24th Annual Report

2005-06

“Create a bold path,

Conquer the future”

Rashtriya Ispat Nigam Limited

Visakhapatnam Steel Plant
(A Govt. of India Undertaking)
Glimpses of Hon'ble Prime Minister Dr. Manmohan Singh’s visit to RINL on 20th May, 2006.
 Annual Report 2005-06

1
Rashtriya Ispat Nigam Ltd.
VISION
To be a continuously growing world class company,
We shall
m harness our growth potential and sustain profitable growth
m deliver high quality and cost competitive products and be the first choice of customers
m create an inspiring work environment to unleash the creative energy of people
m achieve excellence in enterprise management
m be a respected corporate citizen, ensure clean and green environment and develop vibrant communities
around us.

MISSION
To attain 16 million tonne (Mt) liquid steel capacity through
technological up-gradation, operational efficiency and expansion; to
produce steel at international standards of cost and quality; and to
meet the aspirations of the stakeholders.

OBJECTIVES
m Expand plant capacity to 6.3 Mt by 2008-09 with the mission to expand further in subsequent phases
as per the Corporate Plan.
m Sustain gross margin to turnover ratio> 25%.
m Be amongst top five lowest cost liquid steel producers in the world by 2009-10.
m Achieve higher levels of customer satisfaction than competitors.
m Instill right attitude amongst employees and facilitate them to excel in their professional, personal and
social life.
m Be recognized as an excellent business organisation by 2008-09.
m Be proactive in conserving environment, maintaining high levels of safety and addressing social
concerns.

CORE VALUES
With a view to running the business in a transparent manner meeting the needs and expectation of the
stakeholders, it was felt desirable to give utmost importance to the value System in the company. Accordingly,
RINL has finalized its Core Values, which are brought out below.
m Commitment
m Customer satisfaction
m Continuous improvement
m Concern for environment
m Creativity & innovation. 2
 Annual Report 2005-06

BOARD OF DIRECTORS

Y. SIVA SAGAR RAO

Chairman cum Managing Director

P.K. BISHNOI K.A. NAIDU H.S. CHHATWAL

Director (Finance) Director (Personnel) Director (Commercial)

P.K. MISRA A.K. RATH G. ELIAS

Director (Operations) AS & FA, Min. of Steel & Director Jt. Secy, Min. of Steel & Director

R.S.S.L.N. BHASKARUDU Dr. V.K. BHALLA J.S. MATHUR

Director Director Director

P. MOHAN RAO
Company Secretary
(As at the 24th Annual General Meeting held on 25th September, 2006)
3
Rashtriya Ispat Nigam Ltd.

BOARD OF DIRECTORS
Chairman-cum-Managing Director Y. Siva Sagar Rao

Director (Finance) P.K. Bishnoi

Director (Personnel) K.A. Naidu

Director (Commercial) H.S. Chhatwal

Director (Operations) K.K. Rao (upto 31.07.2006)

P.K. Misra (from 01.08.2006 onwards)
Directors A.K. Rath
J.P. Singh (upto 23.01.2006)
Dr. S.N. Dash (upto 06.04.2006)
G. Elias (from 13.04.2006 onwards)
R.S.S.L.N. Bhaskarudu (from 26.04.2006 onwards)
Dr. V.K. Bhalla (from 29.06.2006 onwards)
J.S. Mathur (from 11.07.2006 onwards)

Company Secretary P. Mohan Rao

Registered Office Administrative Building, Visakhapatnam Steel Plant
Visakhapatnam 530 031 (Andhra Pradesh)
website : www.vizagsteel.com
BANKERS
State Bank of India
Bank of Baroda
Canara Bank
UCO Bank
Andhra Bank
State Bank of Hyderabad CONTENTS
Allahabad Bank
Chairman’s Statement 9
Indian Overseas Bank
HSBC Bank Ltd. Directors’ Report 13
IDBI Bank Ltd. Highlights 38
Indian Bank
Audited Accounts 43
Auditors Auditor’s Report 70
M/s Rao & Kumar Comments of C&AG 76
Chartered Accountants
Review of Accounts by C&AG 78
Visakhapatnam

4
 Annual Report 2005-06

Foundation Stone Laying Ceremony for Expansion of RINL

from 3MT to 6.3MT p.a. of Liquid Steel

5
Rashtriya Ispat Nigam Ltd.

Glimpses of Hon’ble Minister of State (Steel) Dr. Akhilesh Das’s visit to Vizag Steel

India Steel Summit

(L to R) Sri Ram Vilas Paswan, Hon’ble Union Minister for Steel,

Sri R.S. Pandey, Secretary (Steel) & Sri Y. Siva Sagar Rao, CMD, RINL.

6
 Annual Report 2005-06

Awards Galore

National Energy Conservation Award

Best Industrial Productivity Award

Best CEO Award

Golden Peacock Award for

Environmental Management

7
Rashtriya Ispat Nigam Ltd.

Glimpses of Parliament Committee’s visit to Vizag Steel

8
 Annual Report 2005-06

CHAIRMAN’S STATEMENT
It gives me great pleasure to
welcome you to this very special
24th Annual General Meeting of
your company, the first after its
declaration as a Mini Ratna
Company by the Hon’ble Minister
for Steel, Chemicals and
Fertilizers, Government of India
on 20th May 2006.

Your company has moved ahead

with a strong performance and
well conceived strategies for
Expansion, Improved capacity
utilization and Corporate
transformation. The sustained performance of the company particularly during the last four years with its
relentless pursuit towards excellence enthuse over all confidence among all the stake holders. I feel proud
to quote the Hon’ble Prime Minister on the momentous occasion of the “Foundation stone laying ceremony”
on the 20th May 2006 for the expansion of the plant from its present capacity of 3 Mt to 6.3 Mt liquid steel.

“The turnaround of this steel plant is a land mark achievement. It shows that with hard work and
commitment, PSUs can perform well against competition. RINL has shown other PSUs the way forward.
I congratulate everyone associated with the remarkable turnaround. We rejoice in your success.”

2005-06 : The record breaking year :

Our continued excellence and relentless endeavours backed by our sound work culture and dedicated work
force helped in registering the best ever sales turnover of Rs.8482 crs in the year 2005-06, the best since
inception. This is really noteworthy particularly given the steel market scenario in 2005-06 that witnessed
softening of the steel prices and hardening of the raw material inputs.
The Global Scenario :
The global steel scenario has stabilized by the end of 2005-06 and it is expected to grow steadily with
increased demand for steel from China and USA followed by India due to increase in infrastructural and
manufacturing activities. Apart from this, renewed business confidence from Europe and Asia has made
the economic scenario appear quite positive.

9
Rashtriya Ispat Nigam Ltd.

Indian Scenario :
The Indian economic scenario is robust at present backed by sustained manufacturing activity and focus
on Infrastructure development by the government. The GDP growth was around 8.4% (estimated) in 2005-
06 against 7.5% in 2004-05. Growth prospects of the economy and business opportunities exude confidence
and there is over all optimism in all sectors paving way for investments by foreign institutional investors.
This will definitely help in augmenting the infrastructure sector which will enable handsome steel growth.

Indian Steel Sector :

The Indian Steel Sector has shown an accelerated growth rate of over 9% in the last five years and is all
set to grow further backed by strong economic growth. A National Steel Policy under the able stewardship
of the Hon’ble Minister for Steel, Chemicals and Fertilizers has been evolved to facilitate smooth growth
of the steel industry. The long term goal of the National Steel Policy is to develop India as a modern and
efficient steel producer and achieve global competitiveness not only in terms of cost, quality and product
mix but also in terms of efficiency in productivity.

RINL - Bright Years ahead :

RINL, the emerging giant, has evolved both short term and long term strategies in line with the National
Steel Policy to convert the challenges into opportunities and propel the company to become a world class
integrated steel plant. The current expansion to double the capacity by 2008-09 is another step in its vision
to emerge as a world class company. The Corporate Plan 2020 is being worked out to capitalize on the
current opportunities and leverage the inherent strength, which will provide a blue print for growth of your
great company.

Strategic Initiatives :
Raw material security has become the prime concern and various strategies have been drawn to acquire
captive mines both within the country as well as abroad through joint ventures and acquisitions. An
exclusive group is working in this direction and joint ventures with NMDC and MOIL are the results of
such efforts. Our continued efforts for captive mines has resulted in the allocation of Mahal Coking Coal
Block with an estimated reserve of 258 Million Tonnes.

To strengthen our brand leadership in the market and improve process optimization, concerted efforts are
being put to provide more value to the customers at a price that is competitive and attractive. Therefore,
an exclusive R&D Department has been formed to focus on value advantage and cost optimization.

To further enhance the operational efficiencies, Enterprise Resource Planning is given due priority and
a cross functional team has been set up to ensure its implementation at the earliest.

10
 Annual Report 2005-06

On the energy front, in line with the vision of our Hon’ble President Dr Abdul Kalam ji, renewable energy
and generation of bio-diesel has been given due attention and action plans have been drawn to substitute
5% of the energy requirement through renewable energy. A Renewable Energy Policy has been drawn
committing our efforts towards augmenting Renewable Energy.

Human Resources Development :

Today RINL stands tall among its competitors with an unmatched quality leadership. This is phenomenal,
given the high levels of capacity utilization of about 125%. The Labour Productivity of 282 t/man year
is the best in the steel industry of the country. This would not have been possible but for the committed
and dedicated team of our employees and their passion to excel. Their excellence is best exemplified by
your company winning almost one fifth of the Vishwakarma Rashtriya Puraskars at the National level. The
company therefore puts concerted efforts to sharpen the innovative and creative skills of the employees
for building upon the existing competencies and also for creating new areas of excellence. The HRM
practices are directed to motivate them and ensure their readiness to face the emerging challenges and
the upswing in the company’s business.

Corporate Social Responsibility (CSR) :

As a responsible corporate citizen your company has initiated voluntary measures addressing the social
and environmental concerns of the stake holders. A comprehensive CSR Policy has been evolved. CSR is
viewed as a key business process to ensure peripheral development and for promoting the cultural
efflorescence of the society around. A number of welfare and development projects have been taken up and
a lot more have been planned to promote all round development of the society.

Continued Excellence :
The first quarter of the second fiscal has started on a bright note with the sales registering a growth of
30%. The Expansion programme has been given continued fillip and all efforts are being put for completing
the expansion by 2008-09 as promised to the government. A High Power Steering Committee is formed
to monitor the progress periodically. The task is quite daunting and therefore the need for speedy
implementation has been given specific focus through empowerment and refinement of processes and
systems. I am confident with the resources and competencies available, the RINL collective will leave no
stone unturned in accomplishing its objective.

Laurels :
The performance of your company has been well recognized and has been bestowed with a number of
accolades in various spheres of our activities. Some of them are :
- The National Energy Conservation Award for the sixth time in succession
- The ICWAI Award for Excellence in Cost Management
- Commendation Certificate for Strong Commitment in HR Excellence from CII

11
Rashtriya Ispat Nigam Ltd.

- The INSAAN Award for Organisational Excellence

- The QCFI Award for the best QC implementation
- Golden Peacock Award for Environment Management
- The CII Award for Excellence in Water Management
- The Viswakarma Rashtriya Puraskars (6 out of 28 awards at the National Level)

The Future :
With the kick starting of the second phase of RINL, your company has now embarked in chalking out the
growth path for future. As mentioned earlier, the Corporate Plan 2020 is under preparation to leverage
the inherent strengths and create more value to the stake holders. As the steel industry becomes more and
more technology driven, the need for intensifying the R&D activities has become more imperative and due
care is taken to strengthen this area further. The integration of the existing assets with the emerging
technologies and diversification of activities in line with the market needs are the broad areas of focus
in the Corporate Plan to be released shortly.

Acknowledgements :
The journey of RINL as a Mini Ratna Company has just started and with a committed and competent
team, your company is poised to create more wealth and greater value for the shareholders. During the
current fiscal year, as the Company enters into its Silver Jubilee year, I am sure it will take on its stride
the challenges to convert them into profitable avenues to place it on a higher orbit of growth and
excellence to acquire the ‘NAVRATNA’ status in the coming years.

The sustained excellence of your company could be achieved with the commitment and contribution from
the entire RINL collective and support from various other corners, the Valued Customers, Suppliers, the
Statutory Auditors, C&AG, Financial Institutions, Banks, Officers’ Association and the Unions. I take this
opportunity to thank the Hon’ble Minister of Steel, Chemicals & Fertilizers, the Hon’ble Minister of State
for Steel, the Secretary and officials of the Ministry of Steel, Government of India for their unstinted
support. I would also like to acknowledge the support extended by the Hon’ble Chief Minister of Andhra
Pradesh and officials of the State Government. I am thankful to the assistance rendered by other Ministries/
Departments of the Government of India and the Government of Andhra Pradesh. I am grateful to the
entire Board of Directors for their guidance and support. I thank each and every employee of the Company
for their dedicated efforts and hard work in keeping the Company’s flag flying high at all times.

( Y Siva Sagar Rao )

Place : Visakhapatnam
Date : 25th September, 2006

12

DIRECTORS’ REPORT
To
The Members,
Rashtriya Ispat Nigam Ltd, Visakhapatnam.
On behalf of the Board of Directors of the Company,
I have great pleasure in presenting the 24th Annual
Report of the Company together with the Audited
Accounts for the year ended 31st March, 2006.
It is a matter of immense satisfaction for me and the
entire VSP collective that as your Company enters the
Silver Jubilee year of its existence, it has posted a
sterling performance encompassing all facets of
corporate excellence. For the past twenty four years,
your company has focused on its core competencies
without any diversions. It has put in all out efforts for
excellence in almost all fields of its functioning and in
spite of various adverse factors and situations over
the last twenty four years, the Company ultimately
emerged as a profit making company wiping out all its
accumulated losses and setting industry standards in
many technical parameters benchmarking with the best
in the world of Steel industry.
2005-06 : AN YEAR OF SUSTAINED GROWTH
The year 2005-06 has been a significant one for the
Steel industry in general with the world steel production
24th AGM held at Vizag on 25th September, 2006.
13
Annual Report 2005-06
registering a 6% growth. On the domestic front, the
industry has grown by over 16%, a remarkable
achievement indeed. This only supports the growth
anticipated in the National Steel Policy symbolizing
robust economic growth. During the year, RINL on its
part achieved a capacity utilization of 120% of its rated
capacity and registered a 2% growth in Saleable Steel
production. The total sales turnover has improved by
3.68%. Majority of the Units have achieved a rare
distinction of highest ever production since inception.
The turnover touched an all time high since inception.
The year shall also be reckoned as a landmark and
memorable one for RINL, because it could secure
the final approval /clearance of the Government of
India in a record time of 10 months for its Expansion
Project from 3Mt to 6.3 Mt of Liquid Steel i.e. almost
doubling its rated capacities thus paving way for a
sustainable growth path in coming years as well.
FINANCIAL REVIEW
The Financial year 2005-06 was an eventful year for
RINL. It has created Record Turnover of over Rs.8,482
crores. For the fifth consecutive year it earned Net
Profit and for the year it is Rs.1,252 crores after
taxes. This is apart from payment of (a) Income Tax
of Rs.500 crores towards Corporate Tax, (b) over
Rs.1000 crores towards Excise Duty and (c) over
Rashtriya Ispat Nigam Ltd.

Rs.250 crores by way of Sales Tax to different State The summary of Financial performance is as follows:
Governments. With the current year's net profit, all the Rs. In Crores
accumulated losses of the company since its inception
Description 2005-06 2004-05
have been fully wiped out. With this, RINL became a
real profit making company and it has, therefore, been
Turnover (Gross) 8482.44 8181.34
classified as a MINIRATNA CATEGORY-I PSE by Govt.
Total Income 7761.59 7646.15
of India vide Ministry of Steel's letter No.1(9)2004-VSP
dated 25th May, 2006. It is indeed a great journey Total expenditure 5392.54 4375.16
from a time when the company has reported to BIFR Gross margin 2369.04 3270.99
its erosion of Net Worth and now conferred with Interest charges 31.24 11.11
MINIRATNA status.
Cash Profit 2337.80 3259.88
Depreciation 448.29 447.25
The Company was conferred National Award for
Excellency in Cost Reduction instituted by the Institute Profit before exceptional items 1889.51 2812.63
of Cost and Works Accountants of India (ICWAI) for Depreciation of earlier years - 558.87
the year 2005 in recognition of its efforts for effective Profit before tax 1889.51 2253.76
implementation of Cost and Management Accounting
Provision for tax
tools, quality of cost accounting records, optimum
Current Tax 474.97 87.18
utilization of resources, waste management, etc. by
the Ministry of Company Affairs, Government of India. Fringe benefit Tax 3.94 -
This is one more feather in the cap of RINL. The Deferred Tax 158.23 158.49
Finance and Accounts Department of the Company Net Profit 1252.37 2008.09
secured the ISO 9001 Certificate, which is unique in
Accumulated loss (-) / profit (+) (+) 346.38 (-) 905.99
Public Sector Steel Plants in the Country.

Board Meeting held at Vizag on 31st August, 2006.

14
 Annual Report 2005-06

SALES AND MARKETING REVIEW
Marketing Performance during April 2005 - March
2006
As against the MOU target of Rs. 8793 Crs. for the
year 2005-06, VSP achieved a sales realisation of
Rs. 8482 Crs., thus registering a fulfilment of 96%
and a growth of 4% over the sales turnover of
Rs. 8181 Crs. in 2004-05. The Sales turn over of
Rs.8482 Crs. of 2005-06 were the best ever since
inception. And this could be possible against the
backdrop of sluggish market conditions right throughout
the year which has brought price line under tremendous
pressure for any year. Domestic sales turnover of Rs.
8040 Crs. in 2005-06 was also the best ever till date.
Sales performance w.r.t. MOU Target 2005-06 :
Volum e in '000 t
2005-06
ITEM 2004-05 Growth
Target Actual Ful-mnt
The revenue generation increased with higher sales
realization value as well as the increased sale of value
added products. Sale of value added products grew
by 5 % in 2005-06 as compared to 2004-05.
Total sales in Steel volume during 2005-06 registered
record sales of 3.3 million tons (since inception) with
a 6% growth over previous year. Domestic steel
volume of 3.10 million tons recording a growth of 1%
over 2004-05 (3.06 million tons).
To further strengthen the Exports, 2.02 lakh tonnes of
steel was exported during the year to the countries
viz. Bangladesh, Myanmar, Nepal, Sri Lanka, Thailand
and USA being our strategic markets, compared to
0.56 lakh tons last year.
Sales of By-Products during the year was Rs 150 Crs.
registering a growth of 5% over 2004-05 (Rs.142
Crs.). This includes exports of 6.95 lakh tons of Blast

Dom e stic furnace slag to Bangladesh, Malaysia and USA.

