essar steel india limited · essar steel india limited 1 ... company secretary shri pankaj s...

140th ANNUAL REPORT 2015-16

Essar Steel India Limited

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BOARD OF DIRECTORS

Shri Prashant Ruia Director

Shri Jatinder Mehra Director

Shri V. G. Raghavan Independent Director

Shri Arvind Pande Independent Director

Shri Parveen Kumar Malhotra Additional Director (w.e.f 16-09-2016)

Shri Sunit V Joshi Nominee Director (SBI) (w.e.f 22-11-2016)

Shri Hiranmoy Biswas Nominee Director (IDBI Bank)

Smt Gayathri Sukumar Director

Shri Dilip C. Oommen Managing Director & CEO

Shri Mahadev Iyer Director (Finance) & CFO

Shri Rajiv Kumar Bhatnagar Additional Director & Director (Projects) (w.e.f 22-11-2016)

Shri Firdose Vandrevala Executive Vice Chairman (upto 01-02-2016)

Shri Rana Som Director (upto 31-03-2016)

Shri S Santhanakrishnan Nominee Director (SBI) (upto 06-07-2016)

COMPANY SECRETARY

Shri Pankaj S Chourasia

REGISTERED OFFICE

27th KM, Surat Hazira Road, Hazira, Dist. Surat, Pin - 394270, Gujarat. Tel. : 0261-668 2400 Fax : 0261-668 5731 email : [email protected] CIN : U27100GJ1976FLC013787

CORPORATE OFFICE

Essar House, 11 Keshavrao Khadye Marg, Mahalaxmi, Mumbai - 400 034. Tel. : 022-66601100 Fax : 022-23532695

CONTENTSNotice 02Board’s Report 15Auditors’ Report 47Balance Sheet 54Profit & Loss Account 55Cash Flow Statement 56Notes to Financial Statements 58Consolidated Financial Statements 107Proxy Form 167

BANKERS

Allahabad Bank Axis Bank Ltd. Bank of Baroda Bank of India Canara Bank Central Bank of India Corporation Bank Export Import Bank of India HDFC Bank Ltd. ICICI Bank Ltd. IDBI Bank Ltd. Indian Overseas Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala Syndicate Bank The Jammu & Kashmir Bank Ltd. The Lakshmi Vilas Bank Ltd. UCO Bank Union Bank of India

AUDITORS

M. M. Chaturvedi & Co., Chartered Accountants, 24, Atlanta, Nariman Point, Mumbai - 400 021.

REGISTRAR & SHARE TRANSFER AGENTS

Data Software Research Company Pvt. Ltd. Unit : Essar Steel India Limited 19, Pycrofts Garden Road, Off Haddows Road, Nungambakkam, Chennai - 600 006. Tel. : (044) 2821 3738, 2821 4487 Fax : (044) 2821 4636 E-mail : [email protected]

Visit us at our website

http://www.essarsteel.com

2 2 40th ANNUAL REPORT 2015-16


NOTICE TO SHAREHOLDERSNOTICE is hereby given that the Fortieth Annual General Meeting of the Members of Essar Steel India Limited will be held at Utsav Community Hall, Nandniketan Township, Hazira, Dist.: Surat, Gujarat, Pin-394270 on Wednesday, December 21, 2016, at 2:00 p.m. to transact, the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt:

a) the Audited Financial Statements of the Company for the financial year ended March 31, 2016, together with the Report of the Board of Directors and the Auditors thereon;

b) the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2016, together with the Report of the Auditors thereon;

2. To appoint a Director in the place of Shri J Mehra (DIN 00042789) who retires by rotation and being eligible, offers himself for reappointment;

3. To appoint a Director in the place of Smt. Gayathri Sukumar (DIN 07115908) who retires by rotation and being eligible, offers herself for reappointment;

4. To ratify the appointment of M/s. M.M. Chaturvedi & Co., Chartered Accountants, Mumbai having Firm Registration No.112941W, as Statutory Auditors of the Company and to fix their remuneration and, if thought fit pass, with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 139(1), 142 and other applicable provisions of the Companies Act, 2013, (“Act”) and the Rules framed thereunder, as amended from time to time and pursuant to the resolution passed by the Members at the Annual General Meeting held on November 27, 2014, and pursuant to recommendation of Audit Committee, the appointment of M/s. M. M. Chaturvedi & Co., Chartered Accountants, Mumbai (Audit Firm Registration No. 112941W) as the Statutory Auditors of the Company to hold office till the conclusion of Annual General Meeting to be held in the year 2018, be and is hereby ratified and that the Board of Directors be and is hereby authorized to fix the remuneration payable to them for the financial year ending March 31, 2017, as may be determined by Audit Committee in consultation with the Auditors.”

SPECIAL BUSINESS:

5. To appoint Shri Parveen Kumar Malhotra (DIN 03494232) as Director:

To consider and if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution.

“RESOLVED THAT Shri Parveen Kumar Malhotra, (holding DIN 03494232), who was appointed as an Additional Director of the Company by the Board of Directors with effect from 16th

September, 2016, in terms of Section 161(1) of the Companies Act, 2013 (“the Act”) read with Article 95 of the Articles of Association of the Company and who holds office up to the date of this Annual General Meeting of the Company in terms of Section 161 of the Companies Act, 2013, and in respect of whom the Company has received a Notice in writing from a

Member under Section 160 (1) of the Companies Act, 2013, proposing his candidature for the office of Director of the Company, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

6. To appoint Shri Rajiv Kumar Bhatnagar (DIN 07018252) as Director:To consider and if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution.“RESOLVED THAT Shri Rajiv Kumar Bhatnagar, (holding DIN 07018252), who was appointed as an Additional Director of the Company by the Board of Directors with effect from 22nd November, 2016, in terms of Section 161(1) of the Companies Act, 2013 (“the Act”) read with Article 95 of the Articles of Association of the Company and who holds office up to the date of this Annual General Meeting of the Company in terms of Section 161 of the Companies Act, 2013, and in respect of whom the Company has received a Notice in writing from a Member under Section 160 (1) of the Companies Act, 2013, proposing his candidature for the office of Director of the Company, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

7. To appoint Shri Rajiv Kumar Bhatnagar (DIN 07018252) as Whole Time Director designated as Director Projects:To consider and if thought fit, to pass with or without modifications, the following resolution as a Special Resolution.“RESOLVED THAT in accordance with the provisions of Sections 149, 152, 196, 197 and 203 read with Schedule V (as may be or amended from time to time) and all other applicable provisions if any, of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, subject to approval of the Central Government, if required, approval of the members of the Company be and is hereby accorded to the re-appointment of Shri Rajiv Kumar Bhatnagar (DIN 07018252) as Whole Time Director designated as Director Projects of the Company for a period of three years with effect from 22nd November, 2016 to 21st November, 2019, liable to retire by rotation, on terms and conditions (including remuneration payable in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment) as set out below, with liberty to the Board of Directors (hereinafter referred to as “the Board” which term shall deemed to include any Committee of the Board constituted to exercise its powers including the powers conferred by this resolution) to determine, alter and vary the terms and conditions of the said re-appointment and/or remuneration.(a) Salary:

Basic Salary in the scale of ` 5 Lakh to ` 8 Lakh per month, as may be determined by the Board of Directors or Remuneration Committee or such other authority as may be delegated by the Board of Directors from time to time.

(b) Perquisites:i. Provident Fund, Superannuation, Gratuity, Leave

Travel Concession, Reimbursement of Medical Expenses – As per rules of the Company.



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ii. Allowances, Performance Bonus and Reimbursements not exceeding ` 20 Lakh per month, subject to overall remuneration not exceeding ` 200 lakh per annum.

“RESOLVED FURTHER THAT even in the absence of or inadequacy of profits in any Financial Year, subject to the provisions of Schedule V of the Companies Act, 2013 and such other approvals as may be required, Shri Rajiv Kumar Bhatnagar, be paid the same remuneration as mentioned above as minimum remuneration for the entire tenure or such period as may be approved by the Shareholders of the Company and/or Central Government, if required.”

“RESOLVED FURTHER THAT the Board be and is hereby authorised to do all such acts, deeds, matters and things, as in its absolute discretion, it may consider, necessary, expedient or desirable in order to give effect to this resolution.”

8. To re-appoint Shri V G Raghavan (DIN 00008683) as an Independent Director:


“RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 read with Schedule IV and other applicable provisions, if any, of the Companies Act, 2013, and the Rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) Shri V. G. Raghavan (DIN: 00008683) who has submitted a declaration that he meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013, and who is eligible for re-appointment, and in respect of whom the Company has received a notice in writing pursuant to Section 160 of the Companies Act, 2013, proposing his candidature for the office of the Director, be and is hereby re-appointed as an Independent Director of the Company for a term of 5 (five) years with effect from November 27, 2016, to November 26, 2021.”

9. To re-appoint Shri Arvind Pande (DIN 00007067) as an Independent Director:


“RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 read with Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) Shri Arvind Pande (DIN: 00007067), who has submitted a declaration that he meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and who is eligible for re-appointment, and in respect of whom the Company has received a notice in writing pursuant to Section 160 of the Companies Act, 2013 proposing his candidature for the office of the Director, be and is hereby re-appointed as an Independent Director of the Company for a term of 5 (five) years with effect from November 27, 2016 to November 26, 2021.”

10. To re-appoint Shri Dilip Oommen (DIN: 02285794) as Managing Director & CEO of the Company:

To consider and if thought fit, to pass with or without modifications, the following resolution as a Special Resolution.

“RESOLVED THAT in accordance with the provisions of Sections 149, 152, 196, 197 and 203 read with Schedule V (as may be or amended from time to time) and all other applicable provisions if any, of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, subject to approval of the Central Government, if required, approval of the members of the Company be and is hereby accorded to the re-appointment of Shri Dilip Oommen as Managing Director & CEO of the Company for a period of three years with effect from July 07, 2017 to July 06, 2020, liable to retire by rotation, on terms and conditions (including remuneration payable in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment) as set out below, with liberty to the Board of Directors (hereinafter referred to as “the Board” which term shall deemed to include any Committee of the Board constituted to exercise its powers including the powers conferred by this resolution) to determine, alter and vary the terms and conditions of the said re-appointment and/or remuneration.

(a) Salary:


(b) Perquisites:

i. Provident Fund, Superannuation, Gratuity, Leave Travel Concession, Reimbursement of Medical Expenses – As per rules of Company.


“RESOLVED FURTHER THAT even in the absence of or inadequacy of profits in any Financial Year, subject to the provisions of Schedule V of the Companies Act, 2013, and such other approvals as may be required, Shri Dilip Oommen, be paid the same remuneration as mentioned above as minimum remuneration for the entire tenure or such period as may be approved by the Shareholders of the Company and/or Central Government, if required.”


11. To re-appoint Shri Mahadev Iyer (DIN: 01871295) as Whole Time Director designated as Director Finance & CFO:

To consider and if thought fit, to pass with or without modifications, the following resolution as a Special Resolution.



“RESOLVED THAT in accordance with the provisions of Sections 149, 152, 196, 197 and 203 read with Schedule V (as may be or amended from time to time) and all other applicable provisions if any, of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, subject to approval of the Central Government, if required, approval of the members of the Company be and is hereby accorded to the re-appointment of Shri Mahadev Iyer, (holding DIN 01871295) as Whole Time Director designated as Director Finance and Chief Financial Officer of the Company for a period of three years with effect from 16th November, 2016, to 15th November, 2019 liable to retire by rotation, on terms and conditions (including remuneration payable in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment) as set out below, with liberty to the Board of Directors (hereinafter referred to as “the Board” which term shall deemed to include any Committee of the Board constituted to exercise its powers including the powers conferred by this resolution) to determine, alter and vary the terms and conditions of the said re-appointment and/or remuneration.

(a) Salary:


(b) Perquisites:

i. Provident Fund, Superannuation, Gratuity, Leave Travel Concession, Reimbursement of Medical Expenses – As per rules of the Company.


“RESOLVED FURTHER THAT even in the absence of or inadequacy of profits in any Financial Year, subject to the provisions of Schedule V of the Companies Act, 2013 and such other approvals as may be required, Shri Mahadev Iyer, be paid the same remuneration as mentioned above as minimum remuneration for the entire tenure or such period as may be approved by the Shareholders of the Company and/or Central Government, if required.”


12. To ratify the remuneration of the Cost Auditors for the financial year ending 31st March, 2017.

To consider and if thought fit, to pass, with our without modification(s) the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148(3) and all other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification or amendments thereof, for the time being in force), the remuneration of `4,00,000 (Rupees Four Lakh only) plus applicable Service Tax thereon and reimbursement of out of pocket expenses,

if any, payable to M/s Manubhai & Associates, Cost Accountants (Firm Registration M-2502), as recommended by the Audit Committee and approved by the Board of Directors of the Company for conducting Audit of the Cost Accounting Records of the Company for the financial year from April 01, 2016 till March 31, 2017 or extended financial year as may be decided by the Board, in terms of the Companies Act, 2013 and Rules framed thereunder, be and is hereby ratified.

“RESOLVED FURTHER THAT the Board of Directors and/or Director (Finance) and CFO of the Company be and are hereby severally authorised to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this resolution.”

By Order of the Board of DirectorsFor Essar Steel India Limited

Place : Mumbai Date: November 22, 2016

Pankaj S Chourasia Company Secretary

Registered Office

Essar House,27 km, Surat Hazira Road,Dist. SuratGujarat – 394270Website: www.essarsteel.comEmail: [email protected] no. 0261-6682400, 022-66601100Fax no. 0261 - 6685731

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE FORTIETH ANNUAL GENERAL MEETING (THE “MEETING”) IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. The instrument appointing the proxy should, however, be deposited at the Registered Office of the Company not less than forty-eight hours before the commencement of the Meeting.

A person can act as a proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the Company carrying voting rights. A member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder. The holder of proxy shall prove his identity at the time of attending the Meeting.

The Register of the Members and Share Transfer Books of the Company will remain closed from December 12, 2016 to December 20, 2016 (both days inclusive).

2. Corporate members intending to send their authorised representative(s) to attend the Meeting are requested to send to the Company a certified true copy of the relevant Board Resolution together with the specimen signature(s) of the representative(s) authorised under the said Board Resolution to attend and vote on their behalf at the Meeting.



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3. This Notice is also being sent with Annual report along with attendance slip, proxy form and route map of the venue of the Meeting.

4. A Statement pursuant to Section 102(1) of the Companies Act, 2013 (“the Act”), relating to the Special Business to be transacted at the Meeting is annexed hereto.

5. The Company is providing facility for voting by electronic means (e-voting) through an electronic voting system which will include remote e-voting as prescribed by the Companies (Management and Administration) Rules, 2014 as presently in force and the business set out in the Notice will be transacted through such voting. Information and instructions including details of User ID and password relating to e-voting are provided in the Notice under Note No 17.

6. Shri J Mehra, Smt. Gayathri Sukumar, Shri Parveen Kumar Malhotra, Shri Rajiv Kumar Bhatnagar, Shri V G Raghavan, Shri Arvind Pande, Shri Dilip Oommen and Shri Mahadev Iyer are interested in the Ordinary/Special Resolutions set out at Item Nos. from 2 & 3 and 5 to 11 respectively, of the Notice with regard to their appointment / re-appointment. The relatives of such interested directors may be deemed to be interested in the said Resolutions to the extent of their shareholding interest, if any, in the Company. Save and except the above, none of the Directors / Key Managerial Personnel of the Company / their relatives are, in any way, concerned or interested, financially or otherwise, in the Ordinary / Special Resolutions set out under remaining items of the Notice.

7. Members / Proxies / Authorised Representatives are requested to bring to the Meeting necessary details of their shareholding, attendance slip(s) and copy(ies) of their Annual Report.

8. In case of joint holders attending the Meeting, only such joint holder who is higher in the order of names will be entitled to vote at the Meeting.

9. Relevant documents referred to in the Notice are open for inspection by the members at the Registered Office of the Company on all working days (i.e., except Saturdays, Sundays and Public Holidays) during business hours up to the date of the Meeting. The aforesaid documents will also be available for inspection by members at the Meeting.

10. The Company’s Registrars & Transfer Agents for its share registry (both, physical as well as electronic) is Data Software Research Company Private Limited (“DSRC”) having its office at 19, Pycrofts Garden Road, Off Haddows Road, Nungambakkam, Chennai - 600006.

11. Members holding shares in electronic mode are requested to intimate any change in their address or bank mandates to their Depository Participants (DPs) with whom they are maintaining their demat accounts. Members holding shares in physical mode are requested to advise any change in their address or bank mandates to the Company / DSRC.

12. The Company has transferred the unpaid or unclaimed dividends declared up to financial years 2007-08, from time to time, to the Investor Education and Protection Fund (IEPF) established by the Central Government.

13. Members holding shares in physical mode are advised to make nomination in respect of their shareholding in the Company. Members holding shares in electronic mode may contact their respective DPs for availing the nomination facility.

14. Members who hold shares in physical mode in multiple folios in identical names or joint holding in the same order of names are requested to send the share certificates to DSRC, for consolidation into a single folio.

15. Members who have not registered/updated their e-mail addresses with DSRC, if shares are held in physical mode or with their DPs, if shares are held in electronic mode, are requested to do so for receiving all future communications from the Company including Annual Reports, Notices, Circulars, etc., electronically.

16. Non-Resident Indian members are requested to inform DSRC / respective DPs, immediately of:

a) Change in their residential status on return to India for permanent settlement.

b) Particulars of their bank account maintained in India with complete name, branch, account type, account number and address of the bank with pin code number, if not furnished earlier.

17. Voting through electronic means

i) In compliance with the provisions of Section 108 of the Companies Act, 2013, Rule 20 of the Companies (Management and Administration) Rules, 2014, as amended by the Companies (Management and Administration) Amendment Rules, 2015, the Company is pleased to provide to the Members a facility to exercise their right to vote on resolutions proposed to be considered at the 40th Annual General Meeting (AGM) by electronic means through e-Voting Services. The facility of casting votes by the Members using an electronic voting system from a place other than venue of the AGM (‘remote e-voting’) will be provided by M/s Central Depository Services (India) Limited (CDSL).

ii) The facility for voting through ballot paper shall be made available at the AGM and the Members attending the meeting, who have not cast their vote by remote e-voting shall be able to exercise their right at the meeting through Ballot Paper/Electronically.

iii) The Members who have cast their vote by remote e-voting prior to the AGM may also attend the AGM, but shall not be entitled to cast their vote again.

iv) The voting period begins on 17th December, 2016 and ends on 20th December, 2016. During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date 16th December, 2016 may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter.

v) The shareholders should log on to the e-voting website www.evotingindia.com.

vi) Click on Shareholders.

vii) Now Enter your User IDa. For CDSL: 16 digits beneficiary ID,b. For NSDL: 8 Character DP ID followed by 8 Digits

Client ID,c. Members holding shares in Physical Form should

enter Folio Number registered with the Company.



viii) Next enter the Image Verification as displayed and Click on Login.

ix) If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any company, then your existing password is to be used.

x) If you are a first time user follow the steps given below:

For Members holding shares in Demat Form and Physical Form

PAN Enter your 10 digit alpha-numeric PAN issued by Income Tax Department (Applicable for both demat shareholders as well as physical shareholders)• Members who have not updated their PAN

with the Company/Depository Participant are requested to use the first two letters of their name and the 8 digits of the sequence number in the PAN field.

• In case the sequence number is less than 8 digits enter the applicable number of 0’s before the number after the first two characters of the name in CAPITAL letters. Eg. If your name is Ramesh Kumar with sequence number 1 then enter RA00000001 in the PAN field.

Dividend Bank Details OR Date of Birth (DOB)

Enter the Dividend Bank Details or Date of Birth (in dd/mm/yyyy format) as recorded in your demat account or in the company records in order to login.• If both the details are not recorded with the

depository or company please enter the member id / folio number in the Dividend Bank details field as mentioned in instruction (iv).

xi) After entering these details appropriately, click on “SUBMIT” tab.

xii) Members holding shares in physical form will then directly reach the Company selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

xiii) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice.

xiv) Click on the EVSN for ESSAR STEEL INDIA LIMITED on which you choose to vote.

xv) On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

xvi) Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.

xvii) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be

displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

xviii) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

xix) You can also take a print of the votes cast by clicking on “Click here to print” option on the Voting page.

xx) If a demat account holder has forgotten the changed password then Enter the User ID and the image verification code and click on Forgot Password & enter the details as prompted by the system.

xxi) Shareholders can also cast their vote using CDSL’s mobile app m-Voting available for android based mobiles. The m-Voting app can be downloaded from Google Play Store. Apple and Windows phone users can download the app from the App Store and the Windows Phone Store respectively. Please follow the instructions as prompted by the mobile app while voting on your mobile.

xxii) Note for Non – Individual Shareholders and Custodians

• Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) and Custodian are required to log on to www.evotingindia.com and register themselves as Corporates.

• A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to [email protected].

• After receiving the login details a Compliance User should be created using the admin login and password. The Compliance User would be able to link the account(s) for which they wish to vote on.

• The list of accounts linked in the login should be mailed to [email protected] and on approval of the accounts they would be able to cast their vote.

• A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian, if any, should be uploaded in PDF format in the system for the scrutinizer to verify the same.

xxiii) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.com, under help section or write an email to [email protected].

xxiv) You can also update your mobile number and email ID in the user profile details of the Folio which may be used for sending future communication(s).

xxv) The voting rights of Members shall be in proportion to their shares of the paid up equity share capital of the Company as on the cut-off date of 16th December, 2016.

xxvi) Any person, who acquires shares of the Company and becomes Member of the Company after dispatch of the notice and holding shares as of the cut-off date i.e. 16th December, 2016, (also follow the same process of login mentioned above) may obtain the login ID and password by sending a request at [email protected] or to the Issuer at [email protected].



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However, if you are already registered with CDSL for remote e-voting then you can use your existing user ID and password for casting your vote. If you forget your password, then you can reset your password by using ‘Forgot User Details/ Password option available on www.evoting.india.com or contact CDSL at its toll free no.:1800-200-5533.

xxvii) A member may participate in the AGM even after exercising his right to vote through remote e-voting but shall not be allowed to vote again at the AGM.

xxviii) A person, whose name is recorded in the Register of Members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting at the AGM through ballot paper/electronically.

xxix) Shri Dinesh Deora, Practicing Company Secretary, has been appointed as Scrutinizer to scrutinize the voting and remote e-voting process in a fair & transparent manner.

xxx) The Chairman shall, at the AGM, at the end of discussion on the resolutions on which the voting is to be held, allow voting with the assistance of scrutinizer, by use of ‘Ballot Paper/Electronically’ for all those Members who are present at the AGM but have not cast their votes by availing the “remote e-voting” facility

xxxi) The Scrutinizer shall, after the conclusion of voting at the general meeting, first count the votes cast at the meeting

and there after unblock the votes cast through remote e-voting in the presence of at least two witnesses, not in the employment of the Company and shall submit, not later than three days of the conclusion of the AGM, a Consolidated Scrutinizer’s Report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him / her in writing, who shall counter sign the same and declare the result of the voting forthwith.

xxxii) The Results declared along with the report of the Scrutinizer shall be placed on the website of the Company, viz. www.essarsteel.com.

ANNEXURE TO NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013:

Item No. 5

Shri Parveen Kumar Malhotra (DIN: 03494232) was appointed as an Additional Director of the Company vide Board resolution passed on 16th September 2016. Pursuant to the provisions of Section 161, Shri Parveen Kumar Malhotra (DIN: 03494232) holds office up to the date of this Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Act along with requisite deposit, proposing appointment of Shri Parveen Kumar Malhotra (DIN: 03494232) as Director of the Company.

Details of Director as required to be provided pursuant to the provisions of Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India and approved by the Central Government are provided herein below:

Name of the Director Shri Parveen Kumar Malhotra (DIN: 03494232)Age 61 yearsQualification Shri P. K. Malhotra is a Science graduate from Punjabi University and Certified Associate of

Indian Institute of Bankers. Masters in Financial Management from Jamnalal Bajaj Institute of Management Studies, University of Mumbai.

Experience (including expertise in specific functional area)/Brief Resume

Shri Malhotra joined State Bank of India in 1978 as Probationary Officer and retired as Dy. Managing Director, heading Stress Asset Management Group in August 2015. During the course of his engagement with the India’s largest Bank & PSU SBI, he carried out multifarious assignments in positions of high responsibility around the country and abroad. He honed his skills in International Finance and Operations as Head of Syndication in Bahrain and then as CEO of State Bank’s operations in Singapore. His core competencies include Project Finance, funding of Large Corporates and resolution of Stressed Industrial Assets.

Shri Malhotra has been part of policy making committees in SBI as also Reserve Bank of India. He has represented State Bank in quite a few infrastructure related groups/task forces constituted by Government of India and other bodies. He has also served on Boards of Investment and Manufacturing Companies in the past.

Terms and Conditions of Re-appointment He is non-executive Director of the Company liable to retire by rotation.Remuneration last drawn NilRemuneration proposed to be paid NilDate of first appointment on the Board 16th September 2016Shareholding in the Company NilRelationship with other Directors/Key Managerial Personnel

Not Applicable

Number of meetings of the Board attended during the financial year

Not applicable for financial year ended 31st March 2016.

Directorships of other Boards NilMembership/ Chairmanship of Committees of other Boards

Nil



The Nomination and Remuneration Committee and Board recommends the resolution for appointment of Shri Parveen Kumar Malhotra as a Director of the Company as set out at Item no.5 of the Notice for your approval.Except for Shri Parveen Kumar Malhotra, none of the Directors or Key Managerial Personnel of the Company or their relatives are in any way, financially or otherwise, concerned or interested in the aforesaid Resolution.Item No.6 & 7The Board of Directors at its meeting held on November 22, 2016, Shri Rajiv Kumar Bhatnagar (DIN: 07018252) was appointed as Additional Director and as Whole-time Director designated as Director Projects of the Company for a period of three years with effect from 22nd November, 2016 to 21st November, 2019.Pursuant to the provisions of Section 161, Shri Rajiv Kumar Bhatnagar (DIN: 07018252) holds office up to the date of this Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Act along with requisite deposit, proposing appointment of Shri Rajiv Kumar Bhatnagar (DIN: 07018252) as Director of the Company.Details of Director as required to be provided pursuant to the provisions of Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India and approved by the Central Government are provided herein below:

Name of the Director Shri Rajiv Kumar BhatnagarAge 58 yearsQualification Shri Rajiv Kumar Bhatnagar is a B. Tech in Metallurgical Engineering from IIT Kanpur.

Subsequently he completed his post graduate degree in Industrial engineering from IIIE, Mumbai. Later in the career he completed International Executive Programme (a condensed MBA) from INSEAD, France.

Experience (including expertise in specific functional area)/Brief Resume

With 37 years of industry experience, Shri Bhatnagar joined Essar Steel as a Head-Technology in August 2010 and took up the role of CEO of Hazira facility since July 2011 and served in this position for 4 years.He rose to the position of Director, Hazira complex and presently working as Executive Director at Essar Steel.Prior to Essar steel he served Arcelor Mittal steel company for a total period of 9 years and in 3 different locations, namely, Romania, Macedonia and Ukraine. His role and designations were as follows:Romania; GM Rolling Mills and strategy;Macedonia; CEO;Ukraine; Director (Tech Admn, projects and strategy);Prior to that, Shri Bhatnagar served in Steel Authority of India Ltd for 22 years starting from a Junior Manager in its Plate Mill of Bhilai steel plant to Asst general manager in the rail and structural Mill, handled key assignments in various areas of production.While in SAIL he was placed in a high value HR role as a tutor of specially designed management modules for 3 years and in addition played a key role to represent SAIL in various national and international competitions and presentations.He is Vice Chair of Association of Iron and Steel Technology, India chapter, and is ex-chairman of southern Gujarat council of CII. He is also a fellow of Institution of Engineers (India).

Terms and Conditions of Re-Appointment

(a) Salary:Basic Salary in the scale of ` 5 lakhs to ` 8 lakhs per month, as may be determined by the Board of Directors or Remuneration Committee or such other authority as may be delegated by the Board of Directors from time to time.(b) Perquisites:i. Provident Fund, Superannuation, Gratuity, Leave Travel Concession, Reimbursement of

Medical Expenses – As per rules of Company.ii. Allowances, Performance Bonus and Reimbursements not exceeding ̀ 20 Lakhs per month,

subject to overall remuneration not exceeding ` 200 lakhs per annum.Remuneration last drawn `156 lakhs per annum.Remuneration proposed to be paid As per the terms and conditions within the overall limits of ` 200 lakhs per annum.Date of first appointment on the Board 22nd November, 2016Shareholding in the Company NilRelationship with other Directors/Key Managerial Personnel

Not Applicable


Not Applicable

Directorships of other Boards He holds directorship in 2 other public companies.Membership/ Chairmanship of Committees of other Boards

Nil



9

The Nomination and Remuneration Committee and Board recommends the resolution for appointment of Shri Rajiv Kumar Bhatnagar as Director and Whole time Director designated as Director Projects of the Company as set out at Item no.6 & 7 of the Notice for your approval.

Except for Shri Rajiv Kumar Bhatnagar, none of the Directors or Key Managerial Personnel of the Company or their relatives are in any way, financially or otherwise, concerned or interested in the aforesaid Resolution.

Item No.8 and 9

Shri Arvind Pande and Shri V. G. Raghavan were appointed as Independent Directors under Section 149 and all other applicable provisions of the Companies Act, 2013 to hold office for a term of three year each. The term of the directors expires at this Annual General Meeting.

The Directors are not disqualified from being appointed as Directors in terms of Section 164 of the Act and they have given their respective consent to act as Directors. The Company has received notices in writing from members along with the deposit of requisite amount under Section 160 of the Act proposing the candidatures of each of Shri Arvind Pande, and Shri V. G. Raghavan for the office of Directors of the Company.

The Company has also received declarations from Shri Arvind Pande and Shri V. G. Raghavan that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act.


Name of the Director Shri V. G. Raghavan (DIN: 00008683)Age 71 yearsQualification Shri Raghavan has a degree in Commerce from Loyola College, Chennai and is a Chartered

AccountantExperience (including expertise in specific functional area) / Brief Resume

Shri V G Raghavan, formerly the Chief Financial Officer of the Essar Group is currently a member of a number of Board Committees, including group finance committee. Raghavan brings a wealth of experience in Indian and global financial markets and was responsible for financial planning and fund raising for the growth and expansion plans of the Essar Group. Shri Raghavan has a degree in Commerce from Loyola College, Chennai and is a Chartered Accountant. Prior to joining Essar, Shri Raghavan was with the State Bank of India, Chennai, as Credit Officer in charge of Corporate Finance, for seven years. After joining the Essar Group, he took charge as Chief Financial Officer of Essar Shipping and saw through the expansion of Essar Shipping. He was in charge of the IPO of Essar Steel when the company went into steel manufacturing. He has considerable experience in domestic banking and the international syndicated loan market as the company has been raising funds from the international market for setting up the Integrated Steel Plant. Shri Raghavan also concluded the First Power Purchase Agreement of Essar Power Ltd. with the Gujarat Electricity Board as Director - Finance of Essar Power Ltd. He joined Essar Steel India Limited as Chief Financial Officer in June 1999 and subsequently joined the Board of Essar Steel as Director – Finance and continued till 29.01.2007. Thereafter he continued with the Essar Group and served in advisory capacity on the Board of various Group Companies.


He is appointed as Independent Director of the Company. The terms and conditions are governed by the rules of the Company and provisions of the Companies Act 2013 as amended from time to time.

Remuneration last drawn NilRemuneration proposed to be paid NilDate of first appointment on the Board 29th October 2003Shareholding in the Company NilRelationship with other Directors/Key Managerial Personnel

Not Applicable


6 Board Meetings.

Directorships of other Boards He holds directorships of 9 other public companies and 1 private company.Membership/ Chairmanship of Committees of other Boards

Holding membership in 4 committee

Name of the Director Shri Arvind Pande (DIN 00007067)Age 74 yearsQualification Bachelor of Science and Master of Economics. Experience (including expertise in specific functional area) / Brief Resume

Arvind Pande joined the Indian Administrative Service in 1965 and spent the early years in Madhya Pradesh. He was Advisor to the Executive Director for India, Bangladesh and Sri Lanka at the World Bank, Washington D.C. from 1971 to 1974, representing the Govt. of India and assisting in processing of Bank assisted projects in India. Continued with World Bank assisted projects in the Department of Economic Affairs, Ministry of Finance, Govt. of India from 1974 to 1978. He was the Director and Joint Secretary to the Prime Minister of India from 1981 to 1986, helping with policy and issues relating to Economic and Scientific Departments/ Ministries.



Experience (including expertise in specific functional area) / Brief Resume

Moved to the Corporate Public Sector in 1986,joining the Board of Directors of Steel Authority of India Ltd.(SAIL) as a full time functional Director dealing with several areas like Corporate Planning, Personnel and Human Resources, Rourkela Steel Plant, Special Steel Plants, etc. to become Chairman and Chief Executive Officer from Jan. 1997 to September 2002. During this period successfully led the implementation of a major restructuring exercise for SAIL involving, among others, debt rescheduling, cost rationalization, productivity and quality improvements, reorganization of major assets and functions.Has served/is serving on Boards/Committees/Advisory Groups of major organisations like the Board for Reconstruction of Public Sector Enterprises, Govt. of India, National Council of Applied Economic Research (NCAER), HDFC Bank Ltd, Coal India Ltd., Visa Steel Ltd, XIM Bhubaneswar, CII National Council, International Iron and Steel Institute, Bengal Aerotropolis Projects Ltd., Sandhar Technologies Ltd, Era Infra engineering Ltd, Posco India Ltd., Titagarh Wagons Ltd., JPAL SA at IFMR.

Terms and Conditions of Re- Appointment

He is appointed as Independent Director of the Company. The terms and conditions are governed by the rules of the Company and provisions of the Companies Act, 2013, as amended from time to time.

Remuneration last drawn NilRemuneration proposed to be paid NilDate of first appointment on the Board 29th May 2013Shareholding in the Company NilRelationship with other Directors/Key Managerial Personnel

Not Applicable


8 Board Meetings.

Directorships of other Boards He holds directorships of 2 other public companies.Membership/ Chairmanship of Committees of other Boards

Chairman of Audit Committee of Sandhar Technologies Limited

Your Directors recommends passing of a Special Resolution for re-appointment of the above Independent Directors as proposed at Item No.8 and 9 of the Notice.

Except for Shri Arvind Pande and Shri V G Raghavan, for their respective appointments, none of the Directors or Key Managerial Personnel of the Company or their relatives are in any way, financially or otherwise, concerned or interested in the aforesaid Resolution.

Item No.10

The term of Shri Dilip Oommen as Managing Director & CEO of the Company ends on 6th July 2017. The Board of Directors of the Company at their meeting held on 22nd November, 2016 has re-appointed Shri Dilip Oommen as Managing Director & CEO for a period of three years with effect from 7th July, 2017 to 6th July, 2020.


Name of the Director Shri Dilip Oommen (02285794)Age 58 yearsQualification He is a Metallurgical Engineer from the Indian Institute of Technology, Kharagpur.Experience (including expertise in specific functional area) / Brief Resume

Shri Dilip Oommen joined Essar Steel India in July 2003 and has held the post of Chief Executive Officer, Essar Steel India Operations since March, 2008 and is Director Operations of Essar Steel India Limited since July 2008. Prior to joining Essar Steel India, Shri Oommen was Head of Hadeed Steel Plant from May 1998 to July 2003, initially with responsibility for long products and later for flat products. Prior to taking up his post at Hadeed Steel Plant, Shri Oommen held the position of Vice President—Steel Making Plant, at Essar Steel India at Hazira from January 1996 to May 1998. He has more than 32 years of experience in the steel industry. In addition to his other responsibilities, Shri Oommen serves on the board of directors of Essar Steel and Essar Power.

Terms and Conditions of Re- Appointment

(a) Salary: Basic Salary in the scale of ` 5 lakhs to ` 8 lakhs per month, as may be determined by the

Board of Directors or Remuneration Committee or such other authority as may be delegated by the Board of Directors from time to time.

(b) Perquisites:i. Provident Fund, Superannuation, Gratuity, Leave Travel Concession, Reimbursement of

Medical Expenses – As per rules of Company.ii. Allowances, Performance Bonus and Reimbursements not exceeding `20 Lakh per month,

subject to overall remuneration not exceeding `350 lakh per annum.Remuneration last drawn ` 325.80 lakhs per annum.Remuneration proposed to be paid As per the terms and conditions within the overall limits of `350 lakhs per annum.Date of first appointment on the Board 7th July, 2008.Shareholding in the Company Nil



11

Relationship with other Directors/Key Managerial Personnel

Not Applicable


8 Board Meetings.


Nil

The Board recommends the resolution for appointment of Shri Dilip Oommen as Managing Director & CEO of the Company as set out at Item no.10 of the Notice for your approval.Except for Shri Dilip Oommen, none of the Directors or Key Managerial Personnel of the Company or their relatives are in any way, financially or otherwise, concerned or interested in the aforesaid Resolution.Item No.11The term of Shri Mahadev Iyer as Whole Time Director of the Company ends on 15th November, 2016. The Board of Directors of the Company at their meeting held on November 22, 2016 has re-appointed Shri Mahadev Iyer as Whole Time Director for a period of three years with effect from 16th November 2016 to 15th November, 2019.Shri Mahadev Iyer is associated with the Company since last 23 years. He is heading the finance function and has also served the Company as CFO and Director (Finance) during the period from February 16, 2009 to August 31, 2011. In 2011, he assumed responsibility as a CFO for Essar Steels’ Business Group.Shri Mahadev Iyer joined the Essar Group in December 1990 and was CFO of Essar Steel Business Vertical and Director (Finance) of Essar Steel India Ltd from February 2009 till August 2011. He has more than 30 years of experience including over 10 years as CFO. At Essar Group, he has held various leadership positions and has worked in areas such as Treasury Management, Corporate Finance and Project Finance. Prior to assuming overall responsibility as Director (Finance) for Essar Steel India, Shri Iyer played a leadership role in the project financing of Company’s forward and backward integration expansion projects, including the expansion of steelmaking to 10 MTPA at Hazira. He is a qualified Chartered Accountant, a Company Secretary and Cost and Work Accountant.Details of Director as required to be provided pursuant to the provisions of Secretarial Standard on General Meetings (“SS-2”), issued by the Institute of Company Secretaries of India and approved by the Central Government are provided herein below:

Name of the Director Shri Mahadev Iyer (DIN 01871295)Age 58 yearsQualification He is B.Com, a qualified Chartered Accountant, Company Secretary and Cost and Work

Accountant.Experience (including expertise in specific functional area) / Brief Resume

Shri Mahadev Iyer is associated with the Company since last 23 years. He was heading the finance function and has also served the Company as CFO and Director (Finance) during the period from February 16, 2009 to August 31, 2011. In 2011, he assumed responsibility as a CFO for Essar Steels’ Business Group.Shri Mahadev Iyer joined the Essar Group in December 1990 and was CFO of Essar Steel Business Vertical and Director (Finance) of Essar Steel India Ltd from February 2009 till August 2011. He has more than 30 years of experience including over 10 years as CFO. At Essar Group, he has held various leadership positions and has worked in areas such as Treasury Management, Corporate Finance and Project Finance. Prior to assuming overall responsibility as Director (Finance) for Essar Steel India, Shri Iyer played a leadership role in the project financing of Company’s forward and backward integration expansion projects, including the expansion of steelmaking to 10 MTPA at Hazira.


(a) Salary: Basic Salary in the scale of ` 5 lakhs to ` 8 lakhs per month, as may be determined by the

Board of Directors or Remuneration Committee or such other authority as may be delegated by the Board of Directors from time to time.

(b) Perquisites: i. Provident Fund, Superannuation, Gratuity, Leave Travel Concession, Reimbursement

of Medical Expenses – As per rules of Company. ii. Allowances, Performance Bonus and Reimbursements not exceeding ` 20 Lakh per

month, subject to overall remuneration not exceeding ` 300 lakh per annum.Remuneration last drawn ` 250 lakhs per annum.Remuneration proposed to be paid As per the terms and conditions within the overall limits of ` 300 lakhs per annum.Date of first appointment on the Board 16th February 2009.Shareholding in the Company NilRelationship with other Directors/Key Managerial Personnel

Not Applicable


8 Board Meetings.


Nil



The Board recommends the resolution for appointment of Shri Mahadev Iyer as a Director of the Company as set out at Item no.11 of the Notice for your approval.Except for Shri Mahadev Iyer, none of the Directors or Key Managerial Personnel of the Company or their relatives are in any way, financially or otherwise, concerned or interested in the aforesaid ResolutionItem No.12Based on the recommendation of the Audit Committee, the Board of Directors of the Company at their meeting held on July 21, 2016 have re-appointed M/s Manubhai & Associates, Cost Accountants, as the Cost Auditors of the Company to carry out cost audit pertaining to Steel Business of the Company for the year ending March 31, 2017 at a remuneration of ` 4,00,000/- plus applicable service tax and reimbursement of out of pocket expenses. In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the provisions of Rule 14 of Companies (Audit and Auditors) Rules 2014, the remuneration payable to the Cost Auditors requires ratification by the shareholders. Accordingly, approval of the members is sought for passing an Ordinary Resolution for ratification of the remuneration payable to the Cost Auditors for the financial year ending March 31, 2017. Your Directors recommends passing of an Ordinary Resolution as proposed at Item No.12 of the Notice. None of the Directors, Key Management Personnel of the Company, or their relatives are, in any way, concerned or interested, financially or otherwise, in this resolution. A statement containing information required to be provided to the shareholders as per the provision of Schedule XIII in respect of re-appointment of Shri Dilip Oommen, Shri Mahadev Iyer and appointment of Shri Rajiv Kumar Bhatnagar is given below:I. GENERAL INFORMATION: (1) Nature of industry : Manufacturing and processing of Steel, Steel Hot Rolled Coils, Steel Cold Rolled Coils, Steel Plates, Steel Pipes and

other steel products. (2) Date or expected date of commencement of commercial production: Not applicable, as the Company is an existing Company. (3) In case of new companies, expected date of commencement of activities as per project approved by financial institutions appearing in

the prospectus: Not Applicable

(4) Financial performance based on given indicators (` in Crore)

Particulars FY 2015-16 FY 2014-15 FY 2013-14

Total Income 14,378.52 14,369.35 14,348.55

Total Expenditure (Incl. Finance Cost, Exch. Variance, Depreciation, Exceptional Items and Tax)

20,178.66 13,721.30 15,945.69

Profit / (Loss) After tax (5,800.14) 648.05 (1,597.14)

Earnings Per Share (18.67) 2.26 (5.70)

(5) Foreign investments or collaborations, if any: Till date holding companies have made foreign investment of approx. ` 6,800 Crore in the share capital of the Company.

II. INFORMATION ABOUT THE APPOINTEES:

Particulars Shri Dilip Oommen Shri Mahadev Iyer Shri Rajiv Kumar Bhatnagar

Background details: Shri Dilip Oommen is a Metallurgical Engineer from the Indian Institute of Technology, Kharagpur.

Shri Dilip Oommen joined Essar Steel India in July 2003 and has held the post of Chief Executive Officer, Essar Steel India Operations since March, 2008 and is Director Operations of Essar Steel India Limited since July 2008. Prior to joining Essar Steel India, Shri Oommen was Head of Hadeed Steel Plant from May 1998 to July 2003, initially with responsibility for long products and later for flat products.

Shri Mahadev Iyer is a B.Com, a qualified Chartered Accountant, a Company Secretary and Cost and Work Accountant.

Shri Mahadev Iyer is associated with the Company since last 23 years. He was heading the finance function and has also served the Company as CFO and Director (Finance) during the period from February 16, 2009 to August 31, 2011. In 2011, he assumed responsibility as a CFO for Essar Steels’ Business Group.

Shri Rajiv Kumar Bhatnagar is a B. Tech in Metallurgical Engineering from IIT Kanpur. Subsequently he completed his post graduate degree in Industrial engineering from IIIE, Mumbai. Later in the career he completed International Executive Programme (a condensed MBA) from INSEAD, France.

With 37 years of industry experience, Shri Bhatnagar joined Essar Steel as a Head-Technology in August 2010 and took up the role of CEO of Hazira facility since July 2011 and served in this position for 4 years.



13

Particulars Shri Dilip Oommen Shri Mahadev Iyer Shri Rajiv Kumar Bhatnagar

Prior to taking up his post at Hadeed Steel Plant, Shri Oommen held the position of Vice President—Steel Making Plant, at Essar Steel India at Hazira from January 1996 to May 1998. He has more than 32 years of experience in the steel industry. In addition to his other responsibilities, Shri Oommen serves on the board of directors of Essar Steel and Essar Power.

Shri Mahadev Iyer joined the Essar Group in December 1990 and was CFO of Essar Steel Business Vertical and Director (Finance) of Essar Steel India Ltd from February 2009 till August 2011. He has more than 30 years of experience including over 10 years as CFO. At Essar Group, he has held various leadership positions and has worked in areas such as Treasury Management, Corporate Finance and Project Finance. Prior to assuming overall responsibility as Director (Finance) for Essar Steel India, Shri Iyer played a leadership role in the project financing of Company’s forward and backward integration expansion projects, including the expansion of steelmaking to 10 MTPA at Hazira.

He rose to the position of Director, Hazira complex and presently working as Executive Director at Essar Steel.

Prior to Essar steel he served Arcelor Mittal steel company for a total period of 9 years and Steel Authority of India Ltd for 22 years.

He is Vice Chair of Association of Iron and Steel Technology, India chapter, and is ex-chairman of southern Gujarat council of CII. He is also a fellow of Institution of Engineers (India).

Past Remuneration (per annum) ` 325.80 Lakhs ` 250 Lakhs ` 156 Lakhs

Recognition or Awards NA NA NA

Job Profile and his suitability The qualifications, experience and expertise, as mentioned herein before, proves his suitability

The qualifications, experience and expertise, as mentioned herein before, proves his suitability

The qualifications, experience and expertise, as mentioned herein before, proves his suitability

Remuneration Proposed As per the terms and conditions within the overall limits of ` 350 Lakhs p.a.

As per the terms and conditions within the overall limits of ` 300 Lakhs p.a.

As per the terms and conditions within the overall limits of ` 200 Lakhs p.a.

Comparative remuneration profile with respect to industry, size of the company, profile of the position and person (in case of expatriates the relevant details would be with respect to the country of his origin)

Remuneration paid is commensurate with the size of the Company, profile of his position, experience & expertise and is as per the industry standards for such post.



Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any.

NA NA NA

III. OTHER INFORMATION: (1) Reasons of loss or inadequate profits: The Company had faced various extraneous challenges

such as disruption of committed natural gas supplies, disruption in supply of raw materials, steep fall in selling price resulted into reduction in net sales realisation. The situation was compounded by world-wide glut in steel and dumping in Indian market predominantly by Chinese suppliers at predatory prices, high interest cost and unwinding of OSPIL transaction.

(2) Steps taken or proposed to be taken for improvement: The Company has taken rigorous and multifaceted efforts

to improve overall operations and functioning of the Company. This includes scaling up production, reduction in overheads, better capacity utilisation and optimum use of resources. The Government of India also took several measures such as imposition of higher import duty, safeguard duty and minimum import price etc. These will protect the steel industry from dumping of cheap import of steel.



In order to address the transient liquidity challenge and further to ensure long term viability, the Company is in active discussion with its lenders for implementing the scheme of restructuring as per the RBI guidelines.

In view of the above, the Company believes that sufficient future income will be available.

(3) Expected increase in productivity and profits in measurable terms:

With overall internal efforts coupled with conducive market and regulatory environment the Company expects to achieve targeted sales of 6.6 mn tonne of steel and 2.8 mn tonne of pellets and expected to earn EBIDTA of more than ` 3,300 Crore in the current financial year.

IV. DISCLOSURES:

(i) All elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors;

Details of remuneration are mentioned in the respective resolutions and explanatory statement.

(ii) Details of fixed component and performance linked incentives along with the performance criteria;

The overall remuneration (inclusive of performance linked incentives) is mentioned in the respective resolution or as maybe altered time to time.

(iii) Stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable:

Not Applicable as no such options are provided.

