(Rs. in crores)
 
                                     As at 30th    As at 30th 
                                     June, 2011    June, 2010
 
 1. Contingent liabilities not provided
 for in respect of:
 
 a) Claims by suppliers and third       62.95         15.97
 parties not acknowledged as debts
 
 b)     Excise and Custom Demands       14.64          9.03
 under dispute/appeal
 
 c)  Income Tax demands under appeal     3.86          3.38
 
 d) Sales Tax matters (under dispute/    1.63          1.63
 appeal)
 
 e) Bills  discounted  and  Bank      1160.73       1176.22
 Guarantees outstanding
 
 f) Corporate Guarantees issued to      66.99        290.44
 Financial Institutions and others on
 behalf of various bodies corporate
 
 g) Custom  Duty on import  of         115.32        213.94
 equipments and spare parts under
 EPCG-scheme.
 
 2.  Estimated amount of contracts     128.53         79.36
 remaining to be executed on
 Capital Account and not provided
 for [Net of Advances Rs. 8.87 crores
 (Rs. 13.00 crores)]
 
 2. Arrear Dividend (including tax)    813.33        748.32
 on Cumulative Redeemable
 Preference Shares for the period
 from 1999 - 2000 to the Balance
 Sheet date
 
 3.  Excise Duty & Cess on Stocks represents differential excise duty &
 cess on opening and closing stock of finished goods, saleable scrap and
 by-products.
 
 4.  a) The Company has entered into a Subscription cum Shareholders
 Agreement (SSA) with its promoters and JSW Steel Limited on December
 20,2010, pursuant to which, an amount of Rs. 2157 crores has been
 received by the Company during the year from JSW Steel Limited towards
 subscription to equity snares in the Company.
 
 In terms of the special resolution passed at the Extra Ordinary General
 meeting of the Company held on January 18,2011, the Company was
 authorized to issue 108,66,49,874 Equity Shares to JSW Steel Limited,
 on preferential basis, at a price of Rs. 19.85 per Equity Share,
 determined in terms of SEBI''s Issue of Capital and Disclosure
 Requirement (ICDR) Guidelines, Accordingly, the Securities Issue
 Committee of the Board of Directors of the Company, at its meeting held
 on January 24,2011, has allotted 108,66,49,874 Equity Shares of Rs. 10
 each at a premium of Rs. 9.85 per share to JSW Steel Limited.
 
 b) In terms of Regulations 10 and 12 of the Securities and Exchange
 Board of India (Substantial Acquisition of Shares and Takeovers)
 Regulations, 1997, JSW Steel Limited had made an open offer to the
 equity shareholders of the Company which opened on March 12,2011 and
 closed on April 5,2011.  Pursuant to the open offer, JSW Steel Limited
 has further acquired 8,99,40,890 Equity Shares of the Company.
 
 5. a) Pursuant to the provisions contained in Section 23 of the Sick
 Industrial Companies (Special Provisions) Act, 1985 (StCA), the Company
 held an Extra Ordinary General meeting on January 18, 2011 and informed
 the shareholders about the accumulated losses of the Company as at the
 end of the last financial year, i.e. June 30, 2010 being Rs. 2134.23
 crores, which led to erosion of more than fifty percent of the
 Company''s peak net worth of the immediately preceding four financial
 years. As required by the said provisions, the Company has also
 reported the fact of such erosion of net worth to the Board for
 Industrial and Financial Reconstruction (BIFR).
 
 b) As at the Balance sheet date, the accumulated losses of the Company
 stand at Rs. 3940.11 crores (Rs. 2134.23 crores) and the Shareholders''
 Fund amounts to Rs. 5082.17 crores (Rs. 2748.98 crores) [excluding
 revaluation reserve of Rs. 884.34 crores (Rs. 965.94 crores)].
 
 As stated in para 5 above, JSW Steel Limited has invested an amount of
 Rs. 2157 crores, during the year, towards equity shares in the Company.
 Infusion of the said funds would enable the Company to meet tts
 long-term working capital requirements and also achieve savings in
 interest cost. Besides achieving marketing synergies, the Company is
 also expected to make significant savings in raw material and energy
 costs. The Company has chalked out revised turnaround strategies which
 would enable generation of operational surpluses and adequate
 cash-flows to meet its requirement of additional funds in the near
 future, out of internal accruals. The Company has also made net profit
 (before exceptional items) in the last two quarters i.e. 1st January,
 2011 to 30th June, 2011. Moreover, the net worth of the Company, as at
 the balance sheet date, is positive.
 
 Accordingly, these financial statements have been drawn up as per the
 going concern assumption, which Is appropriate in the opinion of the
 management.
 
