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Notes to Accounts of Tata Steel Ltd.

Mar 31, 2015

Additional information:

(1) Interest paid is exclusive of and purchase of fixed assets is inclusive of interest capitalised Rs 647.25 crores (2013-14: Rs 310.66 crores).

(2) Investment in subsidiaries represents the portion of purchase consideration discharged in cash during the year and includes application money on investments Nil (2013-14: Rs 4.85 crores).

(3) Includes Rs 0.47crore of Kalimati Investment Company Limited on amalgamation with Tata Steel Limited.

(4) Previous year figures have been recast/restated where necessary.

(2) Terms of repayment of outstanding unsecured borrowings are as follows:

(a) Bonds/Debentures

(i) 10.25% p.a. interest bearing 25,000 debentures of face value Rs 10,00,000 each are redeemable at par in 3 equal annual installments commencing from 6th January, 2029.

(ii) 10.25% p.a. interest bearing 5,000 debentures of face value Rs 10,00,000 each are redeemable at par in 3 equal annual installments commencing from 22nd December, 2028.

(iii) 2.00% p.a. interest bearing 15,000 debentures of face value Rs 10,00,000 each are redeemable at a premium of 85.03% of the face value on 23rd April, 2022.

(iv) 9.15% p.a. interest bearing 5,000 debentures of face value Rs 10,00,000 each are redeemable at par on 24th January, 2021.

(v) 11.00% p.a. interest bearing 15,000 debentures of face value Rs 10,00,000 each are redeemable at par on 19th May, 2019.

(vi) 10.40% p.a. interest bearing 6,509 debentures of face value Rs 10,00,000 each are redeemable at par on 15th May, 2019.

(vii) 9.15% p.a. interest bearing 5,000 debentures of face value Rs 10,00,000 each are redeemable at par on 24th January, 2019.

(viii) 12.50% p.a. interest bearing 12,500 debentures of face value Rs 10,00,000 each, amounting to Rs 833.33 crores are redeemable at par in 2 equal annual installments; the next installment is due on 19th November, 2015.

(ix) 10.20% p.a. interest bearing 6,200 debentures of face value Rs 10,00,000 each are redeemable at par on 7th May, 2015.

(b) Term loans from banks

(i) USD 200.00 million equivalent to Rs 1,250.00 crores (31.03.2014: USD 200.00 million equivalent to Rs 1,198.00 crores) loan is repayable in 3 equal annual installments commencing from 11th March, 2018.

(ii) Indian rupee loan amounting Rs 7,000.00 crores (31.03.2014: Rs 2,000.00 crores) is repayable in 34 quarterly installments commencing from 31st December, 2016 subject to achievement of financial closure of Kalinganagar project debt.

(iii) Indian rupee loan amounting Rs 1,000.00 crores (31.03.2014:Rs 1,500.00crores) is repayable in 3 semi-annual installments; the next installment is due on 30th April, 2016.

(iv) JPY 988.09 million equivalent to Rs 51.48 crores (31.03.2014:JPY 1,097.90 million equivalent to Rs 63.71 crores) loan is repayable in 18 equal semi-annual installments; the next installment is due on 27th July, 2015.

(v) Euro 37.83 million equivalent to Rs 254.17 crores (31.03.2014: Euro 43.23 million equivalent to Rs 356.68 crores) loan is repayable in 14 equal semi-annual installments; the next installment is due on 6th July, 2015.

(vi) Euro 18.77 million equivalent to Rs 126.13 crores (31.03.2014: Euro 23.46 million equivalent to Rs 193.59 crores) loan is repayable in 8 equal semi-annual installments; the next installment is due on 1st July, 2015.

(vii) USD 335.00 million equivalent to Rs 2,093.75 crores (31.03.2014: USD 335 million equivalent to 2,006.65 crores) loan is repayable on 10th June, 2015.

(viii) Euro 2.91 million equivalent to Rs 19.55 crores (31.03.2014: Euro 3.88 million equivalent to Rs32.01 crores) loan is repayable in 6 equal semi-annual installments; the next installment is due on 2nd May, 2015.

(ix) Euro 143.29 million equivalent to Rs 962.84 crores (31.03.2014: Euro 162.40 million equivalent to Rs 1,339.89 crores) loan is repayable in 15 equal semi-annual installments; the next installment is due on 30th April, 2015.

(x) GBP 100.00 million equivalent to Rs 924.31 crores (31.03.2014: GBP 100 million equivalent to Rs 998.35 crores) loan is repayable on 4th April, 2015.

(c) Term loans from financial institutions and others

(i) Indian rupee loan amounting Rs 650.00 crores (31.03.2014: Rs 650.00 crores) is repayable on 16th June, 2019.

(ii) Indian rupee loan amounting Rs 199.00 crores (31.03.2014: Rs 199.00 crores) is repayable on 30th June, 2016.

2. DEFERRED TAX LIABILITIES (NET)

[Item No. 3(b), Page 156]

Deferred tax liabilities

(a) Differences in depreciation and amortisation for accounting and income tax purposes

(b) Prepaid expenses

Deferred tax assets

(a) Employee separation compensation

(b) Provision for doubtful debts and advances

(c) Disallowance under Section 43B of Income Tax Act, 1961

(d) Provision for employee benefits

(e) Redemption Premium on issue of non-convertible debenture

(f) Discount on issue of non-convertible debenture

(g) Fair value changes of cash flow hedges

(h) Others

Additional information:

(1) Includes provision for leave salaries Rs 854.37 crores (31.03.2014: Rs575.98crores).

(2) Provision for employee separation compensation has been calculated on the basis of net present value of the future monthly payments of pension and lump sum benefits under the scheme including Rs 33.52 crores (2013-14: Rs24.84crores) in respect of schemes introduced during the year.

(3) Provision for taxation is after year wise set off against advance payment against taxes.

(1) Additions relating to acquisitions represents addition on amalgamation of Kalimati Investment Company Limited.

(2) Additions and depreciation on assets written off during the year include adjustments for inter se transfers.

(3) Deductions include cost of assets scrapped/surrendered during the year.

(4) Buildings include Rs 2.32 crores (31.03.2014: Rs 2.32 crores) being cost of shares in Co-operative Housing Societies and Limited Companies.

(5) Rupee liability has increased by Rs 31.60 crores (net) (2013-14: Rs 264.98 crores) arising out of realignment of the value of long-term foreign currency loans and vendor retention liability for procurement of fixed assets. This increase has been adjusted in the carrying cost of respective fixed assets and has been depreciated over their remaining depreciable life. The depreciation for the current year has increased by Rs 1.75 crores (2013-14: Rs 15.11 crores) arising on account of this adjustment.

(1) Includes Nil (2013-14:Rs 2.61 crores) being capitalised out of opening work-in-progress of automation division. This has been not considered in claiming research and development expenditure.

Additional information:

(1) Additions include adjustments for inter se transfers.

(2) Development of property represents expenditure incurred on development of mines/collieries.

(3) Addition and gross block of software costs includes cost of software purchased for in-house research recognised facility Nil (2013-14:Rs 0.27crore).

(4) The above intangible assets do not include any internally generated assets.

(1) Include capital advance in respect of research and development activities of Rs 3.19 crores (31.03.2014:Rs 12.78 crores).

(2) Loans and advances to related parties include:

(a) Advance against equity for purchase of shares in subsidiaries, joint ventures and associate Rs 21.28 crores (31.03.2014: Rs 140.79 crores).

(b) Loans and advances in the nature of loans given to subsidiaries and associate Rs 641.36 crores (31.03.2014: Rs 712.84 crores). Disclosure as per clause 32 of the listing agreement:

(3) Advance payment against taxes is after year wise set off against provision for taxation.

(4) Other loans and advances include:

(a) Loan due by an officer of the Company Nil (31.03.2014: Rs81,250)

(b) Intercorporate deposits Rs 2.00 crores (31.03.2014: Rs 2.00 crores)

(5) Loans and advances in the nature of loans and inter-corporate deposits have been given for business purpose.

(1) Represents bank deposits not due for realisation within 12 months of the balance sheet date.

(2) Includes balances with banks held as security against guarantees Rs 29.57 crores (31.03.2014: Rs28.46 crores).

(1) The consumption figures shown above are after adjusting excess and shortages ascertained on physical count, unserviceable items, etc.

(2) Raw materials consumed includes Rs 2,161.10 crores (2013-14: Rs 2,544.67 crores) charged to wages and salaries and other revenue accounts.

(1) Includes components for manufacture of metallurgical machinery Rs 25.96 crores (2013-14:Rs 138.48crores).

3. EXCEPTIONAL ITEMS

[Item No. 4, Page 157]

(a) During the year, the Company divested its stake in The Dhamra Port Company Limited (DPCL) to Adani Ports and Special Economic Zone Limited for Rs 1,121.96 crores and in Lanka Steel Special Steels Limited (LSSL) for Rs 20.32 crores.

''Profit on sale of non-current investments'' represents Rs 787.96 crores and Rs 18.14 crores on account of profit on sale of investments in DPCL and LSSL respectively.

(b) During the year, the Company carried out impairment testing of its exposure in some of its affiliate companies due to the existence of factors indicating probable impairment.

Consequently, an amount of Rs 198.40 crores on account of investment exposure in Tayo Rolls Limited (a subsidiary) and Adityapur Toll Bridge Company Limited (a subsidiary) including advances has been provided for.

The previous year amount of Rs 141.76 crores relates to provision on account of the Company''s exposure in, Tayo Rolls Limited (a subsidiary), Strategic Energy Technology Systems Private Limited (an associate) and Tata Steel Special Economic Zone Limited (a subsidiary).

(c) During the year, the Company has reversed impairment loss of Rs 136.29 crores in respect of land acquired in Gopalpur. The amount was impaired during financial years FY 2004-05 to FY 2013-14. Reversal has been taken keeping in view the setting up of a 55 ktpa Ferro Chrome Plant in Phase-I and setting up of an industrial park through Tata Steel Special Economic Zone Limited (a 100% subsidiary).

(d) During the year, the Company completed the sale of a land at Borivali, Mumbai. ''Profit on sale of non-current assets'' of Rs 1,146.86 crores represents profit on sale of the land.

4. CONTINGENT LIABILITIES AND COMMITMENTS

A. Contingent Liabilities

(a) Claims not acknowledged by the Company

Rs crores As at 31.03.2014

(i) Excise and Service Tax 451.32 415.27

(ii) Customs 13.72 13.71

(iii) Sales Tax and VAT 432.33 283.25

(iv) State Levies 264.97 271.73

(v) Suppliers and Service Contract 82.07 80.38

(vi) Labour Related 51.71 48.85

(vii) Income Tax 301.11 107.55

(viii) Royalty 14.01 14.01

(b) Claim by a party arising out of conversion arrangement - Rs 195.82 crores (31.03.2014: Rs 195.82 crores).The Company has not acknowledged this claim and has instead filed a claim of Rs 139.65 crores (31.03.2014: Rs 139.65 crores) on the party. The matter is pending before the Calcutta High Court.

(c) The State Government of Odisha introduced "Orissa Rural Infrastructure and Socio Economic Development Act, 2004" with effect from February 2005 levying tax on mineral bearing land computed on the basis of value of minerals produced from the mineral bearing land. The Company had filed a Writ Petition in the High Court of Orissa challenging the validity of the Act. Orissa High Court held in November 2005 that State does not have authority to levy tax on minerals. The State Government of Odisha moved to the Supreme Court against the order of Orissa High Court and the case is pending with Supreme Court. The potential liability, as of 31st March, 2015 would be approximately Rs 4,805.18 crores (31.03.2014: Rs 3,946.65 crores).

