COMPANY BACKGROUND AND ITS HISTORY

The Precursor
SAIL traces its origin to the formative years of an emerging nation - India. After
independence the builders of modern India worked with a vision - to lay the infrastructure
for rapid industrialisaton of the country. The steel sector was to propel the economic
growth. Hindustan Steel Private Limited was set up on January 19, 1954.

Expanding Horizon (1959-1973)

Hindustan Steel (HSL) was initially designed to manage only one plant that was coming
up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by
the Iron and Steel Ministry. From April 1957, the supervision and control of these two
steel plants were also transferred to Hindustan Steel. The registered office was originally
in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December
1959.

The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of
December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January
1962 after commissioning of the Wheel and Axle plant. The crude steel production of
HSL went up from .158 MT (1959-60) to 1.6 MT. A new steel company, Bokaro Steel
Limited, was incorporated in January 1964 to construct and operate the steel plant at
Bokaro.The second phase of Bhilai Steel Plant was completed in September 1967 after
commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the
Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur
Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS.
Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT
at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in
1968-69 and subsequently to 4MT in 1972-73.

Holding Company
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presented to the Parliament on December 2,
1972. On this basis the concept of creating a holding company to manage inputs and
outputs under one umbrella was mooted. This led to the formation of Steel Authority of
India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of
Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai,
Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel
Plant. In 1978 SAIL was restructured as an operating company.
Since its inception, SAIL has been instrumental in laying a sound infrastructure for the
industrial development of the country. Besides, it has immensely contributed to the
development of technical and managerial expertise. It has triggered the secondary and
tertiary waves of economic growth by continuously providing the inputs for the
consuming industry.
ABOUT THE COMPANY

Steel Authority of India Limited (SAIL) (NSE: SAIL) is one of the largest state-owned
steel makers in India. With a turnover of 48,681 crore (US$10.56 billion), the company
is among the top five highest profit earning corporate of the country. It is a public sector
undertaking which trades publicly in the market is largely owned by Government of India
and acts like an operating company. Incorporated on January 24, 1973, SAIL has more
than 131,910 employees. The company's current chairman is C.S Verma. With an annual
production of 13.5 million metric tons, SAIL is the 16th largest steel producer in the
world.
Major plants owned by SAIL are located at Bhilai, Bokaro, Durgapur, Rourkela, Burnpur
(near Asansol) and Salem. SAIL is a public sector company, owned and operated by the
Government of India. According to a recent survey, SAIL is one of India's fastest
growing Public Sector Units.

Vision
To be a respected world Class Corporation and the leader in Indian steel business in
quality, productivity, profitability and customer satisfaction.

Management of the Company

Sl. Name
Address
No

Chairman
Steel Authority of India
1. Shri C S Verma
Limited,
New Delhi-110003
 Director (Finance)
Shri Soiles Steel Authority of India
2.
Bhattacharya Limited,
New Delhi-110003

5-B Friends Colony

Prof Deepak
3. (West),
Nayyar
New Delhi- 110065

House no. 23, Sector-14

A,
4. Shri AK Goswami
Noida- 201301 (Uttar
Pradesh)

Director (Personnel)
Steel Authority of India
5. Shri BB Singh
Limited.
New Delhi-110003

Additional Secretary &

Financial Adviser to the
Shri S Machendra Government of India
6.
Nathan Ministry of Steel, Udyog
Bhawan,
New Delhi-110011
 Studio #205, IHDP,
Dr. Jagdish
7. Plot # 7, Sector-127,
Khattar
Noida-201301.

Dept of Mining
Engineering, Indian
Prof. Subrata
8. School of Mines
Chaudhuri
Dhanbad-826004,
Jharkhand.

Director (Commercial)
Shri Shuman Steel Authority of India
9.
Mukherjee Limited.
New Delhi-110003

