Notes to Accounts of Visa Steel Ltd.

Mar 31, 2018

1 CORPORATE INFORMATION

VISA Steel Limited (“VSL” or “the Company”) is engaged in the manufacturing of Iron and Steel products including Pig Iron, Sponge Iron, Special Steel and High Carbon Ferro Chrome with captive power plant Incorporated on 10 September, 1996, VSL has its registered office at Bhubaneswar and Corporate Office in Kolkata with manufacturing facilities at Kalinganagar in Odisha and branch offices across India. VSL is a Public Limited Company with its shares listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). These financial statements are approved for issue by the Company’s board of directors on 2 May 2018.

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS, SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ESTIMATES & JUDGEMENTS

2.1 Basis of preparation of financial statements

2.1.1 Compliance with Ind AS

These financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 [As amended] notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act, to the extent applicable.

The Company has adopted all the Indian Accounting standard effective 1 April 2016 and the adoption was carried out in accordance with Ind AS 101, First time adoption of indian accounting standards with 1 April 2015 as the transition date. The transition was carried out from indian accounting principles generally accepted in India as prescribed under section 133 of the Act, read with rule 7 of the Companies (accounts) rules, 2014 which was the previous GAAP.

This Note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1.2 Historical cost convention

The financial statements have been prepared on the historical cost convention and on accrual basis except for the following:

- certain financial assets and liabilities including derivative instruments measured at fair value

- defined benefit plans - plan assets measured at fair value

- share-based payments

2.1.3 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is current when it is:

Expected to be realised or intended to be sold or consumed in normal operating cycle

Held primarily for the purpose of trading

Expected to be realised within twelve months after the reporting period, or

Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in normal operating cycle

It is held primarily for the purpose of trading

It is due to be settled within twelve months after the reporting period, or

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

(a) Raw Materials includes Goods in Transit Rs. 47.29 Million(31 March 2017 : Rs.19.67 Million).

(b) The Inventories have been pledged as security for bank loans under a mortgage. See Note no. 45 for details of security pledged for each class of borrowings.

(c) Write downs of Inventories to Net Realisable Value amount to Rs.2.86 million (31 March 2017 : Rs.84.85 million).These were recognised as an expense during the year and included in “Changes in Inventories of Finished Goods, Stock-in -Trade and Work-in-Progress” in Statement of Profit and Loss.

a)(i) An application for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956 to Mr. Vishambhar Saran, Whole time Director designated as Chairman of the Company, for the period 1 April 2012 to 14 December 2013 was filed. In response to such application, the Central Government permitted the payment of remuneration of Rs.20.72 Million for the period from 1 April 2012 to 14 December 2013 as against total remuneration of Rs.41.44 Million paid during the period from 1 April 2012 to 14 December 2013 with the direction to the Company to recover the remaining excess remuneration of Rs. 20.72 Million pertaining to the said period. The Company had again made representation to the Central Government praying to re-open and reconsider the application and allow for waiver of the entire excess remuneration paid from 1 April 2012 to 14 December 2013. The decision of the Central Government is pending.

a)(ii) An application was filed with the Central Government for payment of remuneration in excess of the limits prescribed under the Companies Act, 1956 to Mr. Vishambhar Saran, Whole time Director designated as Chairman of the Company for a period of 3 years w.e.f. 15 December 2013 to 14 December 2016 (including payment of minimum remuneration, in case of loss or inadequacy of profits during the aforesaid period), as approved by the Members of the Company at the Annual General Meeting of the Company held on 16 December 2013. The said application was turned down in the year 2015-16 and thereafter appropriate representation to the concerned authority against the said rejection had been made and the necessary decision is pending. Out of the period mentioned above the Company provided managerial remuneration as per the applicable limits from 1 April 2014 till 14 December 2016 and had paid excess remuneration of Rs.6.80 Million for the period 15 December 2013 to 31 March 2014. Pending decision of the Central Government, Rs.27.52 Million [comprising items set out in (i) and (ii) above] is being held in trust by Mr. Vishambhar Saran on behalf of the Company.

b) An application for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956, for the period 1 April 2012 to 24 ]une 2014 was filed. In respect of such application, the Central Government permitted the payment of remuneration of Rs. 22.69 Million for the period 1 April 2012 to 31 March 2014 as against total remuneration of Rs. 45.37 Million paid during the period 1 April 2012 to 31 March 2014 with the further direction to the Company to recover the remaining excess remuneration of Rs. 22.69 Million pertaining to the said period. The Company had again made representation to the Central Government praying to re-open and reconsider the application and allow for waiver of entire remuneration only for the period from 1 April 2012 to 31 March 2014, the balance period’s remuneration being within the applicable limit. The decision of the Central Government is pending. Pending decision of the Central Government, Rs.22.69 Million is being held in trust by Mr. Vishal Agarwal on behalf of the Company.

c) Necessary application was filed with the Central Government for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956, to Mr. Pankaj Gautam, erstwhile Joint Managing Director & CEO of the Company, who ceased to be Joint Managing Director and CEO and Director of the Company w.e.f. 28 February 2014, for the period 1 April 2013 to 28 February 2014. The Central Government permitted the payment of remuneration of Rs. 4.46 Million as against a total remuneration of Rs. 8.91 Million with the direction to the Company to recover the remaining excess remuneration of Rs. 4.46 Million. The Company again made representation to the Central Government praying, inter alia, for waiver of remaining excess remuneration. However, on the basis of legal opinion obtained by the Company subsequent to making the said representation to the Central Government, the Company has made a fresh representation in April 2016 to the Central Government for withdrawal of both the initial application and the representation for waiver since Mr. Pankaj Gautam was a Non Promoter director and a professional and the initial application, as well as the subsequent representation for waiver of alleged excess remuneration were made due to misconception, which was however turned down in June 2016 by the Ministry of Corporate Affairs.

Meanwhile, the company has based on the legal advice made another representation in October 2016 to the Office of the Ministry of Corporate Affairs stating that the original application for payment of remuneration to Mr. Pankaj Gautam and subsequent applications seeking waiver were only made erroneously under mistake of law and the requirement of Central Government approval was not at all applicable in the subject matter which aspects have escaped the attention of the Hon’ble Ministry of Corporate Affairs. The response in respect of the foregoing representation is awaited from the Ministry of Corporate Affairs. Pending decision of the Central Government, Rs.4.34 Million is being held by Mr. Pankaj Gautam in trust.

2.2 Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

This Note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

Estimated useful lives of property, plant and equipment and intangible assets - Notes 2.2.2 and 2.2.3

Estimation of defined benefit obligation - Note 30

Estimation of fair values of contingent liabilities - Note 36

Impairment of trade receivables - Note 47

Estimation of Finance cost - Note 18 D,

Estimation of provision for unsalable/obsolete inventories

- Note 9

Recognition of deferred tax assets for carried forward losses and current tax assets - Note 7 and 15 respectively Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.”

2.3 Standards issued but not yet effective

In March 2018, the Ministry of Corporate Affairs notified new Indian Accounting Standard/amendments to existing standards which will be applicable to the Company with effect from 1 April 2018

New Ind AS 115

The new Ind AS will come into force from accounting period commencing on or after 1 April 2018. It replaces existing recognition guidance, including Ind AS 18 on Revenue and Ind AS 11 on Construction contract. The standard is likely to affect the measurement, recognition and disclosure of revenue. The Company has evaluated and there is no material impact of this Ind AS on this Financial Statements of the Company except disclosure. The Company will adopt the Ind AS 115 from effective date.

Amendments to Other Ind AS

The amendments to Ind AS 21 addresses issue to determine the date of transactions for the purpose of determining the exchange rate to be used on initial recognition of related assets, expenses or income when entity has received or paid advances in foreign currencies by incorporating the same in Appendix B to Ind AS 21. The amendment will come into force from accounting period commencing on or after 1 April 2018. The Company has evaluated this amendment and there is no material impact of this Ind AS on this Financial Statements of the Company.

The Companies (Indian Accounting Standards)Amendment Rules, 2018 has also made amendments to Ind AS 12, Income Taxes, Ind AS 28, Investment in Associates and Joint Ventures, Ind AS 40, Investment Property. These rules come into force from 1st April, 2018. The Company has evaluated these amendments and as per assessment impact of amendment to Ind AS 12 will not have any material impact on the Financial Statement and amendment to Ind AS 40 and Ind AS 28 will not have any impact on the financial statement of the company.”

(b) Terms and rights attached to equity shares

The Company has only one class of equity shares referred to as equity shares having a par value of Rs.10 per share. Each Shareholder is entitled to one vote per share held. The Company declares and pays dividend in Rupees. The dividend proposed by the Board of Directors is subject to the approval of 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.

Nature and purpose of Reserves

(a) Capital Reserve represents amount arisen pursuant to Scheme of Amalgamation.

(b) Securities Premium Reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the specific provisions of the Act.

(c) General Reserve represents free reserve not held for any specific purpose.

A. Debt Restructuring

The Company has been under financial stress due to various external factors beyond the control of the Company and its management which amongst others, include (i) failure of the State Government of Odisha to fulfil its obligation under the MOU executed with the Company for grant of Captive Iron Ore Mine, which has deprived the Company of assured supply of consistent quality iron ore at a reasonable cost, (ii) de-allocation of Coal Block by Ministry of Coal and Hon’ble Supreme Court judgment dated 24 September 2014, which has deprived the Company of assured supply of consistent quality coal at a reasonable cost, (iii) non-availability of Iron Ore & Chrome Ore at viable prices due to closure of Mines following the investigations by Shah Commission which commenced sometime in 2011 and the Hon’ble Supreme Court judgment dated 16 May 2014, (iv) dumping of Steel products by overseas manufacturers resulting in sharp drop in prices, (v) high cost of logistics for transportation of raw materials as these rates are fixed by Associations at rates much above the Government notified rates, (vi) non-disbursement of sanctioned loans by lenders for plant operations and setting up Sinter plant and adjustment of sanctioned facilities with interest / principal repayment falling due over time, which resulted in complete depletion of working capital of the Company. The Company has also informed lenders that it reserves its right to claim losses suffered due to the actions and inactions of lenders arising out of breaches and violations of contractual and other arrangements and such claim amount shall be claimed as a right of set-off against any dues.

The Company’s debts had been restructured under the aegis of Corporate Debt Restructuring cell (CDR) and a Master Restructuring Agreement (MRA) dated 19 December 2012 was executed to give effect to the package approved by CDR cell with effect from 1 March 2012. Pursuant to the approval of the Company’s Business Re-organisation Plan (Refer Note 37) by the CDR, a Common Loan Agreement (CLA) had also been executed on 28 March 2015 among the Company, its Subsidiary Company - VISA Special Steel Limited and lenders. In terms of MRA and CLA the Company’s Debt portfolio was reorganised/reallocated and secured as under:

i) Principal Term Loans

ii) Fresh Loan (Loan pursuant to CDR package)

iii) Working Capital Term Loans (WCTL) (Loan pursuant to CDR package)

iv) Funded Interest Term Loans (FITL) (Loan pursuant to CDR package)

v) Corporate Loan 1 & 2 and Sinter Loan (Loan pursuant to Debt Restructuring under CLA)

vi) Working Capital Loans [Indicated in Note 20]

vii) Structured Mezzanine Credit Facility [SMCF(Sub debt)]

Due to the aforesaid external factors, the EBITDA margins of the Company since 2011-12 have not been sufficient to service interest / principal repayment and whilst the outstanding principal term loan amount is only Rs. 10,078.72 Million, during the period April 2011 to March 2016, the lenders have charged approx. Rs. 23,151.44 Million on account of interest/ repayment whereas EBITDA was only approx. Rs. 990.78 Million. This has resulted in ballooning of liabilities of the Company towards its lenders, which are far in excess of the hard cost of investments in the project for which the principal term loan had been taken from the lenders.

The Company exited from the CDR mechanism with status of “Holding-On operation” and for the purpose of these financial statements, the Company has followed reorganization/reallocation and other terms and conditions of MRA/CLA as set out above.

SBI has filed an application with National Company Law Tribunal, Kolkata Bench(NCLT) for initiating Corporate Insolvency Resolution Process(CIRP) under Insolvency and Bankruptcy Code (IBC). The Company has filed a petition before Hon’ble Orissa High Court challenging the initiation of CIRP and the court has ordered a stay on further proceedings pending before NCLT. In the meantime, at the JLF meeting, the Lenders have agreed to implement Resolution Plan through Sale of Debt to Asset Reconstruction Companies (ARC’s) and some lenders have already implemented the Sale of Debt to ARC’s.

The Company does not have working capital and is presently carrying its operation with the support of the operational creditors. Due to the application filed by SBI in NCLT, there is panic among operational creditors whose financial support is necessary for plant operations, without which there is risk of plant closure, agitation and law and order problems from workers.

B. Details of Securities (Also refer note 45)

i. Principal Term Loan, VBL Term Loan, Fresh Loan, SMCF (Sub debts), Working Capital Term Loans(WCTL), Funded Interest Term Loans (FITL), Corporate Term Loans (I & II), Fresh Term Loan (For Sinter Plant) and Working Capital facilities:

(a) First pari-passu charge by way of hypothecation of all the Company’s current assets and fixed assets (excluding land) including movable and immovable plant and machinery, machinery spares, tools and accessories, vehicles and other moveable assets both present and future (“Hypothecated Assets”) of the Company, save and except specific assets charged to Banks, Financial Institutions and Non Banking Financial Companies (NBFC).

