Steel Authority of India : Annual Financials 2021

Steel Authority of India Limited
Consolidated Cash Flow Statement		(` Crore)
	For the period ended	For the Year ended 31st
	30th September, 2020	March, 2020
	(Unaudited)	(Audited)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit/(Loss) before tax	(1,270.00)	3,301.58
Adjustments for:
Depreciation and amortisation expenses	1,963.48	3,755.73
Loss/(Gain) on disposal of fixed assets (net)	-	49.43
Interest income	(53.62)	(143.48)
Finance costs	1,585.01	3,387.02
Unrealised Loss/(Gain) on foreign exchange fluctuations	21.65	99.74
Loss/(Gain) on sale of non-current investments	-	(0.59)
Bad debts and provision for doubtful advances/receivables	36.21	76.12
Other provisions	30.18	212.93
Share of profit from joint ventures	(122.56)	(194.32)
Unclaimed balances and excess provisions written back	(82.75)	(407.24)
Operating Profit/(Loss) before working capital changes	2,107.60	10,134.00
Changes in assets and liabilities:
Trade receivables	575.55	(4,416.24)
Loans, other financial assets and other assets	(346.54)	(207.86)
Trade payable	523.50	(898.99)
Other financial liabilities, other liabilities and provisions	448.58	(623.80)
Inventories	3,111.33	(4,511.27)
Cash flow from operating activities post working capital changes	6,420.02	(524.16)
Income tax paid (net)	12.80	(93.51)
Net cash flow from operating activities (A)	6,432.82	(617.67)
B CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment (including capital	(1,277.19)	(4,754.36)
work-in-progress) and intangibles
Proceeds from sale/disposal of property, plant & equipment	44.99	373.07
Purchase of current and non-current investments	8.10	6.74
Movement in fixed deposits (net)	31.29	(32.37)
Interest received	53.62	143.48
Dividend received	-	2.92
Net cash flows/(used) in investing activities (B)	(1,139.19)	(4,260.52)

1. CASH FLOWS FROM FINANCING ACTIVITIES

	Proceeds from long-term borrowings (net)	(6,036.12)	2,897.82
	Proceeds from short-term borrowings (net)	2,546.85	6,009.56
	Finance cost paid	(1,879.32)	(3,653.78)
	Dividend paid (including tax)	-	(250.45)
	Net cash flows/(used) in financing activities (C)	(5,368.59)	5,003.15
D	Increase in cash and cash equivalents (A+B+C)	(74.96)	124.96
	Cash and cash equivalents at the beginning of the period	190.54	65.58
	Cash and cash equivalents at the end of the period	115.58	190.54

The amendments to Ind AS 7 - Statement of Cash Flows requires the entity to provide disclosures that enables users of financial statements to evaluate changes in liabilities arising from financial activities, including both changes arising from cash flows and non cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in Balance Sheet for liabilities arising from financial activities, to meet the disclosure requirement. The required disclosure is given below. There is no other impact on the financial statements due to this amendment.

The cash flow statement has been prepared using the Indirect Method as set out in Ind AS-7, Statement of Cash Flows. The accompanying notes are an integral part of these consolidated financial statements.

STEEL AUTHORITY OF INDIA LIMITED

CIN: L27109DL1973GO1006454

REGISTERED OFFICE: ISPAT BHAWAN, LODI ROAD, NEW DELHI - 110 003

Tel: [phone], Fax: [phone], E-mail: [e-mail], Website: www.sail.co.in

Statement of Consolidated Unaudited Financial Results for the Quarter and Half Year ended 30th September, 2020

