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Notes to Accounts of Coal India Ltd.

Mar 31, 2015

The above approach resulted in maintaining an excellent industrial relations in the company leading to reduction in number of strikes, production loss & man shift loss.

CSR & Sustainable Development Reserve

Company has adopted the CSR policy for F.Y. 2014-15 as per the provisions of the Companies Act,2013. Since Sustainable Development acvtities are merged with CSR activities, the reserve has been transferred to General Reserve during the year. Adjustment for depreciation against opening surplus of Statement of Profit & Loss relates to the transition provision on introduction of depreciation rates as per Schedule II of Companies Act 2013.

Interim Dividend

During the year the company has paid interim dividend of Rs..20.70 (Rs.29.00) per equity share of face value of Rs..10/- each for the year 2014-15 amounting to Rs. 13074.88 crore.

Corporate Dividend Tax

The above represent the Dividend Tax pertaining to the Dividend paid over and above the Dividend received from Subsidiaries, as per provision of Income Tax Act.

Shifting and Rehabilitation Fund

Following the direction of the Ministry of Coal the company has setup a fund for implementation of action plan for shifting & rehabilitation dealing with fire & stabilization of unstable areas of Eastern Coal Fields Ltd. & Bharat Coking Coal Ltd. The fund is utilized (by ECL and BCCL) based on implementation of approved projects in this respect. The subsidiaries of CIL [except ECL (upto 31.12.14), CMPDIL and Coal India Africana Limitada] are making a contribution of Rs. 6/- per tonne of their respective coal dispatch per annum to this fund, which remains in the custody of CIL, till they are disbursed/utilised by subsidiaries/agencies implementing the relevant projects. However ECL has also started contributing from January 2015 on coming out of BIFR (Refer to Note11-""Investment in ECL & BCCL").

Interest earned (Net of TDS) on bank deposits earmarked for this fund is credited to this fund.

Cash Credit

Pending finalisation of formalities for transfer of assets and liabilities of erstwhile Coal Mine Authorities Ltd. and its divisions, now Coal India Ltd, the bank borrowings of Coal India Ltd. has been secured by creating charge against stock of coal , stock of stores and spare parts and book debts and other assets of CIL and its subsidiary companies.

The total working capital credit limit available to CIL is Rs. 550.00 crore, out of which fund based limit is Rs. 250.00 crore. The balance Rs. 300.00 crore limit is non-fund based and Coal India Limited is contingently liable to the extent such facility is actually utilised by the subsidiaries. There is no credit balance in the cash credit account.

1 Land:

- Title deeds for land acquired, in some cases, have not been executed in favour of the company and mutation in certain cases are yet to be executed.

- Land in possession of North Eastern Coalfields, Assam, includes 8069.70 hectares of lease hold land for which no value has been shown in the Balance Sheet.

2 Dankuni Coal Complex / Indian Institute of Coal Management :

- Fixed assets comprising power plant and related building and other assets having written down value as on 31.03.2015 of Rs. 12.30 crore, continue to be let out to South Eastern Coalfields Ltd. for a nominal lease rent of Rs.1/- per annum under cancellable operating lease agreement. The above written down value of Rs. 12.30 crore includes land of Rs. 3.73 crore (at cost) and building of Rs. 6.10 crore (at WDV).The actual worth of the property is considered to be much higher than its WDV and hence no provision is called for.

- Fixed assets comprising plant & machinery and related building and other assets having written down value as on 31.03.2015 of Rs. 13.14 crore have been let out to Indian Institute of Coal Management, a registered society under Societies Registration Act, 1860 for an annual lease rent of Rs. 1.53 crore under cancellable operating lease agreement.

3 Depreciation has been provided as per Schedule II of the Companies Act,2013. However, pending completion of technical assessment to segregate the value of certain assets embedded within a different class of asset, depreciation has been provided on these assets on the basis of useful life applicable as per Schedule II of the Companies Act,2013 for the un-segregated class of asset.

NOTE - 4

NON - CURRENT INVESTMENTS - Unquoted at Cost

1 Investment in ECL and BCCL

The net worth of BCCL had turned positive at the end of the year 2012-13 and came out of BIFR, and had continued to earn profit. Considering the improved financial position of BCCL, the investment in share of BCCL ( Rs. 2118.00 crore & Rs. 2539.00 crore in equity shares & 5% redeemable cumulative preference shares respectively) are valued at cost."

During the year further investment in 6% redeemable cumulative preference shares in ECL (redeemable at par compulsorily after 7 years from the date of issue or after 5 years from the date of issue at the option of CIL) was made by way of conversion of past unsecured loan due to CIL of Rs. 518.97 crore and current account balance (receivable from ECL) of Rs. 1532.00 crore.

The above arrangement was made as a mutually agreed mechanism between ECL and CIL as required by the scheme of rehabilitation approved by BIFR with subsequent modification made by State Bank of India (monitoring agency) on 1st November, 2014 as per direction of BIFR.

On implementation of above ECL has reported a positive net-worth as on 31.12.2014 and has come out of BIFR and also continued to earn profits. In view of the improved financial position of ECL the investment in shares of ECL ( Rs. 2218.45 crore & Rs. 2050.97 crore in equity shares & 6% redeemable cumulative preference shares respectively) are valued at cost.

2 Investment in International Coal Ventures Pvt. Ltd.

CIL has entered into a Memorandum of Understanding (vide approval from its Board in 237th meetting held on 24th November, 2007) regarding formation of Special Purpose Vehicle (SPV) through joint venture involving CIL/SAIL/RINL/NTPC & NMDC for acquisition of coking coal properties abroad. The formation of the SPV had been approved by the Cabinet, Govt. of India, vide its approval dated 8th November, 2007.

The aforesaid SPV viz. International Coal Ventures Pvt. Ltd. was initially formed by incorporation under Companies Act, 1956 on 20th May,2009 with an authorised capital of Rs. 1.00 crores and paid up capital of Rs.0.70 crore. The authorised Capital and paid up Capital as on 31.03.2015 stood at Rs.1110.00 crore and Rs. 515.63 crore respectively. Out of above paid up capital, Coal India Ltd. is owning 0.54% share i.e. Rs. 2.80 crore face value of equity shares.

3 Investment in CIL NTPC Urja Private Ltd.

CIL NTPC Urja Pvt.Ltd., a 50:50 joint venture company was formed on 27th April'2010 between CIL & NTPC for setting up of joint integrated power plants along with mining of coal. Coal India Ltd. is holding 50% equity shares of face value of Rs. 0.02 crore in the joint venture company.

4 Investment in Coal India Africana Limitada (100% owned subsidiary -Overseas )

Coal India Ltd., has formed a 100% owned subsidiary in Republic of Mozambique, named "Coal India Africana Limitada" to explore non-coking coal properties in Mozambique. The initial paid up capital on such formation (known as "Quota Capital") is Rs. 0.01 crore (USD 1000).

ADDITIONAL NOTES ON ACCOUNTS (Standalone)

i) Contingent liabilities / Commitments

a) Capital commitment : Rs.21.28crore (Rs.45.44 crore)

b) Revenue commitment : Rs.327.04 crore (Rs.510.83 crore)

c) Claims against the company : Rs.1806.13 crore (Rs.1802.25 crore) not acknowledged as debt

d) The Competition Commission of India (CCI), on the basis of complaints by few coal customers (called as 'informant' in the case) against certain conducts of M/S Coal India Limited, M/S Western Coalfields Limited, M/S South Eastern Coalfields Limited, M/S Mahanadi Coalfields Limited (called as 'opposite party' in the case) heard the case and vide its order dated 09.12.2013, had inter-alia imposed a penalty of Rs. 1773.05 crore which is to be deposited within 60 days of receipt of the order.

The appeal against the above order has already been filed and the hearing is taking place from time to time.

The Competition Appellate Tribunal vide its interim order dated 13.01.14, has granted status quo until further orders, in respect of implementation of directions/restraints (other than the imposition of penalty) ordered by CCI on 09.12.13.

Further, the Competition Appellate Tribunal in the hearing dated 26.02.2014 has agreed to grant stay in favour of CIL on the order of penalty of Rs. 1773.05 crore pending disposal of Appeal, on the condition that CIL deposits a token penalty ofRs. 50 crore within 3 weeks from the date of the order.. Accordingly the said sum of Rs. 50 crore has been deposited on 12th March 2014.

