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Accounting Policies of Monnet Ispat & Energy Ltd. Company

Mar 31, 2015

I. Basis of Accounting

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 read together with paragraph 7 of the Companies (Accounts) Rules 2014, other provisions of the Companies Act 2013 and Companies Act 1956 (to the extent applicable). The financial statements have been prepared on an accrual basis and under the historical cost convention.

II. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

III. Revenue Recognition

Revenue is recognised only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Sales of products are shown inclusive of excise duty and net of sales tax, rebates and discounts etc. Interdivision transfer are excluded from sales.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable. Interest wherever uncertainty is involved is accounted for on receipt/ payment basis.

IV. Tangible Fixed Assets, Depreciation/ Amortization, Tangible Capital Work in Progress and Intangible Assets under Development

a) Fixed assets are stated at their original cost of acquisition inclusive of inward freight, duties and expenditure incurred in the acquisition, construction & installation and are net of available duty / tax credits.

b) Expenditure during Construction period (including interest, exchange rate variations and other incidental expenses on loans obtained for acquisition of capital assets and the expenses which are considered directly attributable to the capital assets) are kept under Capital Work in Progress and shall be allocated to fixed assets on pro-rata basis as and when the project is ready for its intended use.

c) Intangible assets under development are shown separately and the same shall be amortised over the useful life of the asset after commencement of operations.

d) Depreciation / amortization on tangible and intangible fixed assets is provided to the extent of depreciable amount on the straight line Method (SLM). Depreciation is provided at the rates and in the manner prescribed in Schedule II to the Companies Act, 2013 except on some assets, where useful life has been taken based on external / internal technical evaluation as detailed below:

V. Investments

Long Term Investments are stated at cost. Provision for diminution is made only if such a decline is other than temporary. Short term investments are carried at lower of cost or quoted / fair value.

VI. Inventories

Inventories are valued on the following basis:

a) Finished Goods - at lower of cost or estimated realisable value.

b) Semi Finished Goods - at lower of cost or estimated realisable value.

c) Work-in-Process - at lower of cost or estimated realisable value

d) Raw Materials - at cost. However, in cases where the realizable value of the finished product falls below cost, materials are written down to net realizable value.

e) Stores and Spares - at cost

VII. Employee Benefits

Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Pension Scheme. The Company's contribution is recognised as an expense in the Profit and Loss Statement during the period in which the employee renders the related service.

Defined Benefit Plans

The liability in respect of defined benefit plans and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees' services.

Actuarial gains and losses in respect of post- employment and other long term benefits are charged to the Profit and Loss Statement.

VIII. Borrowing Cost

Borrowing cost including allied expenses related to project under construction stage are considered as cost for the acquisition of qualifying assets are capitalized and included in Capital Work in Progress.

IX. Provisions and Contingent Liabilities

Provisions are recognized for present obligations arising as a result of past event and where a reliable estimate can be made of probable outflows of resources along with economic benefits embodied thereto for settlement of such obligations. In cases where it is not certain that probable outflow of resources can happen or where reliable estimate can be made of the obligation the same is shown as Contingent Liabilities. The information are determined on the basis of available information.

X. Foreign Currency Transactions & derivative transactions

Foreign currency transactions are initially recorded at the exchange rate prevailing at the date of transactions.

Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting year and gain or loss arising on translation of such monetary items has been charged to revenue.

Currency and Interest rate swap derivatives are undertaken by the company to hedge the interest rate risk and gains/loss are accounted for as and when amount is actually realized/ paid on periodical settlement of contract to the extent it relates to interest rate swap. Mark to Market loss; after adjusting the interest income arising from such derivative transaction on currency and interest rate swap as at the end of the year is provided and is adjusted in Statement of Profit & Loss; whereas gain is ignored.

In case of forward exchange contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

Exchange differences arising on reporting of long term foreign currency monetary items, in so far as they relate to acquisition of a depreciable capital asset are adjusted in the carrying cost of the asset as per Companies (Accounting standards) (second amendment) rules, 2011 for additions after 1.4.2011.

