A.  During the period, the Company has fully redeemed the remaining
 portion of Rs 81.03 crores with respect to 8% Non-Convertible
 Debentures of the face value of Rs. 427.78 crores, which were secured
 by a first legal mortgage/equitable mortgage on the Companys immovable
 properties and pari-passu first charge by way of hypothecation of all
 the moveable properties of the Company (save and except book debts)
 including moveable machinery, machinery spares, tools and accessories
 both present and future, subject to prior charges created in favour of
 the Companys bankers on the stock of raw materials, finished goods,
 work in process, consumable stores and book debts for securing
 borrowings for working capital requirements.
 
 The trustees for debenture holders have released the above securities
 on redemption of debentures.
 
 B.  (i) The Rupee and Foreign Currency Term Loans from Financial
 Institutions and Banks, are secured by way of equitable mortgage
 
 by deposit of title deeds of the Companys immovable properties at
 Geetapuram (Dolvi) and by mortgage of leasing rights in the immovable
 properties at Kalmeshwar (Nagpur) both in the State of Maharashtra and
 a first charge by way of hypothecation of the Companys movables (save
 and except book debts) including movable machinery, machinery spares,
 tools and accessories, (both present and future), subject to prior
 charges created in favour of the Companys bankers on the stock of raw
 materials, finished goods, process stock, consumable stores and book
 debts for securing working capital facilities.
 
 (ii) The above Term Loans are also secured by way of english mortgage
 of the title in the Landed property at Mumbai, which was sold by the
 Company to Peddar Realty Pvt Ltd (PRPL) in an earlier year. The
 Companys title is subject to the rights and interest of PRPL. The
 indenture of mortgage has been jointly signed by the Company and PRPL.
 These term loans are further secured by the corporate guarantee and
 pledge of entire shareholdings of PRPL.
 
 (iii) All the mortgages and charges created in favour of the Financial
 Institutions and Banks rank pari-passu inter se, except where
 specifically stipulated otherwise.
 
 (iv) A second charge on the fixed and current assets has been created
 in favour of the working capital lenders and term loan lenders
 respectively.
 
 (v) Term Loans are also secured by the pledge of a part of the
 shareholding of the promoters as well as by the personal guarantees of
 Mr. Pramod Mittal and Mr. Vinod Mittal, directors of the Company. Term
 loans aggregating to Rs. 143 crores (Rs. 143 crores) are also secured
 by personal guarantee of Mr. M. L. Mittal, a former director of the
 Company.
 
 (vi) Term Loans of Rs. 143.68 crores (Rs 143.68 crores) are further
 secured by the Corporate Guarantee of Navoday Consultants Ltd.
 
 C.  Cash Credit and other working capital facilities from Banks are
 secured by the hypothecation of raw materials, finished goods, process
 stock, consumable stores, book debts, etc. (both present and future),
 and second charge over the entire fixed assets of the Company.  The
 working capital facilities from banks, are also secured by personal
 guarantees of Mr. Pramod Mittal and Mr. Vinod Mittal, directors of the
 Company. A part of the cash credit and other facilities from Punjab
 National Bank and Bank of India are also secured by personal guarantee
 of Mr. M. L. Mittal, a former director of the Company.
 
 D.  Term Loans aggregating to Rs. 869.68 crores (Rs. 118.99 crores) are
 repayable within one year.
 
 
                                                   (Rs in crores)
 
 1.  Contingent liabilities not provided 
 for in respect of:                          As at 30th   As at 31st 
                                             June, 2010   March, 2009
 
 a) Claims against the Company not 
 acknowledged as debts                           15.97      25.65
 
 b) Excise and Custom Demands under 
 dispute/ appeal                                  9.03       1.48
 
 c) Income Tax demands under appeal               3.38       3.66
 
 d) Sales Tax matters (under dispute/appeal)      1.63       1.68
 
 e) Letters of Credit, Bills discounted and 
 Bank Guarantees outstanding                    250.66     216.17
 
 f) Corporate Guarantees issued to 
 Financial Institutions and others on
 behalf of various bodies corporate             290.44     370.44
 
 g) Custom Duty on import of equipments 
 and spare parts under
 EPCG-scheme (including Rs 38.22 crores 
 (Rs 38.22 crores) relating to
 Ispat Energy Ltd., a subsidiary company)       213.94     229.05
 