In view of the above, the entire amount of penalty of Rs. 1773.05 crore under appeal has been shown as contingent liability and included with Rs. 1806.13 crore mentioned in (c ) above, with corresponding Rs. 50 crore under deposits in the books of Coal India Limited being a holding company.

e) The company has given guarantee for loans obtained by subsidiaries from Export Development Bank of Canada (EDC) and Liebherr France the outstanding balance of which as on 31.03.2015 stood at Rs.170.21 crore (Rs. 168.07 crore) and Rs.7.40 crore (Rs.9.75 crore) respectively.

f) As on 31.03.2015 outstanding letters of credits amounted to Rs.0.13 crore (Rs.59.66 crore).

ii) Disclosure for employee benefits:

a) Provident Fund:

Company pays fixed contribution to provident fund and pension fund at predetermined rates to a separate trust named Coal Mines Provident Fund (CMPF), which invests the fund in permitted securities. The contribution towards the fund during the year is Rs.26.59 crore (Rs.26.45 crore) has been recognized in the statement of profit & loss (Note 24).

b) The disclosures as per actuary's certificate for employee benefits for gratuity and leave encashment are given below:-

vi) Related party disclosure :

Key management personnel for the year ending 31.03.2015:

Dr. A. K. Dubey, Additional charge of Chairman-Cum-Managing Director w.e.f. 26th June, 2014 to 4th Jan,2015 Mr. S. Narsing Rao, Chairman-Cum-Managing-Director (Upto 25th June,2014)

Mr. S. Bhattacharya, Chairman-Cum-Managing Director w.e.f 5th Jan,2015 Mr. R. Mohan Das, Director (P&IR)

Mr. A. Chatterjee, Director (Finance) (Upto 28th Feb,2015)

Mr. C.K. Dey, Director (Finance) (From 1st Mar,2015)

Mr. N. Kumar. Director (Technical)

Mr. B. K. Saxena, Director ( Marketing)

vii) Taxation :

An amount of Rs.230.00 crore (Rs.380.00crore) is provided in the accounts during current year towards income tax. However there is no deferred tax liability of the company for this period.

The company is having a deferred tax asset (net) on the basis of calculation as per Accounting for Taxes on Income (AS-22), issued by Institute of Chartered Accountants of India. Since as per existing provisions of tax laws the dividend received from subsidiaries which accounts for the income of Coal India Ltd, is tax free w.e.f. financial year 2003-04 and since without considering such dividend there is no virtual certainty of generation of future taxable income, as a prudent practice no deferred tax asset is recognised in the accounts.

viii) The fund available with the company from the management period (Pre-nationalisation) of non-coking coal mines i.e. on 1.5.1973

The fund available with the company against cash, bank balances, road coupons etc. taken over by the company from the management period of non-coking coal mines i.e. on 1.5.1973 has been adjusted against the deposit made by the company on behalf of the Govt of India to Commissioner of Payments on account of surplus of the said management period.

ix) Goods procured by Coal India Ltd. on behalf of Subsidiaries

As per existing practice, goods purchased by Coal India Ltd. on behalf of subsidiary companies are accounted for in the books of respective subsidiaries directly.

x) Insurance and escalation claims

Insurance and escalation claims are accounted for on the basis of admission/final settlement.

xi) Provisions made in the Accounts

Provisions made in the accounts against slow moving/non-moving/obsolete stores, claims receivable, advances, doubtful debts etc. are considered adequate to cover possible losses.

xii) Micro, Small and Medium Enterprises

There is no reported Micro, Small and Medium Enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006", to whom the company owes dues.

xiii) Current Assets, Loans and Advances etc.

In the opinion of the Management Current Assets, Loans and Advances etc. have realisable value in the course of business at least equal to the net amount at which they are stated.

xiv) Balance confirmation

Balance confirmation/reconciliation is carried out for bank balances, all major loans & advances, long term liabilities and current liabilities. Provision is taken against all doubtful unconfirmed balances.

xv) Classification as per Schedule III of the Companies Act 2013

The classification of Assets and Liabilities into "Current Assets" and Non Current Assets" has been made in Balance Sheet as per below mentioned prescribed guidelines:-

Current Assets

An asset has been classified as current when it satisfies any of the following criteria:-

- It is expected to be realized in, or is intended for sale or consumption in, the Company's normal operating cycle i.e. one year.

- It is held primarily for the purpose of being traded

- It is expected to be realized within twelve months after the reporting date

- It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

Non-Current Assets

All assets other than current assets are Non- Current Assets

Current Liabilities

A liability has been classified as current when it satisfies any of the following criteria:

- It is expected to be settled in the company's normal operating cycle i.e. one year

- It is held primarily for the purpose of being traded

- It is due to be settled within twelve months after the reporting date

- The company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Non-Current Liabilities

All liabilities other than current liabilities are Non- Current Liabilities.

Operating Cycle for Coal India Limited

As there is no normal Operating cycle the same is considered to be 12 months period.

xvi) During the financial year 2013-14, a case of misappropriation of Company's fund for personal gain came to the notice of the management which is still under investigation by different agencies. Pending completion of the investigation process the impact of such misappropriation cannot be ascertained at this stage.

xvii) In the absence of notification of rules by the central/state Governments the effects of the provisions of the "The Mines and Minerals (Development and Regulation) Amendment Act, 2015" has not been considered in the Accounts.

xviii) The information required in paragraph 5 (viii) (a) Part II of Schedule - III of Companies Act., 2013, value of imports on CIF basis :

xxiii) Significant accounting policy

Significant accounting policy (Note-33) has been suitably modified / re-drafted over previous year, as found necessary to elucidate the accounting policies adopted by the company.

xxiv) Change in Accounting Policy regarding capitalisation of certain costs in acquisition of land.

During the year the Accounting Policy on capitalisation of value of land acquired has been changed, in as much as compensation in lieu of employment incurred for displaced persons is being considered as part of cost of land acquired and capitalised. Such cost was previously being charged off as revenue expenses. Such change is made effective from the financial year 2014-15 onwards only and no such transaction has taken place during the year in NEC, the only production unit under CIL (Standalone).

xxv) Previous year's figures

Previous year's figures have been regrouped and rearranged wherever considered necessary.

Figures in the parentheses relating to Note nos. 1 to 19 (Balance Sheet items) correspond to position as on 31.03.2014 and figures relating to Note nos. 20 to 32 (Profit & Loss items) correspond to year ended 31.03.2014.

Note 1 to 19 form part of the Balance Sheet as at 31st March 2015 and 20 to 32 form part of Statement of Profit & Loss for the period ended on that date. Note - 33 represents Significant Accounting Policies and Note - 34 represents additional notes on the Accounts.


Mar 31, 2013

1 Contingent Liabilities & Commitments

i) The amount remaining to be executed on capital account not provided for is Rs. 2452.16 crores (Rs. 1926.84 crores). The amount remaining to be executed on revenue account not provided for is Rs. 11587.51 crores (Rs. 10506.38 crores).

ii) Claims against the company not acknowledged as debt are Rs. 16523.41 crores (Rs. 12694.14crores).

iii) Outstanding letters of credit amounted to Rs. 253.09 crores (Rs. 310.70 crores).

iv) The Company has given counter-guarantee to Government of India for loans obtained from JBIC & IBRD Banks and on lent to its Subsidiaries. The outstanding balance as on 31.03.2013 stood at Rs. 550.43 crores (Rs. 720.10 crores) and Rs. 585.80 crores (Rs. 642.62 crores) respectively.

Further, the Company has also given guarantee for loans obtained by subsidiaries from Export Development Bank of Canada (EDC) and Liebherr France the outstanding balance of which as on 31.03.2013 stood at Rs. 160.35 crores (Rs. 155.63 crores) and Rs. 8.72 crores (Rs. 9.03 crores) respectively.

v) Outstanding Deferred Payment Guarantee issued by banks amounted to Rs. 23.36 crores (Rs. 4.42 crores).

2 Basis of Preparation of Financial Statements

i) The financial statements of the subsidiaries used in the consolidation are drawn up to the same reporting date as that of the Parent Company, i.e. year ending 31st March, 2013.

ii) The financial statements have been prepared under the historical cost convention and on the accrual basis of accounting. The accounts of the subsidiaries have been prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India and on the basis of accounting principles generally accepted in India.

iii) The financial statements have been prepared in line with the requirements of Revised Schedule-VI of Companies Act, 1956 as introduced by the Ministry of Corporate Affairs from financial year ended on 31st March 2012. Accordingly, assets and liabilities are classified between current and non-current considering 12 months period as operating cycle. The adoption of Revised Schedule- VI does not impact recognition and measurement principles followed for preparation of consolidated financial statements. However, it has sufficient impact on presentation and disclosures made in the financial statements. Consequently, the company has re-classified previous years figures to conform to this years classification.

