Jindal Steel & Power

1.    OVERVIEW
 
Jindal Steel & Power Limited (“the Company”) is one of the India’s leading steel
producers with significant presence in sectors like mining and power generati on. It is listed on the
National Stock Exchange of India and Bombay Stock Exchange in India. Its business is spread across India and
overseas. The registered office is situated in the state of Haryana, the corporate office is situated in New
Delhi and the manufacturing plants in India are in the states of Chhaffisgarh, Odisha, Jharkhand etc. The
Company has global presence through subsidiaries, mainly in Australia, Botswana, Cameroon, Dubai, Indonesia,
Liberia, Mauritania, Mauritius, Mozambique, Madagascar, Namibia, South Africa, Sultanate of Oman, Tanzania
and Zambia and representative office in China. There are several business initiatives running simultaneously
across continents.
 
These financial statements were approved and adopted by the Board of Directors of the Company in their
meeting held on 09th May, 2018.
 
2.    BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
The financial statements have been prepared in accordance with accounting standards as prescribed under
Section 133 of the Companies Act, 2013 (the ‘Act’) read with Companies (Accounts) Rules, 2015
(Indian Accounting Standards(IND AS)). The Company has consistently applied the accounting policies used in
the preparation of its financial statements.
 
The standalone financial statements provide comparative information in respect of previous year.
 
The significant accounting policies used in preparing the financial statements are set out in Note no. 3
of the Notes to the Standalone Financial Statements.
 
The preparation of the financial statements in conformity with Indian Accounting Standards (Ind AS)
requires management to make judgments, esti mates and assumpti ons that affect the reported amounts of
revenues, expenses, assets and liability es, and the accompanying disclosures at the date of the financial
statements. The judgments, estimates and underlying assumpti ons are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised if the revision effects
only that period or in the period of the revision and future periods if the revision affects both current and
future years and, if material, their effects are disclosed in the notes to the financial statements. Actual
results could vary from these estimates. (Refer Note no. 4 on critical accounting estimates, assumptions and
judgments).
 
3. CRITICAL ACCOUNTING ESTIMATES,ASSUMPTIONS AND JUDGEMENTS
 
3.1    Property, plant and equipment
 
External advisor and/or internal technical team assess the remaining useful life and residual value of
property, plant and equipment. Management believes that the assigned useful lives and residual values are
reasonable.
 
3.2    Intangibles
 
Internal technical and user team assess the remaining useful lives of Intangible assets. Management
believes that assigned useful lives are reasonable. All Intangibles are carried at net book value on
transition.
 
3.3    Mine restoration obligation
 
In determining the cost of the mine restoration obligation the Company uses technical estimates to
determine the expected cost to restore the mines and the expected timing of these costs.
 
3.4    Liquidated damages
 
Liquidated damages payable or receivable are estimated and recorded as per contractual terms/management
assertion; estimate may vary from actuals as levy by customer/vendor.
 
3.5    Other estimates
 
The Company estimates the un-collectability of accounts receivable by analyzing historical payment
patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial
condition of a customer deteriorates, additional allowances may be required. Similarly, the Company provides
for inventory obsolescence, excess inventory and inventories with carrying values in excess of net realizable
value based on assessment of the future demand, market conditions and specific inventory management
initiatives. In all cases inventory is carried at the lower of historical cost and net realizable value.
 
3.6 Standards issued but not effective
 
On March 28, 2018 the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contract
and Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the company
from April 01, 2018.
 
a)    Issue of Ind As 115 - Revenue from Customers and Contracts
 
Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11
Construction Contracts, and the related interpretations. Ind AS 115 provides a single model of accounti ng for
revenue arising from contracts with customers based on the identification and satisfaction of performance
obligations.
 
b)    Amendment to existing issued Ind As
 
The MCA has also carried out amendments of the following accounting standards:
 
i)    Ind AS 21 - The effect of changes in Foreign Exchange Rates
 
ii)    Ind AS 40 - Investment Property
 
iii)    Ind AS 12 - Income Taxes
 
iv)    Ind AS 28 - Investment in Associates and Joint Ventures, and
 
v)    Ind AS 112 - Disclosure of Interest in other entities.
 
Application of above standards is not expected to have any significant impact on the Company’s
Financial Statements.
 
During the year the company has issued equity shares of Rs.1 each as follows :
 
14,20,000 equity shares at issue price of Rs.140.31 each (including premium of Rs.139.31 per share) to
the promoter group company and 5,15,02,145 equity shares of Rs.1 each at issue price of Rs.233 each
(including premium of Rs.232 per share) by way of Qualified Institutions Placement (QIP).
 
b)    Terms/rights attached to equity shares
 
The Company has only one class of equity shares having par value of Rs.1 per share. Each holder of equity
share is entitled to one vote per share. The Company declares dividend in Indian Rupees. The dividend, if any,
proposed by the Board of Directors is subject to approval of the Shareholders in the ensuing Annual General
Meeting.
 
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive
remaining assets of the Company after payment of all liabilities. The distribution will be in proportion to
the number of equity shares held by the shareholders.
 
c)    Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares
bought back during the period of five years immediately preceding the reporting date:
 
In accordance with Section 77 of the Companies Act, 1956 and buy back regulations of SEBI, the Company
during the financial year 2013-14 bought back and extinguished 19,959,584 equity shares of Rs.1 each and
created a Capital Redemption Reserve of Rs.2.00 Crore out of surplus in the Statement of Profit and Loss. The
premium on buy back of Rs.498.80 Crore had been utilised from Securities Premium Account Rs.122.96 Crore and
out of surplus in Statement of Profit and Loss Rs.375.84 Crore.
 
During the five years immediately preceding 31st March, 2018, the Company has not allotted any
equity shares as bonus shares and also not issued any share for consideration other than cash.
 
In addition the Company allotted 1,50,000 equity shares during the preceding five years under its various
Employees Stock Option Schemes / Employee Stock Purchase Scheme
 
d)    Details of shareholders holding more than 5% shares in the Company
 
As per records of the Company, including its register of shareholders/members and other declarations
received from shareholders regarding beneficial interest, the above shareholding represents both legal and
beneficial ownership of shares.
 
e)    Employees Stock purchase Scheme
 
In accordance with SEBI (Share Based Employees Benefits) Regulations 2014 and pursuant to JSPL ESPS 2013
Scheme, the Nomination and Remuneration Committee has vide its resolution dated 27.01.2017 offered and the
Corporate Management Committee of the Board vide its resolution dated 03.02.2017 allotted 1,20,434 nos.
equity shares of Rs.1 each at a premium of Rs.81.20 each to Mr Ravi Uppal, the then Managing Director & Group
CEO during previous year. Out of total offered 150000 nos. equity shares so far, the Company had during the
earlier years allotted 29,566 nos. equity shares of Rs.1 each.
 
f)    Employees Stock Option Scheme
 
The Board of Directors in its meeting held on 8th August, 2017 approved the JSPL Employee
Stock Option Plan 2017(JSPL ESOP Scheme-2017) and the same was approved by the shareholders in the Annual
General Meeting held on 22nd September 2017, in accordance with SEBI (Share Based Employee
Benefits) Requlations 2014.
 
