File_2012_Document1

170 Jindal Steel & Power LimitedBusiness Leadership Sustainable Operations Excellent Governance Robust FinancialsAnnual Report 2011-12171ConsolidatedNOTES to the consolidated financial statements as at and for the year ended 31st March, 2012 NOTES to the consolidated financial statements as at and for the year ended 31st March, 20121. OVERVIEWJindal Steel & Power Limited which commenced operationsin the year 1991 is one of the India’s leading steelproducers with significant presence in sector like mining,power generation and infrastructure. It is listed on theNational Stock Exchange of India and Bombay StockExchange in India. Its business is spread across India andoverseas. The corporate office is situated in New Delhiand the manufacturing Plants in India are in the statesof Chhattisgarh, Odisha, Jharkhand etc. The Companyhas global presence in Australia, Brasil, Bolivia, China,Mongolia, Mozambique, Madagascar, Indonesia, SouthAfrica, Sultanate of Oman, Tanzania and Zambia. There areseveral business initiatives running simultaneously acrosscontinents.2. SIGNIFICANT ACCOUNTING POLICIESi) Basis of Preparation of Financial StatementsThe consolidated financial statements are preparedunder the historical cost convention, on going concernbasis and in terms of the Accounting Standards notifiedby Companies (Accounting Standard) Rules, 2006 incompliance with Section 211(3C) of the Companies Act,1956. The Company follows the mercantile system ofaccounting and recognises income and expenditure onaccrual basis to the extent measurable and where thereis certainty of ultimate realisation in respect of incomes.Accounting policies not specifically referred to otherwiseare consistent and in consonance with the generallyaccepted accounting principles in India. The accountingpolicies have been consistently applied by the Group andare consistent with those used in previous year.ii)The Company has prepared its financial statements inaccordance with Schedule VI as inserted by Notification-S.O. 447(E), dated 28th Februaury’2011 (As amended byNotification No F.NO. 2/6/2008-CL-V, Dated 30th March,2011). The Schedule does not impact recognition andmeasurement principle followed for the preparationof financial statements. However it has necessitatedsignificant changes in the presentation of and disclosuresin financial statements. The Company has reclassified itsprevious year figures to confirm to the classification as perthe aforesaid Schedule.Use of estimatesThe preparation of financial statements in conformitywith generally accepted accounting principles requiresmanagement to make estimates and assumptions thataffect the reported amount of assets and liabilities anddisclosure of contingent liabilities and commitments atthe date of the financial statements and the results ofiii)operations during the reporting period. Although theseestimates are based upon management’s best knowledgeof current events and actions, actual results could differfrom these estimates. Difference between the actual resultand estimates are recognised in the period in which theresults are known/materialised.Principles of ConsolidationThe Consolidated Financial Statements relate to JindalSteel & Power Limited (“the Company”) and its subsidiary,Joint Venture and Associate companies. The ConsolidatedFinancial Statements have been prepared on the followingbasis:a) The financial statements of the Company and itssubsidiaries have been consolidated on a line byline basis by adding together book value of likeitems of assets, liabilities, income and expensesafter fully eliminating inter-company transactions,balances and the unrealised profit or losses on intercompanytransactions as per Accounting Standard(AS-21) ‘Consolidated Financial Statements’, and arepresented to the extent possible, in the same manneras the Company’s independent financial statements.b) In case of foreign subsidiaries, being non-integraloperations, revenue items are consolidated at theaverage exchange rate prevailing during the year. Allassets and liabilities are converted at the exchangerates prevailing at the end of the year and exchangedifferences arising thereon are recognised in theforeign currency translation reserve.c) The difference between the cost of investment in thesubsidiaries and joint ventures and the Company’sshare of net assets at the time of acquisition of sharesin the subsidiaries and joint ventures is recognised inthe financial statements as goodwill or capital reserveas the case may be.d) Minority Interest’s share of net profit of consolidatedsubsidiaries for the year is identified and adjustedagainst the income of the group in order to arrive atthe net income attributable to the shareholders of theCompany.e) Minority’s interest in the net assets of the consolidatedsubsidiaries is identified and presented in theconsolidated balance sheet separately from liabilitiesand the equity of the Company’s shareholders.f) Minority’s interest in the net assets of consolidatedsubsidiaries consists of the amount of equityattributable to minorities on which investment ina subsidiary is made and the minorities’ share ofmovements in the equity since the date the parentsubsidiary relationship comes into existence.g) Investment in associate companies have beenaccounted for, by using equity method wherebyinvestment is initially recorded at cost and the carryingamount is adjusted thereafter for post acquisitionchange in the Company’s share of net assets ofthe associate, in accordance with the AccountingStandard (AS-23) ‘Accounting for Investment inAssociates in Consolidated Financial Statements’.h) Interests in Joint Ventures have been accounted byusing the proportionate consolidation method as perAccounting Standard (AS-27) ‘Financial Reporting ofInterests in Joint Ventures’.1. The subsidiary companies considered in the consolidated financial statements are:i) investments other than in subsidiaries, associates andjoint ventures have been accounted as per AccountingStandard (AS-13) ‘Accounting for investments’.j) As far as possible, the consolidated financialstatements are prepared using uniform accountingpolicies for like transactions and other events in similarcircumstances and are presented in the same manneras the Company’s separate financial statements.k) Figures pertaining to the subsidiaries, associatesand joint ventures have been re-classified wherevernecessary to bring them in line with the parentcompany’s financial statements.The list of subsidiaries, associates and joint ventureswhich are included in the consolidation and theCompany’s holdings therein are as under:Name of Subsidiary Country of Incorporation Proportion of Ownership (%) as on31.03.2012 31.03.2011Affiliate Overseas Limited Mauritius - 100.00Attunli Hydro Electric Power Company Limited India 74.00 74.00Belde Empreendimentos Mineiros Limited Mozambique 100.00 100.00Eastern Solid Fuels (Pty) Limited South Africa 100.00 100.00Enduring Overseas Limited Mauritius 100.00 100.00Etalin Hydro Electric Power Company Limited India 74.00 74.00Gas to Liquids International S.A. Bolivia 87.56 80.00Harmony Overseas Limited Mauritius 100.00 100.00Jindal Africa Investments (Pty) Limited South Africa 100.00 100.00Jindal Brasil Mineracao S.A. Brasil 99.995 98.00Jindal DRC SPRL Congo - 99.99Jindal Hydro Power Limited India 98.80 98.80Jindal Infosolutions Limited@ India 99.00 95.00Jindal Investimentos LDA Mozambique 100.00 100.00Jindal Investment Holdings Limited Mauritius 100.00 100.00Jindal Madagascar SARL Madagascar 100.00 100.00Jindal Minerals & Metals Africa Limited Mauritius - 80.00Jindal Minerals and Metals Africa Congo SPRL Congo - 99.95Jindal Mining & Exploration Limited Mauritius 100.00 100.00Jindal Mining (Pty) Ltd South Africa 74.00 74.00Jindal Mining Industry LLC Mongolia 100.00 100.00