The fair value of the property, plant and equipment (PPE) is determined on the basis of valuation carried out at the reporting date by independent valuer. The fair value measurement for PPE has been categorized as Level 3 based on the valuation techniques used and inputs applied. The main inputs considered by the valuer are government rates, property location, market research, market trend, contracted rentals, terminal yields, discount rates and comparable values, as appropriate. In estimating the fair value of the PPE, the highest and best use of the properties is their current use.

Impairment of Assets (Ind AS 36)

The Company is having following two cash generated Units:

Pellet Plant Unit: The Pellet Plant Unit is continuously in operation and resulted in positive cash flow.

Pig Iron Plant Unit: Due to un-economic price of Pig Iron, Pig Iron Plant / Blast Furnace Unit (BFU) could not be operated during the year. After impairment test based on the net selling price as assessed by Approved Valuer, the recoverable amount in each class of assets in BFU are found to be more than the respective carrying amount. Hence, there is no impairment loss to be recognized during the year.

* The ROU of land includes 17,483 sq. mtrs 99 years leasehold land which was acquired by the Company from Karnataka Industrial Areas Development Board (KIADB) on payment of upfront lease premium at the time of commencement of lease and subsequesnt lease premium provided during the FY 2023-24 (paid in April 2024). The aggregate depreciation expense on ROU assets is included under depreciation and amortization expense in the Statement of Profit and Loss. The land allotted by KIADB at Doddaballapur to construct an R & D center, however due to certain pending approvals the R&D project yet to be commenced. The land alloted by KIADB is under ligation by 3^rd party due to encrochment. We have already intimated to KIADB ON 12^th September 2023 to settle the land dispute at the earliest for construction of balance portion of boundry wall.

*52.87 acres land valuing H 657.25 lakhs taken under 20 years lease from KIADB, for the purpose of constructing a railway siding, the lease is valid till 29.12.2028 and thereafter sale deed to be executed in favour of the Company. This land has been classified under ROU. Due to technical feasibility, the construction of railway siding is kept on hold. KIADB has fixed personal hearing on 2^nd February 2024 for implimentaion od project on alloted land. Based on thepersonal hearing letter dated 8^th April 2024 submitted to KIADB for permitting another 5 years to construct railway siding which is required for transportation of Iron Ore from our captive Devdari mine to Pellet Plant. Company has retained the classification as Right to use (ROU) asset as on 31^st March 2024 and as on 31^st March 2023.

* The Company had extended H 18 Crores inter-corporate loans to Hindustan Photo Films Mfg Company Ltd (HPF Ltd) during 1992-93. HPF Ltd has been declared to be sick under Sick Industrial Companies (Special provisions) Act 1985 in January 1996. Provision towards 100% of the said loan made in the books. The NCLT, Chennai has appointed Resolution Professional. The claim lodged by the Company has been admitted by the Resolution Professional. The liquidator vide letter dated 13.04.2023 forwarded the Resolution Plan and H 64,190 has been allocated under the plan to the Company for part of the assets sold under resolution process and an amount of H 38,848 received on 18.05.2023 and H 25,342 received on 16.09.2023. (Total receipt H 64,190 shown as Note no 18.2 "Other Income- Provision no longer required". C.A.Mahalingam Suresh Kumar was appointed as Liquidator. KIOCL has also filed claim before Liquidator amounting to H 154.54 Crores. The Liquidator has fixed dates for sale of Corporate debtor as a going concern. But e auction could not be done as there was no bidders.

* Raw materials includes goods in transit amounting to H 2420.40 lakhs (H 929.71 lakhs as on 31^st March 2023)

# Stores and spares includes goods in transit amounting to H 5.71 lakhs (H 150.52 lakhs as on 31^st March 2023)

^A100% Impairment is recognised for the value of non-moving stores & spares held for 5 years and above. Net peovision recognised H 65.49 lakhs during the year included in Note No. 24" Other expenses- Provision for surplus stores, DDR and others" (Previous year net provision withdrawn H 35.78 lakhs against items which were classified as moving items on usages included in Note no 18.2 "Other Income- Provision no longer required (Net))".

-For method of valuation for each class of Inventories refer Note No. 1.13

The Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At regular intervals, the historically observed default rates are updated and changes in forward-looking estimates are analysed.

a) Terms and rights attached to Equity Shares - The Company has only one class of equity shares having a par value of H 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholder in ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation of the Company, the shareholders will be eligible to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

a) General reserve:

The general reserve is a free reserve which is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

b) Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilized in accordance with the provisions of Section 69 of the Companies Act, 2013.

c) Retained Earnings:

This reserve represents undistributed accumulated earnings of the Company as on balance sheet date.

