Mar 31, 2023
1. CORPORATE INFORMATION
Godawari Power & Ispat Ltd. (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act. It''s shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The company is mainly engaged in Mining of Iron Ore and Manufacturing of Iron Ore Pellets, Sponge Iron, Steel Billets, Wire Rods, H.B. Wire and Ferro Alloys with generation of Electricity.
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report.
The standalone financial statements were approved for issue in accordance with a resolution of the directors on 20 May 2023.
2. SIGNIFICANT ACCOUNTING POLICIES
i) The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III).
ii) The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities and
- Defined benefit plans
iii) Company''s financial statements are presented in Indian Rupees (H), which is also its functional currency and the figures have been rounded off to nearest H in lacs.
iv) The standalone financial statements provide comparative information in respect of the previous period. In addition, the Company presents an additional balance sheet at the beginning of the preceding period when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- expected to be realised or intended to be sold or consumed in normal operating cycle;
- held primarily for the purpose of trading;
- expected to be realised within twelve months after the reporting period; or
- cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. 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.
All other assets are classified as non-current.
A liability is current when it is:
- expected to be settled in normal operating cycle;
- held primarily for the purpose of trading;
- due to be settled within twelve months after the reporting period; or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The company has identified twelve months as its operating cycle.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Normally at initial recognition, the transaction price is the best evidence of fair value.
However, when the Company determines that transaction price does not represent the fair value, it uses inter-alia valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy. This categorisation is based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
Financial assets and financial liabilities that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re- assessing categorisation at the end of each reporting period.
i) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1,2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.
ii) An item of PPE is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
iii) The cost of an item of property, plant and equipment is measured at :
- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
- the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation which is to be incurred either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
iv) Expenditure incurred on renovation and modernization of PPE on completion of the originally estimated useful life resulting in increased life and/or efficiency of an existing asset, is added to the cost of the related asset. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition principles.
v) After initial recognition, PPE is carried at cost less accumulated depreciation/amortization and accumulated impairment losses, if any.
vi) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognized when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as âstores & sparesâ forming part of the inventory.
vii) If the cost of the replaced part or earlier inspection is not available, the estimated cost of similar new parts/ inspection is used as an indication of what the cost of the existing part/ inspection component was when the item was acquired or inspection carried out.
viii) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
ix) The company has continued the policy adopted for accounting for exchange differences arising from translation of long term foreign currency monetary items recognized in financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP, as permitted under Ind AS 101, ''First time adoption of Indian Accounting Standards''. Accordingly, the exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciable asset have been adjusted to the cost of the asset and are depreciated over the remaining life of the asset.
i) Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work in Progress. Such costs comprises purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and rebates and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
ii) Cost directly attributable to projects under construction include costs of employee benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-gradation etc. of common public facilities, depreciation on assets used in construction of project, interest during construction and other costs if attributable to construction of projects. Such costs are accumulated under âCapital works in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects.
iii) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is essential principally for construction of the project is capitalized and carried under âCapital work in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in view the âattributabilityâ and the âUnit of Measureâ concepts in Ind AS 16- âProperty, Plant & Equipmentâ. Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.
i) Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
ii) Software (not being an integral part of the related hardware) acquired for internal use, is stated at cost of acquisition less accumulated amortisation and impairment losses, if any.
iii) An item of Intangible asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
The company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset. The company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
i) Exploration and Evaluation Assets
Upon obtaining the legal rights to explore a specific area but before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the expenditure incurred on finding specific mineral resources are capitalised as Exploration and Evaluation Assets. These expenditure include expenses on acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource and such other related expenses. When the technical feasibility and commercial viability of extracting a mineral resource are demonstrated, the Exploration and Evaluation Assets are reclassified as part of the right to mine.
At the initial recognition the Exploration and Evaluation Assets are measured at cost. After recognition, the company continues to use the cost model.
Exploration and Evaluation Assets are assessed for impairment when facts and circumstances suggest that the carrying amount of such assets may exceed its recoverable amount.
After the reclassification of the Exploration and Evaluation Assets as part of the Right to Mine, the cost is then amortised over the remaining useful life of the mining rights.
ii) Stripping Activity
During the development phase of the mine (before production begins), stripping costs are capitalised as part of the cost of right to mine.
During the production phase, two benefits accrue from the stripping activity: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods.
To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the costs of that stripping overburden removal activity is accounted for in accordance with the principles of Ind AS 2, Inventories.
To the extent the benefit is improved access to ore, these costs are recognised as Stripping Activity Asset, if the following criteria are met:- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow;
- the component of the ore body for which access has been improved can be identified; and
- the costs relating to the stripping activity associated with that component can be measured reliably.
The Stripping Cost capitalised during the development phase or during the production phase is amortised using the units or production method.
A. Sale of Goods
The Company recognises revenue when control over the promised goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements as it typically controls the goods or services before transferring them to the customer.
Revenue is adjusted for variable consideration such as discounts, rebates, refunds, credits, price concessions, incentives, or other similar items in a contract when they are highly probable to be provided. The amount of revenue excludes any amount collected on behalf of third parties.
The Company recognises revenue generally at the point in time when the products are delivered to customer or when it is delivered to a carrier for export sale, which is when the control over product is transferred to the customer.
Revenue from sale of by products are included in revenue.
Contract Balances
Contract Assets:
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration.
Trade Receivables:
A receivable is recognised when the goods are delivered and to the extent that it has an unconditional contractual right to receive cash or other financial assets (i.e., only the passage of time is required before payment of the consideration is due).
Contract Liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract including Advance received from Customer.
Refund Liabilities:
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer including volume rebates and discounts. The Company updates its estimates of refund liabilities at the end of each reporting period.
B. Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
C. Dividend income
Dividend income is recognised when the company''s right to receive payment is established, which is generally when shareholders approve the dividend.
D. Rendering of services
Income from services rendered is recognised based on agreements/arrangements with the customers as the service is performed and there are no unfulfilled obligations.
i) Depreciation on Property, Plant & Equipment is provided on Straight Line Method based on estimated useful life of the assets which is same as envisaged in schedule II of the Companies Act, 2013 with the exception of the following:
- spares classified as plant and equipment are depreciated over 3 to 15 years based on the technical evaluation of useful life done by the management.
- assets costing H5,000 or less are fully depreciated in the year of purchase.
ii) Depreciation on additions to /deductions from Property, Plant & Equipment during the year is charged on pro-rata basis from / up to the date on which the asset is available for use / disposal.
iii) The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
iv) Where the life and / or efficiency of an asset is increased due to renovation and modernization, the expenditure
thereon along with its unamortized depreciable amount is charged prospectively over the revised / remaining useful life determined by technical assessment.
v) Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower.
vi) Leasehold land is amortised annually on the basis of tenure of lease period. Freehold land is not depreciated.
vii) Expenditure incurred on Mining Rights are amortised over useful life of the mines or lease period whichever is shorter.
viii) Other Intangible assets i.e. Computer Softwares are amortized on a straight line basis over technically useful life i.e. 10 years.
i) Inventories are valued at lower of cost and net realizable value, after providing for obsolences, if any.
ii) Cost of Raw Materials, Stores & Spares, Work in Progress, Finished Goods and Stock-in-Trade are computed on Moving Average basis.
iii) Cost of Work in Progress and Finished Goods includes direct materials, labour, conversion and proportion of manufacturing overheads incurred in bringing the inventories to their present location and condition.
iv) The cost is determined using moving average cost formula and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Income tax expense represents the sum of current and deferred tax. Tax is recognised in the Statement of Profit and
Loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income. In which
case the tax is also recognised directly in equity or in other comprehensive income.
i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
i) Transactions in foreign currency are initially recorded at exchange rate prevailing on the date of transaction. At each Balance Sheet date, monetary items denominated in foreign currency are translated at the exchange rates prevailing on that date.
ii) Exchange differences arising on translation or settlement of monetary items are recognised as income or expenses in the period in which they arise in the Statement of Profit and loss.
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
Post-Employment Benefits
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Contributory Pension Fund. The Company''s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined Benefits Plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The company has recognized the gratuity payable to the employees as per the Payment of Gratuity Act,1972. Leave encashment benefit is a long term benefit plan whereas Gratuity is a post retirement benefit plan. The liability in respect of these benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on management estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a standalone asset only when the reimbursement is virtually certain.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are not recognized but are disclosed in the financial statements when inflow of economic benefits is probable.
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset''s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Par value of the equity share is recorded as share capital and the amount received in excess of the par value is classified as share premium.
Treasury shares held in the Trust are deducted from the equity.
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
B. Subsequent measurement
Financial assets carried at amortised cost
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
C. Investment in subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in subsidiaries, associates and joint venture at cost.
D. Other Equity Investments
All other equity investments are measured at fair value through Other Comprehensive Income with value changes recognised therein.
E. Impairment of financial assets
In accordance with Ind AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through OCI.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies ''simplified approach'' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
ii) Financial Liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) Derivative financial instruments and Hedge Accounting
The Company uses derivative financial instruments such as interest rate swaps and forward contracts to mitigate the risk of changes in interest rates and exchange rates. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss, except for the effective portion of cash flow hedges which is recognised in Other Comprehensive Income and later to Statement of Profit and Loss when the hedged item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial assets or non-financial liability.
iv) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a right issue to existing shareholders.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Dividend distribution to the Company''s shareholders is recognised as a liability in the company''s financial statements in the period in which the dividends are approved by the Company''s shareholders.
i) Cash and Cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. However for Balance Sheet presentation, Bank overdrafts are classified within borrowings in current liabilities.
ii) Statement of Cash Flows is prepared in accordance with the Indirect Method prescribed in the relevant Accounting Standard.
2.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Property, plant and equipment / intangible assets are depreciated / amortised over their estimated useful lives, after taking into account estimated residual value. The estimated useful lives and residual values of the assets are reviewed annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes and other related matters. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the period of overdues, the amount and timing of anticipated future payments and the probability of default.