A-1/139, 1st Floor,

10. Shri PC Jha Safdarjung Enclave,
New Delhi - 110029

B-204, Koyala Vihar

11. Shri PK Sengupta Vasundhara, VIP Road,
Kolkata - 700052
Steel Authority of India Ltd balance sheet

Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006 Mar 2005
Rs.Cr Rs.Cr Rs.Cr Rs.Cr Rs.Cr Rs.Cr
SOURCES OF FUNDS :
Share Capital 4130.40 4130.40 4130.40 4130.40 4130.40 4130.40
Reserves Total 29186.30 24017.82 18933.17 13182.75 8471.01 6176.25
Equity Share Warrants 0.00 0.00 0.00 0.00 0.00 0.00
Equity Application Money 0.00 0.00 0.00 0.00 0.00 0.00
Total Shareholders Funds 33316.70 28148.22 23063.57 17313.15 12601.41 10306.6
Secured Loans 7755.90 1497.64 925.31 1556.39 1122.16 1603.98
Unsecured Loans 8755.35 6065.19 2119.93 2624.13 3175.46 4165.81
Total Debt 16511.25 7562.83 3045.24 4180.52 4297.62 5769.79
Total Liabilities 49827.95 35711.05 26108.81 21493.67 16899.03 16076.4
APPLICATION OF FUNDS :
Gross Block 35396.19 32852.42 30922.73 29912.71 29360.46 28043.4
Less : Accumulated Depreciation 21780.91 20547.03 19351.42 18315.00 17198.32 15558.4
Less:Impairment of Assets 0.00 0.00 0.00 0.00 0.00 0.00
Net Block 13615.28 12305.39 11571.31 11597.71 12162.14 12485.0
Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00
Capital Work in Progress 15026.13 6549.71 2389.55 1198.52 757.94 366.48
Producing Properties 0.00 0.00 0.00 0.00 0.00 0.00
Investments 668.83 652.70 538.20 513.79 292.00 606.71
Current Assets, Loans & Advances
Inventories 9192.67 10320.31 7018.10 6814.10 6371.66 4220.69
Sundry Debtors 3493.90 3027.77 3048.12 2314.75 1881.73 1908.45
Cash and Bank 22436.37 18264.67 13759.44 9609.83 6172.64 6132.12
Loans and Advances 4123.43 3222.14 2652.83 1802.57 1366.40 2072.37
Total Current Assets 39246.37 34834.89 26478.49 20541.25 15792.43 14333.6
Less : Current Liabilities and Provisions
Current Liabilities 10936.86 7688.67 6400.92 5397.77 5191.70 4780.67
Provisions 6376.88 9609.76 6958.70 5676.32 5645.14 5385.40
Total Current Liabilities 17313.74 17298.43 13359.62 11074.09 10836.84 10166.0
Net Current Assets 21932.63 17536.46 13118.87 9467.16 4955.59 4167.56
Miscellaneous Expenses not written off 0.00 0.00 59.48 129.15 215.82 294.93
Deferred Tax Assets 1031.89 1162.39 991.39 1295.13 1405.07 1187.74
Deferred Tax Liability 2446.81 2495.60 2559.99 2707.79 2889.53 3032.05
Net Deferred Tax -1414.92 -1333.21 -1568.60 -1412.66 -1484.46 -1844.31
Total Assets 49827.95 35711.05 26108.81 21493.67 16899.03 16076.4
Contingent Liabilities 4714.26 4199.70 3739.82 3635.18 3730.45 4056.90

Steel Authority of India Ltd profit and loss account

Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006 Mar 2005
Rs.Cr Rs.Cr Rs.Cr Rs.Cr Rs.Cr Rs.Cr
INCOME :
Sales Turnover 43903.56 48721.71 45985.36 39481.80 32686.89 32023.8
Excise Duty 3383.32 5534.05 6217.18 5393.82 4605.48 3455.12
Net Sales 40520.24 43187.66 39768.18 34087.98 28081.41 28568.7
Other Income 2822.59 2585.09 1953.73 1716.46 1151.99 1072.69
Stock Adjustments -1161.01 1934.53 436.28 285.21 1131.31 367.72
Total Income 42181.82 47707.28 42158.19 36089.65 30364.71 30009.1
EXPENDITURE :
Raw Materials 17342.97 20206.77 13935.27 13272.37 12391.12 9358.92
Power & Fuel Cost 3413.90 3232.74 2860.75 2609.50 2526.97 2227.62
Employee Cost 5416.86 8561.14 7917.52 5083.23 4156.28 3811.91
Other Manufacturing Expenses 4480.20 4764.05 4353.43 3730.51 3268.56 2607.77
Selling and Administration Expenses 1520.42 1494.99 1478.62 1375.59 1467.62 1167.04
Miscellaneous Expenses 689.46 1154.17 461.17 497.12 525.41 613.33
Less: Pre-operative Expenses Capitalised 2553.27 2652.64 1803.72 1444.90 1352.05 921.71
Total Expenditure 30310.54 36761.22 29203.04 25123.42 22983.91 18864.8
Operating Profit 11871.28 10946.06 12955.15 10966.23 7380.80 11144.2
Interest 402.01 259.41 250.94 332.13 467.76 651.98
Gross Profit 11469.27 10686.65 12704.21 10634.10 6913.04 10492.3
Depreciation 1337.24 1287.77 1235.48 1211.48 1207.30 1126.95
Profit Before Tax 10132.03 9398.88 11468.73 9422.62 5705.74 9365.35
Tax 3295.94 3414.90 3743.11 3265.65 1913.81 704.07
Fringe Benefit tax 0.00 52.24 32.90 26.48 24.33 0.00
Deferred Tax 81.72 -238.66 155.94 -71.80 -245.37 1844.31
Reported Net Profit 6754.37 6170.40 7536.78 6202.29 4012.97 6816.97
Extraordinary Items 19.68 -23.16 239.52 371.79 38.69 -4.72
Adjusted Net Profit 6734.69 6193.56 7297.26 5830.50 3974.28 6821.69
Adjst. below Net Profit 0.00 0.00 0.00 -14.50 -910.27 0.00
P & L Balance brought forward 20345.05 16019.23 10811.65 6698.84 4758.77 22.69
Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00
Appropriations 2325.13 1844.58 2470.77 2074.98 1162.63 2080.89
P & L Balance carried down 24774.29 20345.05 15877.66 10811.65 6698.84 4758.77
Dividend 1363.03 1073.90 1528.25 1280.42 826.08 1363.03
Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00
Equity Dividend % 33.00 26.00 37.00 31.00 20.00 33.00
Earnings Per Share-Unit Curr 15.80 14.50 17.62 14.54 9.44 16.06
Earnings Per Share(Adj)-Unit Curr 15.80 14.50 17.62 14.54 9.44 16.06
Book Value-Unit Curr 80.66 68.15 55.84 41.92 30.51 24.95

