1. RELATED PARTY TRANSACTIONS

Related party disclosure as identified by the management in accordance with the Ind AS 24 on 'Related Party Disclosures' are as follows:

Names of the related parties and description of relationships:

A Company Relationship

Electrosteel Castings Limited Promoter/Associate Company

B Key Management personnel Designation

Rama Shankar Singh Director (Ceased to be a Wholetime Director w.e.f

February 05, 2017)

Umang Kejriwal Director

Rajkumar Khanna Director

Jinendra Kumar Jain Director

Lalit Kumar Singhi Director

Naresh Pachisia Director

Sunil Vasant Diwakar Director

Jayantika Ganguly Director (appointed w.e.f December 08, 2016)

Devaprasad Mozumder Director (appointed w.e.f December 08, 2016)

Amarendra Prasad Verma Director (resigned w.e.f October 18, 2016)

Pradeep Kumar Misra Director (Resigned w.e.f. July 5, 2017)

Sunil Katial Chief Executive Officer

Ashutosh Agarwal Chief Financial Officer

C Entities where KMP or their close member have significant influence or control and with whom transaction have taken place during the year

Bose Estates Private Limited

Sree Khemisati Constructions Private Limited

Hooghly Alloy & Steels Company Private Limited

Wilcox Merchants Private Limited

Tulsi Highrise Private Limited

D Close member of key management personnel where transactions have taken place during the year Key Management personnel Relationship

Pushpa Singh Wife of Rama Shankar Singh

Radha Kinkari Kejriwal Agarwal Daughter of Umang Kejriwal

Nityangi Kejriwal Jaiswal Daughter of Umang Kejriwal

Madhav Kejriwal Son of Umang Kejriwal

Notes:

1. The above related party information isas identified by the management and relied upon bytheauditor.

2. In respect of above parties, there is no provision for doubtful debts as on March 31, 2018 and no amount has been written back or written off during the year in respect of debts due from/ to them.

3. Post-Employee benefits and other long term employee benefits have been disclosed based on retirement/resignation of services but does not include provision made on acturial basis as the same pertains to all the employees together.

4. As stated in Note no. 42, pending completion of CIRP proceeding and on appointment of Resolution Professional, the Company's Board of Directors and significant influence etc. on the Company was suspended. The disclosure for related party as given herein above are based on the influence and control existing prior to initiation of CIRP proceedings.

5. Mr. Dhaivat Anjaria, was appointed as a Resolution Professional by the COC, as stated in Note no. 42, as an Independent Person appointed under Insolvency and Bankruptcy Code, 2016 and has substituted the Board during CIRP (Refer Note no. 35.2.1)

6. Re-appointment of Mr. Rama Shankar Singh, as a whole time director with effect from February 06, 2017 of the Company and the remuneration paid to him with effect from February 06, 2017 has not been approved by the Shareholders in the annual general meeting of the Company held on November 07, 2017 and accordingly the amount paid During the year has been recovered from him.

2. COMMITMENTS AND CONTINGENCIES

i. Operating leases:

Lease payments in respect of land taken on operating lease terms, are recognized as an expense on straight line basis over the lease term. The Company does not have the right to sub-let the said land. The company has an option to renew the said lease land after the expiry of initial period of 30 years from the date of agreement, at such rent as may then be fixed by the less or. The Company does not have an option to purchase the leased land at the expiry of the lease period.

Further to above, the Company has certain operating lease arrangements for office accommodations, transit houses, railway siding etc. with tenure extending up to 9 years. Term of certain lease arrangements include escalation clause for rent on expiry of 12 and 36 months from the commencement date of such lease and deposit/refund of security deposit etc. Expenditure incurred on account of rental payments under such leases During the year and recognized in the Profit and Loss account amounts to Rs, 182.16 lakhs (March 31, 2017: f 84.46 lakhs).

(g) There are several Civil and criminal proceedings pending against the Company, the financial liability thereof, if any, is unascertainable.

Notes:

1) The Company's pending litigations comprises of claims against the company and proceedings pending with Statutory/ Government Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, and disclosed contingent liabilities, where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial positions. Future cash flow, if any in respect of (a), (d), (e), (f) and (g) is dependent upon the outcome of judgments/decisions.

2) The Committee of Creditors in their meeting held on September 21, 2017 discussed in light of the relevant CDR and RBI circulars (CDR Master Circular dated 25th June 2015 and RBI Circular bearing no. DBOD.No.BP.BC.No.37 /21.04.132/2008-09 dated 27th August 2008 on Prudential Guidelines on Restructuring of Advances by Banks) and agreed that the Right of Recommendation cannot be claimed and thereby to undertake calculation of claim amounts on the basis of the principal and interest along with any amounts arising on account of penal interest.

