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Notes to Accounts of Gujarat Mineral Development Corporation Ltd.

Mar 31, 2016

1 The Government of Gujarat (GOG) has provided funds amounting to Rs, 8,740.31 Lacs (P.Y. Rs, 7,629.01 Lacs) which are in the nature of deposits for construction and other expenses for Stone Parks, Laboratory, Trade Fair and ISRC activities on behalf of Commissioner of Geology & Mining (CGM) GOG, iCEM and iCREATE . Out of the said deposits, Corporation has incurred Rs, 5,513.18 Lacs (P.Y. Rs, 4,134.78 Lacs) till 31st March, 2016. These funds have been shown as Other Liabilities. Net balance of unutilized funds amounting to Rs, 3,227.13 Lacs (P.Y. Rs, 3,494.24 Lacs) is shown under the head “Other Liabilities”.

2 Vide Government Resolution dated 19/11/2009, GMDC has been given permission to lift Manganese Ore from dumps of Shivrajpur areas and dispose the same for which GMDC will be entitled to retain 20% of the sale price. GMDC has to keep remaining 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society (GMRDS) for mineral survey and exploration. Accordingly, Rs, 166.95 Lacs (P.Y. Rs, 79.47 Lacs) (i.e. 80% of the basic sale price) has been transferred to GMRDS and included under the head “Other Liabilities” above. 2.08.01 During the year ended 31st March, 2016, the amount of dividend per share recognized as distribution to equity shareholders was Rs, 3 per share (P.Y. Rs, 3 per share), subject to approval of share holders in ensuing Annual General Metting.

Defined Benefit Plan

a) The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and the reconciliation of opening balances of the present value of the defined benefit obligation.

The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including attrition rate. The above information is certified by the actuary.

b) Consequent to the Guidance on implementing Accounting Standard 15 “Employees Benefits” (AS-15) which clarifies the applicability of the Accounting Standard, the Corporation has considered certain entitlements to earned leave which can be carried forward to future periods as a long term employee benefit.

3. Depreciation on free hold land represents depletion on wasting assets.

4. GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities and also for general public in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs, 59.40 Lacs (P.Y. Rs, 59.40 Lacs) are accounted in the books of the Corporation and included in the respective heads of the assets

5. Fixed Assets shown above include 373 assets valuing Rs, 13.76 Crores which were commissioned long back. Corporation has taken 1st April, 1987 as an identical commissioning date for such assets.

6. Intangible assets shown above is other than internally generated intangible assets having useful life of 10 years. It is amortized as per Straight Line Method over its useful life.

7. Statement showing assets discontinued from operations awaiting disposal included in fixed assets stated above.

8. As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase 16 Lacs number of shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt. of Gujarat for its approval. The balance 25.45 Lacs number of shares as shown in above schedule of GACL have been purchased by the corporation from the open market.

9. The corporation has provided for diminution in respect of the investment made in Gujarat State Mining & Resources Corporation Ltd, Gujarat Jaypee Cement and Inftra Ltd. and Naini Coal Company Ltd.

10. Naini Coal Company Ltd. is a 50:50 joint venture of GMDC and Pondicherry Industrial Promotion Development Investment Corp Ltd. (PIPDIC). Naini Coal Company Ltd had given bank guarantee of Rs, 65 Crores to Coal Ministry, Govt of India for allocation of Naini Coal block in the State of Orissa. The said bank guarantee was secured by Corporate Guarantee of GMDC for an amount of Rs, 3,250 Lacs and another Rs, 3,250 Lacs was secured by bank guarantee of UCO Bank, arranged by PIPDIC. Ministry of Coal, Govt of India has invoked 50% of Bank Guarantee i.e. Rs, 3,250 Lacs given by the Naini Coal Company Ltd. vide their letter dated 27/12/2012 due to non-compliance of some terms and conditions of Naini Coal block allocation. GMDC had discharged its liability towards invoked bank guarantee and has accounted for the same as advance to Naini Coal Company Ltd.

Recently, the Supreme Court has delivered a landmark judgment cancelling all coal block allocation. GMDC has already filed special civil application before the Gujarat High court against arbitary cancellation of coal block as well as invocation of bank guarantee. The said petition is still pending before the Gujarat High Court.

11. Corporation has given Operation & Maintenance Contract to KEPCO for the Thermal Power Project from February-2013 to Feberuary-2028. As per terms and conditions of the contract, the inventory of stores, spares and parts lying at the plant in the ownership of Corporation has been given on loan to KEPCO for utilization in Operation & Maintenance activities and those inventories would be given back by KEPCO to Corporation at the end of contract.

12. As per the guidelines of Coal Controller, Ministry of Coal, the corporation has deposited in Escrow account a sum of Rs, 10,096.44 Lacs (P.Y. Rs, 945.78 Lacs) for following Mines during the Financial Year in line with the Mine Closure Plan approved by the Coal Controller.

13. Cash and Cash Equivalents as of 31st March, 2016 and 31st March, 2015 include restricted cash and bank balances of Rs, 221.72 Lacs (P.Y. Rs, 289.65 Lacs). The restrictions are primarily on account of cash and bank balances held as margin money, fixed deposits and unclaimed dividends.

14. Pending clearance of the title of the land, sale deed in respect of the land of the cement plant at Hadad sold earlier, is not executed and an amount of Rs, 24.92 Lacs (P.Y. Rs, 24.92 Lacs) is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Corporation has placed the same with Union Bank of India, Vastrapur Branch, Ahmadabad.

15. As per the Mine Closure guidelines the amount is required to be deposited in Escrow Account with a scheduled bank. While corporation has opened the Escrow accounts for four mines and for other two mines, the Corporation is having sufficient funds in the form of inter-corporate deposits (ICDs) to meet such obligation. The matter is under correspondence with the Ministry of Coal and the amount will be transferred as directed by the Ministry of Coal out of available ICDs to Escrow Accounts, on approval of mine closure plan.

16. In respect of sale of electricity by Themal Power Project, as per Power Purchase Agreement between Corporation and Gujarat Urja Vikas Nigam Ltd, the rate of Return of Equity is 13%, Normative Plant Load Factor is 75% and auxiliary consumption @ 11%.

17. As per the guidelines issued by the Ministry of Coal, the corporation has amended the Mine Closure Provisions with reference to WPI as per the approved / submitted mine closure plan. Due to this, the corporation has written back the excess mine closure provisions of Rs, 381.86 Lacs for Rajpardi Project during the year.

18. During previous year Royalty on account of sale of Bauxite had been accounted for Rs, NIL (P.Y. Rs, 466.23 lacs) on ad hoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

19. In view of the Supreme CourtRs,s decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2040 (P.Y. 2040) hectares of land for extracting lignite are pending since 1993-94. Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalization of renewal applications.

20. During the year, corporation has written off Rs, 0.96 Lacs and written back Rs, NIL to the books of accounts. In the opinion of the management, such amounts are no longer payable / receivable. Net effect is write off to the Profit & Loss account an amount of Rs, 0.96 Lacs.

21. In compliance with Section 135(5) of the amended Companies Act, 2013, the corporation has spent Rs, 1,496.69 Lacs against the statutory requirement of spending Rs, 1,446.10 Lacs (based on average net profits of last 3 years) during the year towards Corporate Social Responsibility (CSR) Expense which mainly includes Contribution to Sardar Vallabhbhai Patel Rashtriya Ekta Trust of Rs, 1,000 Lacs and Donation To Gujarat Cancer Hospital for MRI, CT Scan & Highend Ultrasonography Machines of Rs, 345 Lacs.

22 Contingent Liabilities

Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt Rs, 47,276.28 Lacs (P.Y. Rs, 44,106.19 Lacs).

23. As against claims for additional compensation of Rs, 1,000 per sq. mtr. by ex-owners of land acquired for Bhavnagar Project, District Court has partly allowed the claims of ex-land owners by Rs, 4 per sq. mtr. The Corporation has deposited Rs, 912.32 Lacs with District Court, Bhavnagar in AprilRs,14 towards this order. The Corporation has also decided to file an application before High Court against the order of District Court. Necessary adjustment shall be made in accounts after final decision/outcome of the case. During this year case is again refered to civil court in which compensation is demanded @ Rs, 85/- per sq. mtr. which comes to Rs, 2,700 Lacs. Management perceives that liability recognized by the corporation is based on the order of judicial authority and land acquisition act. Management is of the view that it is unlikely of significant increase of compensation by higher court.

24. The Honourable Supreme Court has given judgement to pay additional compensation to land owners of Rajpardi lignite mines. However, the total compensation amount has not been quantified by the Court till date. Necessary adjustment shall be made in the books as and when the amount is quantified by the court. At present, Rs, 552.31 Lacs deposited earlier are shown as Deposits with Courts.

25. Corporation has paid compensation of Rs, 1,200.28 Lacs to land owners of Umarsar Mines at Rs, 15.60 per sq. mtr. But during this Feb 16 land owners has filed the appeal with supreme court for enhancement of compensation of Rs, 25 per sq. mtr. which comes to additional claim of Rs, 1,400.00 Lacs. Management percives that liability recognized by the corporation is based on the order of judicial authority and land acquisition act. Management is of the view that it is unlikely of significant increase of compansation by higher court.

26. Income Tax : Rs, 28,524.73 Lacs (P.Y. Rs, 26,730.03 Lacs)

27. Sales Tax/ VAT : Rs, 425.45 Lacs (P.Y. Rs, 425.45 Lacs)

28. Excise : Rs, 504.39 Lacs (P.Y. Rs, 450.58 Lacs)

29 Related to Contractors and Others : Rs, 7,029.92 Lacs (P.Y. Rs, 8,896.02 Lacs)

30. Bank Guarantee/letter of credits issued by banks on behalf of the Corporation. : Rs, 37.16 Lacs (P.Y. Rs, 37.16 Lacs)

31. Royalty, Stamp duty and Conversion tax : Rs, 4,943.48 Lacs (P.Y. Rs, 4,943.48 Lacs)

32. Incentive to Employees : Rs, 1,158.84 Lacs (P.Y. Rs, 1,158.84 Lacs)

In view of the various court cases/litigations and claims disputed by the Corporation, financial impact as to outflow of resources in respect of various expenses is not ascertainable at this stage.

