Credit policy The approved credit policy circulated vide Ref No Mktg/HQ/AN/06-07 dated for the sales of stainless

steel products shall remain as the guideline for making any commitment in the officer to customers. The detailed credit policy is placed at(annexure-10 with attachments therein as annexure 10(1) to 10(9) for guidance of all concerned. As a rule, stainless steel product from SSP shall be sold against Cash payment (ie.againts Cheque /DD/Pay order). For this purpose, each branch shall identify a list of customer on the basics of pat performance and payment record, who can be allowed t make payment by cheque. This list, to be approved by ED,shall also stipulate a limit upto which cheque can be accepted. It would be necessary to update this list every year for any addition /deletion in the list as may be called for. Other customer or such customer having an indifferent payment history shall be asked to make payment by demand draft. Unsecured credit shall not normally be extended to any customer. However, if it is required to be extended to any customer circumstances, approval of the competent Authority shall be obtained before commencement of dispatch in the prescribed format. (Annexure-10(5), clearly indicating the period, value etc. Based on the customer requirement, off-take, criticality of the order etcif it is need so arises. Secured Credit may be extended against an irrevocable letter of credit(LC) through a Scheduled / Nationalized bank. The branch Manager shall take additional precaution to verify the LC condition, documentation stipulated, LC charge etc before hand.

In special cases Secured Credit may also be extended against Bank Grantee from scheduled /Nationalized Banks. Approval for Secured Credit is to b obtained in the prescribed format (Annexure-10(6)). As a measure of abundant precaution, the Branch Manger shall independently verify the authenticity of the BG /LC from the issuing bank, at the time of its receipt / before dispatch of the material, after obtaining confirmation of LC from Regional /Zonal Office of the issuing Branch. The secured credit shall also be extended only after obtaining specific approval from the Competent Authority. In such proposal, the branch marketing executive shall specifically bring forth the requirement as to whether the secured credit shall be interest bearing or interest free and for the period so proposed.

STEEL

AUTHORITY

OF

INDIA

LTD

SALEM STEEL PLANT, SALEM-636013 CREDIT POLICY OBJECTIVE:

The credit policy aims at laying down guideline for deciding the suitability of a customer for extending credit, minimizing the risk involved and methodology for sanction and monitoring credit. GUIDING PRINCIPLE: Material should be sold mainly on cash and carry basis or delivery against payment through negotiation of documents. For the purpose, bank draft, pay orders. Banker cheque and dated cheque shall also be considered as Cash. Acceptance of current will be guided as per the operational guidelines enclosed at annexure -10(1). Material may be on Secured Credit basis on letter of credit (LC) or Bank Guarantee (BG) of adequate amount from a Scheduled Bank. Material may be sold provision of credit shall be processed in consultation with Branch Finance (BF) / Finance & Account department (FAD), Salem. Secured credit facility may be extended to customer by the Branch Manger as per delegation of powers indicated in the Operational Guidelines. Unsecured Credit facility may be provided to customer only with the approval of the Executive Director(ED). CATEGORISATION OF CUSTOMERS: Fir the purpose of selling of material on credit, customer may be broadly divided into two categories, namely CATEGORY I: 1. Central / State Govt department. 2. Public Sector Undertaking (whose net worth is positive)

3. Project of National / State level importance, including those funded by International Financial Agencies. 4. Public Limited Companies (whose shares are traded regularly) 5. Customer, with whom MoU /tie up has been executed CATEGORY II 1. Public Sector Undertaking (whose net worth is negative) 2. Public Limited companies (whose share are not trade regularly) and Private Limited and Private Limited Companies (i.e. closely held companies). 3. HUFs / Partnership / Proprietorship firms. While processing proposal for provision of credit, special attention should be paid to the second category of customer because of the relatively higher risk involved. CREDIT LIMITS: Based on prevailing market condition and business needs, an overall limit for provision of secured and unsecured credit separately shall be fixed at the beginning of each financial year by Executive Director, SSP in consultation with Corporate Finance. These limits may be revised in case of necessity out of pressing market condition with in the approval of ED, SSP. Credit, Secured and Unsecured provided at any point of time, should not exceed the limit.

In case of sale of material against secured credit, the Branch Manger in consultation with Branch Finance /FAD, Salem, shall issue material against valid banking document(s) on approval from Regional Manager of SSP Mktg. over all position of provision of secured credit shall be monitored at the Branch level the concerned Branch Manger of SSP Marketing and Fad, Salem and at the Plant level by HOD and shall be reviewed by ED,SSP, Salem on quarter basis. Limit fixed for unsecured credit shall be sub-allocated various region by Head of Marketing Department in consultation with HOD, FAD, Salem. The Regional Manager shall sub-allocate the limit among the Branches. The supervisory officer shall be by head of Mktg within the over-all limit, as per necessity from time to time. Proposal for unsecured credit limit for individual customer shall be initiated by the Branch Manger in consultation with FAD, Salem along with supporting document and routed through the Regional Manager to Mktg HQ for approval by the Executive Director, SSP after getting concurrence of HOD of FADV Salem. The current dated cheques must be obtained in maximum cases of unsecured credit. Certain reputed buyer as also Government Department, Defence Units, Railways etcmay be provided PDCs or current dated cheque.The current dated cheque may be accompanied with the letter of undertaking from the customer authorizing SSP to present the cheque to bank on the due date, in case of failure to make payment against invoices o or before the due date or such extended due date obtained with the approval of computer authority Blank / undated cheques shall not be accepted.

