006 and in that connection various competitions departments.
such as Quiz, Essay, Debate, Poster etc. were
conducted. Safety Playlet and First Aid ENVIRONMENT MANAGEMENT REVIEW
Competitions were also held. The commitment of VSP management for preservation
• Inter-departmental Safety Performance and House of the environment as an integral part of its products
Keeping Competitions were conducted. and services has always remained a guiding principle
of its business strategy. Being an ISO-14001 certified
VSP won the Leadership and Excellence Award for
company since May 2001, VSP has expressly included
the efforts in Safety, Health and Environment in the
social and environmental responsibility in its corporate
competition organized by CII, Southern Region.
objective which is regularly reviewed and improved.
OTHER IMPORTANT ACTIVITIES MAJOR ENVIRONMENTAL PROJECTS UNDER
• VSP imparted refresher Safety Training to about IMPLEMENTATION
5000 regular employees and Safety Induction
All statutory requirements are fulfilled and over a dozen
training and Job Specific Training was given to all
projects to improve the environmental standards further
contractor employees.
in VSP are under implementation at an estimated cost
• Control Measures for Hazard Identification and Risk of over Rs.263 Crores. This is an enough evidence on
Assessment were implemented and monitored. the part of VSP that it giving priority to people before
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Annual Report 2005-06
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Rashtriya Ispat Nigam Ltd.
TRAINING PROGRAMMES
MOU FULFILMENT
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Annual Report 2005-06
Operations" is organized for personnel under "Chairman Tho Mata" for non-executives. There was
directorate of Commercial who are connected with encouraging feedback.
stockyard operations. An expert faculty Shri J Charlu
from Bangalore who served as ED (Mktg) at SAIL and IMPLEMENTATION OF SIX SIGMA
JVSL in the past, facilitated the tailor-made
As an ongoing process towards business excellence,
programmes during October '05 at Chennai and
Six Sigma concept was introduced in VSP. During
December '05 at Mumbai. The programme design
February 2005, M/s Omnex Consultants, Chennai have
includes visit to stockyard with senior management
been entrusted with the job of implementing Six Sigma
members and drawing up individual action plans. The
concept to improve the performance. Specific projects
feedback was quite encouraging.
on Quality, performance, cost-reduction, waste
ORGANISATION DEVELOPMENT elimination would be taken up by the teams under
the supervision of M/s Omnex Consultants for
EMPLOYEES SATISFACTION SURVEY
breakthrough improvement in the above areas. An
Following the documented approach of taking external appreciation programme was held in March 05 for Top/
consultant's help to conduct a survey after every two Senior management team by the consultants. 65
years, work order has been placed on M/s AcNielsen projects have been identified in Works and Non-works
ORGMARG, New Delhi, after assessing the capabilities areas involving a potential savings of Rs.42 crores to
of leading agencies in the country. The results of the Company. The projects are being continuously
survey analysis pertaining to critical parameters like monitored by the Champions. It is expected that this
work content, hygiene factors, welfare, motivation, initiative will move from its present nascent stage to
leadership etc., are expected to come by close of the cover many more aspects of the processes once
second quarter 06-07. training and competencies are built up.
Organisation climate survey was conducted in the Plant THROUGH TRAINING & DEVELOPMENT
internally and analysis was made for submitting the CENTRE:
same for HR excellence award.
EMPLOYEES DEVELOPMENT PROGRAMMES:
INTERNAL COMMUNICATION 1. Training programmes conducted covering a total
Launched novel informal monthly interaction sessions number of 44,488 employees, which includes
of our employees with our CMD starting with maiden employees covered by T&DC (29,892 numbers),
sessions of "Dil Ki Baat" for senior officers and HRD, Safety Dept. and CISF Fire Wing thus
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Rashtriya Ispat Nigam Ltd.
achieving 11.46 man days of training per employee 8. "Ukku Parichayam", a book on Steel making in
per year. Telugu has been reviewed, edited and printed and
was released during the Training Week Valedictory
2. Thrust is given to departmental refresher
Function.
programmes covering over 10,000 employees
which is 100% growth over last year. On the Job 9. The Training Portal was inaugurated during the
Training covered 7003 employees. 24 SOPs and Training Week Valedictory Session.
192 SMPs were translated into Telugu.
10. Refurbishing of T&DC auditorium and Conference
3. A Competency Mapping Model has been developed Hall has been done. New class room furniture
and executed in Sinter Plant covering Chargeman procured. Three class rooms were air conditioned.
to E-4 level. 4 LCD projectors procured and fixed in the class
rooms. The ambience of Trainees Hostel and T&DC
4. With regard to quality of training, in reaction level
canteen were improved.
feed back 87.12% participants rated>4 on a 5-
point scale, in learning level 84% participants 11. Auditorium facilities and necessary help extended
scored >60% marks in post training tests, in in organizing and conducting 35 programmes
application level feed back, controlling officers rated including VRUDDHI summit, IREFCON-2006, WIPS
>3.5 for 81% participants on a 5-point scale. functions etc.
5. 365 employees were trained on Critical Equipment 12. 186 QC Projects have been submitted to MS
Training and 200 employees were trained on Department against a target of 18 QCs during the
Critical Activities training (to take care of the critical year.
contractual jobs).
13. 208 suggestions generated in T&DC against the
6. Trade Tests were conducted for 1689 employees target of 130 during the year.
for the Inter Cluster promotions in different Works
and Non-works Departments. OTHER INITIATIVES :
7. Training Week was celebrated from 20-3-2006 to i) FRESHERS TRAINING: 141 M.T(T)s, 10 M.Ts (Fin)
25-3-2006 and prizes were distributed during the and 2 Jr. Trainees were given Induction Training
valedictory session. and posted for on the job training.
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Annual Report 2005-06
ii) COMPREHENSIVE MANAGERIAL COURSE FOR vii) LIBRARY: 919 books, 3113 journals, 16 e-journals,
JOs and JSOs: 34, 198 and 192 candidates have 126 Indian and International Standards were
attended Phase-I, Phase-II & Phase-III programmes procured.
respectively (altogether 424 including outstation
227 Management and Technical Articles, 3 Nos. of
candidates).
Library bulletins were circulated to senior
iii) APPRENTICESHIP TRAINING: For the first time, executives and Directors.
VSP hosted the Centralised walk-in-interviews for
Centralized Air Condition with false ceiling has been
selection of various apprentices from different
done.
organizations in liaison with the apprenticeship
authorities. viii) REVENUE GENERATION :
a) Training charges received Rs. 5, 89, 220/-
77 Trade Apprentices, 153 Graduate Apprentices
from (JSWL, JSPL etc.)
and 138 Technician Apprentices, 87 Technician
(Vocational) Apprentices were given training. b) Amount received for Rs. 29,36,050/-
utilization of facilities at
iv) VACATIONAL TRAINING, COLLABORATIVE
T&DC and Hostel and
TRAINING AND GUIDED VISITS TO THE PLANT:
Vacational Training
As part of social obligation, VSP has been
Total Rs. 35,25,270/-
extending training/project work facilities to students
of educational institutions. 3021 students were
given training. PERSONNEL DEPARTMENT
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Rashtriya Ispat Nigam Ltd.
Peripheral Development
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Annual Report 2005-06
seven hundred and (Fifty only) per month and 2 Monthly Benefit to the dependents of the deceased
Scholarships of Rs.400/- (Rupees four hundred employees/Medically Unfit cases.
only) per month will be awarded to the meritorious
4 INDUSTRIAL RELATIONS :
students among SC/STs every year.
f) Besides, since the year 1991, coinciding with the The overall IR situation at RINL/VSP during the
Birth Centenary Celebrations of Bharat Ratna Dr. year 2005-06 was peaceful and helped in
B R Ambedkar, Annual Merit Cash Awards for sustaining the targeted levels of production. Despite
students belonging to SC/ST communities were of hectic activities on account of Union Elections,
introduced. Based on the pass results of the Xth/ the Employees' Unions demand on work related
SSC Examination held during March 2005, 10 nos. issues, various agitational activities by Regular and
of Cash Merit Awards of Rs.500/- (Rupees five Contract Labour unions, normal and safe levels of
hundred only) each and 9 nos. of Rs.250/- production could be maintained due to proactive &
(Rupees two hundred and fifty only) each were preventive IR measures adopted by Personnel
given to the 1st and 2nd rank students of SC/ST Department and maintenance of harmonious
communities respectively, from each of the schools Industrial Relations.
of VSP.