(d) Interest expenditure on loans taken for acquisition of a subsidiary has been disallowed in assessments with tax demand raised for Rs 715.01 crores (31.03.2014: Rs 453.00 crores).Company has deposited Rs 340.00 crores (31.03.2014: Rs 300.00 crores) as a precondition to prefer appeals. The Company expects to sustain its position on ultimate resolution of the appeals.

(e) For the purpose of payment of royalty, there are two salient provisions viz: Section 9 in Mines and Minerals (Development and Regulation) Act 1957, related to the incidence of royalty and Rules 64B and 64C of Mineral Concession Rules, 1960. The Company has been paying royalty on coal extracted from its quarries pursuant to the judgment and order dated 23 rd July, 2002 passed by the Jharkhand High Court. However, the State Government demanded royalty at rates applicable to processed coal. Though the Company contested the above demand, it started paying, under protest, royalty on processed coal from November 2008. The demand of the state mining authority was confirmed by the High Court vide its Judgment dated 12th March, 2014. The Court concluded that the State cannot claim interest till the Hon''ble Supreme Court decides the pending SLP''s filed by State and Company in the year 2004.

In the appeals filed by Tata Steel in respect of the issues related to Coal royalty, the Hon''ble Supreme Court has pronounced the judgment on 17th March, 2015 in which it has interpreted Section 9 and approved the law that removal of coal from the seam in the mine and extracting it through the pithead to the surface satisfies the requirement of Section 9 (charging section) of the MMDR Act in order to give rise to a liability for royalty. In regard to the interpretation of Rules 64B and 64C of MC Rules, the Supreme Court has clarified that the constitutional validity or the vires of the Rules has not been adjudicated upon. Therefore it is open to Tata Steel either to revive the appeals limited to this question or to separately challenge the constitutionality and vires of these Rules. It is also pertinent to mention that the Union of India in its counter-affidavit has stated that the provisions of Rules 64B and 64C may not be applicable to the mineral coal.

All demands are solely based on application of Rules 64B and 64C. In view of (i) the clear interpretation of charging Section 9 by Supreme Court by three judges Bench following two earlier three Judge Bench orders (ii) the affidavit of Union of India and (iii) the liberty given by Supreme Court, the Company is of the opinion that any related present/probable demands are not payable. Out of the principal demand of '' 190.25 crores, an amount of Rs 163.80 crores has been paid till FY 15 and balance has been provided for. Interest amount of Rs 318.45 crores (31.03.2014: Rs 301.83 crores) has been considered as contingent liability.

(f) The Company pays royalty on ore on the basis of quantity removed from the leased area at the rates based on notification by the Ministry of Mines, Government of India and the price published by India Bureau of Mines (IBM) on a monthly basis. A demand of Rs 411.08 crores has been raised by Deputy Director of Mines, Joda, claiming royalty at sized ore rates on despatches of ore fines. The Company has filed a revision petition on 14th November, 2013 before the Mines Tribunal, Government of India, Ministry of Mines, New Delhi, challenging the legality and validity of the demand raised and also to grant refund of royalty excess paid by the Company. Mines tribunal vide its order dated 13th November, 2014 has stayed the demand of royalty on iron ore for Joda east of Rs 314.28 crores upto the period ending 31st March, 14. For the demand of Rs 96.80 crores for April 14 to September 14, a separate revision application will be filed before Mines Tribunal. Accordingly, the demand of Rs 411.08 crores (31.03.2014: Rs 148.15 crores) has been considered as a contingent liability.

(g) In 2008-09, NTT DoCoMo Inc (Docomo) entered into an Agreement with Tata Teleservices Ltd. (TTSL) and Tata Sons Limited to acquire 20% of the equity share capital under the primary issue and 6% under the secondary sale from Tata Sons Limited. In terms of the Agreements with Docomo, Tata Sons Limited, inter alia, agreed to provide various indemnities and a Sale Option entitling Docomo to sell its entire shareholding in 2014 at a minimum pre-determined price of Rs 58.045 per share if certain performance parameters were not met by TTSL. The minimum pre-determined price represented 50% of the acquisition price of 2008-09. The Agreements are governed by Indian Law.

The Company in 2008-09 had accepted an offer made voluntarily by Tata Sons Limited to all shareholders of TTSL to participate pro-rata in the secondary sale to Docomo together with bearing liabilities, if any, including the Sale Option in proportion of the number of shares sold by the Company to the aggregate Secondary Sale to Docomo. Accordingly, an Inter se Agreement was executed by the Company with Tata Sons and other Selling Shareholders. The Company sold 52,46,590 shares of TTSL to Docomo at Rs 116.09 per share, resulting in a profit of Rs 49.77 crores. The Company is obliged to acquire 2,58,83,846 shares of TTSL in the above proportion in the event the Sale Option is exercised by Docomo.

Docomo has exercised the Sale Option in July, 2014 and has called upon Tata Sons Limited to acquire its entire shareholding in TTSL at the pre-determined price of Rs 58.045 per share. Tata Sons Limited has in turn informed the Company that they may be called upon to acquire 2,58,83,846 shares, in terms of its original offer to the Company and the inter-se agreement to participate in the Secondary Sale.

Tata Sons have also informed the Company that the Reserve Bank of India have not permitted acquisition of the shares at the pre-determined price and have advised that the acquisition can only be made at Fair Market Value (FMV) prevailing at the time of the acquisition. The FMV determined as at 30th June, 2014 is Rs 23.34 per share. Tata Sons Limited has conveyed to Docomo its willingness to acquire the shares at Rs 23.34 per share, however, Docomo reiterated its position that the shares be acquired at Rs 58.045 per share.

Docomo have initiated Arbitration in the matter.

The liability, if any, to the extent of the difference in price sought by Docomo and the Fair Market Value is dependent upon the outcome of the Arbitration and prevailing Exchange Control Regulations.

(h) Bills discounted Rs 260.83 crores (31.03.2014: Rs 369.59 crores).

B. Commitments

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for: Rs 6,466.63 crores (31.03.2014: Rs8,830.93 crores).

(b) Uncalled liability on partly paid shares and debentures Rs 0.01 crore (31.03.2014: Rs 0.01 crore).

5. The Company has given undertakings to: (a) IDBI not to dispose of its investment in Wellman Incandescent India Ltd., (b) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd., (c) Standard Chartered Bank, State Bank of India not to dispose of majority stake in Tata Steel (KZN) (Pty) Ltd., (d) Mizuho Corporate Bank Limited and Japan Bank of International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte Limited, (minimal stake required to be able to provide a corporate guarantee towards long-term debt), (e) Standard Chartered Bank, Singapore not to dispose of the management control (directly held) in NatSteel Asia Pte. Ltd., (f) ICICI Bank Limited not to dispose of its investment in the Jamshedpur Continuous Annealing and Processing Company Private Limited, (g) Sumitomo Mitsui Banking Corporation not to dispose of the management control in Tata Metaliks Di Pipes Limited (Formerly known as Tata Metaliks Kubota Pipes Limited) held through Tata Metaliks Ltd. so long as the dues to Sumitomo Mitsui Banking Corporation is subsisting by Tata Metaliks DI Pipes Limited, without the prior consent of the respective financial institutions/banks so long as any part of the loans/facilities sanctioned by the institutions/banks to these companies remains outstanding.

The Company has furnished a security bond in respect of its immovable property to the extent of Rs 20 crores in favour of the Registrar of the Delhi High Court and has given an undertaking not to sell or otherwise dispose of the said property.

The Promoters of Tata BlueScope Steel Limited (TBSSL) (i.e. BlueScope Steel Asia Holdings Pty Limited, Australia and Tata Steel Limited) have given an undertaking to IDBI Trusteeship Services Ltd., Debenture Trustees, and to State Bank of India not to reduce collective shareholding in TBSSL, below 51% without prior consent of the Lender. Further, The Company has given an undertaking to State Bank of India to intimate them before diluting its shareholding in TBSSL below 50%.

The Promoters'' (i.e. The Tata Power Company Limited and Tata Steel Limited) combined investments in Industrial Energy Limited (IEL) representing 51% of lEL''s paid-up equity share capital are pledged with Infrastructure Development Finance Corporation Limited (IDFC).

The Company has agreed, if requested by Tata Steel UK Holdings Limited (TSUKH), an indirect wholly owned subsidiary of Tata Steel Limited, to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.

The Company has agreed, on request by Jamshedpur Utilities & Services Company Limited, to extend continued support in operational and financial matters for the next twelve months ending 31st March, 2016 subject to the condition that the financial support extended will not exceed Rs 77 crores at any point of time during the twelve months period.

The Company has given guarantees aggregating Rs 13,761.45 crores (31.03.2014: Rs2,224.38 crores).

(a) In favour of Timken India Limited for Rs 80.00 crores (31.03.2014: Rs80.00crores) against renewal of lease of land pending with State Government and further '' 1.07 crores (31.03.2014: Rs 1.07crores) on behalf of Timken India Limited to Commissioner of Customs in respect of goods imported.

(b) In favour of Mizuho Corporate Bank Ltd., Japan for Rs 78.89 crores (31.03.2014: Rs 179.70 crores) against the loan granted to Tata NYK Shipping Pte. Ltd.

(c) In favour of The President of India for Rs 177.18 crores (31.03.2014:Rs 177.18crores) against performance of export obligation under the various bonds executed by Jamshedpur Continuous Annealing and Processing Company Private Limited.

(d) In favour of Note holders for Rs 11,718.75 crores (31.03.2014:Nil) and Rs 1,705.41 crores (31.03.2014:Rs 1,786.28 crores) against due and punctual repayment of all amounts payable towards issued Guaranteed Notes by ABJA Investment Co. Pte. Ltd.

(e) In favour of President of India for Rs 0.15 crore (31.03.2014: Rs 0.15 crore) as bank guarantee against advance license.

6. The Company had, on 20th August, 2005, signed an agreement with the Government of Jharkhand to participate in a special health insurance scheme to be formulated by the Government of Jharkhand for the purpose of providing medical facilities to the families of the people below poverty line. The State Government would develop a suitable scheme and the Company has agreed to contribute to such scheme, when operational, a sum of Rs 25 crores annually for a period of 30 years or upto the year of operation of the scheme whichever is lower. The matter is under discussion and no contribution has been made till 31st March, 2015.

7. Odisha legislative assembly issued an amendment to Indian Stamp Act on 9th May, 2013 and inserted a new provision (Section 3a) in respect of stamp duty payable on grant/renewal of mining leases. As per the amended provision, stamp duty is levied equal to 15% of the average royalty that would accrue out of the highest annual extraction of minerals under the approved mining plan multiplied by the period of such mining lease. The Company had filed a writ petition challenging the constitutionality of the Act on 5th July, 2013. The Hon''ble High Court, Cuttack passed an order on 9th July, 2013 granting interim stay on the operation of the Amendment Act, 2013. As a result of the stay, as on date, the Act is not enforceable and any demand received by the Company is not liable to be proceeded with. Meanwhile, the Company received demand notices for the various mines at Odisha totalling to Rs 5,579 crores. On the basis of external legal opinion, the Company has concluded that it is remote that the claim will sustain on ultimate resolution of the legal case by the courts.