 6.  ''In-principle'' approval of the Stock Exdanges for the proposed
 preferential allotment of 11,33,06,895 Equity Warrants to promoters was
 not received by the Company due to non-receipt of lenders'' consent for
 ''lock-in'' of the pledged equity shares belonging to the Promoters. The
 Board of Directors, in its meeting held on December 20,2010, has
 cancelled the aforesaid preferential issue of Warrants and the amount
 of Rs. 18 crores, being application money received towards equity
 warrants, has been shown as current liabilities.
 
 7.  a) During the year, certain lenders, in terms of loan / facility
 agreements entered into with the Company, have opted for conversion
 into equity shares of their outstanding dues to the extent of Rs. 77.71
 crores comprising Rs. 39.91 crores towards principal and Rs. 37.80
 crores towards interest. Accordingly, the Board of Directors at its
 meeting held on November 24, 2010 has allotted 7,77,07,038 Equity
 Shares of Rs.10 each, at par, to these lenders, pursuant to Section
 81(3) of the Companies Act, 1956 read with Public Companies (Terms of
 Issue of Debentures and Raising of Loans with Option to Convert such
 Debentures or Loans into Shares) Rules, 1977.
 
 b) Pursuant to the approval of the CDR Empowered Group at its meeting
 held on January 12,2011 and subsequent notices given to the Company by
 certain lenders for conversion of part of their outstanding dues into
 equity shares in the Company, the Securities Issue Committee of the
 Board of Directors of the Company, at its meeting held on March 31,
 2011, had decided to allot 10,24,17,239 Equity Shares of Rs. 10 each at
 a premium of Rs. 4.74 per share aggregating to Rs. 150.96 crores to the
 respective lenders, subject to receipt of ''in-principle'' approval from
 the Stock Exchanges in terms of Clause 24(a) of the Listing Agreement.
 The ''in- principle'' approval of Bombay Stock Exchange Ltd. (BSE) has
 been received, while approval of National Stock Exchange of India Ltd.
 (NSE) is still awaited. Accordingly, the said amount of Rs. 150.96
 crores has been considered as ''Share Capital Suspense Account as at
 the Balance Sheet date. Pendbig receipt of ''In-principle'' approval from
 NSE, the company has paid interest of Rs. 4.76 crores on these
 outstanding dues to the lenders, till Balance Sheet date.
 
 8.  Exceptional items of Rs. 1160.62 crores represent the following
 provisions towards doubtful debts/ advances and diminution in the value
 of investments, Inventory etc:
 
 a) The Company had invested Rs. 110 crores in the equity of its wholly
 owned subsidiary, Ispat Energy Limited (IEL) for the purpose of setting
 up a captive power plant and had also given advances of Rs. 330.44
 crores, including unsecured loan of Rs. 28 crores, to IEL for
 development of the power plant project. IEL has carried out technical
 evaluation of the condition of the equipments acquired for the power
 project by an independent expert who has reported that the equipments,
 lying in the plant premises, are in poor condition and beyond economic
 repair / use and that any attempt to use the same may result in
 accidents during operation. Considering the above, the Board of
 Directors of IEL has decided not to pursue the above project.
 Accordingly, IEL has, based on the report of an independent valuer,
 valued the above plant, equipments, buildfng etc. at the net realizable
 value of Rs. 14 crores and charged the balance amount of Rs. 436.78
 crores to its Profit & Loss Account for the quarter ended 30th June,
 2011. As a consequence thereof, the company has made provision of Rs.
 110 crores in the accounts towards diminution in the value of its
 investments in IEL and has also made provision of Rs. 324.19 crores
 towards loans and advances made to IEL, not likely to be recoverable.
 
 Further, custom duty and interest thereon aggregating to Rs. 66.99
 crores, in respect of equipment imported for the above project under
 EPCG Scheme, have also been provided by I EL in its books of accounts
 for the quarter ended 30th June, 2011.
 
 b) The Company had made investments aggregating to Rs. 119.24 crores in
 earlier years in certain wholly owned subsidiaries overseas,
 incorporated for the purpose of acquisition and development of Iron Ore
 and Coal mines overseas. The Auditors of these subsidiaries have, in
 their reports on the financial statements for the year ended 31st
 March, 2011, expressed their inability to assess the value of the
 investments as wetl as the recoverability of loans and advances made by
 the respective subsidiaries.  Subsequently, in their accounts for the
 quarter ended 30th June, 2011, the respective subsidiaries have fully
 provided for the said investments and loans and advances aggregating to
 Rs.118.36 crores. Considering the provisions of Rs. 118.36 crores
 already made by the respective subsidiaries in their accounts for the
 quarter ended 30th June,.2011, with respect to the aforesaid
 investments and advances, and the negative net worth reported by the
 respective subsidiaries, the company has also made provision of Rs.
 119.24 crores in the accounts towards diminution in the value of its
 investments in the aforesaid wholly owned subsidiaries.
 
