Mar 31, 2023
1. General Information
JSW Steel Limited ("the Company") is primarily engaged in the business of manufacture and sale of Iron and Steel Products.
The Company is an integrated manufacturer of diverse range of steel products with its manufacturing facilities located at Vijaynagar Works in Karnataka, Dolvi Works in Maharashtra and Salem works in Tamil Nadu. The Company also has a Plate and Coil mill Division in Anjar, Gujarat. The Company has entered into long term lease arrangements of iron ore mines located at Odisha and Karnataka.
The Company has also signed Coal Mine Development and Production Agreement (CMDPA) for three coal mines, Sitanala coking coal block, Parbatpur Central coking coal block in Jharkhand, and Banai & Bhalumuda coal block in Chhattisgarh .
JSW Steel Limited is a public limited company incorporated in India on 15 March 1994 under the Companies Act, 1956 and listed on the Bombay Stock Exchange and National Stock Exchange. The registered office of the Company is JSW Centre, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Significant Accounting policies
I. Statement of compliance
Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation and disclosures requirement of Division II of revised Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to standalone financial statement.
Accordingly, the Company has prepared these Standalone Financial Statements which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as "Standalone Financial Statements" or "financial statements").
These financial statements are approved for issue by the Board of Directors on 19 May 2023.
The Standalone Financial Statements have been prepared on the historical cost basis except for certain financial instruments measured at fair values at the end
of each reporting year, as explained in the accounting policies below.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes in account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, fair value of plan assets within scope the of Ind AS 19 and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
I n addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:
? Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
? Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and
? Level 3 inputs are unobservable inputs for the asset or liability.
The Financial Statement is presented in INR and all values are rounded to the nearest crores except when otherwise stated.
The Company presents assets and liabilities in the balance sheet based on current / noncurrent classification.
An asset is classified as current when it satisfies any of the following criteria:
? it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle. it is held primarily for the purpose of being traded;
? it is expected to be realised within 12 months after the reporting date; or
In revenue arrangements with multiple performance obligations, the Company accounts for individual products and services separately if they are distinct -i.e. if a product or service is separately identifiable from other items in the arrangement and if a customer can benefit from it. The consideration is allocated between separate products and services in the arrangement based on their stand-alone selling prices. Revenue from sale of by products are included in revenue.
Revenue from sale of power is recognised when delivered and measured based on the bilateral contractual arrangements.
Contract balances
i) Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration.
ii) Trade receivables
A receivable is recognised when the goods are delivered and to the extent that it has an unconditional contractual right to receive cash or other financial assets (i.e., only the passage of time is required before payment of the consideration is due).
Trade receivables is derecognised when the Company transfers substantially all the risks and rewards of ownership of the asset to another party including discounting of bills on a non-recourse basis.
iii) Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract including Advance received from Customer.
iv) Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer including volume
? it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
? it is expected to be settled in the Company''s normal operating cycle;
? it is held primarily for the purpose of being traded;
? it is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified 12 months as its operating cycle.
Deferred tax assets and liabilities are classified as noncurrent only.
The Company recognises revenue when control over the promised goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company has generally concluded that it is the principal in its revenue arrangements as it typically controls the goods or services before transferring them to the customer.
Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives, or other similar items in a contract when they are highly probable to be provided. The amount of revenue excludes any amount collected on behalf of third parties.
The Company recognises revenue generally at the point in time when the products are delivered to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer. In contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a separate performance obligation and revenue is recognised when such freight services are rendered.
rebates and discounts. The Company updates its estimates of refund liabilities at the end of each reporting period.
B. Dividend and interest income
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
IV. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term is as follows.
Class of assets |
Years |
Leasehold land |
99 Years |
Buildings |
3 to 30 years |
Plant a Machinery |
3 to 15 years |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are subject to impairment test.
The Company accounts for sale and lease back transaction, recognising right-of-use assets and lease liability, measured in the same way as other right-of-use assets and lease liability. Gain or loss on the sale transaction is recognised in statement of profit and loss.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value (i.e., below H 5,00,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
V. Foreign currencies
The functional currency of the Company is determined on the basis of the primary economic environment in which it operates. The functional currency of the Company is Indian National Rupee (INR).
The transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in Statement of Profit and Loss in the year in which they arise except for:
? exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
? exchange differences on transactions entered into in order to hedge certain foreign currency risks (see below the policy on hedge accounting in 2 (XVIII) (C) (c));
VI. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the year less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows
funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures on that asset.
Borrowing Cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises as expenses the related costs for which the grants are intended to compensate or when performance obligations are met.
The benefit of a government loan at a below-market rate of interest and effect of this favorable interest is treated as a government grant. The Loan or assistance is initially recognised at fair value and the government grant is measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and recognised to the Statement of profit and loss immediately on fulfillment of the performance obligations. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting year. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the Balance sheet with a charge or credit recognised in other comprehensive income in the year in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to Statement of profit and loss. Past service cost is recognised in Statement of profit and loss in the year of a plan amendment or when the company recognises corresponding restructuring cost whichever is earlier. Net interest is calculated by
applying the discount rate to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
? service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
? net interest expense or income; and
? re-measurement
The Company presents the first two components of defined benefit costs in Statement of profit and loss in the line item ''Employee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the Balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick/ contingency leave in the year the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
IX. Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 39.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting year, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The Company has created an Employee Benefit Trust for providing share-based payment to its employees. The Company uses the Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The Trust buys shares of the Company from the market, for giving shares to employees. The Company treats Trust as its extension and shared held by the Trust are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from Equity. No gain or loss is recognised in profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options exercised during the reporting year are satisfied with treasury shares.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax is the amount of expected tax payable based on the taxable profit for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an deferred tax asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year.
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 taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax are recognised in profit and loss, except when they are relating to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the year in which the costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
Assets in the course of construction are capitalised in the assets under Capital work in progress. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels, revenue (net of cost) generated from production during the trial period is capitalised.
Property, plant and equipment held for use in the production, supply or administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance support etc.
Class of assets |
Years |
Plant and equipment |
8 to 40 years |
Work-rolls (shown under Plant and equipment) |
1 - 5 years |
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future dates at no additional cost, are not depreciated.
Major overhaul costs are depreciated over the estimated life of the economic benefit derived from the overhaul. The carrying amount of the remaining previous overhaul cost is charged to the Statement of Profit and Loss if the next overhaul is undertaken earlier than the previously estimated life of the economic benefit.
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Estimated useful lives of the intangible assets are as follows:
Class of assets |
Years |
Computer Software & Licenses |
3-5 years |
Mining assets are amortised using unit of production method over the entire lease term.
The Company has elected to continue with carrying value of all its intangible assets recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
The cost of Mining Assets capitalised includes costs associated with acquisition of licenses and rights to explore, stamp duty, registration fees and other such costs.
Bid premium and royalties payable with respect to mining operations is contractual obligation. The said obligations are variable and linked to market prices. The Company has accounted for the same as expenditure on accrual basis as and when related liability arises as per respective agreements/ statute.
Exploration and evaluation expenditure incurred after obtaining the mining right or the legal right to explore are capitalised as exploration and evaluation assets (intangible assets) and stated at cost less impairment. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The Company measures its exploration and evaluation assets at cost and classifies as Property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
Exploration expenditure includes all direct and allocated indirect expenditure associated with finding specific mineral resources which includes depreciation and applicable operating costs of related support equipment and facilities and other costs of exploration activities:
General exploration costs - costs of surveys and studies, rights of access to properties to conduct those studies (e.g., costs incurred for environment clearance, defense clearance, etc.), and salaries and other expenses of geologists, geophysical crews and other personnel conducting those studies.
Costs of exploration drilling and equipping exploration - Expenditure incurred on the acquisition of a license interest is initially capitalised on a license-by-license basis. Costs are held, undepleted, within exploration and evaluation assets until such time as the exploration phase on the license area is complete or commercial reserves have been discovered.
Developmental stripping costs in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
Other production stripping cost incurred are expensed in the statement of profit and loss.
Developmental stripping costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the costs of restoration are capitalised. The provision for decommissioning assets is based on the current estimates of the costs for removing and decommissioning production facilities, the forecast timing of settlement of decommissioning liabilities and the appropriate discount rate. A corresponding provision is created on the liability side. The capitalised asset is charged to profit and loss over the life of the asset through amortisation over the life of the operation and the provision is increased each period via unwinding the discount on the provision. Management estimates are based on local legislation and/or other agreements are reviewed periodically.
The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration technology. Details of such provisions are set out in note 22.
At the end of each reporting year, the Company reviews the carrying amounts of its tangible assets and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
Inventories are stated at the lower of cost and net realisable value.
Cost of raw materials include cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of semifinished /finished goods and work in progress include cost of direct materials and labor and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs. Cost of semi-finished /finished iron ore inventory includes a proportion of cost of mining, bid premium, royalties and other manufacturing overheads depending on stage of completion of related activities.. Cost of traded goods include purchase cost and inward freight.
Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. In case of semi finished/ finished iron ore inventory from mining operations estimated cost includes any bid premium, royalties and duties payable to the authorities.
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations arising under onerous contracts are recognised and measured as provisions. However, before a separate provision for an onerous contract is established, the Company recognises any write down that has occurred on assets dedicated to that contract. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).
Investment in subsidiaries, associates and joint ventures are shown at cost in accordance with the option available in Ind AS 27, âSeparate Financial Statements''. Where the carrying amount of an investment in greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount and the difference is transferred to the Statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the Statement of Profit and Loss.
The Company has elected to continue with carrying value of all its investment in affiliates recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
XVIII. Financial Instruments
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
A. Financial assets
a) Recognition and initial measurement
A financial asset is initially recognised at fair value and, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Purchases and sales of financial assets are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument.
b) Classification of financial assets
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit and loss. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
? The asset is held within a business model whose objective is to hold assets 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.
A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;
? The asset is held within a business model whose objective is achieved by 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.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.The equity instruments which are strategic investments and held for long term purposes are classified as FVTOCI.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.
Financial assets at FVTPL are measured at fair value at the end of each reporting year, with any gains and losses arising on remeasurement recognised in statement of profit and loss. The net gain or loss recognised in statement of profit and loss incorporates any dividend or interest earned on the financial asset and is included in the ''other income'' line item. Dividend on financial assets at FVTPL is recognised when:
? The Company''s right to receive the dividends is established,
? It is probable that the economic benefits associated with the dividends will flow to the entity,
? The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
c) Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
d) Impairment
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for
purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous year, but determines at the end of a reporting year that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous year, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet
The Company has performed sensitivity analysis on the assumptions used and based on current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets.
e) Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter year, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in statement of profit and loss and is included in the ''Other income'' line item.
a) Classification as debt or equity
Debt and equity instruments issued by a company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
b) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
c) Financial liabilities
Financial liabilities are classified as either financial liabilities ''at FVTPL'' or ''other financial liabilities''.
Financial liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
? It has been incurred principally for the purpose of repurchasing it in the near term; or
? on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
? it is a derivative that is not designated and effective as a hedging instrument.
? A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
? such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
? the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
? it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognised in Statement of Pro
Mar 31, 2022
1. General Information
JSW Steel Limited ("the Company") is primarily engaged in the business of manufacture and sale of Iron and Steel Products.
The Company is an integrated manufacturer of diverse range of steel products with its manufacturing facilities located at Vijaynagar Works in Karnataka, Dolvi Works in Maharashtra and Salem works in Tamil Nadu. The Company also has a Plate and Coil mill Division in Anjar, Gujarat. The Company has entered into long term lease arrangements of iron ore mines located at Odisha and Karnataka.
JSW Steel Limited is a public limited company incorporated in India on 15 March, 1994 under the Companies Act, 1956 and listed on the Bombay Stock Exchange and National Stock Exchange. The registered office of the Company is JSW Centre, Bandra Kurla Complex, Bandra (East), Mumbai -400 051.
2. Significant Accounting policies
Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation and disclosures requirement of Division II of revised Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to standalone financial statement.
Accordingly, the Company has prepared these Standalone Financial Statements which comprise the Balance Sheet as at 31 March, 2022, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as "Standalone Financial Statements" or "financial statements").
The Ministry of Corporate Affairs (MCA) through a notification, amended Schedule III to the Companies Act, 2013 which is applicable from 1 April, 2021 and accordingly the presentation for line items in balance sheet is based on the amended schedule III and corresponding numbers as at 31 March, 2021 have been regrouped/reclassified.
These financial statements are approved for issue by the Board of Directors on 27 May, 2022.
The Standalone Financial Statements have been prepared on the historical cost basis except for certain financial instruments measured at fair values at the end of each reporting year, as explained in the accounting policies below.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes in account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, fair value of plan assets within scope the of Ind AS 19 and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
I n addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Financial Statement is presented in INR and all values are rounded to the nearest crores except when otherwise stated.
The Company presents assets and liabilities in the balance sheet based on current / noncurrent classification.
An asset is classified as current when it satisfies any of the following criteria:
⢠it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle. it is held primarily for the purpose of being traded;
⢠it is expected to be realised within 12 months after the reporting date; or
⢠it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
⢠it is expected to be settled in the Company''s normal operating cycle;
⢠it is held primarily for the purpose of being traded;
⢠it is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified 12 months as its operating cycle.
Deferred tax assets and liabilities are classified as non-current only.
The Company recognises revenue when control over the promised goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company has generally concluded that it is the principal in its revenue arrangements as it typically controls the goods or services before transferring them to the customer.
Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives, or other similar items in a contract when they are highly probable to be
provided. The amount of revenue excludes any amount collected on behalf of third parties.
The Company recognises revenue generally at the point in time when the products are delivered to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer. In contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a separate performance obligation and revenue is recognised when such freight services are rendered.
In revenue arrangements with multiple performance obligations, the Company accounts for individual products and services separately if they are distinct - i.e. if a product or service is separately identifiable from other items in the arrangement and if a customer can benefit from it. The consideration is allocated between separate products and services in the arrangement based on their stand-alone selling prices. Revenue from sale of by products are included in revenue.
Revenue from sale of power is recognised when delivered and measured based on the bilateral contractual arrangements.
i) Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration.
A receivable is recognised when the goods are delivered and to the extent that it has an unconditional contractual right to receive cash or other financial assets (i.e., only the passage of time is required before payment of the consideration is due).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs under the contract including Advance received from Customer
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer including volume rebates and discounts. The Company updates its estimates of refund liabilities at the end of each reporting period.
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
The Company applies a single recognition and measurement approach for all leases, except for
short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term is as follows.
Class of assets |
Years |
Leasehold land |
99 Years |
Buildings |
3 to 30 years |
Plant & Machinery |
3 to 15 years |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are subject to impairment test.
The Company accounts for sale and lease back transaction, recognising right-of-use assets and lease liability, measured in the same way as other right-of-use assets and lease liability. Gain or loss on the sale transaction is recognised in statement of profit and loss.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value (i.e., below '' 5,00,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The functional currency of the Company is determined on the basis of the primary economic environment in which it operates. The functional currency of the Company is Indian National Rupee (INR).
The transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in Statement of Profit and Loss in the year in which they arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as
an adjustment to interest costs on those foreign currency borrowings;
⢠exchange differences on transactions entered into in order to hedge certain foreign currency risks (see below the policy on hedge accounting in 2 (XVIII) (C) (c));
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the year less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures on that asset.
Borrowing Cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises as expenses the related costs for which the grants are intended to compensate or when performance obligations are met.