(iv) Service contracts, notice period, severance fees; and other disclosures

The appointment shall be governed as per the shareholders resolution and agreement to be executed on the basis of the terms as approved by the Board and Shareholders; notice period is three months and there is no provision for severance fees. The Company has already applied for an in-principle approval of secured lenders for the proposed remuneration of the above Directors;

By Order of the Board of DirectorsFor Essar Steel India Limited

Place : Mumbai Date: November 22, 2016

Pankaj S Chourasia Company Secretary



15

BOARD REPORTTo,The Members of Essar Steel India Limited,Your Directors have pleasure in presenting the 40th Annual Report of your Company together with the Audited Statement of Accounts for the year ended 31st March, 2016. 1. FINANCIAL STATEMENTS & RESULTS a. Financial Results (Figures are ` in Crore)

ParticularsStandalone Consolidated

FY 2015-16 FY 2014-15 FY 2015-16 FY 2014-15Gross Revenue 14,380.77 16,465.46 15,560.36 17,575.64Less: Revenue from Trial Run Operations 2.25 2,096.11 2.25 2,096.11 Net Revenue 14,378.52 14,369.35 15,558.11 15,479.53Expenses 13,394.34 11,772.90 14,162.71 12,576.70 Profit before Finance Costs, Exchange Variation and Derivative Losses, Depreciation /Amortisation, Exceptional/Prior Period Items and Tax

984.18 2,596.45 1,395.40 2,902.83

Less: Finance Cost 4,467.63 3,865.01 4,750.36 4,257.29 Less: Exchange Variation and Derivative Losses (net) 697.89 382.44 694.79 365.68 Less: Depreciation / Amortization 1,735.69 807.75 1,846.66 911.57 Profit /(Loss) before Exceptional Items and Taxation (5,917.03) (2,458.75) (5,896.41) 161.33 Add: Reversal of Depreciation Provision - 586.68 - 586.68 Add: Exceptional / Prior period items (2,798.89) 2,881.03 (2,793.77) 2,881.03Profit /(Loss) before Taxation (8,715.92) 1,008.96 (8,690.18) 836.00 Add: Current tax - - (0.13) - Add: Excess Provision of Earlier Years (Net) - 16.87 - 16.87 Add: Deferred Tax Credit/(Charge) 2,915.78 (377.78) 2,915.78 (377.78)Add: Share in Profit / (Loss) of Associates (Net) - - (20.80) (8.56)Profit /(Loss) after taxation (5,800.14) 648.05 (5,795.33) 466.53 Add: Balance brought forward from previous year (3,150.29) (3,925.28) (6,244.96) (6,838.43)Add: Balance value of assets transfer from Assets as per Companies Act, 2013 (Net of deferred tax)

- (34.60) - (34.60)

Add: Transfer from Revaluation Reserve 167.82 161.54 167.82 161.54 Balance carried forward to next year (8,782.61) (3,150.29) (11,872.47) (6,244.96)

b. OperationsGLOBAL SCENARIOGlobal economy grew 3.1 percent in 2015. The recovery which continued throughout 2015 remained fragile and was at a slow pace. The growth in Emerging & Developed Economies’ declined while a modest recovery continued in Advanced Economies. Three key transitions continue to influence global economic scenario:1) China’s rebalancing from Manufacturing &

investment toward consumption & services.2) Lower prices for Commodities and energy.3) Tightening of monetary policy in the US.Growth in United States was 2.5% driven by steady job creation, income growth, lower oil prices and improved consumer confidence. Growth in Japan was 0.6% on account of fiscal support & accommodative financial conditions and rising incomes. The EU area grew by 1.5%

with consumption supported by low oil prices and higher net exports.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

World Advance Economies Emerging Markets &DevelopingEconomies

2015

3.1 3.2

1.9 1.9

4 4.1

WORLD GDP (% CHANGE)

2016(f)

Source: IMF



INDIAN SCENARIOIndia has emerged as the world’s fastest growing economy beating China. The Indian economy is being viewed as a beacon of stability and growth because of low inflation, modest current account deficit (CAD) and commitment to fiscal rectitude. India’s GDP grew 7.6% in FY2015-16 up from 7.2% in FY2014-15.In Q4-FY2015-16, the GDP grew 7.9% up from 7.2% in Q3-FY15 on account of rebound in farm output (-0.1% in Q3 to 2.3% in Q4), improvement in mining (7.1% in Q3 to 8.6% in Q4) and a sharp pickup in electricity generation (5.6% in Q3 to 9.3% in Q4).

6.8

7

7.2

7.4

7.6

7.8

8

FY 2015Q1 -FY 16

7.5

7.6 7.6

7.2 7.2

7.9

Q2 -FY 16

Q3 -FY 16

Q4 -FY 16

INDIA GDP % GROWTH

FY 2016

Source: GOI

GDP in FY2016-17 is expected to grow by 7.6% as per RBI and IMF. Favourable monsoon in 2016 is one of the reasons for higher GDP growth boosting agricultural output and rural demand. Improved outlook for the rural economy which has a 51% share in manufacturing and 26% in services will positively impact the non-agriculture sectors. In addition, the Make in India initiatives, creation of Smart cities, the Pay Commission payouts, contained inflation and easy monetary conditions will support increased economic growth.

STEEL INDUSTRY

Global Overview

Global steel demand declined by 2.7% in 2015 over 2014 on the back of decline in demand in China by 5.4% following deceleration in its economy as it began its transition from investment driven growth to consumption driven growth. Steel consumption in India was healthy and encouraging growing at 5.3% in 2015.

Crude Steel Production (Mt) Steel Demand (Mt) Steel Demand Growth (%)

2014 2015 Growth (%) 2014 2015 2016(f) 2015/14 (%) 2016/15 (%)

World 1647 1599 -2.9% 1539.9 1498.7 1501.3 -2.7% 0.2%

China 823 804 -2.3% 710.8 672.3 665.6 -5.4% -1.0%

India 87 90 2.6% 76.1 80.1 84.4 5.3% 5.4%

Japan 111 105 -5.0% 67.4 62.7 63.0 -7.0% 0.4%

USA 88 79 -10.5% 106.9 96.1 95.0 -10.1% -1.2%

S. Korea 71 70 -1.9% 55.5 55.8 56.4 0.5% 1.0%

EU 169 166 -1.8% 149.3 153.6 154.8 2.9% 0.8%

Source: World Steel Association Short Range Outlook October 2016.

The global steel demand is expected to grow by a modest 0.2% in 2016 to 1,501 Mt as against a decline of -2.7% in 2015. In China, the steel demand decline during 2016 is projected to be less than earlier expected and is pegged at -1.0% attributed to slowdown in construction and manufacturing sectors. In other regions, challenging economic and political environment, insufficient investment expenditure and continued weakness in the manufacturing sector is affecting steel demand growth across major economies. In US, steel demand growth is projected to remain negative in 2016 from the earlier expectation of a positive growth.

The lower than expected job market improvement and lower growth in construction activities and the emerging political scenario is pulling down the demand prospects in 2016. Steel demand in US is forecasted to decline by 1.2% in 2016. In the EU, steel demand growth is expected to be modest although economic sentiments and investment conditions continue to improve. Uncertainties in the political landscape relating to the refugee crisis and Brexit raises risks to the improving economic condition. Steel demand in the EU is forecast to grow by 0.8% in 2016.



17

Domestic OverviewIndia emerged as the world’s 3th largest producer and consumer of steel in 2015.The steel consumption in India according to World Steel Association was 80.1Mt in 2015 as against 76.1Mt in 2014. The consumption grew 5.3% in 2015 over 2014. According to Joint Parliamentary Committee (JPC), the steel consumption in FY 2015-16 was 80.27Mt as against 77Mt in FY2014-15 indicating a growth of 4.3%.The steel demand in FY2016-17, based on various estimates is projected to reach 84.6-86.5 Mt with growth projected to be 5.4% to 7.8%.The steel demand in FY2016-17 is forecasted to be better than in FY2015-16 due to several favourable growth factors enumerated below:

0

1

2

3

4

5

6

7

8

9

WSA India Ratings

India Steel Demand forecast % - FY 17

5.4

6.4

7.8

Fitch Ratings

Source: WSA Short Range Outlook October -16 (CY), Fitch Report Nov-15 and

India Ratings-February 16.

• Increased infrastructure spending and different government initiatives such as ‘Make in India’, ease of doing business and policy reforms.

• The revival in construction, automobiles and consumer durables’ demand in the country.

• The rising rural consumption expenditure on consumer durables. It was 3% of the total rural expenditure in FY2000 which increased to 6% in FY2012. The prediction of good monsoon will boost increase in rural consumption of consumer durables and other non-food steel intensive items helping increase in consumption of steel in the country.

• Lower fuel cost, interest rate cuts, lower cost of ownership and launch of new car models will help increase demand for passenger vehicles in the country which is a positive for steel consumption. Passenger vehicles and commercial vehicle sales grew by 7.2% and 11.5% respectively in FY2015-16 according to Society of Indian Automobile Manufacturers (SIAM). They are expected to grow by 6-8% and 12-15% respectively in FY2016-17.

• Government’s focus on infrastructural growth through various initiatives such as housing for all, development of 100 smart cities and launch of National Infrastructure Investment Fund (NIIF) is expected to re-ignite steel demand in construction sector. Construction sector which accounts for 60% of steel demand in the country is expected to grow significantly supported by these initiatives. The order inflow in the construction sector is likely to grow as the government has increased outlay for highways and railways in the union budget 2016-17. The government has also laid out ambitious targets for spending on other infra sectors like irrigation, drinking water supply, housing and power supply.

• A benign inflationary environment and lower interest rates is expected to boost demand for capital goods and consumer durables.

SALES AND MARKETING

The year 2015-16 continued to remain turbulent and challenging for the steel industry. Demand for steel continued to remain stagnant to negative as the pace of global economic growth in major nations slowed down. Steelmakers are struggling for survival in the face of global excess capacity, flood of Chinese steel exports and historically low prices. Global excess capacity stands at around 600-700 million tons, out of which a substantial portion is located in China. In 2015 a record 112 million tons of steel was exported from China to world markets as per General Administration of Customs, China.

India’s steel industry, continued to face an existential threat due to flood of cheap and predatory priced imports from China, Japan and Korea; muted domestic demand, low exports, underutilization of capacity, higher interest costs, falling revenues and dwindling profits.

Steel imports into the country remained high jumping from 9.32Mt in FY2014-15 to 11.71Mt in FY2015-16, an increase of 25.6%. The cheap steel imports into the country is hurting the domestic steel industry and needs to be curbed so that the domestic industry does not go into a death spiral.

The government of India recognizing the trend of surging imports at cheap predatory prices adopted series of Trade Measures to curb the unabated flow of steel import into the country. The Trade measures initiated by the government included Minimum import Price, Safeguard Duty on Imports and Anti-Dumping investigations.

Your company’s sales volume stood at 3.73Mt, registering a growth of 13% compared to 3.31Mt in the previous year. Total domestic sales stood at 3.34Mt and exports at 0.39Mt. Your company registered a 42% increase in sale for Q4 vis-à-vis Q3 FY16. Q4 sales contributed 32% of the overall volumes of FY2015-16.



Q432%

Q322%

Q223%

Q123%

Source : Internal

Your company remained committed towards its customers in FY2015-16. Several initiatives were successfully executed by your company during the year. Some of these are:• Increase in sales and revenue through geography

& segment focus and through sale of value added products. In domestic sector, 77% of sales was focused in Gujarat and West region, while in Exports, 66% sales was in Middle East including Persian Gulf.

• Long term MOUs with Volume customers covering 70% of OEM volume.

• Preferred choice for Auto Customers – Testimony of various awards by Maruti, VE commercial, JCB etc. Caterpillar has awarded the Supplier Quality Excellence Process in recognition of achieving “Caterpillar MQ11005” supplier certification. This was as a result of demonstrated results in achieving excellent process control and desire for ongoing continuous improvement

• Your company has supplied more than 150,000t for the SAUNI project in Gujarat under Gujarat Government’s initiative to move precious water from Narmada to the parched Saurashtra region. Your company is actively involved in supplies of large diameter spiral pipes to Water Pipeline projects in Telengana, Madhya Pradesh and Gujarat. In the Oil and Gas sector, your company has supplied steel for more than 1200km pipeline to Oil & Gas projects in India, UAE, Nigeria, Chile, Columbia, USA, Algeria, Iraq etc.

• Afcons India, which is using your company’s steel to build the world’s highest arch bridge, has written a letter of appreciation, commending your company for its service and for completing plate rolling well ahead of time. The construction of the Chenab River Bridge is one of India’s most challenging infrastructure projects and your company is proud to be among the suppliers to this engineering marvel.

• Your company has undertaken production of steel grade DMR1700 by using the continuous casting route for the first time in India which has application in Defence sector.

• The Principal Directorate of Naval Architecture has approved the company for supply of steel plates according to DMR249A for construction of warships.

Sales Trend Channel Wise:The prices in the international markets continued to remain volatile and fragile driven by slowdown in Chinese domestic steel consumption, rise in steel exports from China and slowdown in major steel consuming countries/Regions.

FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16

Domestic

54%

25%22%

20%

27%

16% 16%17%18%21%

58% 57%

65%

58%

26%

% SALES TURNOVER

Export Retail

Region Wise Exports Sales:

18%

3%

55%

15%

9%

REGIONWISE EXPORT SALES - FY 2015

REGIONWISE EXPORT SALES - FY 2016

Middle East

66%4%

3%

17%

1%

6%3%

NAFTA

Asean

Europe

Africa

South America

Asia



19

Despite stiff competition and challenging environment, your company improved its exports to Middle East. It also expanded to new regions particularly South America and Asian countries like Sri Lanka/Bangladesh/Nepal etc. Lower exports to NAFTA & ASEAN region were compensated by sales to New Regions/Countries.Region wise Domestic Sales:Your company continued to maintain strong presence in Gujarat and other Western states. In North & South your company continued to focus on key customers to remain strategically present in these territories.

REGIONWISE DOMESTIC SALES

0%

10%

20%

30%

40%

50%

60%

69%

77%73%

18%

11% 11%12% 13% 13%

1%1% 1%

70%

80%

90%

West North South East

2013-14 2014-15 2015-16

OPERATIONSDuring the year, your company produced 20% higher crude steel production over last year. We produced 3.72 million tons of crude steel against 3.1 million ton during the last year. With the reduction in natural gas price, the production from HBI plants has increased 54% compared to last year. The Blast furnace also produced higher than its rated capacity for the second consecutive year.The Q4 has seen significant jump in production. The crude steel production grew 62% over Q4 last year. During the month of March 2016, your company produced highest ever flat steel production – 500,000 Mt.

The introduction of MIP and Quality standards by the Government of India have resulted in better sales realization and contained over supply situation in Indian market. The import at predatory prices should reduce significantly with these barriers. Your company has put in significant efforts in strengthening operations to achieve higher capacity utilization. In order to improve profitability, the company focused on margin maximization by reducing fixed and variable cost as well as increasing value added grades. Key highlights of the year were – Multi fuel power plant commissioned in June 2015.

This will enable us to use the by- products (coal fines and Corex gas) for generation of power.

Odisha pellet plant 1 production increased 122% compared to last year. The 2nd 6 MTPA Pellet plant under construction.

Highest monthly production achieved at Blast Furnace (180KT @ 2.1 million run rate), Corex (127 KT), SMP2 (316 KT) and CSP Mill (251 KT).

The finishing line production also increased significantly. Hazira Galvanizing produced 42KT @ 0.5 million run rate & Pickling 113KT @ 1.36 million run rate.

The Pune facility production has touched all time high levels with pickling line producing 0.45 Million Ton, Galvanizing lines 0.34 Million Tons and Color Coated line producing 0.2 Million Tons.

Significant reduction in raw material prices Declared preferred bidder for Sagasahi iron ore

mines in Odisha – a significant step for raw material security. Mine close to Dabuna plant and with 99.6 MT ore reserves.

Reduction in Administration and overhead cost by 30%

Awards and AccoladesYour company received the following awards during the year:

Sr. AWARD TITLE CATEGORY AWARDED BY YEAR1 Greentech Safety

Award 2016Metal Mining Sector in Gold Award category. Greentech Foundation 2016

2 GSC & DISH, Govt. of Gujarat

Safety Honour & Appreciation Certificates For HBI & Pipe Division Essar Steel India Ltd

Gujarat Safety Council 2016

3 Ispat Suraksha Puraskar

No Fatal Accident during the Calendar Year – 2014 & 2015

Joint Committee on Safety, Health & Environment in Steel Industry (JCSSI)-SAIL

2016

4 Safety Innovation Award

Out Standing Health & Safety performance The Institution of Engineers (India)

2015

5 World Steel Recognition

Worldsteel Safety Excellence Recognition - 2015 in “Safety Leadership

World Steel Association 2015

6 Ispat Suraksha Puraskar

“No Fatal Accident during the Calendar Year – 2013 & 2014 in four Zones of Integrated Steel Plant.1. Coal, Coke & Chemical2. Blast Furnaces, Slag Granulation Plant, Sinter

Plants & Raw Material Department3. Steel Melting Shops, Continuous Casting Shops4. Centralized Maintenance, Utilities, Services,

Rail & Road Traffic.

Joint Committee on Safety, Health & Environment in Steel Industry (JCSSI)-SAIL

2015



FINANCEDuring the Financial Year under review, the company focused on:-a) Draw down of enhanced Working Capital limits as

approved by consortium of banks;b) Flexible structuring of Term loans over the economic

life of the assets under the 5/25 scheme as per RBI circular dated December 15, 2014;

c) Transaction for monetisation of the Odisha slurry pipeline.

Your Company has availed working capital facilities from a consortium of 12 banks led by State bank of India. The lenders had in the previous year approved an enhancement in the working capital limits required for ramp-up of operations. State Bank of India and some of the consortium banks had released the limits in a gradual manner over the previous year and some of the banks released the limits in the financial year under review. During the year under review, the Company has received disbursements of` 1,035 Crs of enhanced limits from the consortium of banks.One of the issues faced by the Company was the short maturity of loans. Recognising this issue faced by a number of companies in the Infrastructure and Core sector (including steel), the Reserve Bank of India (RBI) had announced a Scheme for Flexible Structuring of Project Loans over the balance economic life of the assets (“5/ 25 Scheme”). During the year, the Company obtained the approval of the consortium of lenders for the Flexible Structuring of project loans amounting to Rs 14,526 Crs over the residual economic life of the assets, after completing all the prescribed formalities as per the RBI guidelines. Some of the Banks have implemented the Flexible restructuring of loans aggregating to ` 5,673 Crs under the 5/ 25 Scheme.Your Company had, in February 2015, entered into a Business Transfer Agreement for sale of the 12 MTPA Odisha Slurry Pipeline to Odisha Slurry Pipeline Infrastructure Ltd. (OSPIL) along with a Right to Use Agreement for use of the pipeline for its operations. During the year under review, OSPIL paid a part of the purchase consideration to your Company. However, in January 2016, the RBI issued a clarification to banks stating that such sale and lease back transactions will be treated as an event of restructuring for the debt of the seller as well as the buyer. Thus, OSPIL could not raise the envisaged debt and equity for making the payment of the full amount of purchase consideration to the Company for the transaction, thus effectively frustrating the transaction. Therefore, it was decided to unwind the transaction w.e.f. June 2016. Consequently, similar monetisation transactions envisaged relating to the Coke oven and Vizag Slurry Pipeline could not be progressed.In the previous years, the Company had entered into long term export contracts, against which Company had received long term export advance aggregating to appx. ` 7,300 crs, which were to be met by exports over a period of 10 years. The export advance was secured by Export Performance Bank Guarantees (EPBG) issued by Indian lenders of the Company and were utilised to repay the long term debt availed from Indian lenders of the Company.

The aforesaid transaction was implemented based on an approval received from the RBI. The RBI approval provided for renewal of the EPBG every two years. In December 2015, Company applied to RBI for necessary approval for renewal of the EPBGs. In January 2016, the RBI declined the renewal of the EPBGs and therefore the export advances of appx. ` 6,700 crs were required to be repaid by the EPBG issuing banks during January to March 2016, while the balance EPBGs will be completing the initial two year period during FY16-17.The extraordinary adverse market conditions in the global steel market on account of surplus capacities, predominantly in China, led to pressure on prices and adversely affected the industry for the most part of the year under review. The situation was compounded by the unfair dumping of steel into the country at predatory prices. The Government of India introduced safeguard duty in September 2016, which however failed to have any positive impact due to a further steep fall in international steel prices, which resulted in imports continuing unabated. In February 2016, the Government of India introduced Minimum Import Price for steel products, the benefits of which fructified only in March 2016 and thereafter.Due to the aforesaid factors, your Company continued to face liquidity challenges during the year under review and could not ramp up its operations. Furthermore, the banks were not in a position to complete the implementation of the Flexible Structuring of project loans under the 5/ 25 Scheme and to assign an appropriate repayment schedule for the Rupee EPBG liability. This necessitated a relook at the Company’s capitalisation structure. In consultation with the lenders, various options were evaluated including induction of a strategic partner/ investor, restructuring under RBI guidelines, etc. RBI has, in June 2016, issued fresh guidelines for Sustainable Structuring of loans and amendments thereto were also issued recently. The Company is actively engaged in discussions with lenders to appropriately structure its debt under the RBI guidelines.d. REPORT ON PERFORMANCE OF SUBSIDIARIES,

ASSOCIATES AND JOINT VENTURE COMPANIES:The performance and financial position of each of the subsidiaries, associates and joint venture companies for the year ended 31st March 2016 is attached and marked as Annexure I and forms part of this Report. Details of companies which have become or ceased as subsidiary, associates and joint ventures, during the year under review, are as under:

Name of the Company

Relationship with the Company

Details of changes

Date of change

Odisha Slurry Pipe Line Infrastructure Company Limited*

Subsidiary & Associate

Ceased to be Subsidiary and Associate

21-05-2015

11-09-2015

*Ceased to be an Associate of the Company



21

e. DIVIDEND Your Directors do not recommend any dividend for the year. f. TRANSFER TO RESERVES:The Board of Directors has not recommended transfer of any amount of profit to reserves during the year under review.g. REVISION OF FINANCIAL STATEMENT:There was no revision of the financial statements for the year under review.h. DEPOSITSThe Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 (“the Act”) read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.i. DISCLOSURES UNDER SECTION 134(3)(l) OF

THE COMPANIES ACT, 2013:Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company’s financial position have occurred between the end of the financial year of the Company and date of this report.j. DISCLOSURE OF ORDERS PASSED BY

REGULATORS OR COURTS OR TRIBUNAL – No orders have been passed by any Regulator or Court or Tribunal which can have material adverse impact on the going concern status and the Company’s operations in future.k. PARTICULARS OF CONTRACTS OR

ARRANGEMENT WITH RELATED PARTIES- The transactions/contracts/arrangements entered by the Company with related party(ies) during the period under review, are in the ordinary course of business and at arms’ length. Therefore such transactions do not come within the purview of the provisions of Section 188 of the Companies Act, 2013 (“Act”).To systematically deal with and ensure proper compliance of Section 177 and 188 of the Act, the Company has formulated a detailed Related Party Transactions Policy containing identification of related parties, identification of related party transactions, creation of monitoring team, roles and responsibilities of executives, approval matrix, approval process, documentation for arm’s length justification, methods to be used for arm’s length pricing, Audit trails etc.Company’s major related party transactions are generally with its subsidiaries and associates. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, industry specialization and the Company’s long-term strategy for investments, optimization of market share, profitability, contractual obligations of lenders, legal requirements, liquidity and capital resources of subsidiaries and associates. All related party transactions are negotiated on an arms’ length basis, and are intended to further the

Company’s interests. Attention of members is drawn to the disclosure of transactions with related parties set out in Note No.37 of Standalone Financial Statements, forming part of the Annual Report. l. PARTICULARS OF LOANS, GUARANTEES,

INVESTMENTS AND SECURITIES: - Particulars of loans, guarantees, investments and securities provided during the financial year under review along with the purposes for which such loans, guarantees and securities are proposed to be utilized by the recipients thereof, has been furnished in Annexure III which forms part of this report.m. DISCLOSURE UNDER SECTION 43(a)(ii) OF THE

COMPANIES ACT, 2013:-The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.n. DISCLOSURE UNDER SECTION 54(1)(d) OF THE

COMPANIES ACT, 2013:The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.o. DISCLOSURE UNDER SECTION 62(1)(b) OF THE

COMPANIES ACT, 2013: The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.p. DISCLOSURE UNDER SECTION 67(3) OF THE

COMPANIES ACT, 2013:During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, and hence no information is required to be furnished.2. MATTERS RELATED TO DIRECTORS AND KEY

MANAGERIAL PERSONNEL a. BOARD OF DIRECTORS & KEY MANAGERIAL

PERSONNELShri Alok Dhir, Shri Firdose Vandrevala and Shri Rana Som Directors of the Company have resigned w.e.f. May 13, 2015, February 01, 2016 and March 31, 2016, respectively, as Directors of the Company. State Bank of India who had nominated Shri S Santhanakrishnan on the Board has withdrawn his nomination w.e.f. July 06, 2016 and has nominated Shri Sunit V Joshi in his place w.e.f. November 22, 2016. The Board places on record its gratitude for the services rendered by them during their tenure as a Director of the Company.



Smt. Gayathri Sukumar was appointed as Additional Director vide a circular resolution of Board of Directors of the Company passed on March 30, 2015. Her appointment was regularized as Director at the Annual General Meeting of the Company held on 29th September 2015.Shri Parveen Kumar Malhotra (DIN: 03494232) was appointed as Additional Director of the Company vide circular resolution passed on 16th September 2016. Pursuant to the provisions of Section 161, Shri Parveen Kumar Malhotra (DIN: 03494232) holds office up to the date of this Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Act along with requisite deposit, proposing appointment of Shri Parveen Kumar Malhotra (DIN: 03494232) as Director of the Company.Shri Rajiv Kumar Bhatnagar (DIN: 07018252) was appointed as Additional Director of the Company vide resolution passed on 22nd November, 2016. Pursuant to the provisions of Section 161, Shri Rajiv Kumar Bhatnagar (DIN: 07018252) holds office up to the date of this Annual General Meeting of the Company. The Company has received a notice under Section 160 of the Act along with requisite deposit, proposing appointment of Shri Rajiv Kumar Bhatnagar (DIN: 07018252) as Director of the Company.During the year under review, Shri Rakesh Darji resigned as Company Secretary of the Company with effect from September 3, 2015 and accordingly ceases to be a Key Managerial Personnel of the Company and Shri Pankaj S Chourasia was appointed as Company Secretary and Key Managerial Personnel of the Company w.e.f. October 27, 2015.As per the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Shri J Mehra and Smt Gayathri Sukumar retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. Based on the recommendation of the Nomination and Remuneration Committee, the Board re-appointed Shri Dilip Oommen and Shri Mahadev Iyer as Managing Director

and Whole Time Director respectively and also appointed Shri Rajiv Kumar Bhatnagar as Additional Director and Wholetime Director designated as Director Projects. Shri Dilip Oommen is re-appointed for a term of three years from July 07, 2017 to July 06, 2020. Shri Mahadev Iyer is re-appointed for a term of three years from November 16, 2016 to November 15, 2019. Shri Rajiv Kumar Bhatnagar is appointed for a term of three years from November 22, 2016 to November 21, 2019. Their appointment / re-appointment is subject to approval of the members. The Board recommends their appointment / re-appointment.Shri Arvind Pande and Shri V G Raghavan, are proposed to be re-appointed as Independent Directors under Section 149 of the Companies Act, 2013 to hold office as per their tenure of re-appointment mentioned in the Notice of the forthcoming Annual General Meeting of the Company.The proposals regarding the appointment / re-appointment of the aforesaid Directors are placed for your approval. The Board of Directors recommend their appointment / re-appointment.b. DECLARATIONS BY INDEPENDENT DIRECTORS: The Company has received declarations from Shri Arvind Pande and Shri V G Raghavan, Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company. The meeting of the independent directors was held on 22nd November, 2016, to evaluate the performance of the Board of Directors of the Company.c. PAYMENT OF COMMISSION TO MANAGERIAL

PERSONNELThe Company has not paid any Commission to Managerial Personnel during the financial period under review. 3. DISCLOSURES RELATED TO BOARD,

COMMITTEES AND POLICIES a. BOARD MEETINGS:During the year under review, the Board of Directors met eight times as under:

The attendance of Directors at the Board Meetings was under:

Date of Board Meetings (Yes or No)Name of the Directors 21-05-15 26-08-15 26-09-15 07-11-15 27-11-15 22-12-15 28-01-16 30-03-16Shri P.S. Ruia Y Y Y N Y N Y NShri J Mehra Y Y Y Y Y Y Y YShri V G Raghavan Y Y Y N Y Y Y NShri Rana Som Y Y Y N Y N N NSmt S Gayathri Y Y Y Y Y Y Y YShri Arvind Pande Y Y Y Y Y Y Y YShri S Santhanakrishnan Y Y Y Y Y Y Y YShri H Biswas Y Y Y N Y N Y YShri Firdose Vandrevala Y Y Y Y Y N Y YShri Dilip Oommen Y Y Y N Y Y Y YShri Mahadev Iyer Y Y Y Y Y Y Y Y



23

b. DIRECTOR’S RESPONSIBILITY STATEMENT:In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2016, the Board of Directors hereby confirms that:a. in the preparation of the annual accounts, the

applicable accounting standards had been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit/loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

c. AUDIT COMMITTEE:The composition of the Audit Committee is in conformity with the provisions of Section 177 of the Companies Act, 2013. The Audit Committee comprises of Shri Arvind Pande, Chairman (Independent Director), Shri V G Raghavan (Independent Director), Shri J Mehra (Non-executive Director). The Company Secretary acts as the Secretary of the Audit Committee.The attendance of Members at the Audit Committee Meetings was as per the provisions and terms of reference of Audit Committee.

The scope and terms of reference of the Audit Committee have been amended in accordance with the provisions of new Act. The Board of Directors of the Company had accepted all the recommendations of the Committee on all the matters.d. NOMINATION AND REMUNERATION

COMMITTEE:The composition of Nomination and Remuneration Committee of Directors is in accordance with the requirements of Section 178 of the Act. The committee presently consists of Shri J. Mehra (Non-executive Director), Shri Arvind Pande (Independent Director), Shri V G Raghavan (Independent Director). Shri S

Santhanakrishnan (Nominee Director-SBI) ceased to be a member of the Committee w.e.f July 06, 2016 consequent to his resignation as director of the Company. During the year, the Committee had met on May 21, 2015 and August 26, 2015. The Company Secretary acts as the Secretary of the Nomination and Remuneration Committee.The attendance of Members at the Nomination and Remuneration Committee Meetings was under:

Name of the Directors Date of Meeting21-05-15 26-08-15

Shri J Mehra Y YShri V G Raghavan NA YShri Arvind Pande Y YShri S Santhanakrishnan Y Y

The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. The Policy is available on the web site of the Company and the link for the same is provided below:

‘www.essarsteel.com/investors’e. STAKEHOLDERS RELATIONSHIP COMMITTEE: The composition of Stakeholders Relationship Committee of Directors is in accordance with the requirements of Section 178 of the Act. The committee presently consists of Shri J. Mehra (Non-executive Director), Shri V G Raghavan (Independent Director) Shri S Santhanakrishnan (Nominee Director) and Shri Mahadev Iyer (Executive Director). Shri S Santhanakrishnan (Nominee Director-SBI) ceased to be a member of the Committee w.e.f July 06, 2016 consequent to his resignation as director of the Company. During the year, the Committee had met on August 26, 2015, November 27, 2015 and March 30, 2016. The Company Secretary acts as the Secretary of the Stakeholders’ Relationship Committee.The attendance of Members at the Stakeholders Relationship Committee Meetings was as under:

Name of the Directors

Date of Meeting(Y/N)26-08-15 27-11-15 30-03-2016

Shri J Mehra Y Y YShri V G Raghavan Y Y NShri Mahadev Iyer Y Y YShri S Santhanakrishnan Y Y Y

f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

Pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, the Board of Directors of the Company has formulated “Vigil Mechanism Policy” for Directors and employees of the Company to provide a mechanism which ensures



adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.g. RISK MANAGEMENT POLICY:The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company’s businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. h. CORPORATE SOCIAL RESPONSIBILITY POLICY: The Corporate Social Responsibility Committee was formed in May 2013. As per the provisions of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, said committee was re-constituted and the present Committee consists of Shri J Mehra, (Non-Executive Director), Shri Arvind Pande, (Independent Director), Shri V G Raghavan (Independent Director) and Shri Dilip Oommen (Managing Director). During the year under review, committee met once on March 30, 2016 to approve CSR budget, to take overview of activities to be undertaken and review activities carried out during the period. The Board of Directors of the Company has approved CSR Policy based on the recommendation of the CSR Committee. The CSR Policy of the Company and CSR report for FY 2015-16 is available on the Company’s website and the link for the same is provided below:http://www.essar.com/ebook/Foundation/ESTIL_CSR_

AR_2015-16/index.htmlThe Company is incurring losses and therefore not required to spend money on CSR activities required under Section 135 of the Companies Act, 2013, however, Company is undertaking CSR activities as part of MoEF conditions and also generally for the upliftment and benefit of project affected persons and persons residing in the vicinity where company carries its operations.i. ANNUAL EVALUATION OF DIRECTORS,

COMMITTEE AND BOARD:The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. The Board has followed process for its own performance and that of its Committees and individual Directors as devised in Nomination and Remuneration Policy.

j. INTERNAL CONTROL SYSTEMS:Adequate internal control systems commensurate with the nature of the Company’s business and size and complexity of its operations are in place has been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.k. INDIAN ACCOUNTING STANDARDS (IND AS)As per the roadmap announced by the Ministry of Corporate Affairs, the Company will comply with the new Accounting Standards, IND AS in preparation of its financial statements for accounting periods beginning on April 01, 2016 along with comparatives for the period ending March 31, 2016. Hence the Company would prepare and report results / financial statements under IND AS from April 01, 2016, including restatement of the opening balance sheet.l. DISCLOSURE UNDER SECTION 197(12) OF

THE COMPANIES ACT, 2013 AND RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014 - PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report.Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure IV to this report.Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Company’s website.m. PAYMENT OF REMUNERATION / COMMISSION TO

DIRECTORS FROM HOLDING OR SUBSIDIARY COMPANIES:

None of the managerial personnel i.e. Managing Director and Whole time Directors of the Company are in receipt of remuneration/commission from the Holding or Subsidiary Company of the Company.



25

n. DISCLOSURE ABOUT REMUNERATION AS PER SECTION II OF SCHEDULE V:

Disclosure about remuneration pay package of Directors and other details are given in Annexure IV to this report.

4. AUDITORS AND THEIR REPORTS –

The matters related to Auditors and their Reports are as under:

a. Observations of Statutory Auditors on Standalone Accounts for the year ended March 31, 2016 and Management Response.

The auditors of the Company have qualified their report to the extent and as mentioned in the Auditors’ Report. The qualification in auditors’ report and management’s response to such qualification are as under:

The Company has recognized deferred tax asset of ` 4,781.83 Crore on unabsorbed depreciation and carried forward business losses based on future profitability projections made by the management as stated in Note 14 of the financial statements which, in our opinion, does not meet the criteria of ‘virtual certainty supported by convincing evidence’ as required under Accounting Standard (AS) 22-Accounting for taxes on Income. Had the deferred tax asset as aforesaid not been recognized, accumulated losses would have been higher and the deferred tax asset would have been lower by `4,781.83 Crore and loss after tax for the year would have been higher by ` 2,902.76 Crore. This matter was also qualified in our report on the financial statements for the year ended 31st March, 2015.

Management’s Response:

Note 14 appearing in annexed Financial Statements is self-explanatory and needs no further explanation. Management has made the full disclosure of the facts and its view in the said note.

The Auditors have put emphasis on the following matters and drawn the attention to certain facts considered in preparation of Annual Accounts for the financial year 2015-16.

1. We draw attention to Note 34 (c.1) regarding investment of Rs. 738.07 Crore in Essar Steel Offshore Limited, Mauritius (ESOL) and Corporate guarantee given to lenders of ESOL, in connection with an outstanding loan of USD 413 Million taken by ESOL for the purpose of investment in Trinity Parent Corporation, USA, an indirect subsidiary of the Company, which loan has been recalled by lender thereof and the related exposure. For reasons explained in the Note, no provision has been made by the Company for diminution in the value of said investments or against the said exposure.

Management’s Response:Note 34 (c.1) appearing in annexed Financial Statements is self-explanatory and needs no further explanation. Management has made the full disclosure of the facts and its view in the said note.

2. We draw attention to Note 49 regarding Company’s current liabilities exceeding its current assets by ` 24,684.73 Crore as at 31st March, 2016. The Company believes that for the reasons stated in the said Note, it will have adequate liquidity to meet its liabilities as and when they fall due.

Management’s Response:Note 49 appearing in annexed Financial Statements is self-explanatory and needs no further explanation. Management has made the full disclosure of the facts and its view in the said note.

3. We draw attention to Note No. 34 (b) (4) regarding cross subsidy surcharge amounting to ` 327.28 Crore claimed by Dakshin Gujarat Vij Company Limited for the period from June 2013 to March 2016. For reasons explained in the Note, the Company has reversed/not provided the said amount during the year under report.

Management’s Response:Note 34(b) (4) appearing in annexed Financial Statements is self- explanatory and needs no further explanation. Management has made the full disclosure of the facts and its view in the said note.

a1. Management’s response on the Statutory Auditors’ Qualification / Comments on the Company’s consolidated financial statements:

1. Qualification pertaining to recognition of Deferred Tax Asset on unabsorbed depreciation and carried forward business losses, management response has been provided in note no. 16 of Consolidated Financial Statement which is self-explanatory and need no further explanation.

2. Qualification pertaining to unaudited financial information of certain step down subsidiaries and an associate, management accounts has been considered for the consolidation of accounts of these companies in Consolidated Financial Statement.

3. Emphasis of matter - Management response has been provided in the respective Note to Account of Consolidated Financial Statement.

b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31ST MARCH 2016Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. Dinesh Kumar Deora, Company Secretaries were appointed to issue Secretarial Audit Report for the financial year 2015-16.



Secretarial Audit Report issued by Dinesh Kumar Deora., Company Secretaries in Form MR-3 for the financial year 2015-16 forms part to this report (Refer Annexure V). The said report does not contain any observation or qualification requiring explanation or comments from the Board.

c. RATIFICATION OF APPOINTMENT OF AUDITORS: Pursuant to the provisions of Section 139 of the

Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. M M Chaturvedi & Co, Chartered Accountants, the Statutory Auditors of the Company were appointed for a term till the conclusion of Annual General Meeting to be held in year 2018. Their appointment as Statutory Auditors is required to be ratified by the Members at the ensuing Annual General Meeting. The Company has received a confirmation from the said Auditors that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company.

Necessary resolution for ratification of appointment of Auditors is included in the Notice of AGM for seeking approval of members.

d. COST AUDITORS: The Board has re-appointed M/s. Manubhai &

Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2016-17 for all applicable Product Groups. The Company received the approval of the Central Government for the said appointment. The Cost Audit Report for the financial year 2015-16 has been filed within the stipulated period of 180 days from the closure of the financial year.

e. INTERNAL AUDITOR: As required under Section 138 of the Companies

Act, 2013 and Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Audit function is carried out by an in house qualified and experienced team. The Internal Auditors present their report to the Audit Committee. The scope, functioning, periodicity and methodology for conducting the internal audit have been formulated in consultation with the Audit Committee and the Board of Directors and the same is also commensurating the size and operation of the company.

5. OTHER DISCLOSURESOther disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March 2016 made under the provisions of Section 92(3) of the Act is attached as Annexure VI which forms part of this Report.

b. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure VII which forms part of this Report.

c. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 –The Company has in place an Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committees are set up at each business locations to redress complaints, if any. All employees are covered under the policy. There is no complaint outstanding as on 31.03.2016 for redresal.

6. ACKNOWLEDGEMENTYour directors would like to express their gratitude for the assistance and cooperation received from the Financial Institutions, Banks, Government Authorities, Vendors, Customers and Shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.

For and on behalf of the BoardFor Essar Steel India Limited

Dilip Oommen Managing Director

V G Raghavan Director

Date: 22nd November, 2016Place: Mumbai



27

Annexure IREPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

(` in Crores)

Sr. No.

Name of the subsidiary

SubsidiariesEssar Steel

Trading FZE

Essar Steel

Middle East FZE

Paradeep Steel

Company Limited and Subsidiaries

Essar Steel

Logistics Limited

Essar Steel

Offshore Limited

Essar Minerals Limited

Essar Mineral

Cooperatief U.A.

Essar Minerals Canada Limited

Essar Minerals

INC

New Trinity Holdings LLC and

Subsidiaries

1 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

NA NA NA NA NA NA NA NA NA NA

2 Reporting currency in the case of foreign subsidiaries

USD USD INR INR USD USD USD USD USD USD

3 Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries (` / INR)

66.33 66.33 NA NA 66.33 66.33 66.33 66.33 66.33 66.33

4 % of shareholding 100 100 100 100 100 100 100 100 100 100

5 Share Capital (incl. Share application Money)

25.98 409.07 0.20 0.05 864.70 929.07 2,031.32 2,868.15 1,971.72 836.74

6 Reserves & Surplus 26.34 30.81 (10.12) 5.12 (1,157.69) 63.40 (103.19) (1,171.20) (2,433.18) 2,103.09

7 Total Assets (excluding Investment)

87.31 3,028.15 6.40 13.95 0.97 940.68 0.05 5.56 2.87 3,717.73

8 Total Liabilities 34.99 2,588.27 16.37 8.78 3,601.69 1,979.64 940.07 113.84 464.33 777.90

9 Investments - - 0.05 - 3,307.73 2,031.43 2,868.16 1,805.23 - -

10 Revenue 5.11 1,096.34 2.71 - - 47.94 - - - -

11 Profit/ (Loss) before Taxation

1.13 7.18 0.36 (0.43) (136.57) (52.88) (47.94) (0.01) 413.22 (158.51)

12 Provision for Taxation

- - 0.13 0.02 - - - - - -

13 Profit/ (Loss) after Taxation

1.13 7.18 0.23 (0.45) (136.57) (52.88) (47.94) (0.01) 413.22 (158.51)

14 Proposed Dividend - - - - - - - - - -



(` in Crores)

Sr. No.

Name of the Associates Associates Bhander

Power Limited

Essar Bulk Terminal Limited

Essar Power Hazira

Limited

Essar Power Orissa Limited

Essar Steel Chhattisgarh

Limited

Essar Power MP Limited

1 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

NA NA NA NA NA NA

2 Reporting currency in the case of foreign subsidiaries

INR INR INR INR INR INR

3 Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries (` / INR)

NA NA NA NA NA NA

4 % of shareholding 26.00% 26.00% 26.00% 26.00% 47.38% 26.00%

5 Share Capital (incl. Share application Money)

378.45 261.50 514.78 373.65 12.20 2,418.28

6 Reserves & Surplus 513.99 1,245.85 (2.76) (8.78) 0.13 (152.26)

7 Total Assets (excluding Investment) 636.37 3,410.18 1,867.73 1,095.90 16.73 10,176.37

8 Total Liabilities 576.73 2,142.65 1,355.71 731.02 4.40 7,910.34

9 Investments 832.80 239.81 - - - -

10 Revenue 33.59 657.46 0.01 56.25 8.76 -

11 Profit/ (Loss) before Taxation (88.77) 199.17 (0.03) 0.36 0.10 (44.44)

12 Provision for Taxation - 28.71 - 0.31 0.03 -

13 Profit/ (Loss) after Taxation (88.77) 170.46 (0.03) 0.05 0.07 (44.44)

14 Proposed Dividend - - - - - -

Annexure II

Form AOC-2(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms’ length transactions under third proviso thereto1. Details of contracts or arrangements or transactions not at arm’s length basis – NIL2. Details of material contracts or arrangement or transactions at arm’s length basis - NIL

Annexure III

Particulars of loans, guarantees, investments and securities:Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in note number 55 of the Notes to the standalone financial statements.



29

Annexure IVDisclosures under Section 197 (12) of the Companies Act, 2013Remuneration of Directors – 1) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for

the financial year 2015-16 and the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, during the financial year and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

A. Whole-time Directors and KMP

Name of KMP % increase in remuneration

Ratio of remuneration of each director to the median remuneration paid/payable to

all employee for FY 2015-16Shri Firdose Vandrevala, Executive Vice Chairman

Nil 100:1

Shri Dilip Oommen, Managing Director & CEO

Nil 43:1

Shri Mahadev Iyer, Director (Finance) & CFO

Nil 36:1

Shri Rakesh Darji,Company Secretary (upto September 02, 2015)

5% 5:1

Shri Pankaj S Chourasia, Company Secretary, w.e.f October 27, 2015

0% 8:1

Comparison of remuneration of KMP against performance of the Company:

The Company had incurred loss for FY 2015-16 as compared to profit for FY 2014-15 and also the overall remuneration to key

managerial personnel has decreased by approximately 15% for FY 2015-16 as compared to FY 2014-15.

B. Non-Executive Directors Non-executive Directors are not entitled to any remuneration except payment of sitting fees, details of which

are appearing in Annexure IV.2) Median remuneration of all the employees of the Company for the financial year 2015-16 : ` 6.50 lakhs per annum3) The percentage increase in the median remuneration of Employees for the financial year: 6 %4) The number of permanent employees on the payrolls of the Company as on March 31, 2016 : 40815) Relationship between average increase in remuneration and Company’s performance: Average increase percentage recommended by CHR and approved by Board was considered while giving increments

for 2015 – 16. Based on individual performance, scores, increment percentage paid across employees and levels. 6) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company: Refer

Point No.17) Variation in market capitalization: Not applicable as shares of Company are not listed.8) Average percentage increase made in the salaries of Employees other than the managerial personnel in the financial

year was 6 % whereas the increase in the managerial remuneration was Nil 9) The key parameters for any variable component of remuneration availed by the directors Based on the Company performance for FY 2015 – 16, Directors were paid 45% of the Budgeted Variable Component 10) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive

remuneration in excess of the highest paid director during the year. No employee of the Company receives remuneration in excess of the highest paid director, i.e. Shri Firdose Vandrevala11) Remuneration is as per the remuneration policy of the company.



ANNEXURE-V

Form no. MR-3 Secretarial Audit Report

For the Financial Year Ended March 31, 2016[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014] To,The Members,Essar Steel India Limited27km, Surat Hazira Road Hazira Surat - 394270

Dear Members,I have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Essar Steel India Limited (hereinafter called “the Company”). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing my opinion thereon.Based on my verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended March 31, 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2016 according to the provisions of:1. The Companies Act, 2013 (the Act) and the rules made thereunder;2. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;3. The Depositories Act, 1996 and the Regulations and bye-laws framed thereunder;4. The provisions of Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of

Foreign Direct Investment, Overseas Direct Investment and External Commercial borrowings;5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (“SEBI Act”)

-Not Applicable (NA) a) Securities and Exchange Board of India, (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; NA b) Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; NA c) Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; NA d) Securities and Exchange Board of India (Employees Stock Options Scheme And Stock Purchase Scheme ) Guidelines

1999; NA e) Securities and Exchange Board of India ( Issue of Listing of Debt Securities) Regulations, 2008; NA f) Securities and Exchange Board of India (Registrar to Issue and Share Transfer Agents) Regulations 1993 regarding

the Companies Act, and dealing with client. NA g) Securities and Exchange Board of India (delisting of equity shares) regulations, 2009 and(NA) h) Securities and Exchange Board of India (buyback of securities) regulations 1998; (NA)6. All applicable Labour Laws7. Factories Act, 19488. Bombay Shop & Establishment Act,19489. Environment Protection Act, 1986 and other Environmental Laws.10. Hazardous Wastes (Management and Handling) Rules, 1989 and Amendment Rules, 200311. Indian Contract Act,187212. Income Tax Act,1961 and Indirect Tax LawsWe have also examined compliance with the applicable clauses of the following:(i) Secretarial Standards issued by the Institute of Company Secretaries of India;(ii) the listing agreements entered into by the Company with the stock exchange, regulations, guidelines, standard etc. mentioned

above subject to the following observations. (Not Applicable – Since Company Shares are not Listed)



31

During the under review the Company has complied with the provisions of the Act, rules, regulations, guidelines, standards etc. mentioned above.I have relied on the representations made by the Company and its Officers for systems and mechanism formed by the Company for compliances under other applicable Acts, Laws and Regulations to the Company. I further report that the Company has generally complied with the Secretarial Standards issued by Institute of Company Secretaries of India and filed event based e-forms to be filed with Registrar of Companies.I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non - Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meetingMajority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

Dinesh Kumar DeoraPractising Company Secretary

Place : Mumbai FCS NO. 5683Date : 02nd November, 2016 C P NO. 4119

Note: This report is to be read with our letter of even date that is annexed as Annexure - I and forms an integral part of this report.

ANNEXURE - IToThe Members, Essar Steel India Limited27km,Surat Hazira Road Hazira Surat – 394270

Our report of even date is to be read along with this letter:1. Maintenance of secretarial records is the responsibility of management of the Company. Our responsibility is to express an

opinion on these secretarial records based on our audit.2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness

of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, followed provide a reasonable basis for our opinion.