3 Principles of Consolidation and Financial Reporting of Interest in Joint Venture and Overseas Subsidiary.

i) The consolidated financial statements relate to Coal India Limited, its wholly owned subsidiary companies, namely Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Northern Coalfields Limited (NCL), Western Coalfields Limited (WCL), South Eastern Coalfields Limited (SECL), Mahanadi Coalfields Limited (MCL), Central Mine Planning & Design Institute Limited (CMPDIL) & Coal India Africana Limitada (Overseas Subsidiary), proportionate stake in International Coal Venture Pvt. Limited (ICVL) and CIL- NTPC Urja Pvt. Ltd.

ii) The financial statements of MCL has been consolidated with its three subsidiary companies - MNH Shakti Limited, MJSJ Coal Limited and Mahanadi Basin Power Limited.

iii) The financial statements of the company and its subsidiary companies are combined on a line-by-line basis adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standard- 21 " Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India. However the non-recognition of interest in holding companys accounts from one of its subsidiaries ( as per Accounting Standard-9 ) has been ignored in such consolidation

iv) Significant Accounting Policies and Notes to these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide for better understanding the consolidated position of the companies. Recognizing this purpose, the Company has disclosed only such Policies and Notes from individual financial statements, which fairly present the needed disclosure.

v) CIL has entered into a Memorandum of Understanding (vide approval from its Board in 237th meeting held on 24th November, 2007) regarding formation of Special Purpose Vehicle (SPV) through joint venture involving CIL/ SAIL/RINL/NTPC & NMDC for acquisition of coking coal properties abroad. The formation of the SPV had been approved by the Cabinet, Govt. of India, vide its approval dated 8th November, 2007.The aforesaid SPV viz. International Coal Ventures Pvt. Ltd. has been formed by incorporation under Companies Act, 1956 on 20th May: 2009 with an authorised capital of Rs. 1.00 crores and paid up capital of Rs. 0.70 crores. The authorised Capital and paid up Capital as on 31.03.2013 stood at Rs. 1110.00 crores and Rs. 9.80 crores respectively. Out of above paid up capital, Coal India Ltd. is owning 2/7th share i.e. worth Rs. 2.80 crores face value of equity shares.

vi) The consolidated financial statements include the interest of the company in the above joint venture (International Coal Ventures Pvt. Ltd.) which has been accounted for using the proportionate consolidation method of accounting and reporting whereby the companys share of each asset, liability of a jointly controlled entity has been considered. Such accounting has been carried out considering the latest available un-audited financial statements as on 31.03.2013.

vii) CIL NTPC Urja Pvt. Ltd., a 50 : 50 Joint Venture Company was formed on 27th April2010 between CIL & NTPC and CIL has invested Rs. 0.02 crores as on 31.03.2013. The un-audited Accounts of the above joint venture company upto the year ended 31.03.2013 has been considered in consolidation.

viii) On incorporation of subsidiaries on the basis of joint venture agreement as per directives from the Ministry of Coal, Mahanadi Coalfields Ltd has deposited money / transferred debits for capital and other expenditure.

ix) In terms of Memorandum of Understanding (MOU) signed on 03.11.2012 between South Eastern Coalfields Limited (SECL), IRCON International Limited (IRCON) and the Government of Chhattisgarh (GoCG) for establishment of two Railway Corridors viz., East Corridor and East West Corridor, two(2) Subsidiary Companies of SECL have been Incorporated under the Companies Act,1956 viz., M/s Chhattisgarh East Railway Limited (CERL) incorporated on 12.03.2013 and M/s. Chhattisgarh East-West Railway Limited (CEWRL) incorporated on 25.03.2013 with an Authorised Capital of Rs. 5.00 Crores each.

x) Investment in Subsidiary (Overseas)

Coal India Ltd., formed a 100% owned subsidiary in Republic of Mozambique, named "Coal India Africana Limitada". The initial paid up capital on such formation (known as "Quota Capital") was Rs. 0.01 Crores (USD 1000), The un-audited Accounts of the above subsidiary company upto the year ended 31.03.2013 has been considered in consolidation.

4 Provision for Employee Benefits

The year-end liability of certain other employee benefits like Gratuity, Earned Leave, Life Cover Scheme, Settlement Allowance, Group Personal Accident Insurance Scheme, Leave Travel Concession, Medical Benefits for Retired Executives, Compensation to dependants incase of mine accidental death are valued on actuarial basis. Total liability as on 31.03.2013 based on valuation made by the Actuary, details of which are mentioned below is Rs. 17403.60 crores.

5 In BCCL expenditure of erstwhile Kustore Area (now merged with PB Area) is under investigation by different authorities. Bills lying amounting to Rs. 24.44 crores has been considered as Contingent Liabilities due to pending decision,

6 Eastern Coalfields Limited and Bharat Coking Coal Limited

ECL had become sick and were referred to BIFR under Sick Industrial Company (Special Provisions) Act, 1985, The revival plan/ scheme of ECL had already been approved by BIFR and thereafter vetted by the concerned ministry

During the year further investment in 5% redeemable cumulative preference share in BCCL (redeemable at par compulsorily after seven years from the date of issue or after five years at the option of CIL) was made by way of conversion of past loan to BCCL of Rs. 1083.00 crore and current account balance (receivable from BCCL) of Rs. 1456 crore. By giving effect to the above issuance of the Preference Shares by BCCL to CIL, CIL no longer remained a creditor of BCCL with respect to these funds. Based on this mutually agreed mechanism between BCCL and CIL, the waiver of the funds by CIL, as required by the Scheme, was implemented by converting such funds into subscription monies for issuance of the Preference Shares to CIL,

On the basis of waivers (of past loan of Rs. 1083 crore and current account balance of Rs. 1456.00 crore) by CIL, under the scheme, BCCL reported positive net worth. As part of the ongoing proceedings before the Honble Board, on February, 14, 2013, the Honble Board concluded in its order that BCCL had ceased to be a sick industry company in terms of the Sick Industrial Companies (Special Provisions) Act,1985 ("SICA"), and directed inter-alia that provisions of the sanctioned scheme, if any would be implemented by all concerned.

The implementation of the revival scheme in ECL will substantially improve the financial position of the company.

7 Discontinuing Operation

i) CBE Plant, Bhandra - Western Coalfields Limited:

The Plant used to manufacture Nitro-Glycerine based Permitted Explosives used in the underground mines of the Company till its closure on 28.04.2003. Consequent upon decision of the Government of India to discontinue/ban production of NG-based explosives in the country and its adoption by the Board of Ordnance Factories of India, the Jt. Venture partner of the Plant, the Plant was closed on and from 28.04.2003.

CIL had given its approval for disposal of the Plant and the Company in its 197th Board Meeting held on 19.04.2006 had approved the disposal of P&M by tendering/e-auction and accordingly the P&M along with related stores & spares have been disposed off during 2006-07 by auction through MSTC. The Net Block of assets pending disposal is Rs. 0.08 crores. The liability towards Overheads after closure of the Plant till 31.03.2013 for maintenance and upkeep of the Plant is Rs. 0.40 crores.

The revenue expenses incurred during the current year is Nil (Previous Year Nil). Since the Plant works on No- Profit-No-Loss basis, all expenses are passed on to the Areas. Hence there is no question of profit/loss. There is no cash outflow attributable to operating, investing and financing of discontinuance (Previous Year Nil).

ii) DFD Plant, Hinganghat, Western Coalfields Limited:

The Plant used to manufacture Coal Briquettes from raw coal for domestic fuel purposes till its closure in 1994. Consequent upon non-viability of the Plant as per the decision of the Board of the Company, the Plant was closed in 1994.

The disposal of the Plant is under process and the exact date of completion of discontinuance is not determinable as of now. The Net Block of assets pending disposal is Rs. 0.03 crores and the liability towards Municipal Taxes is Rs. 0.04 crores. The Company has applied to the Hinganghat Nagar Palika for waiver of the Municipal Taxes for the past four years on the ground that the Plant is no more in operation. The revenue expenses incurred during the current year is Rs. 0.01 crores (Previous Year Rs. 0.01 crores). Since the Plant is inoperative for the past ten years and the final disposal of the Plant is yet to be done, there is no question of profit/loss. There is no cash outflow attributable to operating, investing and financing of discontinuance.