Term loan availed from Canara bank for setting of non recovery coke oven and ductile iron spun pipe at BFU Mangalore with exclusive charge hypothecation on project assets currently, structure assets, civil work, structure work and plant & equipment's, financed out of the term loan. Applicable rate of interest is 3 months MCLR with annual reset. Loan tenure is 12 years (door to door tenure) including 4 years moratorium period, repayable in 32 quarterly instalments and intertest to be served as and when due. The loan has been utilized for the purpose for which it was availed.

The Company is having arrangement with Union Bank, Canara Bank, Punjab National Bank and State Bank of India regarding secured overdraft limit (against term deposit) as at 31^st March,2024 outstanding balance was H Nil, Nil , H Nil and H 3,292.56 Lakhs respectively. (As at 31^st March, 2023 outstanding balance was H 12,856.85 lakhs, Nil , H 2,927.20 Lakhs and H 2,2298.06 Lakhs).

1. Sale of Products are generally against advance payment by customers or are against letters of credit/ cash against documents and proceeds are realised within one month period. Accordingly, the amount of consideration does not contain any significant financing component.

2. Sale of Services are rendered to Departments of Central Government/State Government / Central PSUs/ State PSUs/ Corporates with short term credit period of one- two months and does not contain any significant financing component.

3. As per the terms of the contract with its customers, the Company has a right to receive consideration from its customers for all completed performance obligations. Accordingly, the Company has availed the practical expedient available under paragraph 121 of Ind AS 115 and dispensed with the additional disclosures with respect to performance obligations that remained unsatisfied (or partially unsatisfied) at the balance sheet date. Further, since the terms of the contracts directly identify the transaction price for each of the completed performance obligations there are no elements of transaction price which have not been included in the revenue recognized in the financial statements. Further, there is no material difference between the contract price and the revenue from contract with customers.

Nature of CSR Expenditure

During the year the Company has spent H 465.67 Lakhs (Previous year 589.96 laks) including H 40 Lakhs against on- going projects (previous year H 196.10 lakhs) and H 378.17 lakhs set off out of CSR expenditure brought forward (Previous year H 34.98 Lakhs) towards health care, promotion of education, eradicating hunger and poverty nutrition, community development.

* H 11,057.62 Lakhs (Previous year H 11,057.62 Lakhs) towards Forest Development Tax (FDT) at the rate of 12% of basic price of iron ore. The supplier NMDC Limited has filed a writ petition before the Hon'ble High Court of Karnataka challenging the levy of the same. The case was disposed of vide order dated 3^rd December, 2015 directing the Govt. of Karnataka to refund the FDT within three months. However, the Govt. of Karnataka has filed Special Leave Petition before the Hon'ble Supreme Court of India. The matter was listed on 9^th August, 2019 and the Hon'ble Supreme court directed to list the appeal for hearing.

Further, against H 11,057.62 Lakhs, an amount of H 2,617.43 Lakhs (Previous year H 2,617.43 Lakhs) (equivalent to 25% of FDT) collected earlier by NMDC as per the interim order of Hon'ble Court is shown under "Other Non-Current Assets" in Books of Accounts and the Bank Guarantee equivalent to H 2,734.87 Lakhs (Previous year H 2,734.87 Lakhs) furnished to NMDC in this regard has not been included under the contingent liabilities against Bills discounted/Letter of Credits/ Bank guarantees.

28.2.1 Employee Benefits as per Ind AS 19 a) PF interest Guarantee:

The Company's contribution to the Provident Fund is remitted to a separate Trust based on a fixed percentage of the eligible employee's salary and charged to Statement of Profit and Loss. Further, the Company makes good the shortfall, if any, in the return from investments of the Trust vis-a-vis the notified rate of interest, based on actuarial valuation. During the year no additional provision made towards PF interest guarantee (Previous year H 439.01 Lakhs) based on actuarial valuation report.

(i) The Company is exempted under Section 17 of the EPF & MP Act, 1952 and the PF corpus is managed by a Trust. The plan assets of the Trust are managed by Board of Trustees.

(ii) Discount rate is based on the prevailing market yield of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

(iii) The salary escalation rate is arrived taking into consideration the seniority in the promotion and other relevant factors, such as demand supply in employment market.

