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Notes to Accounts of JSW Ispat Special Products Ltd.

Mar 31, 2022

Terms of / Rights attached to equity shares

The Company has a single class of equity shares having par value of ''10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Terms of / Rights attached to CCPS

The holders of CCPS shall be entitled to payment of 0.01% per annum as dividend on each CCPS, as and when the Company declares any dividend. Each CCPS shall be convertible into 1 (one) equity share at any date prior to the expiry of the term of 20 (Twenty) years from the date of issuance of the CCPS ("CCPS Term") at the option of the holder of the CCPS. Unless already converted each CCPS outstanding at the expiry of the CCPS Term shall be compulsorily converted into 1 (one) equity share of the Company. The CCPS will have priority with respect of dividend, if declared, or repayment of capital vis-a- vis equity shares. The CCPS holders shall not be entitled to participate in the surplus fund of the Company or participate in the surplus assets and profits, on winding up which may remain after the entire capital has been repaid. The payment of dividend shall be on a non cumulative basis.

Equity shares allotted as fully paid up (during 5 years preceding March 31, 2022) without payment being received in cash

34,90,00,000 equity shares and 52,59,80,000 compulsorily convertible preference shares issued on August 16, 2018, to the shareholders of Milloret Steel Limited in terms of the scheme of amalgamation (''the Scheme'') sanctioned by Mumbai bench of National Company Law Tribunal vide its order dated July 24, 2018.

a) Capital reserve

The reserve created pursuant to the acquisition of business represents the difference of liabilities and assets acquired.

b) Securities premium

The amount received in excess of face value of the equity shares is recognised in securities premium. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

c) Capital redemption reserve

Reserve is created for redemption of preference shares as per statutory requirement. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

d) Capital Reconstruction Reserve

Reserve acquired at the time of amalgamation accounted for using the pooling of interest method.

e) Amalgamation Reserve

Reserve is created on account of gain arising at the time of amalgamation accounted for using the pooling of Interest method.

f) General reserve

Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations.

Consequent to introduction of Companies Act, 2013, the requirement of mandatory transfer of a specified percentage of the net profit to general reserve has been withdrawn and the Company may transfer any amount from the surplus of profit or loss to the General reserves, if it wants to voluntarily. This reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.

g) Equity instruments through OCI

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of the equity instruments.

h) Equity contribution resulted on merger

The equity contribution resulted on merger is a surplus after extinguishment of optionally convertible preference shares (OCPS) issued to Milloret Steel Limited.

i) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings includes re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss. Retained earnings is a free reserve available to the Company.

Based on legal advice from an independent expert, the management is of the view that vide NCLT order dated July 24, 2018 in response to the resolution plan submitted by the consortium of JSW Steel Limited and AION Investment Private II Limited for acquisition of the Company under the Insolvency Bankruptcy Code, 2016 ("NCLT Order"), the Company will be entitled to carry forward the aforementioned accumulated losses pertaining to the period prior to acquisition and off-set the same against the future taxable income of the Company.

i. Acceptances include credit availed by the Company from banks for payment to suppliers for raw materials purchased by the Company. The arrangements are interest-bearing and are payable within one year.

ii. Trade payables are non-interest bearing and are normally settled within 90 days except for SME''s which are settled within 45 days.

iii. Trade payables from related parties details has been disclosed in note 41.

iv. For the Company''s credit risk management processes, refer note 44.

The Company does not have any significant adjustments between the contracted price and revenue recognised in the Statement of profit and loss.

The performance obligation is satisfied based on the terms of sale, normally, upon delivery of the goods and payment is generally due within 30 to 120 days from delivery.

Amount of revenue recognized from amounts included in the contract liabilities at the beginning of the year is ''68.27 crores (previous year ''16.97 crores).

Equity shares to be issued upon conversion of compulsorily convertible preference share have not been considered for the purpose of calculation of diluted earning per share purpose during the previous year as they were anti-dilutive.

37. Commitments and contingencies

(a) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) of ''42.19 crores (March 31, 2021 - ''47.59 crores)

(b) Contingent liabilities

'' in crores

Particulars

As at 31 March 2022

As at 31 March 2021

Bank guarantees

70.87

104.41

Claim against the Company not acknowledged as debt

52.00

52.00

Pursuant to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 initiated on 18 July 2017, the National Company Law Tribunal on 24 July 2018 (Order date) approved (with modifications), the Resolution Plan submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited read with the independent legal opinion obtained by the Company and the recent judgment of Supreme Court of India, all contingent liabilities, commitments, other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31 August 2018) and not part of the Resolution Plan, shall stand extinguished.

I. The Company had entered into an MOU with Ecomaister Company Limited, South Korea for transfer of its holding in JV company Monnet Ecomaister Enviro Private Limited having gross carrying value of ''14.21 crores (provision of ''14.21 crores, hence net book value is zero) for a total consideration of ''10,000 (Rupees Ten Thousand). Accordingly, the Company has measured the said investment at lower of its carrying amount and fair value less costs to sell and classified it as held-for-sale.

II. The Company upon approval of plan to sell off properties in their present condition by the Board of directors, had re-classed advance to properties as held for sale at their fair value less cost to sell and had recognised an impairment loss of ''1.80 crore. Since the Company to whom the advance was given is under Insolvency proceedings, the Company has filed its claim and awaits the court order.

III. In the Board Meeting held on 19 January 2021, the Board had approved to sell the aircraft. Accordingly, the Company had entered into a letter of intent with Nav Durga Aviation Private Limited on 6th October, 2020 and had measured the aircraft at lower of its carrying amount or fair value less costs to sell and had classified it as held-for-sale.

The Company has received the consideration in current year and has accordingly recognised sale.

39. Employee benefit plans

a) Defined contribution plans

The Company operates defined contribution retirement benefit plans for all qualifying employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs.

Company''s contribution to provident fund & family pension scheme recognised in statement of profit and loss aggregates to ''6.54 crores (31 March 2021: ''6.55 crores) (included in note 32).

Contribution towards Company owned trust is detailed in Defined benefit plans.

b) Defined benefit plans

The Company sponsors funded defined benefit plans for all qualifying employees. The level of benefits provided depends on the member''s length of service and salary at retirement age.

The gratuity plan is covered by The Payment of Gratuity Act, 1972. Under the gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days'' salary for each year of service until the retirement age of 58, 60 and 63. The vesting period for gratuity as payable under The Payment of Gratuity Act, 1972 is 5 years.

The fund is managed by Monnet Ispat & Energy Employees Group Gratuity Trust and it is governed by the Board of trustees. The Board of trustees are responsible for the administration of the plan assets and for defining the investment strategy.

The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Interest risk A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.

Salary risk The present value of the defined benefit plan liability is calculated by reference to the future

salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

No other post-retirement benefits are provided to the employees.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March 2022 by Independent, Qualified Actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Sensitivity analysis:-

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

Each year an asset liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles.

The Company is expected to contribute ''2.01 crore to its gratuity plan for the next year. The weighted average duration of the plan is 12 years.

44. Financial Instruments

44.1 Capital risk management

The Company, being in a capital intensive industry, its objective is to maintain a strong credit rating and establish a capital structure that would maximise the return to stakeholders through optimum mix of debt and equity.

The Company monitors its capital using gearing ratio which is net debt to total equity. Net debt includes borrowings less cash and cash equivalents and other bank balances.

The objective of the Company''s capital management structure is to ensure that there remains sufficient liquidity within the Company to carry out committed work programme requirements. The Company monitors the long term cash flow requirements of the business in order to assess the requirement for changes to the capital structure to meet that objective and to maintain flexibility. The Company manages its capital structure and makes adjustments to it, based on underlying macro economic factors affecting business environment, financial market conditions and interest rates environment.

44.3 Financial risk management objectives and policies

The Company''s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge these risk exposures, wherever required. The use of financial derivatives is governed by the Company''s policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The sensitivity analysis of the above mentioned risk in the following sections relate to the position as at 31 March 2022 and 31 March 2021.

A. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

B. Foreign currency risk management

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates.

The Company''s functional currency is Indian Rupee (INR). The Company also undertakes transactions denominated in foreign currencies. Consequently, exposure to exchange rate fluctuations arises. Volatility in exchange rates affects the Company''s revenue from export markets and the cost of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade portfolio.

A reasonably possible strengthening/weakening of the foreign currencies (USD / Euro) against INR would affect the measurement of financial instruments denominated in foreign currencies and affect equity and profit and loss by the amounts shown below. The analysis assumes that all other variables remain constant.

44.4 Credit risk management:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

A. Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit review and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. At the year end the Company does not have any significant concentrations of credit risk other than that disclosed in note 13.

