JSW Steel Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2022
Leasehold land aggregating to '' 85 crores wherein the lease deed has expired and the Company has a right to convert the land into freehold land subject to complying with certain conditions. The Company is in the process of converting the title into freehold as per the lease cum sale agreement.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The Company has lease contracts for machinery that contains variable payments amounting to '' 1,088 crores ('' 452 crores in 31 March, 2021) shown under cost of material consumed/ other expenses.
The Company has recognised '' 15 crores as rent expenses during the year which pertains to short term lease/ low value asset which was not recognised as part of right of use asset.
(i) The Company acquired mining blocks vis: -Nuagaon, Narayanposhi, Jajang and Ganua in the Auctions held by the Government of Odisha in February 2020. The Company has signed the Mine Development and Production agreement(s) for all the four blocks and executed the lease deed(s) with Government of Odisha after complying with all regulatory aspects. Acquisition cost incurred for these mines such as stamp duty, registration fees and other such costs amounting to '' 817 crores have been capitalised as Intangible Assets. The Company had started mining operations at all the above said blocks since 1 July, 2020. The Company has also recognised restoration liability and capitalised '' 443 crores during the previous year. During the current year, the Company reestimated the restoration liability through a mining expert and accordingly recognised an additional assest and corresponding liability of '' 387 crores.
(ii) I ntangible assets under development include expenditure incurred on development of mining rights and other related costs for mines which are yet to be made operational.
a) NIL shares (as at 31 March, 2021 30,43,73,882 shares ) are pledged to the Amba River a Coke Limited (ARCL)''s banker.
b) 98,00,00,000 shares (as at 31 March, 2021 98,00,00,000 shares) are pledged to the Piombino Steel Limited''s banker.
a. The Company has purchased non-convertible debentures amounting to '' 269 crores issued by Crexient Special Steels Limited (''CSSL'') from open market hence not disclosed as part of related party transactions.
(a) The Company had recognised financial guarantee obligation in the earlier years towards lenders of a subsidiary, against which incremental loans have been advanced to the subsidiary during the current year. Consequently, the financial guarantee obligation has been released and basis of the recoverability of the said loans provision for doubtful allowances has been recognised, resulting in NIL impact in Statement of profit S loss.
a. Maharashtra Electricity Regulation Commission (MERC) had approved levy of additional surcharge of '' 1.25/kWh w.e.f. 1 September, 2018 to all the consumers sourcing power from Captive power plants. Company had contested the demand and got a favorable judgement from Appellate tribunal for Electricity (''APTEL'') in March 2019. MERC subsequently filed special leave petition (''SLP'') in the Honourable Supreme Court against APTEL''s decision. The Honourable Supreme Court has passed an order in favour of the Company on 10 December, 2021 confirming that the captive users are not liable to pay the additional surcharge leviable under Section 42(4) of the Electricity Act, 2003. Hence, the commission has proposed to adjust the amount paid under dispute towards 50% of the monthly transmission charges payable by the Company.
Accordingly, '' 72 crores has been classified as current and remaining '' 581 crores has been classified as noncurrent assets.
The credit period on sales of goods ranges from 7 to 120 days with or without security.
Before accepting any new customer, the Company uses an external credit scoring system to assess the potential customer''s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed once a year.
The Company does not generally hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.
Trade receivables have been given as collateral towards borrowings details relating to which has been described in note 20 and note 25.
Credit risk management regarding trade receivables has been described in note 43.7.
Trade receivables from related parties'' details has been described in note 44.
Trade receivables does not include any receivables from directors and officers of the company.
a) Note for Shares held Under ESOP Trust:
The Company has created an Employee Stock Ownership Plan (ESOP) for providing share-based payment to its employees.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its subsidiaries in India. For the purpose of the scheme, the Company purchases shares from the open market under ESOP trust. The Company treats ESOP trust as its extension and shares held by ESOP trust are treated as treasury shares.
For the details of shares reserved for issue under the Employee Stock Ownership Plan (ESOP) of the Company refer note 39.
b) Rights, Preferences and Restrictions Attached to Equity Shares
The Company has a single class of equity shares having par value of '' 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(i) General reserve
Under the erstwhile Indian Companies Act 1956, a general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable reserves for that year.
Consequent to introduction of Companies Act 2013, the requirement of mandatory transfer of a specified percentage of the net profit to general reserve has been withdrawn and the Company can optionally transfer any amount from the surplus of profit and loss to the General reserves. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(ii) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.
(iii) Equity Instruments through other comprehensive income
The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
(iv) Effective portion of cash flow hedges
Effective portion of cash flow hedges represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges, which shall be reclassified to profit and loss only when the hedged transaction affects the profit and loss, or included as a basis adjustment to the non-financial hedged item, consistent with the Company accounting policies.
(v) Equity settled share based payment reserve
The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management of JSW Steel and its subsidiaries. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.
(vi) Capital reserve
Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(vii) Capital redemption reserve
Reserve is created for redemption of preference shares as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(viii) Securities Premium
The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
Indian companies are subject to Indian income tax on a standalone basis. For each fiscal year, the entity profit and loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax ("MAT").
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India adjusted in accordance with the provisions of the (Indian) Income Tax Act, 1961. Statutory income tax is charged at 30% plus a surcharge and education cess.
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 for the fiscal year 2021-22 is charged at 15% plus a surcharge and education cess. MAT paid in excess of regular income tax during a year can be set off against regular income taxes within a period of fifteen years succeeding the fiscal year in which MAT credit arises subject to the limits prescribed.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
a. Working capital loans from banks of '' 541 crores (31 March, 2021''785 crores) are secured by:
i) pari passu first charge by way of hypothecation of stocks of raw materials, finished goods, work-in-process, consumables (stores and spares) and book debts / receivables of the Company, both present and future.
ii) pari passu second charge on movable properties and immovable properties forming part of the property, plant and equipment of the Company, both present and future except such properties as may be specifically excluded.
b. The quarterly returns/ statements read with subsequent revisions filed by the Company with the banks are in agreement with the books of accounts.
a. Advance from customers includes '' 1,010 crores (31 March, 2021 '' 1,010 crores) relating to current portion of APSA. Refer note 24.
b. Export obligation deferred income represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme on purchase of property, plant and equipment accounted for as government grant and accounted in revenue on fulfillment of export obligation.
a. 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 historically. The Company currently recognises income for such government grants based on the State Goods & Service Tax rates instead of VAT rates, in accordance with the relevant notifications issued by the State of Maharashtra and the State of Karnataka post implementation of Goods & Services Tax (GST).
i) The Company is eligible for claiming incentives for investments made under the Industrial Policy of the Government of Maharashtra under PSI Scheme 2007 & PSI 2013 Scheme. The Company completed the Phase 1 expansion of 3.3 MTPA to 5 MTPA at Dolvi, Maharashtra in May 2016 and has also received the eligibility certificate for the same basis which it has started availing incentives under the PSI 2007 since then. Further, the Company completed the second phase of expansion from 5 MTPA to 10 MTPA at Dolvi Maharashtra during the financial year 2021-22. The Company is in the process of submitting required documents with the State Government for issuance of the Eligibility Certificate for the second phase and believes that all conditions with respect to the same are met by the Company and hence there are no uncertainties attached in recognising the grant income. Accordingly, the Company has recognised the cumulative grant income amounting to '' 571 crores for the year ended 31 March, 2022.
ii) The State Government of Maharashtra (GOM) vide its Government Resolution (GR) dated 20 December, 2018 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.
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.
Ind AS 115 Revenue from Contracts with Customers
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 assessed and determined the following categories for disaggregation of revenue in addition to that provided under segment disclosure (refer note 40):
The credit period on sales of goods ranges from 7 to 120 days with or without security.
As at 31 March, 2022''218 crores (previous '' 192 crores) was recognised as provision for allowance for doubtful debts on trade receivables.
Contract liabilities include long term and short term advances received for sale of goods. The outstanding balances of these accounts decreased in due to adjustment against receivable balances. Long term advances are detailed in note 24.
Amount of revenue recognised from amounts included in the contract liabilities at the beginning of the year '' 2,072 crores (previous year '' 1,487 crores) and performance obligations satisfied in previous years '' NIL (previous year '' NIL).
Out of the total contract liabilities outstanding as on 31 March, 2022, '' 1,887 crores (previous '' 2,072 crores) will be recognised by 31 March, 2023 and remaining thereafter.
The Company in FY 2020 launched a one-time scheme (''Samruddhi'') applicable only for certain permanent employees (Eligible Employee) of the Company. The Eligible Employee can purchase the Equity Shares from the open market by availing a loan provided by a bank / non-banking financial institution ("Lending Agency") identified by the Company to facilitate acquisition of Equity Shares by the Eligible Employees under the Plan. The plan provides that the Company shall service 75% of the total interest liability owed to the Lending Agency and the balance 25% will be borne by the Eligible Employee. The interest expense recognised in the financial statements during the year was '' 4 crores. ('' 11 crores in 31 March, 2021). The scheme has been completed in September 2021.
There was no amount unspent for the year ended 31 March, 2022. In respect of the unspent amount of '' 86 crores for FY 2021, the Company has spent an amount of '' 73 crores in the current financial year.
c) The Company had applied with Reserve Bank of India ("RBI") for waiver of outstanding interest on intercompany loan given to Periama Holding LLC (subsidiary) upto 31 December, 2020 aggregating to USD 224 million. Of this USD 57.22 mio ('' 430 crores) was recognised and provided for in the books of account in earlier years and balance USD 166.78 mio was not recognised due to uncertainty involved in its collectability. RBI has provided its approval for waiver of the interest for the period upto 31 December, 2020 in November 2021 subject to fulfillment of certain conditions. The Company on fulfillment of the conditions has written off interest accrued of USD 57.22 mio ('' 430 crores) and waived interest of USD 166.78 mio (''1,234 crores) aggregating to USD 224 mio.
39. Employee share based payment plans
ESOP Scheme 2016
The Board of Directors of the Company at its meeting held on 29 January, 2016, formulated the JSWSL EMPLOYEES STOCK OWNERSHIP PLAN 2016 ("ESOP Plan"). At the said meeting, the Board authorised the ESOP Committee for the superintendence of the ESOP Plan.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its'' subsidiaries in India.
Three grants would be made under ESOP plan 2016 to eligible employees on the rolls of the Company as at 1 April, 2016, 1 April, 2017 and 1 April, 2018.
During the previous year the Company has made supplementary grants under the JSWSL Employee stock ownership Plan 2016 to its permanent employees who are on the rolls of the Company and its Indian subsidiaries as on 5 December, 2019 and the same was approved by the ESOP committee in its meeting held on 5 December, 2019.
The maximum value and share options that can be awarded to eligible employees is calculated by reference to certain percentage of individuals fixed salary compensation. 50% of the grant would vest at the end of the third year and 50% of the grant would vest at the end of the fourth year with a vesting condition that the employee is in continuous employment with the Company till the date of vesting.
The exercise price is determined by the ESOP committee at a certain discount to the primary market price on the date of grant.
A total of 2,86,87,000 options are available for grant to the eligible employees of the Company and a total of 31,63,000 options would be available for grant to the eligible employees of the Indian subsidiaries of the Company under the ESOP Plan.
These options are equity settled and are accounted for in accordance with the requirement applying to equity settled transactions.
ESOP Plan 2021
The Board of Directors of the Company at its meeting held on 21 May, 2021, formulated the Shri OP Jindal Employees Stock Ownership Plan ("OPJ ESOP Plan"). At the said meeting, the Board authorised the ESOP Committee for the superintendence of the ESOP Plan.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its'' subsidiaries in India.
Three grants would be made under OPJ ESOP plan 2021 to eligible present and future employees on the rolls of the Company as at date of the grant.
The maximum value and share options that can be awarded to eligible employees is calculated by reference to certain percentage of individuals fixed salary compensation. 25% of the grant would vest at the end of the first year, 25% of the grant would vest at the end of the second year and 50% of the grant would vest at the end of the third year with a vesting condition that the employee is in continuous employment with the Company till the date of vesting.
The exercise price is determined by the ESOP committee at '' 1 per share.
A total of 47,00,000 options are available for grant to the eligible employees of the Company and a total of 3,00,000 options would be available for grant to the eligible employees of the Indian subsidiaries of the Company under the ESOP Plan.
These options are equity settled and are accounted for in accordance with the requirement applying to equity settled transactions.
Samruddhi Plan 2021
The Board of Directors of the Company at its meeting held on 21 May, 2021, formulated the Shri OP Jindal Samruddhi Plan ("OPJ Samruddhi Plan"). At the said meeting, the Board authorised the ESOP Committee for the superintendence of the ESOP Plan.
Samruddhi plan is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its'' subsidiaries in India.
Single grants would be made under OPJ ESOP plan 2021 to eligible employees on the rolls of the Company as at date of the grant.
The maximum value and share options that can be awarded to eligible employees is calculated by reference to certain percentage of individuals fixed salary compensation. 25% of the grant would vest at the end of the second year, 25% of the grant would vest at the end of the third year and 50% of the grant would vest at the end of the forth year with a vesting condition that the employee is in continuous employment with the Company till the date of vesting.
The exercise price is determined by the ESOP committee at '' 1 per share.
A total of 67,00,000 options are available for grant to the eligible employees of the Company and a total of 13,00,000 options would be available for grant to the eligible employees of the Indian subsidiaries of the Company under the ESOP Plan.
These options are equity settled and are accounted for in accordance with the requirement applying to equity settled transactions.
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 (''CODM'') for assessment of Company''s performance and resource allocation.
a) Defined contribution plan
The Company operates defined contribution retirement benefit plans for all qualifying employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs.
Company''s contribution to provident fund a family pension scheme recognised in statement of profit and loss of '' 56 crores (31 March, 2021: '' 46 crores) (included in note 33).
b) Defined benefit plans
The Company sponsors funded defined benefit plans for all qualifying employees. The level of benefits provided depends on the member''s length of service and salary at retirement age.
The gratuity plan is covered by The Payment of Gratuity Act, 1972. Under the gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days'' salary for each year of service until the retirement age of 58, 60 and 62, without any payment ceiling. The vesting period for gratuity as payable under The Payment of Gratuity Act, 1972 is 5 years.
The fund is managed by JSW Steel limited Employee Gratuity Trust and it is governed by the Board of trustees. The Board of trustees are responsible for the administration of the plan assets and for defining the investment strategy.
g) The Company expects to contribute '' 41 crores (previous year '' 38 crores) to its gratuity plan for the next year.
h) The average duration of the defined benefit plan obligation at the end of the reporting period is 8 years (31 March, 2021: 8 years)
i) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations after considering several applicable factors such as the composition of plan assets, investment strategy, market scenario, etc.
j) The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
k) The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting year, which is the same as that applied in calculating the defined benefit obligation recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Each year an Asset-Liability-Matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles.
ii) Other long term benefits:
a. Compensated Absences
Under the compensated absences plan, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement, superannuation or resignation. Employee are entitled to encash leave while serving in the Company at the rate of daily salary, as per current accumulation of leave days.
b. Long Service Award
The Company has a policy to recognise the long service rendered by employees and celebrate their long association with the Company. This scheme is called - Long Association of Motivation, Harmony & Excitement(LAMHE). The award is paid at milestone service completion years of 10, 15, 20 and 25 years.
42.1 Capital risk management
The Company being in a capital intensive industry, its objective is to maintain a strong credit rating, healthy capital ratios and establish a capital structure that would maximise the return to stakeholders through optimum mix of debt and equity.
The Company''s capital requirement is mainly to fund its capacity expansion, repayment of principal and interest on its borrowings and strategic acquisitions. The principal source of funding of the Company has been, and is expected to continue to be, cash generated from its operations supplemented by funding from bank borrowings and the capital markets. The Company is not subject to any externally imposed capital requirements.
The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce interest cost and elongate the maturity of its debt portfolio, and closely monitors its judicious allocation amongst competing capital expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.
The Company monitors its capital using gearing ratio, which is net debt, divided to total equity. Net debt includes, interest bearing loans and borrowings less cash and cash equivalents, bank balances other than cash and cash equivalents and current investments.
i. Equity includes all capital and reserves of the Company that are managed as capital.
ii. Debt is defined as long and short term borrowings (excluding derivatives and financial guarantee contracts), as described in notes 20 and 25.
43. Fair value hierarchy of financial instruments
The carrying amounts of trade receivables, trade payables, capital creditors, cash and cash equivalents, other bank balances, other financial assets and other financial liabilities (other than those specifically disclosed) are considered to be the same as their fair values, due to their short term nature.
A significant part of the financial assets is classified as Level 1 and Level 2. The fair value of these assets is marked to an active market or based on observable market data. The financial assets carried at fair value by the Company are mainly investments in equity instruments, debt securities and derivatives, accordingly, any material volatility is not expected.
43.1 Financial risk management
The Company has a Risk Management Committee established by its Board of Directors for overseeing the Risk Management Framework and developing and monitoring the Company''s risk management policies. The risk management policies are established to ensure timely identification and evaluation of risks, setting acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks and their limits, improve risk awareness and transparency. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Company''s activities to provide reliable information to the Management and the Board to evaluate the adequacy of the risk management framework in relation to the risk faced by the Company.
The risk management policies aims to mitigate the following risks arising from the financial instruments:
⢠Market risk
⢠Credit risk; and
⢠Liquidity risk
⢠Equity price risk
43.2 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market prices. The Company is exposed in the ordinary course of its business to risks related to changes in foreign currency exchange rates, commodity prices and interest rates.
The Company seeks to minimise the effects of these risks by using derivative and non-derivative financial instruments to hedge risk exposures. The use of financial derivatives and non-derivative financial instruments is governed by the Company''s policies approved by the Board of Directors, which provide written principles on foreign exchange risk,
interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Management and the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivatives for speculative purposes.
43.3 Foreign currency risk management
The Company''s functional currency is Indian Rupees (INR). The Company undertakes transactions denominated in foreign currencies; consequently, exposure to exchange rate fluctuations arise. Volatility in exchange rates affects the Company''s revenue from export markets and the costs of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade and debt portfolio.
Adverse movements in the exchange rate between the Rupee and any relevant foreign currency result''s in increase in the Company''s overall debt position in Rupee terms without the Company having incurred additional debt and favourable movements in the exchange rates will conversely result in reduction in the Company''s receivables in foreign currency.
In order to hedge exchange rate risk, the Company has a policy to hedge cash flows up to a specific tenure using forward exchange contracts, options and other non-derivative financial instruments like long-term foreign currency borrowings and acceptances. At any point in time, the Company hedges its estimated foreign currency exposure in respect of forecast sales over the following 6 months using derivative instruments. Forecasted sales beyond the period of 6 months are hedged using non-derivative financial instruments basis the tenure of the specific long term foreign currency borrowings. In respect of imports and other payables, the Company hedges its payables as when the exposure arises. Short term exposures are hedged progressively based on their maturity.
All hedging activities are carried out in accordance with the Company''s internal risk management policies, as approved by the Board of Directors, and in accordance with the applicable regulations where the Company operates.
The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Company continues to believe that there is no impact on effectiveness of its hedges.
The following table details the Company''s sensitivity to a 1% increase and decrease in the INR against the relevant foreign currencies net of hedge accounting impact. 1% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 1% change in foreign currency rates, with all other variables held constant. A positive number below indicates an increase in profit or equity where INR strengthens 1% against the relevant currency. For a 1% weakening of INR against the relevant currency, there would be a comparable impact on
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43.4 Commodity price risk:
The Company''s revenue is exposed to the market risk of price fluctuations related to the sale of its steel products. Market forces generally determine prices for the steel products sold by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may reduce the revenue that the Company earns from the sale of its steel products.