Pig Iron 383 307 80% 120 155%
Steel 3078 3105 101% 3064 1% Pig iron recorded sales of 3.07 lakh tons in Domestic
market during 2005-06 with a growth of 156% over
Ex port
Pig Iron 33 104 315% 110 -5% 2004-05 (1.20 lakh tons).
Steel 47 202 429% 56 263%
The focus during the year was on the development of
Total actual user base in domestic market. Around 60% of
Pig Iron 416 411 99% 230 79% the steel was supplied to the actual user segment in
Steel 3125 3307 106% 3119 6% 2005-06.
Va lue in Rs.Crs.
Domestic * 8643 8039.9 93% 7932.5 1% As a step towards increasing customer satisfaction
Export 150 442.6 295% 248.8 78% levels, settlement of customer quality complaints
Total 8793 8482 96% 8181 4% through e-system has been developed and
* Domestic includes Iron, Steel & By Products implemented on VSP's intranet. This will eliminate

Wire Rod Coils in process VSP Products - Wire Rods

15
Rashtriya Ispat Nigam Ltd.

delay in processing of quality complaints and provide

an efficient mechanism for settlement of quality
complaints.

SALES TURNOVER DURING THE LAST

3 YEARS:

MATERIALS MANAGEMENT REVIEW

During the year 2005-06, the required materials were
made available in time with no disruption of
Production.
Long Term Agreements were entered into for Hard
Coking Coal, Soft Coking Coal, Coke, Iron Ore Lumps
and Fines and MOUs were signed for MCC, Boiler
Coal, Aluminium Coils & Ingots and Steel Items, in
order to curtail price fluctuations in a highly volatile
market and to control the scarcity of material.
Coking Coal block at Mahal, Dhanbad (Dist), Jaria
Coal Field has been allotted to RINL and further studies
are underway. A High Level Delegation visited Canada,
Columbia, USA & Australia to explore the possibility of
acquiring Coking Coal Mines and submitted it's report.
MOU was entered with NMDC for a Joint Venture for
Iron Ore Pellet/Sponge Iron Plant in Chattisgarh.
3 Year Contracts were entered into for Special
Refractory Items. Also Rate Contracts were entered/
continued for various spares and consumables.

Coke Oven Battery Coke Ovens - By Product Plant

16

5S was implemented in almost all areas of Stores for
better house keeping and service. A 20 T Gantry
crane, lying idle for almost two decades, was made
operative through in-house efforts.
The inventory of Stores and Spares at cost as on
31.03.2006 was Rs. 294.72 crores (provisional) and
was Rs. 290.83 crores as on 31.3.2005. While adding
In-transit/under inspection items and reducing
obsolescence and non-moving items, the level of
Inventory was brought down from Rs.279.26 crores in
2004-05 to Rs.273.54 crores in 2005-06. During the
period under consideration, project inventory of Coke
Oven Battery IV has gone up from Rs.16.12 crores to
Rs.32.81 crores
The Internal procurement Leadtime stood at 84 days
and the Total Leadtime at 206 days. Initiatives like Six
Sigma, simplification of Purchase Procedures, Total
Logistics Management etc., were taken to reduce the
Procurement Leadtime.
The total earnings during the year 2005-06 stood at
Rs.10258.57 lakhs with earnings from Disposal -
Rs. 947.76 lakhs; Cenvat - Rs. 8217.46 lakhs; Early
despatch of vessels- Rs.1082.83 lakhs; Charter agency
- Rs. 65.74 lakhs; Customs agency- Rs.6.82 lakhs.
Savings through negotiations was Rs. 8.51 Crores.
In order to improve the existing online MIS system
and to make it more effective, a Committee was formed
on Data Ware Housing. The recommendations of the
Converter
17
Annual Report 2005-06
Committee were approved and modules are being
tested. MIS System for port operations and Major Raw
material order placement were made online.
PRODUCTION REVIEW AND TECHNO
ECONOMIC FACTORS
Rated capacity of the Plant has been surpassed for
the fifth consecutive year. VSP continued to honour
the commitments made in the MOU for the year 05-06
entered into with the Government of India in almost all
shops by registering more than 100% fulfillment in Oven
Pushing (104%), Bars Mill products (108%), Wire Rods
(113%), MMSM products (116%), Billets (103%),
Saleable Steel (104%), Liquid Steel (103%), Hotmetal
(104%) and Sinter (104%).
Highlights on Production front are briefly stated below:
• Production of 2.973 Mt Finished Steel with 3%
growth over last year.
• Value added production of 8,89,112 t is the highest
with 1% growth over 04-05.
• Highest no. of Iron and Steel rakes (859 rakes in
a year, 102 rakes in a month) dispatched since
inception.
• Highest no. of Road vehicles dispatched in a month
(10776 in March 06)
• Labour productivity of 282 t/man-yr [6% growth
over last year (265t/man-yr)] is the best so far.
Continuous Casting
Rashtriya Ispat Nigam Ltd.
• Gross Water consumption of 2.56 cum/t LS (8%
reduction over last year) is the best so far.
• Gross Power consumption of 457 Kwh/t LS is the
lowest so far.
• Lowest Semis of 8.13% in Saleable Steel so far.
• Highest BF Productivity (w.r.t. Working Volume)
2.07 t/day
COST REDUCTION MEASURES
a) Maximizing the utilization of waste products like:
i) LD Slag used in SP, BF and SMS to replace
limestone to the extent of 78,523 t.
ii) Scrap to the extent of 6,769t was reclaimed
from maintenance activities and used in SMS.
b) Separate Calcining of lime and dolomite and using
the flux separately in the converters has reduced
the consumption of flux per tonne of Liquid Steel
drastically from 52.7 kg to 45 kg.
In addition to the techno-economic parameters being
focused and monitored by Works Division, the other
functional areas like Finance, Materials Management
and Marketing have also adopted various measures in
order to achieve cost reduction in freight, transportation
and handling charges in respect of both inward and
outward movement of materials including export as
well as reduction in interest expenses.
Blast Furnace
18
RAW MATERIALS / CAPTIVE MINES
The performance of Jaggayyapeta Limestone Mine for
the year 2005-06 was excellent with all time production
record of 4,10,325 tonnes and dispatch record of
4,03,611 tonnes of limestone. The % growth in respect
of JLM production was 7.74% and dispatch was
12.31% as compared to 2004-05.
The performance of Madharam Dolomite Mine for the
year 2005-06 was also excellent with all time production
record of 6,80,293 tonnes and dispatch record of
6,48,185 tonnes of dolomite. The % growth in respect
of MDM production was 9.65% and dispatch was 6.65%
as compared to 2004-05.
The production of manganese at Garbham Manganese
Mine was 13,467 tons and dispatch was 12,989 tons.
Production achieved was 70.14% of the budget. The
usage of sand was reduced and achieved 46.00% of
sand from Nellimarla Sand Mine and Sarepalli Sand
Mine, which was opened on 16.12.2004.
The Karajada Sand Mine at Vamshadhara river in
Srikakulam district will be operated during 2006-07. It
is proposed to operate a Quartz Mine during this
financial year 2006-07 at Kintada Village, K Kotapadu
Mandal, Visakhapatnam district to maintain uniformity
in quality of quartz and reduce usage of sand.
The Company has submitted 5 mining lease
applications for iron ore deposit in the State of Orissa
(4415.8807 ha.), two applications in the state of

Chhattisgarh (4606.34 ha.) and two applications in the
State of Andhra Pradesh (1384.27 ha). These
applications are pending with respective State
Governments and the same is being followed up with
Ministry of Mines through Ministry of Steel.
ACQUISITION OF COAL MINES IN INDIA AND
ABROAD
Government of India allotted "Mahal Block" (Medium
Coking Coal) to RINL/VSP. Work Order is issued for
"Pre-Feasibility Study" to Central Mining Plan and
Design Institute Ltd (CMPDIL), Ranchi. RINL/VSP
applied for Tenughat Jhirkhi Coking Coal Block to the
Ministry of Coal and also applied for three Non-coking
coal blocks in Khammam District to the Ministry of
Coal. Ministry of Coal forwarded it to the Ministry of
Steel for their comments.
"Expression of interest for acquisition of Hard Coking
Coal Mines abroad" was placed in VSP's website.
Responses from Australia, USA and Canada have been
received and the Evaluation Process is continuing for
selecting suitable mine for Joint Venture. Consultant is
proposed to be appointed by the Company for further
evaluation of the proposals.
RINL signs MOU with MOIL
19
Annual Report 2005-06
SMS LIMESTONE JOINT VENTURES
RINL received proposals and samples from different
agencies of Oman, Malaysia, Thailand and Philippines.
So far no agency is finalized for Joint Venture with
RINL/VSP due to non-matching of required
specification. The processing is continuing for selecting
suitable Mine for Joint Venture.
SAFETY, ENVIRONMENT & HEALTH CARE :
Safety
Visakhapatnam Steel Plant is the first integrated steel
plant to be certified for "Occupational Health & Safety
Management System" as per British Standards Institute
specification in the year 2002 and re-certified again in
the year 2005. Two Surveillance Audits were
conducted in the year 2005-06. Continuous efforts in
implementation of safety standards, monitoring of
hazards in the activities had helped in achieving a
10.67% reduction of reportable accidents.
HIGHLIGHTS AND ACHIEVEMENTS :
• "Zero Accident" was achieved in 17 departments
viz. ACVS, CED, CSD, Canteens, EnMD, ETL,
L&H, OHSRC, PPM, PEM, PD, RMD, StED,
Systems, TELECOM, TS, and T&DC.
Safety at workplace
Rashtriya Ispat Nigam Ltd.
• 10.67% reduction of Reportable accidents was
achieved during the year 2005-06.
• First and Second Surveillance Audits of OHSAS-
18001 were successfully completed and well
appreciated by the external auditors.
• Internal Safety Audits were conducted in respect
of 16 departments.
• Two plant level Mock Drills were conducted to
check the emergency preparedness and response
of various agencies.
• National Safety Day was celebrated on 4th March,
2006 and in that connection various competitions
such as Quiz, Essay, Debate, Poster etc. were
conducted. Safety Playlet and First Aid
Competitions were also held.
• Inter-departmental Safety Performance and House
Keeping Competitions were conducted.
VSP won the Leadership and Excellence Award for
the efforts in Safety, Health and Environment in the
competition organized by CII, Southern Region.
OTHER IMPORTANT ACTIVITIES
• VSP imparted refresher Safety Training to about
5000 regular employees and Safety Induction
training and Job Specific Training was given to all
contractor employees.
• Control Measures for Hazard Identification and Risk
Assessment were implemented and monitored.
Workshop for Children on Education
20
Measurable targets were set in respect of Safety
and Occupational Health for each department and
corresponding management programs had been
prepared and monitored for achieving the
objectives.
• On site emergency plan and Safety Report were
updated.
• One training Program was organized for the Central
Safety Committee members, including a plant visit
to NTPC Simhadri. Departmental Safety Committee
meetings were held in every month in various
departments.
ENVIRONMENT MANAGEMENT REVIEW
The commitment of VSP management for preservation
of the environment as an integral part of its products
and services has always remained a guiding principle
of its business strategy. Being an ISO-14001 certified
company since May 2001, VSP has expressly included
social and environmental responsibility in its corporate
objective which is regularly reviewed and improved.
MAJOR ENVIRONMENTAL PROJECTS UNDER
IMPLEMENTATION
All statutory requirements are fulfilled and over a dozen
projects to improve the environmental standards further
in VSP are under implementation at an estimated cost
of over Rs.263 Crores. This is an enough evidence on
the part of VSP that it giving priority to people before
Park in Township
 Annual Report 2005-06

profits. The major projects under implementation HEALTH CARE

include the following :
Computerization of Visakha Steel General Hospital
services was completed successfully and brought into
VSP CERTIFIED TO ISO 14001 : 2004 usage for all Out-Patient activities starting from
VSP was first certified to ISO 14001 : 1996 in May Registration, Consultation, Clinical Laboratory,
2001 and recertified on 15.12.2004. However, the Radiological Investigations, Retrieval of Investigation
standard was upgraded to ISO 14001 : 2004 and VSP Reports and Dispensing of Drugs from the Dispensary
took rapid strides to comply with the new standard. through Online (Computerized Operational Activities)
VSP was audited for its EMS from 6th to 8th February from 21st January, 2006.
2006 and having complied with all the new
requirements, VSP has been certified by M/s BVQI for The Second Phase of Computerization is under
certification to ISO 14001 : 2004. process and efforts have been initiated for obtaining
ISO Certification for VSGH.
Sl. Projects under Estimated Target
No. implementation Cost date Implementation of "5-S" initially in Medical Stores,
Admn. Office, Operation Theatre was taken up and
(Rs crore)
presently they are in "2-S" & "3-S" stage.
1 Pulverised coal dust 181.00 31st December
injection in BF - 1 , 2 2008 The total no. of in-Patients treated was 4,407 and total
no. of out-Patients treated was 4,72,436.
2 High temperature membrane 7.16 31st December
bag filters in CRMP : 2006 While extending medical care round the clock in VSGH,
FK - 1, 2, 3, 4 to have expert opinion and second opinion in certain
cases, and where specialists do no exist in particular
3 Replace compressors 1.50 31st December disciplines, visiting consultants are visiting VSGH from
working on 'ODS' with 2006 Visakhapatnam City and extending their services on
non-ODS weekly basis.
(R - 22 / R - 134a) :
a) 2 chillers of CWP - 4
b) 4 chillers of CWP-3 4.87 31st December
2006

4 Dry fly ash handling, storage 2.49 31st July 2006

and delivery system

5 a) Continuous on-line stack 2.05 31st August

monitoring systems 2006
(10 nos.)

b) Continuous on-line stack 2.49 31st December

monitoring stations 2006
(10 nos.)
Awareness Programme on Health Care

21
Rashtriya Ispat Nigam Ltd.

With the help of social service associations like Lions

SNo Particulars Total
Club, Rotary Club, free eye camps are being conducted
in the VSP's peripheral areas and also Steel Doctors 1.0 No. of Programmes
Trust is being conducting general cases.
1.1.1 Inhouse Programmes 106
In addition to all the above services, to create 1.1.2 External Nominations 354
enthusiasm and awareness among the VSP employees
and other Public in and around Ukkunagaram, number Grand Total 460
of other programmes like :
2.0 No. of Employees
• Conducting statutory Health checkup to all
2.1.0 Executives
Employees at OHSRC
2.1.1 Inhouse Programmes 2613
• Organizing First Aid Training to Executives and
Non-executives(9287 employees covered) at 2.1.2 External Nominations 1052
OHSRC
Sub-Total 3665
• Apart from Patient Care, conducting CMEs -
Internal and External for updating the knowledge 2.2.0 Non-Executives
of doctors
2.2.1 Inhouse Programmes 769
• Weekly once conducting the De-addiction clinic in
2.2.1 External Nominations 229
VSGH

Patients awareness programmes were also conducted Sub-Total 998

periodically. Grand Total 4663
An amount of Rs.22 Lakhs was realized by the
Employees were nominated to participate in
treatment of Non-Entitled Cases at VSGH.
programmes at XLRI, Jamshedpur; ASCI, Hyderabad;
NITIE, Mumbai; IIM Bangalore; CII-Godrej Insitute;
HUMAN RESOURCE MANAGEMENT REVIEW ESCI, Hyderabad etc. Besides these, a unique
programme titled "Improving Effectiveness of Stockyard
The Company has long drawn plans aimed at
individual and overall development of its Human
Resources. Towards achieving synergy and group
concept, the HRD focused on many skilled training
programmes for enhancement of managerial
competencies.

THROUGH HRD CENTRE :

TRAINING PROGRAMMES

MOU FULFILMENT

Executives Non-Execs. Total MOU

2005-06 3665 998 4663 2000 Sri KA Naidu, Director (Personnel) receiving
HR Excellence Award

22

Operations" is organized for personnel under
directorate of Commercial who are connected with
stockyard operations. An expert faculty Shri J Charlu
from Bangalore who served as ED (Mktg) at SAIL and
JVSL in the past, facilitated the tailor-made
programmes during October '05 at Chennai and
December '05 at Mumbai. The programme design
includes visit to stockyard with senior management
members and drawing up individual action plans. The
feedback was quite encouraging.
ORGANISATION DEVELOPMENT
EMPLOYEES SATISFACTION SURVEY
Following the documented approach of taking external
consultant's help to conduct a survey after every two
years, work order has been placed on M/s AcNielsen
ORGMARG, New Delhi, after assessing the capabilities
of leading agencies in the country. The results of
survey analysis pertaining to critical parameters like
work content, hygiene factors, welfare, motivation,
leadership etc., are expected to come by close of the
second quarter 06-07.
Organisation climate survey was conducted in the Plant
internally and analysis was made for submitting the
same for HR excellence award.
INTERNAL COMMUNICATION
Launched novel informal monthly interaction sessions
of our employees with our CMD starting with maiden
sessions of "Dil Ki Baat" for senior officers and
Launching of “RINADS”
23
Annual Report 2005-06
"Chairman Tho Mata" for non-executives. There was
encouraging feedback.
IMPLEMENTATION OF SIX SIGMA
As an ongoing process towards business excellence,
Six Sigma concept was introduced in VSP. During
February 2005, M/s Omnex Consultants, Chennai have
been entrusted with the job of implementing Six Sigma
concept to improve the performance. Specific projects
on Quality, performance, cost-reduction, waste
elimination would be taken up by the teams under
the supervision of M/s Omnex Consultants for
breakthrough improvement in the above areas. An
appreciation programme was held in March 05 for Top/
Senior management team by the consultants. 65
projects have been identified in Works and Non-works
areas involving a potential savings of Rs.42 crores to
the Company. The projects are being continuously
monitored by the Champions. It is expected that this
initiative will move from its present nascent stage to
cover many more aspects of the processes once
training and competencies are built up.
THROUGH TRAINING & DEVELOPMENT
CENTRE:
EMPLOYEES DEVELOPMENT PROGRAMMES:
1. Training programmes conducted covering a total
number of 44,488 employees, which includes
employees covered by T&DC (29,892 numbers),
HRD, Safety Dept. and CISF Fire Wing thus
Inauguration of Jashuva park at Township by
CMD-RINL
Rashtriya Ispat Nigam Ltd.
achieving 11.46 man days of training per employee
per year.
2. Thrust is given to departmental refresher
programmes covering over 10,000 employees
which is 100% growth over last year. On the Job
Training covered 7003 employees. 24 SOPs and
192 SMPs were translated into Telugu.
3. A Competency Mapping Model has been developed
and executed in Sinter Plant covering Chargeman
to E-4 level.
4. With regard to quality of training, in reaction level
feed back 87.12% participants rated>4 on a 5-
point scale, in learning level 84% participants
scored >60% marks in post training tests, in
application level feed back, controlling officers rated
>3.5 for 81% participants on a 5-point scale.
5. 365 employees were trained on Critical Equipment
Training and 200 employees were trained on
Critical Activities training (to take care of the critical
contractual jobs).
6. Trade Tests were conducted for 1689 employees
for the Inter Cluster promotions in different Works
and Non-works Departments.
7. Training Week was celebrated from 20-3-2006 to
25-3-2006 and prizes were distributed during the
valedictory session.
Foundation Stone Laying for Expansion by Hon’ble Prime Minister of India
24
8. "Ukku Parichayam", a book on Steel making in
Telugu has been reviewed, edited and printed and
was released during the Training Week Valedictory
Function.
9. The Training Portal was inaugurated during the
Training Week Valedictory Session.
10. Refurbishing of T&DC auditorium and Conference
Hall has been done. New class room furniture
procured. Three class rooms were air conditioned.
4 LCD projectors procured and fixed in the class
rooms. The ambience of Trainees Hostel and T&DC
canteen were improved.
11. Auditorium facilities and necessary help extended
in organizing and conducting 35 programmes
including VRUDDHI summit, IREFCON-2006, WIPS
functions etc.
12. 186 QC Projects have been submitted to MS
Department against a target of 18 QCs during the
year.
13. 208 suggestions generated in T&DC against the
target of 130 during the year.
OTHER INITIATIVES :
i) FRESHERS TRAINING: 141 M.T(T)s, 10 M.Ts (Fin)
and 2 Jr. Trainees were given Induction Training
and posted for on the job training.
 Annual Report 2005-06

ii) COMPREHENSIVE MANAGERIAL COURSE FOR vii) LIBRARY: 919 books, 3113 journals, 16 e-journals,
JOs and JSOs: 34, 198 and 192 candidates have 126 Indian and International Standards were
attended Phase-I, Phase-II & Phase-III programmes procured.
respectively (altogether 424 including outstation
227 Management and Technical Articles, 3 Nos. of
candidates).
Library bulletins were circulated to senior
iii) APPRENTICESHIP TRAINING: For the first time, executives and Directors.
VSP hosted the Centralised walk-in-interviews for
Centralized Air Condition with false ceiling has been
selection of various apprentices from different
done.
organizations in liaison with the apprenticeship
authorities. viii) REVENUE GENERATION :
a) Training charges received Rs. 5, 89, 220/-
77 Trade Apprentices, 153 Graduate Apprentices
from (JSWL, JSPL etc.)
and 138 Technician Apprentices, 87 Technician
(Vocational) Apprentices were given training. b) Amount received for Rs. 29,36,050/-
utilization of facilities at
iv) VACATIONAL TRAINING, COLLABORATIVE
T&DC and Hostel and
TRAINING AND GUIDED VISITS TO THE PLANT:
Vacational Training
As part of social obligation, VSP has been
Total Rs. 35,25,270/-
extending training/project work facilities to students
of educational institutions. 3021 students were
given training. PERSONNEL DEPARTMENT

v) TRAINING FOR OTHER ORGANISATIONS: 24 1. MANPOWER :

officers from JSWL, Bellary and 07 officers from
JSPL, Raigarh were given training in Sinter Plant
and Blast Furnace respectively.
vi) FOREIGN TRAINING: 25 officers, 8 non-executives
and 01 from MOS were sent on Foreign training/
business visits to different countries.
During the period from 01-04-2005 to 31-03-2006
there was a net decrease in the manpower by 39
i.e. from 16,613 as on 01-04-2005 to 16,574 as on
31-03-2006.
As on 31-03-2006, the number of Displaced
Persons on the rolls of VSP was 5,571.