At each reporting date, the Company computes the expected credit loss using simplified approach. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at the balance sheet date. The Company does not hold collateral as security. The Company has evaluated the concentration of risk with respect to trade receivables as low. The outstanding trade receivables are regularly monitored and appropriate action is taken for collection of overdue receivables.

B. Financial instruments and bank deposits

Credit risk from investments with banks is managed by the Treasury functions in accordance with the management policies. Investments of surplus funds are only made with approved counterparties who meet the appropriate rating and/or other criteria, and are only made within approved limits. The management continually re-assesses the Company''s policy and updates the same as required. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty failure.

III. Liquidity risk

Liquidity risk refers to the risk of financial distress or extraordinarily high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

Maturity pattern of financial assets and liabilities:

The table below summarises the maturity profile of the Company''s financial assets and liabilities based on contractual undiscounted payments.

I. During the year due to improvement in demand and better realization, the Company has earned positive net profit resulted into better return on equity.

II. During the year due to increased operations and higher productions, the Company could rotate the inventory better

III. During the year due to better performance on account of improvement in demand and realization, the Company has earned positive net profit resulted into positive net profit ratio.

IV. During the year due to better performance on account of improvement in demand and realization, the Company has earned higher EBIT resulted into higher return on capital employed.

V. During previous year due to post COVID recovery the share price had risen significantly as compared to current year resulted into higher return on investment in PY.

49. Other statutory information

i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.

ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of The Company (ultimate beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

vii) The Company is not declared wilful defaulter by and bank or financials institution or lender during the year.

viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

ix) The Company does not have any transactions with companies which are struck off.

50. The Board of Directors of the Company, at their meeting held on February 16, 2022, has inter alia, approved,

a) the acquisition of 100% of the paid up equity share capital of Mivaan Steels Limited ("MSL").

b) the Scheme of Arrangement under applicable provisions of the Companies Act, 2013 and rules and regulation made thereunder, for transfer of specified undertaking of the Company pertaining to manufacturing facilities at Raipur and mining facilities at Kanker and associated coal washery operations at Patherdih along with other assets, properties and liabilities as defined in the Scheme on a going concern basis to MSL by way of a slump sale.

The Company has filed the Scheme with necessary authorities and accordingly the implementation of the Scheme is subject to the necessary approvals, sanctions and consents from the stock exchanges, shareholders, creditors, National Company Law Tribunal and any other authorities as may be required under the applicable laws and regulations.

The Company completed the acquisition of entire paid up equity share capital of MSL on February 24, 2022, and with this acquisition Mivaan Steels Limited has become wholly owned subsidiary of the Company.

51. The figures for the corresponding previous years have been reclassified / regrouped wherever necessary to make them comparable.


Mar 31, 2019

1. EARNINGS PER SHARE (EPS)

Basic and Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year. Diluted EPS are calculated by dividing the profit for the year attributable to the equity holders of the company by weighted average number of Equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

2. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans - General Description

Retirement benefits in the form of provident fund, superannuation fund and national pension scheme are defined contribution schemes. The Company has no obligation, other than the contribution payable to the provident fund. The Company''s contribution to the provident fund is Rs, 4.10 crores (31 March 2018 Rs, 4.96 crores)

Defined Benefit Plans - General Description Gratuity:

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement / termination / resignation. The benefit vests on the employee completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions are deposited to an insurer to provide gratuity benefits by taking a scheme of Insurance, whereby these contributions are transferred to

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting year. Sensitivities due to mortality are insiginificant and hence ignored.

Sensitivities as to rate of inflation, rate of increase of pensions in payments, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.

Expected contributions to post-employment benefit plans for the year ending 31 March 2019 is Nil

3. RELATED PARTY DISCLOSURES

A. List of related parties

(a) Entities substantially owned directly or indirectly by the Company, irrespective of whether transactions have occurred or not:-

1 Monnet Global Ltd

2 Monnet Cement Ltd

3 Monnet Enterprises PTE LTD. (upto 04.12.2018)

4 Chomal Exports Private Limited

5 Monnet Sports Foundation

6 Pt Monnet Global (step - subsidiary) (upto 31.03.2018)

7 Pt. Sarwa Sembada Karya Bumi (step - subsidiary)

8 LLC Black Sea Natural Resources, Abkhazia (step - subsidiary)

(b) Joint Ventures

1 MP Monnet Mining Company Ltd

2 Mandakini Coal Company Ltd

3 Urtan North Mining Company Ltd

4 Monnet Ecomaister Enviro Pvt Ltd.

(c) Associates Monnet Power Company Ltd

(d) Partnership Firm Khasjamda Mining Company

(e) Holding Company Creixent Special Steel Ltd. (w.e.f. 31.08.2018)

(f) Joint Venturer of holding company JSW Steel Ltd. (w.e.f. 31.08.2018)

(g) Subsidiary of Joint Venturer of holding company JSW Steel Coated Products Ltd. (w.e.f. 31.08.2018)

(h) Enterprise owned by Key Management Personnel or major shareholders of the reporting enterprise and enterprises that have a member of key management in common with the reporting enterprise:-

1 Tirumala Balaji Alloys Pvt. Ltd. (Till 24.07.2018)

2 M. K. Jajodia & Sons HUF (Till 24.07.2018)

3 Monnet Project Developer Ltd. (Till 24.07.2018)

4 Excello Fin Lea Ltd. (Till 24.07.2018)

5 JSW Steel coated products Ltd.(From 31.08.2018)

(i) Key Management Personnel:-

1 Mr. Sandeep Kumar Jajodia - Chairman & Managing Director (upto 17.7.2017)

2 MrJ.PLath - Independent director (upto 17.7.2017)

3 SBI Observer (upto 17.7.2017)

4 Mr. Suman Jyoti Khaitan - Independent director (upto 17.7.2017)

5 IDBI Representative (upto 17.7.2017)

6 Mr. Kunal Sharma - Independent director (upto 17.7.2017)

7 Ms. Ankita Wadhwan - Independent director (upto 17.7.2017)

8 Mr. Sanjay Garodia (CFO upto 20.01.2019)

9 Mr. Hardeep Singh (Company Secretary upto 20.01.2019)

10 Mr. Sumit Binani (Interim resolution professional / resolution professional/ director) (From 18.7.2017 to 31.8.18)

11 Mr. D Ravichandar (w.e.f. 31.08.2018)

12 Ms.Anuradha Ambar Bajpai (w.e.f. 30.07.2018)

13 Ms. Sutapa Banerjee (w.e.f. 27.09.2018)

14 Mr. Jyotin Mehta (w.e.f. 30.07.2018)

15 Mr. Kalpesh Kikani (w.e.f. 31.08.2018)

16 Mr. Nikhil Gahrotra (w.e.f. 31.08.2018)

17 Mr. Sanjay Kumar (w.e.f. 31.08.2018)

18 Mr. Seshagiri Rao (w.e.f. 31.08.2018)

19 Mr. J. Nagarajan (CFO w.e.f. 21.01.2019)

20 Mr. Ajay Kadhao (Company Secretary w.e.f. 21.01.2019)

4. SEGMENT INFORMATION

The Company is in the business of manufacturing steel products and allied products having similar characteristics and reviewed by the Chief Operating Decision Maker for assessment of Company''s performance and resource allocation. Accordingly, the Company has only one reportable operating segment as per Ind AS 108 - Operating Segments.

Customer contributing to more than 10% of Revenue : the Company has only one customer contributing to 14.69% of the turnover.

5. FINANCIAL INSTRUMENTS

Fair value hierarchy

All financial instruments for which fair value is recognized or disclosed are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 : valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : valuation techniques for which the lowest level input which has a significant effect on fair value measurement is not based on observable market data.

6. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities, other than derivatives, comprise of borrowings, trade and other payables, security deposits, employee liabilities. The Company''s principal financial assets include trade and other receivables, loans given and cash and short-term deposits/ loan that derive directly from its operations. The company also holds FVTOCI investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s management oversees the management of these risks. The Company''s senior management is supported by the Finance department that advises on financial risks and the appropriate financial risk governance framework for the Company. The finance function provides assurance to the Company''s management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The management reviews and agrees policies for managing each of these risks, which are summarized below.

I. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk such as equity price risk. Financial instruments affected by market risk include loans and borrowings and FVTOCI investments.

The sensitivity analysis of the above mentioned risk in the following sections relate to the position as at 31 March 2019 and 31 March 2018.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities of foreign operations. The analysis for contingent liabilities is provided in Note 34.

The following assumptions have been made in calculating the sensitivity analysis:

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2019 and 31 March 2018

A. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.

The following table provides a breakup of the Company''s fixed and floating rate borrowings:

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly lower volatility than in prior years due to decrease in the overall borrowings.

B. Foreign currency risk management

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates.