(b) First pari-passu mortgage and charge on the immovable properties of the Company situated at Kalinganagar Industrial Complex, Jajpur, (Odisha), Golagaon, Jajpur, (Odisha), Raigarh, (Chhattisgarh) and office premises of the Company at Bhubaneswar, (Odisha).

(c) Pursuant to CDR, pledge of equity shares of the Company with the CDR Lenders.

(d) Pledge of Equity Shares equivalent to 51 % of the present shareholding in Ghotaringa Minerals Limited(GML) held by the Company.

(e) Pledge of entire Equity Shares held by the Company in VISA Urban Infra Limited.

(f) Lien on all Bank Accounts including the Trust and Retention Account.

(g) The Lenders of SMCF are having a second pari-passu charge on the hypothecated assets and a second charge on the mortgaged assets of the Company.

(h) SIDBI (exposure of Rs.76.40 Million as on 1 March 2012 for bill discounting facility relating to working capital finance) has a second charge on fixed assets.

Further, the above facilities are also covered by the following:

- The Corporate Guarantee of VISA International Limited (subject to the approval of Scheme of Arrangement presently pending before the Hon’ble Orissa High Court).

- The personal guarantee of Mr. Vishambhar Saran, Chairman and Mr. Vishal Agarwal, Vice Chairman and Managing Director of the Company given pursuant to CDR.

- The corporate guarantee of Ghotaringa Minerals Limited (GML) given pursuant to CDR. SBI has filed an application to initiate CIRP under IBC in GML which has been admitted on 16 February 2018 and an Insolvency Resolution Professional (IRP) was appointed. The CIRP process is already on.

ii. Equipment and Vehicle Term Loans

These loans are secured by way of hypothecation of vehicles / machinery acquired under the respective loan arrangements.

iii. Term Loans from Bank and Other Parties

(a) Term Loan from HUDCO -Secured loan from other parties includes Term Loan (CDR) of Rs. 497.63 Million, Funded Interest Term Loan (FITL) of Rs.100.53 Million and Term Loan (Non CDR) of Rs.116.16 Million due and outstanding to HUDCO. The subsisting charge in respect of the Term Loan (CDR) and FITL became irrelevant and stood satisfied upon the Company entering into Master Restructuring Agreement (MRA) dated 19 december 2012 with the CDR lenders and the same was substituted by the fresh charge created in favour of the lenders who became parties to the MRA.

HUDCO is disputing the satisfation of the previous charge and creation of fresh charge by the CDR lenders pursuant to MRA dated 19 December 2012.

Both the Company and the State Bank of India, as the Lead Bank has since been calling upon HUDCO to execute a Deed of Accession so that the aforesaid charge substituted in favour of the CDR lenders could also be extended to HUDCO. HUDCO, however, has refused to do so despite specific order passed to the said effect by the Hon’ble High Court of Orissa at Cuttack in Copet No 17 of 2014 (Re: VISA Steel Ltd and VISA Special Steel Ltd) on 13 October 2015, and has instead filed an application in the said proceeding for recalling the said order. The matter is since sub-judice and awaiting further orders of the Hon’ble Court.

For creation of charge on the Term Loan (Non CDR), the charge documents need to be executed between HUDCO and the Company, which by reason of the pendency of the dispute referred hereinabove has also not yet taken place and is awaiting finalisation.”

C. Terms of Repayment of loans

i. Terms of Repayment and outstanding balance as at the year end of Term Loans including Fresh Loan and SMCF (TL):

Upon implementation of CDR Package during the Financial Year 2012-13, then existing Restructured Term Loan of Rs.12,355.48 Million and Additional Term Loan of Rs.6,100.00 Million sanctioned as per CDR package, were to be repaid over a period of 10 years in quarterly instalments commencing from March 2013. Further such loans carry interest @ 10.75% p.a. for the first 4 years, @ 11.5% for 5th and 6th year and @ 2% above SBI’s Base Rate for subsequent years of restructuring. Above mentioned loan amounting to Rs. 16,689.73 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below with already due amount of Rs. 5,086.61 Million.

ii Terms of Repayment and outstanding balances of VBL Term Loan

VBL, since amalgamated with the Company, had entered in Joint consortium agreement with Punjab National Bank, Oriental Bank of Commerce, EXIM Bank and Punjab and Sind Bank on 16 January 2012, whereby an amount of Rs. 1,820.00 Million was sanctioned at (PNB BR 2.5% Term Premium i.e. 0.5%) with annual reset. The outstanding amount as on the balance sheet date is Rs. 1,790.48 Million to be repaid as per the repayment schedule given below with already due amount of Rs. 816.12 Million.

Subsequently, pursuant to CDR LOA dated 31st December 2014 loan of Rs. 175.00 Million was sanctioned at SBI BR 2.5% for setting up ferro chrome furnace. Out of the aforesaid sanction amount, Rs. 71.86 Million is outstanding with already due amount of Rs. 32.94 Million and the said outstanding amount was adjusted by the lenders towards interest and instalment.

iii. Terms of Repayment and outstanding balances of Corporate Term Loans :

In line of aforementioned CLA, Corporate Term Loan amounting Rs. 4,500 Million, bearing an interest rate at 2.50% p.a. above the SBI’s Base Rate, was sanctioned. Outstanding balance of such loan as at the balance sheet date is Rs. 4,359.43 Million to be repaid as per the below repayment schedule with already due amount of Rs. 485.06 Million

iv. Terms of Repayment and outstanding balances of Fresh Term Loan (For Sinter Plant):

Fresh Term Loan (For Sinter Plant) of Rs. 650 Million was sanctioned vide the CLA, bearing an interest rate at 2.50% p.a. above the SBI’s Base Rate. Outstanding balance of such loan as at balance sheet is Rs. 27.10 Million repayable as per the below mentioned schedule with already due amount of Rs. 6.50 Million. The said outstanding amount was adjusted by the lenders towards interest and instalment.

v Terms of Repayment and outstanding balances of Working Capital Term Loan (WCTL)

Upon implementation of CDR package during the Financial Year 2012-13, then overdrawn cash credit accounts of the Company amounting to Rs.1,720.00 Million had been carved out into a separate Working Capital Term Loans, which were to be repaid over a period of 8 years in quarterly instalments commencing from March 2013. Further such loans carry the interest rate of 0.50% above the SBI’s Base Rate. Above mentioned loan amounting to Rs. 1,344.03 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below with the already due amount of Rs. 914.06 Million.

of TL, WCTL and Additional Term Loan for the period 1 March 2012 to 28 Feb 2014 had been converted into Funded Interest Term Loans (FITL) which were repayable in quarterly instalments commencing from September 2014 and ending in December 2021. During the Financial Year 2012-13, Company had prepaid instalments due till the second month of second quarter of FY 2016-17. FITL carry interest @ 10.00% p.a. throughout the tenure of facility. Loan outstanding as on balance sheet date are to be repaid as per the repayment schedule given below. Above mentioned loan amounting to Rs. 3,019.57 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below with already due amount of Rs. 739.86 Million.

vi. Terms of Repayment and outstanding balances of Funded Interest Term Loans (FITL):

In terms of the CDR Package, the aggregate amount of interest accrued and due on the principal amounts

In view of proposed debt resolution, the rate of interest, terms of repayment and other terms and condition of debts may undergo changes. Further, upon sanction of the Scheme of Arrangement (refer note 37A) pending before Hon’ble Orissa High Court, substantial debt of the Company, being part of the special steel undertaking shall stand transferred to VISA Special Steel Limited.

D The debts of the Company which were restructured pursuant to the MRA dated 19 December 2012 having cut-off date of 1 March 2012 could not be fully serviced and have since been categorised as Non-Performing Assets (NPA).

State Bank of India, the lead bank vide its letter bearing No AMT-II/04 dated 4 April 2016 has classified the debts of the Company as NPA with effect from 11 July 2012. By reason of the aforesaid, the Company stopped providing further interest in its books effective 1 April 2016. The amount of such interest not provided for in the financial year ended 31 March 2018 is estimated at Rs. 3,874.55 million and the cumulative amount of such unprovided interest as on the said date is estimated at Rs. 7,715.51 million.

In the meantime, the lenders have provided “holding on operations” status to the Company with monthly cut-back out of the sale proceeds. The company is regularly servicing the cut-back amount and has not defaulted therein. The monthly cut-back amount is presently being adjusted in the books of the Company with the principal amount of the loan.

(a) The Short term Loan taken for making payment to VISA SunCoke Limited (VSCL) is secured by pledging of 10,54,471 shares of VSCL held by the Company.

(b) Short term borrowing from Small Industries Development Bank of India (SIDBI) is the amount outstanding as on Balance Sheet date against the limit of Rs.76.40 Million (31 March 2017 : Rs.76.40 Million) under the MSMED Receivable Finance Scheme sanctioned by SIDBI covering the sale of goods / services made by SME / eligible service sector and transport services. Also refer Note 18.B (i) for details of security.

Additional disclosures relating to Employee Benefit Obligations/ Expenses

(I) Post Employment Defined Contribution Plan

The Company contributes to the Provident Fund (PF) maintained by the Regional Provident Fund Commissioner. Under the PF scheme contributions are made by both the Company and its eligible employees to the Fund, based on the current salaries. An amount of Rs. 28.00 Million (31 March 2017 : Rs. 26.13 Million) has been charged to the Statement of Profit and Loss towards Company’s contribution to the aforesaid PF scheme. Apart from making monthly contribution to the scheme, the Company has no other obligation.

(II) Post Employment defined benefit plan - Gratuity (funded)

The Company provides for Gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity Trust Funds managed by the Life Insurance Corporation of India (LICI) make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s eligible salary for specified number of days, as per provisions of Gratuity Act depending upon the tenure of service subject to a maximum limit of Rs.2.00 Million. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 2.2.11, based on which, the Company makes contributions to the Gratuity Fund.

The Company ensures that the investment positions are managed within an Asset - Liability Matching (ALM) framework that has been developed to achieve investment that are in line with the obligation under the Gratuity scheme. Within this framework the Company’s ALM objective is to match asset with gratuity obligation. The Company actively monitors how the duration and the expected yield of instruments are matching the expected cash outflow arising from the gratuity obligations. The Company has not changed the process used to manage its risk from previous period. The Company does not use derivatives to manage its risk. The gratuity scheme is funded with LICI which has good track record of managing fund.

(VIII) Sensitivity Analysis

The following table presents a sensitivity analysis to one of the relevant actuarial assumption, holding other assumptions constant, showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumptions that were reasonably possible at the reporting date.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk Exposure

Valuations are performed on certain basic set of predetermined assumptions and other regulatory framework which may vary overtime. Thus, the Company is exposed to various risks in providing the above gratuity benefit, the most significant of which are as follows:

Interest Rate risk : The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity Risk : This is the risk that the company is not able to meet the short term gratuity pay-outs. This may arise due to non availability of enough cash/cash equivalents to meet the liabilities.

Salary Escalation Risk : The present value of the defined benefit plan 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.

Demographic Risk : The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory Risk : Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972(as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity of Rs. 10,00,000). An upward revision of maximum gratuity limit will result in gratuity plan obligation.

3 BUSINESS RE-ORGANISATION/RE-STRUCTURING PLAN

(a) The Board of Directors of the Company at its meeting held on 12 August 2013 had approved the Scheme of Arrangement (the Scheme) between VISA Special Steel Limited (VSSL) and the Company pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956. As per the Scheme, the Company will transfer its Special Steel undertaking on going concern basis to VSSL with effect from 1 April, 2013. The Scheme is pending sanction in Orissa High Court. While the Scheme was pending sanction of the Orissa High Court, the jurisdiction for sanction of the same has, with the promulgation of the respective provisions on scheme of arrangement under the Companies Act, 2013, was to be transferred to National Company Law Tribunal (NCLT), Kolkata Bench vide MCA notification dated 7 December 2016. However, this notification was challenged through a writ petition by Orissa High Court Advocate''s Bar Association and the Hon''ble Orissa High Court granted stay on transfer of cases to NCLT, Kolkata Bench. Pending the sanction of the Scheme, accounting adjustments, as may be necessary pursuant to the Scheme, have not been considered at the time of the compilation of these Financial Statements.

(b) The Board of Directors of the Company at its meeting held on 18 December 2014 had approved the merger of Kalinganagar Special Steel Pvt Ltd, a wholly owned Subsidiary of the Company, with the Company, on a going concern basis by way of Scheme of Arrangement (the Scheme) with effect from 31 March 2014 pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956. While the Scheme was pending sanction of the High Court, the jurisdiction for sanction of the same has in the meantime with the promulgation of the respective provisions on scheme of arrangement under the Companies Act, 2013 has now shifted to National Company Law Tribunal (NCLT). Accordingly, the scheme shall now be subject to sanction of Jurisdictional NCLT. Pending the sanction of the Scheme, accounting adjustment necessary pursuant to the Scheme has not been considered at the time of the compilation in these Financial Statements.