In April, 2015 the Company has received an intimation from Government of Odisha, granting extension of validity period for leases under the MMDR Amendment Act, 2015 up to 31st March, 2030 in respect of eight mines and up to 31st March, 2020 for one more mine subject to execution of supplementary lease deed within 3 months from the date of the intimation. Liability has been provided in the books of accounts as on 31st March, 2015 as per the existing provisions of the Stamp Act 1899 and the Company has since paid the stamp duty and registration charges totalling Rs. 326.78 crores for supplementary deed execution in respect of seven mines out of the above mines.

8. Demand notices have been raised by Deputy Director of Mines, Odisha amounting to Rs 3,828 crores for the excess production over the quantity permitted under the mining plan scheme, environment clearance or consent to operate, during the period 2000-01 to 2009-10. The demand notices have been raised under Section 21(5) of the Mines & Minerals (Development and Regulations) Act (MMDR). However, the Act specifies that demand can be raised only when the land is occupied without lawful authority. The Company is of the view that Section 21(5) of the MMDR Act is not applicable as the mining is done within the sanctioned mining lease area and accordingly the Company has filed revision petitions before the Mines Tribunal against all such demand notices. Consequent to it stay has been granted by the Mines Tribunal against the entire demand of Rs 3,828 crores and directed the State that no coercive action should be taken for recovery of demand.

Based on the judgment of Hon''ble High court of Jharkhand on 11th December, 2014 in the matter of our writ petition for renewal of lease and continuation of operation at Noamundi iron mine, the Government of Jharkhand approved the renewal of lease of Noamundi Mines by an express order on 31st December, 2014. Express Order also held that the mining operation carried out between 1st January, 2012 to 31st August, 2014 to be unlawful and computed an amount of Rs 3,568 crores on account of such alleged unlawful mining. The Mines and Minerals Development and Regulation (MMDR) Amendment Ordinance 2015 promulgated on 12th January, 2015 provides for renewal of the above mines.

Based on the new Ordinance, Jharkhand Government revised the Express order on 12th February, 2015 for lease renewal up to 31st March, 2030 with following terms and conditions:

- Value of Iron Ore produced by alleged unlawful mining during the period 1.1.12 to 20.04.2014 for Rs 2,994.49 crores to be decided on the basis of disposal of our writ petition before Hon''ble High Court of Jharkhand.

- Value of Iron Ore produced from 21.4.2014 to 17.7.2014 amounting to Rs 421.83 crores to be paid in maximum 3 installments.

- Value of Iron Ore produced from 18.7.2014 to 31.08.2014 i.e. Rs 152 crores to be paid immediately.

The Company has paid Rs 152 crores under protest. District Mining Officer Chaibasa on 16th March, 2015 has issued demand note for payment of Rs 421.83 crores, payable in three monthly instalments. The Company replied on 20th March, 2015, since the lease has been extend till 31st March, 2030, the above demand is not tenable. No fresh demand has been issued thereafter. At present, the formalities for renewal of lease is under process with Government of Jharkhand.

9. The Income Tax department raised demand on account of Excess mining in the assessment for Assessment Year 2009-10, subsequently quashed by the Dispute Resolution Panel. Tax department reopened assessments of the earlier years on the same ground and raised cumulative demand of Rs 1,086 crores. The Company has obtained stay on the demand raised, with expectation of succeeding in appeals preferred by the department, to the higher appellate authorities. In the meantime the Company has succeeded in getting a favourable order from the Dispute Resolution Panel for Assessment Year 2010-11.

(1) The consumption figures shown above are after adjusting excess and shortages ascertained on physical count, unserviceable items, etc.

(2) In respect of items which are purchased both from indigenous and imported sources, the identity of individual items consumed cannot be established but segregation of consumption between imported and indigenous sources has been made on a reasonable approximation determined from the Company''s records.

(3) Raw materials consumed includes Rs 2,161.10 crores (2013-14: Rs2,544.67crores)charged to wages and salaries and other revenue accounts.

(4) Stores and spares consumed (including write-off of obsolete spares, if any) includes Rs 74.65 crores (2013-14: Rs 192.84 crores) being cost of stores manufactured departmentally and charged to wages and salaries and other revenue accounts.

(c) Expenditure in foreign currency:

(d) Remittance in foreign currencies for dividend:

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividend have been made by/on behalf of non-resident shareholders. The particulars of dividend payable to non-resident shareholders (including non-resident Indian shareholders) which were declared during the year are as under:

(f) Revenue expenditure charged to Statement of Profit and Loss in respect of research and development activities undertaken during the year is Rs 107.87 crores (2013-14: Rs 68.45 crores) including depreciation of Rs 4.80 crores (2013-14: Rs 2.07 crores). Capital expenditure in respect of research and development activities undertaken during the year is Rs 25.93 crores (2013-14:Rs 12.06 crores).

(g) (i) Amount required to be spent by the Company on Corporate Social Responsibility (CSR) activities during the year was Rs 168.26 crores.

(ii) Revenue expenditure charged to Statement of Profit and Loss in respect of Corporate Social Responsibility (CSR) activities undertaken during the year is Rs 161.31 crores [Rs 157.91 crores has been paid in cash and Rs 3.40 crores is yet to be paid in cash]. Capital expenditure incurred during the year in construction of capital assets under CSR projects is Rs 10.15 crores [Rs 9.43 crores paid in cash and Rs 0.73 crores is yet to be paid in cash].

10. The Committee of Directors in their meeting held on 10th April, 2013 approved the scheme of amalgamation of Tata Metaliks Ltd. and Tata Metaliks Kubota Pipes Limited with an appointed date of 1st April, 2013. The Scheme is subject to the approval of the High Courts of Judicature at Bombay and Calcutta. As on 31st March, 2015, the final approval from both the Courts was pending.

11. 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, 2015 are as under:

(a) The Company has recognised, in the Statement of Profit and Loss for the year ended 31st March, 2015, an amount of Rs 283.34 crores (2013-14: Rs251.71 crores) as expenses under the following defined contribution plans.

(b) The Company operates post retirement defined benefit plans as follows:

(i) Funded

- Post Retirement Gratuity

(ii) Unfunded

- Post Retirement Medical Benefits

- Pensions to Directors

- Farewell Gifts

- Packing and Transportation Costs on Retirement

(c) Details of the post retirement gratuity plan are as follows:

The long-term estimate of the expected rate of return on the plan assets have been arrived at based on the asset allocation and prevailing yield rates on such assets. The major portions of the assets are invested in GOI Securities, PSU bonds and LIC. Assumed rate of return on assets is expected to vary from year to year reflecting the returns on matching Government Bonds.

Additional information:

(1) The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisational structure and internal reporting system. The Company''s operations predominantly relate to manufacture of Steel and Ferro Alloys and Minerals business. Other business segments comprise Tubes and Bearings.

(2) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallocated corporate cost. Assets and liabilities that cannot be allocated between the segments are shown as unallocated corporate assets and liabilities respectively.

(3) Unallocable Assets and Liabilities exclude:

12. DERIVATIVE INSTRUMENTS

(a) The Company has entered into the following derivative instruments. All the swaps and forward contracts are accounted for as per Accounting Policies stated in Note 1 annexed to Balance Sheet and Statement of Profit and Loss.

(i) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations. The use of foreign currency forward contracts is governed by the Company''s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

Outstanding short-term forward exchange contracts and option contracts entered into by the Company on account of payables including forecast payables:

* Represents outstanding long-term forward exchange contracts used to hedge currency risk of Euro and GBP against USD. The corresponding USD exposure has been disclosed under unhedged loans payable.

(Long-term forward exchange contracts outstanding as on 31st March, 2015 have been used to hedge the foreign currency risk on repayment of External Commercial Borrowings and Export Credit Agency Borrowings of the Company).

(ii) The Company also uses derivative contracts other than forward contracts to hedge the interest rate and currency risk on its capital account. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments, consistent with the Company''s Risk Management Policy. The Company does not use these contracts for speculative purposes.

Outstanding Interest Rate Swaps to hedge against fluctuations in interest rate changes:

13. The Board recommended dividend of Rs 8.00 per Ordinary Share (2013-14: Rs 10 per Ordinary Share) of Rs 10 each for the year ended 31st March, 2015. The dividend is subject to the approvals of the shareholders at the Annual General Meeting. The total dividend payout (including tax on dividend) works out to Rs 929.99 crores (2013-14:Rs 1,037.40crores) for the Company.

14. Previous year''s figures have been recast/restated where necessary.

15. Figures in italics are in respect of the previous year.


Mar 31, 2014

1. Particulars of securities convertible into Ordinary Shares:

In November 2009, the Company had issued 5,469.35 numbers of 4.5% Foreign Currency Convertible Bonds (FCCBs) of face value USD 0.1 million each aggregating to USD 546.935 million. These represent 4,28,28,141 (31.03.2013: 4,25,96,510) underlying shares and are convertible at any time on or after 31st December, 2009 and upto 11th November, 2014 by the holders of such FCCBs at a conversion price of f 592.0385 per share (31.03.2013:Rs.595.2578 per share) and at a fixed USD/ INR conversion rate of 46.36.

2. 2,88,75,320 shares (31.03.2013: 2,17,38,923 shares) of face value of Rs. 10 per share represent the shares underlying GDRs which were issued during 1994 and 2010. Each GDR represents one underlying Ordinary Share.

3. The rights, powers and preferences relating to each class of share capital and the qualifications, limitations and restrictions thereof are contained in the Memorandum and Articles of Association of the Company. The principle rights are as follows:

A. Ordinary Shares of Rs. 10 each

(a) In respect of every Ordinary Share (whether fully paid or partly paid), voting right shall be in the same proportion as the capital paid up on such Ordinary Share bears to the total paid up Ordinary Capital of the Company.

(b) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

(c) In the event of liquidation, the shareholders of Ordinary Shares are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b. ''A'' Ordinary Shares of Rs. 10 each

(a) (i) The holders of ''A'' Ordinary Shares shall be entitled to such rights of voting and/or dividend and such other rights as per the terms of the issue of such shares, provided always that:

in the case where a resolution is put to vote on a poll, such differential voting entitlement (excluding fractions, if any) will be applicable to holders of ''A'' Ordinary Shares.

In the case where a resolution is put to vote in the meeting and is to be decided on a show of hands, the holders of ''A'' Ordinary Shares shall be entitled to the same number of votes as available to holders of Ordinary Shares.

(ii) The holders of Ordinary Shares and the holders of ''A'' Ordinary Shares shall vote as a single class with respect to all matters submitted for voting by shareholders of the Company and shall exercise such votes in proportion to the voting rights attached to such shares including in relation to any scheme under Sections 391 to 394 of the Act.

(b) The holders of ''A'' Ordinary Shares shall be entitled to dividend on each ''A'' Ordinary Share which may be equal to or higher than the amount per Ordinary Share declared by the Board for each Ordinary Share, and as may be specified at the time of the issue. Different series of ''A'' Ordinary Shares may carry different entitlements to dividend to the extent permitted under applicable law and as prescribed under the terms applicable to such issue.

C. preference Shares

The Company has two classes of preference shares i.e. Cumulative Redeemable Preference Shares (CRPS) of Rs. 100 per share and Cumulative Convertible Preference Shares (CCPS) of Rs. 100 per share.

