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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

Jindal Steel & Power Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்

Mar 31, 2017

1. OVERVIEW

Jindal Steel & Power Limited ("the Company") is one of the India''s leading steel producers with significant presence in sectors like mining and power generation. It is listed on the National Stock Exchange of India and Bombay Stock Exchange in India. Its business is spread across India and overseas. The registered office is situated in the state of Haryana, the corporate office is situated in New Delhi and the manufacturing plants in India are in the states of Chhattisgarh, Odisha, Jharkhand etc. The Company has global presence through subsidiaries, mainly in Australia, Botswana, Cameroon, China, Dubai, Indonesia, Liberia, Mauritania, Mauritius, Mozambique, Madagascar, Namibia, South Africa, Sultanate of Oman, Tanzania and Zambia. There are several business initiatives running simultaneously across continents.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Company has adopted Indian Accounting Standards (the ''Ind AS'') prescribed under section 133 of the Companies Act, 2013 (the ''Act''), read with the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016, with effect from 1st April 2016 with 1st April 2015 as the date of transition. Accordingly the financial statements have been prepared in accordance with the said Ind AS & Rules and other recognized accounting practices & policies to the extent applicable.

For all periods up to and including the year ended 31st March 2016, the Company had prepared its financial statements in accordance with accounting standards as prescribed under Section 133 of the Companies Act, 2013 (the ''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 (referred to as ''Indian GAAP''). The Company has consistently applied the accounting policies used in the preparation of its opening Ind AS Balance Sheet at April 1, 2015 throughout all periods presented, as if these policies had always been in effect and are covered by Ind AS 101 ''''First-time adoption of Indian Accounting Standards''''. The transition was carried out from accounting principles generally accepted in India (''''Indian GAAP'''') which is considered as the previous GAAP, as defined in Ind AS 101. The reconciliation of effects of the transition from Indian GAAP on the equity as at April 1, 2015 and March 31, 2016 and on the net profit and material adjustments to cash flows for the year ended March 31, 2016 is disclosed in Note no 66 to these financial statements.

The standalone financial statements provide comparative information in respect of previous year. In addition, the company presents balance sheet as at the beginning of previous year which is the transition date to Ind AS.

The significant accounting policies used in preparing the financial statements are set out in Note no 3 of the Notes to the Standalone Financial Statements.

The preparation of the financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures at the date of the financial statements. The judgments, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision effects only that period or in the period of the revision and future periods if the revision affects both current and future years and, if material, their effects are disclosed in the notes to the financial statements. Actual results could vary from these estimates. (refer Note no. 4 on critical accounting estimates, assumptions and judgments).

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Measurement

These financial statements have been prepared under the historical cost convention on the accrual basis, except for the following assets and liabilities which have been measured fair value:

- Property, Plant & Equipment (at fair value as deemed cost as at 1st April 2015),

- Derivative financial instruments,

- Defined benefit plans- plan assets measured at fair value,

- Financial assets and liabilities except certain investments and borrowings carried at mortised cost (refer accounting policy regarding financial instruments).

- Share based payments

The financial statements are presented in Indian Rupees (?) which is the Company''s functional and presentation currency and all amounts are rounded to the nearest crore(? 00,00,000) and two decimals thereof, excepts otherwise stated.

3.2 Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non- financial asset takes in to account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy in which they fall.

3.3 Property, plant and equipment

On transition to Ind AS, the Company has adopted optional exception under Ind AS 101 to measure Property, Plant and Equipment at fair value. Consequently the fair value has been assumed to be deemed cost of Property, Plant and Equipment on the date of transition. Subsequently Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment losses, if any. Costs include costs of acquisitions or constructions including incidental expenses thereto, borrowing costs, and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits.

Subsequent expenditure relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognized in Statement of Profit & Loss as incurred.

Gains or losses arising from discard/sale of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is discarded / sold.

The Company adjusts exchange differences arising on translation/settlement of long-term foreign currency monetary items as referred in Policy for Foreign exchange transactions. (Refer Note no 5)

On transition to Ind AS, the Company has adopted fair value as deemed cost of property, plant and equipment as at 1st April 2015 under Ind AS 101 and revisited and revised useful life of various categories of assets. Subsequent to adoption of fair value as deemed cost of property, plant and equipment as at 1st April 2015 under Ind AS 101, property, plant and equipment are measured in accordance with Ind AS 16''s requirements for cost model.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively.

Capital work-in-progress: Expenditure related to and incurred on implementation of new/expansion-cum-modernization projects is included under capital work-in-progress until the relevant assets are ready for its intended use. All other expenditure (including trial run / test run expenditures) during construction / erection period (net of income) are shown as part of pre-operative expenditure pending allocation / capitalization and the same is allocated to the respective asset on completion of its construction/erection.

Depreciation: Depreciation on property, plant and equipment is provided on straight-line method (SLM) as per the useful life of assets, as estimated by the management / independent professional, which is generally in line with Schedule II to the Companies Act, 2013 except for certain assets specified below:

1. Plant and equipment:

- Power generating units: 40-60 years

- Certain continuous process plants: 25-48 years

- Certain Other Plant and equipments: 15-35 years

2. Certain non-factory buildings: 18-30 years

Subsequent to fair value as deemed cost of property, plant and equipment as at 1st April 2015 under Ind AS 101, depreciation is charged on fair valued amount less estimated salvage value.

Based on management evaluation, depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of property, plant and equipment.

Certain plant and machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Leasehold land is amortized on a straight line basis over the period of lease.

3.4 Intangible assets

Capital expenditure on purchase and development of identifiable on monetary assets without physical substance is recognized as Intangible Assets when:

- it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

- the cost of the asset can be measured reliably.

Such Intangible assets are stated at cost less accumulated amortization and impairment losses, if any.

Intangible Assets are amortized on straight-line method over the expected duration of benefits. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates and adjusted prospectively.

Estimated useful lives of intangible assets are as follows:

- Computer software- 1 to 10 years

- Design & Drawings- 5 years

- Licenses- 25 years

3.5 Intangible assets under development

Mines development expenditure incurred in respect of new iron ore/coal and likewise mines are shown under ''Intangible assets under development''. On mines being ready for intended use, this amount is transferred to appropriate head under intangible assets and amortized over a period of ten years starting from the said year or the future expected extraction period of the reserves based on actual extraction till date, whichever is shorter.

Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate all the following:

- The technical feasibility of completing the intangible asset so that it will be available for use or sale

- Its intention to complete the asset

- Its ability to use or sell the asset

- How the asset will generate future economic benefits

- The availability of adequate resources to complete the development and to use or sell the asset

- The ability to measure reliably the expenditure attributable to the intangible asset during development.

3.6 Biological assets

Biological assets are measured at fair value. Feeding and maintenance costs are expensed as incurred.

3.7 Investment property

Investment properties are measured at cost, including transaction costs less accumulated depreciation and impairment losses, if any.

3.8 Impairment

The carrying amount of Property, plant and equipment, Intangible assets and Investment property are reviewed at each Balance Sheet date to assess impairment, if any based on internal / external factors. An asset is treated as impaired when the carrying cost of asset or exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed, if there has been an improvement in recoverable amount.

3.9 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that is not explicitly specified in an arrangement.

The rental payments under operating lease are recognized as expense in the statement of profit and loss on a straight-line basis over the lease term.

3.10 Borrowing Costs

Borrowing costs include interest and other costs that the Company incurs in connection with the borrowing of funds.

Borrowing costs related to a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of qualifying asset, using the effective interest method. All other borrowing costs are charged to statement of profit and loss.

In case of significant long term loans, other costs incurred in connection with the borrowing of funds are amortized over the period of respective Loan.

3.11 Valuation of Inventories

Inventories are valued at lower of cost, computed on weighted average basis, or net realizable value. Cost of inventories includes in case of raw material, cost of purchase and incidental expenses; in case of work-in-progress, estimated direct cost and appropriate proportion of administrative and other overheads; in case of finished goods, estimated direct cost and appropriate administrative and other overheads and excise duty; and in case of traded goods, cost of purchase and other costs.

Scrap is valued at estimated realizable value. However raw materials, components, stores and spares held for use in the production of finished goods are not written down below cost if the finished products are expected to be sold at or above cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges, recognized in OCI, in respect of the purchases of raw materials.

3.12 Foreign Currency Transactions

- Transactions in foreign currencies are initially recorded by the Company at rates prevailing at the date of the transaction. Subsequently, monetary items are translated at closing exchange rates of balance sheet date and the resulting exchange difference recognized in profit or loss. Differences arising on settlement of monetary items are also recognized in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the transaction. Non-monetary items (Other than investment in shares of Subsidiaries, Joint Ventures and Associates) carried at fair value that are denominated in foreign currencies are translated at the exchange rates prevailing at the date when the fair value was determined. Exchange component of the gain or loss arising on fair valuation of non-monetary items is recognized in line with the gain or loss of the item that gave rise to such exchange difference.

- The Company has availed the exemption available in Ind AS 101, to continue capitalization of foreign currency fluctuation on long term foreign currency monetary liabilities outstanding on transition date.

3.13 Revenue Recognition

- Revenue is measured at fair value of the consideration received or receivable. The Company recognizes revenue from sale of products net of discounts, sales incentives, rebates granted, returns, VAT, sales tax and duties when the products are delivered to customer or when delivered to a carrier for export sale, which is when significant risks and rewards of ownership pass to the customer, Sale of product is presented gross of manufacturing taxes like excise duty, wherever applicable.

- Income from aviation and other services is accounted for at the time of completion of service and billing thereof.

- Revenue from sale of power is recognized when delivered and measured based on bilateral contractual arrangements.

- Export benefits available are accounted for in the year of export, to the extent the realization of the same is not considered uncertain by the Company.

- Government grants/ subsidies are recognized at fair value where there is reasonable certainty that the grant /subsidy will be received and all attached conditions will be complied with. The grant/subsidy is recognized in the statement of profit and loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.

3.14 Inter-Division Transfers/Captive sales

- Inter-division transfer of independent marketable products, produced by various divisions and used for further production/sales is accounted for at approximate prevailing market price/other appropriate price.

- Captive sales are in regard to products produced by various divisions and used for capital projects. These are transferred at cost to manufacture.

- The value of inter-divisional transfer and captive sales is netted off from sales and corresponding cost under cost of materials consumed and total expenses respectively. The same is shown as a contra item in the statement of profit and loss.

- Any unrealized profit on unsold/unconsumed stocks is eliminated while valuing the inventories.

3.15 Other Income

- Claims receivable

The quantum of accruals in respect of claims receivable such as from railways, insurance, electricity, customs, excise and the like are accounted for on accrual basis to the extent there is reasonable certainty of realization.

- Dividend Income from Investment

Dividend income from investments is recognized when the right to receive payment has been established.

- Interest Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is netted off from interest cost under the head "Interest Cost (Net)" in the statement of profit and loss.

3.16 Employee Benefits

- Short term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

- Payment to defined contribution plan is recognized as expense when employees have rendered services. Remeasurements of the defined benefit liability/asset comprising actuarial gains and losses are recognized in other comprehensive income.

- The liability for gratuity, a defined benefit plan is determined using the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. Remeasurements comprising actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged / credited to Other Comprehensive Income in period in which they arise. Other costs are accounted for in Statement of Profit and Loss.

- Liability in respect of compensated absences due or expected to be availed within one year from the Balance Sheet date is estimated on the basis of valuation carried out by third party actuaries at each Balance Sheet date. Remeasurements comprising actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged / credited to profit and loss in the period in which they arise.

- Share based compensation benefits are recognized in the profit and loss in the year in which the same is granted as per Employees Share Purchase Scheme of the Company.

3.17 Research and Development expenditure

Revenue expenditure on research is expensed as incurred. Capital expenditure incurred on research is added to the cost of Property, plant and equipment/ respective intangible asset.