Pursuant to the JSPL ESOP Scheme-2017, the Company may grant upto 4,50,00,000 options convertible into
equal number of equity shares of Rs.1 each.
 
The Nomination and Remuneration Committee of the Board in its meeting held on 5th January,
2018 granted 51,21,735 options convertible into equal number of equity shares of the Company, to the eligible
employees of the Company and its subsidiaries, at an exercise price of Rs.244.55 per option. As per JSPL ESOP
Scheme-2017 the vesting period shall not be less than one year and maximum period will be three years. The
employee shall exercise his options within a period of six months from respective vesting. No options have
been vested/ exercised as on date. 28,934 options have lapsed as on 31st March, 2018.
 
Notes-
 
(i)    On account of substantial investment made by the Company in seffing up/ expansion of industrial
unit(s) at Raigarh (Chhattisgarh), including investment in acquisition of capital assets, one of the
Company’s unit is eligible for sales tax exemption under the State Industrial Policy which aims towards
industrialization of the State and development of backward areas. The Company had earlier treated the amount
relating to sales tax exemption as capital receipt and credited the same to “Sales tax subsidy /
Capital reserve” shown under the head “Reserve and Surplus” up to the Financial year ended
31st March, 2015. During the previous year Rs.316.70 Crore as stated above was credited to and
considered as part of “other operating revenue”.
 
(ii)    Securities Premium Reserve represents the amount received in excess of par value of securities
issued by the company. This reserve is utilised in accordance with provisions of the act.
 
(iii)    The Company is required to create Debenture Redemption Reserve out of the profits which is
available for the purpose of redemption of debentures.
 
(iv)    Capital Redemption Reserve represents the statutory reserve created on buy back of shares. It is
not available for distribution.
 
(v)    During the year, the company has issued 4,80,00,000 converti ble warrants at issue price of
Rs.140.31 each to a promoter group company on preferential basis. These warrants are convertible into equal
number of fully paid equity shares of Rs.1 each upon exercise of the option of conversion of the warrants
held by the holder(s), within a period of 18 months from the date of allotment of warrants. Out of Rs.168.37
Crore (i.e. 25% of the total consideration of Rs.673.49 Crore) received, Rs.4.80 Crore has been shown as
‘Money Received against Share Warrants’ and balance amount of Rs.163.57 Crore has been included
under ‘Securities premium account.
 
Debentures
 
Security
 
i)    Balance amount of debentures of Rs.650 Crore (net of Rs.100 Crore redeemed during the year) (March
31, 2017 NIL) placed initially with HDFC Bank Limited on private placement basis are redeemable at par on
11.03.2021 as unsecured. During the year, the company has created security by way of first and exclusive
pledge, in favour of Debenture trustee, over 5,78,05,714 nos. equity shares of Jindal Power Limited held by
the Company.
 
ii)    Debentures of Rs.1000 Crore (March 31, 2017 Rs.1000 Crore) placed initially with Life Insurance
Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the
end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs.100 Crore (12.10.2009), Rs.150 Crore
(22.10.2009), Rs.150 Crore (24.11.2009), Rs.150 Crore (24.12.2009), Rs.150 Crore (25.01.2010), Rs.150 Crore
(19.02.2010) and Rs.150 Crore (26.03.2010). The debentures are to be secured (charge to be modified) by way
of first ranking pari passu charge over the both movable and immovable fixed assets, both present & future,
and other related miscellaneous assets etc.of the Angul Phase 1A Plant (Angul Phase 1A plant means
collectively the Angul Integrated Steel Plant (ISP) and Plate Mill (PM) Project, the Angul Direct Reduced
Iron (DRI) Project and the Angul Captive Power Plant (CPP) Project) at Angul, Odisha of the Company in favour
of the Debenture Trustees.
 
iii) Debentures of Rs.500 Crore (March 31, 2017 Rs.500 Crore) placed initi ally with Life Insurance
Corporation of India on private placement basis are redeemable at par in 2 equal annual instalments at the
end of 9.5 and 10.5 years from the date of respective allotments i.e. Rs.100 Crore (24.08.2009), Rs.80 Crore
(08.09.2009), Rs.80 Crore (08.10.2009), Rs.80 Crore (09.11.2009), Rs.80 Crore (08.12.2009) and Rs.80 Crore
(08.01.2010). The debentures are secured on pari-passu charge basis by way of hypothecati on of movable fixed
assets of the Company (excluding assets charged on exclusive basis) in favour of the Debenture Trustees. In
addition a first pari passu mortgage on a part of immovable property pertaining to unit located at Kharsia
Road, Raigarh and a part of the immovable property pertaining to unit located at 13 KM Stone, G E Road,
Mandir Hasaud, Raipur in favour of the Debenture Trustees.
 
iv)    Debentures of Rs.1000 Crore (March 31, 2017 NIL) placed initi ally with Kotak Mahindra Bank on
private placement basis are redeemable at par in 3 instalments, Rs.330 Crore at the end of 4 years, Rs.330
Crore at the end of 5 years and Rs.340 Crore at the end of 6 years from the date of allotment i.e.
18th December, 2014 as unsecured. During the year, the Company has created security by way of
first and exclusive pledge, in favour of Debenture trustee, over 7,70,74,285 nos. equity shares of Jindal
Power Limited held by the Company.
 
v)    Balance amount of debentures of Rs.49.60 Crore (March 31, 2017 Rs.62 Crore) placed initially with
SBI Life Insurance Company Limited on private placement basis are redeemable at par in 4 equal annual
instalments. The debentures are to be secured (charge to be modified) by way of first ranking pari passu
charge over the both movable and immovable fixed assets, both present & future, and other related
miscellaneous assets etc. of the Angul Phase 1A Plant (Angul Phase 1A plant means collectively the Angul ISP
and PM Project, the Angul DRI Project and the Angul CPP Project) at Angul, Odisha of the company in favour of
the Debenture Trustees.
 