4 The Company has incurred net loss during the year ended 31 March 2018 and the year end current liabilities exceeded the current assets as on 31 March 2018 which has adversely impacted the net worth of the Company. The Company''s financial performance has been adversely affected due to non-availability of raw materials at viable prices, non-availability of working capital for operations, and other external factors beyond the Company’s control. With the improvement in raw material availability, likely improvement in working capital availability and debt resolution, it is expected that the overall financial health of the Company would improve considerably. Considering the above developments and favourable impact thereof on the Company’s operations and financials, the Company has prepared these financial statements on the basis of going concern assumption.

5 OPERATING LEASES

The Company has lease agreement for various premises which are in the nature of operating lease. The tenure of Lease arrangement ranges between 3 Years to 10 Years which are cancellable lease. There is no obligation for renewal of these lease agreements and are renewable by mutual consent.

(B) Disclosures pursuant to Sub-Section (4) of Section 186 of Companies Act, 2013 regarding loans given, investment made and guarantees given are mentioned in respective Notes of Non Current Investment [Refer Note 4], Loans -non current [Refer Note 5] and Guarantees [Refer Note 36A(c)].

6 SHARE - BASED COMPENSATION

The shareholders of the Company in the Annual General Meeting held on 17 August, 2010, had approved an Employee Stock Option Scheme 2010 (the “ESOP Scheme 2010”), formulated by the Company, under which the Company could have issued 5,500,000 options to its permanent employees and directors, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines. The Scheme had a vesting period not earlier than one year and not later than five years from the date of grant of the options in one or more tranches with exercise period of 3 years from the date of vesting. There were neither any vesting of ESOP nor any exercise of vesting of the ESOP Scheme 2010 during the tenancy of the Scheme and there will not be any further exercise of the vested options upon expiry of the scheme as on 4 February 2018

Each option when exercised would be converted into one fully paid - up equity share of Rs.10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company (‘’the Committee”). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. During the current year the Company has not granted any new options. The following share-based payment arrangements were in existence during the reporting period.

7 SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2018

The Company’s chief operating decision making group [CODMG] (as set out in Note 2.2.15), examines the Company’s performance both from business (product) & geographical perspective and has identified two reportable business segments viz. “Special Steel” and “ Ferro Alloys”.

Segment disclosures are consistent with the information provided to CODMG which primarily uses operating profit / loss of the respective segments to assess their performance. CODMG also periodically receives information about the segments revenue and assets.

Details of products included in each of the above Segments are given below:

Special Steel - Bar and Wire Rods, Billets and Blooms, Pig Iron and Sponge Iron and Other Allied Products

Ferro Alloys - Ferro Chrome and Captive Power

Segment assets, liabilities, revenue and expenses are measured in the same way as in the standalone financial statements. These assets are allocated based on the operations of the segment and the physical location of the assets.

8 AMALGAMATION OF SUBSIDIARY COMPANY

Pursuant to the Scheme of Amalgamation of VISA Bao Limited (“VBL” or “the Transferor Company”), an erstwhile subsidiary Company, with VISA Steel Limited (“the Company” or “the Transferee Company”) filed under section 391 to 394 and other applicable provisions of Companies Act,1956 (“the Sanctioned Scheme”) sanctioned by the National Company Law Tribunal, Kolkata (“NCLT”) vide its Order dated 12 October 2017, the whole of the undertaking of VBL including its assets, properties and liabilities stands transferred to and vested in the Company with effect from 1 April 2015 (“the Appointed Date”). Certified copy of the said Order of NCLT sanctioning the Scheme has been filed by both VBL and the Company with the Registrar of Companies, Orissa on 17 October 2017. Accordingly the Scheme became effective on and from 17 October 2017 (the “Effective Date”).

Pursuant to NCLT order on Scheme of Amalgamation, the authorised capital of VISA Bao Limited (Transferee Company) stands amalgamated with the authorised capital of the Company resulting in increase in authorised share capital by 92,000,000 shares of Rs. 10/- each.

Further, pursuant to the Scheme, the Company has issued and allotted 5,789,500 (Fifty seven lakhs eighty nine thousand five hundred) equity shares of face value of Rs. 10 each amounting to Rs. 57.90 Million to Baosteel Resources Co. Ltd, China in lieu of their shareholding in VISA Bao Limited.

b) Fair value hierarchy

The table shown below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:

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

- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Notes:

(i) Current financial assets and liabilities are stated at amortized cost which is approximately equal to their fair value.

(ii) Non- current financial assets and liabilities measured at amortised cost have same fair value as at 31 March 2018 and 31 March 2017.

c) Valuation techniques

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

Investment has been fair valued based on valuation carried out by independent valuer as on 31 March 2018.

Derivative assets has been fair valued based on Mark to Market valuation provided by Banks.

Changes in level 2 and level 3 fair values are analysed at each reporting period

9 FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprise loans and borrowings in domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also enters into derivative contracts.

The Company has exposure to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

This note presents information about the Company’s exposure to each of the above risks and how the Company is managing such risk.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company''s risk management is carried out by the CFO and his team.

(A) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and others. In addition, credit risk arises from financial guarantees.

The Company implements a credit risk management policy under which the Company only transacts business with counterparties that have a certain level of credit worthiness based on internal assessment of the parties, financial condition, historical experience, and other factors. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Company has established a credit policy under which each new customer is analysed individually for creditworthiness.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component that are expected to occur. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. Debt securities are analysed individually, and an expected loss shall be directly deducted from debt securities.

Credit risk also arises from transactions with financial institutions, and such transactions include transactions of cash and cash equivalents, various deposits, and financial instruments such as derivative contracts. The Company manages its exposure to this credit risk by only entering into transactions with banks that have high ratings. The Company’s treasury department authorizes, manages, and oversees new transactions with parties with whom the Company has no previous relationship.

Furthermore, the Company limits its exposure to credit risk of financial guarantee contracts by strictly evaluating their necessity based on internal decision making processes, such as the approval of the board of directors.

(B) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

However, in view of various unfavourable factors as set out in Note 38, the Company has been experiencing stressed liquidity condition. In order to overcome such situation, the Company has been taking measures to ensure that the Company’s cash flow from business borrowing or financing is sufficient to meet the cash requirements for the Company’s operations.

(C) Market Risk

Market risk means that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The goal of market risk management is optimization of profit and controlling the exposure to market risk within acceptable limits.

i) Interest rate risk

The Company manages the exposure to interest rate risk by adjusting of borrowing structure ratio between borrowings at fixed interest rates and variable interest rate. The company monitors interest rate risks regularly in order to avoid exposure to interest rate risk on borrowings at variable interest rate.

The exposure of the Company’s borrowings to interest rate changes at the end of the reporting period are as follows:

b) Sensitivity analysis on the fair value of financial instruments with fixed interest rate

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company does not designate derivatives (interest rate swaps) as hedging instruments under fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.

c) Sensitivity analysis on the cash flows of financial instruments with variable interest rate

As of 31 March 2018 and 31 March 2017, provided that other factors remain the same and the interest rate of borrowings with floating rates increases or decreases by 1%, the changes in interest expense for the years ended 31 March 2018 and 31 March 2017 were as follows:

(a) The company has stopped providing interest accrued and unpaid effective 1 April 2016 in its books. Refer note 18 (D).

ii) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$ and EUR. Foreign exchange risk arises from commercial transactions and recognized assets and liabilities denominated in a currency that is not the company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the INR cash flows of highly probable forecast transactions.

The Company’s policy in respect of foreign currency risks is a natural hedge whereby foreign currency income is offset with foreign currency expenditures. The remaining net exposures after the natural hedge have been hedged using derivative contracts such as forward exchange contracts. In addition, the Company’s derivative transactions are limited to hedging actual foreign currency transactions and speculative hedging is not permitted.

The spot component of forward contracts is determined with reference to relevant spot market exchange rates. The differential between the contracted forward rate and the spot market exchange rate is defined as the forward points.

10 CAPITAL MANAGEMENT

a) Risk Management

The fundamental goal of capital management are to:

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management of deployed funds and leveraging opportunities in domestic and international financial markets so as to maintain investor, creditor and market confidence and to sustain future development of the business.

For the purpose of company’s capital management, capital includes issued capital and all other equity reserves. The company manages its capital structure in light of changes in the economic and regulatory environment and the requirements of the financial covenants.

However in view of certain adverse factors and challenges being faced by the Company over past few years as explained in Note 38, the net worth of the Company has been eroded and the Company has initiated certain measures/been actively engaging with the lenders for restructuring of its debts at sustainable level and thereby continuing to operate as a going concern. The Company has not declared any dividend since financial year 2011-12.

The Company manages its capital on the basis of net debt to equity ratio which is net debt divided by total equity

b) Loan Covenants

The Company has been under financial stress since 2011-12 due to various external factors beyond the control of the Company and the EBITDA margings of the Company since 2011-12 have not been sufficient to service interest / principal repayment. While the outstanding principal term loan amount is Rs. 10078.72 Millions, during the period April 2011 to March 2016, the lenders have charged approx. Rs. 23151.44 Millions on account of interest/ repayment whereas EBITDA was only approx. Rs. 990.78 Millions. This has resulted in huge ballooning of liabilities of the Company towards its lenders (Also refer note 18A).

(f) To ensure uninterrupted supply of essential goods and critical raw material for plant operations, the Company has settled its receivable from one related party with payable to another related party based on the tri-partite agreement executed on various dates during the year.

11 i) Balances of certain debtors and creditors are subject to confirmation and reconciliation. In the opinion of the management, current assets and advances will have value on realization in the ordinary course of business at least equal to the amount at which they are stated and also the current liabilities and advances will not have claims more than at which they are stated. ii) Balances of banks/financial institutions are subject to confirmation. iii) Some winding up petitions filed against the Company are pending before Hon’ble Orissa High Court and the Company is contesting the same.

12 PREVIOUS YEAR FIGURES

The previous year figures are reclassified where considered necessary to conform to this year’s classification.

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Mar 31, 2016

A. Debt Restructuring

Pursuant to restructuring of the Company''s debts, a Master Restructuring Agreement dated 19 December 2012 (MRA) had been executed to give effect to the CDR package approved by the Corporate Debt Restructuring (CDR) cell with effect from 1 March 2012, resulting in various reliefs/measures such as reduction of interest rates, funding of interest, rearrangement of securities etc to the Company.

Further, pursuant to the approval of the Company''s Business Re-organization Plan (Refer Note 34) by the CDR cell, a Common Loan Agreement (CLA) had also been executed on 28 March 2015 among the Company, its Subsidiary company, VISA Special Steel Limited, and lenders. CLA would operate in continuation of above mentioned MRA. In terms of CLA, inter-alia, additional credit facilities have been granted and effective 28 March 2015 the Company''s existing Debt portfolio has been reorganized/ reallocated and secured as under:

i) Term Loans (I &II), Corporate Term Loans (I &II) and Fresh Term Loan (for sinter plant)

ii) Working Capital Term Loans (WCTL)

iii) Funded Interest Term Loans (FITL)

iv) Working Capital Loans [Indicated in Note 9]

v) Structured Mezzanine Credit Facity [SMCF (Sub debt)]

During the past years, performance of the Company has been adversely affected mainly because of external factors beyond management control, due to which the Company was not able to meet the repayment terms as per the CLA and the Company is under discussion with the lenders for sustainability of its debts. Pending outcome of such discussion, the lenders have allowed for the time being "Hold-On operation" status to the Company and for the purpose of these financial statements, the Company has followed reorganization/reallocation and other terms and conditions of MRA/CLA as set out above.

B . Details of Securities

i. Term Loans (I & II), SMCF (Sub debts), Working Capital Term Loans(WCTL), Funded Interest Term Loans (FITL),

Corporate Term Loans (I & II), Fresh Term Loan (For Sinter Plant) and Working Capital facilities:

(a) First pari-passu charge by way of hypothecation of all the Company''s current assets and fixed assets (excluding land) including movable and immovable plant and machinery, machinery spares, tools and accessories, vehicles and other moveable assets both present and future ("Hypothecated Assets") of the Company, save and except specific assets charged to Banks, Financial Institutions and Non Banking Financial Companies (NBFC)

(b) First pari-passu mortgage and charge on the immovable properties of the Company situated at Kalinganagar Industrial Complex, Jajpur, Odisha, Golagaon, Jajpur, Odisha, Raigarh, Chhattisgarh and office premises of the Company at Bhubaneshwar, Odisha.

(c) Pledge of 51% of Promoter''s Shareholding and further Pledge up to 51% of total equity of the Company needs to be executed.

(d) Pledge of Equity Shares equivalent to 51% of the present shareholding in Ghotaringa Minerals Limited held by the Company and entire Equity Shares held by the Company in VISA Urban Infra Limited.

(e) Lien on all Bank Accounts including the Trust and Retention Account

(f) The Lenders of SMCF are having a second pari-passu charge on the hypothecated assets and a second charge on the mortgaged assets of the Company.

(g) SIDBI (exposure of Rs. 76.40 Million as on 1 March 2012 for bill discounting facility relating to working capital finance) has a second charge on fixed assets.

