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Notice 02

Corporate Information 08

Chairman’s Statement 10

Performance Highlights 12

Directors’ Report 14

Management Discussion & Analysis 28

Report on Corporate Governance 36

Balance Sheet 40

Profit & Loss Accounts 41

Cash Flow Statement 62

Balance Sheet Abstract 63

Auditors’ Report 64

Comments of Comptroller and Auditor General 70

10 Years at a Glance 72

C O N T E N T S

2 l Hindustan Steelworks Construction Limited

No. HSCL/AGM/48/2012

N O T I C EToAll Members

NOTICE is hereby given that the 48th Annual General Meeting of Hindustan Steelworks Construction Limited will be held at the Company’s Corporate Office at 5/1, Commissariat Road, Hastings, Kolkata- 700 022 on Saturday, the 29th September, 2012 at 2.00 p.m. to transact the following business:

1. To receive, consider and adopt the Report of the Board of Directors for the year ended 31st March, 2012.

2. To receive, consider and adopt the Audited Accounts including the Balance Sheet as at March 31, 2012, the Profit & Loss Account for the year ended on that date along with Auditors’ Report thereon.

SPECIAL BUSINESS:

1. To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution :

“RESOLVED THAT Sri S.B. Mishra, who retires by rotation and is eligible for re-appointment, be and is hereby re-appointed as Non Official Part Time Director of the Company and his period of office will be liable to determination by retirement of Directors by rotation.”

2. To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution :

“RESOLVED THAT pursuant to Section 224(8)(aa) read with Section 619 and all other provisions, if any, of the Companies Act, 1956, read with amendments thereof, the Board of Directors of the Company be and is hereby authorised to fix the remuneration and other terms and conditions, including reimbursement of out of pocket expenses in connection with the audit work, to the Statutory Auditors of the Company as will be appointed by Comptroller and Auditor-General of India for the year 2012-2013.”

By order of the BoardFor Hindustan Steelworks Construction Limited

Sd/-P. C. Gupta

Company SecretaryDated : 10th September, 2012Place : Kolkata

NOTE:

1. A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and vote instead of himself and the proxy need not be a member of the Company.

2. Consent of Shareholder has been obtained to give shorter notice and to circulate Balance Sheet and connected documents, Profit & loss Account, Directors’ report and Auditors’ Report, etc. less than 21 days before the date of meeting, as required under the provisions of Companies Act, 1956.

Hindustan Steelworks Construction LimitedA Government of India Undertaking

3

(EXPLANATORY STATEMENT AS REQUIRED UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956)

ITEM NO. 1

Article 66 of Articles of Association of the Company mentions that all other business transacted at the General Meeting except to receive and consider the Profit & Loss Account, Balance Sheet and the Report of Directors and of the Auditors, and to declare dividends, if any, shall be deemed special business.

In accordance with the Article 96(f) of the Articles of Association of the Company and relevant provisions under Section 255 and 256 of the Companies Act, 1956, one-third of the Non-official part time Directors of the Company are liable to retire by rotation. Such Director shall be eligible for reappointment. Sri S.B. Mishra, Non Official Part Time Director of the Company and retiring by rotation shall be reappointed as the Non Official Part Time Director of the Company. None of the Directors, except Sri S. B. Mishra are interested in the resolution. Directors recommend the resolution as proposed in the Notice for Member’s approval.

ITEM NO.2

As per Section 619 of the Companies Act, 1956, the Statutory Auditors of HSCL, being a Government Company, are appointed by the Comptroller and Auditor General of India (C&AG). The sub-section 8(aa) of Section 224 of the Companies Act, 1956 requires that the remuneration of an auditor appointed under Section 619 of the Companies Act, 1956 shall be fixed by the Company in General meeting or in such manner as the Company in General meeting may determine.

No Statutory Auditors have yet been appointed by the C&AG for the Statutory Audit of the Company for the financial year 2012-2013. Necessary resolution has been placed before the members for authorising the Board of Directors to fix up the remuneration and reimbursement of other out of pocket expenses to the Statutory Auditors of the Company as will be appointed by the C&AG for the financial year 2012-2013. None of the Directors are interested in the resolution. Directors recommend the resolution as proposed in the Notice for Member’s approval.

By order of the BoardFor Hindustan Steelworks Construction Limited

Sd/-P. C. Gupta

Company SecretaryDated : 10th September, 2012Place : Kolkata

Hindustan Steelworks Construction LimitedA Government of India Undertaking


Flyover, Noida


Tower crane, Bhilai

7

Growth has always been the mantra for us at HSCL. Be it building the largest of bridges to the biggest of steel plants, or constructing massive structures to creating the most complex of frameworks. For over four decades Hindustan Steelworks has been the bellwether of progress and foundation of prosperity in the country. Shaping the future of a dynamic and rapidly developing India, it continues to envision and create trendsetting infrastructure across its length and breadth year after year.

And this year, the trend has been no different. With an extraordinary topline growth and a total income figure that’s no less magical, HSCL has yet again proved that the past success has only motivated it to set bigger goals and keep raising the bar. While the figures beat all past records, the company also made remarkable improvements across all other parameters, be it quality of products, increase in market share or rise in brand equity. A sure sign of a leader who is firm footed on the ground and rising sky wards. And today, armed with a progressive outlook, aggressive plans, increased capacity, sound foundation and strong resolve, we are only getting better each day, with every opportunity. While we had a great last year, we are already working towards a greater one.


CORPORATE INFORMATION

Shri Malay ChatterjeeChairman-Cum-Managing Director

Dr. Dalip Singh, IASJt. Secretary to the Govt. of India, Ministry of Steel

Shri Moyukh BhaduriDirector (Finance)

Shri S. B. Mishra, IAS (Retd.)Ex-Chief Secretary, Govt. of Odisha

Mrs. Lalitha Kumar IAS (Retd.)

9

HINDUSTAN STEELWORKS CONSTRUCTION LIMITED(A Government of India Undertaking)

REGISTERED OFFICEP-34A, Gariahat Road (South), Kolkata- 700 031

HEAD OFFICE5/1, Commissariat Road, Hastings, Kolkata- 700 022

NCR Corporate Centre2nd Floor, Core-IV, Scope Minar, Laxmi Nagar, New Delhi-110092

BOARD OF DIRECTORSCHAIRMAN AND MANAGING DIRECTOR

Shri Malay Chatterjee

DIRECTOR (FINANCE)Shri Moyukh Bhaduri (from 13.07.2011)

Shri Abhijit Ghosh( upto 31.05.2011)

DIRECTORSOFFICIAL PART-TIMEDr. Dalip Singh, IAS

Non-Official Part-Time (Independent)Shri S. B. Mishra, IAS(Retd.)

Mrs. Lalitha Kumar, IAS (Retd.)

COMPANY SECRETARYShri P. C.Gupta

AUDITORS1. M/s Sambhu N. De & Co.

Chartered Accountants, 1 B , Old Post Office Street, Emerald House, 3rd Floor,

Kolkata -700001

2. M/s Munshi & BhattacharyaChartered Accountants,

22, North Range, 3rd Floor, Kolkata-17

MAIN BANKERSState Bank of India

Vijaya BankBank of Baroda

Dena BankCorporation Bank

Axis BankIndian BankHDFC BankICICI BankYes Bank


CHAIRMAN’S STATEMENT

THE YEAR IN NUMBERS

The company reported a top line growth of 21.27% during the year, recording a total income of INR 1208.16 Crore. The operational profit also extended itself to INR 76.64 Crore.

Our market share exhibited marked improvement, in the region of 4%. Orders worth INR 1899 Crore were procured in steel as well as in the infrastructure sector spread over most of the regions of the country. The year was also a watershed in terms of an increase in operational efficiency. Earning per employee, a key indicator, increased by a substantial margin of 75.94%; clocking in at INR 2.34 Crore, it underlined the cost effectiveness of our operations.

VENTURING FORWARD

We embarked on several new projects and absolutely new areas of Construction during 2011-12. On the back of our inspiring performances over the past few years, we went forth, confident in our abilities to carry out ventures of varying magnitude, within the country and abroad.

The following is an account of some of the significant projects we undertook during the past 12 months:

• We secured the Implementation of ESIC Paramedical Institution at Gulbarga, Karnataka’ as a PIU. It was valued at INR 334 Crore and is one of the biggest project in HSCL’s Building and Medical Infrastructure portfolio since its inception. It may not be out of place to mention that award of Paramedical Institution is a take out of ESIC’s confidence bestowed on HSCL based on the performance of the I900 Crore project of Medical and Dental College at Gulbarga.

• The Steel business experienced a major boost with 5 medium to high value key packages executed by your company under the capacity expansion programme of Bhilai Steel Plant for over I300 Crore. This was an important development, marking a renewal of trust and faith in our abilities on the part of the Steel Industry.

• In the area of open cast mining also the company resumed its business operation during 2011-12 after a long period of dormancy. Two major packages under SAIL/ISP and CCL were taken up at Ramnagar and Chari at a value ofI130 Crore.

• We undertook the construction of 90 of disaster shelters in South 24 Parganas in West Bengal. The project, classified as a PIU is worth INR 286 Crore and will be carried out in phases under direct supervision of the National Disaster Management Authority. (NDMA)

• As on 1st March, 2012, HSCL holds orders worth I4000 Crore including some orders for which DPR are under prepared. To go with it, we also enjoy considerable market share in the construction industry.

The company is in the process of expanding its business exposure in implementation of rural roads under PMGSY in Tripura and Jharkhand. I315 Crore worth of order for Phase VIII was awarded in Tripura and is under execution at the desired places.

In addition to the above, our foray into international territory with the Low Cost Housing project in Sri Lanka is set to take off under Ministry of External Affairs with the financial assistance of GOI., marking a significant triumph in overseas business, for HSCL has not undertaken such a task of this magnitude and importance in the last two decades.

DEAR SHAREHOLERS,

Another eventful year has passed and it is that time again when we sit down to take stock of the past 12 months. It is a valuable opportunity for us to reflect on our performances, acknowledge our achievements and renew our resolve for yet another promising year.

Coming close on the heels of an exemplary year in the annals of HSCL, 2011-12 was a significant period for all members of the organization. It was important that we didn’t sit on our laurels and continued to march ahead in the quest for excellence. I am extremely pleased to be able to look back and say that we exceeded our expectations in all facets of the infrastructure development of the country.

11

(MALAY CHATTERJEE)Chairman-cum-Managing DirectorDate : 23.08.2012

THE TRYST WITH TECHNOLOGY

We realize the importance of sharing knowledge and expertise in a constantly evolving technology landscape. In order to give ourselves a competitive edge in the market, we have entered into a handful of critical partnerships with domestic and international entities to encash upon each other’s core competency in the field of business operation. These collaborations will help us not only in providing our customers with superior products and better services but create an atmosphere of perpetual innovation and growth in the overall development of the country.

• We signed a MOU with EdCIL for the development of education infrastructure in the country.

• We are being partnered by TPE targetting to penetrate and secure technology base for execution of turnkey projects in integrated steel plants.

• We have tied up with Cimprogetti, an Italian company, which deals in the design and supply of equipment and plants for the lime industry for exploring the possibilities of business propagation by participating in high value tenders.

• The MOU between the Institute for Steel Development & Growth (INSDAG) and HSCL was approved by the Board of Directors for cooperation in design and execution of steel intensive projects in India. We are at present implementing INSDAG building in Kolkata.

• The Togolese Republic have signed an MOU with HSCL for a housing development project in Togo, Western Africa, which will see the company expand its business beyond the sub-continent.

• MOU has been signed with Zarubezhugol, a Russian entity that specializes in Coal Washery and large scale technology sector.

EMPOWERING COMMUNITIES

Hand in hand with our business initiatives, we have pursued the cause of community welfare and rural development. Focusing on infrastructure development in the areas of education and health care, we have undertaken several projects to support communities in need.

• We partnered the NGO Prayasam in their project ONTRACK to develop a leadership institute for the education of adolescents hailing from the slum pockets of West Bengal.

• Tricycles were distributed to the physically handicapped at Vizag.

• One ambulance each donated to Taparia, Udaipur District hospital at Tripura and to Kailasahar District Hospital, North Tripura

CORPORATE GOVERNNACE

• HSCL was rated ‘Excellent’ by DPE in the MOU assessment for the Year 2010-11.

• The company complied with DPE Guidelines in full.

On the 23rd of June, 2012, the company celebrated its 49th year of incorporation. It was a significant milestone, providing all members of the organization with a context to renew their commitment to the company’s vision. We have had a couple of excellent years. Leading up to our 50th, we have the opportunity to create a legacy of sustained brilliance, a legacy that inspires future employees as well as present ones to keep pushing our standards higher, towards greater accomplishments and abrighter future.

The greatest achievement is not to get ahead of others but to surpass yourself.


Total Income Order Booking

2007

-08

2008

-09

2009

-10

2010

-11

2007

-08

2008

-09

2009

-10

526.

18

s in

Cro

re

s in

Cro

re

721.

26

800.

35

2010

-11

996.

30

940

871

1036

1826

2011

-12

1208

.16

2011

-12

1899

PERFORMANCE HIGHLIGHTS

13

Income per Employee Operational Profit

s in

Cro

re

s in

Cro

re

2007

-08

2008

-09

2009

-10

2010

-11

2007

-08

2008

-09

2009

-10

40.2

1

64.6

3

69.0

9

2010

-11

71.2

1

2011

-12

0.36

0.56

0.79

1.33

2.34

2011

-12

86.6

4


II. SECURED ORDERS

The Company secured, high-value, pan-India projects during the fiscal that showcased confidence amongst the diverse customers in your Company’s abilities. The Company secured orders worth R1899.46 Crore, out of which, R248.19 Crore from the steel sector and R1651.27 Crore from other infrastructure sectors.

SIGNIFICANT ORDERS INCLUDE:

i. Project jobs of R100 Crore, which include R35 Cr. Fabrication Erection of CRM Complex at SAIL/BSL and R27 Crore BOF Structural Package of SAIL/RSP under the Capacity Expansion Programme of the Plant.

ii. Operational and maintenance jobs of SAIL/Bokaro, Bhilai and RINL/Vizag for R148 Crore.

iii. Raising of Ash Dyke at BTPS under DVC for R27.50 Crore.

iv. Two open cast mining projects were secured during the year one at Chari mines under CCL for R77.17 Crore and the other one at Ramnagore under ISP for R50.21 Crore.

Significantly, in the year under review, the financial health of the Company improved in all respects. The Company’s turnover showed an up trend. It increased by R 211.86 Crore i.e., 21.26% in 2011-12 compared with 2010-11. Net loss during the year has gone down from R 38.09 Cr. in 2010-11 to R 28.08 Crore in spite of rise in interest on Govt. loan and extraordinary expenditure on account of settlement arbitration cases. Manpower cost of the Company has gone down to R18.71 Crore due to separation of manpower on superannuation. Embargo on recruitment continued during the year.

The Company’s liquidity improved by 31st March, 2012 with cash balance increasing from R291.85 Crore to R333.30 Crore as on 31.3.2012.

Following the Restructuring-cum-Financial Assistance Package, approved by the Government of India in 1999, the Company secured a loan of R518.36 Crore from various banks to fund the Voluntary Retirement Scheme, with the loan’s interest fully subsidized by the Government of India. The Company separated 11,485 employees till 31st March, 2012under VRS.

Dear Shareholders,

Your Directors are pleased to submit the 48th Annual Report of the Company, the audited statement of accounts and the Auditors’ Report together with the comments of the Comptroller and Auditor General of India for the year ended 31st March, 2012.

I. FINANCIAL HIGHLIGHTS: (R in Cr.)

The Company’s three-year financial position is as follows:

Sl.No Particulars 2011-12 2010-11 2009-10

i. Turnover 1208.16 996.30 800.35

ii. Manpower cost 18.71 22.06 18.26

iii. Administrative expenses 33.23 22.79 15.62

iv. Operational profit 86.64 71.21 69.09

v. Retirement benefit 5.02 5.25 18.60

vi. Depreciation 3.36 2.71 2.80

vii. Interest on govt. loan 100.99 99.86 98.34

viii. Other interest & financial charges 1.44 1.78 2.31

ix. Deferred Revenue expenditure 0.00 0.00 1.66

x. Extra-ordinary expenditure 3.94 -- --

xi. Other provision --- -- --

xii. Deferred Tax & FBT (-)0.03 (-)0.30 (-)0.03

xiii. Net Profit/(loss) (28.08) (38.09) (54.59)

DIRECTOR’S REPORT

15

v. SRO at Hubli under EPFO for R18.00 Crore.

vi. Paramedical Institute for ESIC at Gulbarga for R334 Crore.

vii. Flood protection work of River Bagmati, out of the total Project estimate of R1125 Crore, awarded during 2011-12 was R594.80 Crore.

viii. R24.14 Crore DPR has been approved for Aligarh Muslim University Centre at Jangipur in West Bengal in the 1st phase. The total value of the project is estimated at R1200 Crore. The Company is hopeful of securing the entire project during the coming years.

ix. Steel intensive INSDAG building in Kolkata is under execution by HSCL.

x. Rural Road project in Tripura under Phase VIII for R204.37 Crore. Rural Roads under Phase IV, V, VI and VII are already under execution by HSCL.

xi. R17 Crore CSR projects in UP for SAIL, RINL, and NMDC etc.

xii. R40.39 Crore towards services and other facilities for ICMR, Mumbai.

A SECTOR-WISE BREAK-UP OF ORDERS SECUREDDURING 2011-12

(R in Crore)

Steel Sector 248

Infrastructure Sector

Dams & Irrigation 595

Building 613

Roads 226

Power 27

KVS & NVS 06

Mining and other Misc. Projects 184

Total 1651

Total orders secured (R248 Cr.+R1651 Cr.): R1899 Cr.

III. OVERVIEW OF PROJECTS:

Your Company launched projects across sectors like Steel, Power, Railways, Disaster Management, Educational Institutions, Hospitals, Rural and Urban Roads, Opencast Mining and other infrastructure development, establishing its comprehensive credibility across the country. An overview of HSCL’s activities across a wide range of sectors for various clients is given below:

A. STEEL PLANT WORK

Hindustan Steelworks Construction Ltd. (HSCL) was established in 1964, as a construction agency of Government of India under Ministry of Steel, to mobilize indigenous capability for putting up integrated steel plants in the country. The young organization rose to the occasion and successfully met the challenge by bringing together competent human resources and mobilizing a fleet of updated construction equipment. Since then there has been no looking back. In the years that followed, most of the units of almost every major steel plant in India were constructed by HSCL. The Company’s capabilities range from land development to commissioning. During the late nineties and the initial years of the last decade, the steel industry went through a recession. During 2011-12, the project packages secured during the previous year in SAIL Steel Plants and RINL under Capacity Expansion programme progressed well. The Company will continue to striving hard to increase its business volume in steel plants during the coming years. A number of high value tenders submitted in consortium with technology partners for upcoming Capacity Expansion Packages at SAIL Plants at Bokaro and Bhilai are under negotiation.

Till 31.3.2012, the Company has executed about R6056 Crore worth of orders in the Steel Sector since inception.

The Company achieved a Turnover of about R255 Crore in Steel Sector during 2011-12.

BOKARO STEEL PLANT : Starting with the 1st phase i.e., 1.7MT stage work of Bokaro Steel Plant in 1964, your Company took up and successfully commissioned the units coming under 2.5 MT and 4 MT stages. HSCL’s participation in construction of Bokaro Steel Plant was total and comprehensive from soil investigation to commissioning of Coke Oven Batteries, Byproduct Plant, Raw Material Plant, Blast Furnace, Steel Melting Shop, Hot Rolling Mill, Cold Rolling Mill and other Auxiliary facilities including steel and concrete chimneys. It is a matter of pride that the Plant is running to its capacity and to the satisfaction of the client. Subsequent to tapering down of project work, HSCL took up operational and maintenance jobs of Bokaro Steel Plant to support its establishment at the unit. HSCL is permanently maintaining a fleet of modern construction equipment at Bokaro to cater to the needs of the Steel Plant.