Term Loans from Banks
 
Security
 
i)    Loans of Rs.5,983.03 Crore (March 31, 2017 Rs.6,118.22 Crore) are repayable in 71 quarterly
instalments are to be secured by way of first ranking pari passu charge over the both movable and immovable
fixed assets, both present & future, and other related miscellaneous assets etc. of the Angul Phase 1A Plant
(Angul Phase 1A plant means collectively the Angul ISP and PM Project, the Angul DRI Project and the Angul
CPP Project) at Angul, Odisha of the Company. The next instalment is due on 30th June, 2018.
 
ii)    a. Loans of Rs.1,508.72 Crore (March 31, 2017 Rs.1,559.61 Crore) repayable in 27 quarterly
instalments are secured by way of a first charge on pari passu basis over all the movable and immovable fixed
assets (plate mill & ISP facility, DRI, Captive Power Plant and other misc. assets etc.), both present and
future, of plant phase 1A at Angul, Odisha. The next instalment is due on 30th June, 2018.
 
b. Loans of Rs.475.00 Crore (March 31, 2017 Rs.500.00 Crore) repayable to HDFC bank in 27 quarterly
instalments are secured by way of a first charge on pari passu basis over all movable fixed assets (plate
mill & ISP facility, DRI, CPP and other misc. assets etc.), both present and future, of phase 1A at Angul,
Odisha. Further, charge in favor of HDFC Bank in respect of said loan by way of a first charge on immovable
fixed assets, both present and future, of Phase 1A at Angul, Odisha is to be created. The next instalment is
due on 30th June, 2018.
 
iii)    Loans of Rs.1055.05 Crore (March 31, 2017 Rs.1,340 Crore) initi ally taken from ICICI bank on
bilateral basis are repayable by way of ballooning instalments in two tranches. An amount of Rs.190.05 Crore
shall be repayable in 3 quarterly instalment and an amount of Rs.865 Crore shall be repayable in 23 quarterly
instalments; the next instalment is due on 15th April, 2018.
 
Loans of Rs.799.95 Crore (March 31, 2017 Rs.956.24 Crore) initially taken from HDFC Bank on bilateral
basis are repayable in 16 quarterly instalments; the next instalment is due on 30th June,
2018.
 
Loans of Rs.1,274.66 Crore (March 31, 2017 Rs.1,465.94 Crore) from State Bank of India are repayable in
24 quarterly instalments; the next instalment is due on 30th June, 2018.
 
Above loans are secured by way of a first pari passu charge on all the present movable Fixed Assets of
units located at Balkudra, Patratu, District Ramgarh, Jharkand; 13 KM Stone, G E Road, Mandir Hasaud, Raipur;
201 to 204, Industrial Park SSD, Punjipatra, Raigarh, Chhattisgarh; Bhikaji Cama Place, New Delhi; and all
movable Fixed Assets (present as well as future) located at Kharsia Road, Raigarh, Chhattisgarh. In addition
a first ranking mortgage and pari passu charge on immovable property pertaining to unit located at Kharsia
Road, Raigarh and a part of the immovable property pertaining to unit located at 13 KM Stone, G E Road,
Mandir Hasaud, Raipur.
 
iv)    Loans of Rs.366.86 Crore (March 31, 2017 Rs.360.22 Crore) are repayable in 71 quarterly
instalments and are to be secured by way of first ranking pari passu charge over both the immovable and
movable assets, both present and future, (including related rights, titles claims and demands in the
contracts etc.) of Dongamahua Captive Power Plant (CPP) Project A. (Dongamahua CPP Project A means the 2*135
MW (Phase -1) captive power plant situated at village Dongamahua, Chaffisgarh). The next instalment is due on
30th June, 2018.
 
v)    Loans of Rs.472.53 Crore (March 31, 2017 Rs.483.16 Crore) are repayable in 71 quarterly instalments
and are to be secured by way of a first ranking pari passu charge over both the immovable and movable assets,
both present and future, (including related rights, titles claims and demands in the contracts etc.) of the
Dongamahua CPP Project B. (Dongamahua CPP Project B means the 2*135 MW (Phase -2) captive power plant
situated at village Dongamahua, Chattisgarh). The next instalment is due on 30th June, 2018.
 
OTHER LOANS
 
Security
 
Other loan of Rs.191.91 Crore (March 31, 2017 Rs.196.21 Crore) is repayable in 71 quarterly instalments
and are to be secured by way of first ranking pari passu charge over the both movable and immovable fixed
assets, both present & future, and other related miscellaneous assets etc. of the Angul Phase 1A Plant.
(Angul Phase 1A plant means collectively the Angul ISP and PM Project, the Angul DRI Project and the Angul
CPP Project) at Angul, Odisha of the Company.
 
Note-
 
Project Loan of Rs.7215.34 Crore outstanding as on 30th Nov 2015 were elongated under the 5/25
Scheme (outstanding as on 31st March 2018 Rs.7014.33 Crore). The Company has executed Joint
Documentation with lenders to effect the sanctioned restructuring scheme. Security against some of the stated
loans along with debentures (refer para: “Debenture” ii & v, “Term Loan from Banks” i
and “other Loans”) is to be modified to first ranking pari passu charge over the both movable and
immovable fixed assets, both present & future, and other related miscellaneous assets etc. of the Angul Phase
1A Plant (Angul Phase 1A plant means collectively the Angul ISP and PM Project, the Angul DRI Project and the
Angul CPP Project) at Angul, Odisha of the Company in favour of the debenture trustees/ security trustee and
security against other stated loans (refer para; “term loan from banks” iv & v) is to be modified
by way of first ranking pari passu charge over both the immovable and movable assets, both present and future,
of the Dongamahua CPP project A and project B respectively (including related rights, titles claims and
demands in the contracts etc.). (Dongamahua CPP Project A means the 2*135 MW (Phase-1) captive power plant
and Dongamahua CPP project B means the 2*135 MW (Phase-2) captive power plant; both situated at village
Dongamahua, Chaffisgarh). Security against loans pertaining to Dongamahua CPP project A is to be modified in
favor of security trustee and security pertaining to Dongamahua CPP project B is to be modified in favour of
the Lender.
 
Buyer’s credit
 
Loans Rs.592.12 Crore (Previous Year Rs.660.10 Crore) are secured by first ranking pari-passu charge by
way of hypothecation over all of the Company’s current assets, both present and future and second
ranking pari passu charge (charge created/to be created) over the entire fixed assets, both movable &
immovable, of the Company, both present and future.
 
The interest rate for the above term loans from banks and others (excluding penal interest) varies from
9.75% to 13% p.a The weighted average rate of interest for buyers’ credit is 2.00%p.a.
 
In respect of certain loan, charges are in process of satisfaction/modification
 
Debentures
 
Debentures of Rs.300 Crore (Previous Year Rs.300 Crore) placed initi ally with ICICI Bank Limited on
private placement basis are redeemable at par at the end of 5 years from the date of allotment i.e.
11.08.2014.
 
