Mar 31, 2022
These are used to maximise operational flexibility in terms of managing the assets used in the Company''s operations. Majority of the extension and termination options held are exercisable based on mutual agreement of the Company and the lessors.
With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right of- use asset and a lease liability. Payments made for short-term leases and leases of low value are expensed on a straight-line basis over the lease term.
Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and asset.
For leases recognised under long-term arrangements involving use of a dedicated asset, non-lease components are excluded based on the underlying contractual terms and conditions. A change in the allocation assumptions may have an impact on the measurement of lease liabilities and the related right-of-use assets.
During the year ended March 31, 2022, the Company has recognised the following in the statement of profit and loss:
a) expense in respect of short-term leases and leases of low-value assets ?4.18 crore (2020-21: ?8.20 crore) and Nil (2020-21: ?0.34 crore) respectively.
b) expense in respect of variable lease payments not included in the measurement of lease liabilities ?6.89 crore (2020-21: ?60.96 crore).
c) income in respect of sub-leases of right-of-use assets ?0.35 crore (2020-21: ?0.53 crore).
During the year ended March 31, 2022, total cash outflow in respect of leases amounted to ?1,008.91 crore (March 31, 2021: ^1,123.77 crore).
As at March 31, 2022, commitments for leases not yet commenced was Nil (March 31, 2021: ?230.94 crore).
(i) The Company holds more than 50% of the equity share capital in TM International Logistics Limited. However, decisions in respect of activities which significantly affect the risks and rewards of these businesses, require unanimous consent of all the shareholders. These entities have therefore been considered as joint ventures.
(ii) During the year ended March 31, 2022, the Company has transferred its investments held in Tata Steel Special Economic Zone, Adityapur Toll Bridge Company Limited, Tata Pigments Limited, Himalaya Steel Mill Services Private Limited, Nicco Jubilee Park Limited and Jamshedpur Injection Power Company Limited to Tata Steel Utilities and Infrastructure Services Limited, a wholly owned subsidiary of the Company against issue of shares by Tata Steel Utilities and Infrastructure Services Limited and investments held in Tata Steel Advanced Materials Limited to Tata Steel Downstream Products Limited, a wholly owned subsidiary of the Company against issue of shares by Tata Steel Downstream Products Limited. The gain on transfer of such shares has been recognised within exceptional items.
(v) During the year ended March 31, 2022, the Company considered indicators of impairment such as operational losses in previous years, changes in outlook of future profitability among other potential indicators for investments held in steel, mining and other business operations either directly or indirectly.
The recoverable value of investments held in T Steel Holdings Pte. Ltd. (TSH), a wholly owned subsidiary of the Company is dependent on the operational and financial performance of Tata Steel Europe (TSE) and net assets of the other underlying businesses. The recoverable amount of TSE is higher of the value in use (VIU) of the underlying businesses or the fair value less cost to sell of those businesses which inter-alia considers impact of switching the heavy end and other relevant assets to a more "green steel" capex base. The VIU computation uses cash flow forecasts based on most recently approved financial budgets and strategic forecasts which cover a period of three years and future projections taking the analysis out into perpetuity based on a steady state, sustainable cash flow reflecting average steel industry conditions between successive peaks and troughs of profitability. Key assumptions for the value in use computations are those regarding the discount rates, exchange rates, market demand, sales volume and sales prices, cost to produce etc. The projections are based on both past performance and the expectations of future performance and assumptions therein. The Company estimates discount rates using pre-tax rates that reflect the current market rates adjusted to reflect the way the European union steel market would assess the specific risk. The weighted average pre-tax discount rates used for discounting the cash flows projections is in range of 8.40% - 9.30% (March 31,2021: 8.10% to 8.70%). Beyond the specifically forecasted period, a growth rate of 1.80% (March 31, 2021: 1.25%) is used to extrapolate the cash flow projections. This rate does not exceed the average long-term growth rate for the relevant markets.
TSE is exposed to climate risks through the EU Emission Trading Scheme (ETS) which is applicable to all steel plant within Europe. Further, the Netherlands'' government has enacted legislation for a local additional carbon tax (linked to the EU ETS scheme CO2 allowances and traded prices). Given that most European steel producers have not been heavily affected by CO2 compliance costs to date, TSE''s estimate is that such CO2 emission costs, Netherland''s EU ETS costs and specific carbon tax costs will majorly be passed on to end customers from Fy 2025. Further, given the aim to be carbon neutral by 2050, TSE is considering its future strategy on operating processes while continuing to serve its customers. The technology transition and investments will be dependent on national and international policy which is evolving.
The outcome of the assessment as on March 31, 2022 did not result in recognition of any impairment for investments held in T Steel Holdings Pte. Ltd. The Company has also conducted sensitivity analysis on the impairment tests including sensitivity in respect of discount rate. The management believes that no reasonably possible change in any of the key assumptions used in the assessment would cause the carrying value of such investment to exceed its recoverable amount.
(i) Non-current loans to related parties represents loan given to subsidiaries ?30,750.72 crore (March 31, 2021: ^8,112.23 crore), out of which ?558.95 crore (March 31, 2021: ?558.95 crore) is impaired.
(ii) Current loans to related parties represent loans/advances given to subsidiaries ?2,433.04 crore (March 31, 2021: ?1,627.77 crore) and associates ?100.00 crore (March 31, 2021: Nil) out of which ?67.67 crore (2020-21: ?67.67 crore) and ?100.00 crore (March 31, 2021: Nil) is impaired respectively.
(iii) Other loans primarily represent loans given to employees.
(iv) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person or entity, including foreign entities ("Intermediaries") with the understanding (whether recorded in writing or otherwise) that the Intermediary shall, whether, directly or indirectly lend or invest in other persons/ entities identified in any manner whatsoever by or on behalf of the Company (''ultimate beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries other than loans aggregating ?23,029.77 crore (including roll over ?1,515.60 crore) given during the year to T Steel Holdings Pte Ltd, a subsidiary and an investment company of the Company in the ordinary course of business and in keeping with the applicable regulatory requirements for onward funding to certain overseas subsidiaries of the Company towards meeting their business requirements and/or loan prepayments. Accordingly, no further disclosures, in this regard, are required.
(v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding party") with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries); or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(i) Security deposits are primarily in relation to public utility services and rental agreements. It includes deposit with a subsidiary ?14.00 crore (March 31, 2021: ?14.00 crore) and deposits with Tata Sons Private Limited ?1.25 crore (March 31, 2021: ?1.25 crore).
(ii) Non-current earmarked balances with banks represent deposits and balances in escrow account not due for realisation within 12 months from the balance sheet date. These are primarily placed as security with government bodies, margin money against issue of bank guarantees, etc.
(iii) Current other financial assets include amount receivable from post-employment benefit funds ?171.30 crore (March 31, 2021: ?91.31 crore) on account of retirement benefit obligations paid by the Company directly.
[Item No. V(e), Page 292]
A. Income tax expense/(benefit)
The Company is subject to income tax in India on the basis of its financial statements. The Company can claim tax exemptions/ deductions under specific sections of the Income Tax Act, 1961 subject to fulfilment of prescribed conditions, as may be applicable. The Company during the year ended March 31, 2020 had opted for the new tax regime under Section 115BAA of the Act, which provides a domestic company with an option to pay tax at a rate of 22% (effective rate of 25.168%). The lower rate shall be applicable subject to certain conditions, including that the total income should be computed without claiming specific deduction or exemptions.
As per the tax laws, business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period. The reconciliation of estimated income tax to income tax expense is as below:
(i) Subscribed and paid-up capital includes 11,68,393 (March 31, 2021: 11,68,393) Ordinary Shares of face value ?10 each fully paid-up, held by Rujuvalika Investments Limited, a wholly-owned subsidiary of the Company.
Further, erstwhile Tata Steel BSL Limited held 13,500 Ordinary Shares in the Company as on March 31, 2021. Pursuant to the composite Scheme of Amalgamation of Tata Steel BSL Limited (TSBSL) and Bamnipal Steel Limited into and with Tata Steel Limited as sanctioned and approved by the Hon''ble National Company Law Tribunal, Mumbai Bench vide Order dated October 29, 2021, TSBSL merged with the Company. Accordingly, the crossholding of TSBSL in the Company aggregating to 13,500 Ordinary Shares stands cancelled and extinguished and the subscribed and paid-up share capital of the Company stands reduced by 13,500 Ordinary Shares as on March 31, 2022.
(a) 1,82,23,805 Ordinary Shares of face value ?10 each were allotted to eligible shareholders of Tata Steel BSL Limited as on the record date of November 16, 2021, in share entitlement ratio of 1:15, pursuant to the composite Scheme of Amalgamation of Tata Steel BSL Limited and Bamnipal Steel Limited into and with Tata Steel Limited as sanctioned and approved by Hon''ble National Company Law Tribunal, Mumbai Bench vide Order dated October 29, 2021.
3,450 Ordinary Shares of face value ?10 each were allotted at a premium of ?290 per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2007.
2,584 Ordinary Shares of face value ?10 each were allotted at a premium of ?590 per share in lieu of Cumulative Convertible Preference Shares of ?100 each to the shareholders whose shares were kept in abeyance in the Rights Issue of 2007.
1,328 Fully Paid Ordinary Shares of face value ?10 each were allotted at a premium of ?500 per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2018.
(b) 664 Partly Paid Ordinary Shares of face value ?10 each (?2.504 paid-up) were allotted at a premium of ?605 (?151.496 paid-up) per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2018.
(c) During the year ended March 31, 2022, the Company has sent several Reminder-cum-Forfeiture Notice to the holders of partly paid-up equity shares on which the first and final call money remains unpaid. As on March 31, 2022, the Company has converted 71,64,259 partly paid-up shares into fully paid-up shares of the Company.
(iii) As at March 31, 2022, 2,92,785 Ordinary Shares of face value ?10 each (March 31, 2021: 2,98,822 Ordinary Shares) are kept in abeyance in respect of Rights Issue of 2007.
As at March 31, 2022, 1,19,965 fully paid Ordinary Shares of face value ?10 each (March 31, 2021: 1,21,293 fully paid Ordinary Shares) are kept in abeyance in respect of Rights Issue of 2018.
As at March 31, 2022, 59,828 Ordinary Shares of face value ?10 each (March 31, 2021: 60,492 Ordinary shares) are kept in abeyance in respect of Rights Issue of 2018. Pursuant to the first and final call on the partly paid-up equity shares, the right on 59,828 Partly Paid Ordinary Shares formerly kept in abeyance will now be 59,828 Ordinary Shares kept in abeyance.
votes in proportion to the voting rights attached to such shares including in relation to any scheme under Sections 391 to 394 of the Companies Act, 1956.
(ii) 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 ?100
per share and Cumulative Convertible Preference Shares
(CCPS) of ?100 per share.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(vii) 96,95,642 shares (March 31, 2021: 1,00,14,395 shares) of face value of ?10 per share represent the shares underlying GDRs which were issued during 1994 and 2009. Each GDR represents one underlying Ordinary Share.
(viii) 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 principal rights are as below:
A. Ordinary Shares of ?10 each
(i) In respect of every Ordinary Share (whether fully paid or partly paid), voting right and dividend 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.
(ii) 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.
(iii) 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 ?10 each
(i)(a) 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.
(b) 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
The provisions of the Companies Act, 2013 read with the related rules required a company issuing debentures to create a Debenture redemption reserve (DRR) of 25% of the value of debentures issued, either through a public issue or on a private placement basis, out of the profits of the Company available for payment of dividend. The amounts credited to the DRR can be utilised by the Company only to redeem debentures.
As per the amendment in the Companies (Share Capital and Debentures) Rules, 2014, a listed company issuing privately placed debentures on or after August 16, 2019, is not required to maintain additional amount in the DRR. Accordingly, the existing balance in the DRR shall be maintained to be utilised only for the redemption of existing debentures issued by the Company before August 16, 2019.
(i) As at March 31, 2022, ?2,715.14 crore (March 31, 2021: ?9,876.43 crore) of the total outstanding borrowings were secured by a charge on property, plant and equipment, inventories, receivables and other current assets.
(ii) The security details of major borrowings as at March 31, 2022 is as below:
(a) Loan from Joint Plant Committee-Steel Development Fund
It is secured by mortgages on all present and future immovable properties wherever situated and hypothecation of movable assets, excluding land and building mortgaged in favour of Government of India under the deed of mortgage dated April 13, 1967 and in favour of Government of Bihar under two deeds of mortgage dated May 11, 1963, immovable properties and movable assets of the Tube Division, Bearings Division, Ferro Alloys Division and Cold Rolling Complex (West) at Tarapur and all investments and book debts of the Company subject to the prior charges created and/or to be created in favour of the bankers for securing borrowing for the working capital requirement and charges created and/or to be created on specific items of machinery and equipment procured/to be procured under deferred payment schemes/bill re-discounting schemes/asset credit schemes.
The loan is repayable in 16 equal semi-annual instalments after completion of four years from the date of the tranche.
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 subjudice.
The loan includes funded interest ?1,074.96 crore (March 31, 2021: ?1,038.07 crore).
It includes ?1,639.33 crore (March 31, 2021: ?1,639.33 crore) representing repayments and interest on earlier loans for which applications of funding are awaiting sanction and is not secured by charge on movable assets of the Company.
(i) Rupee term loans as on 31 March 2021, amounting to ?6,949.03 crore were secured by a charge on immovable & movable properties including movable machinery, spares, tools & accessories, ranking pari passu inter-se. The term loan were originally payable across 18 half yearly instalments starting from March 2022. The interest rate on such term loans was 0.55% spread over MCLR (Marginal Cost of funds based Lending Rate). During the year ended 31 March 2022, the Company has repaid such loans.
(ii) Working capital facilities from banks as at March 31, 2021 amounting to ?250.00 crore was secured by a first pari passu charge on the stock of raw materials, finished goods, stock in process, consumable stores and book debts of the Company.
(iii) As at March 31, 2022, the register of charges of the Company as available in records of the Ministry of Corporate Affairs (MCA) includes charges that were created/modified since the inception of the Company. There are certain charges which are historic in nature and it involves practical challenges in obtaining no-objection certificates (NOCs) from the charge holders of such charges, despite repayment of the underlying loans. The Company is in the continuous process of filing the charge satisfaction e-form with MCA, within the timelines, as and when it receives NOCs from the respective charge holders.
(v) The details of major unsecured borrowings as at March 31, 2022 is as below:
The details of debentures issued by the Company is as below:
(i) 9.84% p.a. interest bearing 43,150 debentures of face value ?10,00,000 each are redeemable at par in 4 equal annual instalments commencing from February 28, 2031.
(ii) 8.15% p.a. interest bearing 10,000 debentures of face value ?10,00,000 each are redeemable at par on October 1, 2026.
(iii) 7.70% p.a. interest bearing 6,700 debentures of face value ?10,00,000 each are redeemable at par on March 13, 2025.
(iv) 7.95% p.a. interest bearing 5,000 debentures of face value ?10,00,000 each are redeemable at par on October 30, 2023.
(v) Repo rate plus 4.08% p.a. interest bearing 4,000 debentures of face value ?10,00,000 each are redeemable at par on June 02, 2023.
(vi) 8.25% p.a. interest bearing 10,000 debentures of face value ?10,00,000 each are redeemable at par on May 19, 2023.
(vii) Repo rate plus 3.45% p.a. interest bearing 5,000 debentures of face value ?10,00,000 each are redeemable at par on April 28, 2023.
(viii) Repo rate plus 3.30% p.a. interest bearing 10,000 debentures of face value ?10,00,000 each are redeemable at par on April 27, 2023.
(ix) 7.85% p.a. interest bearing 5,100 debentures of face value ?10,00,000 each are redeemable at par on April 21, 2023.
(x) 7.85% p.a. interest bearing 10,250 debentures of face value ?10,00,000 each are redeemable at par on April 17, 2023.
(xi) 2.00% p.a. interest bearing 15,000 debentures of face value ?10,00,000 each are redeemable at a premium of 85.03% of the face value on April 22, 2022.
The details of loans from banks and financial institutions availed by the Company is as below:
(i) Rupee loan amounting ?1,320.00 crore (March 31, 2021: ?2,600.00 crore) is repayable in 3 semi-annual instalments, the next instalment is due on August 31, 2029.
(ii) Rupee loan amounting ?595.00 crore (March 31, 2021: ?595.00 crore) is repayable in 4 semi-annual instalments, the next instalment is due on October 16, 2026.
(iii) Rupee loan amounting ?520.00 crore (March 31, 2021: ?520.00 crore) is repayable in 5 semi-annual instalments, the next instalment is due on June 30, 2025.
(iv) Rupee loan amounting ?930.42 crore (March 31, 2021: ?990.00 crore) is repayable in 14 semi-annual instalments, the next instalment is due on November 15, 2023
(v) USD 440 million equivalent to ?3,335.09 crore (March 31,2021: USD 440.00 million equivalent to ?3,217.06 crore) loan is repayable in 3 equal annual instalments commencing from September 9, 2023.
(vi) Euro 9.55 million equivalent to ?80.37 crore (March 31, 2021: Euro 28.66 million equivalent to ?245.87 crore) loan is repayable in 1 semi-annual instalment, the next instalment is due on April 30, 2022.
(vii) USD loan amounting to 66.67 million equivalent to ?487.83 crore as on March 31, 2021 due for repayment on February 16, 2022 has been repaid during the year.
(viii) Rupee loan amounting ?400.00 crore as on March 31,2021 repayable in 3 semi-annual instalments, has been fully prepaid during the year.
(c) Commercial papers raised by the Company are short-term in nature ranging between twenty days to six months.
[Item No. IV(g), Page 293]
(iv) As per the Companies Act, 2013, amount required to be spent by the Company on Corporate Social Responsibility (CSR) activities during the year was ?266.57 crore (2020-21: ?189.85 crore).
During the year ended March 31, 2022 amount approved by the Board to be spent on CSR activities was ?526.00 crore (2020-21: ?270.17 crore).
During the year ended March 31,2022, in respect of CSR activities revenue expenditure incurred by the Company amounted to ?405.97 crore [?398.11 crore has been paid in cash and ?7.86 crore is yet to be paid]. The amount spent relates to purpose other than construction or acquisition of any asset and out of the above, ?167.21 crore was spent on ongoing projects during the year. There was no amount unspent for the year ended March 31, 2022 and the Company does not propose to carry forward any amount spent beyond the statutory requirement.
During the year ended March 31, 2021, revenue expenditure incurred by the Company amounted to ?229.97 crore [?225.22 crore has been paid in cash and ?4.75 crore was yet to be paid], which included ?87.34 crore spent on ongoing projects. There was no amount unspent for year ended March 31, 2021.
During the year ended March 31, 2022, amount spent on CSR activities through related parties was ?309.42 crore (2020-21: ?104.80 crore).
(v) During the year ended March 31,2022, revenue expenditure charged to the statement of profit and loss in respect of research and development activities undertaken was ?212.44 crore (2020-21: ?228.29 crore) including depreciation of ?9.24 crore (2020-21: ?9.43 crore). Capital expenditure incurred in respect of research and development activities during the year was ?0.74 crore (2020-21: ?2.75 crore).
[Item No. VI, Page 293]
Exceptional items are those which are considered for separate disclosure in the financial statements considering their size, nature or incidence. Such items included the statement of profit and loss are as below:
(a) Profit/(loss) on sale of non-current investments ?343.68 crore (2020-21: ?1,084.85 crore) relates to profit recognised on sale of investments of three subsidiaries and three joint ventures to a wholly owned subsidiary of the Company.
(b) Provision for impairment of investments/doubtful advances ?93.22 crore (2020-21: reversal ?149.74 crore) relates to provision recognised for loan given to associate net off reversal of provision for investment in subsidiary.
(c) Employee separation compensation ?330.81 crore (2020-21: ?443.55 crore) relates to provisions recognised in respect of employee separation scheme of employees.
(d) Restructuring and other provisions ?204.84 crore (2020-21: ?Nil) represents provision recognised under family protection scheme for dependents of employees who lost their lives due to COVID-19.
(e) Gain/(loss) on non-current investments classified as fair value through profit and loss ?49.74 crore (2020-21: loss ?49.74 crore) represents gain on investments in debentures held of an erstwhile joint venture (subsidiary as at balance sheet date).
(i) During the year ended March 31, 2021, 5,70,42,370 options in respect of partly paid and 1,22,619 options in respect of fully paid shares were excluded from weighted average number of Ordinary Shares for the computation of diluted earnings per share as these were anti- dilutive.
A. Defined contribution plans
The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
The major defined contribution plans operated by the Company are as below:
The Company provides provident fund benefits for eligible employees as per applicable regulations wherein both employees and the Company make monthly contributions at a specified percentage of the eligible employee''s salary. Contributions under such schemes are made either to a provident fund set up as an irrevocable trust by the Company to manage the investments and distribute the amounts entitled to employees or to state managed funds.
Benefits provided under plans wherein contributions are made to state managed funds and the Company does not have a future obligation to make good short fall if any, are treated as a defined contribution plan.
The Company has a superannuation plan for the benefit of its employees. Employees who are members of the superannuation plan are entitled to benefits depending on the years of service and salary drawn.
Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees'' salary or ?1,50,000, whichever is lower, to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.
The contributions recognised as an expense in the statement of profit and loss during the year on account of the above defined contribution plans amounted to ?169.61 crore (2020-21: ?179.97 crore).
The defined benefit plans operated by the Company are as below:
Provident fund benefits provided under plans wherein contributions are made to an irrevocable trust set up by the Company to manage the investments and distribute the amounts entitled to employees are treated as a defined benefit plan as the Company is obligated to provide the members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company''s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in profit and loss under employee benefits expense.
In accordance with an actuarial valuation of provident fund liabilities based on guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump- sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on a year-end actuarial valuation.
Under this unfunded scheme, employees of the Company receive medical benefits subject to certain limits on amounts of benefits, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company under an early separation scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The Company accounts for the liability for post-retirement medical scheme based on a year-end actuarial valuation.
(d) Other defined benefits
Other benefits provided under unfunded schemes include post-retirement lumpsum benefits, pension payable to directors of the Company on their retirement, farewell gifts and reimbursement of packing and transportation charges to the employees based on their last drawn salary.
The defined benefit plans expose the Company to a number of actuarial risks as below:
(i) Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit.
(ii) Interest risk: A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the value of plan''s debt investments.
(iii) Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants.
As such, an increase in salary of the plan participants will increase the plan''s liability.
(iv) Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
36. Contingencies and commitments
A. Contingencies
I n the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an on-going basis, with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Company''s financial condition, results of operations or cash flows.
I t is not practicable for the Company to estimate the timings of the cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the same.
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not believe to be of a material nature, other than those described below:
The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowance of expenses, tax treatment of certain expenses claimed by the Company as deduction and the computation of, or eligibility of the Company''s use of certain tax incentives or allowances.
Most of these disputes and/or disallowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years.
As at March 31, 2022, there are matters and/or disputes pending in appeal amounting to ?3,544.68 crore (March 31, 2021: ?2,360.77 crore).
The details of significant demands are as below:
(a) Interest expenditure on loans taken by the Company for acquisition of a subsidiary has been disallowed in assessments with tax demand raised for ?1,641.64 crore (inclusive of interest) (March 31, 2021: ?1,551.10 crore).
(b) Interest expenditure on "Hybrid Perpetual Securities" has been disallowed in assessments with tax demand raised for ?484.78 crore (inclusive of interest) (March 31, 2021: ?170.54 crore)
In respect of above demands, the Company has deposited an amount of ?1,255.63 crore (March 31, 2021: ?1,250.54 crore) as a precondition for obtaining stay. The Company expects to sustain its position on ultimate resolution of the said appeals.