The Company carried out the following activities at Bokaro Steel Plant during 2011-12.

Extraction and transportation of ash from ash pond.


Blast furnace, Duburi

17

Sludge removal from sludge compartment and Slag Pitching.

Civil and Structural Package of Boiler 9 under BPSCL.

Expansion and maintenance of ware house.

Fabrication and Erection of New CRM Complex.

Material Handling.

Processing of LD Slag.

Infrastructure facility for SMS III.

Road over bridge project of ISP.

Township services.

Other miscellaneous Operation and Project jobs.

BHILAI STEEL PLANT : HSCL contributed immensely in the 4 MT expansion work of Bhilai Steel Plant. The main units constructed and commissioned by the Company were Plate Mill I&II, Converter Shop, Continuous Casting Shop, Blast Furnace No.7, Coke Oven Battery No.9, Raw Material Plant-II, Benzol Rectification Plant, Auxiliary Shop, Inside Plant Railway work, Wire Rod Mill, Township etc.

HSCL has already completed a number of Packages under the Capacity Expansion Programme of Bhilai Steel Plant. Besides project packages, the Company took up operation and maintenance jobs of the Plant on a regular basis. HSCL’s equipment holding at the unit comes handy to take up any project / operation and emergency jobs without loss of time. The Company has already put its steps forward to secure high value civil and structural packages under Capacity Expansion Programme of Bhilai Steel Plant. A number of medium to high value tenders participated by the Company are expected to be decided during the coming months. The 5 Nos. of civil and structural packages, of BOF & CCP, BRM and URM are under good progress taking into stride the bottlenecks in respect of availability of front drawings etc. in time and in sequence.

HSCL is committed complete the ongoing projects with full customer satisfaction to ensure enhance its business exposure in future.

The Company has built up its competitive capacity by entering into technological tie up with leading players in the field of implementation of Steel Plant projects on turnkey basis. It is expected that securing high value projects under Capacity Expansion programme of SAIL is only a matter of time.

The Company carried out the following activities at Bhilai Steel Plant during 2011-12.

Civil work for BOF & CCP Pkg-(033A) for R111 Cr.

Civil work for Universal Rail Mill Pkg-(052A) for R86 Cr.

Structural work of Universal Rail Mill Pkg-(052B) for R27 Cr.

Civil work for Bar & Rod Mill Pkg (051A-1) for R67 Cr.

Structural work of Bar & Rod Mill Pkg (051A) for R12 Cr.

De silting of 0.5 Lac cum of Iron Ore slime at Hitkasha dam.

Enabling work for expansion Pkg.118 (E).

Civil work for road & culvert pkg.–100-2 for R12 Cr.

Hot repair full wall / partial wall of COB 1 to 8.

Emergency repair of Coke Oven Battery 9.

Civil, Structural work for relocation of Mechanical Repair shop and Quenching Car Repair shop.

Replacement of NB 1200 mm mixed gas pipeline from Mixing Station to Normalising Furnace.

Dismantling and Relocation for 7MT expansion Pkg.118 (B).

Township maintenance and miscellaneous labour intensive repair and revamping jobs.

Vizag Steel Plant : HSCL started its activities at Visakhapatnam Steel Plant during the 1st phase stage with the site leveling work of the entire Plant area. Subsequently, the Company contributed successfully in construction of Blast Furnace 1&2, Raw Material Handling System, Steel Melting Shop Coke Oven & Byproduct Plant. After commissioning of the 1st phase, the Company took up some of the maintenance jobs like hot and cold repair of Coke Oven Batteries and other jobs relating to the plant operation. Under the ongoing 6.3MT expansion programme also, HSCL took up and successfully completed some civil, structural and piling packages. The Company carried out the following activities at Visakhapatnam Steel Plant (RINL) during 2011-12.

Structural steel work of Raw Material Handling Plant.

Structural steel work of Wire Rod Mill.

Piling work for Structural Mill.

Miscellaneous civil work in SMS-II.

Structural Steel and Cladding work of BF3.

Civil work of Coal Handling Plant of Battery No.4.

Structural work of Granulated Conveyor of BF-3.

Running and planned repair of Coke oven Batteries.

Technical assistance for repair of Coke Oven Batteries.

Handling and processing of non-roll able blooms.

Bloom scrap salvage.

Other operational and miscellaneous jobs.

NINL/DUBURI, ODISHA : The 1 MT Blast furnace, constructed and successfully commissioned by HSCL at NINL, Duburi, was unique in nature. It was an old Blast Furnace reconditioned and erected by HSCL along with other Auxiliary Units. The Furnace is running to its capacity and to the satisfaction of the client.


The Company successfully completed the structural work of BOF, GCP & CCP during the year. Some operation and maintenance jobs were carried out at NINL on regular basis.

SALEM STEEL PLANT : HSCL carried out civil and structural work for all the earlier three phases of construction in Salem Steel Plant. The Company constructed the Cold Rolling Mill in the 1st Phase, Z mill in the 2nd Phase and Hot Rolling Mill in the 3rd Phase. In the ongoing expansion programme also the Structural steel & cladding work for CRM Complex and Railway tracks inside the plant have been undertaken and successfully completed by HSCL with full satisfaction of SAIL/SSP.

The Company has already strengthened its establishment at Salem and exploring the possibilities of securing upcoming project and day to day operation and maintenance jobs of the Plant.

B. POWER PLANT WORKS

The Company has executed a number of projects in the Power Sector over the years. The following projects need special mention:

Make up water system of NTPC Super Thermal Power Plant at Simadrih, which involved construction of well and jetty in high seas.

Construction of Unit 3,4,5,6 of (4x500MW) Talcher Super Thermal Power Plant of NTPC.

The main plant and off-site civil works package at NTPC, Unchahar Super Thermal Power Plant.

SG Area civil package and Offsite area civil package at NTPC Vindhyachal Super Thermal Power Project.

SG Area civil package and Main Plant package have been completed at Khalgaon Super Thermal Power Project.

The ash dyke work of Lagoon III A,B,C worth R7.00 Crore has been completed at KSTPP for NTPC.

S.G. Area civil work package at Sipat Super Thermal Power Project, worth R64.29 Crore is in the final stage of completion.

Leveling and Grading work at 2x500MW units Anpara-D Thermal Power Station of UPRUVNL under BHEL forR24 Crore has been completed along with connecting roads.

Construction of Ash Pond for R49 Cr. has been successfully completed. The increased scope of R27 Crore is under progress.

C. DAMS AND IRRIGATION PROJECTS

The Company has a remarkable history in construction of irrigation projects all over the country.

The 350 m long and 101m high concrete dam constructed

at Supa in Karnataka speaks highly about the mechanized construction capability of the Company.

Construction of Chitravathi Balancing Reservoir near Parnapalli, Andhra Pradesh, Icha Dam for Subarnarekha Multipurpose Project, Bihar, Earthen Dam Project at Rajghat for Betwa River Board are also worth mentioning.

RIVER TRAINING PROJECT OF BAGMATI RIVER IN BIHAR

The Company has been executing the mega turnkey ‘River Training project of Bagmati’ in Bihar, on the basis of MOU signed with Water Resources Department, Govt. of Bihar. The cost of the project has presently gone up to R956 Crore and is likely to go beyond R2000 Crore in phases. Till now, work worth R500 Crore has been completed. In this project, HSCL’s involvement includes soil investigation, preparation of DPR, execution and maintenance through the defect liability period. On completion of the stretch of the embankments, sustainable development is evident in the adjoining areas with the elimination of possibilities of inundation during monsoon.

Left and Right embankment work at Jhanjharpur for R32 Crore is progressing as per schedule and work of value R26 Crore has already been completed.

DISASTER MANAGEMENT PROJECT OF RIVER KOSI

It is a matter of enormous pride that Water Resources Department of Govt. of Bihar has conferred Hindustan Steelworks Construction Ltd. with ‘Certificate of Excellence’ for its performance in ‘Construction of Afflux Bundh and Breach Closure at Kusaha (Nepal)’ in connection with Koshi Disaster Management project.

The project was of immense importance for the 30 Lac marooned habitants of the vast areas of Supaul, Madhepura and Saharsha inundated on the banks of river Koshi. The work was completed by HSCL in 23 days against the contractual completion period of 30 days.

Cyclone Shelters in the coastal areas of South 24 Parganas in West Bengal.

Out of the planned 90 Cyclone shelters in the coastal areas of South 24 Parganas in West Bengal, DPRs for 15 have already been approved by NDMA. Work for 7 shelters has been started and progressing as per schedule. Preparation of DPR for the remaining shelters will be taken up after getting clearance from NDMA. The value of the project is expected to be more than R300 Crore.

D. RAILWAY PROJECTS

The Company has diversified in a big way in Railways all over the Country in the recent years. HSCL’s participation in Railway projects involves formation of embankments, construction of minor and major bridges for gauge conversion and laying of new lines, construction of platforms, railway workshops, administrative buildings and other facilities. South

19

NINL Plant at Duburi


Eastern, Chittaranjan Locomotive Works, East Central, South Central and South Western Railways are the major clients of the Company.

The Company’s ongoing Railway projects are as below:

HL Bridge over Ganga River for R4 Crore under ECR

Construction of Bakhtiyarpur flyover of ECR for R5.5 Cr.

Construction of workshop at Samastipur, (ECR), for R22 Crore.

Road work of ECR for R9 Cr.

Earthwork of ECR for R8 Cr.

Construction of new B.G.Line from Kodarma to Ranchi (Reach30) for R17 Cr. for ECR.

Earthwork in connection with Construction of BG line from Kodarma to Ranchi (Reach 25, 27, 21) for R56 Cr. under ECR.

Construction of minor bridges between Hazaribagh and Barkakana (Reach 19&20) for R5.5 Cr.- Work has been completed.

Earth work, minor bridges, etc., to construct a new B.G. line between Barkakana and Hazaribagh (Reach 14) for ECR at R14 Crore. Work has been completed.

Earthwork & Construction of minor bridges for new BG line between Hazaribagh – Barkakana for BG line from Koderma to Ranchi, a project worth R39 Crore.

Earthwork and embankment work between Chandrapura and Rajabera for R10 Cr.

Construction of workshop sheds etc. at Chittaranjan Locomotive works for R24 Cr.

During 2011-12 the Company accomplished a turnover of R47 Cr. from Railway projects.

E. ROADS AND HIGHWAYS

The Company has been an old campaigner in Road Sector business. Starting from Plant and Township Roads for almost all the Steel Plants, HSCL has constructed high value 2nd Hoogly Bridge approach road and flyover in Kolkata, Bhopal Sehore Bypass road in MP, the flyover project at NOIDA etc. Besides these, the two road maintenance projects under World Bank funding between Salem-Karur and Tuticorin in Tamilnadu are worth mentioning. Road work of NH84 from Golambar to Boxer is continuing in good pace at present.

It is a matter of great satisfaction that the Company has also won the prestigious ‘Certificate of Recognition’ awarded by Essar Steel in association with E18 and CNBC TV18 for its contribution in building India’s Infrastructure. The flyover project at NOIDA, which had been completed with high quality standard and before the completion schedule was showcased for the prestigious accolade.

PMGSY PROJECTS

Rural Engineering Departments under different State Governments have taken up construction of new rural roads and up gradation of existing links in phases under Pradhan Mantri Gram Sadak Yojana (PMGSY).The PMGSY is a major initiative under Govt.’s Bharat Nirman Programme. HSCL, being a leading construction Company in the Public Sector, considers it a primary responsibility to participate in the development programme in the remote areas of the country.

The work has been taken up by HSCL as a Project Implementation Unit in phases under Public Works Department of Govt. of Tripura for establishing new connectivity and up gradation of existing roads in rural areas with population densities ranging from 250 to 1000+. The work involves activities from soil testing, survey and construction / up gradation including maintenance of the constructed roads for five years after handing over. HSCL is at present working in two Districts – Dhalai and North District. The summary of the projects under PMGSY is as below:

No. of road links approved by NRRDA 179

No. of roads completed 112

No. of roads where work is in progress 63

Total length 846.118 Km.

Work completed 380.035 Km.

Total value of work R692.51 Cr.

The PMGSY work in two Districts, North and Dhalai of Tripura under five phases Phase IV, V, VI, VII & VIII is going on under strict supervision and adequate security for the working personnel. 113 Nos. of links have already been opened to public. HSCL will take up implementation of road links of 250+ habitations in the next phase.

So far, DPR for 232 Nos. of road links involving 723 Km. of rural roads in 4 districts of Jharkhand for a value of R233 Cr. under PMGSY has been approved by NRRDA. The work is already in good progress. Till March 2012 work worth R129.81Cr. has been completed. The scope of work is expected to go up to 1400 Km. with a cost of about R500 Crore. DPRs for Road Bridges and culverts worth R50 Crore are in the process of approval by NRRDA. Besides this, HSCL is hopeful of securing orders for implementation of rural roads in some more LWE affected districts in Jharkhand.

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The Company has approached NRRDA for nominating HSCL as the PIU for implementation of PMGSY projects in other states also. In Uttarakhand, the Company stands a good chance of being nominated as one of the nodal agencies for implementation of PMGSY projects.

F. EDUCATIONAL INSTITUTIONS, HOSPITALS, COMMERCIAL & RESIDENTIAL COMPLEXES, INDUSTRIAL BUILDINGS AND OTHERS:

1. Educational institutions

KVS & NVS Projects

The Company can take pride for its participation in the field of building infrastructures for spread of education in the country. Kendriya Vidyalaya Samiti and Navodaya Vidyalaya Samity are two of the major clients for whom the Company has been taking up construction of School Buildings including all the allied infrastructures for the last several years. The performance of the Company in this sector has always been outstanding and appreciated by the clients. About 10-12% of the Turnover is generated from these projects every year. During 2011-12, the Company’s business from KVS & NVS was about 6%. The reduction in business is due to the dearth in sanction from Ministry of HRD.

The Company executed projects worth R73 Crore during 2011-

12 for Navodaya and Kendriya Vidyalayas across the states of Jharkhand, Bihar, Delhi, Karnataka, Tamil Nadu, Andhra Pradesh, West Bengal, Orissa, Punjab and UP.

At present the Company has about R170 Crore worth of KVS and NVS orders in hand.

Apart from KVS and NVS, Benaras Hindu University, Pondichery University, Jadavpur University in West Bengal and Central Institute of Higher Tibetan Studies at Beneras also figure in the Company’s clients’ list. The Company has opened up its business exposure with Central University at Sagar in MP and Aligarh Muslim University Centre at Murshidabad in West Bengal. Progress at Sagar is as per schedule. The volume of work will increase in stages.

The work of AMU has just started after remaining on hold due to local disturbances. The volume of work is expected to go beyond R1200 Crore in stages. Besides these, the work of National Law University at Bhubaneswar for a value of R38 Crore has alreadytaken off.

Other Educational Infrastructure Projects

The following are the Company’s ongoing projects inEducation sector.

PMGSY Road, Tripura


Extension of 3 floors of Library Building for Indian Association of Cultivation of Science in Kolkata for R7 Crore. The work has successfully been completed.

Building Infrastructure for Tata Institute of Social Science in Gwahati, The value of the project is expected at R88 Crore in phases.

Construction of Polytechnic at Fulkumari, Udaipur, South Tripura for R15 Crore.

Construction of Sports Stadium for Pondicherry University forR4 Cr.

Construction and modernization of Indo Swiss Training Centre for CSIO at Chandigarh as a PMC. The project cost is expected at R17 Crore. The work is progressing well.

Renovation and addition at Benaras Hindu University for R68 Cr.

Extension of existing Research Hostel, Construction of Graduate & Research Hostel for Institute for Higher Tibetan Studies at Sarnath for R12 Crore. The work is progressing well and further expansion work is expected in future.

Rajdhani College new buildings in two phases for R7Cr.

Construction of Students’ Hostel and renovation of existing infrastructure for R8 Crore for Institute of Minerals & Materials Technology, Bhubaneswar.

2. Medical Complexes

Company’s contribution in building up Hospitals, Health Care Centers and Medical Research Institutes has been remarkable. During the last several years, the Company intensified its activities in this field and achieved a resounding success.

The picturesque building of National Institute of Epidemiology, Chennai, constructed for Indian Council of Medical Research, bears the stamp of modern architecture, quality and perfection.

Apart from Indian Medical Research Institute, the Company has taken up construction of Medical complexes under Department of Health, Government of Tripura, Department of Health, Government of Jharkhand and Society of Applied Microwave Electronics Engineering and Research (SAMEER).

ESIC under Ministry of Labour has oblate emerged as a major customer of the Company. The performance of the Company in implementation of 500 bedded Hospital, Medical and Dental College at Gulbarga for R787 Cr. has been excellent with 3 more Hospitals at Hubli, Davangiri and Mysore and one Auditorium and Nursing College and Hostel at Indira Nagar in Karnataka for more than R150 Crore.

Besides these, R334 Crore Paramedical Institute at Gulbarga for ESIC is another land mark project under execution by the Company, the progress of which is on track. The Company expects to increase its business volume with ESIC in near

future.

Following are the Company’s other ongoing Medical projects:

Construction of one 100-bed hospital at Teliamura, Tripura for R18 Crore.

Construction of three 150-bed district hospitals in Tripura under the Department of Health, Government of Tripura for R70 Crore. The hospitals at Udaypur and Kailashahar have been successfully completed and handed over. The 3rd hospital at Kulai is expected to be completed soon.

Construction of Trauma Center at Dhalai district hospital for R8 Crore is likely to be completed in the near future.

Two projects worth R34 Crore for the National Institute for Research in Reproductive Health/Mumbai in Maharashtra. The value of the project is likely to go up to R100 Cr. Clearance for Phase II work is awaited. The services for Quarantine Building and Monkey Carol and Corncrib are in progress along with other facilities.

A project worth R22 Crore to construct a 150-bed super-specialty hospital for ECR at Patna Junction is in the final stage of completion.

TDRC and International Hostel renovation work, RMRI, Patna- R35 Crore has been completed and handed over.

Construction of 17 Community Health Centers and 1 Sadar Hospitals in different Districts of Jharkhand worth R70 Crore. In spite of facing acute cash crunch, a number of facilities have been handed over to the state Health Department.

Repair and renovation of a number of ESIC health care centres all over the country.

3. Multi-Storied commercial and residential complexes

The Company has a rich credential in construction of Multi-Storied commercial and residential complexes. The journey started with construction of Township for Bokaro Steel Plant. Later on, the Company contributed in building Townships for other SAIL steel plants and at Simahdri, Andhra Pradesh for NTPC.

The four towers of 10 Storied MLA quarters at Chennai stand as a sign of construction excellence of the Company.

The ‘Pouro Bhaban’ in Kolkata for Bidhan Nagar Municipality is another landmark built by the Company.

Administrative Building and Residential Quarters (A, B, C, D type) for MOIL, constructed by HSCL, earned appreciation from the Hon’ble Steel Minister for its quality and timely completion. Scientists Hostel for DRDO at Bawanpally, Disaster Recovery Data Center for HPCL in A.P. also are noteworthy projects completed by the Company. Regional Science Centre–NCSM, Ranchi and Stockyard for MSTC with allied infrastructure facilities have also been completed successfully.

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Following are the Company’s ongoing building projects:

Construction of Handloom Marketing Complex at Janpath, Delhi under Ministry of Textile for R41 Crore. The project is on the verge of handing over to the Ministry of Textile.

