Mar 31, 2015
I) Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost convention, on accrual basis of accounting, in accordance with the generally accepted accounting principles in India as applicable, accounting standards notified under section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014 and the other relevant provisions of the Companies Act, 2013.
ii) Use of Estimates
The preparation of financial statements requires use of estimates and assumptions to be made that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.
iii) A) Fixed Assets & Depreciation
a) Fixed Assets
Fixed Assets are stated at their cost of acquisition / construction less accumulated depreciation and impairment losses. Cost comprises of all cost, net of income (if any), incurred to bring the assets to their present location and working condition and other related overheads till such assets are ready for intended use. Assets vested under slump sale in the company pursuant to the Composite Scheme of Arrangement are stated at their fair market values based on the valuation report of technical value.
Depreciation on Fixed Assets is provided on Straight Line Method over their useful lives and in the manner specified in Schedule II of the Companies Act, 2013. However, in respect of assets vested under slump sale in the company pursuant to the Composite Scheme of Arrangement, depreciation is provided as per their useful lives assessed on the basis of technical evaluation by an expert value. The details of estimated life are as under:
Building ranging from 12 to 50 years
Plant & Machinery ranging from 3 to 45 years
Electric Installation ranging from 11 to 24 years
c) Assets not owned by the Company are amortized over a period of ten years.
d) Lease Hold Assets are amortized over the period of lease.
e) Classification of plant & machinery into continuous and non-continuous is made on the basis of technical assessment and depreciation is provided for accordingly.
B) Intangible Assets
Intangible Assets are stated at cost which includes any directly attributable expenditure on making the asset ready for its intended use. Intangible Assets are amortized over the expected duration of benefit or 10 years, whichever is lower.
Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.
iv) Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty exists to its realization or collection.
Revenue from sale of goods: is recognized on delivery of the products, when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred and no effective ownership is retained.
Revenue from other activities: is recognized based on the nature of activity, when consideration can be reasonably measured. Certain claims like those relating to Railways, Insurance, Electricity, Customs, and Excise are accounted for on acceptance/when there is a reasonable certainties.
v) Borrowing Costs
Borrowing costs attributable to the acquisition /construction of qualifying assets are capitalized as part of cost of such assets and other borrowing costs are recognized as expense in the period in which these are incurred.
vi) Foreign Currency Transactions
Foreign currency transactions are recorded at the rate of exchange prevailing on the date of the transactions. Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year end rate.
The difference in translation of Monetary assets and liabilities and realized gains and losses on foreign exchange transaction are recognized in statement of profit & loss except of loan/liability related with acquisition of depreciable fixed asset where the same is treated as cost of the asset.
Foreign currency gain/loss relating to translation of net investment in non-integral foreign operation is recognized in the foreign currency translation reserve.
Premium/Discount on forward foreign exchange contracts are pro-rated over the period of contract. vii) Investments
Long term investments are carried at cost. When there is a decline other than temporary in their value, the carrying amount is reduced on an individual investment basis and decline is charged to the statement of Profit & Loss. Appropriate adjustment is made in carrying value of investment in case of subsequent rise in value of investments.
Current Investments are carried at lower of cost or market value.
viii) Valuation of Inventories
Inventories are valued at the lower of cost and net realizable value except scrap which is valued at net realizable value. The cost is computed on Weighted Average basis. Finished goods and Work in Progress includes cost of conversion and other overheads incurred in bringing the inventories to their present location and condition.
ix) Employee Benefits
a) Short term Employee Benefits
Short term employee benefits are recognized during the year in which the services have been rendered and are measured at cost.
b) Defined Contribution Plans
The Provident Fund and Employee's State Insurance are defined contribution plans and the contributions to the same are expensed in the statement of Profit and Loss during the year in which the services have been rendered and are measured at cost.
c) Defined Benefit Plans
The Provident Fund (Funded), Leave Encashment and Gratuity are defined benefit plans. The Company has provided for the liability at year end based on actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses are recognized as and when incurred.
x) Miscellaneous Expenditure
a) Preliminary expenses are written off over the period of ten years.
b) Bonds issue expenses and premium on redemption are written off over the expected duration of benefit or life of the bonds, whichever is earlier.
c) Mines development expenses incurred for developing and preparing new mines are written off over the period of expected duration of benefits or ten years, whichever is earlier.