The Company''s functional currency is Indian Rupees(''). The Company undertakes transactions denominated in foreign currencies. Consequently, exposure to exchange rate fluctuations arises. Volatility in exchange rates affects the Company''s revenue from export markets and the cost of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade portfolio.

A reasonably possible strengthening/weakening of the foreign currencies (USD / Euro/ CAD/ AED) against INR would have affected the measurement of financial instruments denominated in foreign currencies and affected equity and profit and loss by the amounts shown below. The analysis assumes that all other variables, in particular interest rates remain constant.

The movement in the pre-tax effect on profit and loss is a result of a change in the fair value of derivative financial instruments not designated in a hedge relationship and monetary assets and liabilities denominated in INR, where the functional currency of the entity is a currency other than INR.

II. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions.

Credit risk from investments with banks and other financial institutions is managed by the Treasury functions in accordance with the management policies. Investments of surplus funds are only made with approved counterparties who meet the appropriate rating and/or other criteria, and are only made within approved limits. The management continually re-assess the Company''s policy and update as required. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty failure.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

A. Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit review and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.

At the year end the Company does not have any significant concentrations of bad debt risk other than that disclosed in note 10."

An impairment analysis is performed at each reporting date on an individual basis for major clients. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at the balance sheet date. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets. The outstanding trade receivable’s are regularly monitored and appropriate action is taken for collection of overdue receivable’s.

B. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties.

III. Liquidity risk

Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

Maturity pattern of financial assets and liabilities:

The table below summarizes the maturity profile of the Company''s financial assets and liabilities based on contractual undiscounted payments.

7 .CAPITAL MANAGEMENT

The Company, being a capital intensive industry, its objective is to maintain a strong credit rating, healthy capital ratios and establish a capital structure that would maximize the return to stakeholders through optimum mix of debt and equity. The Company monitors its capital using gearing ratio which is net debt to total equity. Net debt includes interest bearing loans and borrowings less cash and cash equivalents and bank balances."

The objective of the Company''s capital management structure is to ensure that there remains sufficient liquidity within the Company to carry out committed work programme requirements. The Company monitors the long term cash flow requirements of the business in order to assess the requirement for changes to the capital structure to meet that objective and to maintain flexibility.

The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital, issue new shares for cash, repay debt, put in place new debt facilities or undertake other such restructuring activities as appropriate.

(i) Equity includes all capital and reserves of the company that are managed as capital.

(ii) Debt is defined as long term borrowings and short term borrowings.

I. The Company has entered into an agreement for sale of its investment in preference shares and loan given to Orissa Sponge Iron and Steel Ltd at 15% of the original amount paid. Accordingly, these amounts have been reclassified as held for sale and the difference has been recognized in the profit & loss account for the year.

II. The Company has entered into an MOU with Ecomaister Company Limited, South Korea for transfer of its holding in JV company Monnet Ecomaister Enviro Private Limited having a carrying value of Rs,14.21 crores for a total consideration of '' 10000 (Rupees Ten Thousand). Accordingly, the Company has measured the said investment at lower of its carrying amount and fair value less costs to sell and has been classified as held for sale.

44. IMPAIRMENT OF CURRENT AND NON CURRENT ASSETS

Following IBC Proceedings, third party consultant was appointed to assess the recoverable amount of the CGU on the effective date of the order i.e. 31 August 2018. The carrying amount of the CGU was determined to be higher than its recoverable amount of Rs, 4,252 crores and an impairment loss of Rs, 3,949 crores was recognized as on the effective date of the order. Out of the same Rs, 3,915 crores was recognized as ''exceptional items'' in the statement of profit or loss and Rs, 34 crores was recognized under equity instruments through other comprehensive in come.

The recoverable amount of the CGU (each plant as a CGU) was based on its value in use and was determined with the assistance of independent appraisers. Value in use was determined by discounting the future cash flows to be generated from the continuing use of the CGU by using a post-tax discount rate of 11.75%.

The discount rate calculation is based on the specific circumstances of MIEL and is derived from its weighted average cost of capital (WACC). WACC represents the returns required by the investors of both debt and equity weighed for their relative funding in the entity. The returns expected depend on the perceived level of risk associated with the business of the company and the industry in which the company operates.

Following the impairment loss recognized in the CGU, the recoverable amount was equal to the carrying amount.

8. The Hon''ble Supreme Court of India by its Order dated 24th December, 2014 had cancelled a number of coal blocks allocated to various entities which includes five under development mines allotted to the Company or its joint venture companies. The Ministry of Law and Justice (Legislative Department), Government of India, has promulgated an Ordinance on October 21, 2014 for implementing the order of Hon''ble Supreme Court and fixation of compensation etc.

9. Pursuant to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 initiated on 18 July 2017, the National Company Law Tribunal (NCLT) on 24 July 2018 (Order date) approved (with modifications), the Resolution Plan (the Plan) submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited, which, inter alia, resulted in the following:

(a) Extinguishment of 5,07,32,841 equity shares of Rs, 10 each and 1,75,00,000 preference shares of Rs, 100 each held by the erstwhile promoters. The said amount has been transferred to capital redemption reserve.

(b) Reduction in the face value of the balance 36,52,33,620 equity shares (including the equity shares issued under (c) and (d) below) held by the non- promoter equity shareholders to Rs, 3.30 per share and their consolidation into 12,05,27,534 equity shares of Rs, 10 each. The difference has been transferred to capital redemption reserve.

(c) Settlement of debts of financial creditors amounting to Rs, 10,247.86 crores, partly by issue of 20,00,56,892 equity shares of Rs, 10 each, partly by cash payment of Rs, 2,457.00 crores, and partly by the effective purchase of the remaining debt, (on deemed conversion into Optionally Convertible Preference shares), for a sum of Rs, 199.85 crores by a company of the consortium, Milloret Steel Limited (MSL).

(d) Settlement of corporate guarantees issued to financial creditors amounting to Rs, 767.05 crores, partly by issue of 1,51,41,327 equity shares of Rs, 10 each and cash payment of Rs, 20.07 crores.

(e) Settlement of operational creditors, (other than employees and workmen), for a sum of Rs, 25 crores payable by the Company within one year from the Order date and extinguishment of other current and noncurrent liabilities standing as on the commencement of Corporate Insolvency Resolution Process.

(f) Extinguishment of all contingent liabilities, commitments and other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31 August 2018).

10. Milloret Steel Limited, amalgamated with the Company, with effect from August 31, 2018, in accordance with the terms of the final resolution plan approved by the Mumbai bench of National Company Law Tribunal vide its order dated July 24, 2018. The Company issued 34,90,000 equity shares and 52,59,80,000 compulsorily convertible preference shares of'' 10 each to shareholders of Milloret Steel Limited in the ratio of one share of the Company for every one share of Milloret Steel Limited pursuant to the Scheme. All the assets and liabilities of Milloret Steel Limited were recorded by the Company at their respective fair values. Optionally convertible preference shares (OCPS) of Rs, 7486.88 crores, issued by the Company and purchased by Milloret Steel Limited for Rs, 199.85 crores were extinguished and the resultant surplus of Rs, 7,287.03 crores has been recognized as equity contribution resulted on merger in other equity.

11. DISCLOSURE UNDER IND AS 7 ‘STATEMENT OF CASH FLOWS''

Effective April 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities.

12. The figures for the corresponding previous years have been reclassified / regrouped wherever necessary to make them comparable.


Mar 31, 2018

1. Corporate information

Monnet Ispat & Energy Limited (“MIEL” or “the company”) is a limited company domiciled in India and was incorporated on 1st February 1990. Equity shares of the Company are listed in India on the Bombay stock exchange and the National stock exchange. The registered office of the Company is located atMonnet Marg, Mandir, Hasaud Raipur, Chhattisgarh - 492101, India.

MIEL is engaged in manufacturing and marketing of Sponge Iron, Steel and Ferro Alloys. MIEL is also engaged in mining of minerals like coal and iron ore. MIEL is in the elite group of primary steel producers with a world class integrated steel plant at Raigarh that has a production capacity of 1.5 MTPA to produce HR plates, rebars and structure profiles to cater to the rapidly growing infrastructure & construction industry.

Corporate Insolvency Resolution Process (CIRP) has been initiated in respect of Monnet Ispat & Energy Limited (“Company” ) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’) by an Order of the National Company Law Tribunal (NCLT) with effect from 18th July 2017. As per section 17 of the Insolvency and Bankruptcy Code, 2016 (‘Code’), upon appointment of the Resolution Professional, the powers of the Board of Directors stand suspended and such powers shall be exercised by the Resolution Professional appointed for the Company. Hence, in this regard, pursuant to Regulation 30 and 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Resolution Professional on 30thMay, 2018 has considered and taken on record the financial statements of the company for the year ended 31st March 2018.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.