Pilgrimage centre at Sikkim, a project worth R110 Crore has been completed and handed over for opening to the visitors.

Cultural Centre at Yangang, a project worth R50 Crore is in the final stage of completion.

Construction of Office – cum training Center at Jaidev Vihar for SIDBI for R10 Cr.

Construction of Residential Flats for SIDBI at Lucknow.

Construction of Cyclone Shelters in South 24 Parganas. Till now DPRs for 15 Nos. of Shelters for R48 Cr. have been approved. Work for 7 shelters has been started and going on as per schedule. The value of the project is likely to go over R300 Cr. on completion of all the 90 Shelters planned under the project.

Construction of A,B,C,D type Quarters at MOIL mines in Nagpur for R25 Crore and addition and modification of Guest House for R1.6 Crore.

Scientists Hostel and Facility Block for SAMEER at Khargar in Mumbai for R7 Crore.

Renovation work of RCF Towers in Mumbai.

Steel intensive INSDAG building in Kolkata for R10 Crore.

SRO of EPFO at Hubli for R18 Crore.

Renovation of EPFO infrastructures all over the country.

G. REALTY SECTOR

HSCL is all set to venture into Realty Sector. Some plots of land have already been purchased and some are in the process of finalization. The Company expects to raise its bottom line at a faster pace by embarking on Realty Sector business in the coming years.

The Company has already purchased a plot of land at Rajarhat New Town, Kolkata (5 acre) from HIDCO, and one at Mohali (1 acre) from GMDC. The present state of litigation in respect of the HIDCO plot is expected to be concluded favourably.

IV. WORK OVERSEAS

As already reported in the earlier years, two decades ago, the Company had pulled out from all projects in Libya on “as-is-where-is basis” on 28th July, 1988, under the directive of Indian Embassy in Libya according to the advice of the Ministry of Steel, Government of India, New Delhi.

In the 7th Session of the Indo-Libyan Joint Commission Meeting held in April 1995, it was decided that the Libyan

Government would pay all dues within one year after approval by the General People’s Committee for Planning and Finance.

The 9th Session of Indo-Libyan Joint Commission was held in Libya during November 2004. In accordance with the approach suggested during the Session, your Company took action to retrieve relevant documents in co-ordination with relevant government departments of Libya to establish the claim. The administrative Ministry has also been requested for a comprehensive solution of the disputed issues at a governmental level so that Libya discharges eight bank guarantees and releases the outstanding payment.

Subsequently in December 2007, the comprehensive claim against Libyan projects was sent to Counselor (Com), Embassy of India in response to the intimation received from the Ministry of Foreign Affairs, Government of Libya.

The matter has again been projected for taking up during the 11th Session of Indo- Libyan Joint Commission (JCM) with a claim of LD 7.796 mn.

The issue remains unsettled till now. However, provision has been made for the entire amount towards Libyan debtors and the liabilities have been written back with the approval of the Board of Directors.

HSCL is all set to go international for a noble cause.

Govt. of India has a commitment to construct / repair 50,000 Low Cost Houses in Sri Lanka for resettlement of the Internally Displaced Persons (IDPs) and the Plantation Community in the war ravaged island. The project is to be implemented under Ministry of External Affairs by 3 PSUs on Govt. of India assistance. Hindustan Steelworks Construction Ltd. is proud to be one of them.

Ministry of External Affairs, in the 1st phase, decided to assign HSCL with implementation of 2000 houses in the Central Province of Sri Lanka for the Plantation Community. The estimated cost of the project in the 1st phase would be about R100 Crore.

Out of the proposed 50,000 houses, either to be constructed new or to be repaired under Govt. of India assistance, about

Coke oven, Vizag


5000 to 6000 will be constructed for the dwelling purposes of the Plantation Community in the Central Province of Sri Lanka.

The proposed single storied houses will be built in the picturesque hilly terrain in clusters with a plinth area of about 550 sq.ft. per unit.

As the situation stands now, Ministry of External Affairs may go for open tender for deciding on the minimum PMC fee.

HSCL is all set to take up the challenge of reconstruction of the Island undergone huge destruction during the long drawn war which continued for more than 25 years.

Housing Infrastructure Development in the Republic of Togo.

HSCL has signed MOU with the Ministry of Urban Development, Republic of Togo for cooperation in housing development in Lome. It is likely that, the MOU will turnout to be a bright business prospect for the Company.

V. AWARDS AND ACCOLADES

1. Institute of Economic Studies (IES) has recently awarded Certificate of Excellence in Productivity, Quality, Innovation & Management to HSCL and Udyog Rattan Award to Sri Malay Chatterjee, CMD.

2. Sri Malay Chatterjee, CMD was awarded with the Turn around leader award during the World HR Congress in Mumbai. The award was conferred on him by Hon’ble Secretary DPE.

3. The ‘Exemplary leader award’ was given to Shri Malay Chatterjee, CMD at the Asia Pacific HRM Congress Awards 2011.

4. Sri Malay Chatterjee, CMD was awarded with CIDC Vishwakarma Award 2012 for category Industry Doyen by the CIDC.

These awards will add mileage to the reputation of the Company and in its endeavour toward expanding its business volume with a wide range of clients.

VI. EMPLOYEE PROFILE

In accordance with the provision in the Restructuring Package implemented in 1999, HSCL opened the VRS option for the employees to make the business operation of the Company more cost effective. The initiative has been successful and the manpower has come down from 13576 as on 1.4.2000 to 517 as on 1.4.2012. The rise in Turnover and reduction in number of employees resulted in substantial improvement in human productivity. Income per employee has gone up from R0.022 Crore in 1999-2000 to R2.34 Crore in 2011-12.

VII. EXECUTIVE DEVELOPMENT PROGRAMME

The Company imparted 446 man days of training on a wide range of disciplines to its executives during 2011-12.

The details are as below:

Ranchi: 97 Man days

(a) Conducted by NRRDA, New Delhi on PMGSY work

59 Man days

(b) Vigilance matters and Professional subjects

38 Man days

Patna: 12 Man days

(a) Competence building for effective management, IIPA, N. Delhi

12 Man days

Vizag: 26 Man days

(a) Vigilance Work shop 26 Man days

Kolkata (Project)

(a) Vigilance Awareness and Project Management

3 Man days

Bhilai : 66 Mandays

(a) Noting and Drafting of letters 9 Man days

(b) Training programme on RTI 2 Man days

(c) Management of Contract Labour, Construction Workers & Outsources – problem solving and related case laws

2 Man days

(d) Management Development Training programme

15 Man days

(e) Vigilance awareness programme 38 Man days

Bokaro : 200 Man days

(a) Vigilance awareness programme 150 Man days

(b) Training on different aspects of management development

50 Man days

HO : 42 Man days

(a) Hazard identification and Risk Management

4 Man days

(b) Investigation of disproportionate Assets and Trap cases

5 Man days

(c) Training on PF by I.C.C. 2 Man days

(d) Seminar on Information Technology and Rajbhasa, SAIL

6 Man days

(e) To optimise your performance 3 Man days

(f) Symposium on Right to InformationAct, 2005

10 Man days

(g) Workshop on management of contract labour

8 Man days

(h) Awareness programme on DTC & GST 2 Man days

(i) Challenges and opportunities in occupational safety & health

1 Man day

(j) Interactive programme on Union Budget 1 Man day

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VIII. REPRESENTATION OF SCHEDULED CASTE AND SCHEDULED TRIBES, FEMALE EMPLOYEES, EX-SERVICEMEN AND PHYSICALLY-CHALLENGED EMPLOYEES

Position in respect of SC/ST/OBC

Group No. of employees as on 31.3.2012

SC ST OBC Female Employees

Physically Challenged

Ex- Servicemen

Group A 144 12 1 20 6 2 -Group B 26 4 - 5 - - -Group C 346 52 45 23 18 2 -Group D 1 1 - - - - -Total 517 69 46 48 24 4 -

IX. INDUSTRIAL RELATIONS

By and large, the Company enjoyed peaceful industrial relations during the year under report.

X. PUBLIC/STAFF GRIEVANCE REDRESSAL

During the year company received 11 no. of cases and suitable replies of all were sent to the Ministry /others for compliance during the year 2011-12.

XI. RIGHT TO INFORMATION ACT, 2005

Your Company implemented the Right to Information Act, 2005, nominating one Chief Information Officer at the head office

and 19 assistant public information officers across different units. The appellate authority is the Chairman-cum-Managing Director under the provision of the above Act. In compliance to the Act, the Company has put up 17 manuals under Section 4 (1) (b) on its website, www.hscl.co.in. During the fiscal, 88 applications seeking information under the provision of the Act were received and disposed off. In addition, 22 1st appeal applications were also received and disposed off.

XII. USE OF HINDI

Your Company continued to implement the Official Language Policy and programmes of the Department of Official Language,

Tri-Cycles for differently abled persons, Vizag


Government of India, encouraging the use of Hindi. As a recognition to the effort of the Company in implementation of Hindi, HSCL was conferred with Rajbhasa Award for 2011-12. Sri Phagu Sigh, Executive, Hindi was awarded with Certificate of appreciation.

XIII. VIGILANCE

There was no vigilance case pending at the end of the year under report. Vigilance week and awareness programmes were conducted at several units during the year. Periodic review meetings were held for ensuring transparency in business operations of the Company.

XIV. BUSINESS, ORGANISATIONAL AND FINANCIAL RESTRUCTURING

The Business, Organisational and Financial Restructuring of the Company, recommended by Board for Reconstruction of Public Sector Enterprises (BRPSE) in its 58th meeting held in Delhi on 13th May, 2008 on the basis of the study conducted by A. F. Ferguson & Co. Pvt. Ltd. is awaiting consideration of Committee of Secretaries before being put up to CCEA.

XV. CSR ACTIVITIES

The Company implemented 4 projects under Corporate Social Responsibility programme during 2011-12 with an expenditure of R7.49 Lac.

1. “ONTRACK PROGRAM of PRAYASUM” involving distribution of two No. of Laptop, one No. of Video Camera, two No. of Digital Still Camera, one No. of Audio Player, two Nos. of Antivirus & Books and CDs, for developing a leadership institute which will educate the adolescents belonging to slum pockets of West Bengal in their Life and Cancer Choices with an expenditure of R0.89 Lac.

2. Distribution of 34 nos. of Tricycle Rickshaws to Physically Challenged Persons through NGO ARDAR with an expenditure of R1.88 Lac.

3. Distibution of one no. of Maruiti Omni Ambulance for 150 bedded district hospital at Tepania, Udaiputr (Tripura) with an expenditure of R3.19 Lac.

4. Sponsoring Computer Programme of Delhi Foundation of Deaf Woman (DFDW) distributing one Laser Printer, 10 Nos. of Steel Chairs and 10 Nos. of Computer Table for an expenditure of R1.53 Lac.

Besides the above programmes, the Company took up implementation of CSR programmes of other PSUs like SAIL, MOIL, RINL and NMDC etc.

XVI. MOU WITH MINISTRY OF STEEL FOR 2012-13 AND MOU RATING FOR 2011-12

The MOU negotiation meeting with Task Force members was held in New Delhi on 25th January, 2012. The turnover target of R1345 Crore and Operational Profit target (PBIDT) of R87 Crore were agreed to for the Financial Year 2012-13. The Order

Booking target has been set at R2050 Cr. Accordingly, the MOU was signed by Sri P.K.Misra, Hon’ble Secretary (Steel) and Sri Malay Chatterjee, Chairman-cum-Managing Director on behalf of the Administrative Ministry and the Company respectively in a solemn function organized on 29.3.2011 at Udyog Bhavan, Ministry of Steel. Your Company takes pledge to achieve MOU Excellence during 2012-13.

The Composite Score against the MOU for 2011-12 was 1.45 on the basis of audited accounts and the ratingwas ‘Excellent’.

XVII. COMPLIANCE WITH THE GUIDELINES ON CORPORATE GOVERNANCE

A separate chapter has been placed on ‘Report on Corporate Governance.’

All the guidelines under the control of CPSU have been complied with. The grade was EXCELLENT with a score of 100.

XVIII. ENVIRONMENT POLICY

Environment Policy of the Company has been adopted by the Board of Directors in the 258th Meeting held on 28.03.2012. The policy document has been circulated to all concerned for compliance.

XIX. SPORTS POLICY

Sports Policy of the Company, in line with the Sports Policy of Ministry of Steel has been adopted by the Board of Directors in the 258th Meeting held on 28.03.2012.

XX. CORPORATE PLAN

Corporate Plan on the basis of Business /Revival Plan contained in the Restructuring Proposal has been adopted by the Board of Directors in its 256th Meeting held on 01.08.2011.

XXI. AUDITORS

Your Directors thank M/s. Sambhu N. De & Co. Chartered Accountants, and M/s. Munshi & Bhattacharyya, Chartered Accountants, appointed by the Comptroller and Auditor General of India as the Company’s Joint Statutory Auditors of the Company for 2011-2012.

XXII. REPORT OF STATUTORY AUDITORS

The Board of Directors’ response to the comments made in the Statutory Auditor’s report on the Company’s accounts for the fiscal is given as addendum to this report.

XXIII. AUDITOR’S CERTIFICATE ON COMPLIANCE OF CORPORATE GOVERNANCE GUIDELINES

Auditor’s certificate on compliance of Corporate Governance Guidelines is placed as addendum to this report.

XXIV. COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956

27

For the FY 2011-12 Company has obtained NIL comments from the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956, on the Company’s accounts. Comments of the Comptroller and Auditor General is placed separately.

XXV. EMPLOYEE REMUNERATION

No employee of the Company received remuneration in excess of the limits prescribed in Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended up to date.

XXVI. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 (as amended by Companies (Amendment) Act, 2002), the Directors wish to place on record:

i. That in the preparation of the annual accounts, applicable accounting standards were followed with proper explanation relating to material departures.

ii. That the Directors selected such accounting policies and applied them consistently and made judgments 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 2011-2012 and of the Company’s profit & loss accounts for the period.

iii. That the Directors had taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the Company’s assets and to prevent and detect fraud and other irregularities.

iv. That the Directors had prepared the annual accounts on a “going concern basis”.

XXVII. BOARD OF DIRECTORS

Mr. Malay Chatterjee, Chairman-cum-Managing Director and Mr. Moyukh Bhaduri, Director (Finance) are whole-time Directors.

Dr. Dalip Singh, IAS, Joint Secretary to the Government of India, Ministry of Steel is a part-time Official Director on the

Board of the Company with effect from 7th November, 2008.

Mr. S. B. Mishra was appointed as a Part Time Non-official Director on the Board effect from 1.4.2010.

Mrs. Lalitha Kumar was appointed as a Part Time Non-official Director on the Board effect from 24.11.2010.

The tenure of Mr. Abhijit Ghosh as Director (Finance) was completed on 31.5.2011 on superannuation.

XXVIII. ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their gratitude to the Hon’ble Steel Minister, Secretary (Steel) and other officials of the Ministry of Steel for their valuable assistance and guidance as well as the Central and State Government Departments, Steel Authority of India Ltd., Rashtriya Ispat Nigam Ltd., National Thermal Power Corporation Ltd. and other Central and State Government Undertakings. The Directors also thank other valued clients for their co-operation and assistance.

Your Directors are grateful to the Comptroller and Auditor General of India and Principal Director and Ex-Officio Member, Audit Board, their officials and the Statutory Auditors for their co-operation and guidance. Your Directors would also place on record their sincere gratitude to the bankers for their continued support and faith in the Company.

Your Directors would also wish to place on record their appreciation for the services rendered by the Company’s officers, staff and workers.

For and on behalf of the Board of Directors

Sd/-

(Malay Chatterjee)

Chairman-cum-Managing Director

Place: New Delhi

Dated: 10.09.2012

Rajiv Gandhi Cricket Stadium, Pondicherry

MANAGEMENT DISCUSSION AND ANALYSIS


and maintenance jobs of the Steel Plant will increase proportionately. The Company can expect to increase its turnover in perennial jobs considerably. However, the Administrative Ministry may insist on award of AMR and perennial jobs in favour of HSCL on nomination / rate structure / negotiation as per the recommendation of the Parliamentary Standing Committee on Coal and Steel. Execution of AMR jobs in steel plants adds to the bottom line of the Company at much higher rates compared to the other sectors of business. Approved rate structures for HSCL are in place at Bhilai Steel Plant for labour intensive operation, maintenance and other perennial jobs. Similar rate structures with other steel plants of SAIL and RINL would help in increasing Company’s business volume in steel sector substantially. Steel Plant authorities of SAIL and RINL have been approached in this direction.

INFRASTRUCTURE SECTOR

A) ROAD SECTOR

• Investment of about R2,27,258 Cr. had been planned for National Highway Development Programme under NHAI during the 11th Plan for construction / up gradation of approximately 47,000 Km. of Highways through the length and breadth of the country. As of now, more than 28000 Km. is balance to be awarded under NHDP. Besides this the existing network of Highways of 71772 Km. has been planned to be raised to 85,000 Km. during 12th plan. The investment during the 12th plan is estimated at R3,23,774 Crore. The Company can expect to secure a good chunk of the investment through suitable technological tie ups with major players in this sector. However, the execution through PPP model continues to be a deterrent for the Company.

• Construction and up gradation of rural roads under PMGSY is another area where 3,67,673 Km. of new links and 3,74,844 Km. of upgradation has been planned for which R1,18,949 Crore has already been sanctioned and further R1,85,438 Crore will be sanctioned in phases. The Company is already in implementation of these projects as a PIU in the state of Tripura and Jharkhand. There is a good prospect of increasing the business volume in these states as well as in other states. All the State Governments, including the North Eastern States, State Rural Roads Development Authorities and NRRDA have been approached for nomination of HSCL as the nodal agency for implementation of PMGSY projects. The prospect of HSCL being entrusted with rural road projects in Uttarakhand is bright.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The overall industrial scenario of the country had been by and large encouraging during 2011-12. New projects came up under capacity expansion programmes of PSU Steel Plants as well as in the diversified fields of Infrastructure Sector. Though the award process for steel plant packages had been delayed in some cases, the Company was successful in securing 2 medium value packages under Capacity Expansion Programme of Bokaro and Rourkela Steel Plant. However, it would have been satisfying if some more projects were secured to maintain the rising trend of business in steel sector. The success in securing orders in the Infrastructure Sector was quite satisfactory during the year. Sector wise observation on the Industry Structure is enumerated below:

STEEL SECTOR

• From the present capacity of 32 MT, the steel production is likely to go up to 75 to 80 MT with an investment of R100000 Cr. in the coming years. Out of which, SAIL / RINL will add about 17 MT to its capacity at an estimated expenditure of R52000 Cr. With a bit of capacity building and technological tie up with the leading players in steel sector business, HSCL may hope to secure considerable volume of jobs under the Capacity Expansion programme of SAIL & RINL, which will be continued through 12th Plan also.

• In the present situation, when the prospect of securing high value project jobs in Steel Sector does not seem to be bright because of stringent prequalification criteria and the adopted system of award through reverse auction, the Company is depending on small packages of R10 Cr. to R15 Cr. with occasional medium value packages. However, efforts are on to secure high value projects with technological tie ups with major players in the related fields. Intense follow up is going on for exploring business opportunities in collaboration with M/s. UZINEXPORT SA, Romania, with whom the Company has already entered into an MOU for business cooperation in India. Besides this, MOU has been signed with State Enterprise Foreign Economic Association ‘Tyazhpromexport’ - referred to as TPE for cooperation in securing and implementation of identified projects in steel plants and related fields and with CIMPROGETTI, Italy for supply of nonexclusive License, Know how, Design & Engineering & Technical Documentation and Supply of Key Equipment for Lime & Dolomite Kilns.

