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Notes to Accounts of Jindal Stainless Ltd.

Mar 31, 2016

1. Composite Scheme of Arrangement

1. A Composite Scheme of Arrangement (here in after referred to as ‘Scheme’) amongst Jindal Stainless Limited (the Company/Transferor Company) and its three wholly owned subsidiaries namely Jindal Stainless (Hisar) limited (JSHL), Jindal United Steel Limited (JUSL) and Jindal Coke Limited (JCL) under the provision of Sec 391-394 read with Sec 100-103 of the Companies Act, 1956 and other relevant provision of Companies Act, 1956 and / or Companies Act, 2013 has been sanctioned by the Hon’ble High Court of Punjab & Haryana, Chandigarh vide its Order dated 21st September, 2015, as amended vide order dated 12th October, 2015.

Section I and Section II of the Scheme became effective on 1st November, 2015, operative from the appointed date i.e. close of business hours before midnight of March 31, 2014.

Section III of the scheme comprising Transfer of the Business undertaking 2 (as defined in the scheme) of the Company comprising, inter-alia, of the Hot Strip Plant of the Company located at Odisha and vesting of the same in Jindal United Steel Limited (JUSL) on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015 and Section IV of the Scheme comprising Transfer of the Business Undertaking 3 (as defined in the Scheme) of the Company comprising, inter-alia, of the Coke Oven Plant of the Company Located at Odisha and vesting of the same with Jindal Coke Limited (JCL) on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. Section III and section IV of the Scheme has become effective on 24th September, 2016 [i.e. on receipt of approvals from the Orissa Industrial Infrastructure Development Corporation (OIIDCO) for the transfer/grant of the right to use in the land on which Hot Strip (HSM Plant) & Coke Oven Plants are located to JUSL & JCL respectively as specified in the Scheme].

2. Pursuant to the Section I and Section II of the Scheme becoming effective:

a) Against amount ofRs, 36,618.67 Lacs, the company is required to issue and allot equity shares to JSHL at a price to be determined in accordance with chapter VII of SEBI (ICDR) regulations 2009, with the record date jointly to be decided by the board of directors of the Company and JSHL being considered as relevant date as specified in the Scheme. The board of the Company and JSHL have, in their respective meetings held on 06th November, 2015, fixed 21st November, 2015 as the record date. However, since the price worked out for issue of equity shares by the Company to JSHL, in terms of the provisions of chapter VII SEBI (ICDR) was not reflective of the actual price of the equity shares of the Company on Ex -JSHL basis, therefore the allotment of equity shares based on the aforesaid record date has not been pursued. Hence, pending allotment by the Company of the aforesaid equity shares to JSHL as on 31st March, 2016, the same has been shown as “Share Capital Suspense Account”. Subsequent to the Balance Sheet date the company has allotted 16,82,84,309 nos. fully paid up equity shares ofRs, 2/ each @ Rs, 21.76 per share (including premium ofRs, 19.76 per share) on 3rd July’2016.

b) Out of'' 2,60,000.00 Lacs payable by JSHL,Rs, 1,18,493.00 Lacs has been received upto 31 st March, 2016 and also balance amount ofRs, 1,41,507.00 Lacs has been received subsequent to balance sheet date.

c) In terms of the Scheme, all the business and activities of Demerged Undertakings and Business Undertaking 1 carried on by the Company on and after the appointed date, as stated above, are deemed to have been carried on behalf of JSHL. Accordingly, necessary effects had been given in the previous year accounts and in these accounts on the Scheme becoming effective (read with note no. 5 below).

3. Pursuant to the Section III and Section IV of the Scheme becoming effective:

a) Business undertaking 2 & Business undertaking 3 have been transferred to and vested in JUSL & JCL respectively with effect from the Appointed Date i.e. close of business hours before midnight of March 31, 2015 and the same has been given effect to in these accounts.

b) (i) Business Undertaking 2 has been transferred at a lump sum consideration ofRs, 2,41,267.33 Lacs; out of this Rs, 2,15,000.00 Lacs shall be paid by JUSL and against the balance amount ofRs, 26,267.33 Lacs, the JUSL is to issue & allot to the Company 17,50,00,000 nos. 0.01% non-cumulative compulsorily convertible preference shares having face value ofRs, 10 each and 8,76,73,311 nos. 10% non-cumulative non-convertible redeemable preference shares having face value ofRs, 10 each as specified in the Scheme; AND

(ii) Business undertaking 3 has been transferred at a lump sum consideration ofRs, 49,264.71 Lacs; out of this Rs, 37,500.00 Lacs shall be paid by JCL and against the balance amount ofRs, 11,764.71 Lacs, the JCL is to issue & allot to the Company 2,60,00,000 nos. 0.01% non-cumulative compulsorily convertible preference shares having face value of Rs, 10 each and 9,16,47,073 nos. 10% non-cumulative non-convertible redeemable preference shares having face value ofRs, 10 each as specified in the Scheme. Pending allotment as stated above the same have been shown as “Investment- pending Allotment”

c) On transfer of Business Undertaking 2 & Business Undertaking 3, the differential between the book values of assets & liabilities transferred and the lump sum consideration received as stated above amounting to Rs, 36,259.75 Lacs has been credited in the Statement of Profit & Loss and included under Exceptional Item. (Note no. 30).

d) In terms of the Scheme, all the business and activities of Business Undertaking 2 & Business Undertaking 3 carried on by the company on and after the appointed date, as stated above, are deemed to have been carried for and on behalf of JUSL & JCL respectively. Accordingly, necessary effects have been given in these accounts on the Scheme becoming effective.

4. The necessary steps and formalities in respect of transfer of the properties, licenses, approvals and investments in favor of JSHL, JUSL & JCL and modification of charges etc. are under implementation.

5. While according its approval for transfer/right to use of the land in the name of JUSL & JCL Government of Odisha, Department of Steel & Mines vide letter dated 16th August 2016, had put a condition that Section I & II of the Scheme will not be carried out in so far as the mining lease of the Company is concerned; accordingly transfer of the Mining Rights to Demerged Undertakings (as referred in the Scheme) (Demerged undertaking transferred to JSHL) is not been given effect, consequently :- (i) all mining activities in relation to the Mining Rights continue to be carried out by the company (JSL); and (ii) all assets (excluding fixed assets) and liabilities (including contingent liabilities) in relation to the Mining Rights continue to be recorded in the books of JSL; and (iii) all revenue and net profit: post 1st November 2015 on section I & II of the scheme becoming effective are recorded in the books of the company.

6. Post Section III of the Scheme becoming effective, the Company has entered into an agreement for Trolling of slabs got done from JUSL (Business Undertaking 2) effective from 1st April 2015, accordingly impact of the same amounting to Rs, 35,262.50 Lacs has been given under manufacturing expenses in these accounts.

7. (A) Pursuant to the Scheme the effects on the financial statements of operations carried out by the company for on behalf of JUSL & JCL

post the said appointed date have been given in these accounts from the effective date (for the close of business hours before midnight of 31st March, 2015) are as summarized below :

(B ) As stated in note no. 1 above, the Section III and Section IV of the Scheme became effective on 24th September 2016, accordingly interest on amount receivable will be accounted for.

8. The financial statements of the Company for the year ended 31st March, 2016 were earlier approved by the Board of Directors at their meeting held on 28th May, 2016 on which the Statutory Auditors of the Company had issued their report dated 28th May, 2016. These financial statements have been reopened and revised to give effect to the Scheme as stated in note no. 1 & 3 herein above.

9. Current year’s figures are not comparable with those of the previous year for the reasons as stated in note no. 1 & 3 herein above.

10. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs, 1,378.06 Lacs (Rs, 3,177.51 Lacs).

11.. Exceptional items includes

i) Gain/ (Loss) (net) of (Rs, 4,082.46) Lacs (Rs, 1,041.71 Lacs) on translation/settlement of foreign currency monetary items (including borrowing), gain / (loss) of (Rs, 647.31 Lacs) {(Rs, 57.22) Lacs} upon marked to market of derivatives contracts, gain/ (loss) of Rs, 1,560.46 Lacs (Rs, 1,955.70 Lacs) on forward cover cancellation.

ii) Provision for diminution in value of investment and advances Rs, NIL (Rs, 1,637.49 Lacs) to Jindal Stainless Madencilik Sanayi VE Ticaret A.S., Turkey and Jindal Acerox Inoxidable S.L., Spain

iii) Gain Rs, 36,259.75 Lacs (Rs, 1,16,021.85 Lacs ) pursuant to the Scheme.

iv) Investment written offRs, NIL (Rs, 5.00 Lacs).

v) Foreign Currency Monetary Item Translation Difference Account- amortization expense ofRs, 377.65 Lacs (Rs, Nil).

12.. The Company had received a notice during the year 2012-13 from office of the Dy. Director of Mines, Jajpur Road Circle, Odisha (the Office) asking company to deposit in Rs, 8,540.27 Lacs with the department on account of cost price on mining of excess quantity of Chrome Ore over and above the approved quantity of mining plan/scheme. The company has disputed and challenged the same as demand made by the Office is incorrect, unjustified, and baseless and was without furnishing any supporting documents and/or providing any basis/reason for such demand. The case is pending before Provisional Authority of Mining tribunal, Govt. of India.

13.. (A) Corporate Debt Restructuring

i) Pursuant to the approval of reworked CDR package (“Rework Scheme”) in September 2012 and execution of Amended & Restated Master Restructuring Agreement (“Amended MRA”), the long term financial obligations to the CDR lenders were reworked including reworking of repayment schedule, creation of Funded Interest Term Loan (FITL II) for certain facilities, adjustment in interest rates, etc. w.e.f. 31st March, 2012. Accordingly, interest has been accounted for based upon the terms of the Rework Scheme / confirmations received from the banks.

ii) During the financial year 2014-15, CDR EG vide its letter dated December 26, 2014 has approved conversion of both FITL I & FITL II (“FITL”) into equity / other instruments, on certain terms and conditions, within 30 days of effective date of the Asset Monetization cum Business Reorganization Plan (“AMP”) subject to compliance with applicable laws. As per the approval,Rs, 250 Crore has been proposed to be converted into equity and balance outstanding amount of FITL into 0.01% Cumulative Redeemable Preference Shares (CRPS) / Optionally Convertible Redeemable Preference Shares (OCRPS). Redemption of CRPS/OCRPS shall be by March 31, 2022 and the CDR lenders would have the right to convert CRPS/OCRPS into equity at any time after 5 years from the effective date of the AMP. Alternatively, the Company might redeem these CRPS/OCRPS along with all dues thereof including recompense before conversion option is exercised by the CDR lender.

iii) The credit facilities / loans under Rework Scheme are/will also be secured by:-

a. Unconditional & irrevocable personal guarantee of CMD Mr. Ratan Jindal;

b. Unconditional & irrevocable corporate guarantee of promoter group companies in proportion to the number and to the extent of equity shares pledged or required to be pledged by each promoter group company;

c. Unconditional & irrevocable corporate guarantee of Jindal Stainless (Hisar) Limited.

d. (i) Pari-passu pledge of 10,54,17,065 nos. of equity shares held in the company by promoters. Creation of security over the additional shares allotted subsequent to March, 2016 (share allotted to JSHL pursuant to scheme referred in note no. 27 (2)(a)) is in process of being pledged with lenders); and (ii) pledge of shares of JCL & JUSL to be allotted to JSL /promoters ( refer note no. 27) (will be pledged with lenders).

e. All assets transferred to JSHL, JUSL and JCL pursuant to the Scheme; and

f. Pledge and non-disposal undertaking for all investment of the Company in subsidiaries as listed below:

- JSL Lifestyle Limited (and JSL Architecture Limited (since merged))*

- JSL Logistics Limited *

- PT. Jindal Stainless Indonesia

- Jindal Stainless UK Limited

- JSL Stainless FZE

- JSL Group Holdings Pte. Limited

- Jindal Stainless Madencilik Sanaye Ve Ticaret A.S.

- Jindal Aceros Inoxidables S.L.

- Iberjindal S.L.

- transferred to JSHL pursuant to the Scheme.

g. Certain conditions, covenants and creation of security under the Rework Scheme, as the case may be, are in process of compliance/ waiver. Certain secured facilities from Banks are subject to confirmation and/or reconciliation.

iv) The lenders have right to recompense as per the approval of reworked CDR package in accordance with applicable CDR guidelines.

(B) Restructuring of ECB Facilities

Besides reworking of its domestic term debt obligations as stated in note A above, the Company has also completed the restructuring of its debt obligations in relation to USD 250 million ECB facilities (outstanding of USD 196.88 million as on 31 st March 2016) availed for the part financing of Odisha Phase II project and has executed requisite amendment agreements with all the ECB lenders on 29th March 2013. The revised terms inter-alia includes deferment of repayment schedule, increase in interest rates, etc. had been implemented on receipts of RBI approvals. Consent of certain ECB lenders to AMP is under discussion.