Employee development programme in progress.. Corporate Social Responsibility

25
Rashtriya Ispat Nigam Ltd.

2. REPRESENTATION OF SCHEDULED 3. WELFARE ACTIVITIES

CASTES AND SCHEDULED TRIBES:
A) Welfare of SCs & STs:
I. The group-wise representation of SCs and STs
a) Three parks in the Steel Township have been
in the Company as on 31-03-2006 is as follows:
named after Dr. B R Ambedkar, Babu Jagjeevan
Ram and Ekalavya and a separate Library-cum-
GROUP TOTAL SC S C (%) ST S T (%)
Reading Room was named after Dr B R Ambedkar.
STRENGTH

A 4637 766 16.52 211 4.55

b) Jayanthi Celebrations of Dr. Babu Jagjeevan Ram
and Bharat Ratna Dr. B R Ambedkar were
B 1576 272 17.26 104 6.60
observed by garlanding functions followed by
C 8666 1467 16.93 599 6.91 commemoration meetings, which were organized
D 1653 231 13.97 117 7.08 at Babu Jagjeevan Ram Children's Park, Sector-5
D" 42 14 33.33 1 2.38 on 05.04.2005 and at Dr. Ambedkar Park,
(Sweepers) 16574 2750 16.59 1032 6.23 Sector-6 on 14.04.2005 respectively.

c) A Sports and Cultural Festival was organized

II. POSTS FILLED BY RECRUITMENT :
during the month of April 2005 at CWC,
Ukkunagaram in connection with Bharat Ratna
Class of Total No. of vacancies No. of
Dr. B R Ambedkar Jayanthi Celebrations.
posts no. of reserved candidates
vacancies for (out of appointed d) In connection with Vardhanthi Ceremony of Bharat
filled Col.1) Ratna Dr. B R Ambedkar, Garlanding Function
SC ST SC ST was organized on 06.12.2005 at Dr. Ambedkar
Park, Sector-6.
(1) (2) (3) (4) (5)
e) RINL/VSP has increased the number of
Scholarships from 3 Nos. to 6 Nos. per year
A 177 31 36 25 27
exclusively for the children of SC/ST employees
B - - - - -
from the academic year 2005-06. Under this
C 1 - - - - Scholarship Scheme, 2 Scholarships of Rs.1,500/
D 1 - - - - - (Rupees One Thousand and Five Hundred only)
per month and 2 Scholarships of Rs.750/- (Rupees

Peripheral Development

26
 Annual Report 2005-06

seven hundred and (Fifty only) per month and 2 Monthly Benefit to the dependents of the deceased
Scholarships of Rs.400/- (Rupees four hundred employees/Medically Unfit cases.
only) per month will be awarded to the meritorious
4 INDUSTRIAL RELATIONS :
students among SC/STs every year.

f) Besides, since the year 1991, coinciding with the The overall IR situation at RINL/VSP during the
Birth Centenary Celebrations of Bharat Ratna Dr. year 2005-06 was peaceful and helped in
B R Ambedkar, Annual Merit Cash Awards for sustaining the targeted levels of production. Despite
students belonging to SC/ST communities were of hectic activities on account of Union Elections,
introduced. Based on the pass results of the Xth/ the Employees' Unions demand on work related
SSC Examination held during March 2005, 10 nos. issues, various agitational activities by Regular and
of Cash Merit Awards of Rs.500/- (Rupees five Contract Labour unions, normal and safe levels of
hundred only) each and 9 nos. of Rs.250/- production could be maintained due to proactive &
(Rupees two hundred and fifty only) each were preventive IR measures adopted by Personnel
given to the 1st and 2nd rank students of SC/ST Department and maintenance of harmonious
communities respectively, from each of the schools Industrial Relations.
of VSP.
I. SETTLEMENTS :
B) General :
a) Night Shift Allowance :
a) RINL/VSP has increased the number of
Record Notes of discussion was signed on
Scholarships from 11 Nos. to 30 Nos. and also
20.09.2005 between the representatives of
enhanced the scholarship amount for the children
Management and Visakha Steel Employees
of VSP employees from the academic year 2005-
Congress (INTUC)-Recognised Union on the
06 under 3 categories of its Scholarship Schemes
revision of 'Night Shift Allowance' to both
i.e. General, SC/ST and Physically Handicapped.
Executives & Non-Executives employees w.e.f.
b) RINL/VSP has introduced the new schemes for 01-01-2005.
grant of Dr.Sarvepalli Radhakrishnan Merit Cash
b) MoU on Bonus/Ex-gratia
Awards @ Rs.5,000/- each (one time) for the
Following the persistent demand for payment
children of VSP employees who secure admission
of Bonus/Exgratia by the Unions, a
and join IITs, IIMs and IISc or ISI courses. Also
Col.C K Nayudu Sports Cash Awards @
Rs. 5,000/- each (one time) for the children, who
have represented the country in any event or who
has won 1st place in the Nationals conducted by
respective Federations of India, or National School
Games and Sports conducted by School Games
Federation of India or Ranji or Inter-State Cricket
Matches conducted by BCCI. These Cash Award
schemes have been implemented from the
academic year 2005-06.

c) 435 cases have been covered upto 2005-06 under

Employees Family Benefit Scheme extending Healthcare at peripheral Areas

27
Rashtriya Ispat Nigam Ltd.
Memorandum of Understanding on payment of
Adhoc Advance to all eligible employees under
Annual Performance Linked Reward Scheme
(APLRS) was signed on 08.10.2005 with the
representatives of Regd. Trade Unions.
II. DEVELOPMENTAL PROGRAMME/AWARENESS
PROGRAMME FOR TRADE UNIONS :
a) A 3-day Developmental Programme for Trade
Union leaders was held at Centre for HRD on
23.03.2006 organized by HRD in coordination
with the Personnel-CER section.
b) An orientation programme was organized on
24.02.2006 by the Jt. Director of ESI
Corporation for the benefit of Union members,
Contractors, Contract labour, Personnel
Executives and HoDs regarding the benefits of
ESI Scheme and the need for compliance with
the provisions of the ESI Act.
c) A Presentation-cum-Interaction session on 5S
Programme was conducted on 25.02.2006 at
T&DC Auditorium with external faculty.
III. INTERACTION WITH UNIONS :
24 formal meetings were held with unions including
Recognised Union during year on work related
issues which inter-alia include:
* Meeting of Unions with Jt.Secretary (Steel) and
* Meeting with NPC team and Panel of Judges
MOU on Bonus Ex-gratia to Employees
28
for assessing VSP under PM's Trophy in
January, 2006.
IV. WORKERS' PARTICIPATION :
A number of initiatives and strategies were taken
to promote and sustain a conducive IR climate for
smooth operation of the Plant. The most important
initiative in this direction was strengthening of the
foundation of a sound and effective collective
bargaining system.
To uphold the spirit of participation in management
and nurture participative culture of the Company,
total of 81 Joint Committees at Corporate, Shop/
Department levels, Welfare Committees at
Department and Apex level have been constituted
/ reconstituted to discuss issues relating to
production, productivity, quality, safety, corporate
affairs and also other work related points like
incentives, job rotation, deployment and re-
deployment. Sporadic incidents, sudden work
stoppages and pressure tactics have diminished
to a satisfactory degree because of the availability
of Participative Fora as an institutional machinery
for ventilating grievances and resolving genuine
demands of the employees.
IMPLEMENTATION OF OFFICIAL LANGUAGE :
1. With a view to promoting Hindi in the steel
Township, initiatives have been taken to organise
Hindi classes (Prathamica, Madyamica and Rashtra
Hindi classes for the wives of Employees

of Dakshin Bharath Hindi Prachar Sabha) for the
ladies (House wives of the employees).
Expenditure for Text books, note books, teaching
aids, accommodation, examination fee etc. is met
by the management and 205 ladies are trained
during 2005-06. Such initiative is first of its kind
in the Steel Industry in India.
From Oct '05, about 125 ladies (wives of employees
of VSP) are trained in Prathamica, Madhyama and
Rashtra of Dakshin Bharat Hindi Prachar Sabha at
Steel Township (Ukkunagaram).
2. "Hindi portal" is prepared and placed on the intranet
of Visakhapatnam Steel Plant during the current
financial year. Different Circular, formats and
policies of the Company obligations & targets of
Official Language are placed in the portal. Shusha
Font is placed in the Intranet so that it can be
made use of by the departments across the plant.
DISPOSAL OF STAFF/ PUBLIC GRIEVANCES
RINL/VSP has given priority to the redressal of
grievances-Staff as well as public grievances.
STAFF GRIEVANCES
With a view to providing Forums for redressal of
grievances at Shop/Section/ Department/Plant/
Company level and settling the grievances of
employees expeditiously within stipulated time so
Children of Balabadi celebrate Independence Day
29
Annual Report 2005-06
as to help obviating dissatisfaction, a
comprehensive grievance redressal system exists
for Executive as well as Non-Executive employees.
All Zonal Personnel Executives have been
entrusted with the job of disposal of staff grievance
expeditiously.
PUBLIC GRIEVANCES
In compliance with the directives of Ministry of Steel
from time to time, the following actions have been
taken to activate Public Grievance Redressal
System.
As regards the Public Grievances appearing in the
newspaper column, Corporate Communications
Department is entrusted with the job of scrutinizing
and forwarding the grievances to the concerned
Head of Department who, in turn would examine
the grievance and take prompt action for its
redressal.
A senior level executive in the rank of Dy. General
Manager is functioning as OSD (Public Grievances)
in order to monitor the redressal of Public
Grievances centrally and compile monthly status
reports on disposal of Public Grievances for
submission to the Ministry of Steel.
The status of receipt and disposal of Staff/Public
Grievances during the period 2005-06 is as under:
Peripheral Development in the nearby Villages
Rashtriya Ispat Nigam Ltd.

Description Number of Grievances has been implemented.

Received Disposed Off Pending iv) RINL Formation Day on 18.02.2006 was celebrated
Staff Grievances 109 109 NIL with emphasis on Health, Community Development,
Public Grievances 03 03 NIL Environment Enrichment and Cultural
Efflorescence.
TOWN ADMINISTRATION DEPARTMENT
The following programmes were organized on this
The exchange deed in respect of transfer of 1400
occasion:
Acres of VSP land to Govt. of Andhra Pradesh for
development of Port at Gangavaram was signed by a) RINL Health Run involving more than 2500
the representatives of Ministry of Steel, Union of India employees, people from various walks of life
and Govt of Andhra Pradesh and the same has been
registered at Sub-Registrar's Office, Gajuwaka. b) Handing over specially designed bus to
Arunodaya Special School for mentally retarded
60 nos. of quarters (30 nos. A Type and 30 Nos. B
children
Type) constructed by M/s HSCL on the land allotted
by VSP on licence basis has been taken over by VSP c) Launching of Agro-forestry, Plantation of bio-
on payment of reasonable compensation to be diesel plant Jetropha to cover a total of 300
assessed by VSP. The quarters have been utilized for Hectares; out of this, 50 Hectares during 2006-
VSP's purposes. 07.

CORPORATE SOCIAL RESPONSIBILITY (CSR): d) Distribution of JN Awards, Echo Awards,

Shrujan Vikas Awards followed by a variety
RINL has given special emphasis on CSR with the
Cultural programme. All CWCs in Rehabilitation
following;
Centres and Mines also celebrated RINL
i) The Policy on Corporate Social Responsibility has
Formation Day.
been formulated.
ii) RINL has filed its application for membership in v) RINL CSR Policy has adopted a four-fold strategy
UNO Global Compact and the same has been of RINL as a Promoter, as a Partner, as a Facilitator
admitted. and as a Consultant to promote CSR activities.
iii) CSR Calendar of Events for implementation during
vi) Some of CSR activities taken up :
the year 2005-06 has been prepared and the same

Women in Public Sector (WIPS) Day celebrations

30

a) Workshop "Towards Excellence" for teachers
of VSP Schools was conducted on 7th & 8th
September 2005 in association with Andhra
University, UGS - Academic Staff College.
b) "Students Counselling-Competency Develop-
ment Programme" for students (7th and 10th
class) appearing for Public Examination was
conducted on 10th Nov. 2005.
c) Workshop "Towards Excellence" for teachers
of VSP Schools was conducted on 11th & 12th
November 2005 in association with Andhra
University, UGS - Academic Staff College.
d) Adult literacy and female literacy drive through
UKKU AKSHARA JYOTHI programmes were
organized on 09.01.2006 in Aganampudi &
Vadlapudi Rehabilitation Colonies.
e) Personality Development for School children,
interactive session on "Prove Yourself and
Develop Your Personality" was organized on
18.01.2006 at De Paul School, Ukkunagaram.
f) With a view to sensitizing residents of five
Rehabilitation Colonies and Mines, the Multi-
Purpose Social Service Camps/Programmes
were organized at the following places during
this year under CSR Calendar of events. These
programmes inter-alia includes workshop on
Mother & child Care, De-addiction, Life Style
Management, Self-employment & Self Help
Quality Circle Nite celebrations
31
Annual Report 2005-06
Groups (SHGs), Clean & Green Environment,
etc. and a Play-let on AIDs awareness.
MANAGEMENT SERVICES
• VSP bagged Six Government of India Vishwakarma
Rashtriya Puraskar (VRP) Awards at national level
out of total 28 awards announced by Ministry of
Labour. One fifth of the total awards are bagged
by VSP and 32 awardees from VSP are more than
1/3rd of the total at National level. VRP is one of
highest level of award presented to workman in
recognisition of their contribution by Govt of India.
• VSP has bagged Gold Medal in Technical Paper
Contest and Silver Medal in Best Suggestors
Contest at 16th INSSAN National Convention held
at Mumbai in Jan'06.
• 4131 Quality circle projects implemented with an
employee involvement of 74%.
• For the first time 14 QC teams represented at
Quality Circle National Convention at Ernakulum.
Four teams rated as par excellence, seven as
excellent and three as distinguished.
• One QC team was awarded first prize at State
level by CII at Hyderabad and participation award
at Regional level, Chennai.
• For the first time 18 employees from 2 QC teams
sent abroad to participate in International
Conventions. One QC team presented at IEIQC-
Rashtriya Ispat Nigam Ltd.
2005 (International Exposition and Innovation on
Quality Circles) at Singapore and the other at
ICQCC-2005 (International Quality Control Circles)
at South Korea. It was a great motivation as Non-
Executive employees presented at International
forums.
• 33201 suggestions received and 8712
implemented. Suggestion campaigns on "Energy
Conservation", "Safety" and "Finance" conducted.
• Received 3rd prize for "Organisational Excellence
Award in Suggestion Scheme" at INSSAN National
Convention, Mumbai.
• The 5 S activities - Work Place Management have
been taken up in most of the departments.
PROJECT MANAGEMENT
Expansion of the Plant to 6.3Mt :
Keeping in view the upturn in global and domestic
steel demand, VSP has decided to increase its capacity
to 6.3 Mt of liquid steel per year in the beginning and
to increase the capacity upto 10 Mt per year in future
phases. M/s MN Dastur Co, the Consultants engaged
for preparation of Project Report for Expansion of VSP
submitted the Report for Expansion of Plant to 6.5 Mt
of hot metal and 6.3 Mtpa of liquid steel. The product
mix is long products such as wire rods in coils 5.5 mm
to 20 mm dia, special bars of size 16mm to 40 mm dia
in coil and straight length and light & structural to
meet the infrastructure needs which are very well
accepted in the market. In addition, Seamless Pipe
Model of Main gate - Expansion
32
Mill of 300,000 tpa capacity to produce seamless pipes
of higher dia is planned which will be first of its kind
in India.
The salient features of the Expansion are as follows:
Capital cost : Rs.8692 crores (Base: II Quarter
2005)
Construction schedule : Stage-I - 36 months from "Date of
approval by GOI"
Stage-II - 48 months from "Date of
approval by GOI"
GOI approved the project on 28th October 2005 at an
estimated cost of Rs.8692 crores. Preparation of
specifications and tender documents are under
progress. Some preliminary works such as roads, box
culvert and lighting etc. have already been ordered
and work is under progress. An amount of Rs.6.69
crores has been spent upto 31.03.06.
COKE OVEN BATTERY - 4 (PHASE-I)
Government of India approved setting up of Battery
No.4 in December 2003 at a cost of Rs.303 crores to
meet the coke requirement. Construction of the battery
is in progress and the project is likely to be
commissioned by December 2006. An amount of
Rs.165.66 crores has been spent upto 31.03.06.
COKE OVEN BATTERY (PHASE-II)
Projects for construction of By Product Plant and
Additional facilities on coal side have been approved
by the Board of Directors in June, 2006 at an estimated
Construction work at Coke Oven Battery No. 4
 Annual Report 2005-06

cost of Rs.109.39 crores and Rs.88.83 crores with a below.