As at March 31, 2022, there were pending litigations for various matters relating to customs, excise duty, service tax and GST involving demands of ?310.63 crore (March 31, 2021: ?304.48 crore).
The total sales tax demands that are being contested by the Company amounted to ?776.08 crore (March 31, 2021: ?823.37 crore).
The details of significant demands are as below:
(a) The Company stock transfers its goods manufactured at Jamshedpur works plant to its various depots/ branches located outside the state of Jharkhand across the country and these goods are then sold to various customers outside the states from depots/ branches. As per the erstwhile Central Sales Tax Act, 1956, these transfers of goods to depots/branches were made without payment of Central sales tax and F-Form was submitted in lieu of the stock-transfers made during the period of assessment. The value of these sales was also disclosed in the periodical returns filed as per the Jharkhand Vat Act, 2005. The Commercial Tax Department has raised demand of Central Sales tax by levying tax on the differences between value of sales outside the states and value of F-Form submitted for stock transfers. The amount involved for various assessment years beginning 2011-2012 to 2016-2017 as on March 31, 2022 is amounting to ?142.00 crore (March 31, 2021: ?188.65 crore).
Other amounts for which the Company may contingently
be liable aggregate to ?15,790.08 crore (March 31, 2021:
?13,736.46 crore).
The details of significant demands are as below:
(a) Claim by a party arising out of conversion arrangement ?195.79 crore (March 31, 2021: ?195.79 crore). The Company has not acknowledged this claim and has instead filed a claim of ?141.23 crore (March 31, 2021: ?141.23 crore) on the party. The matter is pending before the Calcutta High Court.
(b) 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 Odisha High Court challenging the validity of the Act. The High Court held in December 2005 that the State does not have authority to levy tax on minerals. The State of Odisha filed an appeal in the Supreme Court against the order of the High Court and the case is pending in Supreme Court. The potential liability, as at March 31, 2022 is ?11,023.93 crore (March 31, 2021: ?9,709.73 crore).
(c) The Company pays royalty on iron ore on the basis of quantity removed from the leased area at the rates based on notification issued by the Ministry of Mines, Government of India and the price published by Indian Bureau of Mines (IBM) on a monthly basis.
Demand of ?411.08 crore 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 November 14, 2013, before the Mines Tribunal, Government of India, Ministry of Mines, New Delhi, challenging the legality and validity of the demand and to grant refund of royalty paid in excess by the Company. Mines Tribunal has granted stay on the total demand with directive to Government of Odisha not to take any coercive action for realisation of this demanded amount.
The Hon''ble High Court of Odisha in a similar matter held the circulars based on which demands were raised to be valid. The Company has challenged the judgment of the High Court by a separate petition in the Hon''ble Supreme Court on April 29, 2016.
On July 16, 2019, the Company has filed rejoinders to the reply filed by State of Odisha against the revision petition. The State pressed for rejection of revision applications citing the judgment of the High Court. The Company represented before the authorities and explained that the judgment was passed under a particular set of facts and circumstances which cannot have blanket application on the Company considering the case of the Company is factually different. On August 7, 2019, the Mines Tribunal decided to await the outcome of Special leave petition pending before the Hon''ble Supreme Court and adjourned the matter.
Likely demand of royalty on fines at sized ore rates as on March 31, 2022 is ?2,859.97 crore (March 31, 2021: ?2,207.31 crore).
(d) Demand notices were originally issued by the Deputy Director of Mines, Odisha amounting to ?3,827.29 crore for excess production over the quantity permitted under the mining plan, environment clearance or consent to operate, pertaining to 2000-01 to 2009-10. The demand notices have been raised under Section 21(5) of the Mines & Minerals (Development and Regulations) Act, 1957 (MMDR). The Company filed revision petitions before the Mines Tribunal against all such demand notices. Initially, a stay of demands was granted, later by order dated October 12, 2017, the issue has been remanded to the state for reconsideration of the demand in the light of Supreme Court judgement passed on August 2, 2017.
The Hon''ble Supreme Court pronounced its judgement in the Common Cause case on August 2, 2017 wherein it directed that compensation equivalent to the price of mineral extracted in excess of environment clearance or without forest clearance from the forest land be paid.
In pursuance to the Judgement of Hon''ble Supreme Court, demand/show cause notices amounting to ?3,873.35 crore have been issued during 2017-18 by the Deputy Director of Mines, Odisha and the District Mining Office, Jharkhand.
In respect of the above demands:
⢠as directed by the Hon''ble Supreme Court, the Company has provided and paid for iron ore and manganese ore an amount of ?614.41 crore during 2017-18 for production in excess of environment clearance to the Deputy Director of Mines, Odisha.
⢠the Company has provided and paid under protest an amount of ?56.97 crore during 2017-18 for production in excess of environment clearance to the District Mining Office, Jharkhand.
⢠the Company has challenged the demands amounting to ?132.91 crore in 2017-18 for production in excess of lower of mining plan and consent to operate limits raised by the Deputy Director of Mines, Odisha before the Mines Tribunal and obtained a stay on the matter. Mines Tribunal, Delhi vide order dated November 26, 2018 disposed of all the revision applications with a direction to remand it to the State Government to hear all such cases afresh and pass detailed order. Demand amount of ?132.91 crore (March 31, 2021: ?132.91 crore) is considered contingent.
⢠the Company has made a comprehensive submission before the Deputy Director of Mines, Odisha against show cause notices amounting to ?694.02 crore received during 2017-18 for production in violation of mining plan, Environment Protection Act, 1986 and Water (Prevention & Control of Pollution) Act, 1981. A demand amounting to ?234.74 crore has been received in April 2018 from the Deputy Director of Mines, Odisha for production in excess of the Environmental Clearance. The Company has challenged the demand and obtained a stay on the matter from the Revisionary Authority, Mines Tribunal, New Delhi. The demand of ?234.74 crore has been provided. Based on evaluation of facts and circumstances, the show cause notice of ?694.02 crore is not considered as a contingent liability.
⢠The Company based on its internal assessment has provided an amount of ^ 1,412.89 crore against demand notices amounting to ?2,140.30 crore received from the District Mining Office, Jharkhand for producing more than environment clearance and the balance amount of ?727.41 crore (March 31, 2021: ?727.41 crore) is considered contingent. The Company has however been granted a stay by the Revisional Authority, Ministry of Coal, Government of India against such demand notices.
(e) An agreement was executed between the Government of Odisha (GoO) and the Company in December, 1992 for drawal of water from Kundra Nalla for industrial consumption. In December 1993, the Tahsildar, Barbil issued a show-cause notice alleging that the Company has lifted more quantity of water than the sanctioned limit under the agreement and has also not installed water meter. While the proceedings in this regard were in progress, the Company had applied for allocation of fresh limits.
Over the years, there has also been a steep increase in the water charges against which the Company filed writ petitions before Hon''ble High Court of Odisha. The Company received a demand of ?183.46 crore for the period starting January 1996 to November 2020 in this regard.
The writ petition filed in August, 1997 was listed for hearing before the Full Bench of the Odisha High Court on May 17, 2019. SAIL, one of the petitioners, sought permission to withdraw its writ petition because the settlement was arrived with the State Government on the matter. The High court allowed withdrawal of writ petition of SAIL and directed other parties to negotiate with the State Government. The Company has submitted its detailed representation to Principal Secretary, Water Resource Department, GoO on June 21, 2019, which is under consideration.
The potential exposure as on March 31, 2022 is ?262.13 crore (March 31, 2021: ?206.63 crore) is considered as contingent.
B. Commitments
(a) The Company has entered into various contracts with suppliers and contractors for the acquisition of plant and machinery, equipment and various civil contracts of capital nature amounting to ?8,699.11 crore (March 31, 2021: ?7,079.29 crore).
Other commitments as at March 31, 2022 amount to ?0.01 crore (March 31, 2021: ?0.01 crore).
(b) The Company has given undertakings to:
(i) IDBI not to dispose of its investment in Wellman Incandescent India Ltd.,
(ii) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd.,
(c) The Company and Bluescope Steel Limited have given undertaking to State Bank of India not to reduce collective shareholding in Tata Bluescope Steel Private Limited (TBSPL), 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 TBSPL below 50%.
During the year ended March 31, 2021, the Company after obtaining a ''no objection certificate'' from the lenders of TBSPL, has transferred its stake of 50% in TBSPL to its 100% owned subsidiary Tata Steel Downstream Products Limited.
(d) The Company, as a promoter, has pledged 4,41,55,800 (March 31, 2021: 4,41,55,800) equity shares of Industrial Energy Limited ("IEL") with Infrastructure Development Finance Corporation Limited ("IDFC"). IEL has repaid the entire loan taken from IDFC in financial year 2020-21 and the pledge is in the process of being released.
(e) The Company has given guarantees aggregating
?9,866.85 crore (March 31, 2021: ?9,121.69 crore)
details of which are as below:
(i) in favour of Commissioner Customs for ?1.07 crore (March 31, 2021: ^1.07 crore) given on behalf of Timken India Limited in respect of goods imported.
(ii) in favour of The President of India for ?177.18 crore (March 31, 2021: ?177.18 crore) against performance of export obligation under the various bonds executed by a joint venture Jamshedpur Continuous Annealing & Processing Company Private Limited.
(iii) in favour of State Bank of India and ICICI Bank for ?429.66 crore (March 31,2021: Nil) guaranteeing the financial liability of a subsidiary Tata Steel Mining Limited, for the purpose of availing banking facility for the business operations including working capital & capital expenditure, performance contract and security for bidding for auctions with respect to mines.
(iv) in favour of the note holders against due and punctual repayment of the 100% amounts outstanding as on March 31, 2022 towards issued Guaranteed Notes by a subsidiary, ABJA Investment Co. Pte Ltd. for ?7,579.75 crore (March 31, 2021: ?7,311.50 crore) and ?1,679.04 crore (March 31, 2021: ?1,631.79 crore). The guarantee is capped at an amount equal to 125% of the outstanding principal amount of the Notes as detailed in "Terms and Conditions" of the Offering Memorandum.
(v) in favour of President of India for ?0.15 crore (March 31, 2021: ?0.15 crore) against advance license.
(a) Odisha Legislative Assembly issued an amendment to Indian Stamp Act, 1889, on May 09, 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 July 5, 2013. The Hon''ble High Court, Cuttack passed an order on July 9, 2013 granting interim stay on the operation of the Amendment Act, 2013. Because 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 ?5,579.00 crore (March 31, 2021: ?5,579.00 crore). The Company has concluded that it is remote that the claim will sustain on ultimate resolution of the legal case by the court.
I n 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 March 31,2030 in respect of eight mines and up to March 31, 2020 for two mines subject to execution of supplementary lease deed. Liability has been provided in the books of accounts as on March 31, 2020 as per the existing provisions of the Stamp Act 1899 and the Company had paid the stamp duty and registration charges totalling ?413.72 crore for supplementary deed execution in respect of eight mines out of the above mines.
(b) Noamundi Iron Ore Mine of the Company was due for its third renewal with effect from January 1, 2012. The application for renewal was submitted by the Company within the stipulated time, but it remained pending consideration with the State and the mining operations were continued in terms of the prevailing law.
By a judgement of April 2014 in the case of Goa mines, the Supreme Court took a view that second and subsequent renewal of mining lease can be effected once the State considers the application and decides to renew the mining lease by issuing an express order. State of Jharkhand issued renewal order to the Company on December 31, 2014. The State, however, took a view on interpretation of Goa judgement that the mining carried out after expiry of the period of second renewal was ''illegal'' and hence, issued a demand notice of ?3,568.31 crore being the price of iron ore extracted. The said demand has been challenged by the Company before the Jharkhand High Court.
The mining operations were suspended from August 1, 2014. Upon issuance of an express order, Company paid ?152.00 crore under protest, so that mining can be resumed.
The Mines and Minerals Development and Regulation (MMDR) Amendment Ordinance, 2015 promulgated on January 12, 2015 provides
Mar 31, 2021
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
⢠for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
⢠for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment
or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
(o) Employee benefits
Defined contribution plans
Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity''s actions where:
(i) by an established pattern of past practice, published policies or a sufficiently specific current statement,
the entity has indicated to other parties that it will accept certain responsibilities and;
(ii) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(u) Income taxes
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
The Company manufactures and sells a range of steel and other products.
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are generally made with a credit term of 30-90 days, which is consistent with market practice. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The Company does not adjust the transaction prices for any time value of money in case of contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer does not exceeds one year.
Revenue from sale of power is recognised when the services are provided to the customer based on approved tariff rates established by the respective regulatory authorities. The Company doesn''t recognise revenue and an asset for cost incurred in the past that will be recovered.
The financial statements of the Company are presented in Indian Rupees ("?"), which is the functional currency of the Company and the presentation currency for the financial statements.
I n preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising upto March 31, 2020 on translation of long-term foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101 "First-time adoption of Indian Accounting Standards" are added/deducted to/ from the cost of assets as the case may be. Such exchange differences recognised as part of cost of assets is recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the statement of profit and loss for the period.
(x) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
I nvestment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are recognised as borrowing costs.
All other borrowing costs are recognized as expenses in the period in which it is incurred.
(y) Earnings per share
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive.
Amendment to Ind AS 116 "Leases" - Insertion of practical expedient for COVID-19 related lease concessions
The amendment provides lessee with a practical expedient and an exemption to assess whether a COVID-19 related rent concession is a lease modification to payments originally due on or before June 30, 2021. Amendment also requires disclosure of the amount recognised in statement of profit and loss to reflect changes in lease payments that arise from such concession. The Company has not recognised any amount as reversal of lease liability in the statement of profit and loss.
Amendment to Ind AS 109 "Financial Instruments" and Ind AS 107 "Financial Instruments: Disclosures" - Interest rate Benchmark Reform
The Company has applied the related amendments. The amendments provide relief from the specific hedge accounting requirements assuming that the interest rate benchmark is not altered as a result of the interest rate benchmark reform. The Company is currently evaluating the potential impact of replacement of interest rate benchmark and will accordingly manage the transition plan.
Mar 31, 2019
1. Company information
Tata Steel Limited (âthe Companyâ) is a public limited Company incorporated in India with its registered office in Mumbai, Maharashtra, India. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The Company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The Company offers a broad range of steel products including a portfolio of high value added downstream products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes and wires.
The functional and presentation currency of the Company is Indian Rupee (âRs.â) which is the currency of the primary economic environment in which the Company operates.
As on March 31, 2019, Tata Sons Private Limited owns 31.64 % of the Ordinary Shares of the Company, and has the ability to influence the Companyâs operations.
The financial statements for the year ended March 31, 2019 were approved by the Board of Directors and authorised for issue on April 25, 2019.
(i) Rs.88.68 crore (2017-18: Rs.75.96 crore) of borrowing costs has been capitalised during the year on qualifying assets under construction using a capitalisation rate of 9.00% (2017-18: 9.00%).
(ii) Rupee liability has increased by Rs.106.56 crore (March 31, 2018: Rs.44.33 crore) arising out of re-translation of the value of long-term foreign currency loans and liabilities for procurement of property, plant and equipment, generally plant and machinery. This increase is adjusted against the carrying cost of assets and depreciated over their remaining useful life. The depreciation for the current year is higher by Rs.3.50 crore (2017-18: Rs.1.39 crore) on account of this adjustment.
(iii) Property, plant and equipment (including capital work-in-progress) were tested for impairment during the year where indicators of impairment existed. During the year ended March 31, 2019, the Company has recognised an impairment charge of Rs.8.54 crore (2017-18: Rs.33.99 crore) in respect of expenditure incurred (included within capital work-in-progress) at one of its mining sites. The impairment recognised is included within other expenses in the statement of profit and loss.
(vii) Property, plant and equipment includes capital cost of in-house research facilities as below:
(viii) Details of property, plant and equipment pledged against borrowings is presented in note 19, page 258.
2. Leases
The Company has taken certain land, buildings, plant and machinery under operating and/or finance leases. The following is a summary of the future minimum lease rental payments under non-cancellable operating leases and finance leases entered into by the Company.
A. Operating leases:
Significant leasing arrangements include lease of land for periods ranging between 12 to 99 years renewable on mutual consent, lease of office space and assets dedicated for use under long-term arrangements. Payments under long-term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on the underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on lease assessment and/or lease classification. Payments linked to changes in inflation index under the lease arrangements have been considered as contingent rent and recognised in the statement of profit and loss as and when incurred.
Future minimum lease payments under non-cancellable operating leases is as below:
During the year ended March 31, 2019, total operating lease rental expense recognised in the statement of profit and loss was Rs.222.76 crore, (2017-18: Rs.252.12 crore) including contingent rent of Rs.49.27 crore (2017-18: Rs.31.20 crore).
B. Finance leases:
Significant leasing arrangements include assets dedicated for use under long-term arrangements. The arrangements cover a substantial part of the economic life of the underlying assets and generally contain a renewal option on expiry. Payments under long-term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on lease assessment and/or lease classification.
The minimum lease payments and such payments excluding future finance charges in respect of arrangements classified as finance leases is as below:
(i) Mining assets represent expenditure incurred in relation to acquisition of mines, mine development expenditure post establishment of technical and commercial feasibility and restoration obligations as per applicable regulations.
(ii) The Company has recognised an impairment charge of Rs.5.17 crore (including intangible under development) (2017-18 Nil) for expenditure incurred in respect of certain mines which are not in operation.
(iii) Software costs related to in-house development included within software costs is Rs.0.28 crore (2017-18: Rs.0.27 crore).
(i) The Company holds 51% of the equity share capital in TM International Logistics Limited, Jamshedpur Continuous Annealing & Processing Company Private Limited and T M Mining Company Limited. However, decisions in respect of activities which significantly affect the risks and rewards of these businesses, require unanimous consent of all the shareholders. These entities have therefore been considered as joint ventures.
(ii) Carrying value and market value of quoted and unquoted investments are as below:
(iii) During the year ended March 31, 2019, the Company acquired 51% stake in Creative Port Development Private Limited (CPDPL) a proposed greenfield port project. Consequent to the acquisition, Subarnarekha Port Private Limited became a subsidiary of the Company.
(iv) During the year ended March 31, 2019, the Company through its wholly owned subsidiary Bamnipal Steel Limited, completed the acquisition of Tata Steel BSL Limited (formerly Bhushan Steel Limited) pursuant to a corporate insolvency resolution process implemented under the Insolvency and Bankruptcy Code, 2018.
(v) The Honâble National Company Law Tribunal (NCLT), Kolkata vide order dated April 5, 2019 has admitted the initiation of Corporate Insolvency Resolution Process (CIRP) in respect of Tayo Rolls Limited, a subsidiary of the Company.
(ii) Cumulative gain on de-recognition of investments during the year which were carried at fair value through other comprehensive income amounted to Rs.1.49 crore (2017-18: Rs.3,427.46 crore). Fair value of such investments as on the date of de-recognition was Rs.1.97 crore (2017-18: Rs.3,782.76 crore).
# Cost of unquoted equity instruments has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.
(i) Security deposits are primarily in relation to public utility services and rental agreements. It includes deposit with a subsidiary Rs.14.00 crore (March 31, 2018: Rs.14.00 crore) and deposit with Tata Sons Private Limited Rs.1.25 crore (March 31, 2018: Rs.1.25 crore).
(ii) Non-current loans to related parties represent loans given to subsidiaries Rs.571.95 crore (March 31, 2018: Rs.558.95 crore), out of which Rs.558.95 crore (March 31, 2018: Rs.558.95 crore) is impaired.
(iii) Current loans to related parties represent loans/advances given to subsidiaries Rs.92.06 crore (March 31, 2018: Rs.90.69 crore) andjoint ventures Rs.28.67 crore (March 31, 2018: Rs.46.82 crore) out of which Rs.67.65 crore (2017-18: Rs.67.65 crore) and Rs.1.07 crore (2017-18: Rs.0.60 crore) respectively is impaired.
(iv) Other loans primarily represent loans given to employees.
(v) Disclosure as per Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 186(4) of the Companies Act, 2013.
(a) Loans/advances in the nature of loan outstanding from subsidiaries, associates and joint ventures for the year ended March 31, 2019:
Figures in italics represents comparative figures of previous year.
(i) The above loans have been given for business purpose.
(ii) As at March 31, 2019, loans given to Tayo Rolls Limited, Tata Steel (KZN) (Pty) Ltd. and S & T Mining Company Private Limited were fully impaired.
(b) Details of investments made and guarantees provided are given in note 6, page 232, note 7, page 235 and note 36B, page 278.
(vi) There are no outstanding debts from directors or other officers of the Company.
3. Other financial assets
[Item No. I(f)(iv) and II(b)(vii), Page 210]
A. Non-current
B. Current
(i) Non-current earmarked balances with banks represent deposits and balances in escrow account not due for realisation within 12 months from the balance sheet date. These are primarily placed as security with government bodies, margin money against issue of bank guarantees.
(ii) Non-current other financial assets include advance against purchase of equity shares in subsidiaries Rs.275.19 crore (of which Rs.258.69 crore has been contributed by way of transfer of assets) (March 31, 2018: Rs.2.00 crore) out of which Nil (March 31, 2018: Rs.2.00 crore) is impaired.
(iii) Current other financial assets include amount receivable from post-employment benefit funds Rs.755.95 crore (March 31, 2018: Rs.296.38 crore) on account of retirement benefit obligations paid by the Company directly.
4. Income tax
[Item No. IV(e), Page 210]
A. Income tax expense/(benefit)
The Company is subject to income tax in India on the basis of its standalone financial statements. The Company can claim tax exemptions/deductions under specific sections of the Income-tax Act, 1961 subject to fulfilment of prescribed conditions, as may be applicable. As per the Income-tax Act, 1961, the Company is liable to pay income tax based on higher of regular income tax payable or the amount payable based on the provisions applicable for Minimum Alternate Tax (MAT). MAT paid in excess of regular income tax during a year can be carried forward for a period of fifteen years and can be offset against future tax liabilities arising from regular income tax.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
The reconciliation of estimated income tax to income tax expense is as below:
(i) During the year ended March 31, 2018, the Company re-measured deferred tax balances expected to reverse in future periods based on changes in statutory tax rate made by the Finance Act, 2018.
(ii) Deferred tax assets amounting to Rs.8,112.23 crore as at March 31, 2019 (March 31, 2018: Rs.8,112.23 crore) on fair value adjustment recognised in respect of investments held in a subsidiary on transition to Ind AS has not been recognised due to uncertainty surrounding availability of future taxable income against which such loss can be offset.
(i) Advances with public bodies primarily relate to input credit entitlements and amounts paid under protest in respect of demands and claims from regulatory authorities.
(ii) Prepaid lease payments for operating leases relate to land leases classified as operating as the title is not expected to transfer at the end of the lease term and considering that the land has an indefinite economic life.
(iii) Others include advances against supply of goods/services and advances paid to employees.
In determining allowance for credit losses of trade receivables, the Company has used the practical expedient by computing the expected credit loss allowance based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on ageing of the receivables and rates used in the provision matrix.
(i) Movements in allowance for credit losses of receivables is as below:
(ii) Ageing of trade receivables and credit risk arising therefrom is as below:
(iii) The Company considers its maximum exposure to credit risk with respect to customers as at March 31, 2019 to be Rs.1,363.04 crore (March 31, 2018: Rs.1,875.63 crore), which is the carrying value of trade receivables after allowance for credit losses.