(a) Such shares shall confer on the holders thereof, the right to a fixed preferential dividend from the date of allotment, at a rate as may be determined by the Board at the time of the issue, on the capital for the time being paid up or credited as paid up thereon.

(b) Such shares shall rank for capital and dividend (including all dividend undeclared upto the commencement of winding up) and for repayment of capital in a winding up, pari passu inter se and in priority to the Ordinary Shares of the Company, but shall not confer any further or other right to participate either in profits or assets. However, in case of CCPS, such preferential rights shall automatically cease on conversion of these shares into Ordinary Shares.

(c) The holders of such shares shall have the right to receive all notices of general meetings of the Company but shall not confer on the holders thereof the right to vote at any meetings of the Company save to the extent and in the manner provided in the Companies Act, 1956, or any re-enactment thereof.

(d) CCPS shall be converted into Ordinary Shares as per the terms, determined by the Board at the time of issue; as and when converted, such Ordinary Shares shall rank pari passu with the then existing Ordinary Shares of the Company in all respects.

The Company has filed a writ petition before the High Court at Kolkata in February 2006 claiming waiver of the outstanding loan and interest and refund of the balance lying with Steel Development Fund and the matter is sub-judice.

Loan from the Joint Plant Committee-Steel Development Fund includes Rs. 1,599.73 crores (31.03.2013:Rs.1,517.07 crores) representing repayments and interest on earlier loans for which applications of funding are awaiting sanction is not secured by charge on movable assets of the Company.

(2) Terms of repayment of outstanding unsecured borrowings are as follows:

(a) Bonds/Debentures

(i) 10.25% p.a. interest bearing 25,000 debentures of face value Rs. 10,00,000 each are redeemable at par in 3 equal annual instalments commencing from 6th January, 2029.

(ii) 10.25% p.a. interest bearing 5,000 debentures of face value Rs. 10,00,000 each are redeemable at par in 3 equal annual instalments commencing from 22nd December, 2028.

(iii) 2.00% p.a. interest bearing 15,000 debentures of face value Rs. 10,00,000 each are redeemable at a premium of 85.03% of the face value on 23rd April, 2022.

(iv) 9.15% p.a. interest bearing 5,000 debentures of face value Rs. 10,00,000 each are redeemable at par on 24th January, 2021.

(v) 11.00% p.a. interest bearing 15,000 debentures of face value Rs. 10,00,000 each are redeemable at par on 19th May, 2019.

(vi) 10.40% p.a. interest bearing 6,509 debentures of face value Rs. 10,00,000 each are redeemable at par on 15th May, 2019.

(vii) 9.15% p.a. interest bearing 5,000 debentures of face value Rs. 10,00,000 each are redeemable at par on 24th January, 2019.

(viii) 10.20% p.a. interest bearing 6,200 debentures of face value Rs. 10,00,000 each are redeemable at par on 7th May, 2015.

(ix) 12.50% p.a. interest bearing 12,500 debentures of face value Rs. 10,00,000 each are redeemable at par in 3 equal annual instalments commencing from 19th November, 2014.

(b) Term loans from banks

(i) USD 200.00 million equivalent to Rs. 1,198.00 crores (31.03.2013: Nil) loan is repayable in 3 equal annual instalments commencing from 11th March, 2018.

(ii) Indian rupee loan amounting Rs. 2,000.00 crores (31.03.2013: Nil) is repayable in 34 quarterly instalments commencing from 31st December, 2016 subject to achievement of financial closure of Kalinganagar project debt within 12 months from the date of first disbursement.

(iii) USD 335.00 million equivalent to Rs. 2,006.65 crores (31.03.2013: USD 335 million equivalent toRs.1,818.55 crores) loan is repayable on 10th June, 2015.

(iv) Indian rupee loan amounting Rs. 1,500.00 crores (31.03.2013: Rs. 2,000.00 crores) is repayable in 5 semi-annual instalments commencing from 30th April, 2015.

(v) GBP 100.00 million equivalent to Rs. 998.35 crores (31.03.2013: GBP 100 million equivalent toRs.822.14 crores) loan is repayable on 4th April, 2015.

(vi) JPY 1,097.90 million equivalent to Rs. 63.71 crores (31.03.2013: JPY 4.5 million equivalent toRs.0.26 crore) loan is repayable in 20 equal semi-annual instalments commencing from 27th July, 2014.

(vii) Euro 43.23 million equivalent to Rs. 356.68 crores (31.03.2013: Euro 48.63 million equivalent toRs.338.46 crores) loan is repayable in 16 equal semi-annual instalments; the next instalment is due on 6th July, 2014.

(viii) Euro 23.46 million equivalent to Rs. 193.59 crores (31.03.2013: Euro 28.16 million equivalent toRs.195.95 crores) loan is repayable in 10 equal semi-annual instalments; the next instalment is due on 1st July, 2014.

(ix) USD 19.59 million equivalent to Rs. 117.36 crores (31.03.2013: USD 19.59 million equivalent toRs.106.36 crores) loan is repayable on 4th June, 2014.

(x) Euro 3.88 million equivalent to Rs. 32.01 crores (31.03.2013: Euro 4.85 million equivalent toRs.33.75 crores) loan is repayable in 8 equal semi-annual instalments; the next instalment is due on 2nd May, 2014.

(xi) Euro 162.40 million equivalent to Rs. 1,339.89 crores (31.03.2013: Euro 181.50 million equivalent toRs.1,263.15 crores) loan is repayable in 17 equal semi-annual instalments; the next instalment is due on 30th April, 2014.

(c) Term loans from financial institutions and others

(i) Indian rupee loan amounting Rs. 650.00 crores (31.03.2013:Rs.650.00 crores) is repayable on 16th June, 2019.

(ii) Indian rupee loan amounting Rs. 199.00 crores (31.03.2013:Rs.199.00 crores) is repayable on 30th June, 2016.

4. CONTINGENT LIABILITIES AND COMMITMENTS

A. Contingent Liabilities

(a) Claims not acknowledged by the Company

Rs. crores

As at 31.03.2013

(i) Excise and Service Tax 415.27 466.21

(ii) Customs 13.71 13.70

(iii) Sales Tax and VAT 283.25 386.68

(iv) State Levies 271.73 268.14

(v) Suppliers and Service Contract 80.38 77.52

(vi) Labour Related 48.85 45.23

(vii) Income Tax 107.55 8.11

(viii) Royalty 14.01 14.01

(b) The Company has given guarantees aggregating Rs. 2,224.38 crores (31.03.2013:Rs.579.91 crores) on behalf of others. As at 31st March, 2014, the contingent liabilities under these guarantees amounts to Rs. 2,224.38 crores (31.03.2013:Rs.579.91 crores).

(c) Claim by a party arising out of conversion arrangement - Rs. 195.82 crores (31.03.2013:Rs.195.82 crores). The Company has not acknowledged this claim and has instead filed a claim of Rs. 139.65 crores (31.03.2013: f 139.65 crores) on the party. The matter is pending before the Calcutta High Court.

(d) The State Government of Odisha introduced "Orissa Rural Infrastructure and Socio Economic Development Act, 2004" with effect from February 2005 levying tax on mineral bearing land computed on the basis of value of minerals produced from the mineral bearing land. The Company had filed a Writ Petition in the High Court of Orissa challenging the validity of the Act. Orissa High Court held in November 2005 that State does not have authority to levy tax on minerals. The State Government of Odisha moved to the Supreme Court against the order of Orissa High Court and the case is pending with Supreme Court. The potential liability, as of 31st March, 2014 would be approximately Rs. 3,946.65 crores (31.03.2013:Rs.3,006.46 crores).

(e) Interest expenditure on loans taken and deployed for Corus acquisition has been disallowed in assessments with tax demand raised for Rs. 453 crores. Company has deposited Rs. 300 crores as a precondition to prefer appeals and is reasonably confident of succeeding in litigation, on due consideration of facts and legal position.

(f) The Company has been paying royalty on coal extracted from its quarries pursuant to the judgement and order dated 23rd July, 2002 passed by the Jharkhand High Court. However, the State Government demanded royalty at rates applicable to processed coal. Though the Company has contested the above demand, it has started paying, under protest, royalty on processed coal from November 2008. The demand of the state mining authority has been Confirmed by High Court vide its Judgment dated 12th March, 2014. High Court has concluded that the State cannot claim interest till the Hon''ble Supreme Court decides the pending SLP''s filed by State and Company in the year 2004. Company has filed SLP before Supreme Court against the order of the High Court dated 12th March, 2014. In the hearing held on 2nd May, 2014, the case has been referred to the Larger Bench of the Supreme Court. Principal demand amount have been provided in the books. Interest amount of Rs. 301.83 crores (31.03.2013:Rs.453.91 crores including principal demand ofRs.190 crores) has been considered as contingent liability.

(g) The Company pays royalty on ore on the basis of quantity removed from the leased area at the rates based on notification by the Ministry of Mines, Government of India and the price published by India Bureau of Mines (IBM) on a monthly basis.

An additional demand of Rs. 148.15 crores has been raised by Deputy Director of Mines, Joda, claiming royalty at sized ore rates on despatches of ore fines. The Company has filed a revision petition on 14th November, 2013 before the Mines Tribunal, Government of India, Ministry of Mines, New Delhi, challenging the legality and validity of the demand raised and also to grant refund of royalty excess paid by the Company. Accordingly, the demand of Rs. 148.15 crores (31.03.2013:Rs. 79.08 crores) has been considered as a contingent liability.

(h) In terms of Agreements entered into in 2008-09 between Tata Teleservices Ltd. (TTSL), Tata Sons Limited (TSL) and NTT DoCoMo, Inc. of Japan (Strategic Partner-SP), the Company sold to the SP, 52,46,590 equity shares of Tata Teleservices Ltd. ("TTSL") at Rs. 116.09 per share which resulted in a Profit of Rs. 49.77 crores in the same year. Tata Sons Limited is party to a Shareholders Agreement with NTT DoCoMo, Inc. of Japan (Strategic Partner - SP) dated 25th March, 2009 and amended on 21st May, 2010.

The Company has an "inter se" agreement with Tata Sons Limited and other Tata Group companies. Tata Sons Limited has informed the Company as follows:

(i) Under the terms of the Shareholders Agreement if certain performance parameters and other conditions are not met by TTSL by 31 st March, 2014 the SP has an option to divest its entire shareholdings in TTSL at a price being the higher of fair value or Rs. 58.05 per share (i.e. 50 percent of the subscription price) ("Sale Price"), subject to compliance with applicable law and regulations ("Sale Option").

(ii) Tata Sons Limited had offered other shareholders of TTSL, including the Company, the option in 2008-09 to sell to the SP. If Tata Sons Limited becomes obliged to acquire the Sale Shares under the Sale Option the Company can be nominated by it to acquire pro-rated proportions of the Sale Shares based on the number of shares sold by the Company to the SP. On a pro-rated bases the number of shares would be 2,58,83,846 shares out of the Sale Shares. The Company has further agreed to reimburse Tata Sons Limited for any other indemnification claim made on Tata Sons Limited by SP on a similar proportionate basis.

(iii) In the wake of recent regulatory developments in India, Tata Sons Limited has considered its position relating to the possible exercise of the Sale Option under the Shareholders Agreement.

(iv) The Shareholders Agreement obliges Tata Sons Limited to find a buyer for the shares at the Sale Price.

