100th Annual Report 2006-2007 - Tata Steel

Management Discussion and Analysis
h) Freight and Handling Charges
Freight and handling
charges
Figures in Rs. crores
FY 2006-07 FY 2005-06 Change Change %
1,117.45 1,004.32 113.13 11%
The freight and handling charges increased by 11% to
Rs. 1,117.45 crores as compared to Rs. 1,004.32 crores in the
previous year, mainly due to increase in volume of sales of
various products.
i) Interest
Figures in Rs. crores
FY 2006-07 FY 2005-06 Change Change %
Gross interest 251.32 178.27 73.05 41%
Less: Interest
capitalised
0.07 3.76 (3.69) -98%
Less: Interest received
on sundry advances, 77.35 50.00 27.35 55%
receipts and others
Net interest 173.90 124.51 49.39 40%
The net interest charges increased by 40% to Rs. 173.90 crores
as compared to Rs. 124.51 crores in the previous year, mainly
due to increase in interest on Forex loans, swap charges for
hedging currency and interest rate risks and higher working
capital loans.
j) Employee Separation Compensation
Employee separation
compensation
Figures in Rs. crores
FY 2006-07 FY 2005-06 Change Change %
152.10 52.77 99.33 188%
During the year, 440 employees were separated under the
Employee Separation Scheme (ESS) of the Company, which
resulted in increase in ESS charges by Rs. 11.92 crores. There
has been a decrease in the ESS charge to the extent of
Rs. 4.02 crores due to reduction in the number of old
ESS cases. Further, due to the change in the interest rate
considered for discounting the provision for employee
separation compensation, there was a net charge of Rs. 91
crores as compared to the previous year.
k) Fixed Assets
Figures in Rs. crores
FY 2006-07 FY 2005-06 Change Change %
Gross block 18,526.93 16,564.90 1,962.03 12%
Less: Depreciation
and impairment
7,486.37 6,699.85 786.52 12%
Net Block 11,040.56 9,865.05 1,175.51 12%
Gross Block increased by Rs. 1,962.03 crores during the year,
mainly due to capital expenditure incurred on the 1.8 million
tonnes steel expansion project in Jamshedpur (Rs. 1,346
crores), completion of the 1 million tonne steel expansion
project (Rs. 141 crores), commissioning of 4” Precision Tube
Mill and 3” Commercial Tube Mill and other sustenance and
minor capital schemes.
l) Investments
Figures in Rs. crores
FY 2006-07 FY 2005-06 Change Change %
Trade investments 1,036.94 775.84 261.10 34%
Investments in
subsidiary companies
1,376.71 1,258.53 118.18 9%
Other investments 8.96 8.96 — 0%
Investments in
Mutual Funds
a) Income Funds 117.00 734.65 (617.65) -84%
b) Liquid Funds 3,566.58 1,291.98 2,274.60 176%
Net investments in
Mutual Funds
3,683.58 2,026.63 1,656.95 82%
Total Investments 6,106.18 4,069.96 2,036.22 50%
During the year, the Company invested in Tata BlueScope Steel
Limited, Tata Steel (Thailand) Public Company Ltd., Natsteel
Asia Holdings Pte. Ltd., The Dhamra Port Company Ltd., Rawmet
Ferrous Industries Pvt. Ltd. The Company has liquid funds of
Rs. 3,566.58 crores as on 31st March, 2007 as compared to
Rs. 1,291.98 crores as on 31st March, 2006. The Company
has ring-fenced Rs. 3,262.59 crores out of liquid funds as on
31st March, 2007 to provide cash confirmation in connection
with the acquisition of Corus Group plc.
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