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Notes to Accounts of Tata Steel Long Products Ltd.

Mar 31, 2022

04 Leases

(a) The Company as a lessee

The Company has lease contracts for various items of plant and equipment, vehicles, offices and leased land. Leases of plant and equipment generally have lease terms between 9 to 26 years, vehicles generally have lease terms upto 5 years, offices generally have lease terms between 12 months to 4 years and leases of land generally have lease terms between 30 years to 100 years. Generally, the Company is restricted from assigning or subleasing the leased assets. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may be used as security for borrowing purposes.

The Company also has certain leases of offices with lease term of 12 months or less. The Company applies the ''short-term lease'' recognition exemptions for these leases.

F Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of ''10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

The Company has issued 0.01% Non Convertible Redeemable Preference shares (NCRPS) during the financial year ended March 31, 2022 amounting to ''12,700 crores having face value of ''100 each. Considering the accounting principles to be followed in line with Indian Accounting Standards, the Company has computed the liability portion of NCRPS as the present value of the contractual obligations associated with the instrument and has presented it in Note 15 Borrowings. The difference between the issue amount of NCRPS and the liability so computed is Nil, accordingly ''Equity component of compound financial instruments'' is Nil.

C Rights, preferences and restrictions attached to preference shares

The Company has issued preference shares having a par value of ''100 per share. Preference shares carry voting rights as per the provisions of Section 47(2) of the Companies Act, 2013. The Company declares and pays dividend in Indian Rupees. The preference shares shall carry a preferential right vis-a-vis equity shares of the Company with respect to payment of dividend and repayment of capital. However, the holders of the preference shares shall be paid dividend on a non-cumulative basis. The preference shares shall be non-participating in the surplus funds and also in the surplus assets and profits which may remain after the entire capital has been repaid, on winding up of the Company. For terms of redemption, refer sub-note (ii) of Note 15-Borrowings."

(a) General reserves

Under the erstwhile Indian Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act, 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn though the Company may transfer such percentage of its profits for the financial year as it may consider appropriate. Declaration of dividend out of such reserve shall not be made except in accordance with rules prescribed in this behalf under the Act.

(b) Securities premium

Securities premium is used to record premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(d) Remeasurement gain / (loss) defined benefit plans

The Company recognises remeasurement gain / (loss) on defined benefit plans in Other Comprehensive Income. These changes are accumulated within the equity under "Remeasurement gain / (loss) on defined benefit plans" reserve within equity.

(e) Equity instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of investments in equity instruments (Other body corporates) in Other Comprehensive Income. These changes are accumulated within the "Equity instruments through other comprehensive income" reserve within equity. The Company transfers amounts from this reserve to Retained Earnings when the relevant equity shares are derecognised.

(d) The term loan facility arrangements include financial covenants, which require compliance to certain debt-equity and debt coverage ratios. Additionally, certain negative covenants may limit the Company''s ability to borrow additional funds or to incur additional liens, and/or provide for increased costs in case of breach. The Company has complied with these debt covenants.

(ii) During the financial year ended March 31, 2022, the Company has issued 0.01% Non-Convertible Redeemable Preference Shares ("NCRPS") to Tata Steel Limited on private placement basis. The NCRPS are mandatorily redeemable at the end of 20 years from the date of allotment at premium of ?574.63 per NCRPS. The NCRPS shall be redeemable at premium upon maturity or optional early redemption with accrued interest thereon computed on the basis of the effective yield of the instrument, at the option of the Company on a quarterly basis at 3-month intervals from the date of allotment.

The dividend payment to holders of NCRPS is discretionary (non-guaranteed) and non-cumulative in nature and accordingly these are accounted for as compound financial instruments.

30 Capital management (a) Risk management

The objective of the Company''s capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding needs are met through equity, cash generated from operations, long-term and short-term bank borrowings.

The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

Net debt includes interest bearing borrowings, lease liabilities and liability component of preference shares less cash and cash equivalents, other bank balances (including non-current earmarked balances) and current investments.

31 Disclosures on financial instruments (a) Financial risk management

The Company''s activities expose it to credit risk, liquidity risk and market risk. In order to safeguard against any adverse effects on the financial performance of the Company, derivative financial instruments viz. foreign exchange forward contracts are entered where considered appropriate to hedge foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The Company''s senior management oversees the management of above risks. The senior executives working to manage the financial risks are accountable to the Audit committee and the Board of Directors. This process provides assurance that the Company''s financial risks-taking 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 the Company''s risk appetite.

This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

(i) Credit risk management

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in financial loss to the Company. The Company''s exposure to credit risk primarily arises from trade receivables, investments in mutual funds and balances with banks.

Trade receivables and contract assets

Trade receivables are typically unsecured, considered good and are derived from revenue earned from customers. Customer credit risk is managed as per Company''s policy and procedures which involve credit approvals, establishing credit limits and continually monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. Contract assets mainly relate to unbilled work in progress and have substantially the same characteristics as the trade receivables for the same type of contracts.

Outstanding customer receivables are regularly monitored and the shipments to customers are generally covered by letters of credit or other forms of credit assurance.

Other Financial Assets

Credit risk from balances with banks, term deposits, loans and investments is managed by Company''s finance department. Investments of surplus funds are made only with approved counterparties who meet the minimum threshold requirements. The Company monitors ratings, credit spreads and financial strength of its counterparties.

The carrying value of financial assets represents the maximum credit risk as disclosed in 31 (b)(i). The credit risk relating to trade receivables is shown under Note 11.

(ii) Liquidity risk management

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and maintain adequate source of financing. The Company has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs. The Company invests its surplus funds in bank fixed deposits and in mutual funds, which carry no or low market risk.

a. Financing arrangement

The Company has unutilised fund based arrangement with banks for ''878.25 crores (March 31, 2021: ''695.51 crores). The Company has also Non-Fund based facilities with banks for ''1,100.63 crores (March 31, 2021: ''308.47 crores) which may be utilised at any time.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD exchange rates, with all other variables held constant. The impact on the Company''s profit before tax and profit after tax is due to changes in the fair value of monetary assets and liabilities. The Company''s exposure to foreign currency changes for all currencies other than US Dollars is not material.

The movement in the profit before tax and profit after tax 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. Although the derivatives have not been designated in a hedge relationship, they act as an economic hedge and will offset the underlying transactions when they occur.

b. 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 long-term debt obligations with floating interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax and profit after tax is affected through the impact on floating rate borrowings, as follows.

The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The year end balances are not necessarily representative of the average debt outstanding during the period.

(iv) Commodity Price risk

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchase of imported coal for production of finished goods. Cost of raw materials forms the largest portion of the Company''s cost of sales. Market forces generally determine prices for the coal purchased by the Company. These prices may be influenced by factors such as supply and demand, production costs and global and regional economic conditions and growth. Adverse changes in any of these factors may impact the results of the Company.

Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. The Company, as per its risk management policy, uses forward contract derivative instruments primarily to hedge foreign exchange fluctuations.

(b) Financial Instruments by Category

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

(ii) Fair value measurement

The fair values of financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used in the previous year.

The following methods and assumptions were used to estimate the fair values:

(a) The management assessed that fair values of trade receivables, cash and cash equivalents, other bank balances, other financial assets (current), trade payables, and other financial liabilities (current), approximate to their carrying amounts due to the short-term maturities of these instruments.

(b) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows below.

Quoted prices in an active market (Level 1): This level hierarchy includes financial instruments measured using quoted prices. This includes mutual funds. The mutual funds are valued using the closing Net Asset Value.

Valuation techniques with observable inputs (Level 2): The fair value of Financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. This is the case for derivative instruments.

Valuation techniques with significant unobservable inputs (Level 3): If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There were no amount required to be transferred as at the end of the current year and as at the end of the previous year.

Valuation technique used for Level 3 investments

Fair valuation of the equity investments as at March 31, 2022 have been determined using the market approach. Significant unobservable input used in the valuation was earnings multiple.

The increase / decrease of 1 earnings multiple (keeping other variables constant) would result into an increase / decrease in fair value by ''2.48 crores (March 31, 2021: ''1.84 crores) and ''2.48 crores (March 31, 2021: ''1.92 crores) respectively.

(iii) Derivative financial instruments

Derivative instruments used by the Company are forward exchange contracts. These financial instruments are utilised to hedge future transactions and cash flows and are subject to hedge accounting under Ind AS 109 "Financial Instruments" wherever possible. The Company does not hold or issue derivative financial instruments for trading purposes. All transactions in derivative financial instruments are undertaken to manage risks arising from underlying business activities.

All derivative instruments are designated as not in hedging relationships.

(c) Cross subsidy surcharge payable to power distribution companies

I n 2012-13, the Company injected power to State Grid due to denial of permission for open access by Orissa Power Transmission Corporation Limited (""OPTCL"") to supply power to the parent Company, Tata Steel Limited, beyond the period of invocation of section 11 of Electricity Act, 2003 by the Government of Odisha i.e., June, 2012. As a result, the Company could not meet the minimum stipulated criteria of 51% self-consumption of generated power as a captive power plant and the provisions of Cross Subsidy Surcharge under Electricity Act, 2003 became applicable. The Company filed a case before the Odisha Electricity Regulatory Commission (""OERC"") for relief which was denied and consequently the Company had filed a case before Appellate Tribunal of Electricity (""ATE""). Appeal filed by the Company before ATE was allowed and the matter stands remitted back to the OERC for reconsideration afresh. As a matter of prudence, pending finalisation of the matter, an amount of ''6.01 crores provided in the year ended March 31, 2015, is being continued. In respect of above, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.

(d) The Hon''ble Supreme Court of India vide its order dated September 24, 2014 had cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on February 7, 2006. The carrying amount in books as at March 31, 2022 towards amounts incurred by the Company on the Radhikapur (East) Coal Block in earlier years aggregates ''178.81 crores (March 31, 2021: ''178.81 crores). Pursuant to the judgment of Hon''ble Supreme Court of India, the Government of India had promulgated the Coal Mines (Special Provision) Rules, 2014 and subsequent amendments ("Rules"), for allocation of the coal mines through auction and matters related thereto. In terms of the said Rules, the prior allottee (i.e. the Company) shall be compensated for the expenses incurred towards land and mine infrastructure. As part of 11th tranche of auction under The Coal Mines Act 2015, the Ministry of Coal (MoC) had carried out an auction of the coal block in November 2020 and EMIL Mines and Mineral Resources Limited (EMMRL) was declared as the successful bidder by the Nominated Authority on December 24, 2020. The MoC issued the vesting order dated March 3, 2021 in favour of EMMRL and directed the Company to hand over all the rights/ licenses/ approvals and documents to EMMRL. Accordingly, the Company submitted the documents in respect of title deeds of land and possession of buildings and other required details on April 6, 2021 to EMMRL. On April 28, 2021, the Company submitted a representation along with investment details to Odisha Industrial Infrastructure Development Corporation (IDCO) with a copy to the Joint Secretary to the Government of Odisha (Steel & Mines Department) for determination of valuation of leasehold land. On May 27, 2021, the Special Secretary to the Government of Odisha (Steel & Mines Department) directed IDCO to submit it''s views against Company''s representation. IDCO has submitted its views that the amount incurred by prior allottee shall be calculated as per the Order passed by Nominated Authority, Ministry of Coal, Government of India on July 28, 2021 in line with the decision taken in respect of New Patrapara Coal Block and to be paid by the new allottee EMMRL. The above referred views have also been communicated by IDCO to Additional Secretary to Government, Office of the Nominated Authority, Government of India, Ministry of Coal vide letter dated December 6, 2021.

