NOTE 1: SIGNIFICANT ACCOUNTING POLICIES 1.1 BASIS OF ACCOUNTING The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ("the 2013 Act"). The financial statements have been brpared on accrual basis under the historical cost convention except for the assets and liabilities acquired under the composite scheme of Amalgamation and Arrangement which are recorded at respective fair values. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. 1.2 USE OF ESTIMATES The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) at the date of the financial statements and the reported amounts of revenues and expenses during the year. The Management believes that the estimates used in brparation of financial statements are prudent and reasonable. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Future results could differ due to these estimates and the differences between the actual results and estimates are recognised in the periods in which the results are known/materialize. 1.3 INVENTORIES Inventories are valued at the lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost is determined by the weighted average cost method. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty. Excise duty related to finished goods stock is included under changes in inventories of finished goods, work-in-progress and stock-in-trade (Refer note 21). 1.4 CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. CASH AND CASH EQUIVALENTS Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. 1.5 DEbrCIATION AND AMORTISATION Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. When significant parts of the main asset is having different useful lives as compared to the main asset, the Company debrciates them separately based on their specific useful lives. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc 1.6 REVENUE RECOGNITION Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. Revenue from sale of goods is recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally 1.7 OTHER INCOME Interest income is accounted on accrual basis when there is no significant uncertainty as to its realization or collection. Dividend income is accounted for, when the right to receive income is established. 1.8 FIXED ASSETS (TANGIBLE/ INTANGIBLE) Tangible assets are stated at their cost of acquisition or construction except for assets acquired under the composite scheme of amalgamation and arrangement which are recorded at fair value, less accumulated debrciation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. The Company has adopted the provisions of para 46 / 46A of AS 11 The Effects of Changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of debrciable fixed assets are adjusted to the cost of the respective assets and debrciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and debrciated over the useful life of the principal item of the relevant assets. Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realizable value and are disclosed separately. CAPITAL WORK-IN-PROGRESS: Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest. Fixed assets acquired and put to use for project purpose are capitalised and debrciation thereon is included in the project cost till the project is ready for its intended use. INTANGIBLE ASSETS: Intangible assets are recognised only when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the assets can be measured reliably. Intangible assets are stated at cost except for assets acquired under the composite scheme of amalgamation and arrangement which are recorded at fair value, less accumulated debrciation and impairment losses, if any. Expenditure on Research and development (Refer Note 1.20) eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use. 1.9 FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS INITIAL RECOGNITION Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or at rates that closely approximate the rate at the date of transaction. MEASUREMENT AT BALANCE SHEET DATE Foreign currency monetary items outstanding at the year-end (other than derivative contracts which are accounted as per note 1.22) are translated at the exchange rate brvailing as at the balance sheet date. Non-monetary items such as investments are carried at historical cost using the exchange rates on the