Sensitivity Analysis Method

Sensitivity Analysis Method is determined based on the expected movement in liability if the assumptions were not proved to be true

on different count.

i) Interest Risks: A Decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's debt investments.

ii) Liquidity Risk: This is the risk that the Company is not able to meet the short-term Provident Fund pay outs. This may arise due

to non-availability of enough cash / cash equivalent to meet the liabilities or holding of ill liquid assets not being sold in time.

iii) Market Risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets.

One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate / government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

iv) Legislative Risk/Regulatory Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation / regulation. The government may amend the Payment of Provident Fund Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

b) Gratuity:

Liability with regard to gratuity benefits payable in future is determined by actuarial valuation at the end of the year using the projected unit method. Net provision towards Gratuity fund for the year is H 376.36 Lakhs (Previous year H 329.72 Lakhs (net)). The Company operates a gratuity plan administered by LIC under Group Gratuity Life Assurance Scheme of LIC of India. Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year or part thereof in excess of 6 months of service subject to a maximum of H 20 Lakhs as per the Payment of Gratuity Act, 1972, as adopted by the Company through resolution in 257^th meeting of the Board held on 26^th March 2019. The same is payable at the time of separation from the company or retirement, whichever is earlier. Net Assets recognized in Balance Sheet is H 423.11 Lakhs under Note no 7 (Previous year H 81.02 Lakhs).

i. The plan assets of the Company are managed by Life Insurance Corporation of India through a trust managed by the company in terms of an insurance policy taken to fund obligations of the Company with respect to its gratuity plan. The categories of plan assets as a percentage of total plan assets is based on information provided by Life Insurance Corporation of India. Information on categories of plan assets as at 31 March, 2024 and 31 March, 2023 has not been provided by Life Insurance Corporation of India.

ii. The plan assets have been primarily invested in insurer managed funds. The Company contributes all ascertained liabilities towards gratuity to the Fund. The Gratuity plan provides a lump sum payment to the vested employees at retirement, death, incapacitation or termination of employment based on the respective employee's salary and tenure of the employment with the company.

iii. Expected Contribution in respect of Gratuity for next year will be H 198.80 Lakhs (For the year ended March 31,2023 H 20 Lakhs).

iv. Discount rate is based on the prevailing market yield of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

v. The salary escalation rate is arrived taking into consideration the seniority in the promotion and other relevant factors, such as demand supply in employment market.

(i) Inflation Risks : In the post-retirement plans ie, gratuity, the payment is not linked to inflation, so this is a less material risk.

(ii) Life Expectancy : The post-retirement plan obligations is to provide benefits for the life of the member, so regularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

28.2.5 Leases (Ind AS 116)

As Lessee

The Company's significant leasing arrangements are in respect of operating leases for land and buildings. These arrangements generally range between 3 years and 30 years, except for certain land leases where the lease term ranges up to 99 years. In case of land taken on lease from New Mangalore port trust, termination option is exercisable only by the lessor. Hence, the management has considered the full term of the contract as the lease term, since the Company is liable to pay the lease rental as they do not have the right to terminate the contract.

The Company holds nine tracts of Land totaling 386,691 Sq. Mtrs. on long term lease from New Mangalore Port Trust (MNPT). Lease of the following four tracts of land, pending for registration of lease deeds, are considered as "Lease continuing" in view of company's request for extension of lease with NMPT and the same being under their consideration and continuing in paying annual lease rent and the same is duly acknowledged and accepted by NMPT:

a) 213,783 Sq Mtrs of land taken for Port facilities

b) 9,120 Sq Mtrs of land taken for storage of iron ore fines

c) 27,008 Sq Mtrs of land taken for pellet storage yard and

d) 21,270 Sq Mtrs of land taken for Captive Power Plant

The Company has submitted Security Deposit of H 2,104.00 Lakhs during Jan, 2023 and May, 2023 in the form of Bank Guarantee of for Sl no (a), (c) and (d) for execution of the Lease Deed.

There are no sale and lease back transactions.

Ind AS 116 has resulted into an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

The weighted average incremental borrowing rate applied lease liabilities towards land and building is 8.20% and 8.45% respectively.

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they become due.

Rental expenses recorded for short- term leases were H 98.42 Lakhs for the year ended 31^st March, 2024 (Previous year H 110.88 Lakhs).

As lessor

Rental income on assets given on operating leases was H 208.86 Lakhs for the year ended 31^st March, 2024 (Previous year H .182.36 Lakhs).