The Company is subject to fluctuations in prices for the purchase of iron ore, coking coal, ferro alloys, zinc, scrap and other raw material inputs. The Company purchased primarily all of its iron ore and coal requirements at prevailing market rates during the year ended 31 March, 2022.
The Company aims to sell the products at prevailing market prices. Similarly, the Company procures key raw materials like iron ore and coal based on prevailing market rates as the selling prices of steel prices and the prices of input raw materials move in the same direction.
Commodity hedging is used primarily as a risk management tool to secure the future cash flows in case of volatility by entering into commodity forward contracts.
Hedging commodity is based on its procurement schedule and price risk. Commodity hedging is undertaken as a risk offsetting exercise and, depending upon market conditions hedges, may extend beyond the financial year. The Company is presently hedging maximum up to 100% of its consumption.
The following table details the Company''s sensitivity to a 5% movement in the input price of iron ore and coking coal. The sensitivity analysis includes only 5% change in commodity prices for quantity sold or consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit or equity where the commodity prices decrease by 5% and vice-versa.
43.5 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The Company hedges its US dollar interest rate risk through interest rate swaps to reduce the floating interest rate risk. The company hedges up to 20% of interest risk in US dollars. The Company has exposure to interest rate risk, arising principally on changes in base lending rate and LIBOR rates. The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible bonds and short term loans. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
The sensitivity analyses below have been determined based on the exposure to interest rates for floating rate liabilities, after the impact of hedge accounting, assuming the amount of the liability outstanding at the year-end was outstanding for the whole year.
If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Company''s profit for the year ended 31 March, 2022 would decrease / increase by '' 186 crores (for the year ended 31 March, 2021: decrease / increase by '' 212 crores). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings
Interest rate benchmark reform
The company is exposed to LIBORs through various financial instrument including borrowings and derivatives. Existing LIBOR-referencing contracts that mature beyond their respective LIBOR cessation dates are generally expected to be transitioned to Alternative Reference Rates (ARRs). The company is closely monitoring the market and managing the transition to new benchmark interest rates.
Progress towards implementation of alternative benchmark interest rates:
As a part of the company''s risk management policy for transition, the following measures have been initiated:
⢠New contracts/facilities are being linked to the relevant ARRs or other benchmarks like EURIBOR that are not expected to cease.
⢠The existing facilities/ contracts are a mix of fixed and floating rates denominated in USD, EUR and JPY.
1. The Company''s USD floating rate exposure is primarily linked to USD 6 month LIBOR and these exposures are proposed to be transitioned to SOFR (the ARR recommended for USD exposures) for contracts/ facilities that mature beyond 30 June, 2023 (cessation date for the 6 month USD LIBOR).
2. The JPY facility was linked to JPY LIBOR and has already been transitioned to Tokyo Term Risk Free Rate (TORF), the term RFR applicable for JPY currency.
3. The EUR facilities are linked to EURIBOR, which is presently not expected to be phased out.
⢠Derivative contract: Interest rate swap linked to LIBOR 3 months'' Derivative contract will be transition as per International Swaps and Derivatives Association ("ISDA") protocol.
43.6 Equity Price risk:
The Company is exposed to equity price risk arising from equity investments (other than subsidiairies and joint ventures, which are carried at cost).
Equity price sensitivity analysis:
The sensitivity analysis below has been determined based on the exposure to equity price risk at the end of the reporting period.
If equity prices of the investments increase/ decrease by 5%, other comprehensive income for the year ended 31 March, 2022 would increase/ decrease by '' 157 crores ('' 37 crores in 31 March, 2021).
43.7 Credit risk management:
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Company is exposed to credit risk for trade receivables, cash and cash equivalents, investments, other bank balances, loans, other financial assets, financial guarantees and derivative financial instruments.
Moreover, given the diverse nature of the Company''s business trade receivables are spread over a number of customers with no significant concentration of credit risk. No single customer (other than the Group Companies) accounted for 10% or more of the trade receivables in any of the years presented. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of nonperformance by any of the Company''s counterparties. The assessment is carried out considering the segment of customer, impact seen in the demand outlook of these segments and the financial strength of the customers in respect of whom amounts are receivable. Basis this assessment, the allowance for doubtful trade receivables as at 31 March, 2022 is considered adequate.
For current investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. This, therefore, results in diversification of credit risk for Company''s mutual fund and bond investments. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions.
The carrying value of financial assets represents the maximum credit risk. The maximum exposure to credit risk was '' 37,317 crores as at 31 March, 2022 and '' 30,491 crores as at 31 March, 2021, being the total carrying value of trade receivables, balances with bank, bank deposits, current investments, loans and other financial assets.
In respect of financial guarantees provided by the Company to banks and financial institutions, the maximum exposure which the Company is exposed to is the maximum amount which the Company would have to pay if the guarantee is called upon. Based on the expectation at the end of the reporting period, the Company considers that it is more likely than not that such an amount will not be payable under the guarantees provided.
Receivables are deemed to be past due or impaired with reference to the Company''s normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer''s credit quality and prevailing market conditions. The Company based on past experiences does not expect any material loss on its receivables and hence no provision is deemed necessary on account of expected credit loss (''ECL'').
The credit quality of the Company''s customers is monitored on an ongoing basis and assessed for impairment where indicators of such impairment exist. The Company uses simplified approach (i.e. lifetime expected credit loss model) for impairment of trade receivables/ contract assets. The solvency of the debtor and their ability to repay the receivable
is considered in assessing receivables for impairment. Where receivables have been impaired, the Company actively seeks to recover the amounts in question and enforce compliance with credit terms.
For all other financial assets, if credit risk has not increased significantly, 12-month expected credit loss is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime expected credit loss is used.
43.8 Liquidity risk management
Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds both for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents and short term investments provide liquidity in the short-term and long-term. The Company has acceptances in line with supplier''s financing arrangements which might invoke liquidity risk as a result of liabilities being concentrated with few financial institutions instead of a diverse group of suppliers. The Company has established an appropriate liquidity risk management framework for the management of the Company''s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment Years and its non-derivative financial assets. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting year. The contractual maturity is based on the earliest date on which the Company may be required to pay.
The amount of guarantees/standby letter of credit given on behalf of subsidiaries included in Note 46 represents the maximum amount the Company could be forced to settle for the full guaranteed amount. Based on the expectation at the end of the reporting year, the Company considers that it is more likely than not that such an amount will not be payable under the arrangement.
Collateral
The Company has pledged part of its trade receivables, short term investments and cash and cash equivalents in order to fulfil certain collateral requirements for the banking facilities extended to the Company. There is obligation to return the securities to the Company once these banking facilities are surrendered. (Refer note 20 and 25).
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 recognised an expenses of '' 2 crores (previous year '' 2 crores) towards employee stock options granted to Key Managerial Personnel. The same has not been considered as managerial remuneration of the current year as defined under Section 2(78) of the Companies Act, 2013 as the options have not been exercised.
3. Dividend paid to key management personnel is '' 0.28 crores (previous year 0.09 crores), not included above.
4. The Independent Non-Executive Directors are paid remuneration by way of commission and sitting fees. The commission payable to the Non-Executive Directors (in case of Nominee Director, the commission is paid to the respective institution to which the Nominee Director represents) is based on the number of meetings of the Board attended by them and their Chairmanship/Membership of Audit Committee during the year, subject to an overall ceiling of 1% of the net profits approved by the Members. The Company pays sitting fees at the rate of '' 20,000 for each meeting of the Board and sub-committees attended by them. The amount paid to them by way of commission and sitting fees during current year is '' 3 crores (previous year '' 3 crores), which is not included above.
Terms and conditions
Sales:
The sales to related parties are made on terms equivalent to those that prevail in arm''s length transactions and 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 31 March, 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties.
Purchases:
The purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions and in the ordinary course of business. Purchase transactions are based on made 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 balance as on 31 March, 2022 was '' 7,864 crores (As on 31 March, 2021: '' 6,178 crores). These loans are unsecured and carry an interest rate ranging from LIBOR 375-615 basis points and repayable within a period of one to five years.
Guarantees to subsidiaries/joint venture:
Guarantees provided to the lenders of the subsidiaries/joint venture are for availing term loans and working capital facilities from the lender banks.
The transactions other than mentioned above are also in the ordinary course of business and at arms'' length basis.
a) Excise duty cases includes disputes pertaining to availment of CENVAT credit, valuation methodologies, classification of gases under different chapter heading.
b) Custom duty cases includes disputes pertaining to import of Iron ore fines and lumps under different chapter headings, utilisation of SHIS licences for clearance of imported equipment, payment of customs duty Steam Coal through Krishnapatnam Port and anti-dumping duty on Met Coke used in Corex.
c) Sales Tax/ VAT/ Special Entry tax cases includes disputes pertaining to demand of special entry tax in Karnataka and demand of cess by department of transport in Goa.
d) Service Tax/ Goods & Service tax cases includes disputes pertaining to availment of service tax credit on ineligible services, denial of credit distributed as an ISD, service tax on railway freight not taken as per prescribed documents.
e) Income Tax cases includes disputes pertaining to transfer pricing and other matters.
f) Levies by local authorities - Statutory cases includes disputes pertaining to payment of water charges and enhanced compensation.
g) Levies relating to Energy / Power Obligations cases includes disputes pertaining to uninterrupted power charges by Karnataka Power Transmission Company Ltd., belated payment surcharge, claims for the set off of renewable power obligations against the power generated in its captive power plants and dues relating to additional surcharge imposed on captive consumption by Maharashtra State Electricity Distribution Company Ltd.
h) Claims by Suppliers, other parties and Government includes quality/ shortfall claims issues raised by suppliers and others. Refer note 47( e) for demand relating to MDPA shortfall.
i) There are several other cases which has been determined as remote by the Company and hence not been disclosed above.
j) The Deputy Commissioner of GST State Tax (Enforcement Unit, Orissa) had issued show cause notice (SCN) alleging that the Company has wrongfully and illegally transferred the unutilised Input Tax Credit to the Company''s ISD registration in Mumbai. The Company filed its reply to the SCN, however, the GST Authorities (Department) raised demand for tax of '' 2,539 crores including interest and penalty thereon. The Company filed a Writ Petition challenging the tax demand in October 2021 before the Honourable High Court of Odisha (Odisha High Court) which set aside the order issued by the Department and directed the Department for holding fresh adjudication. The Department issued fresh Orders dated 28 March, 2022 (''impugned orders'') confirming demand of tax, interest and penalty for '' 2,678 crores. The Company again filed Writ Petitions, dated 19 April, 2022 against the impugned orders before the Odisha High Court. The Odisha High Court vide interim orders dated 17 May, 2022 issued notices directing the revenue to file counter affidavits. However, no stay was granted to the Company. Aggrieved by the interim order of the Odisha High Court, the Company has filed Special Leave Petition before the Honourable Supreme Court on 23 May, 2022, wherein hearing is awaited. The Company basis the legal opinion obtained has evaluated the matter and concluded that the outflow of resources is remote (Interest of '' 200 crores has been disclosed as contingent liabilities) and accordingly, no provision is made in the financial statement as on 31 March, 2022.
k) The Company has received a show cause cum demand notice (''SCN'') for additional bid premium and royalty to be paid arising out of grade variation on the iron ore sold by the Company, basis joint sample collected before dispatch amounting to '' 375 crores. The Company has contested the SCN as the iron ore grade is determined on the basis of the analysis report issued by the Deputy Director Chemical Analysis Government Laboratory. Accordingly, the Company believes that the outflow of resources is remote and no provision is made in the financial statements as on 31 March, 2022.
In response to a petition filed by the iron ore mine owners and purchasers (including the Company) contesting the levy of Forest Development Tax (FDT) on iron ore on the ground that the State does not have jurisdiction to legislate in the field of major minerals which is a central subject, the Honourable High Court of Karnataka vide its judgement dated 3 December, 2015 directed refund of the entire amount of FDT collected by Karnataka State Government on sale of iron ore by private lease operators and National Mineral Development Corporation Limited (NMDC). The Karnataka State Government has filed an appeal before the Supreme Court of India ("SCI"). SCI has not granted stay on the judgement but stayed refund of FDT. The matter is yet to be heard by SCI. Based on merits of the case and supported by a legal opinion, the Company has not recognised provision for FDT of '' 1,043 crores (including paid under protest - '' 665 crores) and treated it as a contingent liability.
The State of Karnataka on 27 July, 2016, has amended Section 98-A of the Forest Act retrospectively substituting the levy as Forest Development Fee (FDF) instead of FDT. In response to the writ petition filed by the Company and others, the Honourable High Court of Karnataka has vide its order dated 4 October, 2017, held that the amendment is ultra-vires the Constitution of India and directed the State Government to refund the FDF collected. The State Government has filed an appeal before the SCI, and based on merits of the case duly supported by a legal opinion and a favorable order from the High Court, the Company has not recognised provision for FDF amount of '' 2,667 crores (including paid under protest - ''255 crores) pertaining to the private lease operators S NMDC and treated it as contingent liability.
The Company has issued financial guarantees to banks on behalf of and in respect of loan facilities availed by its group companies. Guarantees given have a markup over and above the loan amount whereas it is recognised only to the extent of outstanding loans.
a. The Company has issued a corporate guarantee dated 24 March, 2021 in favour of trustee for the benefit of the Lenders for the financial assistance availed by Makler Private Limited (merged with Bhushan Power and Steel Limited) for a sum of '' 10,800 crores out of which '' 4,500 crores is outstanding as on 31 March, 2022 to part finance the cost of implementation of the Resolution Plan of Bhushan Power and Steel Limited.
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) I n March 2018, the Company has entered into a five-year Advance Payment and Supply Agreement ("APSA") agreement with Duferco S.A. ("DSA") for supply of Steel Products. Duferco S.A has provided an interest bearing advance amount of US $700 million under this agreement, secured by committed export of steel products to Duferco S.A. Out of this US $296 million is pending towards fulfilment.
(c) 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 year. Such export obligations at year end aggregate to
(d) The Company has given guarantees aggregating '' 127 crores (previous year '' 127 crores) on behalf of subsidiaries to Commissioner of Customs in respect of goods imported.
(e) In The MDPA signed with respect to four mine blocks in Odisha stipulates that the Company is required to fulfil certain minimum production quantities each year from commencement of mining lease. In the event the Company is unable to fulfil the required minimum production quantities, it would be liable to pay penalty, as prescribed in the MDPA, by appropriating the performance security given by the Company.
While det
Mar 31, 2021
Capital work in progress includes exchange fluctuation loss (including regarded as an adjustment to borrowing costs) of '' 46 crores (previous year '' 881 crores) and borrowing cost (net off interest income) of '' 720 crores (previous year '' 574 crores) capitalised during the year.
Leasehold land aggregating to '' 67 crores wherein the lease deed has expired and the Company has a right to convert the land into freehold land subject to complying with certain conditions. The Company is in the process of converting the title into freehold as per the lease cum sale agreement.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The Company has lease contracts for machinery that contains variable payments amounting to '' 452 crores ('' 436 crores in 31 March 2020) shown under cost of material consumed/ other expenses.
The Company has recognised '' 7 crores as rent expenses during the year which pertains to short term lease/ low value asset which was not recognised as part of right of use asset and also recognised a gain of '' 1 crore on sale & leaseback transaction entered during the year. Both of amounts are being recognised as part of other expenses.
The leases that the Company has entered with lessors are generally long-term in nature and no changes in terms of those leases are expected due to the COVID-19.
(i) The Company acquired mining blocks viz: -Nuagaon, Narayanposhi, Jajang and Ganua in the Auctions held by the Government of Odisha in February 2020. The Company has signed the Mine Development and Production agreement(s) for all the four blocks and executed the lease deed(s) with Government of Odisha after complying with all regulatory aspects. Acquisition cost incurred for these mines such as stamp duty, registration fees and other such costs amounting to '' 817 crores have been capitalised as Intangible Assets. Further, the Company had also paid upfront premium payment amounting to '' 1,290 crores which was subsequently adjusted against the premium payment due to the Government. The Company had started mining operations at all the above said blocks since 1 July 2020. The Company has also recognised restoration liability and capitalised '' 443 crores during the year.
(ii) Intangible assets under development include expenditure incurred on development of mining rights and other related costs for mines which are yet to be made operational.
(a) The Company had recognised financial guarantee obligation in the earlier years towards lenders of a subsidiary, against which incremental loans have been advanced to the subsidiary during the current year. Consequently, the financial guarantee obligation has been released and basis of the recoverability of the said loans provision for doubtful allowances has been recognised, resulting in NIL impact in Statement of Statement of profit & loss.
a. Maharashtra Electricity Regulation Commission (MERC) has approved levy of additional surcharge of '' 1.25/kWh w.e.f. 1 September 2018 to all the consumers sourcing power from Captive power plants. The Company had appealed against the levy in Appellate Tribunal for electricity (APTEL) and the APTEL passed an order in favour of the Company. However, the State Government has filed Special Leave Petition before the Honorable Supreme Court of India (SC),. The SC has vide their order dated 1 July 2019, granted stay against the order of the Appellate authority and the matter is pending before the SC.
The amounts paid in dispute amounting to '' 482 crores towards the additional surcharge has been disclosed as part of other non-current assets.
Value of inventories above is stated after write down to net realisable value of ''113 crores (31 March 2020 - NIL). These were recognised as an expense during the year and included in changes in inventories of finished goods, work-in-progress and stock-in-trade.
Inventories have been pledged as security against certain bank borrowings, details relating to which has been described in note 20 and note 25
The credit period on sales of goods ranges from 7 to 90 days with or without security.
Before accepting any new customer, the Company uses an external credit scoring system to assess the potential customer''s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed once a year.
The Company does not generally hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.
Trade receivables have been given as collateral towards borrowings details relating to which has been described in note 20 and note 25.
Credit risk management regarding trade receivables has been described in note 43.6.
Trade receivables from related parties'' details has been described in note 44.
Trade receivables does not include any receivables from directors and officers of the company.
a) NOTE FOR SHARES HELD UNDER ESOP TRUST:
The Company has created an Employee Stock Ownership Plan (ESOP) for providing share-based payment to its employees.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its subsidiaries in India. For the purpose of the scheme, the Company purchases shares from the open market under ESOP trust. The Company treats ESOP trust as its extension and shares held by ESOP trust are treated as treasury shares.
For the details of shares reserved for issue under the Employee Stock Ownership Plan (ESOP) of the Company refer note 39.
b) RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES
The Company has a single class of equity shares having par value of '' 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(i) General reserve
Under the erstwhile Indian Companies Act 1956, a general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable reserves for that year.
Consequent to introduction of Companies Act 2013, the requirement of mandatory transfer of a specified percentage of the net profit to general reserve has been withdrawn and the Company can optionally transfer any amount from the surplus of profit and loss to the General reserves. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(ii) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.
(iii) Equity Instruments through other comprehensive income
The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
(iv) Effective portion of cash flow hedges
Effective portion of cash flow hedges represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges, which shall be reclassified to profit and loss only when the hedged transaction affects the profit and loss, or included as a basis adjustment to the non-financial hedged item, consistent with the Company accounting policies.
(v) Equity settled share based payment reserve
The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management of JSW Steel and its subsidiaries. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.
(vi) Capital reserve
Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(vii) Capital redemption reserve
Reserve is created for redemption of preference shares as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(viii) Securities Premium
The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
Indian companies are subject to Indian income tax on a standalone basis. For each fiscal year, the entity profit and loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax ("MAT").
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India adjusted in accordance with the provisions of the (Indian) Income Tax Act, 1961. Statutory income tax is charged at 30% plus a surcharge and education cess.