 c) Sundry debtors aggregating to Rs. 319.43 crores towards sale of Hot
 Rolled Coils/EAF Slag are due since long and no recovery has been made
 there against inspite of follow up by the company. In the meantime,
 these debtors have raised Claims on the Company towards alleged supply
 of defective materials, non-settlement of turnover discount and also
 substantial losses having been incurred by them due to stoppage of
 supply of materials to them as well as direct sale of material by the
 Company to their customers. Based on such claims, these parties have
 indicated that no amount is payable by them to the Company, while
 reserving their right to submit further claims in due course. Although
 the company intends to take appropriate action in the matter, as a
 matter of prudence and abundant caution, provision of Rs. 319.43 crores
 against the above debtors has been made in the accounts.
 
 d) Raw material valuing Rs. 104.83 crores procured against letter of
 credit is lying in transit overseas with a Stevedore since March 2010.
 As per the terms of contract, the seller was under an obligation to
 effect the first shipment of materials by May 2010 and the second
 shipment by June 2010. However, since the seller, has failed to ship
 the above materials till date, the company has invoked arbitration
 against the seller for breach of contract. Further, as a matter of
 abundant caution, full provision has been made in the accounts towards
 likely potential loss against the above materials.
 
 e) On completion of reconciliation of accounts with certain major
 suppliers of raw materials, an aggregate amount of Rs. 191.41 crores
 has been debited to certain parties being the amount recoverable orv
 account of payments made to them, earlier debited to the accounts of
 the aforesaid suppliers in the past.  However, in view of the disputes
 raised by these parties / non- availability of confirmations, the
 aforesaid sum of Rs.191.41 crores has been provided in the acfounts, on
 a conservative basis, pending further appropriate action in the matter.
 
 f) Other advances of Rs. 11.52 crores, as per details given below,
 being doubtful of recovery, have been fuRy provided in the accounts-
 
 i. Rs. 2.96 crores due from the Company''s subsidiary, Nippon Ispat
 Singapore (Pte) Limited.
 
 ii. Advance of Rs. 8.56 crores made to certain parties against supply
 of stores material/services, not confirmed and / or disputed by the
 respective parties.
 
 9.  In order to be eligible to treat one of the unit (300 MW) of JSW
 Energy Ltd.''s Ratnagiri unit as a captive unit for supply of power, the
 Company has acquired during the year equity shares of the market value
 of Rs. 163.29 crores of JSW Energy Ltd. and is In the process of
 entering into a ''Energy Wheeling Agreemenf with JSW Energy Limited to
 ensure long term power supply from them.
 
 10.  In terms of Accounting Standard - 22, net deferred tax assets
 (DTA) of Rs. 344.48 crores (Rs. 14.15 crores) has been recognised till
 31 st March, 2011 and, as a matter of prudence, the Company has not
 recognised DTA from 1st April, 2011 onwards. Consequently, DTA as on
 30th June, 201T stands at Rs. 1308.76 crores (Rs. 964.28 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.
 
 11.  a) Directors'' Remuneration aggregating to Rs. 3.31 crores (Rs.
 4.68 crores) for the year and Rs. 15.52 crores (Rs. 10.84 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 (MCA). The Company''s representation to the MCA for
 reconsidering the approvals granted for payment of remuneration to the
 Managing and other Whole time Directors has not been acceded to by MCA.
 The Company has initiated the process of recovering the above excess
 remuneration from respective directors/ex-director, and the recoverable
 amount appears under the head ''Loans and Advances'' in Schedule 13.
 However, the company has made a further representation to MCA for
 reconsideration of approvals granted by them.
 
 b) Directors'' Remuneration amounting to Rs. 0.91 crore for the period
 from 1st April, 2011 to 30th June, 2011 is payable to Vice Chairman &
 Managing Director as per the approval obtained in the Remuneration
 Committee and the Board of Directors of the company as well as approval
 obtained from shareholders of the Company, which is subject to further
 approval by the Ministry of Corporate Affairs (MCA). The Company is in
 the process of making necessary application to MCA for such approval.
 Pending such approval, a sum of Rs. 0.06 crore has been paid and
 charged to the Profit & Loss Account for the period 1st April, 2011 to
 30th June, 2011.
 
 c) Directors'' Remuneration amounting to Rs. 0.57 crore for the period
 from 1st February, 2011 to 30th June, 2011 is payable to a whole time
 director, as per approval obtained in the Remuneration Committee and
 Board of Directors of the Company, which is subject to further approval
 by the shareholders of the Company and by the Ministry of Corporate
 Affairs (MCA). The Company is in the process of obtaining such
 requisite approvals, pending which a sum of Rs. 0.10 crore has been
 paid and charged to the Profit & Loss Account for the period 1st
 February, 2011 to 30th June, 2011.
 