3.18 Taxes on Income

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred tax is provided on temporary difference arising between the tax bases of assets & liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax is measured using the tax rate that are expected to apply in the year when the asset is realized or the liability is settled based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized directly in equity/OCI is recognized in equity/OCI and not in the statement of profit and loss.

Deferred tax asset is recognized to the extent that it is probable that sufficient future taxable profit will be available against which the deductible temporary differences and the carry forward unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax [asset or liability] is recognized in respect of temporary differences which reverse during the tax holiday period.

Minimum Alternate tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

3.19 Provisions, contingent liabilities, commitments and contingent assets

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability and commitments, unless the probability of outflow of resources embodying economic benefits is remote. Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

3.20 Earnings per share

Basic earnings per share is computed using the net profit/ (loss) for the year (without taking impact of OCI) attributable to the equity shareholders'' and weighted average number of shares outstanding during the year. The weighted average numbers of shares also includes fixed number of equity shares that are issuable on conversion of compulsorily convertible preference shares, debentures or any other instrument, from the date consideration is received (generally the date of their issue)of such instruments. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effect of potential dilutive equity shares unless impact is anti-dilutive.

3.21 Segment Reporting

- Identification of Operating segments

The Company''s operating businesses are organized and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products and as reviewed by the Chief operating decision maker of the Company.

- Inter-segment transfers

The Company recognises inter-segment sales and transfers as if they were to third parties at current market prices.

- Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

- Unallocated items

It includes general administrative expenses, corporate & other office expenses, income that arises at the enterprise level and relate to enterprise as a whole being not allocable to any business segment and also unallowable assets & liabilities that relate to the company as whole and not allocable to any segment.

- Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

3.22 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

- Initial Recognition

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or release of financial assets and financial liabilities respectively, which are not at fair value through profit or loss, are added to the fair value of underlying financial assets and liabilities on initial recognition. Trade receivables and trade payables that do not contain a significant financing component are initially measured at their transaction price.

- Subsequent Measurement

a. Non- Derivative Financial Instruments

O Financial assets carried at mortised cost

A financial asset is subsequently measured at mortised cost which is held with objective to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

O Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income which is held with objective to achieve both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an election for its investments which are classified as equity instruments (other than investment in shares of Subsidiaries, Joint Ventures and Associates) to present the subsequent changes in fair value through profit and loss account

O Financial assets at fair value through profit or loss A financial asset which is not classified in any of

the above categories are subsequently fair valued through profit or loss. The Company has elected to measure its investments which are classified as equity instruments (other than investment in shares of Subsidiaries, Joint Ventures and Associates) at fair value through profit and loss account.

O Impairment of financial assets

The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. For impairment purposes significant financial assets are tested on an individual basis, other financial assets are assessed collectively in groups that share similar credit risk characteristics.

The Company recognizes lifetime expected losses for all trade receivables. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in profit or loss.

The Company follows ''simplified approach'' for the recognition of impairment loss allowance on trade and other receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

O Financial liabilities

Financial liabilities are subsequently carried at amortized cost using the effective interest method. Financial liabilities at fair value through profit and loss includes financial liability held for trading and financial liability designated upon initial recognition as at fair value through profit and loss.

O Investment in Subsidiaries, Associates and Joint Ventures

Investment in equity shares of subsidiaries, associates and joint ventures is carried at cost in the standalone financial statements.

O Cash and cash equivalents

Cash and cash equivalents consist of cash, bank balances in currents and short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

b. Derivative Financial Instruments

O Derivative instruments such as forward currency contracts are used to hedge foreign currency risks, and are initially recognized at their fair values on the date on which a derivative contract is entered into and are subsequently re-measured at fair value on each reporting date. A hedge of foreign currency risk of a firm commitment is accounted for as a fair value hedge. Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss. However, if hedging instrument hedges an equity instrument for which the Company has elected to present changes as at fair value through other comprehensive income, then fair value changes are recognized in Other Comprehensive Income.

- Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognitionas per Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

- Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

- Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.

4. CRITICAL ACCOUNTING ESTIMATES,ASSUMPTIONS AND JUDGEMENTS

4.1 Property, plant and equipment

External advisor and/or internal technical team assesses the remaining useful life and residual value of property, plant and equipment. Management believes that the assigned useful lives and residual values are reasonable.

4.2 Intangibles

Internal technical and user team assess the remaining useful lives of Intangible assets. Management believes that assigned useful lives are reasonable. All Intangibles are carried at net book value on transition.

4.3 Mine restoration obligation

In determining the cost of the mine restoration obligation the Company uses technical estimates to determine the expected cost to restore the mines and the expected timing of these costs.

4.4 Liquidated damages

Liquidated damages payable or receivable are estimated and recorded as per contractual terms/management assertion; estimate may vary from actual as levy by customer/vendor.

4.5 Other estimates

The Company estimates the un-collectability of accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. Similarly, the Company provides for inventory obsolescence, excess inventory and inventories with carrying values in excess of net realizable value based on assessment of the future demand, market conditions and specific inventory management initiatives. In all cases inventory is carried at the lower of historical cost and net realizable value.

b. Capital Work in Progress includes Rs, 802.15 crore (March 31, 2016 Rs, 445.62 crore & April 01, 2015 Rs, 299.67 crore) being Pre- operative expenditure and Rs, 383.21 crore (March 31, 2016 Rs, 563.94 crore & April 01, 2015 Rs, 344.00 crore ) being Capital stores.

c. Additions to Property, Plant & Equipment include Rs, 148.32 crore (March 31, 2016 Rs, 1.50 crore & April 01, 2015 Rs, 14.22 crore) and addition to Capital work- in- progress include Rs, (0.02) crore (March 31, 2016 Rs, 0.02 crore & April 01, 2015 Rs, 10.22 crore)being expenditure incurred on Research & Development Activities. Additions to Property, Plant & Equipment includes Rs, (0.02) crore (March 31, 2016 Rs, 1.52 & April 01, 2015 Rs, 14.22 crore) being capitalized from Capital work in progress.

d. The Company has opted to continue the policy to capitalize foreign currency fluctuation on long term borrowings which was followed as per previous I-GAAP as per optional election of Ind AS -101, on all long term foreign currency borrowings outstanding on March 31, 2016. Accordingly additions /(adjustments) to plant and machinery/ capital work-in-progress includes addition of Rs, (41.49) crore (March 31, 2016 Rs, 136.16 crore & April 01, 2015 Rs, 101.13 crore) on account of foreign exchange fluctuation (Gain)/loss.

e. Borrowing cost incurred during the year and capitalized is Rs, 5.02 crore (March 31, 2016 Rs, 14.74 crore & April 01, 2015 Rs, 389.84 crore). Borrowing cost incurred during the year and transferred to capital work-in-progress is Rs, 344.43 crore (March 31, 2016 Rs, 75.76 & April 01, 2015 Rs, 9.66 crore).

(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs, 1 per share. Each holder of equity share is entitled to one vote per share. The Company declares dividend in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to approval of the Shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:

In accordance with Section 77 of the Companies Act,1956 and buy back regulations of SEBI, the Company during the financial year 2013-14 bought back and extinguished 19,959,584 equity shares of Rs, 1 each and created a Capital Redemption Reserve of Rs, 2.00 crore out of surplus in the Statement of Profit and Loss. The premium on buy back of Rs, 498.80 crore had been utilized from Securities Premium Account Rs, 122.96 crore and out of surplus in Statement of Profit and Loss Rs, 375.84 crore.

During the five years immediately preceding 31st March, 2017, the Company has not allotted any equity shares as bonus shares and also not issued any share for consideration other than cash.

In addition the Company allotted 5,94,353 nos. equity shares during the preceding five years under its various Employees Stock Option Schemes / Employee Stock Purchase Scheme.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

e) Employees Stock purchase Scheme

In accordance with SEBI (Share Based Employees Benefits) Regulations 2014 and pursuant to JSPL ESPS 2013 Scheme, the Nomination and Remuneration Committee has vide its resolution dated 27.01.2017 offered and the Corporate Management Committee of the Board vide its resolution dated 03.02.2017 allotted 1,20,434 nos. equity shares of Rs, 1 each at a premium of Rs, 81.20 each to Mr Ravi Uppal, Managing Director & Group CEO. Out of total offered 150000 nos. equity shares so far, the Company had during the earlier year allotted 29,566 nos. equity shares of Rs, 1 each.

Notes-

(i) On account of substantial investment made by the Company in setting up/ expansion of industrial unit(s) at Raigarh (Chhattisgarh), including investment in acquisition of capital assets, one of the Company''s unit is eligible for sales tax exemption under the State Industrial Policy which aims towards industrialization of the State and development of backward areas. The Company had earlier treated the amount relating to sales tax exemption as capital receipt and credited the same to "Sales tax subsidy / Capital reserve" shown under the head "Reserve and Surplus" up to the Financial year ended 31st March, 2015. However, in the year ended 31st March, 2016, the Company had, in view of amendment in the Income tax laws and applicability of Ind AS with effect from 1st April, 2016, credited a sum of Rs, 35.12 crore to sales in the statement of profit and loss. Considering the above, the Company had decided to transfer the accumulated balance of Rs, 316.70 crore appearing under "Sales tax subsidy / Capital Reserve" under the head "Reserve and Surplus" as at 31st March,2016 to the statement of profit and loss during the year 2016-17. Accordingly, during the current year Rs, 316.70 crore as stated above has been credited to and considered as part of "other operating revenue" and loss before tax for the current year is lower to that extent.

(ii) The Company has, as on 31st March, 2017, outstanding loan in foreign currency of US$ 109.95 million (equivalent Rs, 712.95 crore) given to an overseas subsidiary. The said loan was earlier treated as part of quasi equity and hence exchange difference arising on the translation of the said loan was accumulated in foreign currency translation reserve. The said loan is to be repaid by the overseas subsidiary on demand. Accumulated balance appearing in the foreign currency translation reserve of Rs, 70.89 crore as at close of 31st March, 2016 had been credited to the statement of profit and loss during the year ended 31st March, 2016.

(iii) The Company is required to create Debenture Redemption Reserve out of the profits which is available for the purpose of redemption of debentures.

(iv) Capital Redemption Reserve represents the statutory reserve created when capital is redeemed/during buy back. It is not available for distribution.

(v) Securities Premium Reserve represents the amount received in excess of par value of securities (equity shares, preference shares and debentures).This reserve is utilized in accordance with provisions of the act.

Debentures

Security

i) Debentures of Rs, 1000 crore (March 31, 2016 Rs, 1000 crore) placed initially with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual installments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs, 100 crore (12.10.2009), Rs, 150 crore (22.10.2009), Rs, 150 crore (24.11.2009), Rs, 150 crore (24.12.2009), Rs, 150 crore (25.01.2010), Rs, 150 crore (19.02.2010) and Rs, 150 crore (26.03.2010). The debentures are secured by way of first charge on pari-passu charge basis over the movable and immovable fixed assets of 810 MW (6x135MW) Captive Power Plant, both present and future, of the company at Angul, Odisha in favour of the Debenture Trustees

ii) Debentures ofRs, 62 crore (March 31, 2016 Rs, 62 crore) placed initially with SBI Life Insurance Company Limited on private placement basis are redeemable at par in 5 equal annual installments commencing from the end of 8 years from the date of allotment i.e. 29.12.2009. The debentures are secured by way of first charge on pari-passu charge basis over the movable and immovable fixed assets of 810 MW (6x135MW) Captive Power Plant, both present and future, of the company at Angul, Odisha in favour of the Debenture Trustees.

iii) Debentures ofRs, 500 crore (March 31, 2016 Rs, 500 crore) placed initially with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual installments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs, 100 crore (24.08.2009), Rs, 80 crore (08.09.2009), Rs, 80 crore (08.10.2009), Rs, 80 crore (09.11.2009), Rs, 80 crore (08.12.2009) and Rs, 80 crore (08.01.2010) . The debentures are secured on pari-passu charge basis by way of hypothecation of movable fixed assets of the Company (excluding assets charged on exclusive basis) in favour of the Debenture Trustees. In addition a first pari passu mortgage on a part of immovable property of the pertaining to unit located at Kharsia Road, Raigarh and a part of the immovable property pertaining to unit located at 13 KM Stone, G E Road, Mandir Hasaud, Raipur in favour of the Debenture Trustees.