The Company has leased out its land under operating lease for periods ranging up to 7 years. Lease payments are structured with periodic escalations consistent with the prevailing market conditions. There are no variable lease payments to be received.

28.3 Others:

28.3.1 With the suspension of mining operations at Kudremukh mine site, the Company is procuring the iron ore fines from NMDC mines in Chhattisgarh state and transporting to its plant at Mangalore by rail cum sea route and from open market.

Railways vide letter No. H/C.474 Classification/11 dated 21^st October, 2011 raised an issue regarding the applicability of distance-based charge (DBC) over and above normal freight on Iron ore transported through railway network for manufacture of pellets and their subsequent export. Both South Western Railway (SWR) and East Coast Railway (ECR) have raised demand of H 44,447.86 Lakhs and H 10,361.38 Lakhs respectively towards distance-based charge (DBC) over and above normal freight on Iron ore transported.

As per the Company's view, DBC should attract only for iron ore fines and lumps which are directly exported and not on the Iron Ore so moved and utilized in the steel plants for manufacture of finished product and exported thereafter. The same is also not applicable to Pig iron and Sponge Iron Industry.

Both KIOCL and SWR have reconcile DBC payable amount for 14,463.93 Lakhs and signed the minutes of meeting. KIOCL had filed writ petition before the Hon'ble High Court of Karnataka. The writ petition was dismissed and KIOCL filed writ appeal challenging the dismissal of the writ petition. The Hon'ble High Court has granted interim order staying DBC, subject to the condition that 50% of the demand excluding penalty is to be deposited. Thus, H 8,325.16 Lakhs was paid (against H 7,231.97 Lakhs I.e. 50% of 14,463.93 Lakhs) and for the balance amount of H 6,138.77 Lakhs (H 14,463.93 Lakhs -H 8,325.16 Lakhs) provision has been made in the books in the FY 2013-14.

Similarly, against the demand of H 10,361.38 Lakhs for DBC and H 31,084.14 Lakhs towards penalty, of ECR which after considering the freight already paid, DBC worked out to be H 6,740.94 Lakhs. KIOCL has filed WRIT petition before High Court of Orissa and High Court granted stay subject to deposit of 50% amount excluding the penalty. The Company has paid H 5,188.86 Lakhs, adjusted the paid amount against admitted liability of H 6,740.94 Lakhs and the balance amount of H 1,552.08 Lakhs provision has been made in the books FY 2013-14. As amount paid to ECR is more than the amount to be deposited based on order of High Court of Orissa, no separate entry has been made for deposit against disputed amount and undisputed amount in the book of accounts. The balance demand toward DBC and penalty of H 34,704.58 Lakhs has been included in contingent liabilities.

Both the cases are not listed so far. Railway has filed transfer petition before Hon'ble Supreme Court and both the cases are stayed by Supreme Court. The transfer petition is still pending before the Hon'ble Supreme Court.

28.3.2. During the FY 2008-09, the Company has claimed refund of congestion surcharge amounting to H 6,877.86 Lakh from South Western Railway (SWR) in respect of 573 rakes moved during 1^st April, 2007 to 21^st May, 2008 through the Company's private Railway Siding at Panambur, Mangalore which was commissioned in January 2006. SWR refunded only H 2,725.39 Lakh till FY 2013-14 which includes H 206.70 Lakh adjusted by SWR towards DBC. During the FY 2014-15, the Company had approached Railway Claims Tribunal (RCT), Bangalore for refund of the balance amount of H 4,152.70 Lakh with interest. The Tribunal allowed the claim by its order dated 7^th December, 2018 and directed SWR to compute and pay the amount together with interest at 6% per annum and in case SWR fails to comply with the order, interest at 9% per annum is payable from 1^st April, 2019. SWR has filed petition against the order of Tribunal in Hon'ble High Court of Karnataka on 11^th April, 2019 vide case no MFA/3165/2019. KIOCL filed cross objection in the appeal and the case is still pending.. KIOCL has filed execution case before RCT Bangalore for realization of the ordered amount and the same is also pending.

