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HOME   >  CORPORATE INFO >  NOTES TO ACCOUNT
Notes Of Account      
 
Year End: March 2015

Note No. 1 Significant Accounting Policies

i) Basis of Preparation of Financial Statements

The financial statements are brpared under the historical cost convention, on accrual basis of accounting, in accordance with the generally accepted accounting principles in India as applicable, accounting standards notified under section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014 and the other relevant provisions of the Companies Act, 2013.

ii) Use of Estimates

The brparation of financial statements requires use of estimates and assumptions to be made that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

iii) A) Fixed Assets & Debrciation

a) Fixed Assets

Fixed Assets are stated at their cost of acquisition / construction less accumulated debrciation and impairment losses. Cost comprises of all cost, net of income (if any), incurred to bring the assets to their brsent location and working condition and other related overheads till such assets are ready for intended use. Assets vested in the company pursuant to the Scheme of Arrangement & De-merger are stated at their fair market values based on the valuation report of financial consultant.

b) Debrciation

Debrciation on Fixed Assets is provided on Straight Line Method over their useful lives and in the manner specified in Schedule II of the Companies Act, 2013. However, in respect of certain Plant & Machinery and Electric Installation, debrciation is provided as per their useful lives assessed on the basis of technical evaluation by the external valuer, ranging from 20 to 25 years.

c) Assets not owned by the Company are amortised over a period of ten years.

d) Lease Hold Assets are amortised over the period of lease.

e) Classification of plant & machinery into continuous and non-continuous is made on the basis of technical assessment and debrciation is provided for accordingly.

B) Intangible Assets

Intangible Assets are stated at cost which includes any directly attributable expenditure on making the asset ready for its intended use. Intangible Assets are amortised over the expected duration of benefit or 10 years, whichever is lower.

C) Impairment

Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount. Post impairment, debrciation is provided on the revised carrying value of the asset over its remaining useful life.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

iv) Revenue Recognition

Revenue is recognized when it is earned and no significant uncertainty exists to its realization or collection.

Revenue from sale of goods: is recognized on delivery of the products, when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred and no effective ownership is retained.

Revenue from other activities: is recognized based on the nature of activity, when consideration can be reasonably measured. Certain claims like those relating to Railways, I nsurance, Electricity, Customs, and Excise are accounted for on acceptance/when there is a reasonable certainties.

v) Borrowing Costs

Borrowing costs attributable to the acquisition /construction of qualifying assets are capitalized as part of cost of such assets and other borrowing costs are recognized as expense in the period in which these are incurred.

vi) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange brvailing on the date of the transactions. Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year end rate.

The difference in translation of Monetary assets and liabilities and realized gains and losses on foreign exchange transaction are recognized in statement of profit & loss except of loan/liability related with acquisition of debrciable fixed asset where the same is treated as cost of the asset.

Foreign currency gain/loss relating to translation of net investment in non-integral foreign operation is recognized in the foreign currency translation reserve.

Premium/Discount on forward foreign exchange contracts are pro-rated over the period of contract.

vii) Investments

Long term investments are carried 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 & Loss. Appropriate adjustment is made in carrying value of investment in case of subsequent rise in value of investments. Current Investments are carried at lower of cost or market value.

viii) Valuation of Inventories

Inventories are valued at the lower of cost and net realisable value except scrap which is valued at net realisable value. The cost is computed on Weighted Average basis. Finished goods and Work in Progress includes cost of conversion and other overheads incurred in bringing the inventories to their brsent location and condition.

ix) Employee Benefits

a) Short term Employee Benefits

Short term employee benefits are recognized during the year in which the services have been rendered and are measured at cost.

b) Defined Contribution Plans

The Provident Fund and Employee's State Insurance are defined contribution plans and the contributions to the same are expensed in the statement of Profit and Loss during the year in which the services have been rendered and are measured at cost.

c) Defined Benefit Plans

The Provident Fund (Funded), Leave Encashment and Gratuity are defined benefit plans. The Company has provided for the liability at year end based on actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses are recognized as and when incurred.

d) Employee Stock Option Scheme

The excess of market price on the date of grant over the exercise price is recognized as deferred compensation expenses amortized over the vesting period on a straight- line basis, as per the accounting treatment brscribed by the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India.

x) Miscellaneous Expenditure

a) Preliminary expenses are written off over the period of ten years.

b) Bonds issue expenses and brmium on redemption are written off over the expected duration of benefit or life of the bonds, whichever is earlier.

c) Mines development expenses incurred for developing and brparing new mines are written off over the period of expected duration of benefits or ten years, whichever is earlier.

xi) Taxation

Provision is made for income-tax liability in accordance with the provisions of Income-Tax Act, 1961.

Deferred tax resulting from timing differences between book profits and tax profits is accounted for applying the tax rates and laws that have been enacted or substantively enacted till the Balance Sheet date.

Deferred Tax Assets arising from timing differences are recognized to the extent there is a reasonable/virtual certainty that the assets can be realized in future.

xii) Management of Metal Price Risk/ Derivatives

Risks associated with fluctuations in the price of the raw material metal are mitigated by hedging on futures/option market. The results of metal hedging contracts/transactions are recorded upon their settlement as part of raw material cost.

Risk of movements in the interest rates, foreign currencies are hedged by derivatives contract such as Interest Rate Swaps, Currency Swaps, Forward Contracts and Currency Options.

