Final 222

Accounting Standards
Chapter 1
RESEARCH DESIGN
INTRODUCTION:
Steel is the widely used metal in the world. It is a versatile commodity which forms the core
constitute of all major economies. As a result steel consumption is a derivative of the growth
pattern of its various end-user sectors like construction, machinery, automobile, ship
building, appliances, petroleum, container, railways etc.
Thanks to liberalization and privatization, the Indian market is confronted with intense
competition, which has propelled a growing number of firms to look out for new
opportunities in terms of new products, new markets, and the like. To ensure success in the
introduction of any new product, among other things, a sokid understanding of the target
market is necessary. The success or failure of a new product depends on the decision of a
prospective buyer to adopt or otherwise, the product in question. Adoption is the decision of
an individual to become a user of the product, irrespective of wherever he is an intensive or
casual user. Thorough understanding of the individual’s adoption process is necessary for the
marketers to influence the individual’s adoption process is necessary for the marketers to
influence the individual to travel positively throughout the adoption process and quicken the
same.
Steel products fall into two main categories, namely flat products and long products. Flat
products are derived from slab and mainly comprise of hopt rolled (HR) coils, plates and
sheets. Long products derive their name from their shape and are made using billets and
blooms, which includes rods, bars, pipes, ropes and wires. There were some signs of evidence
of slow down in the global economy in the year 2005 but it continued expanding and
sustaining its positive movement of growth at 3.5% vies-a-vis 4% in 2004. The factors that
could be attributed for this slow down were marked higher oil prices, tightening monetary
policy in us/other countries, sleep increase in prices of non- ferrous base metals.
Allum Karibasappa Institute of Management -Bellary Page 1

Steel comprises one of the most outputs off all sections of economy steel industry is both
a basis & core industry. The economy of any nation depends upon a strong base on iron &
steel production. Past history has shown that countries having a strong potentially for iron &
steel products have played a predominant role in advancement of civilization in the world.
Steel is such a versatile commodity that every object we see in our day to day life uses either
directly or indirectly. Steel is use in producing small products such as nail, pins, needles etc.
through surgical instruments, boilers, ships, bridges, automobile part to heavy instruments,
currents raises heavy structures buildings etc. Everywhere steel is versatile & an
Indispensable item.
The growth of steel industry can be traced out conveniently studied by dividing the periods
into post & pre independence period. By 1950 the total installed capacity for ignorant steel
production quantity was not significant and development in the steel sector mainly due to
apathy of the government. Only after independence serious steps were taken to develop this
sector and the capacity was increased from 2.2 to about 16 million tons by 1990,s.
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilization. The level of per capital consumption of steel is treating as an
important index of the level of socio economic development and living standards for the
people in any country. It is a product of a large and technologically complex industry having
strong forward and backward linkages in terms of material flow and incomes generation. All
major industry economic are characterized by the existence of strong in industry in their
initial stages of development.

STATEMENT OF THE PROBLEM

The problem of the project is to study the accounting standards followed by JSW and the
effect of those standards on the financial statements of the company such as balance sheets
and to evaluate its efficiency and performance on the growth of the organization.
OBJECTIVES
The following are the objectives of this study:-
 To make the study on the Financial Statements like Balanced Sheet, profit & loss
account and cash flow statement of JSW to evaluate its performance and soundness.
 To provide valuable suggestions as far as possible for the effective functioning

and evaluation of financial performance of the company.
 To know the implementation of following accounting standards which are mandatory

in nature introduced by The Institute of Chartered Accountants of India
• Disclosure of the Accounting Policies.
• Valuation of Inventories.
• Cash Flow Statement.
• Contingencies and Events Occurring after Balance Sheet date.
• Accounting for Fixed Assets.
• Depreciation Accounting.
• Related Party Disclosure etc.
 To know the efficiency of the management of the company.

SCOPE
The study can be analyzed from the following ways:-
 Analysis of the implementation of various Accounting Standards.

 Review of the implementation of the Accounting Standards in the company in order

to measure whether the company is following these standards as per the guidelines of
Institute of Charted Accountants of India.
 Summarizing the conclusions and findings and also by indicating the corrective
measures where necessary.
METHODOLOGY
Jindal South West Steel Ltd. has been selected to know the performance and soundness of
Accounting Standards in the company as it has huge daily financial transactions involve in
India and abroad. So it requires deep knowledge to deal with the accounts of JSW in order to
deal with the account maintenance and follow of accounting standards. For this project data
has been collected from two main sources:-
 Primary Data.
 Secondary Data.
 Primary Data: - primary data was collected through interview with

Mr.MURLIDHAR, DGM (F&A), survey and discussion with the concerned
Employees, Executives and Managers in the JSW.
 Secondary Data: - these data are developed from the primary data for a specialized
purpose. The secondary data is collected from both internal and external sources .The
internal source includes Company’s annual reports, broachers, publications etc.
External sources include books, journals, magazines, news papers, and internet.
LIMITATIONS OF THE STUDY:
The followings are the limitations of the study:
• The research study is conducted for a short span of two months.

• The findings provided by the industry guide, may be based on the window dressing of
financial statements.
• The study was limited to Torangallu only.
• The project was having time constraint as well as resource constraint.
Chapter 2
INDUSTRY PROFILE
Global Scenario
• In 2007 the World Crude Steel output reached 1343.5 million metric tons and showed
a growth of 7.5% over the previous year. It is the fifth consecutive year that world
crude steel production grew by more than 7%.
• China remained the world’s largest Crude Steel producer in 2007 also (489.00 million
metric tons) followed by Japan (112.47 million metric tons) and USA (97.20 million
metric tons). India occupied the 5 th position (53.10 million metric tons) for the
second consecutive year.
• The International Iron & Steel Institute (IISI) in its forecast for 2008 has predicted
that 2008 will be another strong year for the steel industry with apparent steel use
rising from 1,202 million metric tonnes in 2007 to 1,282 million metric tonnes in
2008 i.e. by 6.7%. Further, the BRIC ( Brazil, Russia, India and China) countries will
continue to lead the growth with an expected increase in production by over 11%
compared to 2007.
Domestic Scenario

• The Indian steel industry have entered into a new development stage from
2005-06, riding high on the resurgent economy and rising demand for steel. Rapid rise
in production has resulted in India becoming the 5 th largest producer of steel.
• It has been estimated by certain major investment houses, such as Credit
Suisse that, India’s steel consumption will continue to grow at nearly 16% rate
annually, till 2012, fuelled by demand for construction projects worth US$ 1 trillion.
The scope for raising the total consumption of steel is huge, given that per capita steel
consumption is only 40 kg – compared to 150 kg across the world and 250 kg in
China.
• The National Steel Policy has envisaged steel production to reach 110 million
tonnes by 2019-20. However, based on the assessment of the current ongoing
projects, both in Greenfield and Brownfield, Ministry of Steel has projected that the
steel capacity in the county is likely to be 124.06 million tonnes by 2011-12. Further,
based on the status of MOUs signed by the private producers with the various State
Governments, it is expected that India’s steel capacity would be nearly 293 million
tonne by 2020.
Production
• Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.
• Today, India is the 7th largest crude steel producer of steel in the world.
• In 2008-09, production of Finished (Carbon) Steel was 59.02 million tonnes.
• Production of Pig Iron in 2008-09 was 5.299 Million Tonnes .
• Last 5 year's production of pig iron and finished (carbon) steel is given below:
(in million tonnes)

Category 2004-05 2005-06 2006-07 2007-08 2008-09
Pig Iron 3.228 4.695 4.993 5.314 5.289
Finished Carbon Steel 40.055 44.544 55.416 58.233 59.02
(Source: Joint Plant Committee)
Demand - Availability Projection

• Demand – Availability of iron and steel in the country is projected by Ministry

of Steel annually.
• Gaps in Availability are met mostly through imports.
• Interface with consumers by way of a Steel Consumer Council exists, which is
conducted on regular basis.
• Interface helps in redressing availability problems, complaints related to
quality.
Steel Prices
• Price regulation of iron & steel was abolished on 16.1.1992. Since then steel
prices are determined by the interplay of market forces.
• There has been an up-trend in the domestic steel prices since 2006-07 and the
trend accentuated since January this year.
• Rise in raw material prices, strong demand in the international and domestic
market and up-trend in the global steel prices have been some of the reasons cited by
the industry for increase in the steel prices in the domestic market.
• The mismatch in demand and supply is considered to be the main reason on
the demand side for the rise in steel prices. Honorable Steel Minister has held
discussion with all major steel investors including Arcellor-Mittal, POSCO, Tata
Steel, Essar, Ispat and also SAIL, RINL to explore the possibility of expediting the
ongoing as well as envisaged steel projects.
• The Government also took various fiscal and other measures for stabilizing the
steel prices like exempting pig iron, non alloy steel and steel making inputs like zinc,
ferro-alloys and met coke from customs duty; withdrawing DEPB benefits on export
of various categories of steel products and bringing back railway freight on iron ore
from classification 180 to 170 for domestic steel producers.
• In May 2008, the Government imposed 15% export duty on semi-finished
products, and hot rolled coils/sheet, 10% export duty on cold rolled coils/sheets and

pipes and tubes and 5% export duty on galvanized steel in coil/sheet form in order to
further curtail rising prices and increase supply of steel in the domestic market.
Imports of Iron & Steel
• Iron & Steel are freely importable as per the extant policy.
• Last five years import of Finished (Carbon) Steel is given below:-
Year Qty. (In Million Tonnes)

2004-2005 2.109
2005-2006 3.850
2006-2007 4.436
(Partly estimated)
2007-08 6.581
2008-2009 5149
(Partly estimated)
Exports of Iron & Steel
• Iron & Steel are freely exportable.

• Advance Licensing Scheme allows duty free import of raw materials for
exports.
• Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports.

Under this scheme exporters on the basis of notified entitlement rates, are granted due

credits which would entitle them to import duty free goods. The DEPB benefit on
export of various categories of steel items scheme has been temporarily withdrawn
from 27th March 2008, to increase availability in the domestic market.
• Exports of finished carbon steel and pig iron during the last five years and the
current year is as :
Exports (Qty. in Million Tonnes)

Year Finished (Carbon) Steel Pig Iron
2004-2005 4.381 0.393
2005-2006 4.478 0.440
2006-2007 4.750 0.350
(Prov.estimated)
2007-2008 4.627 0.560
2008-2009 3.482 0.350
(Prov.estimated)
Levies on Iron & Steel
SDF LEVY- This was a levy started for funding modernization, expansion and development
of steel sector.
The Fund, inter-alia, supports:
1. Capital expenditure for modernization, rehabilitation, diversification, renewal

& replacement of Integrated Steel Plants.