8 Bharat Coking Coal Limited has received grant under various SSRC/ EMSC (now included in Master Plan) and R&D Schemes upto 31.03.2013. The Company has received Master Plan and R&D Grants upto 31.03.2013 for Rs. 315.79 crores, and Rs. 1.75 crores respectively. Total expenditure incurred against these are as follows:

9 Medical expenses for retired employees (Note-25) of Rs. 285.22 Crores (Rs. 29.08Crores) includes the actuarial valuation of enhanced medical benefits scheme (as per Order No - CIL/C-5A(PC)/CPRMSE/207 dated 28.12.2012) covering retired employees on and from 01.01.2007.

10 Use of Estimate:

In preparing the financial statements in conformity with Accounting Principles generally accepted in India, Management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosures of contingent liability as at the date of financial statements and the amount of revenue and expenses during the reported period. Actual results would differ from those estimates. Any revision to such estimate is recognized in the period the same is determined.

11 The Company is primarily engaged in a single segment business of Production and sale of Coal. The income from interest and other income is less than 10% of the total revenue, hence no separate segment is recognized for the same.

12 Figures in the parentheses relates to the previous year.

13 Previous years figures have been regrouped and rearranged wherever considered necessary.

14 Note-1 to 19 form part of the Balance Sheet as at 31st March, 2013 and 20 to 32 form part of Statement of Profit & Loss for the year ended on that date. Note-33 represents Significant Accounting Policies and Note-34 represents additional notes on the Accounts.


Mar 31, 2012

I) Contingent Liabilities / Commitments

The amount remaining to be executed on capital account not provided for Is Rs 67.74 crores {Rs 83.51 crores).

The amount remaining to be executed on revenue account not provided for is Rs 345.20 crores.

Claims against the company not acknowledged as debts are Rs 142.81 crores (Rs 134.23 crores).

The company has given counter-guarantee to Government of India for loans obtained from JBIC & IBRD banks am on lent to its subsidiaries. The outstanding balance as on 31.03.2012 stood at Rs 720.10 crores {Rs 731.76 crores) am Rs 642.62 crores (Rs 638.67 crores) respectively.

Further, the company has also given guarantee for loans obtained by subsidiaries from Export Development Bank of Canada (EDO and Liebher France the outstanding balance of which as on 31.03.2012 stood at Rs 155.47 crore (Rs140.45 crores) and Rs 13.87 crores {Rs 13.60 crores) respectively.

As on 31.03.2012 outstanding letters of credits amounted to Rs 218.63 crores {Rs 48.06 crores).

ii) Long Term & Short Term Provision (Refer Note 5 & Note 9)

Provision for Employee Benefits

The disclosures as per actuarys certificate for employee benefits for gratuity and leave encashment are given below:-

iii) Related party disclosure

Key management personnel for the year ending 31.03.2012 :

Mr. N. C. Jha, Chairman (upto 31 st January, 2012)

Ms. Z. Chatterji, Chairman-Cum-Managing Director (from 1 st February, 2012)

Mr. R. Mohan Das, Director (P&IR)

Dr. A.K. Sarkar, Director (Marketing) (upto 30th April, 2011)

Mr. A. K.Sinha, Director (Finance)

Mr. N. Kumar. Director (Technical) (from 1 st February, 2012)

iv) Taxation

An amount of Rs 450.00 crores (Rs 190.00 crores) is provided in the accounts during the current year towards income tax.

There is no deferred tax liability of the company for the year. However, the company is having a deferred tax asset on the basis of calculation as per Accounting for Taxes on Income (AS-22), issued by Institute of Chartered Accountants of India. As per existing provisions of tax laws the dividend received from subsidiaries which accounts for the income of Coal India Ltd, is tax free w.e.f. financial year 2003-04. Since without considering such dividend there is no virtual certainty of future taxable income, as a prudent practice no deferred tax asset is recognised in the accounts.

Further dividend to GOI / other shareholders has been paid out of dividends received from subsidiary companies of CIL, on which Dividend Distribution Tax has been paid by the respective subsidiaries. No tax on dividend to GOI and other shareholders has been considered as per the provision of Income Tax Act, 1961.

v) Borrowing and other Costs in respect of foreign currency loans

Borrowing and other costs (including exchange difference) in respect of foreign currency loans obtained for subsidiary companies have been recovered from the respective subsidiary companies. The company has entered into swap transactions against interest. Gains arising out of swap transactions are being carried as reserve for Foreign Exchange Transactions. Net result of the said swap transactions will be recovered / paid to subsidiary companies upon completion of repayment of foreign currency loans.

vi) The fund available with the company from the management period (Pre-nationalisation) of non-coking coal mines i.e. on 1.5.1973

The fund available with the company against cash, bank balances, road coupons etc. taken over by the company from the management period of non-coking coal mines i.e. on 1.5.1973 has been adjusted against the deposit made by the company on behalf of the Govt of India to Commissioner of Payments on account of surplus of the said management period.

vii) Goods purchased by Coal India Ltd. on behalf of Subsidiaries

As per existing practice, goods purchased by Coal India Ltd. on behalf of subsidiary companies are accounted for in the books of respective subsidiaries directly.

viii) Insurance and escalation claims

Insurance and escalation claims are accounted for on the basis of admission/final settlement. However such details of unsettled claim are maintained by concerned department.

ix) Provisions made in the Accounts

Provisions made in the accounts against slow moving/non-moving/obsolete stores, claims receivable, advances, doubtful debts etc. are considered adequate to cover possible losses.

x) Micro, Small and Medium Enterprises

There is no reported Micro, Small and Medium Enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" to whom the company owes dues.

xi) Current Assets, Loans and Advances etc.

In the opinion of the Management Current Assets, Loans and Advances etc. have realisable value in the course of business at least equal to the net amount at which they are stated.

xii) Balance confirmation

Balance confirmation/reconciliation is carried out for bank balances, all major loans & advances, long term liabilities and current liabilities. Provision is taken against all doubtful unconfirmed balances.

xiii) Revision of Schedule VI to the Companies Act 1956 (w.e.f. 01.04.2011)

Following the Gazette notification dated 30th March, 2011 the Schedule VI of the Companies Act 1956 dealing with the format of Balance Sheet has modified and a format for Statement of Profit & Loss is introduced.

The format as per revised Schedule VI has been applied while preparing this accounts. Following the new guidelines of the revised format inter-alia, the following segregation have been made in the Balance Sheet:

Current Assets

An asset has been classified as current when it satisfies any of the following criteria :-

- It is expected to be realized in, or is intended for sale or consumption in, the companys normal operating cycle

- It is held primarily for the purpose of being traded

- It is expected to be realized within twelve month after the reporting date

- It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

Non-Current Assets

All assets other than current assets are Non- Current Assets

Current Liabilities

A liability has been classified as current when it satisfies any of the following criteria :

- It is expected to be settled in the companys normal operating cycle

- It is held primarily for the purpose of being traded

- It is due to be settled within twelve month after the reporting date

- The company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Non-Current Liabilities

All liabilities other than current liabilities are Non- Current Liabilities.

Operating Cycle for Coal India Limited :-

As there is no normal Operating cycle the same is considered to be 12 months period.

xiv) Significant accounting policy

Significant accounting policy (Note - 33) has been suitably modified/ re-drafted over previous year, as found necessary to elucidate the accounting policies adopted by the company.

xv) Previous years figures

Previous years figures have been regrouped and rearranged wherever considered necessary.

Figures in the parentheses relating to Additional Notes of Balance Sheet and Statement of Profit & Loss correspond to 12 month period of the previous year.

xvi) Use of estimate:

In preparing the financial statements in conformity with accounting principles generally accepted in India, management is sometimes required to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosures of contingent liability as at the date of financial statements and the amount of revenue and expenses during the reported period. Actual results may differ from those estimates. Any revision to such estimate is recognized in the period in which the same is determined.


Mar 31, 2009

1.1 The financial statements of the subsidiaries used in the consolidation are drawn up to the same reporting date as that of the Parent Company, i.e. year ending 31st March.

1.2 The financial statements have been prepared under the historical cost convention and on the accrual basis of accounting. The accounts of the subsidiaries have been prepared in accordance with the Accounting Standard issued by the Institute of Chartered Accountants of India and on the basis of accounting principles generally accepted in India.

2 PRINCIPLES OF CONSOLIDATION

2.1 The consolidated financial statements relate to Coal India Limited and its wholly owned subsidiary companies, namely, Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Northern Coalfields Limited (NCL), Western Coalfields Limited (WCL), South Eastern Coalfields Limited (SECL), Mahanadi Coalfields Limited (MCL) and Central Mine planning & Design Institute Limited (CMPDIL). The financial statements of MCL has been consolidated with its two subsidiary companies - M/s, MNH Shaku* Limited and M/s, MJSJ Coal Limited.The financial statements of the company and its subsidiary companies are combined on a line-by-line basis adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standards - 21 " Consolidated Financial Statements" issued by the Institute of Chartered accountants of India.