The benefit of a government loan at a below-market rate of interest and effect of this favorable interest is treated as a government grant. The
Loan or assistance is initially recognised at fair value and the government grant is measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and recognised to the Statement of profit and loss immediately on fulfillment of the performance obligations. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting year. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the Balance sheet with a charge or credit recognised in other comprehensive income in the year in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to Statement of profit and loss. Past service cost is recognised in Statement of profit and loss in the year of a plan amendment or when the company recognises corresponding restructuring cost whichever is earlier. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement
The Company presents the first two components of defined benefit costs in Statement of profit and loss in the line item ''Employee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the Balance sheet represents the actual deficit or
surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the year the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 38.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting year, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The Company has created an Employee Benefit Trust for providing share-based payment to its employees. The Company uses the Trust as a vehicle for distributing shares to employees under
the employee remuneration schemes. The Trust buys shares of the Company from the market, for giving shares to employees. The Company treats Trust as its extension and shared held by the Trust are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from Equity. No gain or loss is recognised in profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options exercised during the reporting year are satisfied with treasury shares.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax is the amount of expected tax payable based on the taxable profit for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that
it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an deferred tax asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year.
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 taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax for the year
Current and deferred tax are recognised in profit and loss, except when they are relating to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
XI. Property, plant and equipment
The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and
maintenance, are charged to the Statement of Profit and Loss in the year in which the costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
Assets in the course of construction are capitalised in the assets under Capital work in progress. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels until a year of commissioning has been completed. Revenue (net of cost) generated from production during the trial period is capitalised.
Property, plant and equipment held for use in the production, supply or administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the
asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support etc.
Class of assets Years
Plant and equipment 8 to 40 years
Work-rolls (shown under 1 - 5 years
Plant and equipment)_
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future dates at no additional cost, are not depreciated.
Major overhaul costs are depreciated over the estimated life of the economic benefit derived from the overhaul. The carrying amount of the remaining previous overhaul cost is charged to the Statement of Profit and Loss if the next overhaul is undertaken earlier than the previously estimated life of the economic benefit.
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Estimated useful lives of the intangible assets are as follows:
Class of assets Years
Computer Software & Licenses 3-5 years_
Mining assets are amortised using unit of production method over the entire lease term.
The Company has elected to continue with carrying value of all its intangible assets recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
The cost of Mining Assets capitalised includes costs associated with acquisition of licenses and rights to explore, stamp duty, registration fees and other such costs.
Bid premium and royalties payable with respect to mining operations is contractual obligation. The said obligations are variable and linked to market prices. The Company has accounted for the same as expenditure on accrual basis as and when related liability arises as per respective agreements/ statute.
Exploration and evaluation expenditure incurred after obtaining the mining right or the legal right to explore are capitalised as exploration and evaluation assets (intangible assets) and stated at cost less impairment. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The Company measures its exploration and evaluation assets at cost and classifies as Property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
Exploration expenditure includes all direct and allocated indirect expenditure associated with finding specific mineral resources which includes depreciation and applicable operating costs of related support equipment and facilities and other costs of exploration activities:
General exploration costs - costs of surveys and studies, rights of access to properties to conduct those studies (e.g., costs incurred for environment clearance, defense clearance, etc.), and salaries and other expenses of geologists, geophysical crews and other personnel conducting those studies.
Costs of exploration drilling and equipping exploration - Expenditure incurred on the acquisition of a license interest is initially capitalised on a license-by-license basis. Costs are held, undepleted, within exploration and evaluation assets until such time as the exploration phase on the license area is complete or commercial reserves have been discovered.
Developmental stripping costs in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
Other production stripping cost incurred are expensed in the statement of profit and loss.
Developmental stripping costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the costs of restoration are capitalised. The provision for decommissioning assets is based on the current estimates of the costs for removing and decommissioning production facilities, the forecast timing of settlement of decommissioning
liabilities and the appropriate discount rate. A corresponding provision is created on the liability side. The capitalised asset is charged to profit and loss over the life of the asset through amortisation over the life of the operation and the provision is increased each period via unwinding the discount on the provision. Management estimates are based on local legislation and/or other agreements are reviewed periodically
The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration technology. Details of such provisions are set out in note 22.
At the end of each reporting year, the Company reviews the carrying amounts of its tangible assets and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
I ntangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
I f the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
The carrying amounts of the Company''s nonfinancial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
I nventories are stated at the lower of cost and net realisable value.
Cost of raw materials include cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of semifinished /finished goods and work in progress include cost of direct materials and labor and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs. Cost of iron ore inventory includes cost of mining, bid premium, royalties and other manufacturing overheads. Cost of traded goods include purchase cost and inward freight.
Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations arising under onerous contracts are recognised and measured as provisions. However, before a separate provision for an onerous contract is established, the Company recognises any write down that has occurred on assets dedicated to that contract. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).
I nvestment in subsidiaries, associates and joint ventures are shown at cost in accordance with the option available in Ind AS 27, ''Separate Financial Statements''. Where the carrying amount of an investment in greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is transferred to the Statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the Statement of Profit and Loss.
The Company has elected to continue with carrying value of all its investment in affiliates recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
a) Recognition and initial measurement
A financial asset is initially recognised at fair value and, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Purchases and sales of financial assets are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument.
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit and loss. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
⢠The asset is held within a business model whose objective is to hold assets 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.
A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;
⢠The asset is held within a business model whose objective is achieved by 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.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income, impairment losses S reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in
OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
I f the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.
Financial assets at FVTPL are measured at fair value at the end of each reporting year, with any gains and losses arising on remeasurement recognised in statement of profit and loss. The net gain or loss recognised in statement of profit and loss incorporates any dividend or interest earned on the financial asset and is included in the ''other income'' line item. Dividend on financial assets at FVTPL is recognised when:
⢠The Company''s right to receive the dividends is established,
⢠It is probable that the economic benefits associated with the dividends will flow to the entity,
⢠The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the lifetime expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting
date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous year, but determines at the end of a reporting year that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous year, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet
The Company has performed sensitivity analysis on the assumptions used and based on current
indicators of future economic conditions, the Company expects to recover the carrying amount of these assets.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter year, to the net carrying amount on initial recognition.
I ncome is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in statement of profit and loss and is included in the ''Other income'' line item.
a) Classification as debt or equity
Debt and equity instruments issued by a company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities are classified as either financial liabilities ''at FVTPL'' or ''other financial liabilities''.
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠It has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the Statement of Profit and Loss. For Liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit
Mar 31, 2021
1. General Information
JSW Steel Limited ("the Company") is primarily engaged in the business of manufacture and sale of Iron and Steel Products.
The Company is an integrated manufacturer of diverse range of steel products with its manufacturing facilities located at Vijaynagar Works in Karnataka, Dolvi Works in Maharashtra and Salem works in Tamil Nadu. The Company has entered into long term lease arrangements of iron ore mines located at Odisha and Karnataka.
JSW Steel Limited is a public limited company incorporated in India on March 15, 1994 under the Companies Act, 1956 and listed on the Bombay Stock Exchange and National Stock Exchange. The registered office of the Company is JSW Centre, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.
2. Significant Accounting policies
Standalone Financial Statements have been prepared in accordance with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirement of Division II of Schedule III of the Companies Act 2013, (Ind AS Compliant Schedule III), as applicable to standalone financial statement.
Accordingly, the Company has prepared these Standalone Financial Statements which comprise the Balance Sheet as at 31 March, 2021, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory information (together hereinafter referred to as "Standalone Financial Statements" or "financial statements").
These financial statements are approved for issue by the Board of Directors on 21 May, 2021.
The Standalone Financial Statements have been prepared on the historical cost basis except for certain financial instruments measured at fair values at the end of each reporting year, as explained in the accounting policies below.
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, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Company takes in account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Financial Statement is presented in INR and all values are rounded to the nearest crores except when otherwise stated.
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is classified as current when it satisfies any of the following criteria:
⢠it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle. it is held primarily for the purpose of being traded;
⢠it is expected to be realised within 12 months after the reporting date; or
⢠it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
⢠it is expected to be settled in the Company''s normal operating cycle;
⢠it is held primarily for the purpose of being traded;
⢠it is due to be settled within 12 months after the reporting date; or the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Deferred tax assets and liabilities are classified as noncurrent only.
The Company recognises revenue when control over the promised goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company has generally concluded that it is the principal in its revenue arrangements as it typically controls the goods or services before transferring them to the customer.
Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives, or other similar items in a contract when they are highly probable to be provided. The amount of revenue excludes any amount collected on behalf of third parties.
The Company recognises revenue generally at the point in time when the products are delivered to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer. In contracts where freight is arranged by the Company and recovered from the customers, the same is treated as a separate performance obligation and revenue is recognised when such freight services are rendered.
I n revenue arrangements with multiple performance obligations, the Company accounts for individual products and services separately if they are distinct -i.e. if a product or service is separately identifiable from other items in the arrangement and if a customer can benefit from it. The consideration is allocated between separate products and services in the arrangement
based on their stand-alone selling prices. Revenue from sale of by products are included in revenue.
Revenue from sale of power is recognised when delivered and measured based on the bilateral contractual arrangements.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration.
A receivable is recognised when the goods are delivered and to the extent that it has an unconditional contractual right to receive cash or other financial assets (i.e., only the passage of time is required before payment of the consideration is due).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract including Advance received from Customer
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer including volume rebates and discounts. The Company updates its estimates of refund liabilities at the end of each reporting period.
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term and the lease term is as follows.
Class of assets |
Years |
Leasehold land |
99 Years |
Buildings |
3 to 30 years |
Plant a Machinery |
3 to 15 years |
I f ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are subject to impairment test.
The Company accounts for sale and lease back transaction, recognising right-of-use assets and lease liability, measured in the same way as other right-of-use assets and lease liability. Gain or loss on the sale transaction is recognised in statement of profit and loss.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered
of low value (i.e., below '' 5,00,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The functional currency of the Company is determined on the basis of the primary economic environment in which it operates. The functional currency of the Company is Indian National Rupee (INR).
The transactions in currencies other than the entity''s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in Statement of Profit and Loss in the year in which they arise except for:
> exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
> exchange differences on transactions entered into in order to hedge certain foreign currency risks (see below the policy on hedge accounting in 2 (XVIII) (B)
(f));
> exchange difference arising on settlement / restatement of long-term foreign currency monetary items recognised in the financial statements for the year ended 31 March, 2016 prepared under previous GAAP, are capitalised as a part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortised over the maturity year / upto the date of settlement of such monetary item, whichever is earlier, but not beyond 31 March 2020 and charged to the Statement of Profit and Loss. The un-amortised exchange difference is carried under other equity as "Foreign currency
monetary item translation difference account" net of tax effect thereon, where applicable.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the year less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures on that asset.
Borrowing Cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises as expenses the related costs for which the grants are intended to compensate or when performance obligations are met.
The benefit of a government loan at a below-market rate of interest and effect of this favorable interest is treated as a government grant. The Loan or assistance is initially recognised at fair value and the government grant is measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and recognised to the Statement of profit and loss immediately on fulfillment of the performance obligations. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting year. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the Balance sheet with a charge or credit recognised in other comprehensive income in the year in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to Statement of profit and loss. Past service cost is recognised in Statement of profit and loss in the year of a plan amendment or when the company recognises corresponding restructuring cost whichever is earlier. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
> service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
> net interest expense or income; and
> re-measurement
The Company presents the first two components of defined benefit costs in Statement of profit and loss in the line item ''Employee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the Balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the year the related service is
rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
IX. Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 38.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting year, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The Company has created an Employee Benefit Trust for providing share-based payment to its employees. The Company uses the Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The Trust buys shares of the Company from the market, for giving shares to employees. The Company treats Trust as its extension and shared held by the Trust are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from Equity. No gain or loss is recognised in profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options exercised during the reporting year are satisfied with treasury shares.
X. Taxes
I ncome tax expense represents the sum of the tax currently payable and deferred tax.
Current tax is the amount of expected tax payable based on the taxable profit for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an deferred tax asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting year.
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 taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax for the year
Current and deferred tax are recognised in profit and loss, except when they are relating to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
XI. Property, plant and equipment
The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, including relevant borrowing costs for qualifying assets and any expected costs of decommissioning. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are charged to the Statement of Profit and Loss in the year in which the costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken improves the economic benefits expected to arise from the asset.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.
Assets in the course of construction are capitalised in the assets under Capital work in progress. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciation commences. Costs associated with the commissioning of an asset and any obligatory decommissioning costs are capitalised where the asset is available for use but incapable of operating at normal levels until a year of commissioning has been completed. Revenue (net of cost) generated from production during the trial period is capitalised.
Property, plant and equipment except freehold land held for use in the production, supply or administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any.
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements on transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
I ntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Estimated useful lives of the intangible assets are as follows:
Class of assets |
Years |
Computer Software a Licenses |
3-5 years |
Class of assets |
Years |
Plant and equipment |
8 to 40 years |
Work-rolls (shown under Plant and equipment) |
1 - 5 years |
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future dates at no additional cost, are not depreciated.
The Company has applied Ind AS 116 w.e.f. 1 April 2019 and all lease are covered under Right of use assets.
Major overhaul costs are depreciated over the estimated life of the economic benefit derived from the overhaul. The carrying amount of the remaining previous overhaul cost is charged to the Statement of Profit and Loss if the next overhaul is undertaken earlier than the previously estimated life of the economic benefit.
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis.
Mining assets are amortised using unit of production method over the entire lease term.
The Company has elected to continue with carrying value of all its intangible assets recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
The cost of Mining Assets capitalised includes costs associated with acquisition of licenses and rights to explore, stamp duty, registration fees and other such costs.
Bid premium and royalties payable with respect to mining operations is contractual obligation. The said obligations are variable and linked to market prices. The Company has accounted for the same as expenditure on accrual basis as and when related liability arises as per respective agreements/ statute.
Exploration and evaluation expenditure incurred after obtaining the mining right or the legal right to explore are capitalised as exploration and evaluation assets (intangible assets) and stated at cost less impairment. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The Company measures its exploration and evaluation assets at cost and classifies as Property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
Exploration expenditure includes all direct and allocated indirect expenditure associated with finding specific mineral resources which includes depreciation and applicable operating costs of related support equipment and facilities and other costs of exploration activities:
General exploration costs - costs of surveys and studies, rights of access to properties to conduct those studies (e.g., costs incurred for environment clearance, defense clearance, etc.), and salaries and other expenses of geologists, geophysical crews and other personnel conducting those studies.
Costs of exploration drilling and equipping exploration - Expenditure incurred on the acquisition of a license interest is initially capitalised on a license-by-license basis. Costs are held, undepleted, within exploration and evaluation assets until such time as the exploration phase on the license area is complete or commercial reserves have been discovered.
Developmental stripping costs in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
Other production stripping cost incurred are expensed in the statement of profit and loss.
Developmental stripping costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the costs of restoration are capitalised. The provision for decommissioning assets is based on the current estimates of the costs for removing and decommissioning production facilities, the forecast timing of settlement of decommissioning liabilities and the appropriate discount rate. A corresponding provision is created on the liability side. The capitalised asset is charged to profit and loss over the life of the asset through amortisation over the life of the operation and the provision is increased each period via unwinding the discount on the provision. Management estimates are based on local legislation and/or other agreements are reviewed periodically
The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration technology. Details of such provisions are set out in note 22.
At the end of each reporting year, the Company reviews the carrying amounts of its tangible assets and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
XV. Inventories
I nventories are stated at the lower of cost and net realisable value.
Cost of raw materials include cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of finished goods and work in progress include cost of direct materials and labor and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs. Cost of iron ore inventory includes cost of mining, bid premium, royalties and other manufacturing overheads. Cost of traded goods include purchase cost and inward freight.
Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
XVI. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations arising under onerous contracts are recognised and measured as provisions. However, before a separate provision for an onerous contract is established, the Company recognises any write down that has occurred on assets dedicated to that contract. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).
Investment in subsidiaries, associates and joint ventures are shown at cost in accordance with the option available in Ind AS 27, ''Separate Financial Statements''. Where the carrying amount of an investment in greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is transferred to the Statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the Statement of Profit and Loss.
The Company has elected to continue with carrying value of all its investment in affiliates recognised as on transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
A financial asset is initially recognised at fair value and, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Purchases and sales of financial assets are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument.
Financial assets are classified, at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit and loss. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
⢠The asset is held within a business model whose objective is to hold assets 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.