2. Research & Development

3. Rebates to SSI Corporations
4. Expenditure on ERU of JPC
o SDF levy was abolished on 21.4.94

o Cabinet decided that corpus could be recycled for loans to Main
producers
o Interest on loans to Main Producers be set aside for promotion of R&D
on steel etc.
o An Empowered Committee has been set up to guide the R&D effort in
this sector.
o EGEAF – Was a levy started for reimbursing the price differential cost
of inputs used for engineering exporters. Fund was discontinued on 19.2.96.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy has opened up the iron and steel sector for private investment by
(a) removing it from the list of industries reserved for public sector and (b) exempting it from
compulsory licensing. Imports of foreign technology as well as foreign direct investment are
freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role
of facilitator, providing broad directions and assistance to new and existing steel plants, in the
liberalized scenario.
The Growth Profile
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Government have
given a definite impetus for entry, participation and growth of the private sector in the steel
industry. While the existing units are being modernized/expanded, a large number of

new/Greenfield steel plants have also come up in different parts of the country based on
modern, cost effective, state of-the-art technologies.
At present, total (crude) steelmaking capacity is over 34 million tonnes and India, the 8th
largest producer of steel in the world, has to its credit, the capability to produce a variety of
grades and that too, of international quality standards. As per the ratings of the prestigious
“World Steel Dynamics", Indian HR Products are classified in the Tier II category quality
products – a major reason behind their acceptance in the world market. EU, Japan has
qualified for the top slot, while countries like South Korea, USA share the same class as
India.
(ii) Pig Iron
In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the
secondary sector. Post liberalization, the AIFIs has sanctioned 21 new projects with a total
capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned.
The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28
million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221
million tonnes.
SWOT ANALYSIS
Strengths
1. Availability of iron ore and coal: India has abundance of iron ore, coal & other raw
materials required for iron & steel making. It has 4th largest iron ore reserves (13 bn
tons) in the world.
2. Low labor wage rates: India has low unit labor cost, this gets reflected in low cost of
production
3. Abundance of quality manpower: It has 3rd largest pool of technical manpower, next
to United States & erstwhile USSR, capable of understanding and assimilating new
technologies.
4. Mature production base
Weakness
1. Unscientific mining: India is deficient in raw materials required by the steel industry.
Iron ore deposits are finite and there are problems in mining sufficient amounts of it.
India's hard coal deposits are of low quality
2. Low productivity: According to an estimate crude steel output at the biggest Indian
steelmaker is roughly 144 tonnes per worker per year, whereas in Western Europe the
figure is around 600 tonnes.
3. Power shortages: Steel production in India is also hampered by power shortages.
4. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure

impediments to hamper the growth of Indian steel industry
5. Low R&D investments: There are inadequate investments in infrastructure.
6. High cost of debt: Since huge capital investment is required therefore cost of these
dbt is very high
Opportunities
1. Unexplored rural market: The Indian rural market remains fairly unexposed to the
multi-faceted use of steel.
2. Growing domestic demand: There is enormous scope for increasing consumption of
steel in almost all sectors in India.
3. Export Market Penetration: It is estimated that world steel consumption will double
in next 25yrs. Quality improvement of Indian steel combined with low cost
advantages will definitely help in substantial gain in export market.
4. Consolidation: As global companies have realized the threat of excess supply, they
are looking at M&A (mergers and acquisitions) option to retain market share and
improve margins.

Threats
1. Technological change: Technological changes force the industry structure to change.
In India where capital itself is costly, technological obsolescence is a major threat.
Price sensitivity & Demand volatility: The demand for steel is derived demand and
the purchase quantity depends on end-use requirements. The traders are price
sensitive and buy when there are discounts.
2. Dumping of steel by developed countries: High quality products for developed

countries available for imports at competitive prices.
3. Slow Industry Growth
Industry Statistics
Government targets to increase the production capacity from 56 million tones annually to 124
MT in the first phase which will come to an end by 2011 - 12. Currently with a production of
56 million tones India accounts for over 7% of the total steel produced globally, while it
accounts to about 5% of global steel consumption. The steel sector in India grew by 5.3% in
May 2009. Globally India is the only country to post a positive overall
Hurdles
Power shortage hampers the production of steel Use of outdated process for production
Lags behind in the production of stainless steel Deficiency of raw materials required by the
industry Labor productivity is low. It is 144 tons per worker per year against 600 tons in
Western Europe as per estimates inadequate shipment capacity and transport structure
Consumption
India's steel consumption rose 8 per cent in the year ended March 2010, over the same period
a year ago on account of improved demand from sectors like automobile, infrastructure and
housing. The country’s steel consumption increased to 56.3 MT in the 12 months to March
2010 from 52.3 MT in the previous year, as per the Ministry of Steel

Chapter 3
COMPANY PROFILE:
Jindal group is fastest growing group with enviable business trend record and a strong
market presence in India today. Jindal was established by O P Jindal, in year 1952 with small
unit making steel pipes, bends & sockets at Liluah, near Kolkata.
JSW (Jindal South West) was established in year 1982 by O P Jindal and today JSW
is ranked 4th among the top Indian businesses in terms of sales and profit. JSW Steel Ltd is
located at Tornagallu in the Bellary-Hospet area the heart of high grade iron-ore belt; spread
over 3700 acres of land. The plant is 340 km from Bangalore and well connected Goa and
Chennai ports.
JSW group is one of the fastest growing business conglomerates with a strong
presence in the core economic sector. This Sajjan Jindal led enterprise has grown from a steel
rolling mill in 1982 to a multi business conglomerate worth Rs. 15700 cr. (US $ 3.7 billion).
As a part of the US $ 8 billion O. P. Jindal Group, JSW group has diversified interests
in Steel, Energy, Minerals, Mining, Aluminum, Infrastructure and Logistics, Cement and
Information Technology. On its road to growth and expansion, the JSW Group is also
conscious about its responsibility towards the environment and social development. Eco-

efficiency is a matter of principle. Preventive measures for damage to the environment are
taken into account at the planning stage of production and growth.
The JSW took a lead in adopting the latest technology of steel making as COREX
developed by vest alpine of Austria. Using COREX is more environment friendly as
compared to the earlier used furnace technology, to produce Hot Metal. JSW has achieved 7
MTPA production of steel in the year 2008 and it will further expand to 10 MTPA by 2010.
Its Eco- friendly approach has also led to the development of Vijayanagar into a
modern township. Enveloped by acres of greenery and maintained by JSW, Vijayanagar is
prospering by leaps and bounds. Be it education, career opportunity or women empowerment,
the company’s initiative has gone a long way in making Vijayanagar the success that it is
today.
Sales Turnover:
Highlights of 2008-09
• Crude steel output up by 3% to 3.724 million tones.

• Gross turn over up by 20% to 15, 179 crores.
• EBIDTA Rs. 3,093 crores.
• PAT Rs. 459 crores.
• Debt repayment Rs. 1,040 crores.
• Equity Dividend Rs. 1 per share.
Products Profile:
The basic products at JSW Steel Ltd are as follows:
• Pellets.
• Hot Rolled Coils.
• Plates and Sheets.
Pellet Plant-
The rated capacity of 5 MTPA and pellet size ranges from 6 mm to 12 mm.
The pellet of iron manufactured here for the use of COREX.
Agglomeration: It is the process of converting ore fines into limps of suitable physical
characteristics. Pelletisation is one of the techniques used for agglomeration of iron ore
fines.
Pelletisation and Pellet: It is the process in which iron ore fines are converted into tiny
balls of suitable size by rolling the fine materials with a critical amount of water and to
which an external binder or additive may be added. Tiny balls produced are called pallets.

Raw material required-
• Iron ore.
• Limestone.
• Dolomite.
• Coal/CDP dust.
• Coke.
• Corex/BOF Sludge.
• Water.
Hot Rolled Coils:
The Hot Strip Mill (HSM) has been engineering by Danieli United, USA
incorporating the latest technology and is equipped with a high level of automation, provided
by Cegelec, USA, allowing a complete hand off operation and here, the steel slabs are rolled
into coil.
Specifications-
Thickness 1.8 mm to 10 mm
Width 800 mm to 1250 mm
Coil weight 14 tonnes to 21.5 tonnes
Plates and sheets:
Cold rolling is a complex process of plastic deformation of metals between pairs of

rotating rolls to reduce thickness of hot rolled strips and impart desired mechanical and
metallurgical properties to them. Forming is considered as the most economical
manufacturing process as there is no loss of metal in it. In this process desired size and shape
are obtained through the plastic deformation of metal.

Specifications:
Thickness 3 mm to 10 mm
Width 800 mm to 1250 mm
Length 2.5 meters to 10 meters
Ownership Pattern:
Total % of
Category of Share No of Total no of Percentage of share
Holders Share shares total no of holding on
Holders shares each
category
Indian 50 4778236 43.05%
Promoters 55.90%
Foreign 10 1426150 12.85%
Institutional 52 2164351 19.50%

Public 44.10%
Shareholding Non 32540 2730888 24.60%
Institutional
Share held by custodians 0 0 0 0
Total 32652 11099625 100% 100%
1.
Competitors Information:
Major competitors of JSW Steels Ltd are:
• Steel Authority of India Ltd. (SAIL)
• Rashtreeya Ispat Nigam Ltd. (RINL)
• Liyod’s Steel Industries Ltd.
• Tata Steel Company (TISCO)
• Essar Steel

Steel Authority of India:
It is contemplating cost reduction through cutting operating expenses, purchasing

expenses, social infrastructure expenses; inventory carrying costs etc. the company is aiming
at reducing its main power from a level of 170000 to 100000 in next 3-4 years through a
combination of natural attribution and VRS schemes. SAIL is redeploying its surplus assets
within its own units to productive use.
Rashtreeya Ispat Nigam Ltd:
The company has taken number of restricting majors to improve financial

performance of the plant with Govt. assistance.
TATA Steel Company:
It is amongst the lowest cost steel producers of HR coils in the world and their vision
is to become the lowest cost steel producer of the world in the near future. Based on the
platform of low cost raw material and a modern plant the company targets to produce HR
coils at the cost below OSD 170/ ton. The labor productivity is still poor and absence of
safety net, it is difficult to play off redundant labor.
ESSAR Steel:
It uses power from its own captive plant and uses 70% lump are to achieve cost
reduction. The company is planning of installing a pallet plant for reducing cost of production
and achieving the economy of operation besides continuous. It has introduced contract
system of labor instead of permanent.
LIYOD’S Steel Ltd:
The company entered into an agreement with western coalfields Ltd (WCL) for
opening an underground mine exclusively for the use of Liyod’s Steel.
The demand for steel is also expected to go up with automobile sector, which is a
major user segment showing signs of revival. The government, at the centre is expected to
provide much needed political stability and is also expected to increase spending on
infrastructure activities there by increasing the demand of steel.