Further, the above facilities are also covered by the following:

- Irrevocable, unconditional personal guarantee of Mr. Vishambhar Saran, Chairman and Mr. Vishal Agarwal, Vice Chairman and Managing Director of the Company.

- Irrevocable, unconditional Corporate Guarantee of VISA Infrastructure Ltd. with negative Lien on VISA House situated at 8/10 Alipore Road, Kolkata 700027, till the Company brings in additional equity of Rs. 1,250.00 Million over and above of Rs. 3,250.00 Million in the Company as envisaged in the CDR package.

- Irrevocable, unconditional Corporate Guarantee of VISA International Limited and Ghotaringa Minerals Limited.

ii. Equipment and Vehicle Term Loans

These loans are secured by way of hypothecation of vehicles / machinery acquired under the respective loan arrangements.

iii. Term Loans from Bank and Other Parties

(a) Term Loan from IL&FS Financial Services - These loans are secured by way of second pari-passu charge on entire pooled assets of the Company save and except assets charged in favour of Banks/FI/NBFC and 50 acres of land on which VISA BAO Limited is setting up a Ferro Chrome Plant. This loan is also covered by a Corporate Guarantee of VISA International Limited. Subsequently, in September 2015 this loan has been assigned by IL&FS Limited to State Bank of India, CAG Branch, Kolkata.

(b) Term Loan from HUDCO - These loans are secured by way of pari-passu first charge on all the fixed assets, both present and future, of the Company''s plant including township being financed by HUDCO at Kalinganagar Industrial Complex in Odisha and pari-passu second charge on the current assets of the Company within the Integrated Steel Complex including township being financed by HUDCO.This loan is also covered by a Corporate Guarantee of VISA International Limited & Personal Guarantee of Mr Vishal Agarwal Vice Chairman & Managing Director, VISA Steel Ltd.

C. Terms of Repayment of loans

i. Terms of Repayment and outstanding balance as at the year end of Term Loans including SMCF (TL):

Upon implementation of CDR Package during the Financial Year 2012-13, then existing Restructured Term Loan of Rs. 12,355.48 Million and Additional Term Loan of Rs. 6,100.00 Million sanctioned as per CDR package, were to be repaid over a period of 10 years in quarterly installments commencing from March 2013. Further such loans carry interest @ 10.75% p.a. for the first 4 years, @ 11.5% for 5th and 6th year and @ 12%, linked to the base rate, for subsequent years of restructuring. Above mentioned loan amounting to Rs. 17,446.87 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below.

E. Conversion Right

In terms of MRA/CLA as mentioned under item ''A'' above the lenders have right to convert at their option the entire/part of the defaulted amount of interest and principal as set out under item ''D'' above, into fully paid up equity shares of the Company at a pricing to be determined as per the SEBI Regulation, on the date, as may be opted for conversion.

1.D REVISION IN USEFUL LIVES OF TANGIBLE ASSETS

Effective 1 April 2014 the Company has started charging depreciation in keeping with the requirements of Schedule II to the Companies Act, 2013(the ''Act'') and as a result of which the estimated useful lives of certain tangible assets have been revised. Pursuant to the transitional provision set out in the said Schedule II, the carrying amount (after retaining the residual values) aggregating Rs. Nil (31 March 2015: Rs. 45.49 Million) relating to tangible assets, where the revised useful lives are Rs. Nil as on 1 April 2014, has been debited to General Reserve [Refer Note 4]. Further, related tax impact on such adjustment amounting to Rs. Nil (31 March 2015: Rs. 14.06 Million) has been credited to General Reserve.

2. DISCOUNTINUING OPERATIONS

(a) The Board of Directors of the Company at its meeting held on 12 August 2013 had approved the transfer of its Special Steel Undertaking on a going concern basis to its wholly owned subsidiary VISA Special Steel Limited by way of Scheme of Arrangement (the Scheme) with effect from 1 April, 2013 pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 and intimated the same to the respective stock exchanges. The Scheme is subject to the sanctions/approval of Jurisdictional High Court, lenders and other concerned authorities as may be applicable and no accounting effect has been given to the Scheme in these Financial Statements. However, Special Steel business has been considered as discontinuing operations in keeping with Accounting Standard 24: Discontinuing Operations.

3. BUSINESS RE-ORGANISATION/RE-STRUCTURING PLAN

(a) The Board of Directors of the Company at its meeting held on 21 August 2015 had approved the merger of VISA BAO Limited, a subsidiary Company, with the Company on a going concern basis by way of Scheme of Arrangement (the Scheme) with effect from 1 April, 2015 pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 and intimated the same to the respective stock exchanges. The Scheme is subject to the sanctions/ approval of Jurisdictional High Court, lenders and other concerned authorities, as may be applicable. Pending such sanction/ approval, no accounting effect has been given to the Scheme in these Financial Statements.

(b) The Board of Directors of the Company at its meeting held on 18 December 2014 had approved the merger of Kalinganagar Special Steel Pvt Ltd, a wholly owned Subsidiary of the Company, with the Company, on a going concern basis by way of Scheme of Arrangement (the Scheme) with effect from 31 March 2014 pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956. The Scheme is subject to the sanction/approval of Jurisdictional High Court and other concerned authorities as may be applicable. Pending such sanction/approval, no effect has been given to the Scheme in these Financial Statements.

4. SHARE - BASED COMPENSATION

The shareholders of the Company in the Annual General Meeting held on 17 August, 2010, has approved an Employee Stock Option Scheme 2010 (the "ESOP Scheme 2010"), formulated by the Company, under which the Company may issue 5,500,000 options to its permanent employees and directors, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines.

Each option when exercised would be converted into one fully paid - up equity share of Rs. 10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company (''''the Committee"). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. During the current year the Company has not granted any new options. The following share-based payment arrangements were in existence during the reporting period.

5. SEGMENT INFORMATION FOR THE YEAR ENDED 31 MARCH 2016 A Primary Segment Reporting (by Business Segment)

Identification of the Business Segment

The Company has identified primary business segments namely "Special Steel" and "Ferro Chrome" in accordance with the Accounting Standard on Segment Reporting (AS-17) prescribed under the Act and has disclosed segment information accordingly.

Details of products included in each of the above Segments are given below:

Special Steel Bar and Wire Rods , Billets and Blooms , Pig Iron and Sponge Iron and other Allied Products

Ferro Chrome Ferro Chrome and Captive Power

6. The Company has incurred a net loss of Rs. 5835.47 Million (31 March 2015 : Rs. 2414.40 Million) during the year ended 31 March 2016 and the year-end current liabilities exceeded current assets by Rs. 15843.22 Million (31 March 2015 : Rs. 10521.43 Million), and defaulted in its debt servicing obligations as mentioned in Note-5 and has negative net worth at the year end. The Company''s financial Performance has been adversely affected mainly due to non-availability of raw materials at viable prices, depressed market condition and other external factors beyond the Company''s control

With the substantial improvement in raw material availability, likely improvement in market scenario with notification of Minimum Import Price on Steel, and the restructuring plan as may be agreed with lenders, it is expected that the overall financial health of the Company would improve considerably.

Considering the above developments and favorable impact thereof on the Company''s operations and financials, the Company has prepared the financial results on the basis of going concern assumption to which the Statutory Auditors have also drawn attention without qualifying their opinion in their Audit Report.

7. INVESTMENT IN JOINT VENTURE

The Company has invested in VISA Urban Infra Limited vide the consortium agreement with VISA Infrastructure Limited and VISA Realty Limited to start up a project of star hotel and convention centre at Naya Raipur, Chhatisgarh.

8. OPERATING LEASES

The Company has lease agreement for various premises which are in the nature of operating lease. The tenure of Lease arrangement ranges between 3 Years to 10 Years which are cancellable lease. There is no obligation for renewal of these lease agreements and are renewable by mutual consent.

During previous year Company has entered into an agreement with VISA BAO Limited (VBL), for taking on lease a part of Production Facility of VBL located at Kalinganagar, Odisha. The said lease arrangement which is in the nature of cancellable operating lease, had been initially entered for a period of 9 months from 1 July, 2013 which has been further extended up to 30 September 2017.

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Mar 31, 2015

A. Debt Restructuring

The Company was referred to the Corporate Debt Restructuring Forum (CDR), a non statutory voluntary mechanism set up under the aegis of the Reserve Bank of India, for the restructuring of its corporate debt during the year 2012-13 w.e.f 1 March 2012 and pursuant to which the CDR package was approved vide the letter of approval of CDR cell dated 27 September 2012 and a Master Restructuring Agreement (MRA) dated 19 December 2012 was executed to give effect to the CDR package. The CDR Package includes reliefs/measures such as reduction of interest rates, funding of interest, rearrangement of securities etc.

During the current year Company's Business Re-organization Plan (Refer Note 34) was referred to CDR cell by the lenders and same has been approved by CDR cell vide its letter dated 31 December 2014 and pursuant to this approval Common Loan Agreement (CLA) has been executed on 28 March 2015 among the Company, its Subsidiary company, VISA Special Steel Limited, and lenders. CLA would operate in continuation of above mentioned MRA. In terms of CLA, inter-alia, additional credit facilities have been granted and effective 28 March 2015 Company's existing Debt portfolio has been reorganized/ reallocated and secured as under:

i) Term Loans (I &II), Corporate Term Loans (I &II) and Fresh Term Loan (for sinter plant)]

ii) Working Capital Term Loans (WCTL)

iii) Funded Interest Term Loans (FITL)

iv) Working Capital Loans [Indicated in Note 9]

v) Structured Mezzanine Credit Facet [SMCF (Sub debt)]

B. Details of Securities

i. Term Loans (I & II), SMCF (Sub debts), Working Capital Term Loans(WCTL), Funded Interest Term Loans (FITL), Corporate Term Loans (I & II) , Fresh Term Loan (For Sinter Plant) and Working Capital facilities:

(a) First pari-passu charge by way of hypothecation of all the Company's current assets and fixed assets (excluding land) including movable and immovable plant and machinery, machinery spares, tools and accessories, vehicles and other moveable assets both present and future ("Hypothecated Assets") of the Company, save and except specific assets charged to Banks, Financial Institutions and Non Banking Financial Companies (NBFC).

(b) First pari-passu mortgage and charge on the immovable properties of the Company situated at Kalinganagar Industrial Complex, Jajpur, Odisha, Golagaon, Jajpur, Odisha, Raigarh, Chhattisgarh and office premises of the Company at Bhubaneshwar, Odisha.

(c) Pledge of 51% of Promoter's Shareholding and further Pledge up to 51% of total equity of the Company needs to be executed by 31 March 2016.

(d) Pledge of Equity Shares equivalent to 51% of the present shareholding in Ghotaringa Minerals Limited held by the Company and entire Equity Shares held by the Company in VISA Urban Infra Limited.

(e) Hypothecation on profits of the Company, both present and future.

(f) Lien on all Bank Accounts including the Trust and Retention Account.

(g) The Lenders of SMCF are having a second pari-passu charge on the hypothecated assets and a second charge on the mortgaged assets of the Company.

(h) SIDBI (exposure of Rs. 76.40 Million as on 1 March 2012 for bill discounting facility relating to working capital finance) has a second charge on fixed assets.

Further, the above facilities are also covered by the following:

Irrevocable, unconditional personal guarantee of Mr. Vishambhar Saran, Chairman and Mr. Vishal Agarwal, Vice Chairman and Managing Director of the Company.

Irrevocable, unconditional Corporate Guarantee of VISA Infrastructure Ltd. with negative Lien on VISA House situated at 8/10 Alipore Road, Kolkata 700027, till the Company brings in additional equity of Rs. 1,250.00 Million over and above of Rs. 3,250.00 Million in the Company as envisaged in the CDR package.

Irrevocable, unconditional Corporate Guarantee of VISA International Limited and Ghotaringa Minerals Limited

ii. Equipment and Vehicle Term Loans

These loans are secured by way of hypothecation of vehicles / machinery acquired under the respective loan arrangements.

iii. Term Loans from Other Parties

(a) Term Loan from IL&FS Financial Services

These loans are secured by way of second pari-passu charge on entire pooled assets of the Company save and except assets charged in favor of Banks/FI/NBFC and 50 acres of land on which VISA BAO Limited is setting up a Ferro Chrome Plant. This loan is also covered by a Corporate Guarantee of VISA International Limited.

(b) Term Loan from HUDCO - These loans are secured by way of pari-passu first charge on all the fixed assets, both present and future, of the Company's plant including township being financed by HUDCO at Kalinganagar Industrial Complex in Odisha and pari-passu second charge on the current assets of the Company within the Integrated Steel Complex including township being financed by HUDCO.