date of the transaction-also refer note 1(7). Exchange differences arising on settlement or conversion of short-term foreign currency monetary items are recognized in the Statement of Profit and Loss or capital work-in-progress / fixed assets. The exchange differences arising on settlement / restatement of long-term foreign currency monetary items are capitalized as part of the debrciable fixed assets to which the monetary item relates and debrciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of debrciable fixed assets, the exchange difference is amortised over the maturity period / up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortisation is taken to "Foreign currency translation reserve" until disposal / recovery of the net investment. The unamortised exchange difference is carried under Reserves and surplus as "Foreign currency monetary item translation difference account" net of the tax effect thereon, where applicable. ACCOUNTING FOR FORWARD CONTRACTS Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, is amortised over the period of the contracts ifsuch contracts relate to monetary items as at the balance sheet date. 1.10 GOVERNMENT GRANTS, SUBSIDY AND EXPORT INCENTIVE Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidies will be received. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. 1.11 INVESTMENTS Long-term investments are carried individually at cost except for investments acquired under the composite scheme of amalgamation and arrangement which are recorded at fair value, less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. 1.12EMPLOYEE BENEFITS Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund and compensated absences. Employee benefits such as salaries, performance incentives, allowances, non-monetary benefits, provident fund and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense in the Statement of Profit and Loss in the period in which the service is rendered. The cost of compensated absences which is expected to occur within twelve months after the end of the period in which the employee renders the related service, is accounted as under: (a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and (b) in case of non-accumulating compensated absences, when the absences occur. Employee benefits under defined benefit plans such as gratuity fund and compensated absences which fall due for payment after a period of twelve months from rendering service or after completion of employment, are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The Company's obligations recognised in the balance sheet rebrsents the brsent value of obligations as reduced by the fair value of plan assets, where applicable. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. 1.13EMPLOYEE SHARE BASED PAYMENTS The Company has issued an Employee Stock Option Plan - 2012 to the Employees. Employee Stock Options are accounted under the 'Intrinsic Value Method'. Accordingly, the Company amortises the excess of market price of Share over exercise price of the Option over the vesting period specified in Employee Stock Option Plan. 1.14BORROWING COSTS Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. 1.15 SEGMENT REPORTING The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities 1.16 LEASES: (I) FINANCE LEASE Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Where the Company as a lessor leases assets under finance leases, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is recognised based on a constant rate of return on the outstanding net investment. (II) OPERATING LEASES Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. 1.17 EARNINGS PER SHARE Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. 1.18 TAXES ON INCOME Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability. Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss. 1.19 RESEARCH AND DEVELOPMENT EXPENSES Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technical feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for Fixed Assets. 1.20 IMPAIRMENT OF ASSETS The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was brviously charged to the Statement of Profit and Loss. 1.21 PROVISIONS AND CONTINGENCIES A provision is recognised when the Company has a brsent obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements. 