Term Loans from Banks

Security

i) Loans of Rs, 2829.64 crore (March 31, 2016 Rs, 2775.44 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by way of first pari passu charge on all movable plant & machinery, spares including all insurance policies, project contracts, movable and immovable fixed assets, both present and future under the 1.8 MTPA DRI facility at Angul, Odisha.

ii) Loans of Rs, 40.42 crore (March 31, 2016 Rs, 53.89 crore) repayable in 38 quarterly installments starting from October, 2010 (refinancing is in process) are secured by way of first pari passu charge on all movable and immovable fixed assets both present and future under 2X135 MW Power Plant (Phase- 1) at Dongamauha, Raigarh, Chhattisgarh.

iii) Loans of Rs, 319.80 crore (March 31, 2016 Rs, 314.00 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by way of first pari passu charge on all movable and immovable fixed assets including machinery spares, both present and future, of DCPP [2X135 MW Power Plant (Phase - 1)] at Dongamauha, Raigarh, Chhattisgarh. Further, IDFC Loan of Rs, 126.78 crore (March 31, 2016 Rs, 127.50 crore) included in above is additionally secured by all the assets of DCPP [2X135 MW Power Plant (Phase - 2)] at Dongamauha, Raigarh, Chhattisgarh.

iv) Loans of Rs, 2328.99 crore (March 31, 2016 Rs, 2,217.88 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by first pari passu charge on all movable (including project contracts) and immovable fixed assets, both present and future under 1.5 MTPA Integrated Steel Plant and 1.2 MTPA Plate Mill project at Angul, Odisha.

v) Loans of Rs, 959.59 crore (March 31, 2016 Rs, 935.22 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by first pari passu charge on all movable plant & machinery, spare parts, furniture & fixtures including all the project contracts (including insurance policies, rights and titles) and immovable fixed assets, both present and future under 6x135 MW Power Plant Project at Angul, Odisha.

vi) Loans of Rs, NIL (March 31, 2016 Rs, 62.25 crore) repayable in 16 quarterly installments starting from March 2013 was secured by subservient charge on fixed assets of the Company.

vii) Loans of Rs, 1340 crore(March 31, 2016 Rs, 1,430 crore) initially taken from ICICI bank on bilateral basis are repayable by way of ballooning installments in two tranches. An amount of Rs, 500 crore shall be repayable in a period of 5 (five)years in 16 (sixteen) quarterly installment, whereas an amount of Rs, 1000 crore shall be repayable in a period of 10 (Ten) years in 36 (thirty six) quarterly installment starting from January, 2015.

Loans of Rs, 956.24 crore (March 31, 2016 Rs, 979.67 crore) initially taken from HDFC Bank on bilateral basis are repayable in a period of 8 (eight) years in 28 (twenty eight) quarterly installments starting from June, 2015. Loans of Rs, 1,465.94 crore (March 31, 2016 Rs, 1,500 crore) from State Bank of India are repayable in a period of 8 (eight) years in

32 (Thirty Two) quarterly installments starting from June, 2016. Above loans are secured by way of a first pari passu charge on all the present movable Fixed Assets of units located at Balkudra, Patratu, District Ramgarh, Jharkand; 13 KM Stone, G E Road, Mandir Hasaud, Raipur; 201 to 204, Industrial Park SSD, Punjipatra, Raigarh, Chhattisgarh; Bhikaji Cama Place, New Delhi; and all movable Fixed Assets (present as well as future) located at Kharsia Road, Raigarh, Chhattisgarh. In addition a first ranking mortgage and pari passu charge on immovable property pertaining to unit located at Kharsia Road, Raigarh and a part of the immovable property pertaining to unit located at 13 KM Stone, G E Road, Mandir Hasaud, Raipur.

viii) a. Loans of Rs, 1,559.61 crore (March 31, 2016 Rs, 1574.98 crore) repayable in a period of 7.75 years in 31 (Thirty One) quarterly installments, starting from June, 2017 are secured by way of a first charge on pari passu basis over all the movable and immovable fixed assets (Plate Mill & ISP facility, DRI, Captive power plant and other misc. assets etc.), both present and future, of plant Phase 1A at Angul, Odisha.

b. Loans of Rs, 500.00 crore (March 31, 2016 Rs, 500.00 crore) repayable to HDFC bank in a period of 7.75 years in 31 (Thirty One) quarterly installments starting from June, 2017 are secured by way of a first charge on pari passu basis over all movable fixed assets (Plate Mill & ISP facility, DRI, CPP and other misc. assets etc.), both present and future, of Plant Phase 1A at Angul, Odisha. Further, charge in favour of HDFC bank in respect of said loan by way of a first charge on immovable fixed assets, both present and future, of Plant Phase 1A at Angul, Odisha is to be created.

ix) Loans of Rs, 483.16 crore (March 31, 2016 Rs, 485.90 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by way of a first pari passu charge on all movable plant and machinery, spares, vehicles etc. and immovable fixed assets both present and future under 2X135 MW Power Plant (Phase 2) at Dongamahua Raigarh Chattisgarh.

Other Loans Security

Other loans of Rs, 196.21 crore (Previous Year Rs, 197.33 crore) have been refinanced and are repayable in 79 quarterly installments starting from June, 2016 are secured by first pari passu charge on all movable plant & machinery, spare parts, furniture & fixtures including all the project contracts (including insurance policies, rights and titles) and immovable fixed assets, both present and future under 6x135 MW Power Plant Project at Angul, Odisha.


Mar 31, 2016

The significant accounting policies used in preparing the annual financial statements are set out in note 2 of notes to the annual financial statements.

Change in Accounting Policy

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year except for following:

a) Depreciation and Amortization

During the current year, the Company has upward revised the useful life of certain class of fixed assets based on internal assessment and technical estimate. The Company believes that the useful life best represents the period over which Company expects to use these assets. The above change has taken place with effect from 1st April, 2015 and accordingly the depreciation expense for the year ended 31 March, 2016 is lower by Rs.581.01 crore.

b) On account of substantial investment made by the Company in setting up/ expansion of industrial unit(s) at Raigarh (Chhattisgarh), including investment in acquisition of capital assets, one of the Company''s units is eligible for sales tax exemption under the State Industrial Policy which aims towards industrialization of the State and development of backward areas. The period of exemption is dependent upon and linked to the quantum of investment. Till last year, the Company had, based on legal advise, treated incentive on account of sales tax exemption, being the element of sales tax embedded in the sale price of products sold out of the eligible unit, to be in the nature of subsidy granted by the State Government to incentivize industrialization in the State and hence as a capital receipt. For the current year, the Company has, due to amendments in Income tax laws with effect from April 1, 2015 and Ind AS applicability with effect from April 1, 2016, credited a sum of Rs.35.12 crore to sales in the statement of profit and loss. As a result of above change, loss before tax for the current year is lower by Rs.35.12 crore.

(Note 2(iii)(e) of the annual standalone financial statements)

1 BASIS OF PREPARATION

These abridged financial statements have been prepared in accordance with the requirements of Rule 10 of the Companies (Accounts) Rules,2014. These abridged financial statements have been prepared on the basis of the complete set of financial statements for the year ended March 31,2016.

2 NON-CURRENT INVESTMENTS Unquoted

As of 31st March,2016 and 31st March,2015 the aggregate book value of unquoted investment is Rs.1,846.43 crore and Rs.1,828.05 crore respectively.

Aggregate provision for diminution in the value of investment as at March 31,2016 and March 31,2015 is Rs.341.09 crore and Rs.341.09 crore respectively.

Current investments

As of 31st March,2016 and 31st march,2015 the aggregate book value of investment is Rs. Nil and Rs.1,000.00 crore respectively.

As of 31st March, 2016 and 31st march,2015 the aggregate NAV of units of mutual funds is Rs. Nil and Rs.1,018.13 crore respectively

3 DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD (AS-17) "SEGMENT REPORTING"

The primary reportable segments are the business segments namely Iron & Steel and Power. Other business segment mainly comprises of aviation services and machinery division. The secondary reportable segments are geographical segments which are based on the sales to customers located in India and outside India.Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter- segment revenue.

b) Expenses that are directly identifiable with/allocable to segments are considered for determining the segment results.

c) Expenses/Incomes which relates to the group as a whole and not allocable to segments are included under Other Un-allocable Expenditure (net of Un-allocable Income).

d) Segment assets and liabilities include those directly identifiable with respective segments. Un-allocable assets and liabilities represent the assets and liabilities that relate to group as a whole and not allocable to any segment.

4 The Hon''ble Supreme Court of India by its Order dated 24 September 2014 has cancelled number of coal blocks allocated to the Company by Ministry of Coal, Government of India and directed to pay an additional levy of Rs.295 per MT on gross coal extracted from the operational mines from 1993 to till date. The Company filed review petition before the Hon''ble Supreme Court of India which has been rejected. The Company is in the process of filing curative petition before the Hon''ble Supreme Court of India.

i.) The Company has paid under protest such levy on coal extracted during the period from 1993 to 31 March 2015 of Rs.2,082.23 crore. The management based on legal opinion has accounted for Rs.807.77 crore computed on net extraction (run of mines less shale, rejects and ungraded middling) of coal by the Company. The said amount was shown as exceptional item in the year 2014-15 and balance amount of Rs.1,274.46 crore has been shown as recoverable from the Government Authority since the entire amount of additional levy has been paid under protest.

ii.) The Company has net book value of investment made in mining assets including land, infrastructure and clearance etc. of Rs.425 crore. The difference, if any, between book value of investment and compensation to be determined, shall be accounted for when the final compensation is received pursuant to directive vide letter dated 26 December, 2014 given by the Ministry of Coal on such mines.


Mar 31, 2015

I) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis and all material respects with the Accounting Standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realization of incomes. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in depreciation policy which is as per schedule II of the Companies Act, 2013, as referred in Para 39.

ii) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities and commitments at the end of the reporting period and results of operations during the reporting period. Although these estimates are based upon the management''s best knowledge of current events and actions, actual results could differ from these estimates. difference between the actual result and estimates are recognized in the period in which the results are known/ materialized.

iii) Fixed Assets - Depreciation and Amortisation

a. Tangible Assets

Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. Costs include costs of acquisitions or constructions including incidental expenses thereto, borrowing costs , and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits.

Gains or losses arising from discard/sale of tangible fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is discarded/sold.

The Company adjusts exchange differences arising on translation/ settlement of long-term foreign currency monetary items as referred in Policy for Foreign exchange transactions.

b. Intangible assets

Intangible assets are recognized in accordance with the criteria laid down in Accounting Standard (AS-26), whereas they are separately identifiable, measurable and the Company controls the future benefits arising out of them. Intangible assets are stated at cost less amortization and impairment losses, if any.

c. Capital work-in-progress

Expenditure related to and incurred on implementation of new/ expansion-cum-modernisation projects is included under capital work-in-progress and the same is allocated to the respective tangible asset on completion of its construction/erection.

d. Intangible assets under development

Mines development expenditure incurred in respect of new iron ore/coal and likewise mines is shown under ''Intangible assets under development''. On mines being ready for intended use, this amount is transferred to appropriate head under intangible assets and amortized over a period of ten years starting from the said year or the future expected extraction period of the reserves based on actual extraction till date, whichever is shorter

e. depreciation and Amortization

Depreciation on tangible assets is provided on straight-line method (SLM) as per the useful life of the assets estimated by the management which are equal to the rates specified in Schedule II to the Companies Act, 2013. Leasehold land is amortised over the period of lease. In the case of assets where impairment loss is recognised, the revised carrying amount is depreciated over the remaining estimated useful life of the asset. Based on management evaluation depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed assets.

Certain plant and machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Estimated useful life as specified in Schedule II to the Companies Act 2013 is adjusted in respect of plant and machinery working on shift basis.

Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed assets. The management believes that depreciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed assets.

Intangible Assets are amortized on straight-line method over the expected duration of benefits not exceeding ten years. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method is changed to reflect the changed pattern.

iv) Impairment of Assets

The carrying amount of assets is reviewed for impairment at each balance sheet date wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which the asset''s carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. value in use is based on the present value of the estimated future cash flows relating to the asset. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (i.e. cash generating units).

Previously recognized impairment losses are reversed where the recoverable amount increases because of favorable changes in the estimates used to determine the recoverable amount since the last impairment was recognized. A reversal of an asset''s impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognized in prior years.

v) Accounting for Leases

The rental payments under operating lease as per respective lease agreements are recognized as expense on straight line basis in the statement of profit and loss.

vi) Borrowing Cost

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing cost related to a qualifying asset is worked out on the basis of actual utilization of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalized with the cost of qualifying asset. Other borrowing costs incurred during the year are charged to statement of profit and loss. In case of significant long term loans, the ancillary costs incurred in connection with the arrangement of borrowings are amortized over the period of respective Loan.

vii) valuation of Inventories

Raw materials and stores & spares are valued at lower of cost, computed on weighted average basis or net realizable value. Cost includes the purchase price as well as incidental expenses. Scrap is valued at estimated realizable value. However in case of raw materials, components, stores and spares held for use in the production of finished goods are not written down below cost if the finished products are expected to be sold at or above cost.

Work-in-process is valued at lower of estimated cost or net realizable value and finished goods are valued at lower of weighted average cost or net realizable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads. Cost of finished goods also includes excise duty.

Traded goods are valued at lower of cost and net realizable value and cost is determined based on weighted average. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

viii) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction.

Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses of above foreign currency translations are recognized in the statement of profit and loss for the year except to the extent that they relate to:

(a) The Company has elected to account for exchange differences arising on reporting of long-term foreign currency monetary items pertaining to Accounting Standard 11(AS-11) as notified by Government of India. Accordingly, the effect of exchange differences on foreign currency loans of the Company is accounted by addition or deduction to the cost of the assets so far it relates to depreciable capital assets.

(b) Exchange differences relating to monetary items that are in substance forming part of the Company''s net investment in non- integral foreign operations are accumulated in Foreign Currency translation reserve.

The premium or discount arising at the inception of forward exchange contract, except the contract which are long term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change.

Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

ix) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

Long-term investments are carried at cost. Current investments are carried at the lower of cost or market / fair value. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

Provision is made when, in the opinion of the management, diminution in the value of investment is other than temporary in nature. The reduction in carrying amount is reversed when there is a rise in value of investments or if the reason for the reduction no longer exists.

x) Revenue Recognition

a) Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the buyer.

b) Gross Revenue from operations comprises of sale of products and other operating income which also includes export incentives and aviation income. ''Net Revenue from operations'', net of excise duty, Inter-divisional transfer and captive sale is also disclosed separately.

c) Sales are inclusive of excise duty but net of returns, rebates, VAT and sales tax. Products returned are accounted for in the year of return.

d) Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

e) Income from aviation and other services is accounted for at the time of completion of service and billing thereof.

xi) Inter-Division Transfers/Captive sales

a) Inter-division transfer of independent marketable products, produced by various divisions and used for further production/ sales is accounted for at approximate prevailing market price/ other appropriate price.

b) Captive sales are in regard to products produced by various divisions and used for capital projects. These are transferred at cost as per CAS4.

c) The value of inter-divisional transfer and captive sales is netted off from sales and corresponding cost under cost of materials consumed and total expenses respectively. The same is shown as a contra item in the statement of profit and loss.

d) Any unrealized profit on unsold/unconsumed stocks is eliminated while valuing the inventories.

xii) Other Income

a. Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs, Excise and the like are accounted for on accrual basis to the extent there is certainty of ultimate realization.

b. Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

xiii) Interest Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is netted off from interest cost under the head "Interest Cost (Net)" in the statement of profit and loss.

xiv) Employee Benefits

Expenses and liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS)-15 - ''Employee Benefits''.

a) Provident Fund

The Company contributes to Government administered fund as well as to Provident fund Trust. The interest rate payable by the trust to beneficiaries every year is being notified by Government. The Company makes good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

b) Gratuity

Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognized in the Balance Sheet in respect of gratuity is the present value of the defined benefit/ obligation at the Balance Sheet date less the fair value of plan assets, together with adjustment for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the Balance Sheet date by an independent Actuary using the projected unit credit method. Actuarial gains or losses are immediately recognised in the statement of profit and loss and are not deferred.

c) Compensated absences

Liability in respect of compensated absences due or expected to be availed within one year from the Balance Sheet date is estimated on the basis of an actuarial valuation performed by Independent Actuarial using the projected unit credit method. It is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees.

xv) Research and Development expenditure

Research and Development expenditure not fulfilling the recognition criteria as set out in Accounting Standard (AS-26) ''Intangible Assets'' is charged to the statement of profit and loss while capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xvi) Taxes on Income

Tax expense comprises current and deferred tax. Current income- tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period.

xvii) Provisions, contingent liabilities, commitments and contingent assets

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability and commitments, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities and commitments unless the probability of outflow of resources embodying economic benefits is remote. Contingent assets are neither recognized nor disclosed in the financial statements.

xviii) Earnings per share

The earnings considered in ascertaining the Company''s earnings per share (EPS) comprise of the net profit after tax attributable to equity shareholders. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year adjusted for events of bonus issue post period end, bonus elements in right issue to existing shareholders, share split, and reverse share split (consolidation of shares). The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effect of potential dilutive equity shares unless impact is anti-dilutive.

xix) Financial derivatives

Forward contracts entered into to hedge foreign currency/ interest rate risk on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value at each reporting date, in pursuance of the announcement of The Institute of Chartered Accountants of India (ICAI) on Accounting for Derivatives.

As a matter of prudence, the company does not recognise any mark to market gains in respect of any outstanding derivative contract.

xx) Cash and cash equivalents

Cash and cash equivalents consist of cash, bank balances in current and short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase.

xxi) Segment Reporting

a) Identification of segments

Primary Segment

The Company''s operating businesses are organized and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products.

Secondary Segment

The geographical segments have been identified based on the locations of the customers: within India and outside India.

b) Inter-segment transfers

The Company recognises inter-segment sales and transfers as if they were to third parties at current market prices.

c) Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

d) Unallocated items

It includes general administrative expenses, corporate & other office expenses, income that arises at the enterprise level and relate to enterprise as a whole being not allocable to any business segment.

e) Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.


Mar 31, 2014

I) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, ongoing concern basis and in terms of the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 in compliance with Section 211(3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

ii) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities and commitments at the end of the reporting period and results of operations during the reporting period. Although these estimates are based upon the management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognised in the period in which the results are known/materialised.

iii) Fixed Assets - Depreciation and Amortisation

a. Tangible Assets

Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. Costs include costs of acquisitions or constructions, including incidental expenses thereto and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits

b. Intangible assets

Intangible assets are recognised in accordance with the criteria laid down in Accounting Standard (AS-26), whereas they are separately identifiable, measurable and the company controls the future benefits arising out of them. Intangible assets are stated at cost less amortisation and impairment losses, if any.

c. Capital work-in-progress

Expenditure related to and incurred on implementation of new/expansion-cum- modernisation projects is included under capital work-in-progress and the same is allocated to the respective tangible asset on completion of its construction/erection.

d. Intangible assets under development

Mines development expenditure incurred in respect of new iron ore/coal and likewise mines is shown under ''Intangible assets under development. On mines being ready for intended use, this amount is transferred to appropriate head under intangible assets and amortised over a period of ten years starting from the said year or the future expected extraction period of the reserves based on actual extraction till date, whichever is shorter.

e. Depreciation and Amortisation

Depreciation on tangible assets is provided on straight-line method (SLM) at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Leasehold land is amortised over the period of lease. In the case of assets where impairment loss is recognised, the revised carrying amount is depreciated over the remaining estimated useful life of the asset.

Certain plant and machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Intangible Assets are amortised on straight-line method over the expected duration of benefits not exceeding ten years. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method is changed to reflect the changed pattern.

iv) Impairment of Assets

The carrying amount of assets is reviewed for impairment at each balance sheet date wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount for which the asset''s carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (i.e. cash generating units).

Previously recognised impairment losses are reversed where the recoverable amount increases because of favourable changes in the estimates used to determine the recoverable amount since the last impairment was recognised. A reversal of an asset''s impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years.

v) Accounting for Leases

Finance lease is recognised as an asset and a liability to the lessor at fair value at the inception of the lease.

The lease payments under operating lease as per respective lease agreements are recognised as expense in the statement of profit and loss based on the time pattern of the usage benefit over the lease term.

vi) Borrowing Cost

Borrowing cost related to a qualifying asset is worked out on the basis of actual utilisation of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalised with the cost of qualifying asset. Other borrowing costs incurred during the period are charged to statement of profit and loss.

vii) Segment Reporting

a) Identification of segments

Primary Segment

The Company''s operating businesses are organised and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products.

Secondary Segment

The geographical segments have been identified based on the locations of the customers: within India and outside India.

b) Inter-segment transfers

The Company recognises inter-segment sales and transfers as if they were to third parties at current market prices. However, inter segment sales and transfers for Captive/Capital consumption is as per CAS-4 (Cost Accounting Standard-4) with the exception of power segment that is at current market price.

c) Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

d) Unallocated items

It includes general administrative expenses, corporate & other office expenses, income that arises at the enterprise level and relate to enterprise as a whole being not allocable to any business segment.

e) Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

viii) Valuation of Inventories

Raw materials and stores & spares are valued at lower of cost, computed on weighted average basis or net realisable value. Cost includes the purchase price as well as incidental expenses. Scrap is valued at estimated realisable value. However in case of raw materials, components, stores & spares held for use in the production of finished goods are not written down below cost if the finished products are expected to be sold at or above cost.

Work-in-process is valued at lower of estimated cost or net realisable value and finished goods are valued at lower of weighted average cost or net realisable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

ix) Inter-Division Transfers

a) Inter-division transfer of independent marketable products, produced by various divisions and used for captive consumption, is accounted for at approximate prevailing market price.

b) Inter-division transfer of Raw materials and products, not being independent marketable products between various divisions is accounted for primarily in accordance with guidance derived from CAS-4.

c) The value of such inter-divisional transfer is netted off from sales and operational income and expenses under cost of materials consumed and other expenses. The same is shown as a contra item in the statement of profit and loss.

d) Any unrealised profit on unsold/unconsumed stocks is eliminated while valuing the inventories.

x) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognised in the statement of profit & loss for the year, except to the extent that they relate to (a) new projects till the date of capitalisation which are carried to capital work-in- progress and those relating to fixed assets which are adjusted to the carrying cost of the respective assets; and (b) exchange difference arising on the loans provided to foreign subsidiaries being non-integral foreign operations is accumulated in foreign currency translation reserve.