C. Terms of Repayment of loans

i. Terms of Repayment and outstanding balance as at the year end of Term Loans including SMCF (TL):

Upon implementation of CDR Package during the Financial Year 2012-13, then existing Restructured Term Loan of Rs. 12,355.48 Million and Additional Term Loan of Rs. 6,100.00 Million sanctioned as per CDR package, were to be repaid over a period of 10 years in quarterly installments commencing from March 2013. Further such loans carry interest @ 10.75% p.a. for the first 4 years, @ 11.5% for 5th and 6th year and @ 12%, linked to the base rate, for subsequent years of restructuring. Above mentioned loan amounting to Rs. 17,286.71 Million outstanding as on balance sheet date are to be repaid as per the repayment schedule given below.

v. Terms of Repayment and outstanding balances of Funded Interest Term Loans (FITL):

In terms of the CDR Package, the aggregate amount of interest accrued and due on the principal amounts of TL, WCTL and Additional Term Loan for the period 1 March 2012 to 28 Feb 2014 had been converted into Funded Interest Term Loans (FITL) which were repayable in quarterly instilments commencing from September 2014 and ending in December 2021. During the Financial Year 2012-13, Company had prepaid instilments due till the second month of second quarter of FY 2016-17. FITL carry interest @ 10.00% p.a. throughout the tenure of facility. Loan outstanding as on balance sheet date are to be repaid as per the repayment schedule given below.

(a) Short term borrowing from Small Industries Development Bank of India (SIDBI) is the amount outstanding as on Balance Sheet date against the limit of Rs. 76.40 Million (31 March 2014 : Rs. 76.40 Million) under the MSMED Receivable Finance Scheme sanctioned by SIDBI covering the sale of goods / services made by SME / eligible service sector and transport services. Also refer Note 5.B (i) for details of security.

1. D REVISION IN USEFUL LIVES OF TANGIBLE ASSETS

Effective 1 April 2014 the Company has charged depreciation in keeping with the requirements of Schedule II to the Companies Act, 2013(the 'Act') and as a result of which the estimated useful lives of certain tangible assets have been revised. Pursuant to the transitional provision set out in the said Schedule II, the carrying amount (after retaining the residual values) aggregating Rs. 45.49 Million (31 March 2014: Rs. Nil ) relating to tangible assets, where the revised useful lives are nil as on 1 April 2014, has been debited to General Reserve [Refer Note 4]. Further, related tax impact on such adjustment amounting to Rs. 14.06 Million (31 March 2014: Rs. Nil) has been credited to General Reserve.

Consequent to the above, the total depreciation charge for the year ended 31 March 2015 is lower by Rs. 119.61 Million compared to corresponding previous year with corresponding impact on the loss before tax of the Company.

a) Necessary application had been made to Central Government for payment of remuneration in excess of the prescribed limits under the Companies Act, 1956 to Mr. Vishambhar Saran, Whole Time Director of the Company for a period of 3 years w.e.f. 15 December 2013 to 14 December 2016 (including payment of minimum remuneration, in case of loss or inadequacy of profits during the aforesaid period), as approved by the Members of the Company at the Annual General Meeting of the Company held on 16 December 2013. The said application has been turned down during the year and thereafter representation to the concerned authority against the said rejection has been made and the necessary approval is pending. Further, an application for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956, for the period 1 April 2012 to 14 December 2013 has also been filed and the same is also pending. Pending approvals of the Central Government, Rs. 40.05 Million is being held in trust by Mr. Vishambhar Saran on behalf of the Company.

b) Necessary application had been filed with the Central Government for payment of remuneration to Mr. Vishal Agarwal, Vice Chairman & Managing Director of the Company for the period of 3 (three) years w.e.f. 25 June 2014 till 24 June 2017 (including payment of minimum remuneration, in case of loss or inadequacy of profits during the aforesaid period), as approved by the Members of the Company at the Annual General Meeting of the Company held on 24 December 2014. Further, an application for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956, for the period 1 April 2012 to 24 June 2014 has also been filed. Pending approvals of the Central Government, Rs. 36.58 Million is being held in trust by Mr. Vishal Agarwal on behalf of the Company.

c) Necessary application had been filed with the Central Government for waiver of recovery of remuneration paid in excess of the prescribed limits under the Companies Act, 1956, to Mr. Pankaj Gautam, erstwhile Joint Managing Director & CEO of the Company (Mr. Gautam has ceased to be Joint Managing Director and CEO and Director of the Company w.e.f. 28 February 2014) for the period 1 April 2013 to 28 February 2014. During the Financial year company has received approval from Central Government for Rs. 2.90 Million relating to Period 12/12/2013 to 31/03/2014.Pending approval of the Central Government, Rs. 8.91 Million is being held in trust by Mr. Gautam on behalf of the Company.

d) During the financial Year 2014-15, Company has provided managerial remuneration as per limit prescribed in Schedule V to Companies Act ,2013. Remuneration beyond such limit will be paid/provided after receiving Central Government approval for payment of remuneration in excess of Limits.

2. CONTINGENT LIABILITIES

(a) Claim against the Company not acknowledged as debt :

(i) In respect of a charter party dispute between VISA Comrade (Asia) Limited (the "Charterer") and Transfixed Shipping Inc., Panama, (the "Owner of the vessel - Prabhu Gopal"), the said Owner of the vessel has filed a civil suit in the Hon'ble Calcutta High Court against the Company and the charterer and claimed the relief for a decree for US$ 0.30 Million to be expressed in Indian Currency at such rate of exchange and / or on such terms as the Court may deem fit and proper, Injunction, costs or other reliefs. The Company has not accepted the claim as it was not a party to the said Agreement and the matter is sub juiced. The Hon'ble Calcutta High Court passed interim orders dated 11 May 2005 and 20 June 2005, restraining the Company and the Charterer from withdrawing any amount from a specified bank account without leaving a balance for a sum of Rs. 12.50 Million (31 March 2014: Rs. 12.50 Million), which has been set aside by the bank from the cash credit limit of the Company. The Company has been legally advised that the above interim order has been expired due to efflux of time and has not been extended by the Hon'ble Calcutta High Court.

(ii) Applications have been filed by the legal heirs of a deceased employee of the Company, who died in a road accident while travelling in the Company's vehicle for his personal work, claiming a compensation of Rs. 6.10 Million (31 March 2014: Rs. 6.10 Million) and interest @ 18% per annum. The Company has contested the claim, which is currently pending before the Motor Accident Claims Tribunal, Bhubaneswar.

(d) In respect of the contingent liabilities mentioned in Note 22 (a) and (b) above, pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any. In respect of matters mentioned in Note 22 (c) above, the cash outflows, if any, could generally occur during the validity period of the respective guarantees. The Company does not expect any reimbursements in respect of the above contingent liabilities.

(b) Other Commitments

(i) The Company has imported capital goods under the Export Promotion Capital Goods Scheme of the Government of India, at a concessional rate of customs duty on an undertaking to fulfill quantified export obligation within the specified periods, failing which, the Company has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest. Related export obligation to be met at the year end is Rs. 167.21 Million (31 March 2014 : Rs. 164.90 Million). The Company is confident that the above export obligation will be met during the specified period.

(ii) For non-disposal undertaking given by the Company with regard to its investments in VISA Bao Limited Refer Note 14 (a).

Other Disclosures as per Accounting Standard-15 (Revised-2005) on "Employee Benefits

(i) Post Employment Defined Contribution Plan

The Company contributes to the Provident Fund (PF) maintained by the Regional Provident Fund Commissioner. Under the PF scheme contributions are made by both the Company and its eligible employees to the Fund, based on the current salaries. An amount of Rs. 8.08 Million (31 March 2014 : Rs. 9.45 Million) has been charged to the Statement of Profit and Loss towards Company's contribution to the aforesaid PF scheme. Apart from making monthly contribution to the scheme, the Company has no other obligation.

(ii) Post Employment Defined Benefit Plan-Gratuity (Funded)

The Company provides for Gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity Trust Funds managed by the Life Insurance Corporation of India (LICI) make payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's eligible salary for specified number of days, as per provision of Gratuity Act depending upon the tenure of service subject to a maximum limit of Rs. 1.00 Million. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 2.10, based on which, the Company makes contributions to the Gratuity Fund.

The following Table sets forth the particulars in respect of the aforesaid Gratuity fund of the Company.

The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investments of the funds during the estimated terms of the obligations.

The contribution expected to be made by the Company for the year ending 31 March 2016 cannot be readily ascertainable and therefore not disclosed.

The amount of finance cost capitalized for qualifying assets during the year 31 March 2015 is Rs. 2,044.14 Million (31 March 2014 : Rs. 1,970.23 Million)

3. EXCEPTIONAL ITEMS

In view of high volatility in the value of Indian Rupee against USD and other foreign currency, the loss arising out of the re-instatement of foreign currency monetary items had been considered as exceptional item in the previous year.

4. BUSINESS RE-ORGANISATION/RE-STRUCTURING PLAN

(a) The Board of Directors of the Company at its meeting held on 12 August 2013 had approved the transfer of its Special Steel Undertaking on a going concern basis to its wholly owned subsidiary VISA Special Steel Limited by way of Scheme of Arrangement (the Scheme) with effect from 1 April, 2013 pursuant to provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 and intimated the same to the respective stock exchanges. The Scheme is subject to the sanctions/approval of Jurisdictional High Court, lenders and other concerned authorities as may be applicable. Pending such sanction/approval, the Special Steel Undertaking has not been considered as a discontinuing operation and no effect has been given to the Scheme in these Financial Statements.

(b) The Board of Directors of the Company at its meeting held on 1 October 2013, accorded their in-principle approval to the merger of VISA BAO Limited (Subsidiary Company) with the Company, subject to the approvals as may be necessary from stakeholders, lenders and other relevant authorities.

5. SHARE - BASED COMPENSATION

The shareholders of the Company in the Annual General Meeting held on 17 August, 2010, has approved an Employee Stock Option Scheme 2010 (the "ESOP Scheme 2010"), formulated by the Company, under which the Company may issue 5,500,000 options to its permanent employees and directors, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines.

Each option when exercised would be converted into one fully paid - up equity share of Rs. 10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company (''the Committee"). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. During the current year the Company has not granted any new options. The following share-based payment arrangements were in existence during the reporting period.

Fair Valuation:

At grant date, the estimated fair value of stock options granted was Rs. 19.56. The fair valuation was carried out by an independent valued using Black & Schools model. The various inputs and assumptions considered in the pricing model at grant date for the stock options granted under ESOP Scheme 2010 are as under.

6. SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2015 A Primary Segment Reporting (by Business Segment) Identification of the Business Segment The Company has identified primary business segments namely "Special Steel" and "Ferro Chrome" in accordance with the Accounting Standard on Segment Reporting (AS-17) prescribed under the Act and has disclosed segment information accordingly.

Details of products included in each of the above Segments are given below:

Special Steel Bar and Wire Rods , Billets and Blooms , Pig Iron and Sponge Iron and other Allied Products Ferro Chrome Ferro Chrome and Captive Power

- Excluding Shareholder's Funds

B Secondary Segment Reporting (By Geographical Segment) The Company has its customer in India as well as outside India and thus segment information based on Geographical Location of its customer is as follows :

7. The Company has incurred a net loss of Rs. 2414.40 Million (31 March 2014 : Rs. 1524.95 Million) during the year ended 31 March 2015 and the year-end current liabilities exceeded current assets by Rs. 10521.43 Million (31 March 2014 : Rs. 7,657.22 Million), and defaulted in its debt servicing obligations as mentioned in Note-5D and has negative net worth at the year end. The Company's financial performance has been adversely affected mainly due to non-availability of raw materials, increasing material costs and high interest cost.

With the substantial improvement in the availability of major raw material and reducing raw material cost and signs of recovery in the general economic scenario, the Company expects a positive turnaround with substantial increase in its top line and reasonable increase in its bottom line.

The Company's Debt had been restructured under the package approved by Corporate Debt Restructuring (CDR) cell in the earlier years to overcome inter alia the impact of losses due to high interest costs and to improve cash flows. Under the CDR package, short term borrowings have been converted into long term borrowings with extended repayment schedule and reduced the interest rates. The Company has approached its lenders to sanction fresh line of credit, which is under active considerations by the lenders.

The increased availability of the raw material together with expected increase in demand for the Company's products, the Company has planned full-fledged operations of its various units. The same would enable the Company to embark on a sustainable growth path for years to come. Accordingly, with the improvement in the operations, it is expected that the overall financial health of the Company would improve.

Considering the above developments and favorable impact thereof on the financials of the Company and its operation, the Company has prepared these financial statements on the basis of going concern assumption.

8. INVESTMENT IN JOINT VENTURE

The Company has invested in VISA Urban Infra Limited vide the consortium agreement with VISA Infrastructure Limited and VISA Realty Limited to start up a project of star hotel and convention centre at Naya Raipur, Chhattisgarh.

9. OPERATING LEASES

The Company has lease agreement for various premises which are in the nature of operating lease. The tenure of Lease arrangement ranges between 3 Years to 10 Years which are cancellable lease. There is no obligation for renewal of these lease agreements and are renewable by mutual consent.

During previous year Company has entered into an agreement with VISA BAO Limited (VBL), for taking on lease a part of Production Facility of VBL located at Kalinganagar, Odisha. The said lease arrangement which is in the nature of cancellable operating lease, had been initially entered for a period of 9 months from 1 July, 2013 which has been further extended up to 30 September 2015.

10. (B) Disclosure pursuant to Sub-Section (4) of Section 186 of the Companies Act, 2013 regarding loans given, investment made and guarantees given are mentioned in the respective Notes of Non Current Investments [Refer Note 14], Long-term Loans & Advances [Refer Note 15] and Guarantees [ Refer Note 22(c)].