XI. Taxation

Income tax for current year is provided taking into account the provisions of Income Tax Act 1961 and provisions related to Minimum Alternate Tax and tax credit thereof.

Deferred Tax Asset/liability is recognized on the items of timing difference nature by using the enacted tax rates thereon. Deferred Tax Asset is recognized with a prudent approach and management's jurisdiction that the realization of the same in virtually certain.

XII. Unless specifically stated to be otherwise, these policies are consistently followed.


Mar 31, 2014

I. Basis of Accounting

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with Accounting Standards notified under the Companies Act, 1956 of India (the "Act"), read with the General Circular 15/ 2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention.

II. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

III. Income and Expenditure

Accounting of Income & Expenditure is done on accrual basis except interest on late payment received from debtors which is accounted for on receipt basis.

I V. Sales

a) Sales are shown inclusive of excise duty and net of sales tax, rebates and discounts etc.

b) Interdivision sales are reduced from gross turnover as required by AS-9 of ICAI.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customer''s account as evidenced by the receipt of confirmation of execution of delivery instructions.

V. Fixed Assets & Depreciation

a) Fixed assets are stated at their original cost of acquisition inclusive of inward freight, duties and expenditure incurred in the acquisition, construction and installation.

b) Cenvat credit availed on capital equipments is accounted for by credit to respective fixed assets.

c) Incidental expenditure on Modifications, Expansions/New Projects (including interest and other charges on loans obtained for acquisition of capital assets) has been allocated to assets on pro-rata basis on completion of the Project.

d) Depreciation on fixed assets is provided on Straight Line Method (SLM) on pro-rata basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except on some Plant & Machinery of Sponge Iron Division, Unit-I, on which depreciation is being provided since commissioning of the unit on Written Down Value (WDV) method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on improvement to leasehold premises is provided based on tenure of lease.

VI. Inventories

Inventories are valued on the following basis:

a) Finished Goods - at lower of cost or estimated realizable value.

b) Semi Finished Goods - at lower of cost or estimated realizable value.

c) Work-in-Process - at lower of cost or estimated realizable value

d) Raw Materials - at cost. However, in cases where the realizable value of the finished product falls below cost, materials are written down to net realizable value.

e) Stores and Spares - at cost

f) Finished Goods At Depot – at lower of cost or estimated realizable value (including excise duty & freight)

VII. Excise Duty

Cenvat credit, to the extent availed, is adjusted towards cost of materials.

VIII. Retirement Benefits

Gratuity is accounted for on the basis of actuarial valuation as on the closing date.

IX. Contingent Liabilities

Contingent Liabilities are determined on the basis of available information and are disclosed by way of notes to the accounts.

X. Sundry Debtors

Sundry Debtors are shown net of bills discounted. Interest on overdue bills is accounted for on receipt basis.

XI. Investments

Long Term Investments are stated at cost. Provision for diminution is made only if such a decline is other than temporary. Short term investments are carried at lower of cost or quoted / fair value.

XII. Foreign Currency Transactions

a) Monetary Assets and liabilities in foreign currency are revalued at the year end exchange rates. Exchange differences arising on such revaluation are recognized in Statement of Profit & Loss.

b) In case of forward exchange contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

c) Exchange differences arising on reporting of long term foreign currency monetary items, in so far as they relate to acquisition of a depreciable capital asset are adjusted in the cost of the asset as per Companies (Accounting standards) (second amendment) rules, 2011 for additions after 1.4.2011.

XIII. Dividend is accounted for as per the date of declaration.

XIV. Unless specifically stated to be otherwise, these policies are consistently followed.

NOTE NO. 2 : SHARE CAPITAL

b) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders

The holders of preference shares are entitled to preferential dividends from the date of allotment. Such shares shall rank for capital and dividend and for repayment of capital in a winding up, in priority to the ordinary shares of the Company. The holders of such shares shall have the right to receive notice of general meetings of the Company but shall not confer on the holders thereof, the right to vote at any meetings of the Company, save to the extent and in the manner provided in the Companies Act, 1956.

d) The company has issued the following shares for a consideration other than cash or bonus shares during the immediately preceding 5 years:

47,22,539 equity shares of Rs.10 each were allotted as fully paid up for consideration other than cash pursuant to Scheme of Amalgamation of Mounteverest Trading & Investment Limited with the Company as per order dated 9.11.2010 passed by Honourable High Court of Chhattisgarh.

e) The Company has bought back 18,92,385 equity shares during the last five years.

f) Preference shares were issued on 30th March, 2013 for the period of 9 years with periodical put and call options.