2.2 Significant Accounting Policies and Notes to these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide to better understanding the consolidated position of the companies. Recognizing this purpose, the Company has disclosed only such Policies and Notes from individual financial statements, which fairly present the needed disclosure.

3 FIXED ASSETS

3.1 The assets and liabilities taken over from Coal Mines Labour Welfare Organisation and Coal Mines Rescue Organisation, for which no quantitative details are available, have not been incorporated in the accounts pending determination of value thereof.

3.2 The transfer formalities from the Holding Company and other subsidiaries have not been completed and consequently some documents continue to be held in the name of the Holding Company and other subsidiaries. _

3.3 Land acquired under Coal Bearing Areas (Acquisition and Development) Act, 1957 and Land Acquisition Act, 1984 is accounted for on payment basis and the same is shown as Leasehold land.

3.4 Land includes certain land taken on possession by the company for which legal formalities in respect of-title deeds are pending.

3.5 The assets taken over on nationalisation by Bharat Coking Coal Limited amounting to Rs. 1145.81 lakhs being gross value of assets including land valuing Rs.88.30 lakhs (quantitative and value-wise details of which are not available ) on which depreciation has been fully provided for in the Accounts except land.

3.6 41959.32 Ha of land at Central Coalfields Ltd has been acquired under CBA (A&D) Act, 1957. Out of this, approximately 13644.32 Ha. is tenancy land and rest is forest and GMK land. Out of 13644.32 Ha. of tenanacy land compensation has been assessed for 6578.32 Ha. for an amount of Rs.3253 lacs. Out of this an amount of Rs.3087 lakhs has been paid and the balance is being paid by holding regular payment camps in different projects.

3.7 In respect of Chandrapur area of Western Coalfields Limited, till date the ownership of land valued at Rs. 2324.66 lakhs has not been vested with the Area, the amount paid is kept in advance account and shown in Capital Commitments. Similarly, in Kanhan area an amount of Rs. 132.71 lakhs paid to forest department for acquisition of land for Kothideo OC patch , is kept in Advance account as the final clearance from the forest department is pending and hence the ownership of land has not vested with the Area.

3.8 DFD Plant and CBE Plant at Western Coalfields Limited continue to remain inoperative during the year. CBE Plant stands closed since 28.04.03 and DFD Plant since 1994. Leasehold Land of DFD Plant is being amortised over the lease period of 30 years. Plant & Machinery of CBE Plant excepting hospital equipments has been disposed of by auction through MSTCi All the other assets of both these plants are carried in the books at a residual value of 5% of their cost.

3.9 Discarded/Surveyed off assets of Western Coalfields Ltd.and Mahanadi Coalfields Limited amounting to Rs.2265.79 lakhs ( Rs. 1851.36 lakhs) valued at residual 5%, have not been physically verified. Against which there is a provision of Rs.645.93 lakhs (Rs.457.62 lakhs).

3.10 In Central Coalfields Limited, provision of Rs. 18.26 lakhs (Rs.618.92 lakhs) has been made during the year for unserviceable/damaged/obsolete stores and also for Stores & Spares unmoved for five years. The provision of Rs.3159.24 lakhs (Rs. 4086.47 lakhs) after withdrawal of excess provision of Rs.945.49 lakhs as on 31.03.2009 is considered adequate.

3.11 Fixed assets comprising of Plant & Machinery of Rs.218.99 lakhs related to building and other assets of Rs. 1625.37 lakhs, both at book value (WDV) as on 31.03.95 have been let to the Indian Institute of Coal Management, a registered society under Societies Registration Act 1860, under cancellable operating lease agreement. Addition to these assets from letting out to 31-03-2009 are Rs.370.35 lakhs on value of plant & machinery and Rs.381.41 lakhs on value of building and other assets. The cumulative provision for depreciation upto 31.03.2008 stood at Rs. 1084.45 lakhs (including depreciation charged for the current year of Rs.69.25 lakhs). The net WDV of the leased assets as per book as on 31-03-2008 is Rs.1638.83 lakhs.

3.12 As per lease agreement dated 31st March 1993 executed with Dishergarh Power Supply Company Ltd., Eastern Coalfields Limited leased out 2X10MW Chinakuri Thermal Power station including land, building, plant & machinery etc. The lease agreement is for 20 years from the commencement of lease w.e.f. 01-04-1991. The gross value of Power Plant, Building and other assets is Rs. 4024.00 lakhs (Rs.4024.00 lakhs); Rs. 1019.64 lakhs (Rs.1019.64 lakhs) and Rs.772.61 lakhs (Rs.772.61 lakhs) respectively. The cumulative depreciation upto 31.03.09 against the abovementioned assets is Rs. 3806.84 Lakhs (Rs. 3700.471akhs); Rs.575.60 Lakhs ( Rs.544.35 lakhs) and Rs. 612.72 Lakhs (Rs. 5 84.67 lakhs) respectively.

3.13 The lease rental for the year Rs.350 lakhs (Rs.350 lakhs) has been received.

3.14 In terms of license agreement dated 19th day of March 2001 executed with M/s Appollo Hospital Enterprise Ltd. Chennai, South Eastern Coalfields Ltd has granted a right to occupy and use the fully constructed main hospital building measuring 2,97,099.74 sq. ft. and the residential quarters measuring 55,333 sq. ft. with super structures on the land such as sub station building, sewerage treatment plant and pump house. The cost of the gross assets is Rs.3132.21 lakhs (Rs.3132,21 lakhs) against which cumulative depreciation is Rs. 550.84 lakhs (Rs. 494.84 lakhs). The license agreement provides for a lease period of 30 years from the effective date of commencement of lease i.e. November 2001. The future minimum lease payments in the aggregate during the period of lease are Rs.3249.53 lakhs (Rs. 3585.42 lakhs)

The lease rental payable is accounted for as per agreement. During the year Rs.237.00 Lakhs (Rs. 249.00 lakhs) has been accounted for against the said lease rent.

3.15 Pending receipt of option from the land oustees, on account of resettlement compensation payable, based on past experience, Rs.377.49 lakh have been capitalized, by Northern Coalfields Limited, as the cost of leasehold land, on an estimated basis.

4. CAPITAL-WORK-IN-PROGRESS

4.1 Provision has been made on Plant & Machinery which have not been put to use for more than three years and on incomplete civil jobs lying for more than four years at the rates of depreciation which would have been otherwise applicable to such items.

4.2 "Prospecting & Boring" and also Develooment shown under Caoital-ifekdn-Progress mostly relates to jobs awaiting completion.

5. DEVELOPMENT EXPENDITURE

Expenditure relating to projects yet to be sanctioned or construction yet to be taken up has been carried forward under "Prospecting & Boring under construction". Development expenditure of South Eastern Coalfields Limited has been shown in the accounts after deduction of Rs. 1154.79 lakhs (Rs.925.19 lakhs) being sale of coal from development mines and Rs.57.36 lakhs (Rs. 32,33 lakhs) being closing stock of coal at development mines.

6. INVENTORY

6.1 Coal of 4713 61 MT mixed with matti etc. is non-vendable and has been taken at NIL value by Eastern Coalfields Ltd.

6.2 Shortage of coal at Rajmahal OCP of 19.54 lakhs ton including fired stock valued at Rs. 63 85.73 lakhs was accounted for by Eastern Coalfields Limited in accounts of 2007- 08 for which enquiry is in progress.

6.3 Inventories of Bharat Coking Coal Ltd do not include 0.91 lakhs tones of slurry stock flown out of Washery premises and lying on land not belonging to the company (Dugda Washery 0.54 lakh tones and Barora Washery 0.37 lakh tones).

6.4 A provision of Rs.210.00 lakhs was made in the accounts of 2006-07 pending investigation of shortage/difference in the closing stock of raw coal as on 31.03.07 in between the Kathara colliery and Kathara washery under Central Coalfields Limited. The said provision has been retained as on 31.03.2009 as considered necessary.

6.5 Some blocks at Western Coalfields Limited are held for sale. In conformity with As-2 expenses on Agarzari block of Chandrapur Area falling in this category amounting to Rs.99.11 lakhs have been transferred to Inventory schedule and for similar reasons, in Nagpur Area an amount of Rs.403.01 lakhs has been transferred to Inventory from Capital Work-in-progress.

Similarly, prospecting, boring and development expenditure of Mahanadi Coalfields Limited on allotted non-CIL blocks meant for sale amounting to Rs. 1054.51 lakhs has been shown as Inventories at cost.