The financial statements have been prepared on a historical cost basis, except for the certain assets and liabilities which have been measured at different basis and such basis has been disclosed in relevant accounting policy.

The financial statements are presented in INR and all values arerounded to the nearest crore (INR 0,000,000), except when otherwise indicated.

2.2 Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Company has identified the following areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.

Judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:

Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

(b) Defined benefit plans

The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

(c) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

(d) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgments in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

II .The Company holds 99.99% equity shares in Chattel Constructions Private Limited (CCPL). However, as per terms of the operation and management agreement with Moser Baer Clean Energy Limited (MBCEL), the Company’s investment in CCPL has been classified as ‘Investment in equity instruments in other entities’ since the Company does not have control or significant. influence over the entity.

III .The Company had pledged shares of Monnet Power Company Limited (MPCL), held as investment in subsidiary, for availment of credit facilities by the Company/ its subsidiary company. Lenders have invoked the pledge over shares of MPCL. Details of the pledged shares are as below:

Pursuant to invocation of pledge by lender of MPCL, the pledged shares stand transferred to the security trustee’s depository participant account. However, pending appropriation, the ownership of the pledged shares continues to vest with the Company. In the absence of any appropriation value of the pledged shares, no adjustment has been made to the carrying value of the investment of INR 504.22 crore, referred above.

IV. Monnet Power Company Limited, upon application filed by the lender of MPCL, has been admitted for the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’) by the Hon’ble National Company Law Tribunal, Mumbai with effect from 23rd February, 2018. As per Section 17 of the Code, upon appointment of the Interim Resolution Professional (IRP), the powers of the Board of Directors stands suspended and such powers shall be exercised by the Interim Resolution Professional appointed for the Company. Accordingly, in terms of provisions of Ind AS 110, since the control over the investee company now vests with the Resolution Professional and the Company no longer has the ability or power to affect the variable returns from its involvement with the investee company. Accordingly, investment in MPCL has been reclassified as investment in associates. In view of the commencement of CIRP, the management is of the opinion that it is improbable that any amount will be available for distribution to equity shareholders after settlement of financial and operational creditors of MPCL. Accordingly, a provision for impairment of investment has been recorded amounting to Rs.196.57 crores, equivalent to the value of the Company’s investment in MPCL, (excluding shares pledged with IDFC as referred to in para 3 above).

(i) Certain non recoverable advances, outstanding for a long period of time were written off.

(ii) The Company had pledged a part of its non current investment in equity shares of Orissa Sponge Iron and Steel Ltd with its lenders. These shares were invoked by the lenders. The difference between the cost and appropriation value amounting to Rs.177.01 crores was duly recognised in the statement of profit and loss as an exceptional item.

(iii) Based on annual physical verification and technical evaluation of inventory in non operational divisions, loss on account of stock correction / spoilage amounting to Rs.19.33 crores were recognised in the statement of profit and loss as an exceptional item

.(iv) Monnet Power Company Limited , a subsidiary of the Company,upon application filed by the lender of MPCL, has been admitted for the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’) by the Hon’ble National Company Law Tribunal, Mumbai with effect from 23rd February, 2018. In view of the commencement of CIRP, the management is of the opinion that it is improbable that any amount will be available for distribution to equity shareholders after settlement of financial and operational creditors of MPCL. Accordingly, a provision for impairment of investment has been recorded amounting to Rs.196.57 crores, equivalent to the value of the Company’s nvestment in MPCL, (excluding shares pledged with IDFC).

3. Earnings Per Share (EPS)

Basic and Diluted E PS amounts are calculated by dividing the profit for the year attributable to equity holders of the company by the weighted average number of Equity shares outstanding during the year. Diluted EPS are calculated by dividing the profit for the year attributable to the equity holders of the company by weighted average number of Equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

Note : Monnet Power Company Limited, upon application filed by the lender of MPCL, has been admitted for the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’) by the Hon’ble National Company Law Tribunal, Mumbai with effect from 23rd February, 2018. As per Section 17 of the Code, upon appointment of the Interim Resolution Professional (IRP), the powers of the Board of Directors stands suspended and such powers shall be exercised by the Interim Resolution Professional appointed for the Company. Accordingly, in terms of provisions of Ind AS 110, since the control over the investee company now vests with the Resolution Professional and the Company no longer has the ability or power to affect the variable returns from its involvement with the investee company. Accordingly, investment in MPCL has been reclassified as investment in associates even though there is no change in the shareholding.

4. In the opinion of the Management current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated except where indicated otherwise.

5. Employee benefit plans

Defined Contribution Plans - General Description

Retirement benefits in the form of provident fund, superannuation fund and national pension scheme are defined contribution schemes. The Company has no obligation, other than the contribution payable to the provident fund. The Company’s contribution to the povident fund is Rs. 4.96 crores (31 March 2017 Rs. 5.50 crores)

Defined Benefit Plans - General Description Gratuity:

The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement / termination / resignation. The benefit vests on the employee completing 5 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions are deposited to an insurer to provide gratuity benefits by taking a scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/liability in the books of accounts on the basis of actuarial valuation as per the projected unit credit method. Plan assets also include investments and bank balances used to deposit premiums until due to the insurance company.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Sensitivities due to mortality are insiginificant and hence ignored.

Sensitivities as to rate of inflation, rate of increase of pensions in payments, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.Expected contributions to post-employment benefit plans for the year ending 31 March 2018 is Nil

6.Commitments and contingencies

(a)Leases

Operating lease commitments - Company as lessee

The Company has obtained office premises on operating leases. All leases are for less than twelve months. Further, there is a renewal clause in the lease agreements.

Lease payments of Rs. 0.35 crores (previous year - Rs. 0.41 crores) have been recognized as an expense in the statement of profit and loss during the year.

b)Commitments

i) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (Net of advances) of Rs. NIL (March 31, 2017 - Rs. 4.02 crores)

(ii) Letters of Credit opened in favour of inland/overseas suppliers (Net) Rs. 3.26 crores (March 31, 2017 - Rs. 0.30 crores)

(iii)Rupee equivalent of export obligation to be completed by 23th August, 2021 under EPCG Scheme Rs. 152.13 crores (March 31, 2017 - Rs. 259.86 crores).

7. Related party disclosures A. List of related parties

(a) Entities substantially owned directly or indirectly by the Company, irrespective of whether transactions have occurred or not:-

1 Monnet Global Ltd

2 Monnet Power Company Ltd (upto 22nd February, 2018)

3 Monnet Cement Ltd

4 Monnet Enterprises PTE LTD.

5 Chomal Exports Private Limited

6 Monnet Sports Foundation

7 Pt Monnet Global (step - subsidiary)

8 Pt. Sarwa Sembada Karya Bumi (step - subsidiary)

9 LLC Black Sea Natural Resources, Abkhazia (step - subsidiary)

(b) Joint Ventures

1 MP Monnet Mining Company Ltd

2 Mandakini Coal Company Ltd

3 Urtan North Mining Company Ltd

4 Monnet Ecomaister Enviro Pvt Ltd.

(c) Associates Orissa Sponge Iron & Steel Ltd (Upto 10th July, 2017)

(d) Partnership Firm Khasjamda Mining Company

(e) Enterprise owned by Key Management Personnel or major shareholders of the reporting enterprise and enterprises that have a member of key management in common with the reporting enterprise:-

1 Tirumala Balaji Alloys Pvt. Ltd.

2 M. K. Jajodia & Sons HUF

3 Monnet Project Developer Ltd.

4 Excello Fin Lea Ltd.

(f) Key Management Personnel :-

1 Shri Sandeep Kumar Jajodia - Chairman & Managing Director (upto 17.7.2017)

2 Mr.J.P.Lath - Independent director (upto 17.7.2017)

3 SBI Observer (upto 17.7.2017)

4 Suman Jyoti Khaitan - Independent director (upto 17.7.2017)

5 IDBI Representative (upto 17.7.2017)

6 Kunal Sharma - Independent director (upto 17.7.2017)

7 Ankita Wadhwan - Independent director (upto 17.7.2017)

8 Sumit Binani (Interim resolution professional / resolution professional) (w.e.f.18.7.2017)

8.Segment information

As per Indian Accounting Standard (Ind AS) 108 on “Operating Segments”, segment information has been provided in the Notes to Consolidated Financial Statements.

9. Dues to Micro and Small Enterprises

The dues to Micro and Small Enterprises as required under the Micro, Small and Medium Enterprises Development Act, 2006 to the extent information available with the company is given below:

10. Fair value hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is insignificant to the fair value measurements as a whole.

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 : valuation techniques for which the lowest level inputs that has a significant effect on the fair value measurement are observable, either directly or indirectly.