@Shown as secured during the year (previous year unsecured)
 
External Commercial Borrowings
 
The balance amount of ECA from Credit Agricole CIB of Rs.50.59 Crore (Previous Year : ECA of Rs.94.32
Crore from Credit Agricole CIB and ECB of 107.14 Crore from ICICI Bank Limited) repayable in 5 half yearly
instalments. The next instalment is due on 9th September, 2018.
 
Repayments and Interest rates for the above Unsecured Debenture & External Commercial Borrowings are as
follows:
 
i) Loan of Rs.562.50 Crore (Previous year Rs.562.50 Crore) is secured by subservient charge by way of
hypothecation of current assets of the Company comprising of book debts and stocks.
 
Cash Credit from Bank and Buyer’s Credit
 
These are secured by first ranking pari-passu charge by way of hypothecation over all of the
Company’s current assets, both present and future and second ranking pari passu charge (charge
created/to be created) over the entire fixed assets, both movable & immovable, of the Company, both present
and future. The cash credit is repayable on demand.
 
Note
 
The Weighted average rate of interest for Cash credit is 10.94% p.a.
 
The Weighted average rate of interest for WCDL loan is 10.15% p.a.
 
The Weighted average rate of interest on Buyer’s credit is 2% p.a.
 
The Weighted average rate of interest for Secured term loan is 12.50% p.a.
 
The Weighted average rate of interest for Unsecured term loan from bank is 11.52% p.a.
 
The Weighted average rate of interest for Unsecured term loan from others is 10.88% p.a.
 
The Weighted average rate of interest for Loan from related parties is 9.73%
 
5. CSR Expenses
 
In view of the losses in previous three years the Company is not required to spend on corporate social
responsibility (CSR) as per section 135 of the Companies Act, 2013. However company has voluntarily spend
following amount on CSR expenses:-
 
“Provision during the year” for asset retirement obligation is after considering the impact
of change in discount rate.
 
The expected outflow of provisions for asset retirement obligation is 45 to 47 years.
 
6. ‘Employee Benefits’, in accordance with Accounting Standard (Ind AS-19) :
 
A.    The Company has a defined benefit gratuity plan. Every employee who has completed five years or
more of service gets a gratuity on departure at 15 days’ salary (last drawn salary) for each completed
year of service.
 
B.    The actuary has provided a valuation of Provident Fund Liability and based on the below assumptions
made a provision of Rs.12.35 Crore as at 31st March, 2018 (Previous Year Rs.13.88 Crore).
 
C.    The following tables summarise the components of net benefit expense recognised in the Statement of
Profit and Loss and the funded status and amounts recognised in the balance sheet for the respective
plans.
 
The above sensitivity analysis is based on a change in an assumption while holding all other assumption
constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumpti ons the
same method (projected unit credit method has been applied as when calculating the defined benefit obligation
recognised within the Balance Sheet.
 
7.    As per IND AS 108 Operating Segment, segment information has been provided in notes to consolidated
financial statements.
 
8.    Pursuant to the Judgment dated 25.08.2014 read with Order dated 24.09.2014 passed by the
Hon’ble Supreme Court the allocation of the coal blocks, Gare Palma IV/1 (operational); Utkal B-1,
Amarkonda Murgadangal, Gare Palma IV/6, Ramchandi, Urtan North and Jitpur (non-operational) to the
Company/its joint ventures stand de-allocated. Prior to the said de-allocation by the Hon’ble Supreme
Court, the Government had invoked bank guarantees provided by the Company to the extent of Rs.153.55 Crore
(previous year Rs.153.55 Crore) with respect to Ramchandi, Amarkonda Murgadangal and Jitpur Coal Blocks.
These matters, besides the matters with respect to Urtan North and Gare Palma IV/6 coal blocks, were
contested by the Company at various levels and the invocation of the said bank guarantees had been stayed by
the respective Hon’ble High Courts. Bank guarantees amounting to Rs.155 Crore (previous year Rs.155
Crore) have been provided by the Company for the above mentioned non- operational coal blocks.
 
Pursuant to the said de-allocation by the Hon’ble Supreme Court and pending the decision/s of the
Ministry of Coal on the show cause notices issued by the Ministry of Coal calling upon the Company to show
cause as to why the delay in the development of the non-operational coal blocks should not be held as
violation of the terms and conditions of the allocation letters of the said coal blocks, the respective
Hon’ble High Courts have required the Company to keep the said Bank Guarantees alive pending the
decision of the Government (Ministry of Coal) in individual case. The High Courts have restrained the
Ministry of Coal to act in furtherance of its subsequent decision/s, to invoke the bank guarantee/s, for a
further period of two weeks’ time from the date of the communication of such decision/s in order to
enable the Company to challenge such decision/s of the Ministry of Coal. In the meantime, the invocation of
the bank guarantees has been stayed by the Hon’ble High Courts.
 
The Company believes that it has good case in respect to this matter and hence no provision is considered
necessary.
 
9.    Interest in Joint Ventures:
 
The Company’s interest as a venturer, in jointly controlled entities (Incorporated Joint Ventures)
is as under:
 
The Company’s interests in the above Joint Ventures is reported as Non-Current Investments
(Note-8(c)) and stated at cost. However, the Company’s share of assets, liabilities, income and
expenses, etc. (each without elimination of the effect of transactions between the Company and the joint
ventures) related to its interest in the Joint Ventures are:
 
Notes:
 
i)    All Inter corporate deposits are given to unrelated corporate entities at an interest ranging from
7.65% to 13.25% p.a.
 
ii)    All the loans are provided for business purpose of respective entities, repayable on demand with
repayment option to the borrower.
 
b) Investment Made:
 
There are no investment made by the Company other than those stated under note 8 in the financial
statements
 
d) Securities given
 
There are no securities given during the year
 
10. Financial and Derivative Instruments:
 
a) The Company uses foreign currency forward and Interest rate swap contracts to manage some of its
transactions exposure. The details of derivative financial instruments are as follows:
 
b) The principal component of monetary foreign currency loans/debts and payable amounting to Rs.2021.76
Crore (Previous year Rs.2457.69 Crore) and receivable amounting to Rs.970.36 Crore (Previous year Rs.950.51
Crore) not hedged by derivative instruments.
 
11. Fair value of financials assets and liabilities
 
Class wise compositi on of carrying amount and fair value of financial assets and liabilities that are
recognised in the financials statements is given below:
 
Fair value hierarchy
 
The Company uses the following hierarchy for fair value measurement of the company’s financials
assets and liabilities:
 
Level 1: Quoted prices/NAV (unadjusted) in active markets for identical assets and liabilities at the
measurement date.
 
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly.
 
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are
not based on observable market data.
 