COMPOSITION OF ASSETS FIXED ASSETS:

Fixed asset, also known as a non-current asset or as property, plant, and equipment
(PP&E), is a term used in accounting for assets and property which cannot easily be
converted into cash. This can be compared with current assets such as cash or bank
accounts, which are described as liquid assets. In most cases, only tangible assets are
referred to as fixed. Moreover, a fixed/non-current asset can also be defined as an asset
not directly sold to a firm's consumers/end-users. As an example, a baking firm's current
assets would be its inventory (in this case, flour, yeast, etc.), the value of sales owed to
the firm via credit (i.e. debtors or accounts receivable), cash held in the bank, etc. Its non-
current assets would be the oven used to bake bread, motor vehicles used to transport
deliveries, cash registers used to handle cash payments, etc. Each aforementioned non-
current asset is not sold directly to consumers. These are items of value which the
organization has bought and will use for an extended period of time; fixed assets
normally include items such as land and buildings, motor vehicles, furniture, office
equipment, computers, fixtures and fittings, and plant and machinery. These often receive
favorable tax treatment (depreciation allowance) over short-term assets. According to
International Accounting Standard (IAS) 16, Fixed Assets are assets whose future
economic benefit is probable to flow into the entity, whose cost can be measured reliably.
It is pertinent to note that the cost of a fixed asset is its purchase price, including import
duties and other deductible trade discounts and rebates. In addition, cost attributable to
bringing and installing the asset in its needed location and the initial estimate of
dismantling and removing the item if they are eventually no longer needed on the
location. The primary objective of a business entity is to make profit and increase the
wealth of its owners. In the attainment of this objective it is required that the management
will exercise due care and diligence in applying the basic accounting concept of
“Matching Concept”. Matching concept is simply matching the expenses of a period
against the revenues of the same period. The use of assets in the generation of revenue is
usually more than a year- that is long term. It is therefore obligatory that in order to
accurately determine the net income or profit for a period depreciation is charged on the
total value of asset that contributed to the revenue for the period in consideration and
charge against the same revenue of the same period. This is essential in the prudent
reporting of the net revenue for the entity in the period. Net book value of an asset is
basically the difference between the historical cost of that asset and it associated
depreciation. From the foregoing, it is apparent that in order to report a true and fair
position of the financial jurisprudence of an entity it is relatable to record and report the
value of fixed assets at its net book value. Apart from the fact that it is enshrined in
Standard Accounting Statement (SAS) 3 and IAS 16 that value of asset should be carried
at the net book value, it is the best way of consciously presenting the value of assets to
the owners of the business and potential investor.