Level 3 : valuation techniques for which the lowest level input which hass a significant effect on fair value measurement is not based on observable market data.

11. Financial risk management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise of borrowings, trade and other payables, security deposits, employee liabilities. The Company’s principal financial assets include trade and other receivables, loans given and cash and short-term deposits/ loan that derive directly from its operations.The Company is exposed to market risk, credit risk and liquidity risk. The Company’s management oversees the management of these risks. The Company’s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The management reviews and agrees policies for managing each of these risks, which are summarised below.

I. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include , deposits.The sensitivity analyses of the above mentioned risk in the following sections relate to the position as at 31 March 2018 and 31 March 2017.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities of foreign operations. The analysis for contingent liabilities is provided in Note 34.The following assumptions have been made in calculating the sensitivity analyses:

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2017 and 31 March 2016.

A. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates. Foreign currency risk senstivity is the impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The following tables demonstrate the sensitivity to a reasonably possible change in USD and EURO exchange rates, with all other variables held constant.

The movement in the pre-tax effect on profit and loss is a result of a change in the fair value of derivative financial instruments not designated in a hedge relationship and monetary assets and liabilities denominated in INR, where the functional currency of the entity is a currency other than INR.

II. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions.Credit risk from investments with banks and other financial institutions is managed by the Treasury functions in accordance with the management policies. Investments of surplus funds are only made with approved counterparties who meet the appropriate rating and/or other criteria, and are only made within approved limits. The management continually re-assess the Company’s policy and update as required. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty failure. The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

A. Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit review and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.

At the year end the Company does not have any significant concentrations of bad debt risk other than that disclosed in note 10.An impairment analysis is performed at each reporting date on an individual basis for major clients. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at the balance sheet date. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

B. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties.

III. Liquidity risk

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

IV. Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry. The Company’s marketing facilities are situated in different geographies. Similarly the distribution network is spread PAN India.

12 . Capital Management

The objective of the Company’s capital management structure is to ensure that there remains sufficient liquidity within the Company to carry out committed work programme requirements. The Company monitors the long term cash flow requirements of the business in order to assess the requirement for changes to the capital structure to meet that objective and to maintain flexibility.

The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital, issue new shares for cash, repay debt, put in place new debt facilities or undertake other such restructuring activities as appropriate.

13. Derivative instruments and unhedged foreign currency exposure

The Company has no outstanding derivative instrument at the year end. The amount of foreign currency exposure that are not hedged by derivative instruments or otherwise are as under -

14 In the opinion of the Management, the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise. Some of the balances of trade/ other receivables/ payables and loans and advances are subject to confirmation/ reconciliation. Adjustments, if any will be accounted for on confirmation/ reconciliation of the same, which in the opinion of the management will not have a material impact.

15.The Hon’ble Supreme Court of India by its Order dated 24th September, 2014 has cancelled a number of coal blocks allocated to various entities which includes five under development mines allotted to the Company or its joint venture companies. The Ministry of Law and Justice (Legislative Department), Government of India, has promulgated an Ordinance on October 21, 2014 for implementing the order of Hon’ble Supreme Court and fixation of compensation etc.

The Company had invested directly or through Joint Ventures in the following coal blocks which have been cancelled pursuant to the court order as mentioned here in above:

The ministry of coal has, through its letter dated 1st February, 2018, asked erstwhile owners of deallocated coal blocks to submit further information / documents in order to carry out valuation / computation of compensation payable. No adjustment has been made against impairment of assets since the final compensation amount is not yet ascertained / under litigation.

16.The Company has accumulated losses resulting in erosion of net worth and has incurred net cash losses in the current and immediately preceding financial year. The current liabilities of the Company exceeded its current assets as at the balance sheet date. Corporate Insolvency Resolution Process (CIRP) has been initiated in respect of Monnet Ispat & Energy Limited (“Company” )under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’) by an Order of the National Company Law Tribunal (NCLT) with effect from 18th July 2017. The Resolution professional had invited interested Bidders, having adequate financial and technical capability, to submit resolution plan for the Company under CIRP and accordingly Resolution Plan has been submitted by the consortium of AION Capital and JSW Steel Ltd. The Resolution Plan has been approved by the Committee of Creditors (98.97% votes cast in favour of the resolution plan) and the same is currently in the process of evaluation by the NCLT. In view of the same, these financial statements have been prepared on going concern basis.

17.Disclosure under Ind AS 7 ‘Statement of Cash Flows’

Effective April 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities.

18.The figures for the corresponding previous periods have been reclassified / regrouped wherever necessary to make them comparable.

In terms of our report of even date annexed


Mar 31, 2016

1. To comply with the guidance note on “Accounting Treatment of Excise Duty” issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 2062Lacs (Previous Year Rs. 2867lacs) has been included in the value of inventories as on 31st March, 2016 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Loss for the year.

2. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

3. Rupee equivalent of export obligation to be completed by 20th March, 2022 under EPCG Scheme as on 31st March, 2016 is Rs. 47,622.83 Lac, (Previous year Rs. 34,205.91 Lacs).

4. Some of the balances of trade/other receivables/payables and loans and advances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

# The details of amounts outstanding to Micro&Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

5. Employee Benefits : Gratuity & Leave Encashment

The following tables summarizes the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the balance sheet for gratuity & leave encashment

6. Tax Expense is the aggregate of current year income tax and deferred tax charged to the statement of Profit and Loss for the year.

a) Current Year Tax:

No Income Tax on normative basis or MAT u/s 115JB is payable during the year as per provisions of the Income Tax Act.

Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year.

As on 31st March, 2016, the deferred tax assets exceeded deferred tax liabilities. In view of there being no virtual certainty of availability of sufficient future taxable income against which the deferred tax assets (net) at the close of the year can be realized, deferred tax assets, have been recognized only to the extent of deferred tax liabilities.

7. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, along with description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Kumar Jajodia

(Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Relative of Key Managerial Personnel : Shri Nikunj Jajodia

Enterprise where KMP/

Relative has significant influence : A. P. Coal Washeries Pvt Ltd

Tirumala Balaji Alloys Pvt. Ltd.

Paras Traders Ltd.

M. K. Jajodia & Sons HUF

Subsidiaries : Monnet Global Ltd

Monnet Overseas Ltd

Monnet Daniel Coal Wateriest Ltd (upto 02.07.2015) Monnet Power Company Ltd.

Monnet Cement Ltd Monnet Enterprises PTE LTD.

Chattel Constructions Private Limited Chomal Exports Private Limited Monnet Sports Foundation Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC Pt. Sarwa Sembada Karya Bumi Monnet Global Mali S.A.

LLC Black Sea Natural Resources, Abkhazia

Joint Ventures : MP Monnet Mining Company Ltd

Mandakini Coal Company Ltd Urtan North Mining Company Ltd Monnet Ecomaister Enviro Pvt Ltd.

Associates : Orissa Sponge Iron & Steel Ltd

Partnership Firm : Khasjamda Mining Company

B. The following transactions were carried out with related parties in the ordinary course of business :-

8. Segment Reporting

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

9. Interest in joint ventures

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited &Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister EnviroPvt Ltd. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet EcomaisterEnviroPvt Ltd which has set up a plant for manufacturing of PS Balls from slag generated from steel plant.

The Company''s share of the assets, liabilities, income and expenses of the jointly controlled entities as at 31.3.2016 are as follows:

Due to loss in the current year, no dividend has been declaredon preference shares.

10. The Hon''ble Supreme Court of India by its Order dated 24th September, 2014 has cancelled a number of coal blocks allocated to various entities which includes five under development mines allotted to the Company or its joint venture companies.

The Ministry of Law and Justice (Legislative Department), Government of India, has promulgated an Ordinance on October 21, 2014 for implementing the order of Hon''ble Supreme Court and fixation of compensation etc.

No adjustment has been made against impairment of assets since the final compensation amount is not yet ascertained / under litigation.

11. The Company has accumulated losses resulting in substantial erosion of its net worth and has incurred net cash losses in the current and in immediately preceding financial year. The current liabilities of the Company exceeded its current assets as at the balance sheet date.

These conditions may cast doubt about the Company''s ability to continue as a going concern. However, as detailed in note number 52 on invocation of SDR by the lenders of the Company, the lenders now hold 51% equity shares in the Company. As per SDR scheme, the lenders will take steps to identify a new investor within a period of 18 months from the date of invocation of SDR to take over management control of the company. As on the date of signing of financial statements the lenders have initiated the process of selecting such investor. In view of the same, these financial statements have been prepared on going concern basis.