Based on assessment of the matter by the Company including evidence supporting the expenditure and claim and external legal opinion obtained by the Company, the aforesaid amount is considered good and fully recoverable.

(e) MoC, in earlier years, issued notices to the Company for invocation of bank guarantee of ''32.50 crores submitted towards performance of conditions for allocation of Radhikapur (East) Coal Block, which was contested by the Company in the Hon''ble High Court of Delhi. Further, in accordance with the directives from the Hon''ble High Court of Delhi, the Company had extended the validity of the bank guarantee up to April 15, 2021 and MoC vide its letter dated August 10, 2021 intimated the Company that based on the recommendations of the Inter-Ministerial Group, it has decided to release the bank guarantee. The aforesaid bank guarantee was returned back during the year ended March 31,2022, and accordingly, there is no financial impact on the Company in relation to the aforesaid bank guarantee matter.

34 Estimated amounts of contracts remaining to be executed on capital account (Property, plant and equipment) and not provided for is ''77.12 crores (As at March 31, 2021: ''60.43 crores) net of advances of ''3.60 crores (As at March 31, 2021 ''2.22 crores.)

35 Exceptional items Acquisition related expenditure

Acquisition related expenditure represents expenses incurred on stamp duty and registration fees for a portion of land parcels transferred in the name of the Company, which were part of the acquired business from Usha Martin Limited.

* Contribution towards provident fund for certain employees is made to the recognised state managed funds. Such provident fund benefit is classified as defined contribution scheme as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which is recognised as expense in the Statement of Profit and Loss.

@ The Company has a superannuation plan for the benefit of its employees. This benefit is defined contribution scheme as the Company does not carry any further obligations apart from the contributions made which are recognised as expense under ''Contribution to Provident and Other Funds'' in Note 26.

37.02 - Post employment defined benefit plans

(a) Description of plan characteristics

(i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. Gratuity liability arises on retirement, resignation, and death of an employee. The plan provides for a lump-sum payment to vested employees an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service.

The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each Balance Sheet date.

The Scheme is funded by way of a separate irrevocable Trust and the Company is expected to make regular contributions to the Trust. The fund is managed by an insurance Company and the assets are invested in their conventional group gratuity product. The fund provides a capital guarantee of the balance accumulated and declares interest periodically that is credited to the fund account. The Trust assets managed by the fund manager are highly liquid in nature and we do not expect any significant liquidity risks. The Trust is responsible for investment of assets of the Trust as well as day to day administration of the scheme.

(ii) Long term service award

Eligible employees of the Company rendering services for more than twenty years will receive long service award on all causes of exit as per the Company''s policy. The cost of providing benefits under this plan is determined by actuarial valuation using the projected unit credit method by independent qualified actuaries at the year end.

(iii) Ex-MD Pension and Post Retirement Medical Benefit

The Board of Directors of the Company grants approval for provisions of special retirement benefits to Managing Directors. The retirement benefit induces indexed monthly pension which is reviewed in every three years and medical benefits. The benefits in short are called as Ex-MD pension and Post Retirement Medical Benefit (PRMB). Both the benefit schemes are available to the spouses of concern MDs.

The said benefits are not contractual obligation of the Company. The provisions of the above benefits can only be given after signing the agreement containing the no-compete clause. The liabilities are not funded by the Company and disclosed as defined benefit plan.

(b) Risk analysis

Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefit plans and management''s estimation of the impact of these risks are as follows

(i) Interest risk

A decrease in the Indian government bond yield rate (discount rate) will increase the plan liability.

(ii) Salary risk

The present value of the defined benefit plan liability is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

(iii) Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit.

(iv) Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.

E. Provident fund

Eligible employees (except certain employees covered under Note 37.01) of the Company receive benefits from a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee''s salary. The Company contributes a portion to the ''Tata Sponge Employees Provident Fund Trust''. The trust invests in specific designated instruments as prescribed by the Government. The remaining portion is contributed to the Government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.

The Actuary has carried out year-end actuarial valuation of plan''s liabilities and interest rate guarantee obligations as at the Balance Sheet date using Projected Unit Credit Method and Deterministic Approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, the Company has (reversed) / recognised interest rate guarantee shortfall amounting to ''(5.03) crores (March 31, 2021: ''15.39 crore) in the Statement of Profit and Loss. Further during the year, the Company''s contribution of ''4.49 crores (March 31, 2021: ''4.37 crores) to the Provident Fund Trust has been expensed under the ''Contribution to Provident and Other Funds'' in Note 26. Additionally, during the year the Company has contributed ''1.95 crores to the trust, which has been expensed under the ''Contribution to Provident and Other Funds'' in Note 26. (March 31, 2021: Nil).

37.03 - Other contributions

(i) Employees Pension Scheme - Total amount charged to the Statement of Profit and Loss for the year ''3.45 crores (March 31, 2021: ''3.25 crores).

(ii) Employees State Insurance - Total amount charged to the Statement of Profit and Loss for the year ''0.07 crore (March 31,2021: ''0.10 crore).

Contribution to these schemes are made by the company as required as per the statute.

37.04

The Company has assessed the impact of the Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management (supported with a view from a legal expert), the aforesaid matter is not likely to have any impact and accordingly, no provision has been made in these Financial Statements.

38 (a) Acquisition of Wire Mill from Usha Martin Limited

Pursuant to the Transfer Agreement (''Agreement'') entered into between the Company and Usha Martin Limited (''UML'') on December 14, 2020, the Company acquired the Wire Mill from UML on June 30, 2021. In terms of the Agreement, the Company purchased Wire Mill business through exchange of the bright bar assets acquired from UML originally upon acquisition of steel business on April 9, 2019.

The acquisition would help the Company to further enhance its specialty long products portfolio.

(b) The Board of Directors of the Company approved the schemes for amalgamation of Tata Metaliks Limited and The Indian Steel and Wire Products Limited into the Company at its meeting held on November 13, 2020. The Board of Directors recommended exchange ratio of 12 fully paid-up equity shares of ''10 each of the Company for every 10 fully paid-up equity shares of ''10 each held in the Tata Metaliks Limited and 10 fully paid-up equity shares of ''10 each of the Company for every 16 fully paid-up equity shares of ''10 each held in The Indian Steel and Wire Products Limited. The Company submitted the schemes of amalgamation to Stock Exchanges on November 13, 2020 for approval.

In respect of the scheme for amalgamation of The Indian Steel and Wire Products Limited (ISWP) into the Company, the Company received letters dated June 29, 2021 from Stock Exchanges stating that the Securities and Exchange Board of India (SEBI) has returned the Scheme observing non-compliance with the securities law provisions. In respect of the scheme for amalgamation of Tata Metaliks Limited into the Company, the Stock Exchanges have requested the Company for additional information on the scheme and the Company is in the process of appropriately responding to the same.

(c) On January 31, 2022, the Company was identified as the winner of the bidding process to acquire a 93.71% equity stake in Neelachal Ispat Nigam Limited (''NINL'') for total consideration of ''12,100.00 crores, in accordance with the process run by Department of Disinvestment & Public Asset Management (DIPAM), Government of India. On February 2, 2022, DIPAM issued the Letter of Award to the Company for acquisition of 93.71% equity stake of NINL which was accepted by the Company on February 9, 2022. The total consideration of ''12,100.00 crores shall be applied, interalia, for settling the existing debts/ liabilities and for acquisition of 93.71% equity shares in NINL.

On March 10, 2022, the Company has executed a Share Sale and Purchase Agreement (SPA) with MMTC Limited, NMDC Limited, MECON Limited, Bharat Heavy Electricals Limited, Industrial Promotion and Investment Corporation of Odisha Limited, Odisha Mining Corporation Limited, The President of India, The Government of Odisha, Tata Steel Limited and NINL for acquisition of 93.71% equity shares in NINL. Pursuant to execution of the SPA, the Company has deposited of ''1,210.00 crores in the escrow account, representing 10% of the bid amount. The same has been presented as "Advance against equity investment" in the Balance Sheet considering that in future this advance will lead to a strategic nature of an investment.

The aforesaid acquisition will provide an inorganic growth opportunity for the Company to grow in the long products business and leverage the captive iron ore mines of NINL.

Further, during the year ended March 31, 2022, the Company has allotted (as below) 0.01% Non-Convertible Redeemable Preference Shares ("NCRPS") having face value of ''100 each mandatorily redeemable at the end of 20 years from the date of allotment at premium of ''574.63 per NCRPS to Tata Steel Limited on private placement basis as approved by the Board of Directors. The NCRPS shall be redeemable at premium upon maturity or optional early redemption with accrued interest thereon computed on the basis of the effective yield of the instrument, at the option of the Company on a quarterly basis at 3-month intervals from the date of allotment.

â¢ On March 17, 2022, the Company allotted 100,000,000 (Ten crores) 0.01% NCRPS aggregating ''1,000.00 crores.

â¢ On March 30, 2022, the Company allotted 1,170,000,000 (One hundred seventeen crores) 0.01% NCRPS aggregating ''11,700.00 crores.

Proceeds from the aforesaid allotment and accrued interest thereon have been presented under non current Borrowings (Refer Note 15 ) and the interest charge for the period on this instrument has been presented under " Finance Costs" (Refer Note 27).

Pending eventual utilisation, inter alia, for the acquisition of the aforesaid equity shares, the proceeds from the allotment have been used to repay the debt of ''800 crores and invested ''7,700 crores and ''4,200 crores in Mutual Funds and Fixed Deposits respectively, which are in keeping with the purposes of utilisation approved by the shareholders in the Extra Ordinary General Meeting of March 7, 2022.

B. Impairment tests for goodwill

The Goodwill of ''6.16 crores (March 31, 2021: ''5.66 crores) represents the goodwill accounted on the acquisition of Steel Business (CGU) from Usha Martin Limited. The entire goodwill as mentioned above is attributable to the aforesaid acquired business CGU i.e. Integrated steel manufacturing plant. There were no impairment indicators as at the year end.

40 Assets classified as held for sale

(a) Pursuant to the Business Transfer Agreement with Usha Martin Limited (UML), the Company had acquired certain assets (''the Assets'') at Chennai and Ranchi locations from UML. The Company acquired ''the Assets'' with intention of subsequent sale and therefore, the Company recorded ''the Assets'' as held for sale in accordance with Ind AS 105: Non-current Assets Held for Sale and Discontinued Operations.

During the current year, the Company has acquired Wire Mill business from Usha Martin (Refer Note 38(a)) through exchange of ''the Assets''. As at March 31, 2021, the Company measured ''the Assets'' at lower of carrying value and fair value less costs to sell amounting to ''8.39 crores.

(b) Certain items of property, plant and equipments (including capital work in progress) related to Radhikapur (East) coal block (Refer note 33(d)) amounting to '' Nil (March 31, 2021: ''10.88 crores) had been classified as held for sale in accordance with Ind AS 105: Non-current Assets Held for Sale and Discontinued Operations.

41 Segment reporting

The Company is in the business of manufacture of steel and allied products (including the manufacture of sponge iron and generation of power) and accordingly, steel and allied products is the only reportable segment in accordance with Ind AS 108 - Segment Reporting.

Revenue expenditure charged to the Statement of Profit and Loss in respect of CSR activities undertaken during the year is ''2.99 crores, (paid in cash) as compared to ''0.56 crores for the year ended March 31, 2021 (''0.49 crores was paid in cash and ''0.07 crore was unpaid).

c. CSR expenditure incurred through related parties of the Company for the year ended March 31, 2022 is ''0.23 crores. (March 31, 2021: '' Nil.)

d. There are no ongoing CSR projects and no expenditure was incurred during the year on any ongoing project. The Company does not propose to carry forward any amount spent beyond the statutory requirement.