ENVIRONMENTAL POLICY
Works towards a continuous up gradation in our environment interest by achieving globally

presence with a view towards creating a greener world.
JSW commitment towards environment will be achieved by:-
 Restoring and conserving the ecological balance.
 Implementing effective environmental management practices in all activities
 Carrying out operations for going beyond compliance of statutory rules and
regulations.
 Promoting Zero Waste concepts by implementing recovery recycle and reuse
technologies.
 Growing green belt and ecological parks in and around the plant.
 Evaluating & including environmental awareness among all employees.
Vision, Mission
“Transform steel domain through innovations”
JSW’s 5 years Vision:
• Value and groom people for innovating the future.
• Continuous improvement in the value chain for cost stewardship.

• Nurture lasting customer relationship by anticipating their needs and delivering

beyond expectation.
• Catalyst for growth of India’s steel and power industries.
• Out of the box marketing of value added branded products for domestic and global
markets.
• Inspire community growth with utmost care for the environment in areas in which
they operate.
Mission:
JSW corporate mission guide the approach to the work and environment, which
transforms the way they deliver their products and services. To achieve a turnover of Rs.
20,000 cr and increase the capacity upto 10 MTPA by 2010.
“Maximum customer satisfaction and shareholders value through HRD”
With their young thinking, they promise to innovate the future by driving with
leadership and a crystal clear focus while differentiating the benefit of our deliverables to all
stakeholders.
OUR VALUES
Our corporate Values guide our approach to our work and environment, Which Transforms
the way we deliver our products and services. They are dear to us and they guide our
approach to work and environment, transforming the way we deliver our products and
services. And our corporate values encourage young thinking because……
Young thinking is crystal clear
Openness and transparency above all else. Be it in our transactions, our operations or our
interactions with our stakeholders.
Young thinking fosters leadership.

Every man is his own master. Every man has the ability to make vital decisions at every
level. It is the quality, the speed, the resilience and the coherence with which the decisions
are made that determines true leadership.
Young thinking is unique
NO two problems can benefit from the same solution. It is our job, therefore to differentiate
the benefit of our actions so as to be able to provide superior products to our customers and
the community at large.
Young thinking is for winners.
To innovate, to benchmark, to strive and to deliver values beyond expectations.
QUALITY P0LICIES
“We shall strive to continue by innovate and excel in our Endeavour to achieve customer’s
satisfactions and enhance stake holder’s wealth”.
We shall achieve it through:-
 Participation of all concerned in an atmosphere of co-operation and oneness.
 Importing training and enhancing development of all employees in the organization.
 Delivering quality products and services at a competitive price and to achieve

customer satisfaction on time.
 Achieve business leadership through creative and innovation.
 Facilitating absolute decision making through the adequate use of data.
 Prompting a team based culture, which encompasses human values

GOALS AND MAJOR ACTION PLAN
The ultimate goals are to make JSW Steel a benchmark for international steel customer. With
this in mind, JSW has pan for a capacity increase from 1.60 million tons per annum to 4.5
million tons per annum. An electric arc Furnace and a wide slab Caster are part of the
expansion plans.
JSW makes sure that, as the features becomes bright, partners are made to share the joy of
success. Ancillary industries are thus promoted a lesson of learning not only employment but
also for the development of the society and on infrastructure that will attract more industries
and thus more advancement leading India to the developing stages.
SWOT ANALYSIS
Strengths:
• State of the art technology. The Corex process makes it a low cost producer of steel in
the industry.
• Support from the state government.
• The major strength of JSW lies with the price. JSW Ltd. enjoys reduction cost due to
very low cost of power.
• Product quality is another strength of the company.
• Exemption from sales tax as major dispatches is made from plant side.
• JSW ltd has a good brand reputation in steel market. This is the result of long
experience of around 3 decades in steel industry.
Weakness:
• Transportation costs are high due to non-availability of trucks and other transport
means.
• Financial crunch is also a weakness at JSW ltd.

• Problems in efficient warehousing.
Opportunities:
• Located in the centre of Bellary-Hospet region, a high grade iron belt.
• Lies in the vicinity of large potential and unexplored market of southern India, i.e.
Hyderabad, Chennai and Bangalore.
• Easy access to the major port Goa, Chennai and Mumbai.
Threats:
• Tough competition from big players like SAIL, TISCO, ESSAR.
• Price war may result due to close competition and price being the main constrain in
steel marketing.
• Dumping of metals from countries like CIS & KOREA is another major threat.
AWARDS & RECOGNISTIONS
AWARDS
2009-10
• Karnataka Chapter Safety Award 2009: Unnatha Suraksha Puraskara, a trophy

and certificate was presented for outstanding safety performance and management
systems in Metals category of industries during 2006-08, by National Safety Council,
Karnataka Chapter, on 09-09-2009.at Bangalore.
• Greentech Environment Excellence Award 2009: Gold award in metal and mining
sector for outstanding achievement in Environment Management (10th Oct 2009,
Kovalam).

• ISO-14001:2004 Certification: Vidyanagar Township was recommended for

certification of ISO-14001:2004 for environmental management practices, on 23-09-
2009, by TUV Rheinland Group.
• National Award for Excellence in Energy Management 2009: Excellent Energy

Efficient Unit Award 2009 for Best Energy Management Practices (19, 20 Nov 2009,
Chennai), by CII-Godrej Green Business Centre.
• PM’s Trophy 2007-08: Runner-Up of the best performing Integrated Steel Plant in
the country, known as Steel Minister’s Trophy (declared on 13-Nov-2009).
• CII-EXIM Award 2009: “Commendation Certificate for Significant Achievement”
for Business Excellence by Confederation of Indian Industries, on 17-Dec-2009 at
New Delhi.
• IMC Ramakrishna Bajaj National Quality Award:” Performance Excellence
Trophy in the Manufacturing Category” by Indian Merchant Chambers Quality Cell,
on 19-Mar-2010 at Mumbai.
Individual and Team Recognitions:
• Dr. Madhu Ranjan, VP (R&D and SS), has been conferred with 'Metallurgist of the
Year Award - 2009' instituted by the Ministry of Steel, Govt. of India, at the 47th
National Metallurgists' Day Celebrations held on the 14-Nov-09 at Kolkata.
• Oral Presentation Category at 63rd Annual Technical Meet, Kolkatta.

Second Prize was won by –
1. Mr. Pranav Tripathi
2. Mr. Sujay P. Patil
3. Mr. D. Satish Kumar
4. Mr. Abhijit Sarkar
5. Mr. P C Mahapatra
• Third Prize was won by -

1. Mr. GS Rathore

2. Mr. Mukul Verma

3. Mr. Dileep Varma (M/s ABB)
• National Award for Excellence in Energy Management 2009: ‘Most Useful

Presentation Award’ was won by JSW-Steel team for making excellent presentation,
on 20-Nov-09 at CII-Godrej Green Business Centre, Chennai.
Organization chart
VC & MD
JMD & CEO
HOD Non-Works
HOD Works HOD Projects
HOD Civil HOD Raw material

HOD Raw-
Works projects
materials
HOD Commercial HOD Iron making

HOD Iron projects
zone
HOD Steel HOD HR & ADMIN HOD Steel

Zone Making Projects
HOD Fire &

Safety
HOD Logistics

MCKINSEY 7-S FRAMEWORK FOR ORGANISTION STUDY;
According to 7’S Model there are seven basic dimensions, which represent the basic core of
managerial activities. These are the “levers” which executives use to influence complex and
large organization. Obviously, there was a concerted effort on the part of the originators of
the model to coin the managerial variables of the model. The seven S’s are shared values,
strategy, structure, systems, style, staff and skills and these are shown in the following
figure:-
The Mckinsey 7S Model for Organization study is a “ value Based Management Model”
The Value Based Management Model describes how one can holistically and effectively
organize a company. Together these factors determine the way in which a corporation or an
organization operates.

STRUCTURE:
Organizational structure refers to formal hierarchical relationships & positional

arrangements it deals with how members communicate with others, how information flows,
what roles he performs, Rules & procedures existing to guide the activities of members as
part of organization With reference to JSW, it has good mentor, disciplined relationship,
encouragement, help & guidance.
The structure of Jindal south west steels ltd (JSW):
Name Designation
Savitri Devi Jindal

Chairman / Chair Person
Y Siva Sagar Rao

Joint Managing Director & CEO
Vinod Nowal
Director & CEO
Zarin Daruwala
Nominee Director
S K Gupta
Director
Uday M Chitale
Director
Kannan Vijayaraghavan
Director
Vandita Sharma Nominee Director

Designation
Name
Sajjan Jindal
Vice Chairman & Mng Director
M V S Seshagiri Rao
Joint Managing Director & CFO
Jayant Acharya
Director
G R Sundaravadivel
Nominee Director
Anthony Paul Pedder

Director
Sudipto Sarkar
Director
N C Muniyappa
Nominee Director
Vijay Kelkar Additional Director
SKILL:
Skills are capabilities of organization as a whole. Skills, which describe the organization as
competence like in JSW has manufacturing skills, R&D etc,
The skills, which JSW process are assertive, decision-making, business knowledge,
leadership, attitude, adaptability, courageous, & dynamism. However the skill requirement
varies from the job to job. Recruitment & Selection process: Careers: JSW handpicks the best
engineering and managerial talent from the country’s reputed organizations and technical and
management colleges.

The selection is been done from reputed business houses, campus selection, placement
agencies, and Advertisements & Data base. There is a selection committee, which conducts
group discussions, personal interviews & other formalities.
Training & development:
Objective: To bridge the gap between existing skills& desired skills. Training in JSW is
aimed at the systematic development of knowledge, skills, attitude and teamwork. Training &
development of personal skills is considered a high priority area and it forms an integral part.
Programs are undertaken keeping in view the dynamic changes in the environment, which are
contributed by rapid technological obsolescence or for personality development or as an
Induction.
Internal Training is given where an outside agency or a specialist comes to train the
employees.
External training is given when the employees are sent to any management consultancy
firm. Kirloskar Institute of training is one of such institute.
On the job training: is given as induction programs. However JSW don’t make any job
analysis & formal job description. Induction programs are done to familiarize the new comers
& compulsory safety training is given to all employees of JSW. Apart from this managerial
training, behavioral, technical, functional, multi-skill training is given
STYLE: In JSW there are 66 Quality circles where the employees can suggest any
improvements in systems. There is a grass root level participation. These suggestions are
implemented either by interdepartmental communications, mutual understanding, or by top-
level analysis, where huge investments are involved. Even the policy decisions are taken with
consultancy of respective persons. Employees take casual decisions & their immediate head
gives the feedback.
From the above facts we can say that JSW has a participative management style.