During the year ended March 31, 2018 and March 31, 2017, there were no transfers between Level 1 and
Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.
 
Fair valuation of financial guarantees
 
Financial guarantees issued by the company on behalf of its overseas subsidiaries have been measured at
fair value through profit and loss account. Fair value of said guarantees as at March 31, 2018 and March 31,
2017 have been considered at nil as estimated by the management and an independent professional.
 
Fair valuation techniques
 
The Company maintains policies and procedures to value financial assets or financial liabilities using
the best and most relevant data available. The fair values of the financial assets and liabilities are
included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
 
The following methods and assumptions were used to estimate the fair values:
 
1)    Fair value of cash and deposits, trade receivables, trade payables, and other current financial
assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these
instruments.
 
2)    Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the Company based
on parameters such as interest rates, specific country risk factors, credit risk and other risk
characteristics. Fair value of variable interest rate borrowings approximates their carrying values. For
fixed interest rate borrowing fair value is determined by using the discounted cash flow (DCF) method using
discount rate that reflects the issuer’s borrowings rate. Risk of non-performance of the Company is
considered to be insignificant in valuation.
 
3)    The fair values of derivatives are estimated by using pricing models, where the inputs to those
models are based on readily observable market parameters basis contractual terms, period to maturity, and
market parameters such as interest rates, foreign exchange rates, and volatility. These models do not contain
a high level of subjectivity as the valuation techniques used do not require significant judgement, and inputs
thereto are readily observable from actively quoted market prices. Management has evaluated the credit and
non-performance risks associated with its derivative counterparties and believe them to be insignificant and
not warranting a credit adjustment.
 
12. Financial Risk Management
 
The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade
and other payables, and financial guarantee contracts. The main purpose of these financial liabiliti es is to
manage finances for the Company’s operations. The Company’s financial assets comprise investments,
loan and other receivables, trade and other receivables, cash, and deposits that arise directly from its
operations.
 
The Company’s activities are exposed to market risk, credit risk and liquidity risk. In order to
minimise adverse effects on the financial performance of the Company, derivative financial instruments such
as forward contracts are entered into to hedge foreign currency risk exposure. Derivatives are used
exclusively for hedging purposes and not as trading and speculative purpose.
 
I. Market risk
 
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest
rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected
by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
 
The sensitivity analysis in the following sections relate to the position as at 31st March,
2018 and 31st March, 2017.
 
The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and
other post-retirement obligations; provisions. The sensitivity of the relevant profit or loss item is the
effect of the assumed changes in respective market risks. The Company uses derivative financial instruments
such as foreign exchange forward contracts of varying maturity depending upon the underlying contract and
risk management strategy to manage its exposures to foreign exchange fluctuations.
 
(a) Interest rate risk
 
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. In order to optimize the Company’s position with
regard to interest income and interest expenses and to manage the interest rate risk, the Company performs a
comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and
floating rate financial instruments in its total portfolio.
 
The Assumed movement in basis point for interest rate sensitivity analysis is based on currently
observable market environment.
 
(b) Foreign currency risk
 
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. The Company transacts business primarily in Indian Rupees and
US dollars. The Company has obtained foreign currency loans and has foreign currency trade payables and
receivables and is therefore exposed to foreign exchange risk. Certain transactions of the Company act as a
natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies. For
the remaining expore to foreign exchange risk the Company adopts a policy of selective hedging based on risk
perception of the management. Foreign exchange contracts are carried at fair value.
 
The Company hedges its exposure to fluctuati ons by using foreign currency forwards contracts on the
basis of risk perception of the management.
 
The carrying amounts of the Company’s net foreign currency exposure (net of forward contracts)
denominated monetary assets and monetary liabilities at the end of the reporting period as follows:
 
Foreign currency sensitivity
 
5% increase or decrease in foreign exchange rates vis- a -vis Indian Rupees, with all other variables
held constant, will have the following impact on profit before tax and other comprehensive income:
 
The assumed movement in exchange rate sensitivity analysis is based on the currently observable market
environment by the management.
 
(c) Commodity Price Risk
 
Commodity Price Risk is the risk that future cash flow of the Company will fluctuate on account of
changes in market price of key raw materials.
 
The Company is exposed to the movement in price of key raw materials in domestic and internati onal
markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw
materials used in operations. The Company enters into contracts for procurement of materials, most of the
transactions are short term fixed price contract and a few transactions are long term fixed price
contracts.
 
II. Credit risk
 
Credit risk arises from the possibility that the counterparty will default on its contractual obligations
resulting in financial loss to the Company. To manage this, the Company periodically assesses the financial
reliability of customers, taking into account the financial conditions, current economic trends, and analysis
of historical bad debts and ageing of accounts receivable.
 
The Company considers the probability of default upon initial recognition of assets and whether there has
been a significant increase in credit risk on an ongoing basis through each reporting period. To assess
whether there is significant increase in credit risk, it considers reasonable and supportive forward looking
information such as:
 
(i)    Actual or expected significant adverse changes in business.
 
(ii)    Actual or expected significant changes in the operating results of the counterparty.
 
(iii)    Financial or economic conditions that are expected to cause a significant change to the
counterparty’s ability to meet its obligation
 
(iv)    Significant increase in credit risk and other financial instruments of the same counterparty
 
(v)    Significant changes in the value of collateral supporting the obligation or in the quality of
third party guarantees or credit enhancements.
 
III. Liquidity Risk
 
Liquidity risk refers to risk of financial distress or extra ordinary high financing cost arising due to
shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require
financing. The Company’s objective is to maintain at all times optimum levels of liquidity to meet its
cash and collateral requirements. Processes and policies related to such risk are overseen by senior
management and management monitors the Company’s net liquidity position through rolling forecast on the
basis of expected cash flows.
 
The table below provides details regarding the remaining contractual maturities of financial liabilities
at the reporting date based on contractual undiscounted payments:
 
13. Capital Risk Management
 
The Company manages its capital structures and makes adjustment in light of changes in economic
conditions and requirements of financing covenants. To this end the Company may adjust the dividend payment
to shareholders, return capital to shareholders or issue new shares.
 
The primary objective of the Company’s Capital Management is to maximize the shareholder value by
maintaining an efficient capital structure and healthy ratios and safeguard Company’s ability to
continue as a going concern. The Company also works towards maintaining optimal capital structure to reduce
the cost of capital. No changes were made in the objectives,policies, process during the year ended
31st March, 2018.
 
Notes-
 
(i)    Debt is defined as long-term and short-term borrowings including current maturiti es (excluding
derivatives and financial guarantee contracts) as described in notes 23 and 27.
 
(ii)    Equity includes all capital and reserves of the Company that are managed as capital.
 