TSIL Energy Limited (TSIL Energy), a wholly owned subsidiary of the Company, was incorporated primarily for electric power generation, transmission, and its distribution. However, the aforesaid business activity could not be commenced. The members of TSIL Energy in its Annual General Meeting held on September 25, 2021, approved, by way of a special resolution, to initiate voluntary liquidation of TSIL Energy and appointed a Liquidator, authorising exercise of all powers as per the applicable provisions of the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016, to effectively discharge the process of voluntary liquidation of TSIL Energy.

In view of the above, with the loss of control of the Company in TSIL Energy upon passing of the aforesaid resolution / appointment of the Liquidator and having regard to the fact that the Company does not have any other subsidiary and TSIL Energy is not material (Indian Accounting Standards apply only to items that are material), the Company has considered not to present consolidated financial statement for financial year ended March 31, 2022.

The Company has received proceeds from the liquidator during the year ended March 31, 2022 and adjusted the same against the investments in TSIL Energy. During the year ended March 31, 2022, the Liquidator has filed application for dissolution of the TSIL Energy with National Company Law Tribunal Cuttack Bench. The Bench has directed the Registrar of Companies, Odisha, to file their report / representations.

(a) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

(b) Refer Note 52 for disclosure relating to total amount of security (charge created) towards working capital facilities and term loan, as on March 31, 2022.

45 The Company has assessed the possible impact of COVID-19 on its financial statements based on the internal and external information available up to the date of approval of these financial statements and concluded no adjustment is required in these statements. The Company continues to monitor the future economic conditions.

(i) Current ratio has increased due to increase in cash and cash equivalents and investments in mutual funds. The proceeds from issue of NCRPS has been invested in short term deposits, which shall eventually be utilised for acquisition of Neelachal Ispat Nigam Limited.

(ii) Debt to equity ratio has increased due to issue of NCRPS during the current year.

(iii) Debt service coverage ratio has improved due to lower finance cost during the current year.

(iv) Trade receivables turnover ratio has primarily improved due to higher revenue from operations during the current year.

(v) FY''22 Working capital ratio has improved due to higher current investments and cash balances as at March 31, 2022.

*FY''21 Working capital is negative.

48 The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

49 The Company has long-term contracts as at March 31,2022 for which there were no material foreseeable losses. The Company did not have long term derivative contracts.

50 There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company except for amounts aggregating to ''0.06 crores as at March 31, 2022 (March 31, 2021: ''0.06 crores) which is held in abeyance due to pending legal cases.

51 The Company has not granted loans to its promoters, directors, key managerial personnel (KMP) and the other related parties (as defined under the Companies Act, 2013) which are repayable on demand or without specifying any terms or period of repayment or any other loans or advance in the nature of loans.

52 The Company has obtained borrowings from banks on the basis of security of current assets. The quarterly returns or statements of current assets filed by the Company with the banks are in agreement with the books of accounts for year ended March 31, 2022 and March 31, 2021.

The returns for the quarter ended March 31, 2022, are not yet due, which would be appropriately filed by the Company within the due date.

Total amount of security (charge created), towards working capital facilities and term loan, as on March 31, 2022 is ''1,585.00 crores (March 31, 2021: ''1,297.00 crores) and ''2,900.00 crores (March 31, 2021: ''2,900.00 crores) respectively.

53 (a) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources

or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

54 The Company has not made any investments during the year other than investment in mutual funds. The Company has not granted secured/ unsecured loans/ advances in the nature of loans to any Company/Firm/Limited Liability Partnership/Other Party during the year other than loan to employees. The Company has not provided guarantee or security to any Company/ firm/Limited Liability Partnership/Other party during the year other than security provided against certain current assets in connection with working capital facilities from banks (Refer Note 44).

55 The Company has done an assessment to identify Core Investment Company (CIC) [including CIC''s in the Group] as per the necessary guidelines of Reserve Bank of India [including Core Investment Companies (Reserve Bank) Directions, 2016]. The Companies identified as CIC''s at Group level are Panatone Finvest Limited, TATA Capital Limited, TATA Industries Limited, TATA Sons Private Limited, TMF Holdings Limited and T S Investments.

56 No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

57 The Company has not been declared wilful defaulter by any bank or financial institutions or government or any government authority.

58 The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

59 Figures for the previous year has been regrouped and reclassified to conform to classification of current year, wherever necessary.

Mar 31, 2019

1. Company Background

TATA SPONGE IRON LIMITED (âTSILâ or âthe Companyâ) is a public limited company incorporated in India with its registered office at Joda, Odisha, India.

The Company has a presence across the manufacture of sponge iron and generation of power from waste heat as detailed under segment information in Note 35 to the standalone financial statements.

The Company is a subsidiary of Tata Steel Limited. The equity shares of the Company are listed on two of the stock exchanges in India i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

The standalone financial statements were approved and authorized for issue with the resolution of the Companyâs Board of Directors on April 18, 2019.

2.01 The amortisation has been included under âDepreciation and Amortisation Expensesâ in the Standalone Statement of Profit and Loss (Refer Note 26)

2.02 On transition date, the Company has chosen to carry forward the previous GAAP carrying amount and accordingly net carrying amount on transition date was considered deemed cost.

3.1 Refer Note 28 for information about fair value measurement, credit risk and market risk on investments.

(a) Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

(b) Rights, preferences and restrictions attached to preference shares

Such shares shall rank for capital and dividend (including all dividend undeclared upto the commencement of winding up) and for repayment of capital in a winding up, pari passu inter se and in priority to the Equity Shares of the Company, but shall not confer any further or other rights in participating in surplus funds. Such shares shall confer on the holders thereof, the right to a fixed preferential dividend from the date of allotment at 11.30% p.a. and shall be redeemable at par upon maturity or optional early redemption at the option of the Company annually at 12 monthly intervals from the date of allotment. These shares shall carry voting rights as per the provisions of Section 47(2) of the Companies Act, 2013.

(c) These preference shares are yet to be issued and are included above for disclosure for authorised share capital only. Classification of the preference shares as equity or liability will be determined at the time they are issued.

(a) General reserves

Under the erstwhile Indian Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act, 2013, the requirement to mandatory transfer a specified percentage of the net profit to general reserve has been withdrawn though the Company may transfer such percentage of its profits for the financial year as it may consider appropriate. Declaration of dividend out of such reserve shall not be made except in accordance with rules prescribed in this behalf under the Act.

(b) Retained Earnings

Retained Earnings are the profits and gains that the Company has earned till date, less any transfer to general reserve, dividends or other distributions paid to shareholders.

(c) Remeasurement gains / (losses) defined benefit plans

The Company recognises remeasurement gains / (losses) on defined benefit plans in Other Comprehensive Income. These changes are accumulated within the equity under âRemeasurement gains / (losses) on defined benefit plansâ reserve within equity.

(d) Equity instruments through other comprehensive income

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in Other Comprehensive Income. These changes are accumulated within the âEquity instruments through other comprehensive incomeâ reserve within equity.

The Company transfers amounts from this reserve to Retained Earnings when the relevant equity shares are derecognised.

4(a) Financial Risk Management:

The Companyâs activities expose it to credit risk, liquidity risk and market risk. In order to safeguard against any adverse effects on the financial performance of the Company, derivative financial instruments viz. foreign exchange forward contracts are entered where considered appropriate to hedge foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The Companyâs senior management oversees the management of above risks. The senior executives working to manage the financial risks are accountable to the Audit committee and the Board of Directors. This process provides assurance that the Companyâs financial risks-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and the Companyâs risk appetite.

(i) Credit risk management:

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in financial loss to the Company. The Companyâs exposure to credit risk primarily arises from trade receivables, investments in mutual funds and balances with banks.

Trade Receivables

Trade receivables are typically unsecured, considered good and are derived from revenue earned from customers. Customer credit risk is managed as per Companyâs policy and procedures which involve credit approvals, establishing credit limits and continually monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored and the shipments to customers are generally covered by letters of credit or other forms of credit assurance.

Other Financial Assets

Credit risk from balances with banks, term deposits, loans and investments is managed by Companyâs finance department. Investments of surplus funds are made only with approved counterparties who meet the minimum threshold requirements.

The Company monitors ratings, credit spreads and financial strength of its counterparties.

Financial Assets that are Neither Past Due Nor Impaired

None of the Companyâs cash equivalents with banks, loans and investments as at 31 March, 2019 and 31 March, 2018 were past due or impaired. Total trade receivables, of Rs.7,845.45 lacs as at 31 March, 2019 and Rs.5,880.50 lacs as at 31 March, 2018 consisted of customer balances that were neither past due nor impaired.

(ii) Liquidity risk management:

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and maintain adequate source of financing. The Company generates sufficient cash flows from current operations which together with the available cash and cash equivalents and short-term investments provide liquidity both in the short-term as well as long-term.

(a) Financing Arrangements

The Company has unutilised fund based arrangement with banks for Rs. 7000.00 lacs (31 March, 2018: Rs. 11,000.00 lacs).

The Company has also Non-Fund based facilities with banks for Rs.14,815.00 lacs (31 March, 2018: Rs. 31,315.00 lacs) which may be utilised at any time and the banks have a right to terminate the same without notice.

(b) Maturities of Financial Liabilities

The table below analyse the Companyâs financial liabilities into relevant maturity groupings based on their contractual maturities.

The amounts disclosed in the table are the contractual undiscounted cash flows.

(iii) Market risk: (i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currencies (primarily US Dollars).

The Company has foreign currency trade payables and is therefore exposed to foreign currency risk. Foreign currency risk exposure is evaluated and managed through operating procedures and sourcing policies. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

(iv) Securities Price risk:

The Company is exposed to price risks arising from fair valuation of Companyâs investment in mutual funds. The carrying amount of the Companyâs investments designated as at fair value through profit or loss at the end of the reporting period (Refer Note no 5)

(v) Commodity Price Risk

Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of imported coal for production of finished goods. Cost of raw materials forms the largest portion of the Companyâs cost of sales. Market forces generally determine prices for the coal purchased by the Company. These prices may be influenced by factors such as supply and demand, production costs and global and regional economic conditions and growth. Adverse changes in any of these factors may impact the results of the Company.

Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. The Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

(b) Capital Management:

(i) Risk Management

The objective of the Companyâs capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through operating cash flows generated and the Company does not have any borrowings. The Company is not subject to any externally imposed capital requirements.

Fair value measurement:

The following methods and assumptions were used to estimate the fair values:

(a) In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

(b) The management assessed that fair values of, Current Investments, trade receivables, cash and cash equivalents, other bank balances, other financial assets (current), trade payables, and other financial liabilities (current), approximate to their carrying amounts due to the short-term maturities of these instruments.

Fair Value Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classifed its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows below.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds. The mutual funds are valued using the closing Net Asset Value.

Level 2: The fair value of Financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

Valuation technique used for Level 3 investments

Fair valuation of the equity investments have been determined using the discounted cash flow model. Significant unobservable inputs used in the valuation were earnings growth rate and risk adjusted discount rates.

The increase / decrease of 1% in earnings growth rate (keeping other variables constant) would result into an increase / decrease in fair value by Rs. 16.00 lacs and Rs.16.00 lacs respectively.

The increase / decrease in 1% risk adjusted discount rate (keeping other variables constant) would result into decrease / increase in fair value by Rs. 64.00 lacs and Rs. 72.00 lacs respectively.