7.0 SUNDRY DEBTORS

7.1 At Western Coalfields Limited, Ministry of Power, Government of India, had advised Madhya Pradesh Power Generation Corporation Ltd. to securitise outstanding principal and interest upto 30-09-2001 of Rs.17194.00 lakhs and Rs. 2199.00 lakhs respectively.

MPGCL has securitised Rs.12391 lakhs in 2003 leaving Rs.7002 lakhs as un-securitised.

7.2 In Western Coalfields Ltd. The Government of Madhya Pradesh by Gazette Notification dated 30.09.2005 imposed a new tax under "Madhya Pradesh Gramin Avsanrachana Tatha Sadak Vikas Adhiniyam, 2005". This adhiniyam provides for charging of tax @ 5% on annual value w.e.f. 30.09.2005. Some consumers as well as WCL moved the Honble High Court of Madhya Pradesh, Jabalpur and obtained interim relief. As per the interim order da^ed 15.02.2006, the Honble High Court, Jabalpur had directed the Company not to deposit this tax to the State Government but to keep it in a fixed deposit. The matter was later dismissed by the Jabalpur High Court in favour of the MP Government. WCL has filed a Writ before the honble Supreme Court and the matter is still sub judice. Total amount due as per bills raised is Rs. 13484.48 lacs (P.Y. Rs.10838.21 lacs). An amount of Rs.435.71 Lacs collected from coal consumers towards Sales/Entry Tax on Gramin Tax has not been deposited due to dispute regarding Gramin Tax.

SAIL has not made payment of this tax, totaling Rs.1917 lacs upto 31.03.2009, to the Company but consented to abide by decision of honble Supreme Court. For other consumers the Company has received upto 31.03.2009 an amount of Rs.1688 lacs on this a/c. which is shown under Advances and Deposits from Customers. An amount of Rs. 319 lacs against the receipt of Rs.319 lacs on account of MP Tax during the year 2008- 09 is deposited in fixed deposit as on 31.03.2009. Interest on such fixed deposits is treated as liability by WCL. The case is now pending in the honble Supreme Court of India.

7.3 Sundry debtors balances are subject to confirmation by the parties.

8.0 LOANS AND ADVANCES

8.1 Out of Rs.492.16 lakhs deposited with SEC Railway by Mahandai Coalfields Limited for railway overbridge, Rs.333.94 lakhs has been adjusted till date as asset not belonging to company. The balance of Rs. 158.22 lakhs (Rs. 167.16 lakhs) is to be adjusted on receipt of final utilisation certificate from SEC railway.

8.2 An amount of Rs.3335.94 lakhs has been deposited by Mahanadi Coalfields Limited with East Coast Railways for renovation of railway tracks as depository work in Jagannath area. The utilization report thereof upto 31.03.2009 has not been submitted by railways. On the basis of estimation given by the companys the executive department, Rs. 783.47 lakhs has been charged to revenue giving corresponding credit to liability.

An amount of Rs.880.81 lakhs is paid to SEC Railway as advance for line electrification for Hingula area.

8.3 The debit balance in tax deducted at source of Rs.1469.85 lakhs (Rs. 1318.03 lakhs) under the head Loans & Advances of Eastern Coalfields Limited represent incom6 tax deducted for several years but remaining un refunded.

8.4 The expenditure incurred for carrying out exploratory drilling in blocks tinder Eastern Coalfields Ltd. command area by CMPDIL as per the approved Annual Action Plan of Coal India Limited and its subsidiaries, in view of critically week financial position of Eastern Coalfields Limited, now under BEFR, shall initially be borne by Coal India Limited and accounted for suitably in holding companys books for recovery thereof only when mining activities in that block is projectised and implemented. Such expenses on exploratory drilling in blocks under command area of Eastern Coalfields Limited is to be funded by holding company and awaiting adjustments shall continue to reflect in holding companys book for 5 years since they were incurred and accounted for thereafter if remains unresolved / unadjusted for want of projectisation of mining activities, such unadjusted amounts shall be written off in the books of holding company.

The total amount on this account as on 31-03-09 stood at Rs. 5007.67 lakhs including current year addition of Rs. 1236.94 lakhs. However, as an abundant precaution it has been fully provided.

Further, considering the expiry of five years from the date of incurring and accounting of such expenses an amount of Rs. 675.51 lacs (Rs.950.861akhs), for which full provision exists on the date has been written off.

8.5 Notices were served on Western Coalfields Limited during 2007-08 on HQ, Umrer & Nagpur Areas raising demands of income tax on deemed perks for rental accommodation provided to employees for the period 2004-05 to 2006-07. The company filed appeals before the CIT (Appeals), Nagpur who insisted on payment of the demand with interest in order to admit the appeals. Accordingly, the company has paid the demand of Rs. 338.84 lakhs during 2007-08 on account of HQ, Umrer & Nagpur Areas. The same has been booked under Advances Recoverable from Employees. A total of 75 appeals were filed and the same were disposed off in favour of the company. However, the income tax department filed writ before the Bombay High Court, Nagpur Bench which is pending for want of COD permission to the department.

8.6 Loans and Advance includes Rs.342.99 lakhs (Rs.342.99 lakhs) paid by Mahanadi Coalfields Limited to GRIDCO/OPTCL for construction of 220KV overhead line and 3/20 MVA 220 KVA sub-station at Garjanbahal.

8.7 Advance payment for Sales tax of Rs.3710.46 lakhs (Rs. 2591.57 lakhs) by Northern Coalfields Limited includes Sales Tax and Entry Tax paid under protest of Rs.2437.90 lakhs (Rs.2116.53 lakhs), which pertains to the cases under appeal.

8.8 Loans and Advances include an amount of (USD 2.6544 million) Rs J 358.74 lakhs, being 15% advance against supply of Plant & Machinery to WJ. Area of Bharat Coking Coal Limited valuing USD 17.692 million by M/s, Zhenzhou Coal Mining Machinery (Group) Co.Ltd. China. Advance is supported by bank guarantee.

8.9 Year-end provision of Eastern Coalfields Limited includes Rs.275.84 lakhs (Rs.275.84 lakhs) and net un-linked debit and credit balances of advance to suppliers and Sundry Creditors appearing prior to March 1985 has been adjusted / written off as approved in 228th meeting of Board of Directors of ECL held on 22nd June 2009.

8.10 In Eastern Coalfields Limited, amount of Rs. 1585.78 lakhs (Rs. 1588.86 lakhs) for net un-reconciled advance to suppliers, contractors, employees with the corresponding liabilities appearing in the accounts after 31s March,1985.

9.0 CASH AND BANK BALANCE

It includes Rs. 116.12 lakhs (including OREEP Tax), out of which Rs.96.60 lakhs represent amount received by Mahanadi Coalfields Limited from Honble Supreme Court of India towards corpus fund of trust and the balance of Rs. 19.52 lakhs being interest thereon. As per directives of the court, the interest income is to be utilised for welfare of employees. The trust is yet to be formed. It also includes Rs.20.00 lakh deposits with SBI, Mahanadi Coal Complex earmarked for corpus fund of Utkal Rangamanch Trust, interest income of which is disbursed to the trust.

10. CURRENT LIABILITIES

10.1 Advance from customers includes cess on coal which includes principal of Rs. 840.27 lakhs (net of payments) and interest of Rs. 947.11 (net of payments) against receipt from Government of Orissa in the year 2005-06 by Mahanadi Coalfields Limited as per directive of Honble Supreme Court judgement dated 31-07-2001. The company has provided interest of Rs. 100.83 lakhs (Rs.100.84 lakhs) calculated at the rate of 12% for the unpaid principal amount of cess liability as the money is refundable to the customers. The total liability becomes Rs.2142.88 lakhs (Rs.2042.05 lakhs) as at 31-03-2009. The company has not identified the customers / parties to whom the refund is to be made. Finalisation of modalities for refunding the same to the customers/ parties is yet to be done.

10.2 The Current Liabilities and Provision includes Rs. 746.73 lakhs (Rs.800.30 lakhs) on account of provision taken towards stowing and stabilization of unstable workings of Deulbera colliery under Mahanadi Coalfields Limited. This provision is in addition to the current year expenditure (other than expenditure on Salaries & Wages) of Rs, 53.57 lakhs (Rs.144.11 lakhs) against comprehensive scheme of Rs.944.41 lakhs (Rs.944.41 lakhs) (excluding- Salaries & Wages). As the stabilization of unstable workings of Deulbera colliery through sand stowing is being carried out by existing departmental manpower, Salaries and Wages for Rs.1643.53 lakhs (Rs.1643.53 lakhs) being part of the scheme has not been provided for.