The Companyâs exposure to customers is diversified and no single customer contributes more than 10% of the outstanding receivables as at March 31, 2019 and March 31, 2018.
(iv) There are no outstanding receivables due from directors or other officers of the Company.
(i) Earmarked balances with banks include balances held for: unpaid dividends Rs.64.88 crore (March 31, 2018: Rs.55.00 crore), bank guarantees and margin money Rs.66.11 crore (March 31, 2018: Rs.36.89 crore).
(ii) Earmarked balances with banks are denominated and held in Indian Rupees.
(a) 690 Ordinary Shares of face value Rs.10 each were allotted at a premium of Rs.290 per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2007.
(b) 11 Ordinary Shares of face value Rs.10 each were allotted at a premium of Rs.590 per share in lieu of Cumulative Convertible Preference Shares of Rs.100 each to the shareholders whose shares were kept in abeyance in the Rights Issue of 2007.
(c) 4,164 fully paid Ordinary Shares of face value Rs.10 each were allotted at a premium of Rs.500 per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2018.
(d) 2,080 partly paid Ordinary Shares of face value Rs.10 each (Rs.2.504 paid up) were allotted at a premium of Rs.605 (Rs.151.496 paid up) per share to the shareholders whose shares were kept in abeyance in the Rights Issue of 2018.
(iii) The balance proceeds which remained unutilised as at March 31, 2018 from the Rights Issue, 2018 have been fully utilised during the year as below:
(iv) As at March 31, 2019, 2,99,188 Ordinary Shares of face value Rs.10 each (March 31, 2018: 3,00,395 Ordinary Shares) are kept in abeyance in respect of Rights Issue of 2007.
As at March 31, 2019, 1,21,460 fully paid Ordinary Shares of face value Rs.10 each (March 31, 2018: 1,25,624 fully paid Ordinary Shares) and 60,575 partly paid Ordinary Shares of face value Rs.10 each, Rs.2.504 paid up (March 31, 2018: 62,655 partly paid Ordinary Shares, Rs.2.504 paid up) are kept in abeyance in respect of Rights Issue of 2018.
(v) Details of shareholders holding more than 5 percent shares in the Company is as below:
(vi) 1,34,73,958 shares (March 31, 2018: 1,27,40,651 shares) of face value of Rs.10 per share represent the shares underlying GDRs which were issued during 1994 and 2009. Each GDR represents one underlying Ordinary Share.
(vii) 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 principal rights are as below:
A. Ordinary Shares of Rs.10 each
(i) In respect of every Ordinary Share (whether fully paid or partly paid), voting right and dividend 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.
(ii) 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.
(iii) 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. âAâ Ordinary Shares of Rs.10 each
(i) (a) The holders of âAâ 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:
- i n 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 âAâ Ordinary Shares.
- i n 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 âAâ Ordinary Shares shall be entitled to the same number of votes as available to holders of Ordinary Shares.
(b) The holders of Ordinary Shares and the holders of âAâ 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 Companies Act, 1956.
(ii) The holders of âAâ Ordinary Shares shall be entitled to dividend on each âAâ 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 âAâ 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.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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 had issued hybrid perpetual securities of Rs.775.00 crore and Rs.1,500.00 crore in May 2011 and March 2011 respectively. These securities are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The distribution on these securities are 11.50% p.a. and 11.80% p.a. respectively, with a step up provision if the securities are not called after 10 years. The distribution on the securities may be deferred at the option of the Company if in the six months preceding the relevant distribution payment date, the Company has not made payment on, or repurchased or redeemed, any securities ranking pari passu with, or junior to the instrument. As these securities are perpetual in nature and the Company does not have any redemption obligation, these have been classified as equity.
5. Other equity
[Item No. III(c), Page 210]
A. Retained earnings
The details of movement in retained earnings is as below:
(i) Represents profit on sale of investments carried at fair value through other comprehensive income reclassified from investment revaluation reserve.
B. Items of other comprehensive income
(a) Cash flow hedge reserve
The cumulative effective portion of gains or losses arising from changes in fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit or loss or are included as an adjustment to the cost of the related non-financial hedged item.
The Company has designated certain foreign currency forward contracts and interest rate swaps as cash flow hedges in respect of foreign exchange and interest rate risks.
The details of movement in cash flow hedge reserve is as below:
(i) The details of other comprehensive income recognised during the year is as below:
During the year, ineffective portion of cash flow hedges recognised in the statement of profit and loss amounted to Nil (2017-18: Nil)
(ii) The amount recognised in cash flow hedge reserve (net of tax) is expected to impact the statement of profit and loss as below:
- within the next one year: loss Rs.2.17 crore (2017-18: gain Rs.1.39 crore)
- later than one year: gain Rs.0.40 crore (2017-18: gain Rs.3.75 crore)
(b) Investment revaluation reserve
The cumulative gains and losses arising from fair value changes of equity investments measured at fair value through other comprehensive income are recognised in investment revaluation reserve. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.
C. Other reserves
(a) Securities premium
Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
The details of movement in securities premium is as below:
(b) Debenture redemption reserve
The Companies Act, 2013 requires that a company which has issued debentures, shall create a debenture redemption reserve out of profits of the company available for payment of dividend. The company is required to maintain a debenture redemption reserve of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the debenture redemption reserve cannot be utilised by the company except to redeem debentures.
The details of movement in debenture redemption reserve during the year is as below:
(c) General reserve
Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.
The details of movement in general reserve during the year is as below:
(d) Capital redemption reserve
The Companies Act, 2013 requires that when a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to the redemption of preference shares issued in earlier years.
The details of movement in capital redemption reserve during the year is as below:
(e) Others
Others primarily represent amount appropriated out of the statement of profit and loss for unforeseen contingencies. Such appropriations are free in nature.
The details of movement in others during the year is as below:
D. Share application money pending allotment
The details of movement in share application money pending allotment during the year is as below:
(i) As at March 31, 2019, Rs.2,572.19 crore (March 31, 2018: Rs.2,528.86 crore) of the total outstanding borrowings were secured by a charge on property, plant and equipment, inventories and receivables.
(ii) The security details of major borrowings as at March 31, 2019 is as below:
(a) Loans from Joint Plant Committee-Steel Development Fund
It is secured by mortgages on, all present and future immovable properties wherever situated and hypothecation of movable assets, excluding land and building mortgaged in favour of Government of India under the deed of mortgage dated April 13, 1967 and in favour of Government of Bihar under two deeds of mortgage dated May 11, 1963, immovable properties and movable assets of the Tube Division, Bearing Division, Ferro Alloys Division and Cold Rolling Complex (West) at Tarapur and all investments and book debts of the Company subject to the prior charges created and/or to be created in favour of bankers for securing borrowing for working capital requirement and charges created and/or to be created on specific items of machinery and equipment procured/to be procured under deferred payment schemes/bill re-discounting schemes/asset credit schemes.
The loan is repayable in 16 equal semi-annual instalments after completion of four years from the date of the tranche.
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 subjudice.
The loan includes funded interest Rs.924.77 crore (March 31, 2018: Rs.855.09 crore).
It includes Rs.1,639.33 crore (March 31, 2018: Rs.1,639.33 crore) representing repayments and interest on earlier loans for which applications of funding are awaiting sanction and is not secured by charge on movable assets of the Company.
(iii) The details of major unsecured borrowings as at March 31, 2019 is as below:
(a) Non-convertible debentures
(i) 9.84% p.a. interest bearing 43,150 debentures of face value Rs.10,00,000 each are redeemable at par in 4 equal annual instalments commencing from February 28, 2031.
(ii) 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 January 6, 2029.
(iii) 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 December 22, 2028.
(iv) 8.15% p.a. interest bearing 10,000 debentures of face value Rs.10,00,000 each are redeemable at par on October 1, 2026.
(v) 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 April 23, 2022.
(vi) 9.15% p.a. interest bearing 5,000 debentures of face value Rs.10,00,000 each are redeemable at par on January 24, 2021.
(vii) 11.00% p.a. interest bearing 15,000 debentures of face value Rs.10,00,000 each are redeemable at par on May 19, 2019.
(viii) 10.40% p.a. interest bearing 6,509 debentures of face value Rs.10,00,000 each are redeemable at par on May 15, 2019.
(b) Term loans from banks/financial institutions
(i) Rupee loan amounting Rs.2,500.00 crore (March 31, 2018: Rs.4,450.00 crore) is repayable in 9 quarterly instalments commencing from March 31, 2023.
(ii) Rupee loan amounting Rs.1,047.50 crore (March 31, 2018: Rs.1,485.00 crore) is repayable in 10 semi-annual instalments, the next instalment is due on November 29, 2022.
(iii) Rupee loan amounting Rs.584.58 crore (March 31, 2018: Rs.823.84 crore) is repayable in 8 semi-annual instalments, the next instalment is due on June 15, 2021.
(iv) Rupee loan amounting Rs.750.00 crore (March 31, 2018: Rs.750.00 crore) is repayable in 3 equal annual instalments commencing from May 21, 2021.
(v) USD 7.86 million equivalent to Rs.54.38 crore (March 31, 2018: USD 7.86 million equivalent to Rs.51.24 crore) is repayable on March 1, 2021.
(vi) Rupee loan amounting Rs.1,600.00 crore (March 31, 2018: Rs.2,000.00 crore) is repayable in 8 semi-annual instalments, the next instalment is due on April 30, 2020.
(vii) USD 200.00 million equivalent to Rs.1,383.55 crore (March 31, 2018: USD 200.00 million equivalent to Rs.1,303.65 crore) loan is repayable in 3 equal annual instalments commencing from February 18, 2020.
(viii) Rupee loan amounting Rs.640.42 crore (March 31, 2018: Rs.646.16 crore) is repayable in 16 semi-annual instalments, the next instalment is due on August 14, 2019.
(ix) Euro 16.21 million equivalent to Rs.125.96 crore (March 31, 2018: Euro 21.62 million equivalent to Rs.174.68 crore) loan is repayable in 6 equal semi-annual instalments, the next instalment is due on July 8, 2019.
(x) Euro 66.87 million equivalent to Rs.519.58 crore (March 31, 2018: Euro 85.98 million equivalent to Rs.694.80 crore) loan is repayable in 7 equal semi-annual instalments, the next instalment is due on April 30, 2019.
(xi) Rupee loan amounting Rs.1,485.00 crore (March 31, 2018: Nil) is repayable in 19 semi-annual instalments, the next instalment is due on April 16, 2019.
(c) Finance lease obligations
The Company has taken certain plant and machinery on lease for business purpose. In addition, the Company has entered into long-term arrangements whose fulfilment is dependent on the use of dedicated assets. Some of the arrangements have been assessed as being in the nature of lease and have been classified as finance lease.
Finance lease obligations represent the present value of minimum lease payments payable over the lease term. The arrangements have been classified as secured or unsecured based on the legal form.
(iii) Currency and interest exposure of borrowings including current maturities at the end of the reporting period is as below:
(iv) Majority of floating rate borrowings are bank borrowings bearing interest rates based on LIBOR and EURIBOR. Of the total floating rate borrowings as at March 31, 2019, Rs.1,037.66 crore (March 31, 2018: Rs.977.74 crore) has been hedged using interest rate swaps and collars, with contracts covering period of more than one year.
(v) Maturity profile of borrowings including current maturities is as below:
(vi) Some of the Companyâs major financing arrangements include financial covenants, which require compliance to certain debt-equity and debt coverage ratios. Additionally, certain negative covenants may limit the Companyâs ability to borrow additional funds or to incur additional liens, and/or provide for increased costs in case of breach.
(i) Non-current and current creditors for other liabilities include:
(a) creditors for capital supplies and services Rs.1,582.88 crore (March 31, 2018: Rs.1,725.31 crore).
(b) liability for employee family benefit scheme Rs.189.87 crore (March 31, 2018: Rs.184.39 crore).
(i) Non-current and current provision for employee benefits include provision for leave salaries Rs.999.39 crore (March 31, 2018: Rs.984.33 crore) and provision for early separation scheme Rs.843.14 crore (March 31, 2018: Rs.1,019.98 crore).
(ii) As per the leave policy of the Company, an employee is entitled to be paid the accumulated leave balance on separation. The Company presents provision for leave salaries as current and non-current based on actuarial valuation considering estimates of availment of leave, separation of employee etc.
(iii) Non-current and current other provisions include:
(a) provision for compensatory afforestation, mine closure and rehabilitation obligations Rs.791.62 crore (March 31, 2018: Rs.626.01 crore). These amounts become payable upon closure of the mines and are expected to be incurred over a period of 1 to 33 years.
(b) provision for legal and constructive commitments provided by the Company in respect of a loss making subsidiary Rs.47.33 crore (March 31, 2018: Rs.50.33 crore). The same is expected to be settled within one year from the reporting date.
(iv) The details of movement in other provisions is as below:
6. Retirement benefit obligations
[Item No. IV(c) and V(c), Page 210]
A. Non-current
B. Current
(i) Detailed disclosure in respect post-retirement defined benefit schemes is provided in note 35, page 269.
(ii) Other defined benefits include post-retirement lumpsum benefits, long service awards, packing and transportation, farewell gifts etc.
(i) Grants relating to property, plant and equipment relate to duty saved on import of capital goods and spares under the EPCG scheme. Under the scheme, the Company is committed to export prescribed times of the duty saved on import of capital goods over a specified period of time. In case such commitments are not met, the Company would be required to pay the duty saved along with interest to the regulatory authorities. Such grants recognised are released to the statement of profit and loss based on fulfilment of related export obligations.
During the year, an amount of Rs.618.38 crore (2017-18: Rs.519.31 crore) was released from deferred income to the statement of profit and loss on fulfilment of export obligations.
(i) Amount due to micro and small enterprises as defined in the âThe Micro, Small and Medium Enterprises Development Act, 2006â 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 is as below:
7. Other income
[Item No. II, Page 211]
(i) Dividend income includes income from investments carried at fair value through other comprehensive income Rs.18.25 crore (2017-18: Rs.17.20 crore).
(ii) Interest income includes:
(a) income on financial assets carried at amortised cost Rs.874.36 crore (2017-18: Rs.61.06 crore).
(b) income on financial assets carried at fair value through profit and loss Rs.752.88 crore (2017-18: Rs.8.50 crore).
8. Other expenses
[Item No. IV(g), Page 211 ]
(i) Others include: net foreign exchange loss Rs.134.41 crore (2017-18: gain Rs.122.31 crore), loss on fair value changes of financial assets carried at fair value through profit and loss Rs.111.31 crore (2017-18: gain of Rs.387.93 crore) and donations to electoral trusts Rs.175.00 crore (2017-18: Nil).
(ii) Details of auditorsâ remuneration and out-of-pocket expenses is as below:
* Other services includes Nil (2017-18: Rs.0.45 crore) in respect of rights issue which has been charged to securities premium.
(iii) As per the Companies Act, 2013, amount required to be spent by the Company on Corporate Social Responsibility (CSR) activities during the year was Rs.82.40 crore (2017-18: Rs.85.62 crore).
During the year ended March 31, 2019, in respect of CSR activities the Company incurred revenue expenditure which was recognised in the statement of profit and loss amounting to Rs.271.62 crore (Rs.270.12 crore has been paid in cash and Rs.1.50 crore is yet to be paid). During the year ended March 31, 2018, similar expense incurred was Rs.189.96 crore (Rs.188.96 crore was paid in cash and Rs.1.00 crore was unpaid).
During the year ended March 31, 2019, capital expenditure incurred on construction of capital assets under CSR projects is Rs.43.32 crore (Rs.30.92 crore paid in cash and Rs.12.40 crore is yet to be paid). During the year ended March 31, 2018, similar expense incurred was Rs.41.66 crore (Rs.24.25 crore was paid in cash and Rs.17.41 crore was unpaid).
(iv) During the year ended March 31, 2019, revenue expenditure charged to the statement of profit and loss in respect of research and development activities undertaken was Rs.212.97 crore (2017-18: Rs.159.22 crore) including depreciation of Rs.7.80 crore (2017-18: Rs.7.67 crore). Capital expenditure incurred in respect of research and development activities during the year was Rs.21.45 crore (2017-18: Rs.22.42 crore).
9. Exceptional items
[Item No. VI, Page 211]
Exceptional items are those which are considered for separate disclosure in the financial statements considering their size, nature or incidence. Such items included within the statement of profit and loss are detailed below:
(a) Profit/(loss) on sale of non-current investments Rs.262.28 crore (2017-18: Nil) relates to profit recognised on sale of investment in TRL Krosaki Refractories Limited, an associate of the Company.
(b) Provision for impairment of investments/doubtful advances Rs.12.53 crore (2017-18: Rs.36.27 crore) relates to provision recognised for impairment of investments in subsidiaries and joint ventures. During the year ended March 31, 2018 the Company recognised provision in respect of advances paid for repurchase of equity shares in Tata Teleservices Limited from NTT Docomo Inc Rs.26.65 crore.
(c) Provision for demands and claims Rs.328.64 crore (2017-18: Rs.3,213.68 crore) relates to provision recognised in respect of certain statutory demands and claims relating to environment and mining matters.
(d) Employee separation compensation Rs.35.34 crore (2017-18: Rs.89.69 crore) relates to provisions recognised in respect of employee separation scheme of employees.
10. Employee benefits
A. Defined contribution plans
The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
The major defined contribution plans operated by the Company are as below:
(a) Provident fund and pension
The Company provides provident fund benefits for eligible employees as per applicable regulations wherein both employees and the Company make monthly contributions at a specified percentage of the eligible employeeâs salary. Contributions under such schemes are made either to a provident fund set up as an irrevocable trust by the Company to manage the investments and distribute the amounts entitled to employees or to state managed funds.
Benefits provided under plans wherein contributions are made to state managed funds and the Company does not have a future obligation to make good shortfall if any, is treated as a defined contribution plan.
(b) Superannuation fund
The Company has a superannuation plan for the benefit of its employees. Employees who are members of the superannuation plan are entitled to benefits depending on the years of service and salary drawn.
Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employeesâ salary or Rs.1,50,000, whichever is lower, to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.
The contributions recognised as an expense in the statement of profit and loss during the year on account of the above defined contribution plans amounted to Rs.191.18 crore (2017-18: Rs.145.40 crore).
B. Defined benefit plans
The defined benefit plans operated by the Company are as below:
(a) Provident fund and pension
Provident fund benefits provided under plans wherein contributions are made to an irrevocable trust set up by the Company to manage the investments and distribute the amounts entitled to employees are treated as a defined benefit plan as the Company is obligated to provide the members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Companyâs contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in profit and loss under employee benefits expense.
In accordance with an actuarial valuation of provident fund liabilities based on guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.
(b) Retiring gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an year-end actuarial valuation.
(c) Post-retirement medical benefits
Under this unfunded scheme, employees of the Company receive medical benefits subject to certain limits on amounts of benefits, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company under an early separation scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The Company accounts for the liability for post-retirement medical scheme based on an year-end actuarial valuation.
(d) Other defined benefits
Other benefits provided under unfunded schemes include post-retirement lumpsum benefits, pension payable to directors of the Company on their retirement, farewell gifts and reimbursement of packing and transportation charges to the employees based on their last drawn salary.
The defined benefit plans expose the Company to a number of actuarial risks as below:
(i) Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit.
(ii) Interest risk: A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the value of planâs debt investments.
(iii) Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the planâs liability.
(iv) Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
The Companyâs investment policy is driven by considerations of maximising returns while ensuring credit quality of debt instruments. The asset allocation for plan assets is determined based on prescribed investment criteria and is also subject to other exposure limitations. The Company evaluates the risks, transaction costs and liquidity for potential investments. To measure plan assets performance, the Company compares actual returns for each asset category with published benchmarks.
(iii) Key assumptions used in the measurement of retiring gratuity is as below:
(iv) Weighted average duration of the retiring gratuity obligation is 9 years (March 31, 2018: 9 years).
(v) The Company expects to contribute Rs.80.21 crore to the plan during the financial year 2019-20.
(vi) The table below outlines the effect on retiring gratuity obligation in the event of a decrease/increase of 1% in the assumptions used.
The above sensitivities may not be representative of the actual change as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
(b) Post-retirement medical benefits and other defined benefits:
(i) The following table sets out the amounts recognised in the financial statements in respect of post-retirement medical benefits and other defined benefit plans.
11. Contingencies and commitments
A. Contingencies
I n the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an on-going basis with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Companyâs financial condition, results of operations or cash flows.
It is not practicable for the Company to estimate the timings of the cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the same.
Litigations
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not believe to be of a material nature, other than those described below.
Income tax
The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowance of expenses, tax treatment of certain expenses claimed by the Company as deduction and the computation of or eligibility of the Companyâs use of certain tax incentives or allowances.
Most of these disputes and/or disallowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years.
As at March 31, 2019, there are matters and/or disputes pending in appeals amounting to Rs.3,160.64 crore (March 31, 2018: Rs.1,443.29 crore).
The details of demands for more than Rs.100 crore is as below:
(a) Interest expenditure on loans taken by the Company for acquisition of a subsidiary has been disallowed in assessments with tax demand raised for Rs.1,791.29 crore (inclusive of interest) (March 31, 2018: Rs.1,250.16 crore).
(b) I nterest expenditure on âHybrid perpetual securitiesâ has been disallowed in assessments with tax demand raised for Rs.459.13 crore (inclusive of interest) (March 31, 2018: Nil)
I n respect of above demands, the Company has deposited an amount of Rs.1,065.00 crore (March 31, 2018: Rs.665.00 crore) as a precondition for obtaining stay. The Company expects to sustain its position on ultimate resolution of the said appeals.
Customs, excise duty and service tax
As at March 31, 2019, there were pending litigations for various matters relating to customs, excise duty and service taxes involving demands ofRs.682.53 crore (March 31, 2018: Rs.669.48 crore).
Sales tax/VAT
The total sales tax demands that are being contested by the Company amounted to Rs.717.02 crore (March 31, 2018: Rs.567.85 crore).
The details of demands for more than Rs.100 crore is as below:
(a) The Company stock transfers its goods manufactured at Jamshedpur works plant to its various depots/branches located outside the state of Jharkhand across the country without payment of Central Sales Tax as per the provisions of the Act and submits F-Form in lieu of the stock-transfers made during the period of assessment. These goods are then sold to various customers outside the states from depots/branches and the value of these sales are disclosed in the periodical returns filed as per the Jharkhand Vat Act 2005. The Commercial Tax Department has raised demand of Central Sales tax by levying tax on the differences between value of sales outside the states and value of F-Form submitted for stock transfers. The amount involved for various assessment years beginning 2011-12 to 2015-16 is amounting to Rs.127.00 crore (March 31, 2018: Rs.125.00 crore).
(b) The Commercial Tax Department of Jharkhand has rejected certain Input tax credit claimed by the Company on goods purchased from the suppliers within the State of Jharkhand. The Department has alleged that the goods have not been used in accordance with the provisions of Jharkhand VAT Act, 2005. The potential exposure on account of disputed tax and interest for the period beginning 2012-2013 to 2015-2016 as on March 31, 2019 is Rs.104.00 crore (March 31,2018: Rs.93.00 crore).
Other taxes, dues and claims
Other amounts for which the Company may contingently be liable aggregate to Rs.11,639.19 crore (March 31, 2018: Rs.9,925.20 crore).
The details of demands for more than Rs.100 crore are as below:
(a) Claim by a party arising out of conversion arrangement Rs.195.79 crore (March 31, 2018: Rs.195.79 crore). The Company has not acknowledged this claim and has instead filed a claim of Rs.141.23 crore (March 31, 2018: Rs.141.23 crore) on the party. The matter is pending before the Calcutta High Court.