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 for the fiscal year 2020-21 is charged at 15% plus a surcharge and education cess. MAT paid in excess of regular income tax during a year can be set off against regular income taxes within a period of fifteen years succeeding the fiscal year in which MAT credit arises subject to the limits prescribed.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
Pursuant to the Taxation Law (Amendment) Ordinance, 2019 (''Ordinance'') subsequently amended in Finance Act issued by Ministry of Law and Justice (Legislative Department) on 20 September 2019 which is effective 1 April 2019, domestic companies have the option to pay corporate income tax rate at 22% plus applicable surcharge and cess (''New tax rate'') subject to certain conditions.
During the previous year ended 31 March 2020, Company had made an assessment of the impact of the Ordinance and decided to continue with the existing tax structure until utilisation of accumulated minimum alternative tax (MAT) credit. Based on the detailed assessment carried out the management, deferred tax liabilities on temporary differences expected to reverse during the period in which the Company would be under the new tax regime and accordingly applied the new rate for measuring the said deferred tax liabilities in accordance with the requirements of IND AS 12 - ''Income Taxes". This had resulted in reversal of deferred tax liabilities amounting to ''2150 crores in FY 2019-20. During the year, the Company has re-assessed the impact of the Ordinance and there is no significant change.
There are certain income-tax related legal proceedings which are pending against the company. Potential liabilities, if any have been adequately provided for, and the company does not currently estimate any probable material incremental tax liabilities in respect of these matters (refer note 45).
Working capital loans from banks of '' 785 crores (31 March 2020''2,930 crores) are secured by:
i) pari passu first charge by way of hypothecation of stocks of raw materials, finished goods, work-in-process, consumables (stores and spares) and book debts / receivables of the Company, both present and future.
ii) pari passu second charge on movable properties and immovable properties forming part of the property, plant and equipment of the Company, both present and future except such properties as may be specifically excluded.
Acceptances include credit availed by the Company from banks for payment to suppliers for raw materials purchased by the Company. The arrangements are interest-bearing and are payable within one year.
Payables Other than acceptances are normally settled within 180 days.
Trade payables from related parties'' details has been described in note 44.
Advance from customers includes '' 1,010 crores (31 March 2020 '' 1,010 crores) relating to current portion of APSA. Refer note 24.
Export obligation deferred income represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme on purchase of property, plant and equipment accounted for as government grant and accounted in revenue on fulfillment of export obligation.
a) 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 historically. The Company currently recognises income for such government grants based on the State Goods & Service Tax rates instead of VAT rates, in accordance with the relevant notifications issued by the State of Maharashtra and the State of Karnataka post implementation of Goods & Services Tax (GST).
During October 2019, the Company has received an in-principle approval for eligibility from the Government of Maharashtra in response to the application filed by the Company for incentive under PSI Scheme 2007 on its investment for expansion from 3.3 MTPA to 5 MTPA at Dolvi unit for the period beginning May 2016 onwards. The Company has submitted the required documentation with the State Government for issuance of the Eligibility Certificate and expects to receive the same basis the modalities declared by the Government. Accordingly, the Company has recognised grant income amounting to '' 220 crores for the year ended 31 March 2021. The cumulative amount receivable towards the same is '' 772 crores as at 31 March 2021.
Accordingly, during the previous year Company had recognised grant income amounting to '' 466 crores in relation to earlier years.
The State Government of Maharashtra (GOM) vide its Government Resolution (GR) dated 20 December 2018 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.
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.
b) During the previous year, the Company received an amount of '' 250 crores as consideration from a vendor for assignment of its long term supply contract in favor of a third party with same terms and conditions over the remaining term of the contract and have accordingly recognised one-time income in relation to the same.
c) Ind AS 115 Revenue from Contracts with Customers
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 credit period on sales of goods ranges from 7 to 90 days with or without security.
As at 31 March 2021 '' 192 crores (previous '' 153 crores) was recognised as provision for allowance for doubtful debts on trade receivables.
Contract liabilities include long term and short term advances received for sale of goods. The outstanding balances of these accounts decreased in due to adjustment against receivable balances. Long term advances are detailed in note 24.
Amount of revenue recognised from amounts included in the contract liabilities at the beginning of the year '' 1,487 crores (previous year ''990 crores) and performance obligations satisfied in previous years '' NIL (previous year '' NIL).
Out of the total contract liabilities outstanding as on 31 March 2021, '' 2,072 crores (previous '' 1,487 crores) will be recognised by 31 March 2022 and remaining thereafter.
The Company in the previous year launched a one-time scheme (''Samruddhi'') applicable only for certain permanent employees (Eligible Employee) of the Company. The Eligible Employee can purchase the Equity Shares from the open market by availing a loan provided by a bank / non-banking financial institution ("Lending Agency") identified by the Company to facilitate acquisition of Equity Shares by the Eligible Employees under the Plan. The plan provides that the Company shall service 75% of the total interest liability owed to the Lending Agency and the balance 25% will be borne by the Eligible Employee. The interest expense recognised in the financial statements during the year was '' 11 crores. ('' 6 crores in 31 March 2020).
39. Employee share based payment plans
ESOP SCHEME 2016
The Board of Directors of the Company at its meeting held on 29 January 2016, formulated the JSWSL EMPLOYEES STOCK OWNERSHIP PLAN 2016 ("ESOP Plan"). At the said meeting, the Board authorised the ESOP Committee for the superintendence of the ESOP Plan.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its'' subsidiaries in India.
Three grants would be made under ESOP plan 2016 to eligible employees on the rolls of the Company as at 1 April 2016, 1 April 2017 and 1 April 2018.
During the previous year the Company has made supplementary grants under the JSWSL Employee stock ownership Plan 2016 to its permanent employees who are on the rolls of the Company and its Indian subsidiaries as on 5 December 2019 and the same was approved by the ESOP committee in its meeting held on 5 December 2019.
The maximum value and share options that can be awarded to eligible employees is calculated by reference to certain percentage of individuals fixed salary compensation. 50% of the grant would vest at the end of the third year and 50% of the grant would vest at the end of the fourth year with a vesting condition that the employee is in continuous employment with the Company till the date of vesting.
The exercise price is determined by the ESOP committee at a certain discount to the primary market price on the date of grant.
A total of 2,86,87,000 options are available for grant to the eligible employees of the Company and a total of 31,63,000 options would be available for grant to the eligible employees of the Indian subsidiaries of the Company under the ESOP Plan.
These options are equity settled and are accounted for in accordance with the requirement applying to equity settled transactions.
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.
a) Defined contribution plan
The Company operates defined contribution retirement benefit plans for all qualifying employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs.
Company''s contribution to provident fund & family pension scheme recognised in statement of profit and loss of '' 46 crores (31 March 2020: '' 57 crores) (included in note 33).
Contribution towards Company owned trust is detailed in Defined benefit plans
b) Defined benefit plans
The Company sponsors funded defined benefit plans for all qualifying employees. The level of benefits provided depends on the member''s length of service and salary at retirement age.
The gratuity plan is covered by The Payment of Gratuity Act, 1972. Under the gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days'' salary for each year of service until the retirement age of 58, 60 and 62, without any payment ceiling. The vesting period for gratuity as payable under The Payment of Gratuity Act, 1972 is 5 years.
The fund is managed by JSW Steel limited Employee Gratuity Trust and it is governed by the Board of trustees. The Board of trustees are responsible for the administration of the plan assets and for defining the investment strategy.
The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference
to government bond yields; if the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in Government securities and debt instruments.
Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an
increase in the value of the plan''s debt investments.
Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the
mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
No other post-retirement benefits are provided to these employees.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2021 by Independent, Qualified Actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
g) The Company expects to contribute '' 38 crores (previous year '' 39 crores) to its gratuity plan for the next year.
h) The average duration of the defined benefit plan obligation at the end of the reporting period is 8 years (31 March 2020: 10 years)
i) In assessing the Company''s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the Indian assured lives mortality (2006-08) ultimate.
j) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations after considering several applicable factors such as the composition of plan assets, investment strategy, market scenario, etc.
k) The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
i) The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
Capital work in progress includes exchange fluctuation loss (including regarded as an adjustment to borrowing costs) of '' 46 crores (previous year '' 881 crores) and borrowing cost (net off interest income) of '' 720 crores (previous year '' 574 crores) capitalised during the year.
Leasehold land aggregating to '' 67 crores wherein the lease deed has expired and the Company has a right to convert the land into freehold land subject to complying with certain conditions. The Company is in the process of converting the title into freehold as per the lease cum sale agreement.
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The Company has lease contracts for machinery that contains variable payments amounting to '' 452 crores ('' 436 crores in 31 March 2020) shown under cost of material consumed/ other expenses.
The Company has recognised '' 7 crores as rent expenses during the year which pertains to short term lease/ low value asset which was not recognised as part of right of use asset and also recognised a gain of '' 1 crore on sale & leaseback transaction entered during the year. Both of amounts are being recognised as part of other expenses.
The leases that the Company has entered with lessors are generally long-term in nature and no changes in terms of those leases are expected due to the COVID-19.
(i) The Company acquired mining blocks viz: -Nuagaon, Narayanposhi, Jajang and Ganua in the Auctions held by the Government of Odisha in February 2020. The Company has signed the Mine Development and Production agreement(s) for all the four blocks and executed the lease deed(s) with Government of Odisha after complying with all regulatory aspects. Acquisition cost incurred for these mines such as stamp duty, registration fees and other such costs amounting to '' 817 crores have been capitalised as Intangible Assets. Further, the Company had also paid upfront premium payment amounting to '' 1,290 crores which was subsequently adjusted against the premium payment due to the Government. The Company had started mining operations at all the above said blocks since 1 July 2020. The Company has also recognised restoration liability and capitalised '' 443 crores during the year.
(ii) Intangible assets under development include expenditure incurred on development of mining rights and other related costs for mines which are yet to be made operational.
(a) The Company had recognised financial guarantee obligation in the earlier years towards lenders of a subsidiary, against which incremental loans have been advanced to the subsidiary during the current year. Consequently, the financial guarantee obligation has been released and basis of the recoverability of the said loans provision for doubtful allowances has been recognised, resulting in NIL impact in Statement of Statement of profit & loss.
a. Maharashtra Electricity Regulation Commission (MERC) has approved levy of additional surcharge of '' 1.25/kWh w.e.f. 1 September 2018 to all the consumers sourcing power from Captive power plants. The Company had appealed against the levy in Appellate Tribunal for electricity (APTEL) and the APTEL passed an order in favour of the Company. However, the State Government has filed Special Leave Petition before the Honorable Supreme Court of India (SC),. The SC has vide their order dated 1 July 2019, granted stay against the order of the Appellate authority and the matter is pending before the SC.
The amounts paid in dispute amounting to '' 482 crores towards the additional surcharge has been disclosed as part of other non-current assets.
Value of inventories above is stated after write down to net realisable value of ''113 crores (31 March 2020 - NIL). These were recognised as an expense during the year and included in changes in inventories of finished goods, work-in-progress and stock-in-trade.
Inventories have been pledged as security against certain bank borrowings, details relating to which has been described in note 20 and note 25
The credit period on sales of goods ranges from 7 to 90 days with or without security.
Before accepting any new customer, the Company uses an external credit scoring system to assess the potential customer''s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed once a year.
The Company does not generally hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.
Trade receivables have been given as collateral towards borrowings details relating to which has been described in note 20 and note 25.
Credit risk management regarding trade receivables has been described in note 43.6.
Trade receivables from related parties'' details has been described in note 44.
Trade receivables does not include any receivables from directors and officers of the company.
a) NOTE FOR SHARES HELD UNDER ESOP TRUST:
The Company has created an Employee Stock Ownership Plan (ESOP) for providing share-based payment to its employees.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its subsidiaries in India. For the purpose of the scheme, the Company purchases shares from the open market under ESOP trust. The Company treats ESOP trust as its extension and shares held by ESOP trust are treated as treasury shares.
For the details of shares reserved for issue under the Employee Stock Ownership Plan (ESOP) of the Company refer note 39.
b) RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES
The Company has a single class of equity shares having par value of '' 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(i) General reserve
Under the erstwhile Indian Companies Act 1956, a general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable reserves for that year.
Consequent to introduction of Companies Act 2013, the requirement of mandatory transfer of a specified percentage of the net profit to general reserve has been withdrawn and the Company can optionally transfer any amount from the surplus of profit and loss to the General reserves. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(ii) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.
(iii) Equity Instruments through other comprehensive income
The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
(iv) Effective portion of cash flow hedges
Effective portion of cash flow hedges represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges, which shall be reclassified to profit and loss only when the hedged transaction affects the profit and loss, or included as a basis adjustment to the non-financial hedged item, consistent with the Company accounting policies.
(v) Equity settled share based payment reserve
The Company offers ESOP, under which options to subscribe for the Company''s share have been granted to certain employees and senior management of JSW Steel and its subsidiaries. The share based payment reserve is used to recognise the value of equity settled share based payments provided as part of the ESOP scheme.
(vi) Capital reserve
Reserve is primarily created on amalgamation as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(vii) Capital redemption reserve
Reserve is created for redemption of preference shares as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
(viii) Securities Premium
The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act 2013.
Indian companies are subject to Indian income tax on a standalone basis. For each fiscal year, the entity profit and loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax ("MAT").
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India adjusted in accordance with the provisions of the (Indian) Income Tax Act, 1961. Statutory income tax is charged at 30% plus a surcharge and education cess.
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 for the fiscal year 2020-21 is charged at 15% plus a surcharge and education cess. MAT paid in excess of regular income tax during a year can be set off against regular income taxes within a period of fifteen years succeeding the fiscal year in which MAT credit arises subject to the limits prescribed.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period.
Pursuant to the Taxation Law (Amendment) Ordinance, 2019 (''Ordinance'') subsequently amended in Finance Act issued by Ministry of Law and Justice (Legislative Department) on 20 September 2019 which is effective 1 April 2019, domestic companies have the option to pay corporate income tax rate at 22% plus applicable surcharge and cess (''New tax rate'') subject to certain conditions.
During the previous year ended 31 March 2020, Company had made an assessment of the impact of the Ordinance and decided to continue with the existing tax structure until utilisation of accumulated minimum alternative tax (MAT) credit. Based on the detailed assessment carried out the management, deferred tax liabilities on temporary differences expected to reverse during the period in which the Company would be under the new tax regime and accordingly applied the new rate for measuring the said deferred tax liabilities in accordance with the requirements of IND AS 12 - ''Income Taxes". This had resulted in reversal of deferred tax liabilities amounting to ''2150 crores in FY 2019-20. During the year, the Company has re-assessed the impact of the Ordinance and there is no significant change.
There are certain income-tax related legal proceedings which are pending against the company. Potential liabilities, if any have been adequately provided for, and the company does not currently estimate any probable material incremental tax liabilities in respect of these matters (refer note 45).
Working capital loans from banks of '' 785 crores (31 March 2020''2,930 crores) are secured by:
i) pari passu first charge by way of hypothecation of stocks of raw materials, finished goods, work-in-process, consumables (stores and spares) and book debts / receivables of the Company, both present and future.
ii) pari passu second charge on movable properties and immovable properties forming part of the property, plant and equipment of the Company, both present and future except such properties as may be specifically excluded.
Acceptances include credit availed by the Company from banks for payment to suppliers for raw materials purchased by the Company. The arrangements are interest-bearing and are payable within one year.
Payables Other than acceptances are normally settled within 180 days.
Trade payables from related parties'' details has been described in note 44.
Advance from customers includes '' 1,010 crores (31 March 2020 '' 1,010 crores) relating to current portion of APSA. Refer note 24.
Export obligation deferred income represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme on purchase of property, plant and equipment accounted for as government grant and accounted in revenue on fulfillment of export obligation.
a) 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 historically. The Company currently recognises income for such government grants based on the State Goods & Service Tax rates instead of VAT rates, in accordance with the relevant notifications issued by the State of Maharashtra and the State of Karnataka post implementation of Goods & Services Tax (GST).
During October 2019, the Company has received an in-principle approval for eligibility from the Government of Maharashtra in response to the application filed by the Company for incentive under PSI Scheme 2007 on its investment for expansion from 3.3 MTPA to 5 MTPA at Dolvi unit for the period beginning May 2016 onwards. The Company has submitted the required documentation with the State Government for issuance of the Eligibility Certificate and expects to receive the same basis the modalities declared by the Government. Accordingly, the Company has recognised grant income amounting to '' 220 crores for the year ended 31 March 2021. The cumulative amount receivable towards the same is '' 772 crores as at 31 March 2021.
Accordingly, during the previous year Company had recognised grant income amounting to '' 466 crores in relation to earlier years.
The State Government of Maharashtra (GOM) vide its Government Resolution (GR) dated 20 December 2018 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.
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.
b) During the previous year, the Company received an amount of '' 250 crores as consideration from a vendor for assignment of its long term supply contract in favor of a third party with same terms and conditions over the remaining term of the contract and have accordingly recognised one-time income in relation to the same.
c) Ind AS 115 Revenue from Contracts with Customers
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 credit period on sales of goods ranges from 7 to 90 days with or without security.
As at 31 March 2021 '' 192 crores (previous '' 153 crores) was recognised as provision for allowance for doubtful debts on trade receivables.
Contract liabilities include long term and short term advances received for sale of goods. The outstanding balances of these accounts decreased in due to adjustment against receivable balances. Long term advances are detailed in note 24.
Amount of revenue recognised from amounts included in the contract liabilities at the beginning of the year '' 1,487 crores (previous year ''990 crores) and performance obligations satisfied in previous years '' NIL (previous year '' NIL).
Out of the total contract liabilities outstanding as on 31 March 2021, '' 2,072 crores (previous '' 1,487 crores) will be recognised by 31 March 2022 and remaining thereafter.
The Company in the previous year launched a one-time scheme (''Samruddhi'') applicable only for certain permanent employees (Eligible Employee) of the Company. The Eligible Employee can purchase the Equity Shares from the open market by availing a loan provided by a bank / non-banking financial institution ("Lending Agency") identified by the Company to facilitate acquisition of Equity Shares by the Eligible Employees under the Plan. The plan provides that the Company shall service 75% of the total interest liability owed to the Lending Agency and the balance 25% will be borne by the Eligible Employee. The interest expense recognised in the financial statements during the year was '' 11 crores. ('' 6 crores in 31 March 2020).
39. Employee share based payment plans
ESOP SCHEME 2016
The Board of Directors of the Company at its meeting held on 29 January 2016, formulated the JSWSL EMPLOYEES STOCK OWNERSHIP PLAN 2016 ("ESOP Plan"). At the said meeting, the Board authorised the ESOP Committee for the superintendence of the ESOP Plan.
ESOP is the primary arrangement under which shared plan service incentives are provided to certain specified employees of the Company and its'' subsidiaries in India.
Three grants would be made under ESOP plan 2016 to eligible employees on the rolls of the Company as at 1 April 2016, 1 April 2017 and 1 April 2018.
During the previous year the Company has made supplementary grants under the JSWSL Employee stock ownership Plan 2016 to its permanent employees who are on the rolls of the Company and its Indian subsidiaries as on 5 December 2019 and the same was approved by the ESOP committee in its meeting held on 5 December 2019.
The maximum value and share options that can be awarded to eligible employees is calculated by reference to certain percentage of individuals fixed salary compensation. 50% of the grant would vest at the end of the third year and 50% of the grant would vest at the end of the fourth year with a vesting condition that the employee is in continuous employment with the Company till the date of vesting.
The exercise price is determined by the ESOP committee at a certain discount to the primary market price on the date of grant.
A total of 2,86,87,000 options are available for grant to the eligible employees of the Company and a total of 31,63,000 options would be available for grant to the eligible employees of the Indian subsidiaries of the Company under the ESOP Plan.
These options are equity settled and are accounted for in accordance with the requirement applying to equity settled transactions.
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.
a) Defined contribution plan
The Company operates defined contribution retirement benefit plans for all qualifying employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs.
Company''s contribution to provident fund & family pension scheme recognised in statement of profit and loss of '' 46 crores (31 March 2020: '' 57 crores) (included in note 33).