All outstanding derivative instruments at year end are marked-to-market by type of risk and the resultant losses, if any, are recognized in the statement of Profit & Loss /Pre-operative expenses, gains are ignored.

xiii) Government Grants

Government Grants are recognized when there is a reasonable assurance that the same will be received. Revenue grants are recognized in the Statement of Profit and Loss. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to Capital Reserve.

xiv) Earnings Per Share

The Company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard 20 "Earnings per Share". Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

xv) Leases

a) Finance Leases

Assets acquired under finance leases are recognised as an asset and a liability at the commencement of the lease at the lower of the fair value of the assets and the brsent value of minimum lease payments. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Assets given under finance leases are recognised as receivables at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment.

b) Operating Leases

Operating lease receipts and payments are recognized as income or expense in the statement of profit and loss on a straight-line basis over the lease term.

27. Composite Scheme of Arrangement

1. A Composite Scheme of Arrangement (here in after referred to as 'Scheme') amongst Jindal Stainless Limited (the Company/Transferor

Company) and its three wholly owned subsidiaries namely Jindal Stainless (Hisar) limited (JSHL), Jindal United Steel Limited (JUSL) and

Jindal Coke Limited (JCL) under the provision of Sec 391-394 read with Sec 100-103 of the Companies Act, 1956 and other relevant provision of Companies Act, 1956 and / or Companies Act, 2013 has been sanctioned by the Hon'ble High Court of Punjab & Haryana,

Chandigarh vide its Order dated 21st September 2015, modified by order dated 12th October, 2015. The Schemes inter-alia includes:-

a) Demerger of the Demerged Undertakings (as defined in the scheme) of the Company comprising of the Ferro Alloys Division located at Jindal Nagar, Kothavalasa (AP) and the Mining Division of the Company and vesting of the same in Jindal Stainless (Hisar) Limited (JSHL) w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2014. (Section I of the Scheme)

b) Transfer of the Business undertaking 1 (as defined in the scheme) of the Company comprising of the Stainless Steel Manufacturing Facilities of the Company located at Hisar, Haryana and vesting of the same with Resultant Company (JSHL) on Going Concern basis by way of Slump Sale along with investments in the domestic subsidiaries (listed in Part B of schedule 2 of the Scheme) of the company w.e.f. appointed date i.e. close of business hours before midnight of 31st March, 2014. (Section II of the Scheme)

c) Transfer of the Business undertaking 2 (as defined in the scheme) of the Company comprising, inter-alia, of the Hot Strip Plant of the Company located at Odisha and vesting of the same in Jindal United Steel Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section III of the Scheme)

d) Transfer of the Business Undertaking 3 (as defined in the Scheme) of the Company comprising, inter-alia ,of the Coke Oven Plant of the Company Located at Odisha and vesting of the same with Jindal Coke Limited on Going Concern basis by way of Slump Sale w.e.f. appointed date i.e. close of business hours before midnight of March 31, 2015. (Section IV of the Scheme)

Section I and Section II of the Scheme became effective on 1st November, 2015, operative from the said appointed date as stated in sub-para (a) and (b) above and Section III and Section IV (for section III and IV appointed date as stated in sub-para (c) & (d) above) of the Scheme will become effective on receipt of necessary approvals from the OIIDCO or any other concerned authorities for transfer/ grant of the right to use in the land on which Hot Strip & Coke Oven Plants are located as specified in the Scheme.

2. Pursuant to the Section I and Section II of the Scheme becoming effective:

a) Demerged Undertakings and Business undertaking 1 has been transferred to and vested in JSHL with effect from the said Appointed Date and the same has been given effect to in these accounts.

b) The difference of Rs. 58,512.65 Lacs between the book values of assets and liabilities pertaining to the Demerged Undertakings transferred has been adjusted against Security Premium Account.

c) Share capital of JSHL comprising of 250000 equity shares having face value of Rs. 2 each, 100% held by the Company deemed to has been cancelled. Accordingly the said investment amounting to Rs. 5.00 Lacs has been charged off in the Statement of Profit & Loss and has been included under Exceptional Item.

d) Business Undertaking 1 (as defined in sub-para (b) of 1 above) has been transferred at a lump sum consideration of Rs. 280,979.52 Lacs; out of this Rs. 260,000.00 lacs shall be paid by JSHL and Rs. 20,979.52 Lacs has been adjusted against sum of Rs. 57,598.19 lacs lying payable to JSHL in the books of the Company.

Against the balance amount of Rs. 36,618.67 Lacs, the company is to issue equity shares to JSHL at a price to be determined with the record date to be fixed as specified in the Scheme. Pending allotment the same has been shown as "Share Capital Suspense Account".

e) On transfer of Business Undertaking 1, the differential between the book values of assets & liabilities transferred and the lump sum consideration received as stated above amounting to Rs. 116,021.85 Lacs has been credited in the Statement of profit & loss and included under Exceptional Item. (Note no. 30)

f) In terms of the Scheme, all the business and activities of Demerged Undertakings and Business Undertaking 1 carried on by the company on and after the appointed date, as stated above, are deemed to have been carried on behalf of JSHL. Accordingly, necessary effects have been given in these accounts on the Scheme becoming effective.

g) The necessary steps and formalities in respect of transfer of properties, licenses, approvals and investments in favour of JSHL and modification of charges etc. are under implementation. Further transfer of Mining Rights to Demerged Undertakings (as referred in para 1 (a) above) is subject to necessary approvals of the concerned authorities.

3. Pursuant to the Scheme the effects on the financial statements of operations carried out by the company for on behalf of JSHL post the said appointed date have been given in these accounts from the effective date (for the close of business hours before midnight of 31st March, 2014) are as summarised below :

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