(b) The State Government of Odisha introduced âOrissa Rural Infrastructure and Socio Economic Development Act, 2004â 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 December 2005 that the State does not have authority to levy tax on minerals. The State of Odisha filed an appeal in the Supreme Court against the order of Orissa High Court and the case is pending in Supreme Court. The potential liability, as at March 31, 2019 is Rs.7,573.53 crore (March 31, 2018: Rs.6,521.05 crore).
(c) The Company pays royalty on iron ore on the basis of quantity removed from the leased area at the rates based on notification issued by the Ministry of Mines, Government of India and the price published by Indian Bureau of Mines (IBM) on a monthly basis.
Demand ofRs.411.08 crore 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 November 14, 2013 before the Mines Tribunal, Government of India, Ministry of Mines, New Delhi, challenging the legality and validity of the demand raised and to grant refund of royalty paid in excess by the Company. Mines Tribunal has granted stay on the total demand with directive to Government of Odisha not to take any coercive action for realisation of this demanded amount. Likely demand of royalty on fines at sized ore rates as on March 31, 2019 is Rs.1,630.16 crore (March 31, 2018: Rs.1,036.53 crore).
(d) Demand notices were originally issued by the Deputy Director of Mines, Odisha amounting to Rs.3,827.29 crore for excess production over the quantity permitted under the mining plan, environment clearance or consent to operate, pertaining to 2000-01 to 2009-10. The demand notices have been raised under Section 21(5) of the Mines and Minerals (Development and Regulations) Act (MMDR). The Company filed revision petitions before the Mines Tribunal against all such demand notices. Initially, a stay of demands was granted, later by order dated October 12, 2017, the issue has been remanded to the state for reconsideration of the demand in the light of Supreme Court judgement passed on August 2, 2017.
The Honâble Supreme Court pronounced its judgement in the Common Cause case on August 2, 2017 wherein it directed that compensation equivalent to the price of mineral extracted in excess of environment clearance or without forest clearance from the forest land be paid.
In pursuance to the Judgement of Honâble Supreme Court, demand/show cause notices amounting to Rs.3,873.35 crore have been issued during 2017-18 by the Deputy Director of Mines, Odisha and the District Mining Office, Jharkhand.
In respect of the above demands:
- as directed by the Honâble Supreme Court, the Company has provided and paid for iron ore and manganese ore an amount of Rs.614.41 crore during 2017-18 for production in excess of environment clearance to the Deputy Director of Mines, Odisha.
- the Company has provided and paid under protest an amount ofRs.56.97 crore during 2017-18 for production in excess of environment clearance to the District Mining Office, Jharkhand.
- the Company has challenged the demands amounting to Rs.132.91 crore during 2017-18 for production in excess of lower of mining plan and consent to operate limits raised by the Deputy Director of Mines, Odisha before the Mines Tribunal and obtained a stay on the matter. Mines Tribunal, Delhi vide order dated November 26, 2018 disposed of all the revision applications with a direction to remand it to the State Government to hear all such cases afresh and pass detailed order. The demand amount of Rs.132.91 crore is considered contingent.
- the Company has made a comprehensive submission before the Deputy Director of Mines, Odisha against show cause notices amounting to Rs.694.02 crore received during 2017-18 for production in violation of mining plan, Environment Protection Act, 1986 and Water (Prevention and Control of Pollution) Act, 1981. A demand amounting to Rs.234.74 crore has been received in April 2018 from the Deputy Director of Mines, Odisha for production in excess of the Environmental Clearance. The Company has challenged the demand and obtained a stay on the matter from the Revisionary Authority, Mines Tribunal, New Delhi. The demand of Rs.234.74 crore has been provided and Rs.694.02 crore is considered contingent.
- The Company based on its internal assessment has provided an amount of Rs.1,412.89 crore against demand notices amounting to Rs.2,140.30 crore received from the District Mining Office, Jharkhand during 2017-18 for production in excess of environment clearance. The balance amount of Rs.727.41 crore is considered contingent. The Company has however been granted a stay by the Revisional Authority, Ministry of Coal, Government of India against such demand notices.
(e) An agreement was executed between the Government of Odisha (GoO) and the Company in December, 1992 for drawal of water from Kundra Nalla for industrial consumption. In December 1993, the Tahsildar, Barbil issued a show-cause notice alleging that the Company has lifted more quantity of water than the sanctioned limit under the agreement.
While the proceedings in this regard were in progress, the Company had applied for allocation of fresh limits.
Over the years, there has also been a steep increase in the water charges against which the Company filed writ petitions before the Honâble High Court of Odisha. In this regard, the Company has received demands of Rs.118.70 crore for the period beginning January 1996 to December 2018. The potential exposure as on March 31, 2019 is Rs.125.98 crore (March 31, 2018: Rs.99.34 crore) is considered contingent.
B. Commitments
(a) The Company has entered into various contracts with suppliers and contractors for the acquisition of plant and machinery, equipment and various civil contracts of capital nature amounting to Rs.7,265.82 crore (March 31, 2018: Rs.4,275.79 crore).
Other commitments as at March 31, 2019 amount to Rs.0.01 crore (March 31, 2018: Rs.0.01 crore).
(b) The Company has given undertakings to:
(i) IDBI not to dispose of its investment in Wellman Incandescent India Ltd.
(ii) IDBI and ICICI Bank Ltd. (formerly ICICI) not to dispose of its investment in Standard Chrome Ltd.
(iii) Mizuho Corporate Bank Limited and Japan Bank for International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte Limited (to retain minimal stake required to be able to provide a corporate guarantee towards long-term debt)
(iv) ICICI Bank Limited to directly or indirectly continue to hold atleast 51 % shareholding in Jamshedpur Continuous Annealing & Processing Company Private Limited.
(c) The Company and BlueScope Steel Limited have given undertaking to State Bank of India not to reduce collective shareholding in Tata BlueScope Steel Private Limited (TBSPL) (formerly Tata BlueScope Steel Limited), 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 TBSPL below 50%.
(d) The Company, as a promoter, has pledged 4,41,55,800 (March 31, 2018: 4,41,55,800) equity shares of Industrial Energy Limited with Infrastructure Development Finance Corporation Limited.
(e) The Company has agreed, if requested by Tata Steel UK Holdings Limited (TSUKH) (an indirect wholly owned subsidiary), to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.
(f) The Company has given guarantees aggregating Rs.12,096.24 crore (2018: Rs.11,478.00 crore) details of which are as below:
(i) in favour of Commissioner of Customs Rs.1.07 crore (March 31, 2018: Rs.1.07 crore) given on behalf of Timken India Limited in respect of goods imported.
(ii) i n favour of Mizuho Corporate Bank Ltd., Japan for Rs.9.60 crore (March 31, 2018: Rs.27.33 crore) against the loan granted to a joint venture Tata NYK Shipping Pte. Limited.
(iii) in favour of The President of India for Rs.177.18 crore (March 31, 2018: Rs.177.18 crore) against performance of export obligation under the various bonds executed by a joint venture Jamshedpur Continuous Annealing & Processing Company Private Limited.
(iv) i n favour of the note holders against due and punctual repayment of the 100% amounts outstanding as on March 31, 2019 towards issued Guaranteed Notes by a subsidiary, ABJA Investment Co. Pte Ltd. for Rs.10,376.63 crore (March 31, 2018: Rs.9,777.37 crore) and Rs.1,531.61 crore (March 31, 2018: Rs.1,494.90 crore). The guarantee is capped at an amount equal to 125% of the outstanding principal amount of the Notes as detailed in âTerms and Conditionsâ of the Offering Memorandum.
(v) in favour of President of India for Rs.0.15 crore (March 31, 2018: Rs.0.15 crore) against advance license.
12. Other significant litigations
(a) Odisha Legislative Assembly issued an amendment to Indian Stamp Act, 1889, on May 9, 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 July 5, 2013. The Honâble High Court, Cuttack passed an order on July 9, 2013 granting interim stay on the operation of the Amendment Act, 2013. Because 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.5,579.00 crore (March 31, 2018: Rs.5,579.00 crore). The Company has concluded that it is remote that the claim will sustain on ultimate resolution of the legal case by the court.
I n 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 March 31, 2030 in respect of eight mines and up to March 31, 2020 for two mines subject to execution of supplementary lease deed. Liability has been provided in the books of accounts as on March 31, 2019 as per the existing provisions of the Stamp Act 1899 and the Company had paid the stamp duty and registration charges totalling Rs.413.72 crore for supplementary deed execution in respect of eight mines out of the above mines.
(b) Noamundi Iron Ore Mine of TSL was due for its third renewal with effect from January 1, 2012. The application for renewal was submitted by the Company within the stipulated time, but it remained pending consideration with the State and the mining operations were continued in terms of the prevailing law.
By a judgement of April 2014 in the case of Goa mines, the Supreme Court took a view that second and subsequent renewal of mining lease can be effected once the State considers the application and decides to renew the mining lease by issuing an express order. State of Jharkhand issued renewal order to the Company on December 31, 2014. The State, however, took a view on interpretation of Goa judgement that the mining carried out after expiry of the period of second renewal was âillegalâ and hence, issued a demand notice of Rs.3,568.31 crore being the price of iron ore extracted. The said demand has been challenged by the Company before the Jharkhand High Court.
The mining operations were suspended from August 1, 2014. Upon issuance of an express order, the Company paid Rs.152.00 crore under protest, so that mining can be resumed.
The Mines and Minerals Development and Regulation (MMDR) Amendment Ordinance 2015 promulgated on January 12, 2015 provides for extension of such mining leases whose applications for renewal have remained pending with the State(s). Based on the new Ordinance, Jharkhand Government revised the Express Order on February 12, 2015 for extending the period of lease up to March 31, 2030 with the following terms and conditions:
- value of iron ore produced by alleged unlawful mining during the period January 1, 2012 to April 20, 2014 for Rs.2,994.49 crore to be decided on the basis of disposal of our writ petition before Honâble High Court of Jharkhand.
- value of iron ore produced from April 21, 2014 to July 17, 2014 amounting to Rs.421.83 crore to be paid in maximum 3 instalments.
- value of iron ore produced from July 18, 2014 to August 31, 2014 i.e. Rs.152.00 crore to be paid immediately.
District Mining Officer Chaibasa on March 16, 2015 issued
Mar 31, 2018
1. Leases
The Company has taken certain land, buildings, plant and machinery under operating and/or finance leases. The following is a summary of future minimum lease rental payments under non-cancellable operating leases and finance leases entered into by the Company.
A. Operating leases:
Significant leasing arrangements include lease of land for periods ranging between 12 to 99 years renewable on mutual consent, lease of office space and assets dedicated for use under long term arrangements. Payments under long term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on the underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on lease assessment and/or lease classification. Payments linked to changes in inflation index under the lease arrangements have been considered as contingent rent and recognized in the statement of profit and loss as and when incurred.
2. Leases (Contd.)
B. Finance leases:
Significant leasing arrangements include assets dedicated for use under long term arrangements. The arrangements cover a substantial part of the economic life of the underlying assets and generally contain a renewal option on expiry. Payments under long term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on lease assessment and/or lease classification.
(iv) Other loans primarily represent loans given to employees.
(v) Disclosure as per Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 186(4) of the Companies Act, 2013:
(a) Amount of loans/advances in the nature of loan outstanding from subsidiaries, associates and joint venture for the year ended March 31, 2018:
(i) Non-current earmarked bank balances represent deposits and balances in escrow account not due for realisation within 12 months from the balance sheet date. These are primarily placed as security with government bodies, margin money against issue of bank guarantees.
(ii) Non-current other financial assets include advance against equity for purchase of shares in subsidiaries Rs,2.00 crore (March 31, 2017: Rs,12.30 crore) out of which Rs,2.00 crore (March 31, 2017: Rs,2.30 crore) is impaired.
Non-current other financial assets as at March 31, 2017, include advance for repurchase of equity shares in Tata Teleservices Limited (TTSL) from NTT Docomo Inc, Rs,144.07 crore out of which Rs,117.42 crore was impaired.
(iii) Current other financial assets include amount receivable from post-employment benefit fund ''296.38 crore (March 31, 2017: ''247.04 crore) on account of retirement benefit obligations paid by the Company directly.
A. Income tax expense/(benefit)
The Company is subject to income tax in India on the basis of its standalone financial statements. As per the Income Tax Act, 1961, the Company is liable to pay income tax based on higher of regular income tax payable or the amount payable based on the provisions applicable for Minimum Alternate Tax (MAT). MAT paid in excess of regular income tax during a year can be carried forward for a period of fifteen years and can be offset against future tax liabilities arising from regular income tax.
The Company can claim tax exemptions/deductions under specific sections of the Income Tax Act, 1961 subject to fulfillment of prescribed conditions, as may be applicable.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
(i) Finance Act, 2018, changed the statutory tax rate applicable for Indian companies having turnover of more than Rs,250 crore from 34.608 % to 34.944 % (including surcharge and cess) from assessment year 2019-20. The Company has accordingly re-measured deferred tax balances expected to reverse in future periods based on the revised applicable rate.
3. Equity share capital (Contd.)
[Item No. III(a), Page 194]
(a) 450 Ordinary Shares of face value of Rs,10 per share were allotted on May 15, 2017 at a premium of Rs,290 per share to shareholders whose shares were kept in abeyance in the Rights Issue made in 2007.
(b) During the year ended March 31, 2018, the Company allotted 15,52,68,926 fully paid Ordinary Shares of face value of Rs,10 each for cash at a price of Rs,510 per fully paid share (including a premium of Rs,500 per fully paid share) aggregating to Rs,7,918.72 crore and 7,76,34,625 partly paid Ordinary Shares of face value of Rs,10 each (paid up value Rs,2.504 per share) for cash at a price of Rs,615 per partly paid share (including a premium of Rs,605 per partly paid share) aggregating to Rs,1,195.57 crore pursuant to the Rights Issue of 2018.
Tata Sons Limited had undertaken to subscribe, on its own account and through any nominated entity or person belonging to the promoter
Group, to the full extent of their Rights Entitlement in the Issue in accordance with Regulation 10(4)(a) of the Takeover Regulations.
(iv) As at March 31, 2018, 3,00,395 Ordinary Shares (March 31, 2017: 3,01,183 Ordinary Shares) are kept in abeyance in respect of Rights Issue of 2007.
As at March 31, 2018, 1,25,624 Ordinary Shares and 62,655 partly paid Ordinary Shares are kept in abeyance in respect of Rights Issue of 2018.
4. Equity share capital (Contd.)
[Item No. III(a), Page 194]
(vi) 1,27,40,651 shares (March 31, 2017: 1,55,10,420 shares) of face value of Rs,10 per share represent the shares underlying GDRs which were issued during 1994 and 2009. Each GDR represents one underlying Ordinary Share.
(vii) 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 principal rights are as below:
A. Ordinary Shares of Rs,10 each
(i) 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.
(ii) 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.
(iii) 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 ''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 Companies Act, 1956.
(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 ''100 per share and Cumulative Convertible Preference Shares (CCPS) of ''100 per share.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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 had issued hybrid perpetual securities of Rs,775.00 crore and Rs,1,500.00 crore in May 2011 and March 2011 respectively. These securities are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The distribution on these securities are 11.50% p.a. and 11.80% p.a. respectively, with a step up provision if the securities are not called after 10 years. The distribution on the securities may be deferred at the option of the Company if in the six months preceding the relevant distribution payment date, the Company has not made payment on, or repurchased or redeemed, any securities ranking pari passu with, or junior to the instrument. As these securities are perpetual in nature and the Company does not have any redemption obligation, these have been classified as equity.
(i) Represents profit on sale of investments carried at fair value through other comprehensive income.
B. Items of other comprehensive income
(a) Cash flow hedge reserve
The cumulative effective portion of gain or losses arising on changes in the fair value of hedging instruments designated as cash flow hedges are recognized in cash flow hedge reserve. Such changes recognized are reclassified to the statement of profit and loss when the hedged item affects the profit or loss or are included as an adjustment to the cost of the related non-financial hedged item.
The Company has designated certain foreign currency forward contracts and interest rate collars as cash flow hedges in respect of foreign exchange and interest rate risks.
During the year, ineffective portion of cash flow hedges recognized in the statement of profit and loss amounted to Nil (2016-17: Nil)
(ii) The amount recognized in cash flow hedge reserve (net of tax) is expected to impact the statement of profit and loss as below:
- within the next one year: gain Rs,1.39 crore (2016-17: loss Rs,1.35 crore)
- later than one year: gain Rs,3.75crore (2016-17: Nil)
(b) Investment revaluation reserve
The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognized in investment revaluation reserve. The balance of the reserve represents such changes recognized net of amounts reclassified to retained earnings on disposal of such investments.
(d) Capital redemption reserve
The Companies Act, 2013 requires that when a Company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to the redemption of preference shares issued in earlier years.
(e) Others
Others primarily represent amount appropriated out of the statement of profit and loss for unforeseen contingencies. Such appropriations are free in nature.
(i) As at March 31, 2018, Rs,2,528.86 crore (March 31, 2017: Rs,2,435.03 crore) of the total outstanding borrowings were secured by a charge on property, plant and equipment, inventories and receivables.
The security details of major borrowings as at March 31, 2018 are as below:
(a) Loan from Joint Plant Committee-Steel Development Fund
It is secured by mortgages on, all present and future immovable properties wherever situated and hypothecation of movable assets, excluding land and building mortgaged in favour of Government of India under the deed of mortgage dated April 13, 1967 and in favour of Government of Bihar under two deeds of mortgage dated May 11, 1963, immovable properties and movable assets of the Tube Division, Bearing Division, Ferro Alloys Division and Cold Rolling Complex (West) at Tarapur and all investments and book debts of the Company subject to the prior charges created and/or to be created in favour of
the bankers for securing borrowing for the working capital requirement and charges created and/or to be created on specific items of machinery and equipment procured/to be procured under deferred payment schemes/bill re-discounting schemes/asset credit schemes.
The loan is repayable in 16 equal semi-annual instalments after completion of four years from the date of the tranche.
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 subjudice.
The loan includes funded interest Rs,855.09 crore (March 31, 2017: Rs,781.32 crore).
It includes Rs,1,639.33 crore (March 31, 2017: Rs,1,639.33 crore) representing repayments and interest on earlier loans for which applications of funding are awaiting sanction and is not secured by charge on movable assets of the Company.
5. Borrowings (Contd.)
[Item No. IV(a)(i) and V(a)(i), Page 194]
(ii) The details of major unsecured borrowings as at March 31, 2018
are as below:
(a) Non-Convertible 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 January 6, 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 December 22, 2028.
(iii) 8.15% p.a. interest bearing 10,000 debentures of face value Rs,10,00,000 each are redeemable at par on October 1, 2026.
(iv) 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 April 23, 2022.
(v) 9.15% p.a. interest bearing 5,000 debentures of face value Rs,10,00,000 each are redeemable at par on January 24, 2021.
(vi) 11.00% p.a. interest bearing 15,000 debentures of face value Rs,10,00,000 each are redeemable at par on May 19, 2019.
(vii) 10.40% p.a. interest bearing 6,509 debentures of face value Rs,10,00,000 each are redeemable at par on May 15, 2019.
(viii) 9.15% p.a. interest bearing 5,000 debentures of face value Rs,10,00,000 each are redeemable at par on January 24, 2019.
(b) Term loans from banks and financial institutions
(i) Rupee loan amounting Rs,4,450 crore (March 31, 2017: Rs,4,450.00 crore) is repayable in 17 quarterly installments. The Company on March 15, 2018 gave prepayment notice to the lenders for an amount of Rs,1,950.00 crore. The remaining amount is repayable in 9 quarterly installments commencing from March 31, 2023.
(ii) Rupee loan amounting Rs,750.00 crore (March 31, 2017: Nil) is repayable in 3 equal annual instalments commencing from May 21, 2021.
(iii) USD 7.86 million equivalent to Rs,51.24 crore (March 31, 2017: 7.86 million equivalent to Rs,50.98 crore) is repayable on March 1, 2021.
(iv) USD 200 million equivalent to Rs,1,303.65 crore (March 31, 2017: USD 200.00 million equivalent to Rs,1,297.10 crore) loan is repayable in 3 equal annual installments commencing from February 18, 2020.
(v) Rupee loan amounting Rs,2,000.00 crore (March 31, 2017: Rs,2,000.00 crore) is repayable in 10 semi-annual installments commencing from April 30, 2019.
(vi) Rupee loan amounting Rs,646.16 crore (March 31, 2017: Rs,650.00 crore) is repayable in 18 semi-annual installments, the next installment is due on August 14, 2018.
(vii) Euro 21.62 million equivalent to Rs,174.68 crore (March 31, 2017: Euro 27.02 million equivalent to Rs,187.18 crore) loan is repayable in 8 equal semi-annual installments; the next installment is due on July 6, 2018.
(viii) Euro 4.69 million equivalent to Rs,37.92 crore (March 31, 2017: Euro 9.39 million equivalent to Rs,65.02 crore) loan is repayable in 2 equal semi-annual installments, the next installment is due on July 2, 2018.
(ix) Rupee loan amounting Rs,823.84 crore (March 31, 2017: Rs,850.00 crore) is repayable in 14 semi-annual installments, the next installment is due on June 15, 2018.
(x) Rupee loan amounting Rs,1,485 crore (March 31, 2017: Nil) is repayable in 19 semi-annual installments, the next installment is due on May 28, 2018.
(xi) Euro 85.98 million equivalent to Rs,694.80 crore (March 31, 2017: Euro 105.08 million equivalent to Rs,727.98 crore) loan is repayable in 9 equal semi-annual installments, the next installment is due on April 27, 2018.
Interest rates on the above term loans from banks and financial
institutions range between 8.20 % to 8.75 % for rupee term
loans and between 0.12 % to 4.80 % for foreign loans.
INR-Indian rupees, USD-United States dollars.
(iv) Majority of floating rate borrowings are bank borrowings bearing interest rates based on LIBOR and EURIBOR. Of the total floating rate borrowings as at March 31, 2018, Rs,977.74 crore (March 31, 2017: Rs,972.83 crore) has been hedged using interest rate swaps and collars, with contracts covering period of more than one year.
(vi) Some of the Company''s major financing arrangements include financial covenants, which require compliance to certain debt-equity and debt coverage ratios. Additionally, certain negative covenants may limit the Company''s ability to borrow additional funds or to incur additional liens, and/or provide for increased costs in case of breach.
[Item No. IV(b) and V(b), Page 194]
(i) Non-current and current provision for employee benefits include leave salaries Rs,984.33 crore (March 31, 2017: Rs,1,016.95 crore) and provision for early separation scheme Rs,1,019.98 crore (March 31, 2017 Rs,1,036.89 crore).
(ii) As per the leave policy of the Company, an employee is entitled to be paid the accumulated leave balance on separation. The Company presents provision for leave salaries as current and non-current based on actuarial valuation considering estimates of availment of leave, separation of employee, etc.
(iii) Non current and current other provisions include:
(a) provision for compensatory forestation, mine closure and rehabilitation obligations Rs,626.01 crore (March 31, 2017: Rs,529.13 crore). These amounts become payable upon closure of the mines and are expected to be incurred over a period of 1 to 34 years.
(b) provision for legal and constructive commitments provided by the Company in respect of a loss making subsidiary Rs,50.33 crore (March 31, 2017: Rs,135.58 crore). The same is expected to be settled within one year from the reporting date.
