Tata Steel Long Products Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018
Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018
1.The above results have been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 12 January, 2019.
2.The Company is engaged in production of sponge iron and generation of power from waste heat. Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on manufacture of sponge iron and generation of power, and accordingly sponge iron and generation of power are the reportable operating segments for standalone results in accordance with Ind AS 108.
3.On September 22, 2018, Tata Steel Limited (the Parent Company), executed a business transfer agreement for the acquisition of the steel business of Usha Martin Limited (“UML”) through a slump sale on a going concern basis. The acquisition was subsequently novated in favour of the Company, which is subsequently approved by the shareholders. The closing of the acquisition remains subject to execution / fulfilment of relevant condition precedents to the agreement between the Company and UML, required for the transfer of the steel business.
4.(a) In the month of November 2012, Ministry of Coal (“MoC”) issued notices to the Company for invocation of bank guarantee of Rs. 3,250 lacs submitted towards performance of conditions for allocation of coal block against which the Company had filed a writ petition in the Hon'ble High Court of Delhi, which directed the Company to keep the bank guarantee valid till 30 November, 2015 by which date the MoC was directed to take decision. Meanwhile, the bank guarantee expired and had not been renewed, since no communication had been received from MoC. Subsequently, MoC issued a notice dated 28 December, 2015, stating that the bank guarantee be invoked and the aforesaid amount be deposited. Consequent to MoC's notice, the Company has moved to the Hon’ble High Court of Delhi, where the matter is pending adjudication. The Company has been advised and has obtained a legal opinion that as the original allocation has been declared illegal and cancelled by the Hon'ble Supreme Court, the bank guarantee pertaining to such allocation (which is non-est and void ab initio) shall consequently be deemed to be invalid and void ab initio. Pending finalisation of the matter, the amount continues to be disclosed as a contingent liability.
(b) (i)During pendency of the aforesaid matters in Hon'ble High Court of Delhi, the Hon'ble Supreme Court of India vide its order dated 24 September, 2014 had cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on 7 February, 2006. The amount incurred on the Radhikapur (East) Coal Block upto 31 December, 2018 aggregates to Rs. 18,040.96 lacs (31 March, 2018: Rs. 18,040.96 lacs).
(ii) Pursuant to the judgment of Hon’ble Supreme Court of India, the Government of India had promulgated Coal Mines (Special Provision) Rules, 2014 (“Rules”) for allocation of the coal mines through auction and matters related thereto. In terms of the said Rules, the successful bidder will be called upon to pay to the prior allocattee the expenses incurred by the prior allocattee towards land and mine infrastructure. Pursuant to the judgement dated 9 March,2017 of the Hon'ble High Court of Delhi in W.P (c) 973/2015, the directives of MoC vide its letter dated 1 February,2018 and as per details prescribed by Nominated Authority ,the Company has furnished the required statement of expenses and other details in the prescribed format on 22 February, 2018. Relying on the legal position and legal opinion obtained by the Company in respect of the recoverability of the amount, no provision is considered necessary.