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of resources resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or Cash Generating Units (CGU''s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
The measurement of defined benefit and other post-employment benefits obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The Company''s lease asset classes primarily consist of leases for industrial land. The lease premium is the fair value of land paid by the Company to the state government at the time of acquisition and there is no liability at the end of lease term. The lease premium paid by the company has been amortized over the lease period on a systematic basis and classified under Ind AS 16 and therefore, the requirements of both Ind AS 116 and Ind AS 17 as to the period over which, and the manner in which, the right of use asset (under Ind AS 116) or the asset arising from the finance lease (under Ind AS 17) amortized are similar.
The company has not early adopted any standards, amendments that have been issued but are not yet effective/notified.
2.5 RECENT ACCOUNTING DEVELOPMENTS
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022, to amend the existing Ind AS viz. Ind AS 37, 103, 16, 101, 109 & 41. There is no such impact of amendments which would have been applicable from April 1, 2022.
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Mar 31, 2022
1. CORPORATE INFORMATION
Godawari Power & Ispat Ltd. (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act. It''s shares are listed on National Stock Exchange and Bombay Stock Exchange in India. The company is mainly engaged in Mining of Iron Ore and Manufacturing of Iron Ore Pellets, Sponge Iron, Steel Billets, Wire Rods, H.B. Wire and Ferro Alloys with generation of Electricity.
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report. The standalone financial statements were approved for issue in accordance with a resolution of the directors on 28 May 2022.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION AND PRESENTATION
i) The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules,2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III).
ii) The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities and
- Defined benefit plans
iii) Company''s financial statements are presented in Indian Rupees (H), which is also its functional currency.
iv) The standalone financial statements provide comparative information in respect of the previous period. In addition, the Company presents an additional balance sheet at the beginning of the preceding period when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.
2.2 Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19)
The Company has assessed the possible impact of COVID-19 on its financial statements based on the internal and external information available up to the date of approval of these financial results and concluded that no adjustment is required in these financial statements. The Company continues to monitor the future economic conditions.
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Current versus non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- expected to be realised or intended to be sold or consumed in normal operating cycle;
- held primarily for the purpose of trading;
- expected to be realised within twelve months after the reporting period; or
- cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. 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.
All other assets are classified as non-current.
A liability is current when it is:
- expected to be settled in normal operating cycle;
- held primarily for the purpose of trading;
- due to be settled within twelve months after the reporting period; or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The company has identified twelve months as its operating cycle.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Normally at initial recognition, the transaction price is the best evidence of fair value.
However, when the Company determines that transaction price does not represent the fair value, it uses inter-alia valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy. This categorisation is based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
Financial assets and financial liabilities that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re- assessing categorisation at the end of each reporting period.
i) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1,2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.
ii) An item of PPE is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
iii) The cost of an item of property, plant and equipment is measured at :
- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
- the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation which is to be incurred either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
iv) Expenditure incurred on renovation and modernization of PPE on completion of the originally estimated useful life resulting in increased life and/or efficiency of an existing asset, is added to the cost of the related asset. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition principles.
v) After initial recognition, PPE is carried at cost less accumulated depreciation/amortization and accumulated impairment losses, if any.
vi) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognized when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as âstores & sparesâ forming part of the inventory.
vii) If the cost of the replaced part or earlier inspection is not available, the estimated cost of similar new parts/ inspection is used as an indication of what the cost of the existing part/ inspection component was when the item was acquired or inspection carried out.
viii) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
ix) The company has continued the policy adopted for accounting for exchange differences arising from translation of long term foreign currency monetary items recognized in financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP, as permitted under Ind AS 101, ''First time adoption of Indian Accounting Standards''. Accordingly, the exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciable asset have been adjusted to the cost of the asset and are depreciated over the remaining life of the asset.
i) Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work in Progress. Such costs comprises purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and rebates and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
ii) Cost directly attributable to projects under construction include costs of employee benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-gradation etc. of common public facilities, depreciation on assets used in construction of project, interest during construction and other costs if attributable to construction of projects. Such costs are accumulated under âCapital works in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects.
iii) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is essential principally for construction of the project is capitalized and carried under âCapital work in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in view the âattributabilityâ and the âUnit of Measureâ concepts in Ind AS 16- âProperty, Plant & Equipmentâ. Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.
i) Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
ii) Software (not being an integral part of the related hardware) acquired for internal use, is stated at cost of acquisition less accumulated amortisation and impairment losses, if any.
iii) An item of Intangible asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
The company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset. The company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
i) Exploration and Evaluation Assets
Upon obtaining the legal rights to explore a specific area but before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the expenditure incurred on finding specific mineral resources are capitalised as Exploration and Evaluation Assets. These expenditure include expenses on acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource and such other related expenses. When the technical feasibility and commercial viability of extracting a mineral resource are demonstrated, the Exploration and Evaluation Assets are reclassified as part of the right to mine.
At the initial recognition the Exploration and Evaluation Assets are measured at cost. After recognition, the company continues to use the cost model.
Exploration and Evaluation Assets are assessed for impairment when facts and circumstances suggest that the carrying amount of such assets may exceed its recoverable amount.
After the reclassification of the Exploration and Evaluation Assets as part of the Right to Mine, the cost is then amortised over the remaining useful life of the mining rights.
During the development phase of the mine (before production begins), stripping costs are capitalised as part of the cost of right to mine.
During the production phase, two benefits accrue from the stripping activity: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods.
To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the costs of that stripping overburden removal activity is accounted for in accordance with the principles of Ind AS 2, Inventories.
To the extent the benefit is improved access to ore, these costs are recognised as Stripping Activity Asset, if the following criteria are met:- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow;
- the component of the ore body for which access has been improved can be identified; and
- the costs relating to the stripping activity associated with that component can be measured reliably.
The Stripping Cost capitalised during the development phase or during the production phase is amortised using the units or production method.
Revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the company expects to receive in exchange for those products.
Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.
i) Revenue from sales of goods is recognised on output basis measured by units delivered, number of transactions etc.
ii) Revenue from sales of goods is recognised at the point in time when control is transferred to the customer which coincides with the performance obligation under the contract with the customer.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
Revenue is recognised when the company''s right to receive payment is established, which is generally when shareholders approve the dividend.
Income from services rendered is recognised based on agreements/arrangements with the customers as the service is performed and there are no unfulfilled obligations.
i) Depreciation on Property, Plant & Equipment is provided on Straight Line Method based on estimated useful life of the assets which is same as envisaged in schedule II of the Companies Act, 2013 with the exception of the following:
- spares classified as plant and equipment are depreciated over 3 to 15 years based on the technical evaluation of useful life done by the management.
- assets costing H5,000 or less are fully depreciated in the year of purchase.
ii) Depreciation on additions to /deductions from Property, Plant & Equipment during the year is charged on pro-rata basis from / up to the date on which the asset is available for use / disposal.
iii) The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
iv) Where the life and / or efficiency of an asset is increased due to renovation and modernization, the expenditure thereon along with its unamortized depreciable amount is charged prospectively over the revised / remaining useful life determined by technical assessment.
v) Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower.
vi) Leasehold land is amortised annually on the basis of tenure of lease period. Freehold land is not depreciated.
vii) Expenditure incurred on Mining Rights are amortised over useful life of the mines or lease period whichever is shorter.
viii) Other Intangible assets i.e. Computer Softwares are amortized on a straight line basis over technically useful life i.e. 10 years.
i) Inventories are valued at lower of cost and net realizable value, after providing for obsolences, if any.
ii) Cost of Raw Materials, Stores & Spares, Work in Progress, Finished Goods and Stock-in-Trade are computed on Moving Average basis.
iii) Cost of Work in Progress and Finished Goods includes direct materials, labour, conversion and proportion of manufacturing overheads incurred in bringing the inventories to their present location and condition.
iv) The cost is determined using moving average cost formula and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Income tax expense represents the sum of current and deferred tax. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income. In which case the tax is also recognised directly in equity or in other comprehensive income.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
i) Transactions in foreign currency are initially recorded at exchange rate prevailing on the date of transaction. At each Balance Sheet date, monetary items denominated in foreign currency are translated at the exchange rates prevailing on that date.
ii) Exchange differences arising on translation or settlement of monetary items are recognised as income or expenses in the period in which they arise in the Statement of Profit and loss.
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Contributory Pension Fund. The Company''s contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The company has recognized the gratuity payable to the employees as per the Payment of Gratuity Act,1972. Leave encashment benefit is a long term benefit plan whereas Gratuity is a post retirement benefit plan. The liability in respect of these benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on management estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a standalone asset only when the reimbursement is virtually certain.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are not recognized but are disclosed in the financial statements when inflow of economic benefits is probable.
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss to the extent, asset''s carrying amount exceeds its recoverable amount. The recoverable amount is higher of an asset''s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Par value of the equity share is recorded as share capital and the amount received in excess of the par value is classified as share premium.
Treasury shares held in the Trust are deducted from the equity.
i) Financial Assets
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset which is not classified in any of the above categories are measured at FVTPL.
The Company has accounted for its investments in subsidiaries, associates and joint venture at cost.
All other equity investments are measured at fair value through Other Comprehensive Income with value changes recognised therein.
In accordance with Ind AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through OCI.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies ''simplified approach'' which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
The Company uses derivative financial instruments such as interest rate swaps and forward contracts to mitigate the risk of changes in interest rates and exchange rates. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss, except for the effective portion of cash flow hedges which is recognised in Other Comprehensive Income and later to Statement of Profit and Loss when the hedged item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial assets or non-financial liability.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a right issue to existing shareholders.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Dividend distribution to the Company''s shareholders is recognised as a liability in the company''s financial statements in the period in which the dividends are approved by the Company''s shareholders.
i) Cash and Cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. However for Balance Sheet presentation, Bank overdrafts are classified within borrowings in current liabilities.
ii) Statement of Cash Flows is prepared in accordance with the Indirect Method prescribed in the relevant Accounting Standard.
2.4 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Depreciation / amortisation and useful lives of property plant and equipment / intangible assets
Property, plant and equipment / intangible assets are depreciated / amortised over their estimated useful lives, after taking into account estimated residual value. The estimated useful lives and residual values of the assets are reviewed annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes and other related matters. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.
b) Recoverability of trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the period of overdues, the amount and timing of anticipated future payments and the probability of default.
c) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of resources resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
d) Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or Cash Generating Units (CGU''s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
e) Measurement of defined benefit obligations
The measurement of defined benefit and other post-employment benefits obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
f) Amortization of leasehold land
The Company''s lease asset classes primarily consist of leases for industrial land. The lease premium is the fair value of land paid by the Company to the state govenment at the time of aquisition and there is no liability at the end of lease term. The lease premium paid by the company has been amortized over the lease period on a systematic basis and classified under Ind AS 16 and therefore, the requirements of both Ind AS 116 and Ind AS 17 as to the period over which, and the manner in which, the right of use asset (under Ind AS 116) or the asset arising from the finance lease (under Ind AS 17) amortized are similar.