12. Opening raw material inventory included 3.09 lac tons of iron ore valued at 233.13 crores lying Sponge Iron Division of the Company''s Raigarh plant. Out of the above, 1.74 lac tons was consumed during the year and balance 1.35 lac tons was lying unconsumed. Third party valuation of the stock was carried out and revealed that the residual stock was impaired and its commercial value was estimated at Rs.1500 per ton as against the book value of Rs.7544 per ton. It was further established that this inventory is not suitable for being used for sponge iron manufacturing, but can be used in sinter / pallet plant after blending with other raw material.

Based on the above, the Company has recognized impairment loss of Rs. 81.71 crores in its financial statements and classified the same as an exceptional item, considering its nature and amount.

13. The Board of Directors of the Company in their meeting held on February 12, 2016 had, subject to the approval of Members and other requisite approvals, decided to make divestment in its Subsidiary Monnet Power Company Limited (MPCL) by transferring or selling Company''s 100% stake to a potential buyer. A special resolution in this regard was passed by members of the Company through postal ballot / e-voting. The Company had executed annon-binding MOU with a potential buyer but no final agreement has been signed with the party. Pending finalization of sale consideration & other terms, investment in MPCLhas been stated at cost in these financial statements.

14. Earning Per Share (EPS)-The numerators and denominators used to calculate Basic and Diluted Earnings per share :

15. In the Joint Lenders Meeting (JLM) held on 22ndAugust, 2015, the lenders of the Company reviewed performance of the Company and decided to invoke Strategic Debt Restructuring (SDR) in terms of master circular no. DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 of Reserve Bank of India. The same has been approved by the Board of Directors of the company in their meeting held on 6th November 2015 and approval of the shareholders on the SDR was accorded on 21stDecember, 2015.

Subsequently Joint Lenders Meeting held on 28th December, 2015 the lenders, on the basis of necessary approvals as aforesaid, has decided to implement SDR for the company. According to the scheme proportionate share of each member bank in the debt is converted into equity share in the company in a manner and to the extent that the joint holding of the lenders stands at 51% of total share capital of the company. Accordingly allocation of 102,391,803 equity shares to be allotted to eligible banks was decided in the meeting. Further, JLM gave approval for additional 32,550,758 shares to be issued to promoters and their associates against the unsecured loans outstanding. These shares were allotted on 31stDecember, 2015 as per detail given under:

On the allotment of shares, as above, JLF holding stands at 51% equity share capital in the Company. Pending settlement, dues of other lenders, who have not participated till date of balance sheet in the SDR, have been classified as Long term / Short term based on original tenure of their loans.

16. Information under Section 186(4) of the Companies Act 2013:

A. LOANS GIVEN:

There are no loans besides those shown in note no. 19.

B. INVESTMENT

There is no investment besides those shown in note no. 13.

C. GUARANTEE GIVEN

Guarantees given to subsidiary companies shown in note no. 43.

D. The company had provided security of Rs671.54 Crores for borrowing by its subsidiary / Joint Venture companies during the previous years. There is no further transaction in current year.

17. Previous year figures have been regrouped or recanted wherever necessary.


Mar 31, 2015

1. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 2867 Lacs (Previous Year Rs. 3478 lacs) has been included in the value of inventories as on 31st March, 2015 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Loss for the year.

2. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

3. Pre-operative Expenses capitalized as Capital Work in Progress during the year are as under:-

4. Rupee equivalent of export obligation to be completed by 20th March, 2022 under EPCG Scheme as on 31st March, 2015 is Rs. 34,205.91 Lacs (Previous year Rs. 53,236.29 lacs).

5. Some of the balances of trade/other receivables/payables and loans and advances are subject to confirmation/ reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

# The details of amounts outstanding to Micro & Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

6. Tax Expense is the aggregate of current year income tax and deferred tax charged to the statement of Profit and Loss for the year.

a) Current Year Tax:

No Income Tax on normative basis or MAT u/s 115JB is payable during the year as per provisions of the Income Tax Act.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year.

As on 31st March, 2015, the deferred tax assets exceeded deferred tax liabilities. In view of there being no virtual certainty of availability of sufficient future taxable income against which the deferred tax assets (net) at the close of the year can be realized, deferred tax assets, have been recognized only to the extent of deferred tax liabilities.

7. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

8. The Hon'ble Supreme Court of India by its Order dated 24th September, 2014 has cancelled a number of coal blocks allocated to various entities which includes one operational mine and five under development mines allotted to the Company or its joint venture companies.

a) It further directed the Company to pay an additional levy of Rs.295 per MT on coal extracted from its operational mine at Gare Palma from date of operation till date. The Company has paid such levy on coal extracted during the period 2004 to 30th September,2014 and duly provided for the balance amount for period ended 31st March 2015, aggregating to Rs. 252.91 crores. The said amount has been charged to statement of profit and loss and is shown as an exceptional item in the statement of profit & loss.

b) The Ministry of Law and Justice (Legislative Department), Government of India, has promulgated an Ordinance on October 21, 2014 for implementing the order of Hon'ble Supreme Court and fixation of compensation etc.

i. The Company's WDV of mining assets at Gare Palma including land, infrastructure and machinery amounted to Rs. 122.04 crores as on 31.3.2015 (Moveable assets Rs.54.78 lacs and Immoveable assets Rs.67.26 lacs). Against the immoveable assets, a compensation of Rs.31.12 crores has been determined which is being contested by the Company in court. In view of management's perception of having favourable decision in the matter, no provision has been made for impairment of such assets.

9. Corporate Social Responsibility Expenses (CSR)

As per Section 135 of the Companies Act, 2013, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The amount of two percent of average net profits comes out to Rs.404 lacs for the year 2014-15. The Company has spent an amount of Rs.408.56 lacs during the year on CSR as detailed below.

10. Depreciation and Amortization on tangible and intangible fixed assets: the Company was hitherto charging depreciation on Straight Line Method at the rates provided in Schedule XIV of the Companies Act, 1956. In the current year, the Company has reassessed the useful life of assets, and adopted the useful life as provided in Schedule II of the Companies Act, 2013 except in the following cases:

Consequent to change of useful life as above, an amount of Rs.2608.75 lacs representing WDV of those assets whose useful life had already expired as on 1st April, 2014 has been adjusted against the general reserve.

Had there been no change, depreciation charge for the year would have been higher by Rs. 439.30 lacs and profit for the year would have been lower by Rs.439.30 lacs.

11. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2014

(Rs. in Lac)

As at As at 31-03-2014 31-03-2013

1. CONTINGENT LIABILITIES

(Excluding Matters Separately Dealt with in other notes): Claims against the Company not Acknowledged as Debt

- In respect of Disputed Excise Service Tax Demands 3044.70 1714.02

- In respect of Disputed Sales Tax Demands 684.23 579.40

- In respect of Disputed Entry Tax Demands 311.04 259.51

- In respect of Disputed Income Tax Demands 17783.35 16869.56

- In respect of Disputed Demands for water charges by 1284.94 1238.09 Water Resources Division

- In respect of Electricity Duty on Generation of Power 9277.18 4407.56

- Other claims against the Company not acknowledged as Debt 10326.82 5111.07 (The above are basic amounts excluding interest, if any)

2. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

3. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 3478 Lacs (Previous Year Rs. 1452 lacs) has been included in the value of inventories as on 31st March, 2014 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

4. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

5. Balance confirmations have not been received from number of parties showing debit/credit balances.

# The details of amounts outstanding to Micro & Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

6. Rupee equivalent of export obligation to be completed by 20th March, 2022 under EPCG Scheme as on 31st March, 2014 is Rs. 53,236.29 Lacs (Previous year Rs. 73,861.10 lacs).

7. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs. 3256.00 lacs upto 31st March, 2014 (Rs. 2962.00 lacs upto 31st March, 2013). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ''unconstitutional''. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

8. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs. 3505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred for arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

9. RETIREMENT BENEFITS : Gratuity & Leave Encashment

The following tables summarises the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the balance sheet for gratuity & leave encashment:

10. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs. 2089 lacs has been made on current year profits as per provisions of the Income Tax Act (MAT u/s 115JB). Further, MAT credit entitlement of Rs. 372 lacs has been written back as per last return filed.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

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. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

11. RELATED PARTY DISCLOSURES

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel

: Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri Nirmal Chand Jha

(Whole-time Director)

Enterprise where KMP / Relative has significant influence

: A.P. Coal Washeries Pvt Ltd. Tirumala Balaji Alloys Pvt. Ltd.