33 Capital and other commitments :

34. Capital Commitments

Estimated amount of Capital Contracts remaining to be executed and not provided for is Rs, 28,787.91 lacs (P.Y. Rs, 6,200.45 lacs)

35. Other Commitments

a) Corporation has entered into the Sponsor Support Agreement with Bhavnagar Energy Company Ltd (BECL), whereby corporation has given commitment to meet the Cost overrun to the extent of its share of 23.36% in BECL.

b) NALCO has made upfront payment of Rs, 15,100 Lacs for setting up Alumina Refinery & Smelter plant in Kutch region and same has been shown under the head “Other long term Liabilities”. Further, GMDC has deposited the said amount with GSFS as inter corporate deposit. GMDC will supply Bauxite, Limestone and Lignite to NALCO on a long term basis, as per terms and conditions as may be mutually agreed between the parties and subject to approval of appropriate authorities; In case the said arrangement is not materialized as per proposed agreement, then GMDC shall refund the said amount and other compensation to NALCO as admissible as per law prevailing at that time.

36. In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated, unless otherwise stated.

37 Balances of trade payables, trade receivables, loans & advances, advances from customers, other long term/current liabilities, etc. are subject to confirmation, if any, in the accounts.

38 On periodical basis and as and when required, Corporation reviews the carrying amounts of its assets. In the Financial Year 2015-16, Corporation has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

40. SEGMENT REPORTING

The Corporation has identified two reportable segments viz. Mining and Power. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with Accounting Standard 17 on Segmental Reporting issued by the Institute of Chartered Accountants of India.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallowable”.

b) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallowable”.

Notes :

1 Segment assets and liabilities are subject to reconciliation.

2 Segment Revenue of Mining includes Rs, 10,789.46 Lacs (P.Y. Rs, 8,471.20 Lacs) being captive consumption of Lignite/Lime for Power Project.

3 Inter-segment transfers of Lignite and Lime are accounted for at cost.

4 Depreciation is net off Rs, NIL (P.Y. including Rs, 181.07 Lacs) relating to previous years.

5 The operations of the Company are carried out within the country and therefore geographical segments are not applicable.

41. Related party disclosures on 31.3.2016 :

(i) List of Related parties & Relationships :

Name of Related Party Relationship

Shri Atanu Chakraborthy, IAS - Chairman upto 13th May, 2015 Key Managerial Personnel

Shri Arvind Agarwal, IAS - Chairman (w.e.f. 13th May, 2015) and CMD (w.e.f. 18th Feb, 2016)

Shri B B Swain, IAS, - Managing Director up to 23rd April, 2015 Shri Manoj Aggarwal, IAS, - Managing Director (w.e.f. 23rd April, 2015 to 15th June, 2015)

Shri Premkumar Gera, IAS, - Managing Director

(w.e.f. 15th June, 2015 to18th Feb, 2016)__

Gujarat Foundation for Entrepreneurial Excellence Associates

Gujarat Jaypee Cement Infrastructure Ltd. Joint Ventures

Gujarat Credo Mineral Industries Ltd.

Bhavnagar Energy Co. Ltd.

Aikya Chemicals Pvt. Ltd.

Swarnim Gujarat Fluorspar Pvt. Ltd.

Naini Coal Company Ltd.

GMDC Gram Vikas Trust Enterprises over which key management

Lakhpat Welfare Society personnel are able to exercise significant

GMDC Science & Research Centre influence

International Centre for Excellence in Mining Safety & Automation__

42._Corresponding figures of the previous year have been re-grouped / re-arranged and re-classified, wherever necessary, _to make them comparable with the figures of the current year._


Mar 31, 2015

1. In line with the amended Companies Act, 2013, the corporation has changed the method of depreciation from Written Down Value Method to Straight Line Method based on useful life of asset as specified in Schedule II to the Companies Act, 2013 for all the assets of projects and corporate office except plant and machineries pertaining to power generation plant of ATPS project, solar plant and windmills during the year. As a result of this, depreciation charge of Rs. 972.15 Lakhs has been made to General Reserve to bring it in line with the amended Companies Act, 2013. This charge of Rs. 972.15 Lakhs reflect the WDV of all those assets forwhose useful life ofasset as on 31st March, 2014 is Nil.

2. As per the guidelines for preparation of Mines Closure Plan issued by the Ministry of Coal, Government of India the Corporation has made a provision for mines closure expenses to the tune of Rs. 23535.97 Lakhs (P.Y. Rs. 26442.15 Lakhs) and has incurred progressive mine closure expenses of Rs. 2517.52 Lakhs (P.Y. Rs.1555.81 Lakhs) so far. As per the guidelines the amount so provided is required to be deposited in ESCROW Account with a scheduled bank. While corporation has opened the Escrow accounts for two mines and for other four mines, the Corporation is having sufficient funds in the form of inter-corporate deposits (ICDs) to meet such obligation. The matter is under correspondence with the Ministry of Coal and the amount will be so deposited as directed by the Ministry of Coal out of available ICDs, on approval of mine closure plan.

TRADE PAYABLES

3. Based on the information available with the corporation, there are no amounts due to suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006.

4. The Government of Gujarat (GOG) has provided funds for amounting to Rs. 7629.01 Lakhs (P.Y. Rs. 6610.86 lakhs) which are in the nature of deposits for construction and other expenses for Stone Parks, Laboratory, Trade Fair and ISRC activities on behalf of Commissioner of Geology & Mining (CGM), GOG. Out of the said deposits, Corporation has incurred Rs. 4134.77 Lakhs (P.Y. Rs. 3531.86 lakhs) till 31st March, 2015. Further, the corporatoin has also received funds of Rs. 900 Lakhs (P.Y. Rs. 1000 Lakhs) from Government of Gujarat (GOG) for setting up two centres viz., iCEM and iCREATE. These funds have been shown as Other Liabilities. Net balance of unutilised funds amounting to Rs. 3494.24 Lakhs (P.Y. Rs. 3079.00 lakhs) is shown under the head "Other Liabilities".

Details of funds received and utilized for various activities are as under:

5. Vide Government Resolution dated 19/11/2009, GMDC has been given permission to lift Manganese Ore from dumps of Shivrajpur areas and dispose the same for which GMDC will be entitled to retain 20% of the sale price. GMDC has to keep remaining 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society (GMRDS) for mineral survey and exploration. Accordingly, Rs. 79.47 lakhs (P.Y. Rs. 123.43 lakhs) (i.e. 80% of the basic sale price) has been transferred to GMRDS.

6. During the year ended 31st March, 2015, the amount of dividend per share recognised as distribution to equity shareholders was Rs. 3 per share (P.Y. Rs. 3 per share), subject to approval of share holders in ensuing Annual General Metting.

Defined Benefit Plan

a) The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and the reconciliation of opening balances of the present value of the defined benefit obligation.

The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including attrition rate. The above information is certified by the actuary.

b) Consequent to the Guidance on implementing Accounting Standard 15 "Employees Benefits" (AS-15) which clarifies the applicability of the Accounting Standard, the Corporation has considered certain entitlements to earned leave which can be carried forward to future periods as a long term employee benefit.

7. Depreciation on free hold land represents depletion on wasting assets.

8. During the year, depreciation charge of Rs. 972.15 Lakhs has been made to General Reserve to bring it in line with the amended Companies Act, 2013. This charge of Rs. 972.15 Lakhs reflect the WDV of all those assets for whose useful life of asset as on 31st March, 2014 is Nil. Further, corporation has also provided prior period depreciation amounting to Rs. 181.07 Lakhs (Net off Prior Period Depreciation expense of Rs. 1.85 Lakhs) due to change in depreciation rate as per Companies Act, 1956 and the amended useful life specified in the Companies Act, 2013. The same has been adjusted and shown separately in above table.

9. GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities and also for general public in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs. 59.40 lakhs (P.Y.Rs. 59.40 lakhs) are accounted in the books of the Corporation and included in the respective heads of the assets.

10. During the year the corporation has changed the policy from Written Down Value method to Straight Line Method based on useful life of the asset in compliance with amended Companies Act, 2013. Had the corporation not changed the method of depreciation, the depreication for the current year would have been higher by Rs. 317.42 Lakhs and profit would have been lower to that extent.

11. During the year, the corporation has undertaken physical verification exercise for all of its fixed assets located at all the projects and at corporate office. As an outcome of this exercise, 1326 number of assets having WDV of Rs. 191.57 Lakhs, were written off from the books of accounts. Further, the corporation has also recognized 151 number of surplus assets with nominal amount of Rs. 1 in the books of accounts.

12. During the Financial Year 2014-15, the corporation has changed the depreciation rates on Solar and Wind Farm projects to 5.83% from 5.28% to bring it in line with CERC Guidelines. Had it not changed the rates, the corporation's depreciation would have been lower by Rs. 1675.04 Lakhs and the Profit for the year would have been higher to that extent.

13. The corporation is in the process of undertaking impairment study of all of fixed assets. This exercise will be undertaken in the next financial year.

14. As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase the 16 Lakhs number of shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt, of Gujarat for its approval. The balance 25.45 lakhs number of shares as shown in above schedule of GACL have been purchased by the corporation from the open market.

15. The corporation has not provided any dimunition in respect of the investment made in subsidiary company Gujarat State Mining & Resources Corporation Ltd because the said company is in the process of reviewing its business and also to introduce fresh capital.