I. SETTLEMENTS :
B) General :
a) Night Shift Allowance :
a) RINL/VSP has increased the number of
Record Notes of discussion was signed on
Scholarships from 11 Nos. to 30 Nos. and also
20.09.2005 between the representatives of
enhanced the scholarship amount for the children
Management and Visakha Steel Employees
of VSP employees from the academic year 2005-
Congress (INTUC)-Recognised Union on the
06 under 3 categories of its Scholarship Schemes
revision of 'Night Shift Allowance' to both
i.e. General, SC/ST and Physically Handicapped.
Executives & Non-Executives employees w.e.f.
b) RINL/VSP has introduced the new schemes for 01-01-2005.
grant of Dr.Sarvepalli Radhakrishnan Merit Cash
b) MoU on Bonus/Ex-gratia
Awards @ Rs.5,000/- each (one time) for the
Following the persistent demand for payment
children of VSP employees who secure admission
of Bonus/Exgratia by the Unions, a
and join IITs, IIMs and IISc or ISI courses. Also
Col.C K Nayudu Sports Cash Awards @
Rs. 5,000/- each (one time) for the children, who
have represented the country in any event or who
has won 1st place in the Nationals conducted by
respective Federations of India, or National School
Games and Sports conducted by School Games
Federation of India or Ranji or Inter-State Cricket
Matches conducted by BCCI. These Cash Award
schemes have been implemented from the
academic year 2005-06.
27
Rashtriya Ispat Nigam Ltd.
MOU on Bonus Ex-gratia to Employees Hindi classes for the wives of Employees
28
Annual Report 2005-06
of Dakshin Bharath Hindi Prachar Sabha) for the as to help obviating dissatisfaction, a
ladies (House wives of the employees). comprehensive grievance redressal system exists
Expenditure for Text books, note books, teaching for Executive as well as Non-Executive employees.
aids, accommodation, examination fee etc. is met All Zonal Personnel Executives have been
by the management and 205 ladies are trained entrusted with the job of disposal of staff grievance
during 2005-06. Such initiative is first of its kind expeditiously.
in the Steel Industry in India.
PUBLIC GRIEVANCES
From Oct '05, about 125 ladies (wives of employees
of VSP) are trained in Prathamica, Madhyama and In compliance with the directives of Ministry of Steel
Rashtra of Dakshin Bharat Hindi Prachar Sabha at from time to time, the following actions have been
Steel Township (Ukkunagaram). taken to activate Public Grievance Redressal
System.
2. "Hindi portal" is prepared and placed on the intranet
of Visakhapatnam Steel Plant during the current As regards the Public Grievances appearing in the
financial year. Different Circular, formats and newspaper column, Corporate Communications
policies of the Company obligations & targets of Department is entrusted with the job of scrutinizing
Official Language are placed in the portal. Shusha and forwarding the grievances to the concerned
Font is placed in the Intranet so that it can be Head of Department who, in turn would examine
made use of by the departments across the plant. the grievance and take prompt action for its
redressal.
DISPOSAL OF STAFF/ PUBLIC GRIEVANCES
A senior level executive in the rank of Dy. General
RINL/VSP has given priority to the redressal of Manager is functioning as OSD (Public Grievances)
grievances-Staff as well as public grievances. in order to monitor the redressal of Public
Grievances centrally and compile monthly status
STAFF GRIEVANCES reports on disposal of Public Grievances for
With a view to providing Forums for redressal of submission to the Ministry of Steel.
grievances at Shop/Section/ Department/Plant/
Company level and settling the grievances of The status of receipt and disposal of Staff/Public
employees expeditiously within stipulated time so Grievances during the period 2005-06 is as under:
Children of Balabadi celebrate Independence Day Peripheral Development in the nearby Villages
29
Rashtriya Ispat Nigam Ltd.
30
Annual Report 2005-06
a) Workshop "Towards Excellence" for teachers Groups (SHGs), Clean & Green Environment,
of VSP Schools was conducted on 7th & 8th etc. and a Play-let on AIDs awareness.
September 2005 in association with Andhra
University, UGS - Academic Staff College. MANAGEMENT SERVICES
b) "Students Counselling-Competency Develop- • VSP bagged Six Government of India Vishwakarma
ment Programme" for students (7th and 10th Rashtriya Puraskar (VRP) Awards at national level
class) appearing for Public Examination was out of total 28 awards announced by Ministry of
conducted on 10th Nov. 2005. Labour. One fifth of the total awards are bagged
c) Workshop "Towards Excellence" for teachers by VSP and 32 awardees from VSP are more than
of VSP Schools was conducted on 11th & 12th 1/3rd of the total at National level. VRP is one of
November 2005 in association with Andhra highest level of award presented to workman in
University, UGS - Academic Staff College. recognisition of their contribution by Govt of India.
d) Adult literacy and female literacy drive through • VSP has bagged Gold Medal in Technical Paper
UKKU AKSHARA JYOTHI programmes were Contest and Silver Medal in Best Suggestors
organized on 09.01.2006 in Aganampudi & Contest at 16th INSSAN National Convention held
Vadlapudi Rehabilitation Colonies. at Mumbai in Jan'06.
e) Personality Development for School children, • 4131 Quality circle projects implemented with an
interactive session on "Prove Yourself and employee involvement of 74%.
Develop Your Personality" was organized on • For the first time 14 QC teams represented at
18.01.2006 at De Paul School, Ukkunagaram. Quality Circle National Convention at Ernakulum.
f) With a view to sensitizing residents of five Four teams rated as par excellence, seven as
Rehabilitation Colonies and Mines, the Multi- excellent and three as distinguished.
Purpose Social Service Camps/Programmes • One QC team was awarded first prize at State
were organized at the following places during level by CII at Hyderabad and participation award
this year under CSR Calendar of events. These at Regional level, Chennai.
programmes inter-alia includes workshop on • For the first time 18 employees from 2 QC teams
Mother & child Care, De-addiction, Life Style sent abroad to participate in International
Management, Self-employment & Self Help Conventions. One QC team presented at IEIQC-
31
Rashtriya Ispat Nigam Ltd.
2005 (International Exposition and Innovation on Mill of 300,000 tpa capacity to produce seamless pipes
Quality Circles) at Singapore and the other at of higher dia is planned which will be first of its kind
ICQCC-2005 (International Quality Control Circles) in India.
at South Korea. It was a great motivation as Non- The salient features of the Expansion are as follows:
Executive employees presented at International
Capital cost : Rs.8692 crores (Base: II Quarter
forums.
2005)
• 33201 suggestions received and 8712
Construction schedule : Stage-I - 36 months from "Date of
implemented. Suggestion campaigns on "Energy
approval by GOI"
Conservation", "Safety" and "Finance" conducted.
Stage-II - 48 months from "Date of
• Received 3rd prize for "Organisational Excellence
approval by GOI"
Award in Suggestion Scheme" at INSSAN National
GOI approved the project on 28th October 2005 at an
Convention, Mumbai.
estimated cost of Rs.8692 crores. Preparation of
• The 5 S activities - Work Place Management have specifications and tender documents are under
been taken up in most of the departments. progress. Some preliminary works such as roads, box
PROJECT MANAGEMENT culvert and lighting etc. have already been ordered
and work is under progress. An amount of Rs.6.69
Expansion of the Plant to 6.3Mt : crores has been spent upto 31.03.06.