 2.  Estimated amount of contracts 
 remaining to be executed on Capital
 Account and not provided for [Net of 
 Advances Rs 13.00 crores (Rs 18.95 crores)]     79.36      85.12
 
 3. Arrear Dividend (including tax) on 
 Cumulative Redeemable Preference
 Shares for the period from 1999-2000 to 
 the balance sheet date                         748.32     658.48
 
 4. a) In respect of cancellable operating leases, the significant
 leasing arrangements relate to premises (residential, office, etc.) and
 oxygen plant, which are renewable by mutual consent and lease rentals
 payable are accordingly charged as Rent & Hire under Schedule 20.
 
 5.  The Company has given undertakings to financial institutions not to
 dispose off its shareholding in Ispat Profiles India Ltd. till its loan
 is repaid in full.
 
 6.  Excise Duty & Cess on Stocks represents differential excise duty &
 cess on opening and closing stock of finished goods, saleable scrap and
 by-products.
 
 7.  Certain promoters of the Company were allotted 11,32,44,580 equity
 warrants, on preferential basis, on 18th April 2008, pursuant to the
 then applicable SEBI (Disclosure and Investor Protection) Guidelines,
 2000. The said promoters have not exercised the right to apply for
 equity shares within the stipulated period of 18 months from the date
 of allotment of Equity Warrants. Consequently, in accordance with the
 said SEBI Guidelines, the entitlement of the warrant holders to apply
 for equity shares has expired on 17th October 2009 and the aggregate
 amount of Rs 51.98 crores received towards the issue of equity warrants
 has been forfeited and credited to capital reserve account.
 
 8.  In terms of the special resolution passed at the Extra Ordinary
 General meeting of the members of the company on 15th May, 2010, the
 Company is authorized to issue 11,33,06,895 Equity Warrants to the
 eligible promoters, on preferential basis within a period of 15 days
 from the date of passing of the Resolution or within a period of 15
 days from the date of obtaining requisite approvals, if any, whichever
 is later. The Company has made application to the Stock Exchanges for
 in-principle approval, which is awaited as on date. Each equity
 warrants can be converted into one equity shares of Rs 10/- each of the
 Company within a period of eighteen months from the date of allotment,
 at the option of warrant holders. In accordance with the applicable
 guidelines of SEBI, the price of each equity shares of Rs 10/- each,
 arising upon conversion of the equity warrant, has been determined at
 Rs 20.58. The Company has received cheque for Rs 18 crores towards part
 of the subscription amount payable in respect of such equity warrants,
 upto 30th June 2010 which have since been encashed.
 
 9.  During the period, the company has redeemed 12% Cumulative
 Redeemable Preference Shares amounting to Rs. 17.14 crores which is in
 excess of the proceeds of fresh issue of equity warrants made for the
 purpose of redemption. There is also no credit balance in the Profit &
 Loss Account which can otherwise be available for distribution of
 dividends. Thus, the above redemption of preference shares, neither
 being out of fresh issue of shares nor out of Profit & Loss Account
 credit balance, is not in line with Section 80 of the Companies Act,
 1956.
 
 10.  The Company has adjusted net foreign exchange gain of Rs 241.12
 crores arisen during the period (loss of Rs 519.14 crores), on long
 term foreign currency monetary items relating to acquisition of
 depreciable capital assets, to the carrying amount of the respective
 assets and loss of Rs 0.61 crore (loss of Rs 11.87 crores) relating to
 other cases to Foreign Currency Monetary Item Translation Difference
 Account.
 