1.22 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING The Company enters into derivative financial instruments such as foreign exchange/Commodity forward and option contracts, interest rate swaps and currency options to manage its exposure to commercial risks associated with commodity price, foreign exchange and interest rate fluctuations. The Company does not enter into derivative contracts for trading or speculative purposes. Foreign exchange forward contracts or instruments which are in substance forward exchange contracts closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign currency transactions (refer note 1.9). The Company applies the hedge accounting principles set out in "Accounting Standard 30 (AS 30) - Financial Instruments: Recognition and Measurement", and accordingly designates certain derivatives as hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges). Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in a "Hedging Reserve Account" under Reserves and surplus. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss. Amounts deferred in the Hedging Reserve Account are recycled in the Statement of Profit and Loss in the periods when the hedged item is recognised in the Statement of Profit and Loss, in the same line as the hedged item. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. Hedge accounting is discontinued when the Company revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. In case of cash flow hedges any cumulative gain or loss deferred in the Hedging Reserve Account at that time is retained and is recognised when the forecast transaction is ultimately recognised in the Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred is recognised immediately in the Statement of Profit and Loss. In respect of all other derivative contracts, which are not designated for hedge accounting (in terms of AS 30) and not covered under Accounting Standard (AS) 11: The Effects of Changes in Foreign Exchange Rates, the gains / losses arising from settlement and net marked to market (MTM) losses in respect of outstanding derivative contracts as at balance sheet date are recognised in the same line as the hedge item in the Statement of Profit and Loss. The net MTM gains in respect of outstanding derivatives contracts are not recognised adopting the principles of prudence. 1.23 SHARE ISSUE EXPENSES Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account is expensed in the Statement of Profit and Loss. 1.24 INSURANCE CLAIMS Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection. E RIGHTS, brFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES The Company has a single class of equity shares. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all brferential amounts, in proportion to their shareholding. F RIGHTS, brFERENCES AND RESTRICTIONS ATTACHED TO brFERENCE SHARES The Company has two classes of brference shares i.e. 10% cumulative redeemable brference shares (CRPS1) of Rs. 10 each and 0.01% cumulative redeemable brference shares (CRPS2) of Rs. 10 each. Each holder of CRPS1 is entitled to one vote per share, in proportion to the amount paid on CRPS1 held, only on resolutions placed before the Company which directly affect the rights attached to CRPS1. CRPS1 are redeemable at par in four equal quarterly installments commencing from 15 December 2017. The shares carry a right to receive 10% dividend every year till redemption. Each holder of CRPS2 is entitled to one vote per share, in proportion to the amount paid on CRPS2 held, only on resolutions placed before the Company which directly affect the rights attached to CRPS2. It carries dividend @ 0.01% p.a., when declared. CRPS2 is redeemable at par in eight quarterly installments commencing from 15 June 2018. In the event of liquidation, the brference shareholders are eligible to receive the outstanding amount including dividend after distribution of all other brferential amounts, in proportion to their shareholding. In the event of winding-up of the Company before redemption of brference shares, the holders of CRPS1 and CRPS2 will have priority over equity shares in the payment of dividend and repayment of capital. DETAILS OF SECURITY (i) The 10.34% NCDs