SIGNIFICANT ACCOUNTING POLICIES A) BASIS OF brPARATION OF FINANCIAL STATEMENTS The financial statements have been brpared under the historical cost convention, in accordance with the generally accepted accounting principles as adopted consistently by the Company and the provisions of the Companies Act, 2013 . All income and expenditure items having a material bearing on the financial statements are recognized on accrual basis, except in respect of insurance claims and Liquidated damages, where the exact quantum can not be ascertained. B) SALES a] The Sales are inclusive of Excise Duty but net of Sales Tax. b] Revenue in respect of Service/ Works Contracts is recognized based on the Work performed and invoiced as per the terms of specific Contracts. c] Revenue in respect of sale of goods is recognized either on delivery or on transfer of significant risk and rewards of ownership of the goods. d] Incentives on exports and other Government incentives are recognised in books after due consideration of certainty of utilization/receipt of such incentives. C) FIXED ASSETS a) VALUATION OF FIXED ASSETS i] Tangible Fixed Assets are stated at cost of acquisition [net of CENVAT/ Value Added Tax credit] inclusive of all incidental expenses related thereto except Land, Building and Plant and Machinery in respect of Pipe Division, at Kosi Kalan, Mathura which have been stated at revalued amount as a result of their revaluation. ii] Software which is not an integral part of related hardware is classified as an intangible asset and is stated at cost. iii] Iron Ore Mines Development expenditure is capitalised and is debrciated over the useful life of mines or lease period whichever is less, subject to maximum of five years. iv] The overburden removal cost [Stripping cost] is capitalised and amortized in the ratio of Iron Ore extracted during the year to Iron Ore Reserve of each block for a planned period of five years. Stripping cost towards short extraction than the plan is provided for in the Statement of Profit & Loss. v] Mines Restoration Expenditure is provided for in the Statement of Profit & Loss based on estimated expenditure required to restore mines and the same is reviewed periodically on the basis of technical assessment. b) DEbrCIATION AND AMORTISATION i] Debrciation on Fixed Assets is provided on Straight Line Method as per life brscribed and in accordance with Schedule II of the Companies Act, 2013 as amended up to date. ii] Debrciation on revalued fixed assets is computed on Straight Line Method as per life and in accordance with life brscribed in Schedule II to the Companies Act, 2013, as amended up to date and additional debrciation on account of revaluation is adjusted to Revaluation Reserve Account. iii] Leasehold assets are amortized over the lease period. iv] Intangible fixed assets are amortized over a period of 5 years. c) EXPENDITURE DURING CONSTRUCTION PERIOD FOR NEW PROJECTS /EXPANSION CUM MODERNIZATION PROJECTS Expenditure which are directly attributable to identified assets and incurred during the construction period are included under capital work-in-progress, till the completion of the project. Expenditure which are not directly attributable to an identified asset forming part of a project, including interest on borrowed funds, are carried to br-operative expenses, till the completion of the project. On completion of the project, capital work in progress along with br-operative expenses is carried to respective fixed assets. d) IMPAIRMENT OF ASSETS An asset is considered as impaired when at the date of Balance Sheet there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs exceeds its recoverable amount [i.e. the higher of the net asset selling price and value in use].The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss. The impairment loss recognized in the prior accounting period is reversed if there has been a change in the estimate of recoverable amount. Post impairment, debrciation is provided on the revised carrying value of the impaired asset over its remaining useful life. D) VALUATION OF INVENTORIES Inventories are valued at the lower of cost and net realizable value except scrap, which is valued at net realizable value. The cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their respective brsent location and condition. Cost is computed on the weighted average basis. E) INVESTMENTS Long-term investments are stated at cost. When there is a decline other than temporary in their value, the carrying amount is reduced on an individual investment basis and decline is charged to the Statement of Profit and Loss. Appropriate adjustment is made in carrying cost of investment in case of subsequent rise in value of investments. Current investments are carried at lower of cost or fair market value. F) BORROWING COSTS Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized [net of income on temporarily deployment of