Note:

The above includes demand received from Commissioner of Customs (Preventive) aggregating to Rs. 4,398.99 lacs pertaining to the financial year 2012-13 on account of levy of additional customs duty on classification of the imported coal as bituminous coal as against Companyâs classification as steam coal. During the year, the Company has filed an appeal against the aforesaid order in the Customs, Excise and Service Tax Appellate Tribunal, Kolkata. The Company had paid an amount of Rs. 1,087.94 lacs and recognised the non-cenvatable portion of the duty and applicable interest as expense whereas cenvatable portion had been recognised as an advance in the year 2012-13.

In respect of above, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above.

(c) Cross subsidy surcharge payable to power distribution companies

In 2012-13, the Company injected power to State Grid due to denial of permission for open access by Orissa Power Transmission Corporation Limited (âOPTCLâ) to supply power to the parent Company Tata Steel Limited beyond the period of invocation of section 11 of Electricity Act, 2003 by the Government of Odisha i.e., June, 2012. As a result of which the Company could not meet the minimum stipulated criteria of 51% self-consumption of generated power as a captive power plant and the provisions of Cross Subsidy Surcharge under Electricity Act, 2003 became applicable. The Company filed a case before the Odisha Electricity Regulatory Commission (âOERCâ) for relief which was denied and consequently the Company had filed a case before Appellate Tribunal of Electricity (âATEâ). Appeal filed by the Company before (âATEâ) was allowed and the matter stands remitted back to the OERC for reconsideration afresh. As a matter of prudence, pending finalisation of the matter, an amount of Rs. 601.00 lacs provided in the year ended 31 March, 2015, is being continued.

(d) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. June 10, 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lacs had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. Pending finalisation of the matter no adjustments have been made in the financial statements.

As per Industrial Policy Resolution 1992 of Government of Odisha, the Company had to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company had paid the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company considered that the above limit of Rs. 252.56 lacs had to correspondingly reduce and accordingly made reduced payment. The Company however had provided the differential amount of Rs. 513.83 lacs upto the date of availing the benefit i.e., upto 31 March, 2012. The Company had started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. 1 April, 2012 and depositing the same with Sales Tax Authorities after availing set off of applicable input tax credit.

5 (a) In the month of November 2012, Ministry of Coal (âMoCâ) issued notices to the Company for invocation of bank guarantee of Rs. 3,250 lacs submitted towards performance of conditions for allocation of coal block against which the Company had filed a writ petition in the Honâble High Court of Delhi, which directed the Company to keep the bank guarantee valid till 30 November, 2015 by which date the MoC was directed to take decision. The bank guarantee expired after 30 November 2015 and had not been renewed, since no communication had been received from MoC. Subsequently, MoC issued a notice dated 28 December, 2015, stating that the bank guarantee be invoked and the aforesaid amount be deposited. Consequent to MoCâs notice, the Company has moved to the Honâble High Court of Delhi, where the matter is pending adjudication. The Company has been advised and has obtained a legal opinion that as the original allocation of coal block has been declared illegal and cancelled by the Honâble Supreme Court, the bank guarantee pertaining to such allocation (which is non-est and void ab initio) shall consequently be deemed to be invalid and void ab initio. Pending finalisation of the matter, the amount continues to be disclosed as a contingent liability.

(b) (i) During pendency of the aforesaid matters in Honâble High Court of Delhi, the Honâble Supreme Court of India vide its order dated 24 September, 2014 had cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on 7 February, 2006. The amount incurred on the Radhikapur (East) Coal Block upto 31 March, 2019 aggregates to Rs. 18,040.96 lacs (31 March, 2018: Rs. 18,040.96 lacs), and the carrying amount in the books net of depreciation and write off as at 31st March, 2019, is Rs. 17,905 lacs (31 March, 2018 Rs. 17,917 lacs).

(ii) Pursuant to the judgment of Honâble Supreme Court of India, the Government of India had promulgated Coal Mines (Special Provision) Rules, 2014 (âRulesâ) for allocation of the coal mines through auction and matters related thereto. In terms of the said Rules, the successful bidder will be called upon to pay to the prior allocattee the expenses incurred by the prior allocattee towards land and mine infrastructure. Pursuant to the judgement dated 9 March,2017 of the Honâble High Court of Delhi in W.P

(c) 973/2015, the directives of MoC vide its letter dated 1 February,2018 and as per details prescribed by Nominated Authority ,the Company has furnished the required statement of expenses and other details in the prescribed format on 22 February, 2018. Relying on the legal position and legal opinion obtained by the Company in respect of the recoverability of the amount, no provision is considered necessary.

6 Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs. 244.88 lacs (As at 31 March, 2018: Rs. 156.95 lacs) Net of advances Rs.0.31 lacs (As at 31 March, 2018 Rs. 0.31 lacs.)

(E) Pursuant to approval of Board Directors, the Company has paid / provided an amount of Rs. 133.49 lacs as part of long term incentive plan (LTIP) to the Managing Director which is in lieu of the earlier âSpecial Retirement Benefit Schemeââ. The amount paid / provided as aforesaid, is within the limits prescribed under section 197 of the Companies Act, 2013. The Company would seek the shareholdersâ approval / ratification for payment of LTIP in the ensuing annual general meeting.

(b) Post Retirement Gratuity and Ex-MD Pension Description of plan characteristics and associated risks

Gratuity liability arises on retirement, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary (i.e. last drawn salary plus dearness allowance) upto 30 years of service and beyond 30 years of service, the liability is calculated on the basis of one month salary for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of service.

The Scheme is funded by way of a separate irrevocable Trust and the Company is expected to make regular contributions to the Trust.

The fund is managed by an insurance Company and the assets are invested in their conventional group gratuity product. The fund provides a capital guarantee of the balance accumulated and declares interest periodically that is credited to the fund account. The Trust assets managed by the fund manager are highly liquid in nature and we do not expect any significant liquidity risks. The Trust is responsible for investment of assets of the Trust as well as day to day administration of the scheme.

The gratuity plan typically exposes the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk.

1 Interest risk : A decrease in the Indian government bond yield rate (discount rate) will increase the plan liability.

2 Salary risk : The present value of the defined benefit plan liability is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.

In respect of the plans in India, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out as at 31 March, 2019 by Mr. Ritobrata Sarkar, Fellow, Institute of Actuaries of India. The present value of defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

The Board of Directors of the Company grants approval for provisions of special retirement benefits to Managing Directors. The retirement benefit incudes indexed monthly pension which is reviewed in every three years and medical benefits. The benefits in short are called as Ex-MD pension and Post Retirement Medical Benefit (PRMB). Both the benefit schemes are available to the spouses of concern MDs.

The current service cost, past service cost and the net interest expense for the year are included in the âEmployee benefits expenseâ in the Statement of Profit and Loss. The remeasurement of the net defined benefit liability is included in other comprehensive income.

7 The plan assets of the Company relating to Gratuity are managed through a trust are invested through Life Insurance Corporation (LIC). The details of investments relating to these assets are not shown by LIC. Hence, the composition of each major category of plan assets, the percentage or amount that each major category constitutes to the fair value of the total plan assets has not been disclosed.

8 Sensitivity analysis

Significant actuarial assumptions for the determination of the defined 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.

a) On post retirement gratuity plan

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs.93.93 lacs (increase by Rs. 106.83 lacs) [as at 31 March, 2018: decrease by Rs. 104.19 lacs (increase by Rs. 92.58 lacs)].

ii) If the expected salary growth increases/ (decreases) by 100 basis points, the defined benefit obligation would increase by Rs. 105.29 lacs (decrease by Rs. 94.37 lacs) [as at 31 March, 2018: increase by Rs. 102.96 lacs (decrease by Rs. 93.23 lacs)].

b) On post retirement pension plan

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs. 115.06 lacs (increase by Rs. 137.54 lacs) [as at 31 March, 2018: decrease by Rs. 135.73 lacs (increase by Rs. 113.35 lacs)] .

ii) If the expected salary growth increases/ (decreases) by 100 basis points, the defined benefit obligation would increase by Rs. 138.25 lacs (decrease by Rs. 117.56 lacs) [as at 31 March, 2018: increase by Rs. 136.78 lacs (decrease by Rs. 116.07 lacs)].

The Company ensures that the investment positions are managed within an asset liability matching (ALM) framework that has been developed to achieve long term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Companyâs ALM objective is to match assets to the gratuity obligations by investing with LIC.

10 The average duration of the defined benefit plan obligation representing average duration for active members is 8 years (As at 31 March, 2018: 8 years).

11 Sensitivity analysis

On PRMB

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs. 5.36 lacs (increase by Rs. 6.20 lacs) [as at 31 March, 2018: decrease by Rs. 6.32 lacs (increase by Rs. 5.47 lacs)].

Additional information relating to employee benefits obligation:

1. The estimate of future salary increases take into account inflation, seniority, promotion and other relevant factors.

2. Discount rate is based on the prevailing market yields of Government securities as at the Balance Sheet date for the estimated term of the obligations.

3. Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

4. Net liabilities for pension, gratuities and post retirement medical benefits is disclosed in Note 14 under the heading âPost-employment defined benefitsâ.

5. Expenses relating to pension and post retirement medical benefits are included in Employee benefits expense under the heading Salaries and Wages in Note 24 whereas expenses for retiring gratuities are included under the Contribution to Provident and Other Funds in Note 24.

(d) Actuarial assumptions for compensated absences

Notes :

1. The discount rate is based on the prevailing market yields of India Government securities as at the balance sheet date for the estimated term of obligations.

2. The compensated absences plan is funded.

3. The estimates of future salary increases considered take into account the inflation, seniority, promotion and other relevant factors.

(e) Provident Fund - All employees in the rolls of the Company receive provident fund benefits, which are administered by the Provident Fund Trust exempted under section 17(1)(a) of Employees Provident Fund and Miscellaneous Provisions Act 1952 set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employeesâ salary to Provident Fund Trust. If the Board of Trustees is unable to pay interest at the rate declared for Employees Provident Fund by the Govt. of India under Para 60 of the Employees Provident Fund Scheme, 1952 for the reason that the return on Investment is less or for any other reason then the deficiency shall be made good by the Company.

The Actuary has carried out year-end actuarial valuation of planâs liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and Deterministic Approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, there is no future anticipated shortfall with regard to interest rate obligation of the Company as at the Balance Sheet date. Further during the year, the Companyâs contribution of Rs.200.24 lacs (31 March, 2018: Rs.193.68 lacs) to the Provident Fund Trust has been expensed under the âContribution to Provident and Other Fundsâ in Note 24. Disclosures given hereunder are restricted to the information available as per the Actuaryâs Report.

(f) Risk Exposure

Though its defined benefit plans, the Company is exposed to some risks, the most significant of which are detailed below:

Discount Rate Risk

The Company is exposed to the risk of fall in discount rate. A fall in discount rate will eventually increase the ultimate cost of providing the above benefit thereby increasing the value of the liability.

Salary Growth Risks

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

Demographic Risk

In the valuation of the liability, certain demographic (mortality and attrition rates) assumptions are made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the assumptions thereby causing an increase in the benefit cost.

(g) The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of âVivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengalâ and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employeesâ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to provident fund under the Employeesâ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management, these aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these standalone financial statements.

12 Segment Reporting

(a) The Company is engaged in production of sponge iron and generation of power from waste heat. Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on manufacture of sponge iron and generation of power, reportable segments for financial statements in accordance with Ind AS 108 âOperating Segmentâ. The Companyâs activities/operations are primarily within India.

(b) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments and also amounts allocated on a reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallocable. Assets and liabilities that cannot be allocated between the segments are shown as unallocable assets and liabilities respectively.