(i) Detailed disclosure in respect post retirement defined benefit schemes is provided in Note 35, Page 252.
(ii) Other defined benefits include long service awards, packing and transportation, farewell gifts, etc.
(i) Grants relating to property, plant and equipment relate to duty saved on import of capital goods and spares under the EPCG scheme. Under the scheme, the Company is committed to export prescribed times of the duty saved on import of capital goods over a specified period of time. In case such commitments are not met, the Company would be required to pay the duty saved along with interest to the regulatory authorities. Such grants recognized are released to the statement of profit and loss based on fulfillment of related export obligations.
During the year Rs,519.31 crore (2016-17: Rs,342.90 crore ) was released from deferred income to the statement of profit and loss on fulfillment of export obligations.
(iii) As per the Companies Act, 2013, amount required to be spent by the Company on Corporate Social Responsibility (CSR) activities during the year was Rs,85.62 crore (2016-17 : Rs,115.80 crore).
During the year ended March 31, 2018, in respect of CSR activities the Company incurred revenue expenditure which was recognized in the statement of profit and loss amounting to Rs,189.96 crore [Rs,188.96 crore has been paid in cash and Rs,1.00 crore is yet to be paid]. During the year ended March 31, 2017, similar expense incurred was Rs,191.21 crore [Rs,190.29 crore was paid in cash and Rs,0.93 crore was unpaid].
During the year ended March 31, 2018, Capital expenditure incurred on construction of capital assets under CSR projects is Rs,41.66 crore [Rs,24.25 crore paid in cash and Rs,17.42 crore is yet to be paid]. During the year ended March 31, 2017, similar expense incurred was Rs,2.40 crore [Rs,1.66 crore was paid in cash and Rs,0.74 crore was unpaid].
(iv) During the year ended March 31, 2018, revenue expenditure charged to the statement of profit and loss in respect of research and development activities undertaken was Rs,159.22 crore (2016-17: Rs,132.26 crore) including depreciation of Rs,7.67 crore (2016-17: Rs,7.87 crore). Capital expenditure incurred in respect of research and development activities during the year was Rs,22.42 crore (2016-17: Rs,12.32 crore).
6. Exceptional items
[Item No. VI, Page 195]
Exceptional items are those which are considered for separate disclosure in the financial statements considering their size, nature or incidence. Such items included within the statement of profit and loss are detailed below:
(a) Provision for diminution in value of investments held in subsidiaries and joint ventures Rs,36.27 crore (2016-17: Rs,45.42 crore) and provision in respect of advances paid for repurchase of equity shares in Tata Teleservices Limited from NTT Docomo Inc Rs,26.65 crore (2016-17: Rs,125.45 crore).
(b) Provision of Rs,3,213.68 crore (2016-17: Rs,218.25 crore) in respect of certain statutory demands and claims relating to environment and mining matters, net of liability towards district mining fund no longer required written back.
(c) Provision of Rs,89.69 crore (2016-17: Rs,178.68 crore) on account of employee separation scheme.
(d) During the year ended March 31, 2017, provision of Rs,135.58 crore was recognized on account of legal and constructive commitments provided by the Company in respect of a loss making subsidiary.
(i) Basic and diluted earnings per share for the year ended March 31, 2017, have been adjusted retrospectively for the bonus element in respect of rights issue made during the year ended March 31, 2018.
(i) As at March 31, 2018, 28,69,886 options (2016-17: Nil) were excluded from weighted average number of Ordinary Shares for the computation of diluted earning per share as these were anti-dilutive.
7. Employee benefits
A. Defined contribution plans
The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognized in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
The major defined contribution plans operated by the Company are as below:
(a) Provident fund and pension
The Company provides provident fund benefits for eligible employees as per applicable regulations wherein both employee''s and the Company make monthly contributions at a specified percentage of the eligible employee''s salary. Contributions under such schemes are made either to a provident fund set up as an irrevocable trust by the Company to manage the investments and distribute the amounts entitled to employees or to state managed funds.
Benefits provided under plans wherein contributions are made to state managed funds and the Company does not have a future obligation to make good short fall if any, are treated as a defined contribution plan.
(b) Superannuation fund
The Company has a superannuation plan for the benefit of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn.
Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees'' salary or ''1,00,000, whichever is lower, to the trust every year. Such contributions are recognized as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.
8. Employee benefits (Contd.)
The contributions recognized as an expense in the statement of profit and loss during the year on account of defined contribution plans amounted to Rs,145.40 crore (2016-17: Rs,151.34 crore).
B. Defined benefit plans
The defined benefit plans operated by the Company are as below:
(a) Provident fund and pension
Provident fund benefits provided under plans wherein contributions are made to an irrevocable trust set up by the Company to manage the investments and distribute the amounts entitled to employees are treated as a defined benefit plan as the Company is obligated to provide the members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company''s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognized as an expense in profit or loss under employee benefits expense.
I n accordance with an actuarial valuation of provident fund liabilities based on guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.
(b) Retiring gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an year end actuarial valuation.
(c) Post retirement medical benefits
Under this unfunded scheme, employees of the Company receive medical benefits subject to certain limits on amounts of benefits, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company under an early separation scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The Company accounts for the liability for post-retirement medical scheme based on an year end actuarial valuation.
(d) Other defined benefits
Other benefits provided under unfunded schemes include pension payable to directors of the Company on their retirement, farewell gifts and reimbursement of packing and transportation charges to the employees based on their last drawn salary.
The defined benefit plans expose the Company to a number of
actuarial risks as below:
(a) Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit.
(b) Interest risk: A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.
(c) Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan''s liability.
(d) Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.
A. Contingencies
In the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an on-going basis with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Company''s financial condition, results of operations or cash flows.
Litigations
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not believe to be of material nature, other than those described below.
Income tax
The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowance of expenses, tax treatment of certain expenses claimed by the Company as deduction and the computation of or eligibility of the Company''s use of certain tax incentives or allowances.
Most of these disputes and/or dis-allowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years.
As at March 31, 2018, there are matters and/or disputes pending in appeal amounting to Rs,1,443.29 crore (March 31, 2017: Rs,1,417.54 crore).
The details of demands for more than Rs,100 crore is as below:
Interest expenditure on loans taken by the Company for acquisition of a subsidiary has been disallowed in assessments with tax demand raised for Rs,1,250.16 crore (inclusive of interest) (March 31, 2017: Rs,1,217.79 crore). The Company has deposited Rs,665.00 crore (March 31, 2017: Rs,515.00 crore) as part payment as a precondition to obtain stay of demand. The Company expects to sustain its position on ultimate resolution of the appeals.
Customs, excise duty and service tax
As at March 31, 2018, there were pending litigations for various matters relating to customs, excise duty and service taxes involving demands of ''669.48 crore (March 31, 2017: ''482.72 crore).
The details of demands for more than ''100 crore is as below:
The Company has a Chrome ore beneficiation plant at Sukinda which was 100% EOU engaged in the manufacture and export of Chrome concentrates. During the period from Aug 2011 to Jun 2016, chrome concentrates were cleared to some customers in Domestic tariff area on payment of appropriate Excise duty leviable on such goods after availing the benefit of exemption under notification No.23/2003-CE dated 31.03.2003. However, the Excise department has raised the demand for alleged short payment of duty on the ground that exemption notification mentioned above is not applicable to the company and hence custom duty is payable instead of Excise duty. The amount involved comprising of demand and penalty is Rs,121 crore (March 31, 2017: Nil). An appeal is being filed against the order before CESTAT, Kolkata.
Sales tax /VAT
The total sales tax demands that are being contested by the Company amounted to ''567.85 crore (March 31, 2017: ''349.58 crore).
The details of demands for more than ''100 crore is as below:
The Company transfers its goods manufactured at Jamshedpur works plant to various depots/branches located across the country without payment of Central Sales tax as per the provisions of the Act and submits F-Form in lieu of the stock-transfers made during a particular period. These goods are then sold to various customers outside the states from these depots/branches and the value of these sales are disclosed in the periodical returns filed as per the Jharkhand Vat Act 2005. The Commercial Tax Department has raised the demand of Central Sales tax by levying tax on the differences between Value of sales outside the states and value of F-Form submitted for stock transfers during sales tax assessments. The amount involved under various assessment years from 2011-12 to 2014-15 is Rs, 312 crore out of which Rs, 125 crore (March 31, 2017: Nil) has been considered as contingent liability.
Other taxes, dues and claims
Other amounts for which the Company may contingently be liable aggregate to Rs,9,925.20 crore (March 31, 2017: Rs,8,571.00 crore).
The details of demands for more than Rs,100 crore is as below:
(a) Claim by a party arising out of conversion arrangement-Rs,195.79 crore (March 31, 2017: Rs,195.82 crore). The Company has not acknowledged this claim and has instead filed a claim of Rs,141.23 crore (March 31, 2017: Rs,139.65 crore) on the party. The matter is pending before the Calcutta High Court.
(b) 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 December 2005 that State does not have authority to levy tax on minerals. The State of Odisha filed an appeal in the Supreme Court against the order of Orissa High Court and the case is pending in Supreme Court. The potential liability, as at March 31, 2018 would be approximately Rs,6,521.05 crore (March 31, 2017: Rs,5,880.83 crore).
(c) The Company pays royalty on Iron 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 Indian Bureau of Mines (IBM) on a monthly basis.
A demand of Rs,411.08 crore 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 November 14, 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 paid in excess by the Company. Mines tribunal vide its order dated November 13, 2014 has stayed the demand of royalty on iron ore for Joda east of Rs,314.28 crore upto the period ending March 31, 2014. For the demand of Rs,96.80 crore for April, 2014 to September, 2014, a separate revision application was filed before Mines Tribunal. The matter was heard by Mines Tribunal on July 14, 2015 and stay was granted on the total demand with directive to Government of Odisha not to take any coercive action for realisation of this demanded amount. Likely demand of royalty on fines at sized ore rates as on March 31, 2018: Rs,1,036.53 crore (March 31, 2017: Rs,847.96 crore).
(d) Demand notices were originally issued by the Deputy Director of Mines, Odisha amounting to ''3,828 crore for excess production over the quantity permitted under the mining plan, environment clearance or consent to operate, pertaining to 2000-01 to 2009-10. The demand notices have been raised under Section 21(5) of the Mines & Minerals (Development and Regulations) Act (MMDR). The Company filed revision petitions before the Mines Tribunal against all such demand notices. Initially, a stay of demands was granted, later by order dated October 12, 2017, the issue has been remanded to the state for reconsideration of the demand in the light of Supreme Court judgment passed on August 2, 2017.
The Hon''ble Supreme Court subsequently pronounced its judgment in the Common Cause case on August 2, 2017 wherein it directed that compensation equivalent to the price of mineral extracted in excess of environment clearance or without forest clearance from the forest land be paid.
In pursuance to the Judgment of Hon''ble Supreme Court, demand/show cause notices amounting to Rs,3,873.35 crore have been issued by the Deputy Director of Mines, Odisha and the District Mining Office, Jharkhand.
In respect of the above demands:
- as directed by the Hon''ble Supreme Court, the Company has provided and paid for iron ore and manganese ore an amount of Rs,614.41 crore for production in excess of environment clearance to the Deputy Director of Mines, Odisha.
- the Company has provided and paid under protest an amount of Rs,56.97 crore for production in excess of environment clearance to the District Mining Office, Jharkhand.
- the Company has challenged the demands amounting to Rs,132.91 crore for production in excess of lower of mining plan and consent to operate limits raised by the Deputy Director of Mines, Odisha before the Mines Tribunal and obtained a stay on the matter. Demand amount of Rs,132.91 crores has been considered as contingent liability.
- the Company has made a comprehensive submission before the Deputy Director of Mines, Odisha against show cause notices amounting to Rs,694.02 crore for production in violation of mining plan, Environment Protection Act, 1986 and Water (Prevention & Control of Pollution) Act, 1981. There has been a demand amounting to Rs,234.74 crore from the Deputy Director of Mines, Odisha for production in excess of the Environmental Clearance in April 2018 against which suitable legal remedy is being explored. Demand of Rs,234.74 crore has been provided and Rs,694.02 crore has been disclosed as contingent liability.
- the Company based on its internal assessment has provided an amount of Rs,1,412.89 crore against demand notices amounting to Rs,2,140.30 crore received from the District Mining Office, Jharkhand for production in excess of environment clearance and the balance amount of Rs,727.41 crore has been considered as contingent liability. The Company has however been granted a stay by the Revisional Authority, Ministry of Coal, Government of India against such demand notices.
B. Commitments
(a) The Company has entered into various contracts with suppliers and contractors for the acquisition of plant and machinery, equipment and various civil contracts of capital nature amounting to Rs,4,275.79 crore, (2016-17: Rs,3,825.85 crore).
Other commitments as at March 31, 2018 amount to Rs,0.01 crore (March 31, 2017: Rs,0.01 crore).
(b) 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) Mizuho Corporate Bank Limited and Japan Bank for International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte Limited (to retain minimal stake required to be able to provide a corporate guarantee towards long-term debt) (d) ICICI Bank Limited to directly or indirectly continue to hold atleast 51 % shareholding in Jamshedpur Continuous Annealing & Processing Company Private Limited.
(c) Tata Steel Limited and Bluescope Steel Limited have given undertaking to State Bank of India not to reduce collective shareholding in Tata Bluescope Steel Limited (TBSL), 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 TBSL below 50%.
(d) The Company, as a promoter, has pledged 4,41,55,800 equity shares of Industrial Energy Limited with Infrastructure Development Finance Corporation Limited.
(e) The Company along with TS Alloys Limited (Promoters) has given an undertaking to Power Finance Corporation Limited (PFC) and Rural Electrification Corporation Limited (REC) (Lenders) not to dispose off/transfer their equity holding below 51% of total equity in Bhubaneswar Power Private Limited (BPPL) till the repayment of entire loan by BPPL to the lenders without prior written approval of the lenders. The Company along with TS Alloys Limited has pledged 60% of their equity contribution in BPPL to PFC, PFC being the security agent.
(f) The Company has agreed, if requested by Tata Steel UK Holdings Limited (TSUKH) (an indirect wholly owned subsidiary), to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.
(g) The Company has given guarantees aggregating Rs,11,478.00 crore (2017: Rs,11,344.47 crore) details of which are as below:
(i) i n favour of Timken India Limited for Rs,1.07 crore (March 31, 2017: Rs,1.07 crore) on behalf of Timken India Limited to Commissioner of Customs in respect of goods imported.
(ii) in favour of Mizuho Corporate Bank Ltd., Japan for Rs,27.33 crore (March 31, 2017: Rs,45.38 crore) against the loan granted to a joint venture Tata NYK Shipping Pte. Limited.
(iii) in favour of The President of India for Rs,177.18 crore (March 31, 2017: Rs,177.18 crore) against performance of export obligation under the various bonds executed by a joint venture Jamshedpur Continuous Annealing & Processing Company Private Limited.
(iv) I n favour of the note holders against due and punctual repayment of the 100% amounts outstanding as on March 31, 2018 towards issued Guaranteed Notes by a subsidiary, ABJA Investment Co. Pte. Limited for Rs,9,777.37 crore (March 31, 2017: Rs,9,728.25 crore) and Rs,1,494.90 crore (March 31, 2017: Rs,1,392.44 crore). The guarantee is capped at an amount equal to 125% of the outstanding principal amount of the Notes as detailed in "Terms and Conditions" of the Offering Memorandum.
(v) In favour of President of India for Rs,0.15 crore (March 31, 2017: Rs,0.15 crore) against advance license.
9. Other significant litigations
(a) Odisha legislative assembly issued an amendment to Indian Stamp Act on May 09, 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 July 5, 2013. The Hon''ble High Court, Cuttack passed an order on July 9, 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 totaling to Rs,5,579 crore (March 31, 2017: Rs,5,579 crore). The Company has concluded that it is remote that the claim will sustain on ultimate resolution of the legal case by the courts.
I n 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 March 31, 2030 in respect of eight mines and up to March 31, 2020 for two mines subject to execution of supplementary lease deed. Liability has been provided in the books of accounts as on March 31, 2018 as per the existing provisions of the Stamp Act 1899 and the Company has since paid the stamp duty and registration charges totalling Rs,413.72 crore (March 31, 2017: Rs,413.72 crore) for supplementary deed execution in respect of eight mines out of the above mines.
(b) Noamundi Iron Ore Mine of TSL was due for its third renewal with effect from January 01, 2012. The application for renewal was submitted by the Company within the stipulated time, but it remained pending consideration with the State and the mining operations were continued in terms of the prevailing law.
By a judgment of April 2014 in the case of Goa mines, the Supreme Court took a view that second and subsequent renewal of mining lease can be effected once the State considers the application and decides to renew the mining lease by issuing an express order. State of Jharkhand issued renewal order to the Company on December 31, 2014. The State, however, took a view on an interpretation of Goa judgment that the mining carried out after expiry of the period of second renewal was Rs,illegal'' and hence, issued a demand notice of Rs,3568.00 crore being the price of iron ore extracted. The said demand has been challenged by the Company before the Jharkhand Hight Court.
The mining operations were suspended from August 01, 2014. Therefore, upon issuance of express order, Company paid Rs,152.00 crore under protest, so that mining can be resumed.
The Mines and Minerals Development and Regulation (MMDR) Amendment Ordinance 2015 promulgated on January 12, 2015 provides for extension of such mining leases whose applications for renewal have remained pending with the State(s). Based on the new Ordinance, Jharkhand Government revised the Express Order on February 12, 2015 for extending the period of lease up to March 31, 2030 with following terms and conditions:
10. Other significant litigations (Contd.)
- value of Iron ore produced by alleged unlawful mining during the period January 1, 2012 to April 20, 2014 for Rs,2,994.49 crore 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 April 21, 2014 to July 17, 2014 amounting to Rs,421.83 crore to be paid in maximum 3 installments.
- value of Iron Ore produced from July 18, 2014 to August 31, 2014 i.e. Rs,152.00 crore to be paid immediately.
District Mining Officer Chaibasa on March 16, 2015 has issued demand notice for payment of Rs,421.83 crore, payable in three monthly installments. The Company replied on March 20, 2015, since the lease has been extended by application of law till March 31, 2030, the above demand is not tenable. The Company paid Rs,50.00 crore under protest on July 27, 2015, because the State had stopped issuance of transit permits.
Another writ petition has been filed before Hon''ble High Court of Jharkhand and heard on September 9, 2015. An interim
order has been given by Hon''ble High Court of Jharkhand on September 18, 2015 wherein court has directed the Company to discharge the liability of one of the demands raised by the State and pay the amount of Rs,371.83 crore in 3 equal installments, first installment by October 15, 2015, second installment by November 15, 2015 and third installment by December 15, 2015.
In view of the interim order of Hon''ble High Court of Jharkhand Rs,124 crore was paid on September 28, 2015, Rs,124.00 crore was paid on November 12, 2015 and Rs,123.83 crore on December 14, 2015 under protest.
The case is pending at Hon''ble High court for disposal. The State issued similar terms and conditions to other mining lessees in the State rendering the mining as illegal. On a correct application of Goa judgment read with the amendment in the year 2015, the Company expects that it is remote that the claim of the State will sustain and consequently, the demands raised by the State would be quashed by the courts .
11. Capital management
The Company''s capital management is intended to create value for shareholders by facilitating the achievement of long term and short term goals of the Company.
The Company determines the amount of capital required on the basis of annual business plan coupled with long term and short term strategic investment and expansion plans. The funding needs are met through equity, cash generated from operations, long term and short term bank borrowings and issue of non-convertible debt securities.
The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
Net debt includes interest bearing borrowings less cash and cash equivalents, other bank balances (including non-current and earmarked balances) and current investments.
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, basis of measurement and the basis on which income and expenses are recognized in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2(n), Page 205 to the financial statements.
(a) Financial assets and liabilities
The following tables presents the carrying value and fair value of each category of financial assets and liabilities as at March 31, 2018 and March 31, 2017.
(i) Investments in mutual funds and derivative instruments (other than those designated in a hedging relationship) are mandatorily classified as fair value through the statement of profit and loss.
(b) Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares and mutual funds.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes the Company''s over-the-counter (OTC) derivative contracts.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This level includes investment in unquoted equity shares and preference shares.
(i) Current financial assets and liabilities are stated at carrying value which is approximately equal to their fair value.
(ii) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.
(iii) Investments carried at fair value are generally based on market price quotations. The investments included in the level 3 of the fair value hierar
Mar 31, 2017
1. COMPANY INFORMATION
Tata Steel Limited (âthe Companyâ) is a public limited Company incorporated in India with its registered office in Mumbai, Maharashtra, India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The Company has presence across the entire value chain of steel manufacturing, from mining and processing iron ore and coal to producing and distributing finished products. The Company offers a broad range of steel products including a portfolio of high value-added downstream products such as hot rolled, cold rolled and coated steel, rebars, wire rods, tubes and wires.
The financial statements as at March 31, 2017 present the financial position of the Company.
The functional and presentation currency of the Company is Indian Rupee (âââ) which is the currency of the primary economic environment in which the Company operates.
As on March 31, 2017, Tata Sons Limited (or Tata Sons) owns 29.75% of the Ordinary shares of the Company, and has the ability to influence the Companyâs operations
The financial statements for the year ended March 31, 2017 were approved by the Board of Directors and authorised for issue on May 16, 2017.
2. PROPERTY, PLANT AND EQUIPMENT
[Item No. I(a), Page 172]
(i) Buildings include Rs.2.32 crore (March 31, 2016: Rs.2.32 crore; April 1, 2015: Rs.2.32 crore) being cost of shares in co-operative housing societies and limited companies.
(ii) The net carrying value of plant and machinery comprises of:
(iii) The net carrying value of furniture, fixtures and office equipments comprises of:
(iv) Rs.221.25 crore (2015-16: Rs.1,069.58 crore) of borrowing costs has been capitalised during the year on qualifying assets using a capitalisation rate of 9.50% (2015-16: 9.50%).
(v) Rupee liability has increased by Rs.137.11 crore (2015-16: Rs.107.84 crore) arising out of realignment of the value of long-term foreign currency loans and liabilities for procurement of property, plant and equipment. This increase has been adjusted against the carrying cost of assets and has been depreciated over their remaining useful life. The depreciation for the current year is higher by Rs.3.16 crore (2015-16: Rs.6.48 crore) on account of this adjustment.
(vi) With effect from April 1, 2016, the Company has revised the useful life of certain items of property, plant and equipment based on technical evaluation on assessment of the physical condition of the underlying assets and benchmarking with peers across the industry. Had there been no change in the useful life of assets, depreciation for the year would have been higher by Rs.653.44 crore.
(vii) Property, plant and equipment (including capital work-in-progress) were tested for impairment during the year where indicators of impairment existed. Based on an assessment of external market conditions relating to input costs and final product realisation and evaluation of physical working conditions for items of property, plant and equipment, no indicators of impairment were identified during the current year.
During the year ended March 31, 2016, the Company recognised an impairment charge of Rs.10.43 crore which primarily relates to expenses incurred on a project which the Company has decided to discontinue.
(viii) Property, plant and equipment includes capital cost of in-house research facilities as below:
Figures in italics represents comparative figures of previous years.
(ix) The details of property, plant and equipment pledged against borrowings are presented in Note 19, Page 213.