(v) If there is no buyer at the Sale Price, then Tata Sons Limited is obliged to acquire or procure the acquisition of such shares. These obligations are subject to compliance with applicable law and regulations.

(vi) No notice of exercise of the Sale Option has been received although the SP has communicated its board decision to exercise the Sale Option.

(vii) Pending receipt of a notice exercising the Sale Option and in view of applicable law and regulations, the exposure of the Company (if any) cannot be ascertained.

The aforementioned agreements are governed by Indian Law.

(i) Bills discounted 7 369.59 crores (31.03.2013:Rs.469.58 crores).

b. Commitments

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for: Rs. 8,830.93 crores (31.03.2013: f 11,995.60 crores).

(b) Uncalled liability on partly paid shares and debentures 7 0.01 crore (31.03.2013: Rs.0.01 crore).

5. The Company has given undertakings to: (a) IDBI not to dispose of its investment in Wellman Incandescent India Ltd., (b) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd., (c) Standard Chartered Bank, State Bank of India not to dispose of majority stake in Tata Steel (KZN) (Pty) Ltd.,(d) Mizuho Corporate Bank Limited and Japan Bank of International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte Limited, (minimal stake required to be able to provide a corporate guarantee towards long-term debt), (e) State Bank of India not to dispose of the management control (indirectly held) in Tata Steel UK Holdings Limited and Tata Steel Netherlands Holdings B.V. and other companies (the borrower group), (f) Standard Chartered Bank, Singapore not to dispose of the management control (directly held) in NatSteel Asia Pte. Ltd., (g) Sumitomo Mitsui Banking Corporation not to dispose of the management control (indirectly held) in Tata Steel Global Procurement Company Pte. Limited, (h) ICICI Bank Limited not to dispose of its investment in the Jamshedpur Continuous Annealing and Processing Company Private Limited, (i) IL&FS Trust Company Limited, not to transfer, dispose off, assign, charge of lien or in any way encumber its holding in Taj Air Limited, (j) Sumitomo Mitsui Banking Corporation not to dispose of the management control in Tata Metaliks Di Pipes Limited (Formerly known as Tata Metaliks Kubota Pipes Limited) held through Tata Metaliks Ltd. so long as the dues to Sumitomo Mitsui Banking Corporation is subsisting by Tata Metaliks Di Pipes Limited, without the prior consent of the respective financial institutions/banks so long as any part of the loans/facilities sanctioned by the institutions/banks to these companies remains outstanding.

The Company has furnished a security bond in respect of its immovable property to the extent of Rs. 20 crores in favour of the Registrar of the Delhi High Court and has given an undertaking not to sell or otherwise dispose of the said property.

The Promoters of Tata BlueScope Steel Ltd. (TBSSL) (i.e. BlueScope Steel Asia Holdings Pty Limited, Australia and Tata Steel Limited) have given an undertaking to IDBI Trusteeship Services Ltd., Debenture Trustees, not to reduce collective shareholding in TBSSL, below 51%.

In addition to the above undertakings, the Promoters of The Dhamra Port Company Limited (DPCL) i.e. Tata Steel Limited and L&T Infrastructure Development Projects Limited (L&TIDPL) have given an undertaking to a consortium of lenders of DPCL not to reduce collective shareholding in DPCL, held directly or indirectly, below 51%, to retain majority representation on the board of directors and to remain the Promoters of DPCL until the loans are fully repaid.

The Promoters'' (i.e. The Tata Power Company Limited and Tata Steel Limited) combined investments in Industrial Energy Ltd.

(IEL) representing 51% of lEL''s paid-up equity share capital are pledged with Infrastructure Development Finance Corporation Limited (IDFC).

The Company has agreed, if requested by Tata Steel UK Holdings Limited (TSUKH), an indirect wholly owned subsidiary of Tata Steel Limited, to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.

The Company has agreed, if requested by Tayo Rolls Limited to extend support in operational and financial matters subject to the condition that the financial support will not exceed Rs. 79 crores.

The Company has agreed, if requested by Jamshedpur Utilities & Services Company Limited to extend continued support in operational and financial matters for the next twelve months ending 31st March, 2015 subject to the condition that the financial support extended will not exceed Rs. 80 crores at any point of time during the twelve months period.

6. The Company had, on 20th August, 2005, signed an agreement with the Government of Jharkhand to participate in a special health insurance scheme to be formulated by the Government of Jharkhand for the purpose of providing medical facilities to the families of the people below poverty line. The State Government would develop a suitable scheme and the Company has agreed to contribute to such scheme, when operational, a sum of Rs. 25 crores annually for a period of 30 years or upto the year of operation of the scheme whichever is lower. The matter is under discussion and no contribution has been made till 31st March, 2014.

7. Odisha Legislative Assembly issued an amendment to Indian Stamp Act on 9th May, 2013 and inserted a new provision (Section 3A) in respect of stamp duty payable on grant/renewal of mining leases. As per the amended provision, stamp duty is levied equal to 15% of the average royalty that would accrue out of the highest annual extraction of minerals under the approved mining plan multiplied by the period of such mining lease. The Company filed a writ petition challenging the constitutionality of the Act on 5th July, 2013. The Hon''ble High Court, Cuttack has passed an order on 9th July, 2013 granting interim stay on the operation of the Amendment Act, 2013. As a result of the stay, as on date, the Act is not enforceable and any demand received by the Company is not liable to be proceeded with. Meanwhile, the Company has received demand notices for the various mines at Orissa totalling to Rs. 5,579 crores. The Company on the basis of external legal opinion has concluded that it is remote that the claim will sustain against the Company on ultimate resolution of the legal case by the Courts. Liability has been provided in the books of accounts as per the existing provisions of the Stamp Act, 1899.

8. Demand notices have been raised by Deputy Director of Mines, Odisha amounting to Rs. 3,828 crores for the excess extraction over the quantity permitted under the mining plan scheme, environment clearance or consent to operate, during the period 2000-01 to 2009-10. The demand notices have been raised under Section 21(5) of the Mines & Minerals (Development and Regulations) Act (MMDR). However, the Act specifies that demand can be raised only when the land is occupied without lawful authority. The Company is of the view that Section 21(5) of the MMDR Act is not applicable as the mining is done under the approval of the State Government and accordingly the Company has filed revision petitions.

An unconditional stay has been granted by the Mines Tribunal against one of the demand notices, which directed the State that no coercive action should be taken for recovery of demand. The hearing of the balance revision petitions is yet to take place.

9. Tax department raised demand on account of Excess mining in the assessment for assessment year 2009-10, subsequently quashed by the Dispute Resolution Panel. Tax department reopened assessments of the earlier years on the same ground and raised cumulative demand of Rs. 1,086 crores. The Company has obtained stay on the demand raised, with expectation of succeeding in appeals preferred with the higher appellate authorities.

(1) On amalgamation these have been eliminated against investments held by the Company in erstwhile Kalimati Investment Company Limited and the difference of Rs. 0.17 crore has been accounted for under Amalgamation Reserve.

(2) The Company has also recognised Rs. 222.58 crores on account of MAT asset and Rs. 0.10 crore on account of Deferred tax liability which were not recognised in the books of erstwhile Kalimati Investment Company Limited.

(3) Net Profit/loss of Kalimati Investment Company Limited from the appointed date till 31st March, 2013 has been accounted for in the Surplus in the Statement of Profit and Loss in reserves.

(b) The figures for the previous year do not include figures for the erstwhile Kalimati Investment Company Limited and accordingly the current year''s figures are not comparable to those of the previous year.

10. The Committee of Directors in their meeting held on 10th April, 2013 approved the scheme of amalgamation of Tata Metaliks Ltd. and Tata Metaliks Kubota Pipes Limited with an appointed date of 1st April, 2013. The Scheme is subject to the approval of the High Courts of Judicature at Bombay and Calcutta.


Mar 31, 2013

1. EXCEPTIONAL ITEMS

[Item No. 4(a) and 4(b), Page 121]

(a) During the year, the Company divested 49% stake in Jamshedpur Continuous Annealing & Processing Company Private Limited to Nippon Steel & Sumitomo Metal Corporation (erstwhile Nippon Steel Corporation) of Japan, the Venture Partner at a profit of Rs. 9.60 crores. Further, the Company''s entire stake in Sila Eastern Ltd. has been sold to Unistretch Limited at a profit of Rs. 2.73 crores.

[Previous year: The Company sold part of its investment in TRL Krosaki Refractories Limited (formerly Tata Refractories Limited) (TRL) to Krosaki Harima Corporation for Rs. 576.10 crores. Consequently, the Company''s holding in TRL have reduced to 26.46%. Accordingly, it ceased to be a subsidiary and became an associate. "Profit on sale of non-current investment" of Rs. 511.01 crores represents gain on sale of these shares].

(b) The Company''s exposure in its subsidiary, Tata Steel (KZN) (Pty) Ltd. was tested for diminution in the value as on March 2013. Consequently, the Company recognised a provision of Rs. 686.86 crores for its subsidiary TS KZN which includes diminution in the value of equity investment of Rs. 84.70 crores, loans extended amounting to Rs. 487.32 crores (including credit of Rs. 8.47 crores on account of unamortised exchange difference) and interest thereon of Rs. 114.84 crores.

2. CONTINGENT LIABILITIES AND COMMITMENTS

A. Contingent Liabilities

(a) Claims not acknowledged by the Company

Rs. crores

As at 31.03.2012

(i) Excise and Service Tax 466.21 320.81

(ii) Customs 13.70 13.69

(iii) Sales Tax and VAT 386.85 402.29

(iv) State Levies 266.87 149.71

(v) Suppliers and Service Contract 77.52 74.31

(vi) Labour Related 45.23 41.69

(vii) Income Tax 8.11 17.92

(viii) Royalty 134.67 132.96

(b) The Company has given guarantees aggregating Rs. 579.91 crores (31.03.2012: Rs. 391.58 crores) on behalf of others. As at 31st March, 2013, the contingent liabilities under these guarantees amounts to Rs. 579.91 crores (31.03.2012: Rs. 391.58 crores).

(c) Claim by a party arising out of conversion arrangement - Rs. 195.82 crores (31.03.2012: Rs. 195.82 crores). The Company has not acknowledged this claim and has instead filed a claim of Rs. 139.65 crores (31.03.2012: Rs. 139.65 crores) on the party. The matter is pending before the Calcutta High Court.

(d) The Excise Department has raised a demand of Rs. 235.48 crores (31.03.2012: Rs. 235.48 crores) denying the benefit of Notification No. 13/2000 which provides for exemption to the integrated steel plant from payment of excise duty on the freight amount incurred for transporting material from plant to stock yard and consignment agents. The Company filed an appeal with CESTAT, Kolkata and the order of the department was set aside. The department has filed an appeal in Supreme Court where the matter is pending.

(e) TMT bars and rods in coil form were sent to an external processing agent (EPA), on payment of duty at Jamshedpur (ex- works) price, for decoiling and cutting into specified lengths and then dispatch, at assessable value to various stock yards and depots of the Company for further sale. Differential duty was paid by the Company after the month was over. Excise department contested this activity as ''manufacturing'' and demanded duty from the EPA ignoring the payment of duty made by the Company. An appeal against the order of the Commissioner of Central Excise, Jamshedpur was filed in CESTAT, Kolkata and was allowed in favour of the EPA. Subsequently, the department challenged the same in Jharkhand High Court, Ranchi, which is still pending for hearing. Subsequent demand in this regard has not been adjudicated. Meanwhile, since September 2010, the decoiling and cutting activity with the EPA has been discontinued. The potential liability as of 31st March, 2013, will be approximately Rs. 298.88 crores (31.03.2012:Rs. 298.88 crores). However, the Company has already paid duty amounting to Rs. 196.48 crores (31.03.2012: Rs. 196.48 crores) till date based on the final sale price of the material.

