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Accounting Policies of Indian Metals & Ferro Alloys Ltd. Company

Mar 31, 2015

1.1 Basis of Preparation of Financial Statements

These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India, under the historical cost convention, on accrual basis. As per Rule 7 of The Companies (Accounts) Rules, 2014, the standards of accounting as specified under the Companies Act ,1956 shall be deemed to be the accounting standards until accounting standards are specified by the Central Government under section 133 of the Companies Act,2013. Consequently, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211 (3C) of the Companies Act,1956 [Companies (Accounting Standards) Rules,2006] and the relevant provisions of the Companies Act, 2013

Operating Cycle

All assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. The Company has ascertained its operating cycle as twelve months For the purpose of current/non- current classification of assets and liabilities.

1.2 Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions which are considered to arrive at the reported amounts of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and the reported income and expenses during the reporting year. Although these estimates are based upon the management''s best knowledge of current events and actions, actual results could differ from these estimates. The difference between the actual results and the estimates are recognised in the periods in which the results are known / materialised. Any revision to the accounting estimates are recognised prospectively in the current and future years.

1.3 Revenue Recognition

Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection. When recognition of revenue is postponed due to the effect of uncertainties, it is considered as revenue of the period in which it is properly recognised.

a) Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the buyer. Sale of goods is recognised gross of excise duty but net of sales tax and value added tax.

b) Inter unit transfers are adjusted against respective expenses.

c) Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

d) Income from Dividend of shares of corporate bodies is accounted when the Company''s right to receive the dividend is established.

e) Export Incentives:

(i) Export Incentives on account of Duty Drawback Scheme and Focus Product Scheme are accrued in the year when the right to receive as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no uncertainty about its ultimate collection.

(ii) Export Incentives on account of Status Holder Incentive Scheme (SHIS) is recognised as and when certainty of its realisable amount is established by the Company, to the extent the scrip value is sold or utilised against duty to be paid on Capital Goods.

1.4 Fixed Assets, Depreciation/Amortisation and Impairment

I. Fixed Assets

(a) Tangible Fixed assets are carried at cost net of recoverable taxes and includes amounts added on revaluation, less accumulated depreciation and accumulated impairment loses, if any. Cost comprises of the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, which take substantial period of time to get ready for their intended use, are also capitalised to the extent they relate to the period till such assets are ready to put to use.

(b) In respect of fixed assets acquired on Finance Lease on or after 1st April, 2001, the lower of the fair value of the assets and present value of the minimum lease rentals is capitalized as fixed assets at the inception of the lease, with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

II. Depreciation / Amortisation

(a) Depreciation on tangible assets other than Freehold and Leasehold Land, including assets acquired under finance lease, is provided over the estimated useful life of assets, in accordance with Schedule II to the Companies Act,2013. For the year ended 31st March 2014, depreciation was provided in accordance with Schedule XIV to the Companies Act, 1956.

The Company has adopted the useful life as specified in Schedule II to the Companies Act, 2013 except for certain assets for which the useful life has been estimated based on the Company''s past experiences in this regard, duly supported by technical advice. Accordingly, the useful lives of tangible assets of the Company which are different from the useful lives as specified by Schedule II are given below :

Asset Description Estimated useful life Estimated useful life duly supported by as per Schedule II Technical Advice (Years) (Years)

Plant & Machinery

* Furnaces 8 25

* Certain items of Continuous Process 26 - 42 25 Plant

* Railways Sidings 26 15

Depreciation / Amortisation on assets purchased / sold during the reporting year is recognised on a pro-rata basis.

(b) Leasehold Land is held on various leases whose period ranges from 90 years to perpetuity. The Company does not consider such leases as having "a Ltd useful life for the enterprise " as envisaged in AS 6 on Depreciation Accounting and accordingly the cost thereof is not amortised.

III. Impairment

The carrying amount of assets is reviewed at each Balance Sheet date to determine if there is any indication of impairment, based on internal / external factors. An impairment loss is recognized in the Statement of Profit and Loss wherever the carrying amount of an asset or the carrying amount of the cash generating unit to which the asset belongs exceeds its recoverable amount. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on events or changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment

1.5 Capital Work-in-Progress and Intangible Assets under Development

Capital work-in-progress is stated at cost and includes development and other expenses, including interest during construction period. Intangible Assets under Development comprises of Computer Software being developed, that is not yet ready for it''s intended use at the reporting date and is stated at cost.

1.6 Borrowing Costs

Borrowing costs relating to the acquisition / construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. The ancillary costs incurred in connection with the arrangement of borrowings are amortised over the life of underlying borrowings. Borrowing costs also include exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to the borrowing costs.