STRATEGY:
It includes basic purposes, missions, objectives, goals & major action plans & policies In
JSW; every department has its own strategies & policies
Marketing Strategies:
Focusing on selected major customers in terms of their locations, segments, potential

demands etc., Customizing of product so that the best advantage by using JSW product in
terms of yield, lower costs, etc.
JSW Shoppe
A Unique concept of retailing in steel is to expand retail business and ensure the easy
availability of quality & branded steel to all its market.
Pricing Strategies:
JSW is into Industrial goods segment where sales are made according to customer
specifications. Hence not much of publicity & Market leadership techniques are required.
SYSTEMS:
It refers to all rules, regulations & procedures both formal & informal. It includes production
plans, control system, capital budgeting systems, cost accounting procedures, budgetary
systems, recruitment training & development plans.
In JSW, every department has got their own Management Information system
Human resource information system:
There is an HR package which stores all employee profile such as employee ID, code no,
joining date, place of posting, place of posting, name, personal profile, bank name, A\c no,
grade, department, qualifications, designation, experience, pay scale, & history. On the basis
of this data rating is done. It also gives information of overall employee structure like no of
persons joined in a month, transfers, promoted, land giver category, loan taken employees,
etc

Quality systems:
Every production department has quality packages. They have their own targets & grades.
JSW has Laboratory, R&D & Testing facilities .For e.g.: pellet plant is the supplier of corex
dept so corex checks the quality specification while purchasing from pellet plant. Hence there
is a value chain.
STAFF:
Qualification Nos %
PhD 2 0.05
ME/MS 46 1.15
BE 1196 29.99
MBA 8 0.20
CA 15 0.38
ICWA 5 0.13
Postgraduates 66 1.65
Diploma Engineers 2106 52.81
Graduates 294 7.37
Others 250 6.27
Total 3988 100
SHARED VALUES
Concern for People: People come first in the new business paradigm. The success of an
organization essentially depends upon utilization of this resource.
JSW has suggestion scheme & committee called as “mera Sujhav”.All the employees can
give suggestions on improvement of technology, production process or operations. Proposals
with the implementation process are welcomed. The top people reviews & analyses. Scheme
makers get awards, Department with zero level accidents & quality achieved gets incentives.
On Independence Day every year, one employee gets “best employee of JSW award.

CHAPTER 3
THEORETICAL CONCEPT
FINANCE DEPARTMENT
The Finance Department raises funds necessary to start business or expansion of existing
business and Accounts Department look after its effective utilization in the enterprise. Money
is the lifeblood of any organization. It is required to purchase machines and materials to pay
wages and salaries to employees, and to meet other Overheads.
An important requirement for the success of any business organization is the provision of
sufficient amount of funds or capital. It cannot work unless it has for sufficient amount to
purchase raw material, plant and machineries, diversification of business, meeting of day to
expenses and for several other purposes where money is required. The Advent of Capital –
intensive Techniques has increased the importance of finance. The ambition plans of an
industrial undertaking will remain mere a dream unless adequate finance is available to
convert them into reality. Therefore it has become an important function of management to
provide adequate finance for the functioning of the enterprise.
For companies which carry production and distribution on a large scale provision of
adequate finance is very challenging task. It affects all the business decisions where money
is involved, since large commercial and industrial undertakings are set up in the form of
companies. The problem of finance or modern business is a challenging task. All the
important financial decisions are taken by board of directors of the company.
OBJECTIVE OF FINANCE DEPARTMENT

Since financing is one of the functional areas of any business enterprise, the objective of
financial management must be done with the overall objectives of the enterprise. The
objectives of the finance department should be so devised that they contribute directly
towards the achievement of the overall organizational objectives.

 Ensuring regular and efficient supply of capital to the business.
 Ensuring a fair rate of return on capital to the supplier.
 Ensuring better utilization of capital by following the principles of Liquidity,
Profitability and safety.
 Co-coordinating the activities the activities of the finance department with those of
the other department of the enterprise.
FINANCIAL PLANNING
Financial planning is the process of identifying a firm’s growth, investment and financial
needs. The firms would need assists to sustain the higher growth in sales and also need
sound current assists to maintain good ratios. The process of estimating the funds
requirement of a firm and determining the sources of funds is called financial planning. In
the financial planning, analyzing the financial alternatives with its financial policy and
deciding the appropriate means of raising funds, and also analyzing the firms operating
risk etc, to decided about its growth objective. Forecasting the firm’s revenues and
expenses and analyzing of proper dividend policies enhances the profitability of the
company. Financial planning includes preparation of the profit and Loss account, the Balance
Sheet and the Fund Flow statement. Growth in sales is an important objective of most firms.
The firm needs plant and machinery with latest technologies, Adequate trained manpower
etc To increase its production capacity. A part from fixed assets a firm should possess good
current assets base. The firm fixed would have to acquire raw materials and convert them into
finished goods after incurring manufacturing expenses. A firm may also have to sale its
goods on credit to push up the sales but to limited extent. This gives rise to debtors and
account receivable. The suppliers of raw materials may extend credit to firm. When the
firm’s growth is at the peak, internal funds may not be sufficient for the business. Thus the
firm would have to raise external funds either by issuing equity or going for debt. The

process of estimating the funds requirement and determining the sources of funds is called
financial planning.
STEPS IN FINANCIAL PLANNING
Financial forecasting is the basis for financial planning. Forecasts are merely estimates based
on the past data. Study of historical performance of the company can prove to be very useful.
Planning means what a company would like to do in future course of time, and include a
strategic action plan for realizing the predetermining intensions.
Steps involved in financial planning:-
* Past performance:-
Analysis of the firm’s past performance to ascertain the relationship between financial
variables strengths and weakness.
* Corporate strategy and investment needs:-

Determining the firm’s investments need and choice of its growth, objectives and
overall strategy.
* Cash flow from operations:-

Forecasting the firm’s revenues and expenses and need for funds based on its
investment and dividend policies.
* Consequences of financial plans:-

Analyzing the consequences of its financial plans for the long term health and
survival of firm.
* Consistency:-
Evaluating the consistency of financial policies with each other and with the corporate
strategy.

ACCOUNTING STANDARDS
The institute of charted Accountants of India felt the need for setting high quality
accounting standards in the country and established Accounting standard Board in 1977.
The Accounting Standards deals with rules for recognition measurement and presentation of
information in the financial statements.
With passage of time Accounting standards have erupted dealing with various topics most
of them have become mandatory to follow while drafting Balance Sheet And profit&
Loss Account, The main purpose is to make the shareholders who have invested their
money. Aware of the transactions of the enterprise in clear and understanding manner.
The following are the Accounting standard drafted by the institute of chartered Accountants
of India so far:-
1. Disclosure of accounting policies.

2. Valuation of inventories.
3. Cash Flow statements.
4. Contingencies and Events Occurring after Balance Sheet date.
5. Net profit or Loss for the period, period and extraordinary items and changes in
accounting policies.
6. Depreciation Accounting
7. Accounting for construction contracts.
8. Accounting for Research and Development.
9. Revenue Recognition.
10. Accounting for Fixed Assets.

11. Accounting for the Effects of changes in Foreign Exchange rates.
12. Accounting for Government Grants.

13. Accounting for investment.

14. Accounting for Amalgamations
15. Accounting for Retirement Benefits.
16. Borrowing Costs.
17. Segment Reporting.
18. Related party Disclosure
19. Leases.
20. Earning per share.
21. Consolidated Financial Statements.
22. Accounting for Taxes on income.
23. Accounting for investments in Associates in consolidated financial statements.
24. Discounting Operations.
25. Interim Financial Reporting.
26. Intangible Assets.
27. Financial Reporting of interests in joint ventures.
28. Impairment of Assets.
29. Accounting for instruments.
30. Contingent Events.
1. DISSLOSURE OF ACCOUNTING POLICES.

This Accounting standard deals with various policies adopted for treatment of
transactions in the books of account like treatment of goodwill, Method of Depreciation,
Valuation of inventories etc.
The various policies of company as per Accounting standards for disclosure at single
place as required and the following are the policies:-
SIGNICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
A. SIGNIFICANT ACCOUNTING POLICIES:
1. Basis of Accounting
The Accompanying financial statements have been prepared under the historical cost
convention, in accordance with Indian generally Accepted Accounting principles
(GAAP) and the provisions of the companies Act, 1956 ( The Act).

2. Use of Estimates
The preparation of financial statements In conformity with Generally Accepted
Accounting principles require estimates And assumptions to be made that affect the
reported amounts of assets and liabilities and disclosure of contingent liabilities on
the date of financial statements and the reported amounts of revenues and expenses
during the reporting period, Actual results could differ from these estimates and
differences between actual results and estimates are recognized in the periods in
which the results are known / materialize.
3. Fixed Assets and Depreciation
Fixed Assets are started at their cost of acquisition or construction less accumulated
depreciation and impairment losses. Cost comprises of all costs incurred to bring the Assets
to their location and working condition up to the date the assets are put to use.
Expenditure incurred during construction period:-

Apart from costs related directly to the construction of an asset, indirect expenses
incurred up to the date of commencement of commercial production which are incidental
and related to construction are capitalized as part of the construction cost. Income, if any
earned during the construction period is deducted from the indirect costs.
Depreciation on assets is provided, prorata for the period of use, by the straight Line
method ( SLM) at the SLM rates prescribed in Schedule XIV to the Act. For the purpose
of determining the appropriate depreciation rates to be applied to plant and machinery,
continuous process plant and machinery has been identified on the basis of technical
assessment made by the Company.
Lease hold land is amortized over the period of the lease, expect where the lease is
convertible to freehold land under lease agreements at future dates at no additional cost.

The Company capitalizes software where it is reasonably estimated that the software has an
enduring useful life. Software is depreciated over an estimated useful life of 3to 5years
An Assets is considered a impaired In accordance with Accounting standard 28 on “
Impairment of Assets”, When at balance sheet date there are indications of impairment
and the carrying amount of the asset, or where applicable the cash generating unit to
which the asset belongs, exceeds its recoverable amount (i.e., the higher of the asset’s net
selling price and value in use.) The carrying amount Is reduced to 67 annual Report
2007-08 the recoverable amount and the reduction is recognized as an impairment loss in
the Profit and Loss Account.
4. Investments
Investments are classified current or long-term in accordance with “Accounting for
investments”. Current Investments are stated at lower of cost and fair value. Any reduction.
In the carrying amount and any reversals of such reductions are charged or credited to the
Profit and Loss Account. Long term investments are stated at cost. Provision is made to
recognize a decline, other than temporary, in the value of such investments.
5. Derivatives
The Company enters into derivatives contracts such as interest Rate Swaps, Currency
Swaps, Forward Contracts and commodity and Currency Options to hedge against the
risk of adverse movements in interest rates, foreign Currencies or values of the hedged
items. All outstanding derivate instruments at Close are marked to market by type of risk
and the resultant losses relating to the year, if any, are recognized in the Profit and Loss
Account, gains are ignored.
6. Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty exists as to its
realization or collection, Revenue from sale of goods is recognized on delivery of the
products, when all significant contractual obligations have been satisfied the property in
the foods is transferred for a price,. Significant risks and rewards of ownership are
transferred to the customers and no effective ownership is retained. Sales are net of Sales

