3.9 Provisions, contingent liabilities,
commitments and contingent assets

Provisions are recognized for present obligations
of uncertain timing or amount arising as a result
of a past event where a reliable estimate can
be made and it is probable that an outflow of
resources embodying economic benefits will be
required to settle the obligation.

Where it is not probable that an outflow of
resources embodying economic benefits will be
required or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent
liability and commitments, unless the probability
of outflow of resources embodying economic
benefits is remote.

Contingent assets are not recognized but
disclosed in the standalone financial statements
when an inflow of economic benefits is probable.

If the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage
of time is recognised as a finance cost.

3.10 Investment in Subsidiaries, Associates and
Joint Ventures

Investment in equity shares of subsidiaries,
associates and joint ventures is carried at cost in

the standalone financial statements. Investment
carried at cost is tested for impairment as per
Ind AS 36. An investor, regardless of the nature of
its involvement with an entity (the investee), shall
determine whether it is a parent by assessing
whether it controls the investee. An investor
controls an investee when it is exposed, or has
rights, to variable returns from its involvement with
the investee and has the ability to affect those
returns through its power over the investee. Thus,
an investor controls an investee if and only if the
investor has all the following:

• power over the investee;

• exposure, or rights, to variable returns from its
involvement with the investee and

• the ability to use its power over the investee to
affect the amount of the investor's returns

On disposal of investment, the difference between
its carrying amount and net disposal proceeds
is charged or credited to the Statement of Profit
and Loss.

3.11 Cash and cash equivalents

Cash and cash equivalents consist of cash, bank
balances in currents and short-term highly liquid
investments that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value.

3.12 Financial Instruments

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

a. Non- Derivative Financial Instruments
• Initial Recognition

The Company recognizes financial assets
and financial liabilities when it becomes
a party to the contractual provisions of
the instrument. All financial assets and
liabilities are recognized at fair value on
initial recognition. Trade Receivables are
initially recognised at transaction price
where that do not contain any significant
portion of financing component.
Transaction costs that are directly
attributable to the acquisition or release
of financial assets and financial liabilities
respectively, which are not at fair value
through profit or loss, are added to the
fair value of underlying financial assets
and liabilities on initial recognition. Trade
receivables and trade payables that
do not contain a significant financing

component are initially measured at

their transaction price.

• Subsequent Measurement

• Financial assets carried at
amortised cost

A financial asset is subsequently
measured at amortised cost which
is held with objective to hold the
asset in order to collect contractual
cash flows and the contractual
terms of the financial asset give
rise on specified dates to cash
flows that are solely payments
of principal and interest on the
principal amount outstanding.

• Financial assets at fair value
through other comprehensive
income

A financial asset is subsequently
measured at fair value through
other comprehensive income which
is held with objective to achieve both
collecting contractual cash flows
and selling financial assets and the
contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments
of principal and interest on the
principal amount outstanding. The
Company has made an election for
its investments which are classified
as equity instruments (other than
investment in shares of Subsidiaries,
Joint Ventures and Associates) to
present the subsequent changes
in fair value through profit and
loss account.

• Financial assets at fair value
through profit or loss

A financial asset which is not
classified in any of the above
categories are subsequently fair
valued through profit or loss. The
Company has elected to measure
its investments which are classified
as equity instruments (other than
investment in shares of Subsidiaries,
Joint Ventures and Associates)
at fair value through profit and
loss account.

• Financial liabilities at amortised
cost

Financial liabilities are subsequently
carried at amortized cost using the
effective interest method. Financial
liabilities at fair value through profit
and loss includes financial liability
held for trading and financial liability
designated upon initial recognition
as at fair value through profit
and loss.

• Derecognition of financial assets/
liabilities

The Company derecognizes a
financial asset when the contractual
rights to the cash flows from the
financial asset expire or it transfers
the financial asset and the transfer
qualifies for derecognition as per Ind
AS 109. A financial liability (or a part of
a financial liability) is derecognized
from the company's balance sheet
when the obligation specified in the
contract is discharged or cancelled
or expires.

b. Derivative Financial Instruments

Derivative instruments such as forward
currency contracts are used to hedge
foreign currency risks, and are initially
recognized at their fair values on the date on
which a derivative contract is entered into
and are subsequently re-measured at fair
value on each reporting date. A hedge of
foreign currency risk of a firm commitment
is accounted for as a fair value hedge. Any
gains or losses arising from changes in the
fair value of derivatives are taken directly
to Statement of Profit and Loss. However,
if hedging instrument hedges an equity
instrument for which the Company has
elected to present changes as at fair value
through other comprehensive income, then
fair value changes are recognized in Other
Comprehensive Income.

• Offsetting of financial instruments

Financial assets and financial liabilities
are offset and the net amount is
reported in the balance sheet if there
is a currently enforceable legal right
to offset the recognised amounts and
there is an intention to settle on a net
basis, to realise the assets and settle the
liabilities simultaneously.