Contribution towards Company owned trust is detailed in Defined benefit plans
b) Defined benefit plans
The Company sponsors funded defined benefit plans for all qualifying employees. The level of benefits provided depends on the member''s length of service and salary at retirement age.
The gratuity plan is covered by The Payment of Gratuity Act, 1972. Under the gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days'' salary for each year of service until the retirement age of 58, 60 and 62, without any payment ceiling. The vesting period for gratuity as payable under The Payment of Gratuity Act, 1972 is 5 years.
The fund is managed by JSW Steel limited Employee Gratuity Trust and it is governed by the Board of trustees. The Board of trustees are responsible for the administration of the plan assets and for defining the investment strategy.
The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference
to government bond yields; if the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in Government securities and debt instruments.
Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an
increase in the value of the plan''s debt investments.
Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the
mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
No other post-retirement benefits are provided to these employees.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2021 by Independent, Qualified Actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
g) The Company expects to contribute '' 38 crores (previous year '' 39 crores) to its gratuity plan for the next year.
h) The average duration of the defined benefit plan obligation at the end of the reporting period is 8 years (31 March 2020: 10 years)
i) In assessing the Company''s post retirement liabilities, the Company monitors mortality assumptions and uses up-to-date mortality tables, the base being the Indian assured lives mortality (2006-08) ultimate.
j) Expected return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations after considering several applicable factors such as the composition of plan assets, investment strategy, market scenario, etc.
k) The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
i) The discount rate is based on the prevailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting year, which is the same as that applied in calculating the defined benefit obligation recognised in the balance sheet.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting year, which is the same as that applied in calculating the defined benefit obligation recognised in the balance sheet.
(ii) Provident fund:
Provident Fund for certain eligible employees was managed by the Company through JSW Steel Employees Provident Fund Trust, in line with the Provident Fund and Miscellaneous Provisions Act, 1952 till 31 December 2020. The Company made monthly contributions to provident fund managed by trust for qualifying employees. The Trustees of JSW Steel Employees Provident Fund Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law.
The funds of the Trust had been invested under various securities in accordance with the rules prescribed by the Government of India.
Out of the total contribution made for Provident Fund in Defined Contribution Plan, '' 16 crores (previous year '' 27 crores) is made to the JSW Steel Employees Provident Fund Trust till 31 December 2020.
The Company has discontinued operations of the JSW Steel Employees Provident Fund Trust from 1 January 2021 and accordingly, the Trust have transferred to EPFO, Bellary the fund of '' 619 crores in compliance with its obligations as at 31.12.2020. Over and above the said obligations, the Trust has transferred additional fund of '' 20 crores to EPFO, Bellary, which is distributed to respective members
The Company does not have any further obligations with respect to JSW Steel Employees Provident Fund Trust. iii) Other long term benefits:
a. Under the compensated absences plan, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement, superannuation or resignation. Employee are entitled to encash leave while serving in the Company at the rate of daily salary, as per current accumulation of leave days.
b. Long Service Award
The Company has a policy to recognise the long service rendered by employees and celebrate their long association with the Company. This scheme is called - Long Association of Motivation, Harmony & Excitement(LAMHE). The award is paid at milestone service completion years of 10, 15, 20 and 25 years.
42. Financial Instruments
42.1 Capital risk management
The Company being in a capital intensive industry, its objective is to maintain a strong credit rating, healthy capital ratios and establish a capital structure that would maximise the return to stakeholders through optimum mix of debt and equity.
The Company''s capital requirement is mainly to fund its capacity expansion, repayment of principal and interest on its borrowings and strategic acquisitions. The principal source of funding of the Company has been, and is expected to continue to be, cash generated from its operations supplemented by funding from bank borrowings and the capital markets. The Company is not subject to any externally imposed capital requirements.
The Company regularly considers other financing and refinancing opportunities to diversify its debt profile, reduce interest cost and elongate the maturity of its debt portfolio, and closely monitors its judicious allocation amongst competing capital expansion projects and strategic acquisitions, to capture market opportunities at minimum risk.
The Company monitors its capital using gearing ratio, which is net debt, divided to total equity. Net debt includes, interest bearing loans and borrowings less cash and cash equivalents, bank balances other than cash and cash equivalents and current investments.
43. Fair value hierarchy of financial instruments
The carrying amounts of trade receivables, trade payables, capital creditors, cash and cash equivalents, other bank balances, other financial assets and other financial liabilities (other than those specifically disclosed) are considered to be the same as their fair values, due to their short term nature.
A significant part of the financial assets is classified as Level 1 and Level 2. The fair value of these assets is marked to an active market or based on observable market data which factors the uncertainties arising out of COVID-19. The financial assets carried at fair value by the Company are mainly investments in equity instruments, debt securities and derivatives, accordingly, any material volatility is not expected.
43.1Financial risk management
The Company has a Risk Management Committee established by its Board of Directors for overseeing the Risk Management Framework and developing and monitoring the Company''s risk management policies. The risk management policies are established to ensure timely identification and evaluation of risks, setting acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks and their limits, improve risk awareness and transparency. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Company''s activities to provide reliable information to the Management and the Board to evaluate the adequacy of the risk management framework in relation to the risk faced by the Company.
The risk management policies aims to mitigate the following risks arising from the financial instruments:
- Market risk
- Credit risk; and
- Liquidity risk
43.2 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market prices. The Company is exposed in the ordinary course of its business to risks related to changes in foreign currency exchange rates, commodity prices and interest rates.
The Company seeks to minimise the effects of these risks by using derivative and non-derivative financial instruments to hedge risk exposures. The use of financial derivatives and non-derivative financial instruments is governed by the Company''s policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Management and the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivatives for speculative purposes.
43.3 Foreign currency risk management
Mar 31, 2019
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 (âAnnual Standalone Financial Statementsâ) are available at the Companyâs 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 2019, in accordance with the proviso to subsection (1) of section 136 of the Companies Act, 2013 (âthe Actâ) and Rule 10 of the Companies (Accounts) Rules, 2014.
a) 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 historically. The Company currently recognises income for such government grants, on the basis using State Goods Service Tax rates instead of VAT rates, in accordance with the relevant notifications issued by the State of Maharashtra and the State of Karnataka post implementation of Goods S Services Tax (GST).
The State Government of Karnataka vide its circular dated 26 February 2019, has issued guidelines for determining the eligible incentive amount under the GST regime.
The State Government of Maharashtra (âGOMâ) vide its Government Resolution (GR) dated 20 December 2018 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 on related party transactions and certain other restrictions. Subsequently, the GOM issued a corrigendum dated 08 March 2019 to the above mentioned GR allowing eligible units to claim incentives on related party transactions.
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 amounting to Rs. 161 crores (previous year Rs. 110 crores) for the year ended 31 March 2019. The cumulative amount receivable towards the same as at 31 March 2019 amounting to Rs. 271 crores has been considered good and recoverable.
b) Implementation of Goods and Service Tax (GST)
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 âInd AS 115 - Revenueâ, 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 2019 is not comparable to the year ended 31 March 2018.
c) Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 Revenue from Contracts with Customers, mandatory for reporting periods beginning on or after 1 April 2018 replaces the existing revenue recognition standards. The application of Ind AS 115 did not have any significant impact on financial statement of the Company.
However, the Company has determined that, in case of certain contracts, shipping services provided to customer is a separate performance obligation and accordingly the revenue attributable to such shipping services has been recognised as Revenue from operations, which was hitherto netted off against the corresponding freight expenses included as part of other expenditure in the Statement of Profit and Loss. The Company has applied the full retrospective approach and restated the previous periods presented.
The restated revenue for the year ended 31 March 2018 is higher by Rs. 1,489 crores with the corresponding increase in Other expenses. Further, the export benefits amounting to Rs. 300 crores for the year ended 31 March 2018 which was earlier included as part of Revenue from sale of products has been reclassified to Other operating revenue
The above adjustments have no impact on the balance sheet and cash flow statement for the previous period.
*Advance from customer includes the amount relating to a five year Advance Payment and Supply Agreement (âAPSAâ) agreement with Duferco S.A. for supply of Steel Products. Duferco S.A has provided an interest bearing advance amount of US $ 700 million under this agreement. The advance and interest will be adjusted by export of steel products to Duferco S.A .
The credit period on sales of goods ranges from 7 to 60 days with or without security.
As at 31 March 2019, Rs. 82 crore (previous Rs. 78 crores) was recognised as provision for allowance for doubtful debts on trade receivables.
Contract liabilities include long term and short term advances received for sale of goods. The outstanding balances of these accounts increased in due to the continuous increase in the customer base. Long term advances is detailed in note 23 of the annual standalone financial statements.
Amount of revenue recognized from amounts included in the contract liabilities at the beginning of the year Rs. 232 crores (previous year Rs.260 crores) and performance obligations satisfied in previous years Rs. NIL (previous year Rs.NIL).
Out of the total contract liabilities outstanding as on 31 March 2019, Rs.986 crores will be recognized by 31 March 2020, and remaining thereafter.
The Company does not have any significant adjustments between the contracted price and revenue recognized in the Statement of profit and loss account.
3. Segment reporting
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 Companyâs 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
Revenue from operations have been allocated on the basis of location of Customers.
b) Non-current assets
All non-current assets other than financial instruments of the company are located in India.
4. Income tax
Indian companies are subject to Indian income tax on a standalone basis. For each fiscal year, the entity profit or loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax (âMATâ).
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India adjusted in accordance with the provisions of the (Indian) Income Tax Act, 1961 Statutory income tax is charged at 30% plus a surcharge and education cess.
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 for the fiscal year 2018-19 is 21.55%. MAT paid in excess of regular income tax during a year can be set off against regular income taxes within a period of fifteen years succeeding the fiscal year in which MAT credit arises subject to the limits prescribed.
Business loss can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year to which the loss pertains. Unabsorbed depreciation can be carried forward for an indefinite period
There are certain income-tax related legal proceedings which are pending against the company. Potential liabilities, if any have been adequately provided for, and the company does not currently estimate any probable material incremental tax liabilities in respect of these matters.
A. Deferred tax liabilities (net)
Significant components of deferred tax assets/(liabilities) recognised in the financial statements are as follows:
The Company expects to utilize the MAT credit within a period of 15 years.
Deferred tax asset on long term capital losses of Rs. 203 crores and Rs. 2,025 crores expiring in fiscal year 2021-22 and 2024-25 respectively has not been recognised in the absence of probable future taxable capital gains.
Deferred tax asset on short term capital losses of Rs. 689 crores expiring in fiscal year 2024-25 has not been recognised in the absence of probable future taxable capital gains
5. 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. 20 crores (FY 2017-18: Rs. 17 crores).
6. 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. 3 crores (FY 2017-18: Rs. 13 crores).
7. In view of the uncertainty involved in collectability, revenue as interest income of Rs. 454 crores have not been recognised on loan provided to certain overseas subsidiaries.
8. 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.
9. The remuneration includes perquisite value of ESOPs in the year it is exercised â Nil (previous year Rs. 32 crores). The Company has recognised an expenses of Rs. 4 crores (previous year Rs. 2 crores) towards employee stock options granted to Key Managerial Personnel. The same has not been considered as managerial remuneration of the current year as defined under Section 2(78) of the Companies Act, 2013 as the options have not been exercised.
10. Dividend paid to key management personnel is Rs.0.14 crores (previous year Rs. 0.09 crores), not included above.
11. The Independent Non-Executive Directors are paid remuneration by way of commission and sitting fees. The commission payable to the Non-Executive Directors is based on the number of meetings of the Board attended by them and their Chairmanship/Membership of Audit Committee during the year, subject to an overall ceiling of 1% of the net profits approved by the Members. The Company pays sitting fees at the rate of Rs. 20,000/- for each meeting of the Board and sub-committees attended by them. The amount paid to them by way of commission and sitting fees during FY 2018-19 is Rs. 3 crores (FY 2017-18 is Rs. 4 crores), which is not included above.
Terms and conditions Sales:
The sales to related parties are made on terms equivalent to those that prevail in armâs length transactions and 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 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties.
Purchases:
The purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions and in the ordinary course of business. Purchase transactions are based on made 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 31st March, 2019 was Rs. 8,116 crores (As on 31st March, 2018: Rs. 5,404 crores). These loans are unsecured and carry an interest rate ranging from LIBOR 400-530 basis points and repayable within a period of 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.
The transactions other than mentioned above are also in the ordinary course of business and at armsâ length basis.
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). As on 31st Marâ19, the fair value of plan assets was as Rs. 68 crores (As at 31st Marâ18: Rs. 65 crores).
a) Excise duty cases includes disputes pertaining to availment of CENVAT credit, valuation methodologies, classification of gases under chapter heading.
b) Custom duty cases includes disputes pertaining to import of Iron ore fines and lumps under wrong heading, utilisation of SHIS licences for clearance of imported equipment, payment of customs duty Steam Coal through Krishnapatnam Port and anti-dumping duty on Met Coke used in Corex.
c) Sales Tax/ VAT/ Special Entry tax cases includes disputes pertaining to demand of special entry tax in Karnataka and demand of cess by department of transport in Goa.
d) Service Tax cases includes disputes pertaining to availment of service tax credit on ineligible services, KKC amount paid but no credit not availed, denial of credit distributed as an ISD, service tax on railway freight not taken as per prescribed documents.
e) Income Tax cases includes disputes pertaining to transfer pricing, deduction u/s 80-IA and other matters.
f) Levies by local authorities - Statutory cases includes disputes pertaining to payment of water charges and enhanced compensation.
g) Levies relating to Energy / Power Obligations cases includes disputes pertaining to uninterrupted power charges by Karnataka Power Transmission Company Ltd., belated payment surcharge, claims for the set off of renewable power obligations against the power generated in its captive power plants and dues relating to additional surcharge imposed on captive consumption by Maharashtra State Electricity Distribution Company Ltd.
h) Miscellaneous cases includes provident fund relating to contractors.
i) Claims by Suppliers and other parties includes quality claims issues raised by suppliers and others.
j) There are several other cases which has been determined as remote by the Company and hence not been disclosed above.
In response to a petition filed by the iron ore mine owners and purchasers (including the Company) contesting the levy of Forest Development Tax (FDT) on iron ore on the ground that the State does not have jurisdiction to legislate in the field of major minerals which is a central subject, the Honourable High Court of Karnataka vide its judgement dated 3 December 2015 directed refund of the entire amount of FDT collected by Karnataka State Government on sale of iron ore by private lease operators and National Mineral Development Corporation Limited (NMDC). The Karnataka State Government has filed an appeal before the Supreme Court of India (âSCIâ). SCI has not granted stay on the judgement but stayed refund of FDT. The matter is yet to be heard by SCI. Based on merits of the case and supported by a legal opinion, the Company has not recognised provision for FDT of Rs. 1,043 crores (including paid under protest - Rs. 665 crores) and treated it as a contingent liability.
The State of Karnataka on 27 July 2016, has amended Section 98-A of the Forest Act retrospectively substituting the levy as Forest Development Fee (FDF) instead of FDT. In response to the writ petition filed by the Company and others, the Honourable High Court of Karnataka has vide its order dated 4 October 2017, held that the amendment is ultra-vires the Constitution of India and directed the State Government to refund the FDF collected. The State Government has filed an appeal before the SCI, and based on merits of the case duly supported by a legal opinion and a favorable order from the High Court, the Company has not recognised provision for FDF amount of Rs. 1,117 crores (including paid under protest - Rs.255 crores) pertaining to the private lease operators S NMDC and treated it as contingent liability.
(iii) Supreme Court (SC) passed a judgement dated 28 February 2019, relating to components of salary structure that need to be taken into account while computing the contribution to provident fund under the EPF Act. There are numerous interpretative issues relating to the Supreme Court (SC) judgement including the effective date of application. The Company continues to assess any further developments in this matter for the implications on financial statements, if any.
12. Financial guarantees
The Company has issued financial guarantees to banks on behalf of and in respect of loan facilities availed by its group companies.
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 entered a five year Advance Payment and Supply Agreement (âAPSAâ) agreement with Duferco S.A. (âDSAâ) for supply of Steel Products. Duferco S.A has provided an interest bearing advance amount of US $ 700 million under this agreement, secured by committed export of steel products to Duferco S.A .
(c) 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 year. Such export obligations at year end aggregate to
(d) The Company has given guarantees aggregating Rs. 127 crores (previous year Rs. 127 crores) on behalf of subsidiaries to Commissioner of Customs in respect of goods imported.
13. In assessing the carrying amounts of Investments in and loans / advances (net of impairment loss / loss allowance) to certain subsidiaries and a Joint Venture 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. 259 crores (Rs. 259 crores as at March 31, 2018) in equity and preference shares of JSW Steel (Netherlands) B.V (âNBVâ), loans of Rs. 848 crores (Rs. 209 crores as at March 31, 2018), Rs. 5,332 crores (Rs. 4,361 crores as at March 31, 2018) and Rs. 739 crores (Rs. 678 crores as at March 31, 2018) to NBV, Periama Holdings LLC (âPHLâ) and JSW Panama Holdings Corporation respectively and the financial guarantees of Rs. 1,410 crores (Rs. 1,626 crores as at March 31, 2018) and Rs. NIL (Rs. 85 crores as at March 31, 2018) on behalf of PHL and JSW Steel (USA) Inc. respectively - Estimate of values of the businesses and assets by independent external valuers 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 utilisation and margins based on forecasts of demand in local markets, and capacity expansion / availability of infrastructure facilities for mines.
(b) Equity shares of JSW Steel Bengal Limited, a subsidiary (carrying amount: Rs. 446 crores (Rs. 442 crores as at March 31, 2018)) - 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 plans for commencing construction of the said complex.
(c) Equity shares of JSW Jharkhand Steel Limited, a subsidiary (carrying amount: Rs. 88 crores as at March 31, 2019; Rs. 84 crores as at March 31, 2018) - Evaluation of the status of its integrated Steel Complex to be implemented in phases at Ranchi, Jharkhand by the said subsidiary 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 crores as at March 31, 2019; Rs. 24 crores as at March 31, 2018, and loans of Rs. 155 crores as at March 31, 2019; Rs. 155 crores as at March 31, 2018) -Valuation by an independent valuer of the residential complex in which PRPL holds interest.
(e) Investment of Rs. 4 crores (Rs. 4 crores as at March 31, 2018) and loan of Rs. 147 crores (Rs. 137 crores as at March 31, 2018) relating to JSW Natural Resources Mozambique Limitada and JSW ADMS Carvo Limitada (step down subsidiaries) - Assessment of minable reserves by independent experts 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. 198 crores as at March 31, 2019; Rs. 160 crores as at March 31, 2018) - 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.