completion period of 27 months and 24 months
respectively. No. Indicator World RINL Units
Average
PULVARISED COAL INJECTION SYSTEM
1 Investment in 6.2 0.76 % of
Proposals for installation of Pulvarised Coal Injection
New Processes Revenue
system in Blast Furnaces No.1 & 2 has since been
and Products
approved by the Board in July, 2006. The pulverized
scheme enhances the capacity of hot metal production 2 Operating Margin 15.7 26.7 % of
in BF-1 & 2. The salient features of the scheme are as Revenue
follows:
3 Return on Capital 22.3 31.8 % of Capital
Capital cost : Rs.181 crores (Base: IV Quarter
Employed (ROCE) Employed
2004)
Construction schedule : 15 months from the date of GOI 4 Value Added 11.7 14.0 % of
approval Revenue

CORPORATE STRATEGIC MANAGEMENT 5 Energy Intensity 19.1 28.3 GJ / Tonne

of Crude
1 MOU 2005-06 Steel
Secretary, Ministry of Steel, GoI, and CMD, RINL Produced
signed MOU on 28.3.2005 for achieving the set 6 Greenhouse Gas 1.7 3.1 Tonnes of
physical and fiscal targets for the year 2005-06. Emissions CO2 /
As per the performance evaluation based on Tonne of
provisional data, the company achieved a Crude Steel
composite score of 1.37, which corresponds to Produced
Excellent rating for the year.
7 Material Efficiency 95.6 100.0 %
2. Participation in Sustainability Reporting of steel
industries across the world 8 Steel Recycling 42.7 7.9 % of
recycled Steel
The International Iron & Steel Institute (IISI), has used in
started preparing Global Sustainability Report for production of
the world steel industry since 2004. The report for crude steel
2005 has been published. The parameters of
sustainability relate to Economic, Social and 9 Environmental 90.7 99.1 % of Total
Environmental aspects. RINL participated in the Management and
preparation of the reports and submitted data on Systems Contractors
the identified 11 Sustainability Indicators. It is worth Employees
mentioning that RINL's position in 2005 has been Working in
better than the world average on 7 out of 11 Registered
parameters as can be seen from the table given Production
Facilities

33
Rashtriya Ispat Nigam Ltd.
10 Employee Training 9.9 11.1 Training Days
/ Employee
11 Lost Time Injury 6.6 1.6 Frequency / 1
Frequency Rate million Hours
Worked
The return on capital employed of RINL is
significantly higher at 31.8% compared to the world
average of 22.3%. The value added is also higher
at 14% compared to 11.7% of world average.
However, it is seen that RINL's performance on
three parameters, i.e. Investment in New Processes
and Products, Energy Intensity and Greenhouse
Gas Emissions has been below the world average.
As VSP is an integrated steel plant, steel recycling
at lower percentage is not a cause for concern.
3. Knowledge Management
In order to motivate employees to participate in
this, a new reward and recognition scheme titled,
"Gnana Puraskar Yojana" has been launched since
April 2005 and till July 2006 about 200 awards
have been given.
In order to further augment the Knowledge
management initiative, another powerful tool -
Communities of Practice - has been launched in
the year 2005-06 in a bottom-up approach.
The COP provides an opportunity to have a
network of people and through them networking of
knowledge takes place by providing a common
Chairman On-Line
34
context of interest to share their knowledge and
improve their individual competencies. The concept
has started becoming popular and so far 7 COPs
on the following themes have been formed and
are working very well: PLCs; Hoist Controls; Yard
Machines; HT Motors; Electrical Drives; Pumps;
Rolling Mills.
4. Chairman Online
"Chairman Online" an intranet based
communication forum, facilitating direct interaction
of employees with CMD to improve the
organizational performance, was launched in
January, 2005. Till March 2006, about 450 queries
submitted by employees on issues like systems
improvement, productivity improvements, current
challenges and possible solutions, employee
development and welfare, etc. have been mostly
replied within a few days of submission and on an
average the response time is less than a week .
The initiative has become very popular as seen
from the survey conducted in January 2006 wherein
90% of the employees have expressed complete
satisfaction and happiness with regard to its
working and rated its effectiveness as 7.9 on a 10
point scale.
5. Market Survey
Market survey was conducted by Market Research
Group of CSM Dept. to assess potential for opening
outlets in the states of Himachal Pradesh,

Jharkhand, Chattisgarh and Pondicherry. It was
brought out that adequate potential exists for open
new branches in Jamshedpur and Raipur. In other
places, where demand is not assessed to be
sufficient for opening Branch offices, Consignment
Sales Agents or Dealers have been suggested.
Actions have been initiated accordingly.
VIGILANCE ACTIVITIES
During the year:
(i) Vigilance Department conducted 390 system
checks including 20 quality checks and 93 rake/
road re-weighments. The Vigilance observations
were brought to the notice of the concerned for
taking corrective actions/improvement of the
existing procedures/systems, wherever required.
(ii) Vigilance Awareness Week was observed during
the week 7th November to 11th November 2005.
During the week, from 7th November to 11th
November 2005, presentations cum interaction
sessions were held, which were attended by lower
level and middle level Executives of the company,
Trade Union Leaders and Office bearers, Vendors,
Customers and Contractors. During these
sessions, relevant issues were discussed, doubts
clarified and practical inputs were imparted to the
participants.
(iii) On the preventive vigilance front, greater thrust
was laid on examination of tenders at the
processing stage with a view to modifying certain
Vigilance Awareness Programmes
35
Annual Report 2005-06
restrictive tender clauses in line with CVC
guidelines on the issue so as to bring in greater
transparency and increased competition.
(iv) In order to provide yet another platform for any
citizen, necessary publicity has been given in the
newspapers and the website of VSP that any
complaint made to the CVO through Website would
also be entertained and processed further for
suitable action.
(v) Proactive Vigilance work was done in the areas of
estimation, award and execution of contracts
pertaining to operation, maintenance, procurement
and marketing and management exhibited positive
attitude towards the suggestions of the Vigilance.
(vi) The work related to obtaining ISO Certification for
Vigilance by June 2006 is progressing well. This
would further the efforts in streamlining procedures,
systems and accountability.
(vii)Close interaction was maintained with CBI.
Pending cases were reviewed periodically and full
co-operation was extended to them.
(viii)All the periodical statistical returns/reports were
submitted to MOS, CVC, CBI and DOPT in time.
AUDITORS
M/s. Rao & Kumar, Visakhapatnam have been
appointed as the Statutory Auditors of the company
for the year 05-06 by the Comptroller and Auditor
General of India.
Rashtriya Ispat Nigam Ltd.
AUDITORS' REPORT
The Statutory Auditors' Report on the Accounts of the
Company for the financial year ended 31st March 2006
in terms of Section 217(3) of the Companies Act, 1956
along with Management Replies thereon are enclosed
to the Directors' Report as Annexure-I.
C & A G REVIEW
The Comments of the Comptroller & Auditor General
of India (C&AG) alongwith Management Replies
thereon and also the Review on Accounts of the
Company are enclosed as Annexure-II.
REPORT ON CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION etc..
Information in accordance with the provisions of Section
217(1) (e) of the Companies Act, 1956, read with the
provisions of Companies ( Disclosure of particulars in
the Report of the Board of Directors) Rules, 1988,
regarding Conservation of Energy, Technology
absorption and Foreign Exchange earnings and outflow
are furnished in the Annexure - A to this report and
also in Form -A and Form -B annexed to this report.
Foreign Exchange earnings and outgo :
The Export performance of the Company has improved
significantly as compared to the previous year.
The Foreign Exchange earnings during the year 2005-
06 was Rs. 443.51 Crores as against Rs. 259.27
Crores during the previous year. The Foreign Exchange
outgo during the year 2005-06 was Rs.1867.30 Crores
as against Rs.1386.50 Crores during the previous year
PARTICULARS OF EMPLOYEES
There was no employee of the company who received
remuneration in excess of the limits prescribed under
Section 217(2A) of the Companies Act 1956 read with
the Companies (particulars of employees) Rules , 1975.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217 (2AA) of Companies Act, 1956,
36
your Directors state as follows :
(i) that in the preparation of the annual accounts, the
applicable accounting standards had been followed
along with proper explanation relating to material
departures;
(ii) that the directors had selected such accounting
policies and applied them consistently and made
judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the
state of affairs of the company at the end of the
financial year and of the profit or loss of the
company for that period;
(iii) that the directors had taken proper and sufficient
care for the maintenance of adequate accounting
records in accordance with the provisions of this
Act for safeguarding the assets of the company
and for preventing and detecting fraud and other
irregularities.
(iv) that the directors had prepared the annual accounts
on a going concern basis.
CORPORATE GOVERNANCE
As a part of Corporate governance initiative, a
Committee of Directors comprising all functional
Directors and headed by the Chairman-cum-Managing
Director was constituted in September 1998 and has
been functioning since then for reviewing the important
observations of Internal Audit and for taking expeditious
actions by concerned Departments wherever
Audit Committee constituted with
Independent Directors in July ‘06 held its
1st Meeting on 30-8-2006 at Visakhapatnam

necessary. The Committee has held meetings
periodically during the year. Appropriate corrective
actions wherever found necessary were taken which
resulted in considerable savings to the Company.
The Internal Audit Department is manned with both
professional Chartered Accountants and Engineering
professionals for a wider coverage of technical aspects
as well for evolving better controls systems and
procedures and improved savings.
DIRECTORS ( APPOINTMENT / CESSATION) :
The following changes took place in the Board of
Directors of the Company during the year.
Shri G. Elias, Jt. Secretary in the Ministry of Steel was
appointed as Part-time Official Director w.e.f. 13th April,
2006.
Shri R.S.S.L.N. Bhaskarudu, ex-Chairman of PESB
was nominated as part-time non-official Director on
the Board of RINL and he assumed charge as
Independent Director w.e.f. 26th April, 2006.
Dr. V K Bhalla was appointed as part-time non-official
Director on the Board of RINL with effect from 29th
June, 2006.
Shri J S Mathur was appointed as part-time non-official
Director on the Board of RINL with effect from 11th
July, 2006.
Shri P K Misra was appointed as Director (Operations)
on the Board of RINL with effect from 01.08.2006.
Shri J.P. Singh, Jt. Secretary, Ministry of Steel ceased
to be part-time Official Director with effect from 24th
January, 2006 on his resignation from the Board.
Dr. S.N. Dash, Jt. Secretary, Ministry of Steel ceased
to be part-time Official Director with effect from 7th
April, 2006 on his resignation from the Board.
Shri K K Rao, Director (Operations) ceased to be
functional Director with effect from 1st August, 2006
on his superannuation from the Board.
37
Annual Report 2005-06
The Board of Directors wish to place on record their
appreciation of the valuable services rendered and
contribution made by the outgoing Directors during
their tenure on the Board of RINL.
ACKNOWLEDGEMENTS
The Board placed on record its deep appreciation for
the assistance, cooperation and guidance received in
full measure provided by the Govt. of India in general
and Ministry of Steel in particular, the Govt. of Andhra
Pradesh, various suppliers/customers.
The Board also specifically acknowledge their gratitude
to the various Ministries of the Govt. of India with whose
positive and pro-active support, the approval by Govt.
of India for the Expansion of the Plant could be
accorded in record time.
The Board place on record its appreciation for the
cooperation extended by its valued customers,
suppliers, bankers, auditors, solicitors and business
associates, the local District Administration and Law &
Order authorities.
The Board also places on record its appreciation for
the commitment, sincere efforts, hard work and
contribution put in by all the employees of the
Company who are instrumental in scaling new heights
year after year and the cooperation extended by
employees Unions and Steel Executive Association for
the status of MINIRATNA.
For and on behalf of the Board of Directors
(Y. SIVA SAGAR RAO )
Chairman-cum-Managing Director
Visakhapatnam
Date :25-09-2006
Adopted at the 24th Annual General Meeting held on
25th September, 2006.
Rashtriya Ispat Nigam Ltd.

HIGHLIGHTS
Rs.Crores

2005-06 2004-05

A OPERATING RESULTS
Turnover 8482.44 8181.34
Gross Income 8938.32 8467.67
Gross Expenditure 7017.57 6202.79
Gross Profit 1920.75 2264.88
Gross Profit (excluding Interest on Term
Deposits) 1613.90 2139.43
Profit before Tax 1889.51 2253.77
Net Profit After Tax 1252.37 2008.09

B YEAR END FINANCIAL POSITION

Share Capital 7827.32 7827.32
Reserves and Surplus 346.38 —
Capital Employed 8862.65 7153.28
Capital Employed (excluding Term Deposits) 3444.65 3342.28
Net Worth 8148.83 6878.31
Gross Block 8832.13 8763.49
Depreciation 6753.87 6322.18
Net Block 2078.26 2441.31
Inventory 1216.45 1257.53

C PROFITABILITY AND OTHER RATIOS

(I) PERCENTAGE OF:
Gross Profit to Sales 22.64 27.68
Net Profit to Sales 14.76 24.54
Gross Profit to Net Worth 23.57 32.93
Net Profit to Net Worth 15.37 29.19
Gross Profit (excluding Interest on Term
Deposits) to Capital Employed (excluding
Term Deposits) 46.85 64.01
Net Profit to Capital Employed 14.13 28.07
Gross Profit to Share Capital 24.54 28.94
Inventory to Sales 14.34 15.37
Sales to Capital Employed 95.71 114.37

(ii) RATIO OF:

Current Assets to Current Liabilities 5.62 4.53
Quick Assets to Current Liabilities 4.79 3.59

38
 Annual Report 2005-06

Year

39
Rashtriya Ispat Nigam Ltd.

40
 SIXTEEN YEARS DIGEST
FINANCIAL RESULTS

Rs. in Crores
Year Turnover Other Income Raw Stock Employee Depre- Interest & Stores, Profit / Profit /
Revenue Material Accretion/ Remune- ciation Wealth R&M, Loss Loss
consumed Decretion ration & DRE Tax Power & before after
& Benefits Expenses Other tax tax

1990-91 245.15 35.50 244.71 175.27 -26.69 29.14 197.23 192.13 191.12 -477.55 -477.55

1991-92 772.44 22.20 675.83 401.94 -69.61 53.86 449.09 437.26 509.03 -986.93 -986.93

1992-93 1184.84 147.63 1245.10 680.17 -151.60 76.52 340.07 197.56 758.04 -568.29 -568.29

1993-94 1751.04 156.03 1526.44 875.4 160.21 102.5 339.84 346.86 654.92 -572.66 -572.66

1994-95 2208.57 50.22 2091.79 1058.53 -199.67 128.46 414.65 365.97 855.13 -364.28 -364.28

41
1995-96 3038.57 115.92 2809.76 1310.69 -50.45 154.66 430.12 407.11 1106.63 -204.27 -204.27

1996-97 3135.29 78.40 2888.08 1384.56 -114.83 174.42 421.87 430.48 1163.13 -245.94 -245.94

1997-98 3070.93 96.96 2750.92 1405.31 -118.27 210 438.52 198.23 1210.83 -176.73 -176.73

1998-99 2761.13 197.06 2181.69 1219.66 317.61 255.04 111.27 360.88 1150.91 -457.18 -457.18

1999-00 2972.60 154.79 2636.11 1394.32 -95.10 272.49 431.79 382.16 1303.41 -561.68 -561.68

2000-01 3435.96 179.79 3048.88 1443.68 -103.38 407.65 444.60 350.59 1363.91 -291.30 -291.30

2001-02 4080.95 152.92 3395.74 1602.1 62.37 375.02 474.98 290.52 1504.03 -75.15 -75.15

2002-03 5058.25 167.63 4107.16 1805.65 281.09 405.99 454.61 123.19 1634.66 520.69 520.69

2003-04 6169.09 209.23 5398.25 2050.43 25.61 481.15 476.47 49.05 1748.42 1547.19 1547.19

2004-05 8181.34 286.33 7583.80 3019.64 -310.39 490.24 1006.12 11.11 1997.18 2253.77 2008.09

2005-06 8482.44 455.88 7412.57 3584.62 65.85 572.34 448.29 31.24 2346.47 1889.51 1252.37
Annual Report 2005-06
Rashtriya Ispat Nigam Ltd.