13 Disclosure Relating to Provisions as Per Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets

Provisions for interest on income tax and others have been recognised in the financial statements considering the following:

(i) The Company has a present obligation as a result of past event

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(iii) A reliable estimate can be made of the amount of the obligation

14 Assets Hypothecated as Security

The carrying amount of inventories and trade receivables (Note 09 and 10 respectively) are hypothecated as Primary security and Property, plant and equipment (Note 03) hypothecated as collateral security for working capital requirements.

15 Operating Leases

The Company has cancellable operating lease agreements for office spaces and residential accommodations, the tenure of which generally vary from less than a year to 3 years. Terms of such lease include option for renewal on mutually agreed terms. Operating lease rental expenses aggregating Rs. 81.23 lacs (31 March 2018: Rs. 79.29 lacs) have been debited to the Statement of Profit and Loss.

16 Expenditure on Corporate Social Responsibility:

a. Gross amount required to be spent by the Company during the year 31 March, 2019 : Rs. 223.44 lacs (year ended 31 March, 2018 Rs. 179.22 lacs)

b. Amount spent during the year ended 31 March, 2019 (figures in brackets represents amount for the previous year)

17 The Company did not have any material foreseeable losses on long-term contracts as at 31 March, 2019. The Company did not have any derivative contracts as at 31 March, 2019.

18 Pursuant to the Business Transfer Agreement (âBTAâ) entered into between Tata Steel Limited (Companyâs holding company) and Usha Martin Limited (âUMLâ) on September 22, 2018, its subsequent novation in favour of the Company and approval by the Companyâs shareholders, the acquisition of steel business of UML has been completed on April 9, 2019 (âAcquisition dateâ) inter-alia with payment of cash consideration of Rs. 346,863.36 lacs (after adjustments for negative working capital and hold backs of Rs. 64,000.00 lacs pending transfer of some of the assets including mines and certain land parcels) and compliance with other relevant conditions precedents specified in the BTA by respective parties. TSIL will get back Rs.1,456.53 lacs for steel business BGs. The acquisition would help the Company to diversify beyond sponge iron business and enter into steel business with a focus on specialty long products portfolio.

The acquisition date being subsequent to the balance sheet date, no adjustments have been made in the standalone financial statements for the year ended 31 March, 2019. The Company inter-alia is in the process of determining the fair values of acquired assets and liabilities and accordingly the initial accounting for the business combination is not complete and therefore, no further disclosures are applicable.

19 Standards issued and but not yet effective

The Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 and the Companies (Indian Accounting Standards) Second Amendment Rules, 2019 including the following amendments to Ind AS which the Company has not applied in these standalone financial statements as they are effective for annual periods beginning on or after 1 April, 2019.

Ind AS 116 - âLeasesâ

Ind AS 116 will impact primarily the accounting by lessees and will result in the recognition of almost all leases on balance sheet.

The standard removes the current distinction between operating and finance leases and requires recognition of an asset (the right-of-use the leased item) and a financial liability to pay rentals for almost all lease contracts. An optional exemption exists for short-term and low-value leases.

Appendix C, âUncertainty over Income Tax Treatmentsâ, to Ind AS 12, âIncome Taxesâ

This appendix clarifies how the recognition and measurement requirements of Ind AS 12 âIncome Taxesâ are applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The Company is in the process of evaluating the impact of adoption of above amendments on its standalone financial statements.

10 There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of Rs. 4.82 lacs, which is held in abeyance due to pending legal cases.

11 Details relating to Companyâs subsidiaries are as follows.

* The Company was incorporated to primarily engage in generation and sale of power and is yet to carry out such activities.

Mar 31, 2017

a Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income expense, gains, or losses are required to be presented in other comprehensive income, b Under Ind AS, dividend to holders of equity instruments is recognized as a liability in the year in which the obligation to pay is established. Under previous GAAP, dividend payable was recorded as a liability in the year to which it relates. This has resulted in an increase in equity of Rs. 1,853.51 lacs as at 31 March, 2016 and 1 April, 2015. c Under previous GAAP, revenue from sale of products was presented net of excise duty under revenue from operations, whereas, under Ind AS, revenue from sale of products includes excise duty. The corresponding excise duty expense is presented separately on the face of the Statement of Profit and Loss. The change does not affect total equity as at 1 April, 2015and31 March,2016and loss fortheyearended31 March,2016. d Under previous GAAP, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses form part of measurement of the net defined benefit liability / asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss. The actuarial losses for the year ended 31 March, 2016 were Rs. 162.24 lacs and the tax effect thereon was Rs. 56.15 lacs. This change does not affect total equity, but there is an increase in profit before tax of Rs. 106.09 lacs and decrease in other comprehensive income of 106.09 lacs for the year ended 31 March, 2016. e Previous GAAP figures have been reclassified to conform to the Ind AS presentation requirements for the purpose of this note.

The Company holds 800,000 number of equity shares of Rs. 10 each in Jamipol Limited. Since the shares of Jamipol Limited are unquoted, and there is a restriction on disinvestment of shares by the Company as this is a strategic investment, there is a wide range of possible fair value measurements. Consequently, the management of the Company has concluded that cost represents the best estimate of fair value within that range.

a) The Loss on obsolescence relating to stores and spare recognized as an expense for the year ended 31 March, 2017 is Rs.50.63 lacs (for the year ended 31 March, 2016: Rs.57.97 lacs).

b) The cost of inventories relating to iron ore recognized as expenses during the year ended 31 March, 2017 includes Rs. Nil (during the year ended 31 March, 2016 Rs. 1,110.96 lacs) in respect of write-down of inventory to net realizable value.

c) Mode of valuation has been stated in note 2 m.

There are no other customers, other than mentioned above, who represents more than 5% of the total balance of the trade receivables.

b) The Company assesses at each date of balance sheet whether a financial asset ora group of financial assets is impaired. Ind AS 109 "Financial instruments" requires expected credit losses to be measured through a loss allowance. The Company has used a practical expedient and adjusted forforward looking information to compute expected credit losses. Based on historical credit loss experience for the Company and considering forward looking information, there is no expected credit loss allowance on trade receivables.

c) Age of receivables:

1 (iii) Disclosure of specified Bank notes(SBNs)

''The details of Specified Bank Notes (SBNs) or other denomination notes, as defined in the MCA notification G.S.R. 308(E) dated 30 March, 2017, held and transacted during the period from 8 November, 2016 to 30 December, 2016 is provided in the table below:

* For the purposes of this note, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.0.3407(E), dated 8 November, 2016.

(f) Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

(1) In respect of the year ended 31 March, 2017, the Board of Directors in their meeting dated 26 April, 2017 have proposed a final dividend of Rs. 11 per equity share to be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the annual general meeting.

(2) The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety.

Note

1. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.

2. There are no deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been recognized.

Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The amount due to the Micro and Small Enterprise as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" has been determined to the extent such parties have been identified on the basis of the information available with the Company, which has been relied upon by the auditors. The disclosure relating to the Micro and Small Enterprise are as under:

2 Financial Instruments

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 (j) to the Financial Statements.

(a) Capital management:

The objective of the Company''s capital management is to maximize shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through operating cash flows generated and the Company does not have any borrowings. The Company is not subject to any externally imposed capital requirements.

(b) Liquidity risk management:

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of Company''s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and by matching the maturing profiles of financial assets and liabilities.

(c) Market risk:

Market risk is the risk that the fair value of financial instrument will fluctuate because of change in market price. Market risk comprises of two types of risks - foreign currency risk (Refer note 29k) and other price risk (Refer note 29 (d)).

The Company''s activities expose it primarily to currency risk and other price risk such as equity price risk. The financial instruments affected by market risk includes: current investments and other current financial liabilities.

(d) Price risk:

The Company is exposed to price risks arising from fair valuation of Company''s investment in mutual funds. These investments are held for short term purposes.

If prices had been 100 basis points higher/lower, profit before tax for the year ended 31 March, 2017 would increase/decrease by Rs. 261.42 lacs (for the year ended 31 March, 2016: Rs. 283.51 lacs) as a result of the changes in fair value of these investments which have been designated as at FVTPL.

(e) Liquidity risk:

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Company''s principal sources of liquidity are cash and cash equivalents, liquid mutual fund investments and the cash flow that is generated from operations.

The Company manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows. The Company generates sufficient cash flows from current operations which together with the available cash and cash equivalents and short-term investments provide liquidity both in the short-term as well as in the long-term.

The following tables detail the Company''s remaining contractual maturity for its financial liabilities with agreed repayment and realization periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay and realize.

(i) Credit risk management:

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company''s exposure to credit risk primarily arises from trade receivables, investments in mutual funds and balances with banks. The credit risk on bank balances is limited because the counterparties are banks with good credit ratings. Trade receivables consist of a large number of customers. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Company''s policies on assessing expected credit losses is detailed in notes to accounting policies [Refer note 2 (j)]. For details of exposure, default grading and expected credit loss as on the reporting year. (Refer note 11)

Apart from the customers as disclosed in note 11a, the Company does not have significant credit risk exposure to any single counterparty.

(j) Fair value measurement:

Fair value of the Company''s financial assets and financial liabilities that are measured at fair value on recurring basis:

The Company''s investments in mutual funds and equity instruments are measured at fair value at the end of each reporting period. The following table gives information on determination of its fair value, the valuation techniques and inputs used.

Fair value of the Company''s financial assets and financial liabilities that are not measured at fair value on a recurring basis:

The directors consider that the carrying amounts of financial assets and financial liabilities recognized in the Financial Statements approximate their fair values.

(k) Foreign currency risk:

Foreign exchange risk comprises of risk that may arise to the Company because of fluctuations in foreign currency exchange rates. Fluctuations in foreign currency exchange rates may have an impact on the Statement of Profit and Loss. As at the year end, the Company is not exposed to foreign exchange risk.

The above includes demand received from Commissioner of Customs (Preventive) aggregating to Rs. 4,381.05 lacs pertaining to the financial year 2012-13 on account of levy of additional customs duty on classification of the imported coal as bituminous coal as against Companyâs classification as steam coal. During the year, the Company has filed an appeal against the aforesaid order in the Customs, Excise and Service Tax Appellate Tribunal, Kolkata. The Company had paid an amount of Rs. 1,069.86 lacs and recognized the non-cenvatable portion of the duty and applicable interest as expense whereas cenvatable portion had been recognized as an advance in the year2012-13.

3 (a) In the month of November 2012, Ministry of Coal (âMoCâ) issued notices to the Company for invocation of bank guarantee of Rs. 3,250.00 lacs submitted towards performance of conditions for allocation of coal block against which the Company had filed a writ petition in the Hon''ble High Court of Delhi, which directed the Company to keep the bank guarantee valid till 30 November, 2015 by which date the MoC was directed to take decision. Meanwhile, the bank guarantee expired and had not been renewed, since no communication had been received from MoC. Subsequently, MoC issued a notice dated 28 December, 2015, stating that the bank guarantee be invoked and the aforesaid amount be deposited. Consequent to MoC''s notice, the Company has moved to the Hon''ble High Court of Delhi, where the matter is pending adjudication. The Company has been advised and has obtained a legal opinion that as the original allocation has been declared illegal and cancelled by the Hon''ble Supreme Court, the bank guarantee pertaining to such allocation (which is non-est and void ab initio) shall consequently be deemed to be invalid and void ab initio. Pending finalization of the matter, the amount continues to be disclosed as a contingent liability.

(b) (i) During pendency of the aforesaid matters in Hon''ble High Court of Delhi, the Hon''ble Supreme Court of India vide its order dated 24 September, 2014 has cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on 07 February, 2006. The expenditure incurred on the Radhikapur (East) Coal Block up to 31 March, 2017 aggregates to Rs. 18,040.96 lacs (31 March, 2016: Rs. 18,040.96 lacs, 1 April, 2015: Rs 18,040.96 lacs).