14. As on March 31, 2016, the overdue financial obligations to banks/financial institutions (30 in nos.) (23 in nos.) were Rs, 55,359.54 Lacs (Rs, 40,144.56 Lacs) of which maximum overdue period was 61 days (59 days).

15. In view of losses, as at 31st March, 2016, the net worth of the Company have been eroded. However, keeping in view the improving business climate in the recent past giving optimism for the future, increase in the business volume and the expected full implementation of AMP [including conversion of Funded Interest Term Loan by the Lenders of the Company into Equity Shares / Cumulative Redeemable Preference Shares / Optionally Convertible Redeemable Preference Shares (refer note no. 32(A)(ii))], the management of the Company expects that the net worth of the Company will become positive and hence, the accounts have been prepared on a going concern basis.

16. The Company has made investment ofRs, 8.56 Crore (along with bank guarantee ofRs, 10.01 Crore) in MJSJ Coal Limited (MJSJ) and Rs, 0.10 Crore in Jindal Synfuels Limited (Jindal Synfuels), wherein JSL hold 9% and 10% stake respectively (both joint venture companies). The HonRs,ble Supreme Court of India vide order dated 24.09.2014 has cancelled 214 out of 218 coal blocks allotted to various companies/entities, including the coal blocks allotted to MJSJ & Jindal Synfuels. No mining activity/production had commenced in these coal blocks, therefore cancellation of these coal blocks allotted to the MJSJ and Jindal Synfuels will not have any material impact on the current operations of the Company. The Company has filed review petition on 18.11.2014 challenging the order dated 24.09.2014 passed by Hon’ble Supreme Court and the matter is pending adjudication in respect of coal block allotted to MJSJ. After the enactment of the Coal Mines (Special Provisions) Act, 2015 dated 30th March, 2015 allowing compensation to the prior allotees in respect of land and mining infrastructure, the management does not anticipate any material variance between carrying value of assets in investee companies and the expected compensation.

17. (a) Company has filed Writ Petition (C) before the Hon’ble High Court of Orissa, challenging the order passed by the Dy. Commissioner ofCommercial Tax, Jajpur for the period from 01/10/2006 to 30/09/2010, for payment of Entry Tax under the Odisha Entry Tax Act 1999 on the goods procured from outside the territory of India. The demand is on 2/3rd amount of Entry Tax on the goods imported from outside the territory of India on which the payment of 1/3rd amount of entry tax deposited as per the interim order of the Hon’ble Supreme Court. Considering the prudence, demand of entry tax have been fully provided for and pending final decision interest and penalty have been included under note no. 28(A)(d)(i) (Contingent Liability).

The Hon’ble Court has heard the matter and vide its interim order dated 14.03.2012, directed the company to deposit 50% of the amount of interest i.e. '' 1.08 crores by 25.03.2012 and granted stay for the balance amount of demand till disposal of the case. The company has deposited the amount within the permitted time and informed to the Hon’ble Court.

(b) The Company had challenged the legality of Odisha Entry Tax Act 1999 in the Hon’ble Supreme Court of India. On 16.04.2010 the Entry tax matters of the states have been referred to a larger 9-judge Constitutional Bench of the Hon’ble Supreme Court of India. The Hon’ble 9 judge bench while holding the constitutional validity of entry tax, has, vide its Order dated 11th November 2016, referred the same to divisional/ regular benches for testing and determination of the Article 304 (a) of the constitution vis a vis state legislation and levy of entry tax on goods entering the landmass of India from another country. The liability in this regards have been provided. Interest/ penalty if any, will be accounted for as and when this is finally settled/ determined by the Regular Benches hearing the matters/where the appropriate proceedings are continuing. Pending decision, presently included under note no. 28(A)(d)(i) (Contingent Liability).

18. Due from Grid Corporation of Odisha Limited (Gridco) is ofRs, 10,530.58 Lacs (Rs, 11,055.01 Lacs). The company had realized part of the overdue amount on receipt of the order of Odisha Electricity Regulatory Commission (OERC) in Case no. 106 of 2011 No. 4387 dated 17/11/2012. Delayed payment surcharge (Interest) on this have been accounted in terms of contractual obligation. The management is hopeful of recovery of due from Gridco.

19. The company has filed Writ Petition (C) before the Hon’ble High Court of Orissa, Cuttack challenging the order passed by the Jt Commissioner of Commercial Tax, Jajpur disallowing the issue of C Form for the procurement of plant and machinery for Captive Power Plant during the year 2005-06, 2006-07 & 2007-08. The Hon’ble Court heard the matter and passed interim order dated 14.03.2012, directing the company to deposit 25% out of total demanded amount of'' 3,305.92 Lacs. The company has deposited an amount ofRs, 826.47 Lacs within the permitted time and informed the Hon’ble Court. Pending final decision, no provision in this respect has been made in the books and the same is included in note no. 28(A)(d)(i) (Contingent Liability).

* to the extent information available with the company.

20.

(A) Certain balances of trade receivable, loan & advances, trade payable and other liabilities are subject to confirmation and/or reconciliation.

(B) Although the book value\ fair value of certain unquoted investments amounting to Rs, 8,275.51 Lacs (Rs, 5,894.74 Lacs), as reflected in note no. 12, is lower than the cost or companies are having negative net worth, considering the strategic and long term nature of the investment, future prospectus and assets base of the investee company, such decline, in the opinion of the management, has been considered to be of temporary in nature and hence no provision for the same at this stage is considered necessary.

The company has also given inter corporate deposit to its subsidiary companies amounting to Rs, 1,656.25 Lacs (Rs, 1,562.38 Lacs) where the subsidiary companies has accumulated losses\negative net worth. In view of the long term involvement of the company, in the said companies no provision has been considered necessary.

(C) In the opinion of board, assets have a realizable value, in the ordinary course of business at least equal to the amount at which they are stated.

21. In accordance with the provisions of “Accounting Standard-28 - Impairment of Assets”, the company has made an assessment of the recoverable amount of assets based on higher of , the value in use considering its projected scale of operations, prevailing market conditions, future cash flows and future growth projections for domestic consumption and export of stainless steel items in general and estimated net selling price of the assets pertaining to its various Cash Generating Units and found recoverable amount of these assets to be higher as compared to carrying value of assets in its Financial Statements. Accordingly, management consider that there is no need for the provision on account of impairment of assets.

22. a) Derivative contracts entered into by the company and outstanding as on 31st March, 2016 for hedging currency risks:

Note: INR equivalent values have been calculated at the yearend exchange rates (except in case of currency swaps) in INR to give an indicative value of the contracts in rupees. Actual hedges however may be in different currency denominations.

b) Foreign Currency exposure that are not hedged by derivative instruments or otherwise outstanding as on 31st March, 2016 is as under:

The expected return on the plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of assets management, historical results of returns on the plan assets and the policy for the management of plan assets management.

The estimates of future salary increase, considered in actuarial valuation, taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The company is taking necessary steps for transfer of fund balance to the employee transferred to Jindal Stainless (Hisar) Limited, Jindal Coke Limited and Jindal United Steel Limited pursuant of the Scheme. (Refer note no. 27 herein above).

23. On 28th July, 2010, the Company granted 35,77,500 stock options to eligible employees of the Company, its subsidiaries including non executive directors (excluding Nominee Director), as per Employees Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock options is Rs, 75/- per share which would gradually vest over a maximum period of 4 years from the date of grant based on specified criteria, as may be decided by the Compensation Committee.

Pursuant to 1 st vesting @ 30% of ESOP outstanding on 28th July, 2012, 5,34,771 ESOPs were vested to eligible employees based on performance rating and 1,50,000 fresh ESOPs were granted to the employees of the Company on 28th July, 2012. Pursuant to 2nd vesting @ 30% of ESOP outstanding on 28th July 2013, 4,26,024 ESOPs were vested to eligible employees based on performance rating. Pursuant to 3rd vesting @ 40% of ESOP outstanding on 28th July 2014, 5,60,625 ESOPs were vested to eligible employees based on performance rating including employees transferred pursuant to the Scheme (Refer note no. 27 herein above).

In terms of the Composite Scheme of Arrangement between the Company and others, as approved by the Hon’ble High Court of Punjab and Haryana, the employees engaged in Demerged Undertakings, Business Undertakings 1, 2 and 3 who were transferred as a part of the Scheme to Resulting Company i.e. Jindal Stainless (Hisar) Limited or Transferee Company 2 i.e. Jindal United Steel Limited or Transferee Company 3 i.e. Jindal Coke Limited, shall continue to remain entitled to exercise their rights to the stock options granted and vested but have not been exercised as on the Record Date. Further the Stock options granted by the Company to such employees which have been granted but have not vested as of the Effective Date 1 or Effective Date 2 (as defined in the scheme), as the case may be, shall lapse automatically without any further act on the part of the Company. Furthermore, the exercise price of the stock options, in respect of the employees engaged in the Demerged Undertakings and transferred to the Resulting Company i.e. JSHL shall be reduced in the same proportion as the assets of the Demerged Undertakings bear to the total assets of the Company immediately prior to the Appointed Date 1.”

During the year ended on 31st March, 2016, 4,45,546 (3,29,754) stock options lapsed due to resignation, retirement and non-exercise of option by employees. No vested options were exercised by employees during the year. As on 31st March, 2016, 8,33,581 (12,79,127) ESOPs were in force.

24. The company has a regular programme of physical verification for its inventory. Further, during the year physical verification of significant part of inventory of finished goods and work in progress has been carried out by an independent firm of professionals and technical consultant and no material discrepancy were found.

25. Segment Reporting

i) Information about Business Segment (for the year 2015-16 )

Company operates in a Single Primary Segment (Business Segment ) i.e. Stainless Steel products.

ii) Secondary Segments (Geographical Segment )

** As per Income Tax valuation.

** Excluding Gratuity/leave encashment.

# Included in the previous yearRs, 127.36 Lacs allocated to Jindal Stainless (Hisar) Limited pursuant to Composite Scheme ofArrangement (refer note no. 27)

(i) For Remuneration paid to a Whole Time Director/s (WTD):

(a) amounting to Rs, 16.20 Lacs ,Rs, 18.11 Lacs,Rs, 358.98 Lacs and Rs, 220.97 Lacs for the years 2008-2009 , 2009-2010, 2013-14, and 2014-15 respectively, the Company has already filed an application with the Ministry of Corporate Affairs seeking waiver of recovery of the excess remuneration paid and the said application is under consideration.

(b) For the year 2015-16 the company has filed application for approval of amounting to Rs, 149.99 Lacs.

26 Capital work-in-progress (CWIP) includes technical know-how and supervision fees, taxes, machinery under installation/in transit, pre-operative expenses and other assets under erection. Details of same areas under:-

27 Previous years’ figures have been re-arranged and regrouped wherever considered necessary .

28 Figures in bracket indicate previous year figures.

29 Note 1 to 54 are annexed to and from integral part of the Balance Sheet and Statement of Profit and Loss.


Mar 31, 2015

(a) (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 31st 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.

(b) (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. 2/- of the Company per CCCPS at any time after the date of allotment but on or before the expiry of 18 months from the dare 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.

(c) EQUITY SHARES RESERVED FOR ISSUE UNDER OPTIONS For details of shares reserved for issue under the Employee Stock Option Scheme, 2010 of the company, please Refer note no. 49

(d) No bonus, buy back, issue of shares other than in cash in last five years, except about share capital suspense read with note no.27.


Mar 31, 2014

1. (Rs. in Lacs)

A Contingent Liabilities not provided for in respect of : As at As at 31.03.2014 31.03.2013

a) Counter Guarantee given to Company''s Bankers for the Guarantee given by them on behalf of Company 7,441.09 10,283.04

b) Letter of Credit outstanding 92,250.35 82,291.29

c) Bills discounted with Banks 56,211.84 42,132.20

d) i) Sale Tax/Entry Tax demands against which company preferred appeals. 9236.71 9,129.73

ii) Excise Duty/Custom/Service Tax Show Cause Notices/ Demands against which company has preferred appeals. 17,830.03 15,401.82

iii) Income tax demands against which Company has preferred appeals. 4,200.91 4,802.74

iv) Claims and other liabilities against the company not acknowledged as debt. 10,588.26 8,812.91

e) Demand made by Sr. Dy. Director of Mines, Notified Authority, Jajpur Road Circle, Orissa as cess on 320.49 320.49 Chromite Ore production. The matter being pending with Hon''ble Supreme Court.

f) Demand made by Dy. Director of Mines, Jajpur Road Circle, Orissa against which company has 139.56 24.74 preferred appeal.