A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;
⢠The asset is held within a business model whose objective is achieved by 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.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the Other Comprehensive Income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign
exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and Loss.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.
Financial assets at FVTPL are measured at fair value at the end of each reporting year, with any gains and losses arising on remeasurement recognised in statement of profit and loss. The net gain or loss recognised in statement of profit and loss incorporates any dividend or interest earned on the financial asset and is included in the ''other income'' line item. Dividend on financial assets at FVTPL is recognised when:
⢠The Company''s right to receive the dividends is established,
⢠It is probable that the economic benefits associated with the dividends will flow to the entity,
⢠The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to
12-month expected credit losses. 12-month expected credit losses are portion of the lifetime expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous year, but determines at the end of a reporting year that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous year, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forwardlooking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the
loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet
The Company has performed sensitivity analysis on the assumptions used and based on current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter year, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in statement of profit and loss and is included in the ''Other income'' line item.
Debt and equity instruments issued by a company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities are classified as either financial liabilities ''at FVTPL'' or ''other financial liabilities''.
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠It has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profittaking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management
Mar 31, 2019
1. Summary of significant accounting policies
The significant accounting policies used in preparing the annual standalone financial statements in accordance with the Indian Accounting Standards (âIND ASâ) prescribed under section 133 of the Act read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 presentation requirement of Division II to schedule III and the Companies (Accounting Standards) Amendment Rules, 2016 are set out in Note 2 to the annual standalone financial statements.
2. Key sources of estimation uncertainty and critical accounting judgements
In the course of applying the policies outlined in all notes under section 2 above, the Company is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future year, if the revision affects current and future year.
A) Key sources of estimation uncertainty
i) Useful lives of property, plant and equipment
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. This reassessment may result in change in depreciation and amortisation expected in future periods.
ii) Impairment of investments in subsidiaries, joint- ventures and associates
Determining whether the investments in subsidiaries, joint ventures and associates are impaired requires an estimate in the value in use of investments. In considering the value in use, the Directors have anticipated the future commodity prices, capacity utilization of plants, operating margins, mineable resources and availability of infrastructure of mines, discount rates and other factors of the underlying businesses / operations of the investee companies as more fully described in note 50. Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.
iii) Contingencies
In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystalising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized. The cases which have been determined as remote by the Company are not disclosed.
Contingent assets are neither recognized nor disclosed in the financial statements unless when an inflow of economic benefits is probable.
iv) Fair value measurements
When the fair values of financial assets or financial liabilities recorded or disclosed in the financial statements cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility.
v) Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
MAT is assessed on book profits adjusted for certain items as compared to the adjustments followed for assessing regular income tax under normal provisions. MAT paid in excess of regular income tax during a year can be set off against regular income taxes within a specified period in which MAT credit arises, subject to the limits prescribed.
B) Critical accounting judaements
i) Control over JSW Realty S Infrastructure Private Limited (RIPL)
RIPL has developed a residential township in Vijayanagar, Karnataka on the land taken on lease from the Company for a period of 30 years and provides individual housing units on rent to the employees of the Company or other group companies. RIPL is not allowed to sub-let or assign its rights under the arrangement without prior written consent of the Company. Though the Company does not hold any ownership interest in RIPL, the Company has concluded that the Company has practical ability to direct the relevant activities of RIPL unilaterally, considering RIPLâs dependency on the Company for funding significant portion of its operation through subscription to 74.57% of preference share capital amounting to Rs. 199 crore issued by RIPL and significant portion of RIPLâs activities
ii) Separating payments of lease from the other payments
If an arrangement contains a lease, the parties to the arrangement shall apply the requirements of Ind AS 17 to the lease element. Therefore, the Company is required to separate payments and other consideration required by the arrangement into those for the lease and for other elements on the basis of their relative fair values.
However, Management has concluded that it is impracticable to separate both the elements reliably and has recognized an asset and a liability at an amount equal to the carrying value of the specified asset in the books of the lessor. Subsequently, the liability has been reduced as payments are made and an imputed finance charges on the liability recognized using the Companyâs incremental borrowing rate of interest over the tenure of the arrangement. The total payments less payments made towards lease obligation and imputed finance charges have been considered to be the consideration for elements other than lease.
In case of arrangements which are identified to be in the nature of finance lease, the management concluded that it is impracticable to derive the relative fair values of lease and other elements of the arrangement and has accordingly determined the consideration for elements other than lease as a residual post appropriation of lease payments derived based on lesseeâs incremental borrowing rate of interest on the lease obligation corresponding to the respective gross asset values in the books of lessor.
iii) Joint control over Monnet Ispat and Energy Limited
The consortium of JSW Steel Limited and AION Investments Private II Limited. completed the acquisition of Monnet Ispat and Energy Limited (âMIELâ) through their jointly controlled entity Creixent Special Steels Limited (âCSSLâ) on 31 August 2018.
The Company has made an investment of Rs. 375 crores through equity and redeemable preference shares in CSSL to acquire joint control in MIEL and have an effective shareholding of 23.1% in MIEL.
As per the Shareholding agreement, all the relevant activities of CSSL that affect the Companyâs variable returns from its involvement with CSSL/ MIEL have to be decided unanimously by a Steering Committee on which the Company has representation and thus the Company has concluded that it has joint control over CSSL.
iv) Incentives under the State Industrial Policy
The Company units at Dolvi in Maharashtra and Vijayanagar in Karnataka are eligible for incentives under the respective State Industrial Policy and have been availing incentives in the form of VAT deferral / CST refunds.
The State Government of Maharashtra (âGOMâ) vide its Government Resolution (GR) issued the modalities for sanction and disbursement of incentives, under GST regime, and introduced certain new conditions / restrictions for accruing incentive benefits granted to the Company including denying incentives in certain cases.
The management has evaluated the impact of other conditions imposed and has obtained legal advice on the tenability of these changes in the said scheme. Based on such legal advice, the Company has also made the representation to GOM and believes that said Incentives would continue to be made available to the Company under the GST regime, since the new conditions are not tenable legally and will contest these changes appropriately.
Accordingly, the Company has recognized grant income without giving effect to the above restrictions and the cumulative amount receivable towards the same is considered to be good and recoverable.
Mar 31, 2018
1. Complete Standalone Balance Sheet, Standalone Statement of Profit and Loss, Standalone Statement of Changes in Equity, Standalone Statement of Cash Flows and other statements and notes thereto prepared as per requirements of Division II to the Schedule III to the Act are available at the Company''s website www.jsw.in. Copy of financial statement is also available for inspection at the registered office of the company during working hours for a period of 21 days before the date of AGM.
2. Basis of preparation
These abridged standalone financial statements have been prepared on the basis of complete set of the standalone financial statements for the year ended 31 March 2018, in accordance with the proviso to sub-section (1) of section 136 of the Companies Act, 2013 ("the Act") and Rule 10 of the Companies (Accounts) Rules, 2014.
3. Summary of significant accounting policies
The significant accounting policies used in preparing the annual standalone financial statements in accordance with the Indian Accounting Standards ("IND AS") prescribed under section 133 of the Act read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Accounting Standards) Amendment Rules, 2016 are set out in Note 2 to the annual standalone financial statements.
4. Key sources of estimation uncertainty and critical accounting judgments
(refer note 3 of the annual standalone financial statements)
In the course of applying the policies outlined in all notes under section 2 above, the Company is required to make judgments, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future year, if the revision affects current and future year.
A. Key sources of estimation uncertainty
i) Useful lives of property, plant and equipment
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly depreciable lives are reviewed annually using the best information available to the Management.
ii) Impairment of investments in subsidiaries, joint- ventures and associates
Determining whether the investments in subsidiaries, joint ventures and associates are impaired requires an estimate in the value in use of investments. In considering the value in use, the Directors have anticipated the future commodity prices, capacity utilization of plants, operating margins, mineable resources and availability of infrastructure of mines, discount rates and other factors of the underlying businesses / operations of the investee companies as more fully described in note 51 of the annual standalone financial statement. Any subsequent changes to the cash flows due to changes in the above mentioned factors could impact the carrying value of investments.
iii) Contingencies
I n the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized.
iv) Fair value measurements
When the fair values of financial assets or financial liabilities recorded or disclosed in the financial statements cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include consideration of inputs such as liquidity risk, credit risk and volatility.
vi) Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
B. Critical accounting judgments
i) Control over JSW Realty & Infrastructure Private Limited (RIPL)
RIPL has developed a residential township in Vijaynagar, Karnataka on the land taken on lease from the Company for a period of 30 years and provides individual housing units on rent to the employees of the Company or other group companies. RIPL is not allowed to sub-let or assign its rights under the arrangement without prior written consent of the Company. Though the Company does not hold any ownership interest in RIPL, the Company has concluded that the Company has practical ability to direct the relevant activities of RIPL unilaterally, considering RIPL''s dependency on the Company for funding significant portion of its operation through subscription to 73.57% of preference share capital amounting to '' 199 crore issued by RIPL and significant portion of RIPL''s activities.
ii) Control over Dolvi Minerals & Metals Private Limited (DMMPL) and Dolvi Coke Private Limited (DCPL)
DMMPL is an investment company and is setting up recovery type coke oven plant and by-product plant ("Coke Plant") through its wholly owned subsidiary DCPL. Although, the Company owns only 40% of ownership interest, the Company has concluded that the Company has practical ability to direct the relevant activities of DMMPL unilaterally, considering.
- the relevant activities of DCPL are directed through the long-term take or pay arrangement entered into between the Company and DCPL,
- Significant portion of DMMPL and DCPL activities either involve or are conducted on behalf of the Company, and
- Return from Company''s involvement with DMMPL and in turn with DCPL is disproportionately greater than it voting rights considering the take or pay arrangement is at cost plus fixed margin basis.
iii) Separating payments of lease from the other payments
If an arrangement contains a lease, the parties to the arrangement shall apply the requirements of Ind AS 17 to the lease element. Therefore, the Company is required to separate payments and other consideration required by the arrangement into those for the lease and for other elements on the basis of their relative fair values.
However, Management has concluded that it is impracticable to separate both the elements reliably and has recognized an asset and a liability at an amount equal to the carrying value of the specified asset in the books of the lessor. Subsequently, the liability has been reduced as payments are made and an imputed finance charges on the liability recognized using the Company''s incremental borrowing rate of interest over the tenure of the arrangement. The total payments less payments made towards lease obligation and imputed finance charges have been considered to be the consideration for elements other than lease.
In case of arrangements which are identified to be in the nature of finance lease, the management concluded that it is impracticable to derive the relative fair values of lease and other elements of the arrangement and has accordingly determined the consideration for elements other than lease as a residual post appropriation of lease payments derived based on lessee''s incremental borrowing rate of interest on the lease obligation corresponding to the respective gross asset values in the books of lessor.
(a) Revenue from operations for periods up to 30 June 2017 includes excise duty, which is discontinued with effect from 1 July 2017 upon implementation of Goods and Service Tax (GST). In accordance with ''Ind AS 18 - Revenue'', GST is not included in Revenue from operations. In view of the aforesaid change in indirect taxes, Revenue from operations for the year ended 31 March 2018 is not comparable to the year ended 31 March 2017.
(b) The Company''s unit at Dolvi in the State of Maharashtra was eligible for a deferral of VAT/CST collected on sale of finished goods under Package Scheme of Incentive (PSI) - 1993, which is accounted as a Government grant. The Government of Maharashtra vide its notification dated 14 February 2018 has announced the Industrial promotion Subsidy (IPS) schemes would be continued in the GST regime with the incentives being determined based on the State GST in place of the erstwhile VAT. However, the process of disbursing the incentives has not been notified yet. The Company believes that the process of disbursement of incentives would continue to remain unchanged and accordingly has recognized the government grant of Rs, 544 crores for the year.
(c) The Company''s unit at Vijayanagar in the State of Karnataka was eligible for a deferral of VAT collected on sale of finished goods under The State Industrial policy 2009-14. The Government of Karnataka vide its notification dated 13 March 2018 has announced that the incentives schemes would be continued in the GST regime with the incentives being determined based on the SGST rate in place of the erstwhile VAT rate. Accordingly, the Company has recognized the government grant of Rs, 277 crores for the year.
7. Segment reporting
(refer note 40 of the annual standalone financial statements)
The Company is in the business of manufacturing steel products having similar economic characteristics, primarily with operations in India and regularly reviewed by the Chief Operating Decision Maker for assessment of Company''s performance and resource allocation.
The information relating to revenue from external customers and location of non-current assets of its single reportable segment has been disclosed as below
8. Related party disclosures
(refer note 44 of the annual standalone financial statements)
A Relationships_
1 Subsidiaries
JSW Steel (Netherlands) B.V.
JSW Steel (UK) Limited
JSW Steel Service Centre (UK) Limited (ceased w.e.f. 18.10.2016)
JSW Steel Holding (USA) Inc. (ceased w.e.f. 28.03.2017)
JSW Steel (USA) Inc.
Periama Holdings, LLC (w.e.f. 23.01.2017)
Periama Holdings, LLC (ceased w.e.f. 16.03.2017)
Purest Energy, LLC
Meadow Creek Minerals, LLC
Hutchinson Minerals, LLC
R.C. Minerals, LLC
Keenan Minerals, LLC
Peace Leasing, LLC
Prime Coal, LLC
Planck Holdings, LLC
Rolling S Augering, LLC
Periama Handling, LLC
Lower Hutchinson Minerals, LLC
Caretta Minerals, LLC
JSW Panama Holdings Corporation
Inversiones Eurosh Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW ADMS Carvo Lda
JSW Steel East Africa Limited (ceased w.e.f. 08.04.2016)
Nippon Ispat Singapore (PTE) Limited
A Relationships_
Erebus Limited
Arima Holding Limited
Lakeland Securities Limited
JSW Steel Processing Centres Limited
JSW Bengal Steel Limited
JSW Natural Resources India Limited
JSW Energy (Bengal) Limited
JSW Natural Resource Bengal Limited
Barbil Beneficiation Company Limited (ceased w.e.f. 27.01.2017)
Barbil Iron Ore Company Limited (ceased w.e.f. 19.10.2016)
JSW Jharkhand Steel Limited
Amba River Coke Limited
JSW Steel Coated Products Limited
Peddar Realty Private Limited
JSW Steel (Salav) Limited
Dolvi Minerals & Metals Private Limited
Dolvi Coke Projects Limited
JSW Industrial Gases Private Limited (w.e.f. 16.08.2016)(formerly JSW Praxair Oxygen Private Limited)
JSW Realty & Infrastructure Private Limited JSW Steel Italy S.R.L.(w.e.f. 30.01.2017)
JSW Utkal Steel Limited (w.e.f. 16.11.2017)
Hasaud Steel Limited (w.e.f. 13.02.2018)
Creixent Special Steels Limited (w.e.f. 27.02.2018)
Milloret Steel Limited (w.e.f. 08.03.2018)
2 Associate
JSW Industrial Gases Private Limited (ceased w.e.f. 15.08.2016)(formerly JSW Praxair Oxygen Private Limited)
3 Joint Ventures
Vijayanagar Minerals Private Limited Rohne Coal Company Private Limited JSW Severfield Structures Limited Gourangdih Coal Limited GEO Steel LLC
JSW Structural Metal Decking Limited JSW MI Steel Service Centre Private Limited JSW Vallabh Tin Plate Private Limited AcciaItalia S.p.A. (w.e.f. 30.11.2016)
4 Key Management Personnel Mr. Sajjan Jindal
Mr. Seshagiri Rao M V S Dr. Vinod Nowal Mr. Jayant Acharya Mr. Rajeev Pai Mr. Lancy Varghese
5 Other Related Parties JSW Energy Limited
Raj West Power Limited
JSW Power Trading Company Limited*
Himachal Baspa Power Company Limited
Jindal Stainless Limited
JSL Architecture Limited
JSL Lifestyle Limited
Jindal Saw Limited
Jindal Saw USA LLC
Jindal Tubular (India) Limited
Jindal Fittings Limited
Jindal Steel & Power Limited
M/s Shadeed Iron & Steel Co. LLC
Jindal Power Limited
India Flysafe Aviation Limited
JSW Infrastructure Limited
A Relationships_
JSW Jaigarh Port Limited
South West Port Limited
JSW Dharamatar Port Private Limited
JSW Paradip Terminal Private Limited
JSW Cement Limited
South West Mining Limited
JSW Projects Limited
JSW IP Holdings Private Limited
JSOFT Solutions Limited
Reynold Traders Private Limited
JSW Techno Projects Management Limited
JSW Global Business Solutions Limited (formerly Sapphire Technologies Limited)
Jindal Industries Private Limited JSW Foundation
Jindal Technologies & Management Services Private Limited Epsilon Carbon Private Limited (formerly AVH Private Limited)
JSW International Trade Corp PTE Limited
Heal Institute Private Limited (ceased w.e.f. 19.10.2016)
Jindal Education Trust
JSW Paints Private Limited
Toshiba JSW Power System Private Limited
MJSJ Coal Limited
O P Jindal Foundation
JSW Bengaluru Football Club Private Limited Jindal Rail Infrastructure Limited Khaitan & Company#
Vinar Systems Private Limited ##
6 Post-Employment Benefit Entity
JSW Steel EPF Trust
Jindal Steel Group Gratuity Trust
JSW Steel Limited Employee Gratuity Fund
* amalgamated with JSW Green Energy Limited during the year
# Mr. Haigreve Khaitan is a partner in Khaitan & Company
## Mr. Haigreve Khaitan is a director in Vinar Systems Private Limited
*Less than '' 50 lacs
Notes:
1. The Company makes monthly contributions to provident fund managed by JSW Steel EPF Trust for qualifying Vijayanagar employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. During the year, the Company contributed Rs, 17 crores (FY 2016-17: Rs,17 crores).