In case of forward foreign exchange contracts, exchange differences are dealt with in the statement of profit & loss over the life of the contract except those relating to tangible assets in which case they are capitalised with the cost of respective tangible assets. Non-monetary foreign currency items are carried at historical cost.

xi) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Non-current investments are carried at cost. Provision is made when, in the opinion of the management, diminution in the value of investment is other than temporary in nature. The reduction in carrying amount is reversed when there is a rise in value of investments or if the reason for the reduction no longer exists. Current investments are carried at the lower of cost or market /fair value.

xii) Revenue Recognition

a) Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the buyer.

b) Gross Revenue from operations comprises of sale of products and other operating income which also includes export incentives and aviation income. ''Net Revenue from operations'', net of excise duty and Inter-divisional transfer is also disclosed separately.

c) Sales are inclusive of excise duty but net of returns, rebates, VAT and sales tax. Products returned are accounted for in the year of return.

d) Export sales are accounted for on the basis of the date of bill of lading/airways bill.

e) Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

f) Income from aviation and other services is accounted for at the time of completion of service and billing thereof.

xiii) Other Income

a. Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs, Excise and the like are accounted for on accrual basis to the extent there is certainty of ultimate realisation.

b. Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

xiv) Excise Duty

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount is considered for valuation thereof.

xv) Employee Benefits

Expenses & liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS)-15- ''Employee Benefits''.

a) Provident Fund

The Company contributes to Government administered fund as well as Provident fund Trust. The interest rate payable by the trust to beneficiaries every year is being notified by Government. The Company makes good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

b) Gratuity

Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognised in the Balance Sheet in respect of gratuity is the present value of the defined benefit/obligation at the Balance Sheet date less the fair value of plan assets, together with adjustment for unrecognised actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the Balance Sheet date by an independent Actuary using the projected unit credit method. Actuarial gains or losses are immediately recognised in the statement of profit & loss and not deferred.

c) Compensated absences

Liability in respect of compensated absences due or expected to be availed within one year from the Balance Sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the Balance Sheet date is estimated on the basis of an actuarial valuation performed by an independent Actuary using the projected unit credit method.

d) Other short term benefits

Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.

xvi) Research and Development expenditure

Research and Development expenditure not fulfilling the recognition criteria as set out in Accounting Standard (AS-26) ''Intangible Assets'' is charged to the statement of profit and loss while capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xvii) Taxes on Income

Provision for current tax is made considering various allowances and benefits available to the Company under the provisions of the Income Tax Act, 1961.

In accordance with Accounting Standard (AS-22) Accounting for Taxes on Income'', deferred taxes resulting from timing differences between book and tax profits are accounted for at the tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallised. Deferred tax assets are recognised and reviewed at each Balance Sheet date to the extent there is reasonable/virtual certainty of realising such assets against future taxable income.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

xviii)Provisions, contingent liabilities, commitments and contingent assets

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability and commitments, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities and commitments unless the probability of outflow of resources embodying economic benefits is remote. Contingent assets are neither recognised nor disclosed in the financial statements.

xix) Earnings per share

The earnings considered in ascertaining the Company''s earnings per share (EPS) comprise of the net profit aftertax attributable to equity shareholders. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period adjusted for events of bonus issue post period end, bonus elements in right issue to existing shareholders, share split, and reverse share split (consolidation of shares). The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effect of potential dilutive equity shares unless impact is anti-dilutive.

xx) Financial derivatives

Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted for as per Accounting Standard (AS-11) ''The Effects of Changes in Foreign Exchange Rates''. Exchange differences arising on such contracts are recognised in the period in which they arise.

All other derivative contracts, including forward contracts entered into to hedge foreign currency/ interest rate risk on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value at each reporting date, in pursuance of the announcement of The Institute of Chartered Accountants of India (ICAI) on Accounting for Derivatives.

As a matter of prudence, the Company does not to recognise any mark to market gains in respect of any outstanding derivative contracts.

xxi) Cash and cash equivalents

Cash and cash equivalents consist of cash, bank balances in current and short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value ofRs. 1 per share. Each holder of equity share is entitled to one vote per share. The Company declares dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2014, the amount of per share dividend proposed, subject to approval of shareholders in annual general meeting, for distribution to equity shareholders is Rs. 1.50 (Previous Year Rs. 1.60)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

e) Forfeited shares:

Pursuant to the resolution passed at the extra ordinary general meeting dated 4th September, 2009, the Company reclassified the authorised share capital of the Company by cancellation of 10,000,000 Preference Shares of Rs. 100 each and simultaneous creation of 1,000,000,000 fresh Equity Shares of Rs. 1 each and increased the authorised share capital to Rs. 2,000,000,000.

"Consequently, the Company had cancelled 20,00,000 preference shares ofRs. 100 each ( Rs. 5 paid up) which were forefeited earlier. Upon cancellation of such shares, the amount of Rs. 10,000,000 was transferred to General Reserve.

f) Buy back of equity shares :

In accordance with Section 77 of the Companies Act,1956 and buy back regulations of SEBI, the Company during the financial year 2013-14 bought back and extinguished 19,959,584 number of equity shares of Rs. 1 each and created a Capital Redemption Reserve of Rs. 2.00 crore out of surplus in the Statement of Profit and Loss. The premium on buy back of Rs. 498.80 crore has been utilised from Securities Premium Account by Rs. 122.96 crore and out of surplus in Statement of Profit and Loss by Rs. 375.84 crore.

g) Employees Stock purchase Scheme

In accordance with SEBI(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999,

a) As per resolution passed by the Compensation Committee held on 22.07.2013, during the year on 31.07.2013, 11,750 Equity Shares of Rs. 1/- at a premium ofRs. 201.55 were allotted to Mr Ravi Uppal, Managing Director & Group CEO, as per the provisions of Employee Stock Purchase Scheme 2013 (hereinafter referred to as JSPL ESPS 2013 Scheme), duly approved through postal ballot as on 21.06.2013.

b) As per the resolution passed by Compensation Committee dated 29.08.2013, it is proposed to offer 21000 equity shares of Rs. 1/- equivalent of Rs. 50 lacs at an average price of Rs. 236.83 to Mr. Ravi Uppal, Managing Director & Group CEO as per JSPL ESPS 2013 Scheme. This offer will be for one year from the date of this offer letter as per his entitlement of Employee Stock Option worth Rs. 50 lacs per annum.

DEBENTURES

i) Debentures of Rs. 1000 crore placed initially with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs. 100 crore (12.10.2009), Rs. 150 crore (22.10.2009), Rs. 150 crore (24.11.2009), Rs. 150 crore (24.12.2009), Rs. 150 crore (25.01.2010), Rs. 150 crore (19.02.2010) and Rs. 150 crore (26.03.2010). The debentures are secured on pari-passu charge basis by way of mortgage of immovable properties and hypothecation of movable fixed assets created/to be created on the 6x135 MW Power Plant Project at Angul, Odisha in favour of the Debenture Trustees.

ii) Debentures ofRs. 500 crore placed initially with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs. 100 crore (24.08.2009), Rs. 80 crore (08.09.2009), Rs. 80 crore (08.10.2009), Rs. 80 crore (09.11.2009), Rs. 80 crore (08.12.2009) and Rs. 80 crore (08.01.2010). The debentures are secured on pari-passu charge basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

iii) Debentures of Rs. 62 crore placed initially with SBI Life Insurance Company Limited on private placement basis are redeemable at par in 5 equal annual instalments commencing from the end of 8 years from the date of allotment i.e. 29.12.2009. The debentures are secured on pari passu basis by way of mortgage of immovable properties and hypothecation of movable assets created/to be created on the 6x135 MW Power Plant Project at Angul, Odisha in favour of the Debenture Trustees.

iv) Debentures of Rs. 25 crore placed initially with ICICI Lombard General Insurance Company Limited on private placement basis are redeemable at par at the end of 5 years from the date of allotment i.e. 03.12.2009. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

v) Debentures ofRs. 75 crore placed initially with ICICI Prudential Life Insurance Company Limited on private placement basis are redeemable at par at the end of 5 years from the date of allotment i.e. 03.12.2009. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

TERM LOANS Security

i) Loans of Rs. 30.13 crore (Previous year Rs. 97.98 crore) are secured by exclusive charge on fixed assets created under Steel expansion project at Raigarh, Chhattisgarh;

ii) Loans of Rs. 57.62 crore (Previous year Rs. 104.04 crore) are secured by exclusive charge on fixed assets created under Plate Mill project at Raigarh, Chhattisgarh;

iii) Loans of Rs. 17.14 crore (Previous year Rs. 42.86 crore) are secured by exclusive charge on fixed assets created under 3x25 MW Power Plant at Raigarh, Chhattisgarh;

iv) Loans of Rs. 3483.38 crore (Previous year Rs. 2799.40 crore) are secured by exclusive charge on fixed assets created/to be created under the DRI project at Angul, Odisha;

v) Loans ofRs. 523.79 crore (Previous year Rs. 609.59 crore) are secured by exclusive charge on fixed assets created under 2X135 MW Power Plant (Phase-1) at Dongamahua, Raigarh, Chhattisgarh;

vi) Loans of Rs. 583.07 crore (Previous year Rs. 680.25 crore) are secured by exclusive charge on fixed assets created/ to be created under 2X135 MW Power Plant (Phase- 2) at Dongamauha, Raigarh, Chhattisgarh;

vii) Loans of Rs. 3022.33 crore (Previous year Rs. 3,154.55 crore) are secured by exclusive charge on fixed assets created/to be created under 1.6 MTPA Integrated Steel Plant and 1.5 MTPA Plate Mill project at Angul, Odisha;

viii) Loans of Rs. 1480.50 crore (Previous year Rs. 1,692.20 crore) are secured/to be secured by exclusive charge on fixed assets created/to be created under 6x135 MW Power Plant Project at Angul, Odisha;

ix) Loan of Rs. 171.63 crore (Previous year Rs. 234.14 crore) are secured by subservient charge on fixed assets of the Company.

x) Loan of Rs. 1500 crore (Previous year NIL) initially placed with ICICI bank on bilateral basis are redeemable by way of ballooning instalments in two tranches. An amount of Rs. 500 crore shall be repayable in a period of 5 (five )years in 16 (sixteen) quarterly instalment whereas an amount of Rs. 1000 crore shall be repayable in a period of 10 (Ten) years in 36 (thirty six) quarterly instalment. Above loans are secured by way of a first pari passu charge on all the Borrower''s present movable Fixed Assets of units located at Patratu, District Ramgarh, Jharkand; G E Road, Mandir Hasaud, Raipur; Punjipatra, Raigarh Chhattisgarh; Bhikaji Cama Place, New Delhi; at Village Pachwad, District Satara, Maharashtra and all movable Fixed Assets (present as well as future) located at Kharsia Road, Post Box No. 16, Raigarh, Chhattisgarh. In addition a first ranking mortgage and pari passu charge on part of immovable property of the Borrower pertaining to its unit located at Kharsia Road, Post Box No. 16, Raigarh and part of the immovable property of the Borrower pertaining to its unit located at 13 KM Stone, G E Road, Mandir Hasaud, Raipur;

xi) Loan of Rs. 300 crore (Previous year NIL) initially placed with HDFC Bank on on bilateral basis are redeemable in a period of 8 (eight) years in 28 (twenty eight) quarterly installments. Above loans are secured by way of a fi its located at Pataratu, District Ramgarh, Jharkand; G E Road, Mandir Hasaud, Raipur; Punjipatra, Raigarh Chhattisgarh; Bhikaji Cama Place, New Delhi; at Village Pachwad District Satara, Maharashtra and all movable Fixed Assets (present as well as future) located at Kharsia Road, Post Box No. 16, Raigarh, Chhattisgarh. In addition a first ranking mortgage and pari passu charge on part of immovable property of the Borrower pertaining to its unit located at Kharsia Road, Post Box No. 16, Raigarh and part of the immovable property of the Borrower pertaining to its unit located at 13 KM Stone, G E Road, Mandir Hasaud, Raipur.


Mar 31, 2012

I) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, ongoing concern basis and in terms of the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 in compliance with Section 211(3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

The Company has prepared its financial statements in accordance with Schedule VI as inserted by Notification- S.O. 447(E), dated 28th February, 2011 (As amended by Notification No F.NO. 2/6/2008-CL-V, Dated 30th March, 2011). The Schedule does not impact recognition and measurement principle followed for the preparation of financial statements. However it has necessitated significant changes in the presentation of and disclosures in financial statements. The Company has reclassified its previous year figures to confirm to the classification as per the aforesaid Schedule.

ii) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities and commitments at the end of the financial statements and results of operations during the reporting period. Although these estimates are based upon the management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognised in the period in which the results are known/materialised.

iii) Fixed Assets and Depreciation

a) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation and impairment losses, if any. Costs include costs of acquisitions or constructions, including incidental expenses thereto and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits.

b) Expenditure during construction period Expenditure related to and incurred during implementation of new/expansion-cum modernisation projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/erection.

c) Intangible Assets

Intangible Assets are recognised on the basis of recognition criteria as set out in Accounting Standard (AS-26) 'Intangible Assets'.

d) Depreciation and Amortisation

Depreciation on fixed assets is provided on straight- line method (SLM) at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Leasehold Land and Aircraft are amortised over the period of lease. In the case of assets where impairment loss is recognised, the revised carrying amount is depreciated over the remaining estimated useful life of the asset.