B i) Guarantee given to custom authorities for import under EPCG Scheme. {Custom duty saved/to be saved 59,484.56 91,638.82 as on 31st March, 2014 Rs.19,080.63 Lacs (Rs.25,676.82 Lacs)}

ii) Custom Duty saved on material consumed imported under Advance License 337.12 266.66

C Letter of Comfort to banks against credit facilities/ financial assistance availed by subsidiaries. 55,036.61 60,403.29

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.2,474.43 Lacs (Rs.2,082.96 Lacs).

3. Exceptional items includes Gain/(Loss) (net) of (Rs.37,247.31 Lacs) {(Rs.12,484.71 Lacs)} on translation/settlement of foreign currency monetary items (including borrowing), gain / (loss) of Rs. (509.27) Lacs Rs.119.04 Lacs} upon marked to market of derivatives contracts, gain/(loss) of (Rs.3,933.35 Lacs) {(Rs.4,330.39 Lacs)} on forward cover cancelation.

4. Appeals in respect of certain assessments of Sales Tax / Income Tax are pending and additional tax liabilities/refunds, if any, are not determinable at this stage. Adjustments for the same will be made after the same are finally determined. In the opinion of management there will not be material liability on this account.

5. a) Addition/adjustment to Plant & Machinery / Capital Work-In-Progress includes Rs.19,335.20 Lacs (Net Debit) (Rs.25,876.17 Lacs (Net Debit)) on account of foreign exchange fluctuation on Loan/Liability including fluctuation relating to forward cover. (Includes amount disclosed in Note No. 44 (c) below).

b) Interest expenses includes pro-rata premium of Rs.165.98 Lacs (Net Credit) {Rs.134.64 Lacs (Net Credit)}

6. (A) Corporate Debt Restructuring

i) Pursuant to the approval of reworked CDR package ("Rework Scheme") in September 2012 and execution of Amended & Restated Master Restructuring Agreement ("Amended MRA"), the long term financial obligations to the CDR lenders were reworked including reworking of repayment schedule, creation of Funded Interest Term Loan (FITL II), adjustment in interest rates, etc. w.e.f. 31st March, 2012.

ii) Under the Rework Scheme, the interest rates are shifted from fixed rate of interest to floating rate of interest. Interest has been accounted for based upon the terms of the Rework Scheme / confirmations so far received from the Banks.

iii) The Funded Interest Term Loan (FITL-II) has been created on certain credit facilities as per the terms of the Rework Scheme and the amendment thereof. Further, subject to necessary applicable approvals including regulatory and CDR EG, each CDR lender also has option to convert up to an amount equivalent to 30% of FITL - II (created out of interest for the financial year 2012-13 in the Rework Scheme), into equity shares on certain terms and conditions.

iv) The credit facilities / loans under Rework Scheme are/will also be secured by:

a. Unconditional & irrevocable personal guarantee of CMD Mr. Ratan Jindal;

b. Unconditional & irrevocable corporate guarantee of promoter group companies in proportion to the number and to the extent of equity shares pledged or required to be pledged by each body corporate;

c. Pari-passu pledge/ non disposal undertaking / lodgment of 65,306,625 nos. of equity shares held in the company by promoters. Creation of security over 87.7% of the additional equity shares allotted to, a member of the promoter group, on 30th March 2013 and 31st March, 2014; and

d. Under the Scheme, the company had created pledge and submitted non-disposal undertaking for all its investment in subsidiaries as listed below:

- JSL Lifestyle Limited

- JSL Logistics Limited

PT. Jindal Stainless Indonesia

- Jindal Stainless UK Limited

- JSL Stainless FZE

- JSL Group Holdings Re. Limited

- JSL Architecture Limited

- Jindal Stainless Madencilik Sanaye Ve Ticaret A.S.

- JindalAceroslnoxidablesS.L.

- IberjindalS.L.

e. Certain conditions, covenants and creation of security under the Rework Scheme are in process of compliance. Certain secured facilities from Banks are subject to confirmation and/or reconciliation.

(B) Restructuring of ECB Facilities

Besides reworking of its domestic term debt obligations as stated in note A above, the Company has also completed the restructuring of its debt obligations in relation to USD 250 million ECB facilities (outstanding of USD 223.75 million as on 31st March 2014) availed for the part financing of Odisha Phase II project and has executed requisite amendment agreements with all the ECB lenders on 29th March 2013. The revised terms inter-alia includes deferment of repayment schedule, increase in interest rates, etc. has been implemented on receipts of RBI approvals.

7. As on March 31, 2014, the overdue interest to lenders (21 in nos.) was Rs. 3,175.42 Lacs of which maximum overdue period was 30 days.

However, on account of certain technical issues from banks'' side and/or reconciliation issues (refer Note No. 32 (A) (iv) (e) above), certain amounts were reported as overdue for more than 60 days by certain banks. This overdue position of more than 60 days has been rectified subsequent to the balance sheet date.

8. (a) During the year, the Company has received subscription (application/allotment) money (including premium) aggregating to Rs.10,157.66 Lacs from JSL Overseas Limited (the allottee) in two tranches. Subsequent to the receipt of funds, the Company has allottedh

i) 10,750,000 nos. equity shares of Rs.2/- each @ Rs.37.65 per share (including premium of Rs.35.65 per share) to JSL Overseas Limited; and

ii) 15,810,440 nos. Cumulative Compulsory Convertible Preference Shares (CCCPS) of Rs.2/- each @ Rs.37.65 per CCCPS (including premium of Rs. 35.65 per CCCPS) to JSL Overseas Limited.

Amount received of Rs.10,000.01 Lacs have been fully utilized for the purpose the issue was made. The balance amount of Rs.157.65 Lacs after adjustment of consideration for allotment of aforementioned equity shares & CCCPS, pending for refund as on 31st March, 2014 has been subsequently refunded.

(b) During the previous year, Company has issued and allotted 13,550,000 nos fully paid up equity shares of Rs.2 each at Rs.74 per share (including premium of Rs.72 per share) on preferential basis in terms of approval taken from shareholders. Amount received ofRs.100.27 Lacs have been fully utilized for the purpose the issue was made.

9. (a) The company has filed Writ Petition (C) before the Hon''ble High Court of Orissa, challenging the order passed by the Dy Commissioner of Commercial Tax, Jajpur for the period from 01/10/2006 to 30/09/2010, for payment of Entry Tax under the Orissa Entry Tax Act 1999 on the goods procured from outside the territory of India. The demand is on 2/3rd amount of Entry Tax on the goods imported from outside the territory of India on which the payment of 1/3rd amount of entry tax deposited as per the interim order of the Hon''ble Supreme Court. Considering the prudence demand of entry tax have been fully provided for and pending final decision interest and penalty have been shown under note no. 27(d)(i) (Contingent Liability).

The Hon''ble Court has heard the matter and vide its interim order dated 14.03.2012, directed the company to deposit 50% of the amount of interest i.e. Rs.1.08 crores by 25.03.2012 and granted stay for the balance amount of demand till disposal of the case. The company has deposited the amount within the permitted time and informed to the Hon''ble Court.

(b) The Company had also challenged the levy of entry tax on goods not produced in Orissa and same is pending before decision of the Hon''ble Supreme Court. Considering the prudence full liability in this regards have been provided. Interest/ penalty if any, will be accounted for as and when finally settled/determined and the same is included in note no. 27(d)© (Contingent Liability).

10. Due from Grid Corporation of Orissa (Gridco) Limited is of Rs.9,641.21 Lacs (Rs.9,268.43 Lacs). The company had realized part of the overdue amount on receipt of the order of Odisha Electricity Regulatory Commission (OERC) in Case no. 106 of 2011 No. 4387 dated 17/11/2012. Delayed payment surcharge (Interest) on this have been accounted in terms of contractual obligation. The management is hopeful of recovery of due from Gridco.

11. The company has filed Writ Petition (C) before the Hon''ble High Court of Orissa, Cuttak challenging the order passed by the Jt Commissioner of Commercial Tax, Jajpur disallowing the issue of C Form for the procurement of plant and machinery for Captive Power Plant during the year 2005-06, 2006-07 & 2007-08. The Hon''ble Court heard the matter and passed interim order dated 14.03.2012, directing the company to deposit 25% out of total demanded amount of Rs.3,305.92 Lacs. The company has deposited an amount of Rs.826.47 Lacs within the permitted time and informed the Hon''ble Court. Pending final decision, no provision in this respect has been made in the books and the same is included in note no. 27(d)(i) (Contingent Liability).

12. During the previous year, the company has received a notice from office of the Dy. Director of Mines, Jajpur Road Circle, Odisha (the Office) asking company to deposit Rs.8,540.27 Lacs with the department on account of cost price on mining of excess quantity of Chrome Ore over and above the approved quantity of mining plan/scheme. The company has disputed and challenged the same as demand made by the Office is incorrect, unjustified, baseless and was without furnishing any supporting documents and/or providing any basis/ reason for such demand. The case is pending before Revisional Authority of Mining tribunal, Govt. of India.

13. (A) Certain balances of trade receivable, trade payable and other liabilities are subject to confirmation and/or reconciliation.

(B) Certain charges created for secured loans are in process of satisfaction.

(C) Although the book value fair value of certain unquoted investments amounting to Rs.9,967.85 Lacs (Rs.3,663.10 Lacs), as reflected in Note no 12, including investment in foreign subsidiaries is lower than the cost or companies are having negative net worth, considering the strategic and long term nature of the investment, future prospectus and assets base of the investee company, such decline, in the opinion of the management, has been considered to be of temporary nature and hence no provision for the same at this stage is considered necessary.

The company has also given inter corporate deposit to its subsidiary companies amounting to Rs.5,981.43 Lacs (Rs.3,243.15 Lacs) where the subsidiary companies has accumulated lossesnegative net worth. In view of the long term involvement of the company (read with note (C) above) in the said companies no provision has been considered necessary.

14. In accordance with the provisions of "Accounting Standard-28 - Impairment of Assets", the company has made an assessment of the recoverable amount of assets based on higher of, the value in use considering its projected scale of operations, prevailing market conditions, future cash flows and future growth projections for domestic consumption and export of stainless steel items in general and estimated net selling price of the assets pertaining to its various Cash Generating Units and found recoverable amount of these assets to be higher as compared to carrying value of assets in its Financial Statements. Accordingly, management consider that there is no need for the provision on account of impairment of assets.

15. (a) Advance recoverable in cash or in kind or for value to be received includes Interest free loan to employee amounting to Rs.15.55 Lacs (Rs.29.76 Lacs) in the ordinary course of business and as per employee service rules of the company. Maximum balance outstanding during the year is Rs. 24.45 Lacs (Rs.37.53 Lacs).

(b) Loan & Advances to subsidiaries includes Rs.22.30 Lacs (Rs. 22.30 Lacs) as advance against share application money with a subsidiary company.

(c) Public Fixed Deposits includes deposit from a director amounting to Rs.63.13 Lacs (Rs. Nil) in the ordinary course of business of the company. Maximum balance outstanding during the year is Rs.273.33 Lacs (Rs. Nil).

(d) Pursuant to clause 32 of the Listing Agreement, Loans and Advances in the nature of Loans to Subsidiaries companies:

16. Research and Development expenses for the year amounting to Rs.64.63 Lacs (Rs.113.46 Lacs) on account of revenue expenditure charged/debited to respective heads of accounts.

17. The Haryana Government levied w.e.f. 05.05.2000 a Local Area Development Tax (the LADT Act) on the Manufacturing units in the State of Haryana on the entry of goods for use and consumption. JSL and other units have challenged the Act in the Hon''ble Punjab and Haryana High Court. The Hon''ble Punjab and Haryana High Court disallowed the petition in December, 2001 and the company had by a Special Leave Petition challenged the Order of High Court in the Hon''ble Supreme Court. The Hon''ble Supreme Court referred the matter to a ''five judges'' Constitutional Bench, which laid certain parameters to examine the Act on those lines. On the basis of these parameters the Hon''ble High Court have declared the Act to be ultra virus on 14th March, 2007. Since, this issue was being canvassed by various High Courts, the Hon''ble Supreme Court gave an Interim Order that those states where the High Courts have given judgment in favour of the petitioner, no tax would be collected. In the mean time the Haryana Government has repealed the LADT Act and introduced another Act by the name of ''Entry Tax'' on the same lines. That Act was also been held ultra virus by the High Court. However, on prudence basis, the liability has been fully provided for. The order of Punjab and Haryana High Court and other judgements of all the Courts of India have been long pending. The State Governments have requested the Hon''ble Supreme Court that it is very difficult for them to run the Government. So at least till the pendency of the cases in the Hon''ble Supreme Court they may be allowed to charge from past liability and also from the future liability to be accrued. On 30th October, 2009, the Hon''ble Supreme Court have directed that 1/3rd of the liability is to be paid by all the assesses whose cases are pending in the High Courts. As, at present, there is no Act either LADT/Entry Ta x prevalent in Haryana State, no tax is being collected from the assesses however undertaking have given by assesses that in case they lose they will make the payment. As such on prudence basis, full liability has been provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters of the states have been referred to a larger 9-Judges Constitutional Bench of the Supreme Court, where the judgement of 7-Judges Constitutional Bench passed 49 years ago would be revisited. Constitution Bench has not been constituted as yet and the status of the case is as it is and at present no tax is being collected/paid in Haryana.