SIXTEEN YEARS DIGEST

FINANCIAL RESULTS
Rs. in Crores
Year Capital Reserves Loans/ Fixed Total Fixed Number of
& Surplus Buyers Assets Depre- Assets Employees
Credit Gross ciation Net Block as on
Block 31st March

1990-91 3505.85 -- 3924.44 3720.13 247.91 3472.22 14433

1991-92 3505.85 -- 5476.29 5030.79 703.94 4326.85 16656

1992-93 3705.85 -- 3494.61 6156.78 1026.04 5130.74 17454

1993-94 6493.85 -- 3473.68 7325.83 1364.76 5961.07 17483

1994-95 6493.85 -- 3734.56 8288.71 1746.79 6541.92 17369

1995-96 6493.85 -- 3830.60 8391.69 2176.86 6214.83 17642

1996-97 6493.85 -- 3734.89 8547.87 2819.16 5728.71 17478

1997-98 6493.85 -- 2204.5 8592.03 3037.22 5554.81 17354

1998-99 6493.85 -- 2242.79 8615.46 3148.35 5467.11 17400

1999-00 7827.32 -- 2343.36 8635.28 3580.26 5055.02 17254

2000-01 7827.32 -- 2293.18 8642.69 4012.35 4630.34 17131

2001-02 7827.32 -- 1989.38 8702.79 4467.75 4235.04 17026

2002-03 7827.32 -- 1185.92 8730.76 4903.18 3827.58 16894

2003-04 7827.32 -- 37.17 8709.72 5337.59 3372.13 16755

2004-05 7827.32 -- 531.36 8763.49 6322.18 2441.31 16613

2005-06 7827.32 346.38 457.59 8832.13 6753.87 2078.26 16574

42
 Annual Report 2005-06

Audited
Accounts
2005-06

43
Rashtriya Ispat Nigam Ltd.

44
 Annual Report 2005-06

Balance Sheet as at 31st March 2006

Rupees in Crores
Schedule As at As at
No. 31st March, 2006 31st March, 2005

SOURCES OF FUNDS:
SHAREHOLDERSí FUNDS:
Share Capital 1 7827.32 7827.32
RESERVES & SURPLUS :
Profit & Loss Account 346.38 ó
LOAN FUNDS :
Secured loans 2 88.15 88.94
Unsecured loans 3 369.44 442.42
Deferred Tax Liability ( Net ) 316.72 158.49
Total 8948.01 8517.17
APPLICATION OF FUNDS:
FIXED ASSETS :
Gross block 4 8832.13 8763.49
Less: Depreciation 6753.87 6322.18
Net block 2078.26 2441.31
Held for disposal 5 0.01 0.00
Capital work-in-progress 6 180.73 58.85
2259.00 2500.16
INVESTMENTS 8 0.00 0.00
CURRENT ASSETS, LOANS & ADVANCES :
Inventories 9 1216.45 1257.53
Sundry debtors 10 165.65 49.30
Cash & Bank balances 11 5621.70 3932.61
Other Current assets 12 184.36 100.18
Loans & Advances 13 1063.84 710.12
8252.00 6049.74
LESS: CURRENT LIABILITIES & PROVISIONS :
Liabilities 14 871.49 712.46
Provisions 15 716.37 269.27
1587.86 981.73
Net Current Assets 6664.14 5068.01
MISCELLANEOUS EXPENDITURE 16 24.87 43.01
(to the extent not written off or adjusted)
PROFIT & LOSS ACCOUNT ó 905.99
Total 8948.01 8517.17
Accounting Policies & Notes to Accounts 28
Schedules 1 to 28 annexed form part of the Accounts
As per our separate report of even date
For RAO & KUMAR
Chartered Accountants

Sd/- Sd/- Sd/- Sd/-

( Y. Siva Sagar Rao ) (P.K.Bishnoi) (P.Mohan Rao) (CA S.S.Bharadwaj)
Chairman-cum-Managing Director Director (Finance) Company Secretary (Partner) - M.No. 26113

Place : New Delhi

Date : 10-06-2006

45
Rashtriya Ispat Nigam Ltd.

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006
Rupees in Crores
Schedule For the year ended For the year ended
No. 31st March, 2006 31st March, 2005

INCOME
Gross Sales 17 8482.44 8181.34
Less: Excise duty recovered on sales 1176.73 821.50
Net Sales 7305.71 7359.84
Internal consumption 8.26 6.82
Interest earned 18 354.87 158.59
Other revenue 19 92.75 120.90
Total 7761.59 7646.15
EXPENDITURE
Raw materials consumed 20 3584.62 3019.63
Depletion/(Accretion) to Stock of Semi-finished/Finished goods 21 65.85 (310.39)
Employeesí remuneration & benefits 22 572.34 490.25
Stores & spares consumed 338.95 313.46
Power & fuel 23 235.10 216.06
Repairs & maintenance 24 97.24 93.41
Contributions to Joint Plant Committee funds 0.73 0.76
Freight outward 306.71 299.53
Other expenses & provisions 25 255.03 301.05
Interest & finance charges 26 31.06 11.11
Depreciation 415.57 424.19
Wealth tax 0.18 0.12
5903.38 4859.18
Less: Inter account adjustments-raw material mining cost 24.48 24.22
Net expenditure 5878.90 4834.96
Profit for the year 1882.69 2811.19
Prior period adjustments- Net credit 27 6.82 1.44
Profit after Prior Period Adjustments 1889.51 2812.63
Depreciation short provided in earlier years ó 558.87
Profit before Tax 1889.51 2253.76
Provision for Taxation
Current Tax 474.97 87.18
Fringe Benefit Tax 3.94 ó
Deferred Tax 158.23 158.49
Net Profit 1252.37 2008.09
Balance of (loss) brought forward from previous year (905.99) (2914.08)
Balance carried to Balance Sheet 346.38 (905.99)
Basic and Diluted Earnings per Share (in Rupees)(Face Value Rs. 1000 per share) 256.12 410.67
Accounting policies & Notes to accounts 28
Schedules 1 to 28 annexed form part of the accounts
As per our separate report of even date
For RAO & KUMAR
Chartered Accountants

Sd/- Sd/- Sd/- Sd/-

( Y. Siva Sagar Rao ) (P.K.Bishnoi) (P.Mohan Rao) (CA S.S.Bharadwaj)
Chairman-cum-Managing Director Director (Finance) Company Secretary (Partner) - M.No. 26113

Place : New Delhi

Date : 10-06-2006

46
 Annual Report 2005-06

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31st March , 2006

Schedule 01 : Share Capital

Rupees in Crores
As at As at
31st March, 2006 31st March, 2005

AUTHORISED
4,89,00,000 (Previous year 4,89,00,000) Equity shares
of Rs.1000 each 4890.00 4890.00

3,11,00,000 (Previous Year 3,11,00,000) Preference

Shares of Rs.1000 each 3110.00 3110.00

Total 8000.00 8000.00

ISSUED, SUBSCRIBED & PAID-UP

4,88,98,462 (Previous year 4,88,98,462) Equity shares
of Rs.1000 each. 4889.85 4889.85

2,93,74,700 (Previous year 2,93,74,700) 7 % Non-

Cumulative redeemable Preference shares
of Rs.1000 each redeemable at par as under 2937.47 2937.47
10,00,000 during 2011-12 55,00,000 during 2014-15
1,38,05,000 during 2012-13 30,00,000 during 2015-16
60,69,700 during 2013-14
the earliest date of redemption is 31st March, 2012
Total 7827.32 7827.32
Of the above, 21,80,612 Equity Shares of Rs.1000 each were
allotted as fully paid-up for consideration other than cash.

Schedule 02 : Secured loans Rupees in Crores

As at As at
31st March, 2006 31st March, 2005

Cash Credit Accounts with Banks 88.15 88.94

Secured by hypothecation of Raw materials, Semi-finished/
Finished goods, Stores & Spares, Book-debts and second charge
on the Fixed assets to the extent of Rs. 2000 crores.

Total 88.15 88.94

Schedule 03 : Unsecured loans Rupees in Crores

As at As at
31st March, 2006 31st March, 2005

Short Term Foreign Currency Loans 369.44 442.42

Total 369.44 442.42

47
Rashtriya Ispat Nigam Ltd.

Schedule 04 : Fixed Assets Rupees in Crores

Gross Block
As at 31st Additions & Sales & As at 31st
March, adjustments adjustments March
2005 during the during the 2006
year year

A. Plant, Mines & Others :

Land-Freehold (Including cost of development) 41.41 -0.82 ó 40.59
Land-Leasehold 1.65 ó ó 1.65
Railway Lines & sidings 48.03 ó ó 48.03
Roads, Bridges & Culverts 65.91 5.63 ó 71.54
Buildings 732.61 0.71 ó 733.32
Plant & Machinery 6951.23 62.58 10.89 7002.92
Furniture & Fittings 10.35 1.39 0.01 11.73
Locomotives 64.01 0.19 ó 64.20
Vehicles 7.46 1.38 0.15 8.69
Electrical Installations 263.45 0.37 ó 263.82
Water Supply & Sewerage systems 245.38 0.25 ó 245.63
Miscellaneous Articles 70.83 7.18 0.23 77.78
Mining lease rights 5.83 ó ó 5.83
Total (A) 8508.15 78.86 11.28 8575.73
Figures for the previous year 8455.16 57.36 4.37 8508.15

B. Social Facilities :

Land-Freehold ( Including cost of development) 10.30 ó ó 10.30

Roads, Bridges & Culverts 11.94 ó ó 11.94
Buildings 186.39 0.64 ó 187.03
Plant & Machinery 2.07 ó ó 2.07
Furniture & Fittings 0.17 ó ó 0.17
Electrical Installations 18.64 0.09 ó 18.73
Water Supply & Sewerage systems 18.51 0.03 ó 18.54
Miscellaneous Articles 7.32 0.30 ó 7.62
Total (B) 255.34 1.06 0.00 256.40
Figures for the previous year 254.56 0.77 -0.01 255.34

Total (A + B) 8763.49 79.92 11.28 8832.13

Figures for the previous year 8709.72 58.13 4.36 8763.49

48
 Annual Report 2005-06

Schedule 04 : Fixed Assets (continued) Rupees in Crores

Depreciation Net Block
Up to 31st For the year Sales & Up to 31st As at 31st As at 31st
March, ( incl. PPA) adjustments March, March March,
2005 during 2006 2006 2005
the year

ó ó ó ó 40.59 41.41
0.43 0.03 ó 0.46 1.19 1.22
33.23 2.27 ó 35.50 12.53 14.80
12.43 1.11 ó 13.54 58.00 53.48
310.55 22.72 ó 333.27 400.05 422.06
5459.85 362.48 -1.90 5824.23 1178.69 1491.38
7.19 0.87 ó 8.06 3.67 3.16
41.95 3.05 ó 45.00 19.20 22.06
6.95 0.17 0.15 6.97 1.72 0.51
172.33 12.39 ó 184.72 79.10 91.12
166.22 11.39 ó 177.61 68.02 79.16
38.68 7.86 0.22 46.32 31.46 32.15
1.37 0.28 ó 1.65 4.18 4.46
6251.18 424.62 -1.53 6677.33 1898.40 2256.97
5272.00 982.28 3.10 6251.18 2256.97 3183.16

ó ó ó ó 10.30 10.30
2.58 0.19 ó 2.77 9.17 9.36
39.57 3.05 ó 42.62 144.41 146.82
1.20 0.10 ó 1.30 0.77 0.87
0.15 0.01 ó 0.16 0.01 0.02
11.46 0.86 ó 12.32 6.41 7.18
11.97 0.88 ó 12.85 5.69 6.54
4.08 0.44 ó 4.52 3.10 3.24
71.01 5.53 0.00 76.54 179.86 184.33
65.58 5.41 -0.01 71.00 184.34 188.98

6322.19 430.15 -1.53 6753.87 2078.26 2441.30

5337.58 987.69 3.09 6322.18 2441.31 3372.14

49
Rashtriya Ispat Nigam Ltd.

ALLOCATION OF DEPRECIATION Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Charged to Profit & Loss Account:

Current year 415.57 424.19
Prior periods 14.58 4.62
Short provided in earlier years -- 558.87
Total 430.15 987.68

Schedule 05 : Fixed Assets held for disposal Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Value of Fixed Assets 16.03 15.00

Less: Provision for loss 16.02 15.00
Estimated Net Realisable value 0.01 --

Schedule 06 : Capital Work-In-Progress Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Work-in-progress (Including Materials at Site) 172.20 57.25

Less: Provision for Shortages 2.22 2.22 55.03
169.98

Advances to Contractors 0.32 0.49

Less:Provision for doubtful advances 0.00 0.20
0.32 0.29
Advances to Government departments 3.15 2.91
Advances to Suppliers 0.59 0.62
4.06 3.82

Expenditure during construction awaiting 6.69 --

allocation (Schedule : 07)

Total 180.73 58.85

Advances : Unsecured & Considered good 4.06 3.82
Advances : Unsecured considered doubtful 0.00 0.20

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 Annual Report 2005-06

Schedule 07 : Expenditure during Construction Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Expenditure duirng the year:

Employees Remuneration & Benefits 3.56 --
Other Expenses & Provisions 3.13 --

Total awaiting allocation carried to Schedule No.06 6.69 --

Schedule 08 : Investments* (At Cost) Rupees in Crores

As at As at
31st March , 31st March,
2006 2005

Trade - Quoted
1,82,927 Equity shares of Rs.10/- each in
Bisra Stone Lime Company Limited 0.00 0.00
Non-trade - unquoted
2,280 Equity shares of Re.1/- each in
Free Press House Limited 0.00 0.00
Total 0.00 0.00

* Investments amounted to Rs.3100/- and hence shown as zero Crores

1. Investments include one fully paid-up share of Rs.100/- each in Anakapalli
Rural Electric Co-operative socierty Limited
2. Market value of quoted investments - not available.

51
Rashtriya Ispat Nigam Ltd.

Schedule 09 : Inventories (As taken and certified by the Management) Rupees in Crores
As at As at
31st March , 2006 31st March, 2005

Semi Finished/ Finished goods

at lower of cost or net realisable value 447.87 503.63
Add: In-transit 24.43 34.52
472.30 538.15
Raw materials at cost 501.89 454.90
Add: In-transit/ Under inspection 47.83 100.04
549.72 554.94
Less: Provision for shortages & damages 79.11 114.82
470.61 440.12
Stores & Spares at cost 294.72 290.83
Add: In-transit/ Under inspection 17.52 29.72
312.24 320.55
Less: Provision for obsolescence & Non-moving items 38.70 41.29
273.54 279.26
Total 1216.45 1257.53

Schedule 10 : Sundry debtors Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Sundry debtors
Debts over six months 20.75 26.54
Other debts 164.27 43.04
185.02 69.58
Less : Prevision for doubtful debts 19.37 20.28
Total--Unsecured & considered good 165.65 49.30

Schedule 11 : Cash & Bank balances Rupees in Crores

As at As at
31st March , 2006 31st March, 2005
Cash on hand 0.08 0.07
Cheques on hand 29.93 56.32
Remittances in-transit 0.06 0.04
Current Accounts with Scheduled Banks 170.14 38.16
Term deposits with Scheduled Banks 5421.49 3838.02
Total 5621.70 3932.61

Schedule 12 : Other Current assets Rupees in Crores

As at As at
31st March , 2006 31st March, 2005
Interest accrued on loans to employees 1.90 2.34
Interest accrued -- others 182.35 97.63
Other income accrued 0.11 0.21
Total 184.36 100.18

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 Annual Report 2005-06

Schedule 13 : Loans & Advances Rupees in Crores

As at As at
31st March , 2006 31st March, 2005

Loans
Employees 2.72 1.41
Others 240.00 240.00
Material issued on loan 5.26 36.25
Advances & other recoverables
(Recoverable in cash or in kind or
for value to be received)
Government departments 14.94 6.07
Advance Income Tax & Fringe Benefit Tax 506.91 174.24
Contractors 4.54 5.34
Less:Provision for doubtful advances 0.54 0.44
4.00 4.90
Suppliers 52.63 85.78
Less:Provision for doubtful advances 7.90 16.38
44.73 69.40
Employees 4.91 7.12
Less:Provision for doubtful advances 0.16 4.75 0.19 6.93

Others 147.18 94.51

Less:Provision for doubtful
advances/ recoverables 14.67 13.37
132.51 81.14
707.84 342.68
Prepaid expenses 2.39 3.36
Claims recoverable 35.10 17.33
Less: Provision for doubtful claims 0.55 0.66
34.55 16.67
Deposits 71.08 69.75
Total 1063.84 710.12

Loans : Secured & considered good 240.00 240.00

Loans : Unsecured & considered good 7.98 37.66
Advances : Unsecured & considered good 707.84 342.68
Others : Unsecured & considered good 108.02 89.78
1063.84 710.12
Advances : Unsecured considered doubtful 23.27 30.38
Claims : Unsecured considered doubtful 0.55 0.66
23.82 31.04
Total 1087.66 741.16
Amounts due from --
Directors 0.01 0.01
Maximum amount due at any time during the year from --
Directors 0.01 0.01

53
Rashtriya Ispat Nigam Ltd.

Schedule 14 : Liabilities Rupees in Crores

As at As at
31st March , 2006 31st March, 2005
Sundry creditors 275.04 218.39
Advances from customers 120.19 102.90
Other advances 1.60 4.64
Earnest money, security & other deposits 68.89 51.20
Interest accrued but not due 8.43 2.39
Other liabilities 397.34 332.94
Total 871.49 712.46

Schedule 15 : Provisions for Rupees in Crores

Balance as at Additions Total Payments / Written back Balance as at
31st March, during the Utilisation / during the 31st March,
2005 year Charged off year 2006

Gratuity to employees 88.61 35.13 123.74 3.49 -- 120.25

Future leave encashment 62.35 32.70 95.05 19.32 -- 75.73
Post-retirement Benefits 8.86 9.19 18.05 3.96 -- 14.09
Employee Family Benefit Scheme 22.17 4.07 26.24 0.12 -- 26.12
Current Income Tax 87.18 474.97 562.15 87.18 -- 474.97
Fringe Benefit Tax -- 3.94 3.94 0.00 -- 3.94
Mines Closure -- 1.09 1.09 0.00 -- 1.09
Wealth Tax 0.10 0.18 0.28 0.18 (-) 0.08 0.18

Total 269.27 561.27 830.54 114.25 (-) 0.08 716.37

Schedule 16 : Miscellaneous expenditure (To the extent not written-off or adjusted) Rupees in Crores
As at 31st Additions Charged off As at 31st
March, during the during the March
2005 year year 2006

Deferred Revenue Expenditure 43.01 -- 18.14 24.87

Total 43.01 -- 18.14 24.87
Previous Year 61.45 -- 18.44 43.01

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 Annual Report 2005-06

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED 31st March, 2006

Schedule 17 : Gross Sales

Rupees in Crores
Current Previous
Year Year

Domestic 8039.88 7932.52

Export 442.56 248.82
Credited to : Profit & Loss Account 8482.44 8181.34

Schedule 18 : Interest earned Rupees in Crores

Current Previous
Year Year

Loans to employees 0.20 0.13

Banks 307.48 127.03
Others 47.19 31.43
Credited to : Profit & Loss Account 354.87 158.59

Schedule 19 : Other revenues Rupees in Crores

Current Previous
Year Year

Rent recoveries 1.76 1.94

Profit on sale of fixed assets 1.15 19.92
Provision no longer required written back 9.07 51.12
Liquidated damages 1.25 0.37
Claims for finished goods (Shortages & Missing Wagons) 1.57 1.06
Export benefits 24.43 11.29
Sale of power 8.44 9.10
Net income from other operations 0.64 1.13
Exchange Rate Variation 0.54 --
Sundry receipts 43.90 24.97
Credited to : Profit & Loss Account 92.75 120.90

55
Rashtriya Ispat Nigam Ltd.

Quantity: Tonnes
Schedule 20 : Raw materials consumed Value : Rupees in
Crores
Current Year Previous Year
Quantity Value Quantity Value

Coal 3321506 1757.46 3206985 1225.52

Coke and Coke breeze 321976 364.43 443409 777.04
Iron Ore 6343569 1077.63 6071994 658.88
Sponge Iron 10102 12.44 -- --
Iron Ore Pallets 27395 19.17 -- --
Limestone 886612 89.46 794393 88.46
Dolomite 740850 52.42 737559 50.20
Silico Manganese 36947 109.71 35071 119.14
Ferro Silicon 7153 28.40 7227 26.55
Alluminium 3842 41.16 3616 35.27
Manganese Ore 16147 1.47 16456 1.11
Petroleum Coke 5683 7.12 6217 7.43
Sea Water Magnesite 3537 9.47 5396 13.41
Others 14.28 16.61
Total 3584.62 3019.63

Schedule 21 : Depletion/(Accretion) to Stock of Semi-Finished / Finished goods Rupees in Crores

Current Year Previous Year
Opening stock 538.15 227.76
Less: Closing stock 472.30 538.15

Net Depletion/(Accretion) transferred to Profit & Loss Account 65.85 (310.39)

Schedule 22 : Employeesí remuneration & benefits Rupees in Crores

Current Year Previous Year

Salaries, wages & allowances 455.71 404.46

Company's contribution - provident fund & other funds 33.86 31.13
Staff welfare expenses 51.75 42.46
Gratuity 35.13 12.20
Voluntary Retirement Benefits 0.55 0.00
Total 577.00 490.25
Less: Transferred to Capital Work in Progress 1.10 --
575.90 490.25
Charged to : Profit & Loss Account 572.34 490.25
Expenditure during Construction 3.56 --
Total 575.90 490.25

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 Annual Report 2005-06

Schedule 23 : Power & fuel Rupees in Crores

Current Year Previous Year
Purchased power 58.61 53.04
Boiler coal 174.90 162.06
Furnace oil/ LSHS/ LDO 1.59 0.96
Charged to : Profit & Loss Account 235.10 216.06