Subsidiaries

: Monnet Global Ltd. Monnet Overseas Ltd. Monnet Daniel Coal Washeries Ltd. Monnet Power Company Ltd. Monnet Cement Ltd. Monnet Enterprises PTE LTD. Chattel Constructions Private Limited Chomal Exports Private Limited Monnet Sports Foundation

Subsidiary of Subsidiaries

: Pt Monnet Global

Monnet Enterprises DMCC Pt. Sarwa Sembada Karya Bumi Monnet Global Liberia Ltd. Monnet Global Guinea S.A. Monnet Global Mali S.A. Monnet Global Colombia S.A.S

Joint Ventures

: MP Monnet Mining Company Ltd. Mandakini Coal Company Ltd. Urtan North Mining Company Ltd. Monnet Ecomaister Enviro Pvt Ltd.

Associates

: Orissa Sponge Iron & Steel Ltd.

Rameshwaram Steel & Power Pvt Ltd. (w.e.f.1.4.2013)

12. SEGMENT REPORTING

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

13. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

14. INTEREST IN JOINT VENTURE

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister Enviro Pvt Ltd. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet Ecomaister Enviro Pvt Ltd. which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

15. Aggregate capital expenditure as on 31-3-2014 for projects under construction to be capitalized to fixed assets is Rs. 2871.64 Crores and includes capital work in progress Rs. 2158.07 Crores under the head non-current assets and the capital advances Rs. 713.56 Crores under the head long term loans and advances.

16. During the year, Ministry of Coal vide its letter dated 17.02.2014, informed that the recommendation of the IMG with regard to Rajgamar Coal Block allotted to the Company for de-allocation has been considered and accepted by the competent authority on 11.02.2014. However further action is put on hold in view of the interim order of Hon''ble High Court of Delhi filed by MIEL as pronounced on 12.02.2014.

An amount of Rs.1376.65 lacs has been incurred by the Company on development of the coal block upto 31.3.2014. The company is of the view that the decision of the court shall be in favour of the company. Accordingly, no impact for impairment has been taken in the financial statements of the company.

17. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2013

1. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

2. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs.1,452 Lacs (Previous Year Rs.1,592 lacs) has been included in the value of inventories as on 31st March, 2013 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

3. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

b) No provision has been made for diminution in value of long term quoted investments as, in the opinion of the management, the diminution is temporary in nature.

4. Balance confirmations have not been received from number of parties showing debit/credit balances.

5. Rupee equivalent of export obligation to be completed by 20th March, 2021 under EPCG Scheme as on 31st March, 2013 is Rs.73,861.10 Lacs (Previous year Rs.20,293.89 lacs).

6. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs.2,962.00 lacs upto 31st March, 2013 (Rs.2,732.93 lacs upto 31st March, 2012). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as ''unconstitutional''. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

7. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs.3,505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred for arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

8. Tax Expense is the aggregate of current year Income Tax, Fringe Benefit Tax and Deferred Tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs.6,839 lacs has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of Rs.403.51 lacs has been utilised.

b) Deferred Tax :

The Company estimates the Deferred Tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

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. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

9. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on Related Party Disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C.P. Baid

(Dy. Managing Director)

Shri K.K. Khanna (till 13.08.2012)

(Executive Director)

Shri Nirmal Chand Jha (Whole-time Director) Enterprise where KMP has significant influence : A.P. Coal Washeries Pvt Ltd. Subsidiaries : Monnet Global Ltd.

Monnet Overseas Ltd.

Monnet Daniel Coal Washeries Ltd.

Monnet Power Company Ltd.

Monnet Cement Ltd.

Monnet Enterprises PTE Ltd.

Rameshwaram Steel & Power Pvt. Ltd.

Chattel Constructions Private Limited

Chomal Exports Private Limited

Monnet Sports Foundation Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Sarwa Sembada Karya Bumi

Monnet Global Liberia Ltd.

Monnet Global Guinea S.A.

Monnet Global Mali S.A.

Monnet Global Colombia S.A.S. Joint Ventures : MP Monnet Mining Company Ltd.

Mandakini Coal Company Ltd.

Urtan North Mining Company Ltd.

Monnet Ecomaister Enviro Pvt Ltd. Associates : Orissa Sponge Iron & Steel Ltd.

10. Segment Reporting

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

11. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

12. Interest in Joint Venture

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 50% interest in the assets, liabilities, income and expenses of Monnet Ecomaister Enviro Private Limited. All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for Monnet Ecomaister Enviro Private Limited which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

13. Aggregate Capital Expenditure as on 31st March, 2013 for projects under construction to be capitalized to Fixed Assets is Rs.4469.65 Crores and includes Capital Work in Progress Rs.3,685.02 Crores under the head Non-Current Assets and the Capital Advances Rs.784.63 Crores under the head Long-term Loans & Advances.

14. Previous year figures have been regrouped or recasted wherever necessary. For And on Behalf of the Board


Mar 31, 2012

A) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

b) The Company has issued the following shares for a consideration other than cash or bonus shares during the immediately preceding 5 years:

47,22,539 equity shares of Rs.10 each were allotted as fully paid up for consideration other than cash pursuant to scheme of amalgamation of M/s.Mounteverest Trading & Investment Limited with the Company as per order dated 19-11-2010 passed by Honourable High Court of Chattisgarh.

1 Term Loans, External Commercial Borrowings (ECB) and Non Convertible Debentures (NCD) from financial institutions / Banks, are secured by first charge on all immovable and movable assets (present & future) of the Company (subject to prior charges on movables in favour of working capital banks) ranking pari - passu with the charges created in favour of participating financial institutions. Some of the loans / facilities are further guaranteed by the Managing Director of the Company.

2 Vehicle Loans from Banks are secured by hypothecation of the respective assets financed.

3 The repayment terms and rate of interest of term loans are as under:

a) Rupee Term Loan for Steel Project :- The Company has an outstanding balance of Rs.1094.99 Crore of Rupee term loan with interest band of 1.50% to 2.25% plus base rate. These loans are repayable in 26 variable quarterly installments commencing from Financial Year 14.

b) Rupee Term Loan for Power Project :- The Company has an outstanding balance of Rs.93.75 Crore of Rupee term loan with interest band of 11.75% to 13% repayable by Financial Year 2016.

c) Foreign Currency Term Loan $ 192 Million : the loan is repayable in installments from Financial Year 2014-15 to Financial Year 2019-20 and carries interest rate of libor plus 4.25 to 4.6%.

d) Foreign Currency Term Loan $ 90 Million : the loan is repayable in Financial Year 2012-13 and Financial Year 2013-14 and carries interest rate of libor plus 1.90%.

e) Unsecured Term Loan of Rs.150 Crore is repayable in monthly installments from Financial Year 2013-14 to Financial Year 2017-18.

a) Working capital facilities from banks are secured by first charge on movable current assets and second charge on all immovable assets of the Company. These working capital loans are further guaranteed by Managing Director of the Company.

b) Out of the Short Term Rupee Loans, Rs.249.94 Crore since repaid.

Disclosure w.r.t. Micro and Small Enterprises as required by MSMED Act is made in Note No.42

a) Inventories include material in transit.

b) Inventory items have been valued considering the significant accounting policy no. VI disclosed in Note No. 1 to these financial statements.

(Rs. in Lac)

As at As at 31-03-2012 31-03-2011

4. Contingent Liabilities

(excluding matters separately dealt with in other notes):

Claims against the Company not acknowledged as debt

- In respect of disputed Excise Demands 1616.97 815.33

- in respect of disputed Sales Tax Demands 714.60 95.14

- in respect of disputed Entry Tax Demands 1016.89 642.33

- in respect of disputed Income Tax Demands 2908.60 2952.00

- in respect of disputed Demands for water charges by Water Resources 1075.44 402.44 Division.

- In respect of electricity Duty on generation of power 3525.09 1870.58

- Other claims against the Company not acknowledged as debt. 1076.70 336.10

5. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

6. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs.1592 Lac (Previous Year Rs.758 Lac) has been included in the value of inventories as on 31-03-2012 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

7. In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

8. Balance confirmations have not been received from number of parties showing debit/credit balances.

# The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 are as per available information with the Company.

9. Rupee equivalent of export obligation to be completed by 20-03-2020 under EPCG Scheme as on 31-03-2012 is Rs.20293.89 Lac (Previous year Rs.26728.82 Lac).

10. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs.2732.93 Lac upto 31-03-2012 (Rs.2364.99 Lac upto 31-03-2011). The High Court of Chhattisgarh, in its order dated 15-12- 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as 'unconstitutional'. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

11. As reported in earlier years, the Company had received risk purchase claims aggregating to Rs.3505.90 Lac during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred to arbitration. Necessary adjustment, if any, shall be made on finalization of the matter. No fresh claims have been received in this regard during the year.

12. Retirement Benefits : Gratuity & Leave Encashment

The following tables summarizes the components of the net employee benefit expenses recognized in the Statement of Profit & Loss and amount recognized in the balance sheet for gratuity & leave encashment:

13. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs.7551 Lac has been made on current year profits as per provisions of the Income Tax Act. Further, MAT credit entitlement of Rs.408.55 Lac has been utilized.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of its Power Division. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

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. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date.

14. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri K.K. Khanna

(Executive Director)

Enterprise where KMP has significant influence : A.P Coal Washeries Private Limited

Subsidiaries : Monnet Global Limited

Monnet Overseas Limited

Monnet Daniel Coal Washeries Private Limited

Monnet Power Company Limited

Monnet Cement Limited

Monnet Enterprises PTE Limited

Rameshwaram Steel & Power Private Limited

Chattel Constructions Private Limited

Chomal Exports Private Limited

Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Serwa Sembada Karya Bumi

Monnet Global Liberia Limited

Monnet Global Guinea S.A.

Monnet Global Mali S.A.

Joint Ventures : MP Monnet Mining Company Limited

Mandakini Coal Company Limited

Urtan North Mining Company Limited

Monnet Ecomaister Enviro Private Limited

15. Segment Reporting

As per Accounting Standards (AS) 17 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

16. The Company has entered into transactions for hedging, cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

17. Interest in joint venture

The Company has a 33.33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited and 49.96% interest in the assets, liabilities, income and expenses of M/s. Monnet Ecomaister Enviro Private Limited All these Companies are incorporated in India, and involved in setting up and operation of coal mines except for M/s. Monnet Ecomaister Enviro Private Limited which is setting up a plant for manufacturing of PS Balls from slag generated from steel plant.

18. Aggregate capital expenditure as on 31-03-2012 for projects under construction to be capitalized to fixed assets is Rs.2440.28 Crore and includes capital working progress Rs.2021.92 Crore under the head non-current assets and the capital advances Rs.418.36 Crore under the head long term loans advances.

19. Previous year figures have been regrouped or recasted wherever necessary.


Mar 31, 2011

(Rs. in lacs)

Current Previous

Year Year

1. Contingent Liabilities not provided for *

In respect of disputed Excise Demands 815.33 1084.82

in respect of disputed Sales Tax Demands 95.14 1121.58

in respect of disputed Entry Tax Demands 642.33 494.96

in respect of disputed Income Tax Demands 2952.00 0.00

in respect of disputed Demands for water charges by Water 402.44 279.68 Resources Division.

Other claims against the Company not acknowledged as debt. 336.10 110.18

In respect of electricity Duty on generation of power 1870.58 549.17

* Does not include matters dealt with elsewhere in the Notes on Accounts.

2. The inventories are taken as per records duly certified by the Company. The same have been valued in accordance with Accounting Policies.

3. To comply with the guidance note on "Accounting Treatment of Excise Duty" issued by The Institute of Chartered Accountants of India, excise duty amounting to Rs. 758 Lacs (Previous Year Rs. 394 lacs) has been included in the value of inventories as on 31st March, 201 1 and the corresponding amount of excise duty payable has been included in other liabilities. However, this has no impact on the Profit for the year.

4. In the opinion of the Management, the Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet except where stated otherwise.

5. Balance confirmations have not been received from number of parties showing debit/credit balances.

6. As per the information available with the Company in response to the enquiries from existing suppliers with whom Company deals, none of the suppliers are registered with The Micro, Small and Medium Enterprises Development Act, 2006.

7. Rupee equivalent of export obligation to be completed by 29th March, 2018 under EPCG Scheme as on 31st March, 2011 isRs. 26728.82 lacs.

8. No provision has been made for Cess on Power Generation levied by the State of Chhattisgarh amounting to Rs. 2364.99 lacs upto 31st March, 2011 (Rs. 1969.42 lacs upto 31 st March, 2010). The High Court of Chhattisgarh, in its order dated 15th December, 2006 has set aside the demand of the State of Chhattisgarh, terming the levy as 'unconstitutional'. However, the State Government has gone in appeal against the order of the High Court and the matter is pending before the Supreme Court.

9. The Company had received risk purchase claims aggregating to Rs.3505.90 Lacs during earlier years. The Company has disputed the claims and believes that the claims are untenable. The matter has been referred to arbitration. Necessary adjustment, if any, shall be made on finalization of the matter.

10. Retirement Benefits : Gratuity & Leave Encashment

The following tables summarise the components of the net employee benefit expenses recognized in the profit & loss account and amount recognized in the balance sheet for gratuity & leave encashment:

11. Tax Expense is the aggregate of current year income tax, fringe benefit tax and deferred tax charged to the Profit and Loss Account for the year.

a) Current Year Charge:

Income Tax provision of Rs. 7036 lacs has been made on current year profits as per provisions of the Income Tax Act, after deducting MAT credit entitlement of Rs.1 91 lacs.

b) Deferred Tax :

The Company estimates the deferred tax charge using the applicable rate of taxation based on the impact of timing differences between financial statements and estimated taxable income for the current year. The Company has opted for tax exemption under section 80-IA of the Income Tax Act in respect of Power Division for a period of 10 years commencing from the financial year 2004-2005. Pursuant to the clarification on AS22 of The Institute of Chartered Accountants of India, no Deferred Tax is provided on timing differences arising and reversing during the Tax Holiday period in respect of Assets of Power Division.

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. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income -tax during the specified period.

12. Related Party Disclosures

In accordance with the Accounting Standard (AS-18) on related party disclosure, where control exists and where key management personnel are able to exercise significant influence and, where transactions have taken place during the year, alongwith description of relationship on identified, are given below:-

A. Relationships

Key Managerial Personnel : Shri Sandeep Jajodia

(Executive Vice Chairman & Managing Director)

Shri C. P. Baid

(Dy. Managing Director)

Shri K.K. Khanna (Executive Director)

Enterprise where KMP has significant influence

: A.R Coal Washeries Pvt Ltd

Subsidiaries : Monnet Global Ltd

Monnet Overseas Ltd

Monnet Daniel Coal Washeries Pvt. Ltd.

Monnet Power Company Ltd.

Monnet Cement Ltd

Monnet Enterprises PTE LTD.

Rameshwaram Steel & Power Pvt Ltd.

Chattel Constructions Private Limited

Chomal Exports Private Limited

Subsidiary of Subsidiaries : Pt Monnet Global

Monnet Enterprises DMCC

Pt. Serwa Sembada Karya Bumi

Joint Ventures : MP Monnet Mining Company Ltd

Mandakini Coal Company Ltd

Urtan North Mining Company Limited

13. Segment Reporting

As per Accounting Standards (AS) 1 7 on "Segment Reporting", segment information has been provided in the Notes to Consolidated Financial Statements.

14. Share Warrants:

a) The Company had, in its EOGM dated 17.6.2009 allotted warrants to promoter companies. Each warrant was convertible into one equity share of Rs.10/- each at a premium of Rs.191.50 per share as per SEBI guidelines for Preferential issues. Out of the above, 47 lacs warrants were converted into equity shares during the year.

b) M/s Mounteverest Trading and Investment Ltd had, in its EOGM dated 1 7.6.2009 allotted 15 lac warrants to promoter companies. Each warrant was convertible into one equity share of Rs.10/- each at a premium of Rs.75.50 per share as per SEBI guidelines for Preferential issues. Out of the above, equity shares were allotted against 11 33250 warrants as per exchange ratio passed in the scheme of amalgamation of M/s Mounteverest Trading and Investment Ltd with the Company. The holders of remaining 366750 warrants did not exercise their option for conversion into equity shares and consequently, in the meeting of board of directors held on 8th February, 2011, an amount of Rs.78.39 lacs received against these warrants was forfeited and transferred to Capital Reserve.

15. Cash and Bank balances include fixed deposits amounting to Rs.20460.55 lacs (previous year Rs.1 31 76.75 lacs) in no lien / escrow accounts or kept as margin against LCs / bank guarantees by Company's bankers.

16. The Company has entered into hedge derivative transactions for cost reduction and risk diversification strategies to manage its loan portfolio. The Company is accounting for profit / loss on such transactions on actual receipt / payment basis. Recognition of effect on these transactions in the accounts as per AS 30 issued by ICAI shall be adhered to when the said accounting standard becomes mandatory on notification by NACAS.

17. Interest in joint venture

The Company has a 33% interest in the assets, liabilities, income and expenses of Mandakini Coal Company Limited & Urtan North Mining Company Limited. It also has a 49% interest in the assets, liabilities, income and expenses of MP Monnet Mining Company Limited. All these Companies are incorporated in India, and involved in setting up and operation of coal mines.

18. The Company had paid dividend @ Rs.5 per share for the year ended 31.3.201 0. Dividend (including dividend distribution tax) paid on shares allotted between balance sheet signing date and the record date for dividend amounting to Rs.250.30 lacs has been shown as differential dividend on equity shares.

19. Previous year figures have been regrouped or recasted wherever necessary.

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