14. Related Party Disclosures as per Ind AS 24
 
A. List of Related Parties and Relationships
 
a) Subsidiaries, Step down Subsidiaries
 
I Subsidiaries
 
1    Jindal Power Limited
 
2    Jindal Steel Bolivia SA
 
3    Jindal Steel & Power (Mauritius) Limited
 
4    Skyhigh Overseas Limited
 
5    Everbest Steel and Mining Holdings Limited
 
6    Jindal Angul Power Limited
 
7    JB Fabinfra Limited
 
8    Trishakti Real Estate Infrastructure and Developers Limited
 
9    Raigarh Pathalgaon Expressway Ltd
 
II    Subsidiaries of Jindal Power Limited
 
1    Attunli Hydro Electric Power Company Limited
 
2    Etalin Hydro Electric Power Company Limited
 
3    Jindal Hydro Power Limited
 
4    Jindal Power Distribution Limited
 
5    Ambitious Power Trading company Limited
 
6    Jindal Power Transmission Limited
 
7    Jindal Power Ventures (Mauritius) Limited
 
8    Kamala Hydro Electric Power Co. Limited
 
9    Kineta Power Limited
 
10    Uttam Infralogix Limited
 
11    Jindal Realty Limited
 
III    Subsidiary of Skyhigh Overseas Limited Gas to Liquids International S.A
 
IV    Subsidiary of Jindal Power Ventures (Mauritius) Limited Jindal Power Senegal SAU
 
V    Subsidiary of Uttam Infralogix Limited Panther Transfreight Limited
 
VI    Subsidiary of Jindal Realty Limited
 
Jagran Developers Private Limited (w.e.f. January 11, 2018)
 
VII    Subsidiary of JB Fabinfra Pvt Limited
 
All Tech Building System Limited (ceased to be subsidiary w.e.f. October 1, 2017)
 
