Consolidated financial statement of JSW S.A. Capital Group for 2012

2.8. Impairment of non-financial assets

Assets with unspecified useful lives, such as goodwill, are not depreciated but tested for impairment on an annual basis. The assets that are subject to depreciation and amortization are analyzed for impairment any time any events or changes in circumstances indicate that their book value may not be realized.

Impairment loss is recognized at the surplus of the asset's book value over its recoverable value. Recoverable value is the higher of: fair value of the assets minus the cost of sale, or usable value.

For the purpose of the impairment analysis, assets are grouped at the lowest level where there are identifiable separate cash flows (cash flow centers). Impairment tests of property, plant and equipment components are conducted based on the principle that a mine or another subsidiary company constitutes the smallest group of assets.

If an impairment test shows that the recoverable value of an asset component is lower than its book value then a revaluation charge is made at the amount of the difference between the recoverable value and the book value of the asset component.

The revaluation charge associated with impairment of the cash flow center to which goodwill had been allocated is allocated first of all to goodwill and then to other assets in the cash flow center, pro rata to the percentage of the asset's book value in the value of the entire cash flow center.

The impairment charge is recognized instantly in the financial result.

After the revaluation charge associated with impairment is recognized the depreciation charge for the asset is adjusted.

Non-financial assets other than goodwill, impairment of which had been found earlier, are evaluated as at every end date of the financial period for the occurrence of premises indicating that the impairment charge may be reversed.

A reversal of an asset impairment charge is recognized instantly as other income in the financial result.