1.  Corporate information
 
 MSP Steel & Power Limited is a public company domiciled in India and
 incorporated under the provisions of the Companies Act, 1956. Its
 shares are listed on two stock exchanges in India. The company is
 engaged in the manufacture and sale of iron and steel products and
 generation and sale of power.
 
 terms/ rights attached to equity shares
 
 The Company has only one class of equity shares having a nominal value
 of Rs. 10/- per share. Each holder of equity shares is entitled to one
 vote per share. The Company declares and pays dividends in Indian
 rupees. The dividend proposed by the Board of Directors is subject to
 the approval of the shareholders in the ensuing Annual General Meeting.
 
 During the year ended 31st March, 2012, the dividend per share
 recognised as proposed distributions to equity shareholders is Rs. 0.25
 (31st March, 2011: Rs. 0.50).
 
 In the event of liquidation of the Company, the holders of equity
 shares will be entitled to receive remaining assets of the Company,
 after distribution of all preferential amounts. The distribution will
 be in proportion to the number of equity shares held by the
 shareholders.
 
 terms/rights attached to preference shares
 
 The Company has only one class of preference shares (i.e.  6% non
 cumulative redeemable preference shares) having a nominal value of Rs.
 10/- per share. The preference shareholders shall have the right to
 vote on any resolution of the Company directly affecting their rights.
 The Company declares and pays preferential dividends in Indian rupees.
 
 The preference share of the Company are non cumulative in nature and
 therefore in case the Company does not declare dividend in any
 particular year, dividend right gets lapsed and is not eligible for
 carry forward in future years.
 
 During the year, the Company has issued 1,254,000 (31st March, 201 1:
 7,540,000) numbers of preference shares of Rs. 10 each in the same class
 with a premium of Rs. 90 per share on private placement basis.
 
 During the year ended 31st March, 2012, the dividend per share
 recognised as proposed distributions to preference shareholders is Rs.
 0.60 (31st March, 2011: Rs. 0.60).
 
 Preference shares are redeemable within 20 years from the date of
 allotment at a price to be decided by the Board of Directors at the
 time of redemption.
 
 In the event of liquidation of the Company, the holders of preference
 shares will be entitled to receive assets of the Company, before its
 distribution to equity shareholders. The distribution will be in
 proportion to the number of preference shares held by the preference
 shareholders.
 
 NOTE 2. SHARE APPLICATION MONEY PENDING ALLOTMENT
 
 Terms and Conditions relating to Share Application Money pending
 allotment
 
 a.  The Company has issued a special notice dated 31st March, 2012 to
 its shareholders in terms of section 192 (A) of the Companies Act 1956,
 read with Company (Passing of the Resolution by the Postal Ballot)
 Rules 2011, proposing to issue 10,000,000 equity shares to promoter and
 non-promoter group on preferential basis in accordance with Chapter VII
 of the Securities and Exchange Board of India (Issue of Capital and
 Disclosure Requirements) Regulations, 2009 (the ''SEBI ICDR
 Regulations'') through postal ballot. Out of the total proposed shares
 to be issued, the Company has received share application money against
 5,301,667 equity shares considering the proposed issue price of Rs. 60/-
 each (including a premium of Rs. 50/- per share).
 
 b.  The Company expects to allot the proposed equity shares before July
 2012.
 
 c.  The Equity Shares to be allotted on preferential basis at a price
 of Rs. 60/- (including a premium of Rs. 50/- per share) or the price as
 determined in accordance with SEBI (Issue of Capital and Disclosure
 Requirements) Regulations 2009 whichever is higher and on such terms
 and conditions as may be decided and deemed appropriate by the board at
 its sole and absolute discretion.
 
 d.  The Equity shares so issued and allotted shall rank pari passu in
 all respects with the existing Equity Shares of the company. The Equity
 Shares so issued and allotted shall be listed and traded on all the
 Stock Exchanges on which the existing equity shares of the Company are
 Listed.
 
 e.  The Company has sufficient authorised share capital to cover the
 share capital amount on allotment of shares out of aforesaid share
 application money.
 
 Nature of security:
 
 * Rupee Term Loans from Banks are secured by way of equitable mortgage
 of Company''s land and immovable properties at Raigarh, first charge by
 way of hypothecation of the Company''s movable assets (save and except
 book debts) including movable machinery, machinery spares, tools and
 accessories, (both present and future), second charge over entire
 current assets of the company , (both present and future), on pari
 passu basis. The term loans are further secured by the personal
 guarantees of Puranmal Agrawal (the Chairman), Suresh Kumar Agrawal,
 Saket Agrawal and Manish Agrawal (Directors of the Company).
 
 ** Foreign Currency Loans from Banks are secured by way of equitable
 mortgage of Company''s land and immovable properties at Raigarh, first
 charge by way of hypothecation of the Company''s movable assets (save
 and except book debts) including movable machinery, machinery spares,
 tools and accessories, (both present and future), second charge over
 entire current assets of the company, (both present and future), on
 pari passu basis. The term loans are further secured by the personal
 guarantees of Puranmal Agrawal (the Chairman), Suresh Kumar Agrawal,
 Saket Agrawal and Manish Agrawal (Directors of the Company).
 