(d) Off-take agreement with Electro steel Castings Limited for procurement of Iron ore at cost plus mark up During the currency of loan agreements with the lenders.

(*) In terms of notification no. 70(RE-2013)/2009-2014, issued by the Ministry of Commerce and Industry, the company has applied for extension of Export obligation for 3 years from the date of approval of CDR package which has been rejected by the DGFT-Delhi and interim stay has been granted by Honourable Delhi High Court.

C) Disclosure as given in A and B above are without giving effect to Hon'ble NCLT Order, the same being considered to be non-adjusting event, due to reasons stated in Note no. 42.

Note: Disclosure as given above are without giving effect of changes in Capital Structure in terms of Hon'ble NCLT Order, the same being considered to be non-adjusting event, due to reasons stated in Note no. 42.

3. The Company had filed application for renewal of Consent to Operate ('CTO') on August 24, 2017 for the period of five years which was denied by Jharkhand State Pollution Control Board ('JSPCB') on August 23, 2018. Hon'ble High Court of Jharkhand has, on August 25, 2018, granted a stay on the order of denial of CTO by JSPCB and continued their interim order to allow the operations till next hearing. Hon'ble High Court has also directed Ministry of Environment, Forests and Climate Change (MOEF & CC) to take a decision on their show cause notice of June 06, 2012 within four weeks and place the decision before the High Court by filing supplementary affidavit. Hon'ble High Court has also allowed the Company to make an application for regularization of any irregularity before MOEF & CC without prejudice to its rights and contentions. The matter is now posted for hearing on September 27, 2018.

4. The Company incurred significant amount of losses, it's current liabilities became in excess of current assets and net worth got eroded. Interest and other terms and condition of repayment etc. as per the "Corporate Debt Restructuring package" (CDR) sanctioned on September 28, 2013 could not be complied with and lenders in terms of RBI Circular dated July 08, 2015 and September 24, 2015, invoked "Strategic Debt Restructuring” (SDR) in respect of the Company. Pending implementation of SDR, State Bank of India in it's capacity as financial creditor filed a petition on June 27, 2017 under "Insolvency and Bankruptcy Code, 2016” (IBC) with Hon'ble National Company Law Tribunal, Kolkata Bench (NCLT). On July 21,2017, the NCLT vide it's order of even date admitted the said petition and Corporate Insolvency Resolution Process (CIRP) has been initiated in terms of IBC and related rules and regulation issued there under.

CIRP has been completed vide NCLT order dated April 17,2018 (NCLT Order) and resolution plan submitted by one of the applicant Vedanta Limited (Vedanta) has been approved (ARP) by NCLT and thereby Board of Directors ('Board') of the Company has been reconstituted on June 4, 2018, with nominees of Vedanta being inducted as member of the Board. Subsequent to ARP, the appeal filed before NCLAT has been dismissed by NCLAT vide it's order dated August 10, 2018 (NCLAT Order) and NCLT Order has been upheld.

Accordingly, keeping in view the NCLT Order confirmed bythe NCLAT as above:

- The Company has restated its financial liabilities as per the claims admitted and thereby in respect of Financial Creditors reversed Interest pertaining to the period from July 22, 2017 to March 31, 2018 amounting to Rs. 74,340.29 lakhs provided earlier in accordance with the rates and terms and conditions stipulated originally as per CDR Package or otherwise stipulated/advised in this respect. Further, additional liability amounting to Rs. 40,238.39 lakhs relating to Interest as admitted has been recognized in these financial statements.

- In respect of Operational Creditors, the Company has provided for Rs.22,642.80 lakhs, representing the net differential with respect to the amount of claim admitted pursuantto CIRP process and those appearing in books of account. Pending final adjustments as given in (a) below, this has been recognized and disclosed as 'Provision for claims admitted pursuantto CIRP' under Note no. 27.1 of the financial statements and included under Exceptional Items.

- Vedanta Star Limited (a wholly owned subsidiary of Vedanta Limited) has on June 04, 2018 deposited Rs. 532,000.00 lakh in an escrow account ("Escrow Account”) of the Company for payment to financial creditors of the entire amount of sustainable debts in terms of the ARP out of total Outstanding amount of Rs. 12,71,913.21 lakhs and the same has been remitted to them on June 21, 2018.

- 739,91,32,055 equity shares of Rs. 10 each were allotted on June 6, 2018 to financial creditors converting their balance amount of outstanding i.e. non-sustainable debt, to equity.

- On June 14, 2018, the existing 980,83,67,078 equity shares including those allotted on June 6, 2018 to financial creditors as above have been reduced from Rs. 9,80,836.71 lakhs to Rs. 19,616.73 lakhs divided into 980,83,67,078 equity shares of Re. 0.20 each fully paid-up. Simultaneously, 50 such shares of Re 0.20 each thereafter has been consolidated into 1 fully paid-up equity share of Rs. 10 each.