2.5 NEW AND AMENDED STANDARDS
Amendments and interpretations as outlined below apply for the year ended 31 March, 2022, but do not have an impact on the Standalone Financial Statements.
a) Interest Rate Benchmark Reform - Phase 2: Amendments to Ind AS 109, Ind AS 107, Ind AS 104 and Ind AS 116.
b) Ind AS 116: COVID-19 related rent concessions.
c) Ind AS 103: Business combinations.
d) Amendment to Ind AS 105, Ind AS 16 and Ind AS 28.
The company has not early adopted any standards, amendments that have been issued but are not yet effective/notified.
2.6 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING UNDER IND AS ISSUED BY ICAI
The Framework is not a Standard and it does not override any specific standard. Therefore, this does not form part of a set of standards pronounced by the standard-setters. While, the Framework is primarily meant for the standard-setter for formulating the standards, it has relevance to the preparers in certain situations such as to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret the Standards.
The MCA has notified the Amendments to Ind AS consequential to Conceptual Framework under Ind AS vide notification dated June 18, 2021, applicable for annual periods beginning on or after April 1, 2021. Accordingly, the Conceptual Framework is applicable for preparers for accounting periods beginning on or after 1 April 2021.
These amendments had no impact on the financial statements of the Company.
Mar 31, 2018
1.1 summary of significant accounting policies
a) Current versus non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- expected to be realised or intended to be sold or consumed in normal operating cycle;
- held primarily for the purpose of trading;
- expected to be realised within twelve months after the reporting period; or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. 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.
All other assets are classified as non-current.
A liability is current when it is:
- expected to be settled in normal operating cycle;
- held primarily for the purpose of trading;
- due to be settled within twelve months after the reporting period; or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The company has identified twelve months as its operating cycle.
b) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Normally at initial recognition, the transaction price is the best evidence of fair value.
However, when the Company determines that transaction price does not represent the fair value, it uses inter-alia valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy. This categorisation is based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
Financial assets and financial liabilities that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re- assessing categorisation at the end of each reporting period.
c) Property, Plant and Equipment (PPE)
i) An item of PPE is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
ii) The cost of an item of property, plant and equipment is measured at :
- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
- the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation which is to be incurred either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
iii) Expenditure incurred on renovation and modernization of PPE on completion of the originally estimated useful life resulting in increased life and/or efficiency of an existing asset, is added to the cost of the related asset. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition principles.
iv) After initial recognition, PPE is carried at cost less accumulated depreciation/amortization and accumulated impairment losses, if any.
v) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognized when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as âstores & sparesâ forming part of the inventory.
vi) If the cost of the replaced part or earlier inspection is not available, the estimated cost of similar new parts/ inspection is used as an indication of what the cost of the existing part/ inspection component was when the item was acquired or inspection carried out.
vii) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized.
viii) The company has continued the policy adopted for accounting for exchange differences arising from translation of long term foreign currency monetary items recognized in financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP, as permitted under Ind AS 101, âFirst time adoption of Indian Accounting Standardsâ. Accordingly, the exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciable asset have been adjusted to the cost of the asset and are depreciated over the remaining life of the asset.
d) Capital Work in Progress
i) Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work in Progress. Such costs comprises purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and rebates and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
ii) Cost directly attributable to projects under construction include costs of employee benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-gradation etc. of common public facilities, depreciation on assets used in construction of project, interest during construction and other costs if attributable to construction of projects. Such costs are accumulated under âCapital works in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects.
iii) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is essential principally for construction of the project is capitalized and carried under âCapital work in progressâ and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in view the âattributabilityâ and the âUnit of Measureâ concepts in Ind AS 16- âProperty, Plant & Equipmentâ. Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.
e) intangible Assets
i) Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
ii) Software (not being an integral part of the related hardware) acquired for internal use, is stated at cost of acquisition less accumulated amortisation and impairment losses, if any.
iii) An item of Intangible asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
f) Leases
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
- Leased assets
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
g) Mining assets
i) Exploration and Evaluation Assets
Upon obtaining the legal rights to explore a specific area but before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the expenditure incurred on finding specific mineral resources are capitalised as Exploration and Evaluation Assets. These expenditure include expenses on acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource and such other related expenses. When the technical feasibility and commercial viability of extracting a mineral resource are demonstrated, the Exploration and Evaluation Assets are reclassified as part of the right to mine.
At the initial recognition the Exploration and Evaluation Assets are measured at cost. After recognition, the company continues to use the cost model.
Exploration and Evaluation Assets are assessed for impairment when facts and circumstances suggest that the carrying amount of such assets may exceed its recoverable amount.
After the reclassification of the Exploration and Evaluation Assets as part of the Right to Mine, the cost is then amortised over the remaining useful life of the mining rights.
ii) Stripping Activity
During the development phase of the mine (before production begins), stripping costs are capitalised as part of the cost of right to mine.
During the production phase, two benefits accrue from the stripping activity: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods.
To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the costs of that stripping overburden removal activity is accounted for in accordance with the principles of Ind AS 2, Inventories.
To the extent the benefit is improved access to ore, these costs are recognised as Stripping Activity Asset, if the following criteria are met:
- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow;
- the component of the ore body for which access has been improved can be identified; and
- the costs relating to the stripping activity associated with that component can be measured reliably.
The Stripping Cost capitalised during the development phase or during the production phase is amortised using the units or production method.
h) revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Based on the Educational Material on Ind AS 18 issued by the ICAI, the company has considered that recovery of excise duty flows to the company on its own account. Therefore it is a liability of the manufacturer and forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the company on its own account, revenue includes excise duty.
However, Sales Tax/Value Added Tax (VAT) and Goods & Service Tax are not received by the company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised.
i) Sale of goods
Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
ii) Interest income
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
iii) Dividends
Revenue is recognised when the companyâs right to receive payment is established, which is generally when shareholders approve the dividend.
iv) Rendering of services
Revenue from the services is recognised by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.
i) Depreciation on property, plant & Equipment and Amortization of Intangible Assets
i) Depreciation on Property, Plant & Equipment is provided on Straight Line Method based on estimated useful life of the assets which is same as envisaged in schedule II of the Companies Act, 2013 with the exception of the following:
- spares classified as plant and equipment are depreciated over 3 to 15 years based on the technical evaluation of useful life done by the management.
- assets costing Rs. 5,000 or less are fully depreciated in the year of purchase.
ii) Depreciation on additions to /deductions from Property, Plant & Equipment during the year is charged on pro-rata basis from / up to the date on which the asset is available for use / disposal.
iii) The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
iv) Where the life and / or efficiency of an asset is increased due to renovation and modernization, the expenditure thereon along with its unamortized depreciable amount is charged prospectively over the revised / remaining useful life determined by technical assessment.
v) Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower.
vi) Leasehold land is amortised annually on the basis of tenure of lease period. Freehold land is not depreciated.
vii) Expenditure incurred on Right to Mine are amortised over useful life of the mines or lease period whichever is shorter.
viii) Other Intangible assets are amortized over technically useful life of the assets. j) Inventories :
i) Inventories are valued at lower of cost and net realizable value, after providing for obsolences, if any.
ii) Cost of Raw Materials, Stores & Spares, Work in Progress, Finished Goods and Stock-in-Trade are computed on Moving Average basis.
iii) Cost of Work in Progress and Finished Goods includes direct materials, labour, conversion and proportion of manufacturing overheads incurred in bringing the inventories to their present location and condition.
iv) The cost is determined using moving average cost formula and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.
k) Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
l) income Taxes
Income tax expense represents the sum of current and deferred tax. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income. In which case the tax is also recognised directly in equity or in other comprehensive income.
i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period. m) Foreign Currency transactions
i) Transactions in foreign currency are initially recorded at exchange rate prevailing on the date of transaction. At each Balance Sheet date, monetary items denominated in foreign currency are translated at the exchange rates prevailing on that date.
ii) Exchange differences arising on translation or settlement of monetary items are recognised as income or expenses in the period in which they arise in the Statement of Profit and loss.
n) employee Benefits expense
short term employee benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
post-employment benefits
defined Contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Contributory Pension Fund. The Companyâs contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
defined benefits plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The company has recognized the gratuity payable to the employees as per the Payment of Gratuity Act,1972 and Leave Encashment Benefits as defined benefit plans. The liability in respect of these benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employeesâ services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
o) provisions, Contingent Liabilities and Contingent assets
Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on management estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a standalone asset only when the reimbursement is virtually certain.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are not recognized but are disclosed in the financial statements when inflow of economic benefits is probable.
p) impairment of non-financial assets - property, plant and equipment and intangible assets
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
q) Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Par value of the equity share is recorded as share capital and the amount received in excess of the par value is classified as share premium. Treasury shares held in the Trust are deducted from the equity,
r) Financial intruments
i) Financial assets
a. initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
B. Subsequent measurement
Financial assets carried at amortised cost
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
C. investment in subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in subsidiaries, associates and joint venture at cost.
D. other Equity investments
All other equity investments are measured at fair value through Other Comprehensive Income with value changes recognised therein.
E. impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through OCI.
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
ii) Financial Liabilities
A. initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) Derivative financial instruments and Hedge Accounting
The Company uses derivative financial instruments such as interest rate swaps and forward contracts to mitigate the risk of changes in interest rates and exchange rates. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss, except for the effective portion of cash flow hedges which is recognised in Other Comprehensive Income and later to Statement of Profit and Loss when the hedged item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial assets or non-financial liability.