₹ Crore unless stated otherwise

				CONSOLIDATED
			Quarter ended		Half Year ended	Year ended
Sl. No.	Particulars	30th September,	30th June,	30th September,	30th September,	30th September,	31st March,
2020	2020	2019	2020	2019	2020
		Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Audited
1	Income
	(a) Revenue from operations	16925.49	9067.52	14128.96	25993.01	28949.85	61664.16
	(b) Other income	172.08	278.69	153.21	450.77	330.52	905.79
	Total Income	17097.57	9346.21	14282.17	26443.78	29280.37	62569.95
2	Expenses
	a) Cost of materials consumed	5796.63	4378.25	7423.74	10174.88	15589.91	29371.73
	b) Changes in inventories of finished goods, work-in-progress	2944.98	(331.25)	(1043.67)	2613.73	(2422.80)	(5577.63)
	and by-products
	c) Employee benefits expense	2042.66	1996.82	1963.50	4039.48	4013.60	8797.32
	d) Finance costs	720.37	886.29	940.35	1606.66	1728.75	3486.76
	e) Depreciation and amortisation expenses	990.00	973.48	901.27	1963.48	1773.88	3755.73
	f) Other expenses	4238.99	3421.51	4617.91	7660.50	9012.83	18857.02
	Total Expenses	16733.63	11325.10	14803.10	28058.73	29696.17	58690.93
3	Profit / (Loss) before Exceptional items, share of net Profit
	/ (Loss) of investment accounted for using equity method	363.94	(1978.89)	(520.93)	(1614.95)	(415.80)	3879.02
	and Tax
	Share of Profit / (Loss) in investments accounted for using	73.90	48.66	67.95	122.56	113.28	194.32
	equity method
	Profit / (Loss) before Exceptional items and Tax	437.84	(1930.23)	(452.98)	(1492.39)	(302.52)	4073.34
	Add / (Less): Exceptional items	222.39	-	-	222.39	-	(771.76)
4	Profit / (Loss) before Tax	660.23	(1930.23)	(452.98)	(1270.00)	(302.52)	3301.58
	Less: Tax expense
	Current tax	0.73	1.50	1.68	2.23	4.19	229.79
	Deferred tax	222.98	(705.26)	(168.74)	(482.28)	(123.47)	1,099.52
	MAT credit	-	-	-	-	-	(214.75)
	Current tax (earlier years)	-	-	-	-	-	66.31
5	Net Profit / (Loss) for the period	436.52	(1226.47)	(285.92)	(789.95)	(183.24)	2120.71
	Other Comprehensive Income (OCI)
A	(i) Items that will not be reclassified to profit or loss	2.03	2.22	5.51	4.25	6.57	(179.90)
	(ii) Income tax relating to items that will not be reclassified to	(0.94)	(0.52)	(1.28)	(1.46)	(1.53)	62.48
	profit or loss
B	(i) Items that will be reclassified to profit or loss	(44.42)	(40.35)	33.61	(84.77)	43.22	143.45
	(ii) Income tax relating to items that will be reclassified to profit	-	-	-	-	-	-
	or loss
6	Total Comprehensive Income / (Loss) for the period	393.19	(1265.12)	(248.08)	(871.93)	(134.98)	2146.74
7	Paid-up Equity Share Capital (Face Value of ₹ 10/- each)	4130.53	4130.53	4130.53	4130.53	4130.53	4130.53
8	Other equity excluding revaluation reserve				36507.78	35101.68	37379.70
9	Earnings per equity share (of ₹10/- each) (not annualised)
	1. Basic (₹)	1.06	(2.97)	(0.69)	(1.91)	(0.44)	5.13
	2. Diluted (₹)	1.06	(2.97)	(0.69)	(1.91)	(0.44)	5.13
Note: Refer accompanying notes to the financial results.

Notes to Consolidated Unaudited Financial Results:

1. The above results have been reviewed and recommended by the Audit Committee and approved by the Board of Directors in their meetings held on 6th November, 2020.
2. The financial results have been reviewed by the Statutory Auditors/Practicing Chartered Accountants, as required under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
3. The consolidated unaudited financial results include the result of 1 (One) subsidiary which have not been reviewed/audited by their auditors and does not include results of 1 (One) subsidiary as the same is under liquidation. The consolidated unaudited financial results also includes the share of net profit/ loss after tax and total comprehensive income /loss of 1 (One) associate and 11 (Eleven) jointly controlled entities which have not been reviewed/ audited by their auditors and does not include the share of net profit/(loss) after tax and share of total comprehensive income of 5 (Five) jointly controlled entities including 4 (four) entities under closure, as the same are not available.

