Fin Result 0506 English_pdf

8/8/2019 Fin Result 0506 English_pdf

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24th Annual Report

2005-06

Create a bold path,Conquer the future

Rashtriya Ispat Nigam LimiteVisakhapatnam Steel Plant

(A Govt. of India Undertaking)


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Glimpses of Hon'ble Prime Minister Dr. Manmohan Singhs visit to RINL on 20th May, 2006.


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Annual Report 2005-06

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Rashtriya Ispat Nigam Ltd.

VISIONTo 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; toproduce steel at international standards of cost and quality; and to

meet the aspirations of the stakeholders.

OBJECTIVESm 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 VALUESWith 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.


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P.K. BISHNOIDirector (Finance)

K.A. NAIDUDirector (Personnel)

H.S. CHHATWALDirector (Commercial)

P.K. MISRADirector (Operations)

A.K. RATHAS & FA, Min. of Steel & Director

G. ELIASJt. Secy, Min. of Steel & Director

R.S.S.L.N. BHASKARUDUDirector

Dr. V.K. BHALLADirector

J.S. MATHURDirector

Y. SIVA SAGAR RAOChairman cum Managing Director

P. MOHAN RAOCompany Secretary

(As at the 24th Annual General Meeting held on 25th September, 2006)

BOARD OF DIRECTORS


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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 IndiaBank of Baroda

Canara Bank

UCO Bank

Andhra Bank

State Bank of Hyderabad

Allahabad Bank

Indian Overseas Bank

HSBC Bank Ltd.

IDBI Bank Ltd.

Indian Bank

Auditors

M/s Rao & Kumar

Chartered Accountants

Visakhapatnam

CONTENTS

Chairmans Statement 9

Directors Report 13

Highlights 38

Audited Accounts 43

Auditors Report 70

Comments of C&AG 76

Review of Accounts by C&AG 78


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Foundation Stone Laying Ceremony for Expansion of RINL

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


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Glimpses of Honble Minister of State (Steel) Dr. Akhilesh Dass visit to Vizag Steel

India Steel Summit

(L to R) Sri Ram Vilas Paswan, Honble Union Minister for Steel,

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


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Awards Galore

National Energy Conservation Award

Best Industrial Productivity Award

Best CEO Award

Golden Peacock Award for

Environmental Management


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CHAIRMANS 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 Honble 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 Honble 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 andcommitment, 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.


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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 Honble 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.


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On the energy front, in line with the vision of our Honble 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 companys 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


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- 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 fromthe 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 Honble Minister of Steel, Chemicals & Fertilizers, the Honble 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 Honble 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 Companys flag flying high at all times.

( Y Siva Sagar Rao )

Place : Visakhapatnam Date : 25th September, 2006


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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 ofcorporate 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

DIRECTORS REPORT

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 securethe 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

24th AGM held at Vizag on 25th September, 2006.


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Rs.250 crores by way of Sales Tax to different State

Governments. With the current year's net profit, all the

accumulated losses of the company since its inception

have been fully wiped out. With this, RINL became a

real profit making company and it has, therefore, been

classified as a MINIRATNA CATEGORY-I PSE by Govt.

of India vide Ministry of Steel's letter No.1(9)2004-VSP

dated 25th May, 2006. It is indeed a great journey

from a time when the company has reported to BIFR

its erosion of Net Worth and now conferred with

MINIRATNA status.

The Company was conferred National Award for

Excellency in Cost Reduction instituted by the Institute

of Cost and Works Accountants of India (ICWAI) for

the year 2005 in recognition of its efforts for effective

implementation of Cost and Management Accounting

tools, quality of cost accounting records, optimum

utilization of resources, waste management, etc. by

the Ministry of Company Affairs, Government of India.

This is one more feather in the cap of RINL. The

Finance and Accounts Department of the Company

secured the ISO 9001 Certificate, which is unique in

Public Sector Steel Plants in the Country.

The summary of Financial performance is as follows:

Rs. In Crores

Description 2005-06 2004-05

Turnover (Gross) 8482.44 8181.34

Total Income 7761.59 7646.15

Total expenditure 5392.54 4375.16

Gross margin 2369.04 3270.99

Interest charges 31.24 11.11

Cash Profit 2337.80 3259.88

Depreciation 448.29 447.25

Profit before exceptional items 1889.51 2812.63

Depreciation of earlier years - 558.87

Profit before tax 1889.51 2253.76

Provision for tax

Current Tax 474.97 87.18

Fringe benefit Tax 3.94 -

Deferred Tax 158.23 158.49

Net Profit 1252.37 2008.09

Accumulated loss (-) / profit (+) (+) 346.38 (-) 905.99

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


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SALES AND MARKETING REVIEW

Marketing Performance during April 2005 - March

2006

As against the MOU target of Rs. 8793 Crs. for theyear 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 :

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

furnace slag to Bangladesh, Malaysia and USA.