tax/value added Tax. Export turnover includes related export benefits. Excise duty
recovered is presented as a reduction gross turnover.
7. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost of inventories
Comprise all Costs of purchase, Costs of conversion and other Costs incurred in
bringing the inventories to their present location and condition, Cost is Determined by
the weighted average cost method. Excise duty related to finished goods stock is included
under Schedule 16 Materials.
8. Borrowing Costs
Borrowing Costs attributable to the acquisition or construction of qualifying assets, as
defined in Accounting Standard 16 On “ Borrowing Costs” are Capitalized as part of the
Cost of such asset up to date when the asset is ready for its intended use. Other
borrowing Costs are expensed as incurred. Interest income earned is reduced from Interest
and Finance Charges (Schedule 18).
9. Employee Benefits
Short- terms employee benefits ( benefits which are payable within twelve months after
the end of the period in which the employee render service) are measured at cost. Long
terms employee benefits ( benefits which are payable after the end of twelve months
from the end of the period in which the employee render service) and post employment
benefits ( benefits which are payable after completion of employment) are measured on a
discounted basis by the projected Unit Credit Method on the basis of annual third party
actuarial valuations. Contributions to provident Fund, a defined Contribution Plan are
made in Accordance with the statute, and are recognized as an expense when employees
have rendered service entitling them to the contributions.
The Costs of Providing leave encashment and Gratuity, defined benefit Plans, are
determined using the Projected Unit Credit Method, On the basis of actuarial Valuations
Carried out by third party Actuaries at each balance Sheet date. The leave encashment and

gratuity benefit obligations recognized in the Balance Sheet represents the present Value
of the obligations recognized in the Balance Sheet represents the Present Value of the
Obligations as reduced by the fair value of plan Assets, Any Assets resulting from this
Calculation is limited to the discounted Value of any economic benefits available in the
form of refunds from the plan or reductions in future Contributions to the plan. Actuarial
gains and losses are recognized immediately in the profit and Loss Account.
10. Foreign Currency Transactions

Foreign Currency Transactions are recorded at the exchange rates prevailing on the date of
the transaction. Monetary foreign Currency Assets and liabilities are translated into
Rupees at the exchange rate prevailing at the balance Sheet date. All exchange
differences. Are dealt with in the Profit and Loss Account, expect to the extent that they
are regarded as an adjustment to interest costs and capitalized to fixed assets.
Non-monetary items such as investments are carried at historical cost using the exchange
rates on the date of the transaction, In case of forward contracts the premium or discount
arising at inception is amortized as expense or income over the life of the contract.
Exchange differences on such Contracts, expect those relating to forward exchange

contracts entered into to hedge the foreign currency risks of future transactions in
respect of which firm commitments are made are recognized in the profit and Loss
account in the reporting period in which the exchange rates change.
11. Income Tax

Income Taxes are Accounted for in accordance with Accounting standard 22 on “
Accounting for Taxes on Income”. Taxes comprise both current and deferred tax. Current
tax is measured at the amount expected to be paid/recovered from the revenue
authorities, using the applicable tax rates and laws. The tax effect of the timing differences
that result between taxable income and accounting income and are capable of reversal in
one or more subsequent. Periods are recorded as a deferred tax asset or deferred tax liability.
Deferred 68 Tax assets and liabilities are recognized for future tax consequences attributable
to timing differences. They are measured using the substantively enacted tax rates and tax

regulations. The Carrying amount of deferred tax assets at each balance Sheet date is
reduced to the extent that it is no longer reasonably certain that sufficient future taxable
income will be available against which the deferred tax asset can be realized.
Fringe Benefit Tax ( FBT) Payable under the provisions of section 115 WC of the Income
Tax Act, 1961 is in accordance with the Guidance Note on “ Accounting for Fringe
Benefits Tax” issued by the ICAI regarded as an Additional income tax and considered
in determination of profits for the year. Tax on distributed profits payable in Accordance
with the provisions of Section 1150 of the Income Tax Act, 1961 is in accordance with
Guidance Note on “ Accounting for Corporate Dividend Tax” regarded as a tax on
distribution of profits and is not considered in determination of profits for the Year.
12. Eanings per Share

The Company reports basic and diluted Earnings Per Share (EPS) in accordance with
Accounting standard 20 on “ Earning per Share” Basic EPS is computed by dividing the
net profit or loss for the year by the weighted average number of equity shares
outstanding during the year. Diluted EPS is computed by dividing the net profit or loss
for the year by the weighted average number of equity Shares outstanding during the
year as adjusted for the effects of all dilutive potential equity shares, expect where the
results are anti- dilutive.
13. Operating Leases

Operating lease receipts and payments are recognized as income or expense in the profit
and loss account on a straight – line basis, which is representative of the time pattern of
the user’s benefit.
14. Cash Flow Statement
The Cash Flow statement is prepared by the “ indirect method” set out in Accounting
standard 3 on “ Cash Flow Statements” and presents the Cash Flows by operating,
Investing and financing activities of the company. Cash and Cash equivalents presented in
the Cash Flow Statement Consist of Cash on hand and demand deposits with banks.
15. Bond Expenses

Premium payable redemption of bonds is provided for over the life of the bonds. The
Securities Premium Account is applied in providing for premium on redemption in
Accordance with section 78 of the Act. On Conversion of the bonds to equity the redemption
premium is reversed. Expenses on issue of bonds are written off to the securities premium
Account in Accordance with Section 78 of the Act.
16. Stock Based Compensation

The compensation Cost of Stock options granted to employees is calculated using the
intrinsic value of the stock options. The compensations expense is as amortized uniformly
over the vesting period of the option.
17. Contingent Liabilities

Contingent liabilities as defined in Accounting standard 29 on “ provisions, Contingent
Liabilities and contingent Assets” are disclosed by way of notes to the accounts, Provision
is made if it is probable that an outflow of future economic benefits will be required for
an item previously dealt with as a contingent liability.
18. Miscellaneous Expenditure

Miscellaneous Expenditure ( expect under specific circumstances – Sec note B(4) of
Schedule 19) is written off to the Profit and Loss account Over a period of up to five
years depending upon the nature and expected future benefit of such expenditure. The
management reviews the amortization period. On a regular basis and if expected future
benefits from such expenditure are significantly lower from previous estimates, The
amortization period is accordingly changed.
B. NOTES TO ACCOUNTS:
1. Contingent Liabilities not provided for in respect of:
a) Bills discounted Rs. 1,131.21 Crore’s (previous year Rs. 749.76 Corers).
b) Guarantees provided on behalf of ultimate subsidiaries and others Rs. 2,993.16
Corers( previous Year Rs. 62.00 Corers).

c) Disputed statutory Claims / levies including those pending in courts ( excluding

interest livable, if any), in respect of:
(I) Excise Duty Rs. 82.17 Crore’s (previous year Rs. 22.33 Corer);
(ii) Custom Duty Rs. 219.87 Crore’s ( Previous year Rs. 99.05 Corers);
(iii) Income Tax Rs. 36.28 Crore’s (Previous Year Rs. 36.28 Corers);
(iv) Sales Tax/ Special Entry Tax Rs. 0.29 Crore’s ( Previous Year Rs.(0.29 Corers);
(v) Services Tax Rs. 20.32 Crore’s ( Previous Year Rs. 3.40 Corers); And
(vi) Miscellaneous Rs. 0.24 Crore’s (previous Year Rs. (0.24 Corers); and
(vii) Levies by Local Authorities Rs. 15.92 Corers (previous Year Rs, 12.49 Corers);
d) Claims by suppliers and other third parties Rs. 90.81 Crore’s (gross) (previous
Year Rs. 347.33 Crore’s), Counter Claims Rs. Nil ( Previous Year Rs. 245.98
Crore’s).
2. Estimated Amount of contracts remaining to be executed on capital account
and not provided for ( net of advances) Rs. 6,555.68 Crore’s
( Previous Year Rs. 4, 02.20 Crore’s). 69 Annual Reports 2007-2008.
2. VALUATION OF INVENTORIES
Inventories Occupies a major role in preparation of Balance Sheet and Profit & Loss
Account This Account, This Accounting Standard deals with how Inventories are valued.
Methods of valuation such as specific identification method, LIFO, FIFO etc.
The valuation of Inventories of JSW steel Ltd, is as below.-

Rupees in Corers
ASAT As at
SCHEDULE7 31.03.2008 31.03.2007
INVENTORIES
Raw Materials 818.56 611.44

Production Consumables and Stores & 185.67 165.73
Spares

Work-in Progress 44.13 38.89

Semi Finished / Finished Goods 435.87 195.29
Traded Goods (in transit) 64.93 -

Total: 1.549.16 1,011.35
3. CASH FLOW STATEMENTS

This standard is mandatory for all enterprise with certain conditions like enterprise
whose equity or debts are listed either in India or abroad. When such condition does not
exist this accounting standard is not applicable. Cash Flow Statements are useful to Assess
the ability of the enterprise to generate Cash And equivalent to cash and the needs of the
enterprise to utilize the cash.
4. CONTINGENCIES AND EVENTS OCCURING AFTER BALANCE SHEET

DATE
This standard is mandatory in nature and deals with contingent events as on the date of
Balance Sheet. A Contingent event is that event with uncertain future happenings. Such
events may result either in profit or in Loss.
Example:- A pending legal case as on the date of Balance Sheet, and this standard deals
with events Occurring after Balance Sheet like :- a Fire in Company’s go-down.
5. NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD AND

EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES
This standard is mandatory in nature and deals with prior period items i.e. in the previous
year by error or omission certain income or expenses are not booked and which are
accounted in the current year, Accounting of such items disturbs the profit picture of the
current year.
The extraordinary items should be stated separately as occurrence of such items is rare
in ordinary course of business.