Hedges that meet the criteria for hedge accounting are accounted for as follows:
A. Cash flow hedge
The Company designates derivative contracts or non derivative financial assets / liabilities as hedging instruments to mitigate the risk of movement in interest rates and foreign exchange rates for foreign exchange exposure on highly probable future cash flows attributable to a recognised asset or liability or forecast cash transactions. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in the cash flow hedging reserve being part of other comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the underlying transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
B. Fair Value hedge
The Company designates derivative contracts or non derivative financial assets / liabilities as hedging instruments to mitigate the risk of change in fair value of hedged item due to movement in interest rates and foreign exchange rates.
Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to Statement of Profit and Loss over the period of maturity.
iv) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
s) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a right issue to existing shareholders.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
t) Dividend Distribution
Dividend distribution to the Companyâs shareholders is recognised as a liability in the companyâs financial statements in the period in which the dividends are approved by the Companyâs shareholders.
u) Statement of Cash Flows
i) Cash and Cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. However for Balance Sheet presentation, Bank overdrafts are classified within borrowings in current liabilities.
ii) Statement of Cash Flows is prepared in accordance with the Indirect Method prescribed in the relevant Accounting Standard.
v) segment Reporting policies identification of segments :
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements. The Operating segments have been identified on the basis of the nature of products.
inter segment transfers :
The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.
allocation of common costs:
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. unallocated items :
The Corporate and Other segment includes general corporate income and expense items which are not allocated to any business segment.
Mar 31, 2017
. CORPORATE INFORMATION
Godawari Power & Ispat Ltd. (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act. It''s shares are listed on two stock exchanges in India. The company is mainly engaged in Generation of Electricity, Mining of Iron Ore and Manufacturing of Iron Ore Pellets, Sponge Iron, Steel Billets, Wire Rods, H.B. Wire and Ferro Alloys,
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report,
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION AND PRESENTATION
i) The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and guidelines issued by the Securities and Exchange Board of India (SEBI),
ii) For all periods up to and including the year ended 31st March 2016, the company prepared its financial statements in accordance with accounting standards notified as Companies (Accounting Standards) Rules, 2006 and considered as "Previous GAAP".
iii) These financial statements for the year ended 31st March,2017 are the Company''s first Ind AS standalone financial statements,
iv) The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities (including derivative instruments) and
- Defined benefit plans - plan assets
v) Company''s financial statements are presented in Indian Rupees (''), which is also its functional currency,
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Current versus non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- expected to be realized or intended to be sold or consumed in normal operating cycle;
- held primarily for the purpose of trading;
- expected to be realized within twelve months after the reporting period; or
- cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. 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.
All other assets are classified as non-current.
A liability is current when it is:
- expected to be settled in normal operating cycle;
- held primarily for the purpose of trading;
- due to be settled within twelve months after the reporting period; or
- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The company has identified twelve months as its operating cycle,
b) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Normally at initial recognition, the transaction price is the best evidence of fair value,
However, when the Company determines that transaction price does not represent the fair value, it uses inter-alia valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs,
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy. This categorization is based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
Financial assets and financial liabilities that are recognized at fair value on a recurring basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.
c) Property, Plant and Equipment (PPE)
i) The company has elected to avail the exemption granted by Ind AS 101 ''First Time Adoption of the Indian Accounting Standards'' to continue with the carrying value for all of its Property, Plant and Equipment as recognized in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (i.e. as on April 1, 2015).
ii) An item of PPE is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably
iii) The cost of an item of property, plant and equipment is measured at :
- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
- the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation which is to be incurred either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period,
iv) Expenditure incurred on renovation and modernization of PPE on completion of the originally estimated useful life resulting in increased life and/or efficiency of an existing asset, is added to the cost of the related asset. In the carrying amount of an item of PPE, the cost of replacing the part of such an item is recognized when that cost is incurred if the recognition criteria are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition principles,
v) After initial recognition, PPE is carried at cost less accumulated depreciation/amortization and accumulated impairment losses, if any,
vi) Spare parts procured along with the Plant & Machinery or subsequently which meet the recognition criteria are capitalized and added in the carrying amount of such item. The carrying amount of those spare parts that are replaced is derecognized when no future economic benefits are expected from their use or upon disposal. Other machinery spares are treated as "stores & spares" forming part of the inventory,
vii) If the cost of the replaced part or earlier inspection is not available, the estimated cost of similar new parts/ inspection is used as an indication of what the cost of the existing part/ inspection component was when the item was acquired or inspection carried out,
viii) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognized,
ix) The company has continued the policy adopted for accounting for exchange differences arising from translation of long term foreign currency monetary items recognized in financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP, pursuant to para 46A/46AA and D13AA of Ind AS 101, ''First time adoption of Indian Accounting Standards''. Accordingly, the exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciable asset have been adjusted to the cost of the asset and are depreciated over the remaining life of the asset,
d) Capital Work in Progress
i) Expenditure incurred on assets under construction (including a project) is carried at cost under Capital Work in Progress. Such costs comprises purchase price of asset including import duties and non-refundable taxes after deducting trade discounts and rebates and costs that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
ii) Cost directly attributable to projects under construction include costs of employee benefits, expenditure in relation to survey and investigation activities of the projects, cost of site preparation, initial delivery and handling charges, installation and assembly costs, professional fees, expenditure on maintenance and up-gradation etc. of common public facilities, depreciation on assets used in construction of project, interest during construction and other costs if attributable to construction of projects. Such costs are accumulated under "Capital works in progress" and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects,
iii) Capital Expenditure incurred for creation of facilities, over which the Company does not have control but the creation of which is essential principally for construction of the project is capitalized and carried under "Capital work in progress" and subsequently allocated on systematic basis over major assets, other than land and infrastructure facilities, on commissioning of projects, keeping in view the "attributability" and the "Unit of Measure" concepts in Ind AS 16- "Property, Plant & Equipment". Expenditure of such nature incurred after completion of the project, is charged to Statement of Profit and Loss.
e) Intangible Assets
i) The company has elected to avail the exemption granted by Ind AS 101 ''First Time Adoption of the Indian Accounting Standards'' to continue with the carrying value for all of its Intangible Assets as recognized in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (i.e. as on April 1, 2015),
ii) Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
iii) Software (not being an integral part of the related hardware) acquired for internal use, is stated at cost of acquisition less accumulated amortization and impairment losses, if any,
iv) An item of Intangible asset is derecognized upon disposal or when no future economic benefits are expected from its use or disposal, Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized,
f) Leases
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases,
- Leased assets
Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the less or is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized. Contingent rentals are recognized as expenses in the periods in which they are incurred,
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term,
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
g) Mining Assets
i) Exploration and Evaluation Assets
Upon obtaining the legal rights to explore a specific area but before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the expenditure incurred on finding specific mineral resources are capitalized as Exploration and Evaluation Assets. These expenditure include expenses on acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource and such other related expenses. When the technical feasibility and commercial viability of extracting a mineral resource are demonstrated, the Exploration and Evaluation Assets are reclassified as part of the right to mine,
At the initial recognition the Exploration and Evaluation Assets are measured at cost. After recognition, the company continues to use the cost model,
Exploration and Evaluation Assets are assessed for impairment when facts and circumstances suggest that the carrying amount of such assets may exceed its recoverable amount,
After the reclassification of the Exploration and Evaluation Assets as part of the Right to Mine, the cost is then amortized over the remaining useful life of the mining rights.
ii) Stripping Activity
During the development phase of the mine (before production begins), stripping costs are capitalized as part of the cost of right to mine.
During the production phase, two benefits accrue from the stripping activity: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods,
To the extent that the benefit from the stripping activity is realized in the form of inventory produced, the costs of that stripping overburden removal activity is accounted for in accordance with the principles of Ind AS 2, Inventories,
To the extent the benefit is improved access to ore, these costs are recognized as Stripping Activity Asset, if the following criteria are met:
- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow;
- the component of the ore body for which access has been improved can be identified; and
- the costs relating to the stripping activity associated with that component can be measured reliably.
The Stripping Cost capitalized during the development phase or during the production phase is amortized using the units or production method.
In accordance with Ind AS 101 First Time Adoption of Ind AS, the previously recognized asset balance that resulted from stripping activity undertaken during the production phase (''predecessor stripping asset'' classified as Iron Ore Mines under Intangible Assets) is reclassified as a part of an existing asset i.e Right to Mine to which the stripping activity relates, to the extent that there remains an identifiable component of the ore body with which the predecessor stripping asset can be associated. Such balances will be amortized over the remaining expected useful life of the Right to Mine,
h) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government,
Based on the Educational Material on Ind AS 18 issued by the ICAI, the company has considered that recovery of excise duty flows to the company on its own account. Therefore it is a liability of the manufacturer and forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the company on its own account, revenue includes excise duty.
However, Sales Tax/Value Added Tax (VAT) are not received by the company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue,
The specific recognition criteria described below must also be met before revenue is recognized,
i) Sale of goods
Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates,
ii) Interest income
Interest income is recognized using the effective interest rate (EIR) method,
iii) Dividends
Revenue is recognized when the company''s right to receive payment is established, which is generally when shareholders approve the dividend.
iv) Rendering of services
Revenue from the services is recognized by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred are eligible to be recovered,
i) Depreciation on Property, Plant & Equipment and Amortization of Intangible Assets
i) Depreciation on Property, Plant & Equipment is provided on Straight Line Method based on estimated useful life of the assets which is same as envisaged in schedule II of the Companies Act, 2013 with the exception of the following:
- spares classified as plant and equipment are depreciated over 3 to 15 years based on the technical evaluation of useful life done by the management.