Keeping in view the upturn in global and domestic
steel demand, VSP has decided to increase its capacity COKE OVEN BATTERY - 4 (PHASE-I)
to 6.3 Mt of liquid steel per year in the beginning and Government of India approved setting up of Battery
to increase the capacity upto 10 Mt per year in future No.4 in December 2003 at a cost of Rs.303 crores to
phases. M/s MN Dastur Co, the Consultants engaged meet the coke requirement. Construction of the battery
for preparation of Project Report for Expansion of VSP is in progress and the project is likely to be
submitted the Report for Expansion of Plant to 6.5 Mt commissioned by December 2006. An amount of
of hot metal and 6.3 Mtpa of liquid steel. The product Rs.165.66 crores has been spent upto 31.03.06.
mix is long products such as wire rods in coils 5.5 mm
to 20 mm dia, special bars of size 16mm to 40 mm dia COKE OVEN BATTERY (PHASE-II)
in coil and straight length and light & structural to Projects for construction of By Product Plant and
meet the infrastructure needs which are very well Additional facilities on coal side have been approved
accepted in the market. In addition, Seamless Pipe by the Board of Directors in June, 2006 at an estimated
Model of Main gate - Expansion Construction work at Coke Oven Battery No. 4
32
Annual Report 2005-06
33
Rashtriya Ispat Nigam Ltd.
10 Employee Training 9.9 11.1 Training Days context of interest to share their knowledge and
/ Employee improve their individual competencies. The concept
has started becoming popular and so far 7 COPs
11 Lost Time Injury 6.6 1.6 Frequency / 1
on the following themes have been formed and
Frequency Rate million Hours
are working very well: PLCs; Hoist Controls; Yard
Worked
Machines; HT Motors; Electrical Drives; Pumps;
Rolling Mills.
The return on capital employed of RINL is
significantly higher at 31.8% compared to the world 4. Chairman Online
average of 22.3%. The value added is also higher "Chairman Online" an intranet based
at 14% compared to 11.7% of world average. communication forum, facilitating direct interaction
However, it is seen that RINL's performance on of employees with CMD to improve the
three parameters, i.e. Investment in New Processes organizational performance, was launched in
and Products, Energy Intensity and Greenhouse January, 2005. Till March 2006, about 450 queries
Gas Emissions has been below the world average. submitted by employees on issues like systems
As VSP is an integrated steel plant, steel recycling improvement, productivity improvements, current
at lower percentage is not a cause for concern. challenges and possible solutions, employee
development and welfare, etc. have been mostly
3. Knowledge Management
replied within a few days of submission and on an
In order to motivate employees to participate in
average the response time is less than a week .
this, a new reward and recognition scheme titled,
The initiative has become very popular as seen
"Gnana Puraskar Yojana" has been launched since
from the survey conducted in January 2006 wherein
April 2005 and till July 2006 about 200 awards
90% of the employees have expressed complete
have been given.
satisfaction and happiness with regard to its
In order to further augment the Knowledge working and rated its effectiveness as 7.9 on a 10
management initiative, another powerful tool - point scale.
Communities of Practice - has been launched in
the year 2005-06 in a bottom-up approach. 5. Market Survey
The COP provides an opportunity to have a Market survey was conducted by Market Research
network of people and through them networking of Group of CSM Dept. to assess potential for opening
knowledge takes place by providing a common outlets in the states of Himachal Pradesh,
Chairman On-Line
34
Annual Report 2005-06
Jharkhand, Chattisgarh and Pondicherry. It was restrictive tender clauses in line with CVC
brought out that adequate potential exists for open guidelines on the issue so as to bring in greater
new branches in Jamshedpur and Raipur. In other transparency and increased competition.
places, where demand is not assessed to be
(iv) In order to provide yet another platform for any
sufficient for opening Branch offices, Consignment
citizen, necessary publicity has been given in the
Sales Agents or Dealers have been suggested.
newspapers and the website of VSP that any
Actions have been initiated accordingly.
complaint made to the CVO through Website would
VIGILANCE ACTIVITIES also be entertained and processed further for
suitable action.
During the year:
(v) Proactive Vigilance work was done in the areas of
(i) Vigilance Department conducted 390 system estimation, award and execution of contracts
checks including 20 quality checks and 93 rake/ pertaining to operation, maintenance, procurement
road re-weighments. The Vigilance observations and marketing and management exhibited positive
were brought to the notice of the concerned for attitude towards the suggestions of the Vigilance.
taking corrective actions/improvement of the
(vi) The work related to obtaining ISO Certification for
existing procedures/systems, wherever required.
Vigilance by June 2006 is progressing well. This
(ii) Vigilance Awareness Week was observed during would further the efforts in streamlining procedures,
the week 7th November to 11th November 2005. systems and accountability.
During the week, from 7th November to 11th
(vii)Close interaction was maintained with CBI.
November 2005, presentations cum interaction
Pending cases were reviewed periodically and full
sessions were held, which were attended by lower
co-operation was extended to them.
level and middle level Executives of the company,
Trade Union Leaders and Office bearers, Vendors, (viii)All the periodical statistical returns/reports were
Customers and Contractors. During these submitted to MOS, CVC, CBI and DOPT in time.
sessions, relevant issues were discussed, doubts
clarified and practical inputs were imparted to the AUDITORS
participants. M/s. Rao & Kumar, Visakhapatnam have been
(iii) On the preventive vigilance front, greater thrust appointed as the Statutory Auditors of the company
was laid on examination of tenders at the for the year 05-06 by the Comptroller and Auditor
processing stage with a view to modifying certain General of India.
35
Rashtriya Ispat Nigam Ltd.
The Statutory Auditors' Report on the Accounts of the (i) that in the preparation of the annual accounts, the
Company for the financial year ended 31st March 2006 applicable accounting standards had been followed
in terms of Section 217(3) of the Companies Act, 1956 along with proper explanation relating to material
along with Management Replies thereon are enclosed departures;
to the Directors' Report as Annexure-I. (ii) that the directors had selected such accounting
policies and applied them consistently and made
C & A G REVIEW
judgements and estimates that are reasonable and
The Comments of the Comptroller & Auditor General prudent so as to give a true and fair view of the
of India (C&AG) alongwith Management Replies state of affairs of the company at the end of the
thereon and also the Review on Accounts of the financial year and of the profit or loss of the
Company are enclosed as Annexure-II. company for that period;
REPORT ON CONSERVATION OF ENERGY, (iii) that the directors had taken proper and sufficient
TECHNOLOGY ABSORPTION etc.. care for the maintenance of adequate accounting
records in accordance with the provisions of this
Information in accordance with the provisions of Section Act for safeguarding the assets of the company
217(1) (e) of the Companies Act, 1956, read with the and for preventing and detecting fraud and other
provisions of Companies ( Disclosure of particulars in irregularities.
the Report of the Board of Directors) Rules, 1988,
(iv) that the directors had prepared the annual accounts
regarding Conservation of Energy, Technology
on a going concern basis.
absorption and Foreign Exchange earnings and outflow
are furnished in the Annexure - A to this report and CORPORATE GOVERNANCE
also in Form -A and Form -B annexed to this report.
As a part of Corporate governance initiative, a
Foreign Exchange earnings and outgo : Committee of Directors comprising all functional
Directors and headed by the Chairman-cum-Managing
The Export performance of the Company has improved Director was constituted in September 1998 and has
significantly as compared to the previous year. been functioning since then for reviewing the important
The Foreign Exchange earnings during the year 2005- observations of Internal Audit and for taking expeditious
actions by concerned Departments wherever
06 was Rs. 443.51 Crores as against Rs. 259.27
Crores during the previous year. The Foreign Exchange
outgo during the year 2005-06 was Rs.1867.30 Crores
as against Rs.1386.50 Crores during the previous year
PARTICULARS OF EMPLOYEES
36
Annual Report 2005-06
necessary. The Committee has held meetings The Board of Directors wish to place on record their
periodically during the year. Appropriate corrective appreciation of the valuable services rendered and
actions wherever found necessary were taken which contribution made by the outgoing Directors during
resulted in considerable savings to the Company. their tenure on the Board of RINL.