16. Naini Coal Company Ltd. is a 50:50 joint venture of GMDC and Pondicherry Industrial Promotion Development Investment Corp Ltd. (PIPDIC). Naini Coal Company Ltd had given bank guarantee of Rs. 65 Crores to Coal Ministry, Govt of India for allocation of Naini Coal block in the State of Orissa. The said bank guarantee was secured by Corporate Guarantee of GMDC for an amount of Rs. 3250 lakhs and another Rs. 3250 lakhs was secured by bank guarantee of UCO Bank, arranged by PIPDIC. Ministry of Coal, Govt of India has invoked 50% of Bank Guarantee i.e. Rs. 3250 lakhs given by the Naini Coal Company Ltd. vide their letter dated 27/12/2012 due to non-compliance of some terms and conditions of Naini Coal block allocation. GMDC had discharged its liability towards invoked bank guarantee and has accounted for the same as advance to Naini Coal Company Ltd. The corporation has also made provision of the same amount in its books of accounts.

Recently, the Supreme Court has delivered a landmark judgement of cancelling all the coal blocks allocation including Naini Coal Block and has also held that such allocation was void ab initio. The corporation is of the view that since the allocation of coal block has been held void ab initio, all the consequent transactions including the encashment of the bank guarantee shall also be termed as void ab initio. Hence, the corporation is in the process of filling an application to appropriate judiciary for obtaining an order to that effect.

17. Cash and Cash Equivalents as of 31st March, 2015 and 31st March, 2014 include restricted cash and bank balances of Rs. 1128.82 Lakhs and Rs. 176.67 Lakhs respectively. The restrictions are primarily on account of cash and bank balances held as escrow account margin money, fixed deposits and unclaimed dividends.

18. Pending clearance of the title of the land, sale deed in respect of the land of the cement plant at Hadad sold earlier, is not executed and an amount of Rs. 24.92 Lakhs (P.Y.Rs. 24.92 Lakhs) is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Corporation has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.

19. As per the guidelines of Coal Controller, Ministry of Coal, the corporation has deposited in escrow account a sum of Rs. 945.78 Lakhs for its Umarsar Lignite Mines during the Financial Year in line with the Mine Closure Plan approved by the Coal Controller. Further, the Corporation has also opened another escrow account for its Rajpardi G-19 Amod Mines on 18th April 2015 and deposited a sum of Rs.801.02 Lakhs in the month of April 2015, in line with the Mine Closure Plan approved by the Coal Controller.

20. The corporation had sold the land at gotri in vadodara during the year 2012-13 for the payment of Rs. 1831.11 lakhs. At the time of execution of documents Rs. 183.11 lakhs was received . Balance amount of Rs. 1648 lakhs is recoverable in four equal half yearly installments. The said amount is secured by bank guarantee of Dena Bank. During the year 2014-15, the balance amount has been recovered and no dues is pending now.

21. In respect of sale of electricity, GUVNL has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL has executed Supplementary Power Purchase Agreement.

22. As per the guidelines issued by the Ministry of Coal, the corporation has amended the Mine Closure Provisions with reference to WPI as per the approved / submitted mine closure plan. Due to this, the corporation has written back the excess mine closure provisions of Rs. 10916.23 Lakhs during the year.

Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt T 44106.20 lakhs (P.Y. Rs. 42204.61 lakhs).

23. There is a litigation going on amongst the corporation and Ashapura Minechem Ltd (AML) regarding corporation's decision of not executing an MOU with AML due to its failure to find a strong financial partner. Aggrieved by the decision of GMDC, Ashapura Minechem Ltd. has filed an appeal with Supreme Court for appointment of Arbitrator. However, at this point of time, the corporation has not received any statement of claims from Ashapura Minechem and hence the amount of claim cannot be quanitified. Further, the corporation has decided to file review petition against the order of Hon Supreme Court for appointment of arbitrator.

24. As against claims for additional compensation of Rs. 1000 per sq. mtr. by ex-owners of land acquired for Bhavnagar Project, District Court has partly allowed the claims of ex-land owners by T 4 per sq. mtr. The Corporation has deposited T912.32 lakhs with District Court, Bhavnagar in April' 14 towards this order. The Corporation has also decided to file an application before High Court against the order of District Court. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

25. The Honourable Supreme Court has given judgement to pay additional compensation to land owners of Rajpardi lignite mines. However, the total comensation amount has not been quantified by the Court till date. Necessary adjustment shall be made in the books as and when the amount is quantified by the court. At present, T 552.31 Lakhs deposited earlier are shown as Deposits with Courts.

26. Income Tax : Rs. 26730.04 lakhs (PY. Rs 27586.75 lakhs)

27. Sales Tax/ VAT : Rs 425.45 lakhs (PY Rs. 425.45 lakhs)

28. Excise : Rs.450.58 lakhs (PY. Rs. 450.58 lakhs)

29. Related to Contractors : Rs. 8896.02 lakhs (PY Rs.4657.22 lakhs) and Others

30. Bank Guarantee/letter : Rs. 37.16 lakhs (P.Y. Rs. 57.42 lakhs) of credits issued by banks on behalf of the Corporation.

31. Royalty, Stamp duty : Rs. 4943.48 lakhs (PY Rs 4943.48 lakhs) and Conversion tax

32.Incentive to : Rs. 1158.84 lakhs (PY Rs. 1158.84 lakhs) Employees

In view of the various court cases/litigations and claims disputed by the Corporation, financial impact as to outflow of resources in respect of various expenses is not ascertainable at this stage.

33. Capital Commiments

Estimated amount of Capital Contracts remaining to be executed and not provided for T 6200.45 lakhs (P.Y. Rs. 6205.36 lakhs)

34. Other Commitments

a) Corporation has entered in to the Sponsor Support Agreement with Bhavnagar Energy Company Ltd (BECL), where by corporation has given commitment to meet the Cost overrun to the extent of its share of 26% in BECL.

b) NALCO has made upfront payment of T 15100 lakhs for setting up Alumina Refinery & Smelter plant in Kutch region and same has been shown under the head "Other long term Liabilities". Further, GMDC has deposited the said amount with GSFS as inter corporate deposit. GMDC will supply Bauxite, Limestone and Lignite to NALCO on a long term basis, as per terms and conditions as may be mutually agreed between the parties and subject to approval of appropriate authorities; In case the said arrangement is not materialized as per proposed agreement, then GMDC shall refund the said amount and other compensation to NALCO as admissible as per law prevailing at that time.

35. In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, unless otherwise stated.

36. Balances of trade payables, trade receivables, loans & advances, advances from customers, other long term/current libilities, etc. are subject to confirmation, if any, in the accounts.

37. On periodical basis and as and when required, Corporation reviewes the carrying amounts of its assets. In the Financial Year 201213, Corporation had reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

38. SEGMENT REPORTING

The Corporation has identified two reportable segments viz. Mining and Power. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with Accounting Standard 17 on Segmental Reporting issued by the Institute of Chartered Accountants of India.

a) Revenue and expenses have been identifed to a segment on the basis of relationship to operating of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

b) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

(i) List of Related parties & Relationships :

Name of Related Party Relationship

Shri D.J. Pandian, IAS - Chairman up to December 30' 2014

Shri Atnu Chakraborthy, IAS - Chairman

Shri B B Swain, IAS, - Managing Director (w.e.f. 01st November 2014) Key Managerial Personnel

Shri Pankaj Kumar, IAS - Managing Director up to August 25, 2014

Shri D J Pandian, IAS - Managing Director - up to October 31, 2014

Gujarat Foundation for Entrepreneurial Excellence Associates

Gujarat Jaypee Cement Infrastructure Ltd.

Gujarat Credo Mineral Industries Ltd.

Bhavnagar Energy Co. Ltd.

Joint Ventures

Aikya Chemicals Pvt. Ltd.

Swarnim Gujarat Flourspar Pvt. Ltd.

Naini Coal Company Ltd.

Gujarat Mining & Resources Corporation Ltd. Subsidiary company

GMDC Gram Vikas Trust Enterprises over which key management personnel are able to exercise Lakhpat Welfare Society significant influence

GMDC Science & Research Centre

39. Corresponding figures of the previous year have been re-grouped / re-arranged and re-classified, wherever necessary, to make them comparable with the figures of the current year.


Mar 31, 2014

1. PRE-OPERATIVE EXPENSES ON MINING PROJECTS:

Pre-operative Expenses of Mines/Mining Projects under implementation incurred upto the date of commencement of the production on commercial basis are written off in the year in which they are incurred.

2. IMPAIRMENT OF ASSETS:

An asset is treated as impaired when carrying cost of asset exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed, if there has been a change in estimate of recoverable amount. In case of intangible assets, the same will be tested on periodical basis for impairment.

3. REHABILITATION AND RESETTLEMENT EXPENSES:

Rehabilitation and Resettlement Expenses are charged as revenue in the year in which they are incurred.

4. AFFORESTATION EXPENSES:

Afforestation Expenses are charged as revenue to the extent they are incurred by the respective departments.

5. MINE CLOSURE EXPENSES FOR LIGNITE MINES:

a) Progressive mine closure expenses are accounted for as and when incurred.

b) The annual cost of final mine closure is calculated and accounted for considering the useful life of the mines on the basis of approved final mine closure plans otherwise annual cost is calculated on the basis of draft mine closure plans submitted to the Ministry of Coal, GOI or on the basis of technical estimations for mines for which draft mine closure plans have not been submitted.

6. EVENTS OCCURING AFTER THE BALANCE SHEET DATE:

Material adjusting events (that provide evidence of conditions that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represent material change and commitment affecting the financial position are disclosed in the reports of the Board of Directors.

7. PROPOSED DIVIDEND:

Provision is made in accounts for proposed dividend, subject to approval of shareholders in annual general meeting.

2.05.01 As per the guidelines for preparation of Mines Closure Plan issued by the Ministry of Coal, Government of India the Corporation has made a provision for mines closure expenses to the tune of Rs. 26,442.15 Lakhs (P.Y. Rs. 21,317.56 Lakhs) and has incurred progressive mine closure expenses of Rs. 1,555.81 Lakhs (P Y Rs. 656.63 Lakhs) so far. As per the guidelines the amount so provided is required to be deposited in ESCROW Account with a bank. The company is having sufficient funds in the form of inter-corporate deposits (ICDs) to meet such obligation. The matter is under correspondence with the Ministry of Coal and the amount will be so deposited as directed by the Ministry of Coal out of available ICDs.