• With the addition in capacity, the AMR and regular operation

29

projects also during the coming months.

• HSCL has already taken up execution of Aligarh Muslim University for implementation of its Center at Murshidabad, West Bengal. The value of the project is expected to be over R1200 Cr.

• With Sri Hari Singh Gaur National University at Sagar and National Law University at Bhubaneswar under execution, the Company is expecting more business in this sector including the upcoming NIT in Mizoram.

C) HEALTH INFRASTRUCTURE

With the credentials of construction of 4 Nos. of District Hospitals in Tripura, of which 2 have already been completed and handed over and about 17 Community Health Center and 1 District Hospital in Jharkhand, HSCL is hopeful of securing high value Health Infrastructure Projects under Ministry of Health & Family Welfare. Likely investment in this sector is about R3600 Cr. New horizon has been opened up to the Company for implementation of Health Sector projects of ESIC under Ministry of Labour. The R787 Cr. Medical College and Hospital project at Gulbarga in Karnataka along with 3 more Hospitals and one Auditorium for more than R150 Cr. and the R334 Crore Paramedical Institution at Gulbarga are in good progress and the prospect for securing more high value projects under ESIC is quite encouraging.

D) RAILWAYS

• The thrust area identified in Railways includes capacity augmentation through construction of Dedicated Rail Freight Corridor (DRFC) and High Speed Corridors. HSCL has been in the field of construction of embankments, major and minor bridges, workshops and staff quarters etc. for the Railways for the last several years. HSCL’s scope in such peripheral jobs will considerably increase due to the huge upcoming investment in this sector. The Company has already approached for award of Dedicated Rail Freight Corridor work. The Company already has about R120 Cr. worth of projects in hand at present. There is a distinct possibility of increasing the business volume in this Sector many fold. Projects in this sector have been facing dearth in cash flow, which has been a deterring factor for the last several months.

• HSCL has been selected as one of the agencies for the upcoming Metro Express Link Gandhinagar Ahmdabad (MEGA) project. The Company is hopeful of securing implementation of peripheral structures worth more than R300 Crore.

B) EDUCATIONAL INSTITUTIONS

• There are about 955 Kendriya Vidyalayas all over the country. Out of which 678 are functioning from permanent buildings. Construction is going on for 60 schools. 217 are still in need of permanent buildings. Besides this, 6 Zonal Offices, 12 Regional Offices and 6 Training Centres have also been planned with an estimated cost of R2580 Cr. HSCL is one of the main agencies implementing School Projects of Kendriya Vidyalaya Samiti as a PIU for the last several years. There is ample scope for increasing HSCL’s business volume with KVS in future. KVS has been approached for award of more School Projects in favour of HSCL all over the country including North Eastern States. The response is quite positive. The development programme of KVS is expected to continue through the 12th plan period also. However, the continued cash crunch with KVS has put implementation of a number of proposed KVs on hold.

• Implementation of Jawahar Navodaya Vidyalayas (JNV) is another area where the Company has a bright prospect to expand its business. At present 593 JNVs are operational throughout the country. Another 700 new Navodaya Vidyalayas are coming up with an investment of R10,425 Cr. including construction of permanent structures and subsequent expansion of the existing Vidyalayas. Navodaya Vidyalaya Samiti has been approached for award implementation of as many Schools as possible to HSCL. The Company is the second largest PIU after CPWD engaged in implementation of NVS projects. A number of sports stadiums are also coming up under NVS with about R30 Cr. estimated cost per stadium. NVS contributes over 10% of the Company’s business every year.

• HSCL has about R170 Cr. worth of orders in hand at present against KVS and NVS projects alone. Considering the performance of the Company in this sector, securing more School Projects under KVS and NVS will not be difficult. Persuasion is on at the highest level for allotment of more school buildings and allied infrastructures in favour of HSCL. The decline in business with KVS and NVS was due to delay in sanction of new projects.

• Other educational institutions like BHU, Centre for Higher Tibetan Studies, ICMR and ESIC are also coming up with major infrastructure development projects. In Karnataka, Skill development centres are coming up as new business prospects for the Company. HSCL is a common name in implementation of such projects.

• The Company is hopeful of securing high value NIPER


in South 24 Parganas under NDMA. Out of 90 Shelters, 7 are under execution at present. Work of 8 Shelters will start soon on availability of fund with NDMA. DPRs for the balance 75 Shelters will be taken up on getting clearance from NDMA. The value of the project on completion is expected to exceed R300 Crore. The project will be financed by Prime Minister’s Relief Fund. In view of the long coast line, the Disaster Shelters for Fishermen community, Live stocks and Godowns for Relief materials are likely to be constructed in all the flood prone costal states of the country, which will provide an edge to HSCL for implementation. On the basis of Company’s credential in successful completion of Kosi Disaster Management Project, HSCL can reasonably be hopeful for securing more such Disaster Management Projects in future.

G) REALTY SECTOR

• HSCL is all set to embark on to Realty Sector business in a big way. Land for the purpose has already been purchased or being negotiated. The details are as below:

• Realty Sector has been opened up as a prospective business area of the Company. Land has already been purchased from HIDCO at Rajarhat New Town, Kolkata (5 acre), Mohali (1 acre). The present state of litigation in respect of the HIDCO plot is expected to be concluded favourably.

H) MINING SECTOR

The Company has opened up its business front in mining sector after a long period of dormancy.

• R77 Crore open cast mining project at Charahi and R82 Crore project at Kuju under CCL have already been procured and are progressing well. Another R54 Crore project at Urimari Colliery of CCL is under award.

• R50 Crore open cast mining project under ISP at Ramnagore has been secured.

With over R250 Crore mining projects in hand the Company can hope for further consolidation in mining sector during the coming months.

The company has plans for diversification in underground Mining Development and Operation (MDO) services and trading of imported coal and coke also.

MOUs have been signed with NEUERTH COAL MINING PRIVATE LIMITED for cooperation in Mine Development cum Operator Services (MDO Services) and with Kyori Oremin

E) BUILDINGS

• This Sector has enormous potential. A number of PSUs and State Govt. Departments are coming up with Infrastructure development projects like construction of Staff Quarters, Hospitals, District Hospitals and Health Centres, Tourism Development Projects and beatification programmes, Housing Complexes etc. Besides these, the North Eastern State of Tripura, Mizoram and Manipur have many such projects for implementation in the near future. The Company has been entrusted with two hospitals and auditorium projects in Mizoram through MOU. Construction of Warehouses for Warehousing Corporation of India is a distinct possibility for the future for sustainable business expansion in this sector. EPFO is another prospective client for the Company for small to medium value contracts in building sector business.

F) URBAN INFRASTRUCTURE DEVELOPMENT PROJECTS

• All the States are coming up with Urban Infrastructure Development Projects under JNNURM.

• HSCL is already working on preparation of Concept Plan for 14 Nagar Panchayats in the State of Tripura. Some of the Plans have already been approved for implementation. Depending upon the allotment of fund, these comprehensive development projects, estimated at R3500 Cr., will be taken up by the Company in phases. However, no allocation has been made by the UDD for implementation of this project so far.

• JNNURM has already been approached for award of Urban Infrastructure Projects to HSCL in all the States including the North Eastern States.

• Irrigation and Disaster Management Projects.

• During the last few years the Company has acquired immense credentials in implementation of high value Irrigation and Disaster Management Projects particularly in the State of Bihar.

• HSCL has about R455 Crore. worth of unexecuted work in hand at Bagmati River Training Project out of the present value of R956 Crore. The value of the project is expected to go beyond R2000 Crore in phases. Another R800 Cr. Mahananda River project is also likely to come up in Bihar shortly. On the basis of the success achieved in Bagmati, Ganga anti erosion projects and Koshi, the prospect of securing the Mahananda embankment Project is bright.

• The Company has already secured Disaster Shelter Project

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Provision has been made for conversion of the non-plan loan into 30 year 5% Non-cumulative Preferential Shares repayable in 10 installments from 31.3.2031. Bank debt of R518.36 Cr. towards VRS funding will be repaid by the Company in 10 years from its generation of cash flow. This aspect is going to be a big challenge for the company in the post restructuring scenario.

• Embargo on recruitment over the past few years has skewed the organization structure, resulting in vacuum in technical expertise. Lifting of embargo on recruitment has been recommended in the proposal. However, induction on contract has already eased out the situation to a large extent. However, wages of the employees has not been revised from 1992 itself, as a result keeping parity the corresponding remuneration offered to people hired on contract is extremely poor as compared to other similar companies in the sector. This is proving to be a big challenge for the company to attract and retain worthy manpower.

• Imbalance in skill set in the Human Resources. Manpower will be rationalized on implementation of the proposed Restructuring Package.

OPPORTUNITIES

• Growth in Infrastructure - Envisaged large investments in Steel and Infrastructure Sectors.

• Major investment by Government and Government organizations – Government departments and Government organizations are the project owners for a vast majority of construction projects. HSCL being a PSU stands a comparatively better chance with Government clients.

• Capacity expansion programme of SAIL and RINL – Due to HSCL’s long relationship and adequate manpower and equipment resources built up in steel plants and its recent tie ups with technology suppliers, HSCL can hope for securing medium to high value projects under SAIL and RINL’s Capacity expansion programme.

• Significant growth in steel production capacity will increase the volume of AMR and operational jobs. HSCL may get a major share of the increased volume with its rich resources mobilized in steel plants over the years. Increase in the volume of AMR jobs will raise the bottom line at a higher proportion.

THREATS

• Changing Contractual types – Changing trends in

Limited(KOL), for cooperation in coal trading business.

• STRENGTH AND WEAKNESSES

STRENGTHS

• Organization of long standing; has been in the construction industry for around 47 years.

• It has well established set ups all over the country, which will help in executing more projects without much investments towards making new set ups.

• Strong experience in steel industry and related civil, structural, mechanical, electrical and other disciplines of activities, which has enabled the Company to diversify in other infrastructure sectors successfully.

• Wide range of experience, which is an important factor in the increasingly difficult pre-qualification scenario for bidding for high value projects.

• Public Sector organization; hence gets preference in respect of securing orders with selected Govt. clients on nomination as a PMC.

• Comfortable Order Book position ensures increase in turnover in coming years.

WEAKNESSES

• The proposed comprehensive Business, Organisational and Financial Restructuring of the Company, which is awaiting consideration of Committee of Secretaries before putting up to CCEA for approval will take care of the following weaknesses of the Company:

• Large interest burden on Govt. loan, secured to meet certain externally imposed legacy burdens towards loss on Libyan operations and salaries & wages of the manpower compulsively inducted during the 1st phase construction of Bokaro Steel Plant. Waiver of interest on non-plan loan has been suggested.

• Increasing accumulated losses on account of high interest burden on Govt. loan and VRS expenditure, which, however, does not have any bearing on the operational efficiency of the Company. Implementation of the Restructuring Package will set off such losses.

• Uncomfortable net worth, attributable to the above factors, is a matter of hindrance in qualification criteria for securing orders. Write off of losses will automatically strengthen the Net worth of the Company to a large extent.

• Growing debt burden and lack of funds to service the debts.


contract type to BOT etc., which requires strong financial capabilities, may put HSCL in a difficult situation, but its high cash balance will take care of the requirements of funds for such projects. Besides this, tie up with financially strong business associates also will help funding of the BOT projects.

• Increasing competition - Competition from small private sector players and possible entry of foreign agencies may reduce the chances of HSCL securing adequate orders at workable rates. However, effort is on to economise project execution by way of technology upgradation for competitive bidding.

• Diminishing Margins – Diminishing margins due to present positioning in the value chain, the Company has to endeavour for higher value addition and make up the impact of declining margin by increasing the top line.

• Stringent Pre-qualification criteria – Pre-qualification criteria are becoming increasingly stringent requiring a strong balance sheet, equipment base etc., which the Company will fulfill subject to approval of the Comprehensive Restructuring proposal by Govt. of India. Besides this, by virtue of executing wide range of high value projects during the recent years will earn the Company the requisite credentials for pre-qualification.

• Diminishing Government Support – Construction business is perceived as a ‘non-strategic area’. In the long run, it may not enjoy Government patronage. However, intra ministry business cooperation will help in neutralizing the diminishing Government support.

• SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company has a single segment of business.

• OUTLOOK

The Company has a strong conviction to honour its mandate for incorporation and implement various Infrastructure and Steel Sector projects as a Construction Agency / PIU in the Public Sector under Ministry of Steel and contribute in infrastructure development of the country including participation in the Bharat Nirman Programme of Govt. of India.

• RISK AND CONCERN

Risk can be defined as the possibility of suffering loss and the impact that the loss will have on the Company.

Several elements of risks start arising right from the

stage of securing orders till execution and maintenance through the defect liability period to the satisfaction of the client protecting the envisaged business interest of the Company.

The main elements of Risk are involved in the following areas in respect of the business operations of the Company:

a. Selection of client b. Selection of project c. Selection of modalities of execution d. Selection of sub-agencies e. Project Management f. Safety of men and materials g. Realisation of payment from client

h. Protection of envisaged profit margin

Risks in procurement and execution of contracts are many. It is not practically possible that all the conditions involved would be favourable and specific weightage could be assigned to the parameters influencing the success and failure of any project. However, considering the impact of the factors mentioned above, an overall prudent view is taken by the management of the Company in regard to procurement and execution of any particular project so that the assessed level of risk is at the minimum.

• INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Within the available Human Resources of the Company, an overall control system has been put in place. Centralised Cash Management System has been one of such systems which have enabled the Company to utilize the generated cash to the optimum level and provide the desired liquidity for adequately funding project inputs. Measures are in hand to set up a structured MIS and Control System in the Company during 2012-13. Profitability Reporting Management System (PRMS) and Contract Receipt Management System (CRMS) have already put in place for on line monitoring.

• DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Operational performance of the Company during 2011-12 had been quite satisfactory with an Operational Profit (PBIDT) of R86.64 Cr., registering an improvement by about 21.7% over FY2011. In the present scenarioof market economy and cut throat competition, the achieved level of Operational Profit of 7.17% with respect to turnover is quite commendable.

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The Company is in the process of further diversifying its business areas and increasing its turnover, which will improve its operational performance in the coming years.

• MATERIAL DEVELOPMENT IN HUMAN RESOURCES, INDUSTRIAL RELATION FRONT INCLUDING NUMBER OF EMPLOYEES EMPLOYED

The embargo imposed on recruitment as per the provision of the Restructuring Package implemented in July 1999 still continues. The depletion of technical manpower through Voluntary Retirement Scheme and normal superannuation over the last several years without fresh induction has been an area of great concern to cater to the needs of steadily increasing business volume of the Company. However, under the Human Resources Development Programme, 446 days of training had been imparted to the young employees during 2011-12.

No fresh employment was given in any level during the year. Manpower strength stood at 517 at the end of FY2012. Manpower mix of the Company will be adequately rationalized on implementation of the proposed Restructuring Package. Induction on contract has eased out the situation to a great extent.

Industrial Relations in the Company had been by and large peaceful during the year.

• ENVIRONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION, RENEWABLE ENERGY DEVELOPMENT, FOREIGN EXCHANGE CONSERVATION

The Company takes up implementation of projects on behalf of various clients allover the country. The norms provided as per the clause of the contract in respect of Environment Protection and Conservation and Renewable energy development are strictly adhered to. The Company has already started building up its capacity in implementation of building with Green Building concept.

The Company has already adopted its Environment Policy with approval of the Board of Directors.

Foreign Exchange expenditure during 2011-12 was $3761.50 and THB 4000.

• CORPORATE SOCIAL RESPONSIBILITY

The Company implemented 4 projects under Corporate Social Responsibility programme during 2011-12 with an expenditure of R7.49 Lac.

The CSR policy of the Company as per the revised guidelines of DPE has been adopted by the Board of Directors with certain modifications during 2010-11.

As per the approved policy, the following activities will be taken up by the Company under its CSR programme in the coming years:

A. INFRASTRUCTURE FOR EDUCATION

• Distribution of Books, Note Books, Pens, Pencils and School Bags etc.

• Providing necessary infrastructure like comfortable sitting arrangement for teachers and students.

• Supply of pure drinking water through installation of Hand Pumps.

• Providing some basic needs and infrastructure like laboratories for practical studies in some Govt. aided Schools.

• Providing scholarship to meritorious students for a period of One / Two years.

B. HEALTH CARE MANAGEMENT AND MEDICAL INFRASTRUCTURE

• Providing Ambulance in Govt. Hospitals and other medical aids for the benefit of the patients in the States where the Company has been engaged in execution of projects.

• To set up Infrastructure for primary health care in underdeveloped areas.

C. SOLAR ENERGY INITIATIVE OF MINISTRY OF NEW AND RENEWABLE ENERGY SOURCES (MNRES)

• To provide illumination to poor villagers in remote areas through ‘Pollution free Solar Lanterns’.

• To participate in Govt.’s Solar Energy Initiative with moderate expenditure as per the guidelines of MNRES.

The Company is looking forward to contributing as much as possible to the cause of the society in the coming years.

CAUTIONARY STATEMENT: Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations may be considered to be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied, depending upon the economic conditions, Government policies, tax regimes and other incidental unforeseen factors.


Cultural and Pilgrimage Centre at Solopok, Sikkim

REPORT ON CORPORATE GOVERNANCE


1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Corporate Governance contains a set of guidelines, principles, processes and systems to be followed by the Directors, the management and all the employees of the Company for increasing transparency and accountability to the shareholders in particular and other stakeholders in general. Your Company’s philosophy is to continue to enhance stakeholders’ value and customers’ satisfaction by consistently endeavouring to follow the best Corporate Governance practices.

2. BOARD OF DIRECTORS

In terms of the Company’s Corporate Governance policy, all statutory and other significant and material information are placed before the Board to enable it to discharge its responsibility of strategic supervision of the Company as trustees to the shareholder.

2.1 Composition

The Company has two full-time official directors (Functional Directors), one part-time official director (Government director) and two part-time non-official directors (Independent Directors). The composition of the Board of Directors of the Company is in conformity with the Guidelines on Corporate Governance for CPSEs issued by DPE.

The following is the composition of the Board as on 31st March, 2012:

Name of the Director Designation Category No. of other Directorship(s)*Shri Malay Chatterjee Chairman & Managing

DirectorFull-time Official Director NIL

Shri Moyukh Bhaduri Director (Finance) -Do- NILDr. Dalip Singh, IAS

Jt. Secy, Ministry of SteelGovernment Director Part-Time Official Director 2

Shri S. B. Mishra, IAS (Retd.) Independent Director Part-Time Non-Official Director 4Mrs. Lalitha Kumar, IAS (Retd.) Independent Director Part-Time Non-Official Director NIL

*Directorships held in Indian Public Limited companies and its subsidiaries are considered.

2.2 Details of Board Meetings held during the financial year 2011-12

Number of Board Meetings

During the financial year ended 31st March, 2012, four meetings of the Board were held as follows:

Sl. No. Date of the Meeting Board Strength No. of Directors present1 27/05/2011 5 32 01/08/2011 5 53 25/11/2011 5 44 28/03/2012 5 4

2.3 Attendance of Directors at Board Meetings and Annual General Meeting

DirectorNo. of Board Meetings

Attendance at last AGM (30.09.2011)Held during

respective tenureAttended

Shri Malay Chatterjee, Chairman-cum-Managing Director 4 4 Yes

Shri Moyukh Bhaduri, Director (Finance) 3 3 Yes

Shri Abhijit Ghosh , Ex-Director (Finance) 1 1 NA

Dr. Dalip Singh, IAS , Jt. Secy, Ministry of Steel, Official Part-Time Director

4 4 No

Shri S. B. Mishra, IAS (Retd.), Non-Official Part Time Director 4 1 No

Mrs. Lalitha Kumar, IAS (Retd.), Non-Official Part Time Director 4 3 No

37

2.4 Terms & Conditions of appointment of Board Member

The terms, conditions and tenure of appointment of Chairman-cum-Managing Director as well as Full Time and Part Time Directors are decided by the Government of India, Ministry of Steel.

