Jindal Steel & Power

1.  Contingent Liabilities not provided for in respect of :
 
 (Rs. in Crores)
 
 Description                                   Current       Previous
                                               Year          Year
 
 a) Guarantees issued by the Companys 
 Bankers on behalf of the Company              332.91       352.92
 b) Letter of credit opened by banks         1,315.35       932.67
 c) Corporate guarantees / undertakings 
 issued on behalf of thirdp arties.            126.41        46.68
 d) Disputed Excise Duty and Other demands     213.77        30.69
 e) Future liability on account of lease 
 rent for unexpired period.                       -           0.20
 f) Bonds executed for machinery imports 
 under EPCG Scheme                           1,103.10       716.45
 g) Income Tax demands where the cases are 
 pending at various stages of appeal with the   109.81       42.25 
 authorities
 
 2.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances): Rs.4,517.09 crores
 (previous year Rs.5,399.48 crores)
 
 3.  In accordance with the guiding principles enunciated in Accounting
 Standard (AS-29) ‘Provisions, Contingent Liabilities and Contingent
 Assets’ and based on management assessment, the Company has made a
 provision for contingencies on account of duties and taxes payable
 under various laws. At the beginning of the financial year, there was
 an outstanding provision of Rs.107.49 crores (previous year Rs. 66.58
 crores). The Company made an additional provision of Rs.48.53 crores
 during the year (previous year Rs. 40.91 crores) and the amount
 utilized during the year was Nil (Previous year Nil). At the end of the
 financial year, there is an outstanding provision of Rs.156.02 crores
 (previous year Rs.107.49 crores).
 
 4.  One of the Company’s expansion units at Raigarh (Chhatisgarh) is
 eligible for sales tax exemption owing to its investment in capita
 assets under the State industrial policy which aims towards the
 objective of industrialization of the State and development of backward
 areas. The period of exemption is linked to the quantum of investment.
 The Company has been advised that the element of sales tax included in
 the sales price of products sold out of this Unit is in the nature of
 sales tax subsidy granted by the State Government. Accordingly, the
 same amounting to Rs.50.04 crores (previous year Rs. 81.59 crores) has
 been credited during the year to Sales Tax Subsidy Reserve Account. The
 cumulative amount credited to Sales Tax Subsidy Reserve Account up to
 31st March 2009 is Rs. 131.63 crores.
 
 5.  a) Provision for current income tax and fringe benefits tax has
 been made considering various benefits and allowances available to the
 Company under the provisions of the Income Tax Act, 1961.
 
 6.  Additions / (Adjustments) to Plant and Machinery/Capital
 work-in-progress includes adjustment of Rs.377.39 crores (previous year
 Rs. (9.48 crores)) on account of foreign exchange fluctuation on
 long-term liabilities relating to acquisition of Fixed Assets.
 
 7.  The Company has, during the current year, in terms of the Notifi
 cation issued by the Ministry of Corporate Affairs, Government of
 India, relating to Accounting Standard (AS-11) dated 31.03.2009,
 decided to exercise the option of accounting for Exchange diff\erences
 arising on reporting of long term foreign currency monetary items at
 rates different from those at which they were initially recorded during
 the period or reported in the previous financial statements in so far
 as they relate to the acquisition of depreciable capital assets by
 addition to/ deduction from the cost of the asset and depreciate the
 same over the balance life of the asset. Accordingly, exchange losses
 accounted for during the year 2007-08 amounting to Rs. 79.97 crores
 have been reversed during the current year and adjusted from the cost
 of fixed assets with corresponding adjustment to general reserve.
 Depreciation on fixed assets relating to the above amounting to Rs.
 0.01 crores has also been adjusted during the current year. The current
 year exchange losses amounting to Rs. 205.03 crores have also been
 accordingly adjusted to the cost of fixed assets, the impact of
 depreciation thereon being Rs.0.01 crores.
 
 8.  Donations include NIL (previous year Rs. 0.05 crores) to Jharkhand
 Pradesh Congress Committee and Rs.0.02 crores (previous year Nil) to
 Keonjhar District Congress Committee as contribution to political
 parties.
 
 9.  Sales / Adjustments in gross block and depreciation under Schedule
 5 includes the assets taken out of active use during the financial year
 of Rs. NIL and Rs. NIL (Previous year Rs. 61.56 crores and Rs. 59.17
 crores ) respectively. The resultant net block of Rs. NIL (Previous
 year Rs. 2.40 crores) has been considered under inventory of stores &
 spares.
 
 Diff erence between net book value at the time the assets were taken
 out of active use and the estimated net realizable value amounting to
 Rs. NIL (Previous year Rs. 29.05 crores) has been charged under
 depreciation for the year and amounting to Rs. NIL (Previous year Rs.
 8.85 crores) has been charged to previous year expenses owing to the
 assets dedicated for social cause.
 