(f) The State Government of Odisha introduced "Orissa Rural Infrastructure and Socio Economic Development Act, 2004" with effect from February 2005 levying tax on mineral bearing land computed on the basis of value of minerals produced from the mineral bearing land. The Company had filed a Writ Petition in the High Court of Orissa challenging the validity of the Act. Orissa High Court held in November 2005 that State does not have authority to levy tax on minerals. The State Government of Odisha moved to the Supreme Court against the order of Orissa High Court and the case is pending with Supreme Court. The potential liability, as of 31st March, 2013 would be approximately Rs. 3,006.46 crores (31.03.2012: Rs. 2,085.88 crores).

(g) In terms of the agreements entered into between Tata Teleservices Ltd. (TTSL), Tata Sons Ltd. (TSL) and NTT DoCoMo, Inc. of Japan (Strategic Partner-SP), the Company was given by Tata Sons an option to sell 52,46,590 equity shares in TTSL to the SP.

Pursuant to the Rights Issue made in 2010-11, SP''s shareholding in TTSL has increased from 1,17,26,17,866 equity shares of Rs. 10 each to 1,24,89,74,378 equity shares of Rs. 10 each as on 31st March, 2013. The shareholding of SP represents 26.50% of the paid up equity share capital of TTSL on a fully diluted basis as against 26.27% prior to the issuance and allotment of Rights Shares to them.

If certain performance parameters and other conditions are not met by TTSL by 31st March, 2014 and should the SP decide to divest its entire shareholding in TTSL, acquired under the primary issue and the secondary sale, and should TSL be unable to find a buyer for such shares, the Company is obligated to acquire the shareholding of the SP, at the higher of fair value or 50 percent of the subscription purchase price subject to compliance with applicable exchange control regulations, in proportion of the number of shares sold by the company to the aggregate of the secondary shares sold to the SP, or if the SP divests the shares at a lower price pay a compensation representing the difference between such lower sale price and the price referred to above.

Further, in the event of breach of the representations and warranties (other than title and tax) and covenants not capable of specific performance, the Company is liable to reimburse TSL, on a pro rata basis, upto a maximum sum of Rs. 6.00 crores.

(h) The Company has been paying royalty on coal extracted from its quarries pursuant to the judgment and order dated 23rd July, 2002 passed by the Jharkhand High Court. However, the State Government demanded royalty at rates applicable to processed coal. Though the Company has contested the above demand, it has started paying, under protest, royalty on processed coal from November 2008. The incremental amount (including interest), if payable, for the period till October 2008 works out to Rs. 413.46 crores (31.03.2012: Rs. 384.64 crores) and has been considered as a contingent liability.

(i) The Company availed CENVAT credit on the invoices issued by Input Service Distributors (ISD) i.e. by Head office and Sales offices during the period 2006-07 to 2011-12. The Excise department issued show cause cum demand notices disallowing Rs. 215.59 crores (31.03.2012: Nil) including penalty alleging that CENVAT credit can be distributed by an office of the manufacturer only. Accordingly, the head office can only distribute the CENVAT credit of input services and sales offices are not authorized to issue ISD invoices. The Company believes that as per rule any office of the manufacturer can issue ISD invoices for availment of CENVAT credit. The Company has filed appeals before CESTAT.

(j) Billets are being sent to Stockyard for onward transfer to external processing agents (EPA) for further manufacture on behalf of the Company. Since this transfer is for subsequent manufacture and not for sale, excise duty is paid on 110% of cost which is applicable for transfer of materials directly for manufacture. Excise department, Jamshedpur issued show cause notices demanding differential duty of Rs. 109.52 crores (31.03.2012: Nil) including penalty for the period June 2007 to March 2012. Excise department has considered the price of the billets sold by Steel Authority of India (SAIL) as the price at which the duty should have been paid by the Company. The Company is in the process of filing an appeal before CESTAT.

(k) Commercial taxes department has issued demand of Rs. 138.34 crores by treating 30% of the stock transfers as interstate sales to unregistered dealer and imposed tax @ 8%. The Company has filed a revision petition before the Commissioner Commercial Taxes, Ranchi (Jharkhand) and the hearing on merit is pending before the Commissioner Commercial Taxes, Ranchi (Jharkhand). The potential liability, as of 31st March, 2013, is Rs. 137.70 crores (31.03.2012: Rs. 137.70 crores).

(l) Bills discounted f 469.58 crores (31.03.2012: Rs. 174.78 crores).

B. Commitments

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for: f 11,995.60 crores (31.03.2012: Rs. 13,178.11 crores).

(b) Uncalled liability on partly paid shares and debentures f 0.01 crore (31.03.2012: Rs. 0.01 crore).

3. The Company has given undertakings to: (a) IDBI not to dispose of its investment in Wellman Incandescent India Ltd.,

(b) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd., (c) Standard Chartered Bank, Hong Kong and Shanghai Banking Corporation Limited not to dispose of majority stake in Tata Steel (KZN) (Pty) Ltd.,

(d) Mizuho Corporate Bank Limited and Japan Bank of International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte. Limited, (minimal stake required to be able to provide a corporate guarantee towards long-term debt), (e) State Bank of India not to dispose of the management control (indirectly held) in Tata Steel UK Holdings Ltd. and Tata Steel Netherlands Holding B V and other companies (the borrower group), (f) Standard Chartered Bank, Singapore not to dispose of the management control (directly held) in NatSteel Asia Pte. Limited, (g) Sumitomo Mitsui Banking Corporation not to dispose of the management control (indirectly held) in Tata Steel Global Procurement Company Pte. Limited, (h) ICICI Bank Limited not to dispose of its investment in the Jamshedpur Continuous Annealing & Processing Company Private Limited, without the prior consent of the respective financial institutions/banks so long as any part of the loans/facilities sanctioned by the institutions/banks to these companies remains outstanding.

The Company has furnished a security bond in respect of its immovable property to the extent of Rs. 20 crores in favour of the Registrar of the Delhi High Court and has given an undertaking not to sell or otherwise dispose of the said property.

The Promoters of Tata BlueScope Limited (TBSL) (i.e. BlueScope Steel Asia Holdings Pty Limited, Australia and Tata Steel Limited) have given an undertaking to IDBI Trusteeship Services Ltd., Debenture Trustees, not to reduce collective shareholding in TBSL, below 51%.

In addition to the above undertakings, the Promoters of The Dhamra Port Company Limited (DPCL) i.e. Tata Steel Limited and L&T Infrastructure Development Projects Limited (L&TIDPL) have given an Undertaking to a consortium of lenders of DPCL not to reduce collective shareholding in DPCL, held directly or indirectly, below 51%, to retain majority representation on the board of directors and to remain the Promoters of DPCL until the loans are fully repaid.

The Promoters'' (i.e. The Tata Power Company Limited and Tata Steel Limited) combined investments in Industrial Energy Limited (IEL) representing 51% of IEL''s paid-up equity share capital are pledged with Infrastructure Development Finance Corporation Limited (IDFC).

The Company has agreed, if requested by Tata Steel UK Holdings Ltd. (TSUKH), an indirect wholly owned subsidiary of Tata Steel Limited, to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.

The Company has agreed, if requested by Tayo Rolls Limited and Jamshedpur Utilities & Services Company Limited, to extend support in operational and financial matters till 31st March 2014 subject to the condition that the financial support will not exceed Rs. 50 crores and Rs. 80 crores respectively.

4. The Company had, on 20th August, 2005, signed an agreement with the Government of Jharkhand to participate in a special health insurance scheme to be formulated by the Government of Jharkhand for the purpose of providing medical facilities to the families of the people below poverty line. The State Government would develop a suitable scheme and the Company has agreed to contribute to such scheme, when operational, a sum of Rs. 25 crores annually for a period of 30 years or upto the year of operation of the scheme whichever is lower. The matter is under discussion and no contribution has been made till 31st March, 2013.

5. The Board of Industrial and Financial Reconstruction (BIFR) sanctioned a scheme for rehabilitation of Indian Steel & Wire Products Ltd. (ISWP), a Sick Company in FY 2003-04. In terms of the scheme, the Company -

(a) took management control of ISWP; (b) acquired 4,74,030 Equity Shares from the existing promoters at Rs. 1/- per share;

(c) converted Rs. 5 crores of dues into 50,00,000 fully paid Equity Shares at Rs. 10 each and Rs. 10.88 crores into unsecured loan to be repaid by ISWP in 8 annual installments starting from FY 2004-05; (d) has an advance of Nil (31.03.2012: Rs. 8.09 crores) as at 31st March, 2013 with ISWP towards one time settlement with financial institutions for capital expenditure and margin for working capital.

6. The Committee of Directors in their meeting held on 10th April, 2013 approved the scheme of amalgamation of the following subsidiaries with the Company:

(a) Kalimati Investment Company Ltd. with an appointed date of 1st January, 2013. The Scheme is subject to the approval of the High Court of Judicature at Bombay.

The financial statements of the Company do not include the assets and liabilities of Kalimati Investment Company Ltd. as at 31st March, 2013 and the results of operations for three months ended 31st March, 2013.

(b) Tata Metaliks Ltd. and Tata Metaliks Kubota Pipes Limited with an appointed date of 1st April, 2013. The Scheme is subject to the approval of the High Courts of Judicature at Bombay and Calcutta.

7. 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, 2013 are as under:

8. No amount is paid/payable by the Company under Section 441A of the Companies Act, 1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notified yet by the Central Government.

9. EMPLOYEE BENEFITS

(a) The Company has recognised, in the Statement of Profit and Loss for the year ended 31st March, 2013, an amount of Rs. 231.09 crores (2011-12: Rs. 217.79 crores) as expenses under the following defined contribution plans.

10. DERIVATIVE INSTRUMENTS

(a) The Company has entered into the following derivative instruments. All the swaps and forward contracts are accounted for as per Accounting Policies stated in Note 1 annexed to Balance Sheet and Statement of Profit and Loss.

(i) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations. The use of foreign currency forward contracts is governed by the Company''s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

* Represents outstanding long-term forward exchange contracts used to hedge currency risk of Euro and GBP against USD. The corresponding USD exposure has been disclosed under unhedged loans payable.

(Long-term Forward Exchange Contracts outstanding as on 31st March, 2013 have been used to hedge the foreign currency risk on repayment of External Commercial Borrowings and Export Credit Agency Borrowings of the Company).

(ii) The Company also uses derivative contracts other than forward contracts to hedge the interest rate and currency risk on its capital account. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments, consistent with the Company''s Risk Management Policy. The Company does not use these contracts for speculative purposes.

Outstanding Interest Rate Swaps to hedge against fluctuations in interest rate changes:

11. The Board recommended dividend of Rs. 8.00 per Ordinary Share (2011-12: Rs. 12 per Ordinary Share) of Rs. 10 each for the year ended 31st March, 2013. The dividend is subject to the approvals of the shareholders at the Annual General Meeting. The total dividend payout (including tax on dividend) works out to Rs. 905.70 crores (2011-12: Rs. 1,347.03 crores) for the Company.