Example: - Loss due to earth quake. Change in Accounting policies should be made only
when there is a statutory requirement or when it is felt more appropriate presentation is
6. DEPRECIATION ACCOUNTING
Depreciation is a measure of the wearing out, consumption or other loss of value of
depreciable assets arising from use, passage of time or obsolescence through technology
and market changes.
This accounting standard is mandatory in nature and deals with accounting of depreciation
and methods of depreciation to be used. Depreciation is an adjustment entry and appears
both in Balance Sheet (Liability Side) And Profit & Loss Account (Debit side).
7. ACCOUNTING FOR CONSTRUCTION COTRACTS

This Accounting Standard is mandatory in nature and deals with accounting treatment for
Accounting of Construction contracts. There are two methods of Accounting Viz.
Percentage of completion Method and Completed Contract Method. When the outcome of
the Contract can be reliably estimated percentage of contract can be used. While adopting
this method an appropriate allowance for future unforeseen factors should be made in the
books of accounts. Irrespective of the work done, a foreseeable loss on the entire contract
has to be provide in then books.
8. ACCOUNTING FOR RESERCH AND DEVELOPMENT

This Accounting standard is mandatory in nature for those enterprise which are listed in
simple deals with expenditure on research and development. Normally these expenses are
accounted for Profit & Loss Account in the year of incurring the same. But When certain
conditions are fulfilled the expenditure can be spread Over to future period’s i.e. can be
treated as deferred revenue expenses.
9. REVENUE RECOGNITION

This Accounting standard is mandatory in nature and deals with recognition of revenue from
seals and services. The Understanding is that the measurement of performance as to when it
is completed to account the same.
10. ACCOUNTING FOR FIXED ASSETS

The Accounting standard is mandatory in nature and deals with how the cost of fixed
assets and self- constructed assets has to be worked out. It deals with revaluation of
fixed assets and treatment to be given to some special assets like assets purchased on
hire purchase system, goodwill etc.
11. ACCOUNTING FOR THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE

RATES
This Accounting Standard is mandatory in nature and deals with transactions in foreign
currencies or it may have foreign operations. They should be accounted in enterprise’s
reporting currency. If the books of accounting relates to India the transactions should be in
rupees and if it is in foreign books the currency should be in relevant foreign currency.
Otherwise it should be disclosed by way of a note. The treatment to transactions has to the
specific terms such as average Rate, Closing Rate, and Forward Rate etc. When the
enterprise enter into a Forward exchange Contract the difference the gain or loss arising
on conversion of foreign currency into Indian Currency should be accounted for Profit
&Loss Account.
12. ACCOUNTING FOR GOVERNMENT GRANTS

This Accounting Standard is mandatory in nature until and unless the enterprise gives a
reasonable assurance that it will comply with the conditions attached and the grants will
be received, Government grants should not recognized. This standard deals with the
treatment of grants given for specific assets and grants which are in the nature of
revenue. A contingency related to government grant should be treated as per accounting

Standards 4. Likewise earlier years grants becomes refundable should be treated as per
Accounting Standard 5.
13. ACCOUNTING FOR INVESTMENT

An enterprise should disclose current investments and long term investments distinctly in
financial statements as per statutory requirements and in case of absence of statutory
requirements, should disclose where applicable, investments in Government Securities or
Trusts, Shares, Debentures and Bonds, investment properties and in other specifying the
nature, The total Cost of investment should include acquisition changes such as
brokerage, fee and duties. The current investments should be carried in the financial
statements at lower of cost or fair value determined on an individual investment basis or
by category of investment, but not on an overall basis. In the case of long term
investments they should be carried at Cost. On disposal of an investment the gain or loss
should be carried to Profit & Loss Account.
14. ACCOUNTING FOR AMALGAMATION

This Accounting Standard is mandatory in nature. The amalgamation may be either an
amalgamation in nature of merger or in nature of purchase. This standard deals with the
conditions which have to be satisfied in case of both type of amalgamation. If it is in the
nature of purchase the two methods. Viz. The pooling of interest method, the purchase
method is dealt with. The treatment of reserves specified in the scheme of amalgamation is
dealt in this standard.
15. ACCOUNTING FOR RETIREMENT BENEFITS

This Accounting Standard is mandatory in nature. The main retirement benefits on
retirement are Provident Fund& Gratuity. In case of Provident Fund, the contribution paid by
the employer should be charged to Profit & Loss Account. If in case of any excess amount
is paid by the employer the excess amount will be treated as pre-paid amount. In case of
gratuity, the following three treatments are dealt with:-

* If the employer choose to make payment out of his own funds.
* If the employer creates a trust and pays the amount through trust.
* If the employer pays through a Scheme administrated by the insurer.
If any improvement in existing scheme is made and any changes is brought in

calculation of gratuity, should be dealt in line with Accounting Standards 5.
16. BORROWING COSTS
This Accounting Standard is mandatory in nature. Borrowing costs are interest and other
costs incurred by an enterprise in connection with borrowing costs. It deals with Accounting
for borrowing costs and does not deals with the actual or imputed cost of owner’s
equity, including preference share capital not classified as liability. Here the term
“Qualifying Assts” is important. It is an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale. Borrowing costs that are directly attributed to
the acquisition, Construction or production of qualifying assets should be treated as
expenses of the period in which they are incurred. In case such borrowing amount is
temporarily Invested in other securities, the income generated on such investment has to
be deducted from borrowing costs.
17. SEGMENT REPOTING

This Accounting standard Is mandatory for all enterprise with certain conditions like
enterprise whose equity or debts are listed either in India or abroad. When such condition
does not exist, this Accounting standard is not applicable. Information about different types
of products and services of an enterprise and its operations in different geographical area
is called segmentation. This leads to a better understanding of the performance, risks and
returns of the enterprises and to have better decision making at times of necessity. The
related costs and income have to be accounted for individual segments. While doing so,
certain expenses does not include the cost of segment like extraordinary items as defined in
Accounting Standards 5, income Tax Expenses etc.

The Company primarily engaged in the business of manufacture and sale of Iron and Steel
Products. The Company has identified two primary business segments, namely steel and
power ( used mainly for captive consumption), which in the context of Accounting Standard
( AS) – 17 on “ Segment Reporting” Constitute reportable segments.
18. RELATED PARTY DISCLOSURE

This Accounting standard is mandatory for all enterprises with certain conditions like
enterprises whose equity or debts securities are listed either in India or abroad, Financial
institutions, Banks etc. This standard deals with reporting of related party relationship and
transactions between a reporting enterprises and its related parties. Related party
relationship means:-
1. Controlled by or under common control with the reporting enterprise.
2. Associates and joint ventures of the reporting enterprise.
3. Individual, directly or indirectly are interested in voting power of the reporting

enterprise.
4. Key managerial personnel and relatives of such personnel.
5. Enterprise over which any person describes in point no.3 or 4 above is able to
exercise significant control or influence.
The related parties of JSW Steel Ltd. Are as below:-

Parties with whom the Company has entered into transactions during the year/ where control
exists

1. Subsidiaries
JSW Steel ( Netherlands) B.v.
JSW Steel Holding (USA) Inc.
JSW Steel ( USA) Inc.
JSW Steel (UK) Limited
JSW Panama Holdings Corporation
Inversions Euros Limited
Santa Fe Mining
Santa Fe Puerto S.A.
Argent Independent Steel (Holdings) Limited
JSW Steel Service Centre (UK) Limited
JSW Natural resources Limited
JSW Natural Resources Mozambique Limited
JSW Bengal Steel Limited
JSW Steel processing Centers Limited
3. Associates
South west Port Limited
JSW Energy Limited
Jindal Praxair Oxygen Company Private Limited
Jindal Steel & Alloys Limited
Southern Iron & Steel Company Limited
Jindal Stainless Limited
Jindal Saw Limited
Jindal Steel & powder Limited
Jindal south west Holdings Limited
Jsoft Solutions Limited
Art India publishing Company private Limited
Reyonld Traders private Limited
JSW Energy (Vijayanagar) Limited

JSW Jaigarh Port Limited

Raj west power Limited
JSW Energy (Ratnagiri) Limited
JSW Cement Limited
JSW Investments private Limited Jindal Industries Limited
Nalwa Sons Investments Limited.
Nalwa Engineering Private Limited
Jindal Systems Private Limited
JSW Power Trading Company Limited
1. Joint venture
Vijayanagar Minerals Private Limited
2. Key management Personal

Mrs. Savitri Devi Jindal
Mr. Sajjan Jindal
Mr. Seshagiri Rae MVS
Dr. Vinod Nowal (w.e.f 24 July 2007)
Dr. B N Singh (upto 31 May 2007)
3. Relatives of key Management Personal

Mr.Naveen Jindal
Mrs. Nirmala Goel
Mr. P, R. Jindal
19. LEASES
This Accounting standard is mandatory for all enterprises with certain conditions like
enterprise whose equity or debts securities are listed either in India or abroad, Financial
institutions, Insurance Companies etc. This Accounting Standard deals with appropriate
accounting policies and disclosures prescribed for lessees and lessors in relation to
finance leases and operating leases. This Accounting standard is not applicable to lease

agreements to export for or use of natural resources such as gas, Oil etc. Licensing
agreements for items such as video recording, Motion pictures films, and agreements to lose
land. A finance lease is defined as lease that transfers substantially all the risks and rewards
incident to ownership of the asset. Operation Lease is the one which is not Financial Lease.
a) As Lessor:
the Company has entered into a lease arrangement, for renting out 2,279 houses
( Admeasuring Approximately 1,410,997 square feet) at the rate of Rs. 100 per house per
annum and 175 houses ( Admeasuring approximately 93,631 square feet) At the rate of Rs.
24 per square feet per annum, for a period of 60 Months ( “ The term”) from the beginning
of the current financial year and is renewable at the option of the lessee after the end of the
term.
ii). Future minimum lease rental is receivable under operating lease for each of the
following periods as under:
Particulars Current year previous year
Not later than1 year 0.76 0.24

Later than 1to 5years 2.33 0.74
Later than 5 years 0.19 —
Total: 3.28 0.98
iii. Disclosure of depreciation on assets given on lease during the year.
Rupees in Corers
Particulars Current Year (2009) Previous year (2008)
Gross carrying 118.77 100.22

Amount of Assets 8.77 6.86

Accumulated Depreciation
WDV of the leased 110.00 93.36
Assets
Depreciation for the 1 .93 1.10
Year
b) As Lessee;
I. Future minimum sub- lease payments expected to be received under non- cancelable sub
lease Rs. Nil (Previous Year Rs 2.08 Corers).
ii. Lease Rental Charged to Revenue for right to use following assets are:
Rupees in Corers
Particulars Current Year (2009) Previous year (2008)
Cold Rolling Steel

Under taking 1.00 6.00
Office premises, Residential 4.29 3.07
Flats etc.
Total: 5.29 9.07
The agreements are executed for a period of 11 to 60 months with a renewable clause
and also provides for termination at will by other party giving a prior notice period of
1 to 3 months.
iii. Sub- Lease payments recognized in the statement of profit and Loss Account Rs. Nil
Corers ( Previous year Rs. 0.52 Corers).
20. EARNING PER SHARE

This Accounting standard is mandatory and applicable to the enterprises whose equity
shares or potential equity shares are listed on recognize stoke exchange of India. A
potential share is defined as financial instruments or other contract that entitles. Or may
entitle its shareholders to equity shares like share warrants, debts instruments of
preference shares that are convertible into equity shares etc. There are two types of
presentation one is Base Earning per share and other is Diluted Earnings per Share.
Base Earning per share should be calculated by Dividing the Net Profit or Loss for the
period attributable to shares outstanding during that period. Diluted Earnings per Share is
the value of basic Earnings per share when adjusted for the effects of all dilutive
potential equity shares.
Particulars Current Year Previous year
Profit after Tax 1,728.19 1,292.00

Less: Dividend on preference
Shares (Including
Corporate dividend tax) 34.00 32.65
Profit after tax for equity

Share holders
(Numerator) – Basic 1,694.19 1259.35
Less: Exchange gain on FCCB’s 6.63