3. LEASES
The Company has taken land, buildings and plant and machinery under operating and finance leases. The following is the summary of future minimum lease rental payments under non-cancellable operating leases and finance leases entered into by the Company:
A. Operating leases:
Significant leasing arrangements include lease of land for periods ranging between 12 to 99 years with renewal option, lease of office spaces and assets dedicated for use under long term arrangements. Payments under long term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on the underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on the lease assessment and/or lease classification. Payments linked to changes in inflation index under the lease arrangements have been considered as contingent rent and recognised in the statement of profit and loss as and when incurred.
B. Finance leases:
Significant leasing arrangements include assets dedicated for use under long term arrangements. The arrangements covers a substantial part of the economic life of the underlying asset and contain a renewal option on expiry. Payments under long term arrangements involving use of dedicated assets are allocated between those relating to the right to use of assets, executory services and for output based on the underlying contractual terms and conditions. Any change in the allocation assumptions may have an impact on lease assessment and/or lease classification.
4. INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
[Item No. I(e), Page 172]
(i) The Company holds 51% of total equity share capital and voting rights in T M International Logistics Limited, Jamshedpur Continuous Annealing and Processing Company Private Limited and T M Mining Company Limited. However, decisions in respect of certain activities which significantly affect the risks and rewards of the respective businesses require unanimous consent of all the shareholders. These entities have therefore been considered as joint ventures.
(ii) The carrying value and market value of quoted and unquoted investments are as below:
(iii) Other unquoted investments in associate companies include:
8. LOANS
[Item No. I(f)(ii) and II(b)(v), Page 172]
(i) Security deposits include deposit with a subsidiary Rs.14.00 crore (March 31, 2016: Rs.14.00 crore; April 1, 2015: Rs.14.00 crore) and Tata Sons Rs.1.25 crore (March 31, 2016: Rs.1.25 crore; April 1, 2015: Rs.1.25 crore).
(ii) Non-current loans to related parties represent loans given to subsidiaries Rs.539.73 crore (March 31, 2016: Rs.540.51 crore; April 1, 2015: Rs.530.57 crore).
(iii) Current loans to related parties represent inter-corporate deposits given to subsidiaries Rs.82.14 crore (March 31, 2016: Rs.71.19 crore; April 1, 2015: Rs.26.50 crore) and joint venture Nil (March 31, 2016: Nil; April 1, 2015: Rs.62.29 crore).
(iv) Current other loans include inter-corporate deposits Rs.2.00 crore (March 31, 2016: Rs.2.00 crore; April 1, 2015: Rs.2.00 crore) and loans given to employees.
(v) Disclosure as per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:
Figures in italics represents comparative figures of previous years.
The above loans and inter-corporate deposits have been given for business purpose.
(vi) There are no outstanding debts due from directors or other officers of the Company.
(i) Earmarked bank balances represent deposits not due for realisation within 12 months from the balance sheet date. These are primarily placed as security with government bodies and margin money against issue of bank guarantees.
(ii) Non-current other financial assets include:
(a) advance against equity for purchase of shares in subsidiaries and joint ventures Rs.12.30 crore (March 31, 2016: Nil; April 1, 2015: Rs.21.27 crore)
(b) advance for repurchase of equity shares in Tata Teleservices Limited (TTSL) from NTT Docomo Inc, Rs.144.07 crore (March 31, 2016: Nil; April 1, 2015: Nil).
(iii) Current other financial assets include amount receivable from post-employment benefit fund Rs.247.04 crore (March 31, 2016: Rs.97.61 crore; April 1, 2015: Rs.154.34 crore) on account of retirement benefit obligations paid by the Company directly.
5. INCOME TAX
[Item No. IV(e), Page 172]
A. INCOME TAX EXPENSES/(BENEFITS)
The Company is subject to income tax in India on the basis of standalone financial statements. As per the Income Tax Act, the Company is liable to pay income tax which is the higher of regular income tax payable or the amount payable based on the provisions applicable for Minimum Alternate Tax (MAT).
MAT paid in excess of regular income tax during a year can be carried forward for a period of 15 years and can be offset against future tax liabilities.
Companies can claim for tax exemptions/deductions under specific section subject to fulfilment of prescribed conditions as may be applicable. The effective tax rate of the Company was lower as a result of tax deduction claimed by the Company on account of investment allowance on capital expenditure, expenditure on research and development etc.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
6. OTHER ASSETS
[Item No. I(h) and II(c), Page 172]
(i) Advance with public bodies primarily relate to duty credit entitlements and amounts paid under protest in respect of demands from regulatory authorities.
(ii) Prepaid lease payment relate to land leases classified as operating in nature as the title is not expected to transfer at the end of the lease term and considering that land has an indefinite economic life.
(iii) Other assets include advances against supply of goods and services and advances paid to employees.
7. INVENTORIES
[Item No. II(a), Page 172]
(i) The value of inventories above is stated after impairment of Rs.60.81 crore (March 31, 2016: Rs.68.99 crore; April 1, 2015: Rs.48.08 crore) for write-downs to net realisable value and provision for slow moving and obsolete item.
(ii) Cost of inventory recognised as expense during the year amounted to Rs.38,704.78 crore (2015-16: Rs.32,796.55 crore).
8. TRADE RECEIVABLES
[Item No. II(b)(ii), Page 172]
In determining the allowances for credit losses of trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.
(i) Movements in allowance for credit losses of receivables is as below:
(ii) Ageing of trade receivables and credit risk arising there from is as below:
(iii) The Company considers its maximum exposure to credit risk with respect to customers as at March 31, 2017 to be Rs.2,006.52 crore (March 31, 2016: Rs.1,133.17 crore; April 1, 2015: Rs.1,057.02 crore), which is the fair value of trade receivables (after allowance for credit losses).
The Companyâs exposure to customers is diversified and no single customer contributes more than 10% of the outstanding receivables as at March 31, 2017, March 31, 2016 and April 1, 2015.
(iv) There are no outstanding debts due from directors or other officers of the Company.
(v) 1,55,10,420 shares (March 31, 2016: 2,25,14,584 shares; April 1, 2015: 1,79,07,847 shares) of face value of Rs.10 per share represent the shares underlying GDRs which were issued during 1994 and 2009. Each GDR represents one underlying Ordinary share.
(vi) 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 principal rights are as below:
A. Ordinary Shares of Rs.10 each
(a) I n 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. âAâ Ordinary Shares of Rs.10 each
(a) (i) The holders of âAâ 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 âAâ 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 âAâ 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 âAâ 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 Companies Act, 1956.
(b) The holders ofâAâ Ordinary Shares shall be entitled to dividend on each âAâ 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 âAâ 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 had issued Hybrid Perpetual Securities of Rs.775.00 crore and Rs.1,500.00 crore in May 2011 and March 2011 respectively. These securities are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The distribution on these securities are 11.50% p.a. and 11.80% p.a. respectively, with a step up provision if the securities are not called after 10 years. The distribution on the securities may be deferred at the option of the Company if in the six months preceding the relevant distribution payment date, the Company has not made payment on, or repurchased or redeemed, any securities ranking pari passu with, or junior to the instrument. As these securities are perpetual in nature and the Company does not have any redemption obligation, these have been classified as equity.
9. OTHER EQUITY
[Item No. III(c), Page 172]
A. OTHER COMPREHENSIVE INCOME RESERVES
(a) Cash flow hedge reserve
The cumulative effective portion of gain or losses arising on changes in the fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the consolidated statement of profit and loss when the hedged item affects the profit or loss or are included as an adjustment to the cost of the related non-financial hedged item.
The Company has designated certain foreign currency contracts and interest rate collars as cash flow hedges in respect of foreign exchange and interest rate risks.
During the year, ineffective portion of cash flow hedges recognised in the statement of profit and loss amounted to Nil (2015-16: Rs.0.05 crore)
The amount recognised in the cash flow hedge reserve is expected to impact the statement of profit and loss within the next one year.
(b) Investment revaluation reserve
The cumulative gains and losses arising on fair value changes of equity investments measured at fair value through other comprehensive income are recognised in investment revaluation reserve. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.
B. OTHER RESERVES
(a) Securities premium
Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Indian Companies Act, 2013 (the âCompanies Actâ).
(b) Debenture redemption reserve
The Companies Act requires that where a Company issues debentures, it shall create a debenture redemption reserve out of profits of the Company available for payment of dividend. The Company is required to maintain a Debenture Redemption Reserve of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the debenture redemption reserve cannot be utilised by the Company except to redeem debentures.
(c) General reserve
Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.
(d) Capital redemption reserve
The Companies Act requires that where a Company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to a capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. The capital redemption reserve account may be applied by the Company, in paying up unissued shares of the Company to be issued to shareholders of the Company as fully paid bonus shares. The Company established this reserve pursuant to the redemption of preference shares issued in earlier years.
There is no movement in capital redemption reserve during the current and previous year.
(e) Others
Others primarily include:
(i) t he balance of foreign currency monetary item translation difference account (âFCMITDAâ) created for recognising exchange differences on revaluation of long term foreign currency monetary items as per the Previous GAAP. Such exchange differences recognised are transferred to the statement of profit and loss on a systematic basis.
(ii) amounts appropriated out of profit or loss for unforeseen contingencies. Such appropriations are free in nature.
10. BORROWINGS
[Item No. IV(a)(i) and V(a)(i), Page 172]
A. NON-CURRENT
B. CURRENT
(i) As at March 31, 2017, Rs.2,551.77 crore (March 31, 2016: Rs.2,360.37 crore, April 1, 2015: Rs.2,305.87 crore) of the total outstanding borrowings were secured by a charge on property, plant and equipment, inventories and receivables. The security details of major borrowings of the Company are as below:
(a) Loan from Joint Plant Committee-Steel Development Fund
It is secured by mortgages on, all present and future immovable properties wherever situated and hypothecation of movable assets, excluding land and building mortgaged in favour of Government of India under the deed of mortgage dated April 13, 1967 and in favour of Government of Bihar under two deeds of mortgage dated May 11, 1963, immovable properties and movable assets of the Tube Division, Bearing Division, Ferro Alloys Division and Cold Rolling Complex (West) at Tarapur and all investments and book debts of the Company subject to the prior charges created and/or to be created in favour of the bankers for securing borrowing for the working capital requirement and charges created and/or to be created on specific items of machinery and equipment procured/to be procured under deferred payment schemes/ bill re-discounting schemes/asset credit schemes.
The loan is repayable in 16 equal semi-annual installments after completion of four years from the date of the tranche.
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 subjudice.
The loan includes funded interest Rs.781.32 crore (March 31, 2016: Rs.699.58 crore and April 1, 2015: Rs.593.03 crore).
It includes Rs.1,639.33 crore (March 31, 2016: Rs.1,639.33 crore; April 1, 2015: Rs.1,639.33 crore) 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.
(ii) The details of major unsecured borrowings taken by the Company are given below:
(a) Non-Convertible 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 January 6, 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 December 22, 2028.
(iii) 8.15% p.a. interest bearing 10,000 debentures of face value Rs.10,00,000 each are redeemable at par on October 1, 2026.
(iv) 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 April 23, 2022.
(v) 9.15% p.a. interest bearing 5,000 debentures of face value Rs.10,00,000 each are redeemable at par on January 24, 2021.
(vi) 11.00% p.a. interest bearing 15,000 debentures of face value Rs.10,00,000 each are redeemable at par on May 19, 2019.
(vii) 10.40% p.a. interest bearing 6,509 debentures of face value Rs.10,00,000 each are redeemable at par on May 15, 2019.
(viii) 9.15% p.a. interest bearing 5,000 debentures of face value Rs.10,00,000 each are redeemable at par on January 24, 2019.
(b) Term loans from banks and financial institutions
(i) Indian rupee loan amounting Rs.4,450.00 crore (March 31, 2016: Rs.7,000.00 crore; April 1, 2015: Rs.7,000.00 crore) is repayable in 17 quarterly installments. The next instalment is due on March 31, 2021.
(ii) USD 7.86 million equivalent to Rs.50.98 crore (March 31, 2016: 7.86 million equivalent to Rs.52.08 crore) (April 1, 2015: Nil) is repayable on March1, 2021.
(iii) USD 200.00 million equivalent to Rs.1,297.10 crore (March 31, 2016: USD 200.00 million equivalent to Rs.1,325.05 crore; April 1, 2015: USD 200.00 million equivalent to Rs.1,250.00 crore) loan is repayable in 3 equal annual installments commencing from February 18, 2020.
(iv) Indian rupee loan amounting Rs.2,000.00 crore (March 31, 2016: Rs.2,000 crore; April 1, 2015: Nil) is repayable in 10 semi-annual installments commencing from 30th April, 2019.
(v) Indian rupee loan amounting Rs.650.00 crore (March 31, 2016: Nil; April 1, 2015: Nil) is repayable in 20 semi-annual installments commencing from August 15, 2017.
(vi) Euro 27.02 million equivalent to Rs.187.18 crore (March 31, 2016: Euro 32.42 million equivalent to Rs.244.69 crore; April 1, 2015: Euro 37.83 million equivalent to Rs.254.17 crore) loan is repayable in 10 equal semi-annual installments; the next instalment is due on July 6, 2017.
(vii) Euro 9.39 million equivalent to Rs.65.02 crore (March 31, 2016: Euro 14.08 million equivalent to Rs.106.25 crore; April 1, 2015: Euro 18.77 million equivalent to Rs.126.13 crore) loan is repayable in 4 equal semi-annual installments; the next instalment is due on July 3, 2017.
(viii) Indian rupee loan amounting Rs.850.00 crore (March 31, 2016: Nil; April 1, 2015: Nil) is repayable in 16 semi-annual installments commencing from June 15, 2017.
(ix) Euro 0.97 million equivalent to Rs.6.72 crore (March 31, 2016: Euro 1.94 million equivalent to Rs.14.64 crore; April 1, 2015: Euro 2.91 million equivalent to Rs.19.55 crore) loan is repayable in 2 equal semi-annual installments; the next instalment is due on May 2, 2017.
(x) Euro 105.08 million equivalent to Rs.727.98 crore (March 31, 2016:Euro 124.19 million equivalent toRs.937.22 crore; April 1, 2015: Euro 143.29 million equivalent to Rs.962.84 crore) loan is repayable in 11 equal semi-annual installments; the next instalment is due on April 28, 2017.
(c) Commercial papers
Commercial papers raised by the Company are short-term in nature ranging between one to three months.
11. EXCEPTIONAL ITEMS
[Item No. VI, Page 173]
(a) Loss (net) on sale of investment in a subsidiary and an associate Nil (2015-16: Rs.0.85 crore).
(b) Provision for dimunition in value of investments held in subsidiaries Rs.45.42 crore (2015-16: Rs.87.63 crore), in respect of advances paid for repurchase of equity shares in Tata Teleservices Limited from NTT Docomo Inc Rs.125.45 crore (2015-16: Nil). During 2015-16, the Company has recognised provision of Rs.72.99 crore relating to advances paid for a project which the Company has decided to discontinue.
(c) Impairment loss recognised in respect of property, plant and equipment (including capital work in progress) and intangible assets of Nil (2015-16: Rs.51.51 crore).
(d) Provision of Rs.218.25 crore (2015-16: Rs.880.05 crore) in respect of certain statutory demands and claims.
(e) Provision of Rs.178.68 crore (2015-16: Rs.556.25 crore) on account of employee seperation scheme.
(f) Provision towards legal and constructive commitments provided by the Company in respect of a loss making subsidiary Rs.135.58 crore (2015-16: Nil).
12. EARNINGS PER SHARE
[Item No. XII, Page 173]
The following table reflects the profit and shares data used in the computation of basic and diluted earnings per share.
13. EMPLOYEE BENEFITS
A. Defined contribution plans
The Company participates in a number of defined contribution plans on behalf of relevant personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by the Company at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior months contributions that were not due to be paid until after the end of the reporting period.
The major defined contribution plans operated by the Company are as below:
(a) Provident fund and pension
In accordance with the Employeeâs Provident Fund and Miscellaneous Provisions Act, 1952 and The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary.
The contributions, as specified under the law, are made to the provident fund set up as an irrevocable trust by the Company, post contribution of amount specified under the law to Employee Provident Fund Organisation on account of employee pension scheme.
(b) Superannuation fund
The Company has a superannuation plan for the benefit of its employees. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn.
Separate irrevocable trusts are maintained for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employeesâ salary or Rs.1,00,000, whichever is lower, to the trust every year. Such contributions are recognised as an expense as and when incurred. The Company does not have any further obligation beyond this contribution.
The total expenses recognised in the statement of profit and loss during the year on account of defined contribution plans amounted to Rs.310.09 crore (2016: Rs.303.65 crore).
B. Defined benefit plans
The defined benefit plans operated by the Company are as below:
(a) Retiring gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity funds established as trusts or insurance companies. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation.
(b) Post retirement medical benefits
Under this unfunded scheme, employees of the Company receive medical benefits subject to certain limits on amounts of benefits, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company under an early separation scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The Company accounts for the liability for post-retirement medical scheme based on an actuarial valuation.
(c) Other defined benefits
Other benefits provided under unfunded schemes include pension payable to directors of the Company on their retirement, farewell gifts and reimbursement of packing and transportation charges to the employees based on their last drawn salary.
The defined benefit plans expose the Company to a number of actuarial risks as below:
(a) Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government/high quality bond yields; if the return on plan asset is below this rate, it will create a plan deficit.
(b) Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.
(c) Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
(d) Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
14. CONTINGENCIES AND COMMITMENTS
A. CONTINGENCIES
In the ordinary course of business, the Company faces claims and assertions by various parties. The Company assesses such claims and assertions and monitors the legal environment on an ongoing basis with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable.
The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Companyâs financial condition, results of operations or cash flows.
Litigations
The Company is involved in legal proceedings, both as plaintiff and as defendant. There are claims which the Company does not believe to be of material nature, other than those described below.
Income Tax
The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowance of expenses, tax treatment of certain expenses claimed by the Company as deductions and the computation of, or eligibility of the Companyâs use of certain tax incentives or allowances.
Most of these disputes and/or dis-allowances, being repetitive in nature, have been raised by the income tax authorities consistently in most of the years.
As at March 31, 2017, there are matters and/or disputes pending in appeal amounting to Rs.1,417.54 crore (March 31, 2016: Rs.1,312.63 crore; April 1, 2015: Rs.1,016.12 crore).
The details of demands for more than Rs.100 crore is as below:
Interest expenditure on loans taken by the Company for acquisition of a subsidiary has been disallowed in assessments with tax demand raised for Rs.1,217.79 crore (inclusive of interest) (March 31, 2016: Rs.1,124.48 crore; April 1, 2015: Rs.870.36 crore). The Company has deposited Rs.515.00 crore (March 31, 2016: Rs.415 crore; April 1, 2015: Rs.340.00 crore) as part payment as a precondition to obtain stay of demand. The Company expects to sustain its position on ultimate resolution of the appeals.
Customs, Excise Duty and Service Tax
As at March 31, 2017, there were pending litigations for various matters relating to customs, excise duty and service taxes involving demands of Rs.482.72 crore (March 31, 2016: Rs.483.86 crore; April 1, 2015: Rs.465.04 crore).
Sales Tax /VAT
The total sales tax demands that are being contested by the Company amounted to Rs.349.58 crore (March 31, 2016: Rs.567.88 crore; April 1, 2015: Rs.432.33 crore).
Other Taxes, Dues and Claims
Other amounts for which the Company may contingently be liable aggregate to Rs.8,571.00 crore (March 31, 2016: Rs.6,979.48 crore; April 1, 2015: Rs.6,143.31 crore).
The details of demands for more than Rs.100 crore are as below:
(a) Claim by a party arising out of conversion arrangement-Rs.195.82 crore (March 31, 2016: Rs.195.82 crore; April 1, 2015: Rs.195.82 crore). The Company has not acknowledged this claim and has instead filed a claim of Rs.139.65 crore (March 31, 2016: Rs.139.65 crore; April 1, 2015: Rs.139.65 crore) on the party. The matter is pending before the Calcutta High Court.
(b) The State Government of Odisha introduced âOrissa Rural Infrastructure and Socio Economic Development Act, 2004â 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 at March 31, 2017 would be approximately Rs.5,880.83 crore (March 31, 2016: Rs.5,501.98 crore; April 1, 2015: Rs.4,805.18 crore).
(c) For the purpose of payment of royalty, there are two salient provisions viz; Section 9 in Mines and Minerals (Development and Regulation) Act (MMDR) 1957, related to the incidence of royalty and Rules 64B and 64C of Mineral Concession Rules (MC Rules), 1960. The Company has been paying royalty on coal extracted from its coal mines pursuant to the judgement and order dated July 23, 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 judgement dated March 12, 2014. The Court concluded that the State cannot claim interest till the Honâble Supreme Court decides the pending Special Leave Petitions (SLP) filed by State and Company in the year 2004.
In the appeals filed by the Company in respect of the issues related to coal royalty, the Honâble Supreme Court has pronounced the judgement on March 17, 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 the Company either to revive the appeals limited to this question or to separately challenge the constitutionality and vires of these Rules. Accordingly, the Company has filed writ petitions challenging the constitutionality and vires of Rules 64B and 64C of MC Rules on May 19, 2015 at Honâble High Court of Jharkhand. Vide itâs judgement dated June 26, 2015, High Court has held that, the writ petitions are maintainable. 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 Rs.190.25 crore, an amount of Rs.163.80 crore has been paid till FYâ 2015 and balance has been provided for. As the Honâble High Court of Jharkhand refused to grant stay on demand raised in case of West Bokaro division, the Company started providing for differential royalty in the books. Interest amount of Rs.1,043.79 crore (March 31, 2016: Rs.324.06 crore; April 1, 2015: Rs.318.45 crore) being interest raised on all the demands, which are disputed in several cases has been considered as a contingent liability. The interest demand has been raised after several years for the entire past period and is being contested. Rs.12.92 crore, being interest on District Mineral Fund (DMF) and National Mineral Foundation Trust contribution on differential royalty is also considered as a contingent liability.
(d) 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 crore 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 November 14, 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 November 13, 2014 has stayed the demand of royalty on iron ore for Joda east of Rs.314.28 crore upto the period ending March 31, 2014. For the demand of Rs.96.80 crore for April, 2014 to September, 2014, a separate revision application was filed before Mines Tribunal. The matter was heard by Mines Tribunal on July 14, 2015 and stay was granted on the total demand with directive to Government of Odisha not to take any coercive action for realisation of this demanded amount. Likely demand of royalty on fines at sized ore rates as on March 31, 2017: Rs.847.96 crore (March 31, 2016: Rs.411.08 crore: April 1, 2015: Rs.411.08 crore.
B. COMMITMENTS
(a) The Company has entered into various contracts with suppliers and contractors for the acquisition of plant and machinery, equipment and various civil contracts of a capital nature amounting to Rs.3,825.85 crore, (2016: Rs.5416.16 crore, 2015: Rs.6,466.63 crore).
Other commitments as at March 31, 2017 amounts to Rs.0.01 crore (March 31, 2016: Rs.0.01 crore, March 15: Rs.0.01 crore).
(b) 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) Mizuho Corporate Bank Limited and Japan Bank for International Co-operation, not to dispose of its investments in Tata NYK Shipping Pte Limited, (to retain minimal stake required to be able to provide a corporate guarantee towards long-term debt),
(d) ICICI Bank Limited to directly or indirectly continue to hold atleast 51 % shareholding in Jamshedpur Continuous Annealing & Processing Company Private Limited.
(c) The Company has furnished a security bond in respect of its immovable property to the extent of Rs.20 crore 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.
(d) The Promoters of Tata BlueScope Steel 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, and State Bank of India not to reduce collective shareholding in TBSL, 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 TBSL below 50%.