All other costs related to borrowings are recognised as expense in the period in which they are incurred.

1.7 Inventories

(a) Items of inventories are carried at lower of cost and net realisable value, after providing for obsolescence, if any.

(b) Cost of inventories is determined on the ''weighted average'' basis and comprises expenditure incurred in the normal course of business for bringing such inventories to their present location and includes, wherever applicable, appropriate overheads.

1.8 Investments

Investments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with Accounting Standard 13 on ''Accounting for Investments''. All other investments are classified as non-current investments.

Current investments are carried at lower of cost and fair value.

All non-current investments, including investments in subsidiaries, are carried at cost. However, provision is made for diminution in value, if any, only when such diminution is other than temporary in nature.

1.9 Provision For Doubtful Debts and Advances

The Company makes provision for doubtful debts and advances, to the extent considered necessary, based on the management''s best estimate.

1.10 Foreign Currency Transactions, Translations and Derivative Contracts

The reporting currency of the Company is the Indian Rupee (Rs.)

(a) Initial Recognition

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the prevailing exchange rate between the reporting currency and foreign currency, as on the date of the transaction.

(b) Conversion

Year end foreign currency monetary items are reported using the year end rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates prevailing at the date when the values were determined.

(c) Exchange differences

Exchange differences arising on the settlement or reporting of monetary items, at rates different from those at which they were initially recorded during the year or reported in previous financial statements and / or on conversion of monetary items, are recognised as income or expense in the year in which they arise. Exchange differences arising out of foreign currency borrowings are considered as an adjustment to interest cost and recognised in accordance with para 1.6 above.

(d) Derivatives

In terms of the announcement made by The Institute of Chartered Accountants of India, the accounting for derivative contracts excluding forward contracts is done based on the "marked to market" principle, on a portfolio basis and the net loss, after considering the offsetting effect on the underlying hedged item, is charged to the Statement of Profit and Loss. Net gains are ignored as a matter of prudence.

In case of forward contracts the premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the respective contracts. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense in the year in which it is cancelled or renewed.

1.11 Leases

Where the Company is lessee:

Finance Lease

(i) Assets acquired under leases where all the risks and rewards of ownership have been substantially transferred in favour of the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

Operating Lease

(ii) Assets acquired under leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating lease rentals are charged to the Statement of Profit and Loss on accrual basis.

1.12 Employee Benefits

(a) Employee benefits in the form of Provident Fund, Pension Fund, Superannuation Fund and Employees State Insurance are defined contribution plans and the Company''s contributions, paid or payable during the reporting period, are charged to the Statement of Profit and Loss.

(b) Gratuity liability & Leave Encashment liability are defined benefit plans and are provided for on the basis of actuarial valuation on projected unit credit method at the Balance Sheet date.

(c) Actuarial gains/losses are charged to the Statement of Profit and Loss.

1.13 Taxes on Income

Tax expense comprises of current tax [(net of Minimum Alternate Tax (MAT) Credit entitlement)] and deferred tax.

Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax reflects the impact of timing differences between taxable income and accounting income for the current reporting year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment / substantive enactment date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities. The deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each Balance Sheet date, the Company re- assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

MAT Credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT Credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

1.14 Mining Development Expenses

Mining development expenses in respect of operating mines are charged off to revenue as and when incurred.

1.15 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.16 Prior Period, Exceptional and Extraordinary Items

Prior Period, Exceptional and Extraordinary items having material impact on the financial affairs of the Company are disclosed separately.


Mar 31, 2013

1.1 Accounting Convention

(a) The financial statements have been prepared under the historical cost convention (excluding certain fixed assets which are restated pursuant to the composite scheme of arrangement and amalgamation) and in accordance with applicable Accounting Standards except where otherwise stated.

(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrual basis.

1.2 Revenue Recognition

(a) Gross sales represents invoiced value of goods sold net of sales tax but inclusive of excise duty.

(b) Inter unit transfers are adjusted against respective expenses.

1.3 Fixed Assets

(a) Freehold and leasehold lands are not depreciated.

(b) Expenses on construction of approach roads are treated as revenue.

(c) Depreciation is charged on plant & machinery and buildings of third furnace at Therubali on straight line method and for all other categories of assets, on the reducing balance method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

(d) Full depreciation is charged on R & D assets in the year of installation.

(e) Assets held by the Company as lessee, where the Company has substantial ownership and all the risks and rewards are classified as finance lease. Such leases are capitalised at the inception of the lease at the fair market value or the present value of the minimum lease payments whichever is less and a liability is created for an equivalent amount. Each lease rental payment is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability.