- The reconstituted board of directors in its meeting held on June 15, 2018 has approved allotment of 176,55,06,078 fully paid equity shares of Rs. 10 each to Vedanta Star Limited against the money deposited in Escrow Account as above, leaving the balance to be treated as loan bearing interest.

- Consequent to above allotment and consolidation of shares, equity share capital of the company as on June 15,2018 stands at Rs. 19,61,67.34 lakh divided into 196,16,73,420 equity shares of Rs.10each.

a) NCLT Order dated April 17, 2018 approving ARP has been passed subsequent to the end of the reporting period. Accordingly, the adjustments arising out of ARP has been considered to be non-adjusting event and consequential adjustments have therefore not been given effect to in these financial statements.

Other than above,

(I) Statutory liabilities and obligations, Contingent liabilities, obligations and claims against the Company including those relating to unfulfilled export obligations as shown in Note no.39 (ii)(A) and 39(ii)(B)(b) will be extinguished and accordingly no outflow of fund is expected in this respect; and

(II) Impact with reference to Income Taxes since not recognized in the financial statements for reasons stated in Note no. 44, has not been considered for disclosure as above.

b) In view of Note no. 41 above and including the Order of the Hon'ble NCLT as upheld by Hon'ble NCLAT (Note no. 42), whereby the affairs of the company has been held to be viable and steps so far taken by Vedanta and to be taken as envisaged in terms of ARP, the financial statement has been prepared on a Going Concern basis.

(*) As indicated in Note no. 42, the adjustments and disclosure above are without giving effect to Hon'ble NCLT Order, the same being considered to be non adjusting event, due to reasons stated in said note.

b) Fair Valuation Techniques

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions were used to estimate the fair values:

- The fair value of cash and cash equivalents, current trade receivables and payables, current financial liabilities and assets and borrowings approximate their carrying amount largely due to the short-term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognized at nominal cost/amortized cost in the financial statements approximate their fair values.

- A substantial portion of the Company's long-term debt has been contracted at fixed rates of interest. Fair value of variable interest rate borrowings approximates their carrying value subject to adjustments made for transaction cost. In respect of fixed interest rate borrowings, fair value is determined by using discount rates that reflects the present borrowing rate of the company. Borrowings as given above being current in nature carrying amount approximates its fair value.

5. FINANCIAL INSTRUMENTS (Contd.)

- The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc. These derivatives are estimated by using the pricing models, where the inputs to those models are based on readily observable market parameters basis contractual terms, period to maturity, maturity parameters and foreign exchange rates. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgment, and inputs thereto are readily observable from actively quoted market prices. The said valuation has been carried out by the counter party with whom the contract has been entered with and Management has evaluated the credit and non-performance risks associated with the counterparties and believes them to be insignificant and not requiring any credit adjustments.

c) Fair value hierarchy

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31,2018:

During the year ended March 31, 2018 and March 31, 2017, there were no transfers between Level 1, Level 2 and Level 3.

The Inputs used in fair valuation measurement are as follows:

- Fair valuation of Financial assets and liabilities not within the operating cycle of the company is amortized based on the borrowing rate of the company.

- Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace. The inputs used for forward contracts are Forward foreign currency exchange rates and Interest rates to discount future cash flow.

d) Derivatives assets and liabilities:

The Company follows established risk management policies, including the use of derivatives to hedge its exposure to foreign currency fluctuations on foreign currency assets / liabilities. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.

e) Sale of financial assets

In the normal course of business, the Company transfers its bills receivable to banks. Under the terms of the arrangements, the Company surrenders control over the financial assets and transfer is without recourse. Accordingly, such transfers are recorded as sale of financial assets. Gains and losses on sale of financial assets without recourse are recorded at the time of sale based on the carrying value of the financial assets and fair value of servicing liability. In certain cases, transfer of financial assets may be with recourse. Under arrangements with recourse, the Company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with the banks. Accordingly, in such cases the amounts received are recorded as borrowings in the statement of financial position and cash flows from financing activities.

During the year ended March 31, 2018 and 2017, the Company transferred and recorded as sale of financial assets of Rs. 567,34.98 lakhs and Rs. 525,50.20 lakhs respectively, under arrangements without recourse and has included the proceeds from such sale in net cash provided by operating activities. These transfers resulted in finance cost of Rs. 336.88 lakhs and Rs. 219.70 lakhs for the year ended March 31, 2018 and 2017 respectively.

f) FINANCIAL RISK MANAGEMENT

The Company's activities are exposed to a variety of financial risks. The key financial risk includes market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Board of Director's reviews and approves policies for managing these risks. The risks are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives.