TIME LIMIT FOR CREDIT: Interest Bearing Credit (IBC) may be sanctioned by the Regional Manager, Head of Mktg, and ED, SSP, with the concurrence of FAD, Salem for a period not exceeding the limit indicated below, as per delegation provided hereunder.

Secured Credit RM with CFA Head of Mktg with CFA ED,SSP with CFA 30 days 60 days 120 days

Unsecured Credit ------90 days

(CFA-Concurrence of Finance & Account) The date of commencement of credit will be reckoned from the date of Commercial Invoice to the party. The Regional Manager may provided credit to a customer with in the approval limits for the number within the power specified above and shall have to take prior approval of the higher for authority for providing credit exceeding the said period. Extension of credit after the normal period: In exceptional cases, existing credit may be extended beyond the credit period by the higher authority only, on the request of the customer for period not exceeding the limit indicated below, on charging interest as applicable.

Secured Credit Head of Mktg with CFA ED, SSP ED (CP) 15 days 30 days 45 days

Unsecured Credit ------30 days

(CFA-Concurrence of Finance & Accounts.)

In case the period for Credit (IFC) facility may be allowed for the specified time period Provided in clause 5.1 above by the respective levels, by corresponding adjustment of discount / rebates or loading of prices INTERSET ON CREDIT SALE Interest, normal or penal as applicable, shall be charged on credit facility extended at the rates declared from time to time and inline with those of CMO. METHODOLOGY FOR SANCTION OF CREDIT:

Proposal for credit shall be processed, either as per terms of enquiry / tender or on request of the customer in the prescribed format along with supporting documents.

Within the limits for provision of secured credit communicated to the Branch, the Branch Manger shall process all cases in consultation with Branch Finance where available, and decide the credit limit for individual customer, with the approval of Regional Manager. Secured Credit facility may be provided based on LS /BG after verifying genuineness and validity of the documents as per operational guidelines.

MONITORING: Position of sanction, realization and overdue amount against secured and unsecured credit provided to each customer during a particular month vis--vis previous month shall be complied by the Branch Manager and sent to Regional Manager and Marketing HQ with a copy to FAD by 4th of succeeding month. Regional Manager will review the monthly report and report corrective action taken in case of nonrealization of payment due, to HOD Marketing, Salem. A statement, based on the details furnished by Branch Manager, including the over all position of overdue outstanding vis--vis secured /unsecured credit sanctioned shall be sent by Head of Mktg to ED, SSP on quarterly basis with a copy to ED (CP) (Finance) for information. In case of failure to clear the due against secured credit by the due date and if no proposal for extension has been approved, the Branch shall invoke the BG / LCs in time within the validity, so as to ensure that the BG / LCs do not lapse. In such cases, future supply of material should also be monitored / regulated by concerned Branch Manager of SSP Mktg. and Director

In case of default against unsecured credit by the due date taking into account extension given, if any, no future credit shall be provided, even if a part of the credit limit is free. In case of default in payment against unsecured credit, material may be supplied to the customer on cash and carry basis by the Branch Manager with the approval of the head of Mktg, provided there is partial recovery against the amount overdue. GENERALPOINTS All proposals for sanction of credit shall be dealt by the Branch Manager in consultation with Branch Finance / FAD, Salem. In case of difference of opinion, the proposal shall be referred to the next higher authority (HOD, Marketing and HOD, FAD, Salem) and further action will be taken as per decision of the higher authority.

Proposal for issue of material shall be considered only against the vacant Credit Limit of the customer after taking into account encashment of the cheque(s) deposited against the supplies made earlier. It should be ensured that collection of dues is done within the credit period. Incase of delay in payments, suitable action should be initiated against the defaulted customer by the BMs concerned to realize the dues.

Unsecured credit sanctioned in respect of all customers specified in the approval.

shall

automatically lapse on 30th of June every year, if otherwise not

BMs of SSP Mktg and FAD. Salem shall maintain a credit register for effective monitoring of credit utilization against limits approved / available. All payment shall be considered overdue if not made on due date and applicable penal rate shall be chargeable on all overdue. If both secured and unsecured credit are over-due from a customer payments should first be adjusted against unsecured credit. Rate of interest as applicable on the date of sanction of credit shall be chargeable. The interest would be charged on annual rate basis on all outstanding over dues beyond the permitted interest free credit period. The denomination should be 365 days in case of ordinary year and 366 days in case of leap year in case of leap year in those cases where for calculating number of days for interest, 29th February is also counted.

sSecured Credit limit for individual customer shall be operated and monitored by the Branch, which had processed the sanction of credit based on available documents with supporting LC/BG.

Transferring balance past of secured credit to a different Branch Manager will not be considered. While processing proposal for execution of Memorandum of Understanding, which envisages supply of credit on a long term basis, past experience with the party should be taken into account. The date of commencement of credit shall be reckoned from the date of Commercial Invoice. For customer referred to BIFR, the material should be supplied only on cash basis. In case of BIFR companies, the secured credit may not be extended as the operation of BGs/LCs comes to a stay while the proceedings are on. RATE OF INTERSET IN % PER ANNIM Sl.No 1. 2. Particular Normal Rate Penal Rate Secured Credit 15.50% 18.50% Unsecured Credit 20.50% 23.50%

The above interest rate with respect to interest bearing Credit sales and for delayed retirement of document and cash discount was last issued vide MS No.24 of 2011 dated 25.04.2011. in view of latest revision of BPLR by SBI with effect from 12.05.2011, it has now been decided to future the interest rates. Cash Discount may be allowed @ 8.00% p.a to the customers, who make cash payments beyond the due date. For this purpose, the annual rate of interest shall be divided by twelve to arrive at the monthly chargeable.