Schedule 24 : Repairs & Maintenance Rupees in Crores

Current Year Previous Year

Plant & Machinery 56.14 58.21

Buildings 8.43 7.93
Others 32.67 27.27
Charged to : Profit & Loss Account 97.24 93.41

Schedule 25 : Other expenses & provisions Rupees in Crores

Current Year Previous Year

Technical services 2.91 0.58

Rent 2.69 2.56
Rates & taxes 2.69 2.72
Excise Duty (24.27) 72.46
Insurance 3.66 3.91
Handling & scrap recovery 92.77 84.28
Selling expenses 16.69 11.24
Travelling expenses 38.52 24.52
Printing & stationery 2.47 1.86
Postage, telegrams & telephone 3.16 2.96
Water charges 25.92 9.97
Legal expenses 0.56 0.40
Bank charges 1.69 3.42
Security expenses 15.85 14.77
Advertisement 10.81 7.30
Demurrages & wharfages 7.63 0.12
Auditors' Remuneration- Statutory Audit 0.04 0.04
Auditors' remuneration-Tax matters 0.02 0.01
Auditors' travelling & other expenses 0.09 0.06
Provision for shortage/damaged material/obsolescence/non-moving items of stores 7.17 3.61
Provision for doubtful advances and claims 5.88 8.88
Provision for doubtful debts 0.70 0.32
Loss on Fixed Assets held for disposal written off / provided for 0.55 --
Exchange Rate variation -- 4.55
Miscellaneous & deferred revenue expenditure written Off 18.14 18.44
Sundries 21.89 22.07
258.23 301.05
Less : Transferred to Capital Work in Progress 0.07 --
Total 258.16 301.05

Charged to : Profit & Loss Account 255.03 301.05

Expenditure During Construction 3.13 --
Total 258.16 301.05

57
Rashtriya Ispat Nigam Ltd.

Schedule 26 : Interest & finance charges Rupees in Crores

Current Year Previous Years
Interest :
Foreign currency loans/suppliers' credit 26.64 9.28
Banks - Cash Credit 2.13 1.56
Interest on Income Tax 1.89 --
Others 0.40 0.18
31.06 11.02
Finance Charges 0.00 0.09
Charged to : Profit & Loss Account 31.06 11.11

Schedule 27 : Prior period adjustments Rupees in Crores

Current Year Previous Year
Excise 0.00 0.26 CR
Claims for finished goods 0.00 0.10 DR
Raw materials consumed 0.00 6.50 CR
Stores & spares 23.06 CR 0.36 DR
Interest & finance charges 0.00 0.13 CR
Depreciation 14.58 DR 4.62 DR
Other Expenses 2.86 DR 0.37 DR
Other Revenue 1.20 CR 0.00
Credited to : Profit & Loss Account 6.82 CR 1.44 CR

58
 Annual Report 2005-06

Schedule 28: Accounting Policies & Notes on Accounts

A. SIGNIFICANT ACCOUNTING POLICIES
1. GENERAL
Financial statements are prepared on going concern basis under the historical cost convention,
adopting accrual method of accounting and in accordance with the generally accepted Accounting Principles.

2. FIXED ASSETS AND INTANGIBLE ASSETS

a. Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is
inclusive of freight, duties ( net of CENVAT/VAT), taxes, incidental expenses relating to the cost of
acquisition, allocated Expenditure during construction (which comprises of expenses less incomes
attributable to the construction activities), borrowing costs and cost of installation / erection as applicable.

b. Net gain/loss arising on disposal/discarding of fixed assets is treated as revenue.

c. Contributions made by the company towards the cost of fixed assets owned by the State/Central
Government are grouped together with similar assets owned by the company with appropriate disclosure
thereof.

d. Pending ascertainment of actual amount to be capitalised to fixed assets, capitalisation is made initially
on provisional basis. Adjustments to cost and depreciation are made on ascertainment of actual cost of
the respective assets.

e. Expenditure on fixed assets is capitalised at the following points of time:

i) In case of Plant & Machinery, when the respective sub-units are fit for commercial production. A sub-
unit is considered to be fit for commercial production at the later of the following:

a) from the end of 3 months from the commissioning date, provided such unit is capable of producing
at 50% rated capacity.

b) from the end of calender month in which the plant unit produces/becomes capable of producing
atleast 50% of the rated capacity.

ii) In case of land, when the possession is taken/expenditure is incurred on development.

iii) In case of other assets, when they are put to use.

iv) Factory buildings are capitalised alongwith the Plant housed in the buildings.

f. Machinery spares identified with production/service units, whose use is expected to be irregular, but non-
availability of which affects the production / service units are categorised as 'Risk Insurance Spares'.
The cost of such items is depreciated over the useful life of the Principal plant unit.

g. Intangible assets are recorded at cost.

3. DEPRECIATION AND AMORTISATION

i) Depreciation is provided on straight line method (SLM), in accordance with the provisions of Schedule
XIV of the Companies Act, 1956, except the following:
a) Depreciation on Coke ovens & Coal chemical plant units is provided on SLM at 6.33% based on
the Management's estimate of the useful life of the Plant; and

59
Rashtriya Ispat Nigam Ltd.

b) Depreciation on the following categories of assets are provided on SLM at the rates mentioned against
each based on the Management's estimate of the useful life of such assets.
Categories of Assets Depreciation Rate (%)
Photo Copiers & Fax Machines 19.00
Other Office Equipments 13.57
Air Conditioners 13.57
Cranes 9.50
Earth Moving Equipments 13.57
Slag Pot Carriers 9.50
Safety Equipments 11.87
Cars 15.83
Other light vehicles 11.87
Computers (including system software) 23.75

c) Contributions made by the company towards the cost of fixed assets owned by the State/Central
Government are depreciated over the estimated period of their utility or five years whichever is less.
ii) Mining lease rights are amortised over the period of lease.
iii) Intangible assets are amortised over their estimated useful lives.

4. INVENTORIES:
a) (i) Finished/ Semi-finished goods are valued at lower of cost (excluding interest and administrative
expenses but including all other costs incurred in bringing the inventories to their present location
and condition) or net realisable value. Cost of production is the average cost of production of the last
six months during the year considering normal capacity. Normal capacity is based on the average
production of the preceding three years of main production units, excluding abnormal years. Abnormal
year is the year in which the actual production is less than 40% of the installed capacity. Coke and
other By-products are valued at net realisable value wherever cost is not determined except in the
case of stock of BF granulated slag at dump yard for which no value is assigned. Products which are
meant for internal consumption, for further production, but not for sale are valued at cost. No credit is
taken for the value of material in process except those lying at mills.
(ii) Finished/Semi-finished goods transferred for construction/maintenance and included in the stock of
stores & spares are valued at cost.
(iii) Iron scrap and Steel scrap are valued at 75% and 90% respectively of the cost of pig iron or of the
domestic net realisable value of Pig Iron, whichever is less.
b) (i) Raw materials and spares imported during the year are valued at landed cost inclusive of import duty
benefits availed. Liability to the extent of unfulfilled export obligations at the end of the year is provided
for.
(ii) No credit is taken in the accounts for the stock of run of mines ore and rejects at Mines.

c) (i) Raw materials, stores, spares, loose tools, materials in transit are valued at cost. In the event of net
realisable value of finished steel products being less than the cost of production, raw materials are
valued at lower of cost and net realisable value.

(ii) Loss on account of obsolescence of stores & spares is charged to revenue.

(iii) Non-moving items of stores & spares are recognised at 80% of their cost.

(iv) Stock of spares acquired along with the related equipments, not having item-wise breakup of cost,
are valued at average cost.

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 Annual Report 2005-06

(v) For all the above, cost is determined on monthly weighted average basis unless otherwise specified.

5. INVESTMENTS:
Investments are stated at cost. Income from investments is accounted for on accrual basis.

6. SALES:
Gross Sales are inclusive of excise duty and contributions to various funds and are net of discounts and
rebates.
a) Domestic sales on F.O.R. destination basis are accounted for when goods are delivered to the carriers.
b) Exports sales are recognised in the following manner:
i) Sea Exports, Road Exports and Rail Exports are recognised on the date of Bill of Lading, the Date of
Road Consignment Note and Date of Railway Receipt respectively.
ii) in cases where 'realisation of material value without shipment' is provided for in the Letters of Credit
of respective contracts, on expiry of laydays given in notice of readiness of cargo or the laydays
otherwise accepted by the seller or on expiry of 15 days from notice of readiness of cargo whichever
is earlier.

7. EXPORT BENEFITS:
Export benefits are accounted as follows:
a) Import duty benefits availed by way of duty exemption / remission licenses under Export Import Policy
earned on exports are accounted as income under the head 'Export benefits'.
b) DEPB/DFRC or any other Export Incentive credits sold or contracted /identified for sale are accounted on
realisable value.
c) The valid Licences under duty exemption / remission schemes under Export Import Policy, sanctioned till
the date of finalisation of the accounts are accounted as 'Export benefits', to the extent of export obligations
fulfilled up to the end of the year.

8. EXCISE & CUSTOMS DUTIES:

a) Excise duty liability on finished goods is accounted for on the basis of actual production.
b) Customs duty on imports is accounted provisionally, pending completion of final assessment.

9. EMPLOYEES' BENEFITS :
a) The provisions towards Employees Benefits such as gratuity, accrued leave, post-retirement medical and
settlement benefits to employees, future payments to the disabled employees/legal heirs of deceased
employees under the Employees' Family Benefit Scheme are made based on the actuarial valuation as
at the end of the year.
b) Compensation under Voluntary Retirement Scheme is expensed in the year in which it is incurred.

10. RESEARCH & DEVELOPMENT EXPENDITURE :

Research & Development expenditure is accounted under the primary heads of account and charged to P&L
account. Capital expenditure on Research & Development is included in the fixed assets.

11. MISCELLANEOUS EXPENDITURE:

In line with AS 26, expenditure incurred and treated as Deferred revenue expenditure before 1.4.2003 is
written off over a period of five years from the year of commencement of production/ year of initial incurring of
expenditure, as the case may be except in the case of (i) expenditure on Blast Furnace relining which is
written off over a period of eight years; and (ii) expenditure on cold repairs of Coke Oven batteries which is
written off over a period of five years commencing from the year in which the units restarted production.

61
Rashtriya Ispat Nigam Ltd.

12. FOREIGN CURRENCY TRANSACTIONS :

(i) Foreign currency monetary items are translated at the rate of exchange prevailing as on the Balance
Sheet date.
(ii) Net loss/gains arising on account of settlement/conversion of foreign currency monetary items is dealt
with in the following manner:
a) in respect of liabilities incurred to acquire fixed assets, regarded as adjustment of cost and are included
in the carrying amount of the related fixed assets. However, in respect of liabilities incurred to acquire
fixed assets within India, the net loss or gain arising out of foreign currency transactions entered into
on or after 1.4.2004 is recognized as expense or income in the period in which they arise.
b) in respect of current assets/liabilities, recognised as expense or income in the period in which they
arise. However, where forward cover exists, the premium or discount arising at the inception of
forward exchange contract is amortised as expense or income over the life of the contract. Exchange
differences on such contracts are recognized in the profit and loss account in the reporting period in
which the exchange rates change. Profit or loss on cancellation or renewal of such contracts is
recognized as income or expense for the period.

13. PRIOR PERIOD ADJUSTMENTS:

Items of Income/ Expenditure which arise in the current period as a result of errors or omissions in the
preparation of Financial statements of one or more prior periods exceeding Rs.5,00,000 in value in each case
are treated as prior period adjustments.

14. BORROWING COSTS:

(i) Borrowing costs incurred for obtaining assets which take more than 12 months to get ready for its intended
use are capitalised to the respective assets:
a) wherever the costs are directly attributable to such assets; and
b) in other cases by applying weighted average cost of borrowings to the expenditure on such assets.
(ii) Other borrowing costs are treated as expense for the year.

15. EXPENDITURE DURING CONSTRUCTION (EDC):

Expenditure , including that proportion of Employees' Remuneration and benefits, attributable / relating to
Expansion activity, to the extent not directly identifiable to any specific Plant Unit, is kept under Expenditure
During Construction for allocation to Fixed Assets and is grouped under Capital Work-in- Progress.

16. TAXES ON INCOME:

Provision for income tax comprises of current tax and deferred tax. Deferred tax is recognised on timing
differences, being the differences between taxable and accounting income/expenditure that originate in one
period and are capable of reversal in one or more subsequent period(s), subject to consideration of prudence.

17. CLAIMS:
a) Claims for liquidated damages against the suppliers/contractors are accounted for when the amounts are
actually recovered.
b) Claims for escalation by Contractors and Suppliers are accounted on acceptance by the Company.
c) Claims on Railways are accounted for when they are lodged.
d) Claims lodged under various insurance policies, risk purchases, price subsidy & freight subsidy on
Ammonium Sulphate and the interest receivable from Sundry Debtors for delayed payments/banks for
delayed credits for Telegraphic transfers are accounted on certainty of realisation.

62
 Annual Report 2005-06
Schedule 28 Contd...

B. NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st March, 2006.
1. Land acquired at the cost of Rs. 39.99 Crores (previous year Rs.40.81 Crores) is being held in the name of President of India. The
Company is holding Power of Attorney issued by Govt. of India for utilisation of the land acquired for the Project and related purposes
incidental thereto.
2. Sale deeds in respect of the following assets are yet to be executed:

a) Stockyard at Chennai Rs. 1.51 Crores (Previous year Rs. 1.51 Crores)
b) Office buildings at New Delhi Rs. 1.19 Crores (Previous year Rs. 1.19 Crores)
c) Office buildings at Ahmedabad Rs. 0.18 Crores (Previous year Rs. 0.18 Crores)
d) Residential buildings at Kolkata Rs. 1 Crore (Previous year Rs. 0.96 Crores)

3. Land includes 342.1971 acres ( Previous year Rs.341.9771 acres) allotted to various agencies on lease basis.
4. a) Fixed Assets ( Gross Block) include assets costing Rs.10.05 Crores (previous year Rs.10.05 Crores) not owned by the Company
which were depreciated in full as per the accounting policy 3( i ) c.
b) Fixed Assets include Rs.0.17 Crores ( Credit )[ previous year Rs.0.21 Crores(Debit) ] being the Exchange Rate Variation for the
year in respect of foreign currency liabilities incurred to acquire fixed assets prior to 1st April 2004.

5. Main plant units, including Mills, are treated as ìContinuous Process Plantî.

6. a) Sundry Creditors comprise of Rupees in Crores

As on 31st As on 31st
March, 2006 March, 2005
i) Total outstanding dues to Small Scale Industrial Undertakings* 14.41 14.42
ii) Total outstanding dues to creditors other than Small Scale Industrial Undertakings 260.63 203.97
b) There is no Small Scale Industrial Undertakings to whom, a sum exceeding Rs. 1 lakh is owed which is outstanding for more than
30 days.
* Identification of 'Small Scale Industrial Undertakings' is made on the basis of and to the extent of information is available.

7. Adjustments have been made to the extent reconciliation of Priced stores ledger with Bin cards is completed.
8. Housing/ Vehicle Loans to employees are reckoned as unsecured and considered good.
9. Loans and advances, Sundry debtors / Creditors, Stock with some Consignment agents are subject to reconciliation/confirmation.

10. Quantities of Closing Stock of finished / semi-finished goods have been adopted as per physical verification / custodians' certificate
except in the case of Calcined Lime, Liquid Oxygen, Liquid Nitrogen, Argon gas, Oxygen gas, Nitrogen gas, Dolomite magnesite
bricks, Calcium carbide sludge and Stocks at New Steel Yard amounting to Rs.19.94 Crores ( Previous Year Rs 15.05 Crores ) which
are as per book balances.
11. (a) The stock of iron scrap and steel scrap has been considered in the accounts on the basis of visual survey/estimates.
(b) In the absence of Sale of Coke Breeze, the same has been valued at 60% of the production cost of BF coke.
12. Power & fuel does not include the cost of generation of power and production of certain fuel elements in the Plant which are internally
consumed. The related expenses have been included under the primary heads of account.
13. Materials issued for use as 'Dunnage', were capitalised during the year with effect from the respective years. As a result, the Gross
and Net blocks of Fixed Assets have increased by Rs. 3.35 crores and Rs. 2.45 crores respectively and Depletion/(Accretion) to Stock
of Semi-Finished/Finished goods and Internal Consumption are higher by Rs. 4.02 crores and Rs. 3.35 crores respectively. As a net
result, the Net Profit is lower by Rs. 1.57 crores.

63
Rashtriya Ispat Nigam Ltd.

14. Earning Per Share (EPS)

2005-06 2004-05

i) Net Profit (Rupees Crores) 1252.37 2008.09

ii ) Weighted average number of Equity Shares outstanding during the year (No.of shares) 48898462 48898462
iii) Face value per share (Rupees) 1000 1000
iii) Basic and diluted EPS (Rupees) 256.12 410.67

15. The Company's business is construed as one business segment which comprises of mainly production of steel products, whose
associated risks and returns are predominantly the same. Further, the Company has no geographical segments which are subject to
different risks and returns. Hence no separate disclosure in terms of Accounting Standard-17 on segment reporting is considered
necessary.

16. The lease transactions of the Company, being only incidental to the Company's main business of production & sale of Iron & Steel
products, we are of the view that the Accounting Standard AS-19 on Leases is inapplicable.

17. Income tax (MAT) liability under Section 115JB of the Income Tax Act, 1961, for the financial years 2003-04 and 2004-05, was
determined on the basis of the expert opinion of Tax Consultants considering the issue of adjustment of unabsorbed depreciation /
accumulated losses. To avoid possible dispute / litigation with the Income Tax department, an application has been filed before the
Hon'ble Authority for Advance Ruling for determination of the above issue. If the Company's stand is not accepted, the additional
liability towards income tax would be Rs.97.33 Crores (previous year Rs.97.33 Crores).