Dr. S.N. Dash, Jt. Secretary, Ministry of Steel ceased (Y. SIVA SAGAR RAO )
to be part-time Official Director with effect from 7th Chairman-cum-Managing Director
April, 2006 on his resignation from the Board.
Visakhapatnam
Shri K K Rao, Director (Operations) ceased to be Date :25-09-2006
functional Director with effect from 1st August, 2006
on his superannuation from the Board. Adopted at the 24th Annual General Meeting held on
25th September, 2006.
37
Rashtriya Ispat Nigam Ltd.
HIGHLIGHTS
Rs.Crores
2005-06 2004-05
A OPERATING RESULTS
Turnover 8482.44 8181.34
Gross Income 8938.32 8467.67
Gross Expenditure 7017.57 6202.79
Gross Profit 1920.75 2264.88
Gross Profit (excluding Interest on Term
Deposits) 1613.90 2139.43
Profit before Tax 1889.51 2253.77
Net Profit After Tax 1252.37 2008.09
38
Annual Report 2005-06
Year
39
Rashtriya Ispat Nigam Ltd.
40
SIXTEEN YEARS DIGEST
FINANCIAL RESULTS
Rs. in Crores
Year Turnover Other Income Raw Stock Employee Depre- Interest & Stores, Profit / Profit /
Revenue Material Accretion/ Remune- ciation Wealth R&M, Loss Loss
consumed Decretion ration & DRE Tax Power & before after
& Benefits Expenses Other tax tax
1990-91 245.15 35.50 244.71 175.27 -26.69 29.14 197.23 192.13 191.12 -477.55 -477.55
1991-92 772.44 22.20 675.83 401.94 -69.61 53.86 449.09 437.26 509.03 -986.93 -986.93
1992-93 1184.84 147.63 1245.10 680.17 -151.60 76.52 340.07 197.56 758.04 -568.29 -568.29
1993-94 1751.04 156.03 1526.44 875.4 160.21 102.5 339.84 346.86 654.92 -572.66 -572.66
1994-95 2208.57 50.22 2091.79 1058.53 -199.67 128.46 414.65 365.97 855.13 -364.28 -364.28
41
1995-96 3038.57 115.92 2809.76 1310.69 -50.45 154.66 430.12 407.11 1106.63 -204.27 -204.27
1996-97 3135.29 78.40 2888.08 1384.56 -114.83 174.42 421.87 430.48 1163.13 -245.94 -245.94
1997-98 3070.93 96.96 2750.92 1405.31 -118.27 210 438.52 198.23 1210.83 -176.73 -176.73
1998-99 2761.13 197.06 2181.69 1219.66 317.61 255.04 111.27 360.88 1150.91 -457.18 -457.18
1999-00 2972.60 154.79 2636.11 1394.32 -95.10 272.49 431.79 382.16 1303.41 -561.68 -561.68
2000-01 3435.96 179.79 3048.88 1443.68 -103.38 407.65 444.60 350.59 1363.91 -291.30 -291.30
2001-02 4080.95 152.92 3395.74 1602.1 62.37 375.02 474.98 290.52 1504.03 -75.15 -75.15
2002-03 5058.25 167.63 4107.16 1805.65 281.09 405.99 454.61 123.19 1634.66 520.69 520.69
2003-04 6169.09 209.23 5398.25 2050.43 25.61 481.15 476.47 49.05 1748.42 1547.19 1547.19
2004-05 8181.34 286.33 7583.80 3019.64 -310.39 490.24 1006.12 11.11 1997.18 2253.77 2008.09
2005-06 8482.44 455.88 7412.57 3584.62 65.85 572.34 448.29 31.24 2346.47 1889.51 1252.37
Annual Report 2005-06
Rashtriya Ispat Nigam Ltd.
42
Annual Report 2005-06
Audited
Accounts
2005-06
43
Rashtriya Ispat Nigam Ltd.
44
Annual Report 2005-06
SOURCES OF FUNDS:
SHAREHOLDERSí FUNDS:
Share Capital 1 7827.32 7827.32
RESERVES & SURPLUS :
Profit & Loss Account 346.38 ó
LOAN FUNDS :
Secured loans 2 88.15 88.94
Unsecured loans 3 369.44 442.42
Deferred Tax Liability ( Net ) 316.72 158.49
Total 8948.01 8517.17
APPLICATION OF FUNDS:
FIXED ASSETS :
Gross block 4 8832.13 8763.49
Less: Depreciation 6753.87 6322.18
Net block 2078.26 2441.31
Held for disposal 5 0.01 0.00
Capital work-in-progress 6 180.73 58.85
2259.00 2500.16
INVESTMENTS 8 0.00 0.00
CURRENT ASSETS, LOANS & ADVANCES :
Inventories 9 1216.45 1257.53
Sundry debtors 10 165.65 49.30
Cash & Bank balances 11 5621.70 3932.61
Other Current assets 12 184.36 100.18
Loans & Advances 13 1063.84 710.12
8252.00 6049.74
LESS: CURRENT LIABILITIES & PROVISIONS :
Liabilities 14 871.49 712.46
Provisions 15 716.37 269.27
1587.86 981.73
Net Current Assets 6664.14 5068.01
MISCELLANEOUS EXPENDITURE 16 24.87 43.01
(to the extent not written off or adjusted)
PROFIT & LOSS ACCOUNT ó 905.99
Total 8948.01 8517.17
Accounting Policies & Notes to Accounts 28
Schedules 1 to 28 annexed form part of the Accounts
As per our separate report of even date
For RAO & KUMAR
Chartered Accountants
45
Rashtriya Ispat Nigam Ltd.
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006
Rupees in Crores
Schedule For the year ended For the year ended
No. 31st March, 2006 31st March, 2005
INCOME
Gross Sales 17 8482.44 8181.34
Less: Excise duty recovered on sales 1176.73 821.50
Net Sales 7305.71 7359.84
Internal consumption 8.26 6.82
Interest earned 18 354.87 158.59
Other revenue 19 92.75 120.90
Total 7761.59 7646.15
EXPENDITURE
Raw materials consumed 20 3584.62 3019.63
Depletion/(Accretion) to Stock of Semi-finished/Finished goods 21 65.85 (310.39)
Employeesí remuneration & benefits 22 572.34 490.25
Stores & spares consumed 338.95 313.46
Power & fuel 23 235.10 216.06
Repairs & maintenance 24 97.24 93.41
Contributions to Joint Plant Committee funds 0.73 0.76
Freight outward 306.71 299.53
Other expenses & provisions 25 255.03 301.05
Interest & finance charges 26 31.06 11.11
Depreciation 415.57 424.19
Wealth tax 0.18 0.12
5903.38 4859.18
Less: Inter account adjustments-raw material mining cost 24.48 24.22
Net expenditure 5878.90 4834.96
Profit for the year 1882.69 2811.19
Prior period adjustments- Net credit 27 6.82 1.44
Profit after Prior Period Adjustments 1889.51 2812.63
Depreciation short provided in earlier years ó 558.87
Profit before Tax 1889.51 2253.76
Provision for Taxation
Current Tax 474.97 87.18
Fringe Benefit Tax 3.94 ó
Deferred Tax 158.23 158.49
Net Profit 1252.37 2008.09
Balance of (loss) brought forward from previous year (905.99) (2914.08)
Balance carried to Balance Sheet 346.38 (905.99)
Basic and Diluted Earnings per Share (in Rupees)(Face Value Rs. 1000 per share) 256.12 410.67
Accounting policies & Notes to accounts 28
Schedules 1 to 28 annexed form part of the accounts
As per our separate report of even date
For RAO & KUMAR
Chartered Accountants
46
Annual Report 2005-06
AUTHORISED
4,89,00,000 (Previous year 4,89,00,000) Equity shares
of Rs.1000 each 4890.00 4890.00
47
Rashtriya Ispat Nigam Ltd.