(e) The Company, as a promoter, has pledged 4,41,55,800 equity shares of Industrial Energy Limited with Infrastructure Development Finance Corporation Limited.
(f) The Company along with TS Alloys Limited (Promoters) has given an undertaking to Power Finance Corporation Limited (PFC) and Rural Electrification Corporation Limited (REC) (Lenders) not to dispose off/transfer their equity holding of 26% of total equity in Bhubaneshwar Power Private Limited (BPPL) till the repayment of entire loan by BPPL to the lenders without prior written approval of lenders. Such shareholding of promoters may be transferred to the Company or its affiliates subject to compliance of applicable laws. The Company along with TS Alloys Limited has pledged 60% of their equity contribution in BPPL to PFC, PFC being the security agent.
(g) The Company has agreed, if requested by Tata Steel UK Holdings Limited (TSUKH) (an indirect wholly owned subsidiary), to procure an injection of funds to reduce the outstanding net debt in TSUKH and its subsidiaries, to a mutually accepted level.
(h) The Company has given guarantees aggregating Rs.11,344.47 crore (2016: Rs.11,741.71 crore, 2015: Rs.13,761.45 crore) details of which are as below:
(i) in favour of Timken India Limited for Nil, (March 31, 2016: Rs.80.00 crore; April 1, 2015: Rs.80.00 crore) against renewal of lease of land pending with State Government and Rs.1.07 crore (March 31, 2016: Rs.1.07 crore; April 1, 2015: Rs.1.07 crore) on behalf of Timken India Limited to Commissioner of Customs in respect of goods imported.
(ii) in favour of Mizuho Corporate Bank Ltd., Japan for Rs.45.38 crore (March 31, 2016: Rs.65.04 crore; April 1, 2015: Rs.78.89 crore) against the loan granted to a joint venture Tata NYK Shipping Pte. Limited.
(iii) I n favour of The President of India for Rs.177.18 crore (March 31, 2016: Rs.177.18 crore; April 1, 2015: Rs.177.18 crore) against performance of export obligation under the various bonds executed by a joint venture Jamshedpur Continuous Annealing & Processing Company Private Limited.
(iv) in favour of the note holders against due and punctual repayment of the 100% amounts outstanding as on March 31, 2017 towards issued Guaranteed Notes by a subsidiary, ABJA Investment Co. Pte. Limited for Rs.9,728.25 crore (March 31, 2016: Rs.9,937.88 crore; April 1, 2015: Rs.11,718.75 crore) and Rs.1,392.44 crore (March 31, 2016: Rs.1,480.39 crore; April 1, 2015: Rs.1,705.41 crore). The guarantee is capped at an amount equal to 125% of the outstanding principal amount of the Notes as detailed in âTerms and Conditionsâ of the Offering Memorandum.
(v) I n favour of President of India for (Rs.0.15 crore March 31, 2016: Rs.0.15 crore; April 1, 2015: Rs.0.15 crore) against advance license.
15. OTHER SIGNIFICANT LITIGATIONS
(a) Odisha legislative assembly issued an amendment to Indian Stamp Act on May 9, 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 July 5, 2013. The Honâble High Court, Cuttack passed an order on July 9, 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 crore. 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 March 31, 2030 in respect of eight mines and up to March 31, 2020 for two mines 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 March 31, 2017 as per the existing provisions of the Stamp Act 1899 and the Company has since paid the stamp duty and registration charges totalling Rs.413.72 crore for supplementary deed execution in respect of eight mines out of the above mines.
(b) Demand notices have been raised by Deputy Director of Mines, Odisha amounting to Rs.3,828 crore 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 crore and directed the State that no coercive action should be taken for recovery of demand.
Based on the judgement of Honâble High court of Jharkhand on December 11, 2014 in the matter of the writ petition filed by the Company 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 December 31, 2014. Express Order also held mining operation carried out between January 1, 2012 to August 31, 2014 to be unlawful and computed an amount of Rs.3,568 crore on account of such alleged unlawful mining.
The Mines and Minerals Development and Regulation (MMDR) Amendment Ordinance 2015 promulgated on January 12, 2015 provides for renewal of the above mines. Based on the new Ordinance, Jharkhand Government revised the Express Order on February 12, 2015 for lease renewal up to March 31, 2030 with following terms and conditions:
- value of iron ore produced by alleged unlawful mining during the period January 1, 2012 to April 20, 2014 for Rs.2,994.49 crore to be decided on the basis of disposal of writ petition filed before Honâble High Court of Jharkhand.
- value of iron ore produced from April 21, 2014 to July 17, 2014 amounting to Rs.421.83 crore to be paid in maximum 3 installments.
- value of iron ore produced from July 18, 2014 to August 31, 2014 i.e. Rs.152 crore to be paid immediately.
The Company paid Rs.152 crore under protest. District Mining Officer Chaibasa on March 16, 2015 has issued demand notice for payment of Rs.421.83 crore, payable in three monthly installments. The Company replied on March 20, 2015, since the lease has been extended till March 31, 2030, the above demand is not tenable. The Company paid Rs.50 crore under protest on July 27, 2015.
A writ petition was filed before Honâble High Court of Jharkhand and heard on September 9, 2015. An interim order has been given by Honâble High Court of Jharkhand on September 18, 2015 wherein court has directed the Company to pay outstanding amount of Rs.371.83 crore in 3 equal installments, first instalment by October 15, 2015, second instalment by November 15, 2015 and third instalment by December 15, 2015.
In view of the order of Honâble High Court of Jharkhand Rs.124 crore was paid on September 28, 2015, Rs.124 crore was paid on November 12, 2015 and Rs.123.83 crore on December 14, 2015 under protest.
(c) During Financial Year 2014-15, the Income Tax department had reopened assessments of earlier years on account of excess mining and raised cumulative demand for Rs.1,086 crore. During 2015-16, the Commissioner of Income Tax (Appeals) has adjudicated the matter in favour of the Company and quashed the entire demand on account of reopened assessments. The demand outstanding as on March 31, 2017 is Nil (March 31, 2016: Nil; April 1, 2015: Rs.1,086 crore).
(d) During the current year, NTT Docomo Inc. had filed a petition with the Delhi High Court for implementation of the arbitration award (damages along with cost and interest) by the London Court of International Arbitration. The Delhi High Court directed Tata Sons to deposit the damages including costs and interest in an escrow account. During the year, the Company has accordingly remitted its share of Rs. 152 crore to Tata Sons and recognised a provision of Rs.125.44 crore being the difference between the fair value of equity shares to be repurchased and the consideration payable to NTT Docomo Inc.
16. CAPITAL MANAGEMENT
The Companyâs capital management is intended to create value for shareholders by facilitating the meeting of long term and short term goals of the Company.
The Company determines the amount of capital required on the basis of annual business plan coupled with long term and short term strategic investment and expansion plans. The funding needs are met through equity, cash generated from operations, long term and short term bank borrowings and issue of non-convertible debt securities.
The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
Net debt includes interest bearing borrowings less cash and cash equivalents, other bank balances (including non-current earmarked balances) and current investments.
17. DISCLOSURES ON FINANCIAL INSTRUMENTS
This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.
The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2(m), Page 182 to the financial statements.
(a) Financial assets and liabilities
The following tables presents the carrying value and fair value of each category of financial assets and liabilities as at March 31, 2017, March 31, 2016 and April 1, 2015.
(i) Investments in mutual funds and derivative instruments are mandatorily classified as fair value through statement of profit and loss.
(b) Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares, and mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level of hierarchy includes Companyâs over-the-counter (OTC) derivative contracts.
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
(i) Short-term financial assets and liabilities are stated at carrying value which is approximately equal to their fair value.
(ii) Derivatives are fair valued using market observable rates and published prices together with forecasted cash flow information where applicable.
(iii) Investments carried at fair value are generally based on market price quotations. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.
(iv) Fair value of borrowings which have a quoted market price in an active market is based on its market price which is categorised as level 1. Fair value of borrowings which do not have an active market or are unquoted is estimated by discounting expected future cash flows using a discount rate equivalent to the risk-free rate of return adjusted for credit spread considered by lenders for instruments of similar maturities which is categorised as level 2 in the fair value hierarchy.
(v) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.
(vi) There have been no transfers between Level 1 and Level 2 for the years ended March 31, 2017, March 31, 2016 and April 1, 2015.
(c) Derivative financial instruments
Derivative instruments used by the Company include forward exchange contracts, interest rate swaps, currency swaps, options and interest rate caps and collars. These financial instruments are utilised to hedge future transactions and cash flows and are subject to hedge accounting under Ind AS 109 â Financial Instrumentsâ to the extent possible. The Company does not hold or issue derivative financial instruments for trading purpose. All transactions in derivative financial instruments are undertaken to manage risks arising from underlying business activities.
(d) Transfer of financial assets
The Company transfers certain trade receivables under discounting arrangements with banks and financial institutions. Some of such arrangements do not qualify for de-recognition due to recourse arrangement being in place. Consequently, the proceeds received from transfer are recorded as short-term borrowings from banks and financial institutions.
(e) Financial risk management
In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments.
The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks. The risk management policy is approved by the Board of Directors. The risk management framework aims to:
(i) create a stable business planning environment by reducing the impact of currency and interest rate fluctuations on the Companyâs business plan.
(ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.
(i) Market risk:
Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
(a) Market risk - Foreign currency exchange rate risk:
The fluctuation in foreign currency exchange rates may have a potential impact on the statement of profit and loss and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.
The Company, as per its risk management policy, uses foreign exchange and other derivative instruments primarily to hedge foreign exchange and interest rate exposure. Any weakening of the functional currency may impact the Companyâs cost of imports and cost ofborrowings and consequently may increase the cost of financing the Companyâs capital expenditures.
A 10% appreciation/depreciation of the foreign currencies with respect to functional currency of the Company would result in an increase/decrease in the Companyâs net profit before tax by approximately Rs.9.46 crore for the year ended March 31, 2017 (March 31, 2016: Rs.24.45 crore) and increase/ decrease in carrying value of property, plant and equipment (before considering depreciation) by approximately Rs.185.49 crore as at March 31, 2017 (March 31, 2016: Rs.215.55 crore; April 1, 2015: Rs.255.82 crore).
The foreign exchange rate sensitivity is calculated by assuming a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.
The sensitivity analysis has been based on the composition of the Companyâs financial assets and liabilities at March 31, 2017, March 31, 2016 and April 1, 2015 excluding trade payables, trade receivables, other non-derivative and derivative financial instruments not forming part of debt and which do not present a material exposure. The period end balances are not necessarily representative of the average debt outstanding during the period.
(b) Market risk - Interest rate risk:
Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rates. Any movement in the reference rates could have an impact on the Companyâs cash flows as well as costs.
The Company is subject to variable interest rates on some of its interest bearing liabilities. The Companyâs interest rate exposure is mainly related to debt obligations.
Based on the composition of debt as at March 31, 2017 and March 31, 2016 a 100 basis points increase in interest rates would increase the Companyâs finance costs (before interest capitalised) and thereby consequently reduce net profit before tax by approximately Rs.122.34 crore for the year ended March 31, 2017 (2015-16: Rs.152.64 crore).
The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period.
(c) Market risk - Equity price risk:
Equity price risk is related to change in market reference price of investments in equity securities held by the Company.<
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.
Mar 31, 2010
1. Contingent Liabilities
(a) Guarantees
The Company has given guarantees aggregating Rs. 355.28 crores
(31.03.2009 : Rs. 81.22 crores) to banks and financial institutions on
behalf of others. As at 31st March, 2010, the contingent liabilities
under these guarantees amounted to Rs. 355.28 crores (31.03.2009 : Rs.
81.22 crores).
(b) Claims not acknowledged by the Company
As at As at
31.03.2010 31.03.2009
Rs. crores Rs. crores
(i) Excise 296.59 216.72
(ii) Customs 13.68 13.68
(iii) Sales Tax and VAT 587.97 456.01
(iv) State Levies 173.62 154.67
(v) Suppliers and Service Contract 71.02 70.52
(vi) Labour Related 36.92 190.42
(vii) Income Tax 143.44 176.60
(c) Claim by a party arising out of conversion arrangement - Rs. 195.82
crores (31.03.2009 : Rs. 195.82 crores). The Company has not
acknowledged this claim and has instead filed a claim of Rs. 139.65
crores (31.03.2009 : 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
(31.03.2009 : 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 are sent to external processing
agents (EPA) for decoiling and cutting into specified lengths before
the products are despatched for sale. Excise department demanded duty
from the EPA, holding the activity as manufacture and ignoring the
payment of duty made by Tata Steel. 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 demands in this regard have not been
adjudicated. The liability till 31st March 2010, if materializes, will
be to the tune of Rs. 291.22 crores (31.03.2009 : Rs. 271.60 crores).
However, the company has already paid duty amounting to Rs. 189.52
crores (2008-09: Rs. 169.05 crores) till date based on the final sale
price of the material.
(f) The State Government of Orissa introduced ÃOrissa Rural
Infrastructure and Socio Economic Development Act 2004Ã 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 Orissa moved the Supreme Court against the order of
Orissa High Court and the case is pending with Supreme Court. The
liability, if it materialises, as at 31.03.2010 would be Rs. 1,277.74
crores (31.03.2009 : Rs. 1,041.67 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, as part of a secondary
sale of 25,31,63,941 equity shares effected along with a primary issue
of 84,38,79,801 shares by TTSL to the SP. In 2008-09, the company
realised Rs. 60.91 crores on sale of these shares resulting in a profit
of Rs. 49.77 crores.
If certain performance parameters and other conditions are not met,
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, 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 23.07.2002 passed by
the Jharkhand High Court. However, the State Government demanded
royalty on processed coal 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 royalty, paid under protest, during November 2008 to March
2010 of Rs. 17.21 crores has been charged off to Profit and Loss
Account. The incremental amount, if payable, for the period till
October 2008 works out to Rs. 344.19 crores (31.03.2009 : Rs. 232.57
crores) and has been considered as a contingent liability.
(i) Uncalled liability on partly paid shares and debentures Rs. 0.01
crore (31.03.2009 : Rs. 0.01 crore).
(j) Bills discounted Rs. 274.55 crores (31.03.2009 : Rs. 472.14
crores).
2. The Company has given undertakings to (a) IDBI Bank Ltd. not to
dispose of its investment in The Tinplate Company of India Limited, (b)
ICICI Bank Ltd., IFCI and IIBI not to dispose of its investment in the
Indian Steel Rolling Mills Ltd. (ISRM). The ISRM is under liquidation,
(c) IDBI not to dispose of its investment in Wellman Incandescent India
Ltd., (d) IDBI and ICICI Bank Ltd. not to dispose of its investment in
Standard Chrome Ltd., (e) State Bank of India not to dispose of its
investment in Tata BlueScope Ltd. (f) Standard Chartered Bank, Hong
Kong and Shanghai Banking Corporation and Nedbank not to dispose of
majority stake in Tata Steel (KZN) (Pty) Ltd., (g) Mizuho Corporate
Bank Limited, 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), 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 seven
companies remains outstanding. Subsequent to Balance Sheet date, i.e.
30th April, 2010, the Company has given undertaking to State Bank and
others not to dispose of its investment in Centennial Steel Company
Ltd. (CSCL), below 51% of CSCLs paid up equity share capital.
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 Promotersà (i.e. L & T Infrastructure Development Projects Ltd. and
Tata Steel Ltd.) combined investments in The Dhamra Port Company Ltd.,
(DPCL) representing 51% of DPCLÃs paid-up equity share capital are
pledged with IDBI Trusteeship Services Ltd. The Promotersà (i.e. The
Tata Power Company Limited. and Tata Steel Ltd.) combined investments
in Industrial Energy Limited., (IEL) representing 51% of IELÃs paid-up
equity share capital are pledged with Infrastructure Development
Corporation Limited (IDFC).
The Company has agreed to provide contingent support up to a maximum of
ã 500 million to Tata Steel Europe Limited, a wholly-owned indirect
subsidiary, only in the event Tata Steel Europe is unable to generate
the required liquidity internally or externally.
3. 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 less. The scheme is yet to
be formed and no contribution has been made till 31st March, 2010.
4. The Board of Industrial and Financial Reconstruction (BIFR)
sanctioned a scheme for rehabilitation of The Indian Steel and Wire
Products Limited (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 Re. 1/- per share; (c) converted
Rs. 5.00 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. 14.91 crores as at 31.03.2010 (31.03.2009: Rs. 19.47 crores)
with ISWP towards one time settlement with financial institutions for
capital expenditure and margin for working capital.
5. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for : Rs. 10,698.54 crores (31.03.2009 : Rs.
10,152.99 crores).
6. Profit and Loss Account
a) i) Provision for employee separation compensation (ESS) 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. 46.34 crores (31.03.2009 : Rs. 76.93 crores) in respect of schemes
introduced during the year.
ii) The amounts payable within one year under the ESS aggregates to Rs.
192.85 crores (31.03.2009 : Rs. 199.93 crores). iii) Miscellaneous
Expenditure (to the extent not written off) on ESS account in Balance
Sheet represents the balance amount to be amortised over five years or
the financial year ending 31st March, 2010, whichever is earlier.
Accordingly, the balance as at 31st March, 2010 is Rs. Nil.
b) The manufacturing and other expenses and depreciation shown in the
Profit and Loss Account include Rs. 41.43 crores (2008-09 : Rs. 37.65
crores) and Rs. 1.94 crores (2008-09 : Rs. 2.05 crores) respectively in
respect of Research and Development activities undertaken during the
year.
c) The company has opted for accounting the exchange differences
arising on reporting of long term foreign currency monetary items in
line with Companies (Accounting Standards) Amendment Rules 2009
relating to Accounting Standard 11 (AS-11) notified by Government of
India on 31st March, 2009 which allows foreign exchange difference on
long-term monetary items to be capitalised to the extent they relate to
acquisition of depreciable assets and in other cases to amortise over
the period of the monetary asset/ liability or the period up to 31st
March, 2011, whichever is earlier.
As on 31st March, 2010, a credit of Rs. 206.95 crores (31.03.2009 :
Debit of Rs. 471.66 crores) remains to be amortised in the ÃForeign
Currency Monetary Items Translation Difference Accountà after taking a
charge of Rs. 85.67 crores (2008-09 : Rs. 30.79 crores) in the Profit &
Loss Account and Rs. 47.35 crores (net of deferred tax Rs. 24.38
crores) [2008-09 : Rs. 32.54 crores (net of deferred tax Rs. 16.76
crores)] adjusted against Securities Premium Account during the current
financial year on account of amortisation. The Depreciation for the
year ended 31st March, 2010 is higher by Rs. 0.41 crores (2008-09 : Rs.
2.04 crores) and the Profit before taxes for the year ended 31st March,
2010 is lower by Rs. 561.60 crores (2008-09 : Higher by Rs. 889.47
crores).
7. Other Significant Disclosures
(a) Pursuant to the sanction of the Honourable High Court of Calcutta
to the Scheme of Amalgamation, the assets and liabilities of the
erstwhile Hooghly Met Coke & Power Company Ltd. (HMPCL) whose principal
business was manufacture of metallurgical coke, have been merged with
the Company with effect from 1st April, 2009 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 ÃPooling of Interests
methodà as prescribed by Accounting Standard 14 (AS-14) as notified by
the Government of India. Accordingly the assets, liabilities and other
reserves of the erstwhile HMPCL as at 1st April, 2009 have been taken
over at their book values. As a result reserves of the erstwhile HMPCL
aggregating to Rs. 12.28 crores have been added to the reserves of the
Company. The difference of Rs. 0.69 crore between the value of net
assets taken over, and the investment of the Company in the shares of
HMPCL has been adjusted to the Amalgamation Reserve of the Company.
Pursuant to the Scheme, referred to in (a) above, 58,26,63,618 shares
held by the Company in the erstwhile HMPCL have been cancelled.
(b) The Company raised Rs. 3,578.75 crores (US $ 875 million) through
the issue of Foreign Currency Convertible Alternative Reference
Securities (ÃCARSÃ) during FY 2007-08. The CARS will be convertible
into either qualifying securities (which may be in the form of
depository receipts with restricted rights of withdrawal representing
underlying ordinary shares with differential rights as to voting) or
ordinary shares only between 4th September, 2011 to 6th August, 2012
and are redeemable in foreign currency only in September 2012, if not
converted into equity. The CARS will be convertible at a conversion
price of Rs. 733.13 per share. The CARS carry a coupon rate of 1% p.a.
The outstanding CARS, if any, at maturity will be redeemable at a
premium of 23.34% of the principal amount, with an effective YTM of
5.15%.
During 2009-10, the Company invited holders of the CARS to exchange
their holdings for 4.5% Convertible Bonds due in 2014. The offer
closed on 16th November, 2009 and CARS having face value of US$ 493
million were exchanged into Convertible Bonds worth US$ 546.94 million.
The net exchange difference of Rs. 143.15 crores has been recognised as
an expense in the Profit and Loss Account during the year. The 4.5%
Convertible Bonds are convertible at Rs. 605.53 at an exchange rate of
1 US$ = Rs. 46.35 at any time on or after 31st December, 2009 and up to
the close of business on 11th November, 2014. The aggregate principal
amount of CARS remaining outstanding after this exchange is US$ 382
million.
Premium payable on redemption and the expenses related to the issue of
CARS are adjusted against the Securities Premium Account. Changes to
premium payable on account of exchange fluctuation is transferred to
ÃForeign Currency Monetary Items Translation Difference Accountà in
line with Companies (Accounting Standards) Amendment Rules 2009
relating to Accounting Standard 11 (AS-11) notified by Government of
India on 31st March, 2009. Such exchange fluctuation on the premium
payable is amortised over the balance period of CARS but not beyond
31st March, 2011, by adjusting the same to Securities Premium Account.
Accordingly, an amount of Rs. 47.35 crores (net of deferred tax Rs.
24.38 crores) [2008-09 : Rs. 32.54 crores (net of deferred tax Rs.
16.76 crores)] has been amortised and adjusted against Securities
Premium Account.
d) 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.