(f) 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. Accounting to the actuarial Valuation, the Defined Benefit Obligation of Interest Rate Guarantee on exempted Provident Fund in respect of employees of the company as on 31st March, 2014 works out ofRs. Nil (Rs. Nil)and hence no provision is required to be provided for in the books of account towards the guarantee for notified interest rates.

18. On 28th July, 2010, the Company granted 35,77,500 stock options to eligible employees of the Company, its subsidiaries including non executive directors (excluding Nominee Director), as per Employees Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock options is Rs.75/- per share which would gradually vest over a maximum period of 4 years from the date of grant based on specified criteria, as may be decided by the Compensation Committee.

Pursuant to 1st vesting @ 30% of ESOP outstanding on 28th July, 2012, 534,771 ESOPs were vested to eligible employees based on performance rating and 1,50,000 fresh ESOPs were granted to the employees of the Company on 28th July, 2012. Pursuant to 2nd vesting @ 30% of ESOP outstanding on 28th July 2013, 426,024 ESOPs were vested to eligible employees based on performance rating.

During the year ended on 31st March, 2014, 662,763 (497,106) stock options lapsed due to resignation, retirement and low vesting due to performance rating. No vested options were exercised by employees during the year. As on 31st March, 2014, 1,608,881 (2,271,644) ESOPs were in force.

19. Finance Lease

Assets acquired under leases where the company has substantially all the risks and rewards of ownership are classified as finance lease. Such assets are capitalized at inception of the lease at the lower of the fair value or net present value if minimum lease payments and a liability is created for an equivalent amount.

Lease interest charged to profit & loss for right to use of CTL Machine (Cut to length) for the services regarding cutting of Stainless Steel sheets.

20. The company has a regular programme of physical verification for its inventory. Further, during the year physical verification of significant part of inventory of finished goods and work in progress has been carried out by an independent firm of professionals and technical consultant and no material discrepancy were found.

21 Related Party Transactions

A List of Related Party & Relationship (As identified by the Management)

a) Subsidiary Companies :

1 PT. Jindal Stainless Indonesia

2 Jindal Stainless Steelway Limited

3 JSL Lifestyle Limited

4 JSL Architecture Limited

5 Jindal Stainless UK Limited

6 Jindal Stainless FZE

7 Green Delhi BQS Limited

8 Jindal Stainless Madencilik Sanayi Ve Ticaret Anonim Sirketi

9 JSL Media Limited

10 Jindal Aceros Inoxidables S.L.

11 JSL Group Holdings Pte. Limited

12 JSL Logistics Limited

13 Iberjindal S.L.

14 Jindal Stainless Italy Srl.

15 JSL Ventures Pte. Limited

16 JSL Europe SA

17 JSL Minerals & Metals SA

b) Joint Ventures:

1 MJSJ Coal Limited

2 Jindal Synfuels Limited

c) Key Management Personnel :

1 Shri Ratan Jindal Chairman & Managing Director

2 Shri Ramesh R. Nair President & Executive Director (w.e.f. 03.11.2011 to till 04.06.2013)

3 Shri U.K.Chaturvedi Chief Executive Officer (w.e.f. 01.04.2013 to till 31.12.2013)

4 Shri S.S. Virdi Executive Director & Chief Operating Officer (till 31.07.2013)

5 Shri Jitender P. Verma Executive Director - Finance

6 Shri Rajinder Prakash Jindal Executive Director (w.e.f. 06.01.2014)

7 Shri Jitendra Kumar Company Secretary

d) Enterprises over which Key Management Personnel and their relatives exercise significant influence with whom transactions have been taken place during the year:

1 Jindal Steel & Power Limited

2 JSW Steel Limited

3 Jindal Saw Limited

4 Jindal Industries Limited

5 Nalwa Steel & Power Limited

6 Bir Plantation Private Limited

7 JSL Overseas Holding Limited (formely Jindal Overseas Holding Limited)

8 JSL Overseas Limited

9 JSW Ispat Steel Limited

22 Previous years'' figures have been re-arranged and regrouped wherever considered necessary .

23 Figures in bracket indicate previous year figures.

24 Note 1 to 58 are annexed to and form integral part of the Balance Sheet and Statement of Profit & Loss.


Mar 31, 2013

1. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 2,082.96 Lacs (Rs. 5,725.73 Lacs).

2. Custom Duty saved on material consumed imported under advance license scheme as on 31st March, 2013 and 31st March, 2012 is Rs. 266.66 Lacs and Rs. 34.29 Lacs respectively. The management is of the view that considering the past export performance, future prospects and going concern concept there is certainty that pending export obligation under advance licenses will be fulfilled before expiry of the respective licenses.

3. Exceptional items includes Gain/(Loss) (net) of (Rs. 12,484.53 Lacs) {(Rs. 17,231.29 Lacs)} on translation/settlement of foreign currency monetary items (including borrowing), gain / (loss) of Rs.119.04 Lacs {Rs. 456.08 Lacs} upon marked to market of derivatives contracts, gain/(loss) of (Rs. 4,330.19 Lacs) {Rs. 1,045.24 Lacs} on forward cover cancelation, resulting from volatile global market conditions.

4. Appeals in respect of certain assessments of Sales Tax / Income Tax are pending and additional tax liabilities/refunds, if any, are not determinable at this stage. Adjustments for the same will be made after the same are finally determined. In the opinion of management there will not be material liability on this account.

5. a) Addition/adjustment to Plant & Machinery / Capital Work-In-Progress includes Rs. 25,876.17 Lacs (Net Debit) (Rs. 41,153.60 Lacs (Net Debit)) on account of foreign exchange fluctuation on Loan/Liability including fluctuation relating to forward cover. (Includes amount disclosed in Note No. 42 (c) below).

b) Interest expenses includes pro-rata premium of Rs. 134.64 Lacs (Net Credit) {Rs. 41.99 Lacs (Net Credit)}

6. (A) Corporate Debt Restructuring

i) The Company''s proposal in relation to re-work of its term debt obligations ("Rework Scheme") under CDR mechanism has been approved by CDR EG through Rework Letter of Approval ("Rework LOA") vide its letter dated September 18, 2012. The Rework Scheme inter-alia includes reworking of repayment schedule, interest funding, adjustments in interest rates to ensure protection of net present value of the respective facilities, etc w.e.f. 31st March 2012 ("Reworking Cut-off Date"). Consequently, the amended & restated master restructuring agreement ("Amended MRA") & other necessary documents have been executed with all the lenders, except one.

ii) Under the Rework Scheme, the interest rates are shifted from fixed rate of interest to floating rate of interest. Interest has been accounted for based upon terms of Rework Scheme / confirmation so far received from banks.

iii) The Funded Interest Term Loan (FITL-II) has been created on certain credit facilities. Accordingly, the value of debt service (including interest paid) post Reworking Cut-off Date amounting to Rs. 906.61 Lacs (including refunds due of CDR 2009-10) to be refunded by banks/institutions is included under loans and advances.

Further, subject to necessary applicable approvals including regulatory and CDR EG, each CDR Lender have the option to convert up to an amount equivalent to 30% of FITL- II (being created out of interest for the financial year 2012-13 in the Rework Scheme), into equity shares on certain terms and conditions.

iv) As per the Rework Scheme, the company/promoters are to arrange equity of Rs. 200 crores out of which the promoters have already brought in Rs. 100 crores by way of preferential subscription and balance equity is to be introduced by 31st March, 2014.

v) The credit facilities / loans under Rework Scheme will also be secured by:

a. Unconditional & irrevocable personal guarantee of VC & MD Mr. Ratan Jindal;

b. Unconditional & irrevocable corporate guarantee of promoter group companies in proportion to the number and to the extent of equity shares pledged or required to be pledged by each body corporate;

c. Pari-passu pledge/ non disposal undertaking / lodgment of 65,306,625 nos. of equity shares held in the company by promoters. The pledge to the extent of 87.7% in respect of additional equity shares allotted to, a member of the promoter group, on 30th March 2013; and

d. Under the Scheme, the company has created pari passu pledge and submitted non-disposal undertaking for all its investment in subsidiaries as listed below:

- JSL Lifestyle Limited

- JSL Logistics Limited

- PT. Jindal Stainless Indonesia

- Jindal Stainless UK Limited

- JSL Stainless FZE

- JSL Group Holdings Pte. Limited

- JSL Architecture Limited

- Jindal Stainless Madencilik Sanaye Ve Ticaret A.S.

- Jindal Aceros Inoxidables S.L.

- Iberjindal S.L.

e. Certain conditions, covenants and creation of security under the Rework Scheme are in process of compliance. Certain secured facilities (including FITL -II) are subject to bank confirmation and/or reconciliation.

(B) Restructuring of ECB Facilities

Besides reworking of its domestic term debt obligations as stated in note A above, the Company has also completed the restructuring of its debt obligations in relation to USD 250 million ECB facilities (outstanding of USD 225 million as on 31st March 2013) availed for the part financing of Odisha Phase II project and has executed requisite amendment agreements with all the ECB lenders on 29th March 2013. The revised terms inter-alia includes deferment of repayment schedule, increase in interest rates, etc.

7. (a) The company has filed Writ Petition (C) before the Hon''ble High Court of Odisha, challenging the order passed by the Dy Commissioner of Commercial Tax, Jajpur for the period from 01/10/2006 to 30/09/2010, for payment of Entry Tax under the Odisha Entry Tax Act 1999 on the goods procured from outside the territory of India. The demand is on 2/3rd amount of Entry Tax on the goods imported from outside the territory of India on which the payment of 1/3rd amount of entry tax deposited as per the interim order of the Hon''ble Supreme Court. Considering the prudence demand of entry tax have been fully provided for and pending final decision interest and penalty have been shown under note no. 27(d)(i) (Contingent Liability).The Hon''ble Court has heard the matter and vide its interim order dated 14.03.2012, directed the company to deposit 50% of the amount of interest i.e. Rs. 1.08 crores by 25.03.2012 and granted stay for the balance amount of demand till disposal of the case. The company has deposited the amount within the permitted time and informed to the Hon''ble Court.

(b) The Company had also challenged the levy of entry tax on goods not produced in Odisha and same is pending before decision of the Hon''ble Supreme Court. Considering the prudence full liability in this regards have been provided. Interest/ penalty if any, will be accounted for as and when finally settled/determined and the same is included in note no. 27(d)(i) (Contingent Liability).

8. Due from Grid Corporation of Odisha (Gridco) Limited is of Rs. 9,268.43 Lacs. During the year the company have realized part of the overdue amount on receipt of the order of Odisha Electricity Regulatory Commission (OERC) in Case no. 106 of 2011 No. 4387 dated 17/11/2012. Delayed payment surcharge (Interest) on this have been accounted in terms of contractual obligation. The management is hopeful of recovery of balance amount from Gridco.

9. The company has tiled Writ Petition (C) before the Hon''ble High Court of Odisha, Cuttak challenging the order passed by the Jt Commissioner of Commercial Tax, Jajpur disallowing the issue of C Form for the procurement of plant and machinery for Captive Power Plant during the year 2005-06, 2006-07 & 2007-08. The Hon''ble Court heard the matter and passed interim order dated 14.03.2012, directing the company to deposit 25% out of total demanded amount of Rs. 3,305.92 Lacs. The company has deposited an amount of Rs. 826.47 Lacs within the permitted time and informed the Hon''ble Court. Pending tinal decision, no provision in this respect has been made in the books and the same is included in note no. 27(d)(i) (Contingent Liability).

10. During the year, the company has received a notice from office of the Dy. Director of Mines, Jajpur Road Circle, Odisha (the Office) asking company to deposit Rs. 8,540.27 Lacs with the department on account of royalty on mining of excess quantity of Chrome Ore over and above the approved quantity of mining plan/scheme. The company has disputed and challenge the same as demand made by the Office is incorrect, unjustified, baseless and was without furnishing any supporting documents and/or providing any basis/reason for such demand.

11. (A) certain balances of debtors, trade payable and other liabilities are subject to confirmation and/or reconciliation.

(B) Certain charges created for secured loans are in process of satisfaction.

(C) Although the book value fair value of certain unquoted investments amounting to Rs.3,663.10 Lacs (Rs. 3,663.10 Lacs), as reflected in Note no 12, including investment in a foreign subsidiary is lower than the cost or companies are having negative net worth, considering the strategic and long term nature of the investment, future prospectus and assets base of the investee company, such decline, in the opinion of the management, has been considered to be of temporary nature and hence no provision for the same at this stage is considered necessary.