11. (A) RELATED PARTY DISCLOSURES PURSUANT TO ACCOUNTING STANDARD 18

Related Parties Name of the Related Parties

(i) Where Control Exist Holding Company VISA Infrastructure Limited

Subsidiaries Ghotaringa Minerals Limited

VISA BAO Limited

VISA SunCoke Limited

Kalinganagar Special Steel Private Limited

Kalinganagar Chrome Private Limited

VISA Ferro Chrome Limited VISA Special Steel Limited

(ii) Others

Joint Venture Company VISA Urban Infra Limited Enterprise having significant influence VISA International Limited

Fellow Subsidiaries VISA Resources India Limited

VISA Energy Ventures Limited

VISA Power Limited

Key Managerial Personnel Mr. Vishambhar Saran (Chairman)

Mr. Vishal Agarwal (Vice Chairman & Managing Director)

Mr. Punkaj Kumar Bajaj - Joint Managing Director & CEO (Steel Business) Relatives of Key Managerial Personnel Mrs. Bhawna Agarwal (Wife of Mr. Vishal Agarwal) w.e.f. 01 January 2015

Enterprise over which Relatives of Key VISA Resources PTE Limited Managerial Personnel having VISA Bulk Shipping PTE Limited significant influence VISA Trading (Shanghai) Co. Limited

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Mar 31, 2013

1. GENERAL INFORMATION VISA Steel Limited

VISA Steel Limited (VSL) is engaged in the manufacturing of Iron and Steel products including LAM Coke, High Carbon Ferro Chrome, Pig Iron, Sponge Iron and Special Steel with captive power plant at Kalinganagar, Odisha. Incorporated on 10 September 1996, VSL has its registered office at Bhubaneswar and Corporate Office in Kolkata with manufacturing units in Kalinganagar and Golagaon and branch offices across India. VSL is a Public Limited Company with its shares listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). During the year, the Company has transferred its coke business on going concern basis as per detailed Note 34.

2 CONTINGENT LIABILITIES

(a) Claim against the Company not acknowledged as debt

(i) In respect of a charter party dispute between VISA Comtrade (Asia) Limited (the "Charterer”) and Transfield Shipping Inc., Panama, (the "Owner of the vessel - Prabhu Gopal”) the said Owner of the vessel has filed a civil suit in the Hon''ble Calcutta High Court against the Company and the charterer and claimed the relief for a decree for US$ 0.30 Million to be expressed in Indian Currency at such rate of exchange and / or on such terms as the Court may deem fit and proper, Injunction, costs or other reliefs. The Company has not accepted the claim as it was not a party to the said Agreement and the matter is subjudice. The Hon''ble Calcutta High Court passed interim orders dated 11 May 2005 and 20 June 2005, restraining the Company and the Charterer from withdrawing any amount from a specified bank account without leaving a balance for a sum of Rs.12.50 Million, which has been set aside by the bank from the cash credit limit of the Company. The Company has been legally advised that the above interim order has been expired due to efflux of time and has not been extended by the Hon''ble Calcutta High Court.

(ii) Applications have been filed by the legal heirs of a deceased employee of the Company, who died in a road accident while travelling in the Company''s vehicle for his personal work, claiming a compensation of Rs.6.10 Million (31 March 2012: Rs.6.10 Million) and interest @ 18% per annum. The Company has contested the claim, which is currently pending before the Motor Accident Claims Tribunal, Bhubaneswar.

(d) In respect of the contingent liabilities mentioned in Note 22 (a) and (b) above, pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any. In respect of matters mentioned in Note 22 (c) above, the cash outflows, if any, could generally occur during the validity period of the respective guarantees. The Company does not expect any reimbursements in respect of the above contingent liabilities.

3 EXCEPTIONAL ITEMS

In view of high volatility in the value of Indian Rupee against USD and other foreign currencies, the Company has incurred loss arising out of the re-instatement of foreign currency monetary items. Total such forex loss amounting to Rs.142.66 Million [31 March 2012 : (Rs.33.06 Million)] for continuing operation and forex loss amounting to Rs. 254.71 Million (31 March 2012 : Rs. 650.33 Million) for discontinuing operations (Refer Note 34) has been considered as an exceptional item.

Further pursuant to the Share Purchase and Subscription Agreement executed between the Company, VISA SunCoke Limited, Kalinganagar Metcoke Private Limited (KMPL), a wholly owned subsidiary and SunCoke Europe Holding BV (SunCoke B.V) on 20 November 2012, the Company has sold the investment in VISA SunCoke Limited, a subsidiary, to SunCoke B.V. Profit on such sale of Investment amounting to Rs.1,762.70 Million (31 March 2012 : Nil) has been considered as an exceptional item.

4 DISCONTINUING OPERATIONS

On 18 October 2012, the Board of Directors of the Company had approved the plan to sale the Company''s business of manufacturing and sale of metallurgical coke and the associated steam generated unit (the Coke Business) located at Kalinganagar Industrial Complex, Odisha by way of slump sale on a going concern basis to VISA SunCoke Limited (formerly VISA Coke Limited) and intimated the same to the Stock Exchanges. After obtaining necessary approvals, pursuant to the Business Transfer Agreement (BTA) dated 20 November 2012 between the Company and VISA SunCoke Limited (VSCL), the Company has transferred its Coke Business by way of a slump sale on a going concern basis with effect from 18 March 2013 for a lumpsum consideration of Rs.1,800.00 Million. Accordingly, the approved Coke Business has been considered as a discontinuing operations.

5 SHARE - BASED COMPENSATION

The shareholders of the Company in the Annual General Meeting held on 17 August, 2010, has approved an Employee Stock Option Scheme 2010 (the ‘''ESOP Scheme 2010”), formulated by the Company, under which the Company may issue 5,500,000 options to its permanent employees and directors, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines.

Each option when exercised would be converted into one fully paid - up equity share of Rs.10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company (‘''the Committee”). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. During the current year the Company has not granted any new options. The following share-based payment arrangements were in existence during the reporting period.

6 The Company has incurred a net loss of Rs.910.39 Million (31 March 2012 : Rs.1,185.54 Million) during the year ended 31 March 2013 and the year end current liabilities exceeded current assets by Rs.4,479.74 Million (31 March 2012 : Rs.15,111.77 Million). The Company''s financial Performance has been adversely affected mainly due to non availability of raw materials, increasing material costs, high finance cost and volatile foreign exchange.

During the year, the Company had been referred to Corporate Debt Restructuring (CDR) cell for restructuring of its debts to overcome inter alia the impact of losses due to high interest costs and to improve cash flows. The CDR Cell vide letter dated 27 September 2012 has approved a package whereby major part of short term borrowings have been converted into long term borrowings with extended repayment schedule and reduced the interest rates and fresh line of credit has also been sanctioned. The Company has also infused funds amounting to Rs.3,425.00 Million by way of sale of investment and sale of coke business. Further, with the resumption of supplies of iron ore from OMC and other sources, the Company has taken steps to operate its Blast Furnance, Steel Melting Shop and Bar & Wire Rod Mill during 2013-14.

Considering the above developments and favourable impact thereof on the financials of the Company and its operation, the Company has prepared these financial statements on the basis of going concern assumption.

7 OPERATING LEASES

The Company has lease agreement for various premises which are in the nature of operating lease. The lease arrangement range for a period between 3 Years to 10 Years which are cancellable lease. There is no obligation for renewal of these lease agreements and are renewable by mutual consent.

8 AMALGAMATION OF SUBSIDIARY COMPANY

(a) Pursuant to a Scheme of Amalgamation filed under Section 391 to 394 of the Companies Act, 1956 by Kalinganagar Metcoke Private Limited (KMPL), a wholly owned subsidiary of the Company ("the Scheme”) which has been duly sanctioned by the Hon''ble High Court of Judicature at Orissa ("the High Court”), vide its Order dated 6 September 2013, the whole of the undertaking of KMPL including its all assets, investments, properties and liabilities have been transferred to and vested in the Company, as a going concern, with effect from 31 March 2013 ("the Appointed Date”). Certified copies of the said Order of the High Court sanctioning the Scheme have been filed with the Registrar of Companies, Orissa on 23 September 2013 (the "Effective Date”). Accordingly the Scheme became effective on 23 September 2013. KMPL was incorporated with the objective of manufacturing and dealing in coal, coke and related products.

The amalgamation has been accounted for under the "Purchase Method” as prescribed by Accounting Standard 14 (AS-14) on "Accounting for Amalgamation” notified under the Companies (Accounting Standards) Rules, 2006. In accordance with the Scheme, the assets and liabilities of KMPL have been taken over and recorded at their fair values as determined by the Board of Directors of the Company and the net difference amounting Rs.3,761.16 Million [Refer Note 4] between the fair value of such assets and liabilities transferred to the Company after adjusting the Company''s investment in the Equity Share Capital of KMPL as appearing in the books of the Company and all inter company balances have been credited to General Reserve. Further KMPL being a wholly owned subsidiary of the Company no shares of the Company has been issued and allotted in lieu of exchange of company''s holding in the KMPL, which stood cancelled.

Had the Scheme not prescribed the above accounting treatment, the amount transferred to General Reserve (arising pursuant to the Scheme as aforementioned) would have been credited to Capital Reserve in keeping with the requirement of AS-14.

(b) After giving effect to the Scheme, the year end General Reserve [Refer Note 4] represents free reserve not held for any specific purpose, other than to the extent of Rs. 3,761.16 Million (31 March 2012 : Nil) which has arisen on amalgamation as indicated in (a) above.

(c) The Scheme as referred in (a) above, was pending sanction of the High Court as on 29 May 2013, the date on which Company''s financial statements were approved by the Board of Directors and audited by the Statutory Auditors. However, consequent upon the Scheme having become effective and the vesting of whole of the undertaking of KMPL in the Company with effect from the Appointed Date, as indicated in (a) above, these financial statements have now been revised to give effect to the Scheme.

9 PREVIOUS YEAR FIGURES

The previous year figures are reclassified where considered necessary to conform to this year''s classification.

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Mar 31, 2012

1. GENERAL INFORMATION

VISA Steel Limited (VSL) is engaged in the manufacturing of Iron and Steel products including LAM Coke, High Carbon Ferro Chrome, Pig Iron, Sponge Iron and Special Steel with captive power plant at Kalinganagar, Odisha. Incorporated on 10 September, 1996, VSL has its registered office at Bhubaneswar and Corporate Office in Kolkata with manufacturing units in Kalinganagar and Golagaon and branch offices across India. VISA Steel Limited is a public limited company with its shares listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

(a) Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares referred to as equity shares having face value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the Annual General Meeting.

(d) Share Reserved for issue under option

For details of share reserved for issue under the Employee Stock Option Plan (ESOP) of the Company refer note: 3.33

(e) VISA Infrastructure Limited, the holding company has pledged 55,000,000 number of equity shares (17,300,000 number equity shares as on 31 March 2012) being 95.47% of its total shareholding.

A. Term loan From Banks Nature of Security

Term Loan from Banks is secured by way of first charge on the land and fixed assets situated at Kalinganagar Industrial Complex, District Jajpur, Odisha together with hereditaments and premises and building, plant and machineries permanently affixed thereto and other erections thereon both present and future at Plant at Kalinganagar Industrial Complex, District Jajpur, Odisha and second charge on all the current assets of the Company ranking pari-passu with other banks along with Corporate Guarantee of VISA International Limited and personal guarantee of Managing Director of the Company.

Nature of Security

General Corpus Corporate Loan from State Bank of India is secured by first pari-passu charge on the fixed assets of the Company situated at Kalinganagar Industrial Complex, District Jajpur, Odisha and first charge on the fixed assets situated at Golagaon plant at Ankurapal and second charge on all the current assets of the Company both present and future on pari-passu basis along with other term lenders. State Bank of India is also having lien on fixed deposits of Rs.110.00 million.

Terms of Repayment:

The above mentioned facility is to be repaid in One quarterly instalment of Rs.125.00 million and Four quarterly instalments of Rs.187.50 million each, Interest rate @ SBI Advance Rate 2.25%. The period of maturity w.r.t the balance sheet date is 1 year.

C. Subordinate Debt Facility from Banks & FIIS - Nature of Security

Subordinate Debt Facility from a Consortium of banks and financial institutions through IL&FS Financial Services Limited acting as Facilitator is secured by way of a second mortgage & charge on pari-passu basis with the Working Capital Lenders of all such immovable properties and interest in the immoveable properties including buildings, structures, plant and machinery embedded therein, present & future in the industrial land situated at Kalinganagar Industrial Complex, District Jajpur, Odisha, and by way of second charge on pari-passu basis with the Term Loan lenders on all the movable current assets and movable plant & machinery, spares, tools, accessories both present & future along with Corporate Guarantee of VISA International Limited. The registration of the above charge is pending.

Terms of Repayment:

The above mentioned facility is to be repaid in Twenty four quarterly instalments w.e.f end of 9th quarter from the date of first disbursement i.e 30 March 2011, at an interest rate @ SBI Base rate 5%. The period of maturity w.r.t the balance sheet date is 7 years and 3 months.