14.
a. On 15 June 2018, the Company completed acquisition of 100% equity stake in Acero Junction Holdings, Inc (Acero) for a cash consideration of Rs. 536 crores (USD 80.85 million). Acero, along with its wholly owned subsidiary JSW Steel USA Ohio, Inc (Formerly known as Acero Junction, Inc.).
b. Pursuant to the Corporate Insolvency Resolution process for Monnet Ispat S Energy Limited (âMIELâ) under the Insolvency Bankruptcy Code, 2016 initiated on 18 July 2017, the National Company Law Tribunal (âNCLTâ) on 24 July 2018 (Order date) approved (with modifications) the resolution plan submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited. The consortium completed the acquisition of MIEL 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.
c. The Resolution Plan submitted by the Company for Vardhman Industries Limited (VIL) was approved with some modifications, by the Honâble National Company Law Tribunal (NCLT) New Delhi, by its order dated April 16, 2019. The Company filed an appeal challenging the said NCLT Order before National Company Law Appellate Tribunal (NCLAT), in which an interim order was passed on April 30, 2019 suggesting that the Resolution Plan as approved by the Committee of Creditors may be implemented subject to the decision of the appeal. The Company further filed an Appeal before the Honâble Supreme Court against the interim order of NCLAT in which the Honâble Supreme Court vide an order dated May 10, 2019 has ordered status quo and the matter is posted for hearing before the NCLAT on May 28, 2019.
d. On 24 July 2018, the Company through its wholly owned subsidiary in Italy, JSW Steel Italy S.r.l, completed acquisition of 100% shares each of Aferpi S.p.A and Piombino Logistics S.p.A and 69.27% of the shares of GSI Lucchini S.p.A (collectively referred to as âTargetsâ) for a consideration of Rs. 489 crores (Euro 60.70 million) towards acquisition of equity shares and Rs. 100 crores (Euro 12.38 million) towards acquisition of loans provided by erstwhile shareholders of the targets.
e. On 23 October 2018, the Company has acquired an additional stake of 60.004% of the share capital of Dolvi Minerals and Metals Private Limited (âDMMPLâ), a subsidiary, for a cash consideration of Rs.109 crores. Pursuant to the acquisition of shares of DMMPL, DMMPL along with its wholly owned subsidiary Dolvi Coke Projects Limited (âDCPLâ), have become wholly owned subsidiaries of the Company.
15. The Board of Directors of the Company at their meeting held on 25 October 2018, considered and approved the Scheme of Amalgamation pursuant to sections 230 - 232 and other applicable provisions of the Companies Act, 2013, providing for the merger of its wholly owned subsidiaries, Dolvi Minerals and Metals Private Limited, Dolvi Coke Projects Limited, JSW Steel Processing Centre Limited, and JSW Steel (Salav) Limited with the Company. The said scheme has been filed with NCLT and the merger is subject to regulatory approvals.
16. Previous year figures have been re-grouped /re-classified wherever necessary
17. Subsequent Events (refer note 54 of the annual standalone financial statements)
a) The Company has raised US$ 500 million in April 2019 by the allotment of fixed rate senior unsecured notes (âNotesâ) in accordance with Regulation S of the U.S. Securities Act, 1933 as amended, and applicable Indian regulations. The Notes are listed on Singapore Exchange Securities Trading Limited.
b) On 24 May 2019 the board of directors recommended a final dividend of Rs. 4.10 per equity share be paid to shareholders for financial year 2018-19, which is subject to approval by the shareholders at the Annual General Meeting to be held on 25 July 2019. If approved, the dividend would result in a cash outflow of Rs. 1,195 crores inclusive of dividend distribution tax of Rs. 204 crores.
New Standard Ind AS 116 Leases
Ind AS 116 Leases was notified by MCA on 30 March 2019 and it replaces Ind AS 17 Leases, including appendices thereto. Ind AS 116 is effective for annual periods beginning on or after 1 April 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The standard includes two recognition exemptions for lessees - leases of âlow-valueâ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under Ind AS 116 is substantially unchanged from todayâs accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases: operating and finance leases.
The Company is in the process of evaluating the effect of these amendments on the financial statements. Amendments to other Ind AS
There are few amendments to other Ind AS such as Ind AS 109, Financial Instruments , Ind AS 12, Income Taxes Ind AS 19, Employee Benefits; Ind AS 28, Investments in Associates and Joint Ventures
The Company is in the process of evaluating the effect of these amendments on the financial statements.
Mar 31, 2018
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, 2 crores (FY 2016-17: Rs, 1 crores) in respect of employee stock options granted to Key Managerial Personnel. The same has not been considered as managerial remuneration of the current year as defined under 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 made on terms equivalent to those that prevail in arm''s length transactions and 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 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties.
Purchases:
The purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions and 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 31st March, 2018 was Rs, 5,403 crores (As on 31st March, 2017: Rs, 2,689 crores). These loans are unsecured and carry an interest rate ranging from LIBOR 400-530 basis points and repayable within a period of 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.
Notes:
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). As on 31 March 2018, the fair value of plan assets was as Rs, 65 crores (31 March 2017: Rs, 53 crores).
9. Contingent liabilities
(refer note 45 of the annual standalone financial statements)
# Rs, 0.05 Crore
a) Excise duty cases includes disputes pertaining to a ailment of CENVAT credit, valuation methodologies, classification of gases under chapter heading.
b) Custom duty cases includes disputes pertaining to import of Iron ore fines and lumps under wrong heading, utilisation of SHIS licences for clearance of imported equipment, payment of customs duty on Steam Coal through Krishnapatnam Port and anti-dumping duty on Met Coke used in Corex.
c) Sales Tax/ VAT/ Special Entry tax cases includes disputes pertaining to demand of special entry tax in Karnataka and demand of cess by department of transport in Goa.
d) Service Tax cases includes disputes pertaining to a ailment of service tax credit on ineligible services, KKC amount paid but no credit not availed, denial of credit distributed as an ISD, service tax on railway freight not taken as per prescribed documents.
e) Income Tax cases includes disputes pertaining to deduction u/s 80-IA and other matters.
f) Levies by local authorities cases includes disputes pertaining to uninterrupted power charges by Karnataka Power Transmission Company Ltd., payment of water charges, belated payment surcharge, enhanced compensation and claims for the set off of renewable power obligations against the power generated in its captive power plants.
g) Miscellaneous cases include provident fund relating to contractors.
h) Claims by Suppliers and other parties includes quality claims issues raised by suppliers and others.
i) There are several other cases which has been determined as remote by the Company and hence not been disclosed above.
I n response to a petition filed by the iron ore mine owners and purchasers (including JSW Steel Limited [the Company]) contesting the levy of Forest Development Tax (FDT) on iron ore on the ground that the State does not have jurisdiction to legislate in the field of major minerals which is a central subject, the Honourable High Court of Karnataka vide its judgment dated 3 December 2015 directed refund of the entire amount of FDT collected by Karnataka State Government on sale of iron ore by private lease operators and National Mineral Development Corporation Limited (NMDC). The Karnataka State Government has filed an appeal before the Supreme Court of India ("SCI"). SCI has not granted stay on the judgment but stayed refund of FDT amounting to Rs, 1,517 crores. The matter is yet to be heard by SCI. Based on merits of the case and supported by a legal opinion, the Company has not recognized provision for FDT of Rs, 1,043 crores and treated it as a contingent liability.
The State of Karnataka on 27 July 2016, has amended Section 98-A of the Forest Act retrospectively substituting the levy as Forest Development Fee (FDF) instead of FDT. In response to the writ petition filed by the Company and others, the Honourable High Court of Karnataka has vide its order dated 4 October 2017, held that the amendment is ultra-vires the Constitution of India and directed the State Government to refund the FDF collected. The State Government has filed an appeal before the SCI, and based on merits of the case duly supported by a legal opinion and a favorable order from the High Court, the Company has not recognized provision for FDF amount of Rs, 756 crores (including paid under protest - '' 255 crores) pertaining to the private lease operators & NMDC and treated it as contingent liability.
3. Financial Guarantees
(refer note 46 of the annual standalone financial statements)
The Company has issued financial guarantees to banks on behalf of and in respect of loan facilities availed by its group companies.
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 year. Such export obligations at year end aggregate to
4. During the year a subsidiary of the Company has surrendered one of its iron ore mine in Chile considering its economic viability and accordingly the Company has reassessed the recoverability of the loans given to and investments made in subsidiaries and recognized an impairment provision of Rs, 234 crores which has been disclosed as an exceptional item.
(refer note 50 of the annual standalone financial statements)
5. I n assessing the carrying amounts of Investments in and loans / advances (net of impairment loss / loss allowance) to certain subsidiaries and a Joint Venture 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, 259 crores (Rs, 295 crores as at March 31, 2017) in equity and preference shares of NBV, loans of Rs, 209 crores (Rs, 105 crores as at March 31, 2017), Rs, 4,361 crores (Rs, 1,922 crores as at March 31, 2017) and Rs, 678 crores (Rs, 840 crores as at March 31, 2017) to JSW Steel (Netherlands) B.V., Periama Holdings LLC and JSW Panama Holdings Corporation respectively and the financial guarantees of Rs, 1,626 crores (Rs, 3,177 crores as at March 31, 2017) and Rs, 85 crores (Rs, 199 crores as at March 31, 2017) on behalf of PHL and JSU respectively - Estimate of values of the businesses and assets by independent external valuers 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, 442 crores (Rs, 438 crores as at March 31, 2017)) - 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, 84 crores as at March 31, 2018; Rs, 80 crores as at March 31, 2017) - 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 crores as at March 31, 2018; Rs, 24 crores as at March 31, 2017, and loans of Rs, 155 crores as at March 31, 2018; Rs, 157 crores as at March 31, 2017) -Valuation by an independent valuer of the residential complex in which PRPL holds interest.
(e) Investment ofRs, 4 crores (Rs, 4 crores as at March 31, 2017) and loan of Rs, 137 crores (Rs, 117 crores as at March 31, 2017) 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 Sever field Structures Limited, a joint venture (carrying amount: Rs, 160 crores as at March 31, 2018; Rs, 115 crores as at March 31, 2017) - Cash flow projections approved by the said JV which are based on estimates and assumptions relating to order book, capacity utilization, operational performance, market prices of materials, inflation, terminal value, etc. (refer note 51 of the annual standalone financial statements)
6. Standards issued but not yet effective
(refer note 54 of the annual standalone financial statements)
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 ''Revenue from Contracts with Customers'' (New Revenue Standard), which replaces Ind AS 11 ''Construction Contracts'' and Ind AS 18 ''Revenue''. The core principle of the New Revenue Standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Some of the key changes introduced by the New Revenue Standard include additional guidance for multiple-element arrangements, measurement approaches for variable consideration, adjustments for time value of money etc. Significant additional disclosures in relation to revenue are also prescribed. The New Revenue Standard also provides two broad alternative transition options - Retrospective Method and Cumulative Effect Method - with certain practical expedients available under the Retrospective Method. The Company is in the process of evaluating the impact of the New Revenue Standard on the present and future arrangements and shall determine the appropriate transition option once the said evaluation has been completed.
Also Appendix B to Ind AS 21, foreign currency transactions and advance consideration was notified along with the same notification which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The Company is in the process of evaluating the effect of amendment on its financial statements.
Other amendments
Following amendments to other Ind AS which are issued but are not effective in FY 2017-18
(a) Amendments to Ind AS 112 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in Ind AS 112.
(b) Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses
(c) Transfers of Investment Property â Amendments to Ind AS 40
(d) I nd AS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice
The Company is in the process of evaluating the effect of these amendments on the financial statements.
Mar 31, 2017
Notes:
1. To comply with the Companies (Accounting Standard) Rules, 2006, certain account balances have been regrouped as per the format prescribed under Division II of Schedule III to the Companies Act, 2013.
2. Finance lease arrangements:
In respect of certain long-term arrangements, existing at the date of transition and identified to be in the nature of finance lease where the Company is lessee, the underlying assets and corresponding finance lease obligation determined at the inception of respective arrangements have been recognized on the date of transition with the adjustment of difference, if any, in the opening retained earnings, resulting into increase in finance cost and depreciation charge and reduction in the cost of goods / services procured and valuation of underlying inventories. Such arrangements were recognized as per their legal form under the previous GAAP
3. Fair valuation of investments:
Investments in preference shares have been measured at fair value through profit or loss as against cost less diminution of other than temporary nature, if any, under the previous GAAP
Certain equity investments (other than investments in subsidiaries, joint ventures and associates) have been measured at fair value through other comprehensive income (FVTOCI).
The difference between the fair value and previous GAAP carrying value on transition date has been recognized as an adjustment to opening retained earnings / separate component of other equity.
4. Look through approach for employee welfare trust
Employee welfare trust, financed through interest free loan by the Company and warehousing the shares which have not vested yet, for distribution to employees of the Company, has been consolidated on line by line basis by reducing from equity share capital of the Company the face value of such treasury shares held by the trust and adjusting the difference, if any, into opening retained earnings.
5. Preference shares considered as borrowings:
Cumulative redeemable preference shares issued by the Company have been classified as borrowings and recognized at amortized cost on transition date as against part of Equity share capital under previous GAAP The difference on the transition date has been recognized in opening retained earnings net of related deferred taxes. Interest charge at effective interest rate on such borrowings has been recognized as finance cost in subsequent periods as against appropriation of dividend at coupon rate from reserves under the previous GAAP
6. Financial liabilities and related transaction costs:
Borrowings and other financial liabilities which were recognized at historical cost under previous GAAP have been recognized at amortized cost under IND AS with the difference been adjusted to opening retained earnings.
Under previous GAAP, transaction costs incurred in connection with borrowings were amortized equally over the tenure of the borrowings. Under IND AS, transaction costs are deducted from the initial recognition amount of the financial liability and charged over the tenure of borrowing using the effective interest method.
Difference in the un-amortized borrowing cost as per IND AS and previous GAAP on transition date has been adjusted to the cost of asset under construction or opening retained earnings, as applicable.
7. Financial assets at amortized cost:
Certain financial assets held on with an objective to collect contractual cash flows in the nature of principal and interest have been recognized at amortized cost on transition date as against historical cost under the previous GAAP with the difference been adjusted to the opening retained earnings.
8. Deferred tax as per balance sheet approach:
Under previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under IND AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also lead to recognition of deferred taxes on new temporary differences.
9. Dividend:
Under previous GAAP, dividends proposed by the board of directors after balance sheet date but before the approval of the financial statements were considered as adjusting events. However under IND AS, such dividends are recognized when the same is approved by the shareholders in the general meeting.
Accordingly the liability for proposed dividend recognized as on transition date has been reversed with corresponding adjustment to opening retained earnings and dividend in the subsequent period has been recognized in the year of approval in the general meeting.
10. Excise duty:
Under previous GAAP, revenue from sale of goods was presented net of excise duty whereas under IND AS the revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of Profit and Loss as part of expenses.
11. Defined benefit liabilities:
Under IND AS, Remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined liability, are recognized in other comprehensive income instead of profit or loss in previous GAAP
12. Government grant:
Government grant outstanding as on transition date relating to the purchase of fixed asset and conditional upon fulfillment of future export obligations has been recognized as deferred income under Ind AS with the corresponding adjustment to the carrying amount of Property, plant and equipment (net of cumulative depreciation impact) and opening retained earnings.
13. Other comprehensive income:
Under IND AS, all items of income and expense recognized in the period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss and "other comprehensive income" includes remeasurements of defined benefit plans, foreign currency monetary item translation difference account, effective portion of gains and losses on cash flow hedging instruments and fair value gain or losses on FVCTOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP
Mar 31, 2016
1. CONTINGENT LIABILITIES:
a) Bills discounted with re-course Rs. Nil (previous year Rs. 144.98
crores).
b) i) Guarantees provided on behalf of subsidiaries Rs. 2,124.11
crores (previous year Rs. 1,273.97 crores).
ii) Standby letter of credit facility availed from resident Indian
Banks secured by specific fixed assets of the Company in relation to
overseas long-term borrowing by JSW Steel Holding (USA) Inc and JSW
Steel (Netherlands) B.V. (wholly owned subsidiaries of the Company) is
Rs. 2,653.32 crores (previous year Rs. 2,503.63 crores) and Rs. 530.66
crores (previous year Rs. 1439.59 crores) respectively.
iii) Provision of Rs. 957.85 crores (previous year Rs. Nil) has been
created against aforesaid guarantees and standby letter of credit
facilities (refer note 25(4)(a)).
c) Disputed claims/levies (excluding interest, if any), in respect of:
(i) Excise duty Rs. 305.39 crores (previous year Rs. 466.88 crores);
(ii) Custom duty Rs. 407.92 crores (previous year Rs. 437.03 crores);
(iii) Income tax Rs. 170.68 crores (previous year Rs. 170.68 crores);
(iv) Sales tax / Special entry tax Rs. 155.94 crores (previous year Rs.
155.94 crores);
(v) Service tax Rs. 142.06 crores (previous year Rs. 146.54 crores);
(vi) Miscellaneous Rs. 0.05 crores (previous year Rs. 0.05 crores);
(vii) Levies by local authorities Rs. 3.04 crores (previous year Rs.
3.04 crores); and
(viii) Claims by suppliers and other parties Rs. 109.98 crores
(previous year Rs. 350.80 crores)
d) Arrears of fixed cumulative dividend on preference shares (CPRS) Rs.
0.56 crores (previous year Rs. 0.51 crores).
e) Claims related to Forest Development Tax Rs. 966.98 crores (previous
year Rs. 909.38 crores). (including FDT amount paid under protest Rs.
665 crores (previous year Rs. 665 crores)). In 2008, the State
Government of Karnataka levied Forest Development Tax (FDT) treating
iron ore as forest produce. In response to writ petitions filed by
various stakeholders, the Hon''ble High Court of Karnataka granted
partial relief vide judgement dated December 3, 2015. In view thereof,
the State Government of Karnataka has stopped levying FDT with effect
from January 29, 2016. The State Government of Karnataka has filed an
appeal before the Hon''ble Supreme Court of India against the judgement.
The Hon''ble Supreme Court while hearing the petition on April 12, 2016
admitted the appeal, and granted an interim stay on refund of the FDT.
The matter is posted for final arguments in the month of August 2016.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 5,064.37 crores
(previous year Rs. 6,177.96 crores).
3. 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. Such export obligations at year end aggregate to
Rs. 1,316.22 crores (previous year Rs. 628.25 crores).
4. EXCEPTIONAL ITEMS COMPRISE PROVISION TOWARDS :
a) (i) Rs. 982.37 crores (Rs. 333.75 crores for the year ended 31
March, 2015) for ''other than temporary'' diminution in value of
investments relating to JSW Steel USA Inc., JSW Panama Holding
Corporation, and Periama Holding LLC, subsidiaries of the Company; (ii)
Rs. 3,915.30 crores (Rs. nil for the year ended 31 March, 2015) for
loans to the said subsidiaries and interest thereon considered doubtful
of recovery; and (iii) Rs. 957.85 crores (Rs. nil for the year ended 31
March, 2015)*; towards certain guarantees for borrowings by the said
subsidiaries, which provisions are recognised based on estimate of
values of the businesses/ assets of the said subsidiaries by
independent External Valuers and based on cash flow projections. In
making the said projections, reliance has been placed on estimates in
respect of future prices of coal and iron ore, mineable resources, and
assumptions relating to operational performance including improvement
in capacity utilisation of the plants and margins, and availability of
infrastructure for mines.
* amount used/unused amount reversed during the period Rs. nil
b) Pursuant to the order of the Honourable Supreme Court dated 24
September 2014 regarding cancellation of the allotment of coal blocks,
the Company has made an assessment of investments in and loans and
advances to the subsidiaries, joint ventures and associates affected by
the said order and recognised provision of Rs. 4.19 crores (Rs. 21.20
crores for the year ended 31 March 2015) against carrying amount of
investments as Exceptional Item during the year considering the
principle of conservatism.
c) Based on careful evaluation of estimated projections, the management
has recognised provision for diminution of other than temporary nature
of Rs. 0.74 crores (Previous year Rs. 41.35 crores) in the carrying
amount of investment in certain subsidiaries as Exceptional Item during
the year.
5. In respect of certain investments/ loans and advances, following
basis/assumptions/estimates have been considered in concluding that
there is no further decline, other than temporary, in the value of the
investments and that the loans / advances are fully recoverable:
a) Equity shares of JSW Steel Bengal Limited, a subsidiary (carrying
amount: Rs. 436.15 crores (net of provision) as at March 31, 2016).
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.
b) Equity shares of Peddar Realty Private Limited (PRPL) (carrying
amount of investments: Rs. 56.72 crores (net of provision) as at March
31, 2016), and recoverability of loans of Rs. 158.18 crores as at March
31, 2016.