VIII    Subsidiaries of Jindal Steel & Power (Mauritius) Limited
 
1    Blue Castle Ventures Limited
 
2    Brake Trading (Pty) Limited
 
3    Enduring Overseas Inc (ceased to be subsidiary w.e.f. June 26, 2017)
 
4    Fire Flash Investments (Pty) Limited
 
5    Harmony Overseas Limited
 
6    Jin Africa Limited
 
7    Jindal (BVI) Limited
 
8    Jindal Africa Investments (Pty) Limited
 
9    Jindal Africa SA
 
10    Jindal Botswana (Pty) Limited
 
11    Jindal Investimentos LDA
 
12    Jindal Investment Holding Limited.
 
13    Jindal KZN Processing (Pty) Limited
 
14    Jindal Madagascar SARL
 
15    Jindal Mining & Exploration Limited
 
16    Jindal Mining Namibia (Pty) Limited
 
17    Jindal Steel & Minerals Zimbabwe Limited
 
18    Jindal Steel & Power (BC) Limited
 
19    Jindal Steel & Power (Australia) Pty Limited
 
20    Jindal Tanzania Limited
 
21    Jindal Zambia Limited
 
22    JSPL Mozambique Minerals LDA
 
23    Jublient Overseas Limited
 
24    Landmark Mineral Resources (Pty) Limited
 
25    Osho Madagascar SARL
 
26    PT Jindal Overseas
 
27    Jindal Shaded Iron & Steel L.L.C
 
28    Sungu Sungu Pty limited
 
29    Trans Asia Mining Pty. Limited
 
30    Vision Overseas limited
 
31    Wollongong Coal Limited
 
32    Jindal Steel DMCC
 
33    Jindal Mauritania SARL
 
34    Jindal Africa Liberia Limited
 
IX Others
 
1    Belde Empreendimentos Mineiros LDA, a subsidiary of JSPL Mozambique Minerals LDA
 
2    Eastern Solid Fuels (Pty) Limited, a subsidiary of Jindal Mining & Exploration Limited
 
3    PT BHI Mining Indonesia, a subsidiary of Jindal Investment Holding Limited
 
4    PT Sumber Surya Gemilang, a subsidiary of PT. BHI Mining Indonesia
 
5    PT Maruwai Bara Abadi, a subsidiary of PT. BHI Mining Indonesia
 
6    Jindal Mining SA (Pty) Limited, a subsidiary of Eastern Solid Fuels (Pty) Limited
 
7    Bon-Terra Mining (Pty) Limited, a subsidiary of Jindal Energy SA (Pty) Limited
 
8    Jindal (Barbados) Holding Corp, a subsidiary of Jindal (BVI) Limited
 
9    Jindal Energy (Bahamas) Limited, a subsidiary of Jindal (BVI) Limited
 
10    Jindal Energy (Botswana) Pty Limited, a subsidiary of Jindal (BVI) Limited
 
11    Jindal Energy (SA) Pty Limited, a subsidiary of Jindal Africa Investments (Pty) Limited
 
12    Jindal Transafrica (Barbados) Corp, a subsidiary of Jindal (BVI) Limited
 
13    Jindal Resources (Botswana) Pty Limited, a subsidiary of Jindal Transafrica (Barbados) Corp
 
14    Trans Africa Rail (Pty) Limited, a subsidiary of Jindal Transafrica (Barbados) Corp
 
15    Sad-Elec (Pty) Limited, a subsidiary of Jindal Energy (SA) Pty Limited
 
16    Jindal (Barbados) Mining Corp, a subsidiary of Jindal (Barbados) Holding Corp
 
17    Jindal (Barbados) Energy Corp, a subsidiary of Jindal (Barbados) Holding Corp
 
18    Meepong Resources (Mauritius) (Pty) Limited, a subsidiary of Jindal (Barbados) Mining Corp
 
19    Meepong Resources (Pty) Limited, a subsidiary of Meepong Resources (Mauritius) (Pty) Limited
 
20    Meepong Energy (Mauritius) (Pty) Limited, a subsidiary of Jindal (Barbados) Energy Corp
 
21    Meepong Energy (Pty) Limited, a subsidiary of Meepong Energy (Mauritius) (Pty) Limited
 
22    Meepong Service (Pty) Limited, a subsidiary of Meepong Energy (Pty) Limited
 
23    Meepong Water (Pty) Limited, a subsidiary of Meepong Energy (Pty) Limited
 
24    Peerboom Coal (Pty) Limited, a subsidiary of Jindal Africa Investment (Pty) Limited
 
25    Shadeed Iron & Steel Company Limited, a subsidiary of Jindal Shadeed Iron & Steel LLC
 
26    Southbulli Holding Pty Limited, a subsidiary of Wollongong Coal Limited
 
27    Oceanic Coal Resources NL, a subsidiary of Wollongong Coal Limited
 
28    Wongawilli Coal Pty Limited, a subsidiary of Oceanic Coal Resources NL
 
29    Koleko Resources (Pty) Limited, a subsidiary of Jindal Africa Investment (Pty) Limited
 
30    Legend Iron Limited, a subsidiary of Jindal Mining & Exploration Limited
 
31    Cameroon Mining Action (CAMINA) SA, a subsidiary of Legend Iron Limited
 
32    Enviro Waste Gas Services Pty Ltd., Subsidiary of Wollongong Coal Limited
 
b)    Associates
 
1    Nalwa Steel & Power Limited (ceased to be associate w.e.f. March 27, 2018)
 
2    Prodisyne (Pty) Limited
 
3    Thuthukani Coal (Pty) Limited
 
c)    Joint Ventures
 
1    Jindal Synfuels Limited
 
2    Shresht Mining and Metals Private Limited
 
3    Urtan North Mining Private Limited
 
d)    Other Significant influences OPJ Trading Private Limited
 
e)    Key Managerial person
 
1    Shri Naveen Jindal (Chairman)
 
2    Shri Ravi Uppal (MD & CEO) Upto September 30, 2017
 
3    Shri D.K. Saraogi (Wholetime Director)
 
4    Shri Rajeev Bhadauria (Wholetime Director)
 
5    Shri Rajesh Bhatia (Chief Financial Officer) Upto June 27, 2017
 
6    Shri Deepak Sogani (Chief Financial Officer) w.e.f. December 19, 2017
 
7    Shri Murli Manohar Purohit (Company Secretary Upto May 31, 2017)
 
8    Shri Jagdish Patra (Company Secretary w.e.f. August 8, 2017)
 
f)    Enterprises over which Key Management Personnel and their relatives exercise significant influence
and with whom transaction have taken place during the year
 
1    Jindal Stainless Limited
 
2    Jindal Industries Limited
 
3    Bir Plantation Limited
 
4    India Flysafe Aviation Limited
 
5    Minerals Management Services (India) Private Limited
 
6    Jindal Saw Limited
 
7    JSW Steel Limited
 
8    Rohit Tower Building Limited
 
9    JSW Projects Limited
 
10    JSW Energy Limited
 
11    JSW Steel Coated Product Limited
 
12    JSW Severfield Structures Limited
 
13    JSW International Tradecorp Pte Limited
 
14    Jindal Coke Limited
 
15    Jindal Stainless Steelway Limited
 
16    Ambitious Power Trading Company Limited
 
17    Jindal United Steel Limited
 
18    JSW Steel Processing Centres Limited
 
19    JSW Cement Limited
 
20    Opelina Finance & Investment Limited
 
21    Nalwa Steel & Power Limited (w.e.f. March 27, 2018)
 
g)    Post Employment Benefit Entity Jindal Steel & Power Ltd EPF Trust
 
15.    Stock of work in progress (note 13) includes Stock of Iron Ore/ Fines of 12.22 Million MT lying
with third party. The value of such stock is Rs.2,310.94 Crore as per Management on the basis of valuation
report of Independent Valuer.
 
16.    Impairment Review
 
Assets are tested for impairment whenever there are any internal or external indicators of
impairment.
 
Impairment test is performed at the level of each Cash Generating Unit (‘CGU’) or groups of
CGUs within the Company at which the goodwill or other assets are monitored for internal management purposes,
within an operating segment.
 
The impairment assessment is based on higher of value in use and value from sale calculations.
 
During the year, the testing did not result in any impairment in the carrying amount of goodwill and
other assets.
 
The measurement of the cash generating units’ value in use is determined based on financial plans
that have been used by management for internal purposes. The planning horizon reflects the assumptions for
short to- mid term market conditions.
 
Key assumptions used in value-in-use calculations:
 
-    Operating margins (Earnings before interest and taxes)
 
-    Discount Rate
 
-    Growth Rates
 
-    Capital expenditures
 
Operating margins: Operating margins have been estimated based on past experience after considering
incremental revenue arising out of adopti on of valued added and data services from the existing and new
customers, though these benefits are partially offset by decline in tariffs in a hyper competitive scenario.
Margins will be positively impacted from the efficiencies and initiatives driven by the Company; at the same
time, factors like higher churn, increased cost of operations may impact the margins negatively.
 
Discount rate: Discount rate reflects the current market assessment of the risks specific to a CGU or
group of CGUs. The discount rate is estimated based on the weighted average cost of capital for respective
CGU or group of CGUs.
 
Growth rates: The growth rates used are in line with the long term average growth rates of the respecti
ve industry and country in which the Company operates and are consistent with the forecasts included in the
industry reports.
 
Capital expenditures: The cash flow forecasts of capital expenditure are based on past experience coupled
with additional capital expenditure required.
 
17. The Hon’ble Supreme Court of India by its Order dated 24 September 2014 cancelled number of
coal blocks allocated to the Company by Ministry of Coal, Government of India and directed to pay an
additional levy of Rs.295 per MT on gross coal extracted. The Company has paid under protest such levy on
coal extracted during the period from 1993 to 31st March, 2015 of Rs.2,082.23 Crore. The
management based on legal opinion has charged to the statement of profit and loss, as exceptional item during
the year 2014-15 for Rs.807.77 Crore computed on net extraction (run of mines less shale, rejects and ungraded
middling) of coal by the Company. The balance amount of Rs.1,274.46 Crore has been shown as recoverable from
the Government Authority since the entire amount of additional levy has been paid under protest.
 
18.    The Company has net book value of investment made in mining assets including land, infrastructure
and clearance etc. of Rs.425 Crore and filed claim for the same pursuant to directive vide letter dated
26th December, 2014 given by the Ministry of Coal on such mines. Meanwhile the Ministry of Coal
has made interim payment to the Company of Rs.22.72 Crore towards the same. Pending final settlement of the
aforesaid claim, this amount has been accounted for as advance.
 
19.    The Company has filed legal suits /notices or in the process of filing legal case /sending legal
noti ces / making efforts for recovery of debit balances of Rs.180.28 Crore (P.Y. 2016-17 Rs.218.62 Crore)
plus interest wherever applicable, which are being carried as long term /short term advances, trade
receivables and other recoverable. Pending outcome of legal proceedings/Company ‘s efforts for recovery
and based on legal advise in certain cases, the Company has considered aforesaid amounts as fully recoverable.
Hence, no provision has been made in respect of these balances.
 