The company has also given inter corporate deposit to its subsidiary companies amounting to Rs.3,243.15 Lacs (Rs. 4,639.70 Lacs) where the subsidiary companies has accumulated losses egative net worth. In view of the long term involvement of the company (read with note (C) above) in the said companies no provision has been considered necessary.

12. (a) Advance recoverable in cash or in kind or for value to be received includes Interest free loan to employee amounting to Rs. 29.76 Lacs (Rs. 35.62 Lacs) in the ordinary course of business and as per employee service rules of the company.

Maximum balance outstanding during the year is Rs.37.53 Lacs (Rs. 61.85 Lacs).

(b) Loan & Advances to subsidiaries includes Rs. 22.30 Lacs (Rs. 22.30 Lacs) as advance against share application money with a subsidiary company.

13. Research and Development expenses for the year amounting to Rs. 113.46 Lacs (Rs. 86.47 Lacs) on account of revenue expenditure charged/debited to respective heads of accounts.

14. The Haryana Government levied w.e.f. 05.05.2000 a Local Area Development Tax (the LADT Act) on the Manufacturing units in the State of Haryana on the entry of goods for use and consumption. JSL and other units have challenged the Act in the Hon''ble Punjab and Haryana High Court. The Hon''ble Punjab and Haryana High Court disallowed the petition in December, 2001 and the company had by a Special Leave Petition challenged the Order of High Court in the Hon''ble Supreme Court. The Hon''ble Supreme Court referred the matter to a ''tive judges'' Constitutional Bench, which laid certain parameters to examine the Act on those lines. On the basis of these parameters the Hon''ble High Court have declared the Act to be ultra virus on 14th March, 2007. Since, this issue was being canvassed by various High Courts, the Hon''ble Supreme Court gave an Interim Order that those states where the High Courts have given judgment in favour of the petitioner, no tax would be collected. In the mean time the Haryana Government has repealed the LADT Act and introduced another Act by the name of ''Entry Tax'' on the same lines. That Act was also been held ultra virus by the High Court. However, on prudence basis, the liability has been fully provided for. The order of Punjab and Haryana High Court and other judgements of all the Courts of India have been long pending. The State Governments have requested the Hon''ble Supreme Court that it is very difficult for them to run the Government. So at least till the pendency of the cases in the Hon''ble Supreme Court they may be allowed to charge from past liability and also from the future liability to be accrued. On 30th October, 2009, the Hon''ble Supreme Court have directed that 1/3rd of the liability is to be paid by all the assesses whose cases are pending in the High Courts. As, at present, there is no Act either LADT/Entry Tax prevalent in Haryana State, no tax is being collected from the assesses however undertaking have given by assesses that in case they lose they will make the payment. As such on prudence basis, full liability has been provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters of the states have been referred to a larger 9-Judges Constitutional Bench of the Supreme Court, where the judgement of 7-Judges Constitutional Bench passed 49 years ago would be revisited. Constitution Bench has not been constituted as yet and the status of the case is as it is and at present no tax is being collected/paid in Haryana.

15. On 28th July, 2010, the Company granted 35,77,500 stock options to eligible employees of the Company, its subsidiaries including non executive directors (excluding Nominee Director), as per Employees Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock options is Rs.75/- per share which would gradually vest over a maximum period of 4 years from the date of grant based on specified criteria, as may be decided by the Compensation Committee.

16. Finance Lease

Assets acquired under leases where the company has substantially all the risks and rewards of ownership are classified as finance lease. Such assets are capitalized at inception of the lease at the lower of the fair value or net present value if minimum lease payments and a liability is created for an equivalent amount.

17. During the year, Company has issued and allotted 13,550,000 nos fully paid up equity shares of Rs. 2 each at Rs. 74 per share (including premium of Rs. 72 per share) on preferential basis in terms of approval taken from shareholders. Amount received of Rs. 100.27 Crores have been fully utilized for the purpose the issue was made.

18 Segment Reporting

i) Information about Business Segment ( for the year 2012-13 )

Company operates in a Single Primary Segment ( Business Segment ) i.e. Stainless Steel products.

19 Related Party Transactions

A List of Related Party & Relationship ( As identified by the Management)

a) Subsidiary Companies :

1 PT. Jindal Stainless Indonesia

2 Jindal Stainless Steelway Limited

3 JSL Lifestyle Limited

4 JSL Architecture Limited

5 Jindal Stainless UK Limited

6 Jindal Stainless FZE

7 Green Delhi BQS Limited

8 Jindal Stainless Madencilik Sanayi Ve Ticaret Anonim Sirketi

9 JSL Media Limited

10 Jindal Aceros Inoxidables S.L.

11 JSL Group Holdings Pte. Limited

12 JSL Logistics Limited

13 Iberjindal S.L.

14 Jindal Stainless Italy Srl.

15 JSL Ventures Pte. Limited

16 JSL Europe SA

17 JSL Minerals & Metals SA

b) Joint Ventures:

1 MJSJ Coal Limited

c) Key Management Personnel :

1 Shri Ratan Jindal Vice Chairman & Managing Director

2 Shri Ramesh R. Nair President & Executive Director (w.e.f. 03.11.2011)

3 Shri Arvind Parakh Director - Finance (till 01.10.2011)

4 Shri S.S. Virdi Executive Director & Chief Operating Officer

5 Shri Jitender P. Verma Executive Director - Finance (w.e.f. 09.02.2012)

6 Shri Jitendra Kumar Company Secretary

d) Enterprises over which Key Management Personnel and their relatives exercise significant influence with whom transactions have been taken place during the year:

1 Jindal Steel & Power Limited

2 JSW Steel Limited

3 Jindal Saw Limited

4 Jindal Industries Limited

5 Nalwa Steel & Power Limited

6 Bir Plantation Private Limited

7 Sona Bheel Tea Limited

8 Jindal Overseas Holding Limited

9 JSW Ispat Steel Limited


Mar 31, 2012

1. ( Rs. in Lacs )

A Contingent Liabilities not provided for in respect of: 31.03.2012 31.03.2011

a) Counter Guarantee given to Company's Bankers for the Guarantee 6,494.27 4,293.15 given by them on behalf of Company

b) Letter of Credit outstanding 98,215.98 81,132.32

c) Bills discounted with Banks 38,001.59 26,290.73

d) i) Sales Tax demands against which company has preferred 17,257.81 280.68 appeals.

ii) Excise Duty/Service Tax Show Cause Notices/Demands 10,816.49 9,544.41 against which company has preferred appeals.

iii) Income tax demands against which Company has preferred 7,055.66 6,621.38 appeals.

iv) Claims and other liabilities against the company not 3,859.75 9,547.30 acknowledged as debt

e) Demand made by Sr. Dy. Director of Mines, Notified Authority, 320.49 320.49 Jajpur Road Circle, Orissa as cess on Chromite Ore production.

The matter being pending with Hon'ble Supreme Court.

e) Demand made by Dy. Director of Mines, Jajpur Road Circle, 600.84 - Orissa against which company has preferred appeal.

B Guarantee given to custom authorities for import under EPCG Scheme. 89,343.34 80,934.71 {Custom duty saved/to be saved as on 31st March, 2012 Rs. 25,235.08 Lacs ( Rs. 23,144.54 Lacs)}

C Letter of Comfort to banks against credit facilities/financial assistance 66,103.68 30,710.45 availed by subsidiaries

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 5,725.73 ( Rs. 45,557.21 Lacs).

3. Custom Duty saved on material consumed imported under advance license scheme as on 31st March, 2012 and 31st March, 2011 is Rs. 34.29 Lacs and Rs. 353.26 Lacs respectively. The management is of the view that considering the past export performance, future prospects and going concern concept there is certainty that pending export obligation under advance licenses will be fulfilled before expiry of the respective licenses.

4. Exceptional items includes :

a) Gain/(Loss) (net) of ( Rs. 17,231.29 Lacs) { Rs. 4,741.27 Lacs} on translation/settlement of foreign currency monetary items (including borrowing), gain / (loss) of Rs. 456.08 Lacs {( Rs. 600.56 Lacs)} upon marked to market of derivatives contracts, gain of Rs. 1,045.24 Lacs ( Rs. 1,281.78 Lacs) on forward cover cancelation, resulting from volatile global market conditions.

b) During the year, recomputation of energy billing to Gridco for the year 2010-11 as per the order of OERC resulting in net loss of Rs. 1,484.36 Lacs.

c) As per the settlement between Xstrata and the company (Jindal Stainless Limited), Rs. 3,561.60 Lacs has been considered as payable to Xstrata against the disputed shipments of Coking Coal claim (Note no.38).

5. Appeals in respect of certain assessments of Sales Tax / Income Tax are pending and additional tax liabilities/refunds, if any, are not determinable at this stage. Adjustments for the same will be made after the same are finally determined. In the opinion of management there will not be material liability on this account.

6. a) Addition/adjustment to Plant & Machinery / Capital Work-In-Progress includes Rs. 41,153.60 Lacs (Net Debit) {Rs. 6,508.11 Lacs (Net Credit)} on account of foreign exchange fluctuation on Loan/Liability including fluctuation relating to forward cover. (Includes amount disclosed in Note No. 43 (c) below).

b) Addition to Building and Plant & Machinery include interest amounting to Rs. 7,380.81 Lacs and Rs. 53,466.65 Lacs respectively.

c) Interest expenses includes pro-rata premium of Rs. 41.99 Lacs (Net Credit) {Rs. 90.92 Lacs (Net Debit)}

7. Corporate Debt Restructuring:

i) Pursuant to the approval of CDR (the Scheme) in January 2010 and signing of Master Restructuring Agreement (MRA) in March 2010, the financial obligations to the lenders was rescheduled including creation of funded interest term loan (FITL), adjustment in interest rates and additional security in favour of lenders. The Scheme was subsequently amended in December 2010 on account of early completion of certain projects and reduction in FITL. Interest has been accounted for based on the Scheme and the amendments thereof.

ii) The Funded Interest Term Loan (FITL) has been created on certain credit facilities as per the Scheme.

iii) The Credit facilities/loans under CDR is additionally secured by unconditional and irrevocable Personal guarantee of VC & MD Mr. Ratan Jindal.

iv) Under the Scheme, the company have pari passu pledged and submitted non-disposal undertaking for all its investments in subsidiaries as listed below :

- JSL Lifestyle Limited

- JSL Logistics Limited

- PT. Jindal Stainless Indonesia

- Jindal Stainless UK Limited

- Jindal Stainless FZE

- JSL Group Holdings Pte. Limited

- JSL Architecture Limited

- Jindal Stainless Madencilik Sanayi ve Ticaret A.S.

- Jindal Aceros Inoxidables S.L.

- Iberjindal S.L.

v) As per the Scheme, the promoters were to arrange equity of Rs. 515 crore which included Rs. 145 crore linked to sacrifices of lenders as stipulated and balance Rs. 370 crore towards further capital expenditure. The company had infused fresh equity of Rs. 247 crore by way of QIP equity placement in March 2010 and balance equity is proposed to be deferred on account of deferment of underlying capital expenditure.

vi) Certain conditions and covenants under the Scheme are in process of compliance. Certain secured facilities are subject to balance confirmations and/or reconciliation.

vii) During the year, the company has made proposal to its lenders to re-work its debt obligations including reworking of repayment schedule, adjustments towards interest obligations etc and the proposal is under considerations with the lenders.

8. The company has filed Writ Petition (C) before the Hon'ble High Court of Orissa, challenging the order passed by the Dy Commissioner of Commercial Tax, Jajpur for the period from 01/10/2006 to 30/09/2010, for payment of Entry Tax under the Orissa Entry Tax Act 1999 on the goods procured from outside the territory of India. The demand is on 2/3rd amount of Entry Tax on the goods imported from outside the territory of India on which the payment of 1/3rd amount of entry tax deposited as per the interim order of the Hon'ble Supreme Court. The amount of demand is Rs. 27.00 Crores Interest of Rs. 2.17 Crores Penalty of Rs. 54.01 Crores.

The Hon'ble Court has heard the matter and vide interim order dated 14.03.2012, directed the company to deposit 50% of the amount of interest i.e. Rs. 1.08 crores by 25.03.2012 and granted stay for the balance amount of demand till disposal of the case. The company has deposited the amount within the permitted time and informed the Hon'ble Court.

9. Sundry debtors include due from Grid corporation of Orissa (Gridco) Limited outstanding for more than six month amounting to Rs. 102.87 crore. The company had initiated legal action for recovery of amount due upto the end of the previous year and part of the debtors has been realized during the financial year 2010-11. Pending litigation, these debtors balances are not reconciled. The debtors also include interest on overdue amount accounted for in terms of contractua obligation. The management is hopeful of recovery of these debtors from Gridco.