B. Social Facilities :
48
Annual Report 2005-06
ó ó ó ó 40.59 41.41
0.43 0.03 ó 0.46 1.19 1.22
33.23 2.27 ó 35.50 12.53 14.80
12.43 1.11 ó 13.54 58.00 53.48
310.55 22.72 ó 333.27 400.05 422.06
5459.85 362.48 -1.90 5824.23 1178.69 1491.38
7.19 0.87 ó 8.06 3.67 3.16
41.95 3.05 ó 45.00 19.20 22.06
6.95 0.17 0.15 6.97 1.72 0.51
172.33 12.39 ó 184.72 79.10 91.12
166.22 11.39 ó 177.61 68.02 79.16
38.68 7.86 0.22 46.32 31.46 32.15
1.37 0.28 ó 1.65 4.18 4.46
6251.18 424.62 -1.53 6677.33 1898.40 2256.97
5272.00 982.28 3.10 6251.18 2256.97 3183.16
ó ó ó ó 10.30 10.30
2.58 0.19 ó 2.77 9.17 9.36
39.57 3.05 ó 42.62 144.41 146.82
1.20 0.10 ó 1.30 0.77 0.87
0.15 0.01 ó 0.16 0.01 0.02
11.46 0.86 ó 12.32 6.41 7.18
11.97 0.88 ó 12.85 5.69 6.54
4.08 0.44 ó 4.52 3.10 3.24
71.01 5.53 0.00 76.54 179.86 184.33
65.58 5.41 -0.01 71.00 184.34 188.98
49
Rashtriya Ispat Nigam Ltd.
50
Annual Report 2005-06
Trade - Quoted
1,82,927 Equity shares of Rs.10/- each in
Bisra Stone Lime Company Limited 0.00 0.00
Non-trade - unquoted
2,280 Equity shares of Re.1/- each in
Free Press House Limited 0.00 0.00
Total 0.00 0.00
51
Rashtriya Ispat Nigam Ltd.
Schedule 09 : Inventories (As taken and certified by the Management) Rupees in Crores
As at As at
31st March , 2006 31st March, 2005
Sundry debtors
Debts over six months 20.75 26.54
Other debts 164.27 43.04
185.02 69.58
Less : Prevision for doubtful debts 19.37 20.28
Total--Unsecured & considered good 165.65 49.30
52
Annual Report 2005-06
Loans
Employees 2.72 1.41
Others 240.00 240.00
Material issued on loan 5.26 36.25
Advances & other recoverables
(Recoverable in cash or in kind or
for value to be received)
Government departments 14.94 6.07
Advance Income Tax & Fringe Benefit Tax 506.91 174.24
Contractors 4.54 5.34
Less:Provision for doubtful advances 0.54 0.44
4.00 4.90
Suppliers 52.63 85.78
Less:Provision for doubtful advances 7.90 16.38
44.73 69.40
Employees 4.91 7.12
Less:Provision for doubtful advances 0.16 4.75 0.19 6.93
53
Rashtriya Ispat Nigam Ltd.
Schedule 16 : Miscellaneous expenditure (To the extent not written-off or adjusted) Rupees in Crores
As at 31st Additions Charged off As at 31st
March, during the during the March
2005 year year 2006
54
Annual Report 2005-06
Current Previous
Year Year
Current Previous
Year Year
55
Rashtriya Ispat Nigam Ltd.
Quantity: Tonnes
Schedule 20 : Raw materials consumed Value : Rupees in
Crores
Current Year Previous Year
Quantity Value Quantity Value
56
Annual Report 2005-06
57
Rashtriya Ispat Nigam Ltd.
58
Annual Report 2005-06
c. Contributions made by the company towards the cost of fixed assets owned by the State/Central
Government are grouped together with similar assets owned by the company with appropriate disclosure
thereof.
d. Pending ascertainment of actual amount to be capitalised to fixed assets, capitalisation is made initially
on provisional basis. Adjustments to cost and depreciation are made on ascertainment of actual cost of
the respective assets.
i) In case of Plant & Machinery, when the respective sub-units are fit for commercial production. A sub-
unit is considered to be fit for commercial production at the later of the following:
a) from the end of 3 months from the commissioning date, provided such unit is capable of producing
at 50% rated capacity.
b) from the end of calender month in which the plant unit produces/becomes capable of producing
atleast 50% of the rated capacity.
iv) Factory buildings are capitalised alongwith the Plant housed in the buildings.
f. Machinery spares identified with production/service units, whose use is expected to be irregular, but non-
availability of which affects the production / service units are categorised as 'Risk Insurance Spares'.
The cost of such items is depreciated over the useful life of the Principal plant unit.
59
Rashtriya Ispat Nigam Ltd.
b) Depreciation on the following categories of assets are provided on SLM at the rates mentioned against
each based on the Management's estimate of the useful life of such assets.
Categories of Assets Depreciation Rate (%)
Photo Copiers & Fax Machines 19.00
Other Office Equipments 13.57
Air Conditioners 13.57
Cranes 9.50
Earth Moving Equipments 13.57
Slag Pot Carriers 9.50
Safety Equipments 11.87
Cars 15.83
Other light vehicles 11.87
Computers (including system software) 23.75
c) Contributions made by the company towards the cost of fixed assets owned by the State/Central
Government are depreciated over the estimated period of their utility or five years whichever is less.
ii) Mining lease rights are amortised over the period of lease.
iii) Intangible assets are amortised over their estimated useful lives.
4. INVENTORIES:
a) (i) Finished/ Semi-finished goods are valued at lower of cost (excluding interest and administrative
expenses but including all other costs incurred in bringing the inventories to their present location
and condition) or net realisable value. Cost of production is the average cost of production of the last
six months during the year considering normal capacity. Normal capacity is based on the average
production of the preceding three years of main production units, excluding abnormal years. Abnormal
year is the year in which the actual production is less than 40% of the installed capacity. Coke and
other By-products are valued at net realisable value wherever cost is not determined except in the
case of stock of BF granulated slag at dump yard for which no value is assigned. Products which are
meant for internal consumption, for further production, but not for sale are valued at cost. No credit is
taken for the value of material in process except those lying at mills.
(ii) Finished/Semi-finished goods transferred for construction/maintenance and included in the stock of
stores & spares are valued at cost.
(iii) Iron scrap and Steel scrap are valued at 75% and 90% respectively of the cost of pig iron or of the
domestic net realisable value of Pig Iron, whichever is less.
b) (i) Raw materials and spares imported during the year are valued at landed cost inclusive of import duty
benefits availed. Liability to the extent of unfulfilled export obligations at the end of the year is provided
for.
(ii) No credit is taken in the accounts for the stock of run of mines ore and rejects at Mines.
c) (i) Raw materials, stores, spares, loose tools, materials in transit are valued at cost. In the event of net
realisable value of finished steel products being less than the cost of production, raw materials are
valued at lower of cost and net realisable value.
(iii) Non-moving items of stores & spares are recognised at 80% of their cost.
(iv) Stock of spares acquired along with the related equipments, not having item-wise breakup of cost,
are valued at average cost.
60
Annual Report 2005-06
(v) For all the above, cost is determined on monthly weighted average basis unless otherwise specified.
5. INVESTMENTS:
Investments are stated at cost. Income from investments is accounted for on accrual basis.
6. SALES:
Gross Sales are inclusive of excise duty and contributions to various funds and are net of discounts and
rebates.
a) Domestic sales on F.O.R. destination basis are accounted for when goods are delivered to the carriers.
b) Exports sales are recognised in the following manner:
i) Sea Exports, Road Exports and Rail Exports are recognised on the date of Bill of Lading, the Date of
Road Consignment Note and Date of Railway Receipt respectively.
ii) in cases where 'realisation of material value without shipment' is provided for in the Letters of Credit
of respective contracts, on expiry of laydays given in notice of readiness of cargo or the laydays
otherwise accepted by the seller or on expiry of 15 days from notice of readiness of cargo whichever
is earlier.
7. EXPORT BENEFITS:
Export benefits are accounted as follows:
a) Import duty benefits availed by way of duty exemption / remission licenses under Export Import Policy
earned on exports are accounted as income under the head 'Export benefits'.
b) DEPB/DFRC or any other Export Incentive credits sold or contracted /identified for sale are accounted on
realisable value.
c) The valid Licences under duty exemption / remission schemes under Export Import Policy, sanctioned till
the date of finalisation of the accounts are accounted as 'Export benefits', to the extent of export obligations
fulfilled up to the end of the year.