12. Previous year''s figures have been recast/restated where necessary.

13. Figures in italics are in respect of the previous year.


Mar 31, 2012

(1) Particulars of securities convertible into Ordinary Shares:

(a) In November 2009, the Company had issued 5,469.35 numbers of 4.5% Foreign Currency Covertible Bonds (FCCBs) aggregating to uSD 546.935 million. These represent 4,21,12,300 (31.03.2011: 4,19,60,304) underlying shares and are convertible at any time on or after 31st December, 2009 and upto 11th November, 2014 by the holders of such FCCBs at a conversion price of Rs. 602.1022 per share (31.03.2011: Rs. 604.2832 per share) and at a fixed uSD/INR conversion rate of 46.36.

(b) In September 2007, the Company had issued 3,820 numbers of 1% Convertible Alternative Reference Securities (CARS) aggregating to uSD 382 million. These represent 2,10,47,371 (31.03.2011: 2,10,15,711) underlying shares and are convertible at any time on or after 4th September, 2011 and upto 3.00 p.m. on 6th August, 2012 at the option of the holders at a conversion price of Rs. 730.5188 per share (31.03.2011: Rs. 731.6193 per share) and at a fixed uSD/ INR conversion rate of 40.25.

Changes to premium payable on account of exchange fuctuation is transferred to "Foreign Currency Monetary Item Translation Difference Account" in accordance with Companies (Accounting Standards) Amendment Rules 2009 pertaining to Accounting Standard 11 (AS-11) notified by the Government of India on 31st March, 2009 (as amended on 29th December, 2011). Such exchange fuctuation on the premium payable is amotised over the balance period of CARS, by adjusting the same to securities premium reserve. Accordingly, an amount of Rs. 25.22 crores (net of deferred tax Rs. 12.11 crores) [2010-11: Rs. 2.07 crores (net of deferred tax Rs.3.57 crores)] has been adjusted against securities premium reserve on account of amortisation.

(3) (a) 3,867 Shares (31.03.2011: 3,867) of face value of Rs. 10 per share represent the shares underlying GDRs which were issued during 1994. Each GDR represents one underlying Ordinary Share.

(b) 1,80,87,222 Shares (31.03.2011: 2,39,13,921) of face value of Rs. 10 per share represent the shares underlying GDRs which were issued during 2010. Each GDR represents one underlying Ordinary Share.

(4) The rights, powers and preferences relating to each class of share capital and the qualifcations, limitations and restrictions thereof are contained in the Memorandum and Articles of Association of the Company. The principle rights are as follows:

A. ordinary Shares of Rs. 10 each

The Company has only one class of share capital namely Ordinary Shares having a face value of Rs. 10 per share.

(a) In respect of every Ordinary Share (whether fully paid or partly paid), voting right shall be in the same proportion as the capital paid up on such Ordinary Share bears to the total paid up ordinary capital of the Company.

(b) The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

(c) In the event of liquidation, the shareholders of Ordinary Shares are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholdings.

b. 'A' ordinary Shares of Rs. 10 each

(a) (i) The holders of 'A' Ordinary Shares shall be entitled to such rights of voting and/or dividend and such other rights as per the terms of the issue of such shares, provided always that:

in the case where a resolution is put to vote on a poll, such differential voting entitlement (excluding fractions, if any) will be applicable to holders of 'A' Ordinary Shares.

in the case where a resolution is put to vote in the meeting and is to be decided on a show of hands, the holders of 'A' Ordinary Shares shall be entitled to the same number of votes as available to holders of Ordinary Shares.

(ii) The holders of Ordinary Shares and the holders of 'A' Ordinary Shares shall vote as a single class with respect to all matters submitted for voting by shareholders of the Company and shall exercise such votes in proportion to the voting rights attached to such Shares including in relation to any scheme under Sections 391 to 394 of the Act.

(b) The holders of 'A' Ordinary Shares shall be entitled to dividend on each 'A' Ordinary Share which may be equal to or higher than the amount per Ordinary Share declared by the Board for each Ordinary Share, and as may be specified at the time of the issue. Different series of 'A' Ordinary Shares may carry different entitlements to dividend to the extent permitted under applicable law and as prescribed under the terms applicable to such issue.

C. Preference Shares

The Company has two classes of preference shares i.e. Cumulative Redeemable Preference Shares (CRPS) of Rs.100 per share and Cumulative Convertible Preference Shares (CCPS) of Rs. 100 per share.

(a) Such Shares shall confer on the holders thereof, the right to a fixed preferential dividend from the date of allotment, at a rate as may be determined by the Board at the time of the issue, on the capital for the time being paid up or credited as paid up thereon.

(b) Such Shares shall rank for capital and dividend (including all dividend undeclared upto the commencement of winding up) and for repayment of capital in a winding up, pari passu inter se and in priority to the Ordinary Shares of the Company, but shall not confer any further or other right to participate either in Profits or assets. However, in case of CCPS, such preferential rights shall automatically cease on conversion of these shares into Ordinary Shares.

(c) The holders of such Shares shall have the right to receive all notices of general meetings of the Company but shall not confer on the holders thereof the right to vote at any meetings of the Company save to the extent and in the manner provided in the Companies Act, 1956, or any re-enactment thereof.

(d) CCPS shall be converted into Ordinary Shares as per the terms, determined by the Board at the time of issue; as and when converted, such Ordinary Shares shall rank pari pasu with the then existing Ordinary Shares of the Company in all respects.

5. BORROWINGS

Additional information:

(1) Details of outstanding secured borrowings are as follows:

(a) Represents loan from Joint Plant Committee - Steel Development Fund which includes funded interest Rs. 316.13 crores (31.03.2011: f 280.06 crores). It is repayable in 16 equal semi-annual installments after completion of 4 years from the date of receipt of the last tranche.

It is secured by mortgages, ranking pari passu inter se, on all present and future fixed assets, excluding land and buildings mortgaged in favour of Government of India for constructing a hostel for trainees at Jamshedpur and setting up a dispensary and a clinic at collieries, land and buildings, plant and machinery and movables of the Tubes division and the Bearings division mortgaged in favour of the financial institutions and banks, assets of the Ferro Alloys Plant at Bamnipal mortgaged in favour of State Bank of India and assets of Cold Rolling Complex (West) at Tarapur and a foating charge on other properties and assets (excluding investments) of the Company, subject to the prior foating charge in favour of banks under item A (b).

The Company has fled a writ petition before the High Court at Kolkata in February 2006 claiming waiver of the outstanding loan and interest and refund of the balance lying with Steel Development Fund and the matter is sub-judice.

Loan from the Joint Plant Committee-Steel Development Fund includes Rs. 1,411.84 crores (31.03.2011: f 1,317.49 crores) representing repayments and interest on earlier loans for which applications of funding are awaiting sanction is not secured by charge on movable assets of the Company.

(b) Loan from banks repayable on demand are secured by hypothecation of stocks, stores and book debts, ranking in priority to the foating charge under item A (a).

(2) Terms of repayment of outstanding unsecured borrowings are as follows:

(a) Bonds/Debentures

(i) 10.25% p.a. interest bearing 25,000 debentures of face value Rs. 10,00,000 each are redeemable at par in 3 equal annual installments commencing from 6th January, 2029.

(ii) 10.25% p.a. interest bearing 5,000 debentures of face value Rs. 10,00,000 each are redeemable at par in 3 equal annual installments commencing from 22nd November, 2028.

(iii) 11.00% p.a. interest bearing 15,000 debentures of face value Rs. 10,00,000 each are redeemable at par on 19th May, 2019.

(iv) 10.40% p.a. interest bearing 6,509 debentures of face value Rs. 10,00,000 each are redeemable at par on 15th May, 2019.

(v) 10.20% p.a. interest bearing 6,200 debentures of face value Rs. 10,00,000 each are redeemable on 7th May, 2015.

(vi) 12.50% p.a. interest bearing 12,500 debentures of face value Rs. 10,00,000 each are redeemable in 3 equal annual installments commencing from 19th November, 2014.

(b) Term loans from banks

(i) GBP 100 million equivalent to Rs. 815.05 crores (31.03.2011: GBP 100 million equivalent to Rs. 717.02 crores) loan is repayable on 4th April, 2015.

(ii) uSD 335 million equivalent to Rs.1,704.48 crores (31.03.2011: USD 335 million equivalent to Rs. 1,493.93 crores) loan is repayable on 10th June, 2015.

(iii) Euro 5.82 million equivalent to Rs. 39.52 crores (31.03.2011: Euro 6.30 million equivalent to Rs.43.02 crores) loan is repayable in 12 equal semi-annual installments; the next installment is due on 2nd May, 2012.

(iv) Euro 32.85 million equivalent to Rs. 223.11 crores (31.03.2011: Euro 35.20 million equivalent to Rs.237.92 crores) loan is repayable in 14 equal semi-annual installments; the next installment is due on 2nd July, 2012.

(v) Euro 54.04 million equivalent to Rs. 367.03 crores (31.03.2011: Euro 10.58 million equivalent to Rs.67.08 crores) loan is repayable in 20 equal semi-annual installments commencing from 6th July, 2012.

(vi) Euro 183.01 million equivalent to Rs. 1,243.03 crores (31.03.2011: Euro Nil million equivalent to Rs.Nil crores) loan is repayable in 20 equal semi-annual installments commencing from 31st October, 2012.

(vii) JPY 71,598 million equivalent to Rs.4,437.64 crores (31.03.2011: JPY 89,497.50 million equivalent to Rs.4,819.44 crores) syndicated loan is repayable in 4 equal semi-annual installments; the next installment is due on 11th April, 2012.

(viii) Indian rupee loan amounting Rs. 1,500.00 crores (31.03.2011: Rs. 2,500.00 crores) is repayable on 28th July, 2013.

(ix) Indian rupee loan amounting Rs. 500.00 crores (31.03.2011: Rs.Nil) is repayable in 9 semi-annual installments commencing from 30th April, 2013.

(c) Term loans from financial institutions and others

(i) Indian rupee loan amounting Rs. 650.00 crores (31.03.2011: Rs. 650.00 crores) is repayable on 16th June, 2019. (ii) Indian rupee loan amounting Rs. 199.00 crores (31.03.2011:Rs.199.00 crores) is repayable on 30th June, 2016.

(d) Deferred payment liabilities amounting Rs. 3.80 crores (31.03.2011: Rs. 3.80 crores) is payable in 10 annual installments (first 5 installments are of Rs. 0.09 crores each and next 5 installments are of Rs. 0.67 crores each) commencing from 29th December, 2014.

31. EXCEPTIONAL ITEM

(Item No. 4(a), Page 143)

During the year, the Company has sold part of its investment in TRL Krosaki Refractories Limited (formerly Tata Refractories Limited) (TRL) to Krosaki Harima Corporation forRs. 576.10 crores. Consequently, the company's holding in TRL have reduced to 26.46%. Accordingly, it has ceased to be a subsidiary and became an associate. 'Profit on sale of non-current investment' of Rs. 511.01 crores represents gain on sale of these shares. In the previous year, the Company had made Profit on sale of part of its investments in Tata Motors Ltd., The Tata Power Company Ltd. and TRF Limited of f 648.09 crores.