3. AUDIT COMMITTEE

The Company has an Audit Committee at the Board level functioning with the powers and role that are in accordance with Section 292A of the Companies Act, 1956 and DPE Guidelines.

The Committee acts as a link between the management, the Statutory Auditors, Internal Auditors and the Board of Directors to oversee the financial reporting process.

The Audit Committee got duly constituted with three members vide resolution passed at 253rd Board meting held on 14.12.2010 after the appointment of Mrs. Lalitha Kumar, Independent Director vide Ministry of Steel’s Order F. No. 5(21)/2006-HSM dated 19th November, 2010 and assumption of charge on 24.11.2010. During the Financial year 2011-12, four meetings of Audit Committee meeting were held. The time gap between two Audit Committee meetings is not more than four months.

Two of the three members, including the Chairman of the Committee are Independent Directors. In accordance with the requirement of Guidelines on Corporate Governance by DPE, all the Audit Committee members have knowledge of financial matters of the Company and at least one member has good knowledge of accounting and related financial management expertise. Director (Finance) is a permanent invitee to the meeting. Company Secretary acts as a Secretary to the Committee.

The Audit Committee observes and controls the financial reporting process of the Company with a view to provide accurate and proper disclosures. The Committee must review the Internal Audit reports periodically as well as action taken report. The Committee also gives directions to the management in areas which needs to be strengthened. The recommendations of the Audit Committee on any matter relating to financial management, including the audit report, shall be binding on the Board.

During the financial year 2011-12, four meetings of Audit Committee were held. Out of the four meetings of Audit Committee two meetings were conducted through Video Conferencing facility as per the General Circular No.35/2011 dated: 06.06.2011 issued by the Ministry of Corporate Affairs, Govt. of India.

The Composition of the Audit Committee as on 31.3.2012 and the attendance of the members at the meetings are as under:

Name of Director Position held in Audit Committee

No. of Meetings held during respective tenure

No. of meetings attended

Mrs. Lalitha Kumar, IAS (Retd.) Independent Director

Chairperson 4 4

Shri S. B. Mishra, IAS (Retd.) Independent Director

Member 4 4

Shri Malay Chatterjee, CMD Member 4 4

The terms of reference of the Audit Committee are as under :-

a) To comply with the requirements in accordance with Section 292A of the Companies Act, 1956.

b) To comply with the requirement relating to the Audit Committee as envisaged in Guidelines on Corporate Governance issued by the Department of Public Enterprises (DPE) for CPSEs.

4. REMUNERATION COMMITTEE

Being a CPSE, the appointment, tenure and remuneration of Directors are decided by the Government of India. However, in compliance with the DPE Guidelines on Corporate Governance for CPSEs which was made mandatory for unlisted CPSEs, the Company has constituted a Remuneration Committee consisting of three part-time directors and headed by an Independent Director.

The terms of reference of the Committee is in accordance with DPE’s Guidelines on Corporate Governance.

No meeting of remuneration Committee was required to be held during the Financial Yr. 2011-12.

5. REMUNERATION/COMPENSATION TO BOARD OF DIRECTORS

The Chairman-cum-Managing Director and Director (Finance) are paid monthly remuneration as fixed by Government of India.


The Non-Official Part Time Director (Independent Director) are entitled to get sitting fees for attending each meeting of the Committee/ Board of Directors. The Company bears the expenses of Directors for attending Board and Committee Meetings.

Details of remuneration of Whole time Directors during the year 2011-12 are given below:

(s in Lakhs)

Name of Director Salary & Allowances

Provident Fund

Rent(Net) Reimbursement of Medical Expenses

Shri Malay Chatterjee, Chairman-cum-Managing Director

7.99 0.50 2.28 0.72

Shri Moyukh Bhaduri, Director (Finance) 9.12 0.62 1.03 0.19

Non-Official Part Time Director (Government Nominee) is not paid any remuneration. He is also not paid sitting fees for attending meeting of the Committee/ Board of Directors. Independent Directors were paid sitting fee of s7,500/- per meeting of the Board and Committee of the Board. Details of sitting fees paid to the Independent Directors during the year 2011-12 are given below:

(In s)

Name of DirectorSitting Fees

TotalBoard meetings Committee meetings

Sri S.B. Mishra 7500 30000 37500

Smt. Lalitha Kumar 22500 30000 52500

None of the non-executive Directors had any pecuniary relationship or transactions with the Company during the year. The part time Government Directors are exofficio appointees and their terms is co-terminus with the term of respective position held by them in Government at the time of appointment on the Company’s Board. The non-executive Independent Directors are appointed for a period of three years.

6. DETAILS OF GENERAL BODY MEETINGS

Details of last three Annual General Meetings are as under:-

Financial Year ended Meeting Date Time Venue

2010-11 47th AGM 30th September, 2011

12.00 hrs Corporate office of the Company at5/1 Commissariat Road, Hastings,

Kolkata- 700 022

2009-10 46th AGM 30th September, 2010

11.00 hrs Corporate office of the Company at5/1 Commissariat Road, Hastings,

Kolkata- 700 022

2008-09 45th AGM 23rd September, 2009

11.00 hrs Registered office of the Company atP-34A, Gariahat Road(South),

Kolkata- 700 031

7. DISCLOSURES

i. During the year there were no material transactions with the Directors or the Management or their relatives that may have potential conflict with the interest of the company at large.

ii. The status of Compliance with Guidelines on Corporate Governance is being placed before the Board regularly. The Company is complying with all the requirements of Guidelines on Corporate Governance for CPSEs issued by the DPE.

iii. During the year, Presidential Directives issued by the Government of India has been complied by the Company.

iv. During the year, no expenditure is debited in books of accounts, which are not for the purposes of the business and no expenses which are of personal nature have been incurred for the Board of Directors and Top Management.

8. MEANS OF COMMUNICATION

The Company’s financial results are displayed in its website, www.hscl.co.in

9. COMPLIANCE CERTIFICATE OF THE AUDITORS

The statutory auditors have certified that the Company has complied with the conditions of Corporate Governance and the same is annexed to the Report.

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10. CODE OF CONDUCT

The Company is consistently endeavouring to conduct its business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations.

The Company believes that a good corporate governance structure would not only encourage value creation but also provide accountability and control systems commensurate with the risks involved.

The Board of Directors have adopted the Code of Business Conduct and Ethics for Board members and Senior management. The same has been hosted on the Company’s website www.hscl.co.in

The Code has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. A declaration to this effect is annexed to the Report.

Report on Corporate Governance

Hindustan Steelworks Construction Limited, 5/1, Commissariat Road (Hastings), Kolkata - 700 022 is a Government Company and is not listed with any Stock Exchange. Hence, the conditions stipulated in Clause 49 of the Listing Agreement which deals with compliance of provisions of Corporate Governance are not applicable to the Company but the company has to follow the Guidelines issued by Department of Public Enterprises, Government of India as it is a Public Sector Non Listed Enterprise.

As desired by the management of Hindustan Steelworks Construction Limited, we have examined the compliance of Corporate Governance by the Company for the year 2011-2012 in line with the Guidelines issued by Department of Public Enterprises, Government of India.

The Compliance of conditions of corporate governance is the responsibility of the management. Our examination is limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and subject to the above observations we certify that the Company has generally complied with the conditions of Corporate Governance.

We state that such compliance is neither an assurance as to the viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Sambhu N. De & Co.Chartered Accountant

FRN:307055E

Sd/-S.N. Mitra

Partner(M. No. 011678)

Place : KolkataDate : 05.09.2012

DECLARATION UNDER GUIDELINES ON CORPORATE GOVERNANCE FOR CENTRAL PUBLIC SECTOR ENTERPRISES

(CPSEs) ISSUED BY DEPARTMENT OF PUBLIC ENTERPRISES (DPE)

TO WHOMSOEVER IT MAY CONCERN

In accordance with the Guidelines on Corporate Governance for CPSEs issued by DPE, I hereby confirm that, all the Directors and

Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct, as applicable to them, for

the financial year ended on 31sl March, 2012.

Sd/-(Malay Chatterjee)

Chairman and Managing Director

Balance Sheet as at 31st March, 2012(a In Lakhs)

PARTICULARS NOTES 31.03.2012 31.03.2011

EQUITY AND LIABILITIES

Shareholders' funds 1.00 -137,197.05 -134,389.21

Share capital 1.10 11,710.00 11,710.00

Reserves and surplus 1.20 -148,907.05 -146,099.21

Non-current liabilities 2.00 30,692.73 53,025.07

Long-term borrowings 2.01 8,489.63 33,337.80

Deferred tax liabilities (Net) 2.02 10.89 14.16

Other Long term liabilities 2.03 20,779.83 17,289.46

Long-term provisions 2.04 1,412.38 2,383.65

Current liabilities 3.00 239,394.62 194,548.07

Short-term borrowings 3.01 163,932.58 128,079.79

Trade payables 3.02 50,868.19 41,860.98

Other current liabilities 3.03 24,563.37 24,607.30

Short-term provisions 3.04 30.48 0.00

TOTAL 132,890.30 113,183.93

ASSETS

Non-current assets

Fixed assets 4.10 19,727.05 18,405.99

Tangible assets 4.11 4,117.67 3,675.63

Intangible assets 4.12 0.00 0.00

Capital work-in-progress 4.13 0.00 110.00

Intangible assets under development 4.14 0.53 0.00

Non-current investments 4.20 0.02 0.02

Long-term loans and advances 4.30 15,608.83 14,620.34

Other non-current assets 0.00 0.00

Current assets 113,163.25 94,777.94

Inventories 5.10 192.84 295.06

Trade receivables 5.20 52,492.95 41,100.25

Cash and cash equivalents 5.30 33,330.75 29,185.19

Short-term loans and advances 5.40 15,285.63 12,830.62

Other Current Assets 5.50 11,861.08 11,366.82

TOTAL 132,890.30 113,183.93

The Notes referred to above form an integral part of the Accounts In terms of our report of even date

For Sambhu N. De & Co.Chartered Accountants

Firm Registration No.:307055E

Sd/-(S. N. Mittra)

PartnerMembership No.:11678

For Munshi & BhattacharyaChartered Accountants


Sd/-(Amit Kr. Munshi)


Sd/-(Dr. Dalip Singh, IAS)

Director

Sd/-(Moyukh Bhaduri)Director (Finance)

Sd/-(P. C. Gupta)

Company Secretary



Place:- New DelhiDate:- 27/06/2012


41

Statement of Profit & Loss Accountfor the year ended 31st March, 2012

(a In Lakhs)

PARTICULARS NOTES 31.03.2012 31.03.2011

I. Revenue From Operations 6.10 117,141.67 97,490.33

II. Other Income 7.10 5,836.65 3,082.45

III. Total Revenue (I +II) 122,978.32 100,572.78

IV. EXPENSES

a) Payment to Sub-Contractors 106,779.16 87,747.25

b) Consumption of Stores 8.10 170.54 170.87

c) Employee benefits expense 9.10 2,372.22 2,731.69

d) Other Expenses 10.10 4,896.75 3,098.18

e) Depreciation and amortization expense 4.10 336.55 270.85

f) Financial costs 11.10 10,243.09 10,164.37

Total Expenses 124,798.31 104,183.21

V. Profit / (Loss) before exceptional and extraordinary items and tax (III-IV)

-1,819.99 -3,610.43

VI. Exceptional items 12.10 -991.12 -229.13

VII. Profit before extraordinary items and tax (V-VI) -2,811.11 -3,839.56

VIII. Extraordinery Items - -

IX. Profit / (Loss) before Tax (VII - VIII) -2,811.11 -3,839.56

X. Tax expense :

(a) Deferred Tax 3.27 30.35

XI. Profit / (Loss) after Tax (IX-X) -2,807.84 -3,809.21

XII. Earning per Share (Basic & Diluted) (a) -239.78 -325.30

The Notes referred to above form an integral part of the Accounts In terms of our report of even date



Sd/-(S. N. Mittra)







Director


Sd/-(P. C. Gupta)

Company Secretary





SIGNIFICANT ACCOUNTING POLICIES1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Company prepares its financial statements as a going

concern in accordance with the generally accepted accounting

principles in India under historical cost convention on accrual

basis.

2. REVENUE RECOGNITION:

2.1 In case of jobs relating to construction contracts and service

contracts, revenue is recognized on submission of bills to the

client’s upto 31st March and in respect of work done but not

billed as at 31st March on the basis of bills raised or value of

work certified by the client after the balance sheet date, but

before the close of the audit. Work done but not billed as at 31st

March on the basis of value of work certified by the company’s

engineers where HSCL is a PIU.

2.2 Credit for claims for escalation, extra works etc. is recognized,

when the same is reasonably ascertained by the company.

2.3 Credit for Interest on fixed deposits lodged as Security Deposit/

Earnest Money with clients is recognized when received.

2.4 Credit for Interest on fixed deposits with Banks is recognized on

accrual basis.

2.5 Rent, Electricity charges recoverable from the employees and

hire charges of plant and machinery from the contractors have

been recognized as income in certain units on realization basis.

3. FIXED ASSETS:

3.1 Fixed assets are stated at cost net of recoverable taxes, less

accumulated depreciation and other indirect cost related there

to.

3.2 The title of the land on which buildings and structures are

constructed at sites vests with the clients, on completion of

such projects, buildings / structures are taken over by the clients

at depreciated / negotiated value.

3.3 The cost of software purchased initially along with the computer

hardware is capitalized along with the cost of the hardware.

However, expenditure incurred on acquisition of software,

which is not an integral part of related hardware, is treated as

intangible assets.

4. DEPRECIATION & AMORTISATION:

A. Tangible Assets

4.1 Depreciation on Fixed Assets is provided on Straight-Line Method

at the rates specified in Schedule XIV of the Companies Act,

1956.

4.2 Enabling works are amortised / depreciated over the period of

five years as per management decision.

4.3 Individual low cost Fixed Assets acquired for less than a 5,000/-

are entirely depreciated in the year of acquisition. The cost of

mobile phones is entirely depreciated in the year of acquisition

irrespective of their cost.

4.4 Depreciation is not provided on surveyed off fixed assets.

B. Intangible Assets

4.5 Expenditure incurred on acquisition of software is amortised over

a period of three years from the year of acquisition. However,

software individually costing upto a1,00,000/- is fully charged

off in the year of acquisition.

5. INVESTMENTS:

Non current Investments are stated at cost less permanent

diminution in the value of such investments, if any.

6. INVENTORIES:

6.1 Stores, Spares, Loose Tools and Materials-at-Sites are valued at

cost.

6.2 Inventories are valued on the ‘weighted average’ cost basis.

6.3 Off-cuts are valued at estimated realizable price.

7. NON-CURRENT TRADE RECEIVABLES:

Retention Money, Security Deposit and / or Earnest Money lying

with the Clients, which are released at the end of the Contracts,

are considered as Non Current Assets, irrespective of date of

settelment.

8. PROVISION FOR DOUBTFUL DEBTS & ADVANCE:

While making Provision for Doubtful Debts & Advances, the

relative amount payable to Contractor / Sub-Contractor / Supplier

for the same Project is deducted from the Doubtful Debts &

Advances.

9. CONTRACT PAYMENTS:

“Contract Payments” represent amount paid/payable to

contractors/sub-contractors which are accounted for as stated

below :

9.1 On receipt of bills from the contractors for work done.

9.2 Work done by contractors but not billed, on the basis of

documentary evidence of raising of related bills by the contractors

or value of work certified by the Company after the balance sheet

date, but before the close of the audit.

9.3 Claims from contractors for escalation and extra work, on

recognition of corresponding revenue by the Company.

10. NON-CURRENT LIABILITY: TRADE PAYABLES:

Retention Money, Security Deposits and / or Earnest Money

HELD BY THE Company from the Contractor / Sub- Contractor

/ Supplier, which are released at the end of the Contracts, are

considered as Non-Current Liability, irrespective of date of

settlement.

11. EMPLOYEE BENEFITS:

11.1 The Company has gratuity policy with Life Insurance

Corporation of India (under Group Gratuity Scheme) towards

future payment of gratuity to its employees and pays annual

premium as determined by the corporation on Actuarial basis.

11.2 The company contributes to the HSCL Employees Provident

Fund, administered by a Trust Board. Pension contributions are

made to Government administered Family Pension Scheme.

43

Shortfall in interest earning on investments of Provident Fund and

the administered interest rate is made good by the company.

11.3 Liability for Leave encashment and liability for post-retirement

benefit for home town settlement are provided for on the basis

of Actuarial Valuation.

11.4 Acturial gain or losses in respect of post-employment benefits

are charged to Profit & Loss account.

12. CLAIMS LIABILITY:

Claims against the Company are recognized and accounted for

on acceptance of the same by the management.

13. PRIOR PERIOD:

Depreciation is disclosed irrespective of its value.

14. TAXES ON INCOME:

Deferred tax resulting from “timing difference” between taxable

and accounting income that originates in one period and are

capable of reversing in one or more subsequent period(s).

Deferred Tax is accounted for using the tax rates and laws that

are enacted or substantively enacted as on the balance sheet

date.

Deferred Tax Assets are recognized only to the extent there is a

reasonable certainty of its realization.

15. IMPAIRMENT OF ASSETS :

An asset is treated as impaired when the carrying cost of assets

exceeds its recoverable value. An impairment loss is charged to

profit and loss account in the year in which an asset is identified

as impaired. Fixed Assets are reviewed for impairment at every

alternate year, in accordance with Accounting Standard-28

“Impairment of Assets”.

16. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES

AND CONTINGENT ASSETS:

As per AS-29, (Provisions, Contingent Liabilities and Contingent

Assets) issued by the Institute of Chartered Accountants of

India, the Company recognizes provisions, only when it has a

present obligation as a result of past event, it is probable that

an outflow of resources embodying economic benefits will be

required to settle the obligation and when a reliable estimate of

the obligation can be made.

No provision is recognized for :-

16.1 Any possible obligation that arises from past events and the

existence of which will be confirmed only by the occurrence

or non-occurrence of one or more uncertain future events not

wholly within the control of the company.

16.2 Any present obligation that arises from past events is not

recognized when :-

it is not probable that an out flow of resources embodying

economic benefits will be required to settle the obligation;

a reliable estimate of the amount of obligation can not be made.

Such obligations are recorded as contingent liabilities.

16.3 Contingent liabilities are not recognised but are disclosed in the

financial statement.

16.4 Contingent assets are neither recognized nor disclosed in the

financial statement.


Director


Sd/-(P. C. Gupta)

Company Secretary



Place : New DelhiDate : 27.06.2012


(a In Lakhs)

NOTE 01.10 SHARE CAPITAL

As at 31st March, 2012


AUTHORISED

(a) Share Capital

15,00,000 Equity Shares of a 1000/- each 15,000.00 15,000.00

ISSUED, SUBSCRIBED & PAID UP

11,71,000 ( Previous year 11,71,000) Equity shares of a1000/- each fully paid up held by Govt. of India. Out of the above 9,71,000 (Previous year 9,71,000) shares were issued by way of conversion of Plan Loan.