The Konkan Railway offered concessional freight to the Company for movement of rakes through Konkan route instead of shorter route i.e., Hassan-Mangaluru, which has been accepted by the Company and 110 rakes were booked for the Konkan route. Subsequently, Konkan Railway allowed concessional freight for 92 rakes only and balance 18 rakes were moved through shorter routes i.e., Hassan-Mangaluru. Hence, during the FY 2008-09 the Company claimed refund of H 254.45 Lakhs from SWR towards differential freight. However, SWR has not refunded the amount. Hence, during the FY 2014-15 the Company approached RCT, Bengaluru and has claimed H 254.45 Lakhs with interest. The Tribunal dismissed the claim and the Company filed appeal before Hon'ble High Court of Karnataka during the FY 2018-19 and the same is pending.

East Coast Railway have collected 100% congestion surcharge instead of 30% for the rakes moved during the period from 15^th April, 2008 to 21^st May, 2008. During the FY 2008-09, the Company requested ECR for refunding H 436.83 Lakhs being 70% excess congestion surcharge collected in respect of 26 rakes. As ECR failed to refund the amount, the Company has filed a petition before the RCT, Bhubaneswar during the FY 2014-15 for refund of H 436.83 Lakhs with interest. The Tribunal dismissed the claim and the Company filed appeal before Hon'ble High Court of Odisha during the FY 2018-19. The High Court of Odisha has passed order on

17^th August 2023 and allowed the appeal filed by KIOCL in part. The High court directed Union of India to refund 70% of the congestion charges received from KIOCL for the period from 24^th April 2008 to 30^th April 2008 within period of four months. Accordingly, KIOCL has sent letter dated 09^th January 2024 and 26^th March 2024 requesting ECR to pay the ordered amount which is computed for H 121.00 Lakhs.

The Company has not recognized income for above three cases (SWR, Konkan Railway and ECR) in line with the Company's significant accounting policy No.1.4, pending realization

28.3.3. In pursuance of the directives of the Hon'ble Supreme Court, mining activities at Kudremukh were stopped with effect from 01^st January 2006. Indian Bureau of Mines (IBM) has approved Final Mine Closure Plan (FMCP) of Kudremukh Iron Ore Mine and the same was communicated vide letter no. MS/CMG/Fe-38-52 dated 06^th May, 2005. At the time of closure of the mine, the Company filed a petition with prayers for direction, inter-alia, to permit utilization of 54.01 hectares of land required for the purpose of safety and slope stability of the mine.

The Hon'ble Supreme Court, in its judgment (December 2006), directed IIT Delhi to issue global tender for, inter-alia, re-analyzing the stability of slopes, drawing up of mine closure plan, implementation of the above plan and drawing up of detailed terms for the work to be done, consistent with basic paradigm of "no or minimal disturbance to un-broken area".

The expenditure for this purpose was to be met out of H 1,900/- Lakhs paid by the Company before closure of mining i.e. 31^st December, 2005, which is presently lying with the Compensatory Afforestation Fund Management and Planning Authority (CAMPA).

The Hon'ble Supreme Court has also directed that if any funds are required in excess of H 1,900/- Lakhs, the agency or the Designated Officer shall move to the Court for necessary direction.

Ministry of Mines Government of India, vide letter dated 07^th February, 2014, nominated the Regional Controller of Mines, IBM Bangalore as the 'Designated Officer' to take possession of Kudremukh Iron Ore Mine. Accordingly, the Company has handed over the possession of the Kudremukh Iron Ore Mines on 03^rd April, 2014 to the Regional Controller of Mines, IBM Bangalore.

Subsequently, officials of IBM Bangalore and IIT, Delhi inspected the mine site on 20^th May, 2014, in which IIT Delhi opined that, keeping in view of the environment and safety concerns, the residual task of mine closure is relatively minor as compared to what was originally envisaged. Hence, the

amount of H 1,900/- Lakhs paid by the company to Central Empowered Committee (CEC) already lying with the CAMPA would be utilized for environmental restoration at Kudremukh Iron Ore Mine. In addition to above, the Company has also made provision to the extent of H 600/- Lakhs during the FY 2003-04 to 2005-06.