aggregating to Rs. 1,000 crores are secured by way of first pari passu charge on fixed assets related to 2.8 mtpa expansion project located at Vijayanagar Works, Karnataka and a flat at Vasind, Maharashtra. (ii) The 10.02 % NCDs aggregating to Rs. 1,000 crores are secured by: - first pari passu charge on 3.8 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (iii) The 11% NCDs aggregating to Rs. 1,000 crores are secured by way of first pari passu charge on fixed assets related to 2.8 mtpa expansion project located at Vijayanagar Works, Karnataka and a flat at Vasind, Maharashtra. (iv) The 10.60% NCDs aggregating to Rs. 328.13 crores are secured by: - pari passu first charge by way of legal mortgage on land situated in the State of Gujarat - pari passu first charge by way of equitable mortgage on fixed assets of the new 5 mtpa Hot Strip Mill at Vijayanagar Works, Karnataka. (v) The 9.72% NCDs aggregating to Rs. 400 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (vi) The 10.40% NCDs aggregating to Rs. 250 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (vii) The 10.60% NCDs aggregating to Rs. 425 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (viii) The 9.665% NCDs aggregating to Rs. 300 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (ix) The 10.50% NCDs aggregating to Rs. 175 crores are secured first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (x) The 10.10 % NCDs aggregating to Rs. 468.75 crores are secured by: - pari passu first charge on all immovable properties and movable assets both brsent and future located at Salem Works in the State of Tamil Nadu. (xi) The 10.25% NCDs aggregating to Rs. 333.33 crores are secured by : - pari passu first charge on all immovable properties and movable assets both brsent and future located at Salem Works in the State of Tamil Nadu. (xii) The 9.62% NCDs aggregating to Rs. 300 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xiii) The 10.20% NCDs aggregating to Rs. 200 crores are secured by first pari passu charge on 3.8 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xiv) The 10.20% NCDs aggregating to Rs. 500 crores are secured by first pari passu charge on 3.8 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xv) The 10.40% NCDs aggregating to Rs. 175 crores are secured by first pari passu charge on 3.2 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xvi) The 10.55% NCDs aggregating to Rs. 150 crores are secured by first pari passu charge on 3.8 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xvii) The 10.55% NCDs aggregating to Rs. 1,000 crores are secured by pari passu first charge on fixed assets of the new 5 mtpa Hot Strip Mill at Vijayanagar Works, Karnataka. (xviii)The 10.50% NCDs aggregating to Rs. 75 crores are secured by first pari passu charge on 3.8 mtpa fixed assets located at Vijayanagar Works Karnataka (other than specifically carved out) and a flat situated at Vasind, Maharashtra. (xix) The 10.98 % NCDs aggregating to Rs. 1.95 crores are secured by: - pari passu first charge by way of legal mortgage on a flat situated at Mumbai, in the State of Maharashtra. - pari passu first charge by way of equitable mortgage of the Company's immovable properties relating to the 100MW and 130MW Power Plants located at Vijayanagar Works, Karnataka. (xx) Rupee Term Loans from banks are secured as under : - Rupee term loan of Rs. 1,000 crores is secured by by first charge on 3.2 mtpa expansion fixed assets situated at Vijayanagar Works Karnataka - Rupee term loan of Rs. 1,137.50 crores is secured by first pari passu charge on 3.8mtpa upstream assets (other than assets specifically carved out) at Vijayanagar Works, Karnataka. - Rupee term loan of Rs. 900 crores is by first pari passu charge on 3.8mtpa upstream assets (other than assets specifically carved out) at Vijayanagar Works, Karnataka. - Rupee term loan of Rs. 1,950 crores is secured by first charge on fixed assets situated at Dolvi works, Maharashtra. - Rupee term loans of Rs. 1,250 crores is secured by first charge on fixed assets situated at Dolvi works, Maharashtra. - Rupee term loans of Rs. 450 crores is secured by first charge on fixed assets situated at Dolvi works, Maharashtra. - Rupee term loans of Rs. 750 crores is secured by first