2. The Company maintains gratuity trust for the purpose of administering the gratuity payment to its employees (JSW Steel Group Gratuity Trust and JSW Steel Limited Employee Gratuity Fund). During the year, the Company contributed Rs, 13 crores (FY 2016-17: Rs, 2 crores)
3. I n view of the uncertainty involved in collectability, revenue as interest income of Rs, 298 crores has not been recognized on loan provided to certain overseas subsidiaries.
Mar 31, 2017
1. Basis of preparation and presentation
These abridged standalone financial statements have been prepared on the basis of the complete set of the standalone financial statements for the year ended March 31, 2017, in accordance with the proviso to sub-section (1) of section 136 of the of the Companies Act, 2013 ("the Act") and rule 10 of Companies (Accounts) Rules,2014.
2. Summary of significant accounting policies
The significant accounting policies used in preparing the annual standalone financial statements in accordance with Indian Accounting Standards (IND AS) prescribed under the section 133 of the Companies Act, 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Accounting Standards) Amendment Rules, 2016 are set out in note 2 to the annual standalone financial statements.
3. Investments
As at March 31, 2017 the book value and market value of quoted investments is represented as below: (Note 7 and 12 of the annual standalone financial statements)
Explanation : For the purposes of this clause, the term ''Specified Bank Notes''(SBN) shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the 8th November, 2016.
* including Rs,Nil (previous year Rs,25 crores ) paid to Satya Electoral Trust.
# including hedging cost of Rs,316.15 crores (previous year Rs,468.41 crores)
6. Contingent liabilities: (Note 42 of the annual standalone financial statements)
a. (i) Guarantees/standby letter of credit facility given on behalf of subsidiaries.
(i) The Hon''ble High Court of Karnataka has granted partial relief by a judgement dated 3 December, 2015 in response to a petition filed by the mine owners and purchasers (including JSW Steel Limited) of iron ore contesting levy of Forest Development Tax (FDT) by the State of Karnataka. The High Court vide its judgment has directed refund of the entire amount of FDT collected by State Government on sale of iron ores by Private lease operators and NMDC. The State Government has filed an appeal before the Supreme Court of India. The Hon''ble Court has not granted stay on the operation of the judgment but only stayed refund of FDT amounting to Rs,1,516.76 crores. The matter is yet to be heard by the Hon''ble Supreme Court of India. Based on merits of the case and supported by a legal opinion, the Company has not recognized FDT of Rs,1,042.89 crores, and treated the same as a contingent liability.
(ii) The State of Karnataka on 27 July,
2016, has amended Section 98-A of the Forest Act retrospectively and substituting the levy as Forest Development Fee instead of FDT. In response to the writ petition filed by the Company, the Hon''ble High Court of Karnataka has restrained the State of Karnataka from collecting FDF against furnishing of Bank Guarantee for an amount of 25% of the FDF. The State Government of Karnataka filed a Special Leave Petition with the Supreme Court of India (SCI) against the said order and SCI directed the Company and other parties to pay 50% of FDF as deposit and balance to be secured through a bond, by its order dated 13th February, 2017, and remitted the appeal back to the Karnataka High court with a direction to dispose the appeal within 6 months. Based on merits of the case and supported by a legal opinion, the Company has not recognized FDF of Rs,256.83 crores (Paid under protest
- Rs,60.84 crores) pertaining to the private lease operators and NMDC, and treated the same as a contingent liability.
Other commitments:
(a) The Company from time to time provides need based support to subsidiaries and joint ventures entity towards capital and other requirements.
(b) The Company has imported capital goods under the export promotion capital goods scheme to utilise the benefit of a zero or concessional customs duty rate. These benefits are subject to future exports within the stipulated period.
8. Exceptional items for the year ended March 31, 2016 mainly included provision for impairment loss for investments in JSW Steel Netherlands
B.V. (NBV) and JSW Steel Holdings USA Inc. (JSHU), and loss allowances for loans to and financial guarantees given on behalf of, NBV, JSHU and JSW Steel (USA) Inc. (JSU), based on the then estimates of values of their businesses/ assets. (Note 46 of the annual standalone financial statements)
9. Pursuant to a restructuring / reorganization, Periama Holding LLC, West Virginia (PHLW) merged into Periama Holding LLC (PHL), an entity incorporated in the state of Delaware, USA; JSHU''s assets and liabilities were transferred to PHL upon liquidation; and 174,237,650 ordinary shares and 93,694,334 redeemable non-cumulative preference shares with a nominal value of Euro 1 each of NBV were canceled to reflect fair value of its underlying investments. Consequently, the Company wrote off its investment in NBV and JSHU of Rs,1777.34 crores and Rs,0.89 crores respectively, and loan to JSHU of Rs,3,464.76 crores, for which provision was recognised during the earlier years, and hence, it does not have any impact on the profit and loss of the current year (Note 47 of the annual standalone financial statements)
10. In assessing the carrying amounts of Investments in and loans / advances (net of impairment loss / loss allowance) to certain subsidiaries and a JV and financial guarantees to certain subsidiaries (listed below), the Company considered various factors as detailed there against and concluded they are recoverable.
(a) Investments aggregating to Rs,294.63 crores (Rs,814.30 crores as at March 31, 2016, Rs,727.53 crores as at April 1, 2015) i n equ i ty and preference sh ares of N BV, loans of ''105.20 crores (Rs,70.73 crores as at March 31, 2016, Rs,Nil as at April 1, 2015), Rs,1,921.70 crores (Rs,683.39 crores
as at March 31, 2016, Rs,3,063.65 crores as at April 1, 2015) and Rs,839.92 crores (Rs,252.41 crores as at March 31, 2016, Rs,646.18 crores as at April 1, 2015) to NBV, PHL and JPHC respectively and the financial guarantees of Rs,3,177.08 crores (''3,900.37 crores as at March 31, 2016, Rs,3,429.98 crores as at April 1, 2015) and Rs,198.57 crores (Rs,319.23 crores as at March 31, 2016, Rs,Nil crores as at April 1, 2015) on behalf of PHL and JSU respectively -Estimate of values of the businesses and assets by independent external valueâs based on cash flow projections/implied multiple approach. In making the said projections, reliance has been placed on estimates of future prices of iron ore and coal, mineable resources, and assumptions relating to operational performance including significant improvement in capacity utilization and margins based on forecasts of demand in local markets, and availability of infrastructure facilities for mines.
(b) Equity shares of JSW Steel Bengal Limited, a subsidiary (carrying amount: Rs,438.34 crores (Rs,436.04 crores as at March 31, 2016, Rs,427.98 crores as at April 1, 2015))
- Evaluation of the status of its integrated Steel Complex (including power plant) to be implemented in phases at Salboni of district Paschim Medinipur in West Bengal by the said subsidiary, and the projections relating to the said complex considering estimates in respect of future raw material prices, foreign exchange rates, operating margins, etc. and the plans for commencing construction of the said complex.
(c) Equity shares of JSW Jharkhand Steel Limited, a subsidiary (carrying amount: Rs,80.27 crores as at March 31, 2017; Rs,76.71 crores as at March 31, 2016, Rs,76.71 crores as at April 1, 2015) - Evaluation of the status of its integrated Steel Complex to be implemented in phases at Ranchi, Jharkhand by the said subsidiary, and the projections relating to the said complex considering estimates in respect of future raw material prices, foreign exchange rates, operating margins, etc. and the plans for commencing construction of the said complex.
(d) Equity shares of Peddar Realty Private Limited (PRPL) (carrying amount of investments: Rs,24.04 crores as at March 31, 2017; Rs,56.72 crores as at March 31, 2016, Rs,56.72 crores as at April 1, 2015, and loans of Rs,156.79 crores as at March 31, 2017 Rs,158.18 crores as at March 31, 2016, Rs,185.83 crores as at April 1, 2015) -Valuation by an independent valuer of the residential complex in which PRPL holds interest.
(e) Investment of Rs,3.93 crores (Rs,3.93 crores as at March 31, 2016, Rs,3.93 crores as at April 1, 2015) and loan of Rs,116.70 crores (Rs,112.42 crores as at March 31, 2016, Rs,95.25 crores as at April 1, 2015) relating to JSW Natural Resources Mozambique Limitada and JSW ADMS Carvo Limitada (step down subsidiaries) - Assessment of minable reserves by independent experts and cash flow projections based on the plans to commence operations after mining lease arrangements are in place for which application has been submitted to regulatory authorities, and infrastructure is developed.
(f) Equity shares of JSW Severfield Structures
Limited, a joint venture (carrying amount: Rs,115.44 crores as at March 31, 2017; Rs,115.44 crores as at March 31, 2016, Rs,115.44 crores as at April 1, 2015) - Cash flow projections approved by the said JV which are based on estimates and assumptions relating to order book, capacity utilisation, operational performance, market prices of materials, inflation, terminal value, etc (Note 48 of the annual standalone financial statements)
11. Trade receivable includes Rs,159.54 crores (as at 31 March 2016 - Rs,159.54 crores and as at 1 April 2015 - Rs,172.04 crores) recoverable from a customer towards supply of steel. Pursuant to the Consent Term, filed by the Company and the Customer with the Honorable Bombay High Court and adopted by the Court as its order, the receivable of the Company has been secured by a first ranking pari-pasu charge over fixed assets of the customer and is at par with other CDR lenders. Based on these developments, the Company is reasonably confident about the recoverability of the said amount. (Note 49 of the annual standalone financial statements)
12. Segment reporting (Note 37 of the annual standalone financial statements)
The Company is in the business of manufacturing steel products having similar economic characteristics, primarily operated out of India and regularly reviewed by the Chief Operating Decision Maker for assessment of Company''s performance and resource allocation.
The information relating to revenue from
Revenue from operations have been allocated on the basis of location of customers
b) Non-current operating Assets
All non -current assets other than financial instruments, deferred tax assets are located in India
13. Related party disclosures (Note 41 of the annual standalone financial statements)
2. The Company maintains gratuity trust for the purpose of administering the gratuity payment to its employees (JSW Steel Group Gratuity Trust and JSW Steel Limited Employee Gratuity Fund).
During the year, the Company contributed Rs,2.00 crores (FY 2015-16: Rs,10.00 crores).
Notes:
1. As the future liability for gratuity is provided on an actuarial basis for the company as a whole, the amount pertaining to individual is not ascertainable and therefore not included above.
2. The Company has accrued Rs,0.98 crores in respect of employee stock options granted to Joint Managing Director & Group CFO, Deputy Managing Director and Director (Marketing & Commercial). The same has not been considered as managerial remuneration of the current year as defined under S Section 2(78) of the Companies Act, 2013 as the options have not been exercised.
Terms and conditions
Sales:
The sales to related parties are in the ordinary course of business. Sales transactions are based on prevailing price lists and memorandum of understanding signed with related parties. For the year ended 31st March 2017, the Company has not recorded any loss allowances for trade receivables from related parties.
Purchases:
The purchases from related parties are in the ordinary course of business. Purchase transactions are based on normal commercial terms and conditions and market rates.
Loans to overseas subsidiaries:
The Company had given loans to subsidiaries for general corporate purposes. The loan balances as at March 31, 2017 was Rs, 3035.39 crores. These loans are unsecured and carry an interest rate ranging from LIBOR 400-500 basis points and repayable within a period of one to three years.
Guarantees to subsidiaries:
Guarantees provided to the lenders of the subsidiaries are for availing term loans and working capital facilities from the lender banks.
Mar 31, 2016
1.1 BASIS OF ACCOUNTING
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013 ("the 2013 Act"). The financial
statements have been prepared on accrual basis under the historical
cost convention except for the assets and liabilities acquired under
the composite scheme of Amalgamation and Arrangement which are recorded
at respective fair values. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
1.2 USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) at the date of the financial statements and the
reported amounts of revenues and expenses during the year. The
Management believes that the estimates used in preparation of financial
statements are prudent and reasonable. Estimates and underlying
assumptions are reviewed at each Balance Sheet date. Future results
could differ due to these estimates and the differences between the
actual results and estimates are recognised in the periods in which the
results are known/materialize.
1.3 INVENTORIES
Inventories are valued at the lower of cost and net realizable value
after providing for obsolescence and other losses, where considered
necessary. Cost is determined by the weighted average cost method.
Cost includes all charges in bringing the goods to the point of sale,
including octroi and other levies, transit insurance and receiving
charges. Work-in-progress and finished goods include appropriate
proportion of overheads and, where applicable, excise duty.
Excise duty related to finished goods stock is included under changes
in inventories of finished goods, work-in- progress and stock-in-trade
(Refer note 21).
1.4 CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby Profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
1.5 DEPRECIATION AND AMORTISATION
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value. When
significant parts of the main asset is having different useful lives as
compared to the main asset, the Company depreciates them separately
based on their specific useful lives.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013 except in respect of the following
categories of assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking into account the
nature of the asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance
support, etc:
Leasehold land is amortized over the duration of the lease, except
where the lease is convertible to freehold land under lease agreements
at future dates at no additional cost.
Intangible assets are amortized over their estimated useful lives on
straight line method as follows:
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
1.6 REVENUE RECOGNITION
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognised, net of returns and trade
discounts, on transfer of significant risks and rewards of ownership to
the buyer, which generally coincides with the delivery of goods to
customers. Sales include excise duty but exclude sales tax and value
added tax. Export turnover includes related export benefits.
1.7 OTHER INCOME
Interest income is accounted on accrual basis when there is no
significant uncertainty as to its realization or collection. Dividend
income is accounted for, when the right to receive income is
established.
1.8 FIXED ASSETS (TANGIBLE/ INTANGIBLE)
Tangible assets are stated at their cost of acquisition or construction
except for assets acquired under the composite scheme of amalgamation
and arrangement which are recorded at fair value, less accumulated
depreciation and impairment losses, if any.
