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

3.3. Estimation of fair value

Financial instruments carried at fair value in the consolidated statement of financial position are analyzed for valuation procedures. The hierarchy of valuation procedures has been defined as follows:

• Listed (unadjusted) prices from active markets for identical assets or liabilities (Level 1).
• Input data other than the listings covered by this level which may be determined or observed for an asset or liability item directly (i.e. in the form of price) or indirectly (i.e. through calculations based on prices) (level 2).
• Input data for the valuation of assets or liabilities, which are not based on the observable market data (i.e. data which cannot be observed) (level 3).

As at 31 December 2012 and 31 December 2011, the only financial instruments carried at fair value in the Group were financial derivatives. With respect to valuation procedures, they are classified as level 2 in the above hierarchy.

Group's financial assets and liabilities carried at fair value:

	31 Dec 2012 Level 2	31 Dec 2011 Level 2
Financial assets – financial derivatives	3.9	4.0
Financial liabilities – financial derivatives	0.3	0.1

The fair value of financial instruments which are not traded on active markets exists is measured by using adequate valuation techniques. Such valuation techniques optimize the use of observable market data where they are available and rely to the smallest possible extent on the entity-specific estimations. Where all the significant data used for measurement at fair value are observable, the financial instrument is classified as level 2. This group includes financial derivatives.