2.06.01 Based on the information available with the corporation, there are no amounts due to suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006.

2.07.01 The Government of Gujarat (GOG) has provided funds for amounting to Rs. 5,610.86 Lakhs (P.Y. Rs. 3,758.85 Lakhs) which are in the nature of deposits for construction and other expenses for Stone Parks, Laboratory, Trade Fair and ISRC activities on behalf of Commissioner of Geology & Mining (CGM), GOG. Out of the said deposits, Corporation has incurred Rs. 3,531.85 Lakhs (P.Y. Rs. 2,616.70 Lakhs) till 31st March, 2014. Net balance of unutilised funds amounting to Rs. 2,079.01 Lakhs (P.Y. Rs. 1,142.15 Lakhs) is shown under the head "Other Liabilities". Details of funds received and utilized for various activities are as under:

2.07.02 Vide Government Resolution dated 19.11.2009, GMDC has been given permission to lift Manganese Ore from dumps of Shivrajpur areas and dispose the same for which GMDC will be entitled to retain 20% of the sale price. GMDC has to keep remaining 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society (GMRDS) for mineral survey and exploration. Accordingly, Rs. 123.43 Lakhs (P.Y. Rs.. 149.48 Lakhs) (i.e. 80% of the basic sale price) has been transferred to GMRDS.

2.08.01 During the year ended 31st March, 2014, the amount of dividend per share recognised as distribution to equity shareholders was Rs. 3 per share (P.Y. Rs. 3 per share), subject to approval of shareholders in ensuing Annual General Meeting.

2.08.02 Employee Benefits

The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below :

Defined Benefit Plan

a) The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and the reconciliation of opening balances of the present value of the defined benefit obligation.

The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including attrition rate. The above information is certified by the actuary.

b) Consequent to the Guidance on implementing Accounting Standard 15 "Employees Benefits" (AS-15) which clarifies the applicability of the Accounting Standard, the Corporation has considered certain entitlements to earned leave which can be carried forward to future periods as a long term employee benefit.

2.09.01 Depreciation on free hold land represents depletion on wasting assets.

2.09.02 Depreciation is net off Rs. 85.36 Lakhs (P.Y. including Rs. 12.06 Lakhs) relating to previous years including depreciation of Rs.19.93 Lakhs on addition in intengible assets (ERP) amounting to Rs. 31.40 Lakhs.

2.09.03 GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs. 59.40 Lakhs (P.Y. Rs. 59.40 Lakhs) are accounted in the books of the Company and included in the respective heads of the assets.

2.09.05 During the current year the Corporation has changed the policy for provision of depletion.Now onwards it will be based on geological reserve submitted in mine closure plan. Had the corporation continued with earlier policy of the mineable reserve used in previous year then depletion charged during the current year would have been higher by Rs. 45.63 Lakhs and profit before tax and net fixed assets would have been lower to that extent. Due to change in the policy, the corporation has accounted for reduction in provision of Rs. 99.81 Lakhs accounted as prior period income.

2.10.04 As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase the 16 Lakhs number of shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt. of Gujarat for its approval. The balance 25.45 Lakhs number of shares as shown in above schedule of GACL have been purchased by the corporation from the open market.

2.10.05 Naini Coal Company Ltd. is a 50:50 joint venture of GMDC and Pondicherry Industrial Promotion Development Investment Corp Ltd. (PIPDIC). Naini Coal Company Ltd had given bank guarantee of Rs. 65 Crores to Coal Ministry, Govt of India for allocation of Naini Coal block in the State of Orissa. The said bank guarantee was secured by Corporate Guarantee of GMDC for an amount of Rs. 3,250 Lakhs and another Rs. 3,250 Lakhs was secured by bank guarantee of UCO Bank, arranged by PIPDIC. Ministry of Coal, Govt of India has invoked 50% of Bank Guarantee i.e. Rs. 3,250 Lakhs given by the Naini Coal Company Ltd. vide their letter dated 27.12.2012 due to non-compliance of some terms and conditions of Naini Coal block allocation. GMDC had discharged its liability towards invoked bank guarantee and has accounted for the same as advance to Naini Coal Company Ltd. The Company has made provision of Rs. 2,038.12 Lakhs towards advances of Rs. 2,035.62 Lakhs and investments of Rs. 2.50 Lakhs respectively in F.Y. 2012-13, which has been shown as "Exceptional Items" in Statement of Profit & Loss. Meanwhile, company has filed petition in high court against the order of Government of India.

2.15.01 Cash and Cash Equivalents as of 31st March, 2014 and 31st March, 2013 include restricted cash and bank balances of Rs. 176.67 Lakhs and Rs. 164.07 Lakhs respectively. The restrictions are primarily on account of cash and bank balances held as margin money, fixed deposits and unclaimed dividends.

2.15.02 Pending clearance of the title of the land, sale deed in respect of the land of the cement plant at Hadad sold earlier, is not executed and an amount of Rs. 24.92 Lakhs (P.Y.Rs. 24.92 Lakhs) is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Company has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.

2.17.01 The corporation had sold the land at Gotri in Vadodara during the year 2012-13 for the payment of Rs. 1,831.11 Lakhs. At the time of execution of documents Rs. 183.11 Lakhs was received. Balance amount of Rs. 1,648 Lakhs is recoverable in four equal half yearly installments. The said amount is secured by bank guarantee of Dena Bank. During the year 2013-14 two installments have been received.

2.18.01 In respect of sale of electricity, GUVNL has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL are in the process of execution of Supplementary Power Purchase Agreement. Pending such execution and finalization, the revenue has been booked on the basis of amount paid by GUVNL against electricity bills and adjustment of U.I. charges. Necessary adjustment, if any, shall be made in accounts after final outcome of the matter.

2.22.01 Royalty on account of sale of Bauxite has been accounted for Rs. 251.17 Lakhs (P.Y. Rs. 1,130.46 Lakhs) on ad hoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

2.22.02 In view of the Supreme Court''s decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2,040 (P.Y. 2,040) hectares of land for extracting lignite are pending since 1993-94. Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalization of renewal applications.

2.23 Contingent Liabilities

Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt Rs. 42,204.61 Lakhs (P.Y. Rs. 99,083.65 Lakhs).

2.23.01 The ex-owners of land acquired for the Akrimota Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs. 773.52 Lakhs upto 31st March, 2014 (P.Y. Rs. 773.52 Lakhs). Necessary adjustment shall be made in accounts after final decision/outcome of the case.

2.23.02 As against claims for additional compensation of Rs. 1,000 per sq. mtr. by ex-owners of land acquired for Bhavnagar Project, District Court has partly allowed the claims of ex-land owners by Rs. 4 per sq. mtr. The Corporation has deposited Rs. 912.32 Lakhs with District Court, Bhavnagar in April''14 towards this order. The Corporation has also decided to file an application before High Court against the order of District Court. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

2.23.03 Claims for additional compensation against acquisition of land at Rajpardi and Panandhro for mining activities of the Corporation are under litigation before the Hon''ble Gujarat High Court. Pending the final disposal of the matters by the Hon''ble High Court Rs. 1,239.03 Lakhs (P.Y. Rs. 1,239.03 Lakhs) has been deposited and shown under the head ''Deposits with various Courts''. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

2.23.04 Income Tax : Rs. 27,586.75 Lakhs (P.Y. Rs. 24,062.98 Lakhs)

2.23.05 Sales Tax/ VAT : Rs. 425.45 Lakhs (P.Y. Rs. 425.45 Lakhs)

2.23.06 Excise : Rs. 450.58 Lakhs (P.Y. Rs. 450.58 Lakhs)

2.23.07 Related to Contractors and Others : Rs. 4,657.22 Lakhs (P.Y. Rs. 5,548.22 Lakhs)

2.23.08 Bank Guarantee/letter of credits issued by banks on behalf of the Corporation. : Rs. 57.42 Lakhs (P.Y. Rs. 121.88 Lakhs)

2.23.09 Royalty, Stamp duty and Conversion tax : Rs. 4,943.48 Lakhs (P.Y. Rs. 4,466.88 Lakhs)

2.23.10 Incentive to Employees : Rs. 1,158.84 Lakhs (P.Y. Rs. 1,158.84 Lakhs)

In view of the various court cases/litigations and claims disputed by the Corporation,financial impact as to outflow of resources in respect of various expenses is not ascertainable at this stage.

2.24 Capital and other commitments :

2.24.01 Capital Commiments

Estimated amount of Capital Contracts remaining to be executed and not provided for Rs. 6,205.36 Lakhs (P.Y. Rs. 9,844.86 Lakhs)

2.24.02 Other Commitments

a) Corporation has entered in to the Sponsor Support Agreement with Bhavnagar Energy Company Ltd (BECL), whereby corporation has given commitment to meet the Cost overrun to the extent of its share of 26% in BECL.

b) NALCO has made upfront payment of Rs. 15,100 Lakhs for setting up Alumina Refinery & Smelter plant in Kutch region and same has been shown under the head "Other long term Liabilities". Further, GMDC has deposited the said amount with GSFS as inter corporate deposit. GMDC will supply Bauxite, Limestone and Lignite to NALCO on a long term basis, as per terms and conditions as may be mutually agreed between the parties and subject to approval of appropriate authorities; In case the said arrangement is not materialized as per proposed agreement, then GMDC shall refund the said amount and other compensation to NALCO as admissible as per law prevailing at that time.

2.26 In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, unless otherwise stated.

2.27 Balances of trade payables, trade receivables, loans & advances, advances from customers, other long term/current libilities, etc. are subject to confirmation, if any, in the accounts.