1 Term Loans, External Commercial Borrowings (ECB) and Non Convertible Debentures (NCD) from Financial Institution/ Banks, are secured by first charge on all immovable and movable assets (present & future) of the company (subject to prior charges on movables in favour of working capital banks) ranking pari - passu with the charges created in favour of participating financial institutions. Some of the loans / facilities where charge yet to be created as guaranteed by the Managing Director of the company.

2 The repayment terms and rate of interest of term loans are as under:

a) Rupee Term Loan for Steel & Other Projects :- The Company has an outstanding balance of Rs.2,763.71 Crores of Rupee term loan with interest band of 1.50% to 2.50% plus base rate. These loans are repayable in quarterly installments commencing from FY 2013-14.

b) Rupee Term Loan for Power Division :- The Company has an outstanding balance of Rs.61.65 Crores of Rupee term loan with interest band of 11.75% to 12.95% repayable by FY 2015-16.

c) Rupee Term Loan for Washery Project :- The Company has an outstanding balance of Rs.195.52 Crores of Rupee term loan with interest band of 12.50% repayable by FY 2022-23.

d) Other Term Loan of Rs.227.37 Crores is repayable from Sept 2013 to March 2018 with interest band of 2.50% plus base rate. The same carry residual charge on the fixed assets of the Company.

e) Foreign Currency Term Loan $ 282 Million: the loan is repayable in installments from FY 2014-15 to FY 2019-20 and carries interest rate of libor plus 4.25 to 4.6%.

28. Operational performance includes impact of loss of Rs. 84.20 Crores, being losses incurred during ramp up of production of the newly commissioned steel plant due to issues of synchronization and day – today operationalization of different modules of the steel plant. The management believes such losses are one time and non recurring in nature.


Mar 31, 2011

1. Basis of Accounting

The Company has prepared its financial statements in accordance with generally accepted accounting principles and also in accordance with the requirements of the Companies Act, 1 956.

2. Income and Expenditure

Accounting of Income & Expenditure is done on accrual basis except interest on late payment received from debtors which is accounted for on receipt basis.

3. Sales

a) Sales are shown inclusive of excise duty and net of sales tax, rebates and discounts etc.

b) The Company has reduced interdivision sales from gross turnover as required by AS-9 of ICAI.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customer's account as evidenced by the receipt of confirmation of execution of delivery instructions.

4. Claims

Revenue in respect of claims is recognised only when the same is reasonably ascertained.

5. Fixed Assets & Depreciation

a) Fixed assets are stated at their original cost of acquisition inclusive of inward freight, duties and expenditure incurred in the acquisition, construction and installation.

b) Cenvat credit availed on capital equipments is accounted for by credit to respective fixed assets.

c) Incidental expenditure on Modifications, Expansions/New Projects (including interest and commitment charges on loans obtained for acquisition of capital assets) has been allocated to assets on pro-rata basis on completion of the Project.

d) Depreciation on fixed assets is provided on Straight Line Method (SLM) on pro-rata basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1 956 except on some Plant & Machinery of Sponge Iron Division, Unit-I, on which depreciation is being provided since commissioning of the unit on Written Down Value (WDV) method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1 956. Depreciation on improvement to leasehold premises is provided based on tenure of lease.

6. Inventories

Inventories are valued on the following basis using FIFO method:

a) Finished Goods - at lower of cost or estimated realisable value.

b) Semi Finished Goods - at lower of cost or estimated realisable value.

c) Work-in-Process - at lower of cost or estimated realisable value

d) Raw Materials - at cost. However, in cases where the realizable value of the finished product falls below cost, materials are written down to net realizable value.

e) Stores and Spares - at cost

f) Finished Goods At Depot - at lower of cost or estimated realisable value (including excise duty & freight)

7. Excise Duty

- Cenvat credit, to the extent availed, is adjusted towards cost of materials. Custom duty is accounted for at the time of clearance of goods.