 11.  During the period, certain lenders have funded interest of Rs.
 235.72 crores on long term borrowings falling due for one year from
 January 2009 onwards, while certain other lenders have extended new
 long term credit facilities of Rs. 403.17 crores to the company.  These
 loans are repayable in 48 equal monthly instalments commencing from
 April, 2013.
 
 The new credit arrangements are divided into two parts namely Series-I
 aggregating to Rs. 371.98 crores, under which lenders have a right to
 convert outstanding loans into equity as per applicable laws at any
 time during the currency of the loan and Series-II aggregating to Rs.
 266.91 crores under which lenders have a right to convert outstanding
 loans into equity as per applicable laws on occurrence of certain
 specified events of default, which during the period has already
 occurred due to non-achievement of financial closure for certain
 projects (power and coke oven), non-payment of loans and interest
 thereon to the extent of Rs 74.61 crores as on the balance sheet date
 to term loan lenders within 60 days of the relevant due dates etc.
 
 In terms of the above, the lenders have a right to convert loans
 aggregating to Rs 638.89 crores into equity as on the Balance Sheet
 date.
 
 12.  (a) In terms of Accounting Standard - 22, net deferred tax assets
 (DTA) of Rs 14.15 crores (Rs 338.81 crores) has been recognised during
 the period and consequently DTA as on June 30, 2010 stands at Rs 964.28
 crores (Rs 950.13 crores). There is carried forward unabsorbed
 depreciation and business losses as at the Balance Sheet date. However,
 based on the future profitability projections, the Company is virtually
 certain that there would be sufficient taxable income in future, to
 claim the above tax credit.
 
 13.  Sundry Debtors include Rs 255.61 crores (Rs 247.73 crores)
 recoverable from Peddar Realty (P) Ltd. towards sale consideration of
 landed property along with interest upto June 30, 2009 thereon. The
 management is certain about the realization of the total outstanding
 amount based on the current value of above property as per the
 valuation carried out by a reputed independent valuer as on 29th March,
 2010.
 
 14.  Raw materials inventory includes Rs 104.83 crores being the value
 of materials procured through State Trading Corporation against letters
 of credit and lying in transit, overseas with a Stevedoring Agent since
 March, 2010. The management expects these materials to be received by
 30th November, 2010.
 
 15.  Directors remuneration aggregating to Rs.4.68 crores (Rs.9.71
 crores) for the period and Rs.10.84 crores (Rs.4.57 crores) paid in
 earlier years to the Managing and Other Whole Time Directors, is in
 excess of the limit specified under Section 198 of the Companies Act,
 1956 as well as the approvals received from the Ministry of Corporate
 Affairs during the period, vide its various letters dated 27th April,
 2010, 30th April, 2010, 3rd May, 2010 and 4th May, 2010. Thus, the
 above excess remuneration is liable to be recovered from the
 Managing/Whole time directors. However, no accounting adjustment has
 been made in the accounts for the above amount recoverable from the
 Managing/Whole time Directors, as the company has made a representation
 to the Ministry of Corporate Affairs for reconsideration of its
 approvals, which is pending as on date.
 
 16.  Other Income in Schedule 17 includes Rs 244.96 crores (Rs 285.87
 crores), being the gain arising on pre-payment of deferred Value Added
 / Sales Tax liability, in terms of Section 94(2) of Maharashtra Value
 Added Tax Act 2002 read with Rule 84 of Maharashtra Value Added Tax
 Rules 2005. Based on the computation made as per the said Scheme, the
 Company has paid Rs 53.02 crores (Rs. 67.89 crores), equivalent to the
 net present value of the deferred Value Added / Sales Tax liability of
 Rs 297.98 crores (Rs 353.76 crores) payable in future years and the
 balance amount of Rs 244.96 crores (Rs 285.87 crores) has been taken to
 profit & loss account, being the gain accrued on such pre-payment.
 