However, as indicated in Note no. 42 entire borrowings has been restructured and has been settled for consideration and terms as stated in said note. In view of the above, the related risks have undergone significant variation leading to substantial improvement in financial position and will require reconsideration on giving effect to the above adjustments in the financial statements.

MARKET RISK

Market risk is the risk or uncertainty arising from possible market fluctuation resulting in variation in the fair value of future cash flows of a financial instrument. The major components of Market risks are currency risk, interest rate risk and other price risk. Financial instruments affected by market risk includes trade receivables, investment in fixed deposits, borrowings and trade and other payables.

Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's foreign currency denominated borrowings and trade and other payables.

The Company has adopted a comprehensive risk management review system wherein it actively hedges its foreign currency exposure with defined parameters through use of hedging instrument such as forward contracts and options. The Company periodically reviews its risk management initiatives and also takes expert advice on regular basis on hedging strategy.

Derivative financial assets and liabilities dealing with outstanding derivative contracts and unheeded foreign currency exposure has been detailed in earlier para. Unhedged foreign currency exposure is primarily on account of retention money of capital vendor for which hedge cover is taken as per the policy followed by the company depending upon the settlement of such claims.

A 5% strengthening of INR would have an equal and opposite effect on the Company's financial statements Interest Rate Risk

The company exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions. All of the company borrowing fall under the fixed interest rates (approved under CDR schemes) hence interest rate risk due to fluctuation is neutralized.

Further there are deposits with banks which are for short-term period are exposed to interest rate fluctuation on renewal. These deposits are however generally for trade purposes and as such do not cause material implication.

CREDIT RISK

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables). To manage this, the management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly. Further the company obtains necessary security including letter of credits and/or bank guarantee to mitigate its credit risk.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Receivables from customers are reviewed/evaluated periodically by the management and appropriate provisions are made to the extent recovery there against has been considered to be remote.

The carrying amount of respective financial assets recognized in the financial statements, (net of impairment losses) represents the Company's maximum exposure to credit risk. The concentration of credit risk is limited due to the customer base being large and unrelated. Out of the trade receivables balance at the end of the year, there is one customer having outstanding of Rs 4,991.67 lakh (March 31, 2017: Rs 494.95 lakhs) which accounts for more than 10% of the accounts receivable and 10% of revenue as at March 31, 2018 and March 31, 2017.

The Company takes collateral or other credit enhancements to secure the credit risk. The Company has also taken advances, security deposits and Letter of Credit from its customers, which mitigate the credit risk to that extent.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Receivables are reviewed/evaluated periodically by the management and appropriate provisions are made to the extent recovery there against has been considered to be remote.

Financial assets that are neither past due nor impaired

Cash and cash equivalents and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.

Financial assets that are past due but not impaired

Trade receivables amounts which are past due at the end of the reporting period, no credit losses there against are expected to arise.

LIQUIDITY RISK

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's objective is to maintain optimum level of liquidity to meet it's cash and collateral requirements at all times. The company relies on internal accruals and borrowings to meet its fund requirement. Due to delay in project completion there has been liquidity crisis that has led to defaults in repayments and interest payments to the lenders. However, as stated in Note no. 42, Trade Payables and Borrowings will be settled in terms of ARP. The Company has current assets and surplus invested in cash and bank balances which should be sufficient to meet the obligation on account of liability stated herein below.

Liquidity and interest risk tables

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

The company has current financial assets which will be realized in ordinary course of business. Further it has significant retained surplus lying invested in fixed deposits, the company ensures that it has sufficient cash on demand to meet expected operational expenses and obligations.

CAPITAL MANAGEMENT

The primary objective of the Company's Capital Management is to ensure that it maintains a healthy capital ratio in order to support its business and maximize shareholder value. The Company's objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders. The Company is focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.

However, as indicated in Note no. 42, consequent to implementation of the Resolution Plan as approved by NCLT there will be significant variation in amount of Equity and liabilities ratios given herein above leading to substantial improvement thereof.

6. INCOME TAX

In assessing the readability of deferred tax assets, the Company considers the extent to which, it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment.

Deferred tax asset in respect of unused tax losses and others (net of liabilities) amounting to Rs. 289,486.46 lakhs and Rs. 66,529.78 lakhs as of March 31, 2018 and March 31, 2017 respectively as a matter of prudence have not been recognized.

7. SEGMENT INFORMATION

In term of Ind AS 108 "Operating Segment", the Company has one business segment i.e. Iron and Steel and related products and all other activities revolve around the said business.

8. These financial statements have been approved by the Board of Directors of the Company on August 29, 2018 for issue to the shareholders for their adoption.

9. Previous Period's figure has been regrouped/rearranged wherever necessary to comply with current year presentation.