3. I have not verified the correctness and appropriateness of financial records and books of accounts of the Company.4. Wherever required, I have obtained the Management Representation about the compliance of laws, rules and regulations and

happening of events, etc.5. The compliance of the provisions of corporate and other applicable laws, rules and regulations, standards is the responsibility

of the management. My examination was limited to the verification of procedures on test basis.6. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness

with which the management has conducted the affairs of the Company.

Dinesh Kumar DeoraPractising Company Secretary

Place: Mumbai Membership No FCS 5683Date: 02nd November, 2016 COP NO 4119



ANNEXURE-VI

EXTRACT OF ANNUAL RETURNAs on financial year ended on 31st March 2016

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

Form No. MGT 9

I. REGISTRATION AND OTHER DETAILS:

i) CIN : U27100GJ1976FLC013787ii) Registration Date : JUNE 01, 1976iii) Name of the Company : ESSAR STEEL INDIA LIMITED iv) Category / Sub-Category of the Company : MANUFACTURING OF STEEL v) Address of the Registered office and contact details : Essar Steel India Limited

27 km, Surat Hazira Road,Dist Surat Pin 394270Tel no. 0261 – 6682400 Fax no 0261 – 6685731

vi) Whether listed company : Equity Shares of the Company are not listed on any Stock Exchanges

viii) Name, Address and Contact details of Registrar and Transfer Agent, if any:

: Data Software Research Co Pvt Ltd.19, Pycrofts Garden Road,Off Haddows Road, NungambakkamChennai 600006Tel no. 044 28213738 | Fax no – 04428214636

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the company shall be stated:-

Sl. No.

Name and Description of main products/services

NIC Code of the Product/ service % to total turnover of the Company

1 Manufacturing of Hot Rolled Coils/Cold Rolled Coils/Sheets/Plates

330 / (New Code No. 2410) 77%



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diar

y10

0%2(

87)(

ii)

6E

ssar

Ste

el L

ogis

tics

Lim

ited

27 K

M S

urat

Haz

ira R

oad

Sur

at-3

9427

0U

6022

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LC07

4244

Who

lly O

wne

d S

ubsi

diar

y10

0%2(

87)(

ii)

7H

azira

Cok

e Li

mite

d27

KM

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at H

azira

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d S

urat

-394

270

U23

100G

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0782

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tep-

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n W

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0%2(

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ii)

8E

ssar

Min

eral

s Li

mite

dN

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

9E

ssar

Min

eral

Coo

pera

tief U

.AN

AS

tep-

dow

n W

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ii)

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Min

eral

s C

anad

a Li

mite

dN

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tep-

dow

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0%2(

87)(

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11N

ew T

rinity

Hol

ding

s LL

CN

AS

tep-

dow

n W

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0%2(

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ii)

12N

ew T

rinity

Coa

l Inc

.N

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

13N

ew R

esou

rces

Inc.

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

14E

ssar

Min

eral

s IN

CN

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

15Tr

inity

Par

ent C

orpo

ratio

nN

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

16Tr

inity

Coa

l Cor

pora

tion

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

17Tr

inity

Coa

l Par

tner

s LL

CN

AS

tep-

dow

n W

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0%2(

87)(

ii)

18B

ear F

ork

Res

ourc

es L

LCN

AS

tep-

dow

n W

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0%2(

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ii)

19D

eep

Wat

er R

esou

rces

LLC

NA

Ste

p-do

wn

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100%

2(87

)(ii)


Essar Steel India LimitedSr

. N

o.N

ame

and

addr

ess

of th

e co

mpa

nyC

IN/G

LNH

oldi

ng/ S

ubsi

diar

y/ A

ssoc

iate

% o

f Sh

ares

H

eld

App

licab

le

Sect

ion

20Le

visa

For

k R

esou

rces

LLC

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

21N

orth

Spr

ings

Res

ourc

es L

LCN

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

22Li

ttle

Elk

Min

ing

Com

pany

LLC

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

23B

anne

r Coa

l Ter

min

al L

LCN

AS

tep-

dow

n W

oS10

0%2(

87)(

ii)

24H

ughe

s C

reek

Ter

min

al L

LCN

AS

tep-

dow

n W

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0%2(

87)(

ii)

25Tr

inity

Coa

l Mar

ketin

g LL

CN

AS

tep-

dow

n W

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ii)

26Fr

asur

e C

reek

Min

ing

LLC

NA

Ste

p-do

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2(87

)(ii)

27Fa

lcon

Res

ourc

es L

LCN

AS

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dow

n W

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87)(

ii)

28P

rate

r Bra

nch

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ourc

es L

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dow

n W

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0%2(

87)(

ii)

29Tr

inity

RM

G H

oldi

ngs

LLC

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

30R

MG

INC

NA

Ste

p-do

wn

WoS

100%

2(87

)(ii)

31B

hand

er P

ower

Lim

ited

27 K

M S

urat

Haz

ira R

oad

Sur

at-3

9427

0U

3110

1GJ1

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5146

Ass

ocia

tes

26%

2(87

)(ii)

32E

ssar

Bul

k Te

rmin

al L

imite

d27

KM

Sur

at H

azira

Roa

d S

urat

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270

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100G

J200

4PLC

0434

77A

ssoc

iate

s26

%2(

87)(

ii)

33E

ssar

Pow

er (O

rissa

) Lim

ited

27 K

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urat

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ira R

oad

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at-3

9427

0U

3110

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1701

Ass

ocia

tes

26%

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)(ii)

34E

ssar

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el C

hhat

tisga

rh L

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at H

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ssoc

iate

s47

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2(87

)(ii)

35E

ssar

Pow

er H

azira

Lim

ited

27 K

M S

urat

Haz

ira R

oad

Sur

at-3

9427

0U

4030

0GJ2

006P

LC06

3146

Ass

ocia

tes

26%

2(87

)(ii)

36E

ssar

Ste

el P

roce

ssin

g FZ

CO

Plo

t No

S40

402

PB

No

2617

54 J

afza

Sou

th

Dub

ai U

AE

NA

Ass

ocia

tes

40%

2(87

)(ii)

37E

ssar

Pow

er M

P Li

mite

dP

raka

sh D

eep,

10th

Flo

or,7

Tol

stoy

Mar

g N

ew

Del

hi-1

1000

1

U40

100D

L200

5PLC

2019

61A

ssoc

iate

s26

%2(

87)(

ii)



35

IV.

SHA

RE

HO

LDIN

G P

ATTE

RN

(Equ

ity S

hare

Cap

ital B

reak

up a

s pe

rcen

tage

of T

otal

Equ

ity)

A

) C

ateg

ory-

wis

e Sh

are

Hol

ding

Cat

egor

y of

Sha

reho

lder

sN

o. o

f Sha

res

held

at t

he b

egin

ning

of t

he y

ear

[As

on 3

1-M

arch

-201

5]N

o. o

f Sha

res

held

at t

he e

nd o

f the

yea

r [A

s on

31-

Mar

ch-2

016]

% C

hang

e du

ring

the

year

Dem

atPh

ysic

alTo

tal

% o

f Tot

al

Shar

esD

emat

Phys

ical

Tota

l%

of T

otal

Sh

ares

A.

Prom

oter

s

(1)

Indi

an

a)

Indi

vidu

al/ H

UF

00

00

00

00

0

b)

Cen

tral G

ovt

00

00

00

00

0

c)

Sta

te G

ovt(s

)0

00

00

00

00

d)

B

odie

s C

orp.

684

,635

,160

843

684,

636,

003

22.

02

682

9633

35

843

682

9641

78

21.9

70.

05

e)

B

anks

/ FI

00

00

00

00

0

f)

Any

oth

er (T

rust

) 1

91,5

17,5

00

0 1

91,5

17,5

00

6.1

6 1

91,5

17,5

00

0 1

91,5

17,5

00

6.1

6

0

.00

(1)

Fore

ign

a)

In

divi

dual

/ HU

F0

00

00

00

00

d)

B

odie

s C

orp.

215,

21,5

0,64

240

6,38

,24

215,

62,1

4,28

669

.35

215,

78,4

0,08

60

215,

78,4

0,08

669

.41

0.05

Tota

l sha

reho

ldin

g of

Pro

mot

er (A

)30

2,83

,03,

122

40,6

4,66

730

3,23

,67,

789

97.5

430

3,23

,20,

921

843

303,

23,2

1,76

497

.53

0.00

B.

Publ

ic S

hare

hold

ing

1.

Inst

itutio

ns

a)

Mut

ual F

unds

99,7

8119

,563

1,19

,344

0.00

99,7

8119

,563

1,19

,344

0.00

0.00

b)

Ba

nks

/ FI

7,38

,357

5,08

37,

43,4

400.

027,

38,7

4748

437,

43,5

900.

020.

00

c)

Cent

ral G

ovt

00

00

00

00

0

d)

Stat

e G

ovt(s

)0

00

00

00

00

e)

Ve

ntur

e Ca

pita

l Fun

ds0

00

00

00

00

f)

In

sura

nce

Com

pani

es0

00

00

00

00

g)

FI

Is0

71,9

1771

,917

0.00

071

,917

71,9

170.

000.

00

h)

Fore

ign

Vent

ure

Cap

ital

Fund

s0

00

00

00

00

i)

O

ther

s (s

pecif

y)0

00

00

00

00

Sub-

tota

l (B

)(1):-

8,38

,138

96,5

639,

34.7

010.

038,

38,5

2896

,323

9,34

,851

0.03

0.00

2.

Non

-Inst

itutio

ns

a)

Bod

ies

Cor

p.

i)

In

dian

52,8

4,25

190

,198

53,7

4,44

90.

1752

,10,

145

90,2

4353

.00,

388

0.17

0.00

ii)

Ove

rsea

s2,

541

3030

5571

0.00

2,54

13,

030

5,57

10.

000.

00

b)

Indi

vidu

als

i)

Indi

vidu

al

shar

ehol

ders

hol

ding

no

min

alsh

are

capi

tal

upto

` 1

lakh

3,97

,55,

663

1,65

,61,

623

5,63

,17,

286

1.81

3,98

,94,

931

1,64

,60,

767

5,63

,55,

698

1.81

0.00


Essar Steel India LimitedC

ateg

ory

of S

hare

hold

ers

No.

of S

hare

s he

ld a

t the

beg

inni

ng o

f the

yea

r [A

s on

31-

Mar

ch-2

015]

No.

of S

hare

s he

ld a

t the

end

of t

he y

ear

[As

on 3

1-M

arch

-201

6]%

Cha

nge

durin

g th

e ye

arD

emat

Phys

ical

Tota

l%

of T

otal

Sh

ares

Dem

atPh

ysic

alTo

tal

% o

f Tot

al

Shar

es

ii)

In

divi

dual

sh

areh

olde

rs h

oldi

ng

nom

inal

sha

re

capi

tal i

n ex

cess

of `

1

lakh

1,14

,57,

575

4,38

,506

1,18

,96,

081

0.38

1,15

,94,

426

4,38

,506

1,20

,32,

932

0.39

0.00

c)

Oth

ers

(spe

cify

)0

00

00

00

00

N

on R

esid

ent I

ndia

ns10

,16,

626

10,4

5,15

720

,61,

783

0.07

9,64

,869

10,4

1,58

720

,06,

456

0.06

0.00

Fo

reig

n N

atio

nals

00

00

00

00

0

Cle

arin

g M

embe

rs0

00

00

00

00

Tr

usts

00

00

00

00

0S

ub-to

tal (

B)(

2):-

5,75

,16,

656

1,81

,38,

514

7,56

,55,

170

2.43

5,76

,66,

912

1,80

,34,

133

7,57

,01,

045

2.43

0.00

Tota

l Pub

lic S

hare

hold

ing

(B)=

(B)

(1)+

(B)(2

)5,

83,5

4,79

41,

82,3

5,07

77,

65,8

9,87

12.

465,

85,0

5,44

01,

81,3

0,45

67,

66,3

5,89

62.

470.

00

C. S

hare

s he

ld b

y C

usto

dian

for

GD

Rs

& A

DR

s0

00

00

00

00

Gra

nd T

otal

(A+B

+C)

308,

66,5

7,91

62,

22,9

9,74

431

0,89

,57,

660

100

309,

08,2

6,36

11,

81,3

1,29

931

0,89

,57,

660

100

0.00

B)

Shar

ehol

ding

of P

rom

oter

-

SN Sh

areh

olde

r’s N

ame

Shar

ehol

ding

at t

he b

egin

ning

of t

he y

ear

Shar

ehol

ding

at t

he e

nd o

f the

yea

r%

cha

nge

in s

hare

- ho

ldin

g du

ring

the

year

No.

of S

hare

s%

of t

otal

Sh

ares

of t

he

com

pany

%of

Sha

res

Pled

ged

/ en

cum

bere

d to

to

tal s

hare

s

No.

of S

hare

s%

of t

otal

Sh

ares

of t

he

com

pany

%of

Sha

res

Pled

ged

/ en

cum

bere

d to

tota

l sha

res

1E

ssar

Ste

el A

sia

Hol

ding

s Li

mite

d*16

6,11

,01,

947

53.4

322

.97

1,66

,27,

27,7

4753

.48

23.4

60.

05

2E

ssar

Ste

el L

imite

d **

4,95

,112

,339

15.9

315

.84

4,95

,112

,339

15.9

315

.84

0.00

3Im

peria

l Con

sulta

nts

& S

ec P

rivat

e Lt

d62

9,65

6,75

820

.25

13.0

667

2,23

2,72

021

.62

21.6

21.

37

4In

Tru

st –

VG

Rag

hava

n (T

reas

ury

Sha

res

for t

he b

enefi

t of E

ssar

Ste

el

Indi

a Li

mite

d)

191,

517,

500

6.16

6.16

191,

517,

500

6.16

6.16

0.00

5E

ssar

Pro

perti

es L

td68

0,65

20.

020.

0068

0,65

20.

020.

000.

00

6E

ssar

Sec

uriti

es L

imite

d10

,050

,706

0.32

0.00

10,0

50,7

060.

320.

000.

00

7E

ssar

Ser

vice

s In

dia

Lim

ited

100

0.00

0.00

100

0.00

0.00

0.00

8Th

irunv

eli W

indf

arm

s Li

mite

d 44

,247

,787

1.42

0.00

0.0

00.

000.

00-1

.42



37

C) Change in Promoters’ Shareholding (please specify, if there is no change)

Sr No

Particulars Shareholding at the beginning of the year

Cumulative Shareholding during theYear

No. of shares % of totalshares of the

company

No. of shares % of totalshares of the

company1 At the beginning of the year 303,23,67,789 97.542 Date wise Increase / Decrease in Promoters

Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment /transfer / bonus/ sweat equity etc):

-46,025 0.00

Sold during the year 52,080 0.00 303,23,15,709Bought during the year 6,055 0.00 303,23,21,764 97.53

3 At the end of the year 303,23,21,764 97.53

D) Shareholding Pattern of top ten Shareholders: (other than Directors, Promoters and Holders of GDRs and ADRs):

Sr No

For Each of the Top 10Shareholders

Shareholding at the beginning of the year

Shareholding at the end of the year

No. of shares

% of totalshares of the

company

No. of shares


companyAt the Beginning of the year

1 IFCI Limited 7,20,000 0.02% 7,20,000 0.02%2 Neetu Singh 5,85,000 0.02% 5,91,100 0.02%3 Arihant Advertising Private Limited 4,93,000 0.02% 0.00 0.00%4 Global Securities Limited 3,03,000 0.02% 0.00 0.00%5 Nak Securities Limited 2,25,000 0.01% 2,25,000 0.01%6 Copcoan Vyapaar Private Limited 2,25,000 0.01% 2,25,000 0.01%7 Aridhi Vanijya Private Limited 2,18,000 0.01% 2,18,000 0.01%8 Dharamshi Securities Private Limited 2,00,000 0.01% 2,00,000 0.01%9 Rita Bothra 1,99,746 0.01% 0.00 0.00%

10 Jayesh Nagji Nisar 1,93,166 0.01% 1,93,166 0.01%11 Telelink Commercial Pvt Ltd 0.00 0.00 4,96,320 0.02%12 Gangadhar Narsinghdas Agrawal 0.00 0.00 3,00,000 0.01%13 Anoop Kumar Sahu 0.00 0.00 1,90,000 0.01%

E) Shareholding of Directors and Key Managerial Personnel:

Sr. No

Shareholding of each Directors and each Key Managerial Personnel

Shareholding at the beginning of the year

Cumulative Shareholding during the

YearNo. of shares


company

No. of shares

% of totalshares of

thecompany

At the beginning of the year NIL NIL NIL NILDate wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment /transfer/bonus/sweat equity etc):

NIL NIL NIL

At the end of the year NIL NIL NIL NIL



F) INDEBTEDNESS - Indebtedness of the Company including interest outstanding/accrued but not due for payment as on 31st March, 2016 is as under.

(` in Crore)

ParticularSecured Loans

excluding deposits

Unsecured Loans Deposits/ICD Total

Indebtedness

Indebtedness at the beginning of the financial year

i) Principal Amount 28,738.22 226.22 2,471.54 31,435.98 ii) Interest due but not paid 474.48 1.02 175.59 651.09 iii) Interest accrued but not due 244.70 - 73.15 317.85 Total (i+ii+iii) 29,457.40 227.24 2,720.28 32,404.92 Change in Indebtedness during the financial year

Net Change - Addition/ (Reduction) 9,292.78 3.48 933.97 10,230.23 Indebtedness at the end of the financial year i) Principal Amount 37,344.50 229.99 3,257.66 40,832.15 ii) Interest due but not paid 1,098.85 0.73 1.04 1,100.63 iii) Interest accrued but not due 306.82 - 395.56 702.38 Total (i+ii+iii) 38,750.17 230.73 3,654.25 42,635.16

XI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL-A. Remuneration to Managing Director, Whole-time Directors and/or Manager: For FY 2015-16

(` in Lakh)

Sr. No

Particulars of Remuneration Name of MD/WTD/ Manager Total Amount

(` In Lakh)Shri Firdose Vandrevala

Ex. Vice Chairman

Shri Dilip Oommen

MD & CEO

Shri Mahadev Iyer

Dir (Fin) & CFO

1 Gross salary

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

700.00 300.00 250.00 1250.00

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961

0.00 25.80 0.00 25.80

(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961

NIL NIL NIL NIL

2 Stock Option NIL NIL NIL NIL

3 Sweat Equity NIL NIL NIL NIL

4 Commission- as % of profit- others, specify

NIL NIL NIL NIL

5 Others, please specify NIL NIL NIL NIL

Total (A) 700.00 325.80 250.00 1275.80

6 Ceiling as per the Act As per Schedule V, Part II of the Companies Act, 2013



39

B. Remuneration to other directors (` in Lakh)

Sr. No.

Particulars of Remuneration

Name of Directors Total Amount

AP SSK AD1 Independent Directors

Fee for attending board committee meetings 14.00 Nil 12.00 26.00Commission Nil Nil Nil Others, please specify Nil Nil Nil Total (1)

Independent Directors > AP – Shri Arvind Pande, AD – Shri Alok Dhir, (resigned w.e.f May 16, 2015) VGR – Shri V G Raghavan

PSR JM RS SS HB2 Other Non-Executive Directors

Fee for attending board committee meetings Nil Nil Nil 2.60 1.20 3.80CommissionOthers, please specify

Total (2) Total (B)=(1+2) Total Managerial Remuneration

Overall Ceiling as per the ActNon-Executive Directors > PSR – Shri P S Ruia, JM – Shri J Mehra, Shri RS – Rana Som, SS – Shri S Santhanakrishnan, HB – Shri H Biswas

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD (` in Lakh)Sr. No.

Particulars of Remuneration Key Managerial PersonnelCEO CFO CS Total

1 Gross salary (a) Salary as per provisions contained in section 17(1) of the

Income-tax Act, 1961300.00 250.00 50.00 600.00

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 25.80 0.00 0.00 25.80(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961 Nil Nil 0.00 0.00

2 Stock Option N.A. N.A. N.A. N.A.3 Sweat Equity N.A. N.A. N.A. N.A.4 Commission - as % of profit N.A. N.A. N.A. N.A. others, specify… N.A. N.A. N.A. N.A.5 Others, please specify N.A. N.A. N.A. N.A. Total 325.80 250.00 50.00 625.80

XII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

Type Section of the

Companies Act

Brief Description

Details of Penalty / Punishment/

Compounding fees imposed

Authority[RD / NCLT/ COURT]

Appeal made, if any (give Details)

A. COMPANYPenalty

NILPunishmentCompoundingB. DIRECTORSPenalty

NILPunishmentCompoundingC. OTHER OFFICERS IN DEFAULTPenalty

NILPunishmentCompounding



Annexure – VII Annexure – ‘A’ to Directors’ ReportA. CONSERVATION OF ENERGY:a) Energy Conservation measures taken: 1. CPP1-19MW-BBT - Installation of VVFD drive in CEP motors in Turbo blower - Annual Energy savings (KWH)

- 4.82 Lakhs

2. CPP1-19MW-BBT - Optimization of dry Air consumption in Boiler & Blower - Annual Energy savings (KWH) - 1.45 Lakhs

3. SMP1-Stoppage of one Hydraulic pump during casting sequence break -Annual Energy savings (KWH)-6.05 Lakhs

4. SMP1-Reduction in auxiliary power consumption by 5% of kwh/ton of auxiliary power in SMS -Annual Energy savings (KWH)-166.86 Lakhs

5. SMP2 - NG consumption reduction in side lance by 40% - Annual NG Savings (Sm3) - 23.54 Lakhs

6. SMP2 - Reduction of power consumption by 4% of FES 1.1 ID Fan-A by Damper control - Annual Energy savings (KWH) - 31.12 Lakhs

7. BF - Reduce Power consumption in Cooling Tower water circulation pump circuit - Annual Energy savings (KWH) - 6.39 Lakhs

8. COREX - Optimization of Energy Consumption in Corex-1 & 2 Cast house Degusting system - Annual Energy savings (KWH) - 2.2 Lakhs

9. COREX - Optimization of Energy Consumption in Hot Gas ID Fan – 1,2 and 7 in Coal Drying Plant - Annual Energy savings (KWH) - 11.15 Lakhs

10. COREX - Optimization of Energy consumption of CDP Mixing air fan-7,8 & 9 in Coal Drying Plant - Annual Energy savings (KWH) - 4.92 Lakhs

11. CRM - ICTL - Pinch roll drive OFF when line speed is less than 30MPM - Annual Energy savings (KWH) - 0.89 Lakhs

12. CRM - CRCA finishing lines - Jib crane installed at LIR & ICTL for unloading & evacuating CRCA baby coils - Annual Energy savings (KWH) - 2.56 Lakhs

13. CRM - CRCA finishing lines - Transparent roof sheet installed and 270No.s of lights switched off during day time - Annual Energy savings (KWH) - 4.15 Lakhs

14. CRM - FIMI - 15 KW Motors switched off for FIMI Hydraulic system. - Annual Energy savings (KWH) - 1.15 Lakhs

15. CRM - DMS - Jib crane installed at DMS for unloading & evacuate CRCA baby coils - Annual Energy savings (KWH) - 1 Lakhs

16. CRM - GAL-1 - Welding PR operating only during the strip jog. - Annual Energy savings (KWH) - 0.39 Lakhs

17. CRM - GAL-1 - Switched off Deflector Roll-3 DFF Bottom Section Motor - Annual Energy savings (KWH) - 0.42 Lakhs

18. CRM - ICTL - Side trimmer motor kept OFF when side trimmer is running in disengage condition and trimmer is in use. - Annual Energy savings (KWH) - 1.47 Lakhs

19. CRM - GAL-1 - EPPR ( Entry Pulling Pinch Roll ) switched off during Line run (55KW Motor), Considering 35 coils per day & jog time 25 sec - Annual Energy savings (KWH) - 1.25 Lakhs

20. Utilities - Energy Saving in Conarc-1 Utilities IC-2 water cooling system by switching off of One pump - Annual Energy savings (KWH) - 26.53 Lakhs

21. Utilities - Energy saving by Replacement of aluminum blade with FRP blade in Fin Fan Cooler’s Fan - Annual Energy savings (KWH) - 0.19 Lakhs

22. Utilities - Energy saving by replacement of Compression Unit with AHU at Chiller Control room - Annual Energy savings (KWH) - 0.8 Lakhs

23. Utilities - 40% Energy saving in condenser cooling water circuit at Chiller Plant - Annual Energy savings (KWH) - 3.67 Lakhs



41

24. Utilities - Energy saving by VVF drive in fan of fin fan cooler of Conarc-2 FES system - Annual Energy savings (KWH) - 6.59 Lakhs

25. Utilities - Energy saving by replacing of Laminar pump with lower head pump at HSM Pump House - Annual Energy savings (KWH) - 3.1 Lakhs

26. Plate mill - Energy Conservation and Power factor improvement of Slab Area Hydraulic system motors - Annual Energy savings (KWH) - 1.82 Lakhs

27. Plate mill - Energy savings through Auto ON/OFF of lights - Annual Energy savings (KWH) - 0.42 Lakhs

28. Pipe mill - Energy saved by cage setting drive used in Pipe exit conveyors in Tack welding Machine - Annual Energy savings (KWH) - 0.07 Lakhs

29. Installation& Commissioning of Energy Management power saving panel in major lighting circuit: - Annual saving:-25 Lakhs.

30. Replacing LED luminaries with conventional luminaries: - Annual Saving-24 Lakhs.

31. Operating the major process fan loads (24MW) through Variable frequency drives:-Annual Savings - Rs 6 crore.

32. Installation & commission of in line heaters in FO line, which has improved the FO temperature & improved the quality of atomization reduces the specific FO consumption. Annual Savings:- 3 Crore

33. Modification in feeding point of the balling disc which reduced the green ball rejection % & through put increased. Due to this 1 disk operation stopped and power 200KW for 24 hours saved. Annual Saving:- 50 Lakhs

34. Converted CPP pump from DOL running to Variable Frequency Drive, Annual Savings:- Rs 20 Lakhs

35. Operating ZH-15000 11KV Compressor and restricting operating 3 nos. of ZR-750 3.3 KV compressor:- Annual Saving- Rs.12 Lakhs

36. Energy saving on account of Installing Energy Efficient Pumps at Mill-2 Coolant system. In place of Running 02 Pumps of 55 KW each, we are running only one pump of 55 KW, so direct saving of 55KW power per hour. Total Annual savings of Rs.25.95 lakhs

37. Energy saving on account of Installing Energy Efficient Pumps, At Mill-1 Coolant system. In place of Running 02 Pumps of 55 KW each, we are running only one pump of 55 KW, so direct saving of 55KW power per hour. Total Annual savings of Rs.28.31 lakhs

38. Installed 15 KW Pump in place of 30 KW pump at CCL-2 De-greasing section. Total Annual savings of Rs.7.56 lakhs

39. After Using of old RO plant we are saving around 45 m3 of treated water per day. (Total savings on account of Power & Membrane consumption per month is Rs.193000/-) Total Annual savings of Rs.23.16 lakhs

40. Energy Saving on account of reducing the water head by trimming the impellers of CGL Water pumps. Savings per month is Rs.148200/- Total Annual savings of Rs.17.78 lakhs

41. Energy Saving on account of Provision of VFD for Mill 3 Fume ex. Blower 200 kw Total Annual savings of ` 20.15 lakhs

42. Energy Saving on account of Idling of 3200 KVA transformer while installing finish oven (no load losses & copper losses- 52.30KWH at 75 deg. c) in CCL-2 .Total Annual savings of ` 16.33 lakhs

b) Additional Investments and proposals being implemented for reduction in consumption of energy: 1. SINTER - To reduce energy consumption of CF 2 fan Motor/Synchronous trafo revival - Energy Savings (Lakhs

Kwh) - 29.88 - Approx. Investment - 4 Lakhs

2. SINTER - Replace cooler fans with higher efficiency fans - Energy Savings (Lakhs Kwh) - 8.96 - Approx. Investment - 40 Lakhs

3. SINTER - High Efficient (COG) Burner in Ignition Furnace for Sinter Plant-(Savings in terms of NG) - Energy Savings (Lakhs SCM) - 1.78 - Approx. Investment - 52 Lakhs

4. Blast Furnace - Pulverised coal injection increasing from 130 to 150 kg/t - Energy Savings (T) - 6897.06 - Approx. Investment – Nil

5. Blast Furnace - Energy loss due to higher inlet air temperature for compressors - Energy Savings (Lakhs Kwh) - 1.32 - Approx. Investment - 3 Lakhs

6. COREX - Reduction in Specific Nitrogen consumption from 155 to 138 Nm3/t. - Energy Savings (Lakhs NCM) - 170 - Approx. Investment – Nil



7. COREX - Reduction in Specific Oxygen consumption from 530 to 503 Nm3/t. - Energy Savings (Lakhs NCM) - 270 - Approx. Investment – Nil

8. COREX - Phase II - Reduction in Specific Fuel rate consumption from 927 to 900 kg/t - Energy Savings (T) - 27000 - Approx. Investment – Nil

9. SMP-2 - Power saving by providing individual outlet damper for HMPS Station A Booster fan - Energy Savings (Lakhs Kwh) - 10.47 - Approx. Investment - 3 Lakhs

10. SMP-2 - Power saving by providing individual outlet damper for HMPS Station B Booster fan. - Energy Savings (Lakhs Kwh) - 10.47 - Approx. Investment - 3 Lakhs

11. HSM - Laminar Cooling Tower(CT) Pump replacement with energy efficient pumps - Energy Savings (Lakhs Kwh) - 18.32 - Approx. Investment - 30 Lakhs

12. CSP Mill - Reduction in Fuel Consumption by reducing heat losses through better monitoring and maintenance of TF Rolls - Energy Savings (Lakhs SCM) - 4.32 - Approx. Investment – Nil

13. Utilities & Aux - Energy loss due to BF gas flaring (9.7% to 3%) - Energy Savings (Lakhs SCM) - 235.27 - Approx. Investment – Nil

14. Utilities & Aux - Energy loss due to Flaring of corex gas (Flaring reduction from 11.2% to 3%) - Energy Savings (Lakhs SCM) - 296.03 - Approx. Investment – Nil

15. Utilities & Aux - Replacing P-03-A & P 16 A of HSM pump house - Energy Savings (Lakhs Kwh) - 2.21 - Approx. Investment - 9 Lakhs

16. Utilities & Aux - Installing VFD for 05 P006-B of Conarc-2 - Energy Savings (Lakhs Kwh) - 1.83 - Approx. Investment - 2.8 Lakhs

17. Replacement of conventional luminaries with LED Fittings:- Annual Saving- 1 Crore

18. Replacement of burner to high pressure burners :- Annual Saving- 15 Crore

19. Improvement in Power Management after CPP 2nd unit commissioning to reduce the import and improving in power wheeling to Dabuna:- Rs 15 Crore

c) Impact of measures at (a) and (b) above for reduction of energy conservation and on the cost of production of goods:

As mentioned in (a) & (b) aboveB. TECHNOLOGY ABSORPTION: The Company has absorbed/in process of absorption of the following technologies obtained from various sources. Hazira Facility:

Product Technology from Year of import Status of absorption/adaptation

HBI(Sponge Iron)

MIDREX Corpn.U.S.A./Voest Alpine, Austria

1989-90 Fully absorbed

HRC including DC-Electric Arc Furnace, Continuous Caster and Hot Strip Mill

DC-Electric Arc furnace– Clecim, FranceContinuous Caster - SMS, Demag / SiemagHot Strip Mill - SMS, Siemag

1991-94 Fully absorbed

HR Plate Mill SIEMENS VAI Metals Technologies SAS, 2006-08 Fully absorbed

Reheating Furnaces Five Stein France, 2006-08 Fully absorbedHeat Treatment EBNER Austria 2007-08 Fully absorbedShot Blasting and Painting Line

USF, England 2007-08 Fully absorbed

Blast Furnace Unit MCC, China 2008-10 Fully absorbedCorex Unites SVAIC, Austria 2007-10 Fully absorbedHRC from Compact Strip Production (CSP) Mill

SMS Siemag, Germany 2010-11 Fully absorbed

Twin Shell Conarc Furnace SMS Demag 2008-11 Fully absorbedAir Separation Unit (1 & 2) ASU#1 - HOPM, China & 2- SSAB, Sweeden 2006-11 Fully adsorbedAir Separation Unit no. 3 M/S Air Products, UK 2008-11 Fully adsorbed



43

Vizag Facility:

Product Technology from Year of import

Status of absorption / adaptation

Pellet Plant at Vizag Lurgi Traveling Grate Process 1993 Fully absorbedHigh Gradient magnetic separator for the recovering Fe units from low grade ore of 45-50% Fe

M/s Metso 2012 Fully absorbed

Derrick screens for separating -150 Microns of tailing material

M/s Derrick Corporation 2012 Fully absorbed

Ceramic Filters 3 Nos M/s. Huzhou Hehui Machinery co. Ltd

2013 Fully absorbed

Electro Static Precipitator M/s Thermax India Ltd 2013 Fully absorbedHigh pressure fuel burners Metal 7, Canada 2015 Under testing

Odisha Facility:

Product Technology from Year of import Status of absorption / adaptation

Pellet Plant at Odisha Aker Kverner, USA 2008-10 Fully adsorbed

Pune Facility:

Product Technology from Year of import Status of absorption / adaptationColor Coating Line – 2 M/s Commenco 2012 Fully adsorbedContinuous Galvanizing Line – 2 M/s Crescent 2012 Fully absorbed

C. FOREIGN EXCHANGE EARNINGS AND OUTGO: I) Total Foreign exchange used and earned

(Figures are ` in Crore)a) Total Foreign exchange earned FY 2015-16

(i) Foreign exchange directly earned through export 1,457.92(ii) Others 118.28Total Foreign exchange earned 1,576.20

b) Total foreign exchange used(i) For import of plant & machinery/technical know-how 38.43(ii) Others including raw materials and interest 4,641.46Total Foreign exchange used 4,679.89

Particulars with respect to Conservation of Energy:FORM A

A. Power and Fuel Consumption

Sr. No.

Particulars Year 2015-16

Year 2014-15

1 Electricity a) Purchased

Unit (Lakhs) 31752 33733Total Amount (` in crores) 1214 1456Rate/Unit (`) 3.82 4.32

b) Own generation(i) Through diesel generator Unit (Lakhs) 3.66 16.36

Units per ltr. of diesel oil 2.05 3.74 Cost/Unit (`) 27.49 17.37

(ii) Through steam turbine / generator Unit (Lakhs) 1248 953 Units per ltr. of Fuel oil/Gas/Steam Coal 0.98 0.78 Cost/Unit (`) 4.45 4.49



Sr. No.

Particulars Year 2015-16

Year 2014-15

(iii) Through gas turbine / generator Unit - against gas (Lakhs) 8325 1128 Units / SM3 of gas 1.52 1.26 Cost of fuel/Unit (`) 0.56 0.80(iv) Through third party on conversion-against gas-basis Unit (Lakhs) 499 Units / SM3 of NGL/HSD/NG 3.68 Cost of fuel/Unit (`) (excluding fixed cost) 10.97

2 Coal (specify quality and where used) a) Steam Coal for power generation by CPP

Quantity (tones) 93844 66432Total Cost (` crs) 35.12 30.09Average Rate (`) 3742 4529

b) Anthracite Coal consumed as fuel for in duration Quantity (tones) 54916 57556Total Cost (` crs) 42 51Average Rate (`) 7603 8833

3 Furnace OilQuantity (k. ltrs) 56995 60206Total Cost (` Crs) 142 266 Average Rate (Net of Modvat) 24854 44427

4 OthersQuantity.(NG) - ’000 SM3 89817 93726Total Cost (` Crs) 189 231Rate/Unit 21.04 24.61

B. Consumption per unit of Production

ParticularsStandard (If any)

Currentyear

PreviousYear

Product: Beneficiated Concentrate Unit Per MTElectricity (Kwh) 37 24.62 26.40Others (specify) N.A. N.A. N.A.Product: Iron Oxide Pellets Unit Per MTElectricity (Kwh) 38 46.87 46.74Furnace Oil / LSHS (Ltrs) 16 16.81 18.92Anthracite Coal (Kgs) 17 14.17 15.54Coal (Steam coal on net generation) (Kgs) 0.72 13.38 17.01Others (specify) N.A. N.A. N.A.Product: Hot Briquetted Iron Unit Per MTElectricity (Kwh) 125 194.30 213.26Other – NG (including Corex gas equivalent to NG) (SM3) 325 297.61 300.17Product: Liquid Steel Unit Per MTElectricity --- 802.62 831.45Other – NG (SM3) --- 22.68 27.35Product: Color Coated (ESPF) Unit Per MTPickling Line 8 5.15 5.58Cold Rolling Mill – l 135 75.68 81.14



45

ParticularsStandard (If any)

Currentyear

PreviousYear

Cold Rolling Mill – ll 130 124.11 134.81Cold Rolling Mill – lll 110 88.31 94.01Galvanizing Line – l 85 44.40 56.84Galvanizing Line – ll 105 59.39 72.96Color Coating – l 70 60.56 60.67Color Coating – ll 280 51.33 62.54

FORM BRESEARCH AND DEVELOPMENT (R & D):Essar Steel, with 10 MTPA capacity, produces a wide range of flat steel products that include Hot Rolled, Cold Rolled, Galvanized, Colour-Coated products, extra wide plates and pipes. It caters to a wide section of industrial segments that include auto, ship building, white and yellow goods, general engineering, power plants, hydrocarbon industry, pipe making and defence among others.

Essar Steel has a separate corporate level R&D approved by Department of Scientific and Industrial Research. At the apex level, R&D is governed by R&D council which is presided by CEO & MD of Essar Steel The R&D council consists of external members of distinguished merit and ability as well as senior level Essar executives. Dr Sanak Mishra, former CEO of Arcelor Mittal, Dr .V Ramaswamy, former ED of SAIL, R&D and currently Prof at PSG college of Technology , Dr. S.K Biswal, Chief Scientist, IMMT, CSIR lab and Dr. M. Venkatraman, advisor to Essar Steel India Limited, formerly, Chief of R&D, Essar Steel India Limited are the external members.

R&D is engaged in three broad areas of research: -- a) Raw materials, b) Process and c) Product development. Each area is supervised by a committee which is headed by the business function head of that area. Each of these committees approves the projects of that area, and reviews the projects periodically along with project teams.

R&D Facilities (Current)A. Raw Material Research Hot Sintering Machine

Roller Briquetting Machine

Column Floatation Unit

Drum Pelletizer

Disc Pelletizer

Pot Pellet induration Simulator

Reduction degradation index/Reducibility testing apparatus

Pellet cold crushing strength (CCS) testing unit

B. Metallography Metallurgical Microscope with Image Analyser Systems(LIECA)

Micro Hardness Testing (LIECA)

SEM with EDAX & EBSD attachments (JEOL)

C. Mechanical and chemical testing Universal Testing Machine (UTM)

Impact Toughness Testing

Rockwell/Brinel/Vickers Hardness testing

Hole Expansion Testing Machine

Hysteresis Loop Tracer

Drop weight Tear Testing



D. Corrosion Testing HIC/SSCC Laboratory

R&D achievements in FY15-16Accomplishments • Essar Steel won “India Steel Manufacturing Enabling Technology Leadership Award”- Frost and Sullivan- 2015.

• Won Golden Jubilee award for its outstanding work in Research and Development from “The Southern Gujarat Chamber of Commerce and Industry”

• The total percentage volume of Product Contribution to Sales Revenue due to Product developed during last 3 Years is 23%

• Seventeen new products were developed in the FY 2015-16.

Special ultra-high strength (2 GPa) steel armour grade (DMR 1700) developed commercially for Indian defence for first time in country through CCM route and approved by M/s DMRL.

Armour steel plate (CDA 99) up to thickness 80mm qualified in Ballistic performance. Essar Steel is the first steel plant in private sector to qualify for the supply of armour steel plates to Indian Defence.

Armour grade 500 for body armoured protection plate was developed and first commercial order serviced.

Hot forming grade steel for agricultural equipment, which is a value added grade. Product is approved by the customer and is being supplied regularly.

Successfully developed API 5L X-60QS sour quality pipes from Q&T plates with stringent DWTT @ -30˚C.

High strength atmospheric corrosion resistant steel plate for Chennai metro railway project with stringent specification.

High strength steel thick plate in IS 2062 E410 grade up to 80 mm thickness in normalized condition for Chenab bridge project.

• Nine Technical papers were published at various seminars and conferences.

• Essar Steel participated in the DEFEXPO-16 held at Goa and showcased its product portfolio for defence sector

Collaborations:Essar Steel is collaborating with IIT, Kharagpur to develop a model for thermal profiling of sintering machine.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:Please refer table under the head TECHNOLOGY ABSORPTION.



47

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ESSAR STEEL INDIA LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of ESSAR STEEL INDIA LIMITED(“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statement

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting polices used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

The Company has recognised deferred tax asset of ` 4,781.83 Crore on unabsorbed depreciation and carried forward business losses based on future profitability projections made by the management as stated in Note 14 of the financial statements which, in our opinion, does not meet the criteria of ‘virtual certainty supported by convincing evidence’ as required under Accounting Standard (AS) 22-Accounting for taxes on Income. Had the deferred tax asset as aforesaid not been recognized, accumulated losses would have been higher and the deferred tax asset would have been lower by ` 4,781.83 Crore and loss after tax for the year would have been higher by ` 2,902.76 Crore. This matter was also qualified in our report on the financial statements for the year ended 31st March, 2015.

Qualified Opinion

In our opinion and to the best our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the Financial Statements:

1. Note 34 (c.1) regarding investment of ` 738.07 Crore in Essar Steel Offshore Limited, Mauritius (ESOL) and Corporate guarantee given to lenders of ESOL, in connection with an outstanding loan of USD 413 Million taken by ESOL for the purpose of investment in Trinity Parent Corporation, USA, an indirect subsidiary of the Company, which loan has been recalled by lender thereof and the related exposure. For reasons explained in the Note, no provision has been made by the Company for diminution in the value of said investments or against the said exposure.



2. Note 49 regarding Company’s current liabilities exceeding its current assets by ` 24,684.73 Crore as at 31st March, 2016. The Company believes that for the reasons stated in the said Note, it will have adequate liquidity to meet its liabilities as and when they fall due.

3. Note No. 34 (b) (4) regarding cross subsidy surcharge amounting to ` 327.28 Crore claimed by Dakshin Gujarat Vij Company Limited for the period from June 2013 to March 2016. For reasons explained in the Note, the Company has reversed/not provided the said amount during the year under report.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the annexure A, a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) In our opinion, the matter described in paragraph 2 under the Emphasis of Matters paragraph may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31st March,

2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164(2) of the Act.

g) The qualification relating to the maintenance of accounts with regard to Deferred Tax Asset is as stated in the Basis of Qualified Opinion paragraph above.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

i) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements vide Note 34.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

iii. The Company is not required to transfer any amount to the Investor Education and Protection Fund.

For M. M. Chaturvedi & Co., Chartered Accountants

(Firm Reg. No. 112941W)

Madan Mohan ChaturvediPartner

Membership No. 031118Hazira, 21st July, 2016

ANNEXURE-A to the Independent Auditors’ Report-31st March, 2016

(Referred to in our Report of even date)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.



49

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are generally held in the name of the Company.

(ii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act in respect of investments, guarantees and securities.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public during the year in terms of the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3(v) of the Order is not applicable to the Company

(vi) We have broadly reviewed the cost records made and maintained by the Company prescribed by the Central Government under Section 148 of the Act and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Services Tax, Duty of Customs, Duty of Excise, Value Added Tax, and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of aforesaid statutory dues in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable.

(b) Details of dues of Income-tax, Sales Tax, Services Tax, Duty of Customs, Duty of Excise or Value Added Tax which have not been deposited as on 31st March, 2016 on account of disputes are given below:

Sr. No. Name of the statute

Nature of dues Forum where dispute is pending

Period to which the amount relates

Amount disputed

(` in Crore)

Amount deposited

(` in Crore)

1 The Customs Act, 1962

Customs Duty Commissioner of Central Excise, Surat

2006 & 2007 186.17 186.17

Customs Duty Supreme Court 1991 9.25 Nil

Customs Duty Commissioner of Customs, Ahmedabad

Apr 12 - Dec 12 35.43 5.00

a) Customs DutyCESTAT, Bangalore 1998-99

18.46 Nil

b) Penalty 20.00 Nil

a) Customs DutyCESTAT, Mumbai 2004-05

4.42 Nil

b) Penalty 4.42 Nil

Customs Duty High Court, Hyderabad

1995 1.32 Nil

Customs Duty CESTAT, Mumbai 2008-09 0.12 Nil



Sr. No. Name of the statute

Nature of dues Forum where dispute is pending

Period to which the amount relates

Amount disputed

(` in Crore)

Amount deposited

(` in Crore)

2 Central Excise Act, 1944

a) Excise DutyCESTAT, Delhi Sep 2007 - Oct 2007

37.64 -

b) Penalty 37.64 -

Excise Duty Gujarat High Court June 1995 - Sep 1997 33.32 1.81

a) CENVAT creditCESTAT, New Delhi March 2006 to

July 20101.87 Nil

b) Penalty 1.87 Nil

a) CENVAT creditCESTAT 2006-2011

1.50 0.05

b) Penalty 1.50 Nil

Excise Duty Asst. Comm. of Central Excise, Div. - IV, Surat

March 2004 1.98 Nil

Excise Duty Joint Commissioner, CESTAT

2002 to 2004 0.17 Nil

a) Excise Duty Commissioner Appeal 2010-11

0.27 Nil

b) Penalty 0.13 Nil

a) CENVAT credit Commissioner of Central Excise, Vadodara

Dec 10-Aug 110.05 Nil

b) Penalty 0.05 Nil

3 Finance Act,1994 (Service Tax)

Service tax CESTAT-Mumbai 2006-07 0.89 Nil

a) Service tax Commissioner (Appeals), Vizag

June, 2007 to September, 2011

0.11 Nil

b) Penalty 0.11 Nil

4 The Gujarat Sales tax Act

a) Sales Tax Joint Commissioner of sales tax April 2005 - March 2006

10.22 2.56

b) Penalty 15.33 Nil

Sales Tax Joint commissioner of sales tax

1998-1999 1.36 Nil

Sales Tax Joint commissioner of sales tax

1997 to 1999 1.08 Nil

Sales Tax Gujarat VAT Tribunal

1994-1995 0.90 0.05

Sales Tax Joint Commissioner 1995-96 0.75 Nil

Sales Tax Joint Commissioner 2000-01 0.49 Nil

5 Orissa Value Added Tax Act, 2004

Entry Tax SC of India April 2008 to November 2012 15.34 7.68

6 The Central Sales Tax Act Sales Tax STAT 2004-05 0.46 0.22

7 AP VAT Act Sales Tax STAT 2005-06 to 2008-09 0.13 Nil

AP High Court Sep 13 - Oct 13 0.20 0.05



51

(viii) According to the information and explanations given to us, the Company has not taken any loans from Government. The Company has defaulted in repayment of dues to financial institutions and banks during the year. Details of the dues to bank and financial institutions which have not been paid on due dates and which are outstanding as on 31.3.2016 are given below:

Sr. No Name of the Lender Principal amount in default as on 31.3.2016 (` Crore)

Period of default

1 State Bank of India 75.50 Dec 2015 to March 2016

2 Bank of Baroda 133.28 June 2015 to March 2016

3 Bank of India 13.27 September 2015

4 Central Bank of India 67.88 Dec 2015 to March 2016

5 Allahabad Bank 2.14 March 2016

6 Corporation Bank 9.36 March 2016

7 Exim Bank 3.34 March 2016

8 State Bank of Hyderabad 28.31 Dec 2015 to March 2016

9 HDFC Bank 6.30 Nov 2015 to Dec 2015

10 Edelweiss Asset Reconstruction Co. 41.80 Sep 2015 to March 2016

11 ICICI Bank 191.71 Dec 2015 to March 2016

12 IDBI Bank 141.46 March 2016

13 Lakshmi Vilas Bank 0.79 March 2016

14 SREI Multiple Asset Investment Trust 54.12 Dec 2015 to March 2016

15 Syndicate Bank 6.30 March 2016

16 State Bank of Mysore 3.75 March 2016

17 State Bank of Patiala 0.63 March 2016

18 UCO Bank 4.66 March 2016

19 HDFC Limited 7.64 March 2016

TOTAL 792.24

Attention is invited to footnote below Note 5 to the Financial statements.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the company during the year for the purposes for which loans were obtained other than temporary deployment pending application.

(x) To the best of our knowledge and according to the information and explanation given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

(xi) According to the information and explanations given to us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us, the Company is not a Nidhi Company as prescribed under section 406 of the Act. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records



of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him.

(xvi) According to information and explanations given to us, the Company is not required to be registered under Section 45 IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company.