charge on fixed assets situated at Dolvi works, Maharashtra. - Rupee term loans of Rs. 350 crores is secured by first charge on fixed assets situated at Dolvi works, Maharashtra. - Rupee term loans aggregating to Rs. 797.05 crores is secured by first charge on entire movable and immovable fixed assets situated at Dolvi works, Maharashtra (excluding those specifically charged and equipment/machinery procured out of proceeds of ECA/ECB/FCL) both brsent and future. TERMS OF REPAYMENT/ REDEMPTION 1. TERMS OF REDEMPTION OF BOND (i) Foreign currency bond of Rs. 3,316.65 is repayable on 12.11.2019 2. TERMS OF REDEMPTION OF NON-CONVERTIBLE DEBENTURES ( NCDS ) (i) The 10.02% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 500 crores are redeemable on 19.07.2023 (ii) The 10.02% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 500 crores are redeemable on 20.05.2023. (iii) The 10.34% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 1,000 crores are redeemable in three tranches as under : - Rs. 330 crores on 18.1.2022 - Rs. 330 crores on 18.1.2023 - Rs. 340 crores on 18.1.2024 (iv) The 11% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 1,000 crores are redeemable with call and put option excersiable on 16.03.17 and 16.03.19 as under: - Rs. 330 crores each on 16.3.2021 - Rs. 330 crores each on 16.3.2022 - Rs. 340 crores each on 16.3.2023 (v) The 9.72% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 400 crores are redeemable on 23.12.2019. (vi) The 10.40% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 250 crores are redeemable (with Put option excercareable on 19.08.2017) on 19.08.2019. (vii) The 10.60% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 425 crores are redeemable on 19.08.2019. (viii) The 9.665% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 300 crores are redeemable on 23.12.2018. (ix) The 10.5% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 175 crores are redeemable on 19.08.2018. (x) The 9.62% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 300 crores are redeemable on 23.12.2017. (xi) The 10.20% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 200 crores are redeemable on 11.09.2017. (xii) The 10.20% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 500 crores are redeemable on 05.09.2017. (xiii) The 10.40% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 175 crores are redeemable on 19.08.2017. (xiv) The 10.55% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 150 crores are redeemable on 20.03.2017. (xv) The 10.25% Secured NCDs of Rs. 6,66,667 each aggregating Rs. 333.33 crores are redeemable in 2 equal annual instalments of Rs. 166.67 crores each from 17.02.2017 to 17.02.2018. (xvi) The 10.55% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 1000 crores are redeemable on 10.02.2017. (xvii) The 10.60% Secured NCDs of Rs. 8,75,000 each aggregating Rs. 153.13 crores and of Rs. 10,00,000 each aggregating Rs. 175 crores are redeemable in two tranches as under : - 7 half yearly instalments of Rs. 21.875 crores each from 02.07.2016 to 02.07.2019 - 8 half yearly instalments of Rs. 21.875 crores each from 02.08.2016 to 02.02.2020. (xviii) The 10.50% Secured NCDs of Rs. 10,00,000 each aggregating Rs. 75 crores are redeemable on 18.05.2016. (xix) The 10.10% Secured NCDs of Rs. 4,37,500 each aggregating Rs. 218.75 crores and of Rs. 5,00,000 each aggregating Rs. 250 crores are redeemable in two tranches as under : - 7 quarterly instalments of Rs. 31.25 crores each from 04.05.2016 to 04.11.2017 - 8 quarterly instalments of Rs. 31.25 crores each from 15.6.2016 to 15.03.2018. (xx) The 10.98% Secured NCDs of Rs. 25,000 each aggregating Rs. 1.95 crores are redeemable on 13.04.2016. 