Pig iron recorded sales of 3.07 lakh tons in Domestic

market during 2005-06 with a growth of 156% over

2004-05 (1.20 lakh tons).

The focus during the year was on the development of

actual user base in domestic market. Around 60% of

the steel was supplied to the actual user segment in2005-06.

As a step towards increasing customer satisfaction

levels, settlement of customer quality complaints

through e-system has been developed and

implemented on VSP's intranet. This will eliminate

Volume in '000 t

Target Actual Ful-mnt

Domestic

Pig Iron 383 307 80% 120 155%

Steel 3078 3105 101% 3064 1%

Export

Pig Iron 33 104 315% 110 -5%

Steel 47 202 429% 56 263%

Total

Pig Iron 416 411 99% 230 79%

Steel 3125 3307 106% 3119 6%

Va lue in Rs.Crs.

Domestic * 8643 8039.9 93% 7932.5 1%

Export 150 442.6 295% 248.8 78%

Total 8793 8482 96% 8181 4%* Domestic includes Iron, Steel & By Products

ITEM2005-06

2004-05 Growth

VSP Products - Wire RodsWire Rod Coils in process


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delay in processing of quality complaints and provide

an efficient mechanism for settlement of quality

complaints.

SALES TURNOVER DURING THE LAST3 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


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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

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.

Converter Continuous Casting


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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.

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 ManganeseMine 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 uniformityin 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

Blast Furnace


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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 ofCoal. 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.

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 withRINL/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 wereconducted 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.

RINL signs MOU with MOIL Safety at workplace


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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.

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 dozenprojects 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

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profits. The major projects under implementation

include the following :

VSP CERTIFIED TO ISO 14001 : 2004

VSP was first certified to ISO 14001 : 1996 in May

2001 and recertified on 15.12.2004. However, the

standard was upgraded to ISO 14001 : 2004 and VSP

took rapid strides to comply with the new standard.

VSP was audited for its EMS from 6th to 8th February

2006 and having complied with all the new

requirements, VSP has been certified by M/s BVQI for

certification to ISO 14001 : 2004.

Sl. Projects under Estimated Target

No. implementation Cost date(Rs crore)

1 Pulverised coal dust 181.00 31st December

injection in BF - 1 , 2 2008

2 High temperature membrane 7.16 31st December

bag filters in CRMP : 2006

FK - 1, 2, 3, 4

3 Replace compressors 1.50 31st December

working on 'ODS' with 2006

non-ODS

(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.)

HEALTH CARE

Computerization of Visakha Steel General Hospital

services was completed successfully and brought into

usage for all Out-Patient activities starting fromRegistration, Consultation, Clinical Laboratory,

Radiological Investigations, Retrieval of Investigation

Reports and Dispensing of Drugs from the Dispensary

through Online (Computerized Operational Activities)

from 21st January, 2006.

The Second Phase of Computerization is under

process and efforts have been initiated for obtaining

ISO Certification for VSGH.

Implementation of "5-S" initially in Medical Stores,

Admn. Office, Operation Theatre was taken up and

presently they are in "2-S" & "3-S" stage.

The total no. of in-Patients treated was 4,407 and total

no. of out-Patients treated was 4,72,436.

While extending medical care round the clock in VSGH,

to have expert opinion and second opinion in certain

cases, and where specialists do no exist in particular

disciplines, visiting consultants are visiting VSGH from

Visakhapatnam City and extending their services on

weekly basis.

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With the help of social service associations like Lions

Club, Rotary Club, free eye camps are being conducted

in the VSP's peripheral areas and also Steel Doctors

Trust is being conducting general cases.

In addition to all the above services, to create

enthusiasm and awareness among the VSP employees

and other Public in and around Ukkunagaram, number

of other programmes like :

Conducting statutory Health checkup to al l

Employees at OHSRC

Organizing First Aid Training to Executives and

Non-executives(9287 employees covered) at

OHSRC

Apart from Patient Care, conducting CMEs -

Internal and External for updating the knowledge

of doctors

Weekly once conducting the De-addiction clinic in

VSGH

Patients awareness programmes were also conducted

periodically.

An amount of Rs.22 Lakhs was realized by the

treatment of Non-Entitled Cases at VSGH.