Annexure - B to the Independent Auditor’s Report – 31 March 2016

(Referred to in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting Essar Steel India Limited (“the Company”) as at 31 March 2016 in conjunction with our audit of the standalone Financial Statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”).

These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that:

1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;



53

2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

3. Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.







Balance Sheet as at 31st March, 2016(` in Crore)

Note No.

As at31st March, 2016


Equity and LiabilitiesShareholders’ Funds

Share Capital 3 3,153.23 3,153.23Reserves and Surplus 4 5,463.37 10,959.43

8,616.60 14,112.66Non Current Liabilities

Long Term Borrowings 5 20,211.37 22,476.93Other Long Term Liabilities 6 3.47 7,840.85Long Term Provisions 7 99.55 263.80

20,314.39 30,581.58Current Liabilities

Short Term Borrowings 8 9,276.62 4,681.38Trade Payables 9 6,401.75 6,679.60Other Current Liabilities 10 16,660.68 7,351.51Short Term Provisions 11 1,429.52 375.56

33,768.57 19,088.05TOTAL 62,699.56 63,782.29

AssetsNon Current Assets

Fixed AssetsTangible Assets 12 42,396.49 41,989.97Intangible Assets 12 17.48 24.31Capital Work-in-Progress 47 3,396.76 4,582.36

Non Current Investments 13 1,393.83 1,275.67Deferred Tax Assets (net) 14 4,866.34 2,086.40Long Term Loans and Advances 15 572.41 694.75Other Non Current Assets 16 972.41 1,064.33

53,615.72 51,717.79Current Assets

Inventories 17 2,325.55 2,689.65Trade Receivables 18 1,614.77 1,276.54Cash and Bank Balances 19 513.94 767.18Short Term Loans and Advances 20 3,832.11 3,211.74Other Current Assets 21 797.47 4,119.39

9,083.84 12,064.50TOTAL 62,699.56 63,782.29

Notes to Financial Statements form an integral part of the Balance Sheet.

In terms of our report of even date attached For and on behalf of the Board of Directors of Essar Steel India LimitedFor M. M. Chaturvedi & Co.,Chartered Accountants

Madan Mohan Chaturvedi Dilip Oommen Mahadev IyerPartner Managing Director & CEO Director Finance & CFO

Pankaj ChourasiaHazira, 21st July, 2016 Company Secretary



55

Statement of Pro�t and Loss for the year ended 31st March, 2016(` in Crore)

Note No.

For Year ended31st March, 2016


IncomeRevenue from Operations 22 14,923.20 14,984.31Less : Excise Duty 1,268.79 1,050.73

13,654.41 13,933.58Other Income 23 724.11 435.77

14,378.52 14,369.35ExpensesCost of Materials Consumed 24 9,296.76 7,785.94Purchase of Traded Goods 25 160.50 297.80Energy Cost 26 1,893.03 1,795.57(Increase)/Decrease in Inventories of Finished Goods, Work in Progress and Stock in Trade

27 142.63 438.40

Employee Benefits Expense 28 452.94 334.40Other Expenses : Manufacturing & Asset Maintenance 29 664.05 438.68 Administrative Expenses 30 328.71 219.72 Selling & Distribution Expenses 31 455.72 462.39

13,394.34 11,772.90Profit before Finance Costs, Exchange Variation and Derivative Losses, Depreciation /Amortisation, Exceptional/Prior Period Items and Tax

984.18 2,596.45

Finance Costs 32 4,467.63 3,865.01Exchange Variation & Derivative Losses(net) 33 697.89 382.44Depreciation / Amortization Expense 1,735.69 807.75Profit / (Loss) before Exceptional/Prior Period Items and Tax

(5,917.03) (2,458.75)

Exceptional Items (Expense) / Income (Refer Note 51) (2,793.04) 2,793.04Reversal of Depreciation Provision - 586.68Prior Period Items (Expense)/Income (5.85) 87.99Profit / (Loss) before Tax (8,715.92) 1,008.96Tax Expense/ (Benefit)Excess Provision of Earlier Years (Net) - (16.87)Deferred Tax Charge / (Credit) (2,915.78) 377.78Profit / (Loss) after Tax for the period (5,800.14) 648.05

Earning/(Loss) per Share (in Rupees) 41Basic [Nominal value of Shares ` 10 each(Previous Year ` 10 each)]

(18.67) 2.26

Diluted [Nominal value of Shares ` 10 each(Previous Year ` 10 each)]

(18.67) 2.26

Notes to Financial Statements form an integral part of the statement of Profit and Loss.






(` in Crore)For the Year ended

31st March, 2016For the Year ended31st March, 2015

A. Cash Flow from Operating Activities Net Profit/(Loss) before taxation (8,715.92) 1,008.96 Adjustments for - Depreciation / Amortisation 1,735.69 807.75 Profit on sale of Business Undertaking (265.44) (2,793.04) Loss on Sale/Write off of Fixed Assets (net) 0.76 1.93 Reversal of Depreciation Provision - (586.68) Prior Period Items Expense/(Income) - (87.99) Profit on Sale of Non Current Investment (10.74) (121.44) Exceptional Items (Expense) / Income 2,793.04 - Finance Costs 4,467.63 3,865.01 Exchange Variation & Derivatives (Net) 647.90 261.97 Interest on Deposit with Banks and Others (150.04) (157.00) Liabilities / Provision no longer required written back (net) (223.90) (9.32) Dividend Income - Trade Long Term Investment - (0.34)

8,994.90 1,180.85 Operating Profit before Movements in Operating Assets and

Liabilities278.98 2,189.81

Movements in Operating Assets and Liabilities: Decrease in Other Long Term Liabilities - (3,042.61) Increase in Trade Payables 682.72 133.50 Increase/ (Decrease) in Other Current Liabilities (279.24) 3,497.67 (Decrease) in Long Term Provisions (7.52) (4.42) Increase /(Decrease) in Short Term Provisions (1.74) (1.81) Decrease in Inventories 364.10 573.39 (Increase) in Trade Receivables (318.85) (108.72) (Increase) / Decrease in Short Term Loans and Advances (309.39) 117.68 (Increase) / Decrease in Other Non Current Assets 3.12 (42.34) Decrease in Other Current Assets 38.86 0.46

172.06 1,122.80 Cash Generated from Operations 451.04 3,312.61 Direct Taxes (Paid)/Refunded (net) (8.77) 1.96 Net Cash Generated from Operating Activities 442.27 3,314.57B. Cash Flow from Investing Activities Purchase of Fixed Assets, including intangible assets, Capital

Work in Progress, Capital Advances and Trial Run profits/loss(173.45) (1,821.47)

Proceeds from sale of Fixed Assets 2,324.46 113.21 Proceeds from Sale of Non Current Investments in Associates 33.88 286.00 Proceeds from redemption of Non Current Investments 1.94 0.78 Purchase of Non Current Investments (including Share

Application Money) : In Subsidiaries (84.89) (115.58) In Associates - (43.87) Others (501.01) (0.30)

Cash Flow Statement for the year ended 31st March, 2016



57

(` in Crore)For the Year ended


Refund of Advance to Equity 6.13 - Dividend Income from Long Term Investments - 0.34 Interest Income 129.72 72.11 Inter Corporate Deposit Given (Net) (71.48) (240.28) Refund of Deposit Placed with Banks 64.17 26.60 Net Cash used in Investing Activities 1,729.47 (1,722.46)C. Cash Flow from Financing Activities Proceeds from Issuance of Share Capital - 1,283.71 Proceeds from Borrowings (net) 12,761.01 18,093.83 Repayment of Borrowings (2,923.42) (22,135.83) Advance against Export Performance Bank Guarantee (6,948.31) 5,995.80 Finance Cost Paid (3,739.23) (4,529.56) Exchange Variation & Derivatives (net) (1,474.53) (241.58) Repayment of Finance Lease Liabilities (0.63) (1.20) Net Cash Generated from Financing Activities (2,325.11) (1,534.83) Net Increase in Cash and Cash Equivalents (153.37) 57.28 Cash and Cash Equivalents at the beginning of the year (see Note 3 below)

250.69 193.41

Cash and Cash Equivalents at the end of the year (see Note 3 below)

97.32

250.69

Net Increase in Cash and Cash Equivalents (153.37) 57.28

Notes:1 The above Cash Flow Statement has been prepared under the ‘Indirect method’ as set out in the Accounting

Standard–3 on Cash Flow Statements, issued by the Institute of Chartered Accountants of India.2 Previous year’s figures have been regrouped where necessary to conform to this year’s classification.3 Cash and Cash Equivalents included in the Cash Flow Statement comprise the following balance sheet amounts :

(` in Crore)As at

31st March, 2016As at

31st March, 2015Cash and Cash Equivalents (Refer Note 19 (A)) 96.72 250.14Less: Exchange Variation Gain (0.60) (0.55)Cash and Cash Equivalents at the end of the year 97.32 250.69

Cash Flow Statement for the year ended 31st March, 2016






Notes to Financial Statements for the year ended 31st March, 20161. Nature of Operations The Company owns and operates an integrated steel manufacturing facility comprising the unit for manufacturing of

flat rolled products at Hazira – District Surat, a Precoated facility at Pune, Beneficiation Plants at Dabuna and Kirandul and Pelletisation Plants at Paradeep and Vizag. The Company is also in the process of setting up another Pelletisation Plant at Paradeep. The Company also operates Processing and Distribution centers, Hypermarts and Express Marts at various locations across India.

2. Basis of Preparation The Financial Statements have been prepared to comply in all material aspects with the Accounting Standards notified

under Section 133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, other generally accepted accounting practices prevalent in India and the relevant provisions of the Companies Act, 2013 and rules framed thereunder. The Financial Statements have been prepared under the historical cost convention, except as stated elsewhere and on accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

2.1 Statement of Significant Accounting Policies (a) Use of Estimates The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles in India

requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the reported amounts of income and expenses during the year. The Management believes that these estimates are prudent and reasonable and are based upon the Management’s best knowledge of current events and actions. Actual results could differ from these estimates and differences between actual results and estimates are recognised in the periods in which the results are known or materialised.

(b) Tangible and Intangible Assets Tangible and intangible assets are stated at cost or at revalued amounts, less accumulated depreciation,

amortisation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use. Fair market value is determined by an Independent Chartered Engineer & Valuer.

In respect of accounting periods commencing on or after 7th December, 2006, exchange differences arising on reporting of the long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in the previous Financial Statements are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable fixed asset.

(c) Capital Work-In-Progress All expenditure, including interest cost during the project construction period, are accumulated and presented

as Capital Work-In-Progress until the assets are ready for intended use. Assets under construction are not depreciated. Income earned from investments of surplus borrowed funds during the construction/trial run period is reduced from Capital Work-In-Progress. Expenditure/Income arising during trial run is added to/reduced from Capital Work-In-Progress. Interest cost is not added to capital work in progress in case of project which are completed individually but not as part of an intended integrated facility.

(d) Expenditure on Substantial Expansion All direct capital expenditure on expansion are capitalised. As regards indirect expenditures on expansion, only

that portion of expenditure is capitalised that is attributable to the expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its original standard of performance.

(e) Depreciation and Amortisation (i) Tangible Assets Tangible assets are depreciated as per the useful life specified in Schedule II to the Companies Act,

2013 except Plant & Machinery which is as per useful life assessed by an Independent Chartered Engineer & Valuer on straight-line method. Depreciation on additions to / deletions from fixed assets is provided on pro-rata basis from the date of such addition and up to the date of deletion as the case may be. Depreciation on additions to assets due to exchange variation is provided over the remaining useful life of the assets. Depreciation is provided on individual project only after commencement of commercial production from intended integrated facility, to which such project belongs.



59

Notes to Financial Statements for the year ended 31st March, 2016 The difference in useful lives of Plant and Machinery as per Companies Act, 2013 and as assesed by

Independent Chartered Engineer & Valuer (who has assessed useful life after taking into account review of physical status of asset, usage of asset in terms of capacity or physical output, physical wear and tear which depends on operational factors such as the number of shifts for which the asset is to be used and the repair and maintenance program and the care and maintenance of the asset, while idle, technical or commercial or commercial obsolescence arising from changes or improvement in production, or from a change in the market demand for the product or service output of the asset) is highlighted below:

Plant & Machinery Useful life as per Companies Act, 2013

(Years)

Average useful life as per Technical Evaluation

(Years)Sinter Plant,Rolling Mill and Blast Furnace 20 30

Power Generation Plant 40 30

Others 25 30 (ii) Intangible Assets Costs relating to softwares, which are acquired, are capitalised and amortised on straight-line method

over estimated useful life of 5 to 6 years. (f) Impairment of Assets (i) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of

impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(ii) If impairment loss is provided, depreciation is calculated on the revised carrying amount of the assets over its remaining useful life.

(g) Revenue Recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the

revenue can be reliably measured. Sale of Goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the

buyer. Sales is disclosed net of quality claims and rebates. Excise Duty deducted from the gross turnover is the amount of excise duty that is included in the amount of turnover (gross) and not the entire amount of liability arising during the year.

Export Benefits Export benefits are accounted for in the year of exports based on eligibility and where there is certainty of

realising the same. Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate

applicable. Dividends Revenue is recognised when the shareholders’ right to receive payment is established by the balance sheet

date. (h) Taxes on Income Tax expense comprises of current and deferred taxes. Current income tax is measured at the amount expected

to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and Deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relates to the taxes on income levied by same governing taxation laws. Deferred tax assets other than those arising from carry forward losses and unabsorbed depreciations, are recognised only to the extent that



Notes to Financial Statements for the year ended 31st March, 2016there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred Tax Assets arising from unabsorbed depreciation and/or carried forward tax losses, are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises, unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax assets can be realised.

(i) Inventories Raw Materials, Production Consumables, Stores & Spares are valued at lower of cost and net realisable value.

However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold above cost. Cost is determined on a Weighted Average basis. Work-in-progress and finished goods is valued at lower of cost and net realisable value. Cost includes direct material, labour and a proportion of manufacturing and administrative overheads based on normal capacity. Value of finished goods also includes excise duty. Net realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and cost to make the sale.

(j) Investments Investments that are readily realisable and intended to be held for not more than a year are classified as current

investments. All other investments are classified as non current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non current investments are carried at cost. However, provision for diminution in value, if any, is made to recognise a decline other than temporary in the value of such investments.

(k) Foreign Currency Transactions (i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency

amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Measurement of foreign currency monetary items at Balance Sheet Date Foreign currency monetary items are reported using the closing exchange rates. Non-monetary items

which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(iii) Treatment of Exchange Differences Exchange differences, in respect of accounting periods commencing on or after 7th December, 2006,

arising on reporting of long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous Financial Statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, and in other cases, are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the Financial Statements and are amortised over the balance period of such long-term asset/liability.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous Financial Statements, are recognised as income or as expenses in the statement of profit and loss in the year in which they arise.

(iv) Forward Exchange Contracts not intended for Trading or Speculation purposes The premium or discount arising at the inception of forward exchange contracts is amortised as expense

or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.



61

Notes to Financial Statements for the year ended 31st March, 2016 (l) Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity

shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(m) Provisions, Contingent Liabilities and Contingent Assets A provision is recognised when there is a present obligation in respect of which a reliable estimate can be made

as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities are not recognised but disclosed in the notes to the Financial Statements. Contingent assets are neither recognised nor disclosed.

(n) Cash and Cash Equivalents Cash and Cash Equivalents in the Balance Sheet comprise cash in hand and at bank in current accounts.

Margin deposits and term deposits, which are not pledged, with an original maturity of three months or less are considered as cash equivalent.

(o) Derivative Instruments The Company uses principal only swap (POS) contracts to hedge risks associated with foreign currency

fluctuations relating to highly probable forecasted transactions. The Company designates certain POS contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard 30 – Financial Instruments: Recognition and Measurement. These POS contracts are stated at fair value at each reporting date. Changes in the fair value of these POS contracts that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account under Reserves and Surplus (net of applicable deferred income taxes) and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Amounts accumulated in Hedging Reserve Account are reclassified to Statement of Profit and Loss in the same periods during which the forecasted transaction affects Statement of Profit and Loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in Hedging Reserve Account is retained there until the forecasted transactions occur. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognised in Hedging Reserve Account is immediately transferred to the Statement of Profit and Loss.

Mark to market losses on all other derivative contracts, other than forward contracts accounted under Accounting Standard 11 “Effects of changes in foreign exchange rates” as per (l) (iv) above, outstanding at the balance sheet date are recognised in the Statement of Profit and Loss based on the principle of prudence as provided in AS1 - “Disclosure of accounting policies”.

(p) Employee Benefits (i) Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions

are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

(ii) Gratuity liability are defined benefit obligations and are provided for on the basis of an independent actuarial valuation on projected unit credit method made at the end of each financial year.

(iii) Provision for compensated absences and their classifications between current and non current liabilities are based on independent actuarial valuation. The actuarial valuation is done as per projected unit credit method.

(iv) Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

(q) Central Value Added Tax (CENVAT)

CENVAT claimed on capital goods is reduced from the cost of plant and machinery/capital work-in-progress. CENVAT claimed on purchases of raw material and other materials is reduced from the cost of such materials.



Notes to Financial Statements for the year ended 31st March, 2016 (r) Borrowing Costs Borrowing cost in ordinary course of business is recognised as an expense in the period in which these are

incurred. Borrowing costs that are attributable to the acquisition/ construction of qualifying assets are capitalised as part of cost of such asset up to the date the assets are ready for their intended use. However borrowing cost is not capitalised for projects which are completed individually but not as part of an intended integrated facility.

(s) Leases (i) Where the Company is the Lessee Lease rentals in respect of finance lease arrangements entered up to 31st March, 2001 are segregated

into cost of the asset and interest components by applying an implicit internal rate of return. The cost component is amortised over the useful life of the asset and the interest component is recognised in the Statement of Profit and Loss. Lease payments in excess of the charge for the year are treated as prepaid lease rentals wherever agreement is existing and in other cases it has been added to the carrying cost of the fixed assets.

Finance leases entered on or after 1st April, 2001, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

(ii) Where the Company is the Lessor Assets subject to operating lease are included in fixed assets. Lease income is recognised in the

Statement of Profit and Loss on a straight line basis over the lease term. Costs including depreciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.

(t) Mining, Exploration and Development Expenditure Expenditure in respect of mineral, exploration and evaluation is charged to the Statement of profit and loss as

incurred except in following cases where it is capitalised:

• it is expected that the expenditure will be recouped by future exploitation or sale; or

• substantial exploration and evaluation activities have identified a mineral resource but these activities have not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves

(u) Employee Stock Compensation Cost Measurement and disclosure of the employee share-based payment plans is done in accordance with the

Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI.

The Company measures compensation cost relating to employee stock appreciation rights as Cash Settled Scheme using the fair value method. Compensation expense is amortised over the vesting period of the option on a straight line basis. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured if there are material changes in assumption, with any changes in fair value recognised in Statement of Profit and Loss for the year.

(v) Measurement of EBIDTA The company has elected to present earnings before finance costs, exchange variation and derivative losses,

depreciation and amortisation expenses and taxes (EBIDTA) as a separate line item on the face of the Statement of Profit and Loss. The company measures EBIDTA on the basis of Profit /(Loss) from the continuous operations and does not include finance costs, exchange variation and derivative losses, depreciation and amortisation expenses, exceptional and extra ordinary items and taxes.



63

Notes to Financial Statements for the year ended 31st March, 20163 Share Capital (` in Crore)



Authorised

7,175,000,000 (Previous Year 7,175,000,000) Equity Shares of ` 10 each

7,175.00 7,175.00

100,000,000 (Previous Year 100,000,000) 10% Cumulative Redeemable Preference Shares of ` 10 each

100.00

100.00

7,275.00 7,275.00

Issued, subscribed and fully paid-up

3,108,957,660 (Previous Year 3,108,957,660) Equity Shares of ` 10 each

3,108.96 3,108.96

Add: 4,520,703 (Previous Year 4,520,703) Equity Shares Forfeited 0.67 0.67

3,109.63 3,109.63


43.60

43.60

3,153.23 3,153.23

a Reconciliation of number of shares and amount outstanding at the beginning and at the end of the reporting period:

31st March, 2016 31st March, 2015

Number ` in Crore Number ` in Crore

Equity SharesAt the beginning of the year 3,108,957,660 3,108.96 2,824,951,352 2,824.95

Issued during the year - - 284,006,308 284.01

Outstanding at the end of the year 3,108,957,660 3,108.96 3,108,957,660 3,108.96

Preference SharesAt the beginning of the year 43,598,951 43.60 43,598,951 43.60

Outstanding at the end of the year 43,598,951 43.60 43,598,951 43.60

b Rights, preferences and restrictions attached to shares Equity Shares The Company has one class of Equity Shares having face value of `10 per share. Every shareholder is entitled to one

vote for every one share held. In the event of liquidation, the equity share holders shall be entitled to receive remaining assets of the Company after distribution of all dues in proportion to their shareholdings.

Cumulative Redeemable Preference Shares (CRPS) The Company has issued 43,598,951 10% CRPS of ` 10 each. Each CRPS is redeemable at par in 12 equal monthly

installments commencing from 1st October, 2017 to 1st September, 2018. The Company shall have option to redeem the CRPS at par in one or more tranches from any or all of the existing holders, anytime after the date of allotment together with arrears of dividend if any and the Board shall give one month’s notice for any such redemption to the registered holders of the CRPS. Arrears of fixed dividend on Cumulative Redeemable Preference Shares as at 31st March 2016 is ` 26.24 Crore (Previous Year ` 20.40 Crore).



Notes to Financial Statements for the year ended 31st March, 2016c Shares held by Holding Company

Out of above equity shares, 2,155,213,248 equity shares (Previous year 2,153,587,448) are held by Essar Steel Asia Holdings Limited, Mauritius the holding Company.

d Details of shareholders holding more than 5% shares in the Company

As at 31st March, 2016 As at 31st March, 2015

Number % of Holding Number % of Holding

Equity Shares

Essar Steel Asia Holdings Limited1 2,155,213,248 69.32 2,153,587,448 69.27

Imperial Consultants & Securities2 672,232,720 21.62 - -

Imperial Consultants & Securities Pvt. Limited

- - 629,656,758 20.25

Shares under Trust (Venkatraman Govind Raghavan)

191,517,500 6.16 191,517,500 6.16

3,018,963,468 97.10 2,974,761,706 95.68

1. Number of shares includes 492,485,501 shares acquired from Essar Steel Limited, Mauritius for which transfer of shares in demat account is pending and in respect of such shares Essar Steel Asia Holdings Limited (ESAHL) has made necessary declaration under Section 89 of Companies Act, 2013 regarding beneficial ownership of such shares.

2. 672,232,720 shares were held by Imperial Consultants & Securities Private Limited have now been transferred to Imperial Consultants & Securities. The transfer of shares in demat account is pending and requisite disclosure of beneficial holding in respect of such shares held by Imperial Consultants & Securities has been made Under Section 89 of Companies Act, 2013.


Number % of Holding Number % of Holding

Preference Shares

IFCI Limited 22,116,599 50.73 22,116,599 50.73

Imperial Consultants & Securities Pvt Limited

16,940,180 38.85 16,940,180 38.85

39,056,779 89.58 39,056,779 89.58

e Aggregate number of Bonus Shares issued, shares issued for consideration other than cash and shares bought back during the period of five years :



Number Number

Equity shares allotted as fully paid up pursuant to scheme of Amalgamation - 1,073,249,784



65

Notes to Financial Statements for the year ended 31st March, 20164 Reserves and Surplus (` in Crore)



Capital Reserve 12.73 12.73

Capital Redemption Reserve 202.92 202.92

Securities Premium Account

Balance as per last Balance Sheet 7,814.61 6,814.91

Add: Premium on shares issued during the year - 999.70

Closing Balance 7,814.61 7,814.61

Revaluation Reserve

Opening Balance 6,437.81 3,080.06

Addition during the year - 3,519.29

Additional depreciation transferred to retained earnings 167.82 161.54

Closing Balance 6,269.99 6,437.81

Hedging Reserve (Net of deferred tax)

Balance as per Last Balance Sheet (361.01) (590.85)

Add : Effect of foreign exchange rate variations on Hedging Instruments outstanding at the end of the year

(0.53) (11.06)

Less : Transferred to Statement of Profit and Loss 257.23 240.90

Closing Balance (104.31) (361.01)

General Reserve 77.51 77.51

Foreign Currency Monetary Item Translation Difference Account

Balance as per last Balance Sheet (74.85) (57.21)

Add: Effect of foreign exchange rate variations during the year

(14.48) (29.41)

Less: Transferred to Statement of Profit and Loss during the year

61.86 11.77

Closing Balance (27.47) (74.85)

Surplus/ (Deficit) in statement of Profit and Loss

Balance as per last Balance Sheet (3,150.29) (3,925.28)

Add : Net Profit/ (Loss) for the Year (5,800.14) 648.05

Add : Written down value of Fixed Assets(Net of deferred tax)*

- (34.60)

Add: Transfer from Revaluation Reserve 167.82 161.54

Closing Balance (8,782.61) (3,150.29)

5,463.37 10,959.43

* Assets whose useful life has expired as on 1st April, 2014 has been transferred to opening retained earnings as per Companies Act, 2013 .



Notes to Financial Statements for the year ended 31st March, 20165 Long Term Borrowings (Refer note 52) (` in Crore)



Secured3,120 (Previous Year 3,120) Non Convertible Debentures of ` 1,000,000 each

262.50 312.00

Term Loans

From Banks 18,309.30 19,445.88

From Others 1,349.53 1,424.34

Buyers Credit for Capital Expenditure - 51.12

19,921.33 21,233.34

UnsecuredDollar / Rupee Notes

From Banks 213.26 208.65

From Others 0.44 1.28

Sales Tax Deferral Loan 33.32 33.32

Inter Corporate Deposits

From Related Parties 29.78 690.34


290.04 1,243.59

20,211.37 22,476.93

There have been certain delays in repayments of term loans principal amounting to ` 365.56 Crore (less than 90 days), ` 327.53 Crore (more than 90 days) and Interest of ` 430.43 Crore (less than 90 days), ` 386.68 Crore (more than 90 days) as on 31.03.2016. There has been no acceleration of repayment of the loans by banks on account of the delays. Company is in discussion with banks for a suitable restructuring of its loans.

6 Long Term Liabilities (` in Crore)



Advance against Sale of Business Undertaking - 750.00

Advances from Customers Secured against Export Performance Bank Guarantee (Refer note 52)

- 7,063.93

Interest Accrued 3.47 26.92

3.47 7,840.85

7 Long Term Provisions (` in Crore)



Provision for Employee Benefits

Gratuity (Refer note 39) 23.38 23.29

Compensated Absences 13.04 20.65

Provision on Derivative Contracts 63.13 219.86

99.55 263.80



67

Notes to Financial Statements for the year ended 31st March, 20168 Short-Term Borrowings (` in Crore)



Secured (Refer note 53)Short Term Loans from Banks (Due for repayment in March 16) 100.00 100.00Working Capital Loans - From Banks 5,446.93 2,026.02Buyers’ Credit for Operational Expenditure 515.05 1,084.16

6,061.98 3,210.18UnsecuredInter corporate Deposits from Related Parties 3,179.64 1,373.44 from Others 35.00 97.76

9,276.62 4,681.38

9 Trade Payables (` in Crore)As at


31st March, 2015Trade Payables for Goods and Expenses 4,322.12 3,654.80Acceptance for Goods and Expenses 2,079.63 3,024.80

6,401.75 6,679.60

10 Other Current Liabilities (` in Crore)As at


31st March, 2015Current maturities of Long-Term debt (Refer Note 52) [including installments due during Financial Year 2015-16 ` 693.09 Crore (Previous Year ` 171.39 Crore)]

2,453.08 1,250.05

Current maturities of Finance Lease Obligations - 0.63Creditors for Capital Expenditures 251.24 263.24Acceptance for Capital Expenditures 14.07 36.14Interest accrued and due on Borrowings 1,100.63 651.09Interest accrued but not due on Borrowings 702.37 290.93Interest accrued on Other Liabilities 113.28 100.91Advances from Customers 3,662.00 4,184.27Advance against Export Performance Bank Guarantee (Refer Note 54)

975.09 259.14

Security Deposits Received 5.57 5.42Export Performance Bank Guarantees crystallised (Refer Note 54)

6,830.70 -

Statutory Liabilities 270.74 151.54Credit Balance of Current Account 8.05 26.26Other Liabilities 273.86 131.89

16,660.68 7,351.51

11 Short Term Provisions (` in Crore)As at


31st March, 2015Provision for Compensated Absences 3.54 5.28Provision for Indirect Taxes (Refer Note 50) 19.73 19.73Provision against unwinding of Sale of Business undertaking (Refer Note 51)

1,249.76 -

Provision on Derivatives Contracts 156.49 350.551,429.52 375.56


Essar Steel India Limited12

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69

Notes to Financial Statements for the year ended 31st March, 201613 Non-Current Investments

(valued at cost unless stated otherwise) (` in Crore)As at


31st March, 2015(a) Trade investments - Unquoted(a.1) Equity Instruments

Investment in Subsidiaries226 (Previous Year 226) fully paid Equity Shares of AED 226 million (Previous Year AED 226 million) of Essar Steel Middle East FZE Dubai

322.75 322.75

Nil (Previous Year 2,595,000) fully paid Equity Shares of `10 of Odisha Slurry Pipe Line Infrastructure Limited

- 25.50

130,357,881 (Previous Year 103,342,881) fully paid ordinary Shares of USD 130.35 million (Previous Year USD 103.34 million) of Essar Steel Offshore Limited

738.07 569.39

200,000 (Previous Year 200,000) fully paid Equity Shares of `10 (Previous Year ` 10 ) of Paradeep Steel Company Limited

0.20 0.20

50,000 (Previous Year Nil) fully paid Equity Shares of `10 (Previous Year Nil ) of Essar Steel Logistics Limited

0.05 -

14 (Previous Year 14) fully paid Equity Shares of AED 14 million (Previous Year AED 14 million) of Essar Steel Trading FZE Dubai

17.61

17.61

1,078.68 935.45

Investment in Associates96,905,000 (Previous Year 96,905,000) fully paid Equity Shares of ` 10 each of Bhander Power Limited1

104.77 104.77

5,781,944 (Previous Year 5,781,944 ) fully paid Equity Share of ` 10 each of Essar Steel Chattishgarh Limited

5.78 5.78

68,900,000 (Previous Year 68,900,000) fully paid Equity Shares of ` 10 each of Essar Power MP Limited

68.90 68.90

2 (Previous Year 2) fully paid Equity Shares of AED 0.2 million (Previous Year AED 0.2 million) of Essar Steel Processing FZCO Dubai

0.25 0.25

1,300,000 (Previous Year 1,300,000) fully Paid Equity Shares of ` 10 each of Essar Bulk Terminal Limited

1.30 1.30

2,600,000 (Previous year 2,600,000) fully paid Equity shares of ` 10 each of Essar Power Hazira Limited

2.60 2.60

2,600,000 (Previous year 2,600,000) fully paid Equity shares of ` 10 each of Essar Power Orissa Limited

2.60

2.60

186.20 186.20Others2,000 (Previous Year 2,000) fully paid Equity Shares of ` 10 each of Essar Bulk Terminal Paradip Limited (*** ` 20,000)

*** ***

250,000 (Previous Year 250,000) fully paid Equity Shares of ` 10 each of Frontline Roll Forms Private Limited

0.25 0.25

95,000 (Previous Year 95,000) fully paid Equity Shares of ` 10 each of Essar Steel Jharkhand Limited

0.10 0.10

20 (Previous Year 20) fully paid Equity Shares of ` 10 each of Essar Commvision Limited (# ` 200 )

#

#

0.35 0.35(a.2) Convertible Debentures (Others)

1,065,585 (Previous Year 1,065,585) fully paid Compulsory Convertible Cumulative Debenture of ` 1000 each of AMW AutoComponent Limited

106.56 106.56



Notes to Financial Statements for the year ended 31st March, 201613 Non-Current Investments

(valued at cost unless stated otherwise) (` in Crore)As at


31st March, 2015(b) Trade investment(b.1) Equity Instruments (Others) - Quoted

1,273,611 (Previous Year 1,273,611) fully paid Equity Shares of ` 10 each of Essar Shipping Limited1

11.57 11.57

(b.2) Equity Instruments - (Others) -UnquotedNIL (Previous Year 2,547,223) fully paid Equity Shares of ` 10 each of Essar Ports Limited1

- 23.14

(c) Other than Trade investment - Unquoted(c.1) Non Convertible Debentures (Others)

1,226,300 (Previous Year 1,226,300) fully paid 12.5 % Secured Redeemable Non Convertible Debentures of ` 82.95 each (Previous Year ` 98.70 each) of Essar Oil Limited

10.17 12.10

(d) Other than Trade investment - Quoted(d.1) Investments in Mutual Fund

190,931 (Previous Year 190,931) fully paid Units of Unit Linked Insurance Policy Scheme of Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited

0.30

0.30

1,393.83 1,275.67

Aggregate amount of Quoted Investments [(Aggregate Market Value ` 3.47 Crore (Previous Year ` 36.63 Crore)]

11.87 35.01

Aggregate amount of Unquoted Investments 1,381.96 1,240.661,393.83 1,275.67

1 Investment in 71,830,001 shares of Essar Steel Offshore Limited, 96,905,000 shares of Bhander Power Limited and 1,273,611 shares of Essar Shipping Limited have been pledged with Banks as security against loans taken.

2,547,223 equity shares of Essar Ports Limited (already pledged with banks) have been sold to Imperial Consultants & Securities for which transfer of shares in demat account is pending and in respect of such shares Imperial Consultants & Securities has made necessary declaration under Section 89 of the Companies Act, 2013 regarding beneficial ownership of such shares

14 Deferred Tax Assets (Net) (` in Crore)



Deferred Tax Assets on Unabsorbed depreciation and carry forward losses 10,211.31 7,212.29Less : Deferred Tax Liabilities on Fixed Assets (excess of net book value over written down value as per the provisions of the Income Tax Act, 1961)

5,429.48

5,333.22

4,781.83 1,879.07

Other Deferred Tax Assets/ (Liabilities):Mark to Market Valuation of Hedging Instruments 55.21 191.06Provision for Doubtful Debts 2.50 2.48Provision for Doubtful Advances 2.15 2.18Deferred Power Charges 4.13 8.26Other Timing Differences (disallowances under section 43B of the Income Tax Act, 1961)

20.52

3.35

84.51 207.334,866.34 2,086.40



71

Notes to Financial Statements for the year ended 31st March, 2016 During the last 4 years, the Company had faced various extraneous challenges such as disruption of committed

natural gas supplies, delays in obtaining regulatory approvals for projects, disruption of Vizag Slurry Pipeline by rebel elements etc. resulting in (i) delay in complete commissioning of the plant; (ii) disruption in supply of raw materials and (iii) sub-optimal production below the break-even point. The situation was compounded by world-wide glut in steel and dumping in Indian market predominantly by Chinese suppliers at predatory prices.

The Company has overcome/mitigated these extraneous challenges and is now scaling up its operations. During the last few months, the Company has made all round efforts in scaling up its operations like production, sales and cost reduction and the same have resulted in its operational turn-around with improvement in capacity utilisation and EBITDA margins. The Government of India also took several measures such as imposition of higher import duty, safeguard duty and minimum import price etc.

In order to address the transient liquidity challenge and further to ensure long term viability, the Company is in active discussion with its lenders for imposing the scheme of restructuring as per the RBI guidelines.

In view of the above, the Company believes that sufficient future taxable income will be available against which deferred tax asset of ` 4,781.83 Crore recognised as on 31st March, 2016 on unabsorbed depreciation and carried forward business losses, can be realised.

15 Long Term Loans and Advances (Unsecured and considered good unless otherwise stated) (` in Crore)



Capital Advances 458.37 461.96Prepaid Expenses 114.04 232.79

572.41 694.75

16 Other Non Current Assets (` in Crore)As at


31st March, 2015Interest Accrued on Investments 0.15 34.63Shares under Irrevocable Trust* 766.07 766.07Long Term Security Deposit 164.56 167.68Long Term Deposits with Banks - remaining maturity > 12 months (Refer note 19)

40.57 4.92

Advance Towards Equity to Related Parties 1.06 91.03972.41 1,064.33

* Represents 191,517,500 equity shares allotted to a Trust created by the Company, against the Company’s investment in the erstwhile companies namely Essar Steel (Hazira) Limited and Essar Steel Orissa Limited, in pursuant to the scheme of amalgamation. The Company is the sole beneficiary of this trust. All of the 191,517,500 equity shares (Previous Year 191,517,500 equity shares) have been pledged against facility availed by Imperial Consultants & Securities Private Limited.

17 Inventories (` in Crore)As at


31st March, 2015Raw Materials and Components 247.79 214.71Goods-in Transit 197.73 350.70Stores and Spares 348.80 391.06Goods-in Transit 7.50 8.74Production Consumables 68.33 129.81Goods-in Transit 29.89 34.79Fuel 13.49 8.31Work-in-Progress* 967.42 1,275.55Finished Goods ** 440.49 275.98Traded Goods 4.11 -

2,325.55 2,689.65



Notes to Financial Statements for the year ended 31st March, 201617(a) Details of Inventory

Units 31st March, 2016 31st March, 2015Quantity ` in Crore Quantity ` in Crore

Opening StockWork in Progress*

Hot/Cold Rolled Coils, Sheets and Plates MT 48,246 154.03 111,138 358.89Pellet MT 376,785 252.66 401,304 268.36Hot Briquette Iron (including Fines) MT 7,771 10.97 8,125 10.31Iron Ore -Middlings MT 3,682,451 463.93 3,681,879 358.48Pipes MT 12,186 50.31 6,391 22.74Other 343.65 245.84

1,275.55 1,264.62

Finished Goods**Hot/Cold Rolled Coils, Sheets and Plates MT 65,822 259.84 169,409 647.82Pipes MT 1,177 5.05 4,606 19.42Other 11.09 15.25

275.98 682.49

Traded Goods MT - 2.27

Closing StockWork in Progress*

Hot/Cold Rolled Coils, Sheets and Plates MT 89,260 245.90 48,246 154.03Pellet MT 467,988 197.47 376,785 252.66Hot Briquette Iron (including Fines) MT 19,395 19.38 7,771 10.97Iron Ore Middlings MT 3,690,393 215.03 3,682,451 463.93Pipes MT 1,858 6.08 12,186 50.31Other 283.56 343.65

967.42 1,275.55

Finished Goods**Hot/Cold Rolled Coils, Sheets and Plates MT 121,334 424.25 65,822 259.84Pipes MT 2,100 7.93 1,177 5.05Other 8.31 11.09

440.49 275.98

Traded Goods 4.11 - * Work in Progress includes trial run inventory of ` 3.13 Crore (Previous Year ` 222.31 Crore) ** Finished Goods includes trial run inventory of Nil (Previous Year ` 17.02 Crore)18 Trade Receivables (` in Crore)



Debts outstanding for a period exceeding six months from the date they are due for payment Considered Good 749.42 262.93 Considered Doubtful 3.01 7.15

752.43 270.08 Less : Provision for Doubtful Debts 3.01 7.15

749.42 262.93Other Debts 865.35 1,013.61

1,614.77 1,276.54



73

Notes to Financial Statements for the year ended 31st March, 201619 Cash and Bank Balances (` in Crore)



(A) Cash and Cash Equivalents Cash on Hand 0.08 0.09

Balances with Banks in Current Accounts 96.64 250.05

96.72 250.14

(B) Other Bank Balances Deposits with original maturity of less than three

months *10.35 11.89

Deposits with original maturity for more than 12 months*

355.75 388.32

Deposits with original maturity for more than 3 months but less than 12 months *

51.12

116.84

417.22 517.04

513.94 767.18

* Deposits (including long term deposits in Other Non Current Assets with balance maturity period of more than 12 months) of ` 454.74 Crore (Previous Year ` 521.96 Crore), have been pledged with banks as a security for opening Letters of Credit, Buyer’s Credit, Short Term Loans and against Bank Guarantee.

20 Short Term Loans and Advances (Unsecured and Considered good unless otherwise stated) (` in Crore)



Loans and advances to Related Parties 202.17 42.89

Inter Corporate Deposits (ICD) to Related Parties 1,164.46 1,031.78

Deposits with Government & Semi Government Authorities 347.00 357.09

Loans and Advances to Suppliers 568.15 471.24

Prepaid Expenses 107.28 129.22

Claims Receivables 1,349.11 1,067.40

Security Deposits 53.05 79.08

Loans and Advances to Staff 1.56 2.48

Advance Income Tax (Net of provisions) 39.33 30.56

3,832.11 3,211.74

21 Other Current Assets (` in Crore)



Interest Accrued on ICDs, Loans & Deposits 165.06 110.26

Export Benefits Accrued 98.48 98.38

Other Receivables (Net of Provision) (Refer Note 51) 533.93 3,910.75

797.47 4,119.39



Notes to Financial Statements for the year ended 31st March, 201622 Revenue from Operations (` in Crore)

Year Ended31st March, 2016


Sale of Products (Net of Excise) 13,548.90 15,875.43

Sale of Services 19.84 32.26

Other Operating Revenues (Net of Excise) 86.74 119.77

Excise Duty Recovered (including duty on trial run sales) 1,268.79 1,279.44

Total Gross Revenue from Operation 14,924.27 17,306.90

Less: Trial Run Sales (including Excise Duty ) (1.07) (2,322.59)

Revenue from Operation 14,923.20 14,984.31

22a Details of Products Sold

Unit Year Ended31st March, 2016


Quantity ` in Crore Quantity ` in Crore

ProductsPellets MT 1,492,569 737.92 1,236,219 920.01

Hot Briquette Iron Fines MT 5,478 4.13 42,394 35.46

Hot/Cold Rolled Coils, Sheets and Plates MT 3,466,279 11,470.68 3,138,551 13,469.88

Pipes MT 211,958 1,014.94 174,229 969.78

Others 152.86 184.56

Total Products Sales (A) 13,380.53 15,579.69

Traded GoodsTMT Bars MT 48,919 166.07 52,491 198.16

Gases - 59.76

Others 2.30 37.82

Total Traded Goods (B) 168.37 295.74

Services Rendered and Other Operating RevenueJob Work 19.84 13.38

Commission Income - 18.88

Misc. Scrap Material 86.74 119.77

Details of Services Rendered and Other Operating Revenue (C)

106.58 152.03

Excise Duty Recovered (including duty on trial run sales) (D)

1,268.79 1,279.44

Total Gross Sales (A)+(B)+(C)+(D) 14,924.27 17,306.90

Less : Trial Run Sales/ Exceptional Sales (including Excise Duty )

(1.07) (2,322.59)

Total 14,923.20 14,984.31



75

Notes to Financial Statements for the year ended 31st March, 201623 Other Income (` in Crore)



Interest on Deposits with Banks and OthersInter Corporate Deposits 64.21 35.87Bank Deposits 46.21 40.71Others 39.62 80.42

150.04 157.00Rent 21.36 25.18Profit on sale of Long Term Investments 10.74 121.44Dividend Income from Long Term Investments - 0.34Income from Management Services 0.52 0.21Net Gain on Foreign cCurrency Transactions and Translation (other than considered as exchange variation on borrowings)

18.28 29.14

Interest on Swap Contracts 31.71 91.33Liabilities no longer required written back 223.90 9.32Profit on Sale of Business Undertaking 265.44 -Profit on Sale of Fixed Assets 0.08 -Miscellaneous Income 2.04 1.81

724.11 435.77

24 Cost of Materials Consumed (` in Crore)



Opening Stock 268.77 122.18Add: Purchases during the year 7,768.72 6,708.50Less: Closing Stock 445.52 268.77Raw Materials Consumed 7,591.97 6,561.91Production Consumables, Stores and Spares 1,639.23 1,225.40Excise Duty* 65.56 (1.37)

9,296.76 7,785.94

* Represents differential Excise Duty in respect of Closing Stock and Opening Stock etc.

Details of Raw Material and Components Consumed

Units Year Ended31st March, 2016


Consumption of Raw Materials Quantity ` in Crore Quantity ` in Crore Iron Ore Fines MT 6,843,497 1,439.51 5,937,496 2,009.04 Pellets MT 738,887 474.07 661,088 532.29 Iron Ore Lump MT 594,218 336.37 385,097 269.39 Zinc MT 17,403 250.84 18,093 277.41 Natural Gas used for HBI/DRI SM3 244,769,188 584.74 169,406,239 605.54 Coal MT 1,975,012 1,268.36 1,618,140 1,156.51 Coke MT 1,072,880 1,295.52 997,677 1,498.45 HRC/ Plate Consumed MT 68,635 227.25 94,385 341.62 Others/ Cost transfer to CWIP 1,715.31 (128.35)

7,591.97 6,561.91



Notes to Financial Statements for the year ended 31st March, 201625 Purchase of Traded Goods (` in Crore)



Gases - 47.85TMT Bars and Others 160.50 249.95

160.50 297.80

26 Energy Cost (` in Crore)



Petroleum Products - Fuel 436.80 511.23Power and Water Charges 1,456.23 1,284.34

1,893.03 1,795.57

27 Changes in Inventories of Finished Goods, Work in Progress and Stock in Trade (` in Crore)



Opening Stock Finished Goods 275.98 633.45 Work-in-Progress 1,275.55 1,114.88 Traded Goods - 2.27

1,551.53 1,750.60Closing Stock Finished Goods 440.49 258.96 Work-in-Progress 964.30 1,053.24 Traded Goods 4.11 -

1,408.90 1,312.20142.63 438.40

28 Employee Benefits Expense (` in Crore)



Salaries 353.91 248.25Contribution to Provident and Other Funds 28.24 27.65Staff Welfare Expenses 70.79 58.50

452.94 334.40

29 Manufacturing and Asset Maintenance (` in Crore)



Repairs, Maintenance and Equipment Hire Charges 394.21 281.44Labour and Sub-Contracting Charges 250.93 142.65Plant Insurance 18.91 14.59

664.05 438.68



77

Notes to Financial Statements for the year ended 31st March, 201630 Administrative Expenses (` in Crore)



Traveling, Conveyance and Vehicle Hire & Maintenance Charges

43.82 32.86

Printing, Stationery,Postage and Telephone 12.05 10.15Professional Fees 153.49 91.94Operating Lease Rent 30.11 29.00Repairs and Maintenance - Other than Plant 12.39 7.19Insurance - Other than Plant 5.19 0.91Rates and Taxes 16.82 7.61Auditor’s Remuneration* 2.07 2.02Loss on sale/disposal/write off of Fixed Assets (net) 0.84 1.93Miscellaneous Expenses 51.93 36.11

328.71 219.72

* Payment to Auditors (excluding service tax) Audit Fees 2.00 1.90 Other Services 0.07 0.12

2.07 2.02

31 Selling and Distribution Expenses (` in Crore)



Sales Commission 69.38 129.22Freight Outward (net), Intercarting and Packing Charges 334.49 271.73Other Selling Expenses 51.85 61.44

455.72 462.39

32 Finance Cost (` in Crore)



Guarantee and Other Bank Charges 561.00 586.55Interest on Term Loans 2,294.74 2,077.13 on Debentures 38.76 54.07 on Advance from Customer 125.51 83.02 on Inter Corporate Deposits 398.14 303.51 to Banks and Others 1,049.48 760.73

3,906.63 3,278.464,467.63 3,865.01

33 Exchange variation and Derivative (Gain)/Loss (net) (` in Crore)



Mark to Market on Derivative Contract 32.57 (22.04)Exchange Variation (net) 170.98 56.25Amortisation of Foreign Currency Monetary Item Translation Difference

61.86 11.77

Loss on cancellation/settlement of Derivative and Forward Exchange Contracts (Net of Premium paid / Amortised)

432.48

336.46

697.89 382.44



Notes to Financial Statements for the year ended 31st March, 201634 Contingent Liabilities not provided for (` in Crore)



(a) Bills Discounted - 430.94

(b) Claims against the Company not acknowledged as debt in respect of:

(i) Disputed Sales Tax/VAT/ Entry Tax matters in respect which the Company has gone in appeal

18.68 18.68

(ii) Disputed Excise Duty matters in respect which the Company has gone in appeal

0.17 0.17

(iii) Disputed Custom Duty / Export Duty matters in respect which the Company has gone in appeal

134.11 134.11

(iv) Tax on sale of Electricity demanded by collector of electricity duty on Essar Power Limited

45.91 45.91

(v) Electricity Duty demand1 [including amount paid ` 589.24 Crore (Previous year ` 589.24 Crore)]

609.01 609.01

(vi) Wheeling Charges demanded by GETCO2 [including amount paid ` 27.23 Crore (Previous year ` 27.23 Crore)]

393.01 393.01

(vii) Freight Claim by South East Railway [including amount paid ` 14.48 Crore (Previous year ` 14.48 Crore)]

100.53 100.53

(viii) Disputed Differential Electricity Duty [including amount paid ` 49.39 Crore (Previous year ` 49.39 Crore)]

49.39 49.39

(ix) Electricity Charges by DGVCL3 (including amount paid ` 192.58 Crore)

192.58 -

(x) Disputed Cross Subsidy4 (including amount paid ` 168.60 Crore)

327.28 -

(xi) Others 25.78 26.42 Future cash outflows in respect of above matters are determinable only on receipt of judgments/decisions pending at

various forums/authorities. 1. A Show Cause Notice (SCN) dated 10th March, 2010 was issued by the Collector Electricity Duty, Gandhinagar,

demanding Electricity Duty ` 585.31 Crore and Interest ` 528.48 Crore for the period April 2000 to February 2010. The Company has claimed that it is exempt from paying the Electricity Duty for a period of 15 years from the date of commissioning of the captive power project i.e. from 8th August, 1995 to 7th August, 2010.