Certain Plant and Machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Intangible Assets are amortised on straight-line method over the expected duration of benefits not exceeding ten years.

iv) Impairment of Assets

The carrying amount of assets is reviewed for impairment at each balance sheet date wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount for which the asset's carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (i.e. cash generating units).

Previously recognised impairment losses are reversed where the recoverable amount increases because of favorable changes in the estimates used to determine the recoverable amount since the last impairment was recognised. A reversal of an asset's impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years.

v) Accounting for Leases

a) Finance lease is recognised as an asset and a liability to the lessor at fair value at the inception of the lease.

b) The lease payments under operating lease as per respective lease agreements are recognised as expense in the statement of profit and loss on a straight-line basis over the lease term.

vi) Borrowing Cost

Borrowing cost related to a qualifying asset is worked out on the basis of actual utilisation of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalised with the cost of qualifying asset. Other borrowing costs incurred during the period are charged to statement of profit and loss.

vii) Segment Reporting

a) Identification of segments

The Company's operating businesses are organised and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products. The analysis of geographical segment is based on the areas in which major operating divisions of the Company operate.

b) Inter-segment transfers

The Company accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices.

c) Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

d) Unallocated items

It includes general administrative expenses, head office expenses and other expenses & income that arise at the enterprise level and relate to enterprise as a whole, and which are not allocable to any business segment.

e) Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

viii) Valuation of Inventories

Raw materials and stores & spares are valued at lower of cost, computed on weighted average basis or net realisable value. Cost includes the purchase price as well as incidental expenses. Scrap is valued at estimated realisable value.

Work-in-process is valued at lower of estimated cost or net realisable value and finished goods are valued at lower of cost or net realisable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

ix) Inter-Division Transfers

Inter-division transfer of goods, as independent marketable products produced by various divisions for captive consumption, is accounted for at approximate prevailing market price. The same is shown as a contra item to reflect the true working of the respective divisions in the statement of Profit and Loss. Any unrealised profit on unsold stocks is eliminated while valuing the inventories. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under cost of materials consumed and other expenses.

Inter-divisional transfer/captive consumption related to fixed assets is at cost.

x) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognised in the statement of profit & loss for the year, except to the extent that they relate to new projects till the date of capitalisation which are carried to pre-operative expenses and those relating to fixed assets which are adjusted to the carrying cost of the respective assets.

In case of forward foreign exchange contracts, exchange differences are dealt with in the statement of profit & loss over the life of the contract except those relating to fixed assets in which case they are capitalised with the cost of respective fixed assets. Non-monetary foreign currency items are carried at historical cost.

In case of foreign subsidiaries, with non-integral foreign operations, revenue items are converted at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Exchange difference arising on conversion is recognised in Foreign Currency Translation Reserve.

xi) Investments

Non-current investments are carried at cost. Provision is made when, in the opinion of the management, diminution in the value of investment is other than temporary in nature. The reduction in carrying amount is reversed when there is a rise in value of investments or if the reason for the reduction no longer exists. Current investments are carried at the lower of cost or market / fair value.

xii) Revenue Recognition

a) Gross Revenue from operations comprises of sale of products and other operating income which also includes export incentives and aviation income. 'Net Revenue from operations', net of excise duty and Inter-divisional transfer is also disclosed separately.

b) Sales is inclusive of excise duty but net of returns, rebates, VAT and sales tax. Products returned/ rejected are accounted for in the year of return/ rejection.

c) Export sales are accounted for on the basis of the date of bill of lading/airways bill.

d) Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

e) Income from aviation and other services is accounted for at the time of completion of service and billing thereof.

xiii) Other Income

a) Claims receivable

The quantum of accruals in respect of claims receivable such as from Railways, Insurance, Electricity, Customs, Excise and the like are accounted for on accrual basis to the extent there is certainty of ultimate realisation.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

xiv) Excise Duty

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount is considered for valuation thereof.

xv) Employee Benefits

Expenses & liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS)-15 -Employee Benefits'.

a) Provident Fund

The Company contributes to Government administered fund as well as Provident fund Trust. The interest rate payable by the trust to beneficiaries every year is being notified by Government. The Company makes good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

b) Gratuity

Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognised in the Balance Sheet in respect of gratuity is the present value of the defined benefit/obligation at the Balance Sheet date less the fair value of plan assets, together with adjustment for unrecognised actuarial gains or losses and past service costs. The defined benefit/ obligation is calculated at or near the Balance Sheet date by an independent Actuary using the projected unit credit method. Actuarial gains or losses are immediately recognised in the statement of profit & loss and not deferred.

c) Compensated absences

Liability in respect of compensated absences due or expected to be availed within one year from the Balance Sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the Balance Sheet date is estimated on the basis of an actuarial valuation performed by an independent Actuary using the projected unit credit method.

d) Other short term benefits

Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.

xvi) Research and Development expenditure

Research and Development expenditure not fulfilling the recognition criteria as set out in Accounting Standard (AS- 26) 'Intangible Assets' is charged to the statement of profit and loss while capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xvii) Employee Stock Option Scheme

Stock options granted to the employees of the Company and its subsidiary under the Employees' Stock Option Scheme(s) are evaluated on Intrinsic Value Method as per the accounting treatment prescribed by the Employee Stock Option Scheme and Employee Stock Purchase

Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India.

Accordingly, excess of market value of the stock option as on date of grant over the exercise price of the options is recognised as deferred employee compensation and is charged to the statement of profit and loss as employee cost on straight line method over the vesting period of the options. The options that lapse are reversed by a credit to employees' compensation expenses, equal to amortised portion of value of lapsed portion and credit to deferred employee compensation expense, equal to the unamortised portion. The balance in employee stock option outstanding amount net of any unamortised deferred employee compensation is shown separately as part of shareholder's fund.

xviii) Taxes on Income

Provision for current tax is made considering various allowances and benefits available to the Company under the provisions of the Income Tax Act, 1961.

In accordance with Accounting Standard (AS-22) 'Accounting for Taxes on Income', deferred taxes resulting from timing differences between book and tax profits are accounted for at the tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallised. Deferred tax assets are recognised and reviewed at each Balance Sheet date to the extent there is reasonable/virtual certainty of realising such assets against future taxable income.

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

xix) Provisions, contingent liabilities, commitments and contingent assets

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability and commitments, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities and commitments unless the probability of outflow of resources embodying economic benefits is remote. Contingent assets are neither recognised nor disclosed in the financial statements.

xx) Intangible assets under development

Mines development expenditure incurred in respect of new iron ore/coal and likewise mines is shown under 'Intangible assets under development' and amortised over a period of ten years starting from the year of commencement of commercial production or the future expected extraction period of the reserves based on actual extraction till date, whichever is shorter.

xxi) Earnings per share

The earnings considered in ascertaining the Company's earnings per share (EPS) comprise of the net profit after tax attributable to equity shareholders. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period adjusted for events of bonus issue post period end,bonus elements in right issue to existing shareholders, share split, and reverse share split (consolidation of shares). The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effect of potential dilutive equity shares unless impact is anti-dilutive.

xxii) Financial derivatives

Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted for as per Accounting Standard (AS-11). 'The Effects of Changes in Foreign Exchange Rates'. Exchange differences arising on such contracts are recognised in the period in which they arise.

All other derivative contracts, including forward contracts entered into to hedge foreign currency/ interest rate risk on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value at each reporting date, in pursuance of the announcement of The Institute of Chartered Accountants of India (ICAI) on Accounting for Derivatives.

xxiii) Cash and cash equivalents

Cash and cash equivalents consist of cash and short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 1 per share. Each holder of equity share is entitled to one vote per share. The Company declares dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012, the amount of per share dividend recognised as distributions to equity shareholders was Rs. 1.60 (Previous Year Rs. 1.50)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has alloted total 775,651,530 fully paid equity shares upto the year ended 31st March, 2012 as fully paid bonus shares by capitalising securities premium reserve.

In addition the Company has allotted the following equity shares during the preceding five years under its various Employees

e) Forfeited shares:

Pursuant to the resolution passed at the EGM dated 4th September, 2009, the Company reclassified the authorised share capital of the Company by cancellation of 10,000,000 Preference Shares of Rs. 100 each and simultaneous creation of 1,000,000,000 fresh Equity Shares of Rs. 1 each and increased the authorised share capital to Rs. 2,000,000,000.

Consequently, the Company had cancelled 100,000 preference shares of Rs. 100 each, which were forefeited earlier. Upon cancellation of such shares, the amount of Rs. 10,000,000 was transferred to General Reserve.

f) Shares reserved for issue under options

The details of shares reserved for issue under Employee stock option (ESOP) plan of the Company are as under:

The Employees Stock Option Scheme - 2005 (ESOS-2005) was approved by the shareholders of the Company in their Annual General Meeting held on 25th July, 2005 and amended by shareholders on 27th September, 2006. Under ESOS-2005, a maximum of 1,100,000 (Eleven lacs) equity shares of Rs. 5/- each could be granted to the employees of the Company and its subsidiary company(ies). In-principle approval from National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) was given on 01.02.2006. A Compensation Committee was constituted by the Board of Directors of the Company in their meeting held on 12th May, 2005 for the administration of ESOS- 2005. Under ESOS-2005, the Compensation Committee has granted stock options as follows:-

a) 859,400 (Eight lacs fifty nine thousand four hundred) stock options on 26.11.2005 at an exercise price of Rs. 1,014/- per share (Series -1) which would vest after 2 years from the date of grant to the extent of 50% (Part 1), after 3 years from the date of grant to the extent of 25% (Part 2) and after 4 years from the date of grant to the extent of 25% (Part 3);

b) 129,550 (One lac twenty nine thousand five hundred fifty) stock options on 02.09.2006 at an exercise price of Rs. 1,121/- per share (Series - II) which would vest after 2 years from the date of grant to the extent of 50% (Part 1), after 3 years from the date of grant to the extent of 25% (Part 2) and after 4 years from the date of grant to the extent of 25% (Part 3); and

c) 136,950 (One lacthirty sixthousand nine hundred fifty) stock options on 27.04.2007 at an exercise price of Rs. 1,819/- per share (Series - III) which would vest after 2 years from the date of grant to the extent of 50% (Part 1), after 3 years from the date of grant to the extent of 25% (Part 2) and after 4 years from the date of grant to the extent of 25% (Part 3).

Pursuant to Clause 5.3 (f) of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and para 18 of the Employees Stock Option Scheme -2005 of the Company, the Compensation Committee is authorised to make a fair and reasonable adjustment to the number of options and to the exercise price in respect of options granted to the employees under the Scheme in case of corporate actions such as right issue, bonus issue, merger etc.

On 27.12.2007, sub-division of the face value of each equity share of the Company from Rs. 5/- to 5 equity shares of Rs. 1/- each was approved by the shareholders in their General Meeting. Thereafter, the Compensation Committee has, in its meeting held on 27.01.2008, made an adjustment to the exercise price by reducing it in case of Series I to Rs. 203/- Series II to Rs. 225/- and Series III to Rs. 364/- per equity share of Rs. 1/- each and to the number of options by increasing it 5 times the original grant consequent to which the number of maximum options that could be issued under the Employees Stock Option Scheme-2005 increased to 5,500,000 (Fifty five lacs) [originally 1,100,000 (Eleven lacs)

Thereafter, the following allotments of equity shares were made under ESOS-2005 on the exercise of options:-

a) 691,343 (Six lacs ninety one thousand three hundred forty three) equity shares ofRs. 1/- each were allotted on 16th June, 2008 on exercise of options granted under Part 1 of Series I of ESOS 2005;

b) 57,136 (Fifty seven thousand one hundred thirty six) equity shares of Rs. 1/- each were allotted on 13th April, 2009 on exercise of options granted under Part 1 of Series II of ESOS 2005;

c) 420,487 (Four lacs twenty thousand four hundred eighty seven) equity shares of Rs. 1/- each were allotted on 21st July, 2009 on exercise of options granted under Part 2 of Series I of ESOS 2005.