1.4 Investments

Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost except in the case of a permanent diminution in their value, in which case necessary provision is made.

1.5 Inventories

Inventories are valued as under, after providing for obsolescence:

(a) Raw materials, stores & spares and loose tools are valued at weighted average cost. Finished goods, work-in-progress, slow moving, rejected/substandard stocks and fines generated are valued at lower of cost or net realisable value. Cost formula used is weighted average cost.

(b) Carriage inward on general stores material is directly charged to revenue.

(c) Stores and spares purchased for Aviation Division are directly charged to revenue.

(d) Inter unit transfers of mining material and stock of usable ore at mines are valued at lower of cost or net realisable value.

(e) By-products at mines are not valued as they do not carry any material value.

1.6 Debtors and Advances

Provision has been made for doubtful debts and advances to the extent considered necessary by the management.

1.7 Foreign Currency Translation

Foreign currency transactions are translated at the rate of exchange prevailing on the date of transaction. Closing balances in foreign currency as at Balance Sheet date are converted at the rate of exchange prevailing on that date.

1.8 Employee Benefits

(a) Company''s contributions to provident fund, pension fund and superannuation fund are accounted on accrual basis.

(b) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year.

1.9 Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

1.10 Financial Derivatives

In respect of financial derivatives, premium paid, losses on restatement and gains/losses on settlement are charged to the profit and loss account.

1.11 Deferred Tax

Deferred tax is recognised subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

1.13 Mining Development Expenses

Mining development expenses in respect of operating mines are charged off to revenue as and when incurred.

1.14 Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

1.1 ACCOUNTING CONVENTION

(a) The financial statements have been prepared under the historical cost convention (excluding certain fixed assets which are restated pursuant to the composite scheme of arrangement and amalgamation) and in accordance with applicable Accounting Standards except where otherwise stated.

(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrual basis.

1.2 REVENUE RECOGNITION

(a) Gross sales represents invoiced value of goods sold net of sales tax but inclusive of excise duty.

(b) Inter unit transfers are adjusted against respective expenses.

1.3 FIXED ASSETS

(a) Freehold and leasehold lands are not depreciated.

(b) Expenses on construction of approach roads are treated as revenue.

(c) Depreciation is charged on plant & machinery and buildings of third furnace at Therubali on straight line method and for all other categories of assets, on the reducing balance method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

(d) Full depreciation is charged on R & D assets in the year of installation.

1.4 INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long term investments are valued at cost except in the case of a permanent diminution in their value, in which case necessary provision is made.

1.5 INVENTORIES

Inventories are valued as under, after providing for obsolescence:

(a) Raw materials, stores & spares and loose tools are valued at weighted average cost. Finished goods, work-in-progress, slow moving, rejected/ substandard stocks and fines generated are valued at lower of cost or net realisable value. Cost formula used is weighted average cost.

(b) Carriage inward on general stores material is directly charged to revenue.

(c) Stores and spares purchased for Aviation Division are directly charged to revenue.

(d) Inter unit transfers of mining material and stock of usable ore at mines are valued at lower of cost or net realisable value.

(e) By-products at mines are not valued as they do not carry any material value.

1.6 DEBTORS AND ADVANCES

Provision has been made for doubtful debts and advances to the extent considered necessary by the management.

1.7 FOREIGN CURRENCY TRANSLATION

Foreign currency transactions are translated at the rate of exchange prevailing on the date of transaction. Closing balances in foreign currency as at Balance Sheet date are converted at the rate of exchange prevailing on that date.

1.8 EMPLOYEE BENEFITS

(a) Company's contributions to provident fund, pension fund and superannuation fund are accounted on accrual basis.

(b) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year.

1.9 BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

1.10 FINANCIAL DERIVATIVES

In respect of financial derivatives, premium paid, losses on restatement and gains/losses on settlement are charged to the profi t and loss account.

1.11 DEFERRED TAX

Deferred tax is recognised subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

1.12 IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

1.13 MINING DEVELOPMENT EXPENSES

Mining development expenses in respect of operating mines are charged off to revenue as and when incurred.


Mar 31, 2011

1. ACCOUNTING CONVENTION

(a) The financial statements have been prepared under the historical cost convention (excluding certain fixed assets which are restated pursuant to the composite scheme of arrangement and amalgamation) and in accordance with applicable Accounting Standards except where otherwise stated.

(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrual basis.

2. REVENUE RECOGNITION

(a) Gross sales represents invoiced value of goods sold net of sales tax but inclusive of excise duty.