HUMAN RESOURCE MANAGEMENT REVIEW

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

SNo Particulars Total

1.0 No. of Programmes

1.1.1 Inhouse Programmes 106

1.1.2 External Nominations 354

Grand Total 460

2.0 No. of Employees

2.1.0 Executives



Sub-Total 3665

2.2.0 Non-Executives



Sub-Total 998

Grand Total 4663

Employees were nominated to participate in

programmes at XLRI, Jamshedpur; ASCI, Hyderabad;NITIE, Mumbai; IIM Bangalore; CII-Godrej Insitute;

ESCI, Hyderabad etc. Besides these, a unique

programme titled "Improving Effectiveness of Stockyard

Sri KA Naidu, Director (Personnel) receiving

HR Excellence Award


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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 twoyears, 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

"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. 65projects 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

Launching of RINADS Inauguration of Jashuva park at Township by

CMD-RINL


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achieving 11.46 man days of training per employee

per year.

2. Thrust is given to departmental refresher

programmes covering over 10,000 employeeswhich 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, inapplication 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.

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 programmesincluding 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.

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ii) COMPREHENSIVE MANAGERIAL COURSE FOR

JOs and JSOs: 34, 198 and 192 candidates have

attended Phase-I, Phase-II & Phase-III programmes

respectively (altogether 424 including outstation

candidates).

iii) APPRENTICESHIP TRAINING: For the first time,

VSP hosted the Centralised walk-in-interviews for

selection of various apprentices from different

organizations in liaison with the apprenticeship

authorities.

77 Trade Apprentices, 153 Graduate Apprentices

and 138 Technician Apprentices, 87 Technician

(Vocational) Apprentices were given training.

iv) VACATIONAL TRAINING, COLLABORATIVE

TRAINING AND GUIDED VISITS TO THE PLANT:

As part of social obligation, VSP has been

extending training/project work facilities to students

of educational institutions. 3021 students were

given training.

v) TRAINING FOR OTHER ORGANISATIONS: 24

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.

vii) LIBRARY: 919 books, 3113 journals, 16 e-journals,

126 Indian and International Standards were

procured.

227 Management and Technical Articles, 3 Nos. ofLibrary bulletins were circulated to senior

executives and Directors.

Centralized Air Condition with false ceiling has been

done.

viii) REVENUE GENERATION :

a) Training charges received Rs. 5, 89, 220/-

from (JSWL, JSPL etc.)

b) Amount received for Rs. 29,36,050/-

utilization of facilities atT&DC and Hostel and

Vacational Training

Total Rs. 35,25,270/-

PERSONNEL DEPARTMENT

1. MANPOWER :

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.

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2. REPRESENTATION OF SCHEDULED

CASTES AND SCHEDULED TRIBES:

I. The group-wise representation of SCs and STs

in the Company as on 31-03-2006 is as follows:

GROUP TOTAL S C S C (%) S T S T (%)

STRENGTH

A 4637 766 16.52 211 4.55

B 1576 272 17.26 104 6.60

C 8666 1467 16.93 599 6.91

D 1653 231 13.97 117 7.08

D" 42 14 33.33 1 2.38

(Sweepers) 16574 2750 16.59 1032 6.23

II. POSTS FILLED BY RECRUITMENT :

Class of Total No. of vacancies No. of

posts no. of reserved candidates

vacancies for (out of appointed

filled Col.1)

SC ST SC ST

(1) (2) (3) (4) (5)

A 177 31 36 25 27B - - - - -

C 1 - - - -

D 1 - - - -

3. WELFARE ACTIVITIES

A) Welfare of SCs & STs:

a) Three parks in the Steel Township have been

named after Dr. B R Ambedkar, Babu Jagjeevan

Ram and Ekalavya and a separate Library-cum-

Reading Room was named after Dr B R Ambedkar.

b) Jayanthi Celebrations of Dr. Babu Jagjeevan Ram

and Bharat Ratna Dr. B R Ambedkar were

observed by garlanding functions followed by

commemoration meetings, which were organized

at Babu Jagjeevan Ram Children's Park, Sector-5

on 05.04.2005 and at Dr. Ambedkar Park,

Sector-6 on 14.04.2005 respectively.

c) A Sports and Cultural Festival was organized

during the month of April 2005 at CWC,

Ukkunagaram in connection with Bharat Ratna

Dr. B R Ambedkar Jayanthi Celebrations.

d) In connection with Vardhanthi Ceremony of Bharat

Ratna Dr. B R Ambedkar, Garlanding Function

was organized on 06.12.2005 at Dr. Ambedkar

Park, Sector-6.

e) RINL/VSP has increased the number of

Scholarships from 3 Nos. to 6 Nos. per year

exclusively for the children of SC/ST employees

from the academic year 2005-06. Under this

Scholarship Scheme, 2 Scholarships of Rs.1,500/

- (Rupees One Thousand and Five Hundred only)

per month and 2 Scholarships of Rs.750/- (Rupees

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seven hundred and (Fifty only) per month and 2

Scholarships of Rs.400/- (Rupees four hundred

only) per month will be awarded to the meritorious

students among SC/STs every year.

f) Besides, since the year 1991, coinciding with the

Birth Centenary Celebrations of Bharat Ratna Dr.