11,710.00 11,710.00

T O T A L 11,710.00 11,710.00

NOTE 01.11 STATEMENT OF RECONCILIATION OF ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

PARTICULARS

Equity Shares

Number Face Value (a) a In Lakhs

Share outstanding at the beginning of the year 11,71,000 1,000.00 11,710.00

Add: Issue NIL

Less: Reduction of Shares NIL

Share outstanding at the end of the year 11,71,000 1,000.00 11,710.00

01.12 DETAILS OF SHAREHOLDERS HOLDING MORE THAN 5% OF SHARE HOLDING AS AT 31.03.2012

Type of Shares Name of the Shareholder % of Shares

held

No. of shares

held

Equity President of India 99.99 11,70,998

Other Directors 0.01 2

Total 11,71,000

01.13 The Company does not have any holding Company as at 31.03.2012

(a In Lakhs)

Note 01.20 Reserves and Surplus

PARTICULARS As at 31st

March, 2012

As at 31st

March, 2011

a) Capital Reserve

Opening Balance 1.18 1.18

(+) Current Year Transfer

(-) Written Back in Current Year

Closing Balance 1.18 1.18

Total (A) 1.18 1.18

b) Surplus

Opening Balance -146,100.39 -142,291.18

(+) Net Profit/(Net Loss) for the current year -2,807.84 -3,809.21

Closing Balance -148,908.23 -146,100.39

Total (B) -148,908.23 -146,100.39

TOTAL (A + B) -148,907.05 -146,099.21

NOTE FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2012

45

(a In Lakhs)

NOTE 2 : Non-Current LiabilitiesPARTICULARS As at 31st March, 2012 As at 31st March, 2011

2.01 Long-term Borrowings

1. Classification of Long term Borrowings

-Term Loans:

a) From Banks (Secured) 0.00 20,982.00

b) Interest accrued and due on above (Secured) 0.00 0.00

c) From Other Parties (Unsecured) 8,307.20 12,355.80

d) Interest accrued and due on above 0.00 0.00

e) From banks against FDR 182.43 0.00

8,489.63 33,337.80

2.02 Deferred Tax Liabilities (Net) 10.89 14.16

2.03 Other Long-term Liabilities

Others

Deposit from contractors & others 20,779.83 17,289.46

20,779.83 17,289.46

2.04 Long-Term Provisions

a) Gratuity (Funded) 1,020.08 1,858.47

b) Settlement Allowance (Unfunded) 39.42 49.74

c) Leave Encashment (Unfunded) 352.88 1,412.38 475.44 2,383.65

T O T A L 30,692.73 53,025.07

Note: Details of terms of repayment for the borrowings in respect of the secured other long-term borrowing:(a In Lakhs)

2.05 PARTICULARS Terms of repayment As at 31st March, 2012 As at 31st March, 2011

Secured Unsecured Secured Unsecured

Term loans from banks:

State Bank of India Over due on June 2012 20,982.00 20,982.00

----Short Term 20,982.00 -

----Long Term - 20,982.00

Vijaya Bank Over due on 25.04.12 5,000.00 5,000.00

----Short Term 5,000.00 5,000.00

----Long Term - -

ICICI Bank Over due 25,854.00 25,854.00

----Short Term 25,854.00 25,854.00

----Long Term - -

Corporation Bank 24 monthly installments. 422.19 -

----Short Term 239.76 -

----Long Term 182.43 -

Total - Term loans from banks: 52,258.19 51,836.00

----Short Term 52,075.76 30,854.00

----Long Term 182.43 20,982.00

Other loans and advances:

From Govt. of India 54,964.00 54,964.00

----Short Term 46,656.80 42,608.20

----Long Term 8,307.20 12,355.80

NOTE FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2012


2.06 Security for Term Loan from Bank.

Term loan banks received for payment to employees seperated under VRS are backed by Guarantee of Govt. of India and secured by way of first

charge on the movable Fixed Assets after Government of India.

Term loan from Corporation Bank is secured against Fixed Deposit.

The company has defaulted in repayment of loans and interest in respect of the following: (a In Lakhs)

2.07 PARTICULARS

As at 31st March, 2012 As at 31st March, 2011

Secured Unsecured Secured Unsecured

Term Loan from Bank

Principal 25,854.00 30,854.00

Interest 3,551.97 3,068.87

Other loans and advances

Principal 46,656.80 42,608.20

Interest 60,389.03 50,300.08

2.08 REVIVAL THROUGH FINANCIAL RESTRUCTURING

Consequent upon the Financial Restructuring-cum-Financial Assistance Package approved by the Government of India with effect from 01.04.1999,

term loans of a51,836.00 Lakhs (Previous year a51,836.00 Lakhs) have been received from banks against guarantee of Government of India

for making payments to employees who had opted for voluntary retirement. The above term loans consists of a20,982.00 Lakhs received from

State Bank of India, a5,000.00 Lakhs received from Vijaya Bank and a25,854.00 Lakhs received from ICICI Bank. State Bank of India have

rescheduled the repayment date by extending it upto June 2012 and Vijaya Bank have rescheduled the repayment date of a5,000.00 to April

2012. However ICICI bank have not yet approved the proposal for extending the repayment schedule of a25,854.00 Lakhs and this amount is

lying overdue as on 31st March, 2012. All movable Fixed Assets of the company stands hypothecated by way of first charge after Government

of India.

Further, the company has availed Plan Loan of a3,650.00 lakhs and Non-Plan loan of a51,314.00 lakhs for meeting the outstanding statutory

liabilities towards the employees.

Out of the total Non-Plan Loan of a51,314.00 Lakhs, the company was enjoying interest holiday for ten years, i.e. upto 31.3.2009 on

a18,993.00 Lakhs. During the year, Interest of a3,422.54 lakhs has been accounted for in respect of the said loan of a18,993.00 lakhs at

an average Interest rate of 17.52% p.a the same basis as disclosed in the “Notes on Accounts” for the Accounting Year ended 2000-01 in the

absence of the old loan documents plus penal interest rate of 2.50% on default principle.

Guarantee commission of a610.36 Lakhs (Previous year a610.36 Lakhs), in respect of guarantees given by the Govt. of India against VRS Loan,

Fund and Non-Fund based facilities granted by the banks, has been waived by granting a matching subsidy of the said amount. Hence these have

not been reflected in the financial statements.

Accordingly, the following amounts are appearing in the books : (a In Lakhs)

a) Term Loan from Banks : 51,836.00

b) Loan from Government of India : 54,964.00

c) Interest accrued on (a) above : 3,551.97

d) Interest accrued on (b) above : 60,389.03

e) Outstanding Guarantee Fees: 2,684.00

TOTAL 173,425.00

The above debts have not arisen out of normal business operation of the company.

Further, a fresh Restructuring Package duly approved by the Board for Reconstruction of Public Sector Enterprise (BRPSE) was forwarded to Steel

Ministry. The Steel Ministry after obtaining consent of other ministries including Ministry of Finance has forwarded the restructuring proposal

before the Cabinet Committee for approval.

In view of the above, the financial statements have been prepared on a going concern basis.

47

NOTE 3 : Current Liabilities(a In Lakhs)

PARTICULARS As at 31st March, 2012 As at 31st March, 2011

3.01 Short-term Borrowings

1. Classification of Borrowings

-Loans repayable on demand

a) From Banks (Secured) 51,836.00 30,854.00

b) Interest accrued and due on above (Secured) 3,551.97 3,068.87

c) From Other Parties (Unsecured) 46,656.80 42,608.20

d) Interest accrued and due on above 60,389.03 50,300.08

e) From banks against FDR 239.76 0.00

f) Interest accrued but not due on GOI Loan 1,259.02 163,932.58 1,248.64 128,079.79

3.02 Trade Payables

a) Contractors for work done & work done not billed 54,612.55 45,499.90

Less: Advances 3,987.80 3,735.93

Deduct: Allowances for bad Advances 243.44 50,868.19 97.01 41,860.98

3.03 Other Current Liabilities

1. Classification of other current liabilities :-

a) Other payables

i) Suppliers & Client for material supplied 1,911.24 1,327.31

ii) Contractor’s Claims 350.47 354.47

iii) Advances from Clients

- Mobilisation and Others 15,717.69 13,906.63

- Civil Engineering Material 116.48 235.11

-Machinery & Structural Material 105.02 1,236.62

iv) Other Liabilities 6,362.47 7,547.16

24,563.37 24,607.30

3.04 Short-Term Provisions

- Provision for employee benefits

a) Gratuity (Funded) 0.00

b) Settlement Allowance 2.30

c) Leave Encashment 28.18 30.48 0.00

T O T A L 239,394.62 194,548.07

3.05: Other Liabilities include:

Liabilities for Sales Tax of a975.45lakh (Previous year a823.35 lakh), Liability for Service Tax of a66.35 lakh (Previous Year a243.50 lakh)

Outstanding Guarantee Fees of a2,684.00 lakh (Previous year a2,684.00 lakh).

3.06 Pending reconciliation of estate dues with SAIL/ Bokaro Steel Plant the company has provided for the liability of a7.99 crores which is

included in “Other Current Liabilities”.

Note forming part of Balance Sheet as at 31st March, 2012


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49

NOTE 4.20 : Non-Current Investments



Trade investments, unquoted :

-Investments in Equity Instruments

54 Equity Shares of a1000.00 each fully paid up in Engineering Projects (India) Limited (A Govt. of India Undertaking) reduced to a38.95 each after restructuring approved by Government of India.

0.02 0.02

T O T A L 0.02 0.02

(a In Lakhs)

NOTE 4.30 : Long Term Loans And Advances

4.31 PARTICULARS As at 31st March, 2012 As at 31st March, 2011

Loans and advances :-

- Capital Advance

a) Considered good 12.48 0.00

b) Considered Doubtful 0.00 0.00

Less: Provision for doubtful advances 0.00 12.48 0.00 0.00

-Prepaid Expenses 98.68 0.00

-Deposits with Client & others

a) Considered good 15,497.67 14,620.34


Less: Provision for doubtful advances 493.20 15,497.67 469.05 14,620.34

T O T A L 15,608.83 14,620.34

(a In Lakhs)

NOTE 5.10:Inventories

As at 31st March, 2012 As at 31st March, 2011

5.11 Inventories

Classification of Inventories :

a) Stores and spares 136.79 281.07

- Considered Doubtful 147.77 168.12

Less: Allowances for Bad & Doubtful Debts 147.77 136.79 168.12 281.07

b) Loose tools 0.13 0.13



c) Materials at Site 55.92 13.86



d) Shortage of Stores - -



e) Damaged, Obsolete, Unserviceable Stores - -



f) in Libya -

- Considered Doubtful - 267.62

Less: Allowances for Bad & Doubtful Debts - 0.00 267.62 0.00

T O T A L ( a ) 192.84 295.06

Note forming part of Balance Sheet as at 31st March, 2012 (a In Lakhs)


5.12. STORES & SPARES

As regards old and non-moving items of Stores and Spares, the company has taken action for disposal. Physical verification of inventories of major

units have been conducted during the year. a147.77 Lakhs (Previous year – a168.12 Lakhs) is held as provision against the value of Stores and

Spares of a284.56 lakhs (Previous year a449.19 lakhs).

5.13 MATERIAL-AT-SITE

a95.65 Lakhs (Previous year a95.65 Lakhs) is held as provision against value of stock of Material-at-Site of a151.57 lakhs (Previous year

a109.51 lakhs).

5.14 LOOSE TOOLS/SHORTAGE OF STORES/DAMAGED, OBSOLETE, UNSERVICEABLE STORES

Provision is held in this accounts for a0.88 Lakhs (Previous year a0.88 lakhs) against value of stock of Loose Tools of a1.01 lakhs (Previous year

a1.01 lakhs), a151.52 Lakhs (Previous year a142.05 lakhs) against value of net Shortage of Stores of a151.52 lakh (Previous year a142.05

lakh) and a106.84 Lakhs (Previous year a111.42 lakhs) against value of Damaged/Obsolete/Unserviceable Stores of a106.84 lakhs (Previous

year a111.42 lakhs) respectively.

5.15 Inventories in Libya:

As there is no movement in respect of stores lying at Libya due to Government decision for pulling out in 1988 the value of stores of a267.62

lakhs has been written off and provision against it of a267.62 lakhs has been written back.

(a In Lakhs)

NOTE 5.20 Current Assets


Trade Receivables

5.21: Sundry Debtors unsecured

a) Billed considered good less than six months 27,759.47 16,383.30

Less: Adhoc Receipt 838.93 26,920.54 315.24 16,068.06

-Billed considered doubtful

Less: Allowances for Bad & Doubtful Debts - -

b) Un Billed considered good less than six months 13,589.84 11,023.26

Less: Adhoc Receipt 13,589.84 14.48 11,008.78

-Un Billed considered doubtful 1.60

Less: Allowances for Bad & Doubtful Debts - 1.60 -

5.22: Sundry Debtors unsecured

a) Billed considered good exceeding six months 37,133.33 38,759.82

Less: Adhoc Receipt 27,689.01 9,444.32 28,056.97 10,702.85

-Billed considered doubtful 1,701.66 1,203.69

Less: Allowances for Bad & Doubtful Debts 1,701.66 - 1,203.69 -

b) Un Billed considered good exceeding six months 1,137.79 1,920.10

Less: Adhoc Receipt 301.04 836.75 301.04 1,619.06

-Un Billed considered doubtful 77.53 77.53

Less: Allowances for Bad & Doubtful Debts 77.53 - 77.53 -

c) Cliams considered good 1,701.50 1,701.50

-Cliams considered doubtful 5,094.50 5,094.50

Less: Allowances for Bad & Doubtful Debts 5,094.50 1,701.50 5,094.50 1,701.50

Total 52,492.95 41,100.25

5.23: Sundry debtors (unsecured) considered good, include a3,919.87 Lakhs (Previous year a5,540.59 Lakhs) outstanding over three years.

Based on the assessment and information available with the management, a provision of a1,701.66 Lakhs (Previous year a1,203.69 Lakhs) has

been made.


51

5.24: Claims on SAIL:

a6,796.00 Lakhs (Previous year a6,796.00 Lakhs), grouped under Sundry Debtors represents Claims by the company on SAIL which was

referred to Dispute Settlement Committee of Ministry of Steel. Dispute Settlement Committee has directed modalities for settlement of dispute

with SAIL.

However, as a matter of abundant caution a provision of a5,094.50 Lakhs (Previous year a5,094.50 Lakhs) has been made in the accounts.

5.25: Pending acceptance from SAIL/Bokaro Steel Plant the company has not provided for a9.79 crore (Previous year a9.79 crores) against

debtors of the company.

(a In Lakhs)

NOTE 5.30: Cash and Cash Equivalents


a) Cash on hand 0.84 0.82

b) Cheques, drafts on hand 377.06 83.87

c) Balances with banks

(i) In current accounts 4,383.39 11,484.18

(ii) In deposit accounts 15,452.27 17,615.03

(iii) In earmarked accounts

- Balances held as margin money or security against borrowings, guarantees and other commitments.

13,117.14

- Other earmarked accounts (Refer Note 5.32 below) 0.05 13,117.19 1.29 1.29

33,330.75 29,185.19

Notes:

5.31: Balances with banks include deposits amounting to a26,389.88 lakh in which a10,937.62 lakhs earmarked and a418.33 lakh having

maturity date after 12 months.

5.32: Balances with banks - Other earmarked accounts of a0.05 Lakh held in blocked account at Iraq (As at 31st March, 2011 a0.05 lakh at

Iraq and a1.24 lakh at Libya adjusted in 2011-12) which has restriction on repatriation.



(a In Lakhs)

NOTE 5.40: Short Term Loans And Advances


Loans and advances classified (unsecured) :-

-Contractor advance secured




-Contractor advance unsecured

a) Considered good 848.34 1,074.69


Less: Provision for doubtful advances 18.97 848.34 794.76 1,074.69

-Suppliers’ advance unsecured




-Employees’ advance unsecured




-Prepaid Expenses 178.44 205.27

- Other loans and advances




-Deposits with P & T, Customs etc.




-Deposits with other Govt. Deptt.




- Sales Tax deducted by Clients




-Advance with Income Tax Authorities




15,285.63 12,830.62

5.41: HSCL-ARCPL (Joint Co-operation) :

In compliance with the orders dated 1st March, 2006 passed by the Hon’ble Calcutta High Court, HSCL has deposited the balance amount of a199.48 lakhs with Official Liquidator Calcutta High Court for purpose of property of BIL and the Deed of Conveyance is yet to be executed shown under “Deposit with other Govt. Deptt”.


53

(a In Lakhs)

NOTE 5.50: Other Current Assets


a) Interest Accrued on Fixed Deposit 904.06 525.75

b) Interest Subsidy accrued on VR Loan receivable from GOI 5,856.29 5,364.02

c) Recoverable from Contractors for Stores & Servies 1,130.25 1,381.78


Less: Allowances for Bad & Doubtful Debts 643.89 1,130.25 732.08 1,381.78

d) Interest accrued on Loans & Advances to Contractors 397.12 426.52



e) Recoverable from Clients 1,186.00 1,091.29

- Considered Doubtful 158.52

Less: Allowances for Bad & Doubtful Debts 158.52 1,186.00 1,091.29

f) Recoverable from Contractors 1,035.46 994.08


Less: Allowances for Bad & Doubtful Debts 151.69 1,035.46 114.74 994.08

g) Shortages of Fixed Assets 0.00 0.00



h) Other Recoverables 552.01 783.49



i) Advances to HSCL-SIPL Joint Venture 873.49 870.47

Less: Estimated Loss Provided for 873.49 0.00 870.47 0.00

j) Recievable from NHAI (A/C HSCL-SIPL JV) 799.89 799.89

- Considered Doubtful 0.00 799.89 0.00 799.89

11,861.08 11,366.82

5.51:Receivable from NHAI of a799.89 Lakhs for HSCL/SIPL joint venture project, on account of invoked Bank Guarantees by NHAI. The matter is under arbitration, and the proceedings has already started before the Ld. Arbitrator.



(a In Lakhs)

NOTE 6.10 : Revenue from construction contractPARTICULARS For the year

ended 31st March, 2012

For the year ended 31st

March, 2011

Value of work done & billed 103,297.42 85,226.80

Value of work done but not billed 13,823.16 12,136.31

Estimated Value of extra items 19.71 127.22

Others 1.38 -

TOTAL 117,141.67 97,490.33

(a In Lakhs)

6.11: Disclosure under Accounting Standard – 7PARTICULARS Current Year

2011-12Previous Year

2010-11

a) Revenue Recognition Percentage completion method.

Percentage completion method.

b) Contract Revenue recognized 117,141.67 97,490.33

c) Contract cost incurred 106,779.16 87,747.25

d) Advance received from clients 44,768.17 44,066.09

e) Retention by clients 15,990.87 15,089.39

f) Gross amount due from clients for contract works 88,195.62 76,165.30

g) Gross amount due to Sub-contractors for contract works 54,612.55 45,499.90

h) Advance paid to Sub-Contractors 13,728.50 12,764.54

(a In Lakhs)

NOTE-7.10 : OTHER INCOMEPARTICULARS For the year ended 31st

March, 2012For the year ended 31st

March, 2011

a) Interest Income (Refer Note 7.11 below) 2,784.66 1,595.57

b) Profit on Foreign Exchange Transaction 0.12

c) Other non-operating income (Refer Note 7.12 below) 3,051.99 1,486.76

5,836.65 3,082.45

(a In Lakhs)

7.11: Interest Income comprises:Interest from banks on:

- Deposits 1,857.30 1,061.91

- Other balances 31.72 1,889.02 533.66 1,595.57

Interest on loans and advances 895.64

Total - Interest Income 2,784.66 1,595.57

(a In Lakhs)

7.12: Other non-operating income comprises: 2012 2011

- Rental Income from township 203.60 190.70

- Hire Charges on plant & equipment 60.59 24.59

- Profit on sale of surveyed off assets 140.74 14.00

- Profit on sale of off-cuts & scrap 0.00 45.18

- Profit on sale of unserviceable stores 51.71 0.34

- Sale of tender documents 31.32 46.10

- Miscellaneous Receipt 401.80 223.17

- Liabilities / provisions no longer requared written back 2,162.23 942.68

Total - Other non-operating income 3,051.99 1,486.76

Note forming part of Profit & Loss for the year ended 31st March, 2012

55

7.13: In terms of work order of PMGSY, Tripura the Interest earned was not accounted for in the books of the company as per agreement on

Current Linked Term Deposit (CLTD) with State Bank of India, Kunjaban Branch at Agartala.