28.3.4. Total Mining Lease areas of 4,605.02 hectares of land at Kudremukh included an extent of 1,220.03 hectares of government revenue land, apart from forest land as well as the Company's free hold land. The Designated Officer has taken over the entire Mining Lease area on 03^rd April, 2014 for carrying out the mine closure activities in compliance with Hon'ble Supreme Court orders dated 15^th December, 2006. However, the infrastructure and buildings located on revenue land and other lands being the property of the Company shall continue to remain in their physical possession till the cessation of mine closure activities. Till the year 2013-14, the land records of revenue land were in the name of the Company. Meanwhile Government of Karnataka has changed the revenue records removing the Company's name. Hence the Company was constrained to file a suit before Hon'ble Civil Judge Court, Mudigere for an injunction against Government and others, restraining them from dispossessing the Company from the said revenue land. The Hon'ble Court heard the arguments and passed an interim order on 05^th November, 2013 restraining the defendants or anybody under them from dispossessing the Company from the Schedule Property (i.e. revenue land) in any manner till the disposal of the suit or till the modalities have been worked out and implemented as directed by the Hon'ble Supreme Court. The suit was dismissed on 20^th November, 2017.

In consideration of taking over of the entire Mining Lease area of 4,605.02 hectors comprising forest land, revenue land, Company's own land and other lands by the Designated Officer for carrying out the mine closure activities in compliance with the Hon'ble Court's direction, although their physical possession held with the Company, the Company depreciated all its township assets in full during the year 2014-15 as a prudent measure excluding freehold land of 114.31 hectors with books value H 29.06 Lakhs. and other movable assets.

28.3.5. Govt. of Karnataka vide its Gazette Notification dated 23.01.2017 reserved an area of 470.40 ha in Devadari Range in Bellary District for iron ore and manganese ore mining in favour of KIOCL under the provisions of Section 17A (2) of Mines and Minerals (Development and Regulation) Act, 1957.

KIOCL obtained statutory clearances viz Mining Plan approval by Indian Bureau of Mines, Environment Clearance by MoEF&CC, GoI , Consent for Establishment by KSPCB and Forest Clearance by MoEF&CC, GoI. Company paid H 174.14

Crores on 29.10.2021 towards NPV, CA charges and H 20.21 Crores on 23.09.2022 to Karnataka CAMPA fund towards differential CA charges etc as per the Stage - I FC condition.

KIOCL executed Mining Lease Deed of Devadari Iron Ore Mine with Director, Mines and Geology, Govt. of Karnataka on 02.01.2023 for 388 ha area for a period of 50 years for Iron Ore and Manganese Ore (ML No. 020 of 2023) mining. KIOCL has registered the Mining Lease Deed of Devadari Iron Ore Mine on 18.01.2023 at the Office of Sub-Registrar, Sandur Taluk, Ballari Dist and paid H 329.18 Crores towards stamp duty, cess and registration charges.

Govt. of Karnataka issued Government Order on 11.04.2023 for diversion of forest land for Devadari Iron Ore Mine. KIOCL will enter into Forest Lease Agreement with Dy. Conservator of Forests, Ballari for handing over the forest land.

As per Stage II Forest Clearance of Devadari Iron Ore Mine Project and as mentioned in the GO dated 11.04.2023, issue regarding Kudremukha mines needs to be regularized. With the approval of the Board on 9^th August'2023, a proposal forwarded in this regard for seeking permission from Govt of India through Ministry of Steel for handing over of 114.31 ha own land including building and other infrastructure at Kudremukh as is where is basis to Forest Department, GoK, permission from Govt of India is awaited.

Also, Company has placed applications in the Parivesh Portal of MoEF & CC for Regularization of Forest Land Utilized at Kudremukh National Park. The proposals are under active consideration of Forest Department.

Other issues as addressed above involving financial implications are being appropriately dealt with Forest Department for amicable settlement.

Techno Economic Feasibility Report of DIOM Project has got the approval from Board on 2^nd February'2024 further for seeking approval from Govt of India for development and operationalization of DIOM Project with an estimated CAPEX of H 1,78,389 Lakhs. The project CAPEX includes expenses towards Corporate Environmental Responsibility (CER) as stipulated in the Proposal for Environmental clearance of DIOM and the same will be utilized as per the plan. The proposal has already been placed before the PIB, Ministry of Finance through Ministry of Steel. Approval from Govt of India for DIOM Project is awaited.

A comprehensive Rehabilitation and Reclamation Plan (engineering measures to prevent and mitigate possible environmental concerns associated with the Project) for DIOM, is prepared by M/s Indian Council of Forestry Research and Education, MoEF & CC, Govt of India.

On handing over the forest land diverted for Devadari Iron Ore Mine by Forest Department, GoK., Company will undertake exploration, mine development activities development of internal roads, preparation/development of approach roads to waste dump areas, development of benches, establishment of crushing & screening units, establishment of weigh bridge, development of approach road to railway siding for evacuation of iron ore etc. Company has planned to produce the iron ore by Dec 2024 from Devadari Iron Ore Mine.