- assets costing '' 5,000 or less are fully depreciated in the year of purchase.
ii) Depreciation on additions to /deductions from Property, Plant & Equipment during the year is charged on pro-rata basis from / up to the date on which the asset is available for use / disposal,
iii) The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate,
iv) Where the life and / or efficiency of an asset is increased due to renovation and modernization, the expenditure thereon along with its unamortized depreciable amount is charged prospectively over the revised / remaining useful life determined by technical assessment,
v) Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower,
vi) Leasehold land is amortized annually on the basis of tenure of lease period. Freehold land is not depreciated,
vii) Expenditure incurred on Right to Mine are amortized over useful life of the mines or lease period whichever is shorter,
viii) Intangible assets having finite-life are amortized on a straight line basis over the period of their expected useful lifes.
j) Inventories :
i) Inventories are valued at lower of cost and net realizable value, after providing for obsolesces, if any,
ii) Cost of Raw Materials, Stores & Spares, Work in Progress, Finished Goods and Stock-in-Trade are computed on Moving Average basis.
iii) Cost of Work in Progress and Finished Goods includes direct materials, labour, conversion and proportion of manufacturing overheads incurred in bringing the inventories to their present location and condition,
iv) The cost is determined using moving average cost formula and net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale,
k) Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs,
l) Income Taxes
Income tax expense represents the sum of current and deferred tax. Tax is recognized in the Statement of Profit and Loss, except to the extent that it relates to items recognized directly in equity or other comprehensive income. In which case the tax is also recognized directly in equity or in other comprehensive income,
i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date,
ii) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period,
m) Foreign Currency Transactions
i) The Company has elected to avail the exemption available under IND AS 101, First time adoption of IND AS with regard to continuation of policy for accounting of exchange differences arising from translation of long term foreign currency monetary liabilities pursuant to para 46A/46AA and D13AA of Ind AS 101.
ii) Transactions in foreign currency are initially recorded at exchange rate prevailing on the date of transaction. At each Balance Sheet date, monetary items denominated in foreign currency are translated at the exchange rates prevailing on that date,
iii) Exchange differences arising on translation or settlement of monetary items are recognized as income or expenses in the period in which they arise in the Statement of Profit and loss,
n) Employee Benefits Expense Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expense during the period when the employees render the services,
Post-Employment Benefits Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Contributory Pension Fund. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined Benefits Plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date,
The company has recognized the gratuity payable to the employees as per the Payment of Gratuity Act, 1972 and Leave Encashment Benefits as defined benefit plans. The liability in respect of these benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on management estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a standalone asset only when the reimbursement is virtually certain,
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost, Contingent liabilities are disclosed on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent assets are not recognized but are disclosed in the financial statements when inflow of economic benefits is probable,
p) Impairment of non-financial assets - property, plant and equipment and intangible assets
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs,
An impairment loss is recognized in the Statement of Profit and Loss to the extent, asset''s carrying amount exceeds its recoverable amount, The recoverable amount is higher of an asset''s fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount,
q) Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds,
Par value of the equity share is recorded as share capital and the amount received in excess of the par value is classified as share premium,
Treasury shares held in the Trust are deducted from the equity
r) Financial Instruments
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognized using trade date accounting,
B. Subsequent measurement
Financial assets carried at amortized cost
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding,
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding,
Financial assets at fair value through profit or loss (FVTPL)
A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL,
C. Investment in Subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in subsidiaries, associates and joint venture at cost,
D. Other Equity Investments
All other equity investments are measured at fair value through Other Comprehensive Income with value changes recognized therein,
E. Impairment of financial assets
In accordance with Ind AS 109, the Company uses ''Expected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through OCI,
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables Company applies ''simplified approach'' which requires expected lifetime losses to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed,
ii) Financial Liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognized in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) Derivative financial instruments
The Company uses derivative financial instruments such as interest rate swaps and forward contracts to mitigate the risk of changes in interest rates and exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative,
Any gains or losses arising from changes in the fair value of derivatives are taken directly to Statement of Profit and Loss,
iv) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
s) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a right issue to existing shareholders,
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares,
t) Dividend Distribution
Dividend distribution to the Company''s shareholders is recognized as a liability in the company''s financial statements in the period in which the dividends are approved by the Company''s shareholders,
u) Statement of Cash Flows
i) Cash and Cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value,
ii) Statement of Cash Flows is prepared in accordance with the Indirect Method prescribed in the relevant Accounting Standard,
v) Segment Reporting Policies
Identification of segments :
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements. The Operating segments have been identified on the basis of the nature of products.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs, Unallocated items :
The Corporate and Other segment includes general corporate income and expense items which are not allocated to any business segment,
Mar 31, 2015
A) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialised.
b) Tangible Fixed Assets
Tangible Fixed Assets are stated at acquisition cost net of accumulated
depreciation and accumulated impairment losses, if any. Cost includes
taxes, duties, freight, installation and other direct or allocated
expenses upto the date of commencement of commercial production and are
net of CENVAT credit.
From accounting periods commencing on or after 7 December,2006, the
company adjusts exchange differences arising on translation/ settlement
of long term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remining life of the asset.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
The various expenditure incurred during the construction stage and upto
the date of commencement of commercial production for setting-up the
relevant project-assets are grouped under the head "Pre-operative
Expenditure" and allocated to related fixed assets on pro-rata basis
upon completion of project and put to use.
Expenditure incurred on obtaining the mining lease and initial removal
of over burden have been capitlised under Iron Ore Mines account.
c) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the company amortizes the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
The amortization period and the amortization method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period items and Changes in
Accounting Policies.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
d) Depreciation on tangible fixed assets and amortization of intangible
assets
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule II of
the Companies Act, 2013.
ii) Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis.
iii) Free-hold land and site & land development cost are not
depreciated. Leasehold land is amortised annually on the basis of
tenure of lease period.
iv) Expenditure incurred on iron ore mining are amortised over useful
life of the mines or lease period whichever is shorter.
v) Intangible assets are amortized over technically useful life of the
assets.
e) Investments :
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management.
ii) Current Investments are stated at lower of cost/quoted fair value,
computed categorywise.
f) Inventories :
i) Inventories are valued at lower of cost and net realizable value,
after providing for obsolences, if any.
ii) Cost of Raw Materials and stores & spares, Finished Goods & Goods
in Process are computed on Moving Weighted average basis.
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition.
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases.
g) Excise Duty
i) The Excise Duty in respect of closing inventory of finished goods is
provided in books of account and included as part of inventory.
ii) CENVAT Credit relating to raw materials/components are debited
under current assets for availing credit against CENVAT and credited to
respective materials/component account.
h) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
i) Sale of Products
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty and sales
tax/VAT deducted from turnover (gross) is the amount that is included
in the amount of turnover (gross) and not the entire amount of
liability arised during the year.
ii) Interest
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iii) Dividends
Dividend income is recognised when the company's right to receive
payment is established by the reporting date.
iv) Carbon Credits
Revenue is recognised when the company received certification of
quantity of CERs/VERs from CDM Board.
v) Renewable Energy Certificates
Revenue is recognised when the company received certification of
quantity of Renewable Energy Certificates and on the basis of eligible
claims made by the company.
i) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
fixed assets are capitalized only with respect to qualifying fixed
assets i.e. those which take substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
j) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
k) Taxes on Income
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
In the situations where the company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the company's
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
l) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transaction.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. Non-monetary items which are carried in
terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined.
iii) Exchange differences
The company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1 Exchange diffences arising on a monetary item that, in substance,
forms part of the company's net investment in a non- integral foreign
operation is a accumulated in the foreign currency translation reserve
unitl the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
2 Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset. For this
purpose, the company treats a foreign monetary item as "long-term
foreign currency monetary item", if it has a term of 12 months or more
at the date of its origination.
3 Exchange differences arising on other long-term foreign currency
monetary items are accumlated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
4 All other exchange differences are recognized as income or as
expenses in the period in which they arise.
For the purpose of 2 and 3 above, the company treats a foreign monetary
item as "long-term foreign currency monetary item", if it has a term of
12 months or more at the date of its origination. In accordance with
MCA circular dated 09 August 2012, exchange differences for this
purpose, are total differences arising on long-term foreign currency
monetary items for the period. In other words, the company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange difference.
iv) All loans and deferred credits repayable in foreign currency and
outstanding at the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue.
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognized as income or expenses over the
life of the contract.
m) Derivatives Transactions
The company uses derivative financial instruments, such as, foreign
currency forward contracts to hedge foreign currency risk arising from
future transactions in respect of which firm commitments are made or
which are highly probable forecast transactions. It also uses interest
rate swaps to hedge interest rate risk arising from variable rate
loans. The company designates these forward contracts and interest rate
swaps in a hedging relationship by applying the hedge accounting
principles of AS 30 Financial Instruments: Recognition and Measurement.
n) Retirement and other Employee Benefits
i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to statement of
profit and loss of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contributions payable to the respective funds.
ii) Gratuity Liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii) Value of encashable leave are encashed during the year and charged
to the statement of Profit & Loss.
iv) Actuarial gains/losses are immediately taken to statement of profit
and loss and are not deferred.
o) Provisions
Provisions are recognised, where the company has any legal or
constructive obligation or where realiable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outflow of economic benefits will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
p) Impairment of Tangible and Intangible Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
statement of profit & loss. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect.
q) Treatment of Share Issue Expenses
Share issue expenses is charged, first against available balance in
securities premium account and balance, if any, charged to revenue.
r) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Segment Reporting Policies Identification of segments :
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items :
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2014
A) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialised
b) Tangible Fixed Assets
Tangible Fixed Assets are stated at acquisition cost net of accumulated
depreciation and accumulated impairment losses, if any. Cost ncludes
taxes, duties, freight, installation and other direct or allocated
expenses upto the date of commencement of commercia production and are
net of CENVAT credit
From accounting periods commencing on or after 7 December,2006, the
company adjusts exchange differences arising on translation/ settlement
of long term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remining life of the asset
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized
The various expenditure incurred during the construction stage and upto
the date of commencement of commercial production for setting-up the
relevant project-assets are grouped under the head "Preoperative
Expenditure" and allocated to related fixed assets on pro-rata basis
upon completion of project and put to use
Expenditure incurred on obtaining the mining lease and initial removal
of over burden have been capitlised under Iron Ore Mines account
c) Intangible Assets
ntangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the company amortizes the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an ndication that the intangible asset
may be impaired
The amortization period and the amortization method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period items and Changes in
Accounting Policies.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized
d) Depreciation on tangible fixed assets and amortization of intangible
assets
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule XIV of
the Companies Act, 1956.
i) Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis
iii) Free-hold land and site & land development cost are not
depreciated. Leasehold land is amortised annually on the basis of
tenure of lease period
iv) Expenditure incurred on iron ore mining are amortised over useful
life of the mines or lease period whichever is shorter
v) Intangible assets are amortized over technically useful life of the
assets
e) Investments:
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management
i) Current Investments are stated at lower of cost/quoted fair value,
computed categorywise
f) Inventories:
i) Inventories are valued at lower of cost and net realizable value,
after providing for obsolences, if any
i) Cost of Raw Materials and stores & spares, Finished Goods & Goods in
Process are computed on Moving Weighted average basis
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases
g) Excise Duty
i) The Excise Duty in respect of closing inventory of finished goods is
provided in books of account and included as part of inventory.