Valuation by an independent valuer of the residential complex in which
PRPL holds interest.
c) Investment of Rs. 4.51 crores (net of provision) and loan of Rs.
112.42 crores as at March 31, 2016 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.
d) Equity shares of JSW Severfield Structures Limited, a joint venture
(JV) (carrying amount: Rs. 115.44 crores as at March 31, 2016).
Cash fow 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.
6. (a) Pursuant to the requirement under Schedule II to the Companies
Act, 2013 the Company has, based on the external technical advice,
effective 1 April, 2015, identified components (significant parts) of
the main asset having different useful lives as compared to the main
asset and consequently revised the estimated useful lives of Plant &
Machinery and Buildings. Accordingly, the depreciation charge for the
year ended 31 March 2016 is lower by Rs. 499.07 crores, and amount of
Rs. 109.98 crores (net of deferred tax) being effect of
componentization, where the remaining useful life of the asset was
determined to be nil, has been adjusted against the retained earnings
as per transitional provision in Note 7 (b) of Schedule II.
(b) Effective from 1 April 2014, the Company had re- worked
depreciation with reference to the estimated useful lives of fixed
assets prescribed under Schedule II to the Act or useful life of fixed
assets as per technical evaluation. As a result the charge for
depreciation was lower by Rs. 207.30 crores for the year ended March
31, 2015. Pursuant to the transition provisions prescribed in Schedule
II to the Companies Act, 2013, the Company had fully depreciated the
carrying value of assets, net of residual value, where the remaining
useful life of the asset was determined to be nil as on April 1, 2014,
and had adjusted an amount of Rs. 47.29 crores (net of deferred tax)
against the opening Surplus balance in the Statement of Profit and Loss
under Reserves and Surplus.
7. Trade receivables include Rs. 159.54 crores (previous year Rs.172.04
crores) recoverable from a customer towards supply of steel. The
Company recovered an amount of Rs. 12.50 crores from the customer
during the year ended 31 March 2016. Pursuant to the Consent Term,
fled by the Company and the customer with the Honorable Bombay High
Court and adopted by the Court as its order, the receivables of the
Company shall be secured by a first ranking pari-passu charge over the
fixed assets of the customer and shall be at par with other CDR
lenders. The process of creating charge by the Company over the
customer''s certain fixed assets has been completed and the charge
creation for the remaining fixed assets is under progress. Based on
these developments, the Company is reasonably confident about the
recoverability of the said amount.
8. DERIVATIVES:
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to certain
firm commitments, highly probable forecast transactions and foreign
currency required at the settlement date of certain
receivables/payables. The use of foreign currency forward contracts is
governed by the Company''s strategy approved by the board of directors,
which provide principles on the use of such forward contracts
consistent with the Company''s risk management policy.
b) The Company also uses derivative contracts other than forward
contracts to hedge the interest rate and currency risk on capital
account. Such transactions are governed by the strategy approved by the
board of directors, which provide principles on the use of these
instruments, consistent with the Company''s risk management policy. The
Company does not use these contracts for speculative purposes.
9. RELATED PARTIES RELATIONSHIPS, TRANSACTIONS AND BALANCES :
A) LIST OF RELATED PARTIES
1 SUBSIDIARIES
JSW Steel (Netherlands) B.V.
JSW Steel (UK) Limited
Argent Independent Steel (Holdings) Limited (ceased w.e.f 17/11/2015)
JSW Steel Service Centre (UK) Limited
JSW Steel Holding (USA) Inc.
JSW Steel (USA) Inc.
Periama Holdings, LLC
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 Eroush Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW ADMS Carvo Lda
JSW Mali Resources SA (ceased w.e.f 18.06.2015)
JSW Steel Processing Centre Limited
JSW Bengal Steel Limited
JSW Natural Resources India Limited
Barbil Beneficiation Company Limited
Barbil Iron Ore Company Limited
JSW Jharkhand Steel Limited
JSW Steel East Africa Limited
Amba River Coke Limited
JSW Energy (Bengal) Limited
JSW Natural Resource Bengal Limited
JSW Steel Coated Products Limited
Peddar Realty Private Limited
Nippon Ispat Singapore (PTE) Limited
Erebus Limited
Arima Holding Limited
Lakeland Securities Limited
JSW Steel (Salav) Limited (w.e.f 31.10.2014)
Everbest Steel & Mining Holdings Limited (w.e.f. 13.02.2015) (ceased
w.e.f 04.12.2015)
2 ASSOCIATES
JSW Praxair Oxygen Private Limited
Dolvi Minerals & Metals Private Limited (w.e.f. 27.11.2014)
Dolvi Coke Projects Limited (w.e.f. 04.12.2014)
3 JOINT VENTURES
Vijayanagar Minerals Private Limited
Rohne Coal Company Private Limited
JSW Severfeld Structures Limited
Gourangdih Coal Limited
Toshiba JSW Power System Private Limited
MJSJ Coal Limited
GEO Steel LLC
JSW Structural Metal Decking Limited
JSW MI Steel Service Centre Private Limited
JSW Vallabh Tin Plate Private Limited (w.e.f. 07.04.2014)
4 KEY MANAGEMENT PERSONNEL (KMP)
Mr. Sajjan Jindal
Mr. Seshagiri Rao M V S
Dr. Vinod Nowal
Mr. Jayant Acharya
Mr. Rajeev Pai
Mr. Lancy Varghese
5 RELATIVE OF KEY MANAGERIAL PERSONNEL
Mr. Parth Jindal
6 ENTERPRISES OVER WHICH KEY MANAGEMENT PERSONNEL AND RELATIVES OF SUCH
PERSONNEL EXERCISE SIGNIFICANT INFLUENCE
JSW Energy Limited
Jindal Stainless Limited
JSW Realty & Infrastructure Private Limited
Jindal Saw Limited
Jindal Saw USA LLC
Jindal Steel & Power Limited
JSOFT Solutions Limited
Jindal Industries Private Limited
JSW Cement Limited
JSW Jaigarh Port Limited
Reynold Traders Private Limited
Raj West Power Limited
JSW Power Trading Company Limited
JSW Infrastructure Limited
South West Port Limited
JSW Techno Projects Management Limited
JSW Global Business Solutions Limited (Formerly known as Sapphire
Technologies Limited)
South West Mining Limited
JSL Architecture Limited
JSW Projects Limited
JSW Foundation
O P Jindal Foundation
Jindal Technologies & Management Services Private Limited
JSW Dharamatar Port Private Limited
Jindal Tubular (India) Limited
M/s Shadeed Iron & Steel Co. LLC
JSW Investment Private Limited
JSW IP Holdings Private Limited (w.e.f. 01.04.2015)
Epsilon Carbon Private Limited (Formerly known as AVH Private Limited)
JSW International Trade Corp PTE Limited
Heal Institute Private Limited
JSL Lifestyle Limited
Jindal Power Limited
Jindal Fittings Limited
Jindal Education Trust
10. OPERATING LEASE
A) AS LESSOR:
i. The Company has entered into lease arrangements, for renting :
- 2,279 houses (admeasuring approximately 1,410,997 square feet) at the
rate of Rs. 100/- per house per annum, for a period of 120 months.
- 9 houses (admeasuring approximately 9,027 square feet) at the rate of
Rs. 43/- per square feet per month per house, for a period of 60
months.
- Office premises (admeasuring approximately 1795 square feet) at the
rate of Rs. 146/- square feet for the period of 22 months.
The agreements are renewable at the option of the lessee after the end
of the lease term.
ii. Disclosure in respect of assets (building) given on operating
lease:
The agreements are executed for a period of 11 to 180 months with a
renewable clause and also provide for termination at will by either
party giving a prior notice period of 1 to 3 months.
(ii) The agreements for certain plant and equipment is on
non-cancellable basis for a period of 10-15 years, which are renewable
on expiry of the lease period at mutually acceptable terms.
11. THE COMPANY HAS THE FOLLOWING JOINT VENTURE INTEREST IN INDIA AS AT
31ST MARCH 2016: INTEREST AS VENTURER IN JOINTLY CONTROLLED ENTITIES
Vijayanagar Minerals Private Limited: Percentage of holding-40%
(previous year 40%) Rohne Coal Company Private Limited: Percentage of
holdingÂ49% (previous year 49%) JSW Severfield Structures Limited:
Percentage of holding-50% (previous year 50%) Gourangdih Coal Limited:
Percentage of holdingÂ50% (previous year 50%) JSW MI Steel Service
Center Private Limited: Percentage of holding-50% (previous year 50%)
JSW Vallabh Tinplate Private Limited: Percentage of holdingÂ50%
(previous year 50%)
INTEREST AS INVESTOR
MJSJ Coal Limited: Percentage of holdingÂ11% (previous year 11%)
Toshiba JSW Power Systems Private Limited: Percentage of holdingÂ2.48%
(previous year 2.48%)
15. FIGURES OF THE PREVIOUS YEAR ARE REGROUPED AND RECLASSIFIED
WHEREVER NECESSARY TO CORRESPOND TO FIGURES OF THE CURRENT YEAR.
Mar 31, 2014
Note 1
1. Contingent liabilities :
a) Bills discounted Rs. 3,285.56 crores (previous year Rs. 3,012.92
crores).
b) Guarantees provided to banks on behalf of subsidiaries Rs. 1,372.57
crores (previous year Rs. 1,223.95 crores).
c) Standby letter of credit facility availed from resident Indian Banks
secured / to be secured by specific fixed assets of the company in
relation to overseas long term borrowing by JSW Steel Holding (USA) Inc
and JSW Steel (Netherlands) B.V. (wholly owned subsidiaries of the
company) is Rs. 2,403.99 crores (previous year nil) and Rs. 480.80 crores
(previous year nil) respectively.
d) Disputed claims/levies (excluding interest, if any), in respect of:
(i) Excise duty Rs. 441.95 crores (previous year Rs. 199.82 crores); (ii)
Custom duty Rs. 460.12 crores (previous year Rs. 632.76 crores); (iii)
Income tax Rs. 1.74 crores (previous year Rs. 1.47 crores);
(iv) Sales tax / Special entry tax Rs. 223.37 crores (previous year Rs.
226.93 crores);
(v) Service tax Rs. 129.25 crores (previous year Rs. 98.10 crores);
(vi) Miscellaneous Rs. 0.05 crores (previous year Rs. 0.05 crores);
(vii) Levies by local authorities Rs. 3.04 crores (previous year Rs. 3.04
crores); and
(viii) Claims by suppliers and other parties (including for Forest
Development Tax of Rs. 669.54 crores (previous year Rs. 650.75 crores)) Rs.
1039.60 crores (previous year Rs. 872.79 crores)
In 2008, the State of Karnataka levied a Forest Development Tax (FDT)
treating iron ore as a forest produce. Writ petitions filed by various
stakeholders challenging the levy before Karnataka High Court are
pending disposal. The Management of the Company has been legally
advised that this is a fairly arguable case from the company''s
perspective and accordingly, the tax is considered as recoverable. Tax
payments made under protest in the earlier years (refer note 14) / tax
payable are considered as ''contingent liabilities''.
e) Arrears of fixed cumulative dividend on preference shares (CPRS) Rs.
0.46 crores.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 3,176.36 crores
(previous year Rs. 3,217.49 crores).
3. 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. Such
export obligations at year end aggregate to Rs. 3,817.11 crores (previous
year Rs. 10,903.50 crores) by the Company within the stipulated period.
4. On May 3, 2013 the Bombay High Court sanctioned a Composite Scheme
of Amalgamation and Arrangement (Scheme) under Sections 391 to 394 of
the Companies Act, 1956 amongst JSW Steel Limited, JSW Ispat Steel
Limited, JSW Building Systems Limited, JSW Steel Coated Products
Limited and their respective shareholders and creditors with July 1,
2012 being the appointed date. The certified copy of the scheme is
filed with the Registrar of Companies (RoC) on June 1, 2013.
Accordingly, effect of the scheme is considered in the financial
statements of the current year.
In terms of the scheme, effectively, from July 1, 2012:
- The Vasind and Tarapur units of JSW Steel Limited and the Kalmeshwar
unit of JSW Ispat Steel Limited were demerged and their businesses
transferred and vested to JSW Steel Coated Products Limited.
- The residual JSW Ispat Steel Limited was merged with JSW Steel
Limited.
- JSW Steel Coated Products Limited emerged as a subsidiary of JSW
Steel Limited.
- Accordingly, an amount of Rs. 341.95 crores for the period July 1, 2012
to March 31, 2013, have been debited to the reserve & surplus under
surplus in statement of profit and loss.
This amalgamation is an amalgamation in the nature of purchase as
defined by Accounting Standard 14 Â Accounting for Amalgamations
specified in the Companies (Accounting Standards) Rules 2006. Entries
have been passed in the books of account of the Company to give effect
to the scheme, as follows:
With effect from the appointed date,
(a) All the assets and liabilities of residual JSW Ispat and JSW
Building vest in and are transferred to the Company and recorded at
their respective fair values.
(b) 1,86,08,844 equity shares of Rs. 10 each at par are issued to the
equity shareholders of JSW Ispat in the ratio of 1 equity share of the
company for every 72 equity shares of JSW Ispat.
(c) 48,54,14,604 ,0.01% preference shares of Rs. 10 each are issued to
the preference shareholders of JSW Ispat in the ratio of 1 preference
share for every preference share of JSW Ispat.
(d) Inter-company investments and balances, between the company, JSW
Building and residual JSW Ispat stand cancelled.
(e) Assets and liabilities related to the Vasind and Tarapur units of
the company are transferred to and vested in JSW Steel Coated.
(f) The difference of Rs. 3,055.12 crores resulting from the above is
credited to the capital reserve account.
5. In view of the losses from operations of, JSW Steel USA Inc, a
subsidiary of the Company for last few years, the Company has
considered valuations of its fixed assets carried out by an independent
valuer and concluded that no provision is presently necessary against
the carrying amounts of investments and loans aggregating to Rs. 2,007.46
crores and with respect to financials guarantees of Rs. 2,752.57 crores
[included under contingent liabilities  note 26 (1) [(b) and (c)],
relating to the said subsidiary.
6. The carrying amount of investment in equity shares of JSW
Severfield, India, a joint venture (JV) of the Company, is Rs. 98.44
crores as at March 31, 2014. Having regard to its continued operating
losses and current external economic environment, the Management of the
Company has assessed whether the decline in the value of the said
investment is ''other than temporary'' in terms of Accounting Standard
(AS) 13, Investments. On a careful evaluation of the business plans of
the JV and expected profits based thereon, it has been concluded that
the decline is temporary and accordingly, no provision is required.
7. Trade receivable includes Rs. 184.02 crores (previous year Rs. 184.02
crores) recoverable from a customer towards supply of steel. The
customer has applied for corporate debt restructuring to CDR Cell and
mentioned JSW Steel as their "critical and essential supplier" whose
dues needs to be paid on priority basis. The scheme was approved by CDR
empowered group during the year. Based on these developments, the
Company is reasonably confident about the recoverability of the said
amount.
8. Exceptional items represents effect of significant movement and
volatility in the value of the Indian rupee against US dollar.
9. Derivatives:
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to certain
firm commitments and highly probable forecast transactions. The use of
foreign currency forward contracts is governed by the Company''s
strategy approved by the Board of Directors, which provide principles
on the use of such forward contracts consistent with the Company''s Risk
Management Policy.
b) The Company also uses derivative contracts other than forward
contracts to hedge the interest rate and currency risk on capital
account. Such transactions are governed by the strategy approved by the
Board of Directors, which provide principles on the use of these
instruments, consistent with the Company''s Risk Management Policy. The
Company does not use these contracts for speculative purposes.
10. Employee benefits:
A) Defined contribution plan:
Company''s contribution to provident fund Rs. 29.10 crores. (previous year
Rs. 25.62 crores)
11. Segment reporting:
The company is primarily engaged in the business of manufacture and
sale of iron and steel products. The company has identified two primary
business segments, namely steel and power (used mainly for captive
consumption), which in the context of Accounting Standard 17 on
"segment reporting" constitute reportable segments.
12. Related parties disclosure as per Accounting Standard (AS)-18 :
Parties with whom the company has entered into transactions during the
period where control exists :
1 Subsidiaries
JSW Steel (Netherlands) B.V.
JSW Steel (UK) Limited
Argent Independent Steel (Holdings) Limited
JSW Steel Service Centre (UK) Limited
JSW Steel Holding (USA) Inc.
JSW Steel (USA) Inc.
Periama Holdings, LLC
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 Eroush Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW ADMS Carvo Lda
JSW Mali Resources SA (w.e.f 18.02.13)
JSW Steel Processing Centres Limited
JSW Bengal Steel Limited
JSW Natural Resources India Limited
Barbil Beneficiation Company Limited
JSW Jharkhand Steel Limited
JSW Steel East Africa Limited
Amba River Coke Limited
JSW Energy (Bengal) Limited
JSW Natural Resource Bengal Limited (w.e.f. 3.04.2012)
JSW Steel Coated Products Limited (w.e.f. 31.08.2012)
Peddar Realty Private Limited (w.e.f. 16.05.2012)
Nippon Ispat Singapore (PTE) Limited
EREBUS Limited
Arima Holding Limited
Lakeland Securities Limited
2 Associates
Jindal Praxair Oxygen Company Private Limited
JSW Ispat Steel Limited [Refer Note 26(4)]
3 Joint Ventures
Vijayanagar Minerals Private Limited
Rohne Coal Company Private Limited
JSW Severfield Structures Limited
Gourangdih Coal Limited
Toshiba JSW Power Systems Private Limited
MJSJ Coal Limited
GEO Steel LLC
JSW Structural Metal Decking Limited
JSW MI Steel Service Center Private Limited
4 Key Management Personnel (KMP)
Mr. Sajjan Jindal
Mr. Seshagiri Rao M V S
Dr. Vinod Nowal
Mr. Jayant Acharya
5 Relative of Key Managerial Personnel
Mr. Parth Jindal
6 Enterprises over which Key Management Personnel and Relatives of such
personnel exercise significant influence.
JSW Energy Limited
Jindal Stainless Limited
JSW Realty & Infrastructure Private Limited
Jindal Saw Limited
Jindal Steel & Power Limited
JSOFT Solutions Limited
Jindal Industries Limited
JSW Cement Limited
JSW Jaigarh Port Limited
Reynold Traders Private Limited
Raj West Power Limited
JSW Power Trading Company Limited
JSW Aluminim Limited (ceased from 15.10.2013)
O P Jindal Foundation
JSW Infrastructure Limited
South West Port Limited
JSW Techno Projects Management Limited
South West Mining Limited
JSL Architecture Limited
JSW Projects Limited
Sapphire Technologies Limited
Jindal Technologies & Management Services Private Limited
JITF Shipping & Logistics (Singapore) PTE Limited
JSW Foundation
JSW Bengaluru Football Club Private Limited
Shadeed Iron & Steel Co. LLC
15. Operating lease
a) As lessor:
i. The company has entered into lease arrangements, for renting :
2,279 houses (admeasuring approximately 1,410,997 square feet) at the
rate of Rs. 100/- per house per annum, for a period of 120 months.
9 houses (admeasuring approximately 9,027 square feet) at the rate of Rs.
43/- per square feet per month per house, for a period of 60 months.
The agreements are renewable at the option of the lessee after the end
of the lease term.
13. The company has the following joint venture interest in India as
at 31 March 2014: Interest as venturer
Vijayanagar Minerals Private Limited: Percentage of holding  40%
(previous year 40%) Rohne Coal Company Private Limited: Percentage of
holding  49% (previous year 49%)
JSW Severfield Structures Limited: Percentage of holding - 50 %
(previous year 50%)
Gourangdih Coal Limited: Percentage of holding  50 % (previous year
50%)
JSW MI Steel Service Center Private Limited: Percentage of holding -
50% (previous year 50%)
Interest as investor
MJSJ Coal Limited: Percentage of holding  11% (previous year 11%)
Toshiba JSW Power Systems Private Limited: Percentage of holding Â
2.54% (previous year 2.54%)
14. Interest includes Rs. 5.96 crores (previous year Rs. 2.89 crores) on
account of shortfall in payment of direct taxes.