 10.  On 25.07.2005, the Company established the Employees Stock Option
 Scheme – 2005 (ESOS -2005 or plan) which was modified on 27.09.2006.
 Under the Scheme, the Company is authorized to issue up to 55,00,000
 (Fifty five lacs) [originally 11,00,000 (Eleven lacs)] equity settled
 options of Re1/- each (originally Rs.5/- each) to employees (including
 employees of the subsidiary company). A Compensation Committee has been
 constituted by the Board of Directors of the Company to administer the
 Scheme.
 
 Pursuant to Clause 5.3 (f) of SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme) Guidelines, 1999 and para 18 of
 Employees Stock Option Scheme –2005 of the Company, the Compensation
 Committee is authorized to make a fair and reasonable adjustment to the
 number of options and to the exercise price in respect of options
 granted to the employees under the Scheme in case of corporate actions
 such as right issue, bonus issue, merger etc. The shareholders of the
 Company have in their meeting held on 27.12.2007 approved sub-division
 of the face value of each equity share of Rs.5/- into 5 equity shares
 of Re.1/- each.  Accordingly, the Compensation Committee has, in their
 meeting held on 27.01.2008, increased the number of maximum options
 that can be issued under the Employees Stock Option Scheme –2005 to
 55,00,000 (Fifty five lacs) [originally 11,00,000 (Eleven lacs)] and
 the exercise price has been reduced in case of Series I to Rs 203,
 Series II to Rs 225 and Series III to Rs 364 per equity share of Re.
 1/- each fully paid up.
 
 On 26.11.2005, the Company granted 42,97,000 (Forty two lacs ninety
 seven thousand) [originally 8,59,400 (Eight lacs fifty nine thousand
 four hundred)] stock options (Series – I) to its employees (including
 employees of the subsidiary Company). Out of the above stock options,
 19,12,907 (Nineteen lacs twelve thousand nine hundred seven)
 [originally 3,82,581 (Three lacs eighty two thousand five hundred
 eighty one)] have lapsed and during the year, the Company has allotted
 6,91,343 (Six lacs ninety one thousand three hundred forty three)
 Equity Shares of Rs. 1/- each and 16,92,750 (Sixteen lacs ninety two
 thousand seven hundred fi fty) [originally 3,38,550 (Three lacs Thirty
 Eight thousand Five hundred fi fty)] stock options are outstanding as
 on 31.03.2009.
 
 Further, on 02.09.2006, the Company granted stock options of 6,47,750
 (Six lakh forty seven thousand seven hundred fifty) [originally
 1,29,550 (One lakh twenty nine thousand five hundred fifty)] options
 (Series – II) to its employees (including employees of the subsidiary
 company). Out of the above stock options, 2,71,500 (Two Lacs Seventy
 One thousand Five Hundred) [originally 54,300 (Fifty Four thousand
 Three hundred) have lapsed and 3,76,250 (Three lacs seventy six
 thousand two hundred fifty) [originally 75,250 (Seventy five thousand
 two hundred fifty) stock options are outstanding as on 31.03.2009.
 
 Further, on 27.04.2007, the Company granted stock options of 6,84,750
 (Six lakh eighty four thousand seven hundred fifty [originally 1,36,950
 (One lakh thirty six thousand nine hundred fifty)] options (Series –
 III) to its employees (including employees of the subsidiary company).
 Out of the above stock options, 1,88,000 (One lacs eighty eight
 thousand) [originally 37,600 (Thirty seven thousand six hundred)] have
 lapsed and 4,96,750 (Four lacs ninety six thousand seven hundred fifty)
 [originally 99,350 (Ninety nine thousand three hundred fifty)] stock
 options are outstanding as on 31.03.2009.
 
 11.  The Company has unquoted investment of Rs. 1071.88 crores in body
 corporates (Previous year Rs. 994.67 crores). Considering that the fall
 in the value of some of the investments had been a continuing one, the
 management had made a provision for diminution in the value of
 investments of Rs 11.54 crores during the earlier years. Based on the
 financial position of the investee companies, the management is of the
 view that the provision created as aforesaid is adequate.
 
 12.  In the opinion of the Board, Current Assets, Loans and Advances
 have a value on realisation in the ordinary course of business at least
 equal to the amount at which they are stated and provision for all
 known liabilities has been made.
 
 13.  The Company has so far not received information from vendors
 regarding their status under the Micro, Small and Medium Enterprises
 Development Act, 2006 and hence disclosure relating to amounts unpaid
 as at the year-end together with interest paid / payable under this Act
 have not been given.
 
 14.  In the previous year, dividend proposed and corporate dividend tax
 thereon relating to the shares under ESOP was made on the basis of
 options vested but not exercised till the end of the financial year.
 Provision made in respect of options lapsed and not exercised in the
 current year has been adjusted with dividend proposed for the year
 ended on 31st March, 2009.
 
 15.  The Company has not made provision for Corporate Dividend Tax on
 the amount of dividend proposed for the year ended on 31st March, 2009
 since the same has been considered as a set-off against corporate
 dividend tax payable by a subsidiary company on the interim dividend
 declared by it for the same financial year.
 