The cost of fixed assets comprises its purchase price net of any trade
discounts and rebates, any import duties and other taxes (other than
those subsequently recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for its intended
use, other incidental expenses and interest on borrowings attributable
to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. The Company has adopted the provisions of
para 46 / 46A of AS 11 The Effects of Changes in Foreign Exchange
Rates, accordingly, exchange differences arising on restatement /
settlement of long-term foreign currency borrowings relating to
acquisition of depreciable fixed assets are adjusted to the cost of the
respective assets and depreciated over the remaining useful life of
such assets. Machinery spares which can be used only in connection
with an item of fixed asset and whose use is expected to be irregular
are capitalised and depreciated over the useful life of the principal
item of the relevant assets.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately.
CAPITAL WORK-IN-PROGRESS:
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest. Fixed assets acquired
and put to use for project purpose are capitalised and depreciation
thereon is included in the project cost till the project is ready for
its intended use.
INTANGIBLE ASSETS:
Intangible assets are recognised only when it is probable that the
future economic benefits that are attributable to the assets will flow
to the Company and the cost of the assets can be measured reliably.
Intangible assets are stated at cost except for assets acquired under
the composite scheme of amalgamation and arrangement which are recorded
at fair value, less accumulated depreciation and impairment losses, if
any.
Expenditure on Research and development (Refer Note 1.20) eligible for
capitalisation are carried as Intangible assets under development where
such assets are not yet ready for their intended use.
1.9 FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS INITIAL RECOGNITION
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or at rates
that closely approximate the rate at the date of transaction.
MEASUREMENT AT BALANCE SHEET DATE
Foreign currency monetary items outstanding at the year- end (other
than derivative contracts which are accounted as per note 1.22) are
translated at the exchange rate prevailing as at the balance sheet
date. Non-monetary items such as investments are carried at historical
cost using the exchange rates on the date of the transaction- also
refer note 1(7).
Exchange differences arising on settlement or conversion of short-term
foreign currency monetary items are recognised in the Statement of
Profit and Loss or capital work-in-progress / fixed assets.
The exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is amortised over the maturity period /
upto the date of settlement of such monetary items, whichever is
earlier, and charged to the Statement of Profit and Loss except in case
of exchange differences arising on net investment in non-integral
foreign operations, where such amortisation is taken to "Foreign
currency translation reserve" until disposal / recovery of the net
investment. The unamortised exchange difference is carried under
Reserves and surplus as "Foreign currency monetary item translation
difference account" net of the tax effect thereon, where applicable.
ACCOUNTING FOR FORWARD CONTRACTS
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, is amortised over the
period of the contracts if such contracts relate to monetary items as
at the balance sheet date.
1.10 GOVERNMENT GRANTS, SUBSIDY AND EXPORT INCENTIVE
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidies will be received.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
1.11 INVESTMENTS
Long-term investments are carried individually at cost except for
investments acquired under the composite scheme of amalgamation and
arrangement which are recorded at fair value, less provision for
diminution, other than temporary, in the value of such investments.
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments include acquisition charges such as
brokerage, fees and duties.
1.12 EMPLOYEE BENEFITS
Employee benefits include provident fund, superannuation fund, employee
state insurance scheme, gratuity fund and compensated absences.
Employee benefits such as salaries, performance incentives, allowances,
non-monetary benefits, provident fund and other funds, which fall due
for payment within a period of twelve months after rendering service,
are charged as expense in the Statement of Profit and Loss in the
period in which the service is rendered.
The cost of compensated absences which is expected to occur within
twelve months after the end of the period in which the employee renders
the related service, is accounted as under:
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Employee benefits under defined benefit plans such as gratuity fund and
compensated absences which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit credit method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The Company''s obligations recognised in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial gains and losses are recognised immediately in the Statement
of Profit and Loss.
1.13 EMPLOYEE SHARE BASED PAYMENTS
The Company has issued an Employee Stock Option Plan  2012 to the
Employees. Employee Stock Options are accounted under the ''Intrinsic
Value Method''. Accordingly, the Company amortises the excess of market
price of Share over exercise price of the Option over the vesting
period specified in Employee Stock Option Plan.
1.14 BORROWING COSTS
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
1.15 SEGMENT REPORTING
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities".
1.16 LEASES:
(I) FINANCE LEASE
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Where the Company as a lessor leases assets under finance leases, such
amounts are recognised as receivables at an amount equal to the net
investment in the lease and the finance income is recognised based on a
constant rate of return on the outstanding net investment.
(II) OPERATING LEASES
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
1.17 EARNINGS PER SHARE
Basic earnings per share is computed by dividing the Profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. The weighted average number of equity shares outstanding
during the year is adjusted for events for bonus issue, bonus element
in a rights issue to existing shareholders, share split and reverse
share split (consolidation of shares). Diluted earnings per share is
computed by dividing the Profit / (loss) after tax (including the post-
tax effect of extraordinary items, if any) as adjusted for dividend,
interest and other charges to expense or income (net of any
attributable taxes) relating to the dilutive potential equity shares,
by the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares.
1.18 TAXES ON INCOME
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set of. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
1.19 RESEARCH AND DEVELOPMENT EXPENSES
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technical
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Fixed Assets.
1.20 IMPAIRMENT OF ASSETS
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment if any indication of impairment
exists.
If the carrying amount of the assets exceed the estimated recoverable
amount, an impairment is recognised for such excess amount. The
impairment loss is recognised as an expense in the Statement of Profit
and Loss.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash flows to their present value based on an appropriate
discount factor.
When there is indication that an impairment loss recognised for an
asset (other than a revalued asset) in earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, to the extent the
amount was previously charged to the Statement of Profit and Loss.
1.21 PROVISIONS AND CONTINGENCIES
A provision is recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of
resources will be required to settle the obligation in respect of which
a reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
1.22 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
The Company enters into derivative financial instruments such as
foreign exchange/Commodity forward and option contracts, interest rate
swaps and currency options to manage its exposure to commercial risks
associated with commodity price, foreign exchange and interest rate
fluctuations. The Company does not enter into derivative contracts for
trading or speculative purposes.
Foreign exchange forward contracts or instruments which are in
substance forward exchange contracts closely linked to the existing
assets and liabilities are accounted as per the policy stated for
Foreign currency transactions (refer note 1.9).
The Company applies the hedge accounting principles set out in
"Accounting Standard 30 (AS 30) - Financial Instruments: Recognition
and Measurement", and accordingly designates certain derivatives as
hedges of highly probable forecast transactions or hedges of foreign
currency risk of firm commitments (cash flow hedges).
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve Account"
under Reserves and surplus. The gain or loss relating to the
ineffective portion is recognised immediately in the Statement of
Profit and Loss. Amounts deferred in the Hedging Reserve Account are
recycled in the Statement of Profit and Loss in the periods when the
hedged item is recognised in the Statement of Profit and Loss, in the
same line as the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the Statement of Profit
and Loss.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of cash
flow hedges any cumulative gain or loss deferred in the Hedging Reserve
Account at that time is retained and is recognised when the forecast
transaction is ultimately recognised in the Statement of Profit and
Loss. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was deferred is recognised immediately in
the Statement of Profit and Loss.
In respect of all other derivative contracts, which are not designated
for hedge accounting (in terms of AS 30) and not covered under
Accounting Standard (AS) 11: The Effects of Changes in Foreign Exchange
Rates, the gains / losses arising from settlement and net marked to
market (MTM) losses in respect of outstanding derivative contracts as
at balance sheet date are recognised in the same line as the hedge item
in the Statement of Profit and Loss. The net MTM gains in respect of
outstanding derivatives contracts are not recognised adopting the
principles of prudence.
1.23 SHARE ISSUE EXPENSES
Share issue expenses are adjusted against the Securities Premium
Account as permissible under Section 52 of the Companies Act, 2013, to
the extent any balance is available for utilisation in the Securities
Premium Account. Share issue expenses in excess of the balance in the
Securities Premium Account is expensed in the Statement of Profit and
Loss.
1.24 INSURANCE CLAIMS
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that the amount recoverable
can be measured reliably and it is reasonable to expect ultimate
collection.
Mar 31, 2014
1. Basis of accounting
The accompanying financial statements have been prepared under the
historical cost convention on an accrual basis except for the assets
and liabilities acquired under the composite scheme of Amalgamation and
Arrangement which are recorded at respective fair values, in accordance
with Indian Generally Accepted Accounting Principles (GAAP), Accounting
Standards notified under Section 211(3C) of the Companies Act, 1956
("the 1956 Act") {which continues to be applicable in respect of
Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of
general circular 15/2013 dated September 13, 2013 of the Ministry of
Corporate Affairs} and the relevant provisions of the 1956 Act / 2013
Act, as applicable.
2. Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the application of accounting
policies and the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed at each Balance Sheet
date. Revisions in the estimates are recognized in the periods in which
the results are known/materialize.
3. Tangible Assets
Tangible Assets are stated at their cost of acquisition or construction
less accumulated depreciation and impairment losses, if any.
Cost of acquisition comprise all costs including purchase price net of
trade discounts and rebates, non-recoverable taxes, levies and duties
and directly attributable costs to bring the asset to its present
location and working condition up to the date the assets are put to
use. Costs of construction are composed of those costs that relate
directly to specific assets and those that are attributable to the
construction activity in general and can be allocated to specific
assets up to the date the assets are put to use. Borrowing costs
incurred for qualifying assets (i.e. the assets that take substantial
period of time to get ready for its intended use) is capitalised up to
the date the asset is ready for intended use, based on borrowings
incurred specifically for financing the asset or the weighted average
rate of all other borrowings, if no specific borrowings have been
incurred for the asset.
4. Intangible Assets
Intangible assets are recognised only when it is probable that the
future economic benefits that are attributable to the assets will flow
to the Company and the cost of the assets can be measured reliably.
Intangible assets are stated at cost less accumulated amortisation and
impairment loss, if any.
5. Depreciation and amortisation
Depreciation on assets is provided, pro-rata for the period of use, by
the Straight Line Method (SLM) at the rates prescribed in Schedule XIV
to the Act.
Depreciation on assets, acquired under the Composite Scheme of
Amalgamation and Arrangement, is provided, pro-rata for the period of
use, by the SLM at the rates prescribed in Schedule XIV to the Act or
at the SLM rates derived per independent, technical estimate of useful
life, whichever is higher.
Leasehold land is amortized over the period of the lease, except where
the lease is convertible to freehold land under lease agreements at
future dates at no additional cost.
Intangible assets are amortised over the best estimate of their useful
lives, subject to a rebuttable presumption that such useful lives will
not exceed ten years. Software is depreciated over an estimated useful
life of 3 to 5 years.
6. Impairment
The carrying values of assets/cash generating units at each balance
sheet date are reviewed for impairment in accordance with Accounting
Standard 28 "Impairment of Assets". If any indication of impairment
exists, the recoverable amount (i.e. the higher of the asset''s net
selling price and value in use) of such assets is estimated and
impairment is recognized if the carrying amount of these assets exceeds
their recoverable amount. If at the balance sheet date, there is an
indication that a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount but limited to the carrying amount that would have
been determined (net of depreciation / amortisation) had no impairment
loss been recognised in prior accounting periods.
7. Investments
Investments are classified as current or long-term in accordance with
Accounting Standard (AS) 13, Accounting for Investments.
Long term investments are carried at cost or at fair value of
investments acquired under the Composite Scheme of Amalgamation and
Arrangement. Provision for diminution is made to recognize a decline,
other than temporary, in the value of such investments. Current
investments are carried at lower of cost and fair value.
8. Revenue recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Sale of Goods
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks and
rewards of ownership are transferred to the customers and no effective
ownership is retained by the Company. Revenue from sale of goods is
recognised gross of excise duty, and net of rebates and discounts, and
sales tax and value added tax. Excise duty recovered is presented as a
reduction from gross turnover. Export turnover includes related export
benefits.
Gain arising on pre-payment of deferred Value Added Tax (VAT)/Sales Tax
at discounted rate are accounted on payment of VAT to authority.
9. Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for, when the right to receive income is established.
10. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by the weighted average cost
method.
Excise duty related to finished goods stock is included under changes
in inventories of finished goods, work-in-progress and stock-in-trade
(Refer note 22).
11. Borrowing costs
Borrowing costs not attributable to the acquisition or construction of
qualifying assets are expensed as incurred.
12. Employee benefits
Employee benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense in the
statement of profit and loss in the period in which the service is
rendered.
Employee benefits under defined benefit plans, such as gratuity and
compensated absences which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit credit method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The Company''s obligations recognized in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial gains and losses are recognized immediately in the statement
of profit and loss.
13. Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary foreign currency assets and liabilities (monetary items) are
reported at the exchange rate prevailing on the balance sheet date.
Exchange differences relating to long term monetary items are dealt
with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized in
the statement of profit and loss over the balance life of the long-term
monetary item, however that the period of amortization does not extend
beyond 31 March 2020.
All other exchange differences are dealt with in the statement of
profit and loss.
Non-monetary items such as investments are carried at historical cost
using the exchange rates on the date of the transaction- also refer
note 1(7).
14. Derivative financial instruments
The Company enters into derivative financial instruments such as
foreign exchange forward contracts, interest rate swaps and currency
options to manage its exposure to interest rate and foreign exchange
risks.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently re-measured to
their fair value at each balance sheet date.
The Company designates certain derivatives as either hedges of the fair
value of recognized assets or liabilities (fair value hedges) or hedges
of highly probable forecast transactions or hedges of foreign currency
risk of firm commitments (cash flow hedges). The Company does not enter
into derivative contracts for trading or speculative purposes.
A derivative is presented under "Short term loans and advances" (Note
14) or "Other Current Liabilities" (Note 10).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the statement of profit
and loss immediately, together with any changes in the fair value of
the hedged item that are attributable to the hedged risk. The change in
the fair value of the hedging instrument and the change in the hedged
item attributable to the hedged risk are recognized in the same line of
the statement of profit and loss relating to the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve
Account". The gain or loss relating to the ineffective portion is
recognized immediately in the statement of profit and loss. Amounts
deferred in the Hedging Reserve Account are recycled in the statement
of profit and loss in the periods when the hedged item is recognized in
the statement of profit and loss, in the same line as the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of fair
value hedges the adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortized in the statement of profit
and loss from that date. In case of cash flow hedges any cumulative
gain or loss deferred in the Hedging Reserve Account at that time is
retained and is recognized when the forecast transaction is ultimately
recognized in the statement of profit and loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss
that was deferred is recognized immediately in the statement of profit
and loss.
15. Income taxes
Tax expenses comprises of current and deferred tax.
Current tax is measured at the amount expected to be paid to /
recovered from the revenue authorities, using the applicable tax rates
and tax laws. Minimum Alternate Tax (MAT) credit entitlement available
under the provisions of Section 115 JAA of the Income Tax Act, 1961 is
recognized to the extent that the credit will be available for
discharge of future normal tax liability.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or a deferred
tax liability. They are measured using the substantively enacted tax
rates and tax laws as on the balance sheet date. Deferred tax assets
are recognised only when there is a reasonable certainty that
sufficient future taxable income will be available against which they
will be realised. Where there is a carry forward of losses or
unabsorbed depreciation, deferred tax assets are recognised only if
there is a virtual certainty supported by convincing evidence of
availability of taxable income against which such deferred tax assets
can be realised in future.
The carrying amount of MAT credit and deferred tax assets at each
balance sheet date is reduced to the extent that it is no longer
reasonably certain that sufficient future taxable income will be
available against which the assets can be realized.
Where certain expenses or credits which are otherwise required to be
charged in the statement of profit and loss are adjusted directly to
reserves in accordance with a court order or as permitted by
law/accounting standards, the tax benefits or charge, arising from the
admissibility or taxability of such expenses or income for tax purpose
is also recognized in the reserves.
Tax on distributed profits payable in accordance with the provisions of
Section 115O of the Income Tax Act, 1961 which is accounted for in
accordance with the Guidance Note on Accounting for Corporate Dividend
Tax is regarded as a tax on distribution of profits and is not
considered in determination of profits for the year.
16. Earnings per share
The Company reports basic and diluted earnings per share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
17. Leases:
(i) Finance lease
Assets acquired under finance leases are recognised as an asset and a
liability at the commencement of the lease, at the lower of the fair
value of the assets and the present value of minimum lease payments.