10.3 In the process of making payment of cess by Eastern Coalfields Limited on the annual value of coal bearing land based on average production of preceding two years valuing at a rate prevailing on 31-03-2008 and realization made from customers on the value of despatches of coal there remains a balance accumulating to Rs.91797.42 lakhs (Rs. 86227.44 lakhs), which has been shown in Cess Equalisation Account under Current Liabilities and Provision. There is an additional demand of Rs. 26003 lakhs (Rs. 26003 lakhs) arising out of the assessment made upto 2001-02 which has been shown as Contingent Liability.

10.4 Bazaar fees collected by Bharat Coking Coal Limited on sale of coal/coke as per Gazettee Notification no.34 at 18th January 2006 but the same has not been deposited to the appropriate authority as the matter is subjudice at Jharkahnd High Court under case no 6507 of 2006.

10.5 Interest receivable / payable is not accounted for as revised agreement in respect of price of rejects and power tariff, with DLF is not yet finalized at Bharat Coking Coal Ltd. The matter is also pending before an arbitrator. However, interest due to delay in payment to DLF has been provisionally determined as Rs. 830.76 lakhs upto financial year 2008-09.

10.6 Singrauli Municipal Authority has claimed license and composite fees for construction of building of Rs. 986.62 lakhs (Rs.986.62 lakhs) from Northern Coalfields Limited and the same is not provided for in the accounts. However, Rs.600.00 lakhs has been deposited under protest.

10.7 From Northern Coalfields Ltd, Government of Madhya Pradeash has claimed Land Revenue Premium for an amount of Rs. 6213.04 lakhs ( 6213.04 lakhs ) against which an amount of Rs. 300.00 lakhs has been deposited under protest.

10.8 SSADA cess on sale of coal has not been collected from a few parties by Northern Coalfields Limited after the stay obtained by the respective parties from Honble High Court, Allahabad. The amount not collected on this account amounts to Rs. 399.07 lakhs (Rs. 339.26 lakhs) upto 31.03.2009.

10.9 Central excise department had been issuing show cause notice over the years with regard to CWS, Tadali of Western Coalfields Limited, considering the workshop as under Factories Act instead of Mines Act where eligibility exists for exemption. In this regard an appeal pending before the Honble Supreme Court of India (CA no 8403-04/2003) has been decided in favour of the company. The balance refund of Rs.53.47 lakhs is pending clearance of CESTAT though necessary COD permission has been obtained and the appeals before CESTAT revived during the year.

10.10 By virtue of enactment of Cess and Other Taxes on mineral Validation Act, 1992, Central Coalfields Limited and Western Coalfields Limited raised supplementary bills on customers upto 04.04.91. An amount of Rs. 10328.70 lakhs (Rs.10328.70 lakhs) has been shown as liability for cess on royalty under the head Current Liabilities & Provisions. In view of the judgement of Honble High Court, Patna, Ranchi, Bench in writ petition no. CWJC/1280 of 1992, cess is not payable. However, a special leave petition is pending in Supreme Court against it.

10.11 The Government of Madhya Pradesh had passed Madhay Pradesh Gramin Avsanrachna Tatha Sadak Vikash Adhiniyam 2005 which provided for charging of Gramin Tax @5% on annual value of acquired coal bearing land / mineral land from financial year 2005-06 onwards. This tax has been duly collected by Western Coalfields Limited from coal customers. Some of the consumers had moved the Madhya Pradesh High Court at Jabalpur and as per the honble High Court of Jabalpurs interim order dated 15.02.2006, the company was directed not to deposit this tax to state government but to keep it in the Fixed Deposit. Pending final decision of the court, the company has not deposited this 5% Gramin tax but kept them in FDs at HQ. The amount so billed under this head till 31.03.2009is RsJ3484.48 lakhs (Rs. 10838.21 lakhs).

10.12 Northern Coalfields Ltd has received a demand notice of Rs.272.45 lakh from the Service Tax Authority regarding transportation of coal by road for the period 01.01.2005 to 30.09.2006 in respect of MP projects of NCL. As per legal opinion obtained, no service tax is payable on account of transportation of coal and as such an appeal has been filed against the above order. However, the company has deposited Rs.687.67 lakhs (Rs 505.81 lakhs) for the period from 01.01.05 to 31.03.09 under protest.

10.13 The Company has billed Rs.27680.67 Lakhs upto 31.03.2009.to customers towards MP Gramin Adhosanrachana Tatha Sadak Vikas Upkar levied by Madhya Pradesh Government. The levy of cess by the Madhya Pradesh Government has been challenged before the Honble Supreme Court by way of Special Leave petition and hence the amount has not been paid to Madhya Pradesh Government.

The validity of MP Sadak Vikash Upkar has been challenged in the Court of law by certain customers in SECL and the case is subjudice. However SECL is recovering the tax and kept in books of Accounts as a liabilities and the amount has been invested in interest bearing CLTD w.e.f. April 2009.

The liability towards interest payment by SECL for the period from 9.12.2005 to 31.03.2009 is not clear. Hence no provision is made in books however if any adverse decision comes then company may have to incur liability of interest which is unascertained as on date.

The Company has also billed Rs.30489.95 Lakhs upto 31.03.2009 on customers towards Chhatisgarh (Adhosanrachana Vikas Evem Paryavaran) Upkar levied by Chhatisgarh Government. The Honble High Court in its interim order Dt. 26.10.07 has permitted the Chhatisgarh Government to collect the Taxes from the company subject to final result of the writ petition and the company has deposited an amount of Rs.29596.39 Lakhs upto 31.03.2009.

The Company has billed Rs. 2883.06 Lakhs upto 31.03.2009 on customers towards Terminal Tax levied by Madhya Pradesh Government. The levy of this Cess by the Madhya Pradesh Government has been challenged in the Honble High Court of Jabalpur. As per Interim Order of the Court Rs.929.66 Lakhs has been deposited.

11.0 FOREIGN CURRENCY LOAN

11.1 The foreign currency loans drawn from IBRD and JBIC banks on account of Coal Sector Rehabilitation Project to be implemented in various subsidiaries has been shown under the head Unsecured Loan.

In terms of agreement with IBRD and JBIC banks, Coal India Ltd has entered into back to back loan agreements with its participating subsidiaries and loans including effect of exchange rate variation thereon have been shown in the accounts.

Borrowing and other costs (including exchange difference) in respect of foreign currency loans obtained for subsidiaries have been recovered from the respective subsidiary companies. The company has entered into swap transactions against a portion of above stated borrowing and interest thereon. Gains/ losses arising out of swap transactions (except gain/loss on principal only swap which are being recovered from the respective subsidiary companies) are being carried as Reserve for foreign currency transactions. Net result of the said swap transactions will be recovered from/paid to subsidiary companies upon completion of repayment of foreign currency loans.

11.2 The overall Marked to Market position of the existing hedge transactions (net of the positive values) as on 31.03.2009 stood at Rs. 1676.00 lakhs (negative). However, the negative Marked to Market valuation of outstanding position involving six individual Foreign Exchange transactions as on 31.03.2009 before netting up with transactions having positive values stood at Rs.1913.00 lakhs (Rs. 2330.00 lakhs).

Further, the Accounting Standard - 30 on Financial Instruments : Recognition and Measurement issued by Institute of Chartered Accountants of India (ICAI) has been issued with recommendatory implementation from 01-04-2009 and mandatory from 01- 04-2011. However, following the announcement of ICAI on accounting for derivatives the value of negative marked to market position of foreign exchange transactions amounting to Rs. 2330.00 lakhs had been provided for in the Accounts of 2007-08. Considering the negative Marked to Market as on 31-03-2009, the provision so created as aforesaid has been suitably adjusted.

11.3 The carrying cost of the fixed assets and corresponding stores consumption in World Bank aided projects have been adjusted to the extent of foreign exchange fluctuations in case of loans from World Bank except in case of Central Coalfields Limited where the adverse impact of Rs.3257.21 lacs has been debited to Profit & Loss account.

12 PROFIT & LOSS ACCOUNT

12.1 Total claim of Rs. 4766.84 lakhs was lodged with the Director of Electricity, Govt, of West Bengal, in support of relief/concession required for revival of ECL according to BIFRs sanctioned scheme vide its letter no. 40/PA/PR.Secy./IRPE dated 30.08.2005. During the year Rs.608.54 lakhs ( Rs, 1516.55 lakhs ) has been received and recovery of the balance amount of Rs.2641.75 lakhs (Rs.3250.28 lakhs) are in process.