8. Retirement Benefits

Gratuity is accounted for on the basis of actuarial valuation as on the closing date.

9. Contingent Liabilities

Contingent Liabilities are determined on the basis of available information and are disclosed by way of notes to the accounts.

10. Sundry Debtors

Sundry Debtors are shown net of bills discounted. Interest on overdue bills is accounted for on receipt basis.

11. Investments

Long Term Investments are stated at cost. Provision for diminution is made only if such a decline is other than temporary. Short term investments are carried at lower of cost or quoted / fair value.

12. Foreign Currency Transactions

a) Monetary Assets and liabilities in foreign currency are revalued at the year end exchange rates. Exchange differences arising on such revaluation are recognized in Profit & Loss Account.

b) In case of forward exchange contracts, the difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

c) Exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs are capitalized in the respective qualifying assets.

13. Dividend is accounted for as per the date of declaration.

14. Unless specifically stated to be otherwise, these policies are consistently followed.














Mar 31, 2010

1. Basis of Accounting

The Company has prepared its financial statements in accordance with generally accepted accounting principles and also in accordance with the requirements of the Companies Act, 1956.

2. Income and Expenditure

Accounting of Income & Expenditure is done on accrual basis except interest on late payment received from debtors which is accounted for on receipt basis.

3. Sales

a) Sales are shown inclusive of excise duty and net of sales tax, rebates and discounts etc.

b) The Company has reduced interdivision sales from gross turnover as required by AS-9 of ICAI.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customers account as evidenced by the receipt of confirmation of execution of delivery instructions.

4. Claims

Revenue in respect of claims is recognised only when the same is reasonably ascertained.

5. Fixed Assets & Depreciation

a) Fixed assets are stated at their original cost of acquisition inclusive of inward freight, duties and expenditure incurred in the acquisition, construction and installation.

b) Cenvat credit availed on capital equipments is accounted for by credit to respective fixed assets.

c) Incidental expenditure on Modifications, Expansions/New Projects (including interest and commitment charges on loans obtained for acquisition of capital assets) has been allocated to assets on pro-rata basis on completion of the Project.

d) Depreciation on fixed assets is provided on Straight Line Method (SLM) on pro-rata basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except on some Plant & Machinery of Sponge Iron Division, Unit-I, on which depreciation is being provided since commissioning of the unit on Written Down Value (WDV) method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

6. Inventories

Inventories are valued on the following basis using FIFO method:

a) Finished Goods - at lower of cost or estimated realisable value.

b) Semi Finished Goods - at lower of cost or estimated realisable value.

c) Work-in-Process - at lower of cost or estimated realisable value

d) Raw Materials - at cost. However, in cases where the realizable value of the finished product falls below cost, materials are written down to net realizable value.

e) Stores and Spares - at cost

f) Finished Goods At Depot - at lower of cost or estimated realisable value (including excise duty & freight)

7. Excise Duty

- Cenvat credit, to the extent availed, is adjusted towards cost of materials.

- Custom duty is accounted for at the time of clearance of goods.

8. Retirement Benefits

Gratuity is accounted for on the basis of actuarial valuation as on the closing date.

9. Contingent Liabilities

Contingent Liabilities are determined on the basis of available information and are disclosed by way of notes to the accounts.

10. Sundry Debtors

Sundry Debtors are shown net of bills discounted. Interest on overdue bills is accounted for on receipt basis.

11. Investments

Long Term Investments are stated at cost. Provision for diminution is made only if such a decline is other than temporary. Short term investments are carried at lower of cost or quoted / fair value.

12. Foreign Currency Transactions

a) Monetary Assets and liabilities in foreign currency are revalued at the year end exchange rates. Exchange differences arising on such revaluation are recognized in Profit & Loss Account.

b) In case of foward exchange contracts, the difference between the foward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

13. Dividend is accounted for as per the date of declaration.

14. Unless specifically stated to be othewise, these policies are consistently followed.

 
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