B R Ambedkar, Annual Merit Cash Awards for

students belonging to SC/ST communities were

introduced. Based on the pass results of the Xth/

SSC Examination held during March 2005, 10 nos.

of Cash Merit Awards of Rs.500/- (Rupees five

hundred only) each and 9 nos. of Rs.250/-

(Rupees two hundred and fifty only) each were

given to the 1st and 2nd rank students of SC/ST

communities respectively, from each of the schoolsof VSP.

B) General :

a) RINL/VSP has increased the number of

Scholarships from 11 Nos. to 30 Nos. and also

enhanced the scholarship amount for the children

of VSP employees from the academic year 2005-

06 under 3 categories of its Scholarship Schemes

i.e. General, SC/ST and Physically Handicapped.

b) RINL/VSP has introduced the new schemes forgrant of Dr.Sarvepalli Radhakrishnan Merit Cash

Awards @ Rs.5,000/- each (one time) for the

children of VSP employees who secure admission

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

Monthly Benefit to the dependents of the deceased

employees/Medically Unfit cases.

4 INDUSTRIAL RELATIONS :

The overall IR situation at RINL/VSP during the

year 2005-06 was peaceful and helped in

sustaining the targeted levels of production. Despite

of hectic activities on account of Union Elections,

the Employees' Unions demand on work related

issues, various agitational activities by Regular and

Contract Labour unions, normal and safe levels of

production could be maintained due to proactive &

preventive IR measures adopted by Personnel

Department and maintenance of harmonious

Industrial Relations.

I. SETTLEMENTS :

a) Night Shift Allowance :

Record Notes of discussion was signed on

20.09.2005 between the representatives of

Management and Visakha Steel Employees

Congress (INTUC)-Recognised Union on the

revision of 'Night Shift Allowance' to both

Executives & Non-Executives employees w.e.f.

01-01-2005.

b) MoU on Bonus/Ex-gratia

Following the persistent demand for payment

of Bonus/Exgratia by the Unions, a

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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 includingRecognised 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

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 MOU on Bonus Ex-gratia to Employees


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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 ofgrievances at Shop/Section/ Department/Plant/

Company level and settling the grievances of

employees expeditiously within stipulated time so

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 VillagesChildren of Balabadi celebrate Independence Day


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Description Number of Grievances

Received Disposed Off Pending

Staff Grievances 109 109 NIL

Public Grievances 03 03 NIL

TOWN ADMINISTRATION DEPARTMENT

The exchange deed in respect of transfer of 1400

Acres of VSP land to Govt. of Andhra Pradesh for

development of Port at Gangavaram was signed by

the representatives of Ministry of Steel, Union of India

and Govt of Andhra Pradesh and the same has been

registered at Sub-Registrar's Office, Gajuwaka.

60 nos. of quarters (30 nos. A Type and 30 Nos. B

Type) constructed by M/s HSCL on the land allotted

by VSP on licence basis has been taken over by VSP

on payment of reasonable compensation to be

assessed by VSP. The quarters have been utilized for

VSP's purposes.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

RINL has given special emphasis on CSR with the

following;

i) The Policy on Corporate Social Responsibility has

been formulated.

ii) RINL has filed its application for membership inUNO Global Compact and the same has been

admitted.

iii) CSR Calendar of Events for implementation during

the year 2005-06 has been prepared and the same

has been implemented.

iv) RINL Formation Day on 18.02.2006 was celebrated

with emphasis on Health, Community Development,

Environment Enrichment and CulturalEfflorescence.

