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

2.14. Trade liabilities and other liabilities

Liabilities are the current obligation resulting from past events, whose fulfillment, according to expectations, will cause outflow from the Group of resources comprising future economic benefits.

Short-term liabilities comprise trade liabilities and other liabilities maturing within 12 months of the final day of the reporting period. Initially liabilities are recognized at fair value, but this measurement corresponds to the required payment amount or the amount of the liability and, in later periods, financial liabilities are shown at amortized cost, using the effective interest rate method (for trade liabilities this corresponds to the required payment amount), while other non-financial liabilities at the required payment amount.

Long-term liabilities are initially recognized at fair value minus the transaction costs incurred, and in the next periods are shown at amortized cost, using the effective interest rate method.

Increase (decrease) of a liability in connection with elapse of time, is recognized as financial expense (income).