 16.  Related party disclosure as required by Accounting Standard
 (AS–18) issued by the Institute of Chartered Accountants of India:
 
 A.  List of Related Parties and Relationships
 
 a) Subsidiaries, Step down Subsidiaries, Associates and Joint ventures
 Subsidiaries
 
 1.  Jindal Power Limited ( JPL)
 
 2.  Jindal Minerals & Metals Africa Limited (JMMAL)
 
 3.  Jindal Steel & Power (Mauritius) Limited (JSPML)
 
 4.  Jindal Steel Bolivia SA (JSB)
 
 5.  Chhattisgarh Energy Trading Company Limited (CETCL)
 
 Step-down Subsidiaries
 
 1.  Jindal Hydro Power Limited, a subsidiary of JPL
 
 2.  Jindal Power Transmission Limited, a subsidiary of JPL
 
 3.  Jindal Power Distribution Limited, a subsidiary of JPL
 
 4.  Power Plant Engineers Limited, a subsidiary of JPL
 
 5.  Jindal Petroleum Limited, a subsidiary of JPL
 
 6.  Jindal Petroleum (Mauritius) Limited, a subsidiary of Jindal
 Petroleum Limited
 
 7.  Jindal Petroleum (Georgia) Limited, a subsidiary of Jindal
 Petroleum (Mauritius) Limited
 
 8.  Jindal Minerals and Metals Africa Congo SPRL, a subsidiary of JMMAL
 
 9.  Trans Atlantic Trading Limited, a subsidiary of JSPML
 
 10.  PT Jindal Overseas, a subsidiary of JSPML
 
 11.  Vision Overseas Limited, is a subsidiary of JSPML
 
 12.  Jubilant Overseas Limited, a subsidiary of JSPML
 
 13.  Affi liate Overseas Limited, a subsidiary of JSPML
 
 14.  Skyhigh Overseas Limited, a subsidiary of JSPML
 
 15.  Harmony Overseas Limited, a subsidiary of JSPML
 
 16.  Jindal Power LLC, a subsidiary of JSPML
 
 17.  Jindal Steel & Power LLC, a subsidiary of JSPML
 
 18.  Jindal Mining Industry LLC, a subsidiary of JSPML
 
 19.  JSPL Mozambique Minerals LDA, a subsidiary of JSPML
 
 20.  Enduring Overseas Limited, a subsidiary of JSPML
 
 21.  Jindal Mining & Exploration Limited, a subsidiary of JSPML
 
 22.  Jindal Investment Holdings Limited, a subsidiary of JSPML
 
 23.  Jindal Africa Investments (Pty) Limited, a subsidiary of JSPML
 
 24.  Osho Madagascar SARL, a subsidiary of JSPML
 
 25.  Rolling Hills Resources LLC, a subsidiary of JSPML
 
 26.  Worth Overseas Limited(WOL), a subsidiary of JSPML
 
 27.  Gas to Liquids International S.A., a subsidiary of WOL
 
 Associates and Joint ventures
 
 1.  Nalwa Steel & Power Limited, formerly known as Nalwa Sponge Iron
 Limited
 
 2.  Shresht Mining and Metals Private Limited, incorporated Joint
 Venture
 
 3.  Globleq Singapore Pte. Limited
 
 4.  Saras Mineracao De Ferro SA
 
 5.  Jindal Coal to Liquid Limited
 
 b) Key Management Personnel:
 
 1.  Shri Naveen Jindal (Exec.Vice Chairman & Managing Director)
 
 2.  Shri Vikrant Gujral (Vice Chairman & CEO)
 
 3.  Shri Anand Goel (Deputy Managing Director)
 
 4.  Shri Sushil K. Maroo (Whole Time Director upto 17.06.2008)
 
 5.  Shri Ashok Alladi (Whole Time Director from 01.12.2008)
 
 6.  Shri Arun K. Mukherji (Executive Director)
 
 c) Enterprises over which Key Management Personnel and their relatives
 exercise signifi cant infl uence and with whom transactions have taken
 place during the year:
 
 1.  Nalwa Sons Investment Limited
 
 2.  Jindal Stainless Limited
 
 3.  Jindal Saw Limited
 
 4.  India Flysafe Aviation Limited
 
 5.  Gagan Sponge Iron Limited
 
 6.  Opelina Finance and Investment Limited
 
 7.  Jindal System Private Limited
 
 8.  Jindal Coal Private Limited
 
 9.  Advance Sporting Arms Private Limited
 
 10.  Minerals Mangement Services (India) Limited
 
 11.  Jindal Rex Exploration Private Limited
 
 12.  Yno Finvest Private Limited
 
 13.  Uttam Vidyut Transmission Private Limited
 
 14.  Bir Plantation Private Limited
 
 17. Advances recoverable in cash or in kind or for value to be received
 includes Rs. Nil (previous year Rs.0.14 crores) being the amount due
 from directors/offi cers of the Company. Maximum amount outstanding at
 any time during the year was Rs. 0.14 crores (previous year Rs. 0.17
 crores)
 
 18.  Previous Year fi gures have been regrouped and/or rearranged
 wherever considered necessary to facilitate comparison with Current
 Year figures.