i) CENVAT Credit relating to raw materials/components are debited under
current assets for availing credit against CENVAT and credited to
respective materials/component account
h) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured
i) Sale of Products
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty and sales
taxAAT deducted from turnover (gross) is the amount that is included in
the amount of turnover (gross) and not the entire amount of liability
arised during the year.
ii) Interest
nterest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable
iii) Dividends
Dividend income is recognised when the company''s right to receive
payment is established by the reporting date
iv) Carbon Credits
Revenue is recognised when the company received certification of
quantity of CERsA/ERs from CDM Board
v) Renewable Energy Certificates
Revenue is recognised when the company received certification of
quantity of Renewable Energy Certificates and on the basis of eligible
claims made by the company.
i) Borrowing Cost
nterest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
fixed assets are capitalized only with respect to qualifying fixed
assets i.e. those which take substantial period of time to get ready
for its ntended use. All other borrowing costs are charged to revenue
j) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
k) Taxes on Income
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting
date
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
In the situations where the company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first Minimum alternate tax (MAT) paid in a year is charged to the
statement of profit and loss as current tax. The company recognizes
MAT credit available as an asset only to the extent that there is
convincing evidence that the company will pay normal income tax during
the specified period, i.e., the period for which MAT credit is allowed
to be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created byway of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period
I) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transaction
i) Monetary items denominated in foreign currencies at the year end are
restated at year end rates. Non-monetary items which are carried in
terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined
iii) Exchange differences
The company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1 Exchange diffences arising on a monetary item that, in substance,
forms part of the company''s net investment in a non- ntegral foreign
operation is a accumulated in the foreign currency translation reserve
unitl the disposal of the net investment On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognized
2 Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalised and
depreciated over the remaining useful life of the asset. For this
purpose, the company treats a foreign monetary item as "long-term
foreign currency monetary item", if it has a term of 12 months or more
at the date of its origination
3 Exchange differences arising on other long-term foreign currency
monetary items are accumlated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item
4 All other exchange differences are recognized as income or as
expenses in the period in which they arise
For the purpose of 2 and 3 above, the company treats a foreign monetary
item as "long-term foreign currency monetary item", if it has a term of
12 months or more at the date of its origination. In accordance with
MCA circular dated 09 August 2012, exchange differences for this
purpose, are total differences arising on long-term foreign currency
monetary items for the period. In other words, the company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange difference
iv) All loans and deferred credits repayable in foreign currency and
outstanding at the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognized as income or expenses over the
life of the contract
m) Derivatives Transactions
The company uses derivative financial instruments, such as, foreign
currency forward contracts to hedge foreign currency risk arising from
future transactions in respect of which firm commitments are made or
which are highly probable forecast transactions. It also uses nterest
rate swaps to hedge interest rate risk arising from variable rate
loans. The company designates these forward contracts and
interest rate swaps in a hedging relationship by applying the hedge
accounting principles of AS 30 Financial Instruments: Recognition and
Measurement
n) Retirement and other Employee Benefits
i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to statement of
profit and loss of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contributions payable to the respective funds
i) Gratuity Liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year
iii) Value of encashable leave are encashed during the year and charged
to the statement of Profit & Loss
iv) Actuarial gains/losses are immediately taken to statement of profit
and loss and are not deferred
o) Provisions
Provisions are recognised, where the company has any legal or
constructive obligation or where realiable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outflow of economic benefits will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates
p) Impairment of Tangible and Intangible Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
statement of profit & loss. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect
q) Treatment of Share Issue Expenses
Share issue expenses is charged, first against available balance in
securities premium account and balance, if any, charged to revenue
r) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less
s) Segment Reporting Policies
Identification of segments:
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate
Inter segment Transfers:
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs
Unallocated items:
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares
u) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act,1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit & loss. The company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In this measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense
b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value ofRs
10/- per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approva of the shareholders in the ensuing Annual General Meeting
During the year ended 31st March,2014, the amount of per share dividend
recognized as distributions to equity shareholders was Rs 1.50 as
Interim dividend (31st March,2013 : Nil) and Rs 1.00 as proposed final
equity dividend (31st March,2013 : Rs 2.50 as proposed final equity
dividend)
In the event of liquidation of the company, the holders of the equity
shares will be entitled to receive remaining assets of the company,
after distribtion of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders
Security and terms & conditions for above loans:
a. 12% redeemable non-convertible debentures ''A'' Series are redeemable
in 4 half yearly installments commencing from 30th June,2015. The ''A''
Series Debentures are secured by First Pari passu charge on the fixed
assets of the Company both present & future and 2nd pari passu charge
on the current assets of the Company both present & future
b. Part of 12.75% redeemable non-convertible debentures ''B'' Series (Rs
30 crores) are redeemable in a single Bullet repayment at the end of 7
years i.e. 30th September 2018 with a put & call option at the end of
5th year i.e. on 31st October,2016. The ''B'' Series Debentures are
secured by Pari passu first charge on the tangible fixed assets of the
Company
c. Part of 12.75% redeemable non-convertible debentures ''B'' Series (Rs
20 crores) are redeemable in a single Bullet repayment at the end of 7
years i.e.31st October,2018 with a put & call option at the end of 5th
year i.e. on 31st October,2016. The ''B'' Series Debentures are secured
by Pari passu first charge on the tangible fixed assets of the Company
d. 12.90% redeemable non-convertible debentures ''C Series are
redeemable in 8 quarterly installments of Rs 3.75 crores starting from
5th July 2015. The ''C Series Debentures are secured by Pari passu first
charge on the fixed assets of the Company & pari passu second charge on
the current assets of the Company
e. The term loans (both rupee and foreign currency) agreegating to Rs
732.12 Cr (Previous year Rs 592.87 Cr) (including current maturities of
Rs 114.12 Cr (Previous year Rs 95.71 Cr) classified as ''current
liabilities'' in note 10) are secured by a first pari passu charge over
immovable and movable assets of the company, both present and future,
subject to prior charge in favour of working capital bankers of the
Company over the current assets i.e. stocks of raw materials, finished
goods, stock in process, stores & consumables, trade receivables for
securing working capital facilities availed from the banks. Maturity
profile of term loans are as set out below :-
f. The credit facilities mentioned in point ''e'' are also secured by
personal guarantee of promoter directors of the Company & their
relatives and 2nd pari passu charge on the pledge of 25,00,000 equity
shares of the company held by the promoters. Further, 2nd pari passu
charge on pledge of 16,00,000 equity shares of Hira Steels Ltd. held as
investments by the company which have been subsequently released on
April 14
g. Other loans are secured by hypothecation and mortgage of specific
assets from various banks
Terms & Conditions of Secured Loans
1. The cash credit facilities from Banks are secured by first pari
passu charge over entire current assets i.e. stocks of raw materials,
finished goods, stock in process, stores & consumables, trade
receivables of the Company and second charge over the other movable
assets and immovable assets of the Company
2. The above credit facilities are also secured by personal guarantee
of promoter directors of the Company
3. The working capital facilities (including cash credit) are also
secured in line with rupee term loans by pledge of 25,00,000 equity
shares of the company held by the promoters. Further, 16,00,000 equity
shares of Hira Steels Ltd. held as investments by the company were also
pledged with bankers as security & have been subsequently released on
April 14
Capitalized borrowing costs
The borrowing cost capitalized during the year ended 31st March, 2014
was Rs 1200.95 lacs (31st March, 2013: Rs 960.97 lacs). The company
capitalized the borrowing cost in the capital work-in-progress (CWIP) Rs
126.35 lacs (31st March,2013: Rs 960.97). The amount of borrowing cost
shown as other adjustments in the above note reflects the amount of
borrowing cost transferred from Capital Work In Progress
Exchange differences on long term foreign currency monetary items
Pursuant to the option granted by Caluse 46A of the AS-11 (as amended
vide notifiation dt.29.12.2011), the Company during the year added Rs
3583.85 lacs (31 st March, 2013: Rs 260.67 lacs) to the cost of assets,
being the exchange differences of long term foreign currency monetary
items relating to acquisition of assets. This amount is to be
depreciated over the balance life of the assets
Investment given as security
* Out of 14545000 equity shares, 1822500 equity shares pledged with
Bankers as security for credit facilities sanctioned to the company and
6196500 equity shares pledged for the credit facilities sanctioned to
subsidiary company
** Out of 2240100 equity shares, 1600000 equity shares pledged with
Bankers as security for credit facilities sanctioned to the company
which has been released by the Bankers subsequently on April 14
Mar 31, 2013
A) Use of Estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the fnancial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialised.
b) Tangible Fixed Assets
Tangible Fixed Assets are stated at acquisition cost net of accumulated
depreciation and accumulated impirement losses, if any. Cost includes
taxes, duties, freight, installation and other direct or allocated
expenses upto the date of commencement of commercial production and are
net of CENVAT credit.
From accounting periods commencing on or after 7 December,2006, the
company adjusts exchange differences arising on translation/settlement
of long term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
Gains or losses arising from derecognition of fxed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in the statement of proft and
loss when the asset is derecognised.
The various expenditure incurred during the construction stage and upto
the date of commencement of commercial production for setting-up the
relevant project-assets are grouped under the head "Pre-operative
Expenditure" and allocated to related fxed assets on pro-rata basis
upon completion of project and put to use.
Expenditure incurred on obtaining the mining lease and initial removal
of over burden have been capitlised under Iron Ore Mines account.
c) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortisation and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and
expenditure is refected in the statement of proft and loss in the year
in which the expenditure is incurred.