The remaining 4,331,034 (Forty three lacs thirty one thousand thirty four) equity shares of Rs. 1/- each were available for allotment under ESOS -2005 after the above 3 allotments.

On 4th September, 2009, issue of 5 equity shares of Rs. 1/- each as bonus shares on each existing equity share of the Company was approved by the shareholders in their General Meeting and on 19th September, 2009, fully paid- up bonus shares were allotted.

Thereafter, pursuant to clause 5.3 (f) of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and para 18 of the Employees Stock Option Scheme - 2005 of the Company, the Compensation Committee has, in its meeting held on 31st October, 2009 made the following adjustments:-

a) The number of unexercised options and options yet to be granted is increased by 5 times Consequently increasing the number of unexercised options and options yet to be granted from 4,331,034 (Forty three lacs thirty one thousand thirty four) to 25,986,204 (Two Crore fifty nine lacs eighty six thousand two hundred four);

b) The price of unexercised options was reduced in case of Series I to Rs. 34/-, Series II to Rs. 38/- and Series III to Rs. 61/- per equity share of Rs. 1/- each.

In-principle approval for listing of additional 21,655,170 (Two crore sixteen lacs fifty five thousand one hundred seventy) equity shares were obtained from NSE and BSEs.

Thereafter, the following allotments of equity shares were made under ESOS-2005 on exercise of options:-

452,246 (Four lacs fifty two thousand two hundred forty six) equity shares of Rs. 1/- each were allotted on 30th January, 2010 on exercise of options granted under part 1 of Series III of ESOS 2005.

2,52,006 (Two lacs fifty two thousand six) equity shares ofRs. 1/- each were allotted on 13th April, 2010 on exercise of options granted under part 2 of Series II of ESOS 2005.

24,56,922 (Twenty four lacs fifty Six thousand nine hundred twenty two) equity shares ofRs. 1/- each were allotted on 23rd June, 2010 on exercise of options granted under part 3 of Series I of ESOS 2005.

3,26,021 (Three lacs twenty Six thousand twenty one) equity shares of Rs. 1/- each were allotted on 1st February, 2011 on exercise of options granted under part 2 of Series III of ESOS 2005.

2,40,564 (Two lacs forty thousand five hundred sixty four) equity shares ofRs. 1/- each were allotted on 14th April, 2011 on exercise of options granted under part 3 of Series II of ESOS 2005.

3,24,223 (Three lacs twenty four thousand two hundred twenty three) equity shares of Rs. 1/- each were allotted on 12th December, 2011 on exercise of options granted under part 3 of Series III of ESOS 2005.

DEBENTURES

i) Debentures placed with SBI Life Insurance Company Limited on private placement basis are redeemable at par in 5 equal annual instalments commencing from the end of 8 years from the date of allotment i.e. 29.12.2009. The debentures are secured on pari passu basis by way of mortgage of immovable properties and hypothecation of movable assets created/to be created on the 6x135 MW Power Plant Project at Angul, Odisha in favour of the Debenture Trustees.

ii) Debentures placed with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs. 100 crore (12.10.2009), Rs. 150 crore (22.10.2009), Rs. 150 crore (24.11.2009), Rs. 150 crore (24.12.2009), Rs. 150 crore (25.01.2010), Rs. 150 crore (19.02.2010) and Rs. 150 crore (26.03.2010). The debentures are secured on pari-passu charge basis by way of mortgage of immovable properties and hypothecation of movable fixed assets created/to be created on the 6x135 MW Power Plant Project at Angul, Odisha in favour of the Debenture Trustees.

iii) Debentures placed with Life Insurance Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs. 100 crore (24.08.2009), Rs. 80 crore (08.09.2009), Rs. 80 crore (08.10.2009), Rs. 80 crore (09.11.2009), Rs. 80 crore (08.12.2009) and Rs. 80 crore (08.01.2010). The debentures are secured on pari-passu charge basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

iv) Debentures placed with ICICI Lombard General Insurance Company Limited on private placement basis are redeemable at par at the end of 5 years from the date of allotment i.e. 03.12.2009. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

v) Debentures placed with ICICI Prudential Life Insurance Company Limited on private placement basis are redeemable at par at the end of 5 years from the date of allotment i.e. 03.12.2009. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

vi) Debentures placed with LIC Mutual Fund Asset Management Company Limited on private placement basis are redeemable at par at the end of 23 months from the date of allotment i.e. 22.01.2010. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

vii) Debentures placed with United India Insurance Company Limited on private placement basis are redeemable at par at the end of 23 months from the date of allotment i.e. 22.01.2010. The debentures are secured on pari-passu basis by way of mortgage of immovable properties and hypothecation of movable fixed assets of the Company in favour of the Debenture Trustees.

TERM LOANS

Security

i) Loans of Rs. 176.54 crore (Previous year Rs. 255.11 crore) are secured by exclusive charge on fixed assets created under Steel expansion project at Raigarh, Chhattisgarh;

ii) Loans of Rs. 150.40 crore (Previous year Rs. 196.87 crore) are secured by exclusive charge on fixed assets created under Plate Mill project at Raigarh, Chhattisgarh;

iii) Loans of Rs. 77.14 crore (Previous year Rs. 111.43 crore) are secured by exclusive charge on fixed assets created under 3x25 MW Power Plant at Raigarh, Chhattisgarh;

iv) Loans of Rs. NIL crore (Previous year Rs. 454.99 crore) are secured by exclusive charge on fixed assets created/to be created under the DRI project at Angul, Odisha;

v) Loans of Rs. 698.47 crore (Previous year Rs. 788.97 crore) are secured by exclusive charge on fixed assets created under 2X135 MW Power Plant (Phase -1) at Dongamauha, Raigarh, Chhattisgarh;

vi) Loans of Rs. 450.00 crore (Previous year Rs. 140.55 crore) are secured by exclusive charge on fixed assets created/ to be created under 2X135 MW Power Plant (Phase - 2) at Dongamauha, Raigarh, Chhattisgarh;

vii) Loans of Rs. 1,841.10 crore (Previous year Rs. 1,054.97 crore) are secured by exclusive charge on fixed assets created/ to be created under 1.6 MTPA Integrated Steel Plant and 1.5 MTPA Plate Mill project at Angul, Odisha;

viii) Loans of Rs. 1,370.00 crore (Previous year Rs. 100.00) are secured/to be secured by exclusive charge on fixed assets created/to be created under 6x135 MW Power Plant Project at Angul, Odisha;

ix) Loan of Rs. 250.00 crore (Previous year Rs. 244.25 crore) are secured by subservient charge on current assets of the Company;

Cash credit from Banks

Secured by hypothecation by way of first charge on stocks of finished goods, raw materials, work in process, stores and spares and book debts and second charge in respect of other movable and immovable assets. The cash credit is repayable on demand.

The Company has so far not received information from vendors regarding their status under the Micro, Small and Medium Enterprises (Development) Act, 2006 and hence disclosure relating to amounts unpaid as at the year-end together with interest paid / payable under this Act have not been given.

a) Statement Showing the details of Pre-operative Expenditure as at 31st March, 2012

b) Freehold land includes Rs. 5.85 crore jointly owned with a Company with 50% share and pending registration.

c) Capital Work in Progress includes Rs. 597.14 crore (Previous year Rs. 383.42 crore) being Pre-operative expenditure and Rs. 1,079.40 crore (PreviousyearRs. 1,083.39 crore) Capital stores.

d) Addition to Fixed Assets includes Rs. 4.84 crore (Previous year Rs. 3.29 crore) and addition to Capital Work in Progress includes Rs. 0.48 crore (Previous year Rs. 3.16 crore) being expenditure incurred on Research & Development Activities. The Capital Work in Progress accumulated balance as on 31st March, 2012 the is Rs. 0.84 crore (Previous year Rs. 3.16 crore)

e) Additions / (Adjustments) to Plant and Machinery/Capital work-in-progress includes addition of Rs. 332.22 crore (Previous year addition of Rs. 165.92 crore) on account of foreign exchange fluctuation on long-term liabilities relating to acquisition of Fixed Assets pursuant to the notifications issued by the Ministry of Corporate Affairs relating to Accounting Standard ( AS-11) 'The Effects of Changes in Foreign Exchange Rates'.

f) Borrowing cost incurred during the year and capitalised is Rs. 50.48 crore (Previous year Rs. 71.02 crore). Borrowing cost incurred during the year and transferred to Capital Work in Progress is Rs. 372.33 crore (Previous year Rs. 202.69 crore).

g) Expenditure during Trial Run period has been capitalised/decapitaised with Fixed Assets as under


Mar 31, 2011

I) Basis of Preparation of Financial Statements

the financial statements are prepared under the historical cost convention, on going concern basis and in terms of the Accounting Standards notifed by Companies (Accounting Standards) Rules, 2006 in compliance with Section 211(3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

ii) Use of estimates

the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. difference between the actual result and estimates are recognised in the period in which the results are known/materialised.

iii) Fixed Assets and depreciation

a) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation and impairment losses, if any. Costs include cost of acquisitions or constructions, including incidental expenses thereto and other attributable costs of bringing the asset to its working condition for its intended use and are net of available duty/tax credits.

b) Expenditure during construction period

Expenditure related to and incurred during implementation of new/expansion-cum- modernisation projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/erection.

c) Intangible Assets

Intangible Assets are recognised on the basis of recognition criteria as set out in Accounting Standard (AS-26) 'intangible Assets'.

d) depreciation and Amortisation

depreciation on fixed assets is provided on straight-line method (SLm) at the rates and in the manner specified in Schedule XiV to the Companies Act, 1956. Leasehold land and aircraft are amortised over the period of lease. In the case of assets where impairment loss is recognised, the revised carrying amount is depreciated over the remaining estimated useful life of the asset.

Certain Plant and machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Intangible Assets are amortised on straight-line method over the expected duration of benefits not exceeding ten years.

iv) Impairment of Assets

The carrying amount of assets is reviewed for impairment at each balance sheet date wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount for which the asset's carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (i.e. cash generating units).

Previously recognised impairment losses are reversed where the recoverable amount increases because of favourable changes in the estimates used to determine the recoverable amount since the last impairment was recognised. A reversal of an asset's impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years.

v) Accounting for Leases

a) Finance lease, is recognised as an asset and a liability to the lessor at fair value at the inception of the lease.

b) The lease payments under operating lease as per respective lease agreements are recognised as expense in the Profit and loss account on a straight line basis over the lease term.

vi) Borrowing Cost

Borrowing cost related to a qualifying asset is worked out on the basis of actual utilisation of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalised with the cost of the qualifying asset. other borrowing costs incurred during the period are charged to Profit and loss account.

vii) Segment Reporting

a) Identifcation of segments

The Company's operating businesses are organised and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

b) Inter-segment transfers

The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

c) Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

d) Unallocated items

It Include general corporate income and expense items which are not allocable to any business segment.

e) Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

viii) Valuation of Inventories

Raw materials and Stores & Spares are valued at lower of cost, computed on weighted average basis, and net realisable value. Cost includes the purchase price as well as incidental expenses. Scrap is valued at estimated realisable value.

Work-in-process is valued at lower of estimated cost and net realisable value and finished goods are valued at lower of cost and net realisable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

ix) Inter-division transfers

Inter-division transfer of goods, as independent marketable products produced by various divisions for captive consumption, is accounted for at approximate prevailing market price. The same is shown as a contra item to reflect the true working of the respective divisions in the Profit & Loss Account. Any unrealised Profit on unsold stocks is eliminated while valuing the inventories. the value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing and others.