18. In compliance with Accounting Standard -22 on 'Accounting for Taxes on Income' issued by The Institute of Chartered Accountants of
India, the Net Deferred tax liability of Rs. 316.72 Crores (Previous Year Rs.158.49 Crores) has been provided during the current year.
Components of Deferred Tax Liabilities and Deferred Tax Assets are as under:
Rupees in Crores
Particulars As at 31st As at 31st
March, 2006 March, 2005

Deferred Tax Liabilities

Difference between book and tax depreciation 421.66 519.94
Deferred Revenue Expenditure 8.37 14.48
Sub-Total (A) 430.03 534.42

Deferred Tax Assets

Unabsorbed depreciation under Income Tax Act, 1961 0.00 276.49
Provision for Gratuity 40.48 29.83
Provision for doubtful debts,advances & Claims 14.54 17.34
Other Deferred Tax Assets 58.29 52.27
Sub-Total (B) 113.31 375.93

Net Deferred tax Liability / (Asset) (A) - (B) 316.72 158.49

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

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

64
 Annual Report 2005-06

Rupees in Crores

As at 31st As at 31st
March, 2006 March, 2005

21. Estimated amount of contracts remaining to be executed

on capital account and not provided for (net of advances) 439.04 95.15

22. Contingent liabilities not provided for: Rupees in Crores

a) Claims against the Company Claims pending judicial

not acknowledged as debts decisions
As at 31st As at 31st As at 31st As at 31st
March, 2006 March, 2005 March, 2006 March, 2005
Contractors/ Suppliers/ customers 64.65 64.36 146.47 188.69
Local Authorities - State Govt. 2.20 0.48 -- 0.28
Sales Tax matters -- -- 17.52 19.64
Customs/ Excise duty -- -- 33.98 35.47
R & D Cess 13.18 13.18 -- --
b) Claims in Courts in connection with Land Acquisition: ó Amount not ascertainable.
c) Liability towards reimbursement of excise duty on structural works wherever applicable. ó Amount not ascertainable.
d) Amounts paid under protest of Rs.19.44 Crores, Rs.12.19 Crores, Rs. NIL Crores and Rs. 2.93 Crores (Previous year Rs. 29.86
Crores, Rs.12.24 Crores, Rs. 4.98 Crores and Rs 2.93 Crores ) towards disputed demands of income tax on foreign suppliers & TDS,
sales tax, excise duty and customs duty respectively are included under ''Advance recoverable" for which no liability has been
created.
23. Previous yearís figures have been regrouped and reclassified wherever necessary.
24. Stocks & Sales Quantity in Tonnes
Value - Rupees in Crores

Pig Iron Blooms Saleable Sundries Total

Steel Coke & Coke Others
Products

Opening stock- Quantity 30312 58355 173831 159101 -- --

(3178) (27762) (123526) (32295) -- --
Value 31.33 79.12 284.02 89.13 54.55 538.15
(2.39) (26.28) (143.98) (14.30) (40.82) (227.77)
Sales- Quantity 410804 134303 3146759 -- 1204047 --
(229654) (142081) (2968410) (5632) (1449323) --
Value 543.43 256.88 7470.67 -- 211.46 8482.44
(344.42) (301.11) (7366.00) (1.75) (168.06) (8181.34)
Closing stock- Quantity 27750 45095 109687 143193 -- --
(30312) (58355) (173831) (159101) -- --
Value 30.57 70.82 202.23 92.46 76.22 472.30
(31.33) (79.12) (284.02) (89.13) (54.55) (538.15)
Note: Figures in brackets are for previous year.
Closing stock includes 19484 tonnes (Previous year 53400 tonnes) in the custody of consignment agents.
Figures of closing stock are after adjustment for internal consumption, transfers to capital works, shortages/excesses.
Others include By-products and Iron & Steel Scrap.

65
Rashtriya Ispat Nigam Ltd.

25. Value of raw materials etc and stores/spares components consumed:

Current year Previous Year

Raw Materials Stores & Spares Raw Materials Stores & Spares

Rupees Percen- Rupees Percen- Rupees Percen- Rupees Percen-

in Crores tage in Crores tage in Crores tage in Crores tage

(a) Indigenous 1792.97 50.02 297.43 87.75 1316.43 43.60 261.08 83.29
(b) Imported 1791.65 49.98 41.52 12.25 1703.20 56.40 52.38 16.71

Total 3584.62 100.00 338.95 100.00 3019.63 100.00 313.46 100.00

Rupees in Crores
Current Previous
year Year
26. Expenditure in foreign currency (cash basis)
(a) Technical consultation fee/know-how 0.01 0.31
(b) Interest 21.83 7.38
(c) Others 2.08 4.82

27. Earnings in foreign exchange (cash basis)

(a) Export of goods (on FOB basis) 442.65 249.22
(b) Others 0.87 10.05

Rupees in Crores
Current Previous
year Year
28. Value of imports during the year calculated on CIF basis
(a) Spares 37.04 41.03
(b) Raw materials 1734.93 1692.41
(c) Capital Goods -- 1.50

Rupees in Crores
Current Previous
year Year
29. Particulars of Directorsí remuneration
(a) Salaries & allowances * 0.30 0.52
(b) Companyís contribution to provident fund 0.04 0.04
(c) Leave travel concession 0.00 0.01
(d) Medical reimbursement 0.01 0.00
(e) Gratuity 0.07 0.10

Total 0.42 0.67

* includes wage arrears of Rs. NIL Crore ( Previous year Rs. 0.13 Crores ).

66
 Annual Report 2005-06

30. Licensed capacity, installed capacity & actual production ( Tonnes in ë000s)

Current Year Previous Year

*Licensed Installed Actual *Licensed Installed Actual
Capacity Capacity Production Capacity Capacity Production

Product:
(a) Wire Rods 850 1043 850 1014
(b) Light & Medium Merchant Products-Bar Mill 710 873 710 858
(c) Saleable Billets 246 110 246 137
(d) Medium Merchant Structural Mill 850 1058 850 1014
Total 2656 3084 2656 3023
(e) Pig Iron 556 439 556 273
(f) Granulated Slag 1440 1578 1440 1514
(g) Coke Ovens By-products 186 152 186 145

Note: *Licensed capacity not applicable in terms of Government of India notification No. S.O.477(E), dated 25th July, 1991.

31. Expenditure on public relations Rupees in Crores

Current Previous
year Year

(a) Employeesí remuneration & benefits 0.71 0.62

(b) Expenditure on institutional publicity 2.92 2.10

Total 3.63 2.72

32. Cash Flow Statement Rupees in Crores

Current Previous
year Year

A. Cash flow from Operating activities

Net Profit before interest & tax 1565.70 2106.15
Adjustments for:
Add: Depreciation ( including Prior Period Depreciation ) 430.15 987.69
Add: Miscellaneous & deferred revenue expenditure written Off 18.14 18.44
Less: Adjustments on accounts of discard\removal of assets -1.54
Less: Profit on sale of fixed assets 1.15 19.92
Operating Profit 2014.38 3092.36
Less: Adjustments for
Inventories -41.08 551.19
Sundry debtors 116.35 -36.32

67
Rashtriya Ispat Nigam Ltd.

Other Current assets -0.10 0.09

Loans & Advances 21.05 44.98
Liabilities -152.99 111.22
Provisions -55.37 -25.58
Cash generated from operating activities 2126.52 2446.78
Less: Income Tax paid including Fringe Benefit Tax 442.05 114.24

Net cash from operating activities 1684.47 2332.54

B. Cash flow to Investing activity

Increase in fixed assets ( including Capital Work-in-progress) 168.34 88.72
Less: Sale proceeds of Fixed Assets 1.16 20.27
Less: Interest received 270.59 82.83

Net cash used in Investing activity -103.41 -14.38

C. Cash flow to Financing Activity

Repayment of Secured loans 0.79 -51.77
Repayment of Unsecured loans 72.98 -183.94
Interest and Finance charges 25.02 9.73
Net cash used in financing activity 98.79 -225.98

Net increase/decrease(-) in Cash & Cash equivalents (A-B-C) 1689.09 2572.90

Opening Balance of Cash & Cash equivalents 3932.61 1359.71
Closing Balance of Cash & Cash equivalents 5621.70 3932.61
(Represented by Cash & Bank Balances - Schedule 11 )

68
 Annual Report 2005-06

33. Balance Sheet Abstract and Companyís General Business Profile

I. Registration Details
Registration No. 3 4 0 4 State Code : 0 1 0 1
Balance Sheet Date 3 1 0 3 2 0 0 6
Date Month Year

II. Capital raised during the Year (Amount in Rs. Lakhs)

Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Lakhs)
Total Liabilities Total Assets
1 0 5 3 5 8 7 1 0 5 3 5 8 7
Sources of Funds
Paid-up Capital Reserves & Surplus
7 8 2 7 3 2 3 4 6 3 8
Secured Loans Unsecured Loans
8 8 1 5 3 6 9 4 4
Application of Funds
Net Fixed Assets Investments
2 2 5 9 0 0 0
Net Current Assets Miscellaneous Expenditure
6 6 6 4 1 4 2 4 8 7
Accumulated Loss
N I L
IV. Performance of Company (Amount in Rs. Lakhs)
Turnover Total Expenditure
7 7 6 1 5 9 5 8 7 2 0 8
Profit/Loss Before Tax Profit/Loss After Tax
1 8 8 9 5 1 1 2 5 2 3 7
Earnings per Share in Rs. Dividend (%)
2 5 6 N I L
V. Generic names of Three principal Products/ Services of Company (As per Monetary Terms)

Item Code No. (ITC Code) 7 2 1 3 9 1 0 9

Product Description W I R E R O D
Item Code No. (ITC Code) 7 2 0 1 1 0 0 0
Product Description P I G I R O N
Item Code No. (ITC Code) 7 2 1 4 2 0 0 9
Product Description R E B A R S

69
Rashtriya Ispat Nigam Ltd.

Annexure - I
AUDITORS’ REPORT
To the Members of Rashtriya Ispat Nigam Limited
1. We have audited the attached Balance Sheet of Rashtriya Ispat Nigam Limited, as at 31st March 2006, and also the Profit and
Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements
are the responsibility of the Companyís Management. Our responsibility is to express an opinion on these financial statements
based on our audit.
2. We conducted our audit in accourdance with the auditing standards generally accepted in India. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financail
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement prsentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditorís report) Order, 2003, issued by the Central Government of India in terms of Sub-
section (4A) of Secction 227 of the Companies Act, 1956, and on the basis of such checks as we consider appropriate and
according to the information and explanations given to us, we enclose in the annexure a statement on the matters specified
in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that :
(a) We have obtained all the information and the explanations, which to the best of our knowledge and belief were
necessary for the purpose of our audit;
(b) In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from
our examination of those books and proper returns adequate for the purposes of our audit have been received from
the branches not visited by us;
(c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement
with the books of account and with the returns from the branches;
(d) In our opinion, the Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report,
comply with Accounting Standards referred to in sub - Section (3C) of Section 211 of the Companies Act, 1956;
(e) The provisions of section 274(1)(g) are inapplicable to Government Companies vide Notification No. G.S.R. 829 (E)
dated 21-10-2003 as declared by the Central Government;
(f) With regard to the Cess payable under section 441A, the company, vide note 21 in Schedule 26 to the Accounts,
had neither provided nor paid any amount, as the Government o f India had not framed any rules/guidelines in
this regard.
(g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts,
subject to and read together with the Significant Accounting Policies and Notes forming part of accounts
given by way of Schedule 28 to the Accounts, give the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view, inconformity with the accounting principles generally accepted
in India;
(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2006;
(ii) In the case of the Profit and Loss Account of the PROFIT for the year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Place : New Delhi For Rao & Kumar

Date : 10-06-2006 Sd/-
S.S. Bharadwaj
Partner
Chartered Accountant
Membership Number : 26113

70
 Annual Report 2005-06

ANNEXURE TO AUDITORS’ REPORT

Referred to in paragraph 3 of our Report of even date

1. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantative details of fixed assests,
except for historical cost figures in certain cases.

(b) All assets have not been physically verified by the management during the year but there is a regular programme of
verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets.
No material discrepancies were noticed on such verification.

(c) No substantial part of fixed assets of the company has been disposed off during the year.
2. Physical verification and reconciliation of Inventories
(a) Inventories have been physically verified during the year by the management, except stocks with conversion agents/
custodians and with outside agencies and those referred to in Note No. 10 to the Notes on Accounts, which are
adopted based on the book value amounting to Rs. 19.94 crores out of the total reported stock of Rs. 1216.46 crores.
In respect of stores and spares, company has a regular program of verification in a phased manner, which
in our opinion, is adequate and reasonable having regard to the nature and location of stocks.

(b) The procedures for physical verification of inventory followed by the management are reasonable and adequate in
relation to the size of the company and the nature of its business.

(c) Reconciliation between Priced Stores Ledger and Bin Card in respect of Stores and spares was continued during the
year. Adjustment has been carried out to the extent reconciliation was completed. Reconciliation is pending in respect
of stores and spares whose value and impact of adjustments pending is not ascertainable.
3. Loans and Advances to parties covered in register maintained under section 301
of the Act.

The Company had neither granted nor taken any loans, secured or unsecured, to/from companies firms or other parties covered
in the register maintained under Section 301 of the Act. In view of this clauses (b), (c) and (d) of paragraph 4(iii) are inapplicable

4. Internal Control procedure

In our opinion and according to the information and explanations given to us, having regard to the explanation that some of
the items purchased are of special nature and suitable alternative sources do not exist for obtaining compatible quotations, there
are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards
to purchase of inventory, fixed assets and with regard to the sale of goods.

5. Transactions to be entered into Register manitained under Section 301 of the Act,
According to the information and explanations given to us, there are no transactions that need to be entered into the register
maintained under section 301 of the Companies Act, 1956. As there are no such transactions, clause (b) of paragraph 4(v) is
inapplicable.

6. Acceptance of Deposits from Public

The Company had not accepted any deposits from the public. As such, the directives issued by the Reserve Bank of India and
the provisions of Section 58A & 58AA of the Act and the rules framed there under are inapplicable.

7. Internal Audit System

In our opinion, the company has an Internal Audit system commensurate with the size and nature of its business.

71
Rashtriya Ispat Nigam Ltd.

8. Maintenance of Cost Records

We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central
Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956 and we are of the opinion
that prima-facie the prescribed accounts and records have been made and maintained in respect of the applicable products.
With respect to Power Generation, Government of India notified Cost Audit for the year under audit. We are informed that
compilation in the formats under Cost Accounting Records is in progress. As such we could not verify the relevant records. We
have however not made a detailed examination of the records with a view to determine whether they are accurate and complete.

9. Payments and remittances to Statutory Authorities

(a) According to the records of the Company, the company has been regular in depositing with appropriate authorities,
undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise
Duty, Cess and other material Statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income
Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears as at 31st March 2006, for a
period of more than six months from the date they became payable.
(c) According to the explanations given to us, Company is not required to make any contribution under the Employeesí
State Insurance Act.
(d) According to the information and explanations given to us, as at the end of the financial year the disputed dues
of Income Tax, Sales Tax, Customs Duty, Excise Duty and Cess which have not been deposited is as follows:
Name of the Nature of Dues Forum where Amount
Statute dispute is Pending (Rs. in
Crores)

Customs & Excise duty and CESTAT 28.13

Excise Act Modvat
-do- -do- Commissioner Appeals 2.68
-do- Customs Duty District Judge Court Nil
Visakhapatnam
-do- -do- Commissioner 0.97
Appeals, Hyderabad
-do- -do- -do- 0.24
APGST & CST Sales Tax pending Sales Tax Appellate 17.51
Act concessional forms Authority
UP Trade Tax ST appeal for Tribunal Bench, 0.01
Act 1994-95 Agra
R&D Cess Act R&D Cess High Court of Kolkata 9.80

R&D Cess Act R&D Cess -do- 3.38

10. Accumulated Losses

The company did not have any accumulated loss at the end of the financial year as it had posted a surplus for the first time.
The Company has not incurred cash losses in this financial year covered by our audit and in the immediately preceding financial
year.

72
 Annual Report 2005-06

11. Repayment of dues to Banks or Financial Institutions

In our opinion and according to the records produced to us, the Company has not defaulted in repayment of its dues to any
Financial Institution or Bank during the year.

12. Loans and Advances on the basis of security by way of pledge of Shares etc.
In our opinion and according to the information and explanations given to us, the Company has not granted any loans and
advances on the basis of security, by way of pledge of shares, debentures and other securities.

13. Chit Fund or Nidhi / Mutual Benefit Fund / Society

In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii)
of the Companies (Auditorís Report) Order, 2003 are not applicable to the Company.

14. Trading in Shares, Shares etc.

In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly,
the provisions of clause 4(xiv) of the Comapanies (Auditorís Report) Order, 2003 are not applicable to the Company.

15. Guarantee for Loan taken by others

We are informed that the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. Application of Term Loans

According to information and explanations given to us, the Company had not availed any term loan during the year.

17. Usage of Short Term and Long Term Funds

According to the Information and explanations given to us and on an overall examination of the balance sheet of the Company,
we report that no funds raised on short-term basis have been used for long-term investment. The Company has not raised
any funds on long - term basis during the year.

18. Preferential Allotment of shares

According to the information and explanation given to us, the company has not made any
preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act, during
the year.

19. Issue of Debentures

According to the information and explainations given to us, the company had not issued debentures during the year.

20. End use of money raised by Public Issue

According to the informantion and explanations given to us, the company has not raised money by public issues during the year.

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

Place : New Delhi For Rao & Kumar

Date : 10-06-2006 Sd/-
S.S. Bharadwaj
Partner
Chartered Accountant
Membership Number : 26113

73
Rashtriya Ispat Nigam Ltd.

STATUTORY AUDITORS' COMMENTS IN THE ANNEXURE TO THE

AUDITORS' REPORT U/S 4(A) OF SCTION 227 OF COMPANIES'S ACT AND MANAGEMENTS' REPLIES
Comment Management Reply

1 (a) Fixed Assets The auditors' remarks pertain to certain assets procured

The Company has maintained proper records showing for use for construction of the Steel Plant, retained by

full particulars including quantative details of fixed the Company for use in the production period after
assets, except for historical cost figures in certain construction, that were capitalized in the years
cases. 1990-91 and 1991-92

"Guidance Note on Treatment of Expenditure During

Construction Period" issued by the Institute of Chartered
Accountants of India, stipulates the accounting treatment
for assets used for construction of a project which are
also retained for use during operations stage of the
project. The relevant portion of paragraph No. 9.4 is
reproduced hereunder:

"…. If some equipment purchased during the period of

construction has been utilized only partly for the
purposes of construction, a part of the depreciation
thereon, on the basis of a suitable proportion, should be
capitalized as an indirect expenditure incurred during
the construction period. Thereafter, the total cost of the
equipment purchased during the construction period less
the depreciation charged during that period should be
carried forward to the production period so that the
accounts of the production period would begin with the
depreciated value of such equipment, which would then
be further depreciated in the normal way."

Therefore, in line with the Guidance Note of the Institute,

in respect of the assets procured during the period for
plant construction and subsequently retained for use in
the production periods, the values as reduced by the
depreciation for the period of construction are taken to
the Gross Block of Fixed Assets

74
 Annual Report 2005-06

Comment Management Reply

2 Inventories have been physically verified during Stocks with conversion agents/custodians are accounted
(a) the year by the management, except stocks with as per custodians' certificate which is disclosed at Note
conversion agents/custodians and with outside No. 10 of Schedule 28 (B) of Annual Accounts.
agencies and those referred to in Note No. 10 to
the Notes on Accounts, which are adopted based
on the book value amounting to Rs. 19.94 crores
out of the total reported stock of Rs. 1216.46
crores. In respect of stores and spares, company has
a regular program of verification in a phased manner,
which in our opinion, is adequate and reasonable
having regard to the nature and location of stocks.

2 Reconciliation between Priced Stores Ledger and Bin Necessary disclosure has been made at Note No. 7 of
(c) Card in respect of stores and spares was continued Schedule 28 (B) of Annual Accounts.
during the year. Adjustment has been carried out to
the extent reconciliation was completed.
Reconciliation is pending in respect of stores and
spares whose value and impact of adjustments
pending is not ascertainable.