The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining
balance of the liability. Assets given under finance leases are
recognised as receivables at an amount equal to the net investment in
the lease and the finance income is based on a constant rate of return
on the outstanding net investment.
(ii) Operating Leases
Operating lease receipts and payments are recognized as income or
expense in the statement of profit and loss on a straight-line basis
over the lease term.
18. Securities'' expenses
Premium payable on redemption of bonds is provided for over the life of
the bonds. The Securities Premium Account is applied in providing for
premium on redemption in accordance with Section 78 of the 1956 Act. On
conversion of the bonds to equity the provision for the redemption
premium is reversed.
Expenses on issue of securities are written off to the Securities
Premium Account in accordance with Section 78 of the 1956 Act.
19. Stock based compensation
The compensation cost of stock options granted to employees is
calculated using the intrinsic value of the stock options. The
compensation expense is amortized uniformly over the vesting period of
the option.
20. Provision, Contingent liabilities, Contingent Assets and
Commitments
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation.
Contingent liabilities are not recognised; but disclosed unless the
probability of an outflow of resources is remote. Contingent Assets are
neither recognised nor disclosed.
Details of Security
(i) 10.34% NCDs aggregating to Rs. 1,000 crores are secured by way of
first pari passu charge on fixed assets related to 2.8 mtpa expansion
project located at Vijayanagar works, Karnataka and a flat at Vasind,
Maharashtra.
(ii) 11% NCDs aggregating to Rs. 1,000 crores are secured by way of first
pari passu charge on fixed assets related to 2.8 mtpa expansion project
located at Vijayanagar works, Karnataka and a flat at Vasind,
Maharashtra.
(iii) 10.25% NCDs aggregating to Rs. 500 crores are secured by way of
mortgage in respect of all immovable and movable properties of a
subsidiary located at Tarapur Works and Vasind Works in the State of
Maharashtra both present and future. Security shall be released
pursuant to realignment of Security being undertaken, post demerger of
Vasind, Tarapur and Kalmeshwar Works pursuant to the Composite Scheme
of Amalgamation and Arrangement between JSW Steel Limited and JSW Ispat
Steel Limited subject to necessary approvals as may be required. Post
realignment the NCD''s will be secured by the fixed assets located at
Salem works, Tamil Nadu
(iv) 10.60% NCDs aggregating to Rs. 350 crores are secured by:
- pari passu first charge by way of legal mortgage on land situated in
the State of Gujarat
- pari passu first charge by way of equitable mortgage on fixed assets
of the new 5 mtpa Hot Strip Mill at Vijayanagar works, Karnataka.
(v) 10.10 % NCDs aggregating to Rs. 968.75 crores are secured by:
- pari passu first charge by way of legal mortgage on all immovable
properties of a subsidiary located at Tarapur Works and Vasind Works in
the State of Maharashtra both present and future. Security shall be
released pursuant to realignment of Security being undertaken, post
demerger of Vasind, Tarapur and Kalmeshwar Works pursuant to the
Composite Scheme of Amalgamation and Arrangement between JSW Steel
Limited and JSW Ispat Steel Limited subject to necessary approvals as
may be required.
- pari passu first charge on all immovable properties and movable
assets both present and future located at Salem Works in the State of
Tamil Nadu.
(vi) 10.02 % NCDs aggregating to Rs. 1,000 crores are secured by:
- first pari passu charge on 3.8 mtpa fixed assets located at
Vijayanagar Works Karnataka (other than specifically carved out) and a
flat situated at Vasind, Maharashtra.
(vii) 11.93% NCDs aggregating to Rs. 6.28 crores are secured by:
- First charge on land situated in the State of Gujarat.
- First charge on movable and immovable assets related to power plant
situated at Salem Works,Tamilnadu. (viii) 11.93 % NCDs aggregating to
Rs. 17.55 crores are secured by:
- pari passu first charge by way of legal mortgage on a flat situated
at Mumbai, in the State of Maharashtra.
- pari passu first charge by way of equitable mortgage of the Company''s
immovable properties relating to the 100MW and 130MW Power Plants
located at Vijayanagar works, Karnataka.
(ix) 10.55% NCDs aggregating to Rs. 1,000 crores are secured/to be
secured by pari passu first charge by way of equitable mortgage on
fixed assets of the new 5 mtpa Hot Strip Mill at Vijayanagar works,
Karnataka.
(x) 10.50% NCDs aggregating to Rs. 150 crores are secured/to be secured
by first pari passu charge on specific fixed assets of the company.
(xi) 10.55% NCDs aggregating to Rs. 150 crores are secured/to be secured
by first pari passu charge on specific fixed assets of the company.
(x) Rupee Term Loans from Banks/Foreign Currency Term Loan from Bank
are secured / to be secured as under :
- Foreign Currency Term Loans aggregating to Rs. 39.92 crores are secured
by a first charge by an equitable/ registered Mortgage of movable and
immovable properties of assets situated at Salem Works,Tamilnadu and a
second pari passu charge on the current assets at Salem
Works,Tamilnadu.
- Foreign Currency Term Loans aggregating to Rs. 146.49 crores by
exclusive first charge by way of equitable mortgage in respect of all
movable and immovable properties of Cold Rolling Mill Complex (CRM I)
at Vijayanagar works, Karnataka.
- Rupee Term Loans aggregating to Rs. 16.50 crores and Foreign Currency
Term Loans aggregating to Rs. 56.34 crores by exclusive first charge by
way of equitable mortgage in respect of all movable and immovable
properties both present and future of 2.8 mtpa expansion project at
Vijayanagar works, Karnataka.
- Foreign Currency Term Loans aggregating to Rs. 550.63 crores by
exclusive first charge by way of equitable mortgage in respect of all
movable and immovable properties of Hot Strips Mill at Vijayanagar
works, Karnataka.
- Rupee Term Loans aggregating to Rs. 4,076.74 crores by pari passu first
charge by way of mortgage in respect of all movable and immovable
properties both present and future, first charge / Assignment of all
the assets and first charge on all the Bank Accounts of 3.2 mtpa
expansion project at Vijayanagar works, Karnataka.
- Rupee Term Loan aggregating to Rs. 288.75 crores by exclusive first
mortgage and charge on all movable and immovable properties both
present and future, and first charge on the Bank Accounts of the 300 MW
Power Plant - CPP IV at Vijayanagar works, Karnataka.
- Rupee Term Loan aggregating to Rs. 707.14 crores by first mortgage and
charge of all immovable properties both present and future, and a first
charge by way of hypothecation of all movable properties both present
and future of the Beneficiation Plant (6 x 500 tph) and Pellet Plant
(4.2 mtpa) at Vijayanagar works, Karnataka.
- Rupee Term Loan aggregating to Rs. 1,000 crores by first pari passu
charge on 3.8mtpa upstream assets (other than assets specifically
carved out) at Vijayanagar works, Karnataka.
- Rupee Term Loan aggregating to Rs. 1,200 crores secured/to be secured
by first pari passu charge on 3.8 mtpa upstream assets (other than
assets specifically carved out) at Vijayanagar works, Karnataka.
- Rupee Term Loans aggregating to Rs. 2,750.10 crores and Foreign
Currency Term Loans aggregating to Rs. 730.86 crores by first charge on
fixed assets situated at Dolvi works, Maharashtra.
(xi) Rupee Term Loan from Financial Institution aggregating to Rs. 14.23
crores are secured by exclusive first charge by way of hypothecation of
Bombardier Challenger 300 aircraft.
Terms of Repayment/ Redemption/ Conversion
1. Terms of Conversion/ Redemption of Bonds/ Non-Convertible
Debentures (NCDs)
(i) 10.55% Secured NCDs of Rs. 10 lacs each aggregating Rs. 150 crores is
redeemable on 20.03.2017. (ii) 10.50% Secured NCDs of Rs. 10 lacs each
aggregating Rs. 150 crores is redeemable as Under
- Rs. 75 Crore on 26.03.2016
- Rs. 75 Crore on 18.05.2016
(iii) 10.55% Secured NCDs of Rs. 10 lacs each aggregating Rs. 1,000 crores
is redeemable on 10.02.2017.
(iv) 10.02% Secured NCDs of Rs. 10 lacs each aggregating Rs. 500 crores is
redeemable on 20.05.2023.
(v) 10.02% Secured NCDs of Rs. 10 lacs each aggregating Rs. 500 crores is
redeemable on 19.07.2023
(vi) 10.34% Secured NCDs of Rs. 10 lacs each aggregating Rs. 1,000 crores
are redeemable in three tranches as under :
- Rs. 330 crores on 18.1.2022
- Rs. 330 crores on 18.1.2023
- Rs. 340 crores on 18.1.2024
(vii) 11% Secured NCDs of Rs. 10 lacs each aggregating Rs. 1,000 crores are
redeemable with call and put option excersiable on 16.03.17 and
16.03.19 as under:
- Rs. 330 crores each on 16.3.2021
- Rs. 330 crores each on 16.3.2022
- Rs. 340 crores each on 16.3.2023
(viii) 10.25% Secured NCDs of Rs. 10 lacs each aggregating Rs. 500 crores
are redeemable in 3 equal annual instalments of Rs. 166.67 crores each
from 17.02.2016 to 17.02.2018.
(ix) 10.60% Secured NCDs of Rs. 10 lacs each aggregating Rs. 350 crores are
redeemable in two tranches as under :
- 8 half yearly instalments of Rs. 21.875 crores each from 02.01.2016 to
02.07.2019
- 8 half yearly instalments of Rs. 21.875 crores each from 02.08.2016 to
02.02.2020.
(x) 10.10% Secured NCDs of Rs. 10 lacs each aggregating Rs. 968.75 crores
are redeemable in two tranches as under :
- 15 quarterly instalments of Rs. 31.25 crores each from 04.05.2014 to
04.11.2017
- 16 quarterly instalments of Rs. 31.25 crores each from 15.06.2014 to
15.03.2018.
(xi) 11.93% Secured NCDs of Rs. 10 lacs each aggregating Rs. 6.28 crores
are redeemable in 3 quarterly instalments of Rs. 2.09 crores each from
1.07.2014 to 01.01.2015.
(xii) 11.93% Secured NCDs of Rs. 10 lacs each aggregating Rs. 17.55 crores
are redeemable in 9 quarterly instalments of Rs. 1.95 crores each from
15.04.2014 to 15.04.2016.
2. Terms of Repayment of Secured Term Loans
(A) Rupee Term Loan from Banks of :
(i) Rs. 16.50 crores is repayable in 8 quarterly instalments of Rs. 2.06
crores each from 30.4.2014 to 31.1.2016. (ii) Rs. 2,559.35 crores is
repayable as under :
- 4 quarterly instalments of Rs. 75.28 crores from 30.6.2014 - 31.3.2015
- 8 quarterly instalments of Rs. 188.19 crores from 30.6.2015 - 31.3.2017
- 2 quarterly instalments of Rs. 250.91 crores from 30.6.2017 - 30.9.2017
- 1 quarterly instalments of Rs. 250.94 crores on 31.12.2017 (iii) Rs.
1,187.50 crores is repayable as under :
- 8 quarterly instalments of Rs. 31.25 crores each from 30.6.2014 -
31.3.2016
- 12 quarterly instalments of Rs. 78.13 crores each from 30.6.2016 -
31.3.2019. (iv) Rs. 329.88 crores is repayable as under :
- 3 quarterly instalments of Rs. 10 crores each from 1.7.2014 - 1.1.2015
- 8 quarterly instalments of Rs. 25 crores each from 1.4.2015 - 1.1.2017
- 3 quarterly instalments of Rs. 33.33 crores each from 1.4.2017 -
1.10.2017. (v) Rs. 707.14 crores is repayable in 22 quarterly
instalments of Rs. 32.14 crores each from 1.7.2014 to 1.10.2019. (vi) Rs.
288.75 crores is repayable in 7 quarterly instalment of Rs. 41.25 crores
each from 1.7.2014 to 1.1.2016.
(vii) Rs. 1,000 crores is repayable as under :
- 16 quarterly instalments of Rs. 12.5 crores each from 30.6.2014 -
31.3.2018
- 12 quarterly instalments of Rs. 37.5 crores each from 30.6.2018 -
31.3.2021
- 4 quarterly instalments of Rs. 43.75 crores each from 30.6.2021 -
31.3.2022
- 2 quarterly instalments of Rs. 87.5 crores each from 30.6.2022 -
30.9.2022 (viii) Rs. 1,200 crores is repayable as under :
- 16 quarterly instalments of Rs. 12.5 crores each from 31.3.2015 -
31.12.2018
- 12 quarterly instalments of Rs. 37.5 crores each from 31.3.2019 -
31.12.2021
- 4 quarterly instalments of Rs. 43.75 crores each from 31.3.2022 -
31.12.2022
- 2 quarterly instalments of Rs. 187.5 crores each from 31.3.2023 -
30.6.2023 (ix) Rs. 2,750.10 crores is repayable as under :
- 4 quarterly instalments of Rs. 28.82 crores from 30.6.2014 - 31.3.2015
- 4 quarterly instalments of Rs. 100.24 crores from 30.6.2015 - 31.3.2016
- 4 quarterly instalments of Rs. 129.06 crores from 30.6.2016 - 31.3.2017
- 12 quarterly instalments of Rs. 143.13 crores from 30.6.2017 -
31.3.2020
(B) Foreign Currency Term Loan from Banks of :
(i) Rs. 31.55 crores is repayable in 3 half yearly instalments of Rs. 10.52
crores each from 16.6.2014 to 16.6.2015.
(ii) Rs. 114.94 crores is repayable in 3 half yearly instalments of Rs.
38.31 crores each from 7.4.2014 to 7.4.2015.
(iii) Rs. 56.34 crores is repayable on 7.7.2014.
(iv) Rs. 550.63 crores is repayable on 27.5.2014
(v) Rs. 39.92 crores is repayable in 4 half yearly instalments of Rs. 9.98
crores each from 9.9.2014 to 9.3.2016.
(vi) Rs. 730.86 crores is repayable as Under
- Rs. 383.60 is repayable in 35 Monthly instalments of Rs. 10.96 Crore each
from 28.04.2014 to 28.02.2017
- Rs. 8.74 is repayable in 1 Instalment of Rs. 8.74 crores on 28.03.2017.
- Rs. 274.04 crores is repayable in 17 quarterly instalments of Rs. 16.12
crores each from 02.4.2014 to 01.4.2018.
- Rs. 64.48 crores is repayable in 8 quarterly instalments of Rs. 8.06
crores each from 01.7.2018 to 01.4.2020.
(C) Rupee Term Loan from Financial Institutions of :
(i) Rs. 5.71 crores is repayable in 15 monthly instalments of Rs. 0.38
crores each from 11.4.2014 to 11.6.2015. (ii) Rs. 2.82 crores is
repayable in 15 monthly instalments of Rs. 0.19 crores each from
20.4.2014 to 20.6.2015. (iii) Rs. 3.12 crores is repayable in 16 monthly
instalments of Rs. 0.20 crores each from 2.4.2014 to 02.7.2015. (iv) Rs.
2.57 crores is repayable in 15 monthly instalments of Rs. 0.17 crores
each from 15.4.2014 to 15.6.2015.
3. Terms of Repayment of Unsecured Term Loans
(A) Foreign Currency Term Loan from Banks of :
(i) Rs. 1,682.79 crores is repayable in 5 half yearly instalments of Rs.
336.56 crores each from 28.8.2015 to 27.8.2017.
(ii) Rs. 749.75 crores is repayable in 15 half yearly instalments of Rs.
49.98 crores each from 30.5.2014 to 31.3.2021.
(iii) Rs. 522.44 crores is repayable in 16 half yearly instalments of Rs.
32.08 crores each from 31.10.2014 to 30.4.2022 & last instalment of Rs.
9.16 crores on 31.10.2022
(iv) Rs. 88.32 crores is repayable in 16 half yearly instalments of Rs.