3. TERMS OF REPAYMENT OF SECURED TERM LOANS (A) Rupee term loan from banks of : (i) Rs. 750 crores is repayable as under : - 08 Quarterly instalments of Rs 18.75 Crores each from 31.10.2018 - 31.07.2020 - 16 Quarterly instalments of Rs 37.50 Crores each from 31.10.2020 - 31.07.2024 (ii) Rs. 1,000 crores is repayable as under : - 8 Quarterly instalment of Rs 25 Crore each from 31.03.2018 - 31.12.2019 - 16 Quarterly instalment of Rs 50 Crore each from 31.03.2020 - 31.12.2023 (iii) Rs. 450 crores is repayable as under : - 04 Quarterly instalments of Rs 5.625 Crores each from 28.10.2017 - 28.07.2018 - 04 Quarterly instalments of Rs 33.75 Crores each from 28.10.2018 - 28.07.2019 - 04 Quarterly instalments of Rs 5.625 Crores each from 28.10.2019 - 28.07.2020 - 12 Quarterly instalments of Rs 22.50 Crores each from 28.10.2020 - 28.07.2023 (iv) Rs. 1,250 crores is repayable as under : - 16 Quarterly instalments of Rs 15.625 Crores each from 31.10.2016 - 31.07.2020 - 04 Quarterly instalments of Rs 62.50 Crores each from 31.10.2020 - 31.07.2021 - 08 Quarterly instalments of Rs 93.75 Crores each from 31.10.2021 - 31.07.2023 (v) Rs. 1,137.5 crores is repayable as under : - 11 quarterly instalments of Rs. 12.5 crores each from 30.6.2016 - 31.12.2018 - 12 quarterly instalments of Rs. 37.5 crores each from 31.3.2019 - 31.12.2021 - 4 quarterly instalments of Rs. 43.75 crores each from 31.3.2022 - 31.12.2022 - 2 quarterly instalments of Rs. 187.5 crores each from 31.3.2023 - 30.6.2023 (vi) Rs. 1,950 crores is repayable as under : - 10 Quarterly instalments of Rs. 25 Crore each from 30.6.2016 - 30.09.2018 - 10 Quarterly instalments of Rs. 50 Crore each from 31.12.2018 - 31.03.2021 - 4 Quarterly installmets of Rs. 125 Crore each from 30.06.2021 - 31.03.2022 - 2 Quarterly installments of Rs. 350 Crore each from 30.06.2022- 30.09.2022 (vii) Rs. 900 crores is repayable as under : - 8 quarterly instalments of Rs. 12.5 crores each from 30.6.2016 - 31.3.2018 - 12 quarterly instalments of Rs. 37.5 crores each from 30.6.2018 - 31.3.2021 - 4 quarterly instalments of Rs. 43.75 crores each from 30.6.2021 - 31.3.2022 - 2 quarterly instalments of Rs. 87.5 crores each from 30.6.2022 - 30.9.2022 (viii) Rs. 797.05 crores is repayable as under : - 16 quarterly instalments of Rs. 48 crores each from 31.12.2016 - 30.9.2020 - 1 quarterly instalments of Rs. 29.05 crores 31.12.2020 (ix) Rs. 350 crores is repayable as under : - 28 Quarterly instalments of Rs 12.5 Crores each from 30.09.2016 - 30.06.2023 TERMS OF REPAYMENT OF UNSECURED TERM LOANS Foreign currency term loan from banks of : (i) Rs. 994.99 crores is repayable in 3 equal instalments of Rs. 331.66 crores each on 02.04.2020, 21.9.2020 and 21.3.2021 (ii) Rs. 1,658.32 is repayable on 20.03.2020 (iii) Rs. 265.33 crores is repayable in 3 equal annual installments of Rs. 88.44 from 13.8.2019 to 13.8.2021 (iv) Rs. 572.59 crores is repayable as under: - Rs. 100.20 crores on 27.4.2018 - Rs. 229.04 crores on 27.4.2020 - Rs. 243.35 crores on 27.4.2021 (v) Rs. 1,492.49 crores is repayable on 26.6.2017. (vi) Rs. 82.98 crores is repayable in 20 semi annual installments of Rs. 4.15 crores each from 30.04.2017 to 31.10.2026 (vii) Rs. 24.82 crores is repayable in 17 semi annual installments of Rs. 1.40 crores each from 25.12.2016 to 25.12.2024 and an installment of Rs. 1.02 cRs. on 25.6.2025 (viii) Rs. 72.20 crores is repayable in 20 semi annual installments of Rs. 3.61 crores each from 30.11.2016 to 31.5.2026 (ix) Rs. 38.85 crores is repayable in 20 semi annual installments of Rs. 1.94 crores each from 30.10.2016 to 30.4.2026 (x) Rs. 91.92 crores is repayable in 16 half yearly instalments of Rs. 5.74 crores each from 30.9.2016 to 31.3.2024 (xi) Rs. 35.58 crores is repayable in 18 semi annual installments of Rs. 1.89 crores each from 25.9.2016 to 25.3.2025 and an installment of Rs. 1.56 cRs. on 25.9.2025 (xii) Rs. 37.75 crores is repayable in 18 semi annual installments of Rs. 2 crores each from 25.9.2016 to 25.3.2025 and an installment of Rs. 1.75 cRs. on 25.9.2025 (xiii) Rs. 47.11 crores repayable in 15 equal semi annual instalments of Rs. 3.04 crores each from 25.09.2016 to 25.03.2024 and a semi annual instalment of Rs. 1.53 crores on 25.09.2024 (xiv) Rs. 20.16 crores repayable in 13 equal semi annual instalments of Rs. 1.49 crores each from 25.09.2016 to 25.09.2022 and a semi annual instalment of Rs. 0.79 crores on 25.03.2023 (xv) Rs. 85.19 crores is repayable in 16 half yearly instalments of Rs. 5.32 crores each from 18.9.2016 to 18.3.2024. (xvi) Rs. 100.05 crores is repayable in 16 half yearly instalments of Rs. 6.25 crores each from 28.08.2016 to 28.02.2024 (xvii) Rs. 1,114.39 crores is repayable in 3 half yearly instalments of Rs. 371.46 crores each from 28.8.2016 to 27.8.2017. (xviii) Rs. 45.56 crores is repayable in 16 half yearly