Capital expenditure incurred for development of Devadari Iron ore mines upto 31^st march 2024 amounting to H 52,988.31 Lakhs including NPV, CA, stamp duty, cess, registration charges and other incidental charges are classified as mining right under other intangible assets vide note No. 4.1 upon approval of TEFR, (Previous year H 52,728.73 Lakhs was classified as mining right under acquisition under Intangible assets under development vide Note No 4.2.)

28.3.6. Since the closure of mining activities, consequent upon the judgment of Hon'ble Supreme Court w.e.f. 1^st January, 2006, Mangalore Pellet Plant and also Blast Furnace Unit continue to draw the required water from Lakya Dam at Kudremukh. Hence, dam maintenance activity from the safety point of view and maintenance of water drawal system which include electrical and pipeline maintenance are still continuing. Therefore, Kudremukh installation is a working unit as on date as an integral part of Mangalore unit.

28.3.7. In order to utilize the Blast Furnace Unit, the company has made a project proposal for Backward and Forward Integration of the Unit involving capital expenditure of H 836.90 Crore and the same has been approved by the Board in its 255^th meeting held on 13^th November 2018. The same has been approved by Public Investment Bureau (PIB). Environment clearance has been granted by MOEF&CC, GOI on 27^th February, 2020. M/s MECON has been appointed as EPCM contractor for the project.

The installation & commissioning of Coke oven under backward integration project has been entrusted to M/s Tuaman Engineering Limited, Kolkata as a EPC contractor on lumpsum turnkey basis with technology provided by M/s CIMFR, GoI, Dhanbad. The construction works of coke oven are under progress and is expected to be commissioned by 31.03.2025.

The contracts for the balance packages under backward & forward viz., Ductile Iron Spun Pipe plant, Co-Gen Power Plant, Upgradation of Blast furnace, Pulverized Coal Injection system, Oxygen plant and Nitrogen plant could not be concluded due to high cost and change in public procurement policy. Hence, further process of re-tendering is kept on hold. The Joint Venture (JV) option is being explored for setting up

of facilities for value added products in Blast Furnace Unit. Some of the prospective JV partners have responded to KIOCL's Expression of Interest (EOI) and are under discussion.

During the year the Company has incurred H 8.52 Lakhs (Previous year H 16.84 Lakhs) towards Excavation and loading of 1,431.31 MT (Previous year 3,510.47 MT) of auxiliary material of Pig Iron at BFU. The said materials of 351.31 MT worth H 38.54 Lakhs were sold during the year (Previous year 4,085.47MT worth H 470.91 Lakhs). As at the end of the year, Company was holding a physical stock of 1,860 MT (Opening 780 MT plus excavated 1,431.31 MT less 351.31 MT sold) of the same (Previous year 780 MT). As the cost of production of the same had been accounted for in earlier years, the same is valued at nil cost as at the end of the year, although the market value of the same is H 204.02 Lakhs (Previous year H 89.91 Lakhs) as per last sale price of similar product. As a prudent accounting measure, no value has been assigned to the stock in the Books of Accounts.

28.3.8. (a) Expenses incurred towards generation of power being a

significant cost of production have been included under the primary heads of account.

(b) Expenses incurred towards Stores, Spares, Consumables and Additives being a significant cost of production have been included under the primary heads of account.

28.3.9. Financial Risk Management

The Company's business activities expose it to a variety of financial risks, namely liquidity risk, market risk, credit risk and currency risk. The Company's senior management has

overall responsibility for the establishment and oversight of the Company's risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company's risk management policies. The key financial risks and mitigating actions are also placed before the Risk Management Committee / Audit Committee of the Company. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits, to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.

The Risk Management Committee of the Company is supported by the Finance team and experts of respective business divisions that provides assurance that the Company's financial risk activities 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. The activities are designed to:

• Protect the Company's financial results and position from financial risks.

• Maintain market risks within acceptable parameters, while optimizing returns

• Protect the Company's financial investments, while maximizing returns.

The investment committee is responsible for maximizing the return on Company's internally generated funds.

I. Management of Liquidity Risk

Liquidity risk is the risk that the Company faces in meeting its obligations associated with its financial liabilities. The Company's approach to managing liquidity is to ensure that it has sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions. A material and sustained shortfall in our cash flow could undermine the Company's credit rating and impair investor confidence. The following table shows the maturity analysis of the Company's financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date:

II. Management of Market Risk

Market risks comprises of Price risk & Interest rate risk. The Company does not designate any fixed rate financial assets as fair value through Profit and Loss nor at fair value through OCI. Therefore, Company is not exposed to any interest rate risks. Similarly, the Company does not have any financial instrument which is exposed to change in price.