FIXED ASSETS OF SAIL ARE LISTED BELOW:

PLANTS, MINES, OTHERS

Land (including cost of development)

-Freehold Land
-Leasehold Land Buildings
Railway Lines & Sidings
Plant & Machinery
-Steel Plant
-Others Furniture & Fittings
Vehicles Roads, Bridges & Culverts Mining Rights (Intangible) Miscellaneous Articles
B. SOCIAL FACILITIES
Land (including cost of development)
-Freehold Land
-Leasehold
Land Buildings
Plant & Machinery
-Others Water Supply & Sewerage
EDP Equipment's Software (Intangible)
Miscellaneous Articles
Sub-total 'B' Figures for the previous year

C. ASSETS RETIRED FROM ACTIVE USE

Unserviceable / Obsolete Assets

D. CAPITAL EXPENDITURE NOT REPRESENTED BY ASSETS

Total ('A'+'B'+'C'+'D')

CURRENT ASSETS

In accounting, a current asset is an asset on the balance sheet which is expected to be sold
or otherwise used up in the near future, usually within one year, or one operating cycle
whichever is longer. Typical current assets include cash, cash equivalents, accounts
receivable, inventory, the portion of prepaid accounts which will be used within a year,
and short-term investments. Operating cycle is the average time that is required to go
from cash to cash in producing revenues. On the balance sheet, assets will typically be
classified into current assets and long-term assets. The current ratio is calculated by
dividing total current assets by total current liabilities. It is frequently used as an indicator
of a company's liquidity, its ability to meet short-term obligations.

Current Assets = Cash +Bank + Debtors + Bills Receivable + Short Term Investment +
Inventory + Prepaid Expenses.

CURRENT ASSETS FOR SAIL ARE LISTED BELOW:

Semi-finished/Finished Products
Stores & Spares Raw Materials
Total Inventories
Sundry Debtors
Gross Debtors
Less: Provision for Doubtful debts
Net Debtors
Cash & Bank Balances
Other Current Assets
Loans & Advances

Following is a table showing composition of total asset under two heads

“current asset” and “fixed assets”:

2006 2007 2008 2009 2010

Current 17384 20379 26318 34676 39081
asset
Fixed 12162 11598 11571 12305 13615
asset
Total 29546 31977 37889 46780 52696
asset
%curre 58.84 63.73 69.46 73.77 74.16
nt asset
%fixed 41.16 36.27 30.54 26.22 25.83
asset

Ratios
Liquidity Ratios measure the firm’s ability to meet current obligations. The failure of a
company to meet its obligations due to lack of sufficient liquidity will result in poor
credit worthiness, loss of creditor’s confidence.

Liquidity ratios
Current ratio 2.05 1.82 1.73 1.59 1.23
Current ratio (inc. st loans) 1.60 1.61 1.68 1.52 1.17
Quick ratio 1.53 1.24 1.23 1.01 0.72
Inventory turnover ratio 6.02 5.86 8.62 7.50 6.57

Dividend policies
Dividend policies are the regulations and guidelines that companies develop and
implement as the means of arranging to make dividend payments to shareholders.
Establishing a specific dividend policy is to the advantage of both the company and the
shareholder. In order to make sure the policy is workable, a company should develop a
viable policy and then run this policy through a number of test scenarios in order to
determine what impact the dividend policy would have on the operation of the business.

In many cases, companies choose to explicitly state the provisions within the dividend
policy. This is definitely to the advantage of the shareholder, as a well defined policy
makes it much easier to project the amount of payout profits generated for the period
under consideration and thus be able to determine the size of the dividends that will be
issued. When the dividend policy is well defined and documented, it is easy for the
shareholder to obtain a written copy and thus be fully informed as to how the policy
works.

Dividends Declared

Announcement
Effective Date Dividend Type Dividend (%) Remarks
Date
28/12/2010 18/01/2011 Interim 12%
28/05/2010 29/07/2010 Final 17%
12/01/2010 01/02/2010 Interim 16%
28/05/2009 30/07/2009 Final 13%
14/01/2009 30/01/2009 Interim 13%
16/05/2008 31/07/2008 Final 18% AGM
03/01/2008 01/02/2008 Interim 19%
21/05/2007 08/08/2007 Final 15%
16/01/2007 01/02/2007 Interim 16%
25/05/2006 10/08/2006 Final 7.5% AGM
10/01/2006 01/02/2006 Interim 12.5%
26/05/2005 11/08/2005 Final 18% AGM
10/01/2005 31/01/2005 Interim 15%
11/07/1997 Final 2.5%

Dividend
Year Month Dividend (%)
2010 Dec 12
2010 May 17
2010 Jan 16
2009 May 13
2009 Jan 13
2008 May 18
2008 Jan 19
2007 May 15
Year Month Dividend (%)
2007 Jan 16
2006 May 8
2006 Jan 13
2005 May 18
2005 Jan 15
1997 Jul 3