Terms of Repayment:

The above mentioned facility is to be repaid in Twenty four quarterly instalments w.e.f end of 9th quarter from the date of first disbursement i.e 30 March 2011, at an interest rate @ SBI Base rate 5%. The period of maturity w.r.t the balance sheet date is 7 years and 3 months.

Nature of Security

Secured by way of first charge on all the assets, both present & future, of the Company's plant including township being financed by HUDCO at Kalinganagar Industrial Complex, Odisha and pari-passu second charge on all the current assets of the Company within the integrated Steel Complex including Township being financed by with other banks along with Corporate Guarantee of VISA International Limited and personal guarantee of Managing Director of the Company.

Terms of Repayment:

The above mentioned facility is to be repaid in Thirty one quarterly instalments of Rs.28.10 million each from the reporting date at an interest rate @ HUDCO Benchmark rate 1%. The period of maturity w.r.t the balance sheet date is 7 Years and 6 months .

E. Equipment and other loans Nature of Security

Equipment Finance and other loan from banks and financial Institutions are secured by way of hypothecation of vehicles / machinery taken under the loan arrangement.

Terms of Repayment:

The above mentioned facility is to be repaid in equal monthly instalments over the period of loan.

Company has obtained unsecured loan amounting to Rs.250 million from fellow subsidiary VISA Power Limited at an interest rate of prevailing Bank rate as per RBI 1% p.a, which is repayable within12 months from the Balance Sheet date.

Unsecured loan of Rs.506.40 million have also been obtained from holding company VISA Infrastructure Limited, bearing an interest rate as per SBI base rate i.e 10% p.a, which is repayable from the proceeds of infusion of fresh equity in the Company, as per contractual terms.

The working capital facilities from Banks and Financial Institution-EXIM are secured by way of first hypothecation charge ranking pari-passu with other banks on the whole of the current assets, namely, stock of raw material, stock in process, semi finished & finished goods, stores & spares not relating to plant & machinery (i.e. consumable stores & spares), bills receivable & book debts and all other movables, both present and future, whether installed or not provided that the charge in favour of the banks on the movable plant & machinery, machinery spares, tools & accessories shall be subject to the charges created and / or to be created thereon in favour of the term lenders to secure the long term borrowing / loans for capital expenditure. The working capital facilities are also secured by second mortgage charge on the land situated at Kalinganagar Industrial Complex , District Jajpur, Odisha together with building and structures thereon and all plant & machinery attached to the earth or permanently fastened to anything attached to the earth along with corporate guarantee of VISA International Limited and personal guarantee of Managing Director of the Company. Interest rate on such Secured Demand Loan from Banks is linked with the base rate of respective banks. Overdue amount as on Balance Sheet date is Rs.47.30 million.

Short term borrowing from Small Industries Development Bank of India (SIDBI) is the amount availed as on Balance Sheet date against the limit of Rs.100 million under the MSMED Receivable Finance Scheme sanctioned by SIDBI covering the sale of goods / services made by SME / eligible service sector and transport services. Interest is payable on such facility at the rate of 13% p.a. up to 90 days usance. The above loan is secured by way of unconditional corporate guarantee of VISA International Limited.

Pursuant to the Notification No. GSR 914(E) dated 29 December 2011 issued by Ministry of Corporate Affairs amending Accounting Standard (AS) 11, "The Effects of Changes in Foreign Exchange Rates" the Company has exercised the option and accordingly the exchange difference for the year ended 31 March 2012 pertaining to long term foreign currency monetary items to the extent of Rs.145.62 million has been added to the cost of depreciable capital asset. The same will be amortised from the year the relevant capital asset is capitalised over the balance useful life of such assets. Consequent to change in such accounting policy as aforesaid, the period end aggregate carrying amount of Capital Work-in-Progress is higher by Rs.145.62 million with a corresponding favorable impact on the loss for the year ended on 31 March 2012.

2.1 CONTINGENT LIABILITIES

(a) Claim against the Company not acknowledged as debt:

(i) In respect of a charter party dispute between VISA Comtrade (Asia) Limited (the "Charterer") and Transfield Shipping Inc., Panama, (the "Owner of the vessel- Prabhu Gopal") the said Owner of the vessel has filed a civil suit in the Hon'ble Calcutta High Court against the Company and the charterer and claimed the relief for a decree for US$ 0.30 million to be expressed in Indian Currency at such rate of exchange and / or on such terms as the Court may deem fit and proper, Injunction, Costs or other reliefs. The Company has not accepted the claim as it was not a party to the said Agreement and hence cannot be made a party to this suit. The Hon'ble Calcutta High Court passed interim order dated 11 May 2005 and 20 June 2005, restraining the Company and the Charterer from withdrawing any amount from a specified bank account without leaving a balance for a sum of Rs.12.50 million, which has been set aside by the bank from the cash credit limit of the Company. The company has been legally advised that the above interim order has been expired due to efflux of time and has not been extended by the Hon'ble Calcutta High Court.

(ii) Applications have been filed by the legal heirs of a deceased employee of the Company, who died in a road accident while travelling in the Company's vehicle for his personal work, claiming a compensation of Rs.6.10 million and interest @ 18% per annum. The Company has contested the claim, which is currently pending before the Motor Accident Claims Tribunal, Bhubaneswar.

Application filed by the legal heirs of the sister of the deceased employee who died with him, has been disposed off by the Aditional District Judge Cum 3rd Motor Accident Claims Tribunal, Rourkela on 25 November, 2011 directing the New India Assurance Co. Ltd to pay Rs.0.18 million with interest 9% p.a. from the date of application till the date of payment. An appeal has been filed by the New India Assurance Co. Ltd before the Hon'ble High Court of Orissa in May 2012 against such order.

(b) Other Commitments

The Company has obtained licenses from the Government of India under EPCG Scheme for import of machineries at a reduced Customs Duty and thereby saved an amount of Rs.388.35 million towards duty upto 31 March 2012 (2011 : Rs.384.40 million). As per the requirement under the said Scheme, the Company is required to export amounting to Rs.2,989.69 million (2011: Rs.2,986.46 million) within the specified periods, failing which, the Company has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest. The Company is confident that the above export obligation will be met during the specified period.

2.2 (a) Employee Benefits

The Company maintains provident fund with Regional Provident Fund Commissioner, contributions are made by the Company to the Fund, based on the current salaries. In the provident fund schemes, contribution are also made by the employees. An amount of Rs.8.68 million (2011: Rs.15.94 million) has been charged to the Statement of Profit and Loss on account of the above defined contribution schemes.

The Company operates defined benefit schemes like gratuity and leave encashment . The Company has taken out a policy with Life Insurance Corporation of India (LICI) for future payment of gratuity liability to its employees. Annual actuarial valuations are carried out by LICI in compliance with Accounting Standard 15 (revised 2005) on "Employee Benefits". Annual contributions are also made by the Company. Employees are not required to make any contribution.

The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investments of the funds during the estimated terms of the obligations.

The contribution expected to be made by the Company for the year ending 31 March 2013 cannot be readily ascertainable and therefore not disclosed.

* In view of high volatility in the value of Indian Rupee against US$ and other foreign currencies, the loss arising out of the reinstatement of foreign currency monetary items during the current financial year amounting Rs.617.27 million (2011: Rs. Nil) has been considered as an exceptional item.

** Miscellaneous expenses of current year is net off provision written back for bad & doubtful debts Rs.31.84 million and for doubtful advances Rs.10.52 million and also includes current year provision for bad and doubtful debt Rs.3.45 million and for advances Rs.6.34 million.

2.3 SHARE - BASED COMPENSATION

The shareholders of the Company in the Annual General Meeting held on 17 August, 2010, has approved an Employee Stock Option Scheme 2010 (the "ESOP Scheme 2010"), formulated by the Company, under which the Company may issue 5,500,000 options to its permanent employees and directors of the Company, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines.

Each option when exercised would be converted into one fully paid - up equity share of Rs.10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company ("the Committee"). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. During the current year the Company has not granted any new options. The following share-based payment arrangements were in existence during the reporting period.

2.4 As the Company's business activity falls within a single business segment, viz. "Iron & Steel products", the disclosure requirements of Accounting Standard (AS-17) on "Segment Reporting", notified by the Companies (Accounting Standards) Rules, 2006, are not applicable.

2.5 The Company has incurred a net loss of Rs.1,188.54 million during the year ended 31 March 2012 and as of that date the Company's current liabilities exceeded its current assets by Rs.15,111.77 million. The Company has approached the Lenders to restructure its debt profile to convert majority of their short-term loan to long-term loan, which has already been agreed in principle by all the banks and the approval is under process. The Company has prepared the financial statements on the basis of going concern assumption.

2.6 INVESTMENT IN JOINT VENTURE

The Company has invested in VISA Urban Infra Limited vide the consortium agreement with VISA Infrastructure Limited and VISA Realty Limited to start up a project of star hotel and convention centre at Naya Raipur, Chhatisgarh.

The Company's interests in the joint venture is reported as Long-Term Investment in Note no 3.11 and stated at cost. However, the Company's share of each of the assets and liabilities etc. (each without elimination of the effect of transactions between the Company and the joint venture) based solely on the accounts prepared for the internal management reporting purposes to assess the performance of the joint venture related to its interest in the Joint Venture are:

2.7 DEFERRED TAX LIABILITIES (NET)

Deferred Tax Provision has been made in the accounts in accordance with the requirements of the Accounting Standard on "Taxes on Income" (AS 22) issued by The Institute of Chartered Accountants of India. The major components of the Deferred Tax Liabilities / (Assets) based on the tax effects of timing differences are as follows:

2.8 PREVIOUS YEAR FIGURES

The Financial Statements for the year ended 31 March 2011 had been prepared as per the then applicable ,pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

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Mar 31, 2011

1 (a) Claim against the Company not acknowledged as debt:

(i) In respect of a charter party dispute between VISA Comtrade (Asia) Limited (the "Charterer") and Transfield Shipping Inc., Panama (the "Owner of the Vessel - Prabhu Gopal"), the said Owner of the vessel has filed a civil suit in the Honble Calcutta High Court against the Company and the Charterer and claimed relief for a decree for US$ 0.30 million to be expressed in Indian Currency at such rate of exchange and/or on such terms as the Court may deem fit and proper, Injunction, Costs or other reliefs. The company has not accepted the claim as it was not a party to the said Agreement and hence cannot be made a party to the suit. The Honble Court passed interim order dated 11 May 2005 & 20 June 2005, restraining the Company and the Charterer from withdrawing any amount from a specified bank account without leaving a balance for a sum of Rs.12.50 million, which has been set aside by the bank from cash credit limit of the Company. The Company has been legally advised that the above interim order has been expired due to efflux of time and has not been extended by the Honble Calcutta High Court.

(ii) Applications have been filed by the legal heirs of a deceased employee of the Company and his sister respectively, who died in a road accident while travelling in the Companys vehicle for their personal work, claiming a compensation of Rs.6.05 million and interest @ 18% per annum and Rs.0.55 million respectively. The Company has contested the claims, which are currently pending before the Motor Accident Claims Tribunal, Bhubaneswar and the Additional District Judge cum 3rd Motor Accident Claims Tribunal, Rourkela respectively.

(d) The Company has obtained licenses from the Government of India under EPCG Scheme for import of machineries at a reduced Customs Duty and thereby saved an amount of Rs.384.40 million towards duty upto 31 March 2011(2010 : Rs.522.17 million). As per the requirement under the said Scheme, the Company is required to export amounting to Rs.2986.46 million (2010 : Rs.4177.32 million) within the specified periods, failing which, the Company has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest. The Company is confident that the above export obligation will be met during the specified period.

2 (a) The working capital facilities from banks are secured by way of first hypothecation charge ranking pari-passu with other banks on the whole of the current assets, namely, stock of raw material, stock in process, semi finished & finished goods, stores & spares not relating to plant & machinery (i.e. consumable stores & spares), bills receivable & book debts and all other movables, both present and future, whether installed or not provided that the charge in favour of the banks on the movable plant & machinery, machinery spares, tools & accessories shall be subject to the charges created and/or to be created thereon in favour of the term lenders to secure the long term borrowings/loans for capital expenditure. The working capital facilities are also secured by second mortgage charge on the land situated at Kalinganagar Industrial Complex , District Jajpur, Orissa together with building and structures thereon and all plant & machinery attached to the earth or permanently fastened to anything attached to the earth along with corporate guarantee of VISA International Limited and personal guarantee of Managing Director of the Company.

(b) Term Loan from Banks & Financial Institutions other than General Corpus Corporate Loan is secured by way of first charge on the land and fixed assets situated at Kalinganagar Industrial Complex, District Jajpur, Orissa together with hereditaments and premises and building, plant and machineries permanently affixed thereto and other erections thereon both present and future at Plant at Kalinganagar Industrial Complex, District Jajpur, Orissa and second charge on all the current assets of the Company ranking pari-passu with other banks along with Corporate Guarantee of VISA International Limited and personal guarantee of Managing Director of the Company.

General Corpus Corporate Loan is secured by first charge on all the movable fixed assets of the Company and second charge on all the current assets of the Company both present and future on pari passu basis alongwith other term lenders.