5.37 crores each from 1.12.2014 to 1.6.2022 and last instalment of Rs.
2.4 crores on 1.12.2022.
(v) Rs. 1,352.25 crores is repayable on 26.6.2017.
(vi) Rs. 242.97 crores is repayable in 3 yearly instalments of Rs. 80.99
crores each from 26.7.2016 to 26.7.2018.
(vi) Rs. 102.08 crores is repayable in 17 half yearly instalments of Rs.
5.89 crores each from 28.08.2014 to 28.08.2022 and & final instalment
of Rs. 1.95 crores on 28.02.2023
(vii) Rs. 324.29 crores is repayable in 16 half yearly instalments of Rs.
19.15 crores each from 19.7.2014 to 19.1.2022 and 1 half yearly
instalment of Rs. 17.89 crores on 19.7.2022.
(viii) Rs. 246.39 crores is repayable in 16 half yearly instalments of Rs.
15.21 crores each from 19.7.2014 to 19.1.2022 and 1 half yearly
instalment of Rs. 3.03 crores on 19.7.2022.
(ix) Rs. 40.34 crores is repayable in 13 half yearly instalments of Rs.
2.90 crores each from 31.7.2014 to 31.7.2021 and final Instalment of Rs.
2.64 crores on 31.01.2022
(x) Rs. 21.54 crores repayable in 4 equal semi annual instalments of Rs.
5.34 crores each from 09.07.2015 to 09.01.2017 and 1 semi annual
instalment of Rs. 0.17 crores on 09.07.2017
(xi) Rs. 59.43 crores repayable in 5 equal semi annual instalments of Rs.
10.37 crores each from 09.07.2015 to 09.07.2017 and 1 semi annual
instalment of Rs. 7.58 crores on 09.01.2018
Mar 31, 2013
1. Basis of accounting
The accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956 (The Act).
2. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles require estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known/materialize.
3. Fixed assets and depreciation
Fixed Assets are stated at their cost of acquisition or construction
less accumulated depreciation and impairment losses.
Costs of acquisition comprise all costs incurred to bring the assets to
their location and working condition up to the date the assets are put
to use. Costs of construction are composed of those costs that relate
directly to specific assets and those that are attributable to the
construction activity in general and can be allocated to specific
assets up to the date the asset are put to use.
Depreciation on assets is provided, pro-rata for the period of use, by
the Straight Line Method (SLM) at the SLM rates prescribed in Schedule
XIV to the Act.
Leasehold land is amortized over the period of the lease, except where
the lease is convertible to freehold land under lease agreements at
future dates at no additional cost.
The company capitalizes software where it is reasonably estimated that
the software has an enduring useful life. Software is depreciated over
an estimated useful life of 3 to 5 years.
The carrying values of assets /cash generating units at each balance
sheet date are reviewed for impairment in accordance with Accounting
Standard 28 "Impairment of Assets". If any indication of impairment
exist, the recoverable amount of such assets is estimated and
impairment is recognized if the carrying amount of these assets exceeds
their recoverable amount (i.e. the higher of the asset''s net selling
price and value in use).
4. Investments
Investments are classified as current or long-term in accordance with
Accounting Standard 13 "Accounting for Investments".
Current investments are stated at lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited in the statement of profit and loss.
Long term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
5. Revenue recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks and
rewards of ownership are transferred to the customers and no effective
ownership is retained. Sales are net of sales tax/value added tax.
Export turnover includes related export benefits. Excise duty recovered
is presented as a reduction from gross turnover
6. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by the weighted average cost
method.
Excise duty related to finished goods stock is included under changes
in inventories of finished goods, work-in- progress and stock-in-trade
(Refer note 22).
7. Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 "Borrowing
Costs" are capitalized as part of the cost of such asset up to the
date when the asset is ready for its intended use. Other borrowing
costs are expensed as incurred.
8. Employee benefits
Employee benefits such as salaries, allowances, non- monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense in the
statement of profit and loss in the period in which the service is
rendered.
Employee benefits under defined benefit plans, such as gratuity and
compensated absences which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit credit method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The company''s obligations recognized in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial gains and losses are recognized immediately in the statement
of profit and loss.
9. Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary foreign currency assets and liabilities (monetary items) are
reported at the exchange rate prevailing on the balance sheet date.
Exchange differences relating to long term monetary items are dealt
with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized
in the statement of profit and loss over the balance life of the long-
term monetary item, however that the period of amortization does not
extend beyond 31 March 2020.
All other exchange differences are dealt with in the statement of
profit and loss.
Non-monetary items such as investments are carried at historical cost
using the exchange rates on the date of the transaction- also refer
note 1-4.
10. Derivative financial instruments
The Company enters into derivative financial instruments such as
foreign exchange forward contracts, interest rate swaps and currency
options to manage its exposure to interest rate and foreign exchange
risks.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently re-measured to
their fair value at each balance sheet date.
The Company designates certain derivatives as either hedges of the fair
value of recognized assets or liabilities (fair value hedges) or hedges
of highly probable forecast transactions or hedges of foreign currency
risk of firm commitments (cash flow hedges). The Company does not enter
into derivative contracts for trading or speculative purposes.
A derivative is presented under "Short term loans and advances (Note14
) or "Other Current Liabilities" (Note 10).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the statement of profit
and loss immediately, together with any changes in the fair value of
the hedged item that are attributable to the hedged risk. The change in
the fair value of the hedging instrument and the change in the hedged
item attributable to the hedged risk are recognized in the same line of
the statement profit and loss relating to the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve
Account". The gain or loss relating to the ineffective portion is
recognized immediately in the statement of profit and loss. Amounts
deferred in the Hedging Reserve Account are recycled in the statement
of profit and loss in the periods when the hedged item is recognized in
the statement of profit and loss, in the same line as the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of fair
value hedges the adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortized in the statement of profit
and loss from that date. In case of cash flow hedges any cumulative
gain or loss deferred in the Hedging Reserve Account at that time is
retained and is recognized when the forecast transaction is ultimately
recognized in the statement of profit and loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss
that was deferred is recognized immediately in the statement of profit
and loss.
11. Income taxes
Income taxes are accounted for in accordance with Accounting Standard
22 "Accounting for Taxes on Income". Taxes comprise both current and
deferred tax. Current tax is measured at the amount expected to be
paid/ recovered from the revenue authorities, using the applicable tax
rates and tax laws. Minimum Alternate Tax (MAT) credit entitlement
available under the provisions of Section 115 JAA of the Income Tax
Act, 1961 is recognized to the extent that the credit will be available
for discharge of future normal tax liability.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or a deferred
tax liability. They are measured using the substantively enacted tax
rates and tax laws.
The carrying amount of MAT credit and deferred tax assets at each
balance sheet date is reduced to the extent that it is no longer
reasonably certain that sufficient future taxable income will be
available against which the assets can be realized.
Where certain expenses or credits which are otherwise required to be
charged in the statement of profit and loss are adjusted directly to
reserves in accordance with a court order or as permitted by
law/accounting standards, the tax benefits or charge, arising from the
admissibility or taxability of such expenses or income for tax purpose
is also recognized in the reserves.
Tax on distributed profits payable in accordance with the provisions of
section 115O of the Income Tax Act, 1961 which is accounted for in
accordance with the Guidance Note on Accounting for Corporate Dividend
Tax is regarded as a tax on distribution of profits and is not
considered in determination of profits for the year.
12. Earnings per share
The Company reports basic and diluted earnings per share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
13. Operating leases
Operating lease receipts and payments are recognized as income or
expense in the statement of profit and loss on a straight-line basis
over the lease term.
14. Cash Flow Statement
The cash flow statement is prepared using the "indirect method" set out
in Accounting Standard 3 "Cash Flow Statements" and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and cash equivalents presented in the cash flow statement consist
of cash on hand and unencumbered, highly liquid bank balances.
15. Securities'' expenses
Premium payable on redemption of bonds is provided for over the life of
the bonds. The Securities Premium Account is applied in providing for
premium on redemption in accordance with Section 78 of the Act. On
conversion of the bonds to equity the provision for the redemption
premium is reversed.
Expenses on issue of securities are written off to the Securities
Premium Account in accordance with Section 78 of the Act.
16. Stock based compensation
The compensation cost of stock options granted to employees is
calculated using the intrinsic value of the stock options. The
compensation expense is amortized uniformly over the vesting period of
the option.
17. Contingent liabilities
Contingent liabilities as defined in Accounting Standard 29
"Provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits is remote.
Provision is made if it is probable that an outflow of future economic
benefits will be required to settle the obligation.
Mar 31, 2012
1. Basis of accounting
The accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956 (The Act).
The Ministry of Corporate Affairs revised Schedule VI to the Act for
financial years commencing on or after 1 April 2011. The balance sheet,
profit and loss account and the comparative financial information for
the previous year have accordingly been prepared and presented with
disclosures as required under the Revised Schedule VI.
2. Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles require estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known/materialize.
3. Fixed assets and depreciation
Fixed Assets are stated at their cost of acquisition or construction
less accumulated depreciation and impairment losses.
Costs of acquisition comprise all costs incurred to bring the assets to
their location and working condition up to the date the assets are put
to use. Costs of construction are composed of those costs that relate
directly to specific assets and those that are attributable to the
construction activity in general and can be allocated to specific
assets up to the date the asset are put to use.
Depreciation on assets is provided, pro-rata for the period of use, by
the Straight Line Method (SLM) at the SLM rates prescribed in Schedule
XIV to the Act.
Leasehold land is amortized over the period of the lease, except where
the lease is convertible to freehold land under lease agreements at
future dates at no additional cost.
The company capitalizes software where it is reasonably estimated that
the software has an enduring useful life. Software is depreciated over
an estimated useful life of 3 to 5 years.
The carrying values of assets /cash generating units at each balance
sheet date are reviewed for impairment in accordance with Accounting
Standard 28 "Impairment of Assets". If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognized, if the carrying amount of these assets
exceeds their recoverable amount (i.e. the higher of the assets net
selling price and value in use).
4. Investments
Investments are classified as current or long-term in accordance with
Accounting Standard 13 "Accounting for Investments".
Current investments are stated at lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the profit and loss account.
Long term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
5. Revenue recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks
and rewards of ownership are transferred to the customers and no
effective ownership is retained. Sales are net of sales tax/value added
tax. Export turnover includes related export benefits. Excise duty
recovered is presented as a reduction from gross turnover.
6. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by the weighted average cost
method.
Excise duty related to finished goods stock is included under changes
in inventories of finished goods, work-in-progress and stock-in-trade
(Refer note 22).
7. Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
8. Employee benefits
Employee benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
profit and loss account in the period in which the service is
rendered.
Employee benefits under defined benefit plans, such as gratuity and
compensated absences which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit credit method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The companys obligations recognized in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial gains and losses are recognized immediately in the profit
and loss Account.
9. Foreign currency transactions
Foreign currency transactions are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary foreign currency assets and liabilities (monetary items) are
reported at the exchange rate prevailing on the balance sheet date.
Exchange differences relating to long term monetary items are dealt
with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized to
the profit and loss account over the balance life of the long-term
monetary item, however that the period of amortization does not extend
beyond 31 March 2020.
All other exchange differences are dealt with in the profit and loss
account.
Non-monetary items such as investments are carried at historical cost
using the exchange rates on the date of the transaction- also refer
note 1-4.
10. Derivative financial instruments
The Company enters into derivative financial instruments such as
foreign exchange forward contracts, interest rate swaps and currency
options to manage its exposure to interest rate and foreign exchange
risks.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently re- measured
to their fair value at each balance sheet date.
The Company designates certain derivatives as either hedges of the fair
value of recognized assets or liabilities (fair value hedges) or hedges
of highly probable forecast transactions or hedges of foreign currency
risk of firm commitments (cash flow hedges). The Company does not
enter into derivative contracts for trading or speculative purposes.
A derivative is presented under "Short term loans and advances (Note14
) or "Other Current Liabilities" (Note 10).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the profit and loss
account immediately, together with any changes in the fair value of the
hedged item that are attributable to the hedged risk. The change in the
fair value of the hedging instrument and the change in the hedged item
attributable to the hedged risk are recognized in the same line of the
profit and loss account relating to the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve
Account". The gain or loss relating to the ineffective portion is
recognized immediately in profit and loss account. Amounts deferred in
the Hedging Reserve Account are recycled in the profit and loss
account in the periods when the hedged item is recognized in the profit
and loss account, in the same line as the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of
fair value hedges the adjustment to the carrying amount of the hedged
item arising from the hedged risk is amortized to the profit and loss
account from that date. In case of cash flow hedges any cumulative
gain or loss deferred in the Hedging Reserve Account at that time is
retained and is recognized when the forecast transaction is ultimately
recognized in the profit and loss account. When a forecast transaction
is no longer expected to occur, the cumulative gain or loss that was
deferred is recognized immediately in the profit and loss account.
11. Income taxes
Income taxes are accounted for in accordance with Accounting Standard
22 "Accounting for Taxes on Income". Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid/ recovered
from the revenue authorities, using the applicable tax rates and tax
laws. Minimum Alternate Tax (MAT) credit entitlement available under
the provisions of Section 115 JAA of the Income Tax Act, 1961 is
recognized to the extent that the credit will be available for
discharge of future normal tax liability.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or a deferred
tax liability. They are measured using the substantively enacted tax
rates and tax laws.
The carrying amount of MAT credit and deferred tax assets at each
balance sheet date is reduced to the extent that it is no longer
reasonably certain that sufficient future taxable income will be
available against which the assets can be realized.
Where certain expenses or credits which are otherwise required to be
charged to the profit and loss account are adjusted directly to
reserves in accordance with a court order or as permitted by law/
accounting standards, the tax benefits or charge, arising from the
admissibility or taxability of such expenses or income for tax purpose
is also recognized in the reserves.
Tax on distributed profits payable in accordance with the provisions
of section 115O of the Income Tax Act, 1961 which is accounted for in
accordance with the Guidance Note on Accounting for Corporate Dividend
Tax is regarded as a tax on distribution of profits and is not
considered in determination of profits for the year.
12. Earnings per share
The Company reports basic and diluted earnings per share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti- dilutive.
13. Operating leases
Operating lease receipts and payments are recognized as income or
expense in the profit and loss account on a straight-line basis over
the lease term.
14. Cash Flow Statement
The cash flow statement is prepared using the "indirect method" set
out in Accounting Standard 3 Cash Flow Statements" and presents the
cash flows by operating, investing and financing activities of the
Company.
Cash and cash equivalents presented in the cash flow statement consist
of cash on hand and unencumbered, highly liquid bank balances.
15. Securities expenses
Expenses on issue of securities are written off to the Securities
Premium Account in accordance with Section 78 of the Act.
Premium payable on redemption of bonds is provided for over the life of
the bonds. The Securities Premium Account is applied in providing for
premium on redemption in accordance with Section 78 of the Act. On
conversion of the bonds to equity the provision for the redemption
premium is reversed.
16. Stock based compensation
The compensation cost of stock options granted to employees is
calculated using the intrinsic value of the stock options. The
compensation expense is amortized uniformly over the vesting period of
the option.
17. Contingent liabilities
Contingent liabilities as defined in Accounting Standard 29
"Provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits is remote.
Provision is made if it is probable that an outflow of future economic
benefits will be required to settle the obligation.
Mar 31, 2011
1. Basis of Accounting
The accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956 (The Act).
2. Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles require estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known/materialize.
3. Fixed Assets and Depreciation
Fixed Assets are stated at their cost of acquisition or construction
less accumulated depreciation and impairment losses.
Costs of acquisition comprise all costs incurred to bring the assets to
their location and working condition up to the date the assets are put
to use. Costs of construction are composed of those costs that relate
directly to specific assets and those that are attributable to the
construction activity in general and can be allocated to specific
assets up to the date the asset are put to use.