The Company filed an appeal to the Division Bench of Gujarat High Court against the same which was admitted by the Court and a stay was granted vide order dated 5th April, 2010. As per the conditions of stay, the Company has paid under protest ` 589.24 Crore (Previous year ` 589.24 Crore) towards the arrears of the principal amount of electricity duty.

As per the management view and based on the legal opinion from a reputed counsel, the Company is eligible for exemption of Electricity Duty for the period of 15 years i.e. from 8th August, 1995 to 7th August, 2010 and accordingly no provision is required to be made in the books. However the Company has disclosed ` 609.01 Crore towards electricity duty on account of above matter as contingent liability as at 31st March, 2016 and has considered demand of interest as a remote liability.

2. In January 2006, the Dakshin Gujarat Vij Company Limited (“DGVCL”) claimed from Essar Steel India Limited (“ESIL”) for payment of wheeling charges on the ground that ESIL is using its distribution system for conveyance of electricity generated by its two captive power plants to the manufacturing units. In so claiming, the contention of DGVCL was that Bus Bars engineered, procured and constructed by ESIL at its own cost is a part of its service line and since the electricity of ESIL is conveyed through the service line, ESIL is liable to pay wheeling charges. ESIL denied the said claim by contending that Bus Bars are an integral part of its switchyard, which is



79

Notes to Financial Statements for the year ended 31st March, 2016constructed, operated and maintained by ESIL and the same cannot be a service line or extension thereof laid down by the Gujarat Electricity Board (“GEB”). Thereafter, in June 2006, DGVCL served a further demand-cum-disconnection notice on ESIL, which ESIL challenged before the Gujarat High Court by filing a writ petition. The petition was dismissed by the Ld. Single Judge of the Hon’ble High Court on 15th January 2007. After the said judgment, DGVCL abandoned its said claim for payment of wheeling charges and in lieu thereof, the Gujarat Electricity Transmission Corporation Limited (“GETCO”) raised a demand on ESIL for payment of transmission charges on the ground that ESIL is, inter alia, is using its transmission system for conveyance of its electricity. GETCO claimed that the Bus Bars are a part of its transmission line and since the same are used, inter alia, by ESIL for conveyance of its electricity, it is liable to pay transmission charges to GETCO. ESIL denied the said claim of GETCO and further filed an appeal before the Division Bench of the Gujarat High Court, which rejected ESIL’s application for interim stay of recovery of the transmission charges pending hearing and final disposal of the appeal. Consequently, ESIL approached the Supreme Court, which stayed the recovery of transmission charges by GETCO subject to ESIL paying 30% of the transmission charges demanded in February 2007, which was complied with by ESIL. Finally, the Division Bench dismissed the appeal filed by ESIL by Judgment dated 30th August 2011. ESIL has preferred a Special Leave Petition (Civil) No.27540 of 2011 before the Hon’ble Supreme Court, which has stayed recovery of the transmission charges, vide its order dated 5th December, 2011 and the matter is pending for final hearing.

Bus Bars are, inter alia, ESIL’s installation situated within its own premises beyond the Delivery Point. The same are thus, not a part of transmission line or an extension thereof of GETCO. There is no provision in law providing for vesting of any transmission line constructed by one person in another. GETCO, being the transmission licensee has not granted any open access to its transmission system to ESIL and thereby one of the conditions of the charging Section 40 of the Electricity Act, 2003 has not been fulfilled and GETCO is, therefore, not entitled to receive payment of any transmission charges from ESIL.

As per the Memorandum of Minutes dated 1st February 2010, ESIL has shifted the Ichhapore service line to another location. Thereafter, GETCO has stopped billing transmission charges to ESIL. As per the view of the management of ESIL as well as of its reputed Counsel, ESIL is not liable to pay any transmission charges to GETCO and hence no provision is required to be made in the books for the same. However, ESIL has disclosed ` 393.01 Crore (Previous Year ` 393.01 Crore) as contingent liability as on 31st March 2016 towards demand of transmission charges and has considered demand for interest as a remote liability.

3. By Order dated 30th June, 2010, the Hon’ble High Court of Gujarat had sanctioned the Scheme for amalgamation, inter alia, of Essar Steel (Hazira) Limited, (“ESHL”) with Essar Steel India Limited (“ESIL”). The amalgamation became effective from 5th August, 2010. The undertaking (i.e. properties and liabilities) of ESHL became the undertaking of ESIL from the Appointed Date i.e. 1st April, 2009. Thereafter, ESIL has used the electricity, including the electricity supplied by the Dakshin Gujarat Vij Company Limited (“DGVCL”), for manufacturing goods through the undertaking of the erstwhile ESHL. Such use of electricity amounts to use of electricity by ESIL itself. However, DGVCL raised a Supplementary Bill dated 22nd September, 2011 claiming ` 2,311.02 Crore from ESIL on the ground that ESIL has used the electricity in breach of the agreed terms of MOM dated 1st February, 2010 for ESIL has used electricity beyond the approved power boundary. Subsequently, DGVCL raised a revised Supplementary Bill dated 25th January, 2012 for payment of a sum `192.58 Crore, and same has been paid by ESIL to DGVCL under protest to obtain certain pending permissions from DGVCL. As per the facts, use of electricity by ESIL beyond the approved power boundary has not caused any loss or prejudice to DGVCL. In any case, DGVCL cannot apply the increased rate of tariff in respect of electricity generated by the captive power plants of ESIL. ESIL has filed an appeal before Appellate Authority on 19th Nov, 2012 challenging the claim of `192.58 Crore raised by DGVCL. The Appellate Authority and Chief Electrical Inspector (CEI) has ruled that DGVCL can claim only to the extent of DGVCL’s power supplied in the concerned period which amounts to 25.23 million units and DGVCL shall refund the balance.

According to such ruling of the CEI, approx. ` 28.60 Crore stands payable out of which ` 14.30 Crore is already paid by way of regular energy bill raised by DGVCL and ESIL is entitled to a refund of about ` 184.09 Crore. DGVCL has challenged the Order of the Appellate Authority in Hon’ble High Court of Gujarat by way of Special Civil Application. ESIL has also filed Special Civil Application in Gujarat High court mentioning that there is no unauthorized use of power considering merger Order dated 30.06.2010 passed by the Hon’ble High Court of Gujarat or assuming without admitting that there has been unauthorized use of power, the same ought to have been only for 6.63 MU on the basis of proportionate of 25.23 MU supplied by DGVCL during 15.06.11 to 30.07.2011 Ld Single Judge of High Court of Gujarat by way of Judgment dated 22.01.2015 held that the Court did not find any arbitrariness, perversity or illegality in the impugned order dated 01.11.2013, passed by the Appellate Authority directing the refund of the excess amount paid by Essar pursuant to the revised supplementary bills over and above the quantity of unauthorized power used by Essar. DGVCL by way of LPA no 465 and 466 of 2015 challenged the Judgment of Single Judge dated 22.01.2015 before the Div.



Notes to Financial Statements for the year ended 31st March, 2016Bench of Gujarat High Court, the Div. Bench without going in to the merits of case passed order on the point of maintainability and allowed the LPAs. The company has filed SLP No 27920 & 27921 of 2015 before the Supreme Court of India against the Order dated 17.07.2015 of the Div. Bench of Gujarat High Court, which is pending for hearing.

4. The Company has been granted the status of a Regional Entity, vide order dated 08.06.2013 by Central Electricity Regulatory Commission (CERC). The Company disconnected itself from the 220 KV STU network on 23.06.2013 and upon shifting of the connectivity from the State Load Dispatch Centre Gujarat (SLDC) to Western Regional Load Dispatch Centre (WRLDC) Company has ceased to be an embedded customer of Gujarat for all intent and purposes and it is treated as a regional entity independent of the State of Gujarat in the matter of scheduling, dispatch, energy accounting etc. Therefore,the jurisdiction to specify the surcharge is vested in the CERC, if applicable. In view of the above, supported by opinion from a senior Advocate, the Company has informed Dakshin Gujarat Vij Company Ltd. (DGVCL) about wrongfully levied cross subsidy surcharge upon the regional entity and claimed the refund of duty paid during June 2013 to June 2015 vide letter dated July 27, 2015. The levied amount for the period of June 13 to March 15 (` 168.59 Crore) has been shown as “other income” in the period and further cross subsidy surcharge amounting to `158.69 Crore pertaining to April 15 – March 16 has not been recognised. The company has filed Petition No.216/MP/2015 before CERC on 08.09.2015 challenging claims by DGVCL as aforesaid. CERC vide its Order dated 06.07.2016 stated that dispute falls within the jurisdiction of the Gujarat Commission. The Company is taking appropriate legal steps by appealing before appropriate forum.

(` in Crore)As at


31st March, 2015(c) Guarantees given to various Banks, Financial

Institutions, Finance Companies, etc. on behalf of others to the extent of outstanding balance of liabilities as at the year-end against the said guarantees

4,455.56 4,806.26

c.1 The Company has invested ` 738.07 Crore in the equity shares of Essar Steel Offshore Limited, Mauritius (ESOL), a wholly owned subsidiary of the Company as at 31st March, 2016. In addition, the Company along with Essar Minerals Ltd. and Essar Minerals Cooperatief U. A. had given a guarantee of up to USD 586.35 million (outstanding loan amount against the guarantee in the books of ESOL as on 31st March, 2016 is USD 413 Million) for a loan taken by ESOL from Standard Chartered Bank (SCB) for the acquisition of Trinity Parent Corporation, USA (“Trinity”) in July, 2010. Trinity (through its various subsidiaries) is engaged in the extraction of steam and metallurgical coal.

The steam coal operations have been facing challenges due to availability of cheap natural gas as alternate source and increase in various environmental restrictions. SCB has issued a demand notice dated 7th December, 2015 demanding immediate repayment of the full amount of the outstanding loan, together with accrued interest and all other amount due and payable as on date, aggregating to USD 450.67 Million on the principal borrower and all the guarantors. However, considering the coking coal reserves available and business valuation of Trinity by a third party based on future cash flow projections of Trinity business, no provision has been made for diminution in the value of investment made by the Company in ESOL as well as against any future liability due to invocation of corporate guarantee given by the company on behalf of ESOL to SCB.

(` in Crore)As at


31st March, 201535 (a) Estimated amount of contracts remaining to be

executed on capital account and not provided for397.65 531.39

(b) Custom Duty on pending export obligation under EPCG scheme

4,328.43 4,500.95

36 Segment Information Primary Business Segment The Company is primarily engaged in a single business segment of manufacture and sale of steel products and

accordingly, this is the only primary reportable segment. Geographical Segments Secondary segment reporting is based on the geographical location of customers. The geographical segments have

been disclosed based on revenues within India (sales to Customers within India) and revenues outside India (sales to customers located outside India). Secondary segment assets and liabilities are based on the location of such asset/liability.



81

Notes to Financial Statements for the year ended 31st March, 2016 Information about Geographical Segments (` in Crore)

Segment InformationYear ended 31st March, 2016 Year ended 31st March, 2015

India Outside India

Total India Outside India

Total

Revenue (Income from operation) 12,921.10 2,002.10 14,923.20 11,899.71 3,084.60 14,984.31

Carrying amount of segment assets 55,091.31 2,741.91 57,833.22 59,262.56 2,433.33 61,695.89

Carrying amount of segment liabilities 43,677.06 10,405.90 54,082.96 31,715.81 17,953.82 49,669.63

Additions to fixed assets (excluding capital work-in- progress)

2,721.43 - 2,721.43 28,164.05 - 28,164.05

37 Disclosure of related party transactions as required by Accounting Standard - 18 Related Party Disclosures:

(a) Holding Company

1 Essar Steel Asia Holdings Limited (FKA Essar Resources Mauritius Ltd) Immediate Holding Company - (ESAHL)

2 Essar Steel Mauritius Limited – Holding Company of Essar Steel Asia Holdings Limited - (ESML)

3 Essar Global Fund Limited (FKA Essar Global Limited), Cayman Islands – Holding Company of Essar Steel Mauritius Limited (EGFL)

(b) Subsidiaries

1 Essar Steel Middle East FZE (ESMEF) 16 New Trinity Coal Inc. (NTCI)*

2 Essar Steel Trading FZE (ESTF) 17 Bear Fork Resources LLC *

3 Paradeep Steel Company Limited (PSCL) 18 Deep Water Resources LLC *

4 Essar Steel Offshore Limited (ESOSL) 19 Levisa Fork Resources LLC *

5 Odisha Slurry Pipeline Infrastructure Ltd. (OSPIL) (Ceased to be subsidiary w.e.f 21.05.2015)

20 North Springs Resources LLC *

6 Trinity Coal Marketing LLC (EMA) * 21 Little Elk Mining Company LLC *

7 Essar Minerals Limited (FKA Essar Mining Limited)* 22 Banner Coal Terminal LLC *

8 Essar Mineral Cooperatief U.A. * 23 Hughes Creek Terminal LLC *

9 Essar Minerals Canada Limited * 24 Frasure Creek Mining LLC *

10 New Trinity Holding LLC (NTHL)* 25 Falcon Resources LLC *

11 New Resources Inc. (NRI)* 26 Prater Branch Resources LLC *

12 Essar Minerals INC * 27 Trinity RMG Holding LLC *

13 Trinity Parent Corporation * 28 RMG INC *

14 Trinity Coal Corporation * 29 Hazira Coke Limited (HCL)*

15 Trinity Coal Partners LLC * 30 Essar Steel Logistics Limited (ESLL)

* These companies are subsidiaries of a wholly owned subsidiary of the Company

(c) Fellow Subsidiaries

1 Aegis Limited (AEGIS) 3 Arkay Logistics Limited (ELL)

2 AGC Networks Limited (AGCNL) 4 Equinox Business Parks Pvt Limited (EBPPL)



Notes to Financial Statements for the year ended 31st March, 20165 Essar Africa Holdings Limited (EAHL) 23 Essar Power Transmission Company Limited

(EPTCL)

6 Essar Bulk Terminal (Salaya) Limited (EBTSL) 24 Essar Project (India) Limited (EPIL)

7 Essar Bulk Terminal Paradip Limited (EBTPL) 25 Essar Refinery Projects Limited, India (FKA Essar Road Projects Limited) (ERPL) (ceased to be fellow subsidiary from 24.02.2015)

8 Essar Constructions Overseas Limited (ECOL) 26 Essar Shipping & Logistics Limited (ESALL)

9 Essar Electric Power Development Corporation Limited (EEPDCL)

27 Essar Shipping Limited (ESL)

10 Essar Energy II (EII) 28 Essar Steel Algoma Inc (ESA-INC)

11 Essar Energy Limited (FKA Essar Energy Plc) (EEPLC)

29 Essar Steel Limited (FKA Essar Steel Holdings Limited) (ESTLM)

12 Essar Global Services FZE, UAE (EGSF) 30 Essar Telecom Kenya Limited (ETKL)

13 Essar Mineral Resources Limited (EMRL) 31 Essar Vizag Terminal Limited (EVTL)

14 Essar Offshore Subsea Limited (EOSL) 32 Navbharat Power Private Limited (NPPL)

15 Essar Oil (UK) Limited (EOUKL) 33 Peak Trading Overseas Limited (PTOL)

16 Essar Oil Limited (EOL) 34 PT Essar Indonesia (PTEI)

17 Essar Oilfields Services India Limited (EOSPL) 35 The Mobilestore Services Limited. (TMSSL)

18 Essar Pellets Marketing Ltd, India (EPML) 36 Tirunelweli Wind Farms Limited (TWFL) (ceased to be fellow subsidiary from 24.02.2015)

19 Essar Ports Limited (EPL) 37 Vadinar Oil Terminal Limited (VOTL)

20 Essar Power (Jharkhand) Limited (EPJL) 38 Vadinar Ports & Terminal Limited (VPTL)

21 Essar Power Gujarat Limited (EPGL) 39 Vadinar Power Company Limited (VPOCL)

22 Essar Power Limited (EPOL) (w.e.f. 26.09.2014) 40 Vadinar Properties Limited ( VPRL)

(d) Associates

1 Bhander Power Limited (BPOL) 5 Essar Power MP Limited (EPMPL)

2 Essar Bulk Terminal Limited (EBTL) 6 Essar Steel Chhattisgarh Limited (ESCL)

3 Essar Power (Orissa) Limited (EPOOL) 7 Essar Steel Processing FZCO (ESP-FZCO)

4 Essar Power Hazira Limited (EPHL) 8 Odisha Slurry Pipeline Infrastructure Ltd. (OSPIL)

(w.e.f. 21.05.2015 to 11.09.2015)

(e) Key Management Personnel

1 Shri Firdose A. Vandrevala, Executive Vice Chairman (FV) (ceased to be director from 01.02.2016)

2 Shri Dilip Oommen, Managing Director & CEO (DO)

3 Shri Mahadev Iyer, Director (Finance) & CFO (MI)

(f) Enterprise having influence over the Company

1 Imperial Consultants and Securities Private Limited (ceased to be related party w.e.f. 03.03.2016) (ICASPL)

2 Imperial Consultants and Securities (w.e.f. 03.03.2016) (ICAS)



83

Notes to Financial Statements for the year ended 31st March, 2016During the year, following transactions were carried out with some of the related parties in the ordinary course of business: (excluding reimbursement)

(` in crore)Sr. No.

Particulars Holding Companies

Subsidiaries Fellow Subsidiaries

Associates Key Management

Personnel

Enterprise having

influence(a) Sales (Net) - 237.41 78.33 3.25 - -

- (938.77) (197.76) (2.27) - -(b) Income - Lease Rentals / Rent

building- - 5.71 13.85 - -- - (6.68) (13.99) - -

(c) Interest Income-Others - 39.58 17.00 13.35 - -- (35.87) (4.47) - - -

(d) Sale of Business Undertaking - - - - - -- (4,000.00) - - - -

(e) Sales of Fixed assets - - - 0.11 - -- - - (20.46) - -

(f) Management Fees - Income - - - - - -- - (0.21) - - -

(g) Purchase of Raw Materials, Stores and Spares, Production Consumables and Services

- - 808.42 490.27 - -- - (792.40) (419.37) - -

(h) Purchase of Petroleum Products (Fuel)

- - (0.01) - - -- - (0.88) - - -

(i) Power Processing Charges / Recovery

- - -4.03 191.56 - -- - (113.81) (115.79) - -

(j) Repairs and Maintenance - - 5.73 - - -- - (6.58) - - -

(k) Plant and Equipment Hire Charges

- - 16.60 - - -- - (24.92) - - -

(l) Labour Sub Contract Charges - - 1.21 - - -- - (0.58) - - -

(m) Professional Fees - 7.99 30.14 - - -- (27.35) (36.11) - - -

(n) Office Rent - - 7.26 - - -- - (7.28) - - -

(o) Freight Outwards Expenses - 0.26 228.75 57.01 - -- - (196.54) (139.54) - -

(p) Sales Commission - 5.60 -17.61 - - -- - (31.30) - - -

(q) Interest Expenses - 0.48 396.20 82.93 - -- (3.94) (323.87) (75.96) - -

(r) Capital Contract - - 58.10 0.00 - -- - (146.67) - - -

(s) Sale of stores & Spares - - 1.30 5.36 - -- - (0.17) (0.03) - -

(t) Directors’ Remuneration - - - - 15.42 -- - - - (11.57) -



Notes to Financial Statements for the year ended 31st March, 2016(` in crore)

Sr. No.




Personnel

Enterprise having

influence(u) ICD Given - 23.54 114.41 499.95 - -

- (307.84) - - - -(v) Repayment of ICD given - 64.80 - - - -

- (67.29) - - - -(w) ICD taken - - 2,278.02 376.65 - -

- - (2,756.47) (175.00) - -(x) Repayment of ICD taken - - 1,306.83 289.70 - -

- - (2,274.06) - - -(y) Purchase of Investment - 168.68 0.05 - - -

- (221.61) - (64.67) - -(z) Issue of Share Capital - - - - - -

(99.71) - (200.00) - - -(aa) Sale of Investment - - - - - 33.87

- - - - - -Balance outstanding at year end(a) Long Term Investments - 1,078.63 21.74 186.20 - -

- (935.45) (46.82) (186.20) - -(b) Debtors - 475.09 22.78 - - -

- (329.20) (17.30) - - -(c) Other Current Advance/

Receivable- 116.60 10.58 - - -- (3,945.53) (0.32) (0.46) - -

(d) Deposits - - 4.37 - - -- - (4.37) - - -

(e) Other Advance( Including Advance Towards Equity)

0.50 12.61 174.27 13.88 - -(0.50) (101.97) (31.26) (0.28) - (13.63)

(f) Sundry Creditors Payable - 15.30 1,040.54 485.20 - 119.36- (15.00) (940.71) (628.44) - (22.50)

(g) Capital Advances (CWIP) - - 16.49 - - -- - (14.59) (-1.21) - -

(h) Advance From Customer - 17.11 324.74 0.25 - 177.22- (169.35) (494.32) (0.15) - -

(i) Inter Corporate Deposits Given - 1,050.05 114.41 - - -- (1,031.78) - - - -

(j) Inter Corporate Deposits Taken - - 2,759.97 361.95 - 87.50- - (1,788.78) (275.00) - -

(k) Security Deposits Received - - 4.22 - - -- - (4.22) - - -

(l) Guarantees Given - 3,740.10 49.23 182.99 - -- (3,701.76) (49.23) (182.99) - -

(m) Guarantees Received 14,489.86 - 5,881.51 - - -(14,301.82) - (5,787.71) - - -



85

Notes to Financial Statements for the year ended 31st March, 2016Details of Party wise transactions : (` in crore)

Nature of TransactionName of Related Party

BPOL EBTL EPOL EPHL EOL EPGL EPMPL AEGIS ELL EPIL(a) Sales (Net) 0.02 3.23 0.03 - 0.08 - - - 1.38 64.22

(0.29) (1.98) (0.05) - (35.05) - - - (3.28) (130.58)(b) Income - Lease Rentals/Rent building 11.22 0.28 0.12 2.35 0.08 - - 0.30 0.20 4.92

(11.38) (0.28) (0.18) (2.33) (0.21) - - (0.26) (0.28) (5.67)(c) Interest Income-Others - - - - 5.71 - - - - -

- - - - (4.47) - - - - -(d) Sale of Business Undertaking - - - - - - - - - -

- - - - - - - - - -(e) Sale of Fixed Assets - 0.11 - - - - - - - -

- - - - - - - - - -(f) Management Fees -Income - - - - - - - - - -

- - - - - - - - - -(g) Purchases of Raw Materials, Stores

and Spares, Prod. Consumables and services

- 456.18 - - 2.62 - - - 217.37 19.66- (419.37) (-0.00) - (73.87) - - - (205.04) (2.76)

(h) Purchase of Petroleum Products (Fuel) - - - - -0.01 - - - 0.00 -- - - - (0.89) - - - (-0.02) -

(i) Power Processing Charges / Recovery 12.68 - - 125.40 - 0.01 - - - -(12.42) - (55.20) - (9.18) (1.99) (146.16) - - -

(j) Repairs and Maintenance - - 2.68 - - - - 0.17 0.11 2.69- - (1.96) - - - - - - (4.54)

(k) Plant and Equipment Hire Charges - - - - - - - - 16.43 0.18- - - - - - - - (14.74) (10.10)

(l) Labour Sub Contract Charges - - - - - - - 0.01 1.21 -- - - - - - - - (0.09) (0.49)

(m) Professional Fees - - - - 0.08 - - 29.61 - 0.28- - - - (0.11) - - (34.18) - (1.69)

(n) Office Rent - - - - - - - - - -- - - - - - - - - -

(o) Freight Outwards Expenses - 57.01 - - 0.00 - - - 202.64 -- (139.54) - - - - - - (183.17) (0.07)

(p) Sales Commission - - - - - - - - - -- - - - - - - - - -

(q) Interest & Other Financial Expenses 13.00 58.14 7.53 - 254.34 - - - 10.17 25.09(10.03) (39.34) (12.13) - (92.17) - - - (21.46) (0.44)

(r) Capital Contract - - - - - - - 0.00 - 58.10- - - - - - - (-0.00) (0.04) (146.63)

(s) Sale of stores & Spares - 5.36 - - - - - - - 1.30- (0.03) - - - - - - - (0.17)

(t) Directors Remuneration (including perquisites)

- - - - - - - - - -- - - - - - - - - -

(u) ICD Given - - - - - - - - - -- - - - - - - - - -

(v) Refund of ICD Given - - - - - - - - - -- - - - - - - - - -

(w) ICD taken - 376.65 - - 2,047.94 - - - 200.30 -- - - - (2,058.21) - - - (258.62) -

(x) Repayment of ICD taken - 14.70 - - 643.76 - - - 340.64 -- - - - (1,141.40) - - - (264.00) -

(y) Purchase of Investments - - - - - - - - - -- - - - - - (63.70) - - -

(z) Issue of Share Capital (Including Premium)

- - - - - - - - - -- - - - - - - - - -

(aa) Sale of Investment - - - - - - - - - -- - - - - - - - - -





ESL EBTPL ESTLM ESMEF EPML ESTF ESOSL PTEI EOSL EPOOL NPPL(a) Sales (Net) - - - 237.41 - - - 0.00 - - -

- - - (938.77) (0.00) - - (13.72) - - -(b) Income - Lease Rentals/Rent

building- - - - - - - - - - -- - - - - - - - - - -

(c) Interest Income-Others 11.29 - - 36.01 - 3.55 - - - - -- - - (32.56) - (3.31) - - - - -

(d) Sale of Business Undertaking - - - - - - - - - - -- - - - - - - - - - -

(e) Sale of Fixed Assets - - - - - - - - - - -- - - - - - - - - (20.46) -

(f) Management Fees -Income - - - - - - - - - - -- - (0.21) - - - - - - - -

(g) Purchases of Raw Materials, Stores and Spares, Prod. Consumables and services

418.95 132.40 - - - - - 0.02 - - -(365.41) (142.94) - - - - - - - - -


- - - - - - - - - - -- - - - - - - - - - -


- -4.04 - - - - - - - 53.49 -- (-3.33) - - - - - - - (7.21) -

(j) Repairs and Maintenance - - - - - - - - - - -(0.00) - - - - - - - - - -


- - - - - - - - - - -- - - - - - - - - - -

(l) Labour Sub Contract Charges - - - - - - - - - - -- - - - - - - - - - -

(m) Professional Fees - - - 7.99 - - - 0.17 - - -- - - (27.35) - - - (0.12) - - -

(n) Office Rent - - - - - - - - - - -(0.02) - - - - - - - - - -

(o) Freight Outwards Expenses 9.59 17.51 - 0.26 - - - - - - -(14.83) (5.49) - - - - - - - - -

(p) Sales Commission - - -17.61 5.60 - - - - - - -- - (31.30) - - - - - - - -

(q) Interest & Other Financial Expenses

0.95 15.49 - 0.48 8.00 - - - 0.56 3.03 -(1.46) (21.03) - (3.94) (26.59) - - - (50.68) - (0.12)

(r) Capital Contract - - - - - - - - - - -- - - - - - - - - - -

(s) Sale of stores & Spares - - - - - - - - - - -- - - - - - - - - - -


- - - - - - - - - - -- - - - - - - - - - -

(u) ICD Given 114.41 - - 23.00 - - - - - - -- - - (307.84) - - - - - - -

(v) Refund of ICD Given - - - 64.80 - - - - - - -- - - (67.29) - - - - - - -

(w) ICD taken - - - - - - - - - - -- - - - (175.00) - - - - - -

(x) Repayment of ICD taken - - - - 275.00 - - - 5.48 - -- - - - - - - - (484.15) - (32.00)

(y) Purchase of Investments - - - - - - 168.68 - - - -- - - - - - (195.96) - - (0.97) -


- - - - - - - - - - -- - - - - - - - - - -

(aa) Sale of Investment - - - - - - - - - - -- - - - - - - - - - -



87



EEPDCL EPTCL ECOL ESAHL AGCNL EBTSL VPTL ESLL EOUKL PSCL EPJL EBPPL(a) Sales (Net) - - - 0.73 11.88 - - - -

- - (0.06) - - (12.60) - - (2.42) - - -(b) Income - Lease Rentals/Rent

building0.09 - - - - - - - -

- (0.07) - - - - - (0.00) - - - -(c) Interest Income-Others - - - - - - - - -

- - - - - - - - - - - -(d) Sale of Business Undertaking - - - - - - - - - - - -

- - - - - - - - - - - -(e) Sale of Fixed Assets - - - - - - - - - - - -

- - - - - - - - - - - -(f) Management Fees -Income - - - - - - - - - - - -

- - - - - - - - - - - -(g) Purchases of Raw Materials,

Stores and Spares, Prod. Consumables and services

- - - - - - - 0.06 - - - -- - - - - - - (2.38) - - - -


- - - - - - - - - - - -- - - - - - - (0.00) - - - -


- - - - - - - - - - - -(0.76) - - - - - - - - - - -

(j) Repairs and Maintenance - - - - 0.09 - - - - - - -- - - - - - - (0.08) - - - -


- - - - - - - - - - - -- - - - - - - (0.08) - - - -

(l) Labour Sub Contract Charges - - - - - - - - - - - -- - - - - - - - - - - -

(m) Professional Fees - - - - - - - - - - - -- - - - - - - - - - - -

(n) Office Rent - - - - - - - - - - - 7.26- - - - - - - - - - - (7.26)

(o) Freight Outwards Expenses - - - - - - - -0.98 - - - -- - - - - - - (-7.02) - - - -

(p) Sales Commission - - - - - - - - - - - -- - - - - - - - - - - -


- - - - - - 41.30 - - - - -- - - - - - (33.21) - - - - (0.63)

(r) Capital Contract - - - - - - - - - - - -- - - - - - - (-0.00) - - - -

(s) Sale of stores & Spares - - - - - - - - - - - -- - - - - - - - - - - -


- - - - - - - - - - - -- - - - - - - - - - - -

(u) ICD Given - - - - - - - - - - - -- - - - - - - - - - - -

(v) Refund of ICD Given - - - - - - - - - - - -- - - - - - - - - - - -

(w) ICD taken - - - - - - 29.78 - - - - -- - - - - - - - - - - -

(x) Repayment of ICD taken - - - - - - - - - - - -- - - - - - - - - - - -

(y) Purchase of Investments - - - - - - - 0.05 - - - -- - - - - - - - - (0.15) - -


- - - - - - - - - - - -- - - (99.71) - - - - - - - -

(aa) Sale of Investment - - - - - - - - - - - -- - - - - - - - - - - -





TWFL VPOCL OSPIL VPRL ESCL DO MI FV EMRL EVTL TMSSL ICAS(a) Sales (Net) - - - - - - - - - - -

- - - - - - - - - - - -(b) Income - Lease Rentals/Rent

building- - - - - - - - - - - -- - - - - - - - - - - -

(c) Interest Income-Others - - 13.36 - - - - - - - - -- - - - - - - - - - - -

(d) Sale of Business Undertaking - - - - - - - - - - - -- - (4,000) - - - - - - - - -

(e) Sale of Fixed Assets - - - - - - - - - - - -- - - - - - - - - - - -

(f) Management Fees -Income - - - - - - - - - - - -- - - - - - - - - - - -


- - 34.09 - - - - - 0.15 16.88 0.29 -- - - - - - - - - - - -


- - - - - - - - - - - -- - - - - - - - - - - -


- - - - - - - - - - - -- - - - - - - - - - - -

(j) Repairs and Maintenance - - - - - - - - - - - -- - - - - - - - - - - -


- - - - - - - - - - - -- - - - - - - - - - - -

(l) Labour Sub Contract Charges - - - - - - - - - - - -- - - - - - - - - - - -

(m) Professional Fees - - - - - - - - - - - -- - - - - - - - - - - -

(n) Office Rent - - - - - - - - - - - -- - - - - - - - - - - -

(o) Freight Outwards Expenses - - - - - - - - - -0.02 - -- - - - - - - - - - - -

(p) Sales Commission - - - - - - - - - - - -- - - - - - - - - - - -


3.02 26.95 - 2.82 8.75 - - - - - - -(32.35) (28.66) - (2.94) (26.59) - - - - - - -

(r) Capital Contract - - - - - - - - - - - -- - - - - - - - - - - -

(s) Sale of stores & Spares - - - - - - - - - - - -- - - - - - - - - - - -


- - - - - 2.82 2.14 10.46 - - - -- - - - - (2.83) (2.17) (6.56) - - - -

(u) ICD Given - - 500.49 - - - - - - - - -- - - - - - - - - - - -

(v) Refund of ICD Given - - - - - - - - - - - -- - - - - - - - - - - -

(w) ICD taken - - - - - - - - - - - -- (264.64) - - (175.00) - - - - - - -

(x) Repayment of ICD taken 40.66 1.28 - - 275.00 - - - - - - -(239.34) (71.70) - (41.48) - - - - - - - -

(y) Purchase of Investments - - - - - - - - - - - -- - (25.50) - - - - - - - - -

(z) Issue of Share Capital ( Including Premium )

- - - - - - - - - - - -(200.00) - - - - - - - - - - -

(aa) Sale of Investment - - - - - - - - - - - 33.87- - - - - - - - - - - -



89

Notes to Financial Statements for the year ended 31st March, 2016

Bal

ance

out

stan

ding

as

at th

e ye

ar e

nd:

(` in

cro

re)

Part

icul

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BPO

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22.7

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Deb

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--

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475.

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-

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--

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2.37

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-(1

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(0.2

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Cap

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Notes to Financial Statements for the year ended 31st March, 201638 Leases Operating Lease Residential Houses for staff accommodation, offices and equipments are obtained on operating lease. Lease rent is

payable as per the lease term. The lease term is generally for 11 months and renewable for a further period at the option of the Company. There are no restrictions imposed by lease arrangements.

(` in Crore)


Year Ended 31st March, 2015

Finance Lease

Operating Lease

Finance Lease

Operating Lease

Assets taken on Finance Lease on or after 1st April, 2001Total minimum lease payments at the year end - - 0.64 - Less: amount representing finance charges - - 0.01 - Present value of minimum lease payments (Rate of Interest 6.00% p.a.)

- - 0.63 -

Lease payments for the year 0.64 35.98 1.28 36.79 Minimum Lease payments :Not later than one year - 56.75 0.64 29.70 Later than one year but not later than five years - 114.40 - 35.08 Later than five years - 28.22 - 34.39

39 Employee Benefits (i) Defined Contribution Plan Company’s contribution to Provident Fund aggregating to ` 18.75 Crore (Previous year ` 18.70 Crore) are recognised

in the Statement of Profit and Loss and Capital Work-in-Progress, as applicable. There is no obligation other than the contribution payable to the respective funds.

(ii) Defined Benefit Plan 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. The plan is funded through a Gratuity Scheme administered by Life Insurance Corporation of India (LIC).

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and Capital Work-in-Progress -

(` in Crore)



Net Employee Benefit Expense recognised Current Service Cost 5.36 4.84 Interest Cost 4.28 4.50 Expected Return on Plan Assets (3.01) (3.10) Net Actuarial (gain)/loss recognised in the year 0.48 6.20 Total 7.11 12.44 Actual return on Plan Assets 3.06 3.41

The following tables summarise the components of the funded status and amounts recognised in the Balance Sheet for the respective plans -

(` in Crore)


As at 31st March, 2015

Details of Provision for Gratuity Present Value of Obligation (A) 57.39 63.20 Fair value of Plan Assets (B) (34.01) (39.91) Liability Recognised in Balance Sheet (Refer note 7) 23.38 23.29



95

Notes to Financial Statements for the year ended 31st March, 2016(` in Crore)



(A) Changes in the Present Value of the Defined Benefit Obligation are as follows:

Projected Benefit Obligations (PBO) at the beginning of the year

63.20 51.38

Interest Cost 4.28 4.50 Service Cost 5.36 4.84 Benefits paid (16.77) (5.02)Acquisition/Transfer In/(Transfer Out) 0.65 0.99 Actuarial (gain)/loss on obligations 0.67 6.52 PBO at the end of the year 57.39 63.21

(B) Changes in the Fair Value of Plan Assets are as follows:

Fair Value of Plan Assets at the beginning of the year

39.91 36.38

Acquisition Adjustment - 2.90 Expected Return on Plan Assets 3.01 3.10 Contributions/Transfers 7.67 2.24 Benefits Paid (16.77) (5.02)Actuarial Gain / (loss) on Plan Assets 0.19 0.32 Fair Value of Plan Assets at the end of the year 34.01 39.92

Investment details of Plan Assets100% of the plan assets are administered by LIC.

AssumptionsDiscount Rate 7.80% 7.80%Rate of Return on Plan Assets 8.50% 8.50%Mortality Indian Assured Lives

Mortality (2006-08)Indian Assured Lives Mortality (2006 - 08)

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Experience History (` in Crore)

ParticularsAs at

31st March, 2016

As at 31st March,

2015

As at 31st March,

2014

As at 31st March,

2013

As at 31st March,

2012Defined Benefit Obligation at end of the period (57.39) (63.20) (51.38) (51.76) (44.85)Plan assets at end of the period 34.01 39.91 36.38 37.41 36.84 Funded Status (23.38) (23.29) (15.00) (14.35) (8.01)Experience Gain/(Loss) adjustments on plan liabilities (0.67) (1.54) 0.48 0.75 (4.22)Experience Gain/(Loss) adjustments on plan assets 0.19 0.32 0.21 0.42 1.57 Actuarial Gain/(Loss) due to change in assumptions - (4.98) 4.15 (2.19) 1.71 The Company expects to contribute ` 9.00 Crore to its plan assets in Financial Year 2016 -17.

40 During the previous year, the Company had capitalized abnormal cost of ` 1,203.14 Crore related to Hazira Units, incurred prior to commencement of commercial production from integrated facility on 31st March, 2015, on the basis of opinion received from eminent experts in the field of accountancy after considering relevant accounting standards read with other pronouncements by the Institute of Chartered Accountants of India.



Notes to Financial Statements for the year ended 31st March, 201641 Earnings Per Share:



Net Profit/(Loss) as per statement of Profit & Loss ` Crore (5,800.14) ` Crore 648.05 Less: Dividend on Preference Shares for the year (including dividend distribution tax)

` Crore (5.25) ` Crore (5.10)

Net Earning/(loss) for the purpose of basic and diluted earning per shares

` Crore (5,805.39) ` Crore 642.95

Weighted average number of shares for the purpose of calculating Basic earning per share

3,108,957,660 2,842,516,501

Weighted average number of shares for the purpose of calculating Diluted earning per share

3,108,957,660 2,842,516,501

Earnings/(Loss) Per Share Basic earning/(loss) per Equity share of ` 10 each (in `) (18.67) 2.26 Diluted earning/(loss) per Equity share of ` 10 each (in `) (18.67) 2.26

42 Derivative Instruments and Unhedged Foreign Currency ExposureA Derivative Instruments

Sr.No.

Type of Transaction Amount31st March, 2016

Amount

31st March, 2015

Currency Purpose

1 Rupee Indexed Interest Rate Swaps (Overnight Index Swap)

- 500,000,000 INR To reduce the interest cost on Long Term Rupee Term loan

2 Principal Only Swap 4,675,000,000 16,490,000,000 INR To hedge the economic exposure on future dollar linked sales

3 Cross Currency Interest Rate Swap

975,000,000 1,000,000,000 INR To hedge the economic exposure on future dollar linked sales

4 Forward sale contracts (USD / INR)

- 255,000,000 USD To hedge the exchange risk on export receivables

5 Forward purchase contracts (USD / INR)

72,767,125 156,828,618 USD To hedge the exchange risk on Buyers Credit


55,785,533 33,947,020 USD To hedge the exchange risk on Letter of Credit / Acceptance


85,605,518 11,730,000 USD To hedge the exchange risk on Sundry Creditors

8 Forward purchase contracts (USD/INR)

33,200,000 - USD To hedge the exchange risk on Interest on Credit facilities

9 Forward purchase contracts (EURO/INR)

889,925 - EURO To hedge the exchange risk on Buyers Credit

10 Forward purchase contracts (EURO/INR)

599,610 - EURO To hedge the exchange risk on letter of credit/acceptance

11 Forward purchase contracts (CAD/INR)

370,430 - CAD To hedge the exchange risk on Buyers Credit

12 Cross Currency EURO/USD Forward sale contracts

- 3,500,000 EURO To hedge the exchange risk on Buyers Credit

13 Cross Currency EURO/USD Forward sale contracts

- 3,500,000 EURO To hedge the exchange risk on export receivables



97

Notes to Financial Statements for the year ended 31st March, 2016(B) Unhedged Foreign Currency Exposure*

Sr.No.

Particulars of Transaction Foreign Currency (FC)

As at 31st March, 2016 As at 31st March, 2015Amount in

FCAmount

` in CroreAmount in FC

Amount ` in Crore

1 Sundry Creditors CHF 4,789 0.03 4,789 0.03 EUR 11,093,118 83.30 13,310,512 89.86 GBP 7,423 0.07 13,115 0.12 JPY 30,833,950 1.82 33,849,808 1.76 SEK 10,875 0.01 - - USD 14,997,927 99.49 66,309,078 415.03 NOK 1,251,571 1.00 1,251,571 0.97 SGD 26,684 0.13 600 0.00 AUD 60,900 0.31 - - AED 66,465,868 119.89 16,674,991 28.37 CAD 2,996 0.02 21,343 0.10

2 Buyers Credit EUR 516,010 3.88 3,382,418 22.83 AED - - 3,381,000 5.75 USD 3,288,050 21.81 20,207,407 126.48

3 Term Loans USD 974,689,174 6,465.40 1,104,953,218 6,915.99 4 Sundry Debtors USD 64,231,058 426.06 46,960,824 293.93

EUR 3,723,765 27.96 923,515 6.23 AED 1,961,202 3.54 636,261 1.08

5 Advance from Customers AED 343,823 0.62 245,146 0.42 EUR 153,226 1.15 63,936 0.43 USD 233,136,271 1,546.46 1,358,609,904 8,503.65

6 Short Term Loans & Advances and Other Current Assets

USD 178,684,036 1,185.26 178,469,498 1,117.05

7 Cash and Bank Balances USD 260,790 1.73 165,826 1.04 8 Letter of Credit/ Acceptances EUR 456,005 3.42 92,872 0.63

USD 1,075,601 7.13 12,368,687 77.42 9 Working Capital Loans USD 67,757,075 449.45 63,557,075 397.81

10 Interest Accrued on Credit Facilities

USD 5,043,281 33.45 29,442,209 184.28 AED - - 1,659 0.00 EUR 1,693 0.01 6,369 0.04

* ‘The Company consistently enjoys natural hedge in the form of substantial export volume (besides ‘import price parity’ based domestic revenue) to offset USD/INR exchange fluctuation risk that may arise out of unhedged foreign currency liability exposure as stated above.

43 Production

Unit Year Ended31st March, 2016


(a) Production *Iron Ore Pellet MT 5,790,909 4,739,555 Hot Briquette Iron / Direct Reduced Iron MT 1,239,182 829,592 Hot Metal MT 2,916,674 2,619,530 Hot Rolled Coils/Cold Rolled Coils/Plates MT 3,301,338 2,524,405 Plates MT 513,375 629,799 Pipes MT 202,163 178,254

(b) Captive Consumption *Iron Ore Pellet MT 4,207,137 3,527,855 Hot Briquette Iron MT 1,222,080 787,552 Hot Rolled Coils/ Plates** MT 320,543 276,517

* Including Trial Run if any** Including consumption of purchases material 68,635 MT (Previous Year- 94,385 MT).



Notes to Financial Statements for the year ended 31st March, 201644 Value of Imports calculated on CIF basis (` in Crore)



Raw Materials 3,475.37 2,544.82 Production Consumables, Stores and Spares & Fuel 449.96 538.27 Capital Goods 38.43 27.76

3,963.76 3,110.85

45 Expenditure in Foreign Currency (on accrual basis) (` in Crore)



Interest 592.83 511.92 Commission 53.56 96.33 Professional Fees 19.26 45.37 Capital Contract & Services 1.33 6.04 Others 49.15 15.20

716.13 674.86

46 Earnings in Foreign Currency (` in Crore)



(a) FOB Value of Exports* 1,457.92 1,974.49 (b) Others

Freight recovered 78.72 113.26 Interest 39.56 35.87 Others - 0.21

1,576.20 2,123.83

* In addition to the above, the Company has also made exports (including deemed export through canalising agencies as supporting manufacturer) amounting to ` 1,505.70 Crore (Previous Year ` 2,694.48 Crore) at a price linked to USD but received in Indian Rupees.

47 Capital Work-in-Progress (including expenditure during construction period) (` in Crore)



Plant & Machinery and Building including supervision, technical know-how, other capital expenditure and Capital items in stock

2,110.83 2,890.17

Mining Rights and Exploration Expenses 30.82 30.82 Preoperative Expenditure for the year(A) Employee Benefits Expense

Salaries - 7.16 Contribution to Provident Fund, Gratuity and other funds

- 0.68

Staff welfare expenses - 1.54 - 9.38

(B) Manufacturing and Asset Maintenance :Repairs & Maintenance and Insurance 0.62 0.42 Capacity Charges 54.79 -

55.41 0.42



99

Notes to Financial Statements for the year ended 31st March, 2016 As at

31st March, 2016 As at

31st March, 2015(C) Administrative Expenses :

Traveling, Conveyance Exps., Vehicle Hire and Maintenance Charges

- 1.06

Postage Telephone and Fax - 1.08 Professional Fees 0.14 4.32 Depreciation - 2.56 Miscellaneous Expenses 0.24 -

0.38 9.01 (D) Finance Costs :

Bank Charges (including LC Charges, Management and Processing Fees)

0.02 30.73

Interest on Term Loan 384.97 804.56 Interest to Bank & Others 2.50 84.15

387.49 919.44 (E) Foreign Exchange Fluctuation (AS-11 notification) - 227.74 (F) Interest on Deposits with Banks & Others - (3.74)(G) Net expenses on Trial Run for the Year (Refer Note

47 (a) given below) 21.14 1,490.21

Preoperative Expenditure during the Year 464.42 2,652.47 Add: Opening Preoperative Expenditure 1,661.37 5,316.15 Less: Allocated/transferred/capitalised during the Year (870.68) (6,307.25)Closing Preoperative Expenditure 1,255.11 1,661.37 Total Capital Work-in-Progress 3,396.76 4,582.36

47(a) Net Expenses on Trial Run (` in Crore)



IncomeRevenue from Operations 1.07 2,322.59 Less: Excise Duty Paid 0.11 228.71 Revenue 0.96 2,093.88 Other Income 1.29 2.23 Total Income 2.25 2,096.11 ExpensesCost of Materials Consumed 6.71 2,570.99 Energy Cost 7.42 525.22 Changes in Inventories of Finished Goods and Work in Progress

(3.13) (40.56)

Employee Benefits Expense 3.29 160.01 Manufacturing & Asset Maintenance 2.14 157.72 Administrative Expenses 6.94 160.26 Selling & Distribution Expenses 0.02 52.69

23.39 3,586.32 Net expenses on Trial Run for the Year -Transfer to Capital Work in Progress

(21.14) (1,490.21)

48 The Company has circulated confirmation for the identification of suppliers registered under the Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received by the Company from certain parties, no disclosures relating to amounts as at the year end together with interest paid / payable is required to be given.