20.    Subject to customary regulatory approvals and other conditions precedent(s), the Board of
Directors at its meeting held on 3rd May,2016 has approved the agreement for divestment of 1,000
MW Power unit of Jindal Power Limited (a subsidiary of the Company (JPL)), located in Chhaffisgarh into a
separate purpose vehicle (SPV), for the purpose of transferring the same to JSW Energy Limited through sale
of the enti re share capital and other securiti es of the aforesaid entity in terms of the share purchase
agreement for an enterprise value of Rs.6,500 Crore plus the value of Net Current Assets as on the Closing
Date. The valuation may vary based upon the achievement of PPA’s before the closing date
30th June, 2018 and as prescribed in the Agreement subject to minimum of Rs.4,000 Crore plus the
value of Net Current Assets as on the Closing Date.The Company has received advance of Rs.381.13 Crore
(previous year Rs.373 Crore) from JSW Energy against the same.
 
In order to streamline cash flows of the group and create SPV amenable for, the Board of Directors of the
Company and JPL have in principle approved the restructuring involving parent Company and JPL and formed a
committee of directors (“Restructuring Committee”), to explore and evaluate various restructuring
opti ons available including a scheme of arrangement. The restructuring will entail that 1000 MW Power Plant
owned by JPL is hived off into an separate purpose vehicle, being subsidiary of the parent company, creati on
of other SPV amenable for monetizati on by way of divestments as well as achieve better synergy across the
parent company and its subsidiaries, and to ensure that the businesses of these entities are operated in the
most efficient and cost effective manner, including by pooling of technical, distribution and marketing
skills, creating optimal utilisation of resources, better administration and cost reduction. Upon completion
of evaluation of the possible arrangement options, the Restructuring Committee is to submit its
recommendations to the Board of Directors and to such other committee(s) of the Board, including the Audit
Committee, shareholders as may be required by applicable laws.
 
21.    During the previous financial year, the Board of Directors of the Company approved sale of certain
captive power plants (CPP) to Jindal Power Limited (JPL) a subsidiary company situated at Angul, Odisha (6x135
MW) and at Raigarh, Chattisgarh (2x55 MW) aggregating to 920 MW at a fair market value determined by
independent valuer appointed by the Board of Directors amounting to Rs.5,275 Crore; which is subject to
necessary approvals to be arranged by the Company. The Company has received interest free advance against
above of Rs.2,854 Crore (previous year Rs.2854 Crore).
 
22.    Exceptional items:
 
i)    During the year, the Company divested its oxygen plant assets at its integrated steel plants at
Raigarh (Chattisgarh) and Angul (Odisha), resulting in loss of Rs.149.72 Crore, which has been included in
exceptional items.
 
ii)    Pursuant to the judgement of the Hon’ble Supreme Court of India in Common Cause Vs Union of
India and others dated 2.8.2017, the Company was again heard on 14.12.2017 and directed to pay additional
compensation of Rs.137.82 Crore for its iron ore mines at Tensa, which has been included in exceptional
items.
 
iii)    The Company had been making payment of royalty on iron ore fines at the rate of royalty
applicable on iron ore lumps (differential royalty). In view of the adverse judgment dated 16.12.2015 of the
Hon’ble Odisha High Court in the case of Mideast Integrated Steel Co. Ltd. Vs. State of Odisha (W.P.(C)
No. 17403 of 2012) taking a contrary view, against which they (MESCO) had filed Special Leave Petition in
Hon’ble Supreme Court. The Company is also facing similar issue and thus intervened in the above
petition filed by MESCO which is currently sub judice. The Company has thus charged the demand raised on
account of differential royalty by the Mining Authority of Rs.223.70 Crore to the profit and loss account as
an exceptional item.
 
iv)    The Rajasthan High Court in the case of Udaipur Chambers of Commerce and Industry & Ors. Vs. The
Union of India & Anr (Civil Writ Petition No. 14578 / 2016) vide order dated 24.10.2017 has held that service
tax is applicable on amount of royalty payable on mining of natural resources. Special Leave Petition against
the said judgment are presently pending before the Hon’ble Supreme Court. The company has been advised
in view of adverse judgment of the Rajasthan High Court, unless reversed/ set aside by the Supreme Court, the
Company shall be required to pay service tax of Rs.14.87, which had accordingly been charged to the profit and
loss account as exceptional item.
 
v)    Pursuant to the judgement of the Hon’ble Supreme Court dated 9.10.2017, the Company has paid/
provided for entry tax on import of goods in the state of Odisha. The amount of entry tax Rs.67.31 Crore
(including interest Rs.42.07) has been included in the exceptional items.
 
vi)    During the year, the Company sold its entire stake in M/s. Nalwa Steel & Power Limited, an
Associate Company and the profit on its sale amounting to Rs.249.40 Crore is included under exceptional
item.
 
23.    Revenue from operations for the period up to 30th June, 2017 includes excise duty,
which is discontinued effective from 1st July 2017 upon implementation of Goods and Services Tax
(GST). In accordance with IND AS-18, Revenue Recognition, GST is not included in the revenue from operations
during the period 1st July, 2017 to 31st March, 2018. The revenue for the year ended
31st March, 2017 is inclusive of excise duty. In view of the aforesaid change, revenue form
operation for the year ended 31st March, 2018 is not comparable with previous year.
 
24.    During the year Blast furnance and Coke Oven Plant at Angul, Odisha have been commissioned.
 
25.    Operating lease commitments
 
The company has divested its oxygen plant assets at its interegated steel plant at Raigarh (Chaffisgarh)
and Angul (Odisha). The company has also entered into lease back agreement for operating lease with the buyer
of the oxygen plant assets for continued operation by the company for manufacturing of steel at respective
plants. The Future minimum lease payment are as follows:-
 
On expiry of lease term the Company will have option to renew the agreement, or purchase the equipment at
fair value or return the equipment to the lessor.
 
In case of renewal of the agreement the rent shall be mutually agreed with the lessor.
 
26.    Balances of certain advances, creditors and receivables are in process of
confirmation/reconciliation.
 
27.    The Company has raised Rs.1200 Crore (Rs.11,99,99,99,785) by way of Qualified Institutions
Placement (QIP) of 5,15,02,145 equity shares of Rs.1 each fully paid up at issue price of Rs.233 each
(including premium of Rs.232 per share). The net proceeds of the issue have been utilised for the purposes
for which the issue was made and unutilised amount of Rs.482 Crore has been parked in working capital.
 
28.    Information related to Consolidated financial
 
The company is listed on stock exchanges in India. The Company has prepared consolidated financial
statements as required under IND AS 110, Sections 129 of Companies Act, 2013 and listing requirements. The
consolidated financial statements are available on the Company’s website for public use.
 
29.    Previous year figures have been regrouped/ rearranged / recast, wherever considered necessary to
conform to current year’s classification. Figures less than 50000 have been shown as absolute
number.
 
30.    Notes 1 to 70 are annexed to and form an integral part of the financial statements.