Depreciation on assets is provided, pro-rata for the period of use, by
the Straight Line Method (SLM) at the SLM rates prescribed in Schedule
XIV to the Act.
An asset is considered as impaired in accordance with Accounting
Standard 28 on "Impairment of Assets", when at balance sheet date there
are indications of impairment and the carrying amount of the asset, or
where applicable the cash generating unit to which the asset belongs,
exceeds its recoverable amount (i.e. the higher of the assets net
selling
price and value in use). The carrying amount is reduced to the
recoverable amount and the reduction is recognized as an impairment
loss in the profit and loss account.
For the purpose of determining the appropriate depreciation rates to be
applied to plant and machinery, continuous process plant and machinery
has been identified on the basis of technical assessment made by the
Company.
Leasehold land is amortized over the period of the lease, except where
the lease is convertible to freehold land under lease agreements at
future dates at no additional cost.
The Company capitalizes software where it is reasonably estimated that
the software has an enduring useful life. Software is depreciated over
an estimated useful life of 3 to 5 years.
In respect of mining projects, the Company capitalizes cost of
acquisition of mining concessions and all costs incurred till mining
reserves are proved, such as license fees, direct exploration costs and
indirect incidental costs. Once the determination of mining reserves is
made, the following conditions must be met in order for these costs to
remain capitalized;
a. The economic and operating viability of the project is assessed
determining whether sufficient reserves exist to justify further
capitalized expenditure for commercial exploration of the reserves, and
b. Further exploration and development activity is under way or firmly
planned for the near future.
These will be amortized once the mine commences commercial production.
All expenditure related to unsuccessful efforts are charged to the
profit and loss account when so established.
4. Investments
Investments are classified as current or long term in accordance with
Accounting Standard 13 on "Accounting for Investments".
Current investments are stated at lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the profit and loss account.
Long term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
5. Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks and
rewards of ownership are transferred to the customers and no effective
ownership is retained. Sales are net of sales tax/Value Added Tax.
Export turnover includes related export benefits. Excise duty recovered
is presented as a reduction from gross turnover.
Income from Certified Emission Reductions (CER) is recognized as income
on sale of CERs.
6. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by the weighted average cost
method.
Excise duty related to finished goods stock is included under Materials
(Schedule 14).
7. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on
"Borrowing Costs" are capitalized as part of the cost of such asset up
to the date when the asset is ready for its intended use. Other
borrowing costs are expensed as incurred.
Interest income earned is disclosed separately, and reduced from Net
Finance charges (Schedule 17).
8. Employee Benefits
Employee Benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
profit and loss account in the period in which the service is rendered.
Employee Benefits under defined benefit plans, such as compensated
absences and gratuity which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit credit method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The Companys obligations recognized in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial gains and losses are recognized immediately in the profit and
loss account.
9. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary foreign currency assets and liabilities (monetary items) are
reported at the exchange rate prevailing on the balance sheet date.
Exchange differences relating to long term monetary items are dealt
with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to/ deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized to
the profit and loss account over the balance life of the long-term
monetary item, however that the period of amortization does not extend
beyond 31 March 2011.
All other exchange differences are dealt with in the profit and loss
account.
Non-monetary items such as investments are carried at historical cost
using the exchange rates on the date of the transaction- also refer
note A-4 of Schedule 18.
10. Derivative Financial Instruments
The Company enters into derivative financial instruments such as
foreign exchange forward contracts, interest rate swaps and currency
options to manage its exposure to interest rate and foreign exchange
risks.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently re-measured to
their fair value at each balance sheet date.
The Company designates certain derivatives as either hedges of the fair
value of recognised assets or liabilities (fair value hedges) or hedges
of highly probable forecast transactions or hedges of foreign currency
risk of firm commitments (cash flow hedges). The Company does not enter
into derivative contracts for trading or speculative purposes.
A derivative is presented under Current Assets, Loans and Advances
(Schedule 10) or Current Liabilities and Provisions (Schedule 11).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the profit and loss
account immediately, together with any changes in the fair value of the
hedged item that are attributable to the hedged risk. The change in the
fair value of the hedging instrument and the change in the hedged item
attributable to the hedged risk are recognized in the same line of the
profit and loss account relating to the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve
Account". The gain or loss relating to the ineffective portion is
recognized immediately in profit and loss account. Amounts deferred in
the Hedging Reserve Account are recycled in the profit and loss account
in the periods when the hedged item is recognized in the profit and
loss account, in the same line as the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of fair
value hedges the adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortized to the profit and loss
account from that date. In case of cash flow hedges any cumulative gain
or loss deferred in the Hedging Reserve Account at that time is
retained and is recognized when the forecast transaction is ultimately
recognized in the profit and loss account. When a forecast transaction
is no longer expected to occur, the cumulative gain or loss that was
deferred is recognized immediately in the profit and loss account.
11. Income Tax
Income taxes are accounted for in accordance with Accounting Standard
22 on "Accounting for Taxes on Income". Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid/ recovered
from the revenue authorities, using the applicable tax rates and tax
laws. Minimum Alternate Tax (MAT) credit entitlement available under
the provisions of Section 115 JAA of the Income Tax Act, 1961 is
recognized to the extent that the credit will be available for
discharge of future normal tax liability.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. Deferred tax assets and liabilities are recognized for
future tax consequences attributable to timing differences. They are
measured using the substantively enacted tax rates and tax laws.
The carrying amount of MAT credit and deferred tax assets at each
balance sheet date is reduced to the extent that it is no longer
reasonably certain that sufficient future taxable income will be
available against which the assets can be realized.
Where certain expenses or credits which are otherwise required to be
charged to the profit and loss account are adjusted directly to
reserves in accordance with a court order or as permitted by
Law/Accounting Standards, in such cases the tax benefits or charge,
arising from the admissibility or taxability of such expenses or income
for tax purpose is also recognized in the reserves.
Tax on distributed profits payable in accordance with the provisions of
Section 1150 of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as a
tax on distribution of profits and is not considered in determination
of profits for the year.
12. Earnings Per Share
The Company reports basic and diluted Earnings per share
(EPS) in accordance with Accounting Standard 20 on "Earnings per
Share". Basic EPS is computed by dividing the net profit or loss for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year. Diluted EPS is
computed by dividing the net profit or loss for the year attributable
to equity shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
13. Operating Leases
Operating lease receipts and payments are recognized as income or
expense in the profit and loss account on a straight-line basis over
the lease term.
14. Cash Flow Statement
The Cash Flow Statement is prepared by the "indirect method" set out in
Accounting Standard 3 on "Cash Flow Statements" and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist
of cash on hand and unencumbered, highly liquid bank balances.
15. Securities Expenses
Expenses on issue of securities are written off to the Securities
Premium Account in accordance with Section 78 of the Act.
Premium payable on redemption of bonds is provided for over the life of
the bonds. The Securities Premium Account is applied in providing for
premium on redemption in accordance with Section 78 of the Act. On
conversion of the bonds to equity the provision for the redemption
premium is reversed.
16. Stock Based Compensation
The compensation cost of stock options granted to employees is
calculated using the intrinsic value of the stock options. The
compensation expense is amortized uniformly over the vesting period of
the option.
17. Contingent Liabilities
Contingent liabilities as defined in Accounting Standard 29 on
"Provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits is remote.
Provision is made if it is probable that an outflow of future economic
benefits will be required to settle the obligation.
Mar 31, 2010
1. Basis of accounting
The accompanying financial statements have been prepared under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP) and the provisions of the
Companies Act, 1956 (The Act).
2 Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles require estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known/ materialize.
3. Fixed Assets and Depreciation
Fixed Assets are stated at their cost of acquisition or construction
less accumulated depreciation and impairment losses.
Costs of acquisition comprise all costs incurred to bring the assets to
their location and working condition up to the date the assets are put
to use. Costs of construction are composed of those costs that relate
directly to specific assets and those that are attributable to the
construction activity in general and can be allocated to specific
assets up to the date the assets are put to use.
Depreciation on assets is provided, prorata for the period of use, by
the Straight Line Method (SLM) at the SLM rates prescribed in Schedule
XIV to the Act.
An asset is considered as impaired in accordance with Accounting
Standard 28 on "Impairment of Assets", when at balance sheet date there
are indications of impairment and the carrying amount of. the asset, or
where applicable the cash generating unit to which the asset belongs,
exceeds it recoverable amount (i.e. the higher of the assets net
selling price and value in use). The carrying amount is reduced to the
recoverable amount and the reduction is recognized as an impairment
loss in the profit and loss account.
For the purpose of determining the appropriate depreciation rates to be
applied to piant and machinery, continuous process plant and machinery
has been identified on the basis of technical assessment made by the
company.
Leasehold land is amortised over the period of the lease, except where
the lease is convertible to freehold land under lease agreements at
future dates at no additional cost.
The Company capitalises software where it is reasonably estimated that
the software has an enduring useful life. Software is depreciated over
an estimated useful life of 3 to 5 years.
In respect of mining projects, the Company capitalises cost of
acquisition of mining concessions and all costs incurred till mining
reserves are proved, such as license fees, direct exploration costs and
indirect incidental costs. Once the determination of mining reseaes is
made, the following conditions must be met in order for these costs-to
remain capitalized:
a) The economic and operating viability of the project is assessed
determining whether sufficient reserves exists to justify further
capitalized expenditure for commercial exploration of the reserves, and
b) Further exploration and development activity is under way or firmly
planned for the near future.
These will be amortised once the mine commences commercial production.
All expenditure related to unsuccessful efforts are charged to the
profit and loss account when so established.
4. Investments
Investments are classified as current or long-term jn accordance with
Accounting Standard 13 on "Accounting for Investments".
Current investments are stated at lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the profit and loss account.
Long-term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
5. Revenue Recognition
Revenue is recognized when if is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from sale of goods is recognized on delivery of the products,
when all significant contractual obligations have been satisfied, the
property in the goods is transferred for a price, significant risks and
rewards of ownership are transferred to the customers and no effective
ownership is retained. Sales are net of sales tax/ Value Added Tax.
Export turnover includes related export benefits. Excise duty recovered
is presented as a reduction from gross turnover.
Income from Certified Emission Reductions (CER) is recognized as income
on sale of CERs.
6. Inventories
Inventories are valued at the lower of cost and net realizable value.
Cost of inventories comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present
location and condition. Cost is determined by the weighted average cost
method.
Excise duty related to finished goods stock is included under Materials
(Schedule 14).
7. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on "Borrowing
Costs" are capitalized as part of the cost of such asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
Interest income earned is reduced from Interest and Finance charges
(net) (Schedule 17).
8. Employee Benefits
Employee Benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
profit and loss account in the period in which the service is rendered.
Employee Benefits under defined benefit plans, such as compensated
absences and gratuity which fall due for payment after a period of
twelve months from rendering service or after completion of employment,
are measured by the projected unit cost method, on the basis of
actuarial valuations carried out by third party actuaries at each
balance sheet date. The Companys obligations recognized in the balance
sheet represents the present value of obligations as reduced by the
fair value of plan assets, where applicable.
Actuarial Gains and losses are recognised immediately in the Profit and
Loss Account.
9. Foreign Currency Transactions
Foreign Currency transactions are recorded at the exchange rates
prevailing on the date of the transaction.
Monetary Foreign Currency assets and liabilities (monetary items) are
reported at the exchange rate prevailing on the balance sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
Amendment Rules, 2006 on 31st March, 2009, which amended Accounting
Standard 11 on The Effects of Changes in Foreign Exchange Rates,
exchange differences relating to long term monetary items are dealt
with in the following manner:
i. Exchange differences relating to long-term monetary items, arising
during the year, in so far as they relate to the acquisition of a
depreciable capital asset are added to / deducted from the cost of the
asset and depreciated over the balance life of the asset.
ii. In other cases such differences are accumulated in a "Foreign
Currency Monetary Item Translation Difference Account" and amortized to
the profit and loss account over the balance life of the long-term
monetary item, however that the period of amortization does not extend
beyond 31st March 2011.
All other exchange differences are dealt with in the profit and loss
account.
Non-monetary items such as investments are carried at historical cost
using the exchange rates on the date of the transaction.
10. Derivative Financial Instruments
The Company enters into derivative financial instruments such as
foreign exchange forward contracts, interest rate swaps and currency
options to manage its exposure to interest rate and foreign exchange
risks.
Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently remeasured to
their fair value at each balance sheet date.
The Company designates certain derivatives as either hedges of the fair
value of recognised assets or liabilities (fair value hedges) or hedges
of highly probable forecast transactions or hedges of foreign currency
risk of firm commitments (cash flow hedges). The Company does not enter
into derivative contracts for trading or speculative purposes.
A derivative is presented under Current Assets, Loans and Advances
(SchedulelO) or Current Liabilities and Provisions (Schedule 11).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in the profit and toss
account immediately, together with any changes in the fair value of the
hedged item that are attributable to the hedged risk. The change in the
fair value of the hedging instrument and the change in the hedged item
attributable to the hedged risk are recognized in the same tine of the
profit and loss account relating to the hedged item.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in a "Hedging Reserve
Account". The gain or loss relating to the ineffective portion is
recognised immediately in profit and loss account. Amounts deferred in
the Hedging Reserve Account are recycled in the profit and loss account
in the periods when the hedged item is recognized in the profit and
loss account, in the same line as the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. In case of fair
value hedges the adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortized to the profit and loss
account from that date. In case of cash flow hedges any cumulative gain
or loss deferred in the Hedging Reserve Account at that time is
retained and is recognized when the forecast transaction is ultimately
recognized in the profit and loss account. When a forecast transaction
is no longer expected to occur, the cumulative gain or loss that was
deferred is recognized immediately in the profit and loss account.
11. Income Tax
Income taxes are accounted for in accordance with Accounting Standard
22 on "Accounting for Taxes on Income". Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid/ recovered
from the revenue authorities, using the applicable tax rates and tax
laws.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. Deferred tax assets and liabilities are recognized for
future tax consequences attributable to timing differences. They are
measured using the substantively enacted tax rates and tax laws. The
carrying amount of deferred tax assets at each balance sheet date is
reduced to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which the
deferred tax asset can be realized.
Where certain expenses or credits which are otherwise required to be
charged to the Profit and Loss account are adjusted directly to
reserves in accordance with a court order or as permitted by Accounting
Standards, in such cases the tax benefits or charge, arising from the
admissibility or taxability of such expenses or income for tax purpose
is also recognised in the reserves.
Tax on distributed profits payable in accordance with the provisions of
Section 1150 of the Income Tax Act, 1961 is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax regarded as a
tax on distribution of profits and is not considered in determination
of profits for the year.
12. Earnings Per Share
The Company reports basic and diluted Earnings per share (EPS) in
accordance with Accounting Standard 20 on "Earnings per Share". Basic
EPS is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
13. Operating leases
Operating lease receipts and payments are recognized as income or
expense in the profit and loss account on a straight- line basis over
the lease term.
14. Cash Flow Statement
The Cash Flow Statement is prepared by the "indirect method" set out in
Accounting Standard 3 on "Cash Flow Statements" and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist
of cash on hand and unencumbered, highly liquid bank balances.
15. Bond Expenses
Premium payable on redemption of bonds is provided for over the life of
the bonds. The Securities Premium Account is applied in providing for
premium on redemption in accordance with - Section 78 of the Act. On
conversion of the bonds to equity the provision for the redemption
premium is reversed.
Expenses on issue of bonds are written off to the Securities Premium
Account in accordance with Section 78 of the Act.
16. Stock Based Compensation
The compensation cost of stqck options granted to employees is
calculated using the intrinsic value of the stock options. The
compensation expense is amortised uniformly over the vesting period of
the option.
17. Contingent liabilities
Contingent liabilities as defined in Accounting Standard 29 on
"Provisions, Contingent Liabilities and Contingent Assets" are
disclosed by way of notes to the accounts. Disclosure is not made if
the possibility of an outflow of future economic benefits is remote.
Provision is made if it is probable that an outflow of future economic
benefits will be required to settle the obligation.
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