Profit after tax for
Equity share holders
(Numerator) – Diluted 1,687.56 1259.35
Earnings per share – Basic 95.26 80.11
Earning per share – Diluted 94.18 78.88
Nominal value per share 10.00 10.00
Weight average number of
Equity shares for Basic 177,855,318 159,661,527
157,208,820
EPS (Denominator) Nos.
Weighted average number
Of equity shares for Diluted 179,190,974 159,661,527
21. CONSOLEDATED FINANCIAL STATEMENTS

The objective of this Accounting standard is to lay down principles and producers for
preparation and preparation of consolidated financial statements i.e. Combined picture of

holding and subsidiary companies. In preparing consolidated financial statements. The

financial statements of the parent and its subsidiaries should be combined on line by line
basis by adding together, like items of assets, liabilities, income and expenses
22. ACCOUNTING FOR TAXES ON INCOME

This Accounting standard is mandatory it deals with Accounting treatments for
taxes on Income, which is a significant item of Profit & Loss Account As per matching
principle taxes on income accrued relates to same period of revenue and expenses have
been earned/ incurred . But some time practically it may not be so. Firstly, there are
differences between revenue and expenses as compared to profit & Loss Account And for
the purpose of calculation of taxes. Secondly, there may be difference in a particular item of
revenue and expenses of profit & Loss Account as compared to the one for the purpose
of calculation of taxes.
These differences may be classified into permanent and timing differences. Example of
permanent difference is when an expense is partially allowed for exemption, the
disallowed expenditure is difference between taxable income and accounting income
for a period and capable of reversal in future.
Example : - Purchase of machinery for scientific purpose and from tax angle as per
income tax Act it is fully exempted in the year of purchase and as per accounts
depreciation is charged periodically
Rupees in Corers
Current Tax 288.84 364.00

Deferred Tax 428.08 270.63
Fringe Benefit Tax 5.50 4.35
Wealth Tax 0.35 0.35
Tax Adjustment of earlier 33.16 (16.15)

years
Total: 755.93 623.18
b) Deferred Tax Liability comprises of timing differences on account of:
Rupees in Corers
Depreciation 1,388.33 1,130.09
Expenses allowable on (46.11) (38.87)

Payment basis
Provision for doubtful (41.33) (38.80)

Debts/capital advances
Others (49.05) (39.76)
Deferred Tax Liability 1,251.84 1012.66
23. ACCOUNTING FOR INVESTMENTS IN ASSOCIATES IN CONSOLI

DATED FINANCIAL STATEMENTS
This objective of this Accounting standard is to set out principles and procedures for
recognizing in the consolidated financial statements, the effects of the investments in
associates on the format position and operating results of a group.

STRUCTURE OF FINANCE DEPARMENT
FINANCE
DEPARTMENT
JOINT DIRECTOR
MANAGING
DIRECTOR (FINANCE)
Sr. vice
president
(finance &
account)
Vice president
(finance &
account)
GM GM DGM GM AGM DGM

(TRAINING&
(TAXATI (AP) (AR) (TREAS (G&L)
ON) URER) DEVELOPMENT
)
Sr. AGM Manager Asst. Manager NIL
Manage Manage
Staff s Staff Staff Staff Staff NIL
CHAPTER 4
DATA ANALYSIS AND INTERPRETATIONS

BALANCE SHEET AT 31ST MARCH 2009(Rs in crores)
Schedule No. As at 2009 As at 2008
SOURCES OF FUNDS
Share Capital 1 537.01 525.80
Reserves and Surplus 2 7140.24 5068.25
Loan Funds :
Secured Loans 3 5497.08 3632.50
Unsecured Loans 4 2049.45 540.53
7546.53 4173.03
Deferred Tax Liability – Net 1251.84 1012.66
Total 16475.62 10779.74
Application of Funds
Fixed Assets 5
Gross Block 13952.32 10512.76
Less Depreciation 2996.83 2323.66
Net Block 10955.49 8189.10
Capital work – in Progress 5612.43 2002.93
16567.92 10192.03
Investment 6 923.53 192.94
Current Assets, Loans and Advances
Inventories 7 1549.16 1011.35
Sundry Debtors 8 337.39 245.16
Cash and Bank Balances 9 339.22 337.80
Loans and Advances 10 842.15 542.83
Other Current Assets 18.62 342.04
3086.54 2479.18
Less : Current Liabilities and
Provisions
Liabilities 11 3666.36 2210.51
Provisions 12 436.01 68.77
4102.37 2279.28
Net Current Assets 10115.83 199.90
Miscellaneous Expenditure
(to the extent not written of or adjusted) 13 ---------------- 194.87
Total 16475.62 10779.74
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2009 (Rs. Cr.)
Schedule No. As at 2009 As at 2008
INCOME
Domestic Turnover 9021.75 5703.62
Export Turnover 3496.05 3593.64
Sales of Carbon Credits 111.11 -------------
12628.91 9297.26
Less : Excise Duty 1208.91 742.90

Net Turnover 11420.00 8554.36

Other Income 14 257.14 145.23
Total Income 11677.14 8699.59
Expenditure
Employee Remuneration and Benefits 15 273.98 175.47
Materials 16 5693.85 4029.95
Manufacturing and Other Expenses 17 2097.57 1592.20
Interest and Finance Charges (net) 18 440.44 399.54
Depreciation etc. 687.18 498.23
Miscellaneous Expenditure Written of -------------- 109.02
9193.02 6784.41
Profit Before Taxation 2484.12 1915.18
Provision for Taxation (Including Wealth Tax) 955.93 623.18
Profit After Taxation 1728.19 1292.00
Profit Brought forward from earlier years 2267.56 1331.66
Amount available for Appropriation 3995.75 2623.66
Appropriations
Transferred from Debenture Redemption Reserve 23.30 39.48
Dividend on Preference shares (29.06) (27.90)
Interim Dividend on Equity Shares ------------ (204.98)
Proposed Final Dividend on Equity Shares (261.87) --------------
-
Corporate Dividend Tax (49.44) (33.49)
Transfer to General Reserve (172.82) (129.21)
Balance carried to Balance Sheet 3505.86 2267.56
Earnings per share (Equity shares, Per value of Rs. 10 each)
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009
RUPEES IN CRORES
As at As at
31.03.2008 31.03.2007
• CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax 2484.12
Reserves and Surplus
Adjustments for
Depreciation 687.18 498.23
Miscellaneous Expenditure written of ------------ 109.02
-
Loss (Profit ) on sale of Fixed Assets / Investments 1.63 0.77
Interest Income (54.40) (7.27)
Dividend Income (5.64) (0.34)
Interest Paid 351.87 288.24
Foreign exchange variation (net) (75.32) (0.25)
Amortization of Employees Share Payments 3.09 ---------
-
Claims settled and provision no longer required written back (53.69) (8.35)
854.72 878.51
Operating Profit before working capital Changes 3338.84 2793.69
Adjustment for :
Trade and other receivables (206.40) 118.80
Trade Payables 1250.1 281.71
Inventories (463.08) (87.12)
580.57 313.39

Cash flow before taxation 3919.41 3107.08

Direct Taxes Paid (366.71) (284.82)
NET CASH FLOW GENERATED FROM OPERATING 3552.70 2822.26
ACTIVITIES
• CASH FLOW FROM INVESTING ACTIVITIES
Purchase of f fixed assets and capital advances (5265.67) (2346.84)
Purchase of Long Term Investment (537.09) (90.80)
Purchase of Short Term Investments (198.69) (17.06)
Sales of Fixed assets 1.57 0.32
Sales of Investments 5.19 ---------------
Realizations of Other Current Assets 294.19 205.89
Interest received 58.50 3.60
Dividend received 5.64 0.34
Net Cash Used in investing activities 5636.36 2244.55
• CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issued of Equity share capital 199.06 212.19
Proceeds from Long term Borrowings 3440.10 1242.74
Repayment against from Long Term Borrowings (1142.30) 1017.67)
Repayment / a ailment of Bank Borrowings 82.44 (86.76)
Interest Paid (421.73) (326.16)
Dividend Paid (32.64) (408.73)
Net Cash Flow Generated From / Used in financing 2124.93 384.39
activities
NET INCREASE IN CASH AND CASH 41.27 193.32
EQUIVALENTS (A+B+C)
CASH AND CASH EQUIVALENTS - OPENING 242.40 49.08
BALANCE
ADD : PURSUANT TO SCHEME OF 23.15 ------------
AMALGAMATION
(See Note B(4) of Schedule 19 265.55 49.08
CASH AND CASH EQUIVALENTS CLOSING BALANCE 306.82 242.40
INTERPRETATIONS
VALUATION OF INVENTORIES (As-2)
Inventories Occupies a major role in preparation of Balance Sheet and Profit & Loss
Account .This Accounting Standard 2 deals with how Inventories are valued methods of
valuation such as specific identification method, LIFO, FIFO etc.
The valuation of Inventories of JSW steel Ltd, is as below.-
There are many methods for the valuation of inventories but JSW follows weighted average
method for the calculation of inventories. As per the WAC formula, the cost of each item
is determined on the basis of the weighted average of the cost of similar items at the
beginning of the period and costs of similar items purchased are produced during the
period.

SCHEDULE7 As at 31.03.2009 As at 31.03.08
INVENTORIES
Raw Materials 818.56 611.44
Production Consumables and Stores & 185.67 165.73

Spares
Work-in Progress 44.13 38.89
Semi Finished / Finished Goods 435.87 195.29
Traded Goods (in transit) 64.93
Total: 1.549.16 1,011.35
CASH FLOW STATEMENTS (As-3)

This standard is mandatory for all enterprise with certain conditions like enterprise
whose equity or debts are listed either in India or abroad. When such condition does not
exist this accounting standard is not applicable. Cash Flow Statements are useful to Assess
the ability of the enterprise to generate Cash And equivalent to cash and the needs of the
enterprise to utilize the cash.
JSW represent its cash flow activities into 3 classifications they are:
1. Operating activity.
2. Investment activity.
3. Financing activity.
Cash flows from operating activities are generally derived from the transactions and other
events that enter into the determination of net profit or loss.

Cash flows from investing activities are primarily derived from transactions relating to
acquisition and disposal of long-term assets and other investments not included in cash
equivalents.
Cash from financing activities are primarily derived from transactions that results in changes
in the size and composition of the owner’s capital, including preference share capital in the
case of company, and borrowings of the enterprise.
NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD AND

EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES (As-5)
This standard is mandatory in nature and deals with prior period items i.e. in the previous
year by error or omission certain income or expenses are not booked and which are
accounted in the current year, Accounting of such items disturbs the profit picture of the
current year. The extraordinary items should be stated separately as occurrence of such
items is rare in ordinary course of business.
Example: - Loss due to earth quake. Change in Accounting policies should be made only
when there is a statutory requirement or when it is felt more appropriate presentation is
JSW goes for change in the accounting standard(As-5) under 3 conditions they are as follows:
1. When the statue governing the enterprises requires the adoption of the new
policy.
2. To comply with the requirements of an accounting standard.
3. When change is considered to result in a more appropriate preparation or
presentation of the financial statement of the enterprise.
DEPRECIATION ACCOUNTING (AS-6)
Depreciation is a measure of the wearing out, consumption or other loss of value of

depreciable assets arising from use, passage of time or obsolescence through technology
and market changes.