These financial results are not material and impact not significant to the Consolidated Unaudited Financial Results.

5. In respect of Steel Authority of India Limited (the Parent)

a. The COVID-19 pandemic outbreak and measures to curtail it has caused significant disturbances and slow down of economic activities. Consequently, the Company's manufacturing operations had to be scaled down during the quarter ended 30th June, 2020. Following the resumption of operations during the later part of the first quarter, the Company has operated at normal capacity in quarter ended 30th September, 2020.

The Company has considered the possible impact of COVID-19 in preparation of the above results. The impact of the global health pandemic may be different from that estimated as at the date of approval of these financial results and the Company will continue to closely monitor any material changes to the future economic conditions.

b. Sales include sale to Government Agencies recognised on provisional contract prices during the half year ended 30th September 2020: `3721.78 crore (corresponding half year of previous year: `3163.36 crore) and cumulatively upto 30th September, 2020: `11771.50 crore (upto the corresponding half year of previous year : `8772.92 crore).

1. The Company has valued estimated 6.14 lakh tonnes of extractable iron and steel scrap
   embedded in BF Slag and LD Slag at Bhilai, Bokaro, Rourkela and Durgapur Steel Plants as at 30th September, 2020 at ₹624.09 crore (corresponding inventory as on 31st March, 2020 estimated quantity of 6.59 lakh tonnes valued at ₹683.33 crore) and an estimated
   5.16 million tonnes of Slime containing iron ore fines at Dalli mines, Bhilai Steel Plant of SAIL as at 30th September 2020 at ₹216.31 crore (corresponding inventory as on 31st March, 2020 estimated at 5.60 million tonnes valued at ₹234.92 crore).Valuation of such inventory were considered by the Company in line with IND AS 2.

However, Comptroller and Auditor General of India in its supplementary audit, commented on recognition of such stocks as inventory in terms of para 6 of Ind AS 2.

In view of difference of opinion on the interpretation of IND AS 2 in respect of recognition of such stock as inventory, the Company has referred the matters to Expert

Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) to obtain an opinion on such issue. Pending receipt of opinion from EAC of ICAI, the Company continues to recognise such stocks as inventory and value the same as at 30th September, 2020.

1. Pursuant to introduction of Section 115BAA under the Taxation Laws (Amendment) Act, 2019, Company has an irreversible option of shifting to a lower tax rate along with consequent reduction in certain tax incentives including lapse of the accumulated MAT credit and carry forward of additional depreciation. The Company has not yet exercised
   this option and continues to recognize the taxes on income for the quarter and half year ended 30th September, 2020 as per the earlier provisions pending final decision to be taken before filing of the Income Tax Return by due date (extended upto 31.01.2021).
2. The Nine Judges Constitutional Bench of Hon'ble Supreme Court, vide its judgment dated 11.11.2016, upheld the Constitutional validity of Entry Tax Act enacted by various
   States and laid down principles/tests for consideration for deciding the specific issues related to levy of Entry Tax. As on 30th September, 2020, the matters are pending before
   Regular Benches of Hon'ble Supreme Court/Jurisdictional High Courts/assigned authorities in this regard. Pending decision by the other Courts, disputed Entry Tax liabilities of `1675.91 crore have been treated by the Company as Contingent Liability (as on 31st March, 2020 - `1668.35 crore).
3. Hon'ble Supreme Court dismissed the SLP by the Company in respect of dispute with
   Damodar Valley Corporation(DVC) related to provisional tariff petition of electricity charges for 2009-14 vide order dated 18th January, 2017, keeping the question of law open. The Order of Central Electricity Regulatory Commission (CERC) dt.7/8/2013 related to Tariff of 2009-14 against Petition No.275/GT/2012 has been challenged before Appellate Tribunal for Electricity (APTEL) (Appeal No.18 of 2014) in which the Company has also intervened and the order of APTEL is pending. Further, in respect of the civil appeal filed by Damodar Valley Corporation (DVC) pertaining to tariff of Financial Year 2004-05 to 2008-09 against the order of the Appellate Tribunal for
   Electricity (APTEL), the Hon'ble Supreme Court of India dismissed the appeal vide its
   Order dated 3rd December, 2018 which can also have effect on future tariff orders in view of consideration of certain parameters for fixation of tariff. Accordingly, State Electricity Regulatory Commission (SERC) will finalise the retail tariff as directed by APTEL, the financial implication of which can only be ascertained after the Tariff fixation by SERC. For the State of Jharkhand where the dispute of `587.72 crore arises, DVC has not filed its retail tariff petition before the Jharkhand State Electricity Commission on a plea that the issue of 'True-up value' and other related issues are still pending before the Ld. APTEl
   in Appeal No.163/2017. Pending fixation of such Electricity Tariffs, disputed demands of DVC of `587.72 crore upto 30th September, 2020 (upto 31st March, 2020, `587.72 crore)
   has been treated as Contingent Liability. Against the said claims, the entire amount has been paid to DVC and retained as advance. Further from 1st April, 2017 onwards full invoice value is being paid and charged to revenue.
4. The Auditors, in their Audit Report on the Consolidated Financial Statements for the Year ended 31st March, 2020, have brought out that