10. Initially the project was conceived in SEZ and the formal approval was granted by the Ministry of Commerce and Industry vide letter No.F2/444/2006.SEZ dated 25.10.2006 for development of a Special Economic Zone for Stainless steel and ancillary/downstream industry at Kalinga Nagar, Orissa. Due to change in global economic scenario and on the Company's request for de-notification of SEZ, appropriate/concerned authority finally approved after refund of applicable taxes / duties. Finally your company has successfully exited from SEZ Scheme.

11. The company has filed Writ Petition (C) before the Hon'ble High Court of Orissa, Cuttak challenging the order passed by the Jt Commissioner of Commercial Tax, Jajpur disallowing the issue of C Form for the procurement of plant and machinery for Captive Power Plant during the year 2005-06, 2006-07 & 2007-08. The Hon'ble Court heard the matter and passed interim order dated 14.03.2012, directing the company to deposit 25% out of total demand amounting Rs. 33.06 Crores and the balance amount of demand have been stayed till final disposal of the matter. The company has deposited the amount within the permitted time and informed the Hon'ble Court.

12. During June 2008, Jindal Stainless Limited (JSL) entered into coking coal contract with M/s. Xstrata Coal Queensland Pty. Ltd. (Xstrata) for two shipments of coking coal (50,000 MT each). Certain disputes arose between the parties in earlier years. Xstrata invoked Arbitration at London Court of International Arbitration (LCIA) and claimed a loss of USD 12.5 million. LCAI passed an award of USD 8 million plus interest and costs against JSL. JSL had challenged the award by filing its objections u/s 34 of Arbitration and Conciliation Act 1996, in the Hon'ble District Court of Odisha at Cuttack, wherein the Court had admitted JSL's petition and had issued notice to Xstrata.

During the year, Xstrata had initiated enforcement proceedings against certain overseas assets of JSL, including immovable property situated in London, United Kingdom, assets of JSL's overseas subsidiaries and JSL's investments in its overseas subsidiaries. Subsequent to above, the existing lenders initiated their claims in some of the proceedings, pursuant to their rights under the security package.

Xstrata has now in-principle agreed to settle the claim for a total amount of USD 7 million, however, this is subject to necessary statutory approvals and execution of settlement agreement to this effect. Pending the fulfillment of foregoing requirements, a provision has been created for equivalent of USD 7 million under the head Exceptional Items.

13. (A) certain balances of debtors, trade payable and other liabilities are subject to confirmation and/or reconciliation.

(B) Certain charges created for secured loans are in process of satisfaction.

(C) Although the book value/fair value of certain unquoted investments amounting to Rs. 3,663.10 Lacs ( Rs. 3,663.10 Lacs), as reflected in Note no 12, including investment in a foreign subsidiary is lower than the cost or companies are having negative net worth, considering the strategic and long term nature of the investment, future prospectus and assets base of the investee company, such decline, in the opinion of the management, has been considered to be of temporary nature and hence no provision for the same is considered necessary.

The company has also given inter corporate deposit to its subsidiary company amounting to Rs. 4,639.70 Lacs ( Rs. 4,430.11 Lacs) where the subsidiary companies has accumulated losses/negative net worth. In view of the long term involvement of the company in the said companies no provision has been considered necessary.

14. Advance recoverable in cash or in kind or for value to be received includes:- (a) Interest free loan to employee amounting to Rs. 35.62 Lacs ( Rs. 16.82 Lacs) in the ordinary course of business and as per employee service rules of the company. Maximum balance outstanding during the year is Rs. 61.85 Lacs ( Rs. 28.16 Lacs).

(b) Rs. 22.30 Lacs ( Rs. 22.30 Lacs) as advance against share application money with subsidiary company.

15. Research and Development expenses for the year amounting to Rs. 86.47 Lacs ( Rs. 63.28 Lacs) on account of revenue expenditure charged/debited to respective heads of accounts.

16. The Haryana Government levied w.e.f. 05.05.2000 a Local Area Development Tax (the LADT Act) on the Manufacturing units in the State of Haryana on the entry of goods for use and consumption. JSL and other units have challenged the Act in the Hon'ble Punjab and Haryana High Court. The Hon'ble Punjab and Haryana High Court disallowed the petition in December, 2001 and the company had by a Special Leave Petition challenged the Order of High Court in the Hon'ble Supreme Court. The Hon'ble Supreme Court referred the matter to a 'five judges' Constitutional Bench, which laid certain parameters to examine the Act on those lines. On the basis of these parameters the Hon'ble High Court have declared the Act to be ultra virus on 14th March, 2007. Since, this issue was being canvassed by various High Courts, the Hon'ble Supreme Court gave an Interim Order that those states where the High Courts have given judgment in favour of the petitioner, no tax would be collected. In the mean time the Haryana Government has repealed the LADT Act and introduced another Act by the name of 'Entry Tax' on the same lines. That Act was also been held ultra virus by the High Court. However, on prudence basis, the liability has been fully provided for. The order of Punjab and Haryana High Court and other judgements of all the Courts of India have been long pending. The State Governments have requested the Hon'ble Supreme Court that it is very difficult for them to run the Government. So at least till the pendency of the cases in the Hon'ble Supreme Court they may be allowed to charge from past liability and also from the future liability to be accrued. On 30th October, 2009, the Hon'ble Supreme Court have directed that 1/3rd of the liability is to be paid by all the assesses whose cases are pending in the High Courts. As, at present, there is no Act either LADT/Entry Tax prevalent in Haryana State, no tax is being collected from the assesses however undertaking have given by assesses that in case they lose they will make the payment. As such on prudence basis, full liability has been provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters of the states have been referred to a larger 9-Judges Constitutional Bench of the Supreme Court, where the judgement of 7-Judges Constitutional Bench passed 49 years ago would be revisited. Constitution Bench has not been constituted as yet and the status of the case is as it is and at present no tax is being collected/paid in Haryana.

17. On 28th July, 2010, the company has granted 3,577,500 stock options to eligible employees of the company, its subsidiaries including non executive directors (excluding Nominee Director), as per Company's Employee Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock options is Rs. 75/- per share which would gradually vest over a maximum period of 4 years from the date of grant based on specified criteria, as may be decided by Compensation Committee. During the year ended on 31st March, 2012, 487,500 (471,250) stock options lapsed due to resignation, retirement etc.

18. Finance Lease

Assets acquired under leases where the company has substantially all the risks and rewards of ownership are classified as finance lease. Such assets are capitalized at inception of the lease at the lower of the fair value or net present value if minimum lease payments and a liability is created for an equivalent amount.

Lease interest charged to profit & loss for right to use of CTL Machine (Cut to length) for the services regarding cutting of Stainless Steel sheets.

19. During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements, however it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

20. The company has exercised option available to its under clause 46A of Accounting Standard AS 11 as amended by the Companies (Accounting Standards) (Second Amendment) Rules, 2011 in respect of accounting for fluctuation in foreign exchange relating to "Long Term Foreign Currency Monetary Items". Accordingly, during the year, the company has adjusted a sum of Rs. 5,611.19 Lacs to the cost of its fixed assets on account of such difference arising during the year ended on 31st March, 2012, which was hitherto charged to the profit & loss account.

21. Segment Reporting

i) Information about Business Segment ( for the year 2011-12 )

Company operates in a Single Primary Segment ( Business Segment ) i.e. Stainless Steel products.

22. Related Party Transactions

A List of Related Party & Relationship ( As identified by the Management )

a) Subsidiary Companies :

1 PT. Jindal Stainless Indonesia

2 Jindal Stainless Steelway Limited

3 JSL Lifestyle Limited

4 JSL Architecture Limited

5 Jindal Stainless UK Limited

6 Jindal Stainless FZE

7 Green Delhi BQS Limited

8 Jindal Stainless Madencilik Sanayi Ve Ticaret Anonim Sirketi

9 JSL Media Limited

10 Jindal Aceros Inoxidables S.L.

11 JSL Group Holdings Pte. Limited

12 JSL Logistics Limited

13 Iberjindal S.L.

14 Jindal Stainless Italy Srl.

15 JSL Ventures Pte. Limited

16 JSL Europe SA

17 JSL Minerals & Metals SA

b) Joint Ventures:

1 MJSJ Coal Limited

c) Key Management Personnel :

1 Smt. Savitri Devi Jindal Chairperson (till 31.03.2011)

2 Shri Ratan Jindal Vice-Chairman & Managing Director

3 Shri Ramesh R. Nair President & Executive Director (w.e.f. 03.11.2011)

4 Shri Arvind Parakh Director - Finance (till 01.10.2011)

5 Shri S.S. Virdi Executive Director & Chief Operating Officer (w.e.f. 06.04.2010)

6 Shri Jitender P Verma Executive Director - Finance (w.e.f. 09.02.2012)

7 Shri N.P. Jayaswal Executive Director (till 06.04.2010)

8 Shri Jitendra Kumar Company Secretary

d) Enterprises over which Key Management Personnel and their relatives exercise significant influence with whom transactions have been taken place during the year:

1 Jindal Steel & Power Limited

2 JSW Steel Limited

3 Jindal Saw Limited

4 Jindal Industries Limited

5 Nalwa Steel & Power Limited

6 Bir Plantation Private Limited

7 Sona Bheel Tea Limited

8 Jindal Overseas Holding Limited

9 JSW Ispat Steel Limited

23. Previous years' figures have been re-arranged and regrouped wherever considered necessary .

24. Figures in bracket indicate previous year figures.

25. Note 1 to 58 are annexed to and form integral part of the Balance Sheet and Statement of Profit & Loss.


Mar 31, 2011

( Rs. in Lacs )

1A. Contingent Liabilities not provided for in respect of: As at As at

31.03.2011 31.03.2010

a) Counter Guarantee given to Company's Bankers for the guarantee given by them on behalf of Company. 4,293.15 5,754.63

b) Letter of Credit outstanding 81,132.32 60,429.56

c) Bills discounted by banks 26,290.73 7,125.36

d) i) a) Sales tax Demands against which Company has preferred appeals. 280.68 280.68

b) Income tax Demands against which Company has preferred appeals. 6,621.38 3,386.73

ii) Excise Duty/Service Tax Show Cause Notices/Demands against which 9,544.41 5,782.65 company has preferred appeals.

e) Claim against the company not acknowledged as debt 9,547.30 9,269.70

f) Guarantee given to custom authorities for import 80,934.71 17,006.03 under EPCG Scheme. {Custom duty saved/to be saved as on 31st March, 2011 Rs. 23,144.54 Lacs ( Rs. 1,822.67 Lacs)}

g) Demand made by Sr. Dy. Director of Mines, Notified Authority, 320.49 320.49 Jajpur Road Circle, Odisha as cess on Chromite Ore production.

The matter being pending with Hon'ble Supreme Court.

2B. Custom Duty saved on material consumed imported under advance license scheme as on 31st March, 2011 and 31st March, 2010 is Rs. 353.26 Lacs and Rs. 1,045.41 Lacs respectively. The management is of the view that considering the past export performance, future prospects and going concern concept there is certainty that pending export obligation under advance licenses will be fulfilled before expiry of the respective licenses.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 45,557.21 Lacs (Rs. 91,352.22 Lacs).

4. Appeals in respect of certain assessments of Sales Tax/Income Tax are pending and additional tax liabilities/refunds, if any, are not determinable at this stage. Adjustments for the same will be made after the same are finally determined. In the opinion of management there will not be material liability on this account.

5. Exceptional Items includes gain (net) of Rs. 4,741.27 Lacs (Rs. 18,072.60 Lacs) on translation/settlement of foreign currency monetary items (including borrowing), gain / (loss) of Rs. (600.56) Lacs (Rs. 2,601.04 Lacs) upon marked to market of derivatives contracts, gain of Rs. 1,281.78 Lacs (Rs. 2,613.59 Lacs) on forward cover cancelation, resulting from volatile global market.

6. a) Addition/adjustment to Plant & Machinery / Capital Work-In-Progress includes Rs. 6,508.11 Lacs (Net Credit) {Rs. 9,282.36 Lacs (Net Credit)} on account of foreign exchange fluctuation on Loan/Liability including fluctuation relating to forward cover. (Includes amount disclosed in Note No. 16 (c) below).

b) Interest paid on fixed loan includes pro-rata premium of Rs. 90.92 Lacs (Net Debit) {Rs. 703.52 Lacs (Net Debit)}.