NOTE 8.10: Consumption of Stores (a In Lakhs)

PARTICULARS For the year ended 31st March, 2012

For the year ended 31stMarch, 2011

A. Material at sites

Opening stock 109.51 419.79

Add. : Purchases 273.57 120.38

383.08 540.17

Less :

Adjustments for returns, shortages and Damages/Unserviceable Stores/Othersand Damages/Unserviceable Stores/Others

82.84 297.29

Closing stock 151.57 234.41 109.51 406.80

148.67 133.37

B. Materials Directly Consumed. 21.87 37.50

T O T A L 170.54 170.87

8.11: Consumption of Stores :

Indigenous stores : a170.54 Lakhs (Previous year a170.87 Lakhs)

(a In Lakhs)

NOTE 9.10: Employee Benefit Expense

PARTICULARS For the Year ended 31st

March, 2012

For the Year ended 31st

March, 2011

a) Salary and allowances 1,549.95 1,872.86

b) Contribution to Provident Fund 177.31 214.17

c) Staff Welfare Expenses 143.27 119.20

d) Contribution to Gratuity Fund 411.62 415.59

e) Leave Encashment 90.07 109.87

f) Settlement Allowance - -

T O T A L 2,372.22 2,731.69

9.11: Disclosure under AS-15 (Revised) on Employee Benefits - Defined Benefit Schemes

A. General Description of Defined Benefit Schemes:

Gratuity: Payable on separation @ 15 days salary for each completed year of service to eligible employees who render continuous service of 5 years or more, subject to a maximum limit of a10.00 Lakhs.

Leave Encashment Payable on separation to eligible employees who have accumulated earned leave. Maximum limit of accumulation is 240 days for earned leave.

Post Retirement Settlement Benefits: Payable to retiring employees for settlement at their home town.

B. Reconciliaton of Present Value of Defined Benefit Obligation (a In Lakhs)

Sl.no.

PARTICULARS Gratuity Leave Encashment

Settlement Allowance

P.V of DBO as on 31/03/2011 2367.92 475.44 49.73

1 Current Service Cost 54.22 10.94 0

2 Interest Cost 149.48 30.66 3.99

3 Contribution made 0 0 0

4 Actuarial Loss/ (Gain) 286.11 48.47 -11.99

5 Past Sevice Cost 0 0 0

6 Benefit Paid 998.71 184.45 0

P.V of DBO as on 31/3/2012 1859.02 381.06 41.73



C. Reconciliation of Fair Value of Plan Assets and Obligation

The company has partly funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is mainly based on the

information given by LIC through whom the investments have been made by the Fund. The reconciliation of fair value of assets of the Gratuity

Fund and defined benefit Gratuity obligations is as under:

(a In Lakhs)

Sl.no.

PARTICULARS As on 31.03.2012

As on 31.03.2011

1 F.V of Plan Assets (Opening) 509.45 907.91

2 Expected return on Plan Assets 40.76 72.63

3 Benefit Payment 998.71 887.88

4 Contribution made 1,250.00 425

5 Actuarial (Loss)/ Gain 37.44 -8.21

6 F.V of Plan Assets (Closing) 838.94 509.45

7 P.V. of D.B.O. (Closing) 1,859.02 2,367.92

Net liability / (assets) 1,020.08 1,858.47

The defined benefit obligations, other than gratuity, are unfunded.

D. Expenses charged in Profit & Loss Account for the year ended 31st March, 2012 (a In Lakhs)

Sl.no.

PARTICULARS 1 2 3

Gratuity Leave Encashment

Settlement Allowance

1 Current Service Cost 54.22 10.94 0

2 Interest Cost 149.49 30.66 3.97

3 Actuarial Loss/ (Gain) 248.67 48.47 -11.98

4 Past Service Cost 0 0 0

5 Expected Return on Plan Assets 40.76 0 0

Total 411.62 90.07 -8.01

E. Acturial Assumptions for Gratuity

1 Mortality Table LICI 1994-1996

2 Superannuation Age 58

3 Early Retirement & Disablement 10 PER THOUSAND P.A

6 above age 45

3 between 29 and 45

1 below age 29

4 Discount Rate 8.00

5 Inflation Rate 5.00

6 Return of Assets 8.00

7 Remaining Working Life 3

8 FORMULA USED PROJECTED UNIT CREDIT METHOD

9.12: Particulars of remuneration of whole time Directors including Chairman-cum-Managing Director. (a In Lakhs)

2011-12 2010-11

i Salaries & Allowances 17.11 11.14

ii Company’s Contribution to Provident Fund 1.12 1.01

iii Employee Benefits 4.22 2.53

22.45 14.68

57

NOTE 10.10 : Other Expenses (a In Lakhs)

PARTICULARS For the Year ended 31st

March, 2012


March, 2011

a) Repairs and Maintenance of Const. Equipment

- Consumption of Power & Fuel 296.16 388.58

- Consumption of Spares 67.00 124.31

- Other Service charges 33.33 15.12

b) Traveling Expenses 109.52 102.54

c) Legal Charges 81.30 82.66

d) Consultancy Charges 216.99 86.10

e) Rent 37.89 34.56

f) Printing & Stationery 59.72 45.84

g) Postage and Telephone 45.91 41.76

h) Insurance 40.83 16.06

i) Rates and Taxes 196.66 105.54

j) Motor Vehicle Expenses 209.69 188.94

k) Freight and Handling Charges 16.04 11.67

l) Repairs and Maintenance

- Building 6.40 14.57

- Office Equipment & Furniture & Fittings 19.82 33.41

- Motor Vehicles 12.32 9.66

- Township 81.10 46.13

m) Hire charges of Plant & Equipment 54.48 124.58

n) Expenses on Township 882.42 95.08

o) Payment to auditors (Refer Note 10.11 below) 7.50 7.86

p) Provisions

-Provision for doubtful debts 536.47 82.93

-Provision for estimated losses - W.D.N.B

-Provision for Doubtful Recoveries-Others 429.16 88.36

-Provision for Shortage/Damaged/obsolete and Unserviceable Stores 4.69 0.40

-Provision for Shortage / Damaged/obsolete and Unserviceable Fixed Assets 15.51 0.15

-Provision against Advance to Contractors & Suppliers 165.62 77.80

-Provision for loss in Joint Venture 3.01 -

q) Miscellaneous expenses 1,267.21 1,273.57

T O T A L 4,896.75 3,098.18

(a In Lakhs)

Note : 10.11: Payments to the auditors comprises:

2011-12 2010-11

As auditors - statutory audit 2.50 2.76

For taxation matters 1.00 1.10

For other services

Reimbursement of expenses 4.00 4.00

Total 7.50 7.86

10.12: Miscellaneous expenses include : (a In Lakhs)

Honerium paid to ex-employees 582.32 402.68

Outsoursing Expenses 232.31 482.01

PF Shortfall 21.33 42.00



(a In Lakhs)

NOTE 11.10 : Interest & Finance Charges

Particulars For the year ended 31stMarch, 2012

For the year ended 31stMarch, 2011

i) Interest expense on :

a) Cash Credit and Bank Overdraft - 4.51

b) Government Loan 10,099.33 9,985.56

c) Advances from Clients 1.97 -

d) Others 4.38 57.24

10,105.68 10,047.31

e) Voluntary Retirement -Loan 4,754.09 4,877.13

Less : Interest subsidy from Govt. of India 4,754.09 - 4,877.13 -

ii) Bank Guarantee Commission 119.33 105.82

iii) Bank Charges 18.08 11.24

TOTAL 10,243.09 10,164.37

11.11: The Govt. of India has agreed for full reimbursement of interest on Term Loans.

Accordingly, against the liability of interest of a4,754.09 Lakhs for the year (Previous year a4,877.13 Lakhs) Government of India has so far

reimbursed a4,261.81 Lakhs (Previous year a4,775.25 Lakhs). Balance Interest Subsidy payable by Government of India is a492.28 lakhs.

Cumulative interest subsidy yet to be reimbursed of a5,856.29 Lakhs (Previous year a5,364.02 Lakhs) has been accounted for as “Other Current

Assets”

Note-5 (e) (a In Lakhs)

NOTE 12.10: Exceptional Expenditure.Particulars For the Year

ended 31st March, 2012


March, 2011- Prior period incomea) Other Receipts 74.40 17.13 b) Contract Receipts - - c) Contract Payments - 370.84 d) Consumption of Stores - - e) Salary & Wages - 25.45 f) Depreciation - 16.32 g) Interest & Financial Charges - 43.58 h) Other Expenses - 3.48

74.40 476.80 - Prior period expensesa) Other Receipts - - b) Contract Receipts 123.24 491.36 c) Contract Payments 249.31 - d) Consumption of Stores 122.38 11.76 e) Salary & Wages 13.44 - f) Depreciation 4.39 - g) Interest & Financial Charges 31.41 - h) Other Expenses 112.12 - i) Loss in Joint Ventures - 48.65

656.29 551.77 Net Prior Period Expenses(-)/ Income(+) (581.89) (74.97)

Loss on Settelment of Award (393.78) -

Bad Debt (15.45) (154.16) (991.12) (229.13)


59

13.10: WORKS IN LIBYA :

As per decision of the Government of India, the Company had pulled out from all the works in Libya on ‘as is where is basis’ on 28th July 1988.

However, due to various constraints, complete records could not be brought to India. Moreover, the matter of settlement is being handled at

appropriate levels by the Govt. of India.

The written down value of fixed assets have been converted at exchange rates prevailing on the dates of purchases of the respective assets whereas

the inventories have been converted at closing exchange rates prevailing as on 31.3.1989.

Balances with branches of foreign banks are not confirmed as those Accounts are Blocked.

The Assets and Liabilities translated at the exchange rate prevailing as on 31.3.1989 have been considered in the accounts.

As per decision of the Government of India, the Company pulled out from all the works in Libya on ‘as is where is basis’ on 28th July 1988. Inspite

of constant follow up at inter Governmental level, there is no further development in the matter. In view of the above the Assets & Liabilities in the

Books of Accounts of Libya operations as on 31st March, 2011 have been adjusted during the year and net liability amounting to a624.21 lakh

has been written back in the books during the year 2011-12.

13.11: Disclosures under Accounting Standard - 17

Segment Reporting

The company has a single segment i.e construction including fabrication. Hence the disclosure of segment information is considered not

necessary.


i) The list of Related Parties and their relationship are given below :

Nature of Relationship Name of the related party

Key Management Personnel Shri Malay Chatterjee

Shri Moyukh Bhaduri

Dr. Dalip Singh, IAS

Mrs. Lalita Kumar

Shri S. B. Mishra, IAS (Retd.)

Nature of Relationship Name of the related party

Joint Venture Company HSCL-Sricon Infrastructure Pvt. Limited.

ii) The details of transactions between the Company and the related Parties are given below

Remuneration paid - (a In Lakhs)

Nature of transactions Key Management Personnel JV

2011-12 2010-11 2011-12 2010-11

Managerial Remuneration 18.23 12.15 NIL NIL

Employee Benefits 4.22 2.53 NIL NIL

Sitting Fees 0.52 0.42 NIL NIL

Contribution to JV NIL NIL 873.49 870.47


Basic Earning Per Share Current Year Previous Year

Equity Share as on 31.03.2012 fully paid @ R1000/- each 11,71,000 Nos ----

Equity Share as on 31.03.2011 fully paid @ R1000/- each ---- 11,71,000 Nos

Loss for the year 2,807.84 a3,809.21

Basic Earning per Share -239.78 (-) a325.30

Diluted Earning per Share NIL NIL



DEFERRED TAX LIABILTITY (ASSET)

Considering the large accumulated losses and uncertainty of future taxable income, no deferred tax asset has been accounted for in terms

of Accounting Standard-22 issued by the Institute of Chartered Accountants of India. However, liability for deferred tax amounting to

a3.27 lakh has been written back during the year against write back of a30.35 lakh in previous year on the timing difference in respect of

depreciation.

(a In Lakhs)

Deferred Tax Liability As at 31.03.2011

Current year Charge/write

back(-)

Deferred Tax Liability

(Assets) as at 31.03.2012

Difference between book and tax depreciation 14.16 (-) 3.27 10.89


INTANGIBLE ASSETS – Computer Software

a) The amortization method used Straight Line Method.

(a In Lakhs)

Current Year2011-12

Previous Year2010-11

b) Gross Carrying amount (Opening) 10.91 10.85

c) Gross Carrying amount (Closing) 10.91 10.91

d) Accumulated amortization (Opening) 10.91 9.86

e) Amortisation recognized during the period 0 1.05

f) Accumulated amortization (Closing) 10.91 10.91


As per Accounting Standard-27 “Financial Reporting of Interest in Joint Ventures”, the Company’s share of ownership interest, assets, liabilities,

income, expenses, contingent liabilities and capital commitments in Joint Venture are given below:

(a In Lakhs)

Name of the JV Company HSCL-Sricon Infrastructure Pvt. Limited (Joint Venture)

% of the Company’s ownership Interest 51

Assets 2,160.64

Liabilities 3,912.49

Income NIL

Expenditures 13.89

Contingent Liabilities 436.76

Capital Commitment NIL


IMPAIREMENT OF ASSETS

As per policy of the company impairment of assets is reviwed at every alternate year, the company has not reviewed for Impairement of Assets

during the FY-2011-12.

61

13.18: Disclosure under Accounting Standard – 29.

a) PROVISIONS (a In Lakhs)

PARTICULARS As at 1st April, 2011

Provision made during

the year

Amount utilized/ reversed

during the year


Gratuity 1858.47 411.62 1,250.00 1,020.09

Settlement Allowance (Transportation) 49.74 0.00 8.02 41.72

Contractors’ Claim 354.47 276.75 280.75 350.47

Leave Encashment 475.44 90.07 184.45 381.06

Loss on Joint Venture 870.47 3.02 0.00 873.49

b) CONTINGENT LIABILITIES NOT PROVIDED FOR OR NOT ACKNOWLEDGED AS DEBTS:- (a In Lakhs)

Slno.

PARTICULARS Current Year 2011-12

Previous Year 2010-11

i Claims against the Company pending at different Courts. 19,841.22 17,819.05

ii Claims against the Company pending adjudication before different Arbitrators. 19,953.15 6,369.43

iii Central Excise demands in disputes / under adjudication in appeal. 210.77 198.23

iv Sales Tax demands in dispute / under adjudication in appeal. NIL NIL

v Service Tax demands in dispute / under adjudication in appeal. 4,125.53 3,631.48

vi The Regional Provident Fund Commissioner, West Bengal, Kolkata has initiated adjudication proceeding u/s 7 of EPF & Misc. Provision Act 1952 demanding R1728.92 lakhs for the year 1995 to 2004 by way of Pf contribution towards contractors’ workers besides interest and penalty thereon, which is being contested by the Company.

NIL 1,728.92

vii Guarantees given by Banks for and on behalf of the Company to different clients. 11,486.82 11,701.87

Estimates amount of contract/orders remaining to be executed/supplied on capital account and not provided for.

NIL 2,463.15

13.19: GENERAL :

a) Pending completion of assessments, deposits lying under Sales Tax Account of a2,490.05 Lakhs (Note 5 (d)) have not been adjusted against

corresponding liabilities of a975.45 Lakhs (Note- 3).

b) There are no reported Micro, Small and Medium Enterprises as defined in the “The Micro, Small and Medium Enterprises Development Act,

2006”, to whom the company owes any money. There is no overdue amount against SSI units.

c) Against the budgeted amount of a25.00 lakhs as per MOU towards expenditure on Corporate Social Responsibility activities during the year

2011-12, the company incurred a7.49 lakhs and the balance budgeted amount of a17.51 lakhs will be spent in due course. Since the

company does not have any contractual oblication/liability as on 31st March, 2012, the unspent amount is not provided for in the accounts

and would be accounted for as and when spent/incurred.

d) Figures are rounded off to nearest Lakhs.

e) Figures of the previous year have been re-arranged, re-grouped and restated wherever necessary as per Revised Schedule VI.


Note :-

1. Cash and cash equivalents include balances in foreign currency on blocked accounts- a0.05 lakh.

2. Cash and cash equivalents as on 31st March, 2012 includes Cash in Hand a0.84 lakh, Current Account a6,562.92 lakh and Fixed Deposit with Bank a26,389.88 lakh.

(a In Lakhs)

PARTICULARS 2011-2012 2010-2011Cash Flows from Operating ActivitiesNet Profit/(Loss) before Taxation (2,811.11) (3,839.56)Add : Adjustment for

Depreciation 340.94 254.53 Amortisation of deferred exp. - - Deferred exp. Paid - - Interest Expences 10,105.68 10,047.31 Int. on VR Loan 4,754.09 4,877.13 Less: Receivable from Govt. (4,754.09) (4,877.13)

10,446.62 10,301.84 Less: Adjustment for

Profit on Sale/Disposal of Fixed Asset 140.74 14.00 Interest Income 1,889.02 1,595.57 Interest on Loans & Advances 895.64 343.25

2,925.40 1,952.82 4,710.11 4,509.46

Operating profit / (loss) before Working capital change Adjustment for :Stocks 102.22 292.61 Debtors (11,392.70) (9,934.45)Loans & Advances (3,096.58) (12,670.78)Trade Creditors & Payables 11,512.86 26,348.26

(2,874.20) 4,035.64 Cash generated from operations (A) 1,835.91 8,545.10 Cash generated from Investing activities.(B)Purchase of Fixed assets (813.24) (1,121.83)Change in capital advance 75.55 (66.54)Sale of Fixed assets 204.92 72.20 Adjustment of Capital Reserve - - Loss in Investment - - Interest on Fixed Deposit 2,435.75 1,485.79

1,902.98 369.62 Cash flow from financing activities.(C)Proceeds from borrowing 422.19 (8.29)Interest Payment including interest subsidy on VRS loan (4,277.34) (5,038.82)Interest Subsidy on VRS loan received from GOI. 4,261.82 4,775.25

406.67 (271.86)Net Increase/(Decrease) in Cash & Cash Equivalents 4,145.56 8,642.86 Cash and Cash Equivalents at the beginning 29,185.19 20,542.33 Cash and Cash Equivalents at the end 33,330.75 29,185.19

Cash Flow Statment (Indirect Method)


Firm Registration No.307055E

Sd/-(S.N. Mittra)







Director


Sd/-(P. C. Gupta)

Company Secretary




63

II Capital raised during the year (Amount in R Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III Position of Mobilisation and Deployment of Funds (Amount in R Thousands)

Total Liabilities Total Assets

Sources of Funds

Paid-up Capital

Reserves & Surplus

Secured Loans

Unsecured Loans

Deffered Tax Liability

Application of FundsNet Fixed Assets Investments

Net Current Assets

Misc. Expenditure

Accumulated Losses

V Generic Names of Three Principal Products/Services of Company:

I Registration Details

Registration No./CIN State Code

Balance Sheet Date 3 1 0 3 2 0 1 2U25246WB1964PTC026118 2 1

N I L N I L

N I L

1 1 7 1 0 0 0

5 5 8 1 0 1 6

1 0 8 9

1 3 2 8 9 0 3 0 1 3 2 8 9 0 3 0

1 1 6 6 1 2 0 5

N I L

4 1 1 8 2 0

0

1 4 8 9 0 8 2 3

(-) 1 2 6 2 3 1 3 7

2

IV Performance of Company (Amount in R Thousands)

Turnover Total Expenditure

Profit/(Loss) before Tax Profit/(Loss) after Tax

Earning per Share in s Dividend rate %

1 2 2 9 7 8 3 2

(-) 2 8 1 1 1 1 (-) 2 8 0 7 8 4

N I L(-) 2 3 9 . 7 8

1 2 5 7 8 9 4 3

(R in Thousand)

Statutory information persuant to part IV of schedule-VI to the Companies Act, 1956

Balance Sheet Abstract and Company’s General Business Profile

Item Code No. NIL

Product Description Construction and project related activities.