funds] as part of the cost of such assets and other borrowing costs are recognized as expense in the period in which these are incurred. G) FOREIGN EXCHANGE TRANSACTIONS Foreign currency transactions are recorded at the exchange rate brvailing at the date of transaction. Monetary foreign currency assets and liabilities are translated at the year end exchange rates. All exchange differences are dealt with in the Statement of Profit and Loss, except [i] in case of long term liability, where they relate to acquisition of fixed assets,they are adjusted to the carrying cost of such assets [ii] to the extent that they are regarded as an adjustment to the interest cost and the resultant balance for new projects ,till the date of capitalization, are carried to br-operative expenses. In case of forward foreign exchange contracts, exchange difference are dealt within the Statement of Profit and Loss over the life of the contract, except as mentioned in [ii] supra. Non monetary foreign currency items are carried at historic costs. In the case of foreign branches, being integral foreign operations, revenue items are converted at the average rate brvailing during the year. All assets and liabilities are converted at rates brvailing at the end of the year. Exchange Gain/Loss arising on conversion is recognized in the Statement of Profit and Loss. Gain or loss on reinstatement of the forward exchange transaction or on cancellation of forward exchange contracts, if any, is reflected in the Statement of Profit and Loss or capitalized till the date of installation of such fixed asset. The Company follows the principles of AS 30, "Financial Instruments : Recognition and Measurement" with regard to forward and option contracts, to the extent it does not conflict with existing accounting standards, other authoritative pronouncements of the Company Law and other regulatory requirements. H) CONTINGENT LIABILITIES Contingent liabilities are not provided for in the Accounts but are separately disclosed by way of a note. I) EMPLOYEE BENEFITS a] Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related services are rendered. b] Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense in the year in which the employees have rendered services. c] The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. Actuarial gains and/or losses are recognized as and when incurred. J) GOVERNMENT GRANTS Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. Government Grant of the nature of promoters' contribution are credited to capital reserve and treated as a part of shareholders funds. K) TAXATION a] Current tax provision is computed for Income calculated after considering allowances and exemptions under the provisions of the applicable Income Tax Laws. b] Deferred tax is computed at the current rate of tax to the extent of temporary timing differences that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets is recognized only when there is virtual certainty of sufficient taxable profit in future. 2. The Company's manufacturing facility at Nashik has been granted "Mega Project Status" by Government of Maharashtra and therefore is eligible for Industrial Promotion Subsidy [IPS] under Packaged Scheme of Incentive [PSI] 2007. The purpose of the Packaged Scheme of Incentive [PSI] 2007 is for intensifying and accelerating the process of dispersal of industries to the less developed regions and promoting high tech industries in the developed areas of the state coupled with the object of generating mass employment opportunities. Modalities of payment of IPS consists of the following: a. Electricity Duty exemption for a period of 7 years from the date of commencement of commercial production- from 10 September, 2009 to 09 September, 2016 b. 100% exemption from payment of Stamp duty. c. VAT and CST payable to the State Government [on sales made from Nashik plant, within a period of 7 years starting from 10 September, 2009]. IPS will be payable so as to restrict up to 75% of the Eligible Fixed Capital investments made from 13 September, 2007 to 10 September, 2009 . The Eligibility Certificate issued allows maximum Fixed Capital Investment of Rs.350 crores and restricts IPS to 75% of Rs.350 crores i.e. Rs. 262.50 crores. In terms of the Accounting Standard [AS 12] "Accounting for Government Grants" brscribed under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies [Accounts], Rules, 2014, eligible incentive of Rs. 1,929.57 lacs [Previous Year Rs.1,749.96 lacs] is considered to be in the nature of promoters' contribution and has been credited to Capital Reserve. 3. Exceptional items rebrsents net loss on reinstatement/settlement of foreign currency monetary items other than long term foreign currency monetary items related to acquisition of debrciable assets. 