9. EMPLOYEES' BENEFITS :
a) The provisions towards Employees Benefits such as gratuity, accrued leave, post-retirement medical and
settlement benefits to employees, future payments to the disabled employees/legal heirs of deceased
employees under the Employees' Family Benefit Scheme are made based on the actuarial valuation as
at the end of the year.
b) Compensation under Voluntary Retirement Scheme is expensed in the year in which it is incurred.
61
Rashtriya Ispat Nigam Ltd.
17. CLAIMS:
a) Claims for liquidated damages against the suppliers/contractors are accounted for when the amounts are
actually recovered.
b) Claims for escalation by Contractors and Suppliers are accounted on acceptance by the Company.
c) Claims on Railways are accounted for when they are lodged.
d) Claims lodged under various insurance policies, risk purchases, price subsidy & freight subsidy on
Ammonium Sulphate and the interest receivable from Sundry Debtors for delayed payments/banks for
delayed credits for Telegraphic transfers are accounted on certainty of realisation.
62
Annual Report 2005-06
Schedule 28 Contd...
B. NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st March, 2006.
1. Land acquired at the cost of Rs. 39.99 Crores (previous year Rs.40.81 Crores) is being held in the name of President of India. The
Company is holding Power of Attorney issued by Govt. of India for utilisation of the land acquired for the Project and related purposes
incidental thereto.
2. Sale deeds in respect of the following assets are yet to be executed:
a) Stockyard at Chennai Rs. 1.51 Crores (Previous year Rs. 1.51 Crores)
b) Office buildings at New Delhi Rs. 1.19 Crores (Previous year Rs. 1.19 Crores)
c) Office buildings at Ahmedabad Rs. 0.18 Crores (Previous year Rs. 0.18 Crores)
d) Residential buildings at Kolkata Rs. 1 Crore (Previous year Rs. 0.96 Crores)
3. Land includes 342.1971 acres ( Previous year Rs.341.9771 acres) allotted to various agencies on lease basis.
4. a) Fixed Assets ( Gross Block) include assets costing Rs.10.05 Crores (previous year Rs.10.05 Crores) not owned by the Company
which were depreciated in full as per the accounting policy 3( i ) c.
b) Fixed Assets include Rs.0.17 Crores ( Credit )[ previous year Rs.0.21 Crores(Debit) ] being the Exchange Rate Variation for the
year in respect of foreign currency liabilities incurred to acquire fixed assets prior to 1st April 2004.
5. Main plant units, including Mills, are treated as ìContinuous Process Plantî.
7. Adjustments have been made to the extent reconciliation of Priced stores ledger with Bin cards is completed.
8. Housing/ Vehicle Loans to employees are reckoned as unsecured and considered good.
9. Loans and advances, Sundry debtors / Creditors, Stock with some Consignment agents are subject to reconciliation/confirmation.
10. Quantities of Closing Stock of finished / semi-finished goods have been adopted as per physical verification / custodians' certificate
except in the case of Calcined Lime, Liquid Oxygen, Liquid Nitrogen, Argon gas, Oxygen gas, Nitrogen gas, Dolomite magnesite
bricks, Calcium carbide sludge and Stocks at New Steel Yard amounting to Rs.19.94 Crores ( Previous Year Rs 15.05 Crores ) which
are as per book balances.
11. (a) The stock of iron scrap and steel scrap has been considered in the accounts on the basis of visual survey/estimates.
(b) In the absence of Sale of Coke Breeze, the same has been valued at 60% of the production cost of BF coke.
12. Power & fuel does not include the cost of generation of power and production of certain fuel elements in the Plant which are internally
consumed. The related expenses have been included under the primary heads of account.
13. Materials issued for use as 'Dunnage', were capitalised during the year with effect from the respective years. As a result, the Gross
and Net blocks of Fixed Assets have increased by Rs. 3.35 crores and Rs. 2.45 crores respectively and Depletion/(Accretion) to Stock
of Semi-Finished/Finished goods and Internal Consumption are higher by Rs. 4.02 crores and Rs. 3.35 crores respectively. As a net
result, the Net Profit is lower by Rs. 1.57 crores.
63
Rashtriya Ispat Nigam Ltd.
2005-06 2004-05
15. The Company's business is construed as one business segment which comprises of mainly production of steel products, whose
associated risks and returns are predominantly the same. Further, the Company has no geographical segments which are subject to
different risks and returns. Hence no separate disclosure in terms of Accounting Standard-17 on segment reporting is considered
necessary.
16. The lease transactions of the Company, being only incidental to the Company's main business of production & sale of Iron & Steel
products, we are of the view that the Accounting Standard AS-19 on Leases is inapplicable.
17. Income tax (MAT) liability under Section 115JB of the Income Tax Act, 1961, for the financial years 2003-04 and 2004-05, was
determined on the basis of the expert opinion of Tax Consultants considering the issue of adjustment of unabsorbed depreciation /
accumulated losses. To avoid possible dispute / litigation with the Income Tax department, an application has been filed before the
Hon'ble Authority for Advance Ruling for determination of the above issue. If the Company's stand is not accepted, the additional
liability towards income tax would be Rs.97.33 Crores (previous year Rs.97.33 Crores).
18. In compliance with Accounting Standard -22 on 'Accounting for Taxes on Income' issued by The Institute of Chartered Accountants of
India, the Net Deferred tax liability of Rs. 316.72 Crores (Previous Year Rs.158.49 Crores) has been provided during the current year.
Components of Deferred Tax Liabilities and Deferred Tax Assets are as under:
Rupees in Crores
Particulars As at 31st As at 31st
March, 2006 March, 2005
19. The entire plant has been considered as a Cash Generating Unit. As Recoverable amount of the 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 ëImpairment of
assetsí.
20. 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 and/or paid.
64
Annual Report 2005-06
Rupees in Crores
As at 31st As at 31st
March, 2006 March, 2005
65
Rashtriya Ispat Nigam Ltd.
(a) Indigenous 1792.97 50.02 297.43 87.75 1316.43 43.60 261.08 83.29
(b) Imported 1791.65 49.98 41.52 12.25 1703.20 56.40 52.38 16.71
Rupees in Crores
Current Previous
year Year
26. Expenditure in foreign currency (cash basis)
(a) Technical consultation fee/know-how 0.01 0.31
(b) Interest 21.83 7.38
(c) Others 2.08 4.82
Rupees in Crores
Current Previous
year Year
28. Value of imports during the year calculated on CIF basis
(a) Spares 37.04 41.03
(b) Raw materials 1734.93 1692.41
(c) Capital Goods -- 1.50
Rupees in Crores
Current Previous
year Year
29. Particulars of Directorsí remuneration
(a) Salaries & allowances * 0.30 0.52
(b) Companyís contribution to provident fund 0.04 0.04
(c) Leave travel concession 0.00 0.01
(d) Medical reimbursement 0.01 0.00
(e) Gratuity 0.07 0.10
66
Annual Report 2005-06
30. Licensed capacity, installed capacity & actual production ( Tonnes in ë000s)
Product:
(a) Wire Rods 850 1043 850 1014
(b) Light & Medium Merchant Products-Bar Mill 710 873 710 858
(c) Saleable Billets 246 110 246 137
(d) Medium Merchant Structural Mill 850 1058 850 1014
Total 2656 3084 2656 3023
(e) Pig Iron 556 439 556 273
(f) Granulated Slag 1440 1578 1440 1514
(g) Coke Ovens By-products 186 152 186 145
Note: *Licensed capacity not applicable in terms of Government of India notification No. S.O.477(E), dated 25th July, 1991.
67
Rashtriya Ispat Nigam Ltd.
68
Annual Report 2005-06
I. Registration Details
Registration No. 3 4 0 4 State Code : 0 1 0 1
Balance Sheet Date 3 1 0 3 2 0 0 6
Date Month Year
69
Rashtriya Ispat Nigam Ltd.