This accounting standard is mandatory in nature and deals with accounting of depreciation
and methods of depreciation to be used. Depreciation is an adjustment entry and appears
both in Balance Sheet (Liability Side) And Profit & Loss Account (Debit side).
Basically there are two methods for calculating depreciation they are:
1. Straight line method
2. Written down value method.
In JSW they follow Written down value method for calculating the depreciation and the
formula for calculating the same is given below
1/2
Rate of depreciation= 1-n Estimated residual value
Cost of assets
ACCOUNTING FOR FIXED ASSETS (As-10)
The Accounting standard is mandatory in nature and deals with how the cost of fixed
assets and self- constructed assets has to be worked out. It deals with revaluation of
fixed assets and treatment to be given to some special assets like assets purchased on
hire purchase system, goodwill etc.
ACCOUNTIG FOR INVESTMENT (As-13)
At JSW they should disclose current investments and long term investments distinctly in
financial statements as per statutory requirements and in case of absence of statutory
requirements, should disclose where applicable, investments in Government Securities or

Trusts, Shares, Debentures and Bonds, investment properties and in other specifying the
nature, The total Cost of investment should include acquisition changes such as
brokerage, fee and duties. The current investments should be carried in the financial
statements at lower of cost or fair value determined on an individual investment basis or
by category of investment, but not on an overall basis. In the case of long term
investments they should be carried at Cost. On disposal of an investment the gain or loss
should be carried to Profit & Loss Account.
ACCOUNTING FOR AMALGAMATION (As-14)
This Accounting Standard is mandatory in nature. The amalgamation may be either an

amalgamation in nature of merger or in nature of purchase. This standard deals with the
conditions which have to be satisfied in case of both type of amalgamation. If it is in the
nature of purchase the two methods. Viz. The pooling of interest method, the purchase
method is dealt with. The treatment of reserves specified in the scheme of amalgamation is
dealt in this standard.
Amalgamation can be done in two ways they are:

1. Through mergers
2. Through purchases.
In JSW they follow Merger method for any of their amalgamation process and hence they
merge with the required party for their requirements in the organization.
CONSOLIDATED FINANCIAL STATEMENTS (As-21)
The objective of this Accounting standard is to lay down principles and producers for
the preparation of consolidated financial statements i.e. Combined picture of holding and
subsidiary companies. In preparing consolidated financial statements. The financial
statements of the parent and its subsidiaries should be combined on line by line basis by
adding together, like items of assets, liabilities, income and expenses.

Consolidation at JSW is classified under 3 belts they are:

1. Consolidation of subsidies.
2. Consolidation of associates.
3. Consolidation of joint venture.
ACCOUNTING FOR TAXES OF INCOME (As-22)
This Accounting standard is mandatory it deals with Accounting treatments for taxes
on Income, which is a significant item of Profit & Loss Account As per matching
principle taxes on income accrued relates to same period of revenue and expenses have
been earned/ incurred . But some time practically it may not be so. Firstly, there are
differences between revenue and expenses as compared to profit & Loss Account And for
the purpose of calculation of taxes. Secondly, there may be difference in a particular item of
revenue and expenses of profit & Loss Account as compared to the one for the purpose
of calculation of taxes.
These differences may be classified into permanent and timing differences. Example of
permanent difference is when an expense is partially allowed for exemption, the
disallowed expenditure is difference between taxable income and accounting income
for a period and capable of reversal in future.
Example : - Purchase of machinery for scientific purpose and from tax angle as per
income tax Act it is fully exempted in the year of purchase and as per accounts
depreciation is charged periodically.
Rupees in Corers
Particulars As at31.03.2009 As at 31.03.2008
Current Tax 288.84 364.00
Deferred Tax 428.08 270.63
Fringe Benefit Tax 5.50 4.35
Wealth Tax 0.35 0.35

Tax Adjustment of earlier 33.16 (16.15)

years
Total: 755.93 623.18
 Deferred Tax Liability comprises of timing differences on account of:
Particular As at 31-03-2009 As at 31-03-2008
Depreciation 1388.33
1,130.09
Expenses allowable on (46.11)

(38.87)
Payment Basis
Provision for doubtful (41.33)

(38.80)
debts/capital advances
others (49.05)
(39.76)
ACCOUNTING FOR INVESTMENTS IN ASSOCIATES IN CONSOLIDATED

FINANCIAL STATEMENTS (As-23)
This objective of this Accounting standard is to set out principles and procedures for
recognizing in the consolidated financial statements, the effects of the investments in
associates on the format position and operating results of a group.

CHAPTER 5
FINDINGS, SUGGESTIONS & CONCLUSION
FINDINGS
 As the Institute of charted accounted of India has drafted several Accounting

standards most of which as mandatory in nature to be implemented by companies,
it is studied from the point of implementation and found that the company has
followed the guidelines of the Institute.
 With the good projections and benchmarks the company is able to achieve good
financial results.

 From the analysis it is clear that the company is using written down value method for
depreciation.
 Growth in saleable steel is Rs. 11,420.00 Corers.
 The company uses weighted average method for valuation of inventory.
 The company will follow the method of merger to perform any amalgamation activitie
with their parties.
 PAT increased from Rs.1,728.19 Corers in FY 2008-09 to Rs.1,292.00 Corers in

FY 2007-08
SUGGESTIONS AND RECOMMENDATIONS
While analyzing yarned appraisals it is observed that defining the role of each
employee by their duties and responsibilities to achieve the company objectives that are
the part of their annual appraisal along with company goals they have to take one CSR
( Corporate Social Responsibility ) objective is the unique practice. There is proper co-
ordination among the employees in the JSWSL in order to provide effective service to the
customer. Each and every activity in various departments is carried out in a systematic way.
During my “In plant training”, I was able to study various aspects of the organization
practically. I acquired the knowledge of various strategies adopted by the company. I was
able to understand the functioning of various departments and the duties and responsibilities
of each department. The company has different departments broadly classified as functional
and service departments. The producing units called as functional units’ i.e. pellet plan,

Corex, Blast Furnace, Coke Oven and Cement Plant, SMS, Hot strip mill and Cold Rolling
mill and the service departments are those departments which provide services such as
marketing, Finance, Human Resources, Commercial and IT etc.
 It is an added advantages for me to explore my knowledge and go much deeper
into the subject.
 I could learn how to behave in an Organizational environment, i.e. While
interacting with the colleagues and other people.
 I could really see how the teams are formed and formed and their benefits to the
Organization.
The company believes in maintaining a very high level of organizational discipline by

synergizing personal with technological discipline. The Human resource department is
handing functions like employee welfare, personal and administration, Security, Township
administration and corporate communication Employees motivated through rewards and
reorganizations. They have very management has taken very keen interest to take care of
employees grievances therefore we will not see any unions at JSWSL. They have Unique
systems to take care of their associate employees ( Contractor employees) They consider
them as “ partners in Progress” all facilities provided for them, they are also feeling that
they are part of the JSW family.
The Company aims to provide Safe Working conditions at plant. The safety and health of
the employees are taken care by providing safety training , maintaining safety procedures,
providing a safe environment, issuing detailed instructions as regards to the area of
operation, conducting safety awareness programs and competitions among all employees.
The Company has integrated ISO management systems i.e. quality ( ISO 9001:2000),
Environment (ISO14001) and Occupational Health and safety Assessment series ( OHSAS-
18011) I was able to identify the strengths and weakness of the company.
Every year the company conducts “Suggestion Mela” where suggestions are invited to
improve working condition of the company of the company and prizes are distributed to good
and implementable suggestions.

CONCLUSION
JSW steel ltd. Is one of the leading steel companies in India which is rapidly growing year as
compare to other steel industries. JSW manufacture in large quantity because of this it
reduces its manufacturing cost and can easily make huge profits. From the study it is noted
that the company has made a profit of RS 1,728.19crores for the financial year 2008-09. So I
conclude that this company is financially sound.
BIBLIOGRAPHY
Accounting for Managers by Ambrish Guptha
Financial Management- I.M Pandey.
MAGAZINES, NEWSPAPER & JOURNALS
Business Today
Business world
Business India
Connect Issue 3 (JSW)
Induction Manual of JSW
Annual Report of JSW

INDUSTRY PERSONNEL
Mr.Murlidhar, DGM (F&A)

Mr. Jitendra Nath pathak, Jr. Officer, Library.

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Accounting Standards

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STATEMENT OF THE PROBLEM

 To provide valuable suggestions as far as possible for the effective functioning

 To know the implementation of following accounting standards which are mandatory

• Disclosure of the Accounting Policies.

• Cash Flow Statement.

• Contingencies and Events Occurring after Balance Sheet date.

• Accounting for Fixed Assets.

• Related Party Disclosure etc.

 To know the efficiency of the management of the company.

The study can be analyzed from the following ways:-

 Analysis of the implementation of various Accounting Standards.

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 Review of the implementation of the Accounting Standards in the company in order

 Primary Data: - primary data was collected through interview with

LIMITATIONS OF THE STUDY:

The followings are the limitations of the study:

• The research study is conducted for a short span of two months.

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• The study was limited to Torangallu only.

• The project was having time constraint as well as resource constraint.

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(in million tonnes)

Demand - Availability Projection

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• Demand – Availability of iron and steel in the country is projected by Ministry

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Imports of Iron & Steel

• Last five years import of Finished (Carbon) Steel is given below:-

Year Qty. (In Million Tonnes)

Exports of Iron & Steel

• Iron & Steel are freely exportable.

• Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports.

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Exports (Qty. in Million Tonnes)

Levies on Iron & Steel

The Fund, inter-alia, supports:

1. Capital expenditure for modernization, rehabilitation, diversification, renewal

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2. Research & Development

o SDF levy was abolished on 21.4.94

Opportunities for growth of Iron and Steel in Private Sector

The New Industrial Policy Regime

The Growth Profile

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(ii) Pig Iron

3. Power shortages: Steel production in India is also hampered by power shortages.

4. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure

5. Low R&D investments: There are inadequate investments in infrastructure.

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2. Dumping of steel by developed countries: High quality products for developed

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• Gross turn over up by 20% to 15, 179 crores.

• EBIDTA Rs. 3,093 crores.

• PAT Rs. 459 crores.

• Debt repayment Rs. 1,040 crores.

• Equity Dividend Rs. 1 per share.

• Hot Rolled Coils.

• Plates and Sheets.

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