Annual Report for 2011-2012 - Vizag Steel

RASHTRIYA ISPAT NIGAM LIMITED
The steel industry is highly cyclical and a decrease in steel prices may have an adverse effect on our
Company's results of operations and financial condition
Significant increases in prices of key raw materials or our inability to continue to procure raw materials
at favourable terms could have an adverse effect on our Company's results of operations and financial
position.
We currently obtain most of our iron ore required for producing steel from NMDC ("National Mineral
Development Corporation Limited"). Any decrease in supply of iron ore by NMDC would have a
material adverse effect on our business, results of operations and financial condition.
Our Subsidiary has incurred losses.
Our expansion plans may not result in expected benefits
Overcapacity and oversupply in the Indian steel industry may adversely affect our Company's
profitability
We purchase raw materials from foreign suppliers with foreign currencies and therefore face foreign
exchange risks.
Any disruption to our supply of coking coal would have material adverse effect on our Company's
business, results of operations and financial condition.
Our Company does not own the land on which Visakhapatnam Steel Plant ("VSP") and our Registered
and Corporate Office are located.
New materials, products or technologies could reduce the demand for our steel products
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company is having an efficient system of Internal controls for achieving the objectives of the Company
by ensuring efficiency in operations, protection of resources, accuracy and promptness in financial reporting
and compliance with the laid down policies and procedures along with relevant Laws and regulations.
In RINL, there is a separate Internal Audit Department and the Internal Audit is conducted by a team of
experienced Chartered Accountants, Cost Accountants, Engineers including a system analyst with
diversified experience. The Internal Audit Department carries out reviews, evaluates and appraises the
various systems, procedures and policies of the Company and suggests meaningful and useful
improvements along with corrective measures wherever required.
The Internal Audit department focuses on transparency in the systems and proper and adequate internal
control mechanisms. Annual Audit Programmes are drawn up covering critical areas of various departments
in order to bring overall improvements in the Company. From time to time, the Audit Committee is being
apprised on status of audit paras.
The Internal control systems are commensurate with the size of the Company and the reports containing
significant Audit findings are submitted to the Audit Committee of the Company.
The Company has put in place an Enterprise Risk Management (ERM) Policy and procedure duly approved
by the Board in the year and the same has been put on Company's Website. ERM is being implemented
across the organization covering both Works and Non Works Departments by an In-house team. Internal
Audit team is also conducting audit under ERM.
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