Notes to Financial Statements for the year ended 31st March, 201649 Current Liabilities includes current maturity of long term debt (repayable within one year as per existing repayment

schedule) and Long-term Export Performance Bank guarantees (EPBG) crystalized into a fund based liability, for which a repayment schedule is yet to be decided. The Company is actively engaged in discussion with its lenders to implement various initiatives/steps to improve its financial position as a part of a comprehensive restructuring plan under the RBI scheme for restructuring, including, inter alia, the following: –

(a) Fixing an appropriate repayment schedule for the crystalized fund based liability of the EPBG. (b) Fixing an appropriate repayment schedule for the term loans of the company including the completion of the

implementation of the flexible structuring of term loans under the 5/25 scheme of RBI which has been approved by the lenders but only partially implemented,

(c) Proposed infusion of Equity Funds by the promoters and conversion of Inter Corporate Deposit liabilities into Equity,

(d) Proposed conversion of part of Working capital liability into working capital term loan with a suitable repayment schedule,

(e) Proposed conversion of a portion of the liabilities into equity/quasi equity, (f) Deployment of internal accruals in improving the net working capital position. The company and the lenders have already initiated the steps in this direction and the company believes that with the

implementation of an appropriate restructuring scheme, its financial position shall improve significantly.50 Short Term Provisions Provision for Indirect Tax Matter: In respect of SEZ matter, the Company had paid custom duty (Basic duty, countervailing duty and cess) ` 180.73

Crore towards clearance made for the period 27th October, 2006 to 11th April, 2007 against Show Cause Notice (SCN) dated 7th April, 2008 issued by DGCEI pending investigation. Subsequently the Company availed CENVAT credit of ` 140.35 Crore towards countervailing duty and cess out of the said deposit paid based on a legal opinion received. A provision has been made for ` 19.73 Crore being non cenvatable portion of Custom duty paid for the period 11th January, 2007 to 20th March, 2007.

Further, the Company received a show-cause notice from the Commissioner of Central Excise and Customs for availing such credit and the Company submitted its response against the said notice received. The Company also filed a special civil application before the Honorable High Court of Gujarat seeking to quash the restriction on utilization of CENVAT Credit. The Honorable High Court granted interim stay on 11th February, 2009 on the restriction to avail the CENVAT. The Company was also advised by counsels that there is no restriction to utilize the disputed credit in wake of the High Court Order; and accordingly the Company utilized ` 124.54 Crore for discharging the excise duty liability till 31st March, 2009.

The Supreme Court vide order dated 15th April, 2009 ordered to maintain the status as on date and accordingly the balance of ` 15.81 Crore, remaining to be utilized as on the date of order has been kept un-utilized. Further vide order dated 7th March, 2011 the Supreme Court referred the matter back to Commissioner of Central Excise & Customs to take a final decision in the matter within four months with continuation of Interim Order dated 15th April, 2009.

As per the directions of the Hon’ble Supreme Court order dated 7th March, 2011, the Commissioner of Central Excise Surat–I passed an adjudication order dated 28th June, 2011 demanding the reversal of the CENVAT Credit availed along with applicable interest and imposed penalty of ` 25 lacs on the Company. The Company has preferred an appeal with Stay application to the CESTAT against the order issued. CESTAT heard the appeal and remanded the matter to Commissioner, with a direction that the notice to be adjudicated along with the main notice dated 7th April, 2008 (which relates to duty demand and deposits made by the company). As per directions of CESTAT ` 15.81 Crore to be kept as balance in Cenvat credit account. Since the normal adjudication process have resumed; the Hon’ble Supreme Court disposed the Department petition as infructuous vide its order dated 8th July, 2011. Both the show cause notices are pending with the Commissioner of Central Excise Surat for adjudication.

51 During previous year, the Company had sold a Business Undertaking, comprising of slurry Pipeline at Odisha and associated facilities, to M/s Odisha Slurry Pipeline Infrastructure Limited (OSPIL) through a Business Transfer Agreement (BTA). The sale consideration for aforesaid transfer was ` 4,000 Crore which was based on valuation carried out by an independent valuation expert. The Company had booked a profit of ` 2,793.04 Crore on the same in March 2015. The Company and OSPIL also entered into Right to Use Agreement (RTU) in March 2015. As per the RTU agreement, the Company was required to pay usage charges for allocated capacity on take or pay basis.

RBI, through DBR mailbox dated January 13, 2016 on “Principles on classification of sale and lease back transactions as restructuring”, has clarified that a sale and leaseback transaction or other transactions of similar nature will be treated as an event of restructuring for the purpose of asset classification and provisioning in the books of banks with regard to the residual debt of the seller as well as the debt of the buyer.



101

Notes to Financial Statements for the year ended 31st March, 2016 In view of the above, and inability of the bankers to complete the transaction, the BTA stands frustrated as it is

impossible to perform the obligations as agreed in BTA. The Lenders and the Company have, in joint lenders meeting, agreed that the sale transaction be annulled and the Company would have to take back the assets and liabilities in its books after approval from lenders of both the Companies.

Due to inevitable prospect of unwinding of aforesaid transaction, a provision has been made for ` 2,793.04 Crore (including provision of ` 1,543.28 Crore against outstanding receivable from OSPIL towards sale of Business Undertaking) by the Company during the current financial year as de-recognition of “Other Income” recognized in previous year. In view of the fact that the developments, subsequent to aforesaid slump sale, are exceptional and beyond the control of the Company, it has been shown as an “Exceptional Item” in statement of Profit and Loss for the current year. In view of above, the aforesaid profit in previous year, has also been reclassified accordingly, for a meaningful comparison.

52 Long Term Borrowings (` in Crore)



(1) Non Convertible Debentures Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land). 13.4% Non-Convertible Debentures redeemable on annual basis starting from June 16 (15.87% ), June 17 (42.07% ), June 18 (42.07%).

312.00

312.00

312.00 312.00

(2) Term Loans From Banks and Others Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The balance loan is repayable in quarterly instalments during Financial Year 2016-17 (22.68%), 2017-18 (25.28%),2018-19 (0.54%), 2019-20 (0.54%), 2020-21 (1.07%), 2021-22 (1.07%), 2022-23 (1.07%), 2023-24 (1.07%), 2024-25 (2.68%), 2025-26 (3.22%), 2026-27 (3.22%), 2027-28 (3.22%), 2028-29 (3.22%), 2029-30 (4.83%), 2030-31 (4.83%), 2031-32 (5.37%), 2032-33 (5.37%), 2033-34 (5.37%) & 2034-35 (5.35%),

4,732.60 4,909.99

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The Balance Loan will be converted to Rupee Loan during Financial year 2016-17 (15.39%) and Financial year 2017-18 (84.61%).

565.62 533.71

Secured by pari passu first charge on fixed assets (except assets forming part of Nandniketan Township, Service Centers and 19 MW waste heat recovery power plant) and pari passu second charge on current assets of the Company. The balance loan is repayable till July 2016.

30.44 30.44

First pari passu charge on all present and future fixed assets of the Borrower including all land available with the borrower (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company. The balance loan is repayable 10 half yearly installments of 5%, 5%,7.5%,7.5%,12.5%, 12.5%, 12.5%, 12.5%, 12.5% & 12.5% starting from Jan 2020.

497.50 469.43

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company.

a) The balance loan is repayable in half yearly instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (10.53%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (16.84%) and 2022-23 (16.84%).

132.33 124.87






(b) The balance loan is repayable in 13-half-yearly instalments of 2.50%, 2.50%, 2.50%, 2.50%, 5%, 5%, 10%, 10%, 10%, 12.50%, 12.50%, 12.50% and 12.50% starting December 2015.

398.00 375.54

(c) The balance loan is repayable in annual instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%).

31.51 31.30

(d) The balance loan is repayable in annual instalments during Financial Year 2016-17 (11.11%), 2017-18 (11.11%), 2018-19 (15.56%), 2019-20 (15.56%), 2020-21 (15.56%), 2021-22 (15.56%), 2022-23 (15.56%).

238.80 237.85

(e) The balance loan is repayable 10 half yearly instalments of 5%, 5%, 7.5%, 7.5%, 12.5%, 12.5%, 12.5%, 12.5%, 12.5% and 12.5% starting March 2018.

1,061.33 1,001.45

(f) The balance loan is repayable in annual instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%).

787.70 743.27

(g) The balance loan is repayable in Financial Year 2016-17 (2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%)

152.57 143.96

(h) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

94.52 93.89

(i) The balance loan is repayable in Financial Year 2016-17 (5.26%), 2017-18 (10.53%), 2018-19 (10.53%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%) and 2023-24 (14.74%),

138.64 137.70

(j) The balance loan is repayable in Financial Year 2016-17 (10%), 2017-18 (10%), 2018-19 (10%),2019-20 (14%),2020-21 (14%), 2021-22 (14%), 2022-23 (14%) and 2023-24 (14%).

265.33 250.36

(k) The balance loan is repayable in Financial Year 2016-17 (10%), 2017-18 (10%), 2018-19 (10%), 2019-20 (14%), 2020-21 (14%), 2021-22 (14%), 2022-23 (14%) and 2023-24 (14%).

92.87 87.63

(l) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

505.91 522.57

(m) The balance loan is repayable in Financial Year 2016-17 (2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

258.59 267.11

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders.



103




a) The balance loan is repayable in yearly instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%) and 2022-23 (14.74%).

567.15 535.15

b) The balance loan is repayable in annual instalments during Financial Year 2016-17 (7.22%), 2017-18 (6.19%), 2018-19 (10.31%), 2019-20 (17.53%), 2020-21 (17.53%), 2021-22 (20.62%) and 2022-23 (20.62%).

321.71 303.57

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. Balance Loan will be repaid during financial year 2016-17 (22.84%), 2017-18 (0.79%), 2018-19 (0.79%), 2019-20 (0.79%), 2020-21 (1.57%), 2021-22 (1.57%), 2022-23 (1.57%), 2023-24 (1.57%), 2024-25 (3.94%), 2025-26 (4.72%), 2026-27 (4.72%), 2027-28 (4.72%), 2028-29 (4.72%), 2029-30 (7.09%), 2030-31 (7.09%), 2031-32 (7.87%), 2032-33 (7.87%), 2033-34 (7.87%) & 2034-35 (7.87%).

1,434.62 1,502.02

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited and personal guarantee of a promoter. Loan will be repaid in Quarterly Installments during financial year 2016-17(6.46%), 2017-18 (4.41%), 2018-19 (11.01%), 2019-20 (20.84%), 2020-21 (21.01%), 2021-22(20.76%), 2022-23 (15.51%) till September 2022.

2,950.63 2,955.00

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Limited and personal guarantee of a promoter. Balance Loan will be repaid in Quarterly Installments during financial year 2016-17 (2.86%), 2017-18 (4.87%), 2018-19 (12.89%), 2019-20 (12.89%), 2020-21 (12.55%), 2021-22 (12.38%), 2022-23 (12.38%), 2023-24 (14.38%), 2024-25 (0.85%), 2025-26 (1.02%), 2026-27 (1.02%), 2027-28 (1.02%), 2028-29 (1.02%), 2029-30 (1.53%), 2030-31 (1.53%), 2031-32 (1.70%), 2032-33 (1.70%), 2033-34 (1.70%), 2034-35 (1.70%).

5,667.41 5,337.41

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Limited and personal guarantee of a promoter. Balance Loan will be repaid in Quarterly Installments during financial year 2016-17 (2.50%), 2017-18 (5.00%), 2018-19 (15.00%), 2019-20 (15.00%), 2020-21 (15.00%), 2021-22 (15.00%), 2022-23 (15.00%), 2023-24 (17.50%) starting from December 2016.

164.10 154.84

Secured by subservient charge on moveable fixed assets and current assets. The loan repaid during Financial Year 2015-16.

- 12.75

Secured by subservient charge on all moveable fixed assets & current assets of the company, Corporate Guarantee of Essar Steel Limited and pledge of certain shares held in the company by its shareholders. Loan fully repaid in Financial Year 2015-16.

- 175.00






Secured by Pledge of Shares held in EPOL & BPOL held as investments by the company, subservient charge on all movable fixed assets & current assets of the Company, Corporate Guarantee of Essar Steel Limited, Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited and pledge of certain shares held in the company by its shareholders. Loan is repayable in equal monthly installments till September 2016.

50.00 125.04

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held by pledge providers in ESIL, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited. The balance loan is repayable in 12 half yearly instalments of 5%, 5%, 7.5%, 7.5%, 7.5%, 7.5%, 7.5%, 7.5%, 10%, 10%, 12.5% and 12.5% starting September 2016.

746.25 704.15

Secured by pari passu first charge on entire fixed assets of the company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Second pari passu charge on entire present and future current assests of the Company. The balance loan is repayable in Financial Year 2016-17 (18.75%), 2017-18 (25.00%), 2018-19 (25.00%), 2019-20 (25.00%), 2020-21 (6.25%).

160.00 -

Secured by subservient charge on its fixed movable and current assets of the Company. The loan is fully repaid during Financial Year 2015-16.

- 100.00

Secured by subservient charge on its fixed movable and current assets of the Company. The loan is fully repaid during Financial Year 2015-16.

- 63.00

Secured by subservient charge on its movable fixed assets and current assets of the Company located at Hazira. The loan is fully repaid during Financial Year 2015-16.

- 175.00

22,046.13 22,103.98

(3) Buyers Credit Capital Expenditure Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The facility converted into long term loans on maturity.

- 51.12

- 51.12 (4) Dollar Notes / Rupee Notes Rupee Notes is repayable up to 31st March, 2018. Dollar Notes is repayable

on 31st March, 2018. 230.00 226.32

(5) Payment of the Deferred Sales Tax Benefit shall be made during financial year 2016-17 (5.17%), 2017-18 (10.36%), 2018-19 (15.85%), 2019-20 (20.00%), 2020-21 (20.00%), 2021-22 (14.83%), 2022-23 (9.64%), 2023-24 (9.15%) for each year’s collection (i.e. collection from 2005-06 to 2008-09) starting from April, 2016.

33.32 33.32

(6) Long term Liabilities Advance against Export Performance Bank Guarantee: Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company. The balance EPBG is repayable in Financial Year 2015-16 (3.79%) 2016-17 (3.79%), 2017-18 (3.79%), 2018-19 (5.46%), 2019-20 (9.89%), 2020-21 (11.96%), 2021-22 (13.98%), 2022-23 (15.52%), 2023-24 (18.71%), 2024-25 (13.11%).

- 6,784.86



105




Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari-passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited. The balance EPBG is repayable in Financial Year 2015-16 (3.90%), 2016-17 (3.90%), 2017-18 (3.90%), 2018-19 (9.61%), 2019-20 (11.43%), 2020-21 (14.29%), 2021-22 (14.55%), 2022-23 (19.22%), 2023-24 (19.22%).

- 538.21

- 7,323.07

53 Short Term Borrowing (` in Crore)



(1) Short Term Loans From Banks Secured by subservient charge on all fixed assets of the company. The

Loan has become due for repayment during Financial Year 2015-16. 100.00 100.00

100.00 100.00

(2) Working Capital Loans - From Banks Working Capital Loans are secured by pari passu first charge on the

current assets of the Company, second charge on fixed assets of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Corporate Guarantee of Essar Investments Limited and Personal guarantee of Promoters upto ` 1,120 Crs.

5,446.93 2,026.02

5,446.93 2,026.02 (3) Buyers' Credit for Operational Expenditure Secured by margin deposits with the banks & secured by first charge on the

current assets, second charge on the fixed assets (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Corporate Guarantee of Essar Investments Limited and Personal guarantee of Promoters upto ` 1,120 Crs.

515.05 1,084.16

515.05 1,084.16

54 Other Current Liabilities : (` in Crore)



i. Export Performance Bank Guarantee Crystalised Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company.

6,248.37 -

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the Company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited.

582.33 -

6,830.70 -









ii. Advance against Export Performance Bank Guarantee Secured by pari passu first charge on movable fixed assets and mortgage

of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company.

975.09 -

975.09 -

55 Details of Loans given, Investments made and Guarantee given covered U/S 186 (4) of the Companies Act, 2013 during the year :

(` in Crore)

Sr. No.

Name of Entity Year Ended31st March, 2016


(a) Loan given (Inter Corporate Deposits) *Essar Steel Middle East FZE 23.00 307.84

(b) Investment made (incl. Advance towards equity)Essar Steel Offshore Limited 84.89 83.79 Essar Power MP Limited - 54.25 Odisha Slurry Pipe Line Infrastructure Limited - 31.63 Essar Power Orissa Limited - 0.97 Paradeep Steel Company Limited - 0.15

* Loan has been given for business purposes.56 The figures of the previous year has been regrouped, where necessary, to conform to current year’s classification.



107

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ESSAR STEEL INDIA LIMITED

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of ESSAR STEEL INDIA LIMITED (hereinafter referred to as the “Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as the “Group”) and its associates comprising the Consolidated Balance Sheet as at 31st March, 2016, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”).

Management’s Responsibility for the Consolidated Financial Statements

The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as the “Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group including its associates in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group and of its associates are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of the appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.


Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting polices used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in Other Matters paragraph below, is sufficient and appropriate to provide a basis for our qualified audit opinion on the consolidated financial statements.

Basis for Qualified Opinion

1. The Holding Company has recognised deferred tax asset of ` 4,781.83 Crore on unabsorbed depreciation and carried forward business losses based on future profitability projections made by the management as stated in Note 16 of the consolidated financial statements which, in our opinion, does not meet the criteria of ‘virtual certainty supported by convincing evidence’ as required under Accounting Standard (AS) 22-Accounting for taxes on Income. Had the deferred tax asset as aforesaid not been recognized, accumulated losses would have been higher and the deferred tax asset would have been lower by ` 4,781.83. Crore and loss after tax for the year would have been higher by ` 2,902.76 Crore. This matter was also qualified in our report on the financial statements for the year ended 31st March, 2015.

2. The consolidated financial statements include the unaudited consolidated financial statements/financial information of twenty two step down subsidiaries whose consolidated financial statements/financial information reflect total assets (net) of ` 3,520.99 Crore as at 31st March, 2016, total revenue of ` 404.80 Crore and net cash outflows amounting to ` 0.03 Crore for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of net profit of ` 1.41 Crore for the year ended 31st March, 2016, as considered in consolidated financial statements, in respect of an associate, whose financial statements have not



been audited. These financial statements have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and associate and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and associate, is based solely on such unaudited information provided by the Management.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the reports of other auditors on the financial statements of the subsidiaries and associates referred to below in the Other Matters paragraph, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its associates as at 31st March, 2016, and its consolidated loss and its consolidated cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the consolidated financial statements:

1. Note 51 regarding challenges faced by Trinity Parent Corporation, USA (“Trinity”), an indirect subsidiary of the Company, engaged in the extraction of steam and metallurgical coal, through its various subsidiaries, particularly after recall of bank loan on 7th December, 2015 of outstanding dues of USD 450.67 million taken by Essar Steel Offshore Limited, a subsidiary, for the purpose of investment in Trinity. For reasons explained in the Note, no provision has been made for diminution in the carrying values of assets of Trinity in the Consolidated Financial Statements.

2. Note 48 regarding Group’s current liabilities exceeding its current assets by ` 30,610.35 Crore (previous year ` 8,474.37 Crore) as at 31st March, 2016. The Company believes that for the reasons stated in the said Note, it will have adequate liquidity to meet its liabilities as and when they fall due.

3. Note No. 36 (b) (4) regarding cross subsidy surcharge amounting to ` 327.28 Crore claimed by Dakshin Gujarat Vij Company Limited for the period from June 2013 to March 2016. For reasons explained in the Note, the Company has reversed/not provided the said amount during the year under report.

Our opinion is not qualified in respect of the above matters.

Other Matters

We did not audit the financial statements of seven subsidiaries whose financial statements reflect total assets (net) of ` 1,356.90 Crore as at 31st March, 2016, total revenues of ` 1,065.74 Crore and net cash outflows amounting to ` 20.14 Crore for the year ended on that date, as considered in the consolidated financial statements. We also did not audit financial statements of six associates whose financial statements reflect Group’s share of net loss of ` 22.22 Crore. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to amounts and disclosures included in respect of these subsidiaries and associates and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and associates, is based solely on the reports of the other auditors.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of above matters with respect to our reliance on the work done and report of the other auditors.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, we report, to the extent applicable, that :

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b) In our opinion, except for the effect of the matter described in the Basis of Qualified Opinion paragraph above, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors.

c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements.

d) In our opinion, except for the effect of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.



109

e) In our opinion, the matter described in paragraph 2 under the Emphasis of Matters paragraph may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors of the Holding Company as on 31st March, 2016 taken on record by the Board of Directors of the Holding Company and the reports of the other statutory auditors of its subsidiary and associate companies incorporated in India, none of the directors of the Group companies and its associate companies incorporated in India and in respect of whom audit reports are available, is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

g) The qualifications relating to the maintenance of accounts with regard to Deferred Tax Asset and unaudited financial statements of subsidiaries/associate are as stated in the Basis for Qualified Opinion paragraph above.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure to this report.

i) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and

Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Group and its associates have disclosed the impact of pending litigations on its financial position in the consolidated financial statements vide Note 36.

(ii) The Group and its associates have made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding Company, its subsidiary and associate companies incorporated in India

.For M. M. Chaturvedi & Co.,

Chartered Accountants(Firm Reg. No. 112941W)


Membership No. 031118

Mumbai 22nd November, 2016



ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

(Referred to in paragraph 1(h) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date.)

Our reporting under clause (i) of Sub-section 3 of Section 143 of the Act on consolidated financial statements includes three subsidiary companies and five associate companies incorporated in India, to which the aforesaid provision of the Act is applicable, which have been audited by other auditors (hereinafter collectively referred to as “respective entities”) and our report in respect of these entities is based solely on the reports of the other auditors under the aforesaid provision of the Act.

In respect of one associate company incorporated in India, which has been included in the consolidated financial statements based on unaudited financial statements of such entity provided to us by the Management, whilst in our opinion, and according to the information and explanations given to us, reporting under the aforesaid provision of the Act is applicable in respect of the said entity, since this entity is unaudited, the possible effects of the same on our reporting under the aforesaid provision of the Act in the case of these consolidated financial statements has not been considered.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of the Holding Company (“the Company”) and respective entities as at 31st March, 2016 in conjunction with our audit of the consolidated Financial Statements of the Company as of and for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s and respective entities’ managements are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company and respective entities considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of their business, including adherence to company’s and respective entities’ policies, the safeguarding of their assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.


Our responsibility is to express an opinion on the Company’s and respective entities’ internal financial controls over financial reporting based on our audit and audit carried out by other auditors. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s and respective entities’ internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and



111

expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, after considering audit reports of the auditors of respective entities, the Company and respective entities,

which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company and respective entities considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.




Membership No. 031118

Mumbai, 22nd November, 2016



Consolidated Balance Sheet as at 31st March, 2016



Pankaj ChourasiaMumbai, 22nd November, 2016 Company Secretary

` in CroreNote No.



Equity and LiabilitiesShareholders’ Funds

Share Capital 5 3,153.23 3,153.23Reserves and Surplus 6 1,463.76 7,152.80

4,616.99 10,306.03Non Current Liabilities

Long Term Borrowings 7 21,159.65 26,977.56Other Long Term Liabilities 8 3.47 7,840.85Long Term Provisions 9 434.85 580.59

21,597.97 35,399.00Current Liabilities

Short Term Borrowings 10 10,052.74 5,072.09Trade Payables 11 6,504.91 6,870.20Other Current Liabilities 12 20,668.61 9,520.60Short Term Provisions 13 1,490.36 432.97

38,716.62 21,895.86TOTAL 64,931.58 67,600.89

AssetsNon Current Assets

Fixed AssetsTangible Assets (net of depreciation) 14 45,604.66 45,125.83Intangible Assets (net of amortisation) 14 17.48 24.31Capital Work-in-Progress 46 3,396.70 4,582.34

Non Current Investments 15 441.61 512.99Deferred Tax Assets (net) 16 4,866.33 2,086.40Long Term Loans and Advances 17 638.27 868.00Other Non Current Assets 18 1,860.26 979.53

56,825.31 54,179.40Current Assets

Inventories 19 2,332.19 2,709.56Trade Receivables 20 1,184.44 1,060.26Cash and Bank Balances 21 822.86 1,096.97Short Term Loans and Advances 22 3,091.24 4,511.26Other Current Assets 23 675.54 4,043.44

8,106.27 13,421.49TOTAL 64,931.58 67,600.89

Notes to Financial Statements form an integral part of the Consolidated Balance Sheet.



113

` in CroreNote No.



IncomeRevenue from Operations 24 15,649.69 15,743.46Less : Excise Duty 1,268.79 1,050.73

14,380.90 14,692.73Other Income 25 1,177.21 786.80

15,558.11 15,479.53ExpensesCost of Materials Consumed 26 9,973.09 8,348.33Purchase of Traded Goods 27 160.50 297.80Energy Cost 28 1,893.60 1,814.18Decrease in Inventories of Finished Goods, Work in Progress and Stock in Trade

29 147.26 442.97

Employee Benefits Expense 30 466.76 405.50Other Expenses : Manufacturing & Asset Maintenance 31 717.83 518.88 Administrative Expenses 32 325.10 257.15 Selling & Distribution Expenses 33 478.57 491.89

14,162.71 12,576.70Profit before Finance Costs, Exchange Variation and Derivative Losses, Depreciation /Amortisation, Exceptional/Prior Period Items and Tax

1,395.40 2,902.83

Finance Costs 34 4,750.36 4,257.29Exchange Variation and Derivative Losses (net) 35 694.79 365.68Depreciation / Amortization Expense 1,846.66 911.57Profit / (Loss) before Exceptional/Prior Period Items and Tax

(5,896.41) (2,631.71)

Exceptional Items (Expense) / Income (Refer Note 50) (2,793.04) 2,793.04Reversal of Depreciation Provision - 586.68Prior Period Income (0.73) 87.99Profit / (Loss) before Tax (8,690.18) 836.00Tax Expense/ (Benefit)Current Tax 0.13 -Excess Provision of Earlier Years (Net) - (16.87)Deferred Tax Charge / (Credit) (2,915.78) 377.78Profit / (Loss) after Tax for the year (5,774.53) 475.09Add: Share in Profit / (Loss) of Associates (Net) (20.80) (8.56)Profit / (Loss) for the year (5,795.33) 466.53

Earning/(Loss) per Share (in `) 44Basic [Nominal value of Shares ` 10 each (Previous Year ` 10 each)]

(18.66) 1.62

Diluted [Nominal value of Shares ` 10 each (Previous Year ` 10 each)]

(18.66) 1.62

Notes to Financial Statements form an integral part of the Consolidated statement of Profit and Loss.

Consolidated Statement of Pro�t and Loss for the year ended on 31st March, 2016






(` in Crore)Particulars For the Year ended


A. Cash Flow from Operating Activities Net Profit/(Loss) before taxation (8,690.18) 836.00 Adjustments for - Depreciation / Amortisation 1,846.66 911.57 Profit on Sale of Business Undertaking (265.44) (2,793.04) Loss on sale/write off of Fixed Assets (net) 0.76 1.93 Reversal of Depreciation Provision - (586.68) Prior Period Items Expense/(Income) - (87.99) Profit on Sale of Non Current investment (10.74) (419.26) Exceptional Items (Expense) / Income 2,793.04 - Finance Costs 4,750.35 4,257.29 Exchange Variation & Derivatives (Net) 644.80 245.22 Interest on Deposit with Banks and Others (196.83) (205.13) Liabilities / Provision no longer required written back (net) (628.70) (9.32) Dividend Income - Trade Long Term Investment - (0.34)

8,933.90 1,314.25 Operating Profit before Movements in Operating Assets and

Liabilities243.72 2,150.25

Movements in Operating Assets and Liabilities: Decrease in Other Long Term Liabilities - (2,531.14) Increase in Trade Payables 737.55 141.67 Increase/ (Decrease) in Other Current Liabilities (120.24) 3,318.15 (Decrease) in Long Term Provisions (7.90) (4.12) Increase /(Decrease) in Short Term Provisions (1.74) (1.81) Decrease in Inventories 377.37 586.47 (Increase) in Trade Receivables (104.80) (51.66) Decrease in Long Term Loans and Advances - (12.99) (Increase) / Decrease in Short Term Loans and Advances 390.46 (236.96) (Increase) / Decrease in other Non Current Assets 3.12 (42.34) Decrease in Other Current Assets 40.86 (3.00) Foreign Currency Translation reserves 3.86 (4.30)

1,318.54 1,157.97 Cash Generated from Operations 1,562.26 3,308.22 Direct Taxes (Paid)/Refunded (net) (8.90) 1.96 Net Cash Generated from Operating Activities 1,553.36 3,310.18B. Cash Flow from Investing Activities Purchase of Fixed Assets, including intangible assets, Capital

Work in Progress, Capital Advances and Trial Run profits/loss(172.08) (1,819.09)

Proceeds from sale of Fixed Assets 2,324.46 113.21 Proceeds from Sale of Non Current Investments in Associates 33.88 286.00 Proceeds from redemption of Non Current Investments 1.94 0.78 Purchase of Non Current Investments (including Share

Application Money) : In Subsidiaries 0.05 (31.64) In Associates - (43.88) Others (1,389.87) (0.30)

Consolidated Cash Flow Statement for the year ended 31st March, 2016



115

(` in Crore)Particulars For the Year ended


Refund of Advance to Equity 6.13 - Dividend Income from Long Term Investments - 0.34 Interest Income 169.89 160.26 Inter Corporate Deposit given (Net) 46.79 (53.85) Refund of Deposit Placed with Banks 81.52 53.30 Net Cash used in Investing Activities 1,102.71 (1,334.87)C. Cash Flow from Financing Activities Proceeds from issuance of Share Capital - 1,283.71 Proceeds from Borrowings (net) 13,574.65 18,829.98 Repayment of Borrowings (4,011.65) (23,110.77) Advance against Export Performance Bank Guarantee (6,948.31) 5,995.80 Finance Cost Paid (3,969.34) (4,743.66) Exchange Variation & Derivatives (net) (1,474.33) (198.95) Repayment of Finance Lease liabilities (0.63) (1.20) Net Cash Generated from Financing Activities (2,829.61) (1,945.09) Net Increase in Cash and Cash Equivalents (173.54) 30.22

Cash and Cash Equivalents at the beginning of the year (see Note 3 below)

282.56 252.34

Cash and Cash Equivalents at the end of the year (see Note 3 below)

109.02

282.56

Net Increase in Cash and Cash Equivalents (173.54) 30.22

Notes:1 The above Cash Flow Statement has been prepared under the ‘Indirect method’ as set out in the Accounting

Standard–3 on Cash Flow Statements, issued by the Institute of Chartered Accountants of India.2 Previous year’s figures have been regrouped where necessary to conform to this year’s classification.3 Cash and Cash Equivalents included in the cash flow statement comprise the following balance sheet amounts :

(` in Crore)



Cash and Cash Equivalents (Refer Note 21 (A)) 108.42 282.01

Less: Exchange Variation Gain (0.60) (0.55)

Cash and Cash Equivalents at the end of the year 109.02 282.56

Consolidated Cash Flow Statement for the year ended 31st March, 2016






Notes to Consolidated Financial Statements for the year ended 31st March, 20161. Nature of Operations The Company owns and operates an integrated steel manufacturing facility comprising the unit for manufacturing

of flat rolled products at Hazira – District Surat, a Precoated facility at Pune, Beneficiation Plants at Dabuna and Kirandul and Pelletisation Plants at Paradeep and Vizag. The Company is also in the process of setting up another Pelletisation Plant at Paradeep. The Company also operates Processing and Distribution centers, Hypermarts and Express Marts at various locations across India. New Trinity Holding LLC (a downstream subsidiary of the Company) and its subsidiaries are engaged in the extraction and preparation of thermal and metallurgical coal from properties which are either owned or leased in southern West Virginia and eastern Kentucky in the United States of America. Essar Steel Middle East FZE (A subsidiary of the Company) is engaged in activity of trading and processing of steel and construction material in Dubai, UAE.

2. Basis of Preparation The Financial Statements have been prepared to comply in all material aspects with the Accounting Standards notified

under Section 133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other generally accepted accounting practices prevalent in India. The Financial Statements have been prepared under the historical cost convention, except as stated elsewhere and on accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

The consolidated Financial Statements present the consolidated accounts of Essar Steel India Limited and its subsidiaries (collectively referred to as the “Group”). The consolidated financial statements have been prepared on the following basis:

- The Financial statements of the subsidiaries have been consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income & expenses after fully eliminating intra-group balances, intra-group transactions and resultant unrealised profits/losses in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India.

- Investments of the group in Associates are accounted as per the Equity Method under Accounting Standard 23 issued by the Institute of Chartered Accountants of India.

- The consolidated financial statements have been prepared using uniform accounting policies for like transactions and are presented, to the extent possible, in the same manner as the Company’s standalone financial statements except in case of the one of the Associates, Bhander Power Limited, wherein depreciation on Plant and Machinery is provided by applying written down value method (based on useful life assessed by an independent engineer) and in case of another associate, Essar Bulk Terminal Limited, wherein depreciation on assets other than plant and machinery is provided by applying written down value method (based on useful life as per Schedule II to the Companies Act, 2013) which, in both cases, is in variation to the method adopted by the Company as mentioned in Note 2.1 (e) below.

- The foreign operations of the company are classified between integral and non-integral based on the way in which they are financed and operated in relation to Company. Consequently, translation of the financial statement of such non integral foreign operation is effected as under :-

(a) Income and expenses are translated at the average exchange rate prevailing during the year. (b) All assets and liabilities, both monetary and non-monetary, are translated at the exchange rate prevalent

at the date of Balance sheet. (c) The resulting net exchange differences are recognized as foreign currency translation reserve as part of

Reserve and Surplus. In case of subsidiaries, which are integral in nature of the company’s operation, the translation of financials

statement is effected as under : (a) Income and expenses are translated at the average exchange rates prevailing during the year. (b) Monetary items at the end are restated at the year-end rates. Non- monetary foreign currency items are

carried at cost. (c) The resulting net exchange differences are recognized in the statement of profit and loss .2.1 Statement of Significant Accounting Policies (a) Use of Estimates The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles in India

requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the reported amounts of income and expenses during the year. The Management believes that these estimates are prudent and



117

Notes to Consolidated Financial Statements for the year ended 31st March, 2016reasonable and are based upon the Management’s best knowledge of current events and actions. Actual results could differ from these estimates and differences between actual results and estimates are recognised in the periods in which the results are known or materialised.

(b) Tangible and Intangible Assets Tangible and intangible assets are stated at cost or at revalued amounts, less accumulated depreciation,

amortisation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use. Fair market value is determined by an Independent Chartered Engineer & Valuer.

In respect of accounting periods commencing on or after 7th December, 2006, exchange differences arising on reporting of the long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in the previous Financial Statements are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable fixed asset.

(c) Capital Work-In-Progress All expenditure, including interest cost during the project construction period, are accumulated and presented

as Capital Work-In-Progress until the assets are ready for intended use. Assets under construction are not depreciated. Income earned from investments of surplus borrowed funds during the construction/trial run period is reduced from Capital Work-In-Progress. Expenditure/Income arising during trial run is added to/reduced from Capital Work-In-Progress. Interest cost is not added to capital work in progress in case of project which are completed individually but not as part of an intended integrated facility.

(d) Expenditure on Substantial Expansion All direct capital expenditure on expansion are capitalised. As regards indirect expenditures on expansion, only

that portion of expenditure is capitalised that is attributable to the expansion. Both direct and indirect expenditure are capitalised only if they increase the value of the asset beyond its original standard of performance.

(e) Depreciation and Amortisation (i) Tangible Assets Tangible assets are depreciated as per the useful life specified in Schedule II to the Companies Act,

2013 except Plant & Machinery (in respect of assets located in India) which is as per useful life assessed by an independent Chartered Engineer & Valuer on straight-line method. Depreciation on additions to / deletions from fixed assets is provided on pro-rata basis from the date of such addition and up to the date of deletion as the case may be. Depreciation on additions to assets due to exchange variation is provided over the remaining useful life of the assets. Depreciation is provided on individual project only after commencement of commercial production from intended integrated facility, to which such project belongs. Depreciation in respect of subsidiary companies are provided on the basis of estimated useful life on straight line method. Depreciation of Leased Mining Property/ Rights is computed using tonnes of production method over the estimated proven and probable reserve tonnes. Amortization of Mine development Cost is computed using the units of production method over the estimated proven and probable reserve tonnes.

The difference in useful lives of Plant and Machinery (in respect of assets located in India) as per Companies Act, 2013 and as assesed by Independent Chartered Engineer & Valuer (who has assessed useful life after taking into account review of physical status of asset, usage of asset in terms of capacity or physical output, physical wear and tear which depends on operational factors such as the number of shifts for which the asset is to be used and the repair and maintenance program and the care and maintenance of the asset, while idle, technical or commercial or commercial obsolescence arising from changes or improvement in production, or from a change in the market demand for the product or service output of the asset) in the case of the Company is highlighted below:

Plant & Machinery Useful life as per Companies Act, 2013

(Years)

Average useful life as per Technical Evaluation

(Years)Sinter Plant,Rolling Mill and Blast Furnace 20 30

Power Generation Plant 40 30

Others 25 30



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 (ii) Intangible Assets

Costs relating to softwares, which are acquired, are capitalised and amortised on straight-line method over estimated useful life of 5 to 6 years.

(f) Impairment of Assets

(i) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(ii) If impairment loss is provided, depreciation is calculated on the revised carrying amount of the assets over its remaining useful life.

(g) Revenue Recognition

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of Goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales is disclosed net of quality claims and rebates. Excise Duty deducted from the gross turnover is the amount of excise duty that is included in the amount of turnover (gross) and not the entire amount of liability arising during the year.

Export Benefits

Export benefits are accounted for in the year of exports based on eligibility and where there is certainty of realising the same.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends

Revenue is recognised when the shareholders’ right to receive payment is established by the balance sheet date.

(h) Taxes on Income

Tax expense comprises of current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and Deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relates to the taxes on income levied by same governing taxation laws. Deferred tax assets other than those arising from carry forward losses and unabsorbed depreciation, are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred Tax Assets arising from unabsorbed depreciation and/or carried forward tax losses, are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises, unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax assets can be realised.



119

Notes to Consolidated Financial Statements for the year ended 31st March, 2016 (i) Inventories

Raw Materials, Production Consumables, Stores & Spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold above cost. Cost is determined on a Weighted Average basis. Work-in-progress and finished goods is valued at lower of cost and net realisable value. Cost includes direct material, labour and a proportion of manufacturing and administrative overheads based on normal capacity. Value of finished goods also includes excise duty. Net realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and cost to make the sale.

(j) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non current investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Non current investments are carried at cost. However, provision for diminution in value, if any, is made to recognise a decline other than temporary in the value of such investments.

(k) Foreign Currency Transactions

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Measurement of foreign currency monetary items at Balance Sheet Date

Foreign currency monetary items are reported using the closing exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(iii) Treatment of Exchange Differences

Exchange differences, in respect of accounting periods commencing on or after 7th December, 2006, arising on reporting of long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous Financial Statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, and in other cases, are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the Financial Statements and are amortised over the balance period of such long-term asset/liability.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous Financial Statements, are recognised as income or as expenses in the statement of profit and loss in the year in which they arise.

(iv) Forward Exchange Contracts not intended for Trading or Speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

(l) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity

shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(m) Provisions, Contingent Liabilities and Contingent Assets A provision is recognised when there is a present obligation in respect of which a reliable estimate can be made

as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities are not recognised but disclosed in the notes to the Financial Statements. Contingent assets are neither recognised nor disclosed.

(n) Cash and Cash Equivalents Cash and cash equivalents in the Balance Sheet comprise cash in hand and at bank in current accounts.

Margin deposits and term deposits, which are not pledged, with an original maturity of three months or less are considered as cash equivalent.

(o) Derivative Instruments The Company uses principal only swap (POS) contracts to hedge risks associated with foreign currency

fluctuations relating to highly probable forecasted transactions. The Company designates certain POS contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard 30 – Financial Instruments: Recognition and Measurement. These POS contracts are stated at fair value at each reporting date. Changes in the fair value of these POS contracts that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account under Reserves and Surplus (net of applicable deferred income taxes) and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Amounts accumulated in Hedging Reserve Account are reclassified to Statement of Profit and Loss in the same periods during which the forecasted transaction affects Statement of Profit and Loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in Hedging Reserve Account is retained there until the forecasted transactions occur. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognised in Hedging Reserve Account is immediately transferred to the Statement of Profit and Loss.

Mark to market losses on all other derivative contracts, other than forward contracts accounted under Accounting Standard 11 “Effects of changes in foreign exchange rates” as per (l) (iv) above, outstanding at the balance sheet date are recognised in the Statement of Profit and Loss based on the principle of prudence as provided in AS1- “Disclosure of accounting policies”.

(p) Employee Benefits (i) Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions

are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

(ii) Gratuity liability are defined benefit obligations and are provided for on the basis of an independent actuarial valuation on projected unit credit method made at the end of each financial year.

(iii) Provision for compensated absences and their classifications between current and non current liabilities are based on independent actuarial valuation. The actuarial valuation is done as per projected unit credit method.

(iv) Actuarial gains/losses are immediately taken to Statement of Profit and Loss. (q) Central Value Added Tax (CENVAT) CENVAT claimed on capital goods is reduced from the cost of plant and machinery/capital work-in-progress.

CENVAT claimed on purchases of raw material and other materials is reduced from the cost of such materials. (r) Borrowing Costs Borrowing cost in ordinary course of business is recognised as an expense in the period in which these are

incurred. Borrowing costs that are attributable to the acquisition/ construction of qualifying assets are capitalised as part of cost of such asset up to the date the assets are ready for their intended use. However borrowing cost is not capitalised for projects which are completed individually but not as part of an intended integrated facility.

(s) Leases (i) Where the Company is the Lessee Lease rentals in respect of finance lease arrangements entered up to 31st March, 2001 are segregated

into cost of the asset and interest components by applying an implicit internal rate of return. The cost



121

Notes to Consolidated Financial Statements for the year ended 31st March, 2016component is amortised over the useful life of the asset and the interest component is recognised in the Statement of Profit and Loss. Lease payments in excess of the charge for the year are treated as prepaid lease rentals wherever agreement is existing and in other cases it has been added to the carrying cost of the fixed assets.

Finance leases entered on or after 1st April, 2001, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

(ii) Where the Company is the Lessor Assets subject to operating lease are included in fixed assets. Lease income is recognised in the

Statement of Profit and Loss on a straight line basis over the lease term. Costs including depreciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.

(t) Mining, Exploration and Development Expenditure Expenditure in respect of mineral, exploration and evaluation is charged to the Statement of profit and loss as

incurred except in following cases where it is capitalised: • it is expected that the expenditure will be recouped by future exploitation or sale; or • substantial exploration and evaluation activities have identified a mineral resource but these activities

have not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves

(u) Employee Stock Compensation Cost Measurement and disclosure of the employee share-based payment plans is done in accordance with the

Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. The Company measures compensation cost relating to employee stock appreciation rights as Cash Settled

Scheme using the fair value method. Compensation expense is amortised over the vesting period of the option on a straight line basis. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured if there are material changes in assumption, with any changes in fair value recognised in Statement of Profit and Loss for the year.

(v) Measurement of EBIDTA The company has elected to present earnings before finance costs, exchange variation and derivative losses,

depreciation and amortisation expenses and taxes (EBIDTA) as a separate line item on the face of the Statement of Profit and Loss. The company measures EBIDTA on the basis of Profit /(Loss) from the continuous operations and does not include finance costs, exchange variation and derivative losses, depreciation and amortisation expenses, exceptional and extra ordinary items and taxes.

(w) Assets Retirement Obligation Assets retirement Obligation primarily consists of estimates of future costs necessary to reclaim surface land in

accordance with federal and state reclamation regulations. Such requirement are described in mining permits obtained from the regulatory agencies prior to initiating mining or mining related activity. Management utilizes in house engineers and third party engineering consultants to develop detailed engineering calculations of the amount and expected timing of the future cash requirements required to complete reclamation of its mining areas. Such cost estimates include provisions for structure removal, pond removal, earthwork, hydrology, water monitoring and other related costs. Spending estimate which include the assumption that an independent third party will perform the work required are escalated to consider the impact of inflation in future periods.

Upon initial recognition, the company records an assets equal to estimated liability. The assets is included in Fixed Assets and depreciated using the units of production methods over its estimated life. Reclamation performed as part of the ongoing mining process is expensed in the period incurred.



Notes to Consolidated Financial Statements for the year ended 31st March, 20163. List of Direct and Indirect Subsidiaries considered for consolidation is as under :

Sr. No.

Name of the Company Country of Incorporation

Proportion of Ownership Interest (%)

As at31st March 2016


A. Direct Subsidiaries

1 Essar Steel Middle East FZE Dubai 100 100

2 Essar Steel Trading FZE Dubai 100 100

3 Essar Steel Offshore Limited Mauritius 100 100

4 Essar Steel Logistics Limited India 100 -

5 Paradeep Steel Company Limited India 100 100

B. Step Down Subsidiaries

6 Essar Minerals Limited Mauritius 100 100

7 Essar Mineral Cooperatief U.A. Netherlands 100 100

8 Essar Minerals Canada Limited Canada 100 100

9 New Trinity Holdings LLC USA 100 100

10 New Trinity Coal Inc. USA 100 100

11 New Resources Inc. USA 100 100

12 Essar Minerals INC USA 100 100

13 Trinity Parent Corporation USA 100 100

14 Trinity Coal Corporation USA 100 100

15 Trinity Coal Partners LLC USA 100 100

16 Bear Fork Resources LLC USA 100 100

17 Deep Water Resources LLC USA 100 100

18 Levisa Fork Resources LLC USA 100 100

19 North Springs Resources LLC USA 100 100

20 Little Elk Mining Company LLC USA 100 100

21 Banner Coal Terminal LLC USA 100 100

22 Hughes Creek Terminal LLC USA 100 100

23 Trinity Coal Marketing LLC USA 100 100

24 Frasure Creek Mining LLC USA 100 100

25 Falcon Resources LLC USA 100 100

26 Prater Branch Resources LLC USA 100 100

27 Trinity RMG Holdings LLC USA 100 100

28 RMG INC USA 100 100

29 Hazira Coke Limited India 100 100

Note- Odisha Slurry Pipe Line Limited (OSPIL), a company which has ceased to be a subsidiary with effect from 21.05.2015, has been excluded from consolidation during current and previous year due to the reason that control as defined under Accounting Standard 21 [issued by the Institute of Chartered Accountants of India.] was intended to be temporary.



123

Notes to Consolidated Financial Statements for the year ended 31st March, 20164. List of Associates considered for consolidation is as under :

Sr.No.

Name of the Company Proportion of Ownership in Equity Share Capital(%)



1 Bhander Power Limited 26.00 26.00

2 Essar Bulk Terminal Limited * 26.00 26.00

3 Essar Power Hazira Limited # 26.00 26.00

4 Essar Power Orissa Limited @ 26.00 26.00

5 Essar Steel Chhattisgarh Limited 47.38 47.38

6 Essar Power MP Limited $ 26.00 26.00

7 Essar Steel Processing FZCO 40.00 40.00

* The effective holding of the Group in this entity for net equity accounting is 0.50% which is calculated after considering Cumulative Convertible Participating Preference shares (CCPPS) issued by this entity and held outside the group.

# The effective holding of the Group in this entity for net equity accounting is 0.47% which is calculated after considering Cumulative Convertible Participating Preference shares (CCPPS) issued by this entity and held outside the group.

@ The effective holding of the Group in this entity for net equity accounting is 0.70% which is calculated after considering Cumulative Convertible Participating Preference shares (CCPPS) issued by this entity and held outside the group.

$ The effective holding of the Group in this entity for net equity accounting is 3.49% which is calculated after considering Cumulative Convertible Participating Preference shares (CCPPS) issued by this entity and held outside the group.

5 Share Capital ` in Crore



Authorised

7,175,000,000 (Previous Year 7,175,000,000) Equity Shares of ` 10 each 7,175.00 7,175.00


100.00

100.00

7,275.00 7,275.00

Issued, subscribed and fully paid-up

3,108,957,660 (Previous Year 3,108,957,660) Equity Shares of ` 10 each 3,108.96 3,108.96

Add: 4,520,703 (Previous Year 4,520,703) Equity Shares Forfeited 0.67 0.67

3,109.63 3,109.63


43.60

43.60

3,153.23 3,153.23



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 a Reconciliation of number of shares and amount outstanding at the beginning and at the end of the

reporting period:31st March, 2016 31st March, 2015

Number ` in Crore Number ` in CroreEquity SharesAt the beginning of the year 3,108,957,660 3,108.96 2,824,951,352 2,824.95Issued during the year - - 284,006,308 284.01Outstanding at the end of the year 3,108,957,660 3,108.96 3,108,957,660 3,108.96

Preference SharesAt the beginning of the year 43,598,951 43.60 43,598,951 43.60Outstanding at the end of the year 43,598,951 43.60 43,598,951 43.60

b Rights, preferences and restrictions attached to shares Equity Shares The Company has one class of Equity Shares having face value of ̀ 10 per share. Every shareholder is entitled

to one vote for every one share held. In the event of liquidation, the equity share holders shall be entitled to receive remaining assets of the Company after distribution of all dues in proportion to their shareholdings.