instalments of Rs. 2.85 crores each from 31.7.2016 to 31.1.2024. (xix) Rs. 243.92 crores is repayable in 3 yearly instalments of Rs. 81.31 crores each from 26.7.2016 to 26.7.2018. (xx) Rs. 309.21 crores is repayable in 14 half yearly instalments of Rs. 21.13 crores each from 19.7.2016 to 19.1.2023 and a half yearly instalment of Rs. 13.39 crores on 19.7.2023. (xxi) Rs. 227.92 crores is repayable in 14 half yearly instalments of Rs. 15.27 crores each from 19.7.2016 to 19.1.2023 and a half yearly instalment of Rs. 14.14 crores on 19.7.2023. (xxii) Rs. 89.36 crores repayable in 16 equal semi annual instalments of Rs. 5.36 crores each from 09.07.2016 to 09.01.2024 and a semi annual instalment of Rs. 3.60 crores on 09.07.2024 (xxiii) Rs. 189.87 crores repayable in 16 equal semi annual instalments of Rs. 11.44 crores each from 09.07.2016 to 09.01.2024 and a semi annual instalment of Rs. 6.83 crores on 09.07.2024 (xxiv) Rs. 606.84 crores is repayable in 11 half yearly instalments of Rs. 55.17 crores each from 31.05.2016 to 31.3.2021. (xxv) Rs. 58.19 crores repayable in 16 equal semi annual installments of Rs. 3.64 crores each from 15.06.2016 to 15.12.2023. (xxvi) Rs. 18.06 crores is repayable in 17 half yearly instalments of Rs. 1.06 crores each from 30.4.2016 to 30.4.2024 (xxvii) Rs. 528.83 crores is repayable in 15 half yearly instalments of Rs. 35.26 crores each from 30.04.2016 to 30.4.2023 5 Deferred Sales tax of Rs.92.86 crores is repayable in 65 varying monthly instalments starting from 31.1.2016 to 31.8.2021. . OTHER COMMITMENTS : (a) The Company from time to time provides need based support to subsidiaries and joint ventures entity towards capital and other requirements. (b) The Company has imported capital goods under the export promotion capital goods scheme to utilise the benefit of a zero or concessional customs duty rate. These benefits are subject to future exports within the stipulated period. Such export obligations at year end aggregate to Rs. 1,316.22 crores (brvious year Rs. 628.25 crores). 4. EXCEPTIONAL ITEMS COMPRISE PROVISION TOWARDS : a) (i) Rs. 982.37 crores (Rs. 333.75 crores for the year ended 31 March, 2015) for 'other than temporary' diminution in value of investments relating to JSW Steel USA Inc., JSW Panama Holding Corporation, and Periama Holding LLC, subsidiaries of the Company; (ii) Rs. 3,915.30 crores (Rs. nil for the year ended 31 March, 2015) for loans to the said subsidiaries and interest thereon considered doubtful of recovery; and (iii) Rs. 957.85 crores (Rs. nil for the year ended 31 March, 2015)*; towards certain guarantees for borrowings by the said subsidiaries, which provisions are recognised based on estimate of values of the businesses/ assets of the said subsidiaries by independent External Valuers and based on cash flow projections. In making the said projections, reliance has been placed on estimates in respect of future prices of coal and iron ore, mineable resources, and assumptions relating to operational performance including improvement in capacity utilisation of the plants and margins, and availability of infrastructure for mines. * amount used/unused amount reversed during the period ^ nil b) Pursuant to the order of the Honourable Subrme Court dated 24 September 2014 regarding cancellation of the allotment of coal blocks, the Company has made an assessment of investments in and loans and advances to the subsidiaries, joint ventures and associates affected by the said order and recognised provision of Rs. 4.19 crores (Rs. 21.20 crores for the year ended 31 March 2015) against carrying amount of investments as Exceptional Item during the year considering the principle of conservatism. c) Based on careful evaluation of estimated projections, the management has recognised provision for diminution of other than temporary nature of Rs. 0.74 crores (Previous year Rs. 41.35 crores) in the carrying amount of investment in certain subsidiaries as Exceptional Item during the year. 5. I n respect of certain investments/ loans and advances, following basis/assumptions/estimates have been considered in concluding that there is no further decline, other than temporary, in the value of the investments and that the loans / advances are fully recoverable: a) Equity shares of JSW Steel Bengal Limited, a subsidiary (carrying amount: Rs. 436.15 crores (net of provision) as at March 31, 2016). Evaluation of the status of its integrated Steel Complex (including power plant) to be implemented in phases at Salboni of district Paschim Medinipur in West Bengal by the said subsidiary, and the projections relating to the said complex considering estimates in respect of future raw material prices, foreign exchange rates, operating margins, etc. and the plans for commencing construction of the said complex. b) Equity shares of Peddar Realty Private Limited (PRPL) (carrying amount of investments: Rs. 56.72 crores (net of provision) as at March 31, 2016), and recoverability of loans of Rs. 158.18 crores as at March 31, 2016. Valuation by an independent valuer of the residential complex in which PRPL holds interest. c) Investment of Rs. 4.51 crores (net of provision) and loan of Rs. 112.42 crores as at March 31, 2016 relating to JSW Natural Resources Mozambique Limitada and JSW ADMS Carvo Limitada (step down subsidiaries). Assessment of minable reserves by independent experts and cash flow projections based on the plans to commence operations after mining lease arrangements are in place for which application has been submitted to regulatory authorities and infrastructure is developed. d) Equity shares of JSW Severfield Structures Limited, a joint venture (JV) (carrying amount: Rs. 115.44 crores as at March 31, 2016). Cash flow projections approved by the said JV which are based on estimates and assumptions relating to order book, capacity utilisation, operational performance, market prices of materials, inflation, terminal value, etc. (a) Pursuant to the requirement under Schedule II to the Companies Act, 2013 the Company has, based on the external technical advice, effective 1 April, 2015, identified components (significant parts) of the main asset having different useful lives as compared to the main asset and consequently revised the estimated useful lives of Plant & Machinery and Buildings. Accordingly, the debrciation charge for the year ended 31 March 2016 is lower by Rs. 499.07 crores, and amount of Rs. 109.98 crores (net of deferred tax) being effect of componentization, where the remaining useful life of the asset was determined to be nil, has been adjusted against the retained earnings as per transitional provision in Note 7 (b) of Schedule II. (b) Effective from 1 April 2014, the Company had reworked debrciation with reference to the estimated useful lives of fixed assets brscribed under Schedule II to the Act or useful life of fixed assets as per technical evaluation. As a result the charge for debrciation was lower by Rs. 207.30 crores for the year ended March 31, 2015. Pursuant to the transition provisions brscribed in Schedule II to the Companies Act, 2013, the Company had fully debrciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and had adjusted an amount of Rs. 47.29 crores (net of deferred tax) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus 7. Trade receivables include Rs. 159.54 crores (brvious year Rs.172.04 crores) recoverable from a customer towards supply of steel. The Company recovered an amount of Rs. 12.50 crores from the customer during the year ended 31 March 2016. Pursuant to the Consent Term, filed by the Company and the customer with the Honorable Bombay High Court and adopted by the Court as its order, the receivables of the Company shall be secured by a first ranking pari-passu charge over the fixed assets of the customer and shall be at par with other CDR lenders. The process of creating charge by the Company over the customer's certain fixed assets has been completed and the charge creation for the remaining fixed assets is under progress. Based on these developments, the Company is reasonably confident about the recoverability of the said amount 19. FIGURES OF THE brVIOUS YEAR ARE REGROUPED AND RECLASSIFIED WHEREVER NECESSARY TO CORRESPOND TO FIGURES OF THE CURRENT YEAR. For and on behalf of the Board of Directors SAJJAN JINDAL Chairman & Managing Director LANCY VARGHESE Company Secretary RAJEEV PAI Chief Financial Officer SESHAGIRI RAO M.V.S. Jt. Managing Director & Group CFO Place: Mumbai, Dated : 18 May 2016 |