7. Corporate Debt Restructuring:

a) Pursuant to the approval of CDR (the Scheme) under the CDR mechanism approved by the EMPOWERED group of CDR (CDR EG) in previous year and Master Restructuring Agreement (MRA) had been executed with lenders. The Scheme inter - alia includes restructuring of Re-payment Schedule, Reduction/adjustment in interest rates and additional security in favour of CDR lenders by pledge of Shares under promoters control in the company.

b) Interest has been accounted for based upon terms of package/ confirmation so far received from banks. Balance of certain secured loans (including FITL) is subject to confirmation and/or reconciliation.

c) The Funded Interest Term Loan (FITL) has been created on certain credit facilities as per CDR scheme approved. On the decision of the MC that the entire debt services by the company post cut off date i.e. 30th June, 2009 was to be refunded back to the company, which however was pending for sanctions from few of the respective banks/FIs. Accordingly the value of debts service (including interest paid) post cut off date amounting to Rs. 1,353.36 Lacs (Rs. 9,048.70 Lacs) to be refunded by banks/Institutions included under Loans and Advances.

d) As stipulated, promoters shall arrange to bring funds to meet short fall in cash flows on demand by CDR EG.

e) The Credit facilities/ loans under CDR is further secured by unconditional and irrevocable Personal guarantee of VC & MD Mr. Ratan Jindal. Further for waiver of Unconditional and irrevocable corporate guarantee of promoters group companies (as stated in MRA) in proportion to the numbers of equity shares held by them in the company, final decision is under consideration. Balance certain covenants/conditions as stipulated in CDR package are in process of compliance.

f) (i) During the year Company has received necessary approval for part conversion of Non Convertible Debenture of Rs. 180 crores into Rupee Term Loan. (ii) Further, during the year, the CDR lenders have approved for restricting the FITL build up period to 31st March, 2011 instead of earlier approved FITL build up period till 31st March, 2012. Thus, post 31st March, 2011, the company has also started to service the interest on the respective domestic term loans on which the FITL was being created, instead of being converted into FITL, and (iii)The company have pari passu pledged and submitted non-disposal undertaking for all its investments in subsidiaries as listed below :

- JSL Life Style Limited (formerly Austenitic Creations Private Limited)

- JSL Logistics Limited

- PT. Jindal Stainless Indonesia

- Jindal Stainless UK Limited

- Jindal Stainless FZE

- JSL Group Holdings Pte. Limited

- JSL Architecture Limited (formerly Jindal Architecture Limited)

- Jindal Stainless Madencilik Sanayi Ticaret A.S.

- Jindal Aceros Inoxidables S.L.

8. During the financial year 2007-08 the Company had filed Writ Petition in Hon'ble High Court of Odisha challenging the validity of Entry Tax Act, 1999.The Hon'ble High Court of Odisha vide their order dated 16.05.2007 granted stay to the extent of depositing 50% of the entry tax demand raised by the Commercial tax Department. However, the Company has provided full liability for entry tax in the books of accounts during the year 2007-08 while deposited 50% amount with the Department. The outstanding amount of liability on this account as on 31st March, 2008 was Rs. 351.65 Lacs which still remains outstanding.

Subsequently in February, 08, the Hon'ble High Court disposed off the Writ Petition. As per legal advice received by the Company on interpretation of the High Court Order, it believes that its liability will be less than the amount already deposited. Accordingly, the Company has filed the refund application which has been rejected by Joint Commissioner. Subsequently the company has gone for appeal to the Appellate Authority and the hearing is pending.

The commercial tax department has gone for appeal to Hon'ble Supreme Court against the Order of High Court & the Hon'ble Supreme Court has been given stay against the order of Hon'ble High Court. The company again appealed to the Hon'ble Supreme Court against the stay & the Hon'ble Supreme Court after several hearing, ordered to deposit under protest 1/3rd of the outstanding liability. Accordingly the company is depositing 1/3rd of the liability as per order given by the Hon'ble Supreme Court. Pending this, liability of Rs. 4,575.98 lacs may arise depending upon final decesion by Hon'ble Supreme Court.

9. Sundry debtors include due from Grid corporation of Odisha (Gridco) Limited outstanding for more than six month amounting to Rs. 63.43 crore .The company had initiated legal action for recovery of amount due upto the end of the previous year and part of the debtors has been realized during the financial year 2010-11.Pending litigation, these debtors balances are not reconciled. The debtors also include interest on overdue amount accounted for in terms of contractual obligation. The management is hopeful of recovery of these debtors from Gridco.

10. The Company was granted formal approval by the Ministry of Commerce and Industry vide letter No.F.2/444/2006.SEZ dated 25.10.2006 for development of a Special Economic Zone for Stainless steel and ancillary/ downstream industry at Kalinga Nagar, Odisha. The SEZ has been notified vide Notification S.O.2004(E) dated 28.11.2007. The Company was also granted approval to set up a SEZ unit in the said SEZ vide letter No.SEZ/LIC/J-7(1)/2008/955 dated 11.06.2008 issued by the Development Commissioner, Falta SEZ. Due to change in global economic scenario, the Company's request for de- notification of SEZ was in-principle approved by the Board of Approval (BOA) and the Unit Approval Committee has approved de-bonding of the SEZ unit subject to refund of taxes / duties. The amount of Tax/ Duty already paid on account of customs duty, excise duty and others is Rs. 10,160.16 Lacs. Additionally, the Company has taken EPCG license for Rs. 567.24 Crores as per Rule 74 of Special Economic Zones Rules, 2006. Further, for discharging the liability under the Central Sales Tax, the company is collecting the relevant forms and submitting the same with the relevant Development Commissioner. The management is confident that final de-bonding certificate will be received once all the requisite formalities are completed.

11. During June 2008, JSL Stainless Ltd. (JSL) entered into Coking Coal Contract with M/s Xstrata Coal Queensland Pty Ltd. (Xstrata) for two shipments of coking coal (50,000 MT each). Certain disputes arose between the parties. Xstrata invoked Arbitration at London Court of International Arbitration (LCIA) and claimed a loss of 12.5 million US$. LCIA made an award of 8 million US$ against JSL.

JSL has challenged the award by filing objections against the award U/s 34 of Arbitration and Conciliation Act 1996, in the Hon'ble District Court of Odisha, wherein the Court has admitted our petition and has issued notice to Xstrata.

12. a) Certain balances of sundry debtors, sundry creditors are subject to confirmation and/or reconciliation.

b) Certain charges created for secured loans are in process of satisfaction.

c) Although the book value / fair value of certain unquoted investments amounting to Rs. 3,663.10 Lacs (Rs. 3,663.10 Lacs), as reflected in schedule no 6, including investment in foreign subsidiary is lower than the cost, considering the strategic and long term nature of the investment, future prospectus and assets base of the investee company, such decline, in the opinion of the management, has been considered to be of temporary nature and hence no provision for the same is considered necessary.

The company has also given inter corporate deposit to its subsidiary company amounting to Rs. 4,430.11 Lacs (Rs. 4,214.32 Lacs) where the subsidiary companies has accumulated losses / negative net worth. In view of the long term involvement of the company in the said companies no provision has been considered necessary.

13. Advance Recoverable in Cash or in kind or for value to be received includes:

a) Rs. Nil (Rs. Nil), maximum amount outstanding at any time during the Year is Rs. Nil (Rs. 2.89 Lacs) being the amount due from directors/officers of the company.

b) Interest free loan to employees amounting to Rs. 16.82 Lacs (Rs. 11.50 Lacs) in the ordinary course of the business and as per employee service rules of the Company. Maximum balance outstanding during the year Rs. 28.16 Lacs (Rs. 24.53 Lacs).

c) Rs. 22.30 Lacs (Rs. 22.30 Lacs) as advance against share application money with subsidiary company.

14. Research and Development expenses for the year amounting to Rs. 63.28 Lacs (Rs. 39.14 Lacs) on account of revenue expenditure and Rs. Nil (Rs. Nil) on account of capital expenditure have been charged/debited to respective head of accounts.

15. The Haryana Government levied w.e.f. 05.05.2000 a Local Area Development Tax (the LADT Act) on the manufacturing units in the State of Haryana on the entry of goods for use and consumption. JSL and other units have challenged the Act in the Hon'ble Punjab and Haryana High Court. The Hon'ble Punjab and Haryana High Court disallowed the petition in December, 2001 and the company had by a Special Leave Petition challenged the Order of High Court in the Hon'ble Supreme Court. The Hon'ble Supreme Court referred the matter to a 'five judges' Constitutional Bench, which laid certain parameters to examine the Act on those lines. On the basis of these parameters the Hon'ble High Court have declared the Act to be ultra virus on 14th March, 2007. Since, this issue was being canvassed by various High Courts, the Hon'ble Supreme Court gave an Interim Order that those states where the High Courts have given judgement in favour of the petitioner, no tax would be collected. In the mean time the Haryana Government has repealed the LADT Act and introduced another Act by the name of 'Entry Tax' on the same lines. That Act was also been held ultra virus by the High Court. However, on prudence basis, the liability has been fully provided for. The order of Punjab and Haryana High Court and rather judgements of all the Courts of India have been long pending. The State Governments have requested the Hon'ble Supreme Court that it is very difficult for them to run the Government. So at least till the pendency of the cases in the Hon'ble Supreme Court they may be allowed to charge from past liability and also from the future liability to be accrued. On 30th October, 2009, the Hon'ble Supreme Court have directed that 1/3rd of the liability is to be paid by all the assesses whose cases are pending in the High Courts. As, at present, there is no Act either LADT/Entry Tax prevalent in Haryana State, no tax is being collected from the assesses however undertaking have given by assesses that in case they lose they will make the payment. As such on prudence basis, full liability has been provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters of the states have been referred to a larger 9-Judges Constitutional Bench of the Supreme Court, where the judgement of 7-Judges Constitutional Bench passed 49 years ago would be revisited. Constitution Bench has not been constituted as yet and the status of the case is as it is and at present no tax is being collected/paid in Haryana.

16. Money received in Escrow account as on 31st March, 2010 against allotment of 23,447,240 nos. equity shares of Rs. 2/-each at price of Rs. 105.50 per share (including premium of Rs. 103.50 per share) of amounting to Rs. 24,736.84 Lacs from Qualified Institutional Buyer's have been fully utilized for the purpose the said issue of shares was made.

The expected return on the plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of assets management, historical results of returns on the plan assets and the policy for the management of plan assets management.

The estimates of future salary increase, considered in actuarial valuation, taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

f) Pending the issuance of the Guidance Note from the Actuarial Society of India, the company's actuary has expressed his inability to reliably measure the provident fund (funded) liability.

17. The Company has given Letter of Comfort to Banks against credit facilities/financial assistance [amount outstanding as on 31st March, 2011 Rs. 30,710.45 Lacs (Rs. 26,173.23 Lacs)] availed by a subsidiary.

18. On 28th July, 2010, the company has granted 3,577,500 stock options to eligible employees of the company, its subsidiaries including non executive directors (excluding Nominee Director), as per Company's Employee Stock Option Scheme, 2010 (ESOP 2010). The exercise price of stock options is Rs. 75/- per share which would gradually vest over a maximum period of 4 years from the date of grant based on specified criteria, as may be decided by Compensation Committee. During the year ended on 31st March, 2011, 471,250 stock options lapsed due to resignation, retirement etc.

19. Finance Lease

Assets acquired under leases where the company has substantially all the risks and rewards of ownership are classified as finance lease. Such assets are capitalized at inception of the lease at the lower of the fair value or net present value if minimum lease payments and a liability is created for an equivalent amount.

Lease interest charged to profit & loss for right to use of CTL Machine (Cut to length) for the services regarding cutting of Stainless Steel sheets.

20 Segment Reporting

i) Information about Business Segment ( for the year 2010-11 )

Company operates in a Single Primary Segment ( Business Segment ) i.e. Stainless Steel products.

21 Related Party Transactions

A List of Related Party & Relationship ( As identified by the Management )

a) Subsidiary Companies :

1 PT. Jindal Stainless Indonesia

2 Jindal Stainless Steelway Limited

3 JSL Lifestyle Limited (formerly Austenitic Creations Private Limited)

4 JSL Architecture Limited (formerly Jindal Architecture Limited)

5 Jindal Stainless UK Limited

6 Jindal Stainless FZE

7 Green Delhi BQS Limited

8 Jindal Stainless Madencilik Sanayi Ve Ticaret Anonim Sirketi

9 JSL Media Limited (formerly Parivartan City Infrastructure Limited)

10 Jindal Aceros Inoxidables S.L.

11 JSL Group Holdings Pte. Limited

12 JSL Logistics Limited

13 Iberjindal S.L.(w.e.f. 07.05.2009)

14 Jindal Stainless Italy Srl.

15 JSL Ventures Pte. Limited

16 JSL Europe SA

17 JSL Minerals & Metals SA

b) Joint Ventures:

1 MJSJ Coal Limited

c) Key Management Personnel :

1 Smt. Savitri Devi Jindal Chairperson

2 Shri Ratan Jindal Vice-Chairman & Managing Director

3 Shri Arvind Parakh Director - Finance

4 Shri S.S. Virdi Executive Director & Chief Operating Officer (w.e.f. 06.04.2010)

5 Shri N.P. Jayaswal Executive Director (till 06.04.2010)

6 Shri Jitendra Kumar Company Secretary

d) Enterprises over which Key Management Personnel and their relatives exercise significant influence with whom transactions have been taken place during the year:

1 Jindal Steel & Power Limited

2 JSW Steel Limited

3 Jindal Saw Limited

4 Jindal Industries Limited

5 Nalwa Steel & Power Limited

6 Bir Plantation Private Limited

7 Sona Bheel Tea Limited

8 Jindal Overseas Holding Limited


Mar 31, 2010

(Rs. in Lacs) 1A. Contingent Liabilities not provided for in respect of: As at As at 31.03.2010 31.03.2009 a) Counter Guarantee given to Companys Bankers for the 5,754.63 7,918.70 guarantee given by them on behalf of Company. b) Letter of Credit outstanding 60,429.56 151,710.75 c) Bills discounted by banks 7,125.36 11,521.45 d) l) a) Sales tax Demands against which Company has preferred appeals. 280.68 281.68 b) Income tax Demands against which Company has preferred appeals. 3386.73 2594.04 u) Excise Duty/Service Tax Show Cause Notices/Demands against which 5,782.65 3,752.23 company has preferred appeals. e) Claim against the company not acknowledged as debt 9269.70 497.99 f) Guarantee given to custom authorities for import under EPCG Scheme. 17006.03 10820.23 g) Demand made by Sr. Dy Director of Mines, Notified Authority, 320.49 320.49 jajpur Road Circle, Onssa as cess on Chromite Ore producnon. The matter being pending with Honble Supreme Court.