2.28 As at the Balance Sheet date Corporation has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

2.30 SEGMENT REPORTING

The Corporation has identified two reportable segments viz. Mining and Power. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with accounting policy of the corporation with the following additional policies for segment reporting.

a) Revenue and expenses have been identifed to a segment on the basis of relationship to operating of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

2.32 Corresponding figures of the previous year have been re-grouped / re-arranged and re-classified, wherever necessary, to make them comparable with the figures of the current year.

2.33 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956 subject to fulfillment of conditions stipulated in the circular. The company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the consolidated financial statements.


Mar 31, 2013

1.01.01 As per the guidelines for preparation of Mines Closure Plan issued by the Ministry of Coal, Government of India, the Corporation has made a provision for mines closure expenses to the tune of Rs.. 20,660.93 lakhs (P.Y. Rs.. 20,062.43 lakhs) so far. As per the guidelines the amount so provided is required to be deposited in ESCROW Account with a bank. The company is having sufficient funds in the form of inter-corporate deposits (ICDs) to meet such obligation. The matter is under correspondence with the Ministry of Coal and the amount will be so deposited as directed by the Ministry of Coal out of available ICDs.

1.02.01 There are no amounts due to suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006. This information takes into account only those suppliers who have responded to the enquiries made by the company for this purpose.

1.03.01 The Government of Gujarat (GOG) has provided funds amounting to Rs.. 2,876.95 lakhs (P.Y. Rs.. 2,226.95 lakhs) which is in the nature of deposit for construction of Stone Parks on behalf of Commissioner of Geology & Mining (CGM), GOG. Out of the said deposits, Corporation has incurred Rs.. 2,221.60 lakhs (P.Y.Rs.. 1,788.11 lakhs) till 31st March, 2013. Amount received from GOG for construction of stone parks and expenditure incurred against the same are shown under the heads "Other Liabilities" and "Other Loans & Advances" respectively

1.03.02 The GOG has provided funds amounting to Rs.. 850.40 (P.Y. Rs.. 739.40 lakhs) which is in the nature of deposit for construction of laboratory building on behalf of CGM. Out of the said deposits, Corporation has incurred Rs.. 395.11 lakhs (P.Y. Rs.. 6.07 lakhs) till 31st March, 2013. Amount received from GOG for construction of laboratory building and expenditure against the same are shown under the heads "Other Liabilities" and "Loans & Advances" respectively.

1.03.03 Vide Government Resolution dated 19.11,2009, GMDC has been given permission to lift Manganese Ore from dumps of Shivrajpur areas and dispose the same for which GMDC will be entitled to retain 20% of the sale price. GMDC has to keep remaining 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society (GMRDS) for mineral survey and exploration. Accordingly, Rs. 149.48 lakhs (P.Y. Rs. 198.16 lakhs) (i.e. 80% of the basic sale price) has been transferred to GMRDS.

1.04.01 During the year ended 31st March, 2013, the amount of dividend per share recognised as distribution to equity shareholders was Rs.. 3 per share (P.Y Rs.. 3 per share), subject to approval of shareholders in ensuing Annual General Meeting

1.05.01 GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs.. 59.40 lakhs (P.Y. Rs.. 59.40 lakhs) are accounted in the books of the Company and included in the respective heads of the assets.

1.05.02 During the year, the company has changed method of depreciation on plant and machinery of solar project from written down value method to straight line method as prescribed in Schedule XIV to the Companies Act, 1956. Had the company continued to provide depreciation for plant and machinery of solar project on written down value method, depreciation charged during the current year would have been higher by Rs.. 535.05 lakhs as well as profit and net fixed assets would have been lower to that extent.

1.06.01 As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase all the shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt, of Gujarat for its approval.

1.06.02 Naini Coal Company Ltd. is a 50:50 joint venture of GMDC and Pondicherry Industrial Promotion Development Investment Corp Ltd. (PIPDIC). Naini Coal Company Ltd had given bank guarantee of t. 65 Crores to Coal Ministry, Govt of India for allocation of Naini Coal block in the State of Orissa. The said bank guarantee was secured by Corporate Guarantee of GMDC for an amount of Rs.. 3250 Lakhs and another Rs.. 3250 Lakhs was secured by bank guarantee of UCO Bank, arranged by PIPDIC. Ministry of Coal, Govt of India has invoked 50% of Bank Guarantee i.e. Rs.. 3250 Lakhs given by the Naini Coal Company Ltd. vide their letter dated 27.12.2012 due to non-compliance of some terms and conditions of Naini Coal block allocation. GMDC has discharged its liability towards invoked bank guarantee and has accounted for the same as advance to Naini Coal Company Ltd. Total advance given to Naini Coal Company Ltd. as on 31st March, 2013 amounts to 2035.62 Lakhs. The Company has made provision of Rs.. 2038.12 Lakhs towards advances of Rs.. 2035.62 Lakhs and investments of 2.50 lakhs respectively, which has been shown as "Exceptional Items" in Statement of Profit & Loss. Meanwhile, company has filed petition in high court against the order of Government of India.

1.07.01 Cash and Cash Equivalents as of 31st March, 2013 and 31st March, 2012 include restricted cash and bank balances of Rs..164.07 lakhs and t. 143.62 lakhs respectively. The restrictions are primarily on account of cash and bank balances held as margin money, fixed deposits with more than 3 months maturity and unclaimed dividends.

1.07.02 Pending clearance of the title of the land, sale deed in respect of the land of the Cement Plant at Hadad sold earlier, is not executed and an amount of Rs.. 24.92 lakhs (P.Y. Rs.. 24.92 lakhs) is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Company has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.

1.08.01 The possession of the Corporation''s Guest-house at Bhuj given to Tourism Corporation of Gujarat Limited (TCGL) on 6.8.2002 against proposed sale in terms of letter No GMC-102002-415-CHH.1 dated 10.6.2002 of Ministry of Industries and Mines, Government of Gujarat has been returned to the Corporation on 28.2.2006 in terms of letter No TDC-102001-929-S dated 26.10.2005. TCGL during the period of possession has let out some portion of the Guest house. The Corporation is taking necessary steps with TCGL and the Government of Gujarat for recovery of rent for the period of possession, maintenance expenditure, gram panchayat tax and rent recovery from the tenants, which is in process. The said recoveries will be considered in accounts on finalization of negotiations with TCGL and the State Government.

1.09.01 In respect of sale of electricity, GUVNL has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL are in the process of execution of Supplementary Power Purchase Agreement. Pending such execution and finalization, the revenue has been booked on the basis of amount paid by GUVNL against electricity bills and adjustment of U.l. charges. Necessary adjustment shall be made in accounts after final outcome of the matter.

1.11.01 Royalty on account of sale of Bauxite has been accounted for Rs..1,130.46 Lakhs (P.Y. 1,120.24 lakhs) on ad hoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

1.12.02 In view of the Supreme Court''s decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2040 (P.Y. 2040) hectares of land for extracting lignite are pending since 1993-94. Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalization of renewal applications.

1.13 Contingent Liabilities

Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt Rs.. 99,083.65 lakhs (P.Y. Rs.. 1,01,119.33 lakhs).

1.13.01 The ex-owners of land acquired for the Akrimota Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs.. 773.52 lakhs upto 31st March, 2013 (P.Y. Rs..773.52 lakhs). Necessary adjustment shall be made in accounts after final decision/outcome of the case.

1.13.02 The company has acquired total 78.54 Lakhs Sq. Mtrs. at Rs.. 2,088.38 Lakhs as awarded by the competent authority for the Bhavnagar Project, out of which land owners possessing land of 60.84 Lakhs Sq. mtrs. have filed suit for enhancement of compansation. The value of enhancement claimed is Rs.. 60,836.27 lakhs up to 31st March, 2013 (P.Y. Rs.. 60,836.27 lakhs),which is almost 37 times higher than amount of original award and the same is unrealistic. cessary adjustment shall be made in accounts after final decision/outcome of the case.

1.13.03 Claims for additional compensation against acquisition of land at Rajpardi and Panandhro for mining activities of the Corporation are under litigation before the Hon''ble Gujarat High Court. Pending the final disposal of the matters by the Hon''ble High Court Rs.. 1,239.03 lakhs (P.Y. Rs..1,239.03 lakhs) has been deposited and shown under the head ''Deposits with various Courts''. Necessary adjustment shall be made in accounts after final decision /outcome of the case.

1.13.04 Income Tax : Rs.. 24,062.98 lakhs (P.Y. Rs.. 24,166.30 lakhs)

1.13.05 Sales Tax/ VAT : Rs.. 425.45 lakhs (P.Y. Rs.. 453.94 lakhs)

1.13.06 Excise : Rs.. 450.58 lakhs (P.Y. Rs.. 450.58 lakhs)

1.13.07 Related to Contractors and Others : Rs.. 5,548.22 lakhs (P.Y. Rs.. 4,295.92 lakhs)

1.13.08 Bank Guarantee/letter of credits issued by banks on behalf of the Corporation/Corporate Guarantees given by GMDC on behalf of JV company : Rs.. 121.88 lakhs (P.Y. Rs.. 3,278.05 lakhs)

1.13.09 Royalty, Stamp duty and Conversion tax : Rs.. 4,466.88 lakhs (P.Y. Rs.. 4,466.88 lakhs)

1.13.10 Incentive to Employees : Rs.. 1,158.84 lakhs (P.Y. Rs.. 1,158.84)

In view of the various court cases/litigations and claims disputed by the Company, financial impact as to outflow of resources in respect of various expenses is not ascertainable at this stage.

