However, steady depreciation of the rupee during the second half of the last fiscal has increased the rupee liability of the steel major's foreign- currency loans by a whopping Rs 84.06 crore.

A flat demand and lower price realisation for its products, and bleeding non-core businesses caused Tata Steel's net profit to plummet from Rs 469.21 crore in 1996-97 to Rs 322.08 crore in the last fiscal. This has been despite a significant cut in production, by over 25 per cent, of its loss-making bearings division.

The steel major has effected the accounting-policy change by adjusting expenses on issue of shares, secured premium notes, foreign currency convertible bonds, redeemable non-convertible bonds and provision for premium on redemption of non-convertible debentures (NCDs) againstthe Share Premium account.

These were previously amortised by a charge to the profit & loss account and has resulted in a higher profit for the 1997-98 fiscal.

Tata Steel's other income has also been significantly higher for the year at Rs 83.09 crore, against Rs 57.97 crore in the previous year. This has primarily been on account of profit from sale of investment at Rs 13.22 crore and sale of capital assets at Rs 11.29 crore.

The increase in the rupee liability of Tata Steel's forex loans has been adjusted in the carrying cost of the fixed assets to the extent of Rs 84 crore, while the balance Rs 6 lakh has been charged to revenue.

During the fiscal, foreign-currency loans of Rs 125 million were raised to fund the company's ongoing expansions. It also has outstanding syndicated loans of around Rs 220 crore from a clutch of multinational banks.

Most of the company's foreign-currency loans had been raised to fund the company's huge phase IV expansion at its integrated steel complex in Jamshedpur,Bihar.

While the slab reheating furnace has already been commissioned, the expanded hot-strip mill, third convertor and slab caster will be commissioned in mid-1998.

Tata Steel also faces a major foreign-currency outgo within the next 15 months. The company had raised $100 million in 1993-94 through issue of foreign currency convertible bonds, which are to be redeemed after March 1999.

As the pre-determined conversion price of Rs 291 per GDR (each GDR representing one equity share) is far above the market price, the possibility of the bonds being converted into equity shares is minimal.

However, the Tata group is unlikely to create any redemption reserve for the purpose, senior officials of the company had indicated.

Dues from allies up

Tata Steel's outstanding dues from its loss-making associate companies has increased to a staggering Rs 130.2 crore from Rs 75.09 crore in 1996-97. Of this amount, Rs 119.70 crore is due from Tinplate Company of India, while equal amounts of around Rs 5crore is due from Tata Material Handling Systems and Tata Construction & Projects Ltd, a BIFR-referred company.These loans were given by Tata Steel in the form of inter-corporate deposits, supply of materials and services, advances on capital account, etc.

The Tata group flagship has not made any provisions for these dues in view of its long term commitment.Tata Steel has a clutch of engineering and downstream subsidiaries. The markets have been agog with rumours over the last couple of years that in line with the group's proposed restructuring, some of these companies could be merged with Tata Steel.

However, Tata Steel officials say that this will not be possible as most of these associate companies have foreign majors as technical and equity partners, who may not wish to work hand in hand with each other.