Inter-divisional transfer/captive consumption related to Fixed Assets is at cost.

x) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains/losses are recognised in the Profit & loss account for the year, except to the extent that they relate to new projects till the date of capitalisation which are carried to pre-operative expenses and those relating to fixed assets which are adjusted to the carrying cost of the respective assets.

In case of forward foreign exchange contracts, exchange differences are dealt with in the Profit & loss account over the life of the contract except those relating to fixed assets in which case they are capitalised with the cost of respective fixed assets. Non-monetary foreign currency items are carried at historical cost.

In case of foreign subsidiaries, with non-integral foreign operations, revenue items are converted at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Exchange difference arising on conversion is recognised in Foreign Currency Translation Reserve.

xi) Investments

Long-term investments are carried at cost. Provision is made when, in the opinion of the management, diminution in the value of investment is other than temporary in nature. Current investments are carried at the lower of cost or market/fair value.

xii) Revenue Recognition

a) Sales and operational income comprises of sales, inter-division transfer, job charges and export benefits. 'Net Sales and operational income', net of excise duty and inter-divisional transfer is also disclosed separately.

b) Sales is inclusive of excise but net of returns, rebates, VAt and sales tax. materials returned/ rejected are accounted for in the year of return/ rejection.

c) Export sales are accounted for on the basis of the date of bill of lading/airways bill.

d) Income from job charges is accounted for at the time of completion of service and billing thereof.

e) export benefits available under the export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

xiii) other income

a) Claims receivable

Since it is not possible to ascertain with reasonable certainty, the quantum of accruals in respect of claims recoverable such as from Railways, Insurance, Electricity, Customs, Excise and the like, the same are accounted for on receipt basis.

b) Income from Investment

Income from Investment is accounted for on accrual basis when the right to receive income is established.

xiv) excise duty

excise duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount is considered for valuation thereof.

xv) employee benefits

expenses & liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS-15) 'employee benefits'.

a) Provident Fund

The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which services are rendered by the employee.

b) Gratuity

Gratuity is a post employment benefit and is in the nature of a defined benefit plan. the liability recognised in the Balance Sheet in respect of gratuity is the present value of the defined benefit/ obligation at the Balance Sheet date less the fair value of plan assets, together with adjustment for unrecognised actuarial gains or losses and past service costs. the defined benefit/obligation is calculated at or near the Balance Sheet date by an independent Actuary using the projected unit credit method.

c) Compensated absences

Liability in respect of Compensated absences due or expected to be availed within one year from the Balance Sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the Balance Sheet date is estimated on the basis of an actuarial valuation performed by an independent Actuary using the projected unit credit method.

d) other short term benefits expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.

xvi) Research and development expenditure

Research and development expenditure not fulflling the recognition criteria as set out in Accounting Standard (AS-26) 'intangible Assets' is charged to the Profit and loss account while capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xvii) employee Stock option Scheme

Stock options granted to the employees of the Company and its subsidiary under the Employees' Stock option Scheme(s) are evaluated on intrinsic Value method as per the accounting treatment prescribed by the employee Stock option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India.

Accordingly, excess of market value of the stock option as on date of grant over the exercise price of the option is recognised as deferred employee compensation and is charged to the Profit and loss account as employee cost on straight line method over the vesting period of the options. The options that lapse are reversed by a credit to employees' compensation expenses, equal to amortised portion of value of lapsed portion and credit to deferred employee compensation expense, equal to the unamortised portion. The balance in employee stock option outstanding amount net of any unamortised deferred employee compensation is shown separately as part of shareholder's funds.

xviii) Taxes on Income

Provision for current tax is made considering various allowances and benefits available to the Company under the provisions of the Income Tax Act, 1961.

In accordance with Accounting Standard (AS-22) 'Accounting for taxes on income', deferred taxes resulting from timing differences between book and tax Profits are accounted for at the tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallised. deferred tax assets are recognised and reviewed at each Balance Sheet date to the extent there is reasonable/virtual certainty of realising such assets against future taxable income.

Minimum Alternate tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

xix) Provisions, contingent liabilities and contingent assets

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefits is remote.

Contingent assets are neither recognised nor disclosed in the financial statements.

xx) Miscellaneous expenditure

Iron ore/Coal mines development expenditure shown under 'miscellaneous expenditure" is amortised over a period of ten years starting from the year of commencement of commercial production.

xxi) Earnings per Share

The earnings considered in ascertaining the Company's Earnings per Share (EPS) comprise of the net Profit after tax attributable to equity shareholders. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the period adjusted for events of bonus issue post period end, bonus elements in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares). The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.

xxii) Financial derivatives

Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted frm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted as per Accounting Standard (AS-11) 'the Effects of Changes in Foreign Exchange Rates'. Exchange differences arising on such contracts are recognised in the period in which they arise.

All other derivative contracts, including forward contracts entered into to hedge foreign currency/ interest rate risks on unexecuted frm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value at each reporting date, in pursuance of the announcement of the Institute of Chartered Accountants of India (iCAi) on Accounting for derivatives.


Mar 31, 2010

I) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, on going concern basis and in terms of the Accounting Standards issued by the Institute of Chartered Accountants of India and in compliance with Section 211(3C) of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realisation in respect of incomes. Accounting policies not specifically referred to otherwise are consistent and in consonance with the generally accepted accounting principles in India.

ii) Fixed Assets and Depreciation

a) Fixed Assets

Fixed Assets are stated at cost of acquisition inclusive of incidental expenses related thereto and are net of CENVAT/VAT credit. Fixed assets acquired by the Company pursuant to a Scheme of Arrangement are stated at their transfer values.

b) Expenditure during construction period

Expenditure related to and incurred during implementation of new/expansion-cum-modernisation projects is included under capital work-in-progress and the same is allocated to the respective Fixed Assets on completion of its construction/erection. Interest on borrowing costs related to a qualifying asset is worked out on the basis of actual utilisation of funds out of project specific loans and/or other borrowings to the extent identifiable with the qualifying asset and is capitalised with the cost of the qualifying asset.

c) Intangible Assets

Intangible Assets are recognised on the basis of recognition criteria as set out in Accounting Standard (AS-26) ‘Intangible Assets.

d) Depreciation and Amortisation

Depreciation on fixed assets is provided on straight-line method (SLM) at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Leasehold Land and Aircraft are being amortised over the period of lease. In the case of assets where impairment loss is recognised, the revised carrying amount is depreciated over the remaining estimated useful life of the asset.

Certain Plant and Machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same is provided for accordingly.

Intangible Assets are amortised over the expected duration of benefits not exceeding ten years.

iii) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognised in the profit & loss account for the year, except to the extent that they relate to new projects till the date of capitalisation which are carried to pre-operative expenses and those relating to fixed assets which are adjusted to the carrying cost of the respective assets.

In case of forward foreign exchange contracts, exchange differences are dealt with in the profit & loss account over the life of the contract except those relating to fixed assets in which case they are capitalised with the cost of respective fixed assets. Non-monetary foreign currency items are carried at historical cost.

In case of foreign subsidiaries, with non-integral foreign operations, revenue items are converted at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Exchange difference arising on conversion is recognised in Foreign Currency Translation Reserve.

iv) Investments

Long-term investments are carried at cost. Provision is made when, in the opinion of the management, diminution in the value of investment is other than temporary in nature. Current investments are carried at the lower of cost or market / fair value.

v) Valuation of Inventories

Raw Materials and Stores & Spares are valued at lower of cost, computed on weighted average basis, and net realisable value. Cost includes the purchase price as well as incidental expenses. Scrap is valued at estimated realisable value.

Work-in-progress is valued at lower of estimated cost and net realisable value and finished goods are valued at lower of cost and net realisable value. Cost for this purpose includes direct cost and appropriate administrative and other overheads.

vi) Inter-Division Transfers

Inter-division transfer of goods, as independent marketable products produced by separate divisions for captive consumption, is transferred at approximate prevailing market price. The same is shown as a contra item to reflect the true working of the respective divisions in the Profit and Loss Account. Any unrealised profit on unsold stocks is eliminated while valuing the inventories. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing and others.

Inter-divisional transfer/captive consumption to Fixed Assets is at cost.

vii) Employee Benefits

Expenses & liabilities in respect of employee benefits are recorded in accordance with Accounting Standard (AS)-15 -Employee Benefits (revised 2005) issued by ICAI.

a) Provident Fund

The Company makes contribution to statutory provident fund in accordance with the Employees Provident Fund & Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which services are rendered by the employee.

b) Gratuity

Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognised in the Balance Sheet in respect of gratuity is the present value of the defined benefit/obligation at the Balance Sheet date less the fair value of plan assets, together with adjustment for unrecognised actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the Balance Sheet date by an independent Actuary using the projected unit credit method.

c) Compensated absences

Liability in respect of Compensated absences due or expected to be availed within one year from the Balance Sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the Balance Sheet date is estimated on the basis of an actuarial valuation performed by an independent Actuary using the projected unit credit method.

d) Other short term benefits

Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.

viii) Excise Duty and Customs Duty

Excise Duty liability on finished goods manufactured and lying in the factory is accounted for and the corresponding amount is considered for valuation thereof. Customs duty in respect of materials lying in bonded premises and in transit is accounted for as and when the property in the goods passes to the Company.

ix) Miscellaneous Expenditure

The following expenditure shown under "miscellaneous expenditure" is amortised as follows:

a) Share issue expenses are written off over a period of ten years.

b) Debenture/Bonds issue expenses and premium on redemption are written off over the period of Debentures/Bonds.

c) Iron Ore mines/Coal mines development expenditure and Railway plot development expenditure etc., are written off over a period of ten years.

x) Revenue Recognition

a) Sales and Operational income is inclusive of excise duty, export benefits and inter-divisional transfer but net of returns, rebates and sales tax. Materials returned/rejected are accounted for in the year of return/rejection. Sales net of excise duty and inter-divisional transfer is also disclosed separately.

b) Export sales are accounted for on the basis of the date of bill of lading / airways bill.

c) Income from job charges is accounted for at the time of billing.

d) Since it is not possible to ascertain with reasonable certainty, the quantum of accruals in respect of certain claims of Railways, Insurance, Electricity, Customs and Excise, the same continue to be accounted for on acceptance basis.

xi) Export benefits

Export benefits available under the Export Import policy of the Government of India are accounted for in the year of export, to the extent measurable.

xii) Accounting for Leases

In respect of finance lease, the same is recognised as an asset and a liability to the lessor at fair value at the inception of the lease.

In respect of operating lease, the lease payments as per respective lease agreements are recognised as expense in the profit and loss account on a straight-line basis.

xiii) Research and Development Expenditure

Research and Development expenditure not fulfilling the recognition criteria as set out in Accounting Standard (AS-26) on ‘Intangible Assets is charged to the profit and loss account while capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

xiv) Taxes on Income

Provision for current tax is made considering various allowances and benefits available to the Company under the provisions of the Income Tax Act, 1961.

In accordance with Accounting Standard (AS-22) "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred taxes resulting from timing differences between book and tax profits are accounted for at the tax rate substantively enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallised. Deferred tax assets are recognised to the extent there is reasonable/virtual certainty of realising such assets against future taxable income.

xv) Impairment of Assets

Specified assets are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount for which the assets carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset. For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (i.e. cash generating units).

Previously recognised impairment losses, relating to assets other than goodwill, are reversed where the recoverable amount increases because of favourable changes in the estimates used to determine the recoverable amount since the last impairment was recognised. A reversal of an assets impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years.

xvi) Provisions and Contingent Liabilities

Provisions are recognised for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefits is remote.

xvii) Employee Stock Option Scheme

Stock options granted to the employees of the Company and its subsidiary under the Companys Stock Option schemes are evaluated as per the accounting treatment prescribed by the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India. Accordingly, excess of market value of the stock option as on date of grant over the exercise price of the options is recognised as deferred employee compensation and is charged to the profit and loss account as employee cost on straight line method over the vesting period of the options.

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