 12.  Sundry Debtors include Rs. 255.61 crores (Rs. 255.61 crores)
 recoverable from Peddar Realty Pvt. Ltd. towards sale consideration of
 landed property along with interest thereon upto 30th June, 2009. 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 on 18 February,
 2011.
 
 13.  The Income Tax Department had conducted a Search and Seizure
 operation in the Company''s premises on 30th November, 2010, under
 Section 132 of the Income Tax Act, 1961.No order/ demand, consequent to
 such operation, has so far been received by the Company from the Income
 Tax Department.
 
 14.  Other Income in Schedule 17 includes Rs. 219.82 crores (Rs. 244.96
 crores), being the gain arising on pre-payment of net present value of
 the Deferred Value Added/Sales Tax liability of Rs. 267.98 crores (Rs.
 297.98 crores) payable in future years, in terms of Section 94(2) of
 Maharashtra Value Added Tax Act 2002 read with Rule 84 of Maharashtra
 Value Added Tax Rules, 2005.
 
 15. 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.
 
 16.  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 on March 31,2011 .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 is required to be recognised in the books of
 accounts. The ''value in use'' is computed based on the management''s
 latest operational and profitability projections, which have been
 extrapolated till the remaining useful life of the respective assets.
 The cash flows have been discounted using a pre-tax discount rate that
 reflects current market assessments of the time value of money and
 risks specific to the asset.
 
 17. (a) The quantum of mark to market losses on all outstanding
 derivatives contracts amounts to Rs. 29.59 crores (Rs. 22.68 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 year-end represent the
 following:
 
 i. For minimizing the risk of currency exposure, the Forward Cover
 Contracts of US$ NIL (US$ 5,750,000) are on trade receivables, US$
 80,540,273 (US$ 76,897,418) on trade payables and US$ 36,345,500 (US$
 38,499,500) on long term loan from a bank.
 
 ii. Outstanding Principal only Swap contracts for INR / ¥ (Japanese
 Yen) for ¥ 1,868,631,051 [INR / ¥ (Japanese Yen) for ¥ 1,868,631,051]
 at various strike price together with a right to receive differential
 interest on the notional principal amount.
 
 18.  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.
 
 The following tables summarise the components of net benefit/ expense
 recognised in the Profit & Loss Account and balance sheet for the
 respective plans.
 
 19.  Related Party Disclosures:
 
 (a) Name of the related parties:
 
 Enterprise having significant influence over the Company
 
 JSW Steel Ltd. (w.e.f. 24th January, 2011)
 
 Subsidiary Companies
 
 Nippon Ispat Singapore (Pte) Ltd.
 
 Erebus Ltd.
 
 Arima Holdings Ltd.
 
 Lakeland Securities Ltd.
 
 Ispat Energy Ltd.
 
 Rewa Infrastructures Pvt. Ltd. (ceased w.e.f. 16th November, 2010)
 
 Ispat Jharkhand Steels Ltd.
 
 Associate Companies
 
 Kalyani Mukand Ltd.  Drum International Inc.  Minandes S.A.
 
 Joint Venture Company
 
 Amba River Coke Ltd. (ceased w.e.f. 14th February, 2011)
 
 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 (Ceased w.e.f. 16* April, 2011)
 
 Mr. Anil Sureka
 
 Mr. B. K. Singh
 
 Mr. Rajesh Asher (w.e.f. 1s'' May, 2011)
 
 Mr. Ashok Aggarwal (w.e.f. 1st April, 2011)
 
 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.
 
 Navoday Management Services Ltd.
 
 Navoday Consultants 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.
 
 Navdisha Real Estate (P) Ltd.
 
 Balasore Alloys Ltd.
 
 Geetapuram Port Services Ltd. (upto 19m July, 2009)
 
 Peddar Realty (P) Ltd.
 
 Chattisgarh Energy Ltd.
 
 Rewa Infrastructures Pvt. Ltd. (w.e.f. 16,h November, 2010)
 
 Radiant Stars International Ltd.  
 
 Shinning Stars Ltd.
 
 Chancellor Build Estate (P) Ltd.
 
 E-Star Exchange (P) Ltd.
 
 North East Natural Resources (P) Ltd.
 
 Central India Power Company Ltd.
 
 20.   Segment Information:
 
 i) Business Segment: The Company is 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.
 
 21.  The Company''s current accounting year is from 1st July 2010 to
 30th June 2011, whereas the previous accounting year was for fifteen
 months ended 30th June, 2010. Accordingly, the current year''s figure
 being for twelve months ended 30th June 2011, are not comparable with
 those of the previous period.
 
 22.  The name of Company stands changed from Ispat Industries Limited
 to JSW ISPAT Steel Limited with effect from 28th June, 2011.
 
 23.  Previous period''s figures including those in brackets have been
 rearranged / regrouped wherever considered necessary.