15. Figures of the previous year are regrouped and reclassified
wherever necessary to correspond to figures of the current year.
Figures of the previous year are not comparable on account of Composite
Scheme of Amalgamation and Arrangement as referred to in Note 26 (4)
above.
Mar 31, 2013
1. Contingent Liabilities not provided for in respect of :
a) Bills Discounted Rs. 3,012.92 crores (Previous year Rs. 3,117.13
crores).
b) Guarantees provided to banks on behalf of subsidiaries Rs. 1,223.95
crores (Previous year Rs. 1,096.27 crores).
c) Disputed claims/levies (excluding interest, if any), in respect of:
(i) Excise Duty Rs. 199.82 crores (Previous year Rs. 200.27 crores);
(ii) Custom Duty Rs. 632.76 crores (Previous year Rs. 477.44 crores);
(iii) Income Tax Rs. 1.47 crores (Previous year Rs. 1.47 crores);
(iv) Sales Tax / Special Entry tax Rs. 226.93 crores (Previous year Rs.
170.30 crores);
(v) Service Tax Rs. 98.10 crores (Previous year Rs. 70.08 crores);
(vi) Miscellaneous Rs. 0.05 crores (Previous year Rs. 0.05 crores);
(vii) Levies by local authorities Rs. 3.04 crores (Previous year Rs.
3.04 crores); and
(viii) Claims etc. by suppliers and other parties (including for Forest
Development Tax) Rs. 872.79 crores (Previous year Rs. 509 crores)
In 2008, the State of Karnataka levied a Forest Development Tax (FDT)
treating iron ore as a forest produce. Writ Petitions challenging the
levy of FDT filed before Karnataka High Court by various stakeholders
are pending for disposal. Accordingly, the Company has disclosed in the
financial statements FDT paid under protest of Rs. 650.75 crores
(including under e auction) as an advance and Rs. 866.03 crores (above)
as a contingent liability.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 3,217.49 crores
(Previous year Rs. 3,729.12 crores).
3. Other Commitments :
(a) The company has issued an undertaking to associate bankers for non
disposal of its investment of Rs. 2,357.11 crores (Previous year Rs.
2,357.11) in an associate till that entity repays its debts.
(b) The Company from time to time provides need based support to
subsidiaries and a joint venture entity towards capital and other
requirements.
(c) 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. Such
export obligations at year end aggregate to Rs. 10,903.50 crores
(Previous year Rs. 16,912.59 crores) by the company within the
stipulated period.
4. On 3rd May 2013 the Bombay High Court sanctioned a Composite Scheme
of Amalgamation and Arrangement under sections 391 to 394 of the
Companies Act, 1956 amongst JSW Steel Limited, JSW ISPAT Steel Limited,
JSW Building Systems Limited, JSW Steel Coated Products Limited and
their respective shareholders and creditors with effect from 1 July
2012, being the appointed date. The certified copy of the Court Order
is awaited, on receipt of which the Company will initiate requisite
formalities to give effect to the Scheme. Accordingly therefore, the
accounting treatment laid out in the Scheme and consequential
adjustments that would arise will be dealt with by the Company in the
financial statements, once the Scheme is implemented.
5. In respect of the Company''s long term, strategic investment in one
of its subsidiaries, JSW Steel (USA) Inc., the Company periodically
reviews and assesses its business plans and expected future cash flows.
The company has also considered recent independent valuations of the
underlying fixed assets. Whilst the subsidiary may have a longer
gestation period than originally envisaged, the Company has concluded
that the decline is temporary and no provision against the carrying
amounts of investments and loans of Rs. 3,155.65 crores relating to the
subsidiary is presently necessary.
6. Due to the significant movement and volatility in the value of the
rupee against US dollar, the net foreign exchange loss has been
considered by the Company as exceptional in nature.
7. Derivatives:
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to certain
firm commitments and highly probable forecast transactions. The use of
foreign currency forward contracts is governed by the Company''s
strategy approved by the Board of Directors, which provide principles
on the use of such forward contracts consistent with the Company''s Risk
Management Policy
b) The Company also uses derivative contracts other than forward
contracts to hedge the interest rate and currency risk on capital
account. Such transactions are governed by the strategy approved by the
Board of Directors, which provide principles on the use of these
instruments, consistent with the Company''s Risk Management Policy. The
Company does not use these contracts for speculative purposes.
11. Employee Benefits:
a) Defined Contribution Plan:
Company''s contribution to Provident Fund Rs. 25.62 crores. (Previous
Year Rs. 24 crores)
The Company expects to contribute Rs. 37.09 crores (previous year Rs.
23.66 crores) to its Gratuity Plan for the next year. In assessing the
Company''s Post Retirement Liabilities, the Company monitors mortality
assumptions and uses up-to-date mortality tables, the base being the
Indian Assured Lives Mortality (2006-08) Ultimate.
Expected return on plan assets is based on expectation of the average
long term rate of return expected on investments of the fund during the
estimated term of the obligations.
The estimates of future salary increase, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(ii) Provident Fund:
The company makes monthly contributions to Provident Fund managed by
Trust for qualifying employees. Under the scheme, the company is
required to contribute a specified percentage of the payroll costs to
fund the benefits.
In keeping with the Guidance on Implementing Accounting Standard (AS)
15 (Revised) on Employee Benefits notified by the Companies (Accounting
Standards) Rules, 2006, employer established provident fund trusts are
treated as Defined Benefit Plans, since the Company is obliged to meet
interest shortfall, if any, with respect to covered employees.
According to the Defined Benefit Obligation of Interest rate Guarantee
on exempted Provident Fund in respect of employees of the company as at
31st March, 2013 works out to Rs. Nil (previous year Rs. Nil) and hence
no provision is required to be provided for in the books of accounts
towards the guarantee given for notified interest rates.
8. Segment Reporting:
The Company is primarily engaged in the business of manufacture and
sale of Iron and Steel Products. The Company has identified two primary
business segments, namely Steel and Power (used mainly for captive
consumption), which in the context of Accounting Standard 17 on
"Segment Reporting" constitute reportable segments.
9. Related Parties disclosure as per Accounting Standard (AS) - 18:
A) List of Related Parties
Parties with whom the Company has entered into transactions during the
period where control exists :
1 Subsidiaries
JSW Steel (Netherlands) B.V.
JSW Steel (UK) Limited
Argent Independent Steel (Holdings) Limited
JSW Steel Service Centre (UK) Limited
JSW Steel Holding (USA) Inc.
JSW Steel (USA) Inc.
Periama Holdings, LLC
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 Eroush Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW ADMS Carvo Lda
JSW Mali Resources SA (w.e.f. 18.02.2013)
JSW Steel Processing Centres Limited
JSW Bengal Steel Limited
JSW Natural Resources India Limited
Barbil Beneficiation Company Limited
JSW Jharkhand Steel Limited
JSW Building Systems Limited
JSW Steel East Africa Limited
Amba River Coke Limited
JSW Energy (Bengal) Limited
JSW Natural Resource Bengal Limited (w.e.f. 03.04.2012)
JSW Steel Coated Products Limited (w.e.f. 31.08.2012)
2 Associates
Jindal Praxair Oxygen Company Private Limited
JSW Ispat Steel Limited
JSW Energy (Bengal) Limited (upto 04.03.2012)
3 Joint Ventures
Vijayanagar Minerals Private Limited
Rohne Coal Company Private Limited
JSW Severfield Structures Limited
Gourangdih Coal Limited
Toshiba JSW Turbine and Generator Private Limited
MJSJ Coal Limited
GEO Steel LLC
JSW Structural Metal Decking Limited
JSW MI Steel Service Center Private Limited
4 Key Management Personnel (KMP)
Mr. Sajjan Jindal
Mr. Seshagiri Rao M V S
Dr. Vinod Nowal
Mr. Jayant Acharya
5 Relative of Key Managerial Personnel
Mrs. Savitri Devi Jindal
Mr. Parth Jindal
6 Enterprises over which Key Management Personnel and Relatives of such
personnel exercise significant influence.
JSW Energy Limited
JSL Limited
JSW Realty & Infrastructure Private Limited
Jindal Saw Limited
Jindal Steel & Power Limited
JSOFT Solutions Limited
Jindal Industries Limited
Jindal Aluminum Limited
JSW Cement Limited
JSW Jaigarh Port Limited
Reynold Traders Private Limited
Raj West Power Limited
JSW Power Trading Company Limited
JSW Aluminim Limited
O P Jindal Foundation
JSW Infrastructure Limited
South West Port Limited
JSW Techno Projects Management Limited
South West Mining Limited
JSL Architecture Limited
JSW Projects Limited
Sapphire Technologies Limited
Jindal Technologies & Management Services Private Limited
10. Operating Lease
a) As Lessor:
i. The Company has entered into lease arrangements, for renting :
2,279 houses (admeasuring approximately 1,410,997 square feet) at the
rate ofRs. 100/-perhouseperannum, for a period of 180 months.
684 houses (admeasuring approximately 350,103 square feet) at the rate
of Rs. 24/- per square feet per annum, for a period of 36 to 60 months.
9 houses (admeasuring approximately 9,027 square feet) at the rate of
Rs. 43/- per square feet per month per house, for a period of 60
months.
Office premises (part) admeasuring approximately 15,392 square feet at
the rate of Rs. 130 per square feet for a period of 11 months.
The agreements are renewable at the option of the lessee after the end
of the lease term.
11. The Company has the following Joint venture interest in India as at
31st March 2013:
Interest as Venturer
Vijayanagar Minerals Private Limited: Percentage of holding - 40%
(Previous year 40 %)
Rohne Coal Company Private Limited: Percentage of holding - 49%
(Previous year 49 %)
JSW Severfield Structures Limited : Percentage of holding - 50 %
(Previous Year 50%)
Gourangdih Coal Limited : Percentage of holding - 50 % (Previous Year
50 %)
JSW MI Steel Service Center Private Limited : Percentage of holding -
50% (Previous Year 50% )
Interest as Investor
MJSJ Coal Limited: Percentage of holding - 11% (Previous year 11 %)
Toshiba JSW Turbine and Generator Private Limited : Percentage of
holding - 2.54% (Previous year 3.67%)
12. Interest includes Rs. 2.89 crores (previous year Rs. 2.5 crores)
on account of shortfall in payment of Direct Taxes.
13. Comparative financial information (i.e. the amounts and other
disclosure for the preceding year) presented above, is included as an
integral part of the current year''s financial statements, and is to be
read in relation to the amounts and other disclosures relating to the
current year. Figures of the previous year are regrouped and
reclassified wherever necessary to correspond to figures of the current
year.
Mar 31, 2012
1.NOTES
Rights, preferences and restrictions attached to Equity shares
The company has a single class of equity shares. Each shareholder is
eligible for one vote per share held (other than the shares represented
by underlying GDRs which do not carry a voting right). The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders. In the event of liquidation, the equity shareholders are
eligible to receive the remaining assets of the company after
distribution of all preferential amounts, in proportion to their
shareholding.
26,00,938 (previous year 30,85,814) equity shares represent the shares
underlying outstanding Global Depository Receipts (GDRs). Each GDR
represents 1 underlying equity share.
Rights, preferences and restrictions attached to Preference shares
The company has a single class of preference shares. They are
redeemable at par in four equal quarterly installments commencing from
15 December 2017. The shares carry a right to receive 10% dividend
every year till redempton. In the event of liquidation, the preference
shareholders are eligible to receive the outstanding amount after
distribution of all other preferential amounts, in proportion to their
shareholding.
g Equity shares alloted as fully paid-up pursuant to contracts without
payment being received in cash during the period of five years
immediate preceding the date of the Balance Sheet are as under:
1,50,35,712 equity shares to the shareholders of the erstwhile Southern
Iron and Steel Company Limited pursuant to a scheme of Amalgamation.
Details of Security
(i) The 11% NCDs aggregating to Rs. 1,000 crores are secured / to be
secured by way of first pari passu charge on fixed assets related to
2.8 mtpa expansion project located at Upstream division and a fl at
atVasind situated in the state of Maharashtra.
(ii) The 10.25% NCDs aggregating to Rs. 500 crores are secured by way
of mortgage in respect of all immovable and movable properties both
present and future located at Tarapur Works and Vasind Works in the
State of Maharashtra.
(iii) The 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 Toranagallu village in the
State of Karnataka.
(iv) The 10.10 % NCDs aggregating to Rs. 1,000 crores are secured by:
- pari passu first charge by way of legal mortgage on all immovable
properties both present and future located at Tarapur Works and Vasind
Works in the State of Maharashtra.
- 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.
(v) The 11.82% NCDs aggregating to Rs. 23.04 crores are secured by:
- First charge on land situated in the State of Gujarat.
- Second charge on Fixed Assets situated at Salem Works in the state of
Tamilnadu.
(vi) The 11.82 % NCDs aggregating to Rs. 33.15 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
Companys immovable properties relating to the 100MW and 130MW Power
Plants at Toranagallu village in the State of Karnataka.
(vii) Rupee Term Loans from Banks aggregating to Rs. 18.75 crores,
Rupee Term Loan from financial Institution aggregating to Rs. 1.13
crores and Foreign Currency Term Loans from Banks aggregating to Rs.
51.16 crores are secured by:
- pari passu first charge by way of equitable mortgage in respect of
immovable properties of Upstream Division situated at Vaddu, Kurekuppe
and Toranagallu villages in the State of Karnataka and
- pari passu first charge by way of hypothecation of movable
properties of Upstream Division both present and future excluding
inventories and book debts.
(viii) Rupee Term Loans from Banks/Foreign Currency Term Loan from Bank
are secured / to be secured as under :
- Rupee Term Loans aggregating to Rs. 13.42 crores and Foreign Currency
Term Loans aggregating to Rs. 145.43 crores are secured by a first
charge supported by an equitable/ registered Mortgage of movable and
immovable properties and assets situated at Salem Works in the state of
Tamilnadu and a second pari passu charge on the current assets at Salem
Works.
- Rupee Term Loans aggregating to Rs. 176 crores and Foreign Currency
Term Loans aggregating to Rs. 290.95 crores by exclusive first charge
by way of equitable mortgage in respect of all movable and immovable
properties of Cold Rolling Mill Complex at Toranagallu village in the
State of Karnataka.
- Rupee Term Loans aggregating to Rs. 28.05 crores and Foreign Currency
Term Loans aggregating to Rs. 258 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
Toranagallu village, in the State of Karnataka.
- Foreign Currency Term Loans aggregating to Rs. 805.71 crores by
exclusive first charge by way of equitable mortgage in respect of all
movable and immovable properties of Hot Strips Mill at Toranagallu
village in the State of Karnataka.
- Rupee Term Loans aggregating to Rs. 4,573.12 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 Toranagallu village in the State of Karnataka.
- Rupee Term Loan aggregating to Rs. 40 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 Toranagallu village in the State of
Karnataka.
- Rupee Term Loan aggregating to Rs. 615 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 Toranagallu village in the State of Karnataka.
(ix) Rupee Term Loan from Financial Institution aggregating to Rs.
36.48 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) The FCCBs are convertible into Equity Shares at the option of the
bondholders at any time on or after 7 August 2007 and prior to the
close of business on 21 June, 2012 at Rs. 40.28 = 1 USD$.
(ii) The 11% Secured NCDs of Rs. 10 lacs each aggregating Rs. 1,000
crores are redeemable as under with call and put option excersiable on
16.03.17 and 16.03.19 :
- Rs. 330 crores each from 16.3.2021
- Rs. 330 crores each from 16.3.2022
- Rs. 340 crores each from 16.3.2023
(iii) The 10.25% Secured NCDs of Rs. 10 lacs each aggregating Rs. 500
crores are redeemable in 3 equal annual installments of Rs. 166.67
crores each from 17.02.2016 to 17.02.2018.
(iv) The 10.60% Secured NCDs of Rs. 10 lacs each aggregating Rs. 350
crores are redeemable in two tranches as under :
- 8 half yearly installments of Rs. 21.875 crores each from 02.01.2016
to 02.07.2019.
- 8 half yearly installments of Rs. 21.875 crores each from 02.08.2016
to 02.02.2020.
(v) The 10.10% Secured NCDs of Rs. 10 lacs each aggregating Rs. 1,000
crores are redeemable in two tranches as under :
- 16 quarterly installments of Rs. 31.25 crores each from 04.02.2014 to
04.11.2017.
- 16 quarterly installments of Rs. 31.25 crores each from 15.06.2014 to
15.03.2018.
(vi) The 11.82% Secured NCDs of Rs. 10 lacs each aggregating Rs. 23.04
crores are redeemable in 11 quarterly installments of Rs. 2.09 crores
each from 01.07.2012 to 01.01.2015.
(vii) The 11.82% Secured NCDs of Rs. 10 lacs each aggregating Rs. 33.15
crores are redeemable in 17 quarterly installments of Rs. 1.95 crores
each from 15.04.2012 to 15.04.2016.
2. Terms of Repayment of Secured Term Loans
(A) Rupee Term Loan from Banks of :
(i) Rs. 18.75 crores is repayable in 4 monthly installments of Rs. 4.69
crores each from 28.4.2012 to 28.7.2012.
(ii) Rs. 176 crores is repayable in 11 monthly installment of Rs.16
crores each from 1.5.2012 to 1.3.2013.
(iii) Rs. 28.04 crores is repayable in 4 quarterly installment of Rs.
0.83 crores each from 30.4.2012 to 31.1.2013 and of 12 quarterly
installments of Rs. 2.06 crores each from 30.4.2013 to 31.1.2016.
(iv) Rs. 8.84 crores is repayable in 7 quarterly installment of Rs.
1.09 crores each from 30.6.2012 to 31.12.2013 and 1 quarterly
installment of Rs. 1.17 crores on 31.3.2014.
(v) Rs. 4.58 crores is repayable in 7 quarterly installments of Rs.
0.57 crores each from 30.6.2012 to 31.12.2013 and 1 quarterly
installment of Rs. 0.59 crores on 31.3.2014.
(vi) Rs. 2,935.74 crores is repayable as under :
- 4 quarterly installments of Rs.18.82 crores from
30.6.2012 - 31.3.2013.
- 8 quarterly installments of Rs.75.28 crores from
30.6.2013 - 31.3.2015.
- 8 quarterly installments of Rs.188.19 crores from 30.6.2015 -
31.3.2017.
- 2 quarterly installments of Rs.250.91 crores from 30.6.2017 -
30.9.2017.
- 1 quarterly installments of Rs.250.94 crores on 31.12.2017.
(vii) Rs. 1,250 crores is repayable as under :
- 2 quarterly installments of Rs. 15.63 crores each from 31.12.2012 -
31.3.2013.
- 4 quarterly installments of Rs. 7.81 crores each from 30.6.2013 -
31.3.2014.
- 8 quarterly installments of Rs. 31.25 crores each from 30.6.2014 -
31.3.2016.
- 12 quarterly installments of Rs. 78.13 crores each from 30.6.2016 -
31.3.2019.
(viii) Rs. 387.38 crores is repayable as under :
- 3 quarterly installments of Rs. 2.5 crores each from 1.7.2012 -
1.1.2013.
- 8 quarterly installments of Rs. 10 crores each from 1.4.2013 -
1.1.2015.
- 8 quarterly installments of Rs. 25 crores each from 1.4.2015 -
1.1.2017.
- 3 quarterly installments of Rs.33.32 crores each from 1.4.2017 -
1.10.2017.
(ix) Rs. 615 crores is repayable in 19 quarterly installments of Rs.