8. Employee Benefits
b) The Company operates post retirement defined benefit plans as
follows:
a. Funded
i. Post Retirement Gratuity
b. Unfunded
i. Post Retirement Medical Benefits
ii. Pensions to Directors
iii. Farewell Gifts
iv. Packing and Transportation Costs on Retirement
9. Related Party Disclosures
(a) List of Related Parties and Relationships
Name of the Party Country
A. Subsidiaries
i) Adityapur Toll Bridge Company Ltd. India
ii) Centennial Steel Company Ltd.* India
iii) Gopalpur Special Economic Zone Ltd. India
iv) Jamshedpur Utilities & Services Company Ltd. India
1. Haldia Water Management Limited India
2. Naba Diganta Water Management Ltd. India
3. SEZ Adityapur Ltd. India v) Kalimati Investment Company Ltd.
India
1. Bangla Steel & Mining Co. Ltd. Bangladesh
vi) Lanka Special Steels Ltd. Sri Lanka
vii) NatSteel Asia Pte. Ltd. Singapore
1. NatSteel Iranian Private Joint Stock Company Iran
2. NatSteel Middle East FZE UAE
3. Tata Steel Asia (Hong Kong) Ltd. Hongkong
4. Tata Steel Resources Australia Pty. Ltd. Australia viii) Rawmet
Ferrous Industries Ltd. India ix) Sila Eastern Ltd.@ Thailand x) Tata
Incorporated USA xi) Tata Korf Engineering Services Ltd. India
xii) Tata Metaliks Ltd. India
1. Tata Metaliks Kubota Pipes Ltd. India
xiii) Tata Refractories Ltd. India
1. TRL Asia Pvt. Limited Singapore
2. TRL China Limited China xiv) Tayo Rolls Ltd. India
xv) Tata Steel (KZN) (Pty) Ltd. South Africa
xvi) Tata Steel Holdings Pte. Ltd. Singapore
a) NSA Holdings Pte Ltd. Singapore
b) Tata Steel Global Holdings Pte Ltd. Singapore I Corus International
(Singapore)
Holding Pte. Ltd. Singapore
1. Corus Holdings (Thailand) Ltd. Thailand
2. Corus International (Guangzhou) Ltd. China
3. Corus International (Shanghai) Ltd. China
4. Corus Metals (Malaysia) Sdn. Bhd. Malaysia
5. Corus Metals (Thailand) Limited Thailand
6. Corus South East Asia Pte Limited Singapore
7. Tata Steel international (Asia) Limited Hongkong
8. Tata Steel International
(Hongkong) Limited Hongkong
II NatSteel Holdings Pte. Ltd. Singapore
1. Bestbar (Vic) Pte. Ltd. Australia
2. Best Bar Pty. Ltd. Australia
3. Burwill Trading Pte. Ltd. Singapore
4. Easteel Construction Services Pte. Ltd. Singapore
5. Easteel Services (M) Sdn. Bhd. Malaysia
6. Eastern Steel Fabricators Phillipines, Inc. Phillipines
7. Eastern Steel Services Pte. Ltd. Singapore
8. Eastern Wire Pte. Ltd. Singapore
9. Materials Recycling Pte. Ltd. Singapore
10. NatSteel (Xiamen) Ltd. China
11. NatSteel Asia (S) Pte. Ltd. Singapore
12. NatSteel Australia Pty. Ltd. Australia
13. NatSteel Equity IV Pte. Ltd. Singapore
14. Natsteel Recycling Pte Ltd. Singapore
15. NatSteel Trade International
(Shanghai) Company Ltd. China
16. NatSteel Trade International Pte. Ltd. Singapore
17. NatSteel Vina Co. Ltd. Vietnam
18. PT Materials Recycling Indonesia Indonesia
19. The Siam Industrial Wire Co. Ltd. Thailand
20. Wuxi Jinyang Metal Products Co. Ltd. China
III Orchid Netherlands (No.1) B.V. Netherlands
IV Tata Steel Europe Ltd. UK
1. Almana Steel Dubai (Jersey) Limited Jersey
2. Apollo Metals Ltd. USA
3. Ashorne Hill Management College UK
4. Augusta Grundstucks GmbH Germany
5. Automotive Laser Technologies Limited UK
6. B S Pension Fund Trustee Ltd. UK
7. Bailey Steels Limited UK
8. Beheermaatschappij Industriele
Produkten B.V. Netherlands
9. Beltin Beheermaatschappij B.V. Netherlands
10. Bell & Harwood Limited UK
11. Blastmega Limited
(United Steel Forgings Ltd.) UK
12. Blume Stahlservice GmbH Germany
13. Blume Stahlservice Polska Sp. Z.O.O Poland
14. Bore Samson Group Ltd. UK
15. Bore Steel Ltd. UK
16. British Guide Rails Ltd. UK
17. British Steel Holdings B.V. Netherlands
18. British Steel Nederland International B.V. Netherlands
19. British Steel Benelux B.V. Netherlands
20. British Steel Corporation Ltd UK
21. British Steel De Mexico S.A. de C.V. Mexico
22. British Steel Directors (Nominees) Limited UK
23. British Steel Employee Share Ownership Trustees Ltd. UK
24. British Steel Engineering Steels (Exports) Limited UK
25. British Steel International B.V. Netherlands
26. British Steel Samson Limited UK
27. British Steel Service Centres Ltd. UK
28. British Steel Tubes Exports Ltd. UK
29. British Transformer Cores Ltd. UK
30 British Tubes Stockholding Ltd. UK
31. Bs Quest Trustee Limited UK
32. Bskh Corporate Services (UK) Limited UK
33. Burgdorfer Grundstuecks GmbH Germany
34. C V Benine Netherlands
35. C Walker & Sons Ltd. UK
36. Catnic GmbH Germany
37. Catnic Limited UK
38. Cbs Investissements SAS France
39. Cladding & Decking (UK) Limited UK
40. Cogent Power Inc. Canada
41. Cogent Power Inc. Mexico
42. Cogent Power Inc. USA
43. Cogent Power Limited UK
44. Cold Drawn Tubes Ltd. UK
45. Color Steels Limited UK
46. Corbeil Les Rives SCI France
47. Corby (Northants) & District Water Co. UK
48. Cordor (C& B) Limited UK
49. Corus - Sistemas Constructivos E Revestimentos Metalicos, Lda
Portugal
50. Corus Aerospace Service
Centre Suzhou Co Ltd China
51. Corus Aluminium Beheer B.V.* Netherlands
52. Corus Aluminium Limited UK
53. Corus Aluminium
Verwaltungsgesellschaft Mbh Germany
54. Corus America Holdings Inc. USA
55. Corus America Inc. USA
56. Corus Batiment Et Systemes SAS France
57. Corus Belgium Bvba Belgium
58. Corus Benelux B.V. Netherlands
59. Corus Beteiligungs GmbH Germany
60. Corus Brokers Limited UK
61. Corus Building Systems Bulgaria AD Bulgaria
62. Corus Building Systems N.V. Belgium
63. Corus Building Systems SAS France
64. Corus Byggesystemer A/S Denmark
65. Corus Byggsystem AB Sweden
66. Corus Byggsystemer A/S Norway
67. Corus Central Europe S.R.O. Czech Republic
68. Corus Cic Holdings Inc. Canada
69. Corus Cic Inc. Canada
70. Corus CNBV Investments UK
71. Corus Coatings Usa Inc. USA
72. Corus Cold Drawn Tubes Limited UK
73. Corus Construction Products
(Thailand) Limited Thailand
74. Corus Consulting And Technical
Services B.V. Netherlands
75. Corus Consulting B.V. Netherlands
76. Corus Consulting Limited UK
77. Corus Consulting Romania SRL * Romania
78. Corus Degels GmbH Germany
79. Corus Denmark A/S Denmark
80. Corus Deutschland GmbH Germany
81. Corus Distribution Europe BV Netherlands
82. Corus Electrical Limited UK
83. Corus Engineering Limited UK
84. Corus Engineering Steels (UK) Limited UK
85. Corus Engineering Steels Holdings Limited UK
86. Corus Engineering Steels Limited UK
87. Corus Engineering Steels
Overseas Holdings Limited UK
88. Corus Finance Limited UK
89. Corus Finland Oy Finland
90. Corus France SAS France
91. Corus Group Limited UK
92. Corus Holdings Ltd. UK
93. Corus Holdings SA France
94. Corus Hungary Trading Limited
Liability Company Hungary
95. Corus India Ltd. India
96. Corus International (India) Pvt. Limited India
97. Corus International
(Overseas Holdings) Limited UK
98. Corus International Bulgaria Limited Bulgaria
99. Corus International Deutschland GmbH Germany
100. Corus International Limited UK
101. Corus International Nigeria Nigeria
102. Corus International Representacoes
Do Brasil Ltda. Brazil
103. Corus International Romania SRL Romania
104. Corus International Services N.V Belgium
105. Corus International Trading Limited UK
106. Corus International Trading Limited USA
107 Corus Investment B.V. Netherlands
108. Corus Investments Ltd. UK
109. Corus Ireland Ltd. Ireland
110. Corus Laminacion Y Derivados, S.L. Spain
111. Corus Large Diameter Pipes Limited UK
112. Corus Liaison Services (India) Limited UK
113. Corus Management Limited UK
114. Corus Met B.V. Netherlands
115. Corus Metal Iberica S.A Spain
116. Corus Metal Sanayi Ve Ticaret AS Turkey
117. Corus Metals Limited UK
118. Corus Middle East FZE UAE
119. Corus Multi-Metals Limited UK
120. Corus Nederland B.V. Netherlands
121. Corus New Zealand Limited New Zealand
122. Corus Norge A/S Norway
123. Corus Packaging Plus Belgium N.V Belgium
124. Corus Packaging Plus Norway A/S Norway
125. Corus Perfo B.V. Netherlands
126. Corus Polska Sp.Z.O.O. Poland
127. Corus Primary Aluminium B.V. Netherlands
128. Corus Properties (Germany) Limited UK
129. Corus Property UK
130. Corus Quest Trustee Limited UK
131. Corus Rail Consultancy Limited UK
132. Corus Rail France S.A France
133. Corus Rail Limited UK
134. Corus Republic Of Ireland Subsidiaries Pension
Scheme Trustee Limited Ireland
135. Corus Service Center Milano Spa Italy
136. Corus Service Centre Limited UK
137. Corus Service Centre Maastricht B.V. Netherlands
138. Corus Services Nederland B.V. Netherlands
139. Corus Sheet & Tube Inc. USA
140. Corus Special Strip Asia Limited Hong Kong
141. Corus Staal B.V. Netherlands
142. Corus Stahl GmbH Germany
143. Corus Stainless Limited UK
144. Corus Stainless Nl B.V. Netherlands
145. Corus Stainless UK Ltd. UK
146. Corus Star-Frame B.V. Netherlands
147. Corus Steel Limited UK
148. Corus Steel Usa Inc. USA
149. Corus Sverige AB Sweden
150. Corus Technology B.V. Netherlands
151. Corus Trico Holdings Inc. USA
152. Corus Tubes B.V. Netherlands
153. Corus Tuscaloosa Corp. USA
154. Corus UK Healthcare Trustee Limited UK
155. Corus UK Limited UK
156. Corus Vlietjonge B.V. Netherlands
157. Cpn 85 Limited UK
158. Crucible Insurance Company Ltd. I of Man
159. Demka B.V. Netherlands
160. Dsrm Group Plc. UK
161. Ees Group Services Limited UK
162. Ees Nederland B.V. Netherlands
163. Eric Olsson & Soner Forvaltnings AB Sweden
164. Esmil B.V. Netherlands
165. Euro-Laminations Limited UK
166. European Electrical Steels Limited UK
167. Europressings Limited UK
168. Firsteel Group Limited UK
169. Firsteel Holdings Limited UK
170. Firsteel Steel Processing Limited UK
171. Firsteel Strip Mill Products Limited Ireland
172. Fischer Profielen NV Belgium
173. Fischer Profil GmbH Germany
174. Gamble Simms Metals Ltd. Ireland
175. Grant Lyon Eagre Ltd. UK
176. H E Samson Ltd. UK
177. Hadfields Holdings Ltd. UK
178. Hammermega Limited UK
179. Harrowmills Properties Ltd. UK
180. Hille & Muller GmbH Germany
181. Hille & Muller Italia SRL. Italy
182. Hille & Muller Usa Inc. USA
183. Holorib GmbH Germany
184. Hoogovens (UK) Limited UK
185. Hoogovens Aluminium UK Limited UK
186. Hoogovens Finance B.V. Netherlands
187. Hoogovens Technical
Services Coahuila B.V. Netherlands
188. Hoogovens Technical Services
Mexico De S. De R.L. De C.V. Mexico
189. Hoogovens Technical Services
Monclova B.V. Netherlands
190. Hoogovens Tubes Poland Spolka Z.O.O Poland
191. Hoogovens Usa Inc. USA
192. Huizenbezit ÃBreesaapà B.V. Netherlands
193. Ickles Cottage Trust UK
194. Immobilliere De Construction De Maubeuge Et Louvroil SAS France
195. Industrial Steels Limited UK
196. Inter Metal Distribution SAS France
197. K&S Management Service Limited UK
198. Kalzip Asia Pte Singapore
199. Kalzip GmbH Austria
200. Kalzip GmbH Germany
201. Kalzip Guanhzou Limited China
202. Kalzip Inc USA
203. Kalzip Limited UK
204. Kalzip Spain S.L.U. Spain
205. Lister Tubes Ltd. Ireland
206. London Works Steel Company Ltd. UK
207. Midland Steel Supplies Ltd. UK
208. Mistbury Investments Limited UK
209. Montana Bausysteme AG Switzerland
210. Myriad Deutschland GmbH Germany
211. Myriad Espana Sl Spain
212. Myriad Nederland B.V. Netherlands
213. Myriad SA France
214. Myriad United Kingdom Limited UK
215. Namascor B.V. Netherlands
216. Nationwide Steelstock Limited UK
217. Nebam Nedelandse Bevrachting En
Agentuur Maatschappij B.V. Netherlands
218. Oostflank B.V. Netherlands
219. Orb Electrical Steels Limited UK
220. Ore Carriers Ltd. UK
221. Oremco Inc. USA
222. Plated Strip International Limited UK
223. Precoat International Limited UK
224. Precoat Limited UK
225. Rafferty-Brown Steel Co Inc Of Conn. USA
226. Richard Thomas And Baldwins
1978 Limited New Zealand
227. Richard Thomas And Baldwins
(Australia) Pty Ltd. Australia
228. Round Oak Steelworks Ltd. UK
229. Runblast Limited UK
230. Runmega Limited UK
231. S A B Protiel B.V. Netherlands
232. S A B Profil GmbH Germany
233. SA Intertubes Belgium
234. Sacra-Nord SAS France
235. Scrap Processing Holding B.V. Netherlands
236. Seamless Tubes Ltd. UK
237. Sia Corus Building Systems Latvia
238. Simiop Investments Ltd. UK
239. Simiop Ltd. UK
240. Simms Steel Holdings Ltd. UK
241. Skruv Erik AB Sweden
242. Societe Europeenne De
Galvanisation (Segal) Sa Belgium
243. Staalverwerking En Handel B.V. Netherlands
244. Steel Company (N.I.) Ltd. UK
245. Steel Stockholdings Ltd. UK
246. Steelstock Ltd. UK
247. Stewarts & Lloyds Of Ireland Ltd. Ireland
248. Stewarts And Lloyds (Overseas) Ltd. UK
249. Stocksbridge Cottage Trust UK
250. Surahammar Bruks AB Sweden
251. Swinden Housing Association UK
252. Tata Steel International (Italia) SRL Italy
253. Tata Steel International (Schweiz) AG Switzerland
254. Tata Steel Netherlands B.V. Netherlands
255. Tata Steel UK Ltd. UK
256. Telmag (Holdings) Limited UK
257. Telmag Magnetic Components Limited UK
258. The Newport And South Wales
Tube Company Ltd. UK
259. The Stanton Housing Company Ltd. UK
260. The Steel Company Of Ireland Limited Ireland
261. The Templeborough Rolling Mills Ltd. UK
262. Thomas Processing Company USA
263. Thomas Steel Strip Corp. USA
264. Tinsley Trailers Limited UK
265. Toronto Industrial Fabrications Ltd. UK
266. Trierer Walzwerk GmbH Germany
267. Tulip Netherlands (No. 1) B.V. Netherlands
268. Tulip Netherlands (No. 2) B.V. Netherlands
269. Tulip UK Holdings (No. 2) Ltd. UK
270. Tulip UK Holdings (No. 3) Ltd. UK
271. U.E.S. Bright Bar Limited UK
272. UK Steel Enterprise Ltd. UK
273. Ukse Fund Managers Limited UK
274. Ukse Fund Mangers
(General Partner) Limited UK
275. United Steels Co (N Z) Ltd. New Zealand
276. Unitol SAS France
277. Walker Manufacturing
And Investments Ltd. UK
278. Walkersteelstock Ireland Limited Ireland
279. Walkersteelstock Ltd. UK
280. Westwood Steel Services Ltd. UK
281. Whitehead (Narrow Strip) Ltd. UK
V Tata Steel Global Minerals Holdings Pte Ltd. Singapore
1. Al Rimal Mining LLC Oman
2. Black Ginger 461 Proprietary Ltd South Africa
3. Kalimati Coal Company Pty. Ltd. Australia
4. Tata Steel Cote DÃ Ivoire S.A. @ Ivory Coast
VI Tata Steel (Thailand) Public Company Ltd. Thailand
1. NTS Steel Group Plc Thailand
2. The Siam Construction Steel Co. Ltd. Thailand
3. The Siam Iron And Steel (2001) Co. Ltd. Thailand
xvii) Tata Steel Processing And Distribution Limited * India
xviii) TM International Logistics Ltd. India
1. International Shipping Logistics FZE UAE
2. TKM Global China Ltd. China
3. TKM Global GmbH Germany
4. TKM Global Logistics Ltd. India
5. TM Harbour Services Private Ltd.* India xix) The Indian Steel and
Wire Products Ltd. India xx) The Tata Pigments Ltd. India
B. Associate through
i) Kalimati Investment Company Ltd.
1. Rujuvalika Investments Ltd. India
ii) NatSteel Asia Pte. Ltd.
1. Steel Asia Development and Management Corp. Singapore
2. Steel Asia Industries Inc. Singapore
3. Steel Asia Manufacturing Corp. Singapore iii) Tata Incorporated
1. TKM Overseas Ltd. India
iv) Tata Refractories Ltd.
1. Almora Magnesite Ltd. India
v) Tata Steel Ltd.
1. Indian Steel Rolling Mills Ltd. India
2. Industrial Energy Ltd. India
3. Jamipol Ltd. India
4. Kalinga Aquatics Ltd. India
5. Kumardhubi Fireclay & Silica Works Ltd. India
6. Kumardhubi Metal Casting & Engineering Ltd. India
7. Nicco Jubilee Park Ltd. India
8. Strategic Energy Technology
Systems Private Limited * India
9. Tata Construction & Projects Ltd. India
10. Tata Sponge Iron Ltd. India
11. Tinplate Company of India Ltd. India
12. TRF Ltd. India
vi) Tata Steel Holdings Pte. Ltd.
a) Tata Steel Global Holdings Pte Ltd.
I Corus International (Singapore) Holding Pte. Ltd.
1. European Profiles Malaysia (M) Sdn.Bhd. Malaysia
II NatSteel Holdings Pte. Ltd.
1. Southern Steel, Berhard Malaysia
III Tata Steel Europe Ltd.
1. Ab Norskstal AS Norway
2. Albi Protils SRL France
3. Altos Hornos De Mexico S.A. de C.V. Mexico
4. Appleby Frodingham Cottage
Trust Limited UK
5. Combulex B.V. Netherlands
6. Cv Gasexpansie Ijmond Netherlands
7. Danieli Corus Canada Inc. Canada
8. Danieli Corus Asia B.V. Netherlands
9. Danieli Corus B.V. Netherlands
10. Danieli Corus Braseq Ltda. Brazil
11. Danieli Corus Construction Services
B.V. Netherlands
12. Danieli Corus Construction
Services Usa Inc. USA
13. Danieli Corus Do Brasil Ltda. Brazil
14. Danieli Corus Inc. USA
15. Danieli Corus Services Usa Inc. USA
16. Danieli India (PVT) Ltd. India
17. Endex European Energy Derivates
Exchanges N.V.* Netherlands
18. European Profiles (Marketing)
Sdn. Bhd. Malaysia
19. Galvpro LP. USA
20. Gietwalsonderhoudcombinatie
B.V. Netherlands
21. Hoogovens Court Roll Service
Technologies Vof Netherlands
22. Hoogovens Gan Multimedia
S.A. De C.V. Mexico
23. Isolation Du Sud SA France
24. Issb Limited UK
25. MDC Sublance Probe Technology Shanghai
26. Regionale Ontwikkelingsmaatschappij
Voor Het Noordzeekanaalgebied N.V. Netherlands
27. Richard Lees Steel Decking
Asia Snd. Bhd. Malaysia
28. Rsp Holding B.V. Netherlands
29. Schreiner Fleischer AS Norway
30. Shanghai Bao Yi Beverage
Can Making Co Ltd. China
31. Sms Mevac UK Limited UK
32. Stuwadoorsbedrijf Velserkom B.V. Netherlands
33. Thoresen & Thorvaldsen AS Norway
34. Trico LLC USA
35. Weirton/Hoogovens GP USA
36. Workington Cottage Trust UK
37. Wupperman Staal Nederland B.V. Netherlands IV Tata Steel Global
Minerals Holdings Pte Ltd
1. Riversdale Mining Ltd.* Mauritius vii) The Indian Steel and Wire
Products Ltd.
1. Metal Corporation of India Ltd. India
C. Joint Ventures of
i) Tata Steel Ltd.
1. Bhubaneshwar Power Pvt. Ltd India
2. mjunction services ltd. India
3. S & T Mining Company Pvt. Ltd. India
4. Tata Bluescope Steel Ltd. India
5. Tata NYK Shipping Pte Ltd. Singapore
6. Tata Steel Processing And
Distribution Limited * India
7. The Dhamra Port Company Ltd. India
ii) Tata Steel Holdings Pte. Ltd.
a) Tata Steel Global Holdings Pte Ltd.
I Tata Steel Europe Ltd.
1. Afon Tinplate Company Limited UK
2. Air Products Llanwern Limited UK
3. B V Ijzerleew Netherlands
4. Bsr Pipeline Services Limited UK
5. Caparo Merchant Bar Plc UK
6 . Cindu Chemicals B.V. Netherlands
7. Corus Celik Ticaret AS Turkey
8. Corus Cogifer Switches And
Crossings Limited UK
9. Corus Kalpinis Simos Rom SRL. Romania
10. Danieli Corus Technical Services B.V. Netherlands
11. Hks Scrap Metals B.V. Netherlands
12. Ijzerhandel Geertsema Staal B.V. Netherlands
13. Industrial Rail Services Ijmond B.V. Netherlands
14. Laura Metaal Holding B.V. Netherlands
15. Norsk Stal AS Norway
16. Norsk Stal Tynnplater AS Norway
17. Ravenscraig Limited UK
18. Tata Elastron SA Greece
19. Tata Elastron SA Steel Service Center Greece
20. Texturing Technology Limited UK
II Tata Steel Global Minerals Holdings Pte. Ltd.
1. Riversdale Energy (Mauritius) Ltd. Mauritius
D. Promoters holding together with its subsidiary is more than 20%
Tata Sons Ltd.
E. Key Management Personnel à Whole time Directors
Mr. B. Muthuraman* Mr. H. M. Nerurkar*
F. Relatives of Key Management Personnel à (Disclosure will given only
if there have been transactions)
Ms. Sumathi Muthuraman*
10. Earnings in Foreign Exchange
(i) Export of steel and other materials (at F.O.B. value) Rs. 2,034.81
crores (2008-09 : Rs. 3,309.78 crores) [including value of exports
through export houses]. (ii) Interest received Rs. 20.60 crores
(2008-09 : Rs. 19.01 crores). (iii) Others Rs. 44.07 crores (2008-09 :
Rs. 46.87 crores).
11. Derivative Instruments
I) The Company has entered into the following derivative instruments :
a) 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 CompanyÃs strategy
approved by the Board of Directors, which provide principles on the use
of such forward contracts consistent with the CompanyÃs Risk Management
Policy. The Company does not use forward contracts for speculative
purposes.
b) 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 provide principles on the use of these
instruments, consistent with the CompanyÃs Risk Management Policy. The
Company does not use these contracts for speculative purposes.
12. Previous yearÃs figures have been recast/restated where necessary.
The assets and liabilities of Hooghly Met Coke and Power Company Ltd.
(HMPCL) were transferred to and vested in the Company w.e.f. 1st April,
2009 in accordance with the scheme of amalgamation. Accordingly the
figures for the previous year do not include HMPCL.
13. Figures in italics are in respect of the previous year.
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