III. Management of Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers and other receivables. The Company applies prudent credit acceptance policies, performs ongoing credit portfolio monitoring as well as manages the collection of receivables in order to minimize the credit risk exposure.

The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the notes to the Financial Statements. The Company's major classes of financial assets are cash and cash equivalents, term deposits and trade receivables. For banks and financial institutions, only high rated banks / institutions are accepted.

Trade Receivables

Concentrations of credit risk with respect to trade receivables are limited, since the Company's most of the sales (more than 95%) are secured against Letter of Credit and/or Bank Guarantee. Accordingly, based expected credit loss (ECL) experience, the Company has grouped the trade receivable into secured and unsecured.

The Company has applied the simplified approach for calculating ECL for both secured and unsecured trade receivables. During the year ECL assessed for secured and unsecured trade receivables are Nil and H 480 Lakhs respectively (Previous year Nil and H 80 Lakhs) and provision made in the books is included in Note no 9.1.

The carrying value of the financial assets represents the maximum credit exposure. The Company's maximum exposure to credit risk is H 708.23 Lakhs and H 35,422.40 Lakhs as at 31 March 2024 and 31 March 2023 respectively.

IV Foreign Currency Risk

The Company being an EOU, is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar (USD), Euro (EUR), and Japanese Yen (JPY). Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company's functional currency (INR). The currency risk of the said underlying asset is managed by entering into foreign currency forward contracts (only on need basis).

28.3.10 Capital Management

The Company considers the following components of its Balance Sheet to be managed capital:

Total equity as shown in the Balance Sheet includes Retained Earnings and Share Capital. The Company aim to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders. The capital structure of the Company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The Company considers the amount of capital in proportion to risk and manages the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company takes appropriate steps in order to maintain, or if necessary, adjust, its capital structure. Company is not subject to financial covenants in any of its significant financing agreements.

(ii) Fair Value Hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

There have been no transfers among Level 1, Level 2 and Level 3 during the period.

Valuation Process

Forward contracts - Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

Trade receivables, cash and cash equivalents, other bank balances, loans, other financial assets, current borrowings, trade payables and other current financial liabilities: fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

For all other financial instruments, the carrying amount is either the fair value, or approximates the fair value.

28.3.12 Derivative financial instruments

The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The derivative transactions are normally in the form of forward contracts, and these are subject to the Company guidelines and policies.

The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities.

The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board.

The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.

28.3.15 During the current year 1.91 million tons of pellet produced and plant was under shutdown for 129 days due to non-availability of raw-material and unviable market conditions ( 92 days for to non-availability of raw material and 37 days for unviable market conditions) previous year 1.51 million tons of pellet produced and plant was under shutdown 186 days due to levy of 45% export duty by GOI and non-availability of raw-material ( 172 days for levy of 45% export duty by GOI and 14 days for non-availability of raw-material). The pellet plant was under shutdown for unviable market condition from 24.02.2024 and started on 29.05.2024..

28.3.16. The Company has not declared any Interim Dividend for the FY 2023-24 (Previous year NIL) due to loss for the current year and previous year

Proposed Dividend:

The Company has approach DIPAM, Ministry of Finance through Ministry of Steel for seeking exemption from 'Payment of Dividend' for the Financial Year 2023-24 in line with the O.M dated 27^th May 2016. Ministry of Steel vide its Office Memorandum dated F.No.12/3/2021-DIPAM-V recommended DIPAM to exempt KIOCL from payment of Dividend for FY 2023-24. Accordingly, no dividend has been proposed for the current year (Previous year total dividend Nil as per DIPAM exemption letter No.S-25016/34/2022-KIOCL including interim and final dividend.)

28.3.17. Other disclosures :

i) No proceedings have been initiated on or are pending against the company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

ii) The company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

iii) The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

iv) The Company is not required to file quarterly returns or statements with the banks as the overdraft facility is drawn against

deposit with banks.

v) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

vi) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

vii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities

(Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

viii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

ix) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act,1961, that has not been recorded in the books of account.

x) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

xi) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

28.3.18 Figures for the previous year have been regrouped/reclassified to conform to the figures of the current year