 17.  Advances recoverable in Schedule 13 include Regulatory Liability
 Charges (RLC) amounting to Rs 117.63 crores (Rs 170.33 crores) due from
 Maharashtra State Electricity Distribution Company Limited (MSEDCL) as
 on the balance sheet date. In terms of Tariff Orders issued by
 Maharashtra Electricity Regulatory Commission (MERC) from time to time,
 a sum of Rs 52.70 crores (Rs 31.24 crores) has, however, been received
 against such RLC dues, during the period.
 
 18.  Power charges are net of Rs 73.94 crores (Rs Nil) being the refund
 received/receivable from Maharashtra State Electricity Distribution
 Company Ltd (MSEDCL) against additional supply charges collected by
 MSEDCL during the period from October 2006 to May 2008, in terms of the
 order dated 9th November, 2009 from Maharashtra Electricity Regulatory
 Commission (MERC).
 
 19.  A Captive Power Plant is being installed by Ispat Energy Ltd
 (IEL), a wholly owned subsidiary Company. The Company has given
 advances of Rs 340.34 crores (Rs 337.50 crores) as on the balance sheet
 date, which includes unsecured loan of Rs 28 crores (Rs 28 crores). The
 management is certain about the realisation of the above amount in due
 course, after the plant is commissioned.
 
 21.  During the period, the Company has entered into a Joint Venture
 Agreement to set up a Coke Oven Project of the annual capacity of 1.0
 Million Tons at its Dolvi steel complex. The Company will have a 26%
 interest in the assets, liabilities, revenue and expenses of Amba River
 Coke Limited (JV Company), which has been incorporated in India.
 
 22.  In terms of Accounting Standard 28 Impairment of Assets issued
 by the Institute of Chartered Accountants of India, the management has
 carried out the impairment test during the period. The carrying value
 of each cash generating unit (CGU) is lower than their respective
 recoverable value, arrived at based on their value in use and hence,
 no impairment charge has been recognised in the books of accounts. The
 value in use is computed based on the managements latest operational
 and profitability projections, which have been extrapolated till the
 remaining useful life of the respective assets. The cash flows have
 been discounted at an appropriate rate representing the weighted
 average cost of capital of the Company.
 
 23.  The management is in the process of reconciling outstanding
 balance of Rs 1137.17 crores (Rs 1001.40 crores) appearing as on the
 balance sheet date with respect to certain major suppliers of raw
 materials. The management does not expect any material impact on the
 financial statements on account of such reconciliation.
 
 24.  As at the Balance sheet date, the accumulated losses of the
 Company stand at Rs 2134.23 crores (Rs 1832.15 crores) and the
 Shareholders fund amounts to Rs 2748.98 crores (Rs 2798.53 crores)
 [excluding revaluation reserve of Rs 965.94 crores (Rs 1070.44
 crores)].
 
 The business plan and profitability estimates have been noted by the
 Board of Directors at its meeting held on 11th May, 2009. These
 projections reflect that the Company would be in a position to generate
 positive cash flows and operational surplus in the near future.
 Further, the net worth of the company as at 30th June, 2010 is
 positive.
 
 Considering the strategic plans and the future profitability
 projections, these financial statements have been drawn up as per the
 going concern assumption, which is appropriate in the opinion of the
 management.
 
 Board for Industrial and Financial Reconstruction (BIFR) vide its Order
 dated 31st December 2009 has communicated to the Company that the
 accumulated losses of the Company as on 31st March 2009 exceeds 50% of
 its peak net-worth of last 4 years and hence, the Company is
 potentially sick under the provisions of Sick Industrial Companies
 (Special Provisions) Act, 1985. However, the Appellate Authority for
 Industrial & Financial Reconstruction (AAIFR) vide its Order dated 25th
 March 2010 has subsequently granted an interim stay with respect to the
 above BIFR order which has been further extended and is presently in
 force.
 
 25.  (a) The quantum of mark to market losses on all outstanding
 derivatives contracts amounts to Rs 22.68 crores (Rs 18.89 crores) as
 at the balance sheet date, which has been duly provided for in the
 accounts in line with principle of prudence.
 