Annexure - I
AUDITORS’ REPORT
To the Members of Rashtriya Ispat Nigam Limited
1. We have audited the attached Balance Sheet of Rashtriya Ispat Nigam Limited, as at 31st March 2006, and also the Profit and
Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements
are the responsibility of the Companyís Management. Our responsibility is to express an opinion on these financial statements
based on our audit.
2. We conducted our audit in accourdance 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 financail
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement prsentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditorís report) Order, 2003, issued by the Central Government of India in terms of Sub-
section (4A) of Secction 227 of the Companies Act, 1956, and on the basis of such checks as we consider appropriate and
according to the information and explanations given to us, we enclose in the annexure a statement on the matters specified
in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that :
(a) We have obtained all the information and the 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 accounts as required by law have been kept by the company so far as appears from
our examination of those books and proper returns adequate for the purposes of our audit have been received from
the branches not visited by us;
(c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement
with the books of account and with the returns from the branches;
(d) In our opinion, the Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report,
comply with Accounting Standards referred to in sub - Section (3C) of Section 211 of the Companies Act, 1956;
(e) The provisions of section 274(1)(g) are inapplicable to Government Companies vide Notification No. G.S.R. 829 (E)
dated 21-10-2003 as declared by the Central Government;
(f) With regard to the Cess payable under section 441A, the company, vide note 21 in Schedule 26 to the Accounts,
had neither provided nor paid any amount, as the Government o f India had not framed any rules/guidelines in
this regard.
(g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts,
subject to and read together with the Significant Accounting Policies and Notes forming part of accounts
given by way of Schedule 28 to the Accounts, give the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view, inconformity with the accounting principles generally accepted
in India;
(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2006;
(ii) In the case of the Profit and Loss Account of the PROFIT for the year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
70
Annual Report 2005-06
1. Fixed Assets
(a) The Company has maintained proper records showing full particulars including quantative details of fixed assests,
except for historical cost figures in certain cases.
(b) All assets have not been physically verified by the management during the year but there is a regular programme of
verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets.
No material discrepancies were noticed on such verification.
(c) No substantial part of fixed assets of the company has been disposed off during the year.
2. Physical verification and reconciliation of Inventories
(a) Inventories have been physically verified during the year by the management, except stocks with conversion agents/
custodians and with outside agencies and those referred to in Note No. 10 to the Notes on Accounts, which are
adopted based on the book value amounting to Rs. 19.94 crores out of the total reported stock of Rs. 1216.46 crores.
In respect of stores and spares, company has a regular program of verification in a phased manner, which
in our opinion, is adequate and reasonable having regard to the nature and location of stocks.
(b) The procedures for 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.
(c) Reconciliation between Priced Stores Ledger and Bin Card in respect of Stores and spares was continued during the
year. Adjustment has been carried out to the extent reconciliation was completed. Reconciliation is pending in respect
of stores and spares whose value and impact of adjustments pending is not ascertainable.
3. Loans and Advances to parties covered in register maintained under section 301
of the Act.
The Company had neither granted nor taken any loans, secured or unsecured, to/from companies firms or other parties covered
in the register maintained under Section 301 of the Act. In view of this clauses (b), (c) and (d) of paragraph 4(iii) are inapplicable
5. Transactions to be entered into Register manitained under Section 301 of the Act,
According to the information and explanations given to us, there are no transactions that need to be entered into the register
maintained under section 301 of the Companies Act, 1956. As there are no such transactions, clause (b) of paragraph 4(v) is
inapplicable.
71
Rashtriya Ispat Nigam Ltd.
72
Annual Report 2005-06
12. Loans and Advances on the basis of security by way of pledge of Shares etc.
In our opinion and according to the information and explanations given to us, the Company has not granted any loans and
advances on the basis of security, by way of pledge of shares, debentures and other securities.
21. Frauds
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.
73
Rashtriya Ispat Nigam Ltd.
1 (a) Fixed Assets The auditors' remarks pertain to certain assets procured
The Company has maintained proper records showing for use for construction of the Steel Plant, retained by
full particulars including quantative details of fixed the Company for use in the production period after
assets, except for historical cost figures in certain construction, that were capitalized in the years
cases. 1990-91 and 1991-92
74
Annual Report 2005-06
2 Inventories have been physically verified during Stocks with conversion agents/custodians are accounted
(a) the year by the management, except stocks with as per custodians' certificate which is disclosed at Note
conversion agents/custodians and with outside No. 10 of Schedule 28 (B) of Annual Accounts.
agencies and those referred to in Note No. 10 to
the Notes on Accounts, which are adopted based
on the book value amounting to Rs. 19.94 crores
out of the total reported stock of Rs. 1216.46
crores. In respect of stores and spares, company has
a regular program of verification in a phased manner,
which in our opinion, is adequate and reasonable
having regard to the nature and location of stocks.
2 Reconciliation between Priced Stores Ledger and Bin Necessary disclosure has been made at Note No. 7 of
(c) Card in respect of stores and spares was continued Schedule 28 (B) of Annual Accounts.
during the year. Adjustment has been carried out to
the extent reconciliation was completed.
Reconciliation is pending in respect of stores and
spares whose value and impact of adjustments
pending is not ascertainable.
75
Rashtriya Ispat Nigam Ltd.
Annexure - II
(i) Short accountal of interest (Interest earned - Schedule 18) amounting to Rs. 1.02 crore
accrued on term deposits with various banks upto 31st March, 2006.
(ii) Under-valuation of Semi finished/finished goods by Rs. 1.78 crore due to not taking into
account the cost of a raw material consumed.
2. The fact that raw material (Coal) valued at Rs.14.02 crore was lying in the custody of the
conversion Agent for more than two years has not been disclosed in the accounts.
Sd/-
( S.B. Pillay)
Principal Accountant General
76
Annual Report 2005-06
REPLIES TO THE COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA ON THE
ACCOUNTS OF RASHTRIYA ISPAT NIGAM LIMITED, VISAKHAPATNAM FOR THE YEAR ENDED
31ST MARCH 2006, UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956.
Comment Reply
A. PROFIT & LOSS ACCOUNT
Profit for the year: Rs.1882.69 crore
1. The above amount is understated by Rs.2.37
crore on account of following:
The interest income on Term Deposits at the end of year
(i) Short accountal of interest (Interest earned- is recognized based on the certifications issued by the
Schedule 18) amounting to Rs. 1.02 crore Banks. The Banks would pay interest on maturity as
accrued on term deposits with various banks per the terms. Therefore, there would not be any loss of
upto 31st March 2006. interest.
(ii) Under-valuation of Semi finished/ finished Noted. It will be taken care in future.
goods by Rs.1.78 crore due to not taking into
account the cost of a raw material consumed.
3. The State Government of Andhra Pradesh Noted. If the issue is not settled in the year 2006-07,
demanded (December 2005) a sum of Rs.7.57 the fact will be disclosed in the Accounts for the year
crore towards Company's share of expendi- 2006-07.
ture for works relating to Yeleru Water sup-
ply scheme, against which a provision of
Rs.1.93 crore exist in the books. The Com-
pany took up the matter with the State Gov-
ernment for the remaining disputed amount
of Rs.5.64 crore. Pending settlement of the
matter the Company has neither provided the
liability of Rs.5.64 crore nor disclosed the
fact in the accounts
77
Rashtriya Ispat Nigam Ltd.
(This review of Accounts is prepared without taking into account the comments of C&AG of India under Section 619(4) of the Companies
Act, 1956 and the qualifications of the Statutory Auditors)
1. FINANCIAL POSITION
The table below summarises the financial position of the Company under broad headings for the last three years:
( Rs. in crore )
ASSETS
f) Gross Block 8709.72 8763.49 8832.13
g) Less: Cumulative Depreciation 5337.59 6322.18 6753.87
h) Net Block 3372.13 2441.31 2078.26
i) Assets held for disposal 0.03 0.00 0.01
j) Capital Work-in-Progress 25.45 61.07 180.73
k) Investments* 0.00 0.00 0.00
l) Current Assets, Loans & Advances 2726.69 6047.52 8252.00
m) Miscellaneous Expenditure 61.45 43.02 24.87
(to the extent not written-off)
n) Accumulated Loss 2914.09 905.99 0.00
Total 9099.84 9498.91 10535.87
* Investments amounted to Rs.0.03 lakhs and hence are shown as NIL in Crore Rupees.