Cumulative Redeemable Preference Shares (CRPS) The Company has issued 43,598,951 10% CRPS of ` 10 each. Each CRPS is redeemable at par in 12 equal

monthly installments commencing from 1st October, 2017 to 1st September, 2018. The Company shall have option to redeem the CRPS at par in one or more tranches from any or all of the existing holders, anytime after the date of allotment together with arrears of dividend if any and the Board shall give one month’s notice for any such redemption to the registered holders of the CRPS.

Arrears of fixed dividend on Cumulative Redeemable Preference Shares as at 31st March 2016 is ` 26.24 Crore (Previous Year ` 20.40 Crore).

c Shares held by Holding Company Out of above equity shares, 2,155,213,248 equity shares (Previous year 2,153,587,448) are held by Essar

Steel Asia Holdings Limited, Mauritius the holding Company. d Details of shareholders holding more than 5% shares in the Company

As at 31st March, 2016 As at 31st March, 2015Number % of Holding Number % of Holding

Equity SharesEssar Steel Asia Holdings Limited1 2,155,213,248 69.32 2,153,587,448 69.27Imperial Consultants & Securities2 672,232,720 21.62 - -Imperial Consultants & Securities Pvt. Limited

- - 629,656,758 20.25

Shares under Trust (Venkatraman Govind Raghavan)

191,517,500 6.16 191,517,500 6.16

3,018,963,468 97.10 2,974,761,706 95.68

1. Number of shares includes 492,485,501 shares acquired from Essar Steel Limited, Mauritius for which transfer of shares in demat account is pending and in respect of such shares Essar Steel Asia Holdings Limited (ESAHL) has made necessary declaration under Section 89 of Companies Act, 2013 regarding beneficial ownership of such shares.

2. 672,232,720 shares were held by Imperial Consultants & Securities Private Limited have now been transferred to Imperial Consultants & Securities. The transfer of shares in demat account is pending and requisite disclosure of beneficial holding in respect of such shares held by Imperial Consultants & Securities has been made Under Section 89 of Companies Act, 2013.

Preference SharesAs at 31st March, 2016 As at 31st March, 2015

Number % of Holding Number % of HoldingIFCI Limited 22,116,599 50.73 22,116,599 50.73Imperial Consultants & Securities Pvt Limited

16,940,180 38.85 16,940,180 38.85

39,056,779 89.58 39,056,779 89.58



125

Notes to Consolidated Financial Statements for the year ended 31st March, 2016 e Aggregate number of Bonus Shares issued, shares issued for consideration other than cash and

shares bought back during the period of five years :As at


31st March, 2015Number Number

Equity shares allotted as fully paid up pursuant to scheme of Amalgamation

- 1,073,249,784

6 Reserves and Surplus ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Capital Reserve 12.73 12.73Capital Redemption Reserve 202.92 202.92Securities Premium Account

Balance as per last Balance Sheet 7,814.61 6,814.91Add: Premium on shares issued during the year - 999.70Closing Balance 7,814.61 7,814.61

Revaluation ReserveOpening Balance 6,437.81 3,080.06Addition during the year - 3,519.29Additional depreciation transferred to retained earnings 167.82 161.54Closing Balance 6,269.99 6,437.81

Share in Reserve of Associates/SubsidiariesSecurities Premium 1.10 1.10

Capital Reserve on Consolidation - -Hedging Reserve (Net of deferred tax)

Balance as per last Balance Sheet (361.02) (590.86)Add : Effect of foreign exchange rate variations on Hedging Instruments outstanding at the end of the year

(0.53) (11.06)

Less : Transferred to Statement of Profit and Loss 257.23 240.90Closing Balance (104.32) (361.02)

General Reserve 77.51 77.51Foreign Currency Translation Reserve (910.84) (713.05)Foreign Currency Monetary Item Translation Difference Account

Balance as per last Balance Sheet (74.85) (57.21)Add:Effect of foreign exchange rate variations during the year

(14.48) (29.41)

Less:Transferred to Statement of Profit and Loss during the year

61.86 11.77

Closing Balance (27.47) (74.85)Surplus/ (Deficit) in Statement of Profit and Loss

Balance as per last Balance Sheet (6,244.96) (6,838.43)Add : Net Profit/ (Loss) for the Year (5,795.33) 466.53Add : Written down value of Fixed Assets (Net of deferred tax)*

- (34.60)

Add: Transfer from Revaluation Reserve 167.82 161.54Closing Balance (11,872.47) (6,244.96)

1,463.76 7,152.80

* Assets whose useful life has expired as on 1st April, 2014 has been transferred to opening retained earnings as per Companies Act 2013.



Notes to Consolidated Financial Statements for the year ended 31st March, 20167 Long Term Borrowings (Refer note 52) ` in Crore


Secured3,120 (Previous Year 3,120) Non Convertible Debentures of ` 1,000,000 each

262.50 312.00

Term Loans

From Banks 18,464.73 22,168.82

From Others 1,398.94 1,470.96

Buyers Credit for Capital Expenditure - 51.12

20,126.17 24,002.90

UnsecuredDollar / Rupee Notes

From Banks 213.26 208.65


Sales Tax Deferral Loan 33.32 33.32

Inter Corporate Deposits

From Related Parties 773.22 2,421.41


1,033.48 2,974.66

21,159.65 26,977.56

8 Long Term Liabilities ` in Crore


Advance against Sale of Business Undertaking - 750.00

Advances from Customers Secured against Export Performance Bank Guarantee (Refer note 52)

- 7,063.93

Interest Accrued 3.47 26.92

3.47 7,840.85

9 Long Term Provisions ` in Crore


Provision for Employee Benefits

Gratuity (Refer note 42) 24.12 24.40

Compensated Absences 13.04 20.65

Provision on Derivative Contracts 63.13 219.86

Assets Retirement Obligation 334.56 315.68

434.85 580.59



127

Notes to Consolidated Financial Statements for the year ended 31st March, 201610 Short-Term Borrowings ` in Crore

As at 31st March, 2016 As at 31st March, 2015Secured (Refer note 53)Short Term Loans

from Banks 100.00 100.00from Others 3.70 100.00

Working Capital Loans - From Banks 5,446.93 2,026.02Buyers’ Credit for Operational Expenditure 515.05 1,084.16

6,065.68 3,310.18UnsecuredInter corporate Deposits

from Related Parties 3,952.06 1,664.15from Others 35.00 97.76

10,052.74 5,072.09

11 Trade Payables ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Trade Payables for Goods and Expenses 4,425.28 3,700.25Acceptance for Goods and Expenses 2,079.63 3,169.95

6,504.91 6,870.20

12 Other Current Liabilities ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Current Maturities of Long-Term debt (Refer Note 52) 6,071.29 2,237.46Current Maturity of Purchase Price Note - 640.93Current Maturities of Finance Lease Obligations - 0.63Creditors for Capital Expenditures 251.24 263.24Acceptance for Capital Expenditures 14.07 36.14Interest Accrued and due on Borrowings 1,406.76 1,375.11Interest Accrued but not due on Borrowings 808.73 290.93Interest Accrued on Other Liabilities 102.47 92.75Advances from Customers 3,649.98 4,008.83Advance against Export Performance Bank Guarantee (Refer Note 54)

975.09 259.14

Security Deposits Received 5.57 5.42Export Performance Bank Guarantees crystallised (Refer Note 54)

6,830.70 -

Statutory Liabilities 270.80 151.87Credit Balance of Current Account 8.05 26.26Other Liabilities 273.86 131.89

20,668.61 9,520.60

13 Short Term Provisions ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Provision for Compensated absences 3.54 5.28Provision for Indirect Taxes (Refer Note 49) 19.73 19.73Provision against unwinding of Sale of Business undertaking (Refer Note 50)

1,249.76 -

Provision on Derivatives Contracts 156.49 350.55Provision for Assets Retirement Obligation 60.84 57.41

1,490.36 432.97


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129

15 Non-Current Investments (valued at cost unless stated otherwise) ` in Crore


(a) Trade Investments - Unquoted(a.1) Equity Instruments

Investment in SubsidiariesNil (Previous Year 2,595,000) fully paid Equity Shares of ̀ 10 of Odisha Slurry Pipe Line Infrastructure Limited

-

25.50

- 25.50

Investment in Associates96,905,000 (Previous Year 96,905,000) fully paid Equity Shares of ` 10 each of Bhander Power Limited1

104.77 104.77

Add: Share of Accumulated Reserves of Associates 148.85 148.48

Add: Share of Profits/(Loss) from Associates for the current year

(23.08) 0.37

230.54 253.62

5,781,944 (Previous Year 5,781,944 ) fully paid Equity Share of ̀ 10 each of Essar Steel Chattishgarh Limited

5.78 5.78

Add: Share of Accumulated Reserves of Associates 0.11 (0.08)


(0.05) 0.19

5.84 5.89

68,900,000 (Previous Year 68,900,000) fully paid Equity Shares of ` 10 each of Essar Power MP Limited

68.90 68.90

Add: Share of Accumulated Reserves of Associates (6.72) -


1.41 (6.72)

63.59 62.18

2 (Previous Year 2) fully paid Equity Shares of AED 0.2 million (Previous Year AED 0.2 million) of Essar Steel Processing FZCO Dubai

0.25 0.25

Add: Share of Accumulated Reserves of Associates (0.25) (0.25)

- -

13,00,000 (Previous Year 13,00,000) fully Paid Equity Shares of ` 10 each of Essar Bulk Terminal Limited

1.30 1.30

Add: Share of Accumulated Reserves of Associates 5.35 7.72


0.91 (2.37)

7.56 6.65

Notes to Consolidated Financial Statements for the year ended 31st March, 2016





2,600,000 (Previous year 2,600,000) fully paid Equity shares of ` 10 each of Essar Power Hazira Limited

2.60 2.60


2.59 2.59

2,600,000 (Previous year 2,600,000) fully paid Equity shares of ` 10 each of Essar Power Orissa Limited

2.60 2.60



- (0.02)

2.54 2.54

Total Investment in Associates 312.66 333.47

Others2,000 (Previous Year 2,000) fully paid Equity Shares of ` 10 each of Essar Bulk Terminal Paradip Limited (*** ` 20,000)

*** ***

250,000 (Previous Year 250,000) fully paid Equity Shares of ` 10 each of Frontline Roll Forms Private Limited

0.25 0.25

95,000 (Previous Year 95,000) fully paid Equity Shares of ̀ 10 each of Essar Steel Jharkhand Limited

0.10 0.10

20 (Previous Year 20) fully paid Equity Shares of ` 10 each of Essar Commvision Limited (# ` 200 )

# #

0.35 0.35

(a.2) Convertible Debentures (Others)1,065,585 (Previous Year 1,065,585) fully paid Compulsory Convertible Cumulative Debenture of ` 1000 each of AMW AutoComponent Limited

106.56 106.56

(b) Trade investment(b.1) Equity Instruments (Others) - Quoted

1,273,611 (Previous Year 1,273,611) fully paid Equity Shares of ` 10 each of Essar Shipping Limited1

11.57 11.57

(b.2) Equity Instruments - (Others) -UnquotedNIL (Previous Year 2,547,223) fully paid Equity Shares of ` 10 each of Essar Ports Limited1

- 23.14

(c) Other than Trade investment - Unquoted(c.1) Non Convertible Debentures (Others)

1,226,300 (Previous Year 1,226,300) fully paid 12.5 % Secured Redeemable Non Convertible Debentures of ` 82.95 each (Previous Year ` 98.70 each) of Essar Oil Limited

10.17 12.10

` in Crore



131


As at 31st March, 2016 As at 31st March, 2015(d) Other than Trade investment - Quoted(d.1) Investments in Mutual Fund

190,931 (Previous Year 190,931) fully paid Units of Unit Linked Insurance Policy Scheme of Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited

0.30

0.30

441.61 512.99Aggregate amount of Quoted Investments [(Aggregate Market Value ` 3.47 Crore (Previous Year ` 36.63 Crore)]

11.87 35.01

Aggregate amount of Unquoted Investments 429.74 477.98441.61 512.99

1 Investment in 96,905,000 shares of Bhander Power Limited and 1,273,611 shares of Essar Shipping Limited have been pledged with Banks as security against loans taken.

2,547,223 equity shares of Essar Ports Limited (already pledged with banks) have been sold to Imperial Consultants & Securities for which transfer of shares in demat account is pending and in respect of such shares Imperial Consultants & Securities has made necessary declaration under Section 89 of the Companies Act, 2013 regarding beneficial ownership of such shares

16 Deferred Tax Assets (Net) ` in Crore

As at 31st March, 2016 As at 31st March, 2015Deferred Tax Assets on Unabsorbed depreciation and carry forward losses

10,211.31 7,212.29

Less : Deferred Tax Liabilities on Fixed Assets (excess of net book value over written down value as per the provisions of the Income Tax Act, 1961)

5,429.48 5,333.22

4,781.83 1,879.07Other Deferred Tax Assets/ (Liabilities):

Mark to Market Valuation of Hedging Instruments 55.21 191.06Provision for Doubtful Debts 2.50 2.48Provision for Doubtful Advances 2.15 2.18Deferred Power Charges 4.13 8.26Other Timing Differences (disallowances under section 43B of the Income Tax Act, 1961)

20.51 3.35

84.50 207.334,866.33 2,086.40

During the last 4 years, the Company had faced various extraneous challenges such as disruption of committed natural gas supplies, delays in obtaining regulatory approvals for projects, disruption of Vizag Slurry Pipeline by rebel elements etc. resulting in (i) delay in complete commissioning of the plant; (ii) disruption in supply of raw materials and (iii) sub-optimal production below the break-even point. The situation was compounded by world-wide glut in steel and dumping in Indian market predominantly by Chinese suppliers at predatory prices.

The Company has overcome/mitigated these extraneous challenges and is now scaling up its operations. During the last few months, the Company has made all round efforts in scaling up its operations like production, sales and cost reduction and the same have resulted in its operational turn-around with improvement in capacity utilisation and EBITDA margins. The Government of India also took several measures such as imposition of higher import duty, safeguard duty and minimum import price etc.

In order to address the transient liquidity challenge and further to ensure long term viability, the Company is in active discussion with its lenders for imposing the scheme of restructuring as per the RBI guidelines.

In view of the above, the Company believes that sufficient future taxable income will be available against which deferred tax asset of ` 4,781.83 Crore recognised as on 31st March, 2016 on unabsorbed depreciation and carried forward business losses, can be realised.

` in Crore



Notes to Consolidated Financial Statements for the year ended 31st March, 201617 Long Term Loans and Advances (Unsecured and considered good unless otherwise stated) ` in Crore

As at 31st March, 2016 As at 31st March, 2015Capital Advances 458.37 461.96Prepaid Expenses 179.90 294.93Inter Corporate Deposits (ICD) - 111.11

638.27 868.00

18 Other Non Current Assets ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Interest Accrued on Investments 0.15 34.63Shares under irrevocable trust* 766.07 766.07Long Term Security Deposit 164.56 167.68Long Term Deposits with Banks - remaining maturity > 12 months (Refer note 21)

40.57 4.92

Advance Towards Equity to Related Parties 888.91 6.231,860.26 979.53

* Represents 191,517,500 equity shares allotted to a Trust created by the Company, against the Company’s investment in the erstwhile companies namely Essar Steel (Hazira) Limited and Essar Steel Orissa Limited, in pursuant to the scheme of amalgamation. The Company is the sole beneficiary of this trust. All of the 191,517,500 equity shares (Previous Year 191,517,500 equity shares) have been pledged against facility availed by Imperial Consultants & Securities Private Limited.

19 Inventories ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Raw Materials and Components 249.99 225.55Goods-in Transit 197.73 350.70Stores and Spares 348.80 391.06Goods-in Transit 7.50 8.74Production Consumables 68.33 129.81Goods-in Transit 29.89 34.79Fuel 13.49 8.31Work-in-Progress 967.42 1,275.55Finished Goods 444.93 285.05Traded Goods 4.11 -

2,332.19 2,709.56

20 Trade Receivables ` in CroreAs at 31st March, 2016 As at 31st March, 2015

Debts outstanding for a period exceeding six months from the date they are due for payment

Considered Good 442.02 279.70Considered Doubtful 3.01 7.15

445.03 286.85Less : Provision for Doubtful Debts 3.01 7.15

442.02 279.70Other Debts 742.42 780.56

1,184.44 1,060.26



133

Notes to Consolidated Financial Statements for the year ended 31st March, 201621 Cash and Bank Balances ` in Crore


(A) Cash and Cash Equivalents Cash on Hand 0.10 0.11

Balances with Banks in Current Accounts 108.32 281.90

108.42 282.01

(B) Other Bank Balances Deposits with original maturity of less than three

months *10.35 11.89

Deposits with original maturity for more than 12 months *

650.96 673.28

Deposits with original maturity for more than 3 months but less than 12 months *

53.13 129.79

714.44 814.96

822.86 1,096.97

* Deposits (including long term deposits in Other Non Current Assets with balance maturity period of more than 12 months) includes ` 454.74 Crore (Previous Year ` 521.96 Crore) which have been pledged with banks as a security for opening Letters of Credit, Buyer’s Credit, Short Term Loans and against Bank Guarantee and ` 292.36 Crore which are earmarked for Assets retirement and reclamation Obligation.

22 Short Term Loans and Advances (Unsecured and Considered good unless otherwise stated) ` in Crore


Loans and advances to Related Parties 185.86 1,973.09

Inter Corporate Deposits (ICD) to related parties 114.42 177.43

Deposits with Government & Semi Government Authorities 351.78 357.64

Loans and Advances to Suppliers 893.91 701.11

Prepaid Expenses 132.94 152.98

Claims Receivables 1,349.20 1,067.40

Security Deposits 53.11 79.13

Loans and Advances to Staff 1.56 2.48

Advance Income Tax (Net of provisions) 8.46 -

3,091.24 4,511.26

23 Other Current Assets ` in Crore


Interest Accrued on ICDs, Loans & Deposits 43.13 34.21

Export Benefits Accrued 98.48 98.38

Other Receivables (Net of Provision) (Refer Note 50) 533.93 3,910.85

675.54 4,043.44



Notes to Consolidated Financial Statements for the year ended 31st March, 201624 Revenue from Operations ` in Crore

Year Ended 31st March, 2016 Year Ended 31st March, 2015

Sale of Products (Net of Excise) 14,268.47 16,627.57

Sale of Services 26.76 39.27

Other Operating Revenues (Net of Excise) 86.74 119.77

Excise Duty Recovered (including duty on trial run sales)

1,268.79 1,279.44

Total Gross Revenue from Operation 15,650.76 18,066.05

Less: Trial Run Sales (including Excise Duty ) (1.07) (2,322.59)

Revenue from Operation 15,649.69 15,743.46

25 Other Income ` in Crore


Interest on Deposits with Banks and Others

Inter Corporate Deposits 111.00 83.92

Bank Deposits 46.21 40.80

Others 39.62 80.42

196.83 205.14

Rent 21.36 25.18

Profit on sale of Long Term Investments 10.74 419.26

Dividend Income from Long Term Investments - 0.34

Income from Management Services 0.52 0.21

Net Gain on Foreign Currency Transactions and Translation (other than considered as exchange variation on borrowings)

18.28 29.14

Interest on Swap Contracts 31.71 91.33

Liabilities no longer required written back 628.70 9.32

Profit on Sale of Business Undertaking 265.44 -

Profit on Sale of Fixed Assets 0.08 -

Miscellaneous Income 3.55 6.88

1,177.21 786.80

26 Cost of Materials Consumed ` in Crore


Opening Stock 279.61 133.65

Add: Purchases during the year 8,435.34 7,253.77

Less: Closing Stock 447.72 279.61

Raw Materials Consumed 8,267.23 7,107.81

Production Consumables, Stores and Spares 1,640.30 1,241.89

Excise Duty* 65.56 (1.37)

9,973.09 8,348.33

* Represents differential Excise Duty in respect of Closing Stock and Opening Stock etc.



135

Notes to Consolidated Financial Statements for the year ended 31st March, 201627 Purchase of Traded Goods ` in Crore


Gases - 47.85

TMT Bars and Others 160.50 249.95

160.50 297.80

28 Energy Cost ` in Crore


Petroleum Products - Fuel 436.80 529.32

Power and Water Charges 1,456.80 1,284.86

1,893.60 1,814.18

29 Decrease in Inventories of Finished Goods, Work in Progress and Stock in Trade ` in Crore


Opening Stock

Finished Goods 285.05 647.00

Work-in-Progress 1,275.55 1,114.97

Traded Goods - 2.27

1,560.60 1,764.24

Closing Stock

Finished Goods 444.93 268.03

Work-in-Progress 964.30 1,053.24

Traded Goods 4.11 -

1,413.34 1,321.27

147.26 442.97

30 Employee Benefits Expense ` in Crore


Salaries 367.33 318.94

Contribution to Provident and Other Funds 28.64 28.06

Staff Welfare Expenses 70.79 58.50

466.76 405.50

31 Manufacturing and Asset Maintenance ` in Crore


Repairs, Maintenance and Equipement Hire Charges

446.98 333.29

Labour and Sub-Contracting Charges 250.93 142.65

Plant Insurance 19.92 15.88

Royalty on Input - 27.06

717.83 518.88



Notes to Consolidated Financial Statements for the year ended 31st March, 201632 Administrative Expenses ` in Crore

Year Ended 31st March, 2016 Year Ended 31st March, 2015Traveling, Conveyance and Vehicle Hire & Maintenance Charges

44.65 33.42

Printing, Stationery, Postage and Telephone 12.63 10.70Professional Fees 146.14 125.90Operating Lease Rent 31.95 30.69Repairs and Maintenance - Other than Plant 12.39 7.19Insurance - Other than Plant 5.19 0.91Rates and Taxes 16.82 7.61Auditor’s Remuneration* 2.07 2.02Loss on sale/disposal/write off of Fixed Assets (net)

0.84 1.93

Miscellaneous Expenses 52.42 36.78325.10 257.15

* Payment to Auditors (excluding service tax) Audit Fees 2.00 1.90 Other Services 0.07 0.12

2.07 2.02

33 Selling and Distribution Expenses ` in CroreYear Ended 31st March, 2016 Year Ended 31st March, 2015

Sales Commission 68.08 132.36Freight Outward (net), Intercarting and Packing Charges

358.57 325.78

Other Selling Expenses 51.92 33.75478.57 491.89

34 Finance Cost ` in CroreYear Ended 31st March, 2016 Year Ended 31st March, 2015

Guarantee and Other Bank Charges 564.82 610.22Interest

on Term Loans 2,464.66 2,276.19on Debentures 38.76 54.07on Advance from Customer 125.51 83.02on Inter Corporate Deposits 507.13 368.56to Banks and Others 1,049.48 865.23

4,185.54 3,647.074,750.36 4,257.29

35 Exchange variation and Derivative (Gain)/Loss (net) ` in CroreYear Ended 31st March, 2016 Year Ended 31st March, 2015

Mark to Market on Derivative Contract 32.57 (22.04)Exchange Variation (net) 167.88 39.49Amortisation of Foreign Currency Monetary Item Translation Difference

61.86 11.77

Loss on cancellation/settlement of Derivative and Forward Exchange Contracts (Net of Premium paid / Amortised)

432.48

336.46

694.79 365.68



137

Notes to Consolidated Financial Statements for the year ended 31st March, 201636 Contingent Liabilities not provided for ` in Crore



(a) Bills Discounted - 430.94(b) Claims against the Company not acknowledged as

debt in respect of:(i) Disputed Sales Tax/VAT/ Entry Tax matters in

respect which the Company has gone in appeal18.68 18.68

(ii) Disputed Excise Duty matters in respect which the Company has gone in appeal

0.17 0.17

(iii) Disputed Custom Duty / Export Duty matters in respect which the Company has gone in appeal

134.11 134.11

(iv) Tax on sale of Electricity demanded by collector of electricity duty on Essar Power Limited

45.91 45.91

(v) Electricity Duty demand1 [including amount paid ` 589.24 Crore (Previous year ` 589.24 Crore)]

609.01 609.01

(vi) Wheeling Charges demanded by GETCO2 [including amount paid ` 27.23 Crore (Previous year `27.23 Crore)]

393.01 393.01

(vii) Freight Claim by South East Railway [including amount paid ` 14.48 Crore (Previous year ` 14.48 Crore)]

100.53 100.53

(viii) Disputed Differential Electricity Duty [including amount paid ` 49.39 Crore (Previous year ` 49.39 Crore)]

49.39 49.39

(ix) Electricity Charges by DGVCL3 (including amount paid ` 192.58 Crore)

192.58 -

(x) Disputed Cross Subsidy4 (including amount paid ` 168.60 Crore)

327.28 -

(xi) Others 25.78 26.42Future cash outflows in respect of above matters are determinable only on receipt of judgments/decisions pending at various forums/authorities.

(c) Guarantees given to various Banks, Financial Institutions, Finance Companies, etc. on behalf of others to the extent of outstanding balance of liabilities as at the year-end against the said guarantees

715.46 1,104.49

(d) Share in Contingent Liability of Associates 17.84 11.94 1. A Show Cause Notice (SCN) dated 10th March, 2010 was issued by the Collector Electricity Duty, Gandhinagar,

demanding Electricity Duty ` 585.31 Crore and Interest ` 528.48 Crore for the period April 2000 to February 2010. The Company has claimed that it is exempt from paying the Electricity Duty for a period of 15 years from the date of commissioning of the captive power project i.e. from 8th August, 1995 to 7th August, 2010.

The Company filed an appeal to the Division Bench of Gujarat High Court against the same which was admitted by the Court and a stay was granted vide order dated 5th April, 2010. As per the conditions of stay, the Company has paid under protest ` 589.24 Crore (Previous year ` 589.24 Crore) towards the arrears of the principal amount of electricity duty.

As per the management view and based on the legal opinion from a reputed counsel, the Company is eligible for exemption of Electricity Duty for the period of 15 years i.e. from 8th August, 1995 to 7th August, 2010 and accordingly no provision is required to be made in the books. However the Company has disclosed ` 609.01 Crore towards electricity duty on account of above matter as contingent liability as at 31st March, 2016 and has considered demand of interest as a remote liability.



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 2. In January 2006, the Dakshin Gujarat Vij Company Limited (“DGVCL”) claimed from Essar Steel India Limited

(“ESIL”) for payment of wheeling charges on the ground that ESIL is using its distribution system for conveyance of electricity generated by its two captive power plants to the manufacturing units. In so claiming, the contention of DGVCL was that Bus Bars engineered, procured and constructed by ESIL at its own cost is a part of its service line and since the electricity of ESIL is conveyed through the service line, ESIL is liable to pay wheeling charges. ESIL denied the said claim by contending that Bus Bars are an integral part of its switchyard, which is constructed, operated and maintained by ESIL and the same cannot be a service line or extension thereof laid down by the Gujarat Electricity Board (“GEB”). Thereafter, in June 2006, DGVCL served a further demand-cum-disconnection notice on ESIL, which ESIL challenged before the Gujarat High Court by filing a writ petition. The petition was dismissed by the Ld. Single Judge of the Hon’ble High Court on 15th January 2007. After the said judgment, DGVCL abandoned its said claim for payment of wheeling charges and in lieu thereof, the Gujarat Electricity Transmission Corporation Limited (“GETCO”) raised a demand on ESIL for payment of transmission charges on the ground that ESIL is, inter alia, is using its transmission system for conveyance of its electricity. GETCO claimed that the Bus Bars are a part of its transmission line and since the same are used, inter alia, by ESIL for conveyance of its electricity, it is liable to pay transmission charges to GETCO. ESIL denied the said claim of GETCO and further filed an appeal before the Division Bench of the Gujarat High Court, which rejected ESIL’s application for interim stay of recovery of the transmission charges pending hearing and final disposal of the appeal. Consequently, ESIL approached the Supreme Court, which stayed the recovery of transmission charges by GETCO subject to ESIL paying 30% of the transmission charges demanded in February 2007, which was complied with by ESIL. Finally, the Division Bench dismissed the appeal filed by ESIL by Judgment dated 30th August 2011. ESIL has preferred a Special Leave Petition (Civil) No.27540 of 2011 before the Hon’ble Supreme Court, which has stayed recovery of the transmission charges, vide its order dated 5th December, 2011 and the matter is pending for final hearing.

Bus Bars are, inter alia, ESIL’s installation situated within its own premises beyond the Delivery Point. The same are thus, not a part of transmission line or an extension thereof of GETCO. There is no provision in law providing for vesting of any transmission line constructed by one person in another. GETCO, being the transmission licensee has not granted any open access to its transmission system to ESIL and thereby one of the conditions of the charging Section 40 of the Electricity Act, 2003 has not been fulfilled and GETCO is, therefore, not entitled to receive payment of any transmission charges from ESIL.

As per the Memorandum of Minutes dated 1st February 2010, ESIL has shifted the Ichhapore service line to another location. Thereafter, GETCO has stopped billing transmission charges to ESIL. As per the view of the management of ESIL as well as of its reputed Counsel, ESIL is not liable to pay any transmission charges to GETCO and hence no provision is required to be made in the books for the same. However, ESIL has disclosed `393.01 Crore (Previous Year ` 393.01 Crore) as contingent liability as on 31st March 2016 towards demand of transmission charges and has considered demand for interest as a remote liability.

3. By Order dated 30th June, 2010, the Hon’ble High Court of Gujarat had sanctioned the Scheme for amalgamation, inter alia, of Essar Steel (Hazira) Limited, (“ESHL”) with Essar Steel India Limited (“ESIL”). The amalgamation became effective from 5th August, 2010. The undertaking (i.e. properties and liabilities) of ESHL became the undertaking of ESIL from the Appointed Date i.e. 1st April, 2009. Thereafter, ESIL has used the electricity, including the electricity supplied by the Dakshin Gujarat Vij Company Limited (“DGVCL”), for manufacturing goods through the undertaking of the erstwhile ESHL. Such use of electricity amounts to use of electricity by ESIL itself. However, DGVCL raised a Supplementary Bill dated 22nd September, 2011 claiming ` 2,311.02 Crore from ESIL on the ground that ESIL has used the electricity in breach of the agreed terms of MOM dated 1st February, 2010 for ESIL has used electricity beyond the approved power boundary. Subsequently, DGVCL raised a revised Supplementary Bill dated 25th January, 2012 for payment of a sum `192.58 Crore, and same has been paid by ESIL to DGVCL under protest to obtain certain pending permissions from DGVCL. As per the facts, use of electricity by ESIL beyond the approved power boundary has not caused any loss or prejudice to DGVCL. In any case, DGVCL cannot apply the increased rate of tariff in respect of electricity generated by the captive power plants of ESIL. ESIL has filed an appeal before Appellate Authority on 19th Nov, 2012 challenging the claim of `192.58 Crore raised by DGVCL. The Appellate Authority and Chief Electrical Inspector (CEI) has ruled that DGVCL can claim only to the extent of DGVCL’s power supplied in the concerned period which amounts to 25.23 million units and DGVCL shall refund the balance.

According to such ruling of the CEI, approx. ` 28.60 Crore stands payable out of which ` 14.30 Crore is already paid by way of regular energy bill raised by DGVCL and ESIL is entitled to a refund of about ` 184.09 Crore. DGVCL has challenged the Order of the Appellate Authority in Hon’ble High Court of Gujarat by way of Special Civil Application. ESIL has also filed Special Civil Application in Gujarat High court mentioning that there is no unauthorized use of power considering merger Order dated 30.06.2010 passed by the Hon’ble High Court of Gujarat or assuming without admitting that there has been unauthorized use of power, the same ought to



139

Notes to Consolidated Financial Statements for the year ended 31st March, 2016have been only for 6.63 MU on the basis of proportionate of 25.23 MU supplied by DGVCL during 15.06.11 to 30.07.2011 Ld Single Judge of High Court of Gujarat by way of Judgment dated 22.01.2015 held that the Court did not find any arbitrariness, perversity or illegality in the impugned order dated 01.11.2013, passed by the Appellate Authority directing the refund of the excess amount paid by Essar pursuant to the revised supplementary bills over and above the quantity of unauthorized power used by Essar. DGVCL by way of LPA no 465 and 466 of 2015 challenged the Judgment of Single Judge dated 22.01.2015 before the Div. Bench of Gujarat High Court, the Div. Bench without going in to the merits of case passed order on the point of maintainability and allowed the LPAs. The company has filed SLP No 27920 & 27921 of 2015 before the Supreme Court of India against the Order dated 17.07.2015 of the Div. Bench of Gujarat High Court, which is pending for hearing.

4. The Company has been granted the status of a Regional Entity, vide order dated 08.06.2013 by Central Electricity Regulatory Commission (CERC). The Company disconnected itself from the 220 KV STU network on 23.06.2013 and upon shifting of the connectivity from the State Load Dispatch Centre Gujarat (SLDC) to Western Regional Load Dispatch Centre (WRLDC) Company has ceased to be an embedded customer of Gujarat for all intent and purposes and it is treated as a regional entity independent of the State of Gujarat in the matter of scheduling, dispatch, energy accounting etc. Therefore,the jurisdiction to specify the surcharge is vested in the CERC, if applicable. In view of the above, supported by opinion from a senior Advocate, the Company has informed Dakshin Gujarat Vij Company Ltd. (DGVCL) about wrongfully levied cross subsidy surcharge upon the regional entity and claimed the refund of duty paid during June 2013 to June 2015 vide letter dated July 27, 2015. The levied amount for the period of June 13 to March 15 (` 168.59 Crore) has been shown as “other income” in the period and further cross subsidy surcharge amounting to ̀ 158.69 Crore pertaining to April 15 – March 16 has not been recognised. The company has filed Petition No.216/MP/2015 before CERC on 08.09.2015 challenging claims by DGVCL as aforesaid. CERC vide its Order dated 06.07.2016 stated that dispute falls within the jurisdiction of the Gujarat Commission. The Company is taking appropriate legal steps by appealing before appropriate forum.

` in CroreAs at


31st March, 201537 (a) Estimated amount of contracts remaining to be executed on capital

account and not provided for397.65 531.39

(b) Share in Commitments of Associates 61.40 62.42(c) Custom Duty on pending export obligation under EPCG scheme 4,328.43 4,500.95

38 Segment Information Primary Business Segment The Group has disclosed business Segment as Primary Segment. The Segment have been identified taking into

account the nature of Product. The Company’s operation predominantly relate to manufacture of Steel and extraction of Minerals. Segment Result Segment Revenue, Segment Assets & Segment Liabilities include the respective amount identifiable to each of the segment.

Particular Year Ended 31st March, 2016 Year Ended 31st March, 2015Steel Mineral Unallocated Total Steel Mineral Unallocated Total

Segment Revenue 15,649.69 - - 15,649.69 15,571.47 171.99 - 15,743.46Segment Results [Profit/ (Loss)]

(3,594.41) 238.38 - (3,356.03) 5,525.62 (150.57) - 5,375.05

Less: Finance Cost, Exchange Variation and Derivative Losses (net)

- - 5,445.15 5,445.15 - - 4,622.97 4,622.97

Add: Interest Income - - 111.00 111.00 - - 83.92 83.92Profit/(Loss) before Taxation

- - - (8,690.18) - - - 836.00

Tax Expense - - (2,915.65) (2,915.65) - - 360.91 360.91Profit/(Loss) after Taxation

- - - (5,774.53) - - - 475.09

Segment Assets 55,578.68 3,554.46 932.11 60,065.25 61,070.81 3,453.60 990.08 65,514.49Segment Liability 19,990.27 499.60 39,824.72 60,314.59 19,589.38 421.34 37,284.14 57,294.86Addition to Fixed Assets 2,721.43 183.11 - 2,904.54 28,164.05 124.46 - 28,288.51Depreciation 1,742.61 104.05 - 1,846.66 814.34 97.23 - 911.57



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 Geographical Segments Secondary segment reporting is based on the geographical location of customers. The geographical segments have

been disclosed based on revenues within India (sales to Customers within India) and revenues outside India (sales to customers located outside India). Secondary segment assets and liabilities are based on the location of such asset/liability.

Information about Geographical Segments` in Crore

Segment Information Year ended 31st March, 2016 Year ended 31st March, 2015India Outside

IndiaTotal India Outside

IndiaTotal

Revenue (Income from operation) 12,921.11 2,728.58 15,649.69 11,899.71 3,843.75 15,743.46Carrying amount of segment assets

55,233.54 4,831.71 60,065.25 59,513.29 6,001.20 65,514.49

Carrying amount of segment liabilities

43,702.10 16,612.49 60,314.59 31,829.64 25,465.22 57,294.86

Additions to fixed assets (excluding capital work-in- progress)

2,721.43 183.11 2,904.54 28,164.05 124.46 28,288.51

39 Additional information as required by Paragraph 2 of the General Instructions for Preparation of Consolidated Financial Statements to Schedule III to the Companies Act 2013:

Company Net Assets, i.e. total assets minus total liabilities Share in profit or loss

As at 31st March, 2016 As at 31st March, 2015 Year Ended 31st March, 2016 Year Ended 31st March, 2015

As % of consolidated

net assets

Amount (` in

Crore)

As % of consolidated net assets

Amount (` in

Crore)

As % of consolidated profit or loss

Amount (` in Crore)

As % of consolidated profit or loss

Amount (` in Crore)

Parent Essar Steel India Limited 179.86% 8,303.94 133.70% 13,779.19 100.08% (5,800.14) 138.91% 648.05

Indian Subsidiary

Paradeep Steel Company Limited

-0.22% (9.93) -0.10% (10.15) 0.00% 0.22 -2.22% (10.35)

Essar Steel Logistics Limited 0.11% 5.17 - - -0.09% 5.12 - -

Foreign Subsidiary

Essar Steel Trading FZE 1.13% 52.32 0.47% 48.30 -0.07% 4.02 0.56% 2.62

Essar Steel Middle East FZE 8.87% 409.52 3.71% 382.26 -0.47% 27.26 7.17% 33.45

Essar Steel Offshore Limited -6.35% (292.99) -2.24% (231.20) 2.33% (134.81) -32.96% (153.75)

Essar Minerals Limited 21.50% 992.46 9.57% 985.96 0.89% (51.74) -3.34% (15.57)

Essar Mineral Cooperatief U.A. 41.76% 1,928.13 15.39% 1,586.53 0.82% (47.30) -9.27% (43.27)

Essar Minerals Canada Limited 36.75% 1,696.91 12.92% 1,331.78 1.56% (90.20) -1.31% (6.10)

Essar Minerals INC -9.99% (461.46) -10.71% (1,103.40) -6.98% 404.80 -23.12% (107.86)

New Trinity Holdings LLC and Subsidiaries

63.67% 2,939.83 28.37% 2,923.55 1.31% (76.19) -34.69% (161.82)

Elimination/ Adjustment due to consolidation

-243.87% (11,259.58) -94.32% (9,720.25) 0.27% (15.57) 62.09% 289.69

Indian Associates (Investment as per the equity method)

Essar Bulk Terminal Limited 0.16% 7.56 0.06% 6.65 -0.02% 0.91 -0.51% (2.38)

Essar Power MP Limited 1.38% 63.59 0.60% 62.18 -0.02% 1.41 -1.44% (6.72)

Bhander Power Limited 4.99% 230.54 2.46% 253.62 0.40% (23.08) 0.08% 0.37

Essar Power Orissa Limited 0.06% 2.54 0.02% 2.54 0.00% - 0.00% (0.02)

Essar Power Hazira Limited 0.06% 2.59 0.03% 2.59 0.00% - 0.00% -

Essar Steel Chhattisgarh Limited

0.13% 5.84 0.06% 5.89 0.00% (0.05) 0.04% 0.19

Total 100.00% 4,616.99 100.00% 10,306.03 100.00% (5,795.33) 100.00% 466.53



141

Notes to Consolidated Financial Statements for the year ended 31st March, 201640 Disclosure of related party transactions as required by Accounting Standard - 18 Related Party Disclosures: (a) Holding Company 1 Essar Steel Asia Holdings Limited (FKA Essar Resources Mauritius Ltd) Immediate Holding

Company- (ESAHL) 2 Essar Steel Mauritius Limited – Holding Company of Essar Steel Asia Holdings Limited - (ESML) 3 Essar Global Fund Limited (FKA Essar Global Limited), Cayman Islands – Holding Company of Essar

Steel Mauritius Limited (EGFL)

(b) Fellow Subsidiaries1 Aegis Limited (AEGIS) 21 Essar Power Gujarat Limited (EPGL)2 AGC Networks Limited (AGCNL) 22 Essar Power Limited (EPOL) (w.e.f. 26.09.2014)3 Arkay Logistics Limited (ELL) 23 Essar Power Transmission Company Limited

(EPTCL)4 Equinox Business Parks Pvt Limited (EBPPL) 24 Essar Project (India) Limited (EPIL)5 Essar Africa Holdings Limited (EAHL) 25 Essar Refinery Projects Limited, India (FKA

Essar Road Projects Limited) (ERPL) (ceased to be fellow subsidiary from 24.02.2015)

6 Essar Bulk Terminal (Salaya) Limited (EBTSL) 26 Essar Shipping & Logistics Limited (ESALL)

7 Essar Bulk Terminal Paradip Limited (EBTPL) 27 Essar Shipping Limited (ESL)8 Essar Constructions Overseas Limited (ECOL) 28 Essar Steel Algoma Inc (ESA-INC)9 Essar Electric Power Development Corporation

Limited (EEPDCL)29 Essar Steel Limited (FKA Essar Steel Holdings

Limited) (ESTLM)10 Essar Energy II (EII) 30 Essar Telecom Kenya Limited (ETKL)11 Essar Energy Limited (FKA Essar Energy Plc)

(EEPLC)31 Essar Vizag Terminal Limited (EVTL)

12 Essar Global Services FZE, UAE (EGSF) 32 Navbharat Power Private Limited (NPPL)13 Essar Mineral Resources Limited (EMRL) 33 Peak Trading Overseas Limited (PTOL)14 Essar Offshore Subsea Limited (EOSL) 34 PT Essar Indonesia (PTEI)15 Essar Oil (UK) Limited (EOUKL) 35 The Mobilestore Services Limited. (TMSSL)16 Essar Oil Limited (EOL) 36 Tirunelweli Wind Farms Limited (TWFL) (ceased

to be fellow subsidiary from 24.02.2015)17 Essar Oilfields Services India Limited (EOSPL) 37 Vadinar Oil Terminal Limited (VOTL)18 Essar Pellets Marketing Ltd, India (EPML) 38 Vadinar Ports & Terminal Limited (VPTL)19 Essar Ports Limited (EPL) 39 Vadinar Power Company Limited (VPOCL)20 Essar Power (Jharkhand) Limited (EPJL) 40 Vadinar Properties Limited ( VPRL)

(c) Associates1 Bhander Power Limited (BPOL) 5 Essar Power MP Limited (EPMPL)2 Essar Bulk Terminal Limited (EBTL) 6 Essar Steel Chhattisgarh Limited (ESCL)3 Essar Power (Orissa) Limited (EPOOL) 7 Essar Steel Processing FZCO (ESP-FZCO)4 Essar Power Hazira Limited (EPHL) 8 Odisha Slurry Pipeline Infrastructure Ltd.

(OSPIL) (w.e.f. 21.05.2015 to 11.09.2015)

(d) Key Management Personnel 1 Shri Firdose A. Vandrevala, Executive Vice Chairman (FV) (ceased to be director from 01.02.2016) 2 Shri Dilip Oommen, Managing Director & CEO (DO) 3 Shri Mahadev Iyer, Director (Finance) & CFO (MI)

(e) Enterprise having influence over the Company 1 Imperial Consultants and Securities Private Limited (ceased to be related party w.e.f. 03.03.2016)

(ICASPL) 2 Imperial Consultants and Securities (w.e.f. 03.03.2016) (ICAS)



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 During the year, following transactions were carried out with some of the related parties in the ordinary course of

business: (excluding reimbursement)

(` in crore)

Sr. No.




Personnel

Enterprise having

influence(a) Sales (Net) - - 78.33 3.25 - -

- - (222.19) (2.27) - -

(b) Income - Lease Rentals / Rent building

- - 5.71 13.85 - -

- - (6.68) (13.99) - -

(c) Interest Income-Others 3.32 - 93.04 13.35 - -

(3.05) - (84.09) - - -

(d) Sale of Business Undertaking - - - - - -

- (4,000.00) - - - -

(e) Sales of Fixed assets - - - 0.11 - -

- - - (20.46) - -

(f) Management Fees - Income - - - - - -

- - (0.21) - - -

(g) Purchase of Raw Materials, Stores and Spares, Production Consumables and Services

- - 808.42 490.27 - -

- - (792.40) (419.37) - -


- - (0.01) - - -

- - (0.88) - - -


- - -4.03 191.56 - -

- - (113.81) (115.79) - -

(j) Repairs and Maintenance - - 5.73 - - -

- - (6.58) - - -


- - 16.60 - - -

- - (24.92) - - -

(l) Labour Sub Contract Charges - - 1.21 - - -

- - (0.58) - - -

(m) Professional Fees - - 30.28 - - -

- - (36.11) - - -

(n) Office Rent - - 7.26 - - -

- - (7.28) - - -

(o) Freight Outwards Expenses - - 228.75 57.01 - -

- - (196.54) (139.54) - -

(p) Sales Commission - - -17.61 - - -

- - (31.30) - - -

(q) Interest Expenses 99.44 - 407.15 82.93 - -

(58.87) - (330.04) (75.96) - -

(r) Capital Contract - - 58.10 0.00 - -

- - (146.67) - - -

(s) Sale of stores & Spares - - 1.30 5.36 - -

- - (0.17) (0.03) - -

(t) Directors’ Remuneration - - - - 15.42 -

- - - - (11.57) -



143

Notes to Consolidated Financial Statements for the year ended 31st March, 2016(` in crore)

Sr. No.




Personnel

Enterprise having

influence

(u) ICD Given - - 114.41 499.95 - -

- - - - - -

(v) Repayment of ICD given - - - - - -

- - - - - -

(w) ICD taken - - 2,742.33 376.65 - -

(655.26) - (2,756.47) (175.00) - -

(x) Repayment of ICD taken 977.69 - 1,306.83 289.70 - -

- - (2,274.06) - - -

(y) Purchase of Investment - - 0.05 - - -

- (25.50) - (64.67) - -

(z) Issue of Share Capital - - - - - -

(99.71) - (200.00) - - -

(aa) Sale of Investment - - - - - 33.87

- - - - - -

Balance outstanding at year end(` in crore)

Sr. No.