8 Maintenance of Cost Records

We have broadly reviewed the books of account

The compilation in the formats under Cost Accounting
maintained by the company pursuant to the rules made
Records can be completed only after completion of the
by the Central Government for the maintenance of
Statutory Audit of the Accounts since the audited
Cost Records under Section 209(1)(d) of the
accounts are the basis for compilation of Cost Accounting
Companies Act, 1956 and we are of the opinion that
Records.
prima-facie the prescribed accounts and records have
been made and maintained in respect of the applicable
products. With respect to Power Generation,
Government of India notified Cost Audit for the year
under audit. We are informed that compilation in the
formats under Cost Accounting Records is in
progress. As such we could not verify the relevant
records. We have however not made a detailed
examination of the records with a view to determine
whether they are accurate and complete.

75
Rashtriya Ispat Nigam Ltd.

Annexure - II

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF
RASHTRIYA ISPAT NIGAM LIMITED, VISAKHAPATNAM
FOR THE YEAR ENDED 31ST MARCH, 2006

A. PROFIT & LOSS ACCOUNT

Profit for the year : Rs. 1882.69 crore

1. The above amount is understated by Rs. 2.37 crore on account of following:

(i) Short accountal of interest (Interest earned - Schedule 18) amounting to Rs. 1.02 crore
accrued on term deposits with various banks upto 31st March, 2006.

(ii) Under-valuation of Semi finished/finished goods by Rs. 1.78 crore due to not taking into
account the cost of a raw material consumed.

(iii) Over valuation of damaged/non-moving material inventory by Rs. 43 lakh.

B Accounting Policies and Notes to Accounts (Schedule - 28)

2. The fact that raw material (Coal) valued at Rs.14.02 crore was lying in the custody of the
conversion Agent for more than two years has not been disclosed in the accounts.

3. The State Government of Andhra Pradesh demanded (December 2005) a sum of

Rs. 7.57 crore towards Company's share of expenditure for works relating to Yeleru Water
supply scheme, against which a provision of Rs.1.93 crore exists in the books. The Company
took up the matter with the State Government for the remaining disputed amount of Rs.
5.64 crore. Pending settlement of the matter, the Company has neither provided the liability

of Rs.5.64 crore nor disclosed the fact in the accounts.

Sd/-
( S.B. Pillay)
Principal Accountant General

76
 Annual Report 2005-06

REPLIES TO THE COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA ON THE
ACCOUNTS OF RASHTRIYA ISPAT NIGAM LIMITED, VISAKHAPATNAM FOR THE YEAR ENDED
31ST MARCH 2006, UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956.
Comment Reply
A. PROFIT & LOSS ACCOUNT
Profit for the year: Rs.1882.69 crore
1. The above amount is understated by Rs.2.37
crore on account of following:
The interest income on Term Deposits at the end of year
(i) Short accountal of interest (Interest earned- is recognized based on the certifications issued by the
Schedule 18) amounting to Rs. 1.02 crore Banks. The Banks would pay interest on maturity as
accrued on term deposits with various banks per the terms. Therefore, there would not be any loss of
upto 31st March 2006. interest.

(ii) Under-valuation of Semi finished/ finished Noted. It will be taken care in future.
goods by Rs.1.78 crore due to not taking into
account the cost of a raw material consumed.

(iii) Over-valuation of damaged / non-moving Noted.

material inventory by Rs.43 lakh.

B. Accounting Policies and Notes to Accounts

(Schedule-28)
2. The fact that raw material (Coal) valued at
Rs.14.02 crore was lying in the custody of
the conversion Agent for more than two years
has not been disclosed in the accounts.
There is no specific disclosure requirement of the item
as per the accounting Standards. However this point is
noted.

3. The State Government of Andhra Pradesh Noted. If the issue is not settled in the year 2006-07,
demanded (December 2005) a sum of Rs.7.57 the fact will be disclosed in the Accounts for the year
crore towards Company's share of expendi- 2006-07.
ture for works relating to Yeleru Water sup-
ply scheme, against which a provision of
Rs.1.93 crore exist in the books. The Com-
pany took up the matter with the State Gov-
ernment for the remaining disputed amount
of Rs.5.64 crore. Pending settlement of the
matter the Company has neither provided the
liability of Rs.5.64 crore nor disclosed the
fact in the accounts

77
Rashtriya Ispat Nigam Ltd.

REVIEW OF ACCOUNTS OF RASHTRIYA ISPAT NIGAM LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2006
BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

(This review of Accounts is prepared without taking into account the comments of C&AG of India under Section 619(4) of the Companies
Act, 1956 and the qualifications of the Statutory Auditors)

1. FINANCIAL POSITION
The table below summarises the financial position of the Company under broad headings for the last three years:
( Rs. in crore )

2003-04 2004-05 2005-06

LIABILITIES
a) Paid-up Capital
i) Government 7827.32 7827.32 7827.32
ii) Others ó ó ó
iii) Share money Pending Allotment ó ó ó
b) Reserves & Surplus
i) Free Reserves & Surplus 0.00 0.00 346.38
ii) Share Premium Account 0.00 0.00 0.00
iii) Capital Reserves ó ó ó
c) Borrowings
i) From Govt. of India ó ó ó
ii) Financial Institutions ó ó ó
iii) Cash Credit 37.17 88.94 88.15
iv) Short term Foreign Currency Loans -- 0.00 369.44
v) Others ó ó ó
vi) Interest Accrued & Due 0.00 0.00 0.00
d) Current Liabilities and Provisions
i) Current Liabilities and Provisions 1156.15 1335.55 1467.61
ii) Provision for Gratuity 79.20 88.61 120.25
e) Deferred Tax Liability 0.00 158.49 316.72
Total 9099.84 9498.91 10535.87

ASSETS
f) Gross Block 8709.72 8763.49 8832.13
g) Less: Cumulative Depreciation 5337.59 6322.18 6753.87
h) Net Block 3372.13 2441.31 2078.26
i) Assets held for disposal 0.03 0.00 0.01
j) Capital Work-in-Progress 25.45 61.07 180.73
k) Investments* 0.00 0.00 0.00
l) Current Assets, Loans & Advances 2726.69 6047.52 8252.00
m) Miscellaneous Expenditure 61.45 43.02 24.87
(to the extent not written-off)
n) Accumulated Loss 2914.09 905.99 0.00
Total 9099.84 9498.91 10535.87
* Investments amounted to Rs.0.03 lakhs and hence are shown as NIL in Crore Rupees.

78
 Annual Report 2005-06

o) Working Capital [k-d(i)-c(vi)] 1570.54 4711.97 6784.39

p) Capital employed (h+o) 4942.67 7153.28 8862.65
q) Net Worth [a+b(i)+b(ii)-m-n] 4851.78 6878.31 8148.83
r) Net worth per rupee of
Paid-up Capital (Rs.)(q/a) 0.62 0.88 1.04
(including Share Money Pending Allotment)

2. RATIO ANALYSIS
Some important financial ratios on the financial health and working of the Company at the end of last three years are as under :
2003-04 2004-05 2005-06

A) Liquidity Ratios :
Current Ratio 2.36 4.53 5.62
(Current Assets to Current Liabilities
& Provisions and Interest accrued &
due but excluding provision for Gratuity) [k/{d(i)+c(vi)}]

B) Debt Net Worth Ratio :

Long Term Debt to Equity 0.00 0.00 0.00
[c (i to iv but excluding short term loans)/q]

C) Profitability Ratios :
a) Profit before tax to
i) Capital Employed (%) 31 32 21
ii) Net Worth (%) 32 33 23
iii) Sales (%) 25 28 22
b) Profit after tax to Equity (%) * 19.77 25.65 16.00
c) Earning per Share (in Rupees) 316.41 410.67 256.12
* including Preference share capital
3. SOURCES AND UTILISATION OF FUNDS
Funds amounting to Rs. 2236.84 crore from internal and external sources were utilised during the year ended 31 st March, 2006 as
given below:
(Rs. in crore)
A) SOURCES OF FUNDS
a) Funds from Operations 1708.80
b) Sale of Fixed Assets 1.16
c) Increase in borrowings 368.65
d) Increase in Deferred Tax Liability 158.23
Total Funds inflow during the year 2236.84

B) UTILISATION OF FUNDS
e) Increase in Working Capital 2072.42
f) Increase in Fixed Assets 164.42
Total funds outflow during the year 2236.84

79
Rashtriya Ispat Nigam Ltd.

4. CAPACITY UTILISATION
The following table indicates the position of capacity utilisation of different production facilities for the last three years :

PRODUCT YEAR Installed Actual Percentage

Capacity Production of Actual
Production to
Installed
ó TONNES ë000ó Capacity

a) Wire Rods 2003-04 850 974 115

2004-05 850 1014 119
2005-06 850 1043 123

b) Light & Medium Merchant 2003-04 710 815 115

Products - Bar Mill 2004-05 710 858 121
2005-06 710 873 123

c) Saleable Billets 2003-04 246 224 91

2004-05 246 137 56
2005-06 246 110 45

d) Medium Merchant & 2003-04 850 993 117

Structural Mill 2004-05 850 1014 119
2005-06 850 1058 124

e) Pig Iron 2003-04 556 439 79

2004-05 556 273 49
2005-06 556 439 79

f) Granulated Slag 2003-04 1440 1569 109

2004-05 1440 1514 105
2005-06 1440 1578 110

g) Coke Ovens 2003-04 186 150 81

By-Products 2004-05 186 145 78
2005-06 186 152 82

80
 Annual Report 2005-06

5. WORKING RESULTS
The Company started Commercial Production in 1990-91. The following table indicates the position of Sales and Profit/Loss(-)
for the last three years:
(Rs. in crore)

2003-04 2004-05 2005-06

Sales 6169.09 8181.34 8482.44

Profit/Loss (-) before Tax 1547.19 2253.77 1889.51
Profit/Loss (-) after Tax 1547.19 2008.09 1252.37

6. INVENTORIES
The following table indicates the position of inventory at the end of last three years:
( Rs. in crore)

2003-04 2004-05 2005-06

Raw Materials 185.69 440.12 470.61

Stores & Spares including Scrap 292.89 277.04 273.54
Semi Finished/Finished Goods 227.76 538.15 472.30
Total 706.34 1255.31 1216.45

The stock of raw materials in terms of number of months consumption increased from 1.09 in 2003-04 to 1.75 in 2004-05 and decreased
to 1.58 in 2005-06.

7. SUNDRY DEBTORS VIS-¿-VIS SALES :

The following table indicates the value of Sundry Debtors and Sales for the last three years:
( Rs. in crore)
Particulars As on As on As on
31-3-2004 31-3-2005 31-3-2006

SUNDRY DEBTORS :
Considered Good 85.62 49.30 165.65
Considered Doubtful 20.85 20.28 19.37
Total 106.47 69.58 185.02

Sales 6169.09 8181.34 8482.44

Percentage of Debtors to Sales 1.73 0.85 2.18

Sd/-
( S.B. Pillay )
Principal Accountant General

Place : Hyderabad
Date : 28.07.2006

81
Rashtriya Ispat Nigam Ltd.

Annexure - A

MEASURES TAKEN FOR CONSERVATION OF ENERGY DURING THE YEAR 2005-06

A. Sp. Energy consumption reduced from 6.14 Gcal/t LS in 2004-05 to 6.08 Gcal/tLS in 2005-06 due
to various energy initiatives taken during the year and the production unit wise details are given
below.

1 Sp. Heat consumption in Coke Oven decreased from 641 M.Cal/t DCC in 2004-05 to
629 M Cal/t DCC in 2005-06 by optimization of cross wall temperature in Batteries.

2 Sp. Heat consumption in Blast Furnace decreased from 511 M.Cal/t HM in 2004-05 to
482 M Cal/t HM in 2005-06 by optimization of combustion in BF stoves.

3. Sp. Heat consumption in SMS decreased from 38 M.Cal/t LS in 2004-05 to 35 M Cal/t LS in 2005-
06 by optimization of heating time in Ladle Preparation Bay and Continuous Casting Department.

4. Sp. Heat consumption in Billet Mill decreased from 492M.Cal/t Blooms in 2004-05 to
491 M Cal/t Blooms in 2005-06 by improving rolling rate.

5. Sp. Heat consumption in WRM decreased from 255 M.Cal/t Billets in 2004-05 to243 M Cal/t Billets
in 2005-06 by optimization of Calorific Value and pressure of mixed gas.

6. Sp. Heat consumption in MMSM decreased from 359 M.Cal/t Blooms in 2004-05 to
344 M Cal/t Blooms in 2005-06 by maintaining proper thermal regime.

B. OTHER ACHIEVEMENTS
1. LD gas recovery plant
Total Volume of LD gas recovered 363.56 MNCum

2. Waste Heat recovery at

a) Back Pressure Turbine Station
Total Power recovered 106889 MWH
b) Gas Expansion Turbine Station
Total Power recovered 91664 MWH

82
 Annual Report 2005-06

C. FOREIGN EXCHANGE EARNINGS & OUTFLOW :

Foreign Exchange Inflow Rs. 443.51 crores
Foreign Exchange Outflow Rs. 1867.30 crores

ACTIVITIES RELATING TO EXPORTS 2005-06

A total of 305436 MT of Iron & Steel materials were exported in 2005-06 as against 165109 MT in 2004-
05, registering a growth of 85%. In terms of value, a total of Rs.449.81 crores of materials were
exported as against Rs.255.14 crores in 2004-05 registering a growth of 76.30%. VSP also exported
688427 MT of BFG Slag in 2005-06 as against 597438 MT in 2004-05, registering a growth of 15.23%.

VSP also focused on export sales to the neighboring countries, Sri Lanka, Bangladesh & Nepal. A total
of 61413 MT of steel materials were exported to Sri Lanka in 2005-06 as against 15683 MT during the
last year. In Nepal, a total of 21894 MT of steel materials were sold as against 5080 MT during the
last year. A huge growth was registered in the export sales to Bangladesh by selling 68397 MT in 2005-
06 as against 4803 MT during the last year.

VSP also sold 15370 MT of steel materials to South East Asian countries in 2005-06 as against 6135
MT during 2004-05.

VSP also sold 20787 MT of WR Coils to the quality conscious market in USA in 2005-06 as against
10147 MT during 2004-05, thereby establishing its superior quality parameters of WRC.

The plan of exports for the year 2006-07 is to achieve a sale of 4.80 lakh MT of Iron and Steel products,
an increase of 57.37% over the export sales of 2005-06.

83
Rashtriya Ispat Nigam Ltd.

FORM - ‘A’
FORM FOR DISCLOURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
A. Power and fuel consumption 2005-06

1) Electricity
a) Purchased ( Net Import from AP TRANSCO) 40389 MWH
b) Gross exported 57549 MWH
c) Imported 97938 MWH
d) Own generation
- Through steam turbine / generator 1784062 MWH
- Through BPTs 106889 MWH
- Through GETS 91664 MWH

2) Coal Consumption

Boiler Coal 1576624 t

Imported Coking coal 2358502 t
US Coal 25773 t
Imported Soft Coking coal 386749 t
Indigenous Medium coking coal 540084 t

3) Furnace oil Consumption 1049 Kl

4) HSD Consumption 2887 Kl

5) BF Coke purchased 325683 t

B. Consumption per unit of production:

Item Unit Per tonne of liquid steel production

Imported electricity kwh 15.96

Furnace oil lt 0.18
HSD lt 0.02
Coking coal
Imported Coking coal kgs 540.30
US Coal kgs 5.86
Imported Soft Coking coal kgs 88.36
Indigenous Medium coking coal kgs 123.83
Boiler coal kgs 284.76
BF Coke purchased kgs 79.63
Liquid steel production 3602754 t

84
 Annual Report 2005-06

FORM - ‘B’
FORM FOR DISCLOSURE OF PARTICULARS WITH
RESPECT TO TECHNOLOGY ABSORPTION

RESEARCH & DEVELOPMENT (R & D) :

1. Specific Areas in which R&D was carried out by the Company:
a. Effective usage of solid wastes
b. Study on usage of pellets, sponge iron as alternative raw material in the Blast Furnace
c. Study on Low Temperature Thermal Desalination with Pilot Plant
d. Study on effect of moisture and granulometry on bulk density of charge coal
e. Strengthening of charge pad of converter with stainless steel fibre reinforced refractory to increase its
life
f. Improvement of blowing process parameters by varying geometry of lance tip
g. Upgradation of NDT method of rolling mill rolls for efficient roll utilization
h. Study on scale loss during reheating in rolling Mills
i. Development of new grades.

2. Benefits derived as a result of above R&D :

A brief note on R&D activities taken up during Apr'05-Mar'06 with highlights is given at Enclosure-1.

3. Future plan of action :

a. Developing in-house pilot oven and testing the carbonization properties of new coals to optimize the
blends

b. Study the techno-economics of briquetting of SMS, GCP sludge and charging into the converter for
better waste utilization

c. In-house development of a pot sintering unit and testing the effect of different raw materials and addi-
tives on sinter properties

d. Study the effect of discharge temperature, soaking time, deformation in various stands and rate of
cooling on generation and propagation of cracks in billets and rounds of chromium steel and spring
steel

4. Expenditure on R&D

a) Capital Rs. 1.83 Crores

b) Revenue Rs. 8.63 Crores
c) Total Rs.10.46 Crores
R&D expenditure as a 0.124%
%age of turnover

85
Rashtriya Ispat Nigam Ltd.
BENEFITS ACCRUED AS A RESULT OF R&D DURING 2005-06
1. DIFFERENT PROJECTS UNDERTAKEN AND RESULTS ACHIEVED ARE AS UNDER:
Activity
a Effective usage of solid wastes
b. Study on usage of pellets,
sponge iron as alternative raw
material in the Blast Furnace
c. Low Temperature Thermal
Desalination - Pilot Plant
studies
d. Study on effect of moisture
and granulometry on bulk
density of charge coal.
e. Study on scale loss during
reheating in rolling mills
2. The new grades of steel developed during the year are as follows:
Enclosure -1 to Form B
Results achieved
Briquettes were made from GCP sludge, Mill scale etc with
combination of various binders. Attained sufficient physical &
chemical properties of briquettes to charge in SMS converter.
Blast Furnace accepted pellets and sponge iron as alternative
raw material with the following results/advantages -
a. Increase in the Blast intake
b. Increase in the production
c. Decrease in Coke rate
A pilot unit for Low Thermal Desalination was erected at TPP
cooling towers with the help of National Institute of Ocean
Technology (NIOT) to utilize the thermal energy of the return
hot water from boilers. Potable water produced from sea water
is near to DM water quality.
Results -
Desalinated Water quality:
Before After
TDS (ppm) 35000 120
Salinity 55 0
• Yield obtained - 1.03%
The influence on charge bulk density by both moisture content
and size was studied at VSP using a bulk density test apparatus
made from in house design. The study on bulk density vis-à-vis
charge moisture and granulometry provided important information
regarding role of these production factors on oven productivity
and operating regime prevailing inside the oven.
Experiments were conducted and the results revealed that use
of lime coating and ESPON-HF coating reduce the scale loss
in the reheating furnaces.
SAE 1006, SAE 10B21M,
SAE 15B25M, SUP 11A,
35C8, CO2,
SAE 1040
86
 GKPH 2549422

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