(ii) Pursuant to the judgment of Hon''ble Supreme Court of India, the Government of India has promulgated Coal Mines (Special Provision) Rules, 2014 (âRulesâ) for allocation of the coal mines through auction and matters related thereto. In terms of the said Rules, the successful bidder will be called upon to pay to the prior allocattee the expenses incurred by the prior allocatee towards land and mine infrastructure. Pursuant to MoC''s directive seeking the details of expenses vide letter dated 26 December, 2014, the Company has furnished the required statement of expenses on 5 January, 2015. Based on the Rules and necessary legal opinion obtained by the Company, no provision is considered necessary.

4 Estimated amounts of contracts remaining to be executed on capital account and not provided for: Rs.152.49 lacs (As at 31 March, 2016: Rs. 223.05 lacs, 1 April, 2015: Rs.844.29 lacs) [Net of advances Rs.19.06(Asat31 March, 2016 Rs. 0.25 lacs, 1 April, 2015: Rs.109.09 lacs)].

5 Cross subsidy surcharge payable to power distribution companies

In 2012-13, the Company injected power to State Grid due to denial of permission for open access by Orissa Power Transmission Corporation Limited ("OPTCL") to supply power to the parent company Tata Steel Limited beyond the period of invocation of section 11 of Electricity Act, 2003 by the Government of Odisha i.e., June, 2012. As a result of which the Company could not meet the minimum stipulated criteria of 51% self-consumption of generated power as a captive power plant and the provisions of Cross Subsidy Surcharge under Electricity Act, 2003 became applicable. The Company filed a case before the Odisha Electricity Regulatory Commission ("OERC")for relief which was granted and consequently the Company has filed a case before Appellate Tribunal of Electricity ("ATE"), which is pending for adjudication. As a matter of prudence, an amount of Rs.601.00 lacs had been provided in the year ended 31 March, 2015.

6 (a) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption fora period of two years w.e.f. June 10, 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lacs had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the overstating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. Pending finalization of the matter no adjustments have been made in the financial statements.

(b) As per Industrial Policy Resolution 1992 of Government of Odisha, the Company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company had paid the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company considered that the above limit of Rs. 252.56 lacs had to correspondingly reduce and accordingly made reduced payment. The Company however had provided the differential amount of Rs. 513.83 lacs up to the date of availing the benefit i.e., upto 31 March, 2012. The Company had started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. 1 April, 2012 and depositing the same with Sales Tax Authorities after availing set off of applicable input tax credit.

7 Employee Benefits

(a) Defined contribution plans

The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.

The Company has recognized, in the Statement of Profit and Loss for the year ended 31 March, 2017, an amount of Rs. 303.01 lacs (for the year ended 31 March, 2016: Rs. 286.07 lacs) as expenses under the following defined contribution plans. As at 31 March, 2017, contribution of Rs. 37.25 lacs (as at 31 March, 2016 Rs. 34.93 lacs) representing amount payable to the Employee Provident Fund and Rs. 8.58 lacs (as at 31 March, 2016 Rs. 8.50 lacs) representing amount payable to the superannuation fund in respect of the year ended 31 March 2017 (year ended 31 March, 2016) reporting period had not been paid to the plans. The amounts were paid subsequent to the end of respective reporting periods.

(b) Defined benefits plans and other long term employee benefits

The Company operates post retirement defined benefit plans as follows:

Post retirement defined benefit plans

(i) Post retirement gratuity [Funded]

(ii) Post Retirement Medical Benefits of Past Managing Directors (PRMB) [Unfunded]

(iii) Pension to Past Managing Directors [Unfunded]

Description of Plan Characteristics and Associated Risks

The gratuity plan typically exposes the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk.

1 Interest rate risk: A decrease in the Indian government bond yield rate (discount rate) will increase the plan liability.

2 Salary risk: The present value of the defined benefit plan liability is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

3 Mortality risk : The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after the employment. Indian Assured Lives Mortality (2006-08) ultimate table has been used in respect of the above. A change in mortality rate will have a bearing on the plan''s liability.

4 Investment risk : The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government Bonds Yield. If plan liability is funded and return on plan assets is below this rate, it will create a plan deficit.

In respect of the plans in India, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried outasat31 March, 2017 by Mr. Ritobrata Sarkar, Fellow, Institute of Actuaries of India. The present value of defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

The current service cost, past service cost and the net interest expense for the year are included in the ''Employee benefits expense'' in the Statement of Profit and Loss.

The remeasurement of the net defined benefit liability is included in other comprehensive income.

5 The plan assets of the Company managed through a trust are managed by Life Insurance Corporation (LIC). The details of investments relating to these assets are not shown by LIC. Hence, the composition of each major category of plan assets, the percentage or amount that each major category constitutes to the fair value of the total plan assets has not been disclosed.

8 Sensitivity analysis

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

a) On post retirement gratuity plan

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs. 96.08 lacs (increase by Rs. 108.21 lacs) [as at 31 March, 2016: decrease by Rs. 86.99 lacs (increase by Rs. 92.04 lacs)] [as at 1 April, 2015: decrease by Rs. 76.95 lacs (increase by Rs. 81.42 lacs)].

ii) If the expected salary growth increases (decreases) by 100 basis points, the defined benefit obligation would increase by Rs. 106.16 lacs (decrease by Rs. 96.13 lacs) [as at 31 March, 2016: increase by Rs. 91.45 lacs (decrease by Rs. 87.24 lacs)] [as at 1 April, 2015: increase by Rs. 80.90 lacs (decrease by Rs. 77.17 lacs)].

b) On post retirement pension plan

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs. 69.98 lacs (increase by Rs. 77.01 lacs) [as at 31 March, 2016: decrease by Rs. 63.36 lacs (increase by Rs. 68.86 lacs)] [as at 1 April, 2015: decrease by Rs. 47.88 lacs (increase by Rs. 52.04 lacs)].

ii) If the expected salary growth increases (decreases) by 100 basis points, the defined benefit obligation would increase by Rs. 77.39 lacs (decrease by Rs. 70.92 lacs) [as at 31 March, 2016: increase by Rs. 69.70 lacs (decrease by Rs. 64.66 lacs)] [as at 1 April, 2015: increase by Rs. 52.67 lacs (decrease by Rs. 48.86 lacs)].

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

9 The average duration of the defined benefit plan obligation representing average duration for active members is 6 years (As at 31 March, 2016:10years;Asat 1 April, 2015:10years)

10 Sensitivity analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses 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.

On PRMB

i) If the discount rate is 100 basis points higher/(lower), the defined benefit obligation would decrease by Rs. 3.21 lacs (increase by Rs. 3.46 lacs) [as at 31 March, 2016: decrease by Rs. 3.76 lacs (increase by Rs. 4.02 lacs)] [as at 1 April, 2015: decrease by Rs. 3.83 lacs (increase by Rs. 4.10 lacs)].

Additional information relating to employee benefits obligation:

1. The estimate of future salary increases take into account inflation, seniority, promotion and other relevant factors.

2. Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

3. Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

4. Net liabilities for pension, gratuities and post retirement medical benefits is disclosed in note 15 under the heading "Postemployment defined benefits", whereas net assets relating to pension, gratuities and post retirement medical benefits are disclosed undernote9underthe heading "Employee benefits assets"

5. Expenses relating to pension and post retirement medical benefits are included in Employee benefits expense under the heading Salaries and Wages including Bonus in note 25 whereas expenses for retiring gratuities are included under the Contribution to Provident and Other Funds in note 25.

Notes :

1. The discount rate is based on the prevailing market yields of India Government securities as at the balance sheet date for the estimated term of obligations.

2. The compensated absences plan is unfunded.

3. The estimates of future salary increases considered take into account the inflation, seniority, promotion and other relevant factors.

11 Segment reporting

(a) The Company has identified business segment as the primary segment. The Company is engaged in production of sponge iron and generation of power from waste heat. Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on manufacture of sponge iron and generation of power, reportable segments for financial statements in accordance with Ind AS 108 "Operating Segment". The Company''s activities/operations are primarily within India.

12 DISCLOSURE RELATING TO PROVISIONS AS PER IND AS 37- PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions for interest on income tax and others have been recognized in the financial statements considering the following:

(i) The Company has a present obligation as a result of past event;

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(iii) Areliable estimate can be made of the amount of the obligation.

43 OPERATING LEASES

The Company has cancellable operating lease agreements for office spaces and residential accommodations, the tenure of which generally vary from less than a year to 3 years. Terms of such lease include option for renewal on mutually agreed terms. Operating lease rental expenses aggregating Rs. 76.49 lacs (Previous Year: Rs. 80.85 lacs) have been debited to the Statement of Profit and Loss.

13 EXPENDITURE ON CORPORATE SOCIAL RESPONSIBILITY:

a. Gross amount required to be spent by the Company during the year31 March, 2017 :Rs. 218.70 lacs (year ended 31 March, 2016 Rs. 274.35 lacs)

b. Amount spent during the year ended 31 March, 2017 (figures in brackets represents amount for the previous year)

14 The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

15 There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of Rs. 4.08 lacs, which is held in abeyance due to pending legal cases.

16 The financial statements were approved for issue by the Board of Directors on 26 April, 2017.

Mar 31, 2016

(f) Rights, preferences and restrictions attached to shares

1. (a) In the month of November 2012, Ministry of Coal (âMoCâ) issued notices to the Company for invocation of bank guarantee of Rs. 3,250

lakh submitted towards performance of conditions for allocation of coal block against which the Company had filed a writ petition in the Honâble High Court of Delhi, which directed the Company to keep the bank guarantee valid till 30 November, 2015 by which date the MoC was directed to take decision. Meanwhile, the bank guarantee expired and had not been renewed, since no communication had been received from MoC. Subsequently, MoC issued a notice dated 28 December, 2015, stating that the bank guarantee be invoked and the aforesaid amount be deposited. Consequent to MoCâs notice, the Company has moved to the Hon''ble High Court of Delhi, where the matter is pending adjudication. The Company has been advised and has obtained a legal opinion that as the original allocation has been declared illegal and cancelled by the Honâble Supreme Court, the bank guarantee pertaining to such allocation (which is non-est and void ab initio) shall consequently be deemed to be invalid and void ab initio. Pending finalization of the matter, the amount continues to be disclosed as a contingent liability.

(b) (i) During pendency of the aforesaid matters in Honâble High Court of Delhi, the Honâble Supreme Court of India vide its order dated 24 September, 2014 has cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on 7 February, 2006. The carrying value of investments made in Radhikapur (East) Coal Block as on 31 March, 2016 aggregates to Rs. 18,040.96 lakh (March 31, 2015: 18,074.18 lakh).

2. Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs. 223.05 lakh (As at March 31, 2015: Rs. 844.29 lakh) [Net of advances Rs. 0.25 lakh (As at March 31, 2015 Rs.109.09 lakh)].

3. Cross Subsidy Surcharge payable to power distribution companies

In 2012-13, the Company injected power to State Grid due to denial of permission for open access by OPTCL to supply power to the parent company Tata Steel Limited beyond the period of invocation of section 11 of Electricity Act, 2003 by the Government of Odisha i.e., June, 2012. As a result of which the Company could not meet the minimum stipulated criteria of 51% self-consumption of generated power as a captive power plant and the provisions of Cross Subsidy Surcharge under Electricity Act, 2003 became applicable. The Company filed a case before the Odisha Electricity Regulatory Commission ("OERC") for relief which was granted and consequently the Company has filed a case before Appellate Tribunal of Electricity ("ATE"), which is pending for adjudication. As a matter of prudence, an amount of Rs. 601 lacs has been provided in the year 2014-15.