78
Annual Report 2005-06
2. RATIO ANALYSIS
Some important financial ratios on the financial health and working of the Company at the end of last three years are as under :
2003-04 2004-05 2005-06
A) Liquidity Ratios :
Current Ratio 2.36 4.53 5.62
(Current Assets to Current Liabilities
& Provisions and Interest accrued &
due but excluding provision for Gratuity) [k/{d(i)+c(vi)}]
C) Profitability Ratios :
a) Profit before tax to
i) Capital Employed (%) 31 32 21
ii) Net Worth (%) 32 33 23
iii) Sales (%) 25 28 22
b) Profit after tax to Equity (%) * 19.77 25.65 16.00
c) Earning per Share (in Rupees) 316.41 410.67 256.12
* including Preference share capital
3. SOURCES AND UTILISATION OF FUNDS
Funds amounting to Rs. 2236.84 crore from internal and external sources were utilised during the year ended 31 st March, 2006 as
given below:
(Rs. in crore)
A) SOURCES OF FUNDS
a) Funds from Operations 1708.80
b) Sale of Fixed Assets 1.16
c) Increase in borrowings 368.65
d) Increase in Deferred Tax Liability 158.23
Total Funds inflow during the year 2236.84
B) UTILISATION OF FUNDS
e) Increase in Working Capital 2072.42
f) Increase in Fixed Assets 164.42
Total funds outflow during the year 2236.84
79
Rashtriya Ispat Nigam Ltd.
4. CAPACITY UTILISATION
The following table indicates the position of capacity utilisation of different production facilities for the last three years :
80
Annual Report 2005-06
5. WORKING RESULTS
The Company started Commercial Production in 1990-91. The following table indicates the position of Sales and Profit/Loss(-)
for the last three years:
(Rs. in crore)
6. INVENTORIES
The following table indicates the position of inventory at the end of last three years:
( Rs. in crore)
The stock of raw materials in terms of number of months consumption increased from 1.09 in 2003-04 to 1.75 in 2004-05 and decreased
to 1.58 in 2005-06.
SUNDRY DEBTORS :
Considered Good 85.62 49.30 165.65
Considered Doubtful 20.85 20.28 19.37
Total 106.47 69.58 185.02
Sd/-
( S.B. Pillay )
Principal Accountant General
Place : Hyderabad
Date : 28.07.2006
81
Rashtriya Ispat Nigam Ltd.
Annexure - A
A. Sp. Energy consumption reduced from 6.14 Gcal/t LS in 2004-05 to 6.08 Gcal/tLS in 2005-06 due
to various energy initiatives taken during the year and the production unit wise details are given
below.
1 Sp. Heat consumption in Coke Oven decreased from 641 M.Cal/t DCC in 2004-05 to
629 M Cal/t DCC in 2005-06 by optimization of cross wall temperature in Batteries.
2 Sp. Heat consumption in Blast Furnace decreased from 511 M.Cal/t HM in 2004-05 to
482 M Cal/t HM in 2005-06 by optimization of combustion in BF stoves.
3. Sp. Heat consumption in SMS decreased from 38 M.Cal/t LS in 2004-05 to 35 M Cal/t LS in 2005-
06 by optimization of heating time in Ladle Preparation Bay and Continuous Casting Department.
4. Sp. Heat consumption in Billet Mill decreased from 492M.Cal/t Blooms in 2004-05 to
491 M Cal/t Blooms in 2005-06 by improving rolling rate.
5. Sp. Heat consumption in WRM decreased from 255 M.Cal/t Billets in 2004-05 to243 M Cal/t Billets
in 2005-06 by optimization of Calorific Value and pressure of mixed gas.
6. Sp. Heat consumption in MMSM decreased from 359 M.Cal/t Blooms in 2004-05 to
344 M Cal/t Blooms in 2005-06 by maintaining proper thermal regime.
B. OTHER ACHIEVEMENTS
1. LD gas recovery plant
Total Volume of LD gas recovered 363.56 MNCum
82
Annual Report 2005-06
VSP also focused on export sales to the neighboring countries, Sri Lanka, Bangladesh & Nepal. A total
of 61413 MT of steel materials were exported to Sri Lanka in 2005-06 as against 15683 MT during the
last year. In Nepal, a total of 21894 MT of steel materials were sold as against 5080 MT during the
last year. A huge growth was registered in the export sales to Bangladesh by selling 68397 MT in 2005-
06 as against 4803 MT during the last year.
VSP also sold 15370 MT of steel materials to South East Asian countries in 2005-06 as against 6135
MT during 2004-05.
VSP also sold 20787 MT of WR Coils to the quality conscious market in USA in 2005-06 as against
10147 MT during 2004-05, thereby establishing its superior quality parameters of WRC.
The plan of exports for the year 2006-07 is to achieve a sale of 4.80 lakh MT of Iron and Steel products,
an increase of 57.37% over the export sales of 2005-06.
83
Rashtriya Ispat Nigam Ltd.
FORM - ‘A’
FORM FOR DISCLOURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
A. Power and fuel consumption 2005-06
1) Electricity
a) Purchased ( Net Import from AP TRANSCO) 40389 MWH
b) Gross exported 57549 MWH
c) Imported 97938 MWH
d) Own generation
- Through steam turbine / generator 1784062 MWH
- Through BPTs 106889 MWH
- Through GETS 91664 MWH
2) Coal Consumption
84
Annual Report 2005-06
FORM - ‘B’
FORM FOR DISCLOSURE OF PARTICULARS WITH
RESPECT TO TECHNOLOGY ABSORPTION
b. Study the techno-economics of briquetting of SMS, GCP sludge and charging into the converter for
better waste utilization
c. In-house development of a pot sintering unit and testing the effect of different raw materials and addi-
tives on sinter properties
d. Study the effect of discharge temperature, soaking time, deformation in various stands and rate of
cooling on generation and propagation of cracks in billets and rounds of chromium steel and spring
steel
4. Expenditure on R&D
85
Rashtriya Ispat Nigam Ltd.
Enclosure -1 to Form B
a Effective usage of solid wastes Briquettes were made from GCP sludge, Mill scale etc with
combination of various binders. Attained sufficient physical &
chemical properties of briquettes to charge in SMS converter.
b. Study on usage of pellets, Blast Furnace accepted pellets and sponge iron as alternative
sponge iron as alternative raw raw material with the following results/advantages -
material in the Blast Furnace a. Increase in the Blast intake
b. Increase in the production
c. Decrease in Coke rate
c. Low Temperature Thermal A pilot unit for Low Thermal Desalination was erected at TPP
Desalination - Pilot Plant cooling towers with the help of National Institute of Ocean
studies Technology (NIOT) to utilize the thermal energy of the return
hot water from boilers. Potable water produced from sea water
is near to DM water quality.
Results -
Desalinated Water quality:
Before After
TDS (ppm) 35000 120
Salinity 55 0
d. Study on effect of moisture The influence on charge bulk density by both moisture content
and granulometry on bulk and size was studied at VSP using a bulk density test apparatus
density of charge coal. made from in house design. The study on bulk density vis-à-vis
charge moisture and granulometry provided important information
regarding role of these production factors on oven productivity
and operating regime prevailing inside the oven.
e. Study on scale loss during Experiments were conducted and the results revealed that use
reheating in rolling mills of lime coating and ESPON-HF coating reduce the scale loss
in the reheating furnaces.
2. The new grades of steel developed during the year are as follows:
SAE 1006, SAE 10B21M,
SAE 15B25M, SUP 11A,
35C8, CO2,
SAE 1040
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GKPH 2549422