• Reclassification of financial assets

The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial
assets which are equity instruments
and financial liabilities. For financial
assets which are debt instruments, a
reclassification is made only if there
is a change in the business model for
managing those assets. Changes to
the business model are expected to
be infrequent. The company's senior
management determines change
in the business model as a result of
external or internal changes which are
significant to the Company's operations.
Such changes are evident to external
parties. A change in the business model
occurs when the company either begins
or ceases to perform an activity that
is significant to its operations. If the
company reclassifies financial assets, it
applies the reclassification prospectively
from the reclassification date which is
the first day of the immediately next
reporting period following the change in
business model. The company does not
restate any previously recognised gains,
losses (including impairment gains or
losses) or interest.

(a) Critical Accounting Estimates,
Assumptions and Judgements

I n the process of applying the company's
accounting policies, management has made
the following estimates, assumptions and
judgements, which have significant effect on
the amounts recognised in the standalone
financial statements:

(a) 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, the estimates and assumptions
made to determine depreciation are
critical to the company's financial position
and performance.

(b) Intangibles

I nternal 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.

(c) 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.

(d) 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.

(e) Leases

The company determines the lease term
as the non-cancellable term of the lease,
together with any periods covered by an
option to extend the lease if it is reasonably
certain to be exercised, or any periods
covered by an option to terminate the lease,
if it is reasonably certain not to be exercised.

(f) Expected credit losses on financial
assets

The impairment provisions of financial assets
are based on assumptions about risk of
default and expected timing of collection.
The Company uses judgment in making
these assumptions and selecting the inputs
to the impairment calculation, based on the
Company's history of collections, customer's
creditworthiness, existing market conditions
as well as forward looking estimates at the
end of each reporting period. Estimates and
judgements are continually evaluated. They
are based on historical experience and other
factors, including expectations of future
events that may have a financial impact on
the Company and that are believed to be
reasonable under the circumstances.

(g) Impairment testing

The Company has reviewed its carrying value
of long term investments in equity/preference
shares at the end of each reporting period,
for possible impairment if there are events
or changes in circumstances that indicate
that carrying amount of assets may not be
recoverable. If the recoverable value, which
is based upon economic circumstances and
future plan is less than its carrying amount,
the impairment loss is accounted.

(h) Other estimates

The Company provides for other receivables
/ recovery against services, interest, etc.
Also, 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.

4. (b) Other Accounting Policies

(a) Fair Value Measurement

Fair value is the price 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 fair value of an asset or a liability is
measured using the assumptions that market
participants would use when pricing the asset
or liability, assuming that market participants
act in their economic best interest.

A fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic
benefits by using the asset in its highest and
best use or by selling it to another market
participant that would use the asset in its
highest and best use.

For the purpose of fair value disclosures, the
Company has determined classes of assets
and liabilities on the basis of the nature,
characteristics and risks of the asset or
liability and the level of the fair value hierarchy
in which they fall.

(b) Intangible assets

Capital expenditure on purchase and
development of identifiable non-monetary
assets without physical substance is
recognized as Intangible Assets when:

• it is probable that the expected future
economic benefits that are attributable to
the asset will flow to the entity; and

• the cost of the asset can be
measured reliably.

Such Intangible assets are stated at cost less
accumulated amortization and impairment
losses, if any.

i ntangible Assets are amortized on straight¬
line method over the expected duration
of benefits. The amortization period and
the amortization method for an intangible
asset with a finite useful life are reviewed
at least at the end of each financial year.
Changes in the expected useful life or the
expected pattern of consumption of future
economic benefits embodied in the assets
are considered to modify the amortization
period or method, as appropriate, and are
treated as changes in accounting estimates
and adjusted prospectively.

Mines development expenditure incurred
in respect of new iron ore/coal and likewise
mines are shown under 'Intangible assets
under development'. On mines being ready
for intended use, this amount is transferred to
appropriate head under intangible assets

Development expenditure incurred on
an individual project is recognized as an
intangible asset when the Company can
demonstrate all the following:

• The technical feasibility of completing the
intangible asset so that it will be available
for use or sale

• Its intention to complete the asset

• Its ability to use or sell the asset

• How the asset will generate future
economic benefits

• The availability of adequate resources to
complete the development and to use or
sell the asset

• The ability to measure reliably the
expenditure attributable to the intangible
asset during development.

(d) Impairment

The carrying amount of Property, plant and
equipment, Intangible assets and Investment
property are reviewed at each Balance Sheet
date to assess impairment, if any based on

internal / external factors. An asset is treated
as impaired when the carrying cost of asset
or exceeds its recoverable value being higher
of value in use and net selling price. An
impairment loss is recognized as an expense
in the Statement of Profit & Loss in the year
in which an asset is identified as impaired.
The impairment loss recognized in prior
accounting period is reversed, if there has
been an improvement in recoverable amount.

(e) Assets held for sale

Non-current assets are classified as "Held for
Sale” if their carrying amount is intended to
be recovered principally through sale rather
than through continuing use. The condition
for classification of "Held for Sale” is met
when the non-current asset is available for
sale. Non-current assets held for sale are
measured at the lower of carrying amount
and fair value less cost to sell.