4. (a) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. June 10,

1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lakh had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. Pending finalization of the matter no adjustments have been made in the financial statements.

(b) As per Industrial Policy Resolution 1992 of Government of Orissa, the Company has to pay a minimum sales tax of Rs. 252.56 lakh before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company had paid the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company considered that the above limit of Rs. 252.56 lakh had to correspondingly reduce and accordingly made reduced payment. The Company however had provided the differential amount of Rs. 513.83 lakh up to the date of availing the benefit i.e., up to March 31, 2012. The Company had started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. April 1, 2012 and depositing the same with Sales Tax Authorities after availing set off of applicable input tax credit.

5. RELATED PARTY TRANSACTION

(a) List of Related Parties and relationship

Name of the Related Party Relationship

(i) Tata Steel Limited Holding Company

(ii) TSIL Energy Limited Wholly owned Subsidiary

(iii) TM International Logistics Limited

(iv) Jamshedpur Utilities & Services Company Limited

(v) Tayo Rolls Limited

(vi) Tata Steel Global Procurement Co. Pte. Ltd. Fellow Subsidiary

(vii) Tata Pigments Limited

(viii) Tata Metaliks Limited

(ix) The Indian Steel and Wire Products Limited

(x) The Tinplate Company of India Limited

(xi) Mr. D P Deshpande, Managing Director Key Managerial Personnel

(xii) Mr. Sanjay Kumar Pattnaik, Executive Director Key Managerial Personnel

(e) Additional information relating to employee benefits obligation

1. The estimate of future salary increases take into account inflation, seniority, promotion and other relevant factors.

2. Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

3. Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

4. In the absence of detailed information regarding plan assets which is funded with Life Insurance Corporation of India, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

5. Net liabilities for pension and post retirement medical benefits is disclosed in Note 6 under the heading "Postemployment defined benefits", whereas net assets relating to retiring gratuities are disclosed under Note 12 under the heading "Employee benefits assets"

6. Expenses relating to pension and post retirement medical benefits are included in Employee benefits expense under the heading Salaries and Wages including Bonus in Note 23(a) whereas expenses for retiring gratuities are included under the Contribution to Provident and Other Funds in Note 23(b).

39 SEGMENT REPORTING

(a) The Company has identified business segment as the primary segment which has been identified taking into account the nature of the products, the differing risks and returns, the organizational structure and internal reporting system. The Company''s operations predominantly relate to manufacture of sponge iron and generation of power. Further, as the Company''s products are sold primarily in India there is no reportable secondary segment i.e. Geographical Segment.

(b) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallowable. Assets and liabilities that cannot be allocated between the segments are shown as unallowable assets and liabilities respectively.

6. ''DISCLOSURE RELATING TO PROVISIONS AS PER ACCOUNTING STANDARD 29 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions for interest on income tax and others have been recognized in the financial statements considering the following:

(i) The Company has a present obligation as a result of past event

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(iii) A reliable estimate can be made of the amount of the obligation

7. OPERATING LEASES

The Company has cancellable operating lease agreements for office spaces and residential accommodations, the tenure of which generally vary from less than a year to 3 years. Terms of such lease include option for renewal on mutually agreed terms. Operating lease rental expenses aggregating Rs. 80.85 lakh (Previous Year: Rs. 77.90 lakh) have been debited to the Statement of Profit and Loss.

8. EXPENDITURE ON CORPORATE SOCIAL RESPONSIBILITY:

a. Gross amount required to be spent by the Company during the year March 31, 2016 :Rs. 274.35 lakh

b. Amount spent during the year ended March 31, 2016 (figures in brackets represents amount for the previous year)

9. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

10. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of Rs. 7.99 lacs, which is held in abeyance due to pending legal cases.

11. Previous year / period figures have been regrouped / reclassified wherever necessary to correspond with the current period classification / disclosure.

Mar 31, 2015

1. CORPORATE INFORMATION

Tata Sponge Iron Limited which has its manufacturing facility at Bileipada Odisha is engaged in production of sponge iron by direct reduction method of iron ore and generation of power from waste heat.

2. SHARE CAPITAL

(a) Rights, preferences and restrictions attached to shares

The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

3. CONTINGENT LIABILITIES

Claims against the company not acknowledged as debt;

(a) Income tax 346.15 507.05

(b) Sales Tax/Odisha Value Added Tax - 1,001.96

(c) Central excise duty - 684.40

(d) Odisha Entry tax 2,579.93 2,579.93

(e) Demand from SECL 152.13 152.13

(f) Demand from Ministry of Coal against 3,250.00 3,250.00 Radhikapur coal block

(g) Others 549.26 -

4. (a) In the month of November 2012, Ministry of Coal ("MoC") issued notices to the Company for invocation of bank guarantee ("BG") of Rs. 3,250 lac submitted towards performance of conditions for allocation of coal block.The Hon'ble High Court of Delhi vide its order dated October 30, 2014 has granted a stay on invocation of bank guarantee. The High Court also directed the Company to keep the bank guarantee valid till 28th May 2015 by which the Union of India has been directed to take a decision. Pending finalisation of the matter,the BG amount continues to be disclosed as a contingent liability.

(b) During pendency of the aforesaid matters in Delhi High Court, the Hon'ble Supreme Court of India vide its order dated September 24, 2014 has cancelled allocation of 214 coal blocks including the Radhikapur (East) Coal Block which was allotted to the Company on February 07, 2006. The carrying value of investments made in Radhikapur East Coal Block as on March 31st, 2015 is ' 18,074.18 lacs.

(c) Pursuant to the judgment of Hon'ble Supreme Court of India, the Government of India has promulgated Coal Mines (Special Provision) Rules, 2014 ("Rules") for allocation of the coal mines through auction and matters related thereto. In terms of the said Rules, the successful bidder will be called upon to pay to the prior allocattee the expenses incurred by the prior allocatee towards land and mine infrastructure. Pursuant to MoC's directive seeking the details of expenses vide letter dated December 26, 2014, the Company has furnished the required statement of expenses on January 5, 2015. Based on the Rules and necessary legal opinion obtained by the company, no provision is considered necessary.

5. Cross Subsidy Surcharge payable to power distribution companies

In 2012-13, the Company injected power to State Grid beyond the period of invocation of section 11 i.e. June, 2012 by the Government of Odisha. Subsequently the Company continued injecting power to State Grid due to refusal of open access for supply of power to the parent Company, Tata Steel Limited. Consequently, the Company could not qualify to be CGP in the said year and it has filed a case before Appellate Tribunal against the order of OERC to consider the period of injection to State Grid as self consumption and the matter is pending for adjudication. As a matter of prudence, the amount of Rs. 601 lacs has been recognized as provision in the books during the year.

5. Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs. 844.29 lacs (As at March 31,2014: Rs. 894.85 lacs) [Net of advances Rs. 109.09 lacs (As at March 31,2014: Rs.7.26 lacs)].

6. SALES TAX

(a) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. 10 June 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid Sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lacs had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. No credit has been taken in the accounts, as the matter has not reached finality.

(b) As per Industrial Policy Resolution 1992 of Government of Orissa, the Company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company was paying the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company contends that the above limit of Rs. 252.56 lacs has to correspondingly reduce and accordingly made reduced payment.The Company however has provided for the differential amount upto the date of availing the benefit and total provision till March 31,2012 amounts to Rs. 513.83 lacs. Pending assessments for the years 2008-09 to 2011-12, The Company has started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. April 01, 2012 and depositing the same with Sales Tax authorities after availing set off of applicable input tax credit.

7. RELATED PARTY TRANSACTION

(a) List of Related Parties and relationship

Name of the Related Party Relationship

(i). Tata Steel Limited Holding Company

(ii). TSIL Energy Limited Wholly owned Subsidiary

(iii). TM International Logistics Limited

(iv). Tata Metaliks Limited

(v). Kalimati Investments Company Limited

(vi). Jamshedpur Utilities & Services Fellow Subsidiary Company Limited

(vii) Tayo Rolls Limited

(viii) Tata Steel Global Procurement Co. Pte. Ltd.

(ix). The Tinplate Company of India Limited

(x) Mr.D P Deshpande, Managing Director Key Managerial Personnel

(xi) Mr.Sanjay Kumar Pattnaik,Executive Key Managerial Personnel Director

(xii) Mr.S K Mishra , Chief Financial Key Management Personnel Officer

(xiii) Mr.S S Dhanjal , Company Secretary Key Management Personnel

* Kalimati Investments Company Limited (KICL) ), pursuant to a scheme of amalgamation whereby KICL has been amalgamated with Tata Steel Limited.

8. EMPLOYEE BENEFITS

(a) Defined Benefits Plans and other long term employee benefits

The Company operates post retirement defined benefit plans as follows:

Post retirement defined benefit plans

(i) Post Retirement Gratuity [Funded]

(ii) Post Retirement Medical Benefits of Past Managing Directors (PRMB) [Unfunded]

(iii) Pension to Past Managing Directors [Unfunded]

9. SEGMENT REPORTING

(a) The Company has identified sale of power as separate business segment other than sale of sponge iron considering the requirements under Accounting Standard - 17 on "Segment Reporting". Further, as the Company's products are sold primarily in India there is no reportable secondary segment i.e. Geographical Segment.

(b) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallocable. Assets and liabilities that cannot be allocated between the segments are shown as unallocable assets and liabilities respectively.

10. Based on and to the extent of information obtained from suppliers regarding their status as Micro, Small or Medium enterprises under Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts due to them as at the end of the year.

11. OPERATING LEASES

The Company has cancellable operating lease agreements for office spaces and residential accommodations. Tenure of leases generally vary from less than a year to 3 years. Terms of such lease include option for renewal on mutually agreed terms. Operating lease rental expenses aggregating Rs. 77.90 lacs (2013-14: Rs. 73.04 lacs) have been debited to the Statement of Profit and Loss.

12. Disclosure as required under AS 29

Provisions for interest on income tax and others have been recognised in the financial statements considering the following:

(i) The company has a present obligation as a result of past event

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(iii) A reliable estimate can be made of the amount of the obligation

13. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current period classification / disclosure.

Mar 31, 2014

1 CONTINGENT LIABILITIES

Contingent liabilities not provided for

(a) Income tax 169.00 230.44

(b) Sales Tax/Odisha Value Added Tax 1,001.96 1,001.96

(c) Central excise duty 684.40 703.17

(d) Odisha Entry tax 2,579.93 -

(e) Demand from SECL 152.13 162.61

(f) Demand from Ministry of Coal against Radhikapur coal block 3,250.00 3,250.00

2 (a) The Company has received a notice dated November 23, 2012 from the Ministry of Coal ("MoC") for encashment of bank guarantee ("BG") of Rs. 3,250 lacs on the ground that there was a delay in mining at the Radhikapur East coal block allotted to the Company along with two other companies. The Company contends that the delay is mainly attributable to both Central and State Government in granting permissions/ approvals for various critical milestones. The Company has moved to the Hon''ble High Court of Delhi against invocation and encashment of Bank Guarantee by the MoC and the hearing is in process. Pending disposal by the Hon''ble High Court of Delhi and based on legal opinion obtained by the Company, the amount has been disclosed as contingent liability in the financial statements for the year ended March 31, 2014.

(b) The Company earlier applied to the MoC for revision of the zero/normative date of production vide its application dated April 30, 2012. The MoC has rejected the application vide its letter dated February 11, 2014. The Company will initiate legal proceedings against the MoC''s decision.