Personnel

Enterprise having

influence(a) Long Term Investments - - 21.74 186.20 - -

- (25.50) (46.82) (186.20) - -

(b) Debtors - - 31.15 - - -

- - (17.30) - - -

(c) Other Current Advance/Receivable

- - 10.58 - - -

- (3,868.50) (0.32) (0.46) - -

(d) Deposits - - 4.37 - - -

- - (4.37) - - -

(e) Other Advance (Including Advance Towards Equity)

0.50 0.13 174.27 13.88 - -

(0.50) (6.26) (1,972.16) (0.28) - (13.63)

(f) Sundry Creditors Payable 100.78 - 1,075.95 494.63 - 119.36

(17.52) - (1,166.45) (628.44) - (22.50)

(g) Capital Advances (CWIP) - - 16.49 - - -

- - (14.59) (-1.21) - -

(h) Advance From Customer - - 324.74 0.25 - 177.22

- - (494.32) (0.15) - -

(i) Inter Corporate Deposits Given - - 114.41 - - -

(111.11) - (77.43) - - -

(j) Inter Corporate Deposits Taken 761.97 - 3,513.86 361.95 - 87.50

(1,731.05) - (1,862.41) (275.00) - -

(k) Security Deposits Received - - 4.22 - - -

- - (4.22) - - -

(l) Guarantees Given - - 49.23 182.99 - -

- - (49.23) (182.99) - -

(m) Guarantees Received 14,489.86 - 5,881.51 - - -

(14,301.82) - (5,787.71) - - -



Notes to Consolidated Financial Statements for the year ended 31st March, 2016Details of Party wise transactions : (` in crore)

Name of Related PartyNature of Transaction BPOL EBTL EPOL EPHL EOL EPGL EPMPL AEGIS ELL

(a) Sales (Net) 0.02 3.23 0.03 - 0.08 - - - 1.38(0.29) (1.98) (0.05) - (35.05) - - - (3.28)

(b) Income - Lease Rentals / Rent building 11.22 0.28 0.12 2.35 0.08 - - 0.30 0.20(11.38) (0.28) (0.18) (2.33) (0.21) - - (0.26) (0.28)

(c) Interest Income-Others - - - - 5.71 - - - -- - - - (4.47) - - - -

(d) Sale of Business Undertaking - - - - - - - - -- - - - - - - - -

(e) Sale of Fixed Assets - 0.11 - - - - - - -- - - - - - - - -

(f) Management Fees -Income - - - - - - - - -- - - - - - - - -


- 456.18 - - 2.62 - - - 217.37- (419.37) (-0.00) - (73.87) - - - (205.04)

(h) Purchase of Petroleum Products (Fuel) - - - - (0.01) - - - 0.00- - - - (0.89) - - - (-0.02)

(i) Power Processing Charges / Recovery 12.68 - - 125.40 - 0.01 - - -(12.42) - (55.20) - (9.18) (1.99) (146.16) - -

(j) Repairs and Maintenance - - 2.68 - - - - 0.17 0.11- - (1.96) - - - - - -

(k) Plant and Equipment Hire Charges - - - - - - - - 16.43- - - - - - - - (14.74)

(l) Labour Sub Contract Charges - - - - - - - 0.01 1.21- - - - - - - - (0.09)

(m) Professional Fees - - - - 0.08 - - 29.74 -- - - - (0.11) - - (34.18) -

(n) Office Rent - - - - - - - - -- - - - - - - - -

(o) Freight Outwards Expenses - 57.01 - - (0.00) - - - 202.64- (139.54) - - - - - - (183.17)

(p) Sales Commission - - - - - - - - -- - - - - - - - -

(q) Interest & Other Financial Expenses 13.00 58.14 7.53 - 254.34 - - - 10.17(10.03) (39.34) (12.13) - (92.17) - - - (21.46)

(r) Capital Contract - - - - - - - 0.00 -- - - - - - - (-0.00) (0.04)

(s) Sale of stores & Spares - 5.36 - - - - - - -- (0.03) - - - - - - -


- - - - - - - - -- - - - - - - - -

(u) ICD Given - - - - - - - - -- - - - - - - - -

(v) Refund of ICD Given - - - - - - - - -- - - - - - - - -

(w) ICD taken - 376.65 - - 2,047.94 - - - 200.30- - - - (2,058.21) - - - (258.62)

(x) Repayment of ICD taken - 14.70 - - 643.76 - - - 340.64- - - - (1,141.40) - - - (264.00)

(y) Purchase of Investments - - - - - - - - -- - - - - - (63.70) - -

(z) Issue of Share Capital (Including Premium) - - - - - - - - -- - - - - - - - -

(aa) Sale of Investment - - - - - - - - -- - - - - - - - -



145


Name of Related PartyNature of Transaction EPIL ESL EBTPL ESTLM EPML PTEI EOSL EPOOL

(a) Sales (Net) 64.22 - - - - 0.00 - - (130.58) - - - (0.00) (13.72) - -

(b) Income - Lease Rentals / Rent building 4.92 - - - - - - - (5.67) - - - - - - -

(c) Interest Income-Others - 11.29 - 42.41 - - - - - - - (20.96) - - - -

(d) Sale of Business Undertaking - - - - - - - - - - - - - - - -

(e) Sale of Fixed Assets - - - - - - - - - - - - - - - (20.46)

(f) Management Fees -Income - - - - - - - - - - - (0.21) - - - -


19.66 418.95 132.40 - - 0.02 - - (2.76) (365.41) (142.94) - - - - -

(h) Purchase of Petroleum Products (Fuel) - - - - - - - - - - - - - - - -

(i) Power Processing Charges / Recovery - - -4.04 - - - - 53.49 - - (-3.33) - - - - (7.21)

(j) Repairs and Maintenance 2.69 - - - - - - - (4.54) (0.00) - - - - - -

(k) Plant and Equipment Hire Charges 0.18 - - - - - - - (10.10) - - - - - - -

(l) Labour Sub Contract Charges - - - - - - - - (0.49) - - - - - - -

(m) Professional Fees 0.28 - - - - 0.17 - - (1.69) - - - - (0.12) - -

(n) Office Rent - - - - - - - - - (0.02) - - - - - -

(o) Freight Outwards Expenses - 9.59 17.51 - - - - - (0.07) (14.83) (5.49) - - - - -

(p) Sales Commission - - - -17.61 - - - - - - - (31.30) - - - -

(q) Interest & Other Financial Expenses 25.09 0.95 15.49 4.35 8.00 - 0.56 3.03 (0.44) (1.46) (21.03) - (26.59) - (50.68) -

(r) Capital Contract 58.10 - - - - - - - (146.63) - - - - - - -

(s) Sale of stores & Spares 1.30 - - - - - - - (0.17) - - - - - - -

(t) Directors Remuneration (including perquisites) - - - - - - - - - - - - - - - -

(u) ICD Given - 114.41 - - - - - - - - - - - - - -

(v) Refund of ICD Given - - - - - - - - - - - - - - - -

(w) ICD taken - - - 464.31 - - - - - - - - (175.00) - - -

(x) Repayment of ICD taken - - - - 275.00 - 5.48 - - - - - - - (484.15) -

(y) Purchase of Investments - - - - - - - - - - - - - - - (0.97)

(z) Issue of Share Capital (Including Premium) - - - - - - - - - - - - - - - -

(aa) Sale of Investment - - - - - - - - - - - - - - - -




Name of Related PartyNature of Transaction NPPL EEPDCL EPTCL ECOL ESAHL AGCNL EBTSL VPTL ESLL EOUKL

(a) Sales (Net) - - - - - - 0.73 11.88 - -- - - (0.06) - - (12.60) - - (2.42)

(b) Income - Lease Rentals/Rent building - - 0.09 - - - - - - -- - (0.07) - - - - - (0.00) -

(c) Interest Income-Others - - - 3.32 - - - - -- - - - (3.05) - - - - -

(d) Sale of Business Undertaking - - - - - - - - - -- - - - - - - - - -

(e) Sale of Fixed Assets - - - - - - - - - -- - - - - - - - - -

(f) Management Fees -Income - - - - - - - - - -- - - - - - - - - -


- - - - - - - - 0.06 -- - - - - - - - (2.38) -

(h) Purchase of Petroleum Products (Fuel) - - - - - - - - - -- - - - - - - - (0.00) -

(i) Power Processing Charges / Recovery - - - - - - - - - -- (0.76) - - - - - - - -

(j) Repairs and Maintenance - - - - - 0.09 - - - -- - - - - - - - (0.08) -

(k) Plant and Equipment Hire Charges - - - - - - - - - -- - - - - - - - (0.08) -

(l) Labour Sub Contract Charges - - - - - - - - - -- - - - - - - - - -

(m) Professional Fees - - - - - - - - - -- - - - - - - - - -

(n) Office Rent - - - - - - - - - -- - - - - - - - - -

(o) Freight Outwards Expenses - - - - - - - - -0.98 -- - - - - - - - (-7.02) -

(p) Sales Commission - - - - - - - - - -- - - - - - - - - -

(q) Interest & Other Financial Expenses - - - - - - - 41.30 - -(0.12) - - - (43.20) - - (33.21) - -

(r) Capital Contract - - - - - - - - - -- - - - - - - - (-0.00) -

(s) Sale of stores & Spares - - - - - - - - - -- - - - - - - - - -


- - - - - - - - - -- - - - - - - - - -

(u) ICD Given - - - - - - - - - -- - - - - - - - - -

(v) Refund of ICD Given - - - - - - - - - -- - - - - - - - - -

(w) ICD taken - - - - - - - 29.78 - -- - - - - - - - - -

(x) Repayment of ICD taken - - - - - - - - - -(32.00) - - - - - - - - -

(y) Purchase of Investments - - - - - - - - 0.05 -- - - - - - - - - -

(z) Issue of Share Capital (Including Premium) - - - - - - - - - -- - - - (99.71) - - - - -

(aa) Sale of Investment - - - - - - - - - -- - - - - - - - - -



147


Name of Related PartyNature of Transaction EBPPL TWFL VPOCL OSPIL VPRL ESCL DO MI

(a) Sales (Net) - - - - - - - -- - - - - - - -

(b) Income - Lease Rentals/Rent building - - - - - - - -- - - - - - - -

(c) Interest Income-Others - - - 13.35 - - - -- - - - - - - -

(d) Sale of Business Undertaking - - - - - - - -- - - (4,000.00) - - - -

(e) Sale of Fixed Assets - - - - - - - -- - - - - - - -

(f) Management Fees -Income - - - - - - - -- - - - - - - -


- - - 34.09 - - - -- - - - - - - -

(h) Purchase of Petroleum Products (Fuel) - - - - - - - -- - - - - - - -

(i) Power Processing Charges / Recovery - - - - - - - -- - - - - - - -

(j) Repairs and Maintenance - - - - - - - -- - - - - - - -

(k) Plant and Equipment Hire Charges - - - - - - - -- - - - - - - -

(l) Labour Sub Contract Charges - - - - - - - -- - - - - - - -

(m) Professional Fees - - - - - - - -- - - - - - - -

(n) Office Rent 7.26 - - - - - - -(7.26) - - - - - - -

(o) Freight Outwards Expenses - - - - - - - -- - - - - - - -

(p) Sales Commission - - - - - - - -- - - - - - - -

(q) Interest & Other Financial Expenses - 3.02 26.95 - 2.82 8.75 - -(0.63) (32.35) (28.66) - (2.94) (26.59) - -

(r) Capital Contract - - - - - - - -- - - - - - - -

(s) Sale of stores & Spares - - - - - - - -- - - - - - - -

(t) Directors Remuneration (including perquisites) - - - - - - 2.82 2.14- - - - - - (2.83) (2.17)

(u) ICD Given - - - 499.95 - - - -- - - - - - - -

(v) Refund of ICD Given - - - - - - - -- - - - - - - -

(w) ICD taken - - - - - - - -- - (264.64) - - (175.00) - -

(x) Repayment of ICD taken - 40.66 1.28 - - 275.00 - -- (239.34) (71.70) - (41.48) - - -

(y) Purchase of Investments - - - - - - - -- - - (25.50) - - - -

(z) Issue of Share Capital (Including Premium) - - - - - - - -- (200.00) - - - - - -

(aa) Sale of Investment - - - - - - - -- - - - - - - -




Name of Related PartyNature of Transaction FV EGFL PTOL ESA-INC EMRL EVTL TMSSL ICAS

(a) Sales (Net) - - - - - - - -- - (24.43) - - - - -

(b) Income - Lease Rentals/Rent building - - - - - - - -- - - - - - - -

(c) Interest Income-Others - - 33.63 - - - - -- - (58.67) - - - - -

(d) Sale of Business Undertaking - - - - - - - -- - - - - - - -

(e) Sale of Fixed Assets - - - - - - - -- - - - - - - -

(f) Management Fees -Income - - - - - - - -- - - - - - - -


- - - - 0.15 16.88 0.29 -- - - - - - - -

(h) Purchase of Petroleum Products (Fuel) - - - - - - - -- - - - - - - -

(i) Power Processing Charges / Recovery - - - - - - - -- - - - - - - -

(j) Repairs and Maintenance - - - - - - - -- - - - - - - -

(k) Plant and Equipment Hire Charges - - - - - - - -- - - - - - - -

(l) Labour Sub Contract Charges - - - - - - - -- - - - - - - -

(m) Professional Fees - - - - - - - -- - - - - - - -

(n) Office Rent - - - - - - - -- - - - - - - -

(o) Freight Outwards Expenses - - - - - -0.02 - -- - - - - - - -

(p) Sales Commission - - - - - - - -- - - - - - - -

(q) Interest & Other Financial Expenses - 99.44 - 6.60 - - - -- (15.67) - (6.17) - - - -

(r) Capital Contract - - - - - - - -- - - - - - - -

(s) Sale of stores & Spares - - - - - - - -- - - - - - - -


10.46 - - - - - - -(6.56) - - - - - - -

(u) ICD Given - - - - - - - -- - - - - - - -

(v) Refund of ICD Given - - - - - - - -- - - - - - - -

(w) ICD taken - - - - - - - -- (655.26) - - - - - -

(x) Repayment of ICD taken - 977.69 - - - - - -- - - - - - - -

(y) Purchase of Investments - - - - - - - -- - - - - - - -

(z) Issue of Share Capital (Including Premium) - - - - - - - -- - - - - - - -

(aa) Sale of Investment - - - - - - - 33.87- - - - - - - -



149


Bal

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Bal

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151


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EPO

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Bal

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153


Bal

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Notes to Consolidated Financial Statements for the year ended 31st March, 201641 Leases Operating lease Residential Houses for staff accommodation, offices and equipments are obtained on operating lease. Lease rent is

payable as per the lease term. The lease term is generally for 11 months and renewable for a further period at the option of the Company. There are no restrictions imposed by lease arrangements.

` in Crore



Finance lease

Operating lease

Finance lease

Operating lease

Assets taken on Finance Lease on or after 1st April, 2001Total minimum lease payments at the year end - - 0.64 -

Less: amount representing finance charges - - 0.01 -

Present value of minimum lease payments (Rate of Interest 6.00% p.a.)

- - 0.63 -

Lease payments for the year 0.64 35.98 1.28 36.79

Minimum Lease payments :

Not later than one year - 56.75 0.64 29.70

Later than one year but not later than five years - 114.40 - 35.08

Later than five years - 28.22 - 34.39

42 Employee Benefits

(i) Defined Contribution Plan

Company’s contribution to Provident Fund aggregating to ` 18.75 Crore (Previous year ` 18.70 Crore) are recognised in the Statement of Profit and Loss and capital work in progress, as applicable. There is no obligation other than the contribution payable to the respective funds.

(ii) Defined Benefit Plan

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. The plan is funded through a Gratuity Scheme administered by Life Insurance Corporation of India (LIC).

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and Capital Work in Progress -

` in Crore



Net Employee Benefit Expense recognisedCurrent Service Cost 6.12 5.48

Interest Cost 4.28 4.50

Expected Return on Plan Assets (3.01) (3.10)

Net Actuarial (gain)/loss recognised in the year 0.48 6.20

Total 7.87 13.08

Actual return on Plan Assets 3.06 3.41 The following tables summarise the components of the funded status and amounts recognised in the Balance

Sheet for the respective plans -



155

Notes to Consolidated Financial Statements for the year ended 31st March, 2016 Details of provision for Gratuity ` in Crore



Present Value of Obligation (A) 58.13 64.32Fair value of Plan Assets (B) (34.01) (39.92)Liability Recognised in Balance Sheet (Refer note 9) 24.12 24.40

(A) Changes in the present value of the defined benefit obligation are as follows:Projected Benefit Obligations (PBO) at the beginning of the year

64.32 52.19

Interest Cost 4.28 4.50Service Cost 6.12 5.48Benefits paid (17.91) (5.36)Acquisition/Transfer In/(Transfer Out) 0.65 0.99Actuarial (gain)/loss on obligations 0.67 6.52PBO at the end of the year 58.13 64.32

(B) Changes in the fair value of plan assets are as follows:Fair Value of Plan Assets at the beginning of the year 39.91 36.38Acquisition Adjustment - 2.90Expected Return on Plan Assets 3.01 3.10Contributions/Transfers 7.67 2.24Benefits paid (16.77) (5.02)Actuarial Gain / (loss) on Plan Assets 0.19 0.32Fair Value of Plan Assets at the end of the year 34.01 39.92Investment details of Plan Assets100% of the Plan Assets are administered by LICAssumptionsDiscount Rate 7.80% 7.80%Rate of Return on Plan Assets 8.50% 8.50%Mortality Indian Assured

Lives Mortality (2006 - 08)

Indian Assured Lives Mortality

(2006 - 08)

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Experience History ` in CroreParticular As at

31st March, 2016

As at31st March,

2015

As at31st March,

2014

As at31st March,

2013

As at31st March,

2012Defined Benefit Obligation at end of the period

(58.13) (64.32) (52.19) (52.34) (45.29)

Plan Assets at end of the period 34.01 39.92 36.38 37.41 36.84Funded Status (24.12) (24.40) (15.81) (14.93) (8.45)Experience Gain/(Loss) adjustments on Plan Liabilities

(0.67) (1.54) 0.48 0.75 (4.22)

Experience Gain/(Loss) adjustments on Plan Assets

0.19 0.32 0.21 0.49 1.57

Actuarial Gain/(Loss) due to change in assumptions

- (4.98) 4.15 (2.19) 1.71

The Company expects to contribute ` 9.00 Crore to its Plan Assets in Financial Year 2016 -17.



Notes to Consolidated Financial Statements for the year ended 31st March, 201643 During the previous year, the Company had capitalized abnormal cost of ` 1,203.14 Crore related to Hazira Units,

incurred prior to commencement of commercial production from integrated facility on 31st March, 2015, on the basis of opinion received from eminent experts in the field of accountancy after considering relevant accounting standards read with other pronouncements by the Institute of Chartered Accountants of India.

44 Earnings Per Share:



Net Profit/(Loss) as per Statement of Profit & Loss

` Crore (5,795.33) ` Crore 466.53

Less: Dividend on Preference Shares for the year (including dividend distribution tax)

` Crore (5.25) ` Crore (5.10)

Net Earning/(loss) for the purpose of basic and diluted earning per shares

` Crore (5,800.58) ` Crore 461.43

Weighted average number of shares for the purpose of calculating Basic earning per share

3,108,957,660 2,842,516,501

Weighted average number of shares for the purpose of calculating Diluted earning per share

3,108,957,660 2,842,516,501

Earnings/(Loss) Per ShareBasic earning/(loss) per Equity share of ` 10 each (in `)

(18.66) 1.62

Diluted earning/(loss) per Equity share of ` 10 each (in `)

(18.66) 1.62

45 Derivative Instruments and Unhedged Foreign Currency Exposure (A) Derivative Instruments

Sr No.

Type of Transaction Amount as at31st March, 2016

Amount as at31st March, 2015

Currency Purpose

1 Rupee Indexed Interest Rate Swaps (Overnight Index Swap)

- 500,000,000 INR To reduce the interest cost on Long Term Rupee Term loan

2 Principal Only Swap 4,675,000,000 16,490,000,000 INR To hedge the economic exposure on future dollar linked sales

3 Cross Currency Interest Rate Swap

975,000,000 1,000,000,000 INR To hedge the economic exposure on future dollar linked sales

4 Forward Sale Contracts (USD / INR)

- 255,000,000 USD To hedge the exchange risk on export receivables

5 Forward Purchase Contracts (USD / INR)

72,767,125 156,828,618 USD To hedge the exchange risk on Buyers Credit


55,785,533 33,947,020 USD To hedge the exchange risk on Letter of Credit / Acceptance


85,605,518 11,730,000 USD To hedge the exchange risk on Sundry Creditors

8 Forward Purchase Contracts (USD/INR)

33,200,000 - USD To hedge the exchange risk on Interest on Credit facilities

9 Forward Purchase Contracts (EURO/INR)

889,925 - EURO To hedge the exchange risk on Buyers Credit



157

Notes to Consolidated Financial Statements for the year ended 31st March, 2016Sr No.

Type of Transaction Amount as at31st March, 2016

Amount as at31st March, 2015

Currency Purpose

10 Forward Purchase Contracts (EURO/INR)

599,610 - EURO To hedge the exchange risk on letter of credit/acceptance

11 Forward Purchase Contracts (CAD/INR)

370,430 - CAD To hedge the exchange risk on Buyers Credit

12 Cross Currency EURO/USD Forward Sale Contracts

- 3,500,000 EURO To hedge the exchange risk on Buyers Credit

13 Cross Currency EURO/USD Forward Sale Contracts

- 3,500,000 EURO To hedge the exchange risk on export receivables

(B) Unhedged Foreign Currency Exposure*

Sr No.

Particulars of Transactions Foreign Currency

(FC)

As at 31st March, 2016 As at 31st March, 2015Amount in

FCAmount

(` in Crore)Amount in FC Amount

(` in Crore)1 Sundry Creditors CHF 4,789 0.03 4,789 0.03

EUR 11,093,118 83.30 13,310,512 89.86GBP 7,423 0.07 13,115 0.12JPY 30,833,950 1.82 33,849,808 1.76SEK 10,875 0.01 - -USD 90,424,786 599.81 156,545,078 979.83NOK 1,251,571 0.97 1,251,571 0.97SGD 26,684 0.12 600 0.00AUD 60,900 0.31 - -AED 66,465,868 119.89 16,674,991 28.37CAD 2,996 0.01 21,343 0.10

2 Buyers Credit EUR 516,010 3.88 3,382,418 22.83AED - - 3,381,000 5.75USD 3,288,050 21.81 20,207,407 126.48

3 Term Loans USD 1,779,555,743 11,804.31 2,130,610,851 13,335.664 Sundry Debtors USD 4,212,195 27.94 12,399,099 77.61

EUR 3,723,765 27.96 923,515 6.23AED 1,961,202 3.54 636,261 1.08

5 Advance from Customers AED 343,823 0.62 245,146 0.42EUR 153,226 1.15 63,936 0.43USD 231,324,198 1,534.44 1,328,874,814 8,317.53

6 Short Term Loans & Advances and Other Current Assets

USD 194,079,951 1,287.39 376,447,866 2,356.22

7 Cash and Bank Balances USD 46,809,039 310.50 52,830,257 330.678 Letter of Credit/ Acceptances EUR 456,005 3.42 92,872 0.63

USD 1,075,601 7.13 12,368,687 77.429 Working Capital Loans USD 67,757,075 449.45 63,557,075 397.8110 Interest Accrued on Credit

FacilitiesUSD 65,401,573 433.83 143,364,524 897.33AED - - 1,659 0.00EUR 1,693 0.01 6,369 0.04

* ‘The Company consistently enjoys natural hedge in the form of substantial export volume (besides ‘import price parity’ based domestic revenue) to offset USD/INR exchange fluctuation risk that may arise out of unhedged foreign currency liability exposure as stated above.



Notes to Consolidated Financial Statements for the year ended 31st March, 201646 Capital Work-in-Progress (including expenditure during construction period) ` in Crore


Plant & Machinery and Building including supervision, technical know-how, other capital expenditure and Capital items in stock

2,110.77 2,890.15

Mining Rights and Exploration Expenses 30.82 30.82

Preoperative Expenditure for the year

(A) Employee Benefits Expense

Salaries - 7.16

Contribution to Provident Fund, Gratuity and Other Funds

- 0.68

Staff Welfare Expenses - 1.54

- 9.38

(B) Manufacturing and Asset Maintenance :

Repairs & Maintenance and Insurance 0.62 0.42

Capacity Charges 54.79 -

55.41 0.42

(C) Administrative Expenses :

Traveling, Conveyance Exps., Vehicle Hire and Maintenance Charges

- 1.06

Postage Telephone and Fax - 1.08

Professional Fees 0.14 4.32

Depreciation - 2.56

Miscellaneous Expenses 0.24 -

0.38 9.01

(D) Finance Costs :

Bank Charges (including LC Charges, Management and Processing Fees)

0.02 30.73

Interest on Term Loan 384.97 804.56

Interest to Bank & Others 2.50 84.15

387.49 919.44

(E) Foreign Exchange Fluctuation (AS-11 notification) - 227.74

(F) Interest on Deposits with Banks & Others - (3.74)

(G) Net expenses on Trial Run for the Year (Refer Note 46 (a) given below)

21.14

1,490.21

Preoperative Expenditure during the Year 464.42 2,652.47

Add: Opening Preoperative Expenditure 1,661.37 5,316.15

Less: Allocated/transferred/capitalised during the Year (870.68) (6,307.25)

Closing Preoperative Expenditure 1,255.11 1,661.37

Total Capital Work-in-Progress 3,396.70 4,582.34



159

Notes to Consolidated Financial Statements for the year ended 31st March, 201646(a) Net expenses on Trial Run ` in Crore

Year Ended 31st March, 2016 Year Ended 31st March, 2015IncomeRevenue from Operations 1.07 2,322.59Less: Excise Duty Paid 0.11 228.71Revenue 0.96 2,093.88Other Income 1.29 2.23Total Income 2.25 2,096.11ExpensesCost of Materials Consumed 6.71 2,570.99Energy Cost 7.42 525.22Changes in Inventories of Finished Goods and Work in Progress

(3.13) (40.56)

Employee Benefits Expense 3.29 160.01Manufacturing & Asset Maintenance 2.14 157.72Administrative Expenses 6.94 160.26Selling & Distribution Expenses 0.02 52.69

23.39 3,586.32Net expenses on Trial Run for the Year -Transfer to Capital Work in Progress

(21.14) (1,490.21)

47 The Company has circulated confirmation for the identification of suppliers registered under the Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received by the Company from certain parties, no disclosures relating to amounts as at the year end together with interest paid / payable is required to be given.

48 Current Liabilities includes current maturity of long term debt (repayable within one year as per existing repayment schedule) and Long-term Export Performance Bank guarantees (EPBG) crystalized into a fund based liability, for which a repayment schedule is yet to be decided. The Company is actively engaged in discussion with its lenders to implement various initiatives/steps to improve its financial position as a part of a comprehensive restructuring plan under the RBI scheme for restructuring, including, inter alia , the following: –

(a) Fixing an appropriate repayment schedule for the crystalized fund based liability of the EPBG. (b) Fixing an appropriate repayment schedule for the term loans of the company including the completion of the

implementation of the flexible structuring of term loans under the 5/25 scheme of RBI which has been approved by the lenders but only partially implemented,

(c) Proposed infusion of Equity Funds by the promoters and conversion of Inter Corporate Deposit liabilities into Equity,

(d) Proposed conversion of part of Working capital liability into working capital term loan with a suitable repayment schedule,

(e) Proposed conversion of a portion of the liabilities into equity/quasi equity, (f) Deployment of internal accruals in improving the net working capital position. The company and the lenders have already initiated the steps in this direction and the company believes that with the

implementation of an appropriate restructuring scheme, its financial position shall improve significantly.49 Short Term Provisions Provision for Indirect Tax Matter: In respect of SEZ matter, the Company had paid custom duty (Basic duty, countervailing duty and cess) ` 180.73

Crore towards clearance made for the period 27th October, 2006 to 11th April, 2007 against Show Cause Notice (SCN) dated 7th April, 2008 issued by DGCEI pending investigation. Subsequently the Company availed CENVAT credit of ` 140.35 Crore towards countervailing duty and cess out of the said deposit paid based on a legal opinion received. A provision has been made for ̀ 19.73 Crore being non cenvatable portion of Custom duty paid for the period 11th January, 2007 to 20th March, 2007.



Notes to Consolidated Financial Statements for the year ended 31st March, 2016 Further, the Company received a show-cause notice from the Commissioner of Central Excise and Customs for

availing such credit and the Company submitted its response against the said notice received. The Company also filed a special civil application before the Honorable High Court of Gujarat seeking to quash the restriction on utilization of CENVAT Credit. The Honorable High Court granted interim stay on 11th February, 2009 on the restriction to avail the CENVAT. The Company was also advised by counsels that there is no restriction to utilize the disputed credit in wake of the High Court Order; and accordingly the Company utilized ` 124.54 Crore for discharging the excise duty liability till 31st March, 2009.

The Supreme Court vide order dated 15th April, 2009 ordered to maintain the status as on date and accordingly the balance of ` 15.81 Crore, remaining to be utilized as on the date of order has been kept un-utilized. Further vide order dated 7th March, 2011 the Supreme Court referred the matter back to Commissioner of Central Excise & Customs to take a final decision in the matter within four months with continuation of Interim Order dated 15th April, 2009. As per the directions of the Hon’ble Supreme Court order dated 7th March, 2011, the Commissioner of Central Excise Surat –I passed an adjudication order dated 28th June, 2011 demanding the reversal of the CENVAT Credit availed along with applicable interest and imposed penalty of ` 25 lacs on the Company. The Company has preferred an appeal with Stay application to the CESTAT against the order issued. CESTAT heard the appeal and remanded the matter to Commissioner, with a direction that the notice to be adjudicated along with the main notice dated 7th April, 2008 (which relates to duty demand and deposits made by the company). As per directions of CESTAT ` 15.81 Crore to be kept as balance in Cenvat credit account. Since the normal adjudication process have resumed; the Hon’ble Supreme Court disposed the Department petition as infructuous vide its order dated 8th July, 2011.Both the show cause notices are pending with the Commissioner of Central Excise Surat for adjudication.

50 During previous year, the Company had sold a Business Undertaking, comprising of slurry Pipeline at Odisha and associated facilities, to M/s Odisha Slurry Pipeline Infrastructure Limited (OSPIL) through a Business Transfer Agreement (BTA). The sale consideration for aforesaid transfer was ` 4,000 Crore which was based on valuation carried out by an independent valuation expert. The Company had booked a profit of ` 2,793.04 Crore on the same in March 2015. The Company and OSPIL also entered into Right to Use Agreement (RTU) in March 2015. As per the RTU agreement, the Company was required to pay usage charges for allocated capacity on take or pay basis.

RBI, through DBR mailbox dated 13th January, 2016 on “Principles on classification of sale and lease back transactions as restructuring”, has clarified that a sale and leaseback transaction or other transactions of similar nature will be treated as an event of restructuring for the purpose of asset classification and provisioning in the books of banks with regard to the residual debt of the seller as well as the debt of the buyer.

In view of the above, and inability of the bankers to complete the transaction, the BTA stands frustrated as it is impossible to perform the obligations as agreed in BTA. The Lenders and the Company have, in joint lenders meeting, agreed that the sale transaction be annulled and the Company would have to take back the assets and liabilities in its books after approval from lenders of both the Companies.

Due to inevitable prospect of unwinding of aforesaid transaction, a provision has been made for ` 2,793.04 Crore (including provision of ` 1,543.28 Crore against outstanding receivable from OSPIL towards sale of Business Undertaking) by the Company during the current financial year as de-recognition of “Other Income” recognized in previous year. In view of the fact that the developments, subsequent to aforesaid slump sale, are exceptional and beyond the control of the Company, it has been shown as an “Exceptional Item” in statement of Profit and Loss for the current year. In view of above, the aforesaid profit in previous year, has also been reclassified accordingly, for a meaningful comparison.

51 The Company has invested ` 738.07 Crore in the equity shares of Essar Steel Offshore Limited, Mauritius (ESOL), a wholly owned subsidiary of the Company as at 31st March, 2016. In addition, the Company along with Essar Minerals Ltd. and Essar Minerals Cooperatief U. A. had given a guarantee of up to USD 586.35 million (outstanding loan amount against the guarantee in the books of ESOL as on 31st March, 2016 is USD 413 million) for a loan taken by ESOL from Standard Chartered Bank (SCB) for the acquisition of Trinity Parent Corporation, USA (“Trinity”) in July, 2010. Trinity (through its various subsidiaries) is engaged in the extraction of steam and metallurgical coal.

The steam coal operations have been facing challenges due to availability of cheap natural gas as alternate source and increase in various environmental restrictions. SCB has issued a demand notice dated 7th December, 2015 demanding immediate repayment of the full amount of the outstanding loan, together with accrued interest and all other amount due and payable as on date, aggregating to USD 450.67 million on the principal borrower and all the guarantors. However, considering the coking coal reserves available and business valuation of Trinity by a third party based on future cash flow projections of Trinity business, no provision has been made for diminution in the carrying values of assets in the consolidated financial statement.



161

Notes to Consolidated Financial Statements for the year ended 31st March, 201652 Long Term Borrowings

` in CroreAs at

31st March, 2016

As at 31st March,

2015(1) Non Convertible Debentures

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land). 13.4% Non-Convertible Debentures redeemable on annual basis starting from June 16 (15.87% ), June 17 (42.07%), June 18 (42.07%).

312.00

312.00

312.00 312.00

(2) Term Loans From Banks and OthersSecured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The balance loan is repayable in quarterly instalments during Financial Year 2016-17 (22.68%), 2017-18 (25.28%), 2018-19 (0.54%), 2019-20 (0.54%), 2020-21 (1.07%), 2021-22 (1.07%), 2022-23 (1.07%), 2023-24 (1.07%), 2024-25 (2.68%), 2025-26 (3.22%), 2026-27 (3.22%), 2027-28 (3.22%), 2028-29 (3.22%), 2029-30 (4.83%), 2030-31 (4.83%), 2031-32 (5.37%), 2032-33 (5.37%), 2033-34 (5.37%) & 2034-35 (5.35%),

4,732.60 4,909.99

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The Balance Loan will be converted to Rupee Loan during Financial year 2016-17 (15.39%) and Financial year 2017-18 (84.61%).

565.62 533.71

Secured by pari passu first charge on fixed assets (except assets forming part of Nandniketan Township, Service Centers and 19 MW waste heat recovery power plant) and pari passu second charge on current assets of the Company. The balance loan is repayable till July 2016.

30.44 30.44

First pari passu charge on all present and future fixed assets of the Borrower including all land available with the borrower (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company. The balance loan is repayable 10 half yearly installments of 5%, 5%, 7.5%, 7.5%, 12.5%, 12.5%, 12.5%, 12.5%, 12.5% &12.5% starting from Jan 2020

497.50 469.43

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company.a) The balance loan is repayable in half yearly instalments during Financial

Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (10.53%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (16.84%) and 2022-23 (16.84%).

132.33 124.87

b) The balance loan is repayable in 13 -half-yearly instalments of 2.50%, 2.50%, 2.50%, 2.50%, 5%, 5%, 10%, 10%, 10%, 12.50%, 12.50%, 12.50% and 12.50% starting December 2015.

398.00 375.54

c) The balance loan is repayable in annual instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%).

31.51 31.30

d) The balance loan is repayable in annual instalments during Financial Year 2016-17 (11.11%), 2017-18 (11.11%), 2018-19 (15.56%), 2019-20 (15.56%), 2020-21 (15.56%), 2021-22 (15.56%), 2022-23 (15.56%).

238.80 237.85



Notes to Consolidated Financial Statements for the year ended 31st March, 2016` in Crore

As at 31st March,

2016

As at 31st March,

2015e) The balance loan is repayable 10 half yearly instalments of 5%, 5%, 7.5%,

7.5%, 12.5%, 12.5%, 12.5%, 12.5%, 12.5% and 12.5% starting March 2018.

1,061.33 1,001.45

f) The balance loan is repayable in annual instalments during Financial Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%).

787.70 743.27

g) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%)

152.57 143.96

h) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

94.52 93.89

i) The balance loan is repayable in Financial Year 2016-17(5.26%), 2017-18 (10.53%), 2018-19 (10.53%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%), 2022-23 (14.74%) and 2023-24 (14.74%),

138.64 137.70

j) The balance loan is repayable in Financial Year 2016-17 (10%), 2017-18 (10%), 2018-19 (10%),2019-20 (14%),2020-21 (14%),2021-22 (14%),2022-23 (14%) and 2023-24 (14%).

265.33 250.36

k) The balance loan is repayable in Financial Year 2016-17 (10%), 2017-18 (10%), 2018-19 (10%),2019-20 (14%),2020-21 (14%),2021-22 (14%),2022-23 (14%) and 2023-24 (14%).

92.87 87.63

l) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

505.91 522.57

(m) The balance loan is repayable in Financial Year 2016-17(2.00%), 2017-18 (1.00%), 2018-19 (1.00%), 2019-20 (1.00%), 2020-21 (2.00%), 2021-22 (2.00%), 2022-23 (2.00%), 2023-24 (2.00%), 2024-25 (5.00%), 2025-26 (6.00%), 2026-27 (6.00%), 2027-28 (6.00%), 2028-29 (6.00%), 2029-30 (9.00%), 2030-31 (9.00%), 2031-32 (10.00%), 2032-33 (10.00%), 2033-34 (10.00%) and 2034-35 (10.00%).

258.59 267.11

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders.a) The balance loan is repayable in yearly instalments during Financial

Year 2016-17 (15.79%), 2017-18 (10.53%), 2018-19 (14.74%), 2019-20 (14.74%), 2020-21 (14.74%), 2021-22 (14.74%) and 2022-23 (14.74%).

567.15 535.15

b) The balance loan is repayable in annual instalments during Financial Year 2016-17 (7.22%), 2017-18 (6.19%), 2018-19 (10.31%), 2019-20 (17.53%),2020-21 (17.53%),2021-22 (20.62%) and 2022-23 (20.62%).

321.71 303.57



163


As at 31st March,

2016

As at 31st March,

2015Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. Balance Loan will be repaid during financial year 2016-17 (22.84%), 2017-18 (0.79%), 2018-19 (0.79%), 2019-20 (0.79%), 2020-21 (1.57%), 2021-22 (1.57%), 2022-23 (1.57%), 2023-24 (1.57%), 2024-25 (3.94%), 2025-26 (4.72%), 2026-27 (4.72%), 2027-28 (4.72%), 2028-29 (4.72%), 2029-30 (7.09%), 2030-31 (7.09%), 2031-32 (7.87%), 2032-33 (7.87%), 2033-34 (7.87%) & 2034-35 (7.87%)

1,434.62 1,502.02

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited and personal guarantee of a promoter. Loan will be repaid in Quarterly Installments during financial year 2016-17 (6.46%), 2017-18 (4.41%), 2018-19 (11.01%), 2019-20 (20.84%), 2020-21 (21.01%), 2021-22 (20.76%), 2022-23 (15.51%) till September 2022.

2,950.63 2,955.00

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Limited and personal guarantee of a promoter. Balance Loan will be repaid in Quarterly Installments during financial year 2016-17 (2.86%), 2017-18 (4.87%), 2018-19 (12.89%), 2019-20 (12.89%), 2020-21 (12.55%), 2021-22 (12.38%), 2022-23 (12.38%), 2023-24 (14.38%), 2024-25 (0.85%), 2025-26 (1.02%), 2026-27 (1.02%), 2027-28 (1.02%), 2028-29 (1.02%), 2029-30 (1.53%), 2030-31 (1.53%), 2031-32 (1.70%), 2032-33 (1.70%), 2033-34 (1.70%), 2034-35 (1.70%).

5,667.41 5,337.41

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Limited and personal guarantee of a promoter. Balance Loan will be repaid in Quarterly Installments during financial year 2016-17 (2.50%), 2017-18 (5.00%), 2018-19 (15.00%), 2019-20 (15.00%), 2020-21 (15.00%), 2021-22 (15.00%), 2022-23 (15.00%), 2023-24 (17.50%) starting from December 2016.

164.10 154.84

Secured by subservient charge on moveable fixed assets and current assets. The loan repaid during Financial Year 2015-16.

- 12.75

Secured by subservient charge on all moveable fixed assets & current assets of the company, Corporate Guarantee of Essar Steel Limited and pledge of certain shares held in the company by its shareholders. Loan fully repaid in Financial Year 2015-16

- 175.00

Secured by Pledge of Shares held in EPOL & BPOL held as investments by the company, subservient charge on all moveable fixed assets & current assets of the company, Corporate Guarantee of Essar Steel Limited, Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited and pledge of certain shares held in the company by its shareholders. Loan is repayable in equal monthly Installments till Sept’16.

50.00 125.04




As at 31st March,

2016

As at 31st March,

2015Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held by pledge providers in ESIL, Corporate Guarantee of Essar Steel Asia Holding limited & Essar Steel Mauritius Limited. The balance loan is repayable in 12 half yearly instalments of 5%, 5%, 7.5%, 7.5%, 7.5%, 7.5%, 7.5%, 7.5%, 10%, 10%, 12.5% and 12.5% starting September 2016.

746.25 704.15

Secured by pari passu first charge on entire fixed assets of the company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Second pari passu charge on entire present and future current assests of the company. The balance loan is repayable in Financial Year 2016-17 (18.75%), 2017-18 (25.00%), 2018-19 (25.00%), 2019-20 (25.00%), 2020-21 (6.25%).

160.00 -

Secured by subservient charge on its fixed movable and current assets of the Company. The loan is fully repaid during Financial Year 2015-16

- 100.00

Secured by subservient charge on its fixed movable and current assets of the Company. The loan is fully repaid during Financial Year 2015-16

- 63.00

Secured by subservient charge on its movable fixed assets and current assets of the company located at Hazira. The loan is fully repaid during Financial Year 2015-16

- 175.00

One of the Subsidiaries has taken loan for Construction of Service Center which is secured by Pledge of plant & machinery and other movable assets related to project, mortgage over the factory building and corporate guarantee issued by the company

- 6.26

One of the Subsidiaries has taken loan from Bank which is secured by unconditional and irrevocable standby letter of credit (organised by the company)and margin deposits of the said subsidiary

954.66 900.81

One of the Subsidiaries has taken loan which is secured by :(a) Assignment of Contracts by way of security by the said subsidiary which will

assign its rights and interest in: (i) The Advance Payment Guarantee (ii) The Advance Payment and Supply Agreement (iii) The Trade bank Mandate(b) Charge over the Collection Account(c) Charge over the DSRA account

- 156.48

One of the Subsidiaries has taken loan for purpose of funding working capital requirement and the same is secured by unconditional and irrevocable stand-by letter of credit in USD currency amounting to 102% of the facility amount

39.47 23.60

Secured by pledge of shares of Essar Offhsore Limited and chain of share holding in step down subsidiary companies, Essar Minerals Limited, Essar Minerals Canada Limited, Essar Minerals Inc and Membership rights of Essar Mineral Cooperatief U.A. and corporate guarantees of the company and its subsidiary companies, Essar Minerals Limited and Essar Mineral Cooperatief U.A.

2,739.01 2,585.00

Secured by First lien on Financed Mining Equipments purchased by one of its Subsidiary, New Trinity Holding LLC

68.70

64.82

25,847.96 25,840.94



165


As at 31st March,

2016

As at 31st March,

2015(3) Buyers Credit Capital Expenditure

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land) and second pari passu charge on the current assets of the Company. The facility converted into long term loans on maturity.

-

51.12

- 51.12

(4) Dollar Notes / Rupee NotesRupee Notes is repayable up to 31st March, 2018 Dollar Notes is repayable on 31st March, 2018.

230.00 226.32

(5) Payment of the Deferred Sales Tax Benefit shall be made during financial year 2016-17 (5.17%), 2017-18 (10.36%), 2018-19 (15.85%), 2019-20 (20.00%), 2020-21 (20.00%), 2021-22 (14.83%), 2022-23 (9.64%), 2023-24 (9.15%) for each year’s collection (i.e. collection from 2005-06 to 2008-09) starting from April, 2016.

33.32 33.32

(6) Long term LiabilitiesAdvance against Export Performance Bank Guarantee:Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company. The balance EPBG is repayable in Financial Year 2015-16 (3.79%) 2016-17 (3.79%), 2017-18 (3.79%), 2018-19 (5.46%), 2019-20 (9.89%), 2020-21 (11.96%), 2021-22 (13.98%), 2022-23 (15.52%), 2023-24 (18.71%), 2024-25 (13.11%).

- 6,784.86

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari-passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited. The balance EPBG is repayable in Financial Year 2015-16 (3.90%), 2016-17 (3.90%), 2017-18 (3.90%), 2018-19 (9.61%), 2019-20 (11.43%), 2020-21 (14.29%), 2021-22 (14.55%), 2022-23 (19.22%), 2023-24 (19.22%).

-

538.21

- 7,323.07

53 Short Term Borrowing(1) Short Term Loans

From BanksSecured by subservient charge on all fixed assets of the company. The Loan has become due for repayment during Financial Year 2015-16

100.00

100.00

100.00 100.00

(2) Working Capital Loans - From BanksWorking Capital Loans are secured by pari passu first charge on the current assets of the Company, second charge on fixed assets of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Corporate Guarantee of Essar Investments Limited and Personal guarantee of Promoters upto ` 1,120 Crs

5,446.93

2,026.02

5,446.93 2,026.02




As at 31st March,

2016

As at 31st March,

2015(3) Buyers’ credit for Operational Expenditure

Secured by margin deposits with the banks & secured by first charge on the current assets, second charge on the fixed assets (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), Corporate Guarantee of Essar Investments Limited and Personal guarantee of Promoters upto ` 1,120 Crs

515.05

1,084.16

515.05 1,084.16

54 Other Current Liabilities :i. Export Performance Bank Guarantee Crystalised

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company.

6,248.37 -

Secured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company and pledge over certain shares held in the company by its shareholders, Corporate Guarantee of Essar Steel Asia Holding Limited & Essar Steel Mauritius Limited.

582.33

-

6,830.70 -

ii. Advance against Export Performance Bank GuaranteeSecured by pari passu first charge on movable fixed assets and mortgage of immovable properties of the Company (except leasehold rights on the Visakhapatnam Port Trust land and Orissa ISP land), second pari passu charge on the current assets of the Company.

975.09

-

975.09 -

55 The figures of the previous year has been regrouped, where necessary, to conform to current year’s classification.

In terms of our report of even date attached For and on behalf of the Board of Directors of Essar Steel India Limited

For M. M. Chaturvedi & Co.,Chartered Accountants



ESSAR STEEL INDIA LIMITEDRegistered Office: 27th KM, Surat Hazira Road, Hazira, Dist. Surat, Pin-394270, Gujarat

Tel. : 0261-668 2400 Fax : 0261-668 5731 email : [email protected] CIN: U27100GJ1976FLC013787

FORM MGT 11 Proxy Form

[Pursuant to Section 105 (6) of the Companies Act, 2013 andRule 19(3) of the Companies (Management and Administration) Rules, 2014]

Name of the Member(s)

Registered Address

Email ID

Folio No. / DP ID No. & Client ID

I/We, being the Member(s), holding.................... Shares of the above named Company, hereby appoint.

1. Name..................................................................................................................Address..............................................................................

......................................................................................................................................................................................................................

Email id…………………………………………………….......................…Signature……………............……...................…............…………..

or failing him

2. Name..................................................................................................................Address..............................................................................

......................................................................................................................................................................................................................


or failing him

3. Name..................................................................................................................Address..............................................................................

......................................................................................................................................................................................................................


ESSAR STEEL INDIA LIMITEDRegistered Office: 27th KM, Surat Hazira Road, Hazira, Dist. Surat, Pin-394270, Gujarat

CIN: U27100GJ1976FLC013787Attendance Slip

STEEL

STEEL

Folio No. / DP ID No. & Client ID No.*

No. of Equity Shares held

I hereby record my presence at the 40th Annual General Meeting of ESSAR STEEL INDIA LIMITED being held at Utsav Community Hall, Nandniketan Township, Hazira, District-Surat, Gujarat, Pin-394270 on Wednesday, December 21, 2016 at 2.00 p.m.

Name of Shareholder (In Block Letters)

Name of the Proxy holder / Authorised Representative**

* Applicable for investors holding shares in Electronic Mode** Strike out whichever is not applicable

Signature of the Shareholder/Proxy/Authorised RepresentativeNOTE:1. A member / proxy / authorised representative wishing to attend the Meeting must complete this Admission Slip before coming to the

Meeting and hand it over at the entrance.2. If you intend to appoint a proxy, please complete, stamp, sign and deposit the Proxy Form given below at the Company’s Registered

Office at least 48 hours before the Meeting.

as my/our Proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 40th Annual General Meeting of ESSAR STEEL INDIA LIMITED to be held on Wednesday, December 21, 2016 at 2.00 pm. and at any adjournment thereof in respect of such resolutions as are indicated below.

Resolution Number Resolution Type of

ResolutionOptional*

For Against1 Adoption of Financial Statements for FY 2015-16 Ordinary2 Re-appointment of Shri J Mehra (DIN 00042789) as Director Ordinary3 Re-appointment of Smt. Gayathri Sukumar (DIN 07115908) as Director Ordinary4 Re-appointment of Statutory Auditors Ordinary5 Appointment of Shri Parveen Kumar Malhotra (DIN 03494232) as Director Ordinary6 Appointment of Shri Rajiv Kumar Bhatnagar (DIN 07018252) as Director Ordinary 7 Appointment of Shri Rajiv Kumar Bhatnagar (DIN 07018252) as Whole Time

Director designated as Director ProjectsSpecial

8 Re-appointment of Shri V G Raghavan (DIN 00008683) as Independent Director Ordinary 9 Re-appointment of Shri Arvind Pande (DIN 00007067) as Independent Director Ordinary 10 Re-appointment of Shri Dilip Oommen (DIN: 02285794) as Managing Director &

CEO of the CompanySpecial

11 Re-appointment of Shri Mahadev Iyer (DIN: 01871295) as Whole Time Director designated as Director Finance & CFO of the Company

Special

12 To ratify the remuneration of the Cost Auditors for the financial year ending 31st March, 2017

Ordinary

Signed this …………………………… day of …………………......…… 2016.

Signature of the Shareholder ……………………………………………………

Signature of the Proxy Holder(s) .................................................... .................................................... ....................................................

* Strike out whichever is not applicable.

Note: The proxy, in order to be effective, should be duly completed, stamped, signed and must be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the Meeting.

Affix Re. 1 Revenue

Stamp

ESSAR STEEL INDIA LIMITED40th Annual General Meeting Venue - Route Map

Utsav Community Hall, Nandniketan Township, Hazira, Dist.: Surat, Gujarat, Pin-394270

essar steel india limited · essar steel india limited 1 ... company secretary shri pankaj s...

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