(f) Leases

Right of Use Assets

The Company recognizes a right-of-use
asset, on a lease-by-lease basis, to measure
that right-of-use asset an amount equal to
the lease liability, adjusted by the amount
of any prepaid or accrued lease payments
relating to that lease recognised in the
balance sheet immediately before the date
of initial application.

The cost of right-of-use assets includes the
amount of lease liabilities recognised. Initial
direct costs incurred and lease payments
made at or before the commencement
date less any lease incentives received,
the recognised right-of-use assets are
depreciated on a straight-line basis over the
shorter of its estimated useful life and the
lease term. Right-of-use assets are subject to
impairment test on an annual basis.

Lease Liabilities

The Company recognise a lease liability at
the present value of the remaining lease
payments, discounted using the lessee's
incremental borrowing rate.

The lease payments include fixed payments
(including in-substance fixed payments) less
any lease incentives receivable, variable
lease payments that depend on a lease-by¬
lease basis.

In calculating the present value of
lease payments, the Company uses the
incremental borrowing rate at the lease
commencement date if the interest
rate implicit in the lease is not readily
determinable.

Short-term Leases and leases of low-
value assets

The company applies the short-term lease
recognition exemption to its short-term leases
(i.e., those leases that have a lease term of
12 months or less from the commencement
date and do not contain a purchase option).
It also applies the lease of low-value assets
recognition exemption to leases that are
considered of low value. Lease payments on
short-term leases and leases of low-value
assets are recognised as expense on a
straight-line basis over the lease term.

(g) Borrowing Costs

Borrowing costs include interest and other
costs that the Company incurs in connection
with the borrowing of funds.

Borrowing costs related to a qualifying asset
that necessarily takes a substantial period
of time to get ready for its intended use is
worked out on the basis of actual utilization
of funds out of project specific loans and/
or other borrowings to the extent identifiable
with the qualifying asset and is capitalized
with the cost of qualifying asset, using the
effective interest method. All other borrowing
costs are charged to statement of profit
and loss.

In case of significant long-term loans,
other costs incurred in connection with the
borrowing of funds are amortized over the
period of respective Loan.

(h) Captive sales

• Captive sales are in regard to products
produced by various divisions and used
for capital projects. These are transferred
at factory cost to manufacture.

• The value of captive sales is netted off from
sales and corresponding cost under total

expenses. The same is shown as a contra
item in the statement of profit and loss.

(i) Other Income

• Claims receivable

The quantum of accruals in respect of
claims receivable such as from railways,
insurance, electricity, customs, excise
and the like are accounted for on accrual
basis to the extent there is reasonable
certainty of realization.

• Dividend Income from Investment

Dividend income from investments is
recognised when the right to receive
payment has been established.

• Interest Income

I nterest income is recognized on a time
proportion basis taking into account the
amount outstanding and the applicable
interest rate. Interest income is netted
off from interest cost under the head
"Interest Cost (Net)” in the statement of
profit and loss.

(j) Research and Development expenditure

Revenue expenditure on research is expensed
as incurred. Capital expenditure ( other
than related to specific research activities )
incurred on research is added to the cost of
Property, plant and equipment/ respective
intangible asset.

(k) Earnings per share

Basic earnings per share is computed using
the net profit/ (loss) for the year (without
taking impact of OCI) attributable to the
equity shareholders' and weighted average
number of shares outstanding during
the year. The weighted average numbers
of shares is adjusted for treasury shares
and also includes fixed number of equity
shares that are issuable on conversion of
compulsorily convertible preference shares,
debentures or any other instrument, from the
date consideration is received (generally the
date of their issue)of such instruments. The
diluted EPS is calculated on the same basis
as basic EPS, after adjusting for the effect of
potential dilutive equity shares unless impact
is anti-dilutive.

(l) Segment Reporting

The Company is primarily engaged in the
business of manufacturing steel products
having similar economic characteristics,

primarily with operation in India and regularly
reviewed by the Chief Operating Decision
Maker (CODM) for assessment of company's
performance and resource allocation. There
is no other reportable segment for the
company as per the requirements of Ind AS
108 operating segments.

The Company prepares its segment
information in conformity with the
accounting policies adopted for preparing
and presenting the standalone financial
statements of the Company as a whole.

(m) Statement of Cash Flow

Cash Flows are reported using indirect
method, whereby profit for the period is
adjusted for the effects of transactions of a
non-cash nature, any deferrals and accruals
of past or future operating cash receipts and
payments and item of income and expenses
associated with investing or financing
cash flows. The cash flows from operating,
investing, and financing activities of the
company are segregated.

(n) Operating Cycle/ Current and Non¬
Current Classification

Based on the nature of products and the time
between acquisition of assets for processing
and their realisation in cash and cash
equivalents, the Company has ascertained
its operating cycle as twelve months for the
purpose of current/non-current classification
of assets and liabilities.

The Company presents assets and liabilities
in the Balance Sheet based on current/ non¬
current classification.

An asset is current when it is:

• Expected to be realised or intended
to be sold or consumed in normal
operating cycle.