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Accounting Policies of Jindal Steel & Power Ltd. Company

Mar 31, 2016

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

Change in Accounting Policy

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

a) Depreciation and Amortization

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

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

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

1 BASIS OF PREPARATION

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

2 NON-CURRENT INVESTMENTS Unquoted

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

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

Current investments

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

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

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

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

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

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

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

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

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

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

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


Mar 31, 2015

I) Basis of Preparation of Financial Statements

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

ii) Use of estimates

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

iii) Fixed Assets - Depreciation and Amortisation

a. Tangible Assets

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

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

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

b. Intangible assets

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

c. Capital work-in-progress

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

d. Intangible assets under development

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

e. depreciation and Amortization

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

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

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

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

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

iv) Impairment of Assets

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

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

v) Accounting for Leases

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

vi) Borrowing Cost

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

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

vii) valuation of Inventories

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

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

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

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

viii) Foreign Currency Transactions

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

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

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

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

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

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

ix) Investments

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

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

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

x) Revenue Recognition

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

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

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

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

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

xi) Inter-Division Transfers/Captive sales

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

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

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

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

xii) Other Income

a. Claims receivable

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

b. Income from Investment

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

xiii) Interest Income

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

xiv) Employee Benefits

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

a) Provident Fund

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

b) Gratuity

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

c) Compensated absences

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

xv) Research and Development expenditure

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

xvi) Taxes on Income

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

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

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

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

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

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

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

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

xvii) Provisions, contingent liabilities, commitments and contingent assets

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

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

xviii) Earnings per share

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

xix) Financial derivatives

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

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

xx) Cash and cash equivalents

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

xxi) Segment Reporting

a) Identification of segments

Primary Segment

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

Secondary Segment

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

b) Inter-segment transfers

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

c) Allocation of common costs

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

d) Unallocated items

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

e) Segment Policies

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


Mar 31, 2014

I) Basis of Preparation of Financial Statements

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

ii) Use of estimates

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

iii) Fixed Assets - Depreciation and Amortisation

a. Tangible Assets

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

b. Intangible assets

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

c. Capital work-in-progress

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

d. Intangible assets under development

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

e. Depreciation and Amortisation

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

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

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

iv) Impairment of Assets

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

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

v) Accounting for Leases

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

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

vi) Borrowing Cost

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

vii) Segment Reporting

a) Identification of segments

Primary Segment

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

Secondary Segment

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

b) Inter-segment transfers

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

c) Allocation of common costs

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

d) Unallocated items

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

e) Segment Policies

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

viii) Valuation of Inventories

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

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

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

ix) Inter-Division Transfers

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

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

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

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

x) Foreign Currency Transactions

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

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

xi) Investments

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

xii) Revenue Recognition

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

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

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

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

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

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

xiii) Other Income

a. Claims receivable

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

b. Income from Investment

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

xiv) Excise Duty

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

xv) Employee Benefits

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

a) Provident Fund

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

b) Gratuity

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

c) Compensated absences

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

d) Other short term benefits

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

xvi) Research and Development expenditure

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

xvii) Taxes on Income

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

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

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

xviii)Provisions, contingent liabilities, commitments and contingent assets

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

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

xix) Earnings per share

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

xx) Financial derivatives

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

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

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

xxi) Cash and cash equivalents

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

b) Terms/rights attached to equity shares

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

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

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

e) Forfeited shares:

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

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

f) Buy back of equity shares :

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

g) Employees Stock purchase Scheme

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

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

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

DEBENTURES

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

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

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

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

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

TERM LOANS Security

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

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

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

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

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

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

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

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

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

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

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


Mar 31, 2012

I) Basis of Preparation of Financial Statements

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

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

ii) Use of estimates

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

iii) Fixed Assets and Depreciation

a) Fixed Assets

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

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

c) Intangible Assets

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

d) Depreciation and Amortisation

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

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

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

iv) Impairment of Assets

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

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

v) Accounting for Leases

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

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

vi) Borrowing Cost

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

vii) Segment Reporting

a) Identification of segments

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

b) Inter-segment transfers

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

c) Allocation of common costs

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

d) Unallocated items

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

e) Segment Policies

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

viii) Valuation of Inventories

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

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

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

ix) Inter-Division Transfers

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

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

x) Foreign Currency Transactions

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

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

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

xi) Investments

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

xii) Revenue Recognition

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

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

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

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

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

xiii) Other Income

a) Claims receivable

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

b) Income from Investment

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

xiv) Excise Duty

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

xv) Employee Benefits

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

a) Provident Fund

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

b) Gratuity

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

c) Compensated absences

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

d) Other short term benefits

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

xvi) Research and Development expenditure

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

xvii) Employee Stock Option Scheme

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

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

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

xviii) Taxes on Income

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

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

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

xix) Provisions, contingent liabilities, commitments and contingent assets

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

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

xx) Intangible assets under development

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

xxi) Earnings per share

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

xxii) Financial derivatives

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

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

xxiii) Cash and cash equivalents

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

b) Terms/rights attached to equity shares

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

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

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

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

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

e) Forfeited shares:

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

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

f) Shares reserved for issue under options

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DEBENTURES

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

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

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

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

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

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

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

TERM LOANS

Security

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

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

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

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

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

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

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

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

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

Cash credit from Banks

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

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

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

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

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

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

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

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

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


Mar 31, 2011

I) Basis of Preparation of Financial Statements

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

ii) Use of estimates

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

iii) Fixed Assets and depreciation

a) Fixed Assets

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

b) Expenditure during construction period

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

c) Intangible Assets

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

d) depreciation and Amortisation

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

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

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

iv) Impairment of Assets

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

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

v) Accounting for Leases

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

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

vi) Borrowing Cost

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

vii) Segment Reporting

a) Identifcation of segments

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

b) Inter-segment transfers

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

c) Allocation of common costs

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

d) Unallocated items

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

e) Segment Policies

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

viii) Valuation of Inventories

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

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

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

ix) Inter-division transfers

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

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

x) Foreign Currency Transactions

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

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

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

xi) Investments

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

xii) Revenue Recognition

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

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

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

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

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

xiii) other income

a) Claims receivable

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

b) Income from Investment

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

xiv) excise duty

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

xv) employee benefits

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

a) Provident Fund

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

b) Gratuity

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

c) Compensated absences

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

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

xvi) Research and development expenditure

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

xvii) employee Stock option Scheme

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

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

xviii) Taxes on Income

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

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

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

xix) Provisions, contingent liabilities and contingent assets

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

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

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

xx) Miscellaneous expenditure

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

xxi) Earnings per Share

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

xxii) Financial derivatives

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

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

 
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