Provision is made for income-tax liability in accordance with the provisions of Income-Tax Act, 1961.
Deferred tax resulting from timing differences between book profits and tax profits is accounted for applying the tax rates and laws that have been enacted or substantively enacted till the Balance Sheet date.
Deferred Tax Assets arising from timing differences are recognized to the extent there is a reasonable/virtual certainty that the assets can be realized in future.
xii) Management of Metal Price Risk/ Derivatives
Risks associated with fluctuations in the price of the raw material metal are mitigated by hedging on futures/option market. The results of metal hedging contracts/transactions are recorded upon their settlement as part of raw material cost.
Risk of movements in the interest rates, foreign currencies are hedged by derivatives contract such as Interest Rate Swaps, Currency Swaps, Forward Contracts and Currency Options.
All outstanding derivative instruments at year end are marked-to-market by type of risk and the resultant losses, if any, are recognized in the statement of Profit & Loss /Pre-operative expenses, gains are ignored.
xiii) Government Grants
Government Grants are recognized when there is a reasonable assurance that the same will be received. Revenue grants are recognized in the Statement of Profit and Loss. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to Capital Reserve.
xiv) Earnings Per Share
The Company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard 20 "Earnings per Share". Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.
a) Finance Leases
Assets acquired under finance leases are recognized as an asset and a liability at the commencement of the lease at the lower of the fair value of the assets and the present value of minimum lease payments. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Assets given under finance leases are recognized as receivables at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment.
b) Operating Leases
Operating lease receipts and payments are recognized as income or expense in the statement of profit and loss on a straight-line basis over the lease term.
xvi) Contingent Liabilities
Contingent liabilities, if material, are disclosed by way of notes.
(b) (i) TERMS/RIGHTS ATTACHED TO EQUITY SHARES
The company has only one class of equity shares having a par value of Rs, 2/- per share. Each shareholder is eligible for one vote per equity share held [other than the shares represented by Regulation S Global Depositary Shares (the "GDSs") issued by the Company whose voting rights are subject to certain conditions and procedure as prescribed under the Regulation S Deposit Agreement]. The company declares and pays dividends in Indian rupees. The dividend proposed, if any, by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting and also has equal right in distribution of Profit/Surplus in proportions to the number of equity shares held by the shareholders.
As on 31 st March 2015,8,802,167 GDSs (8,802,167 GDSs) with 17,604,334 underlying equity shares (17,604,334 equity shares) were outstanding. Each GDS represents 2 underlying equity shares of the Company.
(ii) TERMS/RIGHTS ATTACHED TO CUMULATIVE COMPULSORY CONVERTIBLE PREFERENCE SHARES (CCCPS)
On 31st March, 2014, the Company has issued & allotted 15,810,440 number 0.10% Cumulative Compulsory Convertible " Preference Shares (CCCPS) of Rs, 2/- each. The holder of the CCCPS shall have an option to apply for and be allotted one Equity Share of face value of Rs, 21- of the Company per CCCPS at any time after the date of allotment but on or before the expiry of 18 months from the date of allotment. The unconverted CCCPS shall compulsorily get converted into equity shares at the end of 18 months from the date of allotment. These CCCPS are subject to the provisions of Memorandum and Articles of Association of the Company. The Equity Shares arising on conversion of CCCPS shall rank pari passu inter se with the then existing Equity Shares of the Company in all respect, including dividend. The holder of CCCPS shall have a right to vote only on resolution placed before the Company which directly affect the rights attached to his preference share.
(a) Working Capital Facilities are secured by way of hypothecation and/or pledge of current assets namely finished goods, raw material, work in progress , consumable stores and spares, book debts, bill receivable and by way of second charge in respect of other moveable and immoveable properties of the Company. Working Capital Facility is repayable on demand.
(b) Buyer Credit Facility are secured by way of hypothecation and/or pledge of current assets namely finished goods, raw material, work in progress, consumable, stores and spares, book debts, bill receivable and by way of second charge in respect of other moveable and immoveable properties of the Company.
@ Undertaking for non disposing of Investment by way of Letter of Comfort given to banks against credit facilities/financial assistance availed by subsidiaries.
Lodged with Government Authorities as Security.
# transferred from Jindal Stainless Limited pursuant to the Scheme (note no 26).