(c) The Company has received another notice dated February 17, 2014 citing deallocation of the Coal Block on the ground that the Company could not obtain environmental clearance , stage I forest clearance and there has been delay in coal mining. However MoC has further stated that action is put on hold in view of the interim order of the Hon''ble Delhi High Court dated February 12, 2014. The Company contends that the grounds for de-allocation stated by the MoC are also part of notice dated November 23, 2012 which is challenged by the Company and the matter is pending disposal by the Hon''ble High Court. The Company has again moved to the Hon''ble High Court of Delhi against de-allocation of the block and obtained a status quo order from the Court. Pending disposal of the Company''s case before the Hon''ble High Court of Delhi and based on legal opinion obtained by the Company, no provisions have been considered necessary for its exposure in the Coal Block.

The Company''s carrying value in the Radhikapur East coal block as at March 31, 2014, is Rs. 18,150 lacs.

3 Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs. 894.85 lacs (As at

March 31, 2013: Rs. 752.32 lacs) [Net of advances Rs. 7.26 lacs (As at March 31, 2013 Rs.1.07 lacs)].

4 SALES TAX

(a) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. June 10, 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid Sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lacs had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. No credit has been taken in the accounts, as the matter has not reached finality.

(b) As per Industrial Policy Resolution 1992 of Government of Orissa, the Company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company was paying the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company contends that the above limit of Rs. 252.56 lacs has to correspondingly reduce and accordingly is making reduced payment. The Company however has provided for the differential amount upto the date of exhausting the benefit of exemption and the total provision till March 31, 2012 amounts to Rs. 513.83 lacs. Pending assessments for the years 2008-09 to 2011-12, the Company has started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. April 1, 2012 and depositing the same with Sales Tax authorities after availing set off of applicable input tax credit.

5 Segment Reporting

(a) The Company has identified sale of power as separate business segment other than sale of sponge iron from the current year considering the requirements under Accounting Standard - 17 on "Segment Reporting" as notified under Companies (Accounting Standards) Rules, 2006 and accordingly the disclosures have been made. Further, as the Company''s products are sold primarily in India there is no reportable secondary segment i.e. Geographical Segment. As sale of power has become reportable from the current year comparatives are not applicable.

(b) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are not directly relatable to the business segment, are shown as unallocable. Assets and liabilities that cannot be allocated between the segments are shown as unallocable assets and liabilities respectively.

6 Based on and to the extent of information obtained from suppliers regarding their status as Micro, Small or Medium enterprises under Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts due to them as at the end of the year.

7 Disclosure as required under AS 29

Provision for interest on Income tax has been recognised in the financial statements considering the following:

(i) The company has a present obligation as a result of past event

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;

and

(iii) A reliable estimate can be made of the amount of the obligation

8 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current period classification / disclosure.

Mar 31, 2013

01 CORPORATE INFORMATION

Tata Sponge Iron Limited which has its manufacturing facility at Bileipada Odisha is engaged in production of sponge iron by direct reduction method of iron ore and generation of power from waste heat.

02 During the financial year 2012-13, Tata Steel Limited has acquired 1,734,040 equity shares, representing 11.26% of outstanding equity share, through a voluntary open offer from the shareholders of the Company at Rs.375/- per share, consequently the holding of Tata Steel Limited increased to 51% with effect from August 28,2012 and accordingly the Company became subsidiary of Tata Steel Limited.

03 The Company has incorporated a wholly owned subsidiary on November 20, 2012 named "TSIL Energy Limited (TSIL Energy)". An amount of Rs. 6.01 lacs has been invested in the fully paid-up equity shares of TSIL Energy having a face value of Rs. 10 each.

4 CONTIGENT LIABILITIES

Contingent liabilities not provided for

a). Income tax 230.44 484.47

b). Sales Tax/Orissa Value Added Tax 1,001.96 1,001.96

c). Central excise duty 703.17 702.04

d). Demand from SECL 162.61 -

e). Demand from Ministry of Coal against Radhikapur coal block 3,250.00 -

5 The Company had received a notice on November 23, 2012 from the Ministry of Coal (MoC) for encashment of bank guarantee (BG) of Rs. 3250 lacs on the ground that there was a delay in commissioning the Radhikapur coal block allotted to the Company along with M/s Scaw Industries Limited and SPS Sponge Iron Limited. The Company contends that the delay in commissioning of the project is mainly attributable to both Central and State Governments in granting permissions/ approvals for various critical milestones. Further, the Company has also applied to the MoC for extension of the normative date of production on account of the above delays which is still pending. The Company had moved to Hon''ble High Court of Delhi against the revocation of BG by the MoC and the hearing is in process. Pending disposal by the MoC of the Company''s application seeking extension of the normative date of production and the disposal of the Company''s case before the Hon''ble High Court of Delhi, the amount has been disclosed as a contingent liability in the financial statements for the year ended March 31, 2013.

6 Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs. 752.32 lacs (As at March 31,2012: Rs. 918.99 lacs ) [Net of advances Rs. 1.07 lacs (As at March 31,2012 Rs.6.10 lacs)].

7 SALESTAX

a). The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. June 10, 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid Sales tax, which had not been collected from customers, and amounts aggregating to Rs. 573.73 lacs had been charged to the Statement of Profit and Loss during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. No credit has been taken in the accounts, as the matter has not reached finality.

b). As per Industrial Policy Resolution 1992 of Government of Orissa, the Company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The Company was paying the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the Company contends that the above limit of Rs. 252.56 lacs has to correspondingly reduce and accordingly is making reduced payment. The Company however has provided for the differential amount upto the date of exhausting the benefit of exemption and the total provision till March 31, 2012 amounts to Rs. 513.83 lacs. Pending assessments for the years 2008-09 to 2011-12, the Company has started collecting sales tax on sale of sponge iron produced in those kilns w.e.f. April 1, 2012 and depositing the same with Sales Tax authorities after availing set off of applicable input tax credit.

8 The Company is engaged in production and sale of Sponge Iron in India and hence Sponge Iron is the only reportable segment in accordance with Accounting Standard 17 - Segment Reporting.

9 Based on and to the extent of information obtained from suppliers regarding their status as Micro, Small or Medium enterprises under Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts due to them as at the end of the year.

10 The foreign currency exposures at the year end that have not been hedged by a derivative instrument or otherwise are given below:

11 Disclosure as required under AS 29

Provisions for Sales tax and Entry tax have been recognised in the financial statements considering the following:

(i) The company has a present obligation as a result of past event

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

(iii) A reliable estimate can be made of the amount of the obligation

12 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current period classification / disclosure.

Mar 31, 2012

01 CORPORATE INFORMATION

Tata Sponge Iron Limited which has its manufacturing facility at Bileipada Odisha is engaged in production of sponge iron by direct reduction method of iron ore and generation of power from waste heat.

Rights, preferences and restrictions attached to shares

The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

02 Estimated amounts of contracts remaining to be executed on capital account and not provided for : Rs.918.99 lacs (As at 31.3.2011: Rs. 658.98 lacs) [Net of advances Rs. 6.10 lacs (Asat31.03.2011 Rs.10.90lacs)].

03 The Company had been allotted a Coal block along with two other companies in 2006-07. The investment and the operation of the mine would be done by the company as the leader of the group. The company has paid advance payments for acquisition of land. The Company has arranged for bank guarantee of Rs. 3250.00 lacs as at 31.03.2012 (As at 31.03.2011 Rs.3250.00 lacs ).

04 SALES TAX

a). The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. 10th June 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid Sales tax, which had not been collected from customers, and amounts aggregating to Rs 573.73 lacs had been charged to the Profit & Loss Account during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. No credit has been taken in the accounts, as the matter has not reached finality.

b). As per Industrial Policy Resolution 1992 of Government of Orissa, the company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The company was paying the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the company contends that the above limit of Rs. 252.56 lacs has to correspondingly reduce and accordingly is making reduced payment. The company however has provided for the differential amount of Rs. 513.83 lacs as at 31st March 2012 (Asat31.03.2011 Rs. 397.92lacs).

05. The Company is engaged in production and sale of Sponge Iron and hence Sponge Iron is the only reportable segment in accordance with Accounting Standard 17 - Segment Reporting.

06. Based on and to the extent of information obtained from suppliers regarding their status as Micro, Small or Medium enterprises under Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts due to them as at the end of the year.

07. DERIVATIVE INSTRUMENTS

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations. The use of foreign currency forward contracts is governed by the Company's strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.

08. DISCLOSURE AS REQUIRED UNDER AS 29

Provisions for Sales tax and Entry tax have been recognised in the financial statements considering the following:

i). The company has a present obligation as a result of past event

ii). It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

iii). A reliable estimate can be made of the amount of the obligation

09. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Mar 31, 2010

1. Contingent Liabilities

31.03.2010 31.03.2009 Rs. In lacs Rs. In lacs

Contingent Liabilities not provided for

a) Income tax 92.46 87.92

b) Bank Guarantee 5,360.79 5,214.23

c) Letter of credit 101.31 57.44

2. Estimated amounts of contracts remaining to be executed on capital account and not provided: Rs,444.48 lacs (As at 31.3.2009 Rs. 482.50 lacs) [Net of advances Rs. Nil (As at 31.03.2009 Rs. Nil)].

3. The Company had been allotted a Coal block along with two other companies in 2006-07. The investment and the operation of the mine would be done by the company as the leader of the group. The company has paid advance payments for acquisition of land. The Company has arranged for bank guarantee of Rs. 3250.00 lacs as at 31.03.2010 (As at 31.03.2009 Rs. 3250.00lacs).

4. Sales Tax

a) The Company had filed a writ petition before the High Court of Orissa for sales tax exemption for a period of two years w.e.f. 10th June 1997 as a Pioneer Unit. The High Court initially ruled that the Company should pay the sales tax under dispute pending disposal of the writ petition. Accordingly, the Company paid Sales tax, which had not been collected from customers, and amounts aggregating to Rs 573.73 lacs had been charged to the Profit & Loss Account during the years 1997-98 to 1999-2000.

The High Court directed the Sales Tax Authorities to refund the amount after ascertaining that the said refund shall not unjustly enrich the Company. The Sales Tax Officer passed the order stating that the refund shall unjustly enrich the Company against which the Company has filed a writ petition in the High Court challenging the correctness of the assessment and the same is pending. No credit has been taken in the accounts, as the matter has not reached finality.

b) As per Industry Policy Resolution 1992 of Government of Orissa, the company has to pay a minimum sales tax of Rs. 252.56 lacs before availing exemption from sales tax on incremental sale of Sponge Iron from Kiln 1 and 2. The company was paying the above amount until the rate of sales tax was reduced. With reduction in rate of sales tax, the company contends that the above limit of Rs. 252.56 lacs has to correspondingly reduce and accordingly is making reduced payment. The company however has- provided for the unpaid amount of Rs. 271.64lacsasat31stMarch2010(Asaf37.03.2009Rs. 145.36lacs).

5. Related party transaction

a) List of Related Parties and Relationship Name of the Related Party

i) Tata Steel Limited Promoter Company holding more than 20%

ii) Key Management Personnel

Mr. Suresh Thawani Managing Director

6. The Company is engaged in production and sale of Sponge Iron and hence Sponge Iron is the only reportable segment in accordance with Accounting Standard 17- Segment Reporting.

7. Based on and to the extent of information obtained from suppliers regarding their status as Micro, Small or Medium enterprises under Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts due to them as at the end of the year.

8. Disclosure as required under AS 29

Provisions for Sales tax and Entry tax have been recognised in the financial statements considering the following:

I). The company has a present obligation as a result of past event

ii). It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

iii). A reliable estimate can be made of the amount of the obligation

9. Figures for the previous year have been restated/regrouped where necessary to conform with figures for the current year

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