NOTES 1. Company Information 2. Significant Accounting Policies

STANDALONE NOTES forming part of the financial statements 1. Company information carrying value of assets and liabilities that are not readily Tata Steel Limited (“the Company”) is a public limited Company apparent from other sources. The estimates and associated incorporated in India with its registered office in Mumbai, assumptions are based on historical experience and other Maharashtra, India. The Company is listed on the BSE Limited factors that are considered to be relevant. Actual results may (BSE) and the National Stock Exchange of India Limited (NSE). differ from these estimates. The Company has presence across the entire value chain of steel Estimates and underlying assumptions are reviewed on an manufacturing from mining and processing iron ore and coal ongoing basis. Revisions to accounting estimates are recognised to producing and distributing finished products. The Company in the period in which the estimate is revised and future offers a broad range of steel products including a portfolio of periods affected. high value added downstream products such as hot rolled, cold Key source of estimation of uncertainty at the date of the rolled, coated steel, rebars, wire rods, tubes and wires. financial statements, which may cause material adjustment The functional and presentation currency of the Company is to the carrying amounts of assets and liabilities within the Indian Rupee (“`”) which is the currency of the primary economic next financial year, is in respect of impairment, useful lives of environment in which the Company operates. property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions and contingent liabilities, fair As on March 31, 2019, Tata Sons Private Limited owns 31.64 % value measurements of financial instruments and retirement of the Ordinary Shares of the Company, and has the ability to benefit obligations as discussed below. influence the Company’s operations. Impairment The financial statements for the year ended March 31, 2019 were approved by the Board of Directors and authorised for issue on The Company estimates the value in use of the cash generating April 25, 2019. unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating 2. Significant accounting policies results and growth rates and anticipated future economic and regulatory conditions. The estimated cash flows are developed The significant accounting policies applied by the Company using internal forecasts. The cash flows are discounted using a in the preparation of its financial statements are listed below. suitable discount rate in order to calculate the present value. Such accounting policies have been applied consistently to Further details of the Company’s impairment review and key all the periods presented in these financial statements, unless assumptions are set out in note 3, page 227, note 5, page 231and otherwise indicated. note 6, page 232. (a) Statement of compliance Useful lives of property, plant and equipment and The financial statements have been prepared in accordance intangible assets with the Indian Accounting Standards (referred to as “Ind The Company reviews the useful life of property, plant and AS”) prescribed under Section 133 of the Companies Act, equipment and intangible assets at the end of each reporting 2013 read with Companies (Indian Accounting Standards) period. This reassessment may result in change in depreciation Rules, as amended from time to time and other relevant and amortisation expense in future periods. The policy has been provisions of the Act. detailed in note 2(i), page 218. (b) Basis of preparation Valuation of deferred tax assets The financial statements have been prepared under the historical The Company reviews the carrying amount of deferred cost convention with the exception of certain assets and tax assets at the end of each reporting period. liabilities that are required to be carried at fair value by Ind AS. The policy has been detailed in note 2 (u), page 224 Fair value is the price that would be received to sell an asset and its further information are set out in note 10, page 243. or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Provisions and contingent liabilities A provision is recognised when the Company has a present (c) Use of estimates and critical accounting judgements obligation as result of a past event and it is probable In the preparation of the financial statements, the Company that the outflow of resources will be required to settle makes judgements, estimates and assumptions about the the obligation, in respect of which a reliable estimate 216 INTEGRATED REPORT & ANNUAL ACCOUNTS 2018-19 | 112TH YEAR STRATEGIC REPORT | 1-88 STATUTORY REPORTS | 89-194 FINANCIAL STATEMENTS | 195-418 NOTES forming part of the financial statements 2. Significant accounting policies (Contd.) incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are can be made. These are reviewed at each balance sheet capitalised. Borrowing costs incurred during the period of date and adjusted to reflect the current best estimates. construction is capitalised as part of cost of qualifying asset. Contingent liabilities are not recognised in the financial statements. Further details are set out in note 21, page 261 and The gain or loss arising on disposal of an item of property, plant note 36A, page 276. and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in Fair value measurements of financial instruments the statement of profit and loss. When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on (e) Exploration for and evaluation of mineral resources quoted prices in active markets, their fair value is measured Expenditures associated with search for specific mineral using valuation techniques including Discounted Cash Flow resources are recognised as exploration and evaluation assets. Model. The inputs to these models are taken from observable The following expenditure comprises cost of exploration and markets where possible, but where this is not feasible, a evaluation assets: degree of judgement is required in establishing fair value. • obtaining of the rights to explore and evaluate mineral Judgements include considerations of inputs such as liquidity reserves and resources including costs directly related to risks, credit risks and volatility. Changes in assumptions about this acquisition these factors could affect the reported fair value of financial instruments. Further details are set out in note 39, page 281. • researching and analysing existing exploration data Retirement benefit obligations • conducting geological studies, exploratory drilling and sampling The Company’s retirement benefit obligations are subject to number of judgements including discount rates, inflation and • examining and testing extraction and treatment methods salary growth. Significant judgements are required when setting • compiling pre-feasibility and feasibility studies these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Company’s • activities in relation to evaluating the technical feasibility and balance sheet and the statement of profit and loss. The Company commercial viability of extracting a mineral resource sets these judgements based on previous experience and Administration and other overhead costs are charged to the cost third party actuarial advice. Further details on the Company’s of exploration and evaluation assets only if directly related to an retirement benefit obligations, including key judgements are exploration and evaluation project. set out in note 35, page 269. If a project does not prove viable, all irrecoverable exploration (d) Property, plant and equipment and evaluation expenditure associated with the project net An item of property, plant and equipment is recognised as an asset of any related impairment allowances is written off to the if it is probable that future economic benefits associated with statement of profit and loss. the item will flow to the Company and its cost can be measured The Company measures its exploration and evaluation assets reliably. This recognition principle is applied to costs incurred at cost and classifies as property, plant and equipment or initially to acquire an item of property, plant and equipment and intangible assets according to the nature of the assets acquired also to costs incurred subsequently to add to, replace part of, and applies the classification consistently. To the extent that a or service it. All other repair and maintenance costs, including tangible asset is consumed in developing an intangible asset, regular servicing, are recognised in the statement of profit and the amount reflecting that consumption is capitalised as a part loss as incurred. When a replacement occurs, the carrying value of the cost of the intangible asset. of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having As the asset is not available for use, it is not depreciated. different useful lives, these components are accounted for as All exploration and evaluation assets are monitored for separate items. indications of impairment. An exploration and evaluation asset is no longer classified

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