The following programmes were organized on this

occasion:

a) RINL Health Run involving more than 2500

employees, people from various walks of life

b) Handing over specially designed bus to

Arunodaya Special School for mentally retarded

children

c) Launching of Agro-forestry, Plantation of bio-

diesel plant Jetropha to cover a total of 300

Hectares; out of this, 50 Hectares during 2006-

07.

d) Distribution of JN Awards, Echo Awards,

Shrujan Vikas Awards followed by a variety

Cultural programme. All CWCs in Rehabilitation

Centres and Mines also celebrated RINL

Formation Day.

v) RINL CSR Policy has adopted a four-fold strategyof RINL as a Promoter, as a Partner, as a Facilitator

and as a Consultant to promote CSR activities.

vi) Some of CSR activities taken up :

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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. Theseprogrammes inter-alia includes workshop on

Mother & child Care, De-addiction, Life Style

Management, Self-employment & Self Help

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 heldat 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-

Quality Circle Nite celebrations


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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 suggest ions 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

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, boxculvert 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 Model of Main gate - Expansion


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34


10 Employee Training 9.9 11.1 Training Days

/ Employee

11 Lost Time Injury 6.6 1.6 Frequency / 1

Frequency Rate million HoursWorked

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 recyclingat 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

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,

Chairman On-Line


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35

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, doubtsclarified 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

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 anycitizen, 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.

Vigilance Awareness Programmes


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36


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, 1956along 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 receivedremuneration 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,

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 materialdepartures;

(ii) that the directors had selected such accounting

policies and applied themconsistently 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 accountingrecords 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


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37

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-officialDirector 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.

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 beaccorded 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.


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38


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

BYEAR 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

HIGHLIGHTS


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39

Year


42/90

40



43/90


41

Rs

.inCrores

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

1990-9

1

245.1

5

35.5

0

244.7

1

175.2

7

-26.6

9

29.1

4

197.2

3

192.1

3

191.1

2

-477.5

5

-477.5

5

1991-9

2

772.4

4

22.2

0

675.8

3

401.9

4

-69.6

1

53.8

6

449.0

9

437.2

6

509.0

3

-986.9

3

-986.9

3

1992-9

3

1184.8

4

147.6

3

1245.1

0

680.1

7

-151.6

0

76.5

2

340.0

7

197.5

6

758.0

4

-568.2

9

-568.2

9

1993-94

1751.0

4

156.0

3

1526.4

4

875.4

160.2

1

102.5

339.8

4

346.8

6

654.9

2

-572.6

6

-572.6

6

1994-95

2208.5

7

50.2

2

2091.7

9

1058.5

3

-199.6

7

128.4

6

414.6

5

365.9

7

855.1

3

-364.2

8

-364.2

8

1995-9

6

3038.5

7

115.9

2

2809.7

6

1310.6

9

-50.4

5

154.6

6

430.1

2

407.1

1

1106.6

3

-204.2

7

-204.2

7

1996-97

3135.2

9

78.4

0

2888.0

8

1384.5

6

-114.8

3

174.4

2

421.8

7

430.4

8

1163.1

3

-245.9

4

-245.9

4

1997-9

8

3070.9

3

96.9

6

2750.9

2

1405.3

1

-118.2

7

210

438.5

2

198.2

3

1210.8

3

-176.7

3

-176.7

3

1998-9

9

2761.1

3

197.0

6

2181.6

9

1219.6

6

317.6

1

255.0

4

111.2

7

360.8

8

1150.9

1

-457.1

8

-457.1

8

1999-0

0

2972.6

0

154.7

9

2636.1

1

1394.3

2

-95.1

0

272.4

9

431.7

9

382.1

6

1303.4

1

-561.6

8

-561.6

8

2000-0

1

3435.9

6

179.7

9

3048.8

8

1443.6

8

-103.3

8

407.6

5

444.6

0

350.5

9

1363.9

1

-291.3

0

-291.3

0

2001-0

2

4080.9

5

152.9

2

3395.7

4

1602.1

62.3

7

375.0

2

474.9

8

290.5

2

1504.0

3

-75.1

5

-75.1

5

2002-0

3

5058.2

5

167.6

3

4107.1

6

1805.6

5

281.0

9

405.9

9

454.6

1

123.1

9

1634.6

6

520.6

9

520.6

9

2003-04

6169.0

9

209.2

3

5398.2

5

2050.4

3

25.6

1

481.1

5

476.4

7

49.0

5

1748.4

2

1547.1

9

1547.1

9

2004-05

8181.3

4

286.3

3

7583.8

0

3019.6

4

-310.3

9

490.2

4

1006.1

2

11.1

1

1997.1

8

2253.7

7

2008.0

9

2005-0

6

8482.4

4

455.8

8

7412.5

7

3584.6

2

65.8

5

572.3

4

448.2

9

31.2

4

2346.4

7

1889.5

1

1252.3

7

SIXT

EENYEARSDIGEST

F

INANCIALRESULTS


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42


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 onBlock 31st March

Documents

Fin Result 0506 English_pdf