1.14 Capital and other commitments :

1.14.01 Capital Commiments

Estimated amount of Capital Contracts remaining to be executed and not provided for Rs. 9,844.86 lakhs (P.Y. Rs.. 1,717.73 lakhs)

1.14.02 Other Commitments

a) Corporation has entered into the Sponsor Support Agreement with Bhavnagar Energy Company Ltd (BECL), whereby corporation has given commitment to meet the Cost overrun to the extent of its share of 26% in BECL.

b) NALCO has made upfront payment of Rs.. 15,100 lakhs for setting up Alumina Refinery & Smelter plant in Kutch region and same has been shown under the head "Other long term Liabilities". Further, GMDC has deposited the said amount with GSFS as inter corporate deposit. GMDC will supply Bauxite, Limestone and Lignite to NALCO on a long term basis, as per terms and conditions as may be mutually agreed between the parties and subject to approval of appropriate authorities; In case the said arrangement is not materialized as per proposed agreement, then GMDC shall refund the said amount and other compensation to NALCO as admissible as per law prevailing at that time.

1.15 In the opinion of Management, any of the Assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, unless otherwise stated.

1.16 Balances of trade payables, trade receivables, loans & advances, advances from customers, other long term/current libilities, etc. are subject to reconciliation and adjustments, if any, in the accounts.

1.17 As at the Balance Sheet date Company has reviewed the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss has been provided.

1.18 SEGMENT REPORTING

The Corporation has identified two reportable segments viz. Mining and Power. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with accounting policy of the corporation with the following additional policies for segment reporting.

a) Revenue and expenses have been identifed to a segment on the basis of relationship to operating of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable''''.

b) Segment assets and segment liabilities represent assets and liabilities in respective segments.Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

1.19 Corresponding figures of the previous year have been re-grouped / re-arranged and re-classified, wherever necessary, to make them comparable with the figures of the current year.

1.20 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956 subject to fulfillment of conditions stipulated in the circular. The company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the consolidated financial statements.


Mar 31, 2012

1.01.01 Considering the revised guidelines dated 11th January, 2012 for preparation of mine closure plan, letter of Ministry of Coal, Government of India (GOI) dated 19th March, 2012 and draft mine closure plans submitted to the GOI, the corporation has changed the policy for provision for mines closure expenses.

As per the policy upto F.Y. 2010-11, such provision was made considering the useful life of mines on the basis of actual reserves, annual production, etc. and technical estimates or 25 years useful life of the mines, whichever is lower. From the F.Y. 2011-12, the corporation has made such provision considering the useful life of the mines on the basis of draft mine closure plans submitted to the Ministry of Coal, GOI for five mines and on the basis of technical estimations for remaining one mine. However, necessary adjustments, if required, shall be made in books of accounts after getting approval of GOI.

Had the Corporation continued the old policy for provision of mines closure expenses, expenses for the current year would have been lower by Rs. 1209.31 lakhs and profit would have been higher to that extent and provisions would have been lower to that extent.

1.01.02 As per the guidelines for preparation of Mines Closure Plan issued by the Ministry of Coal, Government of India the Corporation has made a provision for mines closure expenses to the tune of Rs. 20062.43 lakhs upto 31st March, 2012. As per the guidelines the amount so provided is required to be deposited in ESCROW Account with a bank. The company is having sufficient funds in the form of inter-corporate deposits (ICDs) with GSFS to meet such obligation. The matter is under correspondence with the Ministry of Coal and the amount will be so deposited as directed by the Ministry of Coal out of available ICDs.

1.02.01 As required, the provisions of interest on delayed payment to Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006, the company has not received memorandum as required to be filled by the supplier with the notified authorities under Micro, Small & Medium Enterprises Act claiming their status as Micro, Small & Medium Enterprises.

1.03.01 The Government of Gujarat (GOG) has provided funds amounting to Rs. 2226.95 lakhs which is in the nature of deposit for construction of Stone Parks on behalf of Commissioner of Geology & Mining (CGM), GOG. Out of the said deposits, Corporation has incurred Rs. 1788.11 lakhs till 31st March, 2012. Amount received from GOG for construction of stone parks and expenditure incurred against the same are shown under the heads "Other Liabilities" and "Other Loans & Advances" respectively.

1.03.02 The GOG has provided funds amounting to Rs. 739.40 lakhs which is in the nature of deposit for construction of for construction of laboratory building on behalf of CGM. Out of the said deposits, Corporation has incurred Rs. 6.07 lakhs till 31st March, 2012. Amount received from GOG for construction of laboratory building and expenditure against the same are shown under the heads "Other Liabilities" and "Loans & Advances" respectively.

1.03.03 Vide Government Resolution dated 19/11/2009, GMDC has been given permission to lift Manganese Ore from dumps of Shivrajpur areas and dispose the same for which GMDC will be entitled to retain 20% of the sale price. GMDC has to keep remaining 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society (GMRDS) for mineral survey and exploration. Accordingly, Rs. 198.16 lakhs (P.Y. Rs. 110.24 lakhs) (i.e. 80% of the basic sale price) has been transferred to GMRDS.

1.04.01 During the year ended 31st March, 2012, the amount of dividend per share recognised as distribution to equity Shareholders was Rs. 3 per Share (P. Y. Rs. 3 per Share)

1.04.02 Employee Benefits

The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below :

1.05.01 GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs. 59.40 lakhs (P.Y. Rs. 59.40 lakhs) are accounted in the books of the Corporation and included in the respective heads of the assets.

1.05.02 As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase all the shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt. of Gujarat for its approval.

1.06.01 Gujarat State Road Transport Corporation Limited (GSRTC) has paid 1% residual value of Rs. 20.03 lakhs of 254 buses given on lease as per Agreement between GMDC and GSRTC dated 21.10.1999. Accordingly, corporation has completed formalities for transferring these buses in favour of GSRTC and it has also agreed to pay Rs. 254 lakhs on ad hoc basis towards overdue lease rentals as against the total amount of outstanding lease rentals of Rs. 981 lakhs due as on 31st March, 2012. For the balance amount, the matter shall be taken up with appropriate authorities. The management is hopeful for recovery of outstanding amount.

1.07.01 During the year, the Corporation has changed the method of valuation of inventories of stores, spares and loose tools from cost at FIFO basis to weighted average cost method. Had the Corporation continued the method of valuation of inventories on FIFO basis, expenses for the current year would have been higher by Rs. 0.41 lakhs and inventories as well as profit would have been lower to that extent.

1.08.01 Cash and Cash Equivalents as of 31st March, 2012 and 31st March, 2011 include restricted cash and bank balances of Rs. 143.61 lakhs and Rs. 238.70 lakhs respectively. The restrictions are primarily on account of cash and bank balances held as margin money, fixed deposits with more than 3 months maturity and unclaimed dividends.

1.08.02 Pending clearance of the title of the land, sale deed in respect of the land of the Cement Plant at Hadad sold earlier, is not executed and an amount of Rs. 24.92 lakhs (P.Y.Rs. 24.92 lakhs) is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Company has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.

1.09.01 The possession of the Corporation's Guest-house at Bhuj given to Tourism Corporation of Gujarat Limited (TCGL) on 6.8.2002 against proposed sale in terms of letter No GMC-102002-415-CHH.1 dated 10.6.2002 of Ministry of Industries and Mines, Government of Gujarat has been returned to the Corporation on 28.2.2006 in terms of letter No TDC-102001-929-S dated 26.10.2005. TCGL during the period of possession has let out some portion of the Guesthouse. The Corporation is taking necessary steps with TCGL and the Government of Gujarat for recovery of rent for the period of possession, maintenance expenditure, gram panchayat tax and rent recovery from the tenants, which is in process. The said recoveries will be considered in accounts on finalization of negotiations with TCGL and the State Government.

1.10.01 During the year, the Corporation has changed the accounting policy for capital expenditure incurred on roads, river diversion work and shifting of electrical lines, etc. Till last year, the same were amortized for a period of five years. Now the company has written off the outstanding balance in the current year. Had the Corporation continued the earlier policy of amortization of said expenditure, the expenses for the year would have been lower by Rs. 468.45 lakhs and profit for the year as well as assets would have been higher to that extent.

1.11.01 In respect of sale of electricity, GUVNL has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL are in the process of execution of Supplementary Power Purchase Agreement. Pending such execution and finalization, the revenue has been booked on the basis of amount paid by GUVNL against electricity bills and adjustment of U.I. charges. Necessary adjustment shall be made in accounts after final outcome of the matter.

1.12.01 Royalty on account of sale of Bauxite has been accounted for Rs. 1120.24 Lakhs (P.Y. Rs. 1018.39 lakhs) on ad hoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

1.12.02 In view of the Supreme Court's decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2040 (P.Y. 2040) hectares of land for extracting lignite are pending since 1993-94. Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalization of renewal applications.

1.12.03 During the year, the Corporation has changed the accounting policy for provision on plant and machinery which has not been put to use and lying in capital work in progress (CWIP) for more than ten years and has made full provision against the same. Had the Corporation continued the earlier policy of provision, the expenses for the year would have been lower by Rs. 121.32 lakhs and profit for the year as well as CWIP would have been higher to that extent.

1.13 Contingent Liabilities

Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt Rs. 101119.33 lakhs (P.Y. Rs. 38135.00 lakhs).

1.14.01 The ex-owners of land acquired for the Akrimota Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs. 773.52 lakhs (P.Y. Rs. 773.52 lakhs) upto 31st March, 2012. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

1.14.02 The ex-owners of land acquired for the Bhavnagar Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs. 60836.27 lakhs upto 31st March, 2012. Necessary adjustment shall be made in accounts after final decision/outcome of the case

1.14.03 Claims for additional compensation against acquisition of land at Rajpardi and panandhro for mining activities of the Corporation are under litigation before the Hon'ble Gujarat High Court. Pending the final disposal of the matters by the Hon'ble High Court Rs. 1239.03 lakhs (P.Y. Rs. 1044.78 lakhs) has been deposited and shown under the head 'Deposits with various Courts'. Necessary adjustment shall be made in accounts after final decision /outcome of the case.

