Accounting policy change:Foreign Currency Monetary Item Translation Difference Account

The Company has elected to account for exchange differences arising on reporting of
long-term foreign currency monetary item in accordance with Companies
(Accounting Standards) Amendment Rules 2009 pertaining to Accounting Standard
11 (AS-11) notified by Government of India on 31st March, 2009 (as amended on
29th December, 2011) which allows foreign exchange differences on long-term
monetary items arising on or after 1stApril, 2011 to be capitalised to the extent they
relate to acquisition of depreciable assets and in other cases to amortise over the
balance period of the respective monetary items. As on 31st March, 2012, a debit of
` 404.90 crores (31.03.2011: Nil) remains to be amortised in the "Foreign Currency
Monetary Item Translation Difference Account"

Total expenses
Year 2012 25,951.78 Year 2011 20,994.73

Major changes due to change in prices of raw material (iron ore and coke vale
incresed)
Changes in other expenses item

Other expenses changes are mainly due to:-

The Other cost which includes Net loss on foreign currency transactions has been
increased from (-259.14 Cr ) to (467.12 Cr)

KAR VIJAY HAR SIKHAR: (Savings of 945 crores in FY 2011-2012)

The special improvement initiative, the 'Kar Vijay Har Shikhar' programme launched in India, has
resulted in savings of `945 crores in Financial Year 2011-12. The program is an operations
transformation exercise implemented through a focused methodology to de-bottleneck processes in
order to increase throughput and reduce costs across functions, notably marketing, mining and
production.

Correspondingly the Return on Investment is decent at 8.47%. However, a thing to be noted

here is that the sales margin has steadily decreased from 24.40% in 2006 to 19.64 in 2009.
This could be attributed to either a lowering of prices or an increase in operating costs. The
latter is corroborated by the profit and loss account figures. The operating expenses increase
from Rs. 15927.30 in Mar05 to Rs. 33992.80 in Mar2009. That is probably the reason why
the company has tried to maintain its Return on Investment at a healthy level by trying to
increase its Asset turnover ratio which increased from .38 in 2006 to .43 in 2009
Raw Material changed
production due to reduced exports, increase in price
of ore due to e-auction, reduced coal availability due
to its diversion for power generation coupled with
increased power and freight costs has led to declining
profitability of the Indian steel makers. Tata Steel
continues to focus on its captive mining operations
in a sustainable manner. European operations were
particularly impacted in the second and the third
quarter of the financial year due to high raw material
costs in the seaborne market and the customers timing
their purchases in line with spot price movements in
the raw material market