 (b) Derivative instruments outstanding at the period-end represent the
 following:
 
 i. For minimizing the risk of currency exposure, the Forward Cover
 Contracts of US$ 5,750,000 (US$ 5,000,000) are on trade receivables,
 US$ 76,897,418 (US$ 28,873,214) on trade payables and US$ 38,499,500
 (US$ 45,692,000) on long term loan from a bank.
 
 ii. Outstanding Principal only Swap (POS) contracts for INR / ¥
 (Japanese Yen) for ¥ 1,868,631,051 at various strike price [INR / ¥
 (Japanese Yen) for ¥ 1,868,631,051] together with a right to receive
 differential interest on the notional principal amount.
 
 26.  Gratuity and other post-employment benefit plans :
 
 The Company provides for gratuity and leave liabilities on the basis of
 actuarial valuation. The Company does not have any fund for Gratuity
 liability and the same is accounted for as provision.
 
 27.  Related Party Disclosures:
 
 (a) Name of the related parties:
 
 Subsidiary Companies
 
 Nippon Ispat Singapore (Pte) Ltd.  Ispat Energy Ltd.  Erebus Ltd.
 Arima Holdings Ltd.  Lakeland Securities Ltd.  Rewa Infrastructures
 Pvt. Ltd.  Ispat Jharkhand Steels Ltd.
 
 Associate Companies
 
 Kalyani Mukand Ltd.  Drum International Inc Minandes S.A.
 
 Joint Venture Company Amba River Coke Ltd. (w.e.f. 8th May 2009)
 
 Key Management Personnel and their Relatives
 
 Mr. M L Mittal (Father of Mr. Pramod Mittal and Mr. Vinod Mittal)
 
 Mr. Pramod Mittal
 
 Mr. Vinod Mittal
 
 Mr. Vinod Garg
 
 Mr. Anil Sureka
 
 Mr. B K Singh
 
 Mr. Yadvendra Sahai
 
 Mrs. Natasha Mittal Saraf (Daughter of Mr. Vinod Mittal)
 
 Mr. Atulya Mittal (Son of Mr. Vinod Mittal)
 
 Enterprises over which Key Management Personnel / Share Holders /
 Relatives have significant influence
 
 Navoday Exim (P) Ltd.
 
 (formerly Ispat Holdings (P) Ltd.)
 
 Navoday Management Services Ltd.
 
 (formerly Ispat Finance Ltd.)
 
 Navoday Consultants Ltd.
 
 (formerly Mudra Ispat Ltd.)
 
 Denro Holding (P) Ltd.
 
 Mita Holdings (P) Ltd.
 
 Goldline Tracom (P) Ltd.
 
 Gontermann Peipers India Ltd.
 
 Kartik Credit (P) Ltd.
 
 Ushaditya Trading (P) Ltd.
 
 (formerly Ushaditya Investments (P) Ltd.)
 
 Navdisha Real Estate (P) Ltd.
 
 (formerly Kanoria Plastokem (P) Ltd.)
 
 Elephanta Gases Ltd.
 
 Geetapuram Port Services Ltd. (upto 19th July 2009)
 
 Peddar Realty (P) Ltd.
 
 Chattisgarh Energy Ltd.
 
 Radiant Stars International Ltd.
 
 Shinning Stars Ltd.
 
 Chancellor Build Estate (P) Ltd.
 
 E-Star Exchange (P) Ltd.
 
 North East Natural Resources (P) Ltd. (w.e.f 31st July 2009)
 
 32.  Segment Information:
 
 i) Business Segment: The Company is primarily engaged in the business
 of manufacture and sale of Iron and Steel products.
 
 ii) Geographical Segment: The Company primarily operates in India and
 therefore the analysis of geographical segment is based on the areas in
 which customers of the Company are located.
 
 28.  The Company has extended its accounting year from 31st March 2010
 to 30th June 2010. Accordingly, the current years figure being for
 fifteen months period ended 30th June 2010, are not comparable with
 those of the previous year.
 
 29.  Previous years figures including those in brackets, have been
 rearranged / regrouped wherever considered necessary.