1.14.04 Income - Tax : Rs. 24166.30 lakhs (P.Y. Rs. 23,791.26 lakhs)

1.14.05 Sales -Tax : Rs. 453.94 lakhs (P.Y. Rs. 453.94 lakhs)

1.14.06 Excise : Rs. 450.58 lakhs (P.Y. Rs. NIL )

1.14.07 Related to Contractors and Others : Rs. 4295.92 lakhs (P.Y. Rs. 4792.53 lakhs)

1.14.08 Bank Guarantee issued by banks on behalf of the Corporation/Corporate Guarantees given by GMDC on behalf of JV company : Rs. 3278.05 lakhs (P.Y. Rs. 3559.19 lakhs)

1.14.09 Royalty, Stamp duty and Conversion tax : Rs. 4466.88 lakhs (P.Y. Rs. 3719.78 lakhs)

1.14.10 Incentive to Employees : Rs. 1158.84 lakhs (P.Y. Rs. NIL )

In view of the various court cases/litigations and claims disputed by the Company, financial impact as to outflow of resources in respect of various expenses is not ascertainable at this stage.

1.15 Capital and other commitments :

1.15.01 Capital Commiments

Estimated amount of Capital Contracts remaining to be executed and not provided for Rs. 1717.73 lakhs (P.Y.Rs. 28559.62 lakhs)

1.15.02 Other Commitments

a) Corporation has entered in to the Sponsor Support Agreement with Bhavnagar Energy Company Ltd (BECL), whereby Corporation has given commitment to meet the Cost overrun to the extent of its share of 16% in BECL.

b) NALCO has made upfront payment of Rs. 15100 lakhs for setting up Alumina Refinery & Smelter plant in Kutch region and same has been shown under the head "Other long term Liabilities". Further, GMDC has deposited the said amount with GSFS as inter corporate deposit. GMDC will supply Bauxite, Limestone and Lignite to NALCO on a long term basis, as per terms and conditions as may be mutually agreed between the parties and subject to approval of appropriate authorities; In case the said arrangement is not materialized as per proposed agreement, then GMDC shall refund the said amount and other compensation to NALCO as admissible as per law prevailing at that time.

1.16 Balances of Creditors, Debtors, Loans & Advances and Advances from Customers are subject to reconciliation and adjustments, if any, in the accounts.

1.17 The company is in the process of identifying impairment of assets. In case Impairment loss is identified, the same will be recognized as per accounting policy of the company.

1.18 SEGMENT REPORTING

The Corporation has identified two reportable segments viz. Mining and Power. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with accounting policy of the corporation with the following additional policies for segment reporting.

a) Revenue and expenses have been identifed to a segment on the basis of relationship to operating of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

b) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

1.19 Till year ended 31st March, 2011, the company was using pre-revised schedule VI to the Companies Act, 1956, for preparation and presentation of financial statements. During the year ended 31st March, 2012 the revised schedule VI notified under the Companies Act, 1956, has become applicable to company. Corresponding figures of the previous year have been re-grouped / re-arranged and re-classified, wherever necessary, to make them comparable with the figures of the current year.

1.20 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956 subject to fulfillment of conditions stipulated in the circular. The company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the consolidated financial statements.


Mar 31, 2011

1. Contingent liabilities not provided for Claims against the Corporation not acknowledged as debt Rs. 38,135.00 (P.Y. Rs. 28,262.31) lakhs.

a) The ex-owners of land acquired for the Akrimota Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs. 773.52 (P.Y. Rs. 773.52) lakhs. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

b) Claims for additional compensation against acquisition of land at Rajpardi and Panandhro for mining activities of the Corporation are under litigation before the Hon'ble Gujarat High Court. Pending the final disposal of the matters by the Hon'ble High Court, Rs. 1,044.78(P.Y. Rs. 880.96) lakhs has been deposited and shown under the head 'Advance recoverable in cash or kind or for value to be received'. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

c) Income-tax : Rs. 23,791.26 (P.Y. Rs. 13,978.89) lakhs

d) Sales-tax : Rs. 453.94 (P.Y. Rs. 418.73) lakhs

e) Related to Contractors and Others : Rs. 4,792.53 (P.Y. Rs. 6,474.23) lakhs

f) Bank Guarantee issued by banks on behalf of the Corporation : Rs. 3,559.19 (P.Y. Rs. 3,303.99) lakhs

g) Royalty, Stamp duty and Conversion tax : Rs. 3,719.78 (P.Y. Rs. NIL) lakhs h) Gratuity Rs. Nil (P.Y. Rs. 2,431.99) lakhs

In view of the various court cases/litigations and claims disputed by the Company, financial impact as to outflow of resources is not ascertainable at this stage.

2. Estimated amount of Capital Contracts remaining to be executed and not provided for Rs. 28,559.62 (P.Y. Rs. 50,482.15) lakhs.

3. Pending clearance of the title of the land, sale deed in respect of the land of the Cement Plant at Hadad sold earlier, is not executed and an amount of Rs. 24.92 (P.Y. Rs. 24.92) lakhs is recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court and in turn the Court has directed to the Company to deposit the said amount with a nationalized bank in the form of FDR with a lien marked in favour of Danta Court. Accordingly the Company has placed the same with Union Bank of India, Vastrapur Branch, Ahmedabad.

4. In view of the Supreme Court's decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2,040 (P.Y.2,040) hectares of land for extracting lignite are pending since 1993-94. Necessary adjustment in respect of liability for any charges, taxes, duties etc. will be provided in accounts on finalization of renewal applications.

5. Royalty on account of sale of Bauxite and Manganese Ore has been deposited on adhoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

6. a) The Corporation has changed the method for charging depreciation for the assets purchased upto March 31, 1987 from Straight

Line Method to Written down Value method for the sake of uniformity.

Had the Corporation continued to charge depreciation on Straight Line Method the depreciation charge for the current year would have been lower by Rs. 119.20 lakhs and profit would have been higher to that extent and net assets would have been higher by Rs. 119.20. lakhs. b) The Corporation has changed the policy to charge the depreciation from the date of putting them to use on pro rata basis in respect of all the assets w.e.f. current financial year. So far depreciation on assets in respect of projects other than power project and wind energy farm were charged proportionately for the period from the month of acquisition if it is acquired during the first fortnight of that month and from subsequent month if acquired during the second fortnight of that month. Had the Corporation continued to charge depreciation proportionately for the period from the month of acquisition if it is acquired during the first fortnight of that month and from subsequent month if acquired during the second fortnight of that month. The depreciation charge for the current year would have been higher by Rs. 0.39 lakhs and profit would have been lower to that extent and net assets would have been lower by Rs. 0.39 lakhs.

7. a) GSECL and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs. 59.40 (P.Y. Rs. 59.40) lakhs are accounted in the books of the Corporation and included in the respective heads of the assets. b) An amount of Rs. 168.80(P.Y. Rs. 30.80) lakhs is payable by GSECL on account of 50% of the revenue expenditure incurred by GMDC towards common facilities at Panandhro, which is subject to reconciliation and adjustments, if any.

c) In respect of sale of electricity, GUVNL has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL are in the process of execution of Supplementary Power Purchase Agreement. Pending such execution, the revenue has been booked on the basis of amount paid by GUVNL against electricity bills and adjustment of U.I. charges. Necessary adjustment shall be made in accounts after final outcome of the matter.

8. Gujarat State Road Transport Corporation Limited (GSRTC) had agreed to pay overdue lease rent of Rs. 1,183 lakhs in installments towards providing 254 buses on lease in respect of Agreement between GMDC and GSRTC dated 21.10.1999, which was credited to the Profit and Loss Account in the FY 2005-06 against which an amount of Rs. 202 lakhs is received upto 31st March, 2011. Further, we have received a letter dated 17.5.2011 from GSRTC for waiving the lease rentals amounting Rs. 981 lakhs in respect of the said lease. GMDC has not accepted their request for waiving the lease rentals. GSRTC being a Govt. of Gujarat undertaking, the matter has been referred to the Govt of Gujarat for recovery of outstanding amount of lease rentals , hence, no provision has been made for the same.

9. There are no amounts due to the Suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Corporation for this purpose.

10. a) Balance confirmations have not been received from Indian Oil Corporation Limited and Hindustan Petroleum Corporation Limited for Rs. 221.99 (P.Y. Rs. 304.20) lakhs and Rs. 84.55 (P.Y. Rs. 84.55) lakhs respectively. The said balances are subject to reconciliation and adjustments in the accounts. b) Balances of Creditors, Debtors, Loans & Advances and Advances from Customers are subject to reconciliation and adjustments, if any, in the accounts.

11. In the opinion of Board of Directors, Current Assets. Loans & Advances have value at which they are stated in the Balance Sheet, if realized in the ordinary course of business, unless otherwise stated and provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

12. As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase all the shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt. of Gujarat for its approval.

13. The possession of the Corporation's Guest-house at Bhuj given to Tourism Corporation of Gujarat Limited (TCGL) on 6.8.2002 against proposed sale in terms of letter No GMC-102002-415-CHH.1 dated 10.6.2002 of Ministry of Industries and Mines, Government of Gujarat has been returned to the Corporation on 28.2.2006 in terms of letter No TDC-102001-929-S dated 26.10.2005. TCGL during the period of possession has let out some portion of the Guesthouse. The Corporation is taking necessary steps with TCGL and the Government of Gujarat for recovery of rent for the period of possession, maintenance expenditure, gram panchayat tax and rent recovery from the tenants, which is in process. The said recoveries will be considered in accounts on finalization of negotiations with TCGL and the State Government.

b) Consequent to the Guidance on implementing Accounting Standard 15 "Employees Benefits" (AS-15) which clarifies the applicability of the Accounting Standard, the Corporation has considered certain entitlements to earned leave which can be carried forward to future periods as a long term employee benefit.

14. Related party disclosures on 31.3.2011 :

a) Key Management Personnel

Shri M. Sahu, IAS Chairman

Shri V. S. Gadhavi, IAS Managing Director

b) Particulars of remuneration paid to Managing Director are given below : Shri V. S. Gadhavi, IAS Rs. 12,93,533/-

15. Figures of the Previous Year have been re-grouped / re-arranged, wherever necessary, to make them comparable with the figures of the current year.