32.14 crores each from 1.1.2013 to 1.7.2017 and 1 quarterly installment
of Rs. 4.29 crores on 1.10.2017.
(x) Rs. 40 crores is repayable in 1 quarterly installment of Rs. 27.5
crores each on 1.10.2012 and 1 quarterly installment of Rs. 12.5 crores
on 1.1.2013.
(C) Rupee Term Loan from Financial Institutions of :
(i) Rs. 1.13 crores is repayable in 5 monthly installments of Rs. 0.22
crores each from 28.4.2012 to 28.8.2012.
(ii) Rs. 14.86 crores is repayable in 39 monthly installments of Rs.
0.38 crores each from 11.4.2012 to 11.6.2015.
(iii) Rs. 7.34 crores is repayable in 39 monthly installments of Rs.
0.19 crores each from 20.4.2012 to 20.6.2015.
(iv) Rs. 7.60 crores is repayable in 39 monthly installments of Rs.
0.195 crores each from 2.5.2012 to 02.7.2015.
(v) Rs. 6.68 crores is repayable in 39 monthly installments of Rs. 0.17
crores each from 15.4.2012 to 15.7.2015.
3 Terms of Repayment of Unsecured Term Loans
(A) Rupee Term Loan from Banks of Rs.900 crores is repayable in 6
monthly installments of Rs. 150 crores each from 1.8.2012 to 1.1.2013.
(B) Foreign Currency Term Loan from Banks of :
(i) Rs. 1,432.38 crores is repayable in 5 half yearly installments of
Rs. 286.48 crores each from 28.8.2015 to 27.8.2017.
(ii) Rs. 808.37 crores is repayable in 19 half yearly installments of
Rs. 42.55 crores each from 30.5.2012 to 31.3.2021.
(iii) Rs. 81.67 crores is repayable in 20 half yearly installments of
Rs. 4.08 crores each reckoned 6 months from the date of last drawdown.
(iv) Rs. 51.16 crores is repayable on 28.6.2012.
(v) Rs. 51.16 crores is repayable on 30.9.2012.
4 Long Term Advance from a Customer of Rs. 356.39 crores is repayable
as under :
- 6 monthly installments of Rs.18.17 crores each from
30.4.2012 to 30.9.2012.
- 6 monthly installments of Rs.19.82 crores each from 31.10.2012 to
31.3.2013.
- 5 monthly installments of Rs.21.47 crores each from
30.4.2013 to 31.8.2013.
- 1 monthly installment of Rs.21.14 crores on 1.9.2013.
5 Deferred Sales tax of Rs. 111.65 crores is repayable in 101 varying
monthly installments starting from 30.4.2013 to 31.8.2021.
(Repayments stated above are rounded off to the nearest crore)
Working capital loans of Rs. 162.89 crores and Foreign currency loan of
Rs. 153.46 crores are secured by :
- pari passu first charge by way of hypothecation of Stocks of Raw
Materials, Finished Goods, Work-in-Process, Consumable Stores and
Spares and Book Debts / Receivables of the Company, both present and
future.
- pari passu second charge on movable properties and immovable
properties forming part of the Fixed/Blocked assets of the company,
both present and future except such properties as may be specifically
excluded.
2. Contingent Liabilities not provided for in respect of
a) Bills Discounted Rs. 3,117.13 crores (Previous year Rs. 2,621.86
crores).
b) Guarantees provided to banks on behalf of subsidiaries Rs. 1,096.27
crores (Previous year Rs. 1,620.51 crores).
c) Disputed claims/levies (excluding interest, if any), in respect of:
(i) Excise Duty Rs. 200.27 crores (Previous year Rs. 179.70 crores);
(ii) Custom Duty Rs. 477.44 crores (Previous year Rs. 242.87 crores);
(iii) Income Tax Rs. 1.47 crores (Previous year Rs. 12.47 crores);
(iv) Sales Tax / Special Entry tax Rs. 170.30 crores (Previous year Rs.
72.36 crores);
(v) Service Tax Rs. 70.08 crores (Previous year Rs. 45.18 crores);
(vi) Miscellaneous Rs. 0.05 crores (Previous year Rs. 0.05 crores);
(vii) Levies by local authorities Rs. 3.04 crores (Previous year Rs.
3.04 crores); and
(viii) Claims by suppliers and other parties (including for Forest
Development Tax) Rs. 509 crores (Previous year Rs. 207.41 crores).
3. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 3,729.12 crores
(Previous year Rs. 3,865.45 crores).
4. Other Commitments :
(a) The Company has issued an undertaking to associate bankers for non
disposal of its investment of Rs. 2,357.11 crores (Previous year Rs.
Nil) in an associate till that entity repays its debts.
(b) The Company from time to time provides need based support to
subsidiaries and a joint venture entity towards capital and other
requirements.
(c) 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. Such
export obligations at year end aggregate to Rs. 16,912.59 crores
(Previous year Rs. 17,853.27 crores) by the company within the
stipulated period.
5. In respect of the Companys long term, strategic investment in one
of its subsidiaries, JSW Steel (USA) Inc., the Company has reviewed and
assessed its business plans and expected future cash flows. The
company has also considered an independent valuation of a significant
portion of the underlying tangible assets. Whilst the subsidiary may
have a longer gestation period than originally envisaged, the Company
has concluded that the decline is temporary and no provision against
the carrying amounts of the investment and loans of Rs. 1,948.41 crores
is presently necessary.
In view of estimation uncertainties, assumptions will be monitored on a
periodic basis by management and adjustments will be made in the event
of an other than temporary adverse effect on the recoverable amounts of
the assets.
6. Due to the unusual depreciation in the value of the rupee against
US dollar, the net foreign exchange loss for the year has been
considered by the Company as exceptional in nature.
7. Employee Share based Payment Plans:
b) Expenses arising from employees share- based payment plans-
Rs.10.68 crores (Previous year Rs. 8.12 crores).
8. Derivatives:
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to
certain firm commitments and highly probable forecast transactions.
The use of foreign currency forward contracts is governed by the
Companys strategy approved by the Board of Directors, which provide
principles on the use of such forward contracts consistent with the
Companys Risk Management Policy. The Forward Exchange Contracts
entered into by the Company and outstanding are as under:
b) The Company also uses derivative contracts other than forward
contracts to hedge the interest rate and currency risk on capital
account. Such transactions are governed by the strategy approved by the
Board of Directors, which provide principles on the use of these
instruments, consistent with the Companys Risk Management Policy. The
Company does not use these contracts for speculative purposes.
9. Research and Development Activities:
Disclosure as required under Section 35(2AB) of the Income Tax Act,
1961.
b) The manufacturing and other expenses and depreciation include Rs.
9.28 crores (previous year Rs. 3.85 crores) and Rs. 3.52 crores
(previous year Rs. 1.38 crores), respectively, in respect of Research
and Development activities undertaken during the year.
10. Employee Benefits:
a) Defined Contribution Plan:
Companys contribution to Provident Fund Rs. 24 crores. (Previous Year
Rs. 17.05 crores)
The Company expects to contribute Rs. 23.66 crores (previous year Rs.
12.22 crores) to its Gratuity Plan for the next year.
In assessing the Companys Post Retirement Liabilities, the Company
monitors mortality assumptions and uses up-to-date mortality tables,
the base being the LIC 1994-96 ultimate tables.
Expected return on plan assets is based on expectation of the average
long term rate of return expected on investments of the fund during the
estimated term of the obligations.
The estimates of future salary increase, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(ii) Provident Fund:
The company makes monthly contributions to Provident Fund managed by
Trust for qualifying employees. Under the scheme, the company is
required to contribute a specified percentage of the payroll costs to
fund the benefits.
In keeping with the Guidance on Implementing Accounting Standard (AS)
15 (Revised) on Employee Benefits notified by the Companies
(Accounting Standards) Rules, 2006, employer established provident fund
trusts are treated as Defined Benefit Plans, since the Company is
obliged to meet interest shortfall, if any, with respect to covered
employees. According to the actuarial Valuation, the Defined Benefit
Obligation of Interest rate Guarantee on exempted Provident Fund in
respect of employees of the company as at 31st March, 2012 works out to
Rs. Nil and hence no provision is required to be provided for in the
books of accounts towards the guarantee given for notified interest
rates.
11. Segment Reporting:
The Company is primarily engaged in the business of manufacture and
sale of Iron and Steel Products. The Company has identified two
primary business segments, namely Steel and Power (used mainly for
captive consumption), which in the context of Accounting Standard 17 on
"Segment Reporting" constitute reportable segments.
Notes :
1. Inter Segment transfer from the power segment is measured at the
rate at which power is purchased / sold from / to the respective
Electricity Board.
2. Inter Segment transfer from the steel segment is measured on the
basis of fuel cost.
12. Related Parties disclosure as per Accounting Standard (AS)-18: A
List of Related Parties
Parties with whom the Company has entered into transactions during the
period where control exists :
1 Subsidiaries
JSW Steel (Netherlands) B.V.
JSW Steel (UK) Limited
Argent Independent Steel (Holdings) Limited
JSW Steel Service Centre (UK) Limited
JSW Steel Holding (USA) Inc.
JSW Steel (USA) Inc.
Periama Holdings, LLC
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 Euroush Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW ADMS Carvo Lda
JSW Steel Processing Centres Limited
JSW Bengal Steel Limited
JSW Natural Resources India Limited
Barbil Beneficiation Company Limited
JSW Jharkhand Steel Limited
JSW Building Systems Limited
JSW Steel East Africa Limited (w.e.f 13.09.2011)
Amba River Coke Limited (w.e.f 4.10.2011)
JSW Energy (Bengal) Limited (w.e.f 5.03.2012)
2 Associates
Jindal Praxair Oxygen Company Private Limited
JSW Ispat Steel Limited
JSW Energy (Bengal) Limited (upto 4.03.2012)
3 Joint Ventures
Vijayanagar Minerals Private Limited
Rohne Coal Company Private Limited
JSW Severfield Structures limited
Gourangdih Coal Limited
Toshiba JSW Turbine and Generator Private Limited
MJSJ Coal Limited
GEO Steel LLC
JSW Structural Metal Decking Limited
JSW MI Steel Service Center Private Limited (w.e.f 19.09.2011)
4 Key Management Personnel (KMP)
Mr. Sajjan Jindal Mr. Seshagiri Rao M V S Dr. Vinod Nowal Mr. Jayant
Acharya
5 Relative of Key Managerial Personnel
Mrs. Savitri Devi Jindal
6 Enterprises over which Key Management Personnel and Relatives of such
personnel exercise significant influence.
JSW Energy Limited
JSL Limited
JSW Realty & Infrastructure Private Limited
Jindal Saw Limited
Jindal Steel & Power Limited
Jindal South West Holdings Limited
JSOFT Solutions Limited
Jindal Industries Limited
JSW Cement Limited
JSW Jaigarh Port Limited
JSW Investments Private Limited
Reynold Traders Private Limited
Raj West Power Limited
JSW Power Trading Company Limited
JSW Aluminium Limited
O P Jindal Foundation
JSW Infrastructure Limited
South West Port Limited
JSW Techno Projects Management Limited
South West Mining Limited
JSL Architecture Limited
JSW Projects Limited
Sapphire Technologies Limited
13. Operating Lease
a) As Lessor:
i. The Company has entered into lease arrangements, for renting :
- 2,279 houses (admeasuring approximately 1,410,997 square feet) at the
rate of Rs. 100/- per house per annum, for a period of 180 months.
- 648 houses (admeasuring approximately 326,703 square feet) at the
rate of Rs. 24/- per square feet per annum, for a period of 36 to 60
months.
- 1 house at the rate of Rs. 1.2 lacs per annum, for a period of 11
months.
- 9 houses (admeasuring approximately 9,027 square feet) at the rate of
Rs. 40/- per square feet per month per house, for a period of 60
months.
- 6 houses (approximately 5,529 square feet) at the rate of Rs. 125 per
square feet for a period of 12 months.
- Office premises (part) admeasuring approximately 4,760 square feet
at the rate of Rs. 110 per square feet for a period of 11 months.
- Office premises (part) admeasuring approximately 15,392 square feet
at the rate of Rs. 175 per square feet for a period of 11 months.
The agreements are renewable at the option of the lessee after the end
of the lease term.
ii. Disclosure in respect of assets (building) given on operating lease
:
The agreements are executed for a period of 11 to 60 months with a
renewable clause and also provide for termination at will by either
party giving a prior notice period of 1 to 3 months.
12. The Company has the following Joint venture interest in India as
at 31st March 2012:
Interest as Venturer
Vijayanagar Minerals Private Limited: Percentage of holding Ã
40% (Previous year 40 %)
Rohne Coal Company Private Limited: Percentage of holding Ã
49% (Previous year 49 %)
JSW Severfield Structures Limited : Percentage of holding Ã
50 % (Previous Year 50%)
Gourangdih Coal Limited : Percentage of holding à 50 %
(Previous Year 50 %)
JSW MI Steel Service Center Private Limited à 50% (Previous
Year Nil )
Interest as Investor
MJSJ Coal Limited: Percentage of holding à 11% (Previous year
11 %)
Toshiba JSW Turbine and Generator Private Limited à 5%
(Previous year 5 %)
13. Interest includes Rs. 2.5 crores (previous year Rs. 3.25 crores)
on account of shortfall in payment of Direct Taxes.
14. Comparative fi nancial information (i.e. the amounts and other
disclosure for the preceding year) presented above, is included as an
integral part of the current years fi nancial statements, and is to be
read in relation to the amounts and other disclosures relating to the
current year. Figures of the previous year are regrouped and reclassifi
ed wherever necessary to correspond to fi gures of the current year.
Mar 31, 2010
1. Contingent Liabilities not provided for in respect of :
a) Bills Discounted Rs. 1,275.88 crores (Previous year Rs. 977.32
crores).
b) Guarantees provided on behalf of subsidiaries (including step down
subsidiaries) and others Rs. 1,818.24 crores (Previous year Rs.
2,135.74 crores).
c) Disputed statutory claims/levies including those pending in courts
(excluding interest leviable, if any), in respect of:
(i) Excise Duty Rs. 96.67 crores (Previous year Rs. 90.01 crores);
(ii) Customs Duty Rs. 108.07 crores (Previous year Rs. 223.85 crores);
(iii) Income Tax Rs. 12.47 crores (Previous year Rs. 36.28 crores);
(iv) Sales Tax/Special Entry tax Rs. 0.35 crores (Previous year Rs.
0.35 crores);
(v) Service Tax Rs. 24.46 crores (Previous year Rs.31.27 crores);
(vi) Miscellaneous Rs. 0.05 crores (Previous year Rs. 0.24 crores); and
(vii) Levies by local authorities Rs. 3.04 crores (Previous year Rs.
15.28 crores).
d) Claims by Suppliers and other third parties not acknowledged as
debts Rs. 6.31 crores (Previous year Rs. 131.76 crores).
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 3,644.94 crores
(Previous year Rs. 4,660.30 crores).
3. Unlike the previous year which saw an unprecedented depreciation of
the rupee against major foreign currencies, the movement of the rupee
during the year is much less volatile. Accordingly, exchange
fluctuations for the year have not been considered as an Exceptional
item.
b) Expenses arising from employees share- based payment plans - Rs.
4.03 crores (Previous year Rs. 4.65 crores).
4. Derivatives:
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to certain
firm commitments and highly probable forecast transactions. The use of
foreign currency forward contracts is governed by the Companys
strategy approved by the Board of Directors, which provide principles
on the use of such forward contracts consistent with the Companys Risk
Management Policy.
b) The Company also uses derivative contracts other than forward
contracts to hedge the interest rate and currency risk on capital
account. Such transactions are governed by the strategy approved by the
Board of Directors, which provide principles on the use of these
instruments, consistent with the Companys Risk Management Policy. The
Company does not use these contracts for speculative purposes.
5. Employee Benefits:
a) Defined Contribution Plan:
Companys contribution to Provident Fund Rs. 12.89 crores. (Previous
year Rs. 12.04 crores).
6. Segment Reporting:
The Company is primarily engaged in the business of manufacture and
sale of Iron and Steel Products. The Company has identified two primary
business segments, namely Steel and Power (used mainly for captive
consumption), which in the context of Accounting Standard 17 on
"Segment Reporting" constitute reportable segments.
7. Related parties disclosure as per Accounting Standard (AS) -18: A.
List of Related Parties
Parties with whom the Company has entered into transactions during the
year/where control exists :
1. Subsidiaries
JSW Steel (UK) Limited
JSW Steel Service Centre (UK) Limited
Argent Independent Steel (Holdings) Limited
JSW Natural Resources Limited
JSW Natural Resources Mozambique Limitada
JSW Steel (Netherlands) B.V.
JSW Steel Holding (USA) Inc
JSW Steel (USA) Inc
JSW Panama Holdings Corporation
Inversiones Eurosh Limitada
Santa Fe Mining
Santa Fe Puerto S.A.
JSW Steel Processing Centres Limited
JSW Jharkhand Steel Limited
JSW Bengal Steel Limited
Barbil Benefication Company Limited
JSW Building Systems Limited
2. Associates
Jindal Praxair Oxygen Company Private Limited
3. Joint Ventures
Vijayanagar Minerals Private Limited
Rohne Coal Company Private Limited
JSW Severfield Structures limited
Gourangdih Coal Limited
Toshiba JSW Turbine and Generator Private Limited
MJSJ Coal Limited
4. Key Management Personnel
Mrs. Savitri Devi Jindal
Mr. Sajjan Jindal
Mr. Seshagiri Rao M. V. S.
Dr. Vinod Nowal
Mr. Y. Siva Sagar Rao (Upto 15.05.2009)
Mr. Jayant Acharya (w.e.f. 7.05.2009)
5. Enterprises over which Key Management Personnel and Relatives of
such personnel exercise significant influence.
JSW Energy Limited
JSL Limited
JSW Realty & Infrastructure Private Limited
Jindal Saw Limited
Jindal Steel & Power Limited
Jindal South West Holdings Limited
Jsoft Solutions Limited
Jindal Industries Limited
JSW Energy (Ratnagiri) Limited
JSW Cement Limited
JSW Jaigarh Port Limited
Nalwa Sons & Investments Limited
JSW Investments Private Limited
Reynold Traders Private Limited
Raj West Power Limited
JSW Power Trading Company Limited
JSW Aluminium Limited
O P Jindal Foundation
JSW Infrastructure & Logistic Limited
South West Port Limited
8. Operating Lease:
a) As Lessor:
i. The Company has entered into lease arrangements, for renting:
2,279 houses (admeasuring approximately 1,410,997 square feet) at the
rate of Rs 100/- per house per annum, for a period of 180 months. 672
houses (admeasuring approximately 551,051 square feet) at the rate of
Rs. 24/- per square feet per annum, for a period of 36 to 60 months. 1
house at the rate of Rs. 0.60 lacs per annum, for a period of 11
months.
9. The Company has the following Joint venture interest in India as
at 31 March, 2010:
Interest as Venturer
Vijayanagar Minerals Private Limited: Percentage of holding - 40%
(Previous year 40%)
Rohne Coal Company Private Limited: Percentage Of holding - 49%
(Previous year 49%)
JSW Severfield Structures Limited: Percentage of holding - 50%
(Previous Year Nil)
Gaurangdih Coal Limited: Percentage of holding - 50% (Previous Year
Nil)
Interest as Investor
MJSJ Coal Limited: Percentage of holding -11% (Previous year 11%)
Toshiba JSW Turbine and Generator Private Limited - 5% (Previous year
Nil)
10. Previous years figures have been regrouped, wherever necessary,
to conform to current years presentation.
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JSW Steel Ltd. குறித்த கூடுதல் தகவல்களை
-
JSW Steel Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
JSW Steel Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
JSW Steel Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
JSW Steel Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
JSW Steel Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
JSW Steel Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
JSW Steel Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