Intangible assets are amortised on a straight line basis over the
estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the company amortises the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
The amortisation period and the amortisation method are reviewed at
least at each fnancial year end. If the expected useful life of the
asset is signifcantly different from previous estimates, the
amortisation period is changed accordingly. If there has been a
signifcant change in the expected pattern of economic benefts from the
asset, the amortisation method is changed to refect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Proft or Loss for the Period, Prior Period items and Changes in
Accounting Policies.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the statement of
proft and loss when the asset is derecognised.
d) Depreciation on tangible fxed assets and amortisation of intangible
assets
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule XIV of
the Companies Act, 1956.
ii) Depreciation on fxed assets added/disposed off during the year is
provided on pro-rata basis.
iii) Free-hold land and site & land development cost are not
depreciated. Leasehold land is amortised annually on the basis of
tenure of lease period.
iv) Expenditure incurred on iron ore mining are amortised over useful
life of the mines or lease period whichever is shorter.
v) Intangible assets are amortised over technically useful life of the
assets.
e) Investments :
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management.
ii) Current Investments are stated at lower of cost/quoted fair value,
computed categorywise.
f) Inventories :
i) Inventories are valued at lower of cost and net realisable value,
after providing for obsolescences, if any.
ii) Cost of Raw Materials and stores & spares, Finished Goods & Goods
in Process are computed on Moving Weighted average basis.
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition.
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases.
g) Excise Duty
i) The Excise Duty in respect of closing inventory of fnished goods is
provided in books of account and included as part of inventory.
ii) CENVAT Credit relating to raw materials/components are debited
under current assets for availing credit against CENVAT and credited to
respective materials/component account.
h) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefts will fow to the company and the revenue can be
reliably measured.
i) Sale of Products
Revenue is recognised when the signifcant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty and sales
tax/VAT deducted from turnover (gross) is the amount that is included
in the amount of turnover (gross) and not the entire amount of
liability arised during the year.
ii) Interest
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iii) Dividends
Dividend income is recognised when the company''s right to receive
payment is established by the reporting date.
iv) Carbon Credits
Revenue is recognised when the company received certifcation of
quantity of CERs/VERs from CDM Board.
v) Renewable Energy Certifcates
Revenue is recognised when the company received certifcation of
quantity of Renewable Energy Certifcates and on the basis of eligible
claims made by the company.
i) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/ construction of
fxed assets are capitalised only with respect to qualifying fxed assets
i.e. those which take substantial period of time to get ready for its
intended use. All other borrowing costs are charged to revenue.
j) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
k) Taxes on Income
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes refect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognised directly in equity is recognised in equity
and not in the statement of proft and loss.
In the situations where the company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognised in respect of timing differences which
reverse during the tax holiday period, to the extent the company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which the
timing differences originate. However, the company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
suffcient future taxable income will be available against which such
deferred tax assets can be realised. For recognition of deferred taxes,
the timing differences which originate frst are considered to reverse
frst.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of proft and loss as current tax. The company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specifed period, i.e., the period for which MAT credit is allowed to be
carried forward. In the year in which the company recognises MAT credit
as an asset in accordance with the Guidance Note on Accounting for
Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of proft and loss and shown as "MAT Credit Entitlement." The
company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specifed
period.
l) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transaction.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. Non-monetary items which are carried in
terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined.
iii) Exchange differences
The company accounts for exchange differences arising on translation/
settlement of foreign currency monetary items as below:
1. Exchange differences arising on a monetary item that, in substance,
forms part of the company''s net investment in a non-integral foreign
operation is a accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognised.
2. Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fxed asset are capitalised and
depreciated over the remaining useful life of the asset. For this
purpose, the company treats a foreign monetary item as "long-term
foreign currency monetary item", if it has a term of 12 months or more
at the date of its origination.
3. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
4. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
For the purpose of 2 and 3 above, the company treats a foreign monetary
item as "long-term foreign currency monetary item", if it has a term of
12 months or more at the date of its origination. In accordance with
MCA circular dated 09 August 2012, exchange differences for this
purpose, are total differences arising on long-term foreign currency
monetary items for the period. In other words, the company does not
differentiate between exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to
the interest cost and other exchange difference.
iv) All loans and deferred credits repayable in foreign currency and
outstanding at the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue.
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognised as income or expenses over the
life of the contract.
m) Derivatives Transactions
The company uses derivative fnancial instruments, such as, foreign
currency forward contracts to hedge foreign currency risk arising from
future transactions in respect of which frm commitments are made or
which are highly probable forecast transactions. It also uses interest
rate swaps to hedge interest rate risk arising from variable rate
loans. The company designates these forward contracts and interest rate
swaps in a hedging relationship by applying the hedge accounting
principles of AS 30 Financial Instruments: Recognition and Measurement.
n) Retirement and other Employee Benefts
i) Retirement benefts in the form of Provident Fund is a defned
contribution scheme and the contributions are charged to statement of
proft and loss of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contributions payable to the respective funds.
ii) Gratuity Liability is defned beneft obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each fnancial year.
iii) Value of encashable leave are encashed during the year and charged
to the statement of Proft & Loss.
iv) Actuarial gains/losses are immediately taken to statement of proft
and loss and are not deferred.
o) Provisions
Provisions are recognised, where the company has any legal or
constructive obligation or where realiable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outfow of economic benefts will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to refect the current best
estimates.
p) Impairment of Tangible and Intangible Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
statement of proft & loss. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect.
q) Treatment of Share Issue Expenses
Share issue expenses is charged, frst against available balance in
securities premium account and balance, if any, charged to revenue.
r) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Segment Reporting Policies Identifcation of segments :
The Company''s operating businesses are organised and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items :
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net proft or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders.
For the purpose of calculating diluted earnings per share, the net
proft or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
u) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act,1956, the company has elected to present earnings before
interest, tax, depreciation and amortisation (EBITDA) as a separate
line item on the face of the statement of proft & loss. The company
measures EBITDA on the basis of proft/(loss) from continuing
operations. In this measurement, the company does not include
depreciation and amortisation expense, fnance costs and tax expense.
Mar 31, 2012
A) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended 31st March, 2012, the revised Schedule VI
notified under the Companies Act,1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. the Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognized in the period in which the results are known/
materialized.
c) Tangible Fixed Assets
Tangible Fixed Assets are stated at acquisition cost net of accumulated
depreciation and accumulated impairment losses, if any. Cost includes
taxes, duties, freight, installation and other direct or allocated
expenses up to the date of commencement of commercial production and are
net of CENVAT credit.
From accounting periods commencing on or after 7th December, 2006, the
Company adjusts exchange differences arising on translation/settlement
of long term foreign currency monetary items pertaining to the
acquisition of a depreciable asset to the cost of the asset and
depreciates the same over the remaining life of the asset.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
The various expenditure incurred during the construction stage and upto
the date of commencement of commercial production for setting-up the
relevant project-assets are grouped under the head 'Pre-operative
Expenditure' and allocated to related fixed assets on pro-rata basis
upon completion of project and put to use.
Expenditure incurred on obtaining the mining lease and initial removal
of over burden have been capitalized under Iron Ore Mines account.
d) Depreciation on tangible fixed assets
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule XIV of
the Companies Act, 1956.
ii) Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis.
iii) Free-hold land and site & land development cost are not
depreciated. Leasehold land is amortized annually on the basis of
tenure of lease period.
iv) Expenditure incurred on iron ore mining are amortized over useful
life of the mines or lease period whichever is shorter.
e) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life. the Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the Company amortizes the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
The amortization period and the amortization method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortization period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period items and Changes in
Accounting Policies.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
g) Investments :
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management.
ii) Current Investments are stated at lower of cost/quoted fair value,
computed category wise.
h) Inventories :
i) Inventories are valued at lower of cost and net realizable value,
after providing for obsolesces, if any.
ii) Cost of Raw Materials and stores & spares, Finished Goods & Goods
in Process are computed on Moving Weighted average basis.
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition.
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases.
i) Excise Duty
i) The Excise Duty in respect of closing inventory of finished goods is
provided in books of account and included as part of inventory.
ii) CENVAT Credit relating to raw materials/components are debited
under current assets for availing credit against CENVAT and credited to
respective materials/ component account.
j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Sale of Products
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty and sales
tax/VAT deducted from turnover (gross) is the amount that is included
in the amount of turnover (gross) and not the entire amount of
liability raised during the year.
ii) Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iii) Dividends
Dividend income is recognized when the Company's right to receive
payment is established by the reporting date.
iv) Carbon Credits
Revenue is recognized when the Company received certification of
quantity of CERs/VERs from CDM Board.
v) Renewable Energy Certificates
Revenue is recognized when the Company received certification of
quantity of Renewable Energy Certificates and on the basis of eligible
claims made by the Company.
k) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/ construction of
fixed assets are capitalized only with respect to qualifying fixed
assets i.e. those which take substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
l) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
m) Taxes on Income
Current Taxes are accounted based on provisions of Income Tax Act,1961.
Deferred Taxes are not recognized for those timing differences which
reverse in tax holiday period.
n) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transaction.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. Non- monetary items which are carried
in terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined.
iii) Exchange differences
From accounting periods commencing on or after 7th December,2006, the
Company accounts for exchange differences arising on
transition/settlement of foreign currency monetary items as below:
1 Exchange defenses arising on a monetary item that, in substance,
forms part of the Company's net investment in a non-integral foreign
operation is a accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
2 Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset. For this
purpose, the Company treats a foreign monetary item as long-term
foreign currency monetary item', if it has a term of 12 months or more
at the date of its origination.
3 Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the 'Foreign Currency Monetary Item
Translation Difference Account' and amortized over the remaining life
of the concerned monetary item.
4 All other exchange differences are recognized as income or as
expenses in the period in which they arise.
iv) All loans and deferred credits repayable in foreign currency and
outstanding at the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue.