12.4 The year-end liability of certain other employee benefits like Life Cover Scheme, Settlement Allowance, Gross Personal Accident Insurance Scheme, Leave Travel Concession, Medical Benefits for Retired Executives, Compensation to dependants incase of mine accidental death are valued on actuarial basis.

12.5 Except Central Coalfields Limited, the liabilities for two new employee benefits viz. Retired Executives Medical Benefit Scheme and Compensation to Dependants of deceased in mines accident have been valued on actuarial basis from the current year. The cost based on such actuarial valuation as at 31-03-09 has been adjusted in the income statement of the current year.

12.6 Due to such valuation on actuarial of these two employee benefit schemes the profit of the company reduced by Rs. 15214.52 Lakhs i.e. Rs. 454.66 lakhs on account of medical benefit for retired executives and Rs. 14759.86 on account of Compensation payable to Dependants of deceased in mines accident.

12.3 Liability for some employee benefits viz,. VRS for non-executives, Ex-gratia in lieu of employment on death in harness for employees, etc have not been valued on actuarial basis.

13 INVESTMENT IN EASTERN COALFIELDS LIMITED AND BHARAT COKING COAL LIMITED

13.1 Investment of the Company, in share capital of Bharat Coking Coal Limited and Eastern Coalfields Limited which are long term in nature amounted to Rs. 211800.00 lakhs ands Rs.221845.00 lakhs respectively as on 31-03-2009. Eastern Coalfields Ltd and Bharat Coking Coal Limited have become sick and are referred to BIFR under Sick Industrial Companies (Special Provisions) Act, 1985. Plans for restructuring / revival of Eastern Coalfields Limited and Bharat Coking Coal Limited are in an advanced stage. Scheme recommending restructuring/revival of Eastern Coalfields Limited has been formulated by Operating Agency and is under consideration of BIFR. In case of Bharat Coking Coal Limited, the plan for restructing/revival has been formulated and has been reviewed by an external agency.

The same has since been approved by the CIL Board and is under consideration of the competent authority. Once the revival schemes are finalised and implemented the financial position of these Companies will substantially improve which will turn them into viable Companies. In view of the above the decline in the value of investments, if any, is temporary in nature, and hence, are valued at cost. On the same analogy i.e. these subsidiaries on the above stated grounds will turn into viable companies; no provision on the loans outstanding from these subsidiaries are considered.

14 EFFECT OF CHANGES IN ACCOUNTING POLICY

14.1 The useful life of LHD and SDL have been reviewed during the year. Consequently, depreciation rates of those categories have been revised, resulting in additional charge of depreciation of Rs.5200.61 lalch and profit for the year is lower to that extent.

14.2 Due to change in policy of the company for capitalization of land, the cash compensation expenses and resettlement expenses incurred during the year has been capitalized. Hence, the profit for the year has been increased to the extent of Rs.247.62 lakh.

14.3 Due to chage in the method to determine the value of closing stock of coal on full absorption cost basis (normal capacity), the current years profit is decreased by Rs.316.56 lakhs.

15 DISCONTINUING OPERATION

15.1 CBE Plant, Bhandra - Western Coalfields Limited:

The plant used to manufacture Nitro-Glycerine based permitted explosives used in the underground mines of the company, Consequent upon decision of the Government of India to discontinue / ban production of NG-based explosives in the country and its adoption by the Board of Ordinance Factories of India, the joint venture partner of the plant, the plant was closed on and from 28-04-03.

Coal India Limited had given its approval for disposal of the plant and the company in its 197lh Board meeting held on 19-04-2006 had approved the disposal of plant & machinery by tendering /e-auction and accordingly the plant & machineries along with related stores & spares have been disposed of during the year by auction through MSTC. The net block of assets pending ^disposal is Rs. 11.84 lakhs. The liability towards overheads after closure of the Plant till 31-03-2009 for maintenance and upkeep of the Plant is Rs.39.56 lakhs.

The revenue expenses incurred during the current year is Rs. 0.0(Rs.2.69 lakhs). Since,

Hence, there, is no question of profit/loss. There is a net cash outflow attributable to operating, investing and financing of discontinuance to the tune of Rs.0.01 lakhs (Rs, 0.23 hikh.s).

15.2 DFD Plant, I-Iinganghat, Western Coalfields Limited:

The plant used to manufacture Coal Briquettes from raw coal for domestic fuel purposes. Consequent upon non-viability of the plant as per the decision of the Board, the plant was closed in 1994.

The disposal of the plant is under process and the exact date of completion of discontinuance is not determinable as of now. The net block of assets pending disposal is Rs.2.64 lakhs and the liability towards Municipal Taxes is Rs.2.42 lakhs. The company has applied for the waiver of taxes to the authority. The revenue expenses incurred during the year is Rs. 0.52 lakhs (Rs. 1.10 lakhs). Since, the Plant is inoperative for the past 10 years and the final disposal of the plant is yet to be done, there is no question of profit/loss. There is no cash outflow attributable to operating, investing and financing of ¦ discontinuance.

16. GENERAL

16.1 AmountRs. 31406.73 Lakhs (Rs. 34778.65 Lakhs ) has been provided in the accounts with the "Report of the Committee on Methodology to be adopted in connection with the provision for back filling and other necessary jobs to meet environmental requirements whether covered under EMP or not", an amount equivalent to Rs.75,000/- per hectare each for technical and biological reclamation of the area excavated at the end of the year less the pro-rata area, which are not required to be backfilled.

16.2 The applicability of the Micro, Small and Medium Enterprises Development Act,2006 (MSMEDA, 2006) to the Company for the purpose of disclosure and other requirements are being examined, pending which, the disclosure required under MSMEDA,2006 has not been made.

16.4 As per significant Accounting Policy for opencast mine with a rated capacity of 1 million tones or above, OBR accounting is to be done. However, it has not been followed in case of Amlo project of Central Coalfields Limited since inception i.e. during the last 22 years.

16.5 There is an un-reconciled difference of Rs. 19.39 lakhs as on 31.03.2009 against the bank balance of Western Coalfields Limited as per books with that of bank statement of state Bank of Indhi, Kings way branch, Niigpur. The records arc under re-verification lo reconcile the same.

17. FINANCIAL REPORTING OF INTEREST IN JOINT VENTURE

17.1 As per directives from the Mini.sliry of Con I, the company has enlered inlo n Joint Venture Agreement (J VA) on 30.06.2007 with Neyvcii Lignite Corporation Limited and Hindnlco Industries, with the mnin objective lo enrry out; coal mining nclivHy jointly (it Tnliibirn II mul III eon! MnekN mi n Mingle mine for deployment of optimum technology and conservation of coal. The expenditure incurred in this regard is booked under the head Prospecting and Boring in the books of IB Valley Area.

17.2 Further as per the directives from the Ministry of Coal, the company has entered into another Joint Venture Agreement on 12.11.07 with JSW Steel Ltd, JSW Energy Ltd, Jindal Stainless Ltd and Shyam DRI Power Ltd for coal mining activity jointly at Utkal-

A and Gopalprasad (West). The expenditure in these projects so far incurred by the company has been booked under the head Prospecting & Boring in the books of Hingula Area. Pending identification of the expenditure in detail, these have not been transferred to the respective Joint Venture Companies.

17.3 CIL has entered into a Memorandum of Understanding (vide approval from its Board in 237th meeting held on 24lh November, 2007) regarding formation of Special Purpose Vehicle (SPV) through joint venture involving CIL/SAIL/RINL/NTPC & NDMC for acquisition of coal properties abroad. The formation of the SPV had been approved by Govt of India vide its approval dated 8th November 2007.

As per agreement, CIL would invest Rs.1000 crores in the SPV. The registration of company for the purpose of SPV is at an advanced stage, and till 31.03.2009 CIL has paid a sum of Rs.50.00 lakhs towards its share for initial expenses (pre-incorporation). Pending the finalisation of formation of the company for the SPV, the initial contribution in the SPV has been shown as investment in SPV in the Loans and Advance Schedule.

18.4 The company had given counter guarantee to Government of India for loans obtained from JBIC & IBRD banks and on lent to its subsidiaries, outstanding balance of which stood at Rs.90076.66 lakhs and Rs.88585.83 lakhs respectively.

Further, the company has also given guarantee for loans obtained by subsidiaries the outstanding balance of which as on 31.03.2009 stood at Rs. 17028.41 lakhs (Rs. 13726.27 lakhs).

18.5 Outstanding Deferred Payment Guarantee issued by Banks amounted to Rs. 1385.77 Lakhs (Rs. 1860.71 lakhs)


Mar 31, 2008

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