4. The Company has exercised the option in financial year 2011-12 for accounting of the exchange differences arising on long term foreign currency monetary items in line with Companies [Accounting Standard [Second Amendment] Rules, 2011 dated 29th December, 2011 relating to Accounting Standard [AS-11] notified by Central Government w.e.f. 1st April, 2011. Accordingly it has capitalized the exchange difference on long term foreign currency loans related to acquisition of debrciable assets. 5. The Company's significant leasing arrangements are in respect of operating leases for brmises-residential and offices. These leasing arrangements are cancellable. The aggregate lease rentals payables are charged as rent. 6. The Company has unquoted investments of Rs.91,107.73 lacs [Previous Year Rs. 72,260.47 lacs] and Share Application Money of Rs.2,029.36 lacs [ Previous Year Rs.3,949.67 lacs ] in Subsidiary Companies, which have accumulated losses as per the latest available Balance Sheet and certain other unquoted investments where the fair value [amount unascertained] is lower than the cost, considering the long term strategic investments and future prospects, such diminution, in the opinion of the management, has been considered to be of temporary nature and hence no provision for the same is considered necessary. 7. An amount of Rs. 40,594.78 lacs [Previous Year Rs. 5,403.48 lacs] is outstanding from Subsidiary companies, which have accumulated losses. Having regard to the long- term involvement and future prospects, no provision is considered necessary towards these outstandings. 8. Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any, which is not likely to be material, will be adjusted at the time of confirmation. 9. [a] The company has provided sponsor's undertakings to lenders of the projects being sponsored by its wholly owned subsidiary namely Jindal ITF Limited. Major terms of the undertakings envisage investment/buy back of equity/instruments, retention of major equity in subsidiary company, supporting the projects for shortfall in debt servicing and in the eventuality of any cost overrun. [b] Company has given guarantees/ indemnities for its step down subsidiary Company namely Jindal Saw Italia S.p.A [JSI] favoring supplier/lessor for [i] Inventory purchase by JSI, [ii] towards plant performance/upkeep, and [iii] employees benefits; total amounting to Rs. 2902.95 lacs [ Previous Year Rs. 8,419.42 lacs]. [c] Some of the subsidiaries of the Company have privately placed various instruments including 9.25% -Compulsorily Convertible Debentures of Rs. 8,000 lacs, 0%- Compulsorily Convertible Debentures of Rs. 8,060 lacs and Redeemable Non Convertible Debentures aggregating to Rs. 28,130 lacs all aggregating to Rs. 44,190 lacs. The subscribers of such instruments have put option to require the Company to purchase the securities at the Put Option Price within the time period as per the terms of the agreement/s which is sbrad over a period ending June, 2017. The estimated amount of put option of such securities as per the terms of the agreement/s is Rs. 52,354.08 lacs as on 31st March, 2015 [ brvious year Rs. 64,245.19 lacs]. 10. During the year company spent Rs. 524.93 lacs on Corporate Social Responsibility Activities as per Section 135 of the Companies Act, 2013 read with schedule III, as detailed below: 11. Debrciation for the year ended 31st March, 2015 has been provided for based on useful life brscribed in Schedule II of the Companies Act, 2013. During the brvious year ended 31st March, 2014, the debrciation was charged at the rates brscribed under Schedule-XIV of the Companies Act, 1956. As a result, the debrciation charge for the year ended 31st March, 2015 is higher by Rs. 646.43 lacs. Also debrciation of Rs. 1071.04 lacs [net of deferred tax of Rs.566.83 lacs] where useful life of assets is nil is adjusted against opening balance of retained earnings. 12. In the opinion of the Management, the realizable value of assets other than fixed assets and long term investments, in the ordinary course of business, would not be less than the amount at which they are stated. 13. Details of Loans given, Investment made and Guarantees given, covered U/S 186[4] of the Companies Act, 2013: - Loans given and Investment made are given under the respective heads - Corporate Guarantees have been issued on behalf on subsidiary companies, details of which are given in related parties transactions at Note No. 44. 15. Previous year figures have been regrouped/rearranged, wherever considered necessary. 16. Notes 1 to 55 are annexed and form integral part of Financial Statements. As per our report of even date attached For N. C. Aggarwal & Co. Chartered Accountants Firm Registration No. 003273N Neeraj Kumar Group CEO & Whole-time Director Sminu Jindal Managing Director DIN : 01776688 DIN : 00005317 N. C. Aggarwal Partner M.No. 005951 Sunil K. Jain Company Secretary M.No. FCS 3056 N. K. Agarwal Vice President [Corp. Accounts & Taxation] & CFO Place : New Delhi Dated : 7th May, 2015 |