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognized as income or expenses over the
life of the contract.
o) Derivatives Transactions
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the statement of
profit and loss. Net gains are ignored.
p) Retirement and other Employee Benefits
i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to statement of
profit and loss of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contributions payable to the respective funds.
ii) Gratuity Liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii) Value of encashable leave are encased during the year and charged
to the statement of Profit & Loss.
iv) Actuarial gains/losses are immediately taken to statement of profit
and loss and are not deferred.
q) Provisions
Provisions are recognized, where the Company has any legal or
constructive obligation or where reliable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outflow of economic benefits will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
r) Impairment of Tangible and Intangible Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
statement of profit & loss. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect.
s) Treatment of Share Issue Expenses
Share issue expenses is charged, first against available balance in
securities premium account and balance, if any, charged to revenue.
t) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
u) Segment Reporting Policies
Identification of segments :
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items :
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
v) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
w) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act,1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit & loss. the Company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In this measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2011
A) System of Accounting
i) The financial statements are prepared under the historical cost
convention, on going concern concept and in compliance with the
accounting standards as notified by Companies (Accounting Standards)
Rules, 2006 and the relevant provisions of the Companies Act, 1956.
ii) The Company follows mercantile system of accounting and recognizes
income and expenditure on an accrual basis except those with
significant uncertainities.
iii) The accounting policies have been consistently applied by the
Company and except for the changes in accounting policies discussed
below, are consistent with those used in the previous year.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialised.
c) Fixed Assets
i) Fixed Assets are stated at acquisition cost less depreciation. Cost
includes taxes, duties, freight, installation and other direct or
allocated expenses upto the date of commencement of commercial
production and are net of CENVAT credit.
ii) The various expenditure incurred during the construction stage and
upto the date of commencement of commercial production for setting-up
the relevant project-assets are grouped under the head "Pre-operative
Expenditure" and allocated to related fixed assets on pro-rata basis
upon completion of project and put to use.
iii) Intangible assets are stated at cost of acquisition less
accumulated amortisation.
iv) Expenditure incurred on obtaining the mining lease and initial
removal of over burden have been capitlised under Iron Ore Mines
account.
d) Depreciation/Amortisation
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule XIV of
the Compan ies Act, 1956.
ii) Depreciation on fixed assets added/disposed offduring the year is
provided on pro-rata basis.
iii) Free-hold land and site & land development cost are not
depreciated/amortized. Leasehold land is amortised annually on the
basis of tenure of lease period.
iv) Intangible Assets are amortised on equated basis over their
technically useful life not exceeding 10 years.
v) Expenditure incurred on iron ore mining are amortised over useful
life of the mines or lease period whichever is shorter.
e) Investments
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management.
ii) Current Investments are stated at lower of cost/quoted fair value,
computed categorywise.
f) Inventories
i) Inventories are valued at lower of cost and net realizable value,
after providing for obsolences, if any.
ii) Cos: of Raw Materials and stores & spares, Finished Goods & Goods
in Process are computed on Moving Weighted average basis.
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition.
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases.
g) Excise Duty
i) The Excise Duty in respect of closing inventory of finished goods is
provided in books of account and included as part of inventory.
ii) CENVAT Credit relating to raw materials/components are debited
under current assets for availing credit against CENVAT and credited to
respective materials/component account.
h) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
I) Sale of Products
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
ii) Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Dividends
Revenue is recognised when the shareholders' right to receive payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are recognised after the balance sheet date but
pertains to period on or before the date of balance sheet as per
requirement of Schedule VI of the Companies Act, 1956.
iv) Carbon Credits
Revenue is recognised when the company received certification of
quantity of CERs/VERs from CDM Board.
i) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/construction of
fixed assets are capitalized only with respect to qualifying fixed
assets i.e. those which take substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
j) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
k) Taxes on Income
Current Taxes are accounted based on provisions of Income Tax Act,1961.
Deferred Taxes are not recognised for those timing differences which
reverse in tax holiday period.
I) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transa ction.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. Non-monetary items which are carried in
terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and non-
monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined.
iii) Exchange differences arising on the settlement of monetary items
or on reporting company's monetary items at the rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognised as income or
as expense in the year in which they arise.
iv) All loans and deferred credits repayable in foreign currency and
outstanding a: the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue.
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognized as income or expenses over the
life of the contract.
m) Derivatives Transactions
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the income statement.
Net gains are ignored.
n) Retirement and other Employee Benefits
i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to Profit & Loss
Account of the year when the contributions to the respective funds are
due. There are no other obligations other than the contributions
payable to the respective funds.
ii) Gratuity Liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii) Value of encashable leave are encashed during the year and charged
to the Profit & Loss Account.
iv) Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
o) Provisions
Provisions are recognised, where the company has any legal or
constructive obligation or where realiable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outflow of economic benefits will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
p) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
profit & loss account. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect.
q) Treatment of Share Issue Expenses
Share issue expenses is charged, first against available balance in
securities premium account and balance, if any, charged to revenue.
r) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Segment Reporting Policies
Identification of segments:
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers:
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items:
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2010
(a) System of Accounting
i) The financial statements are prepared under the historical cost
convention, on going concern concept and in compliance with the
accounting standards as notified by Companies (Accounting Standards)
Rules, 2006 and the relevant provisions of the Companies Act, 1956.
ii) The Company follows mercantile system of accounting and recognizes
income and expenditure on an accrual basis except those with
significant uncertainities.
iii) The accounting policies have been consistently applied by the
Company and except for the changes in accounting policies discussed
below, are consistent with those used in the previous year.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon managements
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are
known/materialised.
c) Change in Accounting Policies
The company has during the year, implemented SAP- ERP in line with the
best industry practices. The valuation of Inventory of raw materials,
stores and consumables have been changed from FIFO to Moving Weighted
Average Cost Method to comply with SAP -ERP requirement. The Impact on
financial result of the company for the year due to the said change of
method of valuation is negligible.
d) Fixed Assets
i) Fixed Assets are stated at acquisition cost less depreciation. Cost
includes taxes, duties, freight, installation and other direct or
allocated expenses upto the date of commencement of commercial
production and are net of CENVAT credit
ii) The various expenditure incurred during the construction stage and
upto the date of commencement of commercial production for setting-up
the relevant project-assets are grouped under the head "Preoperative
Expenditure" and allocated to related fixed assets on pro-rata basis.
iii) Intangible assets are stated at cost of acquisition less
accumulated amortisation.
e) Depreciation/Amortisation
i) Depreciation is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule XIV of
the Companies Act, 1956.
ii) Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis.
iii) Free-hold land and site & land development cost are not
depreciated/amortized. Leasehold land is amortised annually on the
basis of tenure of lease period.
iv) Intangible Assets are amortised on equated basis over their
technically useful life not exceeding 10 years.
v) Expenditure incurred on obtaining the mining lease are amortised
over useful life of the mines or lease period whichever is shorter.
f) Investments :
i) Long Term Investments are stated at cost. Provision for diminution
in the value of long-term investments is made only if such is other
than temporary, in the opinion of the management.
ii) Current Investments are stated at lower of cost/quoted fair value,
computed categorywise.
g) Inventories :
i) Inventories are valued at lower of cost and net realizable value,
after providing for obsolences, if any.
ii) Cost of Raw Materials and stores & spares, Finished Goods & Goods
in Process are computed on Moving Weighted average basis.
iii) Cost of Finished Goods and Goods in Process includes direct
materials, labour, conversion and proportion of manufacturing overheads
incurred in bringing the inventories to their present location and
condition.
iv) Proceeds in respect of sales/disposal of raw materials is credited
to the raw material purchases.
h) Excise Duty
i) The Excise Duty in respect of closing inventory of finished goods is
provided in books of account and included as part of inventory.
ii) CENVAT Credit relating to raw materials/components are debited
under current assets for availing credit against CENVAT and credited to
respective materials/component account.
i) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
i) Sale of Products
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
ii) Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
iii) Dividends
Revenue is recognised when the shareholders right to receive payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are recognised after the balance sheet date but
pertains to period on or before the date of balance sheet as per
requirement of Schedule VI of the Companies Act, 1956.
iv) Carbon Credit/Certified Emission Reduction (CER)
Revenue is recognised when the company received certification of
quantity of CERs from CDM board.
j) Borrowing Cost
Interest and other costs in connection with the borrowing of the funds
to the extent related/attributed to the acquisition/ construction of
fixed assets are capitalized only with respect to qualifying fixed
assets i.e. those which take substantial period of time to get ready
for its intended use. All other borrowing costs are charged to revenue.
k) Contingent Liabilities
Liabilities which are material and whose future outcome cannot be
reasonably ascertained are treated as contingent and not provided for
and disclosed by way of notes to the accounts.
l) Taxes on Income
Current Taxes and FBT are accounted based on provisions of Income Tax
Act, 1961. Deferred Taxes are not recognised for those timing
differences which reverse in tax holiday period.
m) Foreign Currency Transactions
i) Foreign currency transactions are recorded in the reporting
currency, by applying the exchange rate prevailing as on the date of
transaction.
ii) Monetary items denominated in foreign currencies at the year end
are restated at year end rates. Non-monetary items which are carried in
terms of historical cost denominating in a foreign currency are
reported using the exchange rate at the date of transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values are determined.
iii) Exchange differences arising on the settlement of monetary items
or on reporting companys monetary items at the rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognised as income or
as expense in the year in which they arise.
iv) All loans and deferred credits repayable in foreign currency and
outstanding at the close of the year are expressed in Indian currency
at the appropriate rates of exchange prevailing as on the date of the
balance sheet, except in cases where these borrowings are covered by
forward exchange contracts. Any increase or reduction in these
liabilities are booked to revenue.
v) In respect of transactions covered by Forward Foreign Exchange
Contracts, the difference between the forward rate and exchange rate at
the inception of contract is recognized as income or expenses over the
life of the contract.
n) Derivatives Transactions
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the income statement.
Net gains are ignored.
o) Retirement and other Employee Benefits
i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to Profit & Loss
Account of the year when the contributions to the respective funds are
due. There are no other obligations other than the contributions
payable to the respective trusts.
ii) Gratuity Liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii) Value of encashable leave are encashed during the year and charged
to the Profit & Loss Account.
iv) Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
p) Provisions
Provisions are recognised, where the company has any legal or
constructive obligation or where realiable estimate can be made for the
amount of the obligation and as a result of past events, for which it
is probable that an outflow of economic benefits will be required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
q) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
profit & loss account. If at the balance sheet date there is an
indication that previously assessed impairment loss no longer exists,
then such loss is reversed and the asset is restated to that effect.
r) Treatment of Share Issue Expenses
Share issue expenses is charged, first against available balance in
securities premium account and balance, if any, charged to revenue.
s) Cash and Cash equivalents
Cash and Cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
t) Segment Reporting Policies
Identification of segments :
The Companys operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Inter segment Transfers :
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs:
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items :
The Corporate and Other segment includes general corporate income and
expense items which are not allocated to any business segment.
u) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue; bonus element in a right issue
to existing shareholders.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.