(c) Subordinate Debt Facility from a Consortium of banks and financial institutions through IL&FS Financial Services Limited acting as Facilitator is secured by way of a second mortgage & charge on pari-passu basis with the Working Capital Lenders of all such immovable properties and interest in the immovable properties including buildings, structures, plant and machinery embedded therein, present & future in the industrial land situated at Kalinganagar Industrial Complex, District Jajpur, Orissa, and by way of second charge on pari-passu basis with the Term Loan lenders on all the movable current assets and movable plant & machinery, spares, tools, accessories both present & future along with Corporate Guarantee of VISA International Limited. The registration of the above charge is pending.

(d) Equipment Finance and other loan from banks and financial Institutions are secured by way of hypothecation of vehicles/machinery taken under the loan arrangement.

3 Pursuant to an inter se transfer of shares between the Promoter Group Companies, VISA Minmetal AG transferred its entire shareholding to a Promoter Group Company, VISA Infrastructure Limited subsequent to which VISA Infrastructure Limited became the holding Company of the Company w.e.f. 30 April 2010.

4 During the year the Joint Venture Company Patrapada Coal Mining Co. Private Limited is dissolved with effect from 05 October 2010.

5 Investment in Joint Venture

The Company has invested in VISA Urban Infra Limited during the year vide the consortium agreement with VISA Infrastructure Limited and VISA Realty Limited to start up a project of star hotel and convention centre at Naya Raipur, Chhatisgarh.

Joint Venture VISA Urban Infra Limited

Country of Incorporation India

% of Ownership Interest as at 31 March 2011 26.00%

The Companys interests in the joint venture is reported as Long Term Investment in Schedule 5 and stated at cost. However, the Companys share of each of the assets and liabilities etc. (each without elimination of the effect of transactions between the Company and the joint venture) in the Joint Venture are:

6 Employee Benefits

The Company maintains provident fund with Regional Provident Fund Commissioner, contributions are made by the company to the Fund, based on the current salaries. In the provident fund schemes, contribution are also made by the employees. An amount of Rs.15.94 million (2010 : Rs.12.98 million) has been charged to the Profit and Loss Account on account of the above defined contribution schemes.

The Company operates defined benefit schemes like gratuity and leave encashment. The Company has taken out a policy with Life Insurance Corporation of India (LICI) for future payment of gratuity liability to its employees. Annual actuarial valuations are carried out by LICI in compliance with Accounting Standard 15 (Revised 2005) on Employee Benefits. Annual contributions are also made by the Company. Employees are not required to make any contribution.

The Company also provides for leave encashment benefit to the employees. Annual actuarial valuations are carried out by an independent actuary in compliance with Accounting Standard 15 (Revised 2005) on Employee Benefits. Employees are not required to make any contribution.

The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investments of the funds during the estimated terms of the obligations.

The contribution expected to be made by the Company for the year ending 31 March 2012 cannot be readily ascertainable and therefore not disclosed.

The above information has been compiled in respect of parties to the extent to which they could be identified as Micro and Small Enterprises under Micro, Small and Medium Enterprises Development Act, 2006 on the basis of information available with the Company.

7 Share - based Compensation

The shareholders of the Company in Annual General Meeting held on 17 August 2010, has approved an Employee Stock Options Scheme 2010 (the ESOP Scheme 2010"), formulated by the company, under which the Company may issue 55,00,000 options to its permanent employees and directors of the company, its subsidiaries and its holding company, as determined by the Remuneration Committee on its own discretion and in accordance with the SEBI Guidelines.

Each options when exercised would be converted into one fully paid - up equity share of Rs.10/- each of the Company. The ESOP Scheme 2010 is administered by the Remuneration Committee of the Board of Directors of the Company (the Committee"). Under the ESOP Scheme 2010, the Committee had granted 900,000 options to its eligible employees during the year ended 31 March 2011. The following share-based payment arrangements were in existence during the reporting periods.

Fair Valuation:

At grant date , the estimated fair value of stock options granted was Rs.19.56. The fair valuation was carried out by an independent valuer using Black & Scholes model. The various inputs and assumptions considered in the pricing model at grant date for the stock options granted under ESOP Scheme 2010 are as under.

8 As the Companys business activity falls within a single business segment, viz. "Iron & Steel products", the disclosure requirements of Accounting Standard (AS-17) on "Segment Reporting", notified by the Companies (Accounting Standards) Rules, 2006, are not applicable.

9 Previous years figures have been rearranged/re-grouped wherever necessary.

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Mar 31, 2010

1 (a) Claim against the Company not acknowledged as Debt:

(i) In respect of a charter party dispute between VISA Comtrade (Asia) Limited (the "Charterer") and Transfield Shipping Inc., Panama (the "Owner of the Vessel - Prabhu Gopal"), the said Owner of the vessel has filed a civil suit in the Honble Calcutta High Court against the Company and the Charterer and claimed relief for a decree for US$ 0.30 Million to be expressed in Indian Currency at such rate of exchange and/or on such terms as the Court may deem fit and proper, Injunction, Costs or other reliefs. The Company has not accepted the claim as it was not a party to the said Agreement and hence cannot be made a party to the suit. The Honble Court passed interim order dated 11 May 2005 & 20 June 2005, restraining the Company and the Charterer from withdrawing any amount from a specified bank account without leaving a balance for a sum of Rs.12.50 Million, which has been set aside by the bank from cash credit limit of the Company. The suit is currently pending before the Honble Calcutta High Court.

(b) The Company has obtained licenses from the Government of India under EPCG Scheme for import of machineries at a reduced Customs Duty and thereby saved an amount of Rs. 522.17 Million towards duty upto 31 March 2010. As per the requirement under the said Scheme, the Company is required to export amounting to Rs. 4,177.32 Million within the specified periods, failing which, the Company has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest. The Company is confident that the above export obligation will be met during the specified period.

2 (a) The working capital facilities from banks are secured by way of first hypothecation charge ranking pari-passu with other banks on the whole of the current assets, namely, stocks of raw material, stock in process, semi finished & finished goods, stores & spares not relating to plant & machinery (i.e. consumable stores & spares), bills receivable & book debts and all other movables, both present and future, whether installed or not provided that the charge in favour of the banks on the moveable plant & machinery, machinery spares, tools & accessories shall be subject to the charges created and/or to be created thereon in favour of the term lenders to secure the long term borrowing/ loans for capital expenditure. The working capital facilities are also secured by second mortgage charge on the land situated at Kalinganagar Industrial Complex , District Jajpur, Orissa together with building and structures thereon and all plant & machinery attached to the earth or permanently fastened to anything attached to the earth along with corporate guarantee of VISA International Limited and personal guarantee of Managing Director of the Company.

(b) Term Loan from bank other than General Corpus Corporate Loan is secured by first charge on the land and fixed assets situated at Kalinganagar Industrial Complex, District Jajpur, Orissa together with hereditaments and premises and building, plant and machineries permanently afixed thereto and other erections thereon both present and future at Plant at Kalinganagar Industrial Complex, District Jajpur, Orissa and second charge on all the current assets of the Company ranking pari-passu with other banks along with Corporate Guarantee of VISA International Limited and personal guarantee of Managing Director if the Company. General Corpus Corporate Loan is secured by first charge on all the movable fixed assets of the Company and second charge on all the current assets of the Company both present and future on pari-passu basis along with other term lenders.

(c) Vehicle and other loan from banks and financial Institutions are secured by way of hypothecation of vehicles/ machinery taken under the loan arrangement.

3 Pursuant to an inter se transfer of shares between the Promoter Group Companies, VISA Minmetal AG transferred its entire shareholding to a Promoter Group Company, VISA Infrastructure Limited subsequent to which VISA Infrastructure Limited became the Holding Company of the Company w.e.f. 30th April 2010.

4 On 29 July, 2008, the Board approved the VISA Steel Employee Stock Option Scheme 2008 (ESOP Scheme) and Members passed the Special Resolution vide Postal ballot pursuant to Section 192A of the Companies Act, 1956 for grant of not more than 5,500,000 stock options convertible into not more than 5,500,000 Equity Shares of face value Rs. 10 each fully paid up, through Trust for the purpose of welfare and benefit of the employees of the Company including any Director of the Company, whether whole-time or otherwise. The Remuneration Committee will administer the scheme through the trust, which has registered in the name and style of "VISA Steel Limited – Employee Welfare Trust" on 23 September 2008 with Registrar of Assurances, Kolkata for implementing the Employee Stock Option Scheme 2008 for the employees specified therein.

In view of that scheme the Company has transfered Rs. 10 Million to VISA Steel Limited – Employee Welfare Trust for procurement of share from the market, which will be granted to the employees of the Company as per the scheme after obtaining the approval of the Remuneration Committee. However the trust has not purchased any share from the market and the amount is lying under the current account of the Trust. Moreover, no option has been granted under the Scheme till date.

*Includes Rs.15.92 Million towards 2008-09 managerial remuneration, for which Central Government has approved waiver of recovery of Rs.7.61 Million and Rs.6.60 Million from Mr. Vishambhar Saran, Chairman and Mr. Vishal Agarwal, Managing Director respectively. The Central Government has not given any approval for waiver in respect of Mr. Basudeo Prasad Modi, Deputy Managing Director, of Rs.1.71 Million as they were of the view that the remuneration payable to him for 2008-09 was within the permissible limit under Schedule XIII of the Companies Act, 1956.

5 Investment in Joint Venture

Joint Venture Patrapada Coal Mining Co. Private Limited

Country of Incorporation India

% of Ownership Interest as at 31 March 2010 0.49%



The Companys interests in the joint venture is reported as Long Term Investment in Schedule 5 and stated at cost. During the current year no Profit and Loss Account has been prepared, as there was no revenue transaction. However, the Companys share of each of the assets and liabilities etc. (each without elimination of the efect of transactions between the Company and the joint venture) based solely on the accounts prepared for the internal management reporting purposes to assess the performance of the joint venture related to its interest in the Joint Venture are:

6 Related Party Disclosures

Nature of Relationship Name of the Related Parties

Holding Company VISA Minmetal AG

Subsidiaries VISA BAO Limited Ghotaringa Minerals Limited

Joint Venture Company Patrapada Coal Mining Company Private Limited

Enterprise having significant influence VISA International Limited Fellow Subsidiaries Far East Trading AG (f.k.a. VISA Comtrade AG)

VISA Coal Pty. Limited VISA GMR Limited

VISA Global Mineral Resources SA (Proprietary) Limited

Far East Chartering Limited VISA Power Limited

VISA Comtrade Limited

Key Managerial Personnel Mr. Vishambhar Saran Mr. Vishal Agarwal

Mr. Basudeo Prasad Modi Relatives of Key Managerial Personnel Mrs. Saroj Agarwal

Mr. Vikas Agarwal

Mr. Vivek Agarwal

Mr. Ashok Agarwal Enterprise over which Relatives of Key Khandadhar Minerals Limited Managerial Personnel having significant VISA Realty Limited

influence VISA Minmetal Limited

VISA Infrastructure Limited

North East Resources Limited

VISA Aviation Limited

Tastebuds Gourmet Foods Private Limited VISA Chartering Limited

VISA Group Limited

VISA Bulk Shipping Pte Limited VISA Resource Pte Limited

VISA Trust

PT VISA Indo



7 Employee Benefits

The Company maintains provident fund with Regional Provident Fund Commissioner, contributions are made by the Company to the Fund, based on the current salaries. In the provident fund schemes, contribution are also made by the employees. An amount of Rs.12.98 Million (2009: Rs.9.15 Million) has been charged to the Profit and Loss Account on account of the above defined contribution schemes.

The Company operates defined benefit schemes like gratuity and leave encashment. The Company has taken out a policy with Life Insurance Corporation of India (LICI) for future payment of gratuity liability to its employees. Annual actuarial valuations are carried out by LICI in compliance with Accounting Standard 15 (Revised 2005) on Employee Benefits. Annual contributions are also made by the Company. Employees are not required to make any contribution.

The Company also provides for leave encashment benefit to the employees. Annual actuarial valuations are carried out by an independent actuary in compliance with Accounting Standard 15 (Revised 2005) on Employee Benefits. Employees are not required to make any contribution.

The estimates of future salary increase considered in the actuarial valuation takes into account factors like infation, seniority, promotion and other relevant factors. The expected return on plan assets is based on actuarial expectation of the average long term rate of return expected on investments of the funds during the estimated terms of the obligations. The contribution expected to be made by the Company for the year ending 31 March 2011 cannot be readily ascertainable and therefore not disclosed.

The above information has been compiled in respect of parties to the extent to which they could be identified as Micro and Small Enterprises under Micro, Small and Medium Enterprises Development Act, 2006 on the basis of information available with the Company.

8 As the Companys business activity falls within a single business segment, viz. "Iron & Steel products", the disclosure requirements of Accounting Standard (AS-17) on "Segment Reporting", notified by the Companies (Accounting Standards) Rules, 2006, are not applicable.

9 As at 31 March 2010, the Company had net outstanding foreign currency exposures of Rs. 3,309.52 Million (US$ 71.33 Million) (2009: Rs.6217.95 Million, US$ 122.04 Million) of which Rs. 1248.89 Million (US$ 27.67 Million) (2009: Rs. 3931.34 Million, US$78.27 Million) has been covered by forward contracts.

10 Previous years figures have been rearranged/re-grouped wherever necessary.