 *** Hire purchases obligations are secured by hypothecation of vehicles
 purchased under the respective agreements.
 
 Terms and conditions attached to Short term borrowings
 
 Cash Credit and other working capital facilities and Foreign currency
 loans from banks are secured by hypothecation of raw materials,
 finished goods, goods under process, stores and spares, book debts etc.
 (both present and future), second charge over the entire fixed assets
 of the Company and personal guarantees of Puranmal Agrawal (the
 Chairman), Suresh Kumar Agrawal, Saket Agrawal and Manish Agrawal
 (Directors of the Company).
 
 Working Capital loan from Body Corporates is secured by personal
 guarantees of Puranmal Agrawal (the Chairman) and Suresh Kumar Agrawal
 (Director of the Company) and Subservient charge on all moveable assets
 including stock and debtors.
 
 * Includes 2,000 Shares held in the name of a Director on behalf of the
 Company.
 
 # 66,960 Shares pledged with IDBI Bank Limited for guarantee given on
 behalf of the investee Company ** Wholly owned subsidiary of the
 Company w.e.f. 31st August, 2011
 
 *** Subsidiary of the Company w.e.f July 08, 2011
 
 note 3. gratuity and other post retirement benefit plans
 
 The Company provides gratuity benefits which are funded with Life
 Insurance Corporation of India in the form of qualifying insurance
 policy. Leave encashment benefits is an unfunded plan of the Company.
 
 The estimate of future salary increase, considered in actuarial
 valuation, takes account of inflation, seniority, promotion and other
 relevant factors such as supply and demand in the employee market.
 
 The Company expects to contribute Rs. 177.60 lacs (Rs. 148.00 lacs) to
 gratuity fund in the year 2012-13.
 
 NOTE 4. INTEREST IN JOINT VENTuRE
 
 The Company has a 14.90 % interest in Madanpur South Coal Company
 Limited (a Joint Venture Company), incorporated in India.
 
 The Company''s share of the assets and liabilities of the above jointly
 controlled entity as at the respective Balance Sheet dates is as
 follows: -
 
 NOTE 5. SEGMENT INFORMATION
 
 The Company is engaged in manufacturing of Iron and Steel.
 Consequently it has one reportable business segment e.g. Iron and
 Steel. The analysis of geographical segments is based on the area in
 which the customers of the Company are located.
 
 The Company has common fixed assets for producing goods for domestic
 and overseas markets which are located at only one place i.e. Raigarh.
 Hence, separate figures for fixed assets / additions to fixed assets
 cannot be furnished. Export debtors at the year end amounts to Rs. 62.01
 lacs (Rs. 306.65 lacs).
 
 There is no possibility of any reimbursement on any of the cases listed
 above
 
 *The Company has given guarantee to ICICI Bank in respect of loan taken
 by AA ESS Tradelinks Private Limited (became subsidiary of the Company
 w.e.f. 8th July, 2011) amounting to Rs. 7,500 lacs (Nil) on 31st May,
 2011. The management believes that the terms of the guartantee given
 are not prejudicial to the interest of the Company as it will derive
 future economic benefits from the subsidiary.
 
 In October 2010, search and seizure operations were conducted by the
 Income Tax authorities under Section 132 of the Income Tax Act, at
 various locations of the Company. During the course of the search and
 seizure operations, the income tax authorities have taken custody of
 certain materials such as documents, records, and recorded statements
 of certain officials of the Company. The Company does not expect any
 liability arising out of the aforesaid search and seizure.
 
 note 6. operating lease company as lessee
 
 The Company has entered into commercial leases on certain office
 spaces. There are no restrictions placed upon the company by entering
 into these leases.
 
 note 7
 
 The Company has during the year made purchases of Rs. 51.29 lacs from and
 sales of Rs. 48.69 lacs to certain parties falling within the purview of
 Section 297 of the Companies Act, 1956 for which, the Company is in the
 process of obtaining the required approval from the Central Government.
 
 note 8
 
 As per information available with the Company, there are no suppliers
 covered under Micro, Small and Medium Enterprise Development Act, 2006.
 As a result, no interest provision/ payment has been made by the
 Company to such creditors, if any, and no disclosure thereof is made in
 the accounts.
 
 note 9
 
 Till the year ended 31st March, 2011, the Company was using pre-revised
 Schedule VI to the Companies Act 1956, for preparation and presentation
 of its financial statements. During the year ended 31st March, 2012,
 the revised Schedule VI notified under the Companies Act 1956, has
 become applicable to the Company. The Company has reclassified previous
 year figures to conform to this year''s classification. The adoption of
 revised Schedule VI does not impact recognition and measurement
 principles followed for preparation of financial statements.  However,
 it significantly impacts presentation and disclosures made in the
 financial statements, particularly presentation of balance sheet.