Item Code No. NIL

Product Description NIL

Item Code No. NIL

Product Description NIL


Director


Sd/-(P. C. Gupta)

Company Secretary




(-) 1 4 8 9 0 7 0 5


To the Members of Hindustan Steelworks Construction Limited.

1. We have audited the attached Balance Sheet of HINDUSTAN STEELWORKS CONSTRUCTION LIMITED, as at 31st March, 2012 and the annexed Profit and Loss Account and the Cash Flow Statement for the year ended on that date. The aforesaid financial statements of the Company for the year 2011-2012 approved /authenticated by the Board of Directors of the Company on 27th June, 2012 have been submitted to us for our report thereon. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required under the Companies (Auditor’s Report) Order, 2003 issued by the Government of India in terms of Section 227(4A) of The Companies Act, 1956, we enclose in the Annexure “A”, the statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Our observations and qualifications on the accounts of the Company for the year ended 31st March, 2012 are stated in Annexure “B” enclosed herewith.

5. Further to our comments in the Annexure “A” and Annexure “B” referred to in paragraph 3 and 4 we report that:

(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in

agreement with the books of account;

(iv) in terms of Department of Company Affairs General Circular No.8/2002 dated 22nd March, 2002, Government Companies are exempt from the applicability of Provisions of Section 274(1)(g) of the Companies Act,1956.

(v) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub Section (3C) of Section 211 of the Companies Act, 1956.

(vi) in our opinion and to the best of our information and according to the explanations given to us, subject to our comments in Annexure-“A” & “B” attached herewith, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

b) in case of the Profit and Loss Account, of the loss for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Place : New DelhiDate : 27th June, 2012

Sd/-(S. N. Mittra)


For Sambhu N. De & Co.Chartered AccountantsFirm Registration No.307055E

For Munshi & BhattacharyaChartered AccountantsFirm Registration No.309141E



AUDITORS’ REPORT

65

i) (a) The Company has maintained fixed asset registers in

various units as well as in its head office. The said schedule

only contain the details of plant & machinery, while for

other assets e.g. furniture & fittings, office equipments,

engineering appliances and small equipments under Plant

& Machinery, only group wise details are available. Fixed

Asset Register in proper form with all updated information,

e.g. mark of identification, quantitative details and situation

thereof have not been maintained by the company in a few

Units.

(b) Fixed Assets of the Company have been physically verified

except in a few units. Linking up of the physically verified

fixed assets with the financial records is still pending

in many cases. Reconciliation wherever completed and

discrepancies identified have been accounted for in the

books.

(c) According to the information and explanations given to us,

the Company has not disposed off substantial part of fixed

assets during the year.

ii) (a) The inventories have been physically verified by the

management during the year barring in a few units of the

Company. In our opinion, the frequency of verification in

those units, where verification has been conducted, is

reasonable.

We have been informed that physical verification of materials

at site have been conducted at major units only.

(b) According to the information and explanations given to us,

the procedures of physical verification of inventories followed

by the management in the units where physical verification

has been conducted appears to be reasonable and adequate

in relation to the size of the Company and the nature of its

business.

(c) On the basis of our examination of the records of inventory

maintained in several large units of the Company, we

found an obsolete stock amounting to a106.84 lakhs and

shortage of stores amounting to a151.52 lakhs, for which

an appropriate action should be taken by the management.

In our opinion, the records maintained by the Company are

adequate but offer scope for improvement.

iii) The Company has not taken / granted any loan, secured or

unsecured from/to Companies, firms and other parties listed in

the register maintained under Section 301 of the Companies

Act, 1956.

iv) In our opinion and according to the information and explanations

given to us, there are adequate internal control procedures

commensurate with the size of the Company and nature of its

business with regard to purchases of inventory, fixed assets and

with regard to the services rendered. Further, on the basis of

our examination of records and according to the information

and explanations given to us, we have not observed any failure

of continuing nature or major weakness in the internal control

system.

v) To the best of our knowledge and belief and according to the

information and explanations given to us, the majority of the

transactions are carried out with various units of Steel Authority

of India Limited where directors are interested as directors of the

Company. However, in view of Section 299(6) of the Companies

Act, 1956 the transactions with units of Steel Authority of India

Limited need not be recorded in the Register required to be

maintained under section 301 of the Companies Act, 1956.

vi) The Company has not accepted any deposit from public during

the year.

vii) During the year Internal Audit has been conducted by five firms

of Chartered Accountants. Scope and coverage of the internal

audit was specified to the internal auditors.

viii) The Central Government has not prescribed the maintenance of

Cost Records under Section 209(1) (d) of the Companies Act,

1956 for the Company.

ix) (a) According to the records, the Company is generally regular in

depositing undisputed statutory dues with the appropriate

authorities including provident fund except Cess imposed

by Government of Bihar. Undisputed Cess amounting to

a442.88 lakhs is yet to be deposited with the appropriate

authorities. The entire amount is due for more than six

months.

We have been informed that none of the employees of the

Company are presently covered under ESI Act.

(Referred to Paragraph “3” of our report of even date)

ANNEXURE -‘A’ TO THE AUDITORS’ REPORT


b) According to the information and explanations given to us, the disputed statutory dues which have not been deposited as on 31.03.2012

are shown as under :

Sl.No. Name of statute Nature of the

Dues

Forum where dispute is pending. Amount

(a in Lakhs)

1. Central Excise Act, 1944 Excise Duty Commissioner of Central Excise, Indore 89.32

2. Central Excise Act, 1944 Excise Duty Commissioner of Central Excise, Bhubaneshwar 121.45

3. Service Tax Act Service Tax Commissioner of Central Excise & Customs, Raipur 771.27

Commissioner of Central Excise & Customs & Service Tax, Vizag 888.76

Commissioner of Central Excise & Customs Bhubaneshwar 663.04

Commissioner of Central Excise & Customs, Raipur 805.53

Commissioner of Central Excise & Customs & Service Tax,

Bokaro

996.93

x) The accumulated loss of the company as on 31.03.2012 is

a1,48,908.23 lakhs which is more than 50% of Share holders’

fund. The Company has incurred cash loss of a2,470.17 lakhs

during the financial year covered by our audit and a3,585.03

lakhs in immediately preceding financial year.

xi) In our opinion and according to the information and explanations

given to us the Company has not defaulted in repayment of

dues to any financial institution or bank except an amount of

a30,854.00 lakhs payable to ICICI Bank Ltd. & Vijaya Bank.

xii) In our opinion and according to the information and explanations

given to us, no loans and advances have been granted by the

Company on the basis of security by way of pledge of shares,

debentures and other securities.

xiii) The Company is not a Chit Fund/Nidhi/Mutual Benefit Fund/

Society. Therefore, the provisions of clause 4(xiii) of the

Companies (Auditor’s Report) Order, 2003 and amendment

thereof are not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares,

securities, debentures and other investments. Accordingly the

provisions of clause 4(xiv) of the Companies (Auditor’s Report)

Order, 2003 and amendment thereof are not applicable to the

Company.

xv) According to the information and explanations given to us, the

Company has not given guarantees for loans taken by others

from banks or financial institutions. Accordingly, the provision of

clause 4(xv) of the Companies (Auditor’s Report) Order, 2003

and amendment thereof is not applicable.

xvi) The Company has not availed any fresh term loan during the

year. As per the information and explanations given to us, the

term loans taken in the earlier years appears to have been

applied for the purposes for which the same were obtained.

xvii) The Company has not raised funds on short term basis, therefore

use of the same for long term investment and vice-versa does

not arise.

xviii) The Company has not made any preferential allotment of shares

during the year.

xix) The Company has not issued any debenture during the year.

xx) According to the information and explanations given to us, no

money was raised by the Company from Public issues during

the year.

xxi) According to the information and explanations given to us, no

fraud on or by the Company has been noticed or reported during

the course of our audit.

Place : New DelhiDate : 27th June, 2012

For Sambhu N. De & Co.Chartered AccountantsFirm Registration No.307055E

Sd/-(S. N. Mittra)


For Munshi & BhattacharyaChartered AccountantsFirm Registration No.309141E



67

(Refer to Paragraph of our report of even date)

ANNEXURE -‘B’ TO THE AUDITORS’ REPORT

Auditor’s Report/Comments Reply of the Company

1. Sundry Debtors

(i). In absence of proper linking of adhoc receipts with bills and proper records of certain old debtors we are unable to comment upon the quantification of doubtful debts and adequacy of provision made thereon.

Please refer to Notes 5.23. The company has maintained details of age wise analysis of Sundry Debtors. Sundry Debtors outstanding for more than 3 years are under periodic scrutiny by the Management. Efforts are being made to realize these dues which are mostly lying with PSU/Government Organization and are considered good. As such further provision is not considered necessary.

(ii). As referred to in Note No.5.24 of Current Assets, sundry debtors include claims of a6,796.00 lakhs outstanding for a long time. In our opinion, full provision should have been made in the accounts instead of a5,094.50 lakhs. Accordingly loss for the year is understated by a1,701.50 lakhs.

As per formula laid down by Dispute Settlement Committee under the Chairmanship of Special Sect. & F&A, Ministry of Steel, HSCL has drawn up the claims and submitted to the respective steel plants with copy endorsed to Ministry.

HSCL has been pursuing the issue for settlement of the long pending demand, but seeing no headway, the issue was referred to Ministry to resolve the matter. The issue is now being taken up at the highest level of SAIL & MECON and positive outcome has already been received.

2. Other Observations

(i). Claims not acknowledged as debt shown under Contingent liabilities include Central Excise Duty of a210.77 lakhs and Service Tax of a4,125.53 lakhs which are contested before appropriate appellate authorities. Pending decision of the respective authorities, we are unable to comment on non-provision of the said liabilities, if any, and consequential effect on the accounts of this year.

The cases are pending before appellate authorities and as such have been considered as contingent liabilities.

(ii). Year end balances of Advances, Deposits, Debtors and Creditors have not been confirmed by the related parties, consequential impact, if any, is not ascertainable.

Balance confirmation letters have been issued to Debtors / Creditors. However response from their side is poor.

(iii). In many units Service Tax has not been charged/collected as per statute at the time of introduction of Service Tax on Construction Companies. Consequently, non-provision of Service Tax liability and interest/penalty for non-payment of service tax and non-submission of return has not yet been ascertained / provided for in the accounts by the company till date.

There is no case where applicable Service Tax has not been charged. Company takes all care & precaution to ensure strict tax compliance.

The cases of Service Tax disputes, which arise mainly due to interpretational differences, have already been disclosed as Contingent Liability.

(iv). In the absence of adjustment of advance given to various contractors lying in the books with the contractor’s liability, we are unable to form an opinion as regards the realisibility of such old advances.

Adjustment of advance is a continuous process. Provision wherever required, has been created in the books.



3. Loss on Joint Venture:

(i) In absence of audited accounts of Joint venture (HSCL-SIPL) for the year 2011-12 of accumulated estimated loss of a873.49 lakhs as shown in Note: 5.50 could not be verified.

The estimated loss of joint venture has been accounted based on unaudited accounts.

(ii) Advances include a799.89 lakhs due from NHAI on account of invocation of Bank Guarantee by them towards cancellation of contracts undertaken under Joint Venture project of HSCL-SIPL. In our opinion the amount appears to be doubtful of recovery for which no provision has been made in the accounts in 2011-2012.

HSCL has filled an application in Calcutta High Court and in terms of order passed therein the amount of a799.89 lakhs is kept in a separate account by NHAI. Meanwhile vide order dated 17.09.2010 the court has appointed Mr. Justice R.C Lahoti, Chief Justice of India (Retd.) as arbitrator to adjudicate the disputes, which is in advanced stage, between the parties. Also refer to Note 5.51 for further clarification.

4. Physical verification of inventories have not been conducted in a few units. The discrepancies, if any and its impact in the year’s Loss in those units have not been ascertained.

Physical verification of the inventories of all the units were conducted during 2011-12 except a few units where material holding is either negligible or adequate provision is available in the books. Thus from internal control point of view adequate measures have been taken.

5. Advances to contractors include a325.81 lakhs appearing in the books of New Delhi Unit which are outstanding for a long time and in our opinion are doubtful of recovery for which no provision has been made.

The issue were germinated with the change in Ministry in UP, UP Govt. decided to review the decision of the previous Govt. and in turn NOIDA suspended the work initially and cancelled the work subsequently without assigning any reason for which HSCL tried its best for restoration of the work and in following the process considerable time was lost resulting into non-realization of the advances from the sub-contractors for an amount of a325.50 lakh. NOIDA being the beneficiary of the BG, the responsibility of encashment/ extension of validity was on NOIDA. As per opinion obtained from Mr. Dipankar P. Gupta, Ex. Solicitor General of India and immediate steps were taken to file the suits against the agencies & Bank to recover the mobilization advance left unrecovered. Suits are in its process as per set procedure as the issues for adjucating the suits have been framed.

In view of explanation given above MOS had also cleared the Audit para No.16.2.1 in C&AG Report No.CA24 of 2009-10.

6. No provision has been made in the accounts for a2,303.05 lakhs shown as Interest Subsidy receivable from Government of India on Term Loan under Voluntary Retirement Scheme which has not been paid by the Government and lying outstanding in the books over a long period of time. Consequently the loss to the company for the year is understated by e2,303.05 lakhs and the current assets is overstated by an equal amount.

The amount of a2,303.05 lakh is included in the total cash infusion by Govt. of India in the revised total restructuring proposal submitted to BRPSE which has been accepted and which is in the final stage of approval by Govt. of India.

69


7. Penal interest, additional interest, other costs and charges levied by ICICI Bank Ltd. up to 31.03.2009 amounting to a3,062.53 lakhs have been duly accounted for by the company and has been shown as “Interest Subsidy accrued on Voluntary Retirement Loan receivable from GOI”. In the absence of confirmation from Government Of India, we are unable to form an opinion as to the realisability of the aforesaid amount of a3,062.53 lakhs and consequential impact of the same, if any, on the accounts of the company.

The term loan of ICICI Bank is backed by Government of India guarantee which covers principle amount of loan along with all Interest thereon.

8. Going Concern Concept :

The company has suffered a cash loss of a2,470.17 lakhs and a Net Loss of a2,811.11 lakhs during the year 2011-2012. The company has incurred continuous losses for the past three years and the net loss carried forward in the accounts as on 31.03.2012 stands at a1,48,908.23 lakhs as against the Shareholders Fund of (-) a1,37,197.05 lakhs. This shows complete erosion of Net Worth of the company.

In view of the details narrated by the Company in Note no. 2.08 of the Non-Current Liabilities, the “Going Concern Concept” adopted by the company in preparation of financial statements for the year 2011-2012 is solely dependent on “Financial Restructuring” being envisaged by Government of India which, if not done, will seriously jeopardize the accounting concept adopted by the Company.

Financial restructuring of the company is under active consideration of Government of India and is likely to be implemented shortly. In view of the above, “Going Concern Concept” of the company has been rightly adopted.

9. No provision has been made in the accounts for a9.79 crores being claim of the company which has not been admitted by Steel Authority of India Ltd.

A committee in BSL/SAIL has been formed to look into the matter in detail. Till receipt the outcome of the committee the issue is unresolved. Follow up action is being taken up.

10. We further report that since the effect of paragraphs 2(iii) and 3(i) above could not be determined, consequential effect on year’s loss could not be ascertained. Had the observations made by us in paragraph 1(ii), 3(ii), 5, 6 and 9 above been considered, the loss for the year after Exceptional items, Extraordinary items and Provision for Deferred Tax would have been a8,917.09 lakhs, against the reported loss of a2,807.84 lakhs in the Profit & Loss Account. Consequently the debit balance of Profit & Loss Account in the Balance Sheet would have been a155,017.48 lakhs instead of a1,48,908.23 lakhs, Trade Receivables would have been a49,785.03 lakhs, instead of a52,492.95 lakhs in Note 5.20, Short Term Loans and Advances would have been a14,959.82 lakhs instead of a15,285.63 lakhs in Note no.5.40, Other Current Assets would have been a8,758.14 lakhs instead of a11,861.08 lakhs.

Management reply on each of the observation has been given at appropriate place.



Sd/-(S.N. Mittra)




For and on the behalf of the Board of Directors.






COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES

ACT, 1956 ON THE ACCOUNTS OF HINDUSTAN STEELWORKS CONSTRUCTION LIMITED FOR THE YEAR ENDED

31st MARCH, 2012

The preparation of financial statements of Hindustan Steelworks Construction Limited for the year ended 31st March, 2012

in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the

management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under Section

619 (2) of the Companies Act, 1956 is responsible for expressing opinion on these financial statements under section 227 of the

Companies Act, 1956 based on independent audit in accordance with the auditing and assurance standards prescribed by their

professional body the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report

dated 27 August, 2012.

I, on behalf of the Comptroller and Auditor General of India have conducted a supplementary audit under section 619(3)(b) of the

Companies Act, 1956 of the financial statements of Hindustan Steelworks Construction Limited for the year ended 31st March,

2012. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors

and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the

accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment

upon or supplement to Statutory Auditor’s Report under section 619(4) of the Companies Act, 1956.

For and on the behalf of theComptroller & Auditor General of India

Sd/-(Sushil K. Jaiswal)

Principal Director of Commercial Audit& Ex-officio Member, Audit Board

RanchiPlace : RanchiDate : 30 August, 2012

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

71

Tower crane at Vizag

Stadium at Cuttak


TEN YEARS AT A GLANCE

Details of physical and financial position of the Company from 2001-02 onwards

Particulars 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Authorised Capital 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00

Paid up Cpital - Equity 117.10 117.10 117.10 117.10 117.10 117.10 117.10 117.10 117.10 117.10

Borrowings

- Govt.of India 435.31 439.31 514.20 518.20 546.64 546.64 546.64 549.64 549.64 549.64

- Banks for VRS 518.36 518.36 518.36 518.36 518.36 518.36 518.36 518.36 518.36 518.36

Income from operation 266.46 295.60 313.94 341.21 423.83 513.55 706.41 785.17 974.90 1171.42

Other Income 10.49 11.35 8.37 8.59 9.50 12.63 14.85 15.18 21.40 36.74

Total Income 276.95 306.95 322.31 349.80 433.33 526.18 721.26 800.35 996.30 1208.16

Operational Profit 3.90 18.40 28.68 30.96 30.17 40.21 64.63 69.09 71.21 86.64

Interest 22.50 36.74 51.13 69.82 82.91 30.68 65.21 100.65 101.64 102.43

VRS Expenditure 114.88 67.61 69.50 35.62 26.30 7.59 3.35 1.66 0.00 0.00

Net Profit/Loss -136.35 -88.50 -94.21 -85.97 -83.50 -26.72 -6.88 -54.59 -38.09 -28.08

No. of Employees 2771 2394 1924 1843 1612 1480 1248 1007 751 517

Order Booking 305.00 513.00 521.00 430.00 781.00 940.00 871.00 1036.00 1826.00 1899.00

(R in Cr.)

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