33. CONTINGENT LIABILITIES AND COMMITMENTS

A. Contingent Liabilities

(a) Claims not acknowledged by the Company

Rs. crores

As at 31.03.2011

(i) Excise 320.81 313.26

(ii) Customs 13.69 13.68

(iii) Sales Tax and VAT 539.99 494.54

(iv) State Levies 202.13 187.28

(v) Suppliers and Service Contract 74.31 72.21

(vi) Labour Related 41.69 38.84

(vii) Income Tax 17.92 119.79

(viii) Royalty (Iron ore) 80.35 -

(b) The Company has given guarantees aggregating Rs. 391.58 crores (31.03.2011: Rs.991.11 crores) to banks and financial institutions on behalf of others. As at 31st March, 2012, the contingent liabilities under these guarantees amounts to Rs. 391.58 crores (31.03.2011:Rs.991.11 crores).

(c) Claim by a party arising out of conversion arrangement - Rs. 195.82 crores (31.03.2011: Rs.195.82 crores). The Company has not acknowledged this claim and has instead fled a claim of Rs. 139.65 crores (31.03.2011: f 139.65 crores) on the party. The matter is pending before the Calcutta High Court.

(d) The Excise Department has raised a demand of Rs. 235.48 crores (31.03.2011: Rs.235.48 crores) denying the benefit of Notification No. 13/2000 which provides for exemption to the integrated steel plant from payment of excise duty on the fireight amount incurred for transporting material from plant to stock yard and consignment agents. The Company fled an appeal with CESTAT, Kolkata and the order of the department was set aside. The department has filed an appeal in Supreme Court where the matter is pending.

(e) TMT bars and rods in coil form were sent to an external processing agent (EPA), on payment of duty at Jamshedpur (ex- works) price, for decoiling and cutting into specified lengths and then dispatch, at assessable value to various stock yards and depots of the Company for further sale. Differential duty was paid by the Company after the month was over. Excise department contested this activity as 'manufacturing' and demanded duty from the EPA ignoring the payment of duty made by the Company. An appeal against the order of the Commissioner of Central Excise, Jamshedpur was fled in CESTAT, Kolkata and was allowed in favour of the EPA. Subsequently, the department challenged the same in Jharkhand High Court, Ranchi, which is still pending for hearing. Subsequent demand in this regard has not been adjudicated. Meanwhile, since September 2010, the decoiling and cutting activity with the EPA has been discontinued. The potential liability as of 31st March, 2012, will be approximately Rs.298.87 crores (31.03.2011: Rs. 298.87 crores). However, the Company has already paid duty amounting to Rs. 196.48 crores (31.03.2011: Rs.196.48 crores) till date based on the final sale price of the material.

(f) The State Government of Odisha introduced "Orissa Rural Infrastructure and Socio Economic Development Act 2004" with effect from February 2005 levying tax on mineral bearing land computed on the basis of value of minerals produced from the mineral bearing land. The Company had fled a Writ Petition in the High Court of Odisha challenging the validity of the Act. Odisha High Court held in November 2005 that State does not have authority to levy tax on minerals. The State Government of Odisha moved to the Supreme Court against the order of Odisha High Court and the case is pending with Supreme Court. The potential liability, as of 31st March, 2012 would be approximately Rs. 2,085.88 crores (31.03.2011: Rs.1,562.72 crores).

(g) In terms of the agreements entered into between Tata Teleservices Ltd. (TTSL), Tata Sons Ltd. (TSL) and NTT DoCoMo, Inc. of Japan (Strategic Partner-SP), the Company was given by Tata Sons an option to sell 52,46,590 equity shares in TTSL to the SP.

Pursuant to the rights issue made in 2010-11, SP's shareholding in TTSL has increased from 1,17,26,17,866 equity shares of Rs.10 each to 1,24,89,74,378 equity shares of Rs.10 each as on 31st March, 2012. The shareholding of SP represents 26.50% of the paid up equity share capital of TTSL on a fully diluted basis as against 26.27% prior to the issuance and allotment of rights shares to them.

If certain performance parameters and other conditions are not met by TTSL by 31st March, 2014 and should the SP decide to divest its entire shareholding in TTSL, acquired under the primary issue and the secondary sale, and should TSL be unable to find a buyer for such shares, the Company is obligated to acquire the shareholding of the SP, at the higher of fair value or 50 percent of the subscription purchase price subject to compliance with applicable exchange control regulations, in proportion of the number of shares sold by the company to the aggregate of the secondary shares sold to the SP, or if the SP divests the shares at a lower price pay a compensation representing the difference between such lower sale price and the price referred to above.

Further, in the event of breach of the representations and warranties (other than title and tax) and covenants not capable of Specific performance, the Company is liable to reimburse TSL, on a pro rata basis, upto a maximum sum of Rs.78.75 crores. The exercise of the option by SP being contingent on several variables the liability, if any, is remote and indeterminable.

(h) The Company has been paying royalty on coal extracted from its quarries pursuant to the judgement and order dated 23rd July, 2002 passed by the Jharkhand High Court. However, the State Government demanded royalty at rates applicable to processed coal. Though the Company has contested the above demand, it has started paying, under protest, royalty on processed coal from November 2008. The incremental amount (including interest), if payable, for the period till October 2008 works out to Rs. 384.64 crores (31.03.2011: Rs.355.83 crores) and has been considered as a contingent liability.

(i) Bills discounted Rs. 174.78 crores (31.03.2011:Rs.212.38 crores).

b. Commitments

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for: Rs. 13,178.11 crores (31.03.2011:Rs. 9,605.46 crores).

(b) uncalled liability on partly paid shares and debentures Rs. 0.01 crores (31.03.2011: Rs.0.01 crores).

34. The Company has given undertakings to: (a) ICICI Bank Ltd. (formerly ICICI), IFCI and IIBI not to dispose of its investment in the Indian Steel Rolling Mills Ltd. (ISRM). The ISRM is under liquidation, (b) IDBI not to dispose of its investment in Wellman Incandescent India Ltd., (c) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd., (d) Standard Chartered Bank, Hong Kong Shanghai Banking Corporation Limited not to dispose of majority stake in Tata Steel (KZN) (Pty) Ltd., (e) Mizuho Corporate Bank Limited and Japan Bank of International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte. Limited, (minimal stake required to be able to provide a corporate guarantee towards long-term debt), (f) State Bank of India not to dispose of the management control (indirectly held) in Tata Steel UK Holdings Ltd. and Tata Steel Netherlands Holding B v and other companies (the borrower group), (g) Bank of America N.A. Singapore, Hong Kong Shanghai Banking Corporation Limited and The Royal Bank of Scotland N.V. not to dispose of the management control (indirectly held) in Tata Steel Global Procurement Company Pte. Limited, (h) Standard Chartered Bank, Singapore not to dispose of the management control (directly held) in NatSteel Asia Pte. Limited, without the prior consent of the respective financial institutions/banks so long as any part of the loans/facilities sanctioned by the institutions/banks to these companies remains outstanding.

The Company has furnished a security bond in respect of its immovable property to the extent of Rs. 20 crores in favour of the

Registrar of the Delhi High Court and has given an undertaking not to sell or otherwise dispose of the said property.

The Promoters of Tata BlueScope Limited (TBSL) (i.e. BlueScope Steel Limited, Australia and Tata Steel Ltd.) have given an undertaking to IDBI Trusteeship Services Ltd., Debenture Trustees, not to dispose of the management control in TBSL.

The Promoters' (i.e. L & T Infrastructure Development PROJECTS Ltd. and Tata Steel Ltd.) combined investments in The Dhamra Port Company Ltd., (DPCL) representing 51% of DPCL's paid-up equity share capital are pledged with IDBI Trusteeship Services Ltd.

The Promoters' (i.e. The Tata Power Company Limited and Tata Steel Ltd.) combined investments in Industrial Energy Limited, (IEL) representing 51% of IEL's paid-up equity share capital are pledged with Infrastructure Development Finance Corporation Limited (IDFC).

The Company has agreed, if requested by Tata Steel UK Holdings Ltd.(TSUKH), an indirect wholly owned subsidiary of Tata Steel Limited, to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.

35. The Company had, on 20th August, 2005, signed an agreement with the Government of Jharkhand to participate in a special health insurance scheme to be formulated by the Government of Jharkhand for the purpose of providing medical facilities to the families of the people below poverty line. The state government would develop a suitable scheme and the Company has agreed to contribute to such scheme, when operational, a sum of Rs. 25 crores annually for a period of 30 years or upto the year of operation of the scheme whichever is lower. In the current financial year the Government initiated discussion and the Company provided a draft trust deed to the Government for formation of the scheme and trust. The matter is still under discussion. However no contribution has been made till 31st March, 2012.

36. The Board of Industrial and Financial Reconstruction (BIFR) sanctioned a scheme for rehabilitation of Indian Steel & Wire Products Ltd. (ISWP), a Sick Company in FY 2003-04. In terms of the scheme, the Company -

(a) took management control of ISWP; (b) acquired 4,74,130 Equity Shares from the existing promoters at Rs. 1/- per share; (c) converted Rs. 5 crores of dues into 50,00,000 fully paid Equity Shares at Rs. 10 each and Rs. 10.88 crores into unsecured loan to be repaid by ISWP in 8 annual installments starting from FY 2004-05; (d) has an advance of Rs. 8.09 crores as at 31st March, 2012 (31.03.2011:Rs.11.50 crores) with ISWP towards one time settlement with financial institutions for capital expenditure and margin for working capital.

38. Pursuant to the sanction of the Honourable High Court of Bombay to the Scheme of Amalgamation, the assets and liabilities of the erstwhile Centennial Steel Company Limited (CSCL) whose principal business was manufacture, sale and purchase of iron and steel and related products have been merged with the Company with effect from 1st April, 2011 in accordance with the Scheme so sanctioned. The effect of the merger has been given in the accounts as per the scheme sanctioned.

The amalgamation has been accounted for under the "Pooling of Interests method" as prescribed by Accounting Standard 14 (AS-14) as notified by the Government of India. Accordingly, the assets (including capital work-in-progress Rs. 3,689.32 crores and capital advance Rs. 877.18 crores), liabilities (including loans of Rs. 1,438.22 crores) and other reserves of the erstwhile CSCL as at 1st April, 2011 have been taken over at their book values. As a result, debit balance of Statement of Profit and Loss of the erstwhile CSCL aggregating to Rs. 0.87 crores have been adjusted against the reserves of the Company.

40. No amount is paid/payable by the Company under Section 441A of the Companies Act, 1956 (cess on turnover) since the rules specifying the manner in which the cess shall be paid has not been notified yet by the Central Government.

45. DERIVATIVE INSTRUMENTS

(a) The Company has entered into the following derivative instruments. All the swaps and forward contracts are accounted for as per Accounting Policies stated in Note 1 annexed to Balance Sheet and Statement of Profit and Loss.

(i) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations. The use of foreign currency forward contracts is governed by the Company's strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.

46. The Board recommended dividend of Rs. 12 per Ordinary Share (2010-11: f 12 per Ordinary Share) for the year ended 31st March, 2012. The dividend is subject to the approvals of the shareholders at the Annual General Meeting. The total dividend payout (including tax on dividend) works out toRs. 1,347.03 crores (2010-11: Rs.1,307.77 crores) for the company.

47. Previous year's figures have been recast/restated where necessary.

48. Figures in italics are in respect of the previous year.

 
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