The Company has not provided for:

1. Demand for Entry tax in various states amounting to `1,668.35 crore as on 31st March, 2020 and

1. Amount paid to Damodar Valley Corporation ("DVC") in earlier years against bills raised for supply of power and retained as advance to DVC by Bokaro Steel Plant amounting to `587.72 crore as on 31st March, 2020.

In respect of item stated at (i), the Company's view is that the Nine Judges Bench of Hon'ble Supreme Court, vide its judgment dated 11th November, 2016, upheld the Constitutional validity of levy of Entry Tax by the States and has laid down principles/tests on levy of Entry Tax Acts in various States. The respective regular benches of the Apex Court would hear the matters as per laid down principles. The West Bengal Finance Act, 2017 has included West Bengal Entry Tax in the jurisdiction of West Bengal Taxation Tribunal. Based on the said amendment, Hon'ble Calcutta High Court has transmitted the Writ Petition of Durgapur Steel Plant, IISCO Steel Plant, Central Marketing Organisation, Alloy Steels Plant and SAIL Growth Works, Kulti, to the West Bengal Taxation Tribunal. Pending decision by the regular benches of the Apex Court on levy of Entry Tax in the States of Chhattisgarh, Odisha, Jharkhand and in respect of the case pending before West Bengal Taxation Tribunal, the Entry Tax demands under dispute have been treated as Contingent Liability.

In respect of item stated at (ii), the Company's view is that on the civil appeal filed by DVC pertaining to tariff of 2004-09 against the Order of the Appellate Tribunal for Electricity (APTEL), the Hon'ble Supreme Court of India dismissed the appeal vide its Order dated 3rd December, 2018. Accordingly, State Electricity Regulatory Commission (SERC) will finalise the retail tariff as directed by APTEL, the financial implication of which can only be ascertained after the Tariff fixation by SERC. For the State of Jharkhand where the dispute of `587.72 crore arises, DVC has not filed its retail tariff petition before the Jharkhand State Electricity Commission on a plea that the issue of 'True-upvalue' and other related issues are still pending before the Ld. APTEL in Appeal No.163/2017. Pending fixation of Electricity Tariffs, disputed claims of DVC of `587.72 crore from FY 2010-11 to FY 2016-17 has been paid and treated as advance. Further, from 1st April, 2017 onwards full invoice value is being paid and charged to revenue.

The disputed demands stated at (i) and (ii) above, contested on valid and bonafide grounds, have been treated as contingent liabilities as it is not probable that present obligations exist as on 30th September, 2020. Therefore, there is no adverse impact on profit for the quarter.

6. The figures for the previous periods have been re-grouped, wherever necessary, so as to conform to the current periods classification.

For and on behalf of Board of Directors

( Amit Sen )

Place: New DelhiDirector (Finance)

Dated: 6th November, 2020