Mar 31, 2010

1. Contingent liabilities not provided for : Claims against the Corporation not acknowledged as debt Rs.28262.31 (P.Y.Rs.25055.11) lakhs.

a) The ex-owners of land acquired for the Akrimota Project of the Corporation have filed suits for enhancement of compensation awarded by the order of the competent authority and the value of enhancement claimed is Rs.773.52 (P.Y.Rs.773.52) lakhs. Necessary adjustment shall be made in accounts after final decision/ outcome of the case.

b) Claims for additional compensation against acquisition of land at Rajpardi and Panandhro for mining activities of the Corporation are under litigation before the Honble Gujarat High Court. Pending the final disposal of the matters by the Honble High Court, Rs.880.96 (P.Y.Rs.880.96) lakhs has been deposited and shown under the head Advance recoverable in cash or kind or for value to be received. Necessary adjustment shall be made in accounts after final decision/outcome of the case.

c) Income-tax : Rs.13,978.89 (P.Y.Rs.13,359.41) lakhs

d) Sales-tax : Rs.418.73 (P.Y.Rs.418.73) lakhs

e) Related to Contractors and Others : Rs.6,474.23 (P.Y.Rs.6,318.50) lakhs

f) Bank Guarantee issued by banks on

behalf of the Corporation : Rs.3,303.99 (P.Y.Rs.3,303.99) lakhs

g) Gratuity (The enhanced ceiling of gratuity from R s.3.50 lakhs to Rs.10 lakhs shall come into force on such date as the Central Govt. may, by notification in the Official Gazette, appoint. The same is subject to receiving notification and approval of the Board of Directors) : Rs.2,431.99 (P.Y.Rs.NIL) lakhs

In view of the various court cases/litigations and claims disputed by the Company, financial impact as to outflow of resources is not ascertainable at this stage.

2. Estimated amount of Capital Contracts remaining to be executed and not provided for Rs.50,482.15 (P.Y.Rs.9,451.03) lakhs.

3. Pending clearance of the title of the land, sale deed in respect of the land of the Cement Plant at Hadad sold earlier, is not executed and Rs.24.92 (P.Y.Rs.24.92) lakhs are recoverable from the buyer on execution of sale deed. The said amount has been deposited by the party before the Danta Court.

4. In view of the Supreme Courts decision in respect of mining activities, applications made by the Corporation for renewal of leases covering 2040 (P.Y.2040) hectares of land for extracting bauxite, lignite, fluorspar, etc. are pending since 1993-94. Necessary adjustment in respect of liability for lease rent and royalty will be provided in accounts on finalization of renewal applications.

5. Royalty on account of sale of Bauxite and Manganese Ore has been deposited on adhoc basis as intimated by the Commissioner of Geology and Mining. Necessary adjustment shall be made in the accounts after final outcome of the matter.

6. As per the letter of Industries & Mines Department, Govt. of Gujarat dated 19.11.2009, GMDC has to keep 80% of the sale price of Manganese Ore dump in a separate account of Gujarat Mineral Research & Development Society for mineral survey and exploration. Accordingly, Rs.226.56 lakhs (80% of the basic sale price) has been transferred to GMRDS Account.

7. Ministry of Coal, Govt. of India has circulated the Guidelines dated 27.8.2009 for preparation of Mines Closure Plan. The Corporation is required to deposit every year the annual cost of Mines Closure @ Rs.6 lakhs per hectare of the lease throughout the Mines life. Accordingly, the Corporation has made a provision for Mines Closure Plan amounting to Rs.3,412.36 lakhs for the current year on pro rata basis from the date of the issuance of the Guidelines.

8. As per CERC (Terms and Conditions of Tariff) Regulations 2009, GMDC is required to provide depreciation @ 5.28% p.a. on straight line method on balance depreciable value of Plant and Machinery including mandatory/ insurance spares of Power Plant as on 1.4.2009. Till last year, the depreciation was provided by the Corporation @ 3.60% p.a. on straight line method on the original cost of the aforesaid assets as per the then prevailing CERC Guidelines.

Had the Corporation continued to provide depreciation for Plant and Machinery including mandatory spares of Power Project @ 3.60% p.a. on straight line method on the original cost, the depreciation charged for the current year would have been lower by Rs.703.51 lakhs and profit would have been higher to that extent and net fixed assets would have been higher by Rs.703.51 lakhs.

9. The Corporation has changed the policy for charging depreciation on fencing as the fencing expense is of recurring nature hence, the same is charged as revenue which was hitherto capitalized.

Had the Corporation continued to charge depreciation on fencing to Profit and Loss Account, the expenses for the current year would have been lower by Rs.49.57 lakhs and profit would have been higher to that extent and assets would have been higher by Rs.49.57 lakhs.

10. a) GSECL (erstwhile GEB) and the Corporation had agreed to create common amenities (school, hospital, drinking water supply, communication, transport facilities, etc.) for the employees of both entities in Panandhro in terms of minutes dated 8.10.1991, 3.8.1992, 1.10.1993. These were to be managed by a Trust to be registered in this regard. Pending formation of the Trust, the capital and revenue expenditure incurred by the Corporation as well as GSECL are shared on 50:50 basis and accounted in the books of the respective entity. Share of 50% given by each against the expenditure incurred by respective entity is subject to confirmation and adjustments, if any. Pending transfer of such assets to the Trust, capital expenditure incurred in the creation of assets towards 50% share of GMDC to the tune of Rs.59.40 (P.Y.Rs.59.40) lakhs are accounted in the books of the Corporation and included in the respective heads of the assets.

b) An amount of Rs.30.80 (P.Y.Rs.179.26) lakhs is payable by GSECL on account of 50% of the revenue expenditure incurred by GMDC towards common facilities at Panandhro, which is subject to reconciliation and adjustments, if any.

c) In respect of sale of electricity, GUVNL (erstwhile GEB) has considered the Return on Equity, Normative Plant Load Factor and auxiliary consumption @ 13% per annum, 75% and 11% respectively as per letter dated 6.10.2006 issued by Energy and Petrochemicals Department, Government of Gujarat. However, as per Power Purchase Agreement, the rate of Return of Equity is 16%, Normative Plant Load Factor is 68.5% and auxiliary consumption @ 10%. GMDC and GUVNL are in the process of execution of Supplementary Power Purchase Agreement. Pending such execution, the revenue has been booked on the basis of amount paid by GUVNL against electricity bills. Necessary adjustment shall be made in accounts after final outcome of the matter.

11. Gujarat State Road Transport Corporation Limited (GSRTC) had agreed to pay overdue lease rent of Rs.1183 lakhs in installments towards providing 254 buses on lease in respect of Agreement between GMDC and GSRTC dated 21.10.1999, which was credited to Profit and Loss Account in the FY 2005-06 against which an amount of Rs.202 lakhs is received upto 31st March, 2010. Further, we have received a letter dated 29.4.2010 from GSRTC for waiving the lease rentals amounting Rs.981 lakhs in respect of the said lease. GMDC has not accepted their request as (a) there is no direction from Govt. of Gujarat in this regard and (b) in respect of another Agreement dated 10.10.2006 between GMDC and GSRTC for 15 Nos buses provided to GSRTC on monthly lease rent of Rs.3.62 lakhs, GMDC has received the due amount upto March 2010 in full. Hence, no provision has been made for the same.

12. There are no amounts due to the Suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Corporation for this purpose.

13. a) Balance confirmations have not been received from Indian Oil Corporation Limited and Hindustan Petroleum Corporation Limited for Rs.304.20 (P.Y.Rs.375.92) lakhs and Rs.84.55 (P.Y.Rs.106.40) lakhs respectively. The said balances are subject to reconciliation and adjustments in the accounts.

b) Balances of Creditors, Debtors, Loans & Advances and Advances from Customers are subject to reconciliation and adjustments, if any, in the accounts.

14. In the opinion of Board of Directors, Current Assets. Loans & Advances have value at which they are stated in the Balance Sheet, if realized in the ordinary course of business, unless otherwise stated and provision for all known liabilities are adequate and not in excess of the amount reasonably necessary.

15. As per the Memorandum of Understanding (MOU) dated 30th March, 1995 entered into with the Gujarat Industrial Investment Corporation Ltd (GIIC), the said company had to repurchase all the shares of Gujarat Alkalies & Chemicals Limited (GACL) purchased by GMDC from GIIC by 30th March, 1998 at an agreed price consisting of cost plus interest @ 14% per annum and service charge @ 0.25% per annum less dividend, bonus and rights, etc. received thereon. GIIC has proposed to enter into a Supplementary MOU by virtue of which GIIC will not be required to buy back the above shares and GMDC shall hold these shares as investment. The Board of Directors of GMDC and GIIC have agreed to enter into Supplementary MOU for which proposal has been sent to the Govt. of Gujarat for its approval.

16. The possession of the Corporations Guest-house at Bhuj given to Tourism Corporation of Gujarat Limited (TCGL) on 6.8.2002 against proposed sale in terms of letter No GMC-102002-415-CHH.1 dated 10.6.2002 of Ministry of Industries and Mines, Government of Gujarat has been returned to the Corporation on 28.2.2006 in terms of letter No TDC-102001-929-S dated 26.10.2005. TCGL during the period of possession has let out some portion of the Guesthouse. The Corporation is taking necessary steps with TCGL and the Government of Gujarat for recovery of rent for the period of possession, maintenance expenditure, gram panchayat tax and rent recovery from the tenants, which is in process. The said recoveries will be considered in accounts on finalization of negotiations with TCGL and the State Government.

17. Employee Benefits

The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below :

18. Related party disclosures on 31.3.2010 :

a) Key Management Personnel

Shri M. Sahu, IAS Chairman

Shri V. S. Gadhavi, IAS Mg. Director

19. Figures of the Previous Year have been re-grouped / re-arranged, wherever necessary, to make them comparable with the figures of the current year.