(b) Inter unit transfers are adjusted against respective expenses.

3. FIXED ASSETS

(a) Freehold and leasehold lands are not depreciated.

(b) Expenses on construction of approach roads are treated as revenue.

(c) Depreciation is charged on plant & machinery and buildings of third furnace at Therubali on straight line method and for all other categories of assets, on the reducing balance method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

(d) Full depreciation is charged on R & D assets in the year of installation.

4. INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long term investments are valued at cost except in the case of a permanent diminution in their value, in which case necessary provision is made.

5. INVENTORIES

Inventories are valued as under, after providing for obsolescence:

(a) Raw materials, stores & spares and loose tools are valued at weighted average cost. Finished goods, work-in-progress, slow moving, rejected/ substandard stocks and fines generated are valued at lower of cost or net realisable value. Cost formula used is weighted average cost.

(b) Carriage inward on general stores material is directly charged to revenue.

(c) Stores and spares purchased for Aviation Division are directly charged to revenue.

(d) Inter unit transfers of mining material and stock of usable ore at mines are valued at lower of cost or net realisable value.

(e) By-products at mines are not valued as they do not carry any material value.

6. DEBTORS AND ADVANCES

Provision has been made for doubtful debts and advances to the extent considered necessary by the management.

7. FOREIGN CURRENCY TRANSLATION

Foreign currency transactions are translated at the rate of exchange prevailing on the date of transaction. Closing balances in foreign currency as at Balance Sheet date are converted at the rate of exchange prevailing on that date.

8. EMPLOYEE BENEFITS

(a) Companys contributions to provident fund, pension fund and superannuation fund are accounted on accrual basis.

(b) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year.

9. BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

10. FINANCIAL DERIVATIVES

In respect of financial derivatives, premium paid, losses on restatement and gains/losses on settlement are charged to the profit and loss account.

11. DEFERRED TAX

Deferred tax is recognised subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

12. IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

13. MINING DEVELOPMENT EXPENSES

Mining development expenses in respect of operating mines are charged off to revenue as and when incurred.

14. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2010

1. Accounting Convention

(a) The financial statements have been prepared under the historical cost convention (excluding certain fixed assets which are restated pursuant to the composite scheme of arrangement and amalgamation) and in accordance with applicable Accounting Standards except where otherwise stated.

(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrual basis.

2. Revenue Recognition

(a) Gross sales represents invoiced value of goods sold net of sales tax but inclusive of excise duty. ,

(b) Inter unit transfers are adjusted against respective expenses.

3. Fixed Assets

(a) Freehold and leasehold lands are not depreciated.

(b) Expenses on construction of approach roads are treated as revenue.

(c) Depreciation is charged on plant & machinery and buildings of third furnace at Therubali on straight line method and for all other categories of assets, on the reducing balance method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

(d) Full depreciation is charged on R & D assets in the year of installation.

4. Investments

Current investments are valued at the lower of cost and fair value. Long term investments are valued at cost except in the case of a permanent diminution in their value, in which case necessary provision is made.

5. Inventories

Inventories are valued as under, after providing for obsolescence:

(a) Raw materials, stores & spares and loose tools are valued at weighted average cost. Finished goods, work-in-progress, slow moving, rejected/ substandard stocks and fines generated are valued at lower of cost or net realisable value. Cost formula used is weighted average cost.

(b) Carriage inward on general stores material is directly charged to revenue.

(c) Stores and spares purchased for Aviation Division are directly charged to revenue.

(d) Inter unit transfers of mining material and stock of usable ore at mines are valued at lower of cost or net realisable value.

(e) By-products at mines are not valued as they do not carry any material value.

6. Debtors and Advances

Provision has been made for doubtful debts and advances to the extent considered necessary by the management.

7. Foreign Currency Translation

Foreign currency transactions are translated at the rate of exchange prevailing on the date of transaction. Closing balances in foreign currency as at Balance Sheet date are converted at the rate of exchange prevailing on that date.

8. Employee Benefits

(a) Companys contributions to provident fund, pension fund and superannuation fund are accounted on accrual basis.

(b) Provision for gratuity and leave encashment is made on the basis of actuarial valuation at the end of the year.

9. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

10. Financial Derivatives

In respect of financial derivatives, premium paid, losses on restatement and gains/losses on settlement are charged to the profit and loss account.

11. Deferred Tax

Deferred tax is recognised subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

12. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

13. Mining Development Expenses

Mining development expenses in respect of operating mines are charged off to revenue as and when incurred.

14. Apportionment of Common Expenses

Common expenses applicable to group companies are shared on predetermined basis.

15. Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

 
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