2A. Custom Duty saved on material consumed imported under advance license scheme as on 31st March, 10 and 31st March, 09 is Rs. 1,045.41 Lacs and Rs. 1,067.59 Lacs respectively. The management is of the view that considering the past export performance and future prospects there is certainty that pending export obligation under advance licenses will be fulfilled before expiry of the respective licenses.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 91,352.22 Lacs (Rs. 249,931.54 Lacs).

4. Appeals in respect of certain assessments of Sales Tax/Income Tax are pending and additional tax HabiMes/refunds, if any, are not determinable at this stage. Adjustments for the same will be made after the same are finaUy determined. In the opinion of management there will not be material liability on this account.

5. a) Exceptional Items includes gam / (loss) (net) of Rs. 18,072.60 Lacs (Rs. (51,902.07 Lacs)) on translation/settlement of foreign currency monetary items (including borrowing), gam / (loss) of Rs. 2,601.04 Lacs (Rs. (2,601.04 Lacs)) upon marked to market of derivatives contracts, gam of Rs. 2,613.59 Lacs (Rs. 420.13 Lacs) on forward cover cancelation and loss of Rs. Nil (Rs. 1,631.66 Lacs) on settlement of commodity hedging contract, resulting from volatile global market.

b) During the previous year, coking coal purchased for coke oven plant was sold out / contracted for sale by the company due to delay in commissioning of plant and resulting a loss of Rs. 3,779.70 Lacs charged to revenue as exceptional item.

6. a) Addition/adjustment to Pkmt & Machinery / Capital Work-in-Progress includes Rs. 9,282.36 Lacs (Net Credit) {Rs. 29,162.62 Lacs (Net Debit)}on account of foreign exchange fluctuation on Loan/ Liability including fluctuation relatmg to forward cover (Includes amount disclosed mNote No. 14(c) below).

b) Interest paid on fixed loan includes pro-rata premium of Rs. 703.52 Lacs (Net Debit) {Rs. 1,067.46 Lacs (Net Debit)}.

7. Corporate Debt Restructuring:

(i) The debt restructuring scheme (the Scheme) under CDR Mechanism has been approved and Letter of Approval issued on 23rd January 2010. The scheme mter-alia includes restructuring of re-payment schedule, interest funding, reduction/adjustment in interest rates and additional security in favour of CDR lenders by pledge of shares of promoters, as stipulated. Master Restructuring Agreement ("MRA") has been executed on 26th March 2010 with majority of Lenders. The impact in terms of the approved Scheme has been given on provisional basis. Pending confirmation of some lenders, additional impact, if any, will be accounted for as and when finally confirmed/assessed.

u) Interest has been accounted for based upon terms of package/confirmations so far received from the Banks. Balance of certain secured loans (including FITL) is subject to confirmanon and/or reconcilianon.

iii) (a) The Funded Interest Term Loan (FITL) has been created on certain credit facilities w.e.f. 1st July 2009 as per the CDR scheme approved by the CDR EG on 18th December 2009, respective letter of approval dated 23rd January 2010 and the Monitoring Committee (MC) meeting held on 7th May 2010. Further based on the decision of the MC that the entire debt serviced by the company post cut off date i.e. 30th June 2009 would have to be refunded to the company, which is however, subject to the approval of CDR EG and also the amendment to sanctions from the respective banks/FIs and accordingly the value of FITL created The FITL value has been considered based on sanctions so far received/to be received. The value of debt serviced (including interest paid) post cut off date amounting to Rs. 9,048.70 Lacs to be refunded by banks/Institutions post cut off date has been included under Loans and Advances.

(b) Part of Non- Convertible Debentures on cut off date shall be (has been converted pending compliance of certain conditions/ approval) reconstituted and/or converted into rupee term loan subject to the necessary approvals.

;iv) The Credit Facilities/loans under CDR will be further secured by unconditional and irrevocable Personal guarantee of VC & MD Mr. Ratan jmdal and unconditional and irrevocable corporate guarantee of promoters group companies (as stated in MRA) in proportion to the numbers of equity shares held by them in the company.

;v) CDR Empowered group have also snpukted that promoters shall arrange to bring funds and also pledge all unencumbered investments (m all subsidiaries either Indian or overseas) in subsidiaries on the Cut Off date subject to necessary approvals.

;vi) Certain covenants/conditions as snpulated in the CDR package are in the process of compliance.

8. During the financial year 2007-08 the Company had filed Writ Petition in Honble High Court of Onssa challenging the validity of Entry Tax Act, 1999. The Honble High Court of Onssa vide their order dated 16.05.2007 granted stay to the extent of depositing 50% of the entry tax demand raised by the Commercial tax Department. However, the Company has provided full liability for entry tax in the books of accounts during the year 2007-08 while deposited of 50% amount with the Department. The outstanding amount of liability on this account as on 31st March, 2008 was Rs. 351.65 Lacs which still remain outstanding.

Subsequently in February, 08, the Honble High Court disposed off the Writ Petition. As per legal advice received by the Company on interpretation of the High Court Order, it believes that its liability will be less than the amount already deposited. Accordingly, the Company has filed the refund application which has been rejected by joint Commissioner. Subsequently the company has gone for appeal to the Appellate Authority and the hearing is pending. For the year 2008-09, the company has computed and deposited the liability as per legal advice.

The commercial tax department has gone for appeal to Honble Supreme Court against the Order of High Court & the Honble Supreme Court has been given stay against the order of Honble Hgh Court. The company again appeal to the Honble Supreme Court against tne stay & the Honble Supreme Court after several hearing, order to deposit under protest1 /3rd of the outstanding liability of the company within 31st March, 10. Accordingly the company has deposited the amount within the specified limit given by the Honble Supreme Court.

9. Based on the intimation received from supplier regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. the required disclosure is given below*:

10. 0.50% Foreign Currency Convertible Bonds ("FCCB") under Unsecured Loans represents outstanding of principal and premium calculated on YTM basis amounting to Rs. 3,232.95 Lacs (USD 7.20 million). The company is under renegotiation of terms of its 0.50% FCCB, & pending this & receipt of necessary approvals, if any, so required, outstanding FCCBs amounting to Rs.14,031.40 Lacs (USD 31.25 million) were not redeemed on due date, i.e. 24th December 2009 and premium after due date has been provided at the rate of 5.75% per annum as against the agreed interest rate of 8% per annum. Accordingly additional liability of Rs. 84.19 Lacs for post due date period has not been provided for. Diluted EPS is currently calculated without considering conversion right.

11. a) Certain balances of sundry debtors, sundry creditors are subject to confirmation and/or reconciliation.

b) Certain charges created for secured loans are in process of satisfaction/modification.

c) Although the book value of investment in certain subsidiary companies (book value amounting to Rs. 2,061.49 Lacs (Rs. 7,529.87 Lacs)) is lower than the cost, considering the strategic and long term nature of the investments, future prospects and assets base of mvestee company, such decline, in the opinion of the management has been considered to be of temporary in nature and hence no provision there against is considered necessary.

12. Advance Recoverable in Cash or in kind or for value to be received includes:

a) Rs. Nil (Rs. 2.89 Lacs), maximum amount outstanding at any time during the Year is Rs. 2.89 Lacs (Rs. 8.09 Lacs) being the amount due from directors/officers of the company.

b) Interest free loan to employees amounting to Rs. 11.50 Lacs (Rs. 21.43 Lacs) in the ordinary course of the business and as per employee service rules of the Company. Maximum balance outstanding during the year Rs. 24.53 Lacs (Rs. 28.61 Lacs).

c) Rs. 22.30 Lacs (Rs. 29.08 Lacs) as advance against share application money with subsidiary companies.

13. Research and Development expenses for the year amounting to Rs. 39.14 Lacs (Rs. 77.26 Lacs) on account of revenue expenditure and Rs. Nil (Rs. 92.80 Lacs) on account of capital expenditure have been charged/debited to respective head of accounts.

c) In compliance of clarifications of ICAI on outstanding derivatives which are not covered by AS-ll"Accounnng for effects of changes in foreign exchange rates", the Company has accounted for Mark to market losses on derivatives entered for INR Term Loans amounting to Rs. 3,524.99 Lacs (Rs. 5,221.84 Lacs) & against interest rate auction Rs. 2,820.98 Lacs (Rs. 3,164.38 Lacs) till 31st March, 10 which have been charged to Pre-operanve expenses.

15. The Haryana Government levied w.e.f. 05.05.2000 a Local Area Development Tax (the LADT Act) on the manufacturing units in the State of Haryana on the entry of goods for use and consumption. JSL and other units have challenged the Act in the Honble Punjab and Haryana High Court. The Honble Punjab and Haryana High Court disallowed the petition in December, 2001 and the company had by a Special Leave Pention challenged the Order of High Court in the Honble Supreme Court. The Honble Supreme Court referred the matter to afive judges Constitutional Bench, which laid certain parameters to examine the Act on those lines. On the basis of these parameters the Honble ffigh Court have declared the Act to be ultra virus on 14th March, 2007. Since, this issue was being canvassed by various High Courts, the Honble Supreme Court gave an Interim Order that those states where the High Courts have given judgement in favour of the petitioner, no tax would be collected. In L mean nme the Haryana Government has repealed the LADT Act and introduced another Act by the name of Entry Tax on the same lines. That Act was also been held ultra virus by the High Court. However, on prudence basis, the liability has been fully provided for. The order of Punjab and Haryana High Court and rather judgements of all the Courts of India have been long pending. The State Governments have requested the Honble Supreme Court that it is very difficult for them to run the Government. So at least till the pendency of the cases in the Honble Supreme Court they may be allowed to charge from past liability and also from the future liability to be accrued On 30th October, 2009, the Honble Supreme Court have directed that l/3rd of the liability is to be paid by all the assesses whose cases are pending in the High Courts. As, at present, there is no Act either LADT/Entry Tax prevalent in Haryana State, no tax is being collected from the assesses however undertaking have given by assesses that in case they lose they will make the payment. As such on prudence basis, full liability has been provided for. In the meantime, i.e. on 16.04.2010 the Entry Tax matters of the states have been referred to a larger 9-judges Constitutional Bench of the Supreme Court.

16. As on 31st March, 2010, the company has received the funds in escrow account and allotted 23,447,240 equity shares of Rs. 2/- each at price of Rs 105.50 per share (including premium of Rs. 103.50 per share) to Qualified Institutional Buyers. Subsequent to the receipt of money in escrow account and the allotment of shares, the paid up share capital of the company have increased from Rs. 3,242.70 Lacs to Rs. 3,711.64 Lacs. Pending listing and receipts of release letter (dated 06^)4.2010) the amount of issue is shown as balance in escrow account under Cash & Bank Balances.

The expected return on the plan assets is determined considering several applicable factors mainly the composition of plan assets held. assessed risk of assets management, historical results of returns on the plan assets and the policy for the management of plan assets management.

The estimates of future salary increase, considered in actuarial valuation, taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

f) Pending the issuance of the Guidance Note from the Actuarial Society of India, the companys actuary has expressed his inability to reliably measure the provident fund (funded) liability.

18. The Company has given Letter of Comfort to Banks against credit facilities/financial assistance [amount outstanding as on 31st March, 2010 Rs. 26,173.23 Lacs (Rs. 17,808.69 Lacs)] availed by a subsidiary.

19 In the absence of profit under section 349 of the Companies Act, 1956 no computaion of net profit has been given.

20 Previous years figures have been re-arranged and regrouped wherever considered necessary.

21 Figures in bracket indicate previous year figures.

